Report of the Board of Directors
We have pleasure in presenting the Banks 86th Annual Report along withthe Audited Balance Sheet and Profit and Loss Account for the year ended 31.03.2013.
The salient features of the Banks performance for the year 2013 are:
Achieved Operating Profit of Rs. 51.40 crores for FY 13 against OperatingLoss of Rs. 97.90 crores for FY 12.
Yield on Advance improved from 11.34% in FY 12 to 12.69% in FY 13.
Interest expenses declined by 10% during FY 13 as compared to FY 12.
Net Interest Income grew by 11.67% during the year.
Net Interest Margin (NIM) improved to 2.33% from 1.81% in the previous year.
Achieved Non-Interest Income of Rs. 114.30 crores.
Employee cost declined by 31.83% in FY 13.
Other operating expenses declined by 29.08% during the year.
In FY 13, out of the gross slippage of NPA of Rs. 504.78 crores, we couldrecover Rs. 228.78 crores during the year, thereby containing the level.
Cost to income ratio declined from 125.03% for FY 12 to 86.85% for FY 13.The ratio came down from 209.49% in Q4 of FY 12 to 68.45% in Q4 of FY 13.
CRAR of the Bank under Basel II as on 31.03.2013 stood at 11.06% against9.49% as at 31.03.2012.
Bank raised Equity Capital of Rs. 35.40 crores in the year and another Rs.69.85 crores in April 2013. Taking into account the additional infusion in April 13, CRARof the Bank would be 11.91%.
Capital and Reserves
The Banks Capital and Reserves increased from Rs. 728.25 crores as on 31.03.2012to Rs. 765.99 crores as on 31.03.2013. The capital adequacy ratio as per Basel I was 9.89%as on 31.03.2013 as against 8.79% as on 31.03.2012. Under Basel II, it was 11.06% as on31.03.2013 against 9.49% as on 31.03.2012. The benchmark prescribed by RBI is 9%.
The Banks customer outlets stood at 676, as on 31.03.2013, comprising 268branches, 396 ATMs and 12 processing centres. We have concentrated on consolidating ouroperations across the country and thereby aiming at utilizing our branches to theirfullest potential.
Total deposits of the Bank as on 31.03.2013 stood at Rs. 11202.13 crores, in which netInter Bank Deposits were only Rs. 494 crores. Total Deposits as on 31.03.2012 were Rs.11804.41 crores wherein Inter Bank Deposits and Certificates of Deposit were Rs. 1185crores. The decrease of Rs. 602.28 crores was mainly on account of repayment of Inter BankDeposits & Certificates of Deposit during FY 13 consequent to the Banks decisionto shed high cost and bulk deposits.
Total advances of the Bank stood at Rs. 7954.00 crores as on 31.03.2013, in whichretail assets bought out was Rs. 323 crores only. Against this, the total advances as on31.03.12 was Rs. 8830.85 crores, in which the retail assets bought out was Rs. 961 crores.The decline of Rs. 876 crores in total advances was mainly on account of the repayment oflow yielding bought out loan portfolio to the tune of Rs. 638 crores. During the year, theCredit Deposit Ratio declined from 74.19% to 69.42%. Yield on Advance improved from 11.34%in FY 12 to 12.69% in FY 13.
During the FY 13, there was a rationalization of the business portfolio in order toreduce the cost of funds and improve the yield on advances. The total business of the Bankstood at Rs. 19156.13 crores as on 31.03.2013 as against Rs. 20635.26 crores as on31.03.2012. The growth in total business achieved during the year was eclipsed by therepayment of high cost Inter Bank Deposits/Certificates of Deposit and repayment of lowyielding corporate advances along with bought out loan portfolio.
Priority Sector Advances
The Bank continued its efforts during the year in facilitating the growth of theproductive sectors of the economy. Priority sector advances decreased from Rs. 2810.34crores as at the end of March 2012 to Rs. 2572.65 crores as at the end of March 2013 - afall of Rs. 237.69 crores during 2012-13, mostly due to repayment of bought out advancesin bulk. Direct agricultural outstanding grew from Rs. 781.71 crores to Rs. 1217.19 croresduring the same period. The share of priority sector advances and agricultural credit inadjusted net bank credit was 29.07% and 15.87% vis--vis the RBI mandated targets of 40%and 18% respectively. The outstanding under the credit to weaker sections of society wasRs. 1134.89 crore representing 12.82% of adjusted Net Bank Credit vis--vis the guidelineof 10% set by RBI.
As against a net loss of Rs. 115.63 crores for the previous year, the Bank posted a netprofit of Rs. 2.62 crores in the current year. Bank achieved operating profit of Rs. 51.40crores against operating loss of Rs. 97.90 crores in the previous year.
In its journey to prosperity, Bank has made progress and posted net profit. However, nodividend could be recommended to the shareholders as the Bank needs to garner more profitsto do so.
The Indian economy faced continued slowdown in the activities at the back of risinginterest rate regime and recessionary scenario globally during the FY 2013. The economiccondition affected the borrowers of our Bank also, particularly those in the industrialand infrastructure sector. During the year, accounts having balance of Rs. 504.78 croresturned into NPA which was abnormally high compared to previous years slippage of Rs. 87.76crores. However, through concerted efforts, the Bank could recover Rs. 227.71 crores Rs.(52.97 crores for the corresponding previous year). The Bank could successfully utilizeall recovery measures open to it under law including the provisions of Securitisation andReconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI) for achieving this record performance. Further the Bank re-empowered itsbranches for quality credit dispensations and management aiming to bring down the NPA andbuild up healthy advance portfolio.
The Bank attaches top priority to the quality of service rendered across itsbranches/offices. It has taken several measures during the year through deployment oftechnology and otherwise for significantly enhancing service quality.
A Customer Service Committee of the Board monitors the implementation of customerservice measures periodically. Customer Service Committees comprising of Bank personnel aswell as our constituents have been formed at the apex level and at branches for monitoringservice quality and bringing about improvements in this area on an ongoing basis. The Bankis member of the Banking Codes and Standards Board of India (BCSBI) and is activelyimplementing the Code of Commitment to Customers as also the Code for Micro and SmallEnterprises formulated by the BCSBI. The Bank has 24 x 7 phone banking call centre atBangalore as an outsourced model, which is functioning satisfactorily.
During the current FY 2012-13, Bank received 8686 complaints as against a total of13100 complaints received in the previous FY 2011-12. The empowerment of branches forhandling all transactions and services for the customers has helped the Bank in bettercustomer service and reduction in number of complaints.
|Particulars ||Contact Centre ||ZO & CO ||ATM Recon ||Banking Ombudsman ||Total |
|No. of Complaints Outstanding at the Beginning of the FY 2012-13 ||14 ||7 ||4 ||3 ||28 |
|No. of Complaints Received during the FY 2012-13 ||3488 ||476 ||4661 ||61 ||8686 |
|No. of Complaints Resolved during the FY 2012-13 ||3490 ||482 ||4665 ||60 ||8697 |
|No. of Complaints Pending at close of FY 2012-13 ||12 ||1 ||0 ||4 ||17 |
Damodaran Committee on Customer Service
The Reserve Bank of India had constituted a Committee under the Chairmanship of Shri M.Damodaran, former Chairman, SEBI to interalia:
Examine the functioning of Banking Ombudsman Scheme - its structure, legalframework and recommend steps to make it more effective and responsive.
Review the role of Board of Directors of banks and the role of Regulators incustomer service matters.
Evaluate the existing system of grievance redressal mechanism prevalent inbanks, its structure and efficacy and recommend measures for expeditious resolution ofcomplaints. The committee may also lay down a suitable time frame for disposal ofcomplaints including last escalation point within that time frame.
Examine the possible methods of leveraging technology for better customerservice with proper safeguards including legal aspects in the light of increasing use ofInternet and IT for bank products and services and recommend measures to enhance consumerprotection.
Review the existing system of attending to customer service in banks approach, attitude and fair treatment to customers from retail, small and pensionerssegments.
We have received a total of 107 recommendations from the Committee since inception. Outof the 100 recommendations applicable to your Bank, we have implemented 80 recommendationsand the implementation of remaining items is in process.
The following important products and services were introduced during the year for thebenefit of the customers:
Foreclosure charges/pre-payment penalties on home loans on floating interestbasis were waived.
Penalty interest on premature closure of all fixed deposits was completelywithdrawn.
Credit of NEFT proceeds directly to the loan accounts of the customers wasenabled.
Forex and Loan Modules were enabled for our Corporate Internet Bankingcustomers thereby facilitating corporate users to access features viz. Card Rates,Outstanding Forex Contracts, Forex Transaction History, Loan Summary, Loan Detail, LoanRepayment Schedule etc.
Withdrawal slips were reintroduced for better customer facilitation.
Popularized AADHAAR card as a proof of identity and addressthereby paving the way for easy account opening process.
Initialized provision for Statement of account in SWIFT format for corporatecustomers to upload the statements directly into their ERP system.
Provided MICR, IFSC code and branch contact details in passbooks forcustomers to have easy access to the branches and the alternate channels.
Displayed the list of unclaimed deposit accounts on the Banks websiteas a proactive initiative to reach out to customers Process guidelines detailing the stepsto be taken by customers in claiming the unclaimed deposits have also been issued.
Facilitated printing of gross interest paid and tax deducted separately inthe customer passbook and savings account statements thereby making it easy for customersto understand interest earnings and tax deductions separately.
Introduced "Dhanam Green Loan" product for funding purchase ofsolar power equipment with a view to promote use of non-conventional energy sources amongour customers. This loan has a subsidy scheme under the Jawaharlal Nehru National SolarMission managed by NABARD.
Released the revised Kissan Credit Card Scheme with an innovative measure ofproviding interest at Savings Bank Interest rate for credit balances in the account.
Introduced a new gold loan product that facilitates greater flexibilitythrough provision for partial release of ornaments and redeposit of ornaments without anyrestrictions.
Started an evening counter for the convenience of customers at our High RoadBranch, Thrissur with effect from 17th August, 2012.
Enabled online Income Tax Return Filing Module for our customers incollaboration with TaxSpanner.com.
Investor Education and Protection Fund
During the year, there is no unclaimed amount transferred for the year 2004-05.
Listing on Stock Exchanges
The equity shares of the Bank are listed on the Bombay Stock Exchange Ltd., NationalStock Exchange Ltd., and Cochin Stock Exchange Ltd. The Bank confirms that it has paid thelisting fees to all the Stock Exchanges for the year 2012-13.
Conservation of energy
All efforts are being made to reduce energy consumption to the maximum extent possible.
Being a Banking Company, the required technology is deployed keeping in view the natureof activities.
Foreign Exchange Earnings and Outgo
Being an authorized dealer in Foreign Exchange, all possible measures are taken by theBank to increase foreign exchange earnings.
The Companies (Disclosure of Particulars in respect of Board of Directors) Rules, 1968
The statement containing particulars of employees as required under Section 217 (2A) ofthe Companies Act, 1956 and the rules thereunder, is given in an Annexure appended heretoand forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report andAccounts are being sent to the shareholders excluding the aforesaid Annexure. Anyshareholder interested in obtaining a copy of the Annexure may write to the CompanySecretary at the Registered Office of the Bank
Directors Responsibility Statement
The Directors confirm that in the preparation of the annual accounts for the year ended31 Mar. 2013:
the applicable accounting standards have been followed along with properexplanation relating to material departures, if any
the accounting policies, framed in accordance with the guidelines of theReserve Bank of India were applied consistently
reasonable and prudent judgement and estimates were made wherever requiredso as to present a true and fair view of the state of affairs of the Bank as at the end ofthe financial year and profit of the Bank for the year ended 31st March 2013
proper and sufficient care was taken for the maintenance of adequateaccounting records in accordance with the provisions of applicable laws governing Banks inIndia
the accounts have been prepared on a going concern basis
that proper systems are in place to ensure compliance of all laws applicableto the Bank.
Change in the Board
Shri Ghanshyam Dass, Director resigned with effect from 16.07.2012 and Shri Shailesh V.Haribhakti, Director retired at the 85th Annual General Meeting of the Bank held on27.09.2012. Shri S. Santhanakrishnan and Shri Sateesh Kumar Andra, Directors resigned witheffect from 31.10.2012. Shri Ghyanendra Nath Bajpai, Chairman resigned with effect from06.11.2012 following completion of his term as Non-Executive Chairman. The Board places onrecord its appreciation for the valuable services and guidance rendered by them to theBank during their tenure. Shri Jayakumar P. G. had been appointed as MD & CEO of theBank for a period of one year from 18.05.2012. Further RBI has given him extension for onemore year as MD & CEO with effect from 18.05.2013. Shri K. Vijayaraghavan and Shri P.Mohanan have been appointed as Additional Directors with effect from 31.10.2012. ShriTekkar Yashwanth Prabhu has been appointed as Director and Part-time Chairman of the Bankfor a period of 3 years with effect from 07.11.2012. Mr. Chella K. Srinivasan and Mr. K.Jayakumar have been appointed as Additional Directors with effect from 17.05.2013. Mr.Manoranjan Dash has been appointed as Additional Director on the Board by Reserve Bank ofIndia.
The Board places on record its gratitude to:
The Reserve Bank of India, The Ministry of Finance, Government of India,State Governments, Securities and Exchange Board of India, Indian Banks Association,Insurance Regulatory and Development Authority, Stock Exchanges and other regulatorybodies for their continued assistance and guidance.
The customers, shareholders, other stakeholders and well wishers for theirvalued patronage.
The clerical and officer associations for their active participation throughfeedback, suggestions and support.
The employees for their active involvement and contribution to theBanks growth and development.
| ||By Order of the Board |
| ||Sd/ |
|Place : Kochi ||Tekkar Yashwanth Prabhu |
|Date : 17.07.2013 ||Chairman |