Leading
responsibly
Integrated Annual Report
2019-20
About this Report
This Annual Report (Integrated) for 2019-20 endeavours to
provide a holistic assessment of the Bank’s financial and
non-financial performance. It also outlines relevant information
on the Bank’s strategy, governance, risks and prospects to
offer better insights into its activities and progress.
Reporting principles and framework
The financial information presented in this report is in line with
the requirements of
•
•
•
•
The Companies Act, 2013 (including the rules
made thereunder)
The Indian Accounting Standards
The Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements)
Regulations, 2015
Banking Regulation Act, 1949 and other relevant
RBI regulations
The report has been prepared in accordance with the
framework prescribed by the International Integrated Reporting
Council (IIRC) and also contains disclosures as per the Global
Reporting Initiative (GRI) and United Nations Sustainable
Development Goals (UN SDGs). Further, the report presents
Environmental, Social and Governance (ESG) information in
accordance with the ESG framework developed by the Bank’s
CSR Committee and ESG Committee.
Materiality and scope
This report includes information which is material to all
stakeholders of the Bank and provides an overview of its
business and related activities. The report discloses matters
that substantially impact or affect the Bank’s ability to create
value and could influence decisions of providers of financial
capital. Materiality assessment was done by the Bank in
2018-19 through a stakeholder engagement exercise.
Forward looking statements
This report contains statements that relate to future operations
and performance of the Bank. Actual results may differ
materially from those suggested by such statements due to
certain risks associated with our expectations with respect to,
but not limited to, future circumstances such as technological
changes, the impact of changes in banking regulations and
other regulatory changes in India and other jurisdictions, natural
calamities, inflation, deflation, unanticipated turbulence in
interest rates, foreign exchange rates, equity prices or other
rates or prices, the performance of the financial markets in
India and globally, among others.
Responsibility statement
The content of this report has been reviewed by the senior
management of the Bank, and reviewed and approved by
the Board of Directors to ensure accuracy, completeness and
relevance of the information presented.
Reporting boundary
The non-financial information in this report covers the activities
and progress of HDFC Bank Limited on a standalone basis.
Report navigation
We have used the icons below to aid navigation and cross-referencing
through the report.
Financial capital
Intellectual capital
Manufactured capital
To read more about a particular topic
across the report,
please look for this icon:
Human capital
Social and
Relationship capital
Natural capital
Get direct access to a
wide range of company
information on:
www.hdfcbank.com
What’s inside
Integrated Report
2
4
6
Theme introduction
Introducing our capitals
Message from the
Managing Director
Introduction to HDFC Bank
12 HDFC Bank at a glance
14 Our business segments
16 Our presence
Our performance
20 Operational highlights
22 Performance highlights
26 Digitisation
32 Customer-centricity
34 Nation building
36 Awards and recognition
How we create value
40 Our value creation model
42 Our external environment
46 Stakeholder engagement
48 Materiality
Our strategy
52 Strategic priorities
58 Risk management
62
Business Continuity Plan
(BCP) at HDFC Bank
Responsible business
66 Environment
70 Social
78 Governance
80 Board of Directors
82 Senior management team
84 Financial highlights
Robust and resilient
2019-20 was another year of
consistent all-round performance,
which is an outcome of our
disciplined approach towards
managing capital.
Page 22
Prudent utilisation
of resources
In order to minimise our carbon
footprint, we have adopted a
goal-based approach to climate
change related issues.
Page 66
Independent auditor’s report
Financial Statements and
Statutory Reports
86 Directors’ report
145
154 Balance sheet
155 Profit and loss account
156 Cash flow statement
158 Schedules to the financial statements
226 Basel III - pillar 3 disclosures
227 Independent auditor’s report for consolidated financials
236 Consolidated balance sheet
237 Consolidated profit and loss account
238 Consolidated cash flow statement
240 Schedules to the consolidated financial statements
283 Certificate on Corporate Governance
285 Corporate Governance
309 Shareholder information
Connecting closely with
people and communities
Parivartan - our social initiatives brand
has reached nearly 8 Crore people.
Our employees have nominated us as
one of the best places to work owing to
our best-in-class people practices.
Page 70
Sound governance
Our ethical and transparent manner
of conducting business is an important
enabler of our success and has
made us one of the most trusted
banks in India.
Page 78
Theme introduction
Leading
responsibly
Key highlights
Theme introduction
Leadership is as much about responsibility as it is about scale and size. Over the
past two-and-a-half decades, we have built a formidable banking franchise by
identifying trends early, making the requisite investments, weaving in the learnings
and then scaling up. We have built this on the strong foundation of our robust
corporate governance practices and anchored by our core values.
E1,530,511 Cr
23.0%#
Balance sheet size**
1.26%
v/s 1.36%
in 2018-19
Gross Non-Performing
Assets (NPAs)**
Largest private
sector lender by
assets**
Environmental performance
Social performance
Responsible governance
page 66
page 70
page 78
Our approach of identifying promising business
opportunities early, such as payments, and then
growing them in relevant markets and channels has
enabled us to deepen our customer engagement
(know more about our complete and convenient
payment solutions on page 50).
We have continued to expand our business by
seizing opportunities in semi-urban and rural market
and by embracing digital. (read more on how we
are reshaping digital banking on page 26). We have
consistently balanced growth and profitability by
creating a robust balance sheet and maintaining
the best-in-class asset quality. Our pan-India reach
enables us (take a glance at our nationwide network
on page 16) to deliver essential banking services to
the remotest corners of the country.
We leverage the same network to drive social
transformation and bring positive changes to the
lives of millions of people, especially in rural India.
On one hand, we are focused on lending to
businesses that lay emphasis on environmental,
social and governance performance (know
more about our responsible lending practices
on page 69). On the other, we are reducing our
environmental footprint by promoting digital banking
platforms and optimising our energy consumption.
As we embark on the next leg of our growth journey,
leveraging digitisation and renewing our push into
semi-urban and rural markets, we commit ourselves
to the same stringent standards of corporate
governance that we have adhered to and the core
values that we have lived by.
E1,147,502 Cr
24.3%#
Total deposits**
Leading
player in cards
and payments
business**
5,416
E26,257.3 Cr
24.6%#
Banking outlets^
(including four overseas)**
Net profit*
Second top constituent
of the NIFTY
enhanced ESG Index**
*During 2019-20
**As on March 31, 2020
#Y-O-Y
^In addition, we have 5,379 BCs managed by CSCs
E535 Cr
CSR spends*
20.5%#
12%
Reduction in power
consumption
through Energy
Management
System (ENMS)
adopted at
600 branches
2
2
3
3
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Introducing our capitals
The capitals that
power our business
Introducing our capitals
Financial capital
Intellectual capital
Manufactured capital
Human capital
Our strong financial position, sustained
growth and consistent shareholder
returns are a result of our disciplined
approach towards raising, lending and
managing our financial capital. It includes
customer deposits, shareholder
equity, retained earnings and external
borrowings among others.
The adoption of data analytics and
emergent technologies such as Artificial
Intelligence and Machine Learning
enables us to increase operational
efficiencies. The knowledge and
expertise incorporated within our
systems, processes and procedures and
the equity built in the HDFC Bank brand
constitute our intellectual capital.
Manufactured capital facilitates our
engagement with customers, people,
the society and other stakeholders.
Our pan-India distribution network
comprising banking outlets, corporate
offices, ATMs and other customer touch
points constitute this capital. It also
covers our IT infrastructure and security
as well as infrastructure development
through CSR projects.
Our people are at the heart of our
success. Their diverse skill sets, expertise
and industry knowledge constitute our
human capital. We further enhance
our human capital through continuous
training and development programmes.
Our focus on developing a skilled and
motivated workforce enables us to
acquire, serve and retain our customers.
E79,447 Crore
Net revenues*
20.6% Y-O-Y
95.1%
Digital Transactions*^
1.26%
Gross NPAs**
v/s 1.36%
in 2018-19
2.01%
v/s 1.90%
in 2018-19
Return on assets*
$22.7 Billion#
Brand value
178
APIs on Partner/Public
API Gateway**
5,416
Banking outlets##
(including four overseas)**
14,901
ATMs + Cash Deposit &
Withdrawal Machines**
2,803
Locations**
1,16,971
Employees**
18.3%
Women employees**
Social and
Relationship capital
The way we manage our stakeholder
expectations constitutes our social
and relationship capital. Be it with
our customers, trade partners and
merchants or communities, we take
a holistic approach to sustainable
value creation by nurturing our
long-standing relationships and
building new ones. Further, through
Parivartan, we work closely with various
communities to improve their lives and
livelihood opportunities.
Natural capital
The natural resources we consume to
conduct our business and seamlessly
deliver our products and services
constitute our natural capital. Our energy
consumption, CO2 emissions, paper
consumption and waste management
impact this capital. Further, we screen
all our large loans to assess them for
environmental and social risks. We are
harnessing renewable energy at our
offices and driving paperless transactions
through deployment of digital tools
and automation.
7.8 Crore+
Beneficiaries
of Parivartan**
1.29 Crore
Participants in the Financial
Literacy Programme**
261.92 Metric Tonnes
E-waste recycled*
145.5 KW
Solar power*
7% Y-O-Y
94,470+
Farmers trained through Holistic Rural
Development Programme (HRDP)**
10 Lakh+
Trees planted**
Page 22
Page 26
Pages 16 and 24
Page 74
Pages 32, 34 and 70
Page 66
#As per WPP Plc.-Kantar Millward Brown BrandZ Report 2019
4
^Retail transactions
##In addition, we have 5,379 BCs managed by CSCs
*During 2019-20
**As on March 31, 2020
5
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Message from the Managing Director
The best of our Bank
is yet to come
Dear Stakeholders,
2020 marks the 26th year of our remarkable journey,
during which we have won multiple accolades.
This would not have been possible without you. So, let
me start by thanking each one of you for the immense
faith and dedication you have shown in co-creating this
great institution.
During the course of a quarter of a century, India and
the world have changed at a breath-taking pace.
And so has our Bank. I’m extremely humbled to be
part of this living legacy and take immense pride at
being given the opportunity to partner with over 1 Lakh
invaluable colleagues who made this possible.
Doing the right thing, always.
Nearly 30 years ago, India opened its markets to the
world. In doing so, it created exciting opportunities
for private sector banks like us. Backed by a strong
parent, we took baby steps and, in 1995, we opened
our first branch in Mumbai at Sandoz House, Worli.
From day one, we were clear about our strategy to
drive growth. Integrity: We would always do what is
right. Prudent: We wouldn’t take short cuts nor cut
corners. Strategic: We wouldn’t take undue risks or
blindly follow trends. By adhering to these stringent
standards, we became the torchbearers of what later
came to be known as corporate governance. And this
is the origin of our five core values: Customer Focus,
Operational Excellence, Product Leadership,
People and Sustainability.
This was also the time when corporate lending
was the order of the day. Naturally, we started out
as a wholesale bank. But then India changed with
liberalisation creating a new class of people with
disposable incomes. And we did too by shifting
our focus to retail banking and now we have an
6
We are pioneers in building a
technology-led Bank and we are
one of the first to offer NetBanking
services, 10-sec Personal Loan, App
Banking and now WhatsApp Banking.
industry-leading position in almost every aspect of
retail banking including private banking and wealth
management. But being prudent we maintained a
balance between both segments of our business.
This strategy has stood us in good stead. Perhaps not
more so than in 2019-20 when wholesale banking has
helped counter the downturn in certain retail segments
as a result of an overall slowdown in consumption.
Backed by our policy of having our ears to the ground,
understanding consumer sentiments and needs and
responding with agility have helped us to continue to
lead on the wholesale banking side.
Bringing about meaningful change
Our vision has always been to bring about meaningful
change. We did this by adopting technology to
power digital transformation in banking, focusing
on semi-urban and rural areas to drive high growth,
and creating sustainability in far-flung areas across
India. We are pioneers in building a technology-led
Bank and we are one of the first to offer NetBanking
services, 10-sec Personal loan, App Banking and
now WhatsApp Banking. To our corporate customers,
we continue to offer the entire gamut of financial
services such as Payments, Tax Solutions, Government
Aditya Puri, Managing Director
HDFC Bank Limited Integrated Annual Report 2019-20 Message from the Managing Director
Message from the
Managing Director
We are well positioned with a strong
balance sheet and healthy liquidity.
Our robust liability franchise continues
to be the bedrock on which we will
build our future
Business, Trade Finance Services, Cash Management
Solutions and Corporate Cards through our flagship
platforms, besides seamlessly connecting our
customers through APIs and Host-to-Host services.
We are also the first bank to have the digital ability
to sanction a working capital loan to MSMEs across
the table at the customers’ premises based on deep
technology integration and AI-led credit risk modelling.
We expanded our footprint to semi-urban and rural
areas, where we have over 50% of our branches
today. Our unswerving commitment to excellence, and
common sense, made all these possible.
What makes us prouder is the transformation we
have brought in the lives of people excluded from
development. Through our social initiatives under
‘Parivartan’, over 10% of our workforce is dedicated
to social causes, making a tangible impact in people’s
lives. Our Sustainable Livelihood Initiative (SLI), for
instance, entails skilling women at the bottom of
the pyramid and providing livelihood finance to help
them break the cycle of poverty. We firmly believe
that empowering women will lead to empowering
families. Through our Holistic Rural Development
Programme (HRDP), we have touched more than
4 Lakh households across 1,282 villages in 17 states.
We continue to stay focused on effecting impactful
change through various initiatives in irrigation, and soil
8
and water conservation, helping build healthcare and
hygiene infrastructure.
I’m also personally proud of our Blood Donation Drive,
which entered the Guinness World Records, through
which we have cumulatively collected over 1.4 Million
units of blood helping save lives.
Riding the Storm
We are living in unprecedented times with COVID-19
claiming lakhs of lives globally including India, and
destroying millions of livelihoods due to extended
lockdowns. My heart goes out to the families of all
those who have lost their lives. Let me also, on behalf
of HDFC Bank, salute our healthcare workers on the
frontline, who have risked and sometimes lost their
lives in this battle against a raging pandemic. Let us,
however, remember that the darkest hour is always just
before the dawn, and that dawn is not far away. Be it
in riding out the health crisis or recovering from the
financial losses that many have suffered, faith and hope
are our biggest allies. But let us also accept that life
has perhaps changed forever. During this period, we
invoked our Business Continuity Plan (BCP), which has
helped us to continue functioning in the ‘new normal’.
We learnt several new things along the way that will
help us improve our stakeholders’ lives. This includes
being efficient while working from home and equipping
ourselves to prepare for the tomorrow through
e-learning programmes and leveraging this opportunity
to further the digital agenda of the Bank.
HDFC Bank has always been strong, growing
consistently through multiple economic cycles.
We have capitalised on opportunities without giving in
to greed. We are well positioned with a strong balance
sheet and healthy liquidity. Our robust liability franchise
continues to be the bedrock on which we will build
our future. In April 2020, global ratings agency S&P
reaffirmed its international rating for HDFC Bank at
BBB-/A3 with a Stable outlook, giving credence to
HDFC Bank’s stability even in these challenging times.
And we feel happy to quote S&P, “Overall, we believe
HDFC Bank’s individual creditworthiness is significantly
stronger than the average of the Indian Banking Sector,
reflected in its SACP of BBB+.”
So where does that leave us?
Our Best is Yet to Come
What about the future? Let me start by reiterating
where we stand today. We as a bank have:
• One of the biggest and strongest balance sheets
• High capital adequacy levels
• Market leadership in most of the products
that we deal in
• An excellent reputation for delivering value to all
stakeholders, especially shareholders
• Technology that offers an omnichannel experience
• The finest people who have made us what we are
• A commitment to society that is second to none
All this means, we are very well placed to ride out the
COVID-19 storm. We intend to continue to innovate,
adapt, and disrupt to remain trailblazers. We will
continue to collaborate to bring the power of One Bank
to our customers. We will continue to invest ahead
in technology, computing and artificial intelligence
to provide hyper-personalised offerings/experiences
to our customers to become a Digital First Bank
where every customer interaction at any touchpoint is
intuitive, seamless, contextual and predictive. All these
collectively ensures that we reduce costs and increase
our reach. It is also reflected in the six strategic
priorities that we have focused on in the last three
years and will continue to do so. These are:
• Reimagining the Branch Channel from a banking
storefront to a financial services marketplace
• Leveraging Bharat’s growth potential based on our
Semi-Urban and Rural footprint
We intend to continue to innovate,
adapt, and disrupt to remain
trailblazers. We will continue to
collaborate to bring the power of One
Bank to our customers.
• A Payments business with a differentiated
business model that leverages the
Bank’s offerings
• Digital 2.0 to transform customer journeys into
omnichannel customer experiences
• Virtual Relationship Management where
technology comes alive with a human touch
• Our subsidiaries that continue to focus on the
segments they operate in
And backed by a key intangible asset that is not
found in our balance sheet but helps build it:
Integrity! Even after 25 years, we have not changed
our fundamentals where Integrity remains our
biggest asset.
And all of this would not have been possible without
the trust our customers have in us, driving us to
deliver what we have over the years. With that
trust in place, I reiterate that the best of our Bank
is yet to come!
Aditya Puri
Managing Director
HDFC Bank Limited
9
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 #HumHaarNahiMaanenge
The COVID-19 outbreak has brought to the fore the undying spirit of humanity in fighting
a global crisis that came with wide ramifications on life and livelihood. At HDFC Bank,
we salute the healthcare workers and government agencies braving an unknown
enemy on the front lines. No matter how great the challenge, we remain committed
to overcoming it together. We teamed up with the Oscar and Grammy award winning
composer - A.R. Rahman and noted lyricist Prasoon Joshi, among other artistes
to create a song of hope #HumHaarNahiMaanenge (We will not give up). This song
received over 18.6 Million views on YouTube. You can listen to it here
Contributed `70 Crore to
PM CARES Fund
Helped hospitals source PPE
kits, ventilators and more
Supplied dry ration to daily
wage-earners and farmers
Provided financial support
to health departments and
municipal bodies
Provided critical
medical equipment to
state governments
Employees volunteered to
provide cooked meals to
daily wage-earners
Equipped police force with safety kits,
infrared thermometers
Shared government advisories
and protocols
Created awareness about PM CARES
Fund through a branch-wide campaign
Shared information on vendors
providing critical supplies
Used cycles and rickshaws to
spread awareness in remote places
Launched mobile ATM vans
across the country
Introduction to HDFC Bank
In this section
HDFC Bank at a glance
Our business segments
Our presence
12
14
16
HDFC Bank at a glance
Leading with trust
HDFC Bank at a glance
HDFC Bank has been playing a key role in reshaping the
financial services landscape in the country for over
25 years. Our wide range of products is tailored to meet
the diverse needs of our 5.6 Crore+ customers. We have
established a wide network of banking outlets and ATMs
including cash deposit and withdrawal machines.
These are supplemented by Common Service Centres
(CSCs), and business correspondents through our
tie-ups with the Government and other alliance partners.
Our best-in-class digital products and platforms deliver
an omnichannel experience across all touchpoints.
We also leverage our pan-India presence to work for
the sustainable development of communities. Through
Parivartan, the umbrella brand for our social initiatives,
we create programmes to bring about a positive change
in lives and livelihoods.
The unfolding story in numbers
2017-18
2018-19
2019-20
Merchant
acceptance points
(Lakh)
17.97
Advances
(C Crore)
993,703
O U R C O R E VALUES
r a t
i o n al Excellence
e
p
O
P
r
o
d
u
c
t
L
e
a
d
e
r
s
h
p
i
O U R P U R P O S E
We exist to help every
Indian make better money
choices, today and tomorrow.
Solar power
consumption
(KW)
145.5
9.61
6.64
135.5
85.5
cus
o
F
r
e
m
o
t
s
u
C
P
e
o
ple
s t ain ability
u
S
819,401
658,333
Deposits
(C Crore)
1,147,502
923,141
788,771
4,787
5,103
HDFC Bank quick facts
5.6 Crore+
Customers**
116,971
Employees
1.26%
Gross NPAs**
One of the lowest levels of Gross NPAs
in the banking industry
India's most
valuable brand
for the sixth consecutive year in 2019, as per WPP
Plc-Kantar Millward Brown BrandZ Report.
12
3.5
12,773
5.4
85.1%
Beneficiaries
from CSR activities
(Million)
7.8
13,489
91.7%
Digital transactions#
95.1%
**As on March 31, 2020
#Retail transactions
*In addition, we have 5,379 BCs managed by CSCs
Banking
outlets
5,416*
ATMs + cash deposit
& withdrawal machines
14,901
13
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20
Our business segments
A complete suite for
diverse customer needs
Our business segments
Business segment
Wholesale Banking
This business focuses on institutional customers
such as
Large corporates including MNCs
Government bodies
Emerging corporates
Business banking/SMEs
Infrastructure finance group
Retail Banking
This business caters to
Individual borrowers
Salaried & professional borrowers
Micro & medium sized businesses
Extremely small businesses like kirana stores
Self-help groups (SHGs)
Non-resident Indians (NRIs)
Treasury
The Treasury is the custodian of the
Bank’s cash/liquid assets and manages its
investments in securities and other market
instruments. It manages the liquidity and
interest rate risks on the balance sheet and is
also responsible for meeting statutory reserve
requirements.
Products and services
Performance highlights*
The HDFC Bank edge
Working capital facilities
Term lending
Project finance
Debt capital markets
Mergers and acquisitions
Trade credit
Supply chain financing
Forex and derivatives
Cash management
services
Wholesale deposits
Letters of credit and
guarantees
Custodial services
Correspondent banking
E479,762 Cr
Domestic wholesale advances
29.3%#
~49%
Of the Bank's
total domestic advances
as per Basel 2 classification.
Auto loans
Credit and debit cards
Personal loans
Home loans
Gold loans
Mortgages
Commercial vehicles
finance
Retail business banking
Savings account
Current account
Fixed and recurring
deposits
Corporate salary
accounts
Construction equipment
finance
Agri and tractor loans
SHG loans
Kisan Gold Card
Distribution of mutual
funds, life, general and
health insurance
Healthcare finance
Offshore loans to NRIs
NRI deposits
Small-ticket working
capital loans
Business loans
Two-wheeler loans
Loans against securities
E494,401 Cr
Domestic retail advances
14.6%#
~51%
Of the Bank's total
domestic advances
as per Basel 2 classification.
E879,145 Cr
Domestic retail deposits
24.0%#
Foreign exchange &
derivatives
Solutions on hedging
strategies
Trade solutions -
domestic and cross
border
Bullion
Debt capital markets
Equities
Research - Reports &
commentary on markets
and currencies
Asset liability management
Statutory reserve
E2,154.8 Cr
Revenue from forex and
derivative transactions
25.2%#
*During 2019-20
#Y-O-Y
Full service ‘One Stop
Shop’ for corporates
with strong technology
backbone
Market leader in cash
management services
Prominent position in
large corporate and
emerging corporate
space
Leading presence
in the payments
business, with
1.45 Crore credit cards
Unique product
proposition for NRIs
through branches in
India and overseas.
Market leader in almost
every asset category
with best-in-class
portfolio quality.
Pioneer and dominant
player in the digital loan
marketplace.
Solutions for non-
residents, hedging
needs in Indian markets
Integrated trade and
treasury solution for
customers
Primary Dealer for
Government securities
15
15
14
14
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Our presence
Unparalleled reach
We have the widest reach among private sector banks in India. Our large network enables us to serve our
customers better and participate actively in the development of the communities around us.
Staying close to our customers
Our network comprises banking outlets, ATMs including cash
deposit and withdrawal machines (CDMs), Common Service
Centres (CSCs) which include Village Level Entrepreneurs
(VLEs) & Business Correspondents (BCs) and merchants.
The banking outlets are linked online to provide the ease
of real-time banking and payment services. We plan to
strategically expand our footprint to further deepen our
presence and enter new geographies.
One of the largest banking networks
in semi-urban and rural India
We were among the earliest private sector banks to reach out
to the hinterlands of India. Over the past decade, we have built
a scalable and profitable business model in the semi-urban and
rural markets. Today, these areas together account for over
half of our total banking outlets. In these areas, we are also
among the few financial services providers to offer a complete
suite of products.
Leveraging our reach to empower
communities
HDFC Bank’s Parivartan has a strong footprint across India.
Over 7.8 Crore people have benefited from our various
initiatives so far. Our Sustainable Livelihood Initiative (SLI)
has reached over 1 Crore households.
Our presence
5,416
Banking outlets
(including
four overseas)**
2,803
Locations**
14,901
ATMs + cash
deposit and
withdrawal machines**
5.6 Crore+
Customers**
5,379
CSC Business
Correspondents (BCs)**
17.97 Lakh
Merchant
acceptance points**
Wide reach across markets
Banking outlets
CSC BCs
ATMs + cash deposit & withdrawal
machines
Rural
1,158
Rural
3,684
Rural
1,085
Semi-Urban
1,650
Semi-Urban
1,116
Semi-Urban
3,428
Urban
Metro
Total
Domestic (A)
1,063
1,541
5412
International (B)
4
Total (A+B)
5416
Urban
Metro
Total
391
188
5,379
Urban
Metro
Total
3,908
6,480
14,901
Parivartan: Empowering communities
19.6 Lakh
Teachers trained**
7.8 Crore
people impacted**
Page 70
*During 2019-20
**As of March 31, 2020
16
17
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 A renewed semi-urban
and rural push
Rising income levels and aspirations in semi-urban and rural (SURU) markets
of India have led to an increased demand for quality financial products and
services. As a responsible leader in the financial services space, we have always
believed in making best-in-class banking products and services accessible to all
sections of the society. The ability to identify and tap into the immense potential
of these markets early on has been key to our success.
Backed by our unmatched physical reach and leveraging
our technology capabilities, we have made a renewed push
in SURU markets in the past couple of years to deepen our
penetration and expand into under-banked areas. This has
been achieved through a wide range of customised offerings
such as pre- and post-harvest crop loans, two-wheeler and
auto loans, loans against gold jewellery, among others.
Our Kisan Gold Card provides loans to farmers across
1.25 Lakh villages in India to help meet their production cost
and post-harvest expenses. They can also finance purchase
of farm machinery and equipment and construction of storage
structures, among others. Further, the Card amalgamates
government benefits for the agricultural sector such as
interest rate subvention, crop insurance under the Pradhan
Mantri Fasal Bima Yojana, among others. Using cutting-edge
analytics, we are even providing loan enhancement over SMS
without any additional paperwork.
Our ‘Milk-to-Money’ initiative brings banking services
for dairy farmers at their doorstep. This initiative will
not only fuel growth of the dairy segment, in line with
the government’s vision, but will also drive financial
inclusion and women empowerment, as a large
section of dairy farmers are marginalised individuals
and women. We plan to scale the programme to
cover 3,000 villages and more than 8 Lakh farmers
over the next 2-3 years.
An important aspect of our village penetration strategy
is to achieve financial inclusion by driving financial
literacy. Our ‘Har Gaon Hamara’ programme enables
customers to choose products that best meet their
financial requirements from our comprehensive suite
of offerings. Under this programme, a gathering of
30-40 villagers is organised to provide financial literacy
and take our products and services to their doorstep
at the most competitive price. So far, we have covered
more than 22,000 villages and engaged with 4.6 Lakh
customers. A toll-free number has been set up
through which customers can express their interest
in our services.
We have also opened 12 Kisan Dhan Vikas Kendras
(KDVKs) across the country. The KDVKs aim to build
a collaborative polygon by bringing together various
stakeholders of the agricultural sector and facilitating
sharing of knowledge, technical assistance, and
support services to farmers for improving livelihood
opportunities. The Kisan Dhan Vikas e-Kendra
webpage was also launched, which is a first of its kind
in the banking industry, as a one-stop destination for
all the requirements of farmers.
Expanding horizons
1.25 Lakh
8 Lakh
Villages covered by Kisan
Gold Card for farm loans
Dairy farmers to be covered under
Milk-to-Money in 2-3 years
4.6 Lakh
Rural customers met
under ‘Har Gaon
Hamara’ programme
12
Kisan Dhan Vikas Kendras set up
to improve livelihood of farmers
Our performance
In this section
Operational highlights
Performance highlights
Digitisation
Customer-centricity
Nation building
Awards and recognition
20
22
26
32
34
36
Operational highlights
Strong year despite challenges
Q1
We had 130
banking outlets
in the North-East region.
100
Banking outlets to be
added in the North-East
Strengthening presence
in the North-East
To better serve the underbanked
population in the North-East region,
we announced the addition of
100 more banking outlets over the
next three years. As part of the
‘semi-urban and rural’ strategy, this
expansion will take the total banking
outlets in the region to 230, including
18 in Sikkim. We are also working
closely with the Central government
to set up 650 CSCs in the region.
‘Future Bankers’
Programme launched in
partnership with MGA-BFSI to
build talent pipeline
Building a pipeline
of future-ready
professionals
Aimed at training entry-level job
aspirants, we partnered with
the Manipal Global Academy of
BFSI (MGA-BFSI) in August 2019
to launch the ‘Future Bankers’
programme. It is a full-time
residential course where
participants will spend the first
six months on the MGA-BFSI’s
campus and the next six with the
Bank as interns. Over the next two
to three years, the programme will
help us recruit 5,000 professionals
and also build a talent pipeline
with the requisite skills to best
serve our customers.
Q2
20
Operational highlights
A shopping bonanza for
our esteemed patrons
We launched ‘Festive Treats’, our
biggest marketing campaign ever
aimed at both retail and business
customers. We partnered with
over 1,000 retail brands to offer
discounts, CashBack and extra
reward points for both in-store and
online purchases. Other benefits
included discounts on the processing
fee on loans, reduced EMIs and
gift vouchers. These offers were
also made available on our digital
platforms such as PayZapp
and SmartBuy. Throughout the
three-month long campaign, all our
banking outlets were transformed into
financial supermarkets for customers
to explore and avail of the offers.
Bespoke offerings for
Indian farmers
With an objective to take banking
to the doorstep of every Indian
farmer and agriculturist, we
launched an exclusive interactive
voice response service, ‘Har Gaon
Hamara’. This service facilitates
access to a vast range of products,
at a faster turnaround time, with the
convenience of our digital platforms.
Customers can connect with us
by dialling a toll-free number and
sharing their PIN code. The nearest
banking outlet is automatically
mapped, and a bank representative
immediately reaches out to them to
address their needs.
Doing our bit to promote
blood donation in India
In December, we conducted our
13th Annual Blood Donation Drive.
Launched in 2007, this drive crossed
new milestones every year covering
more locations and donors, due
to the enthusiastic support of our
colleagues and external partners.
Our campaign #StopMithani won
a Silver Lion at Cannes Lions
International Festival of Creativity
2019. In this edition, we collected
more than 4.20 Lakh units of blood,
up from over 3.10 Lakh units in
the previous year.
4.20 Lakh+
Units of blood collected
Balance Sheet size
crosses E15 Lakh Crore
During the year, our balance sheet
size crossed the C15 Lakh Crore mark,
registering a growth of 23% over
the previous year. This was driven
by a 24.3% growth in deposits to
C11 Lakh Crore and a 21.3% increase
in net advances to C9.94 Lakh Crore.
E1,530,511Crore
Balance sheet size
‘Har Gaon Hamara’
facilitates access to a vast
range of products for farmers
and agriculturists
Q3
We joined
hands with over
1,000 retail brands
including Reliance Digital,
Apple, LG and Samsung
Q4
21
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Performance highlights
Performance that
takes us forward
This year we further consolidated our leadership position by delivering consistent improvement in
our performance, introducing more impactful employee initiatives, increasing our commitment to
Parivartan, fuelling the next wave in digitisation through ‘Digital 2.0’, committing to greater focus
on ESG, and continuing to expand our geographic reach.
Financial capital
Growth
We recorded an improvement in all key
financial metrics, namely Net Interest
Income, Deposits, Loans and
Investments during the year. Our focus
on diversifying across customer
segments and constant effort to
deliver superior customer experiences
have resulted in this healthy and
consistent growth.
Balance Sheet Size
(C Crore)
Advances
(C Crore)
2017-18
1,063,934
2018-19
1,244,541
2019-20
1,530,511
Retail Assets
2017-18
376,167
2018-19
432,687
2019-20
496,691
2017-18
658,333
2018-19
819,401
2019-20
993,703
(C Crore)
Capital Adequacy Ratio
(%)
2017-18
14.8
2018-19
17.1
2019-20
18.5
Deposits
(C Crore)
2017-18
2018-19
2019-20
788,771
3,43,093
4.45,678
923,141
3,91,198
5,31,943
1,147,502
4,84,625
6,62,877
Total deposits
CASA deposit
Time deposit
Performance highlights
Efficiency
Our disciplined approach to managing
capital, ensuring a healthy proportion
of low-cost CASA deposits, making a
conscious decision to stay away from
taking undue risks and maintaining an
unwavering focus on achieving greater
operational efficiencies has enabled us
to maintain healthy levels of profitability.
Our track record of consistently
delivering double-digit growth in earnings
is a result of our continued focus on
keeping operational costs under check.
Cost to Income Ratio
(%)
Net Interest Margin
(%)
2017-18
4.3
2018-19
4.3
2019-20
4.3
(C Crore)
2017-18
41.0
2018-19
39.7
2019-20
38.6
Profit after Tax
2017-18
17,487
2018-19
21,078
2019-20
26,257
Rupee Earned
(%)
Rupee Spent
(%)
11.8
16.7
1.7
1.6
1.7
66.5
5.0
8.0
45.2
8.7
9.4
23.7
Interest from Advances
Interest from Investments
Commission, Exchange, Brokerage
Other Interest Income
Other Income
FX & Derivative Income
Interest Expenses
Operating Expenses
Provisions
Transfer to Reserve
Tax
Dividend Paid and Tax
Resilience
Our prudent credit evaluation policies
and processes have enabled us to
maintain a well-balanced portfolio
which has withstood various economic
cycles. This in turn has led to the
creation of a key differentiator - one of
the lowest levels of Gross NPAs in the
banking industry.
Non-Performing Assets Ratio
(%)
Provision Coverage Ratio (PCR)
(%)
2017-18
2018-19
2019-20
0.40
0.39
0.36
1.30
1.36
1.26
Gross NPA
Net NPA
2017-18
69.8
2018-19
71.4
2019-20
72.0
22
23
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Performance highlights
Performance highlights
Returns
Our key ratios grew consistently
stronger during the year. We have
adopted a holistic approach while
conducting all our business activities
with a sharp eye on return on
investments. This approach is yielding
rich dividends.
* Figures for the years prior to 2019-2020 have
been adjusted to reflect the effect of split of
equity shares from face value of `2/- each into
two equity shares of face value of `1/- each.
Return on Capital
(%) Return on Assets (Average)
(%)
2017-18
18.2
2018-19
16.3
2019-20
16.8
2017-18
1.93
2018-19
1.90
2019-20
2.01
Earnings per Share and
Dividend per Share
(C)
2017-18
2018-19
2019-20
33.9
6.5
39.3
7.5
48.0
**
Earnings Per Share
Dividend Per Share
** During FY 20, the Bank has paid special interim
dividend of `2.50 per equity shares (post split), to
commemorate 25 years of the Bank’s operation.
The Reserve Bank of India, vide its circular dated
April 17, 2020 has decided that banks shall not
make any further dividend payouts from profits
pertaining to the financial year ended March 31,
2020 until further instructions, with a view that
banks must conserve capital in an environment
of heightened uncertainty caused by COVID-19.
Accordingly, the Board of Directors of the Bank,
at their meeting held on April 18, 2020, has not
proposed any final dividend for the year ended
March 31, 2020.
Manufactured capital
A robust franchise
Being one of the country’s largest
banks, we provide our customers with
a wide network of banking outlets and
ATMs across India’s towns, villages and
cities. During the year, we enhanced
our reach in semi-urban and rural
areas. This was achieved by opening
new outlets in strategic locations, and
partnering with the government (CSCs),
small shop owners, merchants and
similar intermediaries.
Banking Outlets#
2017-18
4,787
2018-19
5,103
2019-20
5,416^
Cities/Towns
2017-18
2,691
2018-19
2,748
2019-20
2,803
Debit Cards
2017-18
2.43
2018-19
2.70
2019-20
3.21
ATMs + Cash Deposit & Withdrawal
Machines
2017-18
12,773
2018-19
13,489
2019-20
14,901
Merchant Acceptance Points (Lakh)
2017-18
6.64
2018-19
9.61
2019-20
17.97
(Crore)
Credit Cards
(Crore)
2017-18
1.07
2018-19
1.25
2019-20
1.45
#Including four overseas
^In addition, we have 5,379 BCs managed by CSCs
24
ESG performance
Natural capital
Environment: Managing our
resource footprint
At HDFC Bank, we have a Board-governed environmental
policy that serves as a framework to understand
our environmental risks, impact and opportunities.
Harnessing renewable energy, measuring and minimising
our greenhouse gas emissions, recycling waste and
lending responsibly are some of our focus areas in being
environmentally responsible. We made steady progress on
these fronts during the year.
Energy Consumption per Employee
(GJ)
2017-18
26.88
2018-19
22.60
2019-20
16.77
Energy Consumption by Source
(’000GJ)
2017-18
224.1
2,148.4
2018-19
210.4
1,910.1
2019-20
1,643.23
318.71
The emission/ energy numbers are currently being externally verified.
The assurance statement will be published in the Sustainability
Report 2019-20.
Fuel
Electricity
Page 66
Social and Relationship capital
Social: Being a responsible leader
We have partnered with the Government through CSCs to provide
digital assistance in banking across towns and villages. Our social
performance is measured by the impact we create through our
multi-pronged social responsibility initiative, Parivartan. Our strong
relationships with all our key stakeholders including customers,
trade partners, employees and the community at large is the key to
our success. Our continued effort towards employee engagement
is reflected in the external recognition received by our Bank towards
our people practices. We have been certified as a ‘Great Place to
Work’ by the Great Place to Work Institute in April 2020.
CSR Spends
2017-18
374
2018-19
444
2019-20
535
(C Crore)
Women Employees
(as a % of Total)
2017-18
17.5
2018-19
18.2
2019-20
18.3
Page 70
Governance: Staying compliant
Good corporate governance is a way of life at HDFC Bank.
The hallmark of this is the separation of the risk and credit
Functions leading to prudent lending decisions. At the bank level,
the objective is not just to comply with the law of the land but
also to conduct our business in a fair, transparent and ethical
manner. The Bank is committed by ensuring the highest level 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.
1,05,790
Employees eligible for adherence to
annual Code of Conduct
97.12%
Employees completed the annual
Code of Conduct
Page 78
25
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Digitisation
Intellectual capital
Digitisation
Redefining financial
services with technology
Digitisation is a strategic focus area for HDFC Bank,
and an important marker of its performance. Since
inception, we have led the digital transformation of the
Indian financial services sector and continue to invest
in technologies to improve customer experience and
enhance efficiencies. This is changing the paradigm by
redefining financial services and designing products
and services by always keeping the customer
at the centre.
We are challenging our own model of creating and
delivering products and services through the various
channels. Today, it is important to be present where the
customer is. And, to offer contextual and personalised
solutions seamlessly, in real time, using analytics
and predictive capabilities. Customers are provided
a choice of platforms to access financial services at
their convenience. Partnerships with platform players
and fintechs play an important role in delivering
products digitally.
Our digital offerings cater to all segments – mass
retail, mass affluent, high net worth in retail and
wholesale (MSME).
Digital 2.0
Digital 2.0 is the next phase of our digitisation journey. We are collaborating and partnering with diverse participants in the digital
ecosystem, primarily focusing on:
1
Reimagining customer
journeys and experiences
2
Enabling differentiated experiences through
applications, APIs and analytics
• Developing new platforms and applications
• Creating APIs to enable new user stories
• Powering customer interactions through analytics
4
Shaping customer preferences
through innovations
3
Empowering virtual banking to engage
with customers through technology
Our performance
During 2019-20, we performed well across key areas of
Digital 2.0. We enhanced our presence across multiple
digital platforms and touch points frequented by customers,
providing them with greater convenience. Taking our
digital adoption to the next level, we have worked towards
a more intuitive, relevant, contextual, personalised and
omnichannel experience.
We launched a fully digital account
opening process which helps us acquire
new customers in a few minutes.
Our assets and cards customer
journeys are also being re-imagined to
make them more contextual, real time,
predictive and frictionless. These will
also help ensure business continuity in
the face of unforeseen circumstances
such as lockdowns.
‘SmartHub’ is our new digital payments solution. with over
17 Lakh merchant acceptance points ranging across scan and
pay QR codes, Android POS, Mobile POS, link-based web
solutions and payment gateway, we are the leading acquiring
bank, processing over 48% of the total merchant transactions
in the country. The ‘SmartHub Merchant’ app is especially
designed for self-employed and small businesses, which
enables customers to instantly open an account and become
a merchant. This app is available in nine vernacular languages
and allows merchants to create their product catalogue, run
campaigns using WhatsApp and Facebook, and create their
own customer loyalty programme.
We provide the widest range of solutions to Central and state
governments across departments such as transit (Metro,
bus, waterways, etc.), tolls (national and state highways),
FASTag, government disbursals and payments – subsidies,
direct benefit transfer (DBT), eNam, among others. We are
also providing end-to-end digital transaction solutions
in Smart Cities.
The Bank has recently been awarded the coveted
Pune Metro project.
We launched our new public website and MobileBanking app
in 2019 which have received widespread acceptance among
our customers. The number of visitors to our public website
stands at 55 Million per month. The number of customer
queries handled by our AI assistant EVA has grown to 23 Lakh
per month. We have augmented relevant user journeys,
customer-centric narratives and shifted towards providing a
lifestyle banking experience. Analytical engines are being used
for real-time contextual communications. We are reaching our
customers now with the most relevant next-best-call-to-action.
26
27
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Digitisation
Key initiatives during the year
Reimagining customer journeys and experiences
HDFC Bank made a shift from just digitising products to
elevating experience digitally through customer-centric
journeys. We now offer our customers operational bank
accounts within minutes, at their convenience where they
can fund them instantly and start transacting straightaway.
This capability, coupled with the launch of the new video
KYC service, will enable the customer to complete their
journey across products digitally. Our in-house digital studio,
a ‘Centre of Excellence’ for UI/UX aims to institutionalise
human-centric design thinking across all our digital initiatives
and synchronise our offerings.
Our user experience design framework
INSIGHT
Gather and comprehend the entire array of
design challenges from all stakeholders
INSPIRE
Understand users by observing their lives, hear
their hopes and desires, and get smart on
delivering creative solutions
IDEATE
Make sense of everything that is heard, generate
tons of ideas, identify opportunities for design,
and test and refine solutions.
IMPLEMENT
Bring solutions to life by customer validated and
refined design as clickable prototypes.
28
Intellectual capital
Digitisation
A truly empowering banking experience enables us to switch
between modes and transact across platforms. Therefore, our
integrated services across branch, Phone Banking, Mobile and
Internet Banking offer a seamless, unified and omni-channel
experience to our customers. For instance, the processing
time for a loan application in a branch or online are now almost
similar. Also, our customer satisfaction has improved through
these offerings and via virtual relationship managers. This has
resulted in a large number of digital products being made
available to our customers and a significant improvement in
their satisfaction levels, as evidenced in the NPS Scorecard.
Digital solutions for enterprise
We have built a vibrant enterprise ecosystem and are
making rapid progress to transition from the traditional
product-oriented approach to a customer-oriented approach.
Customer on-boarding
• Analytics based pre-qualified offers and pre-approved offers
• System-generated sanctions
• Straight through processing of limits
Customer servicing
• Exclusive 24*7 self-servicing portal for MSMEs
• ENET – corporate NetBanking with connectivity to customer’s
ERP for smooth accounting operations
• Trade on Net (TON) supporting customers to carry out trade
transactions such as LC/BG online
Monitoring and cross-sell
• One view provides a comprehensive view of customer
relationship
• Analytics-based assessment of credit risk and business
potential
• Analytical approach to statement analyser for account conduct
and monitoring
Road ahead
• Provide post sanction documentation digitally
• Use Bots for customer servicing
Enabling differentiated experiences through
applications, APIs and analytics
Applications and platforms
At HDFC Bank, we are creating differentiated experiences
for our customers through various partnerships and alliances
spanning platforms and applications. ‘SmartBuy’ and
‘PayZapp’ are two such industry-leading initiatives.
SmartBuy is India’s first bank-initiated marketplace offering
the best deals, accelerated rewards and experiences to
customers. It drives high loyalty as it covers all key categories
like travel, hotels, e-shopping, rail & bus bookings, electronics
and so on. The platform has strong brands and partners
like MakeMyTrip, Yatra, Flipkart, Amazon, IRCTC, to name a
few. PayZapp is our comprehensive mobile payment solution
offering ‘many ways to pay’ with a one tap experience.
The app enables customers to do several online payments and
is accepted by over 2,000+ online merchants and brands.
APIs driving customer journeys
Banking now happens beyond the bank. APIs allow seamless
and secure exchange of information between the Bank
systems and others. This enables us to make our products and
services available outside our platforms to all our merchants
and on platforms that our customers prefer (ecommerce sites,
messaging apps, modern trade POS, among others).
We are developing several APIs to cater to the entire spectrum
of our customers’ financial needs, i.e., pay, save, borrow,
invest, insure and shop. APIs for card issuance were launched
to expand the market with new partnerships for open-market
customer sourcing. Our API stack is best-in-class and contains
real-time credit and verification algorithms to be able to
provide an instant soft-approval to an open-market customer.
API sourcing is now live with multiple fintech partners and with
Indigo Airlines for the newly launched Ka-Ching Credit Card.
Powering customer interactions using analytics
At HDFC Bank, big data analytics and Machine Learning
enable us to get better at acquiring, serving and retaining
customers. We are leveraging these technologies to make our
digital campaigns more intelligent and cost-efficient. This helps
us in driving reach and relevance of our communication
and makes a direct business impact through unassisted
digital sourcing of products. This is not only taking banking
closer to customers, but is also enabling us to significantly
increase the speed and convenience of service while reducing
operating costs.
A new capability for delivering in-store finance for new-to-bank
and non-pre-approved customers has been launched in select
stores. This best-in-class capability offers a paperless approval
and disbursal process by providing near real-time decisioning
for customers by incorporating advanced analytics capabilities,
leveraging data from multiple sources. This will soon be
deployed across stores and will ensure a superior customer
experience and product delivery.
Omni-channel marketing campaigns: Powered by our data
stack, we conduct highly personalised and orchestrated
campaigns. This enables customers to view the same
communication across all digital channels – website, email,
SMS, WhatsApp, paid channels, chatbot Eva, NetBanking and
Mobile app. This helps to increase the brand recall, purchase
consideration and effective business growth.
29
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Digitisation
Intellectual capital
Digitisation
Shaping customer preferences through innovations
We are reimagining banking with Artificial Intelligence (AI).
Our vision is to make HDFC Bank a digital-first bank where
every customer journey across touch-points is seamless,
contextual, predictive and frictionless. AI/ML are becoming
an integral part of the banking system. It is making our
products and services more intuitive and efficient by making
them simpler, reducing costs, mitigating risk, and improving
experience. Our virtual assistant EVA is India's first AI-enabled
assistant . EVA is now capable of both acquiring and servicing
customers as well as processing banking transactions. EVA is
also extended to various other platforms like Google Assistant,
Alexa and WhatsApp.
RPA (Robotic Process Automation) is used extensively for
automating backend processes which is delivering higher
productivity and reducing turnaround times.
Key digital innovations in 2019-20
My Account My Choice: Our CASA customers can
choose any account number of their choice while
opening an account; 66,000+ accounts activated
with book balance of over `5,000 Crore
Card-less cash withdrawal: Customers can
withdraw cash from HDFC Bank ATMs without
ATM card; `6.5 Crore withdrawals through
21,000+ transactions
WhatsApp Banking: Official account of HDFC
Bank on WhatsApp for customer servicing, banking,
acquisition and communication; 64 Lakh requests
served and 10 Lakh active users
Smart slips: Enable customers to fill in cash
deposit, withdrawal and cheque deposit slips
through NetBanking using a reference ID, and
complete the transaction at a banking outlet
myApps: A suite of apps for large institutions.
In another industry-first, we launched myApps, a suite of
applications this year. myApps offers digital payment modes
and other value-added services for four key segments –
urban local bodies, including smart cities, housing societies,
clubs and religious institutions to enable digitisation of their
entire ecosystem. Members can make payments for utilities
and fees, book facilities online, stay updated on latest
announcements, and utilise other services offered by these
institutions. The institutions also get easy access to reports on
payments, facilities booked by members, requests, complaints
registered and much more.
Empowering virtual banking to engage with customers
through technology
Started in 2017, this programme has been a huge success
and is now a full-fledged customer engagement channel,
providing end-to-end services. We now have over 5.6 Million
customers that are engaged through Virtual Relationship
Management (VRM). This has matured into a full-fledged
service delivery channel.
We have further fortified this channel in 2019-20, with an aim to
serve a larger customer base in the future.
What is the unique proposition of VRM?
It offers the efficiency of technology and
the personalisation of conversation with a
relationship manager.
What are the services offered via VRM?
• Liability relationship
- Insta account opening
- Video KYC
• Asset relationship
- Insta loans
- Insta cards
• Customer service and engagement
• Financial planning
30
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Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Customer-centricity
Social and Relationship capital
Customer-centricity
Delivering distinct
experiences
Our approach
At HDFC Bank, customers are at the centre of everything we do. We believe that having a great product is not enough; delivering
an outstanding customer experience is key to being truly able to differentiate and develop sustainable competitive advantage.
Thus, our relationship with our customers goes beyond transactions and encompasses their entire journey, starting from
awareness to loyalty. To create a culture of customer-centricity and agility, helping employees think like their customers, we
implemented a Customer Experience (CX) Transformation Programme.
Key initiatives
to establish employee behaviours and practices which lead to
customer-centric actions and continuous improvements in our
offerings, processes and policies.
Customer Experience (CX)
Transformation Programme
As the first step, we benchmarked our CX performance through
a comprehensive primary research covering 30+ cities in India
and a sample of 15,000+ in-person interviews. This large scale
external survey gave us our Net Promoter Score (NPS).
In order to institutionalise the measurement into a management
system, we implemented a high-velocity, closed-loop customer
feedback system branded ‘Infinite Smiles’. The programme aims
Benefits of CX Transformation Programme
• Puts the voice of the customer at the heart of
everything we do
• Empowers employees to continuously improve
customer experience
• Employees earn their customers’ advocacy
• Enables culture change
Our CX Transformation process
1
3
5
Conduct relative benchmarking of customer
experience with peers (top-down NPS study)
Implement a pan-Bank bottom-up
measurement (ongoing episodic customer
feedback after selected interactions) across
all channels – physical and digital
Develop multiple in-person and e-Learning
training programmes for frontline employees
Launch multiple initiatives across the Bank to
improve customer experience
Establish a system to review customer
feedback on a real-time basis, respond to
immediate customer concerns and identify
areas of improvements – both at a local
level (branches and teams) and at a central,
cross-functional level
Communicate and reinforce the benefits
of the programme
2
4
6
32
Millennia range of cards
Millennials account for 34% of India's population, with potential
to be a major driver of consumption. It is a segment that has
not been addressed by traditional large banks. HDFC Bank
became the first bank in India to recognise this powerful yet
unique segment. In the first phase, we launched a range of
cards tailored to millennial needs and aspirations under the
‘Millennia’ brand - Millennia Credit Card, Millennia Debit Card,
Millennia Prepaid Card and EasyEMI Card.
The product suite has been designed keeping in mind the
‘spend anywhere, earn everywhere’ theme. Providing
complete freedom of choice, the ‘Millennia’ range allows
customers to earn CashBacks on every online and offline
spends. The EasyEMI Card offers the convenience of auto EMI
conversion for aspirational purchases.
In March 2020, Millennia became
the youngest card to cross 10 Lakh
subscriber base.
Given the huge untapped opportunity in this segment,
we plan to expand the ‘Millennia’ portfolio beyond cards
to offer a holistic banking ecosystem – banking the way
they always wanted.
Safety grid
This initiative is aimed at ensuring adherence to social
distancing norms to prevent the spread of COVID-19.
Physical markers were created on the ground using our
logo for people waiting in queue in front of essential service
outlets. It was rolled out in more than 10 cities – Mumbai,
Pune, Chennai, Delhi, Kolkata, Chandigarh, Jaipur, Bangalore,
Bhubaneshwar and Hyderabad across 5,000+ locations.
Loan services during COVID-19
We look to address the safety concerns of our customers
as well as the probable liquidity issues that may temporarily
arise due to the prolonged lockdown. With this primary
objective, we have launched attractive schemes on car
loans embedded with features like flexibility of repayment,
lower EMIs (initially), bullet payments at the end of the loan
duration, among others. These schemes are tailored to the
customers’ need of affordability and flexibility. The loans
also provide financing of insurance products along with
the car loan at attractive premiums, to cover customers’
hospitalisation for COVID-19 as well as cover for three
months in case of job loss under specific circumstances.
Customers can choose to avail of these schemes via digital
disbursement post approval, an industry-first solution
through our instant ZipDrive platform for existing customers
and digital end-to-end disbursements for non-HDFC
Bank customers.
33
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Nation building
Social and Relationship capital
Nation building
Supporting the nation’s
developmental agenda
Technology is propelling the Government’s thrust
on financial inclusion. As one of India’s largest and
systematically important banks, we collaborate with the
Government in myriad ways to bring the vast unbanked
and under-banked population into the economic
mainstream. We are connecting with the far-flung corners
of the country to deliver products and services by way
of seamless API integration. Our efforts have simplified
deposits, payments and availing credit, among others, to
substantially enhance customer experiences.
At HDFC Bank, we encourage the use of bank accounts
for financial transactions to maximise our ability to extend
flow-based or balance-based lending, like pre-approved
loans. Annual bank statements are being considered
when offering credit card facilities to small traders
with limits ranging between `10,000 and `1.2 Lakh,
alleviating concerns around fund shortfall. We have
partnered with various tiers of the Government to help
digitise the ecosystem. This in turn has helped them
enhance efficiency and transparency in their working
across different areas. Our integrated Public Financial
Management System (PFMS) has enabled us to disburse
funds to millions of beneficiaries across India for multiple
schemes. In addition, our customised solutions have
helped take Digital India to the last mile. Working with
start-ups, we have been able to integrate fintechs into the
banking ecosystem and helped leverage their expertise
for the public and private sectors.
Common Services
Centres (CSCs)
Our association with CSCs is helping
us offer cost-effective services to the
under-banked in the hinterlands of India.
The CSCs, managed by Village Level
Entrepreneurs (VLEs), serve as access
points in delivering essential public
utilities, healthcare, financial, education
and agrarian services alongside social
welfare schemes and diverse B2C
services. We are leveraging this network
to provide banking solutions nationwide.
Working with Central,
state and local
governments
HDFC Bank is the second largest
collector of direct taxes. We enable
government institutions to achieve
a higher degree of customised
digitisation across fund flows, eliminating
leakages and enhancing efficiency and
transparency. So far, the Bank has
partnered with government authorities
and conceived more than 300
customised digital solutions for them.
myApps
To support the Digital India mission, we
launched myApps, a suite of applications
during 2019-20. myApps offers digital
payment modes and other value-added
services for four key segments – urban
local bodies, including smart cities,
housing societies, clubs and religious
institutions to enable digitisation of their
entire ecosystem.
Members can make payments for
utilities and fees, make online bookings
for various facilities, stay updated on
latest announcements, and utilise a
host of other features offered by these
institutions. The institutions also get
easy access to reports on payments,
facilities booked by members, requests,
complaints registered and much more.
54,000
Women have been supported
through SHG/JLG loans via
our CSC network**
**As of March 31, 2020
34
Highlights of our collaboration with governments
• Help government departments and urban local bodies
monitor large-scale project execution in real time and
release funds linked to achievement of project milestones
• Offer e-auction and e-tendering services to various
government authorities to facilitate transparency in bidding
and procurement activities
•
•
•
Provide timely fund disbursements, including Direct
Benefit Transfers (DBT) and non-DBT payments through
the Public Financial Management System (PFMS)
Integrate with various state government departments
including the Treasury Department for collection of various
types of revenue receipts
Extend a finance management platform to monitor and
manage funds for state-level schemes like National Health
Mission (NHM) for effective budget management and
reduction in leakages
•
•
•
Provide effective budget management solutions for
schemes like State Rural Livelihood Mission and Mid-Day
Meals to enable efficient use of funds
Partner with the Government e-Marketplace (GeM)
to provide financial services to buyers and sellers
on the platform
Join forces with the Ministry of Corporate Affairs (MCA) to
start online account opening services for new corporates
• Collaborate with e-National Agricultural Marketplace
(eNAM) to provide digital payment and settlement services
•
•
Provide digital tax management and collection services for
municipal bodies and Smart Cities
Secured an empanelment for salary business with
non-civil departments, such as Railways, Defence, Border
Security Force and State Police
Digital solutions for
agriculture segment
We have supported online procurement
of agricultural produce by integrating
with platforms like e-Kharid in Haryana
which bring together government
procurement agencies, arthiyas and
farmers to digitise agricultural trading
and process payments. This ensures the
highest standard of transparency and
efficiency, alongside faster realisation of
funds into farmers’ accounts.
Start-Up fund and
SmartUp banking
We are working with multiple
state governments, incubators
and accelerators to promote
entrepreneurship through our
SmartUp programme for start-ups,
providing support to social start-ups
through our start-up fund.
10,000+
SmartUp customers
60+
social impact start-ups
2nd
cohort of start-up fund
35
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Awards and recognition
Acknowledged for excellence
Awards and recognition
1
2
3
CNBC-TV18 India Business Leader
Awards (IBLA) 2019-20
BrandZ Top 75 Most Valuable
Indian Brands 2019
Business Today – Money Today
Financial Awards 2019
4
5
6
ICAI Awards for
Excellence in Financial
Reporting for 2018-19
American Indian
Foundation
Euromoney Awards
for Excellence 2019
1
2
3
4
5
6
HDFC Bank
Brand ‘HDFC Bank’
Fintech
Asiamoney Best Bank
Award 2020
Best domestic bank
Euromoney Awards for
Excellence 2019
India’s best bank
CNBC-TV18 India
Business Leader Awards
(IBLA) 2019-20
Outstanding
company of the year
UTI MF - CNBC TV18
Financial Advisor Awards
2018-19
Best performing bank
(private sector)
Business Today – Money
Today Financial Awards
2019
Best large bank
Institutional Investor in its
All-Asia (ex-Japan)
Executive Team 2019 survey
Ranked HDFC Bank ‘the
Most Honored Company’
WPP Plc-Kantar Millward
Brown BrandZ Report
India’s most valuable
brand (for the sixth
consecutive year in 2019)
Cannes Lions International
Festival of Creativity 2019
Silver Lion for Blood Donation
Drive Campaign #StopMithani
Spikes Asia 2019
Grand Prix for Blood Donation
Drive Campaign #StopMithani
Nasscom DSCI Excellence
Awards 2019
Best security practices in
the banking sector
Business Today – Money
Today Financial Awards
2019
Best fintech engagement
36
Best practices
ICAI Awards for
Excellence in Financial
Reporting for 2018-19
Won the Gold Shield in the
Private Sector Banks (including
Foreign Banks) category
People practices
Certified as a ‘Great Place
to Work’
by the Great Place to Work
Institute in April 2020
Recognised as one of the
‘Top 10 Best Companies to
work for in India’
by Business Today
Honours for our
MD, Aditya Puri
Others
American Indian
Foundation
Honoured for corporate and
philanthropic leadership
13th ICAI Awards 2019
Inducted in the
CA Hall of Fame
QIMPRO Awards 2019
Platinum Standard Awards
– National Statesman for
quality in business
FinanceAsia's Survey 2020
Ranked 1st as Best CEO
11th Inclusive Finance India
Awards (IFI) 2019
Won in the category
‘Innovation and Inclusiveness
in Priority Sector Lending’
SIDBI-ET India MSE
Awards 2019
Best MSE Bank
(Private sector)
FinanceAsia's Survey 2020
Ranked 1st as the Best
•
Managed Company
•
Ranked 1st for Best
Corporate Governance
Greenwich Associates study
Joint Number 1 in large
•
corporate banking with
75% market share
•
•
•
Leader in overall quality
of client relationship in
corporate banking
Number 1 in
middle-market
banking with 60%
market share
Leader in overall quality
of client relationship in
middle-market banking
37
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Going ‘phygital’,
building scale
Retail Branch Banking is the key driver of the Bank’s business, with over 40% of
our human resources in Branch Banking galvanising the key business segments
– all of Retail Deposits, Retail Trade and Forex Business; more than half of
Unsecured Business, a significant part of the Secured Business and more than
three-fourths of fee-based Third Party Business and Business Banking.
In a mobile-first digital world, our Retail Branch Banking
business is being re-imagined through the levers of
digital paperless processes and big data analytics, thus
enabling meaningful conversations with our customers for
well-informed financial decision-making. From choosing
products based on consumption and spending patterns
arrived at by using data analytics, to going completely
paperless with documentation, the focus is on leveraging
technology to deliver an omnichannel experience.
AI-powered recommendations enable branch teams to provide
pre-approved offers in real time which the customer can
avail of with a single tap/click. The teams have been trained
to leverage these tools for customer-centric conversations
rather than product-centric and thus help deliver customer
experience excellence. Faster conversions and reduced
turnaround times contribute to customer stickiness with a
greater share of wallet.
Measuring Smile Scores (read more about our NPS
programme Infinite Smiles on page 32) at each
customer interaction helps gather insights on improving
processes to continuously enhance the experience
of customers. Further, insights-driven shopper
activation programmes have helped transform our
branches from a mere banking storefront to a financial
services marketplace.
In addition to over 5,400 banking outlets*, the Bank has
made significant foray in the business correspondents
model to enhance its distribution footprint nationally,
especially focused on rural through government SPV
- CSC. These business correspondents (BCs) and
business facilitators (BFs) have been appointed under
the hub and spoke model. A retail branch acts as a hub
for a set of BCs and BFs and ensures their training,
monitoring and enablement for business development
and transaction processing, thus building an extensive
future-ready distribution network and lending the Bank
a competitive advantage.
Pillars of best-in-class retail
banking experience:
Brilliant basics
Understanding customers based on their
consumption and spending patterns; setting the
right narrative based on profiles to engage in
meaningful conversations
Sales force digitisation
Digital enablement of sales team and branch
operations; ‘Mobile-first’ CRM empowers our
sales team to engage with customers anywhere;
branches transform through paperless processes
Targeted segmented play
With analytics, big data and AI as key enablers,
there is real time availability of customer-level
recommendations and pre-approved offers with
the sales team along with propensity to buy
Customer
experience excellence
We measure Net Promoter Score (NPS) at
every touch point, receive customer feedback
and gain insights on improving processes to
enhance experience
*In addition, we have 5,379 BCs managed by CSCs
How we create value
In this section
Our value creation model
Our external environment
Stakeholder engagement
Materiality
40
42
46
48
Our value creation model
Designed to create sustainable value
Our value creation model
External drivers
Input capitals
Banking for the future
Outputs
Outcomes: Key stakeholder value
SDGs
Financial capital
• Deposits
• Shareholders’ funds
• External borrowings
Human capital
• Employee base
• Learning & Development
• Employee engagement initiatives
• Employee benefits
Social & relationship capital
• CSR programmes executed through
five focused pillars
• Trade partners and merchants
• Workforce engaged in CSR programmes
• Partnership with government
Manufactured capital
• Banking outlets, Business Correspondents
(BCs) managed under CSC
• ATMs + cash deposit & withdrawal machines
• Corporate office and other locations
• Data centres
Intellectual capital
• Digital enterprise: Advanced technology, data
security analytics, robotics
• Collaboration with fintechs and start-ups
• Sales force digitisation (CRM)
Natural capital
Natural resources consumed in the
operation of business: electricity, fuel,
water, among others
Government
initiatives
Economic
shifts
Customer
expectations
Technology
advancement
Regulatory
oversight
Disruptive
competition
Climate
change
40
Digitisation
Customer
centricity
Responsible
business
Key activities
Product & services
Risk management
Multi-channel
delivery
Talent
management
Innovation
r a
e
t
i o n al Excellence
p
O
us
c
o
F
r
e
m
o
t
s
u
C
P
e
o
ple
C O R E
VA LU E S
P
r
o
d
u
c
t
L
e
a
d
e
r
s
h
ip
s t ain ability
S u
Pay
Invest
Save
Borrow
Retail deposits
Export
Credit
Wholesale deposits
Structured
Finance
Loans/Mortgages
Corporate banking
services
Debit/Credit cards
M&A /
Corporate
Advisory
Custodial /
Depository
Services
Value drivers
Customer and merchant
services
E-Kendra
Execution
Governance
Parivartan
Strategic Priorities
Re-imagining the
branch channel
Leadership in the
payments business
Strengthening our
presence in semi
urban & rural regions
Virtual Relationship
Management
Digital 2.0
Subsidiaries
Environmental, Social
and Governance (ESG)
Page 52
Digital products
Bonds and mutual funds
Digitisation
• Leading payments business with about 17 Lakh
merchant acceptance points
• Industry-first products like 10 second personal loan,
Digital Loan Against Shares (LAS)
Page 26
Customer centricity
• Customer Experience (CX) Transformation
(NPS) Programme
• ‘Millennia’ became the youngest card to cross
10 Lakh subscriber base
Page 32
Responsible business
• Social & Environment Management System for loan
screening and approval
Page 69
Customers
• Customer base: 5.6 Crore+**
• Digital transactions*^: 95.1%
• Servicing customers in 2,803 cities/towns
• Superior customer experience: Deep Financial
Expertise, Advanced Technology, User Interface
of choice, Complete Product Suite
Investors
• Cost to Earnings ratio: 38.6
• Net revenue*: `79,447.07 Crore
• Return on Equity: 16.8%
• Gross NPAs**: 1.26%
Employees
• Inclusive environment
• Employee engagement score: 75%
• Listening organisation
• Organisational capability
Page 74
Society
• Lives impacted by Parivartan: 7.8 Crore
• Rural development: 1,282 villages in 17 states
covered through Holistic Rural Development
Programme (HRDP)
Trade
Insure
Shop
Page 70
*During 2019-20 **As on March 31, 2020 ^Retail transactions
41
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20
Our external environment
Leveraging emerging
opportunities
Current state of affairs
Global and Indian economy
The global economy grew at a healthy pace of 2.9% in 2019,
driven by strong growth in emerging markets. India and China
were at the forefront of driving economic growth in the region.
Looking ahead, the global economic outlook is clouded by
the uncertainty surrounding the spread of COVID-19. The IMF
revised its global growth forecasts from +3% to -3% for 2020.
With the incidence of the disease being acute in developed
economies, the IMF expects advanced economies to contract
by 6% in 2020, from +1.7% in 2019.
India is also expected to see a contraction (GDP growth
at -4.8%), with a sharp fall in Q1 2020-21. In this regard, while
the number of infections is still rising in India, it is likely to have
a much lower per capita infection rate than the global average.
This, along with the graded easing of the lockdown across
states and continued monetary and fiscal support, could aid a
gradual recovery by the second half of the financial year.
On the external trade front, while a slowdown in growth of
major trading partners is likely to weigh on India’s export
growth, the country could gain from the shift in global supply
chains away from China as major economies like the US and
EU look for alternative trade destinations. This could lead to
more sustained foreign flows into India over the medium term,
Strong FDI inflows in India
($ Billion)
52
50
40
30
20
10
0
45
42
39
43
35
31
33
27
2011-12
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Source: CEIC, HDFC Bank
Read more in Directors’ report on page 86
42
US
2
-5.9
World GDP
growth estimates
3.3%
Pre-Covid
-3.0%
Post-Covid
as well as support investment and manufacturing growth in the
country. Moreover, lower oil prices are likely to benefit India’s
current account and fiscal balance.
Once the COVID-19 peaks in a number of countries this year
and economic recovery is supported by substantial fiscal
and monetary stimulus, growth is expected to bounce back
up in 2021. The IMF expects global growth to accelerate to
5.8%, the US and the EU to grow by 4.7%, and India to grow
at 7.4% in 2021.
Indian Banking industry
For the Banking industry, the pandemic and its aftermath are
likely to bring a set of challenges as well as opportunities.
For instance, healthcare is likely to get a boost as the
management of the pandemic underscores the need to
expand capacity in this domain. A boost to healthcare is likely
to impact both the pharmaceutical and medical equipment
segments positively. As the government focuses more on these
sectors, it is likely to draw private participation. The potential in
terms of both credit and non-fund businesses is large.
Global GDP growth estimates
(%)
Pre-Covid
Post-Covid
Our external environment
Russia
1.9
-5.5
China
6
1.2
Japan
0.7
-5.2
India
5.8
-4.81
UK
1.4
-6.5
Euro Area
1.3
-7.5
South Africa
0.8
-5.8
Source: IMF WEO April 2020 Edition
1 For 2020-21, HDFC Bank estimates
Another opportunity for the banking industry is in the
agriculture segment. Recent structural reforms by the
government are likely to see an increase in private interest as
impediments to procurement of produce and warehousing
get eliminated. This is likely to directly benefit the food
processing industry and invite more corporate investment in
addition to expanding the space for banks to fund this sector.
The government has also allocated considerable funding
(`10,000 Crore) to formalise the micro-food processing
segment through technical and infrastructure support.
The micro segment is likely to grow in ‘clusters’ and offer
credit opportunities for banks particularly through microfinance
and Self-Help Group (SHG) channels. Loans to Micro, Small
and Medium Enterprises (MSMEs) are likely to see immediate
traction with the government providing 100% guarantee on
`3,00,000 Crore of collateral-free lending to this segment.
While soverign backstop makes lending to this segment viable
in the near-term, the effort to strengthen and scale up these
firms could well create high-quality borrowers in the process.
Along with this, the government has also introduced a special
credit facility and a partial credit guarantee scheme for NBFCs
and HFIs which is likely to de-risk bank lending to these entities
in the near-term and over the medium-term, could help some
of them escape the vicious cycle of elevated risk perception,
shortage of liquidity and credit and balance sheet stress.
On the policy front, the RBI is likely to continue its strategy of
maintaining surplus liquidity in the system and cut the policy
rate further. All this will ensure low-cost funds for banks.
Challenges, however, remain. The sharp deceleration in
GDP growth is likely to rein in the demand for credit, and
compromise credit quality. A global recession is likely to dent
export growth across sectors. Thus, banks need to navigate
the terrain of enhanced risk carefully, particularly in sectors
such as hospitality and civil aviation, where the impact of
COVID-19 and its management is likely to be prolonged.
The rise in precautionary savings among households and the
possibility of rising unemployment that is often the corollary of
growth deceleration, could rescue the demand for retail lending
particularly for big-ticket items.
43
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Our external environment
Our external environment
Trends shaping our future
Notwithstanding the headwinds from the spread of
COVID-19, the long-term growth levers for India remain
intact. The Indian banking and financial services sector is
at a crossroads. On one hand, the nation’s healthy long-
term economic growth trend, the government’s push for
financial inclusion, and favourable policy and regulatory
reforms are playing a key role in driving industry
growth. On the other hand, the emergence of disruptive
technology companies such as fintechs, and evolving
customer expectations around ease and convenience are
redefining the competitive landscape.
In the current pandemic, elevated precautionary savings
that are typical in the wake of a major shock are likely
to provide the banking system with low-cost deposits.
An increase in risk aversion that could potentially drive
investments away from alternatives such as equities
could also boost deposits.
Not just saving patterns, but payment habits are also likely
to undergo some changes over the medium term. In this
regard, restricted movement and social distancing measures
are likely to provide a push towards electronic payment
modes, boding well for digital banking and reducing cash
transactions in the system over a period of time.
Rapid economic growth
Government and regulatory initiatives
Technology and evolving customer preferences
Governance and climate change concerns
India has been one of the fastest growing large economies
in the past few years. The government has been focusing on
infrastructure development, housing and SMEs, which has
fueled demand for credit. However, India’s credit-to-GDP
remains significantly low compared to peer countries, leaving
large addressable credit gap across sectors. Further, the
expanding working age population and rising disposable
income are boosting demand for banking services. The large
underbanked yet economically active population bodes well
for the industry.
The government’s focus on driving inclusive growth is
accelerating economic formalisation across the country,
creating demand for banking services in the remotest corners.
Further, initiatives such as affordable housing (PMAY) and
Mudra Scheme (PMMY) are boosting credit demand in the
hinterlands. The emergence of new-age banks, such as
small finance banks and payments banks, and the RBI’s
‘on-tap’ licensing policy for NBFCs and MFIs are likely to
further boost formalisation through ‘high technology, low-cost’
banking services.
The proliferation of digital technologies and the increasing
penetration of smart services are disrupting the conventional
modes of delivering banking services. With simplicity, speed
and convenience playing a key role in expanding customers’
mindshare and, in turn, wallet share, financial services
providers are adopting a ‘phygital’ strategy to deliver an
omnichannel experience across platforms. Further, fintech
companies, by leveraging Artificial Intelligence, Machine
Learning and data analytics, are devising innovative methods
to evaluate creditworthiness and deliver financial services,
thereby intensifying competition. That said, technology
comes with its inherent risks, compelling the industry to
invest heavily towards mitigating cyber security risk and
safeguarding customers.
As corporate governance issues surface with increasing
frequency, the Indian banking industry, along with the
regulators, is looking at risks through the ESG performance
prism. The potential impact of climate change on agriculture
and businesses, and thus, on NPA levels due to the increasing
frequency of extreme weather-related events is prompting
the industry to reassess their screening process for project
financing. Further, the global investor community – especially
sovereign wealth funds and pension funds – is increasingly
factoring in ESG performance metrics to assess long-term
profitable growth.
Potential for growth of banking services in India
(Total Credit, % of GDP)
Growing number of Jan Dhan accounts
(in Crore)
Growing acceptance of digital payments in India
(UPI-based payments)
400
300
200
190.1
125.5
380.7
310.8
254.2
258.7
262.3
274.8
38
35
31
28
40
30
20
10
0
21
15
3
.
8
9
0
,
1
2
.
5
1
9
5
.
9
6
9
.
7
1
4
.
3
5
3
,
5
7
.
9
6
7
,
8
6
.
8
1
5
,
2
1
3
.
7
1
3
,
1
2
100
69.8
0
i
a
d
n
I
i
a
s
e
n
o
d
n
I
i
a
s
y
a
a
M
l
Source: CEIC, HDFC Bank
Note: Data as of Q4 2019
44
S
U
i
a
n
h
C
K
U
a
e
r
a
o
r
u
E
n
a
p
a
J
e
r
o
p
a
g
n
S
i
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2016-17
2017-18
2018-19
2019-20
Source: PMJDY Portal,
HDFC Bank
Volume (in Mn)
Value (in Bn)
Source: RBI, NPCI, HDFC Bank
45
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20
Stakeholder engagement
Dialogues that provide insights
The strategies we adopt have long-term implications for the creation and
preservation of value for all our stakeholders. This is how we ensure that the
current and evolving interests of our internal and external stakeholders are
taken into account.
Engaging with stakeholders regularly through various modes of
communication enables us to identify the issues that could materially impact
not just our economic value, but also our social relevance and relationships.
Stakeholder engagement process
We have adopted a five-step stakeholder engagement process.
Apart from ensuring transparency, it captures feedback and response,
which provide us insights to understand our material issues, shape our
business operations and minimise risks.
Customers
Investors
Stakeholder engagement
Modes of Engagement
Key Issues / Expectations
Response and Mitigation
Online, phone &
postal communication
Customer satisfaction
surveys and feedback
Provide products &
services to meet needs
New products enabled by the Bank’s
digitisation strategy
Ease of transacting across channels
Enhanced customer experience, moving
Innovative technology applications
Data security
Advanced analytics
away from transactions to encompass the
entire financial journey
Making personalised
recommendations with VRM
Driving awareness on data
security and privacy
Quarterly Financial Updates
Compliance
Continuous and consistent growth
Investor Meets
Press Releases
Annual General Meetings
Governance and ethical practices
and profitability
Economic performance
Increased use of systems and services for
bank-wide digital projects to reduces
overall operational costs.
Policies related to ethical conduct in place
Regulatory
Bodies
Regular meetings
Policy updates and
Ministry directives
Social security schemes
Public private partnerships
Aadhaar linkages
Awareness generation on Aadhaar
Mandatory filings with regulators
including RBI and SEBI
Compliance
Digital India
Employees
Employee feedback surveys
Employee engagement
Employee townhalls
Learning initiatives
Employee wellness and safety
Learning and development
Employee outreach by Human
Resources in person, over video
conferencing, email, phone,
messaging etc.
Employee connect initiatives
like talent meets (Hunar), Sports
meets (Josh) etc. among others
Our five-step stakeholder
engagement process
linkages and PMJDY
Comply with government norms
Working with CSC
Supporting ‘Digital India’ initiative of the
government through all our businesses
Create a high trust, high performing organisation
through increased employee connect on various
elements of employee engagement
Adopt a holistic approach to wellness under the
‘HDFC Bank Cares’ umbrella across physical,
emotional, financial and social aspects
Structure role-based Learning and
Development initiatives based on the principle
of 70:20:10 for every employee and explore
alternative channels to enable access to
resources across locations
Build talent pipeline through structured
talent management processes leading
to role readiness
1
Stakeholder
Identification
2
5
Stakeholder
Engagement
Reporting
3
4
Communication
of Responses
Community
Materiality
Assessment
Suppliers
46
46
Regular meetings
Training and inclusive growth
Holistic Rural Development Programme (HRDP),
Focus group discussions
Financial literacy
Project monitoring and reviews
Responsible business conduct
Sustainable Livelihood Initiative (SLI)
Financial Literacy Camps
Responsible lending
Regular meetings
Phone calls
Surveys
Partnership
1. Ensure timely payment for services
Governance and ethical practices
47
47
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Materiality
Prioritising issues
of material importance
Material issues comprise both emerging opportunities and threats to value
creation. These issues are determined by factoring in stakeholder expectations
into the economic, social and environmental including governance context in
which we operate.
We ranked the topics most relevant to us based on their degree of importance
to the management as well as stakeholders in consultation with the CSR
Committee of the Board.
Managing stakeholder expectations
Major
Significant
Moderate
l
s
r
e
d
o
h
e
k
a
t
s
l
a
n
r
e
t
x
e
s
'
k
n
a
B
C
F
D
H
o
t
e
c
n
a
t
r
o
p
m
I
01
13
10
08
15
07
09
02
03
12
Parameters
01 Responsible Lending
02 Corporate
Governance and Ethics
03 Economic Performance
11
16
04 E-waste Management
05 Energy Management
06 Emissions
and Climate Change
07 Community Development
and Social Responsibility
08 Employee
Engagement and Welfare
09 Financial Inclusion
10 Product Innovation
11 Customer Satisfaction
and Brand Management
12 Compliance
13 Digitisation
14 Government
Initiatives and Missions
15 Training and Development
16 Information Security
and Data Protection
05
14
06
04
Moderate
Significant
Major
Impact on HDFC Bank's business
Materiality
Responses to material topics of very high importance
Material topics (GRI Topics) Our Response
Capitals Impacted
Corporate governance
and ethics
(Anti-corruption &
Anti-competitive)
The Bank complies with all requisites laid down by
the National Stock Exchange and New York Stock
Exchange and with the Indian Companies Act. The Bank
also has robust Corporate Governance and Risk
Management framework.
Compliance
(Environmental
Compliance)
HDFC Bank operates in a highly regulated sector, thus
regulatory compliance is mandatory and non-negotiable.
All the operations of the Bank comply with legal,
environmental and social requisites prescribed by
regulatory bodies as per applicability.
Economic Performance
(Economic Performance)
The Bank has performed well even under stressful
economic situations due to discreet strategies in
management and capital utilisation.
Customer satisfaction
and brand management
(Marketing and Labelling)
The digital wave has made it easier for the Bank
to understand customers and thus conceptualise
better experiences.
Information security
and data protection
(Customer Privacy)
Framework related to information security and data
protection is established. Board approved 3-year
plan is in place.
Financial Capital
Manufactured Capital
Intellectual Capital
Social and Relationship Capital
Human Capital
Natural Capital
For our response to other material issues, please refer HDFC Bank Sustainability Report 2019-20
48
49
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20
Making payments
simple and convenient
Quick, simple, accessible, and above all, secure and complete – our wide
spectrum of payment solutions emulates these traits to redefine convenience.
Our leadership in the business stems from our ability to understand customers’
changing preferences.
In fact, the majority of shops and
restaurants use card machines deployed
by HDFC Bank, which means a secure
transaction is assured with every swipe.
With our strong merchant relationships,
we have deepened engagement with
both customers and merchants.
Let’s take Ravi’s experience as an
example. A Vice President at a leading
media group in Mumbai, Ravi is married
with two children – his son is studying in
the US; his daughter is in high school.
The family enjoys spending time together
– shopping, dining out, going to the
movies, and even vacationing at exotic
destinations. They frequently visit the
Palladium Mall, and Ravi’s Regalia Credit
and Platinum Debit cards enable him to
avail exciting offers at a host of shops
and restaurants.
Ravi was browsing through TV models
at Reliance Digital the other day when
our loan executive based at the store
advised him to check his Debit Card
EMI eligibility by simply sending an
SMS. He was offered a Debit Card EMI
loan of up to `6 Lakh, much above his
account balance with the bank and
without the need to submit a single
document. More importantly, he could
avail the facility without incurring any
additional cost, thanks to our strong
alliances with leading OEMs like
Apple, LG and Samsung.
HDFC Bank was the first to introduce Debit Card EMI
online and at in-store merchants. Today, customers can
avail EMI facilities on Paper Finance, Debit Card and Credit
Card, not just for consumer durables but also for Lifestyle,
Education, Insurance, amongst other categories.
When it comes to online shopping, the story of our
cards and mobile wallet PayZapp isn’t any different.
Online marketplaces and platforms like Amazon and
Swiggy prefer to partner with us for running various
schemes, simply because our card holders account for the
highest spends.
Ravi and his family also love to travel. Ravi uses HDFC Bank
SmartBuy to compare and get the lowest fares. He can also
redeem his credit card points to buy his tickets.
PayZapp, our digital wallet, allows effortless management
of bill payments and attractive CashBack. Our corporate
card facilitates bill settlement directly by the employer,
without the hassle of claiming reimbursements
for the employee.
When travelling abroad, he carries his HDFC Bank
Regalia Forex Card which has no cross-currency charges,
regardless of which country he’s travelling to. Whether it
comes to providing his teenager with some pocket money,
or sending a last minute e-gift to his sister in Chennai, our
solutions are designed to simplify Ravi’s life, every day.
We have deployed the most robust fund transfer
mechanisms across UPI, IMPS, NEFT, RTGS, with over
400 Crore transactions processed annually. HDFC Bank
has partnered with GooglePay as a payment services
provider (PSP) bank for UPI and is also shortly going live
with WhatsApp.
Further, we provide the widest range of payment solutions
to Central and state governments across departments –
transit (metro rail/ bus/ waterways), tolls (national and state
highways), FASTag, disbursals and payments (subsidies/
DBT/ eNam), as well as Smart Cities.
Numbers that speak volumes
17.97 Lakh
Merchant
acceptance points
3.21 Crore
Debit Cards
1.45 Crore
Credit Cards
40%
POS
transactions in India
50%
Online
transactions in India
1,300+
Alliance partnership
programmes
Our strategy
In this section
2.3 Crore
Registered
customers on
PayZapp
35 Lakh
Prepaid cards
65 Lakh
Customers purchased
through consumer
finance products
Strategic priorities
Risk management
Business Continuity
Plan (BCP) at HDFC Bank
52
58
62
Strategic priorities
Paving pathways for the future
Strategic priorities
At HDFC Bank, we factor in our external environment, emerging risks and opportunities, as well as stakeholder
expectations to arrive at our strategic roadmap.
Our long-term strategic objectives
External environment
Stakeholder expectations
Risks and opportunities
Mission. Vision. Purpose
Environmental, Social and
Governance (ESG)
Re-Imagining the
branch channel
Lower cost
of funds
Increase customer
base
Leadership in
the payments
business
Subsidiaries
Healthy
asset quality
Core Strategic
priorities
Operational
efficiency
Wide range of
products/services
Geographical
reach
Strengthening
our presence in
semi-urban & rural
regions
Increase customer base
We are continuously adding new customers in our existing
as well as new markets by providing innovative solutions,
and ensuring transparent and responsible practices.
We leverage our physical and digital infrastructure to deliver
superior customer experience, which drives customer loyalty
and increase in share of wallet.
Enhance our range of products and services
We offer a comprehensive suite of products and services,
which is designed to address the needs of our diverse
customer base. We make optimum use of our multiple delivery
channels to engage with our customers to expand our
offerings in line with evolving needs and preferences.
Drive operational efficiency
We constantly endeavour to drive efficiencies through
digitisation by creating enabling applications, smart
functionalities, and better platforms.
Maintain healthy asset quality
We have an unwavering focus on our asset quality.
Our disciplined credit risk management and robust culture
of due diligence that considers environmental and evolving
operational risks provide stability to our asset quality across
economic cycles.
Digital 2.0
Value we create
• Responsible leadership
• Consistent growth
• Customer-centricity
• Nationwide footprint
52
Virtual Relationship
Management
• Empowering households
• Climate change initiative
• Good governance
Expand geographic reach
Our deep understanding of various geographies enables
us to develop products and services catering to the unmet
needs of customers, which deepens our penetration
in existing markets. Backed by our strong technology
backbone, we are further expanding our reach by
strategically increasing our banking outlets and adding
channel partners across CSCs, BCs, among others.
Lower cost of funds
We are focused on maintaining our cost of funds at lower
levels, and also on improving our overall cost efficiencies by
optimising our product portfolio mix.
53
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Strategic priorities
Strategic priorities
The Management Team of the Bank over the last two years has conceptualised the following key strategic priorities to
be played out in the next 3-5 years, which is expected to propel the next wave of growth opportunities for the Bank.
Re-Imagining the branch channel
The branch channel is one of the key drivers for our business.
Almost 40% of our employees are involved in retail banking,
galvanising the key business for our bank, that is, retail
deposits, retail trade & forex business, unsecured and
secured business and third party distribution business.
Re-imagining the retail branch banking is focused
on transforming branches as phygital financial
marketplace through :
• Base sales process anchored on catchment scoping
and mining with institutionalised consistency and rigour
across the organisation.
•
Artificial intelligence-led big data analytics to arrive at
sharply customised propositions for customers thus
enabling meaningful customer interactions and improved
customer-centric sales outcomes.
• Customer experience excellence through the Infinite
Smiles programme, measuring Net Promoter Score
(NPS) of customer interactions, continuous improvement
of our customer processes, leveraging technology and
biometrics for customer on-boarding and life cycle
management, thus building India's most customer
obsessed financial brand.
The primary objective of this strategy is to step-up the pace
of customer additions and continue offering the Bank's
complete product offerings to customers.
Our customer base
2017-18
2018-19 2019-20
No. of customers (Crore)
4.36+
4.91+
5.6+
Leadership in the Payments business
We are a leading player in the Payments ecosystem in the
country and will continue to focus on this space. Every third
rupee spent on cards in India happens on an HDFC Bank’s
issued instrument viz credit, debit and prepaid cards. On the
issuing side we have almost 3.21 Crore debit cards and
1.45 Crore credit cards.
On the acquiring side currently we have over 17 Lakh merchant
acceptance points across India and we plan to scale this
network 2-3x over the next few years. On the acquiring side
(merchants), we have an even bigger and dominant market
share, with approximately 50% of electronic card volumes
which consumers swipe at both online and offline merchants in
the country going through the HDFC Bank network.
The focus continues to onboard small merchants including
kirana stores into the formal banking system by digitising
their payment solutions and thereby, capturing the banking
business of this segment. Our value proposition for merchants
is to provide them with a complete suite of financial
services, rather than limiting ourselves to just the payment
processing solutions.
Maintaining lead
2017-18
2018-19 2019-20
Credit card
holders (Crore)
Merchant Acceptance
Points (Lakh)
1.07
1.25
1.45
6.64
9.61
17.97
Strengthening our presence in
semi-urban & rural regions
Almost 60% of India’s population lives in the semi-urban
and rural regions. The banking needs of this aspirational
demographics with an average income level at US$ 2000
resembles that of urban India almost 5-10 years back. A low
Credit-Deposit ratio in these regions indicates deep liquidity
pockets in terms of deposits for our bank and low asset
penetration, which, in turn is a clear lending opportunity for us.
Virtual Relationship Management
With a customer acquisition strategy in place it is imperative
that we step up customer engagement, product penetration
and servicing with a faster turnaround time. While the
traditional formal relationship management programme i.e
servicing by physical relationship managers/ personal bankers
contributes a significant proportion of retail revenues, it is
important to step up similar engagement levels across the
entire customer base.
Aided by an enriched data warehouse, CRM tools and Artificial
Intelligence, we have set up a Virtual Relationship Management
channel wherein relationship managers engage and service the
customers remotely and provide a complete suite of targeted
product offerings digitally.
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 personalised
narratives leading to enhanced relationships and at the
same time helping increase the overall productivity for our
Bank. The entire interface is currently remotely managed by
almost 3,600 VRMs across 13 locations. Currently, 5.6 Million
customers are engaged through this channel. We plan to grow
it three times by March 2023.
Delighting customers
2017-18
2018-19 2019-20
Customers managed
under VRM (Million)
2.95
4.43
5.6
With more than half of our banking outlets and a third of our
workforce (including agri and SLI teams) in this market, we
are well poised to maximise this opportunity. Our focus on
semi urban and rural strategy at no point dilutes any of our
credit standards.
To increase the distribution footprints in semi-urban rural areas,
we have tied up with CSCs, a special purpose vehicle (SPV)
set up by Ministry of Electronics and Information Technology
(MeitY) to offer Citizen Facilitation Services digitally. The CSC
is manned by the Village Level Entrepreneur (VLE) who offers
various citizen facilitation services and also acts as a Banking
Facilitator for the bank. At present, we have on-boarded almost
1 Lakh VLE’s as Banking Facilitators to help source leads for
us (of this almost 40% are actively sourcing leads). Further, we
have integrated our technology platform with the CSCs to
accelerate the pace of lead conversions.
With the help of the VLEs, we intend to create a large
distribution network to capture the opportunities in the
semi-urban and rural areas. We are working closely with the
governments as well as merchants to achieve greater scale
in these regions.
Expanding reach in
India's hinterlands
No. of semi-urban and
rural banking outlets
2017-18
2018-19 2019-20
2,527
2,703
2,808*
*In addition we have 4,800 BCs managed by CSCs
54
55
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Strategic priorities
Strategic priorities
Digital 2.0
In our digital journey spanning the past five years, we have
pioneered a slew of digital products in the sector including the
10 second loan, industry-first Digital LAS, among others which
have been a significant game changer.
Digital 2.0 essentially is about re-imagining our digital
platforms providing the customer with a frictionless financial
experience. The objective is to move the customers from a
single transaction to a complete financial solutions journey and
thereby, meet all their financial needs. Be it Pay, Save, Invest,
Borrow, Shop, Trade, Insure and Advice we offer any financial
experience at a platform/ place of the customer’s choice.
We have pro-actively partnered with online platform players/
fintech players to provide value added benefits to our
customers. By deploying data analytics effectively, we intend to
maximise our digital impact, in terms of context and targeting.
This digitally synchronised marketing approach, will help
us acquire new customers more efficiently. We believe this
transition will lead to significant cost efficiencies on the back of
automation and reduction of origination costs. Simultaneously,
there will be an increase in revenue generation opportunities for
our Bank. Faster time-to-market and optimisation of customers'
digital life cycle are other benefits from this transition.
We are developing disciplines around new technologies like
Robotic Process Automation (RPA), Machine Learning (ML),
Artificial Intelligence (AI) and Block chain 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. Our API Banking
platform is a step in the direction of providing online real-time
financial experience to our corporate/ SME customers.
Platforms for a frictionless financial journey across needs
Subsidiaries
Our subsidiaries will continue to find opportunities within the
segments that they operate in.
HDB Financial services (HDBFS) is a Non-Deposit Taking Non-
Banking Financial company with Assets Under Management
of ` 58,833 Crore, and with a distribution network of 1,468
branches across 1,070 cities, HDBFS offers retail consumer
products, asset finance and collection services.
HDFC Securities Limited (HSL) is one of the largest retail
broking firms, offering retail broking services primarily to
customers of the bank and thereby complementing the
product offerings for the bank. HSL runs as a full-service
brokerage house and its product basket includes all sub-asset
classes such as stocks, derivatives, mutual funds, fixed
deposits, NCDs, insurance, bonds, and currency derivatives.
Environmental, Social and
Governance (ESG)
Our core values guide our ESG practices and in 2014-15,
sustainability was officially included as our fifth (core)
value, alongside customer focus, operational excellence,
product leadership, and people. Our ESG strategy is
focused on climate change, community and society,
employment practices, customers, ESG risks in lending,
procurement practices, governance, transparency and
accountability.
Invest
Shop / Commerce
Save
Insure
Pay
Borrow
56
57
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Risk management
Risk management
Fortifying for a better future
Main risk areas
Risks are inherent in any business and banking is
no different. We have adopted a multi-layered risk
management process to identify, assess, monitor and
manage risks through the effective use of processes,
information and technology.
The broad categories of risk we face are credit
risk, market risk, liquidity risk, interest rate risk and
operational risk. Further, our focus on digitisation
comes with cyber security and data risk as well as
reputational risk.
We are also exposed to Environmental, Social &
Governance risks arising out of the nature of business
operations of our borrowers (particularly large, corporate
borrowers), the industry segment in which they operate
and the deficits in their compliance to statutory/
regulatory norms.
Risk exposures are actively captured and reported to the
relevant levels of management for initiation of appropriate
risk mitigation measures. The risk management function
is independent from business and reports directly to the
Managing Director.
Our Risk Management Framework
Governance
Board of Directors
Board Committees
Management Committees
Risk Frameworks
Risk Appetite
Risk Strategy, Policies, Procedures and Systems
Compliance
Internal Capital Adequacy Assessment Process
and Stress Testing
Internal
Audit
Assessment
Control
Reporting
Risk Identification,
Risk Limits,
Risk MIS & Actions
Measurement,
Monitoring,
Approval
Mitigation
For a detailed explanation on risks and risk management, please refer disclosures to under Basel III - Pillar 3 on page 226.
58
Credit risk
This risk arises from default by borrowers in their
terms of contract with the Bank – especially failure to
make payments or repayments.
Capitals impacted
Market risk
The risk of potential loss in the value of financial
instruments held by us, such as market instruments,
debt securities, equities, derivatives instruments
due to adverse market movements.
Capitals impacted
Compliance risk
The risk of legal or regulatory sanctions, as a
result of failure to comply with applicable laws,
regulations and standards.
Capitals impacted
Strategic priority
Maintaining healthy asset quality with optimal
risk-reward considerations.
Mitigation
There are robust policies and processes for
managing credit risk in both retail and wholesale
businesses, mainly through our (a) segmented
policies, (b) credit approval process,
(c) post-disbursement monitoring and (d) remedial
management procedures.
Environmental, Social & Governance Risks arising
from the business operations of the borrower
are assessed and monitored via the ‘Social &
Environment Management System (SEMS)’.
For large, long-term project loans, the Bank
also appoints a Lenders’ Independent Engineer
(LIE) to do a comprehensive assessment and
monitoring of environment and social risks related
to the project.
Strategic priority
Optimising profitability of marked-to-market
products within the constraints of liquidity and
market risk appetite for the Bank.
Mitigation
Our Board-approved Investment Policy, Market Risk
Policy and Limit packages cap exposure in line with
the Bank’s risk appetite. We follow well-established
procedures for portfolio risk evaluation, market risk
factor assessment and risk controls.
Strategic priority
Ensuring businesses work within the
contours of regulation.
Mitigation
Comprehensive Board-approved Compliance policy
in place which is reviewed on an annual basis.
Drill down of the compliance culture within the
organisation through an intricate and comprehensive
internal control framework.
Financial
capital
Intellectual
capital
Manufactured
capital
Human
capital
Social and
Relationship capital
Natural
capital
59
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Risk management
Risk management
Operational risk
This risk arises from inadequate or failed internal
processes, controls and systems, and procedures due
to employee error or breach, fraud or external events.
Capitals impacted
Strategic priority
Leverage digitisation to create customer delight
and enhanced operational efficiency.
Mitigation
A Board-approved governance structure is in
place with detailed framework and processes,
internal controls, information technology and
fraud monitoring mechanisms.
Reputation risk
Any adverse stakeholder and public perception about
our Bank may negatively impact our ability to attract
and retain customers and may expose us to litigation
and regulatory actions.
Capitals impacted
Strategic priority
• Delivering superior customer experience.
• Wide range of products and services.
Mitigation
We communicate with our stakeholders regularly
through appropriate engagement mechanisms to
address stakeholder expectations and assuage
their concerns, if any.
ESG risk
Environment risk: This risk arises due to unpredictable
weather conditions and impact of climate change on
operations across geographies.
Social and Governance: Issues such as workplace
ethics, discrimination, unfair practices while engaging
with stakeholders may result in this risk.
Strategic priority
• Operational efficiency and targets to
reduce emissions.
• ESG strategy.
Mitigation
An ESG policy framework has been formulated to
address this risk.
Capitals impacted
Cyber and Data risk
Risk of cyber-attacks on our Bank’s systems through
hacking, phishing, ransomware and other means,
resulting in disruption of our services or theft or leak of
sensitive internal data or customer information.
Capitals impacted
Liquidity risk
Liquidity risk is the risk that the Bank may not be able
to meet its financial obligations as they fall due without
incurring unacceptable losses.
Capitals impacted
Strategic priority
• To maintain healthy liquidity in comparison to
balance sheet size of the bank to tide over any
unforeseen stress scenario.
• Maintaining competitive cost of funds.
Mitigation
The Bank's framework for liquidity and interest
rate risk management is spelled out in our Asset
Liability-Management policy. Further, a robust
mechanism to comprehensively track cash flow
mismatches under normal as well as stressed
conditions and critical ratios including Basel III
ratios has also been implemented. The Bank has
an extensive intraday liquidity risk management
framework for monitoring intraday positions
during the day.
Strategic priority
• Facilitating bank growth via secure Digital 2.0 -
Social, Mobile, Analytics and Cloud.
• Sustaining operational effectiveness and efficiency
through secure Work from Home.
• Adapting and updating Cyber Defense framework
to counter new-age threats.
• Continuous information security awareness for
employees and customers.
Mitigation
Every specific cyber threat including data privacy
is assessed basis the framework (Identify,
Prevent/Protect, Detect, Respond and Recover)
and controls such as firewalls, anti-malware,
anti-advance persistent threats, data loss prevention,
Red Teaming, Intrusion prevention/detection, digital
rights management, 24*7 security operation centre,
and forensics solutions have been put in place.
The international ‘general data protection regulation
(GDPR)’ has also been implemented across relevant
operations. The Bank is compliant with ISO 27001 and
PCI DSS standards.
60
Read more in the Directors’ report on page 86.
Financial
capital
Intellectual
capital
Manufactured
capital
Human
capital
Social and
Relationship capital
Natural
capital
61
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Business Continuity Plan (BCP) at HDFC Bank
Ensuring seamless operations
An overview of the BCP
As the world we live in becomes increasingly unpredictable, having a solid back-up and alternative arrangements is imperative.
At HDFC Bank, we have a well-defined Business Continuity Plan (BCP) in place. An ISO 22301 certified plan, our BCP is also
based on regulatory guidelines and is subject to regular reviews. It is guided by a Business Continuity Policy and Procedure with
clearly defined roles and responsibilities.
Scope of BCP
BCP: Governance and management
Retail Banking Operations
Wholesale Banking Operations
Treasury Operations
Retail Portfolio Management - Credit Cards
Payment Business & DBC-Risk Control
Phone Banking
Retail Branch banking
Our central Business Continuity Office works towards
strengthening the business continuity preparedness
BCP is managed by the Information Security Group and
governed by the Business Continuity Steering Committee
This committee is chaired by the Chief Risk Officer (CRO)
The committee’s other representatives are selected from
the senior management team
What are the key plans under the BCP?
Plan
Objective
Business
continuity
Emergency
response
IT Disaster
recovery
Pandemic
response
Resume critical business operations after
a disaster
Deal with site-level emergency at an office or
a branch involving life safety issues like fire,
bomb threats, and so on
Recover critical business applications during
hardware/network/power failure
Facilitate an organised and speedy response
to any pandemic incident threatening safety
of the Bank’s employees and/or disrupting
the Bank’s critical business functions
Crisis
management
Tackle Bank-wide disasters such as
pandemic, terrorist attack, city level flood,
cyber-attack, among others
62
Business Continuity Plan
(BCP) at HDFC Bank
Ensuring Business Continuity
during the lockdown to fight
COVID-19
Team HDFC Bank rose to the challenge of
delivering banking services during the outbreak
of the COVID-19 pandemic and the ensuing
nationwide lockdown.
Our first priority was to ensure the safety of
our people who were advised to either work
from their homes or from a nearby location.
The Crisis Management Plan was invoked.
The Crisis Management Team along with other
Group Heads/Senior Management swung into
action. The team prioritised critical functions
such as IT and Treasury to ensure minimal or no
business disruptions.
Banking unlocked in lockdown
IT infrastructure and Security
Admin - Focus on hygiene, safety
Others
Chief Information Security Officer (CISO)
sent out cyber-security precautions and
instructions related communication to
all employees
IT resources (like laptop, mail on mobile,
access to applications through VDI/
VPN) were made available to employees
on priority
Hardware capacity was increased for
select servers, thus enabling applications
to be securely accessed from home
The teams were kept on high alert to
monitor any unusual activity (like hacking
attempts) to prevent our critical data from
going out into public domain
Undertook cleaning/sanitisation of all
locations; identified pandemic response
coordinators for each location
Treasury was spilt between two
locations in Mumbai
Before the lockdown, the frequency of
cleaning offices across locations was
increased
For certain locations, the administrative
team reached out to the local authorities
to allow people to come to office
Protective measures including the
distribution of masks to security guards,
pantry staff and other support staff were
undertaken
Hand sanitisers were provided at all
locations
Ensured compliance with regulatory
requirements and prompt response to
advisories and circulars
Accommodation for critical IT resources
working at data centres was provided at
the Bank's nearest training centres and
hotels
The teams worked from home/office
round the clock (in shifts) to ensure
IT availability in a secure manner
Highly restricted access provided to
vendors and visitors, only allowed with
approval from Group Heads
Cyber security threats were thwarted by
implementing two-factor authentication,
strengthening anti-virus feature in the
devices at home and prohibiting any
download on local storage drives
Office premises were sanitised, fumigated
and disinfected.
(please refer to pages 33, 73 and 77 for details on how we engaged with key communities, people and customers during the nationwide lockdown)
63
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20
ESG: Approach
and focus areas
It is our firm belief that our success as an
organisation is defined by the long-term
wellbeing of the people we engage
with, the places in which we operate
and the planet that we leave to our
future generations.
We endeavour to drive a paradigm change
in how ESG (Environmental, Social and
Governance) and its parameters are
perceived in the banking sector. We are
building in ESG parameters into our own
business through our products and services
by screening opportunities and managing
risks is an attempt to drive such change.
Environment
Energy management
Emissions and climate change
Renewable energy
Managing waste
Responsible financing
Social
Community and society
Partnering with the government for
nation building
People policies and practices
Customer-centricity
Governance
Good governance
Transparency and accountability
Ethical conduct
Please read more about our customer-centricity and partnering with government initiatives on pages 32 and 34 respectively.
Responsible business
In this section
Environment
Social
Governance
Board of Directors
Senior management team
66
70
78
80
82
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Environment
Using natural
resources
prudently
Building a sustainable future
Energy management
At HDFC Bank, we are cognisant of our
environmental footprint and have been
recording our Greenhouse Gas (GHG)
emissions since 2010. We have aligned with
the Sustainable Development Goals (SDGs)
and are integrating them into our business
strategy as well as execution.
Responsible
financing
Emissions
and Climate
Change
Managing
waste
Renewable
energy
SDGs impacted
SDG 7
Installed solar panels in our offices, with a
focus on making our premises compliant
with green-building norms
SDG 11
Constant focus on consuming natural
resources efficiently
SDG 12
Optimise energy consumption, install
capacitor banks and occupation sensors
to reduce electricity consumption and so on
SDG 13
Focus on reducing Scope 1 and
Scope 2 emissions
Capitals impacted
Natural capital
26%*
2.88 MT CO2e
Emission per Crore
total income
10%
Targeted reduction in Scope 1
and Scope 2 emissions
intensity by 2021-22
Environment
Emissions and climate change
Measuring and disclosing greenhouse gas (GHG) emissions
transparently is an important step towards reducing our
carbon footprint. While our absolute Scope 1 and Scope 2
emissions declined during the year, our target is to reduce
our combined Scope 1 and 2 emissions intensity by 10%
by 2020-21. Our people, customers and other stakeholders
are being sensitised on various emission-reduction options
such as adoption of digital banking channels and paperless
transactions, and energy efficient products.
DG replacement by GG
At Bank branches where diesel generators (DG) with capacity
upto 125 KVA are installed and the locations have a gas
pipeline, we plan to replace the DGs with gas generators to
reduce emissions considerably.
DG replacement by Li-Ion inverter
For DGs with capacity upto 40 KVA, we plan to use Li-Ion
inverter as replacement.
Our track record in emission reduction
Scope 1
8.0
7.0
7.6
Scope 2
506.8
449.7
390.1
Scope 3
26.8
15.7
16.4
(’000 MTCO2e)
(’000 MTCO2e)
(’000 MTCO2e)
2017-18
2018-19
2019-20
Note: Above calculated emissions are being extremely verified.
The assurance statement will be a part of the Sustainability
Report 2019-20.
Energy management
At HDFC Bank, we are playing an active role in making ‘low
carbon economy’ a reality. We are installing energy efficient
systems and leveraging technology to optimise energy
consumption across our operations.
•
•
•
Using technology and innovation as facilitators in areas such
as implementing effective monitoring systems, installing
capacitor banks and occupation sensors.
Sharing energy usage patterns and anomalies through an
easy-to-use portal with our employees, enabling them to
take ownership of efficient energy consumption.
Deploying Energy Management Systems (EnMS) which
use data analytics to help improve energy efficiency,
leading to reduction of power consumption by ~12%
across 600 branches.
LEDfication
We are replacing traditional fluorescent lights with
LED lamps, across several existing as well as new
branches and premises.
Elevator scheduling
Based on our operational hours, elevators at our premises
are being scheduled and partial operations of elevators
were regulated at 18 locations across the country.
Provision of equipment scheduler
We have installed sensors in about 600 branches to
monitor the HVAC, lights and signage, resulting in a
saving of 12% of average energy consumption.
Variable refrigerant flow (VRF) systems and
inverter ACs
The Bank has installed VRF in ACs at back office premises
for high performance and energy efficiency in commercial
buildings. It has installed this system in five back offices.
Almost 30,000+ units of electricity have been saved
since the launch of these systems. The control system in
inverter ACs adjusts the compressor frequency to maintain
temperature control without consuming excess power.
3,041 inverter ACs were installed across existing and new
branches saving about 8.6 Lakh units of electricity.
Energy Consumption by Source (’000GJ)
2017-18
224.1
2,148.4
2018-19
2019-20
210.4
1,910.06
318.71
1,643.23
*Y-O-Y
Fuel
Electricity
67
Financial Statements and Statutory ReportsIntegrated Report Environment
Renewable energy
Our offices at Jaipur, Pune, Noida, Bhubaneswar and Chandigarh
have a cumulative installed solar capacity of 145.5 KW.
We also promote the usage of alternative energy sources and
cleaner energy through our social initiatives. In some rural
areas, where power fluctuation is high, we have installed solar
ATMs. In addition, we finance solar and wind energy projects.
Renewable energy capacity financed
(MW cumulative)
2017-18
601
2018-19
1,043
2019-20
2,268
Read more in Sustainability Report 2019-20
145.5 KW
Solar capacity*
v/s 135.5 KW
in 2018-19
LEED certified buildings:
Mumbai and Bhubaneswar Offices
Certified ‘Gold’ by Leadership in Energy
and Environmental Design (LEED)
Upcoming office in
Mohali and Palava
Training Centre
Constructed as per standards of
Indian Green Building Council (IGBC)
gold certification
Environment
261.92 MT
E-waste disposed
through recyclers*
96 Kg
Plastic removed from
the system by phasing out
single use plastic bottles
Managing waste
Our waste management efforts are structured around
the three Rs of ‘Reduce-Reuse-Recycle’. We deal with
three types of non-hazardous waste, namely, e-waste,
dry waste (paper waste) and wet waste (cafeteria, sewage),
of which e-waste is disposed through authorised recyclers.
Hazardous waste within our Bank’s scope arising from
diesel/fuel oil used in generator sets, is negligible.
Further, e-waste generated by the Bank such as electronic
items and related equipment is disposed of as per
statutory processes.
For some large offices, sewage treatment plants have been
installed within the premises to treat wastewater before
releasing it into municipal waste.
Minimising use of plastic bottles
During the year, we phased out all single use plastic water
bottles from all our hub offices pan-India. Additionally,
multiple use plastic water bottles were replaced with glass
jars across all meeting and video conferencing rooms.
Along with reducing plastic usage and waste, our initiatives
have also triggered a behavioural change among employees.
*During 2019-20
68
*During 2019-20
Responsible financing
Environment, Health and Safety parameters are integral to
our overall credit risk assessment and monitoring process.
Before being funded, every project has to clear the terms of
the EHS risk it entails and the potential impact and mitigation
measures in place or proposed. All financed projects include
clauses prohibiting child, compulsory or forced labour.
Further, loan applications exceeding `10 Crore in value and
5 years in tenure are evaluated under the SEMS (Social and
Environmental Management System) framework, which
evaluates their environmental and social impact.
345
Loan proposals screened and approved
through the SEMS (Social & Environment
Management System) framework*
Read more in Sustainability Report 2019-20
69
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Social - Communities
Building better
connect by
empowering
SDGs impacted
SDGs 1, 2, 3, 4, 5, 6, 7, 8, 12, 13 and 15
Holistic Rural Development Programme (HRDP)
Our social initiatives comprise the work we do towards
developing stronger communities (under Parivartan), working
closely with our people to become their preferred employer
and creating superior experiences for our customers, in
a sustainable manner. We have identified Sustainable
Development Goals (SDGs) that are best aligned with our
areas of focus and material topics.
Community connect
As one of India's largest private sector banks, we are not only
fuelling the nation’s aspirations, but are also actively participating
in its social transformation agenda through Parivartan.
Our initiatives range from financial literacy to skill training and
livelihood enhancement, especially in rural India. We have also
partnered with civil society, government and non-government
agencies to uplift the underserved sections of the society.
Parivartan focus areas
Rural Development
Rural development
Our HRDP, aligned with the government’s Adarsh Gaon
Abhiyan initiative, identifies and addresses key concerns of
villages in consultation with the local authorities and village
communities. Projects under the HRDP range from school
infrastructure to household sanitation, sustainable agricultural
practices to accessible drinking, and irrigation water and
renewable energy sources (solar, biogas, biomass) to
alternative sources of livelihood.
Revenue from waste
Solid Waste Management Units have been established in
18 villages of Punjab covering about 6,000 households to
address the issue of improper dumping of waste. The system
facilitates door-to-door collection of dry and wet segregated
waste, secondary segregation and waste treatment.
These units are revenue generating. Currently, door-to-door
waste collection is being done from about 3,000 households.
Community ownership and self-sustainability are being
developed through respective Village Development
Committees (VDCs) undertaking intensive awareness
generation and mobilisation of households to join the initiative
to ensure source segregation of waste.
SDGs 1, 2, 8 and 9
Skill Training and Livelihood Enhancement
Financial Literacy
and Inclusion
Skill Training
and Livelihood
Enhancement
SDG 4
Promotion of education
SDG 3
Healthcare and Hygiene
SDGs 5 and 8
Financial Literacy and Inclusion
Capitals impacted
Social and Relationship capital
Healthcare
and Hygiene
Promotion of
Education
1,282
Villages in 17 states
covered under HRDP
(Holistic Rural
Development Programme)**
1.6 Lakh+
Individuals upskilled**
16.9 Lakh+
Financial literacy camps**
28,800+
Toilets constructed**
19.6 Lakh
Teachers trained across 28 states/UTs**
**As of March 31, 2020
Social - Communities
28,300+
Acres of agri-land treated**
28,000+
Solar lights installed**
7,800+
Water conservation
structures constructed**
Skill training and
livelihood enhancement
Under this initiative, we aim to empower unemployed and
unskilled rural youth as well as households from economically
backward regions to access better livelihood opportunities.
We support several projects focused on capacity-building,
upskilling, entrepreneurial activities, agricultural and
allied practices.
Financial Independence through Entrepreneurship
The Vidarbha region has been economically vulnerable largely
due to its unpredictable weather conditions. We conducted
training for alternative income generation activities, through
SHGs, for women in one of the villages. The project helped
establish vermi-compost beds as a first step. Till date, 1,865 kg
of vermi-compost has been sold. The project has now been
rolled out across six villages.
7.8 Lakh
Women trained**
**As of March 31, 2020
1.6 Lakh+
Individuals upskilled**
71
Financial Statements and Statutory ReportsIntegrated Report Social - Communities
Promotion of education
Our multi-faceted initiatives for education are aligned with the
Sarva Shiksha Abhiyan of the Government. These initiatives
are structured to promote learning by creating a conducive
environment in schools. Our initiatives cover school
infrastructure, teaching skills, innovation, remedial classes,
quality of education, outreach at grassroot levels, among others.
Zero-Investment Innovations in
Education Initiatives (ZIIEI)
ZIIEI is a pan-India initiative aimed at developing effective,
innovative solutions to improve existing educational processes
at zero or minimal cost. The pilot was launched in Uttar Pradesh
where about 5.5 Lakh teachers were oriented. It has now been
rolled out across 21 States and 7 Union Territories.
202 Lakh+
Students benefited directly
and indirectly**
2.62 Lakh+
Schools outreached**
19.6 Lakh+
Teachers oriented**
Social - Communities
Working with communities to combat COVID-19
During the nationwide lockdown to fight the COVID-19 pandemic, we implemented
a comprehensive plan to support the society.
Healthcare and hygiene
At HDFC Bank, we actively work towards fostering behavioural change in the
areas of health and hygiene. We provide sanitation infrastructure, promote
health through health camps, generate awareness about nutrition, provide
clean drinking water and conduct blood donation drives. Our Annual Blood
Donation Drive has been recognised by the Guinness World Records for
collecting the highest number of units of blood in a single day.
Ushering in better hygiene
Ten-year-old Golu Kumari would often leave early from school complaining
of stomach pain and dizziness. However, she was not the only one in
her school to do so. The root cause of their illness: the school had no
toilet. A toilet was built, for both girls and boys. Awareness camps and
WASH activities were also undertaken. It resulted in an increase in school
attendance by almost 50%.
Financial literacy and inclusion
Financial literacy workshops are conducted in communities outside the
formal economy. We work actively to generate awareness on general
banking, provide credit counselling in schools and colleges, and among
senior citizens and pensioners. Other key interventions under financial
literacy are promotion and capacity building of Self-Help Groups (SHGs).
Individuals reached through financial literacy programme
2017-18
59 Lakh+
2018-19
81 Lakh+
2019-20
129 Lakh+
72
1.4 Million
units of blood collected cumulatively
over a period of 13 years
Digidhan or Dhanchayat
provides financial literacy
on wheels, educating
people in semi urban and
rural areas. The programme
has been running
successfully since 2015.
**As of March 31, 2020
Read more in Sustainability Report 2019-20
Extending support to the Government and hospitals
• Contributed `70 Crore towards PM CARES Fund
• Provided monetary support to health department, municipal
corporations and disaster management verticals across
15+ states in the country
• Supported hospitals to source PPE kits, ventilators and other
essential medical equipment
• Encouraged our employees to donate a day’s basic salary
Supporting the underprivileged and COVID-19 warriors
• Working together with our NGO partners to provide dry ration to
daily wage-earners as well as farmers in rural regions
• Our staff volunteered to work at grassroot levels and provide daily
wage earners with cooked food
• Equipped the police force with safety kits, sanitisers and
infrared thermometers
Spreading awareness
• Created awareness about PM CARES Fund and all government
advisories and protocols around the crisis on social media
platforms and internal information portals
• Facilitated sharing of information on vendors providing
critical supplies
• Initiated mass awareness campaigns through cycles and
rickshaws to reach remote places
• Created awareness through our partners in our project areas
Others
• Launched mobile ATM vans across the country
• Sanctioned donation of water tanks to address the issue of
unavailability of water for workers in Punjab Mandi
• Released a song ‘#HumHaarNahiMaanenge (We will not give
up)’ composed by Oscar and Grammy Award-winning musician
A.R. Rahman, and lyrics penned by noted lyricist and poet,
Prasoon Joshi. The campaign encouraged viewers to contribute
to the COVID-19 relief fund-raiser
73
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Social - People
Creative work
environment.
Engaged
employees.
We believe that our 100,000+ workforce spread
across the country is the cornerstone of our
success. Their engagement and commitment
makes us who we are. It is our constant
endeavour to create great employee experiences
that distinguish us. As an outcome of this we
aspire to be an employer of choice in the BFSI
sector and across industries in India.
SDGs impacted
SDG 3
We undertake varied initiatives to ensure the
health and well-being of our people.
SDG 5
We follow an equal opportunity hiring
process and undertake efforts to develop a
conducive work environment.
SDG 8
Focus on learning and development and a
merit-based, rewarding work culture.
SDG 10
Our Bank is a fair employer and does not
discriminate on the basis of gender, caste,
colour, sex or creed.
Capitals impacted
Human capital
Social - People
Our employee focus areas
Learning & Development
Employee
Engagement
Wellbeing
Learning & Development
Our Learning and Development framework aims at building
employee capability to maintain the highest level of
operational efficiency, customer focus, and people orientation
as well as to prepare employees to take on higher level
roles. It places strong emphasis on ensuring high ethical
standards, professional integrity, corporate governance and
regulatory compliance.
is devoted towards handholding employees on the job and
setting them up for success. Thus, actual ‘training’ investment
accounts for only 10% of the overall capability building effort.
Number of participants in onboarding programmes
2018-19
32,479
2019-20
41,411
Our capability development framework is based on the
principle of 70:20:10 where 70% of the learning is on-the-job
which includes role enlargement and role changes, 20%
through social learning and special projects and 10% is formal
training. We have a well institutionalised process of onboarding
and rotating employees into diverse roles under the career
management framework. Based on this, significant effort
Our training programmes are versatile and interactive and are
delivered through a blended learning platform which includes
classrooms, e-learning etc. We ensure a wide reach of our
learning initiatives by engaging with employees in deeper
geographies through innovative and alternative methodologies
like backpack trainers, byte-sized learning, voice drops,
messaging, short videos among others.
Diversity & Inclusion
Building employee capability
90-second learnings on
product and process
Alternative learning channels such as ‘voice
drops’ and ‘messaging’ that use jingles, etc.,
to make employees aware of the important
aspects of their job role, changes in our
products or processes among others.
Learning on-the-go
Extending learning to employees' families
E
n
g
a
g
i
n
g
f
a
m
i
l
i
e
s
Learning initiative, especially for employees
nearing their retirement and their spouses,
to facilitate a comfortable post-retirement
life – financially, physically and emotionally
covering financial planning, health and
post-retirement interests and careers and
programmes on personal effectiveness for
the children of employees.
60.32
Training hours/employee*
68,660
Participants in wellness
initiatives under
HDFC Bank Cares*
86.61%
Employees trained at
least once through
classroom or e-learning*
94%
Response rate to
Voice – our employee
engagement survey*
*During 2019-20
**As of March 31, 2020
Zero day onboarding
Seamless and uniform onboarding
Learning initiative to ensure that new recruits across
geographies get the necessary information about us,
our products, policies and processes, enabling them to
acclimatise faster.
We continue to partner with best-in-class institutes for future learning to enable our employees to grow and evolve,
adapt and learn in tune with the changes in the market.
Senior leadership programme
Since 2007, we have collaborated with
the Indian Institute of Management (IIM),
Ahmedabad, to provide an exclusive
Senior Leadership Programme for our
senior management cadre.
Future Bankers programme
A programme with the Manipal Global
Academy of BFSI to provide a talent
pipeline of job-ready candidates for
entry-level roles in branch banking.
Currently, three batches of 650+ ‘Future
Bankers’ are undergoing training.
Talent management programme
In 2019-20, we launched the formal
talent management initiative ‘Xlrate’
with best-in-class partners in talent
management space in the country.
75
Financial Statements and Statutory ReportsIntegrated Report
Social - People
Social - People
Employee engagement
We believe that ‘engaged employees’ are organisation builders.
Over the years, we have worked towards becoming a ‘listening
organisation’, thereby building quality employee connect.
We encourage open and transparent communication between
employees and the leadership team to listen to and understand
their needs and aspirations.
Employees have multiple platforms and opportunities ranging
from one-on-one conversations with leaders as well as larger
forums and townhalls to connect with the senior leadership.
‘Circuit meets’ is another platform to share ideas and feedback
across groups of employees from diverse businesses.
‘Vibes’ is a developmental tool which institutionalises a listening
mechanism for all our managers to receive feedback from their
respective teams. ‘Voice’ is an organisation-wide sentiment
survey through an external partner which is our barometer of
Engagement@Work.
Employee connect is also strengthened through various
Bank-wide events such as the annual sports event ‘Josh’,
the annual talent competition ‘Hunar’, among others, which
also brings the Bank closer to employees’ families. This year,
more than 46,000 employees participated across 10 different
employee connect programmes such as ‘Xpressions’ which
is a painting competition for the children of employees and
‘Wanderers’ which are trekking events for employees.
46,000+
Employees participated across
10 employee connect initiatives
Wellbeing
It is our firm belief that an engaged, productive and happy
workforce leads to ‘happy customers’. Employee wellness is an
integral component of our value proposition. Through ‘HDFC
Bank Cares’, we encourage employees to take ownership
of their own wellness. There are a host of offerings broadly
classified under physical, financial and emotional which
employees can take benefit of, based on their requirements.
Physical wellness
• Nutrition
counselling
• Medical second
opinion
• Doctor on cell
• Health talks
• Medical insurance
• Health check-ups
Financial wellness
• Attractive interest
rates on loans
• Awareness
regarding financial
planning and
investing right
• Discounts and
exclusive offers
to employees on
e-commerce
Emotional wellness
• Spending time with
family and loved
ones – partnership
with Indian travel
companies
• Employee
assistance service in
life crisis situation
Diversity and inclusion
Our diverse team brings with them their own unique experience,
perspective and ideas. We also recognise that differences in
age, region, gender, ability may lead to unconscious biases
at workplace. To promote a diverse and inclusive workplace
culture, we have launched several programmes with special
focus on women and Gen-Y employees. Our flagship
programme on diversity, ‘Shrishti’ aims to create a level-playing
field for women employees. We also launched an audio-visual
campaign, ‘Uncovering Unconscious Biases’, which is focused
on creating an inclusive work environment where every
individual is respected and differences are valued.
8,000 women
Balance for Better -
to focus on recruiting
higher number of
women in the Bank
25 women recruits
Bank Again - to provide an
option to talented women,
who had to take a break, to
restart their career
48 ex-defence personnel
Recruitment of former defence personnel
into banking roles
76
Empowering our people during COVID-19 lockdown
At HDFC Bank, we have always put the safety and wellbeing of our employees first. During the
COVID-19 lockdown, Team HDFC Bank left no stone unturned in demonstrating strong commitment and
and ensuring business continuity, sometimes even going beyond their call of duty.
How we engaged with our teams
We invoked our crisis management plan and our first priority
was to ensure employee safety and hygiene. We put in place
all requisite measures, such as providing sanitisers and masks,
disinfecting and fumigating all our locations periodically and
setting up COVID-19 medical helpline for employees. We set
up a special employee communication team to ensure that all
relevant information reached employees through a credible
source and in a timely manner. Medical webinars, newsletters
and videos were published via ‘Our World’, which is an internal
communications channel in the Bank as well as our newly
launched email ID COVID19Instructions@in.hdfcbank.com.
Efforts were made to support employees on their physical and
emotional wellbeing, managing anxiety and fears and being
able to contribute fully during this period. A doctor-on-call was
arranged to address employee queries.
Several teams like Retail Banking, Operations, among others
worked from the offices. For these teams, we put in place a
structured employee connect programme. Video messages
by senior leaders to increase awareness, build morale and
express appreciation and solidarity were released regularly.
Most of our teams worked from home and during this
period, supervisors and managers played an important role.
Several resources were designed and provided to enable
them to work remotely and also build some quick capability in
managing remote teams.
As the lockdown was eased, return to work norms were
circulated to ensure employees were aware of the safety
rules such as social distancing and regular temperature
checks among others.
We intensified our focus on enabling capability development
of the teams through e-learning modules on various roles,
products and processes. LIVE webcast sessions by trainers
and experts were also conducted. Equipped with the right and
appropriate tools, the team members working from home and
from branches reached out to customers making customer
engagements on a daily basis. In summary, client engagement
became stronger, productivity improved, stress levels reduced
and work-life balance was enhanced.
Read more in Sustainability Report 2019-20
77
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Governance
Transparent
and
accountable
At HDFC Bank, we are committed to maintaining
the highest standards of ethics, integrity,
governance and regulatory compliance.
Our Corporate Governance philosophy, enunciated
in our ESG framework, provides direction
around the cardinal principles of independence,
accountability, transparency, fair disclosures,
responsibility and credibility in the way we conduct
our operations.
SDGs impacted
SDG 16
Strong governance practices, including
board expertise and oversight on key
issues with key committees monitoring the
Bank’s systems. We align ourselves with
all Government and National Missions that
enable us to achieve our goals under SDGs.
Capitals impacted
Financial capital
Intellectual capital
Manufactured capital
Human capital
Social and Relationship capital
Board of Directors and Board
competence
Our Board of Directors comprises renowned professionals with
diverse experience and expertise in banking, financial markets,
risk management, regulatory affairs, finance, credit, information
technology, human resource management, small-scale
industries, agriculture, rural economy and law domains.
We have also inducted information technology experts on the
Board as non-executive/independent directors given our focus
on digitisation, and the associated risks related to cyber security,
data privacy and infrastructure. The various Board committees
– Risk Policy & Monitoring Committee, Fraud Monitoring
Committee, Corporate Social Responsibility Committee,
Customer Service Committee, among others – provide focused
oversight on specific areas of significance and compliance.
A majority of the Directors have been associated with the Bank
for more than three years and have in-depth understanding
of the business model, business processes and business
environment. Each Director has specialised knowledge and
practical experience in various areas as required in terms of
provisions of Section 10-A (2)(a) of the Banking Regulation Act,
1949. Familiarisation of Directors is an ongoing process.
The Board members are regularly updated on relevant topics
of interest relating to the Bank's business environment and
operations, such as the current economic outlook, state of
affairs in the Bank, impact of new guidelines issued by the RBI
on performance and compensation of Whole Time Directors and
Material Risk Takers, Compliance framework, Risk Management
framework, Cyber security functions, Internal Capital Adequacy
Assessment Process (ICAAP), among others. The Board
committees conduct elaborate discussions and presentations
on topics such as cyber security landscape and cyber fraud
trends in the banking industry, mitigating controls, CSR and ESG
directives, customer service framework and grievance redressal
mechanism. The Board members also participate in seminars
on relevant subjects conducted by reputed organisations.
Newly appointed Independent Directors undergo a structured
orientation/ familiarisation process and also engage with the
vertical heads to familiarise themselves with their roles and the
Bank’s operations and business model.
33 years
Average
experience
of Board members
31 hours
Spent by the Board
cumulatively in several
familiarisation programmes*
Governance
Board involvement and initiatives
The Board encourages the adoption of global best practices
in our functioning. The Audit Committee, Nomination and
Remuneration Committee, Risk Policy and Monitoring Committee
are comprised mainly of Independent Directors who bring their
objective viewpoints to the table. The Board also seeks external
opinion of experts from the fields of law, macroeconomics, among
others, and emphasises proactive interactions with regulators to
ensure full compliance with applicable legislations and guidelines.
We have a Board-approved policy of appointing Directors that
outlines the extensive due diligence process followed by the
Bank before onboarding Directors.
Board initiatives during the year included
•
Hosting interactive sessions with speaker shareholders
by the management
Governance sub-committee comprising Bank officials for
transparency and flexibility in the functioning of our Bank
•
Culture of transparency
and accountability
Transparency and accountability are among the key
expectations of our stakeholders. We follow timely disclosures
and fair presentation of information as much for compliance as
for stakeholders’ benefit. We have established practices that
allow for sufficient and visible flow of information, with adequate
safeguards in place.
Board initiatives towards transparency include
Policy for appointment and fit and proper
•
criteria of Directors
• Charters of Board-level committees
Policies and frameworks for
ethical conduct
We have adopted industry-best governance practices in India
and globally. To ensure a pervasive culture of good governance,
we have created the environment and instituted polices and
frameworks for ethical business conduct. These policies are
communicated regularly to the management, employees and
other stakeholders.
Our corporate governance policies include
•
•
Code for corporate governance
Policies to prevent insider trading, govern
related-party transactions
Policies around Prevention of Sexual Harassment (POSH)
•
• Whistle blower policy
Natural capital
*During 2019-20
We are working towards making our governance framework
even more transparent and accountable to our stakeholders.
Read more in the Corporate Governance report on page 285
79
Financial Statements and Statutory ReportsIntegrated Report Board of Directors
Steering responsible growth
Board of Directors
Shyamala Gopinath
Part Time Non-Executive
Chairperson and Independent
Director
Malay Patel
Independent Director
MD Ranganath
Independent Director
Sandeep Parekh
Independent Director
Sanjiv Sachar
Independent Director
Umesh Chandra Sarangi
Independent Director
Renu Karnad
Additional Non-Executive Director
Srikanth Nadhamuni
Non-Executive Director
Aditya Puri
Managing Director
Kaizad Bharucha
Executive Director
Detailed profile in the Corporate Governance report on page 285
80
Length of service of Directors (Years)*
Age group of Directors (Years)
< 4
4 to 6
6 to 8
> 8
41 to 50
51 to 60
61 to 70
*Pursuant to Banking Regulation Act, 1949, only the Chairperson and Whole-time Directors may
hold office for a period exceeding eight years
81
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Senior management team
Focused on execution
Senior management team
Aditya Puri
Managing Director
Kaizad Bharucha
Executive Director
Anjani Rathor
Group Head – Digital Banking
Arup Rakshit
Group Head - Treasury - Sales,
Analytics and Overseas
Arvind Kapil
Group Head - Retail Assets
Arvind Vohra
Group Head - Retail Branch
Banking
Ashima Bhat
Group Head - Finance & Strategy,
Administration, Infrastructure and CSR
Ashish Parthasarthy
Treasurer
Benjamin Frank
Group Head - Wholesale Credit
and Risk
Bhavesh Zaveri
Group Head - Operations and
Technology
Jimmy Tata
Chief Risk Officer
Munish Mittal
Chief Information Officer
Nirav Shah
Group Head - Emerging Corporates Group,
Infrastructure Finance Group, Rural Banking Group,
Transportation Group & Tractor Finance
Parag Rao
Group Head - Payments, Consumer
Finance, Marketing & Digital Banking
Rahul Shukla
Group Head - Corporate
Banking, Business Banking &
Healthcare Finance
Rakesh Singh
Group Head - Investment Banking,
Private Banking, Capital Markets and
Financial Institutions
Raveesh Bhatia
Group Head - Corporate Banking,
North
Sashidhar Jagdishan
Group Head and Strategic Change Agent
of the Bank
Smita Bhagat
Group Head - Government and
Institution Business and Ecomm
and Start-ups
Srinivasan Vaidyanathan
Chief Financial Officer
V Chakrapani
Group Head - Internal Audit and Quality
Initiatives Group
Vinay Razdan
Group Head - Human Resources
82
S Sampathkumar
Group Head - Liability Products,
Third Party Products, ATM,
Managed Programs and Non-
Resident Business
Expertise
Our senior management
team comprises a rich
mix of diverse talents with
extensive experience in
banking and other related
industries and functions.
83
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Financial highlights
10-year highlights
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
Interest income
Interest expense
20,380.77
27,874.19
35,064.87
41,135.53
9,385.08
14,989.58
19,253.75
22,652.90
NET INTEREST INCOME
10,995.69
12,884.61
15,811.12
18,482.63
4,945.23
5,783.62
6,852.62
7,919.64
15,940.92
18,668.23
22,663.74
26,402.28
7,780.02
8,160.90
2,342.24
1,198.55
1,143.69
5,818.66
1,892.26
3,926.40
9,277.64
9,390.59
1,877.44
1,091.77
785.67
7,513.15
2,346.08
5,167.07
11,236.11
12,042.20
11,427.63
14,360.08
1,677.01
1,234.21
442.80
9,750.62
3,024.34
6,726.28
1,588.03
1,632.58
(44.56)
12,772.05
4,293.67
8,478.38
Financial highlights
2016-17
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
2017-18
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
17,486.75
2018-19
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
21,078.14
` Crore
2019-20
1,14,812.65
58,626.40
56,186.25
23,260.82
79,447.07
30,697.53
48,749.54
12,142.39
9,083.32
3,059.07
36,607.15
10,349.84
26,257.31
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
15,328.72
5,112.80
10,215.92
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
18,637.94
6,341.71
12,296.23
2,08,586.41
2,46,706.45
2,96,246.98
3,67,337.48
4,50,795.65
5,46,424.19
6,43,639.66
7,88,770.64
9,23,140.93
11,47,502.29
7,393.05
11,105.65
16,586.75
16,643.05
25,376.35
29,924.37
36,214.15
43,478.63
16,254.90
62,009.42
15,090.45
72,677.77
13,182.00
89,462.38
21,107.00
18,232.00
18,232.00
1,06,295.03
1,49,206.32
1,70,986.03
2,83,634.24
3,45,248.26
4,21,327.31
4,91,599.50
5,95,695.13
7,40,796.07
8,63,840.19
10,63,934.32
12,44,540.69
15,30,511.26
1,59,982.67
1,95,420.03
2,39,720.64
3,03,000.27
3,65,495.04
4,64,593.96
5,54,568.20
6,58,333.09
8,19,401.22
9,93,702.88
67,952.59
89,967.10
1,11,303.21
1,00,111.88
1,56,833.82
1,95,836.29
2,14,463.34
2,42,200.24
2,93,116.07
3,91,826.66
8.50
16.52%
12.23%
16.22%
1.65
22.72%
54.55
234.59
11.06
18.37%
11.60%
16.52%
2.15
22.70%
63.76
259.93
14.24
20.07%
11.08%
16.80%
2.75
22.77%
76.10
312.68
17.74
20.88%
11.77%
16.07%
3.42
22.68%
90.62
374.40
27.59
Price to earnings ratio
`1 Crore = `10 Million
*Figures for the years prior to 2019-2020 have been adjusted to reflect the effect of split of equity shares from nominal value of `2 each into two
equity shares of nominal value of `1 each.
**Source: NSE (prices for years prior to 2019-2020 have been divided by two to reflect the sub-division of shares)
***During 2019-20, the Bank has paid special interim dividend of `2.50 per equity shares (post split), to commemorate 25 years of the Bank's operation.
The Reserve Bank of India, vide its circular dated April 17, 2020, has decided that banks shall not make any further dividend payouts from profits pertaining
to the financial year ended March 31, 2020 until further instructions, with a view that banks must conserve capital in an environment of heightened uncertainty
caused by COVID-19. Accordingly, the Board of Directors of the Bank, has not proposed any final dividend for the year ended March 31, 2020.
84
23.51
21.95
21.11
21.08
20.36%
13.66%
16.79%
4.00
23.62%
123.70
511.35
24.26
24.42
28.59
33.88
17.97%
13.22%
15.53%
4.75
23.51%
143.74
535.58
18.04%
12.79%
14.55%
5.50
23.32%
174.56
721.28
18.22%
13.25%
14.82%
6.50
23.26%
204.80
964.50
21.93
25.23
28.47
39.33
16.30%
15.78%
17.11%
7.50
23.36%
273.94
1,159.45
29.48
48.01
16.76%
17.23%
18.52%
***
***
311.83
861.90
17.95
85
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 net worth
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 (`) **
Financial Statements and Statutory ReportsIntegrated ReportHDFC Bank Limited Integrated Annual Report 2019-20 Dear Stakeholders,
Your Directors take great pleasure in presenting the 26th Annual
Report on the business and operations of your Bank, together
with the audited accounts for the year ended March 31, 2020.
FY 2019-20 was one of the most challenging years for the Indian
economy, which faced several headwinds from a slowdown in
domestic and global growth, and geopolitical uncertainties.
This was exacerbated by the outbreak of the COVID 19
pandemic in the second part of the fourth quarter. Faced with
a crisis with no parallels in recent history, most governments
across the world including in India prioritised life over anything
else and imposed a lockdown to break the chain of transmission.
Needless to say, the ‘Great Lockdown’ came with an economic
price as well, with the International Monetary Fund (IMF)
forecasting the “worst economic downturn” globally since the
Great Depression in the 1930s.
Indian government
To minimise the negative impact of the coronavirus outbreak
and revive the economy, governments and central banks
across the world announced a host of fiscal and monetary
policy measures. The
rolled out a
` 1.7 lakh crore interim relief package primarily directed towards
daily wage earners and farm labourers. The finance ministry
also waived late fee, interest and penalties on GST returns for
three months and eased various statutory filing deadlines to
provide regulatory relief to businesses. The RBI announced an
emergency cut in policy rates: by 115 basis points in the repo
rate and 130 basis points in the reverse repo rate. The Central
Bank also announced a three-month moratorium on repayments
of term loans and then extended it by another three months.
The Union Government has also announced a stimulus
package of 20 lakh crore with a focus on the MSME and NBFC
sectors. (Please refer to the Macroeconomic and Industry
Developments section on pages 89-90 for details).
In this uncertain environment, your Bank continued on its growth
path by conducting its business responsibly and reinforcing its
commitment to the environment and community at large.
1) Financial Performance
Your Bank recorded an improvement in majority of its
key financial parameters, largely due to its prudent
credit evaluation of targeted customers and diversified
loan book across customer segments, products, and
sectors. Managing risk-return decisions with discipline
also contributed to the Bank’s performance. Net Profit at
` 26,257.3 crore went up by 24.6 per cent. Net Interest
Income at ` 56,186.3 crore rose 16.5 per cent. Net Interest
Margin remained stable 4.3 per cent. Gross Non-Performing
Assets (NPAs) at 1.26 per cent was among the lowest in
the industry.
2) Parivartan
‘Teaching-The-Teacher’
The Bank believes that businesses can only prosper if
the communities in which they operate prosper as well.
This belief has inspired its social initiatives which have
potentially made a difference to the lives of over 7.8 crore
people, predominantly in rural India. Driving this change
is the Sustainable Livelihood Initiative (SLI) team, which
employs about 10 per cent of the Bank’s workforce and
works exclusively on improving livelihood opportunities.
The
impacted
over 2 crore students. The Holistic Rural Development
Programme has touched another 16 lakh people across
more than 1,200 villages. Having an umbrella brand
enables the Bank to lend a sharper focus to these efforts.
Your Directors are also happy to report that your Bank met
the mandatory CSR expenditure through a spend of ` 535
crore. The Bank contributed ` 70 crore towards Prime
Minister’s CARES Fund to support the government’s fight
against the COVID-19 pandemic.
initiative has
the economy and HDFC Bank are
Summary
Although
facing
immediate-term challenges from the halt in economic activities
due to the lockdown, the market in the post-pandemic
recovery period presents tremendous opportunities, given the
under-penetration of banking services in the country. Your Bank
is well positioned to capitalise on those opportunities, given the
strength of its major franchises. Your Bank is also poised to
make a greater contribution to bridge the urban-rural divide – be
it through its business or social initiatives. This, of course, will not
be possible without the contribution of the ever growing family
of over two lakh employees (including that of the subsidiaries)
across the country, who remain at the forefront of taking your
Bank forward every day. Your Directors would like to especially
thank those who went well beyond their call of duty during the
Covid-19 pandemic to keep your Bank functioning.
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. Sustainability should be viewed in unison with
Environmental, Social and Governance performance. As a part
of this, HDFC Bank through its umbrella CSR brand Parivartan
seeks to bring about change in the lives of communities mainly
in rural India.
During the year under review, the business objective was to
continue building sound customer franchises across distinct
businesses to achieve healthy growth in profitability consistent
with your Bank’s risk appetite.
In line with the above objective, the Bank aims to take
digitalisation to the next level to:
•
•
•
Increase market share in India’s growing banking and
financial services industry
•
Sustain strong asset quality through disciplined credit
risk management
Expand geographical reach
• Maintain low cost of funds
Cross-sell the broad financial product portfolio
Your Bank remains committed to the highest levels of ethical
standards, professional integrity, corporate governance, and
regulatory compliance, which is articulated in its Code of
Conduct. Every employee affirms to abide by the Code annually.
Summary of Financial Performance
Particulars
Deposits and Other Borrowings
Advances
Total Income
Profit Before Depreciation and Tax
Profit After Tax
Profit Brought Forward
Total Profit Available for Appropriation
APPROPRIATIONS
Transfer to Statutory Reserve
Transfer to General Reserve
Transfer to Capital Reserve
Transfer to / (from) Investment Reserve
Transfer to / (from) Investment Fluctuation Reserve
Dividend (including tax / cess thereon) pertaining to previous year paid during the year, net of
dividend tax credits
Special dividend (including tax / cess thereon)
Balance carried over to Balance Sheet
(` crore)
For the year ended / As on
March 31, 2020
March 31, 2019
1,292,130.8
1,040,226.1
993,702.9
138,073.5
37,803.0
26,257.3
49,223.3
75,480.6
6,564.3
2,625.7
1,123.8
-
1,134.0
4,893.4
1,646.9
57,492.5
819,401.2
116,597.9
33,339.8
21,078.1
40,453.4
61,531.5
5,269.5
2,107.8
105.3
-
773.0
4,052.6
-
49,223.3
Dividend
During FY 2019-20, the Bank has paid special interim dividend of ` 2.50 per equity shares (post split), to commemorate 25 years of
the Bank’s operation. In light of the Reserve Bank of India (RBI) Circular dated April 17, 2020, all banks were directed not to make
dividend pay-outs pertaining to the financial year ended March 31, 2020 until further instructions from RBI, with a view that banks
must conserve capital in an environment of heightened uncertainty caused by COVID-19. Accordingly, the Board of Directors of the
Bank has not proposed any final dividend for the year ended March 31, 2020.
In general, your Bank’s dividend policy, among other things, balances the objectives of rewarding shareholders and retaining capital
to fund future growth. It has a consistent track record of dividend distribution, with the Dividend Pay-out Ratio ranging between
20 per cent and 25 per cent, which the Board endeavours to maintain.
The dividend policy of your Bank is available on your Bank’s website:
https://v1.hdfcbank.com/htdocs/common/pdf/corporate/Dividend-Distribution-Policy.pdf
Your Bank continued to transform lives through its
umbrella CSR brand, Parivartan which denotes change.
•
86
Deliver
convenience to customers
superior
experience
and
greater
87
HDFC Bank Limited Integrated Annual Report 2019-20Directors’ ReportFinancial Statements and Statutory ReportsIntegrated ReportDirectors’ Report
Directors’ Report
Ratings
Instrument
Rating
Rating Agency Comments
Fixed Deposit Programme
CARE AAA (FD)
CARE Ratings
IND Taaa
India Ratings
Certificate of Deposits
Programme
CARE A1+
CARE Ratings
Long Term Unsecured,
Subordinated
(Lower Tier 2) Bonds
IND A1+
India Ratings
CARE AAA
CARE Ratings
IND AAA
India Ratings
Upper Tier 2 Bonds
CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Infrastructure Bonds
CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Additional Tier I Bonds (Under
Basel III)
CARE AA+
CARE Ratings
CRISIL AA+
CRISIL
IND AA+
India Ratings
Tier II Bonds (Under Basel III)
CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have very
strong degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have very
strong degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have high degree
of safety regarding timely servicing of financial obligations. Such
instruments carry very low credit risk.
Instruments with this rating are considered to have high degree
of safety regarding timely servicing of financial obligations. Such
instruments carry very low credit risk.
Instruments with this rating are considered to have high degree
of safety regarding timely servicing of financial obligations. Such
instruments carry very low credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have the
highest degree of safety regarding timely servicing of financial
obligations. Such instruments carry the lowest credit risk.
Issuance of Equity Shares and Employee Stock Options (ESOP)
As on March 31, 2020, the issued, subscribed and paid up capital of your Bank stood at ` 5,483,286,460/- comprising of 5,483,286,460
equity shares of ` 1 each. This is subsequent to the sub-division of one equity share of your Bank having face value of ` 2/- into two
equity shares of face value of ` 1/- each and consequent alteration in the Capital Clause of the Memorandum of Association of the
Bank. Further, 36,673,240 equity shares of face value of ` 1/- each were issued by your Bank pursuant to the exercise of Employee
Stock Options (ESOPs) (for information pertaining to ESOPs, please refer Annexure 1 to the Directors’ Report)
88 HDFC Bank Limited Integrated Annual Report 2019-20
Capital Adequacy Ratio (CAR)
As on March 31, 2020, your Bank’s total CAR, calculated as
per Basel III capital regulations, stood at 18.5 per cent, well
above the regulatory minimum requirement of 11.075 per cent
including a Capital Conservation Buffer of 1.875 per cent and an
additional requirement of 0.20 per cent on account of the Bank
being identified as a Domestically Systemic Important Bank.
Tier I Capital was at 17.2 per cent as of March 31, 2020.
Management Discussion And Analysis
Macroeconomic and Industry Developments
The Indian economy faced several domestic and external
headwinds for most part of the year under review due to
protectionist
trade policies, geopolitical uncertainties and
slowdown in major trading partners. Weakness in the auto
sector, lingering issues in the NBFC sector, and a moderation
in private sector investments contributed to the slowdown.
Although growth moderated to 4.2 per cent in FY 2019-20
from 6.1 per cent in FY 2018-19, India became the fifth largest
economy in the world, surpassing the UK and France.
India’s external sector continued to gain stability as the current
account deficit (balance of exports minus imports) declined
to 0.2 per cent of GDP in the third quarter of FY 2019-20.
This was driven by lower crude oil prices for most part of the
year, reducing India’s import bill (imports 80 per cent of total
oil demand). Foreign direct investment (FDI) and portfolio flows
remained strong, rising to over US$ 32 billion and US$ 15 billion
in April-December 2019, respectively.
Domestic demand also began to show green shoots in the second
half of the year, especially in the rural sector. Better food price
realisations and government measures focusing on doubling
farm income, such as increase in Minimum Support Prices
(MSPs), supported rural demand. Government consumption
expenditure remained the support lever in growth dynamics.
As per
the Central Statistical Organisation government
consumption expenditure grew at 11.9 per cent in FY 2019-20
vis-à-vis 10.2 per cent in FY 2018-19.
However, the outbreak of the coronavirus pandemic has
clouded the growth outlook. The nationwide lockdown is likely to
hit consumption of non-essential items and weigh on activity in
the services (particularly in tourism, aviation, and hospitality) as
well as the manufacturing sector. Moreover, lower global growth
is likely to have a bearing on export demand. The World Bank
expects the overall global economy to contract by 5.2 percent
due to the coronavirus impact, significantly affecting the US,
Eurozone and UK economies.
In the financial sector, credit growth moderated to 6.8 per cent
in May 2020 from 13.5 per cent a year ago. The weakness was
recorded in agriculture and services while credit deployment to
industrial sector improved at the margin. The NPA ratio improved
from its peak of 11.2 per cent in the year ended March 31, 2018
to 9.3 per cent in the year ended March 31, 2019, though the
pace of improvement has slowed down in recent quarters.
As per the RBI’s December 2019 Financial Stability Report,
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Gross Non-Performing Assets (GNPA) ratio of scheduled
commercial banks remained unchanged at 9.3 per cent
between March 2019 and September 2019. That said, the
Central Bank estimates the ratio to deteriorate to 9.9 per cent
by September 2020. The current COVID-19 related slowdown
could add further stress in the system.
The Government and the RBI have announced a host of
measures to cushion the direct impact of the lockdown on the
economy. The stimulus package (` 20 Lakh crore) announced
by the GOI in five tranches had a clear focus on the MSME
sector, a key provider of employment in both the organized and
unorganized segments and a critical component of the domestic
industrial supply chain. The MSME sector that encompasses a
wide range of industries had been under considerable stress for
a prolonged period before the incidence of COVID. This made
them particularly vulnerable to the lockdown and its aftermath.
The NBFC sector, a major provider of funding to the MSMEs
had also been going through a period of stress particularly in its
access to finances both from banks and the market. Thus, the
stimulus package focuses on the survival of both MSMEs and
NBFCs through the COVID crisis and also their revival. The critical
element of the stimulus is its attempt to facilitate the flow of credit
to both MSMES directly and to NBFCS. The government aims to
do this by reducing the risk taken by banks and other institutions
in lending to them by providing explicit guarantees either on the
entire loan or a fraction. The guarantees delivered are through
Special Purpose Vehicles (SPVs) in which the government has
initially taken an equity stake. Thus, for instance the targeted
credit flow of ` 300 billion in the form of collateral free loans to
the smaller MSMEs is backed by a 100 per cent GOI guarantee
given through NCGTC. Other measures include creating a
fund of funds for MSMEs, partial credit guarantee scheme
for NBFCs/MFIs and providing subordinate debt for stressed
MSMEs through a Credit Guarantee Fund Trust.
There are non-financial measures as well that aims to benefit
MSMEs. The upward revision of turnover and investment limit
(Micro: turnover increased to ` 5 crore, investment increased to
` 1 crore; Small: Turnover increased to ` 50 crore and investment
increased to ` 10 crore; Medium: Turnover increased to
` 250 crore and investment increased to ` 50 crore) would help
MSMEs expand operations considerably without fear of losing
some of the fiscal and other benefits that the segment enjoys.
The direct fiscal spending component (on MNREGA, EPF
support for business and workers, food grain supply for
migrant workers and enhancing Micro food enterprises among
other things) is relatively low and stands at ` 2 trillion or 1 per
cent of GDP. Instead the broad strategy of the stimulus is to
remove bottlenecks on the supply side for the smaller and
labour intensive firms to set off a “virtuous cycle” of more viable
operations, increased production and employment and higher
incomes that would translate into enhanced demand.
On the monetary policy side, the RBI has taken a number of
steps to provide liquidity and enhance credit flow in the system.
The RBI recently delivered an off-cycle rate cut of 40 bps, taking
89
Directors’ Report
the repo rate to 4.0 per cent and lowered the reverse repo rate
by 40 bps to 3.35 per cent. The RBI has delivered a total rate cut
(repo) of 115 bps since February 2020. The RBI has also taken
a slew of measures to address liquidity constraints such as the
announcement of the moratorium, liquidity infusion through
TLTRO (Targeted Long Term Repo Operations) for NBFCs
(` 50,000 crore), liquidity facility ` 50,000 crore for mutual funds
and a cut in the CRR (Cash Reserve Ratio) by 100 bps to 3%.
We expect the Central Bank to deliver further rate cuts and keep
liquidity in surplus in the coming months, bringing down the cost
of borrowing and pushing credit growth in the system.
CPI inflation remained in a comfortable zone in H1 FY 2019-20.
However, inflation rose from October 2019 onwards, peaking in
January 2020 (to 7.6 per cent) mainly due to rise in food prices
on account of higher onion prices. In FY 2020-21, we (HDFC
Bank) expect the headline inflation to ease gradually on lower
food prices, drop in crude oil prices and dwindling demand
conditions due to the lockdown. For the year ending March 31,
2021, we expect the headline inflation at 3.7 per cent, well within
the RBI’s target range of 4 +/-2 per cent. Thus, with inflation
expected to be below the RBI’s median target of 4 per cent, the
Central Bank could deliver further rate cuts to support growth.
Overall, we expect the growth to remain subdued in the first half
of FY 2020-21, with growth contracting in the first and second
quarters and a gradual recovery in the second half supported by
fiscal and monetary policy stimulus.
Financial Performance
The financial performance of your Bank during the year ended
March 31, 2020, remained healthy with Total Net Revenue
(Net Interest Income Plus Other Income) rising 20.6 per cent
to ` 79,447.1 crore from ` 65,869.1 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 16.5
per cent to ` 56,186.3 crore due to acceleration in loan growth
coupled with a Net Interest Margin (NIM) of 4.3 percent.
Other Income grew by 32.0 per cent to ` 23,260.8 crore.
The largest component was Fees and Commissions, which
increased by 18.5 per cent to ` 16,333.7 crore. Foreign Exchange
and Derivatives Revenue was ` 2,154.8 crore, gain on revaluation
and sale of investments was ` 1,934.4 crore, and recoveries
from written-off accounts were ` 2,253.5 crore. Following the
outbreak of the coronavirus pandemic in March 2020, the central
government imposed a nationwide lockdown from March 24 to
break the chain of transmission. Economic activities slowed
down considerably. As a result, your Bank witnessed an impact
on business volumes in terms of loan originations, distribution of
third party products, and payments product activities, as well as
on collections. Due to these pressures, fees/other income was
lower by ` 450 crore during the year.
Operating (Non-Interest) Expenses rose to ` 30,697.5 crore
from ` 26,119.4 crore. During the year, your Bank set up 313
new Banking Outlets and 1,412 ATMs / Cash Deposit and
Withdrawal Machines (CDMs). This, along with strong growth in
90 HDFC Bank Limited Integrated Annual Report 2019-20
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
38.6 per cent from 39.7 per cent.
Total Provisions and Contingencies were ` 12,142.4 crore as
compared to ` 7,550.1 crore the preceding year. Your Bank’s
provisioning policies remain more stringent than regulatory
requirements. Total provisions for the fourth quarter of the
financial year included credit reserves relating to the coronavirus
pandemic in the form of contingent provisions of approximately
` 1,550.0 crore.
The Coverage Ratio based on specific provisions alone
excluding write-offs was 72 per cent; including General
and Floating provisions, it was 118 per cent. Your Bank
made General Provisions of ` 796.0 crore during the year.
Gross Non-Performing Assets (GNPA) were at 1.26 per cent of
Gross Advances, as against 1.36 per cent in the preceding year.
Net NPA ratio stood at 0.36 per cent as against 0.39 per cent in
the previous year.
In accordance with the RBI guidelines related to the COVID-19
Regulatory Package announced on March 27, 2020 and
April 17, your Bank granted a moratorium of three months on
the payment of all instalments and/or interest, as applicable,
falling due between March 1, 2020 and May 31, 2020 to all
eligible borrowers classified as Standard, even if overdue, as on
February 29, 2020. For all such accounts where the moratorium
is granted, the asset classification shall remain unchanged
during the moratorium period. The Bank has made provisions
above the RBI prescribed requirements against the potential
impact of the coronavirus pandemic (based on the information
available at this point in time).
Profit Before Tax grew by 13.7 per cent to ` 36,607.1 crore.
After providing for Income Tax of ` 10,349.8 crore, Net Profit
increased by 24.6 per cent to ` 26,257.3 crore from ` 21,078.1
crore. Return on Average Net Worth was 16.76 per cent while
Basic Earnings Per Share was ` 48.01 up from ` 39.33.
As on March 31, 2020, your Bank’s Total Balance Sheet
stood at ` 1,530,511 crore, an increase of 23.0 per cent over
` 1,244,541 crore on March 31, 2019. Total Deposits rose by
24.3 per cent to ` 1,147,502 crore from ` 923,141 crore.
Savings Account Deposits grew by 24.8 per cent to ` 310,377
crore while Current Account Deposits rose by 22.3 per cent
to ` 174,248 crore. Time Deposits stood at ` 662,877 crore,
representing an increase of 24.6 per cent. CASA Deposits
accounted for 42.2 per cent of Total Deposits. Advances stood
at ` 993,703 crore, an increase of 21.3 per cent. Domestic loan
portfolio of ` 974,161 crore grew by 21.4 per cent over March 31,
2019. Your Bank had a share of approximately 8.2 per cent in Total
Domestic Deposits and 9.3 per cent in Total Domestic Advances.
BUSINESS REVIEW
Your Bank’s operations are split into domestic and international.
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Domestic Business
A) Retail Banking
Your Bank’s Retail Banking Business registered robust
growth
in
the year under review. Domestic Retail
Deposits grew by 24.0 per cent to ` 879,145 crore from
country to issue one crore credit cards in FY 2017-18, it
ended the year under review with 1.45 crore credit cards.
Credit cards constitute about 6 per cent of
the
overall Bank book.
` 709,085 crore in the preceding year while Retail Advances
In the year under review, your Bank deepened its credit card
rose 14.6 per cent to ` 494,401 crore from ` 431,357 crore.
customer base by launching cards catering to millennials.
Retail deposits
` 879,145 crore
up 24.0 per cent*
Retail advances
` 494,401 crore
up 14.6 per cent*
*Over 2018-19
Your Bank continues to be a leader in the auto loans
segment with strong presence in passenger, commercial
vehicle and two-wheeler financing. The performance must
be seen in the context of a market that has de-grown by
about 15 per cent in the last two years across segments.
Your Bank has countered this by tapping new customers
in the interiors of the country, leveraging its tie-up with
Common Service Centres and also selling loan products
to Kisan Gold Card/Sustainable Livelihood Initiative (SLI)
customers. There has also been a strong focus on internal
bank customers.
The Personal Loan Business witnessed steady growth to
cross the milestone of ` 100,000 crore and end the year at
over ` 115,500 crore. About 80 per cent of the loans were
to employees of top rated corporates with reasonably high
disposable income.
Your Bank also continues to drive value through its digital
platforms, increasing penetration in its internal customer
base. Digitalisation also plays a key role for your Bank in
pioneering various digital loans - 10 second Personal Loan,
Digital Loan Against Shares and Loan Against Mutual Funds.
The Payments Business where your Bank has a dominant
presence not only acts as a catalyst for cashless
transactions but also spurs consumption. With 3.21
crore debit cards,1.45 crore credit cards and about 1.79
million acceptance points (across all form factors), it is
among the largest facilitators of cashless payments in the
country. Your Bank’s payments business has launched
digital offerings such as Bharat QR Code, UPI, and
SMS pay solutions. It has also pioneered products such
as the SmartHub app for small merchants and DigiPos,
which enables
traditional PoS machines
to accept
digital payments.
In the credit card business, your Bank continued to build
on its strong base. After becoming the first bank in the
It took the co-branded route to tap new markets or expand
its presence in existing markets. The co-branded card with
IOC helps expand its reach in the semi-urban and rural
locations; that with Indigo catches the huge aviation market
and the one with Walmart helps cater to the SME segment.
The Virtual Relationship Management (VRM) programme
gained substantial traction during the year under review.
Under VRM, 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 offers tailor-made
solutions using carefully drawn customer level plans and
has been well received since its launch.
Banking Outlets
5,416*
Opened 313 outlets#
ATMs/Cash Deposit and
Withdrawal Machines
14,901
Opened 1,412 units#
#During 2019-20
managed by CSCs
*In
addition we
have 5,379 Banking Outlets
Meanwhile, your Bank also added 313 Banking Outlets
during the year, taking the total to 5,416 across 2,803
cities/towns. The share of semi-urban and rural outlets in
the network is 52 per cent, reflecting our continued focus
on penetrating further into these markets. In addition, your
Bank has 5,379 banking outlets managed by the Common
Service Centres. The number of ATMs / Cash Deposit
& Withdrawal Machines also increased to 14,901 from
13,489. The total number of customers your Bank catered
to as on March 31, 2020 was over 5.60 crore up from 4.90
crore in the previous year.
Customers
5.6 crore+
#During 2019-20
Addition of about 70 lakh customers#
As you are aware that your Bank operates in the Home
Loan Business in conjunction with HDFC Limited. As per
this arrangement, your Bank sells HDFC home loans while
HDFC Limited approves and disburses them. Your Bank
91
Directors’ Report
receives sourcing fee for these loans and, as per the
arrangement, has the option to purchase up to 70 per
cent of fully disbursed loans either through the issuance
of mortgage-backed Pass Through Certificates (PTCs)
or a direct assignment of loans. The balance is retained
by HDFC Limited. Your Bank originated, on an average,
` 2,350 crore of home loans every month in the year
under review and purchased ` 24,127 crore as direct
assignment of loans.
Third Party Products
Your Bank distributes Life, General & Health Insurance,
and Mutual Funds (Third-Party Products). Income from
this business grew by 28% per cent to ` 2,817 crore from
` 2,200 crore and accounted for 17 per cent of Total Fee
Income in the year ended March 31, 2020, compared with
16 per cent in the preceding year.
Insurance
The open architecture adopted by your Bank for insurance
distribution with nine (9) insurers was made more robust
by leveraging more branches and expanding the product
bouquet. Continuing with the digital focus, straight through
process from prospecting to proposal stage was introduced
with real time integration across all insurers. All product
offerings were made available on the Netbanking platform.
Premium mobilisation in life Insurance for the year ended
March 31, 2020 was ` 4,587 crore.
In the Non-Life insurance space, your Bank along with
its six Non-Life insurance partners introduced new and
innovative products and increased customer offerings.
All the products offered are enabled through Netbanking
and Telesales platforms. Employees across channels
have been trained on the new products and processes.
Manpower has been strengthened across non-life insurers
to increase our business in the non-motor insurance space.
Premium mobilisation in General and Health Insurance
grew by 3.61 per cent over the year earlier to ` 2,356 crore.
B) Wholesale Banking
The Wholesale Banking business was a key growth engine
for your Bank in the year under review. This business
focuses on institutional customers such as the Government,
Large and Emerging Corporates, and SMEs. Your Bank’s
strong offerings include Working Capital and Term Loans,
Supply Change Financing, as well as Trade Credit, Cash
Management, Supply Chain Financing, Foreign Exchange,
and Investment Banking services.
The Wholesale Banking business recorded healthy growth,
ending FY 2019-20 with a domestic loan book size of
over ` 4.79 lakh crore recording a growth of 29.3 per cent
over the year earlier. This constituted about 49 per cent of
your Bank’s domestic loans as per Basel II classification.
Your Bank was able to expand its share of the customer
92 HDFC Bank Limited Integrated Annual Report 2019-20
wallet, primarily using sharper customisation, cross-selling
and expanding into greater geographies
Corporate Banking, which focuses on large, well-rated
companies, continued to be the biggest contributor to
Wholesale Banking in terms of asset size. This business
was able to capitalise on the trend of large companies
preferring to deal with fewer banks. Your Bank deepened
its existing relationships as well as gained market share by
leveraging its wide product offering. This business ended
FY 2019-20 with a domestic loan book size of ` 2.4 lakh
crore, recording a rise of 57 per cent over the year earlier.
The Emerging Corporates Group, which focuses on
the mid-market segment,
too witnessed significant
growth. Your Bank leveraged its vast geographical reach,
technology backbone, automated processes, suite of
financial products and quick turnaround times to offer a
differentiated service, which has resulted in new customer
acquisitions as well as a higher share of the wallet from
existing customers. The business continues to have a
diversified portfolio in terms of both industry and geography.
In the last five years, this business has more than doubled
its presence to over 50 cities in India.
The year under review witnessed increased formalisation
of the Micro Small and Medium Enterprises (MSMEs)
sector due to the adoption of the Goods and Service Tax.
This has resulted in greater transparency on data regarding
cash flows (for details on the business, please refer to the
section on MSME on page 95).
The Investment Banking business cemented its prominent
position in the Debt and Equity Capital Markets. Your Bank
was ranked 3rd in the Bloomberg rankings of Rupee Bond
Book Runners. Your Bank is actively assisting clients in
equity fund raising and your Bank was ranked 7th in the
PRIME Database League Tables for IPOs, Rights Issues
and QIPs for FY 2019-20 for private sector issues.
In the Government business, your Bank sustained its
focus on tax collections, collecting direct tax of over
` 3 lakh crore and indirect tax of approximately ` 3,925
crore during FY 2019-20. In addition, your Bank collected
over ` 1.82 lakh crore in 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 Greenwich
Associates, a leading provider of proprietary benchmarking
data, analytics, and qualitative insights to financial services
firms worldwide. It has ranked HDFC Bank:
•
Joint No. 1 in Large Corporate Banking with 75 per
cent share of market
•
Leader in overall Quality of client relationship in
Corporate Banking
• No. 1 in Middle-Market Banking with 60 per cent
share of market
•
Leader in overall Quality of client relationship in
Middle-Market Banking
C) Treasury
The Treasury is the custodian of your 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
your 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. Your Bank recorded revenue of ` 2,154.8
crore from foreign exchange and derivative transactions in
the year under review. While plain vanilla forex products
were in demand across all customer segments, demand
for derivatives products came mostly from large and
emerging corporates.
As part of its prudent risk management, your Bank
enters into foreign exchange and derivatives 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 your Bank enters into
foreign currency derivatives 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, your 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. Your Bank also deals
in derivatives on its own account, including for the purpose
of its own balance sheet risk management.
Your Bank maintains a portfolio of Government Securities,
in line with the regulatory norms governing the Statutory
Liquidity Ratio (SLR). A significant portion of these SLR
securities are ‘Held-to-Maturity’ (HTM) category, while
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
some are ‘Available for Sale’ (AFS). Your Bank is also a
primary dealer for government securities. As a part of this
business, your Bank holds fixed income securities as ‘Held
for Trading’ (HFT).
In the year under review, your Bank continued to be a
significant participant in the domestic exchange and interest
rate markets. It also capitalised on falling bond yields to
book profits and is now looking at tapping opportunities
arising out of the liberalisation in the foreign exchange and
interest rate markets.
D) Partnering with the Government
1) CSC Partnership
Your Bank has been closely working with the Government
both at the central and state levels. It has an equity
investment of over 9 per cent in CSC e-Governance
Services India Ltd. CSCs, operated by Village Level
Entrepreneurs (VLEs), are the access points for the
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 facilitating the Government’s mandate of a socially,
financially and digitally inclusive society. The Government
of India envisages at least one VLE per 2.54 gram
panchayat. Your bank will use this network to offer retail
products and banking services and further contribute to
the Government’s ‘Digital India’ initiative.
During the year under review, your Bank considerably
strengthened its relationship with CSCs by empanelling
over 5,300 Business Correspondents covering nearly 600
districts, over 1800 sub-districts and more than 4,500
revenue centres. Also, 55,000 VLEs are now business
facilitators. This implies that the Bank is able to cover a
much larger footprint at lower costs.
This initiative will not only enable Financial Inclusion, but will
also help generate employment opportunities, particularly
in rural India. Through CSCs, your Bank also supports
women self-help groups by providing loans to improve their
standard of living through income generating activities.
During the period under review, more than 50,000 women
received SHG/JLG loans through CSC VLEs.
Your Bank along with CSC e-Governance Services India
Limited and the Confederation of All India Traders (CAIT)
signed an MOU to offer its complete range of financial and
banking services to CAIT members, even in remote villages.
Your Bank launched ‘Small Business Money Back’ card,
co-branded with CSC e-Governance Services
India
Limited, for small merchants, traders, farmers and other
business entities. They will be able to avail credit limit
by simply uploading their one-year bank statement.
The sourcing of this card is being done exclusively by CSC
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Directors’ Report
VLEs and more than 19,000 small businesses benefitted
through this programme during the year under review.
Under the Digital India initiative, your Bank converted 1,000
villages into ‘DigiGaons’ in Phase I. The CSC VLEs in these
villages were supported with digital infrastructure to impart
financial literacy, provide online education services, apart
from interventions in sanitation and hygiene. In the second
phase, an additional 1,500 DigiGaons were identified
and adopted. An IIT-Delhi study found that this initiative
contributed to the development of those villages.
2) Start-Up Fund and SmartUp Banking
Under its SmartUp Banking Programme for Start-ups, your
Bank crossed the milestone of 10,000 such businesses.
The Bank is working with various state governments and
to promote entrepreneurship.
incubators/accelerators
MoUs have already been signed with
four state
governments and MEITY to enable execution of the varied
aspects of their respective start-up policies. Your Bank also
works with 15 incubators certified by the Department of
Science and Technology, including various Indian Institutes
of Technology and Indian Institutes of Management,
to identify 60 social start-ups that require financial and
advisory support.
E) Semi Urban and Rural
The Semi Urban and Rural markets have always been a
focus of your Bank’s strategy. In the last two years, the
Bank has made a renewed push into the Semi-urban
and rural markets as rising income levels and aspirations
of rural customers are 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,
the Bank has been offering a wide range of products on
the asset side like auto, two-wheeler, personal, gold, light
commercial vehicle (LCV), small shopkeeper loans in these
markets. Now, it plans to increase its coverage of villages
and deepen relationships in existing ones. An important
aspect of this village penetration strategy is an initiative
which combines financial literacy with financial inclusion.
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. A Toll free IVR service has been set up to
help farmers. They just have to dial and share their pin
code details. The nearest branch is automatically mapped
to the farmer and a bank representative will reach out to
address their needs.
The Bank’s operations in Semi Urban and Rural locations
are explained below:
1) Agriculture and Allied Activities
Your Bank’s credit to Agriculture & Allied activities
stood at ` 146,516.75 crore on March 31,
2020, recording nearly 14 per cent increase over
` 128,809.32 crore in the year earlier. The importance
of this segment can be understood from the fact
that over 60 per cent of the population is dependent
on agriculture for livelihood. The key to your Bank’s
success in this market has been its ability to tap the
opportunities through:
• Wide product range
•
•
Faster turnaround time
Digital solutions
range
loans,
two-wheeler
includes pre-and
The Bank’s product
loans,
post-harvest crop
auto
loan against gold, among others.
loans,
This has helped the Bank establish a strong footprint
in the rural hinterland with its asset products.
Apart from advising farmers on their financial needs,
your Bank is increasingly focusing on facilitating
various government/regulatory schemes such as
crop insurance and interest subvention.
The Bank has designed a range of crop and
geography-specific products in line with the harvest
cycles and the local needs of farmers across diverse
agro-climatic zones.
Products such as post-harvest cash credit and
warehouse receipt financing enable faster cash flows
to farmers. Credit is also offered for allied agricultural
activities such as dairy, pisciculture, and sericulture.
Your Bank’s focus in the rural markets has not
just been on increasing credit offtake, but also
on cementing relationships with customers by
empowering them. As part of these efforts, farmer
centres or Kisan Dhan Vikas Kendras have been
rolled out in Punjab, Maharashtra, Uttar Pradesh
and Madhya Pradesh. At these centres, farmers
access information on soil health, mandi prices, and
various government initiatives and also receive expert
advice. These services are also available on the
Bank’s website in vernacular languages. Your Bank
also provides advisory on weather, cropping and
harvesting through SMS.
Digitising Milk Procurement: This initiative brings
transparency in the milk procurement and payment
process, which benefits both farmers and dairy
societies. 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 farmer’s account to enable
faster payments. MFTs have cash dispensers that
function as standard ATMs. Payments are credited
without the hassles of cash distribution. Further, this
process creates a credit history which can then be
used for accessing bank credit. Apart from dairy
and cattle loans, customers gain access to all the
Bank’s 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 1,200 milk
co-operatives across 21 states, benefiting more than
4.5 lakh dairy farmers.
Substituting Moneylenders: Your Bank is slowly
making inroads into a market traditionally dominated
by
the unorganised sector, moneylenders and
pawn brokers. Loans against gold jewellery grew
to over ` 6,200 crore in FY 2019-20 from over
` 5,900 crore in FY 2018-19. The entry of organised
players has increased awareness and transparency.
The availability of the asset and the ease of securing
a loan have made this a convenient and viable
credit option.
In FY 2019-20, your Bank added 150 more branches,
taking the total number to 800 through which gold
loans are distributed. In FY 2020-21, it plans to
make gold loans available in even more branches in
the rural areas.
Social Initiatives in Farm Sector: Farm yield and
income are subject to the vagaries of the weather.
In addition, factors like soil health, input quality (seeds
and fertilizers), water availability, and government
policy have significant impact, along with price
realisations 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, your Bank has
been providing relief to the impacted farmers. It also
has put in place systems designed to enable direct
benefit transfers in a time-bound manner.
Lending to the agriculture sector, including to small
and marginal farmers, is a regulatory mandate
as part of priority sector lending requirements.
This segment has inherent credit risks. Your bank
has taken various initiatives to navigate the changing
agri-lending trend. It has also taken steps pertaining
to delinquency management like root-cause analysis
of critical locations, close monitoring of delinquency,
prioritisation-based
recovery
strategy,
system
automations. The Bank has leveraged its extensive
knowledge of rural customers to create as well as
deliver products and services at affordable price points
and with quick turnaround time. This has enabled
the Bank to establish a strong footprint in the rural
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geographies, which it has now leveraged to increase
its penetration of liability products. Further, your
Bank is building a 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.
2) Semi Urban Micro, Small and Medium
Enterprises (MSME)
The MSME sector serves as an important engine for
economic growth and is one of the largest employers
in the economy. Advances to the MSME segment
as on March 31, 2020 stood at ` 159,107.93
crore as against ` 128,976.48 crore a year ago.
Its advances to Micro Enterprises alone stood at
` 66,419.74 crore as on March 31, 2020.
The adoption of Goods and Service Tax by MSMEs
has resulted in easy availability of data for banks
regarding cash flows of these companies. Added to
this has been the increasing push for digitalisation by
the Government, and the emergence of tech savvy
entrepreneurs. The challenges faced by businesses
due to limited mobility as a result of COVID-19 is likely
to further accelerate digitalisation.
Your Bank has leveraged this trend to create
faster solutions. It has further increased the usage
of analytics-based credit appraisal
tool which
was launched in FY 2018-19 for new customer
acquisitions. This is facilitated by submission of digital
bank statements and a combination of scores arrived
by its analytics model. The digital appraisal process
has emerged as a major engine of growth for this
business as this helps customers to know whether
their loans ranging between ` 11 lakh to ` 5 crore
have been sanctioned or rejected within 3 hours.
For existing customers, the SME portal continues to
offer ad hoc approvals, pre-approved TODs on an
STP basis. Customers can request a top-up of loans
and submit the required documents online. The SME
Portal also helps customers access your Bank’s
services related to sanctioned credit facilities 24/7
from anywhere.
On the trade side, the Bank’s focus has been on
customer engagement for increasing the penetration
of Trade on Net applications. 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.
94 HDFC Bank Limited Integrated Annual Report 2019-20
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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 52 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 24.9 lakh accounts under the Pradhan Mantri
Jan Dhan Yojana (PMJDY) and enrolled 33.4 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 ` 8,149.3 crore were extended
under the Pradhan Mantri Mudra Yojana (PMMY)
and nearly ` 503 crore under the ‘Stand up India’
scheme to Scheduled Caste, Scheduled Tribe and
women borrowers.
4) Sustainable Livelihood Initiative
This is primarily a social initiative with elements of
business. It entails skill training, livelihood financing,
and creating market linkages.
International Business
To address the needs of NRI clients and Indian corporates,
your Bank has opened branches and representative offices
in Manama (Bahrain), Hong Kong, Dubai, DIFC, Abu Dhabi
& Nairobi (Kenya). These offices increase awareness of your
Bank’s brand with existing and prospective clients. It also has a
presence in International Financial Service Centre (IFSC) at GIFT
City in Gandhinagar, Gujarat. This unit was opened three years
ago. Your Bank offers products such as trade credits, foreign
currency term loans including external commercial borrowings
(ECB) and derivatives to hedge loans.
As on March 31, 2020, the Balance Sheet size of the international
business was US 5.7 billion. Advances constituted 2.85 per
cent of the Bank’s Gross Advances. The Total Income of the
overseas branches constituted 0.85 per cent of the Bank’s Total
Income for the year. The numbers may appear small, but what
is significant here is your Bank’s ability to cater to a large and
growing Indian diaspora and maintain its leadership position
among the peer group.
Non-Business Operations Social Commitment
To reiterate your Bank’s social philosophy: businesses can only
prosper if the communities in which they operate prosper as
well. To add to this, the change must be holistic and sustainable.
This has been the guiding spirit of your Bank’s social initiatives
since inception. (For details refer page numbers 70-77.)
96 HDFC Bank Limited Integrated Annual Report 2019-20
(Please refer to Annexure 2 of this report for disclosures
pertaining to CSR as required under Rule 8 of the Companies
(Accounts) Rules, 2014).
Environmental Sustainability
Banking by the very nature of its business is environment
friendly. During the year under review, your Bank has gone a little
further. It has now committed to reducing Scope I and Scope II
emissions by 10 per cent over the next 2 to 3 years as a part of
its commitment to climate change.
To encapsulate the Bank’s philosophy, maintaining a balance
between natural capital and communities is now integral to
our functioning.
To this end, our ATMs have gone paperless, contributing to
a reduction of the carbon footprint. Your 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 Transformation
People is one of the Core Values of your Bank and it
firmly believes that Talent can be a source of competitive
advantage in the marketplace.
Your Bank has articulated its vision: To be an Employer of
Choice. Especially in the BFSI Sector.
This can only happen if we have totally engaged colleagues
who are willing to give their best on a day-to-day basis.
With the objective of creating a great employee experience
which will drive a highly engaged and future ready
workforce, your Bank has rebooted its entire people
strategy and created a three tiered structure.
The first tier is the Centres of Excellence. These drive best
practices and thought leadership in the areas of Talent
Management and Organisation Effectiveness, Technology
and Analytics, Talent Acquisition, Learning and
Development, and Compensation and Benefits.
The second and third tiers of the structure are a hub and
spoke model for delivery.
The central Corporate Business Partnering ensures a
centralised point of interface with Business Leaders,
alignment of HR practices and customised solutions to meet
business needs. A strong decentralised regional leadership
team drives execution collaboratively across businesses.
This truly captures the spirit of ‘ONE BANK’. It acquires
significance given the HDFC Bank’s strong presence in
semi-urban and rural locations and collaborative nature of
work between different business units.
It is important that all employees are aligned with your
Bank’s vision and shared goals. The Bank is therefore
focused on creating a common Culture Code based on the
principles of ‘Nurture’, ‘Care’ and ‘Collaborate’ which will
guide managerial and individual actions while in pursuit of
our common goals. All people interventions are sought to
be underpinned by a common defined set of Leadership
Competencies which will further help us embody these
principles through demonstrated leadership behaviours.
Your Bank is an equal opportunity employer and is striving
to enhance diversity. Its inclusion agenda branded as
‘Valuing Differences’ is focused on creating an inclusive
work environment where every individual is respected
and differences are valued. The objective is to sensitise
employees about ‘Unconscious Biases’, to introspect and
work towards removing them. ‘Shrishti’ is your Bank’s
flagship programme on diversity. It targets providing a
level-playing field to our women employees, to help them
realise their potential, and help them develop and grow as
professionals and leaders.
Wellness is Wealth. The flagship initiative ‘HDFC Bank
Cares’ is designed to enable people to take ownership of
their wellbeing and thus creating an emotionally committed
workforce along the four dimensions of Physical, Mental
and Emotional, Financial and Social Wellbeing. There are
several initiatives under this umbrella focused on proactive
and preventive healthcare like health checkups, nutrition
for
counselling, employee assistance programme
employee counselling as well as reactive support in the
form of medical second opinion, facility of medical top-up
cover and welfare support.
and
open
encourages
transparent
Your Bank
communication and dialogue among employees and the
leadership team. Its philosophy is to build an emotional
connect by creating a culture of openness and collaboration,
where employees believe that senior leaders genuinely
care for them, are empathetic towards their needs and not
just hear but also listen to them. Employees have multiple
platforms and opportunities ranging from one-on-one
conversations with leaders as well as larger forums and
townhalls to connect with senior leadership. In addition,
‘Vibes’ is a developmental tool which institutionalises
a listening mechanism for all our managers to receive
feedback from their respective teams. The feedback survey
is designed around 3 critical tenets of leadership - Nurture,
Care and Collaborate. Your Bank also launched ‘Voice’, an
organisation-wide sentiment survey through an external
partner which is our barometer of Engagement@Work.
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the financial services sector who can take on existing and
emerging roles.
The hub and spoke recruitment model, backed by centres
of excellence and emerging technologies like artificial
intelligence, has helped realise significant productivity
gains while ensuring hiring of the right talent during the
year under review.
There is an equally strong focus on deepening expertise
and expanding the digital skills footprint of our existing
workforce to make it future ready. The Learning and
Development team of your Bank offers an extensive
bouquet of programmes across a gamut of functional and
behavioural themes. The programmes are made available
primarily through digital platforms to ensure that these are
accessible to employees in the remotest locations.
The Bank also aims to be a friend to the retiring employees.
Specific learning programmes have been developed for
them as well as their families. This is in line with its belief that
to enable employees have a long and fulfilling career with
your Bank, it is important to involve their family members in
the co-creation of their development journey.
Your Bank’s belief in a ‘High Tech- High Touch’ approach
towards employee connect is also realised through its
annual sports event ‘Josh’, the annual Talent Competition
‘Hunar’, which has also brought your Bank closer to
employees’ families. In FY 2019-20, more than 46,000
employees participated across ten different employee
connect programmes which were as wide ranging as
the cookery contest ‘Zaika’, painting competition for
the children of employees ‘Xpressions’ and trekking
event ‘Wanderers’.
Your Bank has always believed in creating leaders from
within. Our current leadership team stands testimony to
this. An institutionalised approach based on the premise
that ‘all are talent’ guides your Bank’s talent management
interventions.
Talent philosophy
• We believe that everybody has potential and can
contribute more qualitatively
•
People may have diverse talents and we offer
opportunities for all to succeed and grow.
• We encourage difference in thought and ideas.
• We believe, together, we can achieve more
• We are driven by Merit
• We value Character
The Bank has been spearheading digital transformation in
the industry. To support this, it is imperative for your Bank
to have ready availability of talent with not only functional
expertise, but also the right digital skills. The Bank has
initiated a collaborative journey with reputed educational
institutions for ‘preskilling’ and creating a talent pool for
In a nutshell, your Bank’s talent philosophy is to “identify,
build and nurture leaders across the organisation to
deliver superior business results and address individual
career aspirations”. To actualise the philosophy, the Bank
has designed a comprehensive and holistic development
framework which caters to all employees across levels and
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Directors’ Report
businesses. The principle is to have a structured process
by which all employees have access to development
opportunities that will prepare them for future roles.
talent
institutionalised
review approach
An
through
formalised review panels to arrive at an organisational view
of talent using multiple data-points helps identify hi-potential
employees, possible successors to critical roles and
development plans for individuals to prepare them for their
desired future roles. Outcomes of Development Centre are
one such critical input to the talent management process.
Your Bank has introduced Virtual Development Centres to
enable managers in remote locations to have the same
footing in their development journeys as their counterparts
in urban locations. Learning journeys based on individual
development plans (IDPs) will help address development
areas over a three-year horizon.
Sustained success of a large Bank cannot happen without
the indefatigable contribution of its several ‘solid citizens’.
In recognition of this sentiment, your Bank extended the
participation of this large segment of employees into its
annual Bonus payouts in FY 2019-20. The promotion
and increment cycles were also merged which brought
considerable streamlining and robustness to the rewards
cycle of the Bank. Besides the annual rewards cycle,
several recognition programmes are run in a centralised as
well as business specific manner to motivate employees to
give their best.
Your Bank’s continued recognition
in the 25 Best
Employers Survey by Business Today bears testimony to
its focus on ‘People’.
2)
Information Technology
In the technology space, your Bank continues to maintain
its leadership position. Over 95 per cent of its transactions
are through digital channels. This has been achieved by
creating the right technology solutions by marrying intuition
and scalability.
Take the case of the new MobileBanking App launched
in March 2019. It has intuitive features like Save, Pay
and Invest. UPI is another case in point where your Bank
has demonstrated its ability to process a large volume of
business transactions on a single day.
HDFC Bank has taken the story further by implementing
an open API platform. Application Programme Interface or
API as it is popularly known is a software intermediary code
which allows exchange of data between your Bank and its
customers in a seamless and secure manner. The Bank
has already tied up with over 100 such customers using
API. These include e–commerce platforms, automotive
companies, aggregators merchants, corporates, central
and state government portals, housing societies, hospitals,
mobile device manufacturers and retails, schools and
colleges, fintech companies and start-ups. One of your
98 HDFC Bank Limited Integrated Annual Report 2019-20
Bank’s key initiatives, its tie-up with CSC, has been
enabled through API.
HDFC Bank’s focus on offering assisted digital services
through its relationship managers and field force through a
Smart Account Opening Mobile App has been very popular.
Your Bank has also embraced cloud computing with
the implementation of technology platforms such as
Docker/Kubernetes for its core middleware. Being a
cloud-based model, it generates substantial cost savings
as it is pay per use and can be scaled up or down
based on demand.
3) Cyber Security
A robust cyber, information security and risk management
framework is a must for creating and growing digital
autobahns. Your bank has implemented next generation
firewalls, upgraded its security devices to support new
ciphers and implemented the Network Admission control
defence mechanism to prevent unauthorised devices from
connecting to the Bank’s network.
HDFC Bank has successfully participated in various cyber
security drills conducted by IDRBT and DSCI. It has
implemented a database activity monitoring solution to
ensure secure management of customer data. Your Bank
has also ensured that its systems have multiple layers of
protection from security threats, especially those emanating
from the ‘dark web’.
4) 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. Your Bank
seeks to achieve this by regularly reviewing service levels
and capturing feedback from customers. Moreover, it has
constituted three committees at different levels to monitor
customer service - Branch Level Customer Service
Committees (BLCSCs), Standing Committee on Customer
Service (SCCS), and Customer Service Committee of
the Board (CSCB).
While your Bank has various touch points for its customers
such as branch, managed programme and phone banking,
it has further enhanced customer experience through a
Virtual Relationship Manager (VRM). All these touch points,
along with state-of-the-art platforms like Netbanking
and MobileBanking, ensure that customers have an
omnichannel experience for any of their financial needs.
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 Initiatives Group.
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As part of its continuous efforts to enhance quality of
The hallmark of your Bank’s risk management function is
service, regular reviews, including mystery shopping, are
that it is independent of the business sourcing unit with the
carried out for various products/channels by following
convergence only at the CEO level.
The gamut of key risks faced by the Bank which are
dimensioned and managed include:
• Credit Risk including Residual Risk
• Credit Concentration Risk
• Counterparty Credit Risk
a structured calendar. Such reviews cover key service
parameters like adherence of stipulated TAT, complaints
reduction and
transactions monitoring
to ensure
meeting the committed service levels along with process
enhancements. The effectiveness of quality of service
is reviewed periodically at different levels including the
Customer Service Committee of the Board.
Your Bank has provided multiple channels to its customers
• Market Risk
• Operational Risk
Liquidity Risk
•
•
•
•
Technology Risk
• Outsourcing Risk
• Strategic Risk
• Business Risk
to share feedback on its services as well as register their
Interest Rate Risk in the Banking Book
grievances. It has a Grievance Redressal Policy, duly
Intraday Risk
approved by its Board, available in the public domain for
• Model Risk
ready reference of the customers.
The 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 customer
interest as the focus, your Bank has formulated a Board
Approved Customer Protection Policy which limits the
liability of customers in case of unauthorised electronic
banking transactions.
• Compliance Risk Reputation Risk
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,
The Bank has embarked on the journey to measure
procedures and systems for managing credit risk in both its retail
customer loyalty through a high velocity, closed loop
and wholesale businesses. Wholesale lending is managed on an
customer feedback system. This customer experience
individual as well as portfolio basis. By contrast, retail lending,
transformation programme will help employees empathise
given the granularity of individual exposures, is managed largely
better with customers and improve turnaround times.
on a portfolio basis across various products and customer
Branded as ‘Infinite Smiles’, the programme would
segments. For both categories, there are robust front-end and
help establish behaviours and practices that result in
back-end systems in place to ensure credit quality and minimise
customer-centric actions through continuous improvement
loss from default. The factors considered while sanctioning
in product, services, process and policies.
Risk Architecture
I. Risk Management and Portfolio Quality
retail loans include income, demographics, credit history, loan
tenor and banking behaviour. In addition, there are multiple
credit risk models developed and used to appraise and score
different segments of customers on the basis of portfolio
Traditionally, the key risks that your Bank is exposed
behaviour. In wholesale loans, credit risk is managed by capping
to in the course of its business have been the Pillar
exposures on the basis of borrower group, industry, credit
1 risks - credit risk, market risk and operational risk.
rating grades and country, among others. This is backed by
Given the evolving banking landscape, liquidity risk and
portfolio diversification, stringent credit approval processes and
cyber security risk are also vital. These risks not only have
periodic post-disbursement monitoring and remedial measures.
a bearing on your Bank’s financial strength and operations
Your Bank has been able to ensure strong asset quality through
but also on its reputation. Keeping this in mind, the Bank
volatile times in the lending environment by stringently adhering
has put in place Board-approved Risk Strategy and
to prudent norms and institutionalised processes.
Policies whose implementation is supervised by the 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. It guides the development of policies,
As on March 31, 2020, your Bank’s ratio of Gross Non-Performing
Assets (GNPAs) to Gross Advances was 1.26 per cent. Net Non-
Performing Assets (Gross Non-Performing Assets Less Specific
Loan Loss provisions) was 0.36 per cent of Net Advances.
procedures and systems for managing risks. It ensures that
Your Bank has a conservative and prudent policy for specific
these are adequate and appropriate to changing business
provisions on NPAs. Its provision for NPAs is higher than the
conditions, the structure and needs of your Bank and
minimum regulatory requirements and adheres to the regulatory
its risk appetite.
norms for Standard Assets.
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Digital Lending and Credit Risk
Driven by rapid advancements in technology, digitalisation 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 your Bank’s existing
customers. Often, they are customers across multiple products,
thus enabling the Bank ready access to their credit history and
risk profile. This facilitates evaluation on their loan eligibility.
Besides, most of the credit checks and scores used by your Bank
in process-based underwriting are replicated for digital loans.
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 your Bank’s statutory reserve
management and trading activity in interest rates, equity and
currency market. These risks are managed through a well-defined
Board approved Market Risk Policy, Investment Policy, Foreign
Exchange Trading Policy and Derivatives 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
an end-of-day basis. In addition, forex open positions, currency
option delta 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 a 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 part of this process,
the Bank has established various Board-approved limits both
for liquidity and interest rate risks. While the maturity gap and
stock ratio limits help manage liquidity risk, 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.
100 HDFC Bank Limited Integrated Annual Report 2019-20
Your Bank conducts various studies to assess the behavioural
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 the necessary
framework in place to manage intraday liquidity risk.
The Liquidity Coverage Ratio (LCR), a global standard, is also
used to measure your 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, the RBI has mandated a minimum LCR of 100 per cent
from January 1, 2019 and your Bank’s LCR stood at 132.43 per
cent on a consolidated basis for FY 2019-20.
The RBI has also mandated a minimum Net Stable Funding Ratio
(NSFR) of 100 per cent with effect from April 1, 2020. The 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, your 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 line of defence is
the business line (including support and operations).
line
The first
for managing
is primarily responsible
operational risk on a daily basis, in addition to implementing
internal control-related policies and procedures.
The second line of defence is the ORMD, which develops
policies, procedures, tools and techniques to assess and
monitor the adequacy and effectiveness of your Bank’s
internal controls. In order to achieve the aforesaid objective
pertaining to operational risk management framework, the
ORMC oversees the ORMD with special focus on:
1)
Identification and Assessment of risks across the
Bank through the Risk and Control Self-Assessment
(RCSA) and Scenario analysis;
2) Measurement of operational risk based on the
actual loss data;
b.
c.
3) Monitoring of risk through Key Risk Indicators (KRI))
Management and reporting through KRI, RCSA and
loss data of the Bank.
Internal Audit is the last line of defence. The team reviews
the effectiveness of governance, risk management, and
internal controls within your Bank.
Internal Control
Your Bank has implemented sound internal control practices
across all processes, units and functions. Your Bank has
well laid down policies and processes for management of
its day-to-day activities. Your Bank follows established,
well-designed controls, which include traditional four eye
principles, effective segregation of business and support
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.
Information Technology and Security Practices
Your 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,
among others. Your 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.
Your Bank has a robust Business Continuity and Disaster
Recovery plan that is periodically tested to ensure that
it can meet any operational contingencies. There is an
independent Information Security Group that addresses
information security related risks. A well-documented
Board-approved
and
cyber security policy is in place. The Bank also has a
well-documented crisis management plan in place to
address the strategic issues of a crisis impacting the Bank
and to direct and communicate the corporate response
to the crisis including cyber crisis. In addition, employees
mandatorily and periodically undergo information security
training and sensitisation exercises.
information
security
policy
d. Fraud Monitoring and Control
Your Bank has put in place a Whistle Blower & Vigilance
policy. The central vigilance team, based on investigation,
recommends implementation of fraud prevention measures.
Frauds are investigated to identify the root cause and
relevant corrective steps are taken to prevent recurrence.
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Fraud prevention committees at the senior management
and Board level also deliberate on material fraud events and
advises preventive actions. 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. Your Bank has a Compliance Policy to ensure the
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 actions or regulatory guidelines/actions.
The compliance team also seeks regular feedback on regulatory
compliance from product, business and operation teams
through self-certifications and monitoring.
impact on
ICAAP
Your 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
its business/financial position/capital
adequacy. The ICAAP framework is guided by 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 material risks (Credit
Risk, Market Risk, Operational Risk, Liquidity Risk, Technology
Risk, Reputation Risk, etc.). The Group Risk Management
Committee (GRMC) was instituted in your Bank under the ICAAP
framework, to establish a formal and dedicated structure to
periodically assess the nature/quantum of material risks of the
subsidiaries and adequacy of its risk management processes.
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.
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Directors’ Report
Business Continuity Planning (BCP)
Your Bank has an ISO 22301 certified Business Continuity Plan
(BCP) in place to minimise service disruptions and potential
impact on its business, employees and customers during
any unforeseen adverse event or circumstances. The central
Business Continuity Office works towards strengthening the
continuity preparedness. The Plan is designed in accordance
with the regulatory guidelines, and is reviewed regularly.
The implementation is overseen by the Information Security
Group and the Business Continuity Steering Committee which is
chaired by the Chief Risk Officer (CRO). The Business Continuity
Policy and Procedure defines roles for Crisis Management,
Business Recovery, Emergency Response and IT Disaster
Recovery Planning teams.
(Please refer to page 62 for more details).
Ensuring Business Continuity during the Coronavirus
Lockdown
Your Bank rose to the challenge of delivering banking services
during the coronavirus outbreak and the subsequent nationwide
lockdown. Although your Bank has braved many calamities in the
past such as the Kerala floods and cyclone Fani in Odisha, the
pandemic is comparable to none in terms of scale and impact.
Your Bank’s first priority was to ensure the safety of its people.
They were advised to either work from their homes or a nearby
location. The Crisis Management Plan was invoked. The Crisis
Management Team along with other Group Heads/Senior
Management swung into action. The team prioritised critical
functions such as IT and Treasury to ensure minimal or no
business disruptions. While this has been an unprecedented
crisis, it has also been a period where your Bank’s employees
worked as one unit across functions and verticals.
(Please refer to page 63 for more details).
II.
Indian Accounting Standards
Implementation of
(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)
insurers/insurance
for scheduled commercial banks,
companies and non-banking
financial companies.
This roadmap required these institutions to prepare IND-AS
based financial statements for the accounting periods
beginning April 1, 2018 with comparatives for the periods
beginning April 1, 2017. The Reserve Bank of India (RBI),
through its circular dated February 11, 2016, required all
scheduled commercial banks to comply with IND-AS for
financial statements for the stated periods. The RBI did
not permit banks to adopt IND-AS earlier than the stated
timelines. The said guidelines also stated that the 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 the disclosures required under IND-AS.
The change in the 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 Regulation Act, 1949, as well as
the level of preparedness of several banks, the RBI through
its Statement on Developmental and Regulatory Policies
dated April 5, 2018 had deferred the implementation
of IND-AS by a year by when the necessary legislative
amendments were expected. The legislative amendments
recommended by the RBI are under consideration by the
Government of India. Accordingly, the RBI, through its
circular dated March 22, 2019 deferred the implementation
of IND-AS until further notice.
The implementation of IND-AS is expected to result in
significant changes to the way your 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
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.
(which
2)
Interest will be recognised in the income statement
using the effective interest method, where 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 expenses
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. Your Bank will be
generally required to recognise 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).
Your 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
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Directors’ Report
migrate through the following three stages based on
risk management functions. The credit sanctioning and
the changes in credit quality since initial recognition:
debt management units are also segregated and do not
have any sales and operations responsibilities.
Stage 1: 12-Month ECL
For exposures which have not been assessed
Your Bank has set up various executive-level committees,
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).
Your 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.
with 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 among 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,
your Bank has a mix of preventive and detective controls
implemented through systems and processes ensuring
a robust framework in your 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.
Your Bank has put in place various preventive controls:
(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-à-vis creation of user IDs
(d) Segregation
of
duty
in
processing
of
transactions vis-à-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
Your Bank also has detective controls in place:
(a) Periodic review of user IDs
III.
Internal Controls, Audit and Compliance
(b) Post transaction monitoring at the back-end by way
Your 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 and back office. The front-office units usually
act as customer touch-points and sales and service outlets
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
while the back-office carries out the entire processing,
(c) Daily tally of cash and near-cash items at end of day
accounting and settlement of transactions in the Bank’s
(d) Reconciliation of Nostro accounts (by an independent
core banking system. The policy framework, definition and
monitoring of limits is carried out by various mid-office and
team)
to ascertain and match-off
the Nostro
credits and debits (External or Internal) regularly to
102 HDFC Bank Limited Integrated Annual Report 2019-20
103
Directors’ Report
avoid/identify any unreconciled/unmatched entries
passing through the system
(e) Reconciliation of all Suspense Accounts and
establishment of responsibility in case of outstanding
Independent and surprise checks periodically
by supervisors.
(f)
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 i.e.
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 actions. A strong oversight on the operations is
also kept through off-site monitoring.
Internal Audit Department also
The
independently
reviews your 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 proactively recommends
improvements in operational processes and service quality,
wherever deemed fit.
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.
Your Bank has a comprehensive Know Your Customer,
and Combating
Anti Money
(based on the
Financing of Terrorism
(AML)
(CFT) policy
Laundering
104 HDFC Bank Limited Integrated Annual Report 2019-20
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 to 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 your Bank at
various stages of the customer lifecycle. 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 transaction reviews
for identification of suspicious patterns/trends that helps
your Bank to further carry out enhanced due diligence and
appropriate actions 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 to equip them with the
necessary knowhow 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
your 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 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, your 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.
Your 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, your Bank reserves the right to either reduce its
exposure or recall the loan.
Performance of 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 are 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
is given below.
the companies
1) HDB Financial Services Limited
Incorporated in 2007, HDB Financial Services Limited
(‘HDB’) is a subsidiary company of HDFC Bank. It has a
network of 1,468 branches in 1,070 towns and cities.
HDB’s net interest revenue grew 22.9% to ` 4,152 crore
for the year ended March 31, 2020, from ` 3,378.80
crore in the previous year. This resulted in a net profit of
` 1,004.8 crore (` 1,153.2 crore in previous year).
Its Assets Under Management for FY 2019-20 stood at
` 58,832.75 crore.
HDB is a leading NBFC that caters to the growing needs
of an aspirational India, serving retail, small and medium
commercial clients. HDB offer loans to first time buyers
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Financial Statements and Statutory Reports
Directors’ Report
and other underserved-segments through its distribution
network and digital channels.
HDB has a wide range of financial solutions that help
customers meet their growing financial needs. These include
Consumer Loans, Enterprise Loans and Asset Finance.
With a seamless distribution channel and a committed
workforce, HDB brings in convenience to customers.
Products
The current product portfolio consists of Loans, Fee based
products and BPO services.
Loans
The Company offers a wide range of loan products
(secured and unsecured) to various customer segments.
These
include Consumer Loans, Enterprise Loans
and Asset Finance.
Consumer Loans
The Company provides loans for purchase of white goods
(such as washing machines and refrigerators etc.), brown
goods (such as televisions, audio equipment and similar
household appliances etc.), digital products (such as mobile
phones, computer/laptop etc.) and life style products.
The Company also provides loans to individuals for
personal, family or household purposes to meet their short
or medium term requirements.
Enterprise Loans
Small & Micro Enterprises need funding, whether it is for the
working capital or for setting up new machinery for faster
production. The Company offers secured and unsecured
Loans to cater to the needs of these Enterprises.
Asset Finance
The Company offers loans for purchase of new & used
vehicles and equipment’s that generate income for the
borrowers. It provides finance to a broad spectrum of
customers including fleet owners, first time users, first time
buyers and captive use buyers.
Fee based products/Insurance Services
The Company distributes
third party products.
The Company is a registered Corporate Insurance Agent
having license from Insurance Regulatory & Development
Authority of India (IRDAI). IRDAI has renewed Corporate
Agency license of the Company for a period of 3 years
from April 01, 2019 to March 31, 2022. The Company sells
Life and General insurance products of HDFC Standard
Life Insurance Company Limited and HDFC Ergo General
Insurance Company Limited respectively.
BPO Services
HDB runs a collections BPO business offering end-to-end,
specialised collection services with domain expertise in
collections tele-calling, recovery management, collections
analytics and cash reconciliation management. Its call
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Directors’ Report
centres with fulfilment infrastructure in over 200 towns offer
best-in-class performance to its clients.
HDB’s BPO services division delivers back-office services
such as
forms processing, documents verification,
finance and accounting services and correspondence
management. HDB also delivers front office services such
as contact centre management, outbound marketing and
collection services.
The Enablers
Compelling Product Offering
HDB brings in a compelling product offering across
secured/unsecured
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.
investments or
loans,
Robust Risk Management
The quest for growth has also been balanced by a robust
risk management framework, which has enabled HDB
to maintain net NPA levels at about 2 per cent (among
the lowest in the industry) and strong credit ratings.
HDB’s long-term debt is rated AAA/stable by CARE and
CRISIL, and its short-term debt is rated A1+ by CARE and
CRISIL, indicating the highest degree of safety regarding
timely servicing of financial obligations.
Focus on Phygital: Physical cum Digital
With its ever-growing network of 1,468 branches across
1,070 cities/towns, HDB is reaching out to customers
across the country. Over 85 percent of its branches are
outside the top 25 cities of India.
to customers. For
The company leverages digital channels to offer financial
solutions
instance, customers
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 to the customer’s fingertips.
As on March 31, 2020, your Bank held 95.30% stake in HDB.
2) HDFC Securities Limited (‘HSL’)
HSL’s Total Income under Indian Accounting Standards
was ` 862.2 crore as against ` 770.6 crore in the previous
year and Net Profit was ` 384.1 crore as against ` 329.8
crore in the previous year.
The company has a customer base of 24.1 lakh to whom it
offers an exhaustive range of investment and protection
products. In the year under review, HSL had 7.6 lakh
transacting customers, the third highest number of active
(transacting) customers among all broking houses.
The focus on digitisation continued. Notably, Customers
accessing HSL’s services digitally increased to 79 per cent
from 68 per cent in the previous year. For the mobile app,
this increased to 50 per cent from 37 per cent. In a
106 HDFC Bank Limited Integrated Annual Report 2019-20
conscious effort to rationalise the distribution network with
greater emphasis on digital offerings, HSL consolidated its
existing branches to end with 262 branches across 161
cities/towns at the end of the year.
The company’s performance was influenced by the
sluggish macroeconomic environment and the fall in stock
markets over the year. Benchmark Indices like the Sensex
and Nifty fell by 24 per cent and 26 per cent respectively
over the year. This was their worst ever performance in
over a decade, caused by the slowing economy, global
trade wars and the COVID pandemic towards the end
of the year.
As on March 31, 2020, your Bank held 96.57% stake in HSL.
The annual reports of HDB 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
Nine meetings of the Board were held during the year under
review. The details of Board meetings, 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(3)(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 cost records as specified by the Central Government under
Section 148(1) of the Companies Act, 2013, are not required to
be maintained by the Bank.
Reporting of Frauds by Auditors
During the year under review, no instances of fraud committed
against the Bank by its officers or employees were reported by
the Statutory Auditors and Secretarial Auditor under Section
143(12) of the Companies Act, 2013 to the Audit Committee or
the Board of Directors of the Bank.
Directors’ Responsibility Statement
Pursuant to Section 134(3)(c) read with Section 134(5) of the
Companies Act, 2013, the Board of Directors hereby confirm that:
•
In the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures.
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
• We have selected such accounting policies and applied
• We have devised proper systems to ensure compliance
them consistently and made judgments and estimates that
with the provisions of all applicable laws and that such
are reasonable and prudent so as to give a true and fair
systems were adequate and were operating effectively.
view of the state of affairs of the Bank as on March 31, 2020 and
of the profit of the Bank for the year ended on that date.
Compliance with Secretarial Standards
• We have taken proper and sufficient care for the
The Bank is in compliance with all applicable Secretarial
Standards as notified from time to time.
maintenance of adequate accounting
records
in
accordance with the provisions of the Companies Act,
2013, for safeguarding the assets of the Bank and for
preventing and detecting fraud and other irregularities.
• We have prepared
the annual accounts on a
going concern basis.
• We have laid down internal financial controls to be followed
by the Bank and have ensured that such internal financial
controls were adequate and operating effectively.
Statutory Auditors
The Bank’s current Statutory Auditors are MSKA & Associates,
Chartered Accountants, Mumbai. MSKA & Associates were
appointed as Statutory Auditor at the previous Annual General
Meeting (AGM) of the Bank, to hold office for a period of four
consecutive years, which is the maximum permissible tenure as
per RBI, from FY 2019-20 till (and including) FY 2022-23, subject
to the approval of the RBI.
During the year ended March 31, 2020, fees paid to the MSKA & Associates and its network firms are as follows:
Fees (including taxes)
Statutory Audit
Certification & other attest services
Non-audit services
Outlays and Taxes
Total
HDFC Bank to
Statutory Auditors
HDFC Bank to
Subsidiaries of HDFC Bank to
network firms of
Statutory Auditors
Statutory Auditors and
its network firms
(` in crores)
2.85
0.54
-
0.39
3.78
-
-
-
-
-
-
-
-
-
-
The requirement to place the matter relating to appointment of
Particulars of Loans, Guarantees or Investments
Statutory Auditors for ratification by Members at every AGM has
Pursuant to Section 186 (11) of the Companies Act, 2013, the
been done away with by the Companies (Amendment) Act,
provisions of Section 186 of Companies Act, 2013, except
2017 with effect from May 7, 2018. Accordingly, no resolution is
sub-section (1), do not apply to a loan made, guarantee given or
being proposed for ratification of appointment of Statutory
security provided or any investment made by a banking company
Auditors at the ensuing AGM and a note in respect of the same
in the ordinary course of business. The particulars of investments
has been included in the Notice for this AGM. However, resolution
made by the Bank are disclosed in Note No. 11 of Schedule 18
is being proposed for ratification of additional fees paid to
of the Financial Statements as per the applicable provisions of
Statutory Auditors for FY 2019-20, as well as for approval of fees
Banking Regulation Act, 1949.
payable to them for FY 2020-21.
Disclosure under Foreign Exchange Management Act,
In terms of Section 134 of the Companies Act, 2013 and read
1999
with Rule 8(1) of the Companies (Accounts) Rules, 2014 the
As far as FEMA compliances in relation to strategic downstream
performance and financial position of the Bank’s subsidiaries
investments in the Bank’s subsidiaries are concerned, during the
and associates are enclosed as Annexure 5 to this report.
year under review, there have been no strategic downstream
There were no entities which became or ceased to be the Bank’s
investments made by Bank in its subsidiaries. Accordingly, the
subsidiaries, associates or joint ventures during the year.
Financial Statements of Subsidiaries and Associates
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.
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
Bank’s values and conduct business worldwide with integrity
and highest ethical standards, the Bank has also adopted a
‘Whistle Blower Policy’ which encompasses a comprehensive
107
Directors’ Report
framework of managing complaints of every stakeholder.
It encourages its employees and various stakeholders to raise
concerns about illegal/ unethical behaviour observed in the
Bank, compromise/ violation of Bank’s code of conduct and
ethics policy or legal or regulatory provisions, corruption, misuse
of office, criminal offences, actual or suspected fraud and other
malpractices detrimental to the interest of the Bank without any
fear
or
victimization of any kind.
discrimination,
harassment
reprisal,
of
The policy also covers reporting of instances of leakage/suspected
leakage of unpublished price sensitive information which are in
violation to SEBI (Prohibition of Insider Trading) Regulations,
2015 and the Share Dealing Code of the Bank.
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 to be correct, then the Competent
Authority shall recommend to the appropriate Disciplinary
Authority to take suitable action against the responsible official
and corrective measures in consultation with the concerned
stakeholders. The decision of the Whistle Blower Committee is
final and binding on all. Other actions/measures considered
necessary to prevent/ curb recurrence of events is also taken by
the Competent Authority.
Details of Whistle blower complaints received and subsequent
action taken and the functioning of the Whistle Blower
mechanism are reviewed periodically by the Audit Committee of
the Board. No person has been denied access to the Audit
Committee of the Board. During the FY 2019-20, a total of 84
such complaints were received and taken up for investigation
which has resulted in certain staff actions in 34 cases post
investigation. The broad categories of whistle blower complaints
were in the areas of improper business practices, unethical HR
practices and corruption related.
The Policy is available on the website of the Bank at the link-
https://www.hdfcbank.com/personal/about-us/corporate-
governance/shareholders-information-and-helpdesk/whistle-
blower-policy-vigil-mechanism
Statement on Declaration by Independent Directors
Mrs. Shyamala Gopinath, Mr. Malay Patel, Mr. Umesh Chandra
Sarangi, Mr. Sanjiv Sachar, Mr. M. D. Ranganath and
Mr. Sandeep Parekh are the Independent Directors on the Board
of the Bank as on March 31, 2020.
Pursuant to the provisions of Section 149 of the Companies Act,
2013 the independent directors have submitted declarations
that each of them meet the criteria of independence as provided
in Section 149(6) of the Act along with Rules framed thereunder
and Regulation 16(1)(b) of the Securities and Exchange Board of
108 HDFC Bank Limited Integrated Annual Report 2019-20
(Listing Obligations and Disclosure Requirements)
India
Regulations, 2015 (“SEBI Listing Regulations”). There has been
no change in the circumstances affecting their status as
independent directors of the Bank. In the opinion of the Board,
the independent directors possess the requisite integrity,
experience, expertise and proficiency required under all
applicable laws and the policies of the Bank.
In compliance with Section 149 and 152 of the Companies Act,
2013, Mr. Malay Patel is proposed to be re-appointed as an
Independent Director of the Bank at the ensuing Annual General
Meeting. A resolution seeking shareholders’ approval for his
re-appointment forms a part of the Notice of this AGM. A brief
profile is furnished in the report on Corporate Governance for the
information of shareholders.
Board Performance Evaluation
The Nomination and Remuneration Committee (NRC) has
approved a framework / policy for formal annual 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
the Directors.
corporate governance was sent out
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.
to
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 line with the Bank’s
Board-approved policy on appointment and fit and proper
criteria for directors, any director appointed during the financial
year for which performance review / evaluation exercise of the
Board of Directors is being conducted, must have attended at
least three (3) Board meetings convened in that financial year in
order to participate in such review / evaluation exercise.
Since Mrs. Renu Karnad was appointed on the Board with effect
from March 3, 2020, she has attended one Board meeting held
in FY 2019-20 and is thus not eligible for the Board performance
evaluation for FY 2019-20.
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 Requirement)
Regulations, 2015 by the Independent Directors of the Bank and
their independence from the management. Such performance
evaluation has been duly completed as above.
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
integrity, etc.
qualifications, competence,
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://v1.hdfcbank.com/assets/pdf/
Policy-for-appointment-and-fit-proper-criteria-for-directors.pdf
record,
track
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://v1.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 Note No. 26 of Schedule 18 forming
part of the Acoounts. 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, the Non-Executive Directors, other than the
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Chairperson, are paid profit-related commission of ` 1,000,000
(` Ten Lakh Only) per annum for each Non-Executive Director.
Mr. Aditya Puri is the Non-Executive Chairman of HDB Financial
Services Limited, subsidiary of the Bank. Mr. Puri does not
receive any remuneration including stock options from the
subsidiary. Mr. Malay Patel is an independent director on the
Board of HDFC Securities Limited, subsidiary of the Bank.
Mr. Patel receives sitting fess from the said subsidiary. None of
the Directors of your Bank other than Mr. Puri and Mr. Patel is a
director of the Bank’s subsidiaries as on March 31, 2020.
Succession Planning
The Bank’s Nomination and Remuneration Committee (NRC)
oversees matters of succession planning of its Directors, Senior
Management and Key Managerial Personnel. With respect to
the tenure of the current Managing Director, Mr. Aditya Puri,
ending in October 2020, the Board of Directors of the Bank had
constituted a Search Committee comprising certain Board
members, and Mr. Puri acting as advisor to the Search
Committee, to identify the successor to the Managing Director.
On the recommendations of the Search Committee and the
NRC, the Board of Directors of the Bank, at its meeting held on
April 18, 2020, had finalized the names of three (3) candidates,
in the order of preference, for the position of Managing Director
& Chief Executive Officer of the Bank. In terms of the Banking
Regulation Act and the extant RBI norms, the Bank has
submitted its application to RBI with the names of the candidates
in the order of preference, for RBI’s approval.
Significant and Material Orders Passed by Regulators
During the FY 2019-20, Reserve Bank of India (RBI) had, vide its
order dated June 13, 2019, imposed a monetary penalty of
` 10 million (Rupees ten million only) on the Bank for
non-compliance with directions issued by RBI on Know Your
Customer (KYC) / Anti-Money Laundering (AML) Norms and on
reporting of frauds. The penalty was imposed in exercise of
powers vested in RBI under the provisions of Section 47A (1)(c)
read with Section 46(4)(i) of the Banking Regulation Act, 1949.
In the instant case, the Bank had made a reference to the
Custom Authorities for verification of Bill of Entry submitted by
certain importers. Examination of these customers revealed
violations of RBI directions on ‘KYC/AML norms’ and on
reporting of frauds. The Bank has taken necessary measures to
strengthen its internal control mechanisms so as to ensure that
such incidents do not recur.
RBI had also, vide its order dated January 29, 2020, imposed a
monetary penalty of ` 10 million (Rupees ten million only) on the
Bank for failure to undertake on-going due diligence in case of
39 current accounts opened for bidding in Initial Public Offer
(IPO). The penalty was imposed by RBI in exercise of the powers
conferred under the provisions of Section 47A(1)(c) read with
Section 46(4)(i) of the Banking Regulation Act, 1949. The Bank
109
Directors’ Report
has since strengthened its internal control mechanisms so as to
ensure that such incidents do not recur.
Directors and Key Managerial Personnel
In compliance with Section 152 of the Companies Act, 2013,
Mr. Kaizad Bharucha will retire by rotation at the ensuing Annual
General Meeting and is eligible for re-appointment. A resolution
seeking shareholders’ approval for his re-appointment forms a
part of the Notice of this AGM. A brief profile is furnished in the
information
report on Corporate Governance
of shareholders.
the
for
During the year, Mr. Keki Mistry ceased to be Director of the
Bank from close of business hours on January 18, 2020, on
completing the maximum permitted tenure of eight years as per
Banking Regulation Act, 1949. Your Directors place on record
their sincere appreciation of
the contribution made by
Mr. Keki Mistry during his tenure with the Bank and wishes him
well in future endeavors.
Mrs. Renu Karnad was appointed as an Additional Non-Executive
Director (nominee of Housing Development Finance Corporation
Ltd) on the Board of the Bank with effect from March 3, 2020,
subject to approval of shareholders at the ensuing AGM.
The Board of Directors had appointed Mr. Sashidhar Jagdishan
and Mr. Bhavesh Zaveri each as Additional Director and
Executive Director on the Board of the Bank, subject to the
approval of the Reserve Bank of India and shareholders, for a
period of three (3) years each from November 28, 2019 or for
such other period / from such other date as may be approved by
the Reserve Bank of India. The Bank had also made an
application to the RBI seeking approval for the aforementioned
its communication dated
appointments. RBI
April 7, 2020, advised the Bank to examine and submit the
proposal after a new MD and CEO assumes charge later this
year. Accordingly, their appointments as Executive Directors
have not taken effect, and further, Mr. Sashidhar Jagdishan and
Mr. Bhavesh Zaveri resigned as Additional Directors from the
Board of the Bank in terms of Companies Act, 2013 on
April 18, 2020.
through
Mr. Srinivasan Vaidyanathan was appointed as the Chief
Financial Officer of the Bank with effect from August 22, 2019.
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.
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Secretarial Audit
by the Bank’s employees and look forward to their continued
In terms of Section 204 of the Companies Act, 2013 and the
contribution in building a ‘World Class Indian Bank.’
Rules made thereunder, M/s. Alwyn Jay & Co., Company
Secretaries have been appointed as Secretarial Auditors of the
Conclusion
Bank for the FY 2019-20. 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
The year under review ended with the lockdown and the new
year began with it. This meant that these are genuinely troubled
times for both the global and Indian economy. The first half of the
financial year is likely to be largely about contraction with growth
expected to rebound only in the second half.
Your Bank cannot remain immune to this. What works in its
favour are inherent strengths like : strong capitalisation, asset
quality and franchise. These do not constrain its ability to lend,
expand into new geographies and come up with out of the box
solutions in response to an unprecedented situation.
At the macro-economic level, there is still substantial scope for
financial penetration, particularly banking in India. India is also
expected to capture a significant part of the global production
that is expected to shift from China. In such a scenario the
country’s traditional strengths like demographic dividend will
come
into play. All
these open up substantial growth
opportunities for your Bank.
It will continue to chase growth but maintain its traditional
prudence. And leverage its distribution strength and digital
Information under the Sexual Harassment of Women at
platforms to offer a similar experience to customers across
Workplace (Prevention, Prohibition and Redressal) Act,
urban, semi-urban and rural India.
The
relevant
information
is
included
in
the Corporate
2013
Governance 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
It will of course continue to focus on its 5 Core Values : Customer
Focus, Operational Excellence, Product Leadership, People and
Sustainability. Its commitment to the highest possible standards
of corporate governance remains unwavering as it embarks on
the next stage of its Responsible Growth story.
June 20, 2020
On behalf of the Board of Directors
Shyamala Gopinath
Chairperson
Conservation of Energy, Technology Absorption,
Foreign Exchange Earnings and Outgo
(A) Conservation of Energy
Your Bank has undertaken several
this area such as:
initiatives
in
•
•
•
•
•
•
Installation of green locks and AC controllers in air
conditioning machines in order to save energy and
support go-green initiative
Installation of energy capacitors at high consumption
offices to control the power factor and to reduce
energy consumption
All main signboards
post 10 pm
in branches switched off
Put controls on usage of lifts, ACs, common passage
lights and other electrical equipment
Provision of LED lamps at branches and offices
Provision of solar panels for captive power generation
at our offices in Pune and Bhubaneswar, Noida
It has also reduced contract demand at Kanjurmarg Hub in
Mumbai and Hinjewadi in Maharashtra.
Your Bank has also replaced CFL lamps with LED fixtures
at Kanjurmarg Hub / WBO / Fort in Mumbai / Bank
House Mumbai
(B) Technology Absorption
This year your Bank has extended the on-line real-time
Digital API Technology based collaboration with third party
and fintech platforms to shopkeepers and small merchants
in line with the Bank’s Dukaandaar Dhamaka initiative.Loans
worth over ` 650 crore were disbursed using this technology
in FY 2019-20. Leveraging API based Service Oriented
Architecture, your bank has implemented a Consumer
Durable Loans origination solution which should now
strengthen your Bank’s position on the leader board.
Personalization of Bank’s Brand New website for returning
visitors and Omni channel targeting for next best offers to
customer’s transacting with the Bank on Mobile, Internet,
Home Page, Face Book, Instagram etc. have been other
significant Technology enablement in FY 2019-20. A Smart
Account Opening App has been launched which helps
Relationship Managers to Digitally on-board the New to
Bank customers.
(C) Foreign Exchange Earnings and Outgo
During the year, the total foreign exchange earned by the
Bank was ` 2,154.8 crore (on account of net gains arising
on all exchange /derivative transactions) and the total
foreign exchange outgo was ` 2,342.86 crore towards the
operating and capital expenditure requirements.
110 HDFC Bank Limited Integrated Annual Report 2019-20
111
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 and as required to be disclosed pursuant to sub rule (9) of Rule 12 of the Companies (Share
Capital and Debentures) Rules, 2014, are as under:
EMPLOYEES’ STOCK OPTIONS AS ON MARCH 31, 2020
Schemes
Date of
Shareholders’
Approval
Total No
of Options
Approved
Face value
of ` 1/- each
Exercise
Price
(`) FV
` 1/-
Options
Opening
balance FV
` 1/-
Options
Granted /
Options
Re-
instated FV
` 1/-
Options
Vested FV
` 1/-
Plan E-ESOS XIX
June 30, 2010
200,000,000
Plan D-ESOS XX
June 16, 2007
150,000,000
Plan C-ESOS XXI
June 17, 2005
100,000,000
Plan C-ESOS XXIII
June 17, 2005
100,000,000
340.00
340.00
340.00
417.75
4,997,400
1,319,800
2,962,000
112,800
Plan F-ESOS XXIV
June 27, 2013
200,000,000
417.75
20,681,000
Plan F-ESOS XXV
June 27, 2013
200,000,000
546.33
41,309,400
Plan F-ESOS XXVI
June 27, 2013
200,000,000
548.90
6,000
Options
Exercised
& Shares
Allotted of
` 1/-
3,291,900
973,900
2,502,200
84,100
11,745,000
12,414,400
6,000
Options
forfeited
Options
Lapsed
3,400
7,000
9,600
1,800
Total Options
in Force as
on March
31, 2020
1,705,500
345,900
459,800
25,300
8,929,000
28,883,600
Plan F-ESOS XXVII
June 27, 2013
200,000,000
716.60
26,448,022
7,972,090
4,362,630
1,347,900
12,200
20,725,292
Plan F-ESOS XXVIII June 27, 2013
200,000,000
731.08
32,400
8,330
1,470
Plan G-ESOS XXIX July 21, 2016
200,000,000
1,030.60
37,192,000
11,902,630
1,276,310
2,793,870
Plan G-ESOS XXX
July 21, 2016
200,000,000
1,003.03
Plan G-ESOS XXXI July 21, 2016
200,000,000
1,045.23
880,000
672,000
586,660
211,400
16,800
Plan G -ESOS XXXII July 21, 2016
200,000,000
1,107.18
Plan G -ESOS XXXII July 21, 2016
200,000,000
1,229.00
0
578,000
0 46,175,200
40,540
70,000
0
559,800
30,930
33,121,820
822,660
602,000
578,000
45,615,400
Plan G -ESOS XXXIV July 21, 2016
Total :-
200,000,000
882.85
1,020,400
136,612,822 47,773,600 20,681,110
0
36,673,240
4,815,380
1,020,400
32,200 142,865,602
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 (`)
36,673,240
36,673,240
18,450,147,562
9,697,658,865
28,184,479,667
Note:
One (1) share of the face value of ` 1/- 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.
Maximum Term of Options Provided the employee is in the continuous and uninterrupted employment of the Bank, the options vested under
the ESOP Scheme XIX to ESOP Scheme XXVIII will lapse in case the same are not exercised by the employee within
four years from the respective dates of vesting. For the grant of options under the ESOP Scheme XXIX to ESOP
Scheme XXXIV, the vested options will lapse in case the same are not exercised by the employee within two years
from the respective dates of vesting.
In case of death / permanent disablement or retirement of the employee to whom the options are granted, all
unvested options shall get vested to the employee on the date of happening of such event, provided that the
options have completed the one year period from the date of grant. However, in case the event occurs before the
1st vesting date, then in such case, all such options which are granted shall vest in the employee within one year
from the occurrence of the event or on the 1st vesting date whichever is earlier. All such options are required to be
exercised within one year from the date of vesting.
Primary
Source of shares
Variation in terms of ESOS Nil
i. DETAILS OF OPTIONS GRANTED TO CURRENT DIRECTORS AND SENIOR MANAGERIAL PERSONNEL
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Employee Name
Aditya Puri
Kaizad Bharucha
Anjani Rathor
Arvind Kapil
Arvind Vohra
Ashima Bhat
Ashish Parthasarthy
Benjamin Frank
Bhavesh Zaveri
Sr.
No.
1
2
3
4
5
6
7
8
9
10 Chakrapani Venkatachari
11 Dhiraj Relli (on deputation to HDFC Securities Limited, the Bank 's subsidiary)
12
13 Munish Mittal
14 Nirav Shah
Parag Rao
15
Rahul Shukla
16
Rakesh Singh
17
S. Sampath Kumar
18
Sashidhar Jagdishan
19
Smita Bhagat
20
Srinivasan Vaidyanathan
21
Vinay Razdan
22
Santosh Haldankar
23
Jimmy Tata
Grade
Managing Director
Executive Director
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Chief Financial Officer
Group Head
Senior Vice President (Legal)
& Company Secretary
No. of
options
681,600
266,400
190,000
190,000
260,000
190,000
260,000
190,000
260,000
260,000
190,000
260,000
190,000
190,000
190,000
260,000
260,000
190,000
260,000
190,000
260,000
260,000
30,400
ii.
iii.
iv.
Other employees who receive a grant in any one year of options
amounting to 5 % or more of options granted during that year
None
Identified employees who were granted options, during any one
year, equal to or exceeding 1 percent of the issued capital (excluding
outstanding warrants and conversions)
None
Diluted Earnings Per Share (EPS) pursuant to the issue of shares
on exercise of options calculated in accordance with Accounting
Standard (AS) - 20 (Earnings Per Share)
The diluted EPS of the Bank calculated after considering the effect
of potential equity shares arising on account of exercise of options
is ` 47.7
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 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
Had the Bank followed fair value method for accounting, the stock
option compensation expense would have been higher by ` 719.8
crore. Consequently, profit after tax would have been lower by
` 719.8 crore and the basic EPS of the Bank would have been
` 46.7 per share (lower by ` 1.3 per share) and the diluted EPS
would have been ` 46.4 per share (lower by ` 1.3 per share)
The weighted average price of the stock options exercised is ` 504.1
and the weighted average fair value is ` 171.3
112 HDFC Bank Limited Integrated Annual Report 2019-20
113
Annexure 1 to the Directors’ Report
Annexure 2 to the Directors’ Report
vii
A description of the method and significant assumptions used
during the year to estimate the fair value of options, at the time of
grant including the following weighted average information:
The Securities and Exchange Board of India (SEBI) has prescribed
two methods to account for stock grants; (i) the intrinsic value
method; (ii) the fair value method. The Bank adopts the intrinsic
value method to account for the stock options it grants to the
employees. The Bank also calculates the fair value of options at the
time of grant, using binomial option-pricing model with the following
assumptions
The market price per share was ` 1,107.18, ` 1,229.0 and
` 882.85 at the time of grant of options under ESOS XXXII, ESOS
XXXIII and ESOS XXXIV respectively.
The weighted average market price of Bank’s equity shares on
NSE was ` 2,201.32, ` 1,227.68 and ` 868.05 at the time of
grant of options under ESOS XXXII, ESOS XXXIII and ESOS XXXIV
respectively
The exercise multiple, which is based on historical data of early
option exercise decisions of the employees, incorporates early
exercise price effect in the valuation of ESOPs. The exercise multiple
indicates that option holders tend to exercise their options when the
share price reaches a particular multiple of the exercise price.
Stock expected volatility is completely based on GARCH volatility
forecasting model using historical stock prices from the market.
Stock price and risk free interest rate are variables based on actual
market data at the time of ESOP valuation.
I.
II.
III.
IV.
V.
Risk-free interest rate
Expected life
Expected volatility
Expected dividends
5.81% to 6.70%
1 to 6 years
15.30% to 20.13%
0.61% to 0.85%
The price of the underlying share in the market at the time of option
grant
VI.
The weighted average market price of Bank’s shares on NSE at the
time of option grant
VII. Method used and assumptions made to incorporate effects of
expected early exercise
VIII. How expected volatility was determined, including explanation
of the extent to which expected volatility was based on historical
volatility
IX. Whether and how any other features of the option grant were
incorporated into the measurement of fair value, such as a market
condition
114 HDFC Bank Limited Integrated Annual Report 2019-20
HDFC Bank Annual CSR Report 2019-2020
1. Brief outline of the CSR Policy
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 overview of the projects and programs are
mentioned in the table under Clause 5 below.
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: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: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: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: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: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:1)
3. Average net profit of the Bank for last three financial years
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above)
5. Details of CSR spent during the financial year
(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:253)(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)` 535 crore
(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)(cid:47)(cid:42)(cid:45)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
` 26,680 crore
` 534 crore
(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:253)(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.
CSR project
Sector
Projects or
Amount
Amount
Cumulative
Amount spent: Direct or
No.
/activity
(Schedule VII)
programs
outlay
spent
expenditure
through *implementing
1.Local area
(project-
or others
wise)
(` crore)
1.Direct
2.State and
(` crore)
expenditure
2.Overheads
district
(IV)
(V)
70.27
up to
agency (` crore)
reporting
period
(` crore)
(VII)
(VIII)
(I)
(II)
(III)
1 Promoting
Promotion of
Pan India
Education
Education
2 Skill Training
Skill development
Pan India
28.63
and Livelihood
and Vocational
Enhancement
Training
3 Health Care
Preventive and
Pan India
Curative Healthcare
4 Environmental
Environment
Pan India
0.13
0.25
5 Eradicating
Eradicating poverty Pan India
49.80
Sustainability
Poverty
Development
Projects
(VI)
1) 7.82
2) 0.85
1) 5.26
2) 0.34
1) 0.12
2) 0.01
1) 0.24
2) 0.01
1) 0.00
2) 0.61
2) 4.72
6 Rural
Rural Development
Pan India
386.23
1) 246.25
1463.62 Directly by the Bank:
218.71 Directly by the Bank:
Given in column (VI)
Implementing Agency: 61.61
131.31 Directly by the Bank:
Given in column (VI)
Implementing Agency: 23.03
71.76 Directly by the Bank:
Given in column (VI)
4.37 Directly by the Bank:
Given in column (VI)
73.97 Directly by the Bank:
Given in column (VI)
Implementing Agency: 49.19
Given in column (VI)
Implementing Agency:
135.25
115
Annexure 2 to the Directors’ Report
Annexure 3 to the Directors’ Report
*Details of the implementing agencies are listed below:
Promotion of Education: Bangalore Oniyavara Seva Coota, CBM India Trust, International Foundation for Research and
Education, K. C. Mahindra Education Trust , Light of Life Trust, Magic Bus India Foundation, Moinee, Save the Children India,
(cid:52)(cid:83)(cid:74)(cid:1)(cid:34)(cid:86)(cid:83)(cid:80)(cid:67)(cid:74)(cid:79)(cid:69)(cid:80)(cid:1)(cid:52)(cid:80)(cid:68)(cid:74)(cid:70)(cid:85)(cid:90)(cid:13)(cid:1)(cid:52)(cid:83)(cid:74)(cid:1)(cid:52)(cid:66)(cid:85)(cid:90)(cid:66)(cid:1)(cid:52)(cid:66)(cid:74)(cid:1)(cid:53)(cid:83)(cid:86)(cid:84)(cid:85)(cid:13)(cid:1)(cid:53)(cid:70)(cid:66)(cid:68)(cid:73)(cid:1)(cid:85)(cid:80)(cid:1)(cid:45)(cid:70)(cid:66)(cid:69)(cid:13)(cid:1)(cid:53)(cid:73)(cid:70)(cid:1)(cid:34)(cid:78)(cid:70)(cid:83)(cid:74)(cid:68)(cid:66)(cid:1)(cid:42)(cid:79)(cid:69)(cid:74)(cid:66)(cid:1)(cid:39)(cid:80)(cid:86)(cid:79)(cid:69)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:53)(cid:83)(cid:86)(cid:84)(cid:85)(cid:13)(cid:1)(cid:58)(cid:86)(cid:87)(cid:66)(cid:1)(cid:54)(cid:79)(cid:84)(cid:85)(cid:80)(cid:81)(cid:81)(cid:66)(cid:67)(cid:77)(cid:70)(cid:13)(cid:1)(cid:54)(cid:79)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)
Way of Mumbai; Rural Development: Abhyuday Sansthan, Action for Agricultural Renewal in Maharashtra AFARM, Action
for Food Production, Action for Social Advancement, Aga Khan Foundation, Aga Khan Rural Support Programme India,
Ambuja Cement Foundation, AROH Foundation, BAIF Development Research Foundation, Centre for Advance Research
and Development, Citizens Foundation, Collectives for Integrated Livelihood Initiatives, 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, Manjari Foundation, MYRADA, National Institute of Women Child and Youth Development,
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 and Development, Shikhar Yuva Manch,
(cid:52)(cid:73)(cid:83)(cid:66)(cid:78)(cid:74)(cid:76)(cid:1)(cid:35)(cid:73)(cid:66)(cid:83)(cid:85)(cid:74)(cid:13)(cid:1)(cid:52)(cid:80)(cid:68)(cid:74)(cid:70)(cid:85)(cid:90)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:34)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:74)(cid:79)(cid:1)(cid:36)(cid:80)(cid:78)(cid:78)(cid:86)(cid:79)(cid:74)(cid:85)(cid:90)(cid:1)(cid:41)(cid:70)(cid:66)(cid:77)(cid:85)(cid:73)(cid:13)(cid:1)(cid:52)(cid:80)(cid:68)(cid:74)(cid:70)(cid:85)(cid:90)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:54)(cid:81)(cid:77)(cid:74)(cid:71)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:55)(cid:74)(cid:77)(cid:77)(cid:66)(cid:72)(cid:70)(cid:83)(cid:84)(cid:1)(cid:7)(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:80)(cid:71)(cid:1)(cid:41)(cid:74)(cid:78)(cid:66)(cid:77)(cid:66)(cid:90)(cid:66)(cid:79)(cid:1)
(cid:34)(cid:83)(cid:70)(cid:66)(cid:84)(cid:1)(cid:9)(cid:52)(cid:54)(cid:55)(cid:42)(cid:37)(cid:41)(cid:34)(cid:10)(cid:13)(cid:1)(cid:54)(cid:37)(cid:58)(cid:48)(cid:40)(cid:42)(cid:47)(cid:42)(cid:13)(cid:1)(cid:54)(cid:72)(cid:66)(cid:78)(cid:1)(cid:40)(cid:83)(cid:66)(cid:78)(cid:74)(cid:79)(cid:1)(cid:55)(cid:74)(cid:76)(cid:66)(cid:84)(cid:1)(cid:52)(cid:66)(cid:79)(cid:84)(cid:85)(cid:73)(cid:66)(cid:1)(cid:54)(cid:46)(cid:51)(cid:34)(cid:13)(cid:1)(cid:54)(cid:51)(cid:46)(cid:54)(cid:45)(cid:1)(cid:51)(cid:86)(cid:83)(cid:66)(cid:77)(cid:1)(cid:41)(cid:70)(cid:66)(cid:77)(cid:85)(cid:73)(cid:1)(cid:51)(cid:70)(cid:84)(cid:70)(cid:66)(cid:83)(cid:68)(cid:73)(cid:1)(cid:66)(cid:79)(cid:69)(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:53)(cid:83)(cid:86)(cid:84)(cid:85)(cid:1)
(cid:9)(cid:54)(cid:51)(cid:46)(cid:54)(cid:45)(cid:10)(cid:13)(cid:1)(cid:55)(cid:74)(cid:76)(cid:66)(cid:84)(cid:1)(cid:52)(cid:66)(cid:73)(cid:90)(cid:80)(cid:72)(cid:1)(cid:49)(cid:83)(cid:66)(cid:85)(cid:74)(cid:84)(cid:73)(cid:85)(cid:73)(cid:66)(cid:79)(cid:13)(cid:1)(cid:55)(cid:83)(cid:86)(cid:85)(cid:85)(cid:74)(cid:13)(cid:1)(cid:56)(cid:66)(cid:85)(cid:70)(cid:83)(cid:84)(cid:73)(cid:70)(cid:69)(cid:1)(cid:48)(cid:83)(cid:72)(cid:66)(cid:79)(cid:74)(cid:84)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:53)(cid:83)(cid:86)(cid:84)(cid:85)(cid:13)(cid:1)(cid:56)(cid:80)(cid:83)(cid:77)(cid:69)(cid:1)(cid:55)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:42)(cid:79)(cid:69)(cid:74)(cid:66)(cid:13)(cid:1)(cid:58)(cid:86)(cid:87)(cid:66)(cid:1)(cid:51)(cid:86)(cid:83)(cid:66)(cid:77)(cid:1)(cid:34)(cid:84)(cid:84)(cid:80)(cid:68)(cid:74)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:28)(cid:1)Skills
Training & Livelihood Enhancement:(cid:1)(cid:34)(cid:68)(cid:68)(cid:70)(cid:84)(cid:84)(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:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:13)(cid:1)(cid:38)(cid:79)(cid:69)(cid:1)(cid:49)(cid:80)(cid:87)(cid:70)(cid:83)(cid:85)(cid:90)(cid:13)(cid:1)(cid:39)(cid:83)(cid:74)(cid:70)(cid:79)(cid:69)(cid:84)(cid:1)(cid:54)(cid:79)(cid:74)(cid:80)(cid:79)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:38)(cid:79)(cid:70)(cid:83)(cid:72)(cid:74)(cid:91)(cid:74)(cid:79)(cid:72)(cid:1)(cid:45)(cid:74)(cid:87)(cid:70)(cid:84)(cid:13)(cid:1)
Head Held High Foundation, Jan Jagran Sansthan, Orion Education Society, Pan IIT Alumni Reach for India Foundation,
(cid:49)(cid:83)(cid:66)(cid:85)(cid:73)(cid:66)(cid:78)(cid:1)(cid:38)(cid:69)(cid:86)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:39)(cid:80)(cid:86)(cid:79)(cid:69)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:13)(cid:1)(cid:53)(cid:66)(cid:85)(cid:66)(cid:1)(cid:42)(cid:79)(cid:84)(cid:85)(cid:74)(cid:85)(cid:86)(cid:85)(cid:70)(cid:1)(cid:80)(cid:71)(cid:1)(cid:52)(cid:80)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:52)(cid:68)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:84)(cid:13)(cid:1)(cid:54)(cid:69)(cid:66)(cid:90)(cid:66)(cid:79)(cid:1)(cid:36)(cid:66)(cid:83)(cid:70)(cid:13)(cid:1)(cid:55)(cid:66)(cid:84)(cid:84)(cid:66)(cid:83)(cid:1)(cid:45)(cid:66)(cid:67)(cid:84)(cid:28)(cid:1)Other Donations: Bhagwan
Mahaveer Viklang Sahayata Samiti, Charities Aid Foundation, Common Service Centre (CSC), Emancipaction India
Foundation, Foundation for Promotion of Sports and Games, Grow Trees, Isha Outreach, Jai Vakeel Foundation and
Research Centre, Oxfam India, Rajni Patel Memorial Foundation, Roti Foundation, 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 Bank.
--------------------------
(cid:34)(cid:69)(cid:74)(cid:85)(cid:90)(cid:66)(cid:1)(cid:49)(cid:86)(cid:83)(cid:74)(cid:1)
Managing Director
(cid:1)
(cid:1)
(cid:1)
---------------------------------
(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)
Chairman- CSR Committee
Form No. MGT-9
Extract of the Annual Return as on the financial year ended March 31, 2020
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:
CIN: L65920MH1994PLC080618
Registration Date: August 30, 1994
i.
ii.
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 Agents:
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 per cent 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%
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:
Sr.
No.
Name and Address of the
Company
CIN / GLN
Holding /
Subsidiary /
Associate
Percentage of
shares held
Applicable
Section
1 HDB Financial Services Limited
(cid:54)(cid:23)(cid:22)(cid:26)(cid:26)(cid:20)(cid:40)(cid:43)(cid:19)(cid:17)(cid:17)(cid:24)(cid:49)(cid:45)(cid:36)(cid:17)(cid:22)(cid:18)(cid:17)(cid:19)(cid:25) Subsidiary
Radhika, 2nd Floor, Law Garden Road,
Navrangpura, Ahmedabad - 380 009.
2 HDFC Securities Limited
(cid:54)(cid:23)(cid:24)(cid:18)(cid:19)(cid:17)(cid:46)(cid:41)(cid:19)(cid:17)(cid:17)(cid:17)(cid:49)(cid:45)(cid:36)(cid:18)(cid:22)(cid:19)(cid:18)(cid:26)(cid:20) Subsidiary
I Think, Techno Campus, Building-B,
“Alpha” office, 8th Floor, opposite
Crompton Greaves, Kanjurmarg (East),
Mumbai - 400 042.
95.30% Section 2(87) of
Companies Act,
2013
96.57% Section 2(87) of
Companies Act,
2013
IV. SHAREHOLDING PATTERN: (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)
(i) Category-wise Shareholding
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
(I)
(A)
1
(a)
(b)
(c)
(d)
(e)
(f)
(II)
Demat
Physical
Total
%
of total
shares
Demat
Physical
Total
%
of total
shares
Promoters#
Indian
(cid:42)(cid:79)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:86)(cid:66)(cid:77)(cid:84)(cid:16)(cid:41)(cid:54)(cid:39)
Central Government
State Government(s)
0
0
0
Bodies Corporate (#)
582,312,917
Banks / FI
Any Other (specify)
0
0
Sub Total (A)(1)
582,312,917
0
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
582,312,917
21.38 1,164,625,834
0 1,164,625,834
21.24
0
0
0.00
0.00
0
0
0
0
0
0
0.00
0.00
582,312,917
21.38 1,164,625,834
0 1,164,625,834
21.24
0.00
0.00
0.00
-0.14
0.00
0.00
-0.14
%
Change
during the
year
116 HDFC Bank Limited Integrated Annual Report 2019-20
117
%
Change
during the
year
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-0.14
1.44
0.00
0.03
0.00
0.00
0.45
-1.44
0.00
2.49
3.01
0.00
-2.76
0.00
0.00
0.56
Annexure 3 to the 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
Demat
Physical
Total
%
of total
shares
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Demat
Physical
Total
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
%
of total
shares
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0
0
0
0
0
0
0
582,312,917
21.38 1,164,625,834
0 1,164,625,834
21.24
0
0
0
0
0
0
0
582,312,917
0
0
0
0
0
0
0
0
(I)
2
(a)
(b)
(c)
(d)
(e)
(f)
(II)
Foreign
NRIs - Individuals
Other - Individuals
Bodies Corporate
Banks / FI
Qualified Foreign
Investor
Any Other (specify)
Sub Total (A)(2)
Total Shareholding
of Promoter and
Promoter Group
(A)=(A)(1)+(A)(2)
(B)
Public shareholding
Institutions
Mutual Funds
Banks / FI
Central Government
State Government(s)
Venture Capital Funds
Non-institutions
Bodies Corporate
Indian
Overseas
Individuals
Individuals -
shareholders holding
nominal share capital
up to ` 1 Lakh
Individual shareholders
holding nominal share
capital in excess of
` 1 Lakh
Qualified Foreign
Investor
Other (specify)
NRI Rep
NRI Non - Rept
Foreign Bodies
Foreign National
1
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
2
(a)
(a)(i)
(a)(ii)
(b)
(b)(i)
(b)(ii)
(c)
(d)
d-i
d-ii
d-iii
d-iv
292,857,184
2,000
292,859,184
10.75
668,586,599
4,000
668,590,599
12.19
2,732,591
4,341,880
0
0
8,105
2,740,696
0
0
0
0
4,341,880
0
0
60,886,798
0.10
0.16
0.00
0.00
2.24
5,422,889
13,660
5,436,549
10,195,251
0
0
147,404,983
0
0
0
0
10,195,251
0
0
147,404,983
0.10
0.19
0.00
0.00
2.69
Insurance Companies
60,886,798
FIIs
850,769,414
2,000
850,771,414
31.24 1,633,952,884
4,000 1,633,956,884
29.80
Foreign Venture
Capital Funds
Qualified Foreign
Investor
0
0
Alternate Investment
Funds
4,204,026
Other (specify)
1,056
0
0
0
0
0
0
0.00
0.00
0
0
4,204,026
0.15
10,699,455
1,056
0.00
136,752,356
0
0
0
0
0.00
0
0
136,752,356
2.49
Sub Total (B)(1)
1,215,792,949
12,105 1,215,805,054
44.64 2,613,014,417
21,660 2,613,036,077
47.65
0
0
0
148,783,648
110,920
148,894,568
0
0
270
0
270
0
165,544,268
9,714,018
175,258,286
0.00
5.47
0.00
0.00
6.44
0
0
0
148,320,448
170,650
148,491,098
0
0
540
0
540
0
370,217,387
13,459,542
383,676,929
0.00
2.71
0.00
0.00
7.00
63,168,012
113,000
63,281,012
2.32
119,359,562
226,000
119,585,562
2.18
-0.14
0
2,757,539
1,946,790
7,524,679
0
1,888
0
0
33,380
2,080
0
0
0
2,757,539
1,980,170
7,526,759
0
1,888
0.00
0.10
0.07
0.28
0.00
0.00
0
6,821,336
5,961,078
0
0
6,821,336
54,910
6,015,988
12,907,481
3,640
12,911,121
0
6,447
0
0
0
6,447
Sub Total (B)(2)
389,726,824
9,973,668
399,700,492
14.68
663,593,739
13,915,282
677,509,021
Total Public
Shareholding (B)=(B)
(1)+(B)(2)
1,605,519,773
9,985,773 1,615,505,546
59.33 3,276,608,156
13,936,942 3,290,545,098
Total (A+B)
2,187,832,690
9,985,773 2,197,818,463
80.71 4,441,233,990
13,936,942 4,455,170,932
525,488,147
0
525,488,147
19.30 1,028,115,528
0 1,028,115,528
0
0.00
0.00
0.12
0.11
0.24
0.00
0.00
12.36
60.01
0.02
0.04
-0.04
0.00
0.00
-2.33
0.68
81.25
18.75
0.54
-0.55
2,713,320,837
9,985,773 2,723,306,610
100.00 5,469,349,518
13,936,942 5,483,286,460
100.00
0.00
(C)
Custodians for GDRs
and ADRs
GRAND TOTAL
(A)+(B)+(C)
0.00
0.00
2 HDFC Investments
150,000,000
0.00
300,000,000
10,699,455
0.20
0.04
3 HDFC Holdings
5,000
0.00
10,000
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
On September 21, 2019 the Bank has executed a corporate action for sub-division of its equity shares from the face value
of ` 2/- each to the face value of ` 1/- each
# 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% 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, the percentage of promoter shareholding
after excluding the equity shares underlying depository receipts from the total number of shares would be 26.14 % of the
Bank’s total share capital.
(ii) Shareholding of Promoters
Sr.
Shareholder’s
No.
Name
Shareholding
at the beginning of the year
Shareholding
at the end of the year
No.of
Shares
% of total
% of Shares
No.of
% of total
% of Shares
Shares
Pledged /
Shares
Shares
Pledged /
encumbered
to total
shares
encumbered
to total
shares
% change in
shareholding
during the
year*
1 Housing
432,307,917
15.87
0.00
864,615,834
15.77
0.00
(0.10)
Development
Finance Corporation
Limited
Limited
Limited
Total
5.51
0.00
5.47
0.00
0.00
0.00
(0.04)
0.00
582,312,917
21.38
0.00 1,164,625,834
21.24
0.00
(0.14)
Note: On September 21, 2019, the Bank has executed a corporate action for sub-division of its equity shares from the face
value of ` 2.00 each to the face value of ` 1.00 each.
Shareholding
at the beginning of the year
Cumulative Shareholding
during the year
No. of shares % of total Shares
No. of shares % of total Shares
582,312,917
582,312,917
21.38
10.64
1,164,625,834
21.29
(iii) Change in Promoters’ Shareholding:
Shareholder’s Name
At the beginning of the year
Increase in Promoters’
shareholding during the year
(On September 21, 2019, the Bank has
executed a corporate action for
sub-division of its equity shares from
the face value of ` 2.00 each to the face
value of ` 1.00 each)
At the end of the year
* The change in percentage to share capital at the end of the year is on account of issuance and allotment of additional
equity shares upon exercise of equity stock options by the employees of the Bank.
1,164,625,834
21.24*
118 HDFC Bank Limited Integrated Annual Report 2019-20
119
Annexure 3 to the Directors’ Report
(iv) Shareholding Pattern of top ten shareholders (other than directors, promoters and holders of GDRs and ADRs):
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
1 Europacific
Growth Fund
2 SBI-ETF
NIFTY 50
At the beginning of the year 30-Mar-2019
31-May-2019
Increase
02-Aug-2019
Decrease
09-Aug-2019
Decrease
16-Aug-2019
Decrease
23-Aug-2019
Decrease
13-Sep-2019
Decrease
21-Sep-2019
Corporate Action
10-Jan-2020
Increase
31-Jan-2020
Increase
07-Feb-2020
Increase
14-Feb-2020
Increase
06-Mar-2020
Decrease
13-Mar-2020
Decrease
20-Mar-2020
Decrease
27-Mar-2020
Decrease
31-Mar-2020
Decrease
At the end of the year
31-Mar-2020
At the beginning of the year 30-Mar-2019
05-Apr-2019
Increase
12-Apr-2019
Increase
19-Apr-2019
Increase
26-Apr-2019
Increase
03-May-2019
Increase
10-May-2019
Increase
17-May-2019
Increase
24-May-2019
Increase
31-May-2019
Increase
07-Jun-2019
Decrease
14-Jun-2019
Increase
21-Jun-2019
Increase
28-Jun-2019
Increase
05-Jul-2019
Increase
12-Jul-2019
Increase
19-Jul-2019
Increase
26-Jul-2019
Increase
02-Aug-2019
Increase
09-Aug-2019
Increase
16-Aug-2019
Increase
23-Aug-2019
Increase
30-Aug-2019
Increase
06-Sep-2019
Increase
13-Sep-2019
Increase
20-Sep-2019
Increase
21-Sep-2019
Corporate Action
27-Sep-2019
Increase
30-Sep-2019
Increase
04-Oct-2019
Increase
11-Oct-2019
Decrease
18-Oct-2019
Increase
25-Oct-2019
Increase
01-Nov-2019
Increase
No. of
shares
112,173,464
272,000
(1,081,163)
(2937,436)
(978,198)
(1,502,915)
(15,000)
105,930,752
850,000
1,435,230
4,682,902
1,903,756
(2,461,000)
(10,991,030)
(5,241,140)
(3,508,000)
(1,721,420)
60,379,544
518,969
564,600
295,163
401,178
244,672
260,590
545,649
168,920
259,758
(336,574)
196,571
300,317
470,365
648,645
599,170
506,552
327,390
1,074,109
2,012,293
291,304
278,908
627,692
101,953
87,343
153,597
70,978,678
178,875
55,955
418,604
(164,378)
696,836
899,797
682,723
% of total
shares
4.12
0.01
(0.04)
(0.11)
(0.04)
(0.06)
0.00
1.94
0.02
0.03
0.09
0.04
(0.05)
(0.20)
(0.10)
(0.06)
(0.03)
2.22
0.02
0.02
0.01
0.02
0.01
0.01
0.02
0.01
0.01
(0.01)
0.01
0.01
0.02
0.02
0.02
0.02
0.01
0.04
0.07
0.01
0.01
0.02
0.00
0.00
0.01
1.30
0.00
0.00
0.01
0.00
0.01
0.02
0.01
Cumulative shareholding
during the year
No. of
shares
% of total
shares
112,445,464
111,364,301
108,426,865
107,448,667
105,945,752
105,930,752
211,861,504
212,711,504
214,146,734
218,829,636
220,733,392
218,272,392
207,281,362
202,040,222
198,532,222
196,810,802
196,810,802
60,898,513
61,463,113
61,758,276
62,159,454
62,404,126
62,664,716
63,210,365
63,379,285
63,639,043
63,302,469
63,499,040
63,799,357
64,269,722
64,918,367
65,517,537
66,024,089
66,351,479
67,425,588
69,437,881
69,729,185
70,008,093
70,635,785
70,737,738
70,825,081
7,0978,678
14,195,7356
142,136,231
142,192,186
142,610,790
142,446,412
143,143,248
14,4043,045
14,4725,768
4.12
4.07
3.97
3.93
3.88
3.87
3.87
3.88
3.91
3.99
4.03
3.98
3.78
3.69
3.62
3.59
3.59
2.24
2.26
2.27
2.28
2.29
2.30
2.32
2.33
2.33
2.32
2.33
2.34
2.35
2.38
2.40
2.42
2.43
2.47
2.54
2.55
2.56
2.58
2.59
2.59
2.60
2.60
2.60
2.60
2.61
2.60
2.62
2.63
2.64
120 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
3 Life Insurance
Corporation of
India
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
08-Nov-2019
15-Nov-2019
22-Nov-2019
29-Nov-2019
06-Dec-2019
13-Dec-2019
20-Dec-2019
27-Dec-2019
31-Dec-2019
03-Jan-2020
10-Jan-2020
17-Jan-2020
24-Jan-2020
31-Jan-2020
07-Feb-2020
14-Feb-2020
Increase
21-Feb-2020
Increase
28-Feb-2020
Increase
06-Mar-2020
Increase
13-Mar-2020
Increase
20-Mar-2020
Increase
27-Mar-2020
Increase
31-Mar-2020
31-Mar-2020
At the end of the year
At the beginning of the year 30-Mar-2019
Increase
12-Jul-2019
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Corporate Action
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
At the end of the year
19-Jul-2019
26-Jul-2019
02-Aug-2019
09-Aug-2019
16-Aug-2019
23-Aug-2019
30-Aug-2019
06-Sep-2019
13-Sep-2019
21-Sep-2019
17-Jan-2020
24-Jan-2020
31-Jan-2020
07-Feb-2020
14-Feb-2020
21-Feb-2020
28-Feb-2020
06-Mar-2020
13-Mar-2020
20-Mar-2020
27-Mar-2020
31-Mar-2020
31-Mar-2020
No. of
shares
133,053
666,382
497,542
631,384
1,118,686
(406,583)
735,059
401,215
547,641
242,681
401,808
341405
95,210
133,084
290,303
1,040,116
105,374
1,504,245
1,973,095
1,960,304
3,352,686
3,262,871
2,508,243
55,816,664
1,268,287
796,993
598,463
283,500
318,724
313,921
578,232
600,942
338,234
121,500
61,035,460
155,300
206,000
348,046
674,814
175,461
90,400
258,738
2,582,712
3,073,907
3,118,706
1423,300
1,047,700
% of total
shares
0.00
0.01
0.01
0.01
0.02
(0.01)
0.01
0.01
0.01
0.00
0.01
0.01
0.00
0.00
0.01
0.02
0.00
0.03
0.04
0.04
0.06
0.06
0.05
2.05
0.05
0.03
0.02
0.01
0.01
0.01
0.02
0.02
0.01
0.00
1.12
0.00
0.00
0.01
0.01
0.00
0.00
0.01
0.05
0.06
0.06
0.03
0.02
No. of
shares
144,858,821
145,525,203
14,602,2745
146,654,129
147,772,815
147,366,232
148,101,291
148,502,506
149,050,147
149,292,828
149,694,636
150,036,041
150,131,251
150,264,335
150,554,638
151,594,754
151,700,128
153,204,373
155,177,468
157,137,772
160,490,458
163,753,329
166,261,572
166,261,572
57,084,951
57,881,944
58,480,407
58,763,907
59,082,631
59,396,552
59,974,784
60,575,726
60,913,960
61,035,460
122,070,920
122,226,220
122,432,220
122,780,266
123,455,080
123,630,541
123,720,941
123,979,679
126,562,391
129,636,298
132,755,004
134,178,304
135,226,004
135,226,004
% of total
shares
2.65
2.66
2.67
2.68
2.70
2.69
2.70
2.71
2.72
2.73
2.73
2.74
2.74
2.74
2.75
2.77
2.77
2.80
2.83
2.87
2.93
2.99
3.03
3.03
2.09
2.12
2.14
2.15
2.16
2.17
2.19
2.22
2.23
2.23
2.23
2.23
2.24
2.24
2.25
2.26
2.26
2.26
2.31
2.37
2.42
2.45
2.47
2.47
121
Annexure 3 to the Directors’ Report
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
4 ICICI
Prudential
Bluechip Fund
At the beginning of the year 30-Mar-2019
05-Apr-2019
Decrease
12-Apr-2019
Increase
19-Apr-2019
Decrease
26-Apr-2019
Increase
03-May-2019
Increase
10-May-2019
Increase
17-May-2019
Increase
24-May-2019
Decrease
31-May-2019
Increase
07-Jun-2019
Increase
14-Jun-2019
Increase
21-Jun-2019
Increase
28-Jun-2019
Increase
05-Jul-2019
Increase
12-Jul-2019
Increase
19-Jul-2019
Increase
26-Jul-2019
Increase
02-Aug-2019
Increase
09-Aug-2019
Increase
16-Aug-2019
Increase
23-Aug-2019
Increase
30-Aug-2019
Decrease
06-Sep-2019
Increase
13-Sep-2019
Decrease
20-Sep-2019
Increase
21-Sep-2019
Corporate Action
27-Sep-2019
Decrease
30-Sep-2019
Increase
04-Oct-2019
Increase
11-Oct-2019
Decrease
18-Oct-2019
Increase
25-Oct-2019
Decrease
01-Nov-2019
Decrease
08-Nov-2019
Decrease
15-Nov-2019
Decrease
22-Nov-2019
Increase
29-Nov-2019
Decrease
06-Dec-2019
Increase
13-Dec-2019
Increase
20-Dec-2019
Increase
27-Dec-2019
Decrease
31-Dec-2019
Increase
03-Jan-2020
Increase
10-Jan-2020
Increase
17-Jan-2020
Increase
24-Jan-2020
Increase
31-Jan-2020
Increase
07-Feb-2020
Increase
14-Feb-2020
Increase
21-Feb-2020
Decrease
28-Feb-2020
Decrease
06-Mar-2020
Increase
No. of
shares
17,868,509
(287,397)
122,684
(123,86)
57,066
191,928
616,419
10,445
(42,814)
1,700,895
608,807
351,074
602,761
340,023
164,306
117,241
48,933
875,441
382,156
1,275,002
146,929
10,655
(408,823)
192,672
(67,408)
205,590
25,070,708
(549,121)
461,181
271,834
(189,131)
582,015
(213,392)
(472,128)
(299,438)
(821,297)
176,242
(1,279,138)
255,059
340,712
258,344
(416,384)
366,879
46,016
1893,118
1,128,697
3297,878
1,471,371
921,009
606,762
(240,212)
(89,103)
5,341,395
% of total
shares
0.66
(0.01)
0.01
0.00
0.00
0.01
0.02
0.00
0.00
0.06
0.02
0.01
0.02
0.01
0.01
0.00
0.00
0.03
0.01
0.05
0.01
0.00
(0.02)
0.01
0.00
0.01
0.46
(0.01)
0.01
0.01
0.00
0.01
0.00
(0.01)
(0.01)
(0.02)
0.00
(0.02)
0.01
0.01
0.01
(0.01)
0.01
0.00
0.04
0.02
0.06
0.03
0.02
0.01
0.00
0.00
0.10
122 HDFC Bank Limited Integrated Annual Report 2019-20
Cumulative shareholding
during the year
No. of
shares
% of total
shares
Sr.
Name
Remarks
Date *
No.
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
No. of
shares
% of total
shares
No. of
shares
% of total
shares
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
17,581,112
17,703,796
17,691,410
17748476
17,940,404
18,556,823
18,567,268
18,524,454
20,225,349
20,834,156
21,185,230
21,787,991
22,128,014
22,292,320
22,409,561
22,458,494
23,333,935
23,716,091
24,991,093
25,138,022
25,148,677
24,739,854
24,932,526
24,865,118
25,070,708
50,141,416
49,592,295
50,053,476
50,325,310
50,136,179
50,718,194
50,504,802
50,032,674
49,733,236
48,911,939
49,088,181
47,809,043
48,064,102
48,404,814
48,663,158
48,246,774
48,613,653
48,659,669
50,552,787
51,681,484
54,979,362
56,450,733
57,371,742
57,978,504
57,738,292
57,649,189
62,990,584
0.65
0.65
0.65
0.65
0.66
0.68
0.68
0.68
0.74
0.76
0.78
0.80
0.81
0.82
0.82
0.82
0.85
0.87
0.91
0.92
0.92
0.91
0.91
0.91
0.92
0.92
0.91
0.92
0.92
0.92
0.93
0.92
0.91
0.91
0.89
0.90
0.87
0.88
0.88
0.89
0.88
0.89
0.89
0.92
0.94
1.00
1.03
1.05
1.06
1.05
1.05
1.15
13-Mar-2020
20-Mar-2020
27-Mar-2020
31-Mar-2020
(993,970)
1,141,635
793,353
(379,801)
(0.02)
61,996,614
0.02
0.01
63,138,249
63,931,602
(0.01)
63,551,801
63,551,801
At the end of the year
31-Mar-2020
5 Government of
At the beginning of the year 30-Mar-2019
27,538,825
Singapore
Corporate Action
21-Sep-2019
28,594,243
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
05-Apr-2019
12-Apr-2019
26-Apr-2019
03-May-2019
10-May-2019
17-May-2019
24-May-2019
21-Jun-2019
12-Jul-2019
19-Jul-2019
02-Aug-2019
09-Aug-2019
16-Aug-2019
23-Aug-2019
30-Aug-2019
13-Sep-2019
20-Sep-2019
27-Sep-2019
30-Sep-2019
04-Oct-2019
11-Oct-2019
18-Oct-2019
25-Oct-2019
01-Nov-2019
08-Nov-2019
29-Nov-2019
06-Dec-2019
13-Dec-2019
20-Dec-2019
10-Jan-2020
17-Jan-2020
24-Jan-2020
31-Jan-2020
07-Feb-2020
14-Feb-2020
21-Feb-2020
28-Feb-2020
06-Mar-2020
13-Mar-2020
20-Mar-2020
27-Mar-2020
228,583
(469)
13,686
(39,378)
(10,187)
65,653
(15,000)
438
295,544
274,353
57,964
82,223
2,488
32,102
85,822
(26,707)
9,179
(12,221)
(200,412)
(54,150)
6,335
30,490
12,478
(11,765)
(180,000)
(5,903)
(97,914)
(195,532)
(55,572)
(21,1900)
(138,099)
(453,198)
(160,047)
(366,593)
11,534
(244,526)
153,956
(306,219)
513,800
855,734
110,268
1.01
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.52
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(0.01)
0.00
(0.01)
0.00
0.00
0.00
0.01
0.02
0.00
27,767,408
27,766,939
27,780,625
27,741,247
27,731,060
27,796,713
27,781,713
27,781,275
28,076,819
2,835,1172
28,409,136
28,491,359
28,493,847
28,525,949
28,611,771
28,585,064
28,594,243
57,188,486
57,176,265
56,975,853
5,6921,703
56,928,038
56,958,528
56,971,006
56,959,241
56,779,241
56,773,338
56,675,424
56,479,892
56,424,320
56,212,420
56,074,321
55,621,123
55,461,076
55,094,483
55,106,017
54,861,491
55,015,447
55,223,028
560,78,762
56,189,030
56,189,030
(0.01)
54,709,228
1.13
1.15
1.17
1.16
1.16
1.02
1.02
1.02
1.02
1.02
1.02
1.02
1.02
1.03
1.04
1.04
1.04
1.04
1.04
1.05
1.05
1.05
1.05
1.05
1.04
1.04
1.04
1.04
1.04
1.04
1.04
1.04
1.04
1.03
1.03
1.03
1.02
1.02
1.01
1.01
1.01
1.00
1.00
1.00
1.01
1.02
1.02
1.02
123
At the end of the year
31-Mar-2020
Annexure 3 to the Directors’ Report
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
6 Reliance
Capital
Trustee Co.
Ltd-A/C
Nippon India
ETF Bank
Bees
At the beginning of the year 30-Mar-2019
05-Apr-2019
Decrease
12-Apr-2019
Increase
19-Apr-2019
Increase
26-Apr-2019
Decrease
03-May-2019
Decrease
10-May-2019
Decrease
17-May-2019
Decrease
24-May-2019
Increase
31-May-2019
Increase
07-Jun-2019
Decrease
14-Jun-2019
Increase
21-Jun-2019
Increase
28-Jun-2019
Decrease
05-Jul-2019
Increase
12-Jul-2019
Decrease
19-Jul-2019
Increase
26-Jul-2019
Increase
02-Aug-2019
Decrease
09-Aug-2019
Increase
16-Aug-2019
Decrease
23-Aug-2019
Decrease
30-Aug-2019
Decrease
06-Sep-2019
Decrease
13-Sep-2019
Decrease
20-Sep-2019
Decrease
21-Sep-2019
Corporate Action
27-Sep-2019
Increase
30-Sep-2019
Increase
04-Oct-2019
Increase
11-Oct-2019
Increase
18-Oct-2019
Increase
25-Oct-2019
Increase
01-Nov-2019
Decrease
08-Nov-2019
Decrease
15-Nov-2019
Decrease
22-Nov-2019
Decrease
29-Nov-2019
Decrease
06-Dec-2019
Increase
13-Dec-2019
Decrease
20-Dec-2019
Decrease
27-Dec-2019
Decrease
31-Dec-2019
Decrease
03-Jan-2020
Decrease
10-Jan-2020
Increase
17-Jan-2020
Increase
24-Jan-2020
Decrease
31-Jan-2020
Increase
07-Feb-2020
Increase
No. of
shares
26,060,792
(350,655)
52,215
189,245
(144,131)
(505,130)
(507,643)
(674,711)
22,156
687,677
(345,848)
649,983
324,806
(591,629)
319,497
(1,294,133)
69,311
462,304
(145,166)
3,256,125
(587,079)
(78,939)
(391,606)
(325,119)
(47,443)
(17,579)
26,087,300
1,874,484
143,570
420,026
381,118
1,304,828
45,120
(1,296,103)
(1,426,031)
(781,288)
(329,123)
(326,452)
728,844
(363,587)
(309,043)
(1,821,836)
(301,156)
(49,208)
112,235
359,556
(1,638,827)
549,646
1,218,147
% of total
shares
0.96
(0.01)
0.00
0.01
(0.01)
(0.02)
(0.02)
(0.03)
0.00
0.03
(0.01)
0.02
0.01
(0.02)
0.01
(0.05)
0.00
0.02
(0.01)
0.12
(0.02)
0.00
(0.01)
(0.01)
0.00
0.00
0.48
0.03
0.00
0.01
0.01
0.02
0.00
(0.02)
(0.03)
(0.01)
(0.01)
(0.01)
0.01
(0.01)
(0.01)
(0.03)
(0.01)
0.00
0.00
0.01
(0.03)
0.01
0.02
Cumulative shareholding
during the year
No. of
shares
% of total
shares
25,710,137
25,762,352
25,951,597
25,807,466
25,302,336
24,794,693
24,119,982
24,142,138
24,829,815
24,483,967
25,133,950
25,458,756
24,867,127
25,186,624
23,892,491
23,961,802
24,424,106
24,278,940
27,535,065
26,947,986
26,869,047
26,477,441
26,152,322
26,104,879
26,087,300
52,174,600
54,049,084
54,192,654
54,612,680
54,993,798
56,298,626
56,343,746
55,047,643
53,621,612
52,840,324
52,511,201
52,184,749
52,913,593
52,550,006
52,240,963
50,419,127
50,117,971
50,068,763
50,180,998
50,540,554
48,901,727
49,451,373
50,669,520
0.94
0.95
0.95
0.95
0.93
0.91
0.89
0.89
0.91
0.90
0.92
0.93
0.91
0.92
0.87
0.88
0.89
0.89
1.01
0.99
0.98
0.97
0.96
0.95
0.95
0.95
0.99
0.99
1.00
1.01
1.03
1.03
1.01
0.98
0.97
0.96
0.95
0.97
0.96
0.95
0.92
0.92
0.91
0.92
0.92
0.89
0.90
0.93
124 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
7 HDFC Trustee
Company Ltd
- A/C HDFC
Hybrid Equity
Fund
14-Feb-2020
Increase
21-Feb-2020
Increase
28-Feb-2020
Increase
06-Mar-2020
Increase
13-Mar-2020
Decrease
20-Mar-2020
Decrease
27-Mar-2020
Decrease
31-Mar-2020
Decrease
At the end of the year
31-Mar-2020
At the beginning of the year 30-Mar-2019
05-Apr-2019
Increase
12-Apr-2019
Increase
19-Apr-2019
Decrease
26-Apr-2019
Increase
03-May-2019
Increase
10-May-2019
Decrease
17-May-2019
Decrease
24-May-2019
Decrease
31-May-2019
Increase
07-Jun-2019
Increase
14-Jun-2019
Decrease
21-Jun-2019
Decrease
28-Jun-2019
Increase
05-Jul-2019
Increase
12-Jul-2019
Increase
19-Jul-2019
Increase
26-Jul-2019
Decrease
02-Aug-2019
Decrease
09-Aug-2019
Increase
16-Aug-2019
Increase
23-Aug-2019
Increase
30-Aug-2019
Increase
06-Sep-2019
Increase
13-Sep-2019
Increase
20-Sep-2019
Increase
21-Sep-2019
Corporate Action
27-Sep-2019
Decrease
30-Sep-2019
Increase
04-Oct-2019
Increase
11-Oct-2019
Decrease
18-Oct-2019
Increase
25-Oct-2019
Decrease
01-Nov-2019
Decrease
08-Nov-2019
Decrease
15-Nov-2019
Decrease
22-Nov-2019
Increase
29-Nov-2019
Increase
06-Dec-2019
Increase
13-Dec-2019
Decrease
20-Dec-2019
Decrease
27-Dec-2019
Decrease
31-Dec-2019
Decrease
No. of
shares
529,392
1,512,700
1,895,423
2,177,603
(861,532)
(2,313,172)
(629,641)
(230,517)
29,783,566
638
141,096
(5,744)
(101,841)
(5,2034)
(73,3048)
(11,255)
(407,139)
3,406
3,624
(376,663)
(85,610)
4,641
39,765
29,029
9,894
(187,928)
(74,887)
586,637
9,135
10,397
639,031
510,083
10,202
379,587
30,432,332
(576,455)
4,277
155,934
(23,540)
64,169
(95,860)
(34,686)
(517,777)
(207,734)
16,644
30,189
334,475
(1,295,788)
(589,842)
(1,048,741)
(307062)
% of total
shares
0.01
0.03
0.04
0.04
(0.02)
(0.04)
(0.01)
0.00
1.09
0.00
0.01
0.00
0.00
0.00
(0.03)
0.00
(0.02)
0.00
0.00
(0.01)
0.00
0.00
0.00
0.00
0.00
(0.01)
0.00
0.02
0.00
0.00
0.02
0.02
0.00
0.01
0.56
(0.01)
0.00
0.00
0.00
0.00
0.00
0.00
(0.01)
0.00
0.00
0.00
0.01
(0.02)
(0.01)
(0.02)
(0.01)
No. of
shares
51,198,912
52,711,612
54,607,035
56,784,638
55,923,106
53,609,934
52,980,293
52,749,776
52,749,776
29,784,204
29,925,300
29,919,556
30,021,397
30,073,431
29,340,383
29,329,128
28,921,989
28,925,395
28,929,019
28,552,356
28,466,746
28,471,387
28,511,152
28,540,181
28,550,075
28,362,147
28,287,260
28,873,897
28,883,032
28,893,429
29,532,460
30,042,543
30,052,745
30,432,332
60,864,664
60,288,209
60,292,486
60,44,8420
60,424,880
60,489,049
60,393,189
60,358,503
59,840,726
59,632,992
59,649,636
59,679,825
60,014,300
58,718,512
58,128,670
57,079,929
56,772,867
% of total
shares
0.94
0.96
1.00
1.04
1.02
0.98
0.97
0.96
0.96
1.09
1.10
1.10
1.10
1.10
1.08
1.08
1.06
1.06
1.06
1.05
1.04
1.04
1.04
1.04
1.05
1.04
1.04
1.06
1.06
1.06
1.08
1.10
1.10
1.11
1.11
1.10
1.10
1.11
1.11
1.11
1.10
1.10
1.09
1.09
1.09
1.09
1.10
1.07
1.06
1.04
1.04
125
Annexure 3 to the Directors’ Report
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
8 ICICI
Prudential
Life Insurance
Company
Limited
03-Jan-2020
Decrease
10-Jan-2020
Decrease
17-Jan-2020
Decrease
24-Jan-2020
Decrease
31-Jan-2020
Decrease
07-Feb-2020
Decrease
14-Feb-2020
Increase
21-Feb-2020
Increase
28-Feb-2020
Increase
06-Mar-2020
Increase
13-Mar-2020
Decrease
20-Mar-2020
Decrease
27-Mar-2020
Decrease
31-Mar-2020
Increase
31-Mar-2020
At the end of the year
At the beginning of the year 30-Mar-2019
05-Apr-2019
Decrease
12-Apr-2019
Increase
19-Apr-2019
Increase
26-Apr-2019
Decrease
03-May-2019
Decrease
10-May-2019
Decrease
17-May-2019
Decrease
24-May-2019
Decrease
31-May-2019
Increase
07-Jun-2019
Decrease
14-Jun-2019
Decrease
21-Jun-2019
Increase
28-Jun-2019
Increase
05-Jul-2019
Decrease
12-Jul-2019
Decrease
19-Jul-2019
Decrease
26-Jul-2019
Decrease
02-Aug-2019
Decrease
09-Aug-2019
Decrease
16-Aug-2019
Decrease
23-Aug-2019
Increase
30-Aug-2019
Decrease
06-Sep-2019
Decrease
13-Sep-2019
Increase
20-Sep-2019
Decrease
21-Sep-2019
Corporate Action
27-Sep-2019
Increase
30-Sep-2019
Decrease
04-Oct-2019
Increase
11-Oct-2019
Increase
18-Oct-2019
Decrease
25-Oct-2019
Decrease
01-Nov-2019
Decrease
08-Nov-2019
Decrease
15-Nov-2019
Decrease
No. of
shares
(466489)
(1632449)
(911807)
(711,286)
(30,562)
(121,145)
12,054
39,809
17,287
77,049
(645,286)
(1,408,509)
(1,967,865)
434,854
30,501,652
(187,124)
335,198
19,675
(23,138)
(166,532)
(168,723)
(619,700)
(289,953)
58,928
(85,071)
(94,737)
24,750
54,590
(312,930)
(391,970)
(320,646)
(24,705)
(205,431)
(110,914)
(245,258)
25,996
(233,662)
(121,334)
20,022
(388,384)
27,050,599
107,396
(129,985)
253,394
1,094,192
(974,581)
(1,148,130)
(281,452)
(738,429)
(208,828)
126 HDFC Bank Limited Integrated Annual Report 2019-20
% of total
shares
(0.01)
(0.03)
(0.02)
(0.01)
0.00
0.00
0.00
0.00
0.00
0.00
(0.01)
(0.03)
(0.04)
0.01
Cumulative shareholding
during the year
No. of
shares
56,306,378
54,673,929
53,762,122
53,050,836
53,020,274
52,899,129
52,911,183
52,950,992
52,968,279
53,045,328
52,400,042
50,991,533
49,023,668
49,458,522
49,458,522
% of total
shares
1.03
1.00
0.98
0.97
0.97
0.97
0.97
0.97
0.97
0.97
0.96
0.93
0.89
0.90
0.90
1.12
(0.01)
0.01
0.00
0.00
(0.01)
(0.01)
(0.02)
(0.01)
0.00
0.00
0.00
0.00
0.00
(0.01)
(0.01)
(0.01)
0.00
(0.01)
0.00
(0.01)
0.00
(0.01)
0.00
0.00
(0.01)
0.49
0.00
0.00
0.01
0.02
(0.02)
(0.02)
(0.01)
(0.01)
0.00
30,314,528
30,649,726
30,669,401
30,646,263
30,479,731
30,311,008
29,691,308
29,401,355
29,460,283
29,375,212
29,280,475
29,305,225
29,359,815
29,046,885
28,654,915
28,334,269
28,309,564
28,104,133
27,993,219
27,747,961
27,773,957
2,7540,295
27,418,961
27,438,983
27,050,599
54,101,198
54,208,594
54,078,609
54,332,003
55,426,195
54,451,614
53,303,484
53,022,032
52,283,603
52,074,775
1.11
1.13
1.13
1.13
1.12
1.11
1.09
1.08
1.08
1.08
1.07
1.07
1.07
1.06
1.05
1.04
1.04
1.03
1.02
1.02
1.02
1.01
1.00
1.00
0.99
0.99
0.99
0.99
0.99
1.01
1.00
0.97
0.97
0.96
0.95
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Sr.
Name
Remarks
Date *
No.
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
No. of
shares
% of total
shares
No. of
shares
% of total
shares
9 Aditya Birla
At the beginning of the year 30-Mar-2019
26,698,137
At the end of the year
31-Mar-2020
Sun Life
Trustee
Private
Limited A/C
Aditya Birla
Sun Life
Frontline
Equity Fund
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
22-Nov-2019
29-Nov-2019
06-Dec-2019
13-Dec-2019
20-Dec-2019
27-Dec-2019
31-Dec-2019
03-Jan-2020
10-Jan-2020
17-Jan-2020
24-Jan-2020
31-Jan-2020
07-Feb-2020
14-Feb-2020
21-Feb-2020
28-Feb-2020
06-Mar-2020
13-Mar-2020
20-Mar-2020
27-Mar-2020
31-Mar-2020
05-Apr-2019
12-Apr-2019
19-Apr-2019
26-Apr-2019
03-May-2019
10-May-2019
17-May-2019
24-May-2019
31-May-2019
07-Jun-2019
14-Jun-2019
21-Jun-2019
28-Jun-2019
05-Jul-2019
12-Jul-2019
19-Jul-2019
26-Jul-2019
09-Aug-2019
23-Aug-2019
30-Aug-2019
06-Sep-2019
13-Sep-2019
20-Sep-2019
21-Sep-2019
27-Sep-2019
30-Sep-2019
04-Oct-2019
11-Oct-2019
18-Oct-2019
25-Oct-2019
01-Nov-2019
(223,090)
(1,111,265)
(752,745)
(1,034,240)
505,580
645,735
30,582
254,705
(215,978)
103,682
(947,736)
(54,636)
(292,911)
(189,271)
(752,210)
(997,626)
(85,646)
96,896
(926,479)
1,069,688
(47,229)
130,283
507,642
(750)
(25,750)
(102,000)
(99,913)
(13,647)
54,808
82,250
(17,485)
(498,700)
(404,500)
(75,010)
124,036
(51,004)
(7,921)
(277,750)
30,250
(5,961)
(143,221)
169,250
(550,187)
(250)
327,133
(231,500)
(811,000)
(235)
(87,000)
354,333
(140,115)
0.00
(0.02)
(0.01)
(0.02)
0.01
0.01
0.00
0.01
0.00
0.00
(0.02)
0.00
(0.01)
0.00
(0.01)
(0.02)
0.00
0.00
(0.02)
0.02
0.00
0.98
0.01
0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
(0.02)
(0.02)
0.00
0.01
0.00
0.00
(0.01)
0.00
0.00
(0.01)
0.01
(0.02)
0.00
0.47
0.01
0.00
(0.02)
0.00
0.00
0.01
0.00
51,851,685
50,740,420
49,987,675
48,953,435
49,459,015
50,104,750
50,135,332
50,390,037
50,174,059
502,77,741
49,330,005
49,275,369
48,982,458
48,793,187
48,040,977
47,043,351
46,957,705
47,054,601
46,128,122
47,197,810
47,150,581
47,150,581
26,828,420
27,336,062
27,335,312
27,309,562
27,207,562
27,107,649
27,094,002
27,148,810
27,231,060
27,213,575
26,714,875
26,310,375
26,235,365
26,359,401
26,308,397
26,300,476
26,022,726
26,052,976
26,047,015
25,903,794
26,073,044
25,522,857
25,522,607
51,045,214
51,372,347
51,140,847
50,329,847
50,329,612
50,242,612
50,596,945
50,456,830
0.95
0.93
0.91
0.89
0.90
0.92
0.92
0.92
0.92
0.92
0.90
0.90
0.89
0.89
0.88
0.86
0.86
0.86
0.84
0.86
0.86
0.86
0.99
1.00
1.00
1.00
1.00
1.00
0.99
1.00
1.00
1.00
0.98
0.96
0.96
0.97
0.96
0.96
0.95
0.95
0.95
0.95
0.95
0.93
0.93
0.93
0.94
0.94
0.92
0.92
0.92
0.93
0.92
127
Corporate Action
25,522,607
Annexure 3 to the Directors’ Report
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
Name
Remarks
Date *
Sr.
No.
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
10 (cid:54)(cid:53)(cid:42)(cid:1)(cid:14)(cid:1)(cid:47)(cid:42)(cid:39)(cid:53)(cid:58)(cid:1)
Exchange
Traded Fund
08-Nov-2019
Decrease
15-Nov-2019
Decrease
22-Nov-2019
Decrease
29-Nov-2019
Decrease
06-Dec-2019
Decrease
13-Dec-2019
Increase
20-Dec-2019
Increase
27-Dec-2019
Decrease
31-Dec-2019
Decrease
03-Jan-2020
Decrease
10-Jan-2020
Decrease
17-Jan-2020
Increase
24-Jan-2020
Decrease
31-Jan-2020
Decrease
07-Feb-2020
Decrease
14-Feb-2020
Decrease
21-Feb-2020
Decrease
28-Feb-2020
Decrease
06-Mar-2020
Decrease
13-Mar-2020
Decrease
20-Mar-2020
Increase
27-Mar-2020
Decrease
31-Mar-2020
Increase
At the end of the year
31-Mar-2020
At the beginning of the year 30-Mar-2019
05-Apr-2019
Increase
12-Apr-2019
Increase
19-Apr-2019
Increase
26-Apr-2019
Increase
03-May-2019
Increase
10-May-2019
Increase
17-May-2019
Increase
24-May-2019
Increase
31-May-2019
Decrease
07-Jun-2019
Increase
14-Jun-2019
Increase
21-Jun-2019
Increase
28-Jun-2019
Decrease
05-Jul-2019
Increase
12-Jul-2019
Increase
19-Jul-2019
Increase
26-Jul-2019
Increase
02-Aug-2019
Increase
09-Aug-2019
Increase
16-Aug-2019
Increase
23-Aug-2019
Increase
30-Aug-2019
Increase
06-Sep-2019
Increase
13-Sep-2019
Decrease
20-Sep-2019
Increase
21-Sep-2019
Corporate Action
27-Sep-2019
Decrease
30-Sep-2019
Increase
No. of
shares
(183,400)
(299,433)
(172,500)
(418,280)
(572)
143,500
150,000
(184,533)
(200,000)
(538,367)
(386,915)
124,327
(517,898)
(3,647)
(131,500)
(233,808)
(270,569)
(637,271)
(696,956)
(362,462)
1,110,905
(90,555)
3,797
18,783,741
142,166
79,511
2,465
9,739
31,312
149,971
145,759
189,23
(30,134)
43,418
49,375
9,891
(2,937)
125,644
116,127
148,510
103,773
14,027
168,980
56,633
55,604
66,651
12,604
(106,241)
15,347
20,210,859
(1,038,812)
30,933
% of total
shares
0.00
(0.01)
0.00
(0.01)
0.00
0.00
0.00
0.00
0.00
(0.01)
(0.01)
0.00
(0.01)
0.00
0.00
0.00
(0.01)
(0.01)
(0.01)
(0.01)
0.02
0.00
0.00
0.69
0.01
0.00
0.00
0.00
0.00
0.01
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.01
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.37
0.02
0.00
No. of
shares
50,273,430
49,973,997
49,801,497
49,383,217
49,382,645
49,526,145
49,676,145
49,491,612
49,291,612
48,753,245
48,366,330
48,490,657
47,972,759
47,969,112
47,837,612
47,603,804
47,333,235
46,695,964
45,999,008
45,636,546
46,747,451
46,656,896
46,660,693
46,660,693
18,925,907
19,005,418
19,007,883
19,017,622
19,048,934
19,198,905
19,344,664
19,363,587
19,333,453
19,376,871
19,426,246
19,436,137
19,433,200
19,558,844
19,674,971
19,823,481
19,927,254
19,941,281
20,110,261
20,166,894
20,222,498
20,289,149
20,301,753
20,195,512
20,210,859
40,421,718
39,382,906
39413839
% of total
shares
0.92
0.91
0.91
0.90
0.90
0.90
0.91
0.90
0.90
0.89
0.88
0.89
0.88
0.88
0.87
0.87
0.86
0.85
0.84
0.83
0.85
0.85
0.85
0.85
0.70
0.70
0.70
0.70
0.70
0.71
0.71
0.71
0.71
0.71
0.71
0.71
0.71
0.72
0.72
0.73
0.73
0.73
0.74
0.74
0.74
0.74
0.74
0.74
0.74
0.74
0.72
0.72
128 HDFC Bank Limited Integrated Annual Report 2019-20
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
At the end of the year
04-Oct-2019
11-Oct-2019
18-Oct-2019
25-Oct-2019
01-Nov-2019
08-Nov-2019
15-Nov-2019
22-Nov-2019
29-Nov-2019
06-Dec-2019
13-Dec-2019
20-Dec-2019
27-Dec-2019
31-Dec-2019
03-Jan-2020
10-Jan-2020
17-Jan-2020
24-Jan-2020
31-Jan-2020
14-Feb-2020
21-Feb-2020
28-Feb-2020
06-Mar-2020
13-Mar-2020
20-Mar-2020
27-Mar-2020
31-Mar-2020
31-Mar-2020
No. of
shares
225,923
217,314
141,561
111,793
128,282
357,115
(136,265)
85,322
46,415
16,006
224,655
(74,494)
(18,844)
99,703
55,927
84,215
62,981
56,404
236,356
(27,19)
320,474
1,065,850
828,163
459,073
416,863
373,440
80,2563
% of total
shares
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.02
0.02
0.01
0.01
0.01
0.02
No. of
shares
39639762
39857076
39998637
40,110,430
40,238,712
40,595,827
40,459,562
40,544,884
40,591,299
40,607,305
40,831,960
40,757,466
40,738,622
40,838,325
40,894,252
40,978,467
41,041,448
41,097,852
41,334,208
41,543,612
41,864,086
42,929,936
43,758,099
44,217,172
44,634,035
45,007,475
45,810,038
45,810,038
% of total
shares
0.73
0.73
0.73
0.73
0.74
0.74
0.74
0.74
0.74
0.74
0.75
0.74
0.74
0.75
0.75
0.75
0.75
0.75
0.75
0.76
0.76
0.78
0.80
0.81
0.81
0.82
0.84
0.84
* Date: This date 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
Corporate Action: This is the date of sub-division of the Bank's equity shares from the face value of ` 2/- each to the face
value of ` /- each
(v) Shareholding of Directors and Key Managerial Personnel
Name
Remarks
Date*
Sr.
No.
Shareholding at the
beginning of the year
Shareholding at the end of
the year
1
Aditya Puri
2
Kaizad
Bharucha
At the beginning of the year 30-Mar-2019
21-Jun-2019
Increase
09-Aug-2019
Decrease
21-Sep-2019
Corporate Action
14-Feb-2020
Decrease
28-Feb-2020
Increase
At the end of the year
31-Mar-2020
At the beginning of the year 30-Mar-2019
26-Apr-2019
Increase
31-May-2019
Increase
No. of
shares
3,704,544
448,000
(280,000)
3,872,544
(1,252,037)
1,303,200
891,051
50,000
104,000
% of total
shares
0.14
0.02
(0.01)
0.07
0.02
0.02
0.03
0.00
0.00
No. of
shares
% of total
shares
4,152,544
3,872,544
7,745,088
6,493,051
7,796,251
7,796,251
941,051
1,045,051
0.15
0.14
0.14
0.12
0.14
0.14
0.03
0.04
129
Annexure 3 to the Directors’ Report
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Name
Remarks
Date*
Sr.
No.
Shareholding at the
beginning of the year
Shareholding at the end of
the year
Jointly With
Relatives
21-Sep-2019
Corporate Action
25-Oct-2019
Decrease
01-Nov-2019
Decrease
15-Nov-2019
Decrease
29-Nov-2019
Increase
20-Dec-2019
Decrease
28-Feb-2020
Increase
20-Mar-2020
Increase
At the end of the year
31-Mar-2020
At the beginning of the year 30-Mar-2019
21-Sep-2019
Corporate Action
31-Mar-2020
At the end of the year
3 Renu Karnad At the beginning of the year 30-Mar-2019
21-Sep-2019
Corporate Action
31-Mar-2020
At the end of the year
At the beginning of the year 30-Mar-2019
21-Jun-2019
Increase
09-Aug-2019
Decrease
21-Sep-2019
Corporate Action
31-Mar-2020
At the end of the year
At the beginning of the year 30-Mar-2019
Sashidhar
Jagdishan
5
4
Srinivasan
Vaidyanathan
21-Sep-2019
Corporate Action
At the end of the year
31-Mar-2020
At the beginning of the year 30-Mar-2019
01-Nov-2019
Increase
31-Mar-2020
At the end of the year
6
Santosh
Haldankar
No. of
shares
1045,051
(30,000)
(30,000)
(30,000)
108,000
(1,000)
20,000
7,000
500
500
297,660
297,660
708,094
112,000
(72,000)
748,094
48
48
0
500
% of total
shares
0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.03
0.00
0.00
0.01
0.00
0.00
0.00
0.00
No. of
shares
2,090,102
2,060,102
2,030,102
2,000,102
2,108,102
2,107,102
2,127,102
2,134,102
2,134,102
1,000
1,000
595,320
595,320
820,094
748,094
1,496,188
1,496,188
96
96
500
500
% of total
shares
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.00
0.00
0.01
0.01
0.03
0.03
0.03
0.03
0.00
0.00
0.00
0.00
* Date: This date 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 employee stock option
Decrease: Sale of shares of the Bank
Corporate Action: This is the date of sub-division of Bank’s equity shares from the face value of ` 2/- each to the face Value
of ` 1/- each
V.
INDEBTEDNESS
Indebtedness of the Bank including interest outstanding / accrued but not due for payment:
Secured Loans
excluding deposits (1)
Unsecured
Loans (2)
Deposits (3)
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)
17,400.00
-
6.95
17,406.95
35,125.76
-
35,125.76
99,685.12
-
2,500.93
102,186.05
27,543.43
(35,714.72)
(8,171.29)
52,524.20
-
8.51
52,532.71
92,104.35
-
1,910.41
94,014.76
-
-
-
-
-
-
-
-
-
-
(` crore)
Total
Indebtedness
117,085.12
-
2,507.88
119,593.00
62,669.19
(35,714.72)
26,954.47
1,44,628.55
-
1,918.92
1,46,547.47
130 HDFC Bank Limited Integrated Annual Report 2019-20
(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:
Name of Managing Director / Whole Time
Director / Manager
Aditya Puri
Kaizad Bharucha
(Managing Director) (Executive Director)
(`)
Total
Amount
a) Salary as per provisions contained in Section 17(1) of the
159,256,673
75,530,565
234,787,238
b) Value of perquisites u/s. 17(2) of Income Tax Act, 1961
21,977,704
8,014,247
29,991,951
c)
Profits in lieu of salary under section 17(3) of Income Tax
2 Stock options exercised during the year***
1,615,645,280
316,239,220 1,931,884,500
Sr.
No.
Particulars of Remuneration
1 Gross Salary
Income Tax Act, 1961
except stock options
Act, 1961.
3 Sweat Equity
4 Commission
- as per cent of profits
- others, specify
5 Others *
Total (A) **
Ceiling as per the Act^
-
-
-
-
-
-
-
-
-
7,982,688
189,217,065
2,876,436
10,859,124
86,421,248
275,638,313
^ 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.
*** 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 Shyamala Gopinath
2 Malay Patel
3 (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)
4 Sanjiv Sachar
5 Sandeep Parekh
6 M.D. Ranganath
Sub total (i)
Particulars of Remuneration
Fees for attending
Board / committee
meetings
Commission#
Others
2,900,000
3,350,000
2,100,000
2,300,000
2,100,000
2,650,000
15,400,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
5,000,000
-
3,500,000
-
-
-
-
-
3,500,000
23,900,000
(Amount in `)
Total
Amount
6,400,000
4,350,000
3,100,000
3,300,000
3,100,000
3,650,000
131
Annexure 3 to the Directors’ Report
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Particulars of Remuneration
VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES:
Section of the
Companies
Act
Brief
description
Details of penalties /
punishment / compounding
fees imposed
Authority (RD /
NCLT / Court)
Appeal made,
if any
(give details)
Type
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding
NONE
NONE
NONE
Sr.
No.
Name of Director
Fees for attending
Board / committee
meetings
Other Non-Executive Directors
Commission#
Others
7
Keki Mistry*
8 Srikanth Nadhamuni
9 Renu Karnad**
Sub total (ii)
Total (i+ii)
Ceiling as per the Act^
1,450,000
2,750,000
150,000
4,350,000
19,750,000
1,000,000
1,000,000
-
2,000,000
7,000,000
Total
Amount
2,450,000
3,750,000
150,000
6,350,000
-
-
-
-
3,500,000
30,250,000
# Refers to commission for FY 2018-19, paid out in FY 2019-20.
*Mr. Keki Mistry ceased to be Director of the Bank with effect from the close of business hours on January 18, 2020
** Mrs. Renu Karnad was appointed as Director of the Bank with effect from March 3, 2020
^ 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.
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
Sashidhar
Jagdishan
(Group Head
and Change
Agent)
Srinivasan
Vaidyanathan
(Chief Financial
Officer from
August 22,
2019#)
Santosh
Haldankar
(Company
Secretary)
(`)
Total
(a) Salary as per provisions contained in section 17(1) of the
27,963,215
14,198,263
5,393,611
47,555,089
Income-tax Act, 1961
(b) Value of perquisites u/s 17(2) of Income-tax Act, 1961
548,075
2,938,796
75,730
3,562,601
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***
151,822,040
-
-
-
-
-
-
-
-
560,645 152,382,685
-
-
-
-
-
-
-
-
-
-
-
-
666,266
795,626
312,946
1,774,838
29,177,556
17,932,684
5,782,288
52,892,528
3 Sweat Equity
4 Commission
- as percent of profits
- others, specify
5 Others*
Total**
* 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 FY 2019-20.
# Salary pertains to entire FY 2019-20
132 HDFC Bank Limited Integrated Annual Report 2019-20
133
Annexure 4 to the Directors’ Report
Annexure 5 to the Directors’ Report
Form No. AOC - 2
[Pursuant to clause (h) of Sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014]
Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in
Sub-section (1) of Section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto.
1. Details of contracts or arrangements or transactions not at arm’s length basis: Nil
2. Details of material contracts or arrangement or transactions at arm’s length basis:
(` crore)
(a) Name(s) of the Related Party
Nature of Relationship
HDFC Limited
Promoter of the Bank
(b) Nature of contracts / arrangements /
Purchase of home loans
transactions
Derivative and Foreign exchange
transactions
(c) Duration of the contracts / arrangements /
1 year
Varying maturities
transactions
(d) Salient terms of the contracts or
arrangements or transactions including the
value, if any:
The Bank has an option to purchase
up to 70% of the loans sourced by
it. HDFC Ltd continues servicing of
the assigned portfolio for which Bank
pays servicing fees.
Derivative and foreign exchange
transactions with the Bank.
Home loans purchased: 24,127.25
Outstanding Credit Exposure : 136.86
(e) Date(s) of approval by the Board, if any:
(f) Amount paid as advances, if any:
N.A.
Nil
N.A.
Nil
* The above mentioned transactions were entered into by the Bank in its ordinary course of business. Materiality threshold is as
prescribed in Rule 15 (3) of the Companies (Meetings of Board and its Powers) Amendment Rules, 2019.
Performance and financial position of subsidiaries and associates of the Bank as on
(` crore)
March 31, 2020
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, 2020
Profit or loss for the
year ended March 31, 2020
As % of
Amount***
As % of
Amount**
consolidated net
assets**
consolidated profit
or loss
96.95%
170,986.02
96.34%
26,257.32
0.71%
4.64%
0.33%
1,245.50
8,179.26
576.64
1.55%
3.80%
0.16%
423.37
1,036.94
42.31
**Consolidated net assets are total assets minus total liabilities including minority interest
***Amounts are before inter-company adjustments.
134 HDFC Bank Limited Integrated Annual Report 2019-20
135
Annexure 6 to the Directors’ Report
Annexure 7 to the Directors’ Report
Disclosures on Remuneration
1. Ratio of Remuneration of each director to the median employees’ remuneration for the FY 2019-20
Statement under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 for year ended March 31, 2020
Name and Designation
Shyamala Gopinath, Chairperson & Independent Director
Malay Patel, Independent Director
Umesh Chandra Sarangi, Independent Director
Sanjiv Sachar, Independent Director
Sandeep Parekh, Independent Director
M.D. Ranganath, Independent Director
Keki Mistry, Non-Executive Director
Srikanth Nadhamuni, Non-Executive Director
Renu Karnad, Additional Non-Executive Director
Aditya Puri, Managing Director
Kaizad Bharucha, Executive Director
Ratio
14.73
10.01
7.14
7.60
7.14
8.40
5.64
8.63
0.35
282
128
Sr.
No.
1
2
3
4
5
6
7
8
Note:
a. All employees of the Bank, excluding overseas employees, have been considered.
b.
c.
In case of Managing Director and Executive Director, we have considered fixed pay for the computation of ratios. Fixed pay
includes - salary, allowances, retiral benefits as well as value of perquisites excluding ESOPs.
In case of independent and non-executive directors, sitting fees paid for attending Board and Committee meetings
during FY 2019-20 and commission paid as permitted by relevant RBI guidelines has been considered, except in case of
Chairperson who is not eligible for commission but was paid remuneration of ` 3,500,000 during FY 2019-20 as approved
by the RBI. The commission paid out in FY 2019-20 pertains to FY 2018-19.
d. Mr. Keki Mistry ceased to be Director of the Bank with effect from the close of business hours on January 18, 2020.
e. Mrs. Renu Karnad was appointed as Director of the Bank with effect from March 3, 2020.
2. Percentage increase in remuneration of each Director, CFO, CEO, CS or Manager, if any, in the FY 2019-20
Designation
Managing Director
Executive Director
Group Head & Change Agent of the Bank (KMP)
Chief Financial Officer
Company Secretary
Percentage Increase
20.00
20.00
16.12
15.58
33.94
Non-Executive / Independent Directors:
During FY 2019-20, sitting fees of ` 100,000 for attending each Board meeting and ` 50,000 for attending each Committee
meeting were paid to non-executive / independent directors. The amount of sitting fees paid per Board and Committee meeting
remains unchanged from previous FY 2018-19. Further, the eligible non-executive directors (excluding Chairperson) were paid
commission as permitted by the relevant RBI guidelines of ` 1,000,000 each. The commission paid out in FY 2019-20 pertains
to FY 2018-19. There has been no change in the amount of commission from the previous 2018-19. The Chairperson was
paid remuneration of ` 3,500,000 during FY 2019-20, in addition to sitting fees. The remuneration remains unchanged from
FY 2018-19, and has been approved by RBI.
3. Percentage increase in the median remuneration of employees in the FY 2019-20
The percentage increase in median remuneration of employees in the FY 2019-20 was 12.96%. This excludes front line sales
and overseas staff.
4. The number of permanent employees on the rolls of the Bank
As of March 31, 2020 the number of permanent employees on the rolls of the Bank was 116,971.
5. Average percentage increase already made in the salaries of employees other than the managerial personnel in the
last financial year and its comparison with the percentage increase in the managerial remuneration and justification
thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.
The average percentage increase for Key Managerial Personnel :
The average percentage increase for Non Managerial Staff :
The average percentage increase in the salaries is primarily on account of annual fixed pay increase and promotions.
21.13%
10.16%
6. Affirmation that the remuneration is as per the remuneration policy of the company: Yes
Name of the Employee
Designation
Date of joining
the Bank
Qualifications
Age
Exp.
(No. of
years)
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
Aditya Puri
Kaizad Bharucha
Ashish Parthasarthy
Rahul Shukla
Arvind Vohra
Managing Director
Executive Director
Group Head
Group Head
Group Head
12-Sep-1994 B.Com, CA.
04-Oct-1995 B.Com
01-Nov-1994 B.E., PGDM
01-Mar-2018 MBA, B.Tech
12-Sep-2018 PG Diploma - Others,
B.E.
Bhavesh Zaveri
Rakesh Singh
Sashidhar Jagdishan
9
10
Vinay Razdan
Nirav Shah
Group Head
Group Head
Group Head
Group Head
Group Head
13-Apr-1998 M.Com, CAIIB
11-Apr-2011 MBA, B.Sc.
05-Feb-1996 B.Sc., ACA., M.A.
(Economics)
06-Sep-2018 MBA
15-Jul-1999 MMS, B.Com
69
54
52
51
48
54
51
55
53
48
47
34
31
28
25
31
27
31
32
25
189,217,065 Citibank
86,421,248 SBI Commercial & Intl. Bank Ltd.
32,775,187 INDSEC Investments Ltd.
32,669,004 Citibank
31,724,907 Vodafone India Ltd
31,492,491 Barclays Bank
31,285,890 Roth Child
29,177,556 Deutsche Bank
27,818,912 Vodafone Idea Ltd
27,447,300 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
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Abheek Barua
Abhishek Bhagat
Aditya Dhananjai Kumat
Aditya Prakash Deshpande Vice President
Ajay Kumar Kapoor
Executive Vice President 16-Feb-2015 M.Sc.
Senior Vice President - II 28-Sep-2016 MBA, B.Com
Assistant Vice President 01-Jun-2012 MBA, B.Tech
02-Jan-2006 MBA, BMS
09-Oct-1995 M.Sc.
Senior Executive Vice
President
Senior Vice President - II 18-Feb-2019 CA, B.Com
Senior Vice President - II 23-Aug-1999 Diploma (3-yr
Ajay Pancholi
Ajit Cherian Kuruvilla
Akshat Lakhera
Akshay Dixit
Senior Vice President - II 09-Sep-2010 PGDM, B.Sc.
Senior Vice President - I 29-Sep-2012 CFA, M.Com, CA,
B.Com
Diploma), CA, B.Com
Ameya Shekhar Shenoy
Amit Dayal
Amit Prakash Kapadia
Amol Padhye
Anand Dusane
Anand Mankodi
Anand Sankararaman
Anil Bhavnani
18
Anil Onkarnath Tandon
19
20
21
22
Anita Iyer
Anupama Rajesh
Munagekar
Arun Mediratta
Arun Mohanty
23
Arup Kumar Rakshit
Senior Vice President - I
Executive Vice President 19-Dec-1994 B.Sc., DBM
Deputy Vice President
20-Mar-2006 MBA, CA, B.Com
06-Sep-2006 PGDBM, M.Com,
B.Com
CA, B.Com
01-Jan-1996 CAIIB, M.Com,
Senior Vice President - II 01-Jul-2017
Senior Executive Vice
President
Executive Vice President 02-Apr-1997 CA, B.Com
Executive Vice President 03-Mar-2000 PGDBA, B.E.
Senior Executive Vice
President
Senior Vice President - II 14-Aug-2003 B.Com
16-Jun-2003 CS, B.Com
B.Com
Executive Vice President 18-May-2017 MMS, B.Sc.
Senior Vice President - I 14-Feb-2007
LL.B, B.Com
Executive Vice President 05-May-1998 MBA, M.A., B.A.
09-Nov-2005 B.A.
Senior Executive Vice
President
Senior Executive Vice
President
53
44
31
38
56
48
52
43
40
40
53
41
39
47
47
46
46
50
55
58
52
61
32
21
8
14
34
24
27
19
20
16
29
15
16
27
26
25
26
25
33
28
30
38
13,045,115 ICRIER
11,634,711 Chryseum Advisors LLP
10,225,137 NIL
11,612,352 Standard Chartered Bank
15,222,635 Times Bank Ltd.
11,729,327 Edelweiss Financial Services Ltd
11,094,114 Global Trust Bank
19,401,878 BNP Paribas
10,825,108 Mape Advisory Group Pvt Ltd
14,100,090 Tionale Enterprises Pvt Ltd
18,236,584 SBI Commercial & Intl. Bank Ltd
11,870,053 Citibank
11,732,942 Ernst & Young LLP
14,389,198 State Bank Of Travancore
11,982,185 Dalal & Shah
10,553,963 P&O Nedlloyd (I) Pvt Ltd
14,274,404 CitiCorp Finance I Ltd.
10,862,182 Hongkong & Shanghai Banking
Corporation
12,018,369 Kotak Mahindra Bank
17,894,041 Strategic Capital Corporation
Pvt Ltd
11,914,591 Punjab & Sind Bank
19,260,752 Reserve Bank of India
01-Aug-2006 PGDM, B.E.
51
28
22,581,305 ABN Amro Bank
24
Arvind Kapil
Group Head
18-Dec-1998 MMS, B.E
48
26
22,085,754 GE Countrywide Consumer
Financial Services Ltd
25
26
27
Ashima Khanna Bhat
Ashok Khanna
Ashtosh Raina
Group Head
Group Head
07-Nov-1994 B.Bus, MMS
19-Jun-2002 M.A.
Senior Vice President - II 03-Sep-2007 CAIIB, B.Sc.
49
63
52
27
39
29
24,187,861 A F Ferguson & Co
25,460,554 Centurion Bank Ltd
16,383,464 State Bank of India
136 HDFC Bank Limited Integrated Annual Report 2019-20
137
Annexure 7 to the Directors’ Report
Name of the Employee
Designation
Sr.
No.
Date of joining
the Bank
Qualifications
Age
Exp.
(No. of
years)
Total (`) Last Employment
Name of the Employee
Designation
Date of joining
Qualifications
Age
Exp.
Total (`) Last Employment
28
Augustine S. Quadros
29
B. P. Tikekar
Senior Executive Vice
President
Senior Executive Vice
President
18-Sep-2000 B.Sc., LL.B.,Solicitor
57
35
12,787,900 Tata Housing Development Co.
(Bom.), Solicitor
(Eng & Wales)
Ltd
Priyanka Bakshi
Rajeev Kumar
Senior Vice President - II 26-Mar-2004 B.A.
10,703,090 CitiFinancial India Ltd
Executive Vice President 28-Apr-2003
PG Diploma - Others,
10,799,115 CitiFinancial Retail Services
B.Sc.
India Ltd
30-Aug-1995 B.Com
57
37
14,089,951 New Ind Co-Op Bank Ltd
70
Rajeev Sengupta
Senior Executive Vice
21-Sep-2007 PG (Gen Mgmt), B.E.
59
37
11,511,465 Hutchison Essar Ltd
30
Bardan Sharma
Senior Vice President - II 23-Nov-2011 Master's Degree/Dip -
45
20
10,294,466 Diageo India Pvt Ltd
31
32
33
34
35
36
37
38
39
40
41
42
43
Others, B.Com
Beena Shah
Benjamin Frank
Vice President
Group Head
26-May-2015 MBA, B.Com
05-Apr-2004 MBA, B.Sc.
Benson Benadict
Deputy Vice President
27-Nov-2013 MBA, B.Tech
Bharat Badhwar
Executive Vice President 28-Sep-2002 B.A.
Bhaskar C. Panda
Executive Vice President 21-Nov-1997 B.A.
Brijesh Prabhakar
Deputy Vice President
31-Oct-2011 MBA, B.E.
Charmaine Pereira
Senior Vice President - II 01-Nov-1994 DBM, B.A.
Cheshta Chopra Sharma
Vice President
22-Aug-2000 PGDBA, B.A.
Debajeet Das
Executive Vice President 06-Aug-1996 M.A.
Deepak Kumar Mohanty
Senior Executive Vice
President
24-Dec-2003 M.Sc, MBA, B.Sc.
Deepak Narsinh Shinde
Executive Vice President 08-Feb-2003 B.Com
Doulat Phiroze Kutar
Vice President
18-May-2010 M.A., B.A.
Faisal Ikbal Sara
Senior Vice President - II 05-Dec-2001 PGDBM, Diploma
(3-yr Diploma), B.Com
42
55
40
47
57
40
47
46
48
56
53
45
47
16
34
15
26
35
16
25
21
25
27
32
23
27
17,179,306 Kotak Mahindra Bank
20,346,308 IDBI Bank Ltd
11,839,961 Standard Chartered Bank
11,603,062 Bharti Telenet Ltd
17,313,473 Times Bank Ltd
11,320,965 Citibank
14,844,512 NIL
11,876,599 NSE of India Ltd
19,403,674 Texport syndicate
13,692,950 ICICI Bank Ltd
11,871,563 Centurion Bank Ltd
12,819,983 IL & FS Financial Service
11,533,620 American Express Bank Ltd
44
Gaurav Khandelwal
Senior Vice President - II 17-May-2005 PG Diploma - Others,
41
15
11,300,622 IDBI Bank Ltd
Gourab Roy
Executive Vice President 01-Mar-1996 M.Com, B.Com
Harpuneet Singh
Executive Vice President 10-Apr-2018 Others, CA
B.E.
Harrish Mahadevan
Vice President
06-Apr-2011
BCA
53
46
36
Jagat Dave
Jasmeet Singh
Jay Sonawala
Jimmy Tata
Kapil Bansal
Senior Vice President - II 02-May-2018 MMS, ICWA, B.Com 52
Senior Vice President - II 07-Mar-2005 B.Com
Executive Vice President 12-Aug-1999 MMS, B.Com,
Group Head
15-Dec-1994 B.Com., M.F.M., CFA
Senior Vice President - II 30-Sep-2004 PGPM, B.Com
45
46
47
48
49
50
51
52
53
Lavesh K Sardana
Executive Vice President 31-Jul-2000
PG Diploma - Others,
PGDBM, B.Com
54 Madhuri Desai
Executive Vice President 10-Oct-1994 Others,Diploma
55 Madhusoodan Hegde
Senior Executive Vice
President
(3-yr Diploma), B.A.
11-Feb-1997 CAIIB, B.Sc.
56 Mayuresh Vasant Apte
Executive Vice President 06-Nov-2000 MMS, B.Tech
57 Mohandeep Singh Bedi
Senior Vice President - II 21-Dec-2002 B.A.
58 Munish Mittal
59
N. Srinivasan
Group Head
17-Aug-1996 PGDM, B.Sc.
Senior Executive Vice
President
11-Nov-1996 CA, CWA, CS,
B.Com
60
61
62
63
Nasir Khan
Executive Vice President 14-Nov-2011 M.A., B.A.
Navneet Singh
Neeraj Chawla
Senior Vice President - II 16-Aug-2018 MBA, B.Tech
Senior Vice President - II 06-Jan-2014 CA, B.Com
Nishant Santkumar Jitani
Senior Vice President - I 03-Jun-2002 PG Diploma - Others,
M.Com, B.Com
64
Nitish Nagori
Senior Executive Vice
President
01-Jun-2010 PG Diploma - Others,
B.Sc.
27
21
15
27
23
21
32
21
24
13,887,486 UTI Bank Ltd
20,575,505 Hongkong & Shanghai Banking
Corporation
14,725,847 Citibank
15,435,397 Ambit Private Ltd
12,203,735 IDBI Bank Ltd
15,373,453 NIL
26,633,606 Apple Industries Ltd
16,379,100 ICICI Bank Ltd
13,786,325 GE Countrywide Consumer
Financial Services Ltd
30
10,436,802 Hongkong & Shanghai Banking
Corporation Ltd
35
16,049,280 Times Bank Ltd
27
21
33
30
24
27
18
22
16,695,839 Centurion Bank Ltd
10,749,201 Standard Chartered Bank
18,688,273 Bank Of Punjab
16,857,673 Credential Finance
12,117,741 BNY Mellon (India), Pune
13,291,409 Avendus Capital Private Limited
11,678,991 Citibank
10,470,466 Ampoules & Vials Mfg. Co
17
13,168,381 ICICI Bank Ltd
45
43
53
41
45
49
58
50
46
51
52
50
48
43
41
49
65
Pankaj Bhatla
Senior Vice President - II 22-Oct-2001 PG Diploma - Others,
45
23
10,227,362 Blue Dart Express Ltd
B.Com
66
67
Parag Rao
Prashant Mehra
Group Head
15-Apr-2002 MMS, B.E.
Senior Executive Vice
President
28-Dec-1998 MMS, PGDBM, B.E.
54
48
31
26
23,811,084 IBM Global Services
12,950,387 Maruti Countrywide Auto
Financial Services Ltd
138 HDFC Bank Limited Integrated Annual Report 2019-20
139
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Sr.
No.
68
69
71
72
73
76
77
78
79
80
81
82
84
85
86
87
88
89
90
92
93
95
96
the Bank
(No. of
years)
President
President
President
Rajesh Kanubhai Naik
Senior Vice President - II 21-Sep-2007 CA, B.Com
Rajesh Sharma
Rajinder Babbar
Senior Vice President - II
15-Nov-2000 CA, CS, B.Com
Senior Executive Vice
16-Jan-2001
LL.B, B.Sc.
10,396,044 Yes Bank Ltd
13,070,371 LCC Infotech Ltd
17,485,017 Centurion Bank Ltd
74
Rashmi Singh
Vice President
29-Mar-2010 MBA, B.Sc.
12
11,667,629 Religare Macquarie Wealth
Management Ltd
75
Raveesh Kumar Bhatia
Senior Executive Vice
03-May-2010 PGDM, B.Com
29
17,126,167 Fore Consultants Pvt Ltd
Ravi Santhanam
Executive Vice President 01-Mar-2017 PG Diploma
Ravi Ssn
Executive Vice President 26-Nov-2010 B.Com
19,996,220 Vodafone India Ltd
14,803,590 Deutsche Bank
Resham A. Mahtani
Senior Vice President - II 01-May-2001 PGPIM, PGDBM, B.A. 44
16,277,177 Mecklai Financial & Commercial
Ritesh Sampat
Roopesh H. Patil
Executive Vice President 03-Jan-2012 CA, B.Com
20,132,971 Standard Chartered Bank
Senior Vice President - I 28-Feb-2000 MBA, B.Com
15,838,462 Dalal & Broacha Stock Broking
Sameer Ratolikar
Executive Vice President 09-Jan-2015 CISA, B.E.
12,610,348 Bank of India
Sammeer Saurabbh
Executive Vice President 16-Jan-2016 B.Sc.
12,332,161 Daiwa Capital Markets India
Services Ltd
Pvt Ltd
Pvt Ltd
83
Samrat Bose
Senior Vice President - II 17-May-2002 Master's Degree/Dip -
43
18,216,304 Parasmoney Investments
Sandeep Bansal
Sandeep Kumar
Sanjay D Souza
Deputy Vice President
20-Jan-2011 PGDBA, BBA
Executive Vice President 09-Jul-2002 MBA, B.E.
Senior Executive Vice
01-Dec-1999 MMS, B.E.
Others, B.Com
Sanjay Kumar Singh
Senior Vice President - II 02-Jun-2005 MBA, B.Sc.
Sanjeev Kumar
Sanjiv Bhuyan
Executive Vice President 15-Jan-1996 MBA, B.Sc.
Executive Vice President 30-Aug-2004 PGDBM, B.E.
Sanmoy Chakrabarti
Senior Executive Vice
15-Jun-2010 MS, B.Sc.
President
President
10,990,026 RBS Bank
11,449,566 IDBI Bank Ltd
15,158,972 Nucleus Securities Ltd
10,465,100 IDBI Bank Ltd
10,927,192 ANZ Grindlays Bank
10,898,398 Global Trust Bank
15,990,749 Bank Danamon
91
Santhosh Machangada
Executive Vice President 20-Nov-2003 Others, MBA, B.Sc.
11,654,486 ICICI Home Finanace Co Ltd
Saroj Kumar Swain
Senior Vice President - I 25-Aug-2004 MBA, B.Com
11,904,152 Jaquar & Co Ltd
Sathyamurthy Sampath
Group Head
07-Aug-2000 B.Com
20,941,701 Integrated Finance Co. Ltd
Medappa
Kumar
94
Satish Chandra
Senior Vice President - I 16-Dec-2004 B.Com
30
11,554,473 Global Trust Bank (Merged into
Sharad Rungta
Executive Vice President 02-Jun-2012 CFA, CA, B.Com
19,955,344 Credit Suisse AG
Sharad Vijay Goenka
Senior Vice President - II 27-Jan-2011 CA, B.Com
11,723,738 Hongkong & Shanghai Banking
Oriental Bank of Commerce)
Corporation
97
Shekhar Kumar Mishra
Senior Vice President - II 25-Jul-2000
PGDBM,CAIIB,
10,283,748 SIDBI
98
Silvestre Anthony Pereira
Vice President
15-Sep-2006 MBA, PG Diploma,
12,699,855 UTI Bank Ltd
99
Sitanshu Mitra
Senior Executive Vice
01-Sep-1995 MBA, B.Sc.
14,242,110 ABN Amro Bank Ltd
100 Smita Bhagat
12-Jul-1999 M.Com, MBA
101 Srinivasan Vaidyanathan
Group Head
01-Dec-2018 MBA, FCA, FCMA,
21,545,451 PDCOR Ltd
17,932,684 Citibank
President
Group Head
M.Com, B.Com
B.Com
LIC ICSI, FAIA (UK),
CMA (USA)
102 Sumant Rampal
Executive Vice President 10-Aug-1999 MBA, B.Com
13,711,506 Walchand Capital Ltd
103 Sunali Rohra
Executive Vice President 14-Sep-2018 M.Sc., B.Com
10,306,237 Facebook India Online Services
Pvt Ltd
104 Sundaresan M.
Senior Executive Vice
02-May-2002 B.E. (Mechanical),
14,600,877 GE Countrywide Consumer
President
PSG, MBA
Financial Services Ltd
105 Susmita Subu
Senior Vice President - II 15-Apr-1996
B.Com
10,286,145 Thomas Cook India Ltd
41
48
49
44
52
36
54
50
51
43
46
48
52
42
47
53
42
50
49
44
46
42
47
52
42
41
50
42
52
54
56
44
42
48
49
20
26
25
26
33
27
27
22
20
24
27
26
20
17
22
31
16
28
25
21
18
19
30
19
17
28
18
32
32
32
23
22
26
27
Total (`) Last Employment
Name of the Employee
Designation
Sr.
No.
Date of joining
the Bank
Qualifications
Age
Total (`) Last Employment
Exp.
(No. of
years)
2,638,151 Esanda Finance & Leasing Ltd
148 Zubeda Khetsi*
Assistant Vice President 04-Dec-2016 B.Com
36
18
11,277,850 RAK Bank
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Annexure 7 to the Directors’ Report
Name of the Employee
Designation
Sr.
No.
Date of joining
the Bank
Qualifications
Age
106 Thomson Jose
Executive Vice President 01-Dec-1999 PG Diploma - Others,
45
B.Com
107 V. Chakrapani
Group Head
24-Nov-1994 B.Com, CAIIB, ACS
108 Venkatesh Krishnan
Executive Vice President 27-Sep-2018 CA, B.Com
109 Venkateswaran L
Executive Vice President 12-Nov-2018 MBA, B.Tech
110 Venkatraman Balan Iyer
Senior Executive Vice
President
02-Sep-2000 PG Diploma - Others,
B.Com
56
52
50
53
Exp.
(No. of
years)
23
36
29
25
33
23,518,230 Standard Chartered Bank
12,094,639 Hongkong & Shanghai Banking
Corporation
10,927,610 Citibank
12,585,150 American Express Bank Ltd
111 Vijapurapu Sundar
Executive Vice President 20-Feb-2015 Master's Degree/Dip -
53
33
11,024,987 ICICI Bank Ltd
112 Vijay Krishna Mulbagal
Senior Executive Vice
President
Others, B.Com
02-Jan-2007 PGPM, B.Sc.
113 Vikas Wahal
114 Vineet Arora
Executive Vice President 01-Sep-1998 PGDBM, B.Com
Executive Vice President 11-Dec-2000 CAIIB,CA,
B.Com
115 Vitthal Mangesh Kulkarni
Senior Vice President - II 22-Sep-2007 M.Sc., B.E.
116 Vivek Capoor
117 Vivek Nigam
Executive Vice President 25-Jun-1998 CA, B.Com
Executive Vice President 03-Apr-2017 MBA, B.Tech
118 Vivek Ramesh Vazirani
Senior Vice President - II 29-Mar-2004 CA
119 Anuj Tilak Raj Batra*
Senior Manager
19-Dec-2012 MBA, BBA
120 Ahmed Abdulqawi Al Jneibi* Senior Manager
18-Oct-2017 BBA
121 Dolreich D'Mello*
Deputy Vice President
09-Jan-1997 B.Com
122 Khairnar Dnyanesh T.*
Senior Vice President - I 07-May-2007 MMS, CA, B.Com
123 Dhruven Subodhchandra
Assistant Vice President 02-Jul-2015
B.E.
Shah*
124 Harsh Sarup Gupta*
Senior Vice President - II 04-Sep-2000 PGDBA, B.Sc.
125 Jay Prakash C*
126 Rheetu Karthik*
127 Kinjul Sharma*
Vice President
Vice President
05-Jul-2004 MBA, B.Com
15-Mar-2005 MBA, M.A., B.A.
Deputy Vice President
22-Sep-2008 Master's Degree/Dip,
B.Com
128 Mohammed Mansoor
Deputy Vice President
10-Feb-2003 MBA, B.Com
Azher*
129 Mandeep Singh*
Deputy Vice President
21-Mar-2005 MBA, B.Com
130 Mathew Varghese*
Deputy Vice President
15-Jul-2010 MMS, B.E.
131 Nishant Nangia*
Deputy Vice President
04-Apr-2005
B.Com
132 Naresh Chandiramani*
Deputy Vice President
01-Jul-2010
B.Com
133 Payal Mandhyan*
Senior Vice President - I 18-Jan-2005 PGDBM
134 Pallava Rathore*
Senior Vice President - I 27-Jun-2008 Master's Degree/
Diploma
135 Rohit Ganpatrao Pathrabe* Deputy Vice President
16-Apr-2007
B.E.
136 Rajeev Wariar*
Senior Vice President - I 15-Apr-2010
PGDBA, B.E.
137 Reji John*
Assistant Vice President 30-Aug-2010 PG Diploma, M.A.,
B.A.
49
53
52
48
50
51
39
36
37
44
40
46
44
41
48
38
41
39
41
38
49
41
44
42
44
38
138 Roli Jamthe*
Vice President
05-Apr-2011 MBA, B.Sc., PGDSM 42
139 Sharad Kourani*
Assistant Vice President 10-Aug-2008 B.Com
140 Sheetal Kapadia*
Vice President
06-May-2009 PGDMS, B.Com
141 Steven Noronha*
Deputy Vice President
19-Jul-2011
B.Com
142 Santanu Ghosh*
Assistant Vice President 30-Apr-2012
PG Diploma - Others,
B.E.
143 Sachin Sethi*
144 Faishal Khan*
Vice President
Vice President
28-Aug-2017 MBA, B.Sc.
10-Aug-2006 PGDBA, B.Com
145 Sunjay Ashok Shanbhag*
Deputy Vice President
16-May-2005 MBA, B.E.
146 Umashankar Gopalan*
Vice President
13-Dec-2012 B.Com
147 Siddalingaswamy Veeresh
Deputy Vice President
28-Apr-2008
B.Com
41
43
44
33
42
39
39
51
38
Hiremath*
140 HDFC Bank Limited Integrated Annual Report 2019-20
25
17,898,417 Diamond Management &
Technology Consultants
31
31
26
26
29
18
10
7
23
15
19
22
19
22
15
10,383,873 Hanil Bank
11,011,744 Small Industries Devlopment
15,665,941 Barclays Capital
10,800,942 UTI Securities Exchange Ltd
16,501,602 ICICI Bank Ltd
10,806,202 Standard Chartered Bank
10,267,424 ICICI Bank Ltd
10,825,888 Tourism Development and
Investment Company
14,625,741 ANZ Grindlays Bank
21,009,555 ICICI Bank Ltd
13,825,866 First Wealth
25,124,714 ICICI Cap Ltd
15,846,950 Global Trust Bank
12,335,881 MetLife India Insurance Co Ltd
14,437,764 Citifinancial
17
12,567,512 NIL
16
18
17
18
16
19
10,250,580 The Lakshmi Vilas Bank Ltd
15,762,350 Citibank
15,106,589 E-Serve International Ltd
12,806,970 Citibank
25,901,082 India Bulls Securities Ltd.
19,292,490 IDBI Bank Ltd
20
12,383,488 Hongkong & Shanghai Banking
Corporation
18,716,361 Citibank
18,679,331 Aviva India Life Insurance Co Ltd
28,159,089 Royal Bank of Scotland
16,127,403 HDFC Bank Ltd (as contract staff)
22,277,071 ICICI Bank Ltd
11,976,053 Al Maha Financial Services Ltd
11,704,453 NIL
12,383,166 ICICI Bank Ltd
12,305,381 ICICI Bank Ltd
12,522,393 NIL
22,253,459 ICICI Bank Ltd
15,142,235 RAK Bank
21
16
19
24
20
12
8
20
17
15
26
14
Employed for part of the year
Abhay Aima
Group Head
02-Jan-1995 Grad. from National
57
Defence Academy
Ajith Damodaran
Senior Vice President - I 24-Nov-2004 PG Diploma - Others,
39
B.Tech
Abhishek Deshmukh
Anjani Rathor
Chandramoulee Palani
Geethaa G
Guneet Singh
Lalit Pareek
Executive Vice President 09-Dec-2019 MBA, B.Com
Group Head
01-Feb-2020 MBA, B.Tech
Senior Vice President - II 16-Jun-2017 MBA, B.Tech
Executive Vice President 07-May-2019 MBA, B.Com
Senior Vice President - II 26-Sep-2019 MBA, B.Com
Senior Vice President - II 17-Jun-1999 PG Diploma - Others,
B.Sc.
M. Ramachandran
Executive Vice President 06-Feb-1998 Diploma (3 yr
10
11
Nitin Chugh
Nagarajan Chandran
Group Head
16-Apr-2001
Executive Vice President 11-Jan-2019 Master's Degree/Dip -
Diploma), LL.B, CAIIB,
M.Com
PGDM, B.TECH
Others, B.Sc.
12
Prashanth TS
Senior Vice President - II 16-Jun-2000 PG Diploma - Others,
43
Bachelors Degree -
Other
Prem Chand
Rajesh Kumar Rathanchand Group Head
Ramesh Chandrasekaran
Shailendra Nagarseth
Executive Vice President 13-Aug-2007 B.A.
22-May-2000 PGDM, B.Sc.
Executive Vice President 10-Apr-2019 MBA
Senior Vice President - II 22-May-1995 CAIIB, LL.B, Diploma
(3 yr Diploma), B.Com
CA, B.Com
Senior Vice President - II 02-Jul-2018
Saurabh Jain
Srinivas Sishtla
Sumit Ghosh
Sanjay K.Singla
Vikas Rathore
Executive Vice President 02-May-2019 MBA, B.A.
Senior Vice President - II 11-Sep-2019 MBA, B.Tech
Executive Vice President 10-Nov-2007 PGDM, B.Com
Deputy Vice President
16-Jun-2008 MMS, B.Tech
1
2
3
4
5
6
7
8
9
13
14
15
16
17
18
19
20
21
22
Gagan Salil Malik*
Assistant Vice President 26-Jun-2016 B.Com
23 Mohammed Hannan Abdul* Deputy Vice President
01-Jul-2009 MBA, B.Sc.
24
25
26
27
Rahul Bhandari*
C K Srinivasan*
Sachin Talwar*
Vice President
05-Feb-2002 PGDBM, B.Com
Deputy Vice President
01-Sep-2016 B.Sc.
Deputy Vice President
15-Jan-2020 MBA, B.E.
VS Unni Krishnan*
Senior Vice President - I 12-Apr-2003 MBA, B.Sc., PUC
46
47
42
51
45
60
60
48
48
60
48
46
59
43
49
45
60
36
37
40
42
53
43
44
33
15
23
24
19
27
24
33
31
25
14
20
43
31
16
37
20
27
22
38
12
16
17
18
33
17
22
28,783,513 INDSEC Securities & Finance Ltd
4,502,379 National Agricultural Co-Op
Marketing Federation of India Ltd
3,623,046 IndusInd Bank Ltd
3,009,745 Bharti Airtel
6,492,228 Credit Agricole
11,267,409 Raheja Universal Pvt. Ltd
6,272,515 Validus Wealth
7,365,955 Centurion Bank Ltd
4,973,241 Corporation Bank Ltd
5,770,498 Standered Chartered Bank
1,989,025 Bajaj Auto finance
10,379,367 NIL
7,961,693 UTI Bank Ltd
21,942,935 Trans America Apple Finance Ltd
10,315,949 Standard Chartered Bank
6,634,092 Central Bank of India
7,659,575 Standard Chartered Bank
10,418,998 Citibank
5,704,655 Citibank
9,989,552 State Bank of India
8,602,499 NIL
10,218,721 Standard Chartered Bank
9,797,141 Barclays Bank Plc
14,471,840 NIL
5,037,352 National Bank of Abu Dhabi
2,438,813 Abu Dhabi Commercial Bank
15,301,912 Global Trust Bank Ltd
Varun Mehra*
Deputy Vice President
28
Notes :
1. Remuneration shown above includes basic salary, allowances, performance bonus, cash allowances in lieu of perquisites or taxable value of
perquisites, if availed as computed as per Income-tax rules but excludes gratuity,PF settlement, super annuation settlement, perquisite on
ESOP & super annuation perquisite
4,063,211 Bank International Luxembourg
10-Nov-2019 B.Com
39
18
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, 2020.
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, 2020.
7. None of the employees listed above is a relative of any director of the Bank
141
Annexure 8 to the Directors’ Report
Annexure 8 to the Directors’ Report
Integrated Report
Financial Statements and Statutory Reports
Directors’ Report
Form No. MR-3
SECRETARIAL AUDIT REPORT
For the financial year ended March 31, 2020
the Companies Act,
to Section 204
[Pursuant
Companies
Rule
2013
(Appointment and Remuneration of Managerial Personnel)
Rules, 2014]
(1) of
of
No.9
and
the
To
The Members
HDFC Bank Limited
We have conducted the secretarial audit of the compliance
of applicable statutory provisions and the adherence to
good corporate practices by HDFC Bank Limited (CIN:
L65920MH1994PLC080618) (hereinafter called “the Bank”).
The Secretarial Audit was conducted in a manner that provided
us a reasonable basis for evaluating the corporate conduct and
statutory compliance and expressing our opinion thereon.
Based on the verification of the Bank’s statutory registers,
books, papers, minute books, forms and returns filed and
other records maintained by the Bank and 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 financial year ended on
the audit period covering
March 31, 2020 complied with the statutory provisions listed
hereunder and also that the Bank has followed proper Board-
processes and has required 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 March 31, 2020 according to the
provisions of:
(i)
The Companies Act, 2013 (“the Act”) and the Rules made
thereunder;
ii)
The Securities Contracts (Regulation) Act, 1956 (‘SCRA’)
and the Rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-
laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the Rules
and Regulations made thereunder for compliance in respect
of Foreign Direct Investment, Overseas Direct Investment
and External Commercial Borrowings, as applicable;
142 HDFC Bank Limited Integrated Annual Report 2019-20
(v) The Regulations and Guidelines prescribed under the
Securities and Exchange Board of India Act, 1992 (‘SEBI
Act’), as applicable:-
a)
The Securities and Exchange Board of
India
(Substantial Acquisition of Shares and Takeovers)
Regulations, 2011;
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
The Securities and Exchange Board of
(Prohibition of Insider Trading) Regulations, 2015;
India
The Securities and Exchange Board of India (Issue
of Capital and Disclosure Requirements) Regulations,
2018;
The Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014;
The Securities and Exchange Board of India (Issue
and Listing of Debt Securities) Regulations, 2008;
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 - Not applicable as the Bank is not
registered as Registrar to issue and Share Transfer
Agent during the financial year under review;
The Securities and Exchange Board of India (Delisting
of Equity Shares) Regulations, 2016 -Not applicable
as the Bank has not delisted / proposed to delist its
equity shares from any stock exchange during the
financial year under review;
The Securities and Exchange Board of India (Buyback
of Securities) Regulations, 2018 - Not applicable
as the Bank has not bought back / proposed to
buy-back any of its securities during the financial year
under review;
The Securities and Exchange Board of India (Bankers
to an Issue) Regulations,1994;
The Securities and Exchange Board of India (Merchant
Bankers) Regulations, 1992;
The Securities and Exchange Board of India (Foreign
Portfolio Investors) Regulations, 2019;
The Securities and Exchange Board of India (Issue
and Listing of Non-Convertible and Redeemable
Preference Shares) Regulations, 2013
- Not
applicable as the bank has not issued or listed
Non Convertible and Redeemable Preference Shares
during the financial year under review;
m) The Securities and Exchange Board of
India
(Depositories and Participants) Regulations, 2018.
(vi) Other specific business/industry related laws applicable
and affordable housing) upto a total amount of upto a total
to the Bank - The Bank has complied with the provisions
amount of ` 50,000 Crores in the period of next twelve
of the Banking Regulation Act, 1949, Master Circulars,
months through private placement mode.
Notifications and Guidelines and other directions pertaining
to commercial banking issued by the Reserve Bank of India
from time to time. Further, the Bank has complied with
other applicable general business laws, rules, regulations
and guidelines.
We have also examined compliance of:
(a)
the Secretarial Standards with regards to Meeting of Board
of Directors (SS-1) and General Meeting (SS-2) issued by
the Institute of Company Secretaries of India; and
(b) SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
During the period under review, the Bank has complied with
the provisions of the Act, Rules, Regulations, Guidelines
and Standards mentioned above.
2.
The Board of Directors of the Bank at its meeting held on
April 20, 2019 has approved the termination of the Global
Depository Receipts (“GDRs”) program and delisting of
22 GDRs (representing 11 underlying equity shares of the
Bank cumulatively) from the Luxembourg Stock Exchange.
3.
The Bank has allotted 48,301,348 Equity Shares of ` 2/-
each and 12,522,566 Equity Shares of ` 1/- each under
‘Employee Stock Option Schemes’ of the Bank.
4.
The Board of Directors and the Shareholders of the Bank
at their meetings held on May 22, 2019 and July 12, 2019
respectively have approved the Sub-division of Equity
Shares of the Bank from One (1) Equity Share of face value
of ` 2 each to two (2) Equity Shares of face value of ` 1
each and alteration of the Capital Clause of Memorandum
of Association of the Bank pursuant to the sub-division of
We further report that-
(a) The Board of Directors of the Bank is duly constituted
Equity Shares.
with proper balance of Executive Director, Non-Executive
5.
The Reserve Bank of India (RBI) has, vide its order dated
Directors and Independent Directors;
(b) 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;
(c) Adequate notice is given to all Directors to schedule the
Board Meetings, agenda and detailed notes on agenda
were sent at least seven days in advance and shorter notice
with consent of all the Directors, 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; and
(d) The minutes of the Board meetings have not identified
any dissent by members of the Board, hence we have no
reason to believe that the decisions by the Board were not
approved by all the directors present
We further report that there are adequate systems and
processes in the Bank commensurate with its size and
June 13, 2019, imposed a monetary penalty of ` 10 million
on the Bank for non-compliance with directions issued by
RBI on Know Your Customer (KYC)/ Anti-Money Laundering
(AML) Norms and on reporting of frauds. The penalty has
been imposed in exercise of powers vested in RBI under
the provisions of Section 47A(1)(c) read with Section 46(4)
(i) of the Banking Regulation Act, 1949. However, the Bank
has taken necessary measures to strengthen its internal
control mechanisms so as to ensure that such incidents do
not recur.
6.
The Reserve Bank of India has, vide its order dated
January 29, 2020 imposed a monetary penalty of ` 10
million on the Bank for failure to undertake on-going due
diligence in case of 39 Current Accounts opened for
bidding in Initial Public Offer. The penalty has been imposed
in exercise of powers vested in RBI under the provisions of
Section 47A(1)(c) read with Section 46(4)(i) of the Banking
Regulation Act, 1949.The Bank has since strengthened
its internal control mechanisms so as to ensure that such
operations to monitor and ensure compliance with applicable
incidents do not recur.
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
laws, rules, regulations and guidelines. As informed, the Bank
has responded appropriately to notices received from various
statutory / regulatory authorities including initiating actions for
corrective measures, wherever found necessary.
report.
We further report that during the audit period there were following
specific events / actions having major bearing on Bank’s affairs
in pursuance of the above referred laws, rules, regulations,
guidelines and standards etc.:
1.
The Board of Directors and the Shareholders of the Bank
at their meetings held on April 20, 2019 and July 12, 2019
Place: Mumbai
respectively have approved the issue of Perpetual Debt
Date: June 20, 2020
Instruments (Part of Additional Tier I Capital), Tier II Capital
Bonds and Long Term Bonds (financing of Infrastructure
For Alwyn Jay & Co.
Company Secretaries
[Firm Regn. No. P2010MH021500]
Alwyn D’Souza
Partner
FCS No.:5559 / C P No.:5137
UDIN: F005559B000360342
143
Annexure 8 to the Directors’ Report
Independent Auditor’s 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. Further part of the verification was done on the
basis of electronic data provided to us by the Bank due
to COVID-19 lockdown and on test check basis to ensure
that correct facts as reflected in secretarial and other
records produced to us. We believe that the processes
and practices we followed, provides a reasonable basis for
our opinion for the purpose of issue of the Secretarial Audit
Report.
4. We have not verified the correctness and appropriateness
of financial records and Books of Accounts of the Bank.
5. Wherever required, we have obtained the management
representation about list of applicable laws, compliance
of laws, rules and regulations and major events during the
audit period.
6.
The Secretarial Audit Report is neither an assurance as
to the future viability of the Bank nor of the efficacy or
effectiveness with which the management has conducted
the affairs of the Bank.
For Alwyn Jay & Co.
Company Secretaries
[Firm Regn. No. P2010MH021500]
Alwyn D’Souza
Partner
FCS No.:5559 / C P No.:5137
UDIN: F005559B000360342
Place: Mumbai
Date: June 20, 2020
To the Members of HDFC Bank Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of HDFC Bank Limited (“the Bank”), which comprise the Balance Sheet as at
March 31, 2020, the Profit and Loss Account, Cash Flow Statement for the year then ended, and notes to the standalone 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, 2020 and its profit and its cash flows for the year ended on that
date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) 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 (“the ICAI”) 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 opinion.
Emphasis of Matter
We draw attention to Note 43 to the standalone financial statements, which describes that the extent to which the COVID-19
Pandemic will impact the Bank’s standalone financial statements will depend on future developments, which are highly uncertain.
Our opinion is not modified in respect of this matter.
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 of the current year. 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.
144 HDFC Bank Limited Integrated Annual Report 2019-20
145
Independent Auditor’s Report
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
Identification of Non-performing advances (NPA) and provisioning on advances:
Total Loans and Advances (Net of Provision) as at March 31, 2020: ` 993,702.88 Crores
Provision for NPA as at March 31, 2020: ` 9,107.61 Crores
(Refer Schedule 9, Schedule 17(C)(2), Schedule 18(13))
Key audit matters
How our audit addressed the key audit matter
The Reserve Bank of India’s (“RBI”) guidelines on Income
recognition and asset classification (“IRAC”) prescribe
the prudential norms for identification and classification of
non-performing assets (“NPA”) and the minimum provision
required for such assets.
Tested the design and operating effectiveness of key controls
(including application controls) over approval, recording, monitoring
and recovery of loans, monitoring overdue / stressed accounts,
identification of NPA, provision for NPA and valuation of security and
collateral.
The Bank is required to have Board approved policy as per
IRAC guidelines for NPA identification and provision.
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 provision on NPA are estimated based on ageing and
classification of NPAs, recovery estimates, nature of loan
product, value of security and other qualitative factors and is
subject to the minimum provisioning norms specified by RBI
and approved policy of the Bank in this regard.
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.
In line with the COVID-19 Regulatory Package, the Bank has
framed policies for providing moratorium as a relief measure
to the borrowers.
Since the identification of NPAs and provisioning for
advances require significant level of estimation and given
its significance to the overall audit including possible
observation by RBI which could result into disclosure in the
financial statements, we have ascertained identification and
provisioning for NPAs as a key audit matter.
Testing of Application controls include testing of automated controls,
reports and system reconciliations.
Evaluated the governance process and review controls over
calculations of provision of non-performing advances, basis of
provisioning in accordance with the Board approved policy.
Selected the borrowers based on quantitative and qualitative risk
factors for their assessment of appropriate classification as NPA
including computation of overdue ageing to assess its correct
classification and provision amount as per extant IRAC norms and
Bank policy.
Performed other substantive procedures included and not limited
to the following;
•
Selected samples of performing
loans and assessed
independently as to whether those should be classified as
NPA;
•
•
•
•
•
•
•
For samples selected reviewed the collateral valuation, financial
statements and other qualitative information;
Considered 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;
For selected samples assessed independently accounts
that can potentially be classified as NPA and Red Flagged
Accounts;
Performed 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 needed to be considered as NPA;
Examined the early warning reports generated by the Bank to
identify stressed loan accounts;
Held 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;
Selected samples for standard accounts, default but standard
accounts and overdue accounts and assessed compliance
with RBI circular on COVID-19 Regulatory Package.
Assessed the adequacy of disclosures against the relevant
accounting standards and RBI requirements relating to NPAs.
Evaluation of open tax litigations (Direct and Indirect Tax)
Total claim not acknowledged as debt - Taxation as on March 31, 2020: ` 1,291.91 Crores
(Refer Schedule 12, Schedule 17(C)(18), Schedules 18(18)(d)(1))
Key Audit Matter
How our audit addressed the key audit matter
The Bank has material open tax litigations including
Testing the design and operating effectiveness of the Bank’s key
matters under dispute which involve significant judgment to
controls over the estimation, monitoring and disclosure of provisions
determine the possible outcome of these disputes.
and contingent liabilities.
Significant management judgement is needed in determining
Our substantive audit procedures included and were not limited to
whether an obligation exists and whether a provision should
the following: -
be recognised as at the reporting date, in accordance with
•
Obtained an understanding of the Bank’s process for
the accounting criteria set under Accounting Standard 29 -
determining tax liabilities, tax provisions and contingent
Provisions, Contingent Liabilities and Contingent Assets (‘AS
liabilities pertaining to taxation matters;
29’), or whether it needs to be disclosed as a contingent
liability. Further significant judgements are also involved in
measuring such obligations, the most significant of which
are:
•
Assessment of liability: Judgement is involved in the
determination of whether an outflow in respect of
identified material matters are probable and can be
estimated reliably;
•
Adequacy of provisions: The appropriateness of
assumptions and judgements used in the estimation of
significant provisions; and
•
Adequacy of disclosures of provision for liabilities and
charges, and contingent liabilities.
•
Obtained list of cases / matters in respect of which litigations
were outstanding as at reporting date. For significant matters,
we involved our tax specialist to gain an understanding of
the current status of the litigations, including understanding
of various orders / notices received by the Bank and the
management’s grounds of appeals before the relevant
appellate authorities;
•
Evaluated the merit of the subject matter under consideration
with reference to the grounds presented therein and available
independent legal / tax advice;
•
Agreed underlying tax balances to supporting documentation,
including correspondence with tax authorities.
Assessed the disclosures within the standalone financial statements
The Bank’s assessment is supported by the facts of matter,
their own judgment, experience, and advices from legal
and independent tax consultants wherever considered
in this regard.
necessary.
Since the assessment of these open tax litigations requires
significant level of judgement in interpretation of law, we have
included this as a key audit matter.
146 HDFC Bank Limited Integrated Annual Report 2019-20
147
Independent Auditor’s Report
Information Technology (“IT”) Systems and Controls
Key Audit Matter
How our audit addressed the key audit matter
The Bank has a complex IT architecture to support its day
to day business operations. High volume of transactions is
processed and recorded on single or multiple applications.
The reliability and security of IT systems plays a key role in
the business operations of the Bank. Since large volume of
transactions are processed daily, the IT controls are required
to ensure that applications process data as expected and
that changes are made in an appropriate manner.
Appropriate IT general controls and application controls are
required to ensure that such IT systems are able to process
the data, as required, completely, accurately and consistently
for reliable financial reporting.
We have identified ‘IT systems and controls’ as key audit
matter because of the high level automation, significant
number of systems being used by the management and
the complexity of the IT architecture and its impact on the
financial reporting system.
For testing the IT general controls, application controls and IT
dependent manual controls, we involved IT specialists as part of
the audit. The team also assisted in testing the accuracy of the
information produced by the Bank’s IT systems.
We gathered a comprehensive understanding of IT applications
landscape implemented at the Bank. It was followed by process
understanding, mapping of applications
the same and
understanding financial risks posed by people-process and
technology.
to
Our key IT audit procedures includes testing design and operating
effectiveness of key controls operating over user access management
(which includes user access provisioning, de-provisioning, access
review, password configuration review, segregation of duties and
privilege access, change management (which include change
release in production environment are compliant to the defined
procedures and segregation of environment is ensured), program
development (which include review of data migration activity),
computer operations (which includes testing of key controls
pertaining to, backup, Batch processing (including interface testing),
incident management and data centre security), System interface
controls. This included testing that requests for access to systems
were appropriately logged, reviewed and authorized. Also, entity
level controls pertaining to policy and procedure and Business
continuity plan assessment due impact of COVID-19 was also part
of our audit procedure.
In addition to the above, the design and operating effectiveness of
certain automated controls, that were considered as key internal
system controls over financial reporting were tested. Using various
techniques such as inquiry, review of documentation / record /
reports, observation and re-performance. We also tested few
controls using negative testing technique. We had taken adequate
samples of instances for our test.
Tested compensating controls and performed alternate procedures,
where necessary. In addition, understood where relevant, changes
made to the IT landscape during the audit period.
Integrated Report
Financial Statements and Statutory Reports
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 comprises the information 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 and, in doing so,
consider whether the 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, 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 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 and cash flows of the Bank
in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section
133 of the Act and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars, guidelines and directions issued by the
Reserve Bank of India from time to time as applicable to Bank. 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 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, the Board of Directors 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
the Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors 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:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
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.
•
•
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has
internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by Management.
Conclude on the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit
evidence 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 financial statements or, if such disclosures are inadequate, to modify our
148 HDFC Bank Limited Integrated Annual Report 2019-20
149
Independent Auditor’s Report
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
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.
g)
With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section
197(16) of the Act, as amended.
The Bank is a Banking Company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed
under section 197 of the Companies Act, 2013 do not apply; 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, in our opinion and to the best of our knowledge and belief and according to the information and
explanations given to us:
i.
The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements
- Refer Schedule 12, Schedule 17(C)(18) and Schedule 18(18)(d)(1) to 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 Schedule 17(C)(8) and 17(C)(18), Schedule
18(12) and Schedule 18(18)(d) to 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.
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Swapnil Kale
Partner
Membership Number: 117812
UDIN: 20117812AAAAET9256
Mumbai
April 18, 2020
•
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
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, 2020 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 standalone financial statements of the Bank for the year ended March 31, 2019, were audited by another auditor whose report
dated April 20, 2019 expressed an unmodified opinion on those standalone financial statements.
Our opinion is not modified in respect of this matter.
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)
b)
c)
We have sought and 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;
The transactions of the Bank, which have come to our notice during the course of our audit, have been within the powers
of the Bank;
Since the key operations of the Bank are automated with the key applications integrated to the core banking system,
the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available
therein. However, during the course of our audit we visited 192 branches.
3. As required by Section 143(3) of the Act, we report that:
a)
b)
c)
d)
e)
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;
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;
The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in agreement
with the books of account;
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 the Reserve Bank of India;
On the basis of the written representations received from the directors as on March 31, 2020 taken on record by the Board
of Directors, none of the directors is disqualified as on March 31, 2020 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 with reference to financial statements of the Bank and the
operating effectiveness of such controls, refer to our separate Report in “Annexure A”;
150 HDFC Bank Limited Integrated Annual Report 2019-20
151
Independent Auditor’s Report
ANNEXURE A TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE
STANDALONE FINANCIAL STATEMENTS OF HDFC BANK LIMITED
[Referred to in paragraph 3(f) under ‘Report on Other Legal and Regulatory Requirements’ in the Independent Auditor’s Report of even
date to the Members of HDFC Bank Limited on the Financial Statements for the year ended March 31, 2020]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act,
2013 (“the Act”)
We have audited the internal financial controls with reference to financial statements of HDFC Bank Limited (“the Bank”) as of March
31, 2020 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 with
reference to financial statements 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 (ICAI) (the “Guidance Note”). These responsibilities include the design, implementation and maintenance of internal financial
controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Bank’s
policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the
accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Bank’s internal financial controls with reference to financial statements based on our
audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI 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 internal financial controls with reference to financial statements 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 with reference
to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements
included obtaining an understanding of internal financial controls with reference to financial statements, 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 Bank’s
internal financial controls with reference to financial statements.
Meaning of Internal Financial Controls With reference to Financial Statements
A Bank’s internal financial control with reference to financial statements 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 Bank’s internal financial control with reference to financial statements 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 Bank; (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 Bank are being made only in accordance with authorizations of management and directors of the Bank; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Bank’s
assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls With reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject
152 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
to the risk that the internal financial control with reference to financial statements 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 with reference to financial statements and
such internal financial controls with reference to financial statements were operating effectively as at March 31, 2020, based on the
internal control with reference to financial statements criteria established by the Bank considering the essential components of internal
control stated in the Guidance Note.
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Swapnil Kale
Partner
Membership Number: 117812
UDIN: 20117812AAAAET9256
Mumbai
April 18, 2020
153
Balance Sheet
As at March 31, 2020
CAPITAL AND LIABILITIES
Capital
Reserves and surplus
Deposits
Borrowings
Other liabilities and provisions
Total
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
Total
Contingent liabilities
Bills for collection
Schedule
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
1
2
3
4
5
6
7
8
9
10
11
12
5,483,286
5,446,613
1,704,377,008
1,486,616,908
11,475,022,947
9,231,409,284
1,446,285,372
1,170,851,238
673,943,976
551,082,863
15,305,112,589
12,445,406,906
722,051,210
467,636,184
144,135,970
345,840,208
3,918,266,581
2,931,160,725
9,937,028,781
8,194,012,167
44,319,155
40,300,043
539,310,892
466,457,579
15,305,112,589
12,445,406,906
11,289,534,044
10,247,151,183
515,849,020
499,528,010
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
V EARNINGS PER EQUITY SHARE (FACE VALUE ` 1 PER SHARE)
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Shyamala Gopinath
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Mumbai, April 18, 2020
Santosh Haldankar
Company Secretary
Profit and Loss Account
For the year ended March 31, 2020
I
INCOME
Interest earned
Other income
Total
II EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
Total
III PROFIT
Net profit for the year
Total
IV APPROPRIATIONS
Transfer to Statutory Reserve
Balance in the Profit and Loss account brought forward
the year, net of dividend tax credits
Interim Dividend (including tax)
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
Total
Basic
Diluted
Schedule
Year ended
31-Mar-20
` in ‘000
Year ended
31-Mar-19
13
14
15
16
1,148,126,509
989,720,505
232,608,187
176,258,849
1,380,734,696
1,165,979,354
586,263,979
507,288,285
306,975,289
261,193,700
224,922,278
186,715,716
1,118,161,546
955,197,701
262,573,150
210,781,653
492,233,022
404,534,155
754,806,172
615,315,808
65,643,288
52,695,413
16,469,504
26,257,315
21,078,165
11,238,460
1,053,354
-
-
-
11,340,000
7,730,000
574,924,020
492,233,022
754,806,172
615,315,808
`
48.01
47.66
`
39.33
38.94
Dividend (including tax / cess thereon) pertaining to previous year paid during
48,933,585
40,525,854
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 MSKA & Associates
Chartered Accountants
Shyamala Gopinath
Umesh Chandra Sarangi
Part Time Non-Executive Chairperson &
Independent Director
ICAI Firm Registration Number: 105047W
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Mumbai, April 18, 2020
Santosh Haldankar
Company Secretary
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
154
HDFC Bank Limited Integrated Annual Report 2019-20
155
Cash Flow Statement
For the year ended March 31, 2020
Cash flows from operating activities
Profit before income tax
Adjustments for :
Depreciation on fixed assets
Year ended
31-Mar-20
` in ‘000
Year ended
31-Mar-19
Cash flows from financing activities
Integrated Report
Financial Statements and Statutory Reports
Cash Flow Statement
` in ‘000
Year ended
31-Mar-20
Year ended
31-Mar-19
366,071,513
321,996,620
Proceeds from issue of share capital, net of issue expenses
18,486,821
257,904,302
Redemption of Tier II capital bonds
-
(28,750,000)
11,958,533
11,401,037
Increase / (decrease) in other borrowings
275,434,134
(31,448,462)
(Profit) / loss on revaluation of investments
7,021,095
152,437
Dividend paid during the year (including tax on dividend)
(65,403,089)
(40,525,854)
Amortisation of premium on held to maturity investments
5,014,137
4,534,626
Net cash flow from financing activities
228,517,866
157,179,986
(Profit) / loss on sale of fixed assets
83,208
(64,341)
Effect of exchange fluctuation on translation reserve
2,139,891
953,463
Provision / charge for non performing assets
93,523,605
65,820,705
Net increase / (decrease) in cash and cash equivalents
52,710,788
(415,674,435)
Provision for standard assets and contingencies
30,515,777
11,512,607
Cash and cash equivalents as at April 1st
813,476,392
1,229,150,827
Dividend from subsidiaries
Adjustments for :
(4,237,182)
(2,044,422)
509,950,686
413,309,269
Cash and cash equivalents as at March 31st
866,187,180
813,476,392
(Increase) / decrease in investments
(999,216,055)
(513,892,438)
(Increase) / decrease in advances
Increase / (decrease) in deposits
(1,836,404,567)
(1,676,454,898)
2,243,613,663
1,343,702,888
(Increase) / decrease in other assets
(71,801,285)
(86,877,312)
Increase / (decrease) in other liabilities and provisions
91,939,987
81,830,094
Direct taxes paid (net of refunds)
(61,917,571)
(438,382,397)
(104,980,179)
(122,164,302)
Net cash flow used in operating activities
(166,897,750)
(560,546,699)
Cash flows from investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Dividend from subsidiaries
(15,468,752)
(15,517,953)
182,351
212,346
4,237,182
2,044,422
Net cash flow used in investing activities
(11,049,219)
(13,261,185)
As per our report of even date.
For and on behalf of the Board
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Shyamala Gopinath
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Mumbai, April 18, 2020
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Santosh Haldankar
Company Secretary
156
HDFC Bank Limited Integrated Annual Report 2019-20
157
Schedules to the Financial Statements
As at March 31, 2020
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
SCHEDULE 1 - CAPITAL
Authorised capital
6,50,00,00,000 (31 March, 2019 : 6,50,00,00,000) Equity Shares of ` 1/- each
6,500,000
6,500,000
Issued, subscribed and paid-up capital
5,48,32,86,460 (31 March, 2019 : 5,44,66,13,220) Equity Shares of ` 1/- each
Total
5,483,286
5,483,286
5,446,613
5,446,613
SCHEDULE 2 - RESERVES AND SURPLUS
I Statutory reserve
Opening balance
Additions during the year
Total
II General reserve
Opening balance
Additions during the year
Total
280,171,092
65,643,288
345,814,380
227,475,679
52,695,413
280,171,092
110,234,043
26,257,315
136,491,358
89,155,878
21,078,165
110,234,043
III Balance in profit and loss account
574,924,020
492,233,022
IV Share premium
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18 (6)]
Total
V Amalgamation reserve
Opening balance
Additions during the year
Total
VI Capital reserve
Opening balance
Additions during the year
Total
VII Investment reserve
Opening balance
Additions during the year
Deductions during the year
Total
158 HDFC Bank Limited Integrated Annual Report 2019-20
569,105,180
311,457,310
18,450,148
258,910,728
-
(1,262,858)
587,555,328
569,105,180
10,635,564
10,635,564
-
-
10,635,564
10,635,564
15,409,264
11,238,460
14,355,910
1,053,354
26,647,724
15,409,264
-
-
-
-
-
162,237
(162,237)
-
VIII Investment fluctuation reserve
Opening balance
Additions during the year
Total
IX Foreign currency translation account
Opening balance
Additions / (deductions) during the year
SCHEDULE 3 - DEPOSITS
A
I Demand deposits
(i) From banks
(ii) From others
Total
II Savings bank deposits
III Term deposits
(i) From banks
(ii) From others
B
I Deposits of branches in India
II Deposits of branches outside India
SCHEDULE 4 - BORROWINGS
I Borrowings in India
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
(iv) Upper and lower tier II capital and innovative perpetual debts
(v) Bonds and Debentures (excluding subordinated debt)
Total
Total
Total
Total
Total
Total
Total
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
As at
31-Mar-20
7,730,000
11,340,000
19,070,000
` in ‘000
As at
31-Mar-19
-
7,730,000
7,730,000
1,098,743
2,139,891
3,238,634
145,280
953,463
1,098,743
1,704,377,008
1,486,616,908
36,285,672
34,189,112
1,706,193,073
1,390,788,586
1,742,478,745
1,424,977,698
3,103,771,353
2,487,003,765
136,163,876
60,287,319
6,492,608,973
5,259,140,502
6,628,772,849
5,319,427,821
11,475,022,947
9,231,409,284
11,426,592,411
9,173,767,517
48,430,536
57,641,767
11,475,022,947
9,231,409,284
17,260,000
174,000,000
11,339,756
9,155,858
696,576,700
278,316,800
182,320,000
182,320,000
186,750,000
186,750,000
1,094,246,456
830,542,658
1,446,285,372
1,170,851,238
159
II Borrowings outside India
352,038,916
340,308,580
Secured borrowings included in I and II above: Nil (March 31, 2019: Nil) except borrowings of
` 52,524.20 Cr (March 31, 2019: ` 17,400.00 Cr) under Tri-party repo and transactions under
Liquidity Adjustment Facility and Marginal Standing Facility.
Schedules to the Financial Statements
As at March 31, 2020
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I Bills payable
II Interest accrued
III Others (including provisions)
IV Contingent provisions against standard assets
Total
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
75,837,207
70,403,952
68,199,560
69,509,400
485,528,626
374,772,935
44,378,583
36,396,576
673,943,976
551,082,863
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
3,230,399,049
2,421,293,559
-
-
4,044,055
264,503,537
38,264,875
359,227,260
3,980,968
286,969,969
38,264,875
165,599,323
3,896,438,776
2,916,108,694
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)
Total
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
B Investments outside India in
I Cash in hand (including foreign currency notes)
92,076,984
73,914,902
(i) Government securities (including Local Authorities)
8,409,391
7,236,612
II Balances with Reserve Bank of India:
(a) In current accounts
(b) In other accounts
Total
Total
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
Total
(ii) Money at call and short notice:
(a) With banks
(b) With other institutions
Total
Total
II Outside India
(i) In current accounts
(ii) In deposit accounts
(iii) Money at call and short notice
Total
Total
160 HDFC Bank Limited Integrated Annual Report 2019-20
377,974,226
391,721,282
252,000,000
2,000,000
629,974,226
393,721,282
722,051,210
467,636,184
1,717,287
3,236,030
1,759,869
175,545
3,477,156
3,411,575
-
-
-
18,000,000
77,213,500
95,213,500
3,477,156
98,625,075
47,628,696
83,970,273
10,176,943
2,863,017
82,853,175
160,381,843
140,658,814
247,215,133
(ii) Other investments
(a) Shares
(b) Debentures and bonds
Total
Total
SCHEDULE 9 - ADVANCES
A
(ii) Cash credits, overdrafts and loans repayable on demand
(i) Bills purchased and discounted
(iii) Term loans
Total
B (i) Secured by tangible assets*
(ii) Covered by bank / government guarantees
(iii) Unsecured
Total
* Including advances against book debts
C I Advances in India
(i) Priority sector
(ii) Public sector
(iii) Banks
(iv) Others
Total
C
II Advances outside India
(i) Due from banks
(ii) Due from others
(a) Bills purchased and discounted
(b) Syndicated loans
(c) Others
Total
Total
144,135,970
345,840,208
(Advances are net of provisions)
35,024
13,383,390
21,827,805
35,024
7,780,395
15,052,031
3,918,266,581
2,931,160,725
387,832,198
320,438,660
2,340,489,951
2,022,142,263
7,208,706,632
5,851,431,244
9,937,028,781
8,194,012,167
6,812,916,518
5,705,087,854
201,580,178
278,716,962
2,922,532,085
2,210,207,351
9,937,028,781
8,194,012,167
2,541,995,300
2,174,223,445
623,353,731
68,550,435
216,010,200
139,904,171
6,419,015,531
5,414,048,012
9,652,914,997
7,944,185,828
33,250,983
35,655,221
51,070
12,531,145
238,280,586
284,113,784
860,526
16,686,474
196,624,118
249,826,339
9,937,028,781
8,194,012,167
161
Schedules to the Financial Statements
As at March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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
Total
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Total
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
Total
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Total
Net block
C Assets on lease (plant and machinery)
Gross block
At cost on 31 March of the preceding year
Additions during the year
Total
Depreciation
As at 31 March of the preceding year
Charge for the year
Total
Lease adjustment account
As at 31 March of the preceding year
Charge for the year
Total
Unamortised cost of assets on lease
Total
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
17,984,742
737,974
(85,864)
18,636,852
5,786,797
630,315
(75,309)
6,341,803
12,295,049
17,011,976
1,079,471
(106,705)
17,984,742
5,296,456
579,806
(89,465)
5,786,797
12,197,945
100,927,994
15,512,364
(5,143,488)
111,296,870
87,766,853
14,702,443
(1,541,302)
100,927,994
72,825,896
11,335,351
(4,888,483)
79,272,764
32,024,106
63,410,328
10,826,104
(1,410,536)
72,825,896
28,102,098
4,546,923
-
4,546,923
4,104,467
-
4,104,467
442,456
-
442,456
4,546,923
-
4,546,923
4,104,467
-
4,104,467
442,456
-
442,456
-
44,319,155
-
40,300,043
SCHEDULE 11 - OTHER ASSETS
I
Interest accrued
II Advance tax / tax deducted at source (net of provisions)
III Stationery and stamps
IV Non banking assets acquired in satisfaction of claims
V Bond and share application money pending allotment
VI Security deposit for commercial and residential property
VII Others*
Total
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
103,041,783
93,031,638
25,983,290
19,441,857
430,930
345,677
-
-
-
146,197
5,410,271
5,112,892
404,444,618
348,379,318
539,310,892
466,457,579
*Includes deferred tax asset (net) of ` 3,835.45 crore (previous year: ` 4,352.14 crore) and
deposits placed with NABARD / SIDBI / NHB on account of shortfall in lending to priority sector
of ` 9,196.86 crore (previous year: ` 10,832.25 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
I Claims against the bank not acknowledged as debts - taxation
12,919,109
12,612,436
II Claims against the bank not acknowledged as debts - others
915,938
1,190,364
III Liability on account of outstanding forward exchange contracts
6,079,194,921
5,561,859,469
IV Liability on account of outstanding derivative contracts
V Guarantees given on behalf of constituents - in India
- outside India
VI Aceptances, endorsements and other obligations
VII Other items for which the Bank is contingently liable
Total
4,130,061,603
3,639,008,146
590,864,399
536,870,994
859,639
752,190
440,232,727
475,617,760
34,485,708
19,239,824
11,289,534,044
10,247,151,183
162 HDFC Bank Limited Integrated Annual Report 2019-20
163
Schedules to the Financial Statements
As at March 31, 2020
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
Total
SCHEDULE 14 - OTHER INCOME
I Commission, exchange and brokerage
II Profit / (loss) on sale of investments (net)
III Profit / (loss) on revaluation of investments (net)
IV Profit / (loss) on sale of building and other assets (net)
V Profit / (loss) on exchange / derivative transactions (net)
VI Income earned by way of dividends from subsidiaries / associates and / or joint ventures
abroad / in India
VII Miscellaneous income
Total
SCHEDULE 15 - INTEREST EXPENDED
I Interest on deposits
II Interest on RBI / inter-bank borrowings
III Other interest
Total
SCHEDULE 16 - OPERATING EXPENSES
I Payments to and provisions for employees
II Rent, taxes and lighting
III Printing and stationery
IV Advertisement and publicity
V Depreciation on bank's property
VI Directors' fees / remuneration, allowances and expenses
VII Auditors' fees and expenses
VIII Law charges
IX Postage, telegram, telephone etc.
X Repairs and maintenance
XI
Insurance
XII Other expenditure*
Total
*Includes professional fees, commission to sales agents, card and merchant acquiring expenses
and system management fees
164 HDFC Bank Limited Integrated Annual Report 2019-20
Year ended
31-Mar-20
` in ‘000
Year ended
31-Mar-19
917,878,779
775,441,902
206,333,232
199,974,579
18,289,329
5,625,169
6,357,012
7,947,012
1,148,126,509
989,720,505
163,336,852
137,787,988
26,364,839
(7,021,095)
257,807
21,547,462
4,237,182
4,020,717
(152,437)
331,785
17,203,935
2,044,422
23,885,140
15,022,439
232,608,187
176,258,849
508,037,575
410,518,998
78,033,042
95,063,879
193,362
1,705,408
586,263,979
507,288,285
95,256,682
16,584,727
4,466,320
979,091
77,617,595
14,821,006
5,244,100
1,573,670
11,958,533
11,401,037
37,041
37,823
1,587,423
4,275,952
12,675,704
12,292,295
32,788
36,230
1,419,023
4,074,980
12,618,088
10,414,269
146,823,698
121,940,914
306,975,289
261,193,700
SCHEDULE 17 - Significant accounting
policies appended to and forming part
of the financial statements for the year
ended March 31, 2020
A BACKGROUND
(‘HDFC Bank’ or
HDFC Bank Limited
‘the Bank’),
incorporated in Mumbai, India is a publicly held banking
company engaged in providing a range of banking and
including retail banking, wholesale
financial services
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 Third
Schedule of the Banking Regulation Act, 1949, circulars
and guidelines issued by the Reserve Bank of India (‘RBI’)
from time to time (RBI guidelines), 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 PRINCIPAL ACCOUNTING POLICIES
1
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”).
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Subsequent shifting amongst the categories is done
in accordance with the RBI guidelines. Under each
of these categories, investments are further classified
under six groups (hereinafter called “groups”) -
Government Securities, Other Approved Securities,
Shares, Debentures and Bonds, Investments in
Subsidiaries / Joint Ventures and Other Investments.
Purchase and sale transactions in securities are
recorded under settlement date of accounting,
except in the case of equity shares where trade date
accounting is followed.
Basis of classification:
Investments that are held principally for resale within
90 days from the date of purchase are classified
under HFT category. Investments which the Bank
intends to hold till maturity are classified as HTM
securities. Investments in the equity of subsidiaries /
joint ventures are categorised as HTM in accordance
with the RBI guidelines. Investments which are
not classified in either of the above categories are
classified under AFS category.
Acquisition cost:
Brokerage, commission, etc. and broken period
interest on debt instruments are recognised in the
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.
165
Schedules to the Financial Statements
For the year ended March 31, 2020
Traded investments are valued based on the trades
/ quotes on the recognised stock exchanges or
prices published by Financial Benchmarks India Pvt
Ltd. (FBIL) with Fixed Income Money Market and
Derivatives Association (FIMMDA) as the calculating
agent.
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 prices published by FBIL with
FIMMDA as the calculating agent.
The valuation of other unquoted fixed income
securities (viz. State Government securities, other
approved securities, bonds and debentures), and
preference shares, is done with appropriate mark-
up over the Yield to Maturity (YTM) rates for Central
Government Securities as published by Primary
Dealers Association of India (“PDAI’’) / 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 FBIL and FIMMDA as
the calculating agent.
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 net
asset value declared by the respective schemes of
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.
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
FBIL with FIMMDA as the calculating agent.
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
166 HDFC Bank Limited Integrated Annual Report 2019-20
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
identified and
investments are
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.
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
in respect of non-
loan
performing advances are made based on management’s
assessment of the degree of impairment of wholesale
loss provisions
2
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
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
3
Securitisation and transfer of assets
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.
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,
167
Schedules to the Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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.
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.
Priority Sector Lending Certificates (PSLCs)
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
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.
4
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 Part C of Schedule
II to the Companies Act, 2013, taking into account
changes in environment, changes in technology, the
utility and efficacy of the asset in use, fairly reflects
its estimate of useful lives of the fixed assets.
The estimated useful lives of key fixed assets are
given below:
Asset
Estimated
useful life
as assessed
by the
Bank
Estimated
useful life
specified
under
Schedule
II of the
Companies
Act, 2013
Owned Premises
Automated Teller
Machines (ATMs)
Electrical equipments
and installations
61 years
10 years
60 years
15 years
6 to 10 years 10 years
Office equipments
3 to 6 years
5 years
3 years
3 years
3 to 6 years
6 years
Computers
Modems, routers,
switches, servers,
network and related IT
equipments
Motor cars
4 years
8 years
Furniture and fittings
16 years
10 years
•
•
•
•
Improvements to
lease hold premises are
charged off over the remaining primary period of
lease.
and
Software
development
expenditure is depreciated over a period of
5 years.
system
Point of sales terminals are depreciated over a
period of 4 years.
For assets purchased and sold during the year,
depreciation is provided on pro-rata basis by the
Bank.
5
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
• Whenever there is a revision of the estimated
useful
the unamortised
depreciable amount is charged over the revised
remaining useful life of the said asset.
life of an asset,
6
7
•
•
Profit on sale of immovable property net of taxes
and transfer to statutory reserve, are transferred
to capital reserve account.
Assets (other than POS terminals) costing less
than ` 5,000 individually are fully depreciated in
the year of purchase.
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.
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.
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. Valuation is considered
on present value basis, as directed by FEDAI. For this
purpose, 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 premium 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
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.
9 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.
168 HDFC Bank Limited Integrated Annual Report 2019-20
169
Schedules to the Financial Statements
For the year ended March 31, 2020
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.
fee
is recognised as
Loan processing
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.
10 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 and whole time
directors. 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 has an obligation towards gratuity, a defined
benefit retirement plan covering all eligible employees.
The plan 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 without upper
limit. The Bank makes contributions to recognized
Trusts administered by trustees and whose funds
are managed by insurance companies, of amounts
170 HDFC Bank Limited Integrated Annual Report 2019-20
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.
The actuarial calculations entails assumptions about
demographics, early retirement, salary increases and
interest rates. Actuarial gain or loss is recognised in
the Profit and Loss Account.
Superannuation:
The Bank has a Superannuation Plan under which
employees of the Bank, above a prescribed grade,
are entitled to receive retirement benefits either
under a cash-out option through salary or under a
defined contribution plan. For those opting for a
defined contribution plan, 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 employees of the erstwhile Centurion
Bank of Punjab (eCBoP) staff) to Trust administered by
trustees and whose funds are managed by insurance
companies. The Bank has no liability towards future
superannuation fund benefits other than its annual
contribution, and recognises such contributions as
an expense in the year incurred.
Provident fund:
The Bank is covered under the Employees Provident
Fund and Miscellaneous Provisions Act, 1952 and
accordingly 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 Office. The balance amount of the
12% employer’s share is contributed to an exempted
Trust 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 the Regional Provident Fund Office and from
April 2009 onwards, the same is transferred to the
exempted Trust set up by the Bank and administered
by the Board of Trustees. In respect of eLKB
employees, the Bank contributes to a Trust 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 applicable government
social security 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 trust set up by the Bank
and administered by the Board of Trustees and an
additional amount towards the liability shortfall 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) basis 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.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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.
11 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.
12 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 accounted for
at the time of sale to the customers and reported as
“Other Income”.
The Bank also deals in bullion on a borrowing and
lending basis and the interest thereon is accounted
as interest expense / income respectively.
13 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.
14
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 thereunder and considering the
material principles set out in Income Computation
and Disclosure Standards) and the net change in the
171
Schedules to the Financial Statements
For the year ended March 31, 2020
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.
15 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.
16 Share issue expenses
Share issue expenses are adjusted from Share
Premium Account in terms of Section 52 of the
Companies Act, 2013.
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:
•
•
a possible obligation arising from a past event,
the existence of which will be confirmed by the
occurrence or non-occurrence of one or more
uncertain future events not within the control of
the Bank; or
a present obligation arising from a past event
which is not recognised as it is not probable
that an outflow of resources will be required to
settle the obligation or a reliable estimate of the
amount of the obligation cannot be made.
When there is a possible obligation or a present
obligation in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is
made.
Contingent assets, if any, are not recognised in the
financial statements since this may result in the
recognition of income that may never be realised.
Onerous contracts
Provisions for onerous contracts are recognised when
the expected benefits to be derived by the Bank from
a contract are lower than the unavoidable costs of
meeting the future obligations under the contract.
The provision is measured at the present value of
the lower of the expected cost of terminating the
contract and the expected net cost of continuing with
the contract. Before a provision is established, the
Bank recognises any impairment loss on the assets
associated with that contract.
17 Segment information
19 Cash and cash equivalents
The disclosure relating to segment information is in
accordance with AS-17, Segment Reporting and as
per guidelines issued by RBI.
Cash and cash equivalents include cash and gold in
hand, balances with RBI, balances with other banks
and money at call and short notice.
18 Accounting for provisions, contingent
20 Corporate social responsibility
liabilities and contingent assets
In accordance with AS-29, Provisions, Contingent
Liabilities and Contingent Assets, the Bank recognises
Expenditure towards corporate social responsibility,
in accordance with Companies Act, 2013, are
recognised in the Profit and Loss Account.
172 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
SCHEDULE 18 - Notes forming part of the financial statements for the year ended
March 31, 2020
Amounts in notes forming part of the financial statements for the year ended March 31, 2020 are denominated in rupee crore to
conform to extant RBI guidelines, except where stated otherwise.
1
2
3
Special Dividend
The Bank has paid Special Interim Dividend of ` 5 per equity share of face value of ` 2 each (pre-split) for the financial year 2019-20,
to commemorate 25 years of the Bank’s operation, aggregating to ` 1,646.95 crore inclusive of tax on dividend.
Sub-division of Equity Shares
The shareholders of the Bank at the 25th Annual General Meeting held on July 12, 2019 approved sub-division (split) of one
equity share of the Bank from face value of ` 2/- each into two equity shares of face value of ` 1/- each. All shares and per share
information in the financial statements reflect the effect of sub-division (split) retrospectively.
Proposed dividend
The Reserve Bank of India, vide its circular dated April 17, 2020, has decided that banks shall not make any further dividend
payouts from profits pertaining to the financial year ended March 31, 2020 until further instructions, with a view that banks must
conserve capital in an environment of heightened uncertainty caused by COVID-19. Accordingly, the Board of Directors of the
Bank, at their meeting held on April 18, 2020, has not proposed any final dividend for the year ended March 31, 2020.
During the previous year ended March 31, 2019, the Board of Directors had proposed a dividend of `15 per equity share
aggregating to ` 4,924.64 crore inclusive of tax on dividend, which was subsequently approved by the shareholders at the
Annual General Meeting and paid out. In terms of the revised Accounting Standard (AS) 4 ‘Contingencies and Events Occurring
After the Balance Sheet Date’ the Bank had then not appropriated the proposed dividend from the Profit and Loss Account.
However the effect of the proposed dividend was then reckoned in determining the capital funds in the computation of the
capital adequacy ratio.
4 Capital adequacy
The Bank’s capital to risk-weighted assets ratio (‘Capital Adequacy Ratio’) as at March 31, 2020 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 (CET 1)
Tier I capital
Total capital
2018
7.375
8.875
10.875
As at March 31,
2019
7.525
9.025
11.025
(% of RWAs)
2020
7.575
9.075
11.075
The above minimum CET 1, tier I and total capital ratio requirements include capital conservation buffer (CCB) and additional
capital applicable to our Bank being 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 CET 1 capital
Tier II capital
Total capital
Total risk weighted assets
Capital adequacy ratios under Basel III
Tier I
Of which CET 1
Tier II
Total
March 31, 2020
March 31, 2019
(` crore)
171,414.44
163,414.44
12,843.41
184,257.85
994,715.74
17.23%
16.43%
1.29%
147,022.76
139,172.76
12,434.88
159,457.64
931,929.87
15.78%
14.93%
1.33%
18.52%
17.11%
173
3
at
its
on
are
the
Pillar
Bank’s
website
available
following
disclosures
Schedules to the Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
During the year ended March 31, 2020 and March 31, 2019, the Bank has not raised Additional Tier I and Tier II capital.
Following is the reconciliation of the weighted average number of equity shares used in the computation of basic and diluted
The Bank’s subordinated and perpetual debt capital instruments amounted to ` 10,232.00 crore and ` 8,000.00 crore respectively
during the year ended March 31, 2020 and March 31, 2019.
earnings per share:
Particulars
In accordance with RBI guidelines, banks are required to make Pillar 3 disclosures under the Basel III capital regulations.
link:
The
https://www.hdfcbank.com/aboutus/basel_disclosures/default.htm. These Pillar 3 disclosures have not been subjected to audit
or review by the statutory auditors.
Capital infusion
During the year ended March 31, 2020, the Bank allotted 3,66,73,240 equity shares (previous year: 4,75,44,608 equity shares)
aggregating to face value ` 3.67 crore (previous year: ` 4.75 crore) in respect of stock options exercised. Accordingly, the share
capital increased by ` 3.67 crore (previous year: ` 4.75 crore) and the share premium increased by ` 1,845.01 crore (previous
year: ` 2,196.06 crore).
During the year ended March 31, 2019, pursuant to the shareholder and regulatory approvals, the Bank on July 17, 2018, made
a preferential allotment of 3,90,96,817 equity shares of face value of ` 2 each 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 of
face value of ` 2 each 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 of face value of ` 2 each) 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.
The details of the movement in the paid-up equity share capital of the Bank are given below:
Particulars
Opening balance
Addition pursuant to Preferential allotment / QIP / ADR offering
Addition pursuant to stock options exercised
Closing balance
March 31, 2020 March 31, 2019
(` crore)
544.66
-
3.67
548.33
519.02
20.89
4.75
544.66
5
Earnings per equity share
Basic and diluted earnings per equity share of the Bank have been calculated based on the net profit after tax of ` 26,257.32
crore (previous year: ` 21,078.17 crore) and the weighted average number of equity shares outstanding during the year of
5,46,88,02,148 (previous year: 5,36,00,68,058).
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, 2020 March 31, 2019
1.00
48.01
(0.35)
47.66
1.00
39.33
(0.39)
38.94
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.
174 HDFC Bank Limited Integrated Annual Report 2019-20
175
Weighted average number of equity shares used in computing basic earnings per equity share
5,46,88,02,148
5,36,00,68,058
Effect of potential equity shares outstanding
4,10,17,673
5,32,75,290
Weighted average number of equity shares used in computing diluted earnings per equity share
5,50,98,19,821
5,41,33,43,348
For the years ended
March 31, 2020 March 31, 2019
The Bank has made an appropriation of ` 6,564.33 crore (previous year: ` 5,269.54 crore) out of profits for the year ended
March 31, 2020 to the Statutory Reserve pursuant to the requirements of Section 17 of the Banking Regulation Act, 1949 and
During the year ended March 31, 2020, the Bank appropriated ` 1,123.85 crore (previous year: ` 105.34 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.
The Bank has made an appropriation of ` 2,625.73 crore (previous year: ` 2,107.82 crore) out of profits for the year ended
6 Reserves and Surplus
Statutory Reserve
RBI guidelines dated September 23, 2000.
Capital Reserve
General Reserve
March 31, 2020 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, 2020, the Bank has made an appropriation of ` 1,134.00 crore (previous year: ` 773.00 crore), to the Investment
Fluctuation Reserve from the Profit and Loss Account.
During the year ended March 31, 2020, the net transfer between Investment Reserve Account and Profit and Loss Account was
Investment Reserve Account
Nil (previous year: Nil) as per RBI guidelines.
Draw down from reserves
Share Premium
The Bank has not undertaken any drawdown from share premium during the year ended March 31, 2020 and March 31, 2019
except that during year ended March 31, 2019, share issue expenses of ` 126.29 crore, incurred for the equity raised through the
QIP and ADR offering, had been adjusted against the share premium account in terms of section 52 of the Companies Act, 2013.
7 Dividend on shares allotted pursuant to exercise of stock options
Shares allotted after the Balance Sheet date pursuant to any exercise of employee stock options but before book closure date
are eligible for dividend when declared by the Bank and approved at a General Body Meeting of the shareholders of the Bank.
8
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.
Schedules to the Financial Statements
For the year ended March 31, 2020
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 the 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, 2020 and March 31, 2019, no modifications were
made to the terms and conditions of ESOPs.
Activity in the options outstanding under the Employee Stock Option Plans
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2020:
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
13,66,12,822
4,77,73,600
3,66,73,240
48,47,580
14,28,65,602
6,44,64,392
Weighted average
exercise price (`)
682.99
1,220.13
504.10
962.85
899.03
638.18
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2019:
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
15,08,87,600
3,97,90,000
4,75,44,608
65,20,170
13,66,12,822
8,06,09,722
Weighted average
exercise price (`)
525.11
1,030.24
462.90
753.50
682.99
508.89
•
The following table summarises the information about stock options outstanding as at March 31, 2020:
Plan
Plan C
Plan D
Plan E
Plan F
Plan G
Range of exercise
price (`)
340.00 to 417.75
340.00
340.00
417.75 to 731.08
882.85 to 1,229.00
Number of shares
arising out of options
4,85,100
3,45,900
17,05,500
5,85,68,822
8,17,60,280
Weighted average life
of options (in years)
0.34
0.30
0.30
2.02
3.45
Weighted average
exercise price (`)
344.05
340.00
340.00
587.08
1,139.82
•
The following table summarises the information about stock options outstanding as at March 31, 2019
Plan
Plan C
Plan D
Plan E
Plan F
Plan G
Range of exercise price
(`)
340.00 to 417.75
340.00
340.00
417.75 to 731.08
1,003.03 to 1,045.23
Number of shares
arising out of options
30,74,800
13,19,800
49,97,400
8,84,76,822
3,87,44,000
Weighted average life of
options (in years)
0.87
0.97
0.96
2.71
3.57
Weighted average
exercise price (`)
342.85
340.00
340.00
567.24
1,030.23
Fair value methodology
The fair value of options used to compute the proforma net profit and earnings per equity share have been estimated on the
dates of each grant using the binomial option-pricing model. The Bank estimates the volatility based on the historical prices of
its equity shares. The Bank granted 4,77,73,600 options during the year ended March 31, 2020 (previous year: 3,97,90,000).
The various assumptions considered in the pricing model for the ESOPs granted during the year ended March 31, 2020 are:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the options
March 31, 2020
March 31, 2019
0.61% to 0.85% 0.62% to 0.65%
15.30% to 20.13% 14.53% to 18.68%
5.81% to 6.70% 7.23% to 8.31%
1 to 6 years
1 to 6 years
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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 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)
9 Other liabilities
(` crore)
March 31, 2020
26,257.32
-
719.80
March 31, 2019
21,078.17
-
535.90
25,537.52
20,542.27
(`)
48.01
46.70
47.66
46.35
(`)
39.33
38.32
38.94
37.95
•
The Bank held provisions towards standard assets amounting to ` 4,437.86 crore as at March 31, 2020 (previous year:
` 3,639.66 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) Provision for standard assets of overseas branches is made at higher of rates prescribed by the overseas
regulator or RBI.
(cid:57)
(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%.
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.
Other liabilities include contingent provisions of ` 2,995.80 crore as at March 31, 2020 (previous year: ` 800.10 crore) in
respect of advances.
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, 2020 include unrealised loss on foreign exchange and derivative contracts of ` 18,470.93 crore (previous year:
` 12,772.60 crore).
•
•
10 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.
176 HDFC Bank Limited Integrated Annual Report 2019-20
177
Schedules to the Financial Statements
For the year ended March 31, 2020
On a monthly basis, the Bank reviews information on the unhedged portion of foreign currency exposures of customers, whose
total foreign currency exposure with the Bank exceeds a defined threshold. Based on the monthly review, the Bank proposes
suitable hedging techniques to the customer to contain the risk. A Board approved credit risk rating linked limit on unhedged
foreign currency position of customers is applicable when extending credit facilities to a customer. The compliance with the limit
is assessed by estimating the extent of drop in a customer’s annual Earnings Before Interest and Depreciation (‘EBID’) due to
a potentially large adverse movement in exchange rate impacting the unhedged foreign currency exposure of the customer.
Where a breach is observed in such a simulation, the customer is advised to reduce its unhedged exposure.
In accordance with RBI guidelines, as at March 31, 2020 the Bank holds standard asset provisions of ` 129.95 crore (previous
year: ` 203.48 crore) and maintains capital (including CCB & D-SIB) of ` 574.13 crore (previous year: ` 959.77 crore) in respect
of the unhedged foreign currency exposure of its customers.
11
Investments
•
Value of investments
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
March 31, 2020 March 31, 2019
(` crore)
390,573.74
2,231.39
291,878.72
1,512.03
929.86
48.61
267.85
6.83
389,643.88
2,182.78
291,610.87
1,505.20
• Movement in provisions held towards depreciation on investments:
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
(` crore)
March 31, 2020 March 31, 2019
260.17
274.68
709.60
5.81
978.47
51.58
37.07
274.68
Movement in provisions held towards depreciation on investments has been reckoned on a yearly basis.
• Repo transactions
(cid:57) Details of repo / reverse repo deals excluding tri-party repo / reverse repo (in face value terms) done during the year
ended March 31, 2020:
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, 2020
(` crore)
-
-
-
-
-
-
26,368.04
1,357.92
1,747.44
-
-
-
-
-
-
89,162.10
27,524.91
22,389.54
-
-
-
-
-
-
178 HDFC Bank Limited Integrated Annual Report 2019-20
(cid:57) Details of repo / reverse repo deals excluding tri-party repo / reverse repo (in face value terms) done during the year
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Minimum
outstanding
Maximum
outstanding
Daily average
outstanding
Outstanding
as at
during the year
during the year
during the year
March 31, 2019
(` crore)
40,230.19
6,533.93
17,551.52
Securities purchased under reverse repo
62,745.05
8,320.06
(cid:57) Details of Tri-party repo / reverse repo deals (in amount of funds borrowed or lent terms) done during the year ended
ended March 31, 2019:
Particulars
Securities sold under repo
1 Government securities
2 Corporate debt securities
3 Any other securities
1 Government securities
2 Corporate debt securities
3 Any other securities
March 31, 2020:
Particulars
Securities sold under tri-party repo
1 Government securities
2 Corporate debt securities
3 Any other securities
Securities purchased under tri-party repo
1 Government securities
2 Corporate debt securities
3 Any other securities
March 31, 2019:
Particulars
Securities sold under tri-party repo
1 Government securities
2 Corporate debt securities
3 Any other securities
Securities purchased under tri-party repo
1 Government securities
2 Corporate debt securities
3 Any other securities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Minimum
Maximum
Daily average
Outstanding
outstanding
outstanding
outstanding
as at
during the year
during the year
during the year
March 31, 2020
(` crore)
56,036.05
11,478.42
50,798.20
7,700.00
319.25
Minimum
outstanding
Maximum
outstanding
Daily average
outstanding
Outstanding
as at
during the year
during the year
during the year
March 31, 2019
(` crore)
36,798.00
5,650.95
7,621.35
93.02
7,621.35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
179
(cid:57) Details of Tri-party repo / reverse repo deals (in amount of funds borrowed or lent terms) done during the year ended
Schedules to the Financial Statements
For the year ended March 31, 2020
• Non-SLR investment portfolio
(cid:57)
Issuer-wise composition of non-SLR investments as at March 31, 2020:
Sr.
No.
Issuer
Public sector undertakings
Financial institutions
Banks
Private corporate
Amount(1)
Extent of
private
placement#
3,122.15
1,554.09
6,263.47
3,282.00
4,482.97
944.33
Extent of
“below
investment
grade”
securities#
-
-
-
(` crore)
Extent of
“unrated”
securities#(2)
Extent of
“unlisted”
securities#(3)
-
-
-
-
-
-
27,708.92
23,189.75
1,960.83
15.42
1,695.91
Subsidiaries / Joint ventures(4)
3,826.49
3,826.49
Others
23,520.28
14,993.21
-
-
-
434.32
-
-
Provision held towards depreciation
(978.47)
Total
67,945.81
47,789.87
1,960.83
449.74
1,695.91
# Amounts reported under these columns are not mutually exclusive.
(1) Excludes investments in securities issued by foreign sovereign aggregating to ` 840.94 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.
Investments in debt securities issued by subsidiaries / joint ventures have been classified under private corporate.
(4)
(cid:57)
Issuer-wise composition of non-SLR investments as at March 31, 2019:
Sr.
No.
Issuer
Public sector undertakings
Financial institutions
Banks
Private corporate
Amount(1)
Extent of
private
placement#
669.08
669.08
2,345.29
1,260.38
546.01
230.00
Extent of
“below
investment
grade”
securities#
-
-
-
(` crore)
Extent of
“unrated”
securities#(2)
Extent of
“unlisted”
securities#(3)
-
-
-
-
-
-
29,159.10
25,936.92
25.00
21.23
4,134.39
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Subsidiaries / Joint ventures(4)
Others
3,826.49
13,991.77
3,826.49
4,976.38
-
-
-
1.33
-
-
Provision held towards depreciation
(274.68)
Total
50,263.06
36,899.25
25.00
22.56
4,134.39
# Amounts reported under these columns 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.
Investments in debt securities issued by subsidiaries / joint ventures have been classified under private corporate.
(4)
180 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
(cid:57) Non-performing non-SLR investments:
Particulars
Opening balance
Additions during the year
Reductions during the year
Closing balance
Total provisions held
March 31, 2020
March 31, 2019
(` crore)
88.25
-
5.81
82.44
77.61
92.07
-
3.82
88.25
75.93
• Details of investments category-wise
The details of investments held under the three categories viz. Held for Trading (HFT), Available for Sale (AFS) and Held to
Maturity (HTM) are as under:
(` crore)
Particulars
Government
securities
Other approved
securities
Shares
Debentures and
bonds
Subsidiary / Joint
ventures
Others
Total
As at March 31, 2020
As at March 31, 2019
HFT
AFS
HTM
Total
HFT
AFS
HTM
Total
38,335.31
91,847.40 193,698.14 323,880.85
12,900.81
68,584.58 161,367.62 242,853.01
-
-
-
407.91
-
-
-
407.91
-
-
-
401.60
-
-
-
401.60
447.04
25,920.99
1,420.66
27,788.69
3,524.01
24,530.37
1,420.66
29,475.04
-
-
3,826.49
3,826.49
-
-
3,826.49
3,826.49
8,517.08
27,395.44
10.20
35,922.72
9,005.39
7,547.94
6.60
16,559.93
47,299.43 145,571.74 198,955.49 391,826.66
25,430.21 101,064.49 166,621.37 293,116.07
•
Securities kept as margin
The details of securities that are kept as margin are as under:
Sr.
No.
Particulars
I
Securities kept as margin with Clearing Corporation of India towards:
a)
b)
c)
d)
e)
f)
g)
Collateral and funds management - Securities segment
Collateral and funds management - Tri-party Repo
Default fund - Forex Forward segment
Default fund - Forex Settlement segment
Default fund - Rupee Derivatives (Guaranteed Settlement) segment
Default fund - Securities segment
Default fund - Tri-party repo segment
II
Securities kept as margin with the RBI towards:
a)
b)
c)
Real Time Gross Settlement (RTGS)
Repo transactions
Reverse repo transactions
III
IV
V
Securities kept as margin with National Securities Clearing Corporation of India
(NSCCIL) towards NSE Currency Derivatives segment.
Securities kept as margin with Indian Clearing Corporation Limited towards BSE
Currency Derivatives segment.
Securities kept as margin with Metropolitan Clearing Corporation of India towards MCX
Currency Derivatives segment.
(` crore)
Face value as at March 31,
2020
2019
1,820.00
1,420.00
57,899.98
47,713.88
150.00
110.00
51.05
48.00
65.00
50.00
51.05
43.00
65.00
45.00
54,944.95
54,622.56
22,389.54
107.72
72,411.67
37,216.66
-
309.72
161.00
241.00
13.00
13.00
181
Schedules to the Financial Statements
For the year ended March 31, 2020
•
•
Other investments as at the Balance Sheet date include investments in commercial paper amounting to ` 10,929.00 crore
(previous year: ` 2,568.16 crore) and certificate of deposit amounting to ` 1,473.44 crore (previous year: Nil).
The nature and terms of Rupee IRS outstanding as at March 31, 2019 are set out below:
(` crore, except numbers)
During the year ended March 31 2020, the aggregate book value of investments sold from, and transferred to / from
HTM category was in excess of 5% of the book value of investments held in HTM category at the beginning of the year.
The market value of investments (excluding book value of investments in subsidiaries aggregating to ` 3,826.49 crore and
unquoted units of venture capital funds aggregating to ` 10.20 crore) under HTM category as on March 31, 2020 was
` 201,105.11 crore and was higher than the book value thereof as of that date. In accordance with the RBI guidelines, sale
from, and transfer to / from, HTM category excludes:
a.
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;
b.
c.
d.
e.
f.
sale 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;
direct sales from HTM for bringing down SLR holdings in the HTM category; and
repurchase of State Development Loans (SDLs) by the concerned state government.
12 Derivatives
•
Forward Rate Agreements (FRA) / Interest Rate Swaps (IRS)*:
(` crore)
•
Exchange traded interest rate derivatives
Sr. No. Particulars
i)
ii)
iii)
iv)
v)
vi)
The total notional principal of swap agreements
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
March 31, 2020
364,130.26
4,993.40
March 31, 2019
315,803.02
2,796.54
35.41
60.90%
3,041.17
(203.05)
-
64.62%
1,807.15
88.18
* 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, 2020 and March 31, 2019.
*** Represents outstanding amount of net margin received from customers as at March 31, 2020.
The nature and terms of Rupee IRS outstanding as at March 31, 2020 are set out below:
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Total
Nature
Trading
Trading
Total
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Nos.
Notional principal
Benchmark
Terms
1
4
2,249
2,358
397
307
25.00
1,250.00
INBMK
INCMT
117,220.21 OIS
120,778.99 OIS
23,018.50 MIFOR
15,985.00 MIFOR
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:
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
37,525.32
(` crore, except numbers)
There were no forward rate agreements outstanding as on March 31, 2019.
March 31, 2020 March 31, 2019
(` crore)
Particulars
Sr.
No.
i)
ii)
The total notional principal amount of exchange traded interest rate
derivatives undertaken during the years reported
The total notional principal amount of exchange traded interest rate
Nil
Nil
iii)
The notional principal amount of exchange traded interest rate derivatives
N.A.
iv) Mark-to-market value of exchange traded interest rate derivatives
N.A.
derivatives outstanding
outstanding and not ‘highly effective’
outstanding and not ‘highly effective’
Nil
Nil
N.A.
N.A.
• Qualitative disclosures on risk exposure in derivatives
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 discounted for the interest period of the agreement.
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.
183
The nature and terms of foreign currency IRS as on March 31, 2020 are set out below:
(` crore, except numbers)
Interest rate swaps involve the exchange of interest obligations with the counterparty for a specified period without
Nature
Trading
Trading
Total
Nos.
84
226
Benchmark
Notional
principal
12,786.71 USD LIBOR
30,049.68 USD LIBOR
42,836.39
Terms
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
There were no forward rate agreements outstanding as on March 31, 2020.
182 HDFC Bank Limited Integrated Annual Report 2019-20
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Total
Nos.
1
3
2985
2933
518
329
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
Benchmark
Terms
(` crore, except numbers)
134,283.88 OIS
140,906.49 OIS
28,568.50 MIFOR
16,410.00 MIFOR
321,293.87
Notional
principal
25.00
1,100.00
INBMK
INCMT
Schedules to the Financial Statements
For the year ended March 31, 2020
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 currency
at a certain date in the future, at a specified price. The contract specifies the rate of exchange between one unit of
currency with another.
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
regulatory framework 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.
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 credit risk and market risk limits, within the risk architecture and processes of the Bank.
Derivative policy
The Bank has in place a Derivative Policy which covers various aspects that apply to the functioning of the derivative
business. The derivative business is administered through 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, which forms part of the
Derivative Policy, 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 recommended by the RPMC and approved by 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
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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.
•
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.
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.
• Quantitative disclosure on risk exposure in derivatives
(` crore)
Sr.
No.
Particulars
Currency derivatives
Interest rate derivatives
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
1
Derivatives (notional principal amount)
a) Hedging
b) Trading
2
Marked to market positions
3
4
5
6
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
Maximum of 100*PV01 observed during
the year
a) On hedging
b) On trading
Minimum of 100*PV01 observed during
the year
a) On hedging
b) On trading
-
-
-
-
48,556.58
47,914.10
364,449.58
315,986.71
1,469.15
(1,090.17)
3,562.03
823.55
(663.14)
3,234.07
4,994.01
(5,197.06)
6,734.23
2,797.45
(2,709.26)
4,888.09
-
45.10
-
45.10
-
32.39
-
29.84
-
29.84
-
70.94
-
181.04
-
5.97
-
44.41
-
94.61
-
94.61
-
31.51
(cid:57)
(cid:57)
(cid:57) As at March 31, 2020, the notional principal amount of outstanding foreign exchange contracts classified as trading
amounted to ` 607,919.49 crore (previous year: ` 549,616.22 crore). There were no foreign exchange contracts
classified as hedging outstanding as at March 31, 2020 (previous year: ` 6,569.73 crore).
The notional principal amounts of derivatives reflect the volume of transactions outstanding as at the Balance Sheet
date and do not represent the amounts at risk.
For the purpose of this disclosure, currency derivatives include currency options purchased and sold and cross
currency swaps.
For the purpose of this disclosure, 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.
(cid:57)
(cid:57)
184 HDFC Bank Limited Integrated Annual Report 2019-20
185
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
•
Floating provisions
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, 2020 March 31, 2019
1,451.28
1,451.28
-
-
-
-
1,451.28
1,451.28
Floating provisions shall be 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.
• Divergence in the asset classification and provisioning
In terms of the RBI guidelines, banks are required to disclose the divergence in asset classification and provisioning
consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever the
additional provisioning assessed / additional gross NPAs identified by RBI exceeds the threshold specified by RBI.
The current threshold for provisioning is 10 per cent of the reported profit before provisions and contingencies for the
reference period and that for additional gross NPAs is 15 per cent of the published incremental Gross NPAs for the
reference period. The threshold for the year ended March 31, 2019 was 15 percent of profit after tax and 15 per cent of
the published incremental Gross NPAs respectively.
Based on the above, there was no reportable divergence in asset classification and provisioning for NPAs for the years
ended March 31, 2020 and March 31, 2019.
Schedules to the Financial Statements
For the year ended March 31, 2020
(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.
13 Asset quality
• Movements in NPAs (funded)
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
(` crore)
March 31, 2020 March 31, 2019
0.36%
0.39%
11,224.16
17,563.13
16,137.32
3,604.60
4,278.23
8,254.49
8,606.97
14,382.03
11,764.84
3,251.98
3,932.50
4,580.36
12,649.97
11,224.16
3,214.52
4,885.53
4,557.69
3,542.36
8,009.64
12,677.60
8,254.49
3,325.14
9,107.61
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
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.
•
Technical or prudential write-offs
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:
Particulars
Opening balance of technical / prudential write-offs
Technical / Prudential write-offs during the year
Recoveries made from previously technically / prudentially written-off accounts during
the year
-
-
-
Closing balance of technical / prudential write-offs
-
-
-
-
-
March 31, 2020 March 31, 2019
(` crore)
186 HDFC Bank Limited Integrated Annual Report 2019-20
187
Schedules to the Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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188 HDFC Bank Limited Integrated Annual Report 2019-20
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189
Schedules to the Financial Statements
For the year ended March 31, 2020
•
Details of accounts restructured under Micro, Small and Medium Enterprises (MSME) sector under RBI guidelines issued
in January 2019.
(` crore)
March 31, 2020
March 31, 2019
No. of accounts restructured
Amount outstanding
No. of accounts restructured
Amount outstanding
27
48.11
-
-
•
Details of financial assets sold during the year to securitisation / reconstruction companies (SC / RC) for asset
reconstruction are as under:
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, 2020 March 31, 2019
(` crore)
by the Bank.
24,906
472.99
610.76
218.25
137.77
-
-
-
-
-
-
-
-
-
•
Details of book value of investment in security receipts (SRs) backed by NPAs:
(` crore)
Particulars
(i) Backed by NPAs sold by the Bank as
underlying*
Provision held against (i)
(ii) Backed by NPAs sold by other banks /
financial institutions / non-banking financial
companies as underlying
Provision held against (ii)
Total
SRs issued
within past
5 years
432.36
-
0.43
-
432.79
SRs issued
more than
5 years ago but
within past 8
years
0.19
-
3.15
-
3.34
SRs issued
more than 8
years ago
Total
March 31, 2020
-
-
1.99
-
1.99
432.55
-
5.57
-
438.12
* During the year ended March 31, 2020, contingent provision of ` 185.64 crore was made and held towards investment
in security receipts backed by NPAs sold by the Bank.
Particulars
(i) Backed by NPAs sold by the Bank as
underlying*
Provision held against (i)
(ii) Backed by NPAs sold by other banks /
financial institutions / non-banking financial
companies as underlying
Provision held against (ii)
Total
SRs issued
within past
5 years
190.90
-
0.81
-
191.71
SRs issued
more than
5 years ago but
within past 8
years
-
-
3.44
-
3.44
(` crore)
SRs issued
more than 8
years ago
Total
March 31, 2019
-
-
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 at March 31, 2019.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
•
Details of financial assets sold during the year to companies other than securitisation / reconstruction companies (SC / RC)
for asset reconstruction are as under:
Particulars
(i) No of accounts sold
(ii) Aggregate outstanding
(iii) Aggregate consideration received
March 31, 2020 March 31, 2019
35,018
127.20
28.45
(` crore)
1
121.75
66.27
•
During the years ended March 31, 2020 and March 31, 2019, no non-performing financial assets were purchased
•
Securitised assets as per books of SPVs sponsored by the Bank:
There are no SPVs sponsored by the Bank as at March 31, 2020 and as at March 31, 2019.
•
Detail of Resolution Plan (RP) implemented:
March 31, 2020
(` crore)
No. of borrowers
Amount Outstanding
1
53.31
14. Details of exposures to real estate and capital market sectors, risk category-wise country exposures, factoring
exposures, single / group borrower exposures, unsecured advances and concentration of deposits, advances,
exposures and NPAs
•
Details of exposure to real estate sector
Exposure is higher of limits sanctioned or the amounts outstanding as at the year end.
(of which housing loans eligible for inclusion in priority sector advances)
(26,822.41)
(25,006.05)
(ii) Commercial real estate
42,293.93
35,078.57
(iii)
Investments in Mortgage Backed Securities (MBS) and other securitised
(` crore)
March 31, 2020 March 31, 2019
1,09,166.57
66,415.79
92,051.52
56,967.32
298.59
118.45
39.81
24,158.97
5.63
-
-
23,740.43
23,740.43
1,33,325.54
1,15,791.95
Category
a) Direct exposure
(i) Residential mortgages*
exposures:
(a) Residential
(b) Commercial real estate
(c) Others
b) Indirect exposure
Housing Finance Companies (HFCs)
Total exposure to real estate sector
Fund based and non-fund based exposures on National Housing Bank (NHB) and
24,158.97
*includes loans purchased under the direct loan assignment route
Of the above, exposure to real estate developers as at March 31, 2020 is 0.5% (previous year: 0.5%) of total advances.
190 HDFC Bank Limited Integrated Annual Report 2019-20
191
Schedules to the Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
• Details of capital market exposure
Exposure is higher of limits sanctioned or the amount outstanding as at the year end.
• Details of factoring exposure
The factoring exposure of the Bank as at March 31, 2020 is ` 3,687.86 crore (previous year: ` 3,214.40 crore).
(v) Secured and unsecured advances to stock brokers and guarantees issued on
10,045.51
12,510.28
behalf of stock brokers and market makers
Particulars
1,220.47
2,202.40
Total deposits of twenty largest depositors
45,454.28
56,760.18
Sr.
No.
Particulars
(` crore)
March 31, 2020 March 31, 2019
(i) Direct investments made in equity shares, convertible bonds, convertible
1,625.14
97.52
debentures and units of equity oriented mutual funds the corpus of which is not
exclusively invested in corporate debt
(ii) Advances against shares, bonds, debentures or other securities or on clean basis
172.30
235.82
to individuals for investment in shares (including IPO’s / ESOP’s), convertible bonds,
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
5,145.02
5,098.48
(iv) Advances for any other purposes to the extent secured by collateral security of
787.94
427.15
shares or convertible bonds or convertible debentures or units of equity oriented
mutual funds i.e. where the primary security other than shares / convertible bonds
/ convertible debentures / units of equity oriented mutual funds does not fully cover
the advances
(vi) Loans sanctioned to corporates against the security of shares / bonds / debentures
or other securities or on clean basis for meeting promoter’s contribution to the
equity of new companies in anticipation of raising resources
(vii) Bridge loans to companies against expected equity flows / issues
(viii) Underwriting commitments taken up in respect of primary issue of shares or convertible
bonds or convertible debentures or units of equity oriented mutual funds
(ix) Financing to stock brokers for margin trading
-
-
-
-
-
-
(x) All exposures to venture capital funds (both registered and unregistered)
10.55
6.95
Total exposure to capital market
19,006.93
20,578.60
• Details of risk category wise country exposure
Risk Category
Insignificant
Low
Moderately low
Moderate
Moderately high
High
Very high
Total
March 31, 2020
March 31, 2019
Exposure (net)
Provision held
Exposure (net)
Provision held
(` crore)
19,459.44
10,448.08
190.19
359.70
32.59
0.32
-
30,490.32
-
-
-
-
-
-
-
-
31,262.20
11,200.11
202.27
305.98
43.27
-
-
43,013.83
-
-
-
-
-
-
-
-
• Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the Bank
The RBI has prescribed single and group borrower exposure limits linked to a bank’s eligible capital base. 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, 2020 and March 31, 2019 the Bank was within the limits prescribed by the RBI.
• Unsecured advances
Advances for which intangible collaterals such as rights, licenses, authority, trademarks, patents, etc. are charged in
favour of the Bank in respect of projects financed by the Bank, are reckoned as unsecured advances under Schedule 9
of the Balance Sheet in line with extant RBI guidelines. There are no such advances outstanding as at March 31, 2020
(previous year: Nil).
•
Inter-bank Participation with risk sharing
The aggregate amount of participation issued by the Bank and reduced from advances as per regulatory guidelines as at
March 31, 2020 was ` 4,543.53 crore (previous year: ` 30,734.43 crore).
• Concentration of deposits, advances, exposures and NPAs
a) Concentration of deposits
(` crore, except percentages)
March 31, 2020 March 31, 2019
Percentage of deposits of twenty largest depositors to total deposits of
the Bank
4.0%
6.1%
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, 2020 March 31, 2019
178,942.74
133,373.25
11.6%
10.6%
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
(` crore, except percentages)
March 31, 2020 March 31, 2019
Total exposure to twenty largest borrowers / customers
194,311.35
144,610.12
Percentage of exposure of twenty largest borrowers / customers to total
exposure of the Bank on borrowers / customers
12.0%
11.1%
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
March 31, 2020 March 31, 2019
Total gross exposure to top four NPA accounts
1,271.99
730.54
(` crore)
192 HDFC Bank Limited Integrated Annual Report 2019-20
193
Schedules to the Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
e) Sector-wise advances
Sector
Sr.
No.
(` crore)
Other fixed assets includes amount capitalised relating to software having useful life of five years. Details regarding the same are
March 31, 2020
March 31, 2019
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
A Priority sector
1 Agriculture and allied
82,326.72
3,527.34
4.28% 74,272.49
3,185.41
4.29%
activities
2 Advances to industries
43,310.54
399.22
0.92% 33,559.14
289.74
0.86%
eligible as priority sector
lending
3 Services
100,504.02
1,720.75
1.71%
83,260.85
1,207.50
4 Personal loans
32,181.93
84.97
0.26%
29,558.28
26.02
Sub-total (A)
258,323.21
5,732.28
2.22% 220,650.76
4,708.67
B Non Priority sector
1.45%
0.09%
2.13%
1
Agriculture and allied
23,112.31
75.21
0.33% 8,631.99
181.68
2.10%
activities
Industry
Services
274,581.39
2,777.47
1.01% 201,476.02
2,252.89
190,097.21
2,307.48
1.21% 183,403.18
1,808.92
Personal loans
256,612.68
1,666.94
0.65% 213,172.97
2,183.75
2
3
4
Sub-total (B)
744,403.59
6,827.10
0.92% 606,684.16
6,427.24
Total (A) + (B)
1,002,726.80
12,559.38
1.25% 827,334.92
11,135.91
• Details of Priority Sector Lending Certificates (PSLCs)
1.12%
0.99%
1.02%
1.06%
1.35%
(` crore)
Type of PSLCs
Agriculture
Small and Marginal farmers
Micro Enterprises
General
Total
For the year ended
March 31, 2020
For the year ended
March 31, 2019
PSLC bought
during the year
PSLC sold
during the year
PSLC bought
during the year
PSLC sold
during the year
10,341.50
42,077.25
5,666.50
6,433.00
-
-
3,000.00
13,750.00
5,572.00
31,294.00
7,338.75
1,750.00
500.00
10.00
-
11,171.25
64,518.25
16,750.00
45,954.75
11,681.25
194 HDFC Bank Limited Integrated Annual Report 2019-20
15 Other fixed assets
tabulated below:
Particulars
Cost
As at March 31 of the previous year
Additions during the year
Deductions during the year
Total (a)
Depreciation
As at March 31 of the previous year
Charge for the year
On deductions during the year
Total (b)
Net value (a-b)
16 Other assets
same is as follows:
Particulars
Deferred tax asset arising out of:
Loan loss provisions
Employee benefits
Depreciation
Others
Total (a)
Deferred tax liability (b)
Deferred tax asset (net) (a-b)
Deferred tax assets
Accounts receivable
Deposits & amounts paid in advance
Advances for capital assets
Residual items
Total
•
Other assets include deferred tax asset (net) of ` 3,835.45 crore (previous year: ` 4,352.14 crore). The break-up of the
•
Key items under “Others” in Other assets are as under:
Particulars
March 31, 2020 March 31, 2019
Deposit with NABARD / SIDBI / NHB - PSL shortfall
Unrealised gain on foreign exchange and derivative contracts*
*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.
40,444.46
34,837.94
March 31, 2020 March 31, 2019
3,236.57
2,902.29
2,902.29
334.29
(0.01)
2,098.76
375.01
(0.01)
2,473.76
762.81
March 31, 2020 March 31, 2019
2,600.56
145.41
41.25
1,048.23
3,835.45
-
3,498.19
201.19
14.13
638.63
4,352.14
-
3,835.45
4,352.14
9,196.86
19,006.28
3,835.45
5,087.55
2,578.18
736.63
3.51
(` crore)
2,391.59
510.70
-
-
1,748.61
350.15
2,098.76
803.53
(` crore)
(` crore)
10,832.25
13,261.24
4,352.14
4,301.76
1,773.70
314.50
2.35
195
Schedules to the Financial Statements
For the year ended March 31, 2020
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Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
18 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
March 31, 2020 March 31, 2019
471.12
387.56
(255.59)
603.09
603.09
517.94
(386.88)
734.15
(` crore)
March 31, 2020 March 31, 2019
314.01
84.42
398.43
398.43
46.92
445.35
c) Provision pertaining to fraud accounts reported during the year
Particulars
No. of frauds reported
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)
March 31, 2020 March 31, 2019
5,484
498.44
7,580
222.60
168.88
168.88
-
431.42
431.42
-
d) Description of contingent liabilities
Sr. No. Contingent liability*
1
2
3
4
5
Claims against the Bank not
acknowledged as debts -
taxation
Claims against the Bank not
acknowledged as debts -
others
Liability on account of
forward exchange and
derivative contracts
Guarantees given on behalf of
constituents, acceptances,
endorsements and
other obligations
Other items for which the
Bank is contingently liable
Brief description
The Bank is a party to various taxation matters in respect of which appeals are pending.
The Bank expects the outcome of the appeals to be favorable based on decisions on
similar issues in the previous years by the appellate authorities, based on the facts of the
case and taxation laws.
The Bank is a party to various legal proceedings in the normal course of business.
The Bank does not expect the outcome of these proceedings to have a material adverse
effect on the Bank’s financial conditions, results of operations or cash flows.
The Bank enters into foreign exchange contracts, currency options, forward rate
agreements, currency swaps and interest rate swaps with inter-bank participants on
its own account and for customers. Forward exchange contracts are commitments to
buy or sell foreign currency at a future date at the contracted rate. Currency swaps are
commitments to exchange cash flows by way of interest / principal in one currency
against another, based on predetermined rates. Interest rate swaps are commitments
to exchange fixed and floating interest rate cash flows. The notional amounts of
financial instruments such as foreign exchange contracts and derivatives provide a
basis for comparison with instruments recognised on the Balance Sheet but do not
necessarily indicate the amounts of future cash flows involved or the current fair value
of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price
risks. The derivative instruments become favorable (assets) or unfavorable (liabilities) as
a result of fluctuations in market rates or prices relative to their terms.
As a part of its commercial banking activities, the Bank issues documentary credit and
guarantees on behalf of its customers. Documentary credits such as letters of credit
enhance the credit standing of the Bank’s customers. Guarantees generally represent
irrevocable assurances that the Bank will make payments in the event of the customer
failing to fulfill its financial or performance obligations.
These include: a) Credit enhancements in respect of securitised-out loans; b) Bills
rediscounted by the Bank; c) Capital commitments; d) Underwriting commitments;
e) Investment purchases pending settlement; f) Amount transferred to the RBI under the
Depositor Education and Awareness Fund (DEAF).
*Also refer Schedule 12 - Contingent liabilities
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196 HDFC Bank Limited Integrated Annual Report 2019-20
197
17.49
8.78%
4.29%
1.78%
3.73%
2.01%
0.24
1.26%
1.25%
0.36%
72.00%
0.23
1.36%
1.35%
0.39%
71.36%
March 31, 2020 March 31, 2019
8.93%
4.35%
1.59%
3.58%
1.90%
16.87
Schedules to the Financial Statements
For the year ended March 31, 2020
19 Business ratios / information
Particulars
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
Provision coverage ratio8
Definitions of certain items in Business ratios / information:
1 Working funds is the daily average of total assets during the year.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Other expenditure includes commission paid to sales agents amounting to ` 3,154.21 crore (previous year: ` 2,805.61 crore),
The break-up of provisions and contingencies included in the Profit and Loss Account is given below:
(` crore)
23 Other expenditure
exceeding 1% of the total income of the Bank.
24 Provisions and contingencies
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*
Total
(previous year: Nil).
25 Employee benefits
Gratuity
Particulars
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
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
Reconciliation of opening and closing balance of the present value of the defined
Reconciliation of opening and closing balance of the fair value of the plan assets
March 31, 2020 March 31, 2019
9,833.15
516.69
9,083.32
7.50
795.97
2,255.60
22,492.23
12,129.61
(1,008.12)
6,394.11
4.71
648.38
502.88
18,671.57
March 31, 2020 March 31, 2019
(` crore)
617.95
39.22
88.12
(47.46)
(8.46)
36.50
725.87
501.71
35.58
89.51
(47.46)
(64.41)
-
514.93
514.93
(725.87)
(210.94)
39.22
88.12
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
199
2 Operating profit is net profit for the year before provisions and contingencies and profit / (loss) on sale of building and other
fixed assets (net).
*Includes provisions for tax, legal and other contingencies ` 2,252.38 crore (previous year: ` 500.29 crore), provisions /
(write-back) for securitised-out assets ` 1.14 crore (previous year: ` 2.59 crore) and standard restructured assets ` 2.08 crore
3
4
“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.
5 Gross advances are net of bills rediscounted and interest in suspense.
6
7
Net NPAs are non-performing assets net of specific provisions, ECGC claims received, provisions for funded interest term
loans classified as NPAs and provisions in lieu of diminution in the fair value of restructured assets classified as NPAs.
Net advances are equivalent to gross advances net of specific loan loss provisions, ECGC claims received, provision for
funded interest term loans classified as NPA and provisions in lieu of diminution in the fair value of restructured assets.
8
Provision coverage ratio does not include assets written-off.
20
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, 2020 amounting to ` 147.09 crore (previous year: ` 408.27 crore).
21 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, 2020 and March 31, 2019, 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, 2020 was ` 221.26 crore (previous year: ` 223.25 crore)
and outstanding servicing liability was ` 0.03 crore (previous year: ` 0.03 crore).
22 Other income
• Commission, exchange and brokerage income
(cid:57) Commission, exchange and brokerage income is net of correspondent bank charges.
(cid:57) Commission income for the year ended March 31, 2020 includes fees of ` 2,182.76 crore (previous year: ` 1,473.37
crore) in respect of life insurance business and ` 272.25 crore (previous year: ` 222.68 crore) is in respect of general
insurance and health insurance business, of which ` 1,012.64 crore (previous year: ` 554.82 crore) is for displaying
publicity materials at the Bank’s branches / ATMs.
• Miscellaneous income
Miscellaneous income includes recoveries from written-off accounts amounting to ` 2,253.45 crore (previous year:
` 1,430.81 crore).
198 HDFC Bank Limited Integrated Annual Report 2019-20
Schedules to the Financial Statements
For the year ended March 31, 2020
Particulars
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, 2020 March 31, 2019
(35.58)
92.44
184.20
(28.83)
104.45
(32.13)
(2.67)
77.95
43.84
89.51
6.60% per annum
7.64% per annum
7.00% per annum
7.00% 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
are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
Total
% of fair value to total plan assets
as at
March 31, 2020
25.55%
30.31%
41.03%
3.11%
100.00%
as at
March 31, 2019
23.79%
28.96%
45.03%
2.22%
100.00%
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
2020
514.93
725.87
(210.94)
(64.41)
(8.46)
Years ended March 31,
2019
501.71
617.96
2018
416.40
542.97
2017
355.57
488.00
(116.25)
(126.57)
(132.43)
11.70
7.12
0.13
10.44
32.44
35.48
(` crore)
2016
287.93
390.47
(102.54)
(13.69)
16.24
(` crore)
Particulars
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
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
March 31, 2020 March 31, 2019
0.88
(12.57)
0.83
(14.65)
0.28
-
9.51
9.51
(64.15)
(54.64)
4.11
0.67
(1.10)
4.19
7.87
1.39
7.72
0.48
-
21.95
21.95
(69.54)
(47.59)
5.10
0.75
(1.86)
2.72
6.71
2.34
14.03
6.60% per annum
7.00% per annum
7.00% per annum
7.64% 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
are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
Total
% of fair value to total plan assets
as at
March 31, 2020
20.81%
17.14%
62.05%
100.00%
as at
March 31, 2019
8.49%
73.88%
17.63%
100.00%
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
200 HDFC Bank Limited Integrated Annual Report 2019-20
March 31, 2020 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
2020
9.51
64.15
(54.64)
0.28
9.06
Years ended March 31,
2019
21.95
69.54
(47.59)
0.48
2018
31.30
73.06
(41.76)
0.59
3.32
3.95
2017
36.16
73.55
(37.39)
0.39
4.65
69.54
4.11
0.67
(14.65)
9.06
(4.58)
64.15
21.95
1.10
73.06
5.10
0.75
(12.57)
3.32
(0.12)
69.54
31.30
1.86
(` crore)
2016
38.38
70.88
(32.50)
1.43
17.35
201
Schedules to the Financial Statements
For the year ended March 31, 2020
Provident fund
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, 2020 (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, 2020 March 31, 2019
6.60% per annum
7.64% per annum
8.50% per annum
8.65% per annum
The Bank does not have any unfunded defined benefit plan. The Bank contributed ` 326.22 crore (previous year: ` 247.95 crore)
to the provident fund, ` 3.79 crore (previous year: ` 3.27 crore) to the National Pension Scheme and ` 75.41 crore (previous year:
` 80.66 crore) to the superannuation plan.
The Bank has implemented the judgement of the Hon’ble Supreme Court in Swami Vivekananda Vidyamandir on clubbing
of identified allowances with basic salary up to the maximum salary ceiling specified in the Employees Provident Fund and
Miscellaneous Provisions Act 1952 with effect from April 2019.
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Bank
is given below:
Particulars
Privileged leave
Sick leave
Total actuarial liability
Assumptions
Discount rate
Salary escalation rate
(` crore)
March 31, 2020 March 31, 2019
321.30
66.99
388.29
353.37
73.94
427.31
6.60% per annum
7.00% per annum
7.64% 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.
26 Disclosures on remuneration
Qualitative Disclosures
A.
Information relating to the bodies that oversee remuneration
Name and composition
The Board of Directors of the Bank has constituted the Nomination and Remuneration Committee (hereinafter, the ‘NRC’)
for overseeing and governing the compensation policies of the Bank. The NRC is comprised of four non-executive directors
as of March 31, 2020. 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.
Mandate of the NRC
The primary mandate of the NRC is to oversee the implementation of compensation policies of the Bank. The NRC
periodically reviews the overall compensation policy of the Bank with a view to attract, retain and motivate employees.
In this capacity it is required to review and approve the design of the total compensation framework, including compensation
strategy programs and plans, on behalf of the Board of Directors. The compensation structure and pay revision for Whole
Time Directors is also approved by the NRC. The NRC co-ordinates with the RPMC to ensure that compensation is aligned
with prudent risk taking.
External Consultants
The Bank engaged with AON in the area of compensation market benchmarking and executive compensation. The Bank
also engaged with Towers Willis Watson in the area of Long Term Incentives.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Scope of the Bank’s Remuneration Policy
The Remuneration Policy of the Bank includes within its scope all business lines, all permanent staff in the Bank’s domestic as
well as international offices. The principles articulated in the compensation policy are applicable uniformly across the Bank.
However any statutory / regulatory provisions applicable in overseas locations 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 Remuneration Policy. The number of employees covered under the compensation policy was 1,16,726 as at
March 31, 2020 (previous year: 97,805).
B.
Information relating to the design and structure of remuneration processes and the key features and objectives
of remuneration policy
I.
Key Features and Objectives of Remuneration Policy
The Bank’s 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 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.
Review of Remuneration Policy of the Bank
The Remuneration Policy of the Bank was reviewed by the NRC during the year ended March 31, 2020 and the
following material change was incorporated therein:
(cid:57)
The ESOPs granted subsequent to April 1, 2019 vest no faster than on a pro rata basis.
(cid:57) Assessment of performance of employees at the time of vesting ESOPs shall not be considered for ESOPs
(cid:57) Remuneration of the Group Heads is placed before the Board of Directors for approval with effect from the
vesting effective October 19, 2019.
financial year commencing on April 1, 2019.
II. Design and Structure of Remuneration
a) Fixed Pay
factors including industry practice.
Elements of Fixed Pay
The NRC ensures that the fixed component of the compensation is reasonable, taking into account all relevant
The fixed pay component of the Bank’s compensation structure typically consists of elements such as base
salary, allowances, perquisites and retirement 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.
202 HDFC Bank Limited Integrated Annual Report 2019-20
203
Schedules to the Financial Statements
For the year ended March 31, 2020
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)
(b)
(c)
(d) compliance with all statutory obligations.
fair compensation given the role complexity and size;
fair compensation given the individual’s skill, competence, experience and market pay position;
sufficient contribution to post retirement benefits; and
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 are 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.
b) Variable Pay
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:
• Where the variable pay constitutes 50% or more of the fixed pay, a portion of the same is deferred as per
the schedule mentioned in the table below:
Tranche
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Portion of Variable Pay Timelines
60% Payable effective April 1 of the financial year immediately following the
performance year.
reference performance year.
13.33% Payable effective April 1 of the third financial year following the reference
performance year.
13.33% Payable effective April 1 of the fourth financial year following the
reference performance year.
•
The Bank has devised appropriate malus and claw back clauses as risk mitigants for any negative
contributions 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:
•
Annual bonus plan
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:
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
(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.
Tranche
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Portion of Variable Pay Timelines
60% Payable effective April 1 of the financial year immediately following
the performance year.
13.33% Payable effective April 1 of the second financial year following the
reference performance year.
13.33% Payable effective April 1 of the third financial year following the
reference performance year.
13.33% 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.
•
Performance-linked Plans (PLPs)
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 financial year to provide for any unforeseen performance risks. Employees who are on the PLPs
are excluded from the Annual Bonus Plan.
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 the
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 only in the form of Employee Stock Options.
d) Employee Stock Option Plan (‘ESOP’s)
The Bank considers ESOPs as a vehicle to create a balance between short term rewards and long term sustainable
value creation. ESOPs play a key role in the attraction and retention of key talent. The Bank grants equity share
options to its Whole Time Directors and other employees above a certain grade. All plans for grant of options
are framed in accordance with the SEBI guidelines, 1999 as amended from time to time and are approved by
the shareholders of the Bank. These plans provide for the grant of options post approval by the NRC.
The grant of options is reviewed and approved by the NRC. The NRC grants options after considering parameters
such as the incumbent’s grade and performance rating, and such other factors as may be deemed appropriate
by the NRC. Equity share options granted to the Whole Time Directors are subject to the approval of the NRC,
the Board and the RBI. With effect from April 1, 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. The ESOPs granted subsequent to April 1, 2019 vest no faster than on a pro rata basis. Vesting for all
ESOPs granted subsequent to April 1, 2017 was based on the assessment of performance of the employee at
the time of vesting. During the year ended March 31, 2020, the Bank reviewed its policy of conditional vesting
13.33% Payable effective April 1 of the second financial year following the
c) Guaranteed Bonus
204 HDFC Bank Limited Integrated Annual Report 2019-20
205
Schedules to the Financial Statements
For the year ended March 31, 2020
for employee Stock Options. For this purpose the Bank commissioned the services of Towers Willis Watson, a
consulting firm in the area of Reward and Benefits. Basis the recommendations of the firm, to the NRC, the Bank
discontinued the practice of conditional vesting for employee stock options.
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 at 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.
Pay Increment / Pay Revision
The Bank strives to ensure external competitiveness as well as internal equity without diluting the overall focus on
optimising cost. In order to enhance the Bank’s external competitiveness, it participates in an annual salary survey of
the banking sector to understand key market trends as well as get insights on relative market pay position compared
to peers. The Bank endeavors to ensure that most employees progress to the median of the market in terms of fixed
pay over time. This coupled with key internal data indicators like performance score, job family, experience, job grade
and salary budget form the basis of decision making on revisions in fixed pay.
Increments in fixed pay for majority of the employee population are generally undertaken once every financial year.
However, promotions, confirmations and change in job dimensions could also lead to a change in the fixed pay during
other times of the financial year.
The Bank also makes salary corrections and adjustments during the financial 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.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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
financial year to provide for any unforeseen performance risks. Employees who are on the PLPs are excluded from
the Annual Bonus Plan.
(b) Annual bonus plan:
The Bank takes into consideration the fact that a portion of the Bank’s profits are directly attributable to various types
of risks the Bank is exposed to such as credit risk, market risk, operational risk and other quantifiable risks.
The framework developed by the Bank in order to arrive at the quantum of bonus pool is based on the performance
of the Bank and profitability. The annual bonus is distributed based on business unit and individual performance.
The business unit performance is based on factors such as growth in revenue, growth in profit, cost to income ratio
and achievement vis-à-vis plans and key objectives. Bonus pay out for an individual employee in a particular grade is
linked to the performance rating of the employee and subject to meeting the Bank’s standards of ethical conduct.
The Bank has devised appropriate malus and claw back clauses as a risk mitigant for any negative contributions of the
Bank and / or relevant line of business in any year for Whole Time Directors. Under the malus clause the incumbent
foregoes the vesting of the deferred variable pay in full or in part. Under the claw back clause the incumbent is
obligated to return all the tranches of bonus payout pertaining to the reference performance year. The deferred bonus
is paid out post review and approval by the NRC.
The bonus for Whole Time Directors is capped at 70% of the fixed pay in a year. The variable pay for Whole Time
Directors is approved by the NRC as well as the Board of Directors of the Bank and is subject to the approval of the RBI.
The variable pay component 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:
Portion of Variable Pay Timelines
60% Payable effective April 1 of the financial year immediately following the
13.33% Payable effective April 1 of the second financial year following the reference
13.33% Payable effective April 1 of the third financial year following the reference
13.33% Payable effective April 1 of the fourth financial year following the reference
performance year.
performance year.
performance year.
performance year.
Tranche
Tranche 1
Tranche 2
Tranche 3
Tranche 4
206 HDFC Bank Limited Integrated Annual Report 2019-20
207
Schedules to the Financial Statements
For the year ended March 31, 2020
(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) Business Growth - This includes growth in advances and deposits;
b) Profitability - This includes growth in profit after tax;
c) Asset Quality - Gross NPA, Net NPA and % of Restructured assets to net advances;
d)
e) Shareholder value creation - Return on equity; and
f)
Financial Inclusion - Growth in number of households covered, growth in the value of loans disbursed under this
category and achievement against priority sector lending targets.
Financial Soundness - Capital Adequacy Ratio and Tier I capital ratio;
Most of the above parameters are evaluated in two steps:
A. Achievement against the plans of the Bank; and
B. Achievement against the performance of peers.
Apart from the factors related to business growth there is also a key qualitative factor such as regulatory compliance.
Compliance is the key qualitative factor that acts as the moderator in the entire organisation evaluation process. A low
score on compliance can significantly moderate the other performance measures and depending on severity may even
nullify their impact.
While the above parameters form the core evaluation parameters for the Bank each of the business units are measured on
the following from a remuneration standpoint:
Increase in plan over the previous year;
a)
b) Actual growth in revenue over previous year;
c) Growth in net revenue (%);
d) Achievement of net revenue against plan (%);
e) Actual profit before tax;
f)
g)
h) Achievement of key strategic initiatives.
Growth in profit before tax compared to the previous year;
Improvement in cost to income over the previous year; and
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:
•
Annual Bonus Plan
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.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
The proportion of variable pay to fixed pay increases with job band. Employees on the annual bonus plan are not
part of the PLPs.
•
Performance-linked Plans (PLPs)
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 financial year to provide for any unforeseen performance risks. All PLP plans are based on balanced
scorecard framework.
E. Description of the ways in which the Bank seeks to adjust remuneration to take account of the longer term
performance
A discussion of the Bank’s policy on deferral and vesting of variable remuneration and criteria for adjusting deferred
remuneration before vesting and after vesting is given below:
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:
• Where the variable pay constitutes 50% or more of the fixed pay, an appropriate portion thereof is deferred and vests
as per the schedule mentioned in the table below:
Tranche
Portion of Variable Pay Timelines
Tranche 1
Tranche 2
Tranche 3
Tranche 4
60% Payable effective April 1 of the financial year
immediately
following the
performance year.
13.33% Payable effective April 1 of the second financial year following the reference
performance year.
13.33% Payable effective April 1 of the third financial year following the reference
performance year.
13.33% Payable effective April 1 of the fourth financial year following the reference
performance year.
•
The Bank has devised appropriate malus and claw back clauses as risk mitigants for any negative contributions of the
Bank and / or relevant line of business in any year.
(cid:57) Malus clause
Under the malus clause the incumbent foregoes the vesting of the deferred variable pay in full or in part. In the
event there is a deterioration in specific performance criteria (such as criteria relating to profit or asset quality)
that are laid down by the NRC, then the NRC would review the deterioration in the performance taking into
consideration the macroeconomic environment as well as internal performance indicators and accordingly
decide whether any part of the deferred tranche pertaining to the reference 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.
208 HDFC Bank Limited Integrated Annual Report 2019-20
209
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
•
Employee stock option plan
This is to reward for contribution of employees in creating a long term, sustainable earnings and enhancing shareholder
value. Only employees in a certain job band and with a specific performance rating are eligible for stock options.
Performance is the key criteria for granting stock options.
Quantitative disclosures
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. Subject
March 31, 2020
March 31, 2019
(a)
Number of meetings held by
the
Number of meetings: 9
Number of meetings: 11
NRC during the financial year and
remuneration paid to its members
Remuneration paid: ` 0.17 crore
Remuneration paid: ` 0.17 crore
(b) (i)
Number of employees having received a
32 employees
33 employees
variable remuneration award during the
financial year
(b) (ii)
Number and total amount of sign-on
1,90,000 stock options granted as
4,65,000 stock options granted as
awards made during the financial year
sign-on awards during the year ended
sign-on awards during the year ended
March 31, 2020.
March 31, 2019.
(b) (iii) Number and total amount of guaranteed
None
bonuses awarded during the financial
(b) (iv) Details of severance pay, in addition to
None
accrued benefits, if any
year
forms
(c) (i)
Total amount of outstanding deferred
Total amount of outstanding deferred
Total amount of outstanding deferred
remuneration, split into cash, shares
remuneration (cash bonus) was ` 5.92
remuneration (cash bonus) was ` 1.91
and share-linked instruments and other
crore.
(c) (ii)
Total amount of deferred remuneration
` 2.64 crore
` 2.28 crore
paid out in the financial year
None
None
crore.
Schedules to the Financial Statements
For the year ended March 31, 2020
Employees other than Whole Time Directors
The Bank has formulated the following variable pay plans:
•
Annual bonus plan
The quantum of variable payout is a function of the performance of the Bank, performance of the individual employee,
job band of the employee and the functional category. Basis these key determinants and due adjustment for risk
alignment, a payout matrix for variable pay is developed. Market trends for specific businesses / functions along with
inputs from compensation surveys may also be used in finalising the payout.
Bonus pools are designed to meet specific business needs therefore resulting in differentiation in both the quantum
and the method of payout across functions. Typically higher levels of responsibility receive a higher proportion of
variable pay vis-à-vis fixed pay. The Bank ensures that the time horizon for risk is assessed and the deferment period,
if any, for bonus is set accordingly. Employees on the annual bonus plan are not part of the PLPs.
The following is taken into account while administering the annual bonus:
(cid:57)
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.
Tranche
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Portion of Variable Pay Timelines
60% Payable effective April 1 of the financial year immediately following the
performance year.
13.33% Payable effective April 1 of the second financial year following the reference
performance year.
13.33% Payable effective April 1 of the third financial year following the reference
performance year.
13.33% 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.
•
Performance-linked Plans (PLPs)
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 financial 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.
•
Annual bonus plan
These are paid to reward performance for a given financial year. This covers all employees (excluding employees
under PLPs). 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.
•
Performance-linked Plans (PLPs)
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 financial year to provide for any unforeseen performance risks.
210 HDFC Bank Limited Integrated Annual Report 2019-20
211
Schedules to the Financial Statements
For the year ended March 31, 2020
Sr. No. Subject
March 31, 2020
March 31, 2019
(d)
Breakdown of amount of remuneration
awards for the financial year to show
fixed and variable, deferred and non-
deferred
` 67.48 crore (Fixed*)
` 66.59 crore (Fixed*)
` 18.89 crore (variable pay pertaining
to financial year ended March 31,
2019, in relation to employees where
there was no deferment of pay)
` 13.69 crore (variable pay pertaining
to financial year ended March 31,
2018, in 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.
The approval of the RBI on the
variable pay 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: 40,14,000
(unadjusted for share split)
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.
The approval of the RBI on the
variable pay of the Bank’s Whole Time
Directors for the years ended March
31, 2018 and 2019 has since been
received.
in
relation
` 9.00 crore (variable pay pertaining
to financial year ended March 31,
2018,
to employees
where there was a deferment of
pay), of which ` 5.40 crore was
and
variable
non-deferred
` 3.60 crore was deferred variable pay.
pay
in
relation
` 9.42 crore (variable pay pertaining
to financial year ended March 31,
2019
to employees
where there was a deferment of
pay), of which ` 6.36 crore was
non-deferred
and
variable
` 3.06 crore was deferred variable pay.
pay
Number of stock options granted
during the financial year: 59,58,200
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, 2020 is awaited.
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 has since been
received.
(e) (i)
(e) (ii)
(e) (iii)
Total amount of outstanding deferred
remuneration and retained remuneration
exposed to ex-post explicit and / or
implicit adjustments
Total amount of reductions during the
financial year due to ex-post explicit
adjustments
Total amount of reductions during the
financial year due to ex-post implicit
adjustments
Total amount of outstanding deferred
remuneration (cash bonus) was ` 5.92
crore.
Total amount of outstanding deferred
remuneration (cash bonus) was ` 1.91
crore.
Nil
Nil
Nil
Nil
* Excludes gratuity benefits, since the same is computed at Bank level.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
27. Segment reporting
Business segments
Business segments have been identified and reported taking into account, the target customer profile, the nature of products
and services, the differing risks and returns, the organisation structure, the internal business reporting system and the guidelines
prescribed by RBI. The Bank operates in the following segments:
a) Treasury
The treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money market
borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and
derivative contracts.
b) Retail banking
The retail banking segment serves retail customers through 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.
212 HDFC Bank Limited Integrated Annual Report 2019-20
213
Schedules to the Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Segment reporting for the year ended March 31, 2020 is given below:
Segment reporting for the year ended March 31, 2019 is given below:
3
4
5
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
Segment results
3,462.77
12,942.46
14,121.09
7,784.63
38,310.95
Business segments:
Particulars
Sr.
No.
1
Segment revenue
2 Unallocated revenue
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
(` crore)
Total
Business segments:
Particulars
Sr.
No.
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
26,558.44
107,999.94
61,134.45
19,033.41
214,726.24
1
Segment revenue
23,576.48
89,222.34
54,563.54
15,299.43
182,661.79
2.19
76,654.96
138,073.47
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)
1,703.79
10,349.84
26,257.32
457,240.91
484,270.74
520,567.01
60,500.57 1,522,579.23
7,932.03
1,530,511.26
102,012.09
907,258.10
317,628.87
5,032.43 1,331,931.49
27,593.74
1,359,525.23
15 Capital employed (9) - (12) (Segment assets -
355,228.82
(422,987.36)
202,938.14
55,468.14
190,647.74
Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
(19,661.71)
170,986.03
15 Capital employed (9) - (12)
287,327.36
(303,504.04)
136,862.59
45,497.65
166,183.56
18 Capital expenditure
43.29
1,381.75
119.49
80.50
1,625.03
19 Depreciation
32.79
938.71
126.71
97.64
1,195.85
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
20 Provisions for non - performing assets / others*
7.50
6,632.33
3,756.44
1,725.92
12,122.19
17 Total (15) + (16)
21 Unallocated other provisions*
* Represents material non-cash charge other than depreciation and taxation.
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
20.20
(` crore)
Domestic
International
136,903.00
1,170.47
1,481,234.90
49,276.36
1,623.31
1.72
18 Capital expenditure
93.67
1,149.97
192.62
141.93
1,578.19
19 Depreciation
26.31
912.24
104.52
97.04
1,140.11
20 Provisions for non - performing assets / others*
(0.20)
4,608.34
1,689.09
1,247.44
7,544.67
21 Unallocated other provisions*
* Represents material non-cash charge other than depreciation and taxation.
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
214 HDFC Bank Limited Integrated Annual Report 2019-20
2 Unallocated revenue
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
3
4
5
6 Unallocated expenses
7
Income tax expense (including deferred tax)
8 Net profit (5) - (6) - (7)
10 Unallocated assets
11 Total assets (9) + (10)
13 Unallocated liabilities
14 Total liabilities (12) + (13)
Segment results
1,305.76
11,796.27
14,224.12
6,791.53
34,117.68
9
Segment assets
348,766.21
428,790.92
408,749.72
50,854.71 1,237,161.56
12 Segment liabilities
61,438.85
732,294.96
271,887.13
5,357.06 1,070,978.00
(` crore)
Total
52.78
66,116.65
116,597.92
1,918.04
11,121.50
21,078.14
7,379.15
1,244,540.71
24,356.39
1,095,334.39
(16,977.24)
149,206.32
Domestic
International
115,358.96
1,238.96
1,210,826.50
33,714.21
1,576.84
1.35
5.41
(` crore)
215
Schedules to the Financial Statements
For the year ended March 31, 2020
28. Liquidity coverage ratio
Quantitative information on Liquidity Coverage Ratio (LCR) for year ended March 31, 2020 is given below:
(` crore)
Quarter ended
March 31, 2020
Quarter ended
December 31, 2019
Quarter ended
September 30, 2019
Quarter ended
June 30, 2019
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
281,400.84
276,928.43
253,440.66
225,515.60
679,608.08
60,624.61
663,427.11
61,722.61
613,920.13
56,976.14
580,808.20
53,857.85
Particulars
1
2
Total High Quality Liquid Assets
(HQLA)
Retail deposits and deposits from
small business customers, of
which:
(i)
Stable deposits
146,723.83
7,336.19
92,402.01
4,620.11
88,317.44
4,415.87
84,459.31
4,222.96
(ii)
Less stable deposits
532,884.25
53,288.42
571,025.10
57,102.50
525,602.69
52,560.27
496,348.89
49,634.89
3
Unsecured wholesale funding, of
which:
304,344.42 172,804.61 281,082.43
161,380.77
266,629.81
154,200.50
251,528.82
144,006.73
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
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:
Quarter ended
March 31, 2019
Quarter ended
December 31, 2018
Quarter ended
September 30, 2018
Quarter ended
June 30, 2018
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
Total
unweighted
value
(average)*
Total
weighted
value
(average)*
202,599.15
188,250.76
178,276.15
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
(i) Operational deposits (all
42,366.96
10,444.47
34,686.67
8,597.58
31,496.13
7,800.30
34,903.88
8,651.04
(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
counterparties)
(all counterparties)
(ii) Non-operational deposits (all
251,513.79
151,896.47
238,057.41
144,444.84
226,600.14
137,866.76
207,750.30
126,481.05
(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
counterparties)
(iii) Unsecured debt
10,463.67
10,463.67
8,338.35
8,338.35
8,533.54
8,533.44
8,874.64
8,874.64
4
5
Secured wholesale funding
3,792.62
874.87
7,397.92
7,397.92
Additional requirements, of which
113,635.81
65,326.40 110,281.91
62,648.74
96,419.47
65,085.57
95,759.03
64,300.46
(i) Outflows related to derivative
57,080.24
57,080.24
54,957.64
54,957.63
56,818.08
56,818.07
55,710.21
55,710.21
exposures and other collateral
requirement
(ii) Outflows related to loss of funding
-
-
-
-
-
-
-
-
on debt products
(iii) Credit and liquidity facilities
56,555.57
8,246.16
55,324.27
7,691.11
39,601.39
8,267.50
40,048.82
8,590.25
6 Other contractual funding obligation
19,175.58
19,175.58
13,698.21
13,698.21
17,492.56
17,492.57
17,106.30
17,106.30
7 Other contingent funding
78,141.66
2,344.25
73,360.81
2,200.83
72,616.20
2,178.49
71,632.78
2,148.98
obligations
8
9
Total Cash Outflows
324,068.07
302,526.03
303,331.19
288,818.24
Secured lending (e.g. reverse repo)
-
-
-
-
-
-
-
-
10 Inflows from fully performing
66,199.09
35,402.81
64,887.50
34,429.38
68,415.09
37,644.26
64,170.94
34,634.66
exposures
11 Other cash inflows
83,565.18
75,800.89
76,947.14
69,971.85
80,699.85
73,867.50
80,255.71
74,079.86
12 Total Cash Inflows
149,764.27
111,203.70 141,834.64
104,401.23
149,114.94
111,511.76
144,426.65
108,714.52
13 TOTAL HQLA
14 Total Net Cash Outflows
15 Liquidity Coverage Ratio(%)
Total
Adjusted
Value
281,400.84
212,864.38
132.20%
Total
Adjusted
Value
276,928.43
198,124.80
139.77%
Total
Adjusted
Value
253,440.66
191,819.43
132.12%
Total
Adjusted
Value
225,515.60
180,103.72
125.21%
* The average weighted and unweighted amounts are calculated taking simple average based on daily observation for
the respective quarters.
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 obligation
17,948.21
17,948.21
17,361.18
17,361.18
16,669.89
16,669.89
16,435.76
16,435.76
7 Other contingent funding obligations
71,060.49
2,131.81
71,246.42
2,137.39
66,669.99
2,000.10
66,965.75
2,008.97
8
9
Total Cash Outflows
277,628.01
270,837.66
254,625.62
249,563.39
Secured lending (e.g. reverse repo)
-
-
-
-
213.46
-
-
-
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 TOTAL HQLA
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.
216 HDFC Bank Limited Integrated Annual Report 2019-20
217
Schedules to the Financial Statements
For the year ended March 31, 2020
Qualitative disclosure on LCR
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. This does not include the effect of moratorium, that the Bank may extend.
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 the minimum requirement at 60% which would rise in equal annual steps to reach 100%
on January 1, 2019. This graduated approach was designed to ensure that the LCR could be introduced without material disruption
to the orderly strengthening of banking systems or the ongoing financing of economic activity. The present requirement, as on
March 31, 2020 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
Quarter ended
March 31, 2020
December 31, 2019
September 30, 2019
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
Run-off factors
5% - 10%
5% - 10%
5% - 25%
40%
100%
LCR Maintained
(Average)
LCR Required
132.20%
139.77%
132.12%
125.07%
117.28%
126.03%
118.54%
111.75%
100.00%
100.00%
100.00%
100.00%
100.00%
90.00%
90.00%
90.00%
The average LCR for the quarter ended March 31, 2020 was at 132.20% as against 117.28% for the quarter ended March 31, 2019,
and well above the present prescribed minimum requirement of 100%. The average HQLA for the quarter ended March 31, 2020
was ` 281,400.84 crore, as against was ` 202,599.15 crore for the quarter ended March 31, 2019. During the same period the
composition of government securities and treasury bills in the HQLA remained at 91%.
For the quarter ended March 31, 2020, derivative exposures (net of cash inflows) / collateral requirements and undrawn commitments
constituted just about 0.4% and 2.5% respectively of average cash outflow, in line earlier periods. The Bank has consistently
maintained a robust funding profile with a significant portion of funding through deposits. As of March 31, 2020 the top 20 depositors
comprised of 4% of total deposits indicating a healthy and stable deposit profile.
218 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
29. 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
Kaizad Bharucha, Executive Director
Relatives of key management personnel
Bharucha.
Anita Puri, Amit Puri, Amrita Puri, Adishwar Puri, Aarti Sood, Havovi Bharucha, Huzaan Bharucha, Danesh Bharucha, Daraius
Entities in which key management personnel / their relatives are interested
Salisbury Investments Private Limited, Akuri by Puri
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, 2020 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:
•
Interest paid: HDB Financial Services Limited ` 11.06 crore (previous year: ` 4.56 crore); Housing Development Finance
Corporation Limited ` 8.53 crore (previous year: ` 5.49 crore).
•
•
•
•
•
Interest received: HDB Financial Services Limited ` 430.63 crore (previous year: ` 294.50 crore).
Rendering of services: Housing Development Finance Corporation Limited ` 308.94 crore (previous year: ` 282.97 crore).
Receiving of services: HDB Financial Services Limited ` 2,459.50 crore (previous year: ` 1,916.90 crore); Housing
Development Finance Corporation Limited ` 586.66 crore (previous year: ` 486.95 crore).
Dividend paid: Housing Development Finance Corporation Limited ` 864.62 crore (previous year: ` 511.17 crore).
Dividend received: HDB Financial Services Limited ` 135.11crore (previous year: ` 52.54 crore); HDFC Securities Limited
` 288.61 crore (previous year: ` 151.90 crore).
The Bank’s related party balances and transactions for the year ended March 31, 2020 are summarised as follows:
Items / Related party
Promoter
Subsidiaries
Key management
Total
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
Interest received from
Income from services rendered to
Expenses for receiving services from
3,679.07
(7,717.90)
0.47
(0.47)
-
-
-
-
-
8.53
308.94
586.66
1,423.41
(1,423.41)
10.62
(10.62)
5,181.82
(5,477.27)
-
-
11.88
431.26
62.91
2,470.47
personnel
18.54
(22.51)
0.76
(0.76)
2.55
(2.87)
-
-
1.82
0.09
#
0.31
(` crore)
5,121.02
(9,163.82)
11.85
(11.85)
5,184.37
(5,480.14)
-
-
22.23
431.35
371.85
3,057.44
219
Schedules to the Financial Statements
For the year ended March 31, 2020
Items / Related party
Promoter
Subsidiaries
Key management
personnel
Equity investments
Other Investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
-
-
-
864.62
-
44.48
(55.33)
100.28
(100.28)
0.39
(0.40)
-
24,127.25
3,826.49
(3,826.49)
650.00
(1,101.22)
-
423.72
14.34
(14.34)
147.26
(206.74)
-
-
-
-
-
-
-
-
10.40
-
-
-
-
-
-
-
27.56
-
Total
3,826.49
(3,826.49)
650.00
(1,101.22)
875.02
423.72
58.82
(69.67)
247.54
(307.02)
0.39
(0.40)
27.56
24,127.25
# Denotes amount less than ` 1 lakh.
•
•
•
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding
balances at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated
against the key managerial personnel. These will be paid based on approval from RBI. As of March 31, 2020, approved
unpaid deferred bonus in respect of earlier years was ` 5.92 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 on March 31, 2020 is ` 12,009.95
crore (previous year: ` 5,865.50 crore). The contingent credit exposure pertaining to these contracts computed in line with the extant
RBI guidelines on exposure norms was ` 136.86 crore (previous year: ` 79.12 crore).
During the year ended March 31, 2020, the Bank purchased debt securities from HDB Financial Services Limited ` 2,004.60
crore (previous year: ` 2,180.58 crore) issued by it.
During the year ended March 31, 2020, the Bank made investment of ` 1,982.47 crore (previous year: ` 963.22 crore) in pass
through certificates in respect of assets securitised out by HDB Financial Services Limited for which the outstanding as on
March 31, 2020 was ` 1,553.06 crore.
During the year ended March 31, 2020, 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, 2020, 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, 2020 was ` 39.37 crore (previous year: ` 37.19 crore).
The Bank also paid interest on deposit from HDB Employees Welfare Trust aggregating to ` 3.14 crore (previous year: ` 3.00 crore).
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
Items / Related party
Promoter
Subsidiaries
Key management
personnel
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
-
-
-
4.65
294.50
49.65
1,922.45
3,826.49
(3,826.49)
964.95
(1,740.49)
(1,154.65)
511.17
-
30.55
(48.40)
83.64
(83.64)
0.37
(0.40)
-
23,982.42
-
204.44
16.41
(16.41)
85.16
(85.16)
-
-
-
-
Total
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
1.13
0.10
#
0.61
-
-
-
-
7.43
-
-
-
-
-
-
-
25.88
-
23,982.42
# Denotes amount less than ` 1 lakh.
•
•
•
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding
balances at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated
against the 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.
30. Intra-Group exposure
Intra-Group exposures in accordance with RBI guidelines are as follows:
(` crore)
Particulars
Total amount of intra-group exposures
Total amount of top 20 intra-group exposures
Percentage of intra-group exposures to total exposure of the Bank on borrowers /
customers
March 31, 2020 March 31, 2019
8,542.59
8,542.59
0.53%
7,368.31
7,368.31
0.56%
The Bank’s related party balances and transactions for the year ended March 31, 2019 are summarised as follows:
Details of breach of limits on intra-group exposures and regulatory action thereon, if any
Nil
Nil
Items / Related party
Promoter
Subsidiaries
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
3,290.99
(3,290.99)
0.47
(0.47)
-
-
-
-
614.20
(614.20)
10.62
(10.62)
3,104.74
(3,104.74)
-
-
Key management
personnel
27.02
(27.02)
0.76
(2.51)
2.96
(3.11)
-
-
(` crore)
Total
3,932.21
(3,932.21)
11.85
(13.60)
3,107.70
(3,107.85)
-
-
220 HDFC Bank Limited Integrated Annual Report 2019-20
31. Leases
Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (‘ATM’s), which are
renewable at the option of the Bank. The details of maturity profile of future operating lease payments are given below:
Particulars
Not later than one year
Later than one year and not later than five years
Later than five years
Total
March 31, 2020 March 31, 2019
(` crore)
1,115.49
3,646.15
4,756.70
9,518.34
993.31
3,217.18
4,016.39
8,226.88
221
Schedules to the Financial Statements
For the year ended March 31, 2020
Particulars
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.
March 31, 2020 March 31, 2019
1,345.43
1,199.66
64.23
9.60
270.14
29.31
9.35
206.55
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.
32 Transfers to Depositor Education and Awareness Fund (DEAF)
The details of amount transferred during the respective year to DEAF are as under:
(` crore)
Particulars
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
33 Penalties levied by the RBI
March 31, 2020 March 31, 2019
367.68
132.28
(3.36)
496.60
496.60
131.64
(10.55)
617.69
During the year ended March 31, 2020, RBI has imposed a penalty of ` 1 crore (previous year: ` 0.20 crore) for non-compliance
with various directions issued by RBI on Know Your Customer (KYC) / Anti-Money Laundering (AML) standards. Additionally, RBI
has imposed a monetary penalty of ` 1 crore on the Bank for failure to undertake on-going due diligence in case of 39 current
accounts opened for bidding in Initial Public Offer (IPO).
34 Disclosure for customer complaints / unimplemented awards of Banking Ombudsman
done at other Bank ATMs.
• Customer complaints
(A) Customer complaints other than ATM transaction disputes
Particulars
(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
March 31, 2020 March 31, 2019
4,064
169,846
169,222
4,688
4,688
205,458
208,136
2,010
(B) ATM transaction disputes relating to the Bank’s customers on the Bank’s ATMs
Particulars
(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
March 31, 2020 March 31, 2019
225
19,438
19,481
182
0.94
182
19,885
20,041
26
0.96
(C) ATM transaction disputes relating to the Bank’s customers on other banks’ ATMs
Particulars
(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
March 31, 2020 March 31, 2019
2,553
209,083
208,864
2,772
7.31
2,772
156,892
159,204
460
5.14
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
(D) Total customer complaints and ATM transaction disputes [total of tables (A), (B) and (C) above]
Particulars
(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
March 31, 2020 March 31, 2019
7,642
382,235
387,381
2,496
6,842
398,367
397,567
7,642
Note: ATM transaction disputes reported in the above tables are in accordance with RBI guidelines on disclosure of
customer complaints.
•
Awards passed by the Banking Ombudsman (BO)
Particulars
March 31, 2020 March 31, 2019
(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
•
Top areas of customer complaints
-
-
-
-
-
-
-
-
The average number of customer complaints per branch, including ATM transaction disputes, was 6.2 per month during
the year ended March 31, 2020 (previous year: 6.9 per month). For the year ended March 31, 2020, of the total complaints
retail liability segment accounted for 67.77% (previous year: 80.37%), credit cards at 27.34% (previous year: 14.56%), retail
assets at 4.43% (previous year: 4.50%), and other segments accounted at 0.46% (previous year: 0.57%). The top 10 areas
of customer complaints for the year ended March 31, 2020, including ATM transaction disputes, aggregated to 307,753
complaints (previous year: 3,18,540 complaints) which accounted for 80.51% of total complaints (previous year: 79.96%).
The top 5 areas of customer complaints on which the Bank is working towards root cause remediation are - Unauthorized
usage through Credit Card, Unauthorized usage through Debit Card online, Cash not dispensed or less cash dispensed in
the Bank’s ATMs, BHIM - UPI Unauthorized transactions through accounts and Unauthorized usage through Debit Card
35 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, 2020 and March 31, 2019.
36 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, 2020 and March 31, 2019. The above is based on the information available with the Bank which has been
relied upon by the auditors.
37 Overseas assets, NPAs and revenue
Particulars
Total Assets
Total NPAs
Total Revenue
38 Off-Balance Sheet SPVs
39 Credit default swaps
There are no Off-Balance Sheet SPVs sponsored by the Bank, which need to be consolidated as per accounting norms.
The Bank has not transacted in credit default swaps during the year ended March 31, 2020 (previous year: Nil).
March 31, 2020 March 31, 2019
(` crore)
33,714.21
23.31
1,238.96
43,257.00
194.93
1,170.47
222 HDFC Bank Limited Integrated Annual Report 2019-20
223
Schedules to the Financial Statements
For the year ended March 31, 2020
40. Corporate social responsibility
Operating expenses include ` 535.31 crore (previous year: ` 443.77 crore) for the year ended March 31, 2020 towards Corporate
Social Responsibility (CSR), in accordance with Companies Act, 2013.
The Bank has spent 2.01% (previous year: 2.02%) of its average net profit for the last three financial years as part of its CSR
for the year ended March 31, 2020. As a responsible bank, it has approached the mandatory requirements of CSR spends
positively by laying a foundation on which it would build and scale future projects and partnerships. The Bank continues to
evaluate strategic avenues for CSR expenditure in order to deliver maximum impact. In the years to come, the Bank will further
strengthen its processes as per requirement.
The details of amount spent during the respective year towards CSR are as under:
(` crore)
Sr.
No.
Particulars
March 31, 2020
March 31, 2019
Amount
spent
Amount
unpaid /
provision
Total
Amount
spent
Amount
unpaid /
provision
(i) Construction / acquisition of any
-
-
-
-
asset
(ii)
On purpose other than (i) above
532.18
3.13
535.31
443.77
-
-
Total
-
443.77
41
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, 2020 and March 31, 2019.
42 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, 2020 amounted to ` 1.98 crore (previous year: ` 1.62 crore).
Further, in accordance with RBI guidelines, profit related commission to all Non-Executive Directors other than the Chairperson
for the year ended March 31, 2020 amounted to ` 0.90 crore (previous year: ` 0.90 crore).
43 COVID-19
The SARS-CoV-2 virus responsible for COVID-19 continues to spread across the globe and India, which has contributed to a
significant decline and volatility in global and Indian financial markets and a significant decrease in global and local economic
activities. On March 11, 2020, the COVID-19 outbreak was declared a global pandemic by the World Health Organization.
Numerous governments and companies, including the Bank, have introduced a variety of measures to contain the spread of the
virus. On March 24, 2020, the Indian government announced a strict 21-day lockdown which was further extended by 19 days
across the country to contain the spread of the virus. The extent to which the COVID-19 pandemic will impact the Bank’s results
will depend on future developments, which are highly uncertain, including, among other things, any new information concerning
the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact whether government-mandated
or elected by the Bank.
In accordance with the RBI guidelines relating to COVID-19 Regulatory Package dated March 27, 2020 and April 17, 2020,
the Bank would be granting a moratorium of three months on the payment of all installments and / or interest, as applicable,
falling due between March 1, 2020 and May 31, 2020 to all eligible borrowers classified as Standard, even if overdue, as on
February 29, 2020. For all such accounts where the moratorium is granted, the asset classification shall remain stand still
during the moratorium period (i.e. the number of days past-due shall exclude the moratorium period for the purposes of asset
classification under the Income Recognition, Asset Classification and Provisioning norms).
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Financial Statements
The quantitative disclosures as required by the above referred RBI circular dated April 17, 2020 are given below:
(` crore)
Particulars
Respective amounts in SMA / overdue categories, where the moratorium / deferment was extended, in terms of
paragraph 2 and 3 of the circular
Term Loan Instalments: ` 617.75 crore
Cash Credit / Overdraft: ` 458.19 crore
Respective amount where asset classification benefits is extended
Term Loan Instalments: ` 617.75 crore
Cash Credit / Overdraft: ` 458.19 crore
Provisions made during the quarter ended March 31, 2020 in terms of para 5 of the circular
Provisions adjusted during the respective accounting periods against slippages in terms of paragraph 6 of the circular
Residual provisions as of March 31, 2020 in terms of paragraph 6 of the circular
Amount
1,075.94 (1)
1,075.94
463.00 (2)
Nil
463.00
(1) Represents amounts in SMA / overdue categories where the asset classification benefit is extended, consequent to the
said circular dated April 17, 2020. The Bank may extend moratorium / deferment in terms of the said circular for additional
accounts in the SMA / overdue categories.
(2) Excludes other provisions held by the Bank as at March 31, 2020, against the potential impact of COVID-19 based on the
information available at this point in time. The provisions held by the Bank are in excess of the RBI prescribed norms.
44 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 MSKA & Associates.
As per our report of even date.
For and on behalf of the Board
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Shyamala Gopinath
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Mumbai, April 18, 2020
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Santosh Haldankar
Company Secretary
224 HDFC Bank Limited Integrated Annual Report 2019-20
225
Basel III - Pillar 3 Disclosures
As at March 31, 2020
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:
https://www.hdfcbank.com/aboutus/basel_disclosures/default.htm
The Regulatory Disclosures section contains the following disclosures:
•
Qualitative and quantitative Pillar 3 disclosures:
(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
•
•
•
•
Composition of capital and reconciliation requirements.
Main features and full terms and conditions of regulatory capital instruments.
Leverage ratio disclosures.
Liquidity coverage ratio disclosure.
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”), which comprise the consolidated Balance Sheet
as at March 31, 2020, the consolidated Profit and Loss Account, the consolidated Cash Flow Statement for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory
information (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, 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 Banking Regulation Act, 1949 as well as the Companies Act, 2013 (“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 their consolidated state of affairs of the Group as at March 31, 2020 and of their consolidated profit and their consolidated cash
We conducted our audit in accordance with the Standards on Auditing (SAs) 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 ethical requirements that are
relevant to our audit of the consolidated financial statements in India in terms of Code of Ethics issued by Institute of Chartered
Accountant of India (“ICAI”), and the relevant provisions of the Act and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
flows for the year then ended.
Basis for Opinion
opinion.
Emphasis of Matter
We draw attention to Note 25 to the consolidated financial statements, which describes that the extent to which the COVID-19
Pandemic will impact the Bank’s consolidated financial statements will depend on future developments, which are highly uncertain.
Our opinion is not modified in respect of this matter.
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 of the current year. 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.
226 HDFC Bank Limited Integrated Annual Report 2019-20
227
Independent Auditor’s Report
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
Identification of Non-Provision advances (NPA) and provision on advances
Evaluation of open tax litigations (Direct and Indirect Tax)
Key Audit Matter
How our audit addressed the key audit matter
Key Audit Matter
How our audit addressed the key audit matter
The Bank has material open tax litigations including matters
under dispute which involve significant judgment to determine
the possible outcome of these disputes.
Testing the design and operating effectiveness of the Bank’s
key controls over the estimation, monitoring and disclosure of
provisions and contingent liabilities.
Significant management judgement is needed in determining
whether an obligation exists and whether a provision should
be recognised as at the reporting date, in accordance with
the accounting criteria set under Accounting Standard 29 -
Provisions, Contingent Liabilities and Contingent Assets (‘AS
29’), or whether it needs to be disclosed as a contingent
liability. Further significant judgements are also involved in
measuring such obligations, the most significant of which are:
• Assessment of liability: Judgement is involved in the
determination of whether an outflow in respect of identified
material matters are probable and can be estimated reliably;
• Adequacy of provisions: The appropriateness of
assumptions and judgements used in the estimation of
significant provisions; and
• Adequacy of disclosures of provision for liabilities and
charges, and contingent liabilities
The Bank’s assessment is supported by the facts of matter,
their own judgment, experience, and advices from legal and
independent tax consultants wherever considered necessary.
Since the assessment of these open tax litigations requires
significant level of judgement in interpretation of law, we have
included this as a key audit matter.
Our substantive audit procedures included and were not limited
to the following: -
• Obtained an understanding of the Bank’s process
for
determining tax liabilities, tax provisions and contingent
liabilities pertaining to taxation matters;
• Obtained list of cases/matters in respect of which litigations
were outstanding as at reporting date. For significant matters,
we involved our tax specialist to gain an understanding of
the current status of the litigations, including understanding
of various orders / notices received by the Bank and the
management’s grounds of appeals before the relevant
appellate authorities;
• Evaluated the merit of the subject matter under consideration
with reference to the grounds presented therein and available
independent legal / tax advice;
• Agreed underlying tax balances to supporting documentation,
including correspondence with tax authorities;
Assessed
statements in this regard;
the disclosures within
the standalone financial
The Reserve Bank of India’s (“RBI”) guidelines on Income
recognition and asset classification (“IRAC”) prescribe the
prudential norms for identification and classification of non-
performing assets (“NPA”) and the minimum provision required
for such assets.
Tested the design and operating effectiveness of key controls
recording,
(including application controls) over approval,
monitoring and recovery of loans, monitoring overdue / stressed
accounts, identification of NPA, provision for NPA and valuation of
security and collateral.
The Bank is required to have Board approved policy as per
IRAC guidelines for NPA identification and provision.
Testing of Application controls include testing of automated
controls, reports and system reconciliations.
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 provision on NPA are estimated based on ageing and
classification of NPAs, recovery estimates, nature of loan
product, value of security and other qualitative factors and is
subject to the minimum provisioning norms specified by RBI
and approved policy of the Bank in this regard.
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.
In line with the COVID-19 Regulatory Package, the Bank has
framed policies for providing moratorium as a relief measure to
the borrowers.
Since the identification of NPAs and provisioning for advances
require significant level of estimation and given its significance
to the overall audit including possible observation by RBI which
could result into disclosure in the financial statements, we have
ascertained identification and provisioning for NPAs as a key
audit matter.
Evaluated the governance process and review controls over
calculations of provision of non-performing advances, basis of
provisioning approved in accordance with the Board approved
policy.
Selected the borrowers based on quantitative and qualitative risk
factors for their assessment of appropriate classification as NPA
including computation of overdue ageing to assess its correct
classification and provision amount as per extant IRAC norms and
Bank policy.
Performed other substantive procedures included and not limited
to the following;
• Selected samples of performing
loans and assessed
independently as to whether those should be classified as
NPA;
• For samples selected reviewed the collateral valuation, financial
statements and other qualitative information;
• Considered 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;
• For selected samples assessed independently accounts
that can potentially be classified as NPA and Red Flagged
Accounts;
• Performed 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 needed to be considered as NPA;
• Examined the early warning reports generated by the Bank to
identify stressed loan accounts;
• Held 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;
• Selected samples for standard accounts, default but standard
accounts and overdue accounts and assessed compliance
with RBI circular on Covid-19 Regulatory Package.
Assessed the adequacy of disclosures against the relevant
accounting standards and RBI requirements relating to NPAs.
228 HDFC Bank Limited Integrated Annual Report 2019-20
229
Independent Auditor’s Report
Information Technology (“IT”) Systems and Controls
Key Audit Matter
How our audit addressed the key audit matter
The Bank has a complex IT architecture to support its day
to day business operations. High volume of transactions is
processed and recorded on single or multiple applications.
The reliability and security of IT systems plays a key role in
the business operations of the Bank. Since large volume of
transactions are processed daily, the IT controls are required
to ensure that applications process data as expected and that
changes are made in an appropriate manner.
Appropriate IT general controls and application controls are
required to ensure that such IT systems are able to process
the data, as required, completely, accurately and consistently
for reliable financial reporting.
We have identified ‘IT systems and controls’ as key audit matter
because of the high level automation, significant number of
systems being used by the management and the complexity
of the IT architecture and its impact on the financial reporting
system.
For testing the IT general controls, application controls and IT
dependent manual controls, we involved IT specialists as part of
the audit. The team also assisted in testing the accuracy of the
information produced by the Bank’s IT systems.
We gathered a comprehensive understanding of IT applications
landscape implemented at the Bank. It was followed by process
understanding, mapping of applications to the same and
understanding financial risks posed by people-process and
technology.
include change release
Our key IT audit procedures includes testing design and
operating effectiveness of key controls operating over user
access management (which includes user access provisioning,
de-provisioning, access review, password configuration review,
segregation of duties and privilege access, change management
(which
in production environment
are compliant to the defined procedures and segregation of
environment is ensured), program development (which include
review of data migration activity), computer operations (which
includes testing of key controls pertaining to Backup, Batch
processing (including interface testing), incident management and
data centre security), System interface controls. This included
testing that requests for access to systems were appropriately
logged, reviewed and authorized. Also, entity level controls
pertaining to policy and procedure and Business continuity plan
assessment due impact of COVID-19 was also part of our audit
procedure.
In addition to the above, the design and operating effectiveness of
certain automated controls, that were considered as key internal
system controls over financial reporting were tested. Using
various techniques such as inquiry, review of documentation/
record/reports, observation and re-performance. We also tested
few controls using negative testing technique. We had taken
adequate samples of instances for our test.
Tested compensating controls and performed alternate
procedures, where necessary. In addition, understood where
relevant, changes made to the IT landscape during the audit
period.
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
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 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.
assurance conclusion thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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 term
of the requirements of the Act that give a true and fair view of the consolidated financial position, consolidated financial performance
and 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 and provisions of Section 29 of the Banking Regulation Act, 1949 and
circulars, guidelines and directions issued by the Reserve Bank of India from time to time as applicable to Bank. 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 the assets of the Group and for preventing and detecting frauds and other irregularities;
the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent;
and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring
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 the Board of Directors either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
The respective Board of Directors of the companies included in the Group are responsible for overseeing the Group’s financial
reporting process.
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 Standards on Auditing (“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
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and 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
audit. We also:
control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has
internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
230 HDFC Bank Limited Integrated Annual Report 2019-20
231
Independent Auditor’s Report
•
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by Management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence 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 continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group 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, 2020 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 Matters
a. We did not audit the financial statements of two subsidiaries, whose financial statements reflect total assets of ` 6,195,554 Lacs
as at March 31, 2020, total revenues of Rs. 1,170,933 Lacs and net cash flows amounting to ` 133,856 Lacs for the year ended
on that date, as considered in the consolidated financial statements. These financial statements have been audited by other
auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements,
in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of
sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, is based solely on the reports of the
other auditors.
Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not
modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors
b.
The consolidated financial statements of the Group for the year ended March 31, 2019, were audited by another auditor whose
report dated April 20, 2019 expressed an unmodified opinion on those consolidated financial statements. Our opinion is not
modified in respect this matter.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit and the consideration of the report of the other auditors on separate
financial statements as noted in the ‘Other Matters’ paragraph, we report, to the extent applicable, that:
a.
We have sought and obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purposes of our audit of the aforesaid consolidated financial statements;
b.
In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial
statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
c.
d.
e.
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 relevant books of account maintained for the purpose of preparation of
the consolidated financial statements;
In our opinion, the aforesaid consolidated 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;
On the basis of the written representations received from the directors of the Bank as on March 31, 2020 taken on record
by the Board of Directors of the Bank and the reports of the statutory auditors of its subsidiary companies, none of the
directors of the Group companies, is disqualified as on March 31, 2020 from being appointed as a director in terms of
Section 164 (2) of the Act;
f.
With respect to the adequacy of internal financial controls with reference to the consolidated financial statements of the
Group and the operating effectiveness of such controls, refer to our separate report in “Annexure A”;
g.
With respect to the matter to be included in the Auditor’s Report under Section 197(16):
In our opinion and according to the information and explanations given to us and based on the report of the statutory
auditors of subsidiary companies which were not audited by us, the remuneration paid during the current year by the
subsidiary companies to their directors is in accordance with the provisions of Section 197 of the Act. The remuneration
paid to any director by the subsidiary companies is not in excess of the limit laid down under Section 197 of the Act. The
Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented
upon by us. Further, the bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the
requirements prescribed under Section 197 of the Companies Act, 2013 do not apply to the Bank; 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 Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position
i.
of the Group - Refer Schedule 12, Schedule 17(D)(17) and Schedule 18(13)(d)(1) 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(D)(7) & 17(D)(17) and Schedule 18(13)(d) to the consolidated financial statements in respect of such
items as it relates to the Group; and
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 subsidiary companies incorporated in India.
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Swapnil Kale
Partner
Membership Number: 117812
UDIN: 20117812AAAAEV9284
Mumbai
April 18, 2020
232 HDFC Bank Limited Integrated Annual Report 2019-20
233
Integrated Report
Financial Statements and Statutory Reports
Independent Auditor’s Report
Inherent Limitations of Internal Financial Controls With Reference to Consolidated Financial Statements
Because of the inherent limitations of internal financial controls with reference to consolidated financial statements, 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 with reference to consolidated financial statements to
future periods are subject to the risk that the internal financial control with reference to consolidated financial statements may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, and to the best of our information and according to the explanations given to us, the Bank, its subsidiary companies,
which are companies incorporated in India, have, in all material respects, an adequate internal financial controls with reference
to consolidated financial statements and such internal financial controls with reference to consolidated financial statements were
operating effectively as at March 31, 2020, based on the internal control with reference to consolidated financial statements criteria
established by the respective companies considering the essential components of internal control stated in the Guidance Note issued
Opinion
by the ICAI.
Other Matters
Our aforesaid reports under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls
with reference to consolidated financial statements insofar as it relates to two subsidiary companies, which are companies incorporated
in India, is based on the corresponding reports of the auditors of such companies incorporated in India.
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Swapnil Kale
Partner
Membership Number: 117812
UDIN: 20117812AAAAEV9284
Mumbai
April 18, 2020
Independent Auditor’s Report
ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE
CONSOLIDATED FINANCIAL STATEMENTS OF HDFC BANK LIMITED
[Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements’ in the Independent Auditor’s Report of even
date to the Members of HDFC Bank limited on the consolidated Financial Statements for the year ended March 31, 2020]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act,
2013 (“the Act”)
In conjunction with our audit of the consolidated financial statements of the Bank as of and for the year ended March 31, 2020,
we have audited the internal financial controls with reference to consolidated financial statements 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, its subsidiary companies, which are companies incorporated in India, are responsible
for establishing and maintaining internal financial controls based on the internal control with reference to consolidated financial
statements criteria established by the respective companies considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of
India (“the ICAI”). These responsibilities include the design, implementation and maintenance of internal financial controls that were
operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective 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.
Auditors’ Responsibility
Our responsibility is to express an opinion on the internal financial controls with reference to consolidated financial statements of
the Bank, its subsidiary companies, which are companies incorporated in India, based on our audit. We conducted our audit in
accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by
the ICAI and the Standards on Auditing 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 internal financial controls with reference to consolidated financial statements
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 internal financial controls with reference to consolidated
financial statements and their operating effectiveness. Our audit of internal financial controls with reference to consolidated financial
statements included obtaining an understanding of internal financial controls with reference to consolidated financial statements,
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 auditors’ judgement, including the assessment of the
risks of material misstatement of the consolidated 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 with reference to consolidated financial statements of the Bank, its subsidiary companies, which are companies
incorporated in India.
Meaning of Internal Financial Controls With Reference to Consolidated Financial Statements
A Bank’s internal financial control with reference to consolidated financial statements is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes
in accordance with generally accepted accounting principles. A Bank’s internal financial control with reference to consolidated financial
statements 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 Bank; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Bank are being made only in accordance with authorizations of management and
directors of the Bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Bank’s assets that could have a material effect on the consolidated financial statements.
234 HDFC Bank Limited Integrated Annual Report 2019-20
235
Consolidated Balance Sheet
As at March 31, 2020
Consolidated Profit and Loss Account
For the year ended March 31, 2020
CAPITAL AND LIABILITIES
Capital
Reserves and surplus
Minority interest
Deposits
Borrowings
Other liabilities and provisions
Total
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
Total
Contingent liabilities
Bills for collection
Schedule
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
1
2
2A
3
4
5
6
7
8
9
10
11
12
5,483,286
5,446,613
1,758,103,766
1,531,279,982
5,766,413
5,017,945
11,462,071,336
9,225,026,779
1,868,343,231
1,577,327,790
708,536,341
583,957,956
15,808,304,373
12,928,057,065
722,110,033
468,045,896
157,291,086
350,130,527
3,893,049,519
2,894,458,722
10,436,708,771
8,692,226,631
46,268,558
42,198,371
552,876,406
480,996,918
15,808,304,373
12,928,057,065
11,304,740,615
10,251,253,094
515,849,020
499,528,010
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 MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Shyamala Gopinath
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Mumbai, April 18, 2020
Santosh Haldankar
Company Secretary
I
INCOME
Interest earned
Other income
Total
II EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
Total
III PROFIT
Net profit for the year
Less : Minority interest
Consolidated profit for the year
Balance in the Profit and Loss Account brought forward
Total
IV APPROPRIATIONS
Transfer to Statutory Reserve
Tax (including cess) on dividend
Schedule
Year ended
31-Mar-20
` in ‘000
Year ended
31-Mar-19
13
14
15
16
1,221,892,915
1,051,607,400
248,789,748
189,470,509
1,470,682,663
1,241,077,909
621,374,216
537,126,876
330,360,555
276,947,604
245,985,239
202,547,300
1,197,720,010
1,016,621,780
272,962,653
224,456,129
423,147
1,131,820
272,539,506
223,324,309
528,496,075
430,989,822
801,035,581
654,314,131
67,717,167
54,997,602
902,672
433,081
Dividend (including tax / cess thereon) pertaining to previous year paid during
48,933,585
40,525,854
the year, net of dividend tax credits
Interim Dividend (including tax)
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
Total
V EARNINGS PER EQUITY SHARE (FACE VALUE ` 1 PER SHARE)
Basic
Diluted
Significant accounting policies and notes to the Consolidated financial statements
17 & 18
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
16,469,504
26,257,315
11,238,460
-
21,078,165
1,053,354
-
-
11,340,000
7,730,000
618,176,878
528,496,075
801,035,581
654,314,131
`
49.84
49.46
`
41.66
41.25
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Shyamala Gopinath
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Mumbai, April 18, 2020
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Santosh Haldankar
Company Secretary
236
HDFC Bank Limited Integrated Annual Report 2019-20
237
Integrated Report
Financial Statements and Statutory Reports
Consolidted Cash Flow Statement
` in ‘000
Year ended
31-Mar-20
Year ended
31-Mar-19
748,468
1,454,623
Consolidated Cash Flow Statement
For the year ended March 31, 2020
Year ended
31-Mar-20
` in ‘000
Year ended
31-Mar-19
Cash flows from operating activities
Consolidated profit before income tax
381,525,366
342,049,793
Cash flows from financing activities
Increase in minority interest
Adjustments for:
Depreciation on fixed assets
(Profit) / loss on revaluation of investments
12,767,714
12,206,675
7,021,095
152,437
Proceeds from issue of share capital, net of issue expenses
18,486,821
257,904,302
Proceeds from issue of Tier I and Tier II capital bonds
7,435,000
9,000,000
Redemption of Tier II capital bonds
-
(28,750,000)
Amortisation of premium on held to maturity investments
5,014,137
4,534,626
Increase / (decrease) in other borrowings
283,580,441
32,656,942
(Profit) / loss on sale of fixed assets
81,865
(62,054)
Dividend paid during the year (including tax on dividend)
(66,305,761)
(40,958,935)
Provision / charge for non performing assets
110,657,129
74,233,774
Net cash flow from financing activities
243,944,969
231,306,932
Provision for standard assets and Contingencies
30,574,317
11,852,505
Effect of exchange fluctuation on translation reserve
2,139,891
953,463
547,641,623
444,967,756
Net increase / (decrease) in cash and cash equivalents
61,224,696
(412,439,139)
Adjustments for:
(Increase) / decrease in investments
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
(1,010,700,996)
(514,583,611)
(1,855,003,617)
(1,766,074,976)
2,237,044,557
1,341,275,360
(72,497,457)
(97,167,983)
Cash and cash equivalents as at April 1st
818,176,423
1,230,615,562
Cash and cash equivalents as at March 31st
879,401,119
818,176,423
Increase / (decrease) in other liabilities and provisions
93,598,719
87,851,107
As per our report of even date.
For and on behalf of the Board
Direct taxes paid (net of refunds)
(59,917,171)
(503,732,347)
(108,773,749)
(124,983,100)
For MSKA & Associates
Chartered Accountants
Shyamala Gopinath
Umesh Chandra Sarangi
Part Time Non-Executive Chairperson &
Independent Director
ICAI Firm Registration Number: 105047W
Independent Director
Net cash flow used in operating activities
(168,690,920)
(628,715,447)
Cash flows used in investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
(16,358,706)
(16,206,124)
189,462
222,037
Net cash flow used in investing activities
(16,169,244)
(15,984,087)
Swapnil Kale
Partner
Membership Number: 117812
Mumbai, April 18, 2020
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Santosh Haldankar
Company Secretary
238
HDFC Bank Limited Integrated Annual Report 2019-20
239
Schedules to the Consolidated Financial Statements
As at March 31, 2020
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
SCHEDULE 1 - CAPITAL
Authorised capital
6,50,00,00,000 (31 March, 2019 : 6,50,00,00,000) Equity Shares of ` 1/- each
6,500,000
6,500,000
Issued, subscribed and paid-up capital
5,48,32,86,460 (31 March, 2019 : 5,44,66,13,220) Equity Shares of ` 1/- each
Total
5,483,286
5,483,286
5,446,613
5,446,613
SCHEDULE 2 - RESERVES AND SURPLUS
I Statutory reserve
Opening balance
Additions during the year
Total
II General reserve
Opening balance
Additions during the year
Total
288,321,113
233,323,511
67,717,167
54,997,602
356,038,280
288,321,113
110,484,043
89,405,878
26,257,315
21,078,165
136,741,358
110,484,043
III Balance in profit and loss account
618,176,878
528,496,075
IV Share premium account
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18 (6)]
Total
V Amalgamation reserve
Opening balance
Additions during the year
Total
VI Capital reserve
Opening balance
Additions during the year
Total
240 HDFC Bank Limited Integrated Annual Report 2019-20
569,105,180
311,945,097
18,450,148
258,422,941
-
(1,262,858)
587,555,328
569,105,180
10,635,564
10,635,564
-
-
10,635,564
10,635,564
15,409,264
14,355,910
11,238,460
1,053,354
26,647,724
15,409,264
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
VII Investment reserve account
Opening balance
Additions during the year
Deductions during the year
Total
VIII Investment fluctuation reserve
Opening balance
Additions during the year
Deductions during the year
Total
IX Foreign currency translation account
Opening balance
Additions / (deductions) during the year
Total
Total
SCHEDULE 2 A - MINORITY INTEREST
Minority interest at the date on which parent subsidiary relationship came into existence
Subsequent increase
Total
Includes reserves of Employee Welfare Trust of ` 147.61 crore (March 31, 2019: ` 142.75 crore)
SCHEDULE 3 - DEPOSITS
A
I Demand deposits
(i) From banks
(ii) From others
Total
II Savings bank deposits
III Term deposits
(i) From banks
(ii) From others
Total
Total
B
I Deposits of branches in India
II Deposits of branches outside India
Total
As at
31-Mar-20
-
-
-
-
7,730,000
` in ‘000
As at
31-Mar-19
-
162,237
(162,237)
-
-
11,340,000
7,730,000
-
-
19,070,000
7,730,000
1,098,743
2,139,891
3,238,634
145,280
953,463
1,098,743
1,758,103,766
1,531,279,982
276,029
5,490,384
5,766,413
276,029
4,741,916
5,017,945
36,285,672
34,189,112
1,695,304,394
1,386,120,241
1,731,590,066
1,420,309,353
3,103,769,443
2,487,001,601
136,163,876
60,287,319
6,490,547,951
5,257,428,506
6,626,711,827
5,317,715,825
11,462,071,336
9,225,026,779
11,413,640,800
9,167,385,012
48,430,536
57,641,767
11,462,071,336
9,225,026,779
241
Schedules to the Consolidated Financial Statements
As at March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
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)
Total
II Borrowings outside India
Total
Secured borrowings included in I & II above: ` 36,342.70 crore (March 31, 2019: ` 32,819.98
crore) except borrowings of ` 52,524.20 crore (March 31, 2019: ` 17,400.00 crore) under
Tri-party repo 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
Total
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I Cash in hand (including foreign currency notes)
II Balances with Reserve Bank of India:
(a) In current accounts
(b) In other accounts
Total
Total
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
Total
(ii) Money at call and short notice:
(a) With banks
(b) With other institutions
Total
Total
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
17,260,000
174,000,000
138,040,829
145,278,089
749,824,337
325,310,645
218,755,000
211,320,000
392,424,149
381,110,476
1,516,304,315
1,237,019,210
352,038,916
340,308,580
1,868,343,231
1,577,327,790
75,837,207
85,825,548
70,403,952
82,477,845
500,355,960
392,586,642
46,517,626
38,489,517
708,536,341
583,957,956
92,135,807
74,324,614
377,974,226
391,721,282
252,000,000
2,000,000
629,974,226
393,721,282
722,110,033
468,045,896
4,155,423
12,476,849
16,632,272
-
-
-
3,458,949
4,242,945
7,701,894
18,000,000
77,213,500
95,213,500
16,632,272
102,915,394
(v) Others (Units, CDs, CPs, PTCs and security receipts)
(i) Government securities (including Local Authorities)
8,409,391
7,236,612
II Outside India
(i)
In current accounts
(ii)
In deposit accounts
(iii) Money at call and short notice
Total
Total
Total
Total
Total
SCHEDULE 8 - INVESTMENTS
A Investments in India in
(i) Government securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and bonds
B Investments outside India in
(ii) Other investments
(a) Shares
(b) Debentures and bonds
SCHEDULE 9 - ADVANCES
A (i) Bills purchased and discounted
(ii) Cash credits, overdrafts and loans repayable on demand
(iii) Term loans
Total
(iii) Unsecured
Total
B (i) Secured by tangible assets*
(ii) Covered by bank / government guarantees
* Including advances against book debts
C I Advances in India
(i) Priority sector
(ii) Public sector
(iii) Banks
(iv) Others
Total
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
47,628,696
10,176,943
83,970,273
2,863,017
82,853,175
160,381,843
140,658,814
247,215,133
157,291,086
350,130,527
3,230,399,049
2,421,293,559
-
-
4,182,471
4,095,538
258,011,937
277,328,845
378,628,257
176,688,749
3,871,221,714
2,879,406,691
35,024
13,383,390
21,827,805
35,024
7,780,395
15,052,031
3,893,049,519
2,894,458,722
387,832,198
320,438,660
2,340,489,951
2,022,142,263
7,708,386,622
6,349,645,708
10,436,708,771
8,692,226,631
7,174,666,685
6,085,438,502
201,580,178
278,716,962
3,060,461,908
2,328,071,167
10,436,708,771
8,692,226,631
2,582,817,659 2,213,382,045
623,353,731 216,010,200
68,550,435 139,904,171
6,877,873,162 5,873,103,876
10,152,594,987 8,442,400,292
242 HDFC Bank Limited Integrated Annual Report 2019-20
243
Schedules to the Consolidated Financial Statements
As at March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
C
II Advances outside India
(i) Due from banks
(ii) Due from others
33,250,983
35,655,221
Gross block
At cost on 31 March of the preceding year
C Assets on lease (plant and machinery)
(a) Bills purchased and discounted
51,070
860,526
Additions during the year
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
(b) Syndicated loans
(c) Others
Total
Total
(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
Total
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Total
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
Total
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Total
Net block
244 HDFC Bank Limited Integrated Annual Report 2019-20
12,531,145
16,686,474
238,280,586
196,624,118
284,113,784
249,826,339
Total
Depreciation
As at 31 March of the preceding year
10,436,708,771
8,692,226,631
Charge for the year
18,258,591
17,285,825
737,974
(85,864)
1,079,471
(106,705)
18,910,701
18,258,591
Total
Lease adjustment account
As at 31 March of the preceding year
Charge for the year
Total
Unamortised cost of assets on lease
Total
SCHEDULE 11 - OTHER ASSETS
I Interest accrued
5,816,393
5,321,464
II Advance tax / tax deducted at source (net of provisions)
634,858
(75,309)
584,394
(89,465)
6,375,942
5,816,393
12,534,759
12,442,198
105,848,358
92,109,943
16,378,259
15,385,650
(5,210,480)
(1,647,235)
117,016,137
105,848,358
76,092,185
65,968,721
12,139,660
11,627,195
(4,949,507)
(1,503,731)
83,282,338
76,092,185
33,733,799
29,756,173
III Stationery and stamps
IV Non banking assets acquired in satisfaction of claims
V Bond and share application money pending allotment
VI Security deposit for commercial and residential property
VII Others*
Total
*Includes deferred tax asset (net) of ` 4,144.23 crore (March 31, 2019: ` 4,620.68 crore),
goodwill of ` 148.79 crore (March 31, 2019: ` 148.79 crore) and deposits placed with NABARD /
SIDBI / NHB on account of shortfall in lending to priority sector of ` 9,196.86 crore
(March 31, 2019: ` 10,832.25 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
I Claims against the bank not acknowledged as debts - taxation
II Claims against the bank not acknowledged as debts - others
III Liability on account of outstanding forward exchange contracts
IV Liability on account of outstanding derivative contracts
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
Total
As at
31-Mar-20
` in ‘000
As at
31-Mar-19
4,546,923
4,546,923
-
-
4,546,923
4,546,923
4,104,467
4,104,467
-
-
4,104,467
4,104,467
442,456
442,456
-
-
442,456
442,456
-
-
46,268,558
42,198,371
103,326,928
93,262,783
26,561,476
19,546,668
430,930
345,677
-
-
-
146,197
5,626,425
5,293,406
416,930,647
362,402,187
552,876,406
480,996,918
12,967,986
12,612,813
1,799,920
1,255,424
6,079,194,921
5,561,859,469
4,152,761,103
3,639,008,146
590,864,399
536,870,994
859,639
752,190
440,232,727
475,617,760
26,059,920
23,276,298
11,304,740,615
10,251,253,094
245
Schedules to the Consolidated Financial Statements
As at March 31, 2020
Year ended
31-Mar-20
` in ‘000
Year ended
31-Mar-19
990,796,325
837,361,574
205,727,257
199,247,497
18,687,664
6,681,669
6,606,217
8,392,112
1,221,892,915
1,051,607,400
180,171,223
149,045,609
27,034,829
(7,021,095)
259,150
5,735,619
(152,437)
329,498
21,547,462
17,203,935
26,798,179
17,308,285
248,789,748
189,470,509
507,888,796
410,442,557
113,068,058
124,978,211
417,362
1,706,108
621,374,216
537,126,876
129,201,282
104,511,480
17,796,297
15,775,363
4,484,020
1,004,391
5,261,700
1,593,970
12,767,714
12,206,675
39,741
37,823
1,587,423
4,716,491
35,988
36,230
1,419,023
4,490,653
12,934,396
12,835,334
12,295,061
10,424,807
133,495,916
108,356,381
330,360,555
276,947,604
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
Total
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
Total
SCHEDULE 15 - INTEREST EXPENDED
I Interest on deposits
II Interest on RBI / inter-bank borrowings
III Other interest
Total
SCHEDULE 16 - OPERATING EXPENSES
I Payments to and provisions for employees
II Rent, taxes and lighting
III Printing and stationery
IV Advertisement and publicity
V Depreciation on bank's property
VI Directors' fees / remuneration, allowances and expenses
VII Auditors' fees and expenses
VIII Law charges
IX Postage, telegram, telephone etc.
X Repairs and maintenance
XI Insurance
XII Other expenditure*
Total
*Includes professional fees, commission to sales agents, card and merchant acquiring expenses
and system management fees.
246 HDFC Bank Limited Integrated Annual Report 2019-20
SCHEDULE 17 - Significant accounting
policies appended to and forming part of
the consolidated financial statements for
the year ended March 31, 2020
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 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.
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 Third
Schedule of the Banking Regulation Act, 1949, circulars
and guidelines issued by the Reserve Bank of India
(‘RBI’) from time to time (‘RBI guidelines’), 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.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
Use of estimates
The preparation of consolidated financial statements in
conformity with GAAP requires the management to make
estimates and necessary assumptions in the reported
amounts of assets and liabilities (including contingent
liabilities) as of the date of the financial statements and
the reported income and expenses for the reporting
period. Management believes that the estimates used in
the preparation of the financial statements are prudent
and reasonable. Actual results could differ from these
estimates. Any revision in the accounting estimates is
recognised prospectively in the current and future periods.
Basis of consolidation
The consolidated financial statements present
the
accounts of HDFC Bank Limited with its following
subsidiaries:
Name
Relation
Country of
Ownership
incorporation
interest**
HDFC Securities
Subsidiary
India
Limited
HDB Financial
Subsidiary
India
Services Limited
HDB Employee
*
Welfare Trust
India
96.57%
95.30%
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, 2020 the Bank’s
shareholding in HDB Financial Services Limited
decreased from 95.5% to 95.3% on account of the
stock options exercised by minority stakeholders.
During the year ended March 31, 2020 the Bank’s
shareholding in HDFC Securities Limited decreased
from 97.3% to 96.6% 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, 2020.
247
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
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.
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
248 HDFC Bank Limited Integrated Annual Report 2019-20
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 or
prices published by Financial Benchmarks India Pvt
Ltd. (FBIL) with Fixed Income Money Market and
Derivatives Association (FIMMDA) as the calculating
agent.
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 prices published by FBIL with
FIMMDA as the calculating agent.
The valuation of other unquoted fixed income
securities (viz. State Government securities, other
approved securities, bonds and debentures), and
preference shares, is done with appropriate mark-
up over the Yield to Maturity (YTM) rates for Central
Government Securities as published by Primary
Dealers Association of India (“PDAI’’) / 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 FBIL and FIMMDA as
the calculating agent.
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 net
asset value declared by the respective schemes of
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.
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
FBIL with FIMMDA as the calculating agent.
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
investments
already provided. The valuation of
transactions.
securities under
includes
The book value of individual securities is not changed
after the valuation of investments.
repo
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.
identified and
investments are
Non-performing
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.
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.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
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.
loss provisions
Provisioning:
Specific
in respect of non-
loan
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.
advances
Non-performing
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.
are written-off
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
249
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
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.
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
taking
Company and Deposit taking Company (Reserve
Bank) Directions 2016 as amended.
Important Non-Deposit
Loan origination costs:
Brokerage, commission, incentive to employee, etc.
paid at the time of acquisition of loans are charged to
expenses.
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.
3
250 HDFC Bank Limited Integrated Annual Report 2019-20
transactions through the SPV route, except that such
HDB Financial Services Limited
The Bank enters into transactions for transfer of
standard assets through the direct assignment of cash
flows, which are similar to asset-backed securitisation
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.
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
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
unless it is more than the face value, in which case
the premium is amortised over the tenor of the loans.
•
Prior to Issuance of RBI Circular dated August
21, 2012
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
•
Post Issuance of RBI Circular dated August 21,
upfront.
2012
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 Priority Sector Lending Certificates (PSLCs)
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
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.
5
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.
251
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
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 Part C of Schedule
II to the Companies Act, 2013, taking into account
changes in environment, changes in technology, the
utility and efficacy of the asset in use, fairly reflects
its estimate of useful lives of the fixed assets. The
estimated useful lives of key fixed assets are given
below:
Asset
Owned Premises
Automated Teller
Machines (ATMs)
Estimated
useful
life as
assessed
by the
Bank
61 years
Estimated
useful life
specified under
Schedule II of
the Companies
Act, 2013
60 years
10 years
15 years
Electrical equipments
and installations
6 to 10
years
10 years
Office equipments
3 to 6 years 5 years
3 years
3 years
3 to 6 years 6 years
Computers
Modems, routers,
switches, servers,
network and related IT
equipments
Motor cars
4 years
8 years
Furniture and fittings
16 years
10 years
•
•
•
•
Improvements to
lease hold premises are
charged off over the remaining primary period of
lease.
Software and system development expenditure
is depreciated over a period of 5 years.
Point of sales terminals are depreciated over a
period of 4 years.
For assets purchased and sold during the year,
depreciation is provided on pro-rata basis by the
Bank.
• Whenever there is a revision of the estimated
useful
the unamortised
depreciable amount is charged over the revised
remaining useful life of the said asset.
life of an asset,
•
•
Profit on sale of immovable property net of taxes
and transfer to statutory reserve, are transferred
to capital reserve account.
Assets (other than POS terminals) costing less
than ` 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:
Asset
Estimated useful life
Computer hardware
Office equipments
3 years
5 years
Furniture and fixtures
10 years
Leasehold
improvements
Electricals
Office premises
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
252 HDFC Bank Limited Integrated Annual Report 2019-20
•
•
•
•
•
•
•
All tangible and intangible assets costing less
than ` 5,000 individually are fully depreciated in
the year of purchase.
Useful lives are reviewed at each financial year
end and adjusted if required.
Intangible assets are stated at acquisition
cost, net of accumulated amortisation and
accumulated impairment losses, if any.
Cost of an intangible asset includes purchase
price, non-refundable taxes and duties and any
other directly attributable 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.
Expenditure on software development eligible
for capitalisation are carried as intangible assets
under development where such assets are not
yet ready for their intended use.
Intangible assets are amortised on a straight-
line basis over their estimated useful lives.
The amortisation period and the amortisation
method are reviewed at least at each reporting
date. If the expected useful life of the asset is
significantly different from previous estimates,
the amortisation period is changed accordingly.
Gains or losses arising from the retirement or
disposal of an intangible asset are determined
as the difference between the net 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
Estimated useful life
Computer software
licenses
Electronic trading
platform (Website)
Bombay Stock
Exchange card
5 years
5 years
10 years
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
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
Estimated
useful life as
assessed
by the
Company
Building
Leasehold
improvements
Motor cars
Computers
Furniture and
fixtures
Office equipments 3 years
60 years
Tenure of lease
agreements
4 years
2-5 years
3-7 years
Estimated
useful
life under
Schedule II of
the Companies
Act, 2013
60 years
Tenure of lease
agreements
8 years
3 years
10 years
5 years
•
•
•
•
Improvements to
lease hold premises are
charged off over the primary period of lease or
its useful life, whichever is lower.
Items costing less than ` 5,000 are fully
depreciated in the year of purchase.
The Company has estimated Nil residual value
at the end of the useful life for all block of assets.
For assets purchased and sold during the year,
depreciation is being provided on pro-rata basis
by the Company.
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.
253
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
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.
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.
liabilities of non-integral
Both monetary and non-monetary foreign currency
assets and
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.
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
254 HDFC Bank Limited Integrated Annual Report 2019-20
pairs, the forward points (for rates / tenors not
published by FEDAI) are obtained from Reuters for
valuation of the forex deals. Valuation is considered
on present value basis, as directed by FEDAI. For this
purpose 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 premium 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.
HDB Financial Services Limited
Derivative contracts are designated as cash flow
hedges, the hedging instrument is measured at fair
value and any gain or loss that is determined to be
an effective hedge is recognised within equity i.e.,
Cashflow Hedge Reserve. Amounts recognised in
equity are transferred to the Statement of Profit and
Loss in the same period as the cash flows of hedged
items affect the Statement of Profit and Loss. When
a derivative contract expires or is sold or if a hedge
no longer meets the criteria for hedge accounting,
any cumulative profit or loss in the Cash Flow Hedge
Reserve is retained in equity until the hedged cash
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
flow is recognised in the Statement of Profit and Loss.
•
Commissions
from distribution of financial
•
Interest income on investments in PTCs and
•
Interest income is recognised in the Profit and
However, if hedged cash flows are no longer expected
to occur, the profit or loss against the corresponding
derivative contract, accumulated in the Cash Flow
Hedge Reserve, is immediately released through the
Statement of Profit and Loss. Changes in the fair
values of derivative instruments that do not qualify for
hedge accounting are recognised immediately in the
Statement of Profit and Loss.
8 Revenue recognition
HDFC Bank Limited
•
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.
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.
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.
HDFC Securities Limited
•
Income from services rendered as a broker is
recognised upon rendering of the services.
•
Fees
for subscription based services are
received periodically but are recognised as
earned on a pro-rata basis over the term of the
contract.
products are recognised upon allotment of the
securities to the applicant or as the case may
be, issue of the insurance policy to the applicant.
•
Commissions and fees recognised as aforesaid
are exclusive of goods and service tax, securities
transaction tax, stamp duties and other levies by
SEBI and stock exchanges.
•
Interest is earned on delayed payments from
clients and amounts funded to them as well as
term deposits with banks.
•
Interest
income
is recognised on a
time
proportion basis taking into account the amount
outstanding from customers or on the financial
instrument and the rate applicable.
•
Dividend income is recognised when the right to
receive the dividend is established.
HDB Financial Services Limited
Loss Account on an accrual basis. In case of
Non Performing Assets (NPA), interest income
is recognised upon realisation as per the RBI
Guidelines. Interest accrued and not realised
before the classification of the asset as an NPA
is reversed and credited to the interest suspense
account.
•
Income from BPO services and other financial
charges are recognised on an accrual basis,
except in case of cheque bouncing charges,
late payment charges, foreclosure charges and
application money, which are accounted as and
when received.
recognised at the time of disbursement of loan.
•
Income from dividend is recognised in the Profit
and Loss Account when the right to receive is
established.
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 and whole time
directors. 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.
255
•
Dividend on equity shares, preference shares
•
Upfront / processing fees are recovered and
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
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 has an obligation towards gratuity, a defined
benefit retirement plan covering all eligible employees.
The plan 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 without upper
limit. The Bank makes contributions to recognized
Trusts administered by trustees and whose funds
are managed by insurance companies, of 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.
The actuarial calculations entails assumptions about
demographics, early retirement, salary increases and
interest rates. Actuarial gain or loss is recognised in
the Profit and Loss Account.
Superannuation:
The Bank has a Superannuation Plan under which
employees of the Bank, above a prescribed grade,
are entitled to receive retirement benefits either
under a cash-out option through salary or under a
defined contribution plan. For those opting for a
defined contribution plan, 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 employees of the erstwhile Centurion
Bank of Punjab (eCBoP) staff) to Trust administered by
trustees and whose funds are managed by insurance
companies. The Bank has no liability towards future
superannuation fund benefits other than its annual
contribution, and recognises such contributions as
an expense in the year incurred.
Provident fund:
The Bank is covered under the Employees Provident
Fund and Miscellaneous Provisions Act, 1952 and
accordingly all employees of the Bank are entitled
fund.
to
receive benefits under
the provident
256 HDFC Bank Limited Integrated Annual Report 2019-20
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 Office. The balance
amount of the 12% employer’s share is contributed
to an exempted Trust 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 the Regional Provident
Fund Office and from April 2009 onwards, the same
is transferred to the exempted Trust set up by the
Bank and administered by the Board of Trustees.
In respect of eLKB employees, the Bank contributes
to a Trust 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.
implementing AS-15,
The guidance note on
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 applicable government
social security 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
leave
(IBA) structure. The Bank provides
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.
for
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 trust set up by the Bank
and administered by the Board of Trustees and an
additional amount towards the liability shortfall based
on an independent actuarial valuation as at the
Balance Sheet date, which includes assumptions
retirement, salary
about demographics, early
increases and interest rates.
In respect of certain eLKB employees who had moved
to a Cost to Company (CTC) basis 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.
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.
257
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
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.
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.
the applicable
Provident fund
In accordance with
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 neither have a policy of encashment
of unavailed leaves for its employees nor allow the
leaves to be carry forward to next year. Hence, in
accordance with AS 15 (revised 2005) Employee
Benefits issued by Institute of Chartered Accountants
of India, leave actuarial valuation is not required.
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 accounted for
at the time of sale to the customers and reported as
“Other Income’’.
The Bank also deals in bullion on a borrowing and
lending basis and the interest thereon is accounted
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 thereunder 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.
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
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:
•
a possible obligation arising from a past event,
the existence of which will be confirmed by the
occurrence or non-occurrence of one or more
uncertain future events not within the control of
the Group; or
•
a present obligation arising from a past event
which is not recognised as it is not probable
that an outflow of resources will be required to
settle the obligation or a reliable estimate of the
amount of the obligation cannot be made.
When there is a possible obligation or a present
obligation in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is
made.
Contingent assets, if any, are not recognised in the
financial statements since this may result in the
recognition of income that may never be realised.
Onerous contracts
Provisions for onerous contracts are recognised when
the expected benefits to be derived by the Bank from
a contract are lower than the unavoidable costs of
meeting the future obligations under the contract.
The provision is measured at the present value of
the lower of the expected cost of terminating the
contract and the expected net cost of continuing with
the contract. Before a provision is established, the
Bank recognises any impairment loss on the assets
associated with that contract.
18 Cash and cash equivalents
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.
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
258 HDFC Bank Limited Integrated Annual Report 2019-20
259
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
SCHEDULE 18 - Notes forming part of the consolidated financial statements for the
Following is the reconciliation between the basic and diluted earnings per equity share:
year ended March 31, 2020
Amounts in notes forming part of the consolidated financial statements for the year ended March 31, 2020 are denominated in rupee
crore to conform to extant RBI guidelines, except where stated otherwise.
1
2
3
Special Dividend
The Bank has paid Special Interim Dividend of ` 5 per equity share of face value of ` 2 each (pre-split) for the financial year
2019-20, to commemorate 25 years of the Bank’s operation, aggregating to ` 1,646.95 crore inclusive of tax on dividend.
Sub-division of Equity Shares
The shareholders of the Bank at the 25th Annual General Meeting held on July 12, 2019 approved sub-division (split) of one
equity share of the Bank from face value of ` 2/- each into two equity shares of face value of ` 1/- each. All shares and per
share information in the financial statements reflect the effect of sub-division (split) retrospectively.
Proposed dividend
The Reserve Bank of India, vide its circular dated April 17, 2020, has decided that banks shall not make any further dividend
payouts from profits pertaining to the financial year ended March 31, 2020 until further instructions, with a view that banks must
conserve capital in an environment of heightened uncertainty caused by COVID-19. Accordingly, the Board of Directors of the
Bank, at their meeting held on April 18, 2020, has not proposed any final dividend for the year ended March 31, 2020.
During the previous year ended March 31, 2019, the Board of Directors had proposed a dividend of ` 15 per equity share
aggregating to ` 4,924.64 crore inclusive of tax on dividend, which was subsequently approved by the shareholders at the
Annual General Meeting and paid out. In terms of the revised Accounting Standard (AS) 4 ‘Contingencies and Events Occurring
After the Balance Sheet Date’ the Bank had then not appropriated the proposed dividend from the Profit and Loss Account.
However, the effect of the proposed dividend was then reckoned in determining the capital funds in the computation of the
capital adequacy ratio.
4 Capital infusion
During the year ended March 31, 2020, the Bank allotted 3,66,73,240 equity shares (previous year: 4,75,44,608 equity shares)
aggregating to face value ` 3.67 crore (previous year: ` 4.75 crore) in respect of stock options exercised. Accordingly, the share
capital increased by ` 3.67 crore (previous year: ` 4.75 crore) and the share premium increased by ` 1,845.01 crore (previous
year: ` 2,196.06 crore).
During the year ended March 31, 2019, pursuant to the shareholder and regulatory approvals, the Bank on July 17, 2018, made
a preferential allotment of 3,90,96,817 equity shares of face value of ` 2 each 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 of face
value of ` 2 each 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 of face value of ` 2 each) 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.
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
March 31, 2020 March 31, 2019
544.66
-
3.67
548.33
519.02
20.89
4.75
544.66
5
Earnings per equity share
Basic and diluted earnings per equity share have been calculated based on the consolidated net profit after tax attributable
to the Group of ` 27,253.96 crore (previous year: ` 22,332.43 crore) and the weighted average number of equity shares
outstanding during the year of 5,46,88,02,148 (previous year: 5,36,00,68,058).
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, 2020
March 31, 2019
1.00
49.84
(0.38)
49.46
1.00
41.66
(0.41)
41.25
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, 2020 March 31, 2019
Weighted average number of equity shares used in computing basic earnings per equity share
5,46,88,02,148
5,36,00,68,058
Effect of potential equity shares outstanding
4,10,17,673
5,32,75,290
Weighted average number of equity shares used in computing diluted earnings per equity share
5,50,98,19,821
5,41,33,43,348
6 Reserves and Surplus
Statutory Reserve
The Bank and a subsidiary has made an appropriation of ` 6,771.72 crore (previous year: ` 5,499.76 crore) out of profits for
the year ended March 31, 2020 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, 2020, the Bank appropriated ` 1,123.85 crore (previous year: ` 105.34 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 ` 2,625.73 crore (previous year: ` 2,107.82 crore) out of profits for the year ended
March 31, 2020 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, 2020, the Bank has made an appropriation of ` 1,134.00 crore (previous year: ` 773.00 crore), to the Investment
Fluctuation Reserve from the Profit and Loss Account.
Investment Reserve Account
During the year ended March 31, 2020, the net transfer between Investment Reserve Account and Profit and Loss Account
was Nil (previous year Nil) as per RBI guidelines.
Draw down from reserves
Share Premium
The Bank has not undertaken any drawdown from share premium during the year ended March 31, 2020 and March 31,
2019 except that during year ended March 31, 2019, share issue expenses of ` 126.29 crore, incurred for the equity raised
through the QIP and ADR offering, had been adjusted against the share premium account in terms of section 52 of the
Companies Act, 2013.
260 HDFC Bank Limited Integrated Annual Report 2019-20
261
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
7 Dividend on shares allotted pursuant to exercise of stock options
•
The following table summarises the information about stock options outstanding as at March 31, 2019:
Shares allotted after the Balance Sheet date pursuant to any exercise of employee stock options but before book closure date
are eligible for dividend when declared by the Bank and approved at a General Body Meeting of the shareholders of the Bank.
8
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 the 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, 2020 and March 31, 2019, no modifications
were made to the terms and conditions of ESOPs.
Activity in the options outstanding under the Employee Stock Option Plans
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2020:
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 (`)
13,66,12,822
4,77,73,600
3,66,73,240
48,47,580
14,28,65,602
6,44,64,392
682.99
1,220.13
504.10
962.85
899.03
638.18
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2019:
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 (`)
15,08,87,600
3,97,90,000
4,75,44,608
65,20,170
13,66,12,822
8,06,09,722
525.11
1,030.24
462.90
753.50
682.99
508.89
•
The following table summarises the information about stock options outstanding as at March 31, 2020:
Plan
Plan C
Plan D
Plan E
Plan F
Plan G
Range of exercise
price (`)
Number of shares
arising out of options
Weighted average life
of options (in years)
Weighted average
exercise price (`)
340.00 to 417.75
340.00
340.00
417.75 to 731.08
882.85 to 1,229.00
4,85,100
3,45,900
17,05,500
5,85,68,822
8,17,60,280
0.34
0.30
0.30
2.02
3.45
344.05
340.00
340.00
587.08
1,139.82
262 HDFC Bank Limited Integrated Annual Report 2019-20
Plan
Plan C
Plan D
Plan E
Plan F
Plan G
exercise price (`)
340.00 to 417.75
340.00
340.00
417.75 to 731.08
1,003.03 to 1,045.23
Range of
Number of shares arising
Weighted average life of
out of options
options (in years)
Weighted average
exercise price (`)
30,74,800
13,19,800
49,97,400
8,84,76,822
3,87,44,000
0.87
0.97
0.96
2.71
3.57
342.85
340.00
340.00
567.24
1,030.23
Fair value methodology
The fair value of options used to compute the proforma net profit and earnings per equity share have been estimated on the
dates of each grant using the binomial option-pricing model. The Bank estimates the volatility based on the historical prices of
its equity shares. The Bank granted 4,77,73,600 options during the year ended March 31, 2020 (previous year: 3,97,90,000).
The various assumptions considered in the pricing model for the ESOPs granted during the year ended March 31, 2020 are:
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 for the year and earnings per share would have been as per the proforma amounts indicated below:
Add: Stock-based employee compensation expense included in net income
Less: Stock-based compensation expense determined under fair value based method
Particulars
Dividend yield
Expected volatility
Risk - free interest rate
Expected life of the options
Particulars
Net profit (as reported)
(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
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, and later in June 2019 at a price of ` 4,844/-
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.
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.
March 31, 2020 March 31, 2019
0.61% to 0.85%
0.62% to 0.65%
15.30% to 20.13% 14.53% to 18.68%
5.81% to 6.70%
7.23% to 8.31%
1 to 6 years
1 to 6 years
March 31, 2020 March 31, 2019
26,257.32
21,078.17
25,537.52
20,542.27
-
719.80
(`)
48.01
46.70
47.66
46.35
(` crore)
-
535.90
(`)
39.33
38.32
38.94
37.95
263
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
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.
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:
Activity in the options outstanding under the Employee Stock Options Plan
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2020:
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Company
options
Weighted average
exercise price (`)
1,33,650
94,500
1,16,150
2,000
1,10,000
17,500
1,136
4,844
1,136
4,844
4,254
1,136
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2019:
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
2,01,450
Weighted average
exercise price (`)
1,136
-
61,150
6,650
1,33,650
29,050
-
1,136
1,136
1,136
1,136
The following table summarises the information about stock options outstanding as at March 31, 2020:
Plan
Range of
exercise price (`)
Number of shares
arising out of
options
Company Options
1,136-4,844
1,10,000
Weighted average
remaining
contractual life of
options (in years)
4.85
Weighted
average
exercise price (`)
4,254
The following table summarises the information about stock options outstanding as at March 31, 2019:
Plan
Range of
exercise price (`)
Number of shares
arising out of options
Company Options
1,136
1,33,650
Weighted average
remaining contractual
life of options (in years)
0.90
Weighted
average
exercise price (`)
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
264 HDFC Bank Limited Integrated Annual Report 2019-20
3.52%
March 31, 2017 March 31, 2019
2.57%
43.53% to 42.48% 43.22% to 42.22%
6.36% to 6.63%
3 to 5 years
6.60% to 6.90%
3 to 5 years
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, 2020 March 31, 2019
(` crore)
423.37
-
15.35
408.02
(`)
270.96
261.14
269.29
261.07
347.95
-
2.66
345.29
(`)
223.65
221.94
223.20
221.50
HDB Financial Services Limited
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 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 Plans
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2020:
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
42,30,300
-
18,79,350
1,99,370
21,51,580
Weighted average
exercise price (`)
209.36
-
178.22
197.95
237.62
•
Activity in the options outstanding under the various employee stock option plans as at March 31, 2019:
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
62,69,950
9,10,500
27,64,050
1,86,100
42,30,300
Weighted average
exercise price (`)
168.41
274.00
141.22
159.37
209.36
265
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
The following table summarises the information about stock options outstanding as at March 31, 2020:
Plan
ESOS - 10
ESOS - 11
Range of
exercise price (`)
Number of shares
arising out
of options
213.00
274.00
12,83,200
8,68,380
Weighted average
remaining
contractual life of
options (in years)
4.54
4.94
Weighted
average
exercise price (`)
213.00
274.00
The following table summarises the information about stock options outstanding as at March 31, 2019:
Plan
ESOS - 8
ESOS - 9
ESOS - 10
ESOS - 11
Range of
exercise price (`)
Number of shares
arising out of options
88.00
137.00
213.00
274.00
34,500
8,74,200
24,14,200
9,07,400
Weighted average
remaining contractual
life of options (in years)
1.50
4.53
5.06
5.94
Weighted average
exercise price (`)
88.00
137.00
213.00
274.00
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 company has not granted options during the year. 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
0.66%
34.90%
7.23%
3.01 years
Impact of the fair value method on the net profit and earning per share
Had compensation cost for the Company’s stock option plans been determined based on the fair value approach, the
Company’s net profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net Profit (as reported)
Add: Stock-based employee compensation expense included in net income
Less: Stock-based compensation expense determined under fair value based
method (proforma)
Net Profit (proforma)
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
(` crore)
March 31, 2020 March 31, 2019
1,151.10
-
16.05
1,036.94
-
11.19
1,025.75
(`)
13.19
13.05
13.18
13.03
1,135.05
(`)
14.69
14.48
14.67
14.46
Group
Impact of the fair value method on the net profit and earning per share of the Group
Had compensation cost for the stock option plans outstanding been determined based on the fair value approach, the
Group’s 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, 2020 March 31, 2019
22,332.43
-
554.61
27,253.96
-
746.34
26,507.62
21,777.82
266 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
Particulars
March 31, 2020 March 31, 2019
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
(`)
49.84
48.47
49.46
48.11
(`)
41.66
40.63
41.25
40.23
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, 2020 include unrealised loss on foreign exchange and derivative contracts of ` 18,470.93 crore (previous year:
The details of securities that are kept as margin are as under:
(` crore)
Face value as at March 31,
2020
2019
9 Other liabilities
` 12,772.60 crore).
10
Investments
HDFC Bank Limited
Sr.
No.
Particulars
I
Securities kept as margin with Clearing Corporation of India towards:
a) Collateral and funds management - Securities segment
b) Collateral and funds management - Tri-party 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 - Tri-party repo segment
II
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.
IV Securities kept as margin with Indian Clearing Corporation Limited towards BSE
Currency Derivatives segment.
V
Securities kept as margin with Metropolitan Clearing Corporation of India towards
MCX Currency Derivatives segment.
HDFC Securities Limited
Sr.
No.
Particulars
I Mutual funds marked as lien with stock exchange for margin requirement
1,820.00
57,899.98
150.00
51.05
48.00
65.00
50.00
54,944.95
54,622.56
22,389.54
107.72
161.00
13.00
2020
-
HDB Financial Services Limited
The Company has not placed any securities as margin during the year (previous year - Nil).
1,420.00
47,713.88
110.00
51.05
43.00
65.00
45.00
72,411.67
37,216.66
-
309.72
241.00
13.00
(` crore)
2019
319.00
267
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
11 Other fixed assets
c) Provision pertaining to fraud accounts reported during the year
Other fixed assets includes amount capitalised relating to software, Bombay Stock Exchange card and electronic trading
platform. Details regarding the same are tabulated below:
Particulars
Cost
As at March 31 of the previous year
Additions during the year
Deductions during the year
Total
Depreciation
As at March 31 of the previous year
Charge for the year
On deductions during the year
Total
Net value
March 31, 2020 March 31, 2019
(` crore)
2,980.47
349.15
(0.01)
3,329.61
2,153.87
388.44
(0.01)
2,542.30
787.31
2,454.48
525.99
-
2,980.47
1,791.73
362.14
-
2,153.87
826.60
(a)
(b)
(a-b)
12 Other assets
Other assets include deferred tax asset (net) of ` 4,144.23 crore (previous year: ` 4,620.68 crore). The break-up of the same is
as follows:
Particulars
Deferred tax asset arising out of:
Loan loss provisions
Employee benefits
Depreciation
Others
Total
Deferred tax liability
Deferred tax asset (net)
March 31, 2020 March 31, 2019
(` crore)
2,880.44
154.80
57.78
1,051.21
4,144.23
-
3,735.12
212.53
30.44
642.59
4,620.68
-
4,144.23
4,620.68
(a)
(b)
(a-b)
•
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 assets as at
March 31, 2020 include unrealised gain on foreign exchange and derivative contracts of ` 19,006.28 crore (previous year:
` 13,261.24 crore).
13 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
(` crore)
March 31, 2020 March 31, 2019
471.12
387.56
(255.59)
603.09
603.09
517.94
(386.88)
734.15
(` crore)
March 31, 2020 March 31, 2019
314.01
84.42
398.43
398.43
46.92
445.35
Particulars
No. of frauds reported
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, 2020 March 31, 2019
5,484
7,580
222.60
168.88
168.88
-
498.44
431.42
431.42
-
Sr.
No.
1
2
3
4
5
Contingent liability*
Brief description
Claims against the Group not
acknowledged as debts - taxation
The Group is a party to various taxation matters in respect of which appeals
are pending. The Group expects the outcome of the appeals to be favorable
based on decisions on similar issues in the previous years by the appellate
authorities, based on the facts of the case and taxation laws.
Claims against the Group not
acknowledged as debts - others
The Group is a party to various legal proceedings in the normal
course of business.
Liability on account of forward exchange
and derivative contracts
Guarantees given on behalf of
constituents, acceptances, endorsements
and other obligations
Other items for which the Group is
contingently liable
The Group does not expect the outcome of these proceedings to have a
material adverse effect on the Group’s financial conditions, results of
operations or cash flows.
The Group enters into foreign exchange contracts, currency options, forward
rate agreements, currency swaps and interest rate swaps with inter-bank
participants on its own account and for customers. Forward exchange
contracts are commitments to buy or sell foreign currency at a future date
at the contracted rate. Currency swaps are commitments to exchange cash
flows by way of interest / principal in one currency against another, based
on predetermined rates. Interest rate swaps are commitments to exchange
fixed and floating interest rate cash flows. The notional amounts of financial
instruments such as foreign exchange contracts and derivatives provide a
basis for comparison with instruments recognised on the Balance Sheet but
do not necessarily indicate the amounts of future cash flows involved or the
current fair value of the instruments and therefore, do not indicate the Bank’s
exposure to credit or price risks. The derivative instruments become favorable
(assets) or unfavorable (liabilities) as a result of fluctuations in market rates or
prices relative to their terms.
As a part of its commercial banking activities the Bank issues documentary
credit and guarantees on behalf of its customers. Documentary credits such
as letters of credit enhance the credit standing of the Bank’s customers.
Guarantees generally represent irrevocable assurances that the Bank will
make payments in the event of the customer failing to fulfill its financial or
performance obligations.
These include: a) Credit enhancements in respect of securitised-out
loans; b) Bills rediscounted by the Bank; c) Capital commitments;
d) Underwriting commitments; e) Investment purchases pending settlement;
f) Amount transferred to the RBI under the Depositor Education and
Awareness Fund (DEAF).
*Also refer Schedule 12 - Contingent liabilities
14 Commission, exchange and brokerage income
Commission, exchange and brokerage income is net of correspondent bank charges.
268 HDFC Bank Limited Integrated Annual Report 2019-20
269
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
15 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*
Total
March 31, 2020 March 31, 2019
12,961.15
(1,088.60)
7,192.22
4.71
686.14
499.11
20,254.73
10,422.14
476.45
10,635.01
7.50
800.58
2,256.84
24,598.52
*Includes provisions for tax, legal and other contingencies ` 2,253.62 crore (previous year: ` 496.52 crore), provisions / (write
back) for securitised-out assets ` 1.14 crore (previous year: ` 2.59 crore) and standard restructured assets ` 2.08 crore
(previous year: Nil).
16 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
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
270 HDFC Bank Limited Integrated Annual Report 2019-20
March 31, 2020
March 31, 2019
(` crore)
702.86
45.10
102.92
(58.81)
16.69
42.90
851.66
547.75
38.78
109.67
(58.81)
(59.42)
-
577.97
577.97
(851.66)
(273.69)
45.10
102.92
(38.78)
119.00
228.24
(20.64)
181.17
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)
44.46
90.11
(35.43)
1.64
100.78
44.78
128.46
6.60% per annum
7.00% per annum
7.00% per annum
7.64% per annum
7.00% per annum
8.00% per annum
Particulars
Discount rate
Assumptions (HDFC Securities Limited)
Expected return on plan assets
Salary escalation rate
Assumptions (HDB Financial Services Limited)
Discount rate
Expected return on plan assets
Salary escalation rate
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
March 31, 2020
March 31, 2019
5.95% per annum
7.20% per annum
5.95% per annum
7.20% per annum
7.33% per annum
9.00% per annum
4.87% per annum
6.84% - 6.92%
per annum
4.87% per annum
7.50% per annum
7.00% - 8.00%
5.00% - 8.00%
per annum
per annum
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
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
Category of plan assets as at March 31, 2020
HDFC Bank
HDFC Securities
HDB Financial
Limited
Services Limited
Category of plan assets as at March 31, 2019
HDFC Bank
HDFC Securities
HDB Financial
Services Limited
Experience adjustment
Limited
25.55%
30.31%
41.03%
3.11%
100.00%
Limited
23.79%
28.96%
45.03%
2.22%
38.00%
9.00%
50.00%
3.00%
100.00%
Limited
42.00%
44.00%
10.00%
4.00%
100.00%
100.00%
Years ended March 31,
2020
577.97
851.66
(273.69)
(59.42)
16.69
2019
547.75
702.86
(155.11)
12.04
10.46
2018
457.35
614.06
(156.71)
(2.35)
13.69
2017
390.23
548.50
(158.27)
31.19
39.69
69.54
4.11
0.67
(14.65)
9.06
(4.58)
41.88%
52.83%
-
5.29%
100.00%
32.74%
65.27%
-
1.99%
100.00%
(` crore)
2016
295.46
401.93
(106.47)
(13.61)
16.27
(` crore)
73.06
5.10
0.75
(12.57)
3.32
(0.12)
271
other relevant factors.
are given below:
Government securities
Debenture and bonds
Equity shares
Others
Total
Government securities
Debenture and bonds
Equity shares
Others
Total
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
liabilities
Pension
Particulars
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan
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
Reconciliation of opening and closing balance of the present value of the
March 31, 2020
March 31, 2019
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Particulars
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, 2020
64.15
March 31, 2019
69.54
21.95
1.10
0.83
(14.65)
31.30
1.86
0.88
(12.57)
0.28
-
9.51
9.51
(64.15)
(54.64)
4.11
0.67
(1.10)
4.19
7.87
1.39
7.72
0.48
-
21.95
21.95
(69.54)
(47.59)
5.10
0.75
(1.86)
2.72
6.71
2.34
14.03
6.60% per annum
7.00% per annum
7.00% per annum
7.64% 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
are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
Total
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
2020
9.51
64.15
Years ended March 31,
2019
21.95
69.54
2018
31.30
73.06
2017
36.16
73.55
(54.64)
(47.59)
(41.76)
(37.39)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
0.28
9.06
0.48
3.32
0.59
3.95
0.39
4.65
% of fair value
to total plan
assets as at
March 31, 2020
% of fair value
to total plan
assets as at
March 31, 2019
20.81%
17.14%
62.05%
100.00%
8.49%
73.88%
17.63%
100.00%
(` crore)
2016
38.38
70.88
(32.50)
1.43
17.35
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
Provident fund
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, 2020 (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, 2020
March 31, 2019
6.60% per annum
7.64% per annum
8.50% per annum
8.65% per annum
The Group does not have any unfunded defined benefit plan. The Group contributed ` 490.14 crore (previous year: ` 331.21
crore) to the provident fund. The Bank contributed ` 75.41 crore (previous year: ` 80.66 crore) to the superannuation plan and
` 3.79 crore (previous year: ` 3.27 crore) to the National Pension Scheme.
The Bank has implemented the judgement of the Hon’ble Supreme Court in Swami Vivekananda Vidyamandir on clubbing
of identified allowances with basic salary up to the maximum salary ceiling specified in the Employees Provident Fund and
Miscellaneous Provisions Act 1952 with effect from April 2019.
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Group
is given below:
Particulars
Privileged leave
Sick leave
Total actuarial liability
Assumptions (HDFC Bank Limited)
Discount rate
Salary escalation rate
Assumptions (HDFC Securities Limited)
Discount rate
Salary escalation rate
Assumptions (HDB Financial Services Limited)
Discount rate
Salary escalation rate
(` crore)
March 31, 2020
March 31, 2019
358.94
74.72
433.66
347.22
67.74
414.96
6.60% per annum
7.64% per annum
7.00% per annum
8.00% per annum
5.95% per annum
7.20% per annum
7.33% per annum
9.00% per annum
4.87%
per annum
7.00% - 8.00%
per annum
6.84% - 6.92%
per annum
5.00% - 8.00%
per annum
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and
other relevant factors.
17 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:
272 HDFC Bank Limited Integrated Annual Report 2019-20
273
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
(a) Treasury
Segment reporting for the year ended March 31, 2020 is given below:
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 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.
274 HDFC Bank Limited Integrated Annual Report 2019-20
20 Provisions for non - performing assets / others*
6,632.33
3,756.44
3,283.47
13,679.74
43.29
32.79
7.50
1,381.75
938.71
119.49
126.71
167.09
178.56
* Represents material non-cash charge other than depreciation and taxation.
1
3
4
5
7
9
1
3
4
5
7
9
Business segments:
Sr.
Particulars
No.
Segment revenue
2 Unallocated revenue
Segment results
6 Unallocated expenses
8 Net profit (5) - (6) - (7)
Segment assets
10 Unallocated assets
11 Total assets (9) + (10)
12 Segment liabilities
13 Unallocated liabilities
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
Income tax expense (including deferred tax)
14 Total liabilities (12) + (13)
15 Capital employed (9) - (12)
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
21 Unallocated other provisions*
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
Business segments:
Particulars
Sr.
No.
Segment revenue
2 Unallocated revenue
Segment results
6 Unallocated expenses
8 Net profit (5) - (6) - (7)
Segment assets
10 Unallocated assets
11 Total assets (9) + (10)
12 Segment liabilities
13 Unallocated liabilities
14 Total liabilities (12) + (13)
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
Income tax expense (including deferred tax)
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
Treasury
Retail
Wholesale
banking
banking
Other
banking
operations
26,558.44
107,999.94
61,134.45
28,028.21
223,721.04
(` crore)
Total
3,462.77
12,942.46
14,121.09
9,372.33
39,898.65
457,240.91
484,270.74
520,567.01
110,819.75 1,572,898.41
102,012.09
907,258.10
317,628.87
49,402.29 1,376,301.35
355,228.82
(422,987.36)
202,938.14
61,417.46
196,597.06
Domestic
International
145,897.80
1,531,554.08
1,709.90
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
23,576.48
89,222.34
54,563.54
22,809.31
190,171.67
1,305.76
11,796.27
14,224.12
8,910.06
36,236.21
348,766.21
428,790.92
408,749.72
99,119.71 1,285,426.56
61,438.85
732,294.96
271,887.13
48,653.92 1,114,274.86
2.19
76,654.96
147,068.27
1,703.79
10,898.59
27,296.27
7,932.03
1,580,830.44
27,593.74
1,403,895.09
(19,661.71)
176,935.35
1,711.62
1,276.77
20.20
(` crore)
1,170.47
49,276.36
1.72
(` crore)
Total
52.78
66,116.65
124,107.80
1,918.04
11,872.55
22,445.62
7,379.15
1,292,805.71
24,356.40
1,138,631.26
275
Segment reporting for the year ended March 31, 2019 is given below:
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Particulars
Sr.
No.
15 Capital employed (9) - (12)
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
20 Provisions for non - performing assets / others*
21 Unallocated other provisions*
Treasury
Retail
banking
Wholesale
banking
287,327.36
(303,504.04)
136,862.59
Other
banking
operations
50,465.78
93.67
26.31
(0.20)
1,149.97
912.24
4,608.34
192.62
104.52
1,689.09
210.25
177.60
2,079.54
* Represents material non-cash charge other than depreciation and taxation
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
18 Related party disclosures
Domestic
122,868.84
1,259,091.50
1,645.16
Total
171,151.69
(16,977.24)
154,174.45
1,646.51
1,220.67
8,376.77
5.41
(` crore)
International
1,238.96
33,714.21
1.35
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
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 / their relatives are interested
Salisbury Investments Private Limited, Akuri by Puri
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, 2020 are summarised as follows: (` crore)
Items / Related party
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
Promoter Key management
personnel
3,679.07
(7,717.90)
0.47
(0.47)
-
-
-
-
8.53
18.54
(22.51)
0.76
(0.76)
2.55
(2.87)
-
-
1.82
Total
3,697.61
(7,740.41)
1.23
(1.23)
2.55
(2.87)
-
-
10.35
276 HDFC Bank Limited Integrated Annual Report 2019-20
Items / Related party
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
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
Promoter Key management
personnel
-
308.94
586.66
-
-
-
864.62
-
44.48
(55.33)
100.28
(100.28)
0.39
(0.40)
-
24,127.25
0.09
#
0.31
-
-
-
-
10.40
-
-
-
-
-
-
-
27.56
-
Total
0.09
308.94
586.97
-
-
-
-
875.02
-
44.48
(55.33)
100.28
(100.28)
0.39
(0.40)
27.56
24,127.25
# Denotes amount less than ` 1 lakh
•
•
•
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding
balances at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated
against the key managerial personnel. These will be paid based on approval from RBI. As of March 31, 2020, approved
unpaid deferred bonus in respect of earlier years was ` 5.92 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 on March 31, 2020
is ` 12,009.95 crore (previous year: ` 5,865.50 crore). The contingent credit exposure pertaining to these contracts computed
in line with the extant RBI guidelines on exposure norms was ` 136.86 crore (previous year: ` 79.12 crore).
During the year ended March 31, 2020, 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, 2020, the security deposit
outstanding was ` 3.50 crore (previous year: ` 3.50 crore).
The Group’s related party balances and transactions for the year ended March 31, 2019 are summarised as follows:
Items / Related party
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
Promoter
3,290.99
(3,290.99)
0.47
(0.47)
-
-
-
-
5.49
35.20
282.97
Key management
personnel
27.02
(27.02)
0.76
(2.51)
2.96
(3.11)
-
-
1.13
0.10
#
(` crore)
Total
3,318.01
(3,318.01)
1.23
(2.98)
2.96
(3.11)
-
-
6.62
35.30
282.97
277
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
Items / Related party
Expenses for receiving services from
Promoter
Key management
personnel
486.95
0.61
Equity investments
Other Investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
-
-
-
(1,740.49)
511.17
-
30.55
(48.40)
83.64
(83.64)
0.37
(0.40)
-
23,982.42
-
-
-
-
7.43
-
-
-
-
-
-
-
25.88
-
Total
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
•
•
•
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding
balances at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
Bonus and retiral benefits for key managerial personnel are accrued as a part of an overall pool and are not allocated
against the 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.
19 Additional information pursuant to Schedule III of the Companies Act, 2013
Additional information to consolidated accounts at March 31, 2020 (Pursuant to Schedule III of the Companies Act, 2013)
Total of future minimum sub-lease payments expected to be received under
(` crore)
non-cancellable sub-leases
The total of minimum lease payments recognised in the Profit and Loss Account for
Name of entity
Parent:
HDFC Bank Limited
Subsidiaries*:
Net assets as of
March 31, 2020
Profit or (loss) for the year ended
March 31, 2020
As % of
consolidated
net assets**
Amount***
As % of
consolidated
profit or loss
Amount***
96.95%
170,986.02
96.34%
26,257.32
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
0.71%
4.64%
0.33%
1,245.50
8,179.26
576.64
1.55%
3.80%
0.16%
423.37
1,036.94
42.31
The subsidiaries are domestic entities
*
** Consolidated net assets are total assets minus total liabilities including minority interest
*** Amounts are before inter-company adjustments.
278 HDFC Bank Limited Integrated Annual Report 2019-20
279
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
Additional information to consolidated accounts at March 31, 2019 (Pursuant to Schedule III of the Companies Act, 2013)
Name of entity
Parent:
HDFC Bank Limited
Subsidiaries*:
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
(`` crore)
97.09%
149,206.32
94.38%
21,078.14
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
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
*
The subsidiaries are domestic entities
** Consolidated net assets are total assets minus total liabilities including minority interest
*** Amounts are before inter-company adjustments.
20 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 five years
Later than one year and not later than five years
Total
the year
the year
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
March 31, 2020 March 31, 2019
(` crore)
1,053.94
3,426.70
4,109.25
8,589.89
1,261.30
29.94
9.48
206.55
1,182.83
3,878.65
4,854.12
9,915.60
1,420.48
64.65
9.73
270.14
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.
21 Penalties levied by the RBI
During the year ended March 31, 2020, RBI has imposed a penalty of ` 1 crore (previous year: ` 0.20 crore) for non-compliance
with various directions issued by RBI on Know Your Customer (KYC) / Anti-Money Laundering (AML) standards. Additionally, RBI
has imposed a monetary penalty of ` 1 crore on the Bank for failure to undertake on-going due diligence in case of 39 current
accounts opened for bidding in Initial Public Offer (IPO).
22 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, 2020 and March 31, 2019. The above is based on the information available with the Bank which has been
relied upon by the auditors.
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2020
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, 2020 was ` 0.13
crore (previous year: ` 0.04 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, 2020 was Nil (previous year: Nil). The above is based on the information available with
the Company which has been relied upon by the auditors.
23 Corporate social responsibility
Operating expenses include ` 572.62 crore (previous year: ` 473.50 crore) for the year ended March 31, 2020 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)
March 31, 2020
March 31, 2019
Sr.
No.
Particulars
Amount
spent
Amount
unpaid /
provision
Total
Amount
spent
(i)
Construction / acquisition of any asset
-
-
-
-
(ii) On purpose other than (i) above
566.02
6.60
572.62
473.50
Amount
unpaid /
provision
-
-
Total
-
473.50
24 COVID-19
HDFC Bank Limited
The SARS-CoV-2 virus responsible for COVID-19 continues to spread across the globe and India, which has contributed to a
significant decline and volatility in global and Indian financial markets and a significant decrease in global and local economic
activities. On March 11, 2020, the COVID-19 outbreak was declared a global pandemic by the World Health Organization.
Numerous governments and companies, including the Bank, have introduced a variety of measures to contain the spread of the
virus. On March 24, 2020, the Indian government announced a strict 21-day lockdown which was further extended by 19 days
across the country to contain the spread of the virus. The extent to which the COVID-19 pandemic will impact the Bank’s results
will depend on future developments, which are highly uncertain, including, among other things, any new information concerning
the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact whether government-mandated
or elected by the Bank.
In accordance with the RBI guidelines relating to COVID-19 Regulatory Package dated March 27, 2020 and April 17, 2020,
the Bank would be granting a moratorium of three months on the payment of all installments and / or interest, as applicable,
falling due between March 1, 2020 and May 31, 2020 to all eligible borrowers classified as Standard, even if overdue, as on
February 29, 2020. For all such accounts where the moratorium is granted, the asset classification shall remain stand still
during the moratorium period (i.e. the number of days past-due shall exclude the moratorium period for the purposes of asset
classification under the Income Recognition, Asset Classification and Provisioning norms).
The quantitative disclosures as required by the above referred RBI circular dated April 17, 2020 are given below:
(` crore)
Particulars
Respective amounts in SMA / overdue categories, where the moratorium / deferment was extended, in terms of
paragraph 2 and 3 of the circular
Term Loan Instalments: ` 617.75 crore
Cash Credit / Overdraft : ` 458.19 crore
Respective amount where asset classification benefits is extended
Term Loan Instalments: ` 617.75 crore
Cash Credit / Overdraft : ` 458.19 crore
Provisions made during the quarter ended March 31, 2020 in terms of para 5 of the circular
Provisions adjusted during the respective accounting periods against slippages in terms of paragraph 6 of the
circular
Residual provisions as of March 31, 2020 in terms of paragraph 6 of the circular
Amount
1,075.94(1)
1,075.94
463.00(2)
Nil
463.00
Integrated Report
Financial Statements and Statutory Reports
Schedules to the Consolidted Financial Statements
1. Represents amounts in SMA / overdue categories where the asset classification benefit is extended, consequent to the
said circular dated April 17, 2020. The Bank may extend moratorium / deferment in terms of the said circular for additional
accounts in the SMA / overdue categories.
Excludes other provisions held by the Bank as at March 31, 2020, against the potential impact of COVID-19 based on the
information available at this point in time. The provisions held by the Bank are in excess of the RBI prescribed norms.
2.
HDFC Securities Limited
During the year ended March 31, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization.
On March 24, 2020, the Indian government announced a strict 21-day lockdown across the country to contain the spread of the
virus followed by another extension of the lockdown by another 19 days.
Stock broking and depository services have been declared as essential services and accordingly, the Company has faced no
business stoppage / interruption on account of the lockdown. In light of the steep decline in the indices, the Company, in the
normal course of business, placed additional margin money with the stock exchanges.
As of March 31, 2020, based on facts and circumstances existing as of that date, the Company does not anticipate any material
uncertainties which affects its liquidity position and also ability to continue as a going concern.
HDB Financial Services Limited
The Company has conservatively created COVID 19 provision of ` 73 crore out of its General provisions. The provision is made
as per management’s estimate of stress on the forward flow rates. Strictly as per RBI regulations there is no impairment nor any
provision needs, however the Company is cautiously exercising management discretion to provide on high level estimate.
25 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.
26 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 MSKA & Associates.
As per our report of even date.
For and on behalf of the Board
For MSKA & Associates
Chartered Accountants
ICAI Firm Registration Number: 105047W
Shyamala Gopinath
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Swapnil Kale
Partner
Membership Number: 117812
Mumbai, April 18, 2020
Aditya Puri
Managing Director
Santosh Haldankar
Company Secretary
Srinivasan Vaidyanathan
Chief Financial Officer
280 HDFC Bank Limited Integrated Annual Report 2019-20
281
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
Name of the subsidiary
The date since when subsidiary was acquired
Sr.
No.
1.
2. Reporting period for the subsidiary concerned,
if different from the holding company’s reporting
period
3. Reporting currency and exchange rate as on
the last date of the relevant financial year in the
case of foreign subsidiaries.
4.
Share capital
5. Reserves & surplus
6.
7.
8.
9.
10. Profit before taxation
11. Provision for taxation
12. Profit after taxation
13. Proposed dividend (including tax thereon)*
14. Extent of shareholding (in percentage)
Total assets
Total liabilities
Investments
Turnover
HDFC Securities Limited HDB Financial Services Limited
(` crore)
September 28, 2005
Reporting period of the subsidiary
is the same as that of the holding
company i.e. April 1, 2019 to
March 31, 2020
Not applicable as this is a domestic
subsidiary
August 31, 2007
Reporting period of the subsidiary
is the same as that of the holding
company i.e. April 1, 2019 to
March 31, 2020
Not applicable as this is a domestic
subsidiary
15.73
1,229.77
2721.14
1475.64
24.54
894.85
559.55
136.18
423.37
255.33
96.57%
787.58
7,391.68
59,234.40
51,055.14
1,818.88
10,814.48
1,447.69
410.75
1,036.94
-
95.30%
Certificate on Corporate Governance
To The Members of HDFC Bank Limited (“the Bank”)
We have examined the compliance of conditions of corporate governance by HDFC Bank Limited (“the Bank”) for the year ended
March 31, 2020, 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 Bank for ensuring the compliance of the conditions of the
Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Bank.
In our opinion, and to the best of our information and according to the explanations given to us, we certify that the Bank has complied
with the conditions of Corporate Governance as stipulated in the aforesaid provisions of LODR.
We further state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or effectiveness
with which the management has conducted the affairs of the Bank.
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.: 1303 COP No.: 10440
UDIN: F001303B000360521
Place: Mumbai
Date: June 20, 2020
*
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, 2020.
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
Part Time Non-Executive Chairperson &
Independent Director
Umesh Chandra Sarangi
Independent Director
Aditya Puri
Managing Director
Srinivasan Vaidyanathan
Chief Financial Officer
Mumbai, April 18, 2020
Santosh Haldankar
Company Secretary
282 HDFC Bank Limited Integrated Annual Report 2019-20
283
Certificate under SEBI Listing Regulations
Corporate Governance
[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”)]
[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]
To,
The Members,
HDFC Bank Limited,
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel (West),
Mumbai - 400013.
We have examined the relevant registers, records, forms, returns and disclosures received from the Directors of HDFC Bank Limited
[CIN.: L65920MH1994PLC080618] (hereinafter called the ‘Company’) having its Registered Office at HDFC Bank House, Senapati
Bapat Marg, Lower Parel (West), Mumbai - 400013 and also the information provided by the Company, its officers and the authorised
representatives for the purpose of issuance of the Certificate, in accordance with Regulation 34 (3) read with Schedule V Para-C Sub
clause 10 (i) of the Securities 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 information and according to the verifications (including Directors Identification Number (DIN)
status at the portal www.mca.gov.in) as considered necessary and explanations furnished to us by the Company and its officers, we
hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ended on March 31,
2020 have been debarred or disqualified from being appointed or continuing as Directors of the Company by Securities and Exchange
Board of India, Ministry of Corporate Affairs or any such other Statutory Authority.
S. No. Name of the Director
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Mr. Aditya Puri
Mrs. Renu Sud Karnad
Mr. Sanjiv Sachar
Mr. Umesh Chandra Sarangi
Mrs. Shyamala Gopinath
Mr. Kaizad Bharucha
Mr. Srikanth Nadhamuni
Mr. Sandeep Pravin Parekh
Mr. Malay Yogendra Patel
Mr. Dwarakanath Ranganath Mavinakere
Mr. Bhavesh Zaveri#
Mr. Sashidhar Jagdishan#
DIN
00062650
00008064
02013812
02040436
02362921
02490648
02551389
03268043
06876386
07565125
01550468
08614396
Date of Appointment in the Company*
October 12, 2004
March 3, 2020
July 21, 2018
March 1, 2016
January 2, 2015
December 24, 2013
September 20, 2016
January 19, 2019
March 31, 2015
January 31, 2019
November 28, 2019
November 28, 2019
*Date of appointment is taken from MCA.
#Ceased to be the Director of the Company with effect from April 18, 2020
Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the management of the
Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to
the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the
Company.
Place: Mumbai
Date: June 20, 2020
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.: 1303 COP No.: 10440
UDIN: F001303B000360519
CORPORATE GOVERNANCE FRAMEWORK
Shareholders
Regulators
Board of Directors
Audit Committee
Stakeholders’
Relationship
Committee
Nomination &
Remuneration
Committee
Risk Policy &
Monitoring Committee
Other
Committees
External and Internal
Auditors
Managing Director
Executive
Director
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
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 & Remuneration Committee, Risk
Policy & 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 fiduciary role and responsibility
towards
to meet
its shareholders and strives hard
their expectations.
The Bank believes that best board governance 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.
284 HDFC Bank Limited Integrated Annual Report 2019-20
285
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, the SEBI Listing Regulations and
all other applicable laws.
As on the date of this report, the Board consists of ten (10)
Directors as follows:
Category
Name of Director
Sr.
No.
1) Executive
Directors
Mr. Aditya Puri (Managing Director),
Mr. Kaizad Bharucha
2) Non-Executive
Directors
3)
Independent
Directors
Mr. Srikanth Nadhamuni,
Mrs. Renu Karnad (Additional
Non-Executive Director, Nominee
of Housing Development Finance
Corporation Limited)
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. Keki Mistry ceased to be a Director of the Bank with effect from
the close of business hours on January 18, 2020 on completion
of term of eight continuous years, being the maximum term
prescribed under the Banking Regulation Act, 1949.
Mrs. Renu Karnad was appointed as an Additional Non-Executive
Director (Nominee of Housing Development Finance Corporation
Limited) with effect from March 3, 2020, subject to the approval
of shareholders at the ensuing Annual General Meeting.
The Board of Directors had appointed Mr. Sashidhar Jagdishan
and Mr. Bhavesh Zaveri each as Additional Director and
Executive Director on the Board of the Bank, subject to the
approval of the Reserve Bank of India (“RBI”) and shareholders,
for a period of three years each from November 28, 2019/
from such date and on such terms as may be approved by
the RBI. The Bank had accordingly made an application to the
RBI seeking approval for the aforementioned appointments.
RBI through its communication dated April 7, 2020, advised
the Bank to examine and submit the said proposals after a new
MD and CEO assumes charge later this year. Accordingly, their
appointments as Executive Directors have not taken effect.
Consequently, Mr. Sashidhar Jagdishan and Mr. Bhavesh Zaveri
resigned as Additional Directors from the Board of the Bank in
terms of Companies Act, 2013 with effect from April 18, 2020.
Pursuant to the SEBI Listing Regulations, 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.
Sub-Committee of SEBI. She served as the Chairperson on the
Mr. Puri, along with his relatives, holds 7,796,251 equity shares
Details of directorships, memberships and chairpersonships of
the committees of other companies for the current Directors of
the Bank are as follows:
Name of Director
Directorships
on the Board
of other
companies*
Memberships of
committees of
other
companies *
Mrs. Shyamala Gopinath
Mr. Malay Patel
Mr. Aditya Puri
Mr. Kaizad Bharucha
Mr. Umesh
Chandra Sarangi
Mr. Srikanth Nadhamuni
Mrs. Renu Karnad
Mr. Sanjiv Sachar
Mr. Sandeep Parekh
Mr. M.D. Ranganath
6
2
(1)
-
1
7
1(4)
limited companies:
Listed Public Limited Companies Other Public Limited Companies
-
-
11(1)
6(3)
1
1
-
* The figures in brackets indicate Chairpersonships.
Note: For the purpose of considering the limit of the Directorships and
limits of committees on which the directors are members / Chairpersons,
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 the date of this
report are as under:
Mrs. Shyamala Gopinath
Mrs. Shyamala Gopinath, aged 70 years, holds a Master’s
Degree in Commerce and is a CAIIB. Mrs. Shyamala Gopinath
has over 42 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
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
Advisory Board on Bank, Commercial and Financial Frauds for
in the Bank as on March 31, 2020.
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 does not hold any shares in the Bank as on
March 31, 2020.
Mr. Puri
is currently on the Board of
following public
limited companies:
-
Listed Public Limited Companies Other Public Limited Companies
1) HDB Financial
Services Limited (Non-
Executive Chairman)
Mrs. Gopinath is currently on the Board of following public
Mr. Kaizad Bharucha
1) Tata Elxsi Limited
1) CMS Info Systems Limited
as Executive Director, he is responsible for Wholesale Banking
(Independent Director)
(Independent Director)
2) Colgate-Palmolive
(India) Limited
(Independent Director)
3) BASF India Limited
(Independent Director)
Mr. Aditya Puri
Mr. Aditya Puri, aged 69 years, holds a Bachelor’s degree in
Commerce from Punjab University and is an Associate Member
of the Institute of Chartered Accountants of India.
Prior to joining the Bank, Mr. Puri was the Chief Executive Officer
of Citibank, Malaysia from 1992 to 1994. Mr. Puri has been the
Managing Director of the Bank since September 1994. Mr. Puri
has over four decades of experience in the banking sector in
India and abroad.
Mr. Puri has provided outstanding leadership as the Managing
Director and has contributed significantly to enable the Bank
scale phenomenal heights under his stewardship. During the
financial year 2019-20, Mr. Puri was inducted into the Chartered
Accountants (CA) Hall of Fame by the Institute of Chartered
Accountants of India (ICAI). He is the first member of ICAI to
be honoured with this award. He was also ranked as the ‘Best
CEO’ at FinanceAsia’s Survey 2020. 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
Mr. Kaizad Bharucha, aged 55 years, holds a Bachelor of
Commerce degree from University of Mumbai. He has been
associated with the Bank since 1995. In his current position
covering areas of Corporate Banking, Emerging Corporate Group,
Business Banking, HealthCare Finance Group, Infrastructure
Finance Group, Rural Banking Group, Department for Special
Operations and inclusive Banking Initiatives Group. He has
driven growth and profitability in the aforesaid areas of the Bank.
In addition to the above, Mr. Kaizad Bharucha is a senior
member on various internal committees of the Bank across
functional areas.
In his previous position as Group Head - Credit & Market Risk,
he was responsible for the Bank’s entire 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, along with his relatives, holds 2,135,102 equity
shares in the Bank as on March 31, 2020.
Mr. Bharucha is not a director in any public limited company.
Mr. Malay Patel
Mr. Malay Patel, aged 43 years, is a Major in Engineering
(Mechanical) from Rutgers University, Livingston, NJ, USA, and
an Associate of Arts in Business Administration (A.A.B.A.) from
Bergen County College, Fairlawn, New Jersey, 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. 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.
force behind the Bank’s foray into the world of “digital banking”
Mr. Patel does not hold any shares in the Bank as on
resulting in the roll out of several digital banking products.
March 31, 2020.
286 HDFC Bank Limited Integrated Annual Report 2019-20
287
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Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
Mr. Patel is currently on the Board of following public
limited companies:
(CPU design), Intel Corporation (CPU design), Silicon Graphics
(Interactive TV) and WebMD (Internet Healthcare).
Mr. Parekh does not hold any shares in the Bank as on
March 31, 2020.
Mrs. Karnad is currently on the Board of following public
limited companies:
Listed Public Limited Companies Other Public Limited Companies
-
1) HDFC Securities Limited
(Additional Director)
Mr. Umesh Chandra Sarangi
Mr. Umesh Chandra Sarangi, aged 68 years, holds a
Master’s Degree in Science (Botany) from the Utkal University
(gold medalist).
Mr. Sarangi has over three decades 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 practical experience in agriculture and rural
economy pursuant to Section 10-A(2)(a) of the Banking
Regulation Act, 1949.
Mr. Sarangi does not hold any shares in the Bank as on
March 31, 2020.
Mr. Sarangi is not a director in any public limited company.
Mr. Srikanth Nadhamuni
Mr. Srikanth Nadhamuni, aged 56 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 Central Processing Unit (CPU) design, Healthcare,
e-Governance, National ID, Biometrics, Financial Technology
and Banking sectors.
Mr. Nadhamuni presently is a director of Novopay Solutions
Private Limited, a fintech company involved in the area of mobile
payments and banking solutions and is the Chairman of Khosla
Labs Private Limited, a company focused in digital solutions and
technology . He has also been a co-founder of e-Governments
Foundation with Mr. Nandan Nilekani which work on the
objectives to improve governance in Indian cities, creation of
Municipal ERP suite which improves service delivery of cities.
Mr. Nadhamuni was the Chief Technology Officer of Aadhaar
(Unique Identification 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
Mr. Nadhamuni has been appointed as a Director having
expertise in the field of Information Technology.
Mr. Nadhamuni does not hold any shares in the Bank as on
March 31, 2020.
Mr. Nadhamuni is not a director in any public limited company.
Mr. Sanjiv Sachar
Mr. Sanjiv Sachar, aged 62 years, is a fellow member of the
Institute of Chartered Accountants of India and in November
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 does not hold any shares in the Bank as on
March 31, 2020.
Mr. Sachar is a director on the Board of following public
limited companies:
Listed Public Limited Companies Other Public Limited Companies
1) KDDL Limited
(Independent Director)
-
Mr. Sandeep Parekh
Mr. Sandeep Parekh, aged 49 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.
288 HDFC Bank Limited Integrated Annual Report 2019-20
Mr. Parekh is not a director in any public limited company.
Listed Public Limited Companies Other Public Limited Companies
Mr. M.D. Ranganath
Mr. M.D. Ranganath, aged 58 years, holds Master’s degree
in technology from IIT, Madras and a Bachelor’s degree in
Engineering from the University of Mysore. He holds a Post
Graduate Diploma
Institute
of Management (IIM), Ahmedabad and is a member of
CPA, Australia.
in Management
Indian
from
Mr. Ranganath has over 27 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 company,
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, Merger & Acquisition (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 does not hold any shares in the Bank as
on March 31, 2020
Mr. Ranganath
company.
is not a director
in any public
limited
Mrs. Renu Karnad
Mrs. Renu Karnad, aged 68 years, is the Managing Director of
Housing Development Finance Corporation Limited since 2010.
She is a Post Graduate in Economics from the University of Delhi
and holds a degree in Law from the University of Mumbai. She
is also a Parvin Fellow-Woodrow Wilson School of Public and
International Affairs, Princeton University, USA. Mrs. Karnad
brings with her rich experience and knowledge of the mortgage
sector, having been associated with real estate and mortgage
industry in India for over 40 years. Over the years, she has
been the recipient of numerous awards and accolades, such as
the ‘Outstanding Woman Business Leader’ award granted by
CBNC‐TV18 India Business Leader Awards 2012, induction in
the Hall of Fame, Fortune India magazine’s most powerful women
from 2011 to 2019, ‘Top Ten Powerful Women to watch out for
in Asia’ by Wall Street Journal Asia in 2006, etc. She has been
a Non-Executive Director on the Board of the Bank in the past.
Mrs. Karnad along with her relatives, holds 595,320 equity
shares in the Bank as on March 31, 2020.
1) Housing Development
Finance Corporation
Limited (Managing Director)
1) HDFC ERGO General
Insurance Company
Limited (Non-
Executive Director)
2) ABB India Limited
2) Bangalore International
(Independent Director)
Airport Limited
(Independent Director)
3) HDFC Asset Management
Company Limited (Non-
Executive Director)
4) HDFC Life Insurance
Company Limited (Non-
Executive Director)
5) GlaxoSmithKline
Pharmaceuticals
Limited (Chairperson)
6) Unitech Limited
(Nominee Director)
ATTENDANCE AT BOARD MEETINGS &
LAST ANNUAL GENERAL MEETING (AGM)
The Board / Committee Meetings are convened by giving
appropriate notice well in advance. 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 or other audio visual means are also
provided at the Board / Committee meetings in case any director
is unable to physically remain present at the meetings 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, compliance and risk
management framework, human resource strategy, cyber
security and data privacy, macro economic updates, regulatory
updates 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. Directors
are also encouraged to attend relevant programs and seminars
conducted by organizations such as Centre for Advanced
Financial Research and Learning
for
Development and Research in Banking Technology (IDRBT) etc.
(CAFRAL),
Institute
During the financial year under review, nine (9) Board Meetings
were held. The meetings were held on April 20, 2019,
May 22, 2019, July 12, 2019, July 20, 2019, August 22, 2019,
October 19, 2019, November 28, 2019, January 18, 2020
and March 4, 2020.
289
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Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
Details of attendance at the Board Meetings held during the financial year under review and attendance at the last AGM
are as follows:
The options so vested are to be exercised within
the Directors are paid sitting fees of ` 50,000 and ` 100,000
2 years from the respective dates of vesting.
per meeting for attending Committee & Board meetings
Name of the Director
Independent Directors
Mrs. Shyamala Gopinath
Mr. Malay Patel
Mr. Umesh Chandra Sarangi
Mr. Sandeep Parekh1
Mr. M.D. Ranganath
Mr. Sanjiv Sachar
Non-executive Directors
Mr. Keki Mistry2
Mr. Srikanth Nadhamuni3
Mrs. Renu Karnad4
Executive Directors
Mr. Aditya Puri
Mr. Kaizad Bharucha5
Board Meetings attended during the year
Attendance at last AGM (July 12, 2019)
9
9
9
8
9
9
7
7
1
9
8
Present
Present
Present
Absent
Present
Present
Present
Present
NA
Present
Present
1 Mr. Sandeep Parekh could not attend the previous AGM of the Bank and Board meeting held on July, 12, 2019, since he was travelling abroad on prior
personal commitments.
2 Mr. Keki Mistry ceased to be a Director of the Bank with effect from close of business hours on January 18, 2020 on completion of term of eight
continuous years, being the maximum term prescribed under the Banking Regulation Act, 1949.
3 Mr. Nadhamuni could not attend 2 board meetings held on May 22, 2019 and August 22, 2019 due to his prior professional commitments.
4 Mrs. Renu Karnad has been appointed as Additional Non-Executive Director (Nominee of Housing Development Finance Corporation Limited) with effect
from March 3, 2020, subject to approval of shareholders at the ensuing Annual General Meeting.
5 Mr. Kaizad Bharucha could not participate in the Board meeting held on March 4, 2020, being interested or concerned in the matter of discussion.
REMUNERATION OF DIRECTORS
Managing Director and Executive Director
3. Deferred bonus of previous years amounting
to
` 15,235,836
The details of the remuneration paid to Mr. Aditya Puri,
Managing Director, and Mr. Kaizad Bharucha, Executive
Director during
financial year 2019-20 are as
under:
the
Particulars
Basic
(Amount in `)
Mr. Aditya
Puri
Mr. Kaizad
Bharucha
65,272,366
22,720,320
Allowances and Perquisites
34,292,491
24,833,286
Provident Fund
Superannuation
7,832,688
2,726,436
9,790,860
3,408,048
#
For the Executive Director the total bonus amount,
includes the following:
1. 60% of the performance bonus approved by the
RBI belonging for FY 2018, approved by the RBI in
FY 2020.This amount equals ` 12,944,656.
2. 60% of the Performance Bonus pertaining to FY 2019
approved by the RBI in FY 2020 and subsequently paid
in FY 2020. This amount was equal to ` 14,886,352.
3. Deferred bonus belonging to previous years amounting
to ` 4,902,150.
Performance Bonus #
72,028,660
32,733,158
*
Number of stock options granted *
681,600
266,400
#
For the Managing Director the total bonus amount,
includes the following:
1. 60% of the performance bonus approved by the
RBI belonging for FY 2018, approved by the RBI in
FY 2020.This amount equals ` 25,814,920.
2. 60% of the Performance Bonus pertaining to FY 2019
approved by the RBI in FY 2020 and subsequently paid
in FY 2020. This amount was ` 30,977,904.
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 vesting
schedule for the stock options is - 25% of options
after expiry of twelve months from date of grant, 25%
options after expiry of twenty-four months from the
date of grant, 25% of options after expiry of thirty-six
months from the date of grant and the balance 25%
options after expiry of forty-eight months from date
of grant, subject to performance and approval of RBI.
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.
Pursuant
to
the Banking Regulation Act, 1949,
the
appointment and tenure of Whole-Time Directors is subject
to the approval of RBI.
The Bank provides for gratuity in the form of lump-sum
payment on retirement or on death while in employment or
on termination of employment of an amount equivalent to
15 (fifteen) days basic salary payable for each completed
year of service.
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 2019-20 pertaining to financial
year 2018-19. 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-
The Bank makes annual contributions to funds administered
executive directors during the financial year 2019-20 is as
by trustees and managed by insurance companies for
under:
(Amount in `)
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
Name of the Director
Sitting Fees Commission #
Mrs. Shyamala Gopinath
2,900,000
-
Mr. Malay Patel
Mr. Keki Mistry*
3,350,000
1,000,000
1,450,000
1,000,000
wherever applicable and at actual cost to the Bank otherwise)
Mr. Umesh Chandra Sarangi
2,100,000
1,000,000
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 and Mr. Bharucha for
attending meetings of the Board and / or its Committees.
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 ` 3,500,000. The remuneration of the
Chairperson has been approved by the Reserve Bank of
India. Pursuant to the provisions of Companies Act, 2013,
Mr. Srikanth Nadhamuni
2,750,000
1,000,000
Mr. Sanjiv Sachar
Mr. Sandeep Parekh
Mr. M.D. Ranganath
Mrs. Renu Karnad **
2,300,000
1,000,000
2,100,000
1,000,000
2,650,000
1,000,000
150,000
-
# Refers to commission for FY 2018-19, paid out in FY 2019-20
* Mr. Keki Mistry ceased to be a director of the Bank with effect from
close of business hours on January 18, 2020 on completion of term of
eight continuous years, being the maximum term prescribed under the
** Mrs. Renu Karnad was appointed as an Additional Non-Executive Director
(nominee of Housing Development Finance Corporation Limited) with effect
from March 3, 2020, subject to the approval of shareholders at the ensuing
Annual General Meeting.
There were no other pecuniary relationships or transactions
of Non-Executive Directors vis-à-vis the Bank (except
banking transactions in the ordinary course of business and
on arm’s length basis) during FY 2019-20.
DETAILS OF REMUNERATION / SITTING FEES PAID
Banking Regulation Act, 1949.
TO NON-EXECUTIVE DIRECTORS
290 HDFC Bank Limited Integrated Annual Report 2019-20
291
Corporate Governance
COMPOSITION OF COMMITTEES OF DIRECTORS, TERMS OF REFERENCE AND ATTENDANCE AT THE
MEETINGS
The Board has constituted various Committees of Directors to take informed decisions in the best interest of the Bank. These
Committees monitor the activities as per the scope defined in their respective Charters and terms of reference.
The Board’s Committees are as follows:
Non Executive Directors
Executive Directors
Shyamala
Malay
Umesh
Srikanth
Sanjiv
Sandeep
M.D.
Renu
Aditya
Kaizad
Gopinath
Patel
Chandra
Nadhamuni
Sachar
Parekh
Ranganath
Karnad
Puri
Bharucha
Sarangi
Audit
Nomination and
Remuneration
Stakeholders’
Relationship
Corporate Social
Responsibility
Risk Policy and
Monitoring
Fraud Monitoring
Customer Service
Credit Approval
Digital Transactions
Monitoring
IT Strategy*
Wilful Defaulters’
Identification
Review
Non-Cooperative
Borrowers Review
(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)
(cid:32)
(cid:32)
(cid:32)
Premises
(cid:32)
* Consists of members of senior management and external IT consultant in addition to the above members.
(cid:32)(cid:3)Member (cid:32)(cid:3)Chairperson
(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)
Integrated Report
Financial Statements and Statutory Reports
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 American Depository Receipts 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.
Mr. M. D. Ranganath and Mr. Sanjiv Sachar are the members of Audit Committee having financial expertise. All
the members of the Committee are independent directors.
Mr. Santosh Haldankar, Company Secretary of the Bank, acts as the Secretary of the Committee.
Meetings:
The Committee met nine (9) times during the year on April 18, 2019, June 4, 2019, June 6, 2019, July 19, 2019,
August 22, 2019, October 18, 2019, January 9, 2020, January 17, 2020 and March 18, 2020.
Nomination & Remuneration Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
a. Scrutinizing the nominations of the directors with reference to their qualifications and experience, for identifying
‘Fit and Proper’ persons, assessing competency of the persons and reviewing compensation levels of the
Bank’s employees vis-à-vis other banks and the banking industry in general.
The 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:1)
(cid:1)
(cid:1)
(cid:1)
(cid:116)(cid:1)(cid:1)(cid:1)(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:253)(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: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)
(cid:116)(cid:1)
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.
c. To carry out any other function as is mandated by the Board from time to time and / or enforced by any
statutory notification, amendment or modification, as may be applicable.
Composition:
Mr. Sanjiv Sachar (Chairman), Mrs. Shyamala Gopinath, Mr. Sandeep Parekh and Mr. M.D. Ranganath.
All the members of the Committee are independent directors.
Meetings:
The Committee met nine (9) times during the year on April 18, 2019, May 22, 2019, June 27, 2019, July 12,
2019, July 18, 2019, August 22, 2019, October 18, 2019, November 15, 2019 and January 17, 2020.
292 HDFC Bank Limited Integrated Annual Report 2019-20
293
Corporate Governance
Stakeholders’ Relationship Committee
Brief Terms
of Reference /
Roles and
Responsibilities:
The Committee approves and monitors transfer, transmission, splitting and consolidation of shares and considers
requests for dematerialization of shares. Allotment of shares to the employees on exercise of stock options granted
under the various Employees Stock Option Schemes which are made in terms of the powers delegated by the
Board in this regard, are placed before the Committee for ratification. The Committee also monitors redressal of
grievances from shareholders relating to transfer of shares, non-receipt of Annual Report, dividends, etc.
The Committee shall oversee the various aspects of interests of all stakeholders including shareholders and other
security holders.
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, Company Secretary of the Bank is the Compliance Officer responsible for expediting the share
transfer formalities.
As on March 31, 2020, no instruments of transfer were pending for transfer. The details of the transfers are
reported to the Committee from time to time.
During the year ended March 31, 2020, the Bank received 2,862 complaints from the shareholders. The Bank
had attended to all the complaints. 119 complaints remained pending and 3 complaints have not been solved to
the satisfaction of the shareholders as on March 31, 2020.
Besides, 6,001 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
share certificate upon sub-division of Bank’s shares from the face value of `2/- each to the face value of `1/-
each, amalgamation, request for re-validation of dividend warrants and various other investor related matters.
These letters have also been responded to.
Mr. Umesh Chandra Sarangi (Chairman), Mr. Aditya Puri, Mr. Malay Patel, Mr. Sandeep Parekh and Mrs. Renu Karnad.
(Mrs. Renu Karnad was appointed as a member of the Committee with effect from June 3, 2020)
The Committee met four (4) times during the year on April 16, 2019, July 18, 2019, October 17, 2019 and
January 16, 2020.
Composition:
Meetings:
Risk Policy & Monitoring Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
Composition:
Meetings:
The Risk Policy & Monitoring Committee (RPMC) has been formed as per the guidelines of Reserve Bank of
India on Asset Liability Management / Risk Management Systems. The RPMC is a Board level committee, which
supports the Board by supervising the implementation of the risk strategy. It guides the development of policies,
procedures and systems for managing risk. It ensures that these are adequate and appropriate to changing
business conditions, the structure and needs of the Bank and the risk appetite of the Bank. The RPMC monitors
the compliance of risk parameters/aggregate exposures with the appetite set by the Board. It ensures that
frameworks are established for assessing and managing various risks faced by the Bank, systems are developed
to relate risk to the Bank‘s capital level and methods are in place for monitoring compliance with internal risk
management policies and processes. The Committee ensures that the Bank has a suitable framework for Risk
Management and oversees the implementation of the risk management policy.
Further, the functions of the Committee also include review of the enterprise-wide risk frameworks viz. Risk
Appetite framework (RAF), Internal Capital Adequacy Assessment Process (ICAAP), stress testing framework,
etc. The Committee also reviews the cyber security framework in the Bank from time to time.
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.
Mr. Srikanth Nadhamuni (Chairman), Mrs. Shyamala Gopinath, Mr. M.D. Ranganath, Mr. Aditya Puri and
Mrs. Renu Karnad.
(Mrs. Renu Karnad was appointed as a member of the Committee with effect from June 3, 2020)
The Committee met six (6) times during the year on April 16, 2019, June 27, 2019, July 18, 2019,
August 22, 2019, October 17, 2019 and January 16, 2020.
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
Credit Approval Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
time to time.
The Committee considers proposals for approval, renewal, or modification of various types of funded and non-
funded credit facilities to the customers of the Bank within such authority as delegated to it by the Board from
This facilitates quick response to the needs of the customers and timely disbursement of loans.
Composition:
Mr. Malay Patel, Mr. Aditya Puri, Mr. Kaizad Bharucha and Mr. Srikanth Nadhamuni.
Meetings:
The Committee met twenty four (24) times during the year on April 20, 2019, May 7, 2019,
May 22, 2019, June 11, 2019, June 27, 2019, July 12, 2019, July 20, 2019, August 8, 2019, August 22, 2019,
September 11, 2019, September 27, 2019, October 18, 2019, November 28, 2019, December 11, 2019,
December 24, 2019, January 8, 2020, January 17, 2020, February 4, 2020, February 17, 2020,
February 28, 2020, March 9, 2020, March 12, 2020, March 17, 2020 and March 26, 2020.
Premises Committee
Brief Terms
of Reference
/ Roles and
The Committee approves purchases and leasing of land parcel for proposed buildings & premises for the use of
Bank’s branches, back offices, ATMs, residential training centre(s), currency chests, guest house etc., (including
relocation and renewals) and of residential premises for Bank employees in accordance with the guidelines laid
Responsibilities:
down by the Board from time to time.
Composition:
Mr. Aditya Puri, Mr. Malay Patel and Mrs. Renu Karnad.
(During the year, Mr. Keki Mistry ceased to be a member of the Committee pursuant to his cessation as a Director
of the Bank and Mrs. Renu Karnad was appointed as a member of the Committee with effect from June 3, 2020)
Meetings:
The Committee met four (4) times during the year on April 16, 2019, July 18, 2019, October 17, 2019 and
January 16, 2020.
Fraud Monitoring Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
Pursuant to the directions of the RBI, the Bank has constituted a Fraud Monitoring Committee, exclusively
dedicated to the monitoring and following up of cases of fraud involving amounts of ` 1 crore and above.
The objectives of this Committee are the effective detection of frauds and immediate reporting of the frauds
and actions taken against the perpetrators of frauds with 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
f. Put in place other measures as may be considered relevant to strengthen preventive measures against
Composition:
Mrs. Shyamala Gopinath (Chairperson), Mr. Malay Patel, Mr. Umesh Chandra Sarangi, Mr. Aditya Puri and
(During the year, Mr. Keki Mistry ceased to be a member of the Committee pursuant to his cessation as
Meetings:
The Committee met four (4) times during the year on April 16, 2019, July 18, 2019, October 17, 2019 and
of internal controls; and
frauds.
Mr. Sandeep Parekh.
a Director of the Bank.)
January 16, 2020.
294 HDFC Bank Limited Integrated Annual Report 2019-20
295
Corporate Governance
Customer Service Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
The Committee has been constituted to monitor and bring about continuous improvements in the quality of
services rendered to the customers and also to ensure implementation of directives received from the Reserve
Bank of India (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. Malay Patel, Mr. Srikanth Nadhamuni, Mr. Aditya Puri and
Mr. Sandeep Parekh.
(During the year, Mr. Keki Mistry ceased to be a member of the Committee pursuant to his cessation as a Director
of the Bank.)
Meetings:
The Committee met four (4) times during the year on April 16, 2019, July 18, 2019, October 17, 2019 and
January 16, 2020.
Corporate Social Responsibility Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
The Corporate Social Responsibility (“CSR”) Committee of the Board has been constituted to identify, execute and
monitor CSR projects and assist the Board and the Bank in fulfilling its corporate social responsibility objectives
and achieving the desired results. The Committee shall also ensure legal and regulatory compliance from a CSR
perspective and reporting as well as communication to all the stakeholders on the Bank’s CSR initiatives.
The Board has constituted a Corporate Social Responsibility (CSR) Committee with the following 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)
(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:38)(cid:52)(cid:40)(cid:1)(cid:39)(cid:83)(cid:66)(cid:78)(cid:70)(cid:88)(cid:80)(cid:83)(cid:76)(cid:13)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:90)(cid:13)(cid:1)(cid:72)(cid:80)(cid:66)(cid:77)(cid:84)(cid:1)(cid:66)(cid:79)(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)
Composition:
Mr. Umesh Chandra Sarangi (Chairman), Mr. Sanjiv Sachar, Mr. Malay Patel, Mr. Aditya Puri and Mrs. Renu Karnad.
(Mrs. Renu Karnad was appointed as a member of the Committee with effect from June 3, 2020)
Meetings:
The Committee met four (4) times during the year on April 16, 2019, July 18, 2019, October 17, 2019 and
January 16, 2020.
Review Committee for Wilful Defaulters’ Identification
Brief Terms
of Reference
/ Roles and
Responsibilities:
Composition:
The Board has constituted a Review Committee for Wilful Defaulters’ Identification to review the orders passed
by the Committee of Executives for Identification of Wilful Defaulters and provide the final decision with regard
to identified Wilful defaulters and any other matters as may be decided by the Board from time to time.
Mrs. Shyamala Gopinath (Chairperson), Mr. Aditya Puri, Mr. Sandeep Parekh, Mr. Umesh Chandra Sarangi and
Mr. Sanjiv Sachar.
Meetings:
The Committee met twice during the year on July 20, 2019 and October 19, 2019
Review Committee for Non-Cooperative Borrowers
Brief Terms
of Reference
/ Roles and
Responsibilities:
Composition:
The Board has constituted a Review Committee to review matters related to Non-Co-operative Borrowers which
are handled by the Internal Committee of Executives appointed for this purpose and any other matters as may
be decided by the Board from time to time.
Mrs. Shyamala Gopinath (Chairperson), Mr. Aditya Puri, Mr. Sandeep Parekh, Mr. Umesh Chandra Sarangi and
Mr. Sanjiv Sachar.
Meetings:
The Committee did not meet during the year.
296 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
Digital Transaction Monitoring Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
In order to promote digital transactions of the Bank and to provide directions in terms of strategy and action
plans including monitoring the progress of achievement in the digital transactions space, the Bank has
constituted the Digital Transaction Monitoring Committee. 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, Indian Banks’ Association, 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. Reviewing the Digital Banking strategy of the Bank as and when required thereby providing direction on
focus areas.
e. Reviewing the progress made on the initiatives relating to Digital Banking covering performance initiatives as
determined by the Board of Directors and Government of India from time to time.
f. To review the customer services rendered on digital platform from time to time.
g. 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.
Meetings:
The Committee met four (4) times during the year on April 18, 2019, July 19, 2019, October 18, 2019 and
January 17, 2020.
IT Strategy Committee
Brief Terms
of Reference
/ Roles and
Responsibilities:
The Bank has in place, an IT Strategy Committee to look into various technology related aspects. The functions
of the Committee are to formulate IT strategy and related policy documents, ensure that IT strategy is aligned
with business strategy, review IT risks, etc.
The terms of reference of the Committee are:
(cid:116)(cid:1) (cid:34)(cid:81)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:79)(cid:72)(cid:1)(cid:42)(cid:53)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:90)(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:81)(cid:80)(cid:77)(cid:74)(cid:68)(cid:90)(cid:1)(cid:69)(cid:80)(cid:68)(cid:86)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:84)(cid:66)(cid:78)(cid:70)(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:15)
(cid:116)(cid:1) (cid:38)(cid:79)(cid:84)(cid:86)(cid:83)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:73)(cid:66)(cid:84)(cid:1)(cid:81)(cid:86)(cid:85)(cid:1)(cid:66)(cid:79)(cid:1)(cid:70)(cid:71)(cid:71)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:84)(cid:85)(cid:83)(cid:66)(cid:85)(cid:70)(cid:72)(cid:74)(cid:68)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:79)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:80)(cid:68)(cid:70)(cid:84)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:68)(cid:70)(cid:15)
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(cid:116)(cid:1) (cid:34)(cid:81)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:70)(cid:14)(cid:66)(cid:77)(cid:77)(cid:80)(cid:68)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(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:85)(cid:73)(cid:74)(cid:79)(cid:1)(cid:42)(cid:53)(cid:1)(cid:85)(cid:80)(cid:1)(cid:71)(cid:66)(cid:68)(cid:74)(cid:77)(cid:74)(cid:85)(cid:66)(cid:85)(cid:70)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:81)(cid:83)(cid:74)(cid:80)(cid:83)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:67)(cid:86)(cid:84)(cid:74)(cid:79)(cid:70)(cid:84)(cid:84)(cid:1)(cid:79)(cid:70)(cid:70)(cid:69)(cid:84)(cid:15)
(cid:116)(cid:1) (cid:51)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:87)(cid:74)(cid:79)(cid:72)(cid:1)(cid:42)(cid:53)(cid:1)(cid:74)(cid:78)(cid:81)(cid:77)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:81)(cid:77)(cid:66)(cid:79)(cid:84)(cid:15)
Composition:
This committee consists of Senior Management and external IT consultant in addition to the Board members
viz. Mr. M.D. Ranganath (Chairman), Mr. Srikanth Nadhamuni and Mrs. Shyamala Gopinath.
Meetings:
The Committee met five (5) times during the year on April 18, 2019, July 19, 2019, October 18, 2019,
January 9, 2020 and March 18, 2020.
297
Corporate Governance
Meeting of the Independent Directors:
The Independent Directors of the Bank met on September 18, 2019. All Independent Directors had attended the meeting.
ATTENDANCE AT THE COMMITTEE MEETINGS HELD DURING FINANCIAL YEAR 2019-20
Audit Committee
[Total nine meetings held]
Credit Approval Committee
[Total twenty four meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mr. M.D. Ranganath
Mrs. Shyamala Gopinath
Mr. Umesh Chandra Sarangi
Mr. Sanjiv Sachar
9
8
9
9
Mr. Malay Patel
Mr. Srikanth Nadhamuni
Mr. Kaizad Bharucha
Mr. Aditya Puri
Mr. Keki Mistry*
24
20
24
15
1
Stakeholders’ Relationship Committee
[Total four meetings held]
Customer Service Committee
[Total four meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mr. Umesh Chandra Sarangi
Mr. Malay Patel
Mr. Sandeep Parekh
Mr. Aditya Puri
4
4
4
4
Mrs. Shyamala Gopinath
Mr. Malay Patel
Mr. Srikanth Nadhamuni
Mr. Sandeep Parekh
Mr. Aditya Puri
Mr. Keki Mistry*
4
4
4
4
4
4
Nomination and Remuneration Committee
[Total nine meetings held]
Premises Committee
[Total four meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mr. Sanjiv Sachar
Mrs. Shyamala Gopinath
Mr. Sandeep Parekh
Mr. M.D. Ranganath
9
9
8
8
Mr. Malay Patel
Mr. Aditya Puri
Mr. Keki Mistry*
4
4
4
Fraud Monitoring Committee
[Total four meetings held]
Risk Policy & Monitoring Committee
[Total six meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mrs. Shyamala Gopinath
Mr. Malay Patel
Mr. Umesh Chandra Sarangi
Mr. Sandeep Parekh
Mr. Aditya Puri
Mr. Keki Mistry*
3
4
4
4
4
4
Mr. Srikanth Nadhamuni
Mr. M.D. Ranganath
Mrs. Shyamala Gopinath
Mr. Aditya Puri
5
6
6
6
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. Sanjiv Sachar
Mr. Malay Patel
Mr. Aditya Puri
4
4
4
4
Mr. Srikanth Nadhamuni
Mr. Malay Patel
Mr. M.D. Ranganath
Mr. Aditya Puri
4
4
4
4
* Mr. Keki Mistry ceased to be a director of the Bank with effect from close of business hours on January 18, 2020 on
completion of term of eight continuous years, being the maximum term prescribed the under Banking Regulation Act, 1949.
298 HDFC Bank Limited Integrated Annual Report 2019-20
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
OWNERSHIP RIGHTS
Certain rights that a shareholder in a company enjoys:
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1)(cid:68)(cid:66)(cid:83)(cid:83)(cid:90)(cid:1)(cid:80)(cid:86)(cid:85)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:78)(cid:74)(cid:84)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:16)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:69)(cid:70)(cid:77)(cid:70)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)
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
name on the share certificates(s) and receive the duly
rights is at twenty-six (26) per cent.
endorsed share certificates within the period prescribed
in the SEBI Listing Regulations.
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1) (cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1) (cid:79)(cid:80)(cid:85)(cid:74)(cid:68)(cid:70)(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:13)(cid:1) (cid:66)(cid:79)(cid:79)(cid:86)(cid:66)(cid:77)(cid:1) (cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:13)(cid:1)
the balance sheet and profit and loss account and
the auditor’s report. To attend and speak in person, at
general meetings.
(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)
company by shareholders who collectively hold not less
than 1/10th of the total paid-up 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)
meetings.
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1) (cid:83)(cid:70)(cid:68)(cid:70)(cid:74)(cid:87)(cid:70)(cid:1) (cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1) (cid:68)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1) (cid:67)(cid:70)(cid:79)(cid:70)(cid:71)(cid:74)(cid:85)(cid:84)(cid:1) (cid:77)(cid:74)(cid:76)(cid:70)(cid:1)
(cid:116)(cid:1) (cid:53)(cid:80)(cid:1) (cid:66)(cid:81)(cid:81)(cid:80)(cid:74)(cid:79)(cid:85)(cid:1) (cid:81)(cid:83)(cid:80)(cid:89)(cid:90)(cid:1) (cid:85)(cid:80)(cid:1) (cid:66)(cid:85)(cid:85)(cid:70)(cid:79)(cid:69)(cid:1) (cid:66)(cid:79)(cid:69)(cid:1) (cid:87)(cid:80)(cid:85)(cid:70)(cid:1) (cid:66)(cid:85)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1) (cid:72)(cid:70)(cid:79)(cid:70)(cid:83)(cid:66)(cid:77)(cid:1)
rights, bonus shares, etc. as and when declared /
meetings. In case the member is a body corporate,
announced.
to appoint a representative to attend and vote at the
general meetings of the company on its behalf.
(cid:116)(cid:1) (cid:49)(cid:83)(cid:80)(cid:89)(cid:90)(cid:1) (cid:68)(cid:66)(cid:79)(cid:1) (cid:87)(cid:80)(cid:85)(cid:70)(cid:1) (cid:80)(cid:79)(cid:1) (cid:66)(cid:1) (cid:81)(cid:80)(cid:77)(cid:77)(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:87)(cid:80)(cid:85)(cid:70)(cid:1) (cid:80)(cid:79)(cid:1) (cid:81)(cid:80)(cid:77)(cid:77)(cid:13)(cid:1) (cid:85)(cid:73)(cid:70)(cid:1)
number of votes of a shareholder is proportionate to
the number of equity shares held by him. In case of the
26th Annual General Meeting of the Bank which will be
conducted by Video-Conferencing / Other Audio-Visual
Means pursuant to the relevant MCA circulars, physical
attendance of the shareholders has been dispensed with
and accordingly, the facility for appointment of proxies
for attending and voting on behalf of shareholders will
not be available at the 26th Annual General Meeting of
the Bank.
(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)
1949 as amended with effect from January 18, 2013 vide
the Banking Laws Amendment Act, 2012, no person
holding shares in a banking company shall, in respect
of any shares held by him, exercise voting rights on poll
in excess of ten (10) 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 (10) percent to twenty-six (26)
GENERAL BODY MEETINGS
(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)
books of general meetings and to receive copies thereof
after complying with the procedure prescribed in the
Companies Act, 2013 as amended from time to time.
(cid: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)
shareholder.
(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)
decisions concerning fundamental corporate changes.
(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)
that govern general shareholder meetings.
(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)
of the shareholders.
(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)
abusive actions by, or in the interest of, controlling
shareholders acting either directly or indirectly, and
effective means of redress.
The rights mentioned above are prescribed in the Companies
Act, 2013, the SEBI Listing Regulations and Banking
Regulation Act, 1949, wherever applicable, and should be
followed only after careful reading of the relevant sections.
These rights are not necessarily absolute.
(Following are the details of general body meetings for the previous three financial years held at Birla Matushri Sabhagar, 19,
New Marine Lines, Mumbai 400020 at 2.30 p.m.)
Sr.
No.
Particulars
Day & Date Number of Special
Nature of Special Resolutions
of meeting
Resolutions passed, if any
1 23rd Annual
Monday,
two (2)
1. Re-appointment of Mrs. Shyamala Gopinath as Part-Time Non-
General
Meeting
July 24,
2017
2 Extra-
Friday,
two (2)
Ordinary
General
Meeting
January 19,
2018
General
Meeting
June 29,
2018
General
Meeting
July 12,
2019
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
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
capital), Tier II Capital Bonds and Long Term Bonds (financing of
infrastructure and affordable housing) on a private placement basis
Tier I capital), Tier II Capital Bonds and Long Term Bonds
(financing of infrastructure and affordable housing) on a private
placement basis
299
3 24th Annual
Friday,
one (1)
1. Issue of Perpetual Debt Instruments (part of Additional Tier I
4 25th Annual
Friday,
one (1)
1. Issue Unsecured Perpetual Debt Instruments (part of Additional
Corporate Governance
POSTAL BALLOT
During the financial year 2019-20, no resolutions were passed
by means of postal ballot.
DISCLOSURES
Material Subsidiary
The Bank has two (2) subsidiaries viz: 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
https://v1.hdfcbank.com/htdocs/common/pdf/
Policy-for-determining-material-subsidiary.pdf
at
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 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, 2020 are given in,
Note No. 29 in Schedule 18, forming part of ‘Notes to Accounts’.
The Bank has put in place a policy to deal with related party
transactions and the same has been uploaded on the Bank’s
web-site at 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 Precious Metals i.e, Gold
/ Silver and such open exposures in Gold / Silver 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 / Silver. 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,
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 (1) year is implied from INR-MIFOR and USD-
LIBOR swap 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 applicable 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 31, 2020.
Total open exposure of the Bank to commodities i.e. Gold (in `) as on March 31, 2020: NIL
Commodity
Name
Exposure in
` towards
the particular
commodity
Exposure
in Quantity
terms towards
the particular
commodity
% of such exposure hedged through commodity derivatives
Domestic market
International market
OTC
Exchange
OTC
Exchange
Total
GMS (XAU)
0
0
100
0
0
0
0
Note: As part of trading position in Gold, the Treasury Gold Desk has open position in Gold of 604.45 ounce, which is equivalent to
` 73,706,427.25 as on March 31, 2020, and was within the NOOP limit prescribed for XAU.
300 HDFC Bank Limited Integrated Annual Report 2019-20
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 Third Schedule
of the Banking Regulation Act, 1949, circulars and guidelines
issued by the Reserve Bank of India (‘RBI’) from time to time (RBI
guidelines), 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.
Credit Ratings
The details of all credit ratings obtained by the Bank for all debt
instruments are furnished in the Directors’ Report which may be
referred to.
Whistle Blower Policy / Vigil Mechanism
The details of establishment of whistle blower policy / vigil
mechanism are furnished in the Directors’ Report which may
be referred to. None of the Bank’s personnel have been denied
access to the Audit Committee.
Remuneration and Selection criteria for Directors
Kindly refer to the relevant details as furnished in the Directors’
Report.
Appointment / Resignation of Director
During the year, Mr. Keki Mistry ceased to be a director of the Bank
with effect from close of business hours on January 18, 2020
on completion of term of eight continuous years, being the
maximum prescribed under Banking Regulation Act, 1949.
During the year, Mrs. Renu Karnad has been appointed as
(Nominee of Housing
Additional Non-Executive Director
Development Finance Corporation Limited) with effect from
March 3, 2020, subject to approval of shareholders at the
ensuing Annual General Meeting.
Familiarization of Independent Directors
The details of
to
Independent Directors are available on the website of the Bank
at https://www.hdfcbank.com/aboutus/cg/Familiarization.htm
familiarization programmes
imparted
Strictures and Penalties for last three financial years
During the 2019-20, Reserve Bank of India (RBI) has, vide its
order dated June 13, 2019, imposed a monetary penalty of `10
million (Rupees ten million only) on the Bank for non-compliance
with directions issued by RBI on Know Your Customer (KYC)/
Anti-Money Laundering (AML) Norms and on reporting of frauds.
The penalty has been imposed in exercise of powers vested in
RBI under the provisions of Section 47A(1)(c) read with Section
46(4)(i) of the Banking Regulation Act, 1949. In the instant case,
the Bank had made a reference to the Custom Authorities
for verification of Bill of Entry submitted by certain importers.
Examination of these customers revealed violations of RBI
directions on ‘KYC/AML norms’ and on reporting of frauds. The
Bank has taken necessary measures to strengthen its internal
control mechanisms so as to ensure that such incidents do not
recur.
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
Reserve Bank of India (RBI) has also, vide its order dated
January 29, 2020, imposed a monetary penalty of ` 10 million
(Rupees ten million only) on the Bank for failure to undertake on-
going due diligence in case of 39 current accounts opened for
bidding in Initial Public Offer (IPO). The penalty has been imposed
by RBI in exercise of the powers conferred under the provisions
of Section 47A(1)(c) read with Section 46(4)(i) of the Banking
Regulation Act, 1949. The Bank has since strengthened its
internal control mechanisms so as to ensure that such incidents
do not recur.
During the FY 2018-19, 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 FY 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 had directed the Bank to
conduct an internal inquiry into the leakage of UPSI relating to its
financial figures including Non-Performing Assets (NPAs) results
and take appropriate action against those responsible for the
same, in accordance with the applicable law. The scope of such
inquiry included 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 (3) months from
the date of the SEBI Directions and thereafter, file a report with
SEBI in this regard within a further period of seven (7) days.
The Bank had submitted the requisite information and reports
to SEBI in compliance with the SEBI Directions and within
the timelines prescribed therein. SEBI has since asked for
information / clarifications from the Bank on the said matter from
time to time, which have been furnished by the Bank.
301
Corporate Governance
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
A chart or a matrix setting out the skills / expertise / competence of the Board of Directors
c) Audit Qualifications
d) Separate post of Chairperson and Managing Director/
Sr. No. Name
Designation
Core skills / expertise / competencies available with the
Board
1
2
3
4
5
6
7
8
9
Shyamala Gopinath
Part time Non-executive
Chairperson
Banking, Financial Markets, Risk Management &
Regulatory Affairs
statements.
Aditya Puri
Kaizad Bharucha
Managing Director
Executive Director
Banking Business, Finance & Risk Management
Banking Business, Credit & Risk Management
Srikanth Nadhamuni
Non-executive Director
Information technology
Sanjiv Sachar
Malay Patel
Independent Director
Human Resource Management, Finance
Independent Director
Small Scale Industries
Umesh Chandra Sarangi
Independent Director
Agriculture & Rural Economy
Sandeep Parekh
Independent Director
Law (with focus on securities market and financial
regulations)
M.D. Ranganath
Independent Director
Finance, Information Technology & Risk Management
10
Renu Karnad
Additional Non-Executive
Director
Risk Management, Housing & Real Estate, Financial,
Accounting & Audit, Information Technology, Cyber
Security, Consumer Behaviour, Sales & Marketing,
Legal, Strategy Management
Details of utilization of funds raised through preferential
allotment or qualified institutions placement as specified
under Regulation 32 (7A)
COMPLIANCE WITH NON-MANDATORY
REQUIREMENTS
a) Board of Directors
During the year under review, the Bank has not raised any
funds through Preferential Allotment or Qualified Institutions
Placement as specified under Regulation 32(7A) of the SEBI
Listing Regulations.
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 financial year 2019-20 pertaining to the
Sexual Harassment of Women at Workplace are as under:
Number of complaints received during
the year 2019-20
Number of complaints disposed during
the year 2019-20
Number of complaints pending as on
March 31, 2020
52
48
4
COMPLIANCE WITH MANDATORY REQUIREMENTS
The Bank has complied with all the applicable mandatory
requirements of the Code of Corporate Governance as
prescribed under the SEBI Listing Regulations.
PERFORMANCE EVALUATION
The Bank has put in place a mechanism for performance
evaluation of the Directors. The details of the same have been
included in the Directors’ Report.
302 HDFC Bank Limited Integrated Annual Report 2019-20
The Bank maintains the expenses relating to the office of
non-executive Chairperson of the Bank and reimburses all
the expenses incurred in performance of her duties. Pursuant
to Section 10-A (2)(a) of the Banking Regulation Act, 1949,
none of the directors, other than the Chairperson and/or
whole-time directors, is permitted to hold office continuously
for a period exceeding eight (8) years.
All the independent directors of the Bank possess requisite
qualifications and experience which enable
to
contribute effectively to the Bank. The Board confirms that
in its opinion, the independent directors fulfill conditions
specified in these regulations and are independent of the
management.
them
b) Shareholder’s Rights
The Bank publishes
its website at
www.hdfcbank.com which is accessible to the public at
large. The same are also available on the websites of the
Stock Exchanges on which the Bank’s shares are listed.
results on
its
A half-yearly declaration of financial performance including
summary of the significant events is presently not being sent
separately to each household of shareholders. The Bank’s
results for each quarter are published in an English newspaper
having a wide circulation and in a Marathi newspaper having
a wide circulation in Maharashtra. Hence, half-yearly results
are not sent to the shareholders individually.
During the period under review, there is no audit qualification
CEO
in the Bank’s financial statements. The Bank continues to
Mrs. Shyamala Gopinath is the Chairperson of the Bank and
adopt best practices to ensure regime of unqualified financial
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.
SHAREHOLDERS HOLDING MORE THAN 1% OF THE SHARE CAPITAL OF THE BANK AS AT MARCH 31, 2020
No. of Shares held
% to share capital
GENERAL SHAREHOLDER INFORMATION
Sr No.
Name of the Shareholder
JP Morgan Chase Bank, NA*
Housing Development Finance Corporation Limited
HDFC Investments Limited
Euro Pacific Growth Fund
SBI- ETF Nifty 50
Life Insurance Corporation of India
ICICI Prudential Bluechip Fund
Government of Singapore
1,028,115,528
864,615,834
300,000,000
196,810,802
166,261,572
135,226,004
63,551,801
56,189,030
* One (1) American Depository Share (ADS) represents Three (3) underlying equity shares of the Bank.
DISTRIBUTION OF SHAREHOLDING AS AT MARCH 31, 2020
Share Range From
Share Range To
No. of Shares
% To Capital
No. of Holders % To No. of Holders
1,321,006
97.89
2500
5000
10000
15000
20000
25000
50000
100000
and above
187,321,541
55,287,424
43,333,236
21,731,241
16,919,200
12,086,671
49,025,787
63,114,590
5,034,466,770
5,483,286,460
3.42
1.01
0.79
0.40
0.31
0.22
0.89
1.15
91.81
100
15,028
6,096
1,771
960
535
1,374
883
1,821
1,349,474
1,323,341 Folios comprising of 5,469,349,518 equity shares forming 99.75% of the share capital are in Demat form.
26,133 Folios comprising of 13,936,942 equity shares forming 0.25% of the share capital are in physical form.
Note: Other than the stock options granted to the employees of the Bank which will result in an addition to the equity capital
of the Bank on the exercise of the stock options and subsequent allotment of equity shares, the Bank has no outstanding
warrants or other convertible instruments as on March 31, 2020 which could have an impact on the equity capital of the Bank.
1
2
3
4
5
6
7
8
1
2501
5001
10001
15001
20001
25001
50001
100001
TOTAL
18.75
15.77
5.47
3.59
3.03
2.47
1.16
1.02
1.11
0.45
0.13
0.07
0.04
0.10
0.07
0.14
100
303
BSE Ltd
The National Stock Exchange of India Ltd
New York Stock Exchange
Foreign Institutional Investors
Corporate Governance
SHARE PRICE / CHART
The monthly high and low quotation of Bank’s equity shares traded on BSE Ltd (BSE) and the National Stock Exchange of India Ltd
(NSE) during Financial Year 2019-20 and its performance vis-à-vis BSE SENSEX and S&P CNX NIFTY respectively is given below.
The monthly high and low quotation along with the monthly volume of the Bank’s ADS listed on the New York Stock Exchange is also
given below.
MONTH
HIGH
LOW
SENSEX
Closing
MONTH
HIGH
LOW
NIFTY
closing
MONTH
1,166.18 1,118.50 39,031.55 Apr-19
1,231.98 1,135.70 39,714.20 May-19
Jun-19
1,247.00 1,201.70 39,394.64
1,251.45 1,111.55 37,481.12
Jul-19
1,144.00 1,069.75 37,332.79 Aug-19
1,144.25 1,084.40 38,667.33 Sep-19
1,263.90 1,181.00 40,129.05 Oct-19
1,287.55 1,228.20 40,793.81 Nov-19
1,304.10 1,213.15 41,253.74 Dec-19
Jan-20
1,303.80 1,211.50 40,723.49
Feb-20
1,263.80 1,170.10 38,297.29
738.90 29,468.49 Mar-20
1,200.05
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
* Stock prices from April, 2019 to September, 2019 have been adjusted due to the sub-division of equity shares of the Bank from face
value of ` 2/- each to face value of ` 1/- each.
1,166.00 1,115.50 11,787.15 Apr-19
1,232.50 1,135.80 11,945.90 May-19
Jun-19
1,247.25 1,201.50 12,088.55
1,251.65 1,111.53 11,946.75
Jul-19
1,144.50 1,069.80 11,109.65 Aug-19
1,144.40 1,084.00 11,600.20 Sep-19
1,263.90 1,181.15 11,877.45 Oct-19
1,287.00 1,227.60 12,151.15 Nov-19
1,305.50 1,234.20 12,271.80 Dec-19
Jan-20
1,304.85 1,211.75 12,362.30
Feb-20
1,259.90 1,170.10 12,201.20
738.75 11,303.30 Mar-20
1,201.15
MONTHLY
LOW
VOLUME
(US$)
12,346,400
55.90
16,083,100
57.13
13,256,700
62.26
17,800,900
56.83
20,951,100
52.65
55,169,200
51.03
39,012,000
54.66
23,070,800
60.86
22,492,100
61.21
34,022,500
56.94
28,839,500
53.36
29.50 108,451,000
HIGH
(US$)
58.13
62.36
65.20
65.89
58.11
59.75
61.26
63.47
65.38
64.19
60.33
55.35
Integrated Report
Financial Statements and Statutory Reports
Corporate Governance
CATEGORIES OF SHAREHOLDERS AS AT MARCH 31, 2020
No of shares
% to Capital
Promoters (*)
ADS (#)
Overseas Corporate Bodies, Foreign Bodies, Foreign National and Non Resident Indians
6,022,975
1,164,625,834
1,028,115,528
1,633,956,884
820,974,755
135,226,004
12,178,979
148,491,098
533,694,403
21.24
18.75
29.80
0.11
14.97
2.47
0.22
2.71
9.73
5,483,286,460
100.00
Financial Institutions, Banks, Mutual Funds and Central Government
Life Insurance Corporation of India and its Subsidiaries
Other Insurance Corporations
Indian Companies
Others
TOTAL
Categories of shareholders as at March 31, 2020
9.73%
2.71%
21.24%
Details of Shareholding
Promoters*
ADS
Foreign Institutional Investors
Overseas Corporate Bodies, NRIs, Foreign Bodies
Financial Institutions, Banks, Mutual Funds and
Central Government
LIC of India and its Subsidiaries
Other Insurance Corporations
0.22%
2.47%
14.97%
0.11%
18.75%
Indian Companies
Others
29.80%
( * ) Pursuant to the relevant provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 7,81,93,634 equity shares
held by the Promoter ( HDFC Ltd ) are locked in upto July 21, 2021. None of the Equity Shares held by the Promoter Group are under
pledge.
(#) JP Morgan Chase Bank is the Depository for ADS (1,02,81,15,528 underlying equity shares are issued against the corresponding
34,27,05,176 ADS)
304 HDFC Bank Limited Integrated Annual Report 2019-20
305
MONTHLY VOLUMES OF THE BANK’S EQUITY SHARES
TRADED ON NSE AND BSE
International Listing
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-19
May-19
Jun-19
Jul-19
High
Low
16.7
16.1
17.5
16.2
17.9
17.3
18.1
17.4
* 2 GDRs represent one underlying equity share of the Bank.
During the year, the Bank terminated its GDRs program, by
delisting of the GDRs from Luxembourg Stock Exchange
with effect from July 16, 2019, and the securities underlying
the GDRs were sold by JP Morgan Chase Bank NA on
March 3, 2020. The net proceeds of the same after deducting
the withholding taxes, were remitted to the GDR holders.
Month
April 2019
May 2019
June 2019
July 2019
August 2019
September 2019
October 2019
November 2019
December 2019
January 2020
February 2020
March 2020
BSE
5,243,796
2,740,030
2,202,269
4,136,167
4,287,228
6,292,379
6,089,766
4,441,618
3,151,695
17,275,972
6,990,600
32,057,730
NSE
77,276,083
70,107,628
50,615,960
70,485,404
90,393,496
138,387,088
137,198,453
112,330,501
117,016,801
137,910,086
131,226,577
473,136,503
FINANCIAL CALENDAR
[April 1, 2019 to March 31, 2020]
Board Meeting for consideration of accounts
April 18, 2020
Dispatch of Annual Reports by electronic mode
June 24, 2020 onwards
Date, Time and Venue of the 26th AGM
Meeting will be held on July 18, 2020 through video conferencing at 2.00 pm
Record date for purpose of determining eligibility of
dividend
Not Applicable*
Board Meeting for considering unaudited results
for first three quarters of FY 2019-20
Within 25 days from the end of each quarter
* In light of the Reserve Bank of India (RBI) Circular dated April 17, 2020, all banks were directed not to make dividend pay-outs
pertaining to the financial year ended March 31, 2020 until further instructions from RBI, with a view that banks must conserve capital
in an environment of heightened uncertainty caused by COVID-19. Accordingly, the Board of Directors of the Bank has not proposed
any final dividend for the year ended March 31, 2020.
CODE OF CONDUCT
The Bank has framed and adopted a Code of Conduct, which
is approved by the Board. The Code is applicable to all directors
and senior management personnel of the Bank. This Code has
been posted on the Bank’s website www.hdfcbank.com. All
the Directors and senior management personnel have affirmed
compliance with the Code of Conduct / Ethics as approved and
adopted by the Board.
LISTING
Listing on Indian Stock Exchanges
The equity shares of the Bank are listed at the following Stock
Exchanges and the annual fees for 2019-20 have been paid:
Sr.
No.
1.
2.
Name and address of the Stock
Exchange
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. INE040A01034)
• National Securities Depository Limited (NSDL)
• Central Depository Services (India) Limited (CDSL)
306
Sr.
No.
1
2
Security Description
Name & Address of the International Stock
Exchange
The American Depository
Shares (ADS)
(CUSIP No. 40415F101)
The New York Stock Exchange (Ticker - HDB)
11, Wall Street,
New York, NY 10005
Global Depository Receipts
(GDRs)
(ISIN / Trading Code :
US40415F2002)*
Luxembourg Stock Exchange
Postal Address :
Societe De La Bourse De Luxembourg
Societe Anonyme, 35A Boulevard Joseph II
L-1840 Luxembourg.
Mailing Address :
B.P. 165, L - 2011, Luxembourg
Name & Address of Depository
J.P. Morgan Chase Bank, N.A.
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,
383 Madison Ave, Floor 11,
New York, NY, 10179
*During the year, the Bank terminated its Global Depository Receipts (GDRs) program by delisting of the GDRs from Luxembourg Stok Exchange
with effect from July 16, 2019, and the securities underlying the GDRs were sold by JP Morgan Chase Bank NA on March 3, 2020. The net
proceeds of the same after deducting the withholding taxes, were remitted to the GDR holders.
The Depository for ADS and GDR is represented in India by: JP Morgan Chase Bank N.A., India Sub Custody, JP Morgan Chase Bank NA,
6th Floor, Paradigm “B” Wing, Behind Toyota Showroom, Mindspace, Malad (West), Mumbai - 400 064.
SHARE TRANSFER PROCESS AND SYSTEM
The Bank’s shares which are in compulsory dematerialized
(Demat) list are transferable through the depository system.
Requests for transmission / transposition or for deletion of
name in case of physical share certificates are processed by
the Registrar and Share Transfer Agents, Datamatics Business
Solutions Limited (formerly known as Datamatics Financial
Services Limited) and are approved by the Stakeholders’
Relationship Committee of the Bank or authorized officials of
the Bank. The service requests of such nature are generally
processed within a period of fifteen (15) days from the date
of receipt of the relevant documents by Datamatics Business
Solutions Limited.
Please note that as per the amended SEBI Listing Regulations,
with effect from April 1, 2019, any requests for transfer of
securities shall not be processed unless the securities are held
in dematerialized form.
FEES FOR STATUTORY AUDITORS
For the details of 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 of which the
Statutory Auditor is a part, kindly refer to the Directors’ Report.
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
website at www.hdfcbank.com.
The shareholders can visit the Bank’s website for financial
information, shareholding information, dividend policy, key
shareholders’ agreements, if any, Memorandum and Articles of
Association of the Bank, etc. The website 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 official news/press releases, stock
exchange disclosures and presentations made to investors and
analysts, etc. are regularly displayed on the Bank’s website.
CODE FOR PREVENTION OF INSIDER TRADING
The Bank has adopted a share dealing code for the prevention of
insider trading in the shares of the Bank as well as in other listed
and proposed to be listed companies. The share dealing code,
inter-alia, prohibits dealing in securities of the Bank by insiders
while in possession of unpublished price sensitive information.
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
307
HDFC Bank Limited Integrated Annual Report 2019-20Financial Statements and Statutory ReportsIntegrated ReportCorporate GovernanceCorporate Governance
Corporate Governance
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.
Location wise list of customer care numbers are available at:
http://www.hdfcbank.com/personal/find-your-nearest/
find-phone-banking
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
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.
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. Santosh Haldankar (Nodal
Officer) or Mr. Dhanjit Thaivalappil or Mr. Sushant Date (Deputy
Nodal Officers):
Tel: +91-022-39760016/0012/0003
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, Senior Vice President-Legal & Company Secretary
Telephone: +91-022-3976 0000
BANKING CUSTOMER HELPDESK
In the event of any queries / complaints, banking customers can
directly approach the Branch Manager or can call / write to the
Bank using the following contact details:
Call at: Our customer care (Phone Banking) numbers.
308 HDFC Bank Limited Integrated Annual Report 2019-20
Write to:
HDFC Bank Ltd.
Empire Plaza I, 1st Floor,
LBS Marg, Chandan Nagar,
Vikhroli West, Mumbai - 400 083.
Email : support@hdfcbank.com
Contact us online:
Fill up the “Complaint Form” available at the following website
link:
https://www.hdfcbank.com/query
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 5,416 banking outlets in 2,803 cities /
towns as on March 31, 2020. The locations of the branches are
also displayed on the Bank’s website.
COMPLIANCE CERTIFICATE OF THE AUDITORS
M/s. BNP & Associates, Company Secretaries, 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 said Certificate will be sent to the Stock Exchanges along
with the Annual Report of the Bank.
On behalf of the Board of Directors
Mumbai, June 20, 2020
Shyamala Gopinath
Chairperson
DECLARATION
I confirm that for the year under review, all directors and senior
management have affirmed their adherence to the provisions
of the Code of Conduct of Directors and senior management
personnel.
Mumbai, June 20, 2020
Aditya Puri
Managing Director
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., Electronic Clearing
System (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 (as and
when declared by the Bank), all the eligible shareholders
holding shares in demat mode are requested to update
with their respective Depository Participants, their correct
core banking account number, including 9 digit MICR
Code and 11 digit IFSC Code, E-Mail ID and Mobile No(s).
This will facilitate the remittance of the dividend amount as
directed by SEBI directly 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.
in physical
Shareholders holding shares
form may
communicate details relating to their core banking account,
viz., core banking account number, including 9 digit MICR
Code and 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,
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 self-attested copy of any one of the documents
mentioned hereafter: utility payment bills (not more than
three months old) / bank pass book / passport / driving
license to validate their present address.
Various modes for making payment of dividend under
electronic mode:
In case, the shareholder has updated core banking
account details (including 9 digit MICR Code and 11 digit
IFSC code) for the purpose of payment of dividend (as and
when declared by the Bank), 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 shareholders have an active
Bank account 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 in its records on the said dividend
warrant to avoid fraudulent encashment of the warrants.
The dividend warrant will be dispatched by the Registrars
at the registered address of the shareholder.
Transfer of Shares to
Protection Fund (IEPF) Authority
Investor Education and
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 (7) years, the corresponding shares
have been transferred in the name of IEPF Authority as
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 February 28, 2017 issued
in this regard (Collectively the “IEPF Rules”). As per said
IEPF Rules, Companies are required to transfer the shares
to IEPF Authority where seven years as provided under
Section 124(5) of the Companies Act, 2013 have been
completed and upon completion of 3 months from the date
of the notification as stated hereinabove.
the aforesaid provision on
In compliance with
November 30, 2017, your Bank has
transferred
5,524,448 equity 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 SBI CAP Securities Ltd
as Depository Participant under the Central Depository
Services Limited (CDSL). As required under the said
provisions all subsequent corporate benefits that may
accrue in relation to the above shares will also be
credited to the said IEPF Authority. During the year ended
March 31, 2020 Bank has further transferred 828,846 and
710,122 equity shares to IEPF account on April 12, 2019
and August 30, 2019 respectively. The IEPF Authority, till
March 31, 2020, transferred 242,080 equity shares against
the claims received by them from the shareholders. (Share
figures reported are of the face value of ` 1.00 each).
As per the terms of Section 124(6) of the Companies Act,
2013 and the Rule 7 of the IEPF Rules, the shareholders
whose corresponding equity shares of the face value of
` 1.00 each stand transferred to IEPF account can claim
those 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
•
For claiming the shares and dividend from the IEPF
Authority, shareholders can make an online web
309
Shareholder Information
•
based application through MCA portal. Shareholders
need to register themselves on MCA portal by creating
Login ID credentials. After successful login into MCA
portal, shareholders have to click on MCA services tab
and choose IEPF- 5 option under “Investor Services”
and follow the due process for filing the form.
Printout of the duly filled Form IEPF - 5 with claimant
and joint holders’ (if any) signature and along with
the acknowledgment issued after uploading the form
will have to be submitted together with an indemnity
bond in original, cancelled Cheque leaf of active bank
account (details of which mentioned by the claimant
at the time of uploading the web based form), and
other documents as mentioned in the Form IEPF-5
to Nodal Officer (IEPF) of the Bank in an envelope
marked “Claim for refund from IEPF Authority”.
Certain 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, 2013 read with the Investor Education and
Protection Fund Authority (Accounting, Audit, Transfer
and Refund) Rules, 2016 (“IEPF Rules”), the Bank is
statutorily required to transfer to the Investor Education
& Protection Fund (IEPF) all dividends remaining
unclaimed for a period of seven (7) years from the
date they became due for payment. Dividends for and
up to the financial year ended March 31, 2012 have
already been transferred to the IEPF and the dividend
for the financial year ended March 31, 2013 will be
transferred to IEPF around September 30, 2020.
The details of unclaimed dividends for the financial
year ended 2013 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, 2013
March 31, 2014
March 31, 2015
March 31, 2016
March 31, 2017
March 31, 2018
March 31, 2019
Special Interim Dividend 2019-2020
June 27, 2013
June 25, 2014
July 21, 2015
July 21, 2016
July 24, 2017
June 29, 2018
July 12, 2019
July 20, 2019
B) SHARES LYING IN UNCLAIMED SUSPENSE ACCOUNT
Particulars
Opening Balance as on April 1, 2019
Add: Transfer during the year 2019-20
Less: Claims received and shares transferred *
Less: Shares transferred to IEPF account
Closing Balance as on March 31, 2020 **
Records /
No of shareholders
1,779
4,049
32
1,726
4,070
* 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
June 26, 2020
June 24, 2021
July 20, 2022
July 20, 2023
July 23, 2024
June 28, 2025
July 11, 2026
July 19, 2026
Equity Shares
(Face value of
` 1.00 each)
704,620
1,706,548
17,220
675,070
1,718,878
310 HDFC Bank Limited Integrated Annual Report 2019-20
310 HDFC Bank Limited Integrated Annual Report 2019-20
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
STATUTORY AUDITORS
MSKA & Associates,
Chartered Accountants
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
www.hdfcbank.com
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