Your Directors have great pleasure in presenting before you the Annual Report of theBank along with the audited Balance Sheet, Profit & Loss Account and the Report onBusiness and Operations for the year ended March 31, 2014.
1. MANAGEMENT DISCUSSION AND ANALYSIS:
1.1 Economic scenario 2013-14
Domestic economic developments in the current financial year (FY14) were mostly drivenby inflationary pressures, subdued demand and investment position.
Real GDP growth for the first three quarters of FY14 was 4.6 per cent, which wasmarginally better than 4.5 per cent recorded in same period of FY13. The full year growthis likely to be about 4.7 per cent. Developments in the past two quarters indicate thatslowdown in economic growth has already bottomed out and recovery (although slow) hasstarted.
During the year, growth in industrial production has moved like a snake in a narrowtunnel around the point of stagnation, while in 5 out of the first 10 months there werenegative growths. Among the major industry categories, the worst hit has been ConsumerDurables and Motor Vehicles.
Significant moderation in inflationary pressures and prospects of higher domesticdemands on account of General Elections may spur industrial growth, which has shownnegative growth in current FY so far.
On account of decline in imports and sustained growth in exports (except for the monthof February) trade deficit has been shrinking for the eighth consecutive month. CurrentAccount Deficit (CAD) in the first three quarters of this year has come down to USD 31billion from USD 88 billion in FY 2012-13. The stringent steps taken to curb gold anddeclining non-POL non-gold international commodity prices have helped in shrinking CAD.
In the current financial year, inflation remained the prime focus, especially formonetary policy measures of the RBI.
Dr. Urjit Patel Committee has highlighted the need for CPI inflation to be the nominalanchor for monetary policy considerations and has recommended CPI inflation target of 8per cent by January 2015, 6 per cent by January 2016 and set a long term target of 4 percent with a band of +/-2 per cent.
Both retail (CPI) and wholesale (WPI) inflation, which were in double digits for mostpart of the year, have declined drastically in the last quarter to 8.63 per cent and 4.68per cent in February 2014.
Performance of Indian Banking Industry in 2013-14
During the current financial year, the Banking sector has been witnessing downwardpressure on margins on account of higher cost of deposits, deceleration in credit growthas well as rising NPAs/restructured assets.
Y-o-Y growth in Aggregate Deposits of Scheduled Commercial Banks (SCBs) lagged behindgrowth in bank credit. Due to high domestic inflation and lower economic growth, householdfinancial savings rate has come down which is reflected in the slower deposit growth. Thegap between growth in bank deposits and credit reversed since Sept 2013, thanks to thespecial swap window made available by RBI for FCNR(B) deposits.
As on last reporting Friday of FY14 (31st March 2014), even though aggregate depositsof SCBs witnessed a y-o-y growth of 14.65 per cent to Rs. 77,394 billion, the growth rateadjusted for growth in FCNR(B) deposits has been the RBI targeted rate of 14 per cent.Aggregate Deposit of BoM increased by 25.54 per cent (Y-o-Y) during the same period.
As on 31st March 2014, Bank Credit of SCBs has grown by 14.31 per cent (y-o-y) to Rs.60,131 billion as against 15.37 per cent in the same period of the previous year. Creditof BoM increased by 17.89 per cent (y-o-y) as of 21.03.2014.
C-D Ratio of SCBs stood at 77.69 percent (as on 31st March 2014).
Indian Economy is expected to show better growth in the coming year. IMF has projectedit to grow by 5.4 per cent and 6.4 per cent respectively in calendar years 2014 and 2015as compared to 4.4 per cent the year 2013.
The RBI also has projected economic growth in 2014-15 in the range of 5-6 per cent. Italso projects CPI inflation to be in the range of 7.5-8.5 percent in Q4 of 2014-15.
As per the trend prevailing in the system and reported by various rating agencies,asset quality of Banks will remain under pressure in the next year as economic recovery islikely to be subdued, and it will take time for domestic industrial activity to recover.The weak asset quality is likely to put pressure on Banks' profitability andcapitalization in FY 2014-15.
2. PERFORMANCE OF YOUR BANK 2013-14
Total business of your Bank stood at Rs. 2,07,172 crore as on 31.03.2014, as comparedto Rs. 1,70,734 crore a year ago, registering a year-on-year growth of 21.34 per cent.
Total deposits of the Bank stood at Rs. 1,16,803 crore, up by 23.8 per cent over thelevel of Rs. 94,337 crore as at the end of March 2014.
Current & Savings Bank (CASA) deposits increased to Rs. 41,921 crore as on31.03.2014. Share of CASA deposits in total deposits of your Bank stood at 35.89 per centas on 31.03.2014 which is one of the highest among Public Sector Banks.
2.3 Credit Deployment
The Bank has put in place a lending policy in conformity with the guidelines issued byRBI and also the lending norms of the Government of India. It emphasizes on qualitativecredit growth and ensures compliance with regulatory requirements as well as theprudential exposure limits.
Gross advances of the Bank increased from Rs. 76,397 crore as on 31.3.2013 to Rs.90,369 crore as on 31.3.2014 with growth of 18.29 per cent. Efficient service withcustomer centric approach has enabled the bank in registering growth, in-line with thebanking industry during the year 2013-14.
Several steps have been taken for improving credit delivery mechanism along withimprovement in turnaround without compromising the overall quality of credit.
Mid Corporate shall continue to be one of the thrust areas for the bank in future forincreasing yield on advances and dispersion of credit risk.
Efforts are continued to improve portfolio yield by reshuffling the portfolio mix.
2.3.1 Sectoral Deployment of Credit
While financing to various segments of the economy, the Bank has endeavored to maintaina diversified credit portfolio, with a view to ensuring credit dispersion across sectors.The Bank has continued its efforts to support core, manufacturing and priority sectors aswell as infrastructure projects, which serve to drive economic growth. This focus of theBank will continue in future, in line with the national economic growth priorities.
Industry wise credit deployment as on 31.03.2014 is as under.
|Sr. No. ||Credit deployed ||Outstanding as on 31.03.2014 Rs. in crore ||Percentage to total credit outstanding ||Outstanding as on 31.03.2013 Rs. in crore ||Percentage to total credit outstanding |
|1 ||Industry ||48889.64 ||54.10% ||41307.25 ||54.49% |
| ||of which || || || || |
| ||i. Infrastructure || |
| ||ii. Chemicals, Dyes, Paints, etc ||1578.92 ||1.75% ||1387.15 ||1.83% |
| ||iii. Petroleum ||2270.61 ||2.51% ||1552.71 ||2.05% |
| ||iv. Iron & Steel ||2689.22 ||2.98% ||1640.21 ||2.16% |
| ||v. NBFCs & Trading ||15111.27 ||16.72% ||12671.06 ||16.72% |
| ||vi. Engineering ||2946.42 ||3.26% ||2496.14 ||3.29% |
| ||vii. Construction ||387.52 ||0.43% ||318.29 ||0.42% |
| ||viii. Other Industries ||10900.69 ||12.06% ||9018.1 ||11.90% |
|2 ||Agriculture ||10276.07 ||11.37% ||7378.35 ||9.73% |
|3 ||MSME ||19062.99 ||21.09% ||16788.21 ||22.15% |
|4 ||Housing ||8854.16 ||9.80% ||6578.23 ||8.68% |
|5 ||Education ||622.71 ||0.69% ||551.59 ||0.73% |
|6 ||Exports ||1880.71 ||2.08% ||1886.06 ||2.49% |
|7 ||Commercial Real estate ||4793.96 ||5.30% ||3551.63 ||4.69% |
2.3.2 Credit Administration and Monitoring
Early warning signals are captured from the CBS system on daily basis for closemonitoring of stressed accounts on near real time basis. System generated SMS alerts aresent to the customers to pre-empt delinquency. An integrated web-based reporting has beenintroduced in the Bank to enable instant communication between branches/Zones/Head Officefor effective monitoring of credit portfolio.
The credit quality of borrowal accounts is further monitored through periodical assetperformance review, credit audits & stock audits. Timely rescheduling of repaymentterms is undertaken in deserving cases.
2.4 Asset Performance
During the Financial Year (FY) 2013-14, total cash recovery in NPAs was Rs. 706.41crore (last year Rs. 411.22 crore). Of this, recovery in Ledger balance was Rs. 646.46crore (Rs. 198.73 crore), including recovery in sale of Assets Rs. 242.16 crore (NIL),recovery in written off accounts was Rs. 303.32 crore (Rs. 156.76 crore) and recovery incases of unapplied interest was Rs. 38.22 crore (Rs. 55.73 crore). This was besides upgradation of NPAs to the tune of Rs. 101.39 crore (Rs. 105.19 crore).
This year's achievement was possible due to intensive follow up adopted by the Brancheswith the defaulting borrowers through letters, notices, recovery camps, Lok Adalatas,actions under SARFAESI and through DRTs.
To address and improve recovery in small sized NPAs having ledger balances upto Rs.10.00 lakh, the bank established additional 5 Micro Asset Recovery Cells (MARC) at Zonaloffices thereby making total 39 MARCs. The recovery performance through this vertical wasencouraging with MARCs recovering Rs. 376.66 crore (Rs. 210.53 crore). The share ofrecovery of MARCs in total cash recovery of the bank was 54.05% (51.20%).
The bank continued during this FY a special 'One Time Settlement'(OTS) scheme and alsolaunched special OTS product (M-zero) for recovery in NPA accounts having ledger balanceup to Rs. 5.00 lakh. The total recovery in NPAs under this scheme was Rs. 50.15 crore asagainst Rs. 38.40 crore in the previous year.
The Gross NPA ratio of the bank stood at 3.16% during the financial year from 1.49% asof 31.03.2013. Similarly the ratio of Net NPAs stood at 2.03% as on 31.03.2014 as against0.52% a year ago. The NPA ratios of the Bank are much better than not only of the peerBanks but also of many large Banks.
2.5 Foreign Exchange Business and Export Finance
During the year 2013-14, the Bank has achieved merchant turnover of Rs. 28,370 Crores(Rs. 30,437 Crores) and an interbank turnover of Rs. 4,71,327.30 (Rs. 4,14,162 Crores) andearned Forex Profit of Rs. 74.60 Crores (Rs. 60.41 Crores). The outstanding export creditas on 31st Mar 2014 was Rs. 1948.97 as against Rs. 1908.31 as on 31st Mar 2013. TheTreasury & International Banking Branch at Mumbai (A category branch) and 33 BCategory branches across the country cater to the International business needs of thecustomers of the Bank. In order to provide prompt service to Non Resident Indian (NRI)clients, Bank has a NRI Cell at Deccan Gymkhana Branch, Pune which provides onlineremittance facilities for its NRI customers. With a view to enable branches to providebetter service to NRI clients, Bank has provided Instant NRI information which is updatedon monthly basis.
The net investments of the Bank stood at Rs. 37249.58 crore as on 31.03.2014 ascompared to Rs. 31430.31 crore as on 31.03.2013. Investments under Held to Maturity (HTM)category consist of 86.97 per cent while Available for Sale (AFS) comprised 12.74 per centof total investment portfolio as on 31.03.2014. The net interest income from investmentactivity increased to Rs. 2543.03 crore from Rs. 2231.28 crore during the last year, agrowth of 13.97 per cent.
The borrowings of the Bank as on 31.03.2014 stood at Rs. 8326.47 crore, includingrefinance availed from RBI, NABARD and SIDBI to the extent of Rs. 2861.08 crore. The totalborrowings as at 31.03.2013 were Rs. 12877.49 crore.
2.8 Merchant Banking
The Bank handled 84 issues of Commercial Paper amounting to Rs. 20160.85 crore for itsclients as an Issuing and Paying Agent (IPA) during the year and earned a commissionincome of Rs. 9.52 lakh.
2.9 Depository Services
The Bank is Depository Participant (DP) of Central Depository Services of India Ltd.(CDSL) since September 1999. Account level queries related to Demat account balances etc.are available at the 131 identified branches of the Bank. All the branches of the Bank canopen Demat account through the Demat Cell of Mumbai. The Bank also provides free"EASI" facility (through CDSL) to view account position through internet. Querycompliance facility is available at Maha Seva (Customer Care Center). The Bank has addedtie up with two Share Broking Companies i.e. Reliance Securities Ltd and VenturaSecurities Ltd for Maha-e-trade (Online Share Trading) Services for its customers alongwith existing Religare Securities Ltd.
In order to add new customers in its fold under Demat, Banks is offering waiver inannual maintenance charges for the Demat Accounts opened under Rajiv Gandhi Equity Schemefor three years.
The Annual Maintenance Charges and Dematerialization charges (for converting Bank'sphysical shares into electronic form) are waived for staff/Ex-staff and share holders ofthe Bank. The Bank has also introduced Basic Services Demat Account Facility (BSDA).
All the branches of the Bank are authorized to sell life and non-life insuranceproducts of Life Insurance Corporation of India and United India Insurance Co. Ltd. undercorporate agency arrangements, respectively. The Bank has sold 98929 Non-life InsurancePolicies and 30554 Life Insurance policies during the year 2013-14. The LIC accredited 198branches of the Bank as Bima Bank, besides 17 Zones which were declared as BIMA Zone. TheDelhi Zone became Double Bima Zone.
The Bank offers group insurance scheme of LIC namely 'Maha Suraksha Deposit Scheme (NewOne Year Renewable Group Assurance Plan') a life insurance cover of Rs1 lakh for depositaccount holders. The Bank offers Maha Swasthya Yojana, a Family Floater Group MediclaimPolicy of United India Insurance Co. Ltd. for its customers.
The Bank earned a commission of Rs. 7.32 crore from life insurance, showing growth of10 per cent and Rs. 4.12 crore for non-life insurance business during the year 2013-14showing increase of 18 per cent.
2.11 Mutual Fund Activity
The Bank has a tie-up with 25 AMCs (Asset Management Companies) for selling Mutual Fundproducts. The mutual fund business mobilized by the Bank earned commission income of Rs. 5lakh during the year.
2.12 Government Business
During the year 2013-14, 544553 challans of Direct Taxes were collected; similarly1,89,696 challans of Indirect taxes were collected by the branches. Our Branches are alsocollecting other state Govt. taxes including GRAS of Maharashtra State and the totalnumber of Challans collected during the Year is 5,41,220. Total commission to the tune ofRs. 2.70 Cr was received on Tax collection business from Central Government and Commissionreceived from states Tax collection business is Rs. 0.72 Cr.
The Bank has started processing and crediting monthly pension payments of more than1,13,624 Central Government, Defence, Railway and Telecom pensioners at Central PensionProcessing Cell (CPPC), Pune. The processing and payment for new PPOs/ corrigendum PPOsMaster Data base for central Government pensioners etc are being handled by CPPC. Thisfacilitates faster and accurate payment of pension as well as quick settlement of funds byRBI. Timely complaint redressal system has also been established for pension complaint.The commission on Government Business (Pension) for the Year 2013-14 is Rs. 13.57 Cr.
The unique facility of direct & Indirect taxes & VAT collection of Maharashtrais provided by the Bank, at the branch counter in all branches through Maha e-sevaservices. E-payment of Taxes facility available for net banking customers is alsoavailable for direct / Indirect Taxes / VAT payments (for Govt. of Maharashtra). The taxpayment facility has been introduced for e-payment of custom duty & the MaharashtraState taxes are collected through integration in Govt. Revenue Accounting System (GRAS)both online and across the counters. The Bank has added Karnataka and Delhi states forcollection of state Government commercial taxes. Bank is offering its services in VATCollection in U.P in all branches.
2.13 Non Interest Income
The non-interest income stood at Rs. 894.19 crore for the year ended 31.03.2014 asagainst Rs. 912 crore for the year ended 31.03.2013. Non-interest income (other thanprofit from sale of investment), increased by Rs. 23.20 crore in the FY 201314, showing agrowth of 3.02% over previous year. During the year, income from commission, exchange andbrokerage increased by Rs. 53.48 crores from Rs. 491.34 to Rs. 544.82 crores.
2.14 Income, Expenditure and Profitability
The total income of the Bank grew from Rs. 10525.43 crore to Rs. 12850.85 croreindicating a growth of 22.09 per cent during the year.
The detailed income/ expenditure components are as under:
| || || ||(Rs. in crore) |
|Particulars ||2013-14 ||2012-13 ||Variation (per cent) |
|Interest / discount on advances / bills ||9187.15 ||7298.50 ||25.88 |
|Income on investments ||2543.03 ||2231.28 ||13.97 |
|Interest on interbank lending & other Interest ||226.48 ||83.65 ||170.74 |
|Total interest income ||11956.66 ||9613.43 ||24.37 |
|Non-interest income ||894.19 ||912.00 ||-1.95 |
|Total Income ||12850.85 ||10525.43 ||22.09 |
|Interest on deposits ||7697.04 ||5879.25 ||30.92 |
|Interest on borrowings ||107.93 ||312.27 ||-65.44 |
|Other Interest expenditure ||642.76 ||388.57 ||65.42 |
|Staff expenses ||1595.76 ||1187.82 ||34.34 |
|Other Operating expenses ||800.99 ||608.82 ||31.56 |
|Total Non interest expenses ||2396.75 ||1796.64 ||33.40 |
|Total Operating Expenses ||10844.48 ||8376.73 ||29.46 |
|Operating Profit ||2006.37 ||2148.70 ||-6.62 |
|Provisions and Contingencies || |
|Net Profit || |
2.15 Financial ratios
|Particulars ||2013-14 ||2012-13 |
|EPS (Rs.) ||4.56 ||11.88 |
|Cost to Income Ratio (percent) ||54.43 ||45.54 |
|Return on assets (percent) ||0.30 ||0.74 |
|Return on equity (per cent) ||5.93 ||17.32 |
|Book value per share (Rs.) ||66.69 ||67.10 |
|Profit per Branch(Rs. in lakh) ||20.42 ||43.95 |
|Profit per employee (Rs. in lakh) ||2.68 ||5.59 |
|Business per Branch (Rs. in crore) ||109.61 ||98.80 |
|Business per employee (Rs. in crore) ||14.39 ||12.56 |
|Interest income as per cent to Average working funds ||9.24 ||9.33 |
|Non Interest income as per cent to average working funds ||0.69 ||0.88 |
|Net Interest Margin (per cent) ||2.71 ||3.10 |
|Operating Profit as per cent to average working Funds ||1.55 ||2.08 |
|Staff expenses as a percent to average working funds ||1.23 ||1.15 |
|Dividend (per cent) ||10.00 ||23.00 |
|Net worth (Rs. Crore) || |
|CRAR (%) (Basel II) ||10.79 ||Nil |
|Of which, Tier I CRAR (%) (Basel II) ||7.44 ||Nil |
2.16 Capital from Government of India
During the year, the Bank received equity share capital amounting to Rs. 800 crore(including share premium of Rs. 622.38 crore) from Government of India (GOI) throughallotment of shares on preferential basis. With capital infusion, the share holding of GOIin equity share capital increased to 85.21% as on 31.03.2014.
The Bank's Net worth increased from Rs. 5026.57 crore as on 31.03.2013 to Rs. 6184.11crore as on 31.03.2014.
2.18 Capital Adequacy Ratio
The Capital Adequacy Ratio stood at 10.79 per cent as on 31.03.2014, against theminimum 9 per cent prescribed by RBI in terms of Basel III norms. The Common Equity Tier Icapital adequacy ratio stood at 7.44 per cent.
The Board has recommended Rs. 1 per share (10%) being interim dividend as finaldividend for FY 2013-14.
3. ORGANISATION AND SUPPORT SYSTEM
3.1 Branch Expansion
During the year, the Bank opened 162 new branches, the largest number of branchesopened by the Bank in a financial year since inception. As on 31.03.2014, the total branchnetwork comprised of 1890 branches spread over 29 states and 4 union territories. Thebranch network includes specialized branches in the areas of foreign exchange, governmentbusiness, treasury & international banking, industrial finance, small-scale industryand hi-tech agriculture, pension payment, pension processing, retail credit, Self HelpGroups and asset recovery.
Area wise classification of branches as on 31.03.2014 is given in the table below:
|Sr. No. ||Classification ||As on 31.03.13 ||As on 31.03.14 |
|1 ||Rural ||591 ||648 |
|2 ||Semi-Urban || |
|3 ||Urban || |
|4 ||Metropolitan || |
| ||Total ||1728 ||1890 |
3.2 Human Resources Management
The Bank has put in place a comprehensive HRM Policy that provides the road map foracquiring appropriate & need based human resources, its development through training,job enrichment, reward and recognition for better performance, career progression, welfareand retention.
During the year the Bank recruited 1224 probationary officers and 10 law officers. TheBank has also recruited 487 Clerks during the year.
Inter scale promotions of officers were carried out for promotions to Scales MMGS IIand above. Total 1237 officers were promoted to higher scales.
The cadre wise staff position shows that there is net addition of 776 employees duringthe FY 2013-14. The particulars are as below:
|S. No. ||Particulars ||March 2014 ||March 2013 |
|1 ||Executives ||514 ||418 |
|2 ||Officers ||5576 ||4589 |
|3 ||Clerks ||5867 ||6065 |
|4 ||Sub Staff ||2439 ||2548 |
| ||Total ||14396 ||13620 |
To recognize outstanding performance in Banking activities and to motivate others toperform better, various schemes like Performance Linked incentives to all staff of BestPerforming Branches etc. are in vogue. Tamiya Branch (Jabalpur Zone) has been awarded theRolling Trophy in name of Bharat Ratna Dr. Babasaheb Ambedkar for Excellent PerformingBranch Category in disbursement and recovery of advances to SC/ST community.
During the year, 1053 employees ceased to be in service on account of retirement,resignation, termination and death.
The Bank has been allocating up to 3 per cent of its net profit towards various schemesfor the welfare of staff including retired staff. The welfare schemes are administered bya Central Welfare Committee consisting of management & employees representatives.
The Bank has endeavoured to promote a healthy industrial relations climate throughfair, transparent and firm handling of Industrial related matters.
The Bank has been complying with the reservation policy of Govt. of India. SpecialCells at Head Office and all Zonal Offices are functioning to monitor the implementationof the reservation policies and to redress grievances of SC/ST/OBC & Physicallychallenged employees as well as ex-servicemen. The Bank has designated Chief LiaisonOfficers at Head Office and has set up SC/ST Cells at each of its 34 Zonal Offices for thepurpose. During the year periodical meetings were held with SC/ST/OBC EmployeesAssociation to discuss implementation of reservation policy and other constitutional safeguards and also to facilitate involvement in business growth. Similar meetings were alsoheld at Zonal level.
The number of employees belonging to different categories is as under:
|Sr. No ||Category of Employees ||No. of Employees ||Percentage to total |
|1. ||Women ||3767 ||26.17 |
|2. ||Physically Challenged ||188 ||1.31 |
|3. ||SC Employees ||2788 ||19.37 |
|4. ||ST Employees ||1091 ||7.58 |
|5. ||OBC Employees ||1738 ||12.07 |
Rosters have been maintained as per Government guidelines and are regularly inspected/checked.
The Bank has a training system which facilitates attention to regular periodicassessment of skill gaps at various levels in relation to existing and emerging businessopportunities. Skill building in credit, forex, customer relationship management,marketing of products and services, credit monitoring and recovery, risk management,technology based banking, branch management, complying with statutory, legal and policyrequirements and preventive vigilance received special attention during the year.
The training programmes were also held on thrust areas like financing SMEs, retaillending, agriculture finance and rural development.
The Bank has an apex Training College at Pune with three training establishmentsoperating under it, one each at Mumbai, Nagpur and Pune. Information Technology TrainingInstitute and Computer Labs train the Officers and staff to utilize information technologyfor effective customer service and efficient back office functions.
The highlights of training activity during the year are as under;
322 training programs were conducted during the year out of which 111 were forofficers, 153 were for clerks and 58 were for sub staffs.
Total of 8661 staff members participated in various training programs,consisting of 5429 officers, 2139 clerks and 1093 sub staff.
A total of 917 SCs, 315 STs and 1207 women employees were trained during theyear.
During the year 1461 employees were trained in Information Technology.
In addition, 2024 employees were deputed to different external trainingestablishments.
11 Executives were deputed to Training Institutes outside India forInternational Exposure.
7 programmes for pre- promotional training to SC/ST employees were conductedduring May - June 2013. Total 298 candidates attended the training.
4 programmes on Pre retirement counselling were conducted for the employeesretiring during the year. Besides lecture on investment planning, health check up ofparticipants were also arranged.
3.3 Technology Initiatives
The year 2013-2014 has been a milestone year for the Bank as far as technologyimplementation and up-scaling is concerned. During the year, Bank expanded its ATM Networkfrom 692 ATMs to 1827 ATMs, covering nearly all the 1890 Branches of the Bank. Theimplementation of Bank's Own ATM Switch commenced during the Year and has been implementedLIVE from 08th May 2014. Bank has been in the forefront of Technology in Business &related activities.
Bank has a state-of-the-art Tier III Data Centre and Disaster Recovery (DR) Centre. ANear DR Site is also established to help the Bank achieve Zero Data Loss Objective, in theevent of any untoward incident. We are one of the few Public Sector Banks to implementNear DR Site over last two years. The efficacy of Near Site is tested twice a year duringDR Drills conducted by the Bank.
Bank has its own Corporate Network "MAHANET" with all Branches, ZonalOffices, Training Colleges / Centers and Head Office interconnected and working under CoreBanking Platform. Its robust & secure Network Technology Architecture ensures seamlessservices to the customers. During the year 2013-14, the process of migration of thenetwork to highly redundant and reliable Multi Protocol Label Switching (MPLS)-VPN(Virtual Private Network) based architecture has been completed. With this, we are surethat the Bank's new network is scalable so as to serve our customers even better andintroduce more customer centric applications. Bank has also pioneered in implementingniche network technologies such as 3G, CDMA, etc as back up communication media to ensurehigh availability to the branches.
Bank is having two ATM Galleries, one in Bajirao Raod & one in Shivaji Nagar,set-up with a view to provide integrated technology services under one roof.
Bank has collaborated with VISA for International Debit Cards and with NPCI for RupayDebit Cards. Bank has also been the first Bank to launch Rupay Kisan Debit Card - aGovernment of India initiative.
The payment and settlement systems viz., RTGS and NEFT are running on robust platformfacilitating straight-through-processing (STP) model. In order to promote e-transactions& popularize the usage of NEFT Transactions, the service charges on NEFT transactionsup to Rs. 1.00 Lakh are waived.
The Bank is taking special efforts to encourage transactions through alternate channelssuch as ATM, RTGS / NEFT, Internet Banking, Mobile Banking, ECS etc. More than 40 percenttransactions are now being carried out by customers through these alternate channels. Bankis constantly pursuing efforts to enhance usage of these channels through variousincentive schemes which have been implemented during the year.
Various facilities are being provided through our Internet Banking platform forfacilitating online payment of taxes, utility bill payments, online shopping / e-commerce,railway reservation, LIC premium payment, etc and facility for viewing tax creditstatement 26AS and Demat account with the Bank.
As a part of the effort to respond to the ever evolving information security trends andthe responsibility to enhance security features in the Internet Banking facility, TwoFactor Authentication (2FA) Solution for Retail Users & active Corporate Users isrolled out.
Bank has robust Information Security Management System (ISMS) framework in place. Itsinformation security policy statement being: "Bank of Maharashtra is committed toprotect and safeguard the critical information of all stakeholders in order to ensuresecure business operations"
In order to strengthen the ISMS framework further, Bank had gone for ISO 27001:2005Certification for its IT division including Data Center, Disaster Recovery Center and CBSProject Office. Bank has ensured continuation of the ISO 27001:2005 certification for theyear 2012-13 and now 2013-14 as well.
Bank has in place a captive Security Operations Centre (SOC) for monitoring Critical ITInfrastructure on 24 Rs. 7 basis. The SOC shall enable the Bank to effectively addresssecurity threats by constant, proactive monitoring of security events and meet thecompliance requirements. This has enabled the Bank to automate the vulnerability discoveryprocess by constantly analyzing the logs generated by the core IT security and applicationinfrastructure. The other services namely Anti-Phishing & Anti-Trojan services arealso implemented.
As a part of Customer Initiatives, online facilities are made available to customersfor opening of savings bank accounts and also accounts under New Pension Scheme. Bank hasalso made available facility for submitting applications online for various creditfacilities including Housing, Education, Vehicle, MSME, Consumer and any other Loanproduct (Generic application to accommodate any other credit facility requirement of thecustomer).
Bank has launched a plethora of New IT products/services for Customers like ChequeDeposit Machines, Digital Media Signage, Queue Management Solution (PoC Basis),Standardized Public Grievances Redress System (PGRS) Software, Software for SearchingBranch & ATM Locations of the Bank, SMS to renewed Card Holders, e-Pact New PensionScheme (NPS) LITE Software, POS Usage enabled for all Rupay Cards etc.
Implementation of Biometric Authentication for Branch Staff is taken up and expected tobe completed by 31/05/2014.
Automated Data Flow, an RBI Initiative, has been implemented LIVE from 31/12/2013, asper RBI Timelines.
Cheque Truncation System has been implemented at all 27 Centres under Southern Grid& 20 Centres under Western Grid including Mumbai.
Bank has implemented own Business Correspondent Model at Solapur. Under this model wehave provided 1000 Micro ATMs to all Regions of the Bank & implementation is inprogress.
All the branches of Maharashtra Gramin Bank, the Regional Rural Bank sponsored by theBank are working under CBS since 2011 & are implementing various initiatives to be intune to meet the demands of customers and business development.
Bank proposes to take up following new IT Initiatives during 2014-15.
Newer / Evolving Branch Transformation Initiatives with focus on enhancingcustomer experience. Centralization of Liability Processing Centre (CLPC) / AssetProcessing Centre (CAPC).
Work towards establishment of Enterprise-Wide Data Warehouse, BusinessIntelligence &Analytical CRM.
New - generation Mobile Banking application that can work with variety of mobilephones & platforms and provide secure transactions.
Upgrade of Bank's Call Centre to a complete inbound and outbound call center.
E-Surveillance System to cover all ATMs.
Bank has taken a novel step in the month of July, 2013 by forming a new department byname" Department of Strategic Initiatives". The project is named"Utkarsha" and is a business transformation programme. Bank has engaged EY asconsultants for the transformation. A team of 12 officers headed by an AGM is also formedto undertake this project. Time lines and the scope of work are defined and the expectedtime for the project completion is 18 months. The objective of Utkarsha is to draw astrategic roadmap and align Bank's operating model to emerge as a more competitive, agileand efficient player. Project "Utkarsha" encompasses six core elements namelyBranch Transformation, Centralization and Business Process Re-engineering, SalesEnablement for retail and SME loans, Alternate Channels, Human Capital and CapitalEfficiency.
The Outline of the Transformation Program "Utkarsha"
Identify key drivers for growing deposits and advances business
Revamp sales structure and augment skill-set to improve sales efficiency andeffectiveness
Identify opportunities to streamline processes, aggregate non-core processes atback-end and enhance productivity
Design an efficient operating model to ensure business growth is not achieved atexpense of efficiency
Optimize costs with rising scale of business, increase share of fee-based incomeand improve productivity to enhance profitability
Create a roadmap to ensure capital efficiency
3.4 Customer Centric Initiatives taken by the Bank
The Bank has pursued high standards of customer service to ensure customer satisfactionthroughout the year.
As member of the Banking Codes and Standards Board of India (BCSBI) Bank has adoptedthe Code of Bank's Commitment to Customers and Bank's Code of Commitment to SMEs. Dulydocumented policies approved by the Board on "Deposits", "Collection ofCheques/ instruments", "Redressal of Grievances", "Compensation"and "Operational Procedure for settlement of claims of Deceased Depositors" arein place.
The Committee of the Board on Customer Service meets periodically to monitor thequality of customer service, redressal of customer grievances to ensure customersatisfaction. The Standing Committee on Customer Service at Head Office and Zonal LevelCustomer Service Committees at all the Zonal offices also meet regularly to address andreview various customer related matters to take steps for improvement on an ongoing basis.
Customer Service Committees at all the branches are formed and a cross section ofcustomers representing depositors, Corporates, businessmen, senior citizens are invited toattend the Customer Service meetings at Branch/Zonal/Head Office level, to have feedbackand suggestions on schemes, products and services. Full-fledged grievances redressalmachinery is in place to respond promptly to customer grievances. Complaint ManagementCells are operative at Head Office and all Zonal Offices of the Bank. The Committee of theBoard on Customer Service and Standing Committee on Customer Service at Head Officemonitor the progress of redressal of customer grievances regularly.
The Bank has implemented all major recommendations of Goiporia Committee,Dr.S.S.Tarapore Committee and Damodaran Committee relating to customer service.
The Bank has in place internet based mechanism for lodging the complaint or to givesuggestions/ feedback on services by the customers and for providing acknowledgement andstatus of their feedback/ complaint.
Bank has printed folder called "My Folder" containing all customer servicepolicies, information on service charges, guidelines on Government Schematic Loans,Ombudsman and BCSBI codes. The same is printed in Marathi, Hindi and English and suppliedto all branches and Zones for making the same available to all customers on demand.
Standardized Public Grievances Redressal System:
Bank is in process of implementing "Standardized Public Grievances RedressalSystem (SPGRS)" introduced by GOI, MOF, Department of Financial Services, New Delhion 11.06.2012. I T Department and Planning Department in Head Office are developing InHouse software for Integrated Public Grievances System.
Installation of Kiosk Machine for online registration of complaints:
Kiosk Machine arrangement has been made at Head Office to enable the customers toregister on line complaints/ suggestions, and its operation is started w.e.f. 14.03.2013.
Know Your Customer (KYC) norms / Anti Money Laundering (AML) standards / Combating ofFinancing of Terrorism (CFT) and Obligation of Bank under Prevention of Money LaunderingAct (PMLA) 2002.
The Bank has Board approved KYC-AML-CFT Policy in place. The said Policy is thefoundation on which the Bank's implementation of KYC norms, AML standards and CFT measuresis based. The full KYC compliance entails staff education as well as customer educationfor which the following measures are taken by the Bank.
A comprehensive list of KYC documents is uploaded on the Bank's web site for thebenefit of customers. Regular training sessions are conducted on KYC-AML-CFT guidelines atthe Bank's training establishments to sensitize the employees.
3.6 Risk Management
Banks are faced with a variety of risks while conducting day to day banking operations.Bank has its Risk Management Frame work in accordance with the RBI Guidelines andbenchmarks itself against the industry best practices. This enables the Bank to identify,measure, monitor and manage risk efficiently.
The Board of Directors of the Bank reviews all Risk Management Policies and Strategiesand establishes control systems in line with the Bank's aggregate Risk Appetite. The Boardof Directors is supported by the Risk Management Committee of the Board (RMC) and RMC issupported by subcommittees known as Credit Risk Management Committee (CRMC), Market RiskManagement Committee (MRMC), Operational Risk Management Committee (ORMC) and AssetLiability Management Committee (ALCO). These Committees are headed by Chairman andManaging Director. Executive Directors and General Managers are the members of theCommittees.
Risk Management Policies
In order to provide ready reference and guidance to field functionaries, Bank has putin place various Board approved Risk Management Policies viz. (i) Credit Risk ManagementPolicy, (ii) Market Risk Management Policy, (iii) Asset Liability Management Policy, (iv)Operational Risk Management Policy, (v) Stress Testing Policy, (vi) Outsourcing Policy,(vii) Business Continuity Planning Policy, (viii) Disclosure Policy, (ix) Utilization ofCredit Risk Mitigation Techniques and Collateral Management Policy & (x) InternalCapital Adequacy Assessment Process (ICAAP).
Credit Risk Management
Credit risk is the possibility of a loss being incurred as the result of a borrower orcounterparty failing to meet its financial obligations or as a result of deterioration inthe credit quality of the borrower or counterparty. Effective credit risk management is astructured process to assess, measure, monitor and manage risk on a consistent basis. Thisrequires careful consideration of proposed extensions of credit, the setting of specificlimits, monitoring during the life of the exposure, active use of credit mitigation toolsand a disciplined approach to recognizing credit impairment. The Credit Risk Managementprocess forms an integral part of overall risk management of the Bank. The Bank hasconstituted Credit Risk Management Committee (CRMC) which reviews the policies, proceduresand systems relating to credit administration and monitoring, at periodic intervals.
The Bank has put in place comprehensive Lending Policy, Loan Review Policy and CreditRisk Management Policy for credit risk management. The policies prescribe variousguidelines, procedures, standards and prudential / exposure norms.
To evaluate the risk perception in a lending proposition, the Bank has put in place anin-house developed Credit Risk Rating Framework (CRRF) for rating of existing as well asentry level borrowers in various asset classes, as desired under Basel III. In housedeveloped rating model in TIBD is also in use to rate Non-SLR Investments. The Bankutilizes industry risk rating from reputed credit rating agency and incorporates theindustry risk score in the CRR Models. Bank also uses the rating assigned by RBI approvedexternal credit rating agencies in its credit decision.
The Bank has prescribed threshold ratings for entry level exposures with a view tobuilding up credit portfolio within the risk appetite and achieves the profit plan. With aview to separating the Credit Risk Management function from credit sanctioning, CreditRisk Rating Approval Grids are set up at various levels at Head Office and at Treasury& International Banking Division (TIBD), Mumbai which assess the risk perceptionthrough a committee approach.
The Bank has undertaken migration analysis of credit risk rating of borrowers over atime horizon and probability of default has been estimated in line with Baselrequirements. To achieve risk-return trade off, risk based pricing framework has beenimplemented and reviewed periodically.
The Bank undertakes following studies periodically to assess Credit Risk:
Compliance to Prudential Norms as per Lending Policy
Credit Portfolio Review
Assessment of Concentration Risk in Assets & Liabilities
Quick Mortality of Loans and Advances
Country Risk Management
Aggregate exposure on other banks
Stress Test Report - Credit Risk
Finding of these studies are placed before the Credit Risk Management Committee (CRMC),Risk Management Committee (RMC) and the Board on periodical basis.
Market Risk Management
Market Risk is the risk to the Bank resulting from adverse movements in market pricesdue to changes in interest rates, foreign exchange rates and equity price. The changesimpact the Bank's earnings and capital and can have ramifications on the Bank's liquidityand profitability.
Bank has its separate Market Risk Management Committee which reviews Market RiskManagement Policy on regular basis and reports modifications, if any, to the RiskManagement Committee & the Board for approval. The Bank's Market Risk ManagementPolicy aims to set out the broad processes i.e. by which the Bank will identify risks inthe areas of Interest Rate Risk, Forex Risk, Equity Price Risk and Options Risk. Reportingframework has been prescribed for internal reporting, Regulatory reporting and Pillar IIIdisclosures.
Interest Rate Risk Management
Interest rate risk is the risk where changes in market interest rates affect a bank'sfinancial position. Changes in interest rates impact a bank's earnings (i.e. reportedprofits) through changes in its Net Interest Income (NII) and also impact a bank's MarketValue of Equity (MVE) or Net Worth through changes in the economic value of its ratesensitive assets, liabilities and off-balance sheet positions. The interest rate risk,when viewed from these two perspectives, is known as 'earnings perspective' and 'economicvalue perspective', respectively.
Accordingly, Bank uses the following tools to manage interest rate risk:
1. Traditional Gap Analysis (TGA) which is undertaken through the preparation ofInterest Rate Sensitive Gap Reports on a monthly basis.
2. Earning at Risk: Calculation of impact on NII due to 1% change in interest rates. Italso takes into account Basis Risk, Embedded Option Risk, Yield Cure Risk, Net InterestPosition Risk, Price Risk and Reinvestment Risk.
3. Duration Gap Analysis (DGA) which focuses on the bank's exposure to Interest RateRisk in Banking Book (IRRBB) in terms of sensitivity of Market Value of its Equity (MVE)to interest rate movements.
4. Modified Duration: Considering the interest rate risk in the portfolio, the Bank hasset upper limits of Modified Duration for AFS+HFT category and also the upper limit fortotal investment portfolio.
5. Value at Risk: Value at Risk (VaR) for treasury positions is calculated for 1 Day,10 Days and 30 Days for 99% Confidence Level.
The Bank has constituted Asset Liability Management Committee (ALCO), which meets atregular intervals to review the interest rate scenarios, liquidity positions in thebanking book etc. The ALCO manages and supervises Liquidity Risk through review of ratesof interest on deposits / advances. ALCO also monitors adherence to various risk limitsand determines the business strategy in light of prevailing interest rate scenario andliquidity position in the market with a view to optimizing profit and overall balancesheet management while managing interest rate risk.
The ALM Policy, which is reviewed annually, prescribes the parameters for management ofLiquidity Risk, Interest Rate Risk, etc.
Investment Risk is managed through the prescriptions made in the Investment ManagementPolicy & Investment Risk Management Policy.
Management of Foreign Exchange Risk, prudential limits for open foreign exchangeposition, aggregate gap position, Daylight limit, Overnight limit, Net Open OvernightPosition, Stop loss limit, Limit for undertaking swaps/investment/ borrowing overseas,interbank exposure limits etc. have been put in place. These limits are monitoredregularly.
The 'Liquidity Risk' is measured and managed through 'Gap analysis' for maturitymismatches by reviewing structural liquidity position on daily basis and short termdynamic liquidity on fortnightly basis. Bank is conducting behavioral studies in GAPanalysis. Stress testing is undertaken periodically.
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate or failed internalprocesses, people or systems or from external events. Bank's primary aim is the earlyidentification, recording, assessment, monitoring, prevention and mitigation ofoperational risks, as well as timely and meaningful management reporting.
The Operational Risk Management Committee (ORMC) meets regularly to review the mattersrelated to operational risk. Under the Operational Risk Management Framework and ORMPolicy, Bank is identifying, measuring, monitoring and controlling/mitigating operationalrisks by analyzing historical loss data, Risk and Control Self-Assessment Surveys (RCSAs)and Key Risk Indicators (KRIs). The Bank has put in place policy on Business ContinuityPlanning. A policy on outsourcing is also formulated which facilitates use of expertiseavailable in the market with adequate safeguards against risk associated with outsourcing.
Under the Risk based supervision, Risk Profile Template covering five business risksand two control risks are prepared on quarterly basis and submitted to RBI.
Rating of the branches is done under Risk-based Internal Audit (RBIA) and the positionis reviewed every quarter.
Implementation of Advanced Approaches of Capital Computation
The Bank will enhance its Risk and Capital Management capabilities by migrating to theAdvanced Approaches of the Basel framework. Advanced approaches include Foundation andAdvanced Internal Ratings Based Approach ('FIRBA' & 'AIRBA') for Credit Risk,Standardized and Advanced Measurement Approach ('TSA' & 'AMA') for Operational Riskand Internal Models Approach ('IMA') for Market Risk.
3.7 Internal Control Systems
Inspection & Concurrent Audit:
The Inspection and Audit system & various measures of internal control are adoptedby the Bank to ensure identification /assessment and mitigations of operational risks.
Internal Audit of branches:
As per Seth Committee guidelines the Bank is conducting Risk Based Internal Audit ofthe branches. RBIA of all the branches which were due for RBIA during the year, wereconducted while complying with the Jilani Committee recommendations. It was endeavouredthat the top 200 branches in advances terms of the Bank are covered under RBIA during theyear.
During the year the Bank has implemented some strategic decisions so as to strengthenthe internal control system such as,
Commencement of Off-site monitoring system in which reports on someimportant/sensitive areas are extracted from the CBS system on daily/weekly/monthly basisso that necessary timely rectification/action can be taken.
On the spot rectification of at least 51% irregularities during the course ofinspection itself in the branches.
Implementation of Document mechanization system.
Initiating the process of Web Based application system so as to improve BranchInspection, Concurrent Audit system and Off-site survellance.
During the year the Bank also organized conference of all Inspecting Officials andHeads of Inspection Cells so as to update them on policies, procedures, businessenvironment, opportunities and challenges for banks, emerging areas of risks and theirrole in alterting the Top Management of existing and impending risks at branches andoffices.
Surprise Inspection of 23 branches, focusing mainly on high risk areas was also carriedout in pursuance of Ghosh Committee Recommendations. All the 23 reports are closed.
As per approved Audit Plan for 2013-2014, 418 branches and three departments of theBank are covered under Concurrent Audit covering about 75.78% of Bank's total business.
Income & Expenditure Audit (I. & E. Audit):
I. & E. audit is carried out at 180 branches as per approved plan for the period01.10.2012 to 30.09.2013 having total business above Rs. 25.00 crore & advances aboveRs. 5.00 crore.
Expenses Audit of Zonal Office:
In order to have control over expenditure at Zonal Offices a system has been put inplace through half yearly Expenses Audit for every March and September half years. Theexpenses audit of 34 Zones were conducted as of 30.09.13.
The Bank has also initiated the process of Snap audit of select branches where thegrowth in advances is inconsistent or especially contrary to the past trend.
For assessing their effectiveness of Zonal Offices and different departments in theHead Office in terms of supervision and control, Management Audit of 17 Zonal offices and16 departments at Head Office was carried out during the year.
RBI Inspection under Section 35 of the Banking Regulation Act:
The Bank was also subject to RBI inspection under Section 35 of the Banking RegulationAct besides that two branches were also inspected during the year.
Bank has also reviewed the AML parameters as per IBA guidelines and Prevention of AntiMoney Laundering Act. In order to ensure efficacy of the AML system, a centralized AMLCell has been established at Head Office.
Vigilance activity in the Bank is an integral part of the managerial function. Itsobjective is to enhance the level of managerial efficiency, effectiveness and to ensure aproper climate for an efficient administration, where officials can perform the dutieswithout any fear or favour. 'Vigilance' in the Bank is maintaining a proper balancebetween flexibility and accountability.
Preventive Vigilance is the most important aspect of vigilance. With a view to improvefunctioning at all levels, the Bank has taken several necessary steps. 'Fraud RiskManagement Policy' on prevention, detection, classification and reporting of fraudsincluding action to be taken, has been adopted by the Bank and circulated for the guidanceand use of the branches and field functionaries.
'Vigilance Manual' has been issued by the bank and various aspects of vigilance andother related issues have been dwelt upon for information and necessary action of thefield functionaries.
The Bank has put in place a Compliance Policy, based on the guidelines of Reserve Bankof India. The Compliance Department, headed by the Chief Compliance Officer monitors thecompliance functions. It ensures the implementation of the statutory/regulatory guidelinescoming into force from time to time. The issues relating to regulatory/ statutorycompliances are addressed appropriately. The status of compliance is placed for review tothe Top Management / Audit Committee of the Board periodically. To improve the awarenesson the compliance functions in the Bank, sessions are appropriately included in varioustraining programmes arranged for the officers /staff members.
3.10 Marketing & Publicity
With a view to publicize Bank's various products and also brand image coupled withcorporate social responsibilities, Bank has sponsored various programs like"Sponsorship to BWF Badminton world super series & Ashian AthleticsChampionship" "Connotation on Global warming" "Sponsorship for Mobiledispensary/Dialysis machine & other medical equipments" "Child DevelopmentCentre & Health camps for SHGs" "Project Spinal injury centre" etc.Bank has also donated towards relief fund to Flood & Cyclone affected people anddevelopment of Tribal villages.
3.11 Citizen's Charter
The Bank has adopted the Charter since 2000-01, which details the duties andresponsibilities of the Bank towards its customers. The Charter is displayed at all thebranches and at the website and has been updated from time to time. The Bank has alsoadopted a Citizen Charter of RBI on exchange of notes and coins.
4. SOCIAL BANKING
4.1 Priority Sector Lending
It has been the constant endeavor of the Bank to facilitate equitable and sustainableeconomic development by timely and hassle-free availability of credit for productivepurposes to Small and Marginal Farmers, Micro & Small Enterprises, Retail Traders,Professional & Self Employed, Women Entrepreneurs and entrepreneurs from economicallyweaker sections.
The outstanding advances under Priority Sector as of 31st March 2014 aggregates to Rs.32010.68 crore, constituting 41.99% of the Adjusted Net Bank Credit.
The rise in Priority Sector Advances in absolute terms is Rs. 7291.32 crore overprevious year March 2013, resulting into growth of 29.50% on y-o-y basis.
The Bank disbursed Rs. 5909.54 crore for agriculture and allied activities during theyear 2013-14. The total outstanding advances to agriculture sector have shown a growth of28.89 per cent on y-o-y basis, to reach a level of Rs. 10276.07 crore as on 31.03.2014.
The Bank undertook awareness/sensitization programmes for all the branches forincreasing advances to agriculture by providing hassle free credit to farmers.
4.2.1 Mahabank Kisan Credit Card (MKCC)
This scheme gained popularity especially in rural areas where it is being propagatedsuccessfully and vigorously. The Bank has issued total 470762 Kisan Credit Cards tofarmers. Credit flow to MKCC beneficiaries has reached to the level of Rs. 4312.60 croreas on 31.03.2014, registering a growth of 42.83% on y-o-y basis.
4.3 Micro, Small and Medium Enterprises (MSME)
SMEs are recognized as a major growth engine for the Indian economy. They generateopportunities for direct and indirect employment by facilitating use of natural resourcesand local skills to stem the tide of migration to urban areas and promote low investmententerprises. Finance is made available to viable enterprises at an attractive and low rateof interest. On line enquiry portal is made available on the Bank's website during theyear.
The Bank has adopted Simplified Loan Application for MSEs and the same is displayed onthe Bank's website. The Bank has also adopted Bank's Code of Commitment to Micro and SmallEnterprise and it is displayed on the Bank's website.
The Bank's lending to Micro, Small and Medium Enterprises which was at the level of Rs.11288.92 crore as at 31.03.2013, increased to Rs. 15098.25 crore as at 31.03.2014, whichtranslates into a y-o-y growth of 33.74 per cent.
Mahabank MSME centres - Centralized Processing Cell have been set up for speedydisposal of MSME proposals at Pune, Hyderabad, Delhi and Chandigarh.
Under the scheme, the Bank is providing for supporting SMEs in rural areas finance upto Rs. 100.00 lacs to Micro and Small Enterprises without Collateral Security and/ orThird Party Guarantee.
Accounts under the scheme are covered under Credit Guarantee Fund Scheme for Micro,Small and Medium Enterprises of Government of India. The Bank is bearing 50% annualguarantee fee for loans above Rs. 10.00 lakh & entire annual guarantee fee for loansbelow Rs. 10.00 lakh. The Bank sanctioned loans of Rs. 1040.37 crore to 11,436 borrowersunder this scheme up to March 2014. During the current FY, coverage under Credit GuaranteeFund Scheme has increased by 36.11%.
5. IMPORTANT SCHEMES/PROJECTS OF THE BANK
5.1 Credit Flow to Retail Sector
The Bank is providing retail loans to salaried persons, professionals, businessmen andpensioners for purchase of consumer durables, two/four wheeler vehicles and also for otherpersonal needs.
5.1.1 Centralized Processing of Retail loans:
There are 14 Retail Asset Branches and 18 Retail Processing Centers covering all theZones for hassle free and quality disbursement of retail loans.
5.1.2 Mahabank Gold Loan Scheme
Gold ornaments are the traditional and inherited form of savings among the people inIndia. Being one of the most liquid and precious asset, it serves as a dependable andacceptable form of security to raise loans for meeting immediate financial needs forbusiness, agricultural, consumption purposes such as marriage, medical, educationalexpenses etc. With a view to meet the credit requirement of our customers, Bank haslaunched a new retail loan product "Mahabank Gold Loan Scheme" w. e. f.01.11.2010. The total portfolio of Gold Loan of our Bank is Rs. 624.62 crore.
5.1.3 Mahabank Top-Up Loan Scheme
In order to extend additional credit support to our regular housing loan borrowers,Bank launched another new Retail Loan product "Mahabank Top-Up loan scheme"w.e.f. 01.11.2010.
5.2 Housing loan to public
The Bank has in place Housing Loan Scheme to meet the needs of all economic segmentsincluding NRIs. Financing housing sector in rural and urban parts of India is a thrustarea. The Bank's lending to housing sector has grown by 34.63 percent during the year toreach the level of Rs. 8854.40 crore as of 31.03.2014. The Bank is also implementingGolden Jubilee Rural Housing Scheme of the Government of India in rural areas havingpopulation not exceeding 50,000. Bank is having online facility to apply for housing loan,which has evoked positive response.
5.2.1 One per cent Interest Subvention on Housing Loan up to Rs. 15.00 Lakh.
As per GOI guidelines, Bank has provided 1% interest subvention to borrowers, whoavailed housing loans upto Rs. 15.00 lakh costing worth upto Rs. 25.00 lakh. During theyear 2013-14, 5941 borrowers benefited under the scheme to the extent of Rs. 5.50 crore.
5.3 Model Educational Loan scheme
With the objective of ensuring that all deserving students get opportunity to pursuehigher education, the Bank implemented a Model Educational Loan Scheme. As of March 2014,the Bank had lent Rs. 637.34 crore to 29,876 students. The Bank has provided the facilityof submission of application for education loan through web-access (on line) also.
5.4 Micro Finance
The Bank has always recognized the importance of credit to rural and urban poor fortaking economic activity. The SHGs have proved to be effective instruments for empowermentof women. Bank has specialized SHG branches in all six lead districts and at Goregaon,Mumbai.
As on 31.03.2014, there were 108964 SHGs formed by the Bank, out of which 97261 SHGshave been linked with the bank credit with outstanding of Rs. 160.71 crore as on March2014.
5.5 Assistance to SC/ST beneficiaries:
The Bank has been actively extending finance to SC/ST beneficiaries through variousschemes. Total finance as on 31.03.2014 to SC/ST beneficiaries stood at Rs. 1511.80 crore,constituting 20.41 per cent of advances to weaker sections.
5.6 Advances to Minority Community
A special cell has been set up at Central Office to review & ensure smooth flow ofCredit to minority community. As of March 2014, the outstanding advances to minoritycommunities were at Rs. 2258.72 crore to 102,106 beneficiaries.
5.7 Door Step banking Services
Bank has introduced Door Step Banking Services for its High End Customers and theservices include Corporate and Retail Cash pickup and delivery & Cheque CollectionServices, at Clients' Doorstep. The Services has been initially introduced in Mumbai andPune which is now extended to all Centers except branches in the Bhopal Zone.
5.8 BOM SBI International Credit Card
Bank is offering Co-branded International Credit Card to its customer under tie-uparrangement with SBI cards. The card is offered in two variants viz.Platinum and Goldcard. As on 31.03.2014, the outstanding number of cards issued to its customer is 23861.
5.9 National Pension System (Swavlamban)
NPS Lite Swavalamban was made live in July 2013 and total 1806 branches are registeredas NLCC (NPS Lite Collection Centre) with NSDL for collecting contribution under thescheme. 11833 accounts were opened under the scheme up to 31.03.2014.
5.10 Tie Up
5.10.1 Empanelment as lead Generation agent for SHCIL.
Bank has entered into tie up arrangement with Stock Holding Corporation of India Ltd.(SHCIL) in Maharashtra wherein Bank is empanelled with SHCIL as the lead generation agent.The bank role is to popularize e-stamping system across Maharashtra and provideinformation to customers and guide customers to SHCIL office for their e-stamp business.
5.10.2 Remit2india' by Timesofmoney'
Bank has tie up with Timesofmoney for introducing remit2india an online platform forremittance of funds by NRI customers.
5.10.3 Payment Gateway Facility
Bank has tie up with M/s India Ideas.com Ltd, M/s Avenues India Ltd., M/s AtomTechnologies Ltd, M/s ibibo web Solution Ltd, M/s Citrus Payment Solutions Pvt Ltd, M/sOne 97 Communication Ltd, M/s EBS payment System, M/s Techprocess Payment System, M/sTimesofMoney Limited for facilitating e-commerce and utility bill payment facility to itsinternet banking customers.
5.10.4 ECS Mandate and Direct Debit System
Bank has tied up with Bajaj Finance Ltd. and TVS Credit Pvt. Ltd for ECS Mandateverification of Fresh Mandate and Direct debit system of PDCs.
5.10.5 Online Fee Collection
Bank has entered into tie up with various Institutions during the year where bank isgetting commission on collection of fees for Institutes from Branches. The bank iscollecting online fee collection for Mumbai University from the students appearing forexternal educational programme. The Mumbai University selected Bank from the group of 5Banks.
6. CORPORATE SOCIAL RESPONSIBILITY
The Rural Development Centres at Hadapsar and Bhigwan in Pune District of Maharashtrahave been undertaking various rural developmental activities for the benefit of farmersviz. Lab to Land Project, Re-development of Saline Soils, Soil Testing etc. Bank hasestablished Soil testing Lab (STL) through MARDEF Trust at RDC Bhigwan. The Soil TestingLaboratory has analyzed 8892 Soil & Water samples in the year 2013-14 and accordinglycounseling is done. Farmers from the districts of Pune, Ahmednagar, Solapur and Satara aretaking benefit of the lab.
A Trust viz. Mahabank Agricultural Research and Rural Development Foundation (MARDEF)established by the bank, undertakes various projects and village improvement programmes.MARDEF is imparting training to farmers on various subjects in Agriculture, e.g. Dairy,Goat rearing, Best practices in farming, Application of fertilizers, Agriculture creditschemes, etc. MARDEF Trust has implemented 96 training programmes for farmers at RDCBhigwan & Hadapsar and has benefited 5211 farmers from April 2013 to March, 2014.
The Bank has established Seven Mahabank Self Employment Training Institutes (MSETI) forproviding training to rural youth and women to enable them to acquire skills forself-employment through small business enterprises. The Institute has centers located atPune, Nagpur, Aurangabad, Amravati Jalna, Thane and Nasik. The Institute has so farimparted training to 12,666 educated unemployed youths. The settlement rate is 67 percent.
Gramin Mahila Va Balak Vikas Mandal (GMVBVM), an NGO formed by Bank of Maharashtra andNational Institute of Bank Management is actively involved in formation, nurturing,training and ensuring linkage of SHGs to Bank Credit. The GMVBVM also helps SHGs inmarketing products of SHGs through outlet established in Pune City under the name"SAVITRI". The GMVBVM guides and actively helps SHGs for selection and purchaseof raw materials and quality production.
The Bank has opened Financial Literacy Centers in Six Lead Districts namely Pune,Nasik, Aurangabad, Satara, Jalna & Thane for creating awareness about banking schemes.
Bank has helped various NGOs during the year extending financial support to acquirenecessary inputs for carrying their activities. These include the following:
Fixing of artificial limbs to the needy patients.
Diesel Generator set for the school meant for physically challenged children
Building / classroom / Kindergarten equipments for the needy, mentally retardedand cerebral palsy children, cancer patients and Old age home.
Conducting cancer detection camps in slums for the needy.
Moreover Bank has always stood for the cause of society by contributing at large forimproving medical facilities, vocational training, basic amenities etc. Bank is alsohelping emerging sports persons at budding stage by sponsorships and providing financialassistance to bring the glory to the Nation and contributing to social cause.
7. LEAD BANK SCHEME
7.1 Lead Bank Scheme
Bank has Lead Bank responsibility in six districts of Maharashtra State viz.Aurangabad, Jalna, Nasik, Pune, Satara & Thane. Every year our Bank is successful inachieving the targets under Annual Credit Plan with achievement under various sub sectoraltargets.
7.2 State Level Bankers' Committee
Bank is the Convener of State Level Bankers' Committee (SLBC) for the State ofMaharashtra. Quarterly meetings are held regularly. Detailed discussions are held andimplementation of various schemes like ACP achievement, Priority Sector lending, financialinclusion and Government Sponsored Schemes are reviewed. The performance of variousparticipants is monitored and guidelines are given to LDMs / Banks for their improvement.A special SLBC meeting was convened which was chaired by Hon'ble Chief Minister of theState. An ambitious ACP of Rs. 1.00 lakh Crore was accepted, which is highest in thecountry. The performance of SLBC was commended by Chief Minister. The crop loanachievement for this year was 90%. SLBC has taken proactive steps for supporting thefarmers suffered due to Drought / Hail Storms by issuing guidelines immediately andfollowing up with all the implementing agencies. SLBC has also taken a proactive step inproviding the credit to the farmers in all the districts where the DCCBs are not in aposition to lend by providing a major share of crop loans to Commercial Banks.
As conveners of SLBC, Bank is also coordinating with all member banks in implementingDirect Benefit Transfer. As Convener, bank has taken special emphasis on opening ofaccounts and seeding of aadhaar numbers of the DBT beneficiaries, in formation of 13,431Sub service areas and in coverage of all the sub service areas in DBT districts. SLBC hasalso taken proactive role in implementation of DBTL scheme. Meetings were held withDistrict Authorities, OMCs and District Coordinators of member Banks to ensure bettercoordination among these implementing agencies. SLBC has also taken the lead in monitoringthe progress for making available the delivery channels such as opening of branches,installation of ATMs and providing the services of Business correspondent.
7.3 Aadhaar Initiatives
The Bank is acting as Non State Registrar (NSR) with Unique Identification Authority ofIndia (UIDAI) to assist authority for enrolment of Aadhaar. For Aadhaar enrollment to theresident's bank has engaged agencies. Bank has enrolled more than 21 lakh Aadhaar numberswith the help of these agencies
Bank has taken the initiative for seeding of Aadhaar numbers and has approachedcustomers requesting them for submission of their Aadhaar numbers. Aadhaar seeding is alsodone through our ATMs and Internet Banking apart from requests received directly. Due tothese initiatives Bank is successful in seeding of more than 26 lakh Aadhaar numbers.
7.4 Financial Inclusion Plan
Financial inclusion is one of the key agenda items of the Government as well as ReserveBank of India. Bank has taken Financial Inclusion as business opportunity and has madebanking services available in 6,713 villages of the State through innovative BC - ICTmodel. For this purpose bank has appointed 2,472 BC agents of various agencies forproviding basic banking services as opening of bank accounts of villagers, provide needbased credit, remittance facilities and help to promote financial literacy in rural Indiausing various models and technologies including branchless models.
Bank has opened 4,40,646 customers' accounts through BC agents & a total of 28.43lakh Basic Saving Bank Deposit Accounts (BSBDA) with an outstanding balance of Rs. 203.19Crore. Bank has also made efforts to make BC model sustainable by way of introducing cardless technology for FI customers. Bank has introduced AEPS - Aadhaar Enabled PaymentSystem (On us and Off us - Acquirer and Issuer) technology, both functioning in the samepOs machine. This has helped to increase the number of transactions during the financialyear. The number of transactions increased from 0.95 lakhs to 4.66 lakhs during the year.The amount increased multifold from Rs. 2.93 crore to Rs. 101 crore.
Govt. of India is implementing the scheme of Direct Benefit Transfer (DBT). Under thisscheme Govt. subsidies to the beneficiaries of 26 notified schemes are directly creditedto the Aadhaar enabled bank account of the beneficiary in 121 districts. Out of these 121districts we are operating in 71 districts with 632 branches. Under this scheme Bank hasthe responsibility of three districts as lead districts. Bank has ensured that all thebeneficiaries under the scheme have their account with the bank and their Aadhaar numberreceived from the district authority has been seeded to the accounts and uploaded withNPCI server. Bank had arranged special camps for opening of accounts as well as forenrolment of Aadhaar. Bank has also participated in implementing DBTL program and ensuredmaximum Aadhaar seeding of the beneficiaries.
8. SUBSIDIARIES/JOINT VENTURES AND SPONSORED INSTITUTIONS
8.1 Performance of Regional Rural Bank
Maharashtra Gramin Bank (MGB) is a Regional Rural Bank sponsored by our bank having itsHead Office at Nanded, Maharashtra state. Total no of branches as on 31.3.2014 stood at378 in its area of operation covering 16 out of 33 districts of Maharashtra State.
All 378 branches & controlling offices are now under CBS. During this year, MGBopened 27 new branches and plans to open further more.
During this year, CASA share has improved from 62.75% to 64.27%, other income hasimproved from 21.75 Crore to 25.13 Crore resulting in increase in Net profit from 26.97Crore to 35.51 Crore.
Under Financial Inclusion programme, all 355 allotted villages are covered under ICTbased model. M/s Vakrangee Finserve Ltd., selected through common RFP has been engaged asthe BC for providing BC services in all the villages allotted to the Bank, which isfunctioning actively.
During this year 2013-14, MGB has grown by 7.68% in total deposits and 14.20% inadvances. It has achieved three SOI targets for the year 2013-14. The position of SOItargets and achievement are as under:-
|Sr. No. ||Parameter ||Actual 31.03.2013 ||Target 31.03.2014 ||Actual 31.03.2014 |
|14 ||Performance of RRBs || || || |
|14.1 ||Deposit Growth in % ||19.12% ||12.50% ||7.68% |
|14.2 ||Advance Growth in % ||38.09% ||20.00% ||14.20% |
|14.4 ||Branches under CBS (Nos.) ||351 ||365 ||378 |
|14.5 ||Profit per employee (Rs. In Lakh) ||2.13 ||2.40 ||2.67 |
|14.6 ||No. of loss making branches (being 12 months old or more) ||18 ||30 ||18 |
8.2 The Maharashtra Executor & Trustee Company Pvt. Ltd. (METCO)
The Maharashtra Executor & Trustee Company Pvt. Ltd. (METCO), the 100% subsidiaryof Bank of Maharashtra was established in 1946 with an aim to provide services auxiliaryto banking such as:
Consultation, Drafting & Execution of will
Consultation, Drafting and Management of Private Trusts / Public Trusts
Management of investments & house properties as attorney
Guardianship of minor's property
Consultation for sale / purchase of property
Filing of I-Tax Returns for individuals
The Company is located at Pune having its branch units at Pune, Vashi-Mumbai, Thane andNagpur.
During 2013-14, company could get new assignments for management of additional 9 Trustsbringing total 1070 Public & Private Trusts under our fold for management. During theyear, additional 41 WILLS were added making total 1069 WILLS in our custody for execution.
At present, the Company manages properties both movable and immovable of 82 clientsunder the Power of Attorney. The Company also acts as the Trustees in respect of 170policies under Married Women's Property Act and as Court appointed Guardian of minor'sproperty in 6 cases.
9. IMPLEMENTION OF OFFICIAL LANGUAGE POLICY
During the year 2013-14, the Bank has made various remarkable achievements in the fieldof Official Language implementation.
Two prestigious Hindi-serving Institutions, Mumbai based Aashirvad and Kolkata basedRashtreeya Hindi Academy, Roopambra, awarded trophy to our bank for better use of Hindiimplementation and and shield for Rajbhasha Visheshank of our house magazine"Mahabank Pragati".
On 17th and 18th August, 2013, a two-day seminar was organized in Kolkata for allOfficial Language Officers of our bank. Seminar was Inaugurated by the then C&MD ShriNarendra Singh. Director of the bank, Dr.R.K.Agrawal also graced the occasion.
On 14th September, 2013, Hindi day function was held in Head Office, Pune, which washeaded by the then C&MD Shri Narendra Singh. On this occasion, shields were presentedto the winner Zonal Offices, Branches and Head Office Deptts of bank's internal RajbhashaTrophy Scheme for the year 201213.
On 3rd March, 2014, 29th meeting of Maharashtra State Level Banker's Committee(Rajbhasha) was held at Head Office, Lokmangal, Pune. Executive Director, Shri R. Athmaramheaded the meeting. Shields were presented to the winner member banks and financialinstitutions of state level Rajbhasha Shield competition.
Zonal Office, Akola, Raipur, Nagpur & Kolkata and Vijaywada branch of HyderabadZone were awarded various prizes for better use of Hindi by various Town official LanguageImplementation Committees.
During the year 2013-14, Deputy Director (O.L.), Regional Implementation Office,Department of Official Language, Ministry of Home Affairs inspected the progressive use ofHindi at our Nagpur, Nasik & Chennai Zonal Offices.
Chief Manager (Rajbhasha) Shri Anand Prakash Jaiswal has been nominated as a member inRBI's "Banking Glossary Committee".
Shri Deepak Bhalchandra Karpe, Clerk of our Dewas branch has been awarded in RBI'sInter-bank Hindi Essay competition.
Hon'ble Governor of Madhya Pradesh handed over Madhya Pradesh Rashtrbhasha PracharSamiti, Bhopal "Hinditar Sevi Samman" along with certificate to our ChiefManager, Shri Girish Vaghela.
A national level one-day seminar was arranged by TOLIC Pune with support from PuneCollege, Camp. Our Bank is the convener of this Committee.
10. DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that in the preparation of the annual accounts for the year ended31.03.2014:
The applicable accounting standards of the Institute of Chartered Accountants ofIndia, have been followed along with proper explanation relating to material departures,if any;
The accounting policies framed in accordance with the guidelines of the ReserveBank of India, are consistently applied and proper disclosures are made for changes, ifany;
Reasonable and prudent judgment and estimates were made so as to give a true andfair view of the state of affairs of the Bank at the end of the financial year and theprofit of the Bank for the year.
Proper and sufficient care was taken for maintenance of adequate accountingrecords in accordance with the provisions of applicable laws governing banks, in India;and
The accounts have been prepared on a going concern basis.
11. CHANGES IN THE BOARD OF DIRECTORS
During the year 2013-14, the following changes took place in the Board of Directors:
Shri S.D. Dhanak ceased to be Director w.e.f. 21st July 2013.
Shri Narendra Singh, Chairman & Managing Director superannuated on 30th September2013.
Dr N.K. Drall resigned from Directorship w.e.f 15th November 2013.
Dr. D.S. Patel, Shareholder's Director ceased to be Director w.e.f 1st February 2014.
Dr Rajkumar Agrawal, Shareholder's Director ceased to be Director w.e.f. 1st February2014.
Shri C.VR. Rajendran, Executive Director appointed as Chairman & Managing Directorof Andhra Bank w.e.f 13.12.2013.
Ms Kamala Rajan, RBI Director superannuated on 28th February 2014.
Dr. S.U. Deshpande's Directorship is kept in abeyance w.e.f 16th March2014, byGovernment of India.
Shri R.L. Saydiwal was appointed as Director w.e.f. 21st July 2013.
Shri R. Athmaram was appointed as Executive Director w.e.f 07th August 2013.
Shri Sanjeev Jain was appointed as Director w.e.f. 19th August 2013.
Shri Sushil Muhnot was appointed as Chairman & Managing Director w.e.f 09thNovember.2013.
Shri R.K.Gupta was appointed as Executive Director w.e.f 31st December 2013.
Dr S.Rajagopal was appointed as RBI Director w.e.f. 13th March 2014.
The Board of Directors place on record their sincere appreciation for the valuablecontribution made by the outgoing Directors.
The Board of Directors wishes to express sincere gratitude to the Government of India,the Reserve Bank of India, the Securities and Exchange Board of India, InsuranceRegulatory and Development Authority, Indian Banks' Association and Stock Exchanges andCDSL for their valuable advice and support; to the customers and shareholders for theirpatronage: to the correspondents and associates for their co-operation and to all themembers of staff of "Mahabank Family" for their unstinted commitment andcontribution to the overall development of the Bank.
| ||For and on behalf of the Board of Directors |
|Pune ||(S. Muhnot) |
|Date : 26.05.2014 ||Chairman and Managing Director |