The Board of Directors have pleasure in presenting the Bank''''s Annual Report along with audited accounts for the financial year ended 31st March 2017.
The Business of the Bank stood at Rs,385777.25 crore as on 31.03.2017 as against Rs,362554.20 crore as on 31.03.2016. Total deposits of the Bank stood at Rs,219339.39 crore, registering a growth of 4.99%. The gross advances as at end-March 2017 stood at Rs,166437.86 crore, registering a growth of 8.33%. The Credit deposits ratio of the Bank, as at end- March 2017, stood at 75.92%. The Bank ensured adequate flow of credit to the productive sectors of the economy. The Loans & Advances portfolio of the Bank is well diversified and balanced. Bank''''s retail credit increased by 37.15% during FY 2016-17. Net interest margin for FY 2016-17 was 2.42% as against 2.66% for FY 2015-16.
CAPITAL & RESERVES
The Bank had received a sum of Rs,300.00 crore on 30.03.2016 as contribution of the Central Government for preferential allotment of equity shares pending allotment. The shareholders of the Bank in the Extraordinary General Meeting held on 02.05.2016 approved, through special resolution, the issue and allotment of 24772914 equity shares of face value of Rs,10/- each to the Government of India @ Rs,121.10 per share (including premium). Consequently, during FY 2016-17, the Paid-up capital of the bank increased by Rs,24.77 crore and Share Premium by Rs,275.23 crore. The Capital & Reserves as on March 31, 2017 have gone up to Rs,14121.36 crore as against Rs,14941.15 crore as at end March 2016 and the ratio of Capital & Reserves to average working funds stood at 5.87% as on 31.03.2017 as against 6.54% as on 31st March 2016. During the year, the Bank has issued Basel III Compliant Tier II Bonds aggregating to Rs,1000 crore and Basel III Compliant Additional Tier I Bonds aggregating to Rs,1500 crore.
CAPITAL ADEQUACY RATIO
The Bank''''s Capital Risk Weighted Assets Ratio (CRAR) as on 31.03.2017 under Basel III guidelines stood at 11.64% as against
11.76% as on 31.03.2016. The Bank''''s Capital Risk Weighted Assets Ratio (CRAR) under Basel II stood at 12.57% as on 31.03.2017 as against 12.80% as on 31.03.2016.
The Bank has posted a total income of Rs,21187.85 crore during the year as against Rs,21934.78 crore last year. The Operating Profit of the Bank stood at Rs,4170.13 crore for the year ended 31.03.2017. The Bank has incurred a net loss of Rs,1094.07 crore during the fiscal 2016-17.
The Financial performance of the Bank is given below:
Financial Performance (Amt. in Rs, crore)
Provisions & Contingencies
Net Profit/(loss) for the Year before Exceptional Item
Less: Exceptional Item
Net Profit/(loss) for the year after Exceptional Item
Add-Profit brought forward
Add-Investment Reserve Account
Net Profit/ (loss) available for appropriation
Transferred to Statutory Reserve
Transferred to Revenue and Other reserves
Transferred to Special Reserve u/s 36(1) (viii) of the Income Tax Act 1961
Transferred to Capital Reserve
Transferred to Investment Reserve Account
Tax on Dividend
Balance carried over to Balance Sheet
In view of the net loss of Rs,1094.07 crore during the fiscal, the Board of Directors of the Bank has not recommended any Dividend, for the financial year 2016-17.
During FY 2016-17, your Bank has embarked upon an ambitious and challenging journey of ''''Re-modeling of the Bank''''s Organization and Operational Structure'''' - Project Udbhav to grow in terms of business, profitability, level of compliance and outreach. Project Udbhav aims to achieve Business Growth with enhanced focus on Sales and reduced turnaround time
(TAT), build business ownership, enhance Customer Service & Satisfaction, boost Operational Efficiency and strengthen Compliance function.
The three Pillars of Project Udbhav are (1) Business Processes & Operating Model, (2) Organization Structure and (3) Branch Transformation.
Business Processes & Operating Model: Business processes and operating model have been re-engineered so as to remove redundant and duplicate activities and bring about effectiveness and efficiency. Besides, the power of data is being harnessed under Business Analytics to improve cross selling abilities across customer segments.
Organization Structure: Creation of a flattened Organization Structure based on Functional Specialization whereby sanctioning of credit facilities is done at two levels only i.e., Cluster Office and Head Office. The majority of retail loans and commercial loans up to Rs,10 Crore are sanctioned at Cluster Office level that ensures quick decision making and reduction of turnaround time (TAT).
Besides, specialized verticals have been established to cater to Corporate Business i.e., Mid Corporate Business and Large Corporate Business. Mid Corporate Branches have been established at 48 centres to cater to Mid Corporate Borrowers
i.e., borrowers availing more than Rs,10 Crore and up to Rs,50 Crore while Large Corporate Branches have been established at 5 centres to cater to Large Corporate Borrowers i.e., borrowers availing more than Rs,50 Crore.
A specialized Vertical, Customer Relations Group (CRG) have been established for garnering institutional CASA while dedicated Resolution, Recovery & Law (RR&L) Vertical has been constituted for carrying out recovery & resolution activities in case of borrowers classified as NPA.
Branch Transformation: The branch is an integral channel for business sourcing and plays a pivotal role in providing customer service and establishing brand value of the Bank in local geography by nurturing relationships at the grass root level. Under Branch Transformation, the Branch layout & infrastructure is being redesigned so as to enrich the customer experience with state of art ambience and technology. Further, delineation of the role & responsibilities of the Branch Officials shall enable them to focus on Sales & Marketing and drive efficiency. 500 branches have been covered under the first phase of Branch Transformation.
CORPORATE SOCIAL RESPONSIBILITY
- Bank is a corporate citizen, with resources at its command and benefits, which it derives from operating in society in general. It therefore has a commitment to give back to the community where it operates and owes a solemn duty to the
less fortunate and underprivileged sections of the society.
- Staff members are encouraged to make contributions by understanding the aspirations of underprivileged sections and endeavoring to evolve measures to remove indisputable social and development lacunae. This leads to their self development and improvement of Bank''''s image besides development of the community.
- Under the community service various welfare and social activities are undertaken by the bank both in Banking and non Banking areas to raise the quality of life of the downtrodden and under privileged sections of the society.
- Providing assistance on education, health, sports and environment services are the focus areas.
Major CSR initiatives undertaken by the Bank in FY 2016-17
The Bank has been taking various steps/projects to improve social welfare as part of its CSR activities. The main activities undertaken during 2016-17 include installation of water coolers, RO systems, donation of chairs, uniforms, blankets, invertor, computers to various organizations/trusts/institutes etc. Further, Bank has also taken initiatives for Cleaning of ''''Lal Ghat'''' & ''''Hanuman Garhi Ghat'''' at river Ganga, Varanasi by adopting these holy areas and distributed Tulsi sapling on the occasion of 75th Foundation day to valuable customers of the Bank.
BOARD OF DIRECTORS
During 2016-17, 13 meetings of Board of Directors, 14 meetings of Management Committee of Board and 8 meetings of Audit Committee of Board, were held. Smt. Mala Srivastava and Sh. Sanjay Kapoor joined the Board of the Bank as Part-time Non-official Directors on 25.04.2016 and 26.07.2016 in terms of Section 9(3)(h) and 9(3)(g) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (the ''''Act''''), respectively. Sh. Himanshu Joshi joined the Board as Executive Director in terms of Section 9(3)(a) of the Act on 09.08.2016. Sh. Kingshuk Bhattacharya, Workmen Employee Director and Narendra J Kotiawala, Officer Employee Director vacated their office on the Board of the Bank on 13.06.2016 and 29.01.2017 on completion of tenure as Directors of the Bank. Sh Prashant Goyal joined the Board of the Bank as Government of India Nominee Director on 16.01.2017 in place of Sh. Arunish Chawla in terms of Section 9(3)(b) of the Act.
EXPLANATIONS/COMMENTS BY BOARD OF DIRECTORS IN RESPONSE TO MODIFIED OPINION/ADVERSE REMARKS/ EMPHASIS OF MATTER, IF ANY, IN THE INDEPENDENT AUDITORS’ REPORT
DIRECTORS'''' RESPONSIBILITY STATEMENT
The Directors confirm that, in preparation of the Annual Accounts for the year ended 31st March, 2017:
- the applicable accounting standards have been followed along with proper explanation relating to material departures, 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 true and fair view of the state of affairs of the Bank at the end of financial year and of the profit and loss of the Bank for the year ended on 31st March, 2017,
- proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.
- Internal financial controls were laid down and these were adequate and operating effectively
- Proper systems were in place to ensure compliance of all laws applicable to the Bank and these were adequate and operating effectively
- The accounts have been prepared on a going concern basis.
The Board of Directors expresses its gratitude to the Government of India, Ministry of Finance, Department of Economic Affairs, Reserve Bank of India (RBI), Securities and Exchanges Board of India (SEBI) and other Government & Regulatory Agencies for their valuable guidance and continued support provided to the Bank throughout the year. The Board of Directors are also grateful to the valued customers, esteemed stakeholders and also wish to place on record its great appreciation of the staff members for their involvement and dedication in the overall development, growth and prosperity of the Bank.
For and on behalf of the Board
Place: Gurugram (ANIMESH CHAUHAN)
Date: 12.05.2017 MANAGING DIRECTOR & CEO