United Bank of India


BSE: 533171 | NSE: UNITEDBNK | ISIN: INE695A01019 
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Director's Report

DIRECTORS' REPORT

The Board of Directors have pleasure in presenting the 64th Annual Report of the Bankalong with the Audited Balance Sheet, Profit and Loss Account and the report on Businessand Operations for the year ended March 31, 2014 (FY – 2013-14).

MANAGEMENT DISCUSSION AND ANALYSIS

I. ECONOMIC ENVIRONMENT

Global Economy:The Global economy has broadly strengthened and is expected toimprove further in 2014–15, with much of the impetus coming from advanced economies.Inflation in these economies, however, has underperformed projections, reflectingstill-large output gaps and recent commodity price declines. Activity in many emergingmarket economies has disappointed in a less favorable external financial environment,although they continue to contribute more than two-thirds of global growth.

Indian Economy:

India's economic growth rate for the FY 2013-14 is estimated at 4.9 per cent whichshows better performance than the previous year, mainly due to improved performance in theagriculture and allied sectors.

Gross Domestic Product:

The Central Statistics Office (CSO), Ministry of Statistics and ProgrammeImplementation had estimated the growth of GDP at 4.9 per cent for 2013-14 as compared tothe growth rate of 4.5 per cent in 2012-13.

The highlights of the performance of GDP in the third quarter Q3 (October-December) of2013-14 released by Ministry have been summarized below:

The GDP for Q3 of 2013-14 was estimated at Rs.14.78 lakh crore, as against Rs.14.12lakh crore in Q3 of 2012-13, showing a growth rate of 4.7 per cent over the correspondingquarter of last year.

The economic activities which registered significant growth in Q3 of 2013-14 over Q3 of2012-13 were, 'finance, insurance, real estate and business services' at 12.5 per cent,'community, social & personal services' at 7.0 per cent, 'electricity, gas & watersupply' at 5.0 per cent, 'trade, hotels, transport and communication' at 4.3 per cent and'agriculture, forestry & fishing' at 3.6 per cent.

Sectoral growth of Credit:

As per the sectoral deployment of credit data released by the RBI, incremental non-foodcredit witnessed significant growth in 2013-14. The rise in incremental non-food credit in2013-14 was particularly significant during August and September 2013. Liquiditytightening measures of RBI in July 2013 made the market borrowing via commercial paper(CPs) and other debt instruments expensive. Thus, corporates avoided raising money viadebt instruments and moved towards bank financing for their working capital needs. Bankcreditrose sharply by 20.1 per cent compared to preceding year and reached Rs.6.96trillion. This was the first instance such a rise was noticed in the incremental non-foodcredit in last three years.

Owing to the healthy rise in incremental non-food credit, growth in outstandingnon-food credit recorded a growth of 14.3 per cent in 2013-14 from 13.5 per cent in thepreceding year. However, it remained lower than the levels that were seen during the2008-12 period. Non-food credit had risen by 18.1 per cent per annum between 2008-09 and2011-12.

On a year-on-year (y-o-y) basis, non-food bank credit increased by 14.3 per cent inMarch 2014 as compared with the increase of 13.5 per cent in March 2013.

* Credit to agriculture and allied activities increased by 13.5 per cent in the yearending March 2014 as compared with the increase of 7.9 per cent in March 2013.

* Credit to industry increased by 13.1 per cent during the year 2013-14 as compared to15.1 per cent during 2012-13. Deceleration in credit growth was observed in respect ofmining and quarrying, textiles, wood and wood products, petroleum and coal product,chemical and chemical products, glass and glassware, cement and cement products, basicmetals, engineering, gems and jewellery and infrastructure.

* Credit to the services sector increased by 16.1 per cent in March 2014 as compared tothe increase of 12.6 per cent recorded in March 2013.

* Credit to Non Banking Financial Companies (NBFCs) increased by 13.2 per cent in March2014 as compared with the increase of 11.6 per cent in March 2013.

* Personal loans increased by 15.5 per cent in March 2014 as compared to theincrease of 14.7 per cent in March 2013.

Inflation:

Reversing its downward trend, the annual rate of inflation as measured by the WholesalePrice Index (WPI) rose by 5.7% in the month of March 2014. Mirroring the trend in WPI, CPIfor the month of March '14 rose by 8.31% compared with 8.1% in February '14.

Primary articles basket witnessed a marginal increase in inflation from 7.4% inMarch '13 to 7.7% in March '14. Inflation in food articles rose to 9.9% in March '14compared with 8.6% inflation in March '13. However, the rise in food inflation was offsetto a substantial extent by the fall in inflation in the non food articles from 9.3%in March '13 to 4.6% in March '14.

Fuel and power inflation which had been on the higher end over the last six monthsrose to 11.2% in March '14 compared to 7.8% in the corresponding month of the previousyear. This was the highest inflation rate for the industry in the last six months.

Inflation in manufactured products had dropped to 3.2% in March '14 from 4.3% inMarch '13. This was reflective of the fact that the manufacturing sector has had a slackrun in FY14.

Average Inflation FY 2013-14: Inspite of the high WPI inflation which persisted forthe larger part of FY14, the average WPI inflation for FY14 stood much lower at 5.92% asopposed to the 7.36% of inflation in FY13. Average inflation in primary articles remainedunchanged at 9.9% in FY14 vis--vis 9.8% in FY13. Inflation in food articles escalated to12.8% in FY14 compared with 9.9% in FY13 and inflation in non food articles hasdecelerated to 5.6% from 10.6% it averaged in FY13. Fuel and power inflation on averagehad fallen only marginally to 10.1% from 10.4%. Average inflation in manufactured productsreduced sharply from 5.4% in FY13 to 2.9% in FY14. This further reiterated the apparentslowdown of the manufacturing sector in the country.

External Sector:

A large trade deficit made the Indian economy vulnerable to external sector shocks inthe first half of the FY 2013-14 and saw the Indian currency touching a record low ofalmost 69 per dollar in August. However, a pickup in exports and curbs on gold importshelped India to rein in its current account deficit in the last two quarters of 2013-14.

The trade deficit reached a five-month low in March, totaling USD 10.5 billion, whichwas just below the USD 10.4 billion shortfall recorded in the same month last year. In the12 months up to March, the trade deficit totaled USD 138.5 billion, which marked animprovement over the USD 189.5 billion shortfall seen in the same period of lastyear.March's result reflected a contraction in both imports and exports. Overseas salescontracted 3.2% over the same month last year, which was up from the 3.7% contractionrecorded in February. Imports decreased 2.1% in March (February: -17.1% year-on-year).This marked the softest pace in seven months following six months of double-digitcontractions, which were driven by the strong government-imposed curb on gold imports.

The 12-month sum of exports up to March totaled USD 312.4 billion. Accordingly, India'soverseas sales came in 3.9% short of its export target of USD 325 billion for FY2013-2014.

Government managed to bring the current account deficit (CAD) in 2013-14 down to $32billion, or 1.7 per cent of gross domestic product (GDP), compared with the $45 billionestimated in the interim Budget in February and $35 billion projected towards the end ofMarch.

Economic Environment in West Bengal

West Bengal is the 4th largest State in India in terms of population with over 91million people. Percentage growth in population for the period 2001-2011 was 13.9%. Itholds a large and rich human capital. The area of the State is 88,752 sq. km. and thedensity of population is 1029 per sq. km, which is 2nd in the country.

Against the national GDP growth of 4.9% in 2013-14, Bengal's GSDP growth is estimatedto be 7.7% contributed by a growth of 5.28% in agriculture, 9.58% growth in Industry and7.8% growth in Services.

* West Bengal holds the 5th position in Social Sector Expenditure in India.

* The city of Kolkata has the 3rd highest GDP, based on Purchasing Power Parityamongst all Indian cities.

In respect of Institutional Finance, the State of West Bengal has a robust, dynamic andresilient banking infrastructure. In recent times, the State has shown significantincrease in both deposits and credit.

State's Robust Banking Infrastructure

• The State of West Bengal enjoysthe presence of 26 Public Sector Banks, 18PrivateBanks, 3 Regional Rural Banks, 18 Co-operative banks and 8 Foreign Banks operatingacross the State.

• The Credit-Deposit Ratio (CDR) of the State is around 64%, creating hugepotential for credit availability for industrial activities.

United Bank of India, owing its origin to the State, continuesto hold a key position inthe economic growth of the State. The Bank has been playing a leading role in extendingfinancial services to large number of people through a network of 789 branches,spread across the State of West Bengal.

In March 2013-14, the total business of the Bank in the State stood at Rs.93178 crore,comprising of total deposit at Rs.68112 crore and advance at Rs.25066 crore whichaccounted for 51.91% of Bank's total business in the country.

II. MONETARY AND BANKING DEVELOPMENTS

The Annual Monetary Policy for 2013-14 was formulated by Reserve Bank of India in anenvironment of incipient signs of stabilization in the global economy and prospects of aturnaround, albeit modest, in the domestic economy. The monetary policy stance for 2013-14was intended to:

* continue to address the accentuated risks to growth;

* guard against the risks of inflation pressures re-emerging and adversely impactinginflation expectations, even as corrections in administered prices release suppressedinflation; and

* appropriately manage liquidity to ensure adequate credit flow to the productivesectors of the economy.

The year 2013-14 saw the following key policy measures announced by the RBI

A. Changes in CRR, SLR and Repo Rate during the year:

Review Date CRR SLR Repo Reverse Repo MSF Bank Rate
03.05.2013 4.00 23.00 7.25 6.25 8.25 8.25
15.07.2013 4.00 23.00 7.25 6.25 10.25 10.25
20.09.2013 4.00 23.00 7.50 6.50 9.50 9.50
07.10.2013 4.00 23.00 7.50 6.50 9.00 9.00
29.10.2013 4.00 23.00 7.75 6.75 8.75 8.75
28.01.2014 4.00 23.00 8.00 7.00 9.00 9.00

B. Apart from the above monetary policy announcements, the

RBI also announced the following development and regulatory policies;

1. Basel III Regulation on Countercyclical Capital Buffer:

A    s part of the Basel-III capital framework, an internal WorkingGroup (Chairman: Shri B. Mahapatra) was constituted to operationalise the countercyclicalcapital buffer framework in India and the draft report was placed on the Reserve Bank'swebsite on December 02, 2013 for inviting comments/ suggestions from various stakeholders.

2. Framework for Dealing with Domestic Systemically Important Banks

The Basel Committee on Banking Supervision (BCBS) provided a framework for dealing withdomestic systemically important banks (D-SIBs) in October 2012. The D-SIBs framework isprinciple-based and provides broad guidance to national authorities on assessment of thesystemic importance of banks and additional capital requirements of D-SIBs. RBI placed adraft of the proposed framework for D-SIBs on the Reserve Bank's website on Dec 02, 2013for inviting comments/suggestions from various stakeholders.

3. Guidelines on Stress Testing

The Reserve Bank issued guidelines on stress testing on 02 December 2013. Theseguidelines required banks to have a sound stress testing policy which will determineliquidity risk, interest rate risk, credit risk and foreign exchange risk under stressedscenarios.

4. Un hedged Foreign Currency Exposures of Corporates

The Reserve Bank of India introduced incremental provisioning and capital requirementsfor banks' exposures to entities with un hedged foreign currency exposures from April 1,2014.

Un hedged foreign currency exposures (UFCEs) of corporates are an area of concern asthe corporates which do not hedge their foreign currency exposures can incur significantlosses due to exchange rate movements. These losses may reduce their capacity to servicethe loans taken from the banking system and, thereby, affect the health of the bankingsystem.

5. Periodicity of Payment of Interest on Rupee Savings/ Term Deposits

As per extant instructions, banks are required to pay interest on savings deposits andterm deposits at quarterly or longer intervals. As all commercial banks are now on corebanking platforms, RBI decided to give banks the option to pay interest on savingsdeposits and term deposits at intervals shorter than quarterly intervals.

6. Licensing of New Banks in the Private Sector

The Reserve Bank of India (RBI) released the final guidelines for issuing new banklicences on 22nd February 2013, paving the way for corporate houses to enter the bankingsector. The RBI assessed the quantitative and qualitative aspects of the 27 applicantswhich included analysis of the financial statements of the key entities in the group,10-year track record of running their businesses, proposed business model for the bank aswell as the applicants' demonstrated capabilities for running a bank, amongothers.Thereafter, the applications were referred to the High-Level Advisory Committee(HLAC) headed by former RBI Governor Bimal Jalan., which submitted its recommendations tothe RBI on February 25, 2014.The RBI issued bank licences on 2nd April 2014 after a gap ofa decade to IDFC and Bandhan Financial Services Pvt Ltd. It had last awarded licences toKotak Mahindra Bank and Yes Bank in 2003-04.

7. Mode of Presence of Foreign Banks in India - Scheme of Subsidiarisation

From a financial stability perspective, RBI is in the process of finalizing a scheme ofsubsidiarisation of foreign banks in India, guided by the two cardinal principles ofreciprocity and single mode of presence. The Wholly Owned Subsidiaries (WOSs) would begiven near-national treatment, including in the opening of branches.While it will not bemandatory for existing foreign banks (i.e., banks set up before August 2010) to convertinto WOSs, they will be incentivised to convert into WOSs by the attractiveness of thenear-national treatment afforded to WOSs. The initial minimum paid-up voting equitycapital or net worth for a WOS shall be Rs.5 billion.

OUTLOOK FOR 2014-15

The global economy in 2014 appears to be in a better shape than what it was in 2012 and2013. The IMF forecasts global growth to pick up to 3.6% in 2014 from approximately 2.9%in 2013.

US economy is on a strong recovery path being helped by the reviving job market,increase in manufacturing activity and better conditions for export.

The Eurozone climbed out of recession in the second half of 2013. The EuropeanCommission estimates that the negative impact of fiscal austerity on growth will come downfrom 0.75% in 2013 to 0.2% of Eurozone GDP in 2014. However, weak private sector growthand high unemployment continue to limit recovery and growth is projected to be around 1percent in 2014.

Overall, growth in emerging market and developing economies is expected toincrease to 5.1 percent in 2014. Portfolio shifts and some capital outflows are likelywith Fed tapering. Increased financial market and capital flow volatility and exchangerate adjustments remain a concern.

Resurgence of exports, prospects of revival in the global economy, unclogging ofdomestic policy logjam and moderation in inflation observed recently, point to a betteroutlook for the Indian economy in 2014-15 vis--vis 2013-14. In the World EconomicOutlook update released by the IMF in January 2014, growth projection for India for theyear 2014 has been kept at 5.4% over the estimated growth of 4.9% during the year 2013-14.RBI expects the real GDP of the country to grow in a range of 5 to 6 per cent in 2014-15with downside risks to the central estimate of 5.5 per cent.

The Reserve Bank's policy stance is firmly focused on keeping the economy on adisinflationary glide path that is intended to hit 8 per cent CPI inflation by January2015. However, there are downside risks stemming from a less-than-normal monsoon due topossible el nino effects; uncertainty on the setting of minimum support prices foragricultural commodities and the setting of other administered prices, especially of fuel,fertiliser and electricity; the outlook for fiscal policy; geo-political developments andtheir impact on international commodity prices.

In 2013-14, CAD is estimated to have fallen to $45 billion (2.5% of GDP) from $88billion (4.8% of GDP) inthe previous year. The improvement in CAD is a result of; (i) thecurbs on gold imports, ii) a sharp slowdown in domestic demand pulling down consumptionand investment goods' imports, and (iii) a weak rupee and (iv) recovery in US benefitingexports.Despite the sharp reduction in CAD this year, the nature of improvement isunsustainable and the Current Account gap is expected to widen to about 3.0% of GDP duringthe year 2014-15.

FINANCIAL PERFORMANCE

Bank's performance during the year was in line with the slackened business growthand increase in stressed assets at the industry level. The main performance indicators ofgrowth, profitability, efficiency, productivity, and solvency are as under:

The Bank has registered an Operating Profit of 2061.74 crore during the financial year2013-14 compared to Rs. 2049.91crore in the financial year 2012-13, registering a growthof Rs.11.83 crore (0.58%). However, due to higher provisioning requirement for rise in NPAand staff pension and gratuity requirement, Bank suffered a Net Loss of Rs (-)1213.45crore in FY 2013-14 compared to a net profit of Rs. 391.90 crore earned last year.

Gross Profit per Employee worked out to Rs.12.50 lakh for the year.

Key Financial Ratios (%) March 2013 March 2014
Cost of Funds 7.24 7.23
Yield on Funds 9.73 9.44
Cost of Deposits 7.08 7.14
Yield on Advances 11.31 10.83
Yield on Investments 7.91 8.00
Spread as a % of AWF 2.39 2.10
Net Interest Margin (NIM) 2.67 2.28
Operating Expenses to AWF 1.45 1.40
Return on Avg. Assets (RoAA) 0.38 -0.99
Return on Equity 7.20 -35.56
Business per Employee (Rs. In Crore) 10.83 10.67
Net Profit per Employee (Rs. In Lakh) 2.53 -7.35
Book Value 115.83 84.88

AWF – Average Working Fund

Income and Expenditure Analysis

Interest income of the Bank during 2013-14 increased by Rs.1347.79crore (14.57%) fromRs. 9251.50 crore in the year 2012-13 to Rs. 10599.29crore. Non-interest income increasedby Rs.140.3crore (13.15%) from Rs.1066.57crore in the financial year 2012-13 toRs.1206.87crore in the financial year 2013-14. The Cost of Deposits increased to 7.14% dueto uptrend in interest rates during the year. The Yield on Advances declined to 10.83% asat March 2014 compared to 11.31% as at March 2013.

Interest Expenditure increased to Rs. 8036.47 crore with a lower Y-o-Y increase of18.8% compared to 23.4% registered during last year. The Bank contained its increase inoperating expenses at 13.57% amounting to Rs.1707.95 crore. The Net interest incomerecorded a growth of Rs.75.6 crore (3.04%) during the year and the Net Interest Margin(NIM) worked out at 2.28%.

Capital & Reserves

Net Worth of the Bank was assessed at Rs.4188 crore as on March 31, 2014. Total paid-upcapital of the Bank was Rs.1355 crore while the reserves and surplus stood at Rs.3928crore. The Government shareholding in the Bank accounted for at 88% at March 2014.

(Rs. in crores)

Composition of Capital March 2013 March 2014
Basel-II Norms Basel-II Norms Basel-III Norms
Risk Weighted Assets 62429 60060 61007
Tier 1 Capital 5242 4359 3987
Of which CET1 Capital NA NA 3987
Tier 1 Ratio (%) 8.40 7.26 6.54
Of which CET1 ratio (%) NA NA 6.54
Tier 2 Ratio (%) 2037 2523 1994
Tier 2 Capital 3.26 4.20 3.27
Total Capital 7279 6882 5981
CRAR (%) 11.66 11.46 9.81

Capital Adequacy Ratio under Basel-III norms was assessed at 9.81% with Tier-1 Ratioreaching 6.54% as at March 2014. Capital Adequacy Ratio under Basel-II norms was assessedat 11.46% with Tier-1 Ratio at 8.40% in the same period. The Bank has adequate headroomavailable under both Tier-1 and Tier-2 options to raise capital to support business growthmomentum.

BUSINESS GROWTH

Deposits

During the year 2013-14, Total Deposits of the Bank increased from Rs. 100651 crore ason 31st March, 2013 to Rs. 111510 crore, registering a growth of 10.79 per cent.Bank'sSavings deposits grew by 9.16 per cent and Bank's share of CASA deposits to total depositsstood at 36.98 per cent as on March 31, 2014. With a view to reduce the cost of deposits,the Bank shed a substantial amount of bulk deposits including certificate of deposits.Thrust had also been given to maintain the share of CASA deposits to total deposits at40%.

The Bank's customer acquisition campaign resulted in growth of customer base of theBank from 2.72 crore as at March 2013 to 3.05 crore as at March 2014.

Advances

The total credit portfolio of the Bank went down by Rs.1726 crore (-2.48%) and reachedRs. 67982 crore as on March 31, 2014.

Credit deposit ratio stood at 60.96% as on March 31, 2014. Bank achieved the PRISECAdvance target of 40% of ANBC. Intensive marketing of retail credit products broughtconsiderable growth in Retail Advances. The muted growth in Advances is mainly due to therestrictions on disbursement of loans beyond Rs.10 crore to any single borrower or groupas advised by RBI in November 2013 considering the deterioration in the asset quality andcapital adequacy position.

The Bank is taking all necessary steps to recoup its asset quality. The bank hasadequate capital buffer for provision purposes. Moreover, bank is taking necessary stepsto improve and strengthen its capital adequacy position and will be approaching RBI forrelaxation in credit dispensation.

Bank's non-food credit declined from Rs.68154 crore to Rs.66480 crore,while food credit came down from Rs.1554 crore as on March 31, 2013to Rs.1502 crore at theend of March, 2014.

Total Business

During 2013-14, the total business of the Bank grew by 5.36% to reach Rs.179492 croreas against Rs.170359 crore during the previous financial year.

Productivity, as measured by business per employee, increased to Rs.10.83 crorecompared to Rs.9.87 crore a year ago.

SWOT analysis of the Bank

STRENGTHS

* Bank has a Pan India presence spread in 28 states and 5 union territories

* Maintaining healthy CASA Ratio of 37% - 40% year after year.

* Customer acquisition remains a top priority of the Bank and customer base crossed themilestone of 3 crore this financial year.

* Strong customer loyalty in the ethnic areas of East & North East India hasprovided the Bank with stability and has won appreciation and awards in Customer Serviceon national platform

* Growing fee based and other non-interest income provides better overhead efficiency.

WEAKNESSES

* Bank's advance has posted a negative growth but non-performing assets have increased.Despite good recovery and upgradation, the Gross NPA to Total Advances ratio stillcontinues to remain high and affects earnings.

* Capital base needs to be strengthened further to support credit expansion andensure compliance to BASEL-III norms.

* Low credit off take due to industrial downturn in Eastern and North Eastern part ofthe country where bank is having strong presence

OPPORTUNITIES

* Recent branch expansion in industrially active states will open new vistas forbusiness expansion

* Growth in demand for housing sector opens up scope for Retail Credit expansion

* Industrial climate is likely to improve with stable government in place.

THREATS

* Bank is trying hard to retain borrower base, in view of restrictions on furtherfinancing.

* Bank is tackling the issue of retirement of experienced manpower by fresh recruitment

Retail Lending Operations

Retail Credit has been one of the thrust areas of the Bank for growth of credit duringthe FY 2013-14. Bank has laid special focus on sanctioning of Retail Loans like HousingLoan, Auto Loan and Mortgage Loan which were the major engines of growth under RetailCredit comprising of 65.07% of total Retail Credit Portfolio.

Performance during FY 2013-14:

Lending under Retail Credit witnessed a positive growth of Rs. 308.32 Crore from Rs.10048.50 Crore as on March 31 , 2013 to Rs. 10356.82 Crore as on March 31 , 2014,registering a Y-o-Y growth of 3.07 %. The growth during the period was primarily accountedfor by the following segments: Housing 24.89 %; Car 20.91 % and Mortgage 14.39 %.

* Housing Loan had shown an impressive positive growth during the FY 2013-14. Itregistered a growth of Rs. 873.28 Crore (24.89%) from Rs. 3508.22 Crore as on 31.03.2013to Rs. 4381.50 Crore as on 31.03.2014.

* Car Loan also registered a satisfactory growth of 20.91% during FY 2013-14. It surgedfrom Rs. 536.97 Crore as on 31.03.2013 to Rs. 649.24 Crore as on 31.03.2014.

* With repackaging of the scheme, the Mortgage Loan registered substantial growth toreach Rs. 1708.16 Crore as on 31.03.2014 compared to Rs.1493.29 Crore as on 31.03.2013recording a growth of 14.39 % during the period.

Retail Hubs

With a view to promote hassle free credit delivery with reduced turn around time, Bankhas set up 26 Retail hubs all over the country In these retail hubs, retail creditproposals are processed electronically. During FY 2013-14, these 26 Retail Hubsfunctioning in 21 Regions of the Bank sanctioned 9522 retail credit proposals amounting toRs.1087 crore.

During the Financial Year 2013-14 Bank has launched an innovative scheme for BusinessCorrespondents namely "United Sanyog Paribahan Scheme" to enable them to buy twowheelers to facilitate the cause of financial inclusion.

Besides most other loans like Housing Loan, Auto Loan, Consumer Loan, Education Loan,Mortgage Loan etc. were offered at very competitive rates of interest with variouscustomer friendly features to boost up consumer demand in line with the objectives ofGovt. of India. Housing Loan and special Education Loan for premier institutes wereoffered at Base Rate.

During the Financial Year, the Bank has extended interest subsidy scheme to eligibleEducation Loan borrowers and interest subvention schemes to eligible Housing Loan accountsas per the Govt. Guidelines.

The online application facility for Retail Loans like Housing and Education has been amajor success in FY 2013-14 with many applicants having taken advantage of this hasslefree system. Online Education Loan applications facility are also being extended to theprospective tech savvy students.

TREASURY AND INTERNATIONAL OPERATIONS

The investment portfolio of the Bank increased from Rs. 33659 cr as on 31.03.2013 toRs. 45127 cr as on 31.03.2014 registering a growth of 34%. The SLR investment portfolioincreased from Rs. 25672 cr as on 31.03.2013 to Rs. 35100 cr as on 31.03.2014 registeringa growth of 36.7%. Portfolio modified duration came down to 4.11 as at March 2014 comparedto 4.90 a year ago. The modified duration of the Available for Sale (AFS) portfolio hasdecreased to 1.96 as at March 2014 from 4.14 as at March 2013.

The Bank had earned a total trading profit of Rs 526 Cr during the year as compared toRs467 Cr during the previous year.

The average return on investment during the year was 8.05% (8.04% during previous year)and the Yield on Investment increased from 7.91% as on 31.03.2013 to 8.00% as on31.03.2014.

Foreign business turnover of the Bank aggregated to Rs.16361 crore comprising of Rs.5838 crore under exports, Rs. 3384 crore under Imports and Rs. 7139.37 crore underremittances as on March,2014.

Outstanding export credit of the Bank stood at Rs. 1191 crore as at March, 2014. Bankearned exchange income of Rs. 155.98 crore during the year 2013-14.

The Bank's overseas presence covered two countries namely Myanmar and Bangladesh withone Representative Office each at Dhaka, Bangladesh and Yangoan, Myanmar. Indo-Myanmartrade is routed through our Bank. Twenty banks of Bangladesh maintain thirty (30) Vostroaccounts in USD and EUR currency and thirteen(13) banks in Myanmar maintain sixteen (16)Vostro accounts in EUR, USD, SGD with our Bank. One Vostro account of Global IME Bank Ltd& one vostro account of Commerz Bank Ltd. is maintained in INR.

The Bank's International operations are well supported by a wide network of more than616 Correspondent relationships opened with overseas Banks with 25 Nostro accounts inten(10) Currencies maintained abroad.

OTHER SERVICES

Merchant Banking Division managed Bank's first-ever issue of Basel III compliant TierII Bonds for Rs.500 Crore on 25.06.2013 amongst PSU Banks. Bank holds Certificate ofRegistration issued by SEBI on Banker to an Issue, Debenture Trustee and Merchant Bankerunder which it continues to discharge defined duties and responsibilities as perregulatory norms.

The Bank has tie-up arrangements in both life and non-life insurance segments under its'Bancassurance' arm. The Bank earned a commission income of Rs. 6.23 crore from thelife insurance segment and Rs. 3.78 crore from the non-life insurance segment.

Bank is providing the service of Inward Money Transaction from overseaslocations working as an agent of Western Union, Moneygram and Xpress Money. Bank earned acommission of Rs.11.56 lakh in this segment.

Under Government Business, the Bank undertakes different types of GovernmentBusiness Activities like

* Collection of Central Government Revenue viz. Direct and Indirect Taxes (CBDT, CBECand Customs) through physical mode by Authorized branches and through e-mode (InternetBanking) by all branches of the Bank.

* Collection of State Revenue and Taxes (Sales Tax, VAT, Professional Tax etc), both online and off line.

* Mobilization of Govt deposit (PPF, SCSS, Savings Bond, Inflation Linked Index Bondsetc.)

* Handling of Govt Fund ( Departmentalized Ministries' Accounts, State GovtTreasury Operation)

* Payment of School Teachers' Salary and different types of pension (Central Govt,State Govt and different autonomous organizations).

The Bank has been authorized to act as Point of Presence (POP) by the Pension FundRegulatory and Development Authority (PFRDA) and 1093 Branches have been registered asPoint of Preference-Service Provider (POP-SP) in Central Record keeping Agency (CRA)system for implementation of subscribers' registration process in National Pension System(NPS) for all citizens of India.

The Bank has also been authorized to act as Aggregator by PFRDA in January, 2013 and1400 branches of the Bank have been registered as NPS lite Collection Centers (NL-CCs) inCentral record keeping agency system for implementation of subscribers' registrationprocess in NPS lite / Swavalamban Yojana for unorganized sector and economicallydisadvantaged people. The Bank has registered 8356 subscribers from unorganized section ofthe society under NPS/ NPS lite / Swavalamban Yojana.

Central Pension Processing Centre (CPPC) set up at H.O. is handling disbursement ofPension to nearly 1.00 lac Central Civil, Telecom, Political, Railway and DefensePensioners. The Bank has also been authorized to disburse Postal Pension w.e.f 01.01.2013.

To facilitate dissemination of relevant information to the Pensioners,"Pensioners' Charter" has been displayed in Bank's website and also in allpension disbursing branches. On-line pension grievance redressal mechanism is available onBank's website.

Total Turnover in respect of Government Business handled by the Bank and AgencyCommission earned on such business during the financial year amounted to Rs. 25756.20Crore and Rs.66.22 Crore respectively. Agency commission earned from Government businessduring financial year 2013-14 was as follows:

BUSINESS TYPE

Turn Over Commission (TOC) Earned (Rs. in crore)

2012 -13 2013 -14
TAX 3.25 2.27
PENSION 16.94 15.90
SCHOOL SALARY 32.26 40.67
TREASURY 9.16 6.21
PPF, SCSS, BOND & SDS 0.47 0.41
DMA 0.8 3 0.76
TOTAL 62.91 66.22

ASSET QUALITY AND RISK MANAGEMENT

Asset Quality

The Bank has been complying with RBI guidelines relating to Income Recognition, AssetClassification and Provisioning In percentage terms, gross NPA Ratio of the Bank stood at10.47% as on 31.03.2014 as against 4.25% at the end of the previous year. In absoluteterms Gross NPA stood at Rs. 7118 crore as on 31.03.2014. The Net NPA ratio of the Bankstood at 7.18% as on 31.03.2014 against 2.87% as on 31.03.2013. In absolute terms, Net NPAstood at Rs. 4664 crore as on 31.03.2014. There was fresh generation of NPA of Rs.8007crore during the FY 2013-14. However, the Bank could effect a NPA reduction of Rs. 3853crore during the FY 2013-14 which included Rs. 1084 crore of cash recovery and Rs.2288crore of up gradation. The cash recovery in technically written off accounts was Rs. 95crore during the year.

Bank's Recovery Policy has been revised to facilitate quick settlement in existing NPAaccounts. The Regional Offices are now empowered with more discretionary power to settleexisting NPA accounts and even Branch Heads have been delegated with discretionary powerto allow write off in eligible cases. The Bank also came out with a liberalized guidelinesduring the year for recovery of small value NPA accounts having outstanding balance belowRs.10 lac. The Bank has a well settled policy for sale of assets to Asset ReconstructionCompanies. However, no sale of NPA was made during the FY 2013-14.

Risk Management

Capital Adequacy framework and future strategies

The Bank has a robust and integrated Risk Management system to ensure that the risksassumed by it are within the defined risk appetites and are adequately ring fenced. TheBank has a robust Risk Management Architecture comprising Risk Management Structure, RiskManagement Polices and Risk Management Implementation and Monitoring Systems in order toaddress the various risks to which Bank is exposed.

Risk Management Structure:

The overall responsibility of setting the Bank's risk appetite and effective riskmanagement rests with the Board of Directors, apex level management of the Bank. Bank hasconstituted a Board level Committee named as Risk Management Committee of Board ofDirectors (RMCBOD) to monitor the implementation of the Risk Management system of theBank. There are other internal committees of Top Executives like In-House Risk ManagementCommittee (Credit Risk Management Committee), Asset Liability Management Committee (ALCO)and Operational Risk Management Committee to supervise respective risk managementfunctions.

Bank's Asset Liability Management Committee (ALCO) is a decision making unitresponsible for the strategic management of interest rate and liquidity risks. ALCO met 14times during the year to review various issues namely interest rates scenario, productpricing for both deposits and advances, desired maturity profile of the incremental assetsand liabilities, demand for Bank funds, fixation of Bank's Base Rate, cash flows of theBank, profit planning and overall balance sheet management.

The Operational Risk Management Committee (ORMC) has the responsibility ofmonitoring the operational risk of the Bank and the responsibility of evaluating andtaking necessary steps for mitigation of operational risk by designing and maintaining anexplicit operational risk management process. It also ensures that the norms, policies andguidelines laid down in Operational Risk Management Policy are strictly adhered to. ORMCmet 13 times to discuss various issues from operational risk point of view.

The In-House Risk Management Committee (Credit Risk Management Committee) monitorsvarious credit risk aspects of the Bank by monitoring Bank's credit risk managementfunctions, apart from market risk and other risks. The Committee met 2 times during theyear to monitor the credit risk, market risk and Pillar 2 risks etc.

Risk Management Policies:

To address various risks like credit risk, market risk, operational risk, liquidityrisk, Forex risk and Pillar-2 risks, the Bank has formulated various risk managementpolicies to measure, manage and mitigate such risks that the Bank is exposed to. The majorpolicies developed and approved by the Board of Directors of the Bank to address suchrisks are Lending Policy, Policy on ICAAP, Operational Risk Management Policy, BusinessLine Mapping Policy, Asset Liability Management Policy, Investment Policy, DisclosurePolicy, Credit Audit Policy, Stress Testing Policy, and Policy on Credit Risk MitigationTechnique & Collateral Management etc. All such policies have been reviewed during theyear and approved by the Board.

Credit Risk:

To address the Credit risk, Bank has formulated a Lending Policy which lays down policyguidelines for Credit Management covering all areas of operation where credit Risk isinvolved. The policy enables the Bank to enhance the risk management capabilities byundertaking lending decisions guided by the policy framework for a steady and healthygrowth in its loan portfolio.

The Bank has set various prudential limits to individual borrowers, group borrowers,entry level exposure norms, substantial exposure limits, benchmark financial ratios,borrower standards, exposure limits/ceilings to industries, sensitive sectors, ratingcategory etc in alignment with RBI directives. The Board has reviewed such limits duringthe year.

During the year, analysis of various exposure norms has been undertaken on half yearlybasis to ensure Bank's various exposures are within the exposure limits/ceilings fixed byRBI/ Bank's Board.

Bank has made its loan appraisal function independent of Risk Rating function. Internalrisk rating of loan accounts is carried through a software based rating model to assessthe credit proposal and rating of a borrower.

During the year, Bank conducted the credit portfolio analysis on quarterly interval, tostudy the impact of a particular industry / sector on the credit portfolio of the Bank andadopt strategies to improve the quality of credit portfolio and reduce the potentialadverse impact of concentration risk.

During the year, Bank has also undertaken the rating migration analysis of itsborrowers on half yearly interval to analyze the stability rate, up gradation rate, downgradation rate and default rate for one year, two year, three year and four year timehorizons and appropriate corrective actions are initiated to protect the portfolioquality.

The Bank has put in place a Loan Review Mechanism to improve the quality of loan assetsand to ensure adherence to the policies, procedures and other statutory requirements. TheBank also undertakes on-site credit audit for accounts having credit limit over Rs.40.00lacs to improve the quality of credit portfolio.

Market Risk:

For management of Market Risk, the Bank has given emphasis on measuring, monitoring andmanaging liquidity, interest rates, foreign exchange and equity risk of the Bank. TheMarket Risk in trading book is monitored and managed as per appropriate control mechanismin place. Market position, funding patterns, duration, counterparty limits and varioussensitive parameters are also monitored by the Bank on regular basis. The advanced RiskManagement tools such as Value at Risk (VaR), Earnings at Risk (EaR), Net Overnight OpenPosition Limits (NOOPL) and modified duration limits are used in managing Market Risk.

The Bank measures and monitors liquidity risk for all items of balance sheet throughstructural liquidity statements and stock ratios on regular basis. The Bank also monitorsits Interest rate risk through interest rate sensitivity gap reports.

The Bank has formulated and reviewed its Investment Policy to set operating guidelinesfor its treasury functions. The Bank has also put in place an Asset Liability ManagementPolicy to address the liquidity risk, interest rate risk etc. These policies comprisemanagement practices, procedures, prudential risk limits, review mechanisms and reportingsystems etc. These policies are reviewed periodically in line with changes in financialand market conditions.

Bank has procured "Integrated Treasury Management System (ITMS)" software tomonitor its investment and treasury portfolio on an ongoing basis along with automatedcomputation of capital charge for Market Risk as well as strengthening the internalcontrol system of investment portfolio of the Bank.

Operational Risk:

The Bank has framed an Operational Risk Management Policy for managing the OperationalRisk in an effective manner. The Bank has also formulated Business Line Mapping Policy formapping various products, activities, and income into different business lines.

Bank's Operational Risk Management Committee (ORMC) has the responsibility ofmonitoring the operational risk of the Bank. ORMC also reviews the operational risk lossevent data, new products, process and systems adopted by the Bank and provides suggestionsfor taking corrective/preventive measures to strengthen the internal systems andprocedures.

As a step towards implementation of advanced approaches for computation of CapitalCharge under Operational Risk, Bank has submitted its application to RBI for migration toThe Standardized Approach (TSA).

Basel-II and Basel-III Compliance:

In line with guidelines of the Reserve Bank of India, the Bank has successfullymigrated to Basel-II framework w.e.f 31 March 2009 by adopting Standardized Approach (SA)for Credit Risk, Basic Indicator Approach (BIA) for Operational Risk and StandardizedDuration Approach (SDA) for Market Risk for computing the capital adequacy ratio.

The bank has also followed Basel-III capital regulation norms w.e.f 1st April 2013 inline with RBI guidelines. The Bank has been computing the Capital to Risk Weighted AssetsRatio (CRAR) on both under Basel-III and Basel-II norms at quarterly interval.

To comply with Pillar 2 guidelines of RBI, the Bank has formulated a Policy on InternalCapital Adequacy Assessment Process (ICAAP) for the assessment of all material risks theBank is exposed to and the risk management processes which are put in place to manage andmitigate those risks and also to evaluate its capital adequacy commensurate with suchrisks.

In line with the ICAAP policy, the Bank prepares the ICAAP Document on yearly basis andsubmits to RBI after internal validation and approval by the Board of Directors of theBank. The ICAAP document of the Bank for 2013-14 has been submitted to RBI.

The Bank has reviewed its capital requirement both under Basel-II and Basel-III normsand taken necessary steps for strengthening its capital base. The Bank also reviewed itsICAAP on quarterly basis for monitoring both risks and capital requirement of the Bank.

In line with RBI guidelines and as per the Stress Testing Policy of the Bank, the Bankconducted Stress Testing analysis on quarterly interval on various risks like LiquidityRisk, Interest Rate Risk, Forex Risk and Credit Risk and assessed the impact on capitaladequacy and profitability.

For skill development in Risk Management area, the Bank also nominates its officers onregular basis for various trainings/seminars on Risk Management conducted by reputedinstitutions like NIBM, IBA, IDRBT, NIBSCOM, SBI etc.

NATIONAL PRIORITIES

Priority Sector Advances

Lending under Priority Sector has been increased by Rs. 774 crore (from Rs.25604 crorein March 2013 to Rs. 26378 crore in March 2014) representing a growth of 3.02% on a Y-O-Ybasis. The percentage share of lending to priority sector was 40.05% of ANBC as on31.03.2013 and the same stands at 40.11% as on 31.03.2014.

Agriculture Lending:

Lending to Agriculture has increased by Rs.154 crore from Rs. 9571 crore in March 2013to Rs.9725 crore in March 2014 representing a growth of 1.61% on a Y -o -Y basis. Thepercentage share of lending to agriculture constitutes 13.62% of ANBC as on 31.03.2014.Thepercentage share of lending to direct agriculture constitutes 9.12% of ANBC as on31.03.2014, while the Bank has crossed the stipulated target of Indirect Agriculture whichis 4.5% of ANBC.

The Bank disbursed fresh loan of Rs.5080 crore in agriculture covering 3.85 lakhfarmers during the financial year registering an increase of 18.63%.

Lending to MSE

Lending under MSE sector has increased by Rs.166 crore (from Rs. 11072crore in March 2013 to Rs. 11249 crore in March 2014) representing a growth of 1.50% only on a Y-O-Y basis. Growth in MSE advances was subdued due to slowdown in economy.

Lending to Weaker Section:

Lending to weaker section stood at Rs.7495 crore as on 31st March, 2014. The share ofweaker section to ANBC stood at 10.75% as on 31st March 2014 against a national target of10%.

Lending to Minority Community:

Bank's lending to Minority Communities increased from Rs.3,859 crore as at end of March2013 to Rs. 3949 crore as at the end of March 2014. The share of lending to MinorityCommunities in the Priority Sector lending of the Bank stood at 15.02% as on 31st March2014.

Lending to Women Beneficiaries:

Lending to women beneficiaries increased by Rs.156 Crore during 2013-14 (from Rs. 3395Crore as on 31.03. 2013 to Rs. 3551 Crore as on 31.03.2014) representing a growth of 4.5%.As on 31.03.2014, the percentage share of lending to women beneficiaries stood at 5.09% ofANBC as against national target of 5%.

Kisan Credit Card:

Bank issued 164756 fresh Kisan Credit Cards during the year 2013-14 involving totalcredit limits of Rs.808.60 crore against 152502 KCCs involving Rs. 704 crore disbursedduring the financial year 2012-13. As on 31.03.2014, the total number of KCCs issued bythe Bank stood at 526883 which involve total credit limit of Rs.1802.06 crore against466712 KCC holders enjoying a total credit of Rs.1454.26 crore as on 31.03.2013.The growthof KCC in amount during the year 2013-14 is 23.92%.

In line with the Government guidelines on issuance of RuPay based ATM enabled cards toall the KCC holders, the Bank has issued 193104 such ATM cards to KCC holders in 2013-14.

Self Help Group:

During 2013 -14 the Bank has established credit linkages with 8529 SHGs providingcredit support to the extent of Rs.46.05 crore .

MSME LENDING

The Bank's credit to Micro, Small and Medium Enterprises (MSMEs) reachedRs.12083 crore in FY 13-14 compared to Rs.11822 crore for FY12-13.

The highlights of the Bank's lending to MSME Sector as on 31.03.2014 are as under:-

* Total credit to MSME sector as on 31.03.2014 stood at Rs.12083 crore which accountedfor 16.74% of Adjusted Net Bank Credit (ANBC).

* Credit to MSE sector increased to Rs.11484 crore as on 31.03.2014 from Rs.11072 as onMarch 2013 with a Y-O-Y growth of 3.71%.

* Out of this Rs.11484 crore, amount eligible to be classified under Priority Sector isRs.11249 crore.

* Credit to MSE constitutes 15.91% of ANBC and 43% of Priority Sector lending of theBank as on 31.03.2014

* Credit to Micro Enterprises has increased from Rs.7089 crore as on 31.03.2013 toRs.7259 crore as on 31.03.2014 registering a Y-o-Y growth of 2.40%.

* The share of lending to Micro Enterprises in total Micro & Small Enterprisesstands at 63.21% as against the target of 60% stipulated by RBI.

Performance of Bank in Credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE):

Bank is one of the Member Lending Institutions (MLI) of Credit Guarantee Fund Trust ofMicro and Small Enterprises (CGTMSE) for the purpose of making credit available to Microand Small Enterprises without collateral security and /or third party guarantee. Bank hasregistered substantial growth in credit guarantee coverage under CGTMSE in the FY 2013-14.

The performance of our bank under Credit Guarantee Scheme for the year ended on March,2014 vis--vis corresponding period of March 2013 has been given below:

Performance in CGTMSE Sector Amount

(Rs. Cr.)

Category Fresh Coverage Cumulative
During FY 2012- 13 During FY 2013- 14 Growth Y-O-Y (%) As on 31.03.13 As on 31.03.14 Growth YO-Y (%)
Nos. 8232 10259 25 30839 41098 33
Amount 405.40 479.99 19 1308.88 1788.87 37

Performance of Specialized MSME Branches

As per RBI guidelines, Bank has designated 87 Branches as Specialized MSME Brancheswhere 60% of total advance of the Branch has been extended to MSME Sector, Branch issituated in a cluster of MSEs and / or the branch is located in a District where Bank isthe Lead Bank. The total credit extended through these Specialized MSME Branches amountedto Rs.1908 crore as on 31st March 2014.

Progress under various Tie-ups

Bank has entered into / renewed the tie-up arrangement during the year 2013-14 withvarious renowned manufacturers of Commercial Vehicle, Construction equipment, Solar SystemManufactures/Dealers such as Tata Motors, Hindustan Motors, Volvo Eicher, USG Automobiles(Dealer of Force Motors for West Bengal), Piaggio, Kirti Solar, Hyundai ConstructionEquipments & Tata Power Solar, for extending credit to buy equipment. Further, Bankhas signed MoU with NSIC, SIDBI & IIE, Guwahati, leading players in MSME Sector forsponsoring quality MSME proposals to our Branches.

Financial Inclusion

With the objective of bringing the large un-served population under the bankingmainstream, the Bank is striving towards a more inclusive growth by making financialproducts and services available to the poor at their door step through the BusinessCorrespondent Model. As per the Government of India and the Reserve Bank of Indiadirectives, the Bank has been actively pursuing the agenda of Financial Inclusion, withkey interventions in four areas viz. expanding banking infrastructure, offeringappropriate financial products, making extensive and intensive use of technology andthrough advocacy and active stakeholder participation.

With a view to furthering the financial inclusion initiative, Bank has expanded itsreach in more than 9900 villages across the country through the Business Correspondentmodel during the F.Y.2013-14. The achievements have been summarized below:

Branch opening under ABEP 2013-14:

As per the Annual Branch Expansion Plan (ABEP) for the F.Y.2013-14, Bank has alreadyopened 271 new Branches. Out of the above, 78 Branches have been opened in un-banked ruralcenters.

BC Outlets: Bank has opened BC outlets in 7337 un-banked villages having populationof less than 2000 during the F.Y. 2013-14. A total of 9921 BC outlets are now operationalin the un-banked villages. 4058 BC Agents are engaged to service the FI customers in thesevillages.

Ultra Small Branches: Bank has opened 1758 Ultra Small Branches in the CSPlocations where the Branch officials are visiting with Laptops having VPN connectivity tothe CBS.

On-line transaction in BC outlets:

* Bank has rolled out real time 'On-line' transaction facility in 2290 BC Outletsopened in the 1 phase. New BC Outlets have been opened with 'Online' services only.

2.5 Million no frill accounts have been opened with the help of these BC Agentswho have mobilized Rs. 24.34 crore deposits as at the end of March'14.

Direct Benefit Transfer:

Leveraging the Aadhaar platform and using the BC infrastructure Bank has successfullyrolled out Direct Benefit Transfer (DBT) in 121 identified Districts. Cash subsidy to thetune of Rs.23.77 crore has been disbursed through APBS/NACH channel.

Lead Bank Scheme

The Bank is the Convener of State Level Bankers' Committee (SLBC) in the State of WestBengal and Tripura. It has assumed lead responsibility in 34 districts spread over fourstates; 10 districts in West Bengal,12 districts in Assam, 4 districts in Manipur and 8districts in Tripura.

As Lead Bank of the State, the Bank has been actively involved in formulation andfinalization of Annual Credit Plan( ACP) for the State which is embedded in the Lead BankScheme and has been taking up suitable action plans for implementation of different socioeconomic activities keeping close liaison with the State Government authorities .

The year 2013-14 had been eventful for the bank as SLBC Convener for both West Bengaland Tripura. The SLBC meetings organized in Tripura State have been attended bydignitaries like Shri Manik Sarkar, Hon'ble Chief Minister and Shri Badal Choudhury,Honorouble Finance Minister of the State, Regional Director, RBI and the PrincipalSecretaries of Line Department of the State.

Dr.Amit Mitra, Hon'ble Finance Minister of West Bengal, Regional Director, RBI,CGM, NABARD, Director, DFS, MoF, GoI and the Principal Secretaries of Line Deptts. of theState attended all the SLBC meetings organized in the West Bengal State during the year2013-14.

Under leadership of the Bank the following achievements took place during the year inthe State of West Bengal and Tripura. * In both the states of West Bengal & Tripurathe unbanked villages identified and allotted to banks under FIP having population of lessthan 2000 have been covered under the target set during the year 2013-14 by opening ofbanking outlets. In West Bengal, out of target of 8405 villages, all the banks havecovered 11602 villages through banking outlets during the year 2013-14 and in Tripura allthe identified villages numbering 619 have already been covered through banking outletsduring the year 2013-14.

* The Roadmap for covering the villages through banking outlets have been prepared anduploaded in the SLBC (West Bengal) websites. * The Annual Credit Plan for 2014-15 for bothWest Bengal and Tripura were finalized during the year and made effective right from 1stApril, 2014.

CORPORATE SOCIAL RESPONSIBILITY

CSR has been assuming greater importance in the corporate world, including the bankingsector. Over the years, we at United Bank of India, have integrated CSR principles withthe Bank's financial, promotional and development assistance to the Priority Sector,industrial growth, infrastructure development, as well as our own internal functioningthrough good corporate governance practices. Our CSR pillars are Sustainable Banking,Environment, Social Commitments, Human Resources Development and Stakeholders Engagements.

We acknowledge that lending to MSME sector, Priority Sector including Education Loanshas significant sustainability impact. Responsible banking, along with realization ofeconomic benefits and protection of environment form an integral part of our CSR strategy.For instance, we do not provide credit to Ozone depleting industries. We extend credit toindustrial units only after they obtain 'No Objection Certificate' from the PollutionControl Board, wherever required.

An important plank of our CSR framework has been to widen and deepen the process offinancial inclusion by way of purveying micro credit to the disadvantaged sections, suchas women, minorities and backward classes in rural, unorganized and weaker section of thesociety.

Rural Self-Employment Training Institute (RSETI) :

Bank has so far set up 12 RSETIs in the states of West Bengal, Assam and Tripura toimpart training to the prospective entrepreneurs from the downtrodden community of thesociety.

Up to 31.03.2014, these institutes have imparted training to 33445 rural youths /womenof which 23600 trainees are self employed and 2198 trainees are wage employed. Out of23600 self employed trainees 13338, trainees have got loan from Banks. These institutesare providing post training support (Escort Services) including arrangement of loan fromour Bank branches to enable the trainees to set up their own ventures.

FLCC: Bank has also set up 38 Financial Literacy Centers in the states of WestBengal, Assam, Tripura and Manipur to extend financial literacy and credit counselingservices to the poorer section of the society. In the Financial Year 2013-14, these FLCsconducted 1612 no of Outdoor Activity, wherein 40489 persons participated and alsoconducted regular Indoor activity wherein 12771 persons participated.

United Bank Socio Economic Development Foundation

(UBSEDF) was established on 30th March 2007 with the objective of promoting andcarrying out social and economic developmental activities and rendering assistance toweaker and under privileged section of the society in terms of decision taken by the Boardof Directors of the Bank in its meeting held on 18th December, 2006, towards dischargingcorporate social responsibility of the Bank.

Till the Financial Year 2013-14, the Trust has undertaken various welfare activitiesinvolving total assistance of Rs. 138.02 Lac in 62 cases, Year wise break up of which isfurnished below.

Year No. of Units Amount of Assistance
(Rs/lacs)
2007-08 8 6.50
2008-09 8 7.21
2009-10 7 8.05
2010-11 16 49.39
2011-12 6 17.40
2012-13 9 16.45
2013-14 8 33.02
TOTAL 62 138.02

A few important projects assisted through UBSEDF are, setting up of Arsenic freedrinking water plant at Dharampur, 24 Parganas (North), construction of concrete roof ofthe class rooms of Dakshin Kamarpole F.P.School at 24 Parganas (South) district, settingup Diagonistic Clinic for economically weaker section of the society at Khardah, 24Parganas (North), self employment unit for the women life convicts of Alipur CorrectionalHome (Kolkata), construction of Hostel Building and purchase of furniture for physicallyand mentally challenged children at Duliajan, Assam, providing computers to Kamala DeviSaraswati Shishu Mandir, Meerut for girls students. Assisting Bharat Sevashram Sangha,Varanasi for purchase of an ambulance and assisting Bijoy krishna Ashram Relief Society,Netaji Eye Hospital, Sarsuna for purchase of one ophthalmological Ultra sound A/B Scaninstrument etc.

ORGANIZATION & SUPPORT SERVICES

Branch Network

With the opening of 272 branches during the year 2013-14, the total number of branchesstands at 2001 as on 31.03.2014 spreading across all the States of the country consistingof 799 Rural (39.93%), 409 Semi-urban (20.44%), 461 Urban (23.04%) and 332 Metro (16.59%)branches. The Bank has also 4 Extension Counters. The Bank has 35 Regional Offices acrossthe country. State wise position of opening of branches during 2013-14 is as under:

State No. of branches opened
Assam 50
Arunachal Pradesh 1
Tripura 10
West Bengal 64
Bihar 9
Orissa 8
Jharkhand 6
Rajasthan 16
Uttar Pradesh 27
Haryana 9
Nagaland 1
Uttarakhand 3
Chhattisgarh 6
Maharashtra 2
Gujarat 9
Tamil Nadu 15
Dadra & NH 1
Kerala 6
Karnataka 10
Andhra Pradesh 10
Himachal Pradesh 2
Madhya Pradesh 1
Punjab 6
TOTAL 272

Out of 272 Branches opened during the year 2013-14, 78 Branches (28.68%) have beenopened in unbanked rural centers and 83 branches (30.51%) in Minority ConcentrationDistricts (MCDs). The Bank has also opened 2 Regional offices at Ahmedabad and Jaipurduring the year. Out of total 2001 Branches as on 31.03.2014, 884 Branches (44.18%) arelocated in 85 Minority Concentration Districts (MCDs) throughout the country. 60.37% oftotal Branches are located at rural and semi urban centers to cater to the people livingin hinterland.

Population group-wise Composition of Total Branch Network

Location Number of Branches (% of total)
31.03.2013 31.03.2014
Metropolitan 330 (19.09%) 332 (16.59%)
Urban 397 (22.96%) 461 (23.04%)
Semi-Urban 324 (18.74%) 409 (20.44%)
Rural 678 (39.21%) 799 (39.93%)
Total 1729 2001

Geographical location-wise Composition of Total Branch Network

Location Number of Branches (% of total)
31.03.2013 31.03.2014
Eastern Region 1081 (62.52%) 1168 (58.37%)
North Eastern Region 289 (16.71%) 351(17.54%)
Western Region 73 (4.22%) 85 (4.25%)
Northern Region 92 (5.33%) 125 (6.25%)
Southern Region 77 (4.45%) 118 (5.90%)
Central Region 117 (6.77%) 154 (7.69%)
Total 1729 2001

Special Category Branches

Branch Category Number of Branches
31.03.2013 31.03.2014
Service Branch 19 19
Retail Hub 26 26
ARM Branch 4 4
Corporate Finance Branch 3 4
Treasury Branch 1 1
CPPC 1 1
Cash Management Service Hub 1 1

InfoTech Progress

Virtualisation – KC

Bank has taken a green initiative by consolidating few physical servers into virtualenvironment for non-critical applications. By enabling virtual services, Bank has reducedthe power consumption, carbon footprint and thereby enabling better server management inthe Data Centre.

Self-service Kiosk –KC

A new technology initiative of self-service kiosk services has been deployed in theselected branches. The services offered for Passbook printing, Cash deposit and Chequedeposit services.

Payment Systems –AB

RTGS facility is extended to Bank sponsored RRBs through Bank's Participant InterfaceFacility of direct credit to loan account by Inward NEFT messages and additionalSettlement Batch of 0800 hrs has been successfully incorporated at our end as perIDRBT/RBI instructions. One 'B' Category AD branch (Treasury Branch, Head Office) has beenupgraded to 'A' Category AD branch during the FY 2012-2013. Also, 40 'B' category branchesare using SWIFT facility. New SWIFT DC & DR setup has been implemented at Bank's DRSite (Vashi) and Bank's DC (Kolkata) respectively during the FY 2012-2013. Risk Module forTreasury operation using ITMS has been made operational. LC Operation has been made Livevia SFMS in selected branches and all Regional Offices across the country. Around 485Branches across the country are using MDSS system for collection of mini deposits forsmall investors through our authorized agents.

CMS – AS

Bank has launched U-Connect an integrated portal for online registration fordematerialization of shares and a unique trading platform

CTS –KSR

Bank has implemented CTS solution at Southern Grid covering all branches in theSouthern Region. Also, a centralized inward cheque processing centre has been operationalin Kolkata for handling all inward clearing instruments under Southern Grid. In additionto the above, 6 outward cheque scanning hubs are established for clearing outwardinstruments at the Regional Offices in and around Kolkata.

Network –KC

Bank has implemented WAN optimization solution in all Branches to improve networkperformance. Bank has implemented VSAT links as second backup at selected single centrebranches to provide network connectivity in situations like cable cut, exchange failureetc. Also, Bank has implemented High Speed Data connectivity using 3G at selected branchesusing latest mobile technology.

Mail Messaging System –KC

Corporate Mail Messaging System with centralized archival solution covering all officesis in place.

Bank Website and Intranet – KC

Bank's Intranet portal is used extensively for information sharing, knowledgemanagement and online examinations. Bank has implemented Grievance online, Housing loan,Car loan and Personal loan on Bank's website as per directions of Ministry of Finance.These applications enable customers to make all requests online and permit onlinetracking.

SOC & IT Security – KC

With the growing dependence on IT systems and exponential increase in transactionsthrough electronic delivery channels, Bank has identified Information Security as the keyarea for sustenance of business. RBI guidelines on Information Security, ElectronicBanking, Technology Risk Management and Cyber Frauds are taken as the guiding principlesfor management of Information Security in the Bank. Bank is actively pursuing to mitigategaps to fully comply with RBI guidelines. Bank has engaged professional agency forproviding Anti-Phishing, Anti-Pharming, Anti-Trojan and Anti-Malware Managed Services forBank websites. Bank has implemented Security Operations Centre (SOC) by mapping alldevices accessed in data centre and disaster recovery centre for 24x7 monitoring andrecording of logs. The Database Activity Monitoring (DAM) management server and DatabaseFirewall (X2500) has been installed and configured at both DC and DRC. Internet banking,CMS database, Finacle Core database in Data Centre and in Disaster Recovery Centre hasbeen integrated with DAM server. SOC provides the centralized view of Information Securitystatus and command centre for IS Security operations.

Following enhancement has been made as part of fine tuning of Security OperationsCentre:

a. Generation of Internet Banking transaction count status on hourly basis to monitoravailability of Internet Banking System.

b. Generation of Internet Banking Beneficiary registration within Bank and other bankscount status on hourly basis.

c. Real-time rules have been created to detect presence of BOT (a type of malware) innetwork, which are communicating with their command control centre.

d. Real-time dashboard has been created to monitor the critical link like DC-DRreplication and ATM link.

e. Privilege user monitoring for database access is enabled and reported to concernedteam for review.

f. Antivirus daily update status monitored through SOC.

g. Phishing dashboard is created to track any direct attack towards Bank's InternetBanking Web server.

Biometric -KC

Department of Financial services, Ministry of Finance directed all the Public SectorBanks to introduce biometric log-in for employees of the Bank to prevent incidence ofauthentication frauds. 1662 Branches have been successfully rolled out and implementationin remaining branches is in progress.

ADC

The Bank provides all the popular alternate delivery channels available in theindustry, enabling its customers 24X 7 banking. The status of the channels as on 31.03.14is as under:

ATMs:

685 ATMs have been deployed in the FY 13-14, thereby taking the total ATM count to1602. Apart from this network, our customers can access all NFS / VISA ATMs in the countryand abroad.

Debit Cards:

The total active debit card base of the Bank stood at 27.43 lac. The Bank is issuingboth VISA & RuPay brand of cards. The cards are enabled for transactions at ATMs,shops & at e-commerce sites. Apart from this the Bank is issuing KCC debit cards forall its KCC borrowers and has also forayed in to chip based debit cards (EMV) for extrasecurity.

Internet Banking:

A total of 1.70 lakh customers have been registered for internet banking through whichthey can perform a host of activities such as self user registration, account view, fundstransfer, bill payments, purchases, tax payments, opening of term deposits etc on a roundthe clock basis from the comfort of their home / office.

Mobile Banking:

The mobile bank registration base of the Bank as on 31.03.14 stood at 39,726,consisting of an array of features like account view, funds transfer ( including IMPS ),bill payments, purchases etc on a round the clock basis.

SMS based Account balance:

Customers can know their account balance at any point of time through SMS by giving amissed call at 9015431345.

Manpower Profile

The total Staff strength of the Bank stood at 16499 as on March 31, 2014 as against15479 last year.

Category of Employees March 2013 March 2014
Total No. of Employees 15479 16499
Officers 6445 7550
Clerks 6056 6306
Sub -Staff 2978* 2643*

* Excludes part-time employee

The total staff strength comprises of 45.76% Officers, 38.22% Clerks and 16.02%Sub-Staff. Women employees numbering 3073 constitute 18.63% of the Bank's total staffstrength.

As a part of the effective succession planning, process for recruitment of ProbationaryOfficers, Specialist Officers & Clerks were undertaken successfully during the year2013-14, and 1232 Probationary Officers, 64 Specialist Officers and 1166 Clerks joined thebank. Inter cadre and inter scale promotions were successfully conducted during the FY2013-14 and in total 851 number of employees were promoted to next higher cadre/scale.

Training / Human Resource Development (HRD)

Banking technologies are evolving at a rapid pace and Competence Development is theprime need of the bank by reinforcing the traditional banking skills with the newtechnology based skills. Major steps have been initiated to augment the capacity of the inhouse training system both quantitatively and qualitatively. Presently the Bank is havingone Staff Training College at Kolkata and four Regional Training Centres at Guwahati,Bhubaneswar, Delhi and Mumbai where full time faculties are posted to conduct regularcourses throughout the year. For the specialized subject like Government Transaction andCash Management, Effective Delivery of Rural Credit, Micro Enterprises Development, Forexetc., training has been arranged during the year under the auspices of reputed instituteslike RBI, IIBF Mumbai, BIRD, IDRBT, NIRD, IIBM Guwahati, FEDAI etc.

Special Training Programmes were conducted with focus on creation of talent pool ofofficers in critical areas like Credit, Risk Management, Financial Inclusion, ManagementDevelopment, Fraud Analysis, Forex etc. During the year 7414 employees comprising 5225officers, 1832 clerks and 357 subordinate staff of the Bank attended in-house training.

As per Govt of India guidelines, pre-promotion training for employees belonging toScheduled Castes and Scheduled Tribes were conducted for 333 employees at Staff TrainingCollege, Kolkata, Regional Training Centers and other different locations. Bank has alsoconducted in-company Training Programmes during the year wherein 77 employees haveparticipated. Bank had sent 107 officer employees for 69 different external trainingprogrammes. During the year Bank had sent 7 senior officers/top executives for 4 differentoverseas training programmes.

Employee Welfare

As a welfare measure, considering the aspect of health care for working employees alongwith dependent members of their families as also the retired employees of the Bank alongwith their spouse, the Bank has renewed the existing Mediclaim insurance schemes. Besides, the Bank has entered into tie-up arrangements with Vasan Eye Care taking the totalnumber of such arrangements to 80 Hospitals and Diagnostic Centers located all over Indiato meet hospitalization / health check-up / diagnostic requirements of employees / retiredemployees at a concessional / competitive rate. The Bank has also renewed the tie uparrangement with Apollo Gleneagles Hospital, Ruby General Hospital, B.P. Poddar and PulseDiagnostic Centre at Kolkata

Reservation Policy in respect of SC and ST

The Bank has been meticulously following the government guidelines for reservation inemployment/promotion in respect of specific reserved categories. All backlog vacancies inrecruitment in all cadres have been filled up and at present there is no backlog vacancyin recruitment.

The representation of SC and ST employees in total staff stood at 3058 (19%) and 1075(7%) respectively as on 31.03.2014.

During the year, 234 employees belonging to SC/ST category were promoted to next highercadre. They constituted 29% of the total number of promotions, wherever reservation isapplicable, effected during the year. The Bank had organized pre-promotion trainingprogrammes for the eligible employees from reserved categories prior to holdinginter-cadre promotions in different cadres.

Dependents of 16 deceased employees belonging to SC/ST category who died while inservice were paid ex-gratia lump-sum amount to the tune of Rs. 88 lakh during thefinancial year. Quarterly meetings between the Top Management and SC/ST Employees WelfareCouncil of the Bank were held on regular basis during the year. Complaints received fromindividuals/organizations on SC/ST matters were looked into for early redressal ofgrievances.

Saral Samadhan

It is a unique employee grievance redressal scheme wherein a special portal has beenmade available on the Bank's Intranet Website so that all employees can convenientlyregister their grievances on-line. A reference serial number is being generated onregistering a grievance and the employee can track the status. The HRM Department at HeadOffice takes up the issue with the concerned deptt. at HO/RO/branch for speedy redressalof grievance. Once the grievance is redressed the concerned employee is communicated aboutthe same. Till date the success rate of grievance redressal is 83%.

Customer Orientation

The bank has taken several initiatives to remain customer friendly through providingprompt service, bringing in diversified technology supported products/services, respondingto customer queries/ suggestions and redressal of customer complaints. The 'code ofcommitment to customers' issued by BCSBI is made available at bank's website. In order toimprove the quality of customer service, a Toll free contact facility at Customer ServiceDepartment is provided to facilitate the customer to represent their grievances /suggestions. The Toll free facility is made available from 8.00 AM to 10 PM. For ATMrelated issues, a separate Toll free contact facility at Head Office is provided tofacilitate the customer. Notably the bank has implemented online grievance redressalthrough the bank's website, where the customers can track the status of their complaintsalso. In financial year 2013-14 percentage of customer complaint redressal was 97.30%. Allcomplaints were redressed within stipulated period. As far as cases referred to BankingOmbudsman is concerned, the percentage redressal of complaints was 96.60%. The bank hasimplemented 112 of 116 recommendations of Damodran Committee accepted by Indian Bank'Association.

To facilitate customers to lodge complaints, the Bank started lodgment of complaints bysending SMS, which will be responded by bank officials within 24 hours.

For customer awareness, the bank has actively participated and organized number ofoutreach programmes in association with Banking Ombudsman (West Bengal & Sikkim)during the financial year 2013-14.

Systems and Procedures

Internal Inspection of all the operational units of the Bank is carried out on acontinuous basis to ensure effectiveness of internal control mechanism and to provide highquality counsel to management on the effectiveness of risk management and internalcontrols including regulatory compliance by the Bank.

The Audit & Inspection department at the apex level along with its extended arms offive Regional Inspection Units (RIUs) and a team of Internal Inspectors/External Auditorsat field level is continuously engaged in inspection of Branches / Offices of the Bank asper Board approved Inspection & Audit Policy, for evaluating the level ofimplementation and adherence to the prescribed procedures and norms, and foridentification, measurement and mitigation of risks involved in different functionalareas. In order to align with changing scenario of the Banking System, Inspection Processis updated and necessary changes are incorporated in Inspection & Audit Policy of theBank from time to time. To achieve these objectives, various types of Audits like RiskBased Internal Audit, Concurrent Audit, Information system audit, Snap Audit, RevenueAudit, Inspection of Regional Offices and HO Departments and Management audit of Regionaloffices are conducted.

Risk Based Internal Audit (RBIA) of branches is carried out to focus on effective riskmanagement and internal controls in respect of areas of potential risks and to play animportant role in protecting the Bank from various risks. During the year 2013-14, RBIA of1023 branches has been completed.

Concurrent Audit by external audit firms is conducted in branches/offices to ensureaccuracy, authenticity and due compliance with Internal Systems, Procedures and guidelinesof the Bank. During the year 2013-14, Concurrent Audit of 439 branches have been completedcovering total deposit of 57% and total advance of 89% of the Bank as a whole.

With the increased technology adoption by Bank, the complexities within the ITenvironment have given rise to considerable technology related risks. The InformationSystem Audit is conducted to mitigate and effectively manage these technological risks.The Information System Audit has been conducted in 200 branches during the year 2013-14covering 54% of Bank's business and 19 Regional Offices. Information System Audit alsocovers the Bank's IT Infrastructure.

Know Your Customers (KYC)

The Bank took several measures for effective implementation of Know Your Customer (KYC)and Anti Money Laundering (AML) guidelines and for ensuring KYC compliance by all thebranches.

To ensure better compliance of guidelines on KYC/ AML, following steps have beeninitiated.

* The Bank has ensured 100% submission of Cash Transaction Reports (CTRs) and NonProfit Organizations Transaction Report (NTR) to Financial Intelligence Unit (FIU).

* Suspicious Transaction Reports (STRs) and Counterfeit Currency Reports (CCRs) aresubmitted to FIU as and when received from branches.

* Bank completed the Special KYC audit as advised by the Reserve Bank of India withinthe stipulated schedule.

* The Bank has already adopted a policy on customer risk categorization and theexercise of risk profiling of customers through system is being undertaken.

Security Arrangements

The Bank has taken necessary steps to strengthen the security arrangement in branchesby installing security gadgets from timeto time in conformity with the guidelines issuedby Reserve Bankof India. All 84 Currency Chest branches have been provided with CCTVsystems with 90 days recording facilities and also Access Control system. In addition, theprocesses for installation of CCTV system in 490 non-currency chest branches have beencompleted.

On completion of the process, the remaining branches will be provided with CCTV systemsin phased manner. All Currency Chest branches within the jurisdiction of Kolkata Policehave been brought under Integrated Security Solution (ISS) system which has a controlmonitor at Lalbazar Police Control Room and is functioning effectively.

About 150 Desktop Sorting Machines have been provided to the branches located in borderareas and branches receiving cash of Rs. 25 lakhs and above per day. The process forprocurement of another 1003 Desktop Sorters has been initiated and all branches will beprovided with Desktop Sorters in phased manner.

Security Department has been sensitizing the officers and staff members posted in thebranches regarding detection and impounding of forged notes. In this regard awarenesstraining on detection and impounding of FICN and features of genuine Indian currency notesis imparted regularly at our Training Colleges to the new entrants of our bank.

The Security Officers posted at Head Office as well as Regional Offices haveparticipated actively in the Recovery Drive of the Bank in 2013-14.

During 2013-14 the Security Department pursued and recovered about Rs.1.2 Crores of theold insurance claim dues of Dacoities / Robberies of branches pending with the InsuranceCompany.

The Bank is maintaining constant liaison with the Police Department. Police patrollingis done in most of the trouble prone Districts of Purulia, Bankura, Paschim Medinipur andcrime prone districts of Malda, Uttar Dinajpur, Dakshin Dinajpur, Murshidabad and Nadia ona regular basis.

Premises

During the year 2013-14, Bank has purchased plots of land at (i) Naya Raipur,proposed capital city of Chhattisgarh- Commercial (0.87 Acre)-for administrativeoffice and Residential(2.03 Acres)-for officer/staff quarters (ii) NOIDA –Commercial(3,165 sqft)-for shifting of Sector-33, Noida Branch from domestic to commercial area(iii) New Town, Rajarhat, Kolkata – Commercial (2.548 Acres)-for proposedadministrative office at second Financial Hub of the country.

During the year 2013-14, Bank also purchased five residential flats for Top Executivesand 10 flats for Senior Executives in Kolkata. Besides, Bank purchased 11 flats for SeniorExecutives in Bhubaneswar.

Bank has already initiated the work of renovation/ refurbishing/ air-conditioning toimprove the aesthetics/ ambience of all the branches under different Regions, in a phasedmanner, way back from 2010-11. There are 1411 refurbished (including newly opened)branches as on 31.03.2014. Bank has also completed the job of furbishing work for settingup of Debts Recovery Tribunals – I, II & III at 9th , 7th & 8th Floorsrespectively at "Jeevan Sudha Building", Kolkata.

The major ongoing projects are (a) Construction of Building on Bank's own commercialPlot No.192D, Block B, Sector 52, Noida-UP, (b) Construction of Branch Building atBidhannagar Branch, Durgapur, (c) Construction of Data Center at Bank's own land at SaltLake, Sector-III, Kolkata, (d) Construction of new Building for RUDSETIs at Ambassa andUdaipur in Tripura, (e) Triennial Overhauling and Modifications of Water Treatment Plantat Officer's Quarters at Shantikunj, Kolkata, (f) Maintenance of Central A.C.,Transformers and generators and other electrical installations.

Implementation of Official Language

With a view to create an atmosphere in the Bank, many steps have been initiated topromote the Official Language Policy of the Government. Conference, workshop and awarenessprogrammes were arranged at Head Office of the Bank from time to time. For effectiveimplementation of Hindi, computer training in Hindi and regular training of Hindi Praveen& Pragya courses were organized. An All India Official Language Conference forthe Official Language Officers of the Bank was held during the month of September, 2013 atHead Office. In addition to this many Regional Offices of the Bank were inspected toreview the position of implementation of Hindi.

For promotion of Hindi among the employees of the Bank, Hindi magazine United Darpanand E-Magazine were published regularly.

During the period the quarterly meetings of the Official Language ImplementationCommittee were held at Head Office and performance of implementation of Official Languageof different departments were reviewed. Hindi Day was celebrated on 14thSeptember, 2013 at Head Office and a multilingual poetry recitation programme wasorganized during the same. With a view to create awareness among the employees, different HindiCompetitions were organized and prizes were distributed to the winners.

During the said period the Bank has been awarded with 4 Prize in Rajbhasha GovernorShield for implementation of Official Language in region C of the Bank.

Being the convener of the Town Official Language Implementation Committee of Banks atKolkata, the Bank had organized 2 (two) regular meetings during the year. The designatedofficers of Official Language Department and different Banks were present during the saidmeeting. The Committee received 2nd Prize in East & North Eastern Region forimplementation of Official Language in the Bank.

Regional Rural Banks (RRBs)

The bank has four sponsored RRBs namely Assam Gramin Vikash Bank (AGVB) in Assam,Bangiya Gramin Vikash Bank (BGVB) in West Bengal, Tripura Gramin Bank (TGB) in Tripura andManipur Rural Bank (MRB) in Manipur operating in 53 districts with total number of 1144branches as on 31.03.2014. All the four sponsored RRBs have posted net profit during thisfiscal and Total Net profit stands at Rs.140.20 Crores.

The combined aggregate business positions of the RRBs are as follows:

(Rs/crore)

Parameters Position as on Growth (%) during the year ended on
31.03.13 31.03.14 31.03.13 31.03.14
Total No. of Branches 1,109 1,144 1.37 3.15
Total Business 24,767 28,814 16.93 16.38
Deposit 16,330 19,060 12.85 16.71
Advance 8,437 9,753 16.08 15.72

All of our RRBs are providing NEFT, RTGS, SMS and Debit Card facility to theircustomers by sponsored Bank's gateway.

Under Financial inclusion plan 2717 villages having population over 2000 were allottedto our 4 RRBs, of which 529 villages were covered by Brick and Mortar Branches and 2139villages by BC Model. RRBs were allotted 9392 villages having population below 2000, ofwhich 306 villages are covered by Brick and Mortar Branches and 2689 villages by BC Model.

All RRBs have opened 1281450 accounts under Financial Inclusion and issued 842219 SmartCards.

Awards/ Accolades

Bank has received the following awards and accolades during the year 2013-14

* National Award for outstanding performance in implementation of PMEGP scheme inEastern Zone of the country for the year 2012-13 by Ministry of MSME, Govt. of India.

* RSETI, Howrah, sponsored by the Bank, chosen as top performing institute in thecountry based on overall performance of the RSETI.

* Best Banker's Award by The Sunday Standard under the categories 'customerfriendliness' and 'priority sector lending'.

* Reserve Bank of India Rajbhasha Shield Competition Incentive Award in the linguisticregion 'C' for the year 2011-12.

* National Award (First Prize) for outstanding performance in MSE lending under"National Awards for Excellence in MSE Lending" and Second Prize for excellentperformance in lending to micro enterprises under "National Awards for Excellence inLending to Micro Enterprises" during the year 2011-12.

Compliance

Based on the RBI guidelines and as part of its ongoing sound practices, the bank hasalso set up a Compliance Department whose role is to co-ordinate the identification ofcompliance issues, assess and mitigation of compliance risk. Board adopted CompliancePolicy has been framed and in activity wise areas like deposit and services, advances,KYC-AML, BCSBI Codes, compliance issues are identified . Role responsibility as regardscompliance functions is defined for every tier in the bank. A reporting system has alsobeen introduced to ensure compliance of regulatory and statutory compliance issuesthrough:

(i) Self- certification,

(ii) Random testing through Designated Compliance Officers,

(iii) Quarterly statement by the Branches and Regional Offices, indicating thecompliance status of all circulars received from RBI, IBA & GoI.

(iv) Quarterly statement with details of Compliance rules covering the important areas.

Under Corporate Governance, the Board of Directors periodically reviews compliancereports to ensure timely submission of regulatory returns by the different departments ofthe Head office to the GOI / RBI on regular basis and adherence to all applicableprovisions of law, rules and guidelines. Further, Bank is taking all steps to comply toregulatory instructions with a view to make realistic assessment of the quality of itsassets, improve its asset portfolio, make adequate provisioning and arrest impairment toprofits and capital adequacy.

Corporate Governance

The Bank endeavors to attain highest standard of Corporate Governance and remainscommitted to its responsibilities towards all its Stakeholders including the Customers,Shareholders, Employees, General Public, Society, Patrons, the Government and Regulators.The Bank has adopted the best practices in terms of disclosure, transparency, businessethics that is aimed at adding to the intrinsic value of the stakeholders of theInstitution.

The Bank defines Corporate Governance as a systematic process by which an organizationis directed and controlled to maintain a set of well defined ethical standards and at thesame time enhance its wealth generating capacity. The Bank on one hand is extremelymindful about shareholder's values while on the other hand responsibly upholds the needsof the economy, national priorities and corporate growth. It recognizes high standards ofethical values, financial discipline and integrity in achieving excellence in all fieldsof activities. The Bank seeks to proclaim corporate excellence by –

* Upholding shareholder's values within the principles and legal framework of theNation;

* Extending best of facilities and services to the customers;

* Proclaiming congenial environment for employees, customers and the society at large;

* Ensuring pro-active management, free from any bias.

Thus the Bank considers itself a Trustee to the Shareholders and Stakeholders andacknowledges the fiduciary responsibility towards them by creating and safeguarding theirwealth. The Bank adopts this through nimble and transparent corporate strategies,proactive business plans, effective policies, efficient and simplified procedures, rigidethical standards, strict legal responsibilities and overall professional approach inmanaging its affairs.

Unclaimed Shares

Shares outstanding/unclaimed as on 01.04.2013 – 7107

Shares transferred to beneficiaries till 31.03.2014 – 400

Shares outstanding/unclaimed as on 31.03.2014 – 6707

The voting rights in respect of the unclaimed/outstanding shares shall remain frozentill claimed by the rightful owner.

Constitution of Board of Directors:

The Board is constituted in accordance with The Banking Companies (Acquisition &Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and MiscellaneousProvisions) Scheme,1970, which satisfies the requirements of Corporate Governance.

Smt. Archana Bhargava, Chairperson and Managing Director tendered her voluntaryretirement due to health reasons on 20 February 2014 which was duly accepted by theGovernment.

BOARD OF DIRECTORS AS ON MARCH 31, 2014

Sl.No. Name of Director Designation Nature of Directorship Date of Assuming Office
1. Sri. Deepak Narang Executive Director Executive 01.03.2012
2. Sri. Sanjay Arya Executive Director Executive 18.06.2012
3. Sri. Mihir Kumar Nominee GOI Non - Executive 30.09.2013
4. Smt. Parvathy V Sundaram Nominee –RBI Non - Executive Independent 13.03.2014
5. Sri. Sunil Goyal Non -Official Director under CA category Non - Executive Independent 22.07.2011
6. Sri. Hiranya Bora Non -Official Director Non - Executive Independent 05.04.2011
7. Sri. Kiran B Vadodaria Non -Official Director Non - Executive Independent 28.11.2011
8. Smt. Renuka Muttoo Non -Official Director Non - Executive Independent 24.01.2014
9. Sri. Pijush Kanti Ghosh Officer Employee Director Non - Executive 19.12.2011
10. Sri. Sanjib Pati Workmen Employee Director Non - Executive 06.05.2014
11. Sri. Pratyush Sinha Shareholder Director Non - Executive Independent 14.09.2013

Board & Committee Meetings held during the Year

Type of Meeting Number
Board of Directors 14
Management Committee of the Board of Directors 15
Audit Committee of the Board of Directors 12
Shareholders’ Committee 4
Risk Management Committee of the Board of Directors 2
Special Committee to Review High Value Frauds 2
Board Level Customer Service Committee 2
Directors' Promotion Committee 1
Remuneration Committee 1
High Powered Committee 2
IT Sub Committee of the Board 4
Nomination Committee 1
Special Committee to Monitor Officers above 55 Years -
Election Committee of the Board of Directors -
Recovery Committee of the Board of Directors 4
Board Level HR Steering Committee 1

Director's Responsibility Statements

The Directors confirm that in the preparation of Annual Accounts for the year ended 31March 2014 –

* The applicable accounting standards have been followed along with proper explanationrelating to material departures, if any;

* The accounting policies framed in accordance with the guidelines of the Reserve Bankof India, were consistently applied.

* Reasonable and prudent judgment and estimates were made so as to give a true and fairview of the state of affairs of the Bank at the end of the financial year and the profitof the Bank for the year ended on 31 March 2014.

* Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with applicable provisions of laws governing Banks in India andaccounts have been prepared on a going concern basis.

Proposed Dividend

In view of the net loss incurred the Board of Directors did not recommend any dividendon equity shares or PNCPS for 2013-14.

Acknowledgement

The Board of Directors wishes to place on record its appreciation to the patronage andcooperation received from all the stakeholders. The Board also likes to place on recordthe valuable guidance and excellent support extended by the Reserve Bank of India,Government of India, State Government of West Bengal, other regulatory agencies and allother State level financial institutions. The Board of Directors appreciates thecommendable services of the employees at all levels.

For and on behalf of the Board of Directors
Deepak Narang Sanjay Arya
(Executive Director) (Executive Director)
Place: Kolkata
Date: 20th May, 2014
   

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:

Deepak Narang , Executive Director  

Kiran B Vadodaria , Director(PartTime NonOfficial)  

Piyush Kanti Ghosh , Director (Officer Employee)  

Sanjay Arya , Executive Director  


Company Head Office / Quarters:
United Tower,
11 Hemanta Basu Sarani,
Kolkata,
West Bengal-700001
Phone : 91-033-22487472
Fax : 91-033-22489391
E-mail : investors@unitedbank.co.in
Web : http://www.unitedbankofindia.com
Registrars:

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