Fiscal 2014 saw a combination of various external and internal events that kept marketsturbulent, interest rates high and investor confidence low, resulting in shrinkinginvestment and GDP growth. Due to apprehensions of an impending 'taper' of the US FederalReserve's Quantitative Easing programme, emerging markets, including India, experiencedforeign investment outflows and currency volatility. India's macroeconomic imbalances atthe beginning of the year exposed it to this volatility as well, forcing stringent policyresponses. However, improving fundamentals have gradually restored some stability in themarkets.
Indian economic growth had slowed rapidly from 8.9% in 2010-11 to an officiallyestimated 4.9% in fiscal 2014, caused in large part by structural factors impedinginvestment activity. Decline in financial savings, sluggish growth in fixed capitalformation over successive quarters, persistence of high inflation and low businessconfidence contributed to the decline in potential growth, particularly in the absence ofadequate structural policy measures.
Inflation had emerged as the central concern during the year and in combination withthe current account and fiscal deficits, had forced Reserve Bank of India (RBI) to raiseits policy Repo rate by 75 basis points. While most of the slowdown was due to a steepdrop in investment, a cut in the Government's spending in order to contain the fiscaldeficit at less than the budgeted 4.8% of GDP also contributed to a slowdown inconsumption. For fiscal 2014, fiscal deficit has been revised down to 4.6% of GDP.
The biggest turnaround was in the Current Account Deficit, which had shrunk from $88billion in fiscal 2013 to $31 billion in the first 3 quarters of fiscal 2014. For fiscal2014, the current account deficit is expected to be ~2% of GDP. With large capital inflowsvia Foreign Currency Non-Resident (FCNR-B) deposits and bank capital, the Rupee hasstabilised at around 60-62/USD and has been one of the best performing emerging marketcurrencies over the past few months.
The Repo rate increases have pushed up the floor for rates and despite liquidityinfusion by RBI, short term interest rates have remained high. One of the consequences ofthe slowdown and high inflation has been a contraction of financial savings of households,with a preference for investment in assets like gold and real estate. This has, in turn,affected deposit accretion with banks. The exceptional liquidity tightening measures ofRBI leading to higher rates had resulted in a temporary spike in credit growth in favourof banks compared to credit substitutes in the money market, but this had graduallynormalised. On the resources front, strong NRI inflows through the FCNR(B) deposits routehave helped improve deposit growth. For the fiscal 2014, deposit growth in the system was14.6%, while credit growth was 14.3%.
Prospects for Fiscal 2015
While the medium term prospects point towards an improving growth scenario, given theimproved macroeconomic fundamentals it is likely that there will only be a modest economicrecovery in fiscal 2015. Globally, many emerging markets still look vulnerable andperiodic flights to safe haven US Government securities could result in portfolio fundoutflows. Although markets appear to have factored in a steady taper trajectory withrelative stability, expectations of rising interest rates in the US in 2015 could resultin a resumption of volatility.
Inflation remained the key determinant for calibrating monetary and fiscal policies,including setting of policy interest rates. Headline CPI inflation is likely to meet theRBI glide path to 8% by January 2015. A consolidation of the fiscal environment mightprovide additional space for modest monetary policy stimulus. Interest rates across theyield curve are likely to move down from current levels. The extent of this drop will alsobe determined by the US Federal Reserve stance in increasing interest rates in 2015.
Both the gradual expected downward shift in inflation and moderating fiscal stressmight allow RBI to ease its tight monetary policy stance later in the year, although thisis contingent upon future inflation expectations. Measures to remove bottlenecks by theGovernment will also bring capex on track. Expected global recovery will help exports,adding to the growth revival. In fiscal 2015, RBI expects GDP growth to pick up and be inthe range of 5-6%.
Financial savings are likely to improve with economic recovery and moderatinginflation. This will push up bank deposits in fiscal 2015. We expect deposit growth in therange of 14-15% and credit growth between 15-16%.
OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE
During 2013-14, the operating environment for the banking system continued to bechallenging with persistent high inflation, muted growth, slowdown in credit off-take,concerns regarding growing non-performing assets and a high incidence of assets beingrestructured. Despite these challenges, the Bank's strategy to build its business uponstrong customer franchises, while adopting a prudent approach, had resulted in deliveringstrong results. The underlying performance of the business remained strong with revenuegrowth remaining well ahead of cost growth. The Bank reported a net profit of Rs.6,217.67crores for the year ended 31st March 2014, registering a growth of 20.05% overthe net profit of Rs.5,179.43 crores last year. The healthy growth in earnings was drivenby contribution from all segments. The Bank continued to focus on the quality of growthand displayed strong growth in key balance sheet parameters for the year ended 31stMarch 2014. The total assets increased by 12.53% to Rs.383,245 crores, total depositsincreased by 11.22% to Rs.280,945 crores while total advances increased by 16.81% toRs.230,067 crores.
During the year, the Bank continued to expand its network, with increased focus on thesemi-urban and rural areas. Both the Retail and SME segments continued to benefit fromthis network expansion and have justifiably remained the key growth drivers for the Bankduring the year. The Bank remains committed to a customer-centric approach in dealing withits clientele aided by dependable technology and simple processes. A well distributedbranch banking channel complemented by a robust alternate distribution channel have helpedthe Bank to deliver a wide range of products and services to its customers across thecountry and overseas.
The Bank continued to enhance shareholder value by delivering healthy financial returnratios in difficult economic conditions. Basic Earnings Per Share (EPS) was Rs.132.56compared to Rs.119.67 last year, while the Diluted Earnings Per Share was Rs.132.23compared to Rs.118.85 last year. Return on Equity (RoE) was 18.23% compared to 20.51% lastyear, impacted mainly due to the equity capital raising in the last quarter of 2012-13.However, Return on Assets (RoA) was 1.78% compared to 1.70% last year. The Net InterestMargin (NIM) for the year was 3.81% compared to 3.53% last year. The asset qualityremained stable with ratio of Gross NPAs to gross customer assets at 1.22% compared to1.06% last year and Net NPA ratio (Net NPAs as percentage of net customer assets) was0.40% compared to 0.32% last year.
The Bank strives for continual enhancement of shareholder value by efficiently usingcapital in order to maximise return on equity. Aiming to achieve this objective, the Bankendeavours to develop an asset structure that will be sensitive to the importance ofincreasing the proportion of low risk weighted assets. The Bank's capital managementframework helps ensure an appropriate composition of capital and an optimal mix ofbusinesses.
RBI has issued Guidelines based on the Basel III reforms on capital regulation to theextent applicable to banks operating in India. These guidelines require among otherthings, higher levels of Tier I capital and common equity, capital conservation buffers,higher deductions from common equity and Tier I capital for investments in subsidiariesand changes in the structure of nonequity instruments eligible for inclusion under Tier Icapital. The Basel III capital regulation has been implemented from 1st April2013 in India in a phased manner and is to be fully implemented as on 31stMarch 2019. This will also align full implementation of Basel III in India closer to theinternationally agreed date of 1st January 2019.
Accordingly, the Bank has computed Capital Adequacy Ratio (CAR) as on 31stMarch 2014 in terms of regulatory guidelines on Basel III, wherein the capital charge foroperational risk is computed under the Basic Indicator Approach and the capital charge forcredit and market risk is computed under the Standardised Approach. As on 31stMarch 2014, the Bank's CAR under Basel III was 16.07% (against the minimum regulatoryrequirement of 9%). Of this, the Common Equity Tier I (CET I) CAR was 12.62% (againstminimum regulatory requirement of 5%) and Tier I CAR was 12.62% (against minimumregulatory requirement of 6.5%). As on 31st March 2014, the Bank's Tier II CARwas 3.45%. The capital adequacy ratio of the Bank computed under Basel II norms as on 31stMarch 2013 was 17.00% with tier I CAR of 12.23% and tier II CAR of 4.77%
The following table sets forth the capital, risk-weighted assets and capital adequacyratios computed as on 31st March 2014 (under Basel III) and 31stMarch 2013 (under Basel II).
(Rs. in crores)
|AS ON 31st MARCH ||2014 ||2013 |
| ||(under Basel III) ||(under Basel II) |
|Tier I Capital ||35,805.48 ||31,596.80 |
|Tier II Capital ||9,790.55 ||12,334.32 |
|Out of which || || |
|- Tier II capital Instruments ||8,802.04 ||11,483.19 |
|- Other eligible for Tier II capital ||988.51 ||851.13 |
|Total Capital qualifying for computation of Capital Adequacy Ratio ||45,596.03 ||43,931.12 |
|Total Risk-Weighted Assets and Contingencies ||283,807.26 ||258,355.49 |
|Total Capital Adequacy Ratio ||16.07% ||17.00% |
|Out of above || || |
|- Common Equity Tier I capital ratio ||12.62% ||12.23% |
|- Tier I capital ratio ||12.62% ||12.23% |
|- Tier II capital ratio ||3.45% ||4.77% |
An overview of various business segments along-with their performance during financial2013-14 and future strategies is presented below.
The Retail Banking segment is one of the key drivers of the Bank's growth strategy,encompassing a wide range of products delivered through multiple channels to itscustomers. The Bank today offers a complete suite of products across deposits, loans,investment solutions, payments and cards to its customers. The Bank is committed todeveloping long-term relationships with its customers by providing high-quality servicesand products through regular customer engagement in an easy and convenient manner. Duringthe year, the Bank engaged in 'Lakshya', a retail banking transformation initiative, whichis currently live in more than 1,100 branches, comprising around 80% of the Bank'slow-cost deposit business. Various initiatives under the Lakshya program have helpedincrease sales productivity and operational efficiency while at the same time focusing onincreasing customer satisfaction and improving employee work life balance.
The Bank has over the years built its retail deposit franchise by pursuing a veryrobust and effective customer segmentation strategy. During the year, the Bank continuedto focus on increasing its retail deposits base, particularly demand deposits. SavingsBank deposits have grown at a Compounded Annual Growth Rate (CAGR) of 24.67% over the lastfive years. During the year, Savings Bank deposits grew by 21.95% to Rs.77,776 crores fromRs.63,778 crores last year. On a daily average basis, Savings Bank deposits grew by 19.11%to Rs.62,225 crores. As on 31st March 2014, the Bank had 133 lac savingsaccount customers. With an objective to widen the retail deposit base, the Bank alsocontinued its focus on increasing share of retail term deposits. As on 31stMarch 2014, retail term deposits grew 37.29% YoY to Rs.84,233 crores. However, excludingthe FCNR(B) deposits raised to avail the concessional swap facility provided by RBI,domestic retail term deposits grew 20.87%, constituting 56.01% of domestic term deposits.As on 31st March 2014, CASA and retail term deposits constituted 75% of totaldeposits compared to 69% a year ago. The domestic CASA and retail term depositsconstituted 78% of total domestic deposits.
The Bank continued its focus on increasing share of retail loans to total advances. Theretail assets portfolio of the Bank has increased to Rs.74,491 crores as on 31stMarch 2014 from Rs.53,960 crores last year, thereby registering a growth of 38.05%. As on31st March 2014, retail loans constituted 32% of total advances as compared to27% a year ago. Excluding loans against FCNR(B) deposits, the share of core retail loanswas 31%. Secured loan products accounted for 86% of domestic retail loans, with home loansand loan against property accounting for 72% of the book, of which, home loan accountedfor 63%. Auto loans accounted for 12%. Personal loans and credit cards were 10%, whilenon-schematic loans comprising loans against deposits, other securities etc. accounted for4%. The Bank has further increased its geographical reach for sourcing retail loans. TheBank sources retail loans through 132 Asset Sales Centres. Retail loans are alsooriginated from 1,716 branches. The Bank focused on increasing its retail loans by crossselling to internal customers. More than a third of the incremental retail loans are nowsourced through branches and existing liability customers contribute almost two third ofthis incremental business. The credit quality of retail loans remained steady.
The cards business is an integral part of the Bank's retail strategy withever-increasing number of transactions moving to the electronic mode. The Bank is one ofthe largest debit card issuers in the country, with a base of 133.2 lac. The Bank had 13.8lac credit cards in force as of 31st March 2014 which made it the 5thlargest credit card issuer in the country. The Bank is also one of the largest acquirersof point-of-sale terminals in the country with an installed base of 2.48 lac.
The Bank offers a complete suite of banking and investment products under its NRIServices for Indians living and working overseas. As on 31st March 2014, theBank's aggregate NRI deposits (Savings + Term Deposits) stood at Rs.27,959 croresregistering a growth of 113%. One of the reasons for this sharp growth was mobilisation ofFCNR(B) Deposits in the light of various liberalised measures announced by RBI, which alsoincluded the concessional swap window for banks. The Bank has mobilised FCNR(B) Depositsamounting to USD 1.58 billion under this window. The Bank has 49 branches authorised toissue Portfolio Investment Scheme (PIS) permissions to NRI/PIO who want to trade in theIndian secondary markets through a registered stock broker on a recognised exchange. TheBank has a strong focus on customer service and provides a 24x7 integrated helpdesk forNRI customers with the facility of toll-free numbers from key geographies.
The products offered in the area of retail forex and remittances include travelcurrency cards, inward and outward wire transfers, traveller's cheques, foreign currencynotes and remittance facilities through online portals as well as through collaborationwith correspondent banks, exchange houses and money transfer operators. The Bank continuedto have a market leadership position in Travel Currency Cards with 11 currency optionsother than INR. Additionally, the Bank offers a Multicurrency Forex Card, aimed atfrequent travellers to multiple countries. The aggregate load value on travel currencycards crossed USD 4 billion during the year. The volumes of retail remittances rose by 44%during the year and the Bank processed outward remittances of USD 1.02 billion and inwardremittances of USD 5.63 billion.
'Axis Bank Privee', offers private banking solutions to meet the personalisedinvestment needs of high net worth individuals as well as the corporate advisory needs offamilies in business. Axis Bank Privee brings solutions offered by various business groups(retail and corporate) within the Bank and various group entities under one integratedplatform.
The Bank also distributes third party products such as mutual funds, Bancassuranceproducts (life and general insurance), online trading and gold coins through its branches.The Bank is one of the leading banking distributors of mutual funds in India anddistributes mutual fund products of all major asset management companies. These productsare sold through the Bank's branch distribution network based on client requirements. TheBank distributes life insurance products of Max Life Insurance Company. During the year,more than 2.4 lac lives were insured, with a collection of Rs.1,052 crores towards annualpremiums. In general insurance, the Bank has a tie up with Tata AIG (AmericanInternational Group) and during the year sold more than 3.2 lac policies and collectedRs.163 crores of premium. The Bank has consciously shifted its focus on health relatedproducts and has also created an additional avenue for selling general insurance productsby launching outbound tele sales. The Bank offers online trading services to its customersin collaboration with Axis Securities Ltd. (a 100% subsidiary of the Bank) under the nameAxis Direct, an enhanced and simplified online trading platform, which is now alsoavailable to NRI customers. During the year, the Bank opened more than 1.2 lac onlinetrading accounts.
During the year, the Bank has introduced electronic know-your-customer (e-KYC)facility. Axis Bank has been the first Bank to introduce the e-KYC facility whichfacilitates Aadhaar-registered individuals to step into a branch and open an account,merely by providing his/her unique identification number and through biometricidentification simplifying the KYC process and thereby providing a seamless customerexperience.
In April 2013, the Bank launched India's first bank-wide customer loyalty program 'eDGELoyalty Rewards'. 'eDGE Loyalty' rewards is designed to reward customers for everyrelationship they have with the Bank across savings accounts, cards and electronic channeltransactions, providing multiple opportunities for the customer to earn rewards.
The Bank's organically built branch network over the last twenty years has helped it tostrategically carve out one of the best pan India branch distribution networks. In thelast few years, a higher share of branches have been added to semi-urban and rural areas,which comprise 52% of total branches as of 31st March 2014. During the year,the Bank added 455 branches of which 298 were rural unbanked branches. The geographicalreach of the Bank extended to 29 states and 5 Union Territories, covering 1,636 centresand 535 districts. The Bank also added 1,677 ATMs during the year to reach a network sizeof 12,922 as on 31st March 2014 compared to 1 1,245 ATMs last year. The Bankhas deployed 615 Automated Deposit Machines (for cash deposits into customer accounts) andhas extended this 24x7 facility in certain branches, which have integrated self-servicelobbies. Besides the ATM network, internet banking, mobile banking and phone banking havedeveloped as important alternate distribution channels for the Bank.
The sustained slowdown in economic growth especially deceleration in the momentum ofinvestments has reflected in the corporate sector loan growth. Certain initiatives takenby the Government during the year resulted in a minor uptick in the execution of theexisting projects; however demand and growth of credit remained subdued. The corporatecredit portfolio of the Bank comprising of advances to large and mid-corporates (includinginfrastructure) grew by 4.07% to Rs.102,238 crores from Rs.98,239 crores last year. As on31st March 2014, large corporate advances at Rs.53,706 crores decreased 1.13%comprising 23.34% of total advances, mid corporate advances at Rs.21,422 crores grew 7.06%comprising 9.31% and infrastructure advances stood at Rs.27,110 crores which grew 13.39%and comprised 11.78% of total advances. The Bank witnessed growth in its infrastructureloans mainly due to disbursements from earlier sanctions, in line with the progress inproject execution. As on 31st March 2014, the corporate advances at overseasbranches amounted to Rs.31,716.17 crores (equivalent to USD 5.29 billion) and mainlycomprised of loans to Indian corporates and their subsidiaries, which grew by 5.82% andaccounted for 13.79% of total advances.
The relationship model introduced in earlier years, maintained its focus on increasingthe Bank's wallet share by cross-selling a wide range of banking products to corporatecustomers and thereby increasing customer engagement. The Bank continued its focus ontrade finance, treasury and other fee-based businesses. The Bank has been following asectoral approach to credit where the focus is on identifying sector-specificopportunities and risk. The tracking of industry, group and company specific exposurelimits are undertaken continuously with a view to identify and mitigate risk so as tofacilitate proactive decision making. Portfolio diversification is also ensured throughthis continuous monitoring.
Despite the macroeconomic slowdown, the Bank actively managed its corporate creditportfolio, maintained asset quality and also pursued new lending opportunities in ajudicious manner. The entire corporate credit portfolio of the Bank has been internallyrated. Presently, 61% of outstanding loans and more than 80% of incremental sanctionsduring the year were rated 'A' and above in respect of total corporate loans. The share ofloans rated 'AAA' was 11% as on 31st March 2014.
The Bank continued to retain its leadership position in the loan syndication market andsyndicated an aggregate amount of Rs.22,996 crores by way of Rupee loans and USD 1,977million of foreign currency loans during the year.
The Treasury Group in the Bank includes the Global Markets Team dealing in interestrates and foreign exchange. Treasury plays an important role in the sovereign debt market,participating in primary auctions of RBI and market activities in Government securities.The Foreign Exchange Trading Group under Treasury is an active participant in theinter-bank/financial institutions space.
It also maintains proprietary positions to generate trading income for the Bank. MoneyMarket and Balance Sheet Management groups within Treasury take care of asset-liabilitymismatches and interest rate sensitivities of the Bank's portfolio, along with theresponsibility for liquidity management for the domestic operations and foreign branchesin the different geographies. Over the last few years, the Bank has emerged as one of theleading banks providing foreign exchange and derivatives solutions along with tradefinance services. Through its various verticals, the Treasury serves customers acrossvarious industries, segments and regions.
The Bank is a dominant player in the Debt Capital Market (DCM) Segment. During thecurrent financial year, the Bank arranged Rs.122,556 crores of bonds and debentures forvarious PSUs and corporates. For the sixth year in a row, the Bank has been ranked numberone in Bloomberg league table for domestic corporate bonds in India. The Bank has alsobeen ranked number one bank by The Asset Benchmark Research in local Asian Currencyprimary and secondary corporate bond markets. During the year, the Bank won the award forthe 'Best Domestic Debt House - India' by Asia Money, Best Bond House in India by FinanceAsia and Best Debt House - India by Euro Money.
The Global Financial Institutions Division (GFID) within Treasury is responsible forfostering business relationships with financial institutions (FI) across geographies andundertakes foreign currency fund raising. Global Trade Service Division (GTSD), housed inTreasury is entrusted with the responsibility of transforming Trade Finance business intoa key flow business for the Bank by providing trade solutions for corporates as well asthe FI clients of the Bank. The Customer Trade and Forex Group (CTFG), as part ofTreasury, drives cross-border trade finance, remittances, capital account transactions andderivatives from all segments of corporate relationships through its dedicated andexperienced Relationship Managers across the Bank.
Business Banking provides payments and transaction banking solutions across corporates,SMEs, financial institutions, Government segments and small business customers. The keyproducts offered are current accounts, collection and payment solutions, custodial anddemat services.
Current accounts are a key focus area for the Bank, forming the bedrock of itstransaction banking and payments franchise. Current account products are categorised intovalue-based products, segmented products for specific industry sectors (e.g. financialservices, pharmaceuticals etc.) and need-based products (e.g. escrows, dividend paymentsetc.). The Bank leverages its distribution network and technology platform to deliver aseamless banking experience to its customers. The current accounts group is focused onaugmenting its electronic channels and has rolled out an award-winning mobile applicationfor its current account customers. The Business Banking team also works on various processredesign initiatives to deliver a simple, easy and user-friendly customer experience. TheBank had more than 16 lac live current account customers as on 31st March 2014,a YOY growth of 16%. As on 31st March 2014, Current account deposits stood atRs.48,686 crores and constituted 17.33% of total deposits. During the year, currentaccount balances (on a daily average basis) grew by 9% to Rs.31,281 crores from Rs.28,698crores last year.
The Bank has adopted a two-pronged approach in the collection and payments business -introducing new products, features and channels on the one hand and developingsector-specific solutions on the other. The Bank has made a significant technologyinvestment in terms of an enterprise-wide payment hub, which when fully implemented isexpected to augment the Bank's capabilities in the transaction banking business, acrossdomestic and foreign currency transactions. The Bank offers advanced products such asPower Access, which enable corporates and institutions to ensure straight-throughtransaction processing with multi-layered security protocols and customised MIS. The Bankhas also been in the forefront of the rollout of the newly introduced NACH (NationalAutomated Clearing House) mechanism and has taken the lead in terms of processingtransactions on the NACH platform.
The Bank has identified select industry sectors as focus areas and has rolled outcustomised solutions to cater to the specific needs of clients in these sectors.Operational excellence is a key success factor in the collection and payments business andthe Bank has embarked on a process improvement initiative to provide a solid platform forservice delivery. The Bank processed transactions to the tune of Rs.2,034,866 croresduring 2013-14, a growth of 28% over the previous year. The Bank has one of the largestdistribution channels to support the collections and payments business, with 959 locationsenabled for collections and 421 branches enabled for remote printing of instruments. TheBank also acts as a Sponsor of White Labelled ATM deployers, being only the second Bank inthe country to do so.
The Bank, in its capacity as an agency bank for various Central Government ministries,departments, State Governments and Union Territories, accepts income and other directtaxes. The Bank also handles the disbursement of civil and defence pension through theCentralised Pension Processing Centre (CPPC). In addition, the Bank provides collectionand payment services to four Central Government ministries/departments and 13 StateGovernments and Union Territories. The Bank rolled out customised solutions such as PFMS(Public Financial Management System), e-procurement and e-freight to meet the unique needsof the Government segment. The Bank is the nodal bank for collection of subscription tothe National Pension Scheme. During the year, the Bank also commenced opening of accountsunder the Public Provident Fund scheme. The total Government business throughput duringthe year was Rs.100,318 crores. The Bank has been awarded the mandate for handling'Trustee Bank' services under National Pension System.
The Bank is a SEBI-registered custodian and offers custodial services to both domesticand offshore customers. As on 31st March 2014, the Bank held assets aroundRs.11,000 crores under its custody and had 3,459 demat accounts in the corporate andinstitutional segment.
LENDING TO SMALL AND MEDIUM ENTERPRISES
The Small and Medium Enterprises (SME) business thrives on relationship building andnurturing the entrepreneurial talent available. The Bank extends working capital, termloan, project finance as well as trade finance facilities to SMEs. This segment has beenidentified as one of the key growth areas for the Bank.
The Bank has segmented its SME business into three groups: Medium Enterprises Group(MEG), Small Enterprises Group (SEG) and Supply Chain Finance (SCF), which comprises 47%,41% and 12% of SME advances respectively. During the year, advances to SMEs increased by18.65% to Rs.35,502 crores from Rs.29,922 crores last year and constituted 15.43% of theBank's total advances as compared to 15.19% at the end of last year. The Bank currentlyoperates from 38 SME Centres and 16 SME Cells across the country compared to 32 SMECentres and 9 SME Cells last year, to service customers effectively covering 1,000branches.
Keeping in mind the changing economic environment, the Bank has enhanced its riskmanagement capabilities by developing an 'early warning system' model based on holisticcustomer information. The Bank has also adopted a granular approach in growing the SMEportfolio by focussing primarily on better rated SME accounts. Incremental loan growth inSME is mainly driven by higher rated SME 1 to 3 categories which correspond to a single'A' rating. The loan book remained well diversified and carried lower concentration riskwith 80% of the outstanding loans being rated between SME 1 and SME 3. The SME businesscontinues to perform well and the portfolio behaviour remained healthy.
The Bank also sponsors and supports initiatives and trade fairs to encourage SMEgrowth. The Bank was a 'Presenting Partner' at Chennai, Ludhiana, Indore and Ahmedabad forEngineering Expos 2013, India's Largest SME Gathering on Manufacturing & Engineering.On the operational efficiency front, the Bank has implemented lean processes in the dealerfinance business which has helped the Bank in significantly improving the turn-aroundtime.
The Bank continued its focus on providing need-based products to farmers and toparticipants within the agriculture value chain. Activity and geography specific productsand product variants were introduced to effectively reach out to the various value chainparticipants and to meet their credit requirements. The Bank also continued to ally withreputed corporates in agro based industries to provide value to the farmers and valuechain participants.
The hub and spoke model of branches supported by agriculture clusters and AgricultureBusiness Centres (ABC) continued in 2013-14 with increase in footprint. The agriculturebusiness footprint of the Bank improved from 759 branches in 2012-13 to 1,073 brancheswhich are supported by 111 agriculture clusters and 22 ABCs. New ABCs were formed in Hubliand Lucknow to improve market penetration in these regions.
In addition to credit support, the Bank provides a forum for knowledge sharing amongfarmers by aiding formation of farmer's clubs in co-ordination with National Bank forAgriculture and Rural Development (NABARD). As on 31st March 2014, the Bank hadformed 124 farmer's clubs.
To support the weaker sections of society, the Bank undertakes direct lending to JointLiability Groups (JLGs) in addition to funding Micro Finance Institutions (MFI) foron-lending. Under its direct social collateral lending initiative 'Axis Sahyog', the Bankuses technology to reach out to rural poor in the States of Madhya Pradesh, Bihar andUttar Pradesh with the involvement of 43 branches and a loan book of Rs.70.58 crores.Biometric technology enabled IT architecture is used for enrolment and for authorisingtransactions. The Bank also uses the services of institutional business correspondents forsourcing and servicing micro loans in a Southern State.
During the year, agriculture loans grew 20.14% to Rs.17,836 crores and constituted7.75% of the Bank's total advances as on 31st March 2014.
As on 31st March 2014, the Bank has achieved its overall priority sectorlending requirements.
Financial Inclusion (FI) remains a key driver in the Bank's strategy to extend itsreach in the rural market. The Bank's Financial Inclusion initiatives gathered momentumand scale this year with the Bank opening around 14 lac basic savings bank accountsthrough its branches and Business Correspondent (BC) network. The Bank now has a FIcustomer base of around 74 lac customers being serviced through a network of 576 ruralbranches and more than 74,000 BC agents spread over more than 47,000 villages. Around 24%of the Bank's branches are in rural areas and 76% of the Bank's rural branches are inunbanked locations. The Bank has consolidated its strong position in G2C (Government toConsumer) payments, disbursing close to Rs.764 crores of Government payments to around 31lac beneficiaries across 28 districts in 9 states during 2013-14.
The Bank has further consolidated its position in C2C (Customer to Customer) transfersand has done more than Rs.1,700 crores of domestic money transfers over 47 lac remittancetransactions. The Bank has a KCC (Kisan Credit Card) book of Rs.6,083 crores and a GCC(General Purpose Credit Card) book of Rs.2,490 crores.
The Bank has taken a leadership position in the industry with respect to Aadhaarrelated initiatives. The Bank has opened 16 lac Aadhaar enabled bank accounts and handledRs.69 crores of Government benefits through APBS (Aadhaar Payments Bridge System). TheBank is at No.1 position amongst all banks with respect to Aadhaar enabled payments,having done close to 19 lac AEPS (Aadhaar Enabled Payment System) transactions amountingto Rs.86 crores. The Bank was the first amongst all banks to launch the facility ofaccount opening this year for the FI customers in a paperless and near instant fashionthrough the BC channel via the e-KYC route and has opened more than 26,000 accountsthrough this route in just one district (Adilabad) of A.P.
The international operations of the Bank continue to be at the core of its strategy toexpand the horizon of the product offerings, and delivery channels to various geographiesand across client segments, covering a wide spectrum of retail and corporate bankingsolutions. During the year, the Bank expanded its overseas branch network by upgrading itsrepresentative office in Shanghai into a branch. The Bank is the first Indian privatesector bank to set up a branch in China. Further during the year, the Bank's firstoverseas banking subsidiary - Axis Bank UK Limited commenced its operations. The Bank nowhas overseas presence in six countries with network of five branches at Singapore, HongKong, DIFC - Dubai, Colombo (Sri Lanka) and Shanghai (China), two representative officesat Dubai and Abu Dhabi and an overseas banking subsidiary in the United Kingdom.
While corporate banking, trade finance, treasury and risk management solutions are theprimary offerings through its overseas branches, the Bank also offers retail liabilityproducts from its branches at Hong Kong and Colombo. Further, the Bank's Gulf Co-operationCouncil (GCC) initiatives in the form of representative offices in Dubai and Abu Dhabi andalliances with banks and exchange houses in the Middle East provide the support forleveraging the business opportunities emanating from the large NRI diaspora present inthese countries.
As on 31st March 2014, the total assets at overseas branches stood at USD7.20 billion compared to USD 6.84 billion last year. Axis Bank UK Limited, the Bank'soverseas banking subsidiary, has managed to breakeven in its first year of operations andits total assets stood at USD 372 million as on 31st March 2014.
The risk management objective of the Bank is to balance the trade-off between risk andreturn, and ensure optimum risk-adjusted return on capital. The risk is managed through arisk management architecture as well as through policies and processes approved by theBoard of Directors encompassing independent identification, measurement and management ofrisks across the various businesses of the Bank. An independent risk management functionensures that the Bank operates within the Board approved risk appetite. The riskmanagement function in the Bank strives to proactively anticipate vulnerabilities at thetransaction as well as at the portfolio level, through quantitative or qualitativeexamination of the embedded risks. The Bank continued to focus on refining and improvingits risk measurement systems not only to ensure compliance with regulatory requirements,but also to ensure better risk-adjusted return and optimal capital utilisation, keeping inview its business objectives.
The overall risk appetite and philosophy of the Bank is defined by its Board ofDirectors. Further, the Individual Capital Adequacy Assessment Process (ICAAP) of the Bankassesses all the significant risks associated with various businesses. The independentrisk management structure within the Bank is responsible for managing the credit risk,market risk, liquidity risk, operational risk and exercising oversight on risks associatedwith subsidiaries. The risk management processes are guided by well-defined policiesappropriate for the various risk categories viz. credit risk, market risk, operationalrisk, liquidity risk, counterparty risk, country risk and subsidiaries risk, supplementedby periodic validations of the methods used and monitoring through the sub-committees ofthe Board. The Risk Management Committee (RMC), a committee constituted by the Board,approves policies related to risk and reviews various aspects of risk arising from thebusinesses undertaken by the Bank. The Committee of Directors (COD) and the AuditCommittee of the Board (ACB) supervises certain functions and operations of the Bank,which ultimately enhances the risk and control governance framework within the Bank.Various senior management credit and investment committees, Credit Risk ManagementCommittee (CRMC), Asset-Liability Committee (ALCO), Operational Risk Management Committee(ORMC) and Subsidiaries Risk Management Committee (SRMC) operate within the broad policyframework of the Bank.
Credit risk is the risk of financial loss if a client, issuer of securities that theBank holds or any other counterparty fails to meet its contractual obligations. Creditrisk arises from all transactions that give rise to actual, contingent or potential claimsagainst any counterparty, borrower or obligor. The goal of credit risk management is tomaximise the Bank's risk-adjusted rate of return on capital by maintaining targeted assetquality and managing the credit risk inherent in individual exposures as well as at theportfolio level. The emphasis is placed, both on evaluation and containment of risk at theindividual exposures and analysis of the portfolio behaviour.
The Bank has a structured and standardised credit approval processes, including awell-established procedure of comprehensive credit appraisal. Every extension of creditfacility or material change to a credit facility to any counterparty requires creditapproval at the appropriate authority level. Internal risk rating remains the foundationof the credit assessment process, which provides standardisation and objectivity to theprocess. All sanctioning processes including the delegation of powers are linked to theratings and the sizes of the exposure. The monitoring frequency applicable to the exposurealso depends on the rating of the exposure. Individual borrower exposure ceilings linkedto the internal rating and sector specific caps are laid down in the Credit Policy toavoid concentration risk. For the retail portfolio including small businesses and smallagriculture borrowers, the Bank uses different product-specific scorecards. Both creditand market risk expertise are combined to manage risks arising out of traded creditproducts such as bonds and market related off-balance sheet transactions. Model validationis carried out periodically by objectively assessing its discriminatory power, calibrationaccuracy and stability of ratings both by the Risk Department as well as independently bya Validation Committee.
The Bank continuously monitors portfolio concentrations by segment, borrower, groups,industry and geography, where applicable. Portfolio level delinquency matrices are trackedat frequent intervals with focus on detection of early warning signals of stress. Keysectors are analysed in detail to suggest strategies for business, considering both risksand opportunities. Such analysis is reviewed by the Credit Risk Management Committee toarrive at the appropriate industry ceilings as well as define the origination and accountmanagement strategy for the sector. The Risk Management Committee of the Boardperiodically reviews the impact of the stress scenarios resulting from various scenarioslike increased provisioning requirements, rating downgrades, or drop in the asset valuesin case of secured exposures, on the portfolio. The portfolio level risk analytics provideinsight into the capital allocation required to absorb unexpected losses at a definedconfidence level.
Market risk is the risk of losses in 'on and off-balance sheet' positions arising fromthe movements in market price as well as the volatilities of those changes, which mayimpact the Bank's earnings and capital. The risk may pertain to interest rate relatedinstruments (interest rate risk), equities (equity price risk) and foreign exchange raterisk (currency risk). Market Risk for the Bank emanates from its trading and investmentactivities, which are undertaken both for the customers and on a proprietary basis. Themarket risk management framework of the Bank aims at maximising the risk adjusted rate ofreturn by providing inputs regarding the extent of market risk exposures, the performanceof portfolios vis-a-vis the risk exposure and comparable benchmarks. The Bank adopts acomprehensive approach to market risk management for its banking book as well as itstrading book for both its domestic and overseas operations. The market risk managementframework of the Bank provides necessary inputs regarding the extent of market riskexposures, the performance of portfolios vis-a-vis the risk exposure and comparablebenchmarks which assists in maximising the risk-adjusted rate of return of the Bank'strading and investment portfolio.
Market risk management is guided by well-laid policies, guidelines, processes andsystems for the identification, measurement, monitoring and reporting of exposures againstvarious risk limits set in accordance with the risk appetite of the Bank. TreasuryMid-Office independently monitors the Bank's investment and trading portfolio in terms ofrisk limits stipulated in the Market Risk Management Policy and reports deviations, ifany, to the appropriate authorities as laid down in the policy. The Bank utilises bothstatistical as well as non-statistical measures for the market risk management of itstrading and investment portfolios. The statistical measures include Value at Risk (VaR),stress tests, back tests and scenario analysis while position limits, markedto-market(MTM), stop-loss limits, alarm limits, gaps and sensitivities (duration, PVBP, optiongreeks) are used as non-statistical measures of market risk management.
Historical simulation and its variants are used to compute VaR for the tradingportfolio which is calculated at a 99% confidence level for a one-day holding period overa time horizon of 250 days. VaR models for different portfolios are back-tested on anongoing basis and the results are used to maintain and improve the efficacy of the model.VaR measurements are supplemented with a series of stress tests and sensitivity analysisas per a well laid stress testing framework.
The Asset Liability Management Policy of the Bank stipulates broad framework forliquidity risk management to ensure that the Bank is in a position to meet its dailyliquidity obligations as well as to withstand a period of liquidity stress from, bank-widefactors, market-wide factors or a combination of both.
The liquidity profile of the Bank is analysed on a static as well as on a dynamic basisby using the gap analysis technique supplemented by monitoring of key liquidity ratios andconduct of liquidity stress tests periodically. The liquidity position is monitored forboth domestic as well as overseas operations. The Bank has laid down liquidity riskpolicies for its overseas branches in line with host country regulations and theasset-liability management framework as stipulated for domestic operations. Periodicalliquidity positions and liquidity stress results of overseas branches are reviewed by theBank's ALCO.
RBI has released draft guidelines on liquidity risk management and the Basel IIIframework on liquidity standards. The Bank has taken appropriate steps to ensure adoptionof these guidelines within the timeframe stipulated by RBI. The liquidity guidelines havebeen integrated into the asset liability management framework of the Bank through suitableamendments in order to ensure adherence to RBI guidelines on monitoring and management ofliquidity including liquidity ratios.
Operational risks may emanate from inadequate and/or missing controls in internalprocesses, people and systems or from external events or a combination of all the four.The Bank has in place an Operational Risk Management (ORM) Policy to manage theoperational risk in an effective, efficient and proactive manner. The policy aims atassessing and measuring the magnitude of risks, monitoring and mitigating them throughwell-defined framework and governance structure.
The RMC at the apex level is the policy making body and is supported by the OperationalRisk Management Committee (ORMC), responsible for the implementation of the OperationalRisk framework of the Bank and the management of operational risks across the Bank. Asub-committee of the ORMC, Sub-ORMC has been constituted to assist the ORMC in dischargingits functions.
All new products and processes are subjected to risk evaluation by the Bank's ProductManagement Committee and Change Management Committee. Outsourcing arrangements areexamined and approved by the Bank's Outsourcing Committee. The IT Security Committee ofthe Bank provides directions for mitigating operational risk in the information systems.The Bank has set up a comprehensive Operational Risk Measurement System (ORMS) through theimplementation of a software solution.
Recognising its responsibility to ensure continuity of service to its large customerbase, the Bank has placed a well-defined Business Continuity Framework. The effectivenessof the approved Business Continuity Plan (BCP) framework is tested for all identifiedcritical internal activities to ensure readiness to meet various contingency scenarios.The learning from the BCP exercises are used as inputs to further refine the framework.
The Bank has set up a Financial Crime Management Unit within the Risk departmentcovering oversight on Anti-Money Laundering / Combating Financial Terrorism (AML/CFT),Continuous Offsite Monitoring and Surveillance (COSMOS), Off-Site Audit and FraudManagement and MIS.
The business process re-engineering carried out over the past few years, has resultedin a separation of the production and distribution functions. The Bank now carries outmost significant back-office functions on a centralised basis with product sales andcustomer handling (the distribution technology) primarily carried out at the branches.This has not only helped in reduction of transaction costs but has also ensured smoothnessin operations and increase in productivity. To bring about greater precision in themanagement of operations in both the corporate and retail side of the Bank's businesses,operational processes were constantly refined from the perspective of implementation ofbest practices, risk identification and containment. Operational instructions were issuedon a continual basis and efforts were made to introduce risk-free working at branches.
Retail Banking Operations
The Retail Banking Operations (RBO) unit oversees the operations carried out underbranch banking with a focus on service delivery, risk containment and regulatorycompliance. This unit operates closely with the Retail Liabilities Team as well as withthe Control Units and ensures that branch services meet the business objectives along withrisk and compliance requirements. It carries out oversight through continuous remotemonitoring as well as visits to branches on a periodical basis. It ensures that the branchoperations are efficient and plays a valuable role in delivering services to customer atbranches.
The Retail Business Processes (RBP) team manages the centralised back-end processingfor various activities, such as data processing for new customers, servicing oftransactions and reconciliation activities related to retail banking, cards, consumerlending, business banking, depository services, rural and agricultural banking. The teambrings efficiencies of scale to the above mentioned business lines. Operations are managedthrough two National Processing Centers supported by 23 Regional Centers through a hub andspoke network.
Wholesale Banking Operations
Wholesale Banking Operations (WBO) is structured into four key verticals - TreasuryOperations, Corporate Banking Operations, Trade and Forex Operations (TFO) and CentralisedCollection and Payment Hub (CCPH). These verticals are responsible for providingbest-in-class service to non-retail customers of the Bank, while addressing variousregulatory requirements and internal compliance.
Treasury Operations carries out the functions of settlement and accounting oftreasury-related transactions and operates the centralised electronic payment hubs forRTGS (Real Time Gross Settlement) and NEFT (National Electronic Funds Transfer). CorporateBanking Operations (CBO) ensures delivery, control, monitoring and administration ofcredit facilities of large corporates, mid corporates, SME and corporate agriculturesegments. It also processes domestic trade finance, channel finance and micro financetransactions. CBO operates through Corporate Banking Branches (CBBs) located at 8 majorcentres, 59 Mini-Credit Management Centres (MCMCs) at Tier II cities and Corporate CreditOperations Hub (CCOH) at Hyderabad and Gurgaon. These units, manned by experiencedprofessionals, are trained to handle corporate credit function in close co-ordination withthe business verticals responsible for sourcing and sanction of credit facilities tocorporates. The Trade and Forex Operations (TFO) handles remittances and trade financetransaction processing on behalf of distribution channels dealing in trade finance andforeign exchange through 202 'B' category branches and state-of-the-art centralisedknowledge processing centres located at Mumbai and Hyderabad. TFO intrinsically has a highlevel of regulatory requirements, which is effectively addressed by the specialised staffat TFO units. The Centralised Collections & Payment Hub (CCPH) handles payments andcollections and operates through 2 units located at Mumbai and Hyderabad. Further, inorder to extend operational support and customer hand-holding at the local level, 36Transaction Banking Centres (TBCs) have been set-up under CCPH, which are manned byskilled resources. CCPH works in close association with the Business Banking team of theBank, thereby ensuring efficient service delivery coupled with control over operations.
The Bank's continuous endeavour has been to use technology to further improve thecustomer's experience while transacting with the Bank. In this regard, it has empoweredits relationship managers with a complete 360 degree view of the customer's relationshipwith the Bank. Thus, it has concisely captured the customers' existing relationship andlikely future needs leading to superior service, better business opportunities throughhigher cross sell using a seamless multi-channel experience. To further the Bank's greeninitiatives, technology has helped in issuance of Green Pin through ATM and IVR channelsfor new to bank debit card customers resulting in cost savings in deliverables management.Further, technology has been one of the key contributors in the Bank's launch ofmulti-currency travel cards. A new and faster platform was implemented to enable foreignexchange money transfers for retail customers. The Bank has also re-vamped its loan systemarchitecture with in-memory computing, a much faster process to achieve higher volumes andfaster turnaround time in loan processing.
The Bank's Financial Inclusion (FI) initiatives have also benefited from efficient useof technology. Ultra small branches set up to cater to FI customers are enabled withsystems for account opening and transaction processing through biometric authentication.FI gateway was setup to integrate BC's (Business correspondent) System to the Core bankingSystem and regulatory bodies such as UIDAI (Unique Identification Authority of India),NPCI (National Payments Corporation of India) to facilitate online authentication andtransaction processing. Information Technology has also aided in improving the Bank'sservices to its corporate clients. An Electronic Payments Hub is being implemented toenable faster processing of large volumes of transactions, which facilitated efficientcash management for corporates.
The recent years have seen high adoption of internet and mobile technologies inbanking. As more and more people are moving towards digital channels for their bankingneeds, technology continues to be a key enabler of business growth as well as a source ofcompetitive advantage. The Bank has recognised digital channels as focus areas forenabling superior customer experience leading to increased business opportunities. Toachieve this objective, the Bank has made strategic investments in electronic channelswith the launch of the new Axis Mobile Application for its customers in August 2013. Postthe launch, the Bank has achieved over 10 lac downloads. The Axis Mobile Applicationoffers personalisation depending on the user segments and has social media integrationcapabilities. Since its launch, the Application has contributed to an increase of almost200% in the overall mobile user base.
The Bank has taken a series of steps to improve risk management and control. The Bankhas completed reissuance of chip cards in case of eligible debit cards and all creditcards as per RBI mandate. New system has been implemented for better credit assessment ofcustomers via multi-bureau connectivity. Real-time risk scoring and transaction stoppagemechanism has been implemented to ensure robust fraud management control for cards,channels and core banking systems. Fraud monitoring is done for both offline and onlinetransactions giving the Bank 24x7 capability for detection of suspected frauds. Securityfeatures of the Bank's website have been fortified with risk based adaptiveauthentication, cooling period on beneficiary registration and presenting securityquestions to validate customers identity based on customer's geographic location, internetprotocol (IP) address and machine fingerprint. On the Information Security aspect, theBank has rolled out data leakage prevention solution to protect the sensitive datapertaining to the Bank and customers from being misused.
The Bank has made significant progress in implementing the recommendations of the RBIWorking Group issued in April 2011 on Information Security, Electronic Banking, TechnologyRisk Management and Cyber Frauds. The Bank is committed to implementing therecommendations on the various subject areas indicated in the guidelines. The Bank has putin place the appropriate organisational framework as recommended in the guidelines.Several information security solutions have been implemented like Data Leakage Prevention(DLP), Distributed Denial-of-Service (DDoS) attack mitigation, ISO 27001:2005 standard,Privileged Identity Access Management, Information Rights Management (IRM), Databaseencryption, Laptop encryption etc. to protect customer data, prevent external attacks aswell as strengthening internal controls.
The Security Website http://www.axisbank.com/SecurityPortal/index.aspx was developed bythe Bank for its customers to make them aware on safe e-banking practices. Policies andprocedures of the Bank have also been reviewed and suitably modified. The progress in eacharea of the recommendations has been closely monitored by the top management and thestatus of implementation has been reported to the Board and RBI at regular intervals.
The Bank has always adhered to the highest standards of compliance and corporategovernance. It has put in place controls and an appropriate structure to monitor that theoperating and business units strictly comply with regulatory and internal guidelines. TheCompliance function facilitates in instilling and strengthening a Compliance Culturewithin the Bank through various enablers like dissemination of regulatory changes andspreading compliance knowledge through training, newsletters and direct interaction. Thelevel of compliance is monitored through a Compliance Testing Programme, which isundertaken twice a year. As the focal point of contact with RBI and other regulatoryentities, the Compliance Department periodically apprises both the Bank's management aswell as the Board of Directors on the compliance status of the Bank and changes inregulatory environment.
Introduction of new as well as changes to the existing products and processes aresubjected to scrutiny to ensure that they are in adherence with the relevant regulatoryguidelines. The Bank has implemented the first stage of an Enterprise-wide Governance Riskand Compliance Framework, an online tool, which would address operational, compliance andfinancial reporting risks and help in bringing efficiency in processes and improvement incompliance levels. Significant aspects of the Bank's compliance culture are theWhistle-blower Policy, Code of Right Sell and zero tolerance for fraud, corruption andfinancial irregularities. The Department also propagates and monitors a Group Complianceapproach encompassing the Bank and its subsidiaries.
The Bank's Internal Audit function aims at providing an independent assessment on theadequacy and effectiveness of the processes for controlling its activities and alsomanaging its significant risks. The Internal Audit function undertakes a comprehensiverisk-based audit in respect of auditee units. The Bank has adopted a well-defined policyfor undertaking Risk Based Internal Audit. This policy includes the risk assessmentmethodology for identifying the risk areas based on which the audit plan is drawn. Theaudit plan is aligned vis-a-vis the strategic objectives of the Bank. Accordingly, theBank undertakes internal audit of its auditee units at a frequency synchronised to therisk profile of each auditee unit in line with the spirit of guidelines relating toRisk-Based Internal Audit (RBIA). The scope of RBIA, besides examining the adequacy andeffectiveness of internal control systems and external compliance, also evaluates the riskresiding at the auditee units. The RBIA approach has been structured taking into accountregulatory guidelines and international best practices. To complement the Internal Auditfunction, the Bank has put in place a robust Concurrent Audit system.
To ensure independence of the Audit function and in line with the best corporategovernance practices, the Internal Audit Department functions independently under thesupervision of the Audit Committee of the Board, which reviews the performance of theinternal audit function and effectiveness controls laid down by the Bank and compliancewith regulatory guidelines.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Bank appreciates its role as an agent of change and development for the communitiesit serves. Axis Bank Foundation (ABF) was set up as a Public Trust in 2006 to carry outthe Corporate Social Responsibility initiatives of the Bank. ABF's philosophy is to striveto improve the standard of living of underprivileged people in India, by providing themeducation, healthcare and sustainable livelihoods. The Foundation also aims to help createcapabilities in terms of skills and employment opportunities for disadvantaged/differentlyabled people, especially children. The Bank contributes one percent of its net profitannually to the Foundation under its CSR initiatives. Presently, the Foundation is running39 programs over 185 districts in 24 states and has reached out to 4.42 lac beneficiaries.
The Foundation, presently, runs 20 programs in the field of education covering 20districts in 10 states providing education to underprivileged individuals across Indiathrough special education, supplementary education, primary education, vocational trainingetc. As of 31st March 2014, the cumulative disbursals for the various educationprograms were to the tune of Rs.43.40 crores. Through these programs the Foundation hastouched almost 1.5 lacs lives. The Foundation has been partnering with Lifeline Foundationsince 2007 providing highway trauma care and medical relief which ensures free evacuationof accident victims from the accident spot to the nearest hospital. As of 31stMarch 2014, 19,660 accident victims were attended to in the states of Rajasthan,Maharashtra, Kerala and Gujarat.
In 2011, the Foundation ventured into the domain of providing sustainable livelihoodswhich aim at alleviating poverty and providing livelihood options for economically weakhouseholds. The Foundation aims to provide one million livelihoods to the underprivilegedin some of the most backward regions of the country by 2017, 60% of the beneficiariesbeing women. Presently, 18 programs are running in the field of livelihood covering over165 districts in 23 states. As of 31st March 2014, the cumulative disbursalsfor the various livelihood programs were to the tune of Rs.86.98 crores.
The Foundation provides Axis Bank staff opportunities to volunteer and participate inits various initiatives and also runs a payroll program to collect contributions from theemployees. During the year, 8,019 employees of the Bank have enrolled for the payrollprogram and the monthly collection amounted to Rs.15.19 lac.
The Human Resource (HR) function in the Bank remains focused on improvingorganisational effectiveness, developing frontline leaders, promoting employee empowermentand maintaining stability and sustainability amidst growth and a rapidly changing businessenvironment.
The Bank focuses on innovative strategies in building talent pipelines, by enteringinto arrangements and tie-ups with educational institutes and universities of repute, forensuring adequate supply of skilled manpower with day zero productivity to support itsgrowing business. Leadership Development is another element in the Bank's HR objectiveswith particular focus on developing strategic leadership capabilities in future leaders.The Bank partners with the best-in-class leadership trainers to impart leadershiptraining. To develop a common leadership language, a culture of leadership development andmost importantly, a leadership pipeline, Axis Leadership Practices (ALPs) have beendefined for employees at different levels of the hierarchy to promote desired behavioursand are integrated to people processes like Talent Acquisition, Performance ManagementSystem, Leadership Development and Feedback.
The Bank has built a learning infrastructure where the Learning Maps are aligned to theoverall development plan of employees and facilitate learning process across all levelsthrough a blended learning approach of classroom programmes, external programmes,certification programmes as well as e-learning modules. The Bank's online learningmanagement system 'Axis Academy' reaches out to the dispersed employee base in a costeffective and timely manner.
The Bank promotes a healthy and safe work environment for its employees by offeringseveral health and wellness initiatives and campaigns throughout its network for apositive health and safety culture. The Bank fosters work-life balance and condemns anykind of unfair treatment in the workplace. Regulation and compliance have remained as themajor focus areas for the Bank. The Bank enforces a strict compliant and ethical culturewith adequate channels for raising concerns supported by a grievance handling mechanism.
To foster a spirit of connectedness, the Bank hosts several employee engagementprogrammes through online and offline channels to connect its thinly-spread employeepopulation across a widely dispersed geographical network. Through these platforms,employees can share their unique experiences, best practices and cast their opinion andfeedback about the Bank's products and services. The Bank conducts Employee Engagementsurveys to seek regular feedback from employees on the policies and practices tostrengthen its journey towards creating a team of empowered employees oriented towards therealisation of the Bank's corporate vision.
The strength of the workforce was 42,420 at the end of the year as compared to 37,901last year. A young and engaged workforce with an average age of 29 years and the Bank'spolicy on being an equal opportunity employer continued to significantly contributetowards the Axis Bank brand.
The Bank is also a socially responsible employer. In addition to the activities carriedout through 'Axis Bank Foundation', the Bank partners with 'Teach for India' in itsmission to reform education and seek an innovative solution to ending educationalinequality in India by deputing employees as Fellows in their programme. The Bankcontinued to strive towards realisation of its vision of being the preferred financialservice provider excelling in customer delivery through insight, empowered employees andsmart use of technology, which has contributed in a big way to the increase in employeeproductivity year-on-year.