Annual Report 2011 2012 Federal Bank

A N N U A L
R E P O R T
2 0 1 1 - 2 0 1 2
Message from the Chairman 3
Letter from the Managing Director & CEO 5
Board of Directors & Management Team 7
Performance Dashboard 8
Report of the Board of Directors 10
Management Discussion and Analysis 23
Report on Corporate Governance 44
Balance Sheet as at 31 March 2012 58
Profit and Loss Account for the year ended 31 March 2012 59
Schedules 60
Cash Flow Statement 93
Auditors Report 94
Basel II - Pillar 3 Disclosures as on 31 March 2012 96
Balance Sheet Abstract and the Banks General Business Profile 117
Statement Pursuant to Section 212 of the Companies Act, 1956 118
Related to Subsidiary Companies

Accounts of Subsidiary Company Fedbank Financial Services Limited 119
Consolidated Balance Sheet as at 31 March 2012 150
Consolidated Profit and Loss Account for the year ended 31 March 2012 151
Schedules (Consolidated) 152
Consolidated Cash Flow Statement 190
Auditors Report (Consolidated) 191
Contents
ANNUAL REPORT 2011-12
ANNUAL REPORT 2011-12 3
Message from the Chairman
I am happy to address you all on the occasion of this 81st
Annual General Meeting of your Bank. 2011-12 has been
another excellent year in the history of Federal Bank. I
would like to congratulate the MD & CEO and his able team.
As you are aware, this performance has been achieved in
a very tough business environment. So far, we were under
the impression that Indias GDP growth would continue at a
higher rate of 8 plus %, in spite of the Euro zone crisis and
the very slow recovery in the US, since our domestic market
is huge. But the continuous raising of the bank rate on 13
consecutive occasions over a period of 24 months, obviously
with a view to curb inflation, has had an impact on industrial
production. This combined with the delays in key policy
initiatives that focus on the supply side has had its toll on the
overall business environment.
The macro economic environment of the country exhibits
moderation in private consumption and deceleration in
investment growth. Moderation in the core level inflation has
not transmitted to the retail level. Depreciation in rupee on
account of the global factors like Euro zone uncertainty and
the domestic factors like higher current account deficit and the
slow down in capital inflows are part of the concerns facing the
economy. Growing fiscal and current account deficits are lead
indicators of stresses and strains building up in the system.
The Indian economy is performing below its potential growth
level and is encountering a decline in growth of gross fixed
capital formation, adverse external environment, dampening
domestic sentiment, large fiscal deficit, growing supply side
constraints and persistent inflation, all of which would call for
some swift and decisive action by the policy makers.
However, let me assure you that we need not despair. The
Indian financial markets are more mature, diverse and
deep. They have resilience to absorb shocks. Our regulatory
systems and crisis response mechanisms are very robust and
sophisticated.
You would agree that customer focus is the key to the success
of any organization and in banking, a service industry, it is of
paramount importance. It must be recognized that only the
customer can bring business to the banks and contribute to
their bottom lines. All other constituents such as technology,
employees and infrastructure are only to act as enablers in
the process.
So, any financial innovation, to result in benefits, needs to
focus more on the customer. When innovations have focused
on better alignment of interests between the bank and its
customers, they have always resulted in win-win situations. In
fact your Bank could perform well in this financial year because
of the paramount importance it gave to the customer.
In my Address at the last years AGM, I had stressed that
inclusive growth alone will be sustainable. We have to harness
technology for the benefit of the masses. The large sections of
our population that are still excluded from the formal financial
mainstreams should be provided access to faster, safer, and
cheaper financial services. This alone can ensure financial and
economic stability across the country.
Your Bank has always looked at Financial Inclusion as a
business opportunity and is in the forefront for capturing
untapped business in rural areas covering approximately
2/3rd population of the country. It is effectively utilizing the
RBI policy of simplification of branch licensing where in Domestic Scheduled Commercial Banks have been permitted to freely
open branches in Tier 2 to Tier 6 centers .The Bank has also set up 14 Financial Literacy Centers especially in the rural areas to
undertake Financial Literacy activities.
The financials of the Bank for the year 2012 clearly indicates that we could perform well in many of the key performance
parameters such as profit, capital adequacy and asset quality. Your Banks customer- centric strategies, with a vibrant team,
would definitely take the Bank to greater heights in the days to come.
I have to admit and acknowledge that it is the support and the goodwill of the shareholders of the Bank that made our journey
in the financial year 2012 and all the years past, successful. With your sincere support and cooperation, we will steer the Bank
to greater glory in the years to come, adhering to the best principles enunciated and followed by the founder of the Bank,
Shri.K.P.Hormis.
On this occasion when I am bidding farewell after spending 7 years on the Board, I have to thank the top management, officers
and employees, the share holders, the customers and my distinguished colleagues on the Board of the Bank for their cooperation
during all these years.
With best wishes,
P.C.Cyriac
Chairman
Letter from the Managing Director & CEO
I am pleased to inform you, our esteemed shareholders , that the
performance of your bank for the financial year 2012 was very
encouraging, this against the backdrop of challenging global
and domestic macro economic scenario. We have invested in
strengthening our core platform and I can confidently say that
we are making steady progress in our journey of building one
of the best performing private sector banks in India.
In my inaugural letter last year, I had highlighted that our
objective would be to ensure that we focus on both quality and
inclusive growth in the coming years and shape our Bank as
one that delivers quality, consistently while setting our sight
on exceeding all stakeholder expectations.
I am happy to report to you that our Bank in FY 12 made good
progress on those objectives and notably our key success has
been in the area of national expansion in our footprint while we
very much kept our eyes on key financial metrics of ROE and
cost to income, suggesting that our teams were determined
to ensure their productivity and efficiency in every sphere of
work.
On two occasions last year, we set and achieved new records.
On October 18th 2011 (on our founders day) we opened 66
branches across India, only to be bested by ourselves in March
of 2012, when we had a record opening of 100 branches. We
had the pleasure and privilege of the then Honble Finance
Minister of India, Shri. Pranab Kumar Mukherjee inaugurating
the branches in a very elegant launch function held in Delhi
which was graced by champion cricketer Shri. Kapil Dev as also
the entire Board of Federal Bank.
This financial year (FY 13), we are determined to leverage the
benefits of this expansion as we look to grow much in our
chosen markets in the coming years too, subject to business
metrics meeting our agreed milestones.
A few weeks ago, a notable international bank, had come
up with an analysis of the companies and stocks that have
turned out to be Dependable over a longish period of time
(5 years or more). The analysis suggested that only 22
companies met their stringent criteria to earn the name of
being a Dependable Stock and I am pleased to report that your
Bank is one of those stable and robust performers which have
successfully navigated all market challenges. We of course,
will seek to do even more in the coming years by steadfastly
focusing on the basics of banking with zeal and passion.
This year, in keeping with the focus on extending personalized
and customized service we expanded our Fed Select facilities to
70 branches in the country as we target to cross 100 branches
by the end of FY 13. Further our product teams launched an
array of value added offerings including the prepaid cards for
travel and gifting. Our prepaid foreign currency denominated
travel card comes in three currencies (USD, GBP and Euro).
The Bank has long cherished a strong bond and relationship
with the Indian diaspora, particularly those residing in the
Middle East and gulf countries. This year saw us strengthen
our presence and service for our esteemed customers. Our
customers rewarded us handsomely for our efforts as we were
able to grow our share in the NRI business and this along with
the focus on the growing SME markets will remain our key
thrust areas in the coming years. We are seeking regulatory
approval to open representative offices in Dubai as also an
overseas branch in the DIFC, Dubai.
Let me turn to our increased focus on technology for both
servicing our customers and also to increase our internal
fundamentals. I am happy to inform you that we won the
International ACI Excellence Award 2012 in the Payments
Transformation category for two prestigious projects Visa
Money Transfer (Visa Fast Funds) & Federal Banks Aadhar
(UID) Based Authentication of Payments.
These awards inspire us to retain our focus in using technology
as a key differentiator in the coming years. We had identified
fresh asset quality improvement and strengthening of risk
management as key areas for the bank. The value of strong
risk management practices can never be stated enough and
that too in stressed market conditions. Our teams in risk
have made good progress this year by ensuring all elements
of risk management (origination, underwriting, monitoring
and recovery) have been addressed and the improvement in
numbers are a good testimony to the effort. We will seek to
keep this focus and improve on the good start we have made.
I believe we will benefit from these efforts, particularly in trying
market conditions.
You may recall that I had mentioned about inclusive growth as
a focus for the Bank. Through our business initiatives, aided by
the exclusive focus laid by a newly established Corporate Social
Responsibility team, we were able to make good progress last
year. Some of the noteworthy initiatives were:
l As part of our green initiative, 66 saplings were planted in
Mookkannoor on the 66th Founders Day, with the initiatives
of the employees and the public.
l A Call centre managed by the differently-abled was
inaugurated on 8th November, 2011 by Dr. C. Rangarajan,
Chairman of Prime Ministers Economic Advisory Council. The
bank extended financial support for projects taking care of
children having cerebral palsy.
l We contributed to build an old age home for the financially
downtrodden group of women.
l Fedbank Hormis Memorial Foundation, a trust under
the Bank is granting scholarship to Economically Backward
students.
l The 12th Commemorative Lecture of our Founder
Shri. K.P. Hormis was conducted on 8th November, 2011 by
Dr. C. Rangarajan, Chairman of the Prime Ministers Economic
Advisory Council.
The Bank was recognized for its CSR initiatives and was
awarded the Global CSR Award for the Best Corporate social
responsibility Practice Overall and the Golden Peacock Award
for Corporate Social Responsibility for the year.
Your bank believes that recognizing and rewarding the
employees is a key factor in its success. We have re modeled
our HR system and have introduced a host of HR initiatives
which includes Elixir a mentoring programme to groom and
develop the new recruits, SANGAM - a family get-together to
foster relationships and to develop and exhibit their cultural
talents and Federal Ambassador - an initiative to recognize
the employees for excellent customer service. The Bank
also rewards the employees for their contribution towards
business growth through ESOS and other incentives. We seek
to harness the collective power of our employees by stoking
their passion for the institution through all these efforts and
tasks and thereby be Proud to be a Federal.
Now let me share with you the Banks financial performance
in a few key areas.
Total business of the Bank (deposits plus advances) increased
from ` 74968.01 Crore to ` 86693.11 Crore as on 31
st
March
2012.The Banks deposits increased to ` 48937.12 Crore
registering a YoY growth of 13.77% and advances touched
` 37755.99 Crore, registering a YoY increase of 18.16%.
As on 31
st
March 2012, total NRE Deposits constitute 16.27%
of total deposits. The Bank could reach a figure of ` 7963.61
Crore compared to ` 5871.19 Crore in FY 2011 registering a
growth of 35.64%
The Bank could achieve a net profit figure of ` 776.79 Crore
despite the challenges in the year caused by inflationary
tendencies, moderation in GDP growth and rising cost of the
resources
With increased profits, return on average equity and return
on average total assets followed suit, growing from 11.98% to
14.37% and 1.34% to 1.41% respectively.
Gross NPAs as percentage to Gross Advances stand as 3.35%
as against 3.49% in FY 2011 and Net NPAs at 0.53% of Net
Advances as against 0.60% in the previous financial year.
Fresh accretion to NPAs during the period could be brought
down to ` 695.31 crore from ` 875.84 crore in FY 2011 and
the recovery for the year reached ` 358.78 crore as against
` 241.51 in FY 2011.
As on 31.03.2012, the Bank held a total provision of ` 1055.33
crore. The total provision coverage for NPAs as on March 31
st
,
2012 is 81.13%. As per the extant RBI directive, Banks need to
hold minimum provision coverage of 70% including technically
written off accounts.
We are as a management team, astutely aware that we live
in challenging times and to continue to repeat the strong
performance of FY 12 requires a very disciplined and robust
effort. We are driven as a team, by our Vision 2015, which is
our guiding post to ensure we never go off the rails and are
staying the course charted out by our Board and Shareholders.
Our journey is to build a Bank that is deep-rooted in its values,
in its care for employees and customers, in its endeavor to
deliver customers and quality shareholder value.
We remain determined and optimistic of coming back to you
with more sustained and quality outcomes in the coming
years and we seek your esteemed patronage and of course
your custom and feedback.
I remain, Proud to be a Federal.
Best Wishes,
Shyam Srinivasan
Board of Directors
Prof. Abraham Koshy, Shri. Shyam Srinivasan (MD & CEO), Shri. P. C. Cyriac (Chairman of the Board), Shri. Suresh Kumar, Dr. M. Y. Khan,
Standing: Shri. Nilesh Shivji Vikamsey, Dr. T. C. Nair, Shri P. C. John
Shri. T.S. Jagadeesan
Chief General Manager
Shri. Ashutosh Khajuria
President - Treasury
Shri. Abraham Chacko
Executive Director
Shri. C.P. Mohandas
General Manager
Shri. T. Oommen Benjamin
General Manager
Shri. Jolly Antony
General Manager
Shri. Mohan K.S.
General Manager
Management Team
Growing Income
2010
1410.8
1746.6
1953.4
2011 2012
Net Interest Income
2010
4204.1
4568.8
6090.7
2011 2012
Total Income
2010
Book Value per Share
274.24
298.67
333.61
2011 2012
2010
EPS
27.16
34.32
45.41
2011 2012
2010
ROE
10.3
11.98
14.37
2011 2012
2010
ROA
1.15
1.34 1.41
2011 2012
Enhancing Shareholders Value
Performance Dashboard The Federal Bank Limited
2010 2011 2012
1005
805
732
Number of ATMs
2010 2011 2012
Number of Branches
950
743
672
Expanding Footprint
10.3
11.98
14.37
2010
Net Prot
2011 2012
776.79
587.08
464.55
Growing Profts Improving asset quality
2010
0.48
0.60
0.53
2011 2012
Net NPA
Strengthening Business
2010
26950
31953
37756
2011 2012
Total Advances
2010
36058
43015
48937
2011 2012
Total Deposits
Performance Dashboard The Federal Bank Limited
Dear Shareholders,
Your Board of Directors has great pleasure in presenting the 81
st
Annual Report of The Federal Bank Limited
on its business and operations front along with the audited accounts for the year ended March 31, 2012
In Financial Year 2011 - 2012 we delivered balanced and strong results attributing to year on year growth in
all major parameters in the business front
Financial Parameters
For the year ended (` In Crores)
31-03-2012 31-03-2011
Net Interest Income 1,953.40 1,746.58
Fee and Other Income 532.34 516.81
Net Revenue 2,485.74 2,263.39
Operating Expense 979.27 836.14
Operating Proft 1,506.47 1,427.25
Net Proft 776.79 587.08
Proft brought forward 25.78 23.14
Total Proft Available for appropriation 802.57 610.22
Appropriations:
Transfer to statutory Reserves 194.20 146.80
Transfer to Revenue Reserves 98.88 232.11
Transfer to Capital Reserves 5.40 0.00
Transfer to Special Reserves 28.50 36.56
Proposed Dividend 153.94 145.39
Provision for Dividend Tax 24.97 23.58
Balance Carried over to Balance Sheet 296.68 25.78
Financial Position
Deposits 48,937.12 43,014.78
Advances 37,755.99 31,953.23
Total Business (Deposits + Advances) 86,693.11 74,968.01
Other Borrowings 4,241.03 1,888.36
Investments 17,402.49 14,537.68
Total Assets ( Balance Sheet Size) 60,626.77 51,456.36
Capital 171.05 171.05
Ratios
Return on Total Assets (%) 1.41 1.34
Return on Equity (%) 14.37 11.98
Earnings Per Share (`) 45.41 34.32
Book value per share (`) 333.61 298.67
Operating cost to Income (%) 39.40 36.94
Capital Adequacy Ratio (%) Basel (I) 13.83 15.39
Capital Adequacy Ratio (%) Basel (II) 16.64 16.79
Your Bank could achieve this growth by addressing the challenges in macro-economic conditions, infationary
trends and stringent regulatory norms along with tight monetary measures. A focussed and defned approach
in this fscal year resulted in better performance on various strategic fronts which the Bank had identifed.
Report of the Board of Directors The Federal Bank Limited
In FY 12 we endeavoured to nurture Retail, NRI, SME, Agriculture and Gold through improved value
propositions. Our retail portfolio grew by 21.16% annually, supported by a growth in retail deposits by 23.59 %
and retail advances by 12.58 %. Your Bank took several initiatives in FY 12 to augment the advances to rural,
agriculture and priority sector. Priority sector advances of the Bank scaled up by ` 1,551.63 Cr in the last fscal
year and stood at ` 1,2652.54 Cr as on 31 Mar 2012. Advances to agriculture witnessed a steady increase of
15.21 % and reached ` 4,318.74 Cr. During the year the Bank delivered a healthy performance in gold loan
business with an increase of 80.76 % in the portfolio.
The year also witnessed an aggressive footprint expansion with a 27.86 % growth in network. Your Banks
branch strength as on 31-March-2012 stood at 950. This included a healthy addition of 207 branches during
FY 12. During the year the Banks ATM network also grew by 202 thereby crossing the 1000 milestone and
reaching 1005 ATMs as on 31 Mar 2012. The Bank has systematic plans to scale up its presence across select
geographies outside the state of Kerala, which include the States of Tamilnadu, Karnataka, Punjab, Gujarat
and Maharashtra. The Bank will focus on Agri, SME and NRI business in these states, which are segments
where the Bank has accumulated invaluable expertise through its 66 years of existence.
Net Proft
During the fscal year ended March 31, 2012, your Bank recorded an impressive growth in Net Proft and
achieved ` 776.79 Cr, registering an increase of 32.31 % over the previous year. Rationalised underwriting
processes along with granular attention to asset management led to this healthy show in profts.
Consequent to the improvement in the asset quality of the Bank, we could curtail provisioning by a very
large extent. The total provisions of the Bank during the year was ` 729.68 Cr, of which ` 34.86 Cr was for
investments and ` 392.71 Cr was for income tax. Provisions on account of loan losses for the year were reduced
by 54.63 % to reach ` 221.77 Cr from ` 488.85 Cr. and ` 80.34 Cr was marked for other purposes.
Return on Average Equity and Return on Average Total Assets rose up to 14.37 % and 1.41 % respectively along
with the proft. Earnings per Share of the Bank, as on 31st Mar 2012, increased by 32.31 % to reach ` 45.41 as
compared to the previous fscal year fgure of ` 34.32. Book value per share increased from ` 298.67 in the
previous fscal year to ` 333.61 in FY 12.
Operating Proft
Your Bank could deliver substantial growth in top line and bottom line overcoming the challenging macro
environment. During the year the Bank posted an operating proft of ` 1,506.47 Cr.
In FY 12 Risk Adjusted Net Interest Margin of the Bank scaled up to 3.36 % compared to the previous fscal
year rate of 3.04 %. The Net Interest Margin of the Bank for the year stood at 3.79 %, despite the interest rate
volatility. Net Interest Income of the Bank for the period increased from ` 1,746.58 Cr to reach ` 1,953.40 Cr
registering an annual growth of 11.84 %.
For the fnancial year ended March 2012, the total non-interest income of the Bank stood at ` 532.34 Cr as
against ` 516.81 Cr in FY 11.
Expenditure
The fscal year ended 2012 reported an increase in the total expenses of the Bank that reached ` 4,584.26
Cr from ` 3,141.59 Cr, registering an annual increase of 45.92 %. Interest expenses increased to ` 3,604.99
Cr in FY 12 from ` 2,305.45 Cr in FY 11.
During the year the cost of deposits of Bank climbed to 7.41 % as compared to 5.99 % in the previous fscal
year. Average Cost of all funds (Deposits + Borrowings + Bonds) recorded a marginal increase and reached
7.56 %. The growth in term deposit portfolio, the general increase in rate of interest ofered on term deposits
coupled with the deregulation of the rate of interest ofered on NRE Term deposits (INR) by RBI contributed
to increase in the interest expenses on deposits. Interest expenses as percentage to total income increased
to 59.19 % from 50.46 % in FY 2011.
Your Bank in FY 12, as part of strategy, reduced the proportion of high value deposits and simultaneously
increased the quantum of low cost deposits. As on 31 Mar 2012, the total high value deposits of the Bank
stood at ` 7,169.05 Cr as compared to ` 9,272.42 Cr in the previous fscal year. The share of current account
and savings bank deposit account (CASA) to total deposits of the Bank improved from 26.5 % to 27.4 % as
on 31 Mar 2012.
Operating Expenses of the Bank during the fscal year grew to ` 979.27 Cr from ` 836.14 Cr. However,
Employee cost of the Bank over the period has increased by 13.21 % from ` 480.41 Cr to reach ` 543.85 Cr.
Wage revision, increase in Human Capital, Dearness Allowance, additional contribution towards New Pension
Scheme, retirement benefts of employees etc. contributed to the increase in staf expense. Employee cost
as percentage to total income declined from 10.51 % as at the end of last fscal year to 8.93 % as at 31 Mar
2012.
The expenses on account of the opening of 207 new branches during the fscal year have also contributed
to the increase in operating expenses.
The Cost to Income ratio of the Bank stands at 39.40 % (36.94 % in FY 2011) and is by far one of the best in
the Industry. This fgure is maintained despite the opening of new branches and even after the spurt in
recruitment during the last 2 fnancial years and increase in the other operating expenses.
Income Growth
Despite the compounded slowdown and uncertainties that prevailed throughout the year, your Bank could
stride forward with its policy of creating select good quality assets. With its strong fundamentals, the Bank
could navigate through this turbulent environment with its natural pace.
Total income of the Bank during the fscal year 2012 recorded a 33.31 % growth to reach ` 6,090.73 Cr from the
previous fscal year fgure of ` 4,568.84 Cr. This growth was primarily fuelled by increase in interest income,
which grew by 37.18 %.
Income from advances increased by 32.22 % to reach ` 4,189.76 Cr. At the same time, income from investments
registered a steep rise to reach ` 1,315.74 Cr clocking a 51.58 % annual growth.
The yield on advances increased to 12.58 % from the previous years rate of 11.09 % and the return on advance
(net of loan loss provisions) improved to 11.91 % from 9.37 % in 2011.
The yield on investments excluding trading income increased to 7.32 % as on March 2012 from 6.95 % as
on March 2011. The net interest margin for the fscal year is at 3.79 % against 4.22 % in March 2011, mainly
contributed by the general hike in the cost of deposits.
Concerted eforts to increase the Fee Based Income and Other Income of the Bank resulted in ` 532.34 Cr as
against ` 516.81 Cr in the previous fscal year.
Spread
During the fscal year the Banks spread on advances (gross) increased to 5.17 % from 5.09 % and spread on
investments (gross) stood at 0.36 %. The Spread (net of provisions) on advance grew from last years 3.38%
to reach 4.50 %.
Dividend
Adding value to shareholders continues to be one of the major objectives of the Bank. The Board of Directors
recommended a dividend of ` 9 per share as compared to ` 8.5 in the previous fscal year. The Bank has been
traditionally rewarding its shareholders through cash dividends by striking a balance between cash dividends
and future growth through retained earnings.
Investor Education and Protection Fund
As per the Companies Act 1956, dividend unclaimed for more than 7 years from the date of issue is to be
transferred to Investor Education And Protection Fund. On 20.10.2011, we transferred ` 29,23,183.00 to the
Fund.
Growth in Business
Total business of your Bank has reached ` 86,693.11 Cr as on 31 Mar 2012 with an increase of 15.64 % on a Y-o-Y
basis. Total deposits increased to ` 48,937.12 Cr registering a Y-o-Y growth of 13.77 %, while retail customer
deposits recorded a growth of 23.59 % in FY 12. Advances increased in tandem with Deposits to ` 37,755.99
Cr registering a Y-o-Y increase of 18.16 %.
As mentioned earlier, the Bank reduced its bulk deposits and gave added thrust to retail/low cost
deposits to bring down the overall cost of resources. The growth achieved in retail customer
base helped the Bank in reducing dependence on certificate of deposits and bulk deposits. The
share of high value deposits were brought down to 14.65% from 21.56% in the previous year.
The average deposits of the Bank during the period grew by 24.57 % and average advances by 15.96 %.
Savings deposits of the Bank during FY 12 moved up by 19.48 % to reach ` 10,929.95 Cr as compared to the
base fgure of ` 9,148.29 Cr. During the fscal year NRE deposits clocked an increase of 35.64 % to reach
` 7,963.61 Cr.
Your Banks investment portfolio increased to ` 17,402.49 Cr registering a growth of 19.71 % on Y-o-Y basis
as compared to 11.36 % in the previous fscal year. The average investments on Y-o-Y registered a growth of
44.31 % as compared to previous fscal year growth of 8.99 %.
Loan Asset Quality
Your Bank could combat the delinquency levels for the year by sourcing quality proposals selectively and by
continuous monitoring. The new credit hub system, succeeded in professionally isolating the sourcing and
sanctioning functions of asset procurement. In the earlier system, Branches were the focal point for both
credit sanctioning and dispensation. The institution of Credit Monitoring Cells (CMC) and Stressed Asset
Management Cell (SMAC) (attached to various Zones/Regions) for continuous monitoring and managing
the asset quality yielded the desired results.
The Banks gross NPA and Net NPA improved to 3.35 % and 0.53 % respectively as against 3.49 % and 0.60 %
as at the end of March 2011. Net NPAs of the Bank during the year marginally increased to ` 199.00 Cr from
190.69 Cr as on 31 Mar 2011.
The Bank had taken stringent measures to contain fresh accretion to the NPA portfolio as well as to scale
down the existing portfolio. SARFAESI proceedings were efectively employed and recovery agents were
judiciously deployed after complying with RBI guidelines in respect of their codes of conduct. During the year
the Bank launched a special campaign which was christened War on NPA. The campaign was successful in
educating the feld and motivating them to act. This has resulted in successful reining in of the NPA portfolio.
In adherence to RBI guidelines, one time settlement was permitted in deserving cases. These eforts have
yielded positive results.
Provision Coverage
As on 31 Mar 2012, the Bank held a total provision of ` 1,055.33 Cr. Provision coverage for NPAs as at 31
Mar 2012 stood at 81.13 %. As per the RBI directive, Banks should hold minimum provision coverage of
70 % including technically written of accounts. As on 31 Mar 2012, the provision coverage ratio of the Bank,
including written of accounts is 88.85 %. It has been a prudent policy of the Bank to be conservative on the
Provision Coverage Ratio as indicated by the fgure above.
Capital Adequacy
Your Bank enjoys very strong capital adequacy. CRAR of the Bank calculated in line with Basel II norms stood
at 16.64 % which is signifcantly in excess of the 9 % stipulated by RBI. Of this, Tier 1 CRAR is at 15.86 %.
Employee Productivity
Business Per Employee of the Bank during the period has grown to ` 10.11 Cr from ` 9.23 Cr in the previous
fscal year.
Proft Per Employee of the Bank increased by 25.48 % to reach ` 9.11 Lakh from ` 7.26 Lakh in the previous
fscal year.
Share Value Dimensions
Earnings Per Share of your Bank has increased from ` 34.32 to ` 45.41 registering a growth of 32.31 %. Return
on Equity during the year grew by 19.88 % to reach 14.37 % from the previous fscal years fgure of 11.98 %.
Employee Stock Option Scheme (ESOS)
The Bank has instituted an Employee Stock Option Scheme to enable its employees including whole time
Directors to participate in the future growth and fnancial success of the bank. Under the Scheme 85,51,650
options can be granted to the employees. The employee stock option scheme is in accordance with the
Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme)
Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the
basis of various parameters such as scale, designation, work performance, grades, period of service, annual
fxed pay, Banks performance and such other parameters as may be decided by the Compensation Committee
from time to time in its sole discretion and is approved by the Board of Directors
The Banks shareholders approved the scheme for issuance of stock options to employees including whole
time Directors on December 24, 2010.
The option conversion price was set to be the closing price on the day previous to the grant date. The
compensation committee granted 34,72,020 options during the year 2011 12. The options granted which
are non transferable, with vesting period of 1, 2, and 3 & 4 years subject to standard vesting conditions, and
must be exercised within fve years from the date of vesting. As on 31 March 2012, 30,35,875 options were
in force and none of them has been vested as frst vesting date is 31st May 2012 or on completion of one
year from the date of grant subject to standard vesting conditions and statutory approvals for the options
granted during 2011-12.
The valuation method adopted at the time of the grant was fair value method and it has been changed to
intrinsic value method as approved by the compensation committee of the Bank.
Other statutory disclosures as required by the SEBI guidelines on ESOP are given in Annexure II to this
report.
Expansion of Network
Commemorating the 66
th
Founders day, 66 branches were opened in a single day on 18
th
October 2011.
Another 100 branches were opened on 10th March 2012 across the country by the then Honble Finance
Minister of India, Shri. Pranab Kumar Mukherjee. The Bank was able to add 207 branches in the current fscal
year which included under-banked and un-banked centers as per RBIs guidelines. This resulted in a record
footprint expansion of 27.86 % from base. Out of the 207 Branches opened in FY 12, more than 82 % fall in
select fve states Tamilnadu, Punjab, Gujarat, Karnataka and Maharashtra and also in Kerala.
Corporate Social Responsibility
Corporate Social Responsibility and Sustainable Development initiatives were incorporated in the Banks
business strategies/ policies. The Bank has a well-defned CSR Policy crafted in consultation with the
stakeholders and circulated among the employees and also available in the intranet and Banks website.
Your Bank has always stood for the assistance & upliftment of the rural/agrarian community by devising
specifc schemes and inculcating banking habits in them.
Fedbank Hormis Memorial Foundation, a public charitable trust instituted by your Bank provides scholarships
to the economically needy students for pursuing professional education courses. The Trust is striving hard
to inculcate better knowledge and awareness in the feld of banking through training programmes, focused
seminars, awards and so on.
The social & community initiatives of your Bank include setting up of Banks own customer contact center
manned by the diferently abled personnel, supporting scores of NGOs/institutions with various types of
assistance including building fund, sponsoring ambulances, computers, dialysis machines, elevators, ofering
free midday meals, supporting environmental and healthcare projects, social, cultural and educational
programs etc. The mission includes partnering communities in health, family welfare, education, environment
protection, providing potable water, sanitation, and empowerment of women and other marginalized
groups.
The Bank has taken up credit-plus program called Samrudhi which are extended to villages through the
Community Development Societies (CDS).
By promoting paperless banking, blood donation, adopting small family norms, the Bank has come out
successful in making employees a part of its CSR.
In consonance with RBI directives, Federal Bank has established a Trust- Federal Ashwas Trust with the main
objective of establishing and running the Federal Ashwas Financial Literacy and Credit Counselling Centers
for providing fnancial education and credit counselling to the public.
In diferent ways, the Bank could reach out to the less privileged group such as fshermen, farmers, coolies,
construction workers, rickshaw pullers, migrants at their convenience near their homes. Christened as
Fedjyothi, the ICT (Information & Communication Technology) model accounts which are operated using
Biometric Smart Cards and Micro ATM turned out to be an efective tool in the process of implementation
of the Financial Inclusion program. The Bank opened a Grama Jeevan Branch which aims at providing formal
banking services to the entire unbanked village in a meaningful way. Farmers Club- a grass root level informal
forum of farmers Organised by our rural and semi-urban branches with the support and fnancial assistance
of NABARD stand for the beneft of the village farming community/ rural people. At Federal Bank Corporate
Social Responsibility (CSR) is an embodiment of our commitment to the Society at large.
Awards and Accolades
lYour Bank has won the International ACI Excellence Award 2012 in the Payments Transformation category
for two prestigious projects Visa Money Transfer (Visa Fast Funds) & Federal Banks Aadhar (UID) Based
Authentication of Payments.
lThe Bank has also won awards in 2 categories from the Kerala Management Association in 2011 Innovative
Cost Management Measures and Excellence in House Magazine.
lThe Bank has won the Blue Dart World CSR Day Global CSR Award for Best Corporate Social Responsibility
Practice Overall.
lThe Bank was ranked as the Best Bank among old private sector banks in 2010, by Financial Express.
l Your bank was ranked 497
th
bank in the world by The Banker, the Internatinal Financial Afairs publication
edited from London, in their July 2011 edition.
lThe Golden Peacock Award, a prestigious award instituted by The Golden Peacock Awards Secretariat
(GPAS), on the CSR front was awarded to us in this fscal year.
Corporate Governance
The Bank has adopted a Code of Corporate Governance which while taking care of and safe guarding the
interest of shareholders and all other stakeholders also provides for good management, adoption of prudent
risk management techniques and compliance with required standards of capital adequacy.
The Code also aims at identifying and recognizing the Board of Directors and the Management of the Bank
as the principal instruments through which good corporate governance principles are articulated and
implemented, giving utmost importance to identify and recognize transparency, accountability and equality
of treatment amongst all the stakeholders, which is in tune with statutory and regulatory structures. A copy
of the Code is available on request.
Board of Directors
The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies
Act, 1956, Listing Agreement, and the Code of Corporate Governance adopted by the Bank. The Board
comprises of 8 Directors with rich experience and specialized knowledge in various areas of relevance to
the Bank, including banking, accountancy, MSME, fnance, small scale industry, agriculture, and information
technology.
Shri. Shyam Srinivasan MD & CEO joined the Bank on 23.09.2010. Shri. P.C. John, Executive Director (ED), is
the Whole Time Director of the Bank. Excluding the MD & CEO and the ED all other members of the Board
are Non-Executive and Independent Directors.
Shri. Suresh Kumar was re-elected/appointed as Director of the Bank at its last Annual General Meeting held
on 3
rd
September 2011.
Shri. Nilesh S Vikamsey was appointed as a Director of the Bank on 24.06.2011 and was elected as a Director
of the Bank at its last Annual General Meeting held on 3rd September 2011.
The other Directors who are retiring at this AGM are Prof. Abraham Koshy and Dr. M.Y.Khan. Prof. Abraham
Koshy and Dr. M.Y.Khan, being eligible, have ofered themselves for reappointment.
Prof. Abraham Koshy, Ph.D (Fellow, IIM Ahmedabad), MBA, is an independent Director on the Board of
the Bank since May 18, 2007. He was a member of the faculty at the School of Management Studies, Cochin
University and thereafter the Centre for Management Development, Trivandrum. He subsequently became
a member of the faculty of the Indian Institute of Management, Ahmedabad. He currently serves there as a
Professor of Marketing . He is a Visiting Professor of various European Business schools/Universities and he
conducts executive training programmes for senior executives of companies in India and abroad. He also
provides advisory services for various companies. Apart from publishing several research papers and case
studies in reputed journals, Prof.Koshy has co-authored a book on Marketing Management with legendary
marketing guru, Prof. Kotler.
Prof. Koshy is also a Director of Malayala Manorama Printing and Publishing Co. and Autoline Industries Ltd.
He is Chairman of the Risk Management Committee, Customer Service & Marketing Strategy Committee
and Committee for Human Resources Policy of the Federal Bank Ltd. and also member of its Nomination,
Remuneration and Ethics Committee. Prof. Abraham Koshy held 1000 shares of the Company as on March
31, 2012.
Dr. M. Y. Khan is an Independent Director on our Board since June 06, 2009. He is a professional banker with
vast experience in Banking Industry. He is a Post Graduate in Science and also holds an Honorary Degree,
Doctorate of Philosophy in Business Management (Ph.D) from Burkes University in U.K. He was former
Chairman of Jammu & Kashmir Bank and made signifcant contributions for its growth. He was also heading
J & K Tourism Development Corporation for 5 years as Managing Director. Dr.Khan had been nominated
member of the Chattisgarh Economic Advisory Committee, Government of India, Member of the Banking
and Financial Institutions Committee of FICCI and Member of the Managing Committee of Indian Banking
Association Mumbai, Dr.Khan is the recipient of several prestigious awards like Udyog Rattan award,
Pride of India & IMM award, for excellence as top professional manager, Excellence Award by Institute
of Economic Studies, Star Achievers Award among several others. Currently he is on the Board of Zee
Entertainment Enterprises Ltd, Bharath Hotels Ltd, ETA Star Health & Allied Insurance Company Ltd, United
Corporate Park, Dhir Investments Plc and Unitech CIG Realty Fund.
He is the Chairman of the Audit Committee of Bharath Hotels Ltd and a member of the Audit Committee of
The Federal Bank Ltd. Dr. M.Y. Khan did not hold any shares of the Company as on March 31, 2012.
Subsidiary
FedBank Financial Services Ltd. is a fully owned subsidiary of the Bank. As required under Section 212 of the
Companies Act, 1956, the fnancial statements relating to this company, the sole subsidiary of the Bank, for
FY 12 are attached.
Annual Financial Statements and Audit Report
As required by section 212 of the Companies Act, 1956, the Banks Balance Sheet as on 31 March 2012, its
proft and loss account, and the statutory auditors report and statements required under the section, are
attached.
Statutory Audit
M/s. Varma & Varma, Chartered Accountants, Kochi, and M/s. Price Patt& Co., Chartered Accountants, Chennai,
jointly carried out the statutory central audit of the Bank. The statutory central/branch auditors audited all
the branches and other ofces of the Bank.
M/s. Price Patt & Co., one of the joint statutory central auditors of the Bank whose period was to expire
at the conclusion of this Annual General Meeting, submitted their resignation vide their letter dated
14.06.2012, consequent to their appointment as statutory central auditor of Union Bank of India, a public
sector bank for the year 2012-13, in view of the RBI guidelines that an audit frm cannot do the central audit
of a private sector bank if they are statutory auditors in public sector banks efective from the year 2012-13.
The same has been taken on record by the Audit Committee of the Board.
Joint Venture in Life Insurance Business
The Banks joint venture Life Insurance Company, in association with IDBI Bank Limited and Fortis Insurance
International N.V. (now Ageas), namely IDBI Fortis Life Insurance Company Limited, renamed as IDBI Federal
Life Insurance Company Limited, commenced operations in March 2008. Currently the Bank has a total stake
of ` 208 Cr in the equity of the company holding 26 % of the equity capital.
Statutory Disclosure
Stock Exchange Information
The Banks equity shares are listed on:
1. Bombay Stock Exchange Limited
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai - 400 001.
2. National Stock Exchange Ltd.
Exchange Plaza
Bandra Kurla Complex
Bandra East, Mumbai - 400 051.
3. Cochin Stock Exchange Ltd.
MES, Dr. P.K. Abdul Gafoor
Memorial Cultural Complex
4
th
Fl, 36/1565, Judges Avenue,
Kaloor, Kochi 682 017.
The GDRs issued by the Bank are listed on the London Stock Exchange.
The annual listing fees have been paid to all the Stock Exchanges listed above.
Through its export-fnancing operations, the Bank supports and encourages the countrys export eforts.
Considering the nature of activities of the Bank, the provisions of Section 217 (1) (e) of the Companies Act,
1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank is,
however, constantly pursuing its goal of technological upgradation in a cost-efective manner for delivering
quality customer service.
Personnel
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars
of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the
Annexure to the Directors Report. (Annexure I).
Directors Responsibility Statement
As required by section 217 (2AA) of the companies act, 1956, the Directors state that:
The Bank has in place a system to ensure compliance of all laws applicable to the Bank;
In the preparation of the annual accounts, the applicable accounting standards have been followed along
with proper explanation relating to material departures;
The directors have selected such accounting policies and applied them consistently and made judgments
and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the
Bank at the end of the fnancial year and of the proft of the Bank for that period;
The directors have taken proper and sufcient care for the maintenance of adequate accounting records in
accordance with the provisions of this Act for safeguarding the assets of the Bank and for preventing and
detecting fraud and other irregularities; and
The directors have prepared the annual accounts on a going concern basis.
Acknowledgement
The Board of Directors places on record its sincere thanks to the Government of India, Reserve Bank of India,
Various State Governments and regulatory authorities in India and overseas for their valuable guidance,
support and co-operation. The Directors wish to express their gratitude to investment Banks, rating agencies
and stock exchanges for their excellent support.
The Directors record their sincere gratitude to the Banks shareholders, esteemed customers and all other
well-wishers for their continued patronage. The Directors express their appreciation for the contribution
made by every employee of the Bank.

For and on behalf of the Board of Directors
Aluva P.C. Cyriac
Date. 29
th
June 2012 Chairman of the Board
Annexure I
Statement pursuant to Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars
of Employees) Rules, 1975, (forming part of the Directors Report for the year ended March 31, 2012) in
respect of employees of the Bank.
Name,
Qualifcation and
Age (in years)
Designation
Remuneration
Experience
(In years)
Date of
commencement
of employment
Last
employment Gross (`)
Net (`)
#
Shri. Shyam
Srinivasan @
B.E., P.G.D.M.
(IIM, Kolkata)
50 years
Managing
Director &
CEO
78,61,324 56,17,324 26 years
September 23,
2010
Head
(Consumer
Banking-
India),
Standard
Chartered
Bank
Shri. Abraham
Chacko@
Post graduate
diploma in
Business
Management
(XLRI,
Jamshedpur)
Bachelors in
Commerce
(Honours)
59 years
Executive
Director
77,76,330 56,66,330 33 years May 21, 2011
Regional
Head of
Business/
Sales/Trade
Asia/Middle
East/Central
Asia/Africa,
ABN Amro
Bank/RBS
Shri. Ashutosh
Khajuria@
B.Sc. (Physics),
LL.B,
M.A. (Economics),
CAIIB,DTIRM
52 YEARS
President
(Treasury)
63,51,552 51,10,552 28 years June 16, 2011
CGM &Head
of Treasury,
IDBI BANK
LIMITED
# Net of Taxes Paid
@In addition to the above 5,13,100 stock options were granted to Shri. Shyam Srinivasan, MD & CEO,
1,00,000 stock options were granted to Shri. Abraham Chacko, Executive Director and 60,000 stock options
were granted to Shri. Ashutosh Khajuria, President (Treasury) @ market rates relevant on the date of
grant.
Annexure II
Disclosure in the Directors Report as per SEBI Guidelines.
Sl.
No.
Particulars
ESOP 2010 Granted On
April 09, 2011
ESOP 2010
Granted
On June
02, 2011
ESOP 2010
Granted On June
16, 2011
1. No. of Options Granted 33,12,020 1,00,000 60,000
2. No. of Options issued Nil Nil Nil
3 Pricing Formula
The exercise price considered is the closing market price
as on the day preceding the date of the grant, at the stock
exchange which has had the maximum trading volume of
the Banks share.
4 No. of Options vested Nil Nil Nil
5. No. of Options exercised Nil Nil Nil
6.
No. of Shares arising as a result of
exercise of Options
Nil Nil Nil
7. Options Cancelled 4,36,145 0 0
8. Variation in terms of Options Nil Nil Nil
9.
Money realized by exercise of
options
Nil Nil Nil
10.
Total Number of Options in
force
28,75,875 1,00,000 60,000
11.
Employee wise details of
Options granted to
a) Senior Managerial
Personnel i.e MD &
CEO
5,13,100 - -
ED I
ED II
10,125
-
-
1,00,000
-
-
b) Any other employee
who receives a grant in
any one year of Options
amounting to 5% or more
of the options granted
during the year
Nil Nil Nil
c) Identifed employees
who were granted
options, during any
one year equal to
or exceeding 1% of
the issued capital
(excluding outstanding
warrants and
conversions) of the
company at the time of
grant.
Nil Nil Nil
12. Diluted Earnings Per Share (EPS)
of the Bank after considering
the efect of potential equity
shares on account of exercise of
Options.
` 45.41 per share
13. Impact of the diference
between the Intrinsic Value of
the Options and the Fair Value
of the Options on Profts and
on EPS.
Had the Bank adopted the fair value method (based on
Black-Scholes pricing method) for pricing and accounting
options, Net proft after tax would have been lower by
` 1972.46 Lakh for FY 2011-12
Basic EPS ` 44.26 per share
Diluted EPS ` 44.16 per share
14. Weighted average exercise
prices of options
i. whose exercise price equal
to market price
ii. Exercise price is greater than
Market price
iii. Exercise price is greater than
Market price
` 424.93
Nil
Nil
Weighted average fair value of
options
i. whose exercise price equal
to market price
ii. Exercise price is greater
than Market price
iii. Exercise price is greater
than Market price
` 100.60
Nil
Nil
15. 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 Black-Scholes pricing model
with the following assumptions:
i. Risk Free interest rate 7.50% 8.25% 8.25%
ii. Expected life 3 years to 4.5 years
3 years to
4 years
3 years to 4.5
years
iii. Expected volatility 20% 20% 20%
iv. Expected Dividends 1.50% 1.50% 1.50%
v. The price of the underlying
share in market at the time
of grant of option
`423.45 `449.70 `454.65
The Federal Bank Limited Report of the Board of Directors
Management Discussion And Analysis
Global Scenario
Global growth slowed in 2011, but the world economy stayed on the path of slow recovery, reducing the
likelihood of a double dip recession. Performance of the major advanced economies has been a point of
concern as the economic outlook of the Euro Area continues to be grim in the shadow of a protracted
sovereign debt crisis. Euro Crisis remained as a dominant global factor and a source of volatility in asset and
currency markets.
Signs of better than expected recovery is shaping up in the U.S indicate that modest recovery will continue
in FY 13.
Large scale liquidity infusions by the European Central Bank have signifcantly reduced the stress in global
fnancial markets. However, a sustainable solution to the Euro area debt problem is yet to emerge. Recent
developments, for example in Spain, indicate that the Euro area sovereign debt problem will continue to
weigh on global economy.
Developing countries and economies in transition are expected to continue to stoke the engine of the world
economy, growing on average by 5.6 % in 2012. Among BRICS countries, growth in China slowed from 10.4 %
in 2010 to 9.3 % in 2011 and is projected to slow further to below 9 % in 2012-2013. Output growth in Brazil
was already halved, to 3.7 %, in 2011 and is expected to cool further to a 2.7 % growth in 2012. The slowdown
in growth was relatively modest in Russia and South Africa.
Domestic Economic Scenario
While the rest of the world has been grappling with the after efects of the European Debt Crisis, the Indian
Economy in 2011-12 has also seen a deceleration in growth. Quarterly growth rates have consistently fallen
in 2011-12 since the global crisis of 2008.
The GDP growth rate in India which stood at 7.7 % in Q1 dropped signifcantly and reached a level at 5.3 % as on
31
st
March 2012. This was mainly due to deceleration in Industrial Growth. The service sector has maintained
its strong performance during the fscal year, proving it to be the most resilient sector of the economy.
During 2011-12 rupee came under strain towards the last week of August 2011 under the impact
of outflow of funds by FIIs and remained continuously under pressure till December 2011. From a
peak of ` 43.94 on 27th July 2011 rupee touched a low of ` 54.23 per USD on 15th December 2011.
With the intervention of RBI in the Forex market and tightened regulatory measures by narrowing open
position limit and other measures, speculation was discouraged in the Forex market.
Infation
Last two years we have witnessed high rate of infation. The headline WPI infation, which remained above
9 % during April-November 2011, moderated to 6.89 % by end March 2012. Infation of Food articles continues
to be high and infation in protein items is in double digits, refecting persistent structural demand-supply
imbalances in protein foods.
After consistently high levels of infation around 9 to 10 % for more than twenty months, the wholesale price
index (WPI) dipped to a two year low of 6.55 % during the month of January 2012. Primary articles infation
which was in double digits for over two years till October 2011, moderated to 8.5 % in November 2011 and
further to 2.3 % in January 2012 and has bounced back to 9.6 % as on March 2012.
The Federal Bank Limited Management Discussion and Analysis
Manufactured products infation remained elevated throughout the fscal year 12, albeit declining from 8.1 %
in October 2011 to 6.5 % in January and further declining to 4.9 % in March 2012.
Fuel infation on other hand moderated from over 15 % in November-December 2011 to 10.4 % in March 2012
even as global crude oil prices had risen sharply. Non-Food manufactured products infation decelerated
signifcantly from 8.4 % in November 2011 to 4.7 % in March 2012, on the back of a slowing domestic demand
and softening of global non oil commodity prices.
Monetary and Liquidity Conditions
Liquidity conditions worsened during 2011-12, which remained on defcit mode and RBI resorted to open
market operations and lowered the CRR twice to 6.0 % to 5.50 % and again to 4.75 % which is a 125 basis point
reduction. Interest rate hardened during the year 2011-12 on account of persistent high infation and increase
in repo rates by RBI fve times during the fscal year (Both Repo and reverse Repo rates were increased by
175bps from 6.75 % to 8.50 % and from 5.75 % to 7.50 %).
The money supply during the fscal year remained subdued at 13 %, lower than the RBIs indicative level of
15.5 % on account of slowdown in deposits growth and currency growth. Additionally, structural changes and
increase in agricultural productivity has helped in containing the food articles infation.
In the Equity front, the market turned bearish in 2011-12 and Sensex plummeted to 17404 points as on
31 Mar 2012 from 19445 as on 31st March 2011, registering a decline of 10.5 %. Rates in money market and G-Sec,
market remained high due to tight liquidity situation, high infation, increase in policy rates by RBI and higher
borrowings by Government. During the year call rates went up from around 6.5 % in April to about 9 % -9.5 %
in March 2012 and the yield on benchmark 10 year government bonds also scaled up from 7.98 % as of
March 31, 2011 to 8.57 % as of March 31, 2012.
Liquidity management remained a major challenge for Reserve Bank of India during the last fscal year.
Beginning November 2011, the liquidity defcit went beyond the comfort level. To address the same RBI
injected primary liquidity of around ` 1.3 trillion through open market operations and ` 0.8 trillion through
reductions in cash reserve ratio by 125 basis points.
The Banking Scenario
Indian Banking Sector remained more or less stable despite the turbulent global environment on account
of the Euro Crisis. During Q4 of 2011-12, deposit rates of Scheduled Commercial Banks remained mostly
unchanged from their peak levels attained in H1 of 2011-12. Lending rates marginally notched up and seem
to have plateaued in H2 of 2011-12 in line with the peaking of the policy rate cycle. Despite tight liquidity
conditions, successive policy rate hikes and high cost of funds for banks, the base rate remained sticky on
account of slowdown in non-food credit growth during H2 of 2011-12.
During the year aggressive reforms were introduced by the Reserve Bank of India with a view to building
robust and resilient fnancial system. More stringent capital and liquidity measures for commercial banks
were implemented and steps were taken by RBI to build provision bufers. During the year RBI adopted new
prudential compensation practices for commercial banks. Various institutional mechanisms and tools for
monitoring risks were adopted and put in place.
The deposit growth of the banking system remained robust upto December 2011, but subsequently it lost
pace. However with large deposit accretion during the last month of the fscal year, deposits growth during
2011-12 stood at 17.4 % against 15.9 % during 2010-11. Credit growth of Indian commercial banks during the fscal
year showed a decelerating trend from December 2010 on the back of elevated infation, interest rates and
intensifcation of supply side constraints. The fscal year ended with bank credit growth of 19.3 % against 21.5 %
growth during 2010-2011. The divergence between credit and deposit growth rates had narrowed during
the frst three quarters of FY 12, it widened during the fourth quarter due to sharper deceleration in deposit
growth in Q4, FY 12.
Banks lending to service sector grew by 14.7 % in 2011-12 compared with 23.9 % in 2010-2011. Within the services,
loans to companies ofering fnancial services and commercial real estate grew at the slowest. Credit to
fnance companies grew at 26.3 % in 2011-12 after growing at a sizzling pace of around to 54 % the previous year.
Alongside RBI recently curbed banks exposure to companies ofering gold loans to 7.5 % from 10 % earlier.
With reference to changes on the regulatory front during FY 12, interest rate on savings deposits was initially
raised from 3.50 % to 4.0 % and later it was de-regulated. Provisioning norms for NPA and restructured accounts
were tightened. During the year RBI had advised banks to reduce their exposure to debt oriented mutual
funds, permitted banks to open branches in Tier-2 centres without prior license and modifed regulations
on micro fnance and NBFCs
The Proft After Tax (PAT) of Indian Banks for the fourth quarter ended March 2012 stood at ` 20,188 Cr
increased by 14.62 % Q-o-Q and 51.23 % Y-o-Y. Private Sector banks have relatively performed better than Public
Sector Banks in terms of gaining market share and have displayed strong bottom line numbers.
Going forward to FY 13, RBI has projected aggregate deposits of commercial banks to grow by 16 % and non-
food credit by 17.0 % in line with the overall GDP growth of 7.3 % and broad money supply growth of 15.0 %.
RBI has also instructed all banks in India to start the implementation of Basel III norms in a phased manner
starting with the adoption of Capital adequacy norms by January 2013. Migration to Basel III will ensure
better capital standards & tighter liquidity norms thereby absorb any shocks or systematic risk in the fnancial
sector. Strict income recognition, asset classifcation and provisioning norms of RBI will ensure that banks
have quality assets in its portfolio. With increased levels of competition, banks hence are giving ample thrust
on the key areas of quality of assets, risk return management, liquidity management, introducing innovative
products, leveraging on technology and adopting HR practices in tune with changed economic scenario.
Review of Business Performance
Having achieved a size of ` 60,627 Cr plus in the Balance Sheet and total business around ` 86,693 Cr at the
end of March 2012 with a growth rate of 15.64 % on a Y-o-Y basis, The Bank is set for phenomenal growth
through organic means and targets a total business size of over Rupees One Trillion by the end of March
2013. The fnancial strength of your Bank is refected in the Banks net worth of ` 5,706.33 Cr at the end of
March 2012. Banks Capital to Risk Weighted Assets Ratio (CRAR) stands at 16.64 % at the end of March-2012
as per Basel II norms.
In FY 12, your bank posted strong net proft growth of 32.31 % Y-o-Y and achieved ` 776.79 Cr. During the year
the Banks asset quality improved considerably with gross NPA ratio declining to 3.35 % and net NPA ratio
declining (by 11.62 %) to 0.53 %. Slippages during FY 12 were reduced by ` 180.53 Cr to reach ` 695.31 Cr. With
increased recovery eforts, recovery rate increased to 58.12 % in FY 12.
Advance and deposit portfolio of your Bank grew in tandem with the industry. There was a sustained increase
in Advances portfolio which grew by 18.16 % Y-o-Y to ` 37,755.99 Cr and deposits grew by 13.77 % Y-o-Y to
` 48,937.12 Cr.
During the year your Bank strengthened its recovery mechanism by utilizing SARFESI Act and other tools
more efectively. As a result of which the recoveries picked up signifcantly over the last few quarters, with
a recovery rate of 58.12 %. The Bank has strengthened its risk management systems and has now separated
the two functions credit appraisal and credit sourcing.
During the year total Income of the Bank grew by 33.31 % to reach ` 6,090.73 Cr. With an impressive growth
of 32.31 %, your Bank registered a Net Proft of ` 776.79 Cr on Y-o-Y Basis. Return on average assets of your
Bank improved from 1.34 % to 1.41 %. Earnings per Share improved to reach ` 45.41 from ` 34.32 from the
previous fscal year.
The business per employee and proft per employee as on March 31, 2012 increased to ` 10.11 Cr. and ` 9.11 L
respectively from ` 9.23 Cr and ` 7.26 L as on 31 Mar 2011. The Cost to Income ratio increased to 39.40 % as
on 31 Mar 2012 against 36.94 % as on 31 Mar 2011.
The retail advances of the Bank constituted 27.37 % of the gross advances while SME contributed 26.98 %. The
advance to priority sector of your Bank stood at ` 12,652.54 Cr as on 31 Mar 2012. During the year Lending to
Agriculture sector grew by 15.21 % and stood at ` 4,318.74 Cr.
Corporate Lending
Corporate lending contributed a solid support to the loan portfolio of the Bank. To further consolidate its
position, the Bank has shifted its Large Corporate Department to Mumbai, the center of Corporate Credit in
India. This move aims to fortify the Banks foothold in the Wholesale Banking market of the country.
As on 31 Mar 2012 Large Corporate advances constituted about 44 % of the total advance portfolio. The
business from this segment registered a growth rate of 23.15 % in the fnancial year ended March 31, 2012. The
Bank provides comprehensive fnancial and risk management solutions to clients generally with a turnover
of over ` 500 Cr or with a credit requirement of ` 25 Cr and above.
The Bank aims to partner the growth of the small corporate sector and to be the most preferred banker for
the mid corporate sector, while having a fair share in the large corporate sector. Under Corporate Banking,
the Bank ofers fnancial solutions to various categories including large, mid and emerging Indian Corporate
Groups, Public Sector Enterprises, Government Bodies, Multinational Companies and Financial Institutions.
Bank ofers an array of banking products and services covering working capital, term fnance, trade fnance,
specialized corporate fnance products, structured fnance, foreign exchange, syndication services and
electronic banking requirements of corporate clients. The Bank is committed to provide innovative fnancial
solutions by leveraging on superior product delivery, knowledge-based advisory, industry benchmark service
levels and a strong client orientation.
New customer acquisition and relationship-strengthening constitute the two-pronged growth strategy. The
Bank has endeavoured to identify prospective corporate clientele by analysis of client data obtained from all
credible sources. The Bank is trying to reach out to the prospective clients that match our parameters and
policies. Emphasis has been laid to fne-tune the existing relationships and increase the fee-based income
of the Bank by increasing Forex and Non Fund based business. With these objectives, the Bank has set up
Corporate Consultancy and Business Development Division in Mumbai.
The Bank took an active interest in recruiting specialized ofcers from campuses and Institute of Chartered
Accountants of India (ICAI) for inducting fresh talents.
The loan policy of the Bank has put in place a matrix of industry exposure limits with a view to de-risking the
portfolio through diversifcation. The Bank has also stipulated minimum entry-level exposure criteria based
on credit rating for taking large new exposures. Prudential ceilings are prescribed for exposure in long-term
assets, unsecured advances etc. Apart from subjecting each credit exposure to robust risk analysis at several
levels it is also vetted by a Credit Risk Vetting Committee consisting of senior executives of the Bank. The
exposures are periodically examined for signs of stress so that early corrective actions can be initiated.
Micro, Small & Medium Enterprises
The focal thrust of Federal Bank has always been on the Small and medium enterprises / entrepreneurs and
is built on the philosophy of sharing the trust and confdence with industrialists, traders, businessmen
and agriculturists.
Our SME portfolio continues to be the spark in the business engine of the Bank over the years. During the
past fnancial year, SME advances on a Y-o-Y basis increased to ` 10,471.82 Cr and Current Accounts during
the year increased to ` 2,484.42 Cr respectively. The total priority sector advance has grown by ` 1,551.63 Cr
and reached ` 12,652.54 Cr as on 31 Mar 2012. The year also saw refnement in our Federal Rent Securitization
and Premises Loan schemes. We introduced the new SME loan product Fed SME LAP, with simplifed credit
assessment procedures and fexibility in granting fnance against the security of fxed assets. We have also
tied up pan India with Tata Motors and Ashok Leyland for fnancing their Commercial Vehicles.
Your Bank has crossed the milestone of installation of 5000 plus POS Machines within a short span of time. We
are also planning to introduce Wireless POS machines (GPRS enabled) which will be deployed in the coming
year. The Payment Gateway services provided by the Bank were also well accepted among the business class.
Bangalore Metro Rail Corporation Limited has selected your Bank as their merchant Bank for automatic fare
collection (AFC) for the 13 stations in reach 3, and to issue 2 in 1 combo travel cards.
We have signed MOU with LIC for NEFT payment accounts of LIC Divisional Ofces and has been successful in
reaping in the benifts. Your Bank also have a strong Collection Management System and have entered into
CMS arrangements with leading Corporate Firms across the country. We could start Cash Pick up Services
pan India during the fnancial year, which is expected to bring in substantial current account customers to
our fold.
We also launched the following schemes during the year under report
lFed Arogya A Specifc Current account scheme catering to the Health Sector.
lFed-Chit - Exclusive current account catering to Chit Companies with tailor-made technological supplements
(auto debits, customized net banking, E-Collection etc.)
lFed-Elite - A current account scheme empowering the feld to cater to elite fresh clients with Zero balance
Charge Free current account.
lVisa Business Debit Cards: We have added a feather to sufce the requirements of our corporate customers
by ofering them Business debit cards.
lFed + Amrita: A Health Portal for Amrita Institute of Medical Sciences enabling card holders and our
customers to book online for various services/payment of in-patient bills etc. The Bank plans to have
a complete health portal and associate with leading multi speciality hospitals across the nation in the
ensuing year.
Retail Business
The Bank posted an impressive growth of 23.59 % in resident retail deposits during the reporting period.
Retail deposits peaked at ` 41,279.19 Cr from the base level of ` 33,400.47 Cr. Resident Savings Deposits
grew by 15 % and reached ` 6,263 Cr.
As part of extending personalized and customized services to HNI customers, Bank has been providing
Priority Banking Services across various branches. The premium service christened FedSelect is presently
made available at select 70 branches and is being slated to cover another 30 branches by the end of this
fscal year. Our customers will experience a diferent world of banking through these special banking lounges
and customized service of dedicated customer relations personnel. We also ofer Home Banking services in
select locations under this facility.
The bank has also introduced a bouquet of Pre Paid Cards which includes Gift Card, International Travel card
for our customers etc. We also launched Utsav Rewards, an attractive Debit Card Loyalty Rewards Programme
to our customers so as to make their shopping experience more delightful.
The Bank has always been pro-active in the sales of allied products and has given a huge thrust by ofering
Systematic Investment Plan (SIP), which acts as a vehicle for wealth creation for our customers.
Focus was given in training our ofcials on Mutual Fund products, so that right scheme can be ofered to the
right customer from the best available proposition mix. We are selling life insurance products from our Life
insurance associate IDBIFEDERAL Life Insurance Co. Ltd.
A sizeable volume of Federal Pure Gold was sold through our select branches. The Bank also ofers Depository
Services and e-trading facilities to our investor customers. The depository services are ofered through 183
designated branches across the country. The Bank has an exclusive Depository Services Division at Kochi to
support the depository services ofered by the Bank.
Fed- e-trade, a 3 in 1 online trading facility ofered to customers in association with Geojit BNP Paribas provides
customers the ease of trading in Capital Market from the comfort of their homes. The Bank has a tie up with
Bajaj Allianz General Insurance Company for distribution of General Insurance products across the Bank.
The Bank has launched various programmes as part of cross selling initiatives during the reporting period.
Customized products and attractive ofers were made to select group of customers through this initiative. An
elite personal loan scheme was launched targeting our good and loyal liability customers as a Pre-approved
ofer and a large number of our customers made use of this facility. The Bank also ran campaigns targeting
housing loan customers with good repayment history by ofering them Home plus loan products under the
green channel in attractive terms and Federal Pure Gold with discounts.
The retail loan book of the Bank reached ` 10,623 Cr forming 28.13 % of the total advances of the Bank. Gold
loan portfolio, which was one of the focus area of the Bank this year, showed a quantum growth of 127 %
(excluding Agriculture gold loan) to reach a fgure of ` 2,432 Cr even in the backdrop of intense competition
from private players/NBFCs. Housing and Auto Loans also continued to be a focus area of growth. As on 31
Mar 2012, there were 20233 Educational Loans outstanding with balances totaling to ` 352 Cr. We have in
place more refned norms in sanctioning of retail loans to improve the asset quality.
Agriculture & Financial Inclusion
The Bank has registered a Y-o-Y growth of 15.2 % in its Agricultural Credit Portfolio as on 31 Mar 2012 and
reached a business fgure of ` 4,318.74 Cr from the base of ` 3,748.54 Cr.
As part of the growth plan in the Agri Business Sector, the Bank has adopted an aggressive marketing strategy
for new customer acquisition and for establishing linkages with major Agri Business Clients by deploying a force
of agricultural credit specialists for sourcing of fresh proposals and servicing a multitude of customers.
Your Bank ofers various Agri Business Products including Federal Kissan Credit Cards, Agricultural Cash
Credits, Medium Term Loans, Long Term Loans etc. customized to suit the requirements of the farming
community under plantation, horticulture, land development, irrigation, farm mechanization, construction
of rural godowns, cold storage, green house, foriculture, allied activities like dairy, poultry, fshery, goat
rearing, agro processing, fnance to Agri-input dealers etc.
The Bank is committed in increasing its credit dispensation to the agricultural segment and empowerment
of the farming community through various initiatives including new products like Federal Green Plus Loan
Scheme and Scheme for Financing Broiler Poultry which are already implemented. Launching of new
innovative products like Financing Precision Farming, Poly House Cultivation, Financing Rubber Producers
Societies etc. are in progress.
The Bank has established co-fnancing tie up with National Bank for Agriculture and Rural Development
(NABARD) for co-fnancing under Agricultural Projects/Agro and food processing, High-Tech Agriculture, rural
development schemes, Agricultural Marketing Infrastructure, schemes for replanting of tea, modernization
of tea factories etc.
Financial Inclusion - Information & Communication Technology Model
Federal Bank, as part of its mission to reach out to those who are deprived of banking service, has successfully
implemented Biometric Smart Card and Micro ATM based FedJyothi project in 61 villages through Business
Correspondent services in Kerala and Maharashtra.
Award and Recognition
As a recognition for the speedy and successful implementation of FEDJYOTHI in 13 allotted villages in Kerala,
the Bank received the memento for Total Financial Inclusion Declaration of Kerala State from the Honble
Chief Minister, Shri. Oommen Chandy.
Meaningful Financial Inclusion
Federal Bank has also gone a step ahead in the feld of Financial Inclusion with the implementation of
Meaningful Financial Inclusion programme in our model village Thuruthy, Vengoor West in Ernakulam district
by way of extending micro credit, nurturing of Self Help Groups, formation of Farmers Clubs and engaging
in development programmes to augment rural income and to ensure sustainable livelihood for the villagers
through our Grama Jeevan fnancial inclusion branch and Business Correspondents.
Financial Literacy and Credit Counselling Centers
The Bank has also set up 12 Federal Ashwas Financial Literacy and Credit Counselling Centers with an aim to
educate the public especially in the rural areas on intelligent borrowing and to save them from the debt trap
by ofering preventive/curative credit counseling.
Institutional Tie-ups with Schools
Understanding that education and literacy are imperative for efective Financial Inclusion, the Bank has
conducted workshops in over 120 Higher Secondary Schools across Kerala for the beneft of more than
40,000 students.
Adoption of Schools
The Bank has taken the initiative to distribute refurbished computers to the students in various schools. The
Bank has also adopted 10 tribal schools in Wayanad & Idukki districts to provide basic education to the tribal
children in remote and far fung areas.
Growth in Advance with Quality
The Bank has initiated various measures to maintain asset quality and streamlined NPA recovery management
process, particularly in view of the deteriorating asset quality concerns of the banking industry in general.
Concerted eforts have been made for recovery/up gradation of accounts which were recently slipped as
NPA. Thrust was given for monitoring and timely follow-up of accounts which had shown symptoms of stress,
recovery measures under SARFAESI Act and settlements through compromise were adopted and services
of Recovery Agents /NPA Resolution Agents were availed of, wherever found necessary, for augmenting
NPA recovery.
As a result of the aggressive measures adopted by the Bank, against the gross NPA of 3.49 % and Net
NPA of 0.60 % as on 31 Mar 2011, gross NPAs could be brought down to 3.35 % and net NPA to 0.53 % as on
31 Mar 2012.
As on 31 Mar 2012, the Bank held a total provision of ` 1,055.33 Cr for NPAs, including a foating provision of
` 179.52 Cr. The total provision coverage for NPAs as on 31 Mar 2012 has been 81.13 %.
NRI Business
During the fscal year 2012, NRI business of the Bank registered a growth of 35.09 % reaching a level of
` 11,184 Cr from a base of` 8,279 Cr. The low cost SBNRE portfolio grew by 27 %. We were the frst Bank to
respond to deregulation of interest rates on NRE fxed deposits and our NRE fxed deposit portfolio grew
by 91 % during FY 12. Millionaire FSF, a recurring deposit product launched by the Bank was well accepted
by our NRI patrons. Our representative ofce and vibrant team abroad are acting as Banks gateway to Gulf
Co-operation Council, ofering our service and support to our NRI customers abroad. The overseas team was
further strengthened during the previous FY and the present strength is 35. As a part of our strategy to focus
beyond Kerala, experienced business development managers are posted in major Zones. Extending better
banking convenience to our NRI customers through virtual and online banking is our immediate goal.
International Banking and Cross Border Remittances
We have a strong presence in inbound cross border remittance business. Out of the 93 exchange houses
from Gulf Co-operation Council (GCC), Hong Kong and Singapore having Rupee Drawing Arrangement with
Indian banks, we have got remittance tie ups with 60. In addition to this we have got inward remittance tie up
with Western Union, Xpress Money, VISA Money Transfer, Remit2India as well as Cash Payout arrangements
(Fed e Cash) with Banks in Saudi.
Out of the USD 63.60 billion infow into India during the year 2011-12, our share comes to 7.09 %. We have
handled 40 Lakh inward remittances during the year with an infow of ` 23,000 Cr.
We have a state of the art remittance engine FedFast Plus through which money can be remitted to the
benefciaries accounts with us in seconds and with other banks In India at hourly intervals as per the NEFT
clearance schedule.
The Bank won the international ACI Excellence Awards 2012 in the Payments Transformation category for
two of the projects, VISA Fast Funds using VISA debit cards and Banks Aadhaar (UID) based Authentication
for Payments.
Foreign Exchange Business
The Bank undertakes all types of foreign exchange business. As on 31 Mar 2012, the Bank had two A Category
branches and seventy six (76) B Category branches for handling the foreign exchange business. Swift
connectivity has been extended at the designated branches to facilitate faster and reliable communication
with major banks all over the world.
Export credit facilities are provided both in rupee and in foreign currency for pre-shipment activities and
post-shipment fund requirement of the exporters. The Bank extends export credit facilities to exporters
of cashew, seafood, garments, minerals, coir, spices, other food products, leather, rubber, pharmaceutical
products, gems, jewellery and other items.
Import credit facilities are extended for import of goods including chemicals, timber, raw cashew nuts, paper
and electronic goods. The Bank arranges Buyers Credit for its import customers from various overseas
banks.
The Bank conducted regular one-to-one meetings with exporters/importers to strengthen the relationship
and assess the business position and credit requirements. Updates on Foreign Exchange Markets movements
are sent to the clients regularly.
The Bank is giving thrust to the development of the Foreign Exchange business and is endeavouring to
improve the skills of the operating personnel through meetings, interactions and training programs. This
enables the ofcials of designated branches to improve their efciency substantially. Simultaneously, the
Bank is trying to centralize selected Foreign Exchange functions at Head Ofce to improve efciency and
efectiveness of the designated branches dealing in Foreign Exchange. Foreign Exchange Cell at the Banks
Treasury has already initiated a programme to codify the relevant RBI/FEDAI instructions for the conduct of
the Foreign Exchange business, in the form of master circulars.
Integrated Treasury Operations
The Banks integrated Treasury Operations involve maintenance of Statutory Reserve requirements, Balance
Sheet Management, trading in Money Market, Bonds and Debentures, Equity and Foreign Exchange. The
Bank has established dedicated and full-fedged dealing desks for various segments like Foreign Exchange
business, Merchant Trading, Currency Futures, Money Market, Government Securities, Bonds and Debentures,
Certifcate of Deposits, Commercial Paper, Interest Rate Swaps and Equity at its dealing room in Mumbai. To
encash the trading opportunities in Certifcate of Deposit and Commercial Papers, a separate trading desk
has been established under Money Market.
The Bank has commenced trading actively in Currency Futures in all approved Exchanges. The strength has
been augmented by providing adequate personnel at trading desks to encash the trading opportunities.
The Bank has revamped the Interest Rate Swaps (IRS) desk which undertakes activity of trading on IRS
for proprietary dealings and balance sheet hedging purposes. During the fscal year 2012, the Bank held
interactive sessions with its export/import clients. A separate Marketing Team has been formed at
Treasury Department for marketing of various Treasury Products.
The Bank raises resources in bulk through Certifcates of Deposit, for which the Bank enjoys the highest
rating of A1+ by CRISIL. The Bank has installed various trading platforms like Reuters, D2, FX Clear, BARX,
AUTOBAHN, 360T and COMMERZ in the dealing room for a better and streamlined trading activity in foreign
exchange business.
The Bank is represented on FIMMDA board by virtue of Head - Treasury being one of the twelve Directors of
FIMMDA. The Bank has been re-nominated as a Managing Committee member of FEDAI in FY 2012.
Integrated Risk Management
The primary responsibility of laying down risk parameters and establishing an integrated risk management
framework and control system rests with the Board of Directors. A Board level committee, viz. the Risk
Management Committee (RMC) oversees management of Credit, Market and Operational risks. Three
separate Executive level committees, viz. the Credit Risk Management Committee (CRMC), Asset Liability
Management Committee (ALCO) and Operational Risk Management Committee (ORMC) ensure efective
management of credit, market and operational risks respectively.
Integrated Risk Management Department (IRMD) of the Bank is headed by a Deputy General Manager. Credit,
Market and Operational risk management are functionally assigned to three separate cells under IRMD.
The Bank has put in place the following policies for risk management, approved by the Board of Directors:
1. Integrated Risk Management Policy
2. Credit Risk Management Policy
3. Asset Liability Management Policy
4. Operational Risk Management Policy
5. Stress Testing Policy
6. Business Continuity Plan Policy
7. Policy on Internal Capital Adequacy Assessment Process (ICAAP)
8. Disclosure Policy and
9. Loan Policy
The Bank has established an independent on site Mid-Ofce in Treasury Department, reporting directly to
the Head of IRMD. The Mid-Ofce scrutinizes the treasury deals and transactions from the point of view of
market risk management.
Compliance with Basel II framework
As per the prudential guidelines issued by Reserve Bank of India, the Bank has migrated from Basel I norms
to Basel II norms as on 31 Mar 2009 and Capital Adequacy Ratio under the New Capital Adequacy Framework
(NCAF) is being computed on a quarterly basis.
In tune with regulatory guidelines on Pillar I of Basel II norms, Bank has computed capital charge for credit
risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for
operational risk as per the Basic Indicator Approach. Under Pillar II, your Bank is assessing the level of inherent
risks and related capital requirements on a quarterly basis using a well defned Internal Capital Adequacy
Assessment Process approved by the Board. Additional disclosures under Pillar III of Basel II are also complied
with. The Bank is progressing with initiatives in meeting the requirements for adoption of the advanced
approaches for credit, market and operational risk under Basel II. External consultants have been appointed
for guiding the Bank through the process of migration to advanced approaches. The Bank has also procured
the necessary technological platform for migration to advanced approaches. The framework of the advanced
approaches is in tune with the Banks objective of adopting best practices in risk management.
Capital Adequacy Ratio
Banks Capital Adequacy Ratio as on 31

Mar 2012 under Basel II norms is 16.64 % with Tier I CRAR of 15.86 %, as
against the minimum level of 9 % prescribed by Reserve Bank of India. Banks comfortable capital adequacy
position under Basel II norms ofers a good cushion for further expansion and growth in asset portfolio.
Capital Management Framework
The philosophy of Banks risk management framework is to take risks by choice and not by chance, set
prudential limits for parameters for various types of risks based on regulatory stipulations and internal risk
appetite, monitor operations within the set limits and ensure that returns match the risks taken. Capital
management philosophy of the Bank is to operate with an optimum level of capital in relation to its internal
risk profle and extant regulatory guidelines, that permits utilization of the existing and emerging market
opportunities and ensure optimum level of returns on an on-going basis.
The Bank conducts ICAAP process every year as stipulated by RBI. ICAAP is aimed to ensure that the Bank
maintains capital commensurate to its risk profle, and improves upon its risk management systems and
framework on an on-going basis. It involves a realistic assessment of level of risks inherent in the business
operations of the Bank and setting aside capital adequate to cover all such risks. The ICAAP policy covers all
material risks involved in the business operations of the Bank and establishes an organizational framework
with delineated hierarchical responsibilities. The assessment considers the operational presence, activities,
processes, complexity of products and overall risk profle of the Bank, including that of the wholly owned
subsidiary. The sufciency of Pillar I capital charge is assessed in relation to the risk profle of the Bank.
Monitoring of the level of all material risks also forms part of ICAAP. In short, ICAAP is integrated into the
management and decision making process in true letter and spirit and is refected in the processes and
business operations of the Bank.
Credit Underwriting
Rapid expansion of the credit portfolio brings in its wake various structural issues that need to be addressed
promptly so as to maintain efective credit dispensation architecture. In view of this, Bank has adopted the
Credit Hub mechanism to centralize credit processing and sanctions. The credit hub mechanism is introduced
with the objective of business expansion, selection of quality of assets and exercising greater diligence in
credit approval. Under this system, branches are acting as sourcing points for the credit facilities, whereas
assessment, processing and preparation of documents are being done by Credit hubs which ensure highly
qualitative asset creation. Loan origination process is made online in IT platform leveraging the technology.
All the above improvements help the branches to concentrate more on sourcing and post credit follow up.
Regional Credit Hubs are functioning in 18 centres and are reporting to the National Credit Hub in Corporate
Ofce. Committee approach is being followed in credit sanction. Separate delegation has been given for
Corporate Ofce Committees and Regional Credit Hub Committees for credit sanction. Powers beyond
the delegated powers of Regional Credit Hubs are vested with Corporate Ofce Committees and Board of
Directors are having powers beyond the delegation of Corporate Ofce Committees.
With the various initiatives that the Bank has taken in credit underwriting, it has been successful in driving
enhanced customer service delivery and minimizing inherent risks.
Business Continuity Plan
In terms of the Business Continuity Plan Policy approved by the Board, Business Continuity Plan (BCP)
Committees have been formed in Head Ofce, Zonal Ofces and Branches. A Contingency Management
Team (Task Force) has been formed at Head Ofce, functioning as a Central Crisis Management Team for
ensuring business continuity.
Information Security
The Bank has an Information Systems security team functioning at Head Ofce. The team is in charge of
creation and maintenance of security policies and plans. The team is responsible for the formulation and
periodic review of Information systems security policies as well as creating the Information security awareness
among staf and customers of the Bank. As per the RBI circular dated 29
th
April, 2011, on Working Group on
Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds - Implementation of
Recommendations, the Bank has taken various steps towards complying with the requirements outlined.
Legal and Business Compliance
The Bank has a full fedged Legal department comprising of legal ofcers who are capable of rendering
professional service and expert legal advice on various issues associated with the Organization. The Bank
has embarked on stringent measures to attain the objective of a complaint free bank in order to mitigate
the reputation risk. With a view to impart awareness on latest developments /amendments in various laws/
statutes, a Biennial Conference of Legal Ofcers of the Bank was conducted. Various legal luminaries such
as Justice Thottathil B Radhakrishnan, Mr. Abraham Mathew, Director, Judicial Academy etc. enlightened
the audience on various topics.
Compliance Cell attached to Legal Department had been monitoring and supervising the compliance
functions of the Bank. A separate and independent Compliance Division has been set up with a view to
further strengthen the compliance functions and to ensure efective monitoring/co-ordination of the
compliance functions in our Bank. The Compliance Division is headed by an Asst. General Manager who is
reporting to Chief Compliance Ofcer.
Leveraging Operations & Processes
Your Bank has always been in the forefront in rolling out new technology, systems and processes. Leveraging
on better processes and procedures has lead to enhanced operational efciency and service delivery. During
the year we concentrated on improving the productivity fow through automation, focussed on reducing
the turnaround time and ultimately enhanced customer service.
This year the Bank has won the KMA Excellence Award-2011 for Innovative Cost Management measures
implemented.
In order to ensure data quality and KYC compliance in its true spirit the Bank has implemented image based
centralized account opening for Saving Bank accounts. On an average accounts are opened within a TAT of
12 hours.
The Bank centralized the following activities with a view to have more operational convenience, control and
quality of data:
lOpening of Import LC, scrutiny of import bills and payment of Import Bills under LC.
lCentralization of ATM management by taking over works related to our outsourced of-site ATMs from
41 Nodal branches, pan India.
lDeployed low cost advanced Cash Dispensing machines in selected Branches to reduce counter rush.
lWe have centralized the process of rephasement of EMI of retail loans and sending intimation to borrowers
regarding change in EMI/interest rate.
During the year we expanded our centralised clearing operations to more MICR centres in Mumbai, Chennai,
Bangalore and Pune and also introduced the process of ECS debit origination at all centres.
We initiated the process of centralization of archival of old records at outsourced locations to help branches
to save space and improve the ambience of the ofce. The entire process will be extended to all the identifed
branches in a phased manner.
With a view to have more value addition to our net banking and to add customer convenience; the following
features have been introduced in FedNet, our internet banking facility.
lOnline FedNet Password resetting facility implemented on 02.12.2011.
lAn added security feature, Two factor authentication (2FA) has been implemented in Internet Banking,
which will boost the customer confdence for increased use of our net banking facility.
l Mobile Recharging facility, DTH Recharge and Data Card Recharge directly through FedNet were
introduced.
lInstant Inter-bank Payment Service (IMPS) through FedNet launched on 20.03.2012.
lOnline Term Deposit opening for Resident/Non-Resident customers.
Business Efectiveness Through Technology
Federal Bank is a pioneer among banks in India in the area of using technology to leverage its operations
and was among the frst bank in India to computerize all its branches. Federal Bank ofers its customers,
a variety of services such as Internet banking, Mobile banking, on-line bill payment, on-line fee collection,
depository services, online e trade services, Cash Management Services, merchant banking services, RTGS /
NEFT facility, IMPS, EFEE (school fee management) etc. as part of its strategy in enhancing the convenience
to its customers. Federal Bank has 5000 + Point of Sale (PoS) deployed at various merchant locations. A
24 hour Toll free Helpline ensures that the customers are taken care of round the clock.
lTwo Factor Authentication (2FA) for Internet Banking Transactions
2FA will ensure more security for our internet banking customers. Customers will be beneftted with more
security and he/she can choose from various available options.
lBangalore Metro Rail Corporation (BMRCL)
The Bank has won the bid foated by BMRCL as a Merchant Acquirer Bank. The Bank will be deploying Point
of Sale terminals at Bangalore Metro stations for issuing tickets, will be integrating POS machines with Ticket
Vending Machines and also will be issuing NFC (contactless) COMBO cards which can be used as travel cards
and Debit / Prepaid Cards.
lGift & Travel Cards
The Bank has launched its prepaid card variants Gift Cards and Travel Cards. Gift Card titled FeDelight is
issued in association with MasterCard. Banks foreign currency denominated Cash Passport Travel card is
issued in three currencies viz. USD, GBP and Euro.
ACI Excellence Awards 2012
The Bank has won the international ACI Excellence Awards 2012 in the Payments Transformation category
for two its projects - VISA Fast Funds use VISA debit cards and Banks Aadhaar (UID) based Authentication
for Payments.
Customer Relation Management
A full-fedged CRM application was rolled out during the last fnancial year with a comprehensive 360 degree
view of the customer and analyse the relationship with the Bank uniformly across the various touch points
like branches, contact center and ofcials stationed at the overseas representative ofce of the Bank. CRM
integration will ofer each customer an added advantage of availing uniform services through multiple
channels/locations that were hitherto restricted to the base branch.
SAS Data Flux solution, a Data cleansing tool has also been procured to help the Bank develop and execute
an end to end data management strategy. The Bank is planning to set up a data governance unit to manage
and correct the customer related data and to assign unique customer identifcation number making use of
the de duplication facility.
Online Account Opening for NRIs
Bank is providing the facility for Online account Opening for our NRI customers at our Website. Customers
can key in required details online, take a printout and send it along with the mandatory documents to our
NRI division to get the account opened.
Mobile Banking
Considering the high penetration of mobile phones in the country, Bank has taken various initiatives in
popularizing mobile banking through numerous awareness campaigns. The Bank is currently providing
various facilities like balance enquiries, account statement and transaction services through its mobile
banking platform Fed Mobile.
The Bank has an active alliance with National Payment Corporation of India (NPCI) in enabling Interbank
Mobile Payment Service (IMPS) and is the frst mover in introducing this facility through Internet Banking.
Mobile Banking is also extended to making merchant payments like mobile top ups and ticket booking. The
Bank is poised to provide native applications for all popular Smart phones, which will take the convenience
of mobile banking to the next level.
Internet Banking
Banks Internet Banking platform FEDNet is already popular among its retail and corporate customers.
After considering various customer needs and requirements, we have further enhanced in its security,
convenience and scalability.
The Bank also enhanced customer convenience by adding more arrangements for e-commerce, and integration
of mobile and DTH top up directly from FEDNet. The system was also scaled up to handle more number of
concurrent transactions with faster response times.
Contact Centre
Each contact centre agent undergoes rigorous training in products, services and soft skills for about 4-6
weeks before formally starting to interact with customers. Feedback from branch managers, marketing
team and customers are ploughed back to reshape the attitude of contact centre to infuse better customer
experience. Quality assurance team at contact centre ensures that agent interaction with customers is on
the expected lines.
Payment Gateway
Federal Banks Payment Gateway facility Fed-e-Gate, is an e-commerce service that enables online websites
with shopping / purchase facility to accept payments from their customers on the internet in a secured manner
using credit/debit cards. Our payment gateway is capable of accepting all Visa and MasterCard branded debit /
credit cards including Maestro cards. Transaction processing through Fed-e-Gate is secured by 128-bit SSL
encryption which enable our Customers to confdently use their Credit / Debit cards online. Fed-e-Gate is
compliant with Payment Card Industry Data Security Standard (PCI-DSS) Version 1.2.
Human Resources
At Federal Bank we value human resource as the concrete pillar in its success and growth. Your bank is very
particular on the welfare front of its employees and has been ofering competitive perks and benefts in the
Industry.
Human Capital Composition
a) Of the total human capital engaged by the Bank, 46 % comprised of graduates and more than 16 % are
post graduates.
b) Other Professionals include Engineers/ Chartered accountants / Cost Accountants /PhDs etc.
c) During the year the Average Age of Employees of your Bank has reduced to 40 years from 41 years as
compared to the previous year.
Staf Composition
Cadre Male Female Total
Ofcers 3561 1303 4864
Clerk 1496 1146 2642
Sub Staf 917 25 942
Part Time Employees 30 267 297
The year also saw the formation of an Internal Talent Management Wing, to develop, monitor and nurture
talent within the Bank. Specialized teams like HR Transformation team, Performance and analytics team were
constituted to revamp the HR strategies and to undertake various checks and measures to ascertain the
impact of HR strategies down the line.
Organizational Restructuring
With the increasing competition and the rising customer demand, the organizational structure was redesigned.
In the new GO-TO-MARKET structure, 13 regional ofces were restructured to 8 Zonal ofces and 31 regions
with the view that a Regional Head with controllable number of Branches under him in geographical proximity
can bring in better results. The reporting of 18 Regional Credit Hubs were re-assigned to the National Credit
Hub head, under the administrative control of respective Zonal Heads.
Delegation of HR functions
The HR spread was further extended into the 8 Zones and HR specialists were placed at each Zone so as to
delegate the various HR functions and to have a direct impact down the line. Disciplinary functions were also
delegated through the adoption of the progressive staf accountability policy.
Review of Human Resource Performance Scale of Bank
a) Recruitment:
During the year we conducted a Pan India Recruitment through diverse channels including Campus recruitment
and had a strategic focus on localizing the talents with an added thrust on linguistic and business skills in the
States of Tamil Nadu, Karnataka, Punjab, Gujarat and Maharashtra.
We added 958 new heads to our rolls in FY 12. A new online recruitment window Job Portal was launched
this year which will help us to source experienced talents into our Bank
b) Performance Management System (FedPMS)
Your Bank has deployed an enhanced and efective Performance Management System to track the talent pool
in our Bank and thereby design strategies to foster growth and performance of each of the employees.
c) Employee and Industrial Relations
The industrial relations climate during the year was mostly peaceful and confronting situations were
successfully managed through constructive measures. The year also saw the revamping of the staff
accountability policy of the Bank where clear demarcations were drawn in terms of intentional and non
intentional violations in order to develop a progressive discipline orientation in the Bank.
d) Fed-e-HRM & Auto Push facility
This year we brought in more automation in the internal HR systems; resulting in the speedy dispensation
of various HR functions.
e) Elixir - Our Unique Mentoring Program
A refned mentoring program was launched to groom and develop the young inductees as well as Probationary
Ofcers into the new culture. The program is intended to mould and guide the young talents along the right
trajectory and to ensure a smooth cross over into the new environment. Online module for mentoring has
been launched and this will enable free fow of communication between mentor and mentee.
f) SANGAM - Multi generation Engagement Model
The Bank also charted and implemented various engagement programs with a focus on strengthening
relationships between team members. During the year we launched SANGAM an event to showcase
the hidden and cultural talents among the employees and their families and make each of the members
understand the Federal Culture and spirit.
g) Recognition Programs
A reward and recognition system was started in the Bank to motivate performance. Long term and short term
recognition programs were designed to cater to the diferent recognition needs of the employees. Various
recognition programs were also rolled out to recognize and reward individual and collective performance
which includes;
i) Federal Ambassador Through this unique program we aimed to motivate the levels of customer service
at customer interface points at branches / regions and the results were published online.
ii) Federal Elite Trophy - This award is meant for the best performing business Unit.
iii) Federal Falcon This award will be given to the best unit supporting business.
Vi) Appreciation Forum This forum has been designed to give real time appreciation to an individual
for a job well done. The forum has been already launched and has become an instant hit among the
Federals.
Enhancement in Staf welfare and allowances
During the year Bank has substantially increased various allowances and benefts to its staf, and continues
to be one among the best in the Industry.
Training and Development
On the training front, we introduced innovations and refned the pedagogy. Pedagogy was re-oriented into
experimental in nature with live case studies and group presentations by the participants;
l Fed Campus Online Quizzes for the Employees of the Bank in diferent cadres was a signifcant initiative
in enhancing the knowledge level of Employees. We conducted 36 online Quizzes and on an average 238
Employee participated in one quiz.
l During the Fiscal year 12, the Bank conducted 94 training programmes covering 3,016 personnel. In addition
we also nominated 408 personnel for 147 programmes at outside institutions.
l The learning programmes could be broadly classifed into; Programmes imparting skill in orienting the new
entrants with the culture, ethos, values etc. about the Bank and a hassle free induction on the new entrants
into the Bank and programs imparting technology skills including FINACLE and technology
Management Discussion and Analysis The Federal Bank Limited
l SPARK A programme conducted for Senior Management team of the Bank and ICE (Ideate for Excellence
in Customer Service) was three major initiatives on the learning front. We also launched a platform titled
FLAIR to promote creativity and talents of the Banks employees.
Best Employer Award
We received the Best Employer Award in the banking sector from Indira group of institutes, Pune, a
reputed educational institute. The award was conferred on us for generating employment in spite of adverse
global and economic circumstances.
Employee Stock Option Scheme (ESOS)
In the FY 12, Bank introduced Employees Stock Option Scheme (ESOS 2010) for the employees of the Bank as
long term incentive linked to performance. Accordingly options were granted to all permanent employees
of the Bank as on 8th April 2011. The options granted will start vesting this year according to the vesting
conditions which have been set.
Marketing Initiatives
Marketing Department in the Bank was created with a view to streamline operations in the following area:
a) Branding & Standardization
b) Advertising
c) Public/ Media Relations
The Department has successfully added the visibility of the Federal Bank brand.
Your Bank went for a major network expansion during the last fscal year and keeping pace with the geographic
expansion, the branding and visibility of the Bank reached the nook and corner of the country. In order to
match steps with the changing world, the Bank ushered in a change in terms of branding and positioning of
the Federal Bank brand. The welcome screens at ATMs were also changed and the screens carried messages
in regional languages, based on the locations of the ATMs.
Internal and External Branding
The Bank used every opportunity to generate mileage and could reap signifcant benefts during the concurrent
launch of 66 branches and 100 branches during the year. A sense of pride and ownership was instilled in
every Federal with the help of internal marketing collaterals.
Cross Selling and Marketing Initiatives
The Bank used Search Engine Marketing and Search Engine Optimization to generate customer leads. The
leads were followed up by the sales team of the Bank spread across the country and beyond and the leads
were converted into sales. The CRM tool deployed by the Bank was used to track the leads.
Exploring Social Marketing
The year also marked the entry of the Bank in Social Media Marketing space and started leveraging the
marketing prowess of various social media sites that are popular amongst the youth of the country. The
current year should see a signifcant ramp up in terms of additions of customers on the Banks social pages
and should help the Bank have its ears to the ground and use the platform for constant interaction with the
users - present and potential.
Customer Grievance
Statistics of the complaints received during the fnancial year ended 31
Mar 2012
Complaints
outstanding at the
beginning of the
year
Complaints
received during
the year
Complaints
settled during
the year
Complaints
outstanding at
the end of the
year
28 1588 1571 45
Vigilance
The Bank has put in place an efective vigilance mechanism to safeguard the Bank and its customers from
fraud risk. We have formulated a comprehensive Fraud Risk Management Policy and Whistle Blower Policy
which is reviewed and updated from time to time, in line with RBI instructions. The vigilance function includes
a thorough investigation of frauds including attempted frauds and pursuing of various preventive measures,
such as preventive vigilance audits, vigilance workshops etc. to promote compliance culture and enhance
the awareness of fraud risk among employees for its efective management. We are promoting customer
awareness on frauds, especially cyber frauds as an efective tool in preventing frauds.
KYC And Anti-Money Laundering
The KYC-AML Cell of your Bank has taken sufcient steps for the strict compliance of the Know Your
Customer and Anti Money Laundering (KYC/AML) guidelines by maintaining a comprehensive policy
framework and updating it in tune with the guidelines issued by Reserve Bank of India from time to time.
The KYC policy of the Bank incorporates customer acceptance policy, identifcation procedures, monitoring
transactions and risk management. We have centrally installed Anti Money Laundering software to ensure
the regulatory compliance. The monitoring of transactions against a range of risk variables forms an integral
part of the KYC compliance mandate. The alerts generated in the software on the basis of pre-defned
benchmarks and scenarios help us to monitor the daily transactions enabling to identify any suspicious
transactions undertaken by money launderers and fnanciers of terrorism.
Inspection & Audit
The Bank has a well established Inspection & Audit Department ensuring adherence to systems, policies and
procedures of the Bank. Guidelines received from regulators like Reserve Bank of India, Government of India
etc. and those from the Board of Directors, Audit Committee of the Board and Inspection Review Committee
on various issues of control have become part of the Internal Control System for better compliance at all
levels.
Audits and Inspections are carried out in the Bank as per the Board approved Audit Policy. All the branches
are covered under Risk Based Internal Audit (RBIA). This is being conducted by the Banks own inspection
team. The assessment of level of risk and its direction is done as per the Risk Matrix prescribed by the
Reserve Bank of India which helps the Management in identifying areas of high risk requiring attention on
priority basis. The position of the risk categorization of the branches is reviewed by the Audit Committee of
the Board on a quarterly basis.
As of 31 Mar 2012, 195 branches, Treasury Department, International Banking Department (IBD), DP Division
and Gold Sale business of RBD were subjected to Concurrent Audit covering 65.91 % of the total business
of the Bank (57.18 % of deposits and 75.57 % of advances), as against the minimum requirement of 50 % of
deposits and advances separately, stipulated by RBI.
The Department also covers the Credit Audit function as part of Loan Review Mechanism, which examines
compliance with sanction and post-sanction processes / procedures laid down by the Bank from time to time,
as per the RBI guidelines. The objectives of Credit Audit are as follows.
lImprovement in the quality of credit.
lReview of sanction process and compliance status of large loans.
lFeedback on regulatory compliance.
lIndependent review of Credit Risk Assessment.
lPick up early warning signals and suggest remedial measures.
lRecommend corrective action to improve credit quality, credit administration and credit skills of staf,
etc.
The Information Systems Audit is also conducted as per the IS Audit Policy approved by the Board of Directors.
During the FY 12, 444 branches and key HO Departments like Treasury and IT Department (Data Center)
were subjected to IS Audit. A few of them were done by our own CISA qualifed inspecting ofcers and the
remaining by external audit frms.
Various other inspections are also carried out in the Bank such as Management Audit of Zonal ofces
including Credit Hubs, Credit Monitoring Cells and HO Departments, Forex Audit, Gold Loans Audit, Revenue
Audit, Registration Authority Audit, Vulnerability Analysis & Penetration Testing, Quarterly concurrent basis
certifcation of Internet Payment Intermediaries Accounts etc. During FY 12, all audits required to be done
as per the approved Audit Plan were completed. Under Risk Based Internal Audits (RBIA), 535 audits were
completed as against 505 targeted. All the Regional Credit Hubs and National Credit Hubs were subjected to
Management Audit twice during the year. Six Fedfna Retail Credit Hubs were also subjected to Management
Audit. Management Audits of Zonal ofces were completed in 2 eligible cases. Management Audits of 18 HO
Departments/Divisions were also conducted. Forex Audit was done in all the targeted 60 branches. Revenue
Audit was covered in all the 339 targeted branches. Gold Loan Audit was conducted in 336 branches as against
a target of 325 branches. Credit Audit was completed in 170 large borrowal accounts.
The Bank has an in-house fully automated Audit Management System which covers all audits with dedicated
servers, systems and databases which are managed under secure environments and by adequately trained
personnel. This has contributed in a major way to the Bank going green, by doing away with paper reports
shuttling back and forth.
As a new initiative, the Bank is gradually moving towards more Centralization of Audit works. Revenue Audit
which was previously done visiting branches has now been changed into Of-site Audit without requiring a
visit at the audited branch. Document Management System (DMS) has been introduced for scanning, saving
and archiving loan documents and other related papers so that they can be viewed and verifed centrally
and this has been successfully implemented in 58 branches and is in the process of implementation in other
branches too. A regular of-site surveillance system has also been set up at Inspection & Audit Department
for monitoring exceptional transactions and irregularities in the conduct of business at branches. With these
steps, Bank has been able to improve the quality of compliance at various units and also reduce the cost of
audits.
Report on Corporate Social Responsibility through Sustainable Development
A Policy on Corporate Social Responsibility (CSR) was adopted and a CSR CELL was formed during the year.
States of Kerala, Tamil Nadu, Gujarat and Maharashtra are selected as areas for CSR activities for the time
being. The policy lays emphasis and extends help and support to the following focus areas
lEducation
lMedical Treatment (Health care)
lSupport to Agricultural infrastructure Project.
The Bank encompasses a Triple Bottom Line approach (Social dimensional features, economic features,
environmental features) in its CSR initiatives.
The Bank has always been in the forefront to support socially benefcial initiatives of responsible organisations.
A few activities the Bank associated with, during the FY 2012 are:
lAs a commitment to the greener planet, we planted 66 saplings at Mookkannoor, the birth place of our
Founder Shri. K. P. Hormis, on our 66th Founders Day 18
th
October 2011.
lA Call center managed by differently-abled people was inaugurated on 8
th
November 2011 by
Dr. C Rangarajan, Chairman of Prime Ministers Economic Advisory Council. The interiors of our Call
Center have been meticulously designed to inspire the executives working there.
lDuring the year 2011, the Bank Sponsored the Haemophilia Department at MAGJ Hospital Kerala. In a
joint venture with the Peoples Council for Social Justice, a Mela was organized for exhibition and sale
of products made by physically challenged people. The Mela aimed at providing an exposure to their
products and extending them a dignifed and independent life.
lSponsored an Ambulance for St. Johns Health Service, Trivandrum for the use of patients sufering from
HIV/AIDS.
lThe Bank extended Support in building Deivdan Centre, an old age home for the fnancially downtrodden
group of women.
lThe Bank sponsored project Sparkle a month long intensive fnishing programme for 30 new Financially
Deserving Teacher Graduates.
lThe Bank extended support in building Animation and Renewal Centre under Santhome Charitable Trust
of Kalyan, Mumbai. The center is used for conducting residential programmes for the Trusts focus &
Target group including SHGs, NGOs, CBOs, and Children Groups.
lThe Bank generously contributed to the Collectors Corpus Fund for Endosulfan victims at Kasargod,
Kerala in 2011.
lThe Bank extended fnancial support for the building project for Jyothis- a Developmental Training School
for children having cerebral palsy.
lThe Bank ofered fnancial support to the Kerala Blind School Society to build a visually challenged friendly
hostel at Kizhmad, Aluva.
lThe Bank supported fnancially in setting up a Vocational Training Centre for rehabilitating patients with
Cerebral Palsy and other disabilities at the Adarsh Charitable Trust at Kureekad, Vyttila.
Fedbank Hormis Memorial Foundation
Federal Bank has instituted a public charitable trust by name Fedbank Hormis Memorial Foundation in 1996
to perpetuate the fond memory of late Shri. K. P. Hormis, the Founder of the Bank. The Trust is striving hard
to inculcate better knowledge and awareness in the feld of banking through training programmes, focused
seminars, awards and so on. The activities include:
lScholarship to Economically Backward students
Fedbank Hormis Memorial Foundation has been granting scholarships to economically backward professional
college students. From the year 2011, it has been decided to increase the number of scholarships from 25
to 50.
lCommemorative Lecture Series
The 12
th
Commemorative Lecture organised by Hormis Memorial Foundation was conducted on 8
th
November
2011. This year Dr. C. Rangarajan, Chairman of the Prime Ministers Economic Advisory Council delivered the
commemorative lecture on the Topic The Indian Economy Prospects and Constraints.
The Bank was honoured with two Global awards on the CSR front - Award for Best Corporate social
responsibility Practice Overall and Golden Peacock Award for Corporate Social Responsibility for the year.
These awards are the refection of Banks initiatives to treat the society as an integral stakeholder and is a
testimony of the various steps taken by the Bank as a responsible Corporate Citizen in the felds of healthcare
and education development.
Management Discussion and Analysis
Corporate Governance
The Bank has adopted a Code of Corporate Governance which while taking care of and safeguarding the
interest of shareholders and all other stakeholders also provides for good management, adoption of prudent
risk management techniques and compliance with required standards of capital adequacy.
The Code also aims at identifying and recognizing the Board of Directors and the Management of the Bank
as the principal instruments through which good corporate governance principles are articulated and
implemented, giving utmost importance to identify and recognize transparency, accountability and equality
of treatment amongst all the stakeholders, which is in tune with statutory and regulatory structures. A copy
of the Code is available on request.
Board of Directors
The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies
Act, 1956, Listing Agreement, and the Code of Corporate Governance adopted by the Bank. The Board
comprises of 8 Directors with rich experience and specialized knowledge in various areas of relevance to
the Bank, including banking, accountancy, MSME, fnance, small scale industry, agriculture, and information
technology.
Shri. P.C. John, Executive Director (ED), is the Whole Time Director of the Bank. Excluding the MD & CEO and
the ED all other members of the Board are Non-Executive and Independent Directors.
Shri. Suresh Kumar was re-elected/appointed as Director of the Bank at its last Annual General Meeting held
on 3rd September 2011.
Shri. Nilesh. S.Vikamsey was appointed as a Director of the Bank on 24.06.2011 and was elected as a Director
of the Bank at its last Annual General Meeting held on 3rd September 2011.
The other Directors who are retiring at this AGM are Prof. Abraham Koshy and Dr. M. Y. Khan. Prof. Abraham
Koshy and Dr. M. Y. Khan, being eligible have ofered themselves for reappointment.
Nine Board Meetings were held during the Financial Year ended March 31, 2012.
Attendance Details are given below.
Name of Director No of meetings attended. Attendance at Last AGM
Shri. P. C. Cyriac 9 Present
Shri. Suresh Kumar 8 Present
Dr. T. C. Nair 8 Present
Dr. M. Y. Khan 5 Absent
Prof. Abraham Koshy 7 Present
Shri. Nilesh Vikamsey 6 Present
Shri. Shyam Srinivasan 9 Present
Shri. P. C. John 9 Present
Shri. P. H. Ravikumar* 3 Absent
*Shri. P. H. Ravikumar ceased to be a Director w.e.f 03.09.2011
Board Procedure
All the major issues included in the Agenda for discussion in the Board/Committees of Board are backed
by comprehensive background information to enable the Board/Committee to take informed decisions.
Agenda papers are generally circulated in advance prior to the meeting of the Board/Committee. Also the
Corporate Governance The Federal Bank Limited
Board/Committee agenda contains the Compliance Report of the directions taken at previous meeting. The
members of the Board exercise due diligence in performance of the functions as Directors of the Bank and
follow highest degree of business ethics, transparent practices and code of good governance amidst cordial
environment.
Remuneration to Directors
Shri. Shyam Srinivasan, MD & CEO, was paid ` 78, 61,324.26 (gross), Shri. P. C. John (Executive Director)
was paid ` 29, 99,475.07 (gross) as remuneration for the year in accordance with the terms and conditions
approved by Reserve Bank of India and the shareholders. The details of remuneration are as under.
Shri. Shyam Srinivasan
MD & CEO
Shri. P C John
Executive Director
Basic Pay 69,99,960.00 20,74,000.00
House Rent Allowance Nil 3,83,000.00
Provident Fund
(Employer Contribution)
6,99,996.00 2,04,750.00
Servant Wages 60,000.00 36,000.00
Drivers Wages Nil 90,000.00
Subscription to periodicals Nil Nil
Medical Expenses 101368.26 37,768.00
Premium on Mediclaim Policy Nil Nil
Leave Travel Concession Nil 1,42,690.00
Bonus/Ex-gratia/Others Nil 31,267.07
Total 78,61,324.26 29,99,475.07
Reserve Bank of India has approved payment of variable pay of ` 10.08 Lakh to Shri. Shyam Srinivasan, MD
& CEO and ` 4.97 Lakh to Shri. P. C. John (Executive Director) for the fnancial year 2010-11.
Reserve Bank of India has approved grant of 5, 13,100 options under ESOS 2010 to Shri. Shyam Srinivasan,
MD & CEO and 10125 options to Shri. P. C. John (Executive Director)
The other Independent Directors were paid ` 20, 000/- each as sitting fees for attending Board meeting and
Audit, Finance, Nomination, Ethics and Remuneration Committee & Risk Management Committee meetings
and ` 10, 000/- each for attending other Committee meetings of the Board. The sitting fee paid to the Directors
is within the limits prescribed under the Companies Act, 1956.
Directors Shareholding
Name of the Director No. of Shares held as on 31-03-2012
Shri. P. C. John 1231
Shri. Abraham Koshy 1000
Audit Committee
The Audit Committee consists of three non-executive, independent Directors, and is chaired by Shri. Nilesh
Vikamsey, a Non-Executive Independent Director, since 24
th
June, 2011, on reconstitution of the Committee.
The other members of the Committee are Dr. M. Y. Khan and Dr.T.C Nair, who are Non-Executive Independent
Directors. Shri. Suresh Kumar and Shri.P.C.Cyriac were members of the Committee and they ceased to be
members w.e.f 24.06.2011 and 29.07.2011 respectively on reconstitution of the Committee. Dr. M. Y. Khan
was inducted as a member w.e.f 29.07.2011.The term of reference of the Audit Committee, incorporated in
the Banks Code of Corporate Governance, are in accordance with the listing agreements entered into by
the Bank with stock exchanges where the Banks shares are listed, as well as RBI guidelines. The Committee
is expected to:
a. Review the Banks financial policies, and where necessary, recommend changes for the Boards
approval;
b. Review periodically the adequacy of internal control systems (including the asset-liability management
and risk-assessment and management systems) with the management and external and internal auditors,
assure itself that the systems are being efectively observed and monitored, and, where necessary,
approve changes or recommend changes for the Boards approval;
c. Review the adequacy of the internal audit function, including the structure of the internal audit department,
stafng, and the suitability and seniority of the ofcial heading it, reporting structure coverage, and the
frequency of internal audit, and, where necessary, approve changes;
d. Review the fndings of any investigations by internal auditors or vigilance ofcials into actual or suspected
fraud or irregularity or a failure of internal control systems of a material nature, and convey to the Board
any comments of the Committee or action initiated by it on the fndings;
e. Oversee the Banks fnancial reporting process and the disclosure of its fnancial information to ensure
that the fnancial statements are correct, sufcient, and credible, and present a true and fair view of the
state of afairs and of the proft or loss of the Bank for the relevant fnancial year or other period as the
case may be;
f. Recommend, for shareholders approval, the appointment, reappointment, removal, or replacement of
the external auditors, and the fee payable to them for the audit, taking into consideration any relationship
between the auditors and the Bank that may impact on the independence of the auditors in carrying out
the audit;
g. Discuss with the external auditors, before they commence the audit, the nature and scope of the audit,
and ensure co-ordination where more than one audit frm is employed;
h. Review the draft quarterly and annual fnancial statements with the external auditors and the management
before submission to the Board for approval; and
i. Discuss with the management the auditors report and assessment, their qualifcations and concerns, if
any, and the managements response to the auditors management letter and long-form audit report.
The Audit Committee met 7 (Seven) times during the year in due compliance with RBI and Listing Agreement
requirements.
Name of the members No of meetings attended.
Shri. Nilesh Vikamsey 4
Dr. M. Y. Khan 3
Dr. T. C. Nair 6
Shri. P. C. Cyriac 3
Shri. Suresh Kumar 3
Nomination, Ethics and Remuneration Committee
The Committee is chaired by Shri. P.C. Cyriac and have two other members viz: Prof. Abraham Koshy and Shri.
Suresh Kumar. All of them are Non Executive and Independent Directors. Shri. P. H. Ravikumar was a member
of the Committee and ceased to be a member w.e.f 24.06.2011 on reconstitution of the Committee.
The terms of reference of the Committee are:
a. Develop, for Board approval, a policy on the size and composition of the Board taking into account the
available and needed diversity and balance in terms of experience, knowledge, skills, and judgment of
the Directors.
b. Review, from time to time, possible candidates for current or potential Board vacancies, including
Directors who are to retire and are eligible for reappointment or re-election and other persons who may
be recommended by the Chairman or other Directors, shareholders, senior ofcers of the Bank, or others;
and
c. Recommend to the Board candidates for election (including re-election) or appointment (including
reappointment) to the Board.
d. To look into the complaints and allegations against the top management of the Bank.
e. To review the compensation package for the MD & CEO and the Executive Directors, and recommend
revisions for Board approval.
The Committee met 8 (Eight) times during the year.
Name of the members No of meetings attended.
Shri. P. H. Ravikumar* 4
*Shri. P. H. Ravikumar ceased to be a Director w.e.f 03.09.2011
Shareholders/Investors Grievances and Share Transfer Committee
The Committee is chaired by Shri. P.C. Cyriac and consists of Shri Nilesh Vikamsey, Shri. Shyam Srinivasan, MD
& CEO of the Bank & Shri. P.C. John (Executive Director), as members. Shri Nilesh Vikamsey was inducted as
a member w.e.f 29.07.2011. Shri Girish Kumar. G, Company Secretary, functions as the Compliance Ofcer.
a. To approve or reject applications for transfer of shares referred to the Committee by the Banks Registrar
and Share Transfer Agents in terms of such criteria as may be determined by the Committee and conveyed
to the Agents.
b. To initiate further actions on the complaints as is considered necessary or desirable by way of redressal
or to prevent similar complaints arising in the future; and
c. To review, where necessary, complaints received from shareholders or others regarding transfer of shares,
non-receipt of declared dividends, non-receipt of annual accounts or reports, or other matters relating
to shareholding in the Bank, and any action taken by the Bank on such complaints;
The Committee met 8 (Eight) times during the year and reviewed and redressed 240 complaints out of 240
complaints received from shareholders. The Bank attended to the complaints promptly and to the satisfaction
of the shareholders. All the share-transfer applications received up to 31 March 2012 have been processed.
Name of the members No of meetings attended
Shri. Shyam Srinivasan 8
Shri. P. C. John 8
Finance Committee
The Committee is chaired by Shri Suresh Kumar since 24th June, 2011, on reconstitution of the Committee
and consists of Shri. P.C. Cyriac, Shri. Shyam Srinivasan, MD & CEO of the Bank and Shri. P. C. John, (Executive
Director) as members. Shri. P.C. Cyriac was inducted as a member w.e.f. 29.07.2011. Shri. P. H. Ravikumar
and Dr. M. Y. Khan were members of the Committee and they ceased to be members w.e.f 24.06.2011 and
29.07.2011 respectively on reconstitution of the Committee.
a. To consider proposals for approval, renewal, or modifcation of various types of funded and non-funded
credit facilities to clients within such authority as is delegated to the Committee by the Board from time
to time.
b. Review of top 100 borrowal accounts of below ` 5 Cr in each category of NPA i.e. substandard/doubtful/
loss.
c. Credit proposals sanctioned by MD & CEO/Executive Director/General Manager(s).
d. Compromise proposals/bad debts written of with the approval of MD & CEO/Executive Director.
The Finance Committee met 9 (Nine) times during the year.
Shri. P. C. John 9
Dr. M. Y. Khan 3
*Shri. P. H. Ravikumar ceased to be a Director w. e. f. 03.09.2011
Risk Management Committee
The Committee is chaired by Prof. Abraham Koshy and consists of, Dr.T.C. Nair, Shri. Shyam Srinivasan, MD &
CEO of the Bank, and Shri. P.C John, (Executive Director) as members. Dr. M. Y. Khan was a member of the
Committee and he ceased to be a member w.e.f 29.07.2011 on reconstitution of the Committee. The terms
of reference of the Committee are:
a. Devise the policy and strategy for integrated risk management containing various risk exposure of the
Bank.
b. Effectively coordinate between the Credit Risk Management Committee (CRMC), Asset Liability
Management Committee (ALCO) and Operation Risk Management Committee (ORMC).
c. Setting policies and guidelines for credit risk measurement, management and reporting.
d. Ensuring that the credit risk management processes satisfy the Banks policy.
e. Set risk parameters and prudential limits for credit exposure.
f. Appointment of qualifed and competent staf; ensuring posting of qualifed and competent staf,
independent credit risk managers, etc.
g. Ensure that adequate training is made available to the staf in the Credit Risk Management Department,
which handles this complex function.
h. Ensuring that market risk management processes (including people, systems, operations, limits and
controls) satisfy banks policy.
i. Reviewing and approving market risk limits, including triggers or stop-losses for traded and accrual
portfolios
j. Ensuring robustness of fnancial models, and the efectiveness of all systems used to calculate market
risk.
k. Setting policies and guidelines of operational risk measurement, management and reporting.
l. Ensure that adequate training is made available to the staf handling Operational Risk Management
functions, which is of great importance to the Bank.
The Risk Management Committee met 4 (Four) times during the year.
Dr. T. C. Nair 4
Shri. P. C. John 3
Customer Service Committee
The Committee is chaired by Prof. Abraham Koshy and consists of, Shri. Nilesh Vikamsey, Shri. Shyam
Srinivasan, MD & CEO of the Bank and Shri. P. C John, (Executive Director) as members. Shri. P.C. Cyriac
was a member of the Committee and he ceased to be a member w.e.f 29.07.2011 on reconstitution of the
Committee. Shri. Nilesh Vikamsey was inducted as a member w.e.f 24.06.2011.The terms of reference of the
Committee are:
Addressing the formulation of a comprehensive Deposit Policy, incorporating the issues such as the
treatment of death of a depositor for operations of his account, the product approval process, the
annual survey of depositor satisfaction and the triennial audit of such services. Besides, the Committee
also examines any other issues having a bearing on the quality of customer service rendered.
The Committee met 3 (Three) times during the year.
Shri. P. C. John 2
Committee for Review of Fraud Cases of Rs.1 Cr. & Above
The Committee is chaired by Shri. Shyam Srinivasan, MD & CEO of the Bank, and consists of Dr. T.C. Nair,
Shri. Nilesh Vikamsey and Shri. P.C John (Executive Director) as members. Dr. M.Y. Khan and Shri. P.C. Cyriac
were members of the Committee and they ceased to be members w.e.f.24.06.2011 and Shri. Nilesh Vikamsey
was inducted as a member w.e.f.29.07.2011 on reconstitution of the Committee. The Committee met 2 (Two)
times during the year.
Dr. T. C. Nair 2
Shri. P. C. John 2
Committee for Investment and Raising of Capital
The Committee is chaired by Shri. Suresh Kumar and consists of Shri. Shyam Srinivasan, MD & CEO, Shri. Nilesh
Vikamsey and Dr.T.C Nair as members with an objective to look into the various avenue for strategic & non-
strategic investment within the overall policy of the Bank for its organic and inorganic growth. The Committee
also looks after the various options for raising of resources to achieve the tasks. Shri. P. H. Ravikumar and Dr.
M.Y. Khan were members of the Committee and they ceased to be members w.e.f 24.06.2011. Shri. Nilesh
Vikamsey was inducted as a member w.e.f. 24.06.2011 on reconstitution of the Committee
The Committee met 2 (Two) times during the year.
Dr. T. C. Nair 2
*Shri. P. H. Ravikumar ceased to be a Director w. e. f. 03.09.2011
Committee for Human Resources Policy
The Committee is chaired by Prof. Abraham Koshy, and consists of Shri. Nilesh Vikamsey, Shri. Shyam
Srinivasan, MD & CEO and Shri. P. C John (Executive Director) as members. Shri. P.C. Cyriac was a member
of the Committee and he ceased to be a member w.e.f 29.07.2011 and Shri. Nilesh Vikamsey was inducted
as a member w.e.f 29.07.2011 on reconstitution of the Committee.
a. To review the existing HR policy of the Bank.
b. Finalize the organizational structure
c. Address concerns expressed by various quarters like Union, Association etc.
d. To identify the areas of motivation
e. Review recruitment policies
f. Review compensation policies
g. Make industry comparison
h. Review existing agreements and suggest methods to make them mutually benefcial
i. Introduction of performance management/measurement and compensation packages.
Shri.P.C.John 3
Committee for Marketing Strategies
The Committee is chaired by Prof. Abraham Koshy and consists of Shri. Nilesh Vikamsey, Shri. Shyam Srinivasan,
MD &CEO and Shri. P.C John (Executive Director) as members to evolve and formulate the strategies
for marketing of its various products. Shri. P.C.Cyriac was a member of the Committee and he ceased to
be a member w.e.f 29.07.2011 and Shri. Nilesh Vikamsey was inducted as a member w.e.f 24.06.2011 on
reconstitution of the Committee.
The Committee draws plan & programme to achieve the target in the competitive scenario.
Shri. P. C. John 2
DETAILS OF BOARD, AUDIT COMMITTEE, FINANCE COMMITTEE, RISK MANAGEMENT COMMITTEE AND
SHARE TRANSFER COMMITTEE MEETINGS HELD DURING THE FINANCIAL YEAR ENDED MARCH 31, 2012.
SL.
No.
Board
Meeting
Audit
Committee
Finance
Committee
Risk
Management
Committee
(RMC)
Share transfer
Committee
1. 06.05.2011 06.05.2011 28.04.2011 23.06.2011 06.05.2011
2. 24.06.2011 23.06.2011 08.06.2011 12.10.2011 24.06.2011
3. 29.07.2011 29.07.2011 22.06.2011 15.02.2012 29.07.2011
4. 20.08.2011 21.10.2011 21.07.2011 29.03.2012 03.09.2011
5. 03.09.2011 10.11.2011 02.09.2011 21.10.2011
6. 21.10.2011 14.12.2011 20.10.2011 14.12.2011
7. 14.12.2011 22.01.2012 02.12.2011 23.01.2012
8. 23.01.2012 15.02.2012 19.03.2012
9. 19.03.2012 10.03.2012
Information Relating to Last Three General Body Meetings is Furnished Below:
Name of Meeting
Day, Date and Time of
Meeting
Venue
Special Resolution
Transacted
78th Annual General
Meeting
Monday, 17th August
2009 at 10 A.M.
Mahatma Gandhi Municipal
Town Hall, Aluva
No Special Resolution
79th Annual General
Meeting
Monday, 13
th
September
2010 at 10 A.M.
Town Hall, Aluva
80th Annual General
Meeting
Saturday, 3rd September
2011 at 10 A.M.
Town Hall, Aluva
Disclosures
There were no material transactions between the Bank and its Directors or management having potential
confict with the larger interests of the Bank. The Bank complied with the directives issued by the stock
exchanges on which the Banks shares are listed, SEBI, and other regulatory authorities. No penalties or
strictures have been imposed on the Bank by SEBI or any of the Stock Exchanges for any non-compliance
on any matter relating to capital markets during the last three years.
Insider Trading Code:
The Bank has formulated a code for prevention of Insider Trading pursuant to Securities and Exchange Board
of India (Insider Trading) (Amendment) Regulation 2002 to prevent the practices of Insider Trading. Shri.
Girish Kumar Ganapathy, Company Secretary has been designated as Compliance Ofcer for this purpose.
Senior Management of the Bank has afrmed compliance with the Code of Conduct.
Adherence of Code of Corporate Governance:
The Board of Directors of the Bank has adopted the Code of Corporate Governance. All the Board members
and the senior management of the Bank have afrmed compliance to the Banks Code of Corporate
Governance
Training of Board Members:
The Bank has initiated steps for meeting the training needs of the directors. An interactive session with Shri
P J Nayak, Chief Executive of Morgan Stanley India and Ex Chairman of Axis Bank, and the Board of Directors
was conducted as a part of the training programme.
Mechanism for Evaluating Non-executive Board Members:
The Bank has initiated a mechanism for the performance evaluation of non-executive directors.
Whistle Blower Policy:
The Bank afrms that no employee has been denied access to the Audit Committee of the Board under the
Whistle Blower Policy adopted by the Bank
The Bank has adopted the non-mandatory items like Constitution of Board Remuneration Committee,
Whistle Blower mechanism, Training of Board members etc.
Ethical Standards Employed by the Bank:
The Bank has formulated service manual for its employees. This manual contains comprehensive regulations
on ethical standards to be mandatorily observed by all the employees of the Bank.
Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion Date and Likely Impact on
Equity:
The Bank has 4140841 GDRs (equivalent to equity shares) outstanding, which constituted 2.42 % of the Banks
total equity capital as at 31 March 2012. No convertible debenture is outstanding.
CEO/CFO Certifcation:
In terms of Clause 49 of the Listing Agreement, the certifcation by MD & CEO and Chief Financial Ofcer on
the fnancial statements and internal controls relating to fnancial reporting has been obtained.
Means of Communication:
The quarterly, unaudited and annual audited fnancial results were published in nationally circulated
newspapers in English, such as, Business Line, Business Standard and Financial Express, and in the regionally
circulated Malayalam daily Deepika. The results were also displayed on the Banks website - www.federalbank.
co.in
General Information for Shareholders
Annual General Meeting
Date : 02.08. 2012
Time : 10 AM
Venue : Priyadarshini Town Hall, Thottakkattukara, Aluva-683108
Financial year : 01 April 2011 to 31 March 2012
Period of book closure : 24.07.2012 to 02.08.2012
Dividend payment date : Will be within the prescribed time limit
Financial Calendar
Approval of quarterly results for the period ending:
v30 June 2011 29 July 2011
v30 September 2011 21 October 2011
v31 December 2011 23 January 2012
v31 March 2012 11 May 2012
Listing on Stock Exchanges
The Banks shares are listed on the stock exchanges in Mumbai, Kochi and on the National Stock Exchange of
India Ltd, Mumbai. The GDRs issued by the Bank in 2006 have been listed on the London Stock Exchange.
BSE Scrip Code : 500469 Script ID : FEDBANK
NSE Symbol : FEDERALBNK
Demat ISIN Code : INE171A01011
The annual listing fees for 2011-12 have been paid to all the Stock Exchanges where the shares are listed.
Movements in the Market Price of the Banks Shares on the National Stock Exchange:
Month High Low
Apr-11 457.35 410.00
May-11 446.80 395.25
Jun-11 465.00 417.30
Jul-11 476.40 423.00
Aug-11 433.00 327.00
Sep-11 397.60 350.30
Oct-11 417.00 340.40
Nov-11 422.25 332.15
Dec-11 405.95 322.25
Jan-12 417.80 332.00
Feb-12 474.90 391.60
Mar-12 436.70 388.00
The Federal Bank Limited Corporate Governance
Registrars and Share Transfer agent
Integrated Enterprises (India) Ltd.
2nd Floor, Kences Towers,
No.1, Ramakrishna Street,
Of : North Usman Road
T. Nagar, Chennai-600017
Phone No: 044-28140801-03
Fax: 044-28142479
Email: [email protected]
Share Transfer
The share transfer instruments, as and when received, are duly processed and shares in respect of valid share
transfer instruments are transferred in the names of transferees complying with rules in force.
The Bank obtains from a Company Secretary in practice, half yearly certifcate of compliance with the share
transfer formalities as required under Clause 47(c) of the Listing Agreement with Stock Exchanges and fles
a copy of the certifcate with the Stock Exchanges.
As required by SEBI, a Reconciliation of Share Capital Audit is conducted on a quarterly basis by a Practicing
Company Secretary and Certifcate issued in this regard is forwarded to the Stock Exchanges
Dematerialisation of the Banks Shares
Of the total listed equity shares of the Bank, 97.01 % are held in dematerialized form and 2.99 % in physical
form. Under agreements with National Securities Depository Services Ltd (NSDL) and Central Depository
Services Ltd (CDSL), the Banks shares can be and are traded in electronic form. Shares remaining in physical
form can be dematerialized for which the shareholders are requested to open a Depository Account with
the Depository Participants (DP) and to lodge the share certifcates along with Demat Request Form with
them.
Unclaimed Dividends
Under the Transfer of Unclaimed Dividend Rules, it would not be possible to claim the dividend amount once
deposited in Investors Education & Protection Fund (IEPF). Therefore, shareholders are again requested to
claim their unpaid dividend, if not already claimed.
The details of unclaimed dividend of the last three years are as under:
(As on 31 Mar 2012)
Sl.
No.
Financial
Year
Amount of
unclaimed Dividend
(In `)
1 2008-09 8419185.00
2 2009-10 8053110.00
3 2010-11 13856462.00
Total 30328757.00
SHARE HOLDING PATTERN AS ON MARCH 31, 2012
Share holder Category Shares % Holding
Shares held by Custodians and others against which
Depository Receipts have been issued
4140841 2.42
Mutual Funds/UTI 23480939 13.73
Financial Institutions/Bank/Insurance Companies 12144460 7.10
Foreign Institutional Investors 72271411 42.25
Bodies Corporate 21904814 12.81
NRI, Trust, Overseas Corporate Bodies, Foreign
National, Foreign Body Corporate, Clearing Member
9986607 5.83
Individual 27118429 15.86
Total 171047501 100.00
Details of Shareholders Holding more than 1 % of the Shares as on 31.03.2012
SL.NO. NAME SHARES PERCENTAGE
1 INTERNATIONAL FINANCE CORPORATION 8533442 4.99
2
HSBC BANK (MAURITIUS) LIMITED A/C HSBC IRIS INVESTMENTS
(MAURITIUS) LIMITED
8516310 4.98
3 LIFE INSURANCE CORPORATION OF INDIA 8348284 4.88
4 L & T CAPITAL HOLDINGS LIMITED 7995619 4.67
5 EMIRATES FINANCIAL SERVICES PSC 7123395 4.16
6 MORGAN STANLEY MAURITIUS COMPANY LIMITED 5862934 3.43
7 FID FUNDS (MAURITIUS) LIMITED 4691248 2.74
8 DEUTSCHE BANK TRUST COMPANY AMERICAS 4140841 2.42
9 EQUINOX PARTNERS LP 4099402 2.40
10 GENERAL INSURANCE CORPORATION OF INDIA 3749996 2.19
11 BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD 3641317 2.13
12 ACACIA PARTNERS, LP 3500000 2.05
13 M/S NAPEAN TRADING AND INVESTMENT CO PVT LTD 3348691 1.96
14
RELIANCE CAPITAL TRUSTEE COMPANY LIMITED A/C RELIANCE
GROWTH FUND
3301300 1.93
15
PRUDENTIAL ASSET MANAGEMENT (SINGAPORE) LIMITED A/C
THE PRUDENTIAL ASSURANCE COMPANY LIMITED
3270789 1.91
16 FRANKLIN TEMPLETON INVESTMENT FUNDS 2396064 1.40
17
RELIANCE CAPITAL TRUSTEE CO. LTD A/C RELIANCE BANKING
FUND
2379033 1.39
18 DIMENSIONAL EMERGING MARKETS VALUE FUND 1716368 1.00
19
RELIANCE CAPITAL TRUSTEE CO LTD A/C RELIANCE REGULAR
SAVINGS FUND-EQUITY OPTION
1705125 1.00
Distribution of Holdings as on March 31, 2012
No. of shares held Holders Amount
No. % ` %
Up to 500 62205 98.74 186949840 10.93
501 - 1000 356 0.57 25217870 1.47
1001 - 2000 121 0.19 16842150 0.99
2001 - 3000 60 0.10 14955510 0.87
3001 - 4000 21 0.03 7535400 0.44
4001 - 5000 21 0.03 9720910 0.57
5001 - 10000 61 0.10 44801810 2.62
ABOVE 10001 151 0.24 1404451520 82.11
62996 100.00 1710475010 100.00
*Out of the issued capital and paid up capital of the Bank, 82788 equity shares (only bonus shares) are kept
in abeyance due to litigation.
Locations
With its Head Ofce at Aluva, the Bank has a network of 950 Branches across India.
Address for correspondence: The Federal Bank Ltd.
Secretarial Department,
PB No. 103, Federal Towers,
Head Ofce, Aluva 683 101,
Kerala State, India.
E-mail [email protected]
Company Secretary Shri. Girish Kumar Ganapathy
Auditors M/s. Varma & Varma, Kochi and
M/s. Price Patt & Co., Chennai.
Schedule As at As at
No. 31 March 2012 31 March 2011
31 -rrr 2012
+r r-r-rr>r
rr| r rrr
rr=
rr=
r|=rrr
rr|
r|=r|rrr r |rrr
|-r=rr
=rr
-r r|rrr rrr irrrrr-r
|r|-rrr-r
|:r-r
|=r r|=rrr
-r r|=rrr
r+|=-r+ r|rrr
=r:rrrr + |-r |r-r
-rr r|r | r r r + -r -r+| |rr r
r+r -r |rrr r -rrr r
rrr -r =rr-rr r irrr-r
rrr =rrr -r
-r =r r|
(In thousands of `)
ir-r=r -r=rr -r||rrr
-r=rr =rr-r| |cr|rrr
Balance Sheet as at 31 March 2012 The Federal Bank Limited
CAPITAL AND LIABILITIES
Capital 1 171,04,71 171,04,71
Reserves & Surplus 2 5535,27,98 4937,61,46
Deposits 3 48937,12,21 43014,78,06
Borrowings 4 4241,03,41 1888,36,26
Other Liabilities & Provisions 5 1742,28,90 1444,55,93
Total 60626,77,21 51456,36,42
ASSETS
Cash & Balances with Reserve Bank of India 6 2424,14,66 2935,05,31
Balances with banks & money at call and
short notice 7 1108,40,48 813,25,04
Investments 8 17402,48,77 14537,67,50
Advances 9 37755,98,59 31953,23,37
Fixed assets 10 326,13,92 289,81,68
Other assets 11 1609,60,79 927,33,52
Total 60626,77,21 51456,36,42
Contingent liabilities 12 35849,40,40 22112,74,97
Bills for collection 1189,31,40 912,52,04
Principal Accounting Policies 18
Notes on Accounts 19
DIRECTORS
K. Krishnakumar P. C. John Shyam Srinivasan P. C. Cyriac
Asst. General Manager Executive Director & CFO Managing Director & CEO Chairman
As per our report of even date
For Varma & Varma For Price Patt & Co.,
FRN: 004532S FRN: 02783S
Chartered Accountants Chartered Accountants
Kochi R. Rajasekharan S. Ramaswamy
11-May-2012 Partner, Membership No. 22703 Partner, Membership No. 025918
Suresh Kumar Abraham Koshy Nilesh S Vikamsey
I. INCOME
Interest earned 13 5558,39,24 4052,02,83
Other income 14 532,34,32 516,81,41
Total 6090,73,56 4568,84,24
II. EXPENDITURE
Interest expended 15 3604,98,51 2305,44,96
Operating expenses 16 979,27,31 836,13,91
Provisions & contingencies 729,67,79 840,17,05
Total 5313,93,61 3981,75,92
III. PROFIT/LOSS
Net proft for the year 776,79,95 587,08,32
Add Proft b/f from Previous Year 25,77,66 23,13,93
802,57,61 610,22,25
IV. APPROPRIATIONS
Transfer to Revenue Reserve 98,88,00 232,11,00
Transfer to Statutory Reserve 194,20,00 146,80,00
Transfer to Capital Reserve 5,40,17 -
Transfer to Special Reserve (sec 36(1)(viii) of IT Act) 28,50,00 36,56,00
Provision for proposed dividend 153,94,24 145,39,00
Provision for Dividend Tax 24,97,33 23,58,59
Balance carried over to Balance Sheet 296,67,87 25,77,66
Total 802,57,61 610,22,25
Earnings per Share (Basic) (`) 17 45.41 34.32

For the year
ended
31 March 2011
31 -rrr zo1z +r =r-rrr
rr +|-r -rr-rrr|-r -r=r
rr
rr=
rr=
-rr-r;rr|-r
r|rr rrr
-r rr
rr |+rr rrr rrr
r|rr-r-r rr
=rrr r r+|=-r+ rr
rr + r, -rr-r
rr= |ro-r rr + :r-r|r -rr-r
rrr =rrr -r
-r =r r|
(In thousands of `)
rr
rr=
|r|-rrrr-r
rr=r r|=r|rrr +r rr
ir|r rr r-r (=)
ir-r=r -r=rr -r||rrr
-r=rr =rr-r| |cr|rrr
+r-r-r| r|=r|rrr +r rr
rr|rr r|=r|rrr +r rr
ir=rr|rr -rr-rrrr +r irrrrr-r
-rr-rrr + +r irrrrr-r
|rrr rr rr r-r-r
r>r -r -r rrrr rrrr r!
rr+ +c =r=r-r a (1) (viii)]
Schedule
No.
For the year
ended
31 March 2012
Proft and Loss Account for the year
ended 31 March 2012
The Federal Bank Limited
DIRECTORS
FRN: 004532S FRN: 02783S
SCHEDULE 1. CAPITAL
Authorised Capital 200,00,00 200,00,00
[20,00,00,000 (Previous year 20,00,00,000) equity shares of ` 10 each]
,
Issued Capital 17,13,179 171,31,79
[17,13,17,910 (Previous year 17,13,17,910)
equity shares of ` 10/- each]
Subscribed & Called up Capital 171,04,75 171,04,75
[17,10,47,501 (Previous year 17,10,47,501) equity shares of `10/- each,
which includes 3318 shares (Previous year 3318) of ` 10/- each issued
for consideration other than cash and 4,37,35,378 shares (previous year
4,37,35,378) issued as Bonus shares and 2,00,00,000 underlying equity shares
(previous year 2,00,00,000) of ` 10/- each issued towards Global Depository
Receipts (including over allotment option of 20,00,000 equity shares)
and 8,54,29,763 equity shares of ` 10/- each allotted on Rights basis
during the fnancial year 2007-08] (Allotment of 1306 Shares (Previous
year 1306) of ` 10/- each pertaining to the Rights Issue of 1993 issued
at a premium of ` 25/- per share and 52,420 shares (previous year
52,420) of ` 10/- each pertaining to the Rights Issue of 1996 issued
at a premium of ` 140/- per Share and 2,16,683 equity shares (Previous
year 2,16,683) of ` 10/- each at a premium of ` 240/- per share
pertaining to Rights issue of 2007 are kept pending following orders
from various courts) (Issue of certifcates/credit in demat account
in respect of 82,788 shares (previous year 82,788) of ` 10/- each out
of the Bonus issue of 2004 are kept in abeyance consequent to
injunction orders from various courts).
Less: Calls in arrears 4 4
Add: Forfeited shares - -
Total 171,04,71 171,04,71
SCHEDULE 2. RESERVES & SURPLUS
I. Statutory Reserves
Opening balance 875,26,76 728,46,76
Additions during the year 194,20,00 146,80,00

1069,46,76 875,26,76
II. Capital Reserves
(a) Revaluation Reserve
Deductions during the year 21,86 23,02
5,41,42 5,63,28
(b) Others
Additions during the year 5,40,17 -
165,61,93 160,21,76
171,03,35 165,85,04
(In thousands of `)
As at As at
31 March 2012 31 March 2011
Schedules forming part of Balance Sheet The Federal Bank Limited
III. Share premium
Opening balance 2475,58,56 2475,26,36
Additions during the year - 32,20
2475,58,56 2475,58,56
IV. Revenue & Other Reserves
a) Revenue Reserve
Opening Balance 1021,75,41 789,64,41
1120,63,41 1021,75,41
b) Other Reserves
Investment Fluctuation Reserve
Opening Balance 189,72,00 189,72,00
Additions during the year - -
189,72,00 189,72,00
c) Special Reserve(As per section 36(1)(viii) of IT Act)
Addition during the year 28,50,00 36,56,00
182,06,00 153,56,00
V. Contingency Reserve
Addition during the year - -
30,10,03 30,10,03
VI. Balance in Proft & Loss a/c 296,67,87 25,77,66
Total 5535,27,98 4937,61,46

SCHEDULE 3. DEPOSITS
A. I. Demand Deposits 12,69,97 142,68,91
ii. From Others 2533,20,98 2263,11,94
2545,90,95 2405,80,85
II. Savings Bank Deposits 10929,94,57 9148,29,02
III. Term Deposits
i. From Banks 476,20,50 199,20,23
ii. From Others 34985,06,19 31261,47,96
35461,26,69 31460,68,19
Total 48937,12,21 43014,78,06

B. i. Deposits of branches in India 48937,12,21 43014,78,06
ii. Deposits of branches outside India Nil Nil
Total 48937,12,21 43014,78,06

(In thousands of `)
As at As at
31 March 2012 31 March 2011
SCHEDULE 4. BORROWINGS
I. Borrowings in India
i. Reserve Bank of India 90,00,00 100,00,00
ii. Other Banks - -
iii. Other institutions and agencies 2516,17,33 1417,29,17
iv. Subordinated debt 306,00,00 306,00,00
2912,17,33 1823,29,17
II. Borrowings outside India 1328,86,08 65,07,09
Total 4241,03,41 1888,36,26
Secured borrowings in the above 299,81,45 -
SCHEDULE 5. OTHER LIABILITIES AND PROVISIONS
I. Bills Payable 20,51,90 24,29,70
II. Interofce adjustments (Net) 163,68,47 182,36,54
III. Interest accrued 265,85,32 149,23,10
IV. Deferred Tax Liability (Net) 64,19,00 -
V. Others (including provisions)* 1228,04,21 1088,66,59
Total 1742,28,90 1444,55,93
*Includes Contingent provisions against standard assets 196,03,81 159,58,81

SCHEDULE 6. CASH & BALANCES WITH RESERVE BANK OF INDIA
I. Cash in hand (including foreign currency notes) 395,84,43 332,66,89
II. Balance with R B I in Current Account 2028,30,23 2602,38,42
Total 2424,14,66 2935,05,31

SCHEDULE 7. BALANCES WITH BANKS & MONEY AT CALL & SHORT NOTICE
I. In India
i. Balances with banks
a. in Current Accounts 40,09,02 40,16,13
b. in Other Deposit Accounts 423,18,00 273,67,20
ii. Money at call & short notice
a. With Banks 100,00,00 399,72,13
b. With other institutions 404,57,07 -
Total 967,84,09 713,55,46

II. Outside India
i. in Current Accounts 13,37,64 32,80,33
ii. in Other Deposit Accounts 127,18,75 66,89,25
(In thousands of `)
As at As at
31 March 2012 31 March 2011
iii. Money at call & short notice - -
Total 140,56,39 99,69,58
Grand Total 1108,40,48 813,25,04

SCHEDULE 8. INVESTMENTS
I. Investments in India (Gross) 17453,85,45 14554,17,96
Less Provision for Depreciation 51,36,68 16,50,46
Net Investments 17402,48,77 14537,67,50
Break up of Investments in India
i. Govt. Securities 11531,24,13 9964,52,93
ii. Other approved Securities - 35,74
iii. Shares 190,72,92 168,06,61
iv. Debentures & Bonds 960,35,02 605,34,48
v. Subsidiaries & Joint Ventures 395,92,00 217,00,00
vi. Others ( Mutual Funds, Commercial Paper etc.) 4324,24,70 3582,37,74
Total 17402,48,77 14537,67,50
II. Investments outside India Nil Nil
SCHEDULE 9. ADVANCES
A.
i. Bills purchased & discounted 1853,81,17 898,60,67
ii. Cash credits, overdrafts and loans repayable on demand 21683,22,98 17411,48,48
iii. Term loans 14218,94,44 13643,14,22

Total 37755,98,59 31953,23,37
B.
i. Secured by tangible assets (includes advances against Book Debts) 26278,13,89 23508,51,56
ii. Covered by Bank/Government guarantees 2864,11,38 1671,22,62
iii. Unsecured 8613,73,32 6773,49,19
Total 37755,98,59 31953,23,37
C.
I. Advances in India
i. Priority Sector 12188,45,84 10585,79,92
ii. Public Sector 2817,58,47 1945,87,30
iii. Banks 4,46,36 4,50,44
iv. Others 22745,47,92 19417,05,71
Total 37755,98,59 31953,23,37
(In thousands of `)
As at As at
31 March 2012 31 March 2011
(In thousands of `)
As at As at
31 March 2012 31 March 2011
II. Advances outside India Nil Nil
SCHEDULE 10. FIXED ASSETS.
I OWNED ASSETS
a. Premises
At cost as on 31st March of the preceding year 219,27,17 218,54,14
Additions during the year 1,29,13 74,86
220,56,30 219,29,00
Deductions during the year - 1,83
220,56,30 219,27,17
Depreciation to date 56,88,70 50,78,90
163,67,60 168,48,27
b. Other fxed assets (including furniture & fxtures)
476,23,24 395,04,18
Deductions during the year 8,58,65 11,18,89
467,64,59 383,85,29
162,07,98 120,95,07
II ASSETS GIVEN ON LEASE
Additions during the year - -
3,10,13 3,10,13
Deductions during the year - -
3,10,13 3,10,13
38,34 38,34
Total (I & II) 326,13,92 289,81,68

SCHEDULE 11. OTHER ASSETS
I. Inter ofce adjustments (net) - -
II. Interest accrued 399,50,24 280,41,36
III. Tax paid in advance/tax deducted at source (Net of provision) 620,48,86 338,48,01
IV. Stationery & Stamps 2,69,18 2,62,69
V. Non-banking assets acquired in satisfaction of claims 3,10,61 3,05,01
VI. Deferred Tax Asset (Net) - 1,50,00
VII. Others 583,81,90 301,26,45

Total 1609,60,79 927,33,52

SCHEDULE 12. CONTINGENT LIABILITIES
I. Claims against the Bank not acknowledged as debts 661,14,55 613,31,98
II. Liability on account of outstanding forward exchange contracts 30431,60,64 16163,50,63
III. Guarantees given on behalf of constituents - in Inida 3533,64,90 3739,03,73
IV. Acceptances, endorsements and other obligations 1188,48,26 1562,27,47
V. Other items for which the Bank is contingently liable 34,52,05 34,61,16

Total 35849,40,40 22112,74,97

SCHEDULE 13. INTEREST EARNED
I. Interest/discount on advances/bills 4189,76,37 3168,80,24
II. Income on investments 1315,73,76 868,03,04
III. Interest on balances with RBI & other inter-bank funds 34,88,36 10,59,78
IV. Others 18,00,75 4,59,77

Total 5558,39,24 4052,02,83
SCHEDULE 14. OTHER INCOME
I. Commission, exchange and brokerage 251,56,90 250,22,42
II. Net proft/loss on sale of investments 82,07,06 45,75,89
III. Net proft/loss on revaluation of investments - -
IV. Net proft on sale of land, buildings & other assets 33,16 32,69
V. Net proft on foreign exchange transactions 84,20,86 57,22,90
VI. Income earned by way of dividends etc. from companies in India 5,12,46 3,52,36
VII. Miscellaneous income [Includes Recoveries in assets written of 109,03,88 159,75,15
` 8573.78 lakh (previous year ` 14607.34 lakh)
Total 532,34,32 516,81,41

SCHEDULE 15. INTEREST EXPENDED
I. Interest on deposits 3331,28,00 2161,98,20
II. Interest on Reserve Bank of India/Inter bank borrowings 48,54,65 9,86,75
III. Others 225,15,86 133,60,01
Total 3604,98,51 2305,44,96

SCHEDULE 16. OPERATING EXPENSES
I. Payments to & provisions for employees 543,85,38 480,41,33
II. Rent, taxes & lighting 94,81,28 79,59,52
III. Printing & stationery 10,36,90 10,16,38
IV. Advertisement & publicity 16,05,10 18,12,37
V. Depreciation on Bank`s property 568831 544858
Less: Depreciation on revaluation of Premises transferred
from Revaluation Reserve 2186 2302
56,66,45 54,25,56
VI. Directors fees, allowances and expenses 69,64 70,85
VII. Auditors fees & expenses (including branch auditors) 3,03,69 2,83,52
VIII. Law charges 4,96,44 5,36,41
IX. Postage, Telegrams,Telephones etc 27,61,89 18,86,85
X. Repairs & maintenance 37,32,19 23,03,99
XI. Insurance 43,53,71 35,84,70
XII. Other expenditure 140,34,64 106,92,43

Total 979,27,31 836,13,91

SCHEDULE 17. EARNINGS PER SHARE
Net Proft for the year 776,79,95 587,08,32
Number of Shares 17,10,47 17,10,47
(In thousands of `)
For the year ended For the year ended
31 March 2012 31 March 2011
The Federal Bank Limited Schedules forming part of Proft and Loss Account
Schedules
SCHEDULE 18.
PRINCIPAL ACCOUNTING POLICIES
1. General
The fnancial statements have been drawn up on historical cost convention and on accrual basis of
accounting (unless otherwise stated) and conform to Generally Accepted Accounting Principles in India
which comprises the statutory provisions and practices followed in the banking industry in India.
2. Advances
a) Advances are classifed as Performing Assets (Standard) and Non Performing assets, (Sub-standard,
Doubtful, or Loss assets) and provisions required for possible losses on non performing advances
are made over and above the minimum required as per the guidelines of the Reserve Bank of India
(RBI) on matters relating to prudential norms.
b) Advances shown in the Balance Sheet are net of:
(i) bills rediscounted,
(ii) provisions made for non performing advances.
(c) Provisions are made in respect of the following as per the guideline of RBI and included under the
head Other liabilities and provisions- others in the Balance Sheet.
(i) Provisions towards interest sacrifce/fair value diminution on restructured /rescheduled advances.
(ii) Provision for standard asset.
3. Investments
(a) Investments are classifed under three categories, viz Held for Trading (HFT), Available for Sale
(AFS), and Held to Maturity (HTM) as per RBI guidelines and disclosed in the Balance Sheet under
six classifcations viz.
i) Government Securities
ii) Other Approved Securities
iii) Shares
iv) Debentures and Bonds
v) Subsidiaries & Joint Ventures
vi) Others
Investments are also classifed into performing & non performing as per the guidelines of RBI & provisions
are made for possible losses as non performing investments as per the guidelines of RBI.
b) In respect of Proft on sale of investments under Held to Maturity category, an equivalent amount,
net of taxes and transfer to statutory reserve, is apportioned to the Capital Reserve account.
c) REPO & Reverse REPO transactions are accounted in accordance with the extant RBI Guidelines.
d) Valuation
i) Investments classifed as HFT have been marked to market and valued scrip-wise under each
classifcation at monthly intervals, excluding equity shares which are done on a weekly basis. Within
a classifcation net appreciation is ignored and net depreciation is provided for.
ii) Investments classifed as AFS have also been marked to market, and valued quarterly excluding
equities, which are done on a weekly basis. Within a classifcation net appreciation is ignored and
net depreciation is provided for.
Schedules
iii) Investments classifed as HTM are stated at acquisition cost except in cases where the acquisition cost
is higher than the face value, in which case the excess, i.e. premium on acquisition, is amortised over
the period remaining to maturity on equated basis. Any diminution in value other than temporary,
in investments in subsidiaries/joint venture/associates included under HTM is provided for.
iv) Closing stock of gold is valued at cost or market price whichever is lower.
4. Derivatives
Interest rate swaps/currency swaps in respect of trading position and which are outstanding as on Balance
Sheet date are marked to market and net appreciation is ignored and net depreciation is recognised in
the Proft and Loss Account.
Derivative contracts which are entered for hedging purposes, the net amount receivable/payable
is recognized on accrual basis. Gains or losses on termination on such contracts are deferred and
recognized over the remaining contractual life of the derivatives or the remaining life of the assets/
liabilities, whichever is earlier. Such derivative contracts are marked to market and the resultant gain
or loss is not recognized, except where the contract is designated with an asset/ liability which is also
marked to market, in which case, the resulting gain or loss is recorded as an adjustment to the market
value of the underlying asset/ liability.
5. Transactions Involving Foreign Exchange
a) All monetary assets and liabilities denominated in foreign currencies are translated at the exchange
rates prevailing at the close of the year as advised by the Foreign Exchange Dealers Association of
India (FEDAI).
b) Income and expenditure denominated in foreign currencies have been accounted at the exchange
rates prevailing on the dates of the transactions.
c) Outstanding foreign exchange forward contracts are revalued at the rates applicable on the closing
date as advised by FEDAI. The resultant proft/loss is taken into Proft and Loss account.
d) Contingent liabilities on guarantees, letters of credit, acceptances and endorsements are reported
at the rates prevailing on the Balance Sheet date.
6. Fixed Assets
a) Fixed Assets are stated at historical/revalued cost less accumulated depreciation & impairment
of assets, if any. Premises which were revalued are stated at such values on revaluation and the
appreciation credited to the Capital Reserve.
b) Depreciation on assets has been provided for on the diminishing balances at the rates as per
Schedule XIV to the Companies Act, 1956, except on Computers, Mobile phones & EPABX, which
are depreciated under the straight line method at 33.33% per annum as per RBI guidelines.
Depreciation on assets sold/disposed of during the year is provided for the period upto the date of
sale. Assets costing less than ` 5,000 each are fully depreciated.
c) Depreciation on assets revalued has been charged on their written-down value including the addition
made on revaluation, and an equivalent amount towards the additional depreciation provided
consequent upon revaluation has been transferred from the Capital Reserve to the Proft & Loss
Account.
Schedules
(d) Licence fee and implementation expenditure for Core Banking Solution are amortised on the straight
line basis over a period of three years, on a pro rata basis.
7. Finance Leasing
Accounting Standard on Leases (AS19) issued by the Institute of Chartered Accountants of India (ICAI)
is applicable to leases entered into on or after 1st April 2001. Since all the Banks outstanding fnance
lease transactions were entered into prior to that date, the Bank has followed the earlier ICAI guidelines
in respect of these leases.
Depreciation on non-performing leased assets (NPAs) is provided on written-down value as per the
Companies Act 1956, by directly charging to Proft & Loss Account without any corresponding adjustment
in the Lease Adjustment Account. In addition to depreciation, provision is also made for non-performing
leased assets as per RBI guidelines.
8. Employee Benefts
(a) Post Employment beneft Plans
Payments to defned contribution retirement beneft schemes (other than Second option for pension)
are charged as an expense as they fall due.
For defned beneft schemes, the cost of providing benefts is determined using the Projected Unit
Credit Method, with actuarial valuations being carried out at each Balance Sheet date.
Actuarial gains and losses are recognized in full in the Proft and Loss account for the period in which
they occur. Past service cost is recognized immediately to the extent that the benefts are already vested,
and otherwise is amortized on straight-line basis over the average period until the benefts become
vested.
The retirement beneft obligation recognized in the Balance Sheet represents the present value of the
defned obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of
scheme assets.
The net liability arising out of exercise of the second option for pension is fully reckoned, to be
amortised in fve years commencing from 2010-11 with 1/5th thereof being absorbed in the Proft and
Loss Account of the year as per approval of RBI (vide letter DBOD. No.BP.BC.15896/21.04.018/2010-11
dated 08.04.2011.)
(b) Short-term employee benefts
The undiscounted amount of short-term employee benefts expected to be paid in exchange for the
services rendered by employees is recognized during the period when the employee renders the
service.
(c) The provision towards sick leave beneft to staf is made based on actuarial valuation.
9. Recognition of Income and Expenditure
Items of income and expenditure are accounted for on accrual basis, except as stated hereunder:
a) Income from non performing investments/advances are recognised on realisation as per the
guidelines of RBI.
Schedules
b) Commission other than guarantee commission is accounted on cash basis. Guarantee commission
is recognised over the period of the guarantees. Dividends are recognised as and when declared by
the investee companies.
c) Unpaid funded interest on term loans are accounted on realisation as per the guidelines of RBI.
d) Income from consignment sale of gold is accounted as other income.
10. Provision for Income Tax
Provision for income tax is made for the current tax, and adjustment is made for deferred tax for the
year representing the net change in the deferred tax asset or deferred tax liability, in accordance with
Accounting Standard 22 issued by the Institute of Chartered Accountants of India (ICAI). Deferred tax
assets are recognised on the basis of the managements judgment of reasonable certainty of future
profts.
11. Earnings per Share
Basic Earnings per share (EPS) reported is computed by dividing net proft after tax by the weighted
average number of equity shares outstanding for the year.
12. Segment Information
In terms of the guidelines of the RBI on enhanced disclosure of segment information, the Banks
operations are classifed into four reportable business segments, viz. Treasury Operations (investment
and trading in securities, shares, debentures, etc.), Wholesale Banking, Retail Banking and Other Banking
Operations and segment information is reported accordingly. For this purpose, aggregate exposure to
a single entity exceeding `5 crore is treated as wholesale banking segment and other exposures are
treated as retail banking segment as per the RBI guidelines. For presentation of segment information,
directly attributable income and assets are allocated as such and the other income, expenses, other
assets and liabilities are apportioned on appropriate basis.
13. Net Proft
The net proft disclosed in the Proft and Loss Account is after:
(a) provision for taxes;
(b) provision for possible losses on Standard Assets, NPAs, and other contingencies;
(c) depreciation on investments; and
(d) other usual and necessary provisions.
14. Use of estimates
The preparation of fnancial statements requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the
date of the fnancial statements and the reported income and expenses during the reporting period.
Management believes that the estimates used in the preparation of the fnancial statements are prudent
and reasonable. Future results could difer from these estimates. Any revision to the accounting estimates
is recognised prospectively in the current and future periods.
15. Impairment of assets
Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised in accordance with
Schedules
the Accounting Standard 28 Impairment of Assets issued by Institute of Chartered Accountants of
India (ICAI) and charged to Proft and Loss Account.
16. Accounting for provisions, Contingent Liabilities & Contingent Assets
As per the Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets, issued by
the Institute of Chartered Accountants of India (ICAI), the Bank recognises provisions only when it has
a present obligation as a result of a past event, it is probable that an outfow of resources embodying
economic benefts will be required to settle the obligation, and when a reliable estimate of the amount
of the obligation can be made. Contingent assets are not recognised in the fnancial statements.
17. ESOS
The Bank follows the intrinsic value method to account for its stock-based employee compensation
plans, as per the Guidance Note for Accounting for Employees Share Based Payments issued by
ICAI
SCHEDULE 19 NOTES ON ACCOUNTS
1. Reconciliation
The reconciliation of outstanding entries in inter branch/ofce transactions as on 31st March 2012 has
been substantially completed and the efect, if any, of pending entries will not be material.
2. The net liability arising on exercise of second option for Pension by employees (other than separated/
retired employees) actuarially determined during FY 2010-11 at ` 168.43cr and 1/5th of the said liability
amounting to ` 33.71cr. was charged to the Proft and Loss Account during last FY and balance
unamortized amount of `.134.72 crore was carried forward to be amortised equally over the succeeding
four years, as per approval of RBI (vide letter no.DBOD.No.BP.BC.15896/21.04.018/2010-11 dated
08.04.2011). Accordingly, an amount of `33.68 crore , being proportionate amount is charged to Proft
and Loss during the year. The balance outstanding as unamortized is ` 101.04 crore
3.1 Capital
(` crore)
Particulars 31 March 2012 31 March 2011
Basel II Basel I Basel II Basel I
i) CRAR (%)
ii) CRAR - Tier I capital (%)
iii) CRAR - Tier II Capital (%)
16.64
15.86
0.78
13.83
12.74
1.09
16.79
15.63
1.16
15.39
13.79
1.60
iv) Percentage of the shareholding of the Government
of India in nationalized banks
v) Amount of subordinated Debts raised as Tier II
capital during the year (` Crore)
vi) Amount raised by issue of IPDI
vii) Amount raised by issue of Upper Tier-II
Instruments (` Crore)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The computation of CRAR as per Basel II is compiled by the management with the information/data drawn
from CBS system on which reliance is placed by the Auditors.
Schedules
3.2 Investments
3.2.1 a) Investments under HTM (excluding specifed investments as per RBI norms) account for 24.95%
(previous year 21.01%) of demand and time liabilities as at the end of March 2012 as against
permitted ceiling of 25% stipulated by RBI.
b) In respect of securities held under HTM category premium of ` 22.13 crore (previous year ` 21.90
crore) has been amortised during the year and debited under interest received on Government
securities.
c) Proft on sale of securities from HTM category amounting to `10.66 crore (previous year ` Nil
crore) has been taken to Proft and Loss Account and a sum of ` 5.40 crore (previous year ` Nil
crore) being net of taxes and transfer to statutory reserve of such proft, appropriated to Capital
Reserve.
3.2.2 Investments
(` crore)
(1) Value of Investments
Gross Value of Investments
(a) In India
(b) Outside India,
Provisions for Depreciation
(a) In India
(b) Outside India,
(ii) Net Value of Investments
(a) In India
(b) Outside India.
(2) Movement of provisions held towards
depreciation on investments.
(i) Opening balance
(ii) Add: Provisions made during the year
(iii) Less: Write-of/ write-back of excess
provisions during the year
(iv) Closing balance
17453.85
Nil
51.37
Nil
17402.48
Nil
16.50
51.37
16.50
51.37
14554.18
Nil
16.50
Nil
14537.68
Nil
16.99
16.50
16.99
16.50
Schedules
3.2.3 REPO Transactions
(` crore)
Outstanding during the year Outstanding
as on 31
March 2012
Minimum Maximum Daily average
A) Securities sold under REPOs
i) Gov. Securities -
(-)
2500.00
(600.00)
356.15
(56.33)
2500.00
(-)
ii) Corp. Debt Securities -
(-)
-
(-)
-
(-)
-
(-)
Securities purchased under
REVERSE REPOs
(-)
1000.00
(750.00)
10.11
(32.44)
-
(-)
(-)
-
(-)
-
(-)
-
(-)
B) Securities sold under Market
REPOs
(-)
-
(20.00)
-
(0.11)
-
(-)
(-)
-
(-)
-
(-)
-
(-)
Securities purchased under
REVERSE Market REPOs
(-)
-
(5.00)
-
(0.01)
-
(-)
(-)
-
(-)
-
(-)
-
(-)
(Previous year fgures are given in brackets)
Schedules
3.2.4 Non-SLR Investment Portfolio
i) Issuer Composition of Non-SLR Investments as on 31 March 2012
(` crore)
No.
(1)
Issuer
(2)
Amount
(3)
Extent of
private
placement
(4)
Extent of
below
investment
grade
securities
(5)
Extent of
unrated
securities
(6)
**
Extent of
unlisted
Securities
(7)
***
1 PSUs 80.93
(87.54)
68.00
(84.00)
0.00
(0.00)
0.00
(0.00)
0.00
(0.00)
2 FIs 73.29
(0.50)
50.50
(0.50)
0.00
(0.00)
0.00
(0.00)
0.00
(0.50)
3 Banks 1309.82
(1964.51)
69.68
(54.68)
0.00
(0.00)
0.00
(0.00)
0.00
(0.00)
4 Private corporates 1932.66
(839.75)
601.56
(423.03)
0.00
(0.00)
6.72
(0.00)
74.21
(66.13)
5 Subsidiaries/
Joint ventures
398.00
(217.00)
398.00
(217.00)
0.00
(0.00)
0.00
(0.00)
398.00
(217.00)
6 Others 2092.86
(1467.60)
46.01
(12.50)
0.00
(0.00)
0.00
(0.83)
0.00
(0.83)
7 Less: Provisions held
towards
depreciation
-16.31
(-4.11)
xx xx xx xx
Total 5871.25
(4572.79)
1233.75
(791.71)
0.00
(0.00)
6.72
(0.83)
472.21
(284.46)
** excluding investments in shares ` 193.42 crore (previous year ` 162.56 crore)
*** excluding investments in pass through certifcates ` 0.17 crore (previous year ` 1.80 crore)
ii) Non-SLR investments category-wise:
(` crore)
Shares 190.73 168.07
Debentures & Bonds 960.35 605.34
Subsidiaries/Joint Ventures 395.92 217.00
Others 4324.25 3582.38
Total 5871.25 4572.79
Schedules
iii) Non-performing Non-SLR investments
(` crore)
As at 31 March 2011 0.00
Additions during the year since 01 April 2011 0.00
Reductions during the above period 0.00
As at 31 March 2012 0.00
Total Provisions held 0.00
3.3 Sale and transfers to/ from HTM Category
The value of sales/transfers to / from HTM category is less than 5 per cent of the book value of investments
held in HTM category at the beginning of the year,
3.4 Derivatives
3.4.1 Forward Rate Agreement/ Interest Rate Swap
(` crore)
i) The notional principal of swap agreements
ii) Losses which would be incurred if counter parties failed to
fulfl their obligations under the agreements
iii) Collateral required by the bank upon entering into swaps
iv) Concentration of credit risk arising from the swaps
v) The fair value of the swap book
1075.00
22.80
Nil
Nil
0.22
1250.00
4.76
Nil
Nil
-0.70
3.4.2 Exchange Traded Interest Rate Derivatives:
(` crore)
Sl.No. Particulars 31 March 2012
(i) Notional principal amount of exchange traded interest rate derivatives
undertaken during the year (instrument-wise)
NIL
(ii) Notional principal amount of exchange traded interest rate derivatives
outstanding as on 31st March 2012
NIL
(iii) Notional principal amount of exchange traded interest rate derivatives
outstanding and not highly efective
NIL
(iv) Mark-to-market value of exchange traded interest rate derivatives
NIL
Schedules
3.4.3 Disclosure on Risk exposure in Derivatives
Qualitative Disclosures
Structure, organization, scope and nature of management of risk in derivatives etc
The organizational structure consists of Treasury Department which is segregated into three functional areas,
ie, front ofce, mid ofce and back ofce. Derivative deals are executed for hedging and market making.
The risk in the derivatives is monitored by regularly assessing Marked to Market Position (MTM) of the entire
portfolio and the impact on account of the probable market movements. Various risk limits have been put in
place under diferent segments of the derivatives, as approved by Board. The risk profle of the outstanding
portfolio is reviewed by Board at regular intervals. For own balance sheet management, hedging policies
are devised to mitigate risks, lower borrowing costs and enhance yields. The current outstanding under the
derivatives portfolio were executed for trading and hedging.
Accounting:
Board Approved Accounting Policies as per RBI guidelines have been adopted. The hedge swaps are
accounted for like a hedge of the asset or liability. The hedge swaps are accounted on accrual basis except
where swaps for hedging marked to market asset/liability. Such hedge swaps are marked to market on a
monthly basis and the gain/losses are recorded as an adjustment to the designated asset/liability. The Non
hedge swaps are marked to market every month and the MTM losses in the basket are accounted in the
books while MTM profts are ignored.
Collateral Security:
As per market practice, no collateral security is insisted on for the contracts with counter parties like Banks/
PDs etc. For deals with Corporate Clients, appropriate collateral security/margin etc. are stipulated wherever
considered necessary.
Credit Risk Mitigation:
Most of the deals have been contracted with Banks/ Major PDs and no default risk is anticipated on the deals
with them. In the case of deals with corporate clients, the outstanding positions are closely monitored for
the default risks and appropriate measures are initiated.
Quantitative Disclosures (` crore)
Sl.No Particulars
Currency
Derivatives
Interest rate
Derivatives
1 Derivatives (Notional Principal Amount)
a) For hedging 206.04 -
b) For trading - 1075
2 Marked to Market positions (1)
a) Asset (+) 22.93 8.59
b) Liabilities (-) -8.37
3 Credit Exposure (2) 23.96 10.75
4 Likely impact of one percentage change in
interest rate (100*PV01)
a) on hedging derivatives 0.01 -
b) on trading derivatives - -0.01
5 Maximum and Minimum of 100*PV01 observed during the year
a) on hedging Max. 0.012
Min. 0.010 -
b) on trading -
-
Max. 0.06
Min. -0.01
Schedules
3.5 Asset Quality
3.5.1 Non-Performing Asset
(` crore)
(i) Net NPAs to Net Advances (%) 0.53% 0.60%
(ii) Movement of NPAs (Gross)
(a) Opening balance 1148.33 820.97
(b) Additions during the year 695.31 875.84
(c) Reductions during the year 542.81 548.48
(d) Closing balance 1300.83 1148.33

(iii) Movement of Net NPAs
(d)Closing balance 199.00 190.69

(iv) Movement of provisions for NPAs
(excluding provisions on standard assets)
(b) Provisions made during the year (net) 221.77 488.85
(c) Write-of/ write-back of excess provisions (net) 108.78 230.94
3.5.2 Sector wise NPAs
Sl No Sector Percentage of NPAs to Total
advances in that sector
1 Agriculture and allied Activities 3.42%
2 Industry (Micro &Small, Medium and Large) 6.97%
3 Services 4.10%
4 Personal loans 14.13%
Schedules
3.5.3 Details of Loan Assets subjected to Restructuring for the year 2011-12
(` Crore)
CDR
Mechanism
SME Debt
Restructuring
Others
Standard
advances
restructured
No. of Borrowers 3 2 88
Amount outstanding-Restructured Accounts
Other accounts
81.09
-
13.26
3.15
871.26
72.92
Sacrifce(diminution in the fair value) 24.16 0.02 20.23*
Sub
standard
advances
restructured
Other accounts
39.23
5.66
6.09
0.35
20.01
11.73
Sacrifce(diminution in the fair value) 10.18 0.02 4.89
Doubtful
advances
restructured
No. of Borrowers - - -
Other accounts
-
-
-
-
-
-
Sacrifce (diminution in the fair value) - - -
TOTAL
Other accounts
120.32
5.66
19.35
3.50
891.27
84.65
Sacrifce (diminution in the fair value) 34.34 0.04 25.12
*Includes ` 5.26 Crores being 1/8 th of the total amount of sacrifce of ` 42.05 crores provided in respect
of one account for the current quarter and the balance amount of ` 36.79 crores will be provided over
succeeding 7 quarters as permitted by RBI vide letter dated 15.03.2012.
3.5.4 Details of fnancial assets sold to securitisation/Reconstruction
Company for Asset reconstruction
(` crore)
Particulars 2011-12 2010-11
(a) No of accounts
(b) Aggregate value (net of provisions) of accounts sold to SC/RC
(c) Aggregate consideration
(d) Additional consideration realised in respect of accounts transferred in
earlier years
(e) Aggregate gain/(loss) over net book value
20
36.43
64.95
0.00
28.52
181
44.37
58.43
0.00
14.07
Schedules
3.5.5 Details of non-performing fnancial assets purchased/sold
A. Details of non-performing fnancial assets purchased:
(` crore)
Particulars 31st March
2012
31st March
2011
1. (a) No. of accounts purchased during the year
NIL NIL
(b) Aggregate outstanding
2. (a) Of these, number of accounts restructured during the year
B. Details of non-performing fnancial assets sold
(` crore)
Particulars 31st March 2012 31st March 2011
1.No of Accounts sold
NIL NIL 2. Aggregate outstanding
3.Aggregate consideration received
3.5.6 Movement of Provision for Standard Assets
(` crore)
(a) Opening Balance
(b) Addition/Adjustments during the year
(c) Deduction during the year
(d) Closing Balance
159.59
36.45
0.00
196.04
145.24
14.35
0.00
159.59
3.6 Business Ratios
(i) Interest Income as a percentage to Working Funds
(ii) Non-interest income as a percentage to Working Funds
(iii) Operating Proft as a percentage to Working Funds
(iv) Return on Assets
(v) Business (Deposits plus advances) per employee (` crore)
(vi) Proft per employee (` crore)
10.09
0.97
2.73
1.41
10.11
0.09
9.22
1.18
3.25
1.34
9.23
0.07
Schedules
3.7 Asset Liability Management/
Maturity Pattern of assets and liabilities
(As compiled by the Management)
(` crore)
Maturity
Pattern
Advances Investments Deposits
Borrowings
(including
Subordinated
Debt)
Foreign
Currency
Assets
Foreign
Currency
Liabilities
Next day 182.31 1.88 149.76 0.00 211.82 6.87
2 -7 days 887.62 282.36 628.08 299.81 104.76 21.43
8-14 days 1246.15 68.29 349.29 0.00 129.13 29.75
15-28 days 856.93 269.02 580.22 105.00 248.10 41.35
29 days to 3
months
2814.34 1489.87 4656.61 61.00 217.87 223.24
Over 3 to 6
months
2853.46 705.58 8138.02 1569.55 242.00 216.84
Over 6
months to 1 Yr
4757.42 218.09 11070.48 240.69 35.93 423.35
Over 1 Yr to
3Yrs
17069.49 898.01 21435.66 992.76 296.50 221.84
Over 3 Yrs to
5 Yrs
3128.60 1423.90 1374.28 400.58 22.93 52.59
Over 5 Yrs 3959.67 12045.48 554.72 571.64 5.80 0.00
Total 37755.99 17402.48 48937.12 4241.03 1514.84 1237.26
Schedules
3.8 Exposures
3.8.1 Exposure to Real Estate Sector (As compiled by the Management)
(` crore)
Category 2011-12 2010-11
a) Direct exposure
(i) Residential Mortgages
Lendings fully secured by mortgages on residential property
that is or will be occupied by the borrower or that is rented;
(of which individual housing loans eligible for inclusion in
Priority sector advances)
(ii) Commercial Real Estate
Lendings secured by mortgages on commercial real estates
(ofce buildings, retail space, multi-purpose commercial
premises, multi-family residential buildings, multi-tenanted
commercial premises, industrial or warehouse space, hotels,
land acquisition, development and construction, etc.). Exposure
would also include non-fund based (NFB) limits;
(iii) Investments in Mortgage Backed Securities (MBS) and other
securitised exposures
a. Residential,
b. Commercial Real Estate.
b) Indirect Exposure
Fund based and non-fund based exposures on National
Housing Bank (NHB) and Housing Finance Companies (HFCs).
5168.07
(3368.31)
526.12
31.57
1.21
1127.30
5309.07
(3482.54)
537.38
1.80
1.21
1037.85
Total Exposure to Real Estate sector 6854.27 6887.31
Schedules
3.8.2 Exposure to Capital Market (As compiled by the Management)
(` crore)
(i) direct investment in equity shares, convertible bonds,
convertible debentures and units of equity-oriented mutual
funds the corpus of which is not exclusively invested in
corporate debt;
(ii) advances against shares/bonds/debentures or other securities
or on clean basis to individuals for investment in shares
(including IPOs/ESOPs), 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;
(iv) advances for any other purposes to the extent secured by the
collateral security of shares or convertible bonds or convertible
debentures or units of equity oriented mutual funds i.e.
where the primary security other than shares/convertible
bonds/convertible debentures/units of equity oriented mutual
funds `does not fully cover the advances;
(v) secured and unsecured advances to stockbrokers and
guarantees issued on behalf of stockbrokers and
market makers;
(vi) loans sanctioned to corporates against the security of shares /
bonds/debentures or other securities or on clean basis for
meeting promoters contribution to the equity of new
companies in anticipation of raising resources;
(vii) bridge loans to companies against expected equity
fows/issues;
(viii) underwriting commitments taken up by the banks in respect
of primary issue of shares or convertible bonds or convertible
debentures or units of equity oriented mutual funds;
(ix) fnancing to stockbrokers for margin trading;
(x) all exposures to Venture Capital Funds (both registered and
unregistered) will be deemed to be on par with equity and
hence will be reckoned for compliance with the capital market
exposure ceilings (both direct and indirect)
Total Exposure to Capital Market
196.18
12.20
2.04
-
152.13
-
-
-
-
14.61
377.16
162.31
9.87
0.83
-
120.62
-
-
-
-
7.00
300.63
3.8.3 Country Risk (As compiled by the Management)
The net funded exposure of the Bank in respect of foreign exchange transactions with each country
is within 1% of the total assets of the Bank and hence no provision is required to be made in respect of
country risk as per the RBI circular DBOD.BP.BC.96/21.04.103/2003-04 dated 17 June 2004.
Risk Category wise Country Exposure
(` crore)
Risk Category*
Exposure
(net) as at 31
March 2012
Provision held
as at 31 March
2012
Exposure (net)
as at 31 March
2011
Provision held
as at 31 March
2011
Insignifcant 613.67 0.00 787.17 0.00
Low 340.08 0.00 307.71 0.00
Moderate 28.55 0.00 21.34 0.00
High 5.76 0.00 4.70 0.00
Very High 8.43 0.00 6.43 0.00
Restricted 0.04 0.00 0.00 0.00
Of-credit 0.04 0.00 0.00 0.00
Total 996.57 0.00 1127.35 0.00
* The above fgures include both funded as well as non-funded exposures.
3.8.4 Details of Single Borrower limit (SGL), Group Borrower Limit (GBL) where the bank has exceeded the
prudential exposure during the year.
(` crore)
Borrower Name Total Exposure % to Capital Fund
Food credit 870.00 15.93
3.8.5 Concentration of Deposits, Advances, Exposures and NPAs
Concentration of deposits
(` crore)
Total Deposits of Twenty Large depositors 2374.51
Percentage of Deposits of twenty large depositors to total deposits of
the bank
4.85%
Concentration of advances
(` crore)
Total advances of Twenty Largest Borrowers 6863.43
Percentage of advances of twenty largest Borrowers to total advances
of the bank
18.17%
Schedules The Federal Bank Limited
Concentration of exposures
(` crore)
Total exposures of Twenty Largest borrowers/customers 9071.20
Percentage of exposures to twenty largest borrowers/customers to
total exposure of the bank on borrowers/customers
13.50%
Concentration of NPAs
(` crore)
Total exposures to top Four NPA accounts 208.07
3.8.6 Movement of NPAs
(` crore)
Gross NPAs as on 1st April 2011 1148.33
Additions (Fresh NPAs) during the year 695.31
Sub total (A) 1843.64
Less:
(i) Upgradations 75.68
(ii) Recoveries (excluding recoveries made from upgraded accounts) 358.78
(iii) Write ofs 108.35
Sub-total (B) 542.81
Gross NPAs as on 31 March 2012 1300.83
3.8.7 Details of Overseas Assets, NPAs and Revenue
Nil
3.8.8 Of balance Sheet SPV sponsored
Nil
4. Fixed Assets
i. During the year 1995-96, the appreciation of `9.65 crore in the value of land and buildings consequent
upon revaluation by approved valuers was credited to Capital Reserve. Depreciation for the year on
the net addition to value on such revaluation of assets at`0.22 crore (previous year `0.23 crore) has
been transferred from Capital Reserve to Proft & Loss Account. There has been no revaluation of assets
during this year.
ii. Land and premises include fats `0.37 crore (previous year `0.37 crore), written down value `0.18 crore
(previous year `0.19 crore), taken possession of and being used by the Bank, for which documentation/
registration formalities are to be completed.
5. Employee Stock Option Scheme (ESOS):
Shareholders of the bank has approved Employee Stock Option Scheme (ESOS) through postal ballot, the
result of which was announced on Dec, 24, 2010, enabling the Board and/or the Compensation Committee
to grant such number of equity shares, including options, of the Bank not exceeding 5% of the aggregate
number of paid up equity shares of the Bank, in line with the guidelines of SEBI. Pursuant thereto, the
Compensation Committee of the bank granted the following options:
Sl
No
Particulars
No. of
Options
granted &
Accepted
1 ESOS granted on 9th April 2011 with vesting period of 1,2,3 and 4 years. Exercise
period of 5 years and Exercise price of ` 420.65
2875875
2 ESOS granted on 2nd June 2011 with vesting period of 1,2 and 3 years. Exercise
period of 5 years and Exercise price of ` 449.70
100000
3 ESOS granted on 16th June 2011 with Exercise period of 5 years and Exercise price
of ` 454.65
60000
4 Total number of options granted during the year 3035875
5 Options exercised/forfeited/Lapsed during the year Nil
6 Options outstanding at the end of the year 3035875
As per SEBI guidelines the accounting for ESOS can be done either under the Intrinsic value basis or Fair
value basis.
The Compensation Committee in their meeting dated10/05/2012 decided to adopt Intrinsic value method
for accounting of ESOS, in terms of the power vested on them as per the resolution of EGM dated
24 December 2010
The exercise price of the options granted is the same as the market price on the date prior to grant date and
hence there is no intrinsic value for the options, which has to be amortized over the vesting period.
If Fair Value Method had been adopted based on Black-Scholes pricing model for pricing and accounting
of options, net proft would be lower by `1972.46 lacs.
The impact on Basic and Diluted Earnings per share for the year, had the company followed Fair Value Method
of accounting for ESOS compensation cost is ` 44.26 and ` 44.16 respectively.
6 Disclosure in terms of Accounting Standard
6.1 There is no material prior period income/expenditure requiring disclosure under AS 5 Net Proft or Loss
for the Period, Prior period items and changes in Accounting policies issued by the Institute of Chartered
Accountants of India.
6.2 Employee Benefts (AS 15)
a) Defned Contribution Plan
Provident Fund
Employees who have not opted for pension plan are eligible to get benefts from provident fund, which is
a defned contribution plan. Aggregate contributions along with interest thereon are paid on retirement,
death, incapacitation or termination of employment. Both the employee and the Bank contribute a specifed
percentage of the salary to the Federal Bank Employees Provident Fund. The Bank has no obligation other
than the monthly contribution.
The Bank recognized `41.17 lakhs (Previous year ` 15.84 Cr) for provident fund contribution in the Proft and
Loss account
New Pension Scheme
As per the industry level settlement dated 27/04/2010, employees who joined the services of the Bank are
not eligible for the existing pension scheme where as they will be eligible for Defned Contributory Pension
Scheme in line with the New Pension Scheme introduced for employees of Central Govt. Employee shall
contribute 10% of their Pay and Dearness Allowance towards defned contributory Pension Scheme and the
Bank will also make a matching contribution. There is no separate Provident Fund for employees joining
on or after 01/04/2010.
(b) Defned beneft plan
1) Gratuity
The Bank provides for Gratuity, a defned beneft retirement plan (the Gratuity Plan) covering the eligible
employees. The Gratuity Plan provides a lumpsum payment to vested employees on retirement, death,
incapacitation or termination of employment, of an amount based on the respective employees salary
and the tenure of employment. Vesting occurs upon completion of fve years of service as per Payment of
Gratuity Act, 1972 and its amendment with efect from 24.05.2010 or as per the provisions of the Federal Bank
Employees Gratuity Trust Fund Rules / Bi-partite Award provisions. Liabilities with regard to the Gratuity
Plan are determined by Actuarial valuation as on the Balance Sheet date, based upon which, the Bank
contributes all the ascertained liabilities to the Federal Bank Employees Gratuity Trust Fund (the Trust).
Trustees administer contributions made to the Trust and contributions are invested in specifc investments
as permitted by law.
2) Superannuation / Pension
The Bank provides for monthly pension, a defned beneft retirement plan (the pension plan) covering
eligible employees. The pension plan provides a monthly pension after retirement of the employees till
death and to the family after the death of the pensioner. The monthly pension is based on the respective
employees salary and the tenure of employment. Vesting occurs upon completion of ten years of service.
The Bank pays the monthly pension by purchasing annuities from Life Insurance Corporation of India (LIC).
Liabilities with regard to the pension plan are determined by actuarial valuation as on the Balance Sheet
date, based upon which, the Bank contributes all the ascertained liabilities to the Federal Bank (Employees)
Pension Fund (the Trust). Trustees administer contributions made to the Trust and contributions are
invested in specifc investments as permitted by law.
The following table as furnished by Actuary sets out the funded status of gratuity / pension plan and the
amount recognized in the Banks fnancial statements as at March 31, 2012.
i) Change in beneft obligations:
(` crore)
Particulars
Gratuity Plan Pension Plan
2011-12 2010-11 2011-12 2010-11
Projected beneft obligation,
beginning of the year
203.51 181.73 589.34 195.38
Service Cost 10.94 9.75 49.16 42.68
Interest cost 16.38 14.05 46.48 11.50
Actuarial gain/ (loss)) 15.97 10.15 (1.25) 443.03
Benefts paid (21.55) (12.17) (84.97) (103.25)
Projected beneft obligation, end
of the year
225.25 203.51 598.76 589.34
ii) Change in plan assets:
Particulars
2011-12 2010-11 2011-12 2010-11
Plan assets at beginning of the year at fair
value
184.69 181.73 404.04 195.38
Expected return on plan assets 15.70 14.53 34.34 15.63
Actuarial gain/(loss) 20.04 0.60 1.31 0.92
Employers Contributions - - 67.90 295.36
Benefts paid (21.56) (12.17) (84.97) (103.25)
Plan assets at end of the year, at fair value 198.87 184.69 422.62 404.04
iii) Reconciliation of present value of the obligation and the fair value of the plan assets;
Particulars
2011-12 2010-11 2011-12 2010-11
Fair value of plan assets at the end of the year 198.87 184.69 422.62 404.04
Present value of the defned beneft obligations
at the end of the period
225.25 203.51 598.76 589.34
Liability recognized in the Balance Sheet 26.38 18.82 176.14 @ 185.30
@ Includes amount payable on account of transitional liability due to second option for pension `134.72 crore.
iv) Gratuity/pension cost for the year ended 31st March, 2012:-
Particulars
2011-12 2010-11 2011-12 2010-11
Service cost 10.94 9.75 49.16 42.68
Interest cost 16.38 14.05 46.48 11.50
Actuarial gain/(loss) (4.06) 9.55 (2.56) 442.10
Net cost Debit to Proft and Loss account 7.56 18.82 58.74 50.58
Amount recovered employees exercising second
option for pension/amount transferred to PF
account of such optees *
- - - 295.35
Amount not debited in proft and loss account,
but carried over to be amortised in future years *
- - 101.04 134.72
Actual return on plan assets 16.91 15.13 35.66 16.55
* see Note no. 2 of schedule 19
v) Investment details of plan Assets :-
Particulars
2011-12 2010-11 2011-12 2010-11
Central and state Government bonds
49.05 50.22 141.27 149.69
Other debt securities
31.14 37.64 92.49 108.08
Balance in Saving bank account with the Bank
2.10 1.53 9.17 22.75
Net current assets
2.42 2.88 6.80 8.62
Balance with LIC
114.15 92.42 172.89 114.90
Total
198.86 184.69 422.62 404.04
vi) Assumptions:-
Particulars
2011-12 2010-11 2011-12 2010-11
Discount rate 8.50% 8.00% 8.50% 8.00%
Annuity rate per Rupee - - 125.65445 125.65445
Salary escalation rate 5.50% 5.00% 5.50% 5.00%
Estimated rate of return
on plan assets
8.50% 8.00% 8.50% 8.00%
(c) Leave encashment
The employees of the Bank are entitled to compensated absence. The employees can carry forward a portion
of the unutilised accrued compensated absence and utilise it in future periods or receive cash compensation
at retirement or termination of employment for the unutilized accrued compensated absence for a maximum
of 240 days. The Bank records an obligation for compensated absences in the period in which the employee
renders the services that increase this entitlement. The Bank measures the expected cost of compensated
absence as the additional amount that the Bank expects to pay as a result of the unused entitlement that
has accumulated at the balance sheet date based on actuarial valuations.
(d) Sick Leave / Leave Travel Concession / Unavailed Casual Leave
A sum of ` 24.64 crore (Previous year ` 22.10 crore) has been provided towards the above liabilities in accordance with AS 15 (Revised)
based on actuarial valuation.
6.3 Segment Information (AS 17) (As compiled by the Management)
In terms of the Accounting Standard 17 of ICAI, the Banks operations are classifed into four business segments (see Principal
Accounting Policy no. 12) and the information on them is as under.
(` crore)
Business
Segments Treasury
Corporate/Whole
sale Banking Retail Banking
Other Banking
Operations Total
2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11
Revenue 1530.30 932.00 1992.10 1461.07 2529.04 2157.73 39.29 18.04 6090.73 4568.84
Result (net of
provisions)
42.13 83.86 257.01 222.82 850.39 585.51 19.97 9.62 1169.50 901.81
Unallocated
expenses
- -
Operating proft
(PBT)
1169.50 901.81
Income taxes 392.71 314.73
Extraordinary
proft/loss
- -
Net Proft 776.79 587.08
OTHER
INFORMATION
Segment Assets 20342.52 17720.83 19958.93 16306.14 18797.34 16233.73 557.58 448.32 59656.37 50709.02
Unallocated assets 970.41 747.34
Total assets 60626.78 51456.36
Segment liabilities 18304.57 15832.98 18269.58 15028.32 17576.27 14986.50 0.00 0.41 54510.42 45848.21
Unallocated
liabilities
410.03 499.49
Total liabilities 54920.45 46347.70
The Bank has only the Domestic geographic segment.
6.4 Related Party Disclosures
The following are the signifcant transactions with related parties during the year ended 31 March 2012
Name of the Party Nature of Relationship
IDBI Federal Life Insurance Company Limited Associate
Fed Bank Financial Services Limited Subsidiary
Sri. Shyam Srinivasan Key Management Personnel
Sri P C John Key Management Personnel
(` crore)
Particulars
Key Management Personnel*
31st March 2012 31st March 2011
Remuneration 1.09 1.62
*The normal transactions of the Bank with the above persons as constituents are not reckoned for the
purpose.
Note: In accordance with the RBI Guidelines on Compliance with the Accounting Standards by the Banks, the
details of transactions with associate/joint venture and subsidiary company have not been disclosed since
there is only one entity in the respective category of the related party.
6.5 Earnings per share (AS 20)
The Bank reports basic and diluted earnings per share in accordance with the Accounting Standard -20
Earnings per Share.
Weighted average number of equity shares used in computation of
basic earnings per share (in 000s)
Weighted average number of equity shares used in computation of
diluted earnings per share (in 000s)
Nominal Value of share (in `)
Basic earnings per share (in `)*
Diluted earnings per share (in `)*
Earnings used in the computation of basic and diluted earnings per
share (` in Lakhs)
171047
171047
10
45.41
45.41
77679.95
171047
171047
10
34.32
34.32
58708.32
* Weighted average
6.6 Taxation (AS 22)
i The disputed amount of income tax demand as on 31.03.2012 amounts to `610.32 crore. In the opinion
of the Bank no provision is considered necessary in respect of the above disputed demand in view of
various judicial decisions and the same has been disclosed as contingent liability.
ii The Bank has accounted for income tax in compliance with ICAIs Accounting Standard 22. Accordingly,
timing diferences resulting in deferred tax assets and deferred tax liabilities are recognized. The major
components of deferred tax liabilities and assets as on 31 March 2012 are shown below:
(` crore)

31st March
2012
31st March
2011
Deferred Tax Liability
Tax efect of timing diference in the assessment of:
(i) Interest income 102.24 63.04
(ii) Depreciation on Fixed Asset 5.73 6.10
(iii) Depreciation on Investments 243.32 173.58
(A) 351.29 242.72
Deferred tax asset
Tax efect on timing diference in allowance of:
(i) Interest/premium paid on purchase of securities 47.22 40.05
(ii) Provision for Standard Assets 47.00 47.00
(iii) Others 171.76 157.17
(B) 265.98 244.22
Net Deferred tax liability (Asset) (A-B) 85.31 -1.50
7. Provisions and Contingencies debited in Proft and Loss Account during the year:
(` crore)
For the year ended / As at 31 March 2012 31 March 2011
i) Provision towards NPAs (net) 221.77 488.85
ii) Provision for Investments 34.86 11.13
iii) Provision for Standard Assets 36.45 14.35
iv) Provision for Taxation:
Current Tax
Deferred tax
305.90
86.81
316.26
-1.53
v) Provision towards P/V sacrifce on restructuring, other
contingencies etc
43.89 11.11
Total 729.68 840.17
8. Floating Provision
(` crore)
Particulars Standard Assets Provision NPA Provision
2011-12 2010-11 2011-12 2010-11
(a) Opening Balance in the foating
provisions account
(b) The quantum of foating provisions
made in the accounting year
(c) Amount of draw down made during
the accounting year
(d) Closing Balance in the foating
provisions account
38.00
Nil
Nil
38.00
38.00
Nil
Nil
38.00
179.52
Nil
Nil
179.52
179.52
Nil
Nil
179.52
9. Additional Disclosures:
9.1 Amount of Provisions made for Income-tax during the year
(` crore)
2011-12 2010-11
Provision for Income Tax 392.71 314.73
9.2 Details of penalties imposed by RBI under the provision of Section 46 (4) of BR Act, 1949
Nil
9.3 Disclosure of customer complaints and awards passed by the Banking Ombudsman:
A. Customer Complaints
(a) No. of complaints pending at the beginning of the year 28
(b) No. of complaints received during the year 1588
(c) No. of complaints redressed during the year 1571
(d) No. of complaints pending at the end of the year 45
B. Awards passed by the Banking Ombudsman
(a) No. of unimplemented awards at the beginning of the year 2
(b) No. of awards passed by the Banking Ombudsman 2
(c) No. of awards implemented during the year 2*
(d) No. of unimplemented awards at the end of the year 2$
*One awards is implemented and appellate authority withheld the award in other case
$ Appeal against both the awards fled
9.4.1 Income from bancassurance business
(` lakh)
Sl No Nature of Income As on 31 March 2012
1 For selling life insurance policies 1298.90
2 For selling non-life insurance policies 150.22
3 For selling mutual fund products 36.02
4 Others (reimbursement of expenses) 282.51
9.4.2 Provision coverage ratio
Provision coverage ratio as per RBI guidelines as on 31 March 2012 stood at 88.85 %
9.4.3 Amount of advances for which intangible securities such as charge over rights, licences, authority etc
has been taken as collateral security and the value of such collateral security: Nil
9.4.4 There are no dues to micro and small enterprises as at 31st March 2012. This disclosure is based on the
records available with the Bank.
9.4.5 The Bank has not issued any letters of comforts coming within the Prudential Norms for Issuance of
Letters of Comforts by banks regarding their subsidiaries (DBOD.No. BP.BC.65/21.04.009/2007-08 dated
March 4, 2008).
9.4.6 The Bank has not made any draw down of reserves during the year.
9.5 Previous years fgures have been regrouped and recast wherever necessary.
DIRECTORS
FRN: 004532S FRN: 02783S
A. Cash Flow from Operating Activities
Net Proft Before Tax and Extra Ordinary Items/Provisions 1506,47,74 1427,25,37
Adjustments for:-
Depreciation on Fixed assets 56,88,31 54,48,58
Others (55,02) (55,71)
Operating Proft before Working Capital Changes 1562,81,03 1481,18,24
Adjustments for working capital changes:-
Investments (2718,67,49) (1404,15,45)
Funds Advanced to Customers (6024,52,16) (5491,97,02)
Other Operating Assets (401,76,42) (231,57,67)
Deposits from Customers 5922,34,15 6956,82,98
Borrowings from Banks & Financial Institutions 2352,67,15 341,60,62
Other Operating Liabilities 143,28,34 53,37,81
Cash Generated from Operations 836,14,60 1705,29,51
Taxes Paid (609,04,83) (436,79,10)
Cash Flow before Extraordinary items 227,09,77 1268,50,41
Extraordinary items - -
Net Cash From Operating Activites 227,09,77 1268,50,41
B. Cash Flow from Investing Activities
Purchase of Fixed Assets (93,67,08) (58,17,29)
Sale of Fixed Assets 79,69 3,96,69
Investment in Subsidiary/Joint Venture (181,00,00) (90,00,00)
Net Cash from Investing Activities (273,87,39) (144,20,60)
C. Cash Flow from Financing Activities
Equity Capital including Premium 0 33,61
Dividend Paid (168,97,59) (99,71,97)
Net Cash used in Financing Activities (168,97,59) (99,38,36)
Increase/(Decrease) in Cash & Cash Equivalents (215,75,21) (1024,91,45)
Cash & Cash Equivalents at the beginning of year 3748,30,35 2723,38,90
Cash & Cash Equivalents at the end of year 3532,55,14 3748,30,35
Cash Flow Statement
(In thousands of `)
31 March 2012 31 March 2011
DIRECTORS
FRN: 004532S FRN: 02783S
Auditors Report
The Members,
The Federal Bank Limited,
Aluva
1. We have audited the attached Balance Sheet of THE FEDERAL BANK LIMITED, Aluva as at 31st March
2012 and also the Proft and Loss Account of the Bank and the Cash Flow Statement annexed thereto for
the year ended on that date in which are incorporated the returns of 16 branches /ofces audited by us
and 962 branches / ofces audited by other auditors. These fnancial statements are the responsibility
of the Banks management. Our responsibility is to express an opinion on these fnancial statements
based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the fnancial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes
assessing the accounting principles used and signifcant estimates made by the management, as well as
evaluating the overall fnancial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. The Balance Sheet and the Proft and Loss Account have been drawn up in accordance with the provisions
of Section 29 of the Banking Regulation Act, 1949, read with Section 211 of the Companies Act, 1956.
4. We report that:
a) We have obtained all the information and explanations which, to the best of our knowledge and
belief, were necessary for the purpose of our audit and have found them to be satisfactory;
b) In our opinion, the transactions of the Bank, which have come to our notice, have been within the
powers of the Bank;
c) The returns received from the ofces and branches of the Bank have been found adequate for the
purposes of our audit;
d) In our opinion,the Balance Sheet, the Proft and Loss Account and the Cash Flow Statement comply
with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act,
1956;
e) The Banks Balance Sheet andProft and Loss Account dealt with by this report, are in agreement
with the books of account and the returns;
f) In our opinion, proper books of account as required by law have been kept by the Bank so far as
appears from our examination of those books;
g) The reports on the accounts of the branches audited by branch auditors have been dealt with in
preparing our report in the manner considered necessary by us;
h) As per the information and explanation given to us the Central Government has, till date, not
prescribed any cess payable under Section 441A of the Companies Act,1956;
Auditors Report
i) On the basis of written representation received from the directors as on 31st March 2012and
taken on record by the Board of Directors,none of the directors is disqualifed as on 31st March
2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of
the Companies Act, 1956.
5. Without qualifying our opinion, we draw attention to Note No.2 of Schedule 19 to the fnancial
statements, which describes deferment of pension liability of the bank to the extent of Rs.101.04
crore pursuant to the approval granted by the Reserve Bank of India to the Bank vide letter no.DBOD
No.BP.BC.15896/21.04.018/2010-11 dated0 8.04.2011, for availing the exemption from application of the
provisions of Accounting Standard (AS) 15- Employee Benefts, as provided therein.
6. In our opinion and to the best of our information and according to the explanations given to us, the
said accounts read with the Accounting policies followed by the Bank and the notes thereon, give the
information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the
manner so required for the banking companies and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of afairs of the Bank as at 31st March 2012;
ii) in the case of the Proft and Loss Account, of the proft of the Bank for the year ended on that
date; and
iii) in the case of the Cash Flow Statement, of the cash fows of the Bank for the year ended on that
date.
For Varma and Varma For Price Patt & Co.,
FRN: 004532S FRN: 02783S

R. Rajasekharan S. Ramaswamy
Partner, Membership No. 22703 Partner, Membership No. 025918
Place: Kochi
Date: 11-05-2012
Basel II Pillar 3 Disclosures of The Federal Bank Ltd., As on 31/03/2012
I. SCOPE OF APPLICATION OF BASEL II DISCLOSURES
TABLE DF 1: SCOPE OF APPLICATION
1. Qualitative disclosures
1.1 Name of the top Bank in the group to which the
framework applies
The Federal Bank Ltd.
1.2
Diferences in the basis of consolidation for accounting and regulatory purposes: (outline with a
brief description of entities within the group)
i) The revised capital adequacy norms (in conformity with Basel II Pillar III requirements) apply to
Federal Bank at solo level.
ii) The Bank has one fully owned subsidiary viz. Fedbank Financial Services Ltd and an associate viz.
IDBI Federal Life Insurance Company Ltd.
Consolidated fnancial statements of the group (parent and subsidiary) have been prepared on
the basis of audited fnancial statements of Federal Bank and its subsidiary, combining and adding
together the items such as assets, liabilities, income and expenses, after eliminating intra group
transactions.
1.3 That are fully consolidated: (AS 21)
Name Activity Holding %
a)
FedBank Financial Services Ltd
The wholly owned
subsidiary has
been registered
as an NBFC.The
major activities
include marketing
of banks own
products and
business of lending
against gold
100%
1.4 That are pro-rata consolidated: (AS 27)
a) NIL
1.5 That are given a deduction treatment:
a) NIL
1.6 That are neither consolidated nor deducted
IDBI FEDERAL Life Insurance Company Ltd.
Sale of Insurance
products
26%
2. Quantitative disclosures
2.1 Aggregate amount of capital defciencies in all subsidiaries not included in the consolidation and
that are deducted
Name of subsidiary Activity
Amount of shortfall
deducted (In ` Cr.)
a) NIL NA NA
2.2
The aggregate amounts (e.g. current book value) of the banks total interests in insurance entities,
which are risk-weighted as well as their name, their country of incorporation or residence, the
proportion of ownership interest and, if diferent, the proportion of voting power in these entities.
In addition, indicate the quantitative impact on regulatory capital of using this method versus using
the deduction
a) Name IDBI FEDERAL Life Insurance Co.Ltd.
b) Country of incorporation / residence India
c) Proportion of ownership interest 26%
d) Proportion of voting power 26%
e)
Quantitative impact on regulatory capital of using
this method versus using the deduction
CRAR under deduction method is 16.16%
as against 16.64% under the risk weighting
method.
II. STRUCTURE AND ADEQUACY OF CAPITAL
TABLE DF 2: CAPITAL STRUCTURE
1. Qualitative Disclosures
1.1
Summary (information on the terms and conditions of the main features of all capital instruments,
especially in the case of capital instruments eligible for inclusion in Tier 1 or in Upper Tier 2.).
Type of capital Features
A Tier I Tier I Capital includes Equity Share Capital and Reserves and surpluses
comprising of Statutory Reserve, Capital Reserve Investments, Share
Premium, Revenue Reserve, Investment fuctuation Reserve, Special
Reserve, Contingency Reserve and Balance in Proft & Loss A/c.
B Tier II Tier II Capital includes Revaluation Reserve, Tier II Bonds Subordinated
Debt and General Provisions
2 Quantitative Disclosures
2.1 Details of capital instruments
Type of capital
instrument
Date of
issue
Amount in
` Cr
Tenure in
months
Coupon
(% p.a.)
Rating
A
Innovative
instruments (Tier I
capital)
Nil
B
Other capital
instruments (Tier I) Nil
C
Debt capital
instruments eligible
for inclusion in Upper
Tier II capital
Nil
D
Subordi nated debt
eligible for inclusion in
Lower Tier II capital
Date of
Issue
Amount in
` Cr
Tenure in
Months
Coupon
(% p.a.)
Rating
30.08.03 61 104 7.10 Rating by CARE
as CARE AA
and by Fitch as
AA-(ind)
26.07.04 30 117 6.85
26.07.04 15 93 6.75
16.12.06 200 120 9.25
2.2 Capital funds
Amount in
` Crore
A TIER I CAPITAL
Paid up share capital 171.05
Reserves and Surplus 5,529.86
Innovative instruments (IPDI or any other instrument that may be allowed
from time to time)
0.00
Other capital instruments 0.00
Amounts deducted from Tier I capital, including goodwill and investments 95.00
B TIER II CAPITAL (Total amount net of deductions from Tier II capital)
Debt capital instruments eligible for inclusion in Upper Tier II capital 0.00
Total amount outstanding 0.00
Of which, amount raised during the current year 0.00
Amount eligible to be reckoned as capital funds 0.00
Subordinated debt eligible for inclusion in Lower Tier II capital 306.00
Total amount outstanding 306.00
Of which, amount raised during the current year 0.00
Amount eligible to be reckoned as capital funds 172.00
Other Tier II capital 198.47
Revaluation Reserve 2.43
General Provisions 196.04
Deductions from Tier II capital 95.00
C Other deductions from capital, if any. 0.00
D Total eligible capital 5,881.38
TABLE DF 3: CAPITAL ADEQUACY
1.1 A summary discussion of the Banks approach to assess the adequacy of its capital to support
current and future activities.
1. Policy on Internal Capital Adequacy Assessment Process has been put in place and
the assessment of capital commensurate to the risk profle is reviewed on a quarterly
basis.
2. Capital requirement for current business levels and estimated future business levels
are assessed on a periodic basis.
3. CRAR has been worked out based on Basel- I and Basel- II guidelines and it is well
above the Regulatory Minimum level of 9%.
2. Quantitative Disclosures
2.1 Minimum capital requirements under Pillar I of Basel II Amount in
` Crore.
A Capital requirements for credit risk (@ 9% CRAR) 2737.85
Portfolios subject to Standardized approach 2737.85
Securitisation exposures 0.00
B Capital requirements for market risk (Standardized duration approach)
(@ 9% CRAR) 166.34
Interest rate risk 114.57
Foreign exchange risk (including gold) 18.00
Equity risk 33.77
C Capital requirements for operational risk (Basic Indicator Approach) (@ 9% CRAR) 277.59
2.2 Capital Adequacy Ratio (CRAR) % for consolidated group (consolidation only for annual
disclosures) and signifcant bank subsidiaries
Name of entity Total CRAR Tier I CRAR
Consolidated Bank (group as a whole applicable annually
only)
16.81% 15.76%
The Federal Bank Ltd. (solo basis) 16.64% 15.86%
Signifcant bank subsidiaries (wherever applicable, entity
wise data)
III. RISK EXPOSURE AND ASSESSMENT
(A) Objectives and policies
Sl. No.
1. Credit risk
1.1 Strategies and processes:
The Bank is exposed to credit risk in its lending operations. The Banks strategies to manage the credit risks are
as under:
a) Defned segment exposures delineated into retail, small and medium enterprises and to Corporates;
b) Industry wise segment caps on aggregate lending by Bank across Branches.
c) Individual borrower wise caps on lending as well as borrower group wise lending caps linked as a
percentage to the Banks capital funds at the end of the previous year.
d) Credit rating of borrowers and allowing credit exposures only to defned thresholds of risk levels;
the approach also includes diversifcation of credit rating wise borrowers but within acceptable risk
parameters.
e) The Banks current entire business is within India and hence there is no geographic cap on lending in India;
there is also no cap on lending within a State in India. However, in respect of cross border trade which
would involve exposures to banks and fnancial institutions located outside India, there is a geographic
cap on exposures apart from cap on individual bank/institution.
f) A well defned approach to sourcing and preliminary due diligence while sourcing fresh credit accounts
g) A clear and well defned delegation of authority within the Bank in regard to decision making linking risk
and exposure amount to level of approval.
h) Regular review of all credit structures and caps, continuously strengthening credit processes, and
monitoring oversight which are regularly reviewed and duly approved by the Board of the Bank.
i) At present all the credit facilities except agricultural loans, gold loans etc. are being sanctioned at Credit
Hubs which has strengthened credit processes.
j) All credit proposals of ` 5.00 crore and above are scrutinized and risk assessment is conducted by
Integrated Risk Management Department, independent of the business functions.
Oversight of the Boards sub committee on risk.
Bank has put in place Board approved comprehensive Credit Risk Management Policy designed with added focus
on credit risk management. The policy aims to provide basic framework for implementation of sound credit risk
management system in the Bank. It spells out various areas of credit risk, goals to be achieved, current practices
and future strategies. Bank has also operationalised required organizational structure and framework as prescribed
in the policy for efcient credit risk management through proactive identifcation, precise measurement, fruitful
monitoring and efective control of credit risk arising from its credit and investment operations. Bank has Board
level sub committee, Risk Management Committee, to oversee Bank wide credit risk management and senior
executive level Credit Risk Management Committee to monitor adherence to policy prescriptions and regulatory
directions. CRMC of the Bank meets once in a month to take stock of Banks credit risk profle based on the reports
placed by Credit Risk Management Cell of Integrated Risk Management Department.
Bank has put in place detailed Loan Policy spelling out various aspects of credit dispensation and credit
administration. Loan policy stipulates measures for avoiding concentration risk by setting prudential limits and
caps on taking sector wise, rating grade wise, and customer-constitution wise exposure. The policy gives specifc
instruction on valuation of collaterals .Bank has also put in place guidelines on fxing and monitoring of exposure
ceilings to contain risk in credit and investment exposures. The Internal Capital Adequacy Assessment Process
(ICAAP) periodically conducted by the Bank takes care of the residual risk assessment and also adequacy of capital
under Basel II norms.
1.2 Scope and nature of risk reporting / measurement systems:
Bank has developed comprehensive risk rating system that serves as a single point indicator of diverse risk factors
of counterparty and for taking credit decisions in a consistent manner. Risk rating system is drawn up in a structured
manner, incorporating diferent factors such as borrower specifc characteristics, industry specifc characteristics etc.
Risk rating is made applicable for loan accounts, whether funded or non-funded, with total limits above ` 2 lakhs.
Bank uses diferent rating models for diferent types of exposures. Rating model used for infrastructure exposures
and corporate exposures are comprehensive in structure whereas model used for small exposures in the range
of ` 2 lakh to ` 50 lakh is relatively simple in structure. Retail advances are rated using scoring model. At present
a separate scoring model is used for rating Home loans and Auto loans. Bank also uses a separate rating model
for rating its investment exposures. Bank is undertaking annual validation of its rating model for exposures of ` 5
Crore and above and is also conducting migration and default rate analysis of all loans of ` 50 lakhs and above.
Rating process and rating output are used by the Bank in sanction and pricing of its exposures. Bank also conducts
annual common time point rating of its exposures and the fndings are used in annual migration study and portfolio
evaluation.
Credit facilities are sanctioned at various levels in accordance with the delegation approved by the Board. The
exercise of delegation and credit rating assigned by the sanctioning authority are subjected to confrmation by a
diferent authority. Bank has also operationalised pre-sanction risk vetting of exposures of ` 5 Crore and above by
independent Integrated Risk Management Department. Risk rating and vetting process being done independent
of credit appraisal function ensure its integrity and independency.
Credit audit is being conducted at specifed intervals. Bank has made reasonably good progress in implementing
all available instruments of credit risk mitigation.
1.3 Policies for hedging / mitigating risk and strategies and processes for monitoring the continuing efectiveness of
hedges/ mitigants:
Banks Credit Risk Management Policy also stipulates various tools for mitigation of credit risk and collateral
management. Investment Policy of the Bank covers risk related to investment activities of the Bank and it prescribes
prudential limits, methods of risk measurement, and hedges required in mitigation of risk arising in investment
portfolio. Credit Risk Management Committee at senior executive level and Risk Management Committee at Board
level monitor, discuss, evaluate and review risk mitigation levels and efectiveness of mitigation measures.
Risk rating process by itself is an integral part of processes of selection of clients and sanction of credit facilities.
Exercise of delegation for sanction of fresh loans or renewal/review of existing exposure by feld level functionaries
is permitted only for borrowers above a pre-specifed rating grade. Entry-level restrictions are further tightened in
certain sectors when market signals need for extra caution. Rating of an exposure is confrmed by an independent
authority to ensure its integrity.
2. Market risk
The Bank monitors market risk through risk limits and Middle Ofce in operationally intense areas. Detailed policies
like Asset Liability Management Policy, Investment Policy, Derivatives Policy etc., are put in place for the conduct
of business exposed to market risk and also for efective management of all market risk exposures.
The policies and practices also take care of monitoring and controlling of liquidity risk arising out of its banking
and trading book operations.
Bank has put in place regulatory/ internal limits for various products and business activities relating to trading
book. Bank also subjects investment exposures to credit rating.Limits for exposures to counterparties, industries
and countries are monitored and risks are controlled through Stop Loss Limits, Overnight Limit, Daylight Limit,
Aggregate Gap Limit,Individual Gap Limit, Inter-Bank dealing and investment limits etc.Parameters like Modifed
Duration, VaR etc are also used for risk management and reporting.
Bank has an independent Mid Ofce working on the foor of Treasury Department for market risk management
functions like onsite monitoring of adherence to set limits, independent valuation and reporting of activities. This
separate desk monitors market/operational risks in treasury/forex operations on a daily basis and reports directly
to the Head of IRMD.
Asset Liability Management Committee (ALCO), also known as Market Risk Management Committee, is primarily
responsible for establishing market risk management and asset liability management in the Bank, procedures
thereof, implementing risk management guidelines issued by the regulator,best risk management practices
followed globally and monitoring adherence to the internal parameters,procedures,practices/policiesand risk
management prudential limits.
hedges/ mitigants:
Policies for hedging/ mitigating risk and strategies and processes for monitoring the continuing efectiveness of
hedges / mitigants are discussed in ALCO and based on the views taken by/ mandates given by ALCO, hedge deals/
mitigation steps are undertaken.
Liquidity risk of the Bank is assessed through Statement of Structural Liquidity on static basis and statement of
Short Term Dynamic Liquidity on dynamic basis. Structural liquidity position is assessed on a daily basis and dynamic
liquidity position is assessed on a fortnightly basis. Additional prudential limits on liquidity risk fxed as per ALM policy
of the Bank are also monitored by ALCO on a quarterly basis. Interest rate risk is analyzed from earnings perspective
using Traditional Gap Analysis on a monthly basis and economic value perspective using Duration Gap Analysis on
a quarterly basis .Based on the analysis, steps are taken to minimize the impact of interest rate changes.
Advance techniques such as Stress testing, sensitivity analysis etc. are conducted periodically to assess the
impact of various contingencies.
3. Operational risk
Bank has put in place detailed framework for Operational Risk Management with a well-defned ORM Policy.
Operational Risk Management Committee (ORMC) at the executive level oversees bank wide implementation of
Board approved policies and processes in this regard. All new schemes/products of the Bank are risk vetted from
the point of view of operational risk, before implementation.
Various tools, controls and mitigation measures implemented for management of operational risk are being reviewed
and updated on a regular basis, to suit the changes in risk profle. Bank has also put in place a comprehensive
bank wide Business Continuity Plan to ensure continuity of critical operations of the Bank covering all identifed
disasters.
Bank has started collection of internal operational loss data from Fiscal 2006-07. In the year 2009, Bank has
introduced separate accounting of operational risk events to enhance transparency and to enable efective
monitoring of loss events. Well-designed format for reporting identifed loss events and data in the most granular
form is put in place. Operational Risk Management Cell is the central repository for operational loss data of the
Bank. Consolidation and analysis of loss data is placed before the Operational Risk Management Committee on
a quarterly basis.
hedges/ mitigants:
Bank is using insurance for mitigating operational risk. Bank is subscribing to the General Bankers Indemnity Policy
as mitigation against loss of securities due to various external events. Bank also mitigates loss in other physical
assets through property insurance.
4. Interest rate risk in banking book
Interest Rate Risk is assessed in two perspectives Earnings perspective using Traditional Gap Analysis conducted
monthly to assess the impact of adverse movement in interest rate on the Net Interest Income (Earnings at Risk)
and economic value perspective using Duration Gap Analysis conducted quarterly to assess the impact of adverse
movement in interest rate on the market value of Banks equity.
Interest rate risk in Banking Book is measured and Modifed Duration of Equity is evaluated on a quarterly basis.
The likely drop in Market Value of Equity for 200 bps change in interest rates is computed and benchmarked under
the Internal Capital Adequacy Assessment Process for computation of Pillar II capital charge for Interest Rate Risk.
Earnings at Risk based on Traditional Gap Analysis are calculated on a monthly basis and adherence to tolerance
limit set in this regard is monitored and reported to ALCO / RMC. The results of Duration Gap Analysis are also
reported to ALCO / RMC. Stress tests are conducted to assess the impact of interest rate risk under diferent
stress scenarios on earnings of the Bank.
hedges/ mitigants:
Bank has put in place mitigating/hedging measures prescribed by Investment Policy, ALM Policy, Derivatives
Policy and Stress Testing Policy.
Risk profles are analyzed and mitigating strategies/hedging process are suggested and operationalised by
Treasury Department with the approval of Senior level Committees.
(B) Structure and organization of Banks risk management function
Bank has put in place appropriate organizational framework for bank-wide management of risk on integrated basis. The
structure ensures coordinated process for measuring and managing all types of risk on an enterprise-wide basis to achieve
organizational goals. The structure assures adherence to regulatory stipulations. The structure is designed in tune with the
general guidelines of Regulator.
Banks Board at the top of the structure has assumed overall responsibility for bank-wide management of risk. The Board
decides risk management policies of the Bank and sets risk exposure limits by assessing Banks risk appetite and risk bearing
capacity. Risk Management Committee of the Board assumes responsibility of devising policy and strategy for enterprise-wide
risk management. The Committee also sets guidelines for measurement of risks, risk mitigation and control parameters and
approves institution of adequate infrastructure for risk management. The Committee meets regularly and reviews reports
placed on various risk areas.
There are three support committees of senior executives (CRMC, ALCO also known as MRMC, ORMC) responsible for
implementation of policies and monitoring of level of risks in their respective domains. The Committees are headed by
Managing Director & CEO. Senior executives from respective functional areas and risk management are members of the
Committee. The Committees meet regularly to take stock of various facets of risk management function and place their
reports to Board level Risk Management Committee. CRMC meets at least once in a month and ORMC meets at least once
in a quarter. Depending on requirement, ALCO meets very often. Further, an apex level Business Continuity Plan Committee
is constituted with the Managing Director & CEO as its head, to ensure continuity of critical operations of the Bank in the
event of occurrence of disasters.
Single point management of diferent types of risks bank-wide is made functional through Integrated Risk Management
Department. The Department is responsible for overall identifcation, measurement, monitoring and control of various types of
risks faced by the Bank in its operations and compliance of risk management guidelines and policies issued by Regulator/Board.
The Department has three separate Cells to look after three broad categories of risks. Independent Mid-Ofce functioning on
the foor of Treasury Department is reporting directly to the Head of IRMD.The distinctrisk Cells report to the Head of IRMD.
The Head of IRMDreports to the Managing Director & CEO through the Executive Director.
(C ) Structured risk wise disclosures
TABLE DF 4: CREDIT RISK: GENERAL DISCLOSURES
1.1 Defnitions of past due and impaired (for accounting purposes).
1. Non Performing Assets
An asset including a leased asset becomes non-performing when it ceases to generate income for the
bank. A non performing asset (NPA) is a loan or an advance where
a. Interest and/or installment of principal remain overdue for a period of more than 90 days in respect
of a term loan
b. The account remains out of order as indicated in paragraph 2 below, in respect of an Overdraft
/ Cash Credit (OD/CC)
c. The bill remains overdue for a period of more than 90 days in case of bills purchased and
discounted
d. The installment of principal or interest thereon remains overdue for two crop seasons for short
duration crops.
e. The installment of principal or interest thereon remains overdue for one crop season for long
duration crops.
An account is classifed as NPA if the interest charged during any quarter is not serviced fully within 90 days
from the end of the quarter.
2. Out of Order status
An account is treated as Out of Order if the outstanding balance remains continuously in excess of the
sanctioned limit / drawing power. In cases where the outstanding balance in the principal operating account
is less than the sanctioned limit / drawing power, but there are no credits continuously for 90 days as on
the date of Balance Sheet or credits are not enough to cover the interest debited during the same period,
these accounts are treated as out of order.
3. Overdue
Any amount due to the bank under any credit facility is overdue if it is not paid on the due date fxed by
the bank.
4. Credit Risk
a. Inability or unwillingness of the counterparty to pay interest, repay principal or otherwise to
fulfll their contractual obligations under loan agreements or other credit facilities
b. Downgrading of counter parties whose credit instruments the Bank may be holding, causing the
value of those assets to fall.
c. Settlement Risk (possibility that the Bank may pay a counterparty and fail to receive the
corresponding settlement in return).
1.2 Discussion of the Banks Credit Risk Management Policy
Bank has put in place a detailed Credit Risk Management Policy. Goal of this policy is to create a transparent
framework for identifcation, assessment and efective management of credit risk in all operations of the
Bank and to secure organizational strength and stability in the long run. The policy aims at contributing to the
Banks proftability by efcient and proftable utilization of a prudent proportion of the Banks resources and
maintaining a reasonably balanced portfolio of acceptable risk quality through diversifcation of credit risks.
The policy also envisages optimizing returns with satisfactory spread over funding cost and overheads.
The policy also deals with structure, framework and processes for efective management of inherent credit
risk.
Amount in ` Crore
Fund based
(same as
total assets in
Balance Sheet)
Non-fund
based
(Book
value,
excluding
market
related
OBS
contracts
and
undrawn
exposures)
Total
2.1 Total gross credit risk exposures (after accounting ofsets
in accordance with the applicable accounting regime
and without taking into account the efects of credit risk
mitigation techniques)
60626.79 4722.13 65348.91
2.2 Geographic distribution of exposures (same basis as
adopted for segment reporting adopted for compliance
with AS 17)
Overseas
Domestic 60626.79 4722.13 65348.91
2.3 Industry type distribution of exposures (with industry
break up on same lines as prescribed for DSB returns)
Please refer Table 4 (A)
2.4 Residual contractual maturity breakdown of assets
(maturity bands as used in ALM returns should be used)
Please refer Table 4 (B)
2.5 Amount of NPAs (Gross) 1300.83
Substandard 466.82
Doubtful 1 341.48
Doubtful 2 158.05
Doubtful 3 33.42
Loss 301.06
2.6 Net NPAs 199.00
2.7 NPA ratios
Gross NPAs to gross advances (%) 3.35
Net NPAs to net advances (%) 0.53
2.8 Movement of NPAs (Gross)
Opening balance (balance as at the end of previous Fiscal) 1148.33
Additions during the period 695.31
Reductions 542.81
Closing balance 1300.83
2.9 Movement of provisions for NPAs
Provisions made during the period 221.77
Write-of / Write back of excess provisions 108.78
2.10 Amount of Non Performing Investments 0.00
2.11 Amount of provisions held for Non Performing Investments 0.00
2.12 Movement of provisions for depreciation on investments
Provisions made during the period 51.37
Write-of 0.00
Write-back of excess provisions 16.50
TABLE 4 (A): INDUSTRY TYPE DISTRIBUTION OF EXPOSURES
(Amount in ` Crore)
Sl.
No.
Industry
Gross lending exposures, without netting
% to gross credit
exposure as per
Table DF 4 2.1
Fund based
Non-fund
based
Total
1 Mining & Quarrying 240.24 7.01 247.25 0.38
2 Food Processing 1401.87 4.07 1405.94 2.15
3 Beverages & Tobacco 16.65 0.00 16.65 0.03
4 Textiles 800.66 4.06 804.72 1.23
5 Leather & Leather products 73.51 1.73 75.24 0.12
6 Paper & paper products 200.61 1.08 201.69 0.31
7 Petroleum, Coal products & Nuclear
Fuels
1259.46 1.25 1260.71 1.93
8 Chemicals & Chem products 659.23 1.16 660.39 1.01
9 Rubber, Plastic &their products 101.51 0.25 101.76 0.16
10 Cement & Cem products 73.93 1.40 75.33 0.12
11 Basic Metal & Metal products 1330.04 13.48 1343.52 2.06
12 All Engineering 428.52 233.75 662.27 1.01
13 Vehicles, parts and Transport
Equipments 70.34 0.05 70.39 0.11
14 Gems & Jewellery 21.47 0.00 21.47 0.03
15 Construction 151.12 0.24 151.36 0.23
16 Infrastructure 4455.14 58.98 4514.12 6.91
17 Other Industries 702.45 0.00 702.45 1.07
TOTAL 11986.75 328.51 12315.26
As on 31st March 2012, exposure to infrastructure exceeds 5 % of the gross credit exposure of the Bank.
TABLE 4 (B): RESIDUAL CONTRACTUAL MATURITY BREAKDOWN OF ASSETS
(Amount in ` Crore)
Cash
Balances
with RBI
Balances with
other banks
Investments Advances
Fixed
assets
Other
assets
Total
Day 1 395.84 4.73 207.83 1.88 182.31 1.43 794.02
2 7 days 27.05 284.07 282.36 887.62 0 1481.10
8-14 days 9.74 29.63 68.29 1246.15 0 1353.81
15-28 days 26.13 54.64 269.02 856.93 0 1206.72
29 days & up to 3
months
151.59 523.41 1489.87 2814.34 2.18 4981.39
Over 3 months &
up to 6 months
253.98 8.83 705.58 2853.46 2.34 3824.19
Over 6 months &
up to 1 year
285.41 0 218.09 4757.42 880.82 6141.74
Over 1 year & up
to 3 years
752.98 0 898.01 17069.49 4.91 18725.39
Over 3 years & up
to 5 years
29.31 0 1423.90 3128.60 2.38 4584.19
Over 5 years 487.37 0 12045.48 3959.67 326.14 715.54 17534.20
Total 395.84 2028.29 1108.41 17402.48 37755.99 326.14 1609.60 60626.75
TABLE DF 5: DISCLOSURES FOR PORTFOLIOS SUBJECT TO THE STANDARDIZED APPROACH
For portfolios under the Standardized Approach;
Names of credit rating agencies used, plus reasons for any changes.
Bank has approved all the four External Credit Rating Agencies accredited by RBI for the purpose of
credit risk rating of domestic borrowal accounts that forms the basis for determining risk weights under
Standardized Approach.
External Credit Rating Agencies approved are:
1. CRISIL
2. CARE
3. FITCH India
4. ICRA
No agency has been added/deleted by the Bank during the year. Wherever short term rating is not available,
long term rating grade is used to determine risk weight of the short term claims also. However, even if short
term rating is available, it is not used to determine risk weight of long term claims.
With respect to external credit rating, Bank is using long term ratings for risk weighting all long term claims
and unrated short term claims on the same counterparty. However, short term rating of a counterparty
is used only to assign risk weight to all short term claims of the obligor and not to risk weight unrated long
term claims on the same counterparty
For an unrated claim with respect to external credit rating, The Federal Bank Ltd. is using long term ratings for
risk weighting both unrated long term claims as well as unrated short term claims on the same counterparty.
However, short term rating of counterparty are only used to assign risk weight to unrated short term claims
and not unrated long term claims of the same counterparty.
Wherever external credit rating of guarantor is relevant, the same should be used as the entity rating of
the guarantor and not the rating of any particular issue of the guarantor. Whereas the entity ratings can
be used to risk weight specifc unrated credit exposures of counterparty, rating of any credit exposure of
the counterparty cannot be used to arrive at risk weight of that counterparty as guarantor.
1.2 Types of exposure for which each agency is used.
1. Rating by the agencies is used for both fund based and non-fund based exposures.
2. Short Term Rating given by the agencies is used for exposure with contractual maturity of less than or
equal to one year (except Cash Credit, Overdrafts and other Revolving Credits).
3. Long Term Rating given by the agencies is used for exposures with contractual maturity of above one
year and also for Cash Credit, Overdrafts and other Revolving Credits.
4. Rating assigned to one particular entity within a corporate group is not used to risk weight other entities
within the same group.
1.3 Description of the process used to transfer public issue ratings onto comparable assets in the Banking
Book
The ratings available in public domain are mapped according to mapping process as envisaged in RBI
guidelines on the subject.
Issue Specifc Ratings (Banks own exposures or other issuance of debt by the same borrower constituent/
counterparty) or Issuer Ratings (borrower constituent/counterparty) are applied to unrated exposures of
the same borrower constituent/counterparty subject to the following:
1. Issue specifc ratings are used where the unrated claim of the Bank ranks paripassu or senior to
the rated issue / debt.
2. Wherever issuer rating or issue specifc ratings are used to risk weight unrated claims, such ratings
are extended to entire amount of claim on the same counterparty.
3. Ratings used for risk weighting purposes are confrmed from the websites of the rating agencies
concerned.
Risk weight wise details of credit risk exposures (rated and
unrated) after risk mitigation subject to the Standardized
Approach
(Credit equivalent amount of all exposures subjected to
Standardized Approach, after risk mitigation)
Risk Weight Amount in
` Crore
Below 100% 39156.86
100 % 15081.18
More than 100% 3695.39
Deducted 0.00
Total 57933.43
TABLE DF 6: CREDIT RISK MITIGATION: DISCLOSURES FOR STANDARDIZED APPROACHES
Disclosures on credit risk mitigation methodology adopted by the Bank that are recognized under the
Standardized Approach for reducing capital requirements for credit risk
1.1 Policies and processes for, and an indication of the extent to which the bank makes use of, on- and of-
balance sheet netting
Bank has no practice of on-balance sheet netting for credit risk mitigation. Eligible collaterals taken for the
exposures are separately earmarked and the exposures are expressed without netting.
1.2 Policies and processes for collateral valuation and management
Bank has put in place Board approved policy on Credit Risk Management in which Collateral Management,
and credit risk mitigation techniques used by the Bank for both risk management and capital computation
purposes are separately included. The Loan policy of the Bank covers various aspects of valuation of
collaterals.
1.3 Description of the main types of collateral taken by the Bank
Collaterals used by Bank as risk mitigants for capital computation under Standardized Approach comprise
eligible fnancial collaterals namely:
1. Cash margin and fxed deposits of the counterparty with the Bank.
2. Gold jewellery of purity 91.6% and above, the value of which is notionally converted to value of gold
with 99.99% purity.
3. Securities issued by Central and State Governments
4. Kisan Vikas Patra and National Savings Certifcates.
5. Life Insurance Policies with a declared surrender value of an insurance company regulated by the
insurance sector regulator.
6. Debt securities rated by a chosen Credit Rating Agency in respect of which the bank is sufciently
confdent of market liquidity of the security and where these securities are either:
a. Attracting 100% or lesser risk weight i.e. rated at least BBB (-) when issued by Public sector
entities and other entities including banks and Primary Dealers or
b. Attracting 100% or lesser risk weight i.e. rated at least A3 for short term debt
instruments
7. Debt securities not rated by a chosen Credit Rating Agency in respect of which the bank is sufciently
confdent of market liquidity of the security and where these securities are
a. Issued by the Bank
b. Listed on a recognized exchange
c. Classifed as senior debt
d. All rated issues of the same seniority by the issuing Bank are rated at least BBB (-) or A3
by a chosen Credit Rating Agency
e. The bank has no information to suggest that the issue justifes a rating below BBB (-) or
A3 by a chosen Credit Rating Agency
8. Units of Mutual Funds regulated by the securities regulator of the jurisdiction of the Banks operation
and mutual funds where
a. A price for the units is publicly quoted daily i.e. where the daily NAV is available in public
domain
b. Mutual fund is limited to investing in the permitted instruments listed.
Bank has no practice of monitoring / controlling exposures on a net basis, though Bank is able to determine
at any time loans/advances and deposits of the same counterparty. Netting beneft, even if available, is not
utilized in capital computation under Basel II norms.
1.4 Main types of guarantor counterparty and their creditworthiness.
Bank considers guarantees, which are direct, explicit, irrevocable and unconditional for credit risk mitigation.
Use of such guarantees for capital computation is strictly as per RBI guidelines on the subject.
Main types of guarantor counter party are
a. Sovereigns (Central / State Governments)
b. Sovereign entities like ECGC, CGTSI
c. Banks and Primary Dealers with a lower risk weight than the counter party
Other entities rate AA (-) orbetter. This would include guarantee cover provided by parent, subsidiary and
afliate companies when they have lower risk weight than the obligor. The rating of the guarantor should
be an entity rating which has factored in all the liabilities and commitments (including guarantees) of the
entity.
1.5 Information on market / credit risk concentrations within the mitigation taken by the Bank
Majority of fnancial collaterals held by the Bank are by way of own deposits, government securities, Gold, Life
Insurance Policies and other approved securities like NSC, KVP etc. Bank does not have exposure collateralized
through units of eligible MF. Bank does not envisage market liquidity risk in respect of fnancial collaterals.
As far as Gold, where exposure comes to less than 6%, is considered, Bank is maintaining adequate margin
(minimum 20%) on such exposures and every exposure is reviewed/renewed/closed with in the maximum
period of 12 months stipulated for such exposures. Downward volatility in Gold prices is low, and Gold is
increasingly preferred now as an investment asset class. Bank has long experience in this portfolio and
measures warranted by situations are timely taken as per practices followed in the past (enhancement of
margin, reduction of exposure, auction at short notice etc). Hence, Bank does not anticipate market liquidity
risk in Gold. Overall, fnancial collaterals do not have any issue in realization.
Concentration on account of collateral is also relevant in the case of land & building. Except in the case of
housing loan to individuals, land and building is considered only as additional security. As land and building
is not recognized as eligible collateral under Basel II Standardized Approach, its value is not reduced from
the amount of exposure in the process of computation of capital charge, and is used only in the case of
housing loan to individuals and non performing assets to determine the appropriate risk weight. As such,
there is no concentration risk on account of nature of collaterals.
(Amount in ` Crores)
2.1 Credit risk exposure covered by eligible fnancial collaterals
Type of exposure Credit equivalent
of gross exposure
Value of eligible
fnancial collateral
after haircuts
Net amount of
credit exposure
A Loans and advances 5699.49 5203.70 495.79
B Non-market related of balance sheet items 4430.28 507.35 3922.93
C Securitisation exposures on balance sheet 0.00 0.00 0.00
D Securitisation exposures of balance sheet 0.00 0.00 0.00
TOTAL 10129.77 5711.05 4418.72
2.2 Credit risk exposure covered by guarantees
Type of exposure Credit equivalent
of gross exposure
Amount of
guarantee
(Credit
equivalent)
A Loans and advances 2035.26 1869.16
B Non-market related of balance sheet items 64.91 63.98
C Securitisation exposures on balance sheet 0.00 0.00
D Securitisation exposures of balance sheet 0.00 0.00
TOTAL 2100.16 1933.14
TABLE DF 7: SECURITISATION: DISCLOSURES FOR STANDARDIZED APPROACH
1.1 General disclosures on securitisation exposures of the Bank
A Objectives of securitisation activities of the Bank (including the extent to which these activities transfer
credit risk of the underlying securitized exposures away from the Bank to other entities and nature of other
risks inherent in securitized assets)
Banks securitisation exposure is limited to investments in AAA rated securitisation instruments, primarily
made in an earnings perspective and risks inherent in the investment is within reasonable levels.
B Role of Bank in securitisation processes (originator / investor/ service provider/ facility provider etc.) and
extent of involvement in each activity.
Bank has invested in rated securitized instruments and such investments are held in its Trading Book. Bank
is not active in securitisation processes in any other manner.
C Processes in place to monitor changes in the credit and market risk of securitisation exposures
Bank is constantly monitoring the changes in credit and market risk profle of securitisation instruments
held in the Trading Book.
D Banks policy governing the use of credit risk mitigation to mitigate the risks retained through securitisation
exposures
Bank has not retained any exposure/risk as originator of securitisation transactions.
1.2 Accounting policies for securitisation activities
A Treatment of transaction (whether as sales or fnancings)
N.A
B Methods and key assumptions (including inputs) applied in valuing positions retained or purchased
Income from investments in Pass Through Certifcates is recognized on accrual basis. Income recognition
is subjected to prudential norms stipulated by Reserve Bank of India in this regard.
C Changes in methods and key assumptions from the previous period and impact of the changes
No change is efected in methods and key assumptions used for valuation of investment in securitized
instruments.
D Policies for recognizing liabilities on the balance sheet for arrangements that could require the bank to
provide fnancial support for securitized assets.
Bank has not entered into any arrangement to provide fnancial support for securitized assets.
1.3 In the Banking Book, names of ECAIs used for securitisations and the types of securitisation exposures for
which each agency is used.
Bank does not have any securitisation exposure in the Banking Book.
(Amount in ` Crore)
2.1 In the Banking Book
A Total amount of exposures securitized by the Bank Nil
B For exposures securitized, losses recognized by the Bank during the current period
(exposure type wise break up)
Nil
C Amount of assets intended to be securitized within a year Nil
D Of (C) above, amount of assets originated within a year before securitisation Nil
E Securitisation exposures (by exposure type) and unrecognized gain or losses on sale thereon
Type of exposure Amount
securitized
Unrecognized
gain / loss
Nil Nil Nil
TOTAL
F Aggregate amount of on-balance sheet securitisation exposures retained or purchased
by the Bank (exposure type wise breakup)
Nil
G Aggregate amount of of-balance sheet securitisation exposures (exposure type wise
breakup)
Nil
H Aggregate amount of securitisation exposures retained or purchased and associated capital charges
(exposure type wise and risk weight wise breakup)
Type of exposure
Risk weights
20% 30% 50% 100% 150% 350% 400%
Nil - - - - - - -
I Total amount of deductions from capital on account of securitization exposures Nil
Deducted entirely from Tier I capital-underlying exposure type wise break up Nil
Credit enhancing interest only strips (I/Os) deducted from total capital underlying
exposure type wise break up
Nil
Other exposures deducted from total capital underlying exposure type wise break up Nil
2.2 In the Trading Book
A Aggregate amount of exposures securitized by the Bank for which the Bank has retained some
exposures, which is subject to Market Risk approach (exposure type wise details)
Type of exposure Gross Amount Amt retained
Nil Nil Nil
B Aggregate amount of on-balance sheet securitisation exposures retained or purchased by the Bank
(exposure type wise breakup)
Type of exposure Amt in ` Cr.
Investment in Pass through Certifcates 0.16
C Aggregate amount of of-balance sheet securitisation exposures (exposure type wise
breakup)
Nil
D Securitisation exposures retained / purchased subject to Comprehensive Risk Measure
for specifc risk
-
E Securitisation exposures retained / purchased subject to specifc risk capital charge (risk weight band
wise distribution)
Type of Exposure Capital charge as % to exposure Exposure (` Cr.)
Investment in Pass through Certifcates 1.80 % 0.16
F Aggregate amount of capital requirements for securitisation exposures (risk weight band wise
distribution)
Type of exposure Capital charge as % to
exposure
(Capital charge `)
Investment in Pass through Certifcates 1.80% 29000/-
G Total amount of deductions from capital on account of securitisation
exposures
Nil
Deducted entirely from Tier I capital underlying exposure type wise break
up
Nil
Credit enhancing interest only strips (I/Os) deducted from total capital
underlying exposure type wise break up
Nil
Other exposures deducted from total capital underlying exposure type wise
break up
Nil
TABLE DF 8: MARKET RISK IN TRADING BOOK
1.1 Approach used for computation of capital charge for market risk
Bank has adopted Standardized Duration Approach as prescribed by RBI for computation of capital charge
for general market risk and is fully compliant with such RBI guidelines. Bank uses VaR as an indicative tool
for measuring Forex risk and Equity Price risk. Standardized Duration Approach is applied for computation
of General Market Risk for
Securities under HFT category
Securities under AFS category
Open gold position limits
Open foreign exchange position limits
Trading positions in derivatives
Derivatives entered into for hedging trading book exposures
Specifc capital charge for market risk is computed based on risk weights prescribed by the Regulator.
1.2 Portfolios covered in the process of computation of capital charge
Investment portfolio under AFS and HFT, Gold and Forex open positions and Derivatives entered for trading
and hedging.
(Amount in ` Crore)
2.1 Minimum capital requirements for market risk as per Standardized Duration Approach
under Basel II
166.34
Foreign exchange risk (including gold) 18.00
Equity position risk 33.77
TABLE DF 9: OPERATIONAL RISK
1.1 Approach used for computation of capital charge for operational risk (and for which the Bank is qualifed)
Bank has adopted Basic Indicator Approach as prescribed by RBI for computation of capital charge for
operational risk. Bank has initiated steps to move on to the Advanced Measurement Approach in due
course.
TABLE DF 10: INTEREST RATE RISK IN BANKING BOOK (IRRBB)
1.1 Brief description of approach used for computation of interest rate risk and nature of IRRBB.
Interest Rate Risk in Banking Book is computed through Duration Gap Analysis.
1.2 Key assumptions used in Duration Gap Analysis (DGA) and computation of capital charge for Interest
Rate Risk (including assumptions on prepayment of loans and behavior of non-maturity deposits)
Board approved assumptions as stipulated in applicable policies are used in Duration Gap Analysis and
computation of capital charge for Interest Rate Risk. The following are the key assumptions involved:
1) As indicated by RBI, assets and liabilities are grouped under the broad heads under various time buckets
and bucket wise modifed duration of these groups is computed using the suggested common maturity,
coupon and yield parameters.
2) Advances linked to BPLR and Base Rate has been placed in the bucket of 1 to 28 days as per Banks
interest rate expectations.
3) All the future cash fows (future repricing amount) bucket wise are discounted with midpoint of the
bucket and suggested yield to get more accurate treatment of cash fows. The same present value is
considered to arrive at the weighted Modifed duration of each asset and liability and further to get
the weighted modifed duration of Liabilities and Assets.
4) Banks average standard advances covering Bills Purchased / Discounted, Cash Credits/ Overdrafts and
term loans are mapped to appropriate external ratings.Yield curve for BBB rated corporate bonds is
used as a proxy for yield for Banks average standard advances for arriving at the Modifed Duration of
Advances.
Usual bucketing applicable to the Statement of Interest Rate Sensitivity is also made applicable to the
duration of Equity calculations. Last bucket for liabilities is approximated as 5 years to 10 years and last
bucket for Assets as 5 years to 20 years.
1.3 Frequency of measurement of interest rate risk
Measurement and Computation of Interest rate risk in Banking Book and evaluation of Modifed Duration
of Equity is done by the Bank on a quarterly basis. Bank also calculates on quarterly basis the likely drop in
Market Value of Equity with 200 bps change in interest rates. Earnings-at-Risk is measured on a monthly
basis using Traditional Gap Analysis.
(* Currency wise break up not provided as the turnover in other currencies are less than 5% of total turnover)
2. Quantitative disclosures - Impact of interest rate risk
2.1 Earnings perspective (Traditional Gap Analysis)
Earnings at Risk (EaR) impact for one year due to
Uniform 1% increase in interest rate (Amt in ` Cr.) 0.00
Uniform 1% decrease in interest rate (Amt in ` Cr.) 170.35
2.2 Economic value perspective percentage and quantum of decrease in market
value of equity on account of 1% uniform increase in interest rate
6.09%
`327.54Cr
TABLE DF 11: ADDITIONAL DISCLOSURES AS PER ICAAP
1.1
ICAAP is aimed to equip Bank to undertake various risks knowingly and more fruitfully in a fast changing
dynamics of integrated and complex global fnancial market. The policy proposes process to identify,
control, monitor and appropriately mitigate all possible risks embedded in its operations so as to draw the
risk appetite and risk bearing parameters of the Bank and measure and allocate capital for quantifable risks.
Policy aims the Bank to move towards more advanced approaches in its capital planning and risk assessment
and thereby gather enough strength to sail safe through normal as well as troubled times, present or future.
The document envisages Bank to give sufcient comfort to the Regulator and all its stakeholders on its
stability, growth and earning potential. Policy supports Bank to maximize shareholders wealth and improve
services delivery to the public by following industry level best practices. ICAAP embodies risk philosophy of
the Bank, take risk by choice and not by chance.
2.1 Additional capital requirements under ICAAP Amt in ` Cr.
Credit risk over and above Pillar I capital charge 0.00
Sectoral credit concentration risk 36.39
Geographical credit concentration risk 82.74
Liquidity risk 39.83
2.2 Overall capital adequacy of solo Bank (With aggregate of capital charge under
Pillar I and Pillar II of Basel II norms)
15.85%
P. C. John Shyam Srinivasan P. C. Cyriac
Executive Director & CFO Managing Director & CEO Chairman


Kochi
11-May-2012
DIRECTORS
Balance Sheet Abstract And The Banks
General Business Profle
I Registration Details.
Registration No. : 368
State Code : 09
Balance Sheet Date: Date Month Year
31 March 2012
II Capital raised during the year (Amount in ` Thousands)
Public issue NIL
Rights Issue NIL
Bonus Issue NIL
Private Placement NIL
III Position of Mobilisation and Deployment of Funds (Amount in ` Thousands)
Total of Liabilities 606,267,721
Total Assets 606,267,721
Sources of Funds:
Paid up Capital 1,710,471
Reserves and Surplus 55,352,798
Secured Loans NIL
Unsecured Loans 42,410,341
Deposits 489,371,221

Application of funds
Net fxed assets 3,261,392
Investments 174,024,877
Advances 377,559,859
Miscellaneous Expenditure NIL
Net Current Assets 33,998,703
Accumulated Losses NIL

IV Performance of Bank (Amount in ` Thousands)
Turnover 60,907,356
Total Expenditure 45,842,582
Proft before Tax 11,695,095
Proft after tax 7,767,995
Earning per share (Annualised) `45.41
Dividend @ 90% (Proposed) 1,539,424

V Generic Name of Three Services of Bank (as per monetary terms)
Item Code No. (ITC Code) N A
Product Description Banking, Leasing, Merchant Banking
Statement Pursuant to Section 212 of The Companies
Act, 1956 Related to Subsidiary Companies
Name of Subsidiary The Fedbank Financial Services Limited
1. Financial year of the subsidiary ended on 31st March 2012
2. Share of the subsidiary held by the
Company on the above date:
a) Number and face value 19,00,00,000 equity shares of Rs.10/- each
fully paid up
b) Extent of holding 100%
3. Net aggregate amount of Subsidiarys Proft/
(Losses) so far as it concerns the members of the
Holding Company not dealt with in the Holding
Companys accounts
a) for the current fnancial year (Amount in
thousands)
` (73,748)
b) for the previous fnancial year (Amount in
thousands)
` 13,883
4. Net aggregate amount of Subsidiarys
Profts/(Losses) so far as it concerns the members
of the Holding Company dealt with in the Holding
Companys accounts
a) for the current fnancial year NIL
b) for the previous fnancial year NIL
P. C. John Shyam Srinivasan P. C. Cyriac
Executive Director & CFO Managing Director & CEO Chairman


Kochi
11-May-2012
DIRECTORS
Report of the Board of Directors Fedbank Financial Services Limited
Dear Shareholders,
Your directors have pleasure in presenting 17th Annual Report of Fedbank Financial Services Limited (FedFina)
with the audited statement of accounts for the year ended 31st March, 2012.
FINANCIAL HIGHLIGHTS (` In Lakhs)
Gross Income 3768.90 1551.56
Proft/Loss (-) before Depreciation and Taxation -521.04 230.96
Depreciation 207.9 22.77
Proft /Loss (-) before Tax -728.94 208.19
Provision for Tax 8.53 69.36
Proft / Loss (-) after Tax -737.48 138.83
Balance brought forward from previous year 282.11 171.05
Balance Available for Appropriation -455.37 309.88
Appropriations
Transfer to Reserve Fund 0.00 27.77
Transfer to General Reserve 0.00 0
Proposed Dividend 0.00 0
Corporate Dividend Tax 0.00 0
Balance Carried to Balance Sheet -455.37 282.11
FINANCIAL AND OPERATIONAL REVIEW
Your Company is primarily into Lending against gold ornaments and distributing financial products
predominantly for Federal Bank. The main streams of income for your Company are, interest income and
fee based income. The major expenses for your Company are interest expense, business sourcing expense
and cost of running operations.
Financial Year 2011-12 has been a landmark year for your company with Gross Income being the highest ever
for the company.
During the Financial Year 2011-12, your Companys retail disbursements against gold ornaments were at
` 696 Crore as against ` 5 Crore in the previous year. During the year under review, gross advances stood at
324 Crore as against 5 Crore in the previous year.
As detailed in the Financial Results section above, Gross Income of your Company increased from 15.52
crore in 2010-11 to ` 37.69 crore in 2011-12 registering a growth of 143%. Proft (Loss) before Tax was at ` (7.29)
crore in 2011-12 as compared to ` 2.08 crore in 2010-11. The company grew its network from 41 branches to
142 branches.
There have been a few instances of fraud in gold loans by way of pledging spurious/lower carat gold ornaments
Fedbank Financial Services Limited
involving an aggregate amount of ` 1.36 Crore, as reported in annexure to auditors report. The Company
has put in place necessary risk management systems so as to prevent such instances in future. Adequate
provision in respect of the frauds has been made in the accounts for the year.
Your company is in the process of launching new product ofering Loans against Property in coming months.
Test-run of System is under process and we expect to launch the same by 2nd quarter of FY13. Other NBFC
specifc products like promoter funding, loans against shares, etc. are also being considered apart from
commercial vehicle fnance.
DIVIDEND
The Company being in its initial growth phase, your directors consider it prudent to conserve resources and
therefore do not recommend any dividend on equity shares for the fnancial year under review.
SHARE CAPITAL
During the year under review, company has issued and allotted 15.50 Crore equity shares of `. 10/- each at par
to Federal Bank. Consequent to above allotment, the issued, subscribed and paid-up capital has increased
from 35.00 Crore to `190.00 Crore as at the end of the fnancial year.
RESOURCE MOBILISATION
Your Company started diversifying its funding pattern and got sanction from another bank for its resource
needs. Your companys rated short term debt instruments were also placed with various mutual funds /
fnancial institutions at competitive rates enabling the company to reduce the overall cost of liabilities.
CREDIT RATING
The Companys short-term borrowing program from CRISIL enjoys the highest rating of A1+. A1+ indicates
very strong degree of safety with regard to timely payment of interest and principal.
INTERNAL CONTROL
The Internal Audit department of the company through a team of experienced personnel verifes quality of
the assets pledged and the adherence to various risk management practices at the branch level.
HUMAN RESOURCES
Being a service oriented Company your company considers human resource capital as the biggest asset. As
of 31st March 2012, your company has more than 700 employees on payroll at various management levels.
Your management is committed to providing a wholesome work environment and support with training
programs and workshops.
RBI GUIDELINES
The company has complied with the regulations of Reserve Bank of India as on March 31st March 2012 as
are applicable to it as a Non-banking Finance Company.
CAPITAL ADEQUACY RATIO
The company capital adequacy ratio was 54.15% as on 31st March 2012 which is signifcantly above the
threshold limit as prescribed by the Reserve Bank of India.
BOARD OF DIRECTORS
The Board consists of fve members including Chairman.
Fedbank Financial Services Limited Report of the Board of Directors
Mr. Somsankar Sengupta retired from the Board of Directors as Managing Director and CEO. He ceased to
be a director with efect from 1st October 2011.
The Board places on record the contributions of Mr. Somsankar Sengupta during his tenure as Managing
Director.
Mr. Shyam Srinivasan and Mr. PH Ravikumar, Directors are due to retire by rotation at the forthcoming Annual
General Meeting. As per the Articles of Association of the Company and the Provision of the Companies Act,
1956, Mr. Shyam Srinivasan and Mr. PH Ravikumar being eligible, ofer themselves for re-appointment.
Mr. Pradosh Kumar Mohapatra, presently Additional General Manager of The Federal Bank Limited and
COO of company, was appointed as a Manager of the Company with efect from 1st October 2011 for the
period of one year under the provisions of Companies Act subject to confrmation by shareholders in general
meeting.
Mr. Pradosh Kumar Mohapatra is having professional banking career spanning 33 years with exposure in
branch banking, merchant banking, credit, retail liabilities and asset products, audit and administration. He is
a post graduate in science and holding a degree in law. He is also an associate member of the Indian Institute
of Bankers. He is under deputation from the parent bank to the subsidiary company since November, 2009.
He was part of the frst team of Fedbank Financial Services Ltd. when the company began its Merchant
banking, Leasing/Hire Purchase and other Non-banking Financial operations during 1995.
The Board met 8 times during FY12, and no two successive meetings were more than four months apart.
AUDIT COMMITTEE
The Audit committee consists of Mr. PH Ravikumar (Chairman), Mr. PC Cyriac and Mr. Shyam Srinivasan.
RISK MANAGEMENT COMMITTEE
The Risk Management committee consists of Mr. PC Cyriac, Mr. PH Ravikumar and Mr. Shyam Srinivasan
as its members.
NOMINATION COMMITTEE
The Nomination Committee consists of Mr. Suresh Kumar, Mr. Shyam Srinivasan and Mr. MY Khan as its
members.
AUDITORS
M/s Varma and Varma Chartered Accountants, auditors of the Company retire at the ensuing Annual General
Meeting. They have confrmed their eligibility and willingness to accept ofce of Auditors.
The Audit Committee and the Board of Directors therefore recommend M/s. Varma and Varma, Chartered
Accountants as statutory auditors of the company for 2012-13 for the approval of shareholders.
INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956
A. Conservation of Energy, Technology Absorption and Foreign Exchange Earning & Outgo: Since the
Company does not own any manufacturing facility, the particulars relating to conservation of energy and
technology absorption stipulated in the Companies (Disclosures of particulars in the Report of the Board of
Directors) Rules, 1988 are not applicable.
There are no foreign exchange earnings or outgo during the year under review.
B. Particulars of Employees: The Company does not have any employee of the category specifed in Section
217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment
Rules, 2011.
C. Directors Responsibility Statement: As required by Section 217(2AA) of the Companies Act, 1956, your
directors hereby confrm that:
(1) In the preparation of the annual accounts, the applicable accounting standards have been followed
along with proper explanation relating to material departure
(2) The Directors have selected such accounting policies and applied them consistently and made judgments
and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs
of the company at the end of the fnancial year and of the proft and loss of the company for that
period;
(3) The Directors have taken proper and sufcient care for the maintenance of adequate accounting
records in accordance with the provision of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities; and
(4) The Directors have prepared the annual accounts on a going-concern basis.
ACKNOWLEDGEMENT
Your Directors wish to express their sincere appreciation for the co-operation, assistance and guidance
received from the Reserve Bank of India, other Government and regulatory agencies and rating agencies
and The Federal Bank Ltd. The Board also acknowledges the faith reposed in the Company by the Companys
lending institutions. Your directors look forward to their continued support in future.
Your Directors express their deep sense of appreciation of the commitment, co-operation, active involvement
and dedication displayed by all the employees.
Your Directors thank you for your continued support, trust and confdence reposed in them.

For and on behalf of the Board of Directors
Date: 16th June 2012 Suresh Kumar
Place: Mumbai Chairman
Balance Sheet as at 31st March 2012
Note As at As at
No. 31.03.2012 31.03.2011
(In Thousands of `)
I EQUITY AND LIABILITIES
(1) Shareholders Funds
(a) Share Capital 2.1 1,900,000 350,000
(b) Reserves & Surplus 2.2 (35,653) 38,093
(2) Non-current Liabilities
(d) Long-term Provisions 2.3 1,217 1,598
(3) Current Liabilities
(a) Short-term Borrowings 2.4 1,596,039 -
(b) Trade Payables 2.5 29,216 21,751
(c) Other Current Liabilities 2.6 53,413 49,771
(d) Short-term Provisions 2.7 26,678 672
Total 3,570,910 461,885
II ASSETS
(1) Non-current Assets
(a) Fixed Assets 2.8
(i) Tangible Assets 2.8.1 106,900 30,355
(ii) Intangible Assets 2.8.2 2,051 668
(iii) Capital Work-in Progress 2.8.3 24,508 9,149
(iv) Intangible Assets Under Development 2.8.3 12,510 -
(b) Deferred Tax Assets (Net) 2.9 - 853
(c) Long-term Loans and Advances 2.10 47,720 32,211
(2) Current Assets
(a) Trade Receivables 2.11 10,909 26,055
(b) Cash and Cash Equivalents 2.12 82,130 275,895
(c) Short-term Loans and Advances 2.13 3,276,409 70,438
(d) Other Current Assets 2.14 7,773 16,261
Total 3,570,910 461,885
Signifcant Accounting Policies and Notes on Accounts 1 & 2
DIRECTORS
M. Y. Khan P. H. Ravikumar P.C. Cyriac Shyam Srinivasan
Dilip Maloo P. K. Mohapatra Suresh Kumar
Head - Finance & Company Secretary COO & Manager Chairman
For Varma & Varma
FRN: 004532S
Chartered Accountants
Kochi Vijay Narayan Govind
09 May, 2012 Partner, Membership No. 203094
Statement Of Proft & Loss
For The Year Ended 31st March 2012
Note For the year ended For the year ended
No. 31.03.2012 31.03.2011
(In Thousands of `)
I. INCOME
(a) Revenue from Operations 2.15 375,799 145,556
(b) Other Income 2.16 1,091 9,600
Total 376,890 155,156
II. EXPENDITURE
(a) Employee Beneft Expenses 2.17 155,957 52,726
(b) Financial Costs 2.18 104,336 -
(c) Depreciation and Amortization Expenses 2.8 20,790 2,277
(d) Other Expenses 2.19 168,700 79,334
Total 449,783 134,337
III. Proft/(Loss) before tax ( I -II ) (72,893) 20,819

IV. Provision for Taxes
(1) Current Tax - 7,364
(2) Deferred Tax 853 (428)
V. Proft/ (Loss) for the Year ( III-IV ) (73,746) 13,883
Earnings Per Equity Share (EPS) 2.20
(1) Basic (`) (1.12) 0.85
(2) Diluted (`) (1.12) 0.85
Signifcant Accounting Policies and Notes on Accounts 1 & 2
DIRECTORS
For Varma & Varma
FRN: 004532S
Notes Forming Part Of The Balance Sheet
And Proft And Loss Account as at & for
The Year Ended 31st March, 2012
Signifcant Accounting Policies and Notes on Accounts
1. Principal Accounting Policies
1.1. Basis of Preparation of Financial Statements
Financial Statements are prepared under the historical cost convention, in compliance with the provisions
of the Companies Act 1956 and the Accounting Standards as specifed in the Companies (Accounting
Standards) Rules 2006. Accounting Policies not stated explicitly otherwise are consistent with generally
accepted accounting principles.
1.2. Use of Estimates:
The preparation of fnancial statements in conformity with the generally accepted accounting principles
requires management to make estimates and assumptions that efect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities on the date of the fnancial statements
and the reported amount of revenue and expenses during the reporting period. Actual result could
difer from those estimates. Any revision to accounting estimates is recognized prospectively.
1.3. Revenue Recognition:
Revenue is recognized as and when it is earned and no signifcant uncertainty exists as to its realization
or collection.
Interest Income is recognized on accrual basis, except in case of interest on non-performing assets
which are recognized on receipt basis. Overdue charges are recognized when the company is certain
of its realization.
Income from Logo-sharing (Display of Logo on website) is recognized pro-rata over the period of
contract.
Exclusivity Fees (for providing services exclusively to the clients) is recognized in the year in which right
to receive the same is established subject to volume of business generated.
1.4. Fixed Assets and Depreciation:
Tangible Assets:
Fixed Assets are stated at their cost of acquisition less accumulated depreciation and impairment losses,
if any.
Computers are depreciated using SLM @ 33.33% as against 16.21% as prescribed under Schedule XIV of
the Companies Act, 1956.
Leasehold improvements are depreciated @ 18.10% using WDV method.
Depreciation on other assets is provided, pro-rata for the period of use, using WDV method at the
rates and in the manner prescribed in the said schedule.
Intangible Assets:
Intangible assets include computer software which are acquired, capitalized and amortized on an SLM
basis over the estimated useful lives of 3 years on a pro rata basis..
1.5. Employee Benefts:
a) All employee benefts payable wholly within twelve months of rendering the service are classifed
as short term employee benefts and recognized as an expense at the undiscounted amount in
the Statement of Proft & Loss of the year in which the related service is rendered.
b) The company has defned contribution plans for employees comprising of Provident Fund and
Employee State Insurance. The contributions paid/payable to these plans during the year are
charged to Statement of Proft & Loss for the Year.
Notes Forming Part Of The Balance Sheet And
Proft And Loss Account as at & for
c) The net present value of the obligation for gratuity benefts , which is a defned beneft plan, as
determined on independent actuarial valuation, conducted annually using projected unit credit
method, as adjusted for unrecognized past services cost, if any, is recognised in the accounts.
Actuarial gains and losses are recognised in full in the Statement of Proft & loss for the period in
which they occur.
d) The company has a scheme for compensated absences for employees, the liability of which is
determined on the basis of an independent actuarial valuation carried out at the end of the year,
using the projected unit credit method. Actuarial gains and losses are recognised in full in the
Statement of Proft and Loss for the period in which they occur.
1.6. Provision for Taxes:
Income tax is accounted in accordance with Accounting Standard on Accounting for Taxes on Income
(AS-22), which includes current taxes and deferred taxes. Provision for current tax is made based on
the tax payable under the Income Tax Act, 1961.
Deferred tax on account of timing diference between taxable and accounting income is accounted using
the tax rates and the tax laws enacted or substantively enacted by the balance sheet date. Deferred
tax assets in respect of unabsorbed depreciation or carried forward losses are recognised if there is
virtual certainty of realisation of such assets. Other deferred tax assets are recognised to the extent
there is reasonable certainty of their realisation.
1.7. Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset
that takes a substantial period of time to get ready for its intended use are capitalized. Other borrowing
costs are recognized as expenditure for the period in which they are incurred.
1.8. Impairment of assets.
The company assesses at each Balance Sheet date whether there is any indication that an asset may be
impaired. As asset is identifed as impaired, when the carrying value of the asset exceeds its recoverable
value. Based on such assessment, impairment loss, if any, is charged to the Statement of Proft and Loss
in the period in which, an asset is identifed as impaired. The impairment loss recognised in the prior
accounting periods is reversed if there has been a change in the estimate of recoverable amount
1.9. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised when the company has a present obligation as a result of a past event, for
which it is probable that a cash outfow will be required and a reliable estimate can be made of the
amount of the obligation. Provisions are not discounted to its present value and are determined based
on management estimate required to settle the obligation at the Balance Sheet date. These are reviewed
at each Balance Sheet date and adjusted to refect the correct management estimates.
Contingent Liabilities are disclosed when the company has a possible obligation or a present obligation
and it is probable that a cash fow will not be required to settle the obligation.
Contingent assets are neither recognised nor disclosed in the accounts.
1.10. Advances:
Advances are classifed as Performing Assets and Non-performing Assets and Provisions required
are made as per the guidelines of the Reserve Bank of India on matters relating to Prudential Norms
as applicable to Non-banking Financial (Non-Deposit Accepting or Holding) Companies, Directions,
2007.
1.11. Segment Reporting:
The company has classifed its operations into two segments Distribution (Marketing of Financial
Products) and Retail Finance. For presentation of segment information, directly attributable income
and assets are allocated as such and the other income, expenses and other assets and liabilities are
apportioned on appropriate basis.
1.12. Earnings per share:
The company reports basic and diluted earnings per share in accordance with Accounting Standard
20 on Earnings per Share. Basic earnings per share are computed by dividing the net proft or loss
for the year attributable to equity share holders (after deducting attributable taxes) by the weighted
average number of Equity Shares outstanding during the period.
Diluted earnings per share are computed by dividing the net proft or loss for the year attributable to
equity share holders (after deducting attributable taxes)by the weighted average number of Equity
Shares outstanding during the period as adjusted for the efects of all diluted potential Equity Shares
outstanding as at the year end.
Fedbank Financial Services Limited Notes Forming Part Of The Balance Sheet
Particulars As at As at
31 March 2012 31 March 2011
(In Thousands of `)
2. NOTES ON ACCOUNTS
2.1 SHARE CAPITAL
Authorised Capital
19,00,00,000 (19,00,00,000) Equity Shares of ` 10 each 19,00,000 19,00,000
Issued, Subscribed and Paid Up Capital:
19,00,00,000 (3,50,00,000) Equity Shares of ` 10 each fully paid-up. 19,00,000 3,50,000
All the above shares are held by the Holding Company,
The Federal Bank Ltd and its nominees.
2.1.1 Reconciliation of the number of shares issued, subscribed and paid up at the beginning and at the
end of the year
No of Shares Outstanding at the beginning of the year 35,000 10,000
Add Additional Shares Issued During the Year 1,55,000 25,000
Less Shares Forfeited/Bought Back During the year - -
No Of Shares Outstanding at the end of the year 1,90,000 35,000
2.1.2 Number of shares held by each shareholder holding more than 5% shares in the company:
Equity Shares Held by holding company
- Federal Bank Limited 1,90,000 35,000
2.2. RESERVES & SURPLUS
(a) Reserves
(i) Reserve under Section 45 IC of the RBI Act
As per last Balance Sheet 8,412 5,635
Add: Transferred from Statement of Proft & Loss
(Note 2.2.1 below) - 2,777
8,412 8,412
ii) General Reserve
(b) Surplus
Add : Net Proft / Loss after tax transferred from Statement of (73,746) 13,883
Proft & Loss
Less : Transferred to Reserve under Section 45 IC of the RBI Act, - (2,777)
1934 (Note 2.2.1 below)
(45,535) 28,211
Total of Reserves & Surplus (35,653) 38,093
Fedbank Financial Services Limited Notes Forming Part Of The Balance Sheet And
2.2.1 In view of losses during the year ended 31st March 2012, no transfer has been made to the Reserve
Account specifed under Section 45-IC of the Reserve Bank of India Act, 1934, for the above Financial
Year.
2.3. LONG TERM PROVISIONS
Provision for employee benefts (See Note 2.3.1)
Provision for Compensated Absences 883 844
Provision for Gratuity 334 754
1,217 1,598
2.3.1. Disclosures of employee benefts as required by the accounting standard 15 (revised) employee
benefts are as under:
a) Amount recognized as an expense in the Statement of Proft and Loss in respect of Defned
Contribution Plans
(` in Thousands)
Current Year Previous Year
Provident Fund 5,481 -
Employee State Insurance 1,777 839
Total 7,258 839
b) Defned Beneft Plan- Gratuity (Unfunded) & Long term employee Benefts- Compensated absences-
Vesting (Unfunded).
` Thousands
Particulars
Gratuity
Compensated
Absences
i
Changes in the present value of defned
obligation representing reconciliation
of opening and closing balances thereof
are as follows :
Current
year
Previous
Year
Current
year
Previous
Year
1 Present Value of Defned Beneft
Obligation as at the beginning of the
year
763.23 - 1,393.49 675.12
2
Current Service cost 295.36 468.82 1,948.75 1,063.74
3
Interest Cost 61.06 - 97.75 53.75
4
Actuarial (gains) / losses (719.39) 294.41 (928.44) -392.72
5
Benefts paid - - (343.37 ) (6.40)
6
Present value of Defned Beneft Obligation
as at the end of the year
400.26 763.23 2,168.18 1,393.49
31 March 2012 31 March 2011
(In Thousands of `)
ii Changes in the fair value of plan assets
representing reconciliation of opening
and closing balances thereof are as
follows :
1 Fair value of Plan assets as at the
- -
-

-
2 Expected return on plan assets - -

-

-
3 Actuarial gains/ (losses) - -

-
-
4 Actual contributions - - 343.37 6.40
5 Benefts paid - - (343.37) (6.40 )
6 Fair value of Plan assets as at the end of
the year.
- -

-

-
7 Funded Status (400.26) (763.23) (2,168.18) (1393.49)
iii Reconciliation of Present Value of Defned Beneft Obligation and fair value of plan assets
showing amount recognized in the Balance Sheet :
1
Present value of Defned Beneft
Obligation
400.26

763.23
2,168.18 1,393.49
2 Fair value of plan assets

-
- -

-
3 Funded status (400.26) (763.23) (2,168.18) (1,393.49)
4 Unrecognized Past Service Costs - - - -
5 Net asset/(Liability) recognized in
Balance Sheet
(400.26) (763.23) (2,168.18) (1,393.49)
iv
Expenses recognized in the statement of profit and loss for the year ended 31st
March,2012
1 Current Service cost 295.36 468.82 1,948.75 1,063.74
2 Interest cost 61.06 - 97.75 53.75
3 Expected return on plan assets - - - -
4 Past Service cost - - - -
5 Actuarial Losses/(Gains) (719.39) 294.41 (928.44) (392.71)
6
Total expense recognized in the
Statement of Proft & Loss
(362.97) 763.23 1,118.06 724.78
31 March 2012 31 March 2011
(In Thousands of `)
v Principal Actuarial Assumptions : Gratuity
Compensated
Absences
1 Discount Rate (%) 8.57% 8% 8.57% 8%
2 Expected Return on plan assets (%) - - - -
3 Salary Escalation (%) 10% 10% 10% 10%
4 Mortality LIC (1994-96) Ultimate
vi Experience History Gratuity Compensated Absences
1 (Gain)/Loss due on obligation due to
change in assumption
(475.39) - (73.55) 57.80
2 Experience (Gain)/Loss on Obligation (244.01) 294.41 (854.89) (450.52)
3 Actuarial Gain/(Loss) on plan assets - - - -
The Discount rate is based on the benchmark yields available on Indian Government bonds as at the
Balance Sheet date with terms matching that of the liabilities and the salary increase rates takes into
account the infation, seniority, promotion and other relevant factors.
2.4. SHORT TERM BORROWINGS
Cash Credit Facility (Note No 2.4.1)
From Federal Bank 13,45,957 -
From IDBI Bank 2,50,082 -
15,96,039 -
2.4.1 The above facilities are secured by way of hypothecation on Gold Loan Receivables.
2.5 TRADE PAYABLES
Trade Payables ( See Note 2.5.1) 29,216 21,751
29,216 21,751
2.5.1 The company has taken steps to identify the suppliers who qualify under the defnition of micro and
small enterprises as defned under the Micro, Small and Medium Enterprises Development Act, 2006.
Based on the available information, there are no balances outstanding as payable to such suppliers at
the year end.
2.6. OTHER CURRENT LIABILITIES
Advance from clients - 840
Security Deposits 3,072 3,096
Liability Towards Capital Contracts/goods 21,502 1980
Other Payables:
Withholding Tax and Other Statutory Dues 3,396 3,249
Other Current Liabilities 25,443 40,606
53,413 49,771
31 March 2012 31 March 2011
(In Thousands of `)
2.7. SHORT TERM PROVISIONS
Provision Against Non Performing Assets (See Note 2.7.1) 17,300 -
Contingent Provision Against Standard Assets (See Note 2.7.2) 7,683 113
Provision for Employee benefts: (See Note No 2.3.1)
Provision for Compensated Absences 1,628 550
Provision for Gratuity 67 9
26,678 672
2.7.1. Provision against Loans Classifed as non Performing Assets in accordance with RBI Guidelines has been
made to the extent specifed in such guidelines and has not been netted of against the value of assets
disclosed under short term loans and advances (Note No 2.13).
2.7.2.Contingent Provision of ` 7,570 thousands (` 113 thousands) has been made during the current year
against standard assets as per clause 9A of Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007.
31 March 2012 31 March 2011
(In Thousands of `)
Fixed Assets
2.8.1. TANGIBLE FIXED ASSETS
` Thousands
Description
Gross Block (at cost) Depreciation Net Block
As on 1st
April 2011
Additions
for the
Year
As on 31st
March 2012
As on 1st
April 2011
For the
Year
As on 31st
March 2012
As on 31st
March 2012
As on
31st
March
2011
Tangible Assets
Leasehold
Improvements -
Interior
Furnishings
18,102 56,525 74,627 275 10,612 10,887 63,740 17,827
- (18,102) (18,102) - (275) (275) (17,827) -
Furniture &
Fixtures
11,258 11,600 22,858 1,991 4,000 5,991 16,867 9,267
(4,534) (6,724) (11,258) (1,217) (774) (1,991) (9,267) (3,317)
Vehicles Cars 1,714 - 1,714 1,146 147 1,293 421 568
(1,714) - (1,714) (948) (198) (1,146) (568) (766)
Ofce
Equipments
3,381 15,898 19,279 1,214 1,837 3,051 16,228 2,167
(1,910) (1,471) (3,381) (861) (353) (1,214) (2,167) (1,049)
Computers 2,299 12,532 14,831 1,773 3,414 5,187 9,644 526
(1,975) (324) (2,299) (1,128) (645) (1,773) (526) (847)
Total Tangible
Fixed Assets
36,754 96,555 1,33,309 6,399 20,010 26,409 1,06,900 30,355
(10,133) (26,621) (36,754) (4,154) (2,245) (6,399) (30,355) (5,979)
2.8.2 INTANGIBLE ASSETS
` Thousands
Description
Gross Block (at cost) Amortisation Net Block
As on 1st
April 2011
Additions
for the Year
As on 31st
March 2012
As on 1st
April 2011
For the
Year
As on 31st
March 2012
As on 31st
March 2012
As on 31st
March 2011
Computer
Software
700 2,163 2,863 32 780 812 2,051 668
- (700) (700) - (32) (32) (668) -
Total
Intangible
Assets
700 2,163 2,863 32 780 812 2,051 668
- (700) (700) - (32) (32) (668) -
2.8.3. Capital Work In Progress ` Thousands
Capital Work In Progress
Intangible Assets Under
Development
Particulars Current Year Previous Year Current Year Previous Year
Balance as at the beginning of the
Year
9,149 - - -
Additions during the Year 54,393 9,149 12,510 -
Transferred to Fixed Assets (39,034) - - -
Balance as at the end of the Year 24,508 9,149 12,510 -
2.9. DEFERRED TAX ASSET (NET)
Deferred tax assets (net) has not been recognized by credit to statement of proft and loss for the
year ended 31st March 2012, as a matter of prudence, in the absence of virtual certainty supported by
convincing evidence that sufcient future taxable income will be available, in terms of the Accounting
standard 22,Taxes on Income notifed under the Companies (Accounting Standard) Rules, 2006. The
Deferred Tax Asset carried forward from the previous year towards Depreciation Rs 116 thousands and
towards Expenses allowable on payment basis Rs 737 thousands has been reversed by debit to the
Statement of Proft & Loss.
2.10. LONG TERM LOANS AND ADVANCES
(Unsecured & Considered Good)
Capital Advances 2,955 8,512
Security Deposits (See Note 2.10.1) 44,371 23,168
Pre Paid Expenses 394 531
47,720 32,211
2.10.1 Security Deposits include ` 3072 thousands (` 3096 thousands) paid to The Federal Bank Ltd (Holding
company).
2.11. TRADE RECEIVABLES
Unsecured & Considered Good
Debts Due for a period exceeding six months from the date they
are due for payment - -
Other Debts (See Note 2.11.1) 10,909 26,055
10,909 26,055
2.11.1 Trade receivables include amount due from The Federal Bank Ltd (Holding Company) ` 10,733 thousands
(Previous year - ` 16,448 thousands)
31 March 2012 31 March 2011
(In Thousands of `)
2.12. CASH AND CASH EQUIVALENTS
Balances with Banks
- Current Accounts 5,558 29,785
- Deposit Accounts (See Note No 2.12.1) 21,279 2,33,133
Cash in hand 55,293 12,977
82,130 2,75,895
2.12.1. Balance in Deposit Accounts have maturity period of less than twelve months.
2.13. SHORT TERM LOANS AND ADVANCES
Secured
(a) Considered Good
Loans against Gold (Note 2.13.1) 30,61,284 45,376
Interest Receivable 1,22,106 345
31,83,390 45,721
(b) Considered Doubtful
Loans against Gold (See Note 2.7.1 & Note 2.13.1) 56,955 -
56,955 -
Unsecured
(a) Considered Good
Advance to Employees 798 -
Prepaid Expenses 3,665 1,038
Withholding and Other Taxes Receivables (Net of Provision) 26,420 22,786
Advances for Supplies & Services 909 893
31,792 24,717
(b) Considered Doubtful
Loans against Gold (See Note 2.7.1 & Note 2.13.1) 4,272 -
4,272 -
32,76,409 70,438
2.13.1. a) Percentage of loans granted against the collateral of gold jewellery to total assets (Loans only) as
at 31st March 2012: 100%.
b) Percentage of loans granted against the collateral of gold jewellery to total assets (all assets) as at
31st March 2012: 87.44%
31 March 2012 31 March 2011
(In Thousands of `)
OTHER CURRENT ASSETS
Interest accrued on Fixed Deposits 356 344
Service Tax Input Credit Receivable 145 632
Reimbursement receivable from the Holding company 7,272 15,285
Other Receivables (See Note 2.14.1)
Less:- Provision 2,562
(2,562) -
7,773 16,261

2.14.1 Other Receivables represents amounts recoverable pursuant to fraud at one of the branches of the
company, which is being actively pursued for recovery. Full provision has been made in the accounts as a
matter of abundant caution.
2.15. REVENUE FROM OPERATION ` Thousands
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
(a) Retail Finance
Interest/Other Charges on Gold Loans
2,98,837 344
(b) Other Financial Services
Commission Income
55,702 1,17,320
(C) Fees for Provision of Facilities/ Services 21,260 27,892
3,75,799 1,45,556
2.16. OTHER INCOME ` Thousands
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
Interest on fxed deposits 715 9,600
Interest on Income Tax Refunds 314 -
Miscellaneous Receipts 62 -
1,091 9,600
2.17. EMPLOYEE BENEFIT EXPENSES ` Thousands
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
Salaries and other allowances 1,45,857 51,535
Contribution to Provident and other Funds 7,258 839
Staf Welfare Expenses 2,842 352
1,55,957 52,726
31 March 2012 31 March 2011
(In Thousands of `)
2.18. FINANCE COSTS ` Thousands
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
Interest on Cash Credit Facility 86,893 -
Discount on Commercial Paper 14,816 -
Bank & Other Charges 1,560 -
Processing Fees 1,067 -
1,04,336 -
2.19. OTHER EXPENSES ` Thousands
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
Electricity Charges 2,676 1,083
Rent 46,313 15,786
Repairs & Maintenance
Machinery 84 212
Others 2,843 751
Postage, Telephones &Telegram 5,411 2,073
Travelling, Conveyance & Vehicle Expenses 7,739 3,337
Insurance 1,838 227
Rates & Taxes ( Excluding Taxes On Income) 6,410 8,767
Legal & Professional Charges 3,158 3,185
Advertisement & Business Promotion 3,500 1,991
Commission Paid 12,307 17,359
Sourcing Expenses 1,845 21,336
Ofce Expenses 5,069 1,191
Printing & Stationery 3,241 537
Recruitment Charges 2,930 1,220
Exclusivity Fees refundable (See Note 2.19.2) 7,872 -
Provision for Loss Assets(See Note 2.7.1) 14,981 -
Provision for Sub Standard Assets 4,881 -
Contingent Provision Against Standard Assets
(See Note 2.7.2)
7,570 113
Security Expenses 12,405 -
Valuation Charges 14,249 -
Miscellaneous Expenses (See Note No 2.19.1) 1,378 166
1,68,700 79,334
2.19.1 MISCELLANEOUS EXPENSES INCLUDE PAYMENT TO AUDITORS (NET OF SERVICE TAX)
` Thousands
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
Audit fees 250 110
Tax Audit fees - 35
Taxation matters - 15
Other services 150 -
Out of pocket expenses reimbursed 40 -
Total 440 160
2.19.2 In the Previous year ended 31st March 2011, The Company had taken credit for the whole of the income
from exclusivity fees of ` 10,000 Thousands receivable from a General Insurance Company under an agreement
to provide specifed infrastructure facilities during a period of one year from 1st March 2011 and hence no
part of income is accounted in this period.
As per the said agreement, in the event the insurance company is unable to generate an agreed level of
business, proportionate exclusivity fees to the extent of short fall of the business shall be refunded to them.
Taking in to account the level of business actually achieved during the one year period ending 29th February
2012, an amount of ` 7,872 Thousands is refundable to insurance company, which has been recognized as a
liability by debit to statement of proft and loss.
2.20. Earnings per share (Basic and diluted):
Particulars
For the year
ended
31.03.2012
For the year
ended
31.03.2011
Proft / (Loss) after taxation (` Thousands) (73,746) 13,883
Weighted average No. of Equity Shares (Thousands) 65,750 16,250
Basic & Diluted Earnings per Share (`) (1.12) 0.85
2.21. Related Party Disclosures
(i) List of Related parties and the nature of relationship:
a) Holding Company
b) Key Management Personnel
i) Shri Somsankar Sengupta , CEO and Managing Director - (till 30th September 2011)
ii) Shri P K Mohapatra, COO & Manager (From 1st October 2011)
(ii) Transactions - (` Thousands)
Particulars
For the year ended
31.3.2012
For the year ended
31.3.2011
(a) Holding Company
Transactions during the year:
Interest Income from Fixed Deposits 715 9,600
Commission Income 52,858 93,145
Interest paid on Cash Credit Facility 86,811 -
Re-imbursements of Expenses by Holding Company 31,432 32,778
Rent recovered 3,360 5,381
Rent Paid 4,681 4,425
Security Deposit (Sub-lease of premises) received - 378
Security Deposit Adjusted 24 249
Electricity Expenses Paid 69 72
Re-imbursement of Salary to Holding Company 1,254 924
Closing Balances in:
- Fixed Deposit Accounts 21,279 2,33,477
- Current Account Receivable/(Payable) 2,613 29,785
- Borrowings Cash credit facility 13,45,957 -
- Account Receivable 18,006 32,162
- Account Payable 644 860
- Security Deposit ( Sub-lease of Premises) 3,072 3,096
(b) Key Management Personnel
Remuneration to Managing Director* 4,548 3,400
Remuneration to Manager* 732 -
* - Includes remuneration to Managing Director ` 558 thousands and Manager ` 732 in respect of which
necessary approval of shareholders is being sought at the ensuing Annual General Meeting.
2.22. Segment Information
In terms of the Accounting Standard 17, Segment Reporting notifed under the Companies (Accounting
Standard) Rules, 2006, the companys operations are classifed into two business segments as described in
the accounting policy and the information on the same is as under:
(` In Thousands)
Business
Segments
Distribution Retail Finance Total

Year ended
31.03.2012
Year ended
31.03.2011
Year ended
31.03.2012
Year ended
31.03.2011
Year ended
31.03.2012
Year ended
31.03.2011
Segment
Revenue
55,702 1,17,320 2,98,837 344 3,54,539 1,17,664
Segment
Expenditure
90,350 1,08,708 2,06,267 25,629 296,617 1,34,337
Allocated
Expenditure
6,312 - 33,245 - 39,557 -
Result (40,960) 8,612 59,325 (25,285) 18,366 (16,673)
Unallocated
Income (Net)
12,047 27,892
Interest Income 1,029 9,600
Interest
Expenses
1,04,336 -
Proft before
Tax
(72,895) 20,819
Income Taxes 853 6,936
Net Proft (73,748) 13,883
Other Information
Segment Assets 31,276 90,439 34,83,809 1,14,330 35,15,085 2,04,769
Unallocated
Assets
55,284 2,56,908
Total Assets 31,276 90,439 34,83,809 1,14,330 35,70,909 4,61,677
Segment
Liabilities
8,770 71,998 66,418 1,624 75,188 73,622
Unallocated
Liabilities
16,31,376
Total Liabilities 8,770 71,998 66,418 1,624 17,06,564 73,622
Capital
Expenditure
157 2,502 98,173 33,968 98,330 36,470
Unallocated
Capital
Expenditure
28,257 -
Depreciation/
Amortisation
1,342 1,817 18,918 460 20,260 2,277
Unallocated
Depreciation
530 -
Total
Depreciation
20,790 2,277
The Company has only the Domestic Geographic Segment.
2.23. Schedule appended to the Balance Sheet of a non-deposit taking non-banking fnancial company (as
required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007)
(Figures in Rs thousands)
Particulars
Amount
outstanding
Amount
overdue
Liabilities side :
1
Loans and advances availed by the non-banking fnancial
company inclusive of interest accrued thereon but not paid:
NIL
NIL
NIL
NIL
(a) Debentures : Secured
: Unsecured
(other than falling within the meaning of public deposits*)
(b) Deferred Credits NIL NIL
(c) Term Loans NIL NIL
(d) Inter-corporate loans and borrowing NIL NIL
(e) Commercial Paper NIL NIL
(f) Cash Credit Facility 15,96,039 NIL
Assets side :
Amount outstanding
2
Break-up of Loans and Advances including bills receivables
[other than those included in (4) below] :
31,18,239
4,272
(a) Secured
(b) Unsecured
3
Break up of Leased Assets and stock on hire and other assets
counting towards AFC activities

(i) Lease assets including lease rentals under sundry debtors :
NIL
NIL
(a) Financial lease
(b) Operating lease

(ii) Stock on hire including hire charges under sundry debtors:

NIL
NIL
(a) Assets on hire
(b) Repossessed Assets

(iii) Other loans countng towards AFC actvites

NIL
NIL
(a) Loans where assets have been repossessed
(b) Loans other than (a) above
4 Break-up of Investments :
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Current Investments :
1 Quoted :
(i) Shares : (a) Equity
(b) Preference
(ii) Debentures and Bonds
(iii) Units of mutual funds
(iv) Government Securities
(v) Others (please specify)
2 Unquoted :
(b) Preference
Long Term investments :
1. Quoted :
(b) Preference
2. Unquoted :
(b) Preference
5 Borrower group-wise classifcation of assets fnanced as in (2) and (3) above :
Category Amount net of provisions*
Secured Unsecured Total
1. Related Parties
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
(a) Subsidiaries
(b) Companies in the same group
(c) Other related parties-Holding
Company

2. Other than related parties 31,05,211 NIL 31,05,211

Total 31,05,211 NIL 31,05,211
* Contngent Provision on Standard Assets has not been neted of as per prudental norms
6 Investor group-wise classifcation of all investments (current and long term) in shares and
securities (both quoted and unquoted):

Category
Market Value / Break up or
fair value or NAV
Book Value
(Net of
Provisions)
1. Related Parties
NIL
NIL
NIL
NIL
NIL
NIL
(a) Subsidiaries
(c) Other related parties
2. Other than related parties NIL NIL
Total NIL NIL
7 Other information
Particulars
Amount
(Rs. thousands)
(i) Gross Non-Performing Assets
(a) Related parties Nil
(b) Other than related parties 61,227
(ii) Net Non-Performing Assets
a) Related parties Nil
b) Other than related parties 43,927
(iii) Assets acquired in satisfaction of debt Nil
2.24. Additional disclosures as required by Circular No. DNBS (PD) CC No 125 / 03.05.002/2008-09 dated August
1, 2008 issued by the Reserve Bank of India.
2.24.1 Capital to Risk Assets Ratio (CRAR):
Items
Particular
%
i)
CRAR
54.15
ii)
CRAR - Tier I capital
53.92
iii)
CRAR - Tier II Capital
0.23
As this is the frst year of presentation of the above information, no comparatives have been disclosed for
previous year.
2.24.2 Exposure to Real Estate Sector
The Company does not have any direct or indirect exposure to real estate sector
2.24.3 Asset Liability Management :
Maturity pattern of certain items of assets and liabilities as at 31st March, 2012. (As compiled by the
management)
(` In Thousands)
1 day to
30/31
days
(One
Month)
1 Month
to 2
Months
2 Months
to 3
Months
3
Months
to 6
Months
Over 6
Months
to 1 Year
Over
1 Year
to 3
years
Over 3
Years
to 5
years
Over
5
Years
Total
Liabilities
Borrowings
from banks
- - - -
15,96,039
- - -
15,96,039
Market
Borrowings
- - - - - - - -
-
Assets
Advances
(Considered
good)

7,01,916

7,37,338

3,70,640

7,40,582

5,10,808

-

-

-
30,61,284
Investments - - - - - - - -
As this is the frst year of presentation of the above information, no comparatives have been disclosed for
the previous year.
2.25. Previous years fgures have been regrouped / reclassifed wherever necessary, to make them comparable
with the current years fgures.
For and on behalf of the Board
DIRECTORS
For Varma & Varma
FRN: 004532S
Cash-Flow Statement For
The Year Ended 31st March 2012

Net Proft / (Loss) before tax as per P&L Account (72,893) 20,819
Adjustments for
Finance Cost 104,336 -
Interest on fxed deposits with Federal Bank (715) (9,600)
Provision for Standard Assets 7,570 113
Provision for Loss Assets 14,981 -
Provision for Sub Standard Asset 4,881 -
Depreciation 20,790 2,277

Operating Proft before Working Capital changes 78,950 13,609

Adjustments for Working Capital Changes
Trade Receivables 15,146 -
Short-term Loans and Advances (3,205,971) -
Other Current Assets 4,866 (86,675)
Long term Loans & Advances (21,066) -
(Increase)/ Decrease in Receivables (3,207,026) (86,675)
Long-term Provisions (381) -
Trade Payables 7,465 56,339
Other Current Liabilities (15,880) -
Short-term Provisions (1,426) (113)
Increase/(Decrease) in Trade/Other payables (10,222) 56,226

Cash generated from Operations (3,138,298) (16,840)
Taxes (paid) / refunded 3,634 (15,541)

Cash Flow before extraordinary items (3,134,664) (32,381)
Extraordinary items - -

Net Cash infow / (outfow) from Operating Activities (3,134,664) (32,381)

B. Cash Flow from Investment Activities
Purchase of fxed assets (101,508) (36,470)
Interest on fxed deposits 704 9,600

Net Cash infow / (outfow) from Investment Activities (100,804) (26,870)

For the Year For the Year
ended 31.03.2012 ended 31.03.2011
(In Thousands of `)
DIRECTORS
For Varma & Varma
FRN: 004532S
Interest Expenses (104,336) -
Cash Credit 1,596,039 -
Proceeds from Issue of fresh Equity Shares 1,550,000 250,000

Net Cash infow / (outfow) from Financing activities 3,041,703 250,000

D. Net increase / (decrease) in cash and cash Equivalents (A+B+C) (193,765) 190,749
Opening Balance of Cash and Cash Equivalents 275,895 85,146
Closing Balance of Cash and Cash Equivalents 82,130 275,895

Cash Flow Statement has been prepared in accordance with the Accounting Standard- 3 as per the Companies
(Accounting Standards) Rules, 2006.
Cash-Flow Statement For
The Year Ended 31st March 2012
Auditors Report
To
The Members,
Fedbank Financial Services Ltd
1. We have audited the attached Balance Sheet of FEDBANK FINANCIAL SERVICES LIMITED as at 31st
March, 2012, the Statement of Proft and Loss and the Cash Flow Statement of the company for the year
ended on that date annexed thereto. These fnancial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these fnancial statements based on our
audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those
Standards require that we plan and perform the audit to obtain reasonable assurance about whether
the fnancial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes
assessing the accounting principles used and signifcant estimates made by the management, as well as
evaluating the overall fnancial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of
India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure
a statement on the matters specifed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
i we have obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit;
ii in our opinion, proper books of account as required by law have been kept by the company so far
as appears from our examination of those books;
iii the Balance Sheet, Statement of Proft and Loss and Cash Flow Statement dealt with by this report
are in agreement with the books of account;
iv in our opinion, the Balance Sheet, Statement of Proft and Loss and Cash Flow Statement dealt
with by this report comply with the accounting standards referred to in sub-section (3C) of section
211 of the Companies Act, 1956;
v on the basis of the written representations received from thedirectors of the company as on March
31, 2012, and taken on record by the Board of Directors, we report that none of the directors is
disqualifed as on 31st March, 2012 from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956;
vi in our opinion and to the best of our information and according to the explanations given to us, the
said accounts and read together with the accounting policies and other notes attached thereto,
give the information required by the Companies Act, 1956, in the manner so required and give a
true and fair view in conformity with the accounting principles generally accepted in India;
i in the case of the Balance Sheet, of the state of afairs of the Company as at 31st March,
2012;
ii in the case of the Statement of Proft and Loss, of the loss for the year ended on that date;
and
iii in the case of Cash Flow Statement, of the cash fows for the year ended on that date.
For Varma & Varma
FRN: 004532S
Auditors Report
ANNEXURE REFERRED TO IN PARAGRAPH (3) OF OUR AUDIT REPORT OF EVEN DATE OF FEDBANK
FINANCIAL SERVICES LIMITED.
1 (a) The company is maintaining properrecords showing full particulars, including quantitative details and
situation of fxed assets.
(b) We are informed that the fxed assets of the company have been physically verifed by the management
during the year, which, in our opinion is reasonable having regard to the size of the company and the
nature of operations of the company and that no material discrepancies have been noticed on such
verifcation.
(c) The company has not disposed of a substantial part of the fxed assets during the year.
2 The company does not have any inventory and hence the reporting requirements contained in clause
number 4 (ii) of the Order regarding inventory are not applicable to the company.
3 (a) As informed, the Company has not granted any loans, secured or unsecured, to companies, frms or
other parties covered in the register maintained under section 301 of the Companies Act, 1956.
(b) As informed, the Company has not taken any loans, secured or unsecured, from companies, frms or
other parties covered in the register maintained under section 301 of the Companies Act, 1956.
4 In our opinion and according to the information and explanations given to us, there is adequate internal
control systems commensurate with the size of the company and nature of its business for the purchase of
fxed assets and for the sale of services. In our opinion and according to the information and explanations
given to us, there is no continuing failure to correct major weaknesses in internal controls.
5 In our opinion, and according to the information and explanations given to us, the Company has not
entered into any contracts or arrangements referred to in Section 301 of the Companies Act, 1956.
6 The Company has not accepted any deposits from the public and hence the directives issued by the Reserve
Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies
Act 1956 and the rules framed there under are not applicable to the Company.
7 In our opinion, the company has an internal audit system commensurate with the size of the company
and nature of its business.
8 As per the information and explanations given to us, the Central Government has not prescribed the
maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.
9 (a) As per the information and explanations furnished to us and according to our examination of the
records of the Company, the Company has been generally regular in depositing undisputed statutory
dues on account of Provident Fund, Employee State Insurance, Income Tax, Service Tax and other
statutory dues as applicable to the company with the appropriate authorities during the year. There
are no arrears of undisputed statutory dues outstanding as at the last day of the fnancial year, for a
period of more than six months from the date on which they became payable.
(b) According to the information and explanations given to us and the records of the company examined
by us, there are no disputed statutory dues which were outstanding, at the year end.
10 The accumulated losses as at the end of the fnancial year is not more than ffty percent of the net worth
of the company. The company has incurred cash losses in the current fnancial year. The company has not
incurred cash losses in the immediately preceding fnancial year.
11 As per the information and explanations given by the management, the company has not defaulted in
repayment of its dues to bank during the year.
12 According to the information and explanations given to us and based on the documents and records
produced to us, the Company has not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities, and hence the reporting requirements under clause
4(xii) of the Order are not applicable.
13 In our opinion, the Company is not a chit fund or a nidhi / mutual beneft fund / society,and hence the
reporting requirements under clause 4(xiii) of the Order are not applicable.
14 In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other
investments,and hence the reporting requirements under clause 4(xiv) of the Order are not applicable.
15 According to the information and explanations given to us and the records of the company examined by us,
the company has not given any guarantee for loans taken by others from banks or fnancial institutions.
16 According to the information and explanations given to us and the records of the company examined by
us, no term loans were availed by the company.
17 In our opinion and according to the information and explanations given to us and the records of the
company examined by us, we report that funds raised on short-term basis have not been used for making
long-term investment.
18 The Company has not made any preferential allotment of shares to parties or companies covered in the
register maintained under section 301 of the Companies Act, 1956.
19 The company has not issued any debentures,and hence the reporting requirements under clause 4(xix)
of the order are not applicable.
20 The Company has not raised money by public issues during the year, and hence the reporting requirements
under clause 4(xx) of the order are not applicable.
21 According to the information and explanations given to us and the records of the company examined by
us, during the year the company has reported to the Reserve Bank of India, instances of frauds noticed
at three branches of the company involving an aggregate amount of ` 136.04 lakhs in respect of which
an amount aggregating to 124.67 lakhs is outstanding as at 31st March 2012 . We are informed that legal
action for recovery has been initiated in all the three cases and full provision has been made in the books
of accounts towards the amount involved.
For Varma & Varma
FRN: 004532S
CAPITAL AND LIABILITIES
Capital 1 171,04,71 171,04,71
Reserves & Surplus 2 5421,24,70 4846,65,37
Deposits 3 48934,73,29 42988,45,44
Borrowings 4 4266,04,23 1888,36,26
Other Liabilities & Provisions 5 1751,16,92 1448,32,67
Total 60544,23,85 51342,84,45
ASSETS
Cash & Balances with Reserve Bank of India 6 2429,67,59 2936,35,08
Balances with banks & money at
call and short notice 7 1108,69,93 813,25,04
Investments 8 17102,02,02 14407,90,48
Advances 9 37945,85,19 31957,80,58
Fixed assets 10 337,03,43 292,91,91
Other assets 11 1620,95,69 934,61,36
Total 60544,23,85 51342,84,45
Contingent liabilities 12 35849,40,40 22112,74,97
Bills for collection 1189,31,40 912,52,04
Consolidated Balance Sheet As At 31 March 2012
(In thousands of `)
Schedule As at As at
No: 31 March 2012 31 March 2011
DIRECTORS
FRN: 004532S FRN: 027835

I. INCOME
Interest earned 13 5581,72,10 4052,02,83
Other income 14 532,19,72 518,33,49
Total 6113,91,82 4570,36,32
II. EXPENDITURE
Interest expended 15 3606,66,61 2304,48,96
Operating expenses 16 1008,06,39 836,53,81
Provisions & contingencies 727,68,32 840,86,41
Share of loss of Associate 17,77,74 32,00,48
Total 5360,19,06 4013,89,66
III. PROFIT/LOSS
Net proft for the year 753,72,76 556,46,66
Add Proft b/f from Previous Year
-relating to holding company (68,99,36) (39,62,60)
- relating to subsidiary company 2,82,11 1,71,05
687,55,51 518,55,11
IV. APPROPRIATIONS
Transfer to Revenue Reserve 98,88,00 232,11,00
Transfer to Statutory Reserve 194,20,00 146,80,00
Transfer to Capital Reserve 5,40,17 0
Transfer to Special Reserve (sec 36(1)(viii) of IT Act) 28,50,00 36,56,00
Transfer to Reserve under Sec 45 IC of RBI Act 0 27,77
Provision for proposed dividend 153,94,24 145,39,00
Provision for Dividend Tax 24,97,33 23,58,59
Balance carried over to Balance Sheet 181,65,77 (66,17,25)
Total 687,55,51 518,55,11

Earnings per Share (Basic) (`) 17 44.07 32.53

Consolidated Proft & Loss Account for
the year ended 31 March 2012
(In thousands of `)
Schedule For the year ended For the year ended
No: 31 March 2012 31 March 2011
DIRECTORS
FRN: 004532S FRN: 027835
SCHEDULE 1. CAPITAL
Authorised Capital 200,00,00 200,00,00
[20,00,00,000 (Previous year 20,00,00,000 ) equity shares of ` 10 each]
Issued Capital [17,13,17,910 (Previous year 17,13,17,910) 171,31,79 171,31,79
equity shares of ` 10/- each]
Subscribed & Called up Capital 171,04,75 171,04,75
[17,10,47,501 (Previous year 17,10,47,501) equity shares of ` 10/- each,
which includes 3318 shares (Previous year 3318) of ` 10/- each
issued for consideration other than cash and 4,37,35,378 shares
(previous year 4,37,35,378) issued as Bonus shares and 2,00,00,000
underlying equity shares (previous year 2,00,00,000) of ` 10/- each
issued towards Global Depository Reciepts (including over allotment
option of 20,00,000 equity shares) and 8,54,29,763 equity shares of
` 10/- each allotted on Rights basis during the fnancial year 2007-08]
(Allotment of 1306 Shares (Previous year 1306) of ` 10/- each
pertaining to the Rights Issue of 1993 issued at a premium of `25/-
per share and 52,420 shares (previous year 52,420) of `10/- each
pertaining to the Rights Issue of 1996 issued at a premium of
`140/- per Share and 2,16,683 equity shares of Rs.10/- each
(previous year 2,16,683) at a premium of `240/- per share pertaining
to Rights issue of 2007 are kept pending following orders from
various courts) (Issue of certifcates/credit in demat account in respect
of 82,788 shares of `10/ each out of the Bonus issue of 2004
(previous year - 82,788) are kept in abeyance consequent to injunction
orders from various courts)
Less: Calls in arrears 4 4
Add: Forfeited shares - -
Total 171,04,71 171,04,71
SCHEDULE 2. RESERVES & SURPLUS
I. Statutory Reserves
1069,46,76 875,26,76
II. Capital Reserves
(a) Revaluation Reserve
Deductions during the year 21,86 23,02
5,41,42 5,63,28
(b) Others
Additions during the year 5,40,17 0
165,61,92 160,21,75
171,03,34 165,85,03
Schedules forming part of
Consolidated Balance Sheet
(In thousands of `)
As at As at
31 March 2012 31 March 2011
III. Share premium
Opening balance 2475,58,56 2475,26,36
Additions during the year 0 32,20
2475,58,56 2475,58,56
IV. Revenue & Other Reserves
a) Revenue Reserve
Opening Balance 1021,75,42 789,64,42
1120,63,42 1021,75,42
b) Other Reserves
Investment Fluctuation Reserve
Opening Balance 189,72,00 189,72,00
Additions during the year 0 0
189,72,00 189,72,00
c) Special Reserve(As per section
36 (1)(viii) of IT Act)
Addition during the year 28,50,00 36,56,00
182,06,00 153,56,00
V. Contingency Reserve
Addition during the year 0 0
30,10,03 30,10,03
VI. Reserve Fund
Balance as per last Balance Sheet 84,12 56,35
Transferred from P&L A/c 0 27,77
84,12 84,12
VII. General Reserve
Balance as per last Balance Sheet 14,70 14,70
Transferred from P&L A/c Nil Nil
14,70 14,70
VIII. Balance in Proft & Loss a/c 181,65,77 -66,17,25
Total 5421,24,70 4846,65,37
SCHEDULE 3. DEPOSITS
A. I. Demand Deposits
i. From Banks 12,69,97 142,68,91
ii. From Others 2532,94,85 2260,14,09
2545,64,82 2402,83,00
II. Savings Bank Deposits 10929,94,57 9148,29,02
III. Term Deposits
i. From Banks 476,20,50 199,20,23
ii. From Others 34982,93,40 31238,13,19
35459,13,90 31437,33,42

Total 48934,73,29 42988,45,44

B. i. Deposits of branches in India 48934,73,29 42988,45,44
ii. Deposits of branches outside India Nil Nil
Total 48934,73,29 42988,45,44
(In thousands of `)
As at As at
31 March 2012 31 March 2011
SCHEDULE 4. BORROWINGS
I. Borrowings in India
i. Reserve Bank of India 90,00,00 100,00,00
ii. Other Banks 25,00,82 0
iii. Other institutions and agencies 2516,17,33 1417,29,17
iv. Subordinated debt 306,00,00 306,00,00
2937,18,15 1823,29,17
II. Borrowings outside India 1328,86,08 65,07,09
Total 4266,04,23 1888,36,26
Secured borrowings in the above 324,82,27 0
SCHEDULE 5. OTHER LIABILITIES AND PROVISIONS
I. Bills Payable 20,51,90 24,29,70
II. Interofce adjustments (Net) 163,68,47 182,36,54
III. Interest accrued 265,85,32 149,23,10
IV. Deferred Tax Liability (Net) 64,19,00 0
V. Others (including provisions)* 1236,92,23 1092,43,33
Total 1751,16,92 1448,32,67
*Includes Contingent provisions against standard assets 196,80,64 159,59,94
SCHEDULE 6. CASH & BALANCES WITH RESERVE BANK OF INDIA
I. Cash in hand (including foreign currency notes) 401,37,36 333,96,66
II. Balance with R B I in Current Account 2028,30,23 2602,38,42

Total 2429,67,59 2936,35,08
SCHEDULE 7. BALANCES WITH BANKS & MONEY AT CALL & SHORT NOTICE
I. In India
i. Balances with banks
a. in Current Accounts 40,38,47 40,16,13
b. in Other Deposit Accounts 423,18,00 273,67,20
ii. Money at call & short notice
a. With Banks 100,00,00 399,72,13
b. With other institutions 404,57,07 0
Total 968,13,54 713,55,46
II. Outside India
i. in Current Accounts 13,37,64 32,80,33
ii. in Other Deposit Accounts 127,18,75 66,89,25
iii. Money at call & short notice Nil Nil
Total 140,56,39 99,69,58
Grand Total 1108,69,93 813,25,04
(In thousands of `)
As at As at
31 March 2012 31 March 2011
(In thousands of `)
As at As at
31 March 2012 31 March 2011
SCHEDULE 8. INVESTMENTS
I. Investments in India (Gross) 17151,30,70 14424,40,94
Less Provision for Depreciation 49,28,68 16,50,46
Net Investments 17102,02,02 14407,90,48
Break up of Investments in India
i. Govt. Securities 11531,24,13 9964,52,93
ii. Other approved Securities 0 35,74
iii. Shares 190,72,92 168,06,61
iv. Debentures & Bonds 960,35,02 605,34,48
v. Associates & Joint Ventures 95,45,25 87,22,98
vi. Others ( Mutual Funds, Commercial Paper etc.) 4324,24,70 3582,37,74
Total 17102,02,02 14407,90,48

II. Investments outside India Nil Nil
SCHEDULE 9. ADVANCES
A. i. Bills purchased & discounted 1853,81,17 898,60,67
ii. Cash credits, overdrafts and loans repayable on demand 21873,09,56 17416,05,69
iii. Term loans 14218,94,46 13643,14,22
Total 37945,85,19 31957,80,58
B. i. Secured by tangible assets 26468,00,49 23513,08,77
(includes advances against Book Debts)
ii. Covered by Bank/Government guarantees 2864,11,38 1671,22,62
iii. Unsecured 8613,73,32 6773,49,19
Total 37945,85,19 31957,80,58
C. I. Advances in India
i. Priority Sector 12188,45,84 10585,79,92
ii. Public Sector 2817,58,47 1945,87,30
iii. Banks 4,46,36 4,50,44
iv. Others 22935,34,52 19421,62,92
Total 37945,85,19 31957,80,58

II. Advances outside India Nil Nil
SCHEDULE 10. FIXED ASSETS
I OWNED ASSETS
a. Premises
Additions during the year 1,29,13 74,86
220,56,30 219,29,00
Deductions during the year 0 1,83
220,56,30 219,27,17
163,67,60 168,48,27
b. Other fxed assets (including furniture & fxtures)
489,84,96 398,78,72
Deductions during the year 8,58,65 11,18,89
481,26,31 387,59,83
172,97,49 124,05,30
II ASSETS GIVEN ON LEASE
Additions during the year Nil Nil
3,10,13 3,10,13
Deductions during the year 0 0
3,10,13 3,10,13
38,34 38,34
Total (I & II) 337,03,43 292,91,91

SCHEDULE 11. OTHER ASSETS
I. Inter ofce adjustments (net) 0 0
II. Interest accrued 399,50,24 280,41,36
III. Tax paid in advance/tax deducted at source (Net of provision) 620,48,86 338,48,01
IV. Stationery & Stamps 2,69,18 2,62,69
V. Non-banking assets acquired in satisfaction of claims 3,10,61 3,05,01
VI. Deferred Tax Asset (Net) 0 1,58,53
VII. Others 595,16,80 308,45,76
Total 1620,95,69 934,61,36

SCHEDULE 12. CONTINGENT LIABILITIES
I. Claims against the Bank not acknowledged as debts 661,14,55 613,31,98
II. Liability on account of outstan ding forward exchange contracts 30431,60,64 16163,50,63
III. Guarantees given on behalf of constituents - in India 3533,64,90 3739,03,73
V. Acceptances, endorsements and other obligations 1188,48,26 1562,27,47
VI. Other items for which the Bank is contingently liable 34,52,05 34,61,16

Total 35849,40,40 22112,74,97
(In thousands of `)
As at As at
31 March 2012 31 March 2011
SCHEDULE 13. INTEREST EARNED
I. Interest/discount on advances/bills 4213,09,23 3168,80,24
II. Income on investments 1315,73,76 868,03,04
III. Interest on balances with RBI & other inter-bank funds 34,88,36 10,59,78
IV. Others 18,00,75 4,59,77

Total 5581,72,10 4052,02,83
SCHEDULE 14. OTHER INCOME
I. Commission, exchange and brokerage 251,85,34 250,22,42
II. Net proft/loss on sale of investments 82,07,06 45,75,89
III. Net proft/loss on revaluation of investments - -
IV. Net proft on sale of land, buildings & other assets 33,16 32,69
V. Net proft on foreign exchange transactions 84,20,86 57,22,90
VI. Income earned by way of dividends etc. from companies in India 5,12,46 3,52,36
VII. Miscellaneous income [Includes Recoveries in assets written of 108,60,84 161,27,23
` 8573.78 lakh (previous year ` 14607.34 lakh)
Total 532,19,72 518,33,49
SCHEDULE 15. INTEREST EXPENDED
I. Interest on deposits 3331,20,85 2161,02,20
II. Interest on Reserve Bank of India/Inter bank borrowings 48,54,65 9,86,75
III. Others 226,91,11 133,60,01

Total 3606,66,61 2304,48,96
SCHEDULE 16. OPERATING EXPENSES
I. Payments to & provisions for employees 559,44,95 485,68,59
II. Rent, taxes & lighting 99,61,70 80,77,21
III. Printing & stationery 10,69,31 10,21,75
IV. Advertisement & publicity 16,40,10 18,32,28
V. Depreciation on Bank`s property 58,96,21 54,71,35
Less: Depreciation on revaluation of Premises
transferred from Revaluation Reserve 21,86 23,02
58,74,35 54,48,33
VI. Directors fees, allowances and expenses 69,64 70,85
VII. Auditors fees & expenses (including branch auditors) 3,03,69 2,83,52
VIII. Law charges 5,28,02 5,36,41
IX. Postage, Telegrams,Telephones etc 28,16,00 19,07,58
X. Repairs & maintenance 37,61,46 23,06,13
XI. Insurance 43,72,09 35,86,97
XII. Other expenditure 144,65,08 100,14,19

Total 1008,06,39 836,53,81
SCHEDULE 17. EARNINGS PER SHARE
Net Proft for the year 753,72,76 556,46,66
Number of Shares 17,10,47 17,10,47
(In thousands of `)
31 March 2012 31 March 2011
Consolidated Proft & Loss Account
SCHEDULE 18 PRINCIPAL ACCOUNTING POLICIES
1. General
The fnancial statements have been drawn up on historical cost convention and on accrual basis of
accounting (unless otherwise stated) and conform to Generally Accepted Accounting Principles in India
which comprises the statutory provisions and practices followed in the banking industry in India.
2. Advances
a) Advances are classifed as Performing Assets (Standard) and Non Performing assets,( Sub-standard,
Doubtful, or Loss assets) and provisions required for possible losses on non performing advances
are made over and above the minimum required as per the guidelines of the Reserve Bank of India
(RBI) on matters relating to prudential norms.
In case of the Subsidiary, advances are classifed as Performing Assets and Non-performing Assets
and Provisions required are made as per the guidelines of the Reserve Bank of India on matters
relating to Prudential Norms as applicable to Non-banking Financial (Non-Deposit Accepting or
Holding) Companies, Directions, 2007.
b) Holding Company
Advances shown in the Balance Sheet are net of:
(i) bills rediscounted,
(ii) provisions made for non performing advances.
Subsidiary Company
Provision against loans classifed as Non Performing Assets in accordance with RBI Guidelines has not
been netted of against loans and advances and are shown under Current Liabilities Short Term
Provisions.
c) Provisions are made in respect of the following as per the guideline of RBI and included under the
head Other liabilities and provisions- others in the Balance Sheet.
(i) Provisions towards interest sacrifce/fair value diminution on restructured /rescheduled
advances.
(ii) Provision for standard asset.
3. Investments
a) Investments are classifed under three categories, viz Held for Trading (HFT), Available for Sale
(AFS), and Held to Maturity (HTM) as per RBI guidelines and disclosed in the Balance Sheet under
six classifcations viz.
(i) Government Securities
(ii) Other Approved Securities
(iii) Shares
(iv) Debentures and Bonds
(v) Associates & Joint Ventures
(vi) Others
Investments are also classifed into performing & non performing as per the guidelines of RBI and
provisions are made for possible losses as non performing investments as per the guidelines of RBI.
Schedules Consolidated
b) In respect of Proft on sale of investments under Held to Maturity category, an equivalent amount,
net of taxes and transfer to statutory reserve, is apportioned to the Capital reserve account.
c) REPO & Reverse REPO transactions are accounted in accordance with the extant RBI Guidelines.
d) Valuation
(i) Investments classifed as HFT have been marked to market and valued scrip-wise under each
classifcation at monthly intervals, excluding equity shares which are done on a weekly basis.
Within a classifcation net appreciation is ignored and net depreciation is provided for.
(ii) Investments classifed as AFS have also been marked to market, and valued quarterly excluding
equities, which are done on a weekly basis. Within a classifcation net appreciation is ignored
and net depreciation is provided for.
(iii) Investments classifed as HTM are stated at acquisition cost except in cases where the
acquisition cost is higher than the face value, in which case the excess, i.e. premium on
acquisition, is amortised over the period remaining to maturity on equated basis. Any
diminution in value other than temporary, in investments in subsidiaries/joint venture/
associates included under HTM is provided for.
(iv) Closing stock of gold is valued at cost or market price whichever is lower.
4. Derivatives
Interest rate swaps/currency swaps in respect of trading position and which are outstanding as on
Balance Sheet date are marked to market and net appreciation is ignored and net depreciation is
recognized in the Proft and Loss Account.
Derivative contracts which are entered for hedging purposes, the net amount receivable/payable
is recognized on accrual basis. Gains or losses on termination on such contracts are deferred and
recognized over the remaining contractual life of the derivatives or the remaining life of the assets/
liabilities, whichever is earlier. Such derivative contracts are marked to market and the resultant gain
or loss is not recognized, except where the contract is designated with an asset/ liability which is also
marked to market, in which case, the resulting gain or loss is recorded as an adjustment to the market
value of the underlying asset/ liability.
5. Transactions Involving Foreign Exchange
(a) All monetary assets and liabilities denominated in foreign currencies are translated at the exchange
rates prevailing at the close of the year as advised by the Foreign Exchange Dealers Association
of India (FEDAI).
(b) Income and expenditure denominated in foreign currencies have been accounted at the exchange
rates prevailing on the dates of the transactions.
(c) Outstanding foreign exchange forward contracts are revalued at the rates applicable on the closing
date as advised by FEDAI. The resultant proft/loss is taken into Proft and Loss account.
(d) Contingent liabilities on guarantees, letters of credit, acceptances and endorsements are reported
at the rates prevailing on the Balance Sheet date.
6. Fixed Assets
(a) Fixed Assets are stated at historical/revalued cost less accumulated depreciation & impairment
of assets, if any. Premises which were revalued are stated at such values on revaluation and the
appreciation credited to the Capital Reserve.
(b) Depreciation on assets has been provided for on the diminishing balances at the rates as per
Schedule XIV to the Companies Act, 1956, except on Computers, Mobile phones & EPABX, which are
depreciated under the straight line method at 33.33% per annum as per RBI guidelines. Depreciation
on assets sold/disposed of during the year is provided for the period upto the date of sale. Assets
costing less than ` 5,000 each are fully depreciated.
In case of the Subsidiary, Leasehold improvements are depreciated @ 18.10% using WDV
method.
(c) Depreciation on assets revalued has been charged on their written-down value including the
addition made on revaluation, and an equivalent amount towards the additional depreciation
provided consequent upon revaluation has been transferred from the Capital Reserve to the Proft
& Loss Account.
(d) Licence fee and implementation expenditure for Core Banking Solution are amortised on the
straight line basis over a period of three years, on a pro rata basis.
7. Finance Leasing
Accounting Standard on Leases (AS19) issued by the Institute of Chartered Accountants of India (ICAI)
is applicable to leases entered into on or after 1st April 2001. Since all the Banks outstanding fnance
lease transactions were entered into prior to that date, the Bank has followed the earlier ICAI guidelines
in respect of these leases.
Depreciation on non-performing leased assets (NPAs) is provided on written-down value as per the
Companies Act 1956, by directly charging to Proft & Loss Account without any corresponding adjustment
in the Lease Adjustment Account. In addition to depreciation, provision is also made for non-performing
leased assets as per RBI guidelines.
8. Employee Benefts
(a) Post Employment beneft Plans
Payments to defned contribution retirement beneft schemes (other than Second option for
pension) are charged as an expense as they fall due.
For defned beneft schemes, the cost of providing benefts is determined using the Projected Unit
Credit Method, with actuarial valuations being carried out at each Balance Sheet date.
Actuarial gains and losses are recognized in full in the Proft and Loss account for the period in
which they occur. Past service cost is recognized immediately to the extent that the benefts are
already vested, and otherwise is amortized on straight-line basis over the average period until the
benefts become vested.
The retirement beneft obligation recognized in the Balance Sheet represents the present value
of the defned obligation as adjusted for unrecognized past service cost, and as reduced by the
fair value of scheme assets.
The net liability arising out of exercise of the second option for pension is fully reckoned, to be
amortised in fve years commencing from 2010-11 with 1/5th thereof being absorbed in the Proft and
Loss Account of the year as per approval of RBI (vide letter DBOD. No.BP.BC.15896/21.04.018/2010-
11 dated 08.04.2011.)
(b) Short-term employee benefts
The undiscounted amount of short-term employee benefts expected to be paid in exchange for
the services rendered by employees is recognized during the period when the employee renders
the service.
(c) The provision towards sick leave beneft to staf is made based on actuarial valuation.
9. Recognition of Income and Expenditure
Items of income and expenditure are accounted for on accrual basis, except as stated hereunder:
(a) Income from non performing investments/advances are recognised on realisation as per the
guidelines of RBI.
(b) Commission other than guarantee commission is accounted on cash basis. Guarantee commission
is recognised over the period of the guarantees. Dividends are recognised as and when declared
by the investee companies.
(c) Unpaid funded interest on term loans are accounted on realisation as per the guidelines of RBI.
(d) Income from consignment sale of gold is accounted as other income.
(e) In case of the subsidiary, exclusivity fees (for providing services exclusively to the clients) is
recognized in the year in which right to receive the same is established subject to volume of
business generated.
10. Provision for Income Tax
Provision for income tax is made for the current tax, and adjustment is made for deferred tax for the
year representing the net change in the deferred tax asset or deferred tax liability, in accordance with
Accounting Standard 22 issued by the Institute of Chartered Accountants of India (ICAI). Deferred tax
assets are recognised on the basis of the managements judgment of reasonable certainty of future
profts.
11. Earnings per Share
Basic Earnings per share (EPS) reported is computed by dividing net proft after tax by the weighted
average number of equity shares outstanding for the year.
Diluted Earnings Per share is computed using the weighted average number of equity shares and dilutive
potential equity shares outstanding at the year end.
12. Segment Information
In terms of the guidelines of the RBI on enhanced disclosure of segment information, the Banks
operations are classifed into four reportable business segments, viz. Treasury Operations (investment
and trading in securities, shares, debentures, etc.), Wholesale Banking, Retail Banking and Other Banking
Operations and segment information is reported accordingly. For this purpose, aggregate exposure to
a single entity exceeding `5 crore is treated as wholesale banking segment and other exposures are
treated as retail banking segment as per the RBI guidelines. For presentation of segment information,
directly attributable income and assets are allocated as such and the other income, expenses, other
assets and liabilities are apportioned on appropriate basis.
13. Net Proft
The net proft disclosed in the Proft and Loss Account is after:
(a) provision for taxes;
(b) provision for possible losses on Standard Assets, NPAs, and other contingencies;
(c) depreciation on investments; and
(d) other usual and necessary provisions.
14. Use of estimates
The preparation of fnancial statements requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the
date of the fnancial statements and the reported income and expenses during the reporting period.
Management believes that the estimates used in the preparation of the fnancial statements are prudent
and reasonable. Future results could difer from these estimates. Any revision to the accounting estimates
is recognised prospectively in the current and future periods.
15. Impairment of assets
Impairment losses, if any, on Fixed Assets (including revalued assets) are recognised in accordance with
the Accounting Standard 28 Impairment of Assets issued by Institute of Chartered Accountants of
India (ICAI) and charged to Proft and Loss Account.
16. Accounting for Provisions, Contingent Liabilities & Contingent Assets
As per the Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets, issued by
the Institute of Chartered Accountants of India (ICAI), the Bank recognises provisions only when it has
a present obligation as a result of a past event, it is probable that an outfow of resources embodying
economic benefts will be required to settle the obligation, and when a reliable estimate of the amount
of the obligation can be made. Contingent assets are not recognised in the fnancial statements.
17. ESOS
The Bank follows the intrinsic value method to account for its stock-based employee compensation
plans, as per the Guidance Note for Accounting for Employees Share Based Payments issued by
ICAI.
SCHEDULE 19 NOTES ON ACCOUNTS
1. Reconciliation
The reconciliation of outstanding entries in inter branch/ofce transactions as on 31st March 2012 has
been substantially completed and the efect, if any, of pending entries will not be material.
2. Consolidation
a) The Consolidated Financial Statements include results of the Subsidiary and Associate of Federal
bank limited.
Name of the Company
Country of
incorporation
% Shareholding Consolidated as
Fedbank Financial services
Limited
India 100% Subsidiary
IDBI Federal Life Insurance
Company Limited
India 26% Associate
b) The Consolidated Financial Statements have been prepared on the following basis:
The Financial Statements of the parent company and its subsidiary company have been consolidated
on a line-by-line basis, by adding together the book values of like items of assets, liabilities, income
and expenses, after fully eliminating intra-group balances and intra-group transactions resulting
in unrealised profts or losses.
Accounting for investment in Associates is under the Equity Method as per Accounting Standard
(AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements.
c) Diferences in accounting policies followed by the Subsidiary and associate have been reviewed
and no adjustments have been made, since the impact of these diferences is not signifcant.
3. The net liability arisen on exercise of second option for Pension by employees (other than separated/
retired employees) actuarially determined during FY 2010-2011 at ` 168.43cr and 1/5th of the said
liability amounting to ` 33.71cr. was charged to the Proft and Loss Account during last FY and balance
unamortized amount of ` 134.72 crore was carried forward to be amortised equally over the succeeding
four years, as per approval of RBI (vide letter no.DBOD.No.BP.BC.15896/21.04.018/2010-11 dated
08.04.2011). Accordingly, an amount of ` 33.68 crore, being proportionate amount is charged to Proft
and Loss during the year. The balance outstanding as unamortized is ` 101.04 crore.
4.1 Capital
Particulars 31
st
March 2012 31
st
March 2011
Basel II Basel I Basel II Basel I
i) CRAR (%)
ii) CRAR - Tier I capital (%)
iii) CRAR - Tier II Capital (%)
16.81
15.76
1.05
13.98
12.66
1.32
16.67
15.45
1.22
15.27
13.62
1.65
iv) Percentage of the shareholding of the
Government of India in nationalized banks
v) Amount of subordinated Debts raised as Tier II
capital during the year (` Crore)
vi) Amount raised by issue of IPDI
viii) Amount raised by issue of Upper Tier-II
Instruments (` Crore)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The computation of CRAR as per Basel II is compiled by the management with the information/data
drawn from CBS system on which reliance is placed by the Auditors.
4.2 Investments
4.2.1 a) Investments under HTM (excluding specifed investments as per RBI norms) account for 24.95%
(previous year 21.01%) of demand and time liabilities as at the end of March 2012 as against permitted
ceiling of 25% stipulated by RBI.
b) In respect of securities held under HTM category premium of ` 22.13 crore (previous year ` 21.90
crore) has been amortised during the year and debited under interest received on Government
securities.
c) Proft on sale of securities from HTM category amounting to ` 10.66 crore (previous year `` Nil crore)
has been taken to Proft and Loss Account and a sum of ` 5.40 crore (previous year ` Nil crore) being
net of taxes and transfer to statutory reserve of such proft, appropriated to Capital Reserve.
4.2.2 Investments (` crore)
Particulars 31
st
March 2012 31
st
March 2011
(1) Value of Investments
Gross Value of Investments
(a) In India
(b) Outside India
Provisions for Depreciation
(a) In India
(b) Outside India
(i) Net Value of Investments
(a) In India
(b) Outside India
(2) Movement of provisions held towards depreciation on
investments.
(i) Opening balance
(ii) Add: Provisions made during the year
(iii) Less: Write-of/ write-back of excess provisions
during the year
(iv) Closing balance
17151.31
Nil
49.29
Nil
17102.02
Nil
16.50
49.29
16.50
49.29
14424.40
Nil
16.50
Nil
14407.90
Nil
16.99
16.50
16.99
16.50
4.2.3 REPO Transactions (` crore)

Outstanding during the year
Outstanding
as on
31/03/2012

Minimum Maximum Daily Avg
A) Securities sold under REPOs
i) Gov. Securities
-
(-)
2500.00
(600.00)
356.15
(56.33)
2500.00
(-)
ii) Corp. Debt Securities
-
(-)
-
(-)
-
(-)
-
(-)
Securities purchased under REVERSE
REPOs

i) Gov. Securities
-
(-)
1000.00
(750.00)
10.11
(32.44)
-
(-)
-
(-)
-
(-)
-
(-)
-
(-)
B)Securities sold under Market REPOs
i) Gov. Securities
-
(-)
-
(20.00)
-
(0.11)
-
(-)
-
(-)
-
(-)
-
(-)
-
(-)
Securities purchased under REVERSE
Market REPOs

i) Gov. Securities
-
(-)
-
(5.00)
-
(0.01)
-
(-)
-
(-)
-
(-)
-
(-)
-
(-)
4.2.4 Non-SLR Investment Portfolio
i) Issuer Composition of Non-SLR Investments as on 31st March 2012 (` crore)
No.
(1)
Issuer
(2)
Amount
(3)
Extent of
private
placement
(4)
Extent of
below
investment
grade
securities
(5)
Extent of
unrated
securities
(6)
**
Extent of
unlisted
Securities
(7)
***
1 PSUs
80.93
(87.54)
68.00
(84.00)
0.00
(0.00)
0.00
(0.00)
0.00
(0.00)
2 FIs
73.29
(0.50)
50.50
(0.50)
0.00
(0.00)
0.00
(0.00)
0.00
(0.50)
3 Banks
1309.82
(1964.51)
69.68
(54.68)
0.00
(0.00)
0.00
(0.00)
0.00
(0.00)
4 Private corporates
1932.66
(834.25)
601.56
(423.03)
0.00
(0.00)
6.72
(0.00)
74.21
(66.13)
5
Associates/
Joint ventures
95.45
(87.23)
95.45
(87.23)
0.00
(0.00)
0.00
(0.00)
95.45
(87.23)
6 Others
2092.86
(1473.10)
46.01
(12.50)
0.00
(0.00)
0.00
(0.83)
0.00
(0.83)
7
Less: Provisions held
towards depreciation
-14.23
(-4.11)
xx xx xx xx
Total
5570.78
(4443.02)
931.20
(661.94)
0.00
(0.00)
6.72
(0.83)
169.66
(154.69)
** excluding investments in shares ` 193.42 crore (previous year ` 162.56 crore)
*** excluding investments in pass through certifcates ` 0.17 crore (previous year ` 1.80 crore)
ii) Non-SLR investments category-wise: (` crore)
Particulars 31
st
March 2012 31
st
March 2011
Shares 190.73 168.07
Debentures & Bonds 960.35 605.34
Associates/Joint Ventures 95.45 87.23
Others 4324.25 3582.38
Total 5570.78 4443.02
iii) Non-performing Non-SLR investments (` crore)
As at 31
st
March 2011 0.00
Additions during the year since 01
st
April 2011 0.00
Reductions during the above period 0.00
As at 31
st
March 2012 0.00
Total Provisions held 0.00
4.3 Sale and transfers to/ from HTM Category
The value of sales/transfers to / from HTM category is less than 5 per cent of the book value of investments
held in HTM category at the beginning of the year,
4.4. Derivatives
4.4.1 Forward Rate Agreement/ Interest Rate Swap (` crore)
Particulars 31
st
March 2012 31
st
March 2011
i) The notional principal of swap agreements
ii) Losses which would be incurred if counter parties
failed to fulfl their obligations under the agreements
iii) Collateral required by the bank upon entering into
swaps
iv) Concentration of credit risk arising from the swaps
v) The fair value of the swap book
1075.00
22.80
Nil
Nil
0.22
1250.00
4.76
Nil
Nil
-0.70
4.4.2 Exchange Traded Interest Rate Derivatives: (` crore)
Sl.No. Particulars 31
st
March 2012
(i) Notional principal amount of exchange traded interest rate
derivatives undertaken during the year (instrument-wise)
NIL
(ii) Notional principal amount of exchange traded interest rate
derivatives outstanding as on 31st March 2012
NIL
(iii) Notional principal amount of exchange traded interest rate
derivatives outstanding and not highly efective
NIL
(iv) Mark-to-market value of exchange traded interest rate derivatives
NIL
4.4.3 Disclosure on Risk exposure in Derivatives
Qualitative Disclosures
Structure, organization, scope and nature of management of risk in derivatives etc
The organizational structure consists of Treasury Department which is segregated into three functional
areas, ie, front ofce, mid ofce and back ofce. Derivative deals are executed for hedging and market
making.
The risk in the derivatives is monitored by regularly assessing Marked to Market Position (MTM) of
the entire portfolio and the impact on account of the probable market movements. Various risk limits
have been put in place under diferent segments of the derivatives, as approved by Board. The risk
profle of the outstanding portfolio is reviewed by Board at regular intervals. For own balance sheet
management, hedging policies are devised to mitigate risks, lower borrowing costs and enhance yields.
The current outstanding under the derivatives portfolio were executed for trading and hedging.
Accounting:
Board Approved Accounting Policies as per RBI guidelines have been adopted. The hedge swaps are
accounted for like a hedge of the asset or liability. The hedge swaps are accounted on accrual basis
except where swaps for hedging marked to market asset/liability. Such hedge swaps are marked to
market on a monthly basis and the gain/losses are recorded as an adjustment to the designated asset/
liability. The Non hedge swaps are marked to market every month and the MTM losses in the basket
are accounted in the books while MTM profts are ignored.
Collateral Security:
As per market practice, no collateral security is insisted on for the contracts with counter parties like
Banks/PDs etc. For deals with Corporate Clients, appropriate collateral security/margin etc. are stipulated
wherever considered necessary.
Credit Risk Mitigation:
Most of the deals have been contracted with Banks/ Major PDs and no default risk is anticipated on
the deals with them. In the case of deals with corporate clients, the outstanding positions are closely
monitored for the default risks and appropriate measures are initiated.
Quantitative Disclosures (` crore)
Sl.No Particulars
Currency
Derivatives
Interest rate
Derivatives
1 Derivatives (Notional Principal Amount)
a)For hedging
206.04 -
b) For trading - 1075
2 Marked to Market positions (1)
a) Asset (+) 22.93 8.59
b) Liabilities (-) - -8.37
3 Credit Exposure (2) 23.96 10.75
4 Likely impact of one percentage change in
interest rate (100*PV01)
a) on hedging derivatives 0.01 -
b) on trading derivatives - -0.01
5 Maximum and Minimum of 100*PV01 observed
during the year
a) on hedging Max. 0.012
Min. 0.010 -
b) on trading - Max. 0.06
Min. -0.01
4.5 Asset Quality
4.5.1 Non-Performing Asset (` crore)
Particulars 31
st
March 2012 31
st
March 2011
(i) Net NPAs to Net Advances (%) 0.54% 0.60%
(ii) Movement of NPAs (Gross)

(iii) Movement of Net NPAs
(iv) Movement of provisions for NPAs
(excluding provisions on standard assets)
(a) Opening balance 942.34
684.43
(b) Provisions made during the year (net) 223.50 488.85
(c) Write-of/ write-back of excess provisions (net) 108.78 230.94
4.5.2 Sector wise NPAs
Sl No Sector
Percentage of NPAs to Total
advances in that sector
1 Agriculture and allied Activities 3.42%
2 Industry (Micro &Small, Medium and Large) 6.97%
3 Services 4.10%
4 Personal loans 14.13%
4.5.3 Details of Loan Assets subjected to Restructuring for the year 2011-12 (` Crore)
CDR
Mechanism
SME Debt
Restructuring
Others
Standard
advances
restructured
No. of Borrowers
3 2 88
Other accounts
81.09
-
13.26
3.15
871.26
72.92
Sacrifce(diminution in the fair value) 24.16 0.02 20.23*
Sub
standard
advances
restructured
No. of Borrowers
1 1 13
Other accounts
39.23
5.66
6.09
0.35
20.01
11.73
Sacrifce(diminution in the fair value)
10.18 0.02 4.89
Doubtful
advances
restructured
No. of Borrowers
- - -
Other accounts
-
-
-
-
-
-
Sacrifce (diminution in the fair value) - - -
TOTAL
No. of Borrowers
4 3 101
Other accounts
120.32
5.66
19.35
3.50
891.27
84.65
Sacrifce (diminution in the fair value)
34.34 0.04 25.12
*Includes ` 5.26 Crores being 1/8 th of the total amount of sacrifce of ` 42.05 crores provided in respect
of one account for the current quarter and the balance amount of `36.79 crores will be provided over
succeeding 7 quarters as permitted by RBI vide letter dated 15.03.2012.
4.5.4 Details of fnancial assets sold to securitisation/Reconstruction Company for Asset reconstruction
(` crore)
(a) No of accounts
(b) Aggregate value (net of provisions) of accounts sold to SC/RC
(c) Aggregate consideration
(d) Additional consideration realised in respect of accounts
transferred in earlier years
(e) Aggregate gain/loss over net book value
20
36.43
64.95
0.00
28.52
181
44.37
58.43
0.00
14.07
4.5.5 Details of non-performing fnancial assets purchased/sold
a. Details of non-performing fnancial assets purchased: (Amount in ` crore)
Particulars 31
st
March 2012 31
st
March 2011
1. (a) No. of accounts purchased during the year
NIL NIL
2. (a) Of these, number of accounts restructured during the year
B. Details of non-performing fnancial assets sold: (Amount in ` crore)
Particulars 31
st
March 2012 31
st
March 2011
1. No of Accounts sold
NIL NIL 2. Aggregate outstanding
3. Aggregate consideration received
4.5.6 Movement of Provision for Standard Assets (Amount in ` crore)
(a) Opening Balance
(b) Addition/Adjustments during the year
(c) Deduction during the year
(d) Closing Balance
159.60
37.21
0.00
196.81
145.24
14.36
0.00
159.60
4.6 Business Ratios
Particulars 31
st
March 2012 31
st
March 2011
(i) Interest Income as a percentage to Working Funds
(ii) Non-interest income as a percentage to Working Funds
(iii) Operating Proft as a percentage to Working Funds
(iv) Return on Assets
(v) Business (Deposits plus advances) per employee
(` crore)
(vi) Proft per employee (` crore)
10.12
0.96
2.72
1.32
9.64
0.08
9.22
1.18
3.25
1.27
9.23
0.07
4.7 Asset Liability Management
Maturity Pattern of assets and liabilities (As compiled by the Management) (` crore)
Maturity
Pattern
Advances Investments Deposits
Borrowings
(including
Subordinated
Debt)
Foreign
Currency
Assets
Foreign
Currency
Liabilities
Next day 182.31 1.88 149.76 0.00 211.82 6.87
2 -7 days 887.62 282.36 628.08 299.81 104.76 21.43
8-14 days 1246.15 68.29 349.29 0.00 129.13 29.75
15-28 days 927.12 269.02 580.22 105.00 248.10 41.35
29 days to
3 months
2925.14 1489.87 4656.61 61.00 217.87 223.24
Over 3 to
6 months
2927.52 705.58 8136.64 1569.55 242.00 216.84
Over 6 months
to 1 Yr
4673.90 218.09 11069.73 265.70 35.93 423.35
Over 1 Yr to
3Yrs
17069.49 898.01 21435.40 992.76 296.50 221.84
Over 3 Yrs to
5 Yrs
3128.60 1423.90 1374.28 400.58 22.93 52.59
Over 5 Yrs 3978.00 11745.02 554.72 571.64 5.80 0.00
Total 37945.85 17102.02 48934.73 4266.04 1514.84 1237.26
4.8 Exposures
4.8.1 Exposure to Real Estate Sector (As compiled by the Management) (`crore)
Category 2011-12 2010-11
a) Direct exposure
(i) Residential Mortgages
Lendings fully secured by mortgages on residential property that
is or will be occupied by the borrower or that is rented;
(of which individual housing loans eligible for inclusion in Priority
sector advances)
(ii) Commercial Real Estate
Lendings secured by mortgages on commercial real estates
(ofce buildings, retail space, multi-purpose commercial premises,
multi-family residential buildings, multi-tenanted commercial
premises, industrial or warehouse space, hotels, land acquisition,
development and construction, etc.). Exposure would also include
non-fund based (NFB) limits;
(iii) Investments in Mortgage Backed Securities (MBS) and other
securitised exposures
a. Residential,
b. Commercial Real Estate.
b) Indirect Exposure
Fund based and non-fund based exposures on National Housing
Bank (NHB) and Housing Finance Companies (HFCs).
5168.07
(3368.31)
526.12
31.57
1.21
1127.30
5309.07
(3482.54)
537.38
1.80
1.21
1037.85
Total Exposure to Real Estate sector

6854.27 6887.31
4.8.2 Exposure to Capital Market (As compiled by the Management) (`crore)
(i) direct investment in equity shares, convertible bonds, convertible
debentures and units of equity-oriented mutual funds the corpus of
which is not exclusively invested in corporate debt;
(ii) advances against shares/bonds/debentures or other securities or on
clean basis to individuals for investment in shares (including IPOs/
ESOPs), 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;
(iv) advances for any other purposes to the extent secured by the
collateral security of shares or convertible bonds or convertible
debentures or units of equity oriented mutual funds i.e. where the
primary security other than shares/convertible bonds/convertible
debentures/units of equity oriented mutual funds `does not fully
cover the advances;
(v) secured and unsecured advances to stockbrokers and guarantees
issued on behalf of stockbrokers and market makers;
(vi) loans sanctioned to corporates against the security of shares /
bonds/debentures or other securities or on clean basis for meeting
promoters contribution to the equity of new companies in
anticipation of raising resources;
(vii) bridge loans to companies against expected equity fows/issues;
(viii) underwriting commitments taken up by the banks in respect
of primary issue of shares or convertible bonds or convertible
debentures or units of equity oriented mutual funds;
(ix) fnancing to stockbrokers for margin trading;
(x) all exposures to Venture Capital Funds (both registered and
unregistered) will be deemed to be on par with equity and hence
will be reckoned for compliance with the capital market exposure
ceilings (both direct and indirect)
Total Exposure to Capital Market
196.18
12.20
2.04
---
152.13
------
------
---
---
14.61
377.16
162.31
9.87
0.83
--
120.62
--
--
--
--
7.00
300.63
4.8.3 Country Risk (As compiled by the Management)
The net funded exposure of the Bank in respect of foreign exchange transactions with each country
is within 1% of the total assets of the Bank and hence no provision is required to be made in respect of
country risk as per the RBI circular DBOD.BP.BC.96/21.04.103/2003-04 dated 17 June 2004.
Risk Category wise Country Exposure (`crore)
Risk Category* Exposure (net)
as at 31
st
March
2012
Provision held
as at 31
st
March
2012
Exposure (net)
as at 31
st
March
2011
Provision held
as at 31
st
March
2011
Insignifcant 613.67 0.00 787.17 0.00
Low 340.08 0.00 307.71 0.00
Moderate 28.55 0.00 21.34 0.00
High 5.76 0.00 4.70 0.00
Very High 8.43 0.00 6.43 0.00
Restricted 0.04 0.00 0.00 0.00
Of-credit 0.04 0.00 0.00 0.00
Total 996.57 0.00 1127.35 0.00
* The above fgures include both funded as well as non-funded exposures.
4.8.4 Details of Single Borrower limit (SGL), Group Borrower Limit (GBL) where the bank has exceeded the
prudential exposure during the year. (` crore)
Borrower Name Total Exposure % to Capital Fund
Food credit 870.00 15.93
4.8.5 Concentration of Deposits, Advances, Exposures and NPAs
Concentration of deposits (` crore)
Total Deposits of Twenty Large depositors 2374.51
Percentage of Deposits of twenty large
depositors to total deposits of the bank
4.85%
Concentration of advances (` crore)
Total advances of Twenty Largest Borrowers 6863.43
Percentage of advances of twenty largest
Borrowers to total advances of the bank
18.09%
Concentration of exposures (` crore)
Total exposures of Twenty Largest borrowers/customers 9071.20
Percentage of exposures to twenty largest borrowers/customers
to total exposure of the bank on borrowers/customers
13.52%
Concentration of NPAs (` crore)
Total exposures to top Four NPA accounts 208.07
4.8.6 Movement of NPAs (` crore)
Gross NPAs as on 1
st
April 2011 1148.33
Additions (Fresh NPAs) during the year 701.43
Sub total (A) 1849.76
Less:
(i) Upgradations 75.68
(ii) Recoveries (excluding recoveries made from upgraded accounts) 358.78
(iii) Write ofs 108.35
Sub-total (B) 542.81
Gross NPAs as on 31
st
March 2012 1306.95
4.8.7 Details of Overseas Assets, NPAs and Revenue - Nil
4.8.8 Of balance Sheet SPV sponsored - Nil
5. Fixed Assets
i) During the year 1995-96, the appreciation of ` 9.65 crore in the value of land and buildings
consequent upon revaluation by approved valuers was credited to Capital Reserve. Depreciation
for the year on the net addition to value on such revaluation of assets at ` 0.22 crore (previous
year ` 0.23 crore) has been transferred from Capital Reserve to Proft & Loss Account. There has
been no revaluation of assets during this year.
ii) Land and premises include fats ` 0.37 crore (previous year ` 0.37 crore), written down value
` 0.18 crore (previous year ` 0.19 crore), taken possession of and being used by the Bank, for
which documentation/registration formalities are to be completed.
6. Employee Stock Option Scheme (ESOS):
Shareholders of the bank has approved Employee Stock Option Scheme (ESOS) through postal ballot,
the result of which was announced on Dec, 24, 2010, enabling the Board and/or the Compensation
Committee to grant such number of equity shares, including options, of the Bank not exceeding 5% of
the aggregate number of paid up equity shares of the Bank, in line with the guidelines of SEBI. Pursuant
thereto, the Compensation Committee of the bank granted the following options:
Sl
No.
Particulars
No. of Options
granted &
Accepted
1
ESOS granted on 9
th
April 2011 with vesting period of 1,2,3 and 4 years.
Exercise period of 5 years and Exercise price of `420.65
2875875
2
ESOS granted on 2
nd
June 2011 with vesting period of 1,2 and 3 years.
Exercise period of 5 years and Exercise price of ` 449.70
100000
3
ESOS granted on 16
th
June 2011 with Exercise period of 5 years and
Exercise price of `454.65
60000
4 Total number of options granted during the year 3035875
5 Options exercised/forfeited/Lapsed during the year Nil
6 Options outstanding at the end of the year 3035875
As per SEBI guidelines the accounting for ESOS can be done either under the Intrinsic value basis or
Fair value basis.
The Compensation Committee in their meeting dated 10/05/2012 decided to adopt Intrinsic value
method for accounting of ESOS, in terms of the power vested on them as per the resolution of EGM
dated 24 December 2010
The exercise price of the options granted is the same as the market price on the date prior to grant
date and hence there is no intrinsic value for the options, which has to be amortized over the vesting
period.
If Fair Value Method had been adopted based on Black-Scholes pricing model for pricing and
accounting of options, net proft would be lower by ` 1972.46 lacs.
The impact on Basic and Diluted Earnings per share for the year, had the company followed Fair Value
Method of accounting for ESOS compensation cost is ` 42.91 and ` 42.81 respectively.
7. Disclosure in terms of Accounting Standard
7.1 There is no material prior period income/expenditure requiring disclosure under AS 5 Net Proft or Loss
for the Period, Prior period items and changes in Accounting policies issued by the Institute of Chartered
Accountants of India.
7.2 Employee Benefts (AS 15) Holding Company
a) Defned Contribution Plan
Provident Fund
Employees who have not opted for pension plan are eligible to get benefts from provident fund,
which is a defned contribution plan. Aggregate contributions along with interest thereon are paid
on retirement, death, incapacitation or termination of employment. Both the employee and the Bank
contribute a specifed percentage of the salary to the Federal Bank Employees Provident Fund. The
Bank has no obligation other than the monthly contribution.
The Bank recognized ` 41.17 lakhs (Previous year ` 15.84 Cr) for provident fund contribution in the Proft
and Loss account
New Pension Scheme
As per the industry level settlement dated 27/04/2010, employees who joined the services of the Bank
are not eligible for the existing pension scheme where as they will be eligible for Defned Contributory
Pension Scheme in line with the New Pension Scheme introduced for employees of Central Govt.
Employee shall contribute 10% of their Pay and Dearness Allowance towards defned contributory
Pension Scheme and the Bank will also make a matching contribution. There is no separate Provident
Fund for employees joining on or after 01/04/2010.
(b) Defned beneft plan
1) Gratuity
The Bank provides for Gratuity, a defned beneft retirement plan (the Gratuity Plan) covering the
eligible employees. The Gratuity Plan provides a lumpsum payment to vested employees on retirement,
death, incapacitation or termination of employment, of an amount based on the respective employees
salary and the tenure of employment. Vesting occurs upon completion of fve years of service as per
Payment of Gratuity Act, 1972 and its amendment with efect from 24.05.2010 or as per the provisions
of the Federal Bank Employees Gratuity Trust Fund Rules / Bi-partite Award provisions. Liabilities with
regard to the Gratuity Plan are determined by Actuarial valuation as on the Balance Sheet date, based
upon which, the Bank contributes all the ascertained liabilities to the Federal Bank Employees Gratuity
Trust Fund (the Trust). Trustees administer contributions made to the Trust and contributions are
invested in specifc investments as permitted by law.
2) Superannuation / Pension
The Bank provides for monthly pension, a defned beneft retirement plan (the pension plan) covering
eligible employees. The pension plan provides a monthly pension after retirement of the employees till
death and to the family after the death of the pensioner. The monthly pension is based on the respective
employees salary and the tenure of employment. Vesting occurs upon completion of ten years of
service. The Bank pays the monthly pension by purchasing annuities from Life Insurance Corporation
of India (LIC). Liabilities with regard to the pension plan are determined by actuarial valuation as on
the Balance Sheet date, based upon which, the Bank contributes all the ascertained liabilities to the
Federal Bank (Employees) Pension Fund (the Trust). Trustees administer contributions made to the
Trust and contributions are invested in specifc investments as permitted by law.
The following table as furnished by Actuary sets out the funded status of gratuity / pension plan and
the amount recognized in the Banks fnancial statements as at March 31, 2012.
i) Change in beneft obligations: ( ` Crore)
Particulars Gratuity Plan Pension Plan
2011-12 2010-11 2011-12 2010-11
Projected beneft
obligation, beginning of the year
203.51 181.73 589.34 195.38
Service Cost
10.94 9.75 49.16 42.68
Interest cost
16.38 14.05 46.48 11.50
Actuarial gain/ (loss)
15.97 10.15 (1.25) 443.03
Benefts paid
(21.55) (12.17) (84.97) (103.25)
Projected beneft obligation, end of the year
225.25 203.51 598.76 589.34
ii) Change in plan assets:
Particulars
2011-12 2010-11 2011-12 2010-11
Plan assets at beginning of the year at
fair value
184.69 181.73 404.04 195.38
Actuarial gain/(loss) 20.04 0.60 1.31 0.92
Employers Contributions ----- ----- 67.90 295.36
Benefts paid (21.56) (12.17) (84.97) (103.25)
Plan assets at end of the year, at fair
value
198.87 184.69 422.62 404.04
iii) Reconciliation of present value of the obligation and the fair value of the plan assets;
Particulars
2011-12 2010-11 2011-12 2010-11
Fair value of plan assets at the end of the
year
198.87 184.69 422.62 404.04
Present value of the defned beneft
obligations at the end of the period
225.25 203.51 598.76 589.34
Liability recognized in the Balance Sheet 26.38 18.82 176.14 @ 185.30
@ Includes amount payable on account of transitional liability due to second option for pension `134.72
crore
iv) Gratuity/pension cost for the year ended 31st March, 2012:-
Particulars
2011-12 2010-11 2011-12 2010-11
Service cost 10.94 9.75 49.16 42.68
Interest cost 16.38 14.05 46.48 11.50
Actuarial gain/(loss) (4.06) 9.55 (2.56) 442.10
Net cost Debit to Proft and Loss
account
7.56 18.82 58.74 50.58
Amount recovered from employees
exercising second option for pension/
amount transferred to PF account of
such optees *
- - - 295.35
Amount not debited in proft and
loss account, but carried over to be
amortised in future years *
- - 101.04 134.72
Actual return on plan assets 16.91 15.13 35.66 16.55
* see Note no. 3 of schedule 19
v) Investment details of plan Assets :-
Particulars
2011-12 2010-11 2011-12 2010-11
Central and state Government bonds 49.05 50.22 141.27 149.69
Other debt securities 31.14 37.64 92.49 108.08
Balance in Saving bank account with the Bank 2.10 1.53 9.17 22.75
Net current assets 2.42 2.88 6.80 8.62
Balance with LIC 114.15 92.42 172.89 114.90
Total 198.86 184.69 422.62 404.04
vi) Assumptions:-
Particulars
2011-12 2010-11 2011-12 2010-11
Discount rate 8.50% 8.00% 8.50% 8.00%
Annuity rate per Rupee - - 125.65445 125.65445
Salary escalation rate 5.50% 5.00% 5.50% 5.00%
Estimated rate of return on plan assets 8.50% 8.00% 8.50% 8.00%
(c) Leave encashment
The employees of the Bank are entitled to compensated absence. The employees can carry forward a
portion of the unutilised accrued compensated absence and utilise it in future periods or receive cash
compensation at retirement or termination of employment for the unutilized accrued compensated
absence for a maximum of 240 days. The Bank records an obligation for compensated absences in the
period in which the employee renders the services that increase this entitlement. The Bank measures
the expected cost of compensated absence as the additional amount that the Bank expects to pay as
a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial
valuations.
(d) Sick Leave / Leave Travel Concession / Unavailed Casual Leave
A sum of ` 24.64 crore (Previous year ` 22.10 crore) has been provided towards the above liabilities in
accordance with AS 15 (Revised) based on actuarial valuation.
Employee Benefts (AS 15) Subsidiary Company
a) Amount recognized as an expense in the Statement of Proft and Loss in respect of Defned Contribution
Plans
(` in Thousands)
Current Year Previous Year
Provident Fund 5,481 -
Employee State Insurance 1,777 839
Total 7,258 839
b) Defned Beneft Plan- Gratuity (Unfunded) & Long term employee Benefts- Compensated absences-
Vesting (Unfunded).
` Thousands
Particulars
Gratuity
Compensated
Absences
i Changes in the present value of defned
obligation representing reconciliation
of opening and closing balances thereof
are as follows :
Current
year
Previous
Year
Current
year
Previous
Year
1 Present Value of Defned Beneft
Obligation as at the beginning of the
year
763.23 - 1,393.49 675.12
3 Interest Cost 61.06 - 97.75 53.75
4 Actuarial (gains) / losses (719.39) 294.41 (928.44) (392.72)
5 Benefts paid - - (343.37 ) (6.40)
6 Present value of Defned Beneft
Obligation as at the end of the year
400.26 763.23 2,168.18 1,393.49
ii Changes in the fair value of plan assets
representing reconciliation of opening
and closing balances thereof are as
follows :
1
Fair value of Plan assets as at the
- - - -
2 Expected return on plan assets - - - -
3 Actuarial gains/ (losses) - - - -
4 Actual contributions - - 343.37 6.40
5 Benefts paid - - (343.37) (6.40 )
6 Fair value of Plan assets as at the end of
the year.
- - - -
7 Funded Status (400.26) (763.23) (2,168.18) (1393.49)
iii Reconciliation of Present Value of Defned Beneft Obligation and fair value of plan assets
showing amount recognized in the Balance Sheet :
1 Present value of Defned Beneft Obligation 400.26 763.23 2,168.18 1,393.49
2 Fair value of plan assets - - - -
3 Funded status (400.26) (763.23) (2,168.18) (1,393.49)
4 Unrecognized Past Service Costs - - - -
5
Net asset/(Liability) recognized in Balance
Sheet
(400.26) (763.23) (2,168.18) (1,393.49)
iv Expenses recognized in the statement of proft and loss for the year ended 31st March,2012
2 Interest cost 61.06 - 97.75 53.75
3 Expected return on plan assets

-
-

-

-
4 Past Service cost

-
-

-

-
5 Actuarial Losses/(Gains)

(719.39)

294.41

(928.44)

(392.71)
6
Total expense recognized in the Statement
of Proft & Loss
(362.97) 763.23 1,118.06 724.78
v Principal Actuarial Assumptions : Gratuity
Compensated
Absences
1 Discount Rate (%) 8.57% 8% 8.57% 8%
2 Expected Return on plan assets (%) - - - -
3 Salary Escalation (%) 10% 10% 10% 10%
4 Mortality LIC (1994-96) Ultimate
vi Experience History Gratuity Compensated Absences
1
(Gain)/Loss due on obligation due to
change in assumption
(475.39) - (73.55) 57.80
2 Experience (Gain)/Loss on Obligation (244.01) 294.41 (854.89) (450.52)
3 Actuarial Gain/(Loss) on plan assets - - - -
The Discount rate is based on the benchmark yields available on Indian Government bonds as at the
Balance Sheet date with terms matching that of the liabilities and the salary increase rates takes into
account the infation, seniority, promotion and other relevant factors.
7.3 Segment Information (AS 17) (As compiled by the Management)
In terms of the Accounting Standard 17 of ICAI, the Banks operations are classifed into four business segments (see Principal
Accounting Policy no. 12) and the information on them is as under.
(` crore)
Business
Segments
Treasury
Corporate/ Whole
sale Banking
Retail Banking
Other Banking
Operations
Subsidiary
(Fedfna)
Total
2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11
Revenue 1530.30 932.00 1983.21 1460.89 2528.78 2157.47 39.29 18.04 32.34 1.96 6113.92 4570.36
Result (net of
provisions)
45.22 86.19 250.33 227.60 852.26 591.51 19.97 9.61 -3.47 -11.03 1164.31 903.88
Unallocated
expenses
-- --
Operating
proft (PBT)
1164.31 903.88
Income taxes 392.80 315.42
Share of loss of
associate
17.78 32.00
Extra-ordinary
proft/loss
0.00 0.00
Net Proft 753.73 556.46
OTHER
INFORMATION
Segment Assets 20042.06 17591.06 19752.80 16306.10 18868.50 16233.68 557.57 448.32 352.90 16.34 59573.83 50595.50
Unallocated
assets
970.41 747.34
Total assets 60544.24 51342.84
Segment
liabilities
18167.25 15748.52 18569.71 15055.69 17769.28 15013.75 0.00 0.41 35.68 7.28 54541.92 45825.65
Unallocated
liabilities
410.02 499.49
Total liabilities 54951.94 46325.14
Note: 1) The Bank has only the Domestic geographic segment.
2) For presentation of segment information, income, expenses, assets and liabilities of subsidiary
company are classifed under Retail Banking.
7.4 Related Party Disclosures
The following are the signifcant transactions with related parties during the year ended 31st March 2012
Name of the Party Nature of Relationship
IDBI Federal Life Insurance Company Limited Associate
Sri. Shyam Srinivasan Key Management Personnel
Sri P C John Key Management Personnel
Sri SomSankar Sengupta Key Management Personnel
Shri P K Mohapatra, Manager Key Management Personnel
(` crore)
Particulars
Key Management Personnel*
31
st
March 2012 31
st
March 2011
Remuneration 1.62 2.00
*The normal transactions of the Bank with the above persons as constituents are not reckoned for the
purpose.
Note: In accordance with the RBI Guidelines on Compliance with the Accounting Standards by the
Banks, the details of transactions with associate/joint venture and subsidiary company have not been
disclosed since there is only one entity in the respective category of the related party.
7.5 Earnings per share (AS 20)
The Bank reports basic and diluted earnings per share in accordance with the Accounting Standard -20
Earnings per Share.
Particulars 31
st
March 2012 31
st
March 2011
Weighted average number of equity shares used in
computation of basic earnings per share (in 000s)
Weighted average number of equity shares used in
computation of diluted earnings per share (in 000s)
Nominal Value of share (in `)
Basic earnings per share (in `)*
Diluted earnings per share ( in `)*
Earnings used in the computation of basic and diluted
earnings per share (` in Lakhs)
171047
171047
10
44.07
44.07
75372.76
171047
171047
10
32.53
32.53
55646.66
* Weighted average
7.6 Taxation (AS 22)
i. The disputed amount of income tax demand as on 31.03.2012 amounts to `610.32 crore. In the
opinion of the Bank no provision is considered necessary in respect of the above disputed demand
in view of various judicial decisions and the same has been disclosed as contingent liability.
ii. The Bank has accounted for income tax in compliance with ICAIs Accounting Standard 22.
Accordingly, timing diferences resulting in deferred tax assets and deferred tax liabilities are
recognised. The major components of deferred tax liabilities and assets as on 31st March 2012 are
shown below:
(` crore)
31st March 2012 31st March 2011
Holding Subsidiary Holding Subsidiary
Deferred Tax Liability
Tax efect of timing diference in the assessment of:
(i) Interest income 102.24 0.00 63.04 0.00
(ii) Depreciation on Fixed Asset 5.73 0.00 6.10 0.00
(iii) Depreciation on Investments 243.32 0.00 173.58 0.00
(A) 351.29 0.00 242.72 0.00
Deferred tax asset
(i) Interest/premium paid on purchase of
securities
47.22 0.00 40.05 0.00
(ii) Provision for Standard Assets 47.00 0.00 47.00 0.00
(iii) Others 171.76 0.00 157.17 0.09
(B) 265.98 0.00 244.22 0.09
Net Deferred tax liability/(asset) (A-B) 85.31 0.00 -1.50 -0.09
iii) Deferred tax assets (net) of the subsidiary for the FY 2011-12 has not been recognized by credit to
statement of proft and loss for the year ended 31st March 2012, as a matter of prudence, in the
absence of virtual certainty supported by convincing evidence that sufcient future taxable income
will be available, in terms of the Accounting standard 22,Taxes on Income notifed under the
Companies (Accounting Standard) Rules, 2006.
8. In respect of Holding Company, Provisions and Contingencies debited in Proft and Loss Account during
the year: (` crore)

For the year ended / As at 31
st
March 2012 31
st
March 2011
i) Provision towards NPAs (net) 221.77 488.85
ii) Provision for Investments 34.86 11.13
iii) Provision for Standard Assets 36.45 14.35
iv) Provision for Taxation :
Current Tax
Deferred tax
305.90
86.89
316.99
-1.57
v) Provision towards P/V sacrifce on restructuring,
other contingencies etc
41.81 11.12

Total 727.68 840.87
9. Floating Provision (` crore)
Particulars Standard Assets
Provision
NPA Provision
2011-12 2010-11 2011-12 2010-11
(a) Opening Balance in the foating provisions
account
(b) The quantum of foating provisions made in
the accounting year
(c) Amount of draw down made during the
accounting year
(d) Closing Balance in the foating provisions
account
38.00
Nil
Nil
38.00
38.00
Nil
Nil
38.00
179.52
Nil
Nil
179.52
179.52
Nil
Nil
179.52
10. In the fnancial statement of Subsidiary Company, the schedule appended to the Balance Sheet of a
non-deposit taking non-banking fnancial company (as required in terms of paragraph 13 of Non-Banking
Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions,
2007)
(Figures in ` thousands)
Particulars
Amount
outstanding
Amount
overdue
Liabilities side :
1
Loans and advances availed by the non-banking fnancial
company inclusive of interest accrued thereon but not paid:
NIL
NIL
NIL
NIL
(a) Debentures : Secured
: Unsecured
(other than falling within the meaning of public deposits*)
(b) Deferred Credits NIL NIL
(c) Term Loans NIL NIL

(d) Inter-corporate loans and borrowing NIL NIL
(e) Commercial Paper NIL NIL
(f) Cash Credit Facility 15,96,039 NIL
Assets side :
Amount outstanding
2
Break-up of Loans and Advances including bills receivables
[other than those included in (4) below] :
31,18,239
4,272
(a) Secured
(b) Unsecured
3
Break up of Leased Assets and stock on hire and other assets
counting towards AFC activities


(i) Lease assets including lease rentals under sundry debtors :
NIL
NIL
(a) Financial lease
(b) Operating lease

(ii) Stock on hire including hire charges under sundry debtors:

NIL
NIL
(a) Assets on hire
(b) Repossessed Assets

(iii) Other loans counting towards AFC activities

NIL
NIL
(a) Loans where assets have been repossessed
(b) Loans other than (a) above
4 Break-up of Investments :
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Current Investments :
1 Quoted :
(b) Preference
2 Unquoted :
(b) Preference
Long Term investments :
1. Quoted :
(b) Preference
2. Unquoted :
(b) Preference
5 Borrower group-wise classifcation of assets fnanced as in (2) and (3) above :
Category Amount net of provisions*
Secured Unsecured Total
1. Related Parties
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
(a) Subsidiaries
(c) Other related parties-Holding
Company
2. Other than related parties 31,05,211 NIL 31,05,211

Total 31,05,211 NIL 31,05,211
* Contingent Provision on Standard Assets has not been netted of as per prudential norms
6
Investor group-wise classifcation of all investments (current and long term) in shares and
securities (both quoted and unquoted):

Category
Market Value / Break up or
fair value or NAV
Book Value
(Net of
Provisions)

1. Related Parties
NIL
NIL
NIL
NIL
NIL
NIL
(a) Subsidiaries
(c) Other related parties

2. Other than related parties NIL NIL

Total NIL NIL
7
Other information
Particulars
Amount
(` thousands)
(i) Gross Non-Performing Assets
(a) Related parties Nil
(b) Other than related parties 61,227
(ii) Net Non-Performing Assets
a) Related parties Nil
b) Other than related parties 43,927
(iii) Assets acquired in satisfaction of debt Nil
11. Additional Disclosures:
11.1 Amount of Provisions made for Income-tax during the year
(`crore)
2011-12 2010-11
Provision for Income Tax 392.71 315.42
11.2 Details of penalties imposed by RBI under the provision of Section 46 (4) of BR Act, 1949
Nil
11.3 Disclosure of customer complaints and awards passed by the Banking Ombudsman:
A. Customer Complaints
(a) No. of complaints pending at the beginning of the year 28
(b) No. of complaints received during the year 1588
(c) No. of complaints redressed during the year 1571
(d) No. of complaints pending at the end of the year 45
B. Awards passed by the Banking Ombudsman
(a) No. of unimplemented awards at the beginning of the year 2
(b) No. of awards passed by the Banking Ombudsman 2
(c) No. of awards implemented during the year 2*
(d) No. of unimplemented awards at the end of the year 2$
*One awards is implemented and appellate authority withheld the award in other case
$ Appeal against both the awards fled
11.4.1 Income from bancassurance business
(` lakh)
Sl No Nature of Income As on 31
st
March 2012
1 For selling life insurance policies 1298.90
2 For selling non-life insurance policies 150.22
3 For selling mutual fund products 36.02
4 Others (reimbursement of expenses) 282.51
11.4.1 Provision coverage ratio
Provision coverage ratio as per RBI guidelines as on 31st March 2012 stood at 88.69%
11.4.2 Amount of advances for which intangible securities such as charge over rights, licences, authority etc.
has been taken as collateral security and the value of such collateral security : Nil
11.4.3 There are no dues to micro and small enterprises as at 31st March 2012. This disclosure is based on the
records available with the Bank.
11.4.4 The Bank has not issued any letters of comforts coming within the Prudential Norms for Issuance of
Letters of Comforts by banks regarding their subsidiaries (DBOD.No. BP.BC.65/21.04.009/2007-08
dated March 4, 2008).
11.4.5 The Bank has not made any draw down of reserves during the year.
11.5 Previous years fgures have been regrouped and recast wherever necessary.
DIRECTORS
FRN: 004532S FRN: 027835
Net Proft Before Tax and Extra Ordinary Items/Provisions 14,991,882 14,293,355
Adjustments for:-
Depreciation on Fixed assets 589,621 547,135
Others (5,502) (5,571)

Operating Proft before Working Capital Changes 15,576,001 14,834,919
Adjustments for working capital changes:-
Investments (27,186,750) (13,791,545)
Funds Advanced to Customers (62,098,155) (54,965,423)
Other Operating Assets (4,059,201) (2,384,884)
Deposits from Customers 59,462,785 69,391,622
Borrowings from Banks & Financial Institutions 23,776,797 3,416,062
Other Operating Liabilities 1,483,962 583,606
Cash Generated from Operations 6,955,439 17,084,357
Taxes Paid (6,090,483) (4,359,811)
Cash Flow before Extraordinary items 864,956 12,724,546
Extraordinary items 0 0
Net Cash From Operating Activites 864,956 12,724,546
B. Cash Flow from Investing Activities
Purchase of Fixed Assets (1,035,426) (609,050)
Sale of Fixed Assets 7,969 39,669
Investment in Associate (260,000) (900,000)
Net Cash from Investing Activities (1,287,457) (1,469,381)
Equity Capital including Premium 0 3,361
Dividend Paid (1,689,759) (997,197)
Net Cash used in Financing Activities (1,689,759) (993,836)
Increase/(Decrease) in Cash & Cash Equivalents (2,112,260) 10,261,329
Cash & Cash Equivalents at the beginning of year 37,496,012 27,234,683
Cash & Cash Equivalents at the end of year 35,383,752 37,496,012
Cash Flow Statement Consolidated
(In thousands of `)
For the Year ended For the Year ended
31 March 2012 31 March 2011
DIRECTORS
FRN: 004532S FRN: 027835
The Board of Directors,
The Federal Bank Limited,
Aluva
We have audited the attached Consolidated Balance Sheet of THE FEDERAL BANK LIMITED, Aluva and its subsidiary
(FedBank Financial Services Ltd.) and its associate (IDBI Federal Life Insurance Company Limited) (collectively referred
to as the group) as at 31st March, 2012, and also the Consolidated Proft and Loss Account and the Consolidated Cash
Flow Statement for the year ended on that date annexed thereto.These fnancial statements are the responsibility of
The Federal Bank Limiteds management and have been prepared by the management on the basis of separate fnancial
statements and other fnancial information regarding components. Our responsibility is to express an opinion on these
fnancial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the fnancial statements. An audit also includes assessing the accounting principles used and signifcant estimates made
by management, as well as evaluating the overall fnancial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
The audit of the subsidiary company has been carried out by one of us.
We did not audit the fnancial statements of the associate which have been been audited by other auditors, and whose
report has been furnished to us.These fnancial statements refect the banks share of losses on the investments made
therein, accumulated upto 31st March 2012 amounting to Rs 112.55 crores, and for the year ended on that date amounting
to Rs 17.78 crores, and our opinion thereon is based solely on the report of the said other auditors.
We report that the consolidated fnancial statements have been prepared by The Federal Bank Limiteds management in
accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements and Accounting
Standard (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements, prescribed by the
Companies (Accounting Standards) Rules, 2006.
Without qualifying our opinion, we draw attention to Note No.3 of Schedule 19 to the consolidated fnancial statements,
which describes deferment of pension liability of the bank to the extent of Rs.101.04 crore pursuant to the approval
granted by the Reserve Bank of India to the Bank vide letter no.DBOD No.BP.BC.15896/21.04.018/2010-11 dated 08.04.2011,
for availing the exemption from application of the provisions of Accounting Standard (AS) 15- Employee Benefts, as
provided therein.
Based on our audit and on consideration of reports of other auditors on separate fnancial statements and on the other
fnancial information of the components, and to the best of our information and according to the explanations givento
us, we are of the opinion that the attached consolidated fnancial statements, give a true and fair view in conformity
with the accounting principles generally accepted in India:
a) in the case of the Consolidated Balance Sheet, of the state of afairs of the groupas at 31st March 2012;
b) in the case of the Consolidated Proft and Loss Account, of the proft of the group for the year then ended; and
c) in the case of the Consolidated Cash Flow Statement, of the cash fowsof the group for the year ended on that
date.
Auditors Report on Consolidated
Financial Statements
FRN: 004532S FRN: 027835
Shri. Pranab Kumar Mukherjee, the then Honble Union Minister of Finance fanked by Banks
Chairman Mr. P.C. Cyriac, Star Customer Shri. Kapil Dev and other directors as they posed for
a photo session soon after the inauguration of 100 branches of the Bank by Shri. Mukherjee.
Shri. Pranab Kumar Mukherjee, the then Honble Union Minister of Finance pouring water on
the Federal Tree which was all set to blossom out with 100 fowers representing the 100 new
branches.
Inauguration of Fedselect Priority lounge of Br. Irinjalakuda Nada by Cine Artist Shri. Innocent in
the presence of Shri. Tomy John (AGM & Regional Head - Irinjalakuda), Shri. K.V. Ramanathan
(writer and winner of Samsthana Balasahithya Award), Shri. Rajesh K.G. (Branch Manager)
and others.
Federal Bank Mathrubhumi SEED 2012-13 is inaugurated by Shri. P.C. John, Executive Director
by giving away saplings to students at the launch held at Federal Towers, Ernakulam on World
Environment Day. Shri. P. V. Chandran (MD, Mathrubhumi), Shri. Sathyan Anthikkad (Film
Director), Shri. Thampy Kurian (Addl GM, Agri & Financial Inclusion Dept) and Shri. Biju Menon
(Film Actor) are also seen in the picture.
Our MD & CEO Shri. Shyam Srinivasan exchanges the MOU with Shri. N Sivasailam IAS, MD,
Bangalore Metro Rail Corporation Ltd (BMRCL) enabling our Bank to act as BMRCLs Merchant
Bank for Automatic Fare Collection (AFC) for the 13 stations in Northern REACH.
Exchange of signed agreement between our Bank and Amrita Institute of Medical Sciences,
Kochi by Shri. T.S. Jagadeesan (Chief General Manager) and Dr. Prem Nair (Medical Director,
AIMS) in the presence of Shri. Ajith Kumar K.K. (DGM, SME Business Dept.), Shri. T.P. Mathai
(DGM and Regional Head) and others.
Our MD&CEO Shri.Shyam Srinivasan receives the Golden Peacock Award for Corporate Social
Responsibility 2012 from His Excellency Mr Juma Al Majid, Chairman of Dubai Economic
Council & Founder Chairman of Juma Al Majid Group, in the presence of Shri. Suresh Kumar
(Director) and other dignitaries.
Inauguration of Br.Manarcadu by Shri.Oommen Chandy (Chief Minister of Kerala), in the
presence of our MD & CEO Shri.Shyam Srinivasan, Shri.Simon James (AGM & Kottayam Regional
Head), Shri.Thomas Joseph (Br. Manager) and others.
The launch of 100 new branches at Hotel ITC Maurya, New Delhi by the then Honble Union
Minister of Finance Shri. Pranab kumar Mukherjee. Shri. Kapil Dev, former Indian Cricket
Captain triggered the launch of 100 new ATMs on the same occasion.
Our Bank got the Global CSR Award for Best Corporate Social Responsibility Practice
Overall. The award is being received by Shri. Antu Joseph (Deputy General Manager) from
Dr. M Veerappa Moily (Honble Union Minister of Corporate Afairs), Government of India.
Shri. P.C. John (Executive Director) is seen exchanging the MOU for fnancing Tatas commercial
vehicle with Shri. Sanjay K Mishra (Regional Head, South, Tata Motors), in the presence of Shri.
Ajith Kumar K.K. (DGM), Shri. Eqbal Manoj (CM) and Smt. Treasa Joseph, (SM, SMEBD).
October 18, 2012 was the 66th founders day of the bank. To make the day memorable, 66
branches were opened in one go on that date. MD & CEO, Shri. Shyam Srinivasan is seen
inaugurating the branches by lighting the lamp on the occasion. Shri. P. C. Cyriac (Chairman of
the Board), Shri. P. C. John (Executive Director), Shri. Rajagopalan Nair (Addl. GM, Information
Technology Dept) and Shri. T .Ommen Benjamin (Zonal Head, Ernakulam) are also seen.
Launch Of Three Varients Of Master Cards, 2 Debit Card And One Foreign Currency Travel
Card- Mastero, Premium And Cash Passport Travel Card.
Shri. Antu Joseph (DGM, LCD) and Shri. V.K. Kukreja (ED, Finance and Accounts, LIC) are seen
exchanging the MOU documents on e-Payment services for all Divisional Ofces of LIC across
the country, in the presence of Shri. Anil Kumar V.V. (AGM, Branch Mumbai Fort).
MD & CEO, Shri. Shyam Srinivasan, planting the one of the 66 saplings at Mookannoor, the
hometown of Hormis Sir on October 18, 2012, the 66th founders day of the bank in the presence
of federals and natives of the town.
Shri.K.S. Mohan (GM, Operations) receives the award for the Best Bank in the category of
Innovative Cost Management Measures Implemented, instituted by Kerala Management
Association (KMA) from Mr. K.M. Chandrasekhar (Dy Chairman, Planning Commission and
former Cabinet Secretary) in the presence of Shri. Surinder Kumar Laul (DGM).
Inauguration of Br. New Delhi/ Hauz Khas by Shri. Jaydeep Shah (President, ICAI) in the
presence of Shri. Virender Aggarwal (National Organising Secretary, Akhil Bhartiya Agrawal
Sammelan), Shri. Jose V Joseph (Zonal Head, New Delhi) Shri. P.K. Patney (Regional Head,
New Delhi) and others.
MD & CEO addressing Management workshop conducted by Federal Bank.
Inauguration of contact centre for disabled by Dr.C.Rangarajan (Chairman of Economic Advisory
Council to the Prime Minister of India).
Our MD & CEO Shri. Shyam Srinivasan presenting memento to Dr.C.Rangarajan on the
occassion of the 12th Commemorative Lecture of Fedbank Hormis Memorial Foundation held
at Cochin.
Dr. Subir Gokarn, Deputy Governor, RBI with our MD & CEO.
The distribution of smart cards under fedjyothi is inaugurated by Smt. K.K. Nafeesa (President,
Kuttiyadi Grama Panchayat), in the presence of Shri. C.P. Mohandas (General Manager)
Shri. P.K. Francis (AGM), Shri.Rajagopal T (SM, Br.Thottilpalam) and others.
The Federal Bank Limited, Regd. Office: Aluva.
Corporate Office, Post Box No. 103, Federal Towers, Aluva-683 101, Kerala, India.
Phone: 91-484-2623620-29. Email: [email protected] www.federalbank.co.in

Annual Report 2011 2012 Federal Bank

Uploaded by

Copyright:

Available Formats

Annual Report 2011 2012 Federal Bank

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Annual Report 2011 2012 Federal Bank

Uploaded by

Copyright:

Available Formats

A N N U A L

You might also like