United Bank of India


BSE: 533171 | NSE: UNITEDBNK | ISIN: INE695A01019 
Market Cap: [Rs.Cr.] 1,728 | Face Value: [Rs.] 10
Industry: Banks - Public Sector

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Director's Report

DIRECTORS

The Board of Directors have pleasure in presenting the 63rd 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, 2013 (FY-2012-13).

MANAGEMENT DISCUSSION AND ANALYSIS

I. ECONOMIC ENVIRONMENT

Global Economy: The Global economy looked a bit comfortable as concern in euro area hadabated. Large scale liquidity infusion by European Central Bank reduced the stresssignificantly in global financial markets. Although a sustainable solution to the Eurodebt problems was yet to emerge, the US economy continued to show modest recovery.

Indian Economy:

Gross Domestic Product:

The growth of GDP has been affected in 2012-13 due to interplay of both domestic andinternational factors. The GDP of India is estimated to have grown at around 5% as perestimate of Central Statistical Organization.

The agriculture growth was noted at 1.1% in Q3 2012-13 lower than growth rates seen inQ2 2012-13 (1.2%) and Q3 2011-12 (4.1%). In Q3 2012-13, the industrial growth was reportedat 2.3% while Services which constitute nearly 65% of GDP grew at the lowest growth of6.0% since 2004-05. The construction output expanded 5.8% and financing, insurance, realestate and business services grew 7.9%.

Sectoral growth of Credit:

Non-food credit growth decelerated from 18.2 per cent at the beginning of 2012-13 andremained close to 16.0 per cent for the major part of the year. By March 2013, non-foodcredit growth dropped to 14.0 per cent, lower than the indicative projection of 16.0 percent, reflecting some risk aversion and muted demand. Credit to agriculture increased by8.1 per cent in March 2013, as compared to the increase of 13.3 per cent in March 2012.Credit to industry increased by 15.7 per cent in March 2013 as compared with the increaseof 20.3 per cent in March 2012. Deceleration in credit growth to industry was observed inmajor sub-sectors, barring food processing, textiles, leather and leather products, woodand wood products, chemicals and chemical products, glass and glassware, cement and cementProducts, and vehicles, vehicle parts and transport equipment. Credit to the servicessector increased by 13.6 per cent in March 2013 as compared with the increase of 14.4 percent in March 2012. Within Services, loans to Transport Operators, Shipping, Tourism,Hotels & Restaurants, and Commercial Real Estate grew the slowest. Credit to NBFCsincreased by 14.7 per cent in March 2013 as compared with the increase of 23.9 per cent inMarch 2012.

Inflation:

Headline inflation, as measured by the wholesale price index (WPI), moderated to anaverage of 7.3 per cent in 2012-13.

Non-food manufactured products inflation ruled above the comfort level in the firsthalf of 2012-13 but declined in the second half to come down to 3.5 per cent by March,reflecting easing of input price pressures and erosion of pricing power.

Retail inflation, as measured by the consumer price index (CPI) averaged 10.2 per centduring 2012-13. Even after excluding food and fuel groups, CPI inflation remained sticky.The CPI inflation is reigning in double digit without any break since, December, 2012.

External Sector:

The merchandise export in 2012-13 reached $300.6 billion, however the growth wasnegative as the Merchandise export in 2011-12 was $306.00 billion. This is due to crisisridden Euro Economy, modest growth in economic activity in US and other parts of theworld.

Cumulative value of imports for the period April-March, 2012-13 was US $ 491.5 billionas against US $ 489.3 billion registering a growth of 0.44 per cent.

Although non-oil non-gold imports have decelerated in recent months, the sticky oil andgold imports resulted in widening trade deficit. However, overall balance of payments wasmarginally in surplus due to strong capital inflows, led by FII investment. CAD isexpected to have narrowed on the back of turnaround in export growth and stabilization inimport growth. The recent moderation in oil and gold prices will also help moderation incurrent account. Despite these factors, the CAD is likely to remain above sustainablelevel.

Economic Environment in West Bengal West Bengal is one of the densely populated stateswith population density of 1029 per sq.km. It accounts for 2.7% of the area of the countryand 7.2% of its population, of this 68.11% living in rural areas. More than 60% of thetotal land area is being used in Agriculture.

Total deposits in the state have been growing at an average rate of 16% during the lastthree years. As on 31st March 2013, the total deposit showed an increase of16.7% over the previous year. The Advances, however, posted a growth of 14.58% during thesame period. The CD ratio of the State stands at 65 % as on 31st March 2013.

United Bank of India, owing its origin to the State, is continuing its key position inthe State. The Bank has been playing a leading role in extending financial services tolarge number of people through 789 branches, spread across the State ofWest Bengal.

The total business of the Bank in the State stood at Rs.81884 crore, comprising ofRs.52690 crore under deposits and Rs.29194 crore under Advance as on March 2013,contributing to 47.87% of Bank's total business in the country.

II. MONETARY AND BANKING DEVELOPMENTS

The key monetary aggregates in 2012-13 reflected tight liquidity conditions arisingfrom domestic and global financial environment. The monetary policy stance for 2012-13 wasintended to

• Adjust policy rates to levels consistent with the current growth moderation.

• Guard against risks of demand-led inflationary pressures re-emerging.

• Provide a greater liquidity cushion to the financial system.

Money supply (M3) growth was around 14.0 per cent during Q1 of 2012-13 but deceleratedthereafter to 11.2 per cent by end-December as time deposit growth slowed down. There wassome pick up in deposit mobilization in Q4, taking deposit growth to 14.3 per cent byend-March. Consequently, M3 growth reached 13.3 per cent by end-March 2013, slightly abovethe revised indicative trajectory of 13.0 per cent.

As on March 22, 2013, the aggregate deposit of SCBs recorded a growth of 14.3% and thetotal credit recorded a growth of 14.1%. The year 2012-13 saw the following key policymeasures announced by the RBI

• RBI reduced the repo rate under the liquidity adjustment facility (LAF) by 100basis points from 8.5 per cent to 7.5 per cent.

• RBI reduced the Cash Reserve Ratio (CRR) by 75 basis points from 4.75 per centto 4.00 per cent of the NDTL.

• RBI reduced the Statutory Liquidity Ration (SLR) by 100 bps from 24.0 per centto 23.0 percent of the NDTL

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

Review Date CRR SLR Repo Reverse Repo MSF Bank Rate
17.04.2012 4.75 24.00 8.00 7.00 9.00 9.00
18.06.2012 4.75 24.00 8.00 7.00 9.00 9.00
31.07.20 12 4.75 23.00 8.00 7.00 9.00 9.00
17.09.2012 4.50 23.00 8.00 7.00 9.00 9.00
30.10.2012 4.25 23.00 8.00 7.00 9.00 9.00
18.12.2012 4.25 23.00 8.00 7.00 9.00 9.00
29.01.2013 4.00 23.00 7.75 6.75 8.75 8.75
19.03.2013 4.00 23.00 7.50 6.50 8.50 8.50

Apart from the above monetary policy announcements, the RBI also announced thefollowing development and regulatory policies;

1. Banks advised to disaggregate their Financial Inclusion Plans (FIPs) and put inplace a mechanism to monitor the progress periodically.

2. Banks to have a board approved transparent policy on pricing of liabilities and theyshould also ensure that variation in interest rates on single term deposits of Rs.1.5million and above and other term deposits is minimal.

3. Unique Customer Identification Code (UCIC) number to be allotted to all thecustomers while entering into any new relationships in the case of all individualcustomers to begin with. Similarly, existing individual customers also to be allotted UCICby end-April 2013.

4. RBI proposed that banks should offer a 'basic savings bank deposit account' withcertain minimum common facilities and without the requirement of minimum balance to alltheir customers.

5. Banks advised to complete the process of risk categorisation and compiling/updatingprofiles of all of their existing customers in a time-bound manner, and in any case notlater than end-March 2013.

6. Non-banks to setup, own and operate ATMs to accelerate the growth and penetration ofATMs in the country.

7. Banks are required to implement suitable solutions to generate all the returns to besubmitted to the Reserve Bank by end-March 2013.

In April 2012, RBI came with portability of Intra-bank deposit accounts and advised theBanks that KYC once done by one branch of the bank should be valid for transfer of theaccount within the bank as long as full KYC has been done for the concerned account.

The final guidelines on Basel III capital regulations were released by RBI in the monthof May 2012 making them effective from January 1, 2013. The start date was later shiftedto April 2013 making it mandatory for the Banks to disclose Basel III capital ratios fromthe quarter ending June 30, 2013. The Basel III capital ratios will be fully implementedas on March 31, 2018.

The State Level Bankers' Committees (SLBCs) were mandated by the RBI to prepare aroadmap covering all unbanked villages of population less than 2000 and are required tonotionally allot these villages to banks for providing banking services, in a time-boundmanner. The information on roadmap and achievement should also be published on therespective SlBc websites.

The guidelines on revised targets and classification for Priority Sector lending wereissued by the RBI in July 2012 which was further modified in October 2012 in the light ofthe comments/ suggestions received from various stakeholders. The revised guidelines weremade operational with immediate effect.

The scheme for 1% interest subvention scheme was liberalized by RBI in the month ofSeptember 2012 by extending it to housing loans up to Rs.15 lakh where the cost of thehouse does not exceed Rs.25 lakh.

Reflecting on the requirement of an effective mechanism and granular data for NPAManagement, RBI advised the Banks to review their existing IT and MIS framework and put inplace a robust MIS mechanism for early detection of signs of distress at individualaccount level as well as at segment level (asset class, industry, geographic, size, etc.).Such early warning signals should be used for putting in place an effective preventiveasset quality management framework, including a transparent restructuring mechanism forviable accounts under distress within the prevailing regulatory framework, for preservingthe economic value of those entities in all segments.

Prudential Guidelines on restructuring of Advances by Banks/Financial Institutions werereviewed by the RBI in the month of November 2012. RBI decided to

• To enhance the provisioning requirement for restructured accounts classified asstandard advances from the existing 2.00 per cent to 2.75 per cent in the first two yearsfrom the date of restructuring and

• Restructured accounts classified as non-performing advances, when upgraded tostandard category will attract a provision of 2.75 per cent in the first year from thedate of upgradation instead of the existing 2.00 per cent.

With a view to bringing privately held stock of gold in circulation, reduce thecountry's reliance on import of gold and providing its owners with some income apart fromfreeing them from the problems of storage, movement and security of gold in theirpossession, RBI in the month of February 2013 decided to waive prior approval of RBI forintroduction of Gold Deposit Schemes by the banks authorized to deal in gold.

OUTLOOK FOR 2013-14

Global economic conditions have improved during the past six months. Advanced economypolicymakers successfully defused two of the biggest short-term risks to globalactivity—the threat of a euro area breakup and a sharp fiscal contraction in theUnited States. According to the IMF's latest World Economic Outlook (WEO) report forecastsreal global GDP growth of 3.3 percent on an annual average basis in 2013, about the sameas the 3.2 percent growth seen in 2012, and the IMF expects growth to rise to 4 percent in2014.

Growth in emerging market and developing economies is expected to remain robust,strengthening from about 5 percent in 2012 to 51/4 percent in 2013and 5% percent in 2014. Activity in most of these economies has already picked up after aslowdown in 2012, thanks to resilient consumer demand, supportive macroeconomic policies,and a revival of exports.

Indian economy is expected to show only a modest improvement over last year. Theoutlook for industrial activity remains subdued, with the pipeline of new investmentdrying up and existing projects stalled by bottlenecks and implementation gaps. Withglobal growth unlikely to improve significantly from 2012, growth in services and exportsmay remain sluggish. Accordingly, the baseline GDP growth for 2013-14 is projected at 5.7per cent. Keeping in view the domestic demand-supply balance, the outlook for globalcommodity prices and the forecast of a normal monsoon, WPI inflation is expected to berange-bound around 5.5 per cent during 2013-14. With investment plans of public andprivate sector entities remaining constrained by concerns related to land acquisition,delays in environmental approvals and lack of availability of inputs (natural gas, ironore etc.), investment growth is expected to remain weak in FY 13-14.

In the absence of an improvement in investment activity, import of capital goods islikely to display subdued growth in the near term. Moreover, the export promotion measuresintroduced by Government may provide a limited boost to merchandise exports. These twofactors combined are expected to narrow down the Trade Deficit and have a positive bearingon Current Account Deficit.

With GDP growth expected to display a modest improvement in 2013-14, direct andindirect tax collections are likely to display a moderate expansion in the coming fiscal.Therefore, expenditure-side factors would crucially determine whether Government is ableto restrict the fiscal deficit to the target of 4.8% in 2013-14.

The magnitude and quality of fiscal adjustment indicated by the Union Budget for2013-14 would impact the timing of further monetary policy easing, sentiments of globaland domestic investors and the exchange rate of the Rupee.

The FY 2013-14 is expected to be a better year for the Indian Banking Sector. The majorchallenge before the banks remains to improve the asset quality. In consonance with thegrowth projections and the Reserve Bank's inflation tolerance threshold, M3 growth for2013-14 is projected at 13.0 per cent. Consequently, aggregate deposits of SCBs areprojected to grow by 14.0 per cent. Keeping in view the resource requirements of theprivate sector, the growth in non-food credit of SCBs is projected at 15.0 percent.

FINANCIAL PERFORMANCE

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

The Bank earned a Net profit of Rs.391.90 crore for 2012-13 compared to Rs.632.53 crorelast year. The Bank has registered an Operating Profit of Rs.2049.91 crore during thefinancial year 201 2-1 3 as compared to Rs.1,828.84 crore in the financial year 2011- 12,registering an increase of Rs.221.07 crore (

12.09%). The Return on Average Assets (RoAA) for the year stood at 0.38%. Profit perEmployee worked out to Rs. 13.24 lakh for the year.

The Bank's Board of Directors recommended a dividend of 21% for 2012-13. While BookValue increased to Rs.115.83 as at March 2013 as compared to Rs.114.39 crore for theprevious financial year. EPS stood at Rs8.64 as at March 2013 compared to Rs. 15.79 a yearago. Return on Equity stood at 7.20% for 2012-13

Key Financial Ratios (%) March 2012 March 2013
Cost of Funds 6.77 7.24
Yield on Funds 9.81 9.73
Cost of Deposits 6.68 7.08
Yield on Advances 11.29 11.31
Yield on Investments 7.80 7.91
Spread as a % of AWF 2.75 2.39
Net Interest Margin (NIM) 3.17 2.67
Operating Expenses to AWF 1.53 1.45
Return on Avg. Assets (RoAA) 0.70 0.38
Return on Equity 13.16 7.20
Business per Employee (Rs. In Crore) 9.71 10.83
Profit per Employee (Rs. In Lakh) 4.08 2.53
Book Value 114.39 115.83
Earning per Share 15.79 8.64

Interest income of the Bank during 2012-13 recorded a growth of Rs.1290.40 crore(16.2%) from Rs.7961.09 crore in the year 2011-12 to Rs.9251.49crore.Non-interest incomeincreased by Rs.333.66 crore (45.5%) from Rs.732.90 crore in the financial year 2011-12 toRs.1066.57 crore in the financial year 2012-13. The Cost of Deposits increased to 7.08%due to uptrend in interest rates during the year. The Yield on Advances improved to 11.31%as at March 2013 compared to 11.29% as at March 2012.

While Interest Expenditure increased to Rs.6764.23 crore with a Y-o-Y increase of23.4%, the Bank contained its increase in operating expenses at 8.7% amounting to Rs1503.92 crore. The Net interest income recorded a growth of Rs.8.03 crore (0.32 %) duringthe year and the Net Interest Margin (NM) worked out at 2.67%.

While Interest Expenditure increased to Rs.6764.23 crore with a Capital & ReservesNetworth of the Bank increased to Rs5259 crore as on March 31, 2013 compared to Rs.4939crore as at March 2012. While total paid-up capital of the Bank was Rs375 crore, reservesand surplus increased to Rs4709 crore. The Government shareholding in the Bank stood at82.23% at March 2013.

(Rs. in crores)

Composition of Capital March 2012 March 2013
Risk Weighted Assets 56052 62429
Tier I Capital 4929 5242
CRAR (%) (Tier I) 8.79 8.40
Tier II Capital 2185 2037
CRAR (%) (Tier II) 3.90 3.26
Total Capital 7114 7279
CRAR (%) 12.69 11.66

Capital Adequacy Ratio stood at 11.66% with Tier I Capital Ratio at 8.40% as at March2013. The Bank has adequate headroom available under both Tier-I and Tier-II options toraise capital to support business growth momentum.

During the year 2012-13, Total Deposits of the Bank increased from " 89,116 croreas on 31st March, 2012 to " 100651 crore as on 31st March,2013, registering a growth of 12.94 per cent. Bank's Savings deposits grew by 14.2 percent, CASA deposits grew by 9.8 per cent. Bank's share of CAS A deposits to total depositsstood

With a view to reduce the cost of deposits, the Bank had given thrust to mobilizeretail deposits specially CASA deposits. In the process, the Bank shed a substantialamount of bulk deposits including certificate of deposits. Thrust had also been given tomaintain the share of CASA deposits to total deposits at 40%. From the very beginning ofthe financial year, the Bank had aggressively launched CASA Deposit Campaign.

The Bank's customer acquisition campaign resulted in about 17.41 Lakh fresh SBclientele and about Rs1174.44 crores SB deposit in the new accounts. The total depositcustomer base of the Bank reached a new high of 2.72 crores as at March 2013 registering agrowth of 22.21%.

The total credit portfolio of the Bank went up by Rs5835 crore and reached Rs69708croreas on March 31, 2013, registering a growth of 9.1 % during the fiscal year. Credit depositratio stood at 69.26 % as on March 31, 2013. Focused attention on Prisec Lending enabledthe Bank to achieve the Prisec Advance

target of 40% of ANBC. In addition, intensive marketing of Bank's various retail creditproducts brought considerable growth in Retail Advances.

Bank's non-food credit increased by Rs5603 crore to Rs68154 crore, recording a growthof 8.96 %, while food credit increased to Rs1554 crore as on March 31, 2013 from Rs.1322crore at the end of March, 2012. Bank's customer acquisition drive resulted in 22.45%growth in the number of Borrowal accounts taking it to 17.05 lakh as at March 2013.

During 2012-13, the total business of the Bank grew by 11.4 % to reach Rs. 170359 croreas against " 152989 crore during the previous financial.

Productivity, as measured by business per employee, increased to Rs.10.83 crores fromRs.9.87 crore a year ago. During the year, the Bank's clientele base increased to 2.72crores.

Retail Lending Operations

Retail Credit has been a focused area of the Bank during the Financial Year 2012-13.Bank has given special emphasis for growth of Housing Loan along with Auto Loans andEducation Loans during the year. Retail Credit registered a healthy growth of 23% andincreased from Rs. 8175 Cr. as on 31.3.2012 to Rs. 10049 Cr. as on 31.03.2013.

Housing Loan increased by 25% and Mortgaged Loan increased by 30% during the FinancialYear. Auto Loans, Education Loans and Private Loans also showed healthy growth rates.

Over the years, the Bank has supported number of promising students to pursue highereducation in India and abroad. The Bank has gone for tie-up arrangements with educationalinstitutions to facilitate the process. The year 2012-13 registered an increase of 13.20%in the number of students supported under the Education Loan scheme of the Bank.

Bank has given special emphasis for making tie up arrangements with reputed builders,Education Institutions, Car Manufacturers/ Dealers etc. during the Financial Year 2012-13.More than 100 tie-ups/ strategic alliances were made which helped faster growth of RetailCredit.

During the current Financial Year 26 Retail Hubs were functioning in 21 Regions of theBank. Retail Hubs mobilized more than 12500 proposals amounting Rs. 1275 Cr. during theyear. The hubs also expedited appraisal, sanction and disbursement of Retail Loans thereby substantially reducing the turnaround time (TAT).

During the Financial Year the Bank developed and launched a number of customer friendlyRetail Loans like

• Scheme for Financing of ATM/ Cash Dispensers

• United Gold Loan Scheme

• United Short Term Loan Scheme for financing of Book money

• United Education Loan Scheme for Vocational Training

• United Mortgage Loan (New Scheme)

• United Cash Rental

During the Financial Year the Bank has taken proactive steps and credited interestsubsidy in Education Loan accounts and interest subvention on Housing Loan in all eligibleaccounts.

Bank also introduced online application facility for Housing Loan, Auto Loan andEducation Loan during the Financial Year which is being used by customers.

SMS alert to all the Retail borrowers has been activated during the year.

TREASURY AND INTERNATIONAL OPERATIONS

The investment portfolio of the Bank also increased from 29,247 crores as on 31.03.2012to 33659 cr as on 31.03.2013 registering an increase of 15%. The SLR investment portfolioincreased from 22767 crores as on 31.03.2012 to Rs 25672 crores as on 31.03.2013registering an increase of 13%. Portfolio modified duration came down to 4.90 years as atMarch 2013 from 4.91 years a year ago. The modified duration of the Available for Sale(AFS) portfolio has increased to 4.14 years as at March 2013 from 3.27 years as at March2012 due to redemption of short dated securities and fresh investment made in medium andlong dated securities.

The moderation in interest rate scenario was conducive to increased trading activitiesand the focus shifted from yield enhancement to increase trading profit and the effect wasvisible as the Bank earned a total trading profit of Rs 467 Cr during the year as comparedto 218 Cr during the previous year.

The average return on investment during the year was 8.05% (7.61% during previous year)and the Current Yield on Investment portfolio increased from 7.82% as on 31.03.2012 to7.91% as on 31.03.2013.

Foreign business Turn over of the Bank aggregated to Rs.17684 crore, comprising Rs.6163crore under exports, Rs.5176 crore under imports and Rs.6345 crore under remittances as atMarch, 2013.

Outstanding export credit of the Bank stood at Rs.1248 crore as at March, 2013. Bankhas earned exchange income Rs107.88 crore as at March, 2013.

The Bank's overseas presence covered two (2) countries, with one Representative officesat Dhaka, Bangladesh and another in Yangon, Myanmar. United Bank is the only Indian Bankto have presence in Myanmar. Indo-Myanmar trade is routed to our Bank. Six banks ofBangladesh maintain ten(10) Vostro accounts in USD and EURO currency and four(4) Banks inMyanmar maintain Vostro account in EURO,USD,SGD with us.

The Bank's international operations are well supported by a wide net work of more than325 Correspondent relationships with overseas Banks and 23nostro accounts in 9(Nine)foreign currencies are maintained abroad.

OTHER SERVICES

During the financial year 2012-13, Merchant Banking Division managed the Bank's maidenissue of Perpetual Debt Instrument for Rs.300 Crores. Apart from this, it continued itsfunctions as Debenture Trustee, Banker to an Issue and acted as paying banker to handledividend payment of body corporate. It also ensured all sorts of regulatory compliancesfor all of its functions and could designate all Branches of the Bank as 'Self CertifiedSyndicate Bank' for providing ASBAfacilities to the investors as per SEBi guidelines.

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.16.19 crore from the lifeinsurance segment and Rs.5.93 crore from the non-life segment.

Under card business, the Bank took several initiatives to expand debit-cum-ATM cardbase. The total active debit card base of the Bank increased to 17.87 lakh as at March2013.

Bank offers a range of Cash Management Services (CMS) for the corporate and retailcustomer segments. In addition to collection and Payments, the Bank also offers LiquidityManagement Services as a part of CMS. During the last financial year, Bank had handled703854 instruments/deposits under Collections with turnover of Rs 1319.47 Crore and 887874transactions under Payments with turnover of Rs 3277.33 Crore. The total contribution ofCMS in non-interest income of the Bank in the last financial year was to the tune of Rs18.10 Crore.

Bank offers core ASBA facility through all its branches across the country through acentralised software system interfaced with the e-bidding platform of NSE and BSE for IPO,FPO, Right Issues, Debt IPO, Institutional Placements Programme and NFO collections. Bankis also offering Syndicate ASBA facility at 12 locations specified by SEBI. During thelast financial year, Bank received a total of 591 retail applications with a turnover ofRs 81.58 Crore.

Bank has the unique distinction of offering a special "Indo-Nepal RemittanceService" in association with Global IME Bank Ltd, Nepal for the Nepalese migrantsresiding in India. During the last financial year, Bank carried out a total of 38069transactions under the scheme and earned an income of Rs 28.55 Lakh.

The Bank is offering Demat services as a Depository participant (DP) of CentralDepository Services (India) Limited (CDSL) since 2007. U-Connect, an internet basedtrading facility was launched by the Bank on 12th November, 2012 jointly withCalcutta Stock Exchange to integrate the Bank's Savings/Current Bank account with theDemat services along with the facility to trade online. The same also enables one tomonitor all transactions related to demat and trading by way of the net banking facilityavailable from the Bank's side.

The business figures as on March 31, 2013 for the Demat and Trading Department cansummarized as given below.

(Amt Rs. Lakh)

Business No New Accounts during the FY 2012-13 Total Number of Accounts as on 31/03/13 Income
1 Demat 586 8586 13.25
2 Trading (w.e.f. 12th November, 2012 345 345 1.52
TOTAL 14.77

Under Government Business, The Bank undertakes different types of Government BusinessActivities like.

• Collection of Direct, Indirect and State Taxes (CBDT, CBEC, Sales Tax, Vat,Professional Tax etc), both on line and of line,

• Mobilization of Govt deposit (PPF, SCSS, Savings Bond)

• 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 authorised 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 life Collection Centres (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 7075 subscribers from unorganized section ofthe society under NPS/ NPS lite / Swavalamban Yojana during the Financial Year 2012-13.

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 DefencePensioners. The Bank has also been authorized 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 all pensiondisbursing branches. On-line pension grievance redressal mechanism is available on Bank'swebsite.

Total Turnover in respect of Government Business handled by the Bank and AgencyCommission earned on such business during the financial year amounted to Rs.26078.14 Croreand Rs.61.62 Crore respectively. Agency commission earned from Government business duringFinancial year 2012-13 was as follows:

BUSINESS TYPE

Turn Over Commission (TOC) Earned

(Rs. in crore)

2011 -12 2012 -13
TAX 2.62 3.25
PENSION 15.12 16.94
SCHOOL SALARY 31.59 32.26
TREASURY 8.10 9.16
PPF,SCSS, BOND & SDS 0.38 0.47
DMA 0.66 0.83
TOTAL 58.47 62.91

ASSET QUALITY AND RISK MANAGEMENT

Asset Quality

The Bank has been complying with RBI guidelines relating to Income Recognition, AssetClassification and Provisioning. In percentage term, gross NPA Ratio of the Bank stood at4.25% as on 31.03.2013 as against 3.41% at the end of the previous year. In absolute term,Gross NPA stood at Rs 2964 crore as on 31.03.2013. Net NPA ratio of the Bank stood at2.87% as on 31.03.2013 as against 1.72% as on 31.03.2012. In absolute term, Net NPA stoodat Rs1970 crore as on 31.03.2013. Reduction in NPA achieved during the year was Rs1697crore as against Rs1144 crore during the previous year.

During the year, 10691 Recovery Camps were organized and cash recovery made from suchcamps during the year was Rs82.77 crore as against Rs98.15 crore during the previous year.Notices were issued in 2135 accounts under 13(2) of SARFAESI Act and an amount of Rs242.31crore could be recovered from SARFAESI cases during the year 2012-13. The Bank has alsoframed policy for sale of assets to ARCs. ARCs are also appointed as Recovery Agents forrecovery from NPA / Written Off accounts. Bank's Recovery Policy has been revised tofacilitate quick settlement in existing NPA accounts. The Regional Offices are nowempowered with more discretionary power to settle existing NPA accounts and even BranchHeads have been delegated with discretionary power to allow write off in eligible cases.In the newly introduced Bid policy, where no Bid is received by the Bank during the 1stauction sale under SARFAESI Act, Bank will be eligible to participate in subsequentauction sales.

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 compensated. Toaddress the various risks to which the Bank is exposed to, the Bank has a robust RiskManagement Architecture in the Bank comprising Risk Management Structure, Risk ManagementPolices and Risk Management Implementation and Monitoring Systems.

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, Asset Liability Management Committee (ALCO) and Operational Risk ManagementCommittee to supervise respective risk management functions.

Bank's Asset Liability Management Committee (ALCO) is a decision making unitresponsible the strategic management of interest rate and liquidity risks. ALCO met 20times 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 of monitoringthe operational risk of the Bank and the responsibility of evaluating and taking necessarysteps for mitigation of operational risk by designing and maintaining an explicitoperational risk management process. It also ensures that the norms, policies andguidelines laid down in Operational Risk Management Policy are strictly adhered to. ORMCmet 16 times to discuss various issues from operational risk point of view.

The In-House Risk Management Committee monitors various credit risk aspects of the Bankby monitoring Bank's credit risk management functions, apart from market risk and otherrisks. The Committee met 4 times during the year to monitor the credit risk, market riskand pillar 2 risks etc.

Risk Management Policies:

To address various risks like credit risk, market risk, operational risk, liquidityrisk, forex risk and pillar-II 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. 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 a one year, two years, three years and four years 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 Compliance:

In line with guidelines of the Reserve Bank of India, the Bank has successfullymigrated to Basel-II framework w.e.f 31st March 2009 by adopting StandardizedApproach (SA) for Credit Risk, Basic Indicator Approach (BIA) for Operational Risk andStandardized Duration Approach (SDA) for Market Risk for computing the capital adequacyratio. The Bank has been computing the Capital to Risk Weighted Assets Ratio (CRAR) onparallel basis both under Basel-II and Basel-I norms at quarterly interval.

To comply with Pillar 2 guidelines of RBI under Basel-II norms, the Bank has formulateda Policy on Internal Capital Adequacy Assessment Process (ICAAP) for the assessment of allmaterial risks the Bank is exposed to and the risk management processes which are put inplace to manage and mitigate those risks and also to evaluate its capital adequacycommensurate with such risks.

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 2012-13 has been

submitted to RBI.

As per the RBI directives for validation of ICAAP document of the Bank by externalagency, the Bank took the help of NIBM by validating its ICAAP document 2012-13.

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 capital adequacy andprofitability.

The Bank engaged M/s Accenture Lt as consultant for "Productivity Enhancement andBusiness Excellence" inter-alia to strengthen its Risk Management system andpractices.

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

Bank's lending to the Priority Sector has increased from Rs.22,258 crore as at 31stMarch 2012 to Rs.25,604 crore as at 31st March 2013, registering a growth of 15.03%. ThePriority Sector advances accounted for 40.12% of the Adjusted Net Bank Credit as againstnational target of 40%. To ensure attaining the targeted level even after issuance ofrevised guidelines on Priority Sector Advances by Reserve Bank of India, the Bank hastaken several steps, viz. engaging Collateral Management Companies for Pledge Financing,extending finance to large size units of Dairy, Poultry, Plantation etc. andsecuritization of pool assets.

Priority Sector Advances

As at March

Growth

2012 2013 Amount %
Total Priority Sector 22528 2 5604 3346 15.0 3
Agriculture 8144 9571 1427 17.5 2
Direct Agriculture 6016 6725 709 11.79

Agriculture Lending:

Lending to Agriculture Sector has increased from Rs.8,144 crore as at 31st March 2012to Rs.9571 crore as at 31st March 2013, registering a growth of 17.53%. The percentageshare of lending to Agriculture constitutes 14.99% of the Adjusted Net Bank Credit as on31st March 2013. Advances under Direct Agriculture has increased from Rs.6016 crore as at31st March 2012 to Rs.6725 crore as at 31st March 2013, registeringa growth of 11.79%. The percentage share of lending to Direct Agriculture constitutes10.53% of the Adjusted Net Bank Credit as on 31st March 2013.

The Bank disbursed Rs.4282 crore under agriculture covering 2.57 lakh farmers duringthe financial year registering an increase of 25.68%

Lending to MSE

Lending under MSE sector has been increased by Rs.1910 crore (from Rs.9162 crore inMarch 2012 to Rs.11072 crore in March 2013) representing a growth of20.85% on a Y-o-Ybasis. The percentage share of lending to MSE sector is 17.61% of ANBC as on 31.03.2012.

Lending to Weaker Section:

Lending to weaker section increased from Rs.7,617 crore as at 31 March 2012 to Rs.8083crore as at 31st March 2013, representing a growth of 6.12%, The share of weaker sectionto ANBC stands at 12.65% as on 31st March 2013 against a national target of 10%. Advanceunder DRI Scheme which was Rs.20.49 crore as on 31.03.2012 increased to Rs.39.94 crore ason 31.03.2013 registering a growth of 94.97%.

Various components of weaker section Advances as at March 2013 is as under:

(Amt in Rs. Crore)

Sl No. Sectors Outstanding
1 Small & Marginal farmers, Landless Labourers, Tenant Farmers & Sharecroppers 3075
2 Artisans, Village & Cottage Industries 185
3 SC/ ST beneficiaries 3976
4 DRI Loans 40
5 SJSY beneficiaries 169
6 SJSRY beneficiaries 38
7 SHG / NGOs/ MFIs 599
8 Advances to SLRS 0.91

Lending to Minority Community:

Bank's lending to Minority Communities increased from Rs.3,346 crore as at end of March2012 to Rs.3859 crore as at the end of March 2013 achieving a growth of 15.33%. The shareof lending to Minority Communities in the Priority Sector lending of the Bank stands at15.06% as on 31st March 2013.

Lending to Women Beneficiaries:

Lending to women beneficiaries has increased by Rs.187 Crore during 2012-13 (fromRs.3208 Crore as on 31.03. 2012 to Rs.3395 Crore as on 31.03.2013) representing a growthof 5.8%. As on 31.03.2013, the percentage share of lending to women beneficiaries standsat 5.31% of ANBC as against national target of 5%.

Kisan Credit Card:

The Bank has successfully organized sensitization programmes for issuance of KisanCredit Card (KCC) under revised scheme having composite credit limit for 5 years takingcare of all types of needs of the farming community towards production, investment,maintenance of farm equipments, consumption as well as annual price escalation.

Since inception of the scheme the Bank has issued a total of 8.47 lakh KCC amounting toRs.2461 crore. The Bank has issued 152502 fresh KCCs during 2012-13 with credit limits ofRs.704 crore against 157613 numbers of KCCs with disbursement of Rs.555 crore during2011-12. As on 31.03.2013 the outstanding number of KCCs issued was 466712 with aggregatecredit limit of Rs.1454.26 crore against an amount of Rs.1013 crore to 363375 KCC holdersas on 31.03.2012. The growth of KCC in amount during the year 2012-13 is 43.56%.

In line with the Government guidelines on issuance of Rupay based ATM enabled cards toall the KCC holders, the Bank has issued 5000 such ATM cards to its KCC holders in2012-13.

Self Help Group:

During 2012-13 the Bank has established credit linkages with 12789 SHGs providingcredit of Rs.73.35 crore as compared to credit linkages of 13749 SHGs with an amount ofRs.142.51 crore during 2011-12. Outstanding position of SHGs as on March'12 and March'13are as under:

(Rs. in crores)

As on

Savings Linkage

Credit Linkage

No Amount No Amount
March 2012 112352 123.62 77900 388.30
March 2013 119295 127.05 89199 466.00

Bank actively participated in various Government Sponsored Schemes, such as, PrimeMinister Employment Guarantee programme (PMEGP), Swarnajayanthi Gram Swarojgar Yojana(SGSY), Swarnjayanti Shahari Rojgar Yojana (SJSRY), DRI etc.. As at March 2013, theoutstanding advances under these schemes aggregated to Rs.437.01 crore, involving 0.72lakh beneficiaries.

Nature of the Scheme No. of Accounts Amount (Rs. Crore)
PMRY
PMEGP 12152 190.57
SGSY 30651 169.00
SJSRY 10944 37.59
SLRS 747 0.91
DRI 17104 39.94
Total 71598 437.01

MSME LENDING

The Bank's credit to Micro, Small and Medium Enterprises (MSMEs) reached Rs.11821 crorecompared to FY12.

The highlights of the Bank's lending to MSME Sector as on 31.03.2013 is given below:-

• Total credit to MSE sector as on 31.03.2013 stands at Rs.11,072 crore whichaccounts for 17.33% of Adjusted Net Bank Credit (ANBC) as against 16.99% as on 31.03.2012.

• Credit to MSE sector has increased from Rs.9,162 crore as on March 2012 toRs.11,072. crore as on 31.03.2013 representing a year-on-year growth of 20.85%.

• Credit to micro sector has increased from Rs.6,045 crore as on 31.03.12 toRs.7,089 crore as on 31.03.2013 registering y-o-y growth of 17.27%.

• Credit to small enterprise has increased from Rs.3,117 crore as on 31.03.2012 toRs.3,983 crore as on 31.03.2013 registering y-on-y growth of 27.78%.

• Theshare of lending to Micro Enterprise to total Micro & Small Enterprisesas on 31.03.2013 stands at 64.03% as against target of 60% stipulated by RBI.

• Credit to Micro and Small Enterprise which are the constituents of PrioritySector constitutes 17.33% of ANBC and 43.24% of Priority Sector Lending of our Bank as on31.03.2013 as against 16.99% and 41.13% as on 31/03/2012.

• Credit to medium sector has registered a y-o-y growth of 32% as on March 2013growing from Rs.570 cr. to Rs.750 cr.

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) to make available credit to Micro and SmallEnterprises without collateral security and or third party guarantee.

The performance of our bank under Credit Guarantee Scheme for the year ended on March,2013 vis-a-vis corresponding period of March 2012 is as under:

(Rs/crores)

Achievement up to March 2012

Achievement up to March 2013

During the year

Cumulative

During the year

Cumulative

A/C Amt. A/C Amt. A/C Amt. A/C Amt.
7860 361.54 22651 909.62 8274 410.79 30839 1308.88

Initiatives like special concession of 50 bps for CGTMSE covered accounts and making itmandatory to sanction eligible MSE loans under CGTMSE cover has helped us registering agrowth of 36.67% and 45.74% in respect of no. of A/cs. and Amount as on 31/03/2013.

Performance of Specialized MSME Branches

As per RBI instruction, Bank has designated 57 Branches as Specialized MSME Brancheswith the permission of the Board. Basis of re designation of the branches as SpecializedBranches is 60% of the total advance in the Branch is in MSME Sector, Branch is situatedin a cluster and / or the branch is in a District where Bank is the Lead Bank. The totalMSME Advance in these branches is Rs.1526 crore as on 31/03/2013.

Progress under various Tie-ups

Bank has entered into / renewed the tie-up arrangement during the year 2012-13 withdifferent renowned Commercial Vehicle, Construction equipment, Solar SystemManufactures/Dealers like Tata Motors, Hindustan Motors, Volvo Eicher, USG Automobiles(Dealer of Force Motors for West Bengal), Piaggio, Kirti Solar Hyundai ConstructionEquipments & Tata Power Solar, for financing their customers. Further, Bank has signedMoU with NSIC, SIDBI & IIE, Guwahati, leading players in MSME Sector for sponsoringquality MSME proposals to our Branches. The tie-up arrangements are providing sustainedflow of credit proposals throughout the year. Under this initiative Rs.230 crore has beendisbursed during 2012-13.

Financial Inclusion

With the basic objective of bringing the large unserved population under the bankingmainstream, the Bank is striving towards a more inclusive growth by making financialproducts and services available to the poor in particular. As per the Government of Indiaand the Reserve Bank of India directions, the Bank has been actively pursuing the agendaof Financial Inclusion, with key interventions in four groups, viz. expanding bankinginfrastructure, offering appropriate financial products, making extensive and intensiveuse of technology and through advocacy and stakeholder participation.

Bank has achieved a mile stone of bringing ONE MILLION Financial Inclusion customersinto the banking system.

Banking Correspondents: Bank has opened BC outlets in 738 un-banked villages during theF.Y. 2012-13. A total of 2582 BC outlets are now operational in the un-banked villages.

Ultra Small Branches: Bank has opened 1716 Ultra Small Branches in the CSP locationswhere the Branch officials are visiting with Laptops having VPN connectivity to the CBS.

On-line transaction in BC outlets: Bank has launched real time 'On-line' transactionfacility in 91 BC outlets in the 1st phase.

Overdraft facility to FI customers: Bank has enhanced the Instant OD facility fromRs.500/- to Rs.1000/- for the FI customers.

Urban FI: Bank has successfully launched Urban FI on pilot basis in Kolkata. The Bankhas also participated in Urban FI drive in Delhi Metro, Puducherry, Andhra Pradesh &Jharkhand.

Aadhaar enabled Payment System (AEPS): Bank being the Authentication User Agency (AUA),successfully initiated Aadhaar enabled Payment System (AEPS) in Tripura for payment ofNational Old Age Pension (NOAP) on pilot basis in production environment for Banks'sponsored RRB i.e. Tripura Gramin Bank. The process flow adopted by the Bank has beenappreciated by the NPCI and acknowledged as Best Practice for replicating the same byother PSU Banks.

Direct Benefit Transfer (DBT): Bank has successfully implemented Direct BenefitTransfer (DBT) w.e.f., 01.01.2013 in 43 identified Districts in the 1st phasefor payment of Central Govt. Subsidy to the beneficiaries.

Financial Literacy and Counseling Centres (FLCCs): Bank has opened Financial LiteracyCentres (FLCs) in its all 34 Lead District Managers' offices.

Lead Bank Scheme

The Bank is the convener of State Level Banker's Committee (SLBC) in the states of WestBengal and Tripura The Bank is also helding lead bank responsibility in 34 districtsspread over the states of West Bengal, Assam, Manipur & Tripura. The SLBC meetingsorganized in both the states have been attended by dignitaries like Dr. D. Subbarao,Governor, RBI, Dr. K.C. Chakraborty, Dy. Governor, RBI. Dr Amit Mitra, Finance Minister ofWest Bengal attended all the sLBC meetings of West Bengal during the year 2012-13.

The important action points implemented under the Lead Bank Scheme during the year2012-13 are as under:

• Identified 28140 villages of West Bengal having population < 2000 andprepared roadmap for providing banking outlets in the said villages. 1408 villages havebeen identified for branch opening within the next three years.

• The roadmap has been uploaded in the SLBC (West Bengal) website.

• In Tripura all the 1038 villages have been covered with banking outlets anduploaded in the SLBC website.

• The Annual Credit Plan 2013-14 for both West Bengal and Tripura were finalizedduring the year and made effective right from 1st April, 2013

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 11 RSETIs inthe states of West Bengal, Assam and Tripura to impart training to the prospectiveentrepreneurs from the downtrodden community of the society.

Up to 31.03.2013, these institutes have imparted training to 25094 rural youths /womenof which 18565 trainees are self employed and 1195 trainees are wage employed. Out of18565 self employed trainees 10472, 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 Centres in the states of West Bengal,Assam, Tripura and Manipur to extend financial literacy and credit counseling services tothe poorer section of the society. In the Financial Year 2012-13, these FLCs conducted 539no of Outdoor Activity, wherein 15099 persons participated and also conducted regularIndoor activity wherein 6510 Persons participated.

United Bank Socio Economic Development Foundation (UBSEDF) was established on 30thMarch 2007 with the objective of promoting and carrying out social and economicdevelopmental activities and rendering assistance to weaker and under privileged sectionof the society in terms of decision taken by the Board of Directors of the Bank in itsmeeting held on 18th December, 2006, towards discharging corporate socialresponsibility of the Bank.

Till the Financial Year 2012-13, the Trust has undertaken various welfare activitiesinvolving total assistance of Rs. 106.25 Lac in 53 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 10 21.45
TOTAL 55 110.00

Some of the important projects are, installation of two water hand pumps in Muireivillage and Hamlei Khong Humdung at Ukhrul District of Manipur State, construction ofconcrete roof of the class rooms of Dakshin Kamarpole F.P. School at 24 Parganas (South)district and construction of one Residential Farmers' Training Centre, Chaltaberia, 24Parganas (North) district, setting up Diagonistic Clinic for economically weaker sectionof the society at Khardah, 24 Parganas (North), self employment unit for the women lifeconvicts of Alipur Correctional Home (Kolkata), setting up of free/subsidized DialysisCentre at Maharaja Agrasain Hospital Charitable Trust, Rhotak, New Delhi, construction ofHostel Building and purchase of furniture for physically and mentally challenged childrenat Duliajan, Assam, adoption of 2 scheduled tribe girl child in Jharkhand and setting upof Arsenic free drinking water plant at Dharampur, 24 Parganas (North).

ORGANIZATION & SUPPORT SERVICES

Branch Network

With the opening of 49 branches during the year 2012-13, the total number of branchesstands at 1729 as on 31.03.2013 spreading across all the States of the country consistingof 678 Rural (39.2%), 324 Semi-urban (18.7%), 397 Urban (23.0%) and 330 Metro (19.1%)branches. The Bank has also 4 Extension Counters. The Bank has 33 Regional Offices acrossthe country. State wise position of opening of branches during 2012-13 are as under:

State No. of branches Opened State No. of branches opened
Assam 5 Chhatisgarh 1
Meghalaya 1 Maharashtra 3
Tripura 3 Gujrat 2
West Bengal 4 Tamil Nadu 1
Bihar 2 Pondicherry 1
Orissa 8 Kerala 1
Jharkhand 2 Karnataka 2
Rajasthan 5 Andhra Pradesh 2
Uttar Pradesh 6 TOTAL 49

The bank has opened 14 Branches in unbanked rural centres. The Bank has also opened itsRepresentative office at Myanmar. Out of total 1729 Branches, 796 Branches (16%) arelocated in 68 Minority Concentration Districts (MCDs) throughout the country. 58% of totalBranches are located at rural and semi urban centres to cater to the people living inhinterland.

Composition of Branch Network Geographical location-wise

Location

Number of Branches

31.03.2012 31.03.2013
Eastern Region 1065 1081
% of Total 63.4 62.5
North Eastern Region 280 289
% of Total 16.7 16.7
Western Region 68 73
% of Total 4.0 4.2
Northern Region 87 92
% of Total 5.2 5.3
Southern Region 70 77
% of Total 4.2 4.5
Central Region 110 117
% of Total 6.5 6.8
Total 1680 1729

Composition of Branch Network Population group-wise

Location

Number of Branches

31.03.2012 31.03.2013
Metropolitan 322 330
% of Total 19.2 19.1
Urban 384 397
% of Total 22.9 2 3.0
Semi -Urban 310 324
% of Total 18.5 1 8.7
Rural 664 678
% of Total 39.5 39.2
Total 1680 1729

Special Category Branches

Number of Branches

Branch Category 31.03.2012 31.03.2013
Service Branch 19 19
Retail Hub 26 26
ARM Branch 2 4
Corporate Finance Branch 3 3
Treasury Branch 1 1
CPPC 1 1
Cash Management Service Hub 1 1

InfoTech Progress

In order to leverage CBS platform and robust IT infrastructure implemented in precedingyears, many new initiatives are taken during 2012-13. Internal efficiency, availability,customer service, business process reengineering as well as Information Security were thefocus areas.

CBS

Core Banking Application (Finacle) has been migrated to a higher version. Data baseservers are upgraded to superdome model to reduce the transaction timing.

MIS

MIS/ADF project has already been implemented in the Bank as per the guidelines issuedby RBI. Bank has procured a solution and created a Central Data Repository (CDR) forstorage of all information from various data sources and for generation of ADF & MISreports from it without any type of manual intervention. Further, Bank has also created afew BI Dashboards which will aid in management decision making process. The CDR & itsBI components are expected to be fully operational during current Financial Year.

ADC

Bank provides Anytime, Anywhere Banking facility to its customers through its alternatedelivery channel initiatives like ATMs, Internet Banking, Mobile Banking & Telebankingetc. 115 new ATMs have been added during the year taking the total number of ATMs to 917.Bank has ATM sharing arrangements with networks like NFS, CashTree & VISA enablingcustomers' access to ATM services at other banks' ATMs also. Further value have been addedto Internet banking services during the year by enabling the same for online trading andonline term deposit opening, adding in the existing services of online shopping, utilitybill payment, railway & air ticketing, mobile top-up online, ASBA demat holdingdetails query etc. During the year the Mobile Banking Channel has been enhanced withimmediate payment system (P2P and P2A) for its customers. At present services like balancequery, last ten transaction view, stop cheque, fund transfer (intra & interbank),mobile top-up, IMPS (P2P & P2A) etc are enabled. Complying to mandatory requirementsbank has in place real-time SMS based transaction alerts for all transactions.

Virtualisation

Bank has taken a green initiative by consolidating 25 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

A new technology initiative of self-service kiosk services has been deployed in theselected branches. Initially the services offered for Passbook printing, Cash deposit andCheque deposit services. This new initiative will enable customers to obtain the Bankingservices during the non- business hours.

Payment Systems

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 beenpromoted to 'A' Category AD branch during the FY 2012-2013. Also, 40 'B' category areusing SWIFT facility. New SWIFT DC & DR setup has been implemented at Bank's DR Site(Vashi) and Bank's DC (Kolkata) respectively during the FY 2012-2013. Risk Module forTreasury operation using ITMS made operational. LC Operation has been made Live via SFMSin selected branches and all regional offices across the country. Around 485 Branchesacross the country is using MDSS system for collection of mini deposits for smallinvestors through our authorized agents.

Bilingualization

Bilingual have been successfully deployed at production during last FY-2012-13 forpassbook printing in Hindi.

CMS

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

CTS

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

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

Corporate Mail Messaging System with centralized archival solution covering all officesis in place and upgraded during the year.

Bank Website and Intranet

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

SOC & IT Security

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 RBI guidelines. Bank is regularly conducting IS Security audit ofcritical IT infrastructure through Cert-in empanelled agency. Bank has engagedprofessional agency for providing Anti-Phishing, Anti-Pharming, Anti-Trojan andAnti-Malware Managed Services for Bank Websites. Bank has implemented Security OperationsCentre (SOC) by mapping all devices accessed in data center and disaster recovery centerfor 24x7 monitoring and recording of logs. The Database Activity Monitoring (DAM)management server and Database Firewall (X2500) has been installed and configured at bothDC and DRC. Internet banking and CMS database in Data center and in Disaster recoverycenter has been integrated with DAM server. SOC provides the centralized view ofInformation Security status and command centre for IS Security operations.

Biometric

Department of Financial services, Ministry of Finance directed all the Public SectorBanks to introduce biometric log-in for employees of the Bank to prevent incidences ofauthentication frauds. Roll out of the solution in the branches has been started.

Manpower Profile

The total Staff strength of the Bank stood at 15354 as on March 31, 2013 as against15500 last year.

Category of Employees March 2012 March 2013
Total No. of Employees 15500 15479
Officers 6305 6445
Clerks 6228 6056
Sub -Staff 2967* 2978

Excludes part-time employee

The Bank's staff comprised 41.64% Officers, 39.12% Clerks and 19.24% Sub-Staff. Womenemployees comprising 2337 constituted 15.10% of the Bank's total staff.

As a part of the effective succession planning, process for recruitment of probationaryofficers, specialist officers & clerks were undertaken successfully during the year2012-13, and 281 probationary officers, 27 specialist officers and 529 clerks joined thebank. Inter scale promotion of all grades were successfully completed during the yearthrough which a total of 1340 officers were promoted to their next higher scale.

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 eight more Hospitals viz. Belle ViewClinic, Zoom Health Care , Suraksha Diagnostic Pvt Ltd., Medical Superspeciality Hospital,Kothari Medical Centre, Charnock Hospitals Pvt. Ltd, Merdica North Bengal Clinic, Siliguri& Mission Hospital, Durgapur taking the total number of such arrangements to 79Hospitals and Diagnostic Centres located all over India to meet hospitalization / healthcheck-up / diagnostic requirements of employees / retired employees at a concessional /competitive rate. The Bank has also extended the Annual Health Check up of the officers inthe rank of Scale IV & above along with their spouse.

Reservation Policy in respect of SC and STs

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/ST employees in total staff stood at 3918 as on31.03.2013 constituting 25.51% of the total employees. During the year, 413 employeesbelonging to SC/ST category were promoted to next higher cadre. They constituted 23% ofthe total number of promotions effected during the year. The Bank had organizedpre-promotion training programmes for the eligible employees from reserved categoriesprior to holding inter-cadre promotions in different cadres. Dependents of 17 deceasedemployees belonging to SC/ST category who died while in service were paid ex-gratialump-sum amount to the tune of Rs. 99 lacs during the financial year. Dependants of twoemployees belonging to SC community were also given employment in the Bank. Quarterlymeetings between the Top Management and SC/ST Employees Welfare Council of the Bank wereheld on regular basis during the year. Complaints received from individuals/organizationson SC/ST matters were looked into for early redressal of grievances.

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.

Bank has opened Regional Training Centres at Guwahati (Residential) and Bhubaneswarbesides Delhi, Mumbai and Kolkata as full fledged training centres where full timefaculties are posted to conduct regular courses throughout the year. For the specializedsubject like Government Transaction and Cash Management, Effective Delivery of RuralCredit, Micro Enterprises Development, Forex etc, training has been arranged during theyear under the auspices of reputed institutes like 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 7128 employees comprising 4385 officers, 2237 clerks and 123subordinate staff of the Bank attended in-house Training Programmes besides 158 RRBemployees and 225 Officers of RRB attended Special Programmes conducted at the Bank'sStaff Training College, Kolkata.

As per Govt of India guidelines, pre-promotion trainings for employees belonging toScheduled Castes and Scheduled Tribes were conducted at Staff Training College, Kolkata,Regional Training Centres and other different locations.

Bank has also conducted in-company Training Programmes during the year wherein 618employees have participated. Bank had sent 318 officer employees for 133 differentexternal training programmes. During the year Bank had sent 12 senior officers for tendifferent overseas training programmes.

Two non-official directors on the Boards of the bank attended the conference held on05.11.2012 at Mumbai by CAFRAL (Centre for Advanced Financial Research and Learning) - anorganization promoted by Reserve Bank of India providing opportunity to acquaint theparticipants with the latest thinking amongst the financial sector practitioners,regulators, policy makers and academics on subject of current interest through meaningfuldiscussion.

Customer orientation

The bank has taken several initiatives to remain customer friendly through providingprompt service, bringing in diversified technology supported products / services,responding to customer queries / suggestions and redressal of customer complaints. The'code of commitment to customers' issued by BCSBI is made available at bank's website. Inorder to improve the quality of customer service, a Toll free contact facility at CustomerService Department 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 2012-13, percentage of customer complaint redressal was 97.30%.all complaints were redressed within stipulated period. As far as cases referred toBanking Ombudsman is concerned, the percentage redressal of complaints was 96.60%. Thebank has implemented 112 of 116 recommendations of Damodran Committee accepted by IndianBank' 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 customerawareness, the bank has actively participated and organized number of outreach programmein association with Banking Ombudsman (West Bengal & Sikkim) during the financial year2012-13.

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 / ExternalAuditors at field level is continuously engaged in inspection of Branches / Offices of thebank as per 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 are carried out to focus on effective Riskmanagement and internal controls to anticipate areas of potential risks and to play animportant role in protecting the bank from various risks. During the year 2012-13, RBIA of964 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 2012-13, Concurrent Audit of 435 branches have been completedcovering total deposit of 55% and total advance of 90% 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 210 branches during the year 212-13covering 60% of Bank's business.

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)are submitted to FIU as and when received from branches.

• Bank completed the Special KYC audit as advised by the Reserve Bank of Indiawithin the 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 time to time in conformity with the guidelines issuedby Reserve Bank of India. All currency chest branches have been provided with CCTV systemswith 90 days recording facilities and 82 out of 83 currency chest branches have beenprovided with Access Control system. In addition, the processes for installation of CCTVsystem in 490 non-currency chest branches are in progress. On completion of the process,the remaining branches will be provided with CCTV systems.

During the year 2012-13, 108 newly recruited Armed Guards have joined the bank and theyhave been posted to the branches for the purpose of guarding as well as effective cashremittance. All currency chest branches within the jurisdiction of Kolkata Police havebeen brought under Integrated Security Solution (ISS) system which has a control monitorat Lalbazar Police Control Room and is functioning effectively.

We have been sensitizing the officers and staff members posted in the branchesregarding detection and impounding of forged notes. 150 Desktop Sorting Machines have beenprovided to the branches located in border areas and branches receiving Rs. 25 lacs andabove per day. The process for procurement of another 671 Desktop Sorters has beeninitiated and all branches will be provided with Desktop sorters in phased manner

The training of Armed Guards have been carried out in Staff Training College, Kolkata,during the month of March and September, as per schedule and by Regional Security Officerswherever posted at different locations.

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, Nadia, onregular basis.

Premises

During the year 2012-13, Bank could complete the work of Bank's own building atBhubaneshwar. This newly built four storied building with all the amenities wasinaugurated by the Chairman & Managing Director in the presence of dignitaries fromthe state of Odisha at a glittering function on 21st November, 2012.Bhubaneshwar Regional Office, Retail Hub, Staff Training Centre, Malishahi Branch and theCurrency Chest operate from this building. The Bank has initiated the work of Data Centreat Salt lake in our land held on long term lease. A plot of land measuring 295 sqm. hasbeen purchased from Noida Authority on long term lease for shifting of our Sector-33,Noida Branch and the process of construction of Bank's building has also been initiated.The Bank has purchased a plot of land on long term lease measuring 2.548 acres in theFinancial Hub at New Town, Kolkata for construction of Bank's building there at. The Bankhas also purchased two plots of land measuring 0.88 acres and 2.00 acre of land on longterm lease from Raipur Development Authority for construction of Bank's Office buildingand residential complex respectively.

Implementation of Official Language

Bank has taken many steps to promote awareness through organizing conferences,workshops, awareness camps and training sessions.

All India Official Language Conference was held in the Bank during the month of July,2013 at Head Office.

Being the convenor of Town official Language Implementation Committee of Bank's inKolkata, the Bank organized an Awareness Progamme for the executives of the Member Banksin the presence of The Deputy Director (Implementation), Regional Implementation Office(East). The Committee has been awarded second best prize for best performance in Hindi.

To encourage effective implementation of Official Language in the Bank, HindiWorkshops, computer training in Hindi and Hindi training Classes for 'Praveen' and'Pragya' courses are being held. Also, Many Regional offices were inspected to assess theposition of Official Language implementation.

A translation training program was organized at Staff Training College, Kolkata for thebenefit of the newly posted and senior level Official Language Officers of the Bank withthe help of faculty from Central Translation Bureau, Govt of India, New Delhi and HindiTeaching Scheme, Kolkata.

For promotion of Hindi among the employees of the Bank, a Hindi Magazine "UnitedDarpan" was published on quarterly basis regularly.

Bank's website in bilingual and process of bilinguality in Finacle system is inprogress which is expected to be completed very shortly. Various types of bilingual formsand standard letters are uploaded in Bank's portal for wide publicity and official use.

Regional Rural Banks (RRBs)

The Bank has four sponsored RRBs viz., Bangiya Gramin Vikash Bank in West Bengal, AssamGramin Vikash Bank in Assam, Tripura Gramin Bank in Tripura & Manipur Rural Bank inManipur. The combined aggregate business positions of all the four-sponsored RRBs are asfollows:

(Rs/crore)

Parameters

Position as on

Growth (%) during the year ended on

31.03.12 31.03.13 31.03.12 31.03.13
Total No. of Branches 1093 1109 3.7 1.37
Total Business 21,839 24,767 16.9 13.93
Deposit 14,470 16,330 13.8 12.85
Advance 7,369 8,437 23.6 16.08

Manipur Rural Bank has achieved profit for the first time in its history. As a resultall our sponsored RRBs are earning profit since this financial year. RTGS facility alongwith NEFT facility through sponsored Bank is available to customers of RRBs.

Awards/ Accolades

The bank has received FINWIZ 2012 Best banker's award for customer friendliness.

Bank has been awarded

1. National award as the Best Bank for lending to Small Sector by the Ministry of MSME,Govt. of India for the year 2011-12.

2. National award for outstanding performance in implementation of PMEGP in NorthEastern Sector of the Country for the year 2011-12 Ministry of MSME, Govt. of India.

3. National award as the 2nd best Bank for lending to Micro Sector by theMinistry of MSME, Govt. of India for the year 2011-12.

4. National award as the Second best Bank for the performance of coverage of MSEaccounts under CGTMSE scheme in North Eastern States for the year 2011-12 by CGTMSE.

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 compliance issues in activity wise areas like deposit andservices, advances, KYC-AML, BCSBI Codes, are identified. Role responsibility as regardscompliance functions is defined for every tier of the Bank. A reporting system has alsobeen introduced to ensure compliance of regulatory and statutory compliance issuesthrough:

• Self- Certification,

• Random testing through Designated Compliance Officer,

• Quarterly statement by the Branches and Regional Offices, indicating theCompliance status of all circulars received from RBI, IBA & Govt of India.

• Quarterly statement with details of Compliance rules covering the importantareas.

Under Corporate Governance, the Board of Directors periodically reviews compliancereports to ensure timely submission of regulatory returns by the different departments ofHead Office to the GOI/ RBI on regular basis and adherence to all applicable provisions oflaw, rules and guidelines.

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 atlarge;

• 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 & 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 01.04.2012 - 7107
Shares transferred to beneficiaries till 31.03.2013 - Nil
Shares outstanding/unclaimed as on 31.03.2013 - 7107

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.

Sri Sanjay Arya, Executive Director, joined the Board during the year and the Board ofDirectors extends warm welcome to him.

Sri Bhaskar Sen, Chairman & Managing Director demitted office on attaining the ageof superannuation on 31st December 2013. Sri Soumitra Talapatra, WorkmenEmployee Director demitted office on completion of his tenure, and the Board wished thembest for all their future endeavors.

BOARD OF DIRECTORS AS ON MARCH 31, 2013

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 D Arya Executive Director Executive 18.06.2012
3. Sri. Sandeep Kumar Nominee - GOI Non-Executive 02.12.2011
4. Smt. Surekha Marandi Nominee -RBI Non-Executive Independent 30.07.2010
5. Sri. Sunil Goyal Non-Official Director under CA category Non-Executive Independent 22.07.2011
6. Sri. Srenik Sett Non-Official Director Non-Executive Independent 06.10.2010
7. Sri. Hiranya Bora Non-Official Director Non-Executive Independent 05.04.2011
8. Sri. Kiran B Vadodaria Non-Official Director Non-Executive Independent 28.11.2011
9. Sri. Pijush Kanti Ghosh Officer Employee Director Non-Executive 19.12.2011
10. Sri. Saumen Majumder Shareholder Director Non-Executive Independent 27.11.2010

Board & Committee Meetings held during the Year

Type of Meeting Number
Board of Directors 14
Management Committee of the Board of Directors 19
Audit Committee of the Board of Directors 9
Shareholders' Committee 4
Risk Management Committee of the Board of Dire ctors 4
Special Committee to Review High Value Frauds 2
Board Level Customer Service Committee 2
Departmental Promotion Committee 2
Remuneration Committee 1
High Powered Committee 3
IT Sub Committee of the Board 4
Nomination Committee -
Special Committee to Monitor Officers above 55 Years 1
Election Committee of the Board of Directors 2
Recovery Committee of the Board of Directors 3
Board Level Rights Issue Committee 1

Director's Responsibility Statements

The Directors confirm that in the preparation of Annual Accounts for the year ended 31stMarch 2013 -

• The applicable accounting standards have been followed along with properexplanation relating to material departures, if any;

• The accounting policies framed in accordance with the guidelines of the ReserveBank of India, were consistently applied.

• Reasonable and prudent judgement and estimates were made so as to give a trueand fair view of the state of affairs of the Bank at the end of the financial year and theprofit of the Bank for the year ended on 31st March 2013.

• 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

The Board at its meeting held on May 10th 2013 has recommended, subject tothe approval of the shareholders and appropriate regulatory authorities, final dividend atthe rate of 21% i.e. Rs.2.10 per equity share of face value of Rs.10/- each, to all equityshareholders of the Bank whose name appear on the Register of Members on the date of theBook Closure. This will entail an outgo of Rs. 171.62 cr. on account of Dividend andDividend Tax.

17. 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
Place : Kolkata (Smt Archana Bhargava)
Date : 6th May, 2013 Chairperson & Managing Director
   

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 150,642.89 13.51 1.38 14.51 15.4 0.0 0.00
Bank of Baroda 33,325.25 7.42 1.02 15.30 15.1 0.0 0.00
Punjab Natl.Bank 28,230.60 7.70 0.89 12.68 16.5 0.0 0.00
Bank of India 14,104.03 4.82 0.59 14.59 13.0 0.0 0.00
Canara Bank 12,696.18 4.97 0.54 11.92 13.2 0.0 0.00
IDBI Bank 10,626.10 9.18 0.50 12.70 10.2 0.0 0.00
Union Bank (I) 9,599.47 5.03 0.59 13.67 15.0 0.0 0.00
UCO Bank 7,584.96 5.95 0.81 13.54 9.1 0.0 0.00
Oriental Bank 6,853.07 6.03 0.56 12.44 11.5 0.0 0.00
Central Bank 6,772.46 0.00 0.50 13.46 8.3 0.0 0.00
I O B 6,423.81 16.35 0.46 13.27 4.9 0.0 0.00
Syndicate Bank 6,286.40 3.32 0.64 14.12 22.8 0.0 0.00
Indian Bank 6,101.16 5.17 0.56 12.64 15.7 0.0 0.00
Allahabad Bank 5,157.46 4.52 0.47 12.83 11.8 0.0 0.00
Corporation Bank 4,750.60 5.42 0.47 12.57 16.1 0.0 0.00

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Key Information

Key Executives:

Deepak Narang , Executive Director  

Sunil Goyal , Director(PartTime NonOfficial)  

Hiranya Bora , Non-official Director  

Kiran B Vadodaria , Director(PartTime NonOfficial)  


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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