Indian Overseas Bank

BSE: 532388 | NSE: IOB | ISIN: INE565A01014 
Market Cap: [Rs.Cr.] 9,012 | Face Value: [Rs.] 10
Industry: Banks - Public Sector

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Management Discussions


Economic Environment & Banking Environment

The economy is expected to report a growth of 4.9% in 2013-14 compared to 4.5% in theprevious fiscal. Though the price inflation was not comfortable, the Fiscal deficit wascontained around 4.6% of GDP. Forex reserves stood at US $ 295 billion during Feb 2014.However, the retail inflation in March 2013 increased to 8.31% where as the inflationmeasured in terms of WPI stood at 5.7%. As per CRISIL forecast, the GDP may grow higher at6% in the current fiscal 2014-15. Although there is a modest recovery in the economy,savings rate is yet to pickup as inflationary trends are not easing favorably. The UScentral bank earlier said that it would reduce its monthly US $ 85 billion bond-buyingprogram by US $ 10 billion a month starting January 2014. But the Fed promised to keep thelow-interest-rate regime longer than the markets anticipation. Now, the country is betterprepared to deal with the situation arising out of the tapering of US bond-purchaseprogram. The country raised about US $ 34 billion between September and November when thecentral bank opened a special concessional dollar-swap window to attract FCNR (B)deposits, adding to India’s forex reserves. FIIs have also pumped in a little over Rs45,000 crore since September. Foreign exchange reserves, which had dropped to a three-yearlow in early September 2013, edged to an eight-month high of US $ 295.7 billion. There wasa turnaround in exports and decline in gold imports narrowing current account deficit(CAD) to US $ 5.2 billion. RBI handled the situation carefully and as a matter of factthat the tapering news have not collapsed all emerging market currencies.

In the Banking sector, aggregate deposits of SCB’s are earlier projected to growby 14% and credit by 15%. As of fortnightly ending 21st March 2014, The System recorded14.63% Y-o-Y growth in deposits and 14.26% in the advances. The following were the keychanges in the policy rates during the year 2013-14.

1. Repo rate increased to 8% as of now from 7.25% in May 2013, 7.50% in Sept 2013 &7.75% in Oct 2013.

2. MSF rate presently at 9%, however reduced from 10.25% in July 2013, 9.50% in Sept2013 & 8.75% in Oct 2013.

3. CRR and SLR are maintained at the same level of 4% and 23% respectively for thewhole year.

4. The average Base Rate is between 10-10.25% against the last year level of9.75%-10.50%.

5. Term Deposits of more than 1 year moderated to 8 % - 9.10% at present from the lastyear level of 8.50% - 9.25%.

6. Call Rates is hovering around 8% since Aug 2013. Some of the other measures includeswap facility on US dollar – Rupee, Reviewing the limits on ECB, encouraging overseasDirect Investments, De regulation of Interest rates on NRI deposits, raising overseasborrowing limits of Banks from 50% of unimpaired Tier I capital to 100% with an objectiveto create more room for banks to raise overseas funds, Increasing the import duty on gold,changes in the FDI policy, extension of interest subvention scheme, Broadening theinfrastructure schemes, Steps to contain the rupee depreciation etc.

As per Fitch rating agency report, the stress loans of domestic banks includingrestructured debt may continue to rise to reach 15% by end of 2014-15 from over 10% in2013-14 which causes concern as far as the profitability of the banks is concerned.

Bank’s Operations. Domestic Deposits

The Bank’s total domestic deposits increased from Rs. 1,95,457 crores in Mar 2013to Rs. 2,19,731 crores as of Mar 2014 with a growth of 12.42%. The Bank’s domesticCASA deposits increased to Rs. 56,884 crores with a moderate growth of 7.94% resulting inCASA ratio of 25.89%. The Bank has opened around 38 lacs CASA accounts for the year as awhole. This enabled the Bank to maintain the market share of 2.73% as on 21st March 2014on a year on year fortnightly basis.

Domestic Advances

The Domestic gross Advances improved to Rs. 1,61,998 crores as of March 2014 with agrowth of 11.80% as compared to Rs. 1,44,894 crores in March 2013. The domestic CD Ratiowas maintained at 73.73% by March 2014 compared to 74.13% in the previous year. The Bankwas comfortable with the market share of 2.59%.

Overseas Performance

During August 2013, Bank upgraded its Extension counter in Sri Lanka into a branch,with due regulatory approvals taking the number of branches in Sri Lanka to two. FCBU atColombo has commenced operations from January 2014. Bank is in the process of establishingthe office at Sukhumvit, Thailand and is expected to commence operations before August2014. As at the end of March 2014, the Bank had 13 establishments abroad, including 7overseas branches, 3 Representative offices, 2 Remittance Centres and 1 Joint VentureSubsidiary. There are two branches each at Hongkong and at Sri Lanka and one each atSingapore, South Korea and Bangkok.

Forex Operations Turnover

The total merchant turnover for 2013-14 including AD branches is Rs. 1,30,319 crores asagainst Rs. 1,10,553 crores in last year recording a growth of 17.88%. This includes theprecious metal business of the Bank for 2013-14 to the tune of Rs. 1,470 crores (5,768kgs) as against Rs. 2,538 Crores (8,751 kgs) in the previous year.

Profit on Exchange

The Bank has achieved a total Profit on Exchange at Rs. 221 crores for 2013-14 and Rs.8 crores from the Precious metal business domestically.


The Bank’s MSME advances increased to Rs. 28,978 crores as of March 2014. Theshare of MSME credit on gross domestic credit increased from 16.02% in 2012-13 to 17.56%in 2013-14. This includes advances to Micro and Small Enterprises (MSE) to the tune of Rs.24,575 crores. Priority sector credit under MSME sector as on 31st March 2014 stood at Rs.23,488 crores. The Bank increased advances to MSE sector by 23.02 % surpassing themandatory requirement of 20%. Credit to Micro sector alone surpassed Rs. 10,000 croresduring the year reflecting a growth of 27.16%. The Bank financed 1,39,894 new micro sectoraccounts during the year. The number of Micro sector accounts increased by 43.94% duringthe year, as against the mandatory requirement of 10%. During the year, 16,365 new loanaccounts aggregating to Rs. 879 crores were covered under the Credit Guarantee Scheme ofCGTMSE.

The Bank introduced IOB SME Debit Cards with unique features for the benefit of SMEborrowers. The Bank launched IOB SME Contractor Scheme, exclusively for contractors withcredit limits up to Rs. 5 crores. IOB SME ADD ON scheme was introduced to enable theexisting MSME borrowers to get their additional term loan requirement up to Rs. 25 lacs atthe branch level itself, thereby making the credit available without delay. IOB MICRO ONEscheme launched earlier has been quite successful with nearly 2150 new Micro sectorborrowers were financed under the scheme. IOB SME Kanaka Scheme, which was earlier aregional specific scheme, was extended to all regions during the year. The Bank alsoextended concessional credit terms for purchase of new Ambassador Cars and Swift- Dezirecars under Taxis Replacement Scheme by Government of West Bengal. The Bank entered into anMOU with Bharatiya Yuva Shakthi Trust (BYST), Chamber of Indian Micro Small and MediumEnterprises (CIMSME) and Women Entrepreneurs Welfare Association-Tamil Nadu (WEWA) forcredit facilitation. The Bank entered in to MoU with Naturals, for financing thefranchisees of their Spa Saloons under the SIDBI Loan Facilitation Service (LFS). Bankexpects to utilize these arrangements in the best manner to boost credit to MSME sector.

Retail Banking and Marketing

Retail Loans including Housing Loans, Educational Loans, etc., as major segmentsimproved by 21.61% during the year. Bank surpassed the target set under Pushpaka Vehicleloans with 109.93% achievement.

The income earned under Non Life category, which was at Rs. 771 lacs during 2012- 2013,is at Rs 846 lacs for the current year 2013-14 registering a YoY Growth 9.71%. The incomeearned under Life Insurance Business, which was at Rs. 754 lacs during 2012- 2013, is atRs 788 lacs for the current year 2013-14 with a YoY growth 4.56%. The income earnedthrough IOB Health Care Plus, which was at Rs. 274 lacs during 2012- 2013, is at Rs. 319lacs for the current year 2013-14 with YoY Growth 16.13%. The Bank introduced an exclusiveSavings Bank account, SB Little Star for the kids from Day one to 18 years of age. Toattract the kids further, a Piggy Bank has been offered for the accounts opened with abalance of Rs. 10,000/- . The product elicited good response from the customers.

Mid Corporate

Mid Corporate Group takes care of the lending requirements of borrowers other thanAgriculture/MSME borrowers. Borrowers enjoying credit limits of above Rs. 40 crores andupto Rs. 100 crores are taken care by Mid Corporate Group Vertical at Central office. TheBank has 16 Specialized Mid Corporate branches which are fully operational all over India(Ahmedabad, Bangalore, Baroda, Chennai, Chandigarh, Coimbatore, Delhi, Faridabad,Hyderabad, Indore, Kolkata, Ludhiana, Madurai, Mumbai, Pune and Vijayawada). Mid Corporatebranches send the credit proposals directly to Central Office for speedy disposal. Thesebranches possess necessary expertise in credit appraisal for quicker delivery of creditand have contributed Rs. 5,370 crores of Fund Based exposure and Rs. 978 crores of NonFund based exposure as on 31st March 2014. Total Bank exposure under Mid Corporate segmentas on 31st March 2014 include Fund Based exposure of Rs. 9,472 crores and Non Fund basedexposure of Rs. 2,236 crores. During the year, Mid Corporate group has sanctioned 265proposals from all over India with total sanctioned limit of Rs. 12,387 crores.

Large Corporate

Large Corporate Group is yet another vertical in Credit front taking care of Creditrequirement of borrowers other than Agriculture borrowers whose Credit requirement isabove Rs. 100 Crores. Under this vertical, Bank has a fund based exposure of Rs. 46,095Crores and Non Fund Exposure of Rs. 17,598 crores for the year ended 31st March 2014.During the year, LCG has sanctioned 145 proposals with Fresh and Enhanced credit limits ofRs. 26,242 crores received from Corporate Clients all over India.

To promote focused attention on Large Corporate accounts, the Bank is operatingSpecialized Large Corporate branches at 7 places all over India (Ahmedabad, Bangalore,Coimbatore, Delhi, Hyderabad, Kolkata and Mumbai). These Specialized Large CorporateBranches have exposure of Rs. 12,308 crores as on 31st March 2014. Apart from the above,15 existing branches in Metropolitan Centres are identified as Large Corporate Branches.

These Specialized branches are focusing in lending to borrowers coming under LargeCorporate segment, making available necessary expertise in Credit Appraisal and quickdelivery of credit. These branches are sending the credit proposals directly to CentralOffice for expedite disposal.

Priority Sector Credit

Gross Credit under Priority Sector increased to Rs. 58,090 crores at the end of March2014, registering a growth of 18%. With the achievement of Priority Sector Advances toAdjusted Net Bank Credit(ANBC) Ratio at 40.03%, Bank has further plans to continue andsurpass the National Goal of 40% in the coming years also.


During the year, the Agricultural credit registered an incremental growth of Rs. 2,861crores from Rs. 23,393 crores as of March 2013 to Rs. 26,254 crores as of March 2014. TheBank’s ratio of agricultural advances to Adjusted Net Bank Credit was 18.10% asagainst the required norm of 18%. The Bank disbursed Rs. 35,492 crores under SpecialAgriculture Credit Plan (SACP) as against the target of Rs. 33,594 crores during the year.

The Bank has granted loans to Weaker Section of the society and the outstanding as atthe end of March 2014 was Rs. 21,968 crores which is 15.14% of the ANBC as against thetarget of 10%. The loans outstanding to SC/ST under priority as at the end of March 2014were Rs. 6,802 crores which is 11.68 % of Total Priority Sector loans. The loansoutstanding to Minority community as at the end of March 2014 were Rs. 8,822 crores whichis 15.18% against the target of 15.00%.


During the year, the Bank credit-linked 47,470 Self Help Groups (SHGs) with a creditoutlay of Rs. 846 crores. The cumulative number of SHGs credit linked by the Bank is5,22,642 with a total disbursement of Rs. 5,792 crores as of March 2014. SHG CreditLinkage Week was observed in February and March 2014 coinciding with Founder’s Day on10th February, 2014 and International Women’s Day on 8th March, 2014 to give furtherthrust to SHG linkage under the direct segment.

Credit flow to Women

Bank’s credit flow to women stood at 22,365 crores as of March 31, 2014constituting 15.41 % of the Bank’s Adjusted Net Bank Credit, as against the norm of5%.

New Product Introduction:

A new credit scheme for granting agricultural term loans for investment credit andallied activities against security of gold ornaments was introduced by the Bank on 11thSeptember 2013.

Lead Bank Scheme

The Bank has Lead Bank responsibility in 13 districts in Tamil Nadu and one district inKerala. The Bank is also the Convenor of State Level Bankers’ Committee of Tamil Nadu(SLBC). During the year of review, as Convenor of SLBC, Tamil Nadu, the Bank has conductedfour meetings of the SLBC. In addition, the Bank as convenor of SLBC, Tamil Nadu convenedthe many special meetings during the year namely 1) Meeting of working group on payment ofMGNREGS wages through Banks in Tamil Nadu, 2) TAHDCO scheme loans, 3) Financial Inclusion& Direct Benefit Transfer System, 4) Educational Loan Scheme of NBCFDC implementedthrough Tamil Nadu Backward Classes Economic Development Corporation (TABCEDCO), 5)Development of Micro and Small Enterprises in Tamil Nadu, 6) Subcommittee on Tamil NaduGovernment’s Scheme for Poultry Development-Modifications to the TripartiteAgreement, 7) Meeting on various loan schemes of TAHDCO, 8) Meeting to review progress ofPMEGP/UYEGP schemes, 9) Meeting to discuss Equity Grant & Credit Guarantee Fund Schemeto Farmer Producer Companies, 10) Meeting to discuss issues relating to various loanschemes to Scheduled Caste Beneficiaries, 11) Sub Committee meeting to discussstudy/survey on the functioning of Business Correspondents and 12) Meeting on monitoringbank accounts of village panchayaths.

Initiatives for Financial Inclusion in the State: As Convenor of SLBC, Tamil Nadu.

SLBC identified 4,445 unbanked villages in Tamil Nadu with a population of 2,000 andabove and allotted to various banks. All the 4,445 villages have been provided withbanking facilities under Financial Inclusion well ahead of the timeline given by MOF(March2012).

SLBC identified 7,816 villages with population of below 2,000 and allotted to variousbanks. Banks have provided banking facilities under Financial Inclusion to all the 7,816villages. SLBC facilitated establishment of Rural Self Employment Training Institutes inall the 31 districts by the 4 Lead Banks. SLBC facilitated establishment of FinancialLiteracy & Credit counseling centers in all the 32 districts including Chennai. SLBC,Tamilnadu has achieved 100% in all the above initiatives.

SLBC initiatives on Credit Flow in Tamil Nadu

Tamil Nadu achieved a CD ratio of 120.28% as of December 2013 and stands one among thevery few states who achieved this feat. Tamil Nadu achieved 101% achievement of targetunder Annual Credit Plan (ACP) as of December 2013 which is achieved by only a very fewstates. Tamil Nadu achieved 42.64% under Priority Sector as of December 2013 against thenational norm of 40%. Tamil Nadu achieved 18.90% of Agricultural Advances as of December2013 against the national norm of 18%. Tamil Nadu achieved 12.09% of advances to weakersections as of December 2013 against the national norm of 10%. SLBC, Tamil Nadu hasachieved 100% in all the above initiatives.

SLBC initiatives on Electronic Benefit Transfer in Tamil Nadu

7.19 lakh beneficiaries are being paid pension through Smart Cards operated by BusinessCorrespondents engaged by banks in 6,105 villages in the State under Tamil Nadu GovernmentOld Age Pension Scheme by December, 2013.

1.91 lakh fishermen are paid lean period assistance of Rs. 4,000/- through bank creditin the State.

Around 8 lakh pregnant women are being paid grant of Rs. 12,000/- under Dr.Muthulakshmi maternity benefit scheme through bank credit.

Nearly 33 lakh workers of MGNREGS are paid wages in 18 districts of Tamil Nadu throughbanks through Business Correspondents.

Regional Rural Banks

Bank has sponsored two Regional Rural Banks viz., Pandyan Grama Bank in Tamil Nadu andOdisha Gramya Bank in Odisha. Pandyan Grama Bank has been earning Net Profit after Taxcontinuously since 1997-1998 and its net NPA continues to be NIL for the past 11 years.Both the RRBs have recorded Net Profit during the year. All the branches of both the RRBsare CBS compliant and NEFT facility has been provided to both RRBs.

Financial Inclusion

Covering Villages with Banking Outlets: The Bank has covered 3,726 allottedvillages with various population categories under Financial Inclusion. Of which, 3,667villages are covered under Smart Card Banking and 59 villages under Brick & MortarBranch across the country. Apart from this, Bank has covered 154 other villages also.Smart Card Banking is now being implemented in 3,838 villages spread over 21 States and 2Union Territories covering 56 Regions by engaging 2,456 Business Correspondents. Duringthe year under review, the Bank has opened 21,94,854 Basic Savings Bank Deposit Accountstaking the total number of such accounts to 59,21,110. So far, Bank has issued 11,05,215smart cards and the number of transactions undertaken in the smart card terminal is1,28,66,639.

Special Financial Inclusion Branches: In order to strengthen the FinancialInclusion efforts and ensure close supervision of the Business Correspondents (BCs), Bankhas opened 3 Special Financial Inclusion Branches in the State of Tamil Nadu. The conceptis that BCs operating in a particular area assigned to a few Branches are clustered (8-10BCs) and assisted to operate under this special arrangement which will overcome theproblems encountered by the BCs in getting their basic requirements viz., cashrequirement, passbook printing, account opening, sanction of loans, customer grievances,application forms, cash, paper rolls for HHDs etc.

Setting up Ultra Small Branch (USB): As per the guidelines of Ministry ofFinance, the Bank has set up Ultra Small Branches in 1,278 Financial Inclusion villages.Of which 7 USBs has been upgraded to full fledged branches.

Rural Self Employment Training Institutes (RSETIs)

In line with the guidelines issued by Ministry of Rural development, Govt of India, theBank had set up RSETIs at all Lead Districts to provide training to farmers, members ofSHGs, beneficiaries under SGSY, Educated unemployed youths, artisans and beneficiariesbelonging to weaker sections. In addition to the above, the Bank has set up one RSETI inthe Nilgiris District for the benefit of the tribals. During the year under review,through these RSETIs, the Bank had conducted 673 training programmes benefiting 17,217persons. A Rural Training Centre was set up by the Bank (jointly with NABARD and IndianBank) at Karaikudi (Sivaganga Dist, Tamil Nadu).

Financial Literacy Centre (FLC) viz., SNEHA:

During the period under review the Bank has set up 7 FLCs at Kerala. FLC is named asSNEHA and the Bank has set up 22 FLCs as of now. These centres educate the people in ruraland urban areas with regard to various financial products and services available fromformal financial sector, provide face to face financial counseling services and offer debtcounseling to indebted individuals. FLCs enable the user public to make informed choicesregarding financial services/ products to derive the maximum benefits.

Corporate Social Responsibility

IOB-Sampoorna Project – A Total Village Development Project

IOB Sampoorna is an innovative rural development project aimed at Total VillageDevelopment. IOB-Sampoorna is a unique Project encompassing several livelihood initiativesin the villages to ensure all-inclusive growth of rural population. It comprises of creditand non-credit components such as Financial Inclusion, I.T. Enabled banking operationswith Bio-metric Smart Cards under Business Correspondent model, Tree Planting and SocialForestry, Cleaning Water Bodies, Health Care, Skill Training for youth in computer, RuralBusiness Process Outsourcing, Promotion of non-conventional energy and Rural Tourism.

Educating Tribals

During the year 2013-14, the Bank has sponsored 98 Ekal Vidyalaya School in associationwith M/s Friends of Tribals Society, an NGO to attack illiteracy at the grass root levelthrough a unique concept viz. "One teacher School" or Ekal Vidyalaya. The Bankin association with Max Academy implemented the project on uplifting educational standardsof the under privileged children in 5 villages during the year 2013-14.

Sakthi - Indian Overseas Bank Chidambaram Chettyar Memorial Trust

The Trust, set up jointly by the Management of the Bank, Indian Overseas Bank OfficersAssociation and All India Overseas Bank Employees Union to perpetuate the memory ofBank’s Founder Shri M. Ct. M. Chidambaram Chettyar, continued to provideEntrepreneurial Development Training to women, thereby empowering them socially andfinancially to meet the challenges. During 2013-14, 9 Skill Development Programmes wereconducted in various Regions under aegis of Sakthi - IOB Chidambaram Chettyar MemorialTrust, 245 women have been trained. The Trust has so far conducted 71 EntrepreneurshipDevelopment Programmes (EDP) and skill based training programmes exclusively for women atvarious centres, benefitting 3,576 women.


Gross domestic investments as of 31st March 2014 stood at Rs 68,006 crores as againstRs. 60,195 crores as on 31st March 2013 registering a growth of 12.97% over the previousyear. The investments in SLR segment registered a growth of Rs 5,011 crores or 9.22%during the year while Non-SLR investments increased by Rs. 2,800 crores or 47.68%. Duringthe year 2013-14, securities for Rs 5,349 crores were transferred from Available for Salecategory (AFS) to Held to Maturity (HTM) segment, and Rs. 5,786 crores from Held toMaturity (HTM) to Available for Sale (AFS).

As on 31st March 2014, the extent of SLR securities held in HTM stood at 21.69% of DTLagainst the limit of 24.50% prescribed by RBI compared to 22.92% as on 31st March 2013.

The bond market experienced extreme volatility during the year, due to a host ofexternal and internal factors which saw the yields move upto 8.80% at the close of theyear after opening at 7.95%. The turnover (book value) in the secondary market was Rs71,919 crores during the year 2013-14 as against Rs 97,132 crores in 2012-13. Total profiton sale of securities amounted to Rs. 489 crores during the year 2013-14 as against Rs 307crores of 2012-13. The return on total investments before amortization for the year is7.60% as against 7.53% in 2012-13.

Rupee Derivatives

During the year 2013-14, Bank has traded in Rupee interest swaps and had not enteredinto any fresh hedging swaps. Due to maturity, the outstanding in interest rate swaps hascome down to Rs. 823 crores as on 31st March 2014 as against Rs. 998 crores as on 31stMarch 2013.

Merchant Banking Activities

ASBA (Banker to Issue activity): All general banking branches in India have been madeASBA enabled branches to accept ASBA applications for IPO, FPO and Rights Issues asrequired by SEBI. During the year 2013-14, Bank introduced e-ASBA for lodging ASBAapplications online by customers using net banking facility, whereby not only their ASBAapplications are lodged but also their bank accounts are blocked by themselves uponsubmission. The Bank is also acting as a Syndicate ASBA bank to accept IPO/FPO/Rightsapplications from Brokers.

Other activities under Merchant Banking: The Bank continues to act as Merchant Bankerfor issues, Debenture Trustee, Collecting Bankers to Non ASBA Applications, Paying Bankerfor Dividend/Interest Warrants etc.

Depository Operations: The Bank is a Depository Participant (DP) of NSDL and isextending depository related services through 56 service centre branches. In order toimprove the number of demat accounts, the Bank became a DP of CDSL during 2012-13 byoffering the service through 13 service centres.

Capital Market Services Branch

In order to cater to the financial requirements of Stock Brokers, the Bank has alreadyset up a Capital Market Services Branch at Mumbai to extend credit facilities to StockBrokers and to nominate the Bank as their Clearing and Settlement Bank for handling theirdaily Clearing Obligations of Stock Exchanges.

Customer Service

The Bank is a member in Banking Codes and Standards Board of India (BCSBI). BCSBI hasrevised various Fair Practice Codes which is elaborate covering all the areas of Banking.As per the revised codes, ‘Fair Practice Code for Lenders’ have beenincorporated. As per the survey on Customer service redered by Indian Banks by BCSBI, theBank has been assigned above average rating and is rated fourth amongst the 26 PSBs.

A web based online system called SPGRS (Standardised Public Grievance Redressal System)assisting customers to logde complaint online with status tracking facility is already inplace. The Regional offices and Branches are enabled to view the complaints in the systemand resolve the same immediately. Toll Free Teleservices for Redressal of Customer

Grievances (No.1800-425-4445) is provided on 24x7 basis for receiving the complaintsfrom the customers to resolve within 48 hours. Customers Fortnight was observed in allbranches during November 2013 and Executives from the Central Office and Regional Officeshave visited the branches and met the customers. The Bank has conducted the CustomerService Survey for the year 2013-14 to assess the level of customer service rendered bythe branches.

The details of customer complaints received and redressed during the year 2013-14 aredetailed below.

Sl.No. Details At Central Office At Regional Offices
1. No. of complaints pending at the beginning of the year 114 89
2. No. of complaints received during the year 4030 2141
3. No. of complaints redressed during the year 4050 2158
4. No. of complaints pending at the end of the year 94 72
Settlement Rate 97.73% 96.77%

Details of Complaints are analysed below :

Advances related complaints 893 14.47
ATM related complaints 1299 21.05
Customer service related complaints 879 14.24
Demat services related complaints 21 0.34
Deposit related complaints 546 8.85
General Banking complaints 1349 21.86
Complaints related to 38 0.64
Government business
Complaints related to NRI services 39 0.65
Complaints related 177 2.86
Internet banking related complaints 490 7.93
Credit card related complaints 140 2.27
Pension related complaints 300 4.84
TOTAL 6171 100.00

No. of awards passed by the Banking Ombudsman and implemented by the Bank are asfollows.

1. No. of awards pending at the beginning of the year 0
2. No. of awards passed by Banking Ombudsman during the year 0
3. No. of awards implemented during the year 0
4. No. of awards lapsed due to non acceptance by customer 0
5. No. of unimplemented awards at the end of the year 0

The Bank in the capacity as the Convener of Customer Service Centre in Chennai City hasresolved all the complaints received during the year.

Recovery Management

The Bank has 16 specialised Asset Recovery Management Branches (ARMB) to improve therecovery of NPA accounts. The services of Recovery Agents were also utilised to improverecovery. High value Slippages of Rs. 5 crores and above were reviewed by the Board ofDirectors in all the Board meetings. Top NPA accounts of Rs. 1 crore and above aremonitored from the corporate office on a regular basis and most of the borrowers arepersonally met by the General Manager (Law & Recovery). Top Management hascontinuously reviewed all high value NPA accounts individually on a regular basis withfield functionaries through video conference.

Special schemes empowering branch managers to accept One Time Settlements in smallvalue NPA accounts for all NPAs of less than Rs. 1 lac and Rs. 1 lakh to Rs. 5 lakhs wererevalidated. An amount of Rs. 362 crores has been recovered in small value NPA accountswith outstanding less than Rs. 5 lacs. Out of this, recovery in accounts with outstandingless than Rs. 1 lakh was Rs. 61 crores. One more scheme to gear up recovery in accountswith outstanding of more than Rs. 5 lakhs upto Rs. 1 crore was also introduced. Therecovery under this scheme was Rs. 59 crores. One time settlements being hassle freerecovery process, Regional Heads/Branches were advised to contact the borrowers forsubmitting OTS proposals as per the recovery policy of the Bank. Action under SARFAESI actwas initiated in all eligible accounts and properties brought for sale. FrequentLok Adalats/Recovery camps were conducted especially in respect of small value NPAaccounts. In the National Lok Adalat conducted on 23rd November 2013, the Bank’sparticipation was significant. 7,657 cases amounting to Rs. 68 crores were settled.

As per directives from Ministry of Finance, a separate vertical headed by GeneralManager is created to augment recovery in written-off accounts. Recovery from technicallywritten off accounts was around Rs. 303 crores. As per the guidelines issued by Ministryof Finance, the Bank appointed Nodal Officers at various centres and they were directed totake up all RC issued cases and bring the securities for sale. During the financial year,524 number of DRT cases have been filed amounting to Rs. 3,043 crores (claim amount). 197cases involving Rs. 166 crores have been decided. The recovery made in DRT cases is Rs.119 crores. Cases pending is 2,507 cases amounting to Rs. 7,663 crores (cumulative). Thetotal cash recovery and upgradation (including recovery from written off accounts andrecovery of undebited interest), was Rs. 3,334 crores (including sale of NPAs to ARCs).The upgradation of NPAs alone during the year was Rs. 842 crores. The recovery in lossaccounts was Rs. 28 crores during the year.

Disposal of petitions received under RTI Act

The Bank received 1,840 applications seeking information under RTI Act during the year2013-14. All the requests were duly replied within the specified period and disposed ofbased on merits. The Banks First Appellate Authority received 206 First Appeals from thosewho were not satisfied with the reply of Central Public Information Officer and the samewere duly disposed as per the provisions of the Act. 25 applications resulted as SecondAppeals with the Hon’ble Central Information Commission. All 25 applications weredisposed by CIC by passing appropriate decisions, without any adverse remarks against theBank, which were duly complied with.

Risk Management

The Bank has adopted the New Capital Adequacy Framework (Basel II) with effect fromMarch 31, 2008. In line with Reserve Bank of India guidelines, the Bank has adopted theStandardised Approach (SA) for computation of Credit Risk Capital, Basic Indicatorapproach (BIA) for calculating the capital for Operational Risk and StandardisedMeasurement Method (SMM) for Market Risk Capital computation. The Bank is in compliancewith the regulatory requirements in this regard. The Bank is maintaining capital as perBasel III guidelines issued by RBI with effect from 1st April 2013. With regard to theguidelines on Liquidity Coverage ratio and Net Stable funding ratio which comes intoeffect from January 2015 and January 2018 respectively, the Bank is in the process ofputting systems in place for complying with the same.

As a measure of robust credit risk management process, the Bank has implemented atiered system for validation of internal credit ratings at specified levels which isindependent of credit departments, in order to draw unbiased rating for borrowersnecessary for moving to advanced approaches. In respect of proposals falling under powersof Bank’s Central Office, the validations of ratings are done at Risk ManagementDepartment. Exposures on Corporates/PSEs/ Primary Dealers are assigned with risk weightsbased on available external ratings. For this purpose, the Reserve Bank of India haspermitted Banks to use the ratings of the six domestic External Credit Rating Agencies andthe Bank has decided to accept the ratings assigned by all these ECRAs for capital reliefpurpose. The Bank has used the solicited ratings assigned by any of the ECRAs. The Bankprovides incentive by way of lower rate of interest for better rated borrowal accounts.The Bank also conducts industry study for various industries wherever the exposure of theBank for a particular industry is beyond a threshold limit fixed by the Bank. The Bankconducts portfolio analysis of the credit portfolio. The Bank is also in the process ofupgrading its Risk Management systems and a procedure for migrating to the advancedapproaches envisaged under Basel II framework. Reserve Bank of India has issued finalguidelines on Liquidity Risk Management effective from March 2013. The guidelines coverpreparation and submission of the statements of Consolidated Operations including domesticoperations and overseas operations separately at various frequencies. The Bank has put inplace system and procedure in this regard in compliance with the RBI guidelines and hasalready started generating statements as per guidelines and submitted the data to RBIonline as on June 2013 on trial basis and awaiting further instructions.

The Bank has implemented On Line Credit Processing System which enables appraisal ofthe credit proposal and also rating of the borrowal accounts simultaneously. The processalso provides data for conducting default/migration study and to compute Probability ofDefault etc.

The Bank has put in place Board approved Market Risk Management Policy and AssetLiability Management (ALM) policy for effective management of Market risk, Liquidity Riskand Interest Rate Risk in the bank. The Liquidity risk is managed through gap analysisbased on residual maturity/behavioral pattern of assets and liabilities on daily basis.The Market Risk management policy lays down well defined organizational structure formarket risk management functions and processes whereby the market risks carried by thebank are identified, measured, monitored and controlled within the ALM framework,consistent with the Bank’s risk tolerance level. The policies set various risk limitsfor effective management of market risk and ensuring that the operations are in line withBank’s expectation of return to market risk through proper Asset LiabilityManagement.

The Bank has put in place mechanism of short-term dynamic liquidity management andcontingent funding plan. Prudential (tolerance) limits are prescribed for differentresidual maturity time buckets for effective asset liability management. Liquidity profileof the Bank is evaluated through various liquidity ratios. The Bank has also drawn variouscontingent measures to deal with any kind of stress on liquidity position. The Bankensures adequate liquidity management by Domestic Treasury through systematic and stablefunds planning. Interest rate risk is managed through use of gap analysis of ratesensitive assets and liabilities and monitored through prudential (tolerance) limitsprescribed. The Bank estimates earnings at risk and modified duration gap periodically forassessing the impact on Net Interest Income and Economic Value of Equity with a view tooptimize shareholder value. The Asset-Liability Management Committee (ALCO) / Boardmonitors adherence to prudential limits fixed by the Bank and determines the strategy inthe light of the market conditions (current and expected) as articulated in the ALMpolicy. The Bank has framed operational risk management policy duly approved by the Board.Other policies adopted by the Board which deal with management of operational risk are (a)Information Systems security policy (b) forex risk management policy (c) Policy documenton know your customer (KYC) and Anti-Money Laundering (AML) procedures (d) IT Businesscontinuity and disaster recovery plan (e) compliance policy and (f) policy on outsourcingof Financial Services.

The operational risk management policy adopted by the Bank outlines organizationstructure and detailed processes for management of operational risk. The basic objectiveof the policy is to closely integrate operational risk management processes of the Bank byclearly assigning roles for effectively identifying, assessing, monitoring and controllingor mitigating operational risk and by timely reporting of operational risk exposuresincluding material operational losses. Operational risks in the Bank are managed throughcomprehensive and well-articulated internal control framework. The Bank had made apresentation to RBI on its preparedness for migrating to The Standardized Approach (TSA)for operational risk and is fine-tuning the system as per the suggestions given by RBI.

Credit Monitoring

The Bank monitors the quality of loan portfolio, by identifying the problems and takesproactive steps to correct deficiencies. The objective is to minimize slippages ofperforming assets to Non Performing Assets (NPA) category. Micro monitoring of theaccounts by segmentation and follow up of the accounts on daily basis helps the Bank tominimize slippages. The Bank has introduced system developed tools for identifying thepotential NPAs which enables to initiate proactive measures to control the slippages. Theproblems in the stressed accounts are analysed and necessary steps are taken for recoveryof the dues, restructuring/deep restructuring, enhancement etc. The quality ofrestructured accounts is monitored on a regular basis and the accounts are followed upclosely.

Corporate Debt Restructuring (CDR)

Under the CDR mechanism set up under the aegis of RBI, the Bank during the financialyear 2013-14 received references in 38 accounts with an exposure of Rs. 5,386 croresincluding 2 readmits from previous year which earlier exited CDR on account of delay infinalization and non approval of the packages. Of the referrals, 7 accounts with aggregateexposure of Rs. 600 crores exited from CDR for want of majority, withdrawal and nonfinalization of restructuring scheme within 180 days. 4 accounts with outstanding of Rs224 crores have been put on recovery mode. The exposure of the Bank as on 31st March 2014is Rs 11,089 crores in 96 accounts which is about 6.12% of the total advances. Thecomposition of the total referred accounts are 76 Standard accounts with exposure of Rs.9,555 crores and 20 NPAs with exposure of Rs. 1,534 crores. The companies engaged inEngineering Procurement and Construction(EPC) contract works catering to infrastructuresector, iron & steel industry and Infrastructure activities including power form thebulk of referred accounts with 53 in number and exposure of Rs. 8,146 crores accountingfor 73.46% of the total referred accounts. During 2013 -14, the Bank has approvedrestructuring under CDR in 26 accounts (including one second time restructuring ofexisting CDR account) with the existing exposure of Rs. 4,218 crores with a NPV sacrificeof Rs. 445 crores. The pending references for finalization of restructuring packages andapproval are 11 accounts with exposure of Rs. 1,692 crores.

Industrial Rehabilitation

There are 24 accounts with an exposure of Rs. 753 crores as on 31st March 2014 underBIFR and AAIFR. Of this, 9 accounts aggregating to Rs. 357 crores are Standard andPerforming and remaining 15 accounts are classified under NPA. During the year, recoveryin 6 BIFR accounts amounting to Rs. 153 crores was made. Also, 7 accounts with an exposureof Rs. 451crores were added and 1 account with an exposure of Rs. 22 lacs was out ofpurview of SICA.

Compliance Function

The Bank has well laid "Compliance Policy" as per Reserve Bank of Indiaguidelines and has in place systems and procedures for managing the Compliance Risk andmitigating the same. Necessary circulars/instructions on the regulatory guidelines arebeing issued. Each branch / Regional Office / Central Office department has one ComplianceOfficer who is submitting compliance certificates. The overall compliance level issubmitted to Board /Audit Committee of the Board (ACB). The directions from Board /ACB arecarried out. The Bank provided the utility tool ( in our intranet wherebyall the regulations, guidelines of the various regulators like Ministry of Finance, RBI,SEBI etc. can be accessed at a single point.

Disciplinary Proceedings

All long outstanding Vigilance disciplinary cases {> 6 months} where domesticenquiry was still in progress, as on 30th September 2013 have been completed before 31stMarch 2014(except two cases which are pending with the courts). Efforts are made tocomplete the disciplinary action process within the stipulated time norms. The averagependency of Vigilance disciplinary cases has been considerably reduced. During the yearchargesheets/show cause memos/notices had been issued for 321 cases and Punishment isawarded for 273 cases. Enquiries ordered for 155 cases and 154 enquires were completed.


Bank has introduced system based Risk Based Internal Audit (RBIA) from 1st April 2013initially in the branches of 9 regions of Tamil Nadu and extended to all the branches ofthe country from 1st July 2013. In total, 1406 branches have been covered under the onlineRBIA during 2013-14. The Bank was able to achieve inspection of 2091 branches budgeted upto the quarter ended December 2013. Number of branches which secured overall ‘A’rating was 81 under Transaction Audit and 576 branches secured ‘LOW’ risk ratingunder RBIA during the year. Management Audit of Regional Offices of 36 Regions wasconducted in 2013-14. Bank has revised the system of Management Audit of Regional Officesinto system driven risk assessment in the name of "Corporate Governance Risk Review(CGRR)" and Erode Region was covered under CGRR during 2013-14. Information SystemAudit was conducted in 86 branches, 43 RCCs and the departments at Central Office coveringIT related areas. Off site Control and Surveillance System (OCAS) has been implemented inall the branches of the country from 8th July 2013 onwards and 45 alerts are running.Concurrent Audit System is effectively in use at 570 branches covering the 70.07% of totaldeposits and 73.88% of total advances of the Bank. In addition to this, Chennai DepositoryServices branch and 3 CO Departments were also covered under concurrent Audit. RevenueAudit was carried out in 1,916 branches and Test Check Audit was conducted in 570 branchesduring the year. Stock Audit was conducted in 1,469 accounts on a selective basis. ThroughRevenue Audit and CO Inspection a leakage of income of Rs. 26 crores was detected duringthe year ended 31st March 2014. A special drive to ensure application of correct rate ofinterest in select borrowal accounts was conducted in top 300 branches of the bank duringthe year where a total leakage of Rs. 12 crores was detected.

Information Systems (IS) Audit

Risk Based Internal Audit (RBIA) was introduced in the Bank from 1st April 2013covering Technology Risk adequately. RBIA includes 111 audit points under informationsystem audit (Technology Risk under Operational Risk). Apart from the audited branchesunder RBIA, 43 RO/RCCs and 2 sample branch from each of these RO/RCCs were covered underIS audit during 2013-14. IS Audit 13 Central Office department applications includeNetwork Security, RTGS/NEFT Operations, AML cell, DR Drill Audit of Data Centers atChennai and Disaster Recovery Site at Hyderabad, Internet Banking Operations, Credit CardOperations, Financial Inclusion, Cheque Truncation Systems, ATM/Debit Card Operations/ATMManaged Services, CBS Operations, Mobile Banking Operations, Payment Gateway Operationswere also conducted. During the year 2013-14, the IS Audit policy for the bank wasreviewed in line with the Model Audit Guidelines issued by Ministry of Finance on 28thJune 2012.

Audit Committee of Executives (ACE)

Audit Sub Committee (ASC) was renamed as "Audit Committee of Executives", inline with the observations of the Implementation Committee on Audit Reforms in PSB,constituted by the Ministry of Finance which was approved by the Audit Committee of theBoard in its meeting held on 28th March 2013 at Chennai.

During the Financial year 2013-14, 3 ACE Meetings were held. The Review of CentralOffice Inspection Reports (COIR) of Extra Large Branches (ELB), Exceptionally Extra LargeBranches (EELB)/Specialised Branches/Overseas Branches including Management Audit ofRegional Offices, Review of Stock Audit/Concurrent Audit/Test Check Audit/Revenue Auditswere taken for discussion in the ACE Meetings. The major findings of ACE with Action TakenReport was placed before ACB once in a quarter.


During the year 2013-14 the Bank continued to take effective steps for disposal ofpending Vigilance Disciplinary cases within the time schedule prescribed by CentralVigilance Commission. During the year 111 Vigilance Disciplinary cases were disposed andpenalties awarded. As on 31st March 2014, there are 194 vigilance cases pending of whichonly 3 cases were beyond 24 months mainly due to court stay. In 37 cases, enquiries havebeen concluded and respective summing ups are awaited from Presenting Officer/Defence. In53 cases, findings have been arrived at by the Inquiring Authority and further action isin progress. 62 members are under suspension and these cases are closely reviewed andmonitored by the CVO.

In compliance to the CVC guidelines, details of frauds were placed to Operational RiskManagement Committee and Audit Committee of the Board and the observations/ suggestionsreceived have been acted upon by the Bank. In compliance of RBI Master Circular, cases ofLarge Value Frauds (Amount involving Rs. 100 lacs and above) have been placed to theCommittee for Monitoring Large Value Frauds and the observations of the Directors areacted upon and the Action Taken Report is also placed before the Bank’s Board.Preventive Vigilance measures have been strengthened through periodical branchInspection/visits by CVO. The following are some of the measures taken to strengthenpreventive vigilance

Periodical/Surprise Inspections: Periodical and surprise inspections of branchesare conducted on compliance of systems and procedures including KYC/AML guidelines, etc.

Alertness Award Scheme: This scheme is an exclusive scheme for recognition andreward of alertness in staff members in prevention/detection/ foiling of frauds which hasbeen approved by the Bank’s Board on 20th September 2013.

IOB Vigil: A new quarterly in-house news letter to spread vigilance awareness waslaunched since June 2013. Learning points from frauds, success stories, vigilance news,messages from Top Management, etc. are circulated among staff members.

Trend analysis of frauds: As per the Directions of the Board, a Committee hasbeen formed with an outside expert (retired CBI official) to make an in depth study of thetrend in frauds for the last five years and to give suggestions to prevent perpetration offrauds. The Committee has submitted its findings and action initiated on the remedialmeasures suggested.

Action against Third Party Entities: Bank has already put on intranet, the listof banned third party entities viz., Chartered Accountants, Valuers and Lawyers. So far 5Panel Advocates have been removed from the panel for their failure to comply with theBank’s instructions which enabled perpetration of fraud on the bank by the borrowersby submitting fake title deeds relating to the properties which were mortgaged to the bankeither as prime or collateral security.

Hand book on Do’s and Don’ts: Bank has released a hand book onDo’s and Don’ts on Preventive Vigilance which will serve as a guide to all theoperational staff to follow the laid down systems and procedures.

Wilful Defaulters List: The list of borrowers who have perpetrated frauds, has beenfurnished to Willful Defaulter’s Committee of the Bank for the purpose of publishingtheir names in the Willful Defaulters List. Bank has identified Officers having aptitudefor investigation, data analysis and forensic analysis, etc. and they are givenappropriate training in investigations and forensic audit.

All the Regional Offices have been posted with Vigilance Officers to handle Vigilancematters and their role functions have been well defined which includes submission ofmonthly report on visit to branches. A three day Workshop on Investigation, EnquiryProceedings, was conducted from 19th to 21st August 2013 and one day Workshop forDisciplinary Authorities was conducted at Central Office during November 2013. Anintensive three day Training Programme for all Regional Vigilance Officers (and Officialsfrom Pandyan Grama Bank and Odisha Grama Bank) was conducted by Bank at Chennai from 20thMarch 2014 to 22nd March 2014. The participants were refreshed on various issues relatingto Preventive Vigilance measures and post-fraud follow-up action. Vigilance Awareness weekwas observed by the Bank in October - November 2013 i.e. from 28th October 2013 to 2ndNovember 2013.

Information Security

The Bank has set up Information Security Department headed by Chief InformationSecurity Officer (CISO) as per RBI guidelines. The Information Security Committee meetsevery quarter to review Information Security in the Bank and reviews are submitted toBoard. Information Security Policy which is in place is reviewed every year and the Bankis taking steps to fully implement recommendations of Gopalakrishna Committee. IT productsreview from Information Security perspective is carried out and recommendations andsuggestions are provided to the respective departments.

Information Technology Core Banking Solution

The Bank has implemented the Core Banking Solution developed in-house, christened‘CROWN’ (Centralized Resources Over Wide-area Network) with ISO: 9001:2008certification. As per Ministry directions, the Bank has planned to move to the COTS CBSmodel which is widely used by all other PSB's in India. All the branches of the Bank areenabled for NEFT and RTGS.

Alternate Delivery Channels

ATM: Bank’s ATM application server runs on Sun Solaris and the switch is fromM/s YCS on AIX IBM Server. ATMs runs on port based programs. The Bank has introducede-kiosks and installed 102 kiosks in branches and ATMs. The Bank has launched VISAInternational Gold/Platinum/Signature cards for high net worth customers and had alsolaunched Kisan debit cards to agricultural customers to enable them to draw the loanproceeds through ATMs. Student cards have also been introduced and launched Gift Cardswhich are issued to customers with denominations upto Rs. 50,000/-

Internet Banking: The Bank has home-grown Internet Banking suite, which hascontemporary offerings like Opening of Term Deposits, Funds Transfer using RTGS throughInternet Banking. E-payment of state VAT has been made online for i)Lucknow, ii)Delhi,iii)Maharashtra (GRAS) (Multi Dept. Portal), iv) Pondicherry, v)Karnataka, vi) AndhraPradesh, vii) Tamilnadu, viii) Jharkhand and ix) West Bengal which ensures float funds forthe Bank. Payment of port charges has been enabled for Chennai and Tuticorin Ports whichalso ensures float funds for the Bank. Multiple scheduling of payments to SB/CDCC/RD/ loanaccounts on the lines of branches has been introduced in internet banking. The Bank hasintroduced online opening/ closure / renewal of Deposits opened through internet bankingand has a one-Stop Super market named as IOB Super Market with links to all categories ofmerchants like Telecom, Insurance etc. E-Payment of fees has been introduced to UjjainEngineering College.

Payment Gateway: Payment Gateway for payment of utility bills like mobile payment,insurance premium, other banks’ credit cards, telephone bill payments etc., usingdebit cards has been implemented. Many institutes have been brought under payment gatewaywith net banking, debit and credit cards and other bank VISA cards for payment of collegefees.

Mobile Banking: Mobile Banking solution is two way authentication through OTP (OneTime Pin) and transactions can be done through SMS Mode and Mobile Browser (GPRS). Theservices available in Mobile Banking includes Account Balance Enquiry, Last fewtransactions, Cheque paid status, Loan balance enquiry, Loan payment history (last few),Deposit balance enquiry, Funds transfer facilities, Payment to IOB Credit Card, branchlocator, ATM locator, Suspend ATM/ Debit card, Cheque book request, Stop payment ofcheque, opening of term deposit, Loan Statement request, movie ticket booking, air ticketbooking, mobile topup etc.

GENNEXT: Branches to cater to the needs of tech savvy younger generation ofcustomers has been opened in Chennai, Bangalore and Manipal.

Aadhaar: The Bank is actively participating in the Aadhaar related initiatesof the Government / NPCI. Linking of Aadhaar numbers to account number through Branchchannel is in operation for the past 1 years. Similarly APBS and NACH platforms are inoperation.

Financial Inclusion Project: Bank’s Financial inclusion application enablesfunds transfer, deposits and remittances towards advances in real time and it is alsoBC-interoperable enabling any customer to transact through any Business Correspondent.

Central Plan Schemes Monitoring System (CPSMS): CPSMS is a project initiated byDepartment of Expenditure, Ministry of Finance, Government of India, primarily to trackthe disbursement of funds to the ultimate beneficiaries. The software for processing andaccepting these funds through the Bank is already in place.

Government E-Payment Gateway (GePG): GePG has been implemented to disburse bulkpayments from Central Government departments to Central Govt. employees/ vendors throughBanks NEFT platform. The Bank is one among the 5 banks identified to process transactionsof e-FMS (electronic Funds Management System) in the state of Tamil Nadu wherein NREGAscheme payments are released by Government of Tamil Nadu every week. Transactions arebeing processed on a day-to-day basis and credited to beneficiaries of both intra-bank andinter-bank. Perhaps, IOB is the only Nationalised Bank to collect Chennai Corporate taxacross counters.

Infrastructure Space

The Bank is the pioneer in establishing 3 Data Centres which are setup to ensure Zerodata loss among the Public Sector Banks. It has provided alternate connectivity to all ourData Centres and also to the branches wherever feasible through alternate serviceproviders/medium. Connectivity for Ultra Small Branches is provided through a VAN basedbroadband 3G modem/ Data cards.

IT Organization Structure

Developing software in-house resulted in perfect alignment of business and ITaspirations, reduced cost, increased agility and nimble footedness and the all-importantflavor of domain knowledge. 3 Data Centers has revolutionalized the BCP-DR readiness ofthe Bank. The Data Centers are connected to the network nodes situated mostly at ourRegional Offices by means of MPLS clouds from BSNL (Primary link- except Mumbai &Delhi where MTNL is the Primary link) and Bharati Airtel and to branches directly throughthe BSNL (Primary) cloud and TCL/ Tulip cloud as secondary links. The last mile forsecondary link from TCL/Tulip is in the form of RF/ VSAT links. Apart from introducingnetwork redundancy, this has given us double-bandwidth at half the cost, because ofcompetition. The excess bandwidth has been tapped to introduce Video Conferencing and IP– Video / Audio telephony thereby enhancing reach, at reduced cost. Since, IPtelephony is introduced to 3 of our overseas branches, the benefit is absolute. The,Information System Security Policy conforms to ISO Standards.

Transaction Banking

ATM / Cash Dispensers (CDs): The total number of ATMs/ CDs of the Bank stood at2,533 as on 31st March 2014. There are 1,606 onsite and 927 offsite ATMS. During the yearunder review, the Bank has installed 650 ATMs /CDs. The Bank’s ATM are spread across625 ATMs in Metro Centres, 692 in Urban Centres, 730 in Semi Urban Centres and 486 inRural Centres. Bank’s 1,606 branches are supported with onsite ATMs /CDs apart from927 Offsite ATMs.

Debit Cards: The Bank has a card base of 53 lacs as on 31st March 2014 with 9 lacsnew debit cards issued during the year under review. The Bank has successfully launchedRupay Kisan Debit Cards to Agriculture borrower customers which can be used in ATMs /PoS.The Bank has so far issued 1.27 lacs cards to customers under Kisan Debit Cards. The Bankhas introduced VISA Connect Cards (Debit Cards) for Gen Next customers in the age groupbetween 10 and 28 years. The RuPay Debit card under NPCI launched during the year ispopularized in rural and semi urban branches to take care of the needs of the customerswhose transactions are expected to be mostly domestic. SME Debit Card was also launched tocater to the needs of the SME customers. A separate working capital limit is givenadditionally only for card usage. Loyalty Rewards for usage of Banks Debit and CreditCards has been launched with effect from October 2013. Upto 5% Cash Back offer launched toincrease usage in PoS/Ecom channels (15.10.2013 to 31.03.2014).

Credit Cards: The Bank has 47,774 credit cards as on 31st March 2014 with 4,016cards issued during 2013-14.

Payment Gateway Operations: The Bank has 10 aggregators who have nearly 7,000sub-merchants under their banner including public sector organizations like BSNL, LIC ofIndia etc. The Bank has direct clients like TNEB, AMET University, ITDC, IOACON, LoyolaCollege, Ethiraj College, Madras Christian College, and Dr MGR University.

Internet Banking and Mobile Banking: The internet banking registrations have showna good growth during 2013-14. The Bank introduced customer friendly approaches likegeneration of passwords by customers themselves, increasing the daily funds transfer limitto a max of Rs 2.00 lacs were introduced. The Bank has enabled online fee collectionfacility in internet banking for few institutions. The customers can renew and close termdeposits accounts opened online and Standing Instruction Module for payment of RD and LoanInstalments and Multiple Instalment Scheduling have been introduced. The Bank introducedOTP as additional factor of authentication for amounts of Rs. 50,000 and above and forE-Commerce transactions through internet banking.

Cheque truncation System (CTS) : CTS has been implemented in 1484 branches in 51regions across the country. As CTS has been made mandatory by RBI, the Bank plans tocomplete the implementation in all the regions during this FY 2014-15 in all MICR Centresas and when clearing houses takes decision to migrate to CTS.

Electronic Transactions: As at the end of March 2014, electronic transactions stoodat 68.6% of the total transactions of the Bank.

Branches, Regional Offices are periodically sensitized to effectively market e-productsand to reduce paper based transactions. Training is imparted through Staff TrainingCentres. Customers requesting DDs/POs and who issue cheques are being advised to make useof RTGS/NEFT/ Internet Banking. The Bank issues Debit to all active SB accounts. Staffmembers have been advised to use only e-channels. Business Intelligence analytics havebeen developed and deployed to monitor and analyse the performance of branches in multiplealternate delivery channels. With a view to improve the e-payment transactions, NEFTremittances up to Rs. 1 Lakh are allowed free of charges.

Government Accounts Department Direct Tax Collections

The Bank is authorized to collect Income Tax and other Direct Taxes in physical modeand through On Line Tax Accounting System (OLTAS) by 353 branches all over India. The Bankis also authorized to receive e-payment of Direct taxes. Data submission is 98.59%. TANdata quality is 99.91% and PAN data quality is 99.83%. During the year under review, theBank handled transactions worth Rs. 8,368 crores earning an agency commission of Rs. 2.02crores.

Indirect Tax Collections

The Bank is authorized to collect indirect taxes through Electronic Accounting Systemin Excise and Service Tax (EASIEST) by branches authorized by CBEC. The Bank is alsoauthorized to receive e-payment of Excise and Service Tax. E-payment of Customs Duty ande-refunds of Duty drawback have started in March 2011. The Bank handled transactionsamounting to Rs. 7,948 cores earning commission of Rs. 1.58 crores.

Collection of State Government revenues

The Bank handles e-collection of Commercial Taxes (VAT) through internet banking in thestates of Tamil Nadu, Pondicherry, Andhra Pradesh, Karnataka, Uttar Pradesh, Jharkhand,Odisha, Delhi, Gujarat, West Bengal and Maharashtra. The Bank is also handling physicalcollections in selected locations in Gujarat, Uttar Pradesh, Maharashtra, West Bengal andDelhi.

Payment of Pension

The Bank is servicing pensioners belonging to Central Civil, Defence, Railways,Telecom, State Civil, EPFO, CMPFO, TNEB, Chennai Port Trust, Chennai Dock Labour Board,Local Fund Audit of TN and Malaysian Government Pension apart from credit through ECS.Centralised Pension Processing Centre disburses pension on a centralized basis to CentralCivil, Defence, Railway and Telecom Pensioners for 54,240 pension accounts. The Bank hasdisbursed about Rs. 790 crores during the year and received reimbursement under singlewindow scheme for Central Civil, Defence, and Railway and Telecom pensions within 2-3 daysfrom the date of disbursement. The Bank is accredited for disbursing Postal Pension and isactively pursuing for centralization of Tamil Nadu State Civil Pension. The Bank alsohandles Treasury business of the Government of Tamil Nadu at 12 branches and Government ofOrissa at 3 branches. The Bank services the account of Planning Commission, NationalInformatics Centre and Department of Telecommunications. Post Office Collection (Drawingand Deposit) Account is maintained at 59 branches in Tamil Nadu. The Bank activelyparticipates in the Government of India Savings Schemes like Senior Citizens SavingsScheme 2004, 8% Taxable Bond, Public Provident Fund contributing subscriptions of aboutRs. 93 crores.

NPS Lite – Swavalamban Scheme for unorganized Sector

Government of India, with a view to ensure that persons who are economically andsocially backward and employed in Unorganized sector also should get income by way ofpension at the age of 60 years, introduced the "Swavalamban" Pension scheme. TheBank has registered for 737 branches as NL-CC with NSDL to handle the above Scheme.

Inter Branch Reconciliation

RBI has fixed six months time for elimination of inter-branch entries. Under COMPASS(Completely Automated Settlement System) all credit entries aged more than 3 months as perBank’s Policy Guidelines i.e. entries originated upto 31st January 2014 have beeneliminated by 31st March 2014 and brought to "Nil" status. All debit entriesupto February 2014 in COMPASS and Demand Draft Reconciliation accounts have beeneliminated as on 31st March 2014 is well within the RBI norms of six months. No debitentries are outstanding for more than 15 days under Funds Transfer and 7 days under TTsPaid Reimbursement Accounts as against RBI norms of six months.

Human Resources Development Training

In line with the corporate goal of making the Bank a customer centric one, training hasbeen imparted on contemporary issues of banking apart from basic areas of banking throughthe internal and external mode. The focus continued to be on Credit Appraisal/Credit Monitoring, Non Performing Asset Management and Recovery in addition to RiskManagement and Computer awareness apart from the regular training on general banking.Training Programme on Leadership Development, Customer Relationship Management, StrategicBranch Management, Strategic Branch Leadership, and Faculty Development Programme wereconducted during the year. The Bank also conducted other training programmes likeinduction and pre confirmation training for new recruits, Pre promotion training for SC/STmembers eligible for promotion and pre retirement counseling for members retired duringthe year. Bank has engaged the services of retired executives on contract basis to derivethe benefit of their experience, knowledge and expertise in various facets of banking. ANew HR concept "Mentoring" has been introduced to influence, help, instruct,motivate and lead the young new staff members to the right track. To identify and describethe Behavioral and Managerial competencies which are critical for success in a worksituation or work role, Competency mapping was initiated at the level of AGMs in the Bank.The process would help to identify and build up second line functionaries in the Bank whocan be groomed to take up more complex & higher responsibilities in key areas infuture. The internal training system comprises of a Staff College, 10 Staff TrainingCenters and a Rural Banking Training Centre. Internal training was imparted to 18,202staff comprising of 8,478 Officers, 9,358 Clerical and 366 Sub-staff by conducting 986programmes. Of the total staff trained 4,274 belonged to Scheduled Caste (SC) and 1,300belonged to Scheduled Tribe (ST). Bank has also conducted 60 On-location programmes acrossvarious branches for 556 participants.

The Bank has deputed 1,627 Executives/ Officers for training programmes conducted byreputed external institutes. Apart from these, 21 executives and 11 Officers were deputedfor training abroad. The Bank has also trained 126 staff members of Pandyan Grama Bankthrough 3 training programmes. Of the total staff trained, 25 belonged to SC and 6belonged to ST.


As a motivational measure, the Bank has introduced a reimbursement of Exam fee for thetwo certification courses being conducted by Indian Institute of Banking & Finance(IIB&F), Mumbai namely, Advanced Management Programme in Banking & finance &Certified Banking Compliance

Professional. The Bank has extended the reimbursement of NISM examination fees toClerical staff members also. Quiz Programme for both officers and award staffs across allregions pan India was conducted in three stages viz., region wise, inter region wise andall India final. The Bank has conducted a Combined Quiz Programme for the final roundparticipants of officers and award staff in the month of March, 2014.

Recruitment & Staff Strength

During the year 2013-2014, Bank has recruited 324 Specialist Officers (119 MarketingOfficers, 57 Law Officers, 36 Official Language Officers, 81 Rural Development Officers, 2Law Officers, 21 Chartered Accountants, & 8 Credit Officers), 2177 ProbationaryOfficers and 1373 Clerks. The Bank has initiated a new recruitment methodology throughtie-up with Manipal Global Education Services Pvt Ltd, Bangalore to attract brightgraduate students to pursue a career in banking and provide them with the necessarytraining, knowledge and skills to become a competent banker. A total of 430 candidates areundergoing the training programme at the Indian Overseas Bank Manipal School of Banking(IOBMSB) Campus at Bangalore.

The Bank’s staff strength domestically stood at 29,716 comprising 13,240 Officers,12,236 Clerks and 4,240 Sub-staff as of 31st March, 2014. The overseas staff strengthstood at 209 staffs members (49 expatriate officers & 160 local overseas staff). Ofthe total staff strength, 6,336 members belonged to SC category, 1,799 to ST Category, and5,496 to OBC Category. Staff Strength includes 8,293 Women employees, 979 ex-servicemenand 563 physically challenged members.

Industrial Relations

In order to monitor and maintain good industrial Relations climate in all offices ofthe Bank, guidelines are issued from time to time regarding enforcement of discipline,policies to be followed in recruitment , promotion etc. The guidelines issued by theMinistry of Finance and Indian Banks Association with regard to staff matters areimplemented expeditiously by issuing circulars for the benefit of the employees.

The Industrial relations environment of the Bank remained cordial and conducive forachieving organizations objectives. Court cases are reviewed by the Bank at Apex level asper Ministry of Finance guidelines and efforts are taken to settle/ get the Court casesdisposed of expeditiously. The Sexual Harassment of Women at workplace (Prevention,Prohibition and Redressal) Act 2013 has came into force on 9th December 2013. As per thesaid Act, all Administrative office (Central, NBGM & Regional office) has constitutedinternal complaints committee. The details of the Complaints received / disposed duringthe year 2013 & 2014 are given below.

Complaints Pending as on 31.03.2013 Complaints received during 2013-14 Complaints Disposed Complaints Pending
2 2 2 (received during 2013) 2


Security measures, mandatory and recommendatory, were correctly strictly implemented atall Bank branches and administrative offices and were reviewed periodically keeping inview the local law and order situation and necessary steps taken to fortify securitythereby creating a safe business environment for customers and staff. The Bank continuedto stress on preventive measures for security and fire fighting arrangements andinculcation of security consciousness among staff to ensure safety to life and property.The Bank has sensitised staff members regarding security awareness and sanctionedinstallation of Burglar Alarm and CCTV in all branches and Watchmen/Armed Guards forvulnerable branches and ATMs from Director General Resettlement sponsored Agencies/reputedPrivate Security Agencies.

Rajbhasha (Official Language Policy)

The Bank has taken all efforts to implement the Official Language Policy of Governmentof India during the year 2013-14. During the year 237 staff members who do not possessworking knowledge of Hindi were trained in IOB Praveen and Banking Pragya Courses. 2,465staff members possessing working knowledge of Hindi were trained in General HindiWorkshops held during the year. Rajbhasha Sangoshthi was held on 10th September 2013 forHeads of Central Office departments to strengthen the Official Language Implementation inCentral Office. Minutes of all meetings of all board level committees were translated inHindi. As per the directives of Govt. of India, Bank has enabled Hindi Unicode font in allRegional Offices and has provided the facility of downloading the same on IOB ONLINE.Banking terminology has been provided on IOB ONLINE for the benefit of staff members.Training has been given to 1823 staff members for the use of Hindi in computers. Sixissues of quarterly Hindi Magazine VANI in print as well as in digital form have beenpublished. The Bank’s website is made available in Hindi also. Department of OfficialLanguage, Ministry of Home Affairs, Govt of India, Delhi has awarded First prize tobank’s In-house Hindi magazine VANI for the year 2012-13 in C Region. Reserve Bank ofIndia has awarded Third Prize for Hindi house magazine "VANI" for the year2012-13 in the Inter-Bank Competition for Hindi house magazines of banks and financialinstitutions. Regional Offices were inspected on OL implementation by Official LanguageDepartment, Central Office and Rajbhasha Shields were awarded to Regional Offices andbranches doing good work in official language implementation. Third Sub Committee ofParliamentary Committee on Official Language inspected our Central Office on 25thSeptember 2013 and Valsad Branch on 18th January 2014. Drafting and evidence committee onOfficial Language inspected the Ahmedabad Regional office on 4th April 2013. Both thecommittees expressed satisfaction over the implementation of Official Language in thesecentres. Annual Official Language Review Meeting and Unicode training for OL Officers washeld on 27th & 28th May 2013 to assess the progress made in the area of OLimplementation in Regional Offices and provided inputs for intensive implementation in allRegions.

As convener of Chennai Town Official Language Implementation Committee, the Bank hasreceived the First Prize for its efforts in implementation of Official Language Policyduring the year 2012-13 from Official Language Department, Ministry of Home Affairs,Government of India. The Prize was given by Shri K Rosiah, Governor of Tamil Nadu in theRegional Official Language Conference held on 10th February 2014 at Chennai. On behalf ofthe committee, the Bank conducted two General Hindi Workshops, 12 Inter-Bank Hindicompetitions, Joint Hindi Month Celebration function and Hindi Unicode training programmefor the staff members of member banks / Financial Institutions. A Joint Rajbhasha Samarohwas held on 7th February 2014. In addition to this, two half yearly meetings were alsoconducted. Seminars in Hindi on banking subjects were held for Branch Managers. Annualissue of magazine of "Chennai Bharathi" was brought out.

Costing of Operations

The Costing & Planning functions derived useful results towards corporate levelBudgeting concepts, Monitoring P&L movement on a monthly basis, reporting Daily MIS totop Management, Various study analysis etc. The top management directly monitors SOI, MOUgoals of the Bank as per the directives of Ministry of Finance. During the year, the Bankhas formulated a module on computation of return on assets for all the Regionsindividually so as to assess their performance and compare their contribution with themacro level profit.

Parliamentary Committee:

During the year, the committees visited the Bank were A) Committee on Paper Laid onTable at Kodaikannal from 30th May 2013 to 1st June 2013, B) Study Tour of theParliamentary Committee on Labour at Tirupathi on 29th July 2013, C) Committee on Officiallanguage at Chennai on 24th & 25th Sept 2013, D) Visit of Department relatedParliamentary Standing Committee on Industry to Chennai and Tirupathi from 3rd to 5thOctober 2013, E) Study Tour of the Parliamentary Committee on Welfare of Other BackwardClasses at Chennai 11th & 12th November 2013.

Outlook for 2014-15

As a matter of fact, the economy has started slowly picking up due to various measurestaken by RBI/Govt resulting to improvement in certain parameters such as containment offiscal deficit, current account deficit and inflation at a tolerance level. However, theweather forecasts predict 60% of EL-nino effect which raises spectre of drought and inturn may raise inflation. As the Indian economy depends on both internal and externalfactors, it is hoped that the new Govt/RBI would continue to direct the situation moremeaningfully. The new measures would definitely help the economy to post a moderate GDPgrowth of 5.9% for the year 2014 –15.


Peer Comparison

Company Market Cap
(Rs. in Cr.)
St Bk of India 188,434.27 17.24 1.59 15.19 10.0 0.0 0.00
Bank of Baroda 35,948.40 8.20 1.00 15.42 13.4 0.0 0.00
Punjab Natl.Bank 33,295.96 9.98 0.93 14.98 10.0 0.0 0.00
Canara Bank 18,526.51 7.55 0.77 12.25 10.4 0.0 0.00
Bank of India 18,301.20 6.84 0.70 15.52 11.2 0.0 0.00
IDBI Bank 14,820.41 13.55 0.68 12.91 5.4 0.0 0.00
Union Bank (I) 12,404.30 7.57 0.73 13.17 10.4 0.0 0.00
UCO Bank 10,289.16 6.81 0.97 15.18 16.8 0.0 0.00
Central Bank 9,351.80 0.00 0.76 14.96 0.0 0.0 0.00
Syndicate Bank 9,162.59 5.55 0.84 15.00 16.7 0.0 0.00
I O B 9,011.87 15.52 0.63 13.25 4.5 0.0 0.00
Oriental Bank 8,551.72 7.83 0.67 12.42 9.2 0.0 0.00
Indian Bank 7,486.41 6.84 0.65 13.00 10.3 0.0 0.00
Allahabad Bank 6,573.44 5.72 0.60 12.78 10.9 0.0 0.00
Corporation Bank 6,235.84 11.49 0.62 13.55 5.7 0.0 0.00

Futures & Options Quote

Expiry Date
73.30 =0.00  (0.0%)
Instrument: FUTSTK
Expiry Date: 31 Jul 2014
Open Price: 73.50
Average Price: 73.74
No. of Contracts Traded: 4,576,000
Open Interest: 15,592,000
Underlying: IOB
Market Lot: 8000
Previous Close: 73.30
Day’s High | Low: 74.45 | 72.95
Turnover (Cr.): 33.74
Open Int. Change: 256,000.00 (1.7% )
View detailed F& O quotes >>

Key Information

Key Executives:

M Narendra , Chairman and MD & CEO  

Alok Pande , Nominee (Govt)  

Niranjan Kumar Agarwal , Director(PartTime NonOfficial)  

Ajit Vasant Sardesai , Director(Shareholders)  

Company Head Office / Quarters:
763 Anna Salai,
Tamil Nadu-600002
Phone : 91-44-28519491/28415702/28889392
Fax : 91-44-28585675
E-mail :
Web :
Cameo Corporate Services Ltd
Subramanian Building
1ST Floor No 1
Club House Road
Chennai - 600002

Fund Holding


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