PDF Financial Statements AMERICAN EXPRESS BANKING CORP.

Financial Statements AMERICAN EXPRESS BANKING CORP.

(INDIA BRANCH) Year ended March 31, 2019

1

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

Independent Auditor's Report

To The Chief Executive Officer American Express Banking Corp.- India Branch

Report on the Audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of American Express Banking Corp.- India Branch (`the Bank'), which comprise the Balance Sheet as at March 31, 2019 and the Profit and Loss Account and the Cash Flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements together with notes thereon give full information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (`the Act'), in the manner so required for banking companies and give true and fair view in conformity with the accounting principles generally accepted in India: a. in the case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2019; b. in the case of the Profit and Loss Account, of the profit of the Bank for the year ended on that date; c. in the case of the Cash Flow Statement, of the cash flows of the Bank for the year ended on that date.

Basis for Opinion

2. We conducted our audit in accordance with the Standards on Auditing (`SAs') specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (`ICAI') together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder; and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information Other than the Financial Statements and Auditor's Report Thereon

3. The Bank's management is responsible for the other information. The other information comprises the information included in the Bank's annual report, but does not include the financial statements and our auditors' report thereon. The other information is expected to be made available to us after the date of this auditor's report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

When we read the other Information and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charges with governance as required under SA 720 `The Auditor's responsibilities Relating to other Information'.

Responsibility of Management for Financial Statements

4. The Bank's management is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under prescribed Section 133 of the Act, provision of Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines issued by Reserve Bank of India (`RBI') from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Bank's management is also responsible for overseeing the Bank's financial reporting process.

1

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

Auditor's Responsibilities for the Audit of the Financial Statements

5. Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Our audit process in accordance with the SAs is narrated in details in Annexure 1 to this report.

Report on Other Legal and Regulatory Requirements

6. The Balance Sheet and Profit and Loss Account and the Cash Flow Statement have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.

7. As required by Section 30(3) of the Banking Regulation Act, 1949, we report that: a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and have found them to be satisfactory; b. the transactions of the Bank, which have come to our notice have been within the powers of the Bank; and c. Since the bank is having only one branch, the question on reporting the number of branches audited by us and the manner of audit thereon does not arise.

8. As required by Section 143 (3) of the Act, we report that: a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; b. in our opinion proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books; except that the backup of the books of accounts and other books and papers maintained in electronic mode has not been maintained on servers physically located in India, Refer note I of Schedule 18 of the financial statements wherein it has been stated that the backup of the books of accounts and other paper maintained in electronic mode has been maintained on servers physically located outside India;

c. the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Bank;

e. reporting requirement pursuant to provision of Section 164 (2) of the Act is not applicable considering the Bank is a branch of American Express Banking Corp which is incorporated in United States of America with limited liability;

f. With respect to the adequacy of the internal financial controls with reference to financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in Annexure 2 to this report;

g. Reporting requirement pursuant to section 197 of the Act related to managerial remuneration is not applicable considering the Bank is a branch of American Express Banking Corp which is incorporated in United States of America with limited liability;

h. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us, we report as under: i the Bank has disclosed the impact, if any, of pending litigations on its financial positions in its financial statements as at March 31, 2019; Refer Schedule 12 and Note IV. 11 of Schedule 18 to the financial statements; ii the Bank has made adequate provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts- Refer note IV. 1 (g) of schedule 18 to the financial statements; iii the Bank is currently not liable to transfer any amount to the Investor Education and Protection Fund; iv the disclosure requirements on holdings as well as dealing in specified bank notes during the period from November 08, 2016 to December 30, 2016 as envisaged in Notification G.S.R 308(E) dated March 30, 2017 is not applicable to the Bank.

For Khimji Kunverji & Co LLP (formerly Khimji Kunverji & Co- FRN 105146W) Chartered Accountants

Mumbai June 25, 2019

Gautam V Shah Partner (F-117348)

2

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

Annexure 1 to the Independent Auditors' Report (referred to in para 5 titled "Auditor's Responsibilities for the Audit of the Financial Statements")

As part of our audit in accordance with SAs we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

? Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, to design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

? Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system in place and the operating effectiveness of such controls.

? Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

? Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

? Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

? Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Annexure 2 to the Independent Auditors' Report [referred to in paragraph 8(f) under `Report on Other Legal and Regulatory Requirements' in the Independent Auditor's Report]

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting of American Express Banking Corp- India Branch ("the Bank") as at March 31, 2019 in conjunction with our audit of the financial statements of the Bank for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Bank's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ("ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Bank's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Bank's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining

3

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Bank's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Bank's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Bank's internal financial control over financial reporting includes those policies and procedures that:

(a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank;

(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Bank are being made only in accordance with authorisations of management and directors of the Bank; and

(c) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Bank's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Bank has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI except that the backup of the books of accounts and other books and papers maintained in electronic mode has not been maintained on servers physically located in India, Refer note I of Schedule 18 of the financial statements wherein it has been stated that the backup of the books of accounts and other paper maintained in electronic mode has been maintained on servers physically located outside India.

For Khimji Kunverji & Co LLP (formerly Khimji Kunverji & Co- FRN 105146W) Chartered Accountants

Mumbai June 25, 2019

Gautam V Shah Partner (F-117348)

4

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

BALANCE SHEET AS AT MARCH 31, 2019

(Amount in INR `000)

As at

Schedule March 31,

2019

As at March 31,

2018

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2019

(Amount in INR. `000)

Year ended Year ended

Schedule March 31, March 31,

2019

2018

CAPITAL AND LIABILITIES

Capital Reserves and Surplus Deposits Borrowings Other Liabilities and Provisions

1 17,603,299

2

473,155

3 21,355,294

4 12,534,290

5 33,530,707

Total 85,496,745

14,238,924 402,410

16,105,638 17,039,801

29,465,835

77,252,608

INCOME

Interest Earned Other Income

13 5,187,308 14 14,216,713

3,633,676 12,374,506

Total 19,404,021 16,008,182

EXPENDITURE

Interest Expended

15 1,461,081 1,258,108

Operating Expenses

16 15,125,894 12,256,795

Provisions and Contingencies 17 2,534,761 1,681,175

ASSETS

Cash and Balances with Reserve Bank of India Balances with Banks and Money at Call and Short Notice Investments Advances Fixed Assets Other Assets

6 1,895,697

7 1,485,030 8 23,411,094 9 53,398,404 10 316,448 11 4,990,072

Total 85,496,745

Contingent Liabilities

12

Bills for Collection

Significant Accounting Policies and

Notes to Financial Statements 18

1,219,506 ?

1,425,697

1,463,608 18,638,151 50,981,045

280,102 4,464,005

77,252,608

828,661 ?

Total 19,121,736 15,196,078

PROFIT / (LOSS) Net Profit /(Loss) for the Year Profit / (Loss) brought forward

282,285

812,104

(2,964,037) (3,573,115)

(2,681,752) (2,761,011)

APPROPRIATIONS

Transfer to Statutory Reserve

70,571

203,026

Transfer to Other Reserves

174

?

Transfer to Government /

proposed dividend

?

?

Balance carried over to

Balance Sheet

(2,752,497) (2,964,037)

(2,681,752) (2,761,011) Significant Accounting Policies and Notes to Financial Statements 18

The schedules referred above form an integral part of the Balance Sheet.

This is the Balance Sheet referred to in our Report of even date.

The schedules referred above form an integral part of the Profit and Loss Account.

This is the Profit and Loss Account referred to in our Report of even date.

For Khimji Kunverji & Co. LLP

For and on behalf of

(formerly Khimji Kunverji & Co ? FRN: 105146W)

American Express Banking Corp.- India Branch

Chartered Accountants

Gautam V. Shah

Manoj Adlakha

Partner

Chief Executive Officer

Membership No. F-117348

Vivek Sehgal

Financial Controller

Place: Mumbai

Place: Gurugram

Date: June 25, 2019

Date: June 20, 2019

5

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2019

Year ended March 31, 2019

(Amount in INR. `000)

Year ended March 31, 2018

Cash Flow from Operating activities

Net profit/(loss) before taxes

282,285

812,104

Adjustments for :

Provision for standard advances

42,411

162,598

Provision for non-performing advances

450,790

187,030

Depreciation on assets

111,661

118,495

Net (profit)/loss on sale of land, building and other assets

(1,125)

(1,215)

Operating profit before working capital changes (Increase)/decrease in investments (Increase)/decrease in advances Increase/(decrease) in deposits (Increase)/decrease in other assets Increase/(decrease) in other liabilities and provisions (Taxes paid)/(Taxes deducted at source)/Refund received [net]

886,022 (4,772,943) (2,868,149) 5,249,656 (682,313) 4,022,461

(55,294)

1,279,012 (2,360,311) (15,528,507)

1,813,716 1,674,852 3,650,288 (68,566)

A Net Cash Flow (used in)/from operating activities

1,779,440

(9,539,516)

Cash Flow from Investing activities

Fixed assets purchased Proceeds from sale of fixed assets

(154,853) 7,971

(78,593) 4,491

B Net Cash Flow (used in)/from Investing activities

(146,882)

(74,102)

Cash Flow from Financing activities

Infusion of capital Proceeds/(Repayment) from/of Borrowings Proceeds from Subordinate Debt

3,364,375 (9,455,511)

4,950,000

2,764,040 7,396,030

?

C Net Cash Flow from/(used in)Financing activities

(1,141,136)

10,160,070

Net Increase/(Decrease) in cash and cash equivalents (A+B+C)

Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Increase/(decrease) in cash and cash equivalents

491,422

2,889,305 3,380,727

491,422

546,452

2,342,853 2,889,305

546,452

Notes to the Cash Flow Statement 1. Cash and cash equivalents represents cash and balances with banks, balance with RBI as disclosed in Schedule 6 and 7 2. The above Cash Flow Statement has been prepared under the "Indirect method" as set out in the Accounting Standard (AS-3) on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

This is the Cash Flow Statement referred to in our Report of even date.

For Khimji Kunverji & Co. LLP (formerly Khimji Kunverji & Co ? FRN: 105146W) Chartered Accountants

For and on behalf of American Express Banking Corp.- India Branch

Gautam V. Shah Partner Membership No. F-117348

Manoj Adlakha Chief Executive Officer

Vivek Sehgal Financial Controller

Place: Mumbai Date: June 25, 2019

Place: Gurugram Date: June 20, 2019

6

AMERICANEXPRESSBANKINGCORP.

INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

SCHEDULES FORMING PART OF FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2019

(Amount in INR. `000)

As at

As at

March 31, March 31,

2019

2018

(Amount in INR. `000)

As at

As at

March 31, March 31,

2019

2018

SCHEDULE 1 ? CAPITAL Amount of deposit kept with RBI under section 11 (2) of the Banking Regulation Act, 1949 as per contra.

404,410

201,384

404,410 201,384

HEAD OFFICE ACCOUNT Opening balance Additions during the year

14,238,924 11,474,884 3,364,375 2,764,040

Closing balance

17,603,299 14,238,924

SCHEDULE 2 ? RESERVES

AND SURPLUS

I. STATUTORY RESERVES

Opening balance

402,410

Additions during the year

70,571

Closing balance

472,981

199,384 203,026

402,410

II CAPITAL RESERVES Opening balance Additions during the year Closing balance

?

?

?

?

?

?

III SHARE PREMIUM Opening balance Additions during the year Closing balance

?

?

?

?

?

?

IV REVENUE AND OTHER RESERVES Opening balance Additions during the year

Closing balance

V Balance of Profit and Loss Account

? 174 174

? 473,155

? ? ? ? 402,410

SCHEDULE 3 ? DEPOSITS

A. In India I. DEMAND DEPOSITS

From banks From others

?

?

?

?

II. SAVINGS BANK DEPOSITS

?

?

III. TERM DEPOSITS From banks From others (Institutional)

?

?

21,355,294 16,105,638

21,355,294 16,105,638

B. (i) Deposits of branches in India 21,355,294

(ii) Deposits of branches

outside India

?

21,355,294

16,105,638

? 16,105,638

SCHEDULE 4 ? BORROWINGS I. BORROWINGS IN INDIA

Reserve Bank of India Other banks

?

?

3,034,290 12,489,801

?

II. BORROWINGS OUTSIDE INDIA 9,500,000

Tier 2 Debt Capital raised in the

form of Head Office Borrowings

in Foreign Currency

[Refer Note IV. 1. b of Schedule 18]

12,534,290

4,550,000 17,039,801

Secured borrowings included in I and II above

Nil

Nil

SCHEDULE 5 ? OTHER

LIABILITIES AND PROVISIONS

I. Bills payable

?

?

II. Inter-office adjustments (net)

?

?

III. Interest accrued

272,152 189,486

IV. Others (including provisions)* 33,258,555 29,276,349

33,530,707 29,465,835

* Refer Note IV. 6 of Schedule 18

SCHEDULE 6 ? CASH AND BALANCES WITH RESERVE BANK OF INDIA

I. Cash in hand (including foreign currency notes)

II. Balances with Reserve Bank of India i) In Current Account ii) In Other Accounts

?

1,895,697 ?

1,895,697

?

1,425,697 ?

1,425,697

SCHEDULE 7 ? BALANCES WITH

BANKS AND MONEY AT

CALL AND SHORT NOTICE

I. In India

Balances with banks

i) In Current Accounts

1,485,030 1,463,608

ii) In Other Deposit Accounts

?

?

Money at call and short notice

i) With banks

?

?

ii) With other institutions

?

?

1,485,030 1,463,608

II. Outside India i) In Current Accounts ii) In Other Deposit Accounts

?

?

?

?

iii) Money at call and short notice

?

?

?

?

1,485,030 1,463,608

7

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download