Audited Financial Results for the Quarter and Year ended 31st March 2021

Notes:

1) The figures for the quarter ended 31st March 2021 and 31st March 2020 are the balancing figures between audited figures in respect of the full financial year and the published year to date figures upto the end of the third quarter of the respective financial year.

2) The above financial results for the year ended 31st March 2021 have been reviewed and recommended by the Audit Committee of the Board and approved by the Board of Directors at their meeting held on 28th May 2021. The same have been subjected to audit by the Statutory Central Auditors of the Bank in line with the guidelines issued by Reserve Bank of India and as per listing agreement with the stock exchange.

3) There has been no change in the accounting policies followed in the preparation of these financial results for the year ended 31st March 2021 as compared to those followed in the financial statements for the year ended 31st March 2020.

4) The bank has made provisions in accordance with Reserve Bank of India guidelines, for loan losses and depreciation on investments, standard advances, restructured advances, exposures to entities with unhedged foreign currency exposure. Provision for employees’ retirement benefits viz. pension, gratuity and leave encashment has been made based on actuarial valuation. Provision for Income Tax, Deferred Tax and other contingencies are made on an estimated and proportionate basis and are subject to adjustments, if any, at the year end.

5) Other income includes fees earned from providing services to customers, commission from non-fund based banking activities, earnings from foreign exchange transactions, selling third party products, profit on sale of investments (net), recoveries from advances written off, profit on bullion business etc.

6) In accordance with RBI circular DBOD.No.BP.BC.1/21.06.201/2015-16 dated 1st July 2015, read together with RBI circular DBR.No.BP.BC.80/21.06.201/2014-15 dated 31st March 2015, Banks are required to make Pillar 3 disclosures under Basel III capital regulations. Accordingly, Pillar 3 disclosures under Basel III capital regulations have been made available on the Bank’s website at the following link https://www.kvb.co.in/about-us/disclosures/disclosures-pillar-III/. These disclosures have not been subjected to review / audit by the Statutory Central Auditors.

7) COVID-19 pandemic continues to have a significant impact and volatility in the global and domestic economies resulting in decrease in economic activities. Increase in infection rate and various lockdowns /  movement restrictions announced by Central Government and various State Governments in India and the outbreak of current “second wave” of the pandemic may  further slowdown the economic activity. The extent to which the same will impact the Bank’s operations and financial results remain uncertain and is dependent on several factors including measures initiated or to be initiated by the Government of India and RBI.  There is stress on collection of dues from customers, however the bank is closely monitoring the collection efficiency and will undertake additional steps if the efficiency levels breach the current level.  As on 31st March 2021, the Bank continues to maintain liquidity coverage and capital adequacy ratios at higher levels than the regulatory minimum; the management continues to closely monitor the day to day operations, business, liquidity position and adequacy of capital.

RBI vide circular DOR.No.BP.BC.72/21.04.048/2019-20 dated 23rd May 2020 read with circulars DOR.No.BP.BC.63/21.04.048/2019-20 dated 17th April 2020 and DOR.No.BP.BC.47/21.04.048/2019-20 dated 27th March 2020 announced ‘COVID-19 Regulatory Package’ which envisaged grant of various relief measures to borrowers whose accounts were classified as Standard Assets as on 29th February 2020. Accordingly, Board approved a policy for implementation of the said package including, inter-alia, grant of moratorium on the payment of installments and / or deferment of interest falling due between 1st March 2020 and 31st August 2020 as well as relaxation of certain other parameters, to eligible borrowers, and the asset classification of the eligible borrowers remained unchanged during the moratorium period. Bank was required to make additional provision @ 10%, over two quarters beginning with quarter ending 31st March 2020 in respect of such borrowers whose accounts, though classified as standard as on 31st March 2020, would have become non-performing but for these benefits/relaxations, and accordingly a provision of Rs. 12001 lakh was created (Rs. 1950 lakh during the quarter/year ended 31st March 2020 and Rs. 10051 lakh during the quarter ended 30th June 2020).

As at 31st December 2020, an amount of Rs. 30492 lakh was held as provision towards COVID-19 regulatory package and provision in respect of the accounts which were not declared as NPA as per interim order dated 3rd September 2020 of the Honourable Supreme Court, as per which accounts which were not declared as NPA as on 31st August 2020, shall not be declared as NPA till further orders. Pursuant to the Supreme Court’s judgment dated 23rd March 2021, and the related RBI circular DOR.STR.REC.4/21.04.048/2021-22 dated 7th April 2021, the Bank has undertaken asset classification as per extant IRAC norms with effect from 1st September 2020. Accordingly, the said provision of Rs. 30492 lakh has been utilized for creation of provision required as per IRAC norms. The aggregate provision held for likely impact of COVID-19 as on 31st March 2021 is Rs. 1389 lakh.

Disclosure as per RBI circular DOR.No.BP.BC.63/21.04.048/2019-20 dated 17th April 2020 is given below:

As per the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for the period from 1st March 2020 to 31st August 2020 to eligible borrowers announced by Government of India vide letter No.: F.2/12/2020-BOA.I dated 23rd October 2020 an amount of Rs. 1303 lakh has been refunded to eligible borrowers and the same has been reimbursement by Government of India. Further, pursuant to the judgment of the Honourable Supreme Court of India on 23rd March 2021 in the matter of Small Scale Industrial Manufacturers Association Vs. Union of India & Others and the guidelines issued by RBI vide circular No.: DOR.STR.REC.4/21.04.048/2021-22 dated 7th April 2021, banks are required to refund / adjust the interest on interest / compound interest / penal interest charged to the borrowers during the moratorium period i.e. 1st March 2020 to 31st August 2020. Accordingly, the methodology for calculation of the amount of such ‘interest on interest’ to be refunded / adjusted was finalised by Indian Banks Association. The Bank is in the process of implementing this methodology and pending finalisation thereof, a provision has been created by reducing interest income, during the quarter / year ended 31st March 2021, by an amount of Rs. 2500 lakh towards estimated interest relief which is to be refunded / adjusted.

In accordance with the Resolution Framework for COVID-19 related stress announced by the RBI vide circular DOR.No.BP.BC/3/21.04.048/2020-21 dated 6th August 2020, the Bank has implemented one-time restructuring of eligible borrower accounts, including certain accounts which were not classified as NPA pursuant to the Supreme Court’s interim order dated 3rd September 2020.

Details of resolution plan implemented for COVID-19 related stress is given below:

8) Disclosures as per RBI circular DOR.No.BP.BC.72/21.04.048/2019-20 dated 23rd May 2020 and DOR.No.BP.BC.62/21.04.048/2020-21 dated 17th April 2020 in respect of accounts where the resolution period was extended during the year ended 31st March 2021 is as under :

9) Provision Coverage Ratio as on 31st March 2021 calculated as per the guidelines of Reserve Bank of India is 72.70% (previous period 68.90%).

10) The Board of Directors in their meeting held on 28th May 2021 have proposed dividend of Rs. 0.50 per equity share of Rs. 2/- each for the year 2020-21, subject to necessary approvals. In accordance with AS 4, Contingencies and Events Occurring after the Balance sheet date, the proposed dividend of Rs. 3997 lakh has not been shown as an appropriation from the Profit and Loss appropriation account as on 31st March 2021. For computation of capital adequacy ratio, Bank has reduced the amount of proposed dividend for determining capital funds.

11) Previous period’s / year’s figures have been re-classified / regrouped wherever considered necessary to confirm to the current period’s / year’s classification.

For and on behalf of Board of Directors

B Ramesh Babu
Managing Director & CEO

Place: Karur
Date: 28.05.2021