MANAGEMENT DISCUSSION AND ANALYSIS 2011
1. Global Economic Environment
The Global Macro Economic developments have shown signs of modest recovery and concernsabout the crisis have reduced to some extent in the fourth quarter mainly on account ofaccelerated GDP growth in US due to increase in consumer spending and reduction inunemployment rate but the concerns remain with regard to sustaining the growth. The GDPgrowth during the fourth quarter has declined in EURO zone in spite of injecting largescale liquidity by ECBs through Long Term Refinancing Operations. This has beenmainly on account of the fiscal corrections initiated due to the large public debt levels,tight credit conditions and high level of unemployment. The crisis in the Euro SovereignDebt problem is far from over as can be seen in the recent developments in Spain. Thiswill continue to weigh on the performance of the global economy. The Emerging MarketEconomies world over have also registered slowdown in the growth, mainly on account oftightening of monetary conditions. GDP growth among the BRICS (Brazil, Russia, India,China and South Africa ) nations registered a sharp decline in China and Brazil andmoderate decline in Russia and South Africa. However, the inflationary pressures havemoderated in Brazil and Russia it has increased in China The increase in crude oil pricessince January 2012 which are expected to persist at the current level have added to globalconcerns.
2. Domestic Economic Scenario
Indian economy which had registered a GDP growth of 8.4 % in the preceding two yearsperiod is, expected to grow at the rate of 6.9 % during 2011-12 indicating a slowdown ingrowth. This has been mainly on account of slowdown in industrial growth which bottomedout to 0.8 % in the third quarter of 2011-12 registering a growth of 3.3 % for the ninemonths period up to December 2011. The growth in the agriculture sector moderated to 3.2 %mainly on account of 48% below normal north east monsoon during October December2011. The service sector however was able to maintain relatively well growth level of 8.8%for the period up to December 2011 which was at the same level during the correspondingperiod last year. The slowdown in industrial sector was mainly attributed to theuncertainties in the domestic policy, cumulative impact of monetary tightening andslackening of external demand.
Although during the year Agriculture witnessed a most acute deficiency in wintermonsoon in last decade its overall impact in the agriculture production is not expected tobe severe. With the production of food grains being estimated to reach a record level thatof oilseeds and pulses was expected to be negative.
Industrial growth declined sharply during 2011-12 which was attributed to the supplyside constraints mainly in energy and mineral. Down trend in Industrial Output was onaccount of weak demand for consumer durables, reflecting interest rate sensitivity,deceleration in external demand and subdued investment demand due to decline in businessconfidence.
Services sector, which has the dominant share in GDP, has maintained its momentum butappears to be losing its momentum. The lead indicators point towards a weakening oftelecom and international travel, while railway freight and domestic passenger trafficshow increase. With the road tendering in the recent quarters converting in to groundactivity, construction is expected to improve during the 2012-13.
The inflation continued to remain the major concern up to November 2011, howevermoderated during December 2011- March 2012 due to softening of food prices during December January and non-food manufactured products during February and March 2012.
Indias exports crossed the US$300 Bn mark this year. As per the provisional data,Indias exports grew to US$ 303.7 Bn registering a growth of 21%. Top performingsectors include engineering, petroleum & oil products among others. Imports grew by32.1% to US$488.6 Bn. Major sectors that contributed to the burgeoning imports includepetroleum, oil, lubricants, gold & silver, coal among others. The overall tradedeficit stood at record US$184.9 Bn. This years trade deficit looks significantparticularly when the trade deficit for 2010-11 was estimated at US $ 104.82 Bn which waslower than the deficit of US $ 109.62 Bn during 2009-10. The trade deficit figures mayadversely impact Indias current account as well as the rupee movement. Moving into2012-13, with no solution to euro crisis and listless growth in the US, it will bechallenging year ahead for Indian exporters. However, India looks forward to double itsexport value of 2009 by 2014 with a mix of policy instruments and diversification ofexport markets.
3. Reserve Bank of India Policy Stance
The Reserve Bank of India started its monetary tightening in this fiscal. The ReserveBank of India gradually increased repo rates from 6.75% to 8.50% (increase by 175 bps) tocontain the inflation which was hovering around double digit mark for most period of theyear. The Reserve Bank of India kept the Cash Reserve Ratio (CRR) unchanged at 6% fromApril 2011 till January 2012. This led to liquidity deficit in the system and to reducethe liquidity deficit in the system the Reserve Bank of India reduced the Cash reserveratio (CRR) initially by 50 bps from 6% to 5.50% on January 2012 and then to 4.75% from5.50% in March 2012. The benchmark yields were in the range of 8% to 8.95%.
Reserve Bank of India in its policy stance of containing the inflation and anchorinflation expectations raised policy rate by 375 basis points during March 2010 October2011. During its mid-quarter review in December 2011, RBI kept the policy rates unchanged.As the growth decelerated significantly in quarter 3 to 6.1% considering thegrowth-inflation dynamics Reserve Bank of India in its policy stance for 2012-2013indicated further actions towards the lowering of the rates. Accordingly Reserve Bank ofIndia in its major policy announcements for 2012-2013 indicated to:
- Modify policy rates conducive to the current growth moderation.
- Ensure safeguards against demand-led inflationary pressures re-emerging .
- Provide greater liquidity cushion to the financial system.
Reserve Bank of India reduced the repo rate by 50 basis points to 8 %and the reverserepo rate to 7% with immediate effect in April, 2012.In order to provide greater liquiditycushion to the scheduled commercial banks it raised their borrowing limits under theMarginal Standing Facility ( MSF ) from 1 % to 2 % of their net demand and timeliabilities ( NDTL ) outstanding at the end of the second preceding fortnight withimmediate effect.
4. Banking Industry Trends
In consistency with the growth and inflationary trends the non food credit growth onYear on Year basis, has increased by 17% during 2011-12 which is above the indicativeprojected level of 16 % by Reserve Bank of India. However the deposit growth was 13.4 % bythe end of March 2012 against the Reserve Bank of India projected level of 15.5 %. Thiswas despite Banks maintaining high interest rates on deposits. This has resulted in widegap between Credit Growth and Deposit growth.
5. Business Performance of the Bank
5.1 The composition of Total Business Mix of the Bank for the last two years is asunder:
| || ||(Rs. in Crs) |
|Particulars ||March 2011 ||March 2012 |
|Total Deposits ||64,209.62 ||77,166.80 |
|Total Advances ||45,163.37 ||57,159.20 |
|Total Business Mix ||1,09,372.99 ||1,34,326.00 |
5.2 Business Mix of the Bank has increased from Rs. 1,09,372.99 crore as of March2011, to Rs. 1,34,326.00 crore as of March 2012, registering a growth of 22.81%.
5.3 Total Deposits have grown to the level of Rs. 77,166.80 crore as of March 2012as compared to Rs. 64,209.62 crore as of March 2011, registering a growth of 20.18%.
5.4 Total Advances of the Bank stood at Rs. 57,159.20 crore as of March 2012 ascompared to Rs. 45,163.37 Crore as of March 2011, registering a growth of 26.56%.
6. Deposits Mobilisation
6.1 The incremental growth in different segments of Deposit was to the extent ofRs.12,957.18 Crore during the FY 2011-12. A comparative position of Deposits for the FY2010-11 and 2011-12 is as under:
| || ||(Rs. in Crore) |
|PARAMETERS ||March 2011 ||March 2012 |
|Current ||5419 ||7273 |
| ||(8.74%) ||(10.01%) |
|Savings ||17325 ||19317 |
| ||(27.94%) ||(26.60%) |
|Term ||39241 ||47250 |
| ||(63.31%) ||(65.06%) |
|Aggregate Deposits ||61985 ||73840 |
|Inter Bank Deposits ||2225 ||3327 |
|Total Deposits ||64210 ||77167 |
|(%) CASA to Total Deposits ||35.42% ||34.46% |
(Figures in bracket indicate percentage deposits to aggregate deposits)
6.2 Share of CASA Deposits to Total Deposits during 2011-12 marginally declined to34.46% from 35.42% in the previous year. During the year, CASA increased by 16.91 % ascompared to 24.15 % in the previous year.
7. Credit Deployment and Delivery
Year 2011-12 has witnessed a very challenging macroeconomic environment locally as wellas globally. Domestically, we had to deal with concerns arising due to inflation beingabove the tolerance level, higher fiscal deficit, widening current account deficit, tightliquidity conditions, deceleration in growth, and also deteriorating asset quality. Withall these challenges, the Bank has expanded its quality asset base in line with its policyon prudent credit management.
The advances of the bank increased by Rs.11995.83 crore from Rs.45163.37 crore as on31.03.11 to Rs.57159.20 crore as on 31.03.12, registering a growth of 26.56%. During theyear, focused attention was given for accelerated lending under MSME, Agriculture andRetail sectors, strategically with policy of risk diversification.
As per sectoral deployment of the Bank, lending to industry grew by 19.37% led by MSME,Retail, Agriculture etc. The growth in MSME, Retail and Agriculture advance has been22.22%, 18.69% and 9.39% respectively. The growth in credit was achieved through intensemarketing of various loan products of the bank both under retail and corporate segments.Our Bank has started Debt Syndication Cell (DSC) with effect from 10.01.2011 formobilization of quality credit proposals, increasing fee based income besides meetingrequirements of our existing clients. Apart from the Debt Syndication, Cell also carriesout Techno Economic Viability Study (TEV) and vetting of TEV reports prepared by otheragencies.
Banks various specialized credit outlets viz. Corporate Business Branches (CBBs)and Industrial Finance Branches (IFBs) at major centers viz. New Delhi, Mumbai, Chennai,Kolkata & Ahmedabad, centralized processing centre for MSME advances, Retail AssetBranches for retail products under various Regional Offices have augmented the banksefforts of speedy disposal to meet need of customers.
With its commitment towards nation building, the Bank has been activelyparticipating in infrastructure financing. During 2011-12, Infrastructure lendingconstituted 18.55%. The banks exposure to infrastructure sector decreased from Rs.11434.89 crore as on 31.03.11 to Rs.10605.16 crore as on 31.03.12. This was on account ofthe fact many corporates repaid their dues under telecom sector in view of prevailinguncertainty. In power sector many short term loans were not rolled over on due dates.However, the Bank extended help to PSU distribution companies in restructuring their duesin line with other lenders. The sectoral deployment under infrastructure credit has beenas under:
Credit Monitoring & Asset Quality
The Bank has put in place robust monitoring system for ensuring good quality of assets.The Bank has put in place a system where based on Early Warning System, accounts are puton close watch, wherever required and slippage in asset category is arrested.
8 . Advances to Priority Sector:
8.1 The Bank has been consistently fulfilling its social obligations in respect ofpriority sector lending. The Bank has adopted multi pronged strategies during the year, toaugment credit flow to this sector. Priority Sector Advances of the Bank have thusincreased from the level of Rs.15150 Crore as of March, 2011 to Rs. 17153 Crore as ofMarch, 2012, registering a growth of 13.22 %. The ratio of priority sector advances toAdjusted Net Bank Credit stood at 38.54% as of March, 2012 against the regulatoryguidelines of 40%.
8.2 Lending to Agriculture
In line with the Governments Farm Credit Package, the Bank has been continuouslytaking necessary measures to step up the flow of credit to agriculture.
During the year, the outstanding under agriculture credit increased from the level ofRs. 6389 Crore as of March, 2011 to Rs. 6989 Crore as of March 2012, registering a growthof 9.39 %. The outstanding exposure under agriculture credit represented 15.71% of theAdjusted Net Bank Credit.
8.3 Progress under Special Agricultural Credit Plan
The Bank has disbursed Rs. 2768 crore during the year 2011-12 under Special AgricultureCredit Plan as against the target of Rs. 2200 Crore thus registering 125.82% achievementof the target set for the Bank.
8.4 Dena Kisan Credit Cards
The Bank has issued 56853 fresh Kisan Credit Cards (KCCs) involving credit assistanceof Rs. 492.77 Crore during the year, taking the total number of KCCs to 196817 lakhsinvolving an outstanding credit of Rs. 2078.37 Crore, as at the end of the year.
8.5 Progress under Micro Irrigation Systems (MIS):
In order to promote Micro irrigation system, the Bank has financed 3736 farmersaggregating to Rs. 48.34 Crore for installation of Micro Irrigation System incollaboration with M/s Gujarat Green Revolution Company Ltd.
8.6 Relief to Farmers under Govt. of Indias 2% Interest Subvention Scheme:
Under the Interest Subvention Scheme of GOI, the Bank has provided Rs. 5.11 Crore under1.5% interest subvention and Rs. 8.83 Crore under 2 % additional interest subvention forthe crop loans disbursed during 2011-12.
Similarly, Bank has credited Rs. 20.93 Crore under 2% interest subvention and Rs. 6.59Crore under 3% additional interest subvention for the crop loans disbursed during 2011-12.
8.7 Formation of Farmers Clubs:
The Bank has formed 1652 farmers' club as on March, 2012.
8.8 Financing to Self Help Groups (SHGs) :
The cumulative number of SHGs credit linked by the bank increased to 23341 involvingRs. 97.11 Crore as of March 2012 against 22364 SHGs involving Rs. 89.05 Crore as of March,2011. During the year 977 new SHGs have been credit linked by the Bank.
8.9 Credit Flow to Women :
The aggregate credit flow to women has increased from a level of Rs. 2043 Crore as ofMarch 2011 to a level of Rs. 2261 Crore as of March, 2012, registering a growth of 10.67%.The outstanding credit flow to women constituted 5.08% of the Adjusted Net Bank Credit asagainst a target of 5% set by the Govt. of India. With a view to create awareness on womenempowerment, the Bank organized a number of events on the International Womens Day.
8.10 Advances to weaker section
Consistent with the growth in priority sector advances, the advances to the weakersection increased from a level of Rs. 2689 Crore as of March 2011 to Rs. 3619.52 Crore asof March 2012, registering a growth of 34.56 %. The Bank advances to Weaker Section stoodat 8.13% of the Adjusted Net Bank Credit.
8.11 Advances to SC / ST Communities
The aggregate level of advances to SC/ST Communities, within the priority sectorincreased from a level of Rs. 753 Crore as of March, 2011 to Rs. 798 Crore as of March,2012, registering a growth of 6%. The share of advances to SC/ST is 4.65 % of the prioritysector credit.
8.12 Coverage under CGTMSE scheme:
The Bank has been participating under the guarantee scheme of the Credit Guarantee FundTrust for Small and Micro Enterprises (CGTMSE) to provide collateral free loans to smalland micro-enterprises. In order to mitigate the burden on entrepreneurs, the Bank is alsobearing 50% of the Guarantee fees. The total number of cases covered under the schemestood at 6875 with a guarantee cover of Rs. 367.62 Crore, as at the end of the yearregistering a growth of 56%.
8.13 Golden Jubilee Rural Housing Finance Scheme (GJRHFS):
In order to promote financing of dwelling units in rural areas, the Bank has beenimplementing GJRHFS. Bank has granted loan to 3110 beneficiaries during the year andachieved the target to the extent of 88.85 % under the scheme.
8.14 Prime Ministers 15 point Programme for the welfare of Minorities:
The credit flow to minority communities has increased from the level of Rs. 1400 croreas of March 2011 to Rs. 1723 crore as of March 2012, registering a growth of 23.07 % whichconstitutes 10.05% of Priority Sector Advances.
8.15 Government Sponsored Schemes
The Govt. of India has introduced Prime Minister's Employment Generation Programme(PMEGP) by merging Rural Employment Generation Programme (REGP) and Prime Minister'sRozgar Yojana (PMRY) for generation of employment opportunities through establishment ofmicro enterprises in rural as well as in urban areas effective from 01.04.2008.
The Bank is actively implementing government sponsored schemes aimed at eradication ofpoverty and for generating self employment. The Bank has sanctioned loans to 18092beneficiaries under PMEGP amounting to Rs. 106.45 Crore and 31769 beneficiaries underSwarnajayanti Gram Swarojgar Yojana amounting to Rs. 72.53 Crore and also granted loans to11445 beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY) to the tune of Rs.28.53 Crore.
8.16 Dena General Credit Card (DGCC) Scheme:
The Bank is providing overdraft facility upto Rs. 25,000/- under this scheme toborrowers of small means under rural and semi-urban areas. The Bank has issued 17608 DGCCCards as of March 2012.
8.17 Dena Bhoomiheen Kisan Credit Card:
The Bank has introduced a special scheme for tenant farmers, oral lessees, sharecroppers, landless labourers etc. wherein credit facility up to Rs. 25,000/- is grantedfor various agricultural and allied purposes with a provision of consumption also. Underthe scheme, 2720 Bhoomiheen Kisan Credit Cards have been issued during the year.
8.18 Credit Counseling Centers/Financial Literacy:
RBI has directed the Banks to open Credit Counseling centers in the respective Leaddistricts to ensure 100% financial inclusion. Accordingly, in pursuance with theguidelines of RBI to set up credit counselling centres, Bank rolled out its 1st CreditCounselling centre at Himatnagar (Dist. Sabarkantha) in Gandhinagar Region on 08.08.2007.Bank has opened Credit Counselling centres at Palanpur, Mehsana, Bhuj, Himmatnagar andGandhinagar in the state of Gujarat and Silvassa in the UT of Dadra & Nagar Haveli.The said centers are christened as Dena Mitras.
8.19 Corporate Social Responsibility:
8.19.1 Rural Self Employment Training Institutes (RSETIs) :
Dena Bank has set up a Society known as Dena Rural Development Foundation (DRDF) with acorpus of Rs. 150.00 lacs. DRDF in turn has set up 12 Rural Self Employment TrainingInstitutes (RSETIs) in its lead districts viz (i) Ahmedabad, (ii) Kutch, (iii) Mehsana,(iv) Banaskantana, (v) Sabarkanta (vi) Patan in the state of Gujarat, (vii) Durg, (viii)Dhamtari (ix) Mahasamund (x) Raipur (xi) Rajnandgaon in the state of Chattisgarh and (xii)Silvassa in the U. T. of Dadra & Nagar Haveli where bank is shouldering theresponsibility of lead bank.
8.19.2 Sponsoring Education of Girl Child :
As a part of Corporate Social Responsibility, the Bank had introduced a Nobel schemeviz. Dena Laxmi Shiksha Protsahan Yojana to sponsor education of Girl students in thevillages served by the Bank. The scheme aims at providing a scholarship of Rs. 2000/- andRs. 1500/- per annum to girl student belonging to Below Poverty Line (BPL) family,selected from each of the schools based on first and second rank respectively secured in7th Standard, from the villages under the command area of the Bank. The Bank has so farprovided scholarships to 2213 girl students under the scheme.
8.20 State Level Bankers Committee (SLBC) Responsibilities
The Bank has been discharging its responsibilities as a Convener of SLBC for the Stateof Gujarat and also as Convener of UTLBC for the Union Territory of Dadra & NagarHaveli and Daman. Bank has been given Lead Bank responsibility of Union Territory of Diu.The SLBC has played catalytic role for the development of banking in the State of Gujaratand Dadra & Nagar Haveli through constant monitoring of various Priority Sector anddevelopmental schemes. The Bank has also been monitoring the credit flow to MSME, auto,housing sectors under the stimulus package announced by Government of India.
8.21 Lead Bank Scheme
The Bank is successfully discharging its lead bank responsibility in 13 districts; ofwhich 7 districts are located in Gujarat, 5 districts in Chhattisgarh and two in UnionTerritory of Dadra & Nagar Haveli and Daman & Diu.
8.22 Regional Rural Banks sponsored by the Bank
The Bank has sponsored two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the State ofGujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State of Chhattisgarh. Both theRRBs sponsored by Dena Bank have a network of 277 branches spread over 10 districts ofGujarat and Chhattisgargh. The total business mix of these RRBs stood at Rs. 4920.20 Croreas of March 2012. During the financial year ended 31st March, 2012, both the RRBs areprofit making.
8.23 Core Banking Solution at Regional Rural Banks
In terms of the RBI / Government of India directives, Bank has initiated the process ofimplementation of CBS in Banks both Regional Rural Banks ( RRBs) i.e. Dena GujaratGramin Bank ( DGGB ) and Durg Rajnandgaon Gramin Bank ( DRGB ). As on 31st March, 2012,277 branches of both the RRBs have been successfully brought under CBS platform.
9. Financial Inclusion
The Bank has a Financial Inclusion Plan which envisages road map for provision ofbanking services through banking outlet in 770 villages allocated to it by various SLBCsunder Lead Bank Scheme. The number of villages allotted to Dena Bank has now been reducedfrom 770 to 728 after re-allocation of the villages to other Banks keeping in view thegeographical areas. As per FIP, all these villages are covered by end of March 2012.
The plan includes extension of facilities like Opening of No Frills Accounts, InbuiltOverdraft facility in the No Frills Accounts, Entrepreneurship Credit, Remittancefacilities and Micro-Insurance products. The Bank has engaged M/s Tata ConsultancyServices (M/s TCS) as the Application Service Provider (ASP) for implementation of FI Planfor a period of 3 years. Bank has engaged individual Business Correspondents (BCs) in FIvillages.
9.1 Progress in coverage of villages:
Bank has covered all 728 villages by March 2012.
Brick & Mortar Branch Model: Bank has covered 41 villages by opening Brick& Mortar Branches.
Ultra Small Branch Model: Bank has covered 34 villages by setting up of Ultra SmallBranches.
BC Model: Bank has Covered 653 villages by engaging individual BusinessCorrespondents.
9.2 No Frills Accounts: Total 2.74 lakh No Frills accounts have been openedin the FI Villages by March 2012 against the target of 2.62 lakhs accounts. However, theBank as a whole, the number of No Frills accounts is 12.60 lakhs as of March 2012.
9.3 Inbuilt OD facility in the No Frills Accounts: All No Frills Accounts inFI villages i.e. 2.74 lakh No Frills Accounts have been extended OD facility by March2012, against the target of 2.62 lakh accounts. However, the Bank as a whole, the numberof inbuilt OD facility extended in the No Frills Accounts is 5.53 lakh.
9.4 Dena Kisan Credit Cards and Dena General Credit Cards are also issued underFinancial Inclusion Plan.
9.5 Training to Individual BCs:
Training has been provided to all individual BCs. However, Bank shall provide trainingto BCs on continuous basis through pool of officers identified for training.
9.6 FIP for Regional Rural Banks(RRBs):
Dena Bank has sponsored two RRBs namely Dena Gujarat Gramin Bank (DGGB) in the State ofGujarat and Durg Rajnandgaon Gramin Bank (DRGB) in the State of Chhattisgarh.
DGGB has been allocated 245 villages and DRGB has been allocated 26 villages. In all,both the RRBs have been allocated 271 villages having population above 2000.
Both the RRBs have covered all the villages allotted to it by March 2012.
9.7 FIP for the State of Gujarat:
A total of 3502 villages having population above 2000 were allotted to Banks and allhave been covered by Banks by March 2012. Banks have covered 101 villages through Brick& Mortar Branch Model, 673 villages through Ultra Small Branch Model, 16 villagesthrough Mobile Van model and 2712 villages through BC model. Dena Bank has covered all 493villages allotted to it in the State of Gujarat. All Banks have opened 9.99 lakh accountsunder Financial Inclusion. (Dena Bank has opened 1.67 lakhs accounts.
9.8 FIP for the Union Territory of Dadra & Nagar Haveli:
30 villages having population above 2000 were allotted to Banks. Banks have covered all30 villages, out of which 4 through Brick & Mortar Branch model, 3 through Ultra SmallBranch Model and 23 through BC model. Dena Bank has covered all the 9 villages as proposedin FIP. Banks have opened 0.31 lakhs accounts in the Union Territory of Dadra & NagarHaveli.
9.9 FIP for the Union Territory of Daman & Diu :
6 villages having population above 2000 were allotted to Banks. Banks have covered all6 villages, all through BC model. Dena Bank has covered 3 villages as proposed in FIP.Banks have opened 0.05 lakhs accounts in the Union Territory of Daman & Diu.
10. Advances to MSME Sector
MSME sector has been identified as one of the growth engines for increasing creditportfolio of the Bank. Central Processing Cells were established at the remaining 4centres, thus covering all the 21 Regional offices for speedy disposal of MSME loanproposals. MSME credit camps were organized at various potential centres on regular basis.
Special MSME campaign was organized form 1st November, 2011 under Mission-111 days andprogress of the same were monitored on fortnightly basis. During the campaign Banksanctioned loans to 5637 Borrowers amounting to Rs. 1695.09 Crore upto 31.03.2012. Rate ofInterest were reduced significantly for MSME borrowers and are now in the range of 12% to14.75% as per the credit rating upto "D" rated borrowers.
Bank has entered into tie up with TVS Motor and Bajaj Motor for 3 wheelers financingand with TATA Motors for financing Commercial Vehicle to be covered under MSME sector.
Regular Training programmes were conducted for officers for improving skills forprocessing of loan proposals.
All these measures resulted in growth of MSME credit by 22.22% . In absolute terms, theMSME advances increased from Rs. 6783.72 Crore as of 31.03.2011 to Rs. 8291.13 Crore as of31.03.2012. Credit to Micro Enterprises grew by 28.56% from Rs. 3214.26 Crore as of 31.03.2011 to Rs. 4132.33 Crore as of 31.03.2012. Credit to Micro and Small Enterprises sectorgrew by 21.02% from Rs. 6194.05 Crore as of 31.03.2011 to Rs. 7495.83 Crore as of31.03.2012. Advances to Micro Enterprises constitutes 55.13% of Micro and SmallEnterprises advances as of March, 2012. No. of accounts in Micro Enterprises grew from100503 as of March, 2011 to 114375 as of March, 2012 showing an increase by 13.80%.
Special thrust was given to cover the eligible loan accounts under CGTMSE, whichresulted in increasing the number of borrowers from 4550 as of March-2011 to 6875 as ofMarch-2012 ( Increase by 49.12%) and amount from Rs. 235.66 Crore as of March, 2011 to Rs.367.62 Crore as of March, 2012 ( Increase by 56%).
11. Retail Credit
11.1 Retail Credit has been one of the focus area for credit growth with betterreturns. The Bank has 11 Retail Banking Schemes catering to various needs of a customer.The schemes are modified from time to time keeping in view the market scenario, customerrequirements and feed-back from field functionaries. Concerted efforts were made topopularise the retail banking schemes through wide publicity. Giving emphasis onincreasing housing loan, the Bank has approved 909 housing projects / builders. It willalso ensure quality of assets under housing loan. During the financial year, theoutstanding amount under direct retail credit registered a growth of 21.48% showing anincrease of Rs. 964.37 Crore to reach the level of Rs. 5453.25 Crore. The total retailcredit has increased from Rs. 6135.59 Crore as of March 2011 to Rs. 7282.50 Crore as ofMarch 2012 registering growth of Rs. 1146.91 Crore (18.69%)
11.2 Retail Asset Branches:
In order to take advantage of the potential available for enlarging Banks retaillending portfolio and also to ensure better quality, uniformity and speed in appraisal andsanctions, 12 Retail Asset Branches (RABs) are functioning at various centres viz. atHyderabad, Bangalore, Chennai, Lucknow, Pune, Surat, Bhopal, Bhandup (Mumbai), Juhu VileParle (Mumbai), Kolkata, Ahmedabad and New Delhi. The Retail Asset Branches carry out allthe functions relating to retail advances and expected to ensure quantitative andqualitative growth of retail business and also cut down multiplicity of functions andefforts at branches. Besides, in order to maintain asset quality, Regional Managers havebeen empowered to link the selected branches at RAB centre, as they may deem fit, with theRAB at that centre. Such linked branch will generate lead and all the functions till firstdisbursement shall be carried out by RAB and thereafter by the lead generating branch.
11.3 Refinement of Schemes :
The Bank further refined its various retail schemes like Dena Niwas Housing Finance,Dena Vidyalaxmi Education Loan, Dena Trade Finance Schemes so as to make these schemesmore customer friendly.
11.4 Introduction of new schemes:
To enable our field functionaries to get one more retail product and encash theavailable business potential, a new retail product namely "Dena Gold Loan" hasbeen introduced and operationalized through designated branches.
11.5 Housing Finance:
Fresh disbursements to the tune of Rs. 1374.87 Crore were made during the year towardshousing loan, enabling net increase in outstanding credit from Rs. 4015.98 crore as ofMarch 2011 to Rs. 4730.31 Crore as of March 2012, registering a growth of 17.79%.
11.6 Mortgage Loan:
The outstanding under Mortgage Loan Scheme, increased from Rs. 493.18 Crore. to Rs.743.24 Crore as at the end of the year i.e. an increase of Rs. 250.06 Crore (50.70%).
11.7 Education Loan:
Fresh disbursements to the tune of Rs. 29.39 Crore were made during the year towardseducation loan. There is net increase in outstanding credit from Rs. 316.03 Crore to Rs.327.09 Crore as at the end of the year i.e. an increase of Rs.11.05 Crore (3.50%).
11.8 Trade Finance Scheme:
Outstanding under the Trade Finance Scheme, increased from Rs. 461.46 Crore to Rs.592.99 Crore as at the end of the year i.e. an increase of Rs. 131.53 Crore (28.50%).
Aggregate gross domestic investments of the Bank grew by 23.05% to reach Rs. 23,207.80crores as on 31.03.2012 from the level of Rs. 18,860.22 crores as on 31.03.2011. The SLRsecurities have increased from Rs. 15,304.91 crores to Rs. 19,504.71 crores i.e. anincrease of 27.44% in line with the increase in DTL. The DTL has increased from Rs. 62,897crores to Rs. 74,992.47 crores.
Non SLR Securities have increased from Rs. 3555.31 crores to Rs. 3703.09 crores i.e. anincrease of 4.16%. The increase in Non SLR Securities is mainly due to increase ininvestment in RIDF / RHDF / MSME / MSRE amounting to Rs. 195 crores. The RIDF investmentis mandatory investment to bridge the shortfall in Priority Sector Lending vis--vis RBIstipulated one and is not subject to mark to market.
Bank continued to be an active participant in Government Securities auction. Bankconcentrated in investment in Govt Securities, PSU and Corporate Bonds to augment itsincome from Treasury. The income from Treasury operations has gone up from Rs. 1246 croresfor the year ended 31st March 2011 to Rs. 1635.56 crores for the year ended 31st March2012 i.e. increase of 31.26% on YoY basis. The investments have been maintained in variousmaturity mixes consistent with risk perceptions and investment policies of the bank.
The average yield on investments increased from 7.06% for year ended 31.03.2011 to 7.39% for the year ended 31.03.2012 due to increase in interest income.
13. International Operations
13.1 International Banking business of the bank
Banks focus on providing support to Exporters has resulted in growth of ExportCredit substantially by 45.55% to Rs.2246 crores during the year. The bank continues tooffer a variety of trade finance products to the customers. The customers are quoted verycompetitive exchange rates supported by the periodic review of their business turnover.The bank also makes available rupee and foreign currency pre as well as post shipmentcredit to cater to exporters requirements.
Bank has recruited specialist Forex officers and placed in Treasury and AD branches toprovide prompt / efficient customer service to exporters / importers.
The merchant forex business turnover of the bank surpassed Rs 30200 cr during thefinancial year 2011-12 attaining a growth of 30.44%.
The bank maintains its focus on NRI business. NRI deposit grew by 25.02% to Rs 1846crores during the year. Deregulation of interest rates on NRE deposit has helped the bankincrease its NRI deposit portfolio substantially. The bank is looking forward to launch avariety of forex related products in this calendar year. The bank added two moreauthorized dealer (AD) branches taking the total AD branches to 41 including TreasuryBranch which deals in inter bank and money market operations.
Bank has decided to introduce retail sale of gold coins during the year. Process hasbeen initiated for opening branch/ representative office abroad
14. Asset Quality & Recovery Management
Bank repeated its commendable performance in maintaining asset quality and NPAManagement during the year 2011-12 also irrespective of the heavy slippages experienced bythe banking industry in general. The Banks performance in NPA management is directlyattributed to the concerted efforts made for upgradation of recently slipped NPAs and cashrecovery. Action under SARFAESI Act, recovery through compromise settlements resulted inimproving the cash recovery and upgradation to a considerable extent. The proactive stepstaken by the Bank in NPA reduction ensured that level of NPAs is restricted to the minimumpossible.
Bank has achieved the lowest gross NPA % of 1.67 during this year in the last one andhalf decades. The gross NPA, in absolute terms, increased by Rs. 114.26 crore from Rs.842.24 crore as on 31st March 2011 to Rs. 956.50 crore as on 31st March 2012. Gross NPAratio of the bank reduced to 1.67% as on 31.03.2012 from 1.86% as on 31.03.2011.
The Net NPA ratio of the Bank stood at 1.01% as on 31.03.2012 as against 1.22% as on31.03.2011. Net NPAs in absolute terms increased by Rs. 22.78 crore from Rs. 548.95 croreas on 31st March 2011 to Rs. 571.73 crore as on 31st March 2012.
| || ||(Rs. In Crore ) |
| ||March 2011 ||March 2012 |
|Gross Advances ||45163.37 ||57159.20 |
|Gross NPAS ||842.24 ||956.50 |
|% Gross NPA to Gross Advances ||1.86% ||1.67% |
|Net Advances ||44833.21 ||56606.93 |
|Net NPAS ||548.95 ||571.73 |
|Net NPA to Net Advances ||1.22% ||1.01% |
|Provision Coverage Ratio (including prudential write off ) ||74.62% ||75.53% |
Provision coverage ratio (including prudential write off) stood at 75.53% i.e. wellabove the regulatory requirement of 70%.
Special attention was given to recovery in NPAs during the year through negotiatedsettlements. Special recovery drives were continued for recovery in written off accounts.Recovery camps and Lok Adalats were organized at Regional Offices and major centers onregular intervals. Nodal Officers were nominated for each DRT for follow up of the pendingcases and to co-ordinate with the Advocates for speedy recovery.
The cash recovery during the year 2011-12 was Rs. 222.56 crore and upgradation in theaccounts was Rs. 191.47 crore. Bank has recorded recovery of Rs. 81.93 crore (includinginterest) in written off accounts during the year 2011-12.
Bank has conducted 1461 recovery camps in various Regions during the year which wereattended by 16940 borrowers. A total of 2785 accounts were settled for Rs. 32.46 crore and864 accounts were upgraded for Rs. 21.33 crore during the year through such of 11.34 croreeffected during recovery camps. Spot recovery Rs. these recovery camps.
A total of 3605 accounts were considered under compromise settlement for an amount ofRs. 68.96 crore under banks OTS scheme during the year ended March 2012 againstwhich a recovery of Rs. 37.49 crore was effected as against 4145 accounts with compromiseamount of Rs. 93.13 crore with cash recovery of Rs. 109.88 crores effected during the yearended March 2011.
15. Legal Services/ RTI Act
15.1 Sale of NPA amongst Banks/ FIs and ARC
In terms of the RBI Guidelines issued on 23.04.2003 and 13.07.2005, the Bank has sold 8NPA accounts to ARCs for a total consideration of Rs. 14.13 Crores on cash basis during2011-12.
15.2 Recovery under SARFAESI Act, 2002.
For expediting recovery in NPA accounts under the Securitisation and Reconstruction ofFinancial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) during the year1006 Notices were issued in the eligible accounts involving an amount of Rs. 350.42 Crore.The Bank was successful in recovering an amount of Rs. 36.20 Crore in 1971 accounts(including those where notices were issued during previous years) during the year 2011-12.
15.3 Recovery through Lok Adalats
For an early resolution of disputes and recoveries from its defaulters through LokAdalats constituted under Legal Services Authorities Act. the Bank endeavors to arrangemaximum Lok Adalats wherein both pre and post litigation i.e. suit filed and non suitfiled accounts can be placed for settlement. The Bank has recovered Rs. 2.85 Crore during2011-12 (inclusive of recovery made in the cases settled during previous years), in 3282accounts.
15.4 Recovery through Suits in the Debt Recovery Tribunal/ Civil Court:
As of 31-03-2012, our Bank is having 2367 Suit Filed accounts in various DRT/CivilCourts involving an amount of Rs. 1541.78 Crore and 1885 Decreed accounts in various DRTs/Civil courts involving an amount Rs. 945.93 Crore. During the year, the Bank hadrecovered of Rs. 39.88 Crore in the above suit filed and Decreed accounts.
15.5 BIFR Cases:
In terms of Recovery Policy approved by the Board, a Nodal Officer stationed at NewDelhi, has been identified for co-coordinating the BIFR Cases. During the year, 5 caseswere removed on account of closure of accounts due to compromise / rejection / abatementof reference by BIFR/ asset sold to ARCs. The Bank has recovered a sum of Rs. 10.25 Crore.1 new case / reference was added during the year involving an amount of Rs. 12.71Crore. Atthe end of the year, 24 cases involving Rs. 223.10 Crores, are pending before BIFR/AAIFR
15.6 Right to Information Act.
15.6.1 Bank has designated State Public Information Officers & Central PublicInformation Officers for dealing with requests received from Citizen's of India under RTIAct, 2005. Bank has also designated the Executive Director as Appellate Authority todispose the appeals received against the decision of SPIO/ CPIO. In compliance of theGuidelines Bank has also appointed Transparency Officer.
15.6.2 During the Year the Bank has received 1212 requests under RTI Act, anddisposed off 1148 requests (inclusive of 33 requests carried forward from previous year)as per the norms. The Appellate Authority has received 215 Appeal and disposed off 178Appeals (inclusive of 25 Appeals carried forward from previous year) as per norms duringthe year.
16. Government Business.
Government Business Department is functional at Head Office since 2006 and is dealingexclusively in Government related transactions. All types of Government businessactivities such as collection of Direct Taxes, Central Excise & Services Tax for thecentral Government, collection of commercial taxes for various state Government throughe-payment as well as physical mode, doing pension payment of Central and State Governmentpensioners, maintaining accounts of those ministries for which our Bank is accredited,handling Treasury Business of Central and State Government in the States of Gujarat,Maharashtra and Chattisgarh, maintenance of PPF accounts, Senior Citizen Savings Scheme,RBI Bonds/ Savings Bonds,etc on behalf of Central Government, as well as doing Frankingbusiness for Rajasthan, Gujarat & Maharashtra Government.
Bank has implemented the facility of E-payment for the following states :
1. Facility of e-payment of VAT / CST and Profession TAX for the State of Maharashtrasuccessfully.
2. System for Virtual Treasury ( under which 13 types of collections of StateGovernment revenue such as Motor Vehicle Tax, Road Tax, Stamp Duty etc. will be covered),has been developed and launched for customers in State of Maharashtra
3. Similarly, Bank has received certificate of testing and authorization for the CyberTreasury for state of Gujarat for collection of 13 types of Revenue items. The system isready to launch.
4. During the year Bank has also obtained authorization to develop and launch thefollowing modules from the concerned State Governments.
Commercial Taxes for the State of Uttar Pradesh, Delhi, West Bengal, Karnataka, AndhraPradesh and Union Territory of Daman & Diu. Authorization of On Line collection andpayment for the Chhattisgarh Treasury has also been received. This system is developed,tested and ready to launch shortly.
5. A New application software for all Government Business activities developed by M/s.Accel Front Line is procured in coordination with IT Department. The application isinterfaced with Finacle and is in process of implementation. It is expected to beimplemented across all branches by September 2012. Its implementation will go a long wayto smoothen the Government Business activities such as PPF, Senior Citizen Savings Scheme,Tax collection, Pension Payment, etc and hence result in substantial rise in Net income aswell as image of the Bank.
6. Bank is in process of establishing Central Pension Processing Centre (CPPC). Thiswill aid in better service to pensioners and reduction in Administrative over heads.
7. Bank has received approval for e-franking from IGR, Pune for Maharashtra and now isin advanced stage of implementing the same.
The implementation of all the above activities not only will increase our Banks incomemanifold but will also enhance Banks image as well as presence in those areas / parts ofthe country where up till now we were not known / authorized. This will also help the Bankto increase customer base by providing all facilities under one roof.
17.1 Sale of Third Party Products
The Bank has taken up the activity of distribution of third party products viz.Insurance and Mutual Funds, with a view to provide a wide range of financial services toits customers as value addition, as also to augment its non-interest income.
17.2 Distribution of Mutual Fund Products
The Bank has strategic marketing alliance with Asset Management companies of 14 majorMutual Funds for distribution of their mutual fund products through the Banksbranches.
17.3 Distribution of Insurance Products
The Bank has existing Bancassurance tie up with the Life Insurance Corporation of Indiafor distribution of their life insurance products, which enables our customer to avail oftheir entire range of life insurance products at all branches.
The Bank has also tied up with the United India Insurance Co. Ltd. to offer the generalinsurance products to customers.
18. Depository Participant Services
Bank has been extending Depository Services to its customers since 1998 from CapitalMarket Branch. Bank has now extended the services from 90 branches spread over variouscentres. In order to create awareness among the staff officers in the Bank have beentrained and are duly certified Depository Services Officers. Bank has introducedApplication Supported by Blocked Amount (ASBA) facility during the current year andstarted extending this service from 131 branches. Bank caters to both ASBA and SyndicateASBA services for its customers.
Bank is in the process of implementing On-Line Trading facility for its customers.
19. Income and Expenses 19.1 Income
Total Income of the Bank has increased from Rs. 5567.37 cr for the year-ended 31stMarch 2011 to Rs. 7376.30 cr for the year ended 31st March 2012, resulting in net increaseof Rs. 1808.93 cr, which represents a growth of 32.49%.
Interest income of the Bank has increased by 34.98 % to record a level of Rs.6794.13Crore.
Growth in interest income of the Bank was achieved mainly due to an increase in theinterest income from advances i.e. by 35.09%. The achievement could be attributed to thestrategies adopted by the Bank by concentrating on high yielding credit viz. SME, Retail& Agriculture, etc. and re-pricing of bulk corporate loans. Interest income frominvestments showed an increase of 29.48% Besides this Bank has also received Interest onIncome Tax Refund of Rs. 50.52 crores during the year.
Fee based Income has increased by Rs. 102.48 crore (27.31%) from Rs. 375.25 crore as ofMarch 2011 to Rs. 477.73 crore as of March 2012.
Total expenses has registered an increase of 34.63 % over the previous year.
19.3 Profitability Analysis
Banks net interest income (NII) has increased by 19.15% and stood at Rs. 2101.00Crore as compared to Rs. 1763.37 Crore posted during the previous year.
The Bank has continued to give thrust on recoveries in written off advances during theyear, which resulted in recovery of Rs. 69.76 Crore under this segment.
19.4 Operating Profit
Operating profit of the Bank has registered an increase of 24.89% and stood at Rs.1528.43 Crore as compared to Rs.1223.79 Crore posted during the previous year.
19.5 Net Profit
With the Banks focus on containing interest costs, looking for opportunities ofhigh yielding advances, the Bank is successful in posting 31.31% rise in Net Profit duringthe year. The Net Profit of the Bank stood at Rs.803.14 Crore as against Rs. 611.63 Croreposted during the previous year.
A comparison of income, expenses and provisions & contingencies with the previousyear is given hereunder:
| || ||in crore) |
|Particulars ||2010-11 ||2011-12 |
|Interest Income ||5,033.53 ||6,794.13 |
|Non Interest Income ||533.84 ||582.17 |
|Total Income ||5,567.37 ||7,376.30 |
|Interest Expenses ||3,270.16 ||4,693.13 |
|Operating Expenses ||1073.42 ||1,154.74 |
|Total Expenses ||4,343.58 ||5,847.87 |
|Operating Profit ||1,223.79 ||1,528.43 |
|Provisions & Contingencies ||612.16 ||725.29 |
|Net Profit ||611.63 ||803.14 |
20. Marketing Initiatives
20.1 During the year 2011-12, a wide publicity was given to different products& schemes of our Bank through press, electronic and outdoor media.
20.2 Pan India Advertisements were released in Major Newspapers during the year tobuild the Corporate Image of the Bank.
20.3 Bank's visibility was increased in Tier II & Tier III cities throughadvertising on Hoardings and Glowsigns in these cities besides maintaining the level inTier I Cities.
20.4 The Bank has also utlised other innovative mediums such as Full Train Brandingof the Local Train on the Western & Central lines in Mumbai, Display Panels onShatabdhi & EMU trains in Delhi, Punjab, Haryana, UP & Karnataka etc.
20.5 A major branding exercise was done by associating with the Future Media IndiaLtd. for the Annual Mega Shopping Festival of Big Bazaar & Food Bazaar "SabseSaste 5 Din 2012" in selected stores at 18 centres in Gujarat, Delhi & Rajasthan.
20.6 A wide publicity was also given to the opening of new branches, through NewsPaper Ads, Hoardings, and Leaflet distribution.
20.7 Bank participated in various Social & Cultural events and Trade Fairsduring the year and gained good publicity and mileage.
21. Risk Management
21.1 The Bank has put in place structured risk management systems &architecture that is overseen by a Committee of Directors on Integrated Risk Management.Management level Committees on Asset Liability (ALCO), Credit Risk Management (CRMC) andOperational Risk Management (ORMC) constitute the core level of focused risk managementarchitecture. The Bank has also identified Risk Managers at all controlling offices and atHead office departments to focus on operational risk factors and arranged for theirtraining.
21.2 The Bank reviews and updates its risk related Policies on annual basis or asand when need arises in line with the RBI Guidelines, changes in operating environment andwith a view to manage credit and market risks in an effective manner. Business ContinuityPlans have been formulated for all critical processes of the Bank. The Bank has also setup and operationalised Disaster Recovery Centre for its Core Banking Operations and alsomade use of the same during the year. Operationalisation of Near Site is also underprocess.
21.3 The functions of Mid-Office are broad based for an effective monitoring ofmarket risk. Further, at Mid-office, SAS software has been implemented for effectivemonitoring.
21.4 The Bank has been using eleven internal Credit Rating models including 5models for retail advances. 4 general models are applicable as per size of exposure and 2Specific Models are applicable for infrastructure and general projects. The Bank continuedwith the system of comprehensive risk profiling of the Bank in line with regulatoryguidelines that will facilitate integrated risk management
21.5 A system of verification of the credit rating of borrowers has been in forceand credit monitoring system was further streamlined for focused attention on improvementin asset quality
22. Human Resource Management
22.1 During the year, the Bank had provided training to 3954 employees in thrustareas of Credit, Forex, Soft Skills, Agriculture Lending, NPA & Recovery Management.The Bank also imparted induction training to newly recruited officers and clerks.
The Bank had also conducted pre-examination training for SC/ST candidates appearing forPromotion tests and Banks Probationary Officers examinations as well asclerical recruitment. Pre-promotion training to SC/ST candidates for 10 days and toGeneral Candidates for 4 days was also given.
The Bank also utilizes external training resources from reputed management institutesand training institutions in India and abroad, with a view to providing specializedtraining in newer areas of skill development as also to provide wider exposure toexecutives and officers. During the year, 21 executives/officers were sent abroad forattending training/conference.
22.2 The staff strength of the Bank increased from 9953 as of 31.3.2011 to 10202 atthe end of the FY 2011-12. The total strength comprises of 4501 officers, 3776 clerks and1925 subordinate staff, including 2164 women employees. The representation of ScheduledCastes, Scheduled Tribes employees in the Bank was in conformity with the prescribedlevel.
22.3 The Bank, to meet its requirements of personnel for increasing business levelsand opening of new branches, has recruited 408 Officers (including POs) under variousscales and disciplines, 404 clerks and 17 substaff during the year.
22.4 In Bank's pursuit for growth and career progression of its employees, Bank hadinitiated process for promotion from clerical cadre to officer cadre JMG Scale-I forfilling up identified vacancies up to March, 2012. Accordingly, 427 clerks have beenpromoted to officer cadre JMG Scale I.
22.5 Grievances Redressal Mechanism for SC/ST/OBC /PH/EX-SM Employees TheBank has nominated a top Executive in the rank of General Manager to function as ChiefLiaison Officer to oversee implementation of Reservation Policy for Scheduled Castes,Scheduled Tribes, OBCs, PH and EX-Servicemen Employees. The Quarterly Meetings with AllIndia Dena Bank SC/ST/OBC employees Federation were held at periodic intervals at HeadOffice to redress problems/Grievances.
22.6 Industrial Relations:
The Industrial Relations during the year remained congenial for growth and development.As a part of the industrial relations initiative, a grievance redressal mechanism is inplace in the Bank to address the grievances of individual employees.
23. IT Initiatives
23.1 Core Banking Solution (CBS)-DENA GARIMA
23.1.1 The Bank had embarked upon a process of transformation through technologywith a view to enhance customer satisfaction and to leverage business growth. The Bank hasengaged the services of M/s Wipro, a leading service provider in IT enabled services, forproviding an end-to-end solution for Core Banking Operations of the Bank. It is backed byFinacle software support from M/s Infosys Technologies Ltd. The Core Bankingsystem bundles a host of customer friendly services like Internet Banking, Phone Banking,Mobile Banking and Cash Management Services etc. besides software system for IntegratedTreasury operations. A number of third party software solutions are also being integratedmainly with a view to address Regulatory concerns.
23.1.2 The Project was kicked off with migration of existing operations atbanks Mahim Branch in Mumbai on 12th March 07.
23.1.3 As of March 2012, all the 1342 branches of the bank and the entire businesshas been brought under CBS. This covers 867 centres and 28 states / union territories.
23.2 Other IT Initiatives
Recognizing the significance of communication infrastructures in the Banks drivetowards transformation through technology, the bank has connected all its branches andadministrative offices through DENANET its Wide Area Network using variousconnectivity media. "DENANET" is continuously being monitored on 24X7 basis by aNetwork Monitoring team for ensuring more than 99% up time.
23.2.2 ATM Installations
In keeping with the universal trend of introducing ATMs as the most popular &convenient mode of delivery channels, a total of 543 ATMs have been installed as on 31stMarch 2012 all over the country. Out of these ATMs, 430 are Onsite and 113 are Offsite,covering more than 270 centres. 2 of the ATMs are bio-metric to facilitate illiteratecustomers operating the ATM with thumb impression which is convenient for small customersand semi-literate farmers. The biometric ATMs also speak out instructions to thecustomers. The Bank has ATM sharing arrangement through CASHTREE, VISA, CASHNET & NFStie-ups, enabling more than 90000 ATM access points & more then 4.70 lacs MerchantEstablishments (MEs) in India and more than 1 million ATMs & 26 Million MEs abroad, toBanks customers; Debit/ATM Card base is around 15.48 lacs. The Bank also providesDena International Gold Debit Card to HNI customers with Visa affiliation. The Bank hasnumber of value added services through the ATMs viz. Mobile Pre-paid Top-ups and Post PaidBill Payment etc. Debit Card customers can also make online payment for purchases of goodsand services using Debit Cards on Internet
23.3 Network based Services & Applications
23.3.1 With a view to channelise this infrastructure for customer satisfaction andmaximize the ROI made in creation thereof, we have introduced the following network basedproducts and services: CBS application, Other applications viz ALM / AML, OnlineBalance sheet etc, ATM / Debit Cards, Data Transfer & Remote Support,RBI Payment systems like RTGS & NEFT etc,.
Corporate E-MAIL, Intranet,
IP Telephony, Video Conferencing, Internet Banking.
23.3.2 The Bank has launched "Dena i Connect" the internetBanking Service for customers of its Branches. This enables the customers to access theiraccount information through Internet in the form of (a) Balance Inquiry (b) Mini Statement(Last 9 transactions) (c) Detailed Statement of Account (d) Cheque Book inquiry (e) FundsTransfer (Self/ Third Party) (f) RTGS/NEFT transactions (g) Outward cheque status inquiry(h) E-payment of Direct Taxes and Indirect Taxes (i) Online payment of Maharashtra SalesTax (VAT) (j) E-payment of Commercial Taxes of Dadra & Nagar Haveli. As at the yearend, 1,06,910 customers (Retail customers 1,06,602, corporate user ids - 308) haveregistered for
"Dena i Connect".
Our Bank has implemented "Dena MConnect" services - the convenient andsecure way to conduct banking transaction using mobile handset. Customers can availvarious facilities including funds transfer. The solution is compatible with RBIguidelines on Mobile Banking and about 3000 customers have started using the same.
23.3.3 Bank has started Alert facility through which customers gets SMS onoccurrence of certain events transactions of Rs.5000/- and all RTGS / NEFT and ATMtransactions.
23.3.4 Banks Web sites
Bank has its website with netizen friendly features like Branch Locators, Calculators,Two-click navigation system etc. The webmaster keeps the website updated and dynamic on anongoing basis. With robust IT infrastructure; the Bank is well poised to take the leapforward to drive technology towards affording greater customer convenience.
23.4. Cards Management
The popularity of Dena Debit Card is growing as witnessed by the increase in card baseand number of transaction carried out per day. The Debit card base of the Bank has reached15.48 lacs ( grown by 24 % Y-on-Y ) and the daily transaction also has crossed 61000 mark.The convenience of the Debit Card is now well understood by the customers, as such theissuance of Debit Card across the counter ( Insta Card ) has also picked up . All the VisaDebit Cards of the Bank being International Card , are acceptable on all VISA ATMs and POSTerminals all over the world. In India it is valid on almost all ATMs and POS Terminalsthrough tie up arrangements like VISA , NFS, Cashtree & Cashnet group of ATMs. DenaVISA cards issued since last two years is also valid for Online payment as the same issupported by verified by VISA i.e. VbV Password. The POS and Online payments by use of Dena Debit Card have fetched an income of Rs.1.35 crores in theyear Apr 2011 to Mar 2012, i.e. an increase of 53% over last year.
The Bank is not in the business of issuance of Credit Card after discontinuation ofBanks own credit on 31.12.2008 . The Bank has an arrangement for issuance ofco-branded Credit Cards with SBICards wherein all the formalities for issuance, operationsand credit risk is with SBICards.
24. Customer Service
24.1 The Bank has concentrated on internalizing customer expectations andaspirations more intensely. During the year, the Bank has continued various measures toimprove customer satisfaction.
24.2 Redressal of Customer Grievances
The Bank is according top priority to resolve customers complaints/ grievancesexpeditiously. The customers of the Bank can correspond directly, through letters, e-mailsor through the web-site of the Bank and post their queries / grievances / suggestions, ifany. The complaints / suggestions can be registered through Toll Free Number 1800-225740of the Bank.
24.3 Standing Committee on Procedures & Performance Audit of Customer Service
Standing Committee on Customer Service is headed by the Chairperson and ManagingDirector. Besides Executive Director, General Manager (Resource , Planning, Nodal Officer), General Manager (IT), General Manager (Forex & Treasury), General Manager (Credit)are the members of the Committee. Four / Five customers from different branches areinvited for the quarterly meetings. Four such meetings were organized during the Financialyear 2011-12.
24.4 In addition to above, the Bank has formed Customer Service Committee of theBoard at the apex level to advise measures for enhancing the quality of customer serviceand improving the level of customer satisfaction. Every Branch holds a customer meet in amonth for redressal of customer complaint at the grass root level. Each Regional Officehold a customer meets once in a quarter.
24.5 Code of Banks Commitments to the Customers
A voluntary Code, which sets minimum standards of banking practices for banks to followwhen they are dealing with individual customers was introduced by Banking Codes andStandards Board of India constituted by RBI. It provides protection to customer andexplains how banks are expected to deal with customers for their day-to-day operations..Provisions of the Code may set higher standards than what is indicated in the regulatoryinstructions and such higher standards will prevail as the Code represents best practicesvoluntarily agreed to by us as our commitment to you. RBI has constituted Banking Codesand Standards Board of India for measuring the performance of banks against a bench markreflecting the Best Practices (Codes & Standards). The Bank has adopted "Code ofBanks Commitments to the Customers" and is fully committed to its adherence.
The Bank is a member of BCSBI and a top executive in the rank of General Manager isappointed as the "Code Compliance Officer" on behalf of the Bank.
25. Branch Network and Expansion 25.1 Branch Network
During the year 2011-12, Bank has opened 51 new branches taking the tally to 1342 invarious Regions including upgradation of Sandheli Satellite Office in to full fledgedbranch . The sector-wise breakup of the branch network of the Bank as on 31st March 2012is as under:
|Sector ||No of Branches ||% to Total |
|Rural ||493* ||37 |
|Semi Urban ||264 ||20 |
|Urban ||260 ||19 |
|Metro ||325 ||24 |
|Total ||1342 ||100 |
* including Satellite Branches
During the current year, Bank propose to open 100 branches in various parts of thecountry. Bank has consciously included centres where Banks presence was negligibleor hither to uncovered area.
These centres are mainly in Jharkhand, Bihar, West Bengal, Sikkim, HimachalPradesh,Tamil Nadu, Orissa and Uttarakhand. Bank has also identified areas / centres,mostly falling in the category of under Banked areas as well as under Minority dominateddistricts.
26. Inspection and Internal Audit
The Bank has an in-built system of effective control and supervision of the functioningof its various branches scattered all over the country. In compliance with guidelines ofRBI on audit of branches, Regional Offices and Departments at Head Office, the Inspection& Internal Audit Department is conducting various types of audits through internalinspectors, external Chartered Accountants firms and CISA/DISA qualified IS auditors fromtime to time and ensures strict adherence to the Banks laid down systems andprocedures and timely plugging of loop holes, if any. Risk Based Internal Audit,Concurrent Audit, Management Audit, Information Systems Audit, Revenue Audit and ProprietyAudit apart from Snap Audit as and when required are conducted. These activities are welldocumented and guided by the policies approved by Board.
In line with directives of RBI and to comply with requirement under BASEL II accord,Bank has adopted Risk Based Internal Audit (RBIA) for inspection w.e.f. 1st April, 2007.The officials inspecting the branches have been given adequate training for conductingRBIA. During the year the Bank has carried out RBIA of 773 Branches by internally trainedinspectors as well as by the experienced empanelled external auditors.
To further strengthen adherence to the systems and control, the Bank geared upmonitoring mechanism. Monitoring is done through concurrent audit at various branches byInspection Department at Corporate Office. The strategic approach with special emphasis onstrict adherence to systems and procedures has enabled improvement in the inspectionratings of large number of branches. The effective steps taken are monitored on an ongoingbasis for timely rectification of irregularities pointed out in the inspection reports toimprove the operational efficiency and regulatory rating of the Bank.
To upgrade the knowledge / audit skills training sessions are conducted for internalinspectors and concurrent auditors.
With the onset of Core Banking System in the organization and all the branches beingbrought under its umbrella, Bank has introduced an off-site surveillance system formonitoring of business activities of the branches.
The Bank has an effective set up of Vigilance at its Corporate Office headed by GeneralManager & Chief Vigilance Officer reporting to Chairperson & Managing Director.General Manager & Chief Vigilance Officer is supported by a team of senior andexperienced officers. The role and functions of the Department are Control, Monitoring andSupervision of Vigilance Functions which are Preventive, Investigative and Punitive innature. The function of the Department also includes reporting and monitoring of frauds.Preventive Vigilance Committees have been formed at branch level to identify problem areasso as to tone up systems and procedures at the branch level. At each of the trainingcourses a session on ethical behaviour is included. Workshop for RegionalVigilance Officers is conducted every year to update them on the areas of preventivevigilance, strengthening of internal controls, bringing compliance culture, creation ofethical climate as well as off-site surveillance. Modus operandi of each fraud perpetratedon the Bank is displayed on the intranet site and circulated through IBA for the benefitof member banks .
Fraud Risk Management Committee of General Managers is in place which criticallyevaluates the frauds perpetrated on the Bank, examines the breaches made in the system andprocedures and suggests risk mitigation techniques in respect of frauds . Bank has a BoardLevel Committee for monitoring large value frauds.
The vigilance function in the Bank is supervised and monitored by the Board ofDirectors who review the pending disciplinary ad fraud cases at regular intervals. Adistinction is made between the bonafide and malafide decision/intention of the employeebefore initiating disciplinary action.
Bank ensures strict implementation of instructions/guidelines on Vigilance functioningreceived from Government of India, Central Vigilance Commission and Reserve Bank of India.
28. Implementation of Official Language
28.1 The Bank continued vigorous efforts for implementation of official languageHindi during the financial year under review. During the year Bank's focus was onimplementation of Hindi Softwares through Word Processors, Core Banking Solution andE-mail.
During the year under review Bank was awarded IInd prize by Reserve Bank of India forit's house journal "Dena Jyoti" in bilingual category for the year 2010-11.Bank's house journal "Dena Jyoti" was also awarded "Bronze Trophy" bythe "Association of Business communicators of India" for best article inEnglish. Bank received IInd prize in the competition organized by Maharashtra State LevelBankers Committee(Rajbhasha), Pune for excellent performance in implementation ofofficial language Hindi in its offices and Branches situated in the Maharashtra Stateduring 2010-11. Our Jaipur Branch in New Delhi Region was awarded IInd prize by TOLICJaipur for excellent work in implementation of Official Language. Bank has been awarded a"Rajbhasha Award" by a socio linguistic organization Ashirwad. Ourhouse journal Dena Jyoti has also been awarded by the same organization.
28.3 Hindi Training :
The Bank continued to conduct special Training Programs to promote the use of Hindi inits offices and branches. During the year Bank has organized General Banking and HindiSoftware Training Program for Official Language Officers, who in turn will impart thetraining to officers and staff members working at various offices and branches.
28.4 During the year under review 87 Hindi Workshops and Hindi Software trainingprograms were conducted in which 675 officers & 513 other employees were trained. Inaddition to these 107 Desk Training Programs were also conducted to impart practicaltraining to the employees for doing the official work in Hindi.
28.5 Hindi Software:
Keeping pace with the technological changes, bank continued the implementation ofbilingual word processing facilities on all computers in use at various administrativeoffices and branches through Akruti software and Unicode. Bank also reviewed theperformance of Hindi Software "Script Magic" for CBS Branches. The Bank launchedthe revised version of Script Magic Software in July, 2011. Now the software has beenplaced at the intra-net site of the bank for easy access by the employees. Keeping in viewthe regular corrections in the finacle software, the process of corrections in the"Script Magic" software will continue during the next year. Hindi Softwaretraining programs were conducted to promote the use of these facilities at DIIT Mumbai andother STCs. All the ATMs installed by the Bank have been provided with bilingual accessfacilities.
28.6 Visit of Parliamentary Committee:
The Drafting and Evidence Sub-Committee of the Committee of Parliament on OfficialLanguage has reviewed the performance in implementation of Official Language at the Bank'sM.I.Road, Jaipur Branch (New Delhi Region) on 20-09-2011. The Third Sub Committee of theCommittee of Parliament on Official Language has also reviewed the performance of ourKranti Chowk, Aurangabad Branch (Pune Region) on 21.01.2012. During the Review Meetingsthe Committees discussed with the Executives of our Bank the implementation of OfficialLanguage Hindi in the said branches and expressed satisfaction on the progress.
28.7 Use of Hindi in Publicity
In order to popularize our various schemes among public at large and customers,pamphlets and publicity material of our various schemes were prepared and printed inHindi.
28.8 Bank Branches / offices in all the three linguistic regions are constantlymaking efforts for improving level of implementation of official Language Policy ofGovernment of India and striving to make it as a prime medium of communication to improveour customer service. In order to strengthen the specialist officers in the cadre, duringthe year 6 new Officers have been appointed in various regions.
28.9 Bilingual House Journal
In order to maximize the role of Official Language Hindi in corporate communication andeducating our staff members about various activities and current subjects, during the yearunder review Bank published all issues of its quarterly house journal "DenaJyoti" as Special Issue on various banking subjects in bilingual form. The subjectsof special issues were Thrust Areas of the Bank, Official Language, Vigilance and WomenDevelopment. Articles, news and events are published in bilingual to have its reach toevery staff of the bank.
29. Opportunities and Threats
GDP growth for 2012-13 based on estimated incremental capital output ratios isprojected to be at 7.6 %. The recovery in the growth however is expected to be slow inview of slight decline in investment rate during 2011-12. With the fiscal consolidationgetting back on track, savings and capital formation should begin to rise. During 2012-13the aggregate deposits of the scheduled commercial banks are projected to grow at 16% andthe non food credit is projected to grow at 17%. However, on the risk side theuncertainties in the crude and petroleum products prices recently accentuated by geo-political developments may impact the domestic growth, inflation and the fiscal andcurrent account deficits.
Keeping in view the aforesaid opportunities and threats and at the same time followingthe policy guidelines by Reserve Bank of India on the augmentation of the capital andliquidity buffers in line with provisions with regard to implementation of Basel III, theBank has initiated various measures to equip itself. The Bank by ensuring enhancedliquidity risk management, close credit monitoring to maintain asset quality and focus onenhancing CASA deposits will be able to make maximum of the available opportunities and atthe same time insulate itself to any impacts of threats.
30. Outlook for FY 2012-13
Against the backdrop of uncertain global conditions and fragile domestic demand, therecovery in the economy is expected to remain moderate. With Reserve Bank of Indiaensuring adequate liquidity cushion in the financial system by adjusting policy rates tosustain growth, at the same time without risking external balance or inflation byexcessively fuelling demand, the projected growth for 2012-2013 being higher than2011-2012, performance of Banking sector is expected to improve.