5.21 Provisions, contingent liabilities and contingent assets
In accordance with AS-29 “Provisions, Contingent Liabilities and Contingent Assets”, provision is recognised when the
Bank has a present obligation as a result of past event where it is probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present
value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These
are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
A disclosure of contingent liability is made when there is:
• a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non¬
occurrence of one or more uncertain future events not within the control of the Bank; or
• a present obligation arising from a past event which is not recognised as it is not probable that an outflow of resources
will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.
Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually
and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in
the period in which the change occurs.
5.22 Accounting for dividend
As per AS-4 ‘Contingencies and Events occurring after the Balance Sheet date' as notified by the Ministry of Corporate
Affairs through the Companies (Accounting Standards) Rules, 2021, the Bank does not account for proposed dividend
as a liability through appropriation from the Profit and Loss Account. The same is recognised in the year of actual
payout post approval of the shareholders. However, the Bank considers proposed dividend in determining capital funds
in computing the capital adequacy ratio as on the reporting date.
5.23 Cash and cash equivalents
Cash and cash equivalents include cash in hand, rupee digital currency, balances with RBI, balances with other banks
and money at call and short notice.
5.24 Segment Reporting
The disclosure relating to segment information is made in accordance with AS-17: ‘Segment Reporting' and relevant
guidelines issued by the RBI.
b) Capital and Reserves and Surplus
i) Share Capital
During the years ended 31 March, 2025 and 31 March, 2024, the Bank has not raised equity capital other than through
allotment of equity shares to eligible employees upon exercise of options/units under its Employees Stock Option/Unit
Scheme. During the year ended 31 March, 2025, pursuant to the exercise of options/units, the Bank has raised '685.87
crores, consisting of share capital of '2.16 crores and share premium of '683.71 crores (Previous year '557.21 crores,
consisting of share capital of '1.94 crores and share premium of '555.27 crores).
ii) Draw down from Reserves
During the years ended 31 March, 2025 and 31 March, 2024 the Bank has not undertaken any drawdown from reserves.
iii) Capital Reserve
During the year ended 31 March, 2025, the Bank appropriated '214.35 crores (previous year '139.55 crores) to
the Capital Reserve, net of taxes and transfer to Statutory Reserve, being the gain on sale of HTM investments in
accordance with RBI guidelines.
iv) Special Reserve
During the year ended 31 March, 2025, the Bank appropriated '1,024.73 crores (previous year '968.13 crores) to the
Special Reserve created and maintained in terms of Section 36 (1) (viii) of the Income-tax Act, 1961.
v) Investment Reserve
Effective 1st April, 2024 the Bank has adopted the revised framework as detailed in RBI Master Direction on
Classification, Valuation and Operation of Investment Portfolio issued on 12 September, 2023 (‘RBI Investment
Direction 2023'). Accordingly, as prescribed under the transition provisions of the RBI Investment Direction 2023, the
Bank has transferred the balance in the Investment Reserve Account as at 31 March, 2024 of '242.29 crores to the
General Reserve.
During the previous year ended 31 March, 2024, the Bank had appropriated '242.29 crores to the Investment Reserve
in accordance with the RBI guidelines.
vi) General Reserve
During the year ended 31 March, 2025, the Bank transferred '7.98 crores (previous year '2.20 crores) to the General
Reserve from the Employee Stock Options/Units Outstanding Account, in respect of vested employee stock options/
units that have lapsed during the year. Further, the Bank has also transferred to the General Reserve an amount of
'242.29 crores from the Investment Reserve and an amount of '1,217.86 crores (net of tax) on account of reversal of
balance in provision for depreciation on investments as at 31 March, 2024 and adjustment for the difference between
the carrying value of its investment portfolio as per the revised framework and the previous carrying value as at 31
March, 2024, as per the transition provisions of RBI Investment Direction 2023.
vii) Investment Fluctuation Reserve
During the year ended 31 March, 2025, the Bank appropriated '248.00 crores (previous year '879.00 crores) to the
Investment Fluctuation Reserve in accordance with RBI guidelines.
viii) Available for Sale (AFS) Reserve
The valuation gains and losses at the year ended 31 March, 2025, across all performing investments held under AFS
category investments are aggregated and the net appreciation amounting to '110.39 crores (net of tax) has been
directly recognised in the AFS Reserve.
ix) Cash Flow Hedge Reserve
During the year ended 31 March, 2025, the Bank recognised a loss of '1.64 crores (previous year Nil) in the Cash Flow
Hedge Reserve on derivative contracts designated as cash flow hedge.
1. Classification of assets and liabilities under the different maturity buckets is based on the same estimates and
assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon
by the auditors.
2. Includes foreign currency balances.
3. For the purpose of disclosing the maturity pattern, advances that have been subject to risk participation vide Inter¬
Bank Participation Certificates (‘IBPCs') and Funded Risk Participation (‘FRPs') have been classified in the maturity
bucket corresponding to the contractual maturities of IBPC/FRP instruments.
4. Maturity profile of foreign currency assets and liabilities excludes off balance sheet items.
5. Listed equity investments (except strategic investments) have been considered at 50% haircut as per RBI directions.
b) Disclosure on Liquidity Coverage Ratio
Qualitative disclosure
The Bank has adopted the Basel III framework on liquidity standards as prescribed by RBI and has put in place
requisite systems and processes to enable periodical computation and reporting of the Liquidity Coverage Ratio
(LCR). The mandated regulatory threshold is embedded into the Risk Appetite Statement of the Bank thus subjecting
LCR maintenance to Board oversight and periodical review. The Bank computes the LCR and reports the same to
the Asset Liability Management Committee (ALCO) every month for review as well as to the Risk Management
Committee of the Board.
The Bank computes LCR on a daily basis and in accordance with RBI guidelines the quarterly disclosures of LCR contain
data on the simple average calculated on daily observations over the quarter.
The Bank follows the criteria laid down by RBI for calculation of High Quality Liquid Assets (HQLA), gross outflows
and inflows within the next 30-day period. HQLA predominantly comprises Government securities viz. Treasury Bills,
Central and State Government securities. A relatively smaller part of HQLA is accounted for by the corporate bonds
with mandated haircuts applied thereto.
The Bank monitors the concentration of funding sources from significant counterparties, significant instruments/
products as part of the asset liability management framework. The Bank adheres to the regulatory and internal limits
on Inter-bank liability and call money borrowings which form part of the ALM policy. The Bank's funding sources are
fairly dispersed across sources and maturities.
Expected derivative cash outflows and inflows are calculated for outstanding contracts in accordance with laid down
valuation methodologies. Cash flows, if any, from collaterals posted against derivatives are not considered.
Apart from the LCR position in all currencies put together, the Bank monitors the LCR in US Dollar currency which
qualifies as a significant currency as per RBI guidelines.
The liquidity management of the Bank is undertaken by the Asset Liability Management group in the Treasury department
in accordance with the Board approved policies and ALCO approved funding plans. The Risk department measures
and monitors the liquidity profile of the Bank with reference to the Board approved limits, for both domestic as well
as overseas operations, on a static as well as on a dynamic basis by using the gap analysis technique supplemented
by monitoring of key liquidity ratios and periodical liquidity stress testing. Periodical reports are placed before the
Bank's ALCO for perusal and review. As per RBI guidelines, the Bank is required to maintain a minimum of 100% of
Liquidity Coverage Ratio, which was applicable for all the quarters for the financial years ending on 31 March, 2025 and
31 March, 2024.
All significant outflows and inflows determined in accordance with RBI guidelines are included in the prescribed LCR
computation template.
There are no agreements to replace loans transferred to transferees or pay damages arising from any representations
or warranty for any of the loans transferred during the year ended 31 March, 2025 and 31 March, 2024.
ii) Details of stressed loans acquired and transferred during the year ended 31 March, 2025 and 31 March, 2024
under the RBI Master Direction on Transfer of Loan Exposure dated 24 September, 2021 are given below:
a) The Bank has not acquired any stressed loans (NPA and SMA accounts) during the year ended 31 March, 2025 and
31 March, 2024.
1. Includes 17,281 cases of frauds amounting to '124.35 crores (previous year 32,068 cases of '158.96 crores), relating to digital payment
related transactions
2. In respect of frauds related to advances, the Bank undertakes 100% provisioning of the outstanding amount once the borrower account
is classified as fraud in line with RBI guidelines. In respect of other frauds, provision is made where the claim has been admitted and
the Bank is under an obligation to settle the same. In all other cases declared as fraud but where claim is not admitted, no provision is
required to be made. The number of frauds reported during the year include 96 cases (excluding cases covered under note 1 above)
amounting to '7.13 crores where claim has not been admitted by the Bank (previous year 584 cases amounting to ' 4.19 crores)
3. Excluding 316 cases of advances (previous year 15 cases) amounting to '409.48 crores (previous year '22.76 crores) reported as fraud
during the FY 2024-25 and which are prudentially written off as on 31 March, 2025.
h) Disclosure under Resolution Framework for COVID-19-related Stress
For the year ended on 31 March, 2025
Movement in position of accounts where resolution plan is implemented under RBI Resolution Framework for COVID-19
related stress as per RBI circular dated 6 August, 2020 (Resolution Framework 1.0) and 5 May, 2021 (Resolution
Framework 2.0) during the half year ended 30 September, 2024:
g) Unhedged foreign currency exposures
The Bank has laid down the framework to manage credit risk arising out of unhedged foreign currency exposures of the
borrowers. Both at the time of initial approval as well as subsequent reviews/renewals, the assessment of credit risk
arising out of foreign currency exposure of the borrowers include details of imports, exports, repayments of foreign
currency borrowings, as well as hedges done by the borrowers or naturally enjoyed by them vis-a-vis their intrinsic
financial strength, history of hedging and losses arising out of foreign currency volatility. The extent of hedge/cover
required on the total foreign currency exposure including natural hedge and hedged positions, is guided through a matrix
of internal ratings. The hedging policy is applicable for existing as well as new clients with foreign currency exposures
above a predefined threshold. The details of unhedged foreign currency exposure of customers for transactions
undertaken through the Bank are monitored periodically. The Bank also maintains additional provision and capital, in
line with RBI guidelines.
1.7 Derivatives
a) Disclosure in respect of Interest Rate Swaps (‘IRS'), Forward Rate Agreement (‘FRA') and Cross Currency Swaps (‘CCS')
outstanding is set out below:
An ‘IRS' is a financial contract between two parties exchanging or swapping a stream of interest payments for a
‘notional principal' amount on multiple occasions during a specified period. The Bank deals in interest rate benchmarks
like Mumbai Inter-Bank Offered Rate (MIBOR), Indian Government Securities Benchmark Rate (INBMK), Modified
MIFOR and Alternative Reference Rates (ARR) of various currencies. Pursuant to RBI guidelines on Roadmap for LIBOR
transition all new deals are being offered on Modified MIFOR and ARR interest rates benchmarks as published by the
regulators of respective currencies.
A ‘FRA' is a financial contract between two parties to exchange interest payments for ‘notional principal' amount on
settlement date, for a specified period from start date to maturity date. Accordingly, on the settlement date cash
payments based on contract rate and the settlement rate, which is the agreed bench-mark/reference rate prevailing on
the settlement date, are made by the parties to one another. The benchmark used in the FRA contracts of the Bank is
Bond/ARR of various currencies.
A ‘CCS' is a financial contract between two parties exchanging interest payments and principal, wherein interest
payments and principal in one currency would be exchanged for an equally valued interest payments and principal in
another currency.
Derivatives are financial instruments whose characteristics are derived from an underlying asset, or from interest
and exchange rates or indices. The Bank undertakes Over the Counter (OTC) and Exchange Traded derivative
transactions for Balance Sheet management and also for proprietary trading/market making whereby the Bank
offers OTC derivative products to the customers to enable them to hedge their interest rate and currency risks
within the prevalent regulatory guidelines.
Proprietary trading includes Exchange Traded Currency Options, Interest Rate Futures, Currency Futures and
Rupee Interest Rate Swaps under different benchmarks (viz. MIBOR, Modified MIFOR, LIBOR, ARR and INBMK),
Currency Options, Currency Swaps and Non Deliverable derivatives. The Bank also undertakes transactions
in Cross Currency Swaps, Principal Only Swaps, Coupon Only Swaps, Currency Options, Interest Rate Swaps,
Exotic Derivatives and Long Term Forex Contracts (LTFX) for hedging its Balance Sheet and also offers them
to its customers. These transactions expose the Bank to various risks, primarily credit, market, legal, reputation
and operational risk. The Bank has adopted the following mechanism for managing risks arising out of the
derivative transactions.
There is a functional separation between the Treasury Front Office, Treasury Mid Office and Treasury Back Office
to undertake derivative transactions. The customer and interbank related derivative transactions are originated
by Derivative sales and Treasury Front Office team respectively which ensures compliance with the trade
origination requirements as per the Bank's policy and the RBI guidelines. The Market Risk Group within the Bank's
Risk Department independently identifies, measures and monitors the market risks associated with derivative
transactions and apprises the Asset Liability Management Committee (ALCO) and the Risk Management Committee
of the Board (RMC) on the compliance with the risk limits. The Treasury Back Office undertakes activities such as
trade validation, confirmation, settlement, ISDA and related documentation, post deal documentation, accounting,
valuation and other MIS reporting.
The derivative transactions are governed by the Derivative policy, Suitability and Appropriateness Policy
for derivative products, Market Risk Management policy, Hedging policy and the Asset Liability Management
(ALM) policy of the Bank as well as by the extant RBI guidelines. The Bank has implemented policy on customer
suitability & appropriateness to ensure that derivatives transactions entered into are appropriate and suitable
to the customer. The Bank has put in place a detailed process flow on documentation for customer derivative
transactions for effective management of operational/reputation/compliance risk.
Various risk limits are set up and actual exposures are monitored vis-a-vis the limits allocated. These limits are set
up taking into account market volatility, risk appetite, business strategy and management experience. Risk limits
are in place for risk parameters viz. PV01, VaR, Stop Loss, Delta, Gamma and Vega. Actual positions are monitored
against these limits on a daily basis and breaches, if any, are dealt with in accordance with board approved Risk
Appetite Statement. Risk assessment of the portfolio is undertaken periodically. The Bank ensures that the Gross
PV01 (Price value of a basis point) position arising out of all non-option rupee derivative contracts are within
0.25% of net worth of the Bank as on Balance Sheet date.
Hedging transactions are undertaken by the Bank to protect the variability in the fair value or the cash flow of the
underlying Balance Sheet item. These transactions are tested for hedge effectiveness and in case any transaction
fails the test, the same is re-designated as a trading deal and appropriate accounting treatment is followed.
(b) Accounting policy for recording hedge and non-hedge transactions, recognition of income, premiums and
discounts, valuation of outstanding contracts
Derivative transactions comprise of forward contracts, swaps, FRAs, futures and options which are disclosed as
contingent liabilities. These are categorised as trading or hedge transactions.
Trading derivative contracts are revalued based on actual traded and/or derived from curves published by external
market sources or FBIL with the resulting unrealised gain or loss being recognised in the Profit and Loss Account
and correspondingly in other assets (representing positive MTM) and in other liabilities (representing negative
MTM) on a gross basis. The premium on option contracts is accounted for as per FEDAI guidelines.
The Hedging Policy of the Bank governs the use of derivatives for hedging purpose. Subject to the prevailing RBI
guidelines, the Bank deals in derivatives for hedging fixed rate and floating rate coupon or foreign currency assets/
liabilities. Transactions for hedging and market making purposes are recorded separately.
Foreign exchange forward contracts not intended for trading (including funding swaps), that are entered into to
establish the amount of reporting currency required or available at the settlement date of a transaction, and are
outstanding at the Balance Sheet date, are effectively valued at the closing spot rate. The premium or discount
arising at the inception of such forward exchange contract is amortised on a straight line basis as expense or
income over the life of the contract.
For hedge transactions through other derivatives, the Bank identifies the hedged item (asset or liability) at
the inception of transaction itself. The effectiveness is ascertained at the time of inception of the hedge and
periodically thereafter. In case of a fair value hedge, the changes in the fair value of the hedging instruments and
hedged items are recognized in the Profit and Loss Account and in case of cash flow hedges, the change in fair
value of hedging instrument for the effective portion is recognised in Schedule 2- ‘Reserves and Surplus' under
‘Cash Flow Hedge Reserve' and the ineffective portion of an effective hedging relationship, if any, is recognised
in the Profit and Loss Account. The accumulated balance in the Cash Flow Hedge Reserve, in an effective hedging
relationship, is recycled in the Profit and Loss Account at the same time that the impact from the hedged item is
recognised in the Profit and Loss Account.
Derivative transactions are covered under International Swaps and Derivatives Association (ISDA) master
agreements with respective counterparties. The exposure on account of derivative transactions is computed as
per the RBI guidelines and is marked against the Loan Equivalent Risk (LER) limits approved for the respective
counterparties.
(c) Provisioning, collateral and credit risk mitigation
In accordance with RBI guidelines, any receivables (crystallised receivables and positive MTM) under derivatives
contracts, which remain overdue for more than 90 days, are reversed through the Profit and Loss Account and are
held in a separate Suspense account.
Collateral requirements for derivative transactions are laid down as part of credit sanction terms on a case by case
basis. Such collateral requirements are determined, based on usual credit appraisal process. The Bank retains the
right to terminate transactions as a risk mitigation measure in certain cases.
The credit risk in respect of customer derivative transactions is sought to be mitigated through a laid down policy
on sanction of Loan Equivalent Risk (LER) limits, monitoring mechanism for LER limits and trigger events for
escalation/margin calls/termination.
1.13 Disclosure on Remuneration
Qualitative disclosures
a) Information relating to the composition and mandate of the Nomination and Remuneration Committee:
? Name, composition and mandate of the main body overseeing remuneration:
The Nomination and Remuneration Committee of the Board oversees the framing, review and implementation of
the compensation policy of the Bank on behalf of the Board. The Committee works in close co-ordination with the
Risk Management Committee of the Bank, in order to achieve effective alignment between remuneration and risks.
As on 31 March, 2025, the Nomination and Remuneration Committee comprised of the following Non¬
Executive Directors:
1. Smt. Meena Ganesh - Chairperson
2. Smt. Mini Ipe
3. Shri Girish Paranjpe
4. Shri N.S. Vishwanathan
In respect of Remuneration/HR matters, the Nomination and Remuneration Committee of the Board, functions
with the following main objectives:
a. Review and recommend to the Board for approval, the overall remuneration framework and associated
policies of the Bank (including remuneration policy for Directors and Key Managerial Personnel) including
the level and structure of fixed pay, variable pay, perquisites, bonus pool, stock-based compensation and any
other form of compensation as may be included from time to time to all the employees of the Bank including
the Managing Director & CEO (MD & CEO), other Whole-Time Directors (WTDs) and senior managers one
level below the Board.
b. Recommend to the Board the compensation payable to the Chairman of the Bank.
c. Review and recommend to the Board for approval, the talent management and succession policy and process
in the Bank for ensuring business continuity, especially at the level of MD & CEO, the other WTDs, senior
managers' one level below the Board and other key roles and their progression to the Board.
d. Formulate the criteria and the manner for effective evaluation of performance of the Board as a whole, its
Committees and individual directors, including independent directors of the Bank, which may be carried out
either by the Committee or by the Board or with the help of an independent external agency and to review
its implementation, compliance and outcomes.
e. Review adequacy and appropriateness of HR strategy of the Bank in the broader areas of code of conduct,
ethics, conflict of interest, succession planning, talent management, performance management, remuneration
and HR risk management.
f. Review and recommend to the Board for approval:
> the creation of new positions one level below MD & CEO
> appointments, promotions and exits of senior managers one level below the MD & CEO
g. Set the goals, objectives and performance benchmarks for the Bank and for MD & CEO, WTDs and Group
Executives for the financial year and over the medium to long term.
h. Review the performance of the MD & CEO and other WTDs at the end of each year.
i. Consider and approve the grant of Stock Options to the Managing Director & CEO, other Whole-Time
Directors, Senior Management and other eligible employees of the Bank / subsidiary, in terms of the relevant
provisions of the SEBI Regulations, as amended, from time to time.
j. Perform such other duties as may be required to be done under any law, statute, rules, regulations etc.
enacted by Government of India, Reserve Bank of India or by any other regulatory or statutory body.
? External consultants whose advice has been sought, the body by which they were commissioned, and in what
areas of the remuneration process:
The Bank commissioned Aon Consulting Pvt. Limited (Aon), a globally renowned compensation benchmarking firm,
to conduct market benchmarking of employee compensation. The Bank participates in the salary benchmarking
survey conducted by Aon every year. Aon collects data from multiple private sector peer banks across functions,
levels and roles which is then used by the Bank to assess market competitiveness of remuneration offered
to employees.
? A description of the scope of the Bank's remuneration policy, including the extent to which it is applicable to
branches in India and overseas:
The Committee monitors the remuneration policy for both domestic and overseas branches of the Bank on behalf
of the Board. However, it does not oversee the compensation policy for subsidiaries of the Bank.
? A description of the type of employees covered and number of such employees:
Employees are categorised into following three categories from remuneration structure and
administration standpoint:
Category 1
MD & CEO and WTDs. This category includes 4* employees.
Category 2
All the employees in the Grade of Senior Vice President I and above engaged in the functions of Risk Control,
Internal Audit and Compliance. This category includes 107* employees.
Category 3: Other Staff
‘Other Staff' has been defined as a “group of employees whose actions have a material impact on the risk exposure
of the Bank”. This category includes 25* employees.
Represents employees in these categories during the year FY 2024-25 including employees exited from the Bank
during FY 2024-25.
b) Information relating to the design and structure of remuneration processes and the key features and objectives
of remuneration policy:
? An overview of the key features and objectives of remuneration policy:
The compensation philosophy of the Bank aims to attract, retain and motivate professionals in order to enable the
Bank to attain its strategic objectives and develop a strong performance culture in the competitive environment in
which it operates. To achieve this, the following principles are adopted:
Affordability: Pay to reflect productivity improvements to retain cost-income competitiveness
- Maintain competitiveness on fixed pay in talent market
- Pay for performance to drive meritocracy through variable pay
- Employee Stock Units (ESUs) and Employee Stock Options (ESOPs) for long-term value creation
- Benefits and perquisites to remain aligned with market practices and provide flexibility
Apart from the above, the compensation structure for MD & CEO, WTDs, Material Risk Takers and employees
at the grade of Senior Vice President and above within the Assurance functions at the Bank is aligned to RBI's
guidelines for sound compensation practices issued in November 2019 and addresses the general principles of:
- Effective and independent governance and monitoring of compensation
- Alignment of compensation with prudent risk-taking through well designed and consistent
compensation structures
- Clear and timely disclosure to facilitate supervisory oversight by all stakeholders
Accordingly, the compensation policy for MD & CEO and WTDs seeks to:
a) Ensure that the compensation, in terms of structure and total amount, is in line with the best practices, as well
as competitive vis-a-vis that of peer banks
b) Establish the linkage of compensation with individual performance as well as achievement of the corporate
objectives of the Bank
c) Include an appropriate variable pay component tied to the achievement of pre-established objectives in line
with Bank's scorecard while ensuring that the compensation is aligned with prudent risk taking
d) Encourage attainment of long term shareholder returns through inclusion of equity linked long-term incentives
as part of compensation
Compensation is structured in terms of fixed pay, cash variable pay and share linked instruments (for selective
employees), with a strong linkage of variable pay to performance. The remuneration policy of the Bank is approved
by the Nomination and Remuneration Committee and the Board of Directors of the Bank. Additional approval
from Shareholders and RBI is obtained specifically for compensation of MD & CEO and WTDs.
? Whether the remuneration committee reviewed the firm's remuneration policy during the past year, and if so, an
overview of any changes that were made:
The Bank's remuneration policy was originally reviewed and approved by the Nomination and Remuneration
Committee and Board of Directors in FY2021 in order to align with RBI guidelines. The remuneration policy of the
Bank is reviewed annually and any changes arising therefrom are approved by the Nomination and Remuneration
Committee and Board of Directors.
Key highlights of the policy are mentioned below:
• At least 50% of total compensation i.e. Fixed Pay plus Total Variable Pay shall be variable.
• Value of share linked instruments will be included in definition of ‘Total Variable Pay'
• ‘Total Variable Pay' for the MD & CEO/ Whole-time Directors/ Material Risk Takers of the Bank would be
capped at 300% of Fixed Pay.
• If the ‘Total Variable Pay' is up to 200% of the Fixed Pay, a minimum of 50% of the Variable pay; and in case
Variable Pay is above 200%, a minimum of 67% of the Variable Pay shall be paid via employee stock options.
• Minimum 60% of the ‘Total Variable Pay' shall be deferred over 3 years. If cash component is part of ‘Total
Variable Pay', at least 50% of the cash component of variable pay should also be deferred over 3 years. In
cases where the cash component of Total Variable pay is under '. 25 lakh, variable pay shall not be deferred.
• All the fixed items of compensation, including retiral benefits and perquisites, will be treated as part of Fixed Pay.
• Qualitative and quantitative criteria defined for identification of Material Risk Takers (MRTs).
• Specific guidelines on application of malus and clawback clauses.
? A discussion of how the Bank ensures that risk, internal audit and compliance employees are remunerated
independently of the businesses they oversee:
The Bank ensures that risk, internal audit and compliance employees are remunerated independently of the
businesses they oversee and is guided by the individual employee performance. The remuneration is determined
on the basis of relevant risk measures included in the Balanced Scorecard / key deliverables of staff in these
functions. The parameters reviewed for performance-based rewards are independent of performance of the
business area they oversee and commensurate with their individual role in the Bank. Additionally, the ratio of fixed
and variable compensation is weighed towards fixed compensation in case of employees in risk, internal audit, and
compliance functions.
c) Description of the ways in which current and future risks are taken into account in the remuneration processes:
? An overview of the key risks that the Bank takes into account when implementing remuneration measures:
The business activity of the Bank is undertaken within the limits of risk measures to achieve the financial plan. The
Financial Perspective in the Bank's Balanced Score Card (BSC) contains metrics pertaining to growth, profitability
and asset quality. These metrics along with other metrics in customer, internal process and compliance and people
perspective are taken into account while arriving at the remuneration decisions. The metrics on internal process
and compliance ensure due weightage to non - financial risk that bank may be exposed to. The Remuneration
Policy also contains provisions whereby the Nomination and Remuneration Committee of the Bank may review
and approve the invoking of malus and/or clawback of compensation elements pertaining to the MD & CEO,
WTDs and other Material Risk Takers of the Bank, including consideration of facts on a case to case basis and
application of internal and external benchmarks.
? An overview of the nature and type of key measures used to take account of these risks, including risk
difficult to measure:
The Bank has a robust system of measuring and reviewing these risks. The risk parameters are a part of the
BSC used for setting of performance objectives and for measuring performance which includes, besides financial
performance, adherence to internal processes, compliance and people perspectives. Weightage is placed on
not only financial or quantitative achievement of objectives but also on qualitative aspects detailing how the
objectives were achieved.
? A discussion of the ways in which these measures affect remuneration:
The relevant risk measures are included in the scorecards of MD & CEO and WTDs. Inclusion of the above mentioned
measures ensures that performance parameters are aligned to risk measures at the time of performance evaluation.
The Nomination and Remuneration Committee takes into consideration all the above aspects while assessing
organisational and individual performance and making compensation related recommendations to the Board.
? A discussion of how the nature and type of these measures have changed over the past year and reasons for the
changes, as well as the impact of changes on remuneration:
The Bank continued to track key metrics across financial, customer, internal process and compliance and people
perspective as part of FY 25 BSC. For FY 2024-25, metrics linked to Bank's strategy, with focus on health metrics,
sustainability, specifically on capital position and building distinctiveness were incorporated. Further, critical
deliverables were included to drive progress as per the Bank's Growth, Profitability Score strategy.
d) Description of the ways in which the Bank seeks to link performance during a performance measurement period
with levels of remuneration:
The Bank's performance management and compensation philosophies are structured to support the achievement
of the Bank's on-going business objectives by rewarding achievement of objectives linked directly to its strategic
business priorities. These strategic priorities are cascaded through annualised objectives to the employees.
The Bank follows the Balanced Scorecard approach in designing its performance management system. Adequate
attention is given to the robust goal setting process to ensure alignment of individual objectives to support the
achievement of business strategy, financial and non-financial goals across and through the organisation. The non¬
financial goals for employees include customer service, process improvement, adherence to risk and compliance
norms, operations and process control, learning and knowledge development.
? An overview of main performance metrics for Bank, top level business lines and individuals:
The Bank follows a Balanced Scorecard approach for measuring performance for the Bank, top business lines
and individuals.
? A discussion of how amounts of individual remuneration are linked to the Bank-wide and individual performance:
The Bank's remuneration practices are underpinned by principles of meritocracy and fairness. The remuneration
system strives to maintain the ability to attract, retain, reward and motivate the talent in order to enable the Bank
to attain its strategic objectives within the increasingly competitive context in which it operates. The Bank's pay-
for-performance approach strives to ensure both internal and external equity in line with emerging market trends.
However, the business model and affordability form the overarching boundary conditions.
The Bank follows a Balanced Scorecard approach for measuring performance at senior levels. The Balanced
Scorecard parameters for individuals are cascaded from the Bank's Balanced Scorecard. The Nomination and
Remuneration Committee reviews the achievements against the set of parameters which determines the
performance of the individuals.
For all other employees, performance appraisals are conducted annually and initiated by the employee with self¬
appraisal. The immediate supervisor reviews the appraisal ratings in a joint consultation meeting with the employee
and assigns the performance rating. The final ratings are discussed by a Moderation Committee comprising of
senior officials of the Bank. Both relative and absolute individual performances are considered for the moderation
process. Individual fixed pay increases, variable pay, ESUs and ESOPs are linked to the final performance ratings.
? A discussion of the measures the Bank will in general implement to adjust remuneration in the event that
performance metrics are weak:
In cases where the performance metrics are weak or not well defined to measure the performance effectively,
the Bank uses discretion to reward such employees. The remuneration is then influenced by the operational
performance parameters of the Bank along with individual performance achievement.
Whilst determining fixed and variable remuneration, relevant risk measures are included in scorecards of
senior employees.
As a prudent measure, for Material Risk Takers, a portion of variable pay if it exceeds a certain threshold is deferred
and is paid proportionately over a period of 3 years. The deferred variable pay amount of reference year would be
held back in case of any misrepresentation or gross inaccuracy resulting in a wrong risk assessment.
e) Description of the bank's policy on deferral and vesting of variable remuneration and a discussion of the bank's policy
and criteria for adjusting deferred remuneration before vesting and after vesting.:
i) Bank’s policy on deferral and vesting of variable remuneration:
For MD&CEO, WTDs and other Material Risk Takers of the Bank, minimum 60% of the Total Variable Pay
(including Cash Variable Pay and Stock Options) is deferred over 3 years or such other period as prescribed by
RBI where applicable. In case the cash component is part of Total Variable Pay and exceeds ' 25 lakhs, at least
50% of the cash component of variable pay is also deferred over 3 years or such other period as prescribed by RBI
where applicable.
The Total Variable Pay for MD&CEO, WTDs and other Material Risk Takers of the Bank is subject to malus and
clawback clauses, as defined in the Remuneration Policy of the Bank.
ii) Bank’s policy and criteria for adjusting deferred remuneration before vesting and after vesting through claw
back arrangements:
The Total Variable Pay for MD&CEO, WTDs and other Material Risk Takers of the Bank is subject to malus and
clawback clauses, which are defined in the Remuneration Policy of the Bank. Detailed scenarios under which
said clauses can be applied, such as event of an enquiry determining gross negligence or breach of integrity, or
significant deterioration in financial performance are defined in the Remuneration Policy of the Bank.
f) Description of the different forms of variable remuneration that the Bank utilizes and the rationale for using these
different forms:
? An overview of the forms of variable remuneration offered:
• Variable Pay: Variable Pay is linked to corporate performance, business performance and individual
performance and ensures differential pay based on the performance levels of employees
• Employee Stock Options (ESOPs): ESOPs are given to selective set of employees at senior levels based on
their level of performance and role. ESOP scheme has an inbuilt deferred vesting design which helps in
directing long term performance orientation among employees.
• Employee Stock Units (ESUs): ESUs are given to employees between the grades of AVP and SVP II based on
their level of performance. The ESU scheme has an inbuilt deferred vesting design which helps in directing
long term performance orientation among employees.
? A discussion of the use of different forms of variable remuneration including a description of the factors that
determine the mix and their relative importance:
Variable pay in the form of performance based bonus is paid out annually and is linked to performance achievement
against balanced performance measures and aligned with the principles of meritocracy. The proportion of variable
pay in total pay shall be higher at senior management levels. The payment of all forms of variable pay is governed by
the affordability of the Bank and based on profitability and cost income ratios. At senior management levels (and
for certain employees with potential to cause material impact on risk exposure), a portion of variable compensation
may be paid out in a deferred manner in order to drive prudent behaviour as well as long term & sustainable
performance orientation. Long term variable pay is administered in the form of ESOPs and ESUs with an objective
of enabling employee participation in the business as an active stakeholder and to usher in an ‘owner-manager'
culture. The quantum of grant of stock options is determined and approved by the Nomination and Remuneration
Committee, in terms of the said Regulations and in line with best practices, subject to the approval of RBI. The
current ESOP and ESU design has an inbuilt deferral intended to spread and manage risk.
f) Status of implementation of IFRS converged Indian Accounting Standards (Ind AS):
The RBI had issued a circular in February 2016 requiring banks to implement Indian Accounting Standards (Ind AS)
and prepare standalone and consolidated Ind AS financial statements with effect from 1 April, 2018. Banks were also
required to report the comparative financial statements for the financial year 2017-18, to be published along with the
financial statement for the year beginning 1 April, 2018. However, the RBI in its press release issued on 5 April, 2018
deferred the applicability of Ind AS by one year (i.e. 1 April, 2019) for Scheduled Commercial Banks. Further, RBI in a
circular issued on 22 March, 2019 has deferred the implementation of Ind AS till further notice.
During the financial year 2016-17, the Bank had undertaken a preliminary diagnostic analysis of the GAAP differences
between Indian GAAP vis-a-vis Ind AS. The Bank has also identified and evaluated data gaps, processes and system
changes required to implement Ind AS. The Bank is in the process of implementing necessary changes in its IT systems
wherever required and other processes in a phased manner. The Bank is also submitting Proforma Ind AS financial
statements to RBI on a half-yearly basis.
In line with the RBI guidelines on Ind AS implementation, the Bank has formed a Steering Committee comprising
members from the concerned functional areas, headed by the Deputy Managing Director. The Steering Committee
Volatility is the measure of the amount by which a price has fluctuated or is expected to fluctuate during a period.
The measure of volatility used in the Black-Scholes options pricing model is the annualised standard deviation of the
continuously compounded rates of return on the stock over a period of time. For calculating volatility, the daily volatility
of the stock prices on the National Stock Exchange, over a period prior to the date of grant, corresponding with the
expected life of the options has been considered.
The weighted average fair value of options granted during the year ended 31 March, 2025 is '358.68 (previous
year '297.95).
The weighted average fair value of units granted during the year ended 31 March, 2025 is '1,059.51
(previous year '842.45).
2.3 Proposed Dividend
The Board of Directors, in their meeting held on 24 April, 2025 have proposed a final dividend of '1 per equity share
amounting to '309.74 crores. The proposal is subject to the approval of shareholders at the Annual General Meeting.
In terms of revised Accounting Standard (AS) 4 ‘Contingencies and Events occurring after the Balance sheet date'
as notified by the Ministry of Corporate Affairs through the Companies (Accounting Standards) Rules, 2021, such
proposed dividend has not been recognised as a liability as on 31 March, 2025.
During the year, the Bank paid final dividend of '1 per equity share amounting '309.09 crores pertaining to the previous
year ended 31 March, 2024.
2.4 Segmental reporting
The business of the Bank is divided into four segments: Treasury, Retail Banking, Corporate/Wholesale Banking and
Other Banking Business. These segments have been identified based on the RBI's revised guidelines on Segment
Reporting issued on 18 April, 2007 vide Circular No. DBOD.No.BP.BC.81/21.04.018/2006-07. The principal activities
of these segments are as under.
expected losses etc.
Revenues of the Treasury segment primarily consist of fees and gains or losses from trading operations and interest
income on the investment portfolio. The principal expenses of the segment consist of interest expense on funds
borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct
overheads and allocated expenses.
Revenues of the Corporate/Wholesale Banking segment consist of interest and fees earned on loans given to customers
falling under this segment and fees arising from transaction services and merchant banking activities such as syndication
and debenture trusteeship. Revenues of the Retail Banking segment are derived from interest earned on loans classified
under this segment, fees for banking and advisory services, ATM interchange fees and cards products. Expenses of the
Corporate/Wholesale Banking and Retail Banking segments primarily comprise interest expense on deposits and funds
borrowed from other internal segments, infrastructure and premises expenses for operating the branch network and
other delivery channels, personnel costs, other direct overheads and allocated expenses.
Segment income includes earnings from external customers and from funds transferred to the other segments. Segment
result includes revenue as reduced by interest expense and operating expenses and provisions, if any, for that segment.
Segment-wise income and expenses include certain allocations. Inter segment interest income and interest expense
represent the transfer price received from and paid to the Central Funding Unit (CFU) respectively. For this purpose,
the funds transfer pricing mechanism presently followed by the Bank, which is based on historical matched maturity
and internal benchmarks, has been used by the Bank and relied upon by the Statutory Auditors. Operating expenses
other than those directly attributable to segments are allocated to the segments based on an activity-based costing
methodology. All activities in the Bank are segregated segment-wise and allocated to the respective segment.
2.5 Related party disclosure
The related parties of the Bank are broadly classified as:
a) Promoters
The Bank has identified the following entities as its Promoters:
• Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) (upto 17 July, 2023)
• Life Insurance Corporation of India (LIC)
b) Key Management Personnel
• Mr. Amitabh Chaudhry (MD & CEO)
• Mr. Rajiv Anand (Deputy Managing Director)
• Mr. Subrat Mohanty (Executive Director) (with effect from 17 August, 2023)
• Mr. Munish Sharda (Executive Director) (with effect from 27 February, 2024)
c) Relatives of Key Management Personnel
Ms. Preeti Chaudhry, Mr. Anagh Chaudhry, Mr. Aruj Chaudhry, Mr. Aryan Chaudhry, Ms. Rajul Parekh, Ms. Chhavi Kharb,
Mr. Ashok Kharb, Mr. Om Singh Chaudhry, Ms. Kusum Chaudhry, Ms. Gitanjali Anand, Ms. Tara Anand, Ms. Nandita
Anand, Mr. P.L. Narain, Mr. P. Srinivas, Ms. Ratna Rao Shekar, Ms. Charu Narain, Ms. K Ramalakshmi, Ms. Smitha
Mohanty, Mr. Agastya Mohanty, Mr. Rajat Mohanty, Mr. Neelima Mohanty, Mr. Narasingh Mohanty, Ms. Gitashree
Mohanty, Ms. Rima Sharda, Ms. Tanya Sharda, Ms. Shashi Sharda, Mr. Rakesh Sharda, Ms. Monica Sharda.
d) Subsidiary Companies
• Axis Capital Limited
• Axis Trustee Services Limited
• Axis Asset Management Company Limited
• Axis Mutual Fund Trustee Limited
• Axis UK Limited (formerly Axis Bank UK Limited)
• Axis Finance Limited
• Axis Securities Limited
• A.Treds Limited
• Freecharge Payment Technologies Private Limited
• Freecharge Business and Technology Services Limited (with effect from 6 May, 2024)
2.9 Employee Benefits
Provident Fund
The rules of the Bank's Provident Fund administered by a Trust require that if the Board of Trustees are unable to
pay interest at the rate declared for Employees' Provident Fund by the Government under para 60 of the Employees'
Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the
deficiency shall be made good by the Bank.
Based on an actuarial valuation conducted by the independent actuary, there is no deficiency in the Trust observed as
at the Balance Sheet date.
The contribution to the employee's provident fund (including Employee Pension Scheme) amounted to '421.12 crores
for the year (previous year '377.52 crores) .
Superannuation
The Bank contributed '15.04 crores (previous year '15.95 crores) to the superannuation plan for the year.
The Bank has also accrued '12.93 crores (previous year '16.09 crores) for the eligible employees who had moved to
the Bank as part of the Citibank India consumer business acquisition as they are entitled to receive a lumpsum corpus
amount under a separate Superannuation scheme with vesting criteria of 10 years as a defined contribution plan.
National Pension Scheme (NPS)
During the year, the Bank contributed '20.67 crores (previous year '15.50 crores) to the NPS for employees who have
opted for the scheme.
Gratuity
The following tables summarises the components of net benefit expenses recognised in the Profit and Loss Account
and funded status and amounts recognised in the Balance Sheet for the Gratuity benefit plan.
2.13 Disclosure required as per Ministry of Corporate Affairs notification dated 24 March, 2021
During the year ended 31 March, 2025 and 31 March, 2024, other than the transactions undertaken in the normal course
of banking business and in accordance with extant regulatory guidelines and Bank's internal policies, as applicable:
1. the Bank has not granted any advance/loans or investments or provided guarantee or security to any other
person(s) or entities with an understanding, whether recorded in writing or otherwise, to further lend or invest on
behalf of the Bank or provide guarantee or security or the like to any other person identified by the Bank.
2. the Bank has not received any funds from any person(s) or entities with an understanding, whether recorded in
writing or otherwise, that the Bank shall further lend or invest or provide guarantee or security or the like in any
other person on behalf of and identified by such person(s)/entities.
2.14 Description of contingent liabilities
a) Claims against the Bank not acknowledged as debts
These represent claims filed against the Bank in the normal course of business relating to various legal cases
currently in progress. These also include demands raised by tax authorities and other statutory authorities which
are disputed by the Bank. The Bank holds provision of '896.77 crores as on 31 March, 2025 (previous year '369.37
crores) towards claims assessed as probable.
b) Liability for partly paid investments
This represents amounts remaining unpaid towards liability for partly paid investments.
c) Liability on account of forward exchange contracts
The Bank enters into foreign exchange contracts, including non-deliverable forward (NDF) contracts on its own
account and on OTC for customers. Forward exchange contracts are commitments to buy or sell foreign currency
at a future date at the contracted rate. A non-deliverable forward contract is a currency derivatives contract to
exchange cash flows between the contracted forward exchange rate and prevailing spot rates. The amount of
contingent liability represents the notional principal of respective forward exchange contracts. With respect to
the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the
inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a large
value of gross notional principal of the portfolio, while the net market risk is lower.
d) Liability on account of derivative contracts
The Bank enters into derivative contracts in the form of currency options/swaps, exchange traded currency options,
non-deliverable derivatives and interest rate/ currency futures on its own account and on OTC for customers.
Currency swaps are commitments between two counterparties to exchange streams of interest payments and/or
principal amounts in different currencies on specified dates over the duration of the swap at a pre-agreed exchange
rate. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. Interest rate
futures are standardised, exchange-traded contracts that represent a pledge to undertake a certain interest rate
transaction at a specified price, on a specified future date. Forward rate agreements (FRA) are financial contracts
between two counterparties, in which a buyer will pay or receive, on the settlement date, the difference between
a pre-determined fixed rate (FRA rate) and a reference interest rate, applied on a notional principal amount, for a
specified forward period. A foreign currency option is an agreement between two parties in which one grants to
the other the right to buy or sell a specified amount of currency at a specific price within a specified time period
or at a specified future time. An Exchange Traded Currency Option contract is a standardised foreign exchange
derivative contract, which gives the buyer the right, but not the obligation, to exchange money denominated in
one currency into another currency at a pre-agreed exchange rate on a specified date on the date of expiry. A non¬
deliverable option contract is a currency derivatives contract that offers the right, but not the obligation to either
purchase or sell a currency against another currency and the contract is settled at the difference between the
contracted exchange rate and prevailing spot rate on the expiry date. Currency Futures contract is a standardised,
exchange-traded contract, to buy or sell a certain underlying currency at a certain date in the future, at a specified
price. The amount of contingent liability represents the notional principal of respective derivative contracts. With
respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions
in the inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a
large value of gross notional principal of the portfolio, while the net market risk is lower.
e) Guarantees given on behalf of constituents
As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit
standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the
customer failing to fulfill its financial or performance obligations. These are stated net of cash margin held with the
Bank as on the reporting date in Schedule 12 - Contingent Liabilities of the Balance Sheet.
f) Acceptances, endorsements and other obligations
These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank's
customers that are accepted or endorsed by the Bank. These are stated net of cash margin held with the Bank as
on the reporting date in Schedule 12 - Contingent Liabilities of the Balance Sheet.
g) Other items for which the Bank is contingently liable
Other items represent outstanding amount of bills rediscounted by the Bank, estimated amount of contracts
remaining to be executed on capital account, notional principal on account of outstanding Tom/Spot foreign
exchange contracts, contracts for purchase of investments where settlement is due post balance sheet date, deed
of indemnity issued to liquidator of overseas subsidiary, contingent liability relating to undertakings issued towards
settlements under resolution plan in respect of non-performing assets, commitments towards underwriting and
investment in equity through bids under Initial Public Offering (IPO) of corporates, commitment for investment in
Associate entity and amount transferred to Depositor Education and Awareness Fund (DEAF).
The Bank has a process whereby periodically all long term contracts (including derivative contracts) are assessed for
material foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required under
any law/accounting standards for material foreseeable losses on such long term contracts (including derivative contracts)
in the books of account and disclosed the same under the relevant notes in the financial statements, where applicable.
3. Previous year figures have been regrouped and reclassified, where necessary to conform to current year's presentation.
In terms of our report attached. For Axis Bank Ltd.
For M M Nissim & Co LLP N. S. Vishwanathan
ICAI Firm Registration No.: 107122W/W100672 Chairman
Chartered Accountants
Sanjay Khemani Girish Paranjpe Rajiv Anand Amitabh Chaudhry
Partner Director Deputy Managing Director Managing Director & CEO
Membership No.: 044577
For KKC & Associates LLP Pranam Wahi Meena Ganesh Mini Ipe
(formerly Khimji Kunverji & Co LLP) Director Director Director
ICAI Firm Registration No.: 105146W/W100621
Chartered Accountants
Gautam Shah Sandeep Poddar Puneet Sharma S. Mahendra Dev
Partner Company Secretary Chief Financial Officer Director
Membership No.: 117348
Date : 24 April, 2025
Place: Mumbai
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