CENTRAL BANK OF INDIA Directors Report

_DIRECTORS’ REPORT 2016-17_


Your Directors have pleasure in presenting the Annual Report of the Bank along with the Audited statement of Accounts, the


Profit and Loss accounts and the cash flow statement for the year ended March 31, 2017.


1. PERFORMANCE HIGHLIGHTS


- Total Business of the Bank stood at Rs. 449679 crore as at March 31, 2017 compared to Rs. 456336 crore as at March 31, 2016.


- Total Deposits reached to Rs. 296671 crore in March 2017 from Rs. 266184 crore as at March, 2016 showing a y-o-y growth of 11.45 %.


- Total Advances of the Bank stood at Rs. 153008 crore in March 2017 as against Rs. 190152 crore in March 2016 which was due to sale of loan assets of Rs. 22991.22 crore through IBPC participation.


- Total Income for the financial year ended March 31, 2017 was Rs. 27537 crore as compared to Rs.27825 crore for the financial year ended March 31, 2016.


- Non Interest Income of the Bank increased to Rs. 2876 crore for the financial year ended March 31, 2017 compared to Rs. 1938 crore for the financial year ended March 31, 2016, registering y-o-y growth of 48.38 %.


- Operating Profit of the Bank stood at Rs. 3089 crore for the financial year ended March 31, 2017 as compared to Rs. 2642 crore for the corresponding previous financial year ended March 31, 2016, registering y-o-y growth of 16.92 %.


- Net Loss for the quarter ended March 31, 2017 reduced to Rs. 592 crore in comparison to Net Loss of Rs. 898 crore for the quarter ended March 31, 2016. Net Loss of the Bank stood at Rs. 2439 crore for the financial year ended March 31, 2017.


- Expenses on employees decreased by Rs. 251 crore during the year to Rs. 4214 crore from Rs. 4465 crore in previous year.


- Capital Adequacy Ratio (as per Basel-II) stood at 11.28 per cent with Tier I at 7.16 percent as against 11.07 per cent in previous year. Capital Adequacy Ratio (as per Basel III) stood at 10.95 per cent with Tier I at 8.62 percent as against 10.41 per cent in previous year.


- Net worth stood at Rs. 14735.84 crore.


- Cash Recovery increased to Rs. 2378 crore in the financial year ended March 31, 2017 as compared to Rs.1287 crore in the previous financial year ended March 31, 2016.


- Up gradation of assets improved to Rs. 1183 crore in the financial year March 31, 2017 as compared to Rs.608 crore in the previous financial year ended March 31, 2016.


- Gross NPA to Gross Advances increased to 17.81 % as on March 31, 2017 from 11.95 % as on March 31, 2016, which was due to sale of loan assets of Rs. 22991.22 crore through IBPC participation.


- Net NPA to Net Advances increased to 10.20 % as on March 31, 2017 from 7.36 % as on March 31, 2016.


- Provision Coverage Ratio improved to 58.43% as on March 31, 2017 from 51.52 % as on March 31, 2016.


- Net Interest Margin (NIM) stood at 2.51 per cent in FY 2016-17.


- Business per Employee stood at Rs.11.81 crore in FY 2016-17.


- Return on Assets (ROA) is (0.80) per cent for the financial year ended March 31, 2017.


- The credit deployment under priority sector increased from Rs.82771 crore to Rs.88085.80 crore during 2016-17, recording a growth of Rs.5314.80 crore over previous year. However, to take a benefit of excessive lending in PS advances, Bank sold PSLCs worth Rs.1065 crore and IBPC Rs.8761.80 crore Inspire of the sale; Bank''''s PS lending is in excess by Rs.1621.40 crore.


- Agriculture Advance of the Bank increased to Rs.37537 crore from Rs.36760 crore in FY 2016-17 registering y-o-y growth of 2.11 per cent.


- MSME Advances for the Financial Year ended March 31, 2017 stood at Rs. 30701 crore constituting 20.06 % of the total loans and advances.


- Retail Loans for the Financial Year ended March 31, 2017 stood at Rs. 32008 crore constituting 20.92% of the total loans & advances.


- Housing Loan portfolio of the Bank stood at Rs. 12510 crore constituting 39.08 % of the total Retail Portfolio as on March 31, 2017.


- Bank has established 46 Rural Self Employment and Training Institute (RSETIs) in 9 States of the country viz. Madhya Pradesh(18), Bihar(9), Maharashtra(6), Uttar Pradesh(5), West Bengal(3), Chhattisgarh(2), Rajasthan(1), Orissa(1) and Assam(1). During the year 2016-17, the RSETIs conducted 1153 training programmes and imparted training to 31961 candidates. Out of this, 26511 (i.e.83%) trainees were settled through bank credit, wage settlement and self-finance.


- Bank has 3 RRBs as on 31st March 2017 in 3 states covering 47 districts with a network of 1629 branches.


- Under Financial Inclusion Bank has covered 4,330 villages with population above 2000 and 18,376 villages with population below 2000. Bank has covered all these villages through 6,387 BC Agents. We have opened 176 Urban Financial Inclusion centres. Bank has opened 170.89 lacs Basic Saving Bank Deposit Accounts (BSBDA) through its BCs and Branches. Total balance in these accounts is 2070.14 crores as on 31st March, 2017.


- Total earning from Ban assurance business is Rs. 17.07 crore for FY 2016-17.


- As on 31st March 2017, Bank has a network of 4714 branches, 3677 ultra-small branches (USBs), 5285 ATMs, 10 Satellite Offices & 1 Extension Counters across the country.


2. INCOME & EXPENDITURE


Details of income and expenditure for the period 2016-17 are given hereunder:


Rs. In Crores






























































































































































31.03.2017



31.03.2016



Variation



%



1



INTEREST INCOME



24661



25887



(1226)



(4.73)



- Advances



16283



18978



(2695)



(14.20)



- Investments



7372



6474



898



13.87



- Others



1006



435



571



131.26



2



NON INTEREST INCOME



2876



1938



938



48.40



3



TOTAL INCOME (1 2)



27537



27825



(288)



(103)



4



INTEREST EXPENDED



18087



18822



(735)



(3.90)



- Deposits



17330



17653



(323)



(183)



- Others



757



1169



(412)



(54.43)



5



OPERATING EXPENSES



6361



6361



0



0



- Establishment



4214



4465



(251)



(5.62)



- Others



2147



1896



251



13.24



6



TOTAL EXPENSES (4 5)



24448



25183



(735)



(2.92)



7



SPREAD (1-4)



6574



7065



(491)



(6.95)



8



OPERATING PROFIT (3-6)



3089



2642



447



16.91



9



PROVISIONS



5528



4060



1468



36.15



10



PROVISIONS FOR TAX



(1090)



(1251)



161



(12.87)



11



NET PROFIT/(LOSS)



(2439)



(1418)



(1021)



(72.00)



3. PROVISIONS


Details of Total Provisions of Rs.5528 crore charged to the Profit and Loss Account during the year 2016-17 vis-a-vis previous year are detailed as under:


(Rs. in crore)






















































31.03.2017



31.03.2016



Variation



Provisions for Standard Assets



(164)



470



(634)



Provisions for NPAs



6216



4913



1303



Provisions for Restructured Accounts



321



(1235)



1556



Provision on Investments



300



851



(551)



Provisions for Taxes



(1090)



(1251)



161



Others



(55)



312



(367)



TOTAL



5528



4060



1468



4. PROFITABILITY RATIOS


(In percentage)









































31.03.2017



31.03.2016



Cost of Deposits



6.20



6.86



Cost of Funds



6.27



6.95



Yield on Advances



9.01



10.09



Yield on Investments



7.38



7.46



Net Interest Margin



2.51



2.78



Cost Income Ratio



67.31



70.65



5. BUSINESS RATIOS


(In percentage)









































31.03.2017



31.03.2016



Interest Income to Average Working Fund (AWF)



8.10



8.85



Non-Interest Income to AWF



0.94



0.66



Operating Profit to AWF



1.01



0.90



Return on Average Assets



(0.80)



(0.48)



Business Per Employee (Rs. in crore)



11.81



11.95



Net Profit per Employee (Rs. in lakh)



(6.49)



(3.76)



6. CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)


The components of Capital Adequacy Ratio were as under:







































31.03.2017



31.03.2016



Basel-II



Basel-III



Basel-II



Basel-III



Tier-I



7.16



8.62



7.44



8.20



Tier-II



4.12



2.33



3.63



2.21



Capital Adequacy Ratio



11.28



10.95



11.07



10.41



7. NET LOSS


The Bank has incurred net loss amounting to Rs.2439 crore during the financial year ended March 31, 2017. Accordingly, Board of Directors has not recommended any dividend on equity shares for the Financial Year 2016-17.


8. CHANGES IN THE BOARD DURING THE YEAR


During the year under review, the following changes took place in the Board of Directors of the Bank:


- Shri S. B. Rode ceased to be the Officer Employee Director of the Bank w.e.f. close of working hours on 01.04.2016 consequent upon completion of his tenure.


- Shri N. Nityananda was appointed as Part-time Non-official Director under Chartered Accountant Category for a period of three years w.e.f 21st June 2016.


- Shri Gurbax Kumar Joshi ceased to be the Workmen Employee Director of the Bank w.e.f. close of working hours on 09.07.2016 consequent upon completion of his tenure.


- Smt N. S. Rathnaprabha ceased to be the Part-Time Non-official Director of the Bank w.e.f. close of working hours on 18.12.2016 consequent upon completion of her three years'''' tenure.


- Shri R. K. Goyal retired from the position of Executive Director of the Bank w.e.f. close of working hours on


31.12.2016 on attaining superannuation.


- Shri P. Ramana Murthy was appointed as Executive Director of the Bank for a period of 3 years w.e.f. 17.02.2017.


- Shri R. C. Lodha retired from the position of Executive Director of the Bank w.e.f. close of working hours on


28.02.2017 on attaining superannuation.


The Board places on record its appreciation of valuable contribution extended by Shri S. B. Rode, Shri Gurbax Kumar Joshi, Smt N. S. Rathnaprabha, Shri R. K. Goyal and Shri R. C. Lodha who ceased to be the directors of the Bank during the Financial Year 2016-17.


9. WHISTLE BLOWER POLICY


Bank follows Central Vigilance Commission Guidelines on Whistle Blower complaints under Public Interest Disclosure and Protection of Informers (PIDPI) resolution. Bank also has a web based portal in the name of “Cent Vigil” to facilitate reporting malpractices by employees and directors without revealing their identities which would be known to the Chief Vigilance Officer only. Directors and Employees may also approach Chairman of the Audit Committee on need basis. This helps to curb malpractices, prevent frauds and boost up morale of the employees.


10. BUSINESS RESPONSIBILITY REPORT


Business Responsibility Report as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been hosted on the website of the Bank (www. centralbankofindia.co.in). Any member interested in obtaining a physical copy of the same may write to the Company Secretary at the Head Office of the Bank.


11. DIRECTORS’ RESPONSIBILTY STATEMENT


The Directors confirm that in the preparation of the annual accounts for the financial year ended March 31, 2017:


- The applicable accounting standards have been followed along with proper explanation relating to material departure, if any;


- The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied;


- Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for the financial year ended March 31,2017;


- Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the applicable laws governing banks in India ; and


- The accounts have been prepared on a going concern basis;


- Internal Financial Control are adequate and were operating effectively; and


- Proper systems have been devised to ensure compliance with the provisions of all applicable laws and these systems were adequate and operating effectively.


12. CORPORATE GOVERNANCE


The Board of the Bank is committed to adapt Corporate Governance practices in letter and spirit. The Bank has adopted well documented system and practice on Corporate Governance.


13. ACKNOWLEDGMENT


The Board of Directors places on record its gratitude to the Government of India, Reserve Bank of India and the Securities and Exchange Board of India for their valuable guidance and support. The Board acknowledges with gratitude the unstinted support and faith of its customers and shareholders. The Board wishes to place on record its appreciation of the dedicated services and contribution made by members of staff.


For and on behalf of the Board of Directors


Sd/-


Place : Mumbai Rajeev Rishi


Date : May 23, 2017 Chairman & Managing Director

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