Exchange Board of India (Issue and LAD THE …...2014-15/1298dated 16.03.2015 and re -emphasized vide letter dated Sept 16th2015 and ^IND A+ _with stable outlook by India Ratings &

1

THE SOUTH INDIAN BANK LIMITED Head Office: SIB House, T.B. Road, Mission Quarters, Thrissur 680 001, Kerala, India.

CIN:L65191KL1929PLC001017

Tel: +91-487-2420020, 2420058, 2420113; Fax: +91 487 2442021 E-mail: [email protected]; Website::www.southindianbank.com

GENERAL RISK

For taking an investment decision, investors must rely on their own examination of the Issue and the Disclosure Document including the risks involved. The Issue has not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Disclosure Document. The Bonds are Capital Instruments and not deposits of the Bank and they cannot be used as Collateral for any loan made by the Bank or any of its Subsidiaries or Affiliates. The Bonds are different from Fixed Deposits and are not covered by Deposit Insurance. Unlike the Fixed Deposits where Deposits are repaid at the option of Deposit Holder, the Bonds are not redeemable at the option of the Bondholders or without the prior consent of RBI. The Bonds carry Loss Absorption Features applicable to such instruments as are prescribed by RBI and may impact the payment of interest and principal.

CREDIT RATING

The Bonds proposed to be issued by the Bank have been assigned a rating of “CARE A+” by CARE vide its letter no. CARE/CRO/RL/ 2014-15/1298dated 16.03.2015 and re -emphasized vide letter dated Sept 16

th2015 and “IND A+”with stable outlook by India

Ratings & Research Private Limited vide its letter dated Sept16th

2015 The above ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agency and should be evaluated independently of any other ratings. Please refer to Annexure I & II for the above ratings.

LISTING

The Bonds are proposed to be listed on the Wholesale Debt Market (WDM) segment of BSE.

Issue Opens on Issue Closes on Date of Allotment

Sept29th

2015 Sept30th

2015 Sept30th

2015

The Bank reserves its sole and absolute right to modify (pre -pone/ postpone) the above issue schedule without giving any reasons or

prior notice. The Bank also reserves its sole and absolute right to change the deemed date of allotment of the above issue and/or

reserves the right to keep multiple Deemed Date(s) of Allotment, change the issue size without giving any reasons or prior notice

Private & Confidential – For Private Circulation Only (This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus). This Disclosure Document is prepared in conformity with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular No.. LAD-NRO/GN/2008/13/127878 dated June 06, 2008 as amended and Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide Circular No. LAD-NRO/GN/2012-13/19/5392dated October 12, 2012 as amended.

Dated: 29.09.2015

DISCLOSURE DOCUMENT FOR THE PRIVATE PLACEMENT OF NON-CONVERTIBLE, REDEEMABLE, UNSECURED, BASEL III COMPLIANT TIER 2 BONDS, FOR INCLUSION IN TIER 2 CAPITAL OF THE BANK IN THE NATURE OF DEBENTURES OF THE FACE VALUE OF RS. 10,00,000/- (RUPEES TEN LAKHS) EACH (“BONDS”) AT PAR AGGREGATING UPTO Rs. 300 CRORES (RUPEES THREE HUNDRED CRORES ONLY) WITH AN OPTION TO RETAIN AN OVER-SUBSCRIPTION AGGREGATING UPTO Rs. 200 CRORES (RUPEES TWO HUNDRED CRORES ONLY) AGGREGATING TO A TOTAL ISSUE SIZE OF Rs. 500 CRORES (RUPEES FIVE HUNDRED CRORES ONLY).

Sole Arranger& Escrow Agent

5th floor , 27BKC, C 7, G Block,

BandraKurla Complex, Bandra (E),

Mumbai - 400 051

Debenture Trustee

Asian Building, Ground Floor,17,

R.Kamani Marg, Ballard Estate,

Mumbai-400001

Registrar & Transfer Agent

M S Complex, 1st Floor,Plot No.8, SastriNagar,Near RTO / 200 Feet Road,Kolathur, Chennai–600099

mailto:[email protected]

http://www.southindianbank.com/

Private and Confidential – Not for Circulation

i

Table of Contents Disclaimers: ............................................................................................................................................. 5

1. General Disclaimer: ..................................................................................................................... 5

2. Disclaimer of Securities & Exchange Board of India (SEBI): ........................................................ 6

3. Disclaimer of Arranger to the Issue: ........................................................................................... 7

4. Disclaimer of Stock Exchange: .................................................................................................. 10

5. Disclaimer of Rating Agencies: .................................................................................................. 10

6. Disclaimer of Debenture Trustees: ........................................................................................... 13

Forward Looking Statements ................................................................................................................ 14

Definitions and Abbreviations .............................................................................................................. 15

A. Risk Factors ................................................................................................................................... 20

B. Issuer Information ......................................................................................................................... 37

a. Name and address of the following:- ........................................................................................ 37

i. Registered Office of the Issuer .............................................................................................. 37

ii. Corporate Office of the Issuer ............................................................................................... 37

iii. Compliance Officer of the Issuer ........................................................................................... 38

iv. CFO of the Issuer ................................................................................................................... 38

v. Arrangers ............................................................................................................................... 38

vi. Trustee of the Issue ............................................................................................................... 39

vii. Registrar of the Issue ............................................................................................................. 39

viii. Credit Rating Agencies ........................................................................................................... 39

ix. Auditors of the Issuer as on 30/06/2015 ............................................................................... 40

x. Legal counsel to the issue ...................................................................................................... 40

b. A brief summary of the business/ activities of the Issuer and its line of business containing at-

least following information:- ............................................................................................................ 41

i. Overview ................................................................................................................................ 41

ii. CRAR of the Bank ................................................................................................................... 48

iii. Corporate Structure............................................................................................................... 49

iv. Key Operational and Financial Parameters for the last 3 Audited Years .............................. 53

v. Project Cost and means of financing, in case of funding of new projects ............................ 54

c. A brief history of the Issuer since its incorporation giving details of its activities:- ................. 54


ii

i. Details of Share Capital as on 30th June 2015 ........................................................................ 57

ii. The details of share capital and share premium account (before and after the issue ......... 57

iii. Changes in its capital structure as on30th June 2015, for the last five years:- ...................... 58

iv. Equity Share Capital History of the Company as on last quarter end, for the last five years:-

59

v. Details of any Acquisition or Amalgamation in the last 1 year:- ........................................... 60

vi. Details of any Reorganization or Reconstruction in the last 1 year:- .................................... 60

d. Details of the shareholding of the Company as on30th June 2015:- ......................................... 61

i. Shareholding pattern of the Company as on30th June 2015:- ............................................... 61

ii. List of top 10 holders of equity shares of the Company as on 30th June 2015 ..................... 61

e. Following details regarding the directors of the Company:- .................................................... 62

i. Details of the current directors of the Bank as on 30th June 2015 ........................................ 62

ii. Details of change in directors since last three years:- ........................................................... 65

f. Following details regarding the auditors of the Company:- ..................................................... 66

i. Details of the auditor of the Company as on 30th June 2015: ............................................... 66

ii. Details of change in auditor since last three years:- There was no change in auditor since

last three years.............................................................................................................................. 67

g. Details of borrowings of the Company, as on30th June 2015:- ................................................ 67

i. Details of Loan Facilities:- ...................................................................................................... 67

ii. Details of Deposits as on 30th June 2015:- ............................................................................. 67

iii. Details of NCDs:- .................................................................................................................... 68

iv. List of Top 10 Subordinated Tier II Bonds (Series 2009) Holders as on30th June 2015:- ....... 68

v. The amount of corporate guarantee issued by the Issuer along with name of the

counterparty (like name of the subsidiary, JV entity, Group Company, etc.) on behalf of whom it

has been issued. ............................................................................................................................ 68

vi. Details of Certificate of Deposit: - The total Face Value of Certificate of Deposit Outstanding

as on 30th June 2015 ..................................................................................................................... 68

vii. Details of Commercial Paper: - The total Face Value of Commercial Papers Outstanding as

on the latest quarter end to be provided and its breakup in following table- Not Applicable .... 69

viii. Details of Rest of the borrowings (including hybrid debt like FCCB, Optionally Convertible

Bonds /Preference Shares) as on30.06.2015: ............................................................................... 69

ix. Details of all default/s and/or delay in payments of interest and principal of any kind of

term loans, debt securities and other financial indebtedness including corporate guarantee

issued by the Company and including any statutory dues, in the past 5 years . .......................... 69


iii

x. Details of any outstanding borrowings taken/ debt securities issued where taken / issued (i)

for consideration other than cash, whether in whole or part, (ii) at a premium or discount, or

(iii) in pursuance of an option; ...................................................................................................... 69

h. Disclosures with regards to the interest of directors, litigation etc ......................................... 70

i. Any financial or other material interest of the directors, promoters or key managerial

personnel in the offer and the effect of such interest in so far as it is different from the interests

of other persons ............................................................................................................................ 70

ii. Details of any litigation or legal action pending or taken by any Ministry or Department of

the Government or a statutory authority against any promoter during the last three years

immediately preceding the year of the circulation of the Information Memorandum and any

direction issued by such Ministry or Department or statutory authority upon conclusion of such

litigation or legal action. ............................................................................................................... 70

iii. Details of director’s remuneration ........................................................................................ 70

iv. Related party transactions entered during the last three financial years immediately

preceding the year of circulation of offer letter including with regard to loans made or,

guarantees given or securities provided ....................................................................................... 70

v. Details of any inquiry, inspections or investigations initiated or conducted under the

Companies Act or any previous company law in the last three years immediately preceding the

year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there

were any prosecutions filed (whether pending or not) fines imposed, compounding of offences

in the last three years immediately preceding the year of the offer letter and if so, section-wise

details thereof for the company and all of its subsidiaries ........................................................... 70

vi. Details of acts of material frauds committed against the company in the last three years, if

any, and if so, the action taken by the company. ......................................................................... 70

i. Details of Promoters of the Company:- .................................................................................... 71

Abridged version of Audited Consolidated (wherever available) and Standalone Financial

Information (Profit & Loss statement, Balance Sheet and Cash Flow statement) for last three years

and auditor qualifications ................................................................................................................. 71

j. Any change in accounting policies during the last three years and their effect on the profits and

the reserves of the company. ............................................................................................................ 79

k. Abridged version of Latest audited / Limited Review half yearly/quarterly consolidated

(wherever applicable) and Standalone Financial Information (like Profit & Loss statement, and

Balance Sheet) and auditor’s qualifications, if any. .......................................................................... 80

l. Any material event/ development or change having implications on the financials/credit

quality (e.g. any material regulatory proceedings against the Issuer/Promoters, Tax litigations

resulting in material liabilities, corporate restructuring event etc.) at the time of issue which may

affect the issue or the investor’s decision to invest / continue to invest in the debt securities. ..... 86

m. Names of the Debentures Trustees and Consents thereof .................................................. 86


iv

n. Rating and Rating Letter ........................................................................................................... 88

o. If the security is backed by a guarantee or letter of comfort or any other document /letter

with similar intent, a copy of the same shall be disclosed. In case such document does not contain

detailed payment structure (procedure of invocation of guarantee and receipt of payment by the

investor along with timelines) .......................................................................................................... 88

p. Name and address of the valuer who performed the valuation of the security offered- Not

Applicable.......................................................................................................................................... 88

q. Stock Exchange where Bonds are proposed to be listed .......................................................... 88

r. Other Details ............................................................................................................................. 88

i. DRR Creation ......................................................................................................................... 88

ii. Issue/instrument specific regulations ................................................................................... 88

iii. Application Process ............................................................................................................... 89

C. Issue Details ................................................................................................................................ 103

a. Summary term sheet: ............................................................................................................. 103

b. Cash Flow: ............................................................................................................................... 111

Declaration .......................................................................................................................................... 113

Annexure – I: Credit Rating Letter from CARE ................................................................................ 114

Annexure – II: Credit Rating Letter from India Ratings ................................................................... 116

Annexure - III: Letter of Consent from Debenture Trustee ............................................................ 118

Annexure – IV: Letter of consent from Registrar ............................................................................ 121

Annexure – V: In-Principle Approval of the Stock Exchange .......................................................... 122

Annexure – VI: Application Form .................................................................................................... 123


5

Disclaimers:

1. General Disclaimer:

This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in accordance with Securities

and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/20

08/13/127878 dated June 06, 2008, as amended and Securities and Exchange Board of India (Issue and Listing of Debt Securities)

(Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012, as amended. This

Disclosure Document does not constitute an offer to public in general to subscribe for or otherwise acquire the Bonds to be issued by

(“The South Indian Bank Ltd”/ “SIB”/ the “Issuer”/ the “Bank”). This Disclosure Document is for the exclusive use of the addressee and

it should not be circulated or distributed to third party (ies). It is not and shall not be deemed to constitute an offer or an invitation to

the public in general to subscribe to the Bonds issued by the Issuer. This bond issue is made strictly on private placement basis. Apart

from this Disclosure Document, no offer document or prospectus has been prepared in connection with the offering of this bond issue

or in relation to the issuer.

This Disclosure Document is not intended to form the basis of evaluation for the prospective subscribers to whom it is addressed and

who are willing and eligible to subscribe to the bonds issued by SIB. This Disclosure Document has been prepared to give general

information regarding parties proposing to invest in this issue of Bonds and it does not purport to contain all the information that any

such party may require. SIB believes that the information contained in this Disclosure Document are true and correct as of the date

hereof.

SIB does not undertake to update this Disclosure Document to reflect subsequent events and thus prospective subscribers must

confirm about the accuracy and relevancy of any information contained herein with SIB. However, SIB reserves its right for providing

the information at its absolute discretion. SIB accepts no responsibility for statements made in any advertisement or any other

material and anyone placing reliance on any other source of information would be doing so at his own risk and responsibility.

Prospective subscribers must make their own independent evaluation and judgment before making the investment and are believed

to be experienced in investing in debt markets and are able to bear the economic risk of investing in Bonds. It is the responsibility of

the prospective subscriber to have obtained all consents, approvals or authorizations required by them to make an offer to subscribe

for, and purchase the Bonds. It is the responsibility of the prospective subscriber to verify if they have necessary power and


6

competence to apply for the Bonds under the relevant laws and regulations in force. Prospective subscribers should conducttheir own

investigation, due diligence and analysis before applying for the Bonds. Nothing in this Disclosure Document should be construed as

advice or recommendation by the Issuer or by the Arrangers to the Issue to subscribers to the Bonds. The prospective subscribers also

acknowledge that the Arrangers to the Issue do not owe the subscribers any duty of care in respect of this private placement offer to

subscribe for the bonds. Prospective subscribers should also consult their own advisors on the implications of application, allotment,

sale, holding, ownership and redemption of these Bonds and matters incidental thereto.

This Disclosure Document is not intended for distribution. It is meant for the consideration of the person to whom it is addressed and

should not be reproduced by the recipient. The securities mentioned herein are being issued on private placement Basis and this offer

does not constitute a public offer/ invitation.

The Issuer reserves the right to withdraw the private placement of the bond issue prior to the issue closing date(s) in the event of

any unforeseen development adversely affecting the economic and regulatory environment or any other force majeure condition

including any change in applicable law. In such an event, the Issuer will refund the application money, if any, along with interest

payable on such application money, if any.

Nothing in this Information Memorandum constitutes an offer of securities for sale in the United States of America or any other

jurisdiction where such offer or placement would be in violation of any law, rule or regulation. No action is being taken to permit an

offering of the bonds in the nature of debentures or the distribution of this Information Memorandum in any jurisdiction where such

action is required. The distribution/taking/sending/ dispatching/transmitting of this Information Memorandum and the offering and

sale of the Bonds may be restricted by law in certain jurisdictions, and persons into whose possession this document comes should

inform themselves about, and observe, any such restrictions.

2. Disclaimer of Securities & Exchange Board of India (SEBI):

This Disclosure Document has not been filed with Securities & Exchange Board of India (“SEBI”). The Bonds have not been

recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this Disclosure Document. It is to be

distinctly understood that this Disclosure Document should not, in any way, be deemed or construed that the same has been

cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for


7

which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this Disclosure

Document. The Issue of Bonds being made on private placement basis, filing of this Disclosure Document is not required with SEBI.

3. Disclaimer of Arranger to the Issue:

The role of the Arranger in the assignment is confined to marketing and placement of the Bonds on the basis of this Information

Memorandum as prepared by the Company. The Arranger has neither scrutinized nor vetted nor reviewed nor has it done any due-

diligence for verification of the contents of this Information Memorandum. The Arranger shall use this Information Memorandum for

the purpose of soliciting subscription(s) from Eligible Investors in the Bonds to be issued by the Company on a private placement basis.

It is to be distinctly understood that the aforesaid use of this Information Memorandum by the Arranger should not in any way be

deemed or construed to mean that the Information Memorandum has been prepared, cleared, approved, reviewed or vetted by the

Arranger; nor should the contents to this Information Memorandum in any manner be deemed to have been warranted, certified or

endorsed by the Arranger so as to the correctness or completeness thereof.

The Issuer has prepared this Information Memorandum and the Issuer is solely responsible and liable for its contents. The Issuer will

comply with all laws, rules and regulations and has obtained all regulatory, governmental, corporate and other necessary approvals

for the issuance of the Bonds. The Company confirms that all the information contained in this Information Memorandum has been

provided by the Issuer or is from publicly available information, and such information has not been independently verified by the

Arranger. No representation or warranty, expressed or implied, is or will be made, and no responsibility or liability is or will be

accepted, by the Arranger or their Affiliates for the accuracy, completeness, reliability, correctness or fairness of this Information

Memorandum or any of the information or opinions contained therein, and the Arranger hereby expressly disclaims any responsibility

or liability to the fullest extent for the contents of this Information memorandum, whether arising in tort or contract or otherwise,

relating to or resulting from this Information Memorandum or any information or errors contained therein or any omissions there

from. Neither Arranger and its affiliates, nor its directors, employees, agents or representatives shall be liable for any damages

whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in

connection with the use of this document. By accepting this Information Memorandum, the Eligible Investor accepts terms of this

Disclaimer Clause of Arranger, which forms an integral part of this Information Memorandum and agrees that the Arranger will not

have any such liability.


8

The Eligible Investors should carefully read this Information Memorandum. This Information Memorandum is for general information

purposes only, without regard to specific objectives, suitability, financial situations and needs of any particular person and does not

constitute any recommendation and the Eligible Investors are not to construe the contents of this Information Memorandum as

investment, legal, accounting, regulatory or Tax advice, and the Eligible Investors should consult with its own advisors as to all legal,

accounting, regulatory, Tax, financial and related matters concerning an investment in the Bonds. This Information Memorandum

should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities mentioned

therein, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection with any

contract or commitment whatsoever.

This Information Memorandum is confidential and is made available to potential investors in the Bonds on the understanding that it is

confidential. Recipients are not entitled to use any of the information contained in this Information Memorandum for any purpose

other than in assisting to decide whether or not to participate in the Bonds. This document and information contained herein or any

part of it does not constitute or purport to constitute investment advice in publicly accessible media and should not be printed,

reproduced, transmitted, sold, distributed or published by the recipient without the prior written approval from the Arranger and the

Company. This Information Memorandum has not been approved and will or may not be reviewed or approved by any statutory or

regulatory authority in India or by any Stock Exchange in India. This document may not be all inclusive and may not contain all of the

information that the recipient may consider material.

Each person receiving this Information Memorandum acknowledges that:

a. Such person has been afforded an opportunity to request and to review and has received all additional information

considered by it to be necessary to verify the accuracy of or to supplement the information herein; and

b. Has not relied on the Arranger and/or its affiliates that may be associated with the Bonds in connection with its

investigation of the accuracy of such information or its investment decision.

Issuer hereby declares that the Issuer has exercised due-diligence to ensure complete compliance of applicable disclosure norms in

this Information Memorandum. The Arranger: (a) is not acting as trustee or fiduciary for the investors or any other person; and (b) is

under no obligation to conduct any "know your customer" or other procedures in relation to any person. The Arranger is not


9

responsible for (a) the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Issuer or

any other person in or in connection with this Information Memorandum; or (b) the legality, validity, effectiveness, adequacy or

enforceability of this Information Memorandum or any other agreement, arrangement or document entered into, made or executed

in anticipation of or in connection with this Information Memorandum; or (c) any determination as to whether any information

provided or to be provided to any investor is non-public information the use of which may be regulated or prohibited by applicable

law or regulation relating to insider dealing or otherwise.

The Arranger or any of their directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any

loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this

document. By accepting this Information Memorandum, investor(s) agree(s) that the Arranger will not have any such liability.

Please note that:

a. The Arranger and/or their affiliates may, now and/or in the future, have other investment and commercial banking, trust

and other relationships with the Issuer and with other persons ("Other Persons");

b. As a result of those other relationships, the Arranger and/or their affiliates may get information about Other Persons, the

Issuer and/or the Issue or that may be relevant to any of them. Despite this, the Arranger and/or their affiliates will not be

required to disclose such information, or the fact that it is in possession of such information, to any recipient of this

Information Memorandum;

c. The Arranger and/or their affiliates may, now and in the future, have fiduciary or other relationships under which it, or

they, may exercise voting power over securities of various persons. Those securities may, from time to time, include

securities of the Issuer; and

d. The Arranger and/or their affiliates may exercise such voting powers, and otherwise perform its functions in connection

with such fiduciary or other relationships, without regard to its relationship to the Issuer and/or the securities.”


10

4. Disclaimer of Stock Exchange:

As required, a copy of this Disclosure Document will be submitted to BSE Limited (hereinafter referred to as “BSE”) for hosting the

same on its website. It is to be distinctly understood that such submission of the Disclosure Document withBSE or hosting the same

on its website should not in any way be deemed or construed that the Disclosure Document has been cleared or approved by BSE; nor

does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Disclosure Document;

nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for

the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Issuer. Every person

who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation

and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such

person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be

stated herein or any other reason whatsoever.

5. Disclaimer of Rating Agencies:

CARE- CARE's ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned

Bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be

accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not

responsible for any errors or omissions or for the results obtained from the use of such information.Most entities whose bank

facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In

case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/ proprietor

and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured

loans brought in by the partners/ proprietor in addition to the financial performance and other relevant factors.

Ratings assigned by India Ratings & Research (Ind-Ra) are opinions based on established criteria and methodologies that Ind-Ra is

continuously evaluating and updating. Therefore, ratings are the collective work product of Ind-Ra and no individual, or group of

individuals, is solely responsible for a rating. Ratings are not facts, and therefore cannot be described as being "accurate" or

"inaccurate". Users should refer to the definition of each individual rating for guidance on the dimensions of risk covered by such

rating.


11

Ind-Ra' opinions are forward looking and include analysts' views of future performance. In many cases, these views on future

performance may include forecasts, which may in turn (i) be informed by non-disclosable management projections, (ii) be based on a

trend (sector or wider economic cycle) at a certain stage in the cycle, or (iii) be based on historical performance. As a result, while

ratings may include cyclical considerations and typically attempt to assess the likelihood of repayment at "ultimate/final maturity",

material changes in economic conditions and expectations (for a particular issuer) may result in a rating change.

Credit ratings do not directly address any risk other than credit risk. Credit ratings do not comment on the adequacy of market price or

market liquidity for rated instruments, although such considerations may affect Ind-Ra' view on credit risk, such as access to capital or

likelihood of refinancing.

Ratings are relative measures of risk; as a result, the assignment of ratings in the same category to entities and obligations may not

fully reflect small differences in the degrees of risk. Credit ratings, as opinions on relative ranking of vulnerability to default, do not

imply or convey a specific statistical probability of default, notwithstanding the agency's published default histories that may be

measured against ratings at the time of default. Credit ratings are opinions on relative credit quality and not a predictive measure of

specific default probability.

Ratings are opinions based on all information known to Ind-Ra, including publicly available information and/or non-public documents

and information provided to the agency by an issuer and other parties. Publication and maintenance of all ratings are subject to there

being sufficient information, consistent with the relevant criteria and methodology, to form a rating opinion.

In issuing and maintaining its ratings, Ind-Ra relies on factual information it receives from issuers and underwriters and from other

sources Ind-Ra believes to be credible. Ind-Ra conducts a reasonable investigation of the factual information relied upon by it in

accordance with its rating methodology, and obtains reasonable verification of that information from independent sources, to the

extent such sources are available for a given security or in a given jurisdiction.

The manner of Ind-Ra' factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of

the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold

and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its

advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals,


12

actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and

competent third-party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a

variety of other factors.

Users of Ind-Ra ratings should understand that neither an enhanced factual investigation nor any third-party verification can ensure

that all of the information Ind-Ra relies on in connection with a rating will be accurate and complete. Ultimately, the issuer and its

advisers are responsible for the accuracy of the information they provide to Ind-Ra and to the market in offering documents and other

reports. In issuing its ratings Ind-Ra must rely on the work of experts, including independent auditors with respect to financial

statements and attorneys with respect to legal and tax matters. Further, ratings are inherently forward-looking and embody

assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification

of current facts, ratings can be affected by future events or conditions that were not anticipated at the time a rating was issued or

affirmed. If any such information should turn out to contain misrepresentations or to be otherwise misleading, the rating associated

with that information may not be appropriate. The assignment of a rating to any issuer or any security should not be viewed as a

guarantee of the accuracy, completeness, or timeliness of the information relied on in connection with the rating or the results

obtained from the use of such information.

If a rating does not benefit from the participation of the issuer/originator, but Ind-Ra is satisfied that "minimum threshold"

information for the given criteria is available from public information and other sources available to Ind-Ra, then the non-participatory

issuer, as with all issuers, will be afforded the opportunity to comment on the rating opinion and supporting research prior to it being

published.

Ratings do not constitute recommendations to buy, sell, or hold any security, nor do they comment on the adequacy of market price,

the suitability of any security for a particular investor, or the tax-exempt nature or taxability of any payments of any security. Ind-Ra

does not have a fiduciary relationship with any issuer, subscriber or any other individual. Nothing is intended to or should be

construed as creating a fiduciary relationship between Ind-Ra and any issuer or between the agency and any user of its ratings. Ind-Ra

does not provide to any party any financial advice, or legal, auditing, accounting, appraisal, valuation or actuarial services. A rating

should not be viewed as a replacement for such advice or services.


13

Ratings may be changed, qualified, placed on Rating Watch or withdrawn as a result of changes in, additions to, accuracy of,

unavailability of or inadequacy of information or for any reason Ind-Ra deems sufficient.

The assignment of a rating by Ind-Ra shall not constitute consent by the agency to use its name as an expert in connection with any

registration statement, offering document or other filings under any relevant securities laws.

6. Disclaimer of Debenture Trustees:

Investors should carefully read and note the contents of the Information Memorandum/Disclosure document Each Prospective

investor should make its own independent assessment of the merit of the investment in NCDs/Bonds and the issuer Bank.

Prospective Investor should consult their own financial, legal, tax and other professional advisors as to the risks and investment

considerations arising from an investment in the NCDs and should possess the appropriate resources to analyse such investment and

suitability of such investment to such investor's particular circumstance. Prospective investors are required to make their own

independent evaluation and Judgment before making the investment and are believed to be experienced in Investing in debt markets

and are able to bear the economic risk of investing in such instruments.


14

Forward Looking Statements

The Bank has included statements in this Disclosure Document which contain words or phrases such as “will”, “would”, “aim”,

“aimed”, “will likely result”, “is likely”, “are likely”, “believe”, “expect”, “expected to”, “will continue”, “will achieve”, “anticipate”,

“estimate”, “estimating”, “intend”, “plan”, “contemplate”, “seek to”, “seeking to”, “trying to”, “target”, “propose to”, “future”,

“objective”, “goal”, “project”, “should”, “can”, “could”, “may”, “will pursue”, “our judgement” and similar expressions or variations of

such expressions, that are “forward-looking statements”. Actual results may differ materially from those suggested by the forward-

looking statements due to certain risks or uncertainties associated with the Bank’s expectations with respect to, but not limited to, the

actual growth in demand for banking and other financial products and services, its ability to successfully implement its strategy,

including its use of the Internet and other technology and its rural expansion, its ability to integrate recent or future mergers or

acquisitions into its operations, its ability to manage the increased complexity of the risks the Bank faces following its rapid

international growth, future levels of impaired loans, its growth and expansion in domestic and overseas markets, the adequacy of its

allowance for credit and investment losses, technological changes, investment income, its ability to market new products, cash flow

projections, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions the Bank is or will become a

party to, the future impact of new accounting standards, its ability to implement its dividend policy, the impact of changes in banking

regulations and other regulatory changes in India and other jurisdictions on the Bank, including on the assets and liabilities of SIB, a

former financial institution not subject to Indian banking regulations, its ability to roll over its short-term funding sources and its

exposure to credit, market and liquidity risks. By their nature, certain of the market risk disclosures are only estimates and could be

materially different from what actually occurs in the future. As a result, actual future gains, losses or impact on net interest income

and net income could materially differ from those that have been estimated.

In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements

contained in this Disclosure Document include, but are not limited to, the monetary and interest rate policies of India and the other

markets in which the Bank operates, natural calamities, general economic, financial or political conditions, instability or uncertainty in

India, southeast Asia, or any other country, caused by any factor including terrorist attacks in India or elsewhere, military armament or

social unrest in any part of India, inflation, deflation, unanticipated turbulence in interest rates, changes or volatility in the value of the

rupee, instability in the subprime credit market and liquidity levels in the foreign exchange rates, equity prices or other market rates

or prices, the performance of the financial markets in general, changes in domestic and foreign laws, regulations and taxes, changes in

the competitive and pricing environment in India, and general or regional changes in asset valuations.


15

Definitions and Abbreviations

AY Assessment Year Allotment/ Allot/ Allotted

The issue and allotment of the Bonds to the successful Applicants in the Issue

Allottee A successful Applicant to whom the Bonds are allotted pursuant to the Issue, either in full or in part

Applicant/ Investor A person who makes an offer to subscribe the Bonds pursuant to the terms of this Disclosure Document and the Application Form

Application Form The form in terms of which the Applicant shall make an offer to subscribe to the Bonds and which will be considered as the application for allotment of Bonds in the Issue

Bondholder(s) Any person or entity holding the Bonds and whose name appears in the list of Beneficial Owners provided by the Depositories

Beneficial Owner(s) Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996)

Board/ Board of Directors

The Board of The South Indian Bank or Committee thereof, unless otherwise specified

Bond(s)

Non-Convertible, Redeemable, Unsecured Basel III compliant Tier 2 Bonds for inclusion in Tier 2 Capital in the nature of Debentures of face value of Rs. 10 lacs each at par aggregating uptoRs. 300 Crores (Rupees Three Hundred Crores Only) with an option to retain an over-subscription aggregating uptoRs. 200 Crores (Rupees Two Hundred Crores Only) aggregating to a total issue size of Rs. 500 Crores (Rupees Five Hundred Crores Only).

CARE Credit Analysis & Research Ltd. CAR Capital Adequacy Ratio CDSL Central Depository Services (India) Limited Coupon / Interest Payment Date

The date as may be specified in the Summary Term Sheet of this Disclosure Document

Debt Securities

Non-Convertible debt securities which create or acknowledge indebtedness and include debenture, bonds and such other securities of a body corporate or any statutory body constituted by virtue of a legislation, whether constituting a charge on the assets of the Bank or not, but excludes security bonds issued by Government or such other bodies as may be specified by SEBI, security


16

receipts and securitized debt instruments

Deemed Date of Allotment

The cut-off date declared by the Bank from which all benefits under the Bonds including interest on the Bonds shall be available to the Bondholder(s). The actual allotment of Bonds (i.e. approval from the Board of Directors or a Committee thereof) may take place on a date other than the Deemed Date of Allotment

Depository A Depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time

Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant A Depository participant as defined under Depositories Act

Disclosure Document

This document dated September 29,2015 for private placement of Non-Convertible, Redeemable, Unsecured Basel III compliant Tier 2 Bonds for inclusion in Tier 2 Capital in the nature of Debentures of face value of Rs. 10 lacs each at par aggregating uptoRs. 300 Crores (Rupees Three Hundred Crores Only) with an option to retain an over-subscription aggregating uptoRs. 200 crores (Rupees Two Hundred Crores Only) aggregating to a total issue size of Rs. 500 Crores (Rupees Five Hundred Crores Only) (“Bonds”).

DP Depository Participant DRR Bond/ Debenture Redemption Reserve EPS Earnings Per Share FIs Financial Institutions FIIs Foreign Institutional Investors Financial Year/ FY Period of twelve months ending March 31, of that particular year GoI Government of India/ Central Government

Trustees Trustees for the Bondholders in this case being IDBI Trusteeship Services Limited

Issuer / SIB / Bank The South Indian Bank

I.T. Act The Income Tax Act, 1961, as amended from time to time

Listing Agreement

Listing Agreement for Debt Securities issued by Securities and Exchange Board of India vide circular no. SEBI/IMD/BOND/1/2009/11/05 dated May 11, 2009 and Amendments to Simplified Debt Listing Agreement for Debt Securities issued by Securities and Exchange Board of India vide circular no. SEBI/IMD/DOF-1/BOND/Cir-5/2009 dated November 26, 2009 and Amendments to Simplified Debt Listing Agreement for Debt Securities issued by Securities and Exchange Board of India vide circular no.


17

SEBI/IMD/DOF-1/BOND/Cir-1/2010dated January 07, 2010and Amendments to Simplified Debt Listing Agreement for Debt Securities issued by Securities and Exchange Board of India vide vide Circular no.CIR/IMD/DF/18/2013 dated October 29 2013.

Loss Absorbency

The Bonds shall be subject to loss absorbency features applicable for non-

equity capital instruments vide Master Circular No.

DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 issued by the

Reserve Bank of India on Basel III capital regulations covering terms and

conditions for issue of debt capital instruments for inclusion as Tier II

Capital (Annex 5 of the Master Circular) and minimum requirement to

ensure loss absorbency of non-equity regulatory capital instruments at

the Point of Non Viability (PONV) (Annex 16 of the Master Circular) read

along with RBI Circular No. DBRNO.BP.BC.1/21.06.201/2015-16 dated July

1, 2015 on Master Circular – Basel III Capital Regulations

Amendments.Accordingly, the Bonds may, at the option of the RBI, be

permanently written off upon occurrence of the trigger event called the

“Point of Non Viability Trigger”. PONVtrigger event shall be as defined in

the RBI Regulations and shall be determined by the RBI.

MF Mutual Fund

MoF Ministry of Finance

NSDL National Securities Depository Limited

BSE Bombay Stock Exchange Limited

PAN Permanent Account Number

PONV The Bonds may, at the option of the RBI, be permanently written off upon occurrence of the trigger event called the “Point of Non Viability Trigger” (“PONV Trigger”)

PONV Trigger Event The PONV Trigger event shall be the earlier of:


18

a) a decision that the write off, without which the Bank would become

non-viable, is necessary, as determined by the Reserve Bank of India; and

b) the decision to make a public sector injection of capital, or equivalent

support, without which the Bank would have become non-viable, as

determined by the relevant authority. Such a decision would invariably

imply that the write-off consequent upon the trigger event must occur

prior to any public sector injection of capital so that the capital provided

by the public sector is not diluted.

For the purpose of these guidelines, a non-viable bank will be a bank

which, owing to its financial and other difficulties, may no longer remain a

going concern on its own in the opinion of the Reserve Bank of India

unless appropriate measures are taken to revive its operations and thus,

enable it to continue as a going concern. The difficulties faced by a bank

should be such that these are likely to result in financial losses and raising

the Common Equity Tier 1 capital of the bank should be considered as the

most appropriate way to prevent the bank from turning non-viable. Such

measures may include write off of the Bonds in combinationwith or

without other measures as considered appropriate by the Reserve Bank

of India.

In rare situations, a bank may also become non-viable due to non-

financial problems, such as conduct of affairs of the bank in a manner

which is detrimental to the interest of depositors, serious corporate

governance issues, etc. In such situations raising capital is not considered

a part of the solution and therefore, may not attract provisions of this

framework.


19

GIR General Index Registration Number

Rs. / INR Indian National Rupee

RBI Reserve Bank of India

RBI Norms / RBI Guidelines

Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015on Basel III Capital Regulations issued by the Reserve Bank of India on Basel III capital regulations covering terms and conditions for issue of debt capital instruments for inclusion as Tier 2 capital as updated/modified from time to time

RTGS Real Time Gross Settlement

Record Date As may be specified in the Summary Term Sheet

Registrar Registrar to the Issue, in this case being M/s.BTS Consultancy Services P Ltd

SEBI The Securities and Exchange Board of India, constituted under the SEBI Act, 1992

SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time

SEBI Debt Regulations

Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended and Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392dated October 12, 2012, as amended

TDS Tax Deducted at Source

The Companies Act The Companies Act, 2013 as amended from time to time

The Issue/ The Offer/ Private Placement

Private Placement of Non-Convertible, Redeemable, Unsecured Basel III compliant Tier 2 Bonds for inclusion in Tier 2 Capital in the nature of Debentures of face value of Rs. 10 lacs each at par aggregating up to Rs. 300 Crores (Rupees Three Hundred Crores Only) with an option to retain an over-subscription aggregating up to Rs. 200 Crores (Rupees Two Hundred Croresonly) aggregating to a total issue size of Rs. 500 Crores (Rupees Five Hundred Crores Only) (“Bonds”).


20

A. Risk Factors

Prospective investors should carefully consider the risks and uncertainties described below, in addition to the other information contained

in this Disclosure Document before making any investment decision relating to our Basel III Compliant Tier II Bonds. The occurrence of any

of the following events, or the occurrence of other risks that are not currently known or are now deemed immaterial, could cause our

business, results of operations, cash flows, financial condition and prospects to suffer and which may lead to PONV and you may lose all or

part of your investment.

Prior to making an investment decision, prospective investors should carefully consider this section in conjunction with the information

contained in this Disclosure Document, including the financial statements prepared in accordance with Indian GAAP and included in this

Preliminary Placement Document.

These risks and uncertainties are not the only issues that the Bank faces. Additional risks and uncertainties not presently known to the

Bank or that the Bank currently believes to be immaterial may also have a material adverse effect on its financial condition or business.

Unless specified or quantified in the relevant risk factors, the Bank is not in a position to quantify the financial or other implications of any

risk mentioned herein below.

If any one of the following stated risks actually occurs, the Bank’s business, financial conditions and results of operations could suffer and,

therefore, the value of the Bank’s Debentures could decline and/or the Bank’s ability to meet its obligations in respect of the Debentures

could be affected. More than one risk factor may have simultaneous effect with regard to the Debentures such that the effect of a

particular risk factor may not be predictable. In addition, more than one risk factor may have a compounding effect which may not be

predictable. No prediction can be made as to the effect that any combination of risk factors may have on the value of the Debentures

and/or the Bank’s ability to meet its obligations in respect of the Debentures. Potential investors should perform their own independent

investigation of the financial condition and affairs of the Bank, and their own appraisal of the creditworthiness of the Bank. Potential

investors should consult their own financial, legal, tax and other professional advisors as to the risks and investment considerations with

respect to the Debentures. Potential investors should thereafter reach their own views prior to making any investment decision.

The Bank believes that the factors described below represent the principal risks inherent in investing in the Debentures, but the inability of

the Bank, as the case may be, to pay principal or other amounts on or in connection with any Debentures may occur for other reasons and

the Bank does not represent that the statements below regarding the risks of holding any Debentures are exhaustive.


21

Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify or quantify the financial or other

implications of any of the risks mentioned herein.

Risks Relating to our Business

Our results of operations and cash flows depend to a great extent on our net interest income. Volatility in interest rates and other market

conditions could materially and adversely impact our cash flows and results of operations.

Our results of operations largely depend on our net interest income. For the financial year2015, our net interest income (i.e. gross interest income

minus interest expense) represented 23.62% of our total income.Our interest-earning assets comprised both fixed interest rate assets and floating

interest rate assets, while the majority of our interest-bearing liabilities had fixed interest rates. Any decrease in the interest rates applicable to

our assets, without a corresponding decrease in the interest rates applicable to our liabilities, will result in a decline in our net interest income and

consequently reduce our net interest margin.

Interest rates are sensitive to many factors beyond our control, including India’s GDP growth, inflation, liquidity, the RBI’s monetary policy,

deregulation of the financial sector in India, domestic and international economic and political conditions and other factors. We cannot assure you

that we will be able to adequately manage our interest rate risk in the future. Volatility and changes in market interest rates could

disproportionately affect the interest we earn on our assets as compared to the interest we pay on our liabilities.

Furthermore, in the event of rising interest rates, our borrowers may not be willing to pay correspondingly higher interest rates on their

borrowings and may choose to repay their loans from us if they are able to switch to more competitively priced advances. In the event of falling

interest rates, we may face more challenges in retaining our customers if we are unable to switch to more competitive rates as compared to other

banks in the market. Any inability to retain customers as a result of changing interest rates may also adversely impact our earnings and cash flows

in future periods.

In addition, under the regulations of RBI, we are required to maintain a minimum specified percentage, currently 21.5% statutory liquidity ratio

(“SLR”), of our net demand and time liabilities in Government or other approved securities. Yields on these investments, as well as yields on our

other interest earning assets, are dependent to a large extent on interest rates. In a rising interest rate environment, especially if the increase was

sudden or sharp, we could be adversely affected by the decline in the market value of our Government securities portfolio and other fixed income

securities and may be required to further provide for depreciation in the “available for sale” (“AFS”) and “held for trading” (“HFT”) categories.


22

The value of collateral may decrease or we may experience delays in enforcing the sale of collateral when borrowers default on their

obligations to us, which may result in failure to recover the expected value of collateral security, exposing us to a potential loss.

As of March 31, 2015, 59.72% of our loans to corporate customers were secured by assets, including property, plant and equipment. Our loans to

corporate customers also include working capital credit facilities that are typically secured by a first lien on inventory, receivables and other

current assets. In some cases, we may have taken further security of a first or second lien on fixed assets or a pledge of financial assets like

marketable securities. As of March 31, 2015, 51.07% of our loans to retail customers were also secured by assets, predominantly gold, property

and vehicles.

We use a technology-based risk management system and follow strict internal risk management guidelines on portfolio monitoring, which include

periodic assessment of loan to security value on the basis of conservative market price levels, limits on the amount of margin, ageing analysis and

pre-determined margin call thresholds. However, we may not be able to realize the full value of our collateral as a result of, among other factors:

delays in bankruptcy and foreclosure proceedings;

defects or deficiencies in the perfection of collateral (including due to inability to obtain approvals that may be required from third

parties);

fraud by borrowers;

decreases in value of the collateral, which may be particularly relevant in the case of gold and traded securities;

an illiquid market for the sale of the collateral; and

Current legislative provisions or changes thereto and past or future judicial pronouncements.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (the “SARFAESI Act”), the Recovery of

Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s corporate debt restructuring (“CDR”) mechanism have strengthened the

ability of lenders to resolve NPAs by granting them greater rights to enforce security and recover amounts owed from secured borrowers.

Although special tribunals have been set up for expeditious recovery of debts due to banks, any proceedings brought may be subject to delays and

administrative requirements that may result in, or be accompanied by, a decrease in the value of the collateral.


23

In addition, the RBI’s guidelines on CDR specify that for debt amounts of ₹ 100.0 million and above, 60.0% of the creditors by number and 75.0% of

the creditors by value can decide to restructure the debt and that such a decision would be binding on the remaining creditors. If we own 25.0% or

less of the debt of such a borrower, we could be forced to agree to an extended restructuring of debt, which may not be in our best interests

As a result of the foregoing factors, we may not be able to realise the full value of collateral, which could have an adverse effect on our financial

condition and results of operations.

If we are not able to control the level of NPAs in our portfolio effectively or if we are unable to improve our provisioning coverage as a

percentage of gross NPA, our business may be adversely affected.

Various factors, including a rise in unemployment, a sharp and sustained rise in interest rates, developments in the Indian economy, movements in

global commodity markets and exchange rates and global competition may cause an increase in the level of NPAs and have an adverse impact on

the quality of our loan portfolio. The RBI regulates some aspects of the recovery of non-performing loans, such as the use of recovery agents. Any

limitation on our ability to recover, control and reduce non-performing and restructured loans as a result of these guidelines or otherwise may

affect our collections and ability to foreclose on existing NPAs.

As of March 31, 2015, our provision coverage as a percentage of NPAs was 60.63%. However, there can be no assurance that there will be no

deterioration in the provisioning coverage as a percentage of gross NPAs or otherwise or that the percentage of NPAs that we will be able to

recover will be similar to our past NPA recovery experience. If we are not able to control or reduce the level of our NPAs, the overall quality of our

loan portfolio may deteriorate, which may have a material adverse effect on our financial condition and results of operations.

A portion of our advances are unsecured. If we are unable to recover such advances in a timely manner or at all, our financial condition and

results of operations may be adversely affected.

While we have been selective in our lending policies and strive to satisfy ourselves with the credit worthiness and repayment capacities of our

customers, there can be no assurance that we will be able to recover the interest and principal advanced by us in a timely manner. Any failure to

recover the unsecured advances given to our customers would expose us to a potential loss, which could adversely affect our financial condition

and results of operations.


24

The level of restructured advances in our portfolio may increase and the failure of such restructured advances to perform as expected could

adversely affect our financial condition and results of operations.

As a result of a slowdown in economic activity, rising interest rates and the limited ability of corporations to access capital due to the volatility in

global markets, there has been an increase in restructured advances in the banking system as well as in our loan portfolio for financial year 2014

and financial year 2015. We may not be able to control or reduce the level of restructured advances in our project and corporate finance portfolio.

In May 2013, the RBI issued final guidelines on the restructuring of advances. Pursuant to those guidelines, advances that are restructured (other

than due to delays in project implementation under certain conditions and up to specified periods) from April 1, 2015 onwards would be classified

as non-performing. The general provision required on restructured standard accounts would be increase to 3.5% from March 31, 2014, and

further to 4.6% from March 31, 2015 and 5.0% from March 31, 2016. General provisions on standard accounts restructured after June 1, 2013

were increased to 5.0%. The guidelines also prescribe measures with respect to the terms of restructuring that may be approved for borrowers.

The combination of changes in regulations regarding unstructured advances, provisioning, and any substantial increase in the level of restructured

assets and the failure of these restructured advances to perform as expected, could adversely affect our financial condition and results of

operations.

We are required to lend a minimum percentage of our adjusted net bank credit (“ANBC”) to certain “priority sectors” and if we fail to meet

these requirements, we must place the allocated amount by RBI based on shortfall in an account with Government-sponsored Indian

development banks or with other financial institutions specified by the RBI. These deposits typically carry interest rates lower than market

rates, which would result in reduced interest income on such advances. Any change in the RBI’s regulations relating to priority sector lending

could have a material adverse impact on our financial condition and results of operations.

In accordance with current RBI guidelines, all banks in India, including us, are subject to directed lending regulations. We are required to lend

40.00% of our ANBC or credit equivalent amount of off-balance sheet exposure, whichever is higher, to “priority sectors”. Out of the advances we

are required to lend under the “priority sector”, at least 18.0% of our ANBC or credit equivalent amount of off-balance sheet exposure, whichever

is higher, must be lent to the agricultural sector and at least 10.0% of our ANBC or credit equivalent amount of off-balance sheet exposure,

whichever is higher, must be lent to weaker sectors.

In case of any shortfall by us in meeting the priority sector lending requirements, we would subsequently be required to place the allocated

amount by RBI based on shortfall in priority sector lending in an account with the National Bank for Agriculture and Rural Development

(“NABARD”) or with other financial institutions specified by the RBI. These deposits typically carry interest rates lower than market rates, which


25

would result in reduced interest income on such advances. We have experienced instances of shortfalls in our directed lending to the priority

sectors in the past and we cannot assure you that we will be able to meet the lending targets towards priority sectors in the future.

Further, any change in the RBI’s guidelines may require us to increase our lending to the priority sectors.

Banking is a heavily regulated industry and material changes in the regulations that govern us could cause our business to suffer.

Banks in India are subject to detailed supervision and regulation by the RBI. In addition, banks are generally subject to changes in Indian law, as

well as to changes in regulation and government policies and accounting principles. Since 2005, the RBI has made several changes in regulations

applicable to banking companies, including:

risk-weights on certain categories of loans for computation of capital adequacy;

general provisioning requirements for various categories of assets;

capital requirements and accounting norms for securitisation;

policy interest rates, cash reserve ratio, cessation of payment of interest on cash reserve balances;

limits on investments in financial sector enterprises and venture capital funds; and

Directed lending requirements. The Banking Regulation Act imposes a number of restrictions, which affect our operating flexibility and investors’ rights, including:

We are subject to restrictions in the incorporation of subsidiaries, which may prevent us from exploiting emerging business opportunities in areas other than banking. We may not open branches in new places of business and transfer our existing places of business, which may hamper our operational flexibility.

Our ability to build overseas asset portfolios and exploit business opportunities overseas is limited by the requirement to maintain assets in India of at least 75.0% of our demand and time liabilities in India.

Our ability to produce documents and records for inspection is regulated.


26

The RBI is empowered to direct and generally advise us and may prohibit us from entering into certain transactions and agreements.

We are required to obtain prior approval of the RBI before we appoint our Chairman, Managing Director and CEO and any other full-time Directors and fix their remuneration. The RBI has powers to remove managerial and other persons from office, and to appoint additional directors. We are also required to obtain approval of the RBI for the creation of floating charges for our borrowings, thereby hampering leverage.

Any changes in the regulatory environment under which we operate, or our inability to comply with the regulations, could adversely affect our

business, financial condition and results of operations.

Our Bank has a regional concentration in Southern India and any adverse change in the economy of states in Southern India could impact our

results of operations and cash flows. Additionally, we may not be successful in expanding our operations to other parts of India.

SIB has 828 branches as of June 30th2015 of which689 branches or 83.21% are located in Southern India (comprising the states of Andhra Pradesh,

Telangana, Karnataka, Kerala, Tamil Nadu and the union territory of Pondicherry). As of June 30th, 2014 and June 30th, 2015, 72%, 69%

respectively, of our total advances and 77%, 79% respectively, of our total deposits were from Southern India.

As on 31st March 2015, SIB has 822 branches out of which 680 branches or 82.72 % are located in Southern India (comprising the states of Andhra

Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu and the union territory of Pondicherry). The branch distribution in south India as on 31st

March, 2014 and 31st March 2013 was 667 (84.20%) out of 794 and 622 (82.93%) out of 750 respectively . As of March 31 2013, March 31 2014

and March 31 2015, 74%, 72% and 70% respectively, of our total advances and 73%, 77% and 79% respectively, of our total deposits were from

Southern India.

Any disruption, disturbance or sustained downturn in the economy of or any adverse geological, ecological or political circumstances in, the states in Southern India could adversely affect our business, financial condition and results of operations

Additionally, while we continue to expand our operation outside of Southern India, we face risks with our operations in geographic areas in which

we do not possess the same level of familiarity with the economy, consumer base and commercial operations. In addition, our competitors may

already have established operations in such areas and we may find it difficult to attract customers in such new areas. We may not be able to


27

successfully manage the risks of such an expansion, which could have an adverse effect on our business, financial conditions and results of

operations.

We may not be able to renew or maintain our statutory and regulatory permits and approvals required to operate our business.

We require certain statutory and regulatory permits and approvals to operate our business. We have a licence from the RBI, which requires us to

comply with certain terms and conditions for us to continue our banking operations. In the event that we are unable to comply with any or all of

these terms and conditions, or seek waivers or extensions of time for complying with these terms and conditions, it is possible that the RBI may

revoke this licence or may place stringent restrictions on our operations. This may result in the interruption of all or some of our operations.

Further, under certain of our contractual arrangements, we are required to hold all necessary and applicable approvals and licences from

authorities such as the RBI and the IRDA.

Failure by us to renew, maintain or obtain the required permits or approvals, including those set out above, may result in the interruption of our

operations or delay or prevent our expansion plans and may have a material adverse effect on our business, financial condition and results of

operations

If we are unable to comply with the capital adequacy requirements stipulated by the RBI, our business, financial condition and results of

operations may be materially and adversely affected.

We are subject to regulations relating to the capital adequacy of banks, which determine the minimum amount of capital we must hold as a

percentage of the risk-weighted assets on our portfolio, or capital-to-risk asset ratio (“CRAR”). Although we have been maintaining a CRAR under

the Basel III standards, which was 12.01% as of March 31, 2015 and 11.46% as of June 30, 2015, as compared to the regulatory minimum

requirement of 9.0%, we cannot assure you that we will be able to maintain our CRAR within the regulatory requirements. Further, any adverse

developments could affect our ability to continue to satisfy the capital adequacy requirements, including deterioration in our asset quality, decline

in the values of our investments or applicable risk weight for different asset classes.

The RBI has issued the guidelines on Basel III capital regulations on May 2, 2012, pursuant to the Monetary Policy Statement 2012-13. These

guidelines become effective from April 1, 2013 in a phased manner. The Basel III capital ratios will be fully implemented on March 31, 2019. The

RBI Basel III Capital Regulations require, among other things, higher levels of Tier I capital, including common equity, capital conservation buffers,

deductions from common equity Tier I capital for investments in subsidiaries (with minority interest), changes in the structure of debt instruments

eligible for inclusion in Tier I and Tier II capital and preference shares in Tier II capital, criteria for classification as common shares, methods to deal


28

with credit risk and reputational risk, capital charges for credit risks, introduction of a leverage ratio and criteria for investments in capital of

banks, financial and insurance entities (including where ownership is less than 10.0%). The RBI Basel III Capital Regulations also stipulate that

additionalTier I and Tier II capital should have loss absorbency characteristics, which require them to be written down or be converted into

common equity upon the occurrence of a pre-specified trigger event.

With the implementation of the Basel III guidelines, we may be required to improve the quality, quantity and transparency of Tier I capital, which

will now have to be predominantly equity shares. We may be required to apply regulatory deductions against core capital as opposed to Tier I and

Tier II capital and a minimum capital ratio may be set, among other suggested changes. In addition, these changes may result in the incurrence of

substantial compliance and monitoring costs. Furthermore, with the implementation of Basel III guidelines, our ability to support and grow our

business could be limited by a declining capital adequacy ratio, if we are unable to access or face difficulty in accessing the capital or have difficulty

in obtaining capital in any other manner.

If we fail to meet capital adequacy requirements, the RBI may take certain actions, including restricting our lending and investment activities and

the payment of dividends by us. These actions could materially and adversely affect our business, financial condition and results of operations.

We are required to maintain cash reserve and statutory liquidity ratios and any increase in these requirements could materially and adversely

affect our business, financial condition and results of operations.

Under the RBI regulations, we are subject to a CRR requirement under which we are currently required to keep 4.0% of our net demand and time

liabilities in a current account with the RBI. We do not earn interest on cash reserves maintained with the RBI. The RBI may further increase the

CRR requirement as a monetary policy measure and has done so on numerous occasions. Increases in the CRR requirement could materially and

adversely affect our business, financial condition and results of operations.

In addition, under the Banking Regulation Act and the RBI regulations, our liabilities are subject to an SLR requirement, according to which 21.5%

of our net demand and time liabilities need to be invested in Government securities, state government securities and other securities approved by

the RBI from time to time. In our experience, these securities generally carry fixed coupons. When interest rates rise, the value of these fixed

coupon securities depreciates. We cannot assure you that investments in such securities will provide returns better than other market

instruments. Further, any increase in the CRR and SLR requirements would reduce the amount of cash available for lending, which may materially

and adversely affect our business, financial condition and results of operations.


29

We face maturity mismatches between our assets and liabilities. Our funding is primarily through short-term and medium-term deposits, and if

depositors do not roll over deposited funds on maturity or if we are unable to continue to increase our deposits, our business could be adversely

affected.

Most of our funding requirements are met through short-term and medium-term funding sources, primarily in the form of deposits. A portion of

our assets have long-term maturities, creating a possibility for funding mismatches.

In our experience, a substantial portion of our customer deposits have been rolled over on maturity and have been, over time, a stable source of

funding. However, if a significant portion of our depositors do not roll over deposited funds upon maturity or do so for a shorter maturity than

that of our assets, which tend to have medium to long-term maturities, our liquidity position could be adversely affected. We may be forced to

pay higher interest rates in order to attract or retain further deposits.

Our ability to raise fresh deposits and grow our deposit base depends in part on our ability to expand our network of branches.Branch expansion

plans can be undertaken subject to the fulfilment of the conditions stipulated by RBI.There is no assurance that we will be able to comply with

conditions to meet our requirement of branch expansion to achieve the desired growth in deposit base.

If we fail to sustain or achieve the growth rate of our deposit base, including our CASA base, our business, liquidity position and financial condition

may be adversely affected

We have concentrations of loans to and deposits from certain customers, which expose us to risk of defaults by these borrowers and premature

withdrawal of deposits by these depositors that could materially and adversely affect our business, financial condition and results of

operations.

As of March 31, 2015 our advances to the 20 largest borrowers accounted for approximately 13.50% (i.e. 5962.53 Crores) compared to March 31,

2014 our advances to the 20 largest borrowers accounted for approximately 17.02% (i.e. 6,194.37 Crores). We cannot assure you that there will

not be any default or delay in payments of interest or principal from these borrowers.

As of March 31, 2015 our deposits from the 20 largest depositors accounted for approximately 8.93% (i.e.4634.12 Crores) of our total deposits,

compared to March 31, 2014 our deposits from the 20 largest depositors accounted for approximately 10.77% (i.e.5,112.88Crores) of our

totaldeposits respectively. We cannot assure you that there will not be any premature withdrawals or non-renewal of deposits from these

depositors.

In the event that any of the above risks materialise, our financial condition and results of operations may be adversely affected.


30

Deterioration in the performance of any industry sector in which we have significant exposure may materially and adversely affect our financial

condition and results of operations.

Our total exposure to borrowers is dispersed across various industry sectors, the most significant of which are infrastructure; basic metal and

metal products; and textiles

Despite monitoring our level of exposure to sectors and borrowers, any significant deterioration in the performance of a particular sector driven

by events not within our control, such as natural calamities, regulatory action or policy announcements by central or state government

authorities, would adversely impact the ability of borrowers within that industry to service their debt obligations to us. As a result, we would

experience increased delinquency risk, which may materially and adversely affect our business, financial condition and results of operations.

We cannot assure you that we will be able to diversify our exposure over different industry sectors in the future. Failure to maintain diverse

exposure resulting in industry sector concentration may adversely impact our business, financial condition and results of operations, in case of any

significant deterioration in performance of such industry sector.

Materialization of contingent liabilities could adversely affect our financial condition.

The contingent liabilities have arisen in the normal course of our business and are subject to the prudential norms as prescribed by the RBI. If any

of these contingent liabilities materialize, our business, financial condition and results of operations could be materially and adversely affected.

We could be subject to volatility in income from our treasury operations, which could have a material adverse effect on our results of

operations, cash flows and our business.

Our treasury operations contributed 22.8%, of our total income during the financial year2015. Our income from treasury operations comprises

interest and dividend income from investments, profit from sale of investments and income from our foreign exchange operations. Our treasury

operations are vulnerable to changes in interest rates, exchange rates, equity prices and other factors. Although we have operational controls and

procedures in place for our treasury operations, such as counterparty limits, position limits, stop loss limits and exposure limits, that are designed

to mitigate the extent of such losses, there can be no assurance that we will not incur losses in the course of our proprietary trading on our fixed

income book held in the HFT and AFS portfolios. Any such losses could adversely affect our business, financial condition and results of operations.

Internal or external fraud and misconduct by our employees could adversely affect our reputation, business, results of operations and financial

condition.


31

In the past, we have experienced acts of fraud and misconduct committed by our employees. For further details in relation to the fraud and

misconduct please refer page 70 of this Disclosure Document. Misconduct by our employees could include binding us to transactions that exceed

authorised limits or present unacceptable risks or hiding unauthorised or unlawful activities from us.

Employee misconduct could also involve the improper use or disclosure of confidential information, which could result in regulatory sanctions and

serious reputational or financial harm, including harm to our brand. It is not always possible to deter misconduct by employees and the

precautions we take and the systems we have put in place to prevent and deter such activities may not be effective in all cases. Any instances of

such misconduct or fraud could adversely affect our reputation, business, results of operations and financial condition.

Weaknesses, disruption or failures in IT systems could adversely impact our business.

We are heavily reliant on IT systems in connection with financial controls, risk management and transaction processing. The increasing size of our

operations, which use automated control and recording systems for record keeping, exposes us to the risk of errors in control and record keeping.

Given our high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our

dependence upon automated IT systems to record and process transactions may further increase the risk that technical system flaws will result in

losses that are difficult to detect. As a result, we face the risk that the design of our controls and procedures may prove inadequate thereby

causing delays in detection or errors in information.

Our on-line delivery channels are subject to various risks such as network connectivity failure, information security issues and browser

compatibility issues. We may also be subject to disruptions of our IT systems, arising from events that are wholly or partially beyond our control

(including, for example, damage or incapacitation by human error, natural disasters, electrical or telecommunication outages, sabotage, computer

viruses, hacking, cyber-attacks or similar events, or loss of support services from third parties such as internet backbone providers). So far, we

have not experienced widespread disruptions of service to our customers, but there can be no assurance that we will not encounter disruptions in

the future due to substantially increased number of customers and transactions, or for other reasons. In the event we experience systems

interruptions, errors or downtime (which could result from a variety of causes, including changes in customer use patterns, technological failure,

changes to systems, linkages with third party systems and power failures), this may give rise to deterioration in customer service and to loss or

liability to us and may materially and adversely affect our business, financial condition and results of operations.

We have established and maintain a comprehensive disaster recovery centre in Bengaluru as part of our risk management measures. However, if

for any reason the switch over to the back-up system does not take place or if a calamity occurs in both Kochi and Bengaluru such that our

business is compromised at both centres, our operations would be materially and adversely affected.


32

Further, we are dependent on various external vendors for certain non-core elements of our operations, including implementing IT infrastructure

and hardware, branch roll-outs, networking, managing our data centre and back-up support for disaster recovery and are exposed to the risk that

external vendors or service providers may be unable to fulfil their contractual obligations to us (or will be subject to the same risk of fraud or

operational errors by their respective employees) and the risk that their (or their vendors’) business continuity and data security systems prove to

be inadequate. Failure to perform any of these functions by our external vendors or service providers could materially and adversely affect our


Our risk management policies and procedures may not adequately address unidentified or unanticipated risks.

We have devoted significant resources to develop our risk management policies and procedures and aim to continue to do so in the future.

Despite this, our policies and procedures to identify, monitor and manage risks may not be fully effective. Some of our risk management systems

are not automated and are subject to human error. Some of our methods of managing risks are based upon the use of observed historical market

behaviour. As a result, these methods may not accurately predict future risk exposures, which could be significantly greater than those indicated

by the historical measures.

To the extent any of the instruments and strategies we use to hedge or otherwise manage our exposure to market or credit risk are not effective,

we may not be able to mitigate effectively our risk exposures in particular market environments or against particular types of risk. Further, some

of our risk management strategies may not be effective in a difficult or less liquid market environment, where other market participants may be

attempting to use the same or similar strategies to deal with the difficult market conditions. In such circumstances, it may be difficult for us to

reduce our risk positions due to the activity of such other market participants. Other risk management methods depend upon an evaluation of

information regarding markets, clients or other matters. This information may not in all cases be accurate, complete, up-to-date or properly

evaluated.

Our investment and interest rate risk are dependent upon our ability to properly identify, and mark-to-market changes in the value of financial

instruments caused by changes in market prices or rates. Our earnings are dependent upon the effectiveness of our management of changes in

credit quality and risk concentrations, the accuracy of our valuation models and our critical accounting estimates and the adequacy of our

allowances for loan losses.

To the extent our assessments, assumptions or estimates prove inaccurate or not predictive of actual results, we could suffer higher than

anticipated losses. See also “−If we are not able to control the level of NPAs in our portfolio effectively or if we are unable to improve our

provisioning coverage as a percentage of gross NPA, our business may be adversely affected” above.


33

Management of operations, legal and regulatory risks requires, among other things, policies and procedures to properly record and verify a large

number of transactions and events, and these policies and procedures may not be fully effective. As we seek to expand our operations, we also

face the risk that we may be unable to develop risk management policies and procedures that are properly designed for new business areas or to

manage the risks associated with the growth of our existing businesses. Implementation and monitoring may prove challenging with respect to

businesses that we plan on developing. If we are unable to develop and implement effective risk management policies, it could materially and

adversely affect our business, financial condition and results of operations.

If we fail to effectively manage our growth, it may adversely impact our business.

In the past, we have witnessed rapid growth in both our business and our branch network. The number of branches has grown from 750 as of

March 31, 2013 to794 as of March 31, 2014 and to 822 as of March 31, 2015. Our total assets have grown from 49,795.03 crores as of March 31,

2013 to 54,985.97 crores as of March 31, 2014and to 59,116.32 crores as of March 31, 2015

Our ability to effectively manage our growth depends primarily upon our ability to manage key issues, such as selecting and retaining skilled

manpower, establishing additional branches, achieving cost efficiencies, maintaining an effective technology platform that can be continually

upgraded, developing profitable products and services to cater to the needs of our existing and potential customers, improving our risk

management systems, developing a knowledge base to face emerging challenges and ensuring a high standard of customer service.

A significant reduction in our credit rating could adversely affect our business, financial condition, cash flows and results of operations.

Our debt is rated by various agencies. India Ratings has rated SIB Bonds 2009 issued by us in the form of a subordinated debt instrument as “IND

A+”. CARE Ratings has also rated SIB Bonds 2009 as “CARE A+.” Further, the Bonds proposed to be issued by the bank have been assigned a rating

of “CARE A+” by CARE and “IND A+” by India Ratings & Research Private Limited. Any downgrade in our credit ratings may increase interest rates

for refinancing our outstanding debt, which would increase our financing costs, and adversely affect our future issuances of debt and our ability to

raise new capital on a competitive basis, which may adversely affect our business, financial condition, cash flows and results of operations.

The Indian banking industry is intensely competitive and our inability to compete effectively may adversely affect our business.

We face intense competition from Indian and foreign commercial banks in all our products and services. Some Indian banks have larger customer

and deposit bases, larger branch networks and wider capital base than we have. Further, some banks have recently experienced higher growth,

achieved better profitability and increased their market shares relative to us. We also face competition in some or all of our products and services

from NBFCs, mutual funds and other entities operating in the financial sector.


34

Liberalisation of the Indian financial sector could also lead to a greater presence or new entries of Indian and foreign banks offering a wider range of products and services, which could adversely affect our competitive environment. The RBI has recently issued the Guidelines on Licensing of New Banks in the Private Sector and intends to issue licences on an on-going basis, subject to the RBI’s qualification criteria. Thus far, the RBI has granted “in-principle” approval to two applicants to set up new banks under these guidelines. Further guidelines for licensing of small banks in private sector and licensing of payment banks was released by RBI on 27th November 2014.So far RBI had received 72 applications for small bank license and 41 applications for payment bank license. The issuance of new banking license may increase competition in banking sector and which my adversely affect our business. We also compete with foreign banks with operations in India. These competitors include a number of large multinational banks and financial institutions. In November 2013, the RBI released a framework for the setting up of wholly owned subsidiaries in India by foreign banks. The framework encourages foreign banks to establish a presence in India by granting rights similar to those received by Indian banks, subject to certain restrictions and safeguards. Under the current framework, wholly-owned subsidiaries of foreign banks are allowed to raise Rupee resources through issue of non-equity capital instruments. Further, wholly-owned subsidiaries of foreign banks may be allowed to open branches in Tier 1 to Tier 6 centres (except at a few locations considered sensitive on security considerations) without having the need for prior permission from RBI in each case, subject to certain reporting requirements. The guidelines may result in increased competition from foreign banks. In addition, the moderation of growth in the Indian banking sector is leading to greater competition for business opportunities. We may face attrition and difficulties in hiring at senior management and other levels due to competition from existing Indian and foreign banks, as well as new banks entering the market. Due to such intense competition, we may be unable to execute our growth strategy successfully and offer competitive products and services, which may materially and adversely affect our business, financial condition and results of operations.

We are involved in various legal proceedings, which if determined against us, could have an adverse impact on our financial condition, cash

flows and results of operations.

Our Bank is involved in various civil, criminal, taxation and regulatory proceedings. Most of these proceedings are incidental to our business and

banking operations and have generally arisen in relation to recovery of dues from our borrowers, claims and consumer complaints from our

customers and in relation to certain claims from dismissed employees.

We cannot assure you that these legal proceedings will be decided in our favour. In addition, should any developments arise, such as changes in

Indian law or rulings against us by the regulators, courts or tribunals, we may need to make provisions in our financial statements, which could

increase our expenses and current liabilities. If we fail to successfully defend our claims or if our provisions prove to be inadequate, our financial

condition and results of operations could be adversely affected.


35

We are exposed to fluctuations in foreign exchange rates.

We undertake various foreign exchange transactions to hedge our customers’ business and for proprietary trading, which exposes us to various

kinds of risks, including credit risk, market risk and exchange risk. We have adopted a market risk management policy, which is also articulated in

our asset liability management policy, to mitigate risks through various risk limits such as counterparty limits, country wide exposure limits,

daylight limits, overnight open position limits, aggregate gap limits and value at risk limits. Adverse movements in foreign exchange rates may also

impact our borrowers negatively, which may in turn impact the quality of our exposure to these borrowers. Volatility in foreign exchange rates

could materially and adversely affect our financial condition and results of operations.

We are exposed to possible losses arising out of derivative transactions, which could have a material adverse effect on our financial condition

and results of operations.

We undertake foreign exchange forward contracts for our customers and hedge them with other banks. We are also engaged in the proprietary

trading of foreign exchange forward contracts.

Our proprietary derivative transactions are subject to regular monitoring by our risk assessment committee to ensure compliance with limits

prescribed by the RBI. However, we cannot assure you that we will be able to anticipate the movement in foreign exchange or at all. Failure to

anticipate the foreign exchange movement could cause us to incur losses in such derivatives or forward contracts, thereby adversely affecting our

financial condition and results of operations.

We lease most of our business premises and any failure to renew such leases or their renewal on terms unfavourable to us may affect our


Most of our business premises are leased. A failure to renew these lease agreements or a failure to renew these lease agreements on terms

favourable to us may require us to relocate operations. If we are required to relocate operations, this may cause a disruption in our operations or

result in increased costs, or both, which may adversely affect our business, financial condition and results of operations.

We may also face the risk of being evicted in the event that our landlords allege a breach on our part of any terms under these lease agreements.

This may cause a disruption in our operations or result in increased costs, or both, which may adversely affect our business, financial condition and

results of operations.

We may face labour disruptions that would interfere with our operations and have an adverse impact on our business, financial condition, cash

flows and results of operations.


36

We are exposed to the risk of strikes and other industrial actions. Most of our employees up to Scale IV are unionised and are members of South

Indian Bank Officer’s Association and South Indian Bank Employees Association. While our relations have been good with our employees, we

cannot guarantee that our employees will not undertake or participate in strikes, work stoppage or other industrial action in the future. Any such

event could disrupt our operations, possibly for a significant period of time, result in increased wages and other benefits or otherwise have an

adverse effect on our business, financial condition, cash flows and results of operations.

We depend on the accuracy and completeness of information about customers and counterparties and any misrepresentation, errors or

incompleteness of such information could cause our business to suffer.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to

us by or on behalf of customers and counterparties, including financial statements and other financial information. We may also rely on certain

representations as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent

auditors. For example, in deciding whether to extend credit, we may assume that a customer’s audited financial statements conform to generally

accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the

customer.

The difficulties associated with the inability to accurately assess the value of collateral and to enforce rights in respect of collateral, along with the

absence of such accurate statistical, corporate and financial information, may decrease the accuracy of our assessments of credit risk, thereby

increasing the likelihood of borrower default on our loan and decreasing the likelihood that we would be able to enforce any security in respect of

such a loan or that the relevant collateral will have a value commensurate to such a loan.

Difficulties in assessing credit risks associated with our day-to-day lending operations may lead to an increase in the level of our non-performing

and restructured assets, which could materially and adversely affect our business, financial condition and results of operations.

Our introduction of new products and services may not be successful and, as a result our reputation could be harmed.

We may incur substantial costs to expand our range of products and services and cannot guarantee that such new products will be successful once

they are offered as a result of circumstances beyond our control, such as general economic conditions, or due to inherent shortcomings of such

products and services. In addition, we may not correctly anticipate our customers’ needs or desires, which may change over time. In the event that

we fail to develop and launch new products or services successfully, we may lose any or all of the investments that we have made in promoting

them, and our reputation with our customers would be harmed. In addition, if our competitors are better able to anticipate the needs of those

individuals in our target market, our market share could decrease and our business could be adversely affected.


37

Our insurance coverage could prove inadequate to satisfy potential claims. If we were to incur a serious uninsured loss or a loss that

significantly exceeds the limits of our insurance policies, it could have a material adverse effect on our financial condition and results of

operations.

We have taken out insurance within a range of coverage consistent with industry practice in India to cover certain risks associated with our

business. We cannot assure you that our current insurance policies will insure us fully against all risks and losses that may arise in the future. Even

if such losses are insured, we may be required to pay a significant deductible on any claim for recovery of such a loss, or the amount of the loss

may exceed our coverage for the loss.

In addition, our insurance policies are subject to annual review, and we cannot assure you that we will be able to renew these policies on similar

or otherwise acceptable terms, or at all. If we were to incur a serious uninsured loss or a loss that significantly exceeds the limits of our insurance

policies, it could have a material adverse effect on our financial condition and results of operations.

B. Issuer Information

a. Name and address of the following:-

i. Registered Office of the Issuer

The South Indian Bank Ltd SIB House, T.B. Road, Mission Quarters, Thrissur- 680 001, Kerala, India. Ph: +91-487-2420020, 2420058, 2420113; Fax: +91 487 2442021 Email: [email protected]; [email protected]

ii. Corporate Office of the Issuer

The South Indian Bank Ltd SIB House, T.B. Road, Mission Quarters, Thrissur- 680 001, Kerala, India. Ph: +91-487-2420020, 2420058, 2420113;



38

Fax: +91 487 242442021 Email: [email protected]; [email protected]

iii. Compliance Officer of the Issuer

Shri. Jimmy Mathew Company Secretary The South Indian Bank Ltd Corporate Office, SIB House, Mission Quarters, Thrissur -680 001, Kerala, India. Ph No. 0487 – 2429333 Fax No. 0487 - 2424760 Email: [email protected]

iv. CFO of the Issuer

Shri. Gireesh C. P Chief Financial Officer (CFO) The South Indian Bank Ltd Corporate Office, SIB House, Mission Quarters, Thrissur -680 001, Kerala, India. Ph No. 0487 – 2429628 Fax No. 0487 - 2442021 Email: [email protected]

v. Arrangers& Escrow Agent

Kotak Mahindra Bank Limited Contact Person: Ram S, Senior Vice President, DCM 27BKC, Plot No. C-27 G-Block, BandraKurla Complex Mumbai-400051




39

Maharashtra, India Email: [email protected]

vi. Trustee of the Issue

IDBI Trusteeship Services Ltd. Asian Building, Ground Floor, 17, R.Kamani Marg, Ballard Estate, Mumbai-400001 Tel: +91-22-4080 7000 Fax: +91-22-6631 1776 Email: [email protected] Website: www.idbitrustee.com

vii. Registrar of the Issue

BTS Consultancy Services Pvt. Ltd M S Complex, 1st Floor, Plot No.8, Sastri Nagar, Near RTO / 200 Feet Road, Kolathur, Chennai–600099 Phone: 044–2556 5121 Fax No: 044 – 2556 5131 Email: [email protected]

viii. Credit Rating Agencies

Credit Analysis & Research Limited 4th Floor, Godrej Coliseum, Somaiya Hospital Road Off Eastern Express Highway, Sion(E), Mumbai- 400 022 Ph: +91-22-6754 3456

India Ratings & Research S 206, Manipal Centre, Dickenson Road, Bangalore 560 042. Ph: +91 80 4206 6191/92 Fax: +91 80 4206 6194



40

Fax: +91-22-6754 3457 Email: [email protected]

Email. www.indiaratings.co.in

ix. Auditors of the Issuer as on 30/06/2015

M/s S.R. Batliboi& Associates LLP Chartered Accountants 6th& 7th Floor – “A” Block, Tidel Park, (Module 601,701 & 702) No. 4, Rajiv Gandhi Salai, Taramani, Chennai – 600 113, India. Tel : +91 44 6654 8100 Fax : +91 44 2254 0120 Note: As per the RBI policy of compulsory rotation of auditors, M/s S.R. Batliboi& Associates LLP,Chartered Accountantsare not eligible for reappoint as they have completed the permissible term of 4 years. The shareholders of SIB during the 87th AGM held on 15.07.2015 have appointed the M/s Deloitte Haskins & Sells, Chartered Accountant as the statutory auditors of the Bank for the next 4 years. M/s Deloitte Haskins & Sells Chartered Accountants Chennai India

x. Legal counsel to the issue

M/s Khaitan& Co One Indiabulls Centre 13th Floor, Tower1 841 SenapatiBapat Marg Mumbai 400 013 Tele No 022 – 66365000


41

b. A brief summary of the business/ activities of the Issuer and its line of business containing at-least following information:-

i. Overview

We were incorporated on January 25, 1929 in Thrissur, Kerala, with the goal of providing a safe, efficient and service-

oriented repository of savings to the local community and to reduce the dependence of the business community on

moneylenders by providing need-based credit at a reasonable rate of interest. We became a scheduled bank in 1946.

We are one of the leading scheduled commercial banks in South India and offer a wide range of products and services to corporate and retail customers through a variety of delivery channels. We have a pan-India presence and as of June 30th, 2015, we had 828 branches and 1200 ATMs, located in 27 states and three union territories. As on March 31, 2015 we had no subsidiaries.

We have three main business lines:

Retail Banking;

Corporate Banking; and

Treasury Operations.

Our retail banking portfolio consists of savings, demand and time deposit services, housing loans, auto loans, educational loans, other personal loans, loans backed by gold, and other personal banking products. We also provide agricultural loans. We offer our customers a suite of technological products, including global debit cards, “anywhere banking” facilities, mobile banking, a Real-Time Gross Settlement System (“RTGS”), National Electronic Fund Transfer (“NEFT”) and Internet banking. We also distribute third party financial products, such as insurance (life and non-life) and mutual fund products. In addition, we provide depository services and are a depository participant for CDSL. We also sell gold bars and coins through our branches in Kerala, Tamil Nadu, Karnataka and Andhra Pradesh.


42

Our customer base is geographically and economically diverse, although most of our customers are in South India. We also serve the NRI market. We have remittance facilities for NRIs by way of draft-drawing arrangements and speed remittance facilities under the name SIB EXPRESS. We also provide managerial support to four exchange houses in the UAE to facilitate instantaneous credit of remittances from overseas by electronic transmission. OurSIB PravasiSwagath loan scheme caters for NRIs returning to India on a permanent basis.

We offer various banking products to our corporate and commercial customers, including term loans, short term loans, cash credit, working capital finance, export credit, bill discounting, line of credit, letters of credit and guarantees.

Our treasury operations comprise liquidity management by seeking to maintain an optimum level of liquidity, while complying with the CRR and the SLR. We maintain the SLR through a portfolio of central Government, state Government and Government-guaranteed securities that we actively manage to optimise yield and benefit from price movements. We are also involved in the trading of debt securities, equity securities and foreign exchange within permissible limits.

We have received numerous awards. Some of our more recent awards include Best Bank (Private Sector) in the BFSI (Banking, Financial Services and Insurance) Awards 2015 instituted by ABP News,prestigious Banking Technology Excellence Award (tenth Edition - 2014) for “Best It Team’ from IDBRT, Inspiring Work Places award from Banking Frontiers in 2014, Award from the Sunday Standard, instituted by the New Indian Express Group, for Best Banker (mid-sized) 2013, Best Private Sector Banker, Best Banker – All Round Expansion and Best Banker – Efficiency and Profitability. We also received the Prestigious IBA Banking Technology Award 2012-2013, the Business Excellence Award 2012-2013 instituted by the Trivandrum Chamber of Commerce and Industry. From the Institute for Development and Research in Banking Technology at its Banking Technology Excellence Awards, we received the “Best Bank Award among Small Banks for IT Implementation and Management” in 2011 and the “Best Bank Award among Small Banks for Managing IT Risk” in 2012. We also received awards for “Asset Quality” and “Priority Sector Lending” at the Dun & Bradstreet Banking Awards 2010-2011. We were named “India's Best Bank, 2010” in the small bank category (balance sheet size less than Rs. 300,000.0 million) by Business World and PricewaterhouseCoopers Best Banks Survey, 2010


43

Performance:

Our gross advances plus deposits aggregated were Rs. 83,894.19 crores, Rs. 89638.13crores and total assets were Rs. 54,985.97 crores, Rs. 59116.32 crores as of March 2014 and 2015 respectively. Our total income was Rs. 5383.53 crores and Rs. 5783.29crores for the financial years 2014 and 2015 respectively. Our net profit (after tax) was Rs. 507.50crores and Rs. 307.20crores for the financial years 2014 and 2015, respectively.

Deposits

Total Deposits of the bank grew by Rs. 4421.40 crores from Rs. 47,491.09 crores as on 31.03.2014 to Rs. 51,912.49 crores as on 31.03.2015 registering a growth of 9.31%. Of the total growth in Deposits, Term Deposit increased by Rs. 3560.00crores from Rs.37666.19crores as on 31.03.2014 to Rs.41226.19 crores as on 31.03.2015, which registered a growth of 9.45% in percentage terms and CASA Deposits increased by Rs. 861.39crores from Rs. 9,824.90 crores as on 31.03.2014 to Rs. 10,686.29crores as at 31.03.2015 registering a growth of 8.77%. Advances

Gross Advances of the bank grew by Rs. 1322.54 crores from Rs. 36403.10 crores as on 31.03.2014 to Rs. 37725.64 crores as on 31.03.2015 registering a growth of 3.63%.

Income:

Total Income. Our total income increased by 7.43% to Rs.5783.29crores for the financial year 2015 from Rs. 5,383.53

crores for the financial year 2014as a result of a 5.41% increase in interest earned as well as 34.90% increase in other

income.

Interest Earned. Our interest earned increased by 5.41% to Rs. 5286.22crores for the financial year 2015 from Rs.

5015.06crores for the financial year 2014. The primary reasons for this increase are discussed below.


44

Interest received and discounts on advances and bills increased by 5.15% to Rs. 4152.97crores for the financial year

2015 from Rs. 3949.74crores for the financial year 2014, due to a 9.65% increase in average advances to Rs.

35,272.74crores for the financial year 2015 from Rs. 32168.97crores for the financial year 2014, which was partially

offset by a decrease in average yield on advances to 11.77% during the financial year 2015 from 12.28% during the

financial year 2014.

Income from investments increased by 10.40% to Rs. 1053.73crores for the financial year 2015 from Rs. 954.48crores for the financial year 2014, which was mainly due to a 11.05% increase in average investments toRs. 14638.79crores for the financial year 2015 from Rs. 13182.24crores for financial year 2014, in spite of decrease in the average yield on investments from 7.24% for the financial year 2014 to 7.20% for the financial year 2015.

Interest on other inter-bank funds decreased by 28.25% to Rs. 79.53crores for the financial year 2015 from Rs. 110.85crores for the financial year 2014. This decrease was primarily due a 18.18% decrease in average inter-bank funds to Rs. 980.08crores for the financial year 2015 from Rs. 1,197.83crores for the financial year 2015, which was mainly due todecrease in the average yield on average inter-bank funds from 9.25% for the financial year 2014 to 8.11% for the financial year 2015.

Other Income. Our other income increased by 34.90% to Rs.497.07crores for the financial year 2015 from Rs. 368.46

crores for the financial year 2014. The primary reasons for this increase are discussed below.

Miscellaneous income increased by 18.37% to Rs. 255.34crores for the financial year 2015 from Rs. 215.74 crores for the financial year 2014. This increase was primarily due to a 16.93 % increase in transaction related income (such as loan syndication fees and other transaction charges) from Rs.107.70 crores in financial year 2014 to 125.94 crores in financial year 2015 and a 26.13% increase in income from technology products (primarily due to card operation) from Rs. 67.76 crores in financial year 2014to 85.47crores in financial year 2015 and a 903.33% increasein interest income from IT refund from Rs. 0. 90 crores in financial year 2014 to9.03crores in financial year 2015.

Net profit on foreign exchange transactions decreased by 9.45% to Rs. 31.59crores for the financial year 2015 from Rs. 34.89crores for the financial year 2014, which was primarily due to revaluation loss and decrease in the volume of foreign exchange transactions.


45

Net profit on sale of investments increased by 135% to Rs.163.99crores for the financial year 2015 from Rs. 69.88 crores for the financial year 2014, which was primarily due to increased profit on sale of Government securities during the financial year 2014-15 on account of favourable yield movement.

Commission income decreased by 1.25% to Rs. 46.55crores for the financial year 2015 from Rs. 47.15crores for the financial year 2014 due to adecrease in business volumes.

Expenditure

Our total expenditure increased by 12.31% to Rs. 5476.09 crores for the financial year 2015 from Rs. 4,876.03 crores for

the financial year 2014 as a result of a 8.40% increase in interest expended, a 11.15% increase in operating expenses, a

166.43% increase in provisions (other than tax) and contingencies, which was partially offset by 27.41% decrease in

provision for tax.

Interest Expended. Our interest expended increased by 8.40% to Rs 3,919.99 crores for the financial year 2015 from

Rs.3,616.29crores for the financial year 2014. The primary reasons for this increase are discussed below.

Interest paid on deposits increased by 6.08% to Rs. 3661.78 crores for the financial year 2015 from Rs. 3,451.82 crores for the financial year 2014, which was primarily due to a 8.17% increase in average deposits to Rs. 47151.34crores for the financial year 2015 from Rs. 43588.38crores for the financial year 2014, which was partially offset by the decrease in the average cost of deposits from 7.92% for the financial year 2014 to 7.77% for the financial year 2015.

Interest paid on RBI / inter-bank and other borrowings increased by 29.61% to Rs. 121.04crores for the financial year 2015 from Rs. 93.39crores for the financial year 2014, which was due to a 25.28% increase in average RBI / inter-bank and other borrowings to Rs. 2381.90crores for the financial year 2015 from Rs. 1901.29 crores for the financial year 2014 and an increase in the average cost of average RBI / inter-bank and other borrowings from 8.65% for the financial year 2014 to 10.84% for the financial year 2015.

Operating Expenses.Our operating expenses increased by 11.15% to Rs. 981.30 crores for the financial year 2015 from

Rs. 882.89 crores for the financial year 2014. The primary reasons for this increase are discussed below.


46

Payments to and provisions for employees increased by 19.80% to Rs.633.69crores for the financial year 2015 from Rs. 528.96 crores for the financial year 2014. The primary reasons for this increase was due to an increase in the number of employees to 7825 as of March 31, 2015 from 7,111 as of March 31, 2014 as well as increases in salaries and retirement benefits for employees due to the Xthbipartite settlement.

Our other operating expenses decreased by 1.79% to Rs. 347.60crores for the financial year 2015 from Rs. 353.93 crores for the financial year 2014, which was mainly due to reversal ofexcess depreciation due to change in accounting policy as follows :-

56.59 % decrease in printing and stationery to Rs. 10.52crores for the financial year 2015 from Rs. 24.24crores for the financial year 2014.

Provisions and Contingencies. Our provisions and contingencies increased by 52.53% to Rs.574.60crores for the

financial year 2014 from Rs. 376.84 crores for the financial year 2014. The primary reasons for this increase are

discussed below

Our Provisions (Other than Taxes) and Contingencies. Our provisions (other than tax) and contingencies increased by

166.43% to Rs414.05crores for the financial year 2015 from Rs. 155.41 crores for the financial year 2014. The primary

reasons for this increase are discussed below.

Our provision for NPAs/NPI’s increased by 63.06% to Rs. 223.58crores for the financial year 2015 from Rs. 137.12 crores

for the financial year 2014. Our provision coverage ratio decreasedto 60.63% as of March 31, 2015 from 62.71% as of

March 31, 2014. Our gross NPA ratio has increasedto 1.71% as of March 31, 2015 from 1.19% as of March 31, 2014 and

our net NPA ratio has also increased to 0.96% as of March 31, 2015 from 0.78% as of March 31, 2014.

Our provision for standard assets increased by 0.90% to Rs. 31.37crores for the financial year 2015 from Rs. 31.09

crores for the financial year 2014. The primary reason for this increase was in Advance portfolio as compared to FY

2014.


47

Our provision for restructured assets increased by 235.70% to Rs. 32.55crores for the financial year 2015 from Rs. 9.70 crores for the financial year 2014. The primary reason for this is on account of higher incremental restructured advance in 2015 as compared to that of FY 2014.

Our provision for depreciation in the value of investments in the financial year 2015 has increased to Rs 13.72 crores,compared to write back during the previous financial year 2014Rs 28.46 crores, which was due to lower provision requirement on account of favourable market movement in the financial year 2014 compared to FY 2015.

Provision for TaxOur total provision for tax decreased by 27.41% to Rs. 160.75croresfor the financial year 2015from Rs.

221.44 croresfor the financial year 2014. This decrease was primarily due to our provision for current tax decreasedby

16.71% to Rs. 201.89crores in the financial year 2015 from Rs. 242.38 crores in the financial year 2014, which was

primarily due to an 38.87% decrease in our profit before tax to Rs. 445.60crores for the financial year 2015 from Rs.

728.94 crores for the financial year 2014,.

Profit

As a result of the above, our net profit decreased by 39.47% to Rs.307.20crores for the financial year 2015 from

Rs.507.50crores for the financial year 2014.

Capital Adequacy

The Bank is subject to the capital adequacy guidelines stipulated by RBI, which are based on the framework of the Basel

Committee on Banking Supervision. As per Basel III guidelines, the Bank is required to maintain a minimum Capital to

Risk Weighted Assets Ratio (CRAR) of 9% {11.5% including Capital Conservation Buffer (CCB)}, with minimum Common

Equity Tier I (CET1) of 5.5% (8% including CCB) as on 31st March 2019. These guidelines on Basel III are to be

implemented beginning 1st April 2013 in a phased manner, the minimum capital required to be maintained by the Bank

for the year ended 31st March 2014 is 9% with minimum Common Equity Tier 1 (CET1) of 5%.

The bank is following standardized approach, Standardized Duration approach and Basic Indicator approach for

measurement of capital charge in respect of credit risk, market risk and operational risk respectively. Besides,

computation of CRAR under the Pillar I requirement, the Bank also periodically undertakes stress testing in various risk


48

areas to assess the impact of stressed scenario or plausible events on asset quality, liquidity, profitability and capital

adequacy. The bank conducts Internal Capital Adequacy Assessment Process (ICAAP) on annual basis to assess the

sufficiency of its capital funds to cover the risks specified under Pillar- II of Basel guidelines. The adequacy of banks‟

capital funds to meet the future business growth is also assessed in the ICAAP document.

ii. CRAR of the Bank

CRAR of the Bankunder Basel II Guidelines dipped from 12.53% as on 31.03.2014 to 12.06% as on 31.03.2015 this was

mainly due to increase in credit risk weighted assets on account of increase in advance portfolio and restructured

accounts and also on account of increase in capital charge for market risk due to change in investment portfolio. The

Capital Adequacy Ratio of the Bank under Base III guidelines stands at 12.01 % as at 31.03.2015.


49

iii. Corporate Structure

The Corporate Structure of the Bank as on June 30, 2015 is as follows

ORGANISATION CHART AS ON 30.06.2015

BOARD

M D & C E O Mr.V.G.Mathew

S V P (ADMIN) Mr. Joseph George Kavalam

S V P (OPERATIONS) Mr.Varughese A G

C G M Mr. Thomas Joseph K

G M (Vigilance) Mr. Bobby James

Secretary to MD Mr. George K Varghese


50

S V P (ADMIN) Mr. Joseph George Kavalam

G M (Inspection &

Vigilance) Mr. Bobby James

D G M (C F M) Mr.Gireesh

C P

G M (MARKETING) Mr. Raphael T J

A G M (Security) Capt.ArvindKum

arKamboj

A G M (Secretarial)

Mr. Jimmy Mathew

A G M (Inspection) Mr.Rajan P V

DGM (Inspection)

Mr. Jose P Varghese

C M (2) (Inspection)

A G M (2) (Personnel)

Mr. Roy Dominic P Mr. Jacob M P

C M (2) (S W D)

C M (2) (Personnel)

D G M (2) (Marketing) Mr. Sony A Ms Usha L

A G M (2) (Marketing) Mr. Jose M T

Mr.Raghunath A

C M (6) (Marketing)

D G M (S T C) Mr.Mohanan K.

C M (C F M)

G M (ADMIN.) Mr. Paul V L

C M (OMT)

C M (Vigilance)

C M (2) (S T C)

A G M (C F M) Mr. Paul Antony

Maliakal


51

S V P (OPERATIONS) Mr.Varughese A G

G M (ADMIN.) Mr.Paul V L

D G M (P & M)

Mr. Jose Paul P

C M (P & M)

C M (2) (P & D)

D G M (Compliance) Ms.Chithra H

G M (Treasury)

Mr.Murali N A

A G M (2) (Treasury)

Mr.Chandramgethen K K Mr.Purushothaman K S

G M (DICT)

Mr. Raphael T J

D G M (2) (DICT)

Mr.Shibu K Thomas Mr.SreekumarChengath

C M (12) (DICT)

A G M (2) (DICT)

Mr. Davis Jose Thettayil Mr. Jose Sebastian E

A G M (Hadi) Mr. Paul A F

D G M (IRMD)

Mr.Sibi P M

A G M (IRMD)

Mr.Biju E Punnachalil

C M (IRMD)

C M (3) (Compliance)

D G M (P & D) Mr. Jose Manuel

A G M (P & D)

Mr.Santhosh Arnold John M

A G M (2) (Compliance) Mr. Jose K L

Mr. Jacob E T

A G M (IBD)

Mr. Peter C A


52

GM CORPORATE

Mr.Benoy Varghese

DGM RECOVERY

Mr. Paul Thaliath

GM RETAIL Mr. John Thomas

DGM CORPORATE

Mr.Balakrishnan K

N

CM SANCTION (2) CM LAM SM SAM

AGMMONITORING

Ms.Geetha K

AGM RECOVERY Mr. Ram Mohan V

C M RECOVERY

AGM MSME Mr. Prakash M K

DGM PS& EXP Mr.Krishnadas P B

CM OTHERRETAIL

CM PS, MIS&GOVTSCHEME

CM-CPPI

AGM-CREDIT, MARK. & INTEL.

Mr.Babu T L

DGM (Legal) Mr. Mohan T M

AGM (Legal) Mr.Biby Augustine

GM (Marketing) Mr. Raphael T J

DGM (Retail Hub)

Ms.Usha L

CM (5) (Retail Hub)

CGM Mr. Thomas Joseph K

CM CDMC


53

iv. Key Operational and Financial Parameters for the last 3 Audited Years

Key Operational and Financial Parameters of the Bank for the last 3 Audited

years and Unaudited Results up to 30.06.2015 on a standalone basis are as

under (Rs.incrore)

Particulars Up to 30.06.2015 For FY

2014-15 For FY

2013-14 For FY

2012-13 For FY

2011-12

Capital 135.02 135.02 134.39 133.85 113.37

Reserves & Surplus 3519.72 3,454.39 3233.65 2869.76 2054.11

Net worth 3360.93 3294.87 3123.94 2726.09 1884.23

Deposits 52,323.75 51,912.49 47491.09 44262.3

0 36500.53

Borrowings 1,660.43 2,232.47 2730.78 1284.55 588.19

Other Liabilities & Provisions (including employees stock option outstanding)

1301.50

1,381.95 1396.06 1244.57 1113.85

Cash and Balances with Reserve Bank of India

2,417.08

2,441.58 2200.81 1696.70 1571.84

Balances with Banks and money at call and short notice

824.66

1,153.50 1017.12 2639.20 1068.70

Investments 15,994.37

16,717.16 14351.78 12523.4

7 9399.87

Advances 38,242.97

37,391.64 36229.86 31815.5

3 27280.74

Fixed Assets 478.43

479.05

412.20 396.12 377.50

Other Assets 982.92

933.39 774.20 724.01 671.40

Contingent Liabilities 21006.74 27,220.07

19134.96 10583.36

5458.05

Bills for Collection 588.07 554.44 696.25 479.14 425.89

Interest earned 1,376.68

5,286.22

5015.06 4434.29 3583.42

Other Income 103.83

497.07

368.46 334.93 247.07

Interest expended 1,036.34

3,919.99

3616.29 3153.46 2561.69

Operating expenses 263.28

981.30

882.89 767.17 617.29


54

Provisions and contingencies (including tax)

115.60

574.80

376.84 346.31 249.86

Net Profit for the Period

65.29

307.20 507.50 502.27 401.66

Gross NPA (%) 1.85

1.71 1.19 1.36 0.97

Net NPA (%) 1.21

0.96 0.78 0.78 0.28

Tier I Capital Adequacy Ratio (Basel III (%)

10.04

10.43 10.79 12.05* 11.54*

Tier II Capital Adequacy Ratio (Basel III) (%)

1.43 1.58 1.63 1.86* 2.46*

* As per Basel II Norms

Gross Debt: Equity Ratio of the Company :-( Based on figures as on 30thJune

2015)

Particulars Before the issue

of bonds After the issue of

bonds

Total Borrowing (Rs. Crore) 1,660.43

2160.43

Net worth (Rs. Crore) 3360.93 3360.93

Borrowings / Equity Ratio 0.49 0.64

Note: Borrowings does not include deposits

v. Project Cost and means of financing, in case of funding of new projects

The funds being raised by the Issuer through present issue of Tier II bonds are not meant for financing any particular project. The Bank shall utilize the proceeds of the issue for augmenting its Tier II and overall capital base and for the purpose of its regular business activities & other associated business objectives.

c. A brief history of the Issuer since its incorporation giving details of its activities:-

The South Indian Bank Limited was incorporated on January 25, 1929, under the Companies Act 1913 by a group of prominent enterprising citizens of Thrissur town in Kerala. The Bank came into being during the Swadeshi movement. The establishment of the bank was the fulfilment of the dreams of a group of enterprising men who joined together at Thrissur, a major town (now known as the Cultural Capital of Kerala), in the erstwhile State of Cochin to provide for the people a safe, efficient and service oriented


55

repository of savings of the community on one hand and to free the business community from the clutches of greedy money lenders on the other by providing need based credit at a reasonable rates of interest. It is one of the leading scheduled commercial banks in the Private Sector, with a good track record and pan India presence. In 1960 when there was crisis in the banking industry SIB took over 15 other Banks. Over the years, SIB has steadily grown and as at 30th June 2015 the bank has a network of 828branches and 1200 ATMs spanning 27 states and 3 Union Territories.SIB has been following a policy of upgrading technologies, expanding and modernizing its network of branches to meet the growing demands of customer service and reach. SIB is the first amongst all the Private Sector banks in Kerala to open a currency chest on behalf of Reserve Bank of India. A team of dedicated and qualified staff is managing the day-to-day affairs of SIB. In order to keep its employees abreast of the changes in banking and trade scenario, SIB regularly conducts staff training programs through its own staff training college. In addition SIB deputes its officers for training at Banker's Training College, RBI Training College (College of agriculture banking,Pune), National Institute of Bank Management, Pune etc. SIB has successfully completed its public issue in October 1998, and rights issue during September 2004, which led to its paid up capital expanding to 47.68 crores. During 2005-06, 2.27 crores equity shares were issued by way of FPO on account of which the paid up share capital was increased to Rs. 70.40 crores. In 2007-08, Qualified Institutional Placement of equity shares 2 crores took the share capital to 90.41 crores. In 2008-09, bank had issued 2.26 crores bonus shares to raise the capital to Rs. 113.01crores. During FY 2012-13, the bank again raised its paid up share capital by Rs.20 crores by way of qualified Institutional Placement, on account of this the paid up share capital increased to Rs133.85 crores. Presently the paid up share capital of the bank as on 30.06.2015 comes Rs 135.02 crores Translating the vision of the founding fathers as its corporate mission, the bank has

during its long sojourn been able to project itself as a vibrant, fast growing, service

oriented and trend setting financial intermediary.

Milestones

1929 South Indian Bank was established at Trichur, Kerala State.

1941 First branch outside Kerala (Coimbatore) was opened.

1946 First private sector Bank in Kerala to become a scheduled Bank.

1963 The Bank took over the assets and liabilities of the Kshemavilasam Banking Co., Ltd., Trichur, and the Ambat Bank Private Ltd., Chittur, Cochin.

1964

The Following banks were taken over: Public Bank, Ltd., Pudukad; Subarban Bank (P) Ltd., Trichur; Vijaya Lakshmi Bank (P) Ltd., N. Parur; Chalakudy Bank, Ltd., Chalakudy; Mukkattukara Catholic Bank, Ltd., Mukkattukara; Assyrian Charities Banking Co., Ltd., Trichur; Catholic Syrian Christian Bank, Ltd., Kanjany; Malabar Bank, Ltd., Trichur; Bharatha Union Bank, Ltd., Trichur; Kozhuvanal Bank, Ltd., Kozhuvanal. The business of the Bank crosses Rs. 10 Crore.


56

1970 The business of the Bank crosses Rs. 25 Crores

1977 The business of the Bank crosses Rs. 100 Crores mark

1986 Total business crosses Rs. 500 Crores.

1990 The Bank made an entry into merchant banking activities by supporting underwriting to 99 New Issues.

1992

The bank was selected by RBI to open and operate a currency chest on its behalf, the first private sector bank in Kerala. The FIRST bank in Kerala to develop an in-house, a fully integrated branch automation software in addition to the in-house partial automation solution operational. The first private sector bank to open NRI Branch. The first among the Kerala based banks to offer Credit Card to customers. Total business crosses Rs. 1000 crores mark

1993 The first bank in the private sector to start an Industrial Finance Branch.

The FIRST among the private sector banks in Kerala to open an "Overseas Branch" to cater exclusively to the export and import business.

1998 Bank went Public with an IPO.

2000 The business of the Bank crosses Rs. 5000 Crores

2001 The Bank launched its comprehensive and centralised banking solution, Sibertech, which will run on Finacle platform provided by Infosys Technologies of Bangalore.

The Bank entered into new alliances with three exchange houses in the Gulf.

2002 Ties up with insurance player for the distribution of the products of the insurance company.

Offers VRS to permanent eligible employees of the bank.

Sets up an ATM in Kovai, which is its first online ATM outside its home, Kerala.

2003 Launches its Internet Banking Facility, Sibernet, to provide better services for customers.

Enters into an agreement with Master Card International to Launch Maestro, the global ATM - Debit card. The total business crosses Rs. 10000 crores mark.

2006 Raised capital through Follow on Public Offer 13

2007 Achieved 100% implementation of Core Banking Solution among branches.

2008 Raised capital by way of Qualified Institutional Placement

2009 Completes successful existence of 80 years and crossed Rs. 30000 Crores business.

2010 The face value of shares was sub divided from Rs.10each to 10 equity shares of Rs.1 each

2011 Total Business crossed the land mark of Rs. 50,000 crores .

2012 Networth Crossed Rs.2000 Crores and Equity offering of Rs.442.60 Crores to QIBS through the QIP route

2013 Achieved target of Rs.500 crores in Net Profit, Business Exceeded Rs. 75,000 Crores

2014 Authorised Capital Increased from Rs.160 Crores to Rs. 250 Crores.

The growth of the Bank over the years is given below (Rs. in crore)

Year ended

No. of Branches Deposits Net Advances

1929 1 0.03 N.A

1939 5 0.06 N.A


57

1950 15 1.21 N.A

1960 29 4.97 3.25

1970 83 14.48 10.62

1975 149 39.51 24.25

1980 257 124.58 70.82

1985 286 287.48 168.46

1990 300 492.40 247.18

1995 333 1515.53 742.77

2000 369 3885.36 2021.08

2001 368 4668.55 2468.36

2002 376 5919.70 3231.05

2003 386 6861.27 3612.94

2004 405 8280.02 4196.82

2005 425 8492.31 5365.26

2006 446 9578.66 6370.23

2007 471 12239.21 7918.91

2008 496 15156.12 10453.75

2009 526 18092.33 11852.03

2010 580 23012.00 15822.92

2011 641 29721.07 20488.73

2012 700 36500.53 27280.74

2013 750 44262.30 31815.53

2014 794 47491.09 36229.86

2015 822 51912.49 37391.64

i. Details of Share Capital as on 30th June 2015

Share Capital Rs in crores

Authorized Share Capital 250.00

Issued, Subscribed and Paid-up Share Capital 135.02

ii. The details of share capital and share premium account (before and after

the issue

Particulars Before the issue

(as at30.06.2015)

After the issue

Share Capital 135.02 135.02

Share Premium

account 956.34 956.34


58

iii. Changes in its capital structure as on30th June 2015, for the last five years:-

Date of Change ( AGM/EGM)*

Amount (Increase) Rs in crores

Particulars

15.07.2011 Capital 25.00 Authorized Capital of the Bank is increased

from Rs.125 Crore (Rupees One hundred

and twenty five Crore only) to Rs.160 Crore

(Rupees One hundred and sixty crore only)

by creation of additional 35,00,00,000

(Thirty five crore) shares of Rs. 1/- each.

2011-12 Capital 0.37 Increase in Issued, Subscribed and paid-up

share Capital pursuant to allotment of

Equity shares in various tranches under SIB

ESOS Scheme 2008. Premium 4.93



Equity shares by way of Qualified

Institutional Placement

Premium 422.60




ESOS Scheme 2008.

Premium 6.41




ESOS Scheme 2008.

Premium 7.24

16.07.2014 Capital 90.00 Authorized Capital of the Bank is increased

from Rs.160 Crore (Rupees One hundred

and sixty Crore only) to Rs.250 Crore

(Rupees Two hundred and Fifty crore only)

by creation of additional 90,00,00,000

(Ninety crore) shares of Rs. 1/- each.




ESOS Scheme 2008.

Premium 8.34

Up to 30th June 2015 Capital 0.0015 Increase in Issued, Subscribed and paid-up



ESOS Scheme 2008.

Premium 0.0342


59

iv. Equity Share Capital History of the Company as on last quarter end, for the

last five years:-

Date of

Allotment

No. Of

Equity

Shares

Face

Valu

e

(Rs.)

Issue

Price

(Rs.)

Consi

derati

on

(Cash,

other

than

cash,

etc.)

Natu

re of

Allot

ment

Cumulative

Remarks

No. Of

Equity

Shares

Equity

Share

Capital

(Rs. Crore)

Equity

Share

Premium

(Rs. Crore)

27/09/2011 48500 1 14.37

Cash Equi

ty 11301134

00 113.01

511.36 ESOS

16/02/2012 3636030 1

14.37

Cash

Equi

ty 11337494

30 113.37 516.22

ESOS

06/05/2012 1202627 1

14.37

cash

Equi

ty 11349520

57 113.49 517.82

ESOS

06/08/2012 565440 1

14.37

Cash

Equi

ty 11355174

97 113.55 518.58

ESOS

07/09/2012

20000000

0 1 22.13 Cash

Equi

ty 13355174

97 133.55 941.18

Qualified Institutional

Placement

17/11/2012

702927 1

14.37

Cash

Equi

ty 13362204

24 133.62 942.12

ESOS

17/11/2012

600 1

27.75

Cash

Equi

ty 13362210

24 133.62 942.12

ESOS

06/02/2013

2313015 1

14.37

Cash

Equi

ty 13385340

39 133.85 945.21

ESOS

06/02/2013

4350 1

27.75

Cash

Equi

ty 13385383

89 133.85 945.23

ESOS

05/05/2013

1786596 1

14.37

Cash

Equi

ty 13403249

85 134.03 947.61

ESOS

05/05/2013

1200 1

27.75

Cash

Equi

ty 13403261

85 134.03 947.62

ESOS

13/08/2013

603614 1

14.37

Cash

Equi

ty 13409297

99 134.09 948.42

ESOS

18/11/2013

1222552 1

14.37

Cash

Equi

ty 13421523

51 134.22 950.06

ESOS

18/11/2013

1100 1

27.75

Cash

Equi

ty 13421534

51 134.22 950.06

ESOS

18/02/2014

1794010 1

14.37

Cash

Equi

ty 13439474

61 134.39 952.46

ESOS

18/02/2014

100 1

27.75

Cash

Equi

ty 13439475

61 134.39 952.46

ESOS

13/05/2014 2105300 1

14.37 Cash

Equi 13460528

61 134.61 955.28 ESOS


60

ty

13/05/2014

1050 1

26.80

Cash

Equi

ty 13460539

11 134.61 955.28

ESOS

08/08/2014

1860690 1

14.37

Cash

Equi

ty 13479146

01 134.79 957.77

ESOS

08/08/2014

6750 1

27.75

Cash

Equi

ty 13479213

51 134.79 957.78

ESOS

08/08/2014

9250 1

26.80

Cash

Equi

ty 13479306

01 134.79 957.81

ESOS

08/08/2014

600 1

23.50

Cash

Equi

ty 13479312

01 134.79 957.81

ESOS

11/11/2014

2205350 1

14.37

Cash

Equi

ty 13501365

51 135.01 960.76

ESOS

11/11/2014 3650 1 27.75 Cash

Equi

ty 13501402

01 135.01 960.77 ESOS

11/11/2014 2700 1 26.80 Cash

Equi

ty 13501429

01 135.01 960.77 ESOS

11/11/2014 1500 1 20.80 Cash

Equi

ty 13501444

01 135.01 960.78 ESOS

09/02/2015

3560

1

27.75

Cash

Equi

ty 13501479

61 135.01 960.79

ESOS

09/02/2015

2575

1 26.80 Cash

Equi

ty

13501505

36 135.02 960.79 ESOS

09/02/2015 1500 1 20.80 Cash

Equi

ty

13501520

36 135.02 960.80 ESOS

05/05/2015

3800

1 26.80 Cash

Equi

ty

13501558

36

135.02 960.81

ESOS

05/05/2015

3875

1

24.05

Cash

Equi

ty

13501597

11

135.02 960.82

ESOS

05/05/2015

7800

1 20.80 Cash

Equi

ty

13501675

11 135.02 960.83

ESOS

v. Details of any Acquisition or Amalgamation in the last 1 year:-

There was no Acquisition or Amalgamation in the last 1 year

vi. Details of any Reorganization or Reconstruction in the last 1 year:-

Type of Event Date of Announcement

Date of Completion

Details

There was no Reorganization or Reconstruction in the last 1 year


61

d. Details of the shareholding of the Company as on30th June 2015:-

i. Shareholding pattern of the Company as on30th June 2015:-

Sr. No. Particulars Total No. of

Equity Shares No. of Shares in

Demat Form

Total Shareholding as a % of total no. of

equity shares

(A) Shareholding of Promoter and Promoter Group

Financial Institution/Banks 0 0 0

(B) Public shareholding

1 Institutions

(a) Mutual Funds/UTI 72607751 72607751 5.38

(b) Financial Institutions / Banks 38535443 38535443 2.85

(c) Central Government/State Government(s) 0 0 0

(d) Insurance Companies 62849084 62849084 4.65

(e) Foreign Institutional Investors 380203749 380203749 28.17

(f) Qualified Foreign Investor 0 0 0

Sub Total (B)(1) 554196027 554196027 41.05

2 Non-institutions

(a) Bodies Corporate 59518554 56097544 4.41

(b) Individuals

i) Individuals - shareholders holding nominal share capital up to Rs 1 Lakh 364245686 291794093 26.98

ii) Individual shareholders holding nominal share capital in excess of Rs. 1 Lakh 104738333 100658783 7.76

(c) Qualified Foreign Investor 869453 869453 0.06

(d) Any Other (specify)

(d-i) Non Resident Indian 81663558 68709348 6.05

(d-ii) Trusts 893718 893718 0.07

(d-iii) Foreign National 0 0 0

(d-iv) Clearing Member 2481696 2481696 0.18

(d-v) others 181560486 180815796 13.44

Sub Total (B)(2) 795971484 702320431 58.95

Total Public Shareholding (B)=(B)(1)+(B)(2) 1350167511 1256516458 100.00

(C) Shares held by Custodians and against which Depository Receipts have been issued 0 0 0

GRAND TOTAL (A)+(B)+(C) 1350167511 1256516458 100.00

Note: There are no shares pledged or encumbered by the promoters of the Bank.

ii. List of top 10 holders of equity shares of the Company as on 30th June 2015

Sr. no.

Name of the shareholders Total no. of

equity shares

No. of shares in demat

form

Total Shareholding as % of total no. of

equity shares


62

1 FIRST CARLYLE VENTURES MAURITIUS 66544763 66544763 4.93

2 LIFE INSURANCE CORPORATION OF INDIA 59739424 59739424 4.42

3 YUSUFFALI MUSALIAM VEETTIL ABDUL KADER .

49999998 49999998 3.70

4 GKFF VENTURES 43322329 43322329 3.21

5 CX SECURITIES LIMITED 43128583 43128583 3.19

6 DEUTSCHE SECURITIES MAURITIUS LIMITED

34986189 34986189 2.59

7 IVA INTERNATIONAL FUND 29719091 29719091 2.20

8 KOTAK MAHINDRA (INTERNATIONAL) LIMITED

28500000 28500000 2.11

9 THE PABRAI INVESTMENT FUND IV, LP 27606634 27606634 2.04

10 ACACIA PARTNERS, LP 24985520 24985520 1.85

Brief particulars of management of Bank Sri.AmitabhaGuha Sri.AmitabhaGuha, aged 66 years, is the non-executive Chairman of the Bank.

Sri.V.G.Mathew Sri.V.G.Mathew, aged 61 years, is the Managing Director and CEO of the Bank.

Sri. Mohan EAlapatt Sri. Mohan EAlapatt, aged 51 years, is the non-executive independent director of the Bank.

Sri. K.Thomas Jacob Sri. K.ThomasJacob, aged 62 years,is the non-executive independent director of the Bank.

Dr. John JosephAlapatt Dr. John JosephAlapatt, aged 61 years, is the non-executive independent director of the

Bank.

Sri.FrancisAlapatt Sri.FrancisAlapatt, aged 62 years, is the non-executive independent director of the Bank.

Sri SalimGangadharan Sri SalimGangadharan, aged 61 years, is the non-executive independent director of the

Bank

Sri.CheryanVarkey Sri.CheryanVarkey,aged 63 years, is the non-executive director of the Bank.

Smt.RanjanaSivanandSalgaoc

ar

Smt.RanjanaSivanandSalgaocar,aged 60 years is the non-executive independent director of

the Bank.

Sri. Parayil George John

Tharakan

Sri. Parayil George John Tharakan,aged 54 years,is the non-executive independent director

of the Bank

e. Following details regarding the directors of the Company:-

i. Details of the current directors of the Bank as on 30th June 2015

Sr.

no. Name, Designation and DIN

Age

(yrs.) Address

Director of the

Bank since Details of other directorships

1. Sri.AmitabhaGuha

(Non- Executive

Chairman)

DIN–02836707

Occupation: Retired

66

DL-182, 1st Floor,

Sector- 2, Salt Lake

Kolkata -700 091 31.08.2010

1. M/s.Xpro India Ltd.,

New Delhi

2. Gangavaram Port

Ltd., Hyderabad

3. M/s. Power Mech


63

Banker Projects Limited

4. M/s. Ramkrishna

Forgings Limited

Kolkata

2. Sri.V.G.Mathew

(Managing Director &

CEO)

DIN–05332797

Occupation: Service

61

Variathukala, Vi

A,Willow Heights,

Skyline Apartment,

GosaiKunnu,Kuriachira,

Thrissur, 680006, Kerala,

India

01.10.2014 NIL

3. Sri. MohanEAlapatt

Non-Executive

Independent Director,

DIN–00025594

Occupation: Professional

Service

51

No. 503, Golf Manor, 126

Nal Wind Tunnel Road,

Off Airport Road,

Bangalore-560 017

01.03.2010 NIL

4. Sri. K.Thomas Jacob

Non-Executive


DIN–00812892


Service

62

Kalappilayil, Tc.

5/2548(2), Golf Links

Road, Krishna Gardens,

Kowdiar. Po, Trivandrum,

695003, Kerala, India

31.08.2010

1. Spotmarkets

Securities P Ltd.

2. Syncon

Management

Consultants P Ltd.

5. Dr. John JosephAlapatt

Non-Executive


DIN– 00021735


Service

61

T-4, Nithyadhan

Apartments, Padma

Layout, Trichy Road,

Coimbatore, 641045,

Tamil Nadu, India

24.09.2012 1. JanakshemamKurie

s P Ltd.

6. Sri.FrancisAlapatt

Non-Executive


DIN–01419486

Occupation: Business

62

H.No.37/3166,

Palathingal, Bank Road

KaloorErnakulam,

682017, Kerala, India

01.11.2013

1. CII Guardian

International Ltd

2. Alapatt Properties

Private Limited

7. Sri SalimGangadharan

Non-Executive


DIN–06796232

Occupation: Retired (Ex-

61

C-26, Rnp Lane,,

Sasthamangalam P.O,

Vellayambalam,,

Trivandrum, 695010,

Kerala, India

16.01.2014 M/s IFMR Rural Channels

and Services Ltd


64

Principal Chief General

Manager, RBI)

8. Sri.CheryanVarkey

Non-Executive Director,

DIN–06884551

Occupation:Retired

Banker

63

Sam Villa,

PadinjarethalaAngadi,

Paravattani P.O.,

Thrissur, 680005, Kerala,

India

28.05.2014

NIL

9. Smt.RanjanaSivanandSalg

aocar

Non-Executive


DIN–00120120

Occupation: Business

60

HiraVihar, Airport Road,

Chicalim,

MorgugoaTaluka, Goa –

403711

01.10.2014

1. Achintya Real Estate Pvt.

Ltd.

2. Dhanistha Real Estates

Pvt. Ltd.

3. Ganadev Real Estate Pvt.

Ltd.

4. Ganapal Real Estates Pvt.

Ltd.

5. Ganaraj Real Estates Pvt.

Ltd

6. Medini Real Estates Pvt.

Ltd.

7. Pyramid MetallicsPvt.

Ltd.

8. Pyramid SoftechPvt. Ltd.

9. Salgaocar Real Estates &

Properties Pvt. Ltd.

10. Sandstone Real Estates

Pvt. Ltd.

11. Shinzawa Chemicals Pvt.

Ltd

12. Shivranjani Investments

Pvt. Ltd.

13. Sumedha Plantations Pvt.

Ltd

10 Sri. Parayil George John

Tharakan

Non-Executive


DIN–07018289

Occupation: Agriculture

54

AyanatParayil,

Thykattussery Post,

Alleppey District

Kerala – 688 528

25.11.2014 NIL


65

Note: None of the current Directors of the Bank appear in the RBI’s Defaulters’ List or

ECGC’s Default List

ii. Details of change in directors since last three years:-

Sr.

no.

Name, Designation and

DIN

Date of

Appointment

/ Cessation /

Resignation

Director of

the Bank

since (in

case of

Cessation /

Resignation)

Reason / Remarks

1.

Dr. John Joseph Alapatt,

Non-Executive


DIN- 00021735

24.09.2012

Appointed as Additional Director

on September 24, 2012.

Appointed as Independent

Director w.e.f. 1st April 2014.

2.

Sri. Jose Alapatt, Non-

Executive Independent

Director,

DIN-00043444

11.05.2013 11.05.2005

Demitted office of Directorship

w.e.f. May 11, 2013 on

completing 8 years of

Directorship as stipulated under

the Banking Regulation Act,

1949.

3.

Sri H. Suresh Prabhu,

Non-Executive


DIN - 03359835

02.11.2013 01.12.2010 Demitted office of Directorship

w.e.f. 2nd November, 2013.

4.

Sri Francis Alapatt, Non-


Director, DIN- 01419486

01.11.2013


on 1st November, 2013.



5.

Sri SalimGangadharan,

Non-Executive


DIN - 06796232

16.01.2014


on 16th January, 2014.



6.

Dr. N.J. Kurian, Non-


Director, DIN - 01646207

25.04.2014 23.05.2007


w.e.f. April 25, 2014 on attaining

70 years of age.

7. Sri. CheryanVarkey, Non-

Executive Director DIN 28.05.2014 Appointed as Additional Director

on May 28, 2014. Appointed as


66

06884551 Non-Executive Director w.e.f.

16th July 2014.

8.

Sri. Paul Chalissery, Non-


Director, DIN - 00836980

30.09.2014 30.09.2006


w.e.f. 30th September 2014

upon completion of his 8 year

term, in accordance with Section

10A(2A) of Banking Regulation

Act 1949.

9.

Sri. Mathew L. Chakola,

Non-Executive


DIN - 00633502

30.09.2014 30.09.2006


w.e.f. 30th September 2014

upon completion of his 8 year

term, in accordance with Section

10A(2A) of Banking Regulation

Act 1949

10.

Dr. V.A Joseph, Managing

Director & CEO, DIN -

00181554

30.09.2014 05.06.2005

Demitted office of the Managing

Director & CEO of the Bank

w.e.f. September 30, 2014 (after

closure of business hours) on

expiry of his current tenure

granted by RBI.

11.

Sri. V.G. Mathew,

Managing Director &

CEO, DIN - 05332797

01.10.2014

Appointed as the Managing

Director & CEO of the Bank for a

period of 3 (three) years w.e.f.

October 01, 2014.

f. Following details regarding the auditors of the Company:-

i. Details of the auditor of the Company as on 30th June 2015:

Name Address Auditor since

S. R Batliboi& Associates LLP*

6th& 7th Floor – “A” Block, Tidel Park, (Module 601, 701 & 702), No.4, Rajiv Gandhi Salai, Taramani, Chennai – 600 113, India Tel : +91 44 6654 8100 Fax : +91 44 2254 0120

September 2011


67

Note: As per the RBI policy of compulsory rotation of auditors, M/s S.R. Batliboi& Associates LLP,Chartered Accountantsare not eligible for reappoint as they have completed the permissible term of 4 years. The shareholders of SIB during the 87th AGM held on 15.07.2015 had appointed the M/s Deloitte Haskins & Sells, Chartered Accountant as the statutory auditors of the Bank for the next 4 years.

ii. Details of change in auditor since last three years:-There was no change

inauditor since last three years.

g. Details of borrowings of the Company, as on30th June 2015:-

i. Details of Loan Facilities:-

*Foreign Currency Borrowings USD 120 Mio

ii. Details of Deposits as on 30th June 2015:-

Sr. no. Particulars Amount (Rs. crores) Cumulative (Rs. crores)

I. Demand Deposits 2033.74

i. From Banks 1.19

ii. From Others 2032.55

II. Savings Bank Deposits 9622.33

III. Term Deposits 40667.68

i. From Banks 1556.78

ii. From Others (including Certificate of deposit of Rs. 4403.96crores) 39110.90

Borrowings as on 30.06.2015 (Rs. crores):

I. Borrowings in India

(i) Reserve Bank of India - -

(ii) Other Banks - -

(iii) Other Institutions and Agencies NABARD 618.49

(iv) Others - -

(v) Capital Instruments - -

a. Innovative Perpetual Debt Instruments (IPDI)

- -

b. Subordinated Debt - -

TOTAL 618.49

II. Borrowings outside India

(i) Borrowings and Refinance outside India

Foreign Currency Borrowings *

763.74

TOTAL 763.74

GRAND TOTAL 1382.23

Secured borrowings included in I & II above Nil


68

Total 52323.75

Deposits of Branches in India 52323.75

Deposits of Branches outside India 0.00

Total 52323.75

iii. Details of NCDs:-

Not Applicable

iv. List of Top 10 Subordinated Tier II Bonds (Series 2009) Holders as on30th June

2015:-

Sr. No.

Name of Holders Amount in crores

1 LIFE INSURANCE CORPORATION OF INDIA 135.00

2 THE SOUTH INDIAN BANK EMPLOYEES' PROVIDENT FUND

22.00

3 BANGIYA GRAMIN VIKASH BANK 10.00

4 CORPORATION BANK 10.00

5 SYNDICATE BANK 5.00

6 ALLAHABAD BANK 5.00

7 RAJKOT NAGARIK SAHAKARI BANK LIMITED 5.00

8 THE FEDERAL BANK EMPLOYEES' PROVIDENT FUND 3.00

9 THE SOUTH INDIAN BANK EMPLOYEES GRATUITY TRUST FUND

3.00

10 THE BANK OF RAJASTHAN LTD. EMPLOYEE'S PROVIDENT FUND

2.00

v. The amount of corporate guarantee issued by the Issuer along with name of

the counterparty (like name of the subsidiary, JV entity, Group Company,

etc.) on behalf of whom it has been issued.

There are no Corporate Guarantees issued by the Bank to counterparties including the Bank’s Subsidiaries, Joint Ventures, Group Companies, etc.; except Non Fund based facilities granted to its constituents in the form of Bank Guarantees, during the normal course of Business Operations.

vi. Details of Certificate of Deposit: - The total Face Value of Certificate of

Deposit Outstanding as on 30th June 2015

Maturity date Face Value (in Rs.)

01-Jul-2015 2,00,00,00,000.00

17-Jul-2015 1,00,00,00,000.00

31-Jul-2015 4,00,00,00,000.00

04-Aug-2015 4,00,00,00,000.00

07-Aug-2015 2,00,00,00,000.00

10-Aug-2015 2,00,00,00,000.00


69

17-Aug-2015 8,00,00,00,000.00

20-Aug-2015 2,00,00,00,000.00

21-Aug-2015 1,50,00,00,000.00

24-Aug-2015 7,75,00,00,000.00

27-Aug-2015 50,00,00,000.00

02-Sep-2015 2,00,00,00,000.00

03-Sep-2015 2,00,00,00,000.00

04-Sep-2015 1,25,00,00,000.00

07-Sep-2015 2,50,00,00,000.00

11-Sep-2015 2,00,00,00,000.00 TOTAL 44,50,00,00,000.00

vii. Details of Commercial Paper: - The total Face Value of Commercial Papers

Outstanding as on the latest quarter end to be provided and its breakup in

following table- Not Applicable

viii. Details of Rest of the borrowings (including hybrid debt like FCCB, Optionally

Convertible Bonds /Preference Shares) as on30.06.2015:

The Bank has not issued any hybrid debt like Foreign Currency Convertible Bonds (FCCBs), optionally Convertible Bonds /Debentures (OCBs) / Preference Shares etc.

ix. Details of all default/s and/or delay in payments of interest and principal of

any kind of term loans, debt securities and other financial indebtedness

including corporate guarantee issued by the Company and including any

statutory dues, in the past 5 years.

There has been no default (s) and / or delay (s) in payments of interest and principal of any kind of term loans, debt securities and other financial indebtedness including corporate guarantee issued by the Bank and any statutory dues , in the past five years.

x. Details of any outstanding borrowings taken/ debt securities issued where

taken / issued (i) for consideration other than cash, whether in whole or part,

(ii) at a premium or discount, or (iii) in pursuance of an option;

The Bank confirms that other than and to the extent mentioned elsewhere in this Disclosure Document, it has not issued any debt securities or agreed to issue any debt securities or availed any borrowings for a consideration other than cash , whether in whole or in part, at a premium or discount or in pursuance of an option since inception.


70

h. Disclosures with regards to the interest of directors, litigation etc

i. Any financial or other material interest of the directors, promoters or key

managerial personnel in the offer and the effect of such interest in so far as it

is different from the interests of other persons

NIL

ii. Details of any litigation or legal action pending or taken by any Ministry or

Department of the Government or a statutory authority against any

promoter during the last three years immediately preceding the year of the

circulation of the Information Memorandum and any direction issued by such

Ministry or Department or statutory authority upon conclusion of such

litigation or legal action.

NIL

iii. Details of director’s remuneration

DETAILS OF REMUNERATION PAID TO DIRECTORS during Current Year and Last three FY

Particulars

Current Year upto 30th June 2015 2014-15 2013-14 2012-13

Gross Salary paid to MD & CEO 1500000 8216400 7923960 7039800

Honorarium paid to Chairman (Gross) 390000 1454500 1275000 1129667

Sitting Fee paid to Directors 2430000 7576000 4530000 3932000

Total 4320000 17246900 13728960 12101467

iv. Related party transactions entered during the last three financial years

immediately preceding the year of circulation of offer letter including with

regard to loans made or, guarantees given or securities provided

NIL

v. Details of any inquiry, inspections or investigations initiated or conducted

under the Companies Act or any previous company law in the last three years

immediately preceding the year of circulation of offer letter in the case of

company and all of its subsidiaries. Also if there were any prosecutions filed

(whether pending or not) fines imposed, compounding of offences in the last

three years immediately preceding the year of the offer letter and if so,

section-wise details thereof for the company and all of its subsidiaries

NIL

vi. Details of acts of material frauds committed against the company in the last

three years, if any, and if so, the action taken by the company.

During the quarter ended September 30, 2012, the Bank has identified certain acts

of fraud committed by its employees at one of the Branches amounting to Rs.34.15


71

Crores. Based on the Reserve Bank of India guidelines, the Bank has provided

Rs.32.22 Crores (net of recoveries), and disclosed as an exceptional item.

i. Details of Promoters of the Company:-

Details of Promoter Holding in the Bank as on 30th June 2015:- The bank has no

identifiable promoter and the share holding pattern is well diversified with major

holding by FIIs at 28.16% as at June 30, 2015

Abridged version of Audited Consolidated (wherever available) and Standalone

Financial Information (Profit & Loss statement, Balance Sheet and Cash Flow

statement) for last three years and auditor qualifications

The South Indian Bank BALANCE SHEET

Capital & Liabilities As on As on As on As on

31st March

2015

31st March

2014

31st March

2013

31st March

2012

Capital 135.02 134.39 133.85 113.37

Reserves and Surplus 3,454.39 3233.65 2869.76 2054.11

Deposits 51,912.49 47491.09 44262.30 36500.53

Borrowings 2,232.47 2730.78 1284.55 588.19

Other Liabilities and Provisions

1,381.95 1396.06 1244.57 1113.85

TOTAL 59116.32 54985.97 49795.03 40370.06

Assets

Cash & Balances with Reserve Bank of India

2,441.58 2200.81 1696.70 1571.84

Balances with banks & money at call & short notice

1,153.50 1017.12 2639.20 1068.70

Investments 16,717.16 14351.78 12523.47 9399.87

Advances 37,391.64 36229.86 31815.53 27280.74

Fixed Assets 479.05 412.20 396.12 377.50

Other Assets 933.39 774.20 724.01 671.40

TOTAL 59116.32 54985.97 49795.03 40370.06


72

Contingent Liabilities 27,220.07 19134.96 10583.36 5458.05

Bills for Collection 554.44 696.25 479.14 425.89

The South Indian Bank PROFIT & LOSS ACCOUNT

Particulars Year ended

31st March

2015

Year ended

31st March

2014

Year ended

31st March

2013

Year ended

31st March

2012

Income

Interest earned 5,286.22 5015.06 4434.29 3583.42

Other Income 497.07 368.46 334.93 247.07

TOTAL 5783.29 5383.53 4769.22 3830.50

Expenditure

Interest expended 3,919.99 3616.29 3153.46 2561.69

Operating Expenses 981.30 882.89 767.17 617.29

Provisions and contingencies 574.80 376.84 346.31 249.86

TOTAL 5476.09 4876.03 4266.95 3428.84

Profit

Net Profit for the year 307.20 507.50 502.27 401.66

Profit brought forward 39.86 36.96 23.18 18.47

TOTAL 347.06 544.46 525.46 420.13

Appropriations

Transfer to Statutory Reserves

76.81 126.88 125.57 100.42

Transfer to Other Reserves 3.86 220.00 240.00 211.52


73

Transfer to Capital Reserves 50.00 0.84 6.21 0.51

Proposed Dividend (including Tax thereon)

30.00 125.79 109.41 79.14

Transfer to/from Investment Reserve Account

(6.79) 14.09 (5.69) (7.13)

Transfer to Special Reserve under Sec.36(1)(viii) of

Income Tax

81.01 17.00 13.00 14.00

Transfer from present value provision for ADWARD

16.95

(1.52)

Balance Carried over to Balance Sheet

95.22 39.86 36.96 23.18

TOTAL 347.06 544.46 525.46 420.13

The South Indian Bank CASH FLOW STATEMENT (Amount in Crore) PARTICULARS

31.03.2015

31.03.2015

31.03.2014

31.03.2014

31.03.2013

31.03.2013

31.03.2012

31.03.2012

Cash Flow from

Operating Activity

686.99 925.98

2698.93

1850.83

Cash Flow from Investing

Activity

(172.61) (1849.85)

(1348.07)

(1590.45)

Cash Flow from

Financing Activity

(137.23) (194.10)

344.51

(85.96)

Net Change in Cash & Cash Equivalent

Cash & Cash Equivalent at the beginning

of the year

3217.93 4335.90

2640.54

2466.13

Cash & Cash Equivalent at

the end of the year

3595.08 3217.93

4335.90

2640.54

Net Change in Cash & Cash Equivalent

Cash Flow from

Operating


74

Activity

Net Profit After Tax

307.20 507.50

502.27

401.66

Add:

Provision debited to P&L A/c :

Provision for Taxes

160.75 221.43

153.58

170.69

Provision on Non-

Performing Assets

225.52 129.10

131.90

21.05

Provision on Standard

Assets

31.37 31.09

32.49

39.75

Provision for Depreciation

on Investment

11.78 (20.65)

11.24

13.38

Other Provisions

145.38 15.67

17.10

5.00

Provision for Amortisation -

debited to Intt. Income

19.50 18.34

14.33

15.69

Employee Benefit

Provisions

22.49 28.23

33.59

40.91

Depreciation on Fixed Assets

(1.11) 44.60

39.89

31.20

ESOS Employee

Compensation Expense

Amortised

1.63 0.95

0.82

1.31

(Profit)/Loss on sale of

Land, Building and Other

Assets

0.42 (0.83)

(0.48)

(0.83)

Add: Interest Paid on Bonds

(being Financing Activity)

19.50 19.80 487.73 25.09 459.55 25.12 363.27

Les

Tax Paid (274.98) (259.24)

(185.59)

(230.65)

Add:

(Increase)/ Decrease in Advances

(1438.23) (4553.15)

(4685.40)

(6817.24)

(Increase)/ Decrease in Investment

(2292.55) (42.31)

(1865.76)

1027.25


75

(Increase)/ Decrease in

Other Assets

(55.95) (55.33)

(54.19)

(26.69)

Increase/ (Decrease) in

Deposits

4421.39 3228.79

7761.77

6779.46

Increase/ (Decrease) in Borrowings

(498.30) 1511.22

696.36

297.84

Increase/ (Decrease) in Other Liability & Provisions

(118.83) 17.52 100.77 189.99 69.92 1922.70 55.93 1316.55

Net cash Flow from

Operating Activity

686.98 925.98

2698.93

1850.83

Cash Flow From

Investing Activity

Purchase of fixed Assets

(71.23) (70.03)

(66.05)

(59.29)

Sale of fixed Assets

2.74 3.86

1.38

1.26

(Purchase)/Sale of

Investments (Held to

Maturity)

(104.12) (1783.68) (1849.85) (1283.40) (1348.07) (1532.42) (1590.45)

Cash Flow From

Financing Activity

Issue of Share Capital

8.05 2.50

448.78

4.77

Share Premium

Dividend paid including tax

(125.79) (109.40)

(79.14)

(65.67)

Interest Paid on Bonds

(19.50) (22.20)

(25.13)

(25.06)

Repayment of Subordinate

Bonds

-

(137.23) (65.00) (194.10) 0.00 344.51 0.00 (85.96)

Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark


76

Extracts from Audit Report of Financial Year – 2014-15 Unqualified report for the FY 14-15

Extracts from Audit Report of Financial Year – 2013-14 …. Our Statutory Auditors have included the following matters of emphasis in their

audit report with respect to our financial statements for the financial year 2014:

We draw attention to Note 18.B.7 to the financial statements which describes the

deferment of pension and gratuity liability relating to existing employees of the Bank

to the extent of ₹ 156.53 crores and the unamortized liability of ₹ 22.49 crores as of

March 31, 2014, pursuant to the exemption granted by the Reserve Bank of India and

made applicable to the Bank vide Letter No. DBOD No.BP.BC.15896 /21.04.018

/2010-11 dated April 8, 2011, from the application of the provision of the Accounting

Standards (AS) 15, Employee Benefits. Our opinion is not qualified in respect of this

matter.

We draw attention to Note 18.B.5 to the financial statements, which describes

creation of Deferred Tax Liability (“DTL”) on Special Reserve under section 36(1)(viii)

of the Income Tax Act, 1961 pursuant to RBI’s Circular No. DBOD No.BP.

BC.77/21.04.018/2013-14 dated December 20, 2013, whereby the DTL of ₹ 14.71

crores pertaining to period up to March 31, 2013 has been adjusted to the general

reserve of the Bank and DTL of ₹ 5.78 crores on the special reserve created during the

financial year ended March 31, 2014 has been charged to the profit and loss account.

Our opinion is not qualified in respect of this matter.”

6. Opinion In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Bank as at March 31,

2014; (ii) in the case of the Profit and Loss Account of the profit for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on

that date. Extracts from Audit Report for 2012-13 ….


77

Qualified Audit Opinion

Our Statutory Auditors have qualified their opinion in their audit report with respect to our

financial statements for the financial year 2013 as set out below:

“Basis for qualified opinion

6. Attention is invited to Note 18.A.26 to the financial statements regarding a non-

performing advance of ₹ 150 crores and in respect of which a provision of ₹ 90 crores

has been made by the management of the Bank based on special dispensation

obtained from the Reserve Bank of India (RBI) vide RBI letter dated DBS (T) No.

674/02.05.06/2012-13 dated December 31, 2012 from complying with the

“Prudential Norms on Income Recognition, Asset Classification and Provisioning

pertaining to Advances” issued by the RBI. As the ultimate recoverability of the net

carrying amount is uncertain, pending final determination thereof, we are unable to

comment on the recoverability of the carrying amount and consequential effects of

these matters on the financial statements.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to

us, except for the possible effects of the matter discussed in the basis for qualified opinion

paragraph discussed above, the said accounts together with the notes thereon give the

information required by the Banking Regulation Act, 1949 as well as the Companies Act,

1956, in the manner so required for the banking companies and give a true and fair view in

conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31st March 2013;

(ii) in the case of the Profit and Loss Account of the Profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of cash flows for the year ended on that date.”

Our explanation for our Statutory Auditor’s qualified opinion above is set out below:

At the time of the finalisation of our financial statements for the financial year 2013, we

were in ongoing negotiations with the borrower and we were hopeful of recovering some of

the dues, thereby warranting a lower provision. Therefore, we made the provision as

permittedbythe RBI in its letter to us dated December 31, 2012. If we had not received this

dispensation from the RBI, we would have been required to make a provision of ₹ 150.00

crores for the NPA, which would have increased our provision for NPAs by ₹ 60.00 croresand


78

would have reduced our net profit (after tax) for the financial year 2013 by ₹40.53 crores.

Subsequently, the negotiations failed and we made an additional provision of ₹ 60.00 crores

for this NPA for the financial year 2014. Therefore, this NPA wasfully provided for and, as

such, our Statutory Auditors did not qualify their report on our financial statements for the

financial year 2014.

Our Statutory Auditors have included the following matter of emphasis in their audit report

with respect to our financial statements for the financial year 2013:

“We draw attention to Note 18.B.7 to the financial statements which describes the deferment of pension and gratuity liability relating to existing employees of the Bank to the extent of ₹ 156.53 crores and the unamortized liability of ₹ 50.72 crores as of March 31, 2013, pursuant to the exemption granted by the Reserve Bank of India and made applicable to the Bank vide Letter No. DBOD No.BP.BC.15896 /21.04.018 /2010-11 dated April 8, 2011, from the application of the provision of the Accounting Standards (AS) 15, Employee Benefits. Our opinion is not qualified in respect of this matter”.

….. Extracts from Audit Report for 2011-12 ….

Matters of Emphasis

Our Statutory Auditors have included the following matters of emphasis in their audit report

with respect to our financial statements for the financial year 2012:

“Without qualifying our opinion, we draw attention to Note 18.B.6 to the financial

statements which describes the deferment of pension and gratuity liability relating to

existing employees of the Bank to the extent of ₹ 156.53 crores and the unamortized liability

of ₹ 84.31 crores as of March 31, 2012, pursuant to the exemption granted by the Reserve

Bank of India and made applicable to the Bank vide Letter No. DBOD No.BP.BC.15896

/21.04.018 /2010-11 dated April 8, 2011, from the application of the provision of the

Accounting Standards (AS) 15, Employee Benefits.”

Opinion In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for the banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2012; (ii) in the case of the Profit and Loss Account of the profit for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.


79

Extracts from Audit Report for 2010-11

Without qualifying our opinion we draw attention to: a) Note No. A. 23 (b), Schedule 18, of the Financial Statements regarding disputed Income Tax liability of Rs. 116.05 Crores relating to earlier assessment years consequent to a decision of the Kerala High Court, now pending before the Supreme Court of India, and its treatment as Contingent Liability by the Bank. b) Note No. B. 7, Schedule 18, to the financial statements which describes deferment of pension and gratuity liability of the bank to the extent of Rs. 125.22 Crores pursuant to the exemption granted by the Reserve Bank of India and made applicable to the Bank vide Letter No. DBOD No.BP.BC.15896 /21.04.018 /2010-11 dated April 8, 2011, from the application of the provision of the Accounting Standard (AS) 15, Employee Benefits.

Note: The detailed financials is uploaded on the website of the bank and can be accessed at https://www.SIB.co.in/BalanceSheet.aspx

j. Any change in accounting policies during the last three years and their effect on the profits

and the reserves of the company.

In the FY 2014-15, effective April 1, 2014, the Bank has changed its accounting policy for charging depreciation from Written Down Value ("WDV") method to Straight Line Method ("SLM") in respect of all fixed assets other than computers which were already being depreciated under SLM. The management believes that such change better reflects the actual use of assets acquired. On account of this change in accounting policy, the Bank has in the Q1 quarter of FY 2014, reversed an amount of 65.74 Crores representing the excess depreciation charge for the period up to March 31, 2014 and disclosed the same net of related tax effect of 22.35 Crores as an exceptional item. As a result of this change, the net profit for the Q1 quarter of FY 2014 is higher by 43.39 Crores.

Except as disclosed above, there is no other change in accounting policies during the last three years. Nil

https://www.sib.co.in/BalanceSheet.aspx


80

k. Abridged version of Latest audited / Limited Review half yearly/quarterly

consolidated (wherever applicable) and Standalone Financial Information (like

Profit & Loss statement, and Balance Sheet) and auditor’s qualifications, if any.

South Indian Bank Ltd

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 30th June 2015Rs. in Lakhs

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2015

Rs.in lakhs

3 months ended Year ended

Particulars

30.06.2015 31.03.2015 30.06.2014 31.03.2015

Unaudited Audited # Unaudited Audited

1. Interest earned (a) + (b) + (c) +

(d)

1,37,668

1,32,243

1,34,468

5,28,622

(a) Interest/discount on

advances/bills

1,08,269

1,04,305

1,04,534

4,15,297

(b) Income on

investments

28,024

26,828

26,491

1,05,373

(c) Interest on balances with

Reserve Bank of

India and other inter-bank

funds

1,375

1,110

3,443

7,952

(d) Others

- -

- -

2. Other Income

10,383

12,194

12,116

49,707

3. Total income (1+2)

1,48,051

1,44,437

1,46,584

5,78,329

4. Interest Expended

1,03,634

97,534

1,00,380

3,91,999

5. Operating Expenses

(i) + (ii)

26,328

30,405

24,110

1,04,704

(i) Employees cost

15,741

19,786

14,588

63,370

(ii) Other operating

expenses

10,587

10,619

9,522

41,334

6. Total expenditure (4) + (5)

excluding provisions and

contingencies

1,29,962

1,27,939

1,24,490

4,96,703

7. Operating Profit before

Provisions and Contingencies (3) -

(6)

18,089

16,498

22,094

81,626

8. Provisions (other than tax) and

Contingencies

7,951

13,774

9,463

41,405

9. Exceptional Items (Refer Note

2)

-

-

(4,339)

(4,339)

10. Profit from Ordinary Activities

before tax (7)-(8)-(9)

10,138

2,724

16,970

44,560

11. Tax expense

3,609

1,092

4,305

13,840


81

12. Net Profit from Ordinary

Activities after tax (10)-(11)

6,529

1,632

12,665

30,720

13. Extra ordinary items (Net of

Tax Expense) - - - -

14. Net Profit for the period

(12+13)

6,529

1,632

12,665

30,720

15. Paid-up Equity Share Capital

(Face Value Rs.1)

13,502

13,502

13,461

13,502

16. Reserves excluding

Revaluation Reserves

3,31,581

17. Analytical Ratios

i) Percentage of shares held by

Government of India Nil Nil Nil Nil

ii) Capital Adequacy Ratio (%) -

BASEL III

11.46

12.01

12.19

12.01

iii) Earning Per

Share (EPS)

(a) Basic EPS - before and after

Extraordinary items (Rs.)*

0.48

*

0.12

*

0.94

*

2.28

(b) Diluted EPS - before and

after Extraordinary items (Rs.)*

0.48

*

0.12

*

0.93

*

2.27

iv) NPA Ratios

(a) Gross NPA

71,383

64,345

51,730

64,345

(b) Net NPA

46,398

35,705

31,054

35,705

(c) % of Gross

NPA

1.85

1.71

1.50

1.71

(d) % of Net

NPA

1.21

0.96

0.91

0.96

(e) Return on Assets

(Annualised) 0.45

0.12

0.93

0.56

18. Public

Shareholding

- No.of Shares (in

Lakhs)

13,502

13,502

13,461

13,502

- Percentage of

Shareholding

100% 100% 100% 100%

19. Promoters and promoter group

Shareholding

(a) Pledged/ Encumbered

- Number of shares NIL NIL NIL NIL

- Percentage of shares[as a %

of the total

shareholding of the

promoter and promoter group] NIL NIL NIL NIL

- Percentage of shares [as a %

of the total

share capital of the

Company] NIL NIL NIL NIL

(b) Non Encumbered


- Percentage of shares[as a %


82

of the total

shareholding of the

promoter and promoter group] NIL NIL NIL NIL

- Percentage of shares [as a %

of the total

share capital of the

Company] NIL NIL NIL NIL

* Quarterly numbers are not

annualised

Segmentwise Results

Rs.in lakhs.

Particulars

3 months ended Year ended

30.06.201

5

31.03.201

5

30.06.2014 31.03.2015

Unaudite

d

Audited Unaudited Audited

1. Segment Revenue

a) Treasury

31,693

31,453

35,217

1,32,047

b) Corporate/ Wholesale

Banking

67,482

63,808

58,910

2,45,164

c) Retail Banking

46,067

46,253

50,101

1,89,462

d) Other Banking

Operations

2,809

2,923

2,356

11,656

Total

1,48,051

1,44,437

1,46,584

5,78,329

Less : Inter segment Revenue

- -

- -

Net Income from

Operations

1,48,051

1,44,437

1,46,584

5,78,329

2. Segment Results

Profit(+)/Loss (-) before tax,

exceptional item and after interest

from each segment

a) Treasury

(6,537)

(10,939)

(1,198)

(14,148)


Banking

5,415

1,414

1,551

6,298

c) Retail Banking

8,951

9,939

10,309

38,525

d) Other Banking

Operations

2,309

2,310

1,969

9,546

Total

10,138

2,724

12,631

40,221

Less: unallocated expenditure

(exceptional item)

-

-

(4,339)

(4,339)

Profit Before Tax and

exceptional item

10,138

2,724

16,970

44,560

3.Capital Employed

a) Treasury


83

1,03,063 1,09,954 1,02,050 1,09,954


Banking

1,18,245

1,21,627

1,17,681

1,21,627

c) Retail Banking

68,311

72,943

77,892

72,943

d) Other Banking

Operations - - - -

e) Un allocated

75,856

54,417

50,729

54,417

Total

3,65,475

3,58,941

3,48,352

3,58,941

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2015

Rs. in lakhs

3 months ended Year

ended

Particulars

30.06.2015 31.03.2015 30.06.2014 31.03.2015

Unaudited Audited # Unaudited Audited

1. Interest earned (a) + (b) + (c) + (d)

1,37,668

1,32,243

1,34,468

5,28,622

(a) Interest/discount on advances/bills

1,08,269

1,04,305

1,04,534

4,15,297

(b) Income on

investments

28,024

26,828

26,491

1,05,373

(c) Interest on balances with Reserve

Bank of

India and other inter-bank funds

1,375

1,110

3,443

7,952

(d) Others

- -

- -

2. Other Income

10,383

12,194

12,116

49,707

3. Total income (1+2)

1,48,051

1,44,437

1,46,584

5,78,329

4. Interest Expended

1,03,634

97,534

1,00,380

3,91,999

5. Operating

Expenses (i) + (ii)

26,328

30,405

24,110

1,04,704

(i) Employees cost

15,741

19,786

14,588

63,370

(ii) Other operating

expenses

10,587

10,619

9,522

41,334

6. Total expenditure (4) + (5) excluding

provisions and contingencies

1,29,962

1,27,939

1,24,490

4,96,703

7. Operating Profit before Provisions and

Contingencies (3) - (6)

18,089

16,498

22,094

81,626

8. Provisions (other than tax) and

Contingencies

7,951

13,774

9,463

41,405

9. Exceptional Items (Refer Note 2)

-

-

(4,339)

(4,339)

10. Profit from Ordinary Activities before

tax (7)-(8)-(9)

10,138

2,724

16,970

44,560


84

11. Tax expense

3,609

1,092

4,305

13,840

12. Net Profit from Ordinary Activities

after tax (10)-(11)

6,529

1,632

12,665

30,720

13. Extra ordinary items (Net of Tax

Expense)

-

-

- -

14. Net Profit for the period (12+13)

6,529

1,632

12,665

30,720

15. Paid-up Equity Share Capital (Face

Value Rs.1)

13,502

13,502

13,461

13,502

16. Reserves excluding Revaluation

Reserves

3,31,581

17. Analytical Ratios

i) Percentage of shares held by

Government of India Nil Nil Nil Nil

ii) Capital Adequacy Ratio (%) -

BASEL III

11.46

12.01

12.19

12.01

iii) Earning Per

Share (EPS)

(a) Basic EPS - before and after


0.48

*

0.12

*

0.94

*

2.28

(b) Diluted EPS - before and after


0.48

*

0.12

*

0.93

*

2.27

iv) NPA Ratios

(a) Gross NPA

71,383

64,345

51,730

64,345

(b) Net NPA

46,398

35,705

31,054

35,705

(c) % of Gross

NPA

1.85

1.71

1.50

1.71

(d) % of Net

NPA

1.21

0.96

0.91

0.96

(e) Return on Assets (Annualised)

0.45

0.12

0.93

0.56

18. Public

Shareholding

- No.of Shares (in

Lakhs)

13,502

13,502

13,461

13,502

- Percentage of

Shareholding

100% 100% 100% 100%

19. Promoters and promoter group

Shareholding

(a) Pledged/ Encumbered


- Percentage of shares[as a % of the

total

shareholding of the promoter and

promoter group] NIL NIL NIL NIL

- Percentage of shares [as a % of the

total

share capital of the Company] NIL NIL NIL NIL


85

(b) Non Encumbered


- Percentage of shares[as a % of the

total

shareholding of the promoter and

promoter group] NIL NIL NIL NIL

- Percentage of shares [as a % of the

total

share capital of the Company] NIL NIL NIL NIL

* Quarterly numbers are not annualised

Segment wise Results

Rs.In

lakhs.

Particulars

3 months ended Year

ended

30.06.20

15

31.03.20

15

30.06.201

4

31.03.2015

Unaudit

ed

Audited Unaudite

d

Audited

1. Segment Revenue

a) Treasury

31,693

31,453

35,217

1,32,047

b) Corporate/ Wholesale Banking

67,482

63,808

58,910

2,45,164

c) Retail Banking

46,067

46,253

50,101

1,89,462

d) Other Banking

Operations

2,809

2,923

2,356

11,656

Total

1,48,051

1,44,437

1,46,584

5,78,329

Less : Inter segment Revenue

- -

- -

Net Income from

Operations

1,48,051

1,44,437

1,46,584

5,78,329

2. Segment Results

Profit(+)/Loss (-) before tax, exceptional

item and after interest from each segment

a) Treasury

(6,537)

(10,939)

(1,198)

(14,148)


5,415

1,414

1,551

6,298

c) Retail Banking

8,951

9,939

10,309

38,525

d) Other Banking

Operations

2,309

2,310

1,969

9,546

Total

10,138

2,724

12,631

40,221

Less: unallocated expenditure

(exceptional item)

-

-

(4,339)

(4,339)

Profit Before Tax and exceptional


86

item 10,138 2,724 16,970 44,560

3.Capital Employed

a) Treasury

1,03,063

1,09,954

1,02,050

1,09,954


1,18,245

1,21,627

1,17,681

1,21,627

c) Retail Banking

68,311

72,943

77,892

72,943

d) Other Banking

Operations

-

-

- -

e) Un allocated 75,856 54,417 50,729 54,417

Total

3,65,475

3,58,941

3,48,352

3,58,941

Notes of even date form an integral part of the financial results

Note: The detailed financials is uploaded on the website of the bank and can be accessed at https://www.SIB.co.in/BalanceSheet.aspx Auditor’s Qualification: None

l. Any material event/ development or change having implications on the

financials/credit quality (e.g. any material regulatory proceedings against the

Issuer/Promoters, Tax litigations resulting in material liabilities, corporate

restructuring event etc.) at the time of issue which may affect the issue or the

investor’s decision to invest / continue to invest in the debt securities.

During financial year 2014-2015, the Issuer has been served with show cause notices relating to alleged wrong availment of CENVAT credit for payment of service tax and taxability of certain transactions treated as non-taxable/exempted from service tax. The Issuer has taken/is in the process of taking appropriate action against the notices that are prejudicial to them. As per legal opinion, these notices are likely to be quashed. The total additional contingent liability that may have to be disclosed by the Issuerin respect of these matters amounts to Rs.18.95 crore. The Issuer does not expect the outcome of these proceedings to have a material adverse impact on their financial position.

m. Names of the Debentures Trustees and Consents thereof

IDBI Trusteeship Services Ltd., Mumbai In accordance with the provisions of (i) Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended, (ii) Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide Circular No. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012, as amended,

https://www.sib.co.in/BalanceSheet.aspx


87

The Issuer has appointed IDBI Trusteeship Services Ltdto act as Trustees to the Bondholder(s). The address and contact details of the Trustees are as under: IDBI Trusteeship Services Ltd. Asian Building, Ground Floor, 17, R.Kamani Marg, Ballard Estate, Mumbai-400001 Tel: +91-22-4080 7000 Fax: +91-22-6631 1776 Email: [email protected] Website: www.idbitrustee.com Copy of letter from IDBI Trusteeship Services Ltdconveying their consent to act as Trustees for the current issue of Bonds is enclosed within the Annexure III in this Disclosure Document. The Issuer hereby undertakes that a Debenture Trusteeship Agreement shall be executed by it in favour of the Trustees within three months permissible under applicable laws. Further, the Debenture Trusteeship Agreement shall not contain a clause which has the effect of I. limiting or extinguishing the obligations and liabilities of the Trustees or the Issuer in relation to any rights or interests of the holder(s) of the Bonds, ii. limiting or restricting or waiving the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992); Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 and circulars, regulations or guidelines issued by SEBI iii. Indemnifying the Trustees or the Issuer for loss or damage caused by their act of negligence or commission or omission. The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the holder(s) of the Bonds. Any payment made by the Issuer to the Trustees on behalf of the Bondholder(s) shall discharge the Issuer pro-tanto to the Bondholder(s). No Bondholder shall be entitled to proceed directly against the Issuer unless the Trustees, having become so bound to proceed, fail to do so. The Trustees shall perform its duties and obligations and exercise its rights and discretions, in keeping with the trust reposed in the Trustees by the holder(s) of the


88

Bonds and shall further conduct itself, and comply with the provisions of all applicable laws, provided that, the provisions of Section 20 of the Indian Trusts Act, 1882, shall not be applicable to the Trustees. The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, Disclosure Document and all other related transaction documents, with due care, diligence and loyalty.

n. Rating and Rating Letter

Refer Annexure – I and Annexure II

o. If the security is backed by a guarantee or letter of comfort or any other document

/letter with similar intent, a copy of the same shall be disclosed. In case such

document does not contain detailed payment structure (procedure of invocation of

guarantee and receipt of payment by the investor along with timelines)

Not Applicable

p. Name and address of the valuer who performed the valuation of the security

offered- Not Applicable

q. Stock Exchange where Bonds are proposed to be listed

The Bonds are proposed to be listed on the Wholesale Debt Market (WDM) segment of BSE. BSE shall be the designated stock exchanges for the purpose of present Issue of the BASEL III compliant Tier II Bonds.

r. Other Details

i. DRR Creation

Creation of DRR is not applicable to the bank because the Ministry of Corporate Affairs, Government of India has vide circular no. 11/02/2012-CL-V(A) dated February 11, 2013 clarified that Banks need not create Debenture Redemption Reserve for Debentures issued by Banking Companies.

ii. Issue/instrument specific regulations

The present issue of Bonds is being made in pursuance of RBI

Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 on Basel

III Capital Regulations issued by the RBI, covering Prudential Guidelines on

Implementation of Basel III Capital Regulations in India covering Criteria for

inclusion of Debt Capital Instruments as Tier II Capital (Annex 5) and

Minimum Requirements to ensure loss absorbency of Additional Tier I

instruments at pre-specified trigger and of all non-equity regulatory capital

instruments at the PONV(Annex 16)


89

The present Issue of Bonds is being made pursuant to the approval by the

Board of Directors at its meeting held on 15.07.2015, the Shareholders at

their meeting held on 15.07.2015and the delegation provided there under.

The current issue of bonds is within the overall borrowing limits. The Bank

can issue the bonds proposed by it in view of the present approvals and no

further internal or external permission/ approval(s) is/are required by it to

undertake the proposed activity.

iii. Application Process

1. Who Can Apply The categories of investors who are eligible to apply for this Issue of Bonds are mentioned in the Term Sheet of this Disclosure Document. However, the prospective subscribers must make their own independent evaluation and judgment regarding their eligibility to invest in the Issue. All applicants are required to comply with the relevant regulations/ guidelines applicable to them for investing in the issue of Bonds as per the norms approved by Government of India, RBI or any other statutory body from time to time. However, out of the aforesaid class of investors eligible to invest, this Disclosure Document is intended solely for the use of the person to whom it has been sent by the Issuer for the purpose of evaluating a possible investment opportunity by the recipient(s) in respect of the securities offered herein, and it is not to be reproduced or distributed to any other persons (other than professional advisors of the prospective investor receiving this Disclosure Document from the Issuer).

2. Documents to be provided by Investors Investors need to submit the certified true copies of the following documents, along-with the Application Form, as applicable: Memorandum and Articles of Association/ Constitution/ Bye-laws/

Trust Deed; Board Resolution authorizing the investment and containing

operating instructions; Power of Attorney/ relevant resolution/authority to make

application; Specimen signatures of the authorized signatories (ink signed), duly

certified by an appropriate authority; Government Notification (in case of Primary Co-operative Bank and

RRBs); Copy of Permanent Account Number Card (“PAN Card”) issued by the

Income Tax Department; Necessary forms for claiming exemption from deduction of tax at

source on interest on application money, wherever applicable.


90

3. How to Apply

This being a private placement Issue, the eligible investors who have

been addressed through this communication directly, only are eligible to

apply. Applications for the Bonds must be in the prescribed form and

completed in BLOCK LETTERS in English and as per the instructions

contained therein.

Applications complete in all respects must be submitted before the last

date indicated in the issue time table or such extended time as decided

by the Issuer, at any of the designated collection centres, accompanied

by details of remittance of the application money . The original

Applications Forms (along with all necessary documents as detailed in

this Disclosure Document), payment details and other necessary

documents should be sent to the Corporate Office of the Bank through

respective Arrangers on the same day.

The payment should be made by electronic transfer of funds through

RTGS mechanism for credit as per details given hereunder:

Beneficiary Name The South Indian Bank Limited Name of the Banker Kotak Mahindra Bank Limited Account Name The South Indian Bank Ltd Current Escrow

A/c Credit into EscrowA/c No. 6111648902 IFS Code KKBK0000958 Address of the Branch Mittal Court,224, Nariman Point,

Mumbai - 400 021

Cheque(s), demand draft(s), Money orders, postal orders will not be

accepted. The Bank assumes no responsibility for any applications lost in

mail. The entire amount of Rs.10 lacs per Bond is payable on application.

Applications should be for the number of Bonds applied by the Applicant.

Applications not completed in the said manner are liable to be rejected.

The name of the applicant’s bank, type of account and account number

must be filled in the Application Form. This is required for the applicant’s

own safety and these details will be printed on the refund orders and

interest/ redemption warrants.

The applicant or in the case of an application in joint names, each of the

applicant, should mention his/her Permanent Account Number (PAN)

allotted under the Income -Tax Act, 1961 or where the same has not

been allotted, the GIR No. and the Income tax Circle/Ward/District. As


91

per the provision of Section 139A (5A) of the Income Tax Act, PAN/GIR

No. needs to be mentioned on the TDS certificates. Hence, the investor

should mention his PAN/GIR No. In case neither the PAN nor the GIR

Number has been allotted, the applicant shall mention “Applied for” nor

in case the applicant is not assessed to income tax, the applicant shall

mention ‘Not Applicable’ (stating reasons for non-applicability) in the

appropriate box provided for the purpose. Application Forms without this

information will be considered incomplete and are liable to be rejected.

All applicants are requested to tick the relevant column “Category of

Investor” in the Application Form. Public/ Private/ Religious/ Charitable

Trusts, Provident Funds and Other Superannuation Trusts and other

investors requiring “approved security” status for making investments.

For further instructions about how to make an application for applying for

the Bonds and procedure for remittance of application money, please

refer to the Summary Term Sheet and the Application Form.

4. Terms of Payment The full face value of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to send in the Application Form and the details of RTGS for the full value of Bonds applied for.

5. Force Majeure

The Issuer reserves the right to withdraw the issue prior to the Issue

Closing Date in the event of any unforeseen development adversely

affecting the economic and regulatory environment.

6. Applications under Power of Attorney

A certified true copy of the power of attorney or the relevant authority as

the case may be along with the names and specimen signature(s) of

all the authorized signatories and the tax exemption

certificate/document, if any, must be lodged along with the submission

of the completed Application Form. Further modifications/ additions in

the power of attorney or authority should be notified to the Issuer or to

the Registrars or to such other person(s) at such other address(es) as may

be specified by the Issuer from time to time through a suitable

communication.

7. Application by Mutual Funds


92

In case of applications by Mutual Funds, a separate application must be

made in respect of each scheme of an Indian Mutual Fund registered

with SEBI and such applications will not be treated as multiple

applications, provided that the application made by the Asset

Management Company/ Trustees/ Custodian clearly indicate their

intention as to the scheme for which the application has been made.

8. Application by Provident Funds, Superannuation Funds and Gratuity

Funds

The applications must be accompanied by certified true copies of

a. Trust Deed / Bye Laws /Resolutions

b. Resolution authorizing Investment

c. Specimen Signatures of the Authorized Signatories

Those desirous of claiming tax exemptions on interest on application

money are compulsorily required to submit a certificate issued by the

Income Tax Officer along with the Application form. For subsequent

interest payments, such certificates have to be submitted periodically.

9. Acknowledgements

No separate receipts will be issued for the application money. However,

the Bankers to the Issue receiving the duly completed Application Form

will acknowledge receipt of the application by stamping and returning to

the applicant the acknowledgement slip at the bottom of each

Application Form.

10. Basis of Allocation

Beginning from the issue opening date and until the day immediately

prior to the issue closing date, full and firm allotment against all valid

applications for the Bonds will be made to applicants on a first -come-

first-served basis, subject to a limit of the Issue size, in accordance with

applicable laws. At its sole discretion, the Issuer shall decide the amount

of oversubscription to be retained over and above the basic issue size. If

and to the extent, the Issue (including the option to retain

oversubscription as decided and finalized by the Issuer) is fully subscribed

prior to the issue closing date; no applicationsshall be accepted once the

Issue (including the option to retain oversubscription as decided and

finalized by the Issuer) is fully subscribed.


93

Allotment will be done on “day-priority basis”. In case of

oversubscription over and above the basic size inclusive of the option

to retain oversubscription exercised by the Issuer, the allotment of

such valid applications received on the closing day shall be on pro rata

basis to the investors in the ratio in which they have applied regardless of

investor category. If the proportionate allotment of Bonds to such

applicants is not a minimum of one Bond or in multiples of one Bond

(which is the market lot), the decimal would be rounded off to the next

higher whole number if that decimal is 0.5 or higher and to the next

lower whole number if the decimal is lower than 0.5. All successful

applicants on the issue closing date would be allotted the number of

Bonds arrived at after such rounding off.

11. Right to Accept or Reject Applications

The Issuer reserves its full, unqualified and absolute right to accept or

reject any application, in part or in full, without assigning any reason

thereof. The rejected applicants will be intimated along with the refund

warrant, if applicable, to be sent. Interest on application money will be

paid from the date of realization of the cheque(s)/ demand

drafts(s)/RTGS credit in to the designated account till one day prior to the

date of refund. The application forms that are not complete in all

respects are liable to be rejected and would not be paid any interest on

the application money. Application would be liable to be rejected on one

or more technical grounds, including but not restricted to:

a. Number of bonds applied for is less than the minimum application

size;

b. Applications exceeding the issue size;

c. Bank account details not given;

d. Details for issue of Bonds in electronic/ dematerialized form not

given;

e. PAN/GIR and IT Circle/Ward/District not given;

f. In case of applications under Power of Attorney by limited companies,

corporate bodies, trusts, etc. relevant documents not submitted;

In the event, if any Bond(s) applied for is/ are not allotted in full, the

excess application monies of such Bonds will be refunded, as may be

permitted.


94

12. PAN /GIR Number All applicants should mention their Permanent Account Number or the GIR Number allotted under Income Tax Act, 1961 and the Income Tax Circle/ Ward/ District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided.

13. Signatures

Signatures should be made in English or in any of the Indian Languages.

Thumb impressions must be attested by an authorized official of a Bank

or by a Magistrate/ Notary Public under his/her official seal.

14. Nomination Facility

Only individuals applying as sole applicant/Joint Applicant can nominate,

in the prescribed manner, a person to whom his Bonds shall vest in the

event of his death. Non -individuals including holders of Power of

Attorney cannot nominate.

15. Fictitious Applications

Any person who makes, in fictitious name, any application to a body

corporate for acquiring, or subscribing to, the bonds, or otherwise

induced a body corporate to allot, register any transfer of bonds therein

to them or any other person in a fictitious name, shall be punishable

under the extant laws.

16. Depository Arrangements

The Issuer has appointed BTS Consultancy Services Pvt. Ltdhaving its

office at M S Complex, 1st Floor, Plot No.8, Sastri Nagar, Near RTO / 200

Feet Road,Kolathur, Chennai–600099as the Registrar for the present

Bond Issue. The Issuer has entered into necessary depository

arrangements with National Securities Depository Limited (“NSDL”) and

Central Depository Services (India) Limited (“CDSL”) for

dematerialization of the Bonds offered under the present Issue, in

accordance with the Depositories Act, 1996 and regulations made there

under. In this context, the Issuer has signed two tripartite agreements as

under:

• Tripartite Agreement between the Issuer, NSDL and the Registrar for

dematerialization of the Bonds offered under the present Issue.


95

• Tripartite Agreement between the Issuer, CDSL and the Registrar for

dematerialization of the Bonds offered under the present Issue.

Bondholders can hold the bonds only in dematerialized form and deal

with the same as per the provisions of Depositories Act, 1996 as

amended from time to time.

17. Procedure for applying for Demat Facility

a) Applicant(s) must have a Beneficiary Account with any Depository

Participant of NSDL or CDSL prior to making the application.

b) Applicant(s) must specify their beneficiary account number and

depository participants ID in the relevant columns of the Application

Form.

c) For subscribing to the Bonds, names in the application form should be

identical to those appearing in the account details of the Depository. In

case of Joint holders, the names should necessarily be in the same

sequence as they appear in the account details in the Depository.

d) If incomplete/ incorrect beneficiary account details are given in the

Application Form which does not match with the details in the depository

system, it will be deemed to be an incomplete application and the same

be held liable for rejection at the sole discretion of the Bank.

e) The Bonds shall be directly credited to the Beneficiary Account as given in

the Application Form and after due verification, allotment advice/ refund

order, if any, would be sent directly to the applicant by the Registrars to

the Issue but the confirmation of the credit of the Bonds to the

applicant’s Depository Account will be provided to the applicant by the

Depository Participant of the applicant.

f) Interest or other benefits with respect to the Bonds would be paid to

those bondholders whose names appear on the list of beneficial owners

given by the depositories to the Issuer as on the Record Date. In case, the

beneficial owner is not identified by the depository on the Record Date

due to any reason whatsoever, the Issuer shall keep in abeyance the

payment of interest or other benefits, till such time the beneficial owner

is identified by the depository and intimated to the Issuer. On receiving

such intimation, the Issuer shall pay the interest or other benefits to the

beneficiaries identified, within a period of 15 days from the date of

receiving such intimation.


96

g) Applicants may please note that the Bonds shall be allotted and traded on

the stock exchange(s) only in dematerialized form.

ii. Others 1. Right of Bondholder(s)

Bondholder is not a shareholder. The Bondholders will not be entitled to any other rights and privilege of shareholders other than those available to them under statutory requirements. The Bond(s) shall not confer upon the holders the right to receive notice, or to attend and vote at the General Meetings of the Issuer. The principal amount and interest on the Bonds will be paid to the registered Bondholders only, and in case of Joint holders, to the one whose name stands first. Besides the above, the Bonds shall be subject to the provisions of the terms of this bond issue and the other terms and conditions as may be incorporated in the Debenture Trusteeship Agreement and other documents that may be executed in respect of these Bonds.

2. Modification of Rights

The rights, privileges, terms and conditions attached to the Bonds may be

varied, modified or abrogated with the consent, in writing, of those

holders of the Bonds who hold at least three fourth of the outstanding

amount of the Bonds or with the sanction accorded pursuant to a

resolution passed at a meeting of the Bondholders, provided that nothing

in such consent or resolution shall be operative against the Issuer where

such consent or resolution modifies or varies the terms and conditions of

the Bonds, if the same are not acceptable to the Issuer.

3. Future Borrowings

The Issuer shall be entitled to borrow/ raise loans or avail of financial

assistance in whatever form as also issue Bonds or other securities in any

manner with ranking as pari -passu basis or otherwise and to change its

capital structure, including issue of shares of any class or redemption or

reduction of any class of paid up capital, on such terms and conditions as

the Issuer may think appropriate, without the consent of, or intimation

to, the Bondholder(s) or the Trustees in this connection.

4. Notices

All notices required to be given by the Issuer or by the Trustees to the

Bondholders shall be deemed to have been given if sent by ordinary

post/ courier to the original sole/ first allottees of the Bonds and/ or if


97

published in one English daily newspaper having nation -wide circulation

and one regional language newspaper.

All notices required to be given by the Bondholder(s), including notices

referred to under “Payment of Interest” and “Payment on Redemption”

shall be sent by registered post or by hand delivery to the Issuer or to

such persons at such address as may be notified by the Issuer from time

to time.

5. Minimum subscription

As the current issue of Bonds is being made on private placement basis,

the requirement of minimum subscription shall not be applicable and

therefore the Bank shall not be liable to refund the issue subscription(s) /

proceed (s) in the event of the total issue collection falling short of the

issue size or certain percentage of the issue size.

6. Underwriting

The present issue of Bonds is not underwritten.

7. Deemed Date of Allotment

All benefits under the Bonds including payment of interest will accrue to

the Bondholders from and including the Deemed Date of Allotment. All

benefits relating to the Bonds will be available to the investors from the

Deemed Date of Allotment. The actual allotment of Bonds may take place

on a date other than the Deemed Date of Allotment. The Bank reserves

the right to keep multiple date(s) of allotment / allotment date(s) at its

sole and absolute discretion without any notice. In case if the issue

closing date/ pay in dates is/are changed (pre-poned/ postponed), the

Deemed Date of Allotment may also be changed (pre -pond/ postponed)

by the Issuer at its sole and absolute discretion.

8. Letter(s ) of Allotment / Bond Certificate(s ) /Refund Order (s)/ Issue

of Letter(s ) of Allotment

The beneficiary account of the investor(s) with National Securities

Depository Limited (NSDL)/ Central Depository Services (India) Limited

(CDSL)/ Depository Participant will be given initial credit within 2 working

days from the Deemed Date of Allotment. The initial credit in the account

will be akin to the Letter of Allotment. On completion of the all statutory

formalities, such credit in the account will be akin to a Bond Certificate.

9. Issue of Bond Certificate(s)


98

Subject to the completion of all statutory formalities within time

frame prescribed in the relevant Regulations/Act/ Rules etc., the initial

credit akin to a Letter of Allotment in the Beneficiary Account of the

investor would be replaced with the number of Bonds allotted. The

Bonds since issued in electronic (dematerialized) form, will be governed

as per the provisions of The Depository Act, 1996, Securities and

Exchange Board of India (Depositories and Participants) Regulations,

1996, rules notified by NSDL/ CDSL/ Depository Participant from time to

time and other applicable laws and rules notified in respect thereof. The

Bonds shall be allotted in dematerialized form only.

10. Market Lot

The market lot will be one Bond (“Market Lot”). Since the Bonds are

being issued only in dematerialized form, the odd lots will not arise either

at the time of issuance or at the time of transfer of Bonds.

11. Trading of Bonds

The marketable lot for the purpose of trading of Bonds shall be 1 (one)

Bond of face value of Rs.10 lacs each. Trading of Bonds would be

permitted in demat mode only in standard denomination of Rs.10 lacs

and such trades shall be cleared and settled in recognized stock

exchange(s) subject to conditions specified by SEBI. In case of trading in

Bonds which has been made over the counter, the trades shall be

reported on a recognized stock exchange having a nationwide trading

terminal or such other platform as may be specified by SEBI.

12. Mode of Transfer of Bonds

The Bonds shall be transferred subject to and in accordance with the

rules/ procedures as prescribed by the NSDL/ CDSL/Depository

Participant of the transferor/transferee and any other applicable laws

and rules notified in respect thereof. The normal procedure followed for

transfer of securities held in dematerialized form shall be followed for

transfer of these Bonds held in electronic form. The seller should give

delivery instructions containing details of the buyer’s DP account to his

depository participant. The transferee(s) should ensure that the transfer

formalities are completed prior to the Record Date. In the absence of the

same, interest will be paid/ redemption will be made to the person,

whose name appears in the records of the Depository. In such cases,

claims, if any, by the transferee(s) would need to be settled with the

transferor(s) and not with the Bank.


99

Transfer of Bonds to and from NRIs/ OCBs, in case they seek to hold the

Bonds and are eligible to do so, will be governed by the then prevailing

guidelines of RBI.

13. Common Form of Transfer

The Issuer undertakes that it shall use a common form/procedure for

transfer of Bonds issued under terms of this Disclosure Document.

14. Interest on Application Money

Interest at the Coupon Rate (subject to deduction of income tax under

the provisions of the Income Tax Act, 1961, or any other statutory

modification or re -enactment thereof, as applicable) will be paid to the

applicants on the application money for the Bonds.

Such interest shall be paid for the period starting from and including the

date of realization of application money in Issuer’s Bank Account up to

one day prior to the Deemed Date of Allotment. The interest on

application money will be computed as per Actual/Actual day count

convention. Such interest would be paid on all valid applications,

including the refunds. Where the entire subscription amount has been

refunded, the interest on application money will be paid along with the

Refund Orders. Where an applicant is allotted lesser number of Bonds

than applied for, the excess amount paid on application will be refunded

to the applicant along with the interest on refunded money.

The interest cheque(s)/ demand draft(s)/RTGS credit for interest on

application money (along with Refund Orders, in case of refund of

application money, if any) shall be dispatched by the Issuer within 10

days from the Deemed Date of Allotment and the relative interest

warrant(s) along with the Refund Order(s)/RTGS credit, as the case may

be, will be dispatched by registered post to the sole/ first applicant, at

the sole risk of the applicant.

15. Interest on the Bonds

The Bonds shall carry a fixed rate of interest at the Coupon Rate from,

and including, the Deemed Date of Allotment up to, but excluding the

Redemption Date, payable on the “Coupon Payment Dates”, on the

outstanding Principal Amount of Bonds till Redemption Date, to the

holders of Bonds (the “Holders” and each, a “Holder”) as of the relevant

Record Date. Interest on Bonds will cease from the Redemption Date in

all events.


100

16. Deduction of Tax at Source

Tax as applicable under the Income Tax Act, 1961, or any other statutory

modification or re-enactment thereof will be deducted at source out of

interest payable on Bonds.

Interest payable subsequent to the Deemed Date of Allotment of Bonds

shall be treated as “Interest on Securities” as per Income Tax Rules.

Bondholders desirous of claiming exemption from deduction of income

tax at source on the interest payable on Bonds should submit tax

exemption certificate/ document, under Section 193 of the Income Tax

Act, 1961, if any, with the Registrars, or to such other person(s) at such

other address (es) as the Issuer may specify from time to time through

suitable communication, at least 45 days before the payment becoming

due. Regarding deduction of tax at source and the requisite declaration

forms to be submitted, applicants are advised to consult their own tax

consultant(s).

17. List of Beneficial Owners

The Issuer shall request the Depository to provide a list of Beneficial

Owners as at the end of the Record Date. This shall be the list, which

shall be considered for payment of interest or repayment of principal

amount, as the case may be.

18. Succession

In the event of the demise of the sole/first holder of the Bond(s) or the

last survivor, in case of joint holders for the time being, the Issuer shall

recognize the executor or administrator of the deceased Bondholder or

the holder of succession certificate or other legal representative as

having title to the Bond(s).The Issuer shall not be bound to recognize

such executor or administrator, unless such executor or administrator

obtains probate, wherever it is necessary, or letter of administration or

such holder is the holder of succession certificate or other legal

representation, as the case may be, from a Court in India having

jurisdiction over the matter. The Issuer may, in its absolute discretion,

where it thinks fit, dispense with production of probate or letter of

administration or succession certificate or other legal representation, in

order to recognize such holder as being entitled to the Bond(s) standing

in the name of the deceased Bondholder on production of sufficient

documentary proof or indemnity.


101

Where a non-resident Indian becomes entitled to the Bond by way of

succession, the following steps have to be complied:

Documentary evidence to be submitted to the Legacy Cell of the RBI

to the effect that the Bond was acquired by the NRI as part of the

legacy left by the deceased holder.

Proof that the NRI is an Indian National or is of Indian origin.

Such holding by the NRI will be on a non -repatriation basis

19. Joint – Holders

Where two or more persons are holders of any Bond(s), they shall be

deemed to hold the same as joint tenants with benefits of survivorship

subject to provisions contained in the Companies Act, 1956 and the

amendments there to.

20. Disputes & Governing Law

The Bonds are governed by and shall be construed in accordance with

the existing laws of India. Any dispute arising thereof will be subject to

the sole jurisdiction of courts of Thrissur, Kerala. Investor Relations and

Grievance Redressal

Arrangements have been made to redress investor grievances

expeditiously as far as possible. The Issuer shall endeavour to resolve the

investor’s grievances within 30 days of its receipt. All grievances related

to the issue quoting the Application Number (including prefix), number of

Bonds applied for, amount paid on application and details of collection

centre where the Application was submitted, may be addressed to the

Compliance Officer at registered office of the Issuer. All investors are

hereby informed that the Issuer has designated a Compliance Officer

who may be contacted in case of any pre-issue/ post-issue related

problems such as non-credit of letter(s) of allotment/ bond certificate(s)

in the demat account, non-receipt of refund order(s),interest warrant(s)/

cheque(s) etc. Contact details of the Compliance Officer are given

elsewhere in this Disclosure Document.

21. Material Contracts& Agreements involving Financial Obligations of

the Issuer

By very nature of its business, the Bank is involved in a large number of

transactions involving financial obligations and therefore it may not be

possible to furnish details of all material contracts and agreements


102

involving financial obligations of the Bank. However, the contracts

referred to in Para A below (not being contracts entered into in the

ordinary course of the business carried on by the Bank) which are or may

be deemed to be material that have been entered into by the Bank.

Copies of these contracts together with the copies of documents referred

to in Para B may be inspected at the Head Office of the Bank between

10.00 a.m. and 2.00 p.m. on any working day until the issue closing date.

A. Material Contracts& Documents

a. Letter appointing Registrars and copy of MoU entered into

between the Bank and the Registrars.

b. Letter appointing Trustees to the Issue.

c. Board resolution of the meeting held on

15.07.2015authorizing issue of Bonds offered under terms of

this Disclosure Document.

d. Shareholders resolution held on 15.07.2015

e. Letter of Consent from the Trustees to act as Trustees to the

Issue.

f. Letter of Consent from the Registrars for acting as Registrars

to the Issue.

g. Letter/Email granting In-principle Approval for listing of Bonds

by BSE.

h. Letter from CARE and India Ratings conveying the credit rating

for the Bonds.

i. Tripartite Agreement between the Issuer, NSDL and Registrars

for issue of Bonds in dematerialized form.

j. Tripartite Agreement between the Issuer, CDSL and Registrars

for issue of Bonds in dematerialized form.

k. Annual Report along with Audited financials and Audit Reports

for the last three financial years

l. Limited Review financials for the quarter ended 30th June 2015


103

C. Issue Details

a. Summary term sheet:

Security Name 10.25% SIB Basel III Tier 2 Bonds – October2025

Issuer The South Indian Bank Ltd

Type of Instrument Non-convertible, Redeemable, Unsecured, Basel III compliant Tier 2 Bonds in the nature of debentures for augmenting Tier 2 capital of the Issuer with face value of Rs.10,00,000 each (Bond)

Nature of Instrument Unsecured

Seniority of the Instrument

Claims of the Investors in the Instruments shall be:

(i) Senior to the claims of Investors in Instruments eligible for inclusion in Tier 1 Capital

(ii) Subordinate to the claims of all Depositors and general Creditors of the Bank and

(iii) These Bonds shall neither be secured nor covered by a guarantee of the Issuer or its related entity or other arrangement that legally or economically enhances the seniority of the claim vis -à-vis creditors of the Bank.

The claims of the bondholders shall be subject to the provisions mentioned in the point “Special Features”, “PONV” in the term sheet.

Mode of Issue Private Placement

Eligible Investors

The following class of investors are eligible to participate in the offer: Mutual Funds, Public Financial Institutions as defined in section 4A of the Companies Act, 1956, Scheduled Commercial Banks, Insurance Companies, Provident Funds, Gratuity Funds, Superannuation Funds and Pension Funds, Co -operative Banks, Regional Rural Banks authorized to invest in bonds/ debentures, Companies and Bodies Corporate authorized to invest in bonds/ debentures, Societies authorized to invest in bonds/ debentures, Trusts authorized to invest in bonds/ debentures, Statutory Corporations/ Undertakings established by Central/ State legislature authorized to invest in bonds/ debentures etc and any other person authorised and eligible to invest in the issue as per Regulatory guidelines.

Prohibition on Purchase/Funding in Bonds

Neither the Bank nor any related party over which the Bank exercises control or significant influence (as defined under relevant Accounting Standards) shall purchase the Bonds, nor would the Bank directly or indirectly fund the purchase of the Bonds. The Bank shall not grant advances against the security of the Bonds issued by it

Listing Proposed on the Wholesale Debt Market (WDM) Segment of BSE

Rating of the Instrument CARE A+ and India Ratings (IndA+)

Trustees to the Issue IDBI Trusteeship Services Ltd.

Registrars of the Issue BTS Consultancy Services Pvt. Ltd


104

Issue Size 300 Crores

Option to retain oversubscription 200 Crores

Objects of the Issue Augmenting Tier 2 Capital, under Basel III Capital Regulations as laid out by RBI and overall capital of the Bank for strengthening its capital adequacy and for enhancing its long-term resources

Details of the utilization of the proceeds

The proceeds of the issue are being raised to augment Tier 2 Capital under Basel III Capital Regulations as laid out by RBI. The proceeds of issue shall be utilized for its regular business activities.

Coupon Rate 10.25% p.a

Step Up/Step Down Coupon Rate

Not Applicable

Coupon Payment Frequency

Every financial year end date being 31st March of that year and on maturity

Coupon Payment Dates

Refer table for dates and subject to “Special Features”, ”PONV” mentioned below.

1st Coupon Thursday, March 31, 2016

2nd Coupon Friday, March 31, 2017

3rd Coupon Monday, April 02, 2018

4th Coupon Monday, April 01, 2019

5th Coupon Tuesday, March 31, 2020

6th Coupon Wednesday, March 31, 2021

7th Coupon Thursday, March 31, 2022

8th Coupon Friday, March 31, 2023

9th Coupon Monday, April 01, 2024

10th Coupon Monday, March 31, 2025

Final Coupon and Maturity Friday, October 31, 2025

Coupon Type Fixed Rate

Coupon Reset Process (including rates, spread, effective date, interest rate cap and floor etc.)

Not Applicable

Day Count Basis

Interest for each of the interest periods shall be computed as per Actual / Actual day count conversion on the face value of principal outstanding at the coupon rate rounded off to the nearest rupee. Interest Period means each period beginning on (and including) the deemed date of allotment(s) or any coupon payment date and ending on (but excluding) the next coupon payment date.

Interest on Application Money

Interest at the coupon rate (subject to deduction of income tax/withholding tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to the applicants on the application money for the Bonds for the period starting from and including the date of realization of application money in Issuer’s Bank Account up to one day prior to the Deemed Date of Allotment.


105

For the application amount that has been refunded, the Interest on application money will be paid along with the refund orders and for the application amount against which Bonds have been allotted, the Interest on application money will be paid within ten working days from the Deemed /date of Allotment. Where an applicant is allotted lesser number of Bonds then applied for, the excess amount paid on application will be refunded to the applicant along with the Interest on refunded money, and Income Tax at Source (TDS) will be deducted at the applicable rate on Interest on application money.

Default Interest Rate

In case of a default in payment of Interest and/or principal redemption on the duedates, additional interest @ 2% p.a. over the documented rate will be payable bythe Bank for the defaulting period subject to prevailing regulatory environment

Maturity / Tenor 10 Years, 1 months (121 Months)

Redemption Date 31thOctober 2025

Redemption Amount Subject to the provisions mentioned in “Special Features”, “PONV” in the Term Sheet, the Redemption Amount would be Rs. 10,00,000 per bond.

Premium/Discount on Redemption

Nil

Issue Price, Along with justification of price

At par (Rs.10 lacs per Bond)

Discount at which security is issued and the effective yield as a result of such discount

Nil

Put Option Not Applicable

Put Option Price Not Applicable

Put Option Date Not Applicable

Put Notification Time Not Applicable

Call Option Not Applicable

Call Option Price Not Applicable

Call Option Date Not Applicable

Call Notification Time Not Applicable

Face Value Rs. 10 lacs per Bond as adjusted for the provisions mentioned in “Special Features”, “PONV” in the Term Sheet

Minimum Application 10 (ten) Bonds and in multiples of 1(one) Bond thereafter

Issue Timing: 1. Issue Opening

Date

Sept 29th2015

2. Issue Closing Date Sept 30th2015

3. Pay-in Date Sept 29th2015- Sept 30th2015


106

4. Deemed Date of Allotment

Sept 30th2015

Issuance mode In Demat mode only

Trading Mode In Demat mode only

Settlement Payment of interest and repayment of principal shall be made by way of cheque(s)/interest/ redemption warrant(s)/ demand draft(s)/ credit through direct credit/ NECS/RTGS/ NEFT mechanism in INR

Depository National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL)

Business Day Convention

Business Day” means a day (other than a, Sunday and any day which is a public holiday for the purpose of Section 25 of the Negotiable Instruments Act, 1881(26 of 1881)) or a Bank holiday) on which banks are open for general business in Mumbai. Should any of the dates, other than the Coupon Payment Date including the Deemed Date of Allotment herein, falls on day which is not a business day, the immediately preceding business day shall be considered as the effective date, Should the Coupon Payment Date, as defined herein, falls on day which is not a business day, the immediately next business day shall be considered as the effective date. However the Final Coupon Payment Date shall not exceed the Redemption Date

Record Date

15 days prior to each Coupon Payment Date, and Redemption Date. In the event the Record Date for Coupon Payment Date falls on a day which is not a Business Day, the next Business Day will be considered as the Record Date.

Security Unsecured

Transaction Documents

The Bank has executed/ shall execute the documents including but not limited to the following in connection with the Issue:

a) Letter appointing Trustee to the Bondholders b) Debenture Trusteeship Agreement c) Letter appointing Arranger to the issue d) Letter appointing Registrar e) Rating Letters from CARE and India Ratings f) Tripartite Agreement between the Issuer; Registrar and NSDL for

issue of Bonds in dematerialized form g) Tripartite Agreement between the Issuer, Registrar and CDSL for

issue of Bonds in dematerialized form h) Application made to BSE for seeking its in-principle approval for

listing of Bonds i) Listing Agreement with BSE. j) Certified true copy of resolution of the shareholders of the Issuer

dated 15.07.2015 passed in accordance with Section 180(1)(c) of the New Companies Act;

k) Certified true copy of resolution of the shareholders of the Issuer dated 15th July 2015 passed in accordance with Sections 42 of the New Companies Act;

Conditions precedent to subscription of Bonds

The subscription from applicants shall be accepted for allocation and allotment by the Bank, subject to the following:

a) Rating Letters from CARE and India Ratings not being more then one month old from the date of issue opening date

b) Consent Letter from the Trustees to act as Trustee to the Bondholder(s)

c) Letter from BSE conveying In-Principle Approval for listing &


107

trading of Bonds

Conditions subsequent to subscription of Bonds

The Bank shall ensure that the following documents are executed/ activities are completed as per terms of this Disclosure Document:

a) Credit of Demat Account(s) of the Allottee(s) by number of Bonds allotted within 2 working days from the Deemed Date of Allotment

b) Making application to BSE within 15 days from the Deemed Date of Allotment to list the Bonds and seek listing permission within 20 days from the Deemed Date of Allotment

Cross Default Not Applicable

Role and Responsibilities of Trustees to the Issue

The Trustees shall perform its duties and obligations and exercise its rights and discretions, in keeping with the trust reposed in the Trustees by the holder(s) of the Bonds and shall further conduct itself, and comply with the provisions of all applicable laws, provided that, the provisions of Section 20 of the Indian Trusts Act, 1882, shall not be applicable to the Trustees. The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, Disclosure Document and all other related transaction documents, with due care, diligence and loyalty.

Governing Law and Jurisdiction

The Bonds are governed by and shall be construed in accordance with the laws of India, as modified or amended from time to time. Any dispute arising thereof will be subject to the sole jurisdiction of courts of Thrissur, Kerala.

Additional Covenants

Delay in Listing: The Issuer shall complete all the formalities and seek listing permission within 15 days from the Deemed Date of Allotment. In the event of delay in listing of Bonds beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest of 1.00% per annum over the Coupon Rate from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the Bondholder(s). Refusal for Listing: If listing permission is refused before the expiry of the 20 days from the Deemed Date of Allotment, the Issuer shall forthwith repay all monies received from the applicants in pursuance of the Disclosure Document along with penal interest of 1.00% per annum over the Coupon Rate from the expiry of 20 days from the Deemed Date of Allotmenttill the date the Debentures are listed on the WDM of the BSE. Default in payment of Interest and Principal: In relation to the principal amount and coupon payable in respect of the Bonds, in case the same is not paid on the respective Due Dates, the defaulted amounts shall carry further interest at the rate of 2% (Two Percent) per annum over and above the Coupon Rate, from the date of occurrence of such default up to the date on which the defaulted amounts together with default interest is paid.

PONV

The present issue of Bonds is being made in pursuance of Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015issued by the RBI, covering Prudential Guidelines on Implementation of Basel III Capital Regulations in India covering Criteria for Inclusion of Debt Capital Instruments as Tier 2 Capital(Annex 5) and


108

Minimum Requirements to ensure loss absorbency of non-equity regulatory capital instruments at the PONV(Annex 16) read along with RBI circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015,onImplementation of Basel III Capital Regulations in India – Amendments and as amended from time to time). As per the extant instructions issued by RBI, these Bonds, at the option of the Reserve Bank of India, shall be written off upon the occurrence of the trigger event, called the ‘Point of Non-Viability (PONV) Trigger’ set out below. Once the principal of the Bonds have been written down pursuant to PNOV Trigger Event, the PONV Write Down amount will not be restored in any circumstances, including where the PONV Trigger Event has ceased to continue.

Special Features: PONV Trigger

Further it is clarified that there shall be no residual claims on the Bank following a trigger event and when write-off is undertaken. (i) The PONV Trigger event is the earlier of:

a. a decision that a write-off without which the firm would become non-viable, is necessary, as determined by the Reserve Bank of India; and

b. the decision to make a public sector injection of capital, or equivalent support, without which the firm would have become non-viable, as determined by the relevant authority.

For the purpose of the above, a ‘non-viable’ bank will be: A bank which, owing to its financial and other difficulties, may no longer remain a going concern on its own in the opinion of the Reserve Bank unless appropriate measures are taken to revive its operations and thus, enable it to continue as a going concern. The difficulties faced by a bank should be such that these are likely to result in financial losses and raising the Common Equity Tier 1 capital of the bank should be considered as the most appropriate way to prevent the bank from turning non-viable. Such measures would include write-off / conversion of non-equity regulatory capital into common shares in combination with or without other measures as considered appropriate by the Reserve Bank In rare situations, a bank may also become non-viable due to non-financial problems, such as conduct of affairs of the bank in a manner which is detrimental to the interest of depositors, serious corporate governance issues, etc. In such situations raising capital is not considered a part of the solution and therefore, may not attract provisions of this framework.

Criteria to determine PONV The above framework of PONV will be invoked when the Bank is adjudged by Reserve Bank of India to be approaching the point of non-viability, or has already reached the point of non-viability, but in the views of RBI


109

there is a possibility that a timely intervention in form of capital support, with or without other supporting interventions, is likely to rescue the bank; and if left unattended, the weaknesses would inflict financial losses on the bank and, thus, cause decline in its common equity level. The purpose of write-off of non-equity regulatory capital elements will be to shore up the capital level of the bank. RBI would follow a two-stage approach to determine the non-viability of a bank. The Stage 1 assessment would consist of purely objective and quantifiable criteria to indicate that there is a prima facie case of a bank approaching non-viability and, therefore, a closer examination of the bank’s financial situation is warranted. The Stage 2 assessment would consist of supplementary subjective criteria which, in conjunction with the Stage 1 information, would help in determining whether the bank is about to become non-viable. These criteria would be evaluated together and not in isolation If the PONV Trigger Event ( as described above ) occurs, the Bank shall: decide whether rescue of the bank would be through write-off alone or write-off in conjunction with a public sector injection of funds; without the need for the consent of the Bondholders or the Trustee, write down the outstanding principal of the Bonds by such amount as may be prescribed by RBI and subject as is otherwise required by the RBI at the relevant time, The Bank will affect a write –down within 30 days of the PONV write down amount being determined and agreed with the RBI; Permanent Write-off Features These instruments are subject to permanent write-down upon the occurrence of the PONV Trigger as determined by Reserve Bank of India. The amount of non-equity capital to be written-off will be determined by RBI. Treatment for the purpose of Dividend: When a bank breaches the PONV trigger and the equity is replenished through write-off, such replenished amount of equity will be excluded from the total equity of the bank for the purpose of determining the proportion of earnings to be paid out as dividend in terms of rules laid down for maintaining capital conservation buffer. However, once the bank has attained total Common Equity ratio of 8% without counting the replenished equity capital, that point onwards, the bank may include the replenished equity capital for all purposes.


110

The trigger at PONV will be evaluated both at consolidated and solo level and breach at either level will trigger write-off. Treatment in Bankruptcy / Liquidation The Bondholders shall have no rights to accelerate the repayment of future scheduled payments (coupon or principal) except in bankruptcy and liquidation of the Issuer. If a bank goes into liquidation before these instruments have been written-down, these instruments will absorb losses in accordance with the order of seniority indicated above in this Term Sheet and as per usual legal provisions governing priority of charges. If a bank goes into liquidation after these instruments have been written-down, the holders of these instruments will have no claim on the proceeds of liquidation. Amalgamation of a banking company If a bank is amalgamated with any other bank before these instruments have been written-down, these instruments will become part of the corresponding categories of regulatory capital of the new bank emerging after the merger. If a bank is amalgamated with any other bank after the non-equity regulatory capital instruments have been written-down permanently, these cannot be written-up by the amalgamated entity. If the relevant authorities decide to reconstitute a bank or amalgamate a bank with any other bank under the Section 45 of BR Act, 1949, such a bank will be deemed as non-viable or approaching non-viability and both the pre-specified trigger and the trigger at the point of non-viability for write-down of these instruments will be activated. Accordingly, these instruments will be fully written-down permanently before amalgamation / reconstitution.

Order of Write Down

The order of write down of various instruments issued by the issuer and that may be issued in future shall be as under: Additional Tier I debt instruments including perpetual and nan cumulative preference shares. These instruments shall be subordinate to other instrument and all other deposit holders, unsecured general creditors; The Write-off of any Common Equity Tier 1 (CET-1) capital shall not be required before the write off of any Non-Equity (Additional Tier-I and Tier 2) regulatory capital instrument.


111

Lock-in-Period Not Applicable

Payment Mode

The payment should be made by electronic transfer of funds through RTGS mechanism for credit as per details given hereunder: Beneficiary Name The South Indian Bank Limited Name of the Banker Kotak Mahindra Bank Limited Account Name The South Indian Bank Ltd Current Escrow

A/c Credit into Escrow A/c No.

6111648902

IFS Code KKBK0000958 Address of the Branch Mittal Court,224, Nariman Point,

Mumbai - 400 021 Narration Application Money for Bond Issue

Applicable RBI Guidelines

The present issue of Bonds is being made in pursuance of Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 issued by the RBI, covering Prudential Guidelines on Implementation of Basel III Capital Regulations in India covering Criteria for Inclusion of Debt Capital Instruments as Tier 2 Capital(Annex 5) and Minimum Requirements to ensure loss absorbency of Additional Tier 1 instruments at pre-specified trigger and of all non-equity regulatory capital instruments at the PONV(Annex 16) read along with RBI circular DBOD.No.BP.BC.38/21.06.201/2014-15 dated September 1, 2014 on Implementation of Basel III Capital Regulations in India – Amendments (as amended from time to time). This issue Bonds and the terms and conditions of the Bonds will be subject to the applicable guidelines issues by the Reserve Bank of India and the Securities and Exchange Board of India from time to time.

Note: The Bank reserves its sole and absolute right to modify (pre-pone/ postpone) the above issue schedule without giving any reasons or prior notice. The Bank also reserves its sole and absolute right to change the deemed date of allotment and issue size of the above issue without giving any reasons or prior notice. Consequent to change in Deemed Date of Allotment, the Coupon Payment Dates and/or Redemption Date may also be changed at the sole and absolute discretion of the Issuer.

b. Cash Flow:

Name of the Company The South Indian Bank Ltd

Face Value 10,00,000

Date of Allotment Sept 30th2015

Redemption Date 31stOctober 2025

Coupon Rate 10.25% p a


112

Frequency of Interest Payment

Every financial year end date being 31st March of that year and on maturity

Day Count Convention Actual/Actual

Cash Flow Date No. of Days in Coupon Period

Amount (in Rupees)

Interest 31 March 2016 183 51,250.00

Interest 31 March 2017 365 1,02,500.00

Interest 02 April 2018 367 1,03,061.64

Interest 01 April 2019 364 1,02,219.18

Interest 31 March 2020 365 1,02,219.95

Interest 31 March 2021 365 1,02,500.00

Interest 31 March 2022 365 1,02,500.00

Interest 31 March 2023 365 1,02,500.00

Interest 01 April 2024 367 1,02,780.05

Interest 31 March 2025 364 1,02,219.18

Interest 31October 2025 214 60,095.89

Principal 31October 2025

10,00,000.00

Note: The above example is for illustration purpose only and does not take into account the effect

of holidays announced as well as the impact of the loss absorption features mentioned in the Term

Sheet. The actual payment of interest shall be made as per the terms mentioned in the Information

Memorandum.


113

Declaration A DECLARATION BY THE DIRECTORS THAT

(a) the company has complied with the provisions of the Act and the rules made thereunder;

(b) the compliance with the Act and the rules does not imply that payment of dividend or

interest or repayment of debentures, if applicable, is guaranteed by the Central

Government;

(c) the monies received under the offer shall be used only for the purposes and objects

indicated in the Offer Document;

I am authorized by the Board of Directors of the Company vide resolution dated July

15th2015to sign this form and declare that all the requirements of Companies Act, 2013 and

the rules made thereunder in respect of the subject matter of this form and matters

incidental thereto have been complied with. Whatever is stated in this form and in the

attachments thereto is true, correct and complete and no information material to the

subject matter of this form has been suppressed or concealed and is as per the original

records maintained by the company

It is further declared and verified that all the required attachments have been completely,

correctly and legibly attached to this form.

It is further declared that all the relevant provisions in the regulations/guideline issued by

SEBI and other applicable laws have been complied with and no statement made in this

Disclosure Document is contrary to the provisions of the regulations/guidelines issued by

SEBI and other applicable laws, as the case may be. The information contained in this

Disclosure Document is as applicable to privately placed debt securities and subject to

information available with the Company. The extent of disclosures made in the Disclosure

Document is consistent with disclosures permitted by regulatory authorities to the issue of

securities made by the companies in the past.

For The South Indian Bank Limited ________________________________________________________________________ Authorized Signatory Place: Thrissur Date: 28/09/2015


114

Annexures

Annexure – I: Credit Rating Letter from CARE


115


116

Annexure – II: Credit Rating Letter from India Ratings


117


118

Annexure - III: Letter of Consent from Debenture Trustee


119


120


121

Annexure – IV: Letter of consent from Registrar


122

Annexure – V: In-Principle Approval of the Stock Exchange


123

Annexure – VI: Application Form

THE SOUTH INDIAN BANK LIMITED Head Office: SIB House, T.B. Road, Mission Quarters, Thrissur 680 001, Kerala, India.

Tel: +91-487-2420020, 2420058, 2420113 ; Fax: +91 487 2442021 E-mail: [email protected]; Website::www.southindianbank.com

Application Form Sr. No. Dear Sirs, Having read and understood the contents of the Disclosure Document dated 29thSeptember2015 for Private Placement, we apply for allotment to us of the Unsecured, Redeemable Non-Convertible, Basel III Compliant Tier II Subordinated Bonds in the nature of Debentures. The amount payable on application as shown below is remitted herewith. On allotment, please place our name on the Register of Bond holders. We bind ourselves to the terms and conditions as contained in the Disclosure Document for Private Placement. We note that the Bank is entitled in its absolute discretion to accept or reject this application whole or in part without assigning any reason whatsoever.

(PLEASE READ THE INSTRUCTIONS CAREFULLY BEFORE FILLING THIS FORM)

Form in which certificate is to be issued

Demat NSDL [ ] CDSL [ ]

DP NAME:

DPID: CLIENT ID:

We understand that in case of allotment of Bonds to us, our Beneficiary Account as mentioned above would be credited to the extent of Bonds allotted. In case the Bonds allotted to us cannot be credited to our Beneficiary Account for any reason whatsoever, we will accept physical Bonds certificates. The application shall be for a minimum of 10 Bonds and in Multiples of 1 (One) Bond

thereafter (Each bond of Rs. 10,00,000)

Remittance through Cheque/Draft No. of Bonds applied for (In figures ) No. of Bonds applied for (In words) Amount (Rs.) ___________ (in words) __ ______________________ Date Cheque /Demand Draft No. Cheque /Demand Draft drawn on




124

Remittance through RTGS No. of Bonds applied for (In figures ) No. of Bonds applied for (In words) Amount (Rs.) ___________ (in words) __ ______________________

Remittance Particulars

Mode of Remittance

UTR No. Name of the Remitting Bank and Branch and Date of Remittance

RTGS

We are applying as {Tick () whichever is applicable} 1 Company Body Corporate 2 Commercial Bank 3 Regional Rural

Bank 4 Co-operative Banks 5 Financial Institution 6 Insurance

Companies 7 Mutual Fund 8 Provident/Superannuation/

Gratuity Funds 9 Port Trusts

10 NBFC & Residuary NBFC 11 Association of Persons 12 Others (Please specify)

Application Details

First Applicant’s Name in Full (Block letters) Second Applicant’s Name in Full (Block letters) Third Applicant’s Name in Full (Block letters) Mailing Address in Full (Do not repeat name. Post Box No. alone is not sufficient.) Pin: Tel: Fax: Tax Details PAN or GIR No. IT Circle / Ward / District Not Allotted

Details of Bank Account of the First Applicant:

Name of the Bank ____________________Branch____________________________

Account No: ____________________________ Nature of Account: SB/CA RTGS Code of Bank/ Branch _______________________

Tax Deduction Status: (Please tick one)


125

( ) Fully Exempt (Please furnish exemption certificate): __________________________________________________________________________

( ) Tax to be deducted at Source: ___________________________________________________________________________

Specimen Signature

Name of the Authorised Signatory Designation Signature

1.

2.

Acknowledgement Slip shall be given to the Investors as shown below the Instructions.

-----------------------------------------------------------Tear Here-----------------------------------------

ACKNOWLEDGEMENT SLIP

The South Indian Bank Ltd Head Office: SIB House, T.B. Road, Mission Quarters, Thrissur 680 001, Kerala, India.

Tel: +91-487-2420020, 2420058, 2420113 ; Fax: +91 487 2442021 E-mail: [email protected]; Website::www.southindianbank.com

Application Form Sr. No:

Receivedfrom__________________________________________________________________ Address________________________________________________________________________ an application for _____ Bonds along with Cheque/Demand Draft No. ______ Dated _________ Drawn on _____________ for Rs. __________ (Rupees_________________________ ___________________________________________ only)

(Note: Cheques and Drafts are subject to realisation)

RTGS Remittance Particulars

Mode of Transfer

Date of Remittance

Name of the Remitting Bank and

Branch

Amount of Remittance

RTGS Rs. ____________ (Rupees ___________________)




126

INSTRUCTIONS 1) Application Forms must be completed in BLOCK LETTERS IN ENGLISH. A blank space

must be between two or more parts of the name. For Example:

A B C D E L T D

2) Application forms duly completed in all respects must be lodged with the Bank at its head office, before the closure of the subscription. Cheques/Demand Drafts should be drawn in favour of The South Indian Bank Ltd. and crossed ‘Accounts Payee only’. Cheques / Demand Drafts may be drawn on any bank which is situated at and is a member of the Bankers’ clearing house situated at the Centers where the application form is submitted as mentioned elsewhere in the Information Memorandum. Investors may also remit the application money through RTGS (if remitted from branches of other Banks), with instructions to credit the same to the above account (A/c No.6111648902) maintained at Nariman Point Branch, of Kotak Mahindra Bank Ltd, Mittal Court,224, Nariman Point, Mumbai - 400 021Branch. 3) The branches of other Banks transferring the Application Money through RTGS to the

credit of the above account shall send the money through RTGS Code No. KKBK0000958 4) As an abundant precaution, the investors are advised to send by fax the particulars of

the remittances made through RTGS [like i) Name of the Investor ii) Number of Bonds applied for iii) Amount of Application Money remitted iv) Date of the remittance v) Bank and Branch through which the remittance is made etc.] to any of the Advisors, on the fax number mentioned elsewhere in the Document/Application Form.

6) Cash, outstation cheques/drafts, money orders, postal orders and stock invest will NOT be accepted.

7) As a matter of precaution against possible fraudulent encashment of interest warrants due to loss/misplacement, applicants are requested to mention the full particulars of their bank account as specified in the Application Form. Interest warrants will then be made in favour of the bank for credit to the applicant’s account. In case the full particulars are not given, cheques will be issued in the name of the applicant at his own risk.

8) Receipt of application will be acknowledged by the collecting Bank branch(es) in the “Acknowledgement Slip” appearing below the Application Form. No separate receipt will be issued.

9) All applicant(s) should mention their Permanent Account Number (PAN) or the GIR number allotted under the Income Tax Act, 1961 and the Income Tax Circle/Ward district. In case where neither the PAN nor GIR is allotted, the fact of non-allotment should be mentioned in the application form in the space provided for.

10) The Application would be accepted as per the terms and conditions of the Bonds outlined in the Information Memorandum of Private Placement.

11) Signatures should be made in English or in any other Indian language included in Schedule VIII of the Constitution of India. Thumb impression must be attested by an authorized official of a Bank or by a Magistrate/Notary Public under his/her official seal.

12) Those desirous of claiming tax exemptions on interest on Application Money are compulsorily required to submit a certificate issued by the Income Tax Officer / relevant declaration forms as per Income Tax Act, 1961 along with the Application Form. In case the above documents are not enclosed with the application forms, TDS will be deducted on interest on Application Money. For subsequent interest payments such certificates have to be submitted periodically.


127

Application Form(s) can be submitted to the offices of the Arrangers or Bankers to the Issue or at the head office of The South Indian Bank mentioned in the Information Memorandum