MANAGEMENT DISCUSSION AND ANALYSIS
Indian economy recorded 7.2% growth during 2009-10. Agriculture was impacted by thepoor monsoon but the impact could be muted by better performance in the Rabi season.Industrial growth in the first nine months of the financial year was 8.6%. During the sameperiod, exports and imports showed signs of recovery from the slowdown caused by theglobal crisis.
The Reserve Bank of India, in its Annual Policy, reduced Repo Rate under the LAF by 25basis points from 5.0% to 4.75%. Reverse Repo Rate was also brought down by 25 basispoints from 3.5% to 3.25%. From the fortnight beginning November 7, 2009, the RBI raisedSLR to the pre-crisis level of 25%. CRR was increased from 5.0% to 5.75% in two stages inFebruary 2010. As an anti-inflation measure, the RBI hiked the repo rate from 4.75% to5.0% and reverse repo from 3.25% to 3.50% on March 19, 2010.
The year traversed from easy money policy to tight -policy regime in the second half ofthe year and it is likely to continue in 2010-11 as could be inferred from the AnnualPolicy 2010-11 wherein the RBI has raised Repo Rate and Reverse Repo Rate by further 25basis points to 5.25% and 3.75% respectively. CRR was also hiked by 25 basis points to6.0%.
THE BANK'S OPERATIONS
Aggregate domestic deposits of the Bank increased from Rs.95,434 crore in March 2009 toRs.1,05,434 crore in March 2010 at a growth rate of 10.48%. Domestic core deposits of theBank registered a significant growth of 24.89% over March 2009 due to conscious sheddingof high cost term deposits.
Domestic Gross advances rose from the level of Rs.68,480 crore in March 2009 toRs.73,026 crore in March 2010 despite adverse market condition on account of globaleconomic slow down.
Priority Sector Credit
As per the guidelines of RBI, achievement under Priority Sector for the year 2009-2010is computed taking the Adjusted Net Bank Credit (ANBC) of March 2009 as the base. For theyear ended March 2010, the percentage of Priority Sector advances to Adjusted Net BankCredit was at 40.59 %, the quantum being Rs. 27,237 crore. Thus the Bank fulfilled thestipulated norm of 40% under Priority Sector credit.
The Bank extended credit of Rs.11,660 crore to SME Sector as at the end of March 2010.This includes advances to Micro and Small enterprises to the tune of Rs.9,659 crore whichforms part of Priority Sector Credit. The Bank increased its advance to SME Sector by24.10% surpassing the mandatory requirement of 20%.
The Bank was awarded Chief Minister's trophy for good performance in lending to MicroEnterprises in Tamil Nadu. The Bank was in second position among all banks inimplementation of PMEGP Programme in Tamil Nadu State. The Bank sanctioned more than 700projects in the state of Tamil Nadu during 2009-10, which resulted in creation of over9,900 jobs.
To help speedy revival of potentially viable sick SME units, Nursing and RehabilitationPolicy for SME Sector was formulated and implemented. The policy is more liberal andvarious concessions are available under the policy for viable units for restarting theiroperations. To facilitate smooth and hassle free flow of credit to Micro and SmallEnterprises, who face many disadvantages as compared to Medium and Large Enterprises,Separate Loan Policy for MSE Sector was formulated and implemented. The policy emphasisessanction of timely and adequate amount of credit to MSEs. Thrust is given to sanctioncollateral-free loans up to Rs.1 Crore, in all eligible cases.
The Bank continued the implementation of relief package for SME sector during 2009-10also. Various concessions including reduced rates of interest were continued. SMEFacilitation centres were activated at all Regional Offices. Large number of SME borrowalaccounts was restructured during the year.
All lending to MSME were exempted from Minimum Interest Rate clause to enable them toget the benefit of interest rate reduction whenever bank's BPLR is reduced.
The Bank signed MOU with Bajaj Auto Ltd., on April 9, 2009 and TVS Motor CompanyLimited, on June 3, 2009 for financing auto rickshaws and commercial three wheelers in aspeedy manner, without requirement of collateral security/third party guarantee. More than3,500 loans were sanctioned under this tie-up arrangements during 2009-10, enhancing flowof credit to transport operators in Micro Enterprises Sector. On November 5, 2009, theBank signed MoU with Asia Motor Works Ltd., for financing trucks and commercial transportvehicles and on March 22, 2010 with TATA Motors Limited for financing commercial transportvehicles on easy terms and conditions.
Agricultural credit registered a growth of Rs. 1,780 crore from Rs.10,817 crore inMarch 2009 and reached Rs. 12,597 crore in March 2010. The Bank's ratio of agriculturaladvances to Adjusted Net Bank Credit stood at 18.77% exceeding the required norm of 18%.
The Bank disbursed Rs. 13,327 crore under Special Agricultural Credit Plan (SACP) asagainst the target of Rs. 12,780 crore during the year. The increase in disbursement ofcredit to agricultural sector over the last year's disbursement was 30.35%, as against 30%mandated by the Govt. of India under Special Farm Credit Package.
Kisan Credit Card Scheme (KCC)
The Bank issued 2,03,757 KCCs during the year. The total number of cards cumulativelyissued by the Bank as at the end of March 2010 stood at 19,19,155.
During the year, the Bank credit-linked 68,112 Self Help Groups (SHGs )with a creditoutlay of Rs.706.92 crore. The cumulative number of SHGs credit-linked by the Bankincreased from 2,92,507 (amount disbursed Rs.2,162.68 crore) as at the end of March 2009to 3,60,619 SHGs (amount disbursed Rs.2,869.60 crore) as of March 2010.
During the year, the Bank contributed Rs.1.16 crore towards NABARD's Micro FinanceDevelopment & Equity Fund.
Janashree Bima Yojana (JBY)
JBY is a Social Security Scheme to provide life insurance cover to the rural and urbanpoor living below the poverty line. The Bank, in association with LIC of India, launchedthe scheme to cover women Self Help Group members. During 2009-10, the Bank covered 42,791women members belonging to 3,854 SHGs under the scheme.
Credit flow to Women
As on March 31, 2010, Bank's credit to women amounted to Rs.3,529.69 crore constituting5.26% of the Bank's Adjusted Net Bank Credit, as against the norm of 5%.
Lead Bank Scheme
The Bank has Lead Bank responsibility in twelve districts in Tamil Nadu and onedistrict in Kerala. The Bank is also the Convenor of State Level Banker's Committee ofTamil Nadu. During the year under review, as Convenor of State Level Bankers Committee,Tamil Nadu, the Bank conducted three SLBC Meetings and one State Level Review Meeting. Inaddition, the Bank convened Special SLBC Meetings on Special Package for MSME, Auto &Housing Sectors. Special Bankers' Meeting was convened on Credit Linking of PanchayatLevel Federations, Scheme for Rehabilitation of Manual Scavengers (SRMS) and on the ReliefPackage for Tiruppur Dyers' Association. Senior level officials from member Banks andGovernment of Tamil Nadu participated in the above meetings.
Corporate Social Responsibility
The Bank has, always, supported worthy social causes and endeavours. During the year,the Bank contributed Rs. one crore each to two states, viz., Andhra Pradesh and Karnataka,towards the respective Chief Minister's Relief Funds to give relief to the flood affectedpeople in these two states. Apart from these, the Bank also made donations to otherorganizations serving the community at large.
Sakthi Indian Overseas Bank Chidambaram Chettiar Memorial Trust
The Trust, set up jointly by the Management of the Bank, Indian Overseas Bank Officers'Association and All India Overseas Bank Employees' Union, to perpetuate the memory ofBank's Founder Shri M.Ct.M. Chidambaram Chettiar, continued to provide entrepreneurialdevelopment training to women thereby empowering them socially and financially.
The Trust has so far conducted 44 Entrepreneurial Development Programmes (EDPs)exclusively for women at various centres, benefiting 1,601 women. For the womenentrepreneurs and Self Help Groups, 1013 Sakthi Bazaars' were organized at many branches,for exhibition cum sale of their products.
IOB-Sampoorna Project - A Total Village Development Project
The Bank launched an innovative rural development project aiming at Total VillageDevelopment called IOB-Sampoorna in Kuthambakkam and Padur Villages in TiruvallurDistrict, Kameshwaram village in Nagapattinam District, Dhaliyur Village in CoimbatoreDistrict and Innambur village in Thanjavur District of Tamil Nadu. IOB-Sampoorna is anunique Project encompassing several livelihood initiatives in the villages to ensureall-inclusive growth of rural population.
It comprises credit and non-credit components such as Financial Inclusion, LT enabledbanking operations with Bio-metric Smart Cards under Business Correspondent model, TreePlanting and Social Forestry, Cleaning Water Bodies, Health Care, Skill Training for youthin computer, Rural Business Process Outsourcing, Promotion of non-conventional energy andRural Tourism.
Rural Self Employment Training Institutes (RSETIs)
In line with the guidelines issued by Ministry of Rural Development, Govt of India,Bank had set up RSETIs at Thiruvananthapuram (Kerala State), Tirunelveli, Thanjavur andTrichy (Tamilnadu State) to provide training to farmers, members of SHGs, beneficiariesunder SGSY, Educated Unemployed Youths, Artisans and Beneficiaries belonging to weakersections.
One Rural Training Centre was set up by the Bank (jointly with NABARD and Indian Bank)at Karaikudi (Sivaganga District, Tamil Nadu). The Bank has Lead Bank responsibility inthese Districts. During the year under review, through these Training Institutes, the Bankconducted 142 training programmes benefiting 3,322 trainees.
Financial Literacy and Credit Counselling Centres (FLCCC) viz., SNEHA
With a view to promoting financial education and awareness among general public theBank set up two FLCCCs at Nagercoil and Trichy during the year under review. These centreswill educate the people in rural and urban areas with regard to various financial products/ services available from formal financial sector, provide face-to-face financialcounselling services and offer debt counselling to indebted individuals.
In order to bring hitherto excluded people under banking fold during the year underreview, Bank has opened 2,06,162 No-frills SB accounts and granted 16,930 General PurposeCredit Cards.
To increase the outreach of banking services the Bank introduced Smart Card Banking in33 Branches (18 Regions) across 6 States and one Union Territory. Rural people cantransact banking business at the village itself with the use of bio-metric smart cardsthrough Hand Held Devices. Business Correspondents deliver the services at the door stepof the customers. The devices are voice - enabled in vernacular language and user friendlyfor illiterates. 3,504 biometric smart cards were issued during the year under review.
Agricultural Debt Waiver and Debt Relief Scheme 2008
Agricultural Debt Waiver and Debt Relief Scheme 2008 was announced by the Hon'ble UnionFinance Minister, Govt. of India. Under the scheme, the Bank has identified 3.07 lac Smalland Marginal Farmers eligible for waiver to the tune of Rs.580.89 crores and 68,000 otherfarmers eligible for Relief of Rs.133.00 crores totaling 3.75 lac farmers and Rs.713.89crores respectively.
Bank received an amount of Rs.371.98 crores from Reserve Bank of India , as thereimbursement of waiver claim amount. Out of 68,000 Other Farmers (OF) 46,000 otherfarmers, paid their share and Bank has made a preliminary claim of Rs.83.16 crore. Thelast date for payment of other farmers share is extended upto June 30, 2010.
The Bank has adopted the New Capital Adequacy Framework (Basel-II) with effect fromMarch 31, 2008. In line with Reserve Bank of India's instructions to all commercial banks,the Bank is adopting Standardised Approach (SA) for computation of Credit Risk Capital,Basic Indicator Approach (BIA) for calculating the capital for Operational Risk and theStandardised Duration Approach (SDA) for computing capital requirement for market risks.The Bank is in compliance with the regulatory requirement in this regard.
Further, the Bank is in the process of upgrading its risk management systems andpractices for migrating to the advanced approaches envisaged under the Basel-II Framework.
In order to arrive at the Compliance Risk by ascertaining the concentration ofnon-compliance, the system of verification of level of compliance in branches is used as atool. An official of a branch would verify the level of compliance in core issues inanother branch which are of 'High' and 'Medium' risk on quarterly basis. The overallCompliance Risk in branches, which was at 4.69 % as on December 31, 2008 has been broughtdown to 3.95 % as on December 31, 2009. The Self Assessment procedure introduced foroverseas branches and Representative Offices also serves as an effective tool forRegulatory Compliance Check List. The compliance self assessment procedure introduced forCurrency Chests, Central Clearing Offices and Depository Service branch has improved thelevel of compliance in these offices.
Many pro-active efforts were initiated such as 1) dissemination of information 2)motivation/support 3) empowerment through new and innovative schemes and 4) monitoring ofprogress. These measures infused positive outlook at the operational level and there was aperceptible improvement under NPA Management. The measures include
a) Emphasis on 100% action under SARFAESI in all eligible cases
b) Emphasis on recovery of 'critical amount' towards upgrading the accounts
c) Launching of One Time Settlement Scheme for Small Value Accounts (OTS-
SVA), which delegated Discretionary powers to Branch Heads. The Scheme was in forcefrom 19.10.2009 to 31.03.2010.
d) Launching of recovery contest to staff from 01.02.2010 to 31.07.2010, which providedpayment of Cash incentive to successful performers.
During the year, the Bank made substantial recovery of Rs.787 crore including recoveryfrom written-off accounts. NPAs to the extent of Rs. 435 crore were also upgraded duringthe year.
Disposal of petitions received under RTI Act
The Bank received 1,421 petitions seeking information under RTI Act during the year2009-10. All the requests were duly replied within the specified period of 30 days.Eligible petitions (85%) were positively replied and the balance applications were foundineligible for the requested details.
First Appellate Authority received 122 first appeals, which were not satisfied with thereply of Central Public Information Officer. These appeals were duly disposed as per thedue provisions of the Act.
19 Appeal petitions were escalated as Second Appeal before the Hon'ble CentralInformation Commission. All 19 Appeals were disposed by the Hon'ble CIC. Bank hadmaintained favourable decisions in all the 54 Second Appeals decided till date.
Number of cases under BIFR/AAIFR as at March 31, 2010 were 27 with an exposure of Rs.153.36 crore. Of this 7 accounts for Rs. 74.78 crore were standard and performing. Out ofNPA accounts, recovery in 6 cases amounting to Rs. 4.53 crore was made and one standardaccount under BIFR reference with an exposure of Rs. 3.23 crore was also closed. Duringthe year, 3 accounts with an aggregate exposure of Rs. 11.38 crore were brought out ofSICA purview, two accounts through SARFAESI action and one account by winding up orderpassed by BIFR.
Corporate Debt Restructuring
As on March 31, 2010, the number of restructured borrowal accounts under CDR mechanismwas 12 and the total outstanding was Rs. 335.60 crore (9 cases with an outstanding of Rs.176.05 crore outstanding as on 31.3. 2009) of which 10 accounts for Rs. 285.66 crore areunder standard category and 2 accounts for Rs. 49.94 crore are sub-standard. During theyear, 3 new standard accounts entered CDR mechanism with total exposure of Rs. 173.88crore. Efforts are on for recovery of sub-standard accounts.
The growth in investments during the year 2009-10 was mainly driven by the increase inStatutory Liquidity requirements resulting mainly out of Deposit growth of the bank. GrossDomestic Investments as of March 31, 2010 stood at Rs.36,795.09 crore as againstRs.30,497.19 crore as on 31.03.2009 registering a growth of 20.65% over the previous year.Investments in SLR securities registered a growth of Rs.5,516.11 crore or 20.67% duringthe year while Non SLR Investments increased by Rs.709.21 crore or 18.62%.
During the year 2009-10, securities for Rs.1,001.46 crore were transferred fromAvailable for Sale (AFS) to Held to Maturity (HTM) segment, Rs.2,216.70 crore from Held toMaturity (HTM) to Available for Sale (AFS). As on 31.03.2010, the SLR securities held inHTM stood at 22.39% of DTL against the limit of 25% prescribed by Reserve Bank of India,compared to 22.62% as on 31.03.2009.
The market was volatile and the Bank continued to trade both in Fixed Income Securitiesand Equities throughout the year. Total turnover (Book Value) in the secondary marketreached Rs.65,790 crore during the year 2009-10 as against Rs.83,581 crore during the year2008-09. Total profit on sale of securities amounted to Rs. 291.86 crore during the year2009-10 as against Rs. 636.83 crores during the year 2008-09. Return on total investments(excluding Profit on Sale of Securities & including amortisation) decreased from 7.37%in 2008-09 to 6.85% in 2009-10.
The Bank started trading in Rupee interest rate swap and the outstanding as on31.03.2010 was Rs. 25 crore. During the year 2009-10, the Bank has not entered into anyfresh rupee interest rate swaps towards hedging its assets and liabilities but swapsalready taken matured for a sum of Rs.750 crore during the year. The total Rupee interestrate swaps held by the Bank as on 31.03.2010 is Rs. 1075 crore as against Rs 1800 crore ason 31.03.2009.
Despite the global recession that badly hit the Indian exports, the Bank managed toincrease its forex turn over (merchant and interbank) from Rs.3,02,696.52 crore during2008-09 to Rs.3,11,619.04 crore during 2009-10. The retail sales of gold coins rose from614.252 Kgs to 928.440 Kgs during the same period.
The Bank has started centralization of submission of various regulatory returnsleveraging the corebanking platform thus improving the data integrity. The connectivityestablished between the core banking platform and the overseas branches has eliminated thedelivery time in respect of overseas remittances emanating from its overseas offices toBank's account holders in India. As a result, beneficiaries get instantaneous credit ofthe remitted amount.
The access to the core-banking platform provided to the overseas office has improvedthe service standards to the NRI clients with instantaneous balance enquiries andgeneration of statement of accounts at all the overseas offices of the bank.
Opening of NRI account has been centralized at the NRI cell at Treasury (Foreign). Theaccount opening forms from various overseas offices are pooled at the NRI cell andaccounts opened in the books of the branch of the client's choice and an NRI kitcomprising of the pass book, cheque book, ATM card and the Pin mailer is issued withoutloss of time.
The correspondent banks maintaining rupee account with the bank have been provided aweb-based facility to access their account and check the status of their paymentinstructions including payment of their drafts.
As Chairman of the southern chapter of FEDAI, the Bank conducted the quarterly meetingsof the member banks where issues pertaining to the forex business were deliberated.
The Bank conducted the meetings of the subcommittee of the State Level BankersCommittee for Exports during August 2009 and February 2010 with active participation fromvarious export-oriented organizations such as ECGC, Council for Leather Exports, FIEO,EEPC, etc. The Bank in association with FIEO organized an export awareness programme atMadurai.
A comprehensive Risk Management Policy, with limits duly approved by the Board,covering all risks arising out of forex activities, is in place. Currency-wiseDay-Light/Overnight exposures, duly approved by the Board, are being monitored on dailybasis. Counterparty limits to cover the credit exposure, single-deal limit and stop-losslimits (per deal/per dealer per day) are being monitored effectively.
The Bank's own Visa enabled Credit Card is catering to the requirements of itsclientele and the turnover has increased by 26.23% over last year and the net earnings isRs. 291.70 lakhs - an increase of 14%. During the year, on a revenue sharing model, a tieup was made to venture into Card Acquiring business by deploying Point of Sale terminalsat clients' merchant establishments. This would serve as a tool to build up CASA depositsand 500 terminals have already been installed. The Internet Payment Gateway (IPG), whichwas also launched to popularize E-commerce payment, is gaining momentum.
The Bank continues to act as Debenture Trustee, Collecting Bankers to Issues andDividend/Interest Paying Banker. During the year, the Bank decided to.
i) act as Collecting Bankers for the newly introduced IPO process ASBA (ApplicationsSupported by Blocked Amounts).
ii) change the procedure for handling Dividend/ Interest Warrants as Paying Bankers.Necessary computer programme for this has been developed and successfully tested.
The Bank is a Depository Participant of NSDL and is extending depository relatedservices through 56 service centre branches (including the controlling Chennai Depositorybranch), of which 14 branches are in Chennai, 25 in Mumbai and the remaining in othercities.
Loan Syndication Activities:
Loan Syndication Desk of the Merchant Banking Division of the Bank took advantage ofthe benefits arising out of syndication activity. The Bank has acted as LeadArranger/Co-Lead Arranger for loans to Companies in India and abroad both in INR and USDrespectively. During the year, the Bank achieved financial closure for a large syndicationproposal with a term loan component of Rs.645 crores. Tie-up with other banks in respectof another syndication proposal for a debt component of Rs.1,475 crores is under progress.
Direct Tax Collections
The Bank is authorised to collect Income Tax and other Direct Taxes through On Line TaxAccounting System (OLTAS) in 354 branches. The Bank is given All India Authorisation toreceive e-Payment of Direct Taxes and it has been implemented since 2007.
Gemini Circle Branch, Chennai is functioning as eFocal Point Branch for Direct Taxcollections. TAN data quality is 99.41 % and PAN data quality is 98.35%.
Indirect Tax Collections
The Bank is authorised to receive Indirect Taxes through Electronic Accounting Systemin Excise and Service Tax (EASIEST) in 217 branches. The Bank is given all-Indiaauthorization to receive e-payment of Excise and Service Taxes which has been implementedsince December 2006. Haddows Road Branch, Chennai is functioning as e-Focal Point Branchfor collection of Central Excise and Nariman Point Branch, Mumbai is functioning ase-Focal Point Branch for Service Tax.
Payment of Pension
The Bank handles payment of Pension in respect of Central Civil, Defence, Railways,Telecom, State Governments, TNEB, Chennai Port Trust, Employees' Provident FundOrganisation Pension, Malaysian Government Pension and Coal Mines Provident FundPensioners.
The Bank has established Centralised Pension Processing Centre (CPPC) and Central CivilPension is being paid by CPPC since January 2009. During the year, the Bank completeddisbursement of pension arrears under 611 Pay Commission for Civil and Defence Pensioners,as per Government directives.
Treasury Business of the Government of Tamil Nadu is conducted in 9 branches andGovernment of Orissa in 1 branch. Recently, Valliyoor Branch (Tirunelveli Region) andEppodum Vendran Branch (Tuticorin Region) in Tamil Nadu have also been authorised by theRBI to conduct treasury business.
Other Government Business
The Bank actively participates in the Government of India Savings Schemes like SeniorCitizens Savings Scheme 2004, Relief Bond, Special Deposit Scheme, and Public ProvidentFund. Post Office collection Account is maintained in 42 branches in Tamil Nadu.
The Bank has 34 Currency Chests; which includes Two Currency Chests opened at Erode(Erode Region) and Gajapathinagar (Berhampur Region) during 2009-10.
Inter Branch Reconciliation
The Reserve Bank of India directive stipulates that all debit and credit entries in theIBR accounts are required to be reconciled / eliminated within a period of 6 months. TheBank has significantly reduced the reconciliation cycle, elimination of the COMPASS andDemand Draft debit entries to 15 days. Besides, the Bank ensures that no funds transferand telegraphic transfer entry is outstanding for more than one month.
Central Office Inspection, along with EDP Audit and NIPSA, was carried out in 1,633branches during the year 2009-10. Since all branches were converted to CBS, inspection wasconducted in all the branches on-line. Out of the branches inspected, 451 branches wererated as 'Good'.
Inspection of Hong Kong, Singapore, Seoul, Bangkok and Colombo branches includingRepresentative Offices were also conducted during the period.
Regional Offices carried out periodical Short Inspection of Branches. Management Auditof all 41 Regional Offices and 34 Central Office Departments was also conducted duringthis period. Total of 336 branches were brought under Concurrent Audit covering 58.23% ofDeposits and 74.78% of Advances, thereby exceeding RBI guidelines of covering at-least 50%of Bank's Business. Revenue Audit was carried out in 1,419 branches and Test Check Auditin 334 branches. Stock Audit was conducted for 754 accounts on selective basis.
Risk Based Internal Audit (RBIA) was conducted in the 1633 branches, where COInspection was carried out. Management Audit of Regional Offices was also conducted underRBIA by preparing Risk Profile of the Regions.
Information Systems (IS) Audit was conducted in all the 41 Regional Computer Centres,one Depository branch and 321 branches, consisting of 4 Exceptionally Extra Large, 96Exceptionally Large and 221 Very Large branches. Information Systems Review / Audit ofCO-Departments, viz. Data Centres and DR Site, Network, Core Banking Solution, ATM / DebitCard operations, RTGS/NEFT Operations, Internet Banking and Mobile Banking handled byInformation Technology Department, Credit Card operations, Treasury (Domestic) andTreasury (Foreign) operations were conducted by engaging Qualified External Auditors.
Audit Sub Committee (ASC):
Board of Directors in the meeting held on August 26, 2008 approved the formation ofAudit Sub Committee (ASC). During the financial year 2009-10, 8 ASC Meetings were held.The Review of COIR reports of ELB, EELB/ Specialized Branches/ Overseas Branches includingManagement Audit of Regional Offices, Review of Stock Audit / Concurrent Audit / TestCheck Audit / Revenue Audits were taken up for discussion in the ASC Meetings. The majorfindings of ASC with Action Taken Report was placed to ACB once in a quarter.
During the year 2009-10, the Bank has taken effective steps for disposal of pendingVigilance Disciplinary cases within the time frame fixed by Central Vigilance Commission.During the year 133 vigilance disciplinary cases were disposed. The operational RiskManagement Committee and the Committee of the Board monitoring Large Value Frauds analysedthe frauds reported periodically and observations/ remedial measures made/suggested by theCommittee have been implemented by the Bank. During the year, the Bank issued 12 circulars(internal) captioned Preventive Vigilance - CVO's special circular elaborating thevigilance disciplinary cases handled by the Department. Besides incorporating the detailsof punishments awarded, the important preventive measures to be taken by the staff membersare also included in these circulars. Further emphasis has been given by the Bank towardsPreventive Vigilance measures through periodical Branch inspection by the Chief VigilanceOfficer and also by Vigilance Officers attached to Vigilance Cell at select RegionalOffices. The role of staff at all levels in adherence to Systems and Procedures especiallycompliance to KYC norms, AML guidelines, fraud prone areas etc., has been emphasizedduring periodical visits to Regional Offices and Branches by Chief Vigilance Officer.Vigilance Awareness Week was observed in November 2009.
The Bank has achieved 100% networking status as well as 100% CBS status of brancheswith a total number of 2018 CBS branches and Extension Counters.
As on March 31, 2010, 17 Central Clearing Offices, 41 Regional Offices and 4 CentralOffice Departments and 6 Inspectorates have been brought under CBS. 2 more Central OfficeDepartments have been brought under CBS, with effect from April 2, 2010.
The total number of ATMs as on 31.03.2009 stood at 576 (445 Onsite, 115 Offsite and 16Railway ATMs). During the year, 195 ATMs were brought into the network taking the total to771 (590 Onsite, 146 Offsite and 35 Railway ATMs).
Bank has a total debit card base of 17,67,050 cards which includes 1,75,456 InstaCards. The volume of transactions put through our ATMs amounted to Rs.545.52 crores duringthe month of March 2010.
As on March 31, 2010, 731 ATMs out of 771 have been provided with Video SurveillanceSystems.
RTGS / NEFT - Networked branches are covered under RTGS and NEFT payment systems.During the year, the dividend paid by the Bank was credited to the eligible shareholdersthrough NEFT
Gamut of services have been provided under Internet banking facility. The number ofcustomers who are registered as well as the volume of transactions put through using theInternet is increasing steadily. Apart from the standard services offered, Bank hasintroduced facility for viewing VOSTRO accounts by the Correspondents. Viewing of incometax particulars from NSDL site by the registered Internet Banking Customers, i.e., Form 26AS view, using their PAN is now enabled.
The Bank has introduced Mobile Banking, offering entire range of services. Variousservices have been offered in two phases during the year. Phase I includes query services,funds transfer (inter and intra banks), statement of accounts. Services like air / movieticketing, de-mat services, facility to suspend ATM/Debit Cards, ATM/Branch locator aretested and implemented.
Cheque Truncation System (CTS) has been launched in 85 Branches in NCR, Delhi as perRBI directives.
Bank has launched own Payment Gateway on ASP Model. Bank has integrated payment of TNEBbills by Bank's customers, using their Debit Cards. Integration of Payment of utilitybills, like mobile payment, insurance premium payment etc., using the debit cards is inprocess.
12 branches of erstwhile Swarna Sahakari Bank Ltd, Pune have been brought under CBSfrom day one.
3-way Data-centre has been established to ensure BCP Primary Data Centre at Chennai,and Command Centre at Chennai and DR Site at Hyderabad have been set up. CBS and criticalapplications are functioning from Data Centre. Primary DC and CC are connected by 1 GigaDark Fiber Connection, which ensures synchronous replication. DR Site and DC are onasynchronous replication. Automation Tool is used for automatic fail-over. The networkequipments and hardware used are provided with high availability and complete redundancy(at service provider level, media level and at hardware level).
IP Telephones have been provided to all Regional Offices / Central Office Executivesand to Singapore Branch. On-line tracking of loan applications has been enabled. Borrower/ Applicant can track and know the status of their loan application.
Overseas Branches Computerisation
To ensure uniformity of solutions used by Overseas Branches, centralised CBS softwareis now being used in Singapore, Bangkok and Colombo. The system for overseas branches hasbeen established on hub and spoke model with the hub set up at Singapore with DR Site atBangkok. Bangkok Branch is running parallel and would go online by June 2010. In Colombo,parallel run has been completed and Branch is online with effect from April 1, 2010.Reporting and NOSTRO modules are under process of being implemented.
Direct online remittance through our Singapore Branch to the beneficiary's accountmaintained in our Indian Branches has been enabled. This facility has been well receivedby remitters as well as the beneficiaries. This has also brought the Remittance Businessof the area under organised channel.
In the present set up of Network Infrastructure, redundancy has been achieved at nodelevel in full.
From the existing BSNL point-to-point leased line connections between the branches andthe regional network nodes, the Bank has entered into an MoU with BSNL under Platinumpartner status at competitive rates for migrating the leased line links under BSNLMPLS-VPN cloud connectivity, which would connect the branches directly to the datacentres. Migration process is in progress now.
ATMs are now outsourced under ATM Managed services with M/s TCBIL. Vendor is in theprocess of taking over the ATMs under the managed services. As on March 31, 2010, 129 ATMsin 12 regions have been brought under the managed services. All the ATMs of the Bank willbe handed over during the next three months.
The Bank has launched its first Mobile ATM in Chennai Region. The ATM is functioningusing GPRS Connectivity and has been functioning successfully with an average 200transactions daily.
New IT initiatives include projects on implementation Technology aided FinancialInclusion Plan, setting up of Kiosks with features like Cheque Deposit System (CDS)/ChequeTruncation System (CTS) and e-ticketing. Further, implementation of ERP-SAP solution,which will enable corporate customers to connect to the bank's network directly forstraight through processing of transactions like bill payments, LG/LC requests, utilitypayments etc., is in the process.
Oracle Business Intelligence Suite is being implemented. This solution will providedashboards and tools, which will enable generation of various reports. This will help theExecutives at Central Office, Regional Office and Branch Managers to use the tools togenerate reports that will help them to do trend analysis and assist in taking businessdecisions.
The Bank played the major role in assisting the Regional Rural Banks sponsored by ourBank (Pandyan Grama Bank and Neelachal Gramya Bank) to establish their Data Centre atSiruseri, Chennai and Disaster Recovery Centre at Hyderabad. They have been assisted infinalizing the procurement of hardware, network equipments and in establishing networkconnectivity. Both the Banks have gone on line and brought some of their branches undertheir CBS.
Technology Aided Financial Inclusion Plan
The Bank has launched a technology assisted smartcard based Financial Inclusion Projectto initially cover about 300 branches with a coverage of about 1,500 smart cards perbranch. Appointment of Business correspondents and issuance of smartcards is outsourced toM/s TCS Ltd.
During the year, various policies like the Business Continuity Plan and DisasterRecovery (BCP / DR) Policy, IT Procurement Policy, IT Outsourcing Policy and InformationSystem Security Policy have been put in place.
Costing of Operations
The Costing Cell prepares the profit budget for the Bank and allocation of profitbudgets to individual Regions for onward distribution to branches. Periodical review noteon profitability of the bank vis-a-vis budget are placed to Top Management. In thisprocess, cost of operations and income generation are monitored on a continuous basis andcorrective actions are initiated wherever necessary. Cost and yield factors are analylsedperiodically and any major variations are reported to Top Management besides taking upwith concerned regions immediately for further action. Statement of Intent submitted toFinance Ministry involves projecting growth of key parameters based on past performance,present market trends and future potentials.
The effective implementation of security measures at branches and administrativeoffices ensured a safe environment for business for customers and staff. The securitymeasures were reviewed periodically keeping in view the local law and order situation andadditional steps as necessary were taken to strengthen the security measures. The Bankcontinued to stress on preventive measures for security and fire fighting arrangements andinculcation of security consciousness among staff to ensure safety to life and property.
Human Resources Development
The Bank's staff strength in India stood at 26,732 comprising 10,252 Officers, 11,997Clerks and 4,483 Sub-staff as of March 31, 2010.
Of the total staff strength, 6,421 members belonged to SC category, 1,473 to STCategory, and 2,282 to OBC Category. Staff Strength includes 5,543 Women employees, 1,847employees from Religious minority community, 769 ex-servicemen and 556 physicallychallenged members.
During the year 2009-10, the Bank recruited 98 Specialist Officers (52 FinancialAnalysts, 41 Marketing Managers and 5 HR/IR Officers), besides 769 Probationary Officersand 1040 Clerks.
As a part of staff motivation, Quiz Programme was conducted by Bank both for Officersand Award Staff members. Towards staff motivation and selfdevelopment, HR Motivationseries on various Human Developmental aspects is circulated to all Staff Members.
Keeping in view the mission of the bank 'to enrich Human Capital through all-rounddevelopment aiming at providing excellent customer service & value appreciation toshareholders' training is imparted on contemporary issues of banking apart from basicareas of banking through the internal and external mode. The focus continued to be onCredit Appraisal/ Credit Monitoring, NPA Management & Recovery in addition to RiskManagement and Computer awareness. Apart from the above, training was also given inForeign Exchange, Priority Credit, KYC/ AML, BCSBI, SME /Micro Finance & Rural Credit,IT Products. Programme for Inspectors, Preventive Vigilance, Management Developmentprogramme for AGMs & Chief Managers were also conducted.
Induction programme for newly recruited probationary officers were conducted apart fromOrientation programme & Pre Confirmation Programme for Probationary Officers.
Pre Promotion Training for SC/ST members who are eligible for promotion from Sub Staffto Clerical cadre was conducted at various Staff Training Centres.
Special emphasis was given on programmes like Marketing of the bank's products, SMEFinance, Marketing of CASA & Ancillary Services, apart from Region specific programmes& on location programme for efficient handling of branches. Session on CompliancePolicies, Official Language Implementation and Preventive Vigilance were included in thegeneral training programmes conducted at Staff Training College and Staff TrainingCentres. Training slots were allotted to different Central Office Departments fororganising ad-hoc programmes to enable them to train key functionaries at Branches/Regional Offices on new emerging areas.
The Pre Retirement counseling programme was conducted for Officers and Award StaffMembers who retired during the year. Bank has engaged the services of retired executiveson contract basis in training system to derive the benefit of their experience, knowledgeand expertise in various facets of banking.
Executives were nominated for overseas training to acquire international perspective onbanking & technology and share their expertise and experience with other participants.
As a part of E-Learning a portal was launched by Staff College, to serve as a vehiclefor providing e-lessons on different areas of banking operations.
The internal training system comprises of a Staff College, 9 Staff Training Centres andone Rural Banking Training Centre. Internal training was imparted to 15,613 staffcomprising of 8,548 Officers, 5,915 Clerical and 1,150 Sub-staff by conducting 995programmes. Of the total staff trained 3,205 belonged to SC, and 1,104 belonged to ST.
External Training and Overseas Training
The Bank had also deputed 48 Executives and 270 Officers for training programmesconducted by reputed external institutes. Apart from these 8 executives and 6 officerswere deputed for training abroad.
Training for Staff of RRB's
The Bank had also trained 508 staff members of Neelachal Gramya Bank and Pandyan GramaBank through 33 Training Programmes. Of the total staff trained 88 belonged to SC and 3belonged to ST.
The year 2010-11 is expected to witness improved economic performance, revival ofexport demand and more conducive global economic environment. All these positive featuresare expected to strengthen the economy and launch it on a higher growth path in thesubsequent years.