KEY HIGHLIGHTS
` 21,078 crore
NET PROFIT
An increase of 20.5% compared
to the previous year.
` 1,244,541crore
BALANCE SHEET SIZE
An increase of 17.0% compared
to the previous year.
` 923,141crore
` 819,401crore
TOTAL DEPOSITS
TOTAL ADVANCES
An increase of 17.0% compared to
the previous year.
An increase of 24.5% compared to
the previous year.
17.1%
15.8%
1.36% of Gross Advances
CAPITAL ADEQUACY RATIO
TIER I CAPITAL RATIO
GROSS NON-PERFORMING ASSETS
5,103
13,160
Banking Outlets
ATMs
2,748
Cities/Towns
NETWORK
Table of
Contents
A Responsible Leader: Environmental, Social and Governance (ESG) Practices
Taking A Step Towards Progress With HDFC Bank Parivartan
Transform To Perform: A Digital Plan
Board and Management
Financial Highlights - Graphs
Financial Highlights
Directors’ Report
Independent Auditors’ Report
Financial Statements
Independent Auditors’ Report for Consolidated Financial Statements
Consolidated Financial Statements
Basel III - Pilar 3 Disclosures
Secretarial Auditors’ Certificate on Corporate Governance
Corporate Governance
Shareholder Information
Accolades
02
04
10
13
16
20
22
90
98
178
186
241
242
244
277
280
A RESPONSIBLE LEADER:
ENVIRONMENTAL, SOCIAL & GOVERNANCE
Environmental, Social &
Governance (ESG) Practices:
Furthering Our Sustainability Pledge
As India’s largest private sector bank, we at HDFC Bank have always
stayed strong to our commitment to positively impact the environment,
our customers, employees, and the community at large. Our core values
have guided our ESG practices, which seek to drive growth and empower
communities through our corporate decision-making processes.
In FY 2014-15, sustainability was officially included as our fifth value,
alongside customer focus, operational excellence, product leadership,
and people. This is testament to the fact that sustainability is now a part
of our DNA. It is an area of heightened focus and investment for us, and
has changed our outlook towards our business.
This approach is in perfect alignment with our strategic goals as an
organisation and the experience we seek to offer our customers. For in
the spirit of data-driven transparency, the present-day consumer not only
expects, but is rightly entitled to information on corporate operations and
processes. Customers are increasingly choosing private and public
companies that maintain high levels of transparency and ethics in their
business practices. And we believe that our ESG and Sustainability
disclosures give them exactly that.
HDFC Bank’s ESG Journey
When the concept of ESG emerged nearly thirty years ago, it was used as an investment term that defined the ethical and sustainability impact of a
business. Today, ESG is a key pillar of our business strategy. As a result, we have the second-highest weightage (7.84%) in Nifty-100 ESG, an index of
the NSE that assigns ESG scores to companies. Since FY 2013-14, we have published our annual ESG performance in our Sustainability Report,
following the Global Reporting Initiative (GRI) standards.
Environmental
We look at natural capital and the communities we operate in, as integral elements of our business. That is why we work to strike a balance between
the economic, social and environmental aspects of our decisions. For our environmental initiatives, we are keen to explore how our work can address
various environmental challenges and incorporate technologies and processes that don’t harm, but rather add value to the quality of the environment
around us.
We measure and disclose our greenhouse gas (GHG) emissions with full transparency. We use solar energy and look to install energy efficient fixtures
as much as possible in our premises. We do this with an intention to progressively reduce our carbon footprint. For example, our Pune, Bhubaneswar,
and Noida offices rely on solar panels to supplement grid power.
We have also opted for automated server and desktop shutdown systems that reduce unnecessary energy consumption. And two of our largest office
buildings, located in Mumbai and Bhubaneswar, have been LEED certified thanks to their energy efficient designs.
Moreover, our push to go digital across service and product lines, helps reduce paper consumption and enables our customers to access a
multi-channel digital banking solution, without the hassle of travelling to a branch office. HDFC Bank disposed about 220 tonnes of e-waste in FY 18-19,
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A RESPONSIBLE LEADER:
ENVIRONMENTAL, SOCIAL & GOVERNANCE
through authorised recyclers. We are committed to Responsible Financing and, as a rule of thumb, do not fund projects that have an adverse impact
on environment, health and safety (EHS) levels. All loans, exceeding ` 10 crore in value and spanning a period of more than five years, are screened
through an SEMS (Social and Environmental Management System) framework and carefully scrutinised and validated for their environmental and social
impact. Our board-governed environmental policy serves as a framework to understand and manage our environmental risks, impacts and
opportunities. By implementing this policy and adopting global best environment practices, we hope to achieve a 10% reduction in our Scope 1 and 2
emissions intensity by FY 2021-22.
Social
We understand fully that our identity as a world class Indian bank is shaped by our stakeholders and customers. They are at the heart of of everything
we do. Which is why we leave no stone unturned in delivering value to our customers, to the community, or to our workforce. We ensure a fair
recruitment process that helps us identify and hire people with the right values, who are then groomed, encouraged and retained through a combination
of financial and non-financial incentives.
We strive towards the progress of society, through our Corporate Social Responsibility (CSR) policy. Our Umbrella of Social Initiatives ‘Parivartan’ has
touched millions of lives and helped empower and strengthen entire communities. Activities under the Parivartan banner are spread across a diverse
range of intervention areas and we have spent ` 443.8 crore on the development and empowerment of our communities, reaching out to more than
5.4 crore beneficiaries in the process.
The Sustainable Livelihood Initiative (SLI) has been a key driver in pushing for financial inclusion among families, especially women, in un-banked and
under-banked areas. The initiative has had a major socio-economic impact by focusing on lending financial aid to Self Help Groups (SHG) for women.
Besides providing credit, we also train people in occupational skills, financial literacy, credit counselling and market linkage.
We have been able to meet the critical needs of communities across the country by designing and deploying multi-faceted interventions through our
Holistic Rural Development Programme (HRDP). As part of this program, we enable and empower communities with natural resource management,
education, healthcare and sanitation, to skill training targeted at livelihood enhancement.
Corporate Governance
We are committed to maintaining the highest levels of ethical standards of integrity, corporate governance and regulatory compliance. These parameters
form the bedrock of our corporate governance policy.
We have proactively upheld good governance practices and are constantly striving to enhance our standards. Our Board of Directors is responsible for
setting the course for, and evaluating the bank’s performance with regards to corporate governance. The parameters of evaluation include compliance,
internal control, risk management, information and cybersecurity, customer service, social & environmental responsibility.
Code of Conduct: Transparency and Vigilance
HDFC Bank encourages an open, equitable and transparent system of functioning and interacting with all its internal and external stakeholders. We have
adopted and implemented practices that imbibe this philosophy throughout the enterprise.
Our robust and well-defined Code of Conduct alongside our stringent, zero-tolerance policy against sexual harassment serve as strong regulatory
guidelines and govern our day-to-day functioning.
Our “Whistle Blower Policy” encourages our employees and other stakeholders to bring to our attention any compromise or violation of HDFC Bank’s code
of conduct, or legal and regulatory norms. Our Chief of Internal Vigilance receives and addresses these concerns by initiating a thorough enquiry conducted
by the appropriate authoritative body within the bank.
Our focus on ESG is helping us, as an organisation, understand and realise the positive impact of transparency, ethics and sustainability. We are confident
in our belief that a sharp focus on ESG will maintain the trust and regard of our customers and determine our success and longevity, in a fiercely
competitive market.
3
TAKING A STEP TOWARDS PROGRESS
WITH HDFC BANK PARIVARTAN
At HDFC Bank, we firmly believe that for any business to prosper, it must
consider the social, environmental and ethical impact of its decisions. Ever
since our inception in 1995, we’ve been on a journey to not just take
world-class banking across the country, but to make a positive difference to
our planet. Because to us, progress isn’t simply about moving with the
times. It is about ushering in ‘Parivartan’ - a transformation that improves
lives and empowers communities.
As one of India’s largest corporations, we consider it both an honour and
our responsibility to work towards the betterment of the country and its
people. The philosophy of Parivartan informs how we go about achieving
this. To bring about Parivartan, we first need to imagine a future we want –
one that is fair, equal, happy and healthy. With that vision in mind, we deploy
social development initiatives that take on myriad forms, guided by different
strategies. But ultimately, the objective is to create Parivartan and become
catalysts of positive transformation at the organisational level and in the
communities wherein we operate.
We’ve been privileged to enjoy success over the last quarter of a century.
But this success would be hollow if we didn’t use our resources to give back
to society. This is the founding principle of Parivartan and the cornerstone of
our CSR efforts. Today, our commitments in the field have made us one of
the largest spenders on CSR in the country. But
this
isn’t a new
development. Well before CSR contributions were made mandatory by the
Companies Act of 2013, we were following board-approved targets and
contributing to worthy causes, driven by our desire to create healthy,
sustainable communities and an equal-opportunity world. Through our
efforts, we have impacted 54 million lives so far.
The Five Pillars of Parivartan
We are committed to forging mutually-enriching partnerships for sustainable
development. To achieve this, we work hand-in-hand with marginalised
communities to try and understand their unique needs, and then formulate
customised strategies to bring forth the Parivartan they need.
Our CSR programmes focus on five distinct areas of intervention:
Rural Development
Promotion of Education
Skill Development and Livelihood Enhancement
Healthcare and Hygiene
Financial Literacy and Inclusion
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Rural Development
India is one of the fastest growing economies in the world. But despite that,
over half of its 1.3 billion population lives in rural areas, and more alarmingly,
nearly 73 million people continue to live in extreme poverty (Source: UN and
Brookings, 2018). There are a multitude of complex socio-economic and
environmental factors that are responsible for this. The Holistic Rural
Development Programme (HRDP) is a flagship programme under this area
of intervention that attempts to provide rural communities, with the tools
and means to grow and prosper. This is done through a wide variety of
training and institution building programmes, supported by relevant
infrastructure.
The vast majority of rural communities depend heavily on rain-fed agriculture
for their livelihoods. The availability of water and the quality of soil therefore
dictate their economic health. But with the right resource management and
agricultural
techniques, along with skilling and
training, vulnerable
communities can be better placed to tackle the vagaries of nature. HRDP’s
various initiatives in areas such as educational infrastructure, healthcare and natural resources management including micro-watershed management,
irrigation, soil and water conservation, represent our attempts to usher in meaningful and impactful change where it matters the most. We believe that
this is the surest way to strengthen the economic backbone of the country.
Today, HRDP spans across 17 states and has reached over 3.6 lakh households in more than 1,100 villages. We have set up over 1,200 schools, and
facilitated better learning opportunities for over 1.45 lakh students. We have also trained over 72,500 farmers, distributed more than 10,800 biomass
stoves and set up over 460 libraries.
Other programme highlights include:
21,270+ solar lights installed 26,000+ kitchen gardens promoted 5,800+ water conservation structures built
One of the many millions of lives impacted through this programme is that of Tukojirao Patil, a farmer from Jalgaon, Maharashtra. Tukojirao’s village was
stricken by an acute lack of rainfall and a subsequent water shortage. Under HRDP, HDFC Bank, in partnership with a local NGO (KVGPS), was able to
install 31 groundwater recharge structures that helped tackle the drought.
HRDP has also helped create food security in 21 villages in Uttar Pradesh through grain banks. Take the story of Shaheedan. Even at the age of 53, she
had to work as a manual labourer in order to feed her family. But work was not guaranteed and the pay was often inadequate. During difficult times she
had to resort to borrowing grains from neighbours and money lenders, which often led to further exploitation.
The setting up of a grain bank in her village has helped Shaheedan make it through these times of extreme hardship. Grain banks protect the most
disadvantaged farmer families, like hers, against starvation and exploitation.
“Thanks to the grain bank, we can borrow grains in times of need and return it during the harvesting season. This makes us feel like we are taking out
grain from our own storage. It makes us feel secure.” – Shaheedan
Empowering communities will always remain at the heart of Parivartan. In FY 2019 alone, we have covered over 251 additional villages under this
programme. The momentum we have built up, is now in full force and has revealed a world of possibilities ahead.
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TAKING A STEP TOWARDS PROGRESS
WITH HDFC BANK PARIVARTAN
Promotion of Education
We strongly believe that a quality educational foundation is a gateway to
better opportunities and success. This is why we strive to provide and
promote a conducive and effective learning environment. The Zero
Investment Innovations for Education Initiatives (ZIIEI), is a large scale
teacher outreach initiative started in 2015 by HDFC Bank in partnership with
Sri Aurobindo Society. ZIIEI believes that teachers are the pillars of this
nation, and that their contribution, if recognized and supported, can bring
about a significant improvement in the quality and reach of education.
Therefore, ZIIEI aims to find solutions created by teachers at the grassroots
level and systematically scale them up to millions of students through the
'Navachar Pustika' or Book of Ideas, which is a compilation of the best
ideas selected and recognized by a panel. Till date, Navachar Pustikas have
been distributed across 18 states. Subsequently, close to 1.87+ lakh
schools have implemented innovative ideas.
Along with this transformational journey, the concept of 'Innovative Pathshaala' was also introduced, where each chapter of the state curriculum was
mapped to innovative ideas, that could be used to engage and teach students. While we have currently completed the program in UP and NCERT
curriculum (primary education) the remaining states will be subsequently added. This curriculum is further being put on an online app which can be easily
accessed by teachers. The ZIIEI programme today has touched more than 15 lakh government teachers across 21 states and indirectly reaches out to
more than 1.6 crore students to ensure quality education and bring innovation in the country’s education system. ZIIEI aims to create and strengthen a
teacher-centred ecosystem for education sector stakeholders.
This unique initiative focuses on better utilisation of resources available in government schools i.e. the teachers, thus unleashing the immense potential
of educators by instilling self-belief and making innovation a core value.
Project Disha is yet another initiative that has helped achieve higher levels in numeracy, reading and science in the more remote and rural areas of India.
Initiated in 2016, Project Disha, in partnership with Magic Bus India Foundation, now spans across four states: Chhattisgarh, Maharashtra, Madhya
Pradesh and Rajasthan.
Consider the story of a young scholar named Shamshad Qureshi. Shamshad exhibited a very low level of interest in academics and displayed frequent
truancy at school. Soon his attendance began to plummet dangerously and his teachers feared he would drop out altogether. That was when Project
Disha stepped in with a remedy. By helping teachers implement innovative teaching methods and activity-based teaching, Shamshad’s interest in
knowledge and learning was reignited. He was motivated to participate in school and his attendance improved dramatically.
The project has been able to provide quality education to approximately 18,000 children. It has also built 110 community libraries and set up 55 science
laboratories. We have initiated multiple projects in the fields of education and livelihood training, with the objective of empowering the socially and
economically underserved, with the skills they need to progress. The Educational Crisis Scholarship Support (ECSS) programme provides support to
children undergoing personal and economic exigencies, those who are most at risk of dropping out of school due to poor financial conditions. The ECSS
programme covers students in middle schools and high schools, as well as scholars pursuing undergraduate and postgraduate education. This
assistance helps these students navigate difficult situations without gravely impacting their education.
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TAKING A STEP TOWARDS PROGRESS
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Skill Development & Livelihood Enhancement
We all dream of making a good living and supporting ourselves and our families.
However, for many Indians, particularly in rural areas, there are multiple
stumbling blocks and challenges that prevent them from achieving this dream.
We at HDFC Bank, believe in every individual’s ability to live an independent,
healthy and dignified life. When this happens, they not only better their own
situations but also contribute to the economy. To this end, we have made
educational and skill development programmes and trainings, a priority. Under
Parivartan we have provided both on-farm training to upskill farmers as well as
placement linked training.
Our Training Center in Bhubaneshwar provides training to youth and women in
hospitality, tourism, telecom, retail and health care. Over 1,272 youth have
been placed in 100+ companies and institutions in Odisha.
We have also provided training in fields such as communication skills,
agriculture techniques, livestock management among others. We hope to
expand and diversify this portfolio in the years to come and strengthen our
focus on rural youth and women. As of today, we have served over 1.24 lakh
individuals and empowered over 7.65 lakh women, helping them access
entrepreneurship and employment opportunities.
Sustainable Livelihood Initiative:
Empowering Women Through Financial Inclusion
Located 40 kilometres west of Guwahati, Bihdia Chaygaon is a small village of
600 people. The community here earns its livelihood via a largely unorganised
cottage industry. For the women, weaving and agriculture are the primary
sources of income. We recognised the potential for the empowerment of
women through financial inclusion and entrepreneurial upskilling. Today,
Gitanjali Hira, Nilima Kalita, Mira Nath and thousands of others like them across
the country have become self-reliant with a little help from HDFC Bank’s
Sustainable Livelihood Initiative (SLI).
Through this initiative we have reached out to over 96 lakh households across
27 states through credit facilities, financial literacy and capacity building
programmes. The primary objective of Sustainable Livelihood Initiative is to
bring about Parivartan by creating sustainable communities. This is done by
helping women in rural areas break away from the vicious cycle of financial
dependence to one of growth and opportunities. Run by over 10,000
dedicated bank employees, it provides women with a range of financial and
non-financial services.
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TAKING A STEP TOWARDS PROGRESS
WITH HDFC BANK PARIVARTAN
Healthcare & Hygiene
Sanitation and hygiene standards have a huge impact on the health, fitness and social development of individuals and communities. This is even more
crucial for marginalised rural populations that may not be aware of its importance. Since the values of cleanliness and hygiene are best inculcated in
childhood, a key priority for us, is healthcare and hygiene practices in schools.
Raswanti Bai was used to defecating in the open. After all, it was an age-old habit that she had been practicing all her life. Unfortunately, open defecation
put Raswanti and others like her, at a high risk of contracting various infectious diseases. To bring about much needed Parivartan in this area, we
initiated the construction of individual household toilets under the Swachh Bharat Mission (SBM).
With these household toilets, Raswanti Bai and her daughters were spared the inconvenience and danger of defecating in the open. She was delighted
with this assistance and has pledged to use the toilet.
Under our interventions in healthcare and hygiene we have conducted over 1,500 sanitation drives and have helped build over 22,490 sanitation units
of which 6,954 units have been built in schools and 15,537 in individual households. Through our various other initiatives within the programme, such
as the ‘Swachhata and You’ campaign, we have dedicated ourselves to community-led sanitation and health campaigns. These campaigns help raise
awareness about nutrition, healthcare and hygiene in rural areas, and contribute towards a cleaner, healthier nation. Our health camps have reached
out to 86,000 people so far.
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TAKING A STEP TOWARDS PROGRESS
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Financial Literacy & Inclusion
In a world that operates on the exchange of goods and services for money,
communities cannot progress and interact with the world at large, without
basic financial literacy and inclusion. We understand this, which is why we
have taken on the responsibility to spread financial awareness, by running
workshops to empower the marginalised sections of society. As on FY
2018-19, the initiative saw more than 8.1 million participants benefit through
workshops held at literacy camps and banking outlets.
The flagship project of Digidhan or Dhanchayat has been one of our most
fruitful initiatives. This Literacy Programme-on-Wheels takes financial literacy
to people who do not have access to regular venues. These vehicles are
equipped with micro-ATMs and biometric facilities to enable instant account
opening and Know Your Customer (KYC) processes.
But this endeavour aims to go further than simply spreading financial literacy.
True financial
inclusion and developing the country’s entrepreneurial
ecosystem are also important objectives of this initiative. For instance,
Multifunctional Terminals (MFTs), also known as Milk-to-Money Terminals
(MTM) provided by us, help dairy operators achieve transparency in the milk
procurement and payment process. The MFT, like a standard ATM, contains
a cash dispenser that facilitates quick access to payments which greatly
benefits many dairy farmers. The MTM also assists farmers in building their
credit history, thereby allowing them to enjoy the benefits of mainstream financial services. In an effort to improve the entrepreneurial ecosystem, we
have extended our financial and digital literacy program to SME entrepreneurs alongside the general public. This has helped us bring SMEs into the
organised banking fold.
For 25 years, Kala and her husband have run a traditional weaving business. Once their son came of age, he joined them as well, and bought an
electronic weaving machine. Yet, despite having a respectable level of modernisation and three working members, their business was unable to make
enough money to turn a profit. This was primarily due to a localised market. A Parivartan initiative provided Kala and her family with credit counselling
and a loan of ` 25,000 which she used to meet the high import demands of a non-local shop. Today the family not only earns a comfortable living, but
their booming business has also allowed them to invest in a recurring deposit to save for their future.
The Power of Positive Change for India
At its heart, Parivartan is about progress. And by definition, progress is a never-ending journey for us. Parivartan is our chance to transform the world
for future generations and improve the lives of the underprivileged. And we’ve achieved significant milestones with the support of our tireless, dedicated
employees. As digitisation transforms the banking industry, digital platforms have helped us reach more people, enhance more lives and provide
experiential banking services to customers across the length and breadth of India.
We stand strong in our belief that in our own way, through a spectrum of initiatives and programmes, we are contributing towards India’s growth in a
capacity that extends beyond just economic growth.
We strongly believe that when all Indian citizens prosper and progress, India benefits. And we are confident that with our unwavering commitment to
serve the underserved and uplift the oppressed we will unlock infinite opportunities for a brighter future.
This is just the beginning...
9
TRANSFORM TO PERFORM: A DIGITAL PLAN
Digital Evolution: Delivering Simplicity to the Customer
From the earliest days of our existence, we have sought to anticipate our customers’ needs and become their partners in progress. Our customers were,
are, and shall always remain at the centre of our business. This outlook has always pushed us to go further and do better than any other player in the
Indian banking landscape. This philosophy was behind our vision, a decade ago, to make HDFC Bank India’s first digital lifestyle bank.
When we launched our real-time online internet banking platform in 1999, it took us just 15 days to reach 1,000 registered users. A year later, we
became the first bank in the nation to introduce mobile banking through our SMS-based banking channel. This was an important first step in
revolutionising the Indian banking experience. Our customers could check their account balance, get mini or detailed bank statements, and even
request a new cheque book, by simply sending a text message.
When we introduced our EPI (Electronic Payments Interface) banking capabilities in 2002, it enabled us to collaborate with IRCTC (Indian Railways
Catering and Tourism Corporation) whose system supported by our payment platform transactions, sold over 180 crore tickets by 2014-15.
Our journey towards becoming a genuine digital force and transforming the way the country banked began taking shape in 2012. The goal was simple-
to provide our customers the flexibility to access and consume our banking services over any digital platform of their choice. Our vision was unique- to
unify operations across our four banking platforms — BranchBanking, PhoneBanking, MobileBanking and NetBanking— and create a seamless, world
class banking experience for our customers.
During this time, our Managing Director, Aditya Puri, made a trip to Silicon Valley to take stock of emerging technologies and evaluate their potential
application to India’s financial landscape. His trip revealed many disruptive and untapped possibilities. Building on his experience at Silicon Valley, the
Bank launched unique, customer-favoured products and digi-wallet solutions in 2015, including PayZapp, Chillr, SmartBuy, 10-Second Loans and
WatchBanking. Our Go Digital initiative enabled us to offer over 135 transactions – the largest in India – on our comprehensive and intuitive digital
banking platforms.
From Transactions to Experience: A Story of Digital Excellence
The bank, over the years, has seen a rise in transactions through digital channels. This rose to 55 percent by 2015. User-friendly platforms made
customers feel increasingly comfortable while banking online and through their phones. Their overwhelming response encouraged us to push for the
digitisation of all transactions. By the end of FY 2016, when digital transactions had grown to 71 percent, we shifted our focus to digital journeys. To be
recognised today as the ‘Best Digital Bank’ in India at Asiamoney’s Best Bank Awards 2019, is truly humbling.
Moving Forward with New Technologies
Customer centricity is at the heart of everything we do. Our aim is to now move from providing convenience, to delivering differentiated customer
experiences. Over the past 25 years, we have strived to re-evaluate how customers interact with the bank and how their needs and expectations have
evolved over time. Today, our customers are part of a ‘Market of One’ and we have repositioned ourselves into a day-to-day lifestyle bank; an approach
that goes beyond transactions and to journeys. Our customers are individuals with diverse needs and preferences. The one-size-fits-all approach is no
longer relevant and customisation is the need of the hour. With this in mind, we make it a priority to build digital capabilities that ensure customer
experiences are characterised by:
Intuitiveness
Context
Relevance
Immediacy
Hyper-personalisation
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TRANSFORM TO PERFORM: A DIGITAL PLAN
To do this, we bring next-gen technology into play.
Namely, Artificial Intelligence (AI).
AI is fuelled by data, specifically customer data, to generate tailor-made solutions. This is similar to a salesperson observing a customer’s preferences,
and recommending them products they may like. As our customers interacted and transacted across our digital platforms, we were able to gather
insights on their transactional and behavioural data. AI-based technologies could then harness the massive troves of data, and analyse it to understand
their needs, and use that understanding to create a unique, highly personalised banking experience for everyone.
Today, we’re proud to employ a dedicated team of AI domain experts. Our investments in the field have enabled us to provide innovative product
offerings and convenient experiences to all our customers. We continue to build on our capabilities using cutting-edge technologies to strengthen our
digital solutions to offer cohesive and contextual experiences.
In 2017, we launched EVA (Electronic Virtual Assistant) across all our digital channels. Customers can chat with this virtual assistant 24x7 and easily
obtain the information they need. Today, EVA, through seamless integration with Google Assistant and Alexa, offers our customers ease of accessibility.
For instance, if a customer wants information on our FD interest rates, all they have to do is say, “Alexa, what is the interest rate on an FD for a year?”
and EVA responds with the necessary information.
Stepping into Digital 2.0
Our ability to stay ahead of the curve, drive digital growth
and transform the banking ecosystem as a whole, has
made us pioneers in the era of digital banking. From
creating platform capabilities
that support
lending,
payments and transactions, to developing the in-house
skills needed to excel in a digital-driven world, right up to
offering our customers 10-second loans and Missed Call
Banking, we have paved the way for Digital 2.0.
This new phase in the bank’s transformation rests on five
key pillars and is changing the way customers transact
and interact with the bank:
Reimagined Customer Interface:
By providing customers with an interface that displays all
their daily banking needs in one place, we usher in the next
generation of customer-centric digital banking platforms.
Digital Analytics, Digital Acquisition and Digital
Marketing:
By using data analytics tools, we have maximized our
digital impact, in terms of context and targeting. This
digitally synchronized marketing approach, has helped
us acquire new customers
through our digital
touch-points and platforms.
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TRANSFORM TO PERFORM: A DIGITAL PLAN
Innovation:
We aim to develop disciplines around new technologies like Robotic Process Automation (RPA), Machine Learning (ML), Artificial Intelligence (AI) and
Blockchain to further enhance our current digital portfolio. In the long run, these programmes would help integrate the knowledge required to underpin the
horizontals of, and strengthen our position as an organisation of the future. Going forward, we will continue our focus on innovation and the innovation-led
initiatives we want to realise.
API Banking:
Siloed operations cannot exist in a bank of the future. In fact, banks will need to diversify their services and presence in order to create breathing space
within the fast growing fintech ecosystem. This is why we focus on API tech preparedness to adapt to the next level of the finance ecosystem. We leverage
our understanding of the fintech landscape and our experiential business structure in order to achieve this. A fintech-heavy environment will see
collaborations leading to open banking scenarios. We plan to power partnered platform services using APIs and position ourselves as an ecosystem player.
We have already deployed more than half a dozen APIs with another 20 in the pipeline.
VRM (Virtual Relationship Manager):
What started as an experiment based on the Classic on Phone model (where our Premier Banking customers had a dedicated personal banker assigned
to them), has now turned into a 56 lakhs strong initiative. VRM has merged our previous ‘two channel’ model to one wherein customers can resolve their
queries and receive service information. The eventual goal of this initiative is to achieve 1 crore registered customers within the next three years. The channel
grew by 300 percent in its first 18 months and is set to grow even faster in the future.
Today’s Bank for Your Tomorrow
Personalised interfaces and experiences, EVA, API banking and customised banking solutions give us a distinctive edge. But as always, technology is
simply a medium to get closer to our customers and support them as they meet their goals. Our ultimate ambition is to seamlessly become an indelible
part of our customers’ lifestyles, providing a lifestyle banking experience, which is categorised into 8 customer journeys: Pay, Save, Invest, Borrow,
Shop, Trade, Insure and Advice. Our focus is on delivering highly personalised experiences, since most of our customers interact with us at least once
a day, across various channels. We are proud to share that as of 2018, about 90 percent of all transactions done through the bank are now via digital
platforms. This gives us the honour of being the people’s everyday lifestyle bank.
There are several key factors that have enabled us to earn this position. Firstly, a rich presentation layer removes any experiential inhibitions. This allows
customers to reach a high level of comfort on the platform itself. Secondly, with our constantly evolving product capabilities, customers have their
requirements fulfilled within just a few moments. Further, the platform’s API connectedness allows customers to navigate seamlessly on the platform,
which creates an overall delightful experience.
But the future doesn’t stop here.
We have partnered with various universities and academic institutions to conduct research into what the ecosystem could look like in 2021-22. Based
on these findings, and partnerships with larger fintech players, we endeavour to continue charting India’s banking transformation path.
Moving forward, we will continue to provide intuitive, relevant, contextualised and hyper-personalised experiences to our customers and cater to their
financial goals for tomorrow.
HDFC Bank Limited Annual Report 2018 - 2019
12
BOARD AND MANAGEMENT
BOARD OF DIRECTORS
Shyamala Gopinath
Keki Mistry
Malay Patel
Umesh Chandra Sarangi
Srikanth Nadhamuni
Chairperson
Non-Executive Director
Independent Director
Independent Director
Non-Executive Director
Sanjiv Sachar
Sandeep Parekh
M. D. Ranganath
Aditya Puri
Kaizad Bharucha
Additional Independent Director
Additional Independent Director
Additional Independent Director
Managing Director
Executive Director
KEY MANAGERIAL PERSONNEL
Aditya Puri
Managing Director
Kaizad Bharucha
Executive Director
Sashidhar Jagdishan
Chief Financial Officer
Santosh Haldankar
Company Secretary
13
BOARD AND MANAGEMENT
SENIOR MANAGEMENT TEAM
ADITYA PURI
Managing Director
KAIZAD
BHARUCHA
Executive Director
ABHAY AIMA
Group Head
Equities, Private
Banking, Third Party
Products, NRI &
International
Consumer Business
ARVIND KAPIL
Group Head
Unsecured, Home,
Mortgages, and
Working Capital Loans
ARVIND VOHRA
Group Head
Retail Branch Banking
ASHIMA BHAT
Group Head
Strategy, Business
Finance, CSR,
Administration &
Infrastructure
ASHISH
PARTHASARTHY
Treasurer
ASHOK KHANNA
Group Head
Secured Loans
(Vehicles)
BENJAMIN FRANK
Group Head
Wholesale Credit
BHAVESH ZAVERI
Group Head
Operations &
Technology
JIMMY TATA
Chief Risk Officer
MUNISH MITTAL
Chief Information
Officer
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BOARD AND MANAGEMENT
SENIOR MANAGEMENT TEAM
NIRAV SHAH
Group Head
Emerging Corporates
Group, Infrastructure
Finance Group &
Rural Banking Group
NITIN CHUGH
Group Head
Digital Banking
PARAG RAO
Group Head
Card Payment
Products, Merchant
Acquiring Services &
Marketing
RAJESH KUMAR
Group Head
Retail Credit and Risk
RAKESH SINGH
Group Head
Investment Banking,
Private Banking, Capital
Markets & Financial
Institutions
RAHUL SHUKLA
Group Head
Corporate Banking &
Business Banking
S SAMPATHKUMAR
Group Head
Liability Products,
Third Party Products
and Non-Resident
Business
SMITA BHAGAT
Group Head
Government and
Institutional business,
Ecommerce &
Start-ups
SASHIDHAR
JAGDISHAN
Chief Financial
Officer
SRINIVASAN
VAIDYANATHAN
Group Head
Finance
V CHAKRAPANI
Group Head
Internal Audit and
Quality Initiatives Group
VINAY RAZDAN
Group Head
Human Resources
15
FINANCIAL HIGHLIGHTS
Profit After Tax
(` Crore)
Dividend Per Share (`) /
Earning Per Share (`)
Earning Per Share
Dividend Per Share
16
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FINANCIAL HIGHLIGHTS
Balance Sheet Size
(` Crore)
Advances
(` Crore)
Deposits
(` Crore)
Savings Deposits
(` Crore)
Retail Assets
(` Crore)
Net Interest Margin
17
FINANCIAL HIGHLIGHTS
Banking Outlets
(Nos.)
ATMs
(Nos.)
Cities / Towns
(Nos.)
Acceptance Point
(Nos. in lac)*
Debit Cards
(Nos. in lac)
* Across all the form factors
Credit Cards
(Nos. in lac)
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18
FINANCIAL HIGHLIGHTS
Return On Capital
Capital Adequacy
Rupees Earned
Rupees Spent
3.8%
Proposed Dividend & Tax thereon
10.3%
Tax
7.0%
Provisions
47.1%
Interest Expense
7.7%
Transfer to Reserve
24.2%
Operating Expense
1.2%
Other Interest Income
1.5% FX &
Derivative Income
11.8%
Commission,
Exchange,
Brokerage
66.5%
Interest from
Advances
17.5%
Interest from
Investments
1.5%
Others
19
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
1 Crore = 10 Million
2009 - 2010
2010- 2011
2011 - 2012
16,467.92
20,380.77
7,786.30
8,681.62
4,573.63
9,385.08
10,995.69
4,945.23
13,255.25
15,940.92
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
27,874.19
14,989.58
12,884.61
5,783.62
18,668.23
9,277.64
9,390.59
1,877.44
1,091.77
785.67
7,513.15
2,346.08
5,167.07
167,404.44
208,586.41
246,706.45
6,353.10
7,393.05
21,519.58
25,376.35
11,105.65
29,924.37
222,458.57
283,634.24
345,248.26
125,830.59
159,982.67
195,420.03
51,013.32
67,952.59
89,967.10
13.51
16.80%
13.26%
17.44%
2.40
21.72%
94.02
386.70
28.62
17.00
16.52%
12.23%
16.22%
3.30
22.72%
109.09
469.17
27.59
22.11
18.37%
11.60%
16.52%
4.30
22.70%
127.52
519.85
23.51
*
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.
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20
FINANCIAL HIGHLIGHTS
( Crore)
2012 - 2013
2013- 2014
2014 - 2015
2015 - 2016
2016- 2017
2017 - 2018
2018 - 2019
35,064.87
19,253.75
15,811.12
6,852.62
22,663.74
11,236.11
11,427.63
1,677.01
1,234.21
442.80
9,750.62
3,024.34
6,726.28
41,135.53
22,652.90
18,482.63
7,919.64
26,402.28
12,042.20
14,360.08
1,588.03
1,632.58
(44.56)
48,469.91
26,074.23
22,395.68
8,996.34
31,392.02
13,987.55
17,404.47
2,075.75
1,723.58
352.17
60,221.45
32,629.93
27,591.52
10,751.72
38,343.24
16,979.69
21,363.55
2,725.61
2,133.63
591.98
12,772.05
15,328.72
18,637.94
4,293.67
8,478.38
5,112.80
6,341.71
10,215.92
12,296.23
69,305.96
36,166.74
33,139.22
12,296.49
45,435.71
19,703.32
25,732.39
3,593.30
3,145.30
448.00
22,139.09
7,589.43
14,549.66
80,241.35
40,146.49
40,094.86
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
98,972.05
50,728.83
48,243.22
17,625.87
65,869.09
26,119.37
39,749.72
7,550.08
6,394.11
1,155.97
32,199.64
11,121.50
17,486.75
21,078.14
296,246.98
367,337.48
450,795.65
546,424.19
643,639.66
788,770.64
923,140.93
16,586.75
36,214.15
16,643.05
43,478.63
16,254.90
62,009.42
15,090.45
72,677.77
13,182.00
21,107.00
18,232.00
89,462.38
106,295.03
149,206.32
421,327.31
491,599.50
595,695.13
740,796.07
863,840.19
1,063,934.32
1,244,540.69
239,720.64
303,000.27
365,495.04
464,593.96
554,568.20
658,333.09
819,401.22
111,303.21
100,111.88
156,833.82
195,836.29
214,463.34
242,200.24
290,587.88
57.18
18.04%
12.79%
14.55%
11.00
23.32%
349.12
1,442.55
25.23
67.76
18.22%
13.25%
14.82%
13.00
23.26%
409.60
1,929.00
28.47
78.65
16.30%
15.78%
17.11%
15.00
***
23.36%
547.89
2,318.90
29.48
28.49
20.07%
11.08%
16.80%
5.50
22.77%
152.20
625.35
21.95
35.47
20.88%
11.77%
16.07%
6.85
22.68%
181.23
748.80
21.11
42.15
20.36%
13.66%
16.79%
8.00
23.62%
247.39
1,022.70
24.26
48.84
17.97%
13.22%
15.53%
9.50
23.51%
287.47
1,071.15
21.93
21
DIRECTORS' REPORT
Dear Stakeholders,
Your Directors take great pleasure in presenting the 25th Annual Report on the business and operations of your Bank, together with the audited
accounts for the year ended March 31, 2019. A journey of a thousand miles begins with a single step. Ours began a quarter of a century back
with the launch of the first branch in Mumbai on February 18, 1995. On the same day in 2019, your Bank entered its silver jubilee year by
opening its 5,000th branch again at Mumbai. Along the way it has metamorphosed from a wholesale bank into one with an equally strong retail
presence and is well underway in its journey of offering an omni channel customer experience. In the semi urban and rural areas, where your
Bank has over half its banking outlets, it is acting as a change agent not only through its banking services but social initiatives as well under the
umbrella brand Parivartan. As it enters its silver jubilee year, your Bank has impacted the lives of about 10 crore Indians directly or indirectly
ie over 4.9 crore customers, the 5 crore plus people through its social initiatives and families of its over 1.9 lakh employees (including that of
its two subsidiaries).
In the year ended March 31, 2019 your Bank continued on this path. This came in an economic environment where the Indian economy stood
out as an outlier despite facing various challenges both externally and internally. Externally, it was buffeted by volatile crude prices, rising
interest rates in the developed world particularly in the US, heightened trade tensions and geopolitical uncertainties in some parts of the world.
Internally, the economy was affected by serious concerns regarding the financial health of the NBFC sector, the continuing high NPA levels in
the banking space, slowing consumption demand and some concerns on the fiscal side. Not to mention the uncertainty caused by the imminent
general elections. The Indian economy however continued to be the fastest growing in the world thanks to the reforms of the past few years.
In the year under review, your Bank delivered a strong financial performance on the back of an improvement in a majority of its key parameters.
Financial Parameters
Your Bank recorded an improvement in a majority of its key financial parameters. At ` 48,243.2 crore, Net Interest Income rose by 20.3 per
cent. Core Net Interest Margin remained stable at 4.3 per cent. Gross Non-Performing Assets (NPAs) at 1.36 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, and sectors plus managing risk-return decisions with discipline. Your Bank’s Net Profit at
` 21,078.1 crore went up by 20.5 per cent.
In addition, the year stood out for one of the largest fund raising in your Bank’s history. It also continued to transform lives through Parivartan
and securing recognition.
1)
Fund Raising
Your Bank raised ` 23,715.9 crore in the year under review. This comprises a preferential allotment to Housing Development Finance
Corporation Ltd of ` 8,500 crore, a Qualified Institutional Placement of ` 2,775.0 crore and an ADR offering of $ 1,820 million
(` 12,440.9 crore). Consequent to the above issuances, share capital increased by ` 20.89 crore and share premium increased by
` 23,568.7 crore. This is net of share issue expenses of ` 126.3 crore. The issuances were made pursuant to the shareholder and
regulatory approvals. This has resulted in a strengthening of its capital structure, increasing solvency and shoring up of its Capital
Adequacy Ratio.
2)
Parivartan
The Bank in the year under review has continued its journey of social commitment through Parivartan which means change. Your Bank
firmly believes that businesses cannot prosper if the communities in which they operate don’t. This is what has been inspiring its social
initiatives. This change has been brought about principally by about 10 per cent of the Bank’s workforce which works on the Sustainable
Livelihood Initiative (SLI) which helps people improve their lives by upgrading their skillsets and, thus, enabling them to break out of the
cycle of poverty. And through its ‘Teaching-The-Teacher’ (3T) initiative which has potentially impacted 1.6 crore students as well as the
Holistic Rural Development Programme which has already touched another possible 14.4 lakh people spread across more than 1,100
villages. We are also happy to report that in the year under review, your Bank has met the mandatory CSR expenditure through a spend
of ` 443.8 crore.
HDFC Bank Limited Annual Report 2018 - 2019
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22
DIRECTORS' REPORT
3)
Awards and Recognition
The Bank continued to win awards and 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. HDFC Bank was also ranked No 1 in India by customers in the first edition of
the ‘World’s Best Banks’ survey by Forbes magazine. The publication partnered with market research firm Statista to measure the best
banks in 23 countries and customers were asked to rate banks on overall recommendation and satisfaction, as well as on the 5 key
attributes namely: Trust; Terms and Conditions; Customer Service; Digital Device; Financial Advice.
Summary
To sum up, your Bank is geared up for the next phase of growth given the looming market opportunities and its strong positioning in each of
its major franchises. And also make a greater contribution to bridge the divide between India and Bharat be it through its business or social
initiatives. This, of course, would not have been possible without the contribution of our over 98,000 employees.
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 Focus, Operational
Excellence, Product Leadership, People and Sustainability. The last value Sustainability should be viewed in consonance with Environmental,
Social and Governance criteria. As a part of this, HDFC Bank through its umbrella brand Parivartan seeks to bring about change in the lives
of communities mainly in Rural India.
The business objective has been to continue 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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(cid:42)(cid:79)(cid:68)(cid:83)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:42)(cid:79)(cid:69)(cid:74)(cid:66)(cid:8)(cid:84)(cid:1)(cid:70)(cid:89)(cid:81)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:67)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:69)(cid:86)(cid:84)(cid:85)(cid:83)(cid:90)
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(cid:46)(cid:66)(cid:74)(cid:79)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:77)(cid:80)(cid:88)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:71)(cid:86)(cid:79)(cid:69)(cid:84)
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.
Summary of Financial Performance
Particulars
(` crore)
For the year ended / As on
March 31, 2019
March 31, 2018
Deposits and Other Borrowings
1,040,226.1
Advances
Total Income
Profit Before Depreciation and Tax
819,401.2
1,16,597.9
33,339.8
911,875.6
658,333.1
95,461.7
27,603.6
23
DIRECTORS' REPORT
Particulars
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
Transfer to / (from) Investment Fluctuation Reserve
Dividend (including tax / cess thereon) pertaining to previous year paid during the year,
net of dividend tax credits
Balance carried over to Balance Sheet
Dividend
For the year ended / As on
March 31, 2019
March 31, 2018
21,078.1
40,453.4
61,531.5
5,269.5
2,107.8
105.3
-
773.0
4,052.6
17,486.8
32,668.9
50,155.7
4,371.7
1,748.7
235.5
(44.2)
-
3,390.6
49,223.3
40,453.4
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 ` 15 per equity share of ` 2 as against ` 13 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 Profit and Loss Account for the year ended March 31, 2019. However, the effect of the proposed
dividend, including tax on dividend aggregating to ` 4,924.64 crore, has been reckoned in determining capital funds in the computation of
capital adequacy ratio as at March 31, 2019.
Ratings
Instrument
Rating
Rating Agency Comments
Fixed Deposit Programme
CARE AAA (FD)
CARE Ratings
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.
IND Taaa
India Ratings
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.
Certificate of Deposits Programme
CARE A1+
CARE Ratings
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.
IND A1+
India Ratings
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.
HDFC Bank Limited Annual Report 2018 - 2019
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DIRECTORS' REPORT
Instrument
Rating
Rating Agency Comments
Long Term Unsecured,
CARE AAA
CARE Ratings
Instruments with this rating are considered to have the
Subordinated (Lower Tier 2) Bonds
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
IND AAA
India Ratings
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.
Upper Tier 2 Bonds
CARE AAA
CARE Ratings
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.
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.
Infrastructure Bonds
CARE AAA
CARE Ratings
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.
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.
Additional Tier I Bonds (Under
CARE AA+
CARE Ratings
Instruments with this rating are considered to have high
Basel III)
CRISIL AA+
CRISIL
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.
degree of safety regarding timely servicing of financial
obligations.
Such instruments carry very low credit risk.
IND AA+
India Ratings
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.
Tier II Bonds (Under Basel III)
CARE AAA
CARE Ratings
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.
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.
Issuance of Equity Shares and Employee Stock Options (ESOP)
As on March 31, 2019, the issued, subscribed and paid up capital of your Bank stood at ` 5,446,613,220 comprising 272,33,06,610 equity
shares of ` 2 each. During the year under review, the Bank issued 3,90,96,817 equity shares to Housing Development Finance Corporation
Limited on a preferential basis, 1,28,47,222 equity shares on a qualified institutions placement and 5,25,00,000 equity shares underlying
1,75,00,000 American Depository Receipts (ADRs). Further, 2,37,72,304 equity shares of face value of ` 2 each were issued pursuant to
exercise of Employee Stock Option (ESOP) by the Bank. The information pertaining to ESOPs is given in ANNEXURE 1 to this report.
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DIRECTORS' REPORT
The Board of Directors at its meeting held on May 22, 2019 considered and approved the sub-division of one equity share of the Bank having
face value of ` 2/- each into two equity shares of face value of Re. 1/- each and consequential alteration in the relevant clauses relating to
capital of the Memorandum of Association of the Bank. The sub-division of equity shares as above is subject to the approval of the members
at the ensuing Annual General Meeting of the Bank.
Further, the Bank had issued 1,14,30,383 underlying equity shares representing Global Depository Receipts (GDRs) of the Bank, which are
listed on the Luxembourg Stock Exchange. The Depository for GDRs is represented in India by J.P Morgan Chase Bank N.A. Due to low
trading / conversion volume in GDR, the Board of Directors of the Bank at its meeting held on April 20, 2019 has decided to terminate the GDR
program. The requisite notice of termination is being issued to the custodian and the depository.
Capital Adequacy Ratio (CAR)
As on March 31, 2019 your Bank’s total CAR, calculated in line with Basel III capital regulations, stood at 17.1 per cent well above the regulatory
minimum of 11.025 per cent including the Capital Conservation Buffer of 1.875 per cent. Of this, Tier I CAR was 15.8 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
The Indian economy faced several headwinds both domestic and external for much of the year ended March 31, 2019. Encouragingly, despite
global headwinds like volatile oil prices, elevated trade tensions, geo-political uncertainties in some parts of the world and interest rate tightening
cycle in some of the developed countries notably the US, the Indian economy stood out as an outlier in terms of growth with an estimated
growth of 7 per cent in the year under review (as per the second advance estimates of the Central Statistics Office). The economy remains a
high growth achiever and various policy reform measures over the past couple of years (such as Goods and Service Tax 2017, Insolvency and
Bankruptcy Code 2016 and Bank recapitalization plan 2017) will help improve India’s macro-economic stability considerably, going forward.
Domestically, India faced issues related to financial health of the NBFC sector, high NPA levels in the banking space, slowing consumption
demand and some concerns on the fiscal side. On the back of various measures to address the issue of bad loans in the banking sector,
the NPA cycle is now looking to be bottoming out. As per the RBI’s December 2018 Financial Stability Report, Gross Non-Performing Assets
(GNPA) ratio of scheduled commercial banks declined from 11.5 per cent in March 2018 to 10.8 per cent in September 2018. The ratio is
expected to have declined further to 10.3 per cent by March 2019. The Government along with the RBI has also taken several measures to
infuse greater liquidity in the NBFC sector and plans to take measures to bring in stability in this sector.
Consistent slowdown in domestic consumption growth is one of the major challenges that the economy faces going into 2019-20. As per the
second advance estimates of the Central Statistics Office (CSO), India’s real GDP growth dropped to 6.6 per cent in the third quarter of 2018-
19 - a five-quarter low - from 7 per cent in the second quarter and 8 per cent in the first quarter. Growth is expected to inch down further to
6.5 per cent in the last quarter.
On an annual basis, GDP growth is expected to drop to 7 per cent in 2018-19 from 7.2 per cent in 2017-18. From the production side, the
current slowdown is mainly on account of the agriculture sector (due to weak kharif season), which is expected to grow at a lower rate of 2.7
per cent in the year under review from 5 per cent in the previous year. On the demand side, the slowdown emanates from the consumption side.
While the recovery in private consumption remains tepid, Government consumption is expected to sharply slow down to 8.9 per cent in the year
ended March 31, 2019 from a double digit growth of 15 per cent in the previous year. Going by the 2019-20 Interim Budget, the focus of fiscal
policy in the coming year will be on revival of the rural economy (through schemes such as Pradhan Mantri Kisan Samman Nidhi), which
is likely to partly boost consumption in the coming year. Overall adherence to fiscal discipline remains critical at this juncture so that productive
expenditure is not pruned in a bid to meet the fiscal targets.
Encouragingly, investment revival remains on track in line with the trends in capacity utilization. For the last five quarters, investments growth
(Gross Fixed Capital Formation) has averaged at 11.3 per cent much higher than the average of 7.78 per cent for private consumption.
Construction activity also seems to be picking up pace with a 9.6 per cent growth in the third quarter of the year under review compared to
8 per cent growth registered in the previous year. The government’s focus on low-cost housing and other key infrastructure projects awarded
through the roads and highway ministry seems to be having a favorable impact on the construction sector and the positive momentum is likely
to continue.
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DIRECTORS' REPORT
Overall, on the back of the assumption of a normal monsoon season, continued recovery in private investment, gradual traction in private
consumption with support from Government-led spending, we expect the real GDP growth to come in at 7 to 7.2 per cent in the current financial
year compared to the expected 7 per cent in the year under review.
The moderation in inflation which was seen in 2017-18 continued in the year under review as well, with the CPI falling to 1.97 per cent in January
2019 driven mainly by lower food inflation. Having averaged 4.3 per cent in the first half of 2018-19, inflation has eased down further in the
second half (average close to 2.53 per cent during Oct-Mar 2018-19). However, unwinding of base effect and slight sequential uptick in food
inflation led to the overall headline inflation inching up to 2.86 per cent in March 2019.
On account of sustained downside in food inflation, we estimate FY19 inflation at 3.4 per cent. Though headline inflation for FY20 is estimated
to average higher at 3.7 per cent, it is likely to remain well within the RBI’s target range of 4+/-2 per cent.
Moderation in growth numbers amid an environment of subdued inflation is suggestive of possible rate cuts by the Reserve Bank of India.
The RBI had cut the repo rate first in February 2019 and again in April 2019 in order to support the growth momentum in the economy. The Repo
Rate now stands at 6 per cent and the monetary policy stance is now “neutral” as against “calibrated tightening” prior to the February policy.
Going forward, one of the major risks to the economy remains sharp increases 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 a possible slowdown in the global economy, elevated
protectionist tendencies, Brexit related uncertainty in the UK and monetary policy uncertainty in the developed nations especially in the US.
Financial Performance
The financial performance of your Bank during the year ended March 31, 2019, remained healthy with Total Net Revenue (Net Interest Income
Plus Other Income) rising by 19.1 per cent to ` 65,869.1 crore from ` 55,315.2 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 20.3 per cent to ` 48,243.2 crore due to acceleration in
loan growth coupled with Core Net Interest Margin (CNIM) of 4.3 per cent.
Other Income grew by 15.8 per cent to ` 17,625.9 crore. The largest component was Fees and Commissions, which increased by 21.2 per
cent to ` 13,805.5 crore. Foreign Exchange and Derivatives Revenue was ` 1,720.4 crore, gain on revaluation and sale of investments was
` 386.8 crore, and recoveries from written-off accounts were ` 1,430.8 crore.
Operating (Non-Interest) Expenses rose to ` 26,119.4 crore from ` 22,690.4 crore. During the year, your Bank has set up 316 new Banking
Outlets and 525 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 employee additions and annual wage revisions. Despite higher infrastructure expenses, the Cost to Income
Ratio improved to 39.7 per cent from 41.0 per cent.
Total Provisions and Contingencies were ` 7,550.1 crore as compared to ` 5,927.5 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 was 71 per cent; including General and Floating provisions, it was
117 per cent. Your Bank made General Provisions of ` 648.4 crore during the year. Your Bank’s Gross Non-Performing Assets (GNPA) were at
1.36 per cent of Gross Advances, as against 1.30 per cent the preceding year. Net NPA ratio stood at 0.4 per cent for both the years.
Profit Before Tax grew by 20.6 per cent to ` 32,199.6 crore. After providing for Income Tax of ` 11,121.5 crore, Net Profit increased by 20.5
per cent to ` 21,078.1 crore from ` 17,486.8 crore. The Return on Average Net Worth was 16 per cent while the Basic Earnings Per Share was
` 78.6, up from ` 67.8.
As on March 31, 2019, your Bank’s Total Balance Sheet stood at ` 1,244,541 crore, an increase of 17 per cent over ` 1,063,934 crore on
March 31, 2018. Total Deposits rose by 17 per cent to ` 923,141 crore from ` 788,771 crore.
Savings Account Deposits grew by 11.1 per cent to ` 248,700 crore while Current Account Deposits rose by 19.5 per cent to ` 142,498
crore. Time Deposits stood at ` 531,943 crore, representing an increase of 19.4 per cent. CASA Deposits accounted for 42.4 per cent of Total
Deposits. Advances stood at ` 819,401 crore, representing an increase of 24.5 per cent. The Bank’s domestic loan portfolio of ` 802,329 crore
grew by 24.6 per cent over March 31, 2018. The Bank had a share of approximately 7.2 per cent in Total Domestic Deposits and 8.2 per cent
in Total Domestic Advances.
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DIRECTORS' REPORT
BUSINESS OPERATIONS
Your Bank’s operations are split into domestic and international.
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 22.3 per cent
to ` 709,085 crore from ` 580,006 crore in the preceding year while Retail Advances rose by 15 per cent to ` 432,687 crore from
` 376,167 crore.
The Personal Loan Business surged to nearly ` 93,000 crore on the back of strong product offering and speedy disbursal. Happy to
report, it emerged as the key driver for the Retail Business in the year under review.
It has been increasing its unsecured exposure but without sacrificing credit quality which is well within that prescribed in the product
programme.
Digitalisation has been the key with your Bank emerging as a pioneer in various digital loans be it the 10 second Personal Loan, Digital
Loan Against Shares and more recently Loan Against Mutual Funds. All these are industry firsts.
The Bank is a leader in the Auto Loans Segment with a strong presence in passenger, commercial vehicle and 2-wheeler loans.
While it has a stable and strong loan portfolio in this segment, growth in the 4 wheeler segment was muted at 9.6 per cent. The performance
of this segment must be seen in the context of slowing auto segment sales. Your Bank countered the slowdown in demand in the cities
by increasing its geographic spread. This has enabled it to grow its book size without having to compromise on price and asset quality.
A key differentiator in this journey has been digitalization which has enabled customer delight through convenience.
In 2-wheeler financing your Bank built on its inherent strengths to post a growth of nearly 16 per cent by financing 11.4 lakh units.
In Commercial Vehicles, your Bank was able to ward off intense competition and log robust growth.
The Payments Business where your Bank has a dominant presence merits a special mention. In credit cards your Bank continued to build
on its strong base. It ended the year under review with 1.25 crore credit cards after becoming the first bank in the country to issue one
crore credit cards last year. Existing customers accounted for around 80 per cent of the new cards issued.
The Payments Business not only acts as a catalyst for cashless transactions but also spurs consumption. With 2.69 crore debit cards,
1.25 crore credit cards and almost a million acceptance points (across all form factors), your Bank is among the largest facilitators of
cashless payments in the country. The Bank’s payments business has launched digital offerings such as PayZapp, Bharat QR Code, UPI,
and SMS pay solutions. It has also pioneered path-breaking products such as the SmartHub app which facilitates cashless payments for
small merchants and DigiPos, which enables traditional PoS machines to accept digital payments. Merchants and customers alike have
found these solutions useful.
In the year under review, 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 since its launch.
As regards physical distribution network, the Bank also added 316 Banking Outlets during the year taking the total to 5,103 spread
across 2,748 cities / towns. The share of semi-urban and rural outlets in the total network is 53 per cent, reflecting our continued focus
on these markets. The number of ATMs also increased to 13,160 from 12,635.
The total number of customers your Bank catered to as on March 31, 2019 was over 4.90 crore up from 4.36 crore in the previous year.
The Bank as you are aware 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, as per
the arrangement with HDFC Ltd, 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 Ltd. Your Bank
originated, on an average, ` 2,100 crore of Home Loans every month in the year under review and purchased ` 23,982 crore as direct
assignment of loans.
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DIRECTORS' REPORT
Third Party Products:
The Bank distributes Life Insurance, General Insurance and Mutual Funds, often referred to as Third-Party Products. Income from this
business grew by 5 per cent to ` 2,200 crore from ` 2,091 crore crore and accounted for 16 per cent of Total Fee Income in the year
ended March 31, 2019 compared with 18 per cent in the preceding year.
Insurance
The open architecture adopted by the Bank for Insurance distribution with nine insurance providers was made more robust by leveraging
more branches and increasing the product bouquet. Continuing with the digital focus, straight through process from prospect to proposal
stage was introduced with real-time integration across all insurers. All product offerings by insurers were made available on NetBanking
platform. Premium mobilization in Life Insurance for the year ended March 31, 2019 was ` 4,233 crore a growth of 30 per cent over the
previous year. This was against the backdrop of an overall industry growth of 10 per cent.
In the Non-Life space, the Bank has increased product offerings, opened new channels, and introduced easy Point of Sale Person
Certification for distribution of General and Health Products. It has also introduced new digital platforms like STP, Upscaler Mobile App,
and Insurance help-line for continuously improving knowledge levels of the staff as well as easing distribution in true open architecture
model. These initiatives are the first of their kind in the industry. Overall General and Health Insurance Business grew by 29 per cent over
the previous year with premium mobilization of ` 2,273 crore. The industry grew by 13 per cent in the same period.
Mutual Funds
Global headwinds like trade wars, interest rate hike by the US coupled with domestic concerns like depreciating currency, FPI outflows
and impact of default by IL&FS to other companies dampened market sentiment. At the Industry level there were regulatory changes
like SEBI categorisation and rationalization of schemes, reduction in Total Expense Ratio from 20 basis points to 5 basis points on the
existing AUM and ban on Upfront commission. Six months to one year (Short term) returns on majority of the equity/hybrid schemes were
negative. The impact of all this was the slowing down of the Mutual Fund distribution business which in turn resulted in a lower Mutual
Fund Fee Income.
B) Wholesale Banking
This business focuses on institutional customers such as the Large and Emerging Corporates, SMEs and Government. 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 a healthy 31.9 per cent growth.
The Bank was able to expand its share of the customer wallet, primarily using sharper customisation, cross-selling and expanding
into greater geographies. The Bank ended the year under review with a domestic loan book size of ` 370,000 crore which constituted
46 per cent of the Bank’s domestic advances as per Basel II classification.
Corporate Banking, which focuses on large, well-rated companies remained the biggest component of the Wholesale Banking book.
The Bank selectively participated in several refinancing cases through the NCLT route of companies which have been acquired by
promoters with a good track record.
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 customers a differentiated service leading to both new customers as well as acquiring a higher share of the wallet from existing
customers. The business continues to have a diversified portfolio in terms of both industry and geography. In the last five years this
business has doubled its presence to 47 cities in India.
The year under review has been the one that has seen the greater formalisation of the Micro, Small and Medium Enterprises (MSMEs)
sector due to the adoption of the Goods and Service Tax platform by several Micro and Small Enterprises. The Bank’s advances to
MSMEs amounted to Rs 128, 976.5 crore as on March 31, 2019.
The Investment Banking business cemented its prominent position in the Debt and Equity Capital Markets. For four consecutive years
now, your Bank has been ranked 2nd in the Bloomberg rankings of Rupee Bond Book Runners. The Bank is actively assisting clients in
equity fund raising and your Bank is ranked 9th in PRIME Database IPO League Tables for FY 18-19 for private sector issues.
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DIRECTORS' REPORT
In the Government business, the Bank sustained its focus on tax collections, collecting direct tax of over ` 3.15 lakh crore and indirect
tax of approximately ` 36,000 crore during the year. In addition to the taxes / duties collected on behalf of several state governments,
the Bank also collected over ` 1.71 lakh crore in the form of GST. It continues to enjoy a pre-eminent position among the country’s major
stock and commodity exchanges in both Cash Management Services and Cash Settlement Services.
Your Bank has led the way in providing Digital Banking Services to not only its Retail Customers but also to its wholesale banking
customers. It was an early adopter of Digital technology through the Corporate Net Banking Platform, ENet.
HDFC Bank offers the entire gamut of financial services, such as Payments, Collection, Tax Solutions, Government Business, Trade
Finance Services, Cash Management Solutions and Corporate Cards through its flagship platform, besides seamlessly connecting its
customers through API, S2S (Server to Server) and Host to Host services.
Your Bank’s pre - eminent position in the Wholesale Banking business has secured recognition from Euromoney, a leading global financial
publication. The Euromoney Trade Finance Survey has ranked HDFC Bank No 1 in two categories: Best Service and Market Leader in the
Asian Bank category based on a poll of senior corporate and treasury professionals.
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 ` 1,720.4 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
on a matched basis. For such foreign currency derivatives, 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 some are held in the ‘Available for
Sale’ (AFS) category. The Bank is also a Primary Dealer for Government Securities. As a part of this business, as well as otherwise, the
Bank holds fixed income securities in the ‘Held for Trading’ (HFT) category.
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
In an important development in the year ended March 31, 2019, you will be happy to know that your bank picked up a 9.11 per
cent in CSC e - Governance Services India Ltd for a cash consideration of ` 14.6 crore. This is a company constituted under
the Companies Act by MeITY (Ministry of Electronics & Information Technology). CSCs, managed by Village Level Entrepreneurs
(VLEs), are the access points for delivery of essential public utility services, social welfare schemes, healthcare, financial, education
and agriculture services, apart from a host of B2C services to citizens in rural and remote areas of the country. It is a pan-India
network catering to regional, geographic, linguistic and cultural diversity of the country thus enabling the Government’s mandate
of a socially, financially and digitally inclusive society. Your bank will use this network to offer retail products and banking services
to the citizens across the country and further contribute to the Government’s aim of digital India.
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DIRECTORS' REPORT
Further your bank:
a)
has the second largest share of Direct tax collection and is working to provide the solution on NEFT/RTGS bulk collection
which will further increase the revenue collection share and is facilitating collections of various central government led levies
like fees paid to State Pollution Control Boards
b)
is enabling Direct Benefit Transfers under various Centrally Sponsored Schemes using the Public Financial Management
System (PFMS) to more than 50,000 beneficiaries
c)
is integrated with GeM (Government e-Marketplace) to provide financial services to buyers and sellers on this platform
instituted to promote transparency
d)
works with various government authorities to enable digitisation of payments and collections e.g. collection of property taxes
and water user charges at more than 100 municipal authorities across India to support Government of India’s Ease of Doing
Business initiative
e)
has been the first in the country to develop (e-Vittrapravaha) with the State Government of Madhya Pradesh to provide an
end - to - end solution for efficient health-care budget and fund flow management
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 12 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) Semi Urban and Rural:
The Semi Urban Rural markets have been a focus of your Bank’s strategy. What changed in the year under review has been the greater
thrust as a part of the Semi Urban Rural (SURU) push. The rationale behind has been the rising income levels and aspirations of rural
customers leading to demand for better quality financial products and services. The Rural groups in every department of your bank work
together to tap these opportunities.
Apart from meeting its statutory obligations under PSL, HDFC Bank has been offering the widest range of products on the asset side
of the balance sheet like Auto, 2-wheelers, Personal, Gold, Light Commercial Vehicle (LCV), Small Shopkeeper Loans in these markets.
Now it plans to increase its coverage of villages and also deepen relationships in the existing ones. An equally important aspect of this
village penetration strategy is an initiative which combines financial literacy with financial inclusion where customers in each village would
be educated about various products and services of HDFC Bank which can best meet their financial requirements.
The Semi Urban and Rural push has been backed by its digital strategy. The Bank’s operations in these locations are explained below:
1) Agriculture and Allied Activities
Your Bank’s credit to Agriculture & Allied activities stood at ` 128,809.32 crore on March 31, 2019, representing an increase of
nearly 14 per cent over ` 113,160.60 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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DIRECTORS' REPORT
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:39)(cid:66)(cid:84)(cid:85)(cid:70)(cid:83)(cid:1)(cid:85)(cid:86)(cid:83)(cid:79)(cid:66)(cid:83)(cid:80)(cid:86)(cid:79)(cid:69)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)
(cid:37)(cid:74)(cid:72)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:84)(cid:80)(cid:77)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)
Our product range includes Pre and Post-Harvest Crop Loans, Two-Wheeler, Auto Loans, Loans against Gold Jewellery amongst
others. Consequently, the Bank has established a strong footprint in the rural hinterland with its asset products. Apart from advising
the farmers on their financial needs, your Bank is increasingly focusing on facilitating/educating them on benefits of various
government / regulatory schemes such as crop insurance and interest subvention.
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.
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.
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 Milk Procurement 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 which 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. So far your Bank has digitised payments at over 1,000 milk co-operatives spread over 18 states and
benefiting more than 4 lakh dairy farmers. The Bank facilitates instant realization of payments for over 1 lakh customers.
Substituting the Moneylender: Loans against Gold Jewellery grew to over ` 5,900 crore from over ` 5,500 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.
Social Initiatives in Farm Sector: Farm yield and income are subject to the vagaries of the weather. Factors like soil health, input
quality (seeds and fertilizers), and availability of water and government policy also impact this. So do price realization and storage
facilities. Your Bank has launched a variety of initiatives 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. The Bank is also exploring the use of remote sensing
technologies and analytics to strengthen crop and farm level assessment.
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 taken various initiatives to cope with the changing agri-lending
trend. It has taken steps pertaining to delinquency management like root-cause analysis of critical locations, close monitoring
of delinquency, prioritisation based recovery strategy, system automations. Further, your bank is building upon segment specific
approach like funding to horticulture clusters, supply chain finance, Agribusiness, MSMEs and Dairy farmers. It also continues
to engage closely with farmers to mitigate risks and protect portfolio quality. This is reinforced further by a focus on the liability
business.
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2) Micro, Small and Medium Enterprises (MSME)
Advances to the MSME segment as on March 31, 2019 stood at ` 128,976.48 crore as against ` 89,042.1 crore a year ago.
Its advances to the Micro Enterprises alone stood at ` 55,227.96 crore as on March 31, 2019. The MSME sector serves as an
important engine for economic growth and is one of the largest employers in the economy.
The year ended March 31, 2019 has seen a steady shift towards digital transactions owing to GST implementation, the push by
the Government and the advent/evolution of increasingly tech savvy entrepreneurs. Your Bank is leveraging this trend to create
faster solutions. In line with this, the Bank has recently launched an analytics based credit appraisal tool by which a customer can
get a sanction within 3 hours for loans ranging between ` 11 Lakhs to ` 5 crore. This is facilitated by submission of digital bank
statements and a combination of scores arrived by our analytical model.
For existing customers, the SME portal continues to offer ad hoc approval and auto enhancement of loans.
On the trade side, the focus has been on customer engagement for increasing penetration of Trade on Net application. This, as you
are probably aware is a complete enterprise trade solution for customers engaged in domestic as well as foreign trade enabling
them to initiate online requests and track them seamlessly resulting in reduced time and costs.
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, and RuPay enabled Micro-ATMs.
To bring more under-banked sections of the population into formal financial channels, your Bank has opened over 24.1 lakh accounts
under the Pradhan Mantri Jan Dhan Yojana (PMJDY) and enrolled 31.4 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
` 7,168.7 crore were extended under the Pradhan Mantri Mudra Yojana (PMMY) and nearly ` 500.6 crore under the ‘Stand up
India’ scheme to Scheduled Caste, Scheduled Tribe and women borrowers in the year under review.
4)
Sustainable Livelihood Initiative
This is primarily a social initiative with elements of business. It entails skill training, livelihood financing, and creating market
linkages. Further details are provided in page no 35.
INTERNATIONAL BUSINESS
As on March 31, 2019, the Balance Sheet size of this business was US $4.8 billion. Advances constituted 3.02 per cent of the Bank’s Gross
Advances. The Total Income of the overseas branches constituted 1.06 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, Hong Kong, and the Dubai International Finance Centre (DIFC).
These branches cater to the needs of our overseas clients both corporate, and individual. They offer Banking, Trade Finance and Wealth
Management (primarily for non-resident individual customers). In addition, the Bank has Representative Offices in Abu Dhabi, Dubai and Nairobi.
Your Bank also has a presence in International Financial Service Centre (IFSC) at GIFT City in Gandhinagar, Gujarat. This unit, which opened
about two years back is akin to a foreign branch. Customers can avail of products such as Trade Credits, Foreign Currency Term Loans
including External Commercial Borrowings (ECB) and derivatives to hedge loans.
NON-BUSINESS OPERATIONS:
SOCIAL COMMITMENT
To reiterate your Bank’s social philosophy: Businesses cannot succeed if the communities they operate in don’t. To add to this, the change
must be holistic and sustainable. This has been the guiding spirit of the Bank’s social initiatives since inception. This is explained further below.
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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 fundamental areas:
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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 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 livelihood. Our efforts here are focused in the
areas of soil, water and natural resource management and sanitation, issues that affect rural India. 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 17 states, the programme covers over 3.6 lakh households across more than 1,100 villages. Over 26,000 acres of arable land
have been treated to enhance productivity
Promotion of 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) which was launched at Jaipur, Rajasthan in the
previous year and gained momentum in the year under review. The ‘Teaching The Teacher’ programme (3T) seeks to transform education in
government schools across India. It is a unique programme which is committed to improving the skills of teachers, which in turn benefits the
pupils. Under 3T, more than 15 lakh teachers across 21 states/union territories have been trained by inviting ideas from them, and implementing
the selected ideas in schools to improve the quality of education. This programme has potentially benefited more than 1.6 crore students
indirectly and is being executed jointly with a leading non-governmental organisation.
Skills Training and Livelihood Enhancement
Formal education remains a dream for lakhs of Indians. 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 such as dairy and poultry.
The objective is to help these people find jobs locally, enhance their household income, and prevent migration. The nationwide programme has
benefited over 1,00,000 individuals (excluding those trained under the Sustainable Livelihood Initiative or SLI which is explained in detail later).
As a part of this, more than 40,000 youth have received placement- linked skill development training. Career counselling has been provided to
young school students.
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The flagship programme under Skills Training and Livelihood Enhancement is 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, and credit counselling and livelihood finance and
market linkage. The Bank has a Board approved plan to cover 1 crore households against which 96.7 lakh have been covered.
It’s a unique programme with perhaps no parallel globally. What makes it so are the following:
1)
2)
It’s an all-women programme
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 96.7 lakh women or households/3.87 crore lives (ie 96.7 X 4) being impacted potentially, this is one of the world’s largest such
programmes
4)
Over 10,000 dedicated, passionate employees of the Bank constituting around 10 per cent of the Bank’s total workforce 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.
At the heart of these programmes are community-led sanitation campaigns that promote hygienic conditions in rural areas through appropriate
wastewater disposal. These initiatives are supplemented by construction of toilets and provision of clean drinking water. Nearly 7,000 school
toilets and over 15,000 home toilets have been constructed.
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 12th edition in 2018, your Bank collected over 3 lakh units of blood in a single day which is nearly 42 per cent
higher than the previous year. What started off as a small initiative in 2007 with the participation of just 4,000 volunteers has now grown into a
movement with over 3.5 lakh people from all walks of life participating in the last edition. This included those from colleges, employees of private
and public sector, and the defence establishment. Nearly 4,000 camps were held across 1,100 cities in India.
Bank employees are central to this effort. In the year under review another landmark was reached: Over 1 million units of blood were collected
cumulatively over a period of 12 years.
Financial Literacy and Inclusion
Financial literacy is the first step towards real financial inclusion. 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.
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 ` 443.8 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.
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DIRECTORS' REPORT
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 lower carbon emission not just
from operations but also from 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
Your Bank considers nurturing and promoting a culture built on the foundation of ethics and integrity as a fundamental principle.
And ‘People’ is one of your Bank’s Core Values. What this means is that your Bank hires people with not only the right skill sets but also
those who have similar values and can fit into its culture. Needless to say there is no compromise when it comes to ethics. These values
are reinforced further after onboarding. Your Bank has an institutionalized and well-documented code of conduct, which every employee
has to affirm annually.
The five pillars of the People approach are:
Talent Acquisition: Acquiring the right talent isn’t enough anymore in the current fast paced digital environment. What is critical is
recruiting scientifically and deploying resources quickly. Keeping in mind the synergies needed to run a successful talent acquisition
process, the entire function has been reconfigured. A hub and spoke recruitment model, aided by centers of excellence leveraging new
technology, analytics and capability building have been created.
Your Bank is leveraging Artificial Intelligence based recruitment tools to improve both speed and quality of hiring. This in conjunction
with competency based assessments ensure a scientific merit based talent acquisition and selection process. Digital channels of talent
acquisition continue to remain a priority - such as social media hiring and leveraging job portals.
Career Management: Your Bank’s core career philosophy is that after hiring right a conducive environment is created for employees
to develop and grow. This is done through systematic investment of time in career discussion with employees, competency assessment
and intensive functional and behavioral training through Gurukul - our in-house programme. The Bank also facilitates inter-departmental
job movements to employees to help them stay motivated and engaged.
High Touch Employee Connect Programmes: Your Bank conducts popular events at both local and national levels. While most of
these events are open to employees, some are meant for families as well. Some of the popular events include Josh Unlimited - a pan
India sports event; Hunar - a pan India in-house talent competition; Xpressions - a pan India in-house drawing competition; Corporate
Photography contest and Wanderers - a one-day trek for employees and their children. Events of these nature touch the lives of close to
60,000 people across the country ensuring a vibrant workplace and building an emotional connect with the organisation.
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 behavioral training. The on-boarding training ensures that new employees are trained comprehensively and equipped
with necessary know-how, as well as functional and behavioral skills required for the proper discharge of the role.
The product training and advanced programmes enable skill development and, regular upgrading to 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. In addition to this to ensure that employees are assisted on the job, there is a help-line ‘Ask the Trainers’ which clarifies on
relevant questions within 24 hours.
Rewards and Recognition: Your Bank aims to reward performance as it is the key to keeping employees motivated as well as being
competitive in the market. It aims to do this while ensuring that there is no deviation from ethics, regulatory guidelines and the principle
of maintaining internal equity.
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2) Digital 2.0
Your Bank has always been at the forefront of digital innovation in the industry be it ATMs, net banking or mobile banking. Now it has
embarked on its Digital 2.0 journey.
The strategic objective of Digital 2.0 is to bring about a transformation for both the Bank and customer. For your Bank it brings about cost
efficiencies through automation and reduction in origination costs while simultaneously increasing revenue opportunity. It also results in
a faster time to market and optimization of customer’s digital lifecycle.
For the customer this would mean an improved and hyper personal experience besides an ability to buy bank products from physical/
digital channels alike and also having a conversation with it.
The key elements of the Digital 2.0 strategy are A) Reimagined Net and Mobile Banking Experience B) Digital Marketing, Analytics and
Digital Origination C) Digital Innovations D) API E) Virtual Relationship Manager
A)
Reimagined Net and Mobile Banking Experience: If Digital 1.0 was all about giving the customer convenient access to digital
channels, Digital 2.0 has all been about enriching and customising the experience. Take the new Mobile Banking App for instance.
It combines the user journeys that customers go through when they use the app into simple categories such as Save, Invest and
Pay. It is a large step towards intuitive and simplified banking. This has been built through extensive customer research and by
partnering with world leading platform and design companies. The App did encounter teething problems leading it to be withdrawn
for a while. Post relaunch it has been well received.
B)
Digital Marketing: Deploying Big Data Analytics and Machine Learning: Your Bank has been able to precisely cater to its
customers’ preferences, context, needs / wants on the digital channels. It is able to offer relevant and personalized products /
offers through their channel of preference. Through more intelligent digital marketing campaigns coupled with the ability to close /
sell products digitally, the Bank aims to step up the proportion of unassisted digital sourcing of products to total sourcing over the
next two to three years.
C) Digital Innovations: Building on the success of the last few years’ your Bank has been able to position itself in the forefront of
innovation. One clear example of this has been the creation of EVA India’s first AI powered Chatbot. It engages in an intuitive,
interactive way with people’ and responds to their queries 24*7 instantaneously. Bank on Chat, the other AI conversational offering
allows customers to solve lifestyle needs by helping them in booking transport and movie tickets by simple chat and pay options.
D)
API: This is a software intermediary code which rests between the client application / system and Bank system. This allows
exchange of data between the Bank and the customer in a seamless and secure manner. Thus it enables expanding the eco system
through alliances and entering new markets. Through open innovation and API banking your Bank has started enabling third party
service providers to connect to the bank’s pre identified internal applications / services securely allowing it to offer its products /
services on their properties extending the reach exponentially. Already some platform players have been onboarded through which
customers can now get connected to the Bank, book/renew/liquidate Fixed Deposits, and Recurring Deposits and apply for digital
products. This includes an initiative with CSC, a digital India Initiative to take Auto / Personal / 2-wheeler / Business Loans to
remote locations and thus champion the cause of digital inclusion. Similarly, an initiative was taken to offer all eligible products to
a new to bank customer at the time of on boarding and enabling in principle approval for the same.
The Bank’s efforts have been reinforced through external partnerships like Industry academia interactions, Accelerators Engagement
Program, Digital Innovation Summit and Digital Innovations Day program. Your Bank has already partnered with over 165 leading
institutions including the elite ones like The Indian Institutes of Management (Ahmedabad, Bangalore, and Lucknow), Indian Institute
of Technology (Delhi), Wharton University and University of Florida. It has also evaluated and worked with over 90 startups.
E)
Virtual Relationship Manager: Last but not least is the unique Virtual Relationship Manager programme. It is unique as it is the
only digital channel with a human face/touch. It has the depth and skill, as also the agility to offer concierge services. The channel
is a “bank within the bank” managing over six million customers. It provides connect with customers through a combination of
technology and personalised conversations. The strength of the Virtual Team is its robust training strategies which enables Virtual
Relationship Managers to adopt individual personalized narratives leading to enhanced relationships and at the same time helping
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DIRECTORS' REPORT
increase the overall productivity for the Bank. Additionally, the Bank’s Learning and Development Team has significantly contributed
towards spearheading Leadership Programmes for the supervisory force. In the future, emerging technologies like AI, RPA IoT/ AR/
VR will be continually pursued across relationship banking, digital self-service, branch banking, risk, marketing, collections, HR and
be embedded seamlessly in a process and experience which is simpler, better, faster and delightful for customers.
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.
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.
Another important development has been the Digital Application Platform (DAP) 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. 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.
4) Cyber Security
Your Bank has an effective framework in place to manage cyber security. The framework rides on 4 pillars viz: - Protect, Detect, Respond
& Recover. The Chief Information Security Officer (CISO) is the person who is responsible overall for ensuring effective information and
cyber security programme in the bank. There is also a committee of the Board which dedicatedly looks into cyber security issues and
preparedness.
In the year under review, the Bank enhanced its cyber security protocol by enhancing data protection and cyber defence measures.
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.
Firewalls were upgraded to Next Generation 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 card customers enjoy a very high level of safety while transacting with it.
The ISO 27001 certification pertains to best practices with respect to information security. On building awareness your bank has a regular
programme for both employees and customers. All the board members of the bank have been imparted training on cyber security and this
year, the bank has won 3 awards on best implementation of cyber security including one on spreading cyber security awareness.
5)
Service Quality Initiatives and Grievance Redressal
Customer Focus is one of the five core values of your Bank. Your Bank has adopted a holistic approach for improving customer
experience across multiple channels especially since it 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, the Bank has constituted three committees at different levels to monitor customer service
viz. Branch Level Customer Service Committees (BLCSCs), Standing Committee on Customer Service and Customer Service Committee
of the Board.
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While the Bank has various touch points for the customers such as branch, managed program and phone banking, it has further
enhanced the customer experience through a Virtual Relationship Manager (VRM). All this ensures that customers have an omni channel
experience for any of their financial needs across various touch points. Your Bank has put robust processes in place to regularly monitor
and measure quality of service levels not only at various touch points but also at a product and process level by Quality Insurance Group.
As part of its continuous efforts to enhance quality of service regular service quality reviews, including mystery shopping, are carried out
for various products/ channels by following through on a structured calendar of reviews. Such reviews cover key service parameters like
adherence of benchmark TAT, complaints reduction and, transactions monitoring to ensure meeting the committed service levels along
with process enhancements. The effectiveness is reviewed periodically at different levels including the Customer Service Committee of
the Board.
Your Bank has provided multiple channels to its customers to share feedback on its services as well as register their grievances. It has a
Grievance Redressal Policy, duly approved by its Board, available in the public domain for ready reference of the customers.
Your Bank is at the forefront of developing innovative financial solutions and digital platforms. This, coupled with concerted efforts at
creating awareness among customers, has led to an increase in the use of its digital channels as well as customer loyalty. Keeping the
customer’s interest as the primary focus, your Bank has formulated a Board Approved Customer Protection Policy, thereby limiting liability
of customers in case of unauthorised electronic banking transactions and thus increasing a secure feeling among customers. During the
year, bank has conducted 39 customer awareness sessions touching over 7,300 customers.
This multi-pronged approach, has resulted in continuous improvement in service standards as well as customer satisfaction.
RISK ARCHITECTURE
I.
Risk Management and Portfolio Quality
The key risks that the Bank is exposed to in the course of its business 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 in place a Board approved Risk Strategy and Policies 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 function is, it is independent of the business sourcing unit with the convergence only at the
CEO level.
The gamut of risks faced by the Bank which are dimensioned and managed include:
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(cid:116)(cid:1)(cid:1)
(cid:116)(cid:1)(cid:1)
(cid:36)(cid:83)(cid:70)(cid:69)(cid:74)(cid:85)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:51)(cid:70)(cid:84)(cid:74)(cid:69)(cid:86)(cid:66)(cid:77)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)(cid:84)
(cid:36)(cid:83)(cid:70)(cid:69)(cid:74)(cid:85)(cid:1)(cid:36)(cid:80)(cid:79)(cid:68)(cid:70)(cid:79)(cid:85)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:46)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)(cid:1)
(cid:35)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:48)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)(cid:1)
(cid:52)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:51)(cid:66)(cid:85)(cid:70)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:35)(cid:80)(cid:80)(cid:76)(cid:1)
(cid:36)(cid:80)(cid:78)(cid:81)(cid:77)(cid:74)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:45)(cid:74)(cid:82)(cid:86)(cid:74)(cid:69)(cid:74)(cid:85)(cid:90)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:51)(cid:70)(cid:81)(cid:86)(cid:85)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:42)(cid:79)(cid:85)(cid:83)(cid:66)(cid:69)(cid:66)(cid:90)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:46)(cid:80)(cid:69)(cid:70)(cid:77)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:53)(cid:70)(cid:68)(cid:73)(cid:79)(cid:80)(cid:77)(cid:80)(cid:72)(cid:90)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
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DIRECTORS' REPORT
(cid:116)(cid:1)(cid:1)
(cid:116)(cid:1)(cid:1)
(cid:36)(cid:80)(cid:86)(cid:79)(cid:85)(cid:70)(cid:83)(cid:81)(cid:66)(cid:83)(cid:85)(cid:90)(cid:1)(cid:36)(cid:83)(cid:70)(cid:69)(cid:74)(cid:85)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
(cid:48)(cid:86)(cid:85)(cid:84)(cid:80)(cid:86)(cid:83)(cid:68)(cid:74)(cid:79)(cid:72)(cid:1)(cid:51)(cid:74)(cid:84)(cid:76)
Credit Risk
Credit Risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. Losses
stem from outright default or reduction in portfolio value. Your Bank has a distinct credit risk architecture, policies, procedures and
systems 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 segments. For both categories there are robust front-end and 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 amongst others. This is backed by portfolio diversification, stringent credit
approval processes and periodic post-disbursement monitoring and remedial measures. Your Bank has been able to ensure strong asset
quality through volatile times in the lending environment by stringently adhering to prudent norms and institutionalized processes.
As on March 31, 2019, your Bank’s ratio of Gross Non-Performing Assets (GNPAs) to Gross Advances was 1.36 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 were 0.04 per cent of Gross Advances
The Bank has a conservative and prudent policy for specific provisions on NPAs. Its provision for NPAs is more than the minimum
regulatory requirements, 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 for 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, they are customers across multiple products and so
the Bank is familiar with their credit history and risk profile. 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.
Finally, the Bank has an independent model validation unit that minutely assesses the models used to generate the credit scores for such loans.
These models are monitored, reviewed periodically, 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 in interest rates, equity and currencies
market. These risks are 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. The risk measures 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), Potential Loss Trigger Level (PLTL), and are monitored on end-of-day basis. In addition, forex open
positions and interest rate sensitivity limits are computed and monitored on an intraday basis. 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.
The market risk capital charge of your Bank is computed on daily basis using the Standardised Measurement Method applying the
regulatory factors.
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 Liability 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
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help manage liquidity risk, the net interest 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. Your Bank conducts various
studies to assess the behavioral pattern of non-contractual assets and liabilities and embedded options available to customers, which
are used while managing maturity gaps. Further, your Bank also has necessary framework in place to manage intraday liquidity risk.
The Liquidity Coverage Ratio (LCR), a global standard, is 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 100 per cent from January 1, 2019 and your Bank’s LCR stood at 117.66 per cent on a consolidated basis for the year ended March
31, 2019.
RBI has also mandated minimum Net Stable Funding Ratio (NSFR) of 100 per cent with effect from 1st April, 2020. NSFR seeks to
ensure that the Bank maintains a stable funding profile in relation to the composition of its assets and off balance sheet activities. As a
prudent risk management practice, your Bank has been monitoring this ratio, and is thus adequately prepared to meet the RBI mandated
requirements.
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 heads: Framework and Process, Internal Control, Information Technology and Security Practices
and Fraud Monitoring and Control.
a.
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.
b.
Internal Control
Your Bank has implemented sound internal control practices across all processes, units and functions. The Bank has 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.
c.
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 place a governance framework, information security practices and business
continuity plan to mitigate information technology related risks. An independent 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
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DIRECTORS' REPORT
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, and periodically undergo information security training and
sensitisation exercises.
d.
Fraud Monitoring and Control
The Bank has put in place a whistle blower policy, and a central vigilance team oversees implementation of fraud prevention
measures. Frauds are investigated to identify the root cause and relevant corrective steps are taken to prevent recurrence.
Fraud prevention committees at the senior management 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 highest standards of compliance. A dedicated team of subject matter experts in the
Compliance Department works with business and operations teams to ensure active compliance risk management and monitoring.
The team also provides 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 and updated periodically as
per agreed frequency or based on market action or regulatory guidelines / action. 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 Policy and Framework entails the
use of various techniques to 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
Your Bank has two subsidiaries, HDB Financial Services Limited and HDFC Securities Limited. The Board of each subsidiary is responsible
for managing their respective risks (Credit Risk, Market Risk, Operational Risk, Liquidity Risk, Reputation Risk). The ICAAP at the
subsidiaries is overseen within the Bank’s ICAAP framework. Stress testing for the group as a whole is carried out by integrating the
stress tests of the subsidiaries. Similarly, capital adequacy projections are formulated for the group after incorporating the business /
capital plans of the subsidiaries.
II.
Implementation of Indian Accounting Standards (IND-AS)
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 of India (RBI), vide its circular
dated February 11, 2016 required all scheduled commercial banks to comply with 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.
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. Considering the amendments needed to the Banking
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Regulation Act, 1949, as well as the level of preparedness of several banks, the RBI vide its Statement on Developmental and Regulatory
Policies dated April 5, 2018 had deferred the implementation of IND-AS by one year by when the necessary legislative amendments were
expected. The legislative amendments recommended by the RBI are under consideration of the Government of India. Accordingly, the
RBI, vide its circular dated March 22, 2019 deferred the implementation of IND-AS till further notice.
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 Bank, being an associate of Housing Development Finance Corporation Limited (the ‘Corporation’), is required to submit its
consolidated financial information (‘fit-for-consolidation information’), prepared in accordance with the recognition and measurement
principles of IND-AS as specified under Section 133 of the Companies Act, 2013, to the Corporation for the purposes of the consolidated
financial statements/ results of the Corporation. The results of the Bank upon its first time adoption of and transition to IND-AS, based
on the updated regulations and accounting standards/ guidance and business strategy at the date of actual transition, could differ from
those reported in the fit-for-consolidation information.
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
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DIRECTORS' REPORT
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, business continuity planning and internal risk-based 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.
At the ground-level, the Bank has a mix of preventive and detective controls implemented through systems and 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 mitigating 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 (e) Four eye-principle (maker-checker control) for processing
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 transmission of messages (i) Additional authorisation leg in payment interface systems in applicable cases (j) Audit logs
directly extracted from systems (k) Empowerment grid.
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 ie 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 also pro-actively recommends
improvements in operational processes and service quality wherever deemed fit.
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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 with regulatory guidelines and promotes a compliance
culture in the Bank.
The Bank has a comprehensive Know Your Customer, Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT) policy
(based on the RBI guidelines / provisions of the Prevention of Money Laundering Act, 2002) incorporating the key elements of Customer
Acceptance Policy, Customer Identification Procedures, Risk Management and Monitoring of Transactions. The policy, is subjected an
annual review and is duly approved by the Board.
The Bank has taken significant measures in developing and enhancing an effective and sustainable KYC AML and CFT Compliance
Programme. The adherence to the guidelines prescribed in the policy is monitored by the Bank at various stages of the customer life-
cycle. Your 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 including a dedicated AML CFT monitoring team, which carries
out extensive transaction reviews for identification of suspicious patterns / trends which act as an early warning signal for the Bank to
carry out enhanced due diligence and appropriate action thereafter. The status of adherence to the KYC, AML and CFT guidelines is also
placed before the Audit Committee of the Board for their review at quarterly intervals.
The Audit team and the Compliance team undergo regular training both in-house and external on a continuous basis in order to equip
them with the necessary know-how and expertise to carry out the function.
The Audit Committee of the Board reviews the effectiveness of controls, compliance with 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
Your Bank is committed to Responsible Financing and refrains from funding projects that have an adverse impact on Environment, Health
and Safety (EHS). EHS is an integral part of the bank’s overall credit risk assessment and monitoring process. Every project funded has
to pass the Bank’s muster in terms of the EHS risk it entails, potential impact and mitigation measures in place or proposed.
The key aspects of the assessment process are:
For all loans exceeding ` 10 crore in amount and five years in tenure, borrowers have to submit a declaration of compliance with EHS
norms.
In select large-ticket projects, the Bank appoints a 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.
The LIE regularly monitors such projects during the 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 time to
time to ensure that the project is progressing to the Bank’s satisfaction.
After the project becomes operational, the borrower 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 annual review 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 default interest
in case of deviations and, thus, ensures compliance with the agreed EHS norms. If there are significant deviations that could affect the
viability of the project, the Bank reserves the right to either reduce its exposure or recall the loan.
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DIRECTORS' REPORT
V.
Integrated Reporting (IR)
The Bank has taken a step forward in the Integrated Reporting Journey that it embarked upon last year. It will create an Integrated Report
based on the principles enunciated by the International Integrated Reporting Council which will be hosted on the website of the Bank.
Subsidiary Companies
Your Bank has two subsidiaries, HDB Financial Services Limited (HDBFSL) and HDFC Securities Limited (HSL). HDBFSL is a leading NBFC
that caters primarily to segments not covered by the Bank while HSL is among India’s largest retail broking firms. The financial results of the
subsidiaries have been prepared in accordance with notified Indian Accounting Standards (‘Ind-AS’) with effect from April 1, 2018 (April 1,
2017 being the transition date). Accordingly, the financial results for the comparative reporting period have also been prepared in accordance
therewith.
The detailed financial performance of the companies is given below.
1)
HDB Financial Services Limited
HDBFSL’s Net Interest Income grew 17.2 per cent to ` 3,378.8 crore for the year ended March 31, 2019, from ` 2,882.2 crore in the
previous year. This resulted in a Net Profit rise of 23.6 per cent to ` 1,153.2 crore from ` 933 crore. Net NPA levels stood at 1.12 per cent
on March 31, 2019.
The company is a leading NBFC that caters to the growing needs of an aspirational India, serving both Retail and Small and Medium
Commercial Clients. It has a wide range of financial solutions that help customers meet their growing financial needs.
The Enablers:
Compelling Product Offering
HDBFSL brings in a compelling product offering leading to customer convenience. It offers financial services at one place be it secured /
unsecured loans, investments or insurance. The company offers instant loan approvals for consumer loans with intelligent web application
forms as well as personalised credit appraisal for large business loans.
With a seamless distribution channel and a committed workforce, HDBFS brings in convenience to customers.
Focus on Phygital: Physical cum Digital
With its ever-growing network of 1,350 branches across 961 cities/towns, HDBFS is reaching out to customers spread across the
country. Over 85 per cent of its branches are outside the top 25 cities of India. This means that a branch and customer relationship
manager are never too far from the customer.
By leveraging digitization, it offers financial solutions to individuals. For instance, they can access their loan account through the website
www.hdbfs.com.The self-service mobile application and customer service portal “HDB On-The-Go” aims to bring account management
at a customer’s fingertips. All this means that financial borrowing is now an effortless experience for customers.
This would not have been possible without a committed workforce of over 93,000. The quest for growth has also been balanced by a
robust risk management framework which has enabled net NPA levels of about 1 per cent (among the lowest in the industry) and strong
credit ratings. HDBFSL’s long-term debt is rated AAA/stable by CARE & CRISIL and its short-term debt is rated A1+ by CARE & CRISIL,
indicating the highest degree of safety regarding timely servicing of financial obligations.
BPO Services
Another revenue stream for the company has been Business Process Outsourcing (BPO) solutions to HDFC Bank. The BPO services
division delivers back-office services such as forms processing, documents verification, finance and accounting services and
correspondence management. HDBFS also delivers front office services such as contact centre management, outbound marketing and
collection services.
As on March 31, 2019, HDFC Bank held 95.5 per cent stake in the company.
HDFC Bank Limited Annual Report 2018 - 2019
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DIRECTORS' REPORT
2) HDFC Securities Limited
HSL’s Total Income was ` 782.1 crore as against ` 800.1 crore in the previous year. Net Profit was ` 329.8 crore as against ` 344.7 crore.
The company has a customer base of 21.4 lakh to whom it offers a large bouquet of financial services. In the year under review,
HSL had 7 lakh transacting customers, the third highest number of active (transacting) customers among all broking houses.
The focus on digitisation continued but the percentage of customers accessing HSL’s services digitally decreased to 68 per cent from 70
per cent in the previous year. The percentage accessing it through the mobile app increased to 37 per cent from 33 per cent.
In a conscious effort to rationalize the distribution network with greater emphasis on digital offerings, HSL consolidated its existing
branches to end with 278 branches across 165 cities/towns at the end of the year.
The company’s performance must be seen in the context of the overall macroeconomic scenario. While the capital market indices did
grow on a year on year basis the gains were not as significant as in the previous year. Globally this was due to the Federal Reserve’s
interest rate hikes, volatile oil prices and the US - China trade war. Domestic factors that impeded capital market performance were the
NBFC crisis and a potential India-Pakistan conflict towards the end of the year.
In the year under review, HSL also won many industry accolades. Special mention must be made of the Digital Excellence Awards for
Conversational Investing which it won in the Economic Times BFSI Innovation Tribe Awards 2018 and in the Digital Excellence Awards
2018. HSL was also judged as India’s Most Ethical Company in Financial Services by World CSR Congress. It also won the Most
Attractive Brand in the category of Retail Broking awarded by Trust Research Advisory (TRA). In the Outlook Money Awards 2018, HSL
was the runner up in the Best Retail Broker category.
As on March 31, 2019, your Bank held 97.3 per cent stake in HSL.
The annual reports of HDBFSL and HSL are available on the website of the Bank (www.hdfcbank.com). Shareholders who wish to have
a copy of the annual accounts and detailed information may write to HDFC Bank. These documents 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, attendance, meetings and constitution of various Committees
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 134 (2) (a) and Section 92 (3) of the Companies Act, 2013, the extract of the Annual Return in the prescribed format (MGT-9)
is annexed as ANNEXURE 3 to this Report. Further, the Annual Return of the Bank in the prescribed Form MGT-7 is available on the website
of the Bank at the link www.hdfcbank.com
Requirement for maintenance of cost records:
The Bank is not required to maintain cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013
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:116)(cid:1)(cid:1)
(cid:42)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:70)(cid:81)(cid:66)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:84)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:74)(cid:68)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:70)(cid:69)(cid:1)(cid:66)(cid:77)(cid:80)(cid:79)(cid:72)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:1)(cid:70)(cid:89)(cid:81)(cid:77)(cid:66)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)
to material departures, if any
(cid:116)(cid:1)
(cid:56)(cid:70)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:84)(cid:70)(cid:77)(cid:70)(cid:68)(cid:85)(cid:70)(cid:69)(cid:1)(cid:84)(cid:86)(cid:68)(cid:73)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:74)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:74)(cid:70)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:78)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:85)(cid:77)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)(cid:75)(cid:86)(cid:69)(cid:72)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:66)(cid:84)(cid:80)(cid:79)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2019 and of the profit of the Bank for the
year ended on that date
(cid:116)(cid:1)(cid:1) (cid:56)(cid:70)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:85)(cid:66)(cid:76)(cid:70)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:86)(cid:71)(cid:71)(cid:74)(cid:68)(cid:74)(cid:70)(cid:79)(cid:85)(cid:1)(cid:68)(cid:66)(cid:83)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:78)(cid:66)(cid:74)(cid:79)(cid:85)(cid:70)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:69)(cid:70)(cid:82)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:83)(cid:69)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:83)(cid:69)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
Companies Act, 2013, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities
47
DIRECTORS' REPORT
(cid:116)(cid:1) We have prepared the annual accounts on a going concern basis
(cid:116)(cid:1)(cid:1) (cid:56)(cid:70)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:77)(cid:66)(cid:74)(cid:69)(cid:1)(cid:69)(cid:80)(cid:88)(cid:79)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:67)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:84)(cid:86)(cid:68)(cid:73)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:84)(cid:1)(cid:88)(cid:70)(cid:83)(cid:70)(cid:1)(cid:66)(cid:69)(cid:70)(cid:82)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)
and operating effectively
(cid:116)(cid:1)(cid:1) (cid:56)(cid:70)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:69)(cid:70)(cid:87)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:1)(cid:84)(cid:90)(cid:84)(cid:85)(cid:70)(cid:78)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:74)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:66)(cid:81)(cid:81)(cid:77)(cid:74)(cid:68)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:77)(cid:66)(cid:88)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:84)(cid:86)(cid:68)(cid:73)(cid:1)(cid:84)(cid:90)(cid:84)(cid:85)(cid:70)(cid:78)(cid:84)(cid:1)(cid:88)(cid:70)(cid:83)(cid:70)(cid:1)(cid:66)(cid:69)(cid:70)(cid:82)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)
and were operating effectively.
Compliance with Secretarial Standards
The Bank is in compliance with all applicable Secretarial Standards as notified from time to time.
Auditors
The Bank’s current Statutory Auditors are S. R. Batliboi & Co. LLP, Chartered Accountants. S. R. Batliboi & Co. LLP were appointed as Statutory
Auditor at the previous AGM of the Bank, to hold office till the conclusion of the ensuing AGM. It is now proposed to appoint S. R. Batliboi &
Co. LLP, Chartered Accountants, as Statutory Auditor of the Bank for period of three years with effect from the conclusion of the ensuing AGM,
such that their total appointment does not exceed 4 years, which is the maximum permissible term as per Reserve Bank of India, at such fees
as detailed in the Notice of the 25th AGM of the Bank.
During the year ended March 31, 2019, fees paid to the Statutory Auditors (S.R. Batliboi & Co. LLP) and its network firms are as follows:
(` in crores)
Fees (including taxes)
HDFC Bank to
HDFC Bank to network
Subsidiaries of HDFC Bank to Statutory
Statutory Auditors
firms of Statutory Auditors
Auditors and its network firms
Statutory Audit
Certification & other attest services*
Non-audit services
Outlays and Taxes*
Total
2.50
1.30
-
0.49
4.29
-
-
-
-
-
-
-
-
-
-
*includes fees classified under share issue expenses, towards certification and other attest services in respect of capital raised during the year.
Disclosure under Foreign Exchange Management Act, 1999
As far as FEMA compliances in relation to strategic downstream investments in the Bank’s subsidiaries is concerned, during the year under
review, there have been no strategic downstream investments made by Bank in its subsidiaries. Accordingly, the Bank has obtained a certificate
from its statutory auditors to this effect.
Related Party Transactions
Particulars of transactions with related parties referred to in Section 188 (1), as prescribed in Form AOC-2 under Rule 8 (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 of the Financial Statements as per the applicable
provisions of Banking Regulation Act, 1949.
Financial Statements of Subsidiaries and Associates
In terms of Section 134 of the Companies Act, 2013 and read with Rule 8 (1) of the Companies (Accounts) Rules, 2014 the performance and
financial position of the Bank’s subsidiaries and associates are enclosed as ANNEXURE 5 to this report. There were no entities which became
or ceased to be the Bank’s subsidiaries, associates or joint ventures during the year.
Whistle Blower Policy / Vigil Mechanism
The Bank encourages an open and transparent system of working and dealing amongst its stakeholders. 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
HDFC Bank Limited Annual Report 2018 - 2019
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DIRECTORS' REPORT
also adopted a “Whistle Blower Policy” which encourages its employees and various stakeholders 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 and required corrective measures in consultation with the concerned stakeholders. The decision of the
Whistle Blower Committee is final and binding on all. Preventive measures or any other action considered necessary is also taken forward 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 2018-19, a total of 56 such complaints were received and taken up
for investigation which has resulted in certain staff actions in 15 cases post investigation.
Statement on Declaration by Independent Directors
Mrs. Shyamala Gopinath, Mr. Malay Patel, Mr. Umesh Chandra Sarangi are the Independent Directors whereas Mr. Sanjiv Sachar,
Mr. M. D. Ranganath and Mr. Sandeep Parekh are the Additional Independent Directors on the Board of the Bank as on March 31, 2019.
All the Independent Directors and Additional 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 and are independent
of the management.
Board Performance Evaluation
The Nomination and Remuneration Committee (NRC) has approved a framework / policy for evaluation of the Board, Committees of the
Board and the individual members of the Board (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 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. In addition to the above parameters, the Board also evaluates fulfillment of
the independence criteria as specified in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 by the Independent Directors
of the Bank and their independence from the management. Such performance evaluation has been duly completed as above. As Mr. Sandeep
Parekh and Mr. M. D. Ranganath were recently appointed as Additional Independent Directors on the Board of the Bank with effect from January
19, 2019 and January 31, 2019 respectively, they abstained from participating in the above Board Performance Evaluation process.
Policy on Appointment and Remuneration of Directors and Key Managerial Personnel
Your Bank has in place a Policy for appointment and ‘fit and proper’ criteria for Directors of the Bank. The Policy lays down the criteria for
identification of persons who are qualified and ‘fit and proper’ to become Directors on the Board- such as academic qualifications, competence,
track record, integrity, etc. which shall be considered by the NRC while recommending appointment of Directors. The Policy is available on the
website of the Bank at the link https://www.hdfcbank.com/assets/pdf/Policy-for-appointment-and-fit-proper-criteria-for-directors.pdf
49
DIRECTORS' REPORT
The remuneration of Whole Time Directors, Key Managerial Personnel and Senior Management is governed by the Compensation Policy of the
Bank. The same is available at the web-link https://www.hdfcbank.com/assets/pdf/Compensation-Policy.pdf. 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. The Compensation Policy is aligned to business strategy, market dynamics, internal characteristics and complexities within
the Bank. The ultimate objective is to provide a fair and transparent structure that helps the Bank to retain and acquire the talent pool critical
to building competitive advantage and brand equity.
Your Bank’s approach is to have a pay for performance culture based on the belief that the Performance Management System provides a
sound basis for assessing performance holistically. The compensation system should also take into account factors 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.
Further, expenses incurred by them for attending meetings of the Board and Committees are reimbursed at actuals. Pursuant to the relevant
RBI guidelines and approval of the shareholders, each of the Non-Executive Directors, other than the Chairperson, are paid profit-related
commission of ` 1,000,000 (Rupees Ten Lakh Only) per annum.
Mr. Aditya Puri is the Non-Executive Chairman of HDB Financial 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, 2019.
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. Towards
this end, the Nomination & Remuneration Committee of the Board will constitute a Search Committee to undertake a global search of both
internal and external candidates.
Significant and Material Orders Passed By Regulators
During the year under review, there were no significant and material Orders passed by any regulators or courts or tribunals against the Bank
impacting the going-concern status and Bank’s operations in future.
Directors and Key Managerial Personnel
In compliance with Section 152 of the Companies Act, 2013, Mr. Srikanth Nadhamuni will retire by rotation at the ensuing Annual General
Meeting and is eligible for re-appointment.
During the year, Mr. Partho Datta and Mr. Bobby Parikh ceased to be Directors of the Bank from close of business hours on September 29,
2018 and January 26, 2019 respectively, on completing the maximum permitted tenure of eight years as per Banking Regulation Act, 1949.
Your Directors place on record their sincere appreciation for the contribution made by Mr. Partho Datta and Mr. Bobby Parikh during their tenure
with the Bank and wishes them well in their future endeavors.
Mr. Paresh Sukthankar, Deputy Managing Director, tendered his resignation from the Board of the Bank on August 10, 2018 which came into
effect from November 8, 2018. The Board places on record their sincere appreciation for the contribution made by Mr. Paresh Sukthankar
during his tenure with the Bank and wishes him well in his future endeavors.
Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M. D. Ranganath were appointed as Additional Independent Directors on the Board of the Bank
with effect from July 21, 2018, January 19, 2019 and January 31, 2019 respectively, subject to the approval of the shareholders.
The brief resume / details regarding the Directors proposed to be appointed / 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.
HDFC Bank Limited Annual Report 2018 - 2019
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50
DIRECTORS' 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:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:84)(cid:85)(cid:66)(cid:77)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:72)(cid:83)(cid:70)(cid:70)(cid:79)(cid:1)(cid:77)(cid:80)(cid:68)(cid:76)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:34)(cid:36)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:77)(cid:70)(cid:83)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:74)(cid:83)(cid:1)(cid:68)(cid:80)(cid:79)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:78)(cid:66)(cid:68)(cid:73)(cid:74)(cid:79)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:80)(cid:83)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:66)(cid:87)(cid:70)(cid:1)(cid:70)(cid:79)(cid:70)(cid:83)(cid:72)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:86)(cid:81)(cid:81)(cid:80)(cid:83)(cid:85)(cid:1)(cid:72)(cid:80)(cid:14)(cid:72)(cid:83)(cid:70)(cid:70)(cid:79)(cid:1)(cid:74)(cid:79)(cid:74)(cid:85)(cid:74)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)
(cid:42)(cid:79)(cid:84)(cid:85)(cid:66)(cid:77)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:79)(cid:70)(cid:83)(cid:72)(cid:90)(cid:1)(cid:68)(cid:66)(cid:81)(cid:66)(cid:68)(cid:74)(cid:85)(cid:80)(cid:83)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:73)(cid:74)(cid:72)(cid:73)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:86)(cid:78)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:71)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:80)(cid:88)(cid:70)(cid:83)(cid:1)(cid:71)(cid:66)(cid:68)(cid:85)(cid:80)(cid:83)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:69)(cid:86)(cid:68)(cid:70)(cid:1)(cid:70)(cid:79)(cid:70)(cid:83)(cid:72)(cid:90)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:86)(cid:78)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)
(cid:34)(cid:77)(cid:77)(cid:1)(cid:78)(cid:66)(cid:74)(cid:79)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:67)(cid:80)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:67)(cid:83)(cid:66)(cid:79)(cid:68)(cid:73)(cid:70)(cid:84)(cid:1)(cid:84)(cid:88)(cid:74)(cid:85)(cid:68)(cid:73)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:71)(cid:1)(cid:81)(cid:80)(cid:84)(cid:85)(cid:1)(cid:18)(cid:17)(cid:1)(cid:81)(cid:15)(cid:1)(cid:78)(cid:15)
(cid:49)(cid:86)(cid:85)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:86)(cid:84)(cid:66)(cid:72)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:77)(cid:74)(cid:71)(cid:85)(cid:84)(cid:13)(cid:1)(cid:34)(cid:36)(cid:84)(cid:13)(cid:1)(cid:68)(cid:80)(cid:78)(cid:78)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:84)(cid:84)(cid:66)(cid:72)(cid:70)(cid:1)(cid:77)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:70)(cid:77)(cid:70)(cid:68)(cid:85)(cid:83)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:70)(cid:82)(cid:86)(cid:74)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)
(cid:51)(cid:70)(cid:69)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:66)(cid:68)(cid:85)(cid:1)(cid:69)(cid:70)(cid:78)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:85)(cid:1)(cid:44)(cid:66)(cid:79)(cid:75)(cid:86)(cid:83)(cid:78)(cid:66)(cid:83)(cid:72)(cid:1)(cid:41)(cid:86)(cid:67)(cid:13)
(cid:51)(cid:70)(cid:81)(cid:77)(cid:66)(cid:68)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:36)(cid:39)(cid:45)(cid:1)(cid:45)(cid:66)(cid:78)(cid:81)(cid:84)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:45)(cid:38)(cid:37)(cid:1)(cid:71)(cid:74)(cid:89)(cid:85)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:44)(cid:66)(cid:79)(cid:75)(cid:86)(cid:83)(cid:78)(cid:66)(cid:83)(cid:72)(cid:1)(cid:41)(cid:86)(cid:67)(cid:1)(cid:16)(cid:1)(cid:56)(cid:35)(cid:48)(cid:1)(cid:16)(cid:1)(cid:39)(cid:80)(cid:83)(cid:85)(cid:1)(cid:46)(cid:86)(cid:78)(cid:67)(cid:66)(cid:74)(cid:1)(cid:16)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:41)(cid:80)(cid:86)(cid:84)(cid:70)(cid:1)(cid:42)(cid:79)(cid:69)(cid:80)(cid:83)(cid:70)
(cid:49)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:45)(cid:38)(cid:37)(cid:1)(cid:77)(cid:66)(cid:78)(cid:81)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:67)(cid:83)(cid:66)(cid:79)(cid:68)(cid:73)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:71)(cid:71)(cid:74)(cid:68)(cid:70)(cid:84)
(cid:49)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:80)(cid:77)(cid:66)(cid:83)(cid:1)(cid:81)(cid:66)(cid:79)(cid:70)(cid:77)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:68)(cid:66)(cid:81)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:81)(cid:80)(cid:88)(cid:70)(cid:83)(cid:1)(cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:85)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:80)(cid:71)(cid:71)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:49)(cid:86)(cid:79)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:35)(cid:73)(cid:86)(cid:67)(cid:66)(cid:79)(cid:70)(cid:84)(cid:88)(cid:66)(cid:83)(cid:13)(cid:1)(cid:47)(cid:80)(cid:74)(cid:69)(cid:66)(cid:1)(cid:9)(cid:52)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:1)(cid:21)(cid:10)
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, it further extended the monitoring programme to an additional 500 branches across the country and the results have shown
power savings over 10%.
(B) Technology Absorption
Your Bank has been at the forefront of using technology absorption and evaluates innovative 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 ` 1,720.4 crores (on account of net gains arising on all exchange
/ derivative transactions) and the total foreign exchange outgo was ` 2,130.5 crores 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, Practicing Company Secretaries
had been appointed as Secretarial Auditors of the Bank for the financial year 2018-19. The report of the Secretarial Auditors is enclosed as
ANNEXURE 8 to this Report. There are no observations / qualifications / comments in the Report of the Secretarial Auditor.
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 the Corporate Governance Report
51
DIRECTORS' REPORT
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 Indian economy externally as well as internally. The good news is that despite the challenges of volatile oil
prices, trade wars, rising interest rates, and domestic uncertainties due to the impending general elections in India and slowing consumption
demand, India remained the world’s fastest growing economy. Your Bank which grew faster than the system in the year under review is well
poised to tap the opportunities of what is still an under penetrated market by leveraging its strong balance sheet and franchise.
As always, your Bank will continue to be judicious. It will continue 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 values, namely, Customer Focus, Operational Excellence, 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 to continue delivering sustainable growth to all its stakeholders.
On behalf of the Board of Directors
Mrs. Shyamala Gopinath
Chairperson
Mumbai, May 22, 2019
UPDATED STATEMENT
The Board of Directors of the Bank, had at its meeting dated March 7, 2019, approved the re-appointment of S.R. Batliboi & Co. LLP
(ICAI Firm Registration Number: 301003E/300005) as Statutory Auditors of the Bank for a period of 3 years from the conclusion of 25th Annual
General Meeting, subject to approval of the Reserve Bank of India (RBI) and the shareholders of the Bank. At the said meeting, the Board had
accordingly approved the Notice for 25th Annual General Meeting containing a Board recommended resolution for consideration of shareholders
for re-appointment of the said firm as Statutory Auditors along with the explanatory statement therefor, as also the Director’s Report. Thereafter
on June 03, 2019, RBI has issued a Press Release stating that in terms of RBI’s Enforcement Action Framework, RBI will not approve
S.R. Batliboi & Co. LLP, Chartered Accountants (ICAI Firm Registration Number: 301003E/300005) for carrying out statutory audit assignments
in commercial banks for one year starting from April 01, 2019. Consequently, the Bank was required to appoint a new statutory auditor with effect
from current Financial Year 2019-2020. As a result, pursuant to the recommendation of the Audit Committee of the Bank, the Board of Directors
vide their resolution dated June 7, 2019 and in supersession of their earlier resolution dated March 7, 2019, have approved the appointment of
MSKA & Associates, Chartered Accountants (ICAI Firm Registration No. 105047W) as Statutory Auditors for the Financial Years 2019-2020 to
2022-23, subject to the approval of the RBI and the shareholders of the Bank, and has accordingly approved the Notice for 25th Annual General
Meeting with a recommended resolution for appointment of the said firm as Statutory Auditors along with the explanatory statement therefor.
June 7, 2019
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
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By the order of the Board
Santosh Haldankar
Vice President- Legal
& Company Secretary
(Membership No. ACS 19201)
52
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, 2019
Schemes
Date of Share-
Total No
Exercise
Options
Options
Options
Options
Options
Options
Total
holders
of Options
Approval
Approved
Price (Rs)
FV ` 2/-
Face value of
` 2/- each
Opening
Granted /
balance
FV ` 2/-
Options
Re-instated
FV ` 2/-
Vested FV
` 2/-
Exercised &
forfeited
Lapsed
Options in
Shares
Allotted
of ` 2/-
Force as on
March 31,
2019
Plan-E-ESOS XIX
30th June, 2010
10,00,00,000
680.00
6,224,900
37,00,800
25,400
24,98,700
Plan D-ESOS XX
16th June, 2007
7,50,00,000
680.00
16,35,700
Plan C-ESOS XXI
17th June, 2005
5,00,00,000
680.00
31,41,500
9,75,800
16,60,500
6,59,900
14,81,000
Plan C-ESOS XXIII
17th June, 2005
5,00,00,000
835.50
1,20,000
62,600
1,000
56,400
Plan F-ESOS XXIV
27th June, 2013
10,00,00,000
835.50 1,70,32,350
66,79,250
12,600 1,03,40,500
Plan F-ESOS XXV
27th June, 2013
10,00,00,000
1,092.65 3,04,04,300
1,15,82,500
95,71,600
1,62,300
15,700 2,06,54,700
Plan F-ESOS XXVI
27th June, 2013
10,00,00,000
1,097.80
3,000
900
3,000
Plan F-ESOS XXVII
27th June, 2013
10,00,00,000
1,433.20 1,68,65,850
57,25,915
1,121,754 2,520,085
1,32,24,011
Plan F-ESOS XXVIII
27th June, 2013
10,00,00,000
1,462.15
16,200
6,500
16,200
Plan G-ESOS XXIX
21st July, 2016
10,00,00,000
2,061.20
1,91,19,000
5,23,000
1,85,96,000
Plan G-ESOS XXX
21st July, 2016
10,00,00,000
2,006.05
4,40,000
Plan G-ESOS XXXI
21st July, 2016
10,00,00,000
2,090.45
3,36,000
4,40,000
3,36,000
Total :-
7,54,43,800
1,98,95,000 1,73,15,815
2,37,72,304 32,05,385
54,700 6,83,06,411
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 (`)
53
2,37,72,304
47,544,608.00
21,960,605,639.80
9,592,626,161.00
31,600,776,408.80
DIRECTORS' REPORT
Note:
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 and uninterrupted employment of the Bank as on the date of vesting
and has fulfilled the performance criteria for the 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.
For options granted during the year, the options vested will lapse in case the same are not exercised
by the employee within 2 years from the date of vesting. Except in the case of death / permanent
disablement or retirement of the employee, all unvested options get forfeited on the employee’s last
working date in the Bank.
Source of shares
Primary
Variation in terms of ESOS
Nil
i.
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
Aditya Puri
Kaizad Bharucha
Abhay Aima
Arvind Kapil
Arvind Vohra
Ashima Bhat
Ashish Parthasarthy
Ashok Khanna
Benjamin Frank
Bhavesh Zaveri
Chakrapani Venkatachari
Dhiraj Relli (on deputation to HDFC Securities
Limited, the Bank’s subsidiary)
Jimmy Tata
Munish Mittal
Nirav Shah
Nitin Chugh
Parag Rao
Rahul Shukla
HDFC Bank Limited Annual Report 2018 - 2019
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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
54
4,92,000
1,71,000
1,62,000
1,18,000
1,55,000
1,14,000
1,62,000
64,000
1,14,000
1,62,000
1,38,000
1,14,000
1,62,000
1,18,000
1,18,000
1,14,000
1,18,000
1,62,000
DIRECTORS' REPORT
Sr. No. Employee Name
19
20
21
22
23
24
25
26
Rajesh Kumar R.
Rakesh K. Singh
S. Sampathkumar
Sashidhar Jagdishan
Smita Bhagat
Srinivasan Vaidyanathan
Vinay Razdan
Santosh Haldankar
Grade
Group Head
Group Head
Group Head
Chief Financial Officer
Group Head
Group Head
Group Head
Vice President (Legal) & Company Secretary
No. of options
1,14,000
1,38,000
61,000
1,62,000
1,14,000
1,55,000
1,55,000
13,000
ii. Other employees who receive a grant in any one year of options
None
amounting to 5 % or more of options granted during that year
iii. Identified employees who were granted options, during any
None
one year, equal to or exceeding 1 percent of the issued capital
(excluding outstanding warrants and conversions)
iv. Diluted Earnings Per Share (EPS) pursuant to the issue of shares
The diluted EPS of the Bank calculated after considering the effect
on exercise of option calculated in accordance with Accounting
Standard (AS) - 20 (Earnings Per Share)
of potential equity shares arising on account of exercise of options
is ` 77.9
v. 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
Had the Bank followed fair value method for accounting, the stock
option compensation expense would have been higher by ` 535.9
crore. Consequently, profit after tax would have been lower by
` 535.9 crore and the basic EPS of the Bank would have been
` 76.6 per share (lower by ` 2.0 per share) and the diluted EPS
would have been ` 75.9 per share (lower by ` 2.0 per share)
shall also be disclosed
vi. 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
The weighted average price of the stock options exercised is
` 925.8 and the weighted average fair value is ` 329.8
vii. A description of the method and significant assumptions used
The Securities and Exchange Board of India (SEBI) has prescribed
during the year to estimate the fair value of options, at the time of
two methods to account for stock grants; (i) the intrinsic value
grant including the following weighted average information:
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
55
DIRECTORS' REPORT
I. Risk-free interest rate
7.23 percent to 8.31 percent
II. Expected life
III. Expected volatility
IV. Expected dividends
1 to 6 years
14.53 percent to 18.68 percent
0.62 percent to 0.65 percent
V. The price of the underlying share in the market at the time of option
grant
The market price per share was ` 2061.20, ` 2006.05 and
` 2090.45 the time of grant of options under ESOS XXIX, ESOS XXX
and ESOS XXXI respectively.
VI. The weighted average market price of Bank’s shares on NSE at the
` 2066.01, ` 2002.53 and ` 2099.48 the time of grant of options
time of option grant
under ESOS XXIX, ESOS XXX and ESOS XXXI respectively.
VII. Method used and assumptions made to incorporate effects of
The exercise multiple, which is based on historical data of early
expected early exercise
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.
VIII. How expected volatility was determined, including explanation
Stock expected volatility is completely based on GARCH volatility
of the extent to which expected volatility was based on historical
forecasting model using historical stock prices from the market.
volatility
IX. Whether and how any other features of the option grant were
Stock price and risk free interest rate are variables based on actual
incorporated into the measurement of fair value, such as a market
market data at the time of ESOP valuation.
condition
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
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56
DIRECTORS' REPORT
ANNEXURE 2 to the Directors’ Report
1. Brief outline of the CSR Policy
HDFC Bank Annual CSR Report 2018–2019
The Bank’s CSR is implemented under the aegis of ‘Parivartan’ which is the umbrella brand for all the Bank’s social initiatives. Parivartan aims
to bring about a transformation in the communities in which the Bank operates through multiple initiatives in the areas of Education, Skill
training and Livelihood Enhancement, Health Care, Environmental Sustainability and Rural Development. The Bank’s programs are guided by
CSR Policy duly approved by the Board which is driven by the vision of “Creating Sustainable Communities”. The CSR policy and programs
are aligned to comply with the requirements of Section 135 of the Companies Act, 2013 and are monitored by a Board level committee.
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:116)(cid:1) (cid:46)(cid:83)(cid:15)(cid:1)(cid:54)(cid:78)(cid:70)(cid:84)(cid:73)(cid:1)(cid:36)(cid:73)(cid:66)(cid:79)(cid:69)(cid:83)(cid:66)(cid:1)(cid:52)(cid:66)(cid:83)(cid:66)(cid:79)(cid:72)(cid:74)(cid:13)(cid:1)(cid:36)(cid:73)(cid:66)(cid:74)(cid:83)(cid:78)(cid:66)(cid:79)(cid:1)(cid:9)(cid:42)(cid:79)(cid:69)(cid:70)(cid:81)(cid:70)(cid:79)(cid:69)(cid:70)(cid:79)(cid:85)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:10)
(cid:116)(cid:1) (cid:46)(cid:83)(cid:15)(cid:1)(cid:34)(cid:69)(cid:74)(cid:85)(cid:90)(cid:66)(cid:1)(cid:49)(cid:86)(cid:83)(cid:74)
(cid:116)(cid:1) (cid:46)(cid:83)(cid:15)(cid:1)(cid:46)(cid:66)(cid:77)(cid:66)(cid:90)(cid:1)(cid:49)(cid:66)(cid:85)(cid:70)(cid:77)(cid:1)(cid:9)(cid:42)(cid:79)(cid:69)(cid:70)(cid:81)(cid:70)(cid:79)(cid:69)(cid:70)(cid:79)(cid:85)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:10)
(cid:116)(cid:1) (cid:46)(cid:83)(cid:15)(cid:1)(cid:52)(cid:66)(cid:79)(cid:75)(cid:74)(cid:87)(cid:1)(cid:52)(cid:66)(cid:68)(cid:73)(cid:66)(cid:83)(cid:1)(cid:9)(cid:34)(cid:69)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:42)(cid:79)(cid:69)(cid:70)(cid:81)(cid:70)(cid:79)(cid:69)(cid:70)(cid:79)(cid:85)(cid:1)(cid:37)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:10)
3. Average net profit of the company for last three financial years
` 21,960.4 crore
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above)
` 439.2 crore
5. Details of CSR spent during the financial year
(cid:116)(cid:1) (cid:53)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:84)(cid:81)(cid:70)(cid:79)(cid:85)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:27)(cid:1)` 443.8 crore
(cid:116)(cid:1) (cid:34)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:86)(cid:79)(cid:84)(cid:81)(cid:70)(cid:79)(cid:85)(cid:13)(cid:1)(cid:74)(cid:71)(cid:1)(cid:66)(cid:79)(cid:90)(cid:27)(cid:1)` 0 crore
(cid:116)(cid:1) (cid:53)(cid:73)(cid:70)(cid:1)(cid:78)(cid:66)(cid:79)(cid:79)(cid:70)(cid:83)(cid:1)(cid:74)(cid:79)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:74)(cid:84)(cid:1)(cid:84)(cid:81)(cid:70)(cid:79)(cid:85)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:74)(cid:84)(cid:1)(cid:69)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:70)(cid:69)(cid:1)(cid:67)(cid:70)(cid:77)(cid:80)(cid:88)
Sr.
No.
CSR project/activity Sector (Schedule
VII)
Projects or
programs
1.Local area
or others
2.State and
district
Amount
outlay
(project-
wise)
(` crore)
Amount spent
(` crore)
1.Direct
expenditure
2.Overheads
(I)
(II)
(III)
(IV)
(V)
1 Promoting Education
Promotion of
Education
Pan India
48.52
2 Skill Training
and Livelihood
Enhancement
Skill development
and Vocational
Training
Pan India
24.45
(VI)
1) 3.70
2) 0.52
1) 4.01
2) 0.26
Cumulative
expenditure
up to
reporting
period
(` crore)
(VII)
148.44
102.68
57
Amount spent: Direct or
through *implementing
agency (`
crore)
(VIII)
Directly by the Bank:
Given in column (VI)
Implementing Agency: 44.30
Directly by the Bank:
Given in column (VI)
Implementing Agency: 20.18
DIRECTORS' REPORT
Sr.
No.
CSR project/activity Sector (Schedule
VII)
Projects or
programs
1.Local area
or others
2.State and
district
Amount
outlay
(project-
wise)
(` crore)
Amount spent
(` crore)
1.Direct
expenditure
2.Overheads
(I)
(II)
3 Health Care
4 Environmental
Sustainability
(III)
(IV)
(V)
Preventive and
Curative Healthcare
Pan India
17.34
Environment
Pan India
0.71
5 Eradicating Poverty
Eradicating poverty
Pan India
13.17
(VI)
1) 17.15
2) 0.19
1) 0.71
2) 0.01
1) 0
2) 0.14
Cumulative
expenditure
up to
reporting
period
(` crore)
(VII)
71.63
4.12
24.17
6 Rural Development
Rural Development
Projects
Pan India
339.59
1) 192.43
2) 3.63
1077.39
Amount spent: Direct or
through *implementing
agency (
` crore)
(VIII)
Directly by the Bank:
Given in column (VI)
Directly by the Bank: Given in
column (VI)
Directly by the Bank: Given in
column (VI)
Implementing Agency: 13.03
Directly by the Bank: Given in
column (VI)
Implementing Agency:143.52
*Details of the implementing agencies are listed below:
Promotion of Education: Banasthali Vidyapith, CBM India Trust, International Foundation for Research and Education, K. C. Mahindra Education
Trust , Magic Bus India Foundation, Meljol, Moinee, Save the Children India, Seva Sahayog Foundation, Sri Aurobindo Society, Teach to Lead;
Rural Development : Abhyuday Sansthan, Action for Agricultural Renewal in Maharashtra, Action For Food Production, Action for Social
Advancement, Aga Khan Foundation, Aga Khan Rural Support Programme India, Ambuja Cement Foundation, Anarde Foundation, AROH
Foundation, BAIF Development Research Foundation, Centre for Advance Research and Development, Collectives for Integrated Livelihood
Initiatives, Community Advancement & Rural Development Society, Family Health India, Foundation for Ecological Security, FXB India Suraksha,
Gram Vikas, Gramin Vikas Trust, Gramya Vikash Mancha, Haritika, Indo Global Social Service Society, Integrated Development Foundation,
KGVK, Krushi Vikas Va Gramin Prashikshan Sanstha, M.S. Swaminathan Research Foundation, MYRADA, Nav Bharat Jagriti Kendra, Network
For Enterprise Enhancement and Development Support, Participatory Action for Community Empowerment, Participatory Action for Community
Empowerment, Peoples Action for National Integration, Prayatn Sanstha, Professional Assistance for Development Action, S.M. Sehgal Foundation,
Sahbagi Shikshan Kendra, Sai Jyoti Gramodoyog Samaj Sewa Samiti, Sanjeevani Inst. for Empowerment & Development, Shikhar Yuva Manch,
Shramik Bharti, Society for Action in Community Health, Society for the Upliftment of Villagers & Development of Himalayan Areas (SUVIDHA),
Ugam Gramin Vikas Sanstha Umra, Vikas Sahyog Pratishthan, Vrutti, Watershed Organisation Trust, World Vision India, Yuva Rural Association;
Skills Training & Livelihood Enhancement: Access Development Services, Antarang Foundation, End Poverty, Friends Union for Energizing
Lives, Head Held High Foundation, Pan IIT Alumni Reach for India Foundation, Pratham Education Foundation, Pune City Connect Development
Foundation, Tata Institute of Social Sciences; Other Donations: Abhinav, Common Service Centre (CSC), Yuva Unstoppable, The Aangan 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
Mr. Umesh Chandra Sarangi
Chairman - CSR Committee
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
58
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
95.53
Radhika, 2nd Floor, Law Garden Road,
Navrangpura, Ahmedabad - 380 009.
2 HDFC Securities Limited
U67120MH2000PLC152193
Subsidiary
97.29
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
59
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
Percentage
Change
during the
year
(I)
(II)
Demat
Physical
Total
Percentage
of total
shares
Demat
Physical
Total
Percentage
of total
shares
(A)
Promoters
1
(a)
(b)
(c)
(d)
(e)
(f)
2
(a)
(b)
(c)
(d)
(e)
(f)
Indian
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
Foreign
NRIs - Individuals
Other - Individuals
Bodies Corporate
Banks / FI
Qualified Foreign Investor
Any Other (specify)
Sub Total (A)(2)
0
0
0
0
0
0
0
Total Shareholding
543,216,100
of Promoter and
Promoter Group
(A)=(A)(1)+(A)(2)
(B)
Public shareholding
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
20.93#
582,312,917
0
0
0.00
0.00
0
0
543,216,100
20.93
582,312,917
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
20.93
582,312,917
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
582,312,917
21.38
0
0
0.00
0.00
582,312,917
21.38
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
0.45
0.00
0.00
0.45
0.00
0.00
0.00
0.00
0.00
0.00
0.00
582,312,917
21.38
0.45
1
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Institutions
Mutual Funds
256,405,086
2,000
256,407,086
9.88
292,857,184
2,000
292,859,184
10.75
0.87
Banks / FI
2,962,278
8,115
2,970,393
2,732,591
8,105
2,740,696
Central Government
2,784,112
State Government(s)
Venture Capital Funds
0
0
Insurance Companies
56,983,145
0
0
0
0
2,784,112
0
0
0.11
0.11
0.00
0.00
4,341,880
0
0
0
0
0
0
4,341,880
0
0
60,886,798
0.10
0.16
0.00
0.00
2.24
-0.01
0.05
0.00
0.00
0.04
56,983,145
2.20
60,886,798
FIIs
857,889,653
2,000
857,891,653
33.06
850,769,414
2,000
850,771,414
31.24
-1.82
Foreign Venture Capital
Funds
(i)
Qualified Foreign Investor
0
0
0
0
0
0
0.00
0.00
0
0
0
0
0
0
0.00
0.00
0.00
0.00
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
60
DIRECTORS' REPORT
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
(I)
(j)
Alternate Investment
1,443,123
Funds
(k)
Other (specify)
0
0
0
1,443,123
0.06
4,204,026
0
0.00
1056
0
0
4,204,026
0.15
0.10
1,056
0.00
0.00
Sub Total (B)(1)
1,178,467,397
12,115 1,178,479,512
45.41 1,215,792,949
12,105 1,215,805,054
44.64
-0.77
2
(a)
Non-institutions
Bodies Corporate
0
0
0
0.00
0
0
0
(a)(i)
Indian
152,990,372
121,430
153,111,802
5.90
148,783,648
110,920
148,894,568
(a)(ii)
Overseas
(b)
Individuals
0
0
270
0
270
0
0.00
0.00
0
0
270
0
270
0
(b)(i)
Individuals -
158,476,509 13,810,769
172,287,278
6.64
165,544,268 9,714,018
175,258,286
0.00
5.47
0.00
0.00
6.44
0.00
-0.43
0.00
0.00
-0.20
shareholders holding
nominal share capital up
to ` 1 Lakh
(b)(ii)
Individual shareholders
61,550,251
191,000
61,741,251
2.38
63,168,012
113,000
63,281,012
2.32
-0.06
holding nominal share
capital in excess of
` 1 Lakh
(c)
(d)
d-i
Qualified Foreign Investor
0
Other (specify)
2,762,224
0
0
0
2,762,224
NRI Rep
1,990,585
38,385
2,028,970
d-ii
NRI Non -Rept
8,471,200
1,925
8,473,125
d-iii
Foreign Bodies
d-iv
Foreign National
0
1,588
0
0
0
1,588
0.00
0.11
0.08
0.33
0.00
0.00
0
2,757,539
0
0
0
2,757,539
1,946,790
33,380
1,980,170
7,524,679
2,080
7,526,759
0
1,888
0
0
0
1,888
0.00
0.10
0.07
0.28
0.00
0.00
0.00
-0.01
-0.01
-0.05
0.00
0.00
Sub Total (B)(2)
386,242,729 14,163,779
400,406,508
15.43
389,726,824 9,973,668
399,700,492
14.68
-0.75
Total Public
Shareholding
(B)=(B)(1)+(B)(2)
1,564,710,126 14,175,894 1,578,886,020
60.84 1,605,519,773 9,985,773 1,615,505,546
59.32
-1.52
Total (A+B)
2,107,926,226 14,175,894 2,122,102,120
81.77 2,187,832,690 9,985,773 2,197,818,463
80.70
-1.07
(C)
Custodians for GDRs
472,988,147
0
472,988,147
18.23
525,488,147
0
525,488,147
19.30
1.07
and ADRs
GRAND TOTAL (A)+(B)+(C) 2,580,914,373 14,175,894 2,595,090,267
100.00 2,713,320,837 9,985,773 2,723,306,610
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 26.50% of Bank’s share capital.
61
DIRECTORS' REPORT
(ii) Shareholding of Promoters
Shareholder’s Name
Sr.
No.
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
39,32,11,100
15.15
0.00 43,23,07,917
15.87
FINANCE CORPORATION LIMITED
2 HDFC INVESTMENTS LIMITED
15,00,00,000
3 HDFC HOLDINGS LIMITED
Total
5,000
54,32,16,100
5.78
0.00
20.93
0.00 15,00,00,000
0.00
5,000
0.00 58,23,12,917
5.51
0.00
21.38
0.00
0.00
0.00
0.00
0.72
(0.27)
0.00
0.45
(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
Date wise Increase / Decrease in Promoters
shareholding during the year specifying the reasons
for increase/ decrease (e.g. allotment / transfer /
bonus / sweat / equity etc.)
Increase during the year (Allotment of Equity
Shares to HDFC Limited on preferential basis on
July 17, 2018)
At the end of the year
54,32,16,100
3,90,96,817
20.93
1.48
58,23,12,917
22.41**
58,23,12,917
21.38**
**
In addition to the preferential allotment to HDFC Limited, the change in percentage to share capital is also on account of issuance and
allotment of additional equity shares under the QIP Issue, ADR Issue and upon exercise of equity stock options by the employees.
(iv) Shareholding Pattern of top ten shareholders (other than directors, promoters and holders of GDRs and ADRs):
Name
Sr.
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 Europacific Growth Fund
At the beginning of the Year 31-Mar-2018
98,865,874
3.81
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
06-Apr-2018
1,525,637
0.06 100,391,511
13-Apr-2018
2,880,742
0.11 103,272,253
20-Apr-2018
1,286,742
0.05 104,558,995
27-Apr-2018
04-May-2018
18-May-2018
25-May-2018
08-Jun-2018
23-Nov-2018
467,063
312,565
450,815
313,758
933,268
540,000
0.02 105,026,058
0.01 105,338,623
0.02 105,789,438
0.01 106,103,196
0.04 107,036,464
0.02 107,576,464
30-Nov-2018
2,138,440
0.08 109,714,904
3.87
3.98
4.03
4.04
4.06
4.07
4.09
4.11
3.96
4.04
62
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
DIRECTORS' REPORT
Name
Sr.
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
07-Dec-2018
1,143,229
0.04 110,858,133
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
14-Dec-2018
28-Dec-2018
11-Jan-2019
18-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
28,833
40,381
10,752
11,399
163,966
994,043
30,000
35,957
0.00 110,886,966
0.00 110,927,347
0.00 110,938,099
0.00 110,949,498
0.01 111,113,464
0.04 112,107,507
0.00 112,137,507
0.00 112,173,464
112,173,464
At the END of the Year
30-Mar-2019
2 SBI-ETF NIFTY 50
At the beginning of the Year 31-Mar-2018
44,994,003
1.73
Increase
Increase
Increase
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
06-Apr-2018
13-Apr-2018
20-Apr-2018
337,541
272,039
114,601
0.01 45,331,544
0.01 45,603,583
0.00 45,718,184
27-Apr-2018
(706,686)
(0.03) 45,011,498
04-May-2018
703281
0.03 45,714,779
11-May-2018
(295,590)
(0.01) 45,419,189
18-May-2018
25-May-2018
01-Jun-2018
539,499
(274,265)
(544,744)
0.02 45,958,688
(0.01) 45,684,423
(0.02) 45,139,679
08-Jun-2018
1,086,823
0.04 46,226,502
15-Jun-2018
22-Jun-2018
75,840
(73,549)
0.00 46,302,342
(0.00) 46,228,793
29-Jun-2018
(2,102,749)
(0.08) 44,126,044
06-Jul-2018
1,866,752
0.07 45,992,796
13-Jul-2018
16-Jul-2018
(69,482)
35,818
(0.00) 45,923,314
0.00 45,959,132
17-Jul-2018
(171,993)
(0.01) 45,787,139
20-Jul-2018
(1,044,625)
(0.04) 44,742,514
27-Jul- 2018
(478,911)
(0.02) 44,263,603
01-Aug-2018
231,450
0.01 44,495,053
03-Aug-2018
2,490,427
0.09 46,985,480
10-Aug-2018
(296,515)
(0.01) 46,688,965
17-Aug-2018
24-Aug-2018
66,969
29,449
0.00 46,755,934
0.00 46,785,383
31-Aug-2018
(571,800)
(0.02) 46,213,583
07-Sep-2018
2,608,458
0.10 48,822,041
14-Sep-2018
21-Sep-2018
28-Sep-2018
236,385
200,560
297213
0.01 49,058,426
0.01 49,258,986
0.01 49,556,199
05-Oct-2018
1,533,994
0.06 51,090,193
63
4.08
4.08
4.08
4.08
4.08
4.08
4.12
4.12
4.12
4.12
1.75
1.76
1.76
1.73
1.76
1.75
1.77
1.76
1.73
1.78
1.78
1.78
1.69
1.77
1.76
1.77
1.73
1.69
1.68
1.68
1.73
1.72
1.73
1.72
1.70
1.80
1.81
1.81
1.82
1.88
DIRECTORS' REPORT
Name
Sr.
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
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
12-Oct-2018
19-Oct-2018
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
16-Nov-2018
298,049
(94,981)
293,655
704,906
703,107
177,085
230,729
0.01
51388,242
0.00 51,293,261
0.01 51,586,916
0.03 52,291,822
0.03 52,994,929
0.01 53,172,014
0.01 53,402,743
23-Nov-2018
1,095,560
0.04 54,498,303
30-Nov-2018
(390,469)
(0.01) 54,107,834
07-Dec-2018
79,206
0.00 54,187,040
14-Dec-2018
(160,447)
(0.01) 54,026,593
21-Dec-2018
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
159,078
102,597
64,957
863,631
514,347
239,293
324,778
361,948
513,183
135,843
211,601
257,557
413,004
519,405
0.01 54,185,671
0.00 54,288,268
0.00 54,353,225
0.03 55,216,856
0.02 55,731,203
0.01 55,970,496
0.01 56,295,274
0.01 56,657,222
0.02 57,170,405
0.01 57,306,248
0.01 57,517,849
0.01 57,775,406
0.02 58,188,410
0.02 58,707,815
22-Mar-2019
1,364,705
0.05 60,072,520
29-Mar-2019
307,024
0.01 60,379,544
3 LIFE INSURANCE CORPORATION
At the beginning of the Year 31-Mar-2018
51,535,018
1.99
At the END of the Year
30-Mar-2019
60,379,544
OF INDIA
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
21-Sep-2018
28-Sep-2018
05-Oct-2018
197,760
970,075
618,164
0.01 51,732,778
0.04 52,702,853
0.02 53,321,017
12-Oct-2018
1,007,401
0.04 54,328,418
19-Oct-2018
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
6,600
343,650
198,377
220,278
525,273
194,068
0.00
54335,018
0.01 54,678,668
0.01 54,877,045
0.01 55,097,323
0.02 55,622,596
0.01 55,816,664
55,816,664
At the END of the Year
30-Mar-2019
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
64
1.89
1.89
1.90
1.92
1.95
1.96
1.97
2.01
1.99
1.99
1.99
1.99
2.00
2.00
2.03
2.05
2.06
2.07
2.08
2.10
2.11
2.11
2.12
2.14
2.16
2.21
2.22
2.22
1.91
1.94
1.96
2.00
2.00
2.01
2.02
2.03
2.05
2.05
2.05
DIRECTORS' REPORT
Name
Sr.
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 ICICI PRUDENTIAL LIFE
INSURANCE COMPANY LIMITED
At the beginning of the Year 31-Mar-2018
06-Apr-2018
13-Apr-2018
20-Apr-2018
27-Apr-2018
04-May-2018
11-May-2018
18-May-2018
25-May-2018
01-Jun-2018
08-Jun-2018
15-Jun-2018
22-Jun-2018
29-Jun-2018
06-Jul-2018
13-Jul-2018
16-Jul-2018
17-Jul-2018
20-Jul-2018
27-Jul-2018
01-Aug-2018
03-Aug-2018
10-Aug-2018
17-Aug-2018
24-Aug-2018
31-Aug-2018
07-Sep-2018
14-Sep-2018
21-Sep-2018
28-Sep-2018
05-Oct-2018
12-Oct-2018
19-Oct-2018
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
16-Nov-2018
23-Nov-2018
30-Nov-2018
07-Dec-2018
14-Dec-2018
21-Dec-2018
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Decrease
Increase
Decrease
Increase
32,162,374
109,744
6,153
106,421
(553,246)
153,320
(161,809)
(146,226)
(592,019)
27,057
(38,665)
268,262
(452,182)
(929,510)
459,212
(48,579)
120,091
(40,262)
(173,905)
(1,534,180)
400,000
618,657
(87,548)
(66,431)
(4,730)
196,229
656,186
(442,553)
(404,163)
195,598
964,030
(225298)
224,946
(134,250)
141,922
(407,584)
377,594
62,809
(46,766)
(207,969)
168,474
(193,397)
229,256
65
1.24
0.00 32,272,118
0.00 32,278,271
0.00 32,384,692
(0.02) 31,831,446
0.01 31,984,766
(0.01) 31,822,957
(0.01) 31,676,731
(0.02) 31,084,712
0.00 31,111,769
0.00 31,073,104
0.01 31,341,366
(0.02) 30,889,184
(0.04) 29,959,674
0.02 30,418,886
0.00 30,370,307
0.01 30,490,398
0.00 30,450,136
(0.01) 30,276,231
(0.06) 28,742,051
0.02 29,142,051
0.02 29,760,708
0.00 29,673,160
0.00 29,606,729
0.00 29,601,999
0.01 29,798,228
0.02 30,454,414
(0.02) 30,011,861
(0.02) 29,607,698
0.01 29,803,296
0.04 30,767,326
(0.01) 30,542,028
0.01 30,766,974
(0.01) 30,632,724
0.01 30,774,646
(0.02) 30,367,062
0.01 30,744,656
0.00 30,807,465
0.00 30,760,699
(0.01) 30,552,730
0.01 30,721,204
(0.01) 30,527,807
0.01 30,757,063
1.24
1.24
1.25
1.23
1.23
1.23
1.22
1.20
1.20
1.19
1.20
1.19
1.15
1.17
1.17
1.17
1.15
1.15
1.09
1.10
1.10
1.10
1.09
1.09
1.10
1.12
1.11
1.09
1.10
1.13
1.12
1.13
1.13
1.13
1.12
1.13
1.13
1.13
1.12
1.13
1.12
1.13
DIRECTORS' REPORT
Name
Sr.
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
5 HDFC TRUSTEE COMPANY LTD -
A/C HDFC HYBRID EQUITY FUND
Decrease
Increase
Increase
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
At the END of the Year
At the beginning of the Year
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
22-Mar-2019
29-Mar-2019
30-Mar-2019
31-Mar-2018
06-Apr-2018
13-Apr-2018
20-Apr-2018
27-Apr-2018
04-May-2018
11-May-2018
18-May-2018
25-May-2018
01-Jun-2018
08-Jun-2018
15-Jun-2018
22-Jun-2018
29-Jun-2018
06-Jul-2018
13-Jul-2018
16-Jul-2018
17-Jul-2018
20-Jul-2018
27-Jul-2018
03-Aug-2018
10-Aug-2018
17-Aug-2018
24-Aug-2018
31-Aug-2018
07-Sep-2018
14-Sep-2018
21-Sep-2018
(23,261)
16,712
500,225
(113,766)
(210,848)
351,484
(692,701)
350,905
(151,689)
(284,867)
222,394
352,531
213,786
(187,200)
(154,328)
32,557,853
31,521
(4,657)
65,636
(1,720)
(175,562)
(175,205)
(217,879)
(353,980)
(596,881)
(825,512)
(342,845)
(550,579)
(112,814)
(785,593)
(77,882)
378
219
2112
(8,321)
(220,232)
1,977
3,728
77,821
32,228
(202,483)
135,654
105,427
0.00 30,733,802
0.00 30,750,514
0.02 31,250,739
0.00 31,136,973
(0.01) 30,926,125
0.01 31,277,609
(0.03) 30,584,908
0.01 30,935,813
(0.01) 30,784,124
(0.01) 30,499,257
0.01 30,276,863
0.01 30,629,394
0.01 30,843,180
(0.01) 30,655,980
(0.01) 30,501,652
30,501,652
1.26
0.00 32,589,374
0.00 32,584,717
0.00 32,650,353
0.00 32,648,633
(0.01) 32,473,071
(0.01) 32,297,866
(0.01) 32,079,987
(0.01) 31,726,007
(0.02) 31,129,126
(0.03) 30,303,614
(0.01) 29,960,769
(0.02) 29,410,190
0.00 29,297,376
(0.03) 28,511,783
0.00 28,433,901
0.00 28,434,279
0.00 28,434,498
0.00 28,436,610
0.00 28,428,289
(0.01) 28,208,057
0.00 28,210,034
0.00 28,213,762
0.00 28,291,583
0.00 28,323,811
(0.01) 28,121,328
0.01 28,256,982
0.00 28,362,409
1.13
1.13
1.15
1.15
1.14
1.15
1.12
1.14
1.13
1.12
1.11
1.13
1.13
1.13
1.12
1.12
1.26
1.26
1.26
1.26
1.25
1.24
1.24
1.22
1.20
1.16
1.15
1.13
1.13
1.10
1.09
1.09
1.08
1.08
1.07
1.04
1.04
1.04
1.04
1.04
1.04
1.04
1.05
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
66
DIRECTORS' REPORT
Name
Sr.
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
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
At the END of the Year
28-Sep-2018
05-Oct-2018
12-Oct-2018
19-Oct-2018
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
16-Nov-2018
23-Nov-2018
30-Nov-2018
07-Dec-2018
14-Dec-2018
21-Dec-2018
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
22-Mar-2019
29-Mar-2019
30-Mar-2019
At the beginning of the Year 31-Mar-2018
06-Apr-2018
04-May-2018
25-May-2018
01-Jun-2018
08-Jun-2018
15-Jun-2018
22-Jun-2018
29-Jun-2018
06-Jul-2018
13-Jul-2018
17-Jul-2018
20-Jul-2018
27-Jul-2018
03-Aug-2018
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Increase
161,386
28,436
(76,769)
336,243
7,438
315,160
174,932
32,318
76,063
2,688
(248,685)
7,719
633,251
4,451
9,329
4,650
71,366
38,342
26,354
4,108
10,464
(42,656)
(36,031)
8,103
(260,907)
766
104,756
3,487
24,395
28,625,304
(44,995)
3,726
11,856
(591,863)
202,487
30,000
34,425
5,990
42,446
21,742
(17,578)
(9,656)
(1,398)
68,467
0.01 28,523,795
0.00 28,552,231
0.00 28,475,462
0.01 28,811,705
0.00 28,819,143
0.01 29,134,303
0.01 29,309,235
0.00 29,341,553
0.00 29,417,616
0.00 29,420,304
(0.01) 29,171,619
0.00 29,179,338
0.02 29,812,589
0.00 29,817,040
0.00 29,826,369
0.00 29,831,019
0.00 29,902,385
0.00 29,940,727
0.00 29,967,081
0.00 29,971,189
0.00 29,981,653
0.00 29,938,997
0.00 29,902,966
0.00 29,911,069
(0.01) 29,650,162
0.00 29,650,928
0.00 29,755,684
0.00 29,759,171
0.00 29,783,566
29,783,566
1.10
0.00 28,580,309
0.00 28,584,035
0.00 28,595,891
(0.02) 28,004,028
0.01 28,206,515
0.00 28,236,515
0.00 28,270,940
0.00 28,276,930
0.00 28,319,376
0.00 28,341,118
0.00 28,323,540
0.00 28,313,884
0.00 28,312,486
0.00 28,380,953
1.05
1.05
1.05
1.06
1.06
1.07
1.08
1.08
1.08
1.08
1.07
1.07
1.10
1.10
1.10
1.10
1.10
1.10
1.10
1.10
1.10
1.10
1.10
1.10
1.09
1.09
1.09
1.09
1.09
1.09
1.10
1.10
1.10
1.08
1.08
1.09
1.09
1.09
1.09
1.09
1.07
1.07
1.07
1.05
67
6 Government Of Singapore
DIRECTORS' REPORT
Name
Sr.
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
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
At the END of the Year
24-Aug-2018
31-Aug-2018
07-Sep-2018
14-Sep-2018
21-Sep-2018
28-Sep-2018
12-Oct-2018
26-Oct-2018
09-Nov-2018
16-Nov-2018
30-Nov-2018
14-Dec-2018
28-Dec-2018
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
15-Mar-2019
29-Mar-2019
30-Mar-2019
At the beginning of the Year 31-Mar-2018
06-Apr-2018
13-Apr-2018
20-Apr-2018
27-Apr-2018
04-May-2018
11-May-2018
18-May-2018
25-May-2018
01-Jun-2018
08-Jun-2018
15-Jun-2018
22-Jun-2018
20-Jul-2018
27-Jul-2018
01-Aug-2018
03-Aug-2018
10-Aug-2018
17-Aug-2018
24-Aug-2018
31-Aug-2018
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Decrease
11,376
(231,825)
(116,783)
(965,366)
(354699)
(104,864)
(113,043)
10,055
48,683
125,757
98,306
4,082
19,142
(141,574)
92,091
20,823
(283,029)
4,441
55,714
124,615
22,238
727,757
103,975
21,133,191
(2,000)
230,000
12,237
250,000
323,300
70,000
200,000
920,984
68,200
274,489
(222,500)
66,100
(2,904)
100,000
1,851,850
(101,946)
62,494
828
55,278
(30,000)
0.00 28,392,329
(0.01) 28,160,504
0.00 28,043,721
(0.04) 27,078,355
(0.01) 26,723,656
0.00 26,618,792
0.00 26,505,749
0.00 26,515,804
0.00 26,564,487
0.01 26,690,244
0.00 26,788,550
0.00 26,792,632
0.00 26,811,774
(0.01) 26,670,200
0.00 26,762,291
0.00 26,783,114
(0.01) 26,500,085
0.00 26,504,526
0.00 26,560,240
0.01 26,684,855
0.00 26,707,093
0.03 27,434,850
0.00 27,538,825
27,538,825
0.81
0.00 21,131,191
0.01 21,361,191
0.00 21,373,428
0.01 21,623,428
0.01 21,946,728
0.00 22,016,728
0.01 22,216,728
0.04 23,137,712
0.00 23,205,912
0.01 23,480,401
0.01 23,257,901
0.00 23,324,001
0.00 23,321,097
0.00 23,421,097
0.07 25,272,947
0.00 25,171,001
0.00 25,233,495
0.00 25,234,323
0.00 25,289,601
0.00 25,259,601
1.05
1.04
1.03
1.00
0.98
0.98
0.98
0.98
0.98
0.98
0.99
0.99
0.99
0.98
0.98
0.98
0.97
0.97
0.98
0.98
0.98
1.01
1.01
1.01
0.81
0.82
0.82
0.83
0.85
0.85
0.86
0.89
0.89
0.90
0.89
0.90
0.88
0.89
0.95
0.93
0.93
0.93
0.93
0.93
7 ADITYA BIRLA SUN LIFE
TRUSTEE PRIVATE LIMITED
A/C ADITYA BIRLA SUN LIFE
FRONTLINE EQUITY FUND
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
68
DIRECTORS' REPORT
Name
Sr.
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
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Decrease
At the END of the Year
07-Sep-2018
14-Sep-2018
28-Sep-2018
12-Oct-2018
19-Oct-2018
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
23-Nov-2018
30-Nov-2018
07-Dec-2018
14-Dec-2018
21-Dec-2018
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
22-Mar-2019
29-Mar-2019
30-Mar-2019
At the beginning of the Year 31-Mar-2018
06-Apr-2018
13-Apr-2018
20-Apr-2018
27-Apr-2018
04-May-2018
11-May-2018
18-May-2018
25-May-2018
01-Jun-2018
08-Jun-2018
15-Jun-2018
22-Jun-2018
29-Jun-2018
06-Jul-2018
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
250,000
396,000
7,000
596,000
50,000
20,556
33,300
93,500
427,232
(140,000)
(43,500)
(8,000)
3,000
52,768
(76,362)
(500)
173,000
45,000
(50,000)
22,250
(22,250)
(39,425)
56,150
(239,550)
(1,400)
(127,207)
3,533
(42,559)
25,072,466
363,455
(70,405)
(83,166)
(455,936)
115,619
702,935
(302,167)
(165,768)
(21,000)
(2,783,183)
(70,111)
(579,979)
(24,653)
147,698
0.01 25,509,601
0.02 25,905,601
0.00 25,912,601
0.02 26,508,601
0.00 26,558,601
0.00 26,579,157
0.00 26,612,457
0.00 26,705,957
0.02 27,133,189
(0.01) 26,993,189
0.00 26,949,689
0.00 26,941,689
0.00 26,944,689
0.00 26,997,457
0.00 26,921,095
0.00 26,920,595
0.01 27,093,595
0.00 27,138,595
0.00 27,088,595
0.00 27,110,845
0.00 27,088,595
0.00 27,049,170
0.00 27,105,320
(0.01) 26,865,770
0.00 26,864,370
(0.01) 26,737,163
0.00 26,740,696
0.00 26,698,137
26,698,137
0.97
0.01 25,435,921
0.00 25,365,516
0.00 25,282,350
(0.02) 24,826,414
0.00 24,942,033
0.03 25,644,968
(0.01) 25,342,801
(0.01) 25,177,033
0.00 25,156,033
(0.11) 22,372,850
0.00 22,302,739
(0.02) 21,722,760
0.00 21,698,107
0.01 21,845,805
0.94
0.95
0.95
0.98
0.98
0.98
0.98
0.98
1.00
0.99
0.99
0.99
0.99
0.99
0.99
0.99
1.00
1.00
1.00
1.00
1.00
0.99
1.00
0.99
0.99
0.98
0.98
0.98
0.98
0.98
0.98
0.97
0.96
0.96
0.99
0.98
0.97
0.97
0.86
0.86
0.83
0.83
0.84
69
8 RELIANCE CAPITAL TRUSTEE CO
LTD A/C RELIANCE ETF - BANK
BEES INVESTMENT A/C
DIRECTORS' REPORT
Name
Sr.
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
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Decrease
At the END of the Year
13-Jul-2018
16-Jul-2018
17-Jul-2018
20-Jul-2018
27-Jul-2018
01-Aug-2018
03-Aug-2018
10-Aug-2018
17-Aug-2018
24-Aug-2018
31-Aug-2018
07-Sep-2018
14-Sep-2018
21-Sep-2018
28-Sep-2018
05-Oct-2018
12-Oct-2018
19-Oct-2018
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
16-Nov-2018
23-Nov-2018
30-Nov-2018
07-Dec-2018
14-Dec-2018
21-Dec-2018
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
22-Mar-2019
29-Mar-2019
30-Mar-2019
(510,797)
21,609
15,549
(160,108)
192,656
810,150
(129,960)
315,046
526,551
88,050
962,462
1,448,769
299,434
20,627
314,885
(495,469)
(967,952)
27,139
(275,292)
854,966
(135,586)
352,321
(44,462)
(824,213)
(186,524)
(29,268)
339,225
(391,341)
55,434
25,815
170,774
497,870
110,196
120,246
1,039,814
(436,981)
602,825
168,036
(14,849)
147,947
16,807
48,013
(775,427)
(0.02) 21,335,008
0.00 21,356,617
0.00 21,372,166
(0.01) 21,212,058
0.01 21,404,714
0.03 22,214,864
(0.01) 22,084,904
0.01 22,399,950
0.02 22,926,501
0.00 23,014,551
0.04 23,977,013
0.05 25,425,782
0.01 25,725,216
0.00 25,745,843
0.01 26,060,728
(0.02) 25,565,259
(0.04) 24,597,307
0.00 24,624,446
(0.01) 24,349,154
0.03 25,204,120
(0.01) 25,068,534
0.01 25,420,855
0.00 25,376,393
(0.03) 24,552,180
(0.01) 24,365,656
0.00 24,336,388
0.01 24,675,613
(0.01) 24,284,272
0.00 24,339,706
0.00 24,365,521
0.01 24,536,295
0.02 25,034,165
0.00 25,144,361
0.00 25,264,607
0.04 26,304,421
(0.02) 25,867,440
0.02 26,470,265
0.01 26,638,301
0.00 26,623,452
0.01 26,771,399
0.00 26,788,206
0.00 26,836,219
(0.03) 26,060,792
26,060,792
0.82
0.82
0.81
0.80
0.81
0.84
0.82
0.83
0.85
0.85
0.88
0.94
0.95
0.95
0.96
0.94
0.91
0.91
0.90
0.93
0.92
0.94
0.93
0.90
0.90
0.90
0.91
0.89
0.90
0.90
0.90
0.92
0.93
0.93
0.97
0.95
0.97
0.98
0.98
0.98
0.98
0.99
0.96
0.96
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
70
DIRECTORS' REPORT
Name
Sr.
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 KOTAK BANKING ETF
At the beginning of the Year 31-Mar-2018
16,451,543
0.63
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
06-Apr-2018
(362,610)
(0.01) 16,088,933
13-Apr-2018
20-Apr-2018
(9,513)
13,092
0.00 16,079,420
0.00 16,092,512
27-Apr-2018
(315,704)
(0.01) 15,776,808
04-May-2018
11-May-2018
18-May-2018
25-May-2018
01-Jun-2018
423,385
431,622
621,053
(19,310)
100,054
0.02 16,200,193
0.02 16,631,815
0.02 17,252,868
0.00 17,233,558
0.00 17,333,612
08-Jun-2018
(3,17,640)
(0.01) 17,015,972
15-Jun-2018
22-Jun-2018
29-Jun-2018
06-Jul-2018
13-Jul-2018
20-Jul-2018
27-Jul-2018
01-Aug-2018
03-Aug-2018
10-Aug-2018
322,193
143,092
(76,402)
12,309
(42,796)
72,178
59,783
347,200
139,430
243,936
0.01 17,338,165
0.01 17,481,257
0.00 17,404,855
0.00 17,417,164
0.00 17,374,368
0.00 17,446,546
0.00
17506,329
0.01 17,853,529
0.01 17,992,959
0.01 18,236,895
Decrease
17-Aug-2018
(409,813)
(0.02) 17,827,082
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Increase
24-Aug-2018
31-Aug-2018
07-Sep-2018
14-Sep-2018
21-Sep-2018
28-Sep-2018
19,672
694,641
43,878
23,726
31,372
66,138
0.00 17,846,754
0.03 18,541,395
0.00 18,585,273
0.00 18,608,999
0.00 18,640,371
0.00 18,706,509
05-Oct-2018
892,308
0.03 19,598,817
12-Oct-2018
19-Oct-2018
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
4,854
474,971
18,986
406,387
416,875
(20,116)
0.00 19,603,671
0.02 20,078,642
0.00 20,097,628
0.02 20,504,015
0.02 20,920,890
0.00 20,900,774
16-Nov-2018
(656,651)
(0.02) 20,244,123
23-Nov-2018
(749,756)
(0.03) 19,494,367
30-Nov-2018
(387,142)
(0.01) 19,107,225
07-Dec-2018
124,790
0.01 19,232,015
71
0.62
0.62
0.62
0.61
0.62
0.64
0.66
0.66
0.67
0.65
0.67
0.67
0.67
0.67
0.67
0.66
0.66
0.67
0.66
0.67
0.66
0.66
0.68
0.69
0.69
0.69
0.69
0.72
0.72
0.74
0.74
0.75
0.77
0.77
0.75
0.72
0.70
0.71
DIRECTORS' REPORT
Name
Sr.
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
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
14-Dec-2018
21-Dec-2018
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
22-Mar-2019
53,506
19,454
394,51
(1,477)
20,651
90,001
51405
152,509
284,741
78,249
537,457
20,964
33,105
426,789
73,579
(48,407)
0.00 19,285,521
0.00 19,304,975
0.00 19,344,426
0.00 19,342,949
0.00 19,363,600
0.00 19,453,601
0.00 19,505,006
0.01
19657,515
0.01 19,942,256
0.00 20,020,505
0.02 20,557,962
0.00 20,578,926
0.00 20,612,031
0.02 21,038,820
0.00 21,112,399
0.00 21,063,992
29-Mar-2019
(892,682)
(0.03) 20,171,310
10 UTI - NIFTY EXCHANGE TRADED
At the beginning of the Year 31-Mar-2018
16,982,626
0.65
At the END of the Year
30-Mar-2019
20,171,310
FUND
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
Decrease
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
06-Apr-2018
13-Apr-2018
20-Apr-2018
72170
(40762)
74,999
0.00 17,054,796
0.00 17,014,034
0.00 17,089,033
27-Apr-2018
(46,950)
0.00 17,042,083
04-May-2018
11-May-2018
18-May-2018
25-May-2018
23,203
84,817
(18,582)
69,853
0.00 17,065,286
0.00 17,150,103
0.00 17,131,521
0.00 17,201,374
01-Jun-2018
(227,335)
(0.01) 16,974,039
08-Jun-2018
(64,619)
0.00 16,909,420
15-Jun-2018
22-Jun-2018
29-Jun-2018
06-Jul-2018
13-Jul-2018
16-Jul-2018
17-Jul-2018
42,908
25,181
(69,427)
88,958
(57,620)
8,403
6,974
0.00 16,952,328
0.00 16,977,509
0.00 16,908,082
0.00 16,997,040
0.00 16,939,420
0.00 16,947,823
0.00 16,954,797
20-Jul-2018
(89,178)
0.00 16,865,619
27-Jul-2018
03-Aug-2018
50,129
23,801
0.00 16,915,748
0.00 16,939,549
72
0.71
0.71
0.71
0.71
0.71
0.72
0.72
0.72
0.73
0.74
0.76
0.76
0.76
0.77
0.78
0.77
0.74
0.74
0.66
0.66
0.66
0.66
0.66
0.66
0.66
0.66
0.65
0.65
0.65
0.65
0.65
0.65
0.65
0.65
0.64
0.64
0.64
0.63
DIRECTORS' REPORT
Name
Sr.
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
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
10-Aug-2018
(205,580)
(0.01) 16,733,969
17-Aug-2018
27,225
0.00 16,761,194
24-Aug-2018
(113,896)
0.00 16,647,298
31-Aug-2018
07-Sep-2018
14-Sep-2018
21-Sep-2018
31,074
90,929
66,367
70,810
0.00 16,678,372
0.00 16,769,301
0.00 16,835,668
0.00 16,906,478
28-Sep-2018
(111,406)
0.00 16,795,072
05-Oct-2018
177,225
0.01 16,972,297
12-Oct-2018
2,655
0.00 16,974,952
19-Oct-2018
(145,815)
(0.01) 16,829,137
26-Oct-2018
31-Oct-2018
02-Nov-2018
09-Nov-2018
16-Nov-2018
23-Nov-2018
30-Nov-2018
07-Dec-2018
14-Dec-2018
21-Dec-2018
28-Dec-2018
31-Dec-2018
04-Jan-2019
11-Jan-2019
18-Jan-2019
25-Jan-2019
01-Feb-2019
08-Feb-2019
15-Feb-2019
22-Feb-2019
01-Mar-2019
08-Mar-2019
15-Mar-2019
22-Mar-2019
29-Mar-2019
9,038
(8,763)
218,623
155,556
221,457
43,256
(25,215)
34,412
(54,878)
48,340
16,252
9,258
127,831
167,349
81,492
115,376
97,006
103,568
77,370
43,045
136,738
75,754
138,755
66,198
56,786
0.00 16,838,175
0.00 16,829,412
0.01 17,048,035
0.01 17,203,591
0.01 17,425,048
0.00 17,468,304
0.00 17,443,089
0.00 17,477,501
0.00 17,422,623
0.00 17,470,963
0.00 17,487,215
0.00 17,496,473
0.01 17,624,304
0.01 17,791,653
0.00 17,873,145
0.00 17,988,521
0.00 18,085,527
0.00 18,189,095
0.00 18,266,465
0.00 18,309,510
0.01 18,446,248
0.00 18,522,002
0.01 18,660,757
0.00 18,726,955
0.00 18,783,741
18,783,741
0.62
0.62
0.61
0.61
0.62
0.62
0.62
0.62
0.63
0.63
0.62
0.62
0.62
0.63
0.63
0.64
0.64
0.64
0.64
0.64
0.64
0.64
0.64
0.65
0.65
0.66
0.66
0.67
0.67
0.67
0.67
0.68
0.68
0.69
0.69
0.69
0.69
At the END of the Year
30-Mar-2019
*** 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
73
DIRECTORS' REPORT
(v) Shareholding of Directors and Key Managerial Personnel
Name
Sr.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
1
Aditya Puri
At the beginning of the Year
31-Mar-2018
35,66,544
0.14
Increase
Decrease
01-Jun-2018
3,20,000
0.00
38,86,544
08-Jun-2018
(1,82,000)
0.00
37,04,544
At the END of the Year
30-Mar-2019
37,04,544
2
Kaizad Maneck
Bharucha
At the beginning of the Year
31-Mar-2018
9,50,051
0.04
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
11-May-2018
(10,000)
0.00
9,40,051
18-May-2018
(20,000)
0.00
9,20,051
01-Jun-2018
57,000
0.00
9,77,051
29-Jun-2018
3,000
0.00
9,80,051
26-Oct-2018
10,000
0.00
9,90,051
15-Mar-2019
(70,000)
0.00
9,20,051
22-Mar-2019
(29,000)
0.00
8,91,051
At the END of the Year
30-Mar-2019
8,91,051
Jointly With Relatives
At the beginning of the Year
31-Mar-2018
500
0.00
0.15
0.14
0.14
0.04
0.04
0.04
0.04
0.04
0.03
0.03
0.03
At the END of the Year
30-Mar-2019
500
0.00
3
Keki Minoo Mistry
At the beginning of the Year
31-Mar-2018
2,91,915
0.01
At the END of the Year
30-Mar-2019
2,91,915
0.01
Jointly With Relatives
At the beginning of the Year
31-Mar-2018
4,215
0.00
At the END of the Year
30-Mar-2019
4,215
0.00
4
Sashidhar Jagdishan
At the beginning of the Year
31-Mar-2018
6,73,594
0.03
Increase
Decrease
01-Jun-2018
80,000
0.00
7,53,594
08-Jun-2018
(45,500)
0.00
7,08,094
At the END of the Year
30-Mar-2019
7,08,094
0.03
0.03
0.03
*** 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
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
74
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
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:116)(cid:1)(cid:34)(cid:69)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)
(cid:116)(cid:1)(cid:51)(cid:70)(cid:69)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)
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)
14,240.0
-
2.4
14,242.4
3,164.6
-
3,164.6
17,400.0
-
7.0
17,407.0
108,865.0
-
1,837.7
110,702.7
663.1
(9,179.8)
(8,516.7)
99,685.1
-
2,500.9
102,186.0
123,105.0
-
1,840.1
124,945.1
3,827.7
(9,179.8)
(5,352.1)
117,085.1
-
2,507.9
119,593.0
(1) Secured borrowings represent borrowings under collateralized borrowing and lending obligations and transactions under liquidity
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
Name of Managing Director / Whole Time Director / Manager
Aditya Puri
(Managing
Director)
Paresh Sukthankar Kaizad Bharucha
(Deputy Managing
Director)$
(Executive
Director)
(`)
Total
Amount
a) Salary as per provisions contained in Section
107,337,805
56,067,467
49,377,786
212,783,058
17(1) of the Income Tax Act, 1961
b) Value of perquisites u/s. 17(2) of Income Tax
22,689,694
5,073,966
6,978,736
34,742,396
Act, 1961 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***
3 Sweat Equity
4 Commission
- as per cent of profits
- others, specify
5 Others *
Total (A) **
Ceiling as per the Act^
42,20,80,000
-
-
1,37,46,41,250
-
-
9,20,98,470 1,888,819,720
-
-
-
-
6,677,227
136,704,726
2,202,412
63,343,845
2,422,032
58,778,554
11,301,671
258,827,125
75
DIRECTORS' REPORT
^
Section 198 of the Companies Act, 1956 (which corresponds to the now applicable section 197 of the Companies Act, 2013) does
not by virtue of section 35B (2A) of the Banking Regulation Act, 1949, apply to Banking companies.
*
Includes Provident Fund and tax exempted portion of Superannuation.
** Does not include the value of the stock options exercised during the year.
$
Mr. Paresh Sukthankar resigned from the Bank with effect from November 8, 2018.
*** 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*
4 Mr. Malay Patel
5 Mr. Umesh Chandra Sarangi
6 Mr. Sanjiv Sachar $
7 Mr. Sandeep Parekh $
8 Mr. M.D. Ranganath $
Sub total (i)
Other Non-Executive Directors
9 Mr. Keki Mistry
10 Mr. Srikanth Nadhamuni
Sub total (ii)
Total (i+ii)
Ceiling as per the Act^
Particulars of Remuneration
Fees for attending
Board / committee
meetings
Commission#
Others
(`)
Total
Amount
3,000,000
-
3,500,000
6,500,000
1,050,000
1,000,000
2,150,000
1,000,000
2,950,000
1,000,000
2,000,000
1,000,000
1,000,000
350,000
250,000
-
-
-
-
-
-
-
-
-
-
2,050,000
3,150,000
3,950,000
3,000,000
1,000,000
350,000
250,000
1,2750,000
4,000,000
3,500,000
20,250,000
2,050,000
1,000,000
1,400,000
1,000,000
3,450,000
2,000,000
-
-
3,050,000
2,400,000
5,450,000
16,200,000
6,000,000
3,500,000
25,700,000
# Refers to commission for FY 2017-18, paid out in FY 2018-19.
*Mr. Partho Datta and Mr. Bobby Parikh ceased to be directors of the Bank with effect from September 29, 2018 and January 26, 2019
respectively
$ Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M.D. Ranganath were appointed as Directors of the Bank with effect from July 21, 2018,
January 19, 2019 and January 31, 2019 respectively.
^ 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 2018 - 2019
nnual Report 2018
k Limi
76
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
(Company
Secretary till
May 31, 2018)
Mr. Santosh
Haldankar
(Company
Secretary from
June 1, 2018)
Mr. Sashidhar
Jagdishan
(Chief
Financial
Officer)
Total
(a) Salary as per provisions contained in section 17(1) of the Income-tax
2,927,446
3,706,271
24,302,834 30,936,551
Act, 1961
(b) Value of perquisites u/s 17(2) of Income-tax Act, 1961 except stock options
610,590
167,948
489,724
1,268,262
(c) Profits in lieu of salary under section 17(3) of Income-tax Act, 1961
-
-
-
2 Stock options exercised during the year***
88,416,435
-
105,520,000 193,936,435
3 Sweat Equity
4 Commission
- as percent of profits
- others, specify
5 Others*
Total**
-
-
-
-
-
-
32,656
104,680
575,916
713,252
3,570,692
3,978,899
25,368,474 32,918,065
* 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
77
DIRECTORS' REPORT
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nnual Report 2018
k Limi
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DIRECTORS' REPORT
ANNEXURE 5 to the Directors’ Report
Performance and financial position of subsidiaries and associates of the Bank as on March 31, 2019
(` crore)
Name of entity
Parent:
HDFC Bank Limited
Subsidiaries*:
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
*The subsidiaries are domestic entities
Net assets as of
March 31, 2019
Profit or loss for the
year ended March 31, 2019
As % of
consolidated net
assets**
Amount***
As % of
consolidated profit
or loss
Amount***
97.09%
1,49,206.32
94.38%
21,078.14
0.76%
4.77%
0.33%
1,167.80
7,326.28
501.79
1.56%
5.15%
0.51%
347.95
1,151.09
113.18
**Consolidated net assets are total assets minus total liabilities including minority interest
***Amounts are before inter-company adjustments.
79
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 FY 2018-19
Designation
Managing Director
Executive Director
Note:
Ratio
248:1
109:1
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. Fixed pay includes-Salary, Allowances, Retiral Benefits as well as value of perquisites excluding ESOPs
c. The above includes all employees of the Bank excluding overseas employees.
d. The Deputy Managing Director, Mr. Paresh Sukthankar resigned from the Bank with effect from November 8, 2018 and hence has
not been covered in the above calculations.
2. Percentage increase in remuneration of each Director, CFO, CEO, CS or Manager, if any, in the FY 2018-19
Designation
Managing Director
Executive Director
Chief Financial Officer
Company Secretary up to May 31, 2018 **
Company Secretary from June 01, 2018 ***
Percentage Increase
20.00
15.00
10.00
3.50
14.95
** Mr. Sanjay Dongre retired from the services of the Bank with effect from the close of business hours May 31, 2018.
*** Mr. Santosh Haldankar was appointed as the Company Secretary of the Bank with effect from June 01, 2018.
3. Percentage Increase in the median remuneration of employees in the FY 2018-19
The percentage increase in median remuneration of employees in the FY 2018-19 was 10.31 percent.This excludes front line sales staff.
4. The number of permanent employees on the rolls of the Bank
As of March 31, 2019 the number of permanent employees on the rolls of the Bank was 98,061.
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 cir cumstances for increase in the managerial remuneration.
The average percentage increase for Key Managerial Personnel
The average percentage increase for Non Managerial Staff
:
:
13.08 per cent
9.16 per cent
The average percentage increase in the salaries is primarily on account of annual fixed pay increase and promotions.
6. Affirmation that the remuneration is as per the remuneration policy of the company
:
YES
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
80
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, 2019
Name of the Employee
Designation
Sr.
No
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.
2 Kaizad M. Bharucha
Executive Director
04-Oct-95 B.Com
3 Abhay Aima
4 Navin Puri
5 Ashish Parthasarthy
6 Bhavesh Zaveri
7 Roli Jamthe*
8 Rakesh Singh
9 Sashidhar Jagdishan
10 Nirav Shah
Group Head
Group Head
Group Head
Group Head
02-Jan-95 Grad. from National Defence Academy
01-Feb-99 B. Com, MBA, CA.
01-Nov-94 B.E., PGDM
13-Apr-98 M.Com., CAIIB
Vice President
05-Apr-11 MBA, BSC, PGDSM
Group Head
Group Head
Group Head
11-Apr-11 MBA, BSc
05-Feb-96 B.Sc., ACA., M.A. (Economics)
15-Jul-99 MMS, B.Com
68
53
56
60
51
53
41
50
54
47
46 136,704,726 Citibank
33 58,778,554 SBI Commercial & Intl. Bank Ltd.
32 30,240,753 INDSEC Securities & Finance Ltd.
36 28,622,181 ANZ Grindlays Bank
30 28,231,386 INDSEC Investments Ltd.
30 27,835,275 Barclays Bank
18 27,810,322 Royal Bank Of Scotland
26 27,287,098 Roth Child
30 25,368,474 Deutsche Bank
24 24,378,499 Global Trust Bank
Persons in service for the whole year and drawing emoluments more than ` 1,02,00,000/- per annum, other than above
1 Jimmy Tata
Group Head
15-Dec-94 B.Com., M.F.M., CFA
2 Payal Mandhyan*
Vice President
18-Jan-05 PGDBM
3 Umashankar Gopalan*
Vice President
13-Dec-12 B.Com
4 Harsh S Gupta*
Senior Vice President - II
04-Sep-00 PGDBA, B.Sc
5 Sheetal Kapadia*
Deputy Vice President
06-May-09 PGDMS, B.Com
6 V. Chakrapani
Group Head
24-Nov-94 B.Com, CAIIB, ACS
7 Jay Prakash Chandrashekar*
Deputy Vice President
05-Jul-04 MBA, BCom
8 Ashok Khanna
Group Head
19-Jun-02 MA
9 Arup Kumar Rakshit
Senior Executive
01-Aug-06 PGDM, BE
Vice President
10 Ashima Khanna Bhat
Group Head
07-Nov-94 B. Bus, MMS
11 Anupama Rajesh Munagekar
Senior Vice President - I
14-Feb-07 LL.B, B.Com
12 Mohammed Hannan Abdul *
Deputy Vice President
01-Jul-09 MBA, BSc
13 Parag Rao
14 Nitin Chugh
Group Head
15-Apr-02 MMS, B.E.
Group Head
16-Apr-01 PGDM, B.TECH
15 Sathyamurthy Sampath Kumar
Group Head
07-Aug-00 B.Com
16 Ritesh Sampat
Executive Vice President
03-Jan-12 CA, B.Com
17 Rahul Shukla
18 Arvind Kapil
Group Head
01-Mar-18 MBA, BTech
Group Head
18-Dec-98 MMS, B.E
19 Rajeev Wariar*
Vice President
15-Apr-10 PGDBA, BE
20 Pallava Rathore*
Vice President
27-Jun-08 Master's Degree/Diploma
21 Sharad Rungta
Executive Vice President
02-Jun-12 CFA, CA, B.Com
22 Debajeet Das
Executive Vice President
06-Aug-96 MA
23 Ravi Santhanam
Executive Vice President
01-Mar-17 PG Diploma
81
52
40
50
43
42
55
40
62
50
48
51
39
53
47
46
42
50
47
43
43
41
47
49
31 23,644,770 Apple Industries Ltd.
15 23,610,468 India Bulls Securities Ltd.
25 23,366,065 ICICI Bank
21 22,265,196 ICICI Cap Ltd
19 21,987,124 ICICI Bank Ltd
35 21,078,973 Standard Chartered Bank
18 20,395,535 Global Trust Bank
38 20,260,375 Centurion Bank
27 20,189,197 ABN Amro Bank
26 19,804,160 A F Ferguson & Co
27 19,470,007 Strategic Capital Corporation Pvt Ltd
16 19,379,266 Barclays Bank PLC
30 19,282,132 IBM Global Services
24 19,127,583 Standered Chartered Bank
29 18,995,056 Integrated Finance Co. Ltd.
19 18,989,190 Standard Chartered Bank
27 18,788,164 Citibank NA
25 18,691,798 GE Countrywide Consumer Financial Services Ltd.
20 18,635,526 Citi Bank
18 18,320,767 IDBI Bank Ltd
18 17,994,118 Credit Suisse AG
24 17,933,852 Texport syndicate
26 17,852,896 Vodafone India
DIRECTORS' REPORT Sr.
Name of the Employee
Designation
Date of
Qualifications
Age Exp.
Total (`)
Last Employment
No
joining the
Bank
24 Bhaskar C. Panda
Executive Vice President
21-Nov-97 BA
25 Sharad Kourani*
Assistant Vice President
10-Aug-08 B.Com
26 Smita Bhagat
Group Head
12-Jul-99 M.Com, MBA
27 V S Unnikrishnan*
Senior Vice President - I
12-Apr-03 MBA, BSC, PUC, SSC
28 Veeresh Hiremath*
Assistant Vice President
28-Apr-08 B.Com
29 Arun Mohanty
Senior Executive Vice
09-Nov-05 BA
President
56
40
53
43
37
60
34 17,658,518 Times Bank Ltd.
23 17,272,735 HDFC Bank Ltd
31 17,201,384 PDCOR Ltd.
21 17,054,499 Global Trust Bank Ltd
13 17,045,111 RAK Bank
37 16,908,241 Reserve Bank Of India
30 Rajinder Babbar
Senior Executive Vice
16-Jan-01 LLB, BSC, HSC, SSC
51
32 16,789,248 Centurion Bank Ltd
President
31 Reji John*
Assistant Vice President
30-Aug-10 PG Diploma, MA, BA
32 Samrat Bose
Senior Vice President - II
17-May-02 Master's Degree/Dip - Others, BCom
33 Amit Dayal
Executive Vice President
19-Dec-94 B.Sc., DBM
34 Doulat Phiroze Kutar
Deputy Vice President
18-May-10 MA, BA
35 Rajesh Kumar Rathanchand
Group Head
22-May-00 PGDM, B.Sc.
36 Vivek Nigam
Senior Vice President - II
03-Apr-17 MBA, BTech
37 Benjamin Frank
Group Head
05-Apr-04 MBA, B.Sc
38 Munish Mittal
Group Head
17-Aug-96 PGDM, B.Sc.
39 Vijay Krishna Mulbagal
Senior Executive Vice
02-Jan-07 PGPM, BSC, HSC, SSC
President
40 Amit Prakash Kapadia
Deputy Vice President
06-Sep-06 PGDBM, MCom, BCom
41 Harrish Mahadevan
Deputy Vice President
06-Apr-11 BCA
42 Saroj Kumar Swain
Senior Vice President - I
25-Aug-04 MBA, BCom
43 Kinjul Sharma*
Deputy Vice President
22-Sep-08 Master's Degree/Dip, B.Com
44 Rahul Bhandari*
Vice President
05-Feb-02 PGDBM, B.Com
45 Sanjay K.Singla
Executive Vice President
10-Nov-07 PGDM , B.Com
46 Sanmoy Chakrabarti
Senior Executive
15-Jun-10 MS, BSC
Vice President
47 Pratap Luthra
Vice President
13-Aug-05 MBA, BA
48 Ajay Kumar Kapoor
Senior Executive Vice
09-Oct-95 M.Sc.
President
37
42
52
44
47
50
54
50
48
40
35
41
37
41
59
43
37
55
15 16,761,985 Aviva India Life Insurance Co Ltd
19 16,757,173 Parasmoney Investments
28 16,692,846 SBI Comrcl & Intl. Bank Ltd
22 16,643,461 IL & FS Financial Service
30 16,640,105 Trans America Apple Finance Ltd.
28 16,588,425 ICICI BANK
33 16,572,746 IDBI Bank Ltd.
32 16,399,574 Bank Of Punjab
24 16,186,877 Diamond Management & Technology
Consultants
14 16,006,507 Citibank N A
14 15,786,047 Citibank
18 15,710,397 Jaquar & Co Ltd
14 15,689,831 Citifinancial
17 15,678,826 Fresher
37 15,596,339 State Bank Of India
20 15,557,357 Bank Danamon
16 15,485,897 ABN Amro Bank Ltd
33 15,327,886 Times Bank Ltd.
49 Raveesh Kumar Bhatia
Senior Executive Vice
03-May-10 PGDM, B.Com
53
28 15,320,547 Fore Consultants Pvt Ltd
President
50 Dnyanesh Tukaram Khairnar*
Vice President
07-May-07 MMS, CA, BCom
51 Akshat Lakhera
Senior Vice President - I
09-Sep-10 PGDM, BSC
52 Ashtosh Raina
Senior Vice President - I
03-Sep-07 CAIIB, B.Sc.
53 Rashmi Singh
Deputy Vice President
29-Mar-10 MBA, BSc
54 Roopesh H. Patil
Senior Vice President - I
28-Feb-00 MBA, BCom
55 Kapil Bansal
Senior Vice President - I
30-Sep-04 PGPM, B.Com
56 Pranav Bharat Shah
Deputy Vice President
21-Jul-11 PGDBM, BCom
39
42
51
34
45
40
38
14 15,303,665 ICICI Bank Ltd
18 15,079,872 BNP Paribas
28 14,948,199 State Bank Of India
11 14,801,218 Religare Macquarie Wealth Management Ltd
23 14,754,536 Dalal & Broacha Stock Broking Pvt Ltd
20 14,606,889 ICICI Bank Ltd.
13 14,367,957 Citibank N A
82
HDFC Bank Limited Annual Report 2018 - 2019DIRECTORS' REPORT Sr.
Name of the Employee
Designation
Date of
Qualifications
Age Exp.
Total (`)
Last Employment
No
joining the
Bank
57 Silvestre Anthony Pereira
Vice President
15-Sep-06 MBA, PG Diploma, B.Com
58 Mayuresh Vasant Apte
Executive Vice President
06-Nov-00 MMS, B.TECH, C.H.S.E, C.B.S.E
59 Sumant Rampal
Executive Vice President
10-Aug-99 MBA, B.Com
60 Ravi Ssn
Executive Vice President
26-Nov-10 B.Com
61 Beena Shah
Vice President
26-May-15 MBA, BCom
62 Rheetu Karthik*
Vice President
15-Mar-05 MBA, MA, BA
63 Mathew Varghese*
Assistant Vice President
15-Jul-10 MMS, BE
64 Vitthal Mangesh Kulkarni
Senior Vice President - II
22-Sep-07 M.Sc., BE
65 Suresh Babu Agadkar*
Assistant Vice President
08-Jan-11 MBA, BCom
66 Sheetal Garg
Deputy Vice President
05-Sep-11 MMS, BCom
67 Vikas Rathore
Deputy Vice President
16-Jun-08 MMS, BTech
68 Charmaine Pereira
Senior Vice President - II
01-Nov-94 DBM, BA
69 Resham A. Mahtani
Senior Vice President - I
01-May-01 PGPIM, PGDBM, BA
70 Jay Sonawala
Senior Vice President - II
12-Aug-99 MMS, B.Com, HSC, I.C.S.E
71 Sitaram R. Reddy
Deputy Vice President
01-Dec-11 MBA, BSc
72 Madhusoodan Hegde
Senior Executive Vice
11-Feb-97 CAIIB, B.Sc.
President
73 Sowjanya Lakshmi Koppineedi
Deputy Vice President
11-May-05 MBA, BCom
74 Dolreich D'Mello*
Deputy Vice President
09-Jan-97 B.Com
75 Niloy Dey
Deputy Vice President
01-Apr-05 CFA, MBA, BCom
76 N. Srinivasan
Senior Executive Vice
11-Nov-96 CA, CWA, CS., B.Com
President
41
49
43
50
41
47
40
47
43
40
35
46
43
42
39
57
36
43
43
51
17 14,334,914 UTI Bank Ltd
26 14,280,377 Centurion Bank Ltd
22 14,255,296 Walchnad Capital Ltd.
26 14,253,365 Deutsche Bank
15 14,208,296 Kotak Mahindra Bank
21 14,147,399 MetLife India Insurance Co Ltd
17 14,115,715 Citibank
25 14,050,562 Barclays Capital
22 13,995,309 M/s Centrum Capital Ltd
14 13,994,751 DBS Bank Ltd
11 13,973,943 Fresher
24 13,952,819 Fresher
21 13,860,372 Mecklai Financial & Commercial Services Ltd.
20 13,843,873 Fresher
15 13,733,395 Brics Securities Ltd
34 13,689,214 Times Bank Ltd.
15 13,671,802 JM Morgan Stanley Financial Services Pvt Ltd
22 13,618,745 ANZ Grindlays Bank
15 13,248,278 ING Vysya Financial Services Ltd
29 13,240,556 Credential Finance
77 Atul Sadashiv Barve
Senior Executive Vice
28-Feb-07 MMS, MA, B.Sc
55
35 13,206,373 IDBI Bank Ltd
President
78 Gourab Roy
Executive Vice President
01-Mar-96 MCom, BCom
79 Ameya Shekhar Shenoy
Senior Vice President - I
20-Mar-06 MBA, CA, B.Com
80 Anil Bhavnani
Senior Executive Vice
16-Jun-03 CS, B.Com
President
81 Steven Noronha*
Deputy Vice President
19-Jul-11 B.Com
82 Satyabrata Sahoo
Assistant Vice President
07-Aug-06 MBA, BSc
83 Benson Benadict
Deputy Vice President
27-Nov-13 MBA, BTech
84 Brijesh Prabhakar
Deputy Vice President
31-Oct-11 MBA, BE
85 Rajesh Sharma
Senior Vice President - II
15-Nov-00 CA, CS, B.Com
86 Sundaresan M.
Senior Executive Vice
02-May-02 BE (Mechanical), PSG, MBA
President
87 Nishant Nangia*
Deputy Vice President
04-Apr-05 B.Com
88 Sitanshu Mitra
Senior Executive Vice
01-Sep-95 MBA, B.Sc
President
52
39
45
43
43
39
39
43
47
37
51
26 13,198,944 UTI Bank Ltd
15 13,196,926 Tionale Enterprises Pvt Ltd
25 13,170,409 CitiCorp Finance I Ltd.
11 13,103,396 Al Maha Financial Services Ltd
16 13,031,110 Way 2 Wealth Securities Pvt Ltd
14 13,010,945 Standard Chartered Bank
15 12,889,130 Citibank
25 12,881,821 LCC Infotech Ltd
25 12,865,027 GE Countrywide Consumer Financial Services Ltd.
16 12,798,375 E-Serve International Ltd
31 12,738,421 ABN Amro Bank Ltd.
89 Mohammed Mansoor Azher*
Deputy Vice President
10-Feb-03 MBA, BCom
40
16 12,706,162 Fresher
83
DIRECTORS' REPORT Sr.
Name of the Employee
Designation
Date of
Qualifications
Age Exp.
Total (`)
Last Employment
No
joining the
Bank
90 Lavesh K Sardana
Executive Vice President
31-Jul-00 PG Diploma - Others, PGDBM, BCom
91 Nitish Nagori
Executive Vice President
01-Jun-10 PG Diploma - Others, BSc
92 Aditya Dhananjai Kumat
Senior Manager
01-Jun-12 MBA, BTech
93 Abheek Barua
Executive Vice President
16-Feb-15 M.Sc
94 Chandramoulee Palani
Senior Vice President - II 16-Jun-17 MBA, BTech
95 Anurag Pathak
Senior Vice President - I
29-Oct-12 PG Diploma - Others, BCom
96 Satish Chandra
Senior Vice President - I
16-Dec-04 B.Com
97 Dhruven Subodhchandra Shah*
Assistant Vice President
02-Jul-15 BE
98 Rajeev Sengupta
Senior Executive Vice
21-Sep-07 PG (Gen Mgmt), BE
President
99 Sudhir Sreekumaran*
Assistant Vice President
07-Jul-13 B.Com
100 Venkatraman Balan Iyer
Executive Vice President
02-Sep-00 PG Diploma - Others, BCom
101 B. P. Tikekar
Senior Executive Vice
30-Aug-95 B.Com
President
44
48
30
52
41
45
51
45
58
42
52
56
23 12,680,931 GE Countrywide Consumer Financial Services Ltd.
16 12,340,036 ICICI Bank Ltd
7 12,001,510 Fresher
31 11,988,982 ICRIER
18 11,825,648 Credit Agricole
20 11,793,316 BNP Paribas
29 11,656,292 Global Trust Bank (Merged into Oriental Bank
of Commerce)
8 11,650,754 First Wealth
36 11,642,341 Hutchison Essar Ltd
15 11,634,715 Citi Bank N-A
32 11,586,559 American Express Bank Ltd
36 11,580,234 New Ind Co-Op Bank Ltd
102 Deepak Kumar Mohanty
Senior Executive Vice
24-Dec-03 MSc, MBA, BSc
55
26 11,557,470 ICICI Bank Ltd
President
103 Gaurav Khandelwal
Senior Vice President - II
17-May-05 PG Diploma - Others, BE
104 Prashant Mehra
Senior Executive Vice
28-Dec-98 MMS, PGDBM, BE
President
105 Sharad Vijay Goenka
Senior Vice President - II
27-Jan-11 CA, BCom
106 Rohit Pathrabe*
Deputy Vice President
16-Apr-07 BE
107 Sanjay Desai
Executive Vice President
17-Sep-96 BSc
108 Arun Mediratta
Executive Vice President
05-May-98 MBA, MA, BA
109 Ajit Cherian Kuruvilla
Senior Vice President - II
23-Aug-99 Diploma (3-yr Diploma), CA, BCom
110 Neeraj Chawla
Senior Vice President - II
06-Jan-14 CA, BCom
111 Naresh Chandiramani*
Deputy Vice President
07-Jul-10 B.Com
112 Anand Dusane
Executive Vice President
01-Jan-96 CAIIB, MCom, BCom
113 Vaibhav Jain
Deputy Vice President
01-Sep-07 MBA, BCom
114 C K Srinivasan*
Deputy Vice President
01-Sep-16 BSc
115 Tarunendra Balram Lachhwani
Deputy Vice President
17-Jul-12 MMS, BCom
116 Ahmed Abdulqawi Al Jneibi*
Senior Manager
18-Oct-17 BBA
117 Sanjay D Souza
Executive Vice President
01-Dec-99 MMS, BE
118 Sammeer Saurabbh
Executive Vice President
16-Jan-16 BSc
119 Amol Padhye
Senior Vice President - II
01-Jul-17 CA, BCom
120 Winifred Bhatia
Senior Vice President - II
16-Oct-95 MMS, MCom, BCom
40
47
40
41
52
51
51
42
48
46
41
52
37
36
52
51
38
53
14 11,485,665 IDBI Bank Ltd
25 11,476,148 Maruti Countrywide Auto Financial Services Ltd
16 11,464,603 HSBC
19 11,436,981 HSBC
29 11,392,931 IIT Corporate Service Ltd
29 11,366,946 Punjab & Sind Bank
26 11,355,814 Global Trust Bank
17 11,289,067 CITI Bank
17 11,242,897 Citibank
26 11,230,143 State Bank Of Travancore
17 11,210,809 ABN Amro Bank Ltd N.V.
32 11,147,715 National Bank of Abu Dhabi
15 11,124,072 Religare Macquarie Wealth Management Ltd
6 11,103,954 Tourism Development and Investment Company
30 11,068,492 Nucleus Securities Ltd
25 11,059,578 DAIWA CAPITAL MARKETS INDIA PVT LTD
15 11,016,870 Ernst & Young LLP
27 10,981,692 Nagarjuna Finance Ltd
121 Faisal Ikbal Sara
Senior Vice President - II
05-Dec-01 PGDBM, Diploma (3-yr Diploma), BCom 46
26 10,975,494 American Express Bank Ltd
122 Santhosh Machangada Medappa
Senior Vice President - II
20-Nov-03 Others, MBA, BSc
123 Sameer Ratolikar
Executive Vice President
09-Jan-15 CISA, BE
45
47
17 10,952,529 ICICI Home Finanace Co Ltd
26 10,945,146 Bank of India
84
HDFC Bank Limited Annual Report 2018 - 2019DIRECTORS' REPORT Sr.
Name of the Employee
Designation
Date of
Qualifications
Age Exp.
Total (`)
Last Employment
No
joining the
Bank
124 Harish Kushalchand Parakh
Assistant Vice President
20-Dec-11 PGDBM, BCom
37
14 10,941,748 Barclays Bank PLC
125 Prashanth Ts
Senior Vice President - II
16-Jun-00 PG Diploma - Others, Bachelors Degree
42
19
10,918,952 Fresher
- Other
126 Gagan Salil Malik*
Assistant Vice President
26-Jun-16 B.Com
127 Rajeev Kumar
Senior Vice President - II
28-Apr-03 PG Diploma - Others, BSc
128 Kishan Ghanshani*
Assistant Vice President
22-May-16 B.Com
129 Bardan Sharma
Senior Vice President - II
23-Nov-11 Master's Degree/Dip - Others, BCom
130 Sumedha Malik
Deputy Vice President
30-Mar-05 MA, BA
131 Pinal K. Shah
Senior Vice President - II
01-Jun-98 CFA, MBA, BE
132 Prem Chand
Executive Vice President
13-Aug-07 BA
133 Deepak Narsinh Shinde
Senior Vice President - II
08-Feb-03 B.Com
134 Faishal Khan*
Deputy Vice President
10-Aug-06 PGDBA, BCom
135 Bharat Badhwar
Senior Vice President - II
28-Sep-02 BA
136 Unmesh Sharma
Senior Vice President - I
04-Dec-17 CFA, MBA, BE
137 Nasir Khan
Executive Vice President
14-Nov-11 MA, BA
138 Abhishek Bhagat
Senior Vice President - I
28-Sep-16 MBA, BCom
139 Ramnath Raikar
Executive Vice President
16-Mar-98 BA
140 Priyanka Bakshi
Senior Vice President - I
26-Mar-04 BA
141 Vasudevan Venkatadri
Executive Vice President
26-Oct-06 MBA, BCom
142 Anand Sankararaman
Executive Vice President
03-Mar-00 PGDBA, BE
143 Vijapurapu Sundar
Executive Vice President
20-Feb-15 Master's Degree/Dip - Others, BCom
144 Ashish Bains
Senior Vice President - I
24-Mar-08 MBA, Diploma (3-yr Diploma), BBA
145 Sandeep Bansal
Deputy Vice President
20-Jan-11 PGDBA, BBA
146 Ganesh Babu M
Senior Manager
15-May-13 PG Diploma, BE
Employed for part of the year
36
47
47
44
39
50
59
51
38
46
38
49
43
57
40
50
45
52
41
41
29
15 10,908,560 Standard Chartered Bank
25 10,873,097 CitiFinancial Retail Services India Ltd
22 10,820,619 Noor Bank
19 10,736,348 Diageo India Pvt Ltd
14 10,695,451 Kotak Mahindra Old Mutul Life Insurance Co Ltd
25 10,626,166 Interface Fianancial Services Ltd
42 10,601,416 UTI Bank Ltd
31 10,586,419 Centurion Bank Ltd
16 10,580,224 ICICI Bank Ltd
25 10,572,638 Bharti Telenet Ltd
15 10,555,824 Macquarie Capital Securities
23 10,545,319 BNY Mellon (India), Pune
20 10,531,637 Chryseum Advisors LLP
38 10,505,143 Lloyds Fianance Ltd
19 10,474,720 CitiFinancial India Ltd
27 10,423,127 Al-Rajhi Banking & Investment Corporation
24 10,365,886 P&O Nedlloyd (I) Pvt Ltd
32 10,287,904 ICICI Bank
18 10,264,377 CRISIL Ltd
16 10,260,940 RBS Bank
6 10,239,567 Fresher
147 Paresh Sukthankar
Deputy Managing Director 01-Sep-94 B.Com, M.M.S, A.M.P (Harvard
56
33 63,343,845 Citibank
Business School)
148 Ravi Narayan
Group Head
03-May-99 MBA, B.TECH
149 Neil Percy Francisco
Group Head
20-May-02 MBA, M.Sc., BE
150 Sukarm Bali*
Senior Vice President - I
23-Jul-99 CA, B.Com
151 Harpuneet Singh
Executive Vice President
10-Apr-18 Others, CA
152 Fayaz Ainodin Patel*
Deputy Vice President
02-Aug-10 MBA, B.Com
153 Abhishek Bhuwalka
Senior Vice President - I
10-Jun-99 MBA, CWA, B.Com
154 Manu Joseph*
Deputy Vice President
13-Nov-11 MMS, BE
155 Maheswara P Reddy
Senior Vice President - II
06-May-02 MBA, BA
156 Jagat Dave
Senior Vice President - II
02-May-18 MMS, ICWA, BCom
157 Arvind Vohra
Group Head
12-Sep-18 PG Diploma - Others, BE
158 K. Chandrasekhar
Senior Vice President - II
30-Aug-95 BSC
159 Mahesh Kumar Jugal Kishoretaparia Senior Vice President - I
11-Jun-05 LLB, CS, CA, B.Com
50
57
52
45
39
42
41
47
51
47
51
41
25 17,085,352 Bank of America
30 15,707,641 Standard Chartered Bank
27 14,872,556 Dresdner Bank
20 14,802,174 HSBC Commercial Banking
12 12,902,206 Sharekhan Ltd
23 12,104,938 Matchless Packaging
17 11,767,391 Citibank
23 11,576,370 American Express Bank Ltd
26 11,194,933 Ambit Private Ltd
24 10,688,522 Vodafone India Ltd
30 10,620,810 Citibank
17 10,527,144 UTI Bank Ltd
85
DIRECTORS' REPORT Sr.
Name of the Employee
Designation
Date of
Qualifications
Age Exp.
Total (`)
Last Employment
No
joining the
Bank
160 Sharad Bishnoi
Executive Vice President
09-Aug-04 CAIIB
161 Vinay Razdan
Group Head
06-Sep-18 MBA
162 Pushkar Raghavan Surendran
Deputy Vice President
11-Jan-11 MBA, BCom
163 Priyanshu Gaurav
Deputy Vice President
15-May-06 Master's Degree/Diploma
164 Philip Mathew
Group Head
03-Apr-02 MA, B.Sc.
165 Thomson Jose
Executive Vice President
01-Dec-99 PG Diploma - Others, BCom
166 K. Manohara Raj
Senior Executive Vice
06-Dec-96 CAIIB, B.Com
President
167 Saurabh Jain
Senior Vice President - II
02-Jul-18 CA, BCom
168 Sai Venkatramana Kosuri
Senior Vice President - I
27-Apr-05 LLB, Bcom
169 Navneet Singh
Senior Vice President - II
16-Aug-18 MBA, BTech
170 Ankush Pitale
Executive Vice President
28-Jul-14 MMS
171 Kartik Hirachand Nagda
Senior Vice President - II
29-Nov-04 MBA, BSc
172 Ramen Raymandal
Senior Vice President - II
10-Aug-16 PGDBM
173 Venkatesh Krishnan
Executive Vice President
27-Sep-18 CA - 93, B.Com - 88
174 Srinivasan Vaidyanathan
Group Head
01-Dec-18 MBA, FCA, FCMA, Lic ICSI, FAIA
(UK), CMA (USA)
175 Venkateswaran L
Executive Vice President
12-Nov-18 MBA, BTech
176 Sudesh Puthran
Executive Vice President
28-Dec-15 Master's Degree/Dip - Others, BE
177 Sanjay Dongre
Executive Vice President
02-May-95 B.Com, ACS, CWAINT, LL.B.
178 Deepam Sanghi
Senior Vice President - II
10-Jul-17 PGDBM, BTech
179 Nagarajan Chandran
Executive Vice President
11-Jan-19 Master's Degree/Dip - Others, BSc
180 Sonit Singh
Senior Vice President - I
05-Mar-18 PG Diploma - Others, MBA, BCom
181 Ajay Pancholi
Senior Vice President - II
18-Feb-19 CA, BCom
Notes:
53
52
39
38
56
44
61
42
48
47
46
43
50
51
55
49
49
60
44
47
40
47
31 10,142,795 Zensar Technologies Ltd
31 10,056,798 Vodafone Idea Ltd
16
9,762,948 HSBC
13
8,969,948 Fresher
29
8,478,082 SSKI Investor Services Pvt Ltd
22
8,402,475 Esanda Finance & Leasing Ltd
38
7,883,798 Punjab National Bank
19
7,658,163 STANDARD CHARTERED BANK
25
7,470,260 GE Countrywide Consumer Financial Services Ltd
26
7,199,768 Avendus Capital Private Limited
22
6,721,715 Religare Capital Markets Pvt. Limited
17
6,531,699 GE Countrywide Consumer Financial Services Ltd
24
5,551,939 Kotak Mahindra Capital Company (Subsidiary of
Kotak Mahindra Bank Ltd.)
28
5,224,882 HSBC
31
5,099,160 Citibank
24
4,219,272 Citibank
26
3,578,233 CIBIL
36
3,570,692 Boehringer Mannheim Ltd
21
2,095,382 Rothschild (India) Private Limited
13
2,014,548 Bajaj Auto finance
14
1,927,370 Standard Chartered Bank
23
1,376,119 Edelweiss Financial Services Ltd
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 month’s 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, 2019.
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, 2019.
7. None of the employees listed above is a relative of any director of the Bank.
86
HDFC Bank Limited Annual Report 2018 - 2019DIRECTORS' REPORT DIRECTORS' REPORT
ANNEXURE 8 to the Directors’ Report
Form No. MR-3
SECRETARIAL AUDIT REPORT
For the financial year ended 31st March 2019
[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 2018 to 31st March 2019
(‘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, 2019 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;
(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) Regulations, 1994;
The Securities and Exchange Board of India (Foreign Portfolio Investors)Regulations,2014;
(vi) The Banking Regulation Act, 1949 as specifically applicable to the Bank.
87
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)
Pursuant to the approval of the Board of Directors of the Bank and shareholders of the Bank vide their resolutions dated December
20, 2017 and January 19, 2018 respectively, the Share Allotment Committee of the Bank at its meeting held on July 17, 2018 allotted
3,90,96,817 Equity Shares of face value of ` 2/- each to Housing Development Finance Corporation Limited on a preferential basis, at
a price ` 2,174.09 per Equity Share (including a share premium of ` 2,172.09 per Equity Share), aggregating to ` 84,99,99,98,871.53
(Rupees Eight Thousand Four Hundred and Ninety Nine Crore Ninety Nine Lakhs Ninety Eight Thousand Eight Hundred and Seventy One
and Paise Fifty Three only).
b)
Pursuant to the approval of the Board of Directors of the Bank and shareholders of the Bank vide their resolutions dated December 20,
2017 and January 19, 2018 respectively, the Share Allotment Committee of the Bank at its meeting held on August 2, 2018 allotted
1,28,47,222 Equity Shares of face value of ` 2/- each to eligible Qualified Institutional Buyers, at a price ` 2,160 per Equity Share (including
a share premium of ` 2,158 per Equity Share), aggregating to ` 27,74,99,99,520 (Rupees Two Thousand Seven Hundred and Seventy
Four Crore Ninety Nine Lakhs Ninety Nine Thousand Five Hundred and Twenty only)
c)
Pursuant to the approval of the Board of Directors of the Bank and shareholders of the Bank vide their resolutions dated December 20,
2017 and January 19, 2018 respectively, the Share Allotment Committee of the Bank at its meeting held on August 2, 2018 allotted
5,25,00,000 Equity Shares of face value of ` 2/- each in favour of JP Morgan Chase Bank, N.A. as Depository, which are represented
by 1,75,00,000 American Depository Receipts (ADRs), at a price USD 104 per ADR, with each ADR representing three underlying Equity
Shares of the Bank.
d)
Pursuant to the Board Resolution dated April 21, 2018 and Circular Resolution Nos. 24/2018-19 and 27/2018-19 dated November 23,
2018 and December 11, 2018, passed by the Board of Directors (“Board”), the Bank has allotted on a private placement basis 8.44%
Unsecured, Redeemable Long Term, Fully Paid-up, Non-Convertible Bonds in the nature of Debentures amounting to ` 6000 Crore
(60,000 Bonds of face value ` 10,00,000/- each) on December 28, 2018.
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DIRECTORS' REPORT
e)
SEBI had, vide its Directions dated February 23, 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. Further,
SEBI had 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 within seven days thereof. The Bank has submitted the requisite information and reports to SEBI within the prescribed
timelines. There is no further update in this regard.
Place: Mumbai
Date: 22nd May 2019
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.:1303 / C P No.:10440
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.
Annexure A
To
The Members,
HDFC Bank Limited,
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.
Place: Mumbai
Date: 22nd May 2019
89
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.:1303 / C P No.:10440
INDEPENDENT AUDITOR'S REPORT
To the Members of HDFC Bank Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of HDFC Bank Limited (“the Bank”), which comprise the Balance sheet
as at March 31, 2019, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies and other explanatory information.
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 as well as the Companies Act, 2013 (“the Act”) in the manner so required for
banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs
of the Bank as at March 31, 2019, its profit and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section
143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the
Standalone Financial Statements’ section of our report. We are independent of the Bank in accordance with the ‘Code of Ethics’ issued by
the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial
statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial
statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below,
our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the
responsibilities described in the “Auditor’s Responsibilities for the Audit of the Standalone Financial Statements” section of our report, including
in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks
of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
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INDEPENDENT AUDITOR'S REPORT
Key audit matters
How our audit addressed the key audit matter
Identification of Non-performing advances and provisioning of advances:
Advances constitute a significant portion of the Bank’s
The audit procedures performed, among others, included:
assets and the quality of these advances is measured
in terms of ratio of Non-Performing Advances (“NPA”)
- Considering the Bank’s policies for NPA identification and provisioning and
to the gross advances of the Bank. The Bank’s net
assessing compliance with the IRAC norms.
advances constitute 65.84 % of the total assets and
the gross NPA ratio of the Bank is 1.36% as at March
31, 2019.
The Reserve Bank of India’s (“RBI”) guidelines on
Income recognition and asset classification (“IRAC”)
prescribe the prudential norms for identification and
classification of NPAs and the minimum provision
required for such assets. The Bank is also required
to apply its judgement to determine the identification
and provision required against NPAs by applying
quantitative as well as qualitative factors. The risk of
identification of NPAs is affected by factors like stress
and liquidity concerns in certain sectors.
The provisioning for identified NPAs is estimated
based on ageing and classification of NPAs, recovery
estimates, value of security and other qualitative
factors and is subject to the minimum provisioning
norms specified by RBI.
Additionally, the Bank makes provisions on exposures
that are not classified as NPAs including advances
in certain sectors and identified advances or group
advances that can potentially slip into NPA. These are
classified as contingency provisions.
The Bank has detailed its accounting policy in this
regard in Schedule 17- Significant accounting policies
under note C- 2 Advances.
Since the identification of NPAs and provisioning for
advances require significant level of estimation and
given its significance to the overall audit, we have
ascertained identification and provisioning for NPAs as
a key audit matter.
- Understanding, evaluating and testing the design and operating effectiveness
of key controls (including application controls) around identification of impaired
accounts based on the extant guidelines on IRAC.
- Performing other procedures including substantive audit procedures covering the
identification of NPAs by the Bank. These procedures included:
- Considering testing of the exception reports generated from the application
systems where the advances have been recorded.
- Considering the accounts reported by the Bank and other Banks as Special
Mention Accounts (“SMA”) in RBI’s central repository of information on large
credits (CRILC) to identify stress.
- Reviewing account statements and other related information of the borrowers
selected based on quantitative and qualitative risk factors.
- Performing inquiries with the credit and risk departments to ascertain if there were
indicators of stress or an occurrence of an event of default in a particular loan
account or any product category which need to be considered as NPA. Examining
the early warning reports generated by the Bank to identify stressed loan accounts.
- Holding specific discussions with the management of the Bank on sectors where
there is perceived credit risk and the steps taken to mitigate the risks to identified
sectors.
With respect to provisioning of advances, we performed the following procedures:
- Gained an understanding of the Bank’s process for provisioning of advances.
- Tested on a sample basis the calculation performed by the management for
compliance with RBI regulations and internally laid down policies for provisioning.
- For loan accounts, where the Bank made provisions which were not classified as
NPA, we reviewed the Bank’s assessment for these provisions.
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INDEPENDENT AUDITOR'S REPORT
Evaluation of open tax litigations (Direct and Indirect Tax)
The Bank has material open tax litigations including
- Gained an understanding of the Bank’s process for determining tax liabilities and
matters under dispute which
involve significant
the tax provisions.
judgment to determine the possible outcome of these
disputes.
-
Involved direct and indirect tax specialists to understand the evaluation of likelihood
and level of liability for significant tax risks after considering legal precedence,
Since the assessment of these open tax litigations
other rulings and new information in respect of open tax positions as at reporting
requires significant
level of
judgement, we have
date.
included this as a key audit matter.
- Agreed underlying
tax balances
to supporting documentation,
including
correspondence with tax authorities.
- Assessed the disclosures within the standalone financial statements in this regard.
Information Technology (“IT”) Systems and Controls
The reliability and security of IT systems plays a key
- For testing the IT general controls, application controls and IT dependent manual
role in the business operations of the Bank. Since
controls, we involved IT specialists as part of the audit. The team also assisted in
large volume of transactions are processed daily, the
testing the accuracy of the information produced by the Bank’s IT systems.
IT controls are required to ensure that applications
process data as expected and that changes are made
in an appropriate manner. These systems also play
a key role in the financial accounting and reporting
process of the Bank.
Due to the pervasive nature and complexity of the
IT environment we have ascertained IT systems and
controls as a key audit matter.
- Tested the design and operating effectiveness of the Bank’s IT access controls
over the information systems that are critical to financial reporting. We tested
IT general controls (logical access, change management and aspects of IT
operational controls). This included testing that requests for access to systems
were appropriately reviewed and authorized.
- Tested the Bank’s periodic review of access rights. We inspected requests of
changes to systems for appropriate approval and authorisation. We considered
the control environment relating to various interfaces, configuration and other
application layer controls identified as key to the audit.
-
In addition to the above, the design and operating effectiveness of certain
automated controls that were considered as key internal controls over financial
reporting were tested.
- Tested compensating controls and performed alternate procedures, where
necessary. In addition, understood where relevant, changes made to the IT
landscape during the audit period and tested those changes that had a significant
impact on financial reporting.
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INDEPENDENT AUDITOR'S REPORT
Information Other than the Standalone Financial Statements and Auditor’s Report Thereon
The Bank’s Board of Directors is responsible for the other information. The other information received by us comprises the information included
in the Basel III - Pillar 3 disclosures and graphical representation of financial highlights (but does not include the financial statements and our
auditor’s reports thereon), which we obtained prior to the date of this auditor’s report, and Annual Report, which is expected to be made
available to us after that date.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above and, in
doing so, consider whether such other information is materially inconsistent with the standalone financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we have
obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those Charged with Governance.
Responsibilities of Management and those Charged with Governance for the Standalone Financial Statements
The Bank’s Board of Directors is responsible for the matters stated in section 134(5) of 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, cash flows of the Bank in
accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, accounting principles generally accepted in India, including
the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they
apply to the Bank and guidelines and directions issued by Reserve Bank of India from time to time.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding
of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and 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 standalone financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends
to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
Those Charged with Governance are also responsible for overseeing the Bank’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
(cid:116)(cid:1)
(cid:42)(cid:69)(cid:70)(cid:79)(cid:85)(cid:74)(cid:71)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:78)(cid:66)(cid:85)(cid:70)(cid:83)(cid:74)(cid:66)(cid:77)(cid:1)(cid:78)(cid:74)(cid:84)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:66)(cid:77)(cid:80)(cid:79)(cid:70)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:13)(cid:1)(cid:88)(cid:73)(cid:70)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:69)(cid:86)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:71)(cid:83)(cid:66)(cid:86)(cid:69)(cid:1)(cid:80)(cid:83)(cid:1)(cid:70)(cid:83)(cid:83)(cid:80)(cid:83)(cid:13)(cid:1)(cid:69)(cid:70)(cid:84)(cid:74)(cid:72)(cid:79)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1)
93
INDEPENDENT AUDITOR'S REPORT
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(cid:116)(cid:1) (cid:48)(cid:67)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:1)(cid:83)(cid:70)(cid:77)(cid:70)(cid:87)(cid:66)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:80)(cid:83)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:69)(cid:70)(cid:84)(cid:74)(cid:72)(cid:79)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:69)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:74)(cid:83)(cid:68)(cid:86)(cid:78)(cid:84)(cid:85)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:15)(cid:1)
Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial
controls system in place and the operating effectiveness of such controls.
(cid:116)(cid:1) (cid:38)(cid:87)(cid:66)(cid:77)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:74)(cid:70)(cid:84)(cid:1)(cid:86)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:66)(cid:84)(cid:80)(cid:79)(cid:66)(cid:67)(cid:77)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)
by management.
(cid:116)(cid:1) (cid:36)(cid:80)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:1) (cid:80)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1) (cid:80)(cid:71)(cid:1) (cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:8)(cid:84)(cid:1) (cid:86)(cid:84)(cid:70)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:72)(cid:80)(cid:74)(cid:79)(cid:72)(cid:1) (cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:1) (cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1) (cid:66)(cid:79)(cid:69)(cid:13)(cid:1) (cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1) (cid:80)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1) (cid:70)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank
to cease to continue as a going concern.
(cid:116)(cid:1) (cid:38)(cid:87)(cid:66)(cid:77)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:77)(cid:77)(cid:1)(cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:13)(cid:1)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:66)(cid:77)(cid:80)(cid:79)(cid:70)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:13)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:88)(cid:73)(cid:70)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those Charged with Governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those Charged with Governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those Charged with Governance, we determine those matters that were of most significance in the audit
of the standalone financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Other Matter
The comparative financial statements of the Bank for the corresponding year ended March 31, 2018 were audited by a predecessor auditor
who expressed an unmodified opinion on those financial statements on April 21, 2018.
Report on Other Legal and Regulatory Requirements
1. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking
Regulation Act, 1949 read with Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
2. As required by sub section (3) of section 30 of the Banking Regulation Act, 1949 , we report that:
a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose
of our audit and have found them to be satisfactory;
b. The transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and
c. The financial accounting systems of the Bank are centralized and therefore, accounting returns for the purpose of preparing standalone
financial statements are not required to be submitted by its branches; we have visited 237 branches for the purpose of our audit.
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INDEPENDENT AUDITOR'S REPORT
3. As required by Section 143(3) of the Act, we report that:
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the
purposes of our audit;
b. In our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of
those books;
c. The Balance Sheet, the Profit and Loss Account, the Cash Flow Statement dealt with by this Report are in agreement with the books
of account;
d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of
the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 to the extent they are not inconsistent with the accounting policies
prescribed by RBI;
e. On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2019 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 of the Bank with reference to these standalone
financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 1” to this report;
g. In our opinion, the entity being a banking company, the remuneration to whole-time directors during the year ended March 31, 2019 has
been paid by the Bank in accordance with the provisions of Section 35B(1) of the Banking Regulation Act, 1949; and
h. 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:
i. The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note
C17 of Schedule 17, Note 16 (d) of Schedule 18 and Schedule 12 - Contingent liabilities in the standalone financial statements;
ii. The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any,
on long-term contracts including derivative contracts - Refer Note C17 of Schedule 17, Note 10 and 16 (d) of Schedule 18 forming
part of the standalone financial statements; and
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Bank.
Mumbai
April 20, 2019
For S. R. Batliboi & Co. LLP
Chartered Accountants
Firm’s Registration No.: 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
95
INDEPENDENT AUDITOR'S REPORT
ANNEXURE 1 TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE
STANDALONE FINANCIAL STATEMENTS OF HDFC BANK LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
To the Members of HDFC Bank Limited
We have audited the internal financial controls over financial reporting of HDFC Bank Limited (“the Bank”) as of March 31, 2019 in conjunction
with our audit of the standalone financial statements of the Bank for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Bank’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial
reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include
the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and
efficient conduct of its business, including adherence to the 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 Act.
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”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal
financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India.
Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls
operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial
reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial
controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the 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.
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INDEPENDENT AUDITOR'S REPORT
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, 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 March 31, 2019, 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.
Mumbai
April 20, 2019
For S. R. Batliboi & Co. LLP
Chartered Accountants
Firm’s Registration No.: 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
97
BALANCE SHEET
As at March 31, 2019
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-19
` in ‘000
As at
31-Mar-18
1
2
3
4
5
5,446,613
5,190,181
1,486,616,908
1,057,759,776
9,231,409,284
7,887,706,396
1,170,851,238
1,231,049,700
551,082,863
457,637,181
Total
12,445,406,906
10,639,343,234
6
7
8
9
10
11
467,636,184
1,046,704,730
345,840,208
182,446,097
2,905,878,784
2,422,002,416
8,194,012,167
6,583,330,908
40,300,043
36,072,045
491,739,520
368,787,038
Total
12,445,406,906
10,639,343,234
12
10,247,151,183
8,754,882,292
499,528,010
427,538,250
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 S. R. BATLIBOI & CO. LLP
Shyamala Gopinath
Chartered Accountants
Chairperson
Aditya Puri
Managing Director
Firm Registration No. 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
Kaizad Bharucha
Executive Director
Mumbai, April 20, 2019
& Company Secretary
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
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98
PROFIT AND LOSS ACCOUNT
For the year ended March 31, 2019
I
INCOME
Interest earned
Other income
II
EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
III PROFIT
Net profit for the year
Balance in Profit and Loss account brought forward
IV APPROPRIATIONS
Transfer to Statutory Reserve
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
Transfer to / (from) Investment Fluctuation Reserve
Balance carried over to Balance Sheet
Schedule
Year ended
31-Mar-19
` in ‘000
Year ended
31-Mar-18
13
14
989,720,505
802,413,550
176,258,849
152,203,042
Total
1,165,979,354
954,616,592
15
16
507,288,285
401,464,913
261,193,700
226,903,821
186,715,716
151,380,575
Total
955,197,701
779,749,309
210,781,653
174,867,283
404,534,155
326,689,434
Total
615,315,808
501,556,717
52,695,413
43,716,821
40,525,854
33,905,804
21,078,165
17,486,728
1,053,354
-
7,730,000
2,355,227
(442,018)
-
492,233,022
404,534,155
615,315,808
`
501,556,717
`
78.65
77.87
67.76
66.84
Total
V
EARNINGS PER EQUITY SHARE (Face value ` 2 per share)
Basic
Diluted
Significant accounting policies and notes to the financial statements
17 & 18
The schedules referred to above form an integral part of the
Profit and Loss Account.
As per our report of even date.
For and on behalf of the Board
For S. R. BATLIBOI & CO. LLP
Shyamala Gopinath
Chartered Accountants
Chairperson
Aditya Puri
Managing Director
Firm Registration No. 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
Kaizad Bharucha
Executive Director
Mumbai, April 20, 2019
& Company Secretary
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
99
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
CASH FLOW STATEMENT
For the year ended March 31, 2019
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
Provision for standard assets
Dividend from subsidiaries / associates / joint ventures
Contingency provisions
Adjustments for:
(Increase) / decrease in investments
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
Increase / (decrease) in other liabilities and provisions
Direct taxes paid (net of refunds)
Net cash flow (used in) / from operating activities
Cash flows used in investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Investment in subsidiaries / associates / joint ventures
Dividend from subsidiaries / associates / joint ventures
` in ‘000
Year ended
Year ended
31-Mar-19
31-Mar-18
321,996,620
266,972,951
11,401,037
9,063,418
152,437
1,570,448
4,534,626
3,599,102
(64,341)
3,102
65,773,639
51,784,408
47,066
304,543
6,483,767
5,974,259
(2,044,422)
(2,416,454)
5,028,840
3,891,829
413,309,269
340,747,606
(488,610,497)
(282,699,813)
(1,676,454,898)
(1,089,405,183)
1,343,702,888
1,451,309,833
(112,159,253)
63,297,493
81,830,094
(120,347,372)
(438,382,397)
362,902,564
(122,164,302)
(102,161,907)
(560,546,699)
260,740,657
(15,517,953)
(7,699,194)
212,346
95,089
-
(143,331)
2,044,422
2,416,454
Net cash flow used in investing activities
(13,261,185)
(5,330,982)
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CASH FLOW STATEMENT
For the year ended March 31, 2019
Cash flows from financing activities
Proceeds from issue of equity shares under preferential allotment
Proceeds from issue of shares under Qualified Institutions Placement and American Depository Receipt
offering (net of issue expenses)
` in ‘000
Year ended
Year ended
31-Mar-19
31-Mar-18
84,999,999
150,896,153
-
-
Money received on exercise of stock options by employees
22,008,150
27,259,099
Proceeds from issue of Additional Tier I and Tier II Capital Bonds
-
100,000,000
Redemption of subordinated debt
(28,750,000)
(20,750,000)
Increase / (decrease) in borrowings (excluding subordinate debt, perpetual debt and upper Tier II
(31,448,462)
411,511,034
instruments)
Dividend paid during the year
Tax on dividend paid during the year
Net cash flow from financing activities
Effect of exchange fluctuation on translation reserve
(33,842,896)
(28,312,716)
(6,682,958)
(5,593,088)
157,179,986
484,114,329
953,463
105,872
Net increase / (decrease) in cash and cash equivalents
(415,674,435)
739,629,876
Cash and cash equivalents as at April 1st
Cash and cash equivalents as at March 31st
1,229,150,827
489,520,951
813,476,392
1,229,150,827
As per our report of even date.
For and on behalf of the Board
For S. R. BATLIBOI & CO. LLP
Shyamala Gopinath
Chartered Accountants
Chairperson
Aditya Puri
Managing Director
Firm Registration No. 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
Kaizad Bharucha
Executive Director
Mumbai, April 20, 2019
& Company Secretary
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
101
SCHEDULES TO THE FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 1 - CAPITAL
Authorised capital
3,25,00,00,000 (31 March, 2018: 3,25,00,00,000) Equity Shares of ` 2/- each
Issued, subscribed and paid-up capital
2,72,33,06,610 (31 March, 2018: 2,59,50,90,267) Equity Shares of ` 2/- each
SCHEDULE 2 - RESERVES AND SURPLUS
I
Statutory reserve
Opening balance
Additions during the year
II
General reserve
Opening balance
Additions during the year
III
Balance in profit and loss account
IV
V
VI
VII
VIII
IX
Share premium
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18 (4)]
Amalgamation reserve
Opening balance
Additions during the year
Capital reserve
Opening balance
Additions during the year
Investment reserve account
Opening balance
Additions during the year
Deductions during the year
Investment fluctuation reserve
Opening balance
Additions during the year
Foreign currency translation account
Opening balance
Additions / (deductions) during the year
As at
31-Mar-19
` in ‘000
As at
31-Mar-18
6,500,000
6,500,000
Total
5,446,613
5,446,613
5,190,181
5,190,181
227,475,679
52,695,413
280,171,092
89,155,878
21,078,165
110,234,043
183,758,858
43,716,821
227,475,679
71,669,150
17,486,728
89,155,878
492,233,022
404,534,155
311,457,310
258,910,728
(1,262,858)
569,105,180
284,263,301
27,194,009
-
311,457,310
10,635,564
-
10,635,564
14,355,910
1,053,354
15,409,264
-
162,237
(162,237)
-
-
7,730,000
7,730,000
10,635,564
-
10,635,564
12,000,683
2,355,227
14,355,910
442,018
45,086
(487,104)
-
-
-
-
145,280
953,463
1,098,743
1,486,616,908
39,408
105,872
145,280
1,057,759,776
Total
Total
Total
Total
Total
Total
Total
Total
Total
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SCHEDULES TO THE FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 3 - DEPOSITS
A
I
Demand deposits
(i)
From banks
(ii)
From others
II
III
Savings bank deposits
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-19
` in ‘000
As at
31-Mar-18
34,189,112
27,237,788
1,390,788,586
1,165,587,962
Total
1,424,977,698
1,192,825,750
2,487,003,765
2,238,102,098
60,287,319
72,775,645
5,259,140,502
4,384,002,903
5,319,427,821
4,456,778,548
9,231,409,284
7,887,706,396
Total
Total
9,173,767,517
7,847,886,299
57,641,767
39,820,097
Total
9,231,409,284
7,887,706,396
174,000,000
138,000,000
9,155,858
47,848,399
278,316,800
342,299,500
182,320,000
211,070,000
186,750,000
126,750,000
Total
830,542,658
865,967,899
340,308,580
365,081,801
Total
1,170,851,238
1,231,049,700
Secured borrowings included in I and II above: Nil (March 31, 2018: Nil) other than borrowings of ` 17,400.00
crore (March 31, 2018: ` 14,239.95 crore) 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
70,403,952
82,217,908
69,509,400
56,278,541
374,772,935
289,244,562
36,396,576
29,896,170
Total
551,082,863
457,637,181
103
SCHEDULES TO THE FINANCIAL STATEMENTS
As at March 31, 2019
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)
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)
(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)
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-19
31-Mar-18
73,914,902
75,323,281
391,721,282
364,381,449
2,000,000
607,000,000
Total
Total
393,721,282
971,381,449
467,636,184
1,046,704,730
3,236,030
175,545
3,411,575
8,369,114
1,169,512
9,538,626
18,000,000
-
77,213,500
45,018,623
95,213,500
45,018,623
98,625,075
54,557,249
83,970,273
2,863,017
26,124,304
6,191,625
160,381,843
95,572,919
247,215,133
127,888,848
345,840,208
182,446,097
Total
Total
Total
Total
Total
2,396,593,098
1,883,648,036
-
-
3,980,968
1,197,947
286,969,969
347,873,284
38,264,875
38,264,875
165,017,843
135,541,438
Total
2,890,826,753
2,406,525,580
(i) Government securities (including Local Authorities)
7,236,612
4,218,786
(ii) Other investments
(a) Shares
(b) Debentures and bonds
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35,024
28,375
7,780,395
11,229,675
15,052,031
15,476,836
2,905,878,784
2,422,002,416
Total
Total
104
SCHEDULES TO THE FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 9 - ADVANCES
A
B
(i)
(ii)
(iii)
(i)
(ii)
(iii)
Bills purchased and discounted
Cash credits, overdrafts and loans repayable on demand
Term loans
Secured by tangible assets*
Covered by bank / government guarantees
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)
(ii)
Due from banks
Due from others
(a)
(b)
(c)
Bills purchased and discounted
Syndicated loans
Others
(Advances are net of provisions)
As at
31-Mar-19
` in ‘000
As at
31-Mar-18
320,438,660
216,592,055
2,022,142,263
1,681,643,640
5,851,431,244
4,685,095,213
Total
8,194,012,167
6,583,330,908
5,705,087,854
4,712,405,892
278,716,962
191,682,760
2,210,207,351
1,679,242,256
Total
8,194,012,167
6,583,330,908
2,174,223,445
1,728,666,886
270,921,248
137,708,318
9,754,795
8,357,208
5,489,286,340
4,505,343,473
Total
7,944,185,828
6,380,075,885
35,655,221
33,046,352
860,526
1,052,278
16,686,474
18,265,990
196,624,118
150,890,403
249,826,339
203,255,023
8,194,012,167
6,583,330,908
Total
Total
105
SCHEDULES TO THE FINANCIAL STATEMENTS
As at March 31, 2019
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
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As at
31-Mar-19
` in ‘000
As at
31-Mar-18
17,011,976
16,110,799
1,079,471
(106,705)
978,572
(77,395)
Total
17,984,742
17,011,976
5,296,456
4,778,473
579,806
(89,465)
592,562
(74,579)
Total
5,786,797
5,296,456
12,197,945
11,715,520
87,766,853
80,918,907
14,702,443
7,988,185
(1,541,302)
(1,140,239)
Total
100,927,994
87,766,853
63,410,328
55,983,854
10,826,104
8,471,338
(1,410,536)
(1,044,864)
Total
72,825,896
63,410,328
28,102,098
24,356,525
4,546,923
4,546,923
-
-
Total
4,546,923
4,546,923
106
SCHEDULES TO THE FINANCIAL STATEMENTS
As at March 31, 2019
Depreciation
As at 31 March of the preceding year
Charge for the year
Lease adjustment account
As at 31 March of the preceding year
Charge for the year
Unamortised cost of assets on lease
SCHEDULE 11 - OTHER ASSETS
I
II
III
IV
V
VI
Interest accrued
Advance tax / tax deducted at source (net of provisions)
Stationery and stamps
Non banking assets acquired in satisfaction of claims
Bond and share application money pending allotment
Security deposit for commercial and residential property
VII
Others*
As at
31-Mar-19
` in ‘000
As at
31-Mar-18
4,104,467
4,104,467
-
-
Total
4,104,467
4,104,467
442,456
442,456
-
-
Total
442,456
442,456
Total
40,300,043
36,072,045
-
-
118,313,579
90,737,523
19,441,857
18,456,556
345,677
333,306
-
146,197
-
-
5,112,892
5,004,128
348,379,318
254,255,525
Total
491,739,520
368,787,038
*Includes deferred tax asset (net) of ` 4,352.14 crore (previous year: ` 3,344.02 crore) and deposits
placed with NABARD / SIDBI / NHB on account of shortfall in lending to priority sector of ` 10,832.25
crore (previous year: ` 13,357.25 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
I
II
III
IV
V
Claims against the bank not acknowledged as debts - taxation
Claims against the bank not acknowledged as debts - others
Liability on account of outstanding forward exchange contracts
Liability on account of outstanding derivative contracts
Guarantees given on behalf of constituents:
- In India
- Outside India
VI
Acceptances, endorsements and other obligations
VII
Other items for which the Bank is contingently liable
107
12,612,436
11,359,333
1,190,364
1,042,772
5,561,859,469
4,344,675,713
3,639,008,146
3,482,687,822
536,870,994
448,741,092
752,190
557,296
475,617,760
395,452,699
19,239,824
70,365,565
Total
10,247,151,183
8,754,882,292
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
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)
Income earned by way of dividends from subsidiaries / associates and /
or joint ventures abroad / in India
VII 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
II
Payments to and provisions for employees
Rent, taxes and lighting
III Printing and stationery
IV Advertisement and publicity
V
VI
Depreciation on bank's property
Directors' fees / remuneration, allowances and expenses
VII Auditors' fees and expenses
VIII
Law charges
IX
X
Postage, telegram, telephone etc.
Repairs and maintenance
XI
Insurance
XII Other expenditure*
Year ended
31-Mar-19
` in ‘000
Year ended
31-Mar-18
775,441,902
626,617,888
199,974,579
162,223,679
6,357,012
7,947,012
5,238,842
8,333,141
Total
989,720,505
802,413,550
138,055,432
113,938,744
4,020,717
(152,437)
64,341
10,817,025
(1,570,448)
(3,102)
17,203,935
15,234,978
2,044,422
2,416,454
15,022,439
11,369,391
Total
176,258,849
152,203,042
410,518,998
327,713,471
95,063,879
72,903,298
1,705,408
848,144
Total
507,288,285
401,464,913
77,617,595
14,821,006
5,244,100
1,573,670
11,401,037
32,788
36,230
1,419,023
4,074,980
12,618,088
10,414,269
68,057,439
14,197,682
4,803,103
1,652,205
9,063,418
29,596
26,301
1,648,413
4,456,040
12,933,744
8,273,244
121,940,914
101,762,636
Total
261,193,700
226,903,821
*Includes professional fees, commission to sales agents, card and merchant acquiring expenses and
system management fees.
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108
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
SCHEDULE 17 - Significant accounting policies appended to and forming part of the financial
statements for the year ended March 31, 2019
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 read together with paragraph 7 of the
Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016, 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.
109
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account 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 Profit and Loss Account. 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 Profit and Loss Account 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 categorised under HFT category and netted off from investments in the Balance Sheet. The short position is
marked to market and loss, if any, is charged to the Profit and Loss Account while gain, if any, is ignored. Profit / Loss on settlement of
the short position is recognised in the Profit and Loss Account.
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’) / Financial
Benchmarks India Pvt Ltd. (‘FBIL’), 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 / FBIL.
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 / FBIL.
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 published by FIMMDA / FBIL.
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.
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110
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 are categorised under HTM category for the initial period of three years and valued at cost.
Such investment is 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 /
FBIL.
Net depreciation in the value, if any, compared to the acquisition cost, in any of the six groups, is charged to the Profit and Loss
Account. 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 Profit and Loss Account until received.
Repurchase and reverse repurchase transactions:
In accordance with the RBI guidelines, repurchase (Repo) and reverse repurchase (Reverse Repo) 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 Profit and Loss Account 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 Profit and Loss Account and included under Provisions
and Contingencies.
111
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Non-performing advances are written-off in accordance with the Bank’s policies. Recoveries from bad debts written-off are recognised
in the Profit and Loss Account 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.
In addition to the above, the Bank on a prudent 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 instalments / 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).
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112
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account 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 fulfilment of priority sector obligation and in the case of a purchase transaction the Bank buys the
fulfilment 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 Profit and Loss Account. 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 Profit and Loss Account and if the sale is for a value higher than the net book value,
the excess provision is credited to the Profit and Loss Account 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:
113
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
Estimated useful life specified
as assessed by the
under Schedule II of the
Bank
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:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:42)(cid:78)(cid:81)(cid:83)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:1)(cid:81)(cid:83)(cid:70)(cid:78)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:68)(cid:73)(cid:66)(cid:83)(cid:72)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:71)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:78)(cid:66)(cid:74)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:74)(cid:78)(cid:66)(cid:83)(cid:90)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:15)
(cid:52)(cid:80)(cid:71)(cid:85)(cid:88)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:90)(cid:84)(cid:85)(cid:70)(cid:78)(cid:1)(cid:69)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:79)(cid:69)(cid:74)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:66)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:22)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:84)(cid:15)
(cid:39)(cid:80)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:81)(cid:86)(cid:83)(cid:68)(cid:73)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:80)(cid:77)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:13)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:84)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:14)(cid:83)(cid:66)(cid:85)(cid:66)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:15)
(cid:56)(cid:73)(cid:70)(cid:79)(cid:70)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:66)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:86)(cid:84)(cid:70)(cid:71)(cid:86)(cid:77)(cid:1)(cid:77)(cid:74)(cid:71)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:86)(cid:79)(cid:66)(cid:78)(cid:80)(cid:83)(cid:85)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:74)(cid:84)(cid:1)(cid:68)(cid:73)(cid:66)(cid:83)(cid:72)(cid:70)(cid:69)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
revised remaining useful life of the said asset.
(cid:49)(cid:83)(cid:80)(cid:71)(cid:74)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:84)(cid:66)(cid:77)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:78)(cid:78)(cid:80)(cid:87)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:85)(cid:90)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:66)(cid:89)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:86)(cid:85)(cid:80)(cid:83)(cid:90)(cid:1)(cid:83)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:13)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:15)
(cid:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)` 5,000 individually are fully depreciated in the year of purchase.
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 Profit and Loss Account to the extent the carrying amount of assets exceeds their estimated recoverable amount.
6
Translation of foreign currency items
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 and offshore banking units) 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 Profit and Loss Account.
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 disposal of the non-integral foreign operations in accordance with AS -
11, The Effects of Changes in Foreign Exchange Rates.
Foreign currency denominated contingent liabilities on account of foreign exchange and derivative contracts, guarantees, letters of
credit, acceptances and endorsements are reported at closing rates of exchange notified by FEDAI as at the Balance Sheet date.
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
7
Foreign exchange and derivative contracts
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 forex 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 Profit and Loss Account. 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.
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 Profit and Loss
Account.
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 Profit and Loss Account 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 Profit and Loss Account.
8
Revenue recognition
Interest income is recognised in the Profit and Loss Account 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 communication.
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.
115
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account.
Superannuation:
Employees of the Bank, above a prescribed grade, are entitled to receive retirement benefits under the Bank’s Superannuation Fund.
The Bank contributes a sum equivalent to 13% of the employee’s eligible annual basic salary (15% for the whole time directors and for
certain eligible erstwhile Centurion Bank of Punjab (eCBoP) staff) to insurance companies, which administer the fund. The Bank has no
liability for future superannuation fund benefits other than its contribution, and recognises such contributions as an expense in the year
incurred, as such contribution is in the nature of defined contribution.
Provident fund:
In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund. The Bank contributes an
amount, on a monthly basis, at a determined rate (currently 12% of employee’s basic salary). Of this, the Bank contributes an amount
equal to 8.33% of employee’s basic salary up to a maximum salary level of ` 15,000/- per month, to the Pension Scheme administered
by the Regional Provident Fund Commissioner (RPFC). The balance amount is contributed to a fund set up by the Bank and administered
by a Board of Trustees. In respect of eCBoP employees, employer’s and employee’s share of contribution to Provident Fund till March
2009, was administered by RPFC and from April 2009 onwards, the same is transferred to the fund set up by the Bank and administered
by the Board of Trustees. In respect of eLKB employees, the Bank contributes to a fund set up by eLKB and administered by a Board
of Trustees. The Bank recognises such contributions as an expense in the year in which it is incurred. Interest payable to the members
of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident
Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Bank.
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 an independent actuarial valuation as at the Balance Sheet date, which includes assumptions about demographics, early
retirement, salary increases and interest rates.
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 an
independent actuarial valuation as at the Balance Sheet date.
New Pension Scheme (NPS):
In respect of employees who opt for contribution to the NPS, the Bank contributes certain percentage of the basic salary of employees
to the aforesaid scheme, a defined contribution plan, which is managed and administered by pension fund management companies.
The Bank has no liability other than its contribution, and recognises such contributions as an expense in the year incurred.
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 an independent actuarial valuation as at the Balance Sheet date and included in other
liabilities and provisions.
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.
117
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
The Bank also deals in bullion on a borrowing and lending basis and the interest paid / received thereon is classified as interest expense
/ income respectively.
12
Lease accounting
Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss account 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.
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
A disclosure of contingent liability is made when there is:
(cid:116)(cid:1)
(cid:66)(cid:1)(cid:81)(cid:80)(cid:84)(cid:84)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:66)(cid:1)(cid:81)(cid:66)(cid:84)(cid:85)(cid:1)(cid:70)(cid:87)(cid:70)(cid:79)(cid:85)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:89)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:67)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:71)(cid:74)(cid:83)(cid:78)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:68)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:83)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:80)(cid:68)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)
of one or more uncertain future events not within the control of the Bank; or
(cid:116)(cid:1)
(cid:66)(cid:1)(cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:66)(cid:1)(cid:81)(cid:66)(cid:84)(cid:85)(cid:1)(cid:70)(cid:87)(cid:70)(cid:79)(cid:85)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:74)(cid:84)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)(cid:74)(cid:85)(cid:1)(cid:74)(cid:84)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:81)(cid:83)(cid:80)(cid:67)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:79)(cid:1)(cid:80)(cid:86)(cid:85)(cid:71)(cid:77)(cid:80)(cid:88)(cid:1)(cid:80)(cid:71)(cid:1)(cid:83)(cid:70)(cid:84)(cid:80)(cid:86)(cid:83)(cid:68)(cid:70)(cid:84)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:67)(cid:70)(cid:1)
required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
(cid:1)
(cid:56)(cid:73)(cid:70)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1) (cid:74)(cid:84)(cid:1) (cid:66)(cid:1) (cid:81)(cid:80)(cid:84)(cid:84)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1) (cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:80)(cid:83)(cid:1) (cid:66)(cid:1) (cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:1) (cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:74)(cid:79)(cid:1) (cid:83)(cid:70)(cid:84)(cid:81)(cid:70)(cid:68)(cid:85)(cid:1) (cid:80)(cid:71)(cid:1) (cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:77)(cid:74)(cid:76)(cid:70)(cid:77)(cid:74)(cid:73)(cid:80)(cid:80)(cid:69)(cid:1) (cid:80)(cid:71)(cid:1) (cid:80)(cid:86)(cid:85)(cid:71)(cid:77)(cid:80)(cid:88)(cid:1) (cid:80)(cid:71)(cid:1) (cid:83)(cid:70)(cid:84)(cid:80)(cid:86)(cid:83)(cid:68)(cid:70)(cid:84)(cid:1) (cid:74)(cid:84)(cid:1) (cid:83)(cid:70)(cid:78)(cid:80)(cid:85)(cid:70)(cid:13)(cid:1) (cid:79)(cid:80)(cid:1)
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 Profit and Loss
Account.
119
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
SCHEDULE 18 - Notes forming part of the financial statements for the year ended
March 31, 2019
Amounts in notes forming part of the financial statements for the year ended March 31, 2019 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 20, 2019 have proposed a dividend of ` 15 per equity share (previous year: ` 13.00
per equity share) aggregating ` 4,924.64 crore (previous year: ` 4,067.07 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’, the Bank has not appropriated the proposed dividend from the Profit and Loss Account.
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 assets ratio (‘Capital Adequacy Ratio’) as at March 31, 2019 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
As at March 31,
2018
7.375
8.875
10.875
2019
7.525
9.025
11.025
(% of RWAs)
2020
8.200
9.700
11.700
The above minimum CET1, tier I and total capital ratio requirements include capital conservation buffer (CCB) and additional capital
applicable to us as Domestic-Systemically Important Bank (D-SIB).
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 III
Tier I
Of which CET1
Tier II
March 31, 2019
March 31, 2018
(` crore)
147,022.76
139,172.76
12,434.88
159,457.64
931,929.87
15.78%
14.93%
1.33%
17.11%
106,004.90
98,004.90
12,535.47
118,540.37
800,125.98
13.25%
12.25%
1.57%
14.82%
Total
During the year ended March 31, 2019, the Bank has not raised Additional Tier I and Tier II capital. During the previous year, the Bank
had raised debt capital eligible for inclusion in Additional Tier I capital and Tier II capital under the Basel III capital regulations amounting
to ` 8,000.00 crore and ` 2,000.00 crore respectively.
HDFC Bank Limited Annual Report 2018 - 2019
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120
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
As on March 31, 2019, the Bank’s subordinated and perpetual debt capital instruments amounted to ` 10,232.00 crore (previous year:
` 13,107.00 crore) and ` 8,000.00 crore (previous year: ` 8,000.00 crore) respectively.
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
Pursuant to the shareholder and regulatory approvals, the Bank on July 17, 2018, made a preferential allotment of 3,90,96,817 equity
shares to Housing Development Finance Corporation Limited at a price of ` 2,174.09 per equity share (including share premium of
` 2,172.09 per equity share), aggregating to ` 8,500.00 crore and on August 2, 2018, concluded a Qualified Institutional Placement
(QIP) of 1,28,47,222 equity shares at a price of ` 2,160.00 per equity share aggregating to ` 2,775.00 crore and an American Depository
Receipt (ADR) offering of 1,75,00,000 ADR (representing 5,25,00,000 equity shares) at a price of USD 104 per ADR, aggregating to USD
1,820.00 million (equivalent `12,440.90 crore). Consequent to the above issuances, share capital increased by ` 20.89 crore and share
premium increased by ` 23,568.72 crore, net of share issue expenses of ` 126.29 crore.
During the year ended March 31, 2019, the Bank allotted 2,37,72,304 equity shares (previous year: 3,25,44,550 equity shares) aggregating
to face value ` 4.75 crore (previous year: ` 6.51 crore) in respect of stock options exercised. Accordingly, the share capital increased by
` 4.75 crore (previous year: ` 6.51 crore) and the share premium increased by ` 2,196.06 crore (previous year: ` 2,719.40 crore).
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 Preferential allotment / QIP / ADR offering
Addition pursuant to stock options exercised
Closing balance
3.
Earnings per equity share
March 31, 2019
March 31, 2018
519.02
20.89
4.75
544.66
512.51
-
6.51
519.02
Basic and diluted earnings per equity share of the Bank have been calculated based on the net profit after tax of ` 21,078.17 crore
(previous year: ` 17,486.73 crore) and the weighted average number of equity shares outstanding during the year of 2,68,00,34,029
(previous year: 2,58,05,38,505).
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, 2019
March 31, 2018
2.00
78.65
(0.78)
77.87
2.00
67.76
(0.92)
66.84
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.
121
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Following is the reconciliation of the weighted average number of equity shares used in the computation of basic and diluted earnings
per share:
Particulars
For the years ended
March 31, 2019
March 31, 2018
Weighted average number of equity shares used in computing basic earnings per equity
2,68,00,34,029
2,58,05,38,505
share
Effect of potential equity shares outstanding
2,66,37,645
3,55,30,885
Weighted average number of equity shares used in computing diluted earnings per equity
2,70,66,71,674
2,61,60,69,390
share
4.
Reserves and Surplus
Statutory Reserve
The Bank has made an appropriation of ` 5,269.54 crore (previous year: ` 4,371.68 crore) out of profits for the year ended March 31,
2019 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, 2019, the Bank appropriated ` 105.34 crore (previous year: ` 235.52 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 ` 2,107.82 crore (previous year: ` 1,748.67 crore) out of profits for the year ended March 31,
2019 to the General Reserve.
Investment Fluctuation Reserve
In accordance with RBI guidelines, banks are required to create an Investment Fluctuation Reserve (IFR) equivalent to 2% of their HFT
and AFS investment portfolios, within a period of three years starting fiscal 2019. Accordingly, during the year ended March 31, 2019,
the Bank has made an appropriation of ` 773.00 crore, to the Investment Fluctuation Reserve from the Profit and Loss Account.
Investment Reserve Account
During the year ended March 31, 2019, the net transfer between Investment Reserve Account and Profit and Loss Account was Nil
(previous year: ` 44.20 crore (net) transferred by the Bank from the Investment Reserve Account to the Profit and Loss Account) as per
the RBI guidelines.
Draw down from reserves
Share Premium
The Bank has not undertaken any drawdown from share premium during the year ended March 31, 2019 except towards share issue
expenses of ` 126.29 crore, incurred for the equity raised through the QIP and ADR offering, which have been adjusted against the share
premium account in terms of section 52 of the Companies Act, 2013. There had been no drawdown from reserves during the year ended
March 31, 2018.
HDFC Bank Limited Annual Report 2018 - 2019
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122
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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, 2019, 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 from date of expiry
of vesting period. During the years ended March 31, 2019 and March 31, 2018, 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 Option Plans
(cid:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
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 (`)
7,54,43,800
1,98,95,000
2,37,72,304
32,60,085
6,83,06,411
4,03,04,861
1,050.22
2,060.47
925.79
1,506.99
1,365.97
1,017.78
(cid:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
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
123
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
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
Plan
Plan C
Plan D
Plan E
Plan F
Plan G
Range of exercise price
(`)
Number of shares
Weighted average
Weighted average
arising
life of options
out of options
(in years)
exercise price
(`)
680.00 to 835.50
680.00
680.00
835.50 to 1,462.15
2,006.05 to 2,090.45
15,37,400
6,59,900
24,98,700
4,42,38,411
1,93,72,000
0.87
0.97
0.96
2.71
3.57
685.70
680.00
680.00
1,134.48
2,060.45
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
Plan
Plan C
Plan D
Plan E
Plan F
Fair value methodology
Range of exercise price
(`)
Number of shares
Weighted average
Weighted average
arising
life of options
out of options
(in years)
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
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 1,98,95,000 options during the year ended March 31, 2019 (previous year: 1,68,82,050). The various assumptions
considered in the pricing model for the ESOPs granted during the year ended March 31, 2019 are:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the options
March 31, 2019
0.62% to 0.65%
14.53% to 18.68%
7.23% to 8.31%
1 to 6 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 net profit
(` crore)
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)
March 31, 2019
March 31, 2018
21,078.17
17,486.73
-
535.90
20,542.27
(`)
78.65
76.65
77.87
75.89
-
650.41
16,836.32
(`)
67.76
65.24
66.84
64.36
HDFC Bank Limited Annual Report 2018 - 2019
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124
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
7.
Other liabilities
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:73)(cid:70)(cid:77)(cid:69)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:85)(cid:80)(cid:88)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:66)(cid:83)(cid:69)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:80)(cid:1)` 3,639.66 crore as at March 31, 2019 (previous year: ` 2,989.62
crore). These are included under other liabilities.
(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.
(cid:57)
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.
(cid:57)
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.
(cid:57)
(cid:57)
Provision for standard assets of overseas branches is made at higher of rates prescribed by the overseas regulator or RBI.
Pursuant to a recent RBI guideline issued in January 2019, additional 5% provision is maintained in respect of Micro, Small
and Medium Enterprises (MSME) sector standards accounts which have got restructured.
(cid:57)
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%.
(cid:57)
In accordance with RBI guidelines, an additional provision is made @ 3% on the incremental exposure to the “Specified
Borrowers” (except NBFCs / HFCs) beyond normally permitted lending limit (‘NPLL’) as defined by RBI.
(cid:116)(cid:1)
(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:70)(cid:79)(cid:85)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)` 800.10 crore as at March 31, 2019 (previous year: ` 401.11 crore) in respect of
advances.
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1) (cid:35)(cid:66)(cid:79)(cid:76)(cid:1) (cid:73)(cid:66)(cid:84)(cid:1) (cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:70)(cid:69)(cid:1) (cid:72)(cid:83)(cid:80)(cid:84)(cid:84)(cid:1) (cid:86)(cid:79)(cid:83)(cid:70)(cid:66)(cid:77)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:72)(cid:66)(cid:74)(cid:79)(cid:1) (cid:80)(cid:79)(cid:1) (cid:71)(cid:80)(cid:83)(cid:70)(cid:74)(cid:72)(cid:79)(cid:1) (cid:70)(cid:89)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:69)(cid:70)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1) (cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:66)(cid:68)(cid:85)(cid:84)(cid:1) (cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1) (cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:72)(cid:83)(cid:80)(cid:84)(cid:84)(cid:1)
unrealised loss on foreign exchange and derivative contracts under other liabilities. Accordingly, other liabilities as at March 31,
2019 include unrealised loss on foreign exchange and derivative contracts of ` 12,772.60 crore (previous year: ` 5,093.04 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
125
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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, 2019 the Bank holds standard asset provisions of ` 203.48 crore (previous year:
` 180.30 crore) and maintains capital (including CCB & D-SIB) of ` 959.77 crore (previous year: ` 723.08 crore) in respect of the
unhedged foreign currency exposure of its customers.
9.
Investments
(cid:1)(cid:116)(cid:1)
(cid:55)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)(cid:1)
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:1)(cid:116)(cid:1)
(cid:46)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:73)(cid:70)(cid:77)(cid:69)(cid:1)(cid:85)(cid:80)(cid:88)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:79)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)
Particulars
Opening balance
Add: Provision made during the year (including provision on
non-performing investments)
Less: Write-off, write back of excess provision during the year
Closing balance
March 31, 2019
March 31, 2018
(cid:9)` crore)
289,350.52
1,512.03
240,899.77
1,560.65
267.85
6.83
289,082.67
1,505.20
247.21
12.96
240,652.56
1,547.69
(` crore)
March 31, 2019
March 31, 2018
260.17
51.58
37.07
274.68
64.48
204.91
9.22
260.17
Movement in provisions held towards depreciation on investments has been reckoned on a yearly basis.
(cid:116)(cid:1)
(cid:51)(cid:70)(cid:81)(cid:80)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)
(cid:23)
Details of repo / reverse repo deals excluding triparty repo / reverse repo (in face value terms) done during the year ended
(` crore)
March 31, 2019:
Particulars
Securities sold under repo
1. Government securities
2. Corporate debt securities
3. Any other securities
Securities purchased under reverse repo
1. Government securities
2. Corporate debt securities
3. Any other securities
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily average
outstanding
during the year
Outstanding
as at
March 31, 2019
-
-
-
-
-
-
40,230.19
6,533.93
17,551.52
-
-
-
-
62,745.05
8,320.06
-
-
-
-
-
-
-
-
-
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
126
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:23) Details of repo / reverse repo deals (in face value terms) done during the year ended March 31, 2018:
(` crore)
Particulars
outstanding
outstanding
outstanding
as at
during the year
during the year
during the year
March 31, 2018
Minimum
Maximum
Daily average
Outstanding
Securities sold under repo
1. Government securities
2. Corporate debt securities
3. Any other securities
Securities purchased under reverse repo
1. Government securities
2. Corporate debt securities
3. Any other securities
-
-
-
-
-
-
20,557.80
-
-
62,745.05
-
-
1,433.97
-
-
8,672.06
-
-
13,454.44
-
-
62,745.05
-
-
(cid:23)
Triparty repo / reverse repo transactions are repo / reverse repo transactions where a triparty agent acts as an intermediary
between the two parties to the repo / reverse repo to facilitate services such as collateral selection, payment and settlement
and custody and management during the life of the transaction. The details of triparty repo / reverse repo transactions
undertaken by the Bank during the year ended March 31, 2019 (previous year: Nil) are given below. Amount of funds
(` crore)
borrowed or lent have been reckoned for the purpose of the below table.
Particulars
outstanding
outstanding
outstanding
as at
during the year
during the year
during the year
March 31, 2019
Minimum
Maximum
Daily average
Outstanding
Securities sold under triparty repo
1. Government securities
2. Corporate debt securities
3. Any other securities
Securities purchased under triparty repo
1. Government securities
2. Corporate debt securities
3. Any other securities
-
-
-
-
-
-
36,798.00
-
-
7,621.35
-
-
5,650.95
-
-
93.02
-
-
(cid:1)
(cid:116)(cid:1)
(cid:47)(cid:80)(cid:79)(cid:14)(cid:52)(cid:45)(cid:51)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:81)(cid:80)(cid:83)(cid:85)(cid:71)(cid:80)(cid:77)(cid:74)(cid:80)
(cid:23)
Issuer-wise composition of non-SLR investments as at March 31, 2019:
-
-
-
7,621.35
-
-
(` crore)
Sr.
No.
Issuer
Extent of
Extent of
“below
Extent of
Extent of
Amount(1)
private
investment
“unrated”
“unlisted”
placement#
grade”
securities# (2)
securities# (3)
Public sector undertakings
Financial institutions
Banks
Private corporate
669.08
2,345.29
546.01
669.08
1,260.38
230.00
securities#
-
-
-
29,100.95
25,878.77
25.00
Subsidiaries / Joint ventures(4)
Others
Provision held towards depreciation
3,826.49
13,991.77
(274.68)
3,826.49
4,976.38
-
-
1
2
3
4
5
6
7
-
-
-
21.23
-
1.33
-
-
-
4,134.39
-
-
Total
50,204.91
36,841.10
25.00
22.56
4,134.39
127
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
#
Amounts reported under these columns above are not mutually exclusive.
(1)
Excludes investments in securities issued by foreign sovereign aggregating to ` 723.66 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.
(4)
Investments in debt securities issued by subsidiaries / joint ventures have been classified under private corporate.
(cid:23)
Issuer-wise composition of non-SLR investments as at March 31, 2018:
(` crore)
Sr.
No.
Issuer
Extent of
Extent of
“below
Extent of
Extent of
Amount(1)
private
investment
“unrated”
“unlisted”
placement#
grade”
securities# (2)
securities# (3)
securities#
1
2
3
4
5
6
7
Public sector undertakings
Financial institutions
Banks
Private corporate
225.31
100.00
4,723.31
1,414.21
839.15
80.00
33,830.07
29,375.78
Subsidiaries / Joint ventures
3,826.49
3,826.49
Others
10,228.23
2,212.50
Provision held towards depreciation
(258.99)
Total
53,413.57
37,008.98
-
-
-
-
-
-
-
-
-
-
-
270.94
270.94
39.46
5,106.35
-
-
-
-
310.40
5,377.29
#
Amounts reported under these columns above are not mutually exclusive.
(1)
Excludes investments in securities issued by foreign sovereign aggregating 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
(cid:23)(cid:3)
Non-performing non-SLR investments:
Particulars
Opening balance
Additions during the year
Reductions during the year
Closing balance
Total provisions held
(` crore)
March 31, 2019
March 31, 2018
92.07
-
3.82
88.25
75.93
51.57
41.00
0.50
92.07
76.67
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
128
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:68)(cid:66)(cid:85)(cid:70)(cid:72)(cid:80)(cid:83)(cid:90)(cid:14)(cid:88)(cid:74)(cid:84)(cid:70)(cid:1)
The details of investments held under the three categories viz. Held for Trading (HFT), Available for Sale (AFS) and Held to Maturity
(` crore)
(HTM) are as under:
Particulars
Government securities
Other approved securities
Shares
Debentures and bonds
Subsidiary / Joint ventures
Others
Total
(cid:116)(cid:1)
Securities kept as margin
As at March 31, 2019
As at March 31, 2018
HFT
AFS
HTM
Total
12,831.25
-
-
3,524.01
-
9,005.39
25,360.65
66,184.10 161,367.62 240,382.97
-
401.60
29,475.04
3,826.49
16,501.78
98,605.86 166,621.37 290,587.88
-
401.60
24,530.37
-
7,489.79
-
-
1,420.66
3,826.49
6.60
HFT
2,471.38
-
-
5,023.15
-
8,005.72
15,500.25
AFS
HTM
Total
49,272.32 137,042.98 188,786.68
-
122.63
35,910.30
3,826.49
13,554.15
84,406.11 142,293.89 242,200.25
-
122.63
29,466.48
-
5,544.68
-
-
1,420.67
3,826.49
3.75
The details of securities that are kept as margin are as under:
(` crore)
Sr. No. Particulars
Face value as at March 31,
2018
2019
I.
Securities kept as margin with Clearing Corporation of India towards:
Collateral and funds management - Securities segment
a)
Collateral and funds management - Collateralised Borrowing and
b)
1,420.00
47,713.88
1,520.00
25,770.78
Lending Obligation (CBLO) segment / Triparty Repo
Default fund - Forex Forward segment
Default fund - Forex Settlement segment
Default fund - Rupee Derivatives (Guaranteed Settlement) segment
Default fund - Securities segment
Default fund - CBLO / Triparty repo segment
c)
d)
e)
f)
g)
Securities kept as margin with the RBI towards:
Real Time Gross Settlement (RTGS)
a)
Repo transactions
b)
Reverse repo transactions
c)
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.
II.
III.
IV.
V.
110.00
51.05
43.00
65.00
45.00
72,411.67
37,216.66
-
309.72
241.00
13.00
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
(cid:116)(cid:1)
(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1) (cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1) (cid:66)(cid:84)(cid:1) (cid:66)(cid:85)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:35)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1) (cid:52)(cid:73)(cid:70)(cid:70)(cid:85)(cid:1) (cid:69)(cid:66)(cid:85)(cid:70)(cid:1) (cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:1) (cid:68)(cid:80)(cid:78)(cid:78)(cid:70)(cid:83)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1) (cid:81)(cid:66)(cid:81)(cid:70)(cid:83)(cid:1) (cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1) (cid:85)(cid:80)(cid:1) ` 2,510.01 crore (previous year:
` 3,357.99 crore).
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:51)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:80)(cid:71)(cid:1)(cid:42)(cid:79)(cid:69)(cid:74)(cid:66)(cid:13)(cid:1)(cid:87)(cid:74)(cid:69)(cid:70)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:68)(cid:74)(cid:83)(cid:68)(cid:86)(cid:77)(cid:66)(cid:83)(cid:84)(cid:1)(cid:69)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:34)(cid:81)(cid:83)(cid:74)(cid:77)(cid:1)(cid:19)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:43)(cid:86)(cid:79)(cid:70)(cid:1)(cid:18)(cid:22)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:1)(cid:83)(cid:70)(cid:84)(cid:81)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:77)(cid:90)(cid:1)(cid:72)(cid:83)(cid:66)(cid:79)(cid:85)(cid:70)(cid:69)(cid:1)(cid:67)(cid:66)(cid:79)(cid:76)(cid:84)(cid:1)(cid:66)(cid:79)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:81)(cid:83)(cid:70)(cid:66)(cid:69)(cid:1)
provisioning for mark to market losses on investments held in AFS and HFT for the quarters ended December 31, 2017, March 31,
2018 and June 30, 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 quarter in which the mark to market losses were incurred and has not amortised the same as provided in the
above mention circulars.
129
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:37)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:84)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:67)(cid:70)(cid:70)(cid:79)(cid:1)(cid:79)(cid:80)(cid:1)(cid:84)(cid:66)(cid:77)(cid:70)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:16)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:41)(cid:53)(cid:46)(cid:1)(cid:68)(cid:66)(cid:85)(cid:70)(cid:72)(cid:80)(cid:83)(cid:90)(cid:1)
in excess of 5% of the book value of investments held in the HTM category at the beginning of the year.
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:57)
(cid:57)
(cid:57)
sales to the RBI under pre-announced open market operation auctions;
repurchase of Government securities by Government of India from banks.
additional shifting of securities explicitly permitted by the RBI from time to time; and
direct sales from HTM for bringing down SLR holdings in the HTM category.
10. Derivatives
(cid:116)(cid:1)
(cid:39)(cid:80)(cid:83)(cid:88)(cid:66)(cid:83)(cid:69)(cid:1)(cid:51)(cid:66)(cid:85)(cid:70)(cid:1)(cid:34)(cid:72)(cid:83)(cid:70)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:9)(cid:39)(cid:51)(cid:34)(cid:10)(cid:1)(cid:16)(cid:1)(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:51)(cid:66)(cid:85)(cid:70)(cid:1)(cid:52)(cid:88)(cid:66)(cid:81)(cid:84)(cid:1)(cid:9)(cid:42)(cid:51)(cid:52)(cid:10)(cid:11)(cid:27)(cid:1)(cid:1)
(cid:1)
(cid:1)(cid:9)` crore)
Sr.
No.
i)
ii)
iii)
iv)
v)
vi)
Particulars
March 31, 2019
March 31, 2018
The total notional principal of swap agreements
315,803.02
308,463.47
Total losses which would be incurred if counter parties failed to fulfill their
obligations under the agreements
Collateral required by the Bank upon entering into swaps
Concentration of credit risk arising from swaps (%)**
Concentration of credit risk arising from swaps (Amount)**
The fair value of the swap book
2,796.54
-
64.62%
1,807.15
88.18
1,063.13
-
60.62%
644.45
113.36
* 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, 2019 and March 31, 2018.
The nature and terms of Rupee IRS outstanding as at March 31, 2019 are set out below:
(` crore, except numbers)
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Nos.
Notional principal
Benchmark
Terms
1
4
2,249
2,358
397
307
25.00
INBMK
1,250.00
INCMT
117,220.21
120,778.99
OIS
OIS
23,018.50
MIFOR
15,985.00
MIFOR
Total
278,277.70
Floating receivable v/s fixed payable
Floating receivable v/s fixed payable
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
The nature and terms of foreign currency IRS as on March 31, 2019 are set out below:
(` crore, except numbers)
Nature
Trading
Trading
Nos.
Notional principal
Benchmark
Terms
90
202
13,859.57 USD LIBOR
Fixed receivable v/s floating payable
23,665.75 USD LIBOR
Floating receivable v/s fixed payable
Total
37,525.32
HDFC Bank Limited Annual Report 2018 - 2019
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130
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
There were no FRA outstanding as on March 31, 2019.
The nature and terms of Rupee IRS outstanding as at March 31, 2018 are set out below:
(` crore, except numbers)
Nature
Nos.
Notional principal
Benchmark
Terms
Trading
Trading
Trading
Trading
Trading
Trading
Trading
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
Nos.
Notional principal
Benchmark
Terms
Trading
Trading
Trading
Trading
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
The nature and terms of 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
(cid:116)(cid:1)
(cid:38)(cid:89)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:1)(cid:85)(cid:83)(cid:66)(cid:69)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:69)(cid:70)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:27)(cid:1)
(cid:1)
(cid:1)(cid:9)` crore)
Sr.
No.
Particulars
March 31, 2019
March 31, 2018
i)
The total notional principal amount of exchange traded interest rate derivatives
undertaken during the years reported
ii)
The total notional principal amount of exchange traded interest rate derivatives
outstanding
iii)
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’
Nil
Nil
N.A.
N.A.
Nil
Nil
N.A.
N.A.
131
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:50)(cid:86)(cid:66)(cid:77)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:69)(cid:70)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)
Overview of business and processes
Derivatives are financial instruments whose characteristics are derived from underlying assets, or from interest rates, 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 can create structures such as interest rate collar, cap spreads and floor spreads.
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 (including Exchange Traded Currency Option) 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 yields or implied volatility. The Bank also deals in derivatives to
hedge the risk embedded in some of its Balance Sheet assets or liabilities.
HDFC Bank Limited Annual Report 2018 - 2019
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132
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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.
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, stop loss triggers 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 units. 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 in an effective
hedge relationship, 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 Profit and Loss Account in the relevant
period. Gain or losses arising from hedge ineffectiveness, if any, is recognised in the Profit and Loss Account. 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:116)(cid:1)
Provisioning, collateral and credit risk mitigation
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.
133
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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.
(cid:116)(cid:1)
(cid:50)(cid:86)(cid:66)(cid:79)(cid:85)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:80)(cid:79)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:69)(cid:70)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)
(` crore)
Sr.
No.
Particulars
Currency derivatives
Interest rate derivatives
March 31, 2019 March 31, 2018 March 31, 2019 March 31, 2018
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
-
-
-
-
47,914.10
39,591.46
315,986.71
308,677.32
823.55
(663.14)
3,234.07
684.79
(722.09)
2,740.20
2,797.45
(2,709.26)
4,888.09
1,064.77
(951.41)
3,509.79
-
29.84
-
29.84
-
5.97
-
7.62
0.24
31.32
-
0.88
-
94.61
-
94.61
-
31.51
-
33.94
15.93
80.86
-
26.92
(cid:57)
As at March 31, 2019, the notional principal amount of outstanding foreign exchange contracts classified as hedging
and trading amounted to ` 6,569.73 crore (previous year: ` 14,070.60 crore) and ` 549,616.22 crore (previous year:
` 420,396.97 crore) respectively.
(cid:57)
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.
(cid:57)
For the purpose of this disclosure, currency derivatives include currency options purchased and sold and cross currency
swaps.
(cid:57)
(cid:57)
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.
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:57)
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.
11. Asset quality
(cid:116)(cid:1)
(cid:46)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:47)(cid:49)(cid:34)(cid:84)(cid:1)(cid:9)(cid:71)(cid:86)(cid:79)(cid:69)(cid:70)(cid:69)(cid:10)(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)(cid:9)` crore)
Particulars
(i) Net NPAs to net advances
(ii) Movement of NPAs (Gross)
(a) Opening balance
(b) Additions (fresh NPAs) during the year
(c) Reductions during the year:
- Upgradation*
- Recoveries (excluding recoveries made from upgraded accounts)
- Write-offs
(d) Closing balance
(iii) Movement of net NPAs
(a) Opening balance
(b) Additions during the year
(c) Reductions during the year
(d) Closing balance
(iv) Movement of provisions for NPAs (excluding provisions on standard assets)
(a) Opening balance
(b) Additions during the year
(c) Write-offs
(d) Write-back of excess provisions
(e) Closing balance
March 31, 2019
March 31, 2018
0.39%
0.40%
8,606.97
14,382.03
11,764.84
3,251.98
3,932.50
4,580.36
11,224.16
2,601.02
4,946.36
4,332.86
3,214.52
6,005.95
9,435.67
4,580.36
2,851.62
8,009.64
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
NPAs include all loans, investments and foreign exchange and derivatives that are classified as non-performing by the Bank.
*includes those accounts where all overdue have been paid.
135
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:53)(cid:70)(cid:68)(cid:73)(cid:79)(cid:74)(cid:68)(cid:66)(cid:77)(cid:1)(cid:80)(cid:83)(cid:1)(cid:81)(cid:83)(cid:86)(cid:69)(cid:70)(cid:79)(cid:85)(cid:74)(cid:66)(cid:77)(cid:1)(cid:88)(cid:83)(cid:74)(cid:85)(cid:70)(cid:14)(cid:80)(cid:71)(cid:71)(cid:84)
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. Movement in the stock of
technically or prudentially written-off accounts is given below:
(` crore)
Particulars
March 31, 2019
March 31, 2018
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
-
-
-
-
-
-
-
-
(cid:116)(cid:1)
(cid:39)(cid:77)(cid:80)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)
Floating provision of ` 1,451.28 crore (previous year: ` 1,451.28 crore) have been included under “Other Liabilities”. Movement in
floating provision is given below:
Particulars
Opening balance
Provisions made / reinstated during the year
Draw down made during the year
Closing balance
(` crore)
March 31, 2019
March 31, 2018
1,451.28
1,248.01
-
-
1,451.28
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.
(cid:1)(cid:116)(cid:1)
Divergence in the asset classification and provisioning
There was no divergence observed by the RBI for the year ended March 31, 2018 in respect of the Bank’s assets classification and
provisioning under the extant prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP).
The impact of changes in classification and provisioning arising out of the RBI’s supervisory process for the year ended March 31,
2017 was fully given effect to in the audited financial statements for the year ended March 31, 2018.
HDFC Bank Limited Annual Report 2018 - 2019
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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#
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
138
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:37)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:13)(cid:1)(cid:79)(cid:80)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:84)(cid:1)(cid:88)(cid:70)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:86)(cid:83)(cid:70)(cid:69)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:46)(cid:74)(cid:68)(cid:83)(cid:80)(cid:13)(cid:1)(cid:52)(cid:78)(cid:66)(cid:77)(cid:77)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:46)(cid:70)(cid:69)(cid:74)(cid:86)(cid:78)(cid:1)(cid:38)(cid:79)(cid:85)(cid:70)(cid:83)(cid:81)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:9)(cid:46)(cid:52)(cid:46)(cid:38)(cid:10)(cid:1)
sector under RBI guidelines issued in January 2019.
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:109)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:84)(cid:80)(cid:77)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:84)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:16)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)(cid:9)(cid:52)(cid:36)(cid:1)(cid:16)(cid:1)(cid:51)(cid:36)(cid:10)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)
(` crore)
(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:84)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:27)
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’
March 31, 2019 March 31, 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(cid:116)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:67)(cid:80)(cid:80)(cid:76)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:90)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:81)(cid:85)(cid:84)(cid:1)(cid:9)(cid:52)(cid:51)(cid:84)(cid:10)(cid:1)(cid:67)(cid:66)(cid:68)(cid:76)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:47)(cid:49)(cid:34)(cid:84)(cid:27)
(` crore)
Particulars
SRs
SRs issued
issued
more than
within
5 years ago
past
but within
5 years
past 8 years
SRs issued
more than
8 years
ago
Total
March 31,
2019
(i)
Backed by NPAs sold by the Bank as underlying*
190.90
Provision held against (i)
(ii)
Backed by NPAs sold by other banks / financial institutions / non-
banking financial companies as underlying
Provision held against (ii)
-
0.81
-
Total
191.71
-
-
3.44
-
3.44
-
-
1.32
-
1.32
190.90
-
5.57
-
196.47
*The Bank held contingent provision of ` 76.36 crore towards investment in security receipts backed by NPAs sold by the Bank as
(` crore)
at March 31, 2019.
Particulars
SRs
SRs issued
issued
more than
within
5 years ago
past
but within
5 years
past 8 years
SRs issued
more than
8 years
ago
Total
March 31,
2018
(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)
190.90
-
9.72
-
Total
200.62
-
-
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.
139
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:109)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:84)(cid:80)(cid:77)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:84)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:16)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:74)(cid:70)(cid:84)(cid:1)(cid:9)(cid:52)(cid:36)(cid:1)(cid:16)(cid:1)(cid:51)(cid:36)(cid:10)(cid:1)
(` crore)
(cid:71)(cid:80)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:84)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:27)
Particulars
(i)
No of accounts sold
(ii)
Aggregate outstanding
(iii) Aggregate consideration received
March 31, 2019 March 31, 2018
1
121.75
66.27
-
-
-
(cid:116)(cid:1)
During the years ended March 31, 2019 and March 31, 2018, no non-performing financial assets were purchased by the
Bank.
(cid:116)(cid:1)
(cid:52)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)(cid:67)(cid:80)(cid:80)(cid:76)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:52)(cid:49)(cid:55)(cid:84)(cid:1)(cid:84)(cid:81)(cid:80)(cid:79)(cid:84)(cid:80)(cid:83)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:27)
There are no SPVs sponsored by the Bank as at March 31, 2019 and as at March 31, 2018.
(cid:18)(cid:19)(cid:15)(cid:1) (cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:66)(cid:77)(cid:1)(cid:70)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:84)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:84)(cid:13)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:68)(cid:66)(cid:85)(cid:70)(cid:72)(cid:80)(cid:83)(cid:90)(cid:14)(cid:88)(cid:74)(cid:84)(cid:70)(cid:1)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:83)(cid:90)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1)(cid:71)(cid:66)(cid:68)(cid:85)(cid:80)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1)(cid:84)(cid:74)(cid:79)(cid:72)(cid:77)(cid:70)(cid:1)(cid:16)(cid:1)
group borrower exposures, unsecured advances and concentration of deposits, advances, exposures and NPAs
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:66)(cid:77)(cid:1)(cid:70)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:1)(cid:84)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
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, 2019
March 31, 2018
92,051.52
73,654.38
56,967.32
41,460.65
(of which housing loans eligible for inclusion in priority sector advances)
(25,006.05)
(16,475.22)
(ii) Commercial real estate
35,078.57
32,185.51
(iii)
Investments in Mortgage Backed Securities ( MBS) and other securitised exposures:
(a) Residential
(b) Commercial real estate
b)
Indirect exposure
5.63
-
8.21
-
23,740.43
22,249.51
Fund based and non-fund based exposures on National Housing Bank (NHB) and
23,740.43
22,249.51
Housing Finance Companies (HFCs)
Total exposure to real estate sector
115,791.95
95,903.89
*includes loans purchased under the direct loan assignment route
Of the above, exposure to real estate developers as at March 31, 2019 is 0.5% (previous year: 0.6%) of total advances.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
140
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:78)(cid:66)(cid:83)(cid:76)(cid:70)(cid:85)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1) (cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
Exposure is higher of limits sanctioned or the amount outstanding as at the year end.
(` crore)
Sr.
No.
(i)
Particulars
March 31, 2019 March 31, 2018
Direct investments made in equity shares, convertible bonds, convertible debentures
and units of equity oriented mutual funds the corpus of which is not exclusively
97.52
90.61
invested in corporate debt
(ii)
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,
235.82
158.96
convertible debentures and units of equity oriented mutual funds
(iii)
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
(iv)
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
5,098.48
5,421.51
mutual funds i.e. where the primary security other than shares / convertible bonds
427.15
232.66
/ convertible debentures / units of equity oriented mutual funds does not fully cover
the advances
(v)
Secured and unsecured advances to stock brokers and guarantees issued on behalf
of stock brokers and market makers
(vi)
Loans sanctioned to corporates against the security of shares / bonds / debentures
12,510.28
10,915.99
or other securities or on clean basis for meeting promoter’s contribution to the equity
2,202.40
2,262.75
of new companies in anticipation of raising resources
Bridge loans to companies against expected equity flows / issues
Underwriting commitments taken up in respect of primary issue of shares or convertible
bonds or convertible debentures or units of equity oriented mutual funds
Financing to stock brokers for margin trading
-
-
-
-
-
-
All exposures to venture capital funds (both registered and unregistered)
6.95
4.10
Total exposure to capital market
20,578.60
19,086.58
(vii)
(viii)
(ix)
(x)
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:68)(cid:66)(cid:85)(cid:70)(cid:72)(cid:80)(cid:83)(cid:90)(cid:1)(cid:88)(cid:74)(cid:84)(cid:70)(cid:1)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:83)(cid:90)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)(cid:1)(cid:1)(cid:9)` crore)
Risk Category
Insignificant
Low
Moderately low
Moderate
Moderately high
High
Very high
March 31, 2019
March 31, 2018
Exposure (net)
Provision held
Exposure (net)
Provision held
31,262.20
11,200.11
202.27
305.98
43.27
-
-
Total
43,013.83
141
-
-
-
-
-
-
-
-
18,538.08
9,103.81
486.54
350.17
37.20
-
0.18
28,515.98
-
-
-
-
-
-
-
-
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:71)(cid:66)(cid:68)(cid:85)(cid:80)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)
The factoring exposure of the Bank as at March 31, 2019 is ` 3,214.40 crore (previous year: ` 2,334.53 crore).
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:52)(cid:74)(cid:79)(cid:72)(cid:77)(cid:70)(cid:1)(cid:35)(cid:80)(cid:83)(cid:83)(cid:80)(cid:88)(cid:70)(cid:83)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:1)(cid:9)(cid:52)(cid:40)(cid:45)(cid:10)(cid:1)(cid:16)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:35)(cid:80)(cid:83)(cid:83)(cid:80)(cid:88)(cid:70)(cid:83)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:1)(cid:9)(cid:40)(cid:35)(cid:45)(cid:10)(cid:1)(cid:70)(cid:89)(cid:68)(cid:70)(cid:70)(cid:69)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)
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, 2019 and
March 31, 2018 the Bank was within the limits prescribed by the RBI.
(cid:116)(cid:1)
(cid:54)(cid:79)(cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:70)(cid:69)(cid:1)(cid:66)(cid:69)(cid:87)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)
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, 2019 (previous year: Nil).
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:14)(cid:67)(cid:66)(cid:79)(cid:76)(cid:1)(cid:49)(cid:66)(cid:83)(cid:85)(cid:74)(cid:68)(cid:74)(cid:81)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:74)(cid:79)(cid:72)
The aggregate amount of participation issued by the Bank and reduced from advances as per regulatory guidelines as at March
31, 2019 was ` 30,734.43 crore (previous year: ` 24,454.84 crore).
(cid:116)(cid:1)
(cid:36)(cid:80)(cid:79)(cid:68)(cid:70)(cid:79)(cid:85)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:69)(cid:70)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:84)(cid:13)(cid:1)(cid:66)(cid:69)(cid:87)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:13)(cid:1)(cid:70)(cid:89)(cid:81)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:47)(cid:49)(cid:34)(cid:84)
a)
Concentration of deposits
Particulars
Total deposits of twenty largest depositors
Percentage of deposits of twenty largest depositors to total deposits of the
Bank
b)
Concentration of advances
Particulars
Total advances to twenty largest borrowers
Percentage of advances of twenty largest borrowers to total advances of the
Bank
(` crore, except percentages)
March 31, 2019
March 31, 2018
56,760.18
6.1%
50,066.89
6.3%
(` crore, except percentages)
March 31, 2019
March 31, 2018
133,373.25
10.6%
92,114.45
9.0%
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
Particulars
Total exposure to twenty largest borrowers / customers
(` crore, except percentages)
March 31, 2019
March 31, 2018
144,610.12
104,796.59
Percentage of exposure of twenty largest borrowers / customers to total
11.1%
9.7%
exposure of the Bank on borrowers / customers
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
Particulars
Total gross exposure to top four NPA accounts
(` crore)
March 31, 2019
March 31, 2018
730.54
708.09
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
142
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
e)
Sector-wise advances
Sr.
Sector
No.
A Priority sector
(` crore)
March 31, 2019
March 31, 2018
Gross
advances
Gross non-
performing
loans
% of gross
non-performing
loans to gross
advances in
that sector
Gross
advances
Gross non-
performing
loans
% of gross
non-performing
loans to gross
advances in
that sector
1 Agriculture and allied activities
74,272.49
3,185.41
4.29%
73,513.50
2,514.60
2 Advances to industries eligible
33,559.14
289.74
0.86%
28,405.11
483.71
as priority sector lending
3 Services
83,260.85
1,207.50
1.45%
52,995.58
990.26
4 Personal loans
29,558.28
26.02
0.09%
20,514.50
19.26
3.42%
1.70%
1.87%
0.09%
Sub-total (A)
220,650.76
4,708.67
2.13% 175,428.69
4,007.83
2.28%
B Non Priority sector
1
2
3
4
Agriculture and allied activities
8,631.99
181.68
2.10%
14,131.18
149.41
Industry
Services
201,476.02
2,252.89
1.12% 141,126.81
1,783.60
183,403.18
1,808.92
0.99% 155,844.46
1,114.86
Personal loans
213,172.97
2,183.75
1.02% 177,723.19
1,451.16
1.06%
1.26%
0.72%
0.82%
Sub-total (B)
606,684.16
6,427.24
1.06% 488,825.65
4,499.03
0.92%
Total (A) + (B)
827,334.92
11,135.91
1.35% 664,254.34
8,506.86
1.28%
(cid:116)(cid:1)
(cid:37)(cid:70)(cid:85)(cid:66)(cid:74)(cid:77)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:49)(cid:83)(cid:74)(cid:80)(cid:83)(cid:74)(cid:85)(cid:90)(cid:1)(cid:52)(cid:70)(cid:68)(cid:85)(cid:80)(cid:83)(cid:1)(cid:45)(cid:70)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:36)(cid:70)(cid:83)(cid:85)(cid:74)(cid:109)(cid:68)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:9)(cid:65)(cid:49)(cid:52)(cid:45)(cid:36)(cid:84)(cid:8)(cid:10)(cid:1)
(cid:1)
(cid:9)` crore)
Type of PSLCs
For the year ended March 31, 2019
For the year ended March 31, 2018
PSLC bought
PSLC sold during
PSLC bought
PSLC sold during
during the year
the year
during the year
the year
Agriculture
Small and Marginal farmers
Micro Enterprises
General
5,572.00
31,294.00
7,338.75
500.00
10.00
-
22,251.00
-
5,520.00
1,750.00
11,171.25
-
Total
45,954.75
11,681.25
27,771.00
-
-
-
730.75
730.75
143
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
13. Other fixed assets
Other fixed assets includes amount capitalised relating to software having useful life of five years. Details regarding the same are
(` crore)
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, 2019
March 31, 2018
2,391.59
510.70
-
2,902.29
1,748.61
350.15
-
2,098.76
803.53
2,139.70
251.89
-
2,391.59
1,473.76
274.85
-
1,748.61
642.98
Total (a)
Total (b)
Net value (a-b)
14. Other assets
(cid:116)(cid:1)
(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:1)(cid:69)(cid:70)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:9)(cid:79)(cid:70)(cid:85)(cid:10)(cid:1)(cid:80)(cid:71)(cid:1)` 4,352.14 crore (previous year: ` 3,344.02 crore). The break-up of the same is as
(` crore)
follows:
March 31, 2019
March 31, 2018
Particulars
(cid:37)(cid:70)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:80)(cid:71)(cid:27)
Loan loss provisions
Employee benefits
Depreciation
Others
(cid:37)(cid:70)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:80)(cid:71)(cid:27)
Depreciation
3,498.19
201.19
14.13
638.63
4,352.14
-
-
Total (a)
Total (b)
2,780.22
177.65
-
439.88
3,397.75
(53.73)
(53.73)
3,344.02
(cid:1)(cid:1)(cid:1)(cid:1)(` crore)
(cid:116)(cid:1)
(cid:44)(cid:70)(cid:90)(cid:1)(cid:74)(cid:85)(cid:70)(cid:78)(cid:84)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:105)(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:84)(cid:119)(cid:1)(cid:74)(cid:79)(cid:1)(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:84)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:27)(cid:1) (cid:1)
(cid:1)
(cid:1)
Deferred tax asset (net) (a-b)
4,352.14
Particulars
March 31, 2019
March 31, 2018
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
10,832.25
13,261.24
4,352.14
2,071.32
4,318.64
2.35
34,837.94
13,357.25
5,091.67
3,344.02
1,802.24
1,827.87
2.50
25,425.55
Total
*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
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
144
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
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, 2019
March 31, 2018
(` crore)
471.12
387.56
(255.59)
603.09
431.24
261.95
(222.07)
471.12
(` crore)
March 31, 2019
March 31, 2018
314.01
84.42
398.43
311.90
2.11
314.01
March 31, 2019
March 31, 2018
5,484
498.44
431.42
431.42
-
3,612
146.55
119.02
119.02
-
Sr. No. (cid:36)(cid:80)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:70)(cid:79)(cid:85)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:11)
1
Claims against the Bank
Brief description
The Bank is a party to various taxation matters in respect of which appeals are pending. The Bank
2
3
not acknowledged as
expects the outcome of the appeals to be favorable based on decisions on similar issues in the
debts - taxation
Claims against the Bank
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
not acknowledged as
expect the outcome of these proceedings to have a material adverse effect on the Bank’s financial
debts - others
Liability on account of
conditions, results of operations or cash flows.
The Bank enters into foreign exchange contracts, currency options, forward rate agreements,
forward exchange and
currency swaps and interest rate swaps with inter-bank participants on its own account and for
derivative contracts
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.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
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146
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Sr. No. (cid:36)(cid:80)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:70)(cid:79)(cid:85)(cid:1)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:11)
Brief description
4
Guarantees given on
As a part of its commercial banking activities, the Bank issues documentary credit and guarantees
behalf of constituents,
on behalf of its customers. Documentary credits such as letters of credit enhance the credit standing
acceptances,
of the Bank’s customers. Guarantees generally represent irrevocable assurances that the Bank will
endorsements and
make payments in the event of the customer failing to fulfill its financial or performance obligations.
other obligations
5
Other items for which the
These include: a) Credit enhancements in respect of securitised-out loans; b) Bills rediscounted by
Bank is contingently liable
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
*Also refer Schedule 12 - Contingent liabilities
(DEAF).
e)
The Hon’ble Supreme Court of India issued an order dated February 28, 2019 of relating to employer’s contribution to the provident
fund (‘PF’) under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Bank is in the process of evaluating
the said order and would consider any further effect in its financial statements upon receiving additional clarity on the subject.
(cid:18)(cid:24)(cid:15)(cid:1) (cid:35)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:84)(cid:1)(cid:16)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)
Particulars
March 31, 2019
March 31, 2018
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
8.93%
4.35%
1.59%
3.58%
1.90%
16.87
0.23
1.36%
1.35%
0.39%
8.86%
4.43%
1.68%
3.60%
1.93%
15.08
0.20
1.30%
1.28%
0.40%
Provision coverage ratio8
71.36%
69.78%
Definitions of certain items in Business ratios / information:
1.
2.
3.
4.
5.
6.
Working funds is the daily average of total assets during the year.
Operating profit is net profit for the year before provisions and contingencies and profit / (loss) on sale of building and other assets
(net).
“Business” is the total of quarterly average of net advances and deposits (net of inter-bank deposits).
Productivity ratios are based on average employee numbers.
Gross advances are net of bills rediscounted and interest in suspense.
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.
7.
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.
147
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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, 2019 amounting to ` 408.27 crore (previous year: ` 160.59 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,
2019 and March 31, 2018, 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, 2019 was ` 223.25 crore (previous year: ` 223.25 crore) and outstanding servicing liability was
` 0.03 crore (previous year: ` 0.05 crore).
20. Other income
(cid:116)(cid:1)
(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:70)(cid:89)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:67)(cid:83)(cid:80)(cid:76)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)
(cid:57)
(cid:57)
Commission, exchange and brokerage income is net of correspondent bank charges.
Commission income for the year ended March 31, 2019 includes fees of ` 1,473.37 crore (previous year: ` 1,192.34 crore) in
respect of life insurance business, of which ` 554.82 crore (previous year: ` 406.77 crore) is for displaying publicity materials
at the Bank’s branches / ATMs and ` 222.68 crore (previous year: ` 203.43 crore) is in respect of general insurance and
health insurance business.
(cid:116)(cid:1)
(cid:46)(cid:74)(cid:84)(cid:68)(cid:70)(cid:77)(cid:77)(cid:66)(cid:79)(cid:70)(cid:80)(cid:86)(cid:84)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)
Miscellaneous income includes recoveries from written-off accounts amounting to ` 1,430.81 crore (previous year: ` 1,093.84 crore).
21. Other expenditure
Other expenditure includes commission paid to sales agents amounting to ` 2,805.61 crore (previous year: ` 2,427.96 crore), exceeding
1% of the total income of the Bank.
22. Provisions and contingencies
The break-up of provisions and contingencies included in the Profit and Loss Account 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, 2019
March 31, 2018
12,129.61
(1,008.12)
6,394.11
4.71
648.38
502.88
10,107.25
(896.68)
4,910.43
30.45
597.43
389.18
Total
18,671.57
15,138.06
legal and other contingencies ` 500.29 crore (previous year: ` 390.04 crore), provisions /
*Includes provisions for tax,
(write-back) for securitised-out assets ` 2.59 crore (previous year: ` 2.14 crore) and standard restructured assets Nil (previous year:
` (3.00) crore).
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
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148
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
23. Employee benefits
Gratuity
Particulars
March 31, 2019
March 31, 2018
(` 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:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:16)(cid:1)(cid:9)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:10)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:1)
Expenses recognised in Profit and Loss Account
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
542.97
39.69
73.06
(46.81)
7.12
1.92
617.95
416.40
32.13
88.29
(46.81)
11.70
-
501.71
501.71
(617.96)
(116.25)
39.69
73.06
(32.13)
(2.67)
77.95
43.84
89.51
488.00
35.12
65.19
(39.53)
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
7.64% per annum
7.00% per annum
8.00% per annum
7.50% per annum
7.00% per annum
8.00% per annum
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors.
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, 2019 are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
% of fair value to total plan assets
as at March 31, 2019
23.79%
28.96%
45.03%
2.22%
100.00%
Total
149
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:1)
(cid:38)(cid:89)(cid:81)(cid:70)(cid:83)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:69)(cid:75)(cid:86)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
2019
501.71
617.96
(116.25)
11.70
7.12
Years ended March 31,
2017
2016
2018
416.40
542.97
(126.57)
0.13
10.44
355.57
488.00
(132.43)
32.44
35.48
287.93
390.47
(102.54)
(13.69)
16.24
(cid:9)` crore)
2015
242.88
310.59
(67.71)
21.35
4.59
(` crore)
Pension
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
March 31, 2019
March 31, 2018
73.06
5.10
0.75
(12.57)
3.32
(0.12)
69.54
31.30
1.86
0.88
(12.57)
0.48
-
21.95
21.95
(69.54)
(47.59)
5.10
0.75
(1.86)
2.72
6.71
2.34
14.03
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)
1.74
5.31
2.95
13.79
7.64% per annum
7.00% per annum
8.00% per annum
7.50% per annum
7.00% per annum
8.00% per annum
150
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:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1)(cid:16)(cid:1)(cid:9)(cid:77)(cid:74)(cid:66)(cid:67)(cid:74)(cid:77)(cid:74)(cid:85)(cid:90)(cid:10)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:1)
Expenses recognised in Profit and Loss Account
Interest cost
Current service cost
Expected return on plan assets
Net actuarial (gain) / loss recognised in the year
Net cost
Actual return on plan assets
Estimated contribution for the next year
Assumptions
Discount rate
Expected return on plan assets
Salary escalation rate
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors.
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, 2019 are
given below:
Category of plan assets
Government securities
Debenture and bonds
Others
% of fair value to total plan assets
as at March 31, 2019
8.49%
73.88%
17.63%
100.00%
Total
(cid:1)
(cid:38)(cid:89)(cid:81)(cid:70)(cid:83)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:66)(cid:69)(cid:75)(cid:86)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)(cid:1)(cid:1)(cid:1)(cid:9)` crore)
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
Provident fund
Years ended March 31,
2019
21.95
69.54
(47.59)
0.48
3.32
2018
31.30
73.06
(41.76)
0.59
3.95
2017
2016
2015
36.16
73.55
(37.39)
0.39
4.65
38.38
70.88
(32.50)
1.43
17.35
41.91
57.45
(15.54)
(2.38)
(0.19)
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, 2019 (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, 2019
March 31, 2018
7.64% per annum
8.65% per annum
7.50% per annum
8.55% per annum
The Bank does not have any unfunded defined benefit plan. The Bank contributed ` 247.95 crore (previous year: ` 222.84 crore) to the
provident fund, ` 3.27crore (previous year: ` 2.76 crore) to the National Pension Scheme and ` 103.41 crore (previous year: ` 67.68
crore) to the superannuation plan.
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Bank is given below:
(` crore)
Particulars
Privileged leave
Sick leave
Total actuarial liability
Assumptions
Discount rate
Salary escalation rate
March 31, 2019
March 31, 2018
321.30
66.99
388.29
259.46
61.91
321.37
7.64% per annum
8.00% per annum
7.50% per annum
8.00% per annum
151
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors.
24. Disclosures on remuneration
(cid:50)(cid:86)(cid:66)(cid:77)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:37)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)
A.
Information relating to the bodies that oversee remuneration
Name and composition
The Board of Directors of the Bank has constituted the Nomination and Remuneration Committee (hereinafter, the ‘NRC’) for
overseeing and governing the compensation policies of the Bank. The NRC is comprised of four non-executive directors as of
March 31, 2019. 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. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M.D. Ranganath. Further, Mrs.
Shyamala Gopinath and Mr. M.D. Ranganath are also members of the RPMC. Mr. Sanjiv Sachar is the chairperson of the NRC.
During the year ended March 31, 2019, Mr. Bobby Parikh and Mr. Partho Datta ceased to be a members of the NRC pursuant to
their cessation as directors of the Bank on completing their term of 8 continuous years as permitted under Banking Regulation Act
1949.
Mandate of the NRC
The primary mandate of the NRC is to oversee the implementation of compensation policies of the Bank. The NRC periodically
reviews the overall compensation policy of the Bank with a view to attract, retain and motivate employees. In this capacity it is
required to review and approve the design of the total compensation framework, including compensation strategy programs and
plans, on behalf of the Board of Directors. The compensation structure and pay revision for Whole Time Directors is also approved
by the NRC. The NRC co-ordinates with the RPMC to ensure that compensation is aligned with prudent risk taking.
External Consultants
(cid:34)(cid:48)(cid:47)(cid:27) As commissioned by the NRC, the Bank employed the services of AON in the area of compensation market benchmarking
and executive compensation.
(cid:36)(cid:70)(cid:69)(cid:66)(cid:83)(cid:1)(cid:36)(cid:80)(cid:79)(cid:84)(cid:86)(cid:77)(cid:85)(cid:74)(cid:79)(cid:72)(cid:27) The Bank employed the services of Cedar Consulting to review and recommend key scorecard measures for
the Whole Time Directors.
(cid:52)(cid:68)(cid:80)(cid:81)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:8)(cid:84)(cid:1)(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:49)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)
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 97,805 as at March 31, 2019
(previous year: 87,983).
(cid:35)(cid:15)(cid:1)
(cid:42)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:70)(cid:84)(cid:74)(cid:72)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:84)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:76)(cid:70)(cid:90)(cid:1)(cid:71)(cid:70)(cid:66)(cid:85)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)
policy
(cid:42)(cid:15)(cid:1)
(cid:44)(cid:70)(cid:90)(cid:1)(cid:39)(cid:70)(cid:66)(cid:85)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:48)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:49)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)
The Bank’s Compensation / Remuneration 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
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
152
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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), national pension scheme 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.
153
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:67)(cid:10)(cid:1)
(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:49)(cid:66)(cid:90)
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:116)(cid:1)
(cid:56)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:81)(cid:66)(cid:90)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:74)(cid:85)(cid:86)(cid:85)(cid:70)(cid:84)(cid:1)(cid:22)(cid:17)(cid:6)(cid:1)(cid:80)(cid:83)(cid:1)(cid:78)(cid:80)(cid:83)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:74)(cid:89)(cid:70)(cid:69)(cid:1)(cid:81)(cid:66)(cid:90)(cid:13)(cid:1)(cid:66)(cid:1)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:66)(cid:78)(cid:70)(cid:1)(cid:88)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:67)(cid:70)(cid:1)(cid:69)(cid:70)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)
per the schedule mentioned in the table below:
(cid:49)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:49)(cid:66)(cid:90) 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:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:69)(cid:70)(cid:87)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:66)(cid:77)(cid:86)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:77)(cid:66)(cid:88)(cid:1)(cid:67)(cid:66)(cid:68)(cid:76)(cid:1)(cid:68)(cid:77)(cid:66)(cid:86)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:78)(cid:74)(cid:85)(cid:74)(cid:72)(cid:66)(cid:79)(cid:85)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:79)(cid:70)(cid:72)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)
of the Bank and / or relevant line of business in any year. Under the malus clause the incumbent foregoes the
payout 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:116)(cid:1)
(cid:34)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:1)
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. The following is taken into account while administering
the annual bonus:
(cid:57)
In the event the proportion of variable pay to fixed pay is substantially high (variable pay exceeding 50% of
fixed pay) for employees in certain grades, the Bank has devised the following deferment schedule after
taking into consideration the nature of risk, time horizon of risk, and the materiality of risk.
HDFC Bank Limited Annual Report 2018 - 2019
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:49)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:49)(cid:66)(cid:90) Timelines
60%
Payable effective April 1 of the financial year immediately following the performance
13.33%
13.33%
13.33%
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:57)
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:116)(cid:1)
(cid:49)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:14)(cid:77)(cid:74)(cid:79)(cid:76)(cid:70)(cid:69)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:9)(cid:49)(cid:45)(cid:49)(cid:84)(cid:10)(cid:1)
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. Any employee who is on the PLP is excluded from the bonus plan.
Review of Remuneration Policy of the Bank
The Compensation Policy of the Bank was reviewed by the NRC during the year ended March 31, 2019 and the
following material changes were incorporated therein:
(cid:57)
The Bank has amended its policy for grant of ESOPs. Under this policy, ESOPs granted to eligible
employees vest over four tranches spread over a period of 48 months vis-à-vis 39 months for the earlier
grants.
(cid:57)
(cid:57)
The Bank has introduced a policy under which it may consider granting ESOPs for certain employees in
select strategic roles at the time of hiring.
The Bank has introduced a policy under which it may consider granting performance bonus to critical hires
based on their performance rating at confirmation.
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 bonus based on
performance rating upon confirmation 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 said bonus is generally decided by taking into account appropriate risk factors and market
conditions.
For hiring at levels of Whole Time Directors / Managing Director and certain employees in select strategic roles, a sign-
on bonus, if any, is limited to the first year only and is in the form of Employee Stock Options.
155
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:69)(cid:10)(cid:1)
(cid:38)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:52)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:48)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)(cid:1)(cid:9)(cid:65)(cid:38)(cid:52)(cid:48)(cid:49)(cid:8)(cid:84)(cid:10)
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, 2018, the Bank has amended its policy for grant of ESOPs. Under this policy, ESOPs
granted to eligible employees vest over four tranches spread over a period of 48 months. Vesting for all ESOPs granted
subsequent to April 1, 2017 is 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.
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:42)(cid:79)(cid:68)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:16)(cid:1)(cid:49)(cid:66)(cid:90)(cid:1)(cid:51)(cid:70)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)
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.
HDFC Bank Limited Annual Report 2018 - 2019
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Increments in fixed pay for majority of the employee population are generally undertaken once in 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.
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.
157
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 for Whole Time Directors and employees in certain grades 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:49)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:49)(cid:66)(cid:90)
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)
c)
d)
e)
f)
Business Growth - This includes growth in advances and deposits;
Profitability - This includes growth in profit after tax;
Asset Quality - Gross NPA, Net NPA and % of Restructured assets to net advances;
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.
HDFC Bank Limited Annual Report 2018 - 2019
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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)
c)
d)
e)
f)
g)
h)
Increase in plan over the previous year;
Actual growth in revenue over previous year;
Growth in net revenue (%);
Achievement of net revenue against plan (%);
Actual profit before tax;
Growth in profit before tax compared to the previous year;
Improvement in cost to income over the previous year; and
Achievement of key strategic initiatives.
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
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:116)(cid:1)
(cid:34)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:35)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)
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.
(cid:116)(cid:1)
(cid:49)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:14)(cid:77)(cid:74)(cid:79)(cid:76)(cid:70)(cid:69)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:9)(cid:49)(cid:45)(cid:49)(cid:84)(cid:10)
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:38)(cid:15)(cid:1)
(cid:37)(cid:70)(cid:84)(cid:68)(cid:83)(cid:74)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:88)(cid:66)(cid:90)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:84)(cid:70)(cid:70)(cid:76)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:69)(cid:75)(cid:86)(cid:84)(cid:85)(cid:1)(cid:83)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:66)(cid:76)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:77)(cid:80)(cid:79)(cid:72)(cid:70)(cid:83)(cid:1)(cid:85)(cid:70)(cid:83)(cid:78)(cid:1)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)
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:
159
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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:116)(cid:1)
(cid:56)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:81)(cid:66)(cid:90)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:74)(cid:85)(cid:86)(cid:85)(cid:70)(cid:84)(cid:1)(cid:22)(cid:17)(cid:6)(cid:1)(cid:80)(cid:83)(cid:1)(cid:78)(cid:80)(cid:83)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:74)(cid:89)(cid:70)(cid:69)(cid:1)(cid:81)(cid:66)(cid:90)(cid:13)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:80)(cid:71)(cid:1)(cid:74)(cid:84)(cid:1)(cid:69)(cid:70)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:87)(cid:70)(cid:84)(cid:85)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:81)(cid:70)(cid:83)(cid:1)
the schedule mentioned in the table below:
(cid:49)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:49)(cid:66)(cid:90)
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:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:69)(cid:70)(cid:87)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:66)(cid:77)(cid:86)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:77)(cid:66)(cid:88)(cid:1)(cid:67)(cid:66)(cid:68)(cid:76)(cid:1)(cid:68)(cid:77)(cid:66)(cid:86)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:78)(cid:74)(cid:85)(cid:74)(cid:72)(cid:66)(cid:79)(cid:85)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:66)(cid:79)(cid:90)(cid:1)(cid:79)(cid:70)(cid:72)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)
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:
(cid:116)(cid:1)
(cid:34)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:1)
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
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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)
In the event the proportion of variable pay to fixed pay is substantially high (typically variable pay exceeding 50% of
fixed pay), for employees in certain grade the Bank has devised the following deferment schedule after taking into
consideration the nature of risk, time horizon of risk and the materiality of risk.
(cid:49)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:55)(cid:66)(cid:83)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:49)(cid:66)(cid:90)
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:57)
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:116)(cid:1)
(cid:49)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:14)(cid:77)(cid:74)(cid:79)(cid:76)(cid:70)(cid:69)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:9)(cid:49)(cid:45)(cid:49)(cid:84)(cid:10)
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:116)(cid:1)
(cid:34)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)
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:116)(cid:1)
(cid:49)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)(cid:14)(cid:77)(cid:74)(cid:79)(cid:76)(cid:70)(cid:69)(cid:1)(cid:49)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:9)(cid:49)(cid:45)(cid:49)(cid:84)(cid:10)
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:116)(cid:1)
(cid:38)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)
This is to reward for contribution of employees in creating a long term, sustainable earnings and enhancing shareholder value.
161
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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.
(cid:50)(cid:86)(cid:66)(cid:79)(cid:85)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)
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.
(cid:52)(cid:86)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)
March 31, 2019
March 31, 2018
(a)
Number of meetings held by
the
Number of meetings: 11
Number of meetings: 7
NRC during the financial year and
remuneration paid to its members
Remuneration paid: ` 0.17 crore
Remuneration paid: ` 0.13 crore
(b) (i)
Number of employees having received a
33 employees
34 employees
variable remuneration award during the
financial year
(b) (ii)
Number and total amount of sign-on
4,65,000 stock options granted as sign-on
None
awards made during the financial year
awards during the year ended March 31,
2019.
(b) (iii) Number and total amount of guaranteed
None
bonuses awarded during the financial
year
(b) (iv) Details of severance pay, in addition to
None
accrued benefits, if any
None
None
(c) (i)
Total amount of outstanding deferred
remuneration, split into cash, shares
and share-linked instruments and other
forms
Total amount of outstanding deferred
remuneration (cash bonus) was ` 1.91 crore.
Total amount of outstanding deferred
remuneration (cash bonus) was ` 2.80 crore.
(c) (ii)
Total amount of deferred remuneration
` 2.28 crore
` 1.82 crore
paid out in the financial year
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Sr. No.
(cid:52)(cid:86)(cid:67)(cid:75)(cid:70)(cid:68)(cid:85)
March 31, 2019
March 31, 2018
(d)
Breakdown of amount of remuneration
awards for the financial year to show
fixed and variable, deferred and non-
` 66.59 crore (Fixed*)
` 13.69 crore (variable pay pertaining to
financial year ended March 31, 2018, in
` 55.43 crore (Fixed*)
` 11.76 crore (variable pay pertaining to
financial year ended March 31, 2017, in
deferred
relation to employees where there was no
relation to employees where there was no
deferment of pay).
` 5.90 crore (variable pay pertaining to
financial year ended March 31, 2017, in
relation to employees where there was a
deferment of pay), of which ` 4.51 crore was
non-deferred variable pay and ` 1.39 crore
was deferred variable pay.
deferment of pay).
The approval of the RBI on 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
The approval of the RBI on the variable pay
financial year: 47,11,100
of the Bank’s Whole Time Directors for the
year ended March 31, 2018 is awaited. There
were no other employees where there was
deferment of variable pay.
Number of stock options granted during the
financial year: 33,51,000
The approval of the RBI in relation to grant
of stock options to the Bank’s Whole Time
Directors for the year ended March 31, 2019
is awaited.
(e) (i)
Total amount of outstanding deferred
remuneration and retained remuneration
exposed to ex-post explicit and / or
Total amount of outstanding deferred
remuneration (cash bonus) was ` 1.91 crore.
Total amount of outstanding deferred
remuneration (cash bonus) was ` 2.80 crore.
implicit adjustments
Total amount of reductions during the
Nil
(e) (ii)
financial year due to ex-post explicit
adjustments
Total amount of reductions during the
Nil
(e) (iii)
financial year due to ex-post implicit
adjustments
*Excludes gratuity benefits, since the same is computed at Bank level.
25. Segment reporting
Business segments
Nil
Nil
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.
163
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
b)
Retail banking
The retail banking segment serves retail customers through the Bank’s branch network and other 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 parabanking 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. 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 2018 - 2019
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Segment reporting for the year ended March 31, 2019 is given below:
(cid:1)
(cid:35)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:84)(cid:70)(cid:72)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)(cid:1)
Sr.
Particulars
No.
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
Unallocated assets
Total assets (9) + (10)
Segment liabilities
Unallocated liabilities
Total liabilities (12) + (13)
(cid:9)` crore)
Treasury
Retail
Wholesale
Other
Total
banking
banking
banking
operations
23,576.48
89,222.34
54,563.54
15,299.43
182,661.79
1,305.76
11,796.27
14,224.12
6,791.53
34,117.68
52.78
66,116.65
116,597.92
1,918.04
11,121.50
21,078.14
348,766.21
428,790.92
408,749.72
50,854.71 1,237,161.56
61,438.85
732,294.96
271,887.13
5,357.06 1,070,978.00
7,379.15
1,244,540.71
24,356.39
1,095,334.39
Capital employed (9) - (12)
287,327.36
(303,504.04)
136,862.59
45,497.65
166,183.56
(Segment assets - Segment liabilities)
Unallocated (10) - (13)
Total (15) + (16)
Capital expenditure
Depreciation
93.67
1,149.97
26.31
912.24
192.62
104.52
141.93
1,578.19
97.04
1,140.11
(16,977.24)
149,206.32
Provisions for non - performing assets / others*
(0.20)
4,608.34
1,689.09
1,247.44
7,544.67
Unallocated other provisions*
*Represents material non-cash charge other than depreciation and taxation.
(cid:1)
(cid:40)(cid:70)(cid:80)(cid:72)(cid:83)(cid:66)(cid:81)(cid:73)(cid:74)(cid:68)(cid:1)(cid:84)(cid:70)(cid:72)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
Particulars
Revenue
Assets
Capital expenditure
165
5.41
(cid:9)` crore)
Domestic
International
115,358.96
1,238.96
1,210,826.50
33,714.21
1,576.84
1.35
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Segment reporting for the year ended March 31, 2018 is given below:
(cid:1)
(cid:35)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:84)(cid:70)(cid:72)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)(cid:1)
(cid:1)
Sr.
Particulars
No.
1
Segment revenue
2 Unallocated revenue
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
3
4
5
(cid:9)` crore)
Treasury
Retail
Wholesale
Other
Total
banking
banking
banking
operations
19,841.37
73,843.05
41,504.13
12,259.14
147,447.69
-
51,986.03
95,461.66
Segment results
1,540.00
9,971.72
11,720.51
5,487.90
28,720.13
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)
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)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
5.77
11.58
729.47
723.91
73.05
92.36
88.39
78.49
896.68
906.34
(22,638.14)
106,295.03
20 Provisions for non - performing assets / others*
35.36
3,539.06
1,565.79
773.10
5,913.31
21 Unallocated other provisions*
*Represents material non-cash charge other than depreciation and taxation.
(cid:1)
(cid:40)(cid:70)(cid:80)(cid:72)(cid:83)(cid:66)(cid:81)(cid:73)(cid:74)(cid:68)(cid:1)(cid:84)(cid:70)(cid:72)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:27)(cid:1)
Particulars
Revenue
Assets
Capital expenditure
14.18
(cid:9)` crore)
Domestic
International
94,643.54
818.12
1,036,987.78
26,946.53
896.33
0.35
HDFC Bank Limited Annual Report 2018 - 2019
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166
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
26. Liquidity coverage ratio
Quantitative information on Liquidity Coverage Ratio (‘LCR’) for year ended March 31, 2019 is given below:
(` crore)
Particulars
1
2
Total High Quality Liquid Assets
(HQLA)
Retail deposits and deposits from
small business customers,
of which:
(cid:1)(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
March 31, 2019
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
December 31, 2018
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
September 30, 2018
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
June 30, 2018
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
202,599.15
188,250.76
178,276.15
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
175,093.91
541,900.33
50,120.87
520,268.66
48,092.79
502,045.40
46,411.31
476,575.65
43,977.35
(i) Stable deposits
81,383.24
4,069.16
78,681.49
3,934.07
75,864.72
3,793.24
73,604.32
3,680.22
(ii) Less stable deposits
460,517.09
46,051.71
441,587.17
44,158.72
426,180.68
42,618.07
402,971.33
40,297.13
3
Unsecured wholesale funding,
of which:
(i) Operational deposits
(all counterparties)
246,345.36
128,744.90
227,318.17
113,256.87
220,583.99
108,041.95
229,841.48
114,864.45
48,828.51
12,129.38
37,321.49
9,253.61
29,619.33
7,328.47
29,621.23
7,329.11
(ii) Non-operational deposits
185,626.41
104,725.08
174,949.82
88,956.40
179,240.43
88,989.25
187,489.34
94,804.43
(all counterparties)
(iii) Unsecured debt
11,890.44
11,890.44
15,046.86
15,046.86
11,724.23
11,724.23
12,730.91
12,730.91
4
5
Secured wholesale funding
8,430.54
1,772.41
7,336.78
4,790.74
Additional requirements, of which
103,036.61
70,251.68
118,812.30
88,217.02
104,875.38
74,165.59
98,242.91
67,486.12
(i) Outflows related to derivative
60,637.90
60,637.90
79,939.76
79,939.76
65,418.01
65,418.01
59,024.43
59,024.43
exposures and other
collateral requirement
(ii) Outflows related to loss of
funding on debt products
-
-
-
-
-
-
-
-
(iii) Credit and liquidity facilities
42,398.71
9,613.78
38,872.54
8,277.26
39,457.37
8,747.58
39,218.48
8,461.69
6 Other contractual funding
17,948.21
17,948.21
17,361.18
17,361.18
16,669.89
16,669.89
16,435.76
16,435.76
obligation
7 Other contingent funding
71,060.49
2,131.81
71,246.42
2,137.39
66,669.99
2,000.10
66,965.75
2,008.97
obligations
Total Cash Outflows
277,628.01
270,837.66
254,625.62
249,563.39
Secured lending (e.g. reverse repo)
-
-
-
-
213.46
-
-
-
8
9
10 Inflows from fully performing
59,980.73
32,853.96
58,509.81
32,376.30
54,193.26
28,899.47
50,922.85
26,538.23
exposures
11 Other cash inflows
77,422.45
72,019.99
93,685.78
89,094.61
80,956.77
75,328.74
71,191.50
66,337.13
12 Total Cash Inflows
137,403.18
104,873.95
152,195.59
121,470.91
135,363.49
104,228.21
122,114.35
92,875.36
13 (cid:53)(cid:48)(cid:53)(cid:34)(cid:45)(cid:1)(cid:41)(cid:50)(cid:45)(cid:34)
14 Total Net Cash Outflows
15 Liquidity Coverage Ratio (%)
Total
Adjusted
Value
202,599.15
172,754.06
117.28%
Total
Adjusted
Value
188,250.76
149,366.75
126.03%
Total
Adjusted
Value
178,276.15
150,397.41
118.54%
Total
Adjusted
Value
175,093.91
156,688.03
111.75%
*
The average weighted and unweighted amounts are calculated taking simple average based on daily observation for the respective
quarters.
167
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Quantitative information on Liquidity Coverage Ratio (LCR) for year ended March 31, 2018 is given below:
(` crore)
Particulars
1
2
Total High Quality Liquid Assets
(HQLA)
Retail deposits and deposits from
small business customers, of
which:
(cid:1)(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
March 31, 2018
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
December 31, 2017
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
September 30, 2017
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
June 30, 2017
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
Total
unweighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
159,124.53
144,640.70
139,746.99
Total
weighted
value
(cid:9)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:10)(cid:11)
129,486.04
451,439.43
41,543.33
437,781.88
40,242.17
424,604.50
39,008.20
416,803.77
38,258.84
(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:
(i) Operational deposits
(all counterparties)
217,228.50
108,512.17
218,185.05
108,548.59
208,551.94
103,584.62
193,071.47
97,650.85
30,439.14
7,531.20
32,391.28
8,019.39
27,759.15
6,860.56
26,283.04
6,494.60
(ii) Non-operational deposits
177,618.56
91,810.17
176,441.84
91,177.28
172,534.99
88,466.26
156,271.16
80,638.98
(all 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
5
Secured wholesale funding
8,812.39
4,075.92
2,629.35
1,109.89
Additional requirements,
of which
100,425.78
66,017.10
89,779.68
61,816.62
97,874.66
65,983.77
86,528.11
56,903.77
(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
9
Total Cash Outflows
245,064.13
233,055.25
229,536.72
218,026.50
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:53)(cid:48)(cid:53)(cid:34)(cid:45)(cid:1)(cid:41)(cid:50)(cid:45)(cid:34)
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 2018 - 2019
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168
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:50)(cid:86)(cid:66)(cid:77)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:80)(cid:79)(cid:1)(cid:45)(cid:36)(cid:51)
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 Liquidity Risk Management of the Bank is governed by the Asset Liability Management (ALM) Policy approved by the Board. The Asset
Liability Committee (‘ALCO’) is a decision-making unit responsible for implementing the liquidity and interest rate risk management strategy
of the Bank in line with its risk management objectives and ensures adherence to the risk tolerance / limits set by the Board. In order to
determine cash outflows, the Bank segregates its deposits into various customer segments, viz Retail (which include deposits from individuals),
Small Business Customers (those with deposits under ` 5 crore), and Wholesale (which would cover all residual deposits). Within Wholesale,
deposits that are attributable to clearing, custody and cash management services are classified as Operational Deposits. Other contractual
funding, including a portion of other liabilities which are expected to run down in a 30 day time frame are included in the cash outflows.
These classifications, based on extant regulatory guidelines, are part of the Bank’s LCR framework, and are also submitted to the RBI.
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 then minimum requirement at 60% which rose 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, 2019 is 100%.
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), undrawn commitments, derivative-related exposures and offset with inflows emanating
from assets maturing within the same time period. Given below is a table of run-off factors and the average LCR maintained by the Bank
quarter-wise over the past two years:
Particulars
Retail Deposits
Small Business Customers
Operational deposits
Non-financial corporates, sovereigns, central banks, multilateral development banks and PSEs
Other legal entities
(cid:50)(cid:86)(cid:66)(cid:83)(cid:85)(cid:70)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
December 31, 2017
September 30, 2017
June 30, 2017
LCR Maintained (Average)
LCR Required
117.28%
126.03%
118.54%
111.75%
105.16%
99.51%
97.68%
91.88%
100.00%
90.00%
90.00%
90.00%
90.00%
80.00%
80.00%
80.00%
Run-off factors
5% - 10%
5% - 10%
5% - 25%
40%
100%
The average LCR for the quarter ended March 31, 2019 was at 117.28% as against 105.16% for the quarter ended March 31, 2018, and well
above the present prescribed minimum requirement of 100%. The average HQLA for the quarter ended March 31, 2019 was ` 202,599.15
crore, as against was ` 159,124.53 crore for the quarter ended March 31, 2018. During the same period the composition of government
securities and treasury bills in the HQLA increased from 87% to 91%.
169
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
For the quarter ended March 31, 2019, derivative exposures (net of cash inflows) / collateral requirements and undrawn commitments
constituted just about 0.5% and 3.4% respectively of average cash outflow, in line with earlier periods. The Bank has consistently maintained
a robust funding profile with a significant portion of funding through deposits. As of March 31, 2019, the top 20 depositors comprised of 6.1%
of total deposits.
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
Welfare trust of the Bank
HDB Employees Welfare Trust
Key management personnel
Aditya Puri, Managing Director
Paresh Sukthankar, Deputy Managing Director (ceased to be related party effective November 8, 2018)
Kaizad Bharucha, Executive Director
Relatives of key management personnel
Anita Puri, Amit Puri, Amrita Puri, Adishwar Puri, Aarti Sood, Havovi Bharucha, Huzaan Bharucha, Danesh Bharucha, Daraius Bharucha.
Entities in which key management personnel are interested
Salisbury Investments Private Limited and Akuri by Puri
The following ceased to be related party effective November 8, 2018:
Tanaksh Innovations Private Limited, Sangeeta Sukthankar, Dattatraya Sukthankar, Shubhada Sukthankar, Akshay Sukthankar, Ankita
Sukthankar, Madhavi Lad.
In accordance with paragraph 5 of AS-18, the Bank has not disclosed certain transactions with relatives and interested entities 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, 2019 are given below. A specific related
party transaction is disclosed as a significant related party transaction wherever it exceeds 10% of all related party transactions in that
category:
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:27)(cid:1)(cid:41)(cid:37)(cid:35)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)` 4.56 crore (previous year: ` 2.47 crore); Housing Development Finance Corporation
Limited ` 5.49 crore (previous year: ` 5.96 crore).
HDFC Bank Limited Annual Report 2018 - 2019
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170
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1) (cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:69)(cid:27)(cid:1) (cid:41)(cid:37)(cid:35)(cid:1) (cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1) (cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1) (cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1) ` 294.50 crore (previous year: ` 136.61 crore), HDFC Limited ` 35.20 crore
(previous year: ` 13.28 crore).
(cid:51)(cid:70)(cid:79)(cid:69)(cid:70)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:27)(cid:1)(cid:41)(cid:80)(cid:86)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:37)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)` 282.97 crore (previous year: ` 264.27 crore).
(cid:51)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:27)(cid:1)(cid:41)(cid:37)(cid:35)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)` 1,916.90 crore (previous year: ` 1,759.67 crore); Housing Development
Finance Corporation Limited ` 486.95 crore (previous year: ` 405.17 crore).
(cid:37)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:27)(cid:1)(cid:41)(cid:80)(cid:86)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:37)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)` 511.17 crore (previous year: ` 432.53 crore).
(cid:37)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:69)(cid:27)(cid:1)(cid:41)(cid:37)(cid:35)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)` 52.54 crore (previous year: ` 112.59 crore); HDFC Securities Limited ` 151.90
crore (previous year: ` 129.06 crore).
The Bank’s related party balances and transactions for the year ended March 31, 2019 are summarised as follows:
(cid:42)(cid:85)(cid:70)(cid:78)(cid:84)(cid:1)(cid:16)(cid:1)(cid:51)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:90)
Promoter
Subsidiaries
Associates
Key management
(` crore)
Total
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
Other investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
3,290.99
(3,290.99)
0.47
(0.47)
-
-
-
-
5.49
35.20
282.97
486.95
-
-
-
(1,740.49)
511.17
-
30.55
(48.40)
83.64
(83.64)
0.37
(0.40)
-
23,982.42
614.20
(614.20)
10.62
(10.62)
3,104.74
(3,104.74)
-
-
4.65
294.50
49.65
1,922.45
3,826.49
(3,826.49)
964.95
(1,154.65)
-
204.44
16.41
(16.41)
85.16
(85.16)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27.02
(27.02)
0.76
(2.51)
2.96
(3.11)
-
-
1.13
0.10
#
0.61
-
-
-
-
7.43
-
-
-
-
-
-
-
25.88
-
3,932.21
(3,932.21)
11.85
(13.60)
3,107.70
(3,107.85)
-
-
11.27
329.80
332.62
2,410.01
3,826.49
(3,826.49)
964.95
(2,895.14)
518.60
204.44
46.96
(64.81)
168.80
(168.80)
0.37
(0.40)
25.88
23,982.42
# Denotes amount less than ` 1 lakh.
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:39)(cid:74)(cid:72)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:67)(cid:83)(cid:66)(cid:68)(cid:76)(cid:70)(cid:85)(cid:1)(cid:74)(cid:79)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:66)(cid:89)(cid:74)(cid:78)(cid:86)(cid:78)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:83)(cid:74)(cid:84)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)
at each quarter-end.
(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:70)(cid:89)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:84)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:70)(cid:89)(cid:70)(cid:83)(cid:68)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:15)
(cid:35)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:85)(cid:74)(cid:83)(cid:66)(cid:77)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:71)(cid:74)(cid:85)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:76)(cid:70)(cid:90)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:83)(cid:74)(cid:66)(cid:77)(cid:1)(cid:81)(cid:70)(cid:83)(cid:84)(cid:80)(cid:79)(cid:79)(cid:70)(cid:77)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:77)(cid:77)(cid:1)(cid:81)(cid:80)(cid:80)(cid:77)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:66)(cid:77)(cid:77)(cid:80)(cid:68)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:72)(cid:66)(cid:74)(cid:79)(cid:84)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
key managerial personnel. These will be paid based on approval from RBI. As of March 31, 2019, approved unpaid deferred bonus
in respect of earlier years was ` 1.91 crore.
171
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
The Bank being an authorised dealer, deals in foreign exchange and derivative transactions with parties which include its promoter.
The foreign exchange and derivative transactions are undertaken in line with the RBI guidelines. The notional principal amount of foreign
exchange and derivative contracts transacted with the promoter that were outstanding as on March 31, 2019 is ` 5,865.50 crore
(previous year: ` 5,972.14 crore). The contingent credit exposure pertaining to these contracts computed in line with the extant RBI
guidelines on exposure norms was ` 79.12 crore (previous year: ` 80.76 crore).
During the year ended March 31, 2019, the Bank purchased debt securities from Housing Development Finance Corporation Limited
` 685.00 crore (previous year: ` 2,105.00 crore) and from HDB Financial Services Limited ` 2,180.58 crore (previous year: ` 1,885.00
crore) issued by these entities.
During the year ended March 31, 2019, the Bank made investment of ` 963.22 crore (previous year: Nil) in pass through certificates in
respect of assets securitised out by HDB Financial Services Limited for which the outstanding as on March 31, 2019 was ` 878.20 crore.
During the year ended March 31, 2019, 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, 2019, 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, 2019 was ` 37.19 crore (previous year: ` 49.26 crore).
The Bank also paid interest on deposit from HDB Employees Welfare Trust aggregating to ` 3.00 crore (previous year: ` 3.21 crore).
The Bank’s related party balances and transactions for the year ended March 31, 2018 are summarised as follows:
(` crore)
(cid:42)(cid:85)(cid:70)(cid:78)(cid:84)(cid:1)(cid:16)(cid:1)(cid:51)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:90)
Promoter
Subsidiaries
Associates
Key management
Total
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
Other Investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
# Denotes amount less than ` 1 lakh.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
-
-
-
-
-
-
-
-
1.70
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14.10
(37.45)
2.51
(2.51)
3.16
(3.45)
-
-
1.05
0.12
#
0.76
-
-
-
-
5.67
-
-
-
-
-
-
-
19.29
-
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)
2,723.92
(2,769.46)
438.20
241.65
29.74
(68.53)
104.82
(211.37)
0.25
(0.27)
19.29
5,623.94
3,250.77
(3,250.77)
0.47
(0.47)
-
-
-
-
5.96
13.28
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
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)
1,120.04
(1,165.58)
-
241.65
1.40
(7.74)
72.04
(175.20)
-
-
-
-
172
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:39)(cid:74)(cid:72)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:67)(cid:83)(cid:66)(cid:68)(cid:76)(cid:70)(cid:85)(cid:1)(cid:74)(cid:79)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:66)(cid:89)(cid:74)(cid:78)(cid:86)(cid:78)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:83)(cid:74)(cid:84)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)
at each quarter-end.
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:70)(cid:89)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:84)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:70)(cid:89)(cid:70)(cid:83)(cid:68)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:15)
(cid:35)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:85)(cid:74)(cid:83)(cid:66)(cid:77)(cid:1)(cid:67)(cid:70)(cid:79)(cid:70)(cid:71)(cid:74)(cid:85)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:76)(cid:70)(cid:90)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:83)(cid:74)(cid:66)(cid:77)(cid:1)(cid:81)(cid:70)(cid:83)(cid:84)(cid:80)(cid:79)(cid:79)(cid:70)(cid:77)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:79)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:77)(cid:77)(cid:1)(cid:81)(cid:80)(cid:80)(cid:77)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:66)(cid:77)(cid:77)(cid:80)(cid:68)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:72)(cid:66)(cid:74)(cid:79)(cid:84)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
key managerial personnel. These will be paid based on approval from RBI. As of March 31, 2018, approved unpaid deferred bonus
in respect of earlier years was ` 2.80 crore.
28.
Intra-Group exposure
Intra-Group exposures in accordance with RBI guidelines are as follows:
(` crore)
Particulars
March 31, 2019
March 31, 2018
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
7,368.31
7,368.31
0.56%
Nil
7,137.13
7,137.13
0.67%
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
The total of minimum lease payments recognised in the Profit and Loss Account for the year
Total
(` crore)
March 31, 2019
March 31, 2018
993.31
3,217.18
4,016.39
8,226.88
1,199.66
958.85
3,107.95
3,540.07
7,606.87
1,166.50
Total of future minimum sub-lease payments expected to be received under non-cancellable
29.31
6.33
sub-leases
Sub-lease amounts recognised in the Profit and Loss Account for the year
Contingent (usage based) lease payments recognised in the Profit and Loss Account for the
9.35
206.55
7.77
174.87
year
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.
173
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
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, 2019
March 31, 2018
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
367.68
132.28
(3.36)
496.60
230.50
139.93
(2.75)
367.68
During the year ended March 31, 2019, RBI has imposed a penalty of ` 0.20 crore (previous year: Nil) for non-compliance with various
directions issued by RBI on Know Your Customer (KYC) / Anti-Money Laundering (AML) standards.
(cid:20)(cid:19)(cid:15)(cid:1) (cid:37)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:68)(cid:86)(cid:84)(cid:85)(cid:80)(cid:78)(cid:70)(cid:83)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:66)(cid:74)(cid:79)(cid:85)(cid:84)(cid:1)(cid:16)(cid:1)(cid:86)(cid:79)(cid:74)(cid:78)(cid:81)(cid:77)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:88)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:48)(cid:78)(cid:67)(cid:86)(cid:69)(cid:84)(cid:78)(cid:66)(cid:79)
(cid:116)(cid:1)
(cid:36)(cid:86)(cid:84)(cid:85)(cid:80)(cid:78)(cid:70)(cid:83)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:66)(cid:74)(cid:79)(cid:85)(cid:84)
(A) Customer complaints other than ATM transaction disputes
Particulars
March 31, 2019
March 31, 2018
(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
4,064
169,846
169,222
4,688
2,349
120,439
118,724
4,064
(B) ATM transaction disputes relating to the Bank’s customers on the Bank’s ATMs
Particulars
March 31, 2019
March 31, 2018
(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
225
19,438
19,481
182
0.94
145
19,105
19,025
225
1.00
(C)
ATM transaction disputes relating to the Bank’s customers on other banks’ ATMs
Particulars
March 31, 2019
March 31, 2018
(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
2,553
209,083
208,864
2,772
7.31
1,464
127,307
126,218
2,553
4.98
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
(D)
Total customer complaints and ATM transaction disputes [total of tables (A), (B) and (C) above]
Particulars
March 31, 2019
March 31, 2018
(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
6,842
398,367
397,567
7,642
3,958
266,851
263,967
6,842
Note: ATM transaction disputes reported in the above tables are in accordance with RBI guidelines on disclosure of customer
complaints.
(cid:116)(cid:1)
(cid:34)(cid:88)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:81)(cid:66)(cid:84)(cid:84)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:48)(cid:78)(cid:67)(cid:86)(cid:69)(cid:84)(cid:78)(cid:66)(cid:79)(cid:1)(cid:9)(cid:35)(cid:48)(cid:10)
Particulars
March 31, 2019
March 31, 2018
(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:116)(cid:1)
(cid:53)(cid:80)(cid:81)(cid:1)(cid:66)(cid:83)(cid:70)(cid:66)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:86)(cid:84)(cid:85)(cid:80)(cid:78)(cid:70)(cid:83)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:66)(cid:74)(cid:79)(cid:85)(cid:84)
-
-
-
-
-
-
-
-
The average number of customer complaints per branch, including ATM transaction disputes, was 6.9 per month during the year ended
March 31, 2019 (previous year: 4.7 per month). For the year ended March 31, 2019, retail liability segment accounted for 80.37%
of the total complaints (previous year: 76.46%), followed by credit cards at 14.56% of the total complaints (previous year: 17.14%),
retail assets at 4.50% of the total complaints (previous year: 5.57%), while other segments accounted for 0.57% of total complaints
(previous year: 0.83%). The top 10 areas of customer complaints for the year ended March 31, 2019, including ATM transaction
disputes, aggregated 318,540 complaints (previous year: 2,03,045 complaints) and accounted for 79.96% of total complaints
(previous year: 76.09%). The top 5 areas of customer complaints on which the Bank is working towards root cause remediation
are - unauthorized usage through debit card online, cash not dispensed or less cash dispensed in the Bank’s ATMs, Transaction
dispute related - credit cards, Sales related - credit cards and Unauthorized usage through debit card done at Other Bank ATMs.
The above is based on the information available with the Bank which has been relied upon by the auditors.
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, 2019 and 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, 2019 and
March 31, 2018. The above is based on the information available with the Bank which has been relied upon by the auditors.
175
SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
35. Overseas assets, NPAs and revenue
Particulars
Total Assets
Total NPAs
Total Revenue
(cid:20)(cid:23)(cid:15)(cid:1) (cid:48)(cid:71)(cid:71)(cid:14)(cid:35)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:52)(cid:73)(cid:70)(cid:70)(cid:85)(cid:1)(cid:52)(cid:49)(cid:55)(cid:84)
(` crore)
March 31, 2019
March 31, 2018
33,714.21
26,946.53
23.31
1,238.96
134.64
818.12
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, 2019 (previous year: Nil).
38. Corporate social responsibility
Operating expenses include ` 443.77 crore (previous year: ` 374.54 crore) for the year ended March 31, 2019 towards Corporate Social
Responsibility (CSR), in accordance with Companies Act, 2013.
The Bank has spent 2.02% (previous year: 2.04%) of its average net profit for the last three financial years as part of its CSR for the year
ended March 31, 2019. 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)
March 31, 2019
March 31, 2018
Particulars
Amount
Amount
Total
Amount
Amount
Total
spent
(cid:86)(cid:79)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:16)
spent
(cid:86)(cid:79)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:16)
provision
provision
Construction / acquisition of any asset
On purpose other than (i) above
-
443.77
-
-
-
-
443.77
374.54
-
-
-
374.54
Sr.
No.
(i)
(ii)
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, 2019 and 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, 2019 amounted to ` 1.62 crore (previous year: ` 1.58 crore).
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SCHEDULES TO THE FINANCIAL STATEMENTS
For the year ended March 31, 2019
Further, in accordance with RBI guidelines, profit related commission to all Non-Executive Directors other than the Chairperson for the
year ended March 31, 2019 amounted to ` 0.90 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.
The previous year comparative numbers were audited by a firm of Chartered Accountants other than S.R. Batliboi & Co. LLP.
As per our report of even date.
For and on behalf of the Board
For S. R. BATLIBOI & CO. LLP
Shyamala Gopinath
Chartered Accountants
Chairperson
Aditya Puri
Managing Director
Firm Registration No. 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
Kaizad Bharucha
Executive Director
Mumbai, April 20, 2019
& Company Secretary
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
Keki Mistry
Malay Patel
Umesh Sarangi
(cid:52)(cid:66)(cid:79)(cid:75)(cid:74)(cid:87)(cid:1)(cid:52)(cid:66)(cid:68)(cid:73)(cid:66)(cid:83)
Sandeep Parekh
M D Ranganath
Directors
177
INDEPENDENT AUDITOR'S REPORT
To the Members of HDFC Bank Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of HDFC Bank Limited (hereinafter referred to as “the Bank”) and its
subsidiaries (the Bank and its subsidiaries together referred to as “the Group”) comprising of the consolidated Balance sheet as at March
31, 2019, the consolidated Profit and Loss Account and the consolidated Cash Flow Statement for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies (hereinafter referred to as “the consolidated financial
statements”).
In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of
other auditors on separate financial statements and on the other financial information of the subsidiaries, the aforesaid consolidated financial
statements give the information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and
fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at March
31, 2019, their consolidated profit and their consolidated cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing (SAs), as specified under
section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements’ section of our report. We are independent of the Group in accordance with the ‘Code of Ethics’ issued by
the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements
under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion on the consolidated financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below,
our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the
responsibilities described in the ‘Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements’ section of our report, including
in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the
risks of material misstatement of the consolidated financial statements. The results of audit procedures performed by us and by other auditors
of components not audited by us, as reported by them in their audit reports furnished to us by the management, including those procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
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INDEPENDENT AUDITOR'S REPORT
Key audit matters
How our audit addressed the key audit matter
Identification of Non-performing advances and provisioning of advances:
Advances constitute a significant portion of the
The audit procedures performed, among others, included:
Group’s assets and the quality of these advances
is measured in terms of ratio of Non-Performing
Advances (“NPA”) to the gross advances of the
Group. The Group’s net advances constitute 67.24%
of the total assets as at March 31, 2019.
The Reserve Bank of
India’s
(“RBI”) guidelines
on
Income
recognition and asset classification
(“IRAC”) prescribe
the prudential norms
for
identification and classification of NPAs and the
- Considering the Group’s policies for NPA identification and provisioning and
assessing compliance with the IRAC Norms.
- Understanding, evaluating and testing the design and operating effectiveness of key
controls (including application controls) around identification of impaired accounts
based on the extant guidelines on IRAC.
- Performing other procedures including substantive audit procedures covering the
identification of NPAs by the Bank. These procedures included:
- Considering testing of the exception reports generated from the application systems
minimum provision
required
for such assets.
where the advances have been recorded.
The Group is also required to apply its judgement to
determine the identification and provision required
against NPAs by applying quantitative as well as
qualitative factors. The risk of identification of NPAs is
- Considering the accounts reported by the Bank and other Banks as Special Mention
Accounts (“SMA”) in RBI’s central repository of information on large credits (CRILC)
to identify stress.
affected by factors like stress and liquidity concerns
- Reviewing account statements and other related information of the borrowers
in certain sectors.
selected based on quantitative and qualitative risk factors.
The provisioning for identified NPAs is estimated
- Performing inquiries with the credit and risk departments to ascertain if there were
based on ageing and classification of NPAs, recovery
indicators of stress or an occurrence of an event of default in a particular loan
estimates, value of security and other qualitative
account or any product category which need to be considered as NPA. Examining
factors and is subject to the minimum provisioning
the early warning reports generated by the Bank to identify stressed loan accounts.
norms specified by RBI.
- Holding specific discussions with the management of the Bank on sectors where
Additionally, the Bank makes provisions on exposures
there is perceived credit risk and the steps taken to mitigate the risks to identified
that are not classified as NPAs, including advances
sectors.
in certain sectors and identified advances or group
advances that can potentially slip into NPA. These are
classified as contingency provisions.
The Group has detailed its accounting policy in
this regard in Significant accounting policies under
With respect to provisioning of advances, we performed the following procedures:
- Gained an understanding of the Group’s process for provisioning of advances.
- Tested on a sample basis the calculation performed by the management for
compliance with RBI regulations and internally laid down policies for provisioning.
schedule 17 Note D 2 - Advances.
For loan accounts, where the Bank made provisions which were not classified as NPA,
Since the identification of NPAs and provisioning for
advances require significant level of estimation and
given its significance to the overall audit, we have
ascertained identification and provisioning for NPAs
as a key audit matter.
we reviewed the Bank’s assessment for these provisions.
179
INDEPENDENT AUDITOR'S REPORT
Evaluation of open tax litigations (Direct and Indirect Tax)
The Bank has material open tax litigations including
- Gained an understanding of the Bank’s process for determining tax liabilities and
matters under dispute which
involve significant
the tax provisions.
judgment to determine the possible outcome of these
disputes.
-
Involved direct and indirect tax specialists to understand the evaluation of likelihood
and level of liability for significant tax risks after considering legal precedence, other
Since the assessment of these open tax litigations
rulings and new information in respect of open tax positions as at reporting date.
requires significant level of judgement, we have
included this as a key audit matter.
- Agreed underlying
tax balances
to supporting documentation,
including
correspondence with tax authorities.
- Assessed the disclosures within the consolidated financial statements in this regard.
Information Technology (“IT”) Systems and Controls
The reliability and security of IT systems plays a key
- For testing the IT general controls, application controls and IT dependent manual
role in the business operations of the Group. Since
controls, we involved IT specialists as part of the audit. The team also assisted in
large volume of transactions are processed daily, the
testing the accuracy of the information produced by the IT systems.
IT controls are required to ensure that applications
process data as expected and that changes are made
in an appropriate manner. These systems also play
a key role in the financial accounting and reporting
process of the Bank.
Due to the pervasive nature and complexity of the
IT environment we have ascertained IT systems and
controls as a key audit matter.
- Tested the design and operating effectiveness of the Group’s IT access controls
over the information systems that are critical to financial reporting. We tested
IT general controls (logical access, changes management and aspects of IT
operational controls). This included testing that requests for access to systems
were appropriately reviewed and authorized.
- Tested the Bank’s periodic review of access rights. We inspected requests of
changes to systems for appropriate approval and authorisation. We considered
the control environment relating to various interfaces, configuration and other
application layer controls identified as key to the audit.
-
In addition to the above, the design and operating effectiveness of certain automated
controls that were considered as key internal controls over financial reporting were
tested.
- Tested compensating controls or performed alternate procedures, where necessary.
In addition, understood where relevant, changes made to the IT landscape during
the audit period and tested those changes that had a significant impact on financial
reporting.
Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon
The Bank’s Board of Directors is responsible for the other information. The other information comprises the information included in the Basel
III - Pillar 3 disclosures and graphical representation of financial highlights (but does not include the financial statements and our auditor’s
reports thereon) which we obtained prior to the date of this auditor’s report, and Annual Report, which is expected to be made available to us
after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and,
in doing so, consider whether such other information is materially inconsistent with the consolidated financial statements or our knowledge
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INDEPENDENT AUDITOR'S REPORT
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that
we have obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those Charged with Governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
The Bank’s Board of Directors is responsible for the preparation and presentation of these consolidated financial statements in terms of the
requirements of the Act that give a true and fair view of the consolidated financial position, consolidated financial performance, consolidated
cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified
under section 133 of the Act read Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Group and the guidelines
issued by the Reserve Bank of India.
The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding of the assets of the Group and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent;
and 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 Bank, as aforesaid.
In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group are responsible
for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Those Charged with Governance are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
(cid:116)(cid:1)
(cid:42)(cid:69)(cid:70)(cid:79)(cid:85)(cid:74)(cid:71)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:78)(cid:66)(cid:85)(cid:70)(cid:83)(cid:74)(cid:66)(cid:77)(cid:1)(cid:78)(cid:74)(cid:84)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:80)(cid:77)(cid:74)(cid:69)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:13)(cid:1)(cid:88)(cid:73)(cid:70)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:69)(cid:86)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:71)(cid:83)(cid:66)(cid:86)(cid:69)(cid:1)(cid:80)(cid:83)(cid:1)(cid:70)(cid:83)(cid:83)(cid:80)(cid:83)(cid:13)(cid:1)(cid:69)(cid:70)(cid:84)(cid:74)(cid:72)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(cid:116)(cid:1) (cid:48)(cid:67)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:1)(cid:83)(cid:70)(cid:77)(cid:70)(cid:87)(cid:66)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:80)(cid:83)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:69)(cid:70)(cid:84)(cid:74)(cid:72)(cid:79)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:69)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:74)(cid:83)(cid:68)(cid:86)(cid:78)(cid:84)(cid:85)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:15)(cid:1)
Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial
controls system in place and the operating effectiveness of such controls.
(cid:116)(cid:1) (cid:38)(cid:87)(cid:66)(cid:77)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:74)(cid:70)(cid:84)(cid:1)(cid:86)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:66)(cid:84)(cid:80)(cid:79)(cid:66)(cid:67)(cid:77)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1)
by management.
181
INDEPENDENT AUDITOR'S REPORT
(cid:116)(cid:1) (cid:36)(cid:80)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:1) (cid:80)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1) (cid:80)(cid:71)(cid:1) (cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:8)(cid:84)(cid:1) (cid:86)(cid:84)(cid:70)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:72)(cid:80)(cid:74)(cid:79)(cid:72)(cid:1) (cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:1) (cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1) (cid:66)(cid:79)(cid:69)(cid:13)(cid:1) (cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1) (cid:80)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1) (cid:70)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
(cid:116)(cid:1) (cid:38)(cid:87)(cid:66)(cid:77)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:77)(cid:77)(cid:1)(cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:13)(cid:1)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:80)(cid:77)(cid:74)(cid:69)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:13)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:88)(cid:73)(cid:70)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(cid:116)(cid:1) (cid:48)(cid:67)(cid:85)(cid:66)(cid:74)(cid:79)(cid:1)(cid:84)(cid:86)(cid:71)(cid:71)(cid:74)(cid:68)(cid:74)(cid:70)(cid:79)(cid:85)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:1)(cid:70)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:83)(cid:70)(cid:72)(cid:66)(cid:83)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:79)(cid:85)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:67)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:80)(cid:71)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)
we are the independent auditors, to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the audit of the financial statements of such entities included in the consolidated financial statements of
which we are the independent auditors. For the other entities included in the consolidated financial statements, which have been audited
by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them.
We remain solely responsible for our audit opinion.
We communicate with those Charged with Governance of the Bank and such other entities included in the consolidated financial statements of
which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide those Charged with Governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those Charged with Governance, we determine those matters that were of most significance in the audit
of the consolidated financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Other Matter
(a) We did not audit the financial statements and other financial information, in respect of 2 subsidiaries, whose financial statements include
total assets of Rs. 571,930,600 (thousands) as at March 31, 2019, and total revenues of Rs. 96,231,600 (thousands) and net cash
inflows of Rs. 1,514,400 (thousands) for the year ended on that date. These financial statement and other financial information have been
audited by other auditors, which financial statements, other financial information and auditor’s reports have been furnished to us by the
management. Our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect
of these subsidiaries and our report in terms of sub-sections (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries,
is based solely on the reports of such other auditors.
Our opinion above on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not
modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial
statements and other financial information certified by the Management.
(b) The consolidated financial statements of the Group for the year ended March 31, 2018, included in these consolidated financial statements,
have been audited by the predecessor auditor who expressed an unmodified opinion on those statements on April 21, 2018.
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 report of the other auditors on separate financial
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INDEPENDENT AUDITOR'S REPORT
statements and the other financial information of subsidiaries, as noted in the ‘other matter’ paragraph we report, to the extent applicable, that:
(a) We/the other auditors whose report we have relied upon 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 consolidation of the financial statements
have been kept so far as it appears from our examination of those books and reports of the other auditors;
(c) The Consolidated Balance Sheet, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement dealt with by this
Report are in agreement with the 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 specified under Section 133 of the
Act, read with Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the directors of the Bank as on March 31, 2019 taken on record by the Board of
Directors of the Bank and the reports of the statutory auditors who are appointed under Section 139 of the Act, of its subsidiary companies,
none of the directors of the Group’s companies is disqualified as on March 31, 2019 from being appointed as a director in terms of Section
164(2) of the Act. As reported by the statutory auditor of a subsidiary company, based on the information available on the Ministry of
Corporate Affairs website, it is understood that a director of a subsidiary company has attracted disqualification under section 164(2) as
on March 31, 2019. The subsidiary company has represented to its statutory auditor that the said director is in disagreement with the
disqualification and has tendered his resignation as a director of the subsidiary company on April 16, 2019.
(f) With respect to the adequacy and the operating effectiveness of the internal financial controls over financial reporting with reference to these
consolidated financial statements of the Bank and its subsidiary companies, refer to our separate Report in “Annexure 1” to this report;
(g) In our opinion, the Bank being a banking company, the remuneration to whole-time directors of the Bank during the year ended March 31,
2019 has been paid by the Bank in accordance with the provisions of Section 35B (1) of the Banking Regulation Act, 1949. Based on the
consideration of reports of other auditors of the subsidiaries, the remuneration paid by subsidiaries to their directors during the current year
is in accordance with the provisions of section 197 of the Act;
(h) 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 and based on the
consideration of the report of the other auditors on separate financial statements as also the other financial information of the subsidiaries,
as noted in the ‘Other matter’ paragraph:
i. The consolidated financial statements disclose the impact of pending litigations on its consolidated financial position of the Group in
its consolidated financial statements - Refer Schedule 12.1, Schedule 17 Note D 17, and Schedule 18 Note 11(d) to the consolidated
financial statements;
ii. 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 - Refer Schedule 17 Note D 7 and D 17 and
Schedule 18 Note 11(d) to the consolidated financial statements in respect of such items as it relates to the Group;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank
and its subsidiaries during the year ended March 31, 2019.
Mumbai
April 20, 2019
183
For S. R. Batliboi & Co. LLP
Chartered Accountants
Firm’s Registration No.: 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
INDEPENDENT AUDITOR'S REPORT
ANNEXURE 1 TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE
CONSOLIDATED FINANCIAL STATEMENTS OF HDFC BANK LIMTED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
To the Members of HDFC Bank Limited
In conjunction with our audit of the consolidated financial statements of HDFC Bank Limited as of and for the year ended March 31, 2019,
we have audited the internal financial controls over financial reporting of HDFC Bank Limited (hereinafter referred to as the “Bank”) and its
subsidiary companies, which are companies incorporated in India, as of that date.
Management’s Responsibility for Internal Financial Controls
The respective Board of Directors of the Bank and its subsidiary companies, 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 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 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 Act.
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”) and the
Standards on Auditing, both, issued by Institute of Chartered Accountants of India, and deemed to be prescribed under section 143(10) of the
Act, 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.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial
reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred
to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls
system over financial reporting.
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.
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INDEPENDENT AUDITOR'S REPORT
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, the Bank and its subsidiary companies, have, maintained 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 March 31, 2019, 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.
Other Matters
Our report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial
reporting of the Bank, insofar as it relates to its subsidiary companies, is based on the corresponding reports of the auditors of such subsidiary
companies.
Mumbai
April 20, 2019
For S. R. Batliboi & Co. LLP
Chartered Accountants
Firm’s Registration No.: 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
185
CONSOLIDATED BALANCE SHEET
As at March 31, 2019
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-19
31-Mar-18
1
2
2A
3
4
5
5,446,613
5,190,181
1,531,279,982
1,090,801,062
5,017,945
3,563,322
9,225,026,779
7,883,751,419
1,577,327,790
1,564,420,848
583,957,956
484,134,863
Total
12,928,057,065
11,031,861,695
6
7
8
9
10
11
468,045,896
1,046,882,074
350,130,527
183,733,488
2,869,176,781
2,384,609,240
8,692,226,631
7,000,338,363
42,198,371
38,105,583
506,278,859
378,192,947
Total
12,928,057,065
11,031,861,695
12
10,251,253,094
8,757,769,674
499,528,010
427,538,250
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 S. R. BATLIBOI & CO. LLP
Chartered Accountants
Firm Registration No. 301003E/E300005
Shyamala Gopinath
Aditya Puri
Chairperson
Managing Director
per Sudhir Soni
Partner
Membership No.: 41870
Mumbai, April 20, 2019
Kaizad Bharucha
Executive Director
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
& Company Secretary
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
HDFC Bank Limited Annual Report 2018 - 2019
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186
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended March 31, 2019
I
INCOME
Interest earned
Other income
II EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
III PROFIT
Net profit for the year
Less: Minority interest
Add: Share in profits of associates
Consolidated profit for the year
Balance in the Profit and Loss Account brought forward
IV APPROPRIATIONS
Transfer to Statutory Reserve
Tax (including cess) on dividend
Dividend (including tax / cess thereon) pertaining to previous year paid
during the year, net of dividend tax credits
Transfer to General Reserve
Transfer to Capital Reserve
Transfer to / (from) Investment Reserve Account
Transfer to / (from) Investment Fluctuation Reserve
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
Profit and Loss Account.
As per our report of even date.
For and on behalf of the Board
Year ended
31-Mar-19
1,051,607,400
189,470,509
1,241,077,909
537,126,876
276,947,604
202,547,300
1,016,621,780
224,456,129
1,131,820
-
223,324,309
430,989,822
654,314,131
` in ‘000
Year ended
31-Mar-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
54,997,602
433,081
45,620,310
507,653
40,525,854
33,905,804
21,078,165
1,053,354
-
7,730,000
528,496,075
654,314,131
`
83.33
82.51
17,486,728
2,355,227
(442,018)
-
430,989,822
530,423,526
`
71.73
70.76
Schedule
13
14
Total
15
16
Total
Total
Total
17 & 18
For S. R. BATLIBOI & CO. LLP
Chartered Accountants
Firm Registration No. 301003E/E300005
Shyamala Gopinath
Aditya Puri
Chairperson
Managing Director
per Sudhir Soni
Partner
Membership No.: 41870
Mumbai, April 20, 2019
Kaizad Bharucha
Executive Director
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
& Company Secretary
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
187
CONSOLIDATED CASH FLOW STATEMENT
For the year ended March 31, 2019
Cash flows from operating activities
Consolidated profit before income tax
342,049,793
284,131,068
` in ‘000
Year ended
Year ended
31-Mar-19
31-Mar-18
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
Provision for standard assets
Contingency provisions
Share in current year's profits of associates
Adjustments for:
12,206,675
9,667,819
152,437
1,570,448
4,534,626
3,599,102
(62,054)
11,833
74,186,708
57,553,339
47,066
308,075
6,861,413
6,575,746
4,991,092
3,961,191
-
(5,221)
444,967,756
367,373,400
(Increase) / decrease in investments (excluding investments in subsidiaries)
(489,301,670)
(282,310,524)
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
(1,766,074,976)
(1,203,053,719)
1,341,275,360
1,452,408,940
(122,449,924)
52,336,433
Increase / (decrease) in other liabilities and provisions
87,851,107
(114,511,772)
Direct taxes paid (net of refunds)
(503,732,347)
272,242,758
(124,983,100)
(100,098,994)
Net cash flow (used in) / from operating activities
(628,715,447)
172,143,764
Cash flows used in investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Investment in subsidiaries and / or joint ventures
(16,206,124)
(8,477,746)
222,037
99,204
-
(143,331)
Net cash flow used in investing activities
(15,984,087)
(8,521,873)
HDFC Bank Limited Annual Report 2018 - 2019
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188
CONSOLIDATED CASH FLOW STATEMENT
For the year ended March 31, 2019
Cash flows from financing activities
Increase in minority interest
Proceeds from issue of equity shares under preferential allotment
Proceeds from issue of shares under Qualified Institutions Placement and American
Depository Receipt offering (net of issue expenses)
` in ‘000
Year ended
Year ended
31-Mar-19
31-Mar-18
1,454,623
666,553
84,999,999
150,896,153
-
-
Money received on exercise of stock options by employees
22,008,150
27,259,098
Increase / (decrease) in borrowings (excluding subordinate debt, perpetual debt and
upper Tier II instruments)
32,656,942
498,214,409
Proceeds from issue of Additional Tier I and Tier II Capital Bonds
9,000,000
102,800,000
Redemption of subordinated debt
Dividend paid during the year
Tax on dividend paid during the year
Net cash flow from financing activities
Effect of exchange fluctuation on translation reserve
(28,750,000)
(20,750,000)
(33,842,896)
(28,312,716)
(7,116,039)
(6,100,741)
231,306,932
573,776,603
953,463
105,872
Net increase / (decrease) in cash and cash equivalents
(412,439,139)
737,504,366
Cash and cash equivalents as at April 1st, 2018
Cash and cash equivalents as at March 31st, 2019
1,230,615,562
493,111,196
818,176,423
1,230,615,562
As per our report of even date.
For and on behalf of the Board
For S. R. BATLIBOI & CO. LLP
Chartered Accountants
Firm Registration No. 301003E/E300005
Shyamala Gopinath
Aditya Puri
Chairperson
Managing Director
per Sudhir Soni
Partner
Membership No.: 41870
Mumbai, April 20, 2019
Kaizad Bharucha
Executive Director
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
& Company Secretary
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
189
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 1 - CAPITAL
Authorised capital
3,25,00,00,000 (31 March, 2018: 3,25,00,00,000) Equity Shares of ` 2/- each
Issued, subscribed and paid-up capital
2,72,33,06,610 (31 March, 2018: 2,59,50,90,267) Equity Shares of ` 2/- each
SCHEDULE 2 - RESERVES AND SURPLUS
I
Statutory reserve
Opening balance
Additions during the year
II
III
IV
V
VI
VII
VIII
IX
General reserve
Opening balance
Additions during the year
Balance in profit and loss account
Share premium account
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18 (4)]
Amalgamation reserve
Opening balance
Additions during the year
Capital reserve
Opening balance
Additions during the year
Investment reserve account
Opening balance
Additions during the year
Deductions during the year
Investment fluctuation reserve
Opening balance
Additions during the year
Foreign currency translation account
Opening balance
Additions / (deductions) during the year
As at
31-Mar-19
` in ‘000
As at
31-Mar-18
6,500,000
6,500,000
5,446,613
5,446,613
5,190,181
5,190,181
233,323,511
54,997,602
288,321,113
89,405,878
21,078,165
110,484,043
187,703,201
45,620,310
233,323,511
71,919,150
17,486,728
89,405,878
528,496,075
430,989,822
311,945,097
258,422,941
(1,262,858)
569,105,180
284,751,089
27,194,008
-
311,945,097
10,635,564
-
10,635,564
14,355,910
1,053,354
15,409,264
-
162,237
(162,237)
-
-
7,730,000
7,730,000
145,280
953,463
1,098,743
10,635,564
-
10,635,564
12,000,683
2,355,227
14,355,910
442,018
45,086
(487,104)
-
-
-
-
39,408
105,872
145,280
1,531,279,982
1,090,801,062
Total
Total
Total
Total
Total
Total
Total
Total
Total
Total
HDFC Bank Limited Annual Report 2018 - 2019
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190
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2019
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 ` 142.75 crore (previous year:
` 76.78 crore)
SCHEDULE 3 - DEPOSITS
A
I
Demand deposits
(i)
(ii)
From banks
From others
II
III
I
II
B
Savings bank deposits
Term deposits
(i)
(ii)
From banks
From others
Deposits of branches in India
Deposits of branches outside India
SCHEDULE 4 - BORROWINGS
I
Borrowings in India
(i)
(ii)
(iii)
(iv)
(v)
Reserve Bank of India
Other banks
Other institutions and agencies
Upper and lower Tier II capital and innovative perpetual debts
Bonds and Debentures (excluding subordinated debt)
II
Borrowings outside India
Secured borrowings included in I & II above: ` 32,819.98 crore (previous year:
` 27,269.82 crore) other than borrowings of ` 17,400.00 crore (March 31, 2018:
` 14,239.95 crore) 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
191
As at
31-Mar-19
` in ‘000
As at
31-Mar-18
276,029
276,029
Total
4,741,916
5,017,945
3,287,293
3,563,322
34,189,112
27,237,788
1,386,120,241
1,162,864,325
Total
1,420,309,353
1,190,102,113
2,487,001,601
2,237,968,679
60,287,319
72,775,645
5,257,428,506
4,382,904,982
Total
Total
5,317,715,825
4,455,680,627
9,225,026,779
7,883,751,419
9,167,385,012
7,843,931,322
57,641,767
39,820,097
Total
9,225,026,779
7,883,751,419
174,000,000
145,278,089
325,310,645
211,320,000
381,110,476
138,000,000
168,280,179
371,460,868
231,070,000
290,528,000
Total
1,237,019,210
1,199,339,047
340,308,580
365,081,801
Total
1,577,327,790
1,564,420,848
70,403,952
82,477,845
392,586,642
38,489,517
583,957,956
82,217,908
66,759,768
303,545,722
31,611,465
484,134,863
Total
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I
II
Cash in hand (including foreign currency notes)
Balances with Reserve Bank of India:
(a)
(b)
In current accounts
In other accounts
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I
In India
(i)
Balances with banks:
(a)
(b)
In current accounts
In other deposit accounts
(ii)
Money at call and short notice:
(a) With banks
(b) With other institutions
II
Outside India
(i)
(ii)
In current accounts
In deposit accounts
(iii) Money at call and short notice
SCHEDULE 8 - INVESTMENTS
A
Investments in India in
(i)
(ii)
(iii)
(iv)
(v)
Government securities
Other approved securities
Shares
Debentures and bonds
Others (Units, CDs, CPs, PTCs and security receipts)
B
Investments outside India in
As at
` in ‘000
As at
31-Mar-19
31-Mar-18
74,324,614
75,500,625
391,721,282
364,381,449
2,000,000
607,000,000
Total
Total
393,721,282
971,381,449
468,045,896
1,046,882,074
Total
Total
Total
3,458,949
4,242,945
7,701,894
8,734,805
2,091,212
10,826,017
18,000,000
-
77,213,500
45,018,623
95,213,500
45,018,623
102,915,394
55,844,640
83,970,273
26,124,304
2,863,017
6,191,625
160,381,843
95,572,919
Total
Total
247,215,133
127,888,848
350,130,527
183,733,488
2,396,593,098
1,883,648,036
-
-
4,095,538
1,396,772
277,328,845
336,681,684
176,107,269
147,405,912
Total
2,854,124,750
2,369,132,404
(i) Government securities (including Local Authorities)
7,236,612
4,218,786
(ii) Other investments
(a) Shares
(b) Debentures and bonds
HDFC Bank Limited Annual Report 2018 - 2019
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35,024
28,375
7,780,395
11,229,675
15,052,031
15,476,836
2,869,176,781
2,384,609,240
Total
Total
192
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 9 - ADVANCES
A
(i)
(ii)
(iii)
Bills purchased and discounted
Cash credits, overdrafts and loans repayable on demand
Term loans
B
(i)
(ii)
(iii)
Secured by tangible assets*
Covered by bank / government guarantees
Unsecured
* Including advances against book debts
C
I
C
II
Advances in India
(i)
(ii)
(iii)
(iv)
Priority sector
Public sector
Banks
Others
Advances outside India
(i)
(ii)
Due from banks
Due from others
(a)
(b)
(c)
Bills purchased and discounted
Syndicated loans
Others
(Advances are net of provisions)
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
193
As at
31-Mar-19
320,438,660
2,022,142,263
6,349,645,708
8,692,226,631
6,085,438,502
278,716,962
2,328,071,167
8,692,226,631
` in ‘000
As at
31-Mar-18
216,592,055
1,681,643,640
5,102,102,668
7,000,338,363
5,042,641,201
191,682,760
1,766,014,402
7,000,338,363
2,213,382,045
270,921,248
9,754,795
5,948,342,204
8,442,400,292
1,765,302,486
137,708,318
8,357,208
4,885,715,328
6,797,083,340
35,655,221
33,046,352
860,526
16,686,474
196,624,118
249,826,339
8,692,226,631
1,052,278
18,265,990
150,890,403
203,255,023
7,000,338,363
Total
Total
Total
Total
Total
17,285,825
16,384,648
1,079,471
(106,705)
978,572
(77,395)
Total
18,258,591
17,285,825
5,321,464
4,798,856
584,394
(89,465)
597,187
(74,579)
Total
5,816,393
5,321,464
12,442,198
11,964,361
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2019
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
Depreciation
As at 31 March of the preceding year
Charge for the year
Lease adjustment account
As at 31 March of the preceding year
Charge for the year
Unamortised cost of assets on lease
SCHEDULE 11 - OTHER ASSETS
I
II
III
IV
V
VI
Interest accrued
Advance tax / tax deducted at source (net of provisions)
Stationery and stamps
Non banking assets acquired in satisfaction of claims
Bond and share application money pending allotment
Security deposit for commercial and residential property
VII
Others*
*Includes deferred tax asset (net) of ` 4,620.68 crore (previous year: ` 3,532.07
crore), goodwill of ` 148.79 crore (previous year: ` 148.79 crore) and deposits placed
with NABARD / SIDBI / NHB on account of shortfall in lending to priority sector of
` 10,832.25 crore (previous year: ` 13,357.25 crore)
As at
31-Mar-19
92,109,943
15,385,650
(1,647,235)
Total
105,848,358
65,968,721
11,627,195
(1,503,731)
76,092,185
29,756,173
Total
` in ‘000
As at
31-Mar-18
84,574,310
8,752,421
(1,216,788)
92,109,943
58,013,105
9,071,123
(1,115,507)
65,968,721
26,141,222
4,546,923
4,546,923
-
-
Total
4,546,923
4,546,923
4,104,467
4,104,467
-
-
Total
4,104,467
4,104,467
442,456
442,456
-
-
Total
442,456
442,456
-
-
Total
42,198,371
38,105,583
118,544,724
19,546,668
345,677
-
146,197
5,293,406
90,775,781
18,304,321
333,306
-
-
5,167,669
362,402,187
263,611,870
Total
506,278,859
378,192,947
HDFC Bank Limited Annual Report 2018 - 2019
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194
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at March 31, 2019
SCHEDULE 12 - CONTINGENT LIABILITIES
As at
` in ‘000
As at
31-Mar-19
31-Mar-18
Claims against the bank not acknowledged as debts - taxation
12,612,813
11,359,710
Claims against the bank not acknowledged as debts - others
1,255,424
1,985,622
Liability on account of outstanding forward exchange contracts
5,561,859,469
4,344,675,713
Liability on account of outstanding derivative contracts
3,639,008,146
3,482,687,822
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
SCHEDULE 13 - INTEREST EARNED
I
Interest / discount on advances / bills
II
Income from investments
III
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 Miscellaneous income
195
536,870,994
448,741,092
752,190
557,296
475,617,760
395,452,699
23,276,298
72,309,720
Total
10,251,253,094
8,757,769,674
837,361,574
676,589,047
199,247,497
162,297,863
6,606,217
5,406,186
8,392,112
8,585,341
Total
1,051,607,400
852,878,437
149,313,053
122,935,083
5,735,619
11,005,345
(152,437)
(1,570,448)
62,054
(11,833)
17,203,935
15,234,978
17,308,285
12,972,916
Total
189,470,509
160,566,041
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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-19
31-Mar-18
410,442,557
327,540,435
124,978,211
95,426,124
1,706,108
848,244
Total
537,126,876
423,814,803
104,511,480
91,939,035
15,775,363
15,231,599
5,261,700
4,821,103
1,593,970
1,719,205
12,206,675
9,667,819
35,988
36,230
32,496
26,301
1,419,023
1,648,413
4,490,653
4,850,740
12,835,334
13,149,745
10,424,807
8,286,960
108,356,381
87,898,804
Total
276,947,604
239,272,220
*Includes professional fees, commission to sales agents, card and merchant acquiring expenses and
system management fees.
HDFC Bank Limited Annual Report 2018 - 2019
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196
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
SCHEDULE 17 - Significant accounting policies appended to and forming part of
year ended
the
for
the consolidated financial statements
March 31, 2019
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’.
The corresponding consolidated financial statement of pervious year also include the ‘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 read together with paragraph 7
of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016, 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.
197
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Basis of consolidation
The consolidated financial statements present the accounts of HDFC Bank Limited with its following subsidiaries:
Name
HDFC Securities Limited
HDB Financial Services Limited
HDB Employee Welfare Trust
Relation
Subsidiary
Subsidiary
*
Country of
incorporation
Ownership
interest**
India
India
India
97.3%
95.5%
The financial statements of HDBFSL and HSL have been prepared in accordance with notified Indian Accounting Standards (‘Ind-AS’)
with effect from April 1, 2018. The financial statements used for consolidation are special purpose financial statements prepared in
accordance with Generally Accepted Accounting Principles in India (‘GAAP’) specified under Section 133 of the Companies Act, 2013
read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules,
2016.
*
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.
During 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, 2019 the Bank’s shareholding in HDB Financial Services Limited decreased from 95.9% to 95.5%
on account of the stock options exercised by minority stakeholders.
During the year ended March 31, 2019 the Bank’s shareholding in HDFC Securities Limited decreased from 97.7% to 97.3% on
account of the stock options exercised by minority stakeholders.
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, 2019.
D Principal Accounting Policies
1
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.
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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account 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 Profit and Loss Account. 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 Profit and Loss Account 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 categorised under HFT category and netted off from investments in the Balance Sheet. The short position is
marked to market and loss, if any, is charged to the Profit and Loss Account while gain, if any, is ignored. Profit / Loss on settlement
of the short position is recognised in the Profit and Loss Account.
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’) / Financial
Benchmarks India Pvt Ltd. (‘FBIL’), 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 / FBIL.
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 / FBIL.
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 published by FIMMDA / FBIL.
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.
Security receipts are valued as per the net asset value provided by the issuing Asset Reconstruction Company from time to time.
199
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Investment in unquoted venture capital fund are categorised under HTM category for the initial period of three years and valued at cost.
Such investment is required to be transferred to AFS thereafter.
Pass Through Certificates (‘PTCs’) 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 / FBIL.
Net depreciation in the value, if any, compared to the acquisition cost, in any of the six groups, is charged to the Profit and Loss
Account. 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 Profit and Loss Account until received.
Repurchase and reverse repurchase transactions:
In accordance with the RBI guidelines, repurchase (Repo) and reverse repurchase transactions (Reverse Repo) 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, 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.
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 Profit and Loss Account until received.
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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account 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 Profit and Loss Account 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.
In addition to the above, the Bank on a prudent 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 instalments / 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 Profit and Loss Account until
received. Loan assets are recognised on disbursement of loan and in case of new asset financing on the transfer of ownership.
201
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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.
Any loss arising on account of sale of receivables is recognised in the Profit and Loss Account 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 fulfilment of priority sector obligation and in the case of a purchase transaction the Bank buys the
fulfilment of priority sector obligation through the RBI trading platform. There is no transfer of risks or loan assets. The fee received for
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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
the sale of PSLCs is recorded as miscellaneous income and the fee paid for purchase of the PSLCs is recorded as other expenditure
in Profit and Loss Account. 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 Profit and Loss Account and if the sale is for a value higher than the net book
value, the excess provision is credited to the Profit and Loss Account 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:1)
(cid:116)(cid:1)
(cid:49)(cid:83)(cid:74)(cid:80)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:42)(cid:84)(cid:84)(cid:86)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:51)(cid:35)(cid:42)(cid:1)(cid:36)(cid:74)(cid:83)(cid:68)(cid:86)(cid:77)(cid:66)(cid:83)(cid:1)(cid:69)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:34)(cid:86)(cid:72)(cid:86)(cid:84)(cid:85)(cid:1)(cid:19)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:19)
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:1)
(cid:116)(cid:1)
(cid:49)(cid:80)(cid:84)(cid:85)(cid:1)(cid:42)(cid:84)(cid:84)(cid:86)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:51)(cid:35)(cid:42)(cid:1)(cid:36)(cid:74)(cid:83)(cid:68)(cid:86)(cid:77)(cid:66)(cid:83)(cid:1)(cid:69)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:34)(cid:86)(cid:72)(cid:86)(cid:84)(cid:85)(cid:1)(cid:19)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:19)
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 Profit and Loss Account 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:
203
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
Estimated useful
assessed
by the Bank
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:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:1)(cid:42)(cid:78)(cid:81)(cid:83)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:1)(cid:81)(cid:83)(cid:70)(cid:78)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:68)(cid:73)(cid:66)(cid:83)(cid:72)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:71)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:70)(cid:78)(cid:66)(cid:74)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:74)(cid:78)(cid:66)(cid:83)(cid:90)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:15)
(cid:52)(cid:80)(cid:71)(cid:85)(cid:88)(cid:66)(cid:83)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:90)(cid:84)(cid:85)(cid:70)(cid:78)(cid:1)(cid:69)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:79)(cid:69)(cid:74)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:66)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:22)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:84)(cid:15)
(cid:39)(cid:80)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:81)(cid:86)(cid:83)(cid:68)(cid:73)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:80)(cid:77)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:13)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:84)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:14)(cid:83)(cid:66)(cid:85)(cid:66)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:15)
(cid:56)(cid:73)(cid:70)(cid:79)(cid:70)(cid:87)(cid:70)(cid:83)(cid:1) (cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1) (cid:74)(cid:84)(cid:1) (cid:66)(cid:1) (cid:83)(cid:70)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1) (cid:86)(cid:84)(cid:70)(cid:71)(cid:86)(cid:77)(cid:1) (cid:77)(cid:74)(cid:71)(cid:70)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:79)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:13)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:86)(cid:79)(cid:66)(cid:78)(cid:80)(cid:83)(cid:85)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1) (cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1) (cid:74)(cid:84)(cid:1) (cid:68)(cid:73)(cid:66)(cid:83)(cid:72)(cid:70)(cid:69)(cid:1) (cid:80)(cid:87)(cid:70)(cid:83)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
revised remaining useful life of the said asset.
(cid:49)(cid:83)(cid:80)(cid:71)(cid:74)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:84)(cid:66)(cid:77)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:74)(cid:78)(cid:78)(cid:80)(cid:87)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:70)(cid:83)(cid:85)(cid:90)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:66)(cid:89)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:86)(cid:85)(cid:80)(cid:83)(cid:90)(cid:1)(cid:83)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:13)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:15)
(cid:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)` 5,000 individually are fully depreciated in the year of purchase.
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 Profit and Loss Account 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:
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
204
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
For the following categories of assets, the Company has assessed useful life based on technical advice, taking into account the nature
of the asset, the estimates usage of asset, the operating condition of asset, anticipated technological changes and utility in the business,
as below:
Asset
Vehicles
Network & servers
Estimated useful life
4 years
4 years
(cid:116)(cid:1)(cid:1)
(cid:34)(cid:77)(cid:77)(cid:1)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:74)(cid:79)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)` 5,000 individually are fully depreciated in the year of purchase.
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:54)(cid:84)(cid:70)(cid:71)(cid:86)(cid:77)(cid:1)(cid:77)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:70)(cid:69)(cid:1)(cid:66)(cid:85)(cid:1)(cid:70)(cid:66)(cid:68)(cid:73)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:70)(cid:79)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:69)(cid:75)(cid:86)(cid:84)(cid:85)(cid:70)(cid:69)(cid:1)(cid:74)(cid:71)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:69)(cid:15)
(cid:42)(cid:79)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:84)(cid:85)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:85)(cid:1)(cid:66)(cid:68)(cid:82)(cid:86)(cid:74)(cid:84)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:13)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:68)(cid:68)(cid:86)(cid:78)(cid:86)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:66)(cid:78)(cid:80)(cid:83)(cid:85)(cid:74)(cid:84)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:68)(cid:68)(cid:86)(cid:78)(cid:86)(cid:77)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:74)(cid:78)(cid:81)(cid:66)(cid:74)(cid:83)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:77)(cid:80)(cid:84)(cid:84)(cid:70)(cid:84)(cid:13)(cid:1)(cid:74)(cid:71)(cid:1)(cid:66)(cid:79)(cid:90)(cid:15)
(cid:36)(cid:80)(cid:84)(cid:85)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:79)(cid:1) (cid:74)(cid:79)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1) (cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:84)(cid:1) (cid:81)(cid:86)(cid:83)(cid:68)(cid:73)(cid:66)(cid:84)(cid:70)(cid:1) (cid:81)(cid:83)(cid:74)(cid:68)(cid:70)(cid:13)(cid:1) (cid:79)(cid:80)(cid:79)(cid:14)(cid:83)(cid:70)(cid:71)(cid:86)(cid:79)(cid:69)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1) (cid:85)(cid:66)(cid:89)(cid:70)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:69)(cid:86)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:66)(cid:79)(cid:90)(cid:1) (cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1) (cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:77)(cid:90)(cid:1) (cid:66)(cid:85)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)
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 Profit and Loss Account 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:116)(cid:1)
(cid:38)(cid:89)(cid:81)(cid:70)(cid:79)(cid:69)(cid:74)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1) (cid:80)(cid:79)(cid:1) (cid:84)(cid:80)(cid:71)(cid:85)(cid:88)(cid:66)(cid:83)(cid:70)(cid:1) (cid:69)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1) (cid:70)(cid:77)(cid:74)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1) (cid:71)(cid:80)(cid:83)(cid:1) (cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:74)(cid:84)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:68)(cid:66)(cid:83)(cid:83)(cid:74)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:74)(cid:79)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1) (cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1) (cid:69)(cid:70)(cid:87)(cid:70)(cid:77)(cid:80)(cid:81)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1) (cid:88)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1) (cid:84)(cid:86)(cid:68)(cid:73)(cid:1)
assets are not yet ready for their intended use.
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:66)(cid:78)(cid:80)(cid:83)(cid:85)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:80)(cid:79)(cid:1) (cid:66)(cid:1) (cid:84)(cid:85)(cid:83)(cid:66)(cid:74)(cid:72)(cid:73)(cid:85)(cid:14)(cid:77)(cid:74)(cid:79)(cid:70)(cid:1) (cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1) (cid:80)(cid:87)(cid:70)(cid:83)(cid:1) (cid:85)(cid:73)(cid:70)(cid:74)(cid:83)(cid:1) (cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1) (cid:86)(cid:84)(cid:70)(cid:71)(cid:86)(cid:77)(cid:1) (cid:77)(cid:74)(cid:87)(cid:70)(cid:84)(cid:15)(cid:1) (cid:53)(cid:73)(cid:70)(cid:1) (cid:66)(cid:78)(cid:80)(cid:83)(cid:85)(cid:74)(cid:84)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
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:116)(cid:1)
(cid:40)(cid:66)(cid:74)(cid:79)(cid:84)(cid:1) (cid:80)(cid:83)(cid:1) (cid:77)(cid:80)(cid:84)(cid:84)(cid:70)(cid:84)(cid:1) (cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1) (cid:71)(cid:83)(cid:80)(cid:78)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:83)(cid:70)(cid:85)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1) (cid:80)(cid:83)(cid:1) (cid:69)(cid:74)(cid:84)(cid:81)(cid:80)(cid:84)(cid:66)(cid:77)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:79)(cid:1) (cid:74)(cid:79)(cid:85)(cid:66)(cid:79)(cid:72)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:69)(cid:70)(cid:85)(cid:70)(cid:83)(cid:78)(cid:74)(cid:79)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:69)(cid:74)(cid:71)(cid:71)(cid:70)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1) (cid:67)(cid:70)(cid:85)(cid:88)(cid:70)(cid:70)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:79)(cid:70)(cid:85)(cid:1)
disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Profit and Loss Account
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
Estimated useful life
5 years
5 years
10 years
205
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
HDB Financial Services Limited
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. The estimated lives used and differences from the lives prescribed under Schedule II are noted in the
table below:
Asset
Building
Leasehold improvements
Motor cars
Computers
Furniture and fixtures
Office equipment
Estimated useful life as
Estimated useful life
assessed by
the Company
under Schedule II of
Companies Act, 2013
60 years
60 years
Tenure of lease agreements
Tenure of lease agreements
4 years
2 to 5 years
3 to 7 years
3 years
8 years
3 years
10 years
5 years
(cid:116)(cid:1)(cid:1)
(cid:42)(cid:78)(cid:81)(cid:83)(cid:80)(cid:87)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:1)(cid:81)(cid:83)(cid:70)(cid:78)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:68)(cid:73)(cid:66)(cid:83)(cid:72)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:71)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:81)(cid:83)(cid:74)(cid:78)(cid:66)(cid:83)(cid:90)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:77)(cid:70)(cid:66)(cid:84)(cid:70)(cid:1)(cid:80)(cid:83)(cid:1)(cid:74)(cid:85)(cid:84)(cid:1)(cid:86)(cid:84)(cid:70)(cid:71)(cid:86)(cid:77)(cid:1)(cid:77)(cid:74)(cid:71)(cid:70)(cid:13)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:70)(cid:87)(cid:70)(cid:83)(cid:1)(cid:74)(cid:84)(cid:1)(cid:77)(cid:80)(cid:88)(cid:70)(cid:83)(cid:15)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:42)(cid:85)(cid:70)(cid:78)(cid:84)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)` 5,000 are fully depreciated in the year of purchase.
(cid:53)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:70)(cid:84)(cid:85)(cid:74)(cid:78)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:47)(cid:74)(cid:77)(cid:1)(cid:83)(cid:70)(cid:84)(cid:74)(cid:69)(cid:86)(cid:66)(cid:77)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:79)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:86)(cid:84)(cid:70)(cid:71)(cid:86)(cid:77)(cid:1)(cid:77)(cid:74)(cid:71)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:67)(cid:77)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:15)
(cid:39)(cid:80)(cid:83)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:81)(cid:86)(cid:83)(cid:68)(cid:73)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:80)(cid:77)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:13)(cid:1)(cid:69)(cid:70)(cid:81)(cid:83)(cid:70)(cid:68)(cid:74)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:84)(cid:1)(cid:67)(cid:70)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:69)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:14)(cid:83)(cid:66)(cid:85)(cid:66)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:15)
During the year, the Company re-assessed the useful lives of certain computer-related assets, furniture and fixtures and office equipment.
As a result of the re-assessment, the Company changed the estimated lives from 3 years to a range of 2 to 5 years for computer-related
assets, from 10 years to a range of 3 to 7 years for furniture and fixtures and from 5 years to 3 years for office equipment. The change
in estimate resulted in total additional cumulative catch-up depreciation of ` 10.10 crores during the current year.
Software and system development expenditure are capitalised at cost of acquisition including cost attributable to bring the same in
working condition and the useful life of the same is estimated of 3 years with zero residual value. Any expenses on such software for
support and maintenance payable annually are charged to the Profit and Loss Account.
5
Impairment of assets
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 Profit and Loss Account to the extent the carrying amount of assets exceeds their estimated recoverable amount.
6
Translation of foreign currency items
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 and offshore banking units) at the monthly average closing rates.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
206
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account.
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 disposal of the non-integral foreign operations in accordance with AS -
11, The Effects of Changes in Foreign Exchange Rates.
Foreign currency denominated contingent liabilities on account of foreign exchange and contracts derivative, 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 Profit and Loss Account. 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 Profit and Loss Account and related assets and liabilities are accordingly restated in the Balance
Sheet.
7
Foreign exchange and derivative contracts
HDFC Bank Limited
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 Profit and Loss Account. 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.
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 Profit and Loss
Account.
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 Profit and Loss Account 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 Profit and Loss Account.
207
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
8
Revenue recognition
HDFC Bank Limited
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:49)(cid:83)(cid:80)(cid:71)(cid:74)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:45)(cid:80)(cid:84)(cid:84)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:13)(cid:1)(cid:70)(cid:89)(cid:68)(cid:70)(cid:81)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:66)(cid:84)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:15)(cid:1)
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 communication.
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:80)(cid:79)(cid:1)(cid:74)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:49)(cid:53)(cid:36)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:77)(cid:80)(cid:66)(cid:79)(cid:84)(cid:1)(cid:67)(cid:80)(cid:86)(cid:72)(cid:73)(cid:85)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:85)(cid:73)(cid:83)(cid:80)(cid:86)(cid:72)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:1)(cid:66)(cid:84)(cid:84)(cid:74)(cid:72)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:83)(cid:80)(cid:86)(cid:85)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:74)(cid:83)(cid:1)(cid:70)(cid:71)(cid:71)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)
interest rate.
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1) (cid:80)(cid:79)(cid:1) (cid:79)(cid:80)(cid:79)(cid:14)(cid:68)(cid:80)(cid:86)(cid:81)(cid:80)(cid:79)(cid:1) (cid:67)(cid:70)(cid:66)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1) (cid:69)(cid:74)(cid:84)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:70)(cid:69)(cid:1) (cid:74)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1) (cid:74)(cid:84)(cid:1) (cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:80)(cid:87)(cid:70)(cid:83)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:85)(cid:70)(cid:79)(cid:80)(cid:83)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:74)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1) (cid:80)(cid:79)(cid:1) (cid:66)(cid:1) (cid:68)(cid:80)(cid:79)(cid:84)(cid:85)(cid:66)(cid:79)(cid:85)(cid:1) (cid:70)(cid:71)(cid:71)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)
yield basis.
(cid:116)(cid:1)
(cid:45)(cid:80)(cid:66)(cid:79)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:84)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:70)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:88)(cid:73)(cid:70)(cid:79)(cid:1)(cid:69)(cid:86)(cid:70)(cid:15)(cid:1)(cid:52)(cid:90)(cid:79)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:16)(cid:1)(cid:34)(cid:83)(cid:83)(cid:66)(cid:79)(cid:72)(cid:70)(cid:83)(cid:1)(cid:71)(cid:70)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:88)(cid:73)(cid:70)(cid:79)(cid:1)(cid:66)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:71)(cid:74)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1)
act / milestone is completed.
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:40)(cid:66)(cid:74)(cid:79)(cid:1)(cid:16)(cid:1)(cid:77)(cid:80)(cid:84)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:84)(cid:70)(cid:77)(cid:77)(cid:1)(cid:69)(cid:80)(cid:88)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:77)(cid:80)(cid:66)(cid:79)(cid:84)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:77)(cid:74)(cid:79)(cid:70)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:89)(cid:85)(cid:66)(cid:79)(cid:85)(cid:1)(cid:51)(cid:35)(cid:42)(cid:1)(cid:72)(cid:86)(cid:74)(cid:69)(cid:70)(cid:77)(cid:74)(cid:79)(cid:70)(cid:84)(cid:15)
(cid:37)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1) (cid:80)(cid:79)(cid:1) (cid:70)(cid:82)(cid:86)(cid:74)(cid:85)(cid:90)(cid:1) (cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:13)(cid:1) (cid:81)(cid:83)(cid:70)(cid:71)(cid:70)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1) (cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:80)(cid:79)(cid:1) (cid:78)(cid:86)(cid:85)(cid:86)(cid:66)(cid:77)(cid:1) (cid:71)(cid:86)(cid:79)(cid:69)(cid:1) (cid:86)(cid:79)(cid:74)(cid:85)(cid:84)(cid:1) (cid:74)(cid:84)(cid:1) (cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1) (cid:88)(cid:73)(cid:70)(cid:79)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:1) (cid:85)(cid:80)(cid:1) (cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
dividend is established.
(cid:116)(cid:1)
(cid:40)(cid:86)(cid:66)(cid:83)(cid:66)(cid:79)(cid:85)(cid:70)(cid:70)(cid:1)(cid:68)(cid:80)(cid:78)(cid:78)(cid:74)(cid:84)(cid:84)(cid:74)(cid:80)(cid:79)(cid:13)(cid:1)(cid:68)(cid:80)(cid:78)(cid:78)(cid:74)(cid:84)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:79)(cid:1)(cid:77)(cid:70)(cid:85)(cid:85)(cid:70)(cid:83)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:83)(cid:70)(cid:69)(cid:74)(cid:85)(cid:13)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:77)(cid:80)(cid:68)(cid:76)(cid:70)(cid:83)(cid:1)(cid:83)(cid:70)(cid:79)(cid:85)(cid:1)(cid:71)(cid:70)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1)(cid:71)(cid:70)(cid:70)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:68)(cid:83)(cid:70)(cid:69)(cid:74)(cid:85)(cid:1)(cid:68)(cid:66)(cid:83)(cid:69)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)
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
(cid:116)(cid:1)
(cid:116)(cid:1)
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(cid:39)(cid:70)(cid:70)(cid:84)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:84)(cid:86)(cid:67)(cid:84)(cid:68)(cid:83)(cid:74)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:69)(cid:1)(cid:81)(cid:70)(cid:83)(cid:74)(cid:80)(cid:69)(cid:74)(cid:68)(cid:66)(cid:77)(cid:77)(cid:90)(cid:1)(cid:67)(cid:86)(cid:85)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:84)(cid:1)(cid:70)(cid:66)(cid:83)(cid:79)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:66)(cid:1)(cid:81)(cid:83)(cid:80)(cid:14)(cid:83)(cid:66)(cid:85)(cid:66)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:70)(cid:83)(cid:78)(cid:1)(cid:80)(cid:71)(cid:1)
the contract.
(cid:116)(cid:1)
(cid:36)(cid:80)(cid:78)(cid:78)(cid:74)(cid:84)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1) (cid:71)(cid:83)(cid:80)(cid:78)(cid:1) (cid:69)(cid:74)(cid:84)(cid:85)(cid:83)(cid:74)(cid:67)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:80)(cid:71)(cid:1) (cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1) (cid:81)(cid:83)(cid:80)(cid:69)(cid:86)(cid:68)(cid:85)(cid:84)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:86)(cid:81)(cid:80)(cid:79)(cid:1) (cid:66)(cid:77)(cid:77)(cid:80)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1) (cid:85)(cid:80)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:66)(cid:81)(cid:81)(cid:77)(cid:74)(cid:68)(cid:66)(cid:79)(cid:85)(cid:1) (cid:80)(cid:83)(cid:1) (cid:66)(cid:84)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
case may be, issue of the insurance policy to the applicant.
(cid:116)(cid:1)
(cid:36)(cid:80)(cid:78)(cid:78)(cid:74)(cid:84)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:71)(cid:70)(cid:70)(cid:84)(cid:1) (cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:66)(cid:71)(cid:80)(cid:83)(cid:70)(cid:84)(cid:66)(cid:74)(cid:69)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:70)(cid:89)(cid:68)(cid:77)(cid:86)(cid:84)(cid:74)(cid:87)(cid:70)(cid:1) (cid:80)(cid:71)(cid:1) (cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:1) (cid:85)(cid:66)(cid:89)(cid:13)(cid:1) (cid:72)(cid:80)(cid:80)(cid:69)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:1) (cid:85)(cid:66)(cid:89)(cid:13)(cid:1) (cid:84)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1) (cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:85)(cid:66)(cid:89)(cid:13)(cid:1)
stamp duties and other levies by SEBI and stock exchanges.
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:84)(cid:1)(cid:70)(cid:66)(cid:83)(cid:79)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:69)(cid:70)(cid:77)(cid:66)(cid:90)(cid:70)(cid:69)(cid:1)(cid:81)(cid:66)(cid:90)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:68)(cid:77)(cid:74)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:84)(cid:1)(cid:71)(cid:86)(cid:79)(cid:69)(cid:70)(cid:69)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:78)(cid:1)(cid:66)(cid:84)(cid:1)(cid:88)(cid:70)(cid:77)(cid:77)(cid:1)(cid:66)(cid:84)(cid:1)(cid:85)(cid:70)(cid:83)(cid:78)(cid:1)(cid:69)(cid:70)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:84)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:67)(cid:66)(cid:79)(cid:76)(cid:84)(cid:15)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:66)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:1)(cid:85)(cid:66)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:74)(cid:79)(cid:85)(cid:80)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:66)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:68)(cid:86)(cid:84)(cid:85)(cid:80)(cid:78)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)
financial instrument and the rate applicable.
(cid:116)(cid:1)
(cid:37)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:88)(cid:73)(cid:70)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:74)(cid:84)(cid:1)(cid:70)(cid:84)(cid:85)(cid:66)(cid:67)(cid:77)(cid:74)(cid:84)(cid:73)(cid:70)(cid:69)(cid:15)
HDB Financial Services Limited
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:49)(cid:83)(cid:80)(cid:71)(cid:74)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:45)(cid:80)(cid:84)(cid:84)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:15)(cid:1)(cid:42)(cid:79)(cid:1)(cid:68)(cid:66)(cid:84)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:47)(cid:80)(cid:79)(cid:1)(cid:49)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:74)(cid:79)(cid:72)(cid:1)(cid:34)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1)(cid:9)(cid:47)(cid:49)(cid:34)(cid:10)(cid:13)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)
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.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
208
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:35)(cid:49)(cid:48)(cid:1)(cid:84)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:71)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:68)(cid:73)(cid:66)(cid:83)(cid:72)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:66)(cid:77)(cid:1)(cid:67)(cid:66)(cid:84)(cid:74)(cid:84)(cid:13)(cid:1)(cid:70)(cid:89)(cid:68)(cid:70)(cid:81)(cid:85)(cid:1)(cid:74)(cid:79)(cid:1)(cid:68)(cid:66)(cid:84)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:73)(cid:70)(cid:82)(cid:86)(cid:70)(cid:1)(cid:67)(cid:80)(cid:86)(cid:79)(cid:68)(cid:74)(cid:79)(cid:72)(cid:1)
charges, late payment charges, foreclosure charges and application money, which are accounted as and when received.
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:54)(cid:81)(cid:71)(cid:83)(cid:80)(cid:79)(cid:85)(cid:1)(cid:16)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:84)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:70)(cid:70)(cid:84)(cid:1)(cid:66)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:87)(cid:70)(cid:83)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:69)(cid:74)(cid:84)(cid:67)(cid:86)(cid:83)(cid:84)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:77)(cid:80)(cid:66)(cid:79)(cid:15)
(cid:42)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:74)(cid:84)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:49)(cid:83)(cid:80)(cid:71)(cid:74)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:45)(cid:80)(cid:84)(cid:84)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:88)(cid:73)(cid:70)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:74)(cid:72)(cid:73)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1)(cid:74)(cid:84)(cid:1)(cid:70)(cid:84)(cid:85)(cid:66)(cid:67)(cid:77)(cid:74)(cid:84)(cid:73)(cid:70)(cid:69)(cid:15)(cid:1)
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 Profit and Loss Account.
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
209
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 an independent actuarial valuation as at the Balance Sheet date which includes assumptions about demographics,
early retirement, salary increases and interest rates.
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
an independent actuarial valuation as at the Balance Sheet.
New Pension Scheme (‘NPS’):
In respect of employees who opt for contribution to the NPS, the Bank contributes certain percentage of the basic salary of employees
to the aforesaid scheme, a defined contribution plan, which is managed and administered by pension fund management companies.
The Bank has no liability other than its contribution, and recognises such contributions as an expense in the year incurred.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
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210
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 Profit and Loss Account at the undiscounted amount expected to be paid over the period of services rendered by the
employees to the Company.
Long term
The Company offers its employees long term benefits by way of defined-contribution and defined-benefit plans, of which some have
assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by
the Company along with its employees.
Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation
to pay additional sums. These comprise of contributions to the National Pension Scheme, Employees’ Provident Fund, Family Pension
Fund and Superannuation Fund. The Company’s payments to the defined-contribution plans are reported as expenses during the period
in which the employees perform the services that the payment covers.
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 Profit and Loss Account 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 Profit and Loss Account 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.
211
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
HDB Financial Services Limited
Gratuity
The Company provides for gratuity to all employees. The benefit is in the form of lump sum payments to vested employees on
resignation, retirement, or death while in employment or on termination of employment of an amount equivalent to 15 days basic salary
payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual
contributions to fund administered by trustees and managed by insurance companies for amounts notified by the said insurance
companies. The defined benefit plan are valued by an independent external actuary as at the Balance Sheet date using the projected
unit credit method to determine the present value of defined benefit obligation and the related service costs. Under this method, the
determination is based on actuarial calculations, which include assumptions about demographics, early retirement, salary increases and
interest rates. Actuarial gain or loss is recognised in the Profit and Loss Account.
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
Profit and Loss Account.
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 Institute of Chartered Accountants of India. The provision is based on an independent external actuarial valuation at
the Balance Sheet date.
10 Debit and credit cards reward points
HDFC Bank Limited
The Bank estimates the probable redemption of debit and credit card reward points and cost per point using an actuarial method by
employing an independent actuary, which includes assumptions such as mortality, redemption and spends. Provisions for liabilities on
the outstanding reward points are made based on an independent actuarial valuation as at the Balance Sheet date and included in
other liabilities and provisions.
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
Lease payments including cost escalation for assets taken on operating lease are recognised in the Profit and Loss Account over the
lease term on a straight-line basis in accordance with the AS-19, Leases.
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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 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.
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 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:116)(cid:1)
(cid:66)(cid:1)(cid:81)(cid:80)(cid:84)(cid:84)(cid:74)(cid:67)(cid:77)(cid:70)(cid:1)(cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:66)(cid:1)(cid:81)(cid:66)(cid:84)(cid:85)(cid:1)(cid:70)(cid:87)(cid:70)(cid:79)(cid:85)(cid:13)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:89)(cid:74)(cid:84)(cid:85)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1)(cid:88)(cid:74)(cid:77)(cid:77)(cid:1)(cid:67)(cid:70)(cid:1)(cid:68)(cid:80)(cid:79)(cid:71)(cid:74)(cid:83)(cid:78)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:68)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:83)(cid:1)(cid:79)(cid:80)(cid:79)(cid:14)(cid:80)(cid:68)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)
one or more uncertain future events not within the control of the Group; or
(cid:116)(cid:1)
(cid:66)(cid:1) (cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:1) (cid:80)(cid:67)(cid:77)(cid:74)(cid:72)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1) (cid:66)(cid:83)(cid:74)(cid:84)(cid:74)(cid:79)(cid:72)(cid:1) (cid:71)(cid:83)(cid:80)(cid:78)(cid:1) (cid:66)(cid:1) (cid:81)(cid:66)(cid:84)(cid:85)(cid:1) (cid:70)(cid:87)(cid:70)(cid:79)(cid:85)(cid:1) (cid:88)(cid:73)(cid:74)(cid:68)(cid:73)(cid:1) (cid:74)(cid:84)(cid:1) (cid:79)(cid:80)(cid:85)(cid:1) (cid:83)(cid:70)(cid:68)(cid:80)(cid:72)(cid:79)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:74)(cid:85)(cid:1) (cid:74)(cid:84)(cid:1) (cid:79)(cid:80)(cid:85)(cid:1) (cid:81)(cid:83)(cid:80)(cid:67)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1) (cid:85)(cid:73)(cid:66)(cid:85)(cid:1) (cid:66)(cid:79)(cid:1) (cid:80)(cid:86)(cid:85)(cid:71)(cid:77)(cid:80)(cid:88)(cid:1) (cid:80)(cid:71)(cid:1) (cid:83)(cid:70)(cid:84)(cid:80)(cid:86)(cid:83)(cid:68)(cid:70)(cid:84)(cid:1) (cid:88)(cid:74)(cid:77)(cid:77)(cid:1) (cid:67)(cid:70)(cid:1)
required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
213
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
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 Profit and Loss
Account.
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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
SCHEDULE 18 - Notes forming part of the consolidated financial statements for the
year ended March 31, 2019
Amounts in notes forming part of the consolidated financial statements for the year ended March 31, 2019 are denominated in rupee crore
to conform to extant RBI guidelines, except where stated otherwise.
1
Proposed dividend
The Board of Directors of the Bank, at their meeting held on April 20, 2019, have proposed a dividend of ` 15.00 per equity share
(previous year: ` 13.00 per equity share) aggregating ` 4,924.64 crore (previous year: ` 4,067.07 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’, the Bank has not appropriated the proposed dividend
from the Profit and Loss Account. However, the effect of the proposed dividend has been reckoned in determining capital funds in the
computation of the capital adequacy ratios.
2
Capital infusion
Pursuant to the shareholder and regulatory approvals, the Bank on July 17, 2018, made a preferential allotment of 3,90,96,817 equity
shares to Housing Development Finance Corporation Limited at a price of ` 2,174.09 per equity share (including share premium of
` 2,172.09 per equity share), aggregating to ` 8,500.00 crore and on August 2, 2018, concluded a Qualified Institutional Placement
(QIP) of 1,28,47,222 equity shares at a price of ` 2,160.00 per equity share aggregating to ` 2,775.00 crore and an American Depository
Receipt (ADR) offering of 1,75,00,000 ADR (representing 5,25,00,000 equity shares) at a price of USD 104 per ADR, aggregating to
USD 1,820.00 million (equivalent ` 12,440.90 crore). Consequent to the above issuances, share capital increased by ` 20.89 crore and
share premium increased by ` 23,568.72 crore, net of share issue expenses of ` 126.29 crore.
During the year ended March 31, 2019, the Bank allotted 2,37,72,304 equity shares (previous year: 3,25,44,550 equity shares)
aggregating to face value ` 4.75 crore (previous year: ` 6.51 crore) in respect of stock options exercised. Accordingly, the share capital
increased by ` 4.75 crore (previous year: ` 6.51 crore) and the share premium increased by ` 2,196.06 crore (previous year: ` 2,719.40
crore).
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 Preferential allotment / QIP / ADR offering
Addition pursuant to stock options exercised
Closing balance
3
Earnings per equity share
March 31, 2019
March 31, 2018
519.02
20.89
4.75
544.66
512.51
-
6.51
519.02
Basic and diluted earnings per equity share have been calculated based on the consolidated net profit after tax attributable to the
Group of ` 22,332.43 crore (previous year: ` 18,510.02 crore) and the weighted average number of equity shares outstanding during
the year of 2,68,00,34,029 (previous year: 2,58,05,38,505).
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, 2019
March 31, 2018
2.00
83.33
(0.82)
82.51
2.00
71.73
(0.97)
70.76
215
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
For the years ended
March 31, 2019
March 31, 2018
Weighted average number of equity shares used in computing basic earnings per
2,68,00,34,029
2,58,05,38,505
equity share
Effect of potential equity shares outstanding
2,66,37,645
3,55,30,885
Weighted average number of equity shares used in computing diluted earnings per
2,70,66,71,674
2,61,60,69,390
equity share
4
Reserves and Surplus
Statutory Reserve
The Bank and a subsidiary has made an appropriation of ` 5,499.76 crore (previous year: ` 4,562.03 crore) out of profits for the year
ended March 31, 2019 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, 2019, the Bank appropriated ` 105.34 crore (previous year: ` 235.52 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 ` 2,107.82 crore (previous year: ` 1,748.67 crore) out of profits for the year ended March 31,
2019 to the General Reserve.
Investment Fluctuation Reserve
In accordance with RBI guidelines, banks are required to create an Investment Fluctuation Reserve (‘IFR’) equivalent to 2% of their HFT
and AFS investment portfolios, within a period of three years starting fiscal 2019. Accordingly, during the year ended March 31, 2019,
the Bank has made an appropriation of ` 773.00 crore to the Investment Fluctuation Reserve from the Profit and Loss Account.
Investment Reserve Account
During the year ended March 31, 2019, the net transfer between Investment Reserve Account and Profit and Loss Account was Nil
(previous year: ` 44.20 crore (net) transferred by the Bank from the Investment Reserve Account to the Profit and Loss Account) as
per the RBI guidelines.
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SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Draw down from reserves
Share Premium
The Bank has not undertaken any drawdown from share premium during the year ended March 31, 2019 except towards share issue
expenses of ` 126.29 crore, incurred for the equity raised through the QIP and ADR routes, which have been adjusted against the
share premium account in terms of section 52 of the Companies Act, 2013. There had been no drawdown from reserves during the
year ended March 31, 2018.
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, 2019,
if approved at the ensuing Annual General Meeting.
6
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.
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 from date of
expiry of vesting period. During the years ended March 31, 2019 and March 31, 2018, 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 Option Plans
(cid:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
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
217
Number of
Options
Weighted average
exercise price (`)
7,54,43,800
1,98,95,000
2,37,72,304
32,60,085
6,83,06,411
4,03,04,861
1,050.22
2,060.47
925.79
1,506.99
1,365.97
1,017.78
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
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:1)
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
Plan
Plan C
Plan D
Plan E
Plan F
Plan G
Number of
Weighted average
Weighted average
Range of exercise price (`)
shares arising
life of options
out of options
(in years)
680.00 to 835.50
680.00
680.00
835.50 to 1,462.15
2,006.05 to 2,090.45
15,37,400
6,59,900
24,98,700
4,42,38,411
1,93,72,000
0.87
0.97
0.96
2.71
3.57
exercise price
(`)
685.70
680.00
680.00
1,134.48
2,060.45
(cid:1)
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
Plan
Plan C
Plan D
Plan E
Plan F
Fair value methodology
Number of
Weighted average
Weighted average
Range of exercise price (`)
shares arising
life of options
out of options
(in years)
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
exercise price
(`)
685.72
680.00
680.00
1,113.95
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 1,98,95,000 options during the year ended March 31, 2019 (previous year: 1,68,82,050). The various assumptions
considered in the pricing model for the ESOPs granted during the year ended March 31, 2019 are:
Particulars
Dividend yield
Expected volatility
Risk - free interest rate
Expected life of the options
March 31, 2019
0.62% to 0.65%
14.53% to 18.68%
7.23% to 8.31%
1 to 6 years
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
218
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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 net profit
(` crore)
for the year and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net profit (as reported)
March 31, 2019
March 31, 2018
21,078.17
17,486.73
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
-
535.90
20,542.27
(`)
78.65
76.65
77.87
75.89
-
650.41
16,836.32
(`)
67.76
65.24
66.84
64.36
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 11 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.
Activity in the options outstanding under the Employee Stock Options Plan
(cid:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
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
219
Company
options
Weighted average
exercise price (`)
2,01,450
-
61,150
6,650
1,33,650
29,050
1,136
-
1,136
1,136
1,136
1,136
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
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
2,80,000
-
69,550
9,000
2,01,450
11,750
Weighted average
exercise price (`)
1,136
-
1,136
1,136
1,136
1,136
(cid:1)
(cid:1)
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
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
1,33,650
0.9 Years
1,136
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
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
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
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)
(` crore)
March 31, 2019
March 31, 2018
347.95
-
2.66
345.29
344.42
-
2.64
341.78
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
220
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Particulars
March 31, 2019
March 31, 2018
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
(`)
223.65
221.94
223.20
221.50
(`)
222.40
220.69
221.84
220.14
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-8 on July 14, 2015, ESOS-9 on October 18, 2016 and ESOS-10 on October 13, 2017 and ESOS-11 on
January 15, 2019. 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-8 and maximum of four years from the date of vesting for ESOS-9, ESOS-10 and ESOS-11.
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:1)
(cid:116)(cid:1)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options
Weighted average
exercise price (`)
62,69,950
9,10,500
27,64,050
1,86,100
42,30,300
168.41
274.00
141.22
159.37
209.36
(cid:116)(cid:1)
(cid:1)(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:90)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
221
Options
Weighted average
exercise price (`)
58,78,660
33,40,250
26,91,960
2,57,000
62,69,950
112.46
213.00
106.74
114.01
168.41
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:26)(cid:27)
Plan
ESOS - 8
ESOS - 9
ESOS - 10
ESOS - 11
Range of
Number of shares
Weighted average
Weighted average
exercise price
(`)
arising out
remaining contractual life
of options
of options (in years)
exercise
price (`)
88.00
137.00
213.00
274.00
34,500
874,200
2,414,200
907,400
1.50
4.53
5.06
5.94
88.00
137.00
213.00
274.00
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:71)(cid:80)(cid:77)(cid:77)(cid:80)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:84)(cid:86)(cid:78)(cid:78)(cid:66)(cid:83)(cid:74)(cid:84)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:67)(cid:80)(cid:86)(cid:85)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:46)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:20)(cid:18)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:25)(cid:27)
Plan
ESOS - 8
ESOS - 9
ESOS - 10
Range of
Number of shares
Weighted average
Weighted average
exercise price
(`)
arising out
remaining contractual life
of options
of options (in years)
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
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 based on historical volatility of similar listed enterprises. The various assumptions considered
in the pricing model for the stock options granted by the Company during the year ended March 31, 2019 are:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the option
March 31, 2019
March 31, 2018
0.66%
34.90%
7.23%
0.70%
42.85%
6.44%
3.01 years
3.05 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)
(` crore)
March 31, 2019
March 31, 2018
1,151.10
-
16.05
951.74
-
15.27
1,135.05
936.47
HDFC Bank Limited Annual Report 2018 - 2019
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k Limi
222
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Particulars
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
Group
March 31, 2019
(`)
14.69
March 31, 2018
(`)
12.18
14.48
14.67
14.46
11.99
12.16
11.97
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 net
(` crore)
profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net Profit (as reported)
Less: Stock-based compensation expense determined under fair value based method
(proforma)
Net Profit (proforma)
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
7
Other liabilities
March 31, 2019
March 31, 2018
22,332.43
554.61
21,777.82
(`)
83.33
81.26
82.51
80.46
18,510.02
668.32
17,841.70
(`)
71.73
69.14
70.76
68.20
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, 2019 include
unrealised loss on foreign exchange and derivative contracts of ` 12,772.60 crore (previous year: ` 5,093.04 crore).
8
Investments
HDFC Bank Limited
The details of securities that are kept as margin are as under:
(` crore)
Sr.
No.
I.
Particulars
Face value as at March 31,
2019
2018
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
1,420.00
47,713.88
1,520.00
25,770.78
Obligation (CBLO) segment / Triparty Repo
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 / Triparty repo segment
110.00
51.05
43.00
65.00
45.00
100.00
41.05
41.00
65.00
25.00
223
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Sr.
No.
II.
Particulars
Securities kept as margin with the RBI towards:
a) Real Time Gross Settlement (RTGS)
b) Repo transactions
c) Reverse repo transactions
III.
Securities kept as margin with National Securities Clearing Corporation of India
(NSCCIL) towards NSE Currency Derivatives segment.
Face value as at March 31,
2019
2018
72,411.67
37,216.66
-
309.72
90,130.65
16,307.49
58,341.00
16.00
IV.
Securities kept as margin with Indian Clearing Corporation Limited towards BSE
241.00
241.00
Currency Derivatives segment.
V.
Securities kept as margin with Metropolitan Clearing Corporation of India towards
13.00
13.00
MCX Currency Derivatives segment.
HDFC Securities Limited
Sr. No. Particulars
(` crore)
March 31, 2019 March 31, 2018
I.
Mutual funds marked as lien with stock exchange for margin requirement
319.00
599.06
9
Other fixed assets
Other fixed assets includes amount capitalised relating to software, Bombay Stock Exchange card and electronic trading platform.
(` crore)
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, 2019
March 31, 2018
2,454.48
525.99
-
2,188.08
266.40
-
Total (a)
2,980.47
2,454.48
1,791.73
362.14
-
2,153.87
826.60
1,509.12
282.61
-
1,791.73
662.75
Total (b)
Net value (a-b)
10 Other assets
Other assets include deferred tax asset (net) of ` 4,620.68 crore (previous year: ` 3,532.07 crore). The break-up of the same is as
follows:
Particulars
Deferred tax asset arising out of:
Loan loss provisions
Employee benefits
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(` crore)
March 31, 2019
March 31, 2018
3,735.12
212.53
2,945.98
186.11
224
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Particulars
Depreciation
Others
Deferred tax liability arising out of:
Depreciation
March 31, 2019
March 31, 2018
30.44
642.59
Total (a)
4,620.68
Total (b)
-
-
-
446.58
3,578.67
(46.60)
(46.60)
Deferred tax asset (net) (a-b)
4,620.68
3,532.07
(cid:1)
(cid:116)(cid:1)
(cid:53)(cid:73)(cid:70)(cid:1) (cid:35)(cid:66)(cid:79)(cid:76)(cid:1) (cid:73)(cid:66)(cid:84)(cid:1) (cid:81)(cid:83)(cid:70)(cid:84)(cid:70)(cid:79)(cid:85)(cid:70)(cid:69)(cid:1) (cid:72)(cid:83)(cid:80)(cid:84)(cid:84)(cid:1) (cid:86)(cid:79)(cid:83)(cid:70)(cid:66)(cid:77)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1) (cid:72)(cid:66)(cid:74)(cid:79)(cid:1) (cid:80)(cid:79)(cid:1) (cid:71)(cid:80)(cid:83)(cid:70)(cid:74)(cid:72)(cid:79)(cid:1) (cid:70)(cid:89)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:69)(cid:70)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1) (cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:66)(cid:68)(cid:85)(cid:84)(cid:1) (cid:86)(cid:79)(cid:69)(cid:70)(cid:83)(cid:1) (cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1) (cid:66)(cid:84)(cid:84)(cid:70)(cid:85)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1)
gross unrealised loss on foreign exchange and derivative contracts under other liabilities. Accordingly, other assets as
at March 31, 2019 include unrealised gain on foreign exchange and derivative contracts of ` 13,261.24 crore (previous year:
` 5,091.67 crore).
11
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)
225
March 31, 2019
March 31, 2018
471.12
387.56
(255.59)
603.09
431.24
261.95
(222.07)
471.12
(` crore)
March 31, 2019
March 31, 2018
314.01
84.42
398.43
311.90
2.11
314.01
March 31, 2019
March 31, 2018
5,484
3,612
498.44
431.42
431.42
146.55
119.02
119.02
-
-
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
d)
Description of contingent liabilities
Sr. No. Contingent liability*
Brief description
1
Claims against the Group
The Group is a party to various taxation matters in respect of which appeals are pending.
not acknowledged as debts -
The Group expects the outcome of the appeals to be favourable based on decisions on similar
taxation
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 debts
The Group does not expect the outcome of these proceedings to have a material adverse effect
- others
on the Group’s financial conditions, results of operations or cash flows.
3
Liability on account of
The Bank enters into foreign exchange contracts, currency options, forward rate agreements,
forward exchange and
currency swaps and interest rate swaps with inter-bank participants on its own account and
derivative contracts
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
Guarantees given on behalf
As a part of its commercial banking activities the Bank issues documentary credit and guarantees
of constituents, acceptances,
on behalf of its customers. Documentary credits such as letters of credit enhance the credit
endorsements and other
standing of the Bank’s customers. Guarantees generally represent irrevocable assurances
obligations
that the Bank will make payments in the event of the customer failing to fulfill its financial or
performance obligations.
5
Other items for which the
These include: a) Credit enhancements in respect of securitised-out loans; b) Bills rediscounted
Group is contingently liable
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
e)
The Hon’ble Supreme Court of India issued an order dated February 28, 2019 of relating to employer’s contribution to the
provident fund (‘PF’) under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Group is in the process
of evaluating the said order and would consider any further effect in its financial statements upon receiving additional clarity on
the subject.
12 Commission, exchange and brokerage income
Commission, exchange and brokerage income is net of correspondent bank charges.
HDFC Bank Limited Annual Report 2018 - 2019
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226
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
13
Provisions and contingencies
The break-up of ‘Provisions and Contingencies’ included in the Profit and Loss Account is given below:
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*
(` crore)
March 31, 2019
March 31, 2018
12,961.15
(1,088.60)
7,192.22
4.71
686.14
499.11
10,848.11
(945.03)
5,487.32
30.80
657.58
396.12
Total
20,254.73
16,474.90
*Includes provisions for tax, legal and other contingencies ` 496.52 crore (previous year: ` 396.98 crore), provisions
/ (write back) for securitised-out assets ` 2.59 crore (previous year: ` 2.14 crore) and standard restructured assets
Nil (previous year: ` (3.00) crore).
14
Employee benefits
Gratuity
Particulars
Reconciliation of opening and closing balance of the present
value of the defined benefit obligation
Present value of obligation as at April 1
Interest cost
Current service cost
Benefits paid
Actuarial (gain) / loss on obligation:
Experience adjustment
Assumption change
Present value of obligation as at March 31
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
227
March 31, 2019
March 31, 2018
(` crore)
614.06
44.46
90.11
(56.77)
10.46
0.54
702.86
457.35
35.43
102.39
(56.77)
12.04
(2.69)
547.75
547.75
(702.86)
(155.11)
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)
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Particulars
March 31, 2019
March 31, 2018
Expenses recognised in Profit and Loss Account
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
44.46
90.11
(35.43)
1.64
100.78
44.78
128.46
39.12
78.58
(29.87)
(1.68)
86.15
27.52
114.31
7.64% per annum
7.00% per annum
8.00% per annum
7.20% per annum
7.20% per annum
9.00% per annum
7.50% per annum
7.00% per annum
8.00% per annum
7.40% per annum
8.00% per annum
11.00% per annum
6.84% - 6.92% per annum
7.50% per annum
7.16% per annum
7.50% per annum
5.00% - 8.00% per annum
5.00% - 7.00% per annum
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors.
Expected rate of return on investments is determined based on the assessment made by the Group at the beginning of the year with
regard to its existing portfolio. Major categories of plan assets as a percentage of fair value of total plan assets as of March 31, 2019
are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
HDFC Bank
HDFC Securities
HDB Financial
Limited
Limited
Services Limited
23.79%
28.96%
45.03%
2.22%
42.00%
44.00%
10.00%
4.00%
Total
100.00%
100.00%
98.01%
0.19%
-
1.80%
100.00%
(` crore)
Years ended March 31,
2019
2018
2017
2016
2015
547.75
702.86
457.35
614.06
390.23
548.50
295.46
401.93
(155.11)
(156.71)
(158.27)
(106.47)
248.13
318.37
(70.24)
21.27
4.84
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
12.04
10.46
(2.35)
13.69
31.19
39.69
(13.61)
16.27
HDFC Bank Limited Annual Report 2018 - 2019
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228
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Pension
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
Expenses recognised in Profit and Loss Account
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, 2019
March 31, 2018
(` crore)
73.06
5.10
0.75
(12.57)
3.32
(0.12)
69.54
31.30
1.86
0.88
(12.57)
0.48
-
21.95
21.95
(69.54)
(47.59)
5.10
0.75
(1.86)
2.72
6.71
2.34
14.03
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)
1.74
5.31
2.95
13.79
7.64% per annum
7.00% per annum
8.00% per annum
7.50% per annum
7.00% per annum
8.00% per annum
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors.
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, 2019
are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
% of fair value to total plan assets
as at March 31, 2019
8.49%
73.88%
17.63%
100.00%
Total
229
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
Provident fund
(` crore)
Years ended March 31,
2019
2018
2017
2016
2015
21.95
69.54
31.30
73.06
(47.59)
(41.76)
0.48
3.32
0.59
3.95
36.16
73.55
(37.39)
0.39
4.65
38.38
70.88
(32.50)
1.43
17.35
41.91
57.45
(15.54)
(2.38)
(0.19)
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, 2019 (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, 2019
March 31, 2018
7.64% per annum
7.50% per annum
8.65% per annum
8.55% per annum
The Group does not have any unfunded defined benefit plan. The Group contributed ` 331.21 crore (previous year: ` 308.21 crore) to
the provident fund. The Bank contributed ` 103.41 crore (previous year: ` 67.68 crore) to the superannuation plan and ` 3.27 crore
(previous year: ` 2.76 crore) to the National Pension Scheme.
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Group is given
(` crore)
below:
Particulars
Privileged leave
Sick leave
Total actuarial liability
Assumptions (HDFC Bank Limited)
Discount rate
Salary escalation rate
Assumptions (HDFC Securities Limited)
Discount rate
Salary escalation rate
Assumptions (HDB Financial Services Limited)
Discount rate
Salary escalation rate
March 31, 2019
March 31, 2018
347.22
67.74
414.96
283.08
62.67
345.75
7.64% per annum
8.00% per annum
7.50% per annum
8.00% per annum
7.20% per annum
9.00% per annum
7.40% per annum
11.00% per annum
6.84% - 6.92% per annum
7.20% per annum
5.00% - 8.00% per annum
5.00% - 7.00% per annum
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors.
HDFC Bank Limited Annual Report 2018 - 2019
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230
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
15
Segment reporting
Business segments
Business segments have been identified and reported taking into account, the target customer profile, the nature of products and
services, the differing risks and returns, the organisation structure, the internal business reporting system and the guidelines prescribed
by RBI. The Group operates in the following segments:
(a)
Treasury
The treasury segment primarily consists of net interest earnings from the Bank’s 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 the Bank’s 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 parabanking 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
231
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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. 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, 2019 is given below:
Business segments:
Sr.
No.
Particulars
1
Segment revenue
2 Unallocated revenue
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
3
4
5
Treasury
Retail
Wholesale
banking
banking
Other
banking
operations
(` crore)
Total
23,576.48
89,222.34
54,563.54
22,809.31
190,171.67
52.78
66,116.65
124,107.80
Segment results
1,305.76
11,796.27
14,224.12
8,910.06
36,236.21
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)
1,918.04
11,872.55
22,445.62
348,766.21
428,790.92
408,749.72
99,119.71
1,285,426.56
7,379.15
1,292,805.71
61,438.85
732,294.96
271,887.13
48,653.92
1,114,274.86
24,356.40
1,138,631.26
15 Capital employed (9) - (12)
287,327.36
(303,504.04)
136,862.59
50,465.78
171,151.69
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
93.67
26.31
1,149.97
912.24
192.62
104.52
210.25
177.60
(16,977.24)
154,174.45
1,646.51
1,220.67
20 Provisions for non - performing assets / others*
(0.20)
4,608.34
1,689.09
2,079.54
8,376.77
21 Unallocated other provisions*
5.41
*Represents material non-cash charge other than depreciation and taxation
HDFC Bank Limited Annual Report 2018 - 2019
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232
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
Segment reporting for the year ended March 31, 2018 is given below:
(` crore)
Domestic
International
122,868.84
1,238.96
1,259,091.50
33,714.21
1,645.16
1.35
(` crore)
Business segments:
Sr.
No.
Particulars
1
Segment revenue
2 Unallocated revenue
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
3
4
5
Treasury
Retail
Wholesale
banking
banking
Other
banking
Total
operations
19,841.37
73,843.05
41,504.13
18,141.93
153,330.48
-
51,986.03
101,344.45
Segment results
1,540.00
9,971.72
11,720.51
7,254.51
30,486.74
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)
2,022.81
9,903.08
18,560.85
350,894.38
371,906.59
297,040.57
76,847.35 1,096,688.89
55,349.70
598,785.46
270,287.20
39,672.93
964,095.29
6,497.28
1,103,186.17
29,135.42
993,230.71
15 Capital employed (9) - (12)
295,544.68
(226,878.87)
26,753.37
37,174.42
132,593.60
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
5.77
729.47
73.05
164.81
973.10
11.58
723.91
92.36
138.93
966.78
(22,638.14)
109,955.46
20 Provisions for non - performing assets / others*
35.36
3,539.06
1,565.79
1,417.43
6,557.64
21 Unallocated other provisions*
14.18
*Represents material non-cash charge other than depreciation and taxation
233
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
16 Related party disclosures
(` crore)
Domestic
International
100,526.33
818.12
1,076,239.64
26,946.53
972.75
0.35
As per AS-18, Related Party Disclosure, the Group’s related parties are disclosed below:
Promoter
Housing Development Finance Corporation Limited
Key management personnel
Aditya Puri, Managing Director
Paresh Sukthankar, Deputy Managing Director (ceased to be related party effective November 8, 2018)
Kaizad Bharucha, Executive Director
Relatives of key management personnel
Anita Puri, Amit Puri, Amrita Puri, Adishwar Puri, Aarti Sood, Havovi Bharucha, Huzaan Bharucha, Danesh Bharucha, Daraius Bharucha.
Entities in which key management personnel are interested
Salisbury Investments Private Limited and Akuri by Puri
The following ceased to be related party effective November 8, 2018:
Tanaksh Innovations Private Limited, Sangeeta Sukthankar, Dattatraya Sukthankar, Shubhada Sukthankar, Akshay Sukthankar,
Ankita Sukthankar, Madhavi Lad.
In accordance with paragraph 5 of AS-18, the Bank has not disclosed certain transactions with relatives and interested entities 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, 2019 are summarised as follows: (` crore)
Items / Related party
Promoter
Associates
Key management
personnel
Total
Deposits taken
Deposits placed
Advances given
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
-
-
-
-
-
-
27.02
(27.02)
0.76
(2.51)
2.96
(3.11)
3,318.01
(3,318.01)
1.23
(2.98)
2.96
(3.11)
3,290.99
(3,290.99)
0.47
(0.47)
-
-
234
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
Items / Related party
Promoter
Associates
Key management
personnel
Total
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
Other investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
-
-
5.49
35.20
282.97
486.95
-
-
-
(1,740.49)
511.17
-
30.55
(48.40)
83.64
(83.64)
0.37
(0.40)
-
23,982.42
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.13
0.10
#
0.61
-
-
-
-
7.43
-
-
-
-
-
-
-
25.88
-
-
-
6.62
35.30
282.97
487.56
-
-
-
(1,740.49)
518.60
-
30.55
(48.40)
83.64
(83.64)
0.37
(0.40)
25.88
23,982.42
# Denotes amount less than ` 1 lakh
(cid:116)(cid:1) (cid:39)(cid:74)(cid:72)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:67)(cid:83)(cid:66)(cid:68)(cid:76)(cid:70)(cid:85)(cid:1)(cid:74)(cid:79)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:66)(cid:89)(cid:74)(cid:78)(cid:86)(cid:78)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:83)(cid:74)(cid:84)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)(cid:66)(cid:85)(cid:1)(cid:70)(cid:66)(cid:68)(cid:73)(cid:1)
quarter-end.
(cid:116)(cid:1) (cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:70)(cid:89)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:84)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:70)(cid:89)(cid:70)(cid:83)(cid:68)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:15)
(cid:116)(cid:1) (cid:35)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:83)(cid:70)(cid:85)(cid:74)(cid:83)(cid:66)(cid:77)(cid:1) (cid:67)(cid:70)(cid:79)(cid:70)(cid:71)(cid:74)(cid:85)(cid:84)(cid:1) (cid:71)(cid:80)(cid:83)(cid:1) (cid:76)(cid:70)(cid:90)(cid:1) (cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:83)(cid:74)(cid:66)(cid:77)(cid:1) (cid:81)(cid:70)(cid:83)(cid:84)(cid:80)(cid:79)(cid:79)(cid:70)(cid:77)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:66)(cid:1) (cid:81)(cid:66)(cid:83)(cid:85)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:79)(cid:1) (cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:77)(cid:77)(cid:1) (cid:81)(cid:80)(cid:80)(cid:77)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:79)(cid:80)(cid:85)(cid:1) (cid:66)(cid:77)(cid:77)(cid:80)(cid:68)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1) (cid:66)(cid:72)(cid:66)(cid:74)(cid:79)(cid:84)(cid:85)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:76)(cid:70)(cid:90)(cid:1)
managerial personnel. These will be paid based on approval from RBI. As of March 31, 2019, approved unpaid deferred bonus in respect
of earlier years was ` 1.91 crore.
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, 2019 is ` 5,865.50 crore (previous year: ` 5,972.14
crore). The contingent credit exposure pertaining to these contracts computed in line with the extant RBI guidelines on exposure norms was
` 79.12 crore (previous year: ` 80.76 crore).
During the year ended March 31, 2019, the Bank purchased debt securities from Housing Development Finance Corporation Limited ` 685.00
crore (previous year: ` 2,105.00 crore) issued by it.
During the year ended March 31, 2019, the Bank paid rent of ` 0.66 crore (previous year: ` 0.66 crore) to parties related to the Bank’s key
management personnel in relation to residential accommodation. As at March 31, 2019, the security deposit outstanding was ` 3.50 crore
(previous year: ` 3.50 crore).
235
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
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
Key management
personnel
Total
14.10
3,264.87
(37.45)
(3,288.22)
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
Other investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
3,250.77
(3,250.77)
0.47
(0.47)
-
-
-
-
5.96
13.28
264.27
405.17
-
-
-
-
-
-
-
-
-
-
1.70
-
-
-
-
-
1,603.88
-
(1,603.88)
-
432.53
-
-
-
-
-
28.34
(60.79)
32.78
(36.17)
0.25
(0.27)
2.51
(2.51)
3.16
(3.45)
-
-
1.05
0.12
#
0.76
-
-
-
-
5.67
-
-
-
2.98
(2.98)
3.16
(3.45)
-
-
8.71
13.40
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
-
-
-
-
-
-
-
-
-
-
19.29
5,623.94
-
-
5,623.94
# Denotes amount less than ` 1 lakh
(cid:116)(cid:1)
(cid:39)(cid:74)(cid:72)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1) (cid:74)(cid:79)(cid:1) (cid:67)(cid:83)(cid:66)(cid:68)(cid:76)(cid:70)(cid:85)(cid:1) (cid:74)(cid:79)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1) (cid:78)(cid:66)(cid:89)(cid:74)(cid:78)(cid:86)(cid:78)(cid:1) (cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1) (cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1) (cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:90)(cid:70)(cid:66)(cid:83)(cid:1) (cid:67)(cid:66)(cid:84)(cid:70)(cid:69)(cid:1) (cid:80)(cid:79)(cid:1) (cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:83)(cid:74)(cid:84)(cid:80)(cid:79)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1) (cid:80)(cid:86)(cid:85)(cid:84)(cid:85)(cid:66)(cid:79)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1) (cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1) (cid:66)(cid:85)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
each quarter-end.
(cid:51)(cid:70)(cid:78)(cid:86)(cid:79)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:1)(cid:70)(cid:89)(cid:68)(cid:77)(cid:86)(cid:69)(cid:70)(cid:84)(cid:1)(cid:87)(cid:66)(cid:77)(cid:86)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:70)(cid:78)(cid:81)(cid:77)(cid:80)(cid:90)(cid:70)(cid:70)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:80)(cid:81)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:70)(cid:89)(cid:70)(cid:83)(cid:68)(cid:74)(cid:84)(cid:70)(cid:69)(cid:1)(cid:69)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:15)
(cid:35)(cid:80)(cid:79)(cid:86)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:83)(cid:70)(cid:85)(cid:74)(cid:83)(cid:66)(cid:77)(cid:1) (cid:67)(cid:70)(cid:79)(cid:70)(cid:71)(cid:74)(cid:85)(cid:84)(cid:1) (cid:71)(cid:80)(cid:83)(cid:1) (cid:76)(cid:70)(cid:90)(cid:1) (cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:83)(cid:74)(cid:66)(cid:77)(cid:1) (cid:81)(cid:70)(cid:83)(cid:84)(cid:80)(cid:79)(cid:79)(cid:70)(cid:77)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:66)(cid:68)(cid:68)(cid:83)(cid:86)(cid:70)(cid:69)(cid:1) (cid:66)(cid:84)(cid:1) (cid:66)(cid:1) (cid:81)(cid:66)(cid:83)(cid:85)(cid:1) (cid:80)(cid:71)(cid:1) (cid:66)(cid:79)(cid:1) (cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:77)(cid:77)(cid:1) (cid:81)(cid:80)(cid:80)(cid:77)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:66)(cid:83)(cid:70)(cid:1) (cid:79)(cid:80)(cid:85)(cid:1) (cid:66)(cid:77)(cid:77)(cid:80)(cid:68)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1) (cid:66)(cid:72)(cid:66)(cid:74)(cid:79)(cid:84)(cid:85)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
key managerial personnel. These will be paid based on approval from RBI. As of March 31, 2018, approved unpaid deferred bonus in
respect of earlier years was ` 2.80 crore.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
236
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
17
Additional information pursuant to Schedule III of the Companies Act, 2013
Additional information to consolidated accounts at March 31, 2019 (Pursuant to Schedule III of the Companies Act, 2013)
(` crore)
Name of entity
Net assets as of March 31, 2019
Profit or loss for the
year ended March 31, 2019
As % of consolidated
Amount***
As % of consolidated
Amount***
net assets**
profit or loss
Parent:
HDFC Bank Limited
Subsidiaries*:
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
*The subsidiaries are domestic entities
97.09%
149,206.32
94.38%
21,078.14
0.76%
4.77%
0.33%
1,167.80
7,326.28
501.79
1.56%
5.15%
0.51%
347.95
1,151.09
113.18
**Consolidated net assets are total assets minus total liabilities including minority interest
***Amounts are before inter-company adjustments.
Additional information to consolidated accounts at March 31, 2018 (Pursuant to Schedule III of the Companies Act, 2013)
Name of entity
Net assets as of March 31, 2018
(` crore)
Profit or loss for the
year ended March 31, 2018
As % of consolidated
Amount***
As % of consolidated
Amount***
net assets**
profit or loss
Parent:
HDFC Bank Limited
Subsidiaries*:
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
*The subsidiaries are domestic entities
96.99%
106,295.03
94.47%
17,486.75
0.91%
5.66%
0.33%
1,000.78
6,202.23
356.33
1.86%
5.14%
0.28%
**Consolidated net assets are total assets minus total liabilities including minority interest
***Amounts are before inter-company adjustments.
344.42
952.00
51.34
(` crore)
Name of entity
Investment as per equity method
Share of profit or loss for the
as of March 31, 2018
year ended March 31, 2018
As % of consolidated
Amount
As % of consolidated
Amount
net assets
profit or loss
Associate*:
International Asset Reconstruction
Company Private Limited**
*
The associate is a domestic entity
19.20%
Refer Note
0.003%
0.52
**
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.
237
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
18
Leases
Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (‘ATM’s), which are renewable at
the option of the Group. 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
The total of minimum lease payments recognised in the Profit and Loss Account 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 Profit and Loss Account for the year
Contingent (usage based) lease payments recognised in the Profit and Loss Account for the year
The Bank has sub-leased certain of its properties taken on lease.
Total
(` crore)
March 31, 2019 March 31, 2018
1,053.94
3,426.70
4,109.25
8,589.89
1,261.30
29.94
9.48
206.55
1,016.13
3,303.45
3,626.31
7,945.89
1,231.87
7.08
8.06
174.87
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, 2019, RBI has imposed a penalty of ` 0.20 crore (previous year: Nil) for non-compliance with various
directions issued by RBI on Know Your Customer (KYC) / Anti-Money Laundering (AML) standards.
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,
2019 and March 31, 2018. 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, 2019 was ` 0.04 crore (previous
year: ` 0.03 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, 2019 was Nil (previous year: Nil). The above is based on the information available with the Company
which has been relied upon by the auditors.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
238
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended March 31, 2019
21 Corporate social responsibility
Operating expenses include ` 473.50 crore (previous year: ` 391.92 crore) for the year ended March 31, 2019 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.
(i)
(ii)
Particulars
March 31, 2019
March 31, 2018
Amount
Amount unpaid
Total
Amount
Amount unpaid
Total
spent
/ provision
spent
/ provision
Construction / acquisition of any asset
On purpose other than (i) above
-
473.50
-
-
-
-
473.50
391.92
-
-
-
391.92
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.
The previous year comparative numbers were audited by a firm of Chartered Accountants other than S.R. Batliboi & Co. LLP.
As per our report of even date.
For and on behalf of the Board
For S. R. BATLIBOI & CO. LLP
Shyamala Gopinath
Chartered Accountants
Chairperson
Aditya Puri
Managing Director
Firm Registration No. 301003E/E300005
per Sudhir Soni
Partner
Membership No.: 41870
Kaizad Bharucha
Executive Director
Mumbai, April 20, 2019
& Company Secretary
Santosh Haldankar
Sashidhar Jagdishan
Vice President (Legal)
Chief Financial Officer
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
239
STATEMENT PURSUANT TO SECTION 129
OF THE COMPANIES ACT, 2013
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
(` crore)
Sr.
Name of the subsidiary
HDFC Securities Limited
HDB Financial Services
No.
1.
2.
The date since when subsidiary was acquired
Reporting period for the subsidiary concerned, if different from
September 28, 2005
Reporting period of the
August 31, 2007
Reporting period of the
the holding company’s reporting period
subsidiary is the same as that
subsidiary is the same as that
Limited
3.
Reporting currency and exchange rate as on the last date of the
relevant financial year in the case of foreign subsidiaries.
Share capital
Reserves & surplus
Total assets
Total liabilities
Investments
Turnover
4.
5.
6.
7.
8.
9.
10. Profit before taxation
11. Provision for taxation
12. Profit after taxation
13. Proposed dividend (including tax thereon)*
Extent of shareholding (in percentage)
14.
of the holding company i.e.
of the holding company i.e.
April 1, 2018 to
April 1, 2018 to
March 31, 2019
Not applicable as this is a
March 31, 2019
Not applicable as this is a
domestic subsidiary
15.61
1,152.19
1,998.47
830.67
398.58
781.81
514.83
166.88
347.95
207.06
97.29%
domestic subsidiary
785.70
6,540.58
55,194.59
47,868.31
627.28
8,841.34
1,712.51
561.43
1,151.09
170.50
95.53%
* 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
Profit and Loss Account for the year ended March 31, 2019.
Notes:
1.
2.
There are no subsidiaries that are yet to commence operations.
No subsidiaries were liquidated or sold during the year.
Part B: Associate Companies and Joint Ventures
Not Applicable
For and on behalf of the Board
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
Mumbai, April 20, 2019
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Kaizad Bharucha
Executive Director
Santosh Haldankar
Vice President (Legal)
& Company Secretary
240
Sashidhar Jagdishan
Chief Financial Officer
Keki Mistry
Malay Patel
Umesh Sarangi
Sanjiv Sachar
Sandeep Parekh
M D Ranganath
Directors
BASEL III - PILLAR 3 DISCLOSURES
As at March 31, 2019
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:116)(cid:1)
(cid:50)(cid:86)(cid:66)(cid:77)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:82)(cid:86)(cid:66)(cid:79)(cid:85)(cid:74)(cid:85)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:49)(cid:74)(cid:77)(cid:77)(cid:66)(cid:83)(cid:1)(cid:20)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:27)
(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:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:36)(cid:80)(cid:78)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:79)(cid:68)(cid:74)(cid:77)(cid:74)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:15)
(cid:46)(cid:66)(cid:74)(cid:79)(cid:1)(cid:71)(cid:70)(cid:66)(cid:85)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:71)(cid:86)(cid:77)(cid:77)(cid:1)(cid:85)(cid:70)(cid:83)(cid:78)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:80)(cid:79)(cid:69)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:83)(cid:70)(cid:72)(cid:86)(cid:77)(cid:66)(cid:85)(cid:80)(cid:83)(cid:90)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:74)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:15)
(cid:45)(cid:70)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:84)(cid:15)
(cid:45)(cid:74)(cid:82)(cid:86)(cid:74)(cid:69)(cid:74)(cid:85)(cid:90)(cid:1)(cid:68)(cid:80)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)(cid:1)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:1)(cid:69)(cid:74)(cid:84)(cid:68)(cid:77)(cid:80)(cid:84)(cid:86)(cid:83)(cid:70)(cid:15)
241
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, 2019, 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, 2019
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242
CERTIFICATE
Pursuant to regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 (“SEBI Listing Regulations”)
To
The Members
HDFC Bank Limited
HDFC Bank House
Senapati Bapat Marg
Lower Parel (W)
Mumbai 400013
We have examined the relevant books, papers, minutes books, forms and returns filed, Notices received from the Directors during the Financial
Year 2018-19, and other records maintained by the Company and also the information provided by the Company, its officers, agents and
authorised representatives of HDFC Bank Limited CIN.: L65920MH1994PLC080618 (hereinafter called the ‘Bank’) having its Registered office
at HDFC Bank House, Senapati Bapat Marg, Lower Parel (W) Mumbai - 400013 for the purpose of issuance of a Certificate, in accordance
with Regulation 34 (3) read with Schedule V Para-C Sub clause 10 (i) of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) 2015 (LODR), as amended vide notification no SEBI/LAD/NRO/GN/2018/10 dated May 9, 2018 issued by SEBI.
In our opinion and to the best of our knowledge and based on such examination as well as information and explanations furnished to us,
which to the best of our knowledge and belief were necessary for the purpose of issuance of this certificate and based on such verification as
considered necessary, we hereby certify that none of the Directors stated below who are on the Board of the Bank as on 31st March 2019 have
been debarred or disqualified from being appointed or continuing as Directors of the Bank by Securities and Exchange Board of India or the
Ministry of Corporate Affairs or any such other statutory authority.
S. No.
1
2
3
4
5
6
7
8
9
10
Name of the Director
Shyamala Gopinath
Aditya Puri
Kaizad Maneck Bharucha
Keki Minoo Mistry
Sanjiv Sachar
Umesh Chandra Sarangi
Srikanth Nadhamuni
Sandeep Pravin Parekh
Malay Yogendra Patel
Dwarakanath Ranganath Mavinakere
DIN
02362921
00062650
02490648
00008886
02013812
02040436
02551389
03268043
06876386
07565125
*Date of Appointment in the Bank
02/01/2015
12/10/2004
24/12/2013
19/01/2012
21/07/2018
01/03/2016
20/09/2016
19/01/2019
31/03/2015
31/01/2019
*Date of appointment is the date which is reflected on MCA portal.
We further state that such compliance is neither an assurance as to the future viability of the Bank nor of the efficiency or effectiveness with
which the management has conducted the affairs of the Bank.
Place: Mumbai
Date: May 22, 2019
243
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.: 1303
COP No.: 10440
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
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 Executive Director, under the guidance of the Managing Director, has over-sight over various business functions.
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 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.
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CORPORATE GOVERNANCE
BOARD OF DIRECTORS
The composition of the Board of Directors of the Bank (“Board”) is governed by the provisions of the Companies Act, 2013, the Banking
Regulation Act, 1949 and the listing requirements of the Indian Stock Exchanges where the securities issued by the Bank are listed.
The Board has 10 (ten) Directors as on March 31, 2019
Composition of the Board of Directors of the Bank as on March 31, 2019:
Executive Directors: Mr. Aditya Puri (Managing Director) and Mr. Kaizad Bharucha (Executive Director)
Non-Executive Directors: Mr. Keki Mistry and Mr. Srikanth Nadhamuni.
Independent Directors: Mrs. Shyamala Gopinath (Part-time Non-Executive Chairperson), Mr. Malay Patel, Mr. Umesh Chandra Sarangi,
Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M. D. Ranganath.
Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M. D. Ranganath have been appointed as Additional Independent Directors, subject to the
approval of the shareholders at the ensuing Annual General Meeting of the Bank.
All the Independent Directors of the Bank possess the requisite qualifications and experience which enable them to contribute effectively to
the Bank. The Board confirms that in the opinion of the Board, the Independent Directors fulfill the conditions specified in the SEBI Listing
Regulations and the Companies Act, 2013 and are independent of the management.
Mr. Keki Mistry represents Housing Development Finance Corporation Limited (HDFC Limited) on the Board of the Bank.
Mr. Paresh Sukthankar resigned as Deputy Managing Director of the Bank with effect from November 08, 2018 on account of personal
considerations.
Mr. Partho Datta and Mr. Bobby Parikh ceased to be Directors of the Bank with effect from September 29, 2018 and January 26, 2019 respectively,
each having completed term of eight continuous years, being the maximum period prescribed under the Banking Regulation Act, 1949.
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.
LENGTH OF SERVICE OF DIRECTORS - No. of years (Y)*
AGE GROUP OF DIRECTORS - No. of years (Y)
5
3
3
2
2
2
1
1
1
<4Y
4-6Y
6-8Y
>8Y
40-50
50-54
55-59
60-64
65-69
*Pursuant to Banking Regulation Act, 1949, only the Chairperson
and Whole-Time directors may hold office for a period exceeding
eight years.
245245
CORPORATE GOVERNANCE
BOARD COMPOSITION
20%
20%
60%
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
Mrs. Shyamala Gopinath
Mr. Malay Patel
Mr. Keki Mistry
Mr. Aditya Puri
Mr. Kaizad Bharucha
Mr. Umesh Chandra Sarangi
Mr. Srikanth Nadhamuni
Mr. Sanjiv Sachar
Mr. Sandeep Parekh
Mr. M. D. Ranganath
Directorships on the Board
of other companies*
Memberships of
Committees of other
companies *
7
1
11 (1)
(1)
-
-
6
1
1
-
2 (4)
-
6 (3)
-
-
-
-
-
-
-
Independent Directors
Executive Directors
* The figures in brackets indicate Chairpersonships.
Non-Independent, Non-Executive Directors
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), private limited companies, foreign
companies and companies under Section 8 of the Companies Act, 2013 have
been included. Further, chairpersonships / memberships of only the Audit
Committee and the Stakeholders’ Relationship Committee in these companies
have been considered.
PROFILE OF BOARD OF DIRECTORS
The profile of the Directors of the Bank as on March 31, 2019 is as under:
Mrs. Shyamala Gopinath
Mrs. Shyamala Gopinath, aged 69 years, holds a Master’s Degree in Commerce and is a CAIIB. Mrs. Shyamala Gopinath has over 41 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. 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 is currently on the Board of following 5 (five) public limited companies as Independent Director: Tata Elxsi Limited, Colgate-
Palmolive (India) Limited, CMS Info Systems Limited, Lodha Developers Limited and BASF India Limited.
Mrs. Gopinath does not hold any shares in the Bank as on March 31, 2019.
Mr. Aditya Puri
Mr. Aditya Puri, aged 68 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.
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CORPORATE GOVERNANCE
Mr. Puri has provided outstanding leadership as the Managing Director and has contributed significantly to enable the Bank scale phenomenal
heights under his stewardship. Recently, Mr. Aditya Puri was conferred the AIMA-JRD Tata Corporate Leadership Award for the Year 2018.
Mr. Puri was also honoured for his corporate and philanthropic leadership by the American Indian Foundation (AIF) at their Annual New
York Gala. He was recognized for transformative initiatives undertaken by HDFC Bank under his leadership. 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 personal loans, PayZapp, etc.
Mr. Puri is the Non-Executive Chairman on the Board of HDB Financial Services Limited.
Mr. Puri, along with his relatives, holds 37,04,544 equity shares in the Bank as on March 31, 2019.
Mr. Keki Mistry
Mr. Keki Mistry, aged 64 years, is a Non- Executive Director of the Bank. He holds a Bachelor’s Degree in Commerce from the University of
Mumbai. 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 has worked 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 Life
Insurance Company Ltd. and HDFC Ergo General Insurance Company Ltd. He is currently the Chairman of CII National Council on Corporate
Governance and a member of Primary Markets Advisory Committee set up by SEBI. He was also a member of the Committee of Corporate
Governance set up by SEBI.
Mr. Keki Mistry is currently on Board of following 8 (eight) public limited companies: HDFC Limited: Vice Chairman and CEO, GRUH Finance
Limited: Chairman, HDFC Asset Management Limited, HDFC Life Insurance Company Limited, HDFC ERGO General Insurance Company
Limited, Greatship (India) Limited, Torrent Power Limited and Tata Consultancy Services Limited: Director.
Mr. Mistry, along with his relatives, holds 2,96,130 equity shares in the Bank as on March 31, 2019.
Mr. Kaizad Bharucha
Mr. Kaizad Bharucha, aged 54 years, holds a Bachelor's Degree in Commerce 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, Department for Special Operations and inclusive Banking
Initiatives Group. 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.
He has represented HDFC Bank as a member of the working group constituted by the Reserve Bank of India to examine the role of Credit
Information Bureau and on the sub-committee with regard to adoption of the Basel II guidelines.
Mr. Bharucha is not a director in any other public limited company.
Mr. Bharucha, along with his relatives, holds 8,91,551 equity shares in the Bank as on March 31, 2019.
247247
CORPORATE GOVERNANCE
Mr. Malay Patel
Mr. Malay Patel, aged 42 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. Patel is not a director in any other public limited company.
Mr. Malay Patel does not hold any shares in the Bank as on March 31, 2019.
Mr. Umesh Chandra Sarangi
Mr. Umesh Chandra Sarangi, aged 67 years, holds a Master’s Degree in Science (Botany) from the Utkal University (gold medalist).
Mr. Sarangi has 36 years of experience in the Indian Administrative Services and brought in significant reforms in modernization of agriculture,
focus on agro processing and export. As the erstwhile Chairman of the National Bank for 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 is not a director in any other public limited company.
Mr. Sarangi does not hold any shares in the Bank as on March 31, 2019.
Mr. Srikanth Nadhamuni
Mr. Srikanth Nadhamuni, aged 55 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 29
years of experience in the areas of CPU design, Healthcare, e-Governance, National ID, Biometrics, Financial Technology and Banking sectors.
Mr. Nadhamuni is presently 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 start-up incubator. He has also been a co-founder of e-Governments Foundation with Mr. Nandan
Nilekani which works on the objectives to improve governance in Indian cities and 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. Nadhamuni is not a director in any other public limited company.
Mr. Nadhamuni does not hold any shares in the Bank as on March 31, 2019.
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Mr. Sanjiv Sachar
Mr. Sanjiv Sachar, aged 61 years is an Additional Independent Director on the Board of the Bank. Mr. Sachar, is a Fellow Associate of the
Institute of Chartered Accountants of India and on 31st October, 2016 retired as the Senior Partner of Egon Zehnder, the world’s largest
privately held executive search firm.
Mr. Sachar set up the Egon Zehnder practice in India in 1995 and played a key role in establishing the firm as a market leader in the executive
search space across various country segments. Over the course of his two decades at Egon Zehnder, Mr. Sachar has mentored senior
executives across industry sectors that today are either Board members, CEOs or CFOs of large corporates in India and overseas. Mr. Sachar
has also been the co-founder of the chartered accountancy and management consulting firm, Sachar Vasudeva & Associates and co-founded
executive search firm, Direct Impact.
Mr. Sachar is an Independent Director on the Board of KDDL Limited.
Mr. Sanjiv Sachar does not hold any shares in the Bank as on March 31, 2019.
Mr. Sandeep Parekh
Mr. Sandeep Parekh, aged 48 years, holds an LL.M (Securities and Financial Regulations) degree from Georgetown University and an LL.B.
degree from Delhi University. He is the managing partner of Finsec Law Advisors, a financial sector law firm based in Mumbai. He was an
Executive Director at the Securities & Exchange Board of India during 2006-08, heading the Enforcement and Legal Affairs departments. He is
a faculty at the Indian Institute of Management, Ahmedabad. He has worked for law firms in Delhi, Mumbai and Washington, D.C. Mr. Parekh
focuses on securities regulations, investment regulations, private equity, corporate governance and financial regulations. He is admitted to
practice law in New York and is a member of Mensa. He was recognized by the World Economic Forum as a “Young Global Leader” in 2008.
He was Chairman and member of various SEBI and RBI Committees and sub-Committees and is presently the Chairman of SEBI’s Proxy
Advisory working group and a member of SEBI’s Mutual Fund Advisory Committee.
Mr. Parekh is not a director in any other public limited company.
Mr. Sandeep Parekh does not hold any shares in the Bank as on March 31, 2019.
Mr. M. D. Ranganath
Mr. M. D. Ranganath, aged 57 years, holds Master’s degree in technology from IIT, Madras and a Bachelor’s degree in Engineering from the
University of Mysore. He is a PGDM from IIM, Ahmedabad and a member of CPA, Australia.
Mr. Ranganath has over 26 years of experience in the Global IT services and financial services industry. He was Chief Financial Officer of Infosys
Limited, a globally listed IT services corporation, with over 200,000 employees, till November, 2018. During his tenure of 18 years at Infosys, he
was an integral part of the growth and transformation of Infosys into a globally respected IT services company and effectively played leadership
roles in a wide spectrum of areas- Strategy, Finance, M&A, Consulting, Risk Management, and Corporate planning- culminating in the role of
Chief Financial Officer and worked closely with the Board of Infosys and its committees in formulating and executing its strategic priorities.
Prior to Infosys, he worked at ICICI Limited for 8 years and executed responsibilities in credit, treasury, equity portfolio management and
corporate planning.
In the years 2017 and 2018, Mr. Ranganath was the recipient of the Best CFO Asia award in the technology sector, by Institutional Investor
publication, based on poll of buy-side and sell-side investor community.
Mr. Ranganath is not a director in any other public limited company.
Mr. Ranganath does not hold any shares in the Bank as on March 31, 2019.
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CORPORATE GOVERNANCE
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.
At the Board / Committee meetings, presentations and deep-dive sessions are made covering important areas of the Bank such as annual
plans and strategies, Cyber security and Data Privacy, amendments and salient provisions of the SEBI Listing Regulations and other applicable
regulations / laws, macro-economic updates and monetary policy implications, Parivartan (CSR Initiatives), etc. Further, the Managing Director
periodically provides 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, 9 (nine) Board Meetings were held. The meetings were held on April 21, 2018, May 22, 2018,
June 29, 2018, July 21, 2018, September 28, 2018, October 20, 2018, January 19, 2019, February 02, 2019 and March 07, 2019.
The Board meeting held on February 02, 2019 was a separate off-site meeting dedicated exclusively for strategic matters of the Bank.
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
Board Meetings attended during the year
Attendance at last AGM (June 29, 2018)
Independent Directors
Mrs. Shyamala Gopinath1
Mr. Partho Datta2
Mr. Bobby Parikh2
Mr. Malay Patel
Mr. Umesh Chandra Sarangi
Mr. Sandeep Parekh3
Mr. M. D. Ranganath3
Mr. Sanjiv Sachar3
Non-executive Directors
Mr. Keki Mistry
Mr. Srikanth Nadhamuni 4
Executive Directors
Mr. Aditya Puri
Mr. Paresh Sukthankar 5
Mr. Kaizad Bharucha
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9
4
7
9
9
2
2
5
8
7
9
6
9
250250
Absent
Present
Present
Present
Present
NA
NA
NA
Present
Absent
Present
Present
Present
CORPORATE GOVERNANCE
1Mrs. Shyamala Gopinath was unable to attend the previous AGM of the Bank due to prior personal commitments.
2Mr. Partho Datta and Mr. Bobby Parikh ceased to be Directors of the Bank with effect from September 29, 2018 and January 26, 2019
respectively.
3Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M. D. Ranganath have been appointed as Directors of the Bank with effect from July 21, 2018,
January 19, 2019 and January 31, 2019 respectively.
4Mr. Nadhamuni was unable to attend 2 board meetings held on April 21, 2018 and May 22, 2018 due to his prior commitments in relation to
the Aadhaar matter in the Supreme Court. Further, he could not attend the last AGM of the Bank held on June 29, 2018 since he was unwell.
(Mr. Nadhamuni has attended all the Board meetings of the Bank held during FY 2017-18, as well as the AGM of the Bank held on July 24, 2017
for FY 2016-17.)
5Mr. Paresh Sukthankar resigned as Deputy Managing Director of the Bank with effect from November 08, 2018.
REMUNERATION OF DIRECTORS
Managing Director and other Executive Directors:
The details of the remuneration paid to Mr. Aditya Puri, Managing Director; Mr. Paresh Sukthankar, Deputy Managing Director$ and Mr. Kaizad
Bharucha, Executive Director during the financial year 2018-19 are as under:
Particulars
Basic
Allowances and Perquisites
Provident Fund
Superannuation
Performance Bonus #
Number of stock options granted *
(Amount in `)
Mr. Aditya Puri
Mr. Paresh Sukthankar$ Mr. Kaizad Bharucha
54,393,638
32,915,672
6,527,233
8,159,040
34,709,143
492,000
17,103,452
22,068,605
2,052,412
2,565,518
19,553,858
-
18,933,600
21,032,795
2,272,032
2,840,040
13,700,087
171,000
$ Mr. Paresh Sukthankar resigned from the Bank with effect from November 8, 2018
# For the Managing Director, this amount includes 60% of the Performance Bonus for FY 2016-17 paid out in FY 2018-19 and deferred bonus
tranches of previous financial years. For the Deputy Managing Director and the Executive Director, this amount includes full performance
bonus for FY 2016-17 paid out in FY 2017-18 and deferred bonus tranches of previous financial years. At present, the bonus pertaining to the
FY 2017-18 proposed to be paid out in FY 2018-19 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 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 - 35%
of options after expiry of twelve months from date of grant, 30% options after expiry of twenty-four months from the date of grant, 20% of
options after expiry of thirty-six months from the date of grant and the balance options after expiry of forty-eight months from date of grant,
subject to performance and approval of RBI. The options so vested are to be exercised within 2 years from the respective dates of vesting.
The criteria for evaluation of performance of Whole-Time Directors include performance vis-à-vis business plans, performance vis-à-vis banking
system, and performance in relation to regulatory and compliance requirements.
The notice period for each of them, as specified in their respective terms of appointments, is three months.
The appointment and tenure of Whole-Time Directors has been approved by the RBI.
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CORPORATE GOVERNANCE
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 were 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. No stock options are granted to any of the non-executive directors.
During the year, Mrs. Shyamala Gopinath was paid remuneration of ` 35,00,000. 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 2018-19 pertaining to financial year 2017-18. 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 2018-19 is as under:
Name of the Director
Mrs. Shyamala Gopinath
Mr. Partho Datta*
Mr. Bobby Parikh*
Mr. Malay Patel
Mr. Keki Mistry
Mr. Umesh Chandra Sarangi
Mr. Srikanth Nadhamuni
Mr. Sanjiv Sachar $
Mr. Sandeep Parekh $
Mr. M. D. Ranganath $
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Sitting Fees
Commission #
3,000,000
1,050,000
2,150,000
2,950,000
2,050,000
2,000,000
1,400,000
1,000,000
350,000
250,000
252252
(Amount in `)
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
-
-
-
CORPORATE GOVERNANCE
# Refers to commission for FY 2017-18, paid out in FY 2018-19.
*Mr. Partho Datta and Mr. Bobby Parikh ceased to be directors of the Bank with effect from September 29, 2018 and January 26, 2019
respectively.
$ Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M. D. Ranganath were appointed as Directors of the Bank with effect from July 21, 2018,
January 19, 2019 and January 31, 2019 respectively.
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 2018-19.
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 as per the scope defined in their Charter and 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:
Review:
Wilful
Defaulters'
Identification
Non
Cooperative
Borrowers
Digital
Transactions
Monitoring
IT
Strategy*
Non
Executive
Directors
Mrs. Shyamala
Gopinath
(cid:32)
(cid:32)
Mr. Malay Patel
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
Mr. M. D.
Ranganath
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
Executive
Directors
Mr. Aditya Puri
Mr. Kaizad
Bharucha
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
(cid:32)
* Not a Board-level Committee. Consists of members of senior management and external IT
(cid:32) Chairperson (cid:32) Member
consultant in addition to the above members.
253253
Mr. Keki Mistry
Mr. Umesh
Chandra
Sarangi
Mr. Srikanth
Nadhamuni
Mr. Sanjiv
Sachar
Mr. Sandeep
Parekh
CORPORATE GOVERNANCE
Audit Committee:
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.
Composition:
Mr. M. D. Ranganath (Chairman), Mrs. Shyamala Gopinath, Mr. Umesh Chandra Sarangi and
Mr. Sanjiv Sachar, all of whom are independent directors. Mr. M. D. Ranganath and Mr. Sanjiv Sachar
are the members of Audit Committee having financial expertise.
(During the year, Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the Committee
pursuant to their cessation as Directors of the Bank. Further, Mr. M. D. Ranganath and Mr. Sanjiv
Sachar were appointed as members of the Committee.)
Mr. Santosh Haldankar, Company Secretary of the Bank, acts as the Secretary of the Committee.
Meetings:
The Committee met 7 (seven) times during the year on April 20, 2018; May 22, 2018; July 17, 2018;
July 20, 2018; October 19, 2018; January 18, 2019 and March 7, 2019.
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Nomination and Remuneration Committee:
Brief Terms of Reference / Roles
a. Scrutinizing the nominations of the directors with reference to their qualifications and experience,
and responsibilities:
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 NRC has formulated a Policy for Appointment and Fit and Proper Criteria of Directors,
which inter-alia provides for criteria to assess the competency of the persons nominated, which
includes:
(cid:116)(cid:1) (cid:66)(cid:68)(cid:66)(cid:69)(cid:70)(cid:78)(cid:74)(cid:68)(cid:1)(cid:82)(cid:86)(cid:66)(cid:77)(cid:74)(cid:71)(cid:74)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:13)(cid:1)
(cid:116)(cid:1) (cid:81)(cid:83)(cid:70)(cid:87)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:83)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:13)(cid:1)
(cid:116)(cid:1)
(cid:85)(cid:83)(cid:66)(cid:68)(cid:76)(cid:1)(cid:83)(cid:70)(cid:68)(cid:80)(cid:83)(cid:69)(cid:28)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)
(cid:116)(cid:1)
(cid:74)(cid:79)(cid:85)(cid:70)(cid:72)(cid:83)(cid:74)(cid:85)(cid:90)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:68)(cid:66)(cid:79)(cid:69)(cid:74)(cid:69)(cid:66)(cid:85)(cid:70)(cid:84)(cid:15)
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.
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. Sanjiv Sachar (Chairman), Mrs. Shyamala Gopinath, Mr. Sandeep Parekh and Mr. M. D. Ranganath.
(During the year, Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the Committee
pursuant to their cessation as Directors of the Bank. Further, Mr. Sanjiv Sachar, Mr. Sandeep Parekh
and Mr. M. D. Ranganath were appointed as members of the Committee)
All the members of the Committee are independent directors.
Meetings:
The Committee met 11 (eleven) times during the year on April 20, 2018; May 10, 2018;
June 01, 2018; June 29, 2018; July 31, 2018; August 20, 2018; September 28, 2018;
October 19, 2018; January 18, 2019; January 30, 2019 and March 07, 2019.
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CORPORATE GOVERNANCE
Stakeholders’ Relationship Committee:
Brief Terms of Reference / Roles
The Committee approves and monitors transfer, transmission, splitting and consolidation of shares
and responsibilities:
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. Santosh Haldankar, Vice President-Legal & Company Secretary of the Bank is the
Compliance Officer responsible for expediting the share transfer formalities.
As on March 31, 2019, 234 (Two Hundred Thirty Four) instruments of transfer for 49,313 equity
shares was pending for transfer, which have since been processed. The details of the transfers are
reported to the Committee from time to time.
During the year ended March 31, 2019, the Bank received 5,855 complaints from the shareholders.
The Bank had attended to all the complaints. 101 complaints remained pending and 5 complaints
have not been solved to the satisfaction of the shareholders as on March 31, 2019.
Besides, 15,905 letters were received from the shareholders relating to change of address, nomination
requests, updation of email IDs and PAN No(s), updation of complete bank account details viz. Core
Banking account no., IFSC and / MICR code, Mandate for crediting dividend by National Automated
Clearing House (NACH) and National Electronic Fund Transfer (NEFT), claim of shares from Unclaimed
Suspense account, and from the Investors Education and Protection Fund Authority, queries relating
to the annual reports, non-receipt of shares upon sub-division of Bank’s shares from the face value
of ` 10/- each to the face value of ` 2/- each, amalgamation, request for re-validation of dividend
warrants and various other investor related matters. These letters have also been responded to.
Composition:
Mr. Umesh Chandra Sarangi (Chairman), Mr. Aditya Puri, Mr. Malay Patel and Mr. Sandeep Parekh.
(During the year, Mr. Paresh Sukthankar ceased to be a member of the Committee pursuant to his
resignation. Further, Mr. Sandeep Parekh was appointed as a member of the Committee.)
Meetings:
The Committee met 4 (four) times during the year on April 18, 2018; July 19, 2018; October 17, 2018
and January 17, 2019.
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Risk Policy and Monitoring Committee:
Brief Terms of Reference / Roles
The Committee has been formed as per the guidelines of Reserve Bank of India on Asset Liability
and responsibilities:
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.
Further, as per RBI guidelines, the Chief Risk Officer of the Bank regularly interacts with the members
of the Committee without the presence of management at the meetings of the Committee.
Composition:
Mr. Srikanth Nadhamuni (Chairman), Mrs. Shyamala Gopinath, Mr. M. D. Ranganath and Mr. Aditya
Puri.
(During the year, Mr. Partho Datta ceased to be a member of the Committee pursuant to his cessation
as a director of the Bank and Mr. Paresh Sukthankar ceased to be a member of the committee
pursuant to his resignation as director of the Bank. Further, Mr. Nadhamuni and Mr. M. D. Ranganath
were appointed as members of the Committee.)
Meetings:
The Committee met 5 (five) times during the year on April 18, 2018; June 29, 2018; July 19, 2018;
October 17, 2018 and January 17, 2019.
Credit Approval Committee:
Brief Terms of Reference / Roles
The Committee evaluates and approves credit exposures, which are beyond the powers delegated
and responsibilities:
to executives of the Bank. This facilitates quick response to the needs of the customers and timely
disbursement of loans.
Composition:
Mr. Malay Patel (Chairman), Mr. Aditya Puri, Mr. Kaizad Bharucha and Mr. Srikanth Nadhamuni.
(Mr. Keki Mistry ceased to be a member of the Committee with effect from May 02, 2019.)
Meetings:
The Committee met 13 (thirteen) times during the year on April 13, 2018; April 27, 2018; May 22, 2018;
June 22, 2018; July 21, 2018; September 18, 2018; September 28, 2018; October 20, 2018;
December 05, 2018; January 19, 2019; February 11, 2019; February 27, 2019 and March 28, 2019
Premises Committee:
Brief Terms of Reference / Roles
The Committee approves purchases and leasing of premises for the use of Bank’s branches, back
and responsibilities:
offices, ATMs and residence of executives in accordance with the guidelines laid down by the Board.
Composition:
Mr. Keki Mistry (Chairman), Mr. Aditya Puri and Mr. Malay Patel.
Meetings:
The Committee met 5 (five) times during the year on April 18, 2018; July 21, 2018; October 17, 2018;
January 17, 2019 and March 07, 2019.
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CORPORATE GOVERNANCE
Fraud Monitoring Committee:
Brief Terms of Reference / Roles
Pursuant to the directions of the RBI, the Bank has constituted a Fraud Monitoring Committee,
and responsibilities:
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.
Composition:
Mrs. Shyamala Gopinath (Chairperson), Mr. Keki Mistry, Mr. Malay Patel, Mr. Umesh Chandra Sarangi,
Mr. Aditya Puri and Mr. Sandeep Parekh.
(During the year, Mr. Partho Datta ceased to be a member of the Committee pursuant to his cessation
as Director of the Bank. Further, Mr. Umesh Chandra Sarangi and Mr. Sandeep Parekh were appointed
as members of the Committee.)
Meetings:
The Committee met 5 (Five) times during the year on April 18, 2018; July 19, 2018; September 28, 2018;
October 17, 2018 and January 17, 2019.
Customer Service Committee:
Brief Terms of Reference / Roles
The Committee monitors the quality of services rendered to the customers and also ensures
and responsibilities:
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.
Composition:
Mrs. Shyamala Gopinath (Chairperson), Mr. Keki Mistry, Mr. Malay Patel, Mr. Srikanth Nadhamuni,
Mr. Aditya Puri and Mr. Sandeep Parekh.
(During the year, Mr. Sandeep Parekh was appointed as a member of the Committee.)
Meetings:
The Committee met 4 (Four) times during the year on April 18, 2018; July 19, 2018; October 17, 2018
and January 17, 2019.
HDFC Bank Limited Annual Report 2018 - 2019
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CORPORATE GOVERNANCE
Corporate Social Responsibility Committee:
Brief Terms of Reference / Roles
The Board has constituted a Corporate Social Responsibility (CSR) Committee with the following
and responsibilities:
terms of reference:
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:71)(cid:80)(cid:83)(cid:78)(cid:86)(cid:77)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:8)(cid:84)(cid:1)(cid:36)(cid:52)(cid:51)(cid:1)(cid:52)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:90)(cid:13)(cid:1)(cid:49)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:40)(cid:80)(cid:66)(cid:77)(cid:84)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:78)(cid:80)(cid:79)(cid:74)(cid:85)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:8)(cid:84)(cid:1)(cid:36)(cid:52)(cid:51)(cid:1)(cid:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:68)(cid:70)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:36)(cid:52)(cid:51)(cid:1)(cid:81)(cid:83)(cid:80)(cid:75)(cid:70)(cid:68)(cid:85)(cid:84)(cid:1)(cid:16)(cid:1)(cid:74)(cid:79)(cid:74)(cid:85)(cid:74)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:74)(cid:78)(cid:70)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:77)(cid:70)(cid:72)(cid:66)(cid:77)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:72)(cid:86)(cid:77)(cid:66)(cid:85)(cid:80)(cid:83)(cid:90)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:74)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:66)(cid:1)(cid:36)(cid:52)(cid:51)(cid:1)(cid:87)(cid:74)(cid:70)(cid:88)(cid:81)(cid:80)(cid:74)(cid:79)(cid:85)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:68)(cid:80)(cid:78)(cid:78)(cid:86)(cid:79)(cid:74)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:85)(cid:80)(cid:1)(cid:84)(cid:85)(cid:66)(cid:76)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:8)(cid:84)(cid:1)(cid:36)(cid:52)(cid:51)
Composition:
Mr. Umesh Chandra Sarangi (Chairman), Mr. Sanjiv Sachar, Mr. Malay Patel and Mr. Aditya Puri
(During the year, Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the Committee
pursuant to their cessation as Directors of the Bank and Mr. Paresh Sukthankar ceased to be a
member of the committee pursuant to his resignation as director of the Bank. Further, Mr. Sanjiv
Sachar and Mr. Malay Patel were appointed as members of the Committee.)
Meetings:
The Committee met 4 (four) times during the year on April 18, 2018; July 19, 2018; October 17, 2018
Review Committee for Wilful Defaulters’ Identification:
and January 17, 2019.
Brief Terms of Reference / Roles
The Board has constituted a Review Committee for Wilful Defaulters’ Identification to review the orders
and responsibilities:
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 (Chairperson), Mr. Aditya Puri, Mr. Sandeep Parekh, Mr. Umesh Chandra Sarangi
and Mr. Sanjiv Sachar.
(During the year Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the Committee pursuant
to their cessation as Directors of the Bank. Further, Mr. Sandeep Parekh, Mr. Umesh Chandra Sarangi and
Mr. Sanjiv Sachar were appointed as members of the Committee.)
Meetings:
No meetings of the Committee were held during the year.
Review Committee for Non-Cooperative Borrowers:
Brief Terms of Reference / Roles
The Board has constituted a Review Committee to review matters related to Non-Co-operative
and responsibilities:
Borrowers which are handled by the Internal Committee of Executives appointed for this purpose.
Composition:
Mrs. Shyamala Gopinath (Chairperson), Mr. Aditya Puri, Mr. Sandeep Parekh, Mr. Umesh Chandra
Sarangi and Mr. Sanjiv Sachar.
(During the year Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the Committee
pursuant to their cessation as Directors of the Bank. Further, Mr. Sandeep Parekh, Mr. Umesh
Chandra Sarangi and Mr. Sanjiv Sachar were appointed as members of the Committee.)
Meetings:
No meetings of the Committee were held during the year.
259259
CORPORATE GOVERNANCE
Digital Transaction Monitoring Committee:
Brief Terms of Reference / Roles
In order to promote digital transactions of the Bank and to provide directions in terms of strategy and
and responsibilities:
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 (Chairman), Mr. Malay Patel, Mr. Aditya Puri and Mr. M. D. Ranganath.
(During the year, Mr. Paresh Sukthankar ceased to be a member of the committee pursuant to his
resignation as Director of the Bank. Further, Mr. M. D. Ranganath was appointed as a member of the
Committee.)
Meetings:
The Committee met 4 (Four) times during the year on April 19, 2018; July 20, 2018; October 19, 2018 and
IT Strategy Committee:
January 18, 2019.
Brief Terms of Reference / Roles
The Bank has in place, an IT Strategy Committee to look into various technology related aspects.
and responsibilities:
Composition:
This Committee is not a Board Level Committee. However, Mr. M. D. Ranganath (Chairman) Mr. Srikanth
Nadhamuni, and Mrs. Shyamala Gopinath, are members of the Committee along with other executives of
the Bank and an external expert.
(During the year, Mr. Bobby Parikh ceased to be a member of the committee pursuant to his cessation as
Director of the Bank and Mr. Paresh Sukthankar ceased to be a member of the committee pursuant to
his resignation as director of the Bank. Further, Mr. M. D. Ranganath was appointed as a member of the
Committee.)
Meetings:
The Committee met 4 (four) times during the year on April 19, 2018; July 20, 2018; October 19, 2018 and
Meeting of the Independent Directors:
January 18, 2019
The Independent Directors of the Bank held a meeting on January 16, 2019 and March 07, 2019 without the presence of the non-independent
Directors and senior management team of the Bank. All the Independent Directors as on the date of the respective meeting had attended the
meetings. The Independent Directors discussed matters as required under the relevant provisions of the Companies Act, 2013 and the SEBI
Listing Regulations, 2015.
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CORPORATE GOVERNANCE
ATTENDANCE AT THE COMMITTEE MEETINGS HELD DURING FINANCIAL YEAR 2018-19
Audit Committee
Credit Approval Committee
[Total seven meetings held]
[Total thirteen meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mrs. Shyamala Gopinath
Mr. Bobby Parikh1
Mr. Sanjiv Sachar2
Mr. M. D. Ranganath3
Mr. Partho Datta1
Mr. Umesh Chandra Sarangi
7
6
3
-
2
7
Mr. Bobby Parikh1
Mr. Keki Mistry
Mr. Aditya Puri
Mr. Malay Patel4
Mr. Kaizad Bharucha
Mr. Srikanth Nadhamuni5
Stakeholders’ Relationship Committee
Customer Service Committee
[Total four meetings held]
[Total four meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mr. Umesh Chandra Sarangi
Mr. Malay Patel
Mr. Aditya Puri
Mr. Sandeep Parekh6
Mr. Paresh Sukthankar7
4
4
4
-
3
Mrs. Shyamala Gopinath
Mr. Aditya Puri
Mr. Sandeep Parekh6
Mr. Keki Mistry
Mr. Malay Patel
Mr. Srikanth Nadhamuni
Nomination and Remuneration Committee
Premises Committee
[Total eleven meetings held]
[Total five meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mr. Sanjiv Sachar2
Mr. Partho Datta1
Mrs. Shyamala Gopinath
Mr. Bobby Parikh1
Mr. Sandeep Parekh6
Mr. M. D. Ranganath3
5
6
Mr. Malay Patel
Mr. Aditya Puri
11
Mr. Keki Mistry
9
2
-
261261
2
13
12
11
13
1
4
4
-
3
4
3
5
5
5
CORPORATE GOVERNANCE
Fraud Monitoring Committee
Risk Policy & Monitoring Committee
[Total five meetings held]
[Total five meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mrs. Shyamala Gopinath
Mr. Aditya Puri
Mr. Partho Datta1
Mr. Sandeep Parekh6
Mr. Keki Mistry
Mr. Malay Patel
Mr. Umesh Chandra Sarangi
Mr. Srikanth Nadhamuni
Mrs. Shyamala Gopinath
Mr. Paresh Sukthankar7
Mr. Partho Datta1
Mr. Aditya Puri
Mr. M. D. Ranganath3
5
5
2
-
4
5
5
Corporate Social Responsibility Committee
Digital Transactions Monitoring Committee
[Total four meetings held]
[Total four meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mr. Umesh Chandra Sarangi
Mr. Partho Datta1
Mr. Bobby Parikh1
Mr. Aditya Puri
Mr. Paresh Sukthankar7
Mr. Sanjiv Sachar2
Mr. Malay Patel
Mr. Srikanth Nadhamuni
Mr. Malay Patel
Mr. Aditya Puri
Mr. Paresh Sukthankar7
Mr. M. D. Ranganath 3
-
4
1
4
4
3
-
4
4
5
4
2
5
-
3
4
4
4
1 Mr. Partho Datta and Mr. Bobby Parikh ceased to be directors of the Bank with effect from September 29, 2018 and January 26, 2019
respectively.
2 Mr. Sanjiv Sachar was appointed as a member of Nomination & Remuneration Committee with effect from September 18, 2018, member
of Audit Committee with effect from October 10, 2018 and member of Corporate Social Responsibility Committee with effect from March
7, 2019
3 Mr. M. D. Ranganath was appointed as a member of Audit Committee, Nomination & Remuneration Committee, Risk Policy & Monitoring
Committee and Digital Transactions Monitoring Committee with effect from March 07, 2019.
4 Mr. Malay Patel was appointed as a member of Credit Approval Committee with effect from May 22, 2018.
5 Mr. Srikanth Nadhamuni was appointed as a member of Credit Approval Committee with effect from March 07, 2019.
6 Mr. Sandeep Parekh was appointed as a member of Nomination & Remuneration Committee with effect from January 23, 2019 and
member of Stakeholders’ Relationship Committee, Customer Service Committee and Fraud Monitoring Committee with effect from March
07, 2019.
7 Mr. Paresh Sukthankar resigned as Deputy Managing Director of the Bank with effect from November 08, 2018.
HDFC Bank Limited Annual Report 2018 - 2019
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CORPORATE GOVERNANCE
OWNERSHIP RIGHTS
Certain rights that a shareholder in a company enjoys:
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:70)(cid:82)(cid:86)(cid:74)(cid:85)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:73)(cid:70)(cid:77)(cid:69)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:79)(cid:66)(cid:78)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:15)(cid:1)(cid:49)(cid:86)(cid:83)(cid:84)(cid:86)(cid:66)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:52)(cid:38)(cid:35)(cid:42)(cid:1)(cid:45)(cid:74)(cid:84)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:51)(cid:70)(cid:72)(cid:86)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:13)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:70)(cid:71)(cid:71)(cid:70)(cid:68)(cid:85)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)
April 1, 2019, except in case of transmission or transposition of securities, requests for effecting transfer of securities shall not be processed
unless the securities are held in dematerialized form with a depository.
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speak in person, at general meetings.
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and vote at the general meetings of the company on its behalf.
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by him / her.
(cid:116)(cid:1)
(cid:42)(cid:79)(cid:1)(cid:85)(cid:70)(cid:83)(cid:78)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:52)(cid:70)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:18)(cid:19)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:51)(cid:70)(cid:72)(cid:86)(cid:77)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:34)(cid:68)(cid:85)(cid:13)(cid:1)(cid:18)(cid:26)(cid:21)(cid:26)(cid:1)(cid:66)(cid:84)(cid:1)(cid:66)(cid:78)(cid:70)(cid:79)(cid:69)(cid:70)(cid:69)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:70)(cid:71)(cid:71)(cid:70)(cid:68)(cid:85)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:43)(cid:66)(cid:79)(cid:86)(cid:66)(cid:83)(cid:90)(cid:1)(cid:18)(cid:25)(cid:13)(cid:1)(cid:19)(cid:17)(cid:18)(cid:20)(cid:1)(cid:87)(cid:74)(cid:69)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:45)(cid:66)(cid:88)(cid:84)(cid:1)(cid:34)(cid:78)(cid:70)(cid:79)(cid:69)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)
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 notification dated July 21, 2016 issued by RBI and notified in the
Gazette of India dated September 17, 2016 states that the current level of ceiling on voting rights is at twenty six per cent.
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:84)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:70)(cid:89)(cid:85)(cid:83)(cid:66)(cid:80)(cid:83)(cid:69)(cid:74)(cid:79)(cid:66)(cid:83)(cid:90)(cid:1)(cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:67)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:88)(cid:73)(cid:80)(cid:1)(cid:68)(cid:80)(cid:77)(cid:77)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:77)(cid:90)(cid:1)(cid:73)(cid:80)(cid:77)(cid:69)(cid:1)(cid:79)(cid:80)(cid:85)(cid:1)(cid:77)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:79)(cid:1)(cid:18)(cid:16)(cid:18)(cid:17)(cid:85)(cid:73)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:85)(cid:80)(cid:85)(cid:66)(cid:77)(cid:1)(cid:81)(cid:66)(cid:74)(cid:69)(cid:14)(cid:86)(cid:81)(cid:1)
capital of the company.
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:78)(cid:80)(cid:87)(cid:70)(cid:1)(cid:66)(cid:78)(cid:70)(cid:79)(cid:69)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:83)(cid:70)(cid:84)(cid:80)(cid:77)(cid:86)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:81)(cid:83)(cid:80)(cid:81)(cid:80)(cid:84)(cid:70)(cid:69)(cid:1)(cid:66)(cid:85)(cid:1)(cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:84)(cid:15)(cid:1)
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(cid:116)(cid:1) (cid:53)(cid:80)(cid:1) (cid:74)(cid:79)(cid:84)(cid:81)(cid:70)(cid:68)(cid:85)(cid:1) (cid:87)(cid:66)(cid:83)(cid:74)(cid:80)(cid:86)(cid:84)(cid:1) (cid:83)(cid:70)(cid:72)(cid:74)(cid:84)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1) (cid:80)(cid:71)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:68)(cid:80)(cid:78)(cid:81)(cid:66)(cid:79)(cid:90)(cid:13)(cid:1) (cid:78)(cid:74)(cid:79)(cid:86)(cid:85)(cid:70)(cid:1) (cid:67)(cid:80)(cid:80)(cid:76)(cid:84)(cid:1) (cid:80)(cid:71)(cid:1) (cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1) (cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:84)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:85)(cid:80)(cid:1) (cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1) (cid:68)(cid:80)(cid:81)(cid:74)(cid:70)(cid:84)(cid:1) (cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:80)(cid:71)(cid:1) (cid:66)(cid:71)(cid:85)(cid:70)(cid:83)(cid:1) (cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:90)(cid:74)(cid:79)(cid:72)(cid:1) (cid:88)(cid:74)(cid:85)(cid:73)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
procedure prescribed in the Companies Act, 2013 as amended from time to time.
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:78)(cid:66)(cid:76)(cid:70)(cid:1)(cid:79)(cid:80)(cid:78)(cid:74)(cid:79)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:79)(cid:1)(cid:83)(cid:70)(cid:84)(cid:81)(cid:70)(cid:68)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:84)(cid:1)(cid:73)(cid:70)(cid:77)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:15)(cid:1)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:81)(cid:66)(cid:83)(cid:85)(cid:74)(cid:68)(cid:74)(cid:81)(cid:66)(cid:85)(cid:70)(cid:1)(cid:74)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:67)(cid:70)(cid:1)(cid:84)(cid:86)(cid:71)(cid:71)(cid:74)(cid:68)(cid:74)(cid:70)(cid:79)(cid:85)(cid:77)(cid:90)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:69)(cid:70)(cid:68)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:71)(cid:86)(cid:79)(cid:69)(cid:66)(cid:78)(cid:70)(cid:79)(cid:85)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:84)(cid:15)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:67)(cid:70)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:70)(cid:69)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:83)(cid:86)(cid:77)(cid:70)(cid:84)(cid:13)(cid:1)(cid:74)(cid:79)(cid:68)(cid:77)(cid:86)(cid:69)(cid:74)(cid:79)(cid:72)(cid:1)(cid:87)(cid:80)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:69)(cid:86)(cid:83)(cid:70)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:72)(cid:80)(cid:87)(cid:70)(cid:83)(cid:79)(cid:1)(cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:84)(cid:15)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:66)(cid:69)(cid:70)(cid:82)(cid:86)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:70)(cid:68)(cid:73)(cid:66)(cid:79)(cid:74)(cid:84)(cid:78)(cid:1)(cid:85)(cid:80)(cid:1)(cid:66)(cid:69)(cid:69)(cid:83)(cid:70)(cid:84)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:72)(cid:83)(cid:74)(cid:70)(cid:87)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:15)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:81)(cid:83)(cid:80)(cid:85)(cid:70)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:78)(cid:74)(cid:79)(cid:80)(cid:83)(cid:74)(cid:85)(cid:90)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:66)(cid:67)(cid:86)(cid:84)(cid:74)(cid:87)(cid:70)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:67)(cid:90)(cid:13)(cid:1)(cid:80)(cid:83)(cid:1)(cid:74)(cid:79)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:80)(cid:71)(cid:13)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:77)(cid:74)(cid:79)(cid:72)(cid:1)(cid:84)(cid:73)(cid:66)(cid:83)(cid:70)(cid:73)(cid:80)(cid:77)(cid:69)(cid:70)(cid:83)(cid:84)(cid:1)(cid:66)(cid:68)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:70)(cid:74)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:77)(cid:90)(cid:1)
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.
263263
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.
Particulars of
Day & Date
Number of Special
Nature of Special Resolutions
No.
meeting
Resolutions passed,
1
22nd Annual
General Meeting
Thursday,
July 21, 2016
if any
3 (Three)
1. Alteration of Memorandum of Association on account of
increase in authorized share capital
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
2
3
4
23rd Annual General
Meeting
Monday,
July 24, 2017
Extra-Ordinary
General Meeting
Friday,
January 19, 2018
2 (Two)
1. Re-appointment of Mrs. Shyamala Gopinath as Part-Time
Non-Executive Chairperson of the Bank
2. Issue of perpetual debt instruments, Tier II capital bonds and
senior long-term infrastructure bonds on private placement
basis
Total 3 (Three) special
businesses transacted,
out of which 2
(Two) were special
resolutions
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
24th Annual General
Meeting
Friday,
June 29, 2018
1 (One)
1. Issue of Perpetual Debt Instruments (part of Additional
Tier I capital), Tier II Capital Bonds and Long Term Bonds
(financing of infrastructure and affordable housing) on a
private placement basis
POSTAL BALLOT
During the financial year 2018-19, 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 https://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, 2019 are given in, Note No. 27 in Schedule 18, forming part of ‘Notes to Accounts’.
HDFC Bank Limited Annual Report 2018 - 2019
nnual Report 2018
k Limi
264264
CORPORATE GOVERNANCE
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 https://
www.hdfcbank.com/htdocs/common/pdf/Policy_on_Related_Party_Transactions.pdf
Commodity Price Risks and Foreign Exchange Risks and hedging activities
Being in the business of Banking, as per the extant regulations, the Bank does not deal in any commodity, though, can be exposed to the
commodity price risks of its customers in its capacity as lender / banker.
Currently, the Bank has open exposure in Gold and such open exposures in Gold are primarily on account of positions created from short
term deposits under the Gold Monetisation Scheme (GMS) raised from Customers and trading positions in Gold. These positions are managed
similar to other foreign exchange exposures using spot, outright forwards and swap transactions in Gold and monitored as part of the trading
portfolio within the stipulated trading risk limits viz. Net overnight open position limit, Intraday open position limit, Gap limits, Value-at-Risk limit,
Stop Loss Trigger Level, etc. that are defined in the Treasury Limits Package. In-addition, Bank is authorized by Reserve Bank of India to import
Gold and Silver and the exposure arising out of import of gold and silver on consignment basis is covered on back to back basis.
The spot, forward and swap contracts, outstanding as on the Balance Sheet date and 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 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 foreign exchange 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.
Given below are the exposure details of the Bank under the Gold Monetisation Scheme deposits as of March-2019 quarter-end:
Total exposure of the Bank to commodities i.e. Gold (in INR) as on March-end 2019: 60,94,36,235.10
Commodity
Exposure in
Name
INR towards
Exposure
in Quantity
the particular
terms towards
commodity
the particular
commodity
% of such exposure hedged through commodity derivatives
Domestic market
International market
Total
OTC
Exchange
OTC
Exchange
GMS (XAU)
609,436,235.10
1,93,000 Grams
100
0
0
0
100
Note: The underlying exposure to Gold under GMS is covered using over-the-counter XAU/USD and USD/INR forward transactions.
Fees paid to Statutory Auditors
The total fees for all services paid by the Bank and its subsidiaries, on a consolidated basis, to the Statutory Auditor and all entities in the
network firm / network entity are mentioned in Directors’ Report.
Accounting Treatment
The financial statements have been prepared and presented under the historical cost convention and accrual basis of accounting, unless
otherwise stated and are in accordance with Generally Accepted Accounting Principles in India (‘GAAP’), statutory requirements prescribed
under the Banking Regulation Act, 1949, circulars and guidelines issued by the Reserve Bank of India (‘RBI’) from time to time and Accounting
Standards (‘AS’) specified under Section 133 of the Companies Act, 2013, in so far as they apply to banks.
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.
265265
CORPORATE GOVERNANCE
Remuneration and Selection criteria for Directors
Kindly refer to the relevant details as furnished in the Directors’ Report.
Appointment / Resignation of Director
During the year, Mr. Paresh Sukthankar resigned as Deputy Managing Director of the Bank with effect from November 08, 2018, due to
personal considerations. The Board places on record its sincere appreciation of the contribution made by Mr. Paresh Sukthankar during his
tenure with the Bank and wishes him well in his future endeavors.
During the year, Mr. Partho Datta and Mr. Bobby Parikh ceased to be Directors of the Bank with effect from September 29, 2018 and
January 26, 2019 respectively on completion of eight continuous years as Directors, the maximum term permitted under Banking Regulation
Act, 1949.
Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M.D Ranganath were appointed as Directors of the Bank with effect from July 21, 2018,
January 19, 2019 and January 31, 2019 respectively.
Familiarization of Independent Directors
The details of familiarization programmes imparted to Independent Directors are available on the website of the Bank at http://www.hdfcbank.
com/aboutus/cg/Familiarization.htm
Strictures and Penalties for last three financial years:
During the financial year 2018-19, Reserve Bank of India (RBI) has, vide its order dated February 4, 2019, imposed a monetary penalty of
` 2 million on the Bank for non-compliance with various directions issued by RBI on Know Your Customer (KYC) / Anti-Money Laundering (AML)
standards, more specifically those contained in their circulars dated November 29, 2004 and May 22, 2008. The Bank has since implemented
corrective action to strengthen its internal control mechanisms so as to ensure that such incidents do not recur.
During the 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 had 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 had 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. The Bank has submitted the requisite information and reports to SEBI in compliance with the
SEBI Directions and within the timelines prescribed therein.
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CORPORATE GOVERNANCE
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 it's detailed response. After considering
the Bank’s submission, the RBI imposed a penalty of ` 2.00 crores 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.
A chart or a matrix setting out the skills / expertise / competencies of the Board of Directors
The Board of Directors have identified the following core skills / expertise / competencies / special knowledge or practical experience, as
required in the context of the Bank’s business and sector(s) for it to function effectively. The same are in line with the relevant provisions of the
Banking Regulation Act, 1949 and relevant circulars issued by the Reserve Bank of India from time to time:
(i)
Accountancy,
(ii) Agriculture and Rural Economy,
(iii) Banking,
(iv) Co-operation,
(v) Economics,
(vi) Finance,
(vii) Law,
(viii) Small-Scale Industry,
(ix)
Information Technology,
(x) Payment & Settlement Systems,
(xi) Human Resources,
(xii) Risk Management,
(xiii) Business Management,
(xiv) Any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the
Bank’s business / sectors.
Sr. No. Name
Designation
Core skills / expertise / competencies available with
the Board
1
2
3
4
5
6
7
8
9
Mrs. Shyamala Gopinath
Part time Non-executive Chairperson Banking, Payment & Settlement Systems, Risk Management
Mr. Aditya Puri
Managing Director
Banking, Finance & Risk Management
Mr. Kaizad Bharucha
Executive Director
Banking, Credit & Risk Management
Mr. Keki Mistry
Non-executive Director
Accountancy & Finance
Mr. Srikanth Nadhamuni
Non-executive Director
Information Technology
Mr. Malay Patel
Independent Director
Small-scale industries
Mr. Umesh Chandra Sarangi
Independent Director
Agriculture & rural economy
Mr. Sanjiv Sachar
Additional Independent Director
Human resources & Finance
Mr. Sandeep Parekh
Additional Independent Director
Law (with focus on securities market and financial regulations)
10
Mr. M. D. Ranganath
Additional Independent Director
Finance, Information Technology & Risk Management
267267
CORPORATE GOVERNANCE
Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation
32 (7A)
The Bank has utilized the funds raised through preferential allotment and qualified institutions placement made by the Bank during FY 2018-19
for the purposes as mentioned in the notice of the Extraordinary General meeting held on January 19, 2018, wherein the shareholders had
approved the raising of funds.
Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Details of the number of complaints received, disposed, and pending during the year 2018-19 pertaining to the Sexual Harassment of Women
at Workplace are as under:
Number of complaints received
Number of complaints disposed
Number of cases pending for more than 90 days
COMPLIANCE WITH MANDATORY REQUIREMENTS
25
21
04
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.
b) Shareholder’s Rights
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.
A half-yearly declaration of financial performance including summary of the significant events is presently not being sent separately to
each shareholder. The Bank’s results for each quarter are published in an English newspaper having a wide circulation and in a Marathi
newspaper having a wide circulation in Maharashtra. Hence, half-yearly results are not sent to the shareholders individually.
c) Audit Qualifications
During the period under review, 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.
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.
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CORPORATE GOVERNANCE
GENERAL SHAREHOLDER INFORMATION:
SHAREHOLDERS HOLDING MORE THAN 1% OF THE SHARE CAPITAL OF THE BANK AS AT MARCH 31, 2019
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
52,54,88,147*
43,23,07,917
15,00,00,000
11,21,73,464
5,58,16,664
6,03,79,544
2,97,83,566
3,05,01,652
2,75,38,825
19.30
15.87
5.51
4.12
2.05
2.22
1.09
1.12
1.01
* 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.
Share Range From
Share Range To
No. of Shares
% To Capital
No. of Holders
% To No. Of Holders
DISTRIBUTION OF SHAREHOLDING AS AT MARCH 31, 2019
1
2501
5001
10001
15001
20001
25001
50001
2500
5000
10000
15000
20000
25000
50000
10,31,06,710
2,01,20,502
1,87,23,760
1,13,25,628
86,83,295
91,39,841
3,01,95,957
100000
4,09,04,147
100001
and above
2,48,11,06,770
TOTAL :-
2,72,33,06,610
3.79
0.74
0.69
0.42
0.32
0.34
1.11
1.50
91.11
100
605,848
5,629
2,635
915
496
404
862
578
1228
6,18,595
97.94
0.91
0.43
0.15
0.08
0.07
0.14
0.09
0.20
100
579,483 Folios comprising of 2,71,33,20,837 equity shares forming 99.63 % of the share capital are in demat form.
39,112 Folios comprising of 99,85,773 equity shares forming 0.37 % 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 and 17,13,52,588 outstanding ADRs (representing 51,40,57,764
underlying equity shares of the Bank) and 2,28,60,766 outstanding GDRs (representing 1,14,30,383 underlying equity shares of the Bank) as
on 31.03.2019, the Bank has no outstanding warrants or other convertible instruments as on March 31, 2019 which could have an impact on
the equity capital of the Bank.
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CORPORATE GOVERNANCE
SHARE PRICE / CHART
The monthly high and low quotation of Bank’s equity shares traded on BSE Ltd (BSE) and The
The monthly high and low quotation and the
National Stock Exchange of India Ltd (NSE) during FY 2018-19 and its performance vis-à-vis BSE
volume of Bank’s American Depository Shares
:SENSEX and S&P CNX NIFTY respectively is as under
(ADS) traded on New York Stock Exchange
BSE Ltd
MONTH
HIGH
LOW
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
1984.00
2150.00
2170.05
2219.05
2179.00
2080.00
2052.00
2137.50
2158.15
2173.00
2154.35
2327.00
1880.25
1947.30
2009.75
2065.00
2055.00
1913.80
1884.40
1896.80
2032.15
2023.00
2076.05
2070.25
SENSEX
Closing
35213.30
35993.53
35877.41
37644.59
38989.65
38934.35
36616.64
36389.22
36554.99
36701.03
37172.18
38748.54
LOW
HIGH
MONTH
The National Stock Exchange of India Ltd
NIFTY
closing
10739.35
10736.15
10714.30
11356.50
11680.50
10930.45
10386.60
10876.75
10862.55
10830.95
10792.50
11623.90
1979.00
2160.00
2157.00
2220.00
2175.00
2078.95
2052.20
2137.55
2159.40
2166.50
2155.00
2328.05
1860.30
1946.00
2009.10
2063.25
2058.25
1910.20
1885.00
1896.00
2032.00
2022.00
2073.20
2070.00
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
(NYSE) during FY 2018-19
New York Stock Exchange
MONTH
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
HIGHEST
(US$)
101.13
105.44
107.09
112.10
104.81
99.87
95.32
102.50
104.57
104.10
102.42
115.91
MONTHLY
LOWEST
VOLUME
(US$)
1,73,49,100
93.47
1,98,44,500
94.11
101.00 1,18,71,200
103.31 1,03,98,100
1,51,05,000
98.68
1,55,18,300
90.63
1,95,58,500
85.43
1,58,43,600
88.67
1,74,58,100
94.06
1,53,71,700
94.50
1,19,97,000
97.94
1,48,50,000
99.55
Share Price (`)
HDFC Bank’s share price on BSE
2400
2300
2200
2100
2000
1900
1800
1700
Apr ’18 May ’18 Jun ’18
Jul ’18 Aug ’18 Sep ’18 Oct ’18 Nov ’18 Dec ’18 Jan ’19
Feb’19 Mar ’19
High
Low
Sensex
Sensex
40000
39000
38000
37000
36000
35000
34000
0
Share Price (`)
HDFC Bank’s share price on NSE
S&P CNX Nifty
2400
2300
2200
2100
2000
1900
1800
1700
Apr ’18 May ’18 Jun ’18
Jul ’18 Aug ’18 Sep ’18 Oct ’18 Nov ’18 Dec ’18 Jan ’19
Feb’19 Mar ’19
High
Low
S&P CNX Nifty
12000
11500
11000
10500
10000
0
ADS Price (US$)
HDFC Bank’s ADS price on NYSE
Volume (No. of ADS)
120
100
80
60
40
20
Apr ’18 May ’18 Jun ’18
Jul ’18 Aug ’18 Sep ’18 Oct ’18 Nov ’18 Dec ’18 Jan ’19
Feb’19 Mar ’19
20000000
15000000
10000000
5000000
0
HDFC Bank Limited Annual Report 2018 - 2019
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High
Low
Volume
270270
CORPORATE GOVERNANCE
CATEGORIES OF SHAREHOLDERS AS AT MARCH 31, 2019
No of shares
% to Capital
Promoters (*)
ADS and GDRs (#)
Foreign Institutional Investors
58,23,12,917
52,54,88,147
85,07,71,414
Overseas Corporate Bodies, Foreign Bodies, Foreign National and Non Resident Indians
19,82,328
Financial Institutions, Banks, Mutual Funds and Central Government
Life Insurance Corporation and its subsidiaries
Other Insurance Corporations
Indian Companies
Others
TOTAL
21.38
19.30
31.24
0.07
11.01
2.05
0.19
5.47
9.29
29,99,42,816
5,58,16,664
50,70,134
14,88,94,568
25,30,27,622
2,72,33,06,610
100.00
Categories of shareholders as on March 31, 2019
9.29%
Details of Shareholding
0.19%
5.47%
21.38%
Promoters*
ADS & GDRs#
11.01%
2.05%
0.07%
Foreign Institutional Investors
Overseas Corporate Bodies, NRIs, Foreign Bodies
LIC of India and its Subsiidaries
Banks, Mutual Funds, Financial Institutions and Central
Government
19.30%
Indian Companies
Other Insurance Corporations
Others
31.24%
(*) None of the equity shares held by the Promoter Group are under pledge.
(#) JP Morgan Chase Bank is the Depository for both the ADS (51,40,57,764 underlying equity shares) & GDRs (1,14,30,383 underlying equity shares).
271271
CORPORATE GOVERNANCE
GLOBAL DEPOSITORY RECEIPTS (“GDRs”)*
The monthly high and low quotation of the Bank’s GDRs traded on Luxembourg Stock Exchange are as under:
(in US$)
Month
Apr-18 May-18 Jun-18
Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19
High
14.90
15.80
15.70
16.00
15.80
14.60
14.00
15.20
15.30
15.20
15.10
16.70
Low
14.30
14.40
14.80
15.10
14.50
13.20
12.90
13.00
14.20
14.30
14.60
14.70
* 2 GDRs represent one underlying equity share of the Bank
MONTHLY VOLUMES OF THE BANK’S SHARES TRADED ON NSE AND BSE
Month
Apr-18 May-18 Jun-18
Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19
NSE
BSE
2,63,18,977 3,95,18,909 8,56,91,101 5,10,00,163 5,14,16,350 5,54,30,133 8,27,31,593 6,87,77,510 47,497,880 5,50,45,470 4,31,48,609 7,28,35,637
14,55,912
23,72,911
24,92,621
15,14,165
17,51,687
21,47,912
62,15,324
49,69,802
21,26,648
55,83,172
18,72,998
31,37,964
FINANCIAL CALENDAR
[April 1, 2019 to March 31, 2020]
Board Meeting for consideration of accounts
April 20, 2019
Dispatch of Annual Reports
June 10, 2019 to June 15, 2019
Record date for purpose of determining eligibility of dividend
Electronic and Physical: June 21, 2019
Last date for receipt of proxy forms
July 10, 2019 (up to 2.30 p.m.)
Date, Time and Venue of the 25th AGM
July 12, 2019 at 2.30 p.m.
Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400020
Dividend declaration date
July 12, 2019
Probable date of payment of dividend
Electronic: July 15, 2019 onwards
Physical: July 16, 2019 onwards
Board Meeting for considering unaudited results for first three
Within 25 days from the end of each quarter
quarters of FY 2019-20
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.
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CORPORATE GOVERNANCE
LISTING
Listing on Indian Stock Exchanges:
The equity shares of the Bank are listed at the following Stock Exchanges and the annual fees for 2019-20 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.
STOCK CODE
500180
HDFCBANK
Names of Depositories in India for dematerialization of equity shares (ISIN No. INE040A01026)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:47)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:52)(cid:70)(cid:68)(cid:86)(cid:83)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:37)(cid:70)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:80)(cid:83)(cid:90)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:9)(cid:47)(cid:52)(cid:37)(cid:45)(cid:10)
(cid:36)(cid:70)(cid:79)(cid:85)(cid:83)(cid:66)(cid:77)(cid:1)(cid:37)(cid:70)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:80)(cid:83)(cid:90)(cid:1)(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:1)(cid:9)(cid:42)(cid:79)(cid:69)(cid:74)(cid:66)(cid:10)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:9)(cid:36)(cid:37)(cid:52)(cid:45)(cid:10)
International Listing :
Sr. No. Security description
Name & Address of the International Stock Exchange
Name & Address of Depository
1
The American Depository
The New York Stock Exchange (Ticker - HDB)
J.P. Morgan Chase Bank, N.A.
Shares (ADS)
11, Wall Street,
(CUSIP No. 40415F101)
New York, NY 10005
2
Global Depository Receipts
Luxembourg Stock Exchange
(GDRs)
Postal Address :
J.P. Morgan Depositary Receipts,
383 Madison Ave, Floor 11,
New York, NY, 10179
J.P. Morgan Chase Bank, N.A.
J.P. Morgan Depositary Receipts,
(ISIN / Trading Code :
Societe De La Bourse De Luxembourg
383 Madison Ave, Floor 11,
US40415F2002)
Societe Anonyme, 35A Boulevard Joseph II
New York, NY, 10179
L-1840 Luxembourg.
Mailing Address :
B.P. 165, L - 2011, Luxembourg
The Depository for ADS and GDRs is represented in India by: J.P Morgan Chase Bank N.A., India Sub Custody, J P Morgan Chase Bank NA,
6th Floor, Paradigm “B” Wing, Behind Toyota Showroom, Mindspace, Malad (West), Mumbai - 400 064.
SHARE TRANSFER PROCESS AND SYSTEM
Datamatics Business Solutions Limited (formerly known as Datamatics Financial Services Limited) acts as the Registrar and Share Transfer
Agent (RTA) for the Bank’s equity and debt issues. The Bank’s equity shares which are in compulsory dematerialized (demat) list are transferable
through the depository system. Shares in physical form are processed by the RTA 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 15 (fifteen) days from the date
of receipt of the transfer documents by the RTA. Pursuant to the SEBI Listing Regulations, with effect from April 1, 2019, except in case of
transmission or transposition of securities, requests for effecting transfer of securities shall not be processed unless the securities are held in
dematerialized form with a depository.
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.
273273
CORPORATE GOVERNANCE
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 securities of the Bank as well as in other listed or
proposed to be listed companies. The share dealing code, inter-alia, prohibits purchase / sale of securities of the Bank or of other listed or
proposed to be listed companies by insiders while in possession of unpublished price sensitive information in relation to the Bank or such listed
or proposed to be listed companies.
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, The Ruby, 2nd Floor, SW, 29, Senapati Bapat Marg, Dadar West, Mumbai 400028.
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)
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.
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CORPORATE GOVERNANCE
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, 0003 & 0016
Email : shareholder.grievances@hdfcbank.com
For IEPF Related matters - Mr. Dhanjit Thaivalappil (Nodal Officer):
Tel: +91-022-3976 0012 / 0003 / 0016
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. Santosh Haldankar, Vice President-Legal & Company Secretary
Telephone: +91-022-6652 1000
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 5,103 banking outlets in 2,748 cities / towns as on
March 31, 2019. The locations of the branches are also displayed on the Bank’s website.
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CORPORATE GOVERNANCE
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, 2019
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, 2019
Aditya Puri
Managing Director
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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 21, 2019, their correct core banking account 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 core banking account, Viz. 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 21, 2019 by quoting the reference folio number and attaching a photocopy of the Cheque leaf of their
active core banking account and also a self-attested copy of their PAN card and a utility payment (not more then 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 21, 2019, 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. National Automated Clearing House (NACH)
2. National Electronic Fund Transfer (NEFT)
3. Direct credit in case the bank account is with HDFC Bank Limited.
In case dividend 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. The dividend warrant will be dispatch by the Registrars at the registered address of the shareholder.
Transfer of Shares to Investors Education and Protection Fund (IEPF) Authority
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 been transferred in the name of
IEPF Authority 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 Authority 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.
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SHAREHOLDER INFORMATION
In compliance with the aforesaid provision your Bank has transferred 414423 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 Authority. During the year ended March 31, 2019 the IEPF Authority transferred 4685 shares against the claim received by them
from the shareholders.
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 Authority 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.
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 will have to be submitted 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 (West), 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, 2011 have already been transferred to the IEPF and the dividend for the
financial year ended March 31, 2012 will be transferred to IEPF after July 12, 2019. The details of unclaimed dividends for the financial
year 2011-2012 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, 2012
March 31, 2013
March 31, 2014
March 31, 2015
March 31, 2016
March 31, 2017
March 31, 2018
HDFC Bank Limited Annual Report 2018 - 2019
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July 13, 2012
June 27, 2013
June 25, 2014
July 21, 2015
July 21, 2016
July 24, 2017
June 29, 2018
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July 12, 2019
June 26, 2020
June 24, 2021
July 20, 2022
July 20, 2023
July 23, 2024
June 28, 2025
SHAREHOLDER INFORMATION
B) SHARES LYING IN UNCLAIMED SUSPENSE ACCOUNT
Particulars
Opening Balance as on April 1, 2018
Add: Transfer during the year 2018-19
Less: Claims received and shares transferred *
Less: Shares transferred to IEPF account
Closing Balance as on March 31, 2019 **
Records /
Shares
No of shareholders
1,923
4,01,780
0
144
0
0
49,470
0
1,779
3,52,310
* Number of shareholders who approached the Bank for the transfer of shares from the suspense account.
** Voting rights on these shares shall remain frozen till the rightful owners of such shares claim these shares.
Date
Time
Place
25th ANNUAL GENERAL MEETING
Friday, July 12, 2019
2.30 p.m.
Birla Matushri Sabhagar,
19, New Marine Lines,
Mumbai 400 020
Record date for determining eligibility of Dividend
June 21, 2019
Cut-off date for determining eligibility for e-voting
July 5, 2019
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AWARDS & ACCOLADES
Euromoney Trade Finance Survey 2019
Best Service (Asian Banks only) - India
Market Leader (Asian Banks only) - India
The Financial Express India's Best Banks
Awards 2017-18
Best Bank - New Private Sector Category
Business Today - KPMG India's Best Bank
Awards 2019
Bank of the Year - HDFC Bank and SBI
Best Large Bank - HDFC Bank
The Economic Times Corporate Excellence
Awards 2018
Company of the Year
Mint - EY Emerging Technology Award 2019
Winner - Robotic Process
Automation (software) Category
NASSCOM AI Game Changer Awards 2018
Innovative Application in AI - Virtual Agent Engine
Asiamoney Best Bank Awards 2019
Best Digital Bank (India)
Institutional Investor 2018 All-Asia Executive
Team - Survey
Finance Asia poll on Asia's Best Companies
Best Managed Company - Rank #1
Best Growth Strategy - Rank #1
Best ECG - Rank #2
Best CEO - Rank #1 Aditya Puri
AIMA-JRD Tata Corporate Leadership
Award 2018
Aditya Puri
Outlook Money Awards 2019
Best Private Sector Bank Award - Gold
Euromoney Private Banking and Wealth
Management Survey 2019
No. 1 in Asset Management category
BrandZ India's Most Valuable Brands 2018
HDFC Bank ranked No. 1 - for the 5th consecutive year
BrandZ's Top 100 Global Brands List
HDFC Bank featured in the coveted list for 4th
consecutive year
National Payments Excellence Awards 2018
HDFC Bank wins NPCI National Payments
Excellence Awards
Barron's World's Top 30 CEOs
Aditya Puri in prestigiouss Barron's list for 4th year
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8
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STATUTORY AUDITORS
S.R. Batliboi & Co. LLP
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 NUMBER
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