The Board is pleased to present the Banks Directors Report along with theAudited Balance Sheet as at 31st March 2013 and the Profit & Loss Account statementfor the financial year ended 31st March 2013.
MANAGEMENT DISCUSSION AND ANALYSIS
Macro Economic Scenario Global Perspective
The global economy is at the brink of turbulence as euro area continues to pose a largedownside risk to the global outlook. Available data on the world economy points tocontinuing low growth or recession in all the major countries, keeping the globalfinancial condition still fragile and vulnerable. Poor investment climate, subdued demand,slowdown in credit off-takes, spiraling international crude oil prices along with unabatedeuro zone crisis and geopolitical tension has exacerbated the global recovery process. Thepolicies of abrupt fiscal tightening practiced by major economies, decline in global tradeand volatile capital flows would further hurt global growth prospects. Such globalimbalances have constrained the policy makers across the globe to collectively follow moredecisive policy actions, if global economy is to be pulled out from the morass of downwardgrowth spiral.
Global GDP grew by 3.2% in 2012, which is lower than 4.0 per cent recorded in 2011, asper the IMFs World Economic Outlook published in April, 2013. The growth in advancedeconomies declined from 1.6 per cent in 2011 to 1.2 per cent in 2012, whereas growth inEmerging Market and Developing Economies (EMDEs) dropped from 6.4 per cent in 2011 to 5.1per cent in 2012. UKs GDP grew by 0.2 per cent in 2012 as against a growth of 0.9per cent in 2011.
Against this backdrop, countrys GDP registered a significant downfall, as per CSOestimate, from 6.2 per cent in 2011-12 to 5.0 per cent in 2012-13, due to sluggishindustrial activity, moderation in services sector growth, stalled investment, weakeningdomestic consumption, and bleak external demand. Agriculture, industry and services sectorgrew by 1.8 per cent, 3.1 per cent and 6.6 per cent respectively during 2012-13 as against3.6 per cent, 3.5 per cent and 8.2 per cent respectively registered during 2011-12.
During April-March 2012-13, Eight core Infrastructure industries grew by 2.6 per centas compared to 5 per cent during April- March 2011-12. The average WPI inflation (allcommodities) stood at 7.34 per cent during 2012-13 as compared to 8.94 per cent reportedduring 2011-12. Broad money (M3) 2012-13 (up to March 22, 2013) increased by 13.6 per centas compared to 13.2 per cent during the corresponding period of the last year.
The aggregate deposits of Scheduled Commercial Banks stood at Rs. 6751422 crore as atMar.22, 2013 as compared to Rs.5909082 crore as at Mar.23, 2012 recording a y-o-y growthof 14.26 per cent.
The Bank credit of Scheduled Commercial Banks stood at Rs.5262836 crore as at Mar.22,2013 as compared to Rs.4611852 crore as at Mar.23, 2012 recording a y-o-y growth of 14.12per cent.
Scheduled Commercial Banks (SCBs) Investment in Govt. and other approvedsecurities stood at Rs.2006038 crore as at Mar.22, 2013 as compared to Rs.1737787 croreregistering a growth of 15.44 per cent.
External Sector Growth
The cumulative value of Exports for the period April-March 2012-13, in US dollar termswas USD 300570.58 million as against USD 305963.92 million for April-March 2011-12registering a negative y-o-y growth of 1.76 per cent. Whereas the cumulative value ofImports for the period April-March 2012-13, in US dollar terms was USD 491487.22 millionas against USD 489319.50 million for April-March 2011-12 registering a y-o-y growth of0.44 per cent .
Oil imports during April-March, 2012-13 were valued at USD 169253.0 million which was9.22 per cent higher than USD 154967.5 million during April-March, 2011-12. While non-oilimports during April-March, 2012-13 were valued at USD 322234.2 million which was 3.62 percent lower than USD 334352.0 million during April-March, 2011-12.
The trade deficit, in absolute terms, during April-March, 2012-13 was estimated at USD190916.64 million which was higher than the deficit of USD 183355.58 million recordedduring April-March 2011-12.
Foreign exchange reserves stood at Rs.15900.6 billion as at March 29, 2013 as comparedto Rs.15061.3 billion as at March 30, 2012. Foreign Currency Assets stood at Rs.14126.3billion as at March 29, 2013 as compared to Rs.13305.1 billion as at March 30, 2012.
The rupee appreciated by 5.88 per cent against Japanese yen, while depreciated by 8.11per cent against US dollar, 2.97 per cent against Pound sterling and 6.19 per cent againstEuro in March 2013 over March 2012.
CORPORATE THEME FOR 2012-13
The Bank had opted "LEAD" as the corporate theme for the financial year2012-13 which signifies as under:
Let CASA be our Priority
Endeavour to increase Fee Based Income & Profitability
Attack and bring down NPA
Disburse More Credit under RO/Branch powers
PERFORMANCE HIGHLIGHTS OF THE BANK DURING THE FINANCIAL YEAR 2012-13
Capital & Reserves
Banks authorized share capital stood at Rs.3000 crore and the paid-up capitalRs.601.95 crore (601949955 equity shares of Rs.10 each) during the financial year ended at31.03.2013.
The Reserves and Surplus of the Bank increased from Rs.8439.20 crore in 2011-12 toRs.9939.39 crore in 2012-13 registering a y-o-y growth of 17.78 per cent over the previousyear.
Tangible Net Worth of the Bank (excluding revaluation reserves) improved significantlyfrom Rs.7994 crore as at March 31, 2012 to Rs.9296 crore as at March 31, 2013.
The Board of Directors of the Bank has proposed a final dividend of Rs.6.70 per share(67 per cent), amounting to Rs.403.31 crore for the financial year 2012-13 as compared todividend of Rs.3.80 per share (38 per cent) declared during the financial year 2011-12,amounting to Rs.228.74 crore. Dividend distribution tax of Rs.68.54 crore is payable(previous year Rs.37.11 crore).
The global business of the Bank grew by 18.06 per cent from Rs.283558 crore in 2011-12to Rs.334779 crore in 2012-13, whereas, Banks domestic business rose by 12.63 percent from Rs.258660 crore in 2011-12 to Rs.291337 crore in 2012-13.
Global deposits of the Bank grew by 17.36 per cent from Rs.157941 crore in 2011-12 toRs.185356 crore in 2012-13.
Domestic deposits grew by 13.10 per cent from Rs.147707 crore in 2011-12 to Rs.167055crore in 2012-13.
Domestic CASA deposits of the Bank increased from Rs.46478 crore in 2011-12 to Rs.51926crore in 2012-13, registering a growth of 11.72 per cent. Percentage of domestic CASA todomestic deposits stood at 31.08 per cent as at 31.03.2013.
The Banks global advances rose to Rs.149423 crore in 2012-13 from Rs.125617 crorein 2011-12 registering a growth of 18.95 per cent. Domestic advances grew by 12.01 percent from Rs.110953 crore in 2011-12 to Rs.124282 crore in 2012-13. The global creditdeposit ratio stood at 80.61 per cent in 2012-13 as compared to 79.53 per cent of the lastyear.
Priority Sector Advances increased from Rs.41383 crore in 2011-12 to Rs.46437 crore in2012-13 forming 44.62 per cent of ANBC as against mandatory level of 40 per cent.
Direct Agriculture Advances increased from Rs.13585 crore in 2011-12 to Rs.16018 crorein 2012-13 forming 15.39 per cent of ANBC as against mandatory level of 13.50 Per cent.
MSME Advances increased from Rs.14736 crore in 2011-12 to Rs.16428 crore in 2012-13registering a growth of 11.48 per cent.
The Bank has registered an increase of 3.07 per cent in Operating profit fromRs.3346.79 crore in 2011-12 to Rs.3449.58 crore in 2012-13.
Net profit of the Bank rose by 52.61 per cent from Rs.1313.39 crore in 2011-12 toRs.2004.42 crore in 2012-13.
Business per employee of the Bank improved from Rs.10.74 crore as at March 31, 2012 toRs.12.57 crore as at March 31, 2013. Profit per employee also improved from Rs.5.29 lakhas at March 31, 2012 to Rs.8.11lakh as at March 31, 2013.
Income & Expenditure
The Banks total income rose by 11.94 per cent from Rs.16344.23 crore in 2011-12to Rs.18295.04 crore in 2012-13.
The Banks interest income rose by 12.13 per cent from Rs.15268.35 crore in2011-12 to Rs.17120.68 crore in 2012-13.
The non-interest income of the Bank improved by 9.15 per cent from Rs.1075.88 crore in2011-12 to Rs.1174.36 crore in 2012-13.
The Interest expenditure of the Bank increased by 14.57 per cent from Rs.10183.32 croreas at 31.03.2012 to Rs.11666.63 crore as at 31.03.2013.
Operating expenditure of the Bank increased by 12.96 per cent from Rs.2814.12 crore asat 31.03.2012 to Rs.3178.83 crore as at 31.03.2013.
Important Financial Ratios
a. The Return on Assets improved from 0.81 per cent in 2011-12 to 1.07 per cent in2012-13.
b. The Banks Net Interest Margin (NIM) stood at 3.19 per cent in 2012-13 ascompared to 3.43 per cent in 2011-12.
c. The yield on advances of the Bank stood at 10.51 per cent in 2012-13 as compared to10.98 per cent in 2011-12.
d. The cost of deposits of the Bank stood at 6.83 per cent in 2012-13 as compared to6.74 per cent in 2011-12.
e. The Earning per share (EPS) of the Bank improved from Rs.22.89 as at March 31, 2012to Rs.33.30 as at March 31, 2013.
f. The Book Value per share of the Bank improved from Rs.150.13 as at March 31, 2012 toRs.175.12 as at March 31, 2013.
g. Net NPA percentage to net advances declined from 0.96 per cent in 2011-12 to 0.76per cent in 2012-13.
h. Gross NPA percentage to Gross Advances declined from 2.53 per cent in 2011-12 to1.99 per cent in 2012-13.
i. NPA provision coverage ratio of the Bank improved from 80.06 per cent as at March31, 2012 to 83.41 per cent as at March 31, 2013.
j. The Capital Adequacy Ratio (CRAR) of the Bank, as per Basel II improved from 12.24per cent in 2011-12 to 12.59 per cent in 2012-13.
k. Dividend on equity shares is increased from 38 per cent of previous year to 67 percent in current year.
Retail lending continues to be the thrust area of the Bank. Keeping in view the markettrends, the Bank has redesigned strategies and repositioned products, customizing atperiodical intervals according to the changing market requirements thus enablingcontinuity in the growth of the portfolio. Establishing tie-ups with car/ vehiclemanufacturers is one of the strategies adopted for accelerating the vehicle loans underthe four-wheeler segment.
Bank has introduced Festival Offer Schemes under Housing Loans portfolio, tied up withreputed car manufacturers for Vehicle Loans, and SyndSwarna to garner substantial businessunder these segments. Interest rates were slashed along with waiver of processing chargesto boost advances under these categories. To achieve qualitative growth under selectbranded products viz., SyndNivas, SyndVidya, SyndSuperVidya, SyndSwarna, SyndVahan,SyndRent, SyndNivas Plus and SyndSaral, Bank has adopted a focused lending approachcoupled with rich marketing strategies.
SyndNivas: (Housing Loan Scheme)
SyndNivas scheme is made more attractive with reduction of rate of interest andenhancing the maximum repayment period upto 30 years, the first interest bracket uptoRs.75.00 lakh is charged at base rate. Loan to value of asset is enhanced to 80% and 90%respectively for loans of Rs.20.00 lacs and above, and below Rs.20.00 lacs. In order togarner more business special Festival Offer Schemes were introduced.
The Bank has introduced an optional insurance scheme for Housing loan borrowers forcovering the life of borrower during the loan period. Steps are also initiated for postingof Marketing officers, Law Officers in CPCs to speed up sanction and boost the performanceof CPCs. Outstanding advances under Housing loans stood at Rs.13080.15 crore as at 31stMarch 2013.
During the fiscal year 2012-13, Education loan portfolio witnessed increase fromRs.2269.76 crore as at 31st March 2012 to Rs.2537.75 crore as at 31st March 2013registering growth of 11.81%
I. Special Concessions under the Scheme:
1. All students belonging to SC/ST category are eligible for concession of 0.50% on theapplicable rates on interest.
2. All girl students are eligible for concession of 0.50% on the applicable rates ofinterest.
3. Additionally, girl students under SC/ST category are eligible for a furtherconcession of 0.25% on the above rates (Total Concession of 0.75%).
II. If Interest during the study and moratorium period is serviced regularly, 1%interest concession shall be extended for such loans.
It is a special education loan scheme for the students pursuing Technical, Managementand higher studies in reputed Premier Institutes. This is outside the purview of the modelEducation loan scheme with a view to encourage higher studies at specified PremierEducational Institutions like IIT, IIMs, NIITs and post graduate courses abroad in reputedUniversities of USA, UK, Australia, Canada, Newzealand, Singapore and Germany i.e.,MCA,MBA, MS, Doctorate, DM etc. Maximum amount of loan is Rs.20.00 lacs with the repaymentperiod coinciding with the Model Education Loan policy. There is no collateral taken otherthan the parents guarantee. Rate of Interest is low at Base Rate + 0.50%. The Bank hasalso introduced an optional insurance scheme to cover life of borrower during the loanperiod.
The scheme envisages financing/purchase of 2 wheeler / 4 wheeler vehicles byindividuals with finance upto 95% of on-road-price with 48/84 months repayment period.Tie-up arrangements entered into with various auto manufacturers have paid good dividendsto the Bank. The portfolio registered a growth of 14.63% during the year ended 31.03.2013with an outstanding of Rs.1176.45 crore at the year end. Special Festival Offer withattractive factors/concessions are implemented from 15.09.2012 and extended upto31.03.2013.
SyndSwarna Express (Gold Loan Scheme):
Loans granted against pledge of jewellery for consumption /other personal needs arecovered under SyndSwarna Express. Outstanding balance under SyndSwarna Express loans hasreached Rs.1473.41 crore as at 31.03.2013 as against Rs.620.30 crore as at 31.03.2012,registering an increase of 137.53 per cent. 109 Gold Loan Shoppes are also opened to givegold loans faster.
This is a scheme for financing against rent receivables from properties let out byowners against mortgage of property. The scheme was revisited and liberalized further tomake the product more customer-friendly.
The scheme is meant for meeting the short term needs of traders and short term needs ofindustry and personal needs of individuals.
TREASURY & INTERNATIONAL BANKING DEPARTMENT
Due importance has been given for treasury operations and efficient management ofTreasury functions has integrated Forex and Domestic Treasury operations on 5th December,2012.
T&IBD is the A Category Office in our Bank which maintains ForeignExchange Position, Nostro and Vostro Accounts. Besides, T&IBD also monitorsdevelopment and follow up of Foreign Exchange Business, Overseas Business and TreasuryOperations of our London Branch.
The Banks centralized dealing room at T&IBD, Mumbai is supported by one LinkDealing centre at New Delhi to offer competitive rates, to market our services, to developand maintain customer relationships, and to guide designated branches.
The Bank is one of the first to undertake Web-based trading with Overseas counter partyBanks by using state-of-the-art Web platforms. The Bank is having 87 designated Branches(Category b) to handle full-fledged FX transactions and 376 nominated branches to handlethe FCNR business of the Bank. NRE/NRO deposits are accepted at all branches of the Bank.
The Bank is a member of Clearing Corporation of India Ltd., (CCIL) for settlement ofInter- Bank Forex Deals in USD/INR & for settlement of Inter-Bank USD/INR deals in theForex Forward Segment. Further, the Bank is one of the first Banks to participate inContinuous Linked Settlement (CLS) for Cross Currency Deals by CCIL. Both the initiativesaddress the issue of settlement risk and improve the efficiency of settlement process. TheBank is offering only plain vanilla derivatives and no complex derivative products areoffered by the Bank. There is no litigation against the Bank in respect of existingderivative transactions.
The Bank is implementing an Integrated Treasury Management Software which willintegrate the Domestic and Forex Treasury, Reconciliation, Settlement and Core Bankingplatform of the Bank with Straight-through-Process and access to the branches.
The Bank has become Trading-cum-Clearing Member on three exchanges, i.e., MCX-SX, NSEand USE for undertaking trading in Currency Futures.
The total Forex Turnover of the Bank was Rs.642372.84 crore for the current financialyear, as compared to Rs.493406.78 crore for the previous financial year. The Inter-Bankturnover of the Bank was Rs.596695.40 crore for the current financial year as compared toRs. 443009.75 crore for the previous financial year.
Taking advantage of the robust market, the Bank activated its trading desk and bookedtrading profits in both equity and debt market. The bank has also strengthened the non SLRinvestments by investing in qualitative and rated corporate bonds and debentures,commercial paper, CDs etc, resulting in improved yields on investment portfolio.
The bank has also earned from arbitrage deals, by effectively making use of windowslike CBLO, Repo & Call. The bank has managed funds very efficiently by these moneymarket avenues, monitoring continuously the fund flows and the liquidity position, whilelending and borrowing, depending on the market conditions and rates.
During the year, the Bank successfully raised Rs.1000 crore of subordinated lower tierII bonds to boost capital and pave the way for growth of business assets / credit. Goingforward, the capital raised will augment Basel III requirements.
The domestic investments of the bank were at Rs.45574.21 crore as on 31.03.2013 asagainst Rs.40641.46 crore as on 31.03.2012. Total income from investment portfolio(excluding dividend & trading profits) was Rs.3275.43 crore in the year 2012-13 asagainst Rs.2782.14 crore in the year 2011-12. Banks investment in SLR securitiesamounted to Rs.40185.17crore, which formed 88.16 % of Banks aggregate investments ason 31.03.2013. Trading profits for the year was Rs.121.31 crore.
The Bank has initiated various measures to increase the flow of credit to exportsector. The coverage under the SyndExport Gold Card Scheme, a unique scheme for eligibleexporters offering concessional and preferential terms, was broadened to include morenumber of exporters. Rupee export credit was offered at very competitive interest rateswithin the ceiling prescribed by RBI. The Interest Subvention Scheme, as designed byReserve Bank of India, has been made available by the Bank to its customers in certainspecified sectors, thus passing on the benefits of concessional interest.
The Bank is successfully managing two Exchange Houses viz., M/s. National Exchange Co.,WLL, Doha, Qatar and M/s. Musandam Exchange, Sultanate of Oman. The Bank is also havingfruitful Rupee Drawing Arrangements with other 8 Exchange Houses for improved andcost-effective funds transfer to India from Gulf countries.
Centralised NRI Cell
With a view to increasing the NRE Portfolio of our Bank, T&IBD has opened theCentralized NRI Cell w.e.f 26th Dec 2012 to enable prompt opening of NRE Accountscanvassed by the 2 Exchange Houses of our Bank, namely, Musandam Exchange and NationalExchange Co. T&IBD is opening the account on behalf of the Branch and is dispatchingthe NRE kit containing cheque book, ATM card and Internet IDs etc directly to the ExchangeHouses for delivery to the customer.
Banks overseas presence is in United Kingdom at London. The Branch is active inmoney market operations, Investments, besides Treasury and Forex dealing operations. Thebranch has further augmented its long-term resources by raising additional MTN funds ofUSD 500 Million during October 2012 at a competitive price. The Branch focuses onsyndications and ECBs, besides bilateral loans. With Indian Corporates going global,branch finds new opportunities of business. The branch has robust risk-management system.The branch has been inspected by Reserve Bank of India.
The total business of the branch stands at GBP 6188.562 Million (Rs.43442 crore) as at31st March 2013 as against GBP 3697.586 Million(Rs.24898 crore) as at the correspondingperiod of previous year.
ASSET QUALITY & MANAGEMENT OF NPAS
The Bank accorded top most priority to management of Non Performing Assets (NPAs). NPAlevel management was given priority with focus on reducing NPA level at least by 15% inabsolute terms over March 2012 level, maximizing cash recovery of NPAs and upgrading theexisting NPAs.
Banks Recovery Policy is oriented towards addressing the entire gamut of NPAmanagement and enables the field functionaries in resolving any category of non-performingaccounts.
Bank has introduced/extended special OTS schemes for considering proposals of farmerseligible under Agricultural Tractor loans, small NPA accounts under doubtful and lossassets category with book balance of Rs. 2,00,000/- & below as at March 2012 and ofMicro and Small Enterprises borrowers. A special OTS scheme for settling Synd Jaikisan NPAloans of Farmers was introduced during 2012-13 for the benefit of majority of NPA farmers.
Bank continued to reduce large number of smaller NPA accounts by settling the dues at"Synd Adalats" at all branches throughout the year by meet, talk and settleapproach. Four Bruhat Synd Adalat were conducted at regional/cluster level on 25.09.2012,27.11.2012, 12.02.2013 & 11th to 16th March 2013 and 46561 OTScases were settled, by recovering a sum of Rs.139.47 crore with an offer amount ofRs.535.44 crore.
Bank was able to register a recovery of Rs.531.88 crore during the year 2012-13 byissuing notices and taking possession/auctioning of properties under SARFAESI Act 2002.The efforts at branch level were supplemented by empanelling more enforcement agencies andapproved valuers.
Special intensive NPA recovery campaign named "Synd Vasuli Abhiyan -1213" washeld successfully from 4th July 2012 to 31st March, 2013 for maximizing recovery.
Bank has opened 6 more Asset Recovery Management Branches during the year at Ahmedabad,Ernakulam, Lucknow, Patna, Pune and Vishakapatnam to vigorously follow-up DRT cases and tomonitor and supervise suit filed cases effectively. Quick decision- making was ensured atall levels for OTS proposals.
Top NPAs from each Region were identified for giving focused attention in the beginningof the year itself and many accounts were successfully resolved before March 2013. Thenovel idea of formation of Stressed Tiny Asset Recovery team (START) at all Regionaloffice level for assisting the branches having high concentration of Special MonitoringAssets / Non Performing accounts of below Rs.10.00 lakh has made remarkable success inthis regard.
The recovery in NPAs amounted to Rs.1440.54 crore which includes Rs.940.14 crorerecovery towards principal and Rs.497.62 crore towards uncharged interest.
MID CORPORATE DEPARTMENT
In order to give focused attention to the banking requirements of Mid Corporates, aneed was felt by the Bank to create a separate vertical at CO/RO besides designatingidentified branches as Mid Corporate Branches. It was decided that borrowers (other thanthose under categories of NBFC, infrastructure, CRE, MFIs) enjoying credit limits of overRs.5.00 crore up to Rs.75.00 crore from our Bank be categorized as Mid Corporates anddepartment functions under a separate General Manager.
CREDIT APPROVAL COMMITTEE
Bank has constituted a Credit Approval Committee for considering credit proposals andloan compromise/write off upto Rs. 250 crore and where the total sacrifice does not exceedRs. 250 lakh, respectively. The committee at the Corporate Office level i.e. Tier ICommittee is functioning w.e.f. 03.03.2012.
Our Board of Directors in their meeting held on 05.05.2012 have approved constitutionof Tier II and Tier III Credit Approval Committees at Corporate Office/ T&IBD andRegional Level Credit Approval Committees. In order to make the process smooth, SecondLevel
Regional Credit Approval Committee (RLCAC-II) has also been formed.
NEW BUSINESS GROUP (NBG)
In a way to improve asset quality and to give customers quick response, New BusinessGroup was created to screen the new proposals for Rs.10 crore and above, from risk,exposure and pricing angle.
With the compression of spreads from the core activities of banking, the necessity isfelt in augmenting fee based income which acts as cushions for Banks income. Inorder to have a focused approach to augment fee based income, Bank has initiated steps forcreation of a separate vertical at Corporate Office and Regional Offices to acceleratemarketing efforts to augment fee based income.
Risk Management Architecture
The Board of Directors is primarily responsible for the risk management initiatives inthe Bank. Risk Management Committee (RMC) of the Board is the Apex Committee defininginstitutions risk appetite. The RMC of the Board is ably assisted by Credit RiskManagement Committee (CRMC) with respect to Credit Risk, Asset Liability ManagementCommittee (ALCO) with respect to Asset Liability Management & Liquidity Risk and,Operational Risk Management Committee (ORMC) with respect to Operational Risk.
Risk Management Department at Corporate Office oversees the overall implementation ofvarious risk management initiatives across the Bank, with the assistance of RiskManagement Cell (RMC) at Regional Offices.
Basel II Compliance
The Bank is Basel II norms compliant. The Capital to Risk Weighted Assets Ratio(CRAR)is computed as per Pillar I requirements adhering to RBI guidelines on new CapitalAdequacy framework by adopting Standardized Approach for Credit Risk, Basic IndicatorApproach for Operational Risk and Standardized Duration Approach for Market Risk.
The Bank has a well articulated Internal Capital Adequacy Assessment Process Policy(ICAAP) which is reviewed periodically, so as to be in line with the market realities,economic environment and regulatory requirement. The Capital Plan is reviewed quarterlybased on actual working results and to assess both Pillar I and Pillar II Risks.
The Bank has a Board approved Stress Testing Policy and Disclosure policy.
The Bank has a well documented policy and processes for management of Credit, Marketand Operational Risks which are periodically reviewed, so as to adapt to the changingbusiness and market environment.
The Bank is in the process of putting in place software based identification,measurement and mitigation of Market and Operation Risk by way of Integrated TreasuryManagement Solution and Operational Risk Management Solution, apart from a scientificFunds Transfer Pricing Mechanism.
Asset Liability Management
The Asset Liability Management Committee consists of members of the Top Management andregularly meets to manage Liquidity Risk, Interest Rate Risk, Gaps/Mis-match Risk, BasisRisk, Re-pricing Risk, Forex Risk and Equity Price Risk. It includes product pricing fordeposits as well as advances and the desired maturity profile of assets and liabilities.
With the Financial Services Authority, UK approving "Whole Firm Modification"approach for our London Branch under the liquidity regime of FSA, the Bank has put inplace a mechanism for effective monitoring of liquidity at London Branch and for the Bankas a whole.
The Bank has a well documented Contingency Liquidity Funding Plan for managing anycontingency. The Bank could manage its liquidity during the year efficiently.
Basel III Guidelines
Basel III guidelines have been introduced with a view to improve the bankingsectors ability to absorb shocks arising from financial and economic stress,whatever the source, supplementing the Risk-based capital requirement with a LeverageRatio which require the capital for all on and off balance sheet items and shifting focustowards Common Equity Capital.
During the current year, Bank has taken various measures constantly for improving theCommon Equity Tier 1 Capital by maximizing ploughing back of internal accruals which hasenabled the bank to improve its CET to 8.20 per cent.
Bank is in a comfortable position as per the Capital requirement ratios prescribed byRBI. Bank is taking all steps to improve the CET, CRAR and Leverage Ratio under Basel IIIincluding exploring the avenues for raising the Capital in a phased manner to meet theregulatory requirements of Capital and Leverage Ratios as on 01.01.2015, whilesimultaneously achieving the targeted growth in business.
Based on the Banks experience in lending to different sectors and keeping in viewthe dynamics of Economic Growth, Government Directives, National Priorities andSocio-Economic Obligations, thrust was given to Priority Sector lending especially lendingto agriculture during the year.
Bank has adopted various strategies during the year to achieve sustainable creditgrowth, improved asset quality, higher earnings and for maintaining well diversifiedcredit portfolio covering all sections of the society to ensure inclusive growth. The Bankhas continued its growth under Priority Sector lending with added thrust on consolidationof its position and focus on asset quality. The focus areas for credit were Agriculture,SMEs, Education, Housing, Micro Finance and other productive sectors of the economy.
For quick credit decision and disposal of large number of credit applications, the bankhas introduced the "Online Request" from prospective clients covering creditrequirements under various segments of Priority Sector. The prospective clients can accessthe Banks website and submit their request for loan through application formprescribed therein. System generated acknowledgement is provided immediately to theapplicants with unique reference number which they can use to track their applications.
Priority Sector Advances
Priority Sector Advances of the Bank reached a level of Rs.46437 crore as at March 2013constituting 44.62 per cent of ANBC against the mandatory level of 40 per cent. The Bankhas covered more than 25.22 lakh customers under Priority Sector Advances. Special carewas taken to ensure that the credit needs of SC/ST, Minorities, Weaker sections and Womenare fully met. Advances to Weaker Sections have reached a level of Rs.11918 crore forming11.45 per cent of ANBC, thereby surpassing the mandatory requirement of 10 per cent. Theadvances to women customers increased from Rs.7344.10 crore as at March 2012 to Rs.8245crore as at March 2013, forming 7.92 per cent of ANBC against the mandatory level of 5 percent. Similarly, advances to minorities increased from Rs.6609.08 crore as at March, 2012to Rs.7601 crore as at March, 2013, forming 16.37 per cent of Priority Sector Advancessurpassing the mandatory requirement of 15 per cent.
Agriculture and allied activities
Credit to Agricultural Sector reached a level of Rs.20156 crore forming 19.37 per centof ANBC as at March 2013 against the mandatory requirement of 18 per cent. The DirectAgriculture credit being Rs.16018 crore constituted 15.39 per cent of ANBC against themandatory requirement of 13.50 per cent. Bank has covered more than 16.78 lakh customersunder agricultural advances. The disbursement under Special Plan for Agricultural Creditduring the year amounted to Rs.10773 crore against the disbursement of Rs.10789 croreduring the corresponding period of last year. The Bank brought 127220 new farmers into itsfold during the year through Rural and Semi-Urban branches, registering an average of 75new farmers per Rural and Semi-Urban branch.
Syndicate Kisan Credit Card Scheme (SKCC)
As directed by RBI, Bank has revised the guidelines of Syndicate Kisan Credit Card(SKCC) Scheme and the revised scheme envisages the following.
Fixation of limit for five years.
Provision for issuance of Cheque book and ATM / Debit Cards (Rupay KisanCards) which will enable the farmers to effectively transact their operations in theirSKCC accounts.
The Bank has issued 1.80 lakh Syndicate Kisan Credit Cards during the year 2012-13. Thecumulative number of Syndicate Kisan Credit Cards issued so far, excluding the renewals,is 14.53 lakh with a total credit limit of Rs.9352 crore.
Under Syndicate Kisan Samrudhi Credit Card Scheme, the Bank has issued 131 cards with acredit limit of Rs.1.43 crore during the year, which provides hassle free investmentcredit in addition to need based short-term credit.
Government Sponsored Schemes
The Bank continued to participate in poverty alleviation and employment generationschemes sponsored by the Government in full scale. Special emphasis was laid on coverageof SC/ST, Women and Minority beneficiaries under these schemes. The total amount disbursedunder these schemes viz. PMEGP, SGSY and SJSRY is Rs.45.11 crore benefitting 3709 familiesduring the year. Special thrust was given to extend financial support to SC/ST/OBC andMinorities, while implementing the Govt. sponsored schemes.
Advances to SC/ST
The coverage of SC/ST beneficiaries under various schemes, especially under Govt.Sponsored Schemes is reviewed at regular intervals. Bank has initiated special efforts tocreate awareness about various schemes of the Bank among SC/STs to motivate them to availthe benefits under these schemes. Advances to SC/ST beneficiaries under Priority Sector,rose from Rs.2653.30 crore as at March 2012 to Rs.2946.22 crore as at March 2013,registering a growth of 11.04 per cent during the year 2012-13.
Advances to Minorities
Bank has taken various measures through Regional Offices and Lead District Offices forpopularizing amongst minority communities the various credit products available for theirbenefit. The advances to Minorities rose from Rs.6609.08 crore as at March 2012 to Rs.7601crore as at March 2013, registering a growth of 15 per cent during the year 2012-13. Theinformation pertaining to credit flow to Minority communities and status on implementationof Prime Ministers 15 point programme for Minorities and Sachar Committeerecommendations are placed in the Banks website. Special interest scheme wasintroduced by the Bank during 2010 for the benefits of Minority Community under PrioritySector lending, and the same is continued during 2012-13.
Credit linkage of Self Help Groups/Joint Liability Groups
26638 new Self Help Groups (SHGs) were credit linked with a credit support of Rs.709crore during the year 2012-13.
The outstanding advances to SHGs as at March 2013, was 92751 accounts with anoutstanding balance of Rs.1382.04 crore. During the year, the Bank secured the state levelaward from NABARD for highest average lending to SHGs among the Banks in Karnataka.
During 2012-13, 889 Joint Liability Groups (JLGs) were credit linked with a creditsupport of Rs.9.32 crore.
Progress in extending interest subvention benefit to farmers:
The Bank has extended crop production credit of Rs.5798 crore benefitting 7.14 lakhfarmers during 2012-13 under interest subvention scheme of the Govt. of India. The bankhas extended the interest subvention benefit @2% to the tune of Rs.54 crore and Rs.8 croreas additional incentive subvention @ 3% for timely payment during 2012-13 and making theeligible farmer derive credit at the effective rate of 4 per cent.
Harnessing Solar Energy
The Bank has been actively promoting solar energy application by implementing theschemes for financing Solar Water Heating Systems and Solar Lighting Systems.
During 2012-13, the Bank has financed Rs.1.30 crore for 233 units of Solar HomeLighting Systems and Rs.1.13 crore for 282 units of Solar Water Heating Systems.
Cumulatively so far, the Bank has financed Rs.21.24 crore for 10973 units of Solar HomeLighting Systems. The cumulative number of Solar Water Heating Systems financed by theBank is 35802 units amounting to Rs.101.68 crore up to March, 2013.
Regional Rural Banks
There are 5 Regional Rural Banks sponsored by our Bank, covering 32 districts in 5states, with a network of 1665 branches. RRBs sponsored by the Bank are in the top leagueamong various RRBs of the country, in respect of performance under key businessparameters. Total business of RRBs sponsored by the Bank stood at Rs.45,381 crore,registering an annual growth of 18.47 per cent during the year.
The total deposits and advances of the RRBs reached a level of Rs.23,890 crore andRs.21,491 crore, with an annual growth of 16 per cent and 21.33 per cent, respectively.The total Priority Sector Advances stood at Rs.18,513 crore constituting 86.14 per cent oftotal advances as at 31.03.2013. Agricultural advances reached a level of Rs.14,168 croreforming 65.93 per cent of total advances. In all, the RRBs have issued fresh 3.53 lakhKisan Credit Cards to farmers of FI villages, in addition to more than 12 Lakh KCCs toregular customers.
As per the suggestions of the working group constituted by RBI on Technology upgradation of RRBs, the RRBs sponsored by our bank have moved towards implementation ofCBS. System generated NPA for accounts are implemented in all RRBs sponsored by us.
Syndicate Rural Development Trust (SRDT)
Syndicate Rural Development Trust (SRDT) was established in the year 2000 to promoterural entrepreneurship and self employment among the rural poor, especially women. So far,the Bank has established 16 SyndRural Self Employment Training Institutes (Synd RSETIs) in5 States and 1 Union Territory for imparting training to rural poor. 5 SyndRSETIs havebeen graded A+ and 6 SyndRSETIs have been graded A by MoRD, Govt.of India. These institutes have conducted 438 training programmes during the year 2012-13,benefiting 14057 persons, of whom 9297 were women and 4508 were from SC / ST category.Total candidates trained since inception is 96134. The settlement rate is 69 per cent.
Rural Development and Self Employment Training Institute (RUDSETI)
Bank has co-sponsored 26 Rural Development and Self Employment Training Institutes(RUDSETIs) across the country. These institutes have trained 34779 candidates during theyear 2012-13. Out of these trained candidates 23660 were women and 12003 were from SC/STcategory. Total candidates trained since inception is 321265. The settlement rate is 73per cent.
Our RUDSETI model has been accepted by Govt. of India:
Ministry of Rural Development, as a role model to be replicated in each district of thecountry. A monitoring cell of National Academy of RUDSETIs has been established atBangalore for monitoring these institutes.
Financial Inclusion Resource Centres (FIRCs):
Our Bank has set up 21 Financial Inclusion Resource Centres (FIRCs) in 5 States. TheseFIRCs provide a permanent storehouse of information in the form of Exhibition on variousfacets of Banking, banking services and its products, RBI and its functions, CurrencyNotes etc.
Lead Bank Scheme:
The Bank has been assigned with lead bank responsibilities in 27 districts inclusive ofUT of Lakshadweep across the country. All the Lead District Offices of the Bank haveconducted the District Level Review Committee (DLRC) meetings and District ConsultativeCommittee (DCC) meetings regularly. The credit planning process was completed and DistrictCredit Plan (DCP) 2013-14 was launched as per time schedule envisaged by RBI. The Bank isalso the convener of State Level Bankers Committee (SLBC) in Karnataka and the UnionTerritory of Lakshadweep and satisfactorily discharged the responsibilities cast on it asthe convener of State Level Bankers Committee. The SLBC for Karnataka and UTLBC forLakshadweep are implementing the recommendations of the High Level Committee to review theLead Bank Scheme.
Financial Inclusion Initiatives
Our bank was allotted 1553 Villages having population of over 2000 for providingbanking services by 31st March 2012 under FIP. The Bank has extended banking services toall these villages by opening 334 branches and engaging 1219 BC Agents well before thestipulated date. In addition to this, the Bank was allotted 496 villages in the populationcategory of 1600-2000 for covering these villages with banking outlets before 31.03.2013and Bank has engaged 514 BCAs and opened 8 Branches / Satellite Offices, thusaccomplishing the target given.
Our Bank has 11.23 lakh No Frill Accounts in FI villages and has extended 2.13 lakhKCCs, 0.42 lakh GCCs and issued 3.90 lakh smart cards / mobile enabled accounts.
The Bank has established 936 USBs in the villages having population of over 2000 whichare provided with the services of BCAs. A designated Officer from the Base
Branch is visiting the USB on a pre-determined fixed day with laptop having VPNconnectivity to facilitate the customer to meet their banking needs.
All the 5 RRBs have opened banking outlets in the 1614 allotted FI villages with over2000 population by opening 171 branches, engaging 1413 BCs and also by covering 30villages through mobile vans. Besides this, 2346 villages have been allotted in thepopulation category of 1600- 2000 and RRBs have opened 32 branches and engaged 2138 BCAs.
The Bank has entered into an arrangement with M/s Birla Sunlife Insurance Company Ltdfor extending risk cover to FI customers at a very nominal premium of Rs.15/- p.a.(inclusive of service tax). Insurance cover is provided upto a limit of Rs. 25000/-covering Natural and accidental death besides inbuilt terminal illness benefit.
A number of initiatives have been taken by the Bank to implement FI in its true spirit.
Meaningful & Holistic Financial Inclusion (MHFI):
Bank is implementing need based developmental activities in selected villages as partof Corporate Social Responsibility to transform these villages into modelvillages. Activities undertaken include construction of SHG Work shed, Toilets inGovernment schools, Providing drinking water facility, Free health check up camps,providing e-learning aids, Training and capacity building, solar street lighting to thevillages, etc
Financial Literacy: Bank is promoting financial literacy through JJFLCCTrust which has opened 26 Financial Literacy Centres (FLC) and 21 Financial InclusionResource Centre (FIRC) in the Lead Districts of the Bank. These FLCs have conducted 7878Literacy Camps covering 1757 villages benefitting 409788 persons. Bank has also taken upvarious financial literacy activities, such as, Puppet and Magic shows, Brochures,Pamphlets have been brought out in vernacular languages, Graffiti displayed at prominentplaces in the villages, Yakshagana programmes organized with FI theme in select villages,brought out Comics books depicting the facilities and services available fromthe Bank and distributed the same to the villagers.
Direct Benefit Transfer: The Bank has taken a number of steps for smooth roll outof Direct Benefit Transfer in the identified 43 districts w.e.f. 01.01.2013. Sensitizationprogrammes for the implementing personnel have been organized. Specific Nodal Officer /Executives have been designated for each of the identified Districts for supervision andmonitoring. Assessment of the requirement of BCAs / ATMs /Branch etc., has been made andsteps are taken to meet the requiremens.
These initiatives will ensure passing on the Government benefits to the intendedbeneficiaries seamlessly. Under the DBT, which is being implemented in 43 districtsincluding our Lead District of Anantapur, 190610 accounts of households have been openedand Rs. 201.79 lakhs amount has been credited to their accounts under 26 schemes.
Out of the 43 identified districts for the pilot roll out of DBT scheme, our Bank hasLead Bank responsibility in Anantpur District.
Bank has taken steps to sensitize the Bank officials and the district administration onthe roles to be played by them and has closely coordinated with the DistrictAdministration in obtaining scheme-wise digitized beneficiaries list under various schemesand made available the same to the implementing Banks.
ADVANCES TO MICRO, SMALL & MEDIUM ENTERPRISE (MSME) SECTOR
Bank recognizes the important role of Micro, Small & Medium Enterprises (MSME) inthe economic development through their contribution to GDP, exports and employmentgeneration. In tune with the guidelines issued by the Government of India and RBI, theBank has taken steps for increased flow of credit to MSME sector. Total Advances to MSMEsector stood at Rs.16427.78 crore as at March 31, 2013. Advances to Micro and SmallEnterprises reached a level of Rs.15036.57 crore as at March 2013. The total outstandingadvances to Micro Enterprises constitute 65.10 per cent of advances to Micro and SmallEnterprises Sector against stipulated target of 60.00 per cent to be achieved by March2013.
In order to expand the credit to MSMEs and provide specialized service to the Sector,Bank has designated additional 21 no. of branches as MSME branches during the year 2012-13and has 69 number of MSME Branches as on March 2013.
Credit guarantee fund scheme for Micro and Small Enterprises (CGMSE)
Bank has also implemented Credit Guarantee Fund Trust for Small and Medium Enterprises(CGMSE) guidelines to extend Collateral free loans without third party guarantee to Microand Small Enterprises up to Rs.100.00 lakh.
As a proactive measure to promote collateral free lending to MSEs, Bank is bearing fullGuarantee fee and Annual service fee payable for loans upto Rs.5.00 lakh under allgovernment sponsored schemes and 50% of fee payable for all other loans up to Rs.50.00lakh. The Collateral free loans without third party guarantee granted to Micro and SmallEnterprises and covered under CGMSE scheme increased from 21402 as on March 2012 to 29975as on March 2013 covering additional 8573 accounts amounting to Rs.448.74 crore during theyear 2012-13.
IMPLEMENTATION OF OFFICIAL LANGUAGE
The Bank has been displaying a strong and abiding commitment to encourage the greateruse of Hindi in various forms, not only because it is the policy of the Government ofIndia but also as an ideal and powerful medium of inclusive banking. The Bank madenoteworthy progress under the implementation of Official Language and won many prizes atvarious levels during the year under review. As at 31st March 2013, around 99% ofemployees have obtained working knowledge of Hindi and the Bank has notified 1920branches/offices under Rule 10(4) of O. L. Rules, 1976. During the year under review, 54Functional Hindi Workshops were conducted for those staff members who are having workingknowledge in Hindi. In the sphere of using Information Technology in the OfficialLanguage, the Bank has furthered the use of Unicode package for Word Processing and alsomade bilingual (Hindi & English) provision in all the ATM screens of the Bank. TheBank has taken Corporate License for Script Magic software for usage of Hindiin CBS branches and Script Magic Software is loaded in 1577 branches. The Bank CorporateWebsite is made fully bilingual with Unicode base. A separate Web Page for hindi has beencreated in website. Quarterly Hindi Statement is placed under automated data flow andbilingual applications pertaining to products of the bank are loaded on the website.Official Language Implementation Committee meeting of the Dept. of Financial Services,Ministry of Finance, Govt. of India and Reserve Bank of India for Public Sector Banks/Financial Institutions were successfully hosted by the Bank on 19.5.2012. Committees areconstituted in all the branches of the bank to motivate and guide the employees towardseffective implementation of Official Language Policy of the Govt. of India.
EXPANSION OF BRANCH NETWORK
During the year the Bank has added 215 brick and mortar branches to its network and thetotal number of branches (including London Branch) stood at 2934 as on 31.3.2013.
The addition of branches includes 78 branches in under banked Districts and 53 branchesin minority concentration Districts.
Eight more branches have been opened in the North Eastern Part of India.
The domestic branch network consisted of 903 rural branches, 788 semi-urban branches,629 urban branches, 613 metro & port town branches. ATMs installed reached to 1306 asat 31.03.2013.
The bank has a customer base of 32 million as at March 31, 2013 as against 28 millionat the end of the previous fiscal, registering a growth of 14 per cent.
RE-ORGANIZATION OF REGIONS
As at the end of June 2012, the Bank had 38 regions controlling the functions of over2763 branches including satellite offices and ultra small branches.
Due to increase in business and number of branches under some specific regions, foreffective control and business development, further review of the jurisdictions of theregions was necessitated to open scope for increase in business of the Bank andaccordingly Bangalore, Delhi and Mumbai regions were bifurcated w.e.f.1.1.2013.
The bifurcation of Delhi, Mumbai and Bangalore Regional Offices into two regionsresulted in three additional regions taking the tally of regions to 41 at present.
Facade of Corporate Office Building
Bank has given a new look to the Corporate Office, Bangalore building by giving a facelift and enhancing the front elevation by providing structural glazing and aluminumcomposite panel (ACP). Further, the entry to the premises has been made wider to improvethe overall ambience of the prestigious premises housing the Corporate Office of the Bank.Bank has relocated the ATMs for customers easy access at ground level having largerspace, to accommodate three ATMs adding few more services.
Better Ambience of Bank Premises
Ambience Drive was observed during the month of April 2012 and July 2012 to improve theambience of the branch/office premises for providing a congenial atmosphere for businessdevelopment as also to make the customers comfortable while transacting their business inthe branch. During the ambience drive period, around 2732 branches/ offices have improvedthe ambience.
The Ambience Drive has contributed to a great extent in maintaining the premises tidyand clutter free. It has also made the staff aware about the advantages of working in acongenial set up besides improving the image of the Bank.
Bank is on the Core Banking Platform.
The Bank has operationalised 1306 ATMs as at 31.03.2013, spread across 729 centresthroughout the country.
Bank has issued Global Debit-cum-ATM cards through VISA and Master Card PaymentGateways with a Card-base of over 55.55 lakh for global access to ATMs and POS Terminals.
Internet banking facility was introduced during the year 2003. The User base now standsat 7.13 lakh as at 31st March 2013, with an increase of 0.78 lakh over March, 2012.Facilities such as National Electronic Funds Transfer (NEFT) for transfer of funds,Railway Ticket Reservation, Utility Bills payments, Payment of various types of Taxes, VATetc. are being extended through Internet Banking channel. The number of hits on theBanks Internet Banking webpage, increased from 45.79 lakh in March, 2012 to 54.82lakh in March 2013. Bank is in the process of implementing a new version of internetbanking which provides, among other things, RTGS through internet banking, corporatebanking modules, access by any browser etc.
In order to keep the customer instantly informed of the transactions that went throughhis/her account, as also to provide information of his/her account through message basedbanking, Bank has introduced SMS Banking. The number of customers who have availed thisfacility has grown from 383211 as at 31st March, 2012 to 628750 as at 31st March 2013.
The Bank has implemented Mobile Banking Services during the last year 2011-2012,whereby customers can conduct their banking transactions through mobile phones. The numberof customers who have availed of Mobile Banking facility as on 31.03.2013 stands at 9736.
Centralised Payments System of RBI RTGS/NEFT:
The Bank is offering NEFT and RTGS, the Fund Transfer facility among the Banks, underthe RBIs Centralised Payments System and upto Rs.1 lakh remittance it is free ofcharge to customers.
Automated Data Flow (ADF) of Returns from Banks to RBI:
Automated Data Flow (ADF) solution has been procured. Implementation Process is underprogress for Automation of Reports from their Source Systems to MIS Server of RBI in thespecified format.
Cheque Truncation System (CTS):
Further to CTS implemented in NCR, Delhi, Grid-based CTS Clearing has been implementedat Chennai. Clearing process takes place centrally at Chennai, for all the cities linkedto the Grid. Centres such as Chandigarh, Kolkata, Bangalore, Coimbatore, Hyderabad,Ernakulam and Madurai are linked to Chennai CTS-Grid. The remaining centres of Karnataka,Kerala, Tamil Nadu, Andhra Pradesh, West Bengal and Orissa States are being linked toSouthern CTS-Grid at Chennai. Implementation of Western CTS- Grid at Mumbai through CommonService Bureau is initiated.
Account Opening with Aadhaar UID:
New customers, enrolled for Aadhaar number in UIDAI, can open account with the Bankthrough Outbound-New Account upload Interface. Existing customers, enrolled for Aadhaarnumber in UIDAI, can update the Aadhaar number in their existing accounts with the Bank.
CUSTOMER-CENTRIC IT INITIATIVES
i. Business Process Management Centre (BPMC)
(Back Office function):
As a measure of customer convenience and to relieve the branches from handling routinejobs, a Back Office is established at Bangalore for local Branches. Accounts opening(Activation), issues of Passbook, Internet Banking facility, Issue of Debit Card are beinghandled by BPMC.
As part of e-Lounge facility, it is proposed to provide Self Service Customer Kioskswith facilities for Passbook Printing, Cash counting/sorting, Cheque Deposit and internetbanking, besides ATM at few major centres shortly.
iii. Payment of VAT:
Facility for e-payment of VAT, NVAT & CST of Commercial Tax Dept. through InternetBanking channel of the Bank implemented for Delhi in current year.
iv. Payment towards PM Relief Fund:
Facility for e-payment towards Prime Ministers Relief Fund through InternetBanking channel implemented. South Block, Delhi is the Nodal Branch.
Prevention of Phishing Attacks:
Bank has placed continuous scrolling in the Home Page of Banks Websitehighlighting the message for customers to be alert to Phishing activity and requestingcustomers not to disclose Password or other details through Net as the Bank never asks forsuch details.
Bank has outsourced the 24X7 monitoring & management of the Security Devices andthe security events through the Managed Security Service (MSS) Provider. BanksWebsite is also being monitored 24X7 basis by the same MSS Provider.
Data Encryption Mechanism:
Data Encryption Mechanism implemented for CBS data movement between Branches and DC/DRSite to improve security in the network and as well as complying with Regulatoryguidelines. Bandwidth of Branches using MLLN Leased Lines is upgraded to 128 Kbps acrossIndia.
Enterprise Data Warehousing and Business Intelligence (EDWBI) Project:
The EDWBI Solution envisages establishing a comprehensive single database with thecapability for Centralised MIS Database. As of now, the Project is in PhaseII. Morethan 200 Reports including Analytical Reports have been provided from the system. Furtherto implementation of Anti-money Laundering Solution (AML) and Operational Risk ManagementSolution (ORMS), it is proposed to implement Customer Relations Management (CRM) underPhase-III during the current year. Off-Site surveillance reports are provided from DataWarehouse.
IMPLEMENTATION OF GREEN INITIATIVES
a) Bank has taken steps towards implementation of "Green Initiative inCorporate Governance" by allowing paperless compliances through electronic mode. Bankhas been sending soft copies of Annual Report to those members / investors who haveregistered their email IDs with M/s. Karvy Computershare (P) Ltd., Registrar and ShareTransfer Agents of the Bank. Bank is actively encouraging transactions through alternativechannel to reduce the usage of paper based payment instruments.
b) Discussions/proceedings of several important meetings are held where the requiredinformation/data is kept in the form of soft copies as far as possible.
c) Bank has also initiated steps to provide e-lounge facilities i.e. conduct of bankingtransactions through e-mode, thus paving way for a greater role towards green initiatives.
d) Bank is using corporate e-mail facility and intra-net based IP messaging system andthus reducing dependency on paper based communication.
e) Various periodical and ad hoc reports required by the users across the Bank arebeing provided in an electronic form obviating the need for paper based reports.
CURRENCY MANAGEMENT AND RBI CLEAN NOTE POLICY
As compliance to the RBIs Clean Note Policy all the Currency Chests and Brancheswhere cash inflow is heavy, are provided with Heavy Duty Note Sorting Machines/ Desk TopNote Sorting Machines.
32 Cash Processing Centres are established to implement the Clean Note Policy of RBI.Wherever Currency Chests are not there, Branches are linked to Currency Chests of otherBanks under RBI Linkage Scheme for better Cash Management.
Migration towards CTS 2010 Standard Cheques
Our Bank had started printing and supply of CTS 2010 standard cheques as per theguidance note of National Payment Corporation of India (NPCI) to all the Branches, forissuing to the customers, since January 2011. Steps have been initiated to ensure that DDsare also CTS enabled. All Branches are supplied with CTS standard cheques/ DDs. With this,our Bank will be ready for smooth transition/ migration to CTS 2010 Standard clearingsystem w.e.f. 01.07.2013.
COMMITTEES VISITED DURING THE YEAR
Parliamentary Standing Committee on Industry between 5th to 6thNovember 2012 to assess the implementation of Prime Ministers Employment GenerationProgramme (PMEGP) in the State.
Parliamentary Standing Committee on welfare of other Backward Classes between 6thto 11th February 2013 to discuss all matters pertaining to the Welfare of theOther Backward Classes which fall within the purview of Union government including theadministrations of Union Territories.
Parliamentary Standing Committee on Commerce between 1st & 2nd February, 2013, toexamine the Industrial Policy in the Changing Global Scenario.
HUMAN RESOURCE DEVELOPMENT
The Human Capital of the Bank as on 31.03.2013 was 26606, comprising 10394 Officers,10360 Clerks and 5852 Sub Staff.
The H R policy of the bank has a strong focus on succession planning and is dovetailedto successfully address competitive business challenges for achieving the corporateobjectives.
The Bank had made direct recruitments for inducting skilled manpower in specializedareas like Finance, Marketing, Security, Law and Official Language.
The Bank has recruited 4 Chief Managers (Marketing), 54 Chartered Accountants, 2Security Officers, 9 Law Officers, 6 Official Language Officers, 435 Probationary Officersand 893 Probationary Clerks during the period 2012-13.
The promotion policy has also been fine-tuned to reward outstanding performers and isin line with the succession planning. During the year 2012-13, Bank had initiatedpromotion process to fill up the identified vacancies in various scales/grades upto31.03.2013 and 1179 promotions were made during the year 2012-13 in various scales.
The Bank has been extending applicable reservations/ concessions to SC/ST/OBC/PWDemployees in recruitment/ promotions strictly as per Government guidelines.
A separate SC/ST cell and OBC Cell are functioning at Head Office to redress thegrievances of SC/ST/OBC employees working in the Bank and are currently headed by GeneralManagers designated as Chief Liaison Officer. Quarterly meetings with the representativesof the SC/ST Welfare Associations were held in compliance to Govt. guidelines to redresstheir grievances. The Chief Liaison Officer also had fruitful interactions with themembers /officials of the National Commission for SC/ST during their visits to our HeadOffice & Regional Offices.
During the year, 678 SC/ST Clerical employees and 778 SC/ST Officer employees have beenimparted Pre- Promotion training to prepare them for promotion to the next respectivecadres. In all 3347 SC/ST employees have been given in-house training at SIBM, Manipal andother Staff Training Centres.
TRAINING AND DEVELOPMENT
Syndicate Institute of Bank Management (SIBM), Manipal at the apex level and the sevenTraining Centres at Bangalore, Chennai, Delhi, Ernakulam, Hyderabad, Kolkata & Mumbaicater to the training needs of the Bank by conducting various types of training programmesfor different cadres of employees.
During the year 2012-13, 278 programmes covering 5180 officers and 227 programmescovering 3946 workmen employees were conducted by the Training System. Thus a total of9126 employees were trained through 505 programmes. In addition, 87 executives and 221officers were deputed to external training programmes conducted by training institutes ofrepute in India. Further, 6 executives and 2 officers were deputed to overseas trainingprogrammes.
During the year 1791 officers & 1556 clerks/ sub staff belonging to SC/ST categorywere imparted training. Further, out of the above, as per the Government of Indiaguidelines, pre-promotion training was imparted to 1456 SC/ST Officers & Clerks.
CORPORATE SOCIAL RESPONSIBILITY
Being a responsible social citizen, Bank recognizes its responsibility towards societyand actively involved itself in various CSR (Corporate Social Responsibility) activitieswhich aimed at economic transformation, women development and rural upliSome of theBanks initiatives in the field of Corporate Social Responsibility taken during theyear include assisting integrated tribal development programme of various districts;rehabilitation of children with mental retardation, autism, cerebral palsy & multipledisabilities.
The Bank has Board approved policies on deposits, customer grievance redressal, chequecollection, compensation payable on account of various deficiencies in service etc. Theseare well displayed on the Banks website for the convenience of the customers,besides displaying at each branches of the Bank.
The Grievances Redressal Policy of the Bank is meant for minimizing instances ofcustomer complaints and grievances through proper service delivery and review mechanismand to ensure prompt redressal of customer complaints and grievances.
Customer Service Initiatives taken during the year:
a) With a view to improving the Customer Service in the branches and sensitize thestaff, policy on Customer Service has been adopted based on the followingcardinal principles viz., Courtesy, Communication, Efficiency & timeliness, GeneralManagement of the branches, knowledge, etc.
b) The Bank is a Member of Banking Codes and Standards Board of India (BCSBI) and hasvoluntarily adopted the Code of Banks Commitment to Customers and Code to MSMECustomers.
c) With a view to educate customers about BCSBI Code provisions, Customer Meet has beenorganized in association with BCSBI officials at Bangalore on 19.10.2012, and at Mumbai on23.01.2013 and 24.01.2013.
d) Out of 141 accepted recommendations of Damodaran Committee for implementation, Bankhas implemented 91 recommendations and remaining recommendations are under various stagesof implementation.
e) Branch Level Customer Service Committees shall discuss matters relating to CustomerService, with the participation of customers and senior citizen members.
The Customer Service related matters are also deliberated during quarterly meeting ofCustomer Service Committee of the Board and Meeting of Board of Directors at half yearlyintervals.
f) Uniform Customer Meet was organized in all branches on 23.05.2012 to ascertain thelevel of customer service / feedback of customers on Customer Service. Executives fromHO/CO/ RO visited and interacted with large number of customers and obtained feedback.
g) All customers complaints / suggestions are quickly responded/resolved.
KNOW YOUR CUSTOMER / ANTI MONEY LAUNDERING
The Bank has a Board approved Policy on Know Your Customer (KYC) norms and Anti MoneyLaundering (AML) measures. The Policy clearly lays down the customer identificationprocedures to be adopted for proper identification of customers while opening accounts.
In order to have better compliance of KYC / AML norms, Bank has implemented KYCsolution in the CBS system to enable opening of new accounts only with 100 per cent KYCcompliance. So also, the CBS system is planned to provide for an integrated checking ofTerrorist individuals / entities so that necessary checking is done before opening ofaccounts.
CASH MANAGEMENT SERVICES
The Bank provides an efficient and tailor-made Web based state of the art technologybased CMS solution to suit the corporate customer requirements. The Bank is offeringPayment services to the Customers under the Cash Management Services.
Application Supported by Blocked Amount (ASBA)
ASBA is a simple, safe and smart way for applying in public issues floated by theCompanies. ASBA can be used for Initial and Follow-on Public Offers (IPO & FPO),Rights Issues, Debt Issues and Mutual Funds.
The Bank is one of the Self Certified SyndicateBanks (SCSBs) as perguidelines issued by SEBI, for handling ASBA applications received from customers. Thisfacility is offered to the customers through all branches of the Bank.
New Pension System (NPS)
The Bank has been registered with the Pension Fund Regulatory and Development Authority(PFRDA) as Point of Presence (PoP) for offering the various services under the New PensionSystem, a scheme introduced by the Government of India, for providing old age incomesecurity. The Bank has already registered 2037 branches, under the scope of the NPS asPoint of Presence - Service Provider (PoP-SP). The Bank has also been activelyparticipating in offering services under the Swavalamban Yojana Scheme, a component of theNPS, which has been introduced by the government for persons working in the un-organizedsector.
The Bank has also been appointed as Aggregator by PFRDA for NPS-Lite scheme.
1. The Bank is holding permanent registration as Depository Participant, granted bySEBI.
2. Bank is a Depository Participant of CDSL.
3. This facility enables customers to keep their shares/ Capital Market Securities inelectronic form.
THREE-IN-ONE ACCOUNT FOR EQUITY TRADING
1. Trading in stocks online has gained immense popularity.
To facilitate our customers, the Bank is offering Three-in-One account facility underthe brand name Synd e-trade.
2. The facility comprises the CASA account, Demat account and Trading account enablingour customers to trade in shares online through Straight through process (without anymanual intervention).
Bank is distributing General Insurance products as Corporate Agent of UnitedIndia Insurance Co. including SyndArogya a Group Mediclaim Insurance Cum Personal Accidentpolicy for SyndicateBank Account Holders.
Bank continues to offer insurance cover for Housing & Education LoanCustomers under tailor-made Uni Home Care & Uni Study care policies from United IndiaInsurance Co Ltd.
Under "SyndSuraksha" group insurance policy taken from LIC ofIndia, Bank offers Life Insurance cover, on optional basis, of Rs.1.00 lakh and accidentaldeath cover of Rs.2.00 lakh, at nominal premium.
Bank offers Life Insurance cover to Housing Loan & Education Loan borrowerson optional basis, to cover their liability through group policies obtained from InsuranceCompanies at competitive low cost.
CARD BUSINESS Credit Card Product:
The Bank in association with VISA International, offers Gold and Classic Credit Cards,which can be used at ATMs, Point-of-Sale terminals, Internet, IVR and for Mail Orders.
The cards are valid globally and can be used throughout the world.
Debit Card Product:
1. The Bank has been issuing Global Debit-cum-ATM cards in association with VISA andMaster (Maestro).
2. During the year the Bank has launched two more variants catering to High Net Worthcustomers and
Agriculturists. These variants are as under:-a) International Gold Debit Cards, inassociation with VISA International, for higher transaction limits both at ATMs andMerchant Establishments.
b) Rupay Kisan Cards, in association with National Payment Corporation of India (NPCI).These Cards are meant for domestic use, which can presently be operated in ATMs only.
PRODUCT DEVELOPMENT AND SERVICES
Product Development is a continuous and an ongoing process which plays a critical rolein shaping future growth potential of the Bank. The Bank offers a wide array of productsand services for all segment of the society and always endeavored to reposition andreengineer its products & services as per the changing customer choice andpreferences. During the year the following new products have been introduced by the Bank:
1. SyndNavaratna Savings Bank Account:
A unique Savings Bank account specially designed for the salaried class employed withMNCs/Blue chip companies/reputed private organisations / Government and semi-governmentundertakings has been launched by the Bank offering nine facilities viz. zero balancefacility, instant global debit card, Add-on debit card to joint account holder, SMSbanking facility, funds transfer facility through RTGS/NEFT up to Rs.1.00 lakh, Internetand mobile banking facility, demand draft and pay orders issued without charges (6instances), payable AT PAR cheque facility and temporary overdraft facility.
2. Syndkisan Tatkal :
A special scheme to provide instant medium term credit facility up to a maximum ofRs.50000/- to farmers holding SKCC with satisfactory past record, to meet the emergencycredit needs to tide over the temporary difficulties in Agriculture, Domestic and Socialfronts.
3. SyndicateBank RuPay Kisan Card:
SyndicateBank in association with National Payment Corporation of India (NPCI) hadissued SyndicateBank RuPay Kisan Card to farmers who have availed Kisan credit cardfacility from the bank. The card is enabled for ATM cash withdrawal. The RuPay Kisan Cardwill give further thrust to the financial inclusion initiatives of the Bank by offeringpayment solutions through alternate delivery channels.
4. SyndicateBank-VISA international Gold Debit
Card: Bank has also launched SyndicateBank VISA International Gold DebitCard. These are personalized cards which provide customers with higher dailytransactions limits for Cash withdrawal of Rs.25,000/-and Rs.50,000/- limit for use atMerchant establishments and Online Shopping.
STRATEGIC ALLIANCE & JOINT VENTURES
1. Mutual Fund Distribution Venture:
Bank offers a wide range of Mutual Fund Products as a value added service to itsCustomers, through the MF distribution arrangement with Nine leading Asset ManagementCompanies Viz., 1) Reliance Asset Management Company Ltd., 2) Birla Sun Life AssetManagement Company ltd., 3) IDBI Asset Management Ltd., 4) HDFC Asset Management CompanyLtd, 5) UTI Asset Management Company Ltd., 6) Franklin Templeton Asset Management CompanyLtd.,7) SBI Funds Management Private Limited, 8) ICICI Prudential Asset Management CompanyLtd., 9) DSP BlackRock Investment Managers Pvt. Ltd., thus providing a comprehensiveinvestment option to our customers broad basing our offerings.
2. Tie-up arrangement with M/s PIAGGIO Vehicles Pvt
Ltd. (PVPL): SyndicateBank has entered into a Tie-up arrangement with M/s PIAGGIOVehicles Pvt Ltd (PVPL) in Bangalore, on 5th Dec. 2012 forging thereby strategicpartnership for promotion of the Banks financing for purchase of vehicle forcommercial use.
3. MOUs signed and renewed with reputed Commercial Vehicle Manufacturers:
Bank has also renewed MOUs signed with reputed Commercial Vehicle Manufacturers viz.Tata Motors, TVS Motors, Bajaj Auto Ltd and Force Motors for financing commercial vehiclesunder Micro and Small Enterprises.
4. Tie-up arrangement with M/s Maruti Suzuki India Ltd. (MSIL) Bank hasrenewed MOU with M/s Maruti Suzuki India Ltd.,for financing cars under SyndVahan Scheme asa preferred financing partner with the company.
MULTI BENEFIT CASA CAMPAIGN
Bank has launched a special current account savings account (CASA) campaign withmulti-benefits from July 2012 to September 2012 across its branches in the country. Thecampaign was aimed to bring more new customers, both individuals and business enterprisesinto the Banks fold and also to augment CASA deposit of the bank. The specialattraction of this campaign was offer of multi-benefits (comprehensive package) to theCurrent Account & Savings Account customers. These included instant Global Debit Cards(VISA/Maestro), SyndSuraksha (life insurance cover for SB accounts against nominal premiumpayment), Mobile Banking, SMS banking, Internet Banking, NEFT/RTGS facility, Any BranchBanking Flexi Account (sweep in sweep out) option, POS terminal to Retail outlets, OnlineVAT/Bill Payments.
The Bank raised USD 500 Million on 12th October 2012 under MTN Programme for fundingrequirements of London Branch at very competitive rates. The MTN programme organized bythe Bank was a success with the issue getting oversubscribed 5 times with strongparticipation.
Compliance Policy approved by the Board of Directors of the Bank articulates that thecompliance function is an integral part of governance along with the internal control andrisk management process. The Compliance Department headed by a Chief Compliance Officer(in the rank of General Manager) oversees the compliance functions in the Bank and assiststhe top management in managing the Compliance Risk. Continuing with the Bankscommitment to high compliance standards, compliance function is reviewed regularly formaking improvements. The compliance policy is reviewed every year and amendments, ifnecessary are carried out based on the experience gained and utility aspect.
RIGHT TO INFORMATION ACT, 2005
The Bank has implemented the relevant provisions of the Act with effect from October2005. The information related to the Bank as stipulated under the Act is displayed on theBanks website.
The Appellate Authorities for the Bank under the Act and the Public InformationOfficers (PIOs) and Alternate Public Information Officers (APIOs) at various levels havebeen designated. The Bank has clearly spelt out the roles and responsibilities atdifferent levels under the Act.
The Bank has constituted a Monitoring Committee at Apex level to oversee theimplementation of the RTI Act. During the year, the Committee has reviewed theeffectiveness of implementation of the RTI Act in the Bank.
During the year, the Bank has disposed of all the applications and all appealsreceived, within the stipulated time. Since the inception of the Act, CIC has not imposedany penalty so far on PIOs of the Bank.
INSPECTION & AUDIT
The Bank is having well defined, Board approved policies on Risk Based Internal Audit,Concurrent Audit, Information System Audit, AML/ KYC Compliance and Off-site Monitoring,which are being updated on annual basis. During this financial year, Department hasconducted 13328 audits (as on 31.03.2013) viz., RBIA, Credit Audit, Concurrent Audit,Currency Chest Audit, Service Branch Audit, Compliance Audit and Management Audit of allControlling Offices and Functional Departments.
INTERNAL CONTROL AND VIGILANCE
Vigilance administration is a crucial part of the Management function, aimed atimproving the efficiency and ethical health of the organization.
Stress is laid on preventive vigilance by initiating preventive vigilance studies atbranches, conducting Preventive Vigilance Training Programmes at SIBM & other TrainingCentres of the Bank and constitution of Preventive Vigilance Committees at the brancheswith a view to ensure strict adherence to systems and procedures. During the year underreview, Preventive Vigilance Exercises were conducted in 194 Branches and SurpriseVerification of goods hypothecated to Bank was conducted in 261 accounts covering 130branches. Vigilance Awareness Week was observed throughout the Bank from 29.10.2012 to03.11.2012 in a befitting manner as part of Participative Vigilance measures.
Investigations are conducted expeditiously and disciplinary proceedings are ensuredwherever frauds or irregularities with a vigilance angle are involved.
The Security Department of the Bank has been making constant efforts to provideeffective, efficient and progressively better security solutions to all the branches, ATMsand offices.
The guidelines on security matters are disseminated to Regional Offices forimplementation through Annual Security Action Plan. All RBIs guidelines andinstructions received during the year for Security of Branches, ATMs, Currency Chests andAdministrative Offices have been implemented and complied with.
As per Guidelines, Security Audit has been conducted in respect of all Currency Chests.All Currency Chests are provided with security and surveillance equipment like CCTVs,Automatic Time Lock, Biometric Access Control, Hotlines, Passive Infra Red Devices,Automatic Fire Detection & Alarm System and Auto dialers. All the Cash Vans of theBank have been provided with Global Positioning Radio System (GPRS) to facilitate realtime tracking of remittance in transit.
To augment the security arrangements at branches, CCTV has been installed in 1667identified vulnerable branches.
1. Ministry of Rural Development (MoRD), Govt of India conferred award for bestRural Self Employment Training Institutes (RSETIs) sponsored by the Bank:
Shri Jairam Ramesh, Honble Minister for Rural Development, Govt of India haspresented the awards to Our Manipal and Kumta RSETIs which has been adjudged as theCountrys best and Second Best RSETIs as on 31.03.2012 during the first national meetof RSETI stake holders held at Vigyan Bhavan, New Delhi on 28.07.2012.
2. Best Banker Award by Sunday Standard:
The Bank has been conferred Best Banker award by Sunday Standard amongst large categoryBanks based on field level survey of implementation of financial inclusion.
3. SKOCH Foundations Digital Inclusion Awards 2012:
Gold award has been conferred to SyndicateBank at SKOCH Foundations DigitalInclusion Awards 2012, for Business Continuity Plan (BCP) and IT Disaster Recovery (DR)Project, the highest Independent honour in India, at a colourful function on 18/09/2012 atNew Delhi. A Certificate of Merit was also awarded to SyndicateBank for BusinessContinuity Plan (BCP) & IT Disaster Recovery (DR) Project for being rated amongst theTOP 100 ICT projects in India during 2012.
4. SKOCH Foundations Financial Inclusion Awards:
The Bank was also awarded Certificate of Merit and trophy for themeritorious performance under Financial Inclusion during 2012 by M/s Skoch Group at NewDelhi on 05.01.2013. The Award is presented by Dr. C Rangarajan, former Governor, RBI andpresently Chairman, PMs Economic Advisory Council.
SYNDBANK SERVICES LTD
SyndBank Services Limited (SBSL) was incorporated under the Companies Act 1956 on25.01.2006, as a wholly owned subsidiary of SyndicateBank, with an Authorized Capital ofRs.10 crore and paid up capital of Rs.25 lakh to extend back-office services toSyndicateBank, its clients and other financial Institutions. The subsidiary is a profitmaking company.
CHANGES IN THE BOARD:
i. Shri Anand K.Pandit elected as Shareholder Director of the Bank w.e.f. 18.07.2012.
ii. Ms. Jasleenn Suri elected as Shareholder Director of the Bank w.e.f. 18.07.2012.
iii. Shri C.R.Naseer Ahamed was appointed as Director of the Bank w.e.f. 01.02.2013.
iv. Shri A R Ngappan and Shri Bhupinder Singh Suri, both, Shareholder Directors retiredon 26.06.2012. The Board of Directors places on record their sincere appreciation for thevaluable contribution made by the outgoing Directors.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors, in preparation of the annual accounts for the year ended March 31, 2013,confirm the following:
That the applicable accounting standards have been followed in the preparation ofannual accounts along with proper explanation relating to making departures; That theaccounting policies, framed in accordance with the guidelines of the Reserve Bank ofIndia, were consistently applied; That reasonable and prudent judgments and estimates weremade so as to give a true and fair view of the state of affairs of the Bank as at the endof financial year and of the profit or loss of the Bank for the year ended March 31, 2013;That proper and sufficient care was taken for maintenance of adequate accounting recordsin accordance with the provision of applicable laws governing banks in India forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities; That the annual accounts have been prepared on a going concernbasis.
The Board wishes to place on record its sincere appreciation to the public, valuablecustomers, shareholders and staff members for their continued support and patronage. TheBoard is also indebted to the Ministry of Finance, Government of India; RBI; SEBI andother regulatory authorities, various Financial Institutions, Banks and Correspondents inIndia and abroad for their unflinching and valuable support and guidance from time totime. For and on behalf of the Board of Directors.
|Place : Manipal ||(M G Sanghvi) |
|Date : 18.05.2013 ||Chairman & Managing Director |