Advisory Board:Mr. Sivakumar G.,Executive Vice President (Credit)Mr. John Thomas,Sr. Gen. Manager (Business Development Dept. )Mr. Paul V.L.,Sr. General Manager (Admin)

Editorial Board:Mr. Ajit C Jacob,Dy. GM (CRD)Mr. Peter A. D.,Dy. GM & Principal, SIBSTC, ThrissurMr. M. T. Jose,Dy. GM (Personnel)Mr. Biju E. Punnachalil,Dy. GM (IRMD)Mr. Francy Jos E.,AGM (CCO)Mr. Nanda Kumar C.,Manager, STCMrs. Sherin Thomas,Clerk, HO Inspection & Vigilance

Objectives:

To instil in the bank staff a sense of belonging and involvement in the bank’s affairsTo appreciate and applaud the individual achievements of our members of staffTo act as a communication medium between management and the staffTo increase the professional competence of our bank staff

Corporate Family Magazine of

South Indian Bank

Publisher:Mr. Thomas Joseph K.Executive Vice President (Operations)

EditorMrs. Sheela Davis,CM, Staff Training College

2

Layout, Typeset & PrintingLumiere Printing WorksThrissur 680 020

South Indian Bank bags Digital India Excellence Award 2017

Mr. Thomas Joseph K., EVP (Operations) receiving Digital India Excellence Award 2017 from Sri. K. K Sharma, Secretary (MHRD) & Justice RajeshTandon, Former Judge, Uttarakhand High Court in the presence of Prof. Dinesh Sharma, Hon. Deputy Chief Minister, Uttar Pradesh

Inside

MessageArticles

Indian Accounting Standard (Ind AS) Srikumar V.K.First Time Adoption of Ind AS Dheeraj K.R.Ind AS for Banks, NBFCs and Other Financial Institution Manisha SrivastavaInd AS - Impact on Banking Sector Visanth P NairInd AS : Step to a New Dimension of Accounting Rakesh T.R.Fair Valuation under Ind AS Vijith S.Ind AS - Challenges for Banks C.P. GireeshAssessment of Expected Credit Losses (ECL) under Ind AS 109 Arjun Sunder SSIB Scholar- A Blinking Light House Nearby Narayanan V.C.When Santa Visits RBCPC Arathi APA Sporting Initiative Joe Varghese“Safed Rann’ Vinod K. K.Love is Blind or Deaf Radhika R.B

Regular Features

3

MSME Campaign Magic Smile

MD & CEO, Sri. V G Mathew addressing the achievers of MSME Campaign. The function is also attended by Sri. G. Sivakumar EVP (Credit), Sri. BenoyVarghese (Country Head - Wholesale Banking), Sri. John Thomas - SGM (BDD) and Sri. Balakrishnan K.N. JGM(MCCPC)

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Seen in Photo are Mr. Prashanth George Tharakan (CRO), Mr. Shelly Joseph (JGM), Mr. Regunathan K.N. EVP (Treasury), Mr. Salah Saad Al Daas (ChiefPolice Officer Farwaniya), Mr. Sivakumar G. EVP(Credit), Mr. Sreejil Mukund (AGM), Mr. Sanchay Kumar Sinha (Country Head, Retail banking) and Ms.Beena Davis (CM)

NRE meet at Kuwait

ASSOCHAM Award

Mr. G Sivakumar, Executive Vice President ( Credit ) receiving “ Social Banking Excellence Award-2017” in Priority Sector Lending instituted byASSOCHAM, on behalf of South Indian Bank, from Mr. Shiv Pratap Shukla, Hon’ble Minister of State for Finance.

MD & CEO Speaks ....

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... Credit Loss which currently is taken care of by theprovisioning on crystallized NPAs primarily. Under Ind-AS,provisioning needs to be made on the basis of ExpectedCredit Loss which would mean that we need to be in aposition to predict credit loss using acceptable modelsand based on past trends. A certain level of maturity insystem capability and data quality is therefore aprerequisite ...

“

“The Indian economy has witnessed rapid change and progresssince 1991 when the economy was opened up through structuralreforms. Today there are many transnational corporations of Indianorigin. Similarly several global companies are active in the Indianeconomy. Global capital supports the equity of several Indiancompanies. Our own case is no exception. As you are aware morethan 40% of our own equity capital is held in the form of FDI.

Global capital and global operations would require that we speakthe same global accounting language too. International FinancialReporting Standards (IFRS) is the global accounting standardcurrently being followed. India has taken measures to conformto these standards beginning 2016 in a phased manner, throughthe implementation of Ind-AS. The Banking sector in our countryis expected to migrate to Ind-AS from 1st April 2018. Ind-AS hasmore rigorous accounting and reporting requirements than thecurrent system. Apart from this, it has a very different treatmentfor Credit Loss which currently is taken care of by the provisioningon crystallized NPAs primarily. Under Ind-AS, provisioning needsto be made on the basis of Expected Credit Loss which wouldmean that we need to be in a position to predict credit loss usingacceptable models and based on past trends. A certain level ofmaturity in system capability and data quality is therefore aprerequisite for Ind-AS migration.

A number of these aspects are covered in the current issue ofSIBLINK which carries the Ind-AS as the primary theme. I hopethis issue would make interesting and informative reading forall our enlightened colleagues.

Wishing you all the best

V G MathewManaging Director & CEO

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INTRODUCTIONAccounting Standard is a guideline for financialaccounting such as how a firm prepares andpresents its business income, expenses, assetsand liabilities and may be in accordance tostandards set by the International AccountingStandards Board (IASB).

Accounting Standards are needed so thatfinancial statements will fairly and consistentlydescribe f inancial performance. Theseprinciples are “generally accepted” because anauthoritative body has set them or theaccounting profession widely accepts them asappropriate.

Indian Accounting Standard (abbreviated asInd-AS) is the Accounting standard adopted bycompanies in India and issued under thesupervision and control of AccountingStandards Board (ASB), which was constitutedas a body in the year 1977. The applicability ofInd AS standard is based on the Listing Statusand the networth of the company.

HISTORYIndia was following accounting standards fromIndian Generally Acceptable AccountingPrinciple (IGAAP) prior to adoption of the Ind-AS

The Ministry of Corporate Affairs (MCA) on 16February 2015 notif ied 39 accountingstandards and laid down an Indian AccountingStandards (Ind AS) transition road map forcompanies excluding banks, non-bankingfinancial companies (NBFCs) and insurancecompanies and those listed on SME Exchanges.However the companies should have aNetworth of Rs 250 crore or more.

In January 2016, the MCA announced the IndAS roadmap for scheduled commercial banks(excluding regional rural banks [RRBs]),insurers/insurance companies and NBFCs.TheMCA clarified that notwithstanding the Ind ASroadmap for companies, the holding, subsidiary,joint venture or associate companies of bankswould also prepare Ind AS financial statementsfor accounting periods beginning 1 April 2018The Ind AS are named and numbered in thesame way as the corresponding InternationalFinancial Reporting Standards (IFRS). National

Advisory Committee on Accounting Standards(NACAS) recommend these standards to theMinistry of Corporate Affairs (MCA). MCA has tospell out the accounting standards applicablefor companies in India. As on date MCA hasnotified 41 Ind AS. This shall be applied to thecompanies of financial year 2015-16 voluntarilyand from 2016-17 on a mandatory basis.

SALIENT FEATURESThe following are the Salient features inImplementation of Ind AS:

Voluntary Phase: Early adoption of Ind AS ispermitted from financial year beginning on orafter 1st April 2015

Mandatory Phase 1: Application of Ind AS ismandatory from the financial year beginningon or after 1st April 2016 for the followingcompanies:• Listed or non- listed companies with net

worth of INR 500 crores (INR 5 billion) ormore.

• Holding, subsidiaries, joint ventures orassociate companies of these companies

Mandatory Phase 2: Application of Ind AS ismandatory from the financial year beginningon or after 1 April 2017, for the followingcompanies:• All listed companies not covered under

mandatory Phase 1• Non -Listed Companies with net worth of

Rs 250 crores (INR 2.5 billion) or more andnot covered in the mandatory Phase1.

• Holding, subsidiaries, joint ventures orassociates of these companies

Mandatory Phase 3: Applicable from 1 April2018 onward to:• All commercial banks, term lending

institutions, ref inance institutions andinsurance companies

• Listed or unlisted NBFCs whose net worth

is >= INR 500 crores• Holding, subsidiaries, joint ventures or

associates of these companies

Mandatory Phase 4 applicable from 1 April2019 onward to:• Listed NBFCs whose net worth is < INR 500

crores• Unlisted NBFCs whose net worth is >= INR

250 crores but < INR 500 crores• Holding, subsidiaries, joint ventures or

associates of these companies

An overseas subsidiary, associate, joint ventureand other similar entity of such company mayprepare its stand-alone financial statements inaccordance with the requirements of the specificjurisdiction. However, for group reportingpurposes, it will have to report to its Indianparent under Ind AS to enable its parent topresent Consolidated Financial Statements(CFS) in accordance with Ind AS

RBI GUIDELINES ON IMPLEMENTATION OF IndASThe principal regulator for banks and NBFCs inIndia, the Reserve Bank of India (RBI), issued acircular in February 2016 reiterating thetimeline for Ind AS implementation by banksissued by the MCA and providing furtherdirection on critical issues that banks need toconsider in their Ind AS implementation plan.

Key features of the RBI circular:1. Banks shall comply with Ind AS for financial

statements for accounting periods beginning1stApril 2018, with comparatives for theperiods ending 31st March 2018 or thereafter.Ind AS shall be applicable to both standalonef inancial statements and consolidatedfinancial statements.

2. Banks shall apply Ind AS only as per theabove timelines and shall not be permittedto adopt Ind AS earlier.

3. The boards of the banks should have theultimate responsibility in determining the IndAS direction and strategy and in overseeingthe development and execution of the IndAS implementation plan.

4. Banks are advised to set up a SteeringCommittee headed by an official of the rankof an executive director (or equivalent),comprising members from cross functionalareas of the bank to immediately initiate theimplementation process.

5. The Audit Committee of the Board shalloversee the progress of the Ind ASimplementation process and report to the

Indian Accounting Standard (Ind AS)

Srikumar V KChief ManagerMumbai RO

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Board at quarterly intervals.6. Banks need to submit proforma Ind AS

financial statements to the RBI from thehalf-year ended 30 September 2016onwards.

Key Differences between the existing IndianGAAP and Ind ASThere are several differences between theaccounting treatment under Indian GAAP andInd AS. Some of the key differences relevant tobanking are highlighted in the Table 1.

However the main impact would be for theaccounting of Interest Income on an EffectiveInterest Rate basis which would have an impacton the Net Interest Income and thecorresponding Interest spreads and marginsreported by banking entities.

As a result of changes in accounting for NetInterest income under Ind AS, banking entitieswill need a clear strategy to address the effectof these changes on IT Applications.

Considering the huge volume of data, itsmanual processing may be extremely difficult.Keeping this in view, it is important that thebanking entities modify thier IT Systems so thatthe financial data produced accurately reportsthe revenue.

Ind AS Conversion ProcessIn an Ind AS conversion, an entity undertakesto change its f inancial reporting from itscurrent GAAP to Ind AS. Obviously, differencesbetween the Indian GAAP treatment and IFRSwill be one of the key inputs to the conversionprocess in case of Indian entities. Thesedifferences may vary significantly from oneentity to another depending on the industryand the current accounting policies chosenunder Indian GAAP.

However, the magnitude of an Ind ASconversion project will not depend solely onthe magnitude of the GAAP differences, but willbe influenced by other factors such as:• The quality and flexibility of the existing

financial reporting infrastructure• The size and complexity of the organization• The effect of GAAP changes on the business

Ultimately, the purpose of an Ind AS conversionis to put entities in a position where they areable to report, unaided and reliably, and areable to recognize the Ind AS dimension of theiractions. However, before the actual start of the

Table 1. Key differences relevant to banking accounting treatment under Indian GAAP & Ind ASSl No Parameter Indian GAAP Ind AS 1 Effective Loan Processing Fees are Loan Processing Fees are amortized

Interest Rate recognized upfront in over the period of the Loan usingProfit and Loss Account “Effective Interest Rate”. Effective

Interest Rate is the rate that discountsestimated future Cash payments orreceipts through the expected lifeof the financial asset or financialliability to the gross carrying amountof a financial asset or to amortizedcost of a financial liability

2 Interest Income Recognized on Realization Recognized on Effective Interest Rateon Non- Basis on the Gross Carrying Amount ofPerforming Financial Asset depending on theAssets stage in which the loan is. In the case

where the loan or asset is consideredimpaired, the Interest income will beaccounted for at the Net amount i.eGross carrying amount less provisionsmade

3 Relevant Date Gains or Losses on Sale of Allows to recognize gains and lossesfor recognition Government Securities are either on Trade date or Settlementof gains/ loss recognized on Settlement date. However this policy is to beon dealing Date. Settlement Date is a consistently applied for each categorywith securities securities industry term of Financial asset

describing the date on whicha trade (bonds, equities,foreign exchange,commodities etc) settles. Thatis the actual day on whichtransfer of Cash or assets iscompleted and is usually afew days after the trade wasdone

4 Accounting for Bank does not separately Customer Loyalty programs areCustomer account for income from accounted for as a seperatelyLoyalty customer Loyalty programs. identifiable component of thePrograms The bank provides for transaction in which they are granted.

liability towards these reward The Fair Value of the considerationpoints by estimating the received in respect of initial sale isprobability of redemption of allocated between the award creditscustomer loyalty reward points and the other components of sale.using an acturial method by Income generated from customeremploying an independent Loyalty programs is recognised asactuary and based on certain “Other operating Income”assumptions

5 Sale of NPA Existing guidelines provide for Accounting treatment for such salesthe deferment of recognition would be governed by the de-of gains/losses on sale to recognition criteria specified underReconstruction companies(RC) Ind AS 109. If the criteria for de-or securitization companies recognition is met, then the gains(SC) as well as the non would be recognized upfront.recognition of gains wheresales are made to nonRC’s/SC’s

8

conversion project, an initial diagnostic phaseshould put companies in a position where theyare aware of:• The differences between Ind AS and the

entity’s current accounting policies• The impact of the change to Ind AS on

financial statements• The impact of the change to Ind AS on tax,

business IT and process• The impact of Ind AS on future business

decisions• An understanding of the approach

underlying the formulation of Ind AS

CONCLUSIONInd AS conversion date for banking entities inIndia is 2018–19 with comparative 2017–18.Experience tells us that major Europeancompanies took about 18–24 months toconvert from national GAAP to IFRS. Thisprocess cannot be delayed any further. Moreimportantly, there are no disadvantages togetting a start on the process, but theadvantages include:• Securing the right people, whether by

engaging a third party to provide assistanceor by hiring them directly

• Reducing the burden on valuableaccounting, f inancial reporting and ITresources as the conversion date approaches

• Getting more time to train employees onInd AS and to have them becomecomfortable with the standards andinterpretations

• Discussing financial reporting effects ofconversion to Ind AS with analysts to providethem with confidence that this significantundertaking is well in hand.

• Ensuring that along with the f inancefunction, the involvement of other functions

Table2. Present List of Ind ASInd AS 101 First time adoption of Ind AS Ind AS 1 Presentation of Financial StatementsInd AS 102 Share based Payments Ind AS 2 InventoriesInd AS 103 Business Combination Ind AS 7 Statement of Cash FlowsInd AS 104 Insurance Contracts Ind AS 8 Accounting Policies, Changes in

Accounting Estimates and ErrorsInd AS 105 Non- Current Assets Held for Ind AS 10 Events after Reporting Period

Sale and Discontinued Ind AS 11 Construction ConttractsOperations Ind AS 12 Income Taxes

Ind AS 106 Exploration for and Evaluation Ind AS 16 Property, Plant and Equipmentof Mineral Resources Ind AS 17 Leases

Ind AS 107 Financial Instruments : Ind AS 18 RevenueDisclosures Ind AS 19 Employee benefits

Ind AS 108 Operating Segments Ind AS 20 Accounting for Government Grants andInd AS 109 Financial Instruments Disclosure of Government AssistanceInd AS 110 Consolidated Financial Ind AS 21 The Effects of Changes in Foreign

Statements Exchange RatesInd AS 111 Joint Arrangements Ind AS 23 Borrowing CostsInd AS 112 Disclosure of Interests in Ind AS 24 Related Party Disclosure

Other Entities Ind AS 27 Seperate Financial StatementsInd AS 113 Fair Value Measurement Ind AS 28 Investments in Associates and JointInd AS 114 Regulatory Deferral Accounts venturesInd AS 115 Revenue from Contracts with Ind AS 29 Financial Reporting in Hyper

Customers inflationary EconomiesInd AS 32 Financial Instruments: PresentationInd AS 33 Earnings per ShareInd AS 34 Interim Financial ReportingInd AS 36 Impairment of AssetsInd AS 37 Provisions, Contingent Liabilities and

Contingent AssetsInd AS 38 Intangible AssetsInd AS 40 Investment PropertyInd AS 41 Agriculture

such as treasury, internal audit, businessunits and human capital can be planned wellin advance. This would be critical forensuring commitment and sponsorshipwithin each function for the success of theInd AS conversion process, considering thatit is much more than an accounting change

I have attempted only a brief overview of thesignificant aspects more specifically relating toBanking which is of immediate relevance . Thetopic of Ind AS by itself is very vast and moreaspects of accounting treatments to variousheads are in the evolving stages.

MSME Campaign -Magic Smile Achievers Group Photo with MD & CEO and Senior Executives

To facilitate the smooth transition from theexisting Indian GAAP to Ind AS and tounderstand the impact of the said transition, Ind-AS 101 ‘First time adoption of Ind AS’(corresponding to IFRS 1) has been issued. Thestandard provides guidance on requirements onthe preparation and presentation of financialstatements by entities that are adopting theInd-AS for the first time. This article aims atproviding brief insight into Ind AS-101 withrespect to its application, scope andexemptions.

Objective of Ind AS - 101This standard provides the principles ofaccounting for an Indian company whileadopting Ind AS for the first time. This standardensures that a company’s first Ind AS financialstatements, and its interim financial reportscontained within the period covered by thoseFinancial Statements, comprises high qualityinformation and the information so used:• is transparent and comparable over all

periods presented;• caters as an appropriate initial point for

accounting as per Ind AS and can beproduced at a cost that does not exceedthe paybacks.

Use of Ind AS - 101A company is required to use Ind AS for thefollowing:• First Ind AS compliant Financial

Statements.• Each interim financial report for part of the

period covered by its first Ind AS FinancialStatements.

The standard clarif ies that an entity’s f irstf inancial statements are “the f irst annualfinancial statements in which the entity adoptsInd AS in accordance with Ind AS notified underthe Companies Act, 2013, by an explicit andunreserved statement in those f inancialstatements of compliance with Ind AS. Ind AS-101 is not applicable to those cases, requiringchanges to the accounting policies by thosecompanies who had already applied Ind AS inpast. These changes would be dealt with asfollows:• As per Ind AS 8 ‘Accounting Policies,

First Time Adoption of Ind AS

Changes in Accounting Estimates andErrors’.

• Explicit transitional provisions governed byother Ind AS.

Opening Ind AS Balance Sheet: On adoption ofInd AS, a company is required to prepare andpresent an opening Ind AS Balance Sheet (‘BS’)at the transition date. Transition date is definedas the beginning of the earliest comparativeperiod presented on the basis of Ind AS. This isthe starting point for a company’s accountingin accordance with Ind AS and all adjustmentsarising from the transition to Ind AS are berecorded in the retained earnings as at thetransition date. An entity shall also explain howthe transition from previous GAAP to Ind ASaffected its reported BS, financial performanceand cash flows.

Opening reconciliation: Ind AS-101 also requiresthat a detailed quantitative reconciliation is tobe included in the f irst Ind AS f inancialstatements. With respect to the f inancialstatements for the year 2018-19, the companiescovered under phase-I shall explain the reasonfor the difference between the net equity as at1 April 2017 and 31 March 2018, prepared underthe existing Indian GAAP and under Ind AS. Inaddition, banking companies shall also providereconciliation for its total comprehensiveincome for the FY 2017-18 to explain the impactof the transition.

Comparatives for first Ind AS Balance Sheet: Acompany’s first Ind AS Financial Statementsshall have at least 3 Balance Sheets, 2Statements of profit and loss, 2 Statements ofcash flows and 2 Statements of changes inequity and related notes, including comparativeinformation for all statements presented. Acompany which wishes to additionally provideany Financial Statements containing historical

summaries or comparative information inaccordance with existing Indian GAAP, then itshall:• Mark these information as not being

prepared in accordance with Ind AS.• Disclose the nature of the core adjustments

that would make it comply with Ind AS.However, there is no necessity to quantifythese adjustments.

Accounting Policies: A company preparing theInd AS Financial Statements for the first time:• Shall choose the accounting policies

compliant with Ind AS, effective at its firstannual Ind AS reporting date with certainexceptions.

• Shall generally apply these accountingpolicies retrospectively while preparing theopening BS and for all periods presentedin the first Ind AS BS.

• Shall not apply different versions of Ind ASthat were effective at earlier dates.

• May apply a revised Ind AS which is non-mandatory, if that Ind AS permits earlyadoption.

Recognition and de-recognition: With certainexceptions, a company while preparing itsopening Ind AS Balance Sheet shall:• Recognise all assets and liabilities whose

recognition is required in accordance withInd AS.

• de-recognize all assets or liabilities in caseInd AS prohibit such recognition.

• Reclassify asset, liability or component ofequity in accordance with Ind AS.

• Apply Ind AS for the purpose of measuringall recognised assets and liabilities.

Exemptions provided by Ind AS-101Ind AS 101 prescribes two types of exemptionsfor the first-time adopters to facilitate a smoothtransition to Ind AS. These may be eithermandatory or voluntary exemptions. In case acompany is not eligible for these exemptions,then all applicable Ind AS are to be appliedretrospectively.

Key exemptions- MandatoryFollowing are the signif icant mandatoryexemptions, which are available to the first timeadopters:

Estimates:The estimates used under theexisting Indian GAAP are to be consistentlyapplied, with following exceptions:• If there was an error, or the estimate used

under existing Indian GAAP is no longer

Dheeraj K.R.Manager (CA)Corporate FinancialManagement Dept.

9

relevant since the entity chooses adifferent accounting policy on the adoptionof Ind AS.

In case a company receives some informationafter the transition date with respect to theprevious estimates then the company shalltreat this as a non-adjusting event.

Hedge accounting: A company in its openingInd-AS BS shall not reflect in a hedgingrelationship of a type that does not qualify forhedge accounting in accordance withapplicable Ind-AS with certain exceptions.

• Impairment of financial assets Impairment requirements as per applicable IndAS are to be applied retrospectively, withcertain exceptions.

Classification and measurement of financialassets: With respect to classif ication andmeasurement of financial assets, assessmentneeds to be made based on the conditions thatexist at the transition date.

De-recognition of financial instruments: De-recognition requirements with respect tofinancial instruments are applicable from theprospective effect with certain exceptions.

Non-controlling interests: Certainrequirements of Ind AS-110, ConsolidatedFinancial Statements are applied prospectivelyfrom the date of transition to Ind AS, e.g. therequirements for accounting for changes in theparent’s ownership interest in a subsidiary thatdo not result in a loss of control.

Embedded derivatives: The assessment needsto be done whether an embedded derivativeis required to be separated from the hostcontract and accounted for as a derivative onthe basis of the condition that existed on thedate it first became a party to the contract orthe date a reassessment is required under IndAS 109 which ever is later.

Government loan: The requirements in Ind AS109, Financial Instruments, and Ind AS 20,Accounting for Government Grants andDisclosure of Government Assistance areapplied prospectively to government loansexisting at the date of transition to Ind AS andshall not recognise the corresponding benefitof the government loan at a below-market rateof interest as a government grant.

Key exemptions- Optional Some of the significant optional exemptionsfrom other Ind AS are as follows:

Business combinations: A company may choosenot to apply the applicable Ind AS retrospect-ively to past business combinations. However,if that company restates any businesscombination to comply with the requirementsof applicable Ind AS, then it shall restate alllater business combinations.

Non-current assets held for sale anddiscontinued operations: A company may usethe transitional date circumstances to measuresuch assets or operations at the lower ofcarrying value and fair value less cost to sell.

Long term foreign currency monetary items : Acompany may continue with the previous policyadopted for accounting for exchangedifferences arising from translation of long-term foreign currency monetary itemsrecognised in the previous Financial Statementsas per the existing Indian GAAP.

Leases: A company may evaluate whether anarrangement existing at the transition datecontains a lease on the basis of facts and

10

circumstances existing at transition date, exceptwhere the effect is expected to be immaterial.

Deemed cost: A company may choose tomeasure an item of property, plant andequipment at transition date at its deemed costas prescribed under Ind AS 101.

Share-based payment transactions:A companyis encouraged, however not mandatorilyrequired to apply the principle of relevant IndAS to the liabilities arising from share-basedpayment transactions that were settled beforethe transition date.

ConclusionIt is clear that accounting guidance is morecomprehensive under Ind AS regime than underIndian GAAP, but at the same time it willsignificantly increase efforts of finance peoplefor accounting, measurement and disclosurerequirement. However the Ind AS 101 will giveadequate space for the first time adopters for ahassle free adoption. Companies will need tocarefully evaluate the Ind AS transitionprovisions and election of accounting policy, incase they wish to bring their Ind AS financialstatements closer to IFRS.

South Indian Bank received “Banking Excellence Award 2017” Shri. Shelly Joseph, JGM,Ernakulam Region receiving ‘Banking Excellence Award 2017’ for Private Sector Bank institutedby State Forum of Bankers’ Clubs (Kerala) on behalf of South Indian Bank from HonorableSpeaker of Kerala Legislative Assembly Shri. P. Sreeramakrishnan.

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Indian Accounting Standards Rules,2015 widelyknown as Ind AS had been notified by theMinistry of Corporate Affairs,Govt of India,onFebruary 16,2015.Initially,it was rolled out forall companies and later on,in January 2016,forall commercial banks, NBFCs, insurancecompanies, term lending institutions andrefinance institutions.

Implementation: Ind AS has to be implementedin two phases:1. Phase I: Ind AS will be applicable from 1st

April 2018 fora. All the commercial banks, insurance

companies, term lending institutionsand refinance institutions

b. All the listed and unlisted NBFCshaving net worth equal to or aboveRs.500 crores

c. Holding companies, subsidiaries, jointventures or associate of the abovecompanies.

2. Phase II: Ind AS will be applicable from 1st

April 2019 fora. Listed NBFCs having net worth less

than Rs.500 croresb. All the unlisted NBFCs having net

worth less than Rs.500 crores andequal to or above Rs.250 crores.

c. Holding companies, subsidiaries, jointventures or associate of the abovecompanies.

Journey from IFRS to Ind AS: Globalisation andcross country trades have made it important tohave a universally accepted language forfinancial statements which can be acceptedworldwide. For the same purpose InternationalAccounting Standards Board (IASB) had adoptedInternational Financial Reporting Standard(IFRS) in 2005. Currently more than 100countries have already accepted IFRS andcompanies already have converged fromprevious GAAP guidelines to IFRS guidelines.India also has started the convergence from oldIndian accounting standards to IFRS in the formof Ind AS along with a few changes.

RBI Guidelines: RBI being the regulator forbanks and all other financial institutions hasgiven some guidelines for adopting to Ind ASwhich are following:1. Ind AS should not be adopted by any of the

Ind AS for Banks, NBFCs and OtherFinancial Institution

entity prior to 1st April 2018.2. It will be applicable for the standalone

financial statement and also consolidatedfinancial statement.

3. The Board will have the ultimateresponsibility in determining Ind ASdirection and strategy and in overseeing thedevelopment and execution of the Ind ASimplementation plan.

4. Banks have been advised to set up asteering committee headed by an officialof the rank of an executive director (orequivalent), comprising members fromcross functional areas of the bank.

5. The Audit committee of the Board shalloversee progress of the Ind AS imple-mentation process and report to the boardat quarterly intervals.

6. Banks need to submit proforma Ind ASfinancial statements to the RBI from thehalf yearly ended 30th September 2016.

Salient Features: Ind AS will bring a heap ofchanges in the way reporting is done in financial

Manisha SrivastavaManagerRO Pune

statements. Major changes will be happeningin these areas:1. Fair Value Calculation for Financial Assets

and Liabilities under Ind AS 1132. Financial Instruments Classification and

Valuation under Ind AS 1093. Consolidated Financial Statement under

Ind AS 1104. Business Combinations under Ind AS 1035. Comprehensive Disclosures under Ind AS

1076. Related Party Disclosures under Ind AS 24.

Challenges Ahead: Ind AS implementation willcall for a lot of hard work and many criticalissues will have to be factored in beforeaccepting it whole heartedly:1. Ind AS technical requirements.2. Systems and processes and impact on

information systems.3. Business Impact including profit planning

and budgeting, taxation, impact on capitaladequacy etc.

4. Adequate and fully dedicated internal staff5. Project management for execution etc.

Conclusion: Industry experts are welcoming thechange and are very positive about Ind AS. Thenew financial standards are more practical inapproach but more stringent in capitalrequirements and adherence to BASEL III norms.Ind AS will bring more transparency and aglobal language for our financial statementswhich will draw global investor’s attention toour Country and also improve investor relationsacross the world.

Family tour of RBCPC at Alappuzha

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OverviewThe stage is set for Indian banks to embraceglobal accounting standards. It is not verbatimadoption of International Financial ReportingStandards (IFRS) but the converged standardstermed as Indian Accounting Standards (IndAS). As regards banking sector in India, theimpact of Ind AS is multifold and multi-dimensional. Banks and NBFCs in India arehighly regulated. Like other entities, they arerequired to comply with the accountingstandards, to the extent applicable. In addition,RBI has prescribed mandatory accountingprinciples to be followed by these entities. Forexample, the RBI has prescribed guidelines foraccounting of investments and provisioningnorms for loan assets. Typically, accountingnorms prescribed by a regulator are based onprudence. In contrast, the aim of Ind AS is topresent fairly the f inancial position,performance and cash flows of an entity. Hence,there are significant differences in accountingcurrently applicable (Indian Generally AcceptedAccounting Principles - iGAAP) and Ind AS.

1. Presentation of Financial StatementsAs per existing As per Ind ASstandard (iGAAP)1. Balance Sheet 1. Balance Sheet2. Profit and Loss 2. Statement ofAccount Changes in Equity

(SOCIE) 3. Cash Flow 3. Profit & Loss AccountStatement (Including a Statement of

Other ComprehensiveIncome (OCI))

4. Notes on 4. Cash Flow Statement Accounts 5. Notes on Accounts

with extensive disclo-sures

2. Recognition, Classification and Measurementof Financial InstrumentsEven though there are many Ind AS standardsaffecting the banking sector, Ind AS 109‘Financial Instruments’ gains signif icantimportance among them considering its impact.Major chunk of a bank’s assets and liabilitieswill come under the purview of f inancialinstrument as per this standard.

Initial Recognition: All financial instrumentsshall be initially recognised at fair value, plusor minus, transaction costs that are directlyattributable to the acquisition or issue of the

Visanth P. NairSenior Manager (CA)CFM Department

Ind AS - Impact on Banking Sector

financial asset or financial liability which arenot subsequently classif ied at Fair ValueThrough Profit or Loss (FVTPL), .

Subsequent Measurement: Financial assetsshall be subsequently classified and measuredat Amortized Cost or Fair Value Through Profit& Loss (FVTPL) or Fair Value through OtherComprehensive Income (FVOCI) depending ontests of business model and the contractualcash flow characteristics.

Business Model Test: The asset is held withina business model whose objective is to holdassets in order to collect contractual cash flows.

Cash Flow Test: The contractual terms of thefinancial asset give rise on specified dates tocash flows that are solely payments of principaland interest on the principal amountoutstanding.

Financial liabilities shall be subsequentlyclassified and measured at Amortized Cost orFVTPL. Those held for trading and derivativesare classif ied under FVTPL while all otherfinancial liabilities are measured at AmortisedCost, unless the fair value option is used. IndAS 109 provides the option to designate afinancial liability as FVTPL, if doing so removesor significantly reduces a measurement orrecognition inconsistency (accountingmismatch).

Considering a bank’s portfolio, the impact ofthe above will be as follows:

Loans and Advances: Loans can be initiallyrecognised at their transaction price beingindicative of their fair value since it is basedon the bank’s well documented, transparentpolicies articulating the interest rate forvarious loans offered to public. Loans andadvances given at concessional rates to staffare not based on market terms and thereforethe transaction price cannot be indicativeof the fair value, since it includes an elementof employee benefits. Hence loans except

those bearing concessional interest rate (staffloans) will be recognised at their transactionprice. Concessional interest rate loans (staffloans) are to be fair valued for initialrecognition. The difference between fairvalue and transaction price would beconsidered as an employee cost.

Where the bank has a business model tooriginate and hold the loans till maturity andthe contractual cash flows of the loans willbe solely payment of principal and intereston the principal amount outstanding, all suchloans and advances will be classified andsubsequently measured at Amortized Cost.If the cash flow test is failed, it will getclassif ied under FVTPL category andcorrespondingly fair valuation is done andgains/losses will be routed through P&L.Hence banks have to carefully evaluate theirloans portfolio (prepayment features,presence of embedded derivatives etc) todecide classif ication and subsequentmeasurement criteria under Ind AS.

In respect of restructured loans, assessmenthas to be done as to whether renegotiation/modification of contractual cash flows leadto derecognition of loans at each stage ofrestructuring. When the modification resultsin derecognition, banks need to eliminate thecarrying value of the loan from the balancesheet and recognize a new asset at fair valueon the date of modification with gain/lossthereon recognised in the P&L. When themodif ication does not result in de-recognition, banks shall recalculate thecarrying value of the loan (i.e. modified cashflows needs to be discounted at original EIR)and recognize a gain/loss on modificationto P&L.

Loans sold to Asset ReconstructionCompanies (ARCs) will not meet thederecognition criteria if the bank has nottransferred the substantial risk and rewardsof ownership in such financial assets to theARC. As per Ind AS 101 ‘First Time Adoptionof Ind AS’, loans which are derecognisedbefore the transition date (1st April, 2017)shall not be re-recognised in the financialstatements. Banks should analyse all thecontracts for sale to ARCs to be effected afterthe transition date to evaluate whetherderecognition criteria is met or not.

Investments: Quoted securities can beinitially recognised at their transaction price

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being the market price at which they aretraded in active market. Unquoted securitiesneed to be fair valued using valuationtechniques prescribed in Ind AS 113 ‘FairValue Measurements’. Investments aresubsequently classified and measured asfollows:

Debt InstrumentsAmortised cost: The asset’s contractual cashflows represent “solely payments of principaland interest (SPPI)”, and the asset is held withina business model whose objective is to holdthe asset for collecting contractual cash flows.

FVOCI: The asset’s contractual cash flowsrepresent SPPI, and the asset is held within abusiness model whose objective can be meteither by holding the asset to collectcontractual cash flows or by selling the asset.

FVTPL: Securities which do not meet criteriafor amortised cost/FVTOCI measurement. Inaddition, an entity is permitted to measureother financial assets at FVPL if doing so wouldeliminate or signif icantly reduce ameasurement or recognition inconsistency. Thedesignation to measure financial assets at FVPLis irrevocable and only permitted at initialrecognition.

Equity InstrumentsEquity securities are measured at FVPL unlessthe entity chooses, on initial recognition, topresent fair value changes in the othercomprehensive income (OCI). This option is

irrevocable and applies only to equity securitieswhich are not held for trading. Gains and lossesrecognised in OCI are not recycled on sale andthere is no impairment requirements.

Deposits: Deposits will be initially recognisedat their transaction price being indicative oftheir fair value if the deposit rates are in linewith the market range of rates/ rates of peerbanks. Higher interest rates for senior citizensis a general market feature of the industryand can be considered as at fair value itselffor such categories. Deposits bearingpreferential rate of interest offered toemployees and ex-employees will not bebased on market terms and hence need tobe fair valued and employee costs are to berecognised. Deposits will be classified andsubsequently measured at Amortised Cost ifthe bank do not hold any right to repay beforematurity without the consent of depositor.

Borrowings: Borrowings will be initiallyrecognised at their transaction price if theinterest rates are in line with the marketrange of rates. Borrowings held for tradingpurposes will get subsequently classified andmeasured at FVTPL and rest will be measuredat Amortised Cost.

3. Impairment loss provision on financial assetsUnder the existing practice, banks createimpairment provision based on the provisionmatrix prescribed by the RBI under the incomerecognition, asset classif ication andprovisioning (IRACP) norms. The provision rates

prescribed by the RBI are minimum and a top-up provision is required, if additional losses areexpected on the loan. Under Ind AS 109, theimpairment requirements are based on a moreforward-looking Expected Credit Loss (ECL)model. This framework is introduced forrecognising impairment on financial assets(other than those measured at FVTPL). Banksshall measure the credit risk components suchas Probability of Default (PD), Loss Given Default(LGD), Exposure at Default (EAD) and theExpected Credit Loss being the product of thesecomponents. Under the new impairment model,the general approach is to recognise expectedcredit losses (ECL) in three stages.

Stage 1 - For credit exposures where there hasneither been a significant increase in credit risknor credit-impaired since initial recognition (i.e.,good exposures), entities are required toprovide for credit losses that result from defaultevents ‘that are possible’ within the next 12months (12-month ECL).

Stage 2 - For those credit exposures where therehas been a significant increase in credit risksince initial recognition, a loss allowance isrequired for credit losses expected over theremaining life of the exposure irrespective ofthe timing of the default (lifetime ECL).

Stage 3 - For those credit exposures which arecredit-impaired, life-time loss allowance is tobe provided (lifetime ECL).

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4. Effective Interest Rate (EIR) Method ofRevenue RecognitionThe current Indian GAAP does not contain anyspecif ic guidance on accounting for loanorigination fees and costs. In the absence ofspecif ic guidance, many banks and NBFCstypically recognise these items as income/expense upfront in their Indian GAAP financialstatements. This accounting is not acceptableunder Ind AS. Under Ind AS 109, loanorigination fee and costs should be recognisedas part of interest on an effective interest-ratebasis. This spreads the interest and anyassociated fees, over the life of the loans.

In respect of Stage 1 and Stage 2 assets,interest would be calculated by applyingeffective interest rate on the gross carryingamount of the asset. If the financial assetsbecome credit-impaired (Stage 3), interestrevenue would be calculated by applying theeffective interest rate to the net carryingamount (amortised cost net of loss allowance).

5. Group ConsolidationUnder Indian GAAP, AS 21 ‘ConsolidatedFinancial Statements’ defines the term “control”based on ownership of more than one-half ofthe voting power, or control over compositionof the board of directors. Ind AS 110‘Consolidated Financial Statements’ containssubstance based definition of control. It states,“An investor controls an investee when it isexposed, or has rights, to variable returns fromits involvement with the investee and has theability to effect those returns through its powerover the investee.” Ind AS requires an investorto consider all facts and circumstances,including purpose and design of the investee,to decide who controls investee entity. Hence,it is possible that an investor, who owns lessthan 50% of the voting power in an investeeentity, has control over the investee entity. Forexample, this may happen in the case of defacto control, control through agreements,structured entities and potential voting rights.

ConclusionThe impact of Ind AS is all pervasive startingfrom business planning to financial reporting,affecting the financial performance/positionand capital requirements of the bank. Theimpacts explained above are based on itssignificance to banking sector and as per theregulatory directions as on date. Hence theseshall not be construed as exhaustive and aresubject to further directions by RBI in thisregard.

Other Comprehensive Income: It comprises theincome and expenses including the effect of re-classif ication adjustment of (assets andliabilities based on Ind AS) that are notrecognized in profit or loss as required underInd AS. Its components include: Change inrevaluation surplus / reserve, re-measurementof defined benefit plans, gains and losses ontranslation of Financial Statement of foreignoperations, gains and losses from investmentin equity instruments (designated as Fair valueThrough Other Comprehensive Income -FVTOC),gains or losses on financial assets measured atFVTOC, effective portion of gains and losses onhedging instruments, Change in Fair Value ofLiability designated as at Fair Value ThroughProfit or Loss.

The profit/loss for the period is shown asaddition/deduction from retained earnings andthe other comprehensive income is shown asseparate component of ‘other equity’ in thestatement of Changes in Equity’. In subsequentyears the amount classif ied under othercomprehensive income may be re-classified toProfit or loss. For example, the amount ofunrealized gain which is classified under othercomprehensive income will be re-classified toProfit or loss on its realization.

Another relevant Ind AS is “Fair ValueMeasurement (Ind AS - 113).

The first time adopter shall recognize all itsassets and liabilities at the date of transition toInd AS (other than that are de- recognized / notqualify for recognition). Measurement of allassets and liabilities to be carried out based onInd AS. When there is no change in its functionalcurrency on the date of transition to Ind AS, anentity may elect to continue with the CarryingValue of all of its Property, Plant & Equipments(PPE) (Fixed Assets as per earlier accounting

Ind AS : Step to a New Dimension ofAccounting.

Change in global economic scenario, has madethe majority of countries in the world adoptionof International Financial Reporting Standard(IFRS) / International Accounting Standards(IAS). Currently more than 150 countriesincluding European Union has adopted IFRS orconverged their accounting standards (GAAP)with IFRS. It is mandated by various stockexchanges of these countries to adopt IFRS forreporting financial statements of the entitieslisted with them. In G-20 commitment given byit, India has opted to converge with IFRS.Consequently, Companies (Ind AS) Rules, 2015has came with road map for adoption of Ind AS(Indian Accounting Standards converged withIFRS).

So the companies having its “Networth” morethan or equal to Rs.500 Crs both listed and nonlisted are required to prepare its f inancialstatements in compliance with Ind AS from01.04.16, it mean that its audited financialstatement for the year 2016-17 should be basedon Ind AS. Other listed companies who’s networth is less than Rs.500 Crs and unlistedcompanies who’s networth > Rs. 250 Crs and <Rs. 500 Crs, its AFS 2018 should be compliedwith Ind AS. For NBFCs having networth moreor equal to Rs. 500 Crs requires adoption of IndAS from 01.04.18. For Banks and Insurancecompanies, the applicability is based onnotification of RBI and IRDA respectively.

Let’s see what is new in the presentation ofFinancial statement based on Ind AS. Webankers usually go through the P&L Accountof the borrower once we receive their AFS. Wecan see that the Ind AS complied P&L A/c isnamed as “Statement of Profit and Loss” and inaddition to the net profit of the company forthe year it separately shows “OtherComprehensive Income” and “TotalComprehensive Profit”. In addition to this thereis a separate statement which shows “Changein Equity for the year”. It gives item wise breakup of component of equity and impact /adjustment Other Comprehensive in equityduring the year.

So what does “Other Comprehensive Income”mean?

Rakesh T.R.Chief ManagerNew Delhi Corporate Br.

standard). Entity may elect to measure an itemof PPE at the date of transition to Ind AS at itsfair value as its deemed cost at that date. Thisstandard addresses how the fair value to bemeasured but does not stipulate when it shouldbe applied. Hence, when another Ind ASrequires or permits fair value measurement andits disclosure, it applies to both initial andsubsequent measurement.

Fair value is the price that would be receivedto sell an asset or paid to transfer a liability inan orderly transaction in the principal marketat the measurement date under current marketconditions. For a non financial asset fair valuemeasurement takes into account a marketparticipant to generate economic benefit byusing the assets in its Highest Best Use or byselling it to another market participants thatwould use the asset in its highest and best use.Let’s see some instances where fair valuemeasurement applies:

To ascertain the cost of PPE. Usually allcosts incurred to bring the assets in to itspresent condition and location isconsidered as its value. However, when thePPE is acquired in exchange for nonmonetary assets or combination ofmonetary and non monetary assets, and theexchange transaction has commercialsubstance and fair value of the asset isreliably measurable, then cost of PPE isconsidered as: Fair Value of assets receivedif it is more clearly evident else fair valueof assets given up. (Ind AS 16 Property,Plant & Equipment).Similarly, when an intangible assets areacquired in a business combination or byway of exchange of assets, cost ofintangible assets are valued at its fairvalue. (Ind AS 38- Intangible Assets).Similarly, when investment properties areacquired in exchange for a non monetaryassets or a combination of monetary andnon monetary assets, the exchangetransaction has commercial substance andfair value of the asset is reliablymeasurable, investment property ismeasured at fair value. (Ind AS 40-Investment property).To assess impairment losses: when thecarrying value of as asset is more than itsrecoverable value / fair value, then theasset is considered and impaired,impairment loss is carrying amount lessfair value of the asset less cost of disposal.(Ind AS 36 – Impairment of Assets).To value a non-current assets Held For Sale

(HFS): An entity shall classify a non currentasset (disposal group) as HFS, if its carryingamount will be recovered principallythrough sale rather than through continuinguse. On classification of an asset as HFS itis measured at lower of its (a) carrying costand (b) fair value less cost to sell. (Ind AS105- Non-Current Assets held for sale anddiscontinued operation.

Another relevant standard is Ind AS -114:Regulatory Deferral Accounts:Regulatory Deferral Account Balance (RDBA) isdefined as the balance of any expense or incomethat would not be recognized as an asset orliability in accordance with other standards, butthat qualifies for deferral because it is includedor is expected to be included, by the regulatorin establishing the rates that can be charged tocustomers. Generally, in the case of electricitygenerating / transmission companies the tariffis fixed by Regulator (State / Central ElectricityRegulatory Commission). When the powerdistribution company is not able to pass on thecost (aggregate Technical and Commercial Loss-AT&C) to consumers, due to low tariff fixed bythe regulator, the excess amount is deferred overthe period when they can recover the same fromthe consumers and shown as Regulatory Assets.Earlier, there was no separate accountingstandard for this but ICAI has issued guidancenote on it. Ind AS -114 requires limited changesto the accounting policies that were applied inaccordance with previous GAAP for RDBAs,which are primarily related to the presentationof these accounts. It requires disclosures thatidentify and explain the amounts recognised inentity’s financial statement that arise from rateregulation and helps users of the financialstatements to understand the amount, timingand uncertainty of future cash flows from anyRDBA that recognized.

A Regulatory Asset is an entity’s right to recoverfixed or determinable amount of money towardsincurred costs as a result of actual or expectedactions of its regulator under the applicableregulatory framework. A Regulatory Liability isan entity’s obligation to refund or adjust fixedor determinable amounts of money as a resultof actual or expected action of its regulatorunder applicable regulatory framework. Whenit is certain that regulator will increase the tariffin future and the entity will be able to recoverits previously incurred cost, Regulatory Asset isrecognized. When an entity is required as a resultof actual or expected action of regulator todecrease the rate in future periods in order to

reverse over recoveries of allowable costs.Regulatory Liability need to be recognized.

An entity shall present Regulatory Asset andLiability as separate line item in Balance Sheetwithout classifying into current or non-current.The net movement in RDBAs shall be presentedin OCI section of Statement of Profit or Lossfor the reporting period that relates to itemsrecognized in Other Comprehensive Income. Forthe remaining net movement i.e the amount ofRDBA recovered during the period is shown inP&L as separate line item.

RDBA will also disclose in notes to financialstatement, to help user of financial statementto assess the nature of and the risk associated,with the entity’s rate regulated activities. Foreach type of rate regulated activity, disclose thefollowing:

A brief description of the nature and extentof the rate regulated activity and the natureof the regulatory rate setting process.The identity of rate regulator. If theregulator is a related party the entity shalldisclose that fact together with theexplanation, how it is related.How the future recovery of each class ofRDA debit balance (regulatory asset) orreversal of each class of RDA credit balance(regulatory liability) is affected by risk anduncertainty. For example• Demand Risk: changes in customer

attitudes, the availability of alternativesources of supply or the level ofcompetition.

• Regulatory Risks: the submission orapproval of rate setting application orthe entity’s assessment of the expectedfuture regulatory action and

• Other risks: currency or other marketrisks.

For each type of rate regulated activity, an entityshall disclose the following information:a) A reconciliation of carrying amount at the

beginning and at the end of the period, theamounts that have been recognized in thecurrent period in BS, the amounts that havebeen recognized in Statement of profit orloss relating to the balance that have beenrecovered or reversed in the current periodand other amounts that affects RDBAs suchas impairment, items acquired or disposedin business combinations, or change inforeign exchange rate or discount rates.

b) The Rate of Return or discount rate usedto reflect the time value of money that is

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applicable to each class of RDBAs. Andc) The remaining period over which an entity

expects to recover or reverse each class ofRDBAs.

Another relevant Ind AS is relating to FinancialInstruments – covered under Ind AS 109, Ind AS32 (financial Instrument- presentation) and IndAS 107 (financial Instrument- disclosure).

Let me give an outlook on Financial Instrument:Financial Instrument is any contract that givesrise to a financial asset of one entity and afinancial liability or equity of another entity. Itmay be of two types: (a) Primary instruments:Receivables, Payables and Equity Instruments(b) Derivative Financial Instruments: FinancialOptions, Futures and Forwards, Interest rateswaps and currency swaps.

Financial Assets: is any asset that is (a) Cash(b) Equity Instrument of another entity (c) acontractual right to receive cash or anotherf inancial asset from another entity or toexchange financial assets or financial liabilitieswith another entity under condition that arepotentially favourable to the entity. (d) acontract that may be settled in entity’s ownequity instrument and is (i) a non derivativefor which the entity is or may be obliged toreceive a variable number of the entity’s ownequity instruments or (ii) a derivative that maybe settled other than by the exchange of a fixedamount of cash or another financial asset forf ixed number of entity’s own equityinstruments.

Financial Liability: is any liability that is (a)contractual obligation to deliver cash oranother financial asset to another entity or toexchange financial asset or financial liabilitywith another entity under conditions that arepotentially unfavourable to the entity or (b) acontract will or may be settled in an entity’sown equity instrument and is (i) non derivatefor which entity is or may be obliged to delivera variable number of the entity’s own equityinstrument or (ii) a derivative that will or maybe settled other than the exchange of a fixedamount of cash or another financial asset forf ixed number of entity’s own equityinstruments.

Identification of some assets / liabilities /equity as f inancial assets / liability /instruments:Cash: is a financial asset, it represents mediumof exchange.

Bank balances: is a financial asset, it representsthe contractual right of the depositors to obtaincash from the institution or draw cheque orsimilar instrument.Physical Assets / Intangible Assets: not afinancial asset, since these are controlled assetsand not contractual rights.Instruments expressed payable in financialassets other than cash: promissory notes in govtbonds: financial assets.Perpetual Debt instruments: Financial asset forthe holder and financial liability for the issuer.Contingent rights and obligations: it meets thedefinition of financial asset / financial liabilityhowever they are not always recognized infinancial statements.Finance Lease: Financial InstrumentOperating lease: not a financial instrument.Pre paid expenses: not a financial asset.Warranty obligation: not a financial liability.Assets or liabilities that were not contractualare not financial assets or liabilities: eg. Incometaxes.

Financial instruments are recognized andmeasured initially at fair value adjusted bytransaction costs, except for the transactionsthat are classified through fair value throughprofit and loss(FVTPL) at inception. Purchasesor sales of financial assets that require deliveryof assets within a time frame established byregulation or convention in the market placeare recognized on the trade dates, ie the datethat company commits to purchase or sell theassets.

Subsequent measurements: On subsequentrecognition, a financial asset is classified as

Amortised cost: debt instrumentsFair value through Other ComprehensiveIncome (FVTOCI): Debt instrumentFair value through Other ComprehensiveIncome (FVTOCI): Equity instrumentFair value through profit or loss (FVTPL):Debt instrument.

Amortised Cost: A financial asset is measuredat the amortised cost if both the followingconditions are met and not designated as FVTPL:i. The asset is held within a business model

whose objective is to hold the asset forcollecting contractual cash flow and

ii. Contractual terms of the assets gives riseon specified dates to cash flow that areSolely Payments of Principal and Interest(SPPI) on the principal outstanding.

After the initial measurement, such financialassets are subsequently measured at amortisedcost using the Effective Interest Rate (EIR)method. Amortised cost is calculated by takinginto account any discount or premium onacquisition and fee or cost that are integral partof the EIR. The EIR amortization is included infinance income in the profit or loss. The lossarising from the impairment are recognized inthe profit or loss.

Debt instrument at FVTOCI: a debt instrumentis measured at FVTOCI if both the followingconditions are satisfied and not designated asFVTPL:i. The asset is held within a business model

whose objective is achieved both bycollecting contractual cash flow and sellingfinancial assets. and

ii. Contractual terms of the assets gives riseon specified dates to cash flow that areSolely Payments of Principal and Interest(SPPI) on the principal outstanding.

Debt instrument at FVTPL: All financial assetsnot classified as measured at amortised cost orFVTOCI as described is measured at FVTPL. Thisinclude all derivative financial assets.

All financial liabilities are recognized initiallyat fair value adjusted by transaction costattributed to acquisition of financial liabilities.(See Table below)

Subsequent recognition:Instrument Subsequent Recognition Gains / lossesHeld for trading Fair value FVTPLFinancial Guarantee contract Higher of loss allowance and Statement of Profit and loss

amount recognized lesscumulative amortization

Loans and borrowings Amortised cost Statement of profit and loss

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The application of the respective Ind AS is subject to the case and circumstances. Whenever, thereis a conflict between Ind AS and the law, the provisions of law will prevail and financial statementsare to be prepared in compliance with law.

There are several fundamental changes that thenew standards will bring when compared to theantiquated Indian Accounting Standards(IGAAP). One key fundamental change is thesignificant increase in focus on fair valueaccounting. Ind AS requires application of fairvalue principles, which would result insignif icant differences from f inancialinformation being presented currently.Complying with fair value principles of Ind ASwill require assistance from specialistprofessionals with valuation skills to arrive atreliable fair value estimates.

Also, management and professionals involvedin the preparation of financial statements willhave to hone their valuation skills. Withincreased scrutiny from regulators andinvestors, management and auditors will haveto ensure that fair valuation of assets andliabilities is not only technically correct andsupportable but also complies with principlesof Ind AS.

Let us understand Fair value with one smallexample; Mr. A takes a loan of Rs. 100 @ 7%,when market rate was 10%. He recorded it atRs. 100, but this is not Fair value of the loan.Loan shall be adjusted to the tune of 7% to bebrought down to it’s fair value.

Ind AS 113 - Fair Value MeasurementThis standard establishes a framework formeasurement of assets and liabilities forfinancial reporting purposes, using fair valueas their guiding principle. Ind AS 113 providesthat assets and liabilities shall be recorded at

Fair value at measurement date and providesmeans and principles of recognition,measurement and disclosures. This Ind AS wouldbe crucial one because it provides frameworkfor all other Ind AS which requires Fair valuemeasurement or disclosure.

1. Definition of Fair ValueInd AS 113 defines Fair Value as ‘The price thatwould be received to sell an asset or paid totransfer a liability in an orderly transactionbetween market participants on themeasurement date’.

The Market (Principal or the most advantageousmarket):The principal market is the market with greatestvolume and level of activity for sale or transferof Asset and Liabilities. The most advantageousmarket is the market where entity would fetchmaximum amount for sale of asset andminimizes the amount for transfer of liability,considering transaction costs in respectivemarket.

Market participants:They are buyers and sellers in the principalmarket who are;

- Independent or not related parties- Knowledgeable- Able to transact- Willing to transact

Price and Orderly transaction:An orderly transaction is one which assumesexposure to the market for a period prior tothe measurement date to allow for marketingactivities that are usual and customary for saleor transfer of such Assets & Liabilities anddoesn’t consider a forced transaction. The pricewould be the amount that could be receivedon sale or transfer of asset but excludestransaction cost as same is not an attribute.

2. Hierarchy of Fair ValueInd AS 113 incorporates a three level hierarchyfor inputs used in valuation for measurementof Fair value. The hierarchy gives the highestpriority to quoted prices and lowest tounobservable inputs.

Categories of Inputs: Level 1 Inputs:i. Quoted prices in active market for identical

Assets & Liabilities.ii. The entity can access principal market at

the measurement date.iii. The quoted price shall be used without

adjustment except:• Alternative pricing method is used for

a large number of similar Assets &Liabilities for which quoted prices areavailable but not readily accessible.

• When a quoted price in active marketdoesn’t represent fair value or requiresadjustment.

Level 2 Inputs:i. Inputs other than quoted prices included

within Level 1 that are observable for theAssets & Liabilities, either directly or

Fair Valuation under Ind AS

‘Free Medical Check -Up Camp’ in the Badangpet branch for the customer and non-customers on the occassion of the Annual Day on 15.12.2017.There were 146 registrations for 4 hours camp wherein the branch has garnered 3 SB accounts , 101 Suraksha Kavach policy and a lot of publicity.The event was graced by the presence of HNI customers and Mrs Lakshmi Prabha, Deputy General Manager, RO Hyderabad.

Vijith S.Dy. General Manager(CFM & InvestorRelations)

indirectly.ii. Level 2 inputs include;

• Quoted price for similar Assets &Liabilities in active markets

• Quoted prices for similar or identicalAssets & Liabilities in markets that arenot active markets

Inputs other than quoted market prices thatare observable like;

• Interest rates and yield curves (Bonds,debenture instruments)

• Implied volatilities (Options)• Credit spreads

Level 3 Inputs:i. Unobservable Inputs for the Assets &

Liabilitiesii. Are used only when observable inputs are

not availableiii. Such inputs shall be developed with best

information available, includes entity levelestimates, but shall be adjusted ifreasonable information is made available.

3. Initial Recognition CriteriaItem Transaction Fair Value

priceAssets Price paid Price that would

to acquire be received tosell the asset

Liabilities Amount Amount thatreceived to would be paid to assume the settle or transferliability the liability

Where transaction price is different the entity

shall recognize profit or loss unless that Ind AS specifies otherwise.There may be situation where transaction price differs from Fair value such as;• Where transaction is carried out;

- With related parties- Under duress or forced transaction

• Unit of account represented by transaction price is different from that under fair value Eg:Transaction price includes transaction cost.

• Market in which transaction takes place is other than principal market.

4. Measurement CriteriaItem CriteriaNon-Financial asset 1.For Usage: Highest and best use . Highest and best

use considers considerations such as- Physical- Legal- Financial

2. For Selling: Price to be fetched by market participantsLiabilities and equity instruments Fair value of identical items held as asset by marketheld as assets participantLiabilities and equity instruments Fair value using a valuation technique fromnot held as assets perspective of market participant that owes the

liability or has issued the claim on equity. Financial liability with a demand Not less than amount repayable on demand feature discounted from first date that the amount could be

repaid.

Valuation Technique• Use of valuation technique which maximises use of observable inputs and minimises use of

unobservable inputs.• Multiple techniques may be required.

5. DisclosuresAn entity shall disclose such information that helps the users of its financial statements assessboth of the following:• Valuation technique and inputs used to measure fair value.• Effect of recurring fair value measurement using significant unobservable inputs (Level III)

on profit or loss or other comprehensive income for the period.

ATM at Pettah Junction, Poonithura inaugurated by Smt Sowmini Jain,Mayor Kochi Corporation in the presence of Sri. A B Sabu, Councillor,JGM & Regional Head Sri N J Reddy and Sri Nandakumar A.(BranchManager)

ATM at Pallavaram inaugurated by Dr. Ishari K Ganesh (Chancellor/Founder, Vels Group of Institutions) in the presence of Mr. K C Mohanan(MD & CEO, We Two Engineering Pvt. Ltd.). Ms. Biji S S (DGM & RegionalHead), Mr. P J George (AGM), Mr. Arun Chungath (Br. Manager)

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Convergence in to Ind AS standards for entitiesin the financial services sector is not merelyan accounting exercise, but has significantregulatory, business and IT implications.Considering the impact on FinancialInstruments which constitute the major chunkof assets and liabilities in the f inancialStatement of a Bank will have impact on IndAS, it will be very diff icult to transformmanually but will have to update their ITsystem. The fair value accounting, ECLcomputation etc are likely to have significantimpact on capital position and conventionalperformance yardsticks of entities particularlyin the financial services sector. Stakeholdersneed to be made aware of the impacts andprepared in advance of the potential changesin each and every performance yardsticks dueto convergence into Ind-AS on f inancialstatements, not only as a matter of goodcorporate governance but to avoid any kneejerk reactions from them.

Classification and MeasurementThe crucial aspect of any financial instrumentis the classification at the beginning itself. Theapplication of Cash flow test (Solely Paymentof Principal and Interest - SPPI) and businessmodel test is likely to require signif icantjudgment. To decide whether SPPI criterion ismet, a bank will need to consider all contractualprovisions of the instrument which may impacttiming/amount of contractual cash flows, e.g.,embedded derivative features and prepaymentoptions. The business model test is highlyjudgmental. It is likely to depend on the factsand circumstances and intentions of the bankfor holding each instrument. Part of thebusiness model assessment also depends onhow a bank has achieved the business modelobjective in the past, e.g., whether there havebeen significant recurring sales. To ensuretimely availability of information, banks shouldstart tracking such information on priority. It ispossible that a bank holds the same type ofsecurity (say, government bond) in all threecategories of business model. This may requirethree different measurements for similarinstrument. It is expected that the applicationof Ind AS will require more instruments to bemeasured at fair value, with correspondinggain/loss to be recognised in the OtherComprehensive Income (OCI)/profit or loss.Banks will no longer be permitted to ignore

appreciation in value of these securities. Thiswill result in significant volatility in P&L andequity position.

Impairment lossImpairment loss represents a paradigm shiftfrom current practice in the Indian bankingindustry which follows income recognition, assetclassification and provisioning (IRACP) normsprescribed by the Reserve Bank. To estimateexpected credit losses over the life of the asset,the management will have to create models andcollect significant amount of historical loss data.The need to incorporate forward-lookinginformation means that application will alsorequire considerable judgment as to howchanges in macroeconomic factors will affectECL. This exercise will be very complex andinvolve signif icant judgment. The ECLprovisioning requirement will start onacquisition of asset itself and significantlyincreases on moving to stages in credit risklevels. On initial recognition, Ind AS 109provides certain operational simplifications andpresumptions but these simplifications do notmake impairment assessment a hassle freeprocess. It is expected that the ECL model mayincrease the credit loss allowances for manyfinancial institutions. However, the increase willvary between entities based on various driversin the ECL models and their past data andrecovery pattern. In addition, the focus onexpected losses is likely to result in highervolatility in the amounts charged to profit orloss.

Fair ValuationOne of the key issues facing the banking industrywould be the application of fair valuemeasurement, in view of the very nature ofbanking business and the preponderance offinancial instruments on a bank’s balance sheet.Challenges in migrating to fair valuemeasurement arise on account of the absenceof active markets for corporate bonds and loans,differences with extant RBI instructions and

practices on valuation, absence of anestablished body of accredited valuers and lackof adequate historical experience in the use offair values by banks.

Effective Interest RateThis may pose signif icant operationalchallenges due to lack of adequate and reliabledata/MIS required to compute EIR e.g. fees/commission charged, transaction costs incurred,expected life of the products etc. Operationalcomplexities and challenges of retrospectiveapplication of EIR method would depend uponvariety of individual bank specific factors suchas nature of banks products/services, ITenvironment, banks pricing/waiver policies andpractices, tenor and ticket size of the loans/advances, data retention policy, mergers/acquisitions in the past and so on.

ComplianceA number of regulatory reports/ compliancesare based on Indian GAAP numbers. Moving overto Ind AS, change in measurement under IndAS will have a direct impact on regulatorycompliances. For example, application of IndAS to banks may give significantly differentnumbers having consequential impacts onregulatory capital requirements. It is, therefore,important that both regulators and entitiesconsider these aspects carefully.

Ind AS - Challenges for Banks

C.P. GireeshJGM & CFOHO CFM

19

Painting by Ms. Asha Alice Thomas,Asst. Manager, Br. Thrissur Main

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IntroductionIf accounting is the language of business,Accounting Standards are widely held as thesyntax/grammar governing the use oflanguage. From April 2019 onwards, thereported financial results and position of banksis set to undergo drastic changes due toimplementation of IndAS. IndAS refer to theaccounting standards/rules, framed by Govt inconsultation with ICAI, which govern thefinancial reporting of large enterprises. Ind ASare framed in line with International FinancialReporting Standards (IFRS) issued by IASB. IFRSare applied in financial reporting of entities inroughly 120 countries. Adoption/convergencewith IFRS is expected to increase thecomparability of f inancial statements ofentities domiciled across the world.

These standards are implemented in a phasedmanner and the Indian banks are expected toreport their Profit and Loss statement andBalance sheet prepared under IndAS from F.Yended 2019, along with the comparativefigures for the previous year (i.e F.Y 2017-18).One of the key changes is the introduction ofECL based provision, which is set to replacethe provisions based on IRAC norms. The articleintends to provide a bird’s eye view onassessment of ECL based provision, which isreckoned in reported financial statements ofcommercial banks.

ECL based provision: A novel conceptpropagated by IFRS 9 and IndAS 109IFRS 9 and its Indian counterpart IndAS 109deals with the assessment of impairment lossesfor all loans, long term investments, non-funded limits and all other exposures whichthe bank intends to hold till maturity.Impairment loss (ECL) so computed should bededucted from the value of advances and isset to replace the IRAC provisions which arerule based. Credit risk assessment andquantification of each exposure assumes vitalimportance in computation of ECL. The IndAS109 expects the banks to make earnestattempts in quantification of ECL, which is afunction of Probability of default (PD), Lossgiven default (LGD) and exposure at default(EAD). The provision based on ECL is envisaged

to be better aligned with the PD of differentcategories of bank’s borrowers and recoveryprospects associated with defaulted accounts.In short, the ECL based provisioning aims tocreate stronger banks, which are well positionedto absorb the expected credit losses, whichwould manifest in form of defaults.

Staging of exposuresAs per IndAS 109, the exposures need to begrouped into 3 categories namely Stage-1,Stage-2 and Stage-3 exposures. Stage-3exposures are instances where thecounterparty/borrower has defaulted/failed tofulfill the contractual obligations. All NPAs andrestructured standard advances are treated asStage -3 exposures.Stage-2 exposures refers toexposures of those borrowers whose risk ofdefault has increased substantially. In thisregard, RBI’s Internal working group hasrecommended that rating downgrades ortagging of accounts as Special Mention Account(SMA-2) / Days past Due (DPD)-60 may be takenas indicators to classify accounts under Stage-2 category. All other exposures are treated asStage 1 exposures. The level of provisions underIndAS 109, for exposures grouped underdifferent stages is given in table below.

Stage Amount of provision to be reckonedin Balance sheet

1 12 month Expected credit loss (ECL)assessed for exposures

2 Life time ECL3 Loss given default (i.e. the amount

would lose in event of default); theprobability % need not be multipliedon the loss rate, because the defaulthas already occurred in theseaccounts.

The methods which are generally applied incalculation of PD, LGD and EAD are explainedbriefly in ensuing sections.

Probability of DefaultPD refers to the chance that a borrower woulddefault within 1 year from the reporting date.PD varies for different borrowers and groupingof exposures into Corporate and Retail is a pre-requisite in assignment of PD on differentborrowers/accounts on reporting date. Forcorporate exposures, the borrower rating (BR)is widely regarded as independent variable,which assists the bank to model PD. The higherrating grade borrowers tend to have lower PDand vice versa. Hence PDs are calibrated foreach rating grade using statistical techniquesbased on rating and default history of the bank.For retail exposure PD are generally assessedfor each product categories such as home loans,personal loans, vehicle loans etc. This is becauseof following reasons.

All loans/borrowers within the productcategory tend to share similar risk profile.Unlike corporate loans, retail loans aresanctioned with relatively lower numberof deviations. Further, macro-economic variables tend toaffect a class of retail loans in the samedirection. For e.g. fall in housing prices islikely to have an adverse impact on ECL ofall home loans.

The sub-segments can be created within thesame product category based on otherpredictors of default such retail applicationcredit score (i.e. score generated by retailscorecard), CIBIL score, LTV ratio, etc. Howeverthe ability of bank to create such sub-segmentdepends upon availability of quality data forrelatively long time frame (say five years).

Loss Given DefaultLoss given default refers to the amount of loanoutstanding, which a bank is likely to lose inthe event of default. This is generally expressedin %. LGD is arrived at by deducting recoveryrate from 1. Recovery rate refers to the amountrecovered as a % of amount outstanding at timeof default. Higher the recovery rate experiencedby bank, lower will be the LGD. The recoveryrate/LGD applied by the bank on reporting dateshould be backed by history of recoveries madein defaulted accounts in past. Similar to PD,LGDs are also computed for separate segments/pools. Within the segments, say corporate, theLGDs can be further refined based on otherfactors which helps us to predict/modelrecoveries. Collateral coverage /Facility rating(FR) are risk drivers generally applied by banks

Assessment of Expected Credit Losses(ECL) under Ind AS 109

Arjun Sunder SSenior Manager (CA)IRMD

to model LGD within the broad categories suchas business loans, agricultural loans etc.

Exposure at default (EAD)Exposure at default assumes differentmeanings for different type of exposures. Themeaning of EAD for different type of exposuresis given in table below.

Type of exposure MeaningFunded Limits Balance outstanding(CCOL, term loan etc.) + (Undrawn portion

XCredit ConversionFactor*)

Non-funded limits Balance Outstanding(BG, LC etc) X applicable CCF*

*Credit Conversion Factors (CCF) specified in RBIguidelines on Basel-III norms is applied to computeEAD.

ECL expense and ECL provisionECL provision is the product of PD, LGD andEAD. The sum of ECL associated with allexposures is the ECL provision on reportingdate. The difference in ECL provision betweentwo reporting dates is the ECL expense for theperiod. To illustrate, ECL expense for F.Y 2018-19 is arrived at by deducting the ECL provisionas on 31.03.2018 from ECL provision as on31.03.2019. The key difference in the ECL forStage-1 accounts and Stage-2 accounts is thatunder Stage 2 accounts Lifetime PD replacesthe 12 month PD. Life time PD will be higherthan 12 month PD because it refers to thecumulative probability of default of a borrowertill maturity of his loans. For Stage 3 exposures,LGD and ECL will be same, because PD is 1 forsuch exposures.

RBI guidance and expectationsRBI has formed a separate working group forimplementation of IndAS in Indian banks. Thekey highlights of the RBI’s guidance andexpectations are given in following points.

Circulated the working group’s findings

and guidance on issues related to stagingand computation of ECL.Clarif ied that restructured standardadvances should be treated as Stage-3Directed all scheduled commercial banksto submit proforma Ind AS f inancialstatements for the quarter ended on30.06.2017 duly approved by the Board ofDirectors of the bank on or before 31stOctober 2017

It is widely expected by bankers that the RBIwould come out with a comprehensiveguideline on measurement of ECL under IndAS109. The guideline is expected to reducevariability in PD/LGDs applied by the banks incomputation of ECL.

Comparison with IRACThe ECL based provision framework issignificantly different from IRAC norms. Keydifferences are highlighted in the tableannexed.

Modelling of PD and LGD: Risk manager’sdilemmasECL framework has created fresh challenges forrisk managers, since as indicated earlier the ECLbased provision is more sensitive to credit riskprof ile of the loan portfolio and thequantification of the credit risk has assumedgreater significance which cannot be over-emphasized. Key issues are summarized below.

Data: The modeling of PD and LGD is ahighly data intensive exercise. The banksneed updated database of ratings, defaults,scorings, recoveries, which can be retrievedwithout delay for modeling. Further, thebanks should have robust procedure toensure annual review of ratings, so that thecorrect PDs are applied. The bank’s risingfocus on review of rating at least once inyear should be seen in this perspective.Methods: The statistical methods appliedin estimation of PD and LGD are based onthe RBI’s/Regulator’s guidelines on Internal

S. No Point ECL IRAC1 Size of provisions Based on PD and LGD Based on classification, period of NPA, incidence of fraud,

presence of security coverage etc2 Risk sensitivity More sensitive, Rating downgrade could Less sensitive

increase provision requirement3 Regulatory guidance No comprehensive guideline Master Circular supplemented with notifications4 Conservatism More provision are created prior to the date Greater provision created subsequent to identification

of default, after factoring expected PD and of borrowers as NPALGDHence more conservative

5 Timing of recognition Provision equal to LGD should be recognized The amount of provision gradually increases with passageon the date of default of time.

Rating Based (IRB) approach in computationof risk weighted assets. The ‘IndAS109’provides broad guidelines in assessment ofECL. Fine tuning of statistical methods tomodel PD and LGD after factoring therequirements laid down in IndAS 109 iscomplex exercise. For e.g IndAS required thebanks to factor in future macro- economicscenarios in assessment of ECL. However itdoes not guide banks in modifying PD orLGD to consider expected macro economicvariables such as GDP, interest rate etc.Uncertain regulatory landscape: Adoptionof IRB in calculation of RWA entailsestimation of PD and LGD. RBI has not yetpermitted any bank to follow IRB approachin computation of credit risk weightedassets, despite issue of guidelines on IRBin 2011.This indicates that the regulator isalso on learning curve in assessment of ECL.The RBI is ramping up its human resourcesthrough lateral entries and cross bordertraining. At this juncture, it has become hardfor risk managers to anticipate theregulator’s guidance in computation of ECL.Hence adoption of proactive measures toimprove bank’s preparedness to computeand report ECL-based provisions hasbecome extremely difficult.Higher level of public scrutiny: Traditionallythe risk manager’s services were primarilyconsumed by business units. The methodsto identify, measure and quantify the riskwere also scrutinized by RBI as part of RiskBased Supervision (RBS) or Annual FinancialInspection (AFI). Basel- III disclosures haspartially exposed the risk manager’s domainto investor’s scrutiny through mandating thedisclosure of risk management policies/techniques. Implementation of ECL-basedprovisioning exposes risk manager’squantif ication methods to Board ofdirectors, investors and public at large,because the methods applied nowdrastically influences the reported financialresults and position of the banks. In this

21

regime, risk managers should be preparedto face more questions from investors andtake dynamic measures to adopt mostsophisticated methods in measurement ofECL within the constraints listed above.

Supervisor’s nightmareThe implementation of ECL based provisionframework entail significant challenges forregulator/RBI. Two key challenges are specifiedbelow.

Divergence in provisions: The adoption of thisframework could lead to different rates ofprovision applied to same counterparty indifferent banks. The example given in tablebelow, which quantify ‘12 month- ECL’ of ABCLimited illustrates this point.

Particulars Bank A Bank BAmount of Loan 100 100Rating of borrower AA APD linked to rating grade 2% 3%LGD 30% 40%ECL % 0.6 1.2

If the same supervisor is in charge of inspectionof both banks, he/she must be prepared todigest this situation, which arose solelybecause of change in risk measurement/quantification practices at both banks. For aRBI auditor used to identical standard provisionrate of 0.4%, it takes time and efforts to absorbthis concept and accept this divergence withgrace.

Capacity building: The size of RBI team whichis in charge of IRB approach is relatively smalland very few RBI inspectors are acquainted withstatistical techniques to model PD and LGD.Hence in order to ensure the timelyimplementation of ECL based provisionframework laid down in IndAS 109, the RBIwould have to either a) Increase the size oftrained manpower in short timeframe or b)Increase the scope of statutory auditors tocertify the accuracy of PD/LGD models adoptedby banks in computation of ECL

Reporting of ECLThe banks would need to calculate and reportECL provision at least on a quarterly basis. Inorder to achieve the desired level of consistencyand accuracy in reporting of ECL, appropriateIT systems are required.

Greater interdepartmental co-ordination isrequired to

Design the PD/LGD models,Update the estimates of PD and LGD thrownout by the model on annual basisExchange of data required to compute ECLon timely intervals.

The RBI has already stipulated the format fordisclosure related to ECL. The highest levelcorporate governance and Board oversight isanticipated by RBI to ensure accuracy ofreported ECL numbers.

ConclusionThe adoption of IndAS is expected to increaseprovisioning and capital requirement s of Indianbanking system. The higher provisions areexpected to occur in standard advances withlower internal credit rating and NPAs. The higherprovisions would further erode weakenedcapital position of public sector banks and theability of Govt to infuse capital funds could delaythe implementation schedule of IndAS or ECLrelated provisions of Ind AS. IRDA, the regulatorybody for insurance companies has alreadydeferred implementation of IndAS by one moreyear. Credit risk management framework of the

banks would be greatly benefitted owing tobanks’ drive to achieve preparedness in roll outof ECL-based provisioning.

At this juncture one question emerges: Whetheradoption of ECL based provisioning wouldcreate stronger banks owing the risk sensitivebias of the ECL framework? While theoreticanswer to this question is a resounding ‘Yes’,the risk practitioner in my mind says; the answeris dependent upon multiple factors. Thetransparency /robustness of models, the qualityof input data, processing and reporting systems,professionalism displayed by banks’ board inoversight, timely validation and back testing ofestimates of PD/LGD, support from topmanagement and effective hand holding andproactive uniform consistent regulation fromRBI features prominently in the list of factors.We, bankers do not have the benef it ofhindsight, while laying down the systems andprocedures to assess and report ECL. However,let us use the power of collective wisdom,effective co-ordination and result orientedapproach to implement systems for assessmentof ECL.

Fun & Frolic

Irinjalakuda Regional Office staff members at Munnar

22

“I want to join Indian Navy”. When Roshan toldme about his ambition, I looked at his beamingface. From the depth of his inner consciousness,bubbles of hopeful thoughts were surging upand its glow was evident in his sparkling eyes.

We were meeting for the first time on theoccasion of document verif ication for SIBscholar aspirants at Head office early in themonth of December. Today, he has come againto hand over me a certificate which he couldnot produce during the verification process inDecember.

“Sir, as you asked, I have brought the bonafidecertificate from the college “. He handed overme a piece of paper in which it was writtenthat Roshan is a student of the collegepursuing his BSc Degree course in Physics.

This year also, it was my duty to do spotverification of the short listed candidates forSIB Scholar in Thrissur district. There were 10candidates and I visited each one of them attheir residence. In most of the cases studentslived in abject poverty. Roshan was staying ina rented house. It was an outhouse, adjacentto the residence of the house owner. The tiledhouse was in ruins and it had only one room.The family of 4 members lived there. I sawbooks and study materials neatly kept in theverandah on the floor. There was no furniture.Roshan prepared for his examinations sittingthere and scored 96% marks in the qualifyingexamination.

Keeping the certificate aside after verifying it,I looked at him. I wanted to speak to him more.

“Roshan, is it holiday for you today?” I asked.

“No Sir. I just took a break and have to go backto join NCC parade.”

Oh ! You are in NCC too? Do you really like it?I asked.

“Yes Sir; it is my desire to join Navy and I hopeNCC will help me in that.” It was as simple asthat. Roshan was resolute and he had already

set a goal for himself.

“Well, you need to have good physique andstrength to join Navy” I said this, looking at hisfrail structure. He was short and lean.

“I know Sir. I hope to add more weight and onlythen it will happen one day. He stopped for awhile; then said “After the Beef festival in thecollege, they don’t allow even chicken. We aregiven Vegetable Biriyani now after the parade.It is tasty indeed”

His options to add more weight is limited now.At home it may not be very different either.

“Do your parents really support you, Roshan,” Iasked. I wanted to know how the family is beingmanaged.

“My mother goes to a shop for making eateriesand gets Rs 180 per day. But sir, she will notget work every day.

“Your father “? I asked.

Roshan did not answer. He looked down for awhile and said. “Father drives an autorikshawand he has to pay Rs 450 every day to the owner.Father says he don’t get much money now adays.

I remembered the man who accompaniedRoshan on the day he came for documentverification. His red hot eyes, disheveled hairand the casual attitude clearly said what hewas.

“Father met with an accident yesterday. Autois damaged and we need to spend money to

repair it.” “Fortunately, he is not injuredseriously”.

Roshan now started talking without inhibitions.He is open and relaxed. He wanted to say moreand I played the role of a patient listener.

“We don’t get money even to pay rent for thehouse. For the last four months, father did notcare to pay rent. “Roshan said, but there was noremorse on his face.

“How do you manage it now”? I asked.

“I had some money in my account. The sum Iearned for being topper in the school formatriculation, then cash award for getting goodmarks. We paid rent for two months out of mysavings and nothing is left in my account now.”

Roshan looked sad when he said this. I alsofelt heavy in my heart as I listened to him.

“We have to look for a new house, sir. Since wedefaulted rent for two months, owner asked usto vacate the house immediately. But he is agood man.” Roshan Said. “Knowing that fatheris injured, he gave us time till this weekend. “

Tears welled up in my eyes. I looked down. I didnot want Roshan to see my emotions.

The aspirant to join Indian Navy has now otherpriorities. The sea of life is raging fiercely andhe has to navigate his ship across the menacingtides.

Thank god, there is a light house blinking notfar away.

SIB SCHOLAR!

SIB Scholar- A Blinking Light HouseNearby

Narayanan V.C.Chief ManagerHO CRD ( FIPCell)

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It was once again theseason of hope and newbeginnings at RBCPC...All were still busy withProcessing filesespecially consideringthe quarter end andfew not even realizedSanta has come!Santa though, washappy to note a lot ofchanges since he lastvisited us as many newinitiatives have beenimplemented toimprove the overallperformance and TATof file processing.A Wall of fame guardsthe entrance with topperformers (HighestSanctioned number) ofthe month.

Santa was delighted tomeet still more stars!The Stars of the dayfor each product.Dedicated ProductManagers have beenselected for Housingloan, ODAP/LAP/LCPand Vehicle loan,Education loan andPersonal loan.Campaign on PMAYgoing on.. and plenty of

exciting campaignsplanned ahead for all...RLOS is implementedunder Personal Loanand Housing loan for afew regions.Did You Know seriesbeingcirculated andtraining sessionshappening for staff forbetter product andprocess understanding.With all these changeswe move ahead towelcome new yearhoping to be the best inall we do.. May goodthings happen to allMerry XMAS andHappy New year 2018!!

Arathi APAM, RBD Sales

When Santa Visits RBCPC

24

25

Kuwait is a rich country with strong currencyvalue in the global market. The expatriateshere belong to the affluent segment and ourexisting handful NRI customers always usedto nit-pick about the presence and visibility ofour bank in this place. It is understood thatthere are nearly 2 lakh Indians, working inKuwait, (majority being malayalees) and only14380 customers maintain relationship withour bank.

To put our best foot forward, teaming up withUAE Exchange Centre Kuwait our bank haddeputed a marketing officer during the monthof November 2017 to Kuwait. To elate hispresence and to gladden our existing NRIcustomers we had conducted a NRI customermeet during the month of December 2017which was attended by more than 400customers.

To complement these kinds of initiatives andprogrammes and as a differentiator, SIBdecided to explore alternative marketingstrategies to gain entry into the minds of thewell-heeled NRI’s who do not have anyassociation with our bank.

A great opportunity to foster networking amonga segment of prime HNI NRI clients knocked us.Our bank sponsored a badminton tournament“SMASH 18” in Kuwait organised by The AlumniAssociation of Engineering Colleges in Kerala(AAECK) on 2nd Feb 2018.

A Sporting Initiative

Joe VargheseAGM, NRI Cell,RBD, Ernakulam.

The presence of our RBD, Country Head Mr.Sanchay Sinha, for the programme, invigoratedthe entire AAECK community consisting of 1350members and they promised to open accountsand establish new relationships with our bank.To start off, we were able to open 37 silver and

3 NRI Diamond accounts of this group and weare sure henceforth several of them willassociate with us. Initiatives with a differencealways yield better results.

SIBians at Kuwait

“Let your camera take you places – And notthe other way around”. Photography being mypassion, I have started travelling a lot. Sincebike riding is also my passion, I have startedexploring places in my bike, with my camera.

I had a solo bike trip to the White Desert atthe Rann of Kutch, Bhuj. It is approximately425 km from Ahmedabad. I started in themorning, and reached Bhuj in the afternoon.After a night halt at Bhuj I started to the White

time I frame it in my mind and decide to shootit, the frame is already way behind me. Since Ihave to stick to a schedule, I kept riding on .

First I visited Kalo Dungar (Black Hills) whichis the highest point in Kutch. From here, theentire horizon vanishes into the Great Rann, thedesert and sky often becomingindistinguishable. It is one of the few non-coastal location where you feel you are at theedge of the earth, on the brink of vastness thatfades towards infinity. The far-off views appearblurred under the blaring sun. Straight ahead,the Great Rann stretches out far to the farthesthorizon. The scenic landscape spreading fromleft to right is so vast that it cannot be capturedin a single frame, not even with a wide-anglecamera. This is one of the places where a civiliancan get close to the Pakistan border. A strangephenomenon is observed at Kalo Dungar, thatat one location you can experience vehiclesgoing down the hill at speeds over 80kmpheven with the ignition switched off. While atanother location is the magnetic field where

26

Vinod K. K.ManagerBr. Gota - Ahmedabad

one can stop their vehicle at a specified spotand witness the vehicle moving against thegravitational force, up the slope at a speed of20 kmph.

White desert or Safed Rann is the mainattraction of Kutch. It is a seasonal salt marshland which looks beautiful in broad daylight,better at sun rise or sunset and the best on aFull Moon Night. But now I’m seeing a vast flatland covered with salt for miles on end, and Iam thrilled. This place turns snow white in thedry season and hence the name. I would nothave words to express the ravishing beauty ofthis crystal white piece of land which I couldsee in front of me. A straight line above whichthe colour was blue and below it was all white.The Horizon – I have seen it now.

Back in my room, the deep baritone voicereverberates in my mind, as I recollect theGujarat Tourism’s successful advertisementfeaturing Bollywood superstar and Gujarat’sbrand ambassador, Amithabh Bachan seenwalking in white sands, clothes fluttering in thebreeze – “Kutch nahin dekha toh kuch nahindekha” (If you haven’t seen Kutch then youhaven’t seen anything.)

Desert next day morning. That drive was oneof the best drives I had. It is infact that theroads in Gujarat, especially highways are oneof the best in the country. The view is justamazing - straight barren land with vegetationgoing all sparse. As the sun went above thehead I started witnessing some mirageformation on the distant roads which wasindeed picturesque. The geography and cultureis entirely different. You will not find anybodyelse on both sides of the road. It was just meand my bike.

But the passion of motorcycling and photo-graphy is really a bad combination for a riderwhich I had experienced. There were somelandscapes with amazing beauty and by the

27

Love is blind. But can love be deaf? Especiallyif the persons involved are capable of listeningand talking? ‘No’ is the answer that appearsto be the logical one as far as I am concerned.Being the parents of eligible bachelorchildren, many of us might have gone throughthis dilemma once or other, especially if theyhappen to live in an Indian Metro where thespoken dialects differ from room to room.

It happened when my friend’s son Aalokapproached me for arranging some Kannadatuition for him. I was amused by the love fora South Indian language by a Hind-speakingboy. He had come to stay in the metro onsecuring a good job in a Multi-national firm.His mother who was my colleague in myyounger days fixed me as his local guardian.Aalok, who was much home-sick, would visitus whenever he felt like. Since we also havea son of almost the same age, we couldcommunicate with him very jovially.

I probed curiously why this sudden love for atotally new language started. Blushingly heconfided that a new girl, Shobhika, had joinedhis off ice. He overheard her talking inKannada over phone. To win her heart heassumed that he had to learn Kannada. Ientrusted the ordeal to my son who is locallymore well-informed than us. He returned witha bunch of books – Learn Kannada in 30 days,Learn Kannada through Hindi, Learn Kannadathrough English….Aalok was thrilled. Our sontook up the mission of f inding a tuitionteacher also but couldn’t find one near ourlocality. So both of them devised a group studyplan.

Meanwhile Aalok tried other methods ofwinning Shobhika’s heart by talking to her inEnglish. He took her to an eatery where

delicacies from Karnataka were served, giftedMysore Silk saree, ordered Birthday cake forher in the shape of Mysore Palace…. We wereamused by the innovative ways in which hetried to win her heart.

After about six months, on one of his visits toour house, we tried to test his progress inlearning Kannada. Already we had engaged atuition master for him to teach Kannada. Myson started asking him:

“Nimma Hesaru Yenu?” – What is your name?“ Illi Baa” – Come Here.“Oota aaitha?” – Had food?

To all these, Aalok answered in two words –“Kannada Gothilla” – Don’t know Kannada!! Heconfessed that he was finding it very difficultto learn the language.

“But I will master this language in a few days’time” – he declared. We were confusedwhether the days could get converted intomonths and years…

“Aunty, let’s change the teacher. He is too fastfor me!”

Hearing this, my son literally jolted. It was withgreat difficulty that he found a tutor.

However Aalok was desperate as he could notmake out the nature of Shobhika’s feelingstowards him.

We advised him to take leave for two days andstay with us. We also asked him to report tohis office that he was having high fever andwas staying with us.

The first day nothing happened.

On the second day our door bell rang. When Iopened the door a smart looking young girlwas asking me reluctantly-

“Is Aalok staying here?”

I could instantly make out that it wasShobhika. My son immediately rushed inside,pushed Aalok to the bed and covered him withblankets. The poor guy was sweating in thepeak summer under the blankets! I ledShobhika to Aalok as if he was very seriouslyill. She also believed it and we could make itout from her expressions. After spending sometime with Aalok, Shobhika came outside. Idecided to play the cupid between the twoyoung hearts. I asked her-“Shobhika, did you feel bad when you cameto know that Aalok was sick?”

She blushingly nodded her head.

“Are you serious about your feelings for him?’

In a husky voice she said “Yes”…

I felt like shouting “HURRAY” for Aalok.Suddenly her mobile rang. It was her mother.She started talking to her mother in Gujarati.My jaw dropped. After her conversation gotover I asked her-

“Do you speak Gujarati?”

She replied : “Yes Aunty, we speak Gujarati athome. Since my father was employed inBanglaore my studies were completed there.I talk to all my friends in Kannada!!!”

Hearing this I could see that Aalok had almostfainted… now he has to learn one more newlanguage – Gujarati!!!

I realised that he was never aware of this fact..Love is definitely blind and deaf.... .

Radhika R.BSenior ManagerTrivandum RO

Achievements

28

Francy Jos E.Asst. Gen.l Manager

Secretarial Dept

Suma V. GeorgeSenior Manager

Chalakudy

Peter A.D.Deputy Gen. ManagerStaff Training College

Aijou George MathewSenior Manager IT

Digital Banking Dept.

Rogin C. KurianManager

Velankanni

Aswin SunnyAsst. Manager

Kannur RO

Mahesh K.ManagerUduma

Arun AlappatAsst. ManagerAruppukottai

Divya MohanManager

Transaction BankingDept.

Nanda Kumar CManager

Staff Training College

Pramodkumar M.Asst. Manager

Vijayawada

Members Accomplised Continuing Professional Development (CPD) from IIBF

Elected as Secretary,Bankers Club Kochifor the year 2017-18

Associate Member -Indian Institute ofBanking & Finance

Sheela DavisChief Manager

Staff Training College

Nandakumar A.Manager

Maradu Br.

Children’s Accomplishment

Ms. Risha Ravi D/o. Mr. M. Revi, SeniorManager, Br. Thiruvilwamala, hassecured second rank in the B.Sc. Botanyexamination conducted by University ofCalicut in April 2016.

Best Catwalk Title Winner : Mrs. K. Aswathi, Manager, RBD

Renu Rebecca GeorgeManagerThevara

KirubhakaranManager

Tirupur Main

Sajeesh M.T.ManagerKeekan

29

Aswathy Iyer SClerk

Cochin Mattancherry

Balachander UAsst. Manager

Thanjavur

Sri Ranjane MAsst. ManagerRajapalayam

Vineeta NairSenior Manager

Bopal

Shijinraj P.Asst. Manager

Kudasan

Jose K.A.Chief Manager

Credit Department

Indulatha J.C.Manager

Retail Banking Dept

Somy GeorgeClerk

Puvathur

Shijo JoyClerk

Ammadam

Roopa RClerk

Bangalore City

Joseph ShellyAsst. ManagerBangalore City

Renjini RAsst. Manager

Changaramkulam

Thamya Jeyanthi AClerk

Dindigul

Jobin P KurienAsst. Manager

Tuticorin

Manu MohanAsst. Manager

Puvathur

Shyam SivadasClerk

Chennai Anna Nagar

Abin MathewClerk

Elambulassery

Makesh Kumar TClerk

Perundurai

Geethu GeorgeClerk

Kattappana

Iyer Vishakha HariharanPro Legal Officer

Legal Dept

Alwin AugustineClerk, Transaction

Banking Dept

Jins JosephClerk, Transaction

Banking Dept

Athira ArjunClerk, Transaction

Banking Dept

Jibin JosephClerk, Transaction

Banking Dept

Anju StephenAsst.Manager

R T Nagar

Ms GitanjaliClerk

Shimla

Krishna Kavita P. ClerkWakad

Antony GeorgeAsst. Manager

Br. Indira Nagar

Radhalakshmy V BHO CFM

GST CELL

Prashant NairAsst Manager

Br. Pathanamthita

Sreelakshmy NAsst Manager

B’lore Malleshwaram

Sujitha NAsst Manager

B’lore Malleshwaram

S Nageswara RaoAsst Manager

Guntur

C. VeeraswamyClerk

Malkajgiri

Kiran Tata VSLAsst. Manager

Malkajgiri

NagarajuClerk

Warangal

S.U.ShivakuruAsst. Manager

Bishop Beretta EC

CAIIB

JAIIB

Shijo MathewClerk

Kodungallur

Santhosh SebastianDaftaryMeladur

Theresa GeorgeClerk

Moonnupeedika

SOORAJ M GClerkBalaramapuram

Akhil Pradap M KClerkRO Palakkad

Congratulations !

Know your Branch & Know your BanK

30

Branch Name KOLLENGODE Br. Code - 0036Date of Opening 06.05.1955No. of ATM (Onsite & Off-site) 2 nos offsite ATMsSpecialty of the Location Kollengode is a village situated 19 kms south of Palakkad.

Kollengode Palace and a shrine dedicated to Lord Vishnuare the major attractions here. The main source of incomefor the people is from agriculture.

Nearest Railway Station Oottara 1 kmNearest Airport Cochin International Airport 104 kmNearest Bus Station Kollengode 700 mtsLocation of ATM Two offsite ATMs 1. At Aiswaraya Complex, Kollengode

2. At Sai Hospital, Payyalore

Branch Name KOTTAYAM Br. Code - 0037Date of Opening 29-05-1959No. of ATM 3 OffsiteSpecialty of the Location Business AreaNearest Railway Station Kottayam 2 kmNearest Airport Cochin International Airport 87 kmNearest Bus Station KSRTC Bus Stand Kottayam 1.4 kmLocation of ATM 1. YMCA Kottayam 2. YMCA, Kottayam 3. Kurisupally Junction

Branch Name KOZHIKODE MAIN Br. Code - 0038Date of Opening 30.03.1944No. of ATM 2Specialty of the Location Kozhikode is famous for it’s halwa, biriyani and many more.

Major business places in the city is Valiyangadi & S M Street.Major tourist spots are Kozhikode Beach, Kappad, ThusharagiriWater falls, Kakkayam Dam.

Nearest Railway Station Kozhikode 2.3 kmNearest Airport Calicut International Airport 29 kmNearest Bus Station Kozhikode Bus stand(Private and KSRTC) 2 kmLocation of ATM 1. Ground floor, T T Complex, Jail Road, Puthiyara,

2. Manayil Arcade, Opp. Aster MIMS Hospital, Govindapuram

Branch Name KOZHUVANAL Br. Code - 0040Date of Opening 19-12-1964No. of ATM Onsite ATM- 1Specialty of the Location Kozhuvanal is a town in Meenachil, Kottayam Dist. The nearest

town is Pala.Nearest Railway Station Ettumanoor Railway Station 18 kmNearest Airport Cochin International Airport 78 kmNearest Bus Station Pala 10.6 kmLocation of ATM Onsite ATM, Kozhuvanal

Branch Name KOZHINJAMPARA Br. Code - 0039Date of opening 20.12.1963No. of ATM 1 onsiteSpecialty of the location Kozhinjampara is a village in Palakkad dist. in between

Palakkad – Pollachi route. Kozhinjampara is very near to TamilNadu border. The near by tourist spots are Malampuzha dam,Neliampathy, Parambikulam wild life sanctuary, Aliyar dam etc.

Nearest Railway Station Palakkad junction- 25 kmNearest Airport Coimbatore- 40 kmNearest Bus Station Palakkad- 24 kmLocation of ATM onsite

Know your Branch & Know your BanKBranch Name KUNNAMKULAM Br. Code 0041Date of Opening 13.03.1946No. of ATM 1Specialty of the Location It is an old commercial town, with an ancient history,

famous for its printing and book binding industry. It is theimportant centre of the Malankara Orthodox SyrianChristians in the Kerala state

Nearest Railway Station Guruvayur Railway Station 9 kmNearest Airport Cochin International Airport 75 kmNearest Bus Station Kunnamkulam 2 kmLocation of ATM Offsite - Wadakkancherry Road

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Branch Name CHENNAI GT Br. Code - 0042Date of Opening 15.03.1946No. of ATM 2Specialty of the Location Branch is located in the trade hub of Chennai beside the

Armenian Church Street which is consructed in 17th century.Madras High Court, Marina Beach, St. George Fort- the firstestablishment of the British Empire are near by.

Nearest Railway Station Chennai Central 2 kmNearest Airport Chennai Airport 23 kmNearest Bus Station Broadway 1.6 kmLocation of ATM Beside Branch location, Offsite : Evening Bazar, Broadway

Branch Name CHENNAI MOUNT ROAD Br. Code - 0043Date of Opening 21.01.1952No. of ATM 1 OnsiteSpecialty of the Location The branch is at the starting point of Mount Road which

spreads all the way up to St. Thomas Mount. The famous‘Ritchie Street’ , the market for all kinds of electronic gadgetsincluding second hand items is nearby.

Nearest Railway Station Chennai Central 6 kmNearest Airport Chennai Airport 14 kmNearest Bus Station Koyambedu 9 kmLocation of ATM Chennai Mount Road (Onsite)

Branch Name MADURAI MAIN Br. Code - 0044Date of Opening 15-07-1959No. of ATM 1 onsiteSpecialty of the Location Traders of Pharmaceuticals items, Madurai Meenakshi

Temple, Jighardhanda - a local street vented cooldrink madeout of milk, almond & sarasapirla. Famous for Jallikattu.

Nearest Railway Station Madurai Central Railway Station 2 kmNearest Airport Madurai Airport 12 kmNearest Bus Station Periyar bus Stand 1.3 kmLocation of ATM Onsite( No:3, LIC Building , West Marret Street

Branch Name MAHE Br. Code - 0045Date of Opening 19.11.1966No. of ATM 1 onsite & 1 offsiteSpecialty of the Location An old French colony. Mahe is the part of the Union Territory

Puducherry. Tourist spot Mayyazhi puzha a walk way,Boating-@ Manjakkal Boat house, Mahe Kalagramam, St.Theresa’s Shrine, Sree Krishna Temple are adjacents.

Nearest Railway Station Mahe 2 kmNearest Airport Kannur Airport-37 km /Calicut Airport-89 kmNearest Bus Station Thalassery 8 kmLocation of ATM Mahe (1 onsite CDM, 1 offsite ATM)

Know your Branch & Know your BanK

32

Branch Name MANGALORE MAIN Br. Code - 0046Date of Opening 18.05.1966No. of ATM 2Specialty of the Location Kadri Manjunath Temple, 9th century Mangaladevi Temple,

Milagres Church dating to the 17th Century and Interiorpaintings in St. Aloysius Chapel are major attractions. SpecialFoods include Pulimunchi, Kori Roti & Uruval.

Nearest Railway Station Mangalore Central (MAQ) – 1.5 KmNearest Airport Mangalore - Bajpe International Airport (IXE) – 18 kmNearest Bus Station KSRTC Bejai Bus Stand – 3.5 kmLocation of ATM 1.Onsite: Branch Premises 2. Offsite: Kankanady – 2.5 km

Branch Name MANNARKKAD Br. Code - 0048Date of Opening 03-07-1956No. of ATM 2Specialty of the Location The Branch is Just Opposite to Municipality Bus Stand.

Agriculture is the main occupation of the people. The branchis close to Silent Valley National Park.

Nearest Railway Station Palakkad Junction(Olavakkode) - 33 kmNearest Airport Calicut(Karipoor) Airport – 70 kmNearest Bus Station Muncipal Bus Stand, Mannarkkad. Just OppositeLocation of ATM 1. Onsite – Ground Floor, KCK Square Opp. Muncipal Bus

Stand, Mannarkkad 2. Hospital Junction, Mannarkkad

Branch Name MATHILAKAM Br. Code - 0049Date of Opening 30.03.1971No. of ATM 2Specialty of the Location Matilakam formerly known as Thrikkanamathilakam is a

village in Thrissur Dt. In the Sangam Period Mathilakam wasfamous centre for Jain religion and learning.KodungallurBhagavathi Temple &Cheraman Mosque are the maintourist spots near by

Nearest Railway Station Irinjalakuda 23 kmNearest Airport Nedumbassery 39 kmNearest Bus Station Mathilakam 0.5 kmLocation of ATM 1. Mathilakam(Onsite) 2. Aripalam(Offsite)

Branch Name MULANTHURUTHY Br. Code - 0050Date of Opening 13.05.1964No. of ATM 1Specialty of the Location Mulanthuruthy is about 19 km east of Ernakulam. Known for

historic Mulanthuruhty Marthoman Cathedral built betweenAD 1100-1125 is a pilgrimage centre for Malankara OrthodoxSyrian Church and home parish of Saint Gheevarghese MarGregorios of Parumala

Nearest Railway Station Mulanthuruthy 210 mtrNearest Airport Nedumbasserry 41 kmNearest Bus Station Mulanthuruthy 800 mtrLocation of ATM Onsite

Branch Name MANJERI Br. Code - 0047Date of Opening 21-12-1955No. of ATM 1(Onsite)Specialty of the Location Prominent and fast developing town in Ernad Taluk.Nearest Railway Station Angadipuram 22.3 kmNearest Airport Calicut International Air Port 22.6 kmNearest Bus Station Manjeri Bus Station 100 mtrLocation of ATM Manjeri

Know your Branch & Know your BanK

33

Branch Name MULLASSERY Br. Code - 0051Date of Opening 04-11-1964No. of ATM Onsite:1Specialty of the Location Mullassery Branch housed in own building located very near

to 150 years old Good Shepherd’s Church. Mullassery is alsofamous for Paranpanthally Maha Sivakshethram built inB.C.1000.

Nearest Railway Station Thrissur 20 kmNearest Airport CIAL,Nedumbassery 70 kmNearest Bus Station Thrissur 20 kmLocation of ATM Onsite.

Branch Name NAGAPATTINAM Br. Code - 0052Date of Opening 26-10-1966No. of ATM 1Specialty of the Location One of the oldest port and famous pilgrimage centers

Velankanni church & Nagore Dargah is within 10 km radius.Majority of trading is Fish & Marine products.

Nearest Railway Station Nagapattinam 1.5 kmNearest Airport Trichy 140 kmNearest Bus Station Nagapattinam 1 kmLocation of ATM Onsite

Branch Name NAGERCOIL Branch Code - 0053Date if Opening 02-10-1964No of ATM 1 (Offsite)Speciality of the location A beautiful town close to the tip of Indian Peninsula, locked

with Western Ghats on all sides known as a trade hub ofKanyakumari Dist.

Nearest Railway Station Nagercoil 2 kmNearest Airport Trivandrum 75 kmNearest Bus Station Vadassery, Nagercoil 2 kmLocation of ATM KP Road, Nagercoil

Branch Name NALLEPILLY Branch Code 0054Date if Opening 10-03-1971No of ATM 1 (Onsite)Speciality of the location A village close to Tamil Nadu. Tamil culture and tradition is

influenced more here.Nearest Railway Station Pudunagaram 12 km , Plakkad Jn. 25 kmNearest Airport Coimbatore 40 kmNearest Bus Station Nallepilly 0.5 kmLocation of ATM Adjacent to the Branch

Branch Name NANGIARKULANGARA Br. Code - 0055Date of Opening 24-03-1971No. of ATM 2Specialty of the Location Branch is located along NH 47 near NTPC Township. The

famous Mannarassala Sree Nagaraja Temple is located5km from our branch.

Nearest Railway Station Haripad 2.5 kmNearest Airport Trivandrum 114 km, Cochin 117 kmNearest Bus Station Haripad 2 kmLocation of ATM Nangiarkulangara(Onsite), Muttom (Off-site)

Wedding Bells

Vishnu Salimkumar, Asst Manager,Madurai RO and Aparna S Nirmal

Rajkumar, Asst. Manager, Madurai Mainand Smrithi

Sujith Thomas, Asst. Manager, ChennaiService Br. and Asha Abraham, Clerk,Pullad Br.

Rakesh R., Clerk, Br. Kodungallur andKeerthana

Rakesh N, Assistant Manager, Sreekandapuram andShijina Jayaprakash

Rinoy Anto, Asst Manager, Irinjalakuda RO and Dixy Rinoy

Theresa George, Clerk, Moonnupeedikaand Sachin George

Kanakavel K., Manager, Thanjavur Branchand Gayathiri S.

Deons Davis, Asst. ManagerPune Camp Br. and Anjali Jos

John Sunny, Asst, Manager, HO Legal Dept. and TreesaThomas, Clerk,HO MCCPC

Marymol Kuttichakku, Clerk,Thrissur Mission Quarters Br.and Vibhu I Vadakkan

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S Nageswarao Rao, Asst.Manager ofGuntur Br. and Sathyaveni

Siblink wishes a happy and prosperous wedded life

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Manali-Himachal

Manali-Himachal

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Midhun FrancisPalakkad RO

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