FUTURE CANARA BANK Directors Report

DIRECTORS’ REPORT: 2016-17


The Board of Directors have pleasure in presenting the 48th Annual Report together with the Balance Sheet as on 31st March, 2017 and Profit & Loss Account for the financial year ended March 31, 2017.


MANAGEMENT DISCUSSION AND ANALYSIS


I. Economic Environment


Indian economy continues to remain as an economic bright spot, despite some growth moderation during 2016-17. As per the provisional estimates released by the Central Statistical Organization (CSO), India''''s Gross Domestic Product (GDP) grew by 7.1% y-o-y in 2016-17 compared to 8.0% in the previous year (under the new base year 2011-12). Agriculture and allied activities grew by 4.9% during the year compared to a growth of 0.7% in last year. Mining & quarrying sector grew by 1.8% against a growth of 10.5% last year. Manufacturing sector grew by 7.9% compared to a growth of 10.8% last year. Electricity, gas, water supply and other utility services sector grew by 7.2% compared to 5.0% last year. Construction sector grew by 1.7% compared to 5.0% last year. Trade, Hotels, Transport, communication & services related to broadcasting sector grew lower by 7.8% compared to 10.5% growth in the previous year. Financial, insurance, real estate & professional services sector grew by 5.7% compared to 10.8% last year. Public administration, defense & other services sector grew higher by 11.3% compared to 6.9% in the last year.


The inflation rate remained well under control and remained within the Reserve Bank of India (RBI) comfort level. The retail inflation rate measured by Consumer Price Index (CPI) came down to 3.89% in March 2017 compared to 4.83% in March 2016. However, Wholesale Price Index (WPI) rose to 5.29% in March 2017 against a decline of 1.09% in March 2016. The divergence between WPI and CPI is expected to narrow under new base year series 2011-12.


Both exports and imports have picked up later during second half of the financial year 2016-17 as against a decline in the previous year. As per the provisional data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), total exports rose to US $274.65 billion compared to US $262.29 billion in the last year. Total imports stood at $380.37 billion against US $381.01 billion in the previous year. Trade gap, during the year, was lower at US $105.72 billion compared to US $118.72 billion last year. The pickup in exports was fuelled by rise in global orders for engineering goods, ready-made garments and petroleum products. Current Account Deficit (CAD) stood at 0.7% of GDP from 1.1% GDP in the last year.


Economic Environment in Karnataka


As per the Economic Survey of Karnataka, the Gross State Domestic Product (GSDP) grew lower by 6.9% during 2016-17 compared to 7.3% in the last year, in line with the national economy. Nevertheless, as an economically developed State in India, Karnataka contributes 7% to the country''''s GDP.


Canara Bank, owing its origin to the State, is continuing its key position in the State. The Bank has been playing a leading role in the State through its 984 branches and 2,483 ATMs, spread across the State. The State contributes about 19.5% to total domestic business of the Bank. The total business of the Bank in the State stood at Rs,15,0401 crore, comprising Rs,90,949 crore under deposits and Rs,59,452 crore under advances as at March 2017, with a credit to deposit (C-D) ratio of 65.37%.


II. MONETARY AND BANKING DEVELOPMENTS


Growth in key monetary aggregates and money supply in 2016-17 reflected the changing liquidity conditions arising from domestic and global financial environment. The monetary policy stance during the year was primarily to contain inflation and manage liquidity.


Money supply (M3) growth, which was 10% at the beginning of the financial year, moderated to 7.3% by end-March 2017 due to demonetization of the high denomination currencies notes of Rs,1000 and Rs,500 (called specified bank notes- SBNs) in November 2016. Such notes, valued at Rs,15.4 lakh crore constituted 86.9% of the value of total currency in circulation. Money supply has improved since then with the progressive re-monetization by the RBI.


Aggregate deposits of the Scheduled Commercial Banks (SCBs) grew higher at 11.8% y.o.y compared to 9.9% growth in the previous year, backed by huge cash deposits in banks that came post demonetization.


The surge in deposits in the banking sector has created large surplus liquidity conditions post-demonization. On the other side, SCBs'''' credit growth came down to a multi-decades low of 5.1% y.o.y against a growth of 11.3% in the last year. Consequently, SCBs'''' C-D ratio stood at 72.91% as on March 31, 2017 compared to 77.72% as on March 18, 2016.


Even though there was some moderation in the incremental addition of NPAs, asset quality of the banking sector continued to be under stress during the year, affecting their profits and profitability.


The year 2016-17 saw the following changes in the key policy measures as announced by the RBI.


- Repo rate decreased by 50 basis points (bps) to 6.25% and reverse repo rate stood at 5.75%, the same level as of last year.


- Marginal Standing Facility (MSF) Rate and Bank Rate were aligned 50 bps above the repo rate at 6.75%.


- Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and Time Liabilities (NDTL) during the year.


- Statutory Liquidity Ratio (SLR) was decreased by 75 basis points to 20.50% during the year.


Changes in Repo Rate and MSF Rate during the year






























































Effective


Since



Repo


Rate


(%)



Reverse


Repo


rate


(%)



Cash Reserve Ratio (CRR) (%) of NDTL



Statutory liquidity ratio (SLR) (%)



MSF


Rate


(%)



April 02, 2016



6.75



5.75



4.00



21.25



7.75



April 05, 2016



6.50



6.00



4.00



21.25



7.00



July 09, 2016



6.50



6.00



4.00



21.00



7.00



October 01, 2016



6.50



6.00



4.00



20.75



7.00



October 04, 2016



6.25



5.75



4.00



20.75



6.75



January, 07, 2017



6.25



5.75



4.00



20.50



6.75



RBI made the following major policy announcements / supervisory review / changes during the year.


- As part of the Asset Quality Review (AOR), the deadline for banks to clean up their balance sheets stood at end-March 2017.


- A Monetary Policy Committee (MPC) constituted with the amendment of the RBI Act, 1934 by the Finance Act, 2016 for maintaining price stability, while keeping in mind the objective of growth. The MPC has been given the task of fixing the benchmark policy rate or repo rate required to contain inflation within the specified target level of 4% with upper tolerance level of 6% and lower level of 2%, as notified in the Gazette of India Extraordinary on 6th June 2016.


- Notified the withdrawal of Legal Tender Status for ''''500 and ''''1000 in line with the Government of India Notification No. 2652 dated November 8, 2016.


- Issued ''''500 banknotes with inset letter ''''E'''' in Mahatma Gandhi (New) Series and ''''2000 banknotes with inset letter ''''R'''', with both bearing the signature of Dr. Urjit R. Patel, Governor, Reserve Bank of India.


- Issued guidelines on ''''Scheme for Sustainable Structuring of Stressed Assets''''(S4A) in order to further strengthen the lenders'''' ability to deal with stressed assets. The Scheme envisages determination of the sustainable debt level for a stressed borrower, and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments, which are expected to provide upside to the lenders when the borrower turns around.


- In its financial stability report, the RBI, as per the macro stress test, projected the Gross NPA ratio to increase from 9.1% in September 2016 to 9.8% by March 2017 and further to 10.1% by March 2018. If the macroeconomic conditions deteriorate, the GNPA ratio may increase further under such consequential stress scenarios. Iron & Steel, Construction, Power and Engineering are the high risk sectors that contribute to high NPAs for the banking industry.


- Issued guidelines for sale of stressed assets to Non - Banking Financial Companies (NBFCs) and Financial Institutions (FIs) in addition of securitization companies or reconstruction companies.


- Advised banks to set aside more funds against their exposure to sectors that are sitting on piles of debt viz., telecom, iron and steel and power sectors.


- Reviewed the extant guidelines on ownership in private sector banks which envisaged diversified shareholding in private sector banks by a single entity / corporate entity / group of related entities.


- Announced a package of measures for the development of fixed income and currency markets for further market development, enhance participation, facilitate greater market liquidity and improve communication.


- Established an Inter-disciplinary Standing Committee on Cyber Security to, inter alia, review the threats inherent in the existing/emerging technology; study adoption of various security standards/protocols; interface with stakeholders; and suggest appropriate policy interventions to strengthen cyber security and resilience.


- Issued Draft Circular on rationalization of Merchant Discount Rate (MDR) for Debit Card Transactions.


- Made it mandatory for banks to allow customers to register their mobile numbers through any ATM. In addition, banks have also been asked to make available mobile registration through internet banking.


- Set up a panel to decide on what exactly qualifies as a bank branch, a move aimed to provide more flexibility to banks as new technology enables them to extend most services without the trappings of a traditional branch.


- Issued the Master Circular on amalgamation of private sector banks, 2016 comprising of applicability, scope and statutory provisos for the banks to amalgamate.


- Issued draft guidelines on Investment Advisory services offered by banks and as per the draft, banks desirous of offering these services may do so either through a separate subsidiary set up for the purpose or one of the existing subsidiaries after ensuring that there is an arm''''s length relationship between the bank and the subsidiary.


- In lines with the Basel III Framework on Liquidity Standards, Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards, banks were permitted to reckon government securities held by them up to another 1% of their NDTL under FALLCR within the mandatory SLR requirement as level 1 HQLA for the purpose of computing their LCR. The total carve-out from SLR available to banks would be 11% of their NDTL.


- As part of the Framework for Revitalizing Distressed Assets in the Economy, RBI amended certain guidelines relating to sale of non-performing assets (NPAs) by banks to Securitization Companies (SCs)/ Reconstruction Companies (RCs).


- Put in place the operating guidelines for small finance banks and payment banks in line with the BASEL standards Minimum capital requirement for a payment as well as small finance bank is fixed at 15%.


- In a significant move on consolidation of banks, Government of India approved 1/4/2017 as the record date for the merger of State Bank of India (SBI) with five of its associate banks, viz., State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP) and also Bharatiya Mahila Bank.


OUTLOOK FOR 2017-18


As per the World Economic Outlook, April 2017, by the International Monetary Fund (IMF), world output (global economy) growth has been projected to improve from 3.1% in 2016 to 3.5% in 2017, with positive growth emanating from Advanced Economies and Emerging Market and Developing Economies. The global trade volume has been projected to expand from 2.2% in 2016 to 3.8% in 2017. Further, the Indian Economy is projected to expand from 6.8% in 2016 to 7.2% in 2017. However, there are uncertainties revolving the protectionism stance, volatile global commodity prices and its ramifications, which may affect growth.


RBI, in its second bi-monthly policy review, has projected that India''''s economy, as measured by Gross Value Added (GVA), would grow by 7.3% for 2017-18, with risks evenly balanced. The headline inflation has been projected in the range of 2-3.5% in the first half of the 2017-18 and in the range of 3.5-4.5% in the second half of 2017-18. The improved outlook is backed by several favorable domestic factors like the increased pace of demonetization and gradually improving economic activities in cash-intensive retail trade, hotels and restaurants, transportation and unorganized segments.


Structural reforms and initiatives undertaken by the Government of India and RBI are expected to positively impact growth in 2017-18. The transmission of past policy rate reductions into banks'''' lending rates will also help encourage both consumption and investment demand in the economy. Likely roll-out of the Goods & Services Tax (GST) from July, 01, 2017, will establish a common market and the abolition of the Foreign Investment Promotion Board (FIPB) will boost investors'''' confidence and bring in efficiency gains. The enabling amendments and policy initiatives undertaken the Government of India to address resolution of the stressed assets, like, institution of the Insolvency and Bankruptcy Code and empowering RBI to issue directions to a bank or banks to initiate resolution process under the Banking Ordinance, amending Banking Regulation Act, 1949, under Section 35 AA and Section 35 AB are expected to yield positive results and revitalize the banks.


Canara Bank performed better during the year in sync with its major thrust areas, viz., increasing retail deposits (including CASA), retail credit, fee income, containing NPA, recovery & up gradation and improving operational financial ratios, such as, Net Interest Margin (NIM), Return on Assets (RoA), Return on Equity (RoE) and Cost-to-Income Ratio.


FINANCIAL PERFORMANCE


During the year, the Bank posted improved performance on profitability and operational financial ratios. While total income was sustained at the previous year''''s level, the Bank could substantially reduce its expenditure over last year, resulting in enhanced operating profit. Operating profit of the Bank increased by 24.72% to Rs,8914 crore compared to Rs,7147 crore last year. The Bank posted a net profit of Rs,1122 crore for 2016-17 compared to a net loss of Rs,2813 crore last year.
























































Key Financial Ratios (%)



March


2016



March


2017



Cost of Funds



6.31



5.59



Yield on Funds



8.11



7.35



Cost of Deposits



6.94



6.25



Yield on Advances



9.71



8.99



Yield on Investments



7.92



7.75



Net Interest Margin (NIM)



2.19



2.23



Return on Assets (RoA)



(0.52)



0.20



Return on Equity (RoE)



(10.69)



4.15



Cost to Income Ratio



50.65



48.85



While RoA and RoE increased to 0.20% and 4.15% respectively compared to negative levels in the last year, NIM improved to 2.23% against 2.19% last year and Cost to Income ratio reduced to 48.85% from 50.65% a year ago.


Income and Expenditure Analysis


During the year, total income increased to Rs,48942 crore, comprising Rs,29586 crore interest from loans and advances, Rs,10711 crore interest from investments, Rs,7554 crore from non-interest income and Rs,1091 crore from other income.


In line with the thrust areas for the Bank, non-interest income registered a robust increase of 54.95% to Rs,7554 compared to Rs,4875 crore recorded during last year. Excluding treasury trading profit of Rs,2982 crore, non-interest income rose by 17.68% to Rs,4572 crore. Apart from trading profit, other major sources of non-interest income, like, profit from exchange transactions (Rs,971 crore), recovery from written off accounts (Rs,489 crore), Government business (Rs,93 crore), banc assurance (Rs,87 crore) and service charges (Rs,1144 crore) contributed to the non-interest income of the Bank. The share of non-interest income to total income increased to 15.43% from last year level of 9.97%.


Total expenditure of the Bank came down by 4.13% y.o.y to Rs,40028 crore from Rs,41751 crore, including interest expenses, which declined by 8.01% to Rs,31516 crore. Operating expenses increased 13.62% to Rs,8512 crore, comprising staff cost of Rs,4915 crore and other operating expenses of Rs,3597 crore. Due to downward movement in the interest rates, the BankRs,s cost of deposits reduced by 69 bps to 6.25% from 6.94% during last year.


The net interest income, the difference between interest paid and interest earned by the Bank, increased to Rs,9872 crore compared to Rs,9763 crore last year.


Capital and Reserves


Net worth of the Bank, as at March 2017 increased to Rs,26914 crore compared to Rs,25911 crore as at March 2016. While the total paid-up capital of the Bank stood at Rs,597 crore, the reserves and surplus increased to Rs,33088 crore.


(Amt. Rs, Crore)


































































Composition of Capital



March 2016 Basel III



March 2017 Basel III



Risk Weighted Assets



333869



338999



CET I



27308



30226



CET I (%)



8.18



8.92



AT I



2064



2896



AT I (%)



0.62



0.85



Tier I Capital



29372



33122



CRAR (%) (Tier I)



8.80



9.77



Tier II Capital



7633



10472



CRAR (%) (Tier II)



2.28



3.09



Total Capital



37005



43594



CRAR (%)



11.08



12.86



Capital Adequacy Ratio, under Basel III, improved to 12.86% as at March 2017 against the regulatory requirement of 10.25%, including capital conservation buffer of 1.25%. Within the capital adequacy ratio, CET I ratio was at 8.92% and Tier I capital ratio was at 9.77%.


During 2016-17 the Bank raised Rs,5124 crore capital, comprising equity capital of Rs,1124 crore from the Rights Issue and Rs,1000 crore additional Tier I capital and Rs,3000 crore Tier II capital by issuing Basel III compliant Tier I and Tier II bonds.


The Bank is comfortable in the capital front. Given Government of India''''s shareholding in the Bank at 66.30%, adequate headroom is available to raise capital in order to support the business growth momentum.


Deposits


Total Deposits increased Rs,495275 crore as at March 2017 compared to Rs,479792 crore a year ago, with a y.o.y. growth of 3.23%.


Current and Savings Bank (CASA) deposits of the Bank increased by 21.21% y-o-y to Rs,149749 crore as at March 2017. The Bank''''s CASA deposits to domestic deposits improved to 32.85% from 27.38% last year. Savings deposits grew by 22.61% to Rs,127168 crore. Current deposits grew by 13.89% to Rs,22581 crore. A major portion of the accretion in CASA deposits had come with cash deposits of demonetized currencies of Rs,1000 and Rs,500 notes. Besides above, the focus on premier CASA products, like, Canara Galaxy, Canara Privilege, SB Power plus and NRI accounts was given to improve the average balances under CASA.


Pursuing a strategy of expanding deposit clientele, the Bank added 53 lakhs deposit clientele accounts during the year, taking the total number of deposit accounts to 6.97 crore.


Advances (net)


The Bank expanded its asset base to a well diversified one comprising of the productive segments of the economy, like, Agriculture and Micro, Small and Medium Enterprises (MSMEs) and other productive sectors in addition to the Retail assets, including Housing, Education, Vehicle loan segments.


In line with the banking sector credit growth, advances (Net) of the Bank grew by 5.33% to reach Rs,342009 crore as at March 2017 compared to Rs,324715 crore a year ago.


The number of borrowal clientele accounts increased to 82 lakhs as at March 2017.


Total business of the Bank increased to Rs,837284 crore, with a y-o-y growth of 4.07% compared to Rs,804506 crore in the previous year.


During the year, the Bank’s total clientele accounts increased by 54 lakhs to 7.79 crore from 7.25 crore last year.


In line with the thrust areas set for the year, the Bank''''s retail lending operations recorded good y-o-y growth.


(Amt. Rs, Crore)


Outstanding retail loans portfolio grew by 8.95% y-o-y to Rs,58910 crore as at March 2017. The disbursals under various retail lending schemes amounted to Rs,34283 crore. The outstanding housing loan portfolio rose to Rs,32285 crore, with a y-o-y growth of 4.23% and accounted for 54.80% of the total retail lending portfolio. The Bank''''s Vehicle loans and other personal loans increased by 19.34% and 14.82% y-o-y respectively.


Education Loans


Over the years, the Bank has assisted lakhs


of promising students to pursue higher education in India and abroad. The Bank''''s education loan portfolio increased to Rs,7651 crore. The Bank has financed around 2.99 lakh students as at March 2017. The Bank is performing consistently well with progressive growth in education loan segment. During 2016-17, the Bank has disbursed education loans worth Rs,855.43 crore.


1000 institutions rated as ''''A'''' grade by NAAC have been mapped for providing education loans to students of these institutes. A Memorandum of Understanding (MOU) has been signed with M/s National Skill Development Corporation (M/s NSDC) for sanction of vocation education loans for students pursuing vocational courses in affiliated Institutes of NSDC throughout the country. MOU has also been signed with M/s The Institute of Company Secretaries of India, New Delhi for extending education loans. Tie-up arrangements are made with M/s BIOCON Ltd, M/s Bosch Ltd and M/s Bombay Stock Exchange Institute, M/s.Volvo Eicher Commercial Vehicles Pvt. Ltd., to encourage vocation education loans.


Government of India has set-up a fully IT-based Student Financial Aid Authority to administer and monitor Scholarship as well as Educational Loan Schemes, through Pradhan Mantri Vidya Lakshmi Karyakram to ensure that no student misses out on higher education for lack of funds. A Vidya Lakshmi portal <www.vidyalakshmi.co.in> has been made live on 15.08.2015. The students can apply online for Education Loan from any bank. The Bank has also in place ''''Vidya Turant'''', an online instant loan sanction facility to students and ''''Vidya Sahay'''', a bridge loan scheme for making down payment for Common Entrance Test (CET), at the time of selection and counseling.


The Bank has been designated as the Nodal Bank for administering subsidy schemes of Government of India, which includes Central Scheme of Interest Subsidy on Educational Loans (CSIS), National Rural Livelihood Mission(NRLM), Padho Pardesh subsidy scheme to provide Interest Subsidy on Education Loans for overseas studies pursued by students belonging to notified minority communities and Dr. Ambedkar Central Sector Scheme Of Interest Subsidy On Educational Loan for Overseas Studies for Other Backward Classes (OBCs) & Economically Backward Classes (EBCs).


Several initiatives were undertaken by the Bank to expand retail credit. During the year the Bank popularized its Online Instant in-Principle Sanction for Housing Loan and Car Loan platform, Pradhan Mantri Awaas Yojana, Housing cum Solar Loans and also Housing Loans to High Net worth Individuals (HNIs), Non-Resident Indians (NRIs) and Agriculturists. Nationwide launching of Campaigns, conduct of Expos, offering competitive interest rates, tie-ups with reputed Builders, Car Dealers, introduction of Direct Selling Agents etc., have helped the Bank in expanding its retail loan portfolio.


Sixteen new Retail Asset Hubs were opened, taking total number of RAHs to 81 across major centres in the country. The Bank also implemented several tech-based initiatives like missed call facility for retail lending Schemes, informing due dates and amount of EMIs for housing loans and introduction of web-based lead generation system.


INTEGRATED TREASURY


Aggregate investments (net) of the Bank stood at Rs,150266 crore as at March 2017. While modified duration of the investments portfolio stood at 5.10 as at March 2017, the modified duration of the Available for Sale (AFS) portfolio reduced to 4.02 from 4.45 in the last year. The trading profit under domestic treasury operations for the year increased to Rs,2982 crore as against Rs,990 crore in 2015-16. Following demonetization of the high value currency notes of Rs,500 and Rs,1000, the bond markets witnessed sharp fall in the yields due to excess system liquidity. The yield on investments declined to 7.75% as at March 2017 compared 7.92% a year ago, due to sale of securities and profit booking during the year.


The Bank continues to be an active player in the Government Securities Market as a Primary Dealer (PD). The total amount of bids submitted for underwriting was Rs,57,483 crore, of which, the underwriting commitment accepted by the RBI was Rs,19,172 crore. With regard to Treasury Bills under PD business, as against the minimum success ratio of 40% to be achieved in each half year, the Bank has a success ratio of 55.42% for the first half year ended September 2016 and 67.96% for the second half year ended March 2017.


Foreign Business Turnover of the Bank aggregated to Rs,235425 crore, comprising of Rs,107525 crore under exports, Rs,65047 crore under imports and Rs,62853 crore under remittances during the year ended March 2017.


The Bank has 8 overseas branches, viz., London and Leicester (U.K), Hong Kong, Shanghai (China), Manama (Bahrain), Johannesburg (South Africa), New York (U.S.A) and Dubai International Financial Centre(DIFC), Dubai (UAE). Besides the above 8 overseas branches, the Bank has a Representative Office at Sharjah (UAE), Canara Bank (Tanzania) Ltd., a wholly owned subsidiary at Dar es Salaam in Tanzania and Commercial Indo Bank LLC, a joint venture bank with State Bank of India in Moscow, Russia. The Bank''''s wholly owned subsidiary at Dar es Salaam in Tanzania opened on 9th May 2016. Overseas business of the Bank crossed US $10 billion mark, constituting over 8% of the Bank''''s total business as at March 2017. Total overseas business stood at Rs,68408 crore, comprising deposits of Rs,40666 crore and advances of Rs,27742 crore.


The Bank''''s international operations are well supported by a wide network of 394 Correspondent Banks, spread across 80 countries and the Bank''''s overseas branches and offices. Rupee Drawing Arrangement has been made with 36 Exchange Houses and 25 overseas banks for channelizing the remittances of Non-Resident Indians (NRIs). The Bank has been managing two Exchange Houses viz., Al Razouki International Exchange Company, Dubai and Eastern Exchange Est., Qatar under Secondment and Management Agreements respectively.


''''Remit Money'''', a web-based speed remittance product has been extended to 36 Exchange Houses and also to the Bank''''s 4 overseas branches, viz., London, Shanghai and Hong Kong and Canara Bank (Tanzania) Ltd. To facilitate instant and hassle free remittances to the beneficiaries of Canara Bank in India, the ''''Flashremit'''', an instant credit facility in association with M/s. UAE Exchange, Abu Dhabi, UAE and ''''Instant Remitmoney'''' an instant credit facility with M/s. Al Razouki International Exchange Company, Dubai, M/s. Eastern Exchange Est., Qatar and M/s. Al Ansari Exchange LLC, UAE, continued during the year.


OTHER SERVICES


The Bank''''s Merchant Banking Division handled Private Placement Capital Gain Bond Issues of National Highways Authority of India (NHAI) and Rural Electrification Corporation Ltd (REC) as Arrangers. The amount mobilized in respect of Capital Gain Bonds Issue of NHAI and REC during the year was ''''87.19 crore.


The Bank acted as Collecting Banker for two Private Placement Issues and one Rights Issue, involving an amount of Rs,1998.30 crore. The number of Public and Debt Issues handled under Application Supported by Blocked Amount (ASBA) was 128 and the amount blocked was Rs,3018.02 crore. Two specialized assignments of ''''Fair Valuation of EquityRs, were also handled by the Division during the year.


The Syndication Group handled projects, involving project cost of Rs,3691 crore during the year, with a total debt size of Rs,2030 crore. The Group earned a commission of Rs,3.40 crore during the year. The funds were arranged for projects in various segments, like, Special Economic Zone (SEZ), Hospital, Wind Energy, Solar Energy, Coal Based Power Generation, Textiles, Education Institution, Freight Corridor etc.


The Bank has tie-up arrangements in both life and non-life insurance segments under its ''''Bancassurance'''' arm. During the year, the Bank earned a commission income of Rs,38.3 crore from its joint venture, viz., M/s Canara HSBC OBC Life Insurance Company Ltd. Under the Mutual Fund business, the Bank earned a commission of Rs,14 crore from its joint venture, viz., M/s Canara Robeco Asset Management Company Ltd. A commission income of Rs,18.6 crore was earned under Non-Life (General) Insurance business from its tie-up arrangements with M/s United India Insurance Company Ltd (UIICL) and M/s Bajaj Allianz General Insurance Co Ltd. The Bank also earned a commission income of Rs,15.8 crore from its tie-up agreement with M/s Apollo Munich Health Insurance Co. Ltd for marketing their health insurance products. The Bank also has Corporate Agency Agreement with M/s Export Credit Guarantee Corporation of India for marketing export policies through its branches across India.


To give impetus to general insurance business and also offer innovative and new products at competitive prices to customers, Bank entered into corporate agency partnership with M/s Bajaj Allianz General Insurance Co. Ltd., as the second general insurance partner under the new IRDAI open architecture regulations. This partnership was launched on 26.11.2016 at Bengaluru.


Under Cards Business, the Bank took several initiatives to expand its card base. As at March 2017, total number of Debit Cards increased to 3.31 crore and Credit Cards base rose to 2.15 lakhs. The Bank earned a profit of Rs,13 crore from its card operation during the year.


The Bank offers its ''''Depository Services'''' from 47 DP Service Centres spread across 34 locations in the country. Through these Centres, the Bank is extending Online Trading Facility to DP clients from its own broking subsidiary M/s Canara Bank Securities Ltd., Mumbai. In order to have better synergy of operations and efficient delivery of services, its DP activity has been hived off to M/s Canara Bank Securities Ltd., with effect from 01.04.2017.


Executor, Trustee and Taxation Services outfit of the Bank provides services like Debenture / Security Trusteeship, Will and Executorships, Trusteeship, Personal Tax Assistance and Power of Attorney Services. During the year, it generated a fee based income of Rs,1.10 crore from the above services and availed Central Value Added Taxes (CENVAT) credit of Rs,106.80 crore during the year.


The Bank handles Government Business, comprising Direct and Indirect Tax collections, payment of Central Government and State Government Pensions, Handling of Postal Transactions and State Government Treasury Transactions, Public Provident Fund Scheme and Senior Citizens'''' Saving Scheme and issue of Inflation Indexed Bonds of RBI, issuing Sovereign Gold Bonds, Sukanya Samridhi Scheme, accepting deposits under Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS) and accepting tax under the Scheme. These products contributed to improvement of CASA and also earned a fee income of Rs,93.31 crore during year.


The Bank provides several online payment services, viz., E-payment of Sales Tax / Commercial Tax in Maharashtra, Tamilnadu, Karnataka, Andhra Pradesh, Bihar, Dadra & Nagar Haveli, Odisha, Punjab, West Bengal and Delhi, Virtual Treasury Package in Maharashtra, E-payment of Taxes to Transport Department in Tamilnadu, Collection of Property Tax for the Corporation of Chennai in Tamilnadu and Bengaluru in Karnataka, Online opening of PPF Accounts and E- Stamping project in Jharkhand, Uttar Pradesh, Tamilnadu and Karnataka.


The Bank has been authorized as the accredited banker for Ministry of Human Resources Development (MHRD), Ministry of Culture, Ministry of Youth Affairs & Sports, Archaeological Survey of India and Unique Identification Authority of India (UIDAI), New Delhi. The Bank implemented the National Pension System for Unorganized Sectors under Swavalamban Scheme during 2012-13. The Government of India has launched Atal Pension Yojana Scheme in place of Swavalamban with a view to provide defined pension to unorganized sector. The Bank could mobilise 1,05,232 accounts as at March 2017.


Agricultural Innovation Centre (AIC) outfit of the Bank handled 111 assignments. These 111 assignments consisted of 95 appraisals, 9 vetting, 6 viability studies and 1 project formulation. The total outlay of the assignments worked out to a term loan component of Rs,1011 crore and the Bank earned a fee income of Rs,4.76 crore during the year.


ASSET QUALITY


The Bank performed reasonably well in asset quality, despite continued stress at the industry level. The Bank was able to contain its Gross Non Performing Assets (NPAs) to gross advances ratio below 10% at 9.63% as at March 2017 compared to 9.40% as at March 2016. Gross Non Performing Assets (NPAs) as on March 31, 2017 stood at Rs,34202 crore compared to Rs,31638 crore in the previous year. With a Net NPAs of Rs,21649 crore, the net NPA ratio has come down to 6.33% from 6.42% a year ago.


Cash Recovery during 2016-17 aggregated to Rs,5042 crore compared to Rs,4758 crore in the last year. Recovery from written off accounts stood at Rs,705 crore of which, recovery from loss assets was Rs,352 crore. During the year, an amount of Rs,2265 crore was upgraded as against Rs,1460 crore in the previous year.


During the year, recovery amounting to Rs,541 crore was made on account of initiating action under SARFAESI Act. The Bank conducted 5513 recovery meets, which resulted in a recovery of Rs,404 crore. During the year 12515 cases were referred to Lokadalat, out of which, 6596 cases were settled, covering an amount of Rs,59 crore. Besides, the Bank took several initiatives to contain slippages and speed up recovery from overdue loan accounts. These include, identification of stressed accounts for restructuring/rephasing in time, conduct of Canadalats at branch level, cluster Adalats at Regional levels and mega adalats at Circle levels for one time settlements (OTS), Lokadalats at district levels, regular follow-up of overdues in loan accounts through Call Centre, conduct of e-auctions for sale of seized assets and initiation of stringent recovery measures against Wilful Defaulters. As at March 2017, there were 471 wilful defaulters, with an outstanding amount of Rs,3640 crore.


The Bank also formulated a Special Scheme for settlement of small NPAs (up to Rs,10 lakh), with a special focus on Education / Agricultural / MSME Loans. In the Educational Loan Sector, two Special OTS schemes were launched with liberal terms and additional concession for accounts with sanctioned limits up to Rs,4 lakh and for accounts with sanctioned limits above Rs,4 lakh and up to Rs,7.50 lakh. Special Scheme for small value agricultural loans with limit up to Rs,5 lakh and repeatedly restructured due to natural calamities and MSME loans up to Rs,1 crore launched to provide relief to the affected borrowers.


As at March 2017, the outstanding stressed assets portfolio (including restructured standard accounts) of the Bank stood at Rs,44581 crore, accounting for 12.55% of gross advances.


Risk Management


BASEL III Capital Adequacy Framework and Future Strategies


An independent Risk Management Wing at the Head Office is functioning as a nodal centre for overall implementation of various risk management initiatives across the Bank. Risk Management Sections are functioning at all 21 Circle Offices of the Bank as an extended arm of the Risk Management Wing.


The Bank has in place risk management policies across geographies and across all risks encompassing the entire gamut of risk profile. These include policies on Credit Risk Management, Operational Risk Management, Market Risk Management, Asset Liability Management and Group Risk Management.


The Bank has in place an Internal Capital Adequacy Assessment Process (ICAAP) under Pillar 2 of Basel III norms. The ICAAP exercise covers the domestic and overseas operations of the Bank, the Subsidiaries,


Joint Ventures, Sponsored Entities and Associates. Stress testing exercise is also performed by the Bank to ascertain the potential risks faced by the Bank. The ICAAP document is reviewed and approved by the Risk Management Committee of the Board and the Board of Directors.


The Bank has a Board Level Sub-Committee for Capital Planning Process. The Committee articulates macroeconomic scenarios vis-a-vis capital requirements of the Bank, in tune with business strategies. The Committee ensures maintenance of appropriate level of Capital to Risk Weighted Assets Ratio (CRAR) and evaluates various options for raising the capital.


Adoption of Advanced Approaches


In an Endeavour to move towards Advanced Approaches under Basel III for computation of capital for Credit, Market and Operational Risk, the Bank has engaged the services of a Consultant for implementation of Enterprise-wide Integrated Risk Management solution for itself and the Group Entities, so as to build requisite risk management framework.


As a pre-requisite for the implementation of Enterprise-wide Integrated Risk Management architecture, the Bank has procured a Risk Solution that would enable it to meet requirements of Advanced Measurement Approaches.


The Bank has submitted Letters of Intent to RBI for adoption of Internal Rating Based (IRB) Approach for calculation of capital charge for Credit Risk, Internal Models Approach for calculation of capital charge for Market Risk and Advanced Measurement Approach for calculation of capital charge for Operational Risk.


Preparedness for Basel III


The final guidelines on Basel III Capital Regulations became effective from 1st April, 2013. As per RBI guidelines, the transitional period for full implementation of Basel III Capital regulations is extended up to 31.03.2019. The banks in India need to maintain a minimum Common Equity Tier 1 (CET1) capital of 5.50%, Tier 1 capital of 7.00%, total capital of 9.00% and Capital Conservation Buffer (CCB) of 2.50% at the end of March 2019. The banks also have to maintain a minimum Tier 1 Leverage Ratio of 4.50% during parallel run from 1st January, 2013 to 1st January, 2017, as a credible supplementary measure to the risk based capital requirements.


The Bank endeavors to remain adequately capitalized and has drawn plans to meet the capital requirements stipulated by RBI in transitory phase. The Bank has adequate headroom to raise capital from the market, including recapitalization support from the Government of India. Moving ahead, the Bank''''s capital requirement shall be met by injecting fresh equity capital, retention of profit, optimization of business levers, proactive capital planning and management.


Credit Risk Management


The Credit Risk Management process outlines the principles, standards and approach for credit risk management at the Bank. Systems, procedures, controls and measures are in place to actively manage the credit risks, optimize resources and protect the Bank against adverse credit situations. In order to comprehensively address the issues and concerns of the Credit Risk, the Bank has put in place a comprehensive Credit Risk Management Policy.


A robust system for appraisal of loan/credit proposals, including seeking adequate information for appraising the viability of the proposal and creditworthiness of the applicant for sanctioning credit limits, well defined credit approval process and authorization matrix, standards for collateral management, credit monitoring, restructuring of advances, MSME and Off Balance Sheet Exposures.


Risk Acceptance, Risk Measurement, Prudential Exposure Norms, Organizational Structure, Strategies and Operational Process are in place. In order to address the credit risk at portfolio level and the issue of concentration risk, the Policy prescribes fixation of various exposure ceilings. Risk Based Pricing is in tune with the Risk profile of the borrower to generate returns to achieve target RoA and NIM.


The Bank has a Loan Review Mechanism for constantly evaluating the overall performance of the borrowal accounts and for bringing about qualitative improvements in credit administration, monitoring and credit audit. The entire process of the Loan review and monitoring is dully administered by the Credit Administration & Monitoring Wing.


Market Risk Management


The Market Risk framework of the Bank aims at restricting loss from all types of market risk loss events and also to establish limit structure and triggers for various market risk factors.


Exposure limits, such as, Stop Loss Limits on Trading Book, Intraday and Overnight Limit for various Currency Positions, Dealer-wise Limits, Aggregate Gap Limit, Limits on Money Market Operations, Modified Duration Limits for investment portfolio and VaR Limits are fixed to act as risk mitigants/triggers. Mid Office of Risk Management Wing monitors these limits, along with other triggers, on a daily basis. A reporting framework has been put in place for effective and timely monitoring of market risk limits and triggers.


Operational Risk Management


Operational Risk Management framework in the Bank is based on ethics, organization culture and strong operating procedures, involving corporate values, internal control culture, effective internal reporting and contingency planning.


The Bank has adopted polices for management of Operational Risk, which covers various aspects, such as, Operational Risk Management Structure, Outsourcing Activities and Business Continuity Plan.


At present, the Bank is in the process of migration to Advanced Approaches of Basel III framework from Basic Indicator Approach (BIA). The Bank has initiated process and activities for implementation of Advanced Approaches and to put in place Incident Management, Key Risk Indicators (KRI), Risk Control & Self Assessment (RCSA) and Scenario Analysis to compute capital charge for Operational Risk.


Asset Liability Management


The ALM Policy of the Bank seeks to strike appropriate balance in the maturity and re-pricing profile of assets and liabilities, so as to reduce liquidity risk and manage interest rate risk. Within the policy framework, the Board of the Bank has set up Asset Liability Management Committee (ALCO), which is entrusted, inter alia, with the role of management of assets and liabilities including the funding strategies and its composition, product pricing, stress test and contingency action plan among others. A balanced ALM structure helps to sustain the spreads, profitability and long-term viability of the Bank.


The Bank has implemented the RBI guidelines with respect to Liquidity Coverage Ratio (LCR) with effect from 01.01.2015. As on 31.03.2017, LCR of the Bank is above the stipulated regulatory minimum of 80%.


Group Risk


The Bank has various Subsidiaries, Joint Ventures and Sponsored Entities, which are engaged in diversified activities. As the Bank has considerable stake in these Group Entities, Bank has put in place a Group Risk Management Policy to identify and manage risk in intra Group transactions and exposures to raise the standard of Corporate Governance by reducing and avoiding conflicts of interest between the Group Entities and also to ensure ''''Arms Length Principle'''' among Entities, with regard to business parameters. Presently, the Bank has introduced a Group Chief Risk Officer (GCRO) to supervise the risk management activities of the Group Entities.


NATIONAL PRIORITIES Priority Sector Advances


The Bank continues to accord importance to varied goals under national priorities, including agriculture, micro and small enterprises, education, housing, microcredit, credit to weaker sections and specified minority communities.


Priority Sector Advances of the Bank as at March 2017 reached Rs,160269 crore, recording a y-o-y growth of 10.11% and achieved 46.05% to Adjusted Net Bank Credit (ANBC) against 40% mandated norm.


(Amt. Rs, Crore)































Priority Sector Advances



As at March



Growth



2016



2017



Amount



%



Total Priority Sector



145558



160269



14711



10.11



Agriculture



67176



74079



6903



10.28



With a focus on credit delivery to Agriculture, the Bank''''s advances under agriculture portfolio increased by 10.28% to Rs,74079 crore, covering over 60 lakh farmers. Under agriculture lending, the Bank achieved 19.45% to ANBC against 18% mandated norm. During 2016-17, the Bank''''s agriculture credit disbursal increased to Rs,58691 crore compared to Rs,57018 crore in the previous year.


The Bank undertook special campaigns for extending Crop Loans facility to all farmers.


During the year, the Bank issued 6.50 lakh Kisan Credit Cards (KCCs), amounting to Rs,10017 crore. The credit outstanding under KCCs was at Rs,14305 crore as at March 2017. 7.41 lakh Kisan RuPay Cards were issued against eligible accounts of 7.44 lakh, with an achievement of 99.60%.


The Bank actively participated in various Government Sponsored Schemes, such as, Prime Minister''''s Employment Generation Programme (PMEGP), National Rural Livelihood Mission (NRLM), National Urban Livelihood Mission (NULM), Swarna Jayanti Shahari Rozgar Yojana (SJSRY), and Differential Rate of Interest (DRI) Scheme.


As at March 2017, the outstanding advances under the following Government Schemes, aggregated to ''''999 crore, involving around 1.92 lakh beneficiaries.


Performance under various Government Sponsored Schemes


(Amt. Rs, Crore)












































Scheme



MARCH 2017



Accounts



Amount



Prime Minister Employment Generation Programme (PMEGP)



13895



483



National Rural Livelihood Mission (NRLM)



13625



284



National Urban Livelihood Mission (NULM)



2367



21



Differential Rate of Interest (DRI)



153186



141



Swarna Jayanti Shahari Rozgar Yojana (SJSRY)



8547



70



Total



191620



999



Advances to DRI stood at Rs,141 crore, consisting of 1.53 lakh beneficiaries, of which, advances by rural and semi-urban branches amounted to Rs,112 crore.


In support of the underprivileged sections of the society, the Bank''''s advances to SCs/STs beneficiaries amounted to Rs,7354 crore as at March 2017, covering 5.45 lakh borrowers. The advances to SCs/STs comprised 4.59% of total priority sector advances.


Advances to weaker sections reached Rs,45106 crore, constituting 11.07% to ANBC against mandated norm of 10%.


Various components of advances to Weaker Sections as at March 2017


(Amt. Rs, Crore)

















































Sectors



Outstanding



Accounts



Amount



Small & Marginal Farmers, Landless Labourers, Tenant Farmers and Share Croppers



3894735



39550



Artisans, Village and Cottage Industries



43630



845



SC / ST Beneficiaries



544614



7354



DRI Loans



153186



141



SJSRY Beneficiaries



8547



70



Self Help Group



121350



2500



Joint Liability Group



26764



587



As at March 2017, advances to specified minority communities aggregated to Rs,27688 crore, accounting for 17.28% of the total priority sector advances against the stipulated 15% norm.


Deendayal Antyodaya Yojana (DAY) - National Rural Livelihoods Mission ( DAY-NLRM/ Ajeevika)


Under the Scheme Aajeevika, National Rural Livelihood Mission (NRLM) was launched by the Ministry of Rural Development (MoRD), Government of India in June 2011, with an aim to reduce poverty by enabling the poor household to access gainful self employment and skilled wage employment opportunity, resulting in a sustainable livelihood. The main objectives of the Scheme includes providing interest subvention to Women SHGs (WSHGs) from rural areas who avail loans up to Rs,3 lakhs at 7% per annum and to provide an additional subvention of 3% if WSHGs repay in time, thereby reducing the effective rate of interest to 4%. In the first phase, the focus was on 150 most backward districts.


RBI vide their Circular FIDD.GSSD.CO.BC.No.13/09.01.03/ 2016-17 dated 25/08/2016, has intimated that Interest subvention scheme on credit to Women SHG during 2016-17 for all Commercial Banks and Co-operative Banks will be implemented in 100 more districts along with existing 150 districts. All WSHGs (Women SHGs) promoted by NRLM, NGOs, Central or State Government,


NABARD under WSHG Programme which are linked with the banks are eligible for benefits under the Scheme. Ministry of Rural Development, Government of India, has designated Canara Bank as nodal bank for handling claims of banks. The Bank has developed a web portal, which enables all member banks to upload their claims.


(Amt. in Rs, Crore)







































Interest Subvention Claims made by all Member Banks



Financial Year



No of Accounts



Amount



2013-14



361231



266



2014-15



500829



304



2015-16



568304



365



2016-17



29020



394



TOTAL



1720484



1330



Micro Small & Medium Enterprises (MSMEs) Lending


Advances to MSMEs increased to Rs,74302 crore as at March 2017, with a y-o-y growth of 11.42%. Credit to M&SE segments rose to Rs,53818 crore, with a 5.74% growth. The number of Micro Enterprises accounts recorded a growth of 16.46% against mandated norm of 10%.


Under Pradhan Mantri Mudra Yojana (PMMY), the Bank disbursed an amount of Rs,5182 crore during 2016-17. Sanctions and disbursals under different schemes of Mudra Yojana are as under:












































Category



As on 31.03.2017 (Amt. in Rs, Crore)



No. of Accounts



Sanction


Amount



Disbursement


Amount



Outstanding


Amount



Shishu (< Rs,50,000)



232338



795



790



671



Kishore (Above Rs,50,000 -Rs,5 lakh)



156938



2873



2799



2459



Tarun (Above Rs,5 lakh to Rs,10 lakh)



21023



1633



1593



1459



Total



410299



5301



5182



4589



During the year, the Bank has taken following initiatives to increase flow of credit to MSME sector and also to bring about continued awareness about the steps taken.


- 166 SME Specialized Branches are functioning throughout India and for faster processing of credit proposals. Besides 166 SME Specialized Branches, 49 SME Sulabhs (Specialised SME Loan Processing Centres) are also functioning across the country.


- To extend financial assistance to micro and small enterprises without offering any collateral security and with relaxed lending terms, some segment specific schemes have been launched/ continued, such as, Doctors'''' Choice (improved version), MSE SMART, MSME CAP, MSME Vahan, MSE Vijeta and Canara Contractors'''' Scheme, Canara CARAVAN, Flavour and MSME Expo.


- To increase the Bank''''s exposure to specific clusters and activities, new area / cluster specific schemes have been launched / continued, such as, Canara Textiles, catering to the Textile Sector, Special Scheme for lending to units engaged in Manufacturing of Ceramics and Vitrified Tiles and Weavers Mudra Scheme in lieu of Weavers Credit Card.


- Mega Credit camps are conducted to create awareness and pool sources for increased credit flow to MSME sector.


- Summits were arranged for Start-up Entrepreneurs involving functionaries from different Government Departments and local industrial bodies / organizations for necessary inputs and guidance for successful entrepreneurship.


- Micro Enterprises Business Centre’s were established at Circle Offices for handholding Micro Enterprises.


- The Bank has an exclusive website www. canaramsme.com for easy access and understanding of MSME initiatives.


- The online submission of MSME applications and tracking thereof by the customers are facilitated and used extensively by the MSME clientele.


- Entrepreneur Development Centre at Head Office have been catering to the needs of budding entrepreneurs by way of assimilation of information regarding the challenges and opportunities under MSME, conducting seminars, training initiatives, interaction with the concerned organizations and propagation of the same through regular bulletins.


-An exclusive set up established at Head office has been looking into the aspects of monitoring, slippage management and handholding in times of stress by way of rehabilitation and restructuring of MSME units as per Government guidelines.


The Bank is the nodal agency for Credit Linked Capital Subsidy Scheme (CLCSS) of Ministry of MSME, Government of India, for technology up gradation of Micro & Small Enterprises (MSEs). During 2016-17, subsidy amount received from the Ministry under the Scheme was ''''11.22 crore and the same has been utilized fully during the financial year.


Empowering Women


Department of Women Empowerment at Head Office and Centre for Entrepreneurship Development for Women (CEDW) at 21 Circle Offices and 118 Regional Offices across the country are working relentlessly towards economic empowerment of women. These CEDWs have reached potential entrepreneurs, undertook counselling, supported training need, provided finance and marketing. A total of 350 programmes were organized by the CEDWs during 2016-17.


These centres have also assisted in the formation of Self Help Groups (SHGs) & Credit Linkages. Rural Self Employment Training Institute set up at Harohalli, Karnataka to provide EDP/ skill training to women in various vocations has trained 19,995 women since inception, out of which 630 women have been trained during 2016-17. Through 65 Training Institutes supported by the Bank, 4.05 lakh women have been trained in self employment ventures since inception, of which 33,393 have been trained during 2016-17. Apart from establishing two exclusive Mahila Banking Branches, the Bank has equipped over 80 branches with all women employees to give focused attention to women clientele. 18 Micro finance branches are also engaged in supporting the financial needs of micro & small women entrepreneurs & SHG members. 27.74 lakh women have been assisted with a credit outstanding to the tune of ''''44766 crore as at March 2017 and achieved 13.59% to ANBC as against RBI''''s requirement of 5%.


Several concessions have been provided to women borrowers that include relaxation in eligibility norms and 0.50% interest concession on educational loans to girl students. ''''MSE Vijeta'''', an exclusive loan Scheme for women entrepreneurs for loans up to Rs,2 crore under Micro & Small Enterprises and Canara Mahila Savings Scheme, a special Savings Bank deposit product, with many concessions have been devised for women.


During the year, six successful ''''Women Entrepreneurs were given cash awards on the occasion of International Women''''s Day under Canara Bank Best Woman Entrepreneur Awards (CBWEA), 2015-16''''. Under marketing support, the Bank has provided five unique custom built, high-tech, solar powered mobile sales vans ''''Canara Vahini'''' with computerized billing and card swiping facility to enable women entrepreneurs and SHGs to exhibit or market their products at Bengaluru and Shivamogga (Karnataka) and Aligarh (Uttar Pradesh), Coimbatore (Tamil Nadu), and Thrissur (Kerala).


Lead Bank Responsibility


The Bank has lead bank responsibilities in 31 districts in the country, viz., 8 in Karnataka, 7 in Tamil Nadu, 5 in Kerala, 5 in Uttar Pradesh, 3 in Delhi, 2 in Telangana and 1 in Bihar. The Bank is the Convenor of the State Level Bankers'''' Committee (SLBC) in Kerala.


Financial Inclusion


A Holistic Approach to Financial Inclusion


With the basic objective of bringing the large unnerved population under the banking mainstream, the Bank is striving towards a more inclusive growth by making financial products and services available to financially excluded and marginalized sections of the society in particular. As per the Government of India and the Reserve Bank of India directions, the Bank has been actively pursuing the agenda of Financial Inclusion (FI), with the key interventions, viz., expanding banking infrastructure, offering appropriate financial products, making extensive & intensive use of technology and through advocacy of financial literacy.


The Bank has 878 Financial Inclusion (FI) Branches under branch model and also engaged 2459 Business Correspondent Agents (BCAs) under Business Correspondents (BC) model. In addition, 473 Ultra Small Branches (USBs) are also operational in the Bank.


Pradhan Mantri Jan Dhan Yojana (PMJDY)


PMJDY is the initiative from Government of India for comprehensive financial inclusion of the population of India, particularly aiming at covering the households hitherto excluded from the purview of banking and empowering them with benefits and facilities provided by the banking industry. Accounts opened under PMJDY are issued with Rupay Debit card, accidental Insurance coverage to the extent of Rs,1 lakh, life insurance cover of ''''30,000/- (for accounts opened up to 31.01.2015) and overdraft up to Rs,5000/- after six months of satisfactory dealing. The Bank was allotted 3962 Sub Service Area (SSAs) and 3371 Urban Wards for implementation of PMJDY.


Performance highlights under PMJDY


- Opened 64.66 lakh accounts under PMJDY and mobilized a CASA deposit of Rs,1858 crore.


- Covered all allotted 10049 villages comprising of 3962 allotted SSAs and 3371 Urban wards by opening of 878 brick & mortar branches and engaging 2459 Business Correspondent Agents (Bank Mitras) at remaining locations.


- Hand-held devices are provided to Bank Mitras for facilitating payments, which are enabled for accepting Rupay Cards. The Bank has Issued 42.59 lakh Rupay Debit Cards to all eligible account holders. Bank Mitras have done Rs,83.39 lakh transactions, amounting to Rs,1324 crore during the year.


- Zero balance accounts under PMJDY have been brought down to 14.24%.


- Established a Toll Free number 1800 425 11222 for PMJDY as a part of grievances redressal mechanism and popularized through publication in National Dailies.


-Provided overdraft facilities up to Rs,5000/- to all eligible PMJDY account holders. 2.14 lakh PMJDY accounts holders have been provided with overdraft facility, amounting to Rs,29.73 crore during the year.


So far the Bank has provided PMJDY overdraft facilities to 4.48 lakh account holders to the extent of Rs,74.26 crore.


Social Security Schemes


Under various social security schemes launched by the Government of India during the year, following enrolments have been made.


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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