State Bank of Mysore


BSE: 532200 | NSE: MYSOREBANK | ISIN: INE651A01020 
Market Cap: [Rs.Cr.] 2,678 | Face Value: [Rs.] 10
Industry: Banks - Public Sector

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Director's Report

SALIENT FEATURES OF THE REPORT OF BOARD OF DIRECTORS

SALIENT FEATURES OF

To the State Bank of India, Reserve Bank of India and the Central Government, in termsof Section 43(1) of State Bank of India (Subsidiary Banks) Act, 1959.

1. Management Discussions And Analysis

1.1. Macro economic Scenario and Banking environment.

1.1.1. Global economic activity had strengthened in HY2 and the growth is likely to bein the vicinity of 3.5% in 2014. The expansion in global output is expected to be led byadvanced economies (AEs). However, downside risks to growth trajectory arise from ongoingtapering of quantitative easing (QE) in the US, continuing deflation concerns and weakbalance sheets in the Euro area and, inflationary pressures in the emerging market anddeveloping economies (EMDEs). Weakening growth and financial fragilities in China inrecent years pose a large risk to global trade and growth.

Since the Third Quarter Review of January 2014, global activity appears to havemoderated on slower growth in the US, UK and Japan, restrained by the uncertain externaldemand environment and structural constraints. Going forward, global growth is likely tostrengthen with risks tilted to the downside.

1.1.2. After the unexpected shock from the May 2013 tapering indication by the US Fed,policy action in India has rebuilt buffers to cushion it against possible spill-overs.These buffers effectively bulwarked the Indian economy against the two recent occasions ofspill-overs to EMDEs the first, when the US Fed started the withdrawal of its large-scaleasset purchase programme and the second, which followed escalation of the Ukraine crisis.

1.1.3. On both these occasions, Indian markets were less volatile than its peers.

The sustained FII inflows, augmented by repayments by public sector oil marketingcompanies of their foreign currency obligations to the Reserve Bank during March, coupledwith increased export earnings have led to an increase in reserves to over USD 309billion.

1.1.4. Domestically, the growth in the Indian economy shows signs of bottoming-out withmarginal improvement recorded during Q2 and Q3 of 2013-14 to 4.8% & 4.7%,respectively. This improvement has been feeble and clear signs of recovery are yet toemerge. The real GDP growth continued to be modest in Q3 of 2013-14, with somestrengthening of activity in services. Industrial activity continues to be a drag on theeconomy and the boost provided by robust agricultural production in 2013 may wane, as theIMD outlook for the 2014 south-west monsoon appears weak and uncertain. Since December2013, the sharper than expected disinflation in vegetable prices has enabled a sizablefall in headline inflation. Contingent upon the desired inflation, real GDP growth isprojected to a range of 5-6% in 2014-15, with downside risks of 5.5%. However, leadindicators do not point to a sustained revival in industry and services, as yet.Agricultural sector is contingent upon timely arrival of the monsoon. Easing of supplybottlenecks and improvements in investment climate should brighten growth outlook.

1.1.5. On the basis of an assessment of the current and evolving macro-economicsituation, RBI has decided to:

• Keep the policy repo rate under the liquidity adjustment facility (LAF)unchanged at 8.0%.

• Keep the cash reserve ratio (CRR) of scheduled Banks unchanged at 4% of netdemand and time liability (NDTL) and

• Increase the liquidity provided under 7-day and 14-day term repos from 0.5% ofNDTL of the Banking system to 0.75%, and decrease the liquidity provided under overnightrepos under the LAF from 0.5% of Bank-wise NDTL to 0.25% with immediate effect.

Consequently, the reverse repo rate will remain unchanged at 7.0% and MSF rate and theBank Rate at 9.0%.

Statutory Liquidity ratio: SLR has remained unchanged at 23 per cent w. e. f.11.08.2012.

1.2. Economy of karnataka

1.2.1. Karnataka economy is largely service-oriented, with 61% of the State revenuecoming from services sector, 24% from industrial sector and balance 14% contributioncoming from agricultural sector. The State is the largest producer of coffee, raw silk andsandalwood in the country and also adds considerably to the horticulture production of thecountry. The major manufacturing oriented industries in the state include sugar, paper,steel and cement. 1.2.2. Karnataka’s state capital Bangalore is considered theSilicon Valley of India. Several IT and also Bio-tech companies have their offices inBangalore. The city contributes over 40% of the software export earning of the country andboasts of a pool of Scientists, Engineers, Software Professionals, besides the largestnumber of HNIs in the country. 1.2.3. The general slowdown in the National economy hasimpacted the State economy also, which is expected to grow at 5% as against the originalestimate of 5.9%, and reach Rs.3,11,628 crs. in 2013-14 (from Rs.2,96,658 crs in 2012-13).The slowdown in the economy, coupled with the drought situation prevailing in parts ofKarnataka affected the growth in services sector, which grew by 7.2%, as against 8.9% in2012-13. The growth in Industrial and Agricultural sector was also 1.2% and 0.6%,respectively, as against 4.4% and - 4.9% the previous year. 1.2.4. The State’s owntax revenues increased from Rs 25,987 crs in 2007-08 to Rs 62,464 crs during 2013-14, at acompound annual growth rate (CAGR) of 19.2%. The per capita State income at current pricesis estimated at Rs.86,788 in 2012-13, an increase of 12.3%. The State’s planexpenditure has been growing steadily and today the State boasts of one of the highest percapita plan expenditure in the country.

1.2.5. The business growth of our Bank depends to a large extent on the Karnatakaeconomy, since 82% of branches (772 out of 944 branches, as on 31.03.2014) are located inKarnataka. The budget size and State plan 2014-15 envisages a total expenditure of Rs1,38,008 crs on various development activities and regulatory functions of the Government,which is an increase of 18.75% over the budget of Rs 1,16,213 crs of 2013-14. TheGovernment has facilitated sanction of special economic status to Hyderabad-KarnatakRegion under Article 371J of the Constitution, which will result in massive investment bythe Govt., thereby paving the way for accelerated development in that Region. Taking a cuefrom their action, we have also opened our Regional Office at Gulbarga under thenewly-created Belgaum Zone, to undertake branch expansion for business growth andoutreach.

2. REVIEW OF BANKING OPERATIONS

2.1. Market Share and Business Growth

2.1.1. The business levels of the Bank and the position of market share in recent yearsare furnished hereunder:-

31 year ended 31st March 2010 2011 2012 2013 2014
Aggregate Deposits 38,437 42,779 49,663 56,712 61,087
(Percentage of growth) (18.7) (11.3) (16.1) (14.2) (7.7)
C WmoH$ O-mE (%) 27,724 29,844 35,041 42,360 50,753
Of which Non-Bulk Deposits (%) (72.1) (69.9) (70.6) (74.7) (83.1)
Gr. In Non-Bulk Dep (%) (27.2) (7.7) (17.4) (20.9) (19.8)
Deposits Market share % 0.86 0.79 0.78 0.83 0.76*
Total Advances 29,874 34,442 40,653 45,981 50,894
Percentage of growth) (15.4) (15.3) (18.0) (13.1) (10.7)
Advances Market share % 0.92 0.87 0.85 0.85 0.79*

2.1.2. The Bank has seen continuity in growth during the current year also, withaggregate deposits reaching a level of Rs 61,087 crs, a growth of Rs 4,375 crs over theprevious year at a rate of 7.7%. However the growth in Non Bulk deposit at 19.8% is intune with the past trend and in accordance with our conscious policy of shedding highcost/bulk deposits. The total advances have reached a level of Rs 50,894 crs, recording agrowth of Rs 4,913 crs over the previous year at a growth rate of 10.7%. As on 21.03.2014the Bank’s market share of Deposits decreased to 0.76% from 0.83% and alsoBank’s market share of Advances decreased to 0.79% from 0.85%.

2.2 Key Performance Indicators

Sl. No. Key Indicators 2011-12 2012-13 2013-14
1. Net Profit Rs  . in crs) 369.15 416.10 274.25
2. Return on Assets (%) 0.67 0.66 0.40
3. Return on Equity (%) 10.82 11.05 6.84
4. Expenses – Income Ratio (%) 49.55 46.26 53.40
5. Earnings per Share (in Rs .) 78.88 88.91 57.39
6. Gross NPA to Gross Advances (%) 3.70 4.53 5.54
7. Net NPA to Net Advance (%) 1.93 2.69 3.29
8. Cost of Deposit 7.09 7.32 7.21
9. Yield on Advances 11.44 11.62 10.93
10. - NIM 3.16 3.22 3.02

2.3. Income

Total Income of the Bank increased by 6%, from Rs 6,514 crs as at March, 2013 to Rs6895 crs in March,2014. Interest Income increased from Rs 5,965 crs to Rs6,322 crs (6%). Average Yield on Advances decreased from 11.62% in 2012-13 to 10.93%during 2013-14, while Average Yield on Investments increased from 7.30% in March 2013 to7.37% during the same period. Non Interest Income increased by 4.4% from Rs 548 crs to Rs572 crs with the growth in profit from sale of securities improving marginally from Rs66.53 crs to Rs 69.36 crs. The ratio of Non-Interest Income to Total Income,therefore, stood at a lower level of 8.3% (8.4% last year). Efforts are being made toimprove this ratio, in the coming years.

2.4. Expenses

The Total Expenditure (before provisions and contingencies) increased by Rs 501 crs,from Rs 5,230 crs in 2012-13 to Rs 5730 crs in 2013-14. While Interest Expenses increasedby Rs 271 crs (6.6%), the Operating Expenses increased by Rs 230 crs (21%) during thecurrent year. The Average Cost of Deposits decreased from 7.32% in March, 2013 to 7.21% inMarch, 2014 predominantly owing to increase in CASA share from 31.4% (31.03.13) to 33.3%(31.03.14) and decrease in higher cost bulk deposits.

2.5. Profit

While the Operating Profit decreased from Rs 1,331.03 crs in 2012-13 to Rs 1164.44 crsin 2013-14 (-12.5%), the Net Profit decreased fromRs 416.10 crs to Rs 274.25 crs (-34.1%).The reduction in net profits was predominantly on account of the steep increase inprovisioning on non-performing assets, wage revision & depreciation investment. WhileReturn on Assets (ROA) decreased from 0.66% to 0.40% owing to the expansion in the creditbase, besides subdued growth in net profits, Return on Equity (ROE) also decreased from11.05 % to 6.84% during the year.

2.6. Capital adequacy ratio

The Capital Adequacy Ratio recast under Basel III guidelines as per RBI directiveseffective from 1st April 2013 stands at 11.08 % as at March 2014, against 11.28 %(recastunder Basel III) as at March 2013. The CRAR of 11.08% consists of CET – I of 8.44%,AT-I of 0.21% both forming TIER-I Capital besides 2.43% of TIER-II Capital. The CRAR underBasel II guidelines as at March 2014 stood at 11.50% as against 11.79% in the previousyear.

The Capital Adequacy Ratio of the Bank has come down on account of increase in creditgrowth of the Bank coupled with reduced profitability on account of higher provisioning.

2.7. Dividend

Keeping in mind the need to strengthen Tier I capital of the Bank in the currenteconomic scenario and the reduced profit level, the Board of Directors has declared adividend of 30% (Rs 3.00 per Equity share of Rs 10/-) for the year 2013-14. This involveda pay-out of Rs 16.85 crs, including the tax component. The pay-out ratio for 2013-14works out to 5.25 %, as against 12.93 % for 2012-13.

3. BUSINESS REVIEW

3.1. Deposits

3.1.1. Total Deposits of the Bank grew by Rs 4,590 crs, to reach the level of Rs 61,560crs. Aggregate Deposits (total deposits excl. inter Bank deposits) stood at Rs 61,087 crsas at March 2014, recording a growth of Rs  4,375 crs (7.72%) during the year. Theshare of CASA deposits to Aggregate Deposits increased from 31.4% in March 2013 to 33.3%in March 2014.

3.1.2. Personal Segment Deposits

Personal segment deposits grew by Rs 5,351 crs, registering a growth of 19.2% to reacha level of Rs 33,161 crs as on 31st March 2014. Share of Personal segment deposits toaggregate deposits has increased from 49.0% to 54.3% during the year. The number ofdeposit accounts under Personal segment have increased by 10,05,983 during the year.

To further boost deposits growth under Personal segment, a new product viz "MyBank Century", a term deposit for 101 week carrying interest rate of 9.5% wasintroduced in a special campaign lasting one month, culminating with the conclusion of ourBank’s Centenary year celebrations. The Bank mobilized Rs 1,284.61 crs under thisscheme.

3.2. Credit expansion

3.2.1.While the total advances of the Bank increased from Rs 45,981 crs to Rs 50,894crs, thus registering a growth of Rs 4,886 crs ( 13.1%) during the year, Net advances(i.e. net of NPA related/floating Provisions, and outstanding under Staff FestivalAdvance) of the Bank increased from Rs 44,932 crs in March 2013 to Rs 49,481 crs. CreditDeposit Ratio of the Bank increased from 81.1% in March 2013 to 83.3% in March 2014.

3.2.2 Corporate network

Our Bank has formed the Corporate Network consisting of 11 large branches spread overMetro and other big centers of the country, for catering to the needs of large Corporates.

The Corporate Network of the Bank has achieved a business level of Rs 34,886.61crs,comprising Rs 8,475.34 crs of deposits & Rs 26,411.27 crs of advances, as on31.03.2014. The Advances portion of CNW accounts for 51% of the total advance and 83% ofthe C&I advance of our Bank. The current sluggishness in the economy has also impactedCNW’s advances portfolio. In order to improve the quality of assets, the Bank hasbeen consciously moving its portfolio to investment grade and above [BBB or above] and thestrategy has started yielding desired results.

The Network is planning to open one more branch at Mysore and upgrading AhmedabadBranch & IFB Bellary to Corporate Network grade in FY 2014-15, besides consolidatingAdvances from other nearby branches, to lend more strength and quality to its portfolio.Highlights of the performance of Corporate Network in FY 2013-14 are summarized below:

• The advances growth in CNW was by Rs 2,971.27 crs @ 12.67% over FY13. The growthin investment grade & above is to the extent of 88%.

• Total Forex Turnover of CNW was at Rs 24,870 crs, accounting for 81% of thetotal Bank’s Forex Turnover, recording an increase of 60% over FY13.

• The growth in AAA to A grade of advances [ECR] is apprx. 70%.

3.2.3. Credit Committees

Credit Committees were first established in May 2002, in order to facilitate takingdecisions through committee approach to provide more professional touch to creditappraisal, by thread-bare discussion on the risk factors. Two committees have beenconstituted viz. HOCC-I chaired by Managing Director and HOCC-II chaired by Chief GeneralManager (with CGM/ GMs as members of the committee.)

The Bank has held 53 HOCC-I and 36 HOCC-II Meetings, respectively, during 2013-14, tofacilitate growth in advances. Besides the above HOCCs, in order to provide speediercredit and consequent to devolution of wider powers to the Networks, 4 Network CreditCommittees with Network General Managers as Chairmen were constituted and 228 meetingswere held in aggregate.

3.3. Personal Segment advances

Personal segment advances registered a record growth of Rs  1,393 crs (19%) toreach a level of Rs 8,864 crs. Special campaigns were conducted between June 2013 to Sept2013 and Oct 2013 to Jan 2014 to provide a boost to the growth in Housing loans, Carloans, Gold loans and Personal loans. Housing loans recorded a growth of Rs  702 crs(19%) to reach a level of Rs 4,398 crs. Car loans recorded a growth of Rs 137 crs (24%) toreach a level of Rs 708 crs , Gold loans recorded a growth of Rs 136 crs (55%) to reach alevel of Rs  384 crs and Personal loans recorded a growth of Rs 232 crs (26%) toreach a level of Rs 1,130 crs.

3.4. Priority Sector Lending and Social Banking

3.4.1. Total credit provided to the Priority sector as on March, 2014 stood at Rs15,457 crs (34.4% of ANBC), including

Inter Bank Participation certificate of Rs 375 crs invested in Kaveri Grameena Bank, asagainst Rs 13,483 crs in the previous year ended March 2013 (yoy growth 14.6%).Segment-wise status of these advances are as under:

• Agriculture: The direct Agricultural advances increased by 11% from Rs 5,752 crsto Rs 6,377 crs. Total agricultural advances went up from Rs 6,325 crs (including IBP ofRs.573 crs) to Rs 7,463 crs (including IBP of Rs 375 crs), registering a growth of 18%.

• Fresh Agricultural Advances sanctioned during FY14 stood at Rs 4180 crsbenefitting farmers.

• Agricultural Gold loan registered a growth of 48%, from Rs 885 crs to Rs 1314crs. 55,008 Kissan Credit Cards (KCC) were issued on revised RBI guidelines, aggregatingto Rs 820 crs, during FY13-14.

• Micro and Small Enterprises (MSE): The Bank’s Advance to Micro & SmallEnterprises for FY13-14 at Rs 4,524 crs as against Rs 3,756 crs for FY12-13 reflects a yoygrowth of over 20%.

• Personal & Services Banking (P&SB): Housing loans under priority sectorreached a level of Rs 2,855 crs during the year, from a level of Rs 2,808 crs in FY13.

Education loans grew by Rs 21 crs (3.5%) over FY13 from Rs 594 crs to reach a level ofRs 615 crs as at March 14.

3.5. Agriculture finance:

The following initiatives were taken to increase the flow of credit to the AgricultureSegment.

• During 2013-14, GOK declared 125 taluks as drought-hit. All branches of the Bankconsidered rephasement / restructuring of dues from farmers who were in distress.Additional financing in the shape of production and investment credit was also extended tosuch farmers.

• To mark the culmination of the Centenary year, the Bank has financed forconstruction of 1,786 Green toilets covering 270 villages under Nirmal Bharath AbhiyanScheme and also assisted 1,486 beneficiaries in 233 villages under

Solar Home Lighting Scheme to encourage use of Green energy.

• Interest subvention amounting to Rs 18.81 crs has been provided under Agrisegment to farmers for prompt repayment of loan.

In order to provide some succour from the hardship suffered by the farmers from droughtand other natural calamities, Bank launched three different types of OTS schemes to settleold NPA accounts. 6,997 accounts amounting to Rs 78.97 crs were settled during the year.

3.6. Micro and Small enterprises (Manufacturing)

The Bank’s advances to Micro and Small Enterprises (Manufacturing) as on March2014 is Rs 2,628 crs, as against Rs 2,312 crs as on March 2013, registering an increase ofRs 316 crs (yoy 14%) during the year.

3.7. Micro and Small enterprises (Services)

The Bank’s advances to Micro and Small Enterprises (Services) as on March 2014 isRs 1,896 crs, as against Rs 1,444 crs as on March 2013, registering an increase of Rs 452crs (yoy 31%) during the year.

During the year ended March 2014, Bank has taken various initiatives to increase flowof credit to MSE sector. Interest rates on all loan schemes were rationalized to giveequal focus to each scheme under MSE segment. 14 of the existing general Banking brancheswere re-designated as MSE Specialized branches in compliance to the RBI’s guidelinesof having at least one MSE Specialized branch in each district. Uniform loan applicationform for MSEs for loans upto Rs 1.00 cr has been introduced, which is simple anduser-friendly.

During the year ended March 2014, Bank introduced web-based Credit Proposal TrackingSystem (CPTS) exclusively for MSE segment, for online monitoring of loan applicationsreceived by the Bank at various levels. It has helped in ensuring timely delivery ofcredit to the MSE sector.

3.8. Credit Guarantee Scheme

The Bank continued to extend collateral-free financial assistance to MSE sector byparticipating in Credit Guarantee Scheme of CGTMSE. All loans to eligible MSE units uptoRs 1crore are being sanctioned without any collateral security by obtaining the guaranteecover from CGTMSE. Guarantee fee and Annual service fee on such cases are also borne bythe Bank. As at March 2014, 11,559 accounts amounting to Rs 707 crs were covered under theScheme.

3.9. Assistance to Weaker Sections of the Society

The Bank continued to extend financial assistance to Weaker Sections of the Society,comprising small & marginal farmers with land-holdings upto 5 acres, landlesslabourers, tenant farmers, village & cottage industries with individual limits notexceeding Rs 50,000, besides assistance under schematic lending to SJSRY, SGSY, SLRS, DRI,Self-Help Groups and to SC/ST beneficiaries. The outstanding amount under lending toWeaker Sections stood at Rs 6,360 crs as on March 2014, constituting 14% of ANBC, asagainst the stipulated benchmark of 10%.

3.10. Assistance to Women entrepreneurs

Being fully conscious of the deep positive financial and social impact of extendingcredit to women entrepreneurs, we continued to lay special emphasis on extendingliberalized credit to MSE units being run by women entrepreneurs. The Bank’s totalcredit to women as at March 2014 stood at Rs 3,040 crs covering 1,82,540 beneficiaries,which works out to 6.8% of Adjusted Net Bank Credit, as against the stipulated benchmarkof 5%. The Bank also specially honored outstanding women entrepreneurs of the Bank on theoccasion of Centenary Celebrations which was presided over by Hon’ble Union FinanceMinister, in Oct 2013.

3.11. Measures to Improve the economic Conditions of SCs/Sts

In line with the national objective to extend all-out support for thedevelopment of SCs/STs, we, as a responsible corporate citizen, are ensuring that adequatecredit is available to SCs/STs, in their role of self-employed entrepreneurs. Credit isextended to this section in tie-up with the State-level development corporations dedicatedto SCs/STs. The Bank’s assistance to the SCs/STs under various schemes as at March2014 stood at Rs 593 crs covering 92,271 beneficiaries, which forms 3.8% of PrioritySector Advances.

3.12. Finance to Minority Communities

With the objective of promoting economic activities amongst the notified minorities,Bank has been whole-heartedly participating in this national task for promotingself-employment activities amongst the eligible beneficiaries belonging to the minoritycommunities.

The Bank’s assistance to the notified minorities under various schemes as at March2014 stood at Rs 2,137 crs covering 48,872 beneficiaries, which forms 14.2% of PrioritySector Advances.

3.13. Government Sponsored Schemes

The position of assistance rendered under various Government sponsored schemes by ourBank as at March 2014 is as detailed below:-

3.13.1. Prime Minister’s employment Generation Programme (PMeGP)

The Government of India has launched the new scheme "Prime Minister’sEmployment Generation Programme (PMEGP)" to empower first generation entrepreneurs toset up micro enterprises across the country, by subsuming the earlier PrimeMinister’s Rozgar Yojana (PMRY) and Khadi & Village Industries Commission’sRural Employment Generation Programme (REGP), from the FY 2008-09. The Bank has extendedfinancial assistance of Rs 37 crs to 680 beneficiaries under PMEGP during the year. TheBank’s total credit under PMEGP Scheme as at March 2014 stood at Rs 39.85 crs,covering 1,187 beneficiaries.

3.13.2. Swarna Jayanthi Shahari roj-gar yojana (SJSry) Scheme

The Bank has extended financial assistance of Rs 10 crs under SJSRY during the year to363 beneficiaries.

Total amount outstanding under SJSRY scheme as on March 2014 is Rs 44.7 crs, covering4,640 beneficiaries.

3.13.3. Differential rate of Interest (DrI) Scheme

The Bank’s advances under DRI scheme stood at Rs 15.8 crs as at March 2014covering 13,605 beneficiaries and the share of advances to SC/ST beneficiaries within thisis 51% (Rs 8 crs).

3.13.4. Swarna Jayanthi Gram Swarozgar yojana (SGSy) Scheme

The Bank has extended financial assistance of Rs 2.1 crs under SGSY during the year to67 group beneficiaries. Besides 94 individual beneficiaries were also extended financialassistance to the tune of Rs  0.69 crs. Total amount outstanding under SGSY scheme asat March 2014 is Rs 13.73 crs, covering 1,438 beneficiaries.

3.14. Investments

3.14.1. The total investments of the Bank in Government securities, other approvedsecurities and Non-SLR securities increased from Rs 16,864 crs as at March 2013 to Rs19,300 crs as at March 2014.

3.14.2. Profit on sale of investments increased from Rs 66.53 crs in 2012-13 to Rs69.36 crs in 2013-14. During the year interest and dividend income from investments, netof amortization charges, registered a growth of Rs 151.46 crs (13%) over March 2013 levelof Rs 1,157.57 crs.

3.14.3. While interest yield on investments increased from 7.30% (2012-13) to 7.37%(2013-14) due to the fact that new securities purchased were at higher yield levels, yieldon investments, including profit on sale of securities increased from 7.49% to 7.56%during the same period.

3.14.4. Foreign Exchange Turnover of the Bank in 2013-14 declined to a level of Rs 2.97lac crs (Merchant Turnover Rs 0.30 lac crs and Trading Turnover Rs 2.67 lac crs) againstprevious year’s level of Rs 4.04 lac crs (Merchant Turnover Rs 0.25 laccrs and Trading Turnover Rs 3.79 lac crs.)

3.14.5. The exchange profit generated from Foreign Exchange business during FY 2013-14was, however, higher at Rs 59.60 crs as against Rs 58.25 crs in the previous year.

3.15. International Banking

3.15.1. The level of Export Credit as on 31st March 2014 was Rs 1666.08 crs (Rs 1395.44crs as on 31st March 2013), constituting 3.70% of ANBC. With a view to encouraging exportbusiness, a seminar of exporters/importers in and around Bangalore was conducted.Exporters Gold Cards have also been offered to eligible export units.

3.15.2. NRI Deposits as on March 2014 stood at Rs 1,229 crs as against Rs 972 crs, ason March 2013 comprising of FCNR(B)/ RFC deposits of Rs 226 crs and NRE/NRO deposits of Rs1003 crs. During the FY 2013-14, two specialized NRI branches were opened, one atKoramangala (Bangalore) and another in Mangalore, in addition to a specialised NRI cell atM G Road branch (Bangalore).

3.15.3. As per Bank’s BPR objectives, the Bank had set up five TFCPCs atBangalore, Chennai, Hyderabad, Mumbai and New Delhi. During FY 2013-14, more branches,including CAB branches have been linked to TFCPCs, in order to consolidate the front-lineprocessing and contribute expertise to all such branches, for extending quality service toExporters.

3.15.4. During the year Bank’s Export Credit portfolio, other than exposures toCentral PSU and LC-backed bills business, have been covered under Export Credit Insurancefor Banks (ECIB), Whole Turnover Packing Credit (WTPC) and Whole Turnover Post Shipment(WTPS) Schemes of Export Credit Guarantee Corporation of India.

3.16. Cross Selling

During the year over 24,117 lives were insured through various products of SBI LifeInsurance Company Ltd with a premium collection of Rs 52 crs. The Bank has collected apremium of Rs 16 crs while marketing General Insurance Products. In respect of InvestmentProducts, the Bank is extending Mutual Funds products of SBI MF. Applications for SBICredit Cards are also sourced by the Bank. The Bank has earned an income of Rs 9.18 crsfrom Cross Selling Business during FY 2013-14.

3.17. Government Business

3.17.1. State Government transactions: The Bank has been handling a major share ofGOK transactions since inception (1913). About 88% of our total Government Businessemanates from State Government transactions and the turnover is directly linked to thebudget of the State Government. A turnover of Rs 63,886 crs has been achieved during FY2013-14, as against Rs 55,854 crs in the previous year, fetching a commission income of Rs59.20 crs during the year, which represents 92% of income from Government business.

3.17.2. Central Government transactions:

The Banks business turnover from Central Government undertakings like Postal, Railways,Defence, CBDT, etc., during the year 2013-14 stood at Rs 9,005 crs against a turnover ofRs 9,357 crs registered during 2012-13. We have thus earned a commission of Rs 5.62 crsfrom Central Government business.

3.17.3. Total Income from Government Business:

During 2013-14, we have earned a Commission of Rs 64.82 crs, as against Rs .67.95 crsduring FY 12-13. The decrease in income by Rs 3.13 crs is attributed to the following: a)Increase in the number of participating Banks due to e-payment initiatives of theGovernment. b) Increase in the number of transactions through e-mode. 3.17.4. We areactively involved in most e-governance initiatives of the GOK.

3.18. Marketing Initiatives:-

3.18.1. Marketing of Bank’s products and services on an on-going basis assumesgreat importance in order to retain and increase our market share, in the face ofever-growing competition from existing and new generation Banks. A full-fledged MarketingDepartment is functioning at Head Banking environment and capture market share byleveraging the technology and skilled manpower available. Further to strengthen themarketing activities Customer Relationship Managers are also placed in large branches.

3.18.2. Focused marketing efforts are directed towards improving Retail / PersonalSegment advances by conducting Home Loan/Car Loan Melas at important centers of the Bank.With a view to provide our customers a wide basket of products, the Bank has beenintroducing new products/services regularly. Marketing Department is also putting upstalls in important exhibitions to market Bank's products and services.

3.18.3. Contact Centre

As a customer friendly service, State Bank of Mysore has established a dedicated"SBM Contact Centre". It is an alternate channel which provides information onproducts and services of the Bank and also the current status of customer’s account,through a toll free number 1800-425-2244, which is accessible from throughout the country.The information is provided in English, Hindi and Kannada on 24 hours on 365 days(24x7x365) basis.

Further, as a part of Contact Centre initiative, Lead Management System (LMS) waslaunched in our Bank on 02.11.2012 wherein the business leads are generated on the basisof customer calls received through the toll free helpline number 1800-425-2244. The leadsgenerated are forwarded to the concerned branches, for ultimately converting into tangiblebusiness propositions.

3.18.4. Customer Grievance redressal: -

The Bank has also implemented a friendly Customer Redressal System called SMS'UNHAPPY'. Under this system, customers can air their grievances/ complaints/feedback bysimply sending an SMS "UNHAPPY' to 99 0002 0002. On receipt of the message, theBank’s dedicated staff from "Happy Room" calls back the customer forcollection of details of grievances and redressal of the same.

3.19. Npa Management

3.19.1. Liquidity crisis and the recession that followed adversely affected manysectors of the economy, leading to a spurt in Non Performing Assets. The problems faced byTextiles, Food processing and Infrastructure sectors contributed to a substantial increasein NPAs in the C & I Segment. This, coupled with problems on the agricultural front,caused by drought in most part of the State has resulted in the increase of NPAs from Rs2,081 crs as on March 2013 in the previous year to Rs 2,819 crs in the current year. TheGross NPA ratio increased from 4.53% to 5.54%. The net NPA ratio also increased from 2.69%to 3.29%. The provision for Non Performing Assets (including floating provision andcounter cyclical provisioning buffer) stood at Rs 1,189 (Rs 872) crs. Provision CoverageRatio is at 59.5%. A time-bound action plan with measures including effective use ofSARFAESI Act, rehabilitation of viable units, sale of assets to ARCs and vigorousfollow-up of DRT cases has been put in place to reduce NPA levels.

3.19.2. Restructuring of Debts:

The Bank continues to provide Restructuring Package within the framework of RBIguidelines to deserving borrowers under the Rehabilitation Programme or under packagesapproved by CDR / BIFR, subject to the viability of the units being established. The Bankhas extended the package to Rs 73,224 ( Rs  60,491) borrowal accounts with duesamounting to Rs 4,585 (Rs 3,237) crs. Towards diminution in their fair value on account ofeconomic loss caused in the process of restructuring, provision to an extent of Rs 216 (Rs180) crs has been made by the Bank.

3.20 Lead Bank Scheme

3.20.1 The Bank has been discharging lead Bank responsibilities in 3 districts viz.Mysore, Charmarajnagar and Tumkur. The Annual Credit Plan for 2014-15 has been launched.The combined annual credit plan target of 2014-15 for all Banks in 3 districts has gone upfrom Rs 8,187 crs to Rs 10,039 crs, showing a growth of Rs 1,853 crs (22.6%growth).Achievement of previous year’s credit plan i.e. for 2013-14 is more than 100% in all the 3 districts put together. The Block Level Bankers’ Committee (BLBC),District Consultative Committee (DCC), District Level Review Committee (DLRC), StandingCommittee (SC) meetings are regularly conducted as per Reserve Bank guidelines in all thethree Lead Districts.

Bank has established Financial Literacy .

Centres at our Lead District Office in all the three districts. Bank is conductingliteracy camps during Melas at village level and Literacy materials have been distributedto all the rural branches.

3.20.2 Rural Selfemploymenttraining Institute(rSetI) / rural Development and Selfemploymenttraining Institute (rUDSetI ) :

The Bank has established RUDSETI type of training centres viz. MyBank Institute forPromotion of Self Employment and Development (MIPSED) at Tumkur. Similar Institute calledJSS RUDSETI is established at Chamarajnagar in association with JSS Mahavidyapeetha. TheseInstitutes have been established to impart entrepreneurial skill development and guidanceto unemployed rural youth, to become gainfully self employed. We have also constructed ourown building at MIPSED,Tumkur with from NIRD.

Total number of 1,280, participants have been trained during 2013-14 with 64 %settlement rate with Bank loan and their own resources. The participants have been trainedunder various Government sponsored schemes such as PMEGP, Mobile servicing, Tailoring,Beautician courses, etc. Our RSETI/RUDSETI has been awarded AA as per the latest ratingreleased by MoRD.

3.21. Financial Inclusion

3.21.1 Bank has drawn a comprehensive Financial Inclusion Plan for 2013-2016 forcoverage of villages with Banking infrastructure. Bank had already covered all the 260villages with a population of above 2,000 allotted under "Swabhiman". Further,the Bank had also covered all the allotted 152 villages with population between 1600 to2000 under "extension of Swabhiman".

3.21.2. In respect of the villages with population below 2,000 allotted by SLBC forcoverage with Banking infrastructure, the Bank has covered 1,672 villages, as against thetarget of 1,593 villages during the Financial Year. These villages are covered through 28brick & mortar branches and others through BC outlets. In total, the Bank has so faropened 67 branches in unbanked rural centres. In addition, 154 Ultra Small Branches arealso functioning in the unbanked rural centres.

3.21.3. Implementation of Direct Ben-efi Transfer Scheme for Government Schemes (DBt) :

The Bank is participating in the DBT scheme launched by Government of India in 121districts. Out of this, Bank has got the Lead Bank responsibility in two districts ofTumkur & Mysore. Achievement under seeding of Aadhaar number and mapping to NPCImapper is 100% in these two districts.

3.21.4. Direct Benefit Transfer Scheme for LPG (DBtL) :

The Bank has actively participated in implementing the DBTL scheme, which was launchedin 3 districts of Karnataka under Phase –I, in Dharwad, Tumkur and Mysore. The Bankhas the Lead Bank responsibility in Tumkur and Mysore. The progress in seeding of Aadhaarnumbers in Bank accounts in these districts are to the extent of 86% and 88%,respectively.

3.21.5. Implementation of electronic

Benefit Transfer Scheme for distribu -tion of Social Security Pensions:

Bank has also implemented smart- card based Electronic Benefit Transfer (EBT) schemefor distribution of Social Security Pensions in all the Taluks in Chamarajanagar districtand allotted service area villages in Bellary and Chitradurga districts. The Bank has sofar issued 2,79,000 Smart Cards and distributed pensions amounting to Rs 35.43 crs duringthe Financial Year.

3.21.6. SBM has been the winner of "The Best Banker-Financial Inclusion(Mid-Sized)" award 2013 instituted by Indian Express Group.

3.22. Self help group (SHG) lending :

The Bank has credit linked 7,595 SHGs with an advance amount of Rs 310 crs during FY2013-14, taking the cumulative total of such credit linkage programme to 1,57,698 groups,with a financial outlay of Rs 2,352 crs up to March 2014.

The Bank has advanced to 1,352 beneficiaries amounting to Rs 41 crs under NationalRural Livelihood Mission (NRLM) in FY14. Under NRLM, Women SHGs are being provided financeat subsidised interest rate of 7%, besides interest subvention of 3 % for promptrepayment. In the first phase, the Scheme has been implemented in four districts ofKarnataka viz. Mysore, Tumkur, Koppal and Gadag. Necessary benefits have been passed on toall eligible women SHGs and claims for interest subvention have been lodged with NRLM,Department of Ministry of Rural Development, Government of India.

3.23. Regional rural Bank – kaveri Grameena Bank :

Our Bank has sponsored Kaveri Grameena Bank (KGB) which is headquartered at Mysore. TheBank is operating in 10 districts of Karnataka viz. Mysore, Hassan, Chamrajanagar, Tumkur,Bangalore-Urban, Bangalore-Rural, Ramnagar, Chikmagalore, Kodagu and Mandya and crossed aland mark figure of 400 branches.

Bank has opened 66 branches during 2013-14. All the branches are on CBS mode.The total deposits and advances of KGB as on March 2014 was Rs 4,668 crs and Rs 3,735 crsrespectively, registering a total business of Rs 8,403 crs, with a growth of Rs 1,544 crs(22.5 %).

4. HUMAN RESOURCES:-

4.1. Manpower Profile

4.1.1. Manpower:

The total strength of the Bank as at March 2014 stood as 10,845, as against 10,784 inthe previous year. The staff strength comprised 3,677 officers, 5,075 clerical staff and2,093 subordinate staff. Of these, 844 are Ex-defence personnel, 144 belong to physicallyhandicapped category and 597 belong to the Minority community.

4.1.2. Women’s representation:

As at March 2014, there were 2,991 Women employees (comprising 542 Officers and 2,449Other Employees) in the Bank, compared to 2,843 as at March 2013 (comprising 520 Officersand 2,323 Other Employees). The share of women employees stood at 27% as at March 2014.The Bank continued to provide equal opportunity to women in their career progression.

4.1.3. Scheduled Castes/Scheduled tribes – representation:

As at March 2014, there were 1,732 Scheduled Caste employees, comprising 612 Officers,703 Clerical Staff and 417

Subordinate staff. There were 489 Scheduled Tribe employees comprising 208 Officers,204 Clerical staff and 77

Subordinate staff as at March 2014. All the guidelines of the Government of India forsafeguarding the interests of SC/ST employees have been complied with.

4.1.4. Human resources Management Solutions (HrMS):

Bank has implemented Human Resources Management Solutions (HRMS) on 1st April 2010, tohandle all types of HR related activities in a secured manner, on a user-friendlyplatform. Mechanisation of HR activities has resulted in substantial reduction ofman-power, to be used for deployment in other activities. HRMS Cell was formed tointegrate Salary, Perquisites, reimbursement and leave details of the employees. Asset& Liability Statement and Annual Appraisal Reporting is also implemented through HRMS.

4.2. Training:

4.2.1. Training activities and Coverage:

The Bank regards its employees as its critical & valuable assets. To make theemployees more competitive and knowledgeable in banking field, honing their skills is oneof its priorities.

With a view to achieve the desired goals and to establish high-performance workculture, Bank’s learning centers at Bangalore, Mysore and Hubli are impartingtraining on various subjects such as Advances and Deposits, products knowledge,communication & leadership skills, marketing, behavioral science, etc. Also to gaincompetitive edge in new technology being adopted by the Bank, several programmes on latesttechnology developments like Internet Banking, Mobile Banking and other alternate deliverychannels are conducted regularly. During the year the Bank had trained newly recruited 579Probationary Officers of 2012-13 batch, which has been completed successfully.

During the period, 630 new clerks were inducted in the Bank and all of them have beenimparted Orientation Training immediately on their joining the Bank. Bank has alsoimparted Intermediate Training programme to 663 clerks recruited during 2009 to 2012.

The training methodology of the Bank constantly aims at keeping its work-forcepro-active and customer centric, so that they can discharge their duties effectively inthe challenging Banking scenario. Bank continues to focus on imparting training to maximumnumber of employees to update their skills & knowledge periodically.

Our Learning Centers at Bangalore, Mysore and Hubli have conducted in all 194 training/ workshops both functional and computer based programmes. During the year total 4,929staff got trained at our Learning Centers.

The Bank regularly deputes officers, based on the job profiles, for training to ApexTraining Institutes of SBI and other training institutes like NIBM, IIBF, College ofAgricultural Banking- RBI (Pune), CAFRAL (Centre for Advanced Financial Research &Learning), IDRBT, etc. to hone their skills and update their knowledge. During the year,983 officials were deputed to the Apex Institutes and external training institutes. Duringthe period, Bank has achieved 100% capacity utilization mark on various occasions at theApex Training Institutes, which was appreciated by these Apex Institutes.

Keeping in view the need for imparting training in specialized areas, the Bank has alsoconducted several specialized training programmes/ workshops on MSME business, NRIbusiness, Forex business (through FEDAI), Cross selling, currency management, LoanOriginating System, Project Ganga, KYC compliance, workshop for EOs-POs, Disciplinaryauthorities (Vigilance Dept.), retiring staff, etc.

To bring conformity to the Govt. of India guidelines with regard to providingin-service training to the SC/ST officers, the Bank has also conducted specialized skilldevelopment training programme exclusively for officers belonging to SC/ ST category,which was well appreciated by all.

4.2.2. Pre-promotional training:

Pre-Promotion training programmes for SC/ST/Minority Community employees was conductedat the Learning Centers at Bengaluru & Mysore during the year, who appeared forpromotion (internal promotion) from Sub-Staff to Clerical, from Clerical cadre to officercadre and officers from JMGS I to MMGS II. During the period 99 employees belonging toSC/ST category were given training. The programmes were well appreciated by theparticipants.

4.2.3. Training to subordinate staff:

To bring awareness among the subordinate staff and to make them realize their potential& importance in the organization, Bank has conducted one day capsule trainingprogramme exclusively for 93 subordinate staff at our Learning Centre, Bengaluru, Mysoreand Hubli.

4.2.4. Training to kGB employees:

Our Mysore Learning Center has also imparted training to officers / clerical staff ofKaveri Grameen Bank (sponsored by SBM). During the current year 20 training programmes forKGB employees were conducted, covering 436 employees.

4.2.5. Training to retiring officers/ staff:

To enable our retiring officers / staff to lead a happy and peaceful retired life withinputs on financial planning matters, our Learning Center, Mysore had conducted 9 specialtraining programmes for retiring employees during FY 2013-14 covering 367 employees.

5. IN DUSTRIAL RELATIONS:

5.1. Terminal Benefits to Retired Staff:

The Bank gives due importance to the timely settlement of terminal benefits to thestaff, either on reaching superannuation or any other grounds. During the FY 2013-14 asmany as 492 members of staff have retired from the service of the Bank. Their ProvidentFund, Gratuity, Pension and Commutation benefits, were settled on top priority, on time.

5.2 New Pension Scheme (nPS):

Employees joining the service of the Bank w.e.f 01.04.2010 are eligible to join the NewPension Scheme (Corporate Model), which is governed by the provisions of the NPSintroduced for employees of Central Government w.e.f.  01.04.2004 and modified fromtime to time. As at March 2014, as many as 2,645 employees have been covered under NPS.

5.3 Retired employees Medical

Benefit Scheme II:

In addition to the existing Retired Employees’ Medical Benefit Scheme (SBMREMBS),effective from 15.12.2012, a new scheme has been launched for employees retiring / retiredunder Superannuation, with upper limit for claims ranging from Rs  2 lacs to Rs20 lacs, based on eligibility criteria. During 2013-14, the Bank has received 1,112applications and disbursed an amount of Rs 168 lacs.

6. SUPPORT FUNCTIONS

6.1. Technology Up-gradation

6.1.1. automated teller Machines as acquirer and issuer

Our Bank crossed the milestone of installing its 1000th ATM at Kandaya Bhavan,Bengaluru and as on March 2014 the total ATMs installed stood at 1,107. We have installed254 ATMs, the highest during any financial year, which includes 51 Outsourced Model ATMs(Brown label). With this the Bank has also complied with the MOF, Govt. of India guidelineof one branch One ATM norm. With this every branch in Direct Benefit Transfer (DBT)districts is having an ATM.

6.1.2 E-lobby:

It is a ONE-STOP solution for all Banking needs like ATM, Cash Deposit and Self ServiceKiosks for cash deposit/ passbook printing/Cheque-drop kiosk, etc. Our Bank has installedits first E-lobby facility for its customers at its Avenue Road premises, Bangalore.

A new variant of card called as Euro Master Visa (EMV) card, which is chip-based withMagstripe is being issued to customers. The new card has more security features andprotected data-base.

Bank has taken adequate measures to strengthen security at ATM kiosks, with guards,surveillance cameras and alarm systems.

6.1.3 Value added services:

In addition to the withdrawal of cash, many other value added services are alsoavailable through ATMs, like payment of insurance premium, mobile recharge, card payments,mobile Banking registration, etc. Bank has also introduced Platinum cardfor is achip-based Magstripe card with higher limit for daily cash withdrawal and POStransactions.

6.1.4 Internet Banking:

Internet Banking as an alternate Banking channel has gained acceptability and hasbecome popular among retail and corporate customers. The number of registrations andvolume of transactions through internet Banking has seen a growth of 29% and 38%,respectively, during the year. The facility is now available for Visually-challengedcustomers also. Bank’s Internet Banking site www. onlinesbm.com is secured through256 bit EVSSL (Extended Validation Secured Socket Layer) encryption. With necessaryanti-phishing measures in place, there has been no instance of phishing attack reported.

6.1.5 Mobile Banking:

Bank is offering Mobile Banking Services under the name State Bank Freedom to all itsretail customers under four different modes viz.: Application mode, WAP mode, USSD and SMSbanking, with a daily transaction limit of Rs 50,000/- and overall calendar month limit ofRs 2,50,000/- The service includes enquiry, mini statements, interBank fund transferthrough NEFT and IMPS and bill payment facilities. During the year, Person to Account(P2A) and Person to Merchant (P2M) services through IMPS were also introduced. There is asteady growth in the number of registrations and transactions taking place through thechannel.

The number of mobile Banking registrations and transactions has grown by 113% and 133%,respectively, during the FY 2013-14, though on a small base.

6.1.6. Electronic Payment System:

All branches of the Bank are enabled for RTGS/NEFT/GRPT remittance facility. Inaddition Bank also offers Electronic Clearing Service (ECS) and Immediate Payment Service(IMPS) over Mobile Banking Platform. Percentage of all electronic (ATM, Internet Banking,Mobile Banking, RTGS, NEFT and ECS) transactions to total transactions of the Bankis over 45%. These figures have improved from 33% in the previous year.

6.1.7 Bank’s Website:

The Bank’s website (http://www. stateBankofmysore.co.in) is a repository ofinformation about the Bank, its products and services available to the customers andgeneral public alike, in trilingual and Braille form.

Information on schemes and products for various segments like Personal, Commercial andInstitutional, Micro, Small and Medium enterprises and Agriculture is available on thewebsite. Besides, information on the interest rates, service charges & fees,information on Bank’s financials, policies, acts, online loan enquiry form, onlinecomplaint form, etc. are also available.

Online loan applications downloadable forms for Education, Housing, Car and Gold loanare also available, along with online tracking of the application status.

6.1.8. Digital Signage Solution:

Digital Signage Solution is a method of providing information to our branch customerson various products and services offered by the Bank, which is displayed on LED screen atthe branches. The system is capable of working both in online and offline mode acrossvarious branches/offices.

We propose to provide Digital Signage Solution at 500 branches of Metro, Urban and SemiUrban locations. Till 31.03.2014, 90 branches have been covered.

6.2. New business:

Under New Business initiatives, different range of IT products and services have beenintroduced in Bank. The intention is to maximize customer satisfaction, along withincreasing business and minimizing transaction cost. Concepts like e-lobby, Self ServiceKiosk, Cash Deposit Machines are customised to cater to the new generation, which areself-servicing in nature. Green Channel Counter is another green initiatives wherein cheques and challans are not written for payments, receipts and remittancestransactions.

6.2.1. Merchant acquiring business (mab):

It is a mechanism of facilitating payment for purchase of goods and services throughthe medium of debit/credit card, using Point of Sale (POS) machines. We introduced thisconcept in our Bank since 2013. For the merchant it is favourable cash-less sale withincreased volume of business. For the Acquiring Bank it is increase in CASA deposit, floatfunds and additional income from Merchant in the form of Merchant Discount Rate(MDR). Itis a convenience to the card-holder as he need not carry cash for purchase of merchandise.Our target for the FY 2013-14 was 2000 POS machines, which have been well exceeded.

6.2.2. Cash deposit machine (CDM):

Cash Deposit Machine accepts deposit of cash from customers into their accounts usingDebit cards. Credit is extended instantly to the customer account. It is available to thecustomers 24 hours of the day 7 days a week. It is also a green initiative as no challanis to be written for deposit. The customer is provided with a printed receipt. Otherfunctions like balance enquiry and mini statements are also enabled in the CDMs.

6.2.3. Green channel counter (GCC) :

Last year we had 300 GCC machines in 150 branches. The base now stands increased to 275branches and 425 GCC machines. It is a green initiative where in cash deposit, withdrawaland transfer and remittances can be done by swiping the Debit card in Point of Sale likemachine held at the Single Window Operator (SWO) counters, without the need to entervoucher/cheque details.

6.2.4. Self service kiosks (ssk):

Self Service Kiosks are the revised version of Multi Function Kiosks with addedfeatures like Pass book printing, Funds transfer, Balance enquiry, Account statement, StopCheque payment etc. SSKs are operated through the use of Debit cards. We have deployed intotal 38 SSKs in various branches of our Bank.

6.2.4. SBM e-LoBBy:

As part of our endeavor to deliver a wide array of financial services and products toour customers, we have launched our first e-lobby at Avenue Road, adjoining our HeadOffice, during October 2013.

The e-lobby comprises of three ATMs, a Cash deposit machine, a Self service kiosk andCheque deposit machine. At e-lobby we offer our customers self service facilities whichinclude ATM withdrawals, Cash Deposits, Pass Book printing, National Electronic FundsTransfer and RTGS, Balance enquiry, printing of mini statements, etc.

6.3. Information Security, Business Continuity and Disaster recovery:-

6.3.1. In the backdrop of growing complexity of financial products and the increasedleveraging of technology, operational risks have assumed critical importance in recenttimes. The treatment of technology risk/ operational risk as part of the movement towardsAdvanced/Management approach is a manifestation of the risks in impacting the risk profileof a Bank. Keeping this in mind our Bank has

• Adopted well-defined IT Policy and IS Security Policy, which is beingperiodically reviewed and updated.

• Become a part of well-established (common for State Bank Group) state-of-the artIT infrastructure which is certified as BS 25999- 2:2007 by BSI and is in the process ofobtaining ISO 22301 certification this year.

6.3.2. Our Bank has taken proactive measures to respond to business discontinuities andensure uninterrupted availability of all key business resources that support criticalBanking functions.

The Bank has adopted a well defined Business Continuity Plan and Disaster Recovery PlanPolicy. Our Bank is part of a well established high-end Business Continuity and DisasterRecovery infrastructure which ensures seamless continuity in case of need. The DisasterRecovery drill is being conducted on a half-yearly basis, during which the transactions ofour branches are routed through the DR site. In addition to this, the Bank has a nearbysite to ensure zero data loss in the event of a disaster. The Bank has implementedBusiness Continuity Plan in all the branches and also in the administrative officestogether with periodic reviews and updates.

6.4. Management Information System (MIS):

6.4.1. The MIS Department consolidates and maintains the Credit Information System(CIS) database, apart from collating information from branches and

Head Office Departments for submission of various statements to Reserve Bank of Indialike Basic Statistical Returns, sectoral Deployment of Funds, etc. The Department alsoprovides information to the Top Management and other user Departments in Head Office.

6.4.2. The scope of CIS has also been extended to submission of data to CreditInformation Companies, to whom the Department is submitting individual borrower-wisecredit information every month, after due processing. In turn, the Credit InformationReports (CIRs), drawn from the CICs database, serve as important fraud prevention tool tothe credit appraisal/sanction functionaries.

6.4.3. The Department has developed a webpage in the SBMNEST, providing usefulinformation to the controlling offices and the branches. The Department has also developedthe software/ formats of BalanceSheet,

MOC etc., and has hosted the same in the SBMNEST for use by the branches.

7. SYSTEMS AND PROCEDURES:-

7.1.1 Systems and Procedures Department is a special resource available at Head Officefor effective management of work organization concerning the systems & procedures. TheDepartment vets process changes and regularly reviews charges on the general servicesprovided and modifies the same in accordance with the changing environment and aspirationsof customers.

7.1.2 The Department in the year under review has framed a policy onInoperative/Unclaimed Deposit accounts. The department also issued guidelines on migrationof Post Dated Cheques/EMI, CTS Cheques to ECS, Uniform Holiday Calendar under ChequeTruncation System, Transfer of funds electronically based on registered e-mail addresses,etc. The Department has also brought out Master Circular on Safe Deposit Lockers / SafeCustody Articles, besides codified circular on General Power of Attorney.

7.1.3 The Dept. has redesigned the format of visit report by CM (GB)/CM (Adv) toBranches for effective monitoring and to ensure meticulous implementation of Systems andProcedures at Branches.

8. CONTROL AND SUPERVISION

8.1. Risk management:

8.1.1. An independent Risk Governance structure is in place for Integrated RiskManagement, covering Credit, Market and Operational Risks. This framework visualizesempowerment of business units at the operating level, with technology being the keydriver, enabling identification and management of risk at the place of origination.

8.1.2. Basel Implementation

The Bank has migrated to the Basel II framework, with the Standardized Approach forCredit Risk, Basic Indicator approach for Operational Risk and Standardized MeasurementMethod for Market Risk.

Capital regulations under Basel III have come into effect in India w.e.f 01.04.2013.Bank has complied with both the norms and has maintained its capital adequacy above theRBI mandated level of 9% along with Tier-I at 6%. The Capital Adequacy Ratio recast underBasel III guidelines as per RBI directives effective from 1st April 2013 stands at 11.08 %as at March 2014, against 11.28 %(recast under basel III) as at March 2013. The CRAR of11.08% consists of CET – I of 8.44%, AT-I of 0.21% both forming TIER-I Capitalbesides 2.43% of TIER-II Capital.

8.1.3. Credit risk management

Reserve Bank of India has issued guidelines on implementation of Internal Ratings BasedApproach for calculation of capital charge for Credit Risk in Nov 2011 and our Bankapplied for permission to RBI for migrating to Advanced Approach for Credit Risk underBasel II.

The Bank has submitted Letter of Intent to RBI in terms of the guidelines, where theBank has developed the models for risk components – Probability of Default Estimation(PD), Loss Given Default (LGD) & Exposure at Default (EAD) and also adopted Basel IIcompliant policies approved by the Board of Directors. The Bank has received a responsefrom RBI in July 2013, advising the Bank to further strengthen the areas of IRB frameworkbefore the commencement of parallel run process for Foundation IRB (FIRB) approach.

As part of migration to Advanced Approaches under BASEL-II, State Bank Group isbuilding a technology platform known as the Credit Risk Data Mart (CRDM) to manage all theinformation required for computing, verifying and monitoring credit portfolio risks. TheCRDM will be the single source of data for model implementation, risk component estimationand capital computation. This would subsequently be used for model development andvalidation purposes. EDWP (Enterprise Data Warehouse Project) team is building thedatabase by capturing the Bank's data for various reporting dates.

8.1.4. Market risk management

Bank is using Standardized Measurement Method (SMM) for computation of capital chargeand the necessary systems for migration to IMA are in place. The Bank has submitted Letterof Intent to RBI in Oct 2013 for migration to IMA. The Bank would be on parallel run forcomputation of capital charge under both SMM & IMA, after the approval from RBI.

8.1.5. Operational risk management:

Reserve Bank of India has prescribed three approaches for computing capital charge forOperational Risk, viz.

a) Basic Indicator Approach (BIA)

b) The Standardized Approach (TSA)

c) Advanced Measurement Approach (AMA)

Currently the Bank is following the Basic Indicator Approach. As per AMA guidelines,Banks are allowed to switch over from BIA to AMA directly. Bank is endeavoring to movedirectly to the Advanced Measurement Approach in view of the minimal changes in capitalrequirement under TSA, as compared to BIA. All the policies and documents have beenreviewed, as suggested by our consultants, to meet minimum required standards. A Letter ofIntent (LOI) was submitted to Reserve Bank of India in Oct 2013, seeking permission tomigrate to AMA. The Operational Risk Management Department (ORMD) has been organizingtraining programmes for creating awareness among officers about Basel II requirements,Operational Risk Management, Advanced Measurement Approach for Capital Computation andFraud Prevention Measures.

9. BUSINESS PROCESS RE-ENGINEERING (BPR)

9.1.1. Bank has rolled out various BPR initiatives since 2005, in consonance with thedesign principles provided by SBI. The BPR initiatives leverage technology tosignificantly enhance customers’ satisfaction and convenience. So far

19 BPR initiatives have been rolled-out. Loan Origination Software for processing ofRetail Loans has been implemented in our Bank at Bangalore, Mysore and Delhi Centres. Itwill be extended to other 6 Centres shortly. The software is expected to result insignificantlycutting down the processing period besides improving the quality of theprocessing and asset.

9.1.2. The Central Pension Processing Centre (CPPC):

The Central Pension Processing Centre (CPPC) is functioning at Mangalore andpension/arrears of pension is disbursed online throughout the Bank. CPPC is now using SBIpackage for disbursing Central Government pensions.

Our Centralized Clearing Processing Centres (CCPC) at Bangalore, Mysore, Chennai, Delhiand Mumbai undertake entire clearing work of all the linked branches. Further all the MICRCentres of Karnataka have been linked and brought under decentralized Model of ChequeTruncation System of clearing, obviating the necessity of physical transfer of cheques asper the directions received from Reserve Bank of India in this regard.

Branches are designed as per BPR design principles, keeping in view of thecustomer’s convenience and comfort. In FY-14, 142 branches were opened and 55redesigned / renovated as per BPR design principles at various places.

9.1.3. Currency administration Cells:

Rollout of 4 Currency Administration Cells at Davangere, Hubli, Bellary and Shimogahave been approved and are expected to be opened by June, 2014.

9.1.4. In Branch Cash Handling (IBCH) System:

A new process viz. In Branch Cash Handling (IBCH) System has been approved by theOperational Risk Management Committee and is proposed to be rolled out by June 2014. Thisprocess enables instantaneous cash transactions at commencement of business at thebranches and is designed with a view to give better service to the customers.

10. ASSET LIABILITY MANAGEMENT

10.1. The Asset Liability Management System has been functioning as per the guidelinesprescribed by RBI. The Asset Liability Management Committee (ALCO) of the Bank isentrusted with the task of managing Liquidity and Interest rate risk. The Committee meetsregularly to monitor the risks and Net Interest Margin (NIM) on an ongoing basis. Thetolerance limits for liquidity mismatches and interest rate risks are fixed in accordancewith RBI guidelines and Bank’s ALM Policy, and these are reviewed by ALCO at regularintervals. Various interest rate revisions, including revision of BPLR/ Base Rate arethoroughly discussed and decided by ALCO, duly considering all relevant factors. Possiblemis-matches in the Structural Liquidity projections of the Bank are also discussed withregard to long term asset exposures and appropriate decisions are taken.

The ALCO also develops the market risk strategy by clearly articulating acceptablelevels of exposure to specific risk types (liquidity, interest rate). The Risk ManagementCommittee of the Board (RMCB) oversees the implementation of the system for ALM andreviews its functioning periodically and provides direction. It reviews various decisionstaken by Asset-Liability Management Committee (ALCO) for managing liquidity and interestrate risks.

11. AUDIT AND INSPECTION

11.1. Audit

11.1.1. The overall objective of Internal Audit is to contribute to the effectivenessof the Internal Control System in achieving the Bank’s objectives, besides providinghigh quality counsel to management on the effectiveness of Risk Management and Regulatorycompliance by the Bank. Towards this end, Risk Focussed Internal Audit (RFIA) and IS Auditwas conducted in 626 branches/BPR entities, as against a target of 610 branches/BPRentities envisaged in the Annual Audit Plan 2013-14. That apart, 133 newly opened brancheswere subjected to Spot Audit, 31 Head Office departments and one Staff Learning Centre wasalso subjected to audit. We have also conducted Management Audit of Zonal Offices andSecretariat of General Managers & Retail NetWorks. During 2013-14, 100% of ourbranches have secured Well Controlled/ Adequately Controlled rating and there is no'Unsatisfactory' rated branch. The number of 'Needs Improvement' rated branches reducedfrom 2 as on March 2013 to 'Nil' as on March 2014.

11.1.2 Concurrent Audit is a major function which monitors proper follow-up of laiddown systems and procedures on a continuous basis. 149 branches/ offices covering 51.71%of aggregate deposits and 70.37% of total advances and 7 Head Office departments weresubjected to Concurrent Audit during this year.

11.1.3 We conduct Special Revenue Audit every year to guard against income leakage. 497branches with advances level of more than Rs 10crs and income leakage of Rs 1 Lakh andabove were subjected to Special Revenue Audit (as against 480 branches during the previousyear).

The summary findings enumerated in these audit reports are appraised to the AuditCommittee of the Board and follow up actions are ensured.

11.2. Credit audit

The audit of loan appraisal and administration for high value credit accounts with theaim of improving the asset quality of the Bank is undertaken by the Credit AuditDepartment. Accounts with total exposure of Rs. 2 crore and above are covered under CreditAudit.

During the financialyear 1186 loan accounts in 186 branches were covered under CreditAudit. Out of 1186 accounts,1053 accounts (89%) were rated as Low and Very Low Riskaccounts.

11.3. Vigilance

11.3.1. Vigilance administration as an important aspect of management function iscarried out as per the directives of the Central Vigilance Commission so as to achievegood Corporate Governance for the overall growth of the Bank.

11.3.2. To create better preventive vigilance awareness and to prevent incidence offrauds, various preventive vigilance activities like surprise visit to branches, formationof preventive vigilance committees at all major branches and BPR entities, sessions in theStaffLearningCenters,surprise of cash etc., are being undertaken by the VigilanceDepartment.

11.3.3 In order to speed up and monitor disciplinary proceedings, the Chief Manager,General Banking/Administration at the Zonal/Regional Office level are designated as ZonalVigilance Officers, as an extension of the Vigilance structure at HeadOffice

11.3.4. "Whistle Blower" policy has been introduced in our Bank for theemployees to report to the Management, instances of unethical behavior, actual orsuspected, fraud or violation of the Bank’s code of conduct or ethics policy.

11.3.5. The officers from Vigilance

Department conducted surprise inspections of 81 offices/branches during the year underreport. The main areas of scrutiny are adherence to systems and procedures, rotation ofstaff and deficiencies in fraud-prone areas. The deviations and other irregularities arebrought to the notice of the Module/Regional Heads for taking corrective actions.Vigilance Department is bringing out a Quarterly House Magazine, which contains vitalinformation on vigilance related matters useful to the operating staff.

11.3.6. In accordance with the guidelines of the Central Vigilance Commission, the‘Vigilance Awareness Week’ was observed at all the offices of the Bank from 28thOctober 2013 to 2nd November 2013. The focus of observing the Vigilance Awareness Week wasoriented towards "Transparency in public procurement" Seminars and meetings wereconducted, wherein information relating to evolving and effectively implementingpreventive techniques in vigilance administration, which includes transparencyaccountability and fair play, objectivity and timely response in dealing with mattersrelating to public administration etc., were explained to customers/Staff members.Besides, the role of leveraging of technology in respect of all systems and process fordeliverance of services, which has to be synchronized through use of technology wasstrongly emphasized.

11.3.7. As per the directions of Ministry of Finance, Banking Division, Vigilancesection, Govt. of India, New Delhi, a vigilance setup has been established in KaveriGrameena Bank and the Chief Vigilance Officer of the Bank is overseeing the vigilanceadministration.

12. OTHER ASPECTS

12.1.1. Customer Service:

The Bank continues to accord highest priority for customer service. The Bank has been avoluntary member of the Banking Code and Standards Board of India(BCSBI) and is committedto provide services of a high order in a transparent manner. Bank has adopted the BCSBICode of commitment to Customers and placed the same in the Bank’s website. The policyguidelines relating to Collection of Cheques, Grievance Redressal Mechanism andCompensation were placed on the Bank’s website for the use of the customers.

Based on customer feedback collected by BCSBI, the Bank has been rated 2nd among the 26Public Sector Banks in FY 2013-14

12.1.2. Right to Information

The Right to Information Act 2005 - The required authority Structure for implementationof the Act has been put in place for prompt disposal of RTI requests for Informationwithin the time frame period as prescribed under the Act. The Bank’s website alsocarries all the relevant information on the implementation of the Act.

12.2. Productivity

Business per employee increased from Rs 9.55 crs as at March 2013 to Rs 10.38 crs as atMarch 2014. The Business per branch has decreased from Rs  132 crs in March 2013 toRs  119.26 crs in March 2014 due to addition of 164 new branches during the year.

12.3. Public relations:

12.3.1 State Bank of Mysore has an enduring brand image of its own through its centuryold close association with its clients. It is known as ‘Mysore Bank’ in itstraditional area of operation. In order to preserve, project and enhance its corporateimage and brand equity, a well laid out strategy has been put in place to effectivelycarry out publicity of its products and services through print and electronic media, withappropriate annual budget allocation.

Bank has prominently displayed glow signs/hoardings at Kempegowda International AirportLtd. and Railway stations, besides Bus stations in important cities and towns.Advertisements in the form of hoardings on modern bus shelters, metro line pillars atimportant traffic cross sections have been displayed. During the Centenary Year the Bankhas installed LCD based Video hoarding in the Head Office compound.

The video covers the entire spectrum of banking activity with attractive messages onproducts and services with periodical updates on interest rates etc. Messages havingsocial content are also displayed.

12.3.2. The Bank has also organised ‘Walkathon’ as an annual feature andhosted Musical Evening by vocalist Smt. Shubha Mudgal in Bangalore to commemorate theBanks Centenary. Hon’ble Chief Minister of Karnataka Sri Siddaramaiah, host of ourcustomers and many eminent personalities of the society graced the occasion. On October5th 2013 Sri P Chidambaram, Hon’ble Union Finance Minister addressed thedistinguished gathering of our employees, CMDs of other banks and media representativesregarding contribution of State Bank of Mysore to society and spoke in glowing terms aboutthe important role Banks such as SBM are playing in the socio-economic development intheir respective regions. The Hon’ble Finance Minister, while simultaneouslyinaugurating 101 Branches including 2 NRI Branches, 3 all-women Branches, besides 2 Zonaloffices at Belgaum and Mangalore, 3 Regional offices at Chamarajnagar, Gulbarga and Karwarto mark the occasion, also honoured top customers of the Bank. He also handed oversanction letters to a few beneficiaries of Educational loans/Green auto loans/ GreenToilets, etc. These activities have resulted in good publicity, enhancing the Banks imagein the eyes of the public.

The Bank has been as a policy sponsoring and actively participating in variousState-level seminars, District utsavas, fruit and cultural and sporting events at variousdistricts/taluks. This helps in bringing us closer to society and enhance our Brand Image.Bank has also been actively participating in the Karnataka Rajyotsava function andsponsoring SBM Tableau in Dasara Parade at Mysore, which is appreciated by one and all.

12.3.3. The hoardings installed at vantage points were periodically changed withattractive themes, greeting the public on festivals with our latest deposits/lendingschemes, revision of interest rates, etc. Special media campaigns covering the variousloan schemes, special offer in housing, vehicle, gold loans and MSME loans under CGTMSEscheme, other retails loans and new deposit schemes like Savings Bank, Term Deposit,Personal Accident Insurance, Centenary Liquid Deposit were carried out periodically in theprint and electronic media and through hoardings.

12.3.4. Bank’s performance highlights, launching of new products and services,opening of new branches, ATMs, BPR initiatives and technological achievements were alsoextensively covered in print and electronic media.

12.4. Organizational Development

12.4.1. Branch expansion:

The Bank has opened 164 new branches during the year 2013-14. With this, theBank’s network of branches stands at 944 spread over 16 states. As at 2014, thebranch network comprised 220 Metro, 200 Urban, 216 semi- urban and 308 rural branches.

12.4.2. Two new Zones viz. Mangalore and Belgaum Zones were carved out by re-organizingMysore and Hubli Zones.

Three additional Regional Offices at Chamarajanagar, Karwar and Gulbarga were createdfor better control and monitoring of the branches , with a view to extend better customerservice.

Chamarajanagar Region is specifically formed to concentrate on Financial Inclusion.

12.4.3. IFB Chennai and IFB Delhi Branches are upgraded to be headed by DGMs for afocussed attention of Corporate Business.

12.4.4. Liaison and Official Languages

Department were upgraded to be headed by AGM for better efficiency.

12.4.5. An exclusive post - General Manager (P& SB) was created for a focussedattention, growth and monitoring of Personal segment business marking a paradigm, shift inthe business orientation of bank from Corporate sector and Retail sector.

12.4.6. Branches in Minority Concentrated Districts- Centers (MCDs)/ Under BankedDistricts:

During the year, the Bank has opened 10 branches in Minority ConcentratedDistricts/Centers and 20 branches in Under-Banked Districts. As at March 2014, out of 944branches, the Bank has 82 branches in MCDs constituting 8.7% of the branch network and 117branches in Under-Banked Districts, constituting 12.4% of the branch network.

12.5. Implementation of Official Language Policy:

12.5.1. Bank is progressively improving usage of Hindi and Regional Language to servethe customers to their satisfaction. Efforts have also been made to create favourableatmosphere for use of Official Languages.

12.5.2 To ensure the usage of Hindi, our Bank's Website is made available in Hindi andKannada also and updated periodically. Operating option of Hindi & Regional Languageis provided in all the ATMs of our Bank.

12.5.3 Apart from publishing Hindi Articles in the Bank's House Magazine"Sambhrama", a separate Quarterly Hindi Magazine "MybankBhashadarshini" is being published for enriching Hindi knowledge of our staff. Allthe four issues of Hindi magazine has been published in time. Special issue of HindiMagazine on the occasion of Centenary Year was also brought out.

12.5.4 During the year under review, the Parliamentary Committee on Official Languagevisited our Head Office on 05.07.2013 and appreciated our efforts over the progressive useof Hindi in our Bank.

12.5.5 Bank successfully organised one day National Level Hindi Seminar on"MANAGING ASSET QUALITY" in association under the aegis of College ofAgricultural Banking, RBI, Pune, on 12.08.2013.

12.5.6 The Chairman, Kannada Development Authority, Government of Karnataka alsovisited our Head Office and appreciated our efforts for progressive use of Kannada.

12.6. Community Services Banking

12.6.1. Our Bank as a caring and responsible corporate entity is conscious of thenurturing we have received from society and are alive/ aware of our duty to payback afraction of what we have received from them as a sense of gratitude. As per the Governmentof India guidelines, bank is authorized to spend 1% of its net profit towards CommunityService activities by making equitable donations to any organization engaged in CommunityDevelopment activity with a clean image and good track records. Such donations are madewithout any strings attached.

12.6.2 During the FY13-14, being a Centenary year of our establishment, bank tookspecial interest in donating Rs 1.57crs to Kidwai Memorial Institute of Oncology forconstruction of multi-disciplinary paediatric ward named ‘State Bank of MysoreCentenary Block’ for augmenting facilities for treating children affected withcancer. In commemoration of its Centenary celebration, this bank supported more than 2,300special activities with an outlay of Rs 457 lacs under Community Services banking duringFY13-14.

12.6.3. The Bank also actively participated in State Bank Group initiative by donatingmore than 6,100 ceiling fans and 1,500 water purifiers on the occasion of Teacher’sDay and Children’s Day 2013, respectively, to deserving Govt/ needy schools, througheach of its branches/offices, at a cost of more than Rs.200 lacs for the benefit of thestudents community.

13. CORPORATE GOVERNANCE

13.1.1. Statement of Bank’s Philosophy on Corporate Governance

State Bank of Mysore, as an organization driven by values, is committed to pursueobjectives that are in the interests of the Bank, shareholders and all stake holders andthe society at large, in consonance with best practices. The primary objectives ofCorporate Governance are:

• To protect the interests of the shareholders and all stakeholders

• To ensure maximization of long term shareholder value in a legal and ethicalmanner.

• To act in the best interests of all stakeholders like customers, employees,government and the society.

• To ensure transparency, fairness, courtesy and dignity in all transactionswithin and outside the Bank, which form the hallmark of good governance.

• To maximize operational efficiency in a well defined and transparent manner andachieve excellence and benchmarks at all levels.

• As custodians of public thrift, ensure safety of funds and investments.

• Focus on core competence areas, planned expansions and sustained growth.

• The Bank believes that Corporate Governance facilitates effective management andbetter internal controls.

13.1.2. Compliance: Compliance function is an integral part of corporategovernance along with internal control and risk management process. In view of increasingcomplexities and sophistication in Banking business there is a critical need formanagement of compliance risk arising out of compliance failures.

13.1.3. The Compliance department ensures that the guidelines of various regulatorslike RBI, GOI, SBI, SEBI etc are complied with by the Bank in its conduct of business.

13.1.4. Department has been conducting Compliance Audit based on closed Branch InternalAudit Reports. Commissions/ omissions noticed are being flagged to the branches and thecontrollers for rectification and sensitization.

13.1.5. The Compliance department ensures submission of monthly and quarterly DSB andother related regulatory returns to RBI through Off-site Surveillance Cell in addition tofurnishing back up data for quarterly discussion with the Regulator.

13.1.6. KYC/AML Cell is a part of Compliance Department. The cell is responsible formonitoring and reporting of money laundering activities.

13.1.7. The Bank is committed to ensure that the Bank’s Board of Directors meetregularly to inter-alia provide effective leadership, establish a frame work of strategiccontrol to promote integrity and transparent management processes besides adherence togood business ethics based on sound financial and accounting procedures.

13.1.8. The Directors on the Board of the Bank and Senior Management have affirmedcompliance with the Bank’s Code of Conduct for the Financial Year 2013-14.Declaration in this effect signed by the Managing Director is furnished hereunder.

DECLARATION

AFFIRMATION OF COMPLIANCEWITH THE BANK’S CODE OF CONDUCT

I declare that all members of the Board and Senior Management have affirmed compliancewith the Bank’s Code of Conduct for the Financial Year 2013-14.

Sd/- (Sharad Sharma) Managing Director 25th April, 2014

13.2. Board of Directors

13.2.1 The Board consists of 4 Directors from State Bank of India (including theChairman), the Managing Director, 2 Non-Executive Directors, 3 Non-Executive ShareholderDirectors (of whom one director elected by shareholders and two directors nominated bySBI), one nominee each from Reserve Bank of India and Government of India, a WorkmanDirector and a Non-workman Director.

The Board met 8 times during the year 2013-14, i.e, 29.04.2013, 30.05.2013, 04.06.2013,25.07.2013, 28.08.2013, 06.11.2013, 29.01.2014, and 29.03.2014.

13.2.2. attendance of each Director at the Board Meetings during the year 2013-14 is asunder:

Sl. No. Name of the Director Sri/Smt. Held during the tenure Number of meetings attended General Meeting No. of other BoD’s/Board Committees he is/was member Director/Chairperson
1 Arundhati Bhattacharya 3 - - 29
2 Yas Pratip Chaudhuri 5 3 Attended 34
3 S.Vishvanathan 5 3 - 5
4 Sharad Sharma 8 8 Attended -
5 P.C.Jena 2 1 - 4
6 R.N.Mehra 8 6 - 5
7 K.N.Nayak 6 6 Attended 2
8 M.M.Dawla 7 4 - -
9 Madhumita Sarkar Deb 2 2 - -
10 Murli Radhakrishnan 6 4 - -
11 K.Gururaj Acharya 8 8 Attended -
12 Ramasubramanian S 8 8 Attended -
13 r Milind S.Katti 5 5 Attended -
14 Gururaja Rao 5 5 Attended -
15 A.Prabhakara 2 2 - -
16 Ama Raghavendra R 3 3 - -
17 K.Guruswamy 2 2 - -

The quorum for the Board Meeting is four Directors, of whom one shall be the Chairmanor an Officer-Director nominated by the State Bank of India. The Board meets atleast oncein each quarter and 6 times in a year.

13.3. Executive Committee of the Board

In terms of Section 35(1) of the State Bank of India (Subsidiary Banks) Act, 1959, theExecutive Committee of the Board of Directors has been constituted to consider variousbusiness matters namely; sanctioning of credit proposals, approval of capital and revenueexpenditure, investments, administrative concerns and all other matters falling beyond thepowers of the Executives of the Bank. The Committee comprises of the Managing Director,two Directors (Executive) and two Directors (Non-Executive) nominated by State Bank ofIndia. The Committee meets atleast once in a month and has met 13 times between 1st April2013 and 31st March 2014.

13.4. Audit Committee of the Board

13.4.1. In terms of directives from RBI, the Audit Committee of the Board has beenconstituted. The Committee comprised of two non official Directors, Nominee Director fromthe RBI and Nominee Director from SBI. The quorum for the ACB meeting is 3 Directors. Thechairman of ACB is a Chartered Accountant.

13.4.2. ACB also reviewed the bank's status on implementing Government of Indiaguidelines on internal audit, IS audit and Concurrent audit systems.

13.5. Risk Management Committee of the Board

The Risk Management Committee of the Board has the overall responsibility to monitorand manage enterprise-wide risk. RMCB is supported by different Risk Management Committeesand Integrated Risk Management Department.

The Committee oversees risk management, defines the risk appetite of the Bank andapproves the same. Further, it approves risk management & measurement policies andguidelines before submission to the Board and ensures that the risk management process isin conformity with the guidelines of regulator. It also ensures robustness of financialmodels and effectiveness of system used to measure various risks and utilises the resultsof the various risk stress tests to put in place effective risk mitigation measures.

The Committee consists of the Managing Director, SBI Nominee Director and twoNon-Executive directors. The Committee held 6 meetings during the year.

13.6. Fraud Monitoring and Investigation Cell:

The Fraud Monitoring and Investigation Cell (FMIC) functions under the administrativecontrol of the General Manager & CVO and is attached to the Vigilance department. FMICwill monitor certain critical areas of branch functioning on regular basis as a part ofsurveillance responsibilities.

13.7. Staff alertness award Scheme:

The "Staff Alertness Award Scheme" at Head office met once during the year todiscuss the recommendations received to recognize and reward the contribution of staffmembers in prevention, detection and foiling of frauds. Four members identified by thecommittee were rewarded during the year for their contribution in bringing to light 3cases of frauds during the year.

13.8. Special Committee of the Board for Monitoring and follow-up of High Value fraudsof Rs 1 crore and above.

The special Committee of Directors, constituted in terms of RBI guidelines, meets twicein a year to monitor and follow up cases of frauds involving amount of Rs  1crore and above. The Committee also meets as and when such new cases come to light. Thecommittee has conducted 3 meetings in the year.

13.9. Customer Services Committee of the Board

The Bank has put in place standing committee on Customer Service and Customer ServiceCommittee of the Board are in place to oversee the implementation of Customer serviceinitiatives/directions of Government of India/Reserve Bank of India. Standing Committee onCustomer Service held 2 meetings on 06.09.2013 and 04.02.2014 during the year. TheCustomer Service Committee of the Board has met twice on 30.07.2013 and 26.12.2013 duringthe year.

13.10. nomination Committee of the Board

This Committee consists of SBI Nominee Director, Govt. Nominee Director and NonExecutive Directors. This Committee is constituted to examine the "fit andproper" status of the elected Directors/the person to be elected as a Director on theBoard of the Bank. This Committee was last reconstituted on 29th March 2014.

13.11. Shareholders/Investors Grievances Committee

13.11.1. In terms of the provisions of the Listing Agreement with the Stock Exchanges,a three member Shareholders/Investors Grievances Committee comprising of the followingmembers has been formed

{ZXoeH Director Chairman
Shareholder Director Member
Managing Director Member

13.11.2. The Committee meets once in a quarter to review/redress shareholders andinvestors complaints. The Committee has met four times during the year.

13.11.3. Statement of shareholders complaints received and disposed off:

No. of Complaints at the beginning of the year Nil
No. of Complaints received during the year 119
No. of Complaints resolved during the year 119
No. of Complaints pending at the end of the year

13.11.4. Delisting from Madras Stock exchange:

In terms of the Regulation 7 of the SEBI (Delisting of Equity Shares) Regulations,2009, the Bank had submitted the application to Madras Stock Exchange for delisting afterseeking the approval of the Board of Directors at its meeting held on 29.01.2014. Theapplication has been accepted and our Bank’s Equity Shares are delisted from MSE witheffect from 25.03.2014.

13.11.5. IPP Issue:

In line with the SEBI guidelines to reach minimum public shareholding of 10%, the Bankraised money from QIBs through IPP issue during the FY. As a consequence, the presentshareholding of the Bank is:

Shareholders status Extent of Shareholding in %
SBI (promoters) 90
Public 10
TOTAL 100

13.11.6. General Body Meetings:

Location and time, where last three Annual General Meetings held:

Year AGM No. Date & Time Location
2010-2011 51 08-06-2011
28-05-2012
2011-2012 52
Jnana Jyothi auditorium,Central College
2012-2013 53 04-06-2013 Campus,Opp. Cauvery Guest House
11.30 A.M. Palace Road, Bangalore - 560 001

13.11.7. Disclosures:

1. The materially significant related party transactions that may have potentialconflict with the interests of Bank at large : Nil

2. Non-compliance by the Bank, penalties, strictures imposed on the Bank by StockExchange or SEBI or any statutory authority , on any matter related to capital markets,during the last three years: Nil

13.11.8. Means of Communications:

1. Quarterly results are published in one English daily newspaper and one Kannada dailynewspaper.

2. Results are normally published in Indian Express, Business Standard, FinancialExpress and Kannada Prabha.

3. Details are also displayed at the Bank’s website www. statebankofmysore.co.in

13.11.9. General Shareholder information:

4th June, 2014.
1. Annual General Meeting AUG -560 001
Jnana Jyothi auditorium
Central College Campus
Opp. Cauvery Guest House
Palace Road, Bangalore-560 001
Financial Year 1st April, 2013 to 31st March, 2014
Date of Book Closure
Dividend Payment Date Interim Dividend paid on 22.04.2014. Record Date 12.04.2014
Listing on Stock Exchanges Listed on National, Bombay and Bangalore Stock Exchanges.

13.11.10. Market Price Data:

High-Low during each month in the last financial year

2013-14

Bombay Stock Exchange

National Stock Exchange

Month High VmarI Date Low VmarI Date High VmarI Date Low VmarI Date
Rs. Rs. Rs. Rs.
April 610.00 03.04.13 537.00 15.04.13 610.00 03.04.13 535.00 01.04.13
May 610.00 08.05.13 540.10 31.05.13 612.00 08.05.13 540.00 24.05.13
June 575.00 03.06.13 513.00 26.06.13 575.00 03.06.13 506.35 25.06.13
July 548.50 01.07.13 490.00 31.07.13 550.00 01.07.13 490.65 31.07.13
August 520.00 01.08.13 450.00 30.08.13 514.00 01.08.13 451.05 30.08.13
September 550.00 19.09.14 455.00 02.09.13 549.80 19.09.13 455.00 02.09.13
October 494.00 01.10.13 423.25 28.10.13 516.20 01.10.13 424.00 28.10.13
November 474.35 01.11.13 422.10 13.11.13 475.95 05.11.13 419.90 28.11.13
December 443.70 09.12.13 405.00 19.12.13 444.80 09.12.13 408.00 19.12.13
January 485.00 01.01.14 390.90 29.01.14 448.00 02.01.14 391.15 29.01.14
February 409.50 11.02.14 378.00 28.02.14 406.00 03.02.14 377.40 20.02.14
March 429.05 31.03.14 368.00 18.03.14 430.00 31.03.14 367.95 18.03.14

There were no transactions in Madras and Bangalore Stock Exchanges during the period.

Performance in comparison to Broad –based indices such as BSE Sensex, CRISIL indexetc: A comparison is not attempted in view of the limited movement of the shares.

13.11.11. Registrar and Share transfer agents

Integrated Enterprises (India) Ltd., 2nd Floor, ‘ Kences Towers’, No. 1,Ramakrishna Street, North Usman Road, T. Nagar, Chennai-600 017 Phone Nos.: 044-28140801-03 Fax No. :044-28142479 Email: csdstd@integrat-edindia.in

13.11.12. Share transfer System:

The Bank is committed to provide the best quality investor services to itsshareholders. The Bank has constituted a Share Transfer Committee of three memberscomprising of General Manager(Try) & CFO, Deputy General Manager (F&A) and ChiefManager (Shares and Bonds). Approvals are obtained from the Executive Committee of theBoard of Directors for transmission/ issue of duplicate share certificates. The ShareTransfer Committee ensures that the share transfer agent attends to share transfers /transmission/issue of duplicate share certificates promptly and dispatch the sharecertificates ex peditiously.

13.11.13. Statement showing shareholding pattern of State Bank of Mysore as on31-03-2014

Category of Shareholder No.of Share holders Total no.of Shares % No. of Shares held in Demater- ialised form % %
II III IV V VI VII
SHAREHOLDING OF PROMOTER AND PROMOTER GROUP
Individual/Hindu Undivided Family
Central Government/State Government
Bodies Corporate
Financial Institutions/Banks 1 43212078 43212078 90 90
Any other (specify)
MlAO Cn Hw$b E(1) SUB totaL a(1) 1 43212078 43212078 90 90
Individual(Non resident/foreign) odies corporate
Qualified Foreign Investor
SUB totaL a(2)
Total Shareholding of Promoter and Promoter Group(a)=a(1)+a(2) 1 43212078 43212078 90 90
Public Shareholding
Institutions
Mutual funds/UTI
Financial Institutions/Banks 21 1216721 1216161 2.534 2.534
Central Government/State Government
Venture Capital Funds
Insurance Companies 3 777808 777758 1.620 1.620
Foreign Institutional Investors 1 200
Foreign Venture Capital Investors
Qualified Foreign Investor
SUB totaL B(1) 25 1994729 1993919 4.155 4.155
Bodies Corporate(Indian/foreign/Overseas) 307 104953 95613 0.219 0.219
Individuals (Resident/NRI/Foreign National)
Individual shareholders holding Nominal share Capital upto Rs.1 Lakh 27481 2507084 1644405 5.222 5.222
Individual shareholders holding Nominal share Capital above Rs.1 Lakh 3 84544 84544 0.176 0.176
Clearing Member 185 64487 64487 0.134 0.134
NRI 156 38785 38145 0.081 0.081
TRUST 1 6760 6760 0.014 0.014
SUB totaL B(2) 28133 2806613 1933954 5.845 5.845
(c)=c(1)+c(2)
total Public Share Holding (B)=B(1)+B(2) 28158 4801342 3927873 10.000 10.00
MlAO (J)+(c)
TotaL (a)+(B) 28159 48013420 47139951 100.000 100.00
Shares held by Custodians and against which Depository receipts have been issued
MlAO aEAvAU (J)+(c)+(1)
gH$b Hw$b (E)+(~r)+(gr)
GranD totaL (a)+(B)+(C) 28159 48013420 47139951 100.00

13.11.14. Bank’s shares are available for trading compulsorily in demat form. TheISIN Code allotted by NSDL/CDSL to the Bank’s Equity Shares is INE651A01020. As on31st March 2014. 81.80 % of the non-promoter equity shares held by the public have beendematerialized. 13.11.15. Outstanding GDRs/ADRs/Warrants or any Convertible Instruments,Conversion date and likely impact on equity: Nil

13.11.16. Plant Location: Not Applicable

13.11.17. Address for Correspondence:

The Chief Manager,

Shares and Bonds Department,

State Bank of Mysore,

Head Office, Mysore Bank Circle,

K.G.Road, BENGALURU - 560 254

ph No. Direct – 080 – 22252184

General 080 – 22353901 (10 lines) Extn. – 314

Fax 080 – 22370284,

Email - cmshares@sbm.co.in

14. BOARD OF DIRECTORS 2012-13

i. Smt Arundhati Bhattacharya , Chairman, SBI was appointed as Chairman on the Board ofthe Bank under Clause (a) of Section 19 & sub-section (1) of Section 20 of the StateBank of India Act, 1955 (23 of 1955), with effect from 07.10.2013, in place of Shri PratipChaudhuri, who retired on 30.09.2013.

ii. Shri S.Vishvanathan, Managing Director & GE (A&S), SBI, was nominated as aDirector on the Board of the Bank representing SBI under Section 25(1)(c) of SBI(Subsidiary Banks) Act 1959, with effect from 17.07.2013.

iii. Shri Purna Chandra Jena, General Manager, SBI, was nominated as a Director on theBoard of the Bank representing SBI under Section 25(1)(c) of SBI (Subsidiary Banks) Act1959, with effect from 26.11.2013 in place of Shri K.N.Nayak, DGM, SBI.

iv. Shri M.Mahmood Dawla, Under Secretary, Department of Financial Services, Governmentof India, New Delhi, was nominated as Government Nominee Director on the Board of the Bankunder Section 25(1)(e) of SBI (Subsidiary Banks) Act 1959, with effect from 23.05.2013 inplace of Shri D.D.Maheshwari.

v. Shri Murli Radhakrishnan, Regional Director, Reserve Bank of India, Bhopal, wasappointed as a Director on the Board of the Bank under Section 25(1)(b) of SBI (SubsidiaryBanks) Act 1959, w.e.f 24.05.2013 in place of Smt Madhumita Sarkar Deb, Chief GeneralManager, RBI, Mumbai.

vi. Shri R.Raghavendra was appointed as Workmen Director, with effect from 01.09.2013on the Board of the Bank under section 25(1) (ca) of SBI (Subsidiary Banks) Act 1959consequent to the expiry of the term of Shri Milind S.Katti vii. Shri K.Guruswamy wasappointed as Non-workmen Director on the Board of the Bank with effect from 24.01.2014under section 25(1) (cb) of SBI (Subsidiary Banks) Act 1959 consequent upon the expiry ofthe term of Shri Gururaja Rao. viii. Shri A.Prabhakara was nominated as a Director on theBoard of the Bank under Section 25(1)(c) of SBI (Subsidiary Banks) Act 1959, w.e.f11.01.2014.

iX. Shri S. Vishvanathan, Managing Director & GE (A&S), SBI and Shri Rajeev N.Mehra, CGM (A&S) have both since resigned from the Board on their superannuation on30th April 2014.

X. Shri B. Ramesh Babu, CGM (A&S), SBI, nominated on the Board by SBI on 5th May2014 under Clause (C) of Sub-section (1) of Section 25 of the SBI (Subsidiary Banks) Act,1959.

XI. Shri J.S.Phaugat, Under Secretary, Dept. of Financial Services, Govt. of India, wasnominated on the Board of the Bank under section 25(1)(e) of SBI (Subsidiary Banks) Act1959, w.e.f 07.05.2014 in place of Shri M.M.Dawla.

The Board places on record its appreciation for the invaluable services rendered byShri Pratip Chaudhuri, Shri K.N.Nayak, Shri D.D.Maheshwari, Smt Madhumita Sarkar Deb, ShriMilind . S.Katti and Shri Gururaja Rao and Sjhri M.M.Dawla.

15. ACKNOWLEDGEMENTS

The Board wishes to place on record its sincere appreciation of the patronage andsupport of the customers, shareholders, members of staff, Employees’ Union andOfficers’ Association for their contribution to the overall development of the Bank.

By the Order of the Board

Sharad Sharma

Managing Director

kamal

   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
St Bk of India 186,732.09 17.08 1.58 15.19 10.0 0.0 0.00
Bank of Baroda 37,231.88 8.49 1.03 15.42 13.4 0.0 0.00
Punjab Natl.Bank 33,419.06 10.01 0.93 14.98 10.0 0.0 0.00
Bank of India 18,336.52 6.85 0.70 15.52 11.2 0.0 0.00
Canara Bank 18,208.24 7.42 0.75 12.25 10.4 0.0 0.00
IDBI Bank 14,467.54 13.23 0.66 12.91 5.4 0.0 0.00
Union Bank (I) 12,136.43 7.40 0.72 13.17 10.4 0.0 0.00
UCO Bank 10,258.72 6.79 0.96 15.18 16.8 0.0 0.00
Syndicate Bank 9,097.01 5.51 0.83 15.00 16.7 0.0 0.00
Central Bank 9,041.20 0.00 0.73 14.96 0.0 0.0 0.00
I O B 8,647.44 14.89 0.60 13.25 4.5 0.0 0.00
Oriental Bank 8,410.79 7.70 0.66 12.42 9.2 0.0 0.00
Indian Bank 7,247.01 6.62 0.63 13.00 10.3 0.0 0.00
Allahabad Bank 6,467.24 5.63 0.59 12.78 10.9 0.0 0.00
Corporation Bank 6,020.55 11.09 0.60 13.55 5.7 0.0 0.00

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Key Information

Key Executives:

Arundhati Bhattarcharya , Chairperson  

Sharad Sharma , Managing Director  

Ramasubramanian S , Director  

Gururaj Acharya K , Nominee (Govt)  


Company Head Office / Quarters:
Mysore Bank Circle,
Kempegowda Road,
Bangalore,
Karnataka-560254
Phone : 91-80-22353901-22353909/22353473
Fax : 91-80-22283684
E-mail : cmshares@sbm.co.in
Web : http://www.statebankofmysore.co.in
Registrars:
Integrated Enterprises (I) Ltd
Kences Tower
2nd Floor No 1
Ramakrishna Street
Chennai - 600 017

Fund Holding

 
Scheme Name No. of Shares
No data found

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