Bank of Rajasthan Ltd merged Directors Report

THE BANK OF RAJASTHAN LIMITED ANNUAL REPORT 2009-2010 DIRECTORS REPORT Esteemed Shareholders, Your Directors have great pleasure in presenting to you the 67th Annual Report of the Bank together with the Audited accounts for the year ended 31st March 2010. PERFORMANCE HIGHLIGHTS: The performance highlights for the financial year 2009-10, as reflected from the key financial indicators are as under: (Rs. in crores) FY 2009-10 FY 2008-09 Deposits 15062.35 15187.15 Advances 8329.47 7780.75 Gross NPA 293.81 160.92 Net NPA 133.50 57.03 Investments 6722.51 6809.15 Total Income 1489.48 1507.23 Total Expenditure 1591.61 1389.52 Operating Profit (27.90) 193.77 Net Profit after tax (102.13) 117.71 Profit / (Loss) brought 234.34 185.69 forward Appropriations Transfer to Statutory Reserve - 29.43 Transfer to Capital Reserve 9.03 25.14 for Investment Transfer to Investment - 0.71 Reserve Account Transfer to General Reserve - 10.00 Proposed Dividend - 3.23 Dividend Tax - 0.55 Balance Carried over to 123.18 234.34 Balance Sheet Business Ratios Return on Assets (ROA) (%) (0.58%) 0.74% CRAR - Basel-I 7.74% 12.00% CRAR - Basel-II 7.52% 11.50% Net NPA 1.60% 0.73% Business per Employee 5.70 5.33 Business per Branch 49.01 46.90 NET PROFIT / (LOSS) & DIVIDEND: The net loss for the year after provisions and taxes remained at Rs. 102.13 crones as against net profit of Rs. 117.71 crores for the previous financial year. In view of the loss incurred during the year 2009-10, the directors do not recommend any dividend. CAPITAL, RESERVES AND CAPITAL ADEQUACY RATIO: During the year, the Bank has not issued fresh shares. The Banks Capital Adequacy Ratio as on 31st March 2010 stands at 7.74% as per Basel I and 7.52% as per Basel II as against 12.00% and 11.50% respectively at the end of the previous financial year. LISTING AGREEMENT WITH STOCK EXCHANGES: Pursuant to requirement of Listing Agreement, the Bank declares that its shares are listed on Bombay Stock Exchange (BSE), Jaipur Stock Exchange USE) and National Stock Exchange(NSE). The Tier-II Bonds (Series-III, IV, V, VI & VII) and Upper Tier-II Bonds are also listed at Bombay Stock Exchange. The Bank confirms that it has paid annual listing fees due to stock exchanges. Listing of 1,35,00,000 shares (90 lac shares and two bonus thereon) are pending with the Stock Exchanges. The Civil appeal filed by Bank in this behalf is pending before Honble Supreme Court. SHOW CAUSE NOTICE FROM JAIPUR STOCK EXCHANGE LTD.: The Bank has received a Show Cause Notice from Jaipur Stock Exchange Limited for alleged violation of clause 36 of the Listing Agreement. The Bank has denied any such violation and has duly replied the same. The Bank has also intimated to SEBI and RBI about the correspondence with Jaipur Stock Exchange Ltd., in this matter. TREASURY & INVESTMENT MANAGEMENT: The Bank is a member of Negotiated Dealing System (NDS), NDS-Call, NDS OM and Clearing Corporation of India Ltd. (CCIL). Transactions in Government Securities are carried out through scrip less electronic media with on line settlement. The Bank has joined Real Time Gross Settlement (RTGS) system of Reserve Bank of India in June, 2004, which has eliminated settlement risks and has reduced transaction cost and facilitated better funds management by the Bank. The Bank has also joined NEFT (National Electronic Funds Transfer) for faster transfer of funds to & from other Banks for customers account. The Banks net investment in SLR and Non-SLR securities has decreased to Rs. 6722.51 crores as on 31.03.2010 from Rs. 6809.15 Crores as on 31.03.2009. The investment was made as per the business requirement of the Bank as well as fox complying with statutory requirement. The level of SLR and Non-SLR net Investment remains to Rs. 4442.39 crores and Rs. 2280.11 crores respectively as on 31.03.2010. The investment portfolio enabled your Bank to achieve a yield of 5.64% on its investment. The Bank has parked 87.34 % of its net investment under HTM category. Thus securities marked to market accounted fox 12.66 % of the net investment as at the end of March 2010. The investment in RIDE in the form of deposit with NABARD/ SIDBI/ NHB, has increased from Rs. 1244.57 crores as on 31.03.2009 to Rs. 2021.39 crores as on 31.03.2010, the same is classified under HTM category as per RBI guidelines. The yield on RIDE being low, has affected overall yield on Investment. The liquidity position of the Bank was comfortable throughout the year. The Bank has deployed the available short term surplus funds in Call Money/ Reverse Repo Lending/ CBLO as also in the Units of Mutual Funds, interbank short term Deposits, etc. DEPOSITS & ADVANCES: Total deposits of the Bank decreased from Rs. 15187.15 crores to Rs. 15062.35 crores, while the core deposits (excluding interbank deposits) increased from Rs. 13832.25 crores to Rs. 14204.23 crores showing a growth of 2.69 over previous year. However the Banks average deposits have shown rise of 10.36 % over previous year indicating steady growth during the year. Gross advances registered an increase of 7.67 % compared to the previous year 2008-09, and stood at Rs. 8489.78 crores as on 31st March 2010. The CD Ratio at 51.92% as on 31st March 2009 increased as on 31st March 10 to 56.36 %. The growth of advances is well spread across the sectors and enterprises. The Yield on Advances decreased from 12.04% to 11.68% in 2009- 10 which is in line with decrease in cost of deposits. The growth of average advances during the year has been 1.78% over previous year. Bank followed policy of caution and discrimination in making advances to high risk sectors. As a result of surplus liquidity interest rates moved downward and the Benchmark Prime Lending Rate (BPLR) and Retail Prime Lending Rate (RPLR) registered decrease during the year. Further, Bank continued its close monitoring to contain incidence of fresh Non Performing Assets and made sincere endeavours fox up-gradation of existing assets within permissible parameters / prudential norms. During the year under report the Bank also strengthened its credit approval and monitoring process, which enabled the Bank to keep the incidence of slippage of boxxowal accounts under check. PRIORITY SECTOR & RETAIL BANKING: The Banks advances to Priority Sector (inclusive of eligible investments) as on 31.03.2010 stood at Rs.2747.33 crores. In terms of the directives from the Government of India and the Reserve Bank of India, the Bank has given utmost importance to lending under Priority Sector and Agriculture Sector by introduction of new products / schemes and modifying the existing one fox its growth. Break up of sector wise outstanding under Priority Sector Advances at the end of the financial year 2009-10 is as under: (Rs. in crores) Sector Finance year Finance year 2009-10 2008-09 Agriculture 1455.19 963.61 Small Enterprises 904.28 800.33 Micro Credit 33.39 1.87 Education 9.29 6.08 Housing 345.18 260.16 Total 2747.33 2032.05 The net level of Priority Sector Advances fox the year ended stood at Rs. 2747.33 crores constituting 35.31% of ANBC. The Direct Agriculture Advances have shown increasing trend and reached to Rs. 303.67 crores as of March, 2010 compared to Rs. 155.98 crores as of March, 2009. The advances under Small Enterprises including manufacturing and service enterprises reached a level of Rs. 904.28 crores and the Housing loan portfolio stood at Rs. 345.18 crores whereas Education loans have increased to Rs. 9.29 crores. Under the prime product of Direct Agriculture Advances i.e. under RBKCC / RBKGC Bank has issued 3840 fresh cards aggregating Rs.36 crores. Under tie up arrangement with various tractor manufacturing companies Bank has disbursed Rs. 12 crores in 309 loan accounts during the year ended March, 2010. The Bank has set up Rural Development and Self Employment Training Institutes (RSETIs) under the banner of RAJASTHAN SWAROJGAR VIKAS SANSTHAN (RSVS) at Udaipux and Jodhpur. The institute provides expert guidance and assistance to rural youths and renders all possible help fox obtaining credit facilities and also assists them in setting up their ventures successfully. During the year, the two institutes have conducted 53 training programmes benefiting 3639 entrepreneurs. The State Government has allocated land at Udaipur for development of infrastructure for RSETI on concessional rate i.e. 5% of reserve price. The National Institute of Rural Development (NIRD) has provided grant of Rs.1.00 crore for establishing infrastructure (building) at RSETI Udaipur. The construction work at RSETI Udaipur is nearing completion and the institute is likely to start functioning at the new building soon. The Bank has actively participated in various Government Sponsored Programmes and had disbursed loan of Rs.13 crores in 2797 loan accounts. The Bank has organised camps for financing self help groups and disbursed loan of Rs.5.00 crores to 445 self help groups. OPERATIONS OF MEWAR AANCHALIK GRAMIN BANK (MAGB): Banks sponsored RRB namely Mewar Anchalik Gramin Bank (MAGB) established on 25.01.1983 has 58 branches in 3 districts viz Udaipur, Rajsamand & Pratapgarh. All the branches are computerised. With effective management, the MAGB has earned operating profit of Rs. 246.38 lacs during the year 2009-10. The deposits of MAGB has increased to Rs. 435.66 crores and advances reached to the level of Rs 144.03 crores as on 31.3.2010. RETAIL BANKING: The Bank has achieved an over all growth of 16.39% under the retail assets portfolio of Home Loan, Mortgage Loan, Vehicle Loan and Personal Loan products in the current FY as compared to 3.22% growth achieved in the last FY (Rs. in lacs) Outstanding as on Outstanding as on 31.03.2009 31.03.2010 Number Amount Number Amount of of Accounts Accounts Home 6178 20459 6432 25214 Loans (Direct Mortgage 1710 12061 1641 10828 Loan / OD Vehicle 148 216 356 886 Loans Personal 23946 15233 24598 18904 Loans / CCL Total 31982 47969 33027 55832 The Personal Loan / CCL and Home Loan (direct portfolio of the Bank has increased by 24% and 23.24% while Mortgage Loan has decreased by 10.22% during the FY 2009-10. ASSEST QUALITY MANAGEMENT: The position of NPAs & W-Off a/cs and recoveries is given in the table below: (Rs in lacs) As on As on 31.03.2009 31.03.2010 Recovery in NPA 3341.45* 2982.37* Recovery in W-Off 703.28* 1050.32* Up gradation 736.78 363.13 TOTAL 4781.51 4395.82 *Inclusive of interest During the period ended 31.03.2010 the Bank pursued its recovery drive aggressively. In case of small NPAs for amounts below Rs 50 lacs it was the Banks endeavor to recover maximum dues by organizing Recovery Camps for on the spot settlements. The hard-core high value NPAs were followed up through action against the defaulter borrowers, guarantors and judgment debtors through appropriate legal means. The Bank also exercised its right under the SARFAESI, Act 2002 in eligible cases and issued notices to the defaulting borrowers / guarantors compelling them to come forward with reasonable settlement proposals for liquidation of the dues of the Bank. The Bank accordingly made a recovery of Rs 2982.37 lacs in 3468 NPA accounts during the financial year 31.03.2010. The Bank also launched an extensive drive to execute decrees for enforcing recovery in hardcore accounts by resorting to attachment, taking possession and sale of properties. The Bank affected significant recoveries amounting to Rs 1050.32 lacs in 1310 written off accounts, which added to its net profit. The Bank was able to affect recoveries to the tune of Rs 1132.02 lacs in high value NPAs with outstanding of Rs 50.00 lacs and above during the year ended March 2010. Similarly, substantial recoveries to the tune of Rs 1850.35 lacs were affected in small NPAs having outstanding up to Rs 50.00 lacs. During the period ended March 2010 NPAs amounting to Rs 363.13 lacs were up graded to the category of Performing Assets. There were also fresh slippages aggregating Rs. 16353 lacs reflecting overall situation of loan assets in the industry The position of Gross & Net NPAs are as under: (Rs in crores) As on As on 31.03.2009 31.03.2010 Gross NPAs 160.92 293.81 Gross NPAs % 2.04% 3.46% Net NPAs 57.03 133.50 Net NPAs % 0.73% 1.60% Gross NPAs and Net NPAs of Bank have increased to Rs. 293.81 crones and Rs.133.50 crones from Rs.160.92 crones and Rs.57.03 crones respectively, showing an increase of 3.46% from 2.04% in Gross NPAs and 1.60% from 0.73% in Net NPAs. The Bank is making all out efforts to recover its NPAs. INTERNATIONAL BANKING: The Bank is handling Foreign Exchange business at its 22 branches. During the year 2009-10, the total Forex turnover handled by the Bank amounted to Rs. 19129.59 crones as compared to Rs. 23618.36 crones during the year 2008-09 showing a decline of 19.01% compared to last year. The Bank has been continuously making arrangements with foreign banks for augmenting export /import business of its constituents. As on 31st March 2010, there were 67 correspondent banking relationship in 70 countries. Export credit outstanding was Rs. 145.53 crones as on 31st March 10, whereas 8 Exporters have been allotted Rajbank Exporters Gold Card under the Exporters Gold Card Scheme of the Reserve Bank of India, entitling them to various benefits under the Scheme. The rupee draft drawing arrangement with M/s. Wall Street Exchange Center LLC, Dubai has picked up and it is now proposed to start a Speed remittance facility. Similar arrangement of Rupee Draft drawing and Speed remittance facility will be entered with M/s Al Muzaini Exchange Company, Kuwait and to be started during the first quarter of current year. A separate email Id nrihelpdesk@ rajbank.com has been provided for use by NRIs to facilitate easy communication with the Bank. FOREIGN EXCHANGE EARNING & OUTGO: Total foreign exchange earned (including income in the form of interest, rebates, sharing of income from nostro banks, Recovery of bad debts etc.) at the end of year amounted to Rs 34.24 lacs Total Foreign Exchange used (including charges on nostro accounts, SVIFT and Reuter charges, interest paid on foreign currency borrowings, allowances paid in foreign currency for traveling abroad and audit fee paid etc.) at the end of year amounted to Rs. 18.78 lacs. NEW SERVICES AND PRODUCTS: The Bank has been offering following products & services to customers: GENERAL INSURANCE: The Bank has tie-up with United India Insurance Company for General Insurance as well as Mediclaim products. The United India Insurance Company is one of the leading public sector non-life insurance service providers in the country, and having a large network of its branches/ divisional offices across the country. The Bank has also tie-up with UIICO for selling of Group Mediclaim Policies to its customers namely of RAJBANK AROGYA NIDHT which is available on reasonable premium with special features. During the FY 2009-10 the Bank has booked Rs. 4.06 crones towards total premium and earned income of Rs. 0.66 crore in the form of commission including Rs.0.30 crore received towards reimbursement of publicity expenses. LIFE INSURANCE: There is a tie-up with Aviva Life Insurance Company for life insurance products. During the FY 2009-10, the bank has booked Rs. 43.71 crores in respect of total annualized premium and earned income of Rs. 13.05 crores towards referral fee / commission. DEMAT SERVICES: Since 2000, the Bank has been providing depository services to its customers, becoming the Depository participant (DP) of Central Depository Services (India Limited (CDSL). Presently 221 branches are providing Demat services. During the Financial Year 2009-10, Bank has opened 55466 Depository customer accounts and earned revenue of Rs. 2.08 crores. ON-LINE TRADING OF SECURITIES: In respect of On-Line Trading of Securities, the Bank has a tie-up with IDBI Capital Markets Limited and Religare Securities Limited to provide online trading facility to its customers. As a part of the alliance, customers of the Bank are provided with the facility of a 3-in-1 online investing account wherein the Savings Bank account, Demat Account and the trading account are interlinked. With this facility, the Banks customers can enjoy the convenience of trading and managing their portfolio from any part of the world. ECGC Ltd.: The Bank has also have Bancassurance arrangement with the Export Credit Guarantee Corporation of India Ltd. for soliciting and procuring business of ECGC General Insurance business for & on behalf of them on agency basis. MUTUAL FUNDS: Considering the good returns to its valuable investors through Mutual Funds in Capital Market, Bank has selling / marketing arrangements with following Mutual Funds:- NAME OF MUTUAL FUND: LIC Mutual Fund Prudential ICICI Mutual AMC Principal PNB Mutual AMC ING Vysya AMC Reliance Mutual Fund Birla Sun Life Mutual Fund DSP Merrill Lynch Mutual Fund Sundaram BNP Paribas Mutual Fund Franklin Templeton Asset Management (India) Pvt. Ltd. TATA Mutual Fund UTI Mutual Fund SBI Mutual Fund Edelweiss Mutual Fund Kotak Mahindra Mutual Fund. DBS Cholamandlam During the Financial Year 2009-10, Bank has done total business of Rs. 266.16 crores and earned commission of Rs. 0.22 crore. WESTERN UNION MONEY TRANSFER: The Bank has been providing Western Union Money Transfer services as a sub- agent. The services are available at all branches of the Bank. The Bank has earned gross income of Rs. 0.02 crore at the end of March, 2010 from this activity. CREDIT CARD: The Bank has launched its International Credit Card in association with VISA on 26th December 2005 with special features. Upto the financial year 2009-10, the Bank has issued 30,609 credit cards, with 20% increase over previous year. New variants of the Card with enhanced features/ benefits have been introduced and well recognised in the market. Bank is offering lifetime free credit cards. Bank has also implemented Verified by VISA to make online transactions secured and online SMS alert functionality for POS and internet transactions and to strengthen customer service. Apart from this, specialized SMS alerts are also sent on regular basis to credit card holders on events like birthday, dispatch of statement, value transaction alerts, outstanding balance reminder, due date of payment e-statement etc. Bank has implemented Disaster Recovery Management system for Credit Cards. Bank is planning to come out with various reward and loyalty programmes in this financial year to increase the card base and usage cycle. Bank is also planning for co-branding of credit cards. DEBIT CARD: Bank has tied up with ECS for issuing of ATM-cum-Debit Cards. Banks Debit Card is accepted over 90,000 outlets in India and about 13 million POS globally with Visa Electron. This includes over 32,000 ATMs in India and 1.15 million ATMs world wide. The Bank has tied up arrangements for sharing ATMs with 12 banks including State Bank Group & Corporation Bank. CASH MANAGEMENT SERVICES: Our Bank has good network of online branches, various Banks / Financial Institutions are approaching for arrangements with the Bank for various arrangement like collection of cheques (local and out station, draft drawing arrangement, cash deposit /withdrawal/ remittance etc. Accordingly, these Services are being provided to various banks / institutions like ICICI Bank, Corporation Bank, HDFC Bank, Kotak Mahindra Bank, City Bank, Axis Bank, Yes Bank, Tata Finance Ltd. etc. BOOKING OF RAILWAY TICKETS OVER INTERNET: In our endeavour to provide our esteemed customers with state of the art technology-enabled products and services to transact from the comfort and convenience of home or office or transact even while on move, the Bank has signed an agreement with Indian Railway Catering & Tourism Corporation (IRCTC) to provide facility for booking Railway Tickets over internet. STAMP FRANKING ACTIVITY: The Bank has pioneered this facility in the State of Maharashtra in the year 2004. Encouraged by response, the Bank has further expanded stamp franking activity in the States of Rajasthan, Gujarat, Goa & Bihar, generating revenue of Rs. 2.46 crores through this activity. REAL TIME GROSS SETTLEMENT CHARGES (RTGS) / NATIONAL ELECTRONIC FUND TRANSFER (NEFT): Bank has been providing RTGS / NEFT Scheme based on an electronic paperless settlement system. Looking to the wide acceptability of the system with low cost per transaction, all branches are RTGS / NEFT enabled. e-PAYMENT OF TAXES ON BEHALF OF THE CUSTOMERS: To facilitate e-Payment of Taxes, Bank has been providing the facility through NSDL we.f. 01.08.2008 and the facility is available at all our branches. CALL CENTRE (PHONE BANKING): During this year, the Bank has established its Call Center at Jaipur and started Phone Banking Services. Under the Phone Banking Services, customers (registered for the services may get several services just on a phone call. These services include enquiries on their accounts like Balance Enquiry, Transactions Enquiry relating to Banking Accounts, Credit Cards, Debit Cards, Demat accounts etc. In addition facilities of hot listing of debit cards & stop payment of cheques is also available on 24X7 basis. INFORMATION TECHNOLOGY, COMPUTERISATION & TECHNOLOGY UPGRADATION: Entire business of the Bank is on Core Banking with all the 463 branches covering 287 cities in 22 States and 2 Union Territories are on this platform. The Bank offers convenience of Internet Banking, Visa International Debit Card & SMS alert facilities to all the customers irrespective of branch location. Besides its own brand of VISA credit card, the offers include a bouquet of technology driven products. A 24x7 Call Centre helps enhance the customers satisfaction. Salient Features: 1. Anywhere Banking: Covers All 463 branches covering 287 cities in 22 States and Union Territories. 2. SMS Alert facility: Bank has been providing free SMS alerts for transactions beyond a threshold limit. 3. Retail Internet Banking: For online statement of accounts, fund transfer within the bank, DMAT account enquiry The Bank also provides payment gateway interfaces for online booking of railway tickets and intemet shopping. Customers can pay their credit card dues to the Bank through Internet Banking. 4. ATMs: Besides offering 127 own ATMs/ Cash Dispensers, the Bank has ATM Sharing arrangement with State Bank of India and Cash Tree enabling customers to operate on more than 15000 ATMs across the country The Bank will be in a position to provide interface with majority of the Banks very soon being member of NFS. The Banks ATMs will similarly honour all VISA cards and select NFS member Mastercards. 5. Cheque Truncation System is operating successfully in National Capital Region Delhi for the past one year. 6. The Bank participates in debit & credit ECS and encourages customers to use RTGS / NEFT for funds transfers. 7. Centralized service tax submission, e-payment of direct taxes at identified branches. 8. DR Setup operational for core banking. Other Customer Centric Technology Initiatives: 1. Interface with National Financial Switch (NFS) as well as VISA acquiring project are in progress and are expected to be operational shortly. 2. Mobile banking services will soon provide the facility of financial transaction. 3. Corporate e-banking implementation is in the process and shall be made available during the financial year. 4. Passbook updation / Statement of Account facility from any branch. HUMAN RESOURCES, TRAINING & DEVELOPMENT: In pursuit of Banks business-growth and excellence, it has been the endeavor of the Bank to achieve corporate goals by leveraging its human resources. The position of recruitment in the financial year 31st March, 2010 was as under: Year Officers / Clerks Sub- Total Executives ordinates 2009-2010 54 - - 54 2008-2009 255 14 14 283 The staff-strength of the Bank as on 31st March, 2010 vis-a-vis, previous year stands as under: Cadre 31/03/10 31/03/09 Officers 2058 2106 Clerical 1357 1354 Subordinates 513 565 Marketing Executives / Team 55 50 Leaders Total 3983 4075 It is aim of P&HRD to develop a new cadre of dynamic and charged manpower by exposing them to critical function like marketing strategies, understanding and analyzing customer needs, measuring customer satisfaction, market segmentation and its applications, developing brand image etc. STAFF TRAINING COLLEGE: Ever increasing customer expectations & introduction of technology-based products on regular basis makes it imperative for the Bank to update & develop its human resources in order to keep them current. The Bank has its Staff Training College housed in owned premises with all required infrastructure & residential facilities, working with the mission to act as an enabling mechanism for sustaining growth and promoting organizational excellence by remaining continuously attuned to the needs of the Users. During the year under review, Staff Training College has conducted 90 training programmes in various areas, imparting training to 2062 participants and nominated 35 staff members to various training programmes conducted by BTC / NIBM /CAB & Other reputed training institutions. For overall development of the senior-staff, Management Development Programmes were also conducted with the support of eminent outside faculty. The College, in view of their importance, has been including areas like Demat, Finance, Code of Banks Commitment to Customers, KYC / AML, IS Audit and Customer Services on regular basis, in most of the training programmes. Sessions on life style management with support of Doctors and eminent outside speakers have been incorporated in the curriculum. Professional audiovisual CDs & Video conferencing facility are also used during training programmes. Meditation and Gym facilities have been introduced for all round developments at staff training college. HOUSE KEEPING: Bank has been endeavouring to improve the house keeping to the best standards. Most of the old entries in suspense accounts have been adjusted. Reconciliation of inter branch and inter bank accounts have been undertaken at regular intervals CUSTOMER SERVICES: The customer service area was also closely monitored. The meetings of customer service committees were held at branches, Regional Offices and at Central Office. Important guidelines / feedback received in this regard from BCSBI, RBI, IBA. Banking Ombudsman were transmitted to field functionaries for implementation. It was ensured that prompt, courteous and personalized services are provided to our valued customers. The complaints / grievances of customers were promptly attended and utmost efforts were made to redress the same to the satisfaction of complainant. BRANCH EXPANSION: In terms of RBI directives, the Bank has not been permitted to open any new branches or establish offsite ATMs. Consequently this number of branches remained unchanged at 463. At the end of financial year 2009-10, the Banks network had 463 branches (including 6 service branches, 28 offsite ATMs and 99 onsite ATMs covering 22 States and 2 Union Territories across the country The States-wise details (population group-wise classification) thereof, is given here under: State / U.T. Branches# Total ATMs Metro Urban S.Urban Rural Branches Onsite Offsite Andhra Pradesh 3 4 - - 7 2 - Assam - 3 1 - 4 3 - Bihar 1 - - - 1 - - Chattisgarh - 1 - - 1 - - Delhi 20 - - - 20 6 - Goa - - 1 - 1 1 - Gujarat 5 1 3 1 10 4 - Haryana 1 10 2 1 14 6 1 Himachal Pradesh - 1 - 1 2 1 - Jammu & Kashmir - 1 - - 1 - - Jharkhand - 1 - - 1 - - Karnataka 2 1 - - 3 1 - Kerala - 1 - - 1 - - Madhya Pradesh 9 8 5 - 22 4 1 Maharashtra 18 12 1 1 32 9 1 Orissa - 2 - - 2 - - Punjab 3 5 4 - 12 3 - Rajasthan 50 77 69 98 294 50 23 Tamil Nadu 2 5 1 - 8 1 - Uttar Pradesh 9 4 - - 13 1 1 Uttranchal - 1 - - 1 - - West Bengal 6 2 - - 8 4 - Chandigarh (UT) - 2 - - 2 - 1 D. Ngr. Haveli (UT) - - 3 - 3 3 - TOTAL 129 142 90 102 463 99 28 # Reclassified as per Part-II of the Uniform Code No. (Population range wise) circulated vide RBI letter no. DESACS. BSD. 7070/03.09.62/ 2005-06 dated 12.06.2006. The population group wise classification is given here under: Category# Branches (as on) * Offsite ATMs (as on) 31.03.2009 31.03.2010 31.03.2009 31.03.2010 Metropolitan 129 129 6 6 Urban 142 142 19 19 Semi-Urban 90 90 2 2 Rural 102 102 2 1 Total 463 463 29 28 Category# Onsite ATMs (as on) 31.03.2009 31.03.2010 Metropolitan 30 33 Urban 29 39 Semi-Urban 20 23 Rural 3 4 Total 82 99 # Reclassified as per Part-II of the Uniform Code No. (Population range wise) circulated vide RBI letter no. DESACS. BSD.7070/03.09.62/2005-06 dated 12.06.2006. - Including six service branches (Delhi, Jaipur, Jodhpur, Kota, Mumbai & Udaipur). INSPECTION AND AUDIT: Internal Control System & their Adequacy: The Bank has put in place adequate and effective systems & controls, covering all areas in operations such as Credit, Deposits, Depository and other Para-banking Products, to ensure safety of assets, adherence to business strategy, economic use of resources, reliability of MIS, correctness of financial reports, and compliance with laws & regulations. The Audit Committee of Board effectively monitors the working and gives directions. Internal Inspection: During the year, regular inspection of 305 Branches, 12 Controlling Offices & 24 Departments of Central / Corporate Office including M.A.G.B. was conducted. The inspections revealed that 66 & 333 branches were able to attain Excellent and Good rating respectively. Only one branch was found to be Below Average. Branches were evaluated on the basis of business parameters and compliance with risk control measures. Concurrent Audit: The concurrent audit system is extended to 91 branches including Treasury Branch covering 51.97% of total deposits and 76.63% advances and off balance sheet business viz. L.G. 80.50% & L.C.98.76% as against the requirement to cover minimum 50% of the business under concurrent audit stipulated by Reserve Bank of India. The concurrent auditors are also verifying 100% foreign exchange business at the Forex Branches of the Bank. Certain Departments of Central & Corporate Office such as C.O. Administration, Jaipur & Mumbai, Credit Card Management Division, Treasury & Investment Department, Corporate Office, Mumbai are also subject to concurrent audit. Services of qualified firms of Chartered Accountants, most of them having DISA / CISA qualifications, are being utilized for this work. Risk Based Supervision (RBS): The RBS process essentially involves continuous monitoring and evaluation of the Banks risk profile in relation to its business strategy and risk exposures, which is facilitated by the construction of a Risk Matrix. The Bank has made significant progress in quality and reliability of data, soundness of systems & technology, appropriateness of risk control mechanism, etc for ensuring effectiveness of Risk Based Supervision in critical areas. The Bank is moving towards reorienting its organizational set up towards RBS and put in place efficient risk management architecture and strengthened the management information system. Risk Based Internal Audit: The Bank evaluates business risks & control risks and prepares a risk matrix for each business location taking into account both the business risk & control risk factors as per Risk based Audit Plan. The documented risk assessment methodology is approved by the Board and the risk assessment is undertaken annually. In terms of the provisions of section 30(1B) of the Banking Regulation Act, 1949, the Reserve Bank of India appointed M/s Deloitte, Huskins & Sells to carry out special audit of the Bank. The Auditors have pointed out in their interim report that in certain standard assets, Bank has made less provisioning (0.40% as against 1.00% in commercial real assets sector and also has not made required provisions for employees benefits (pension and gratuity and payment of arrears against wage revision (w.e.f 1.4.2007). Bank has initiated steps to rectify the observations while finalizing the annual accounts for the year 2009-10. Information Systems (I.S.) Audit: The I.S. Audit Cell conducts periodical risk based audit of Information Systems and monitor compliance of controls to ensure safety, security & integrity of Data. This function also involves identification of the extent to which the Banks Information Technology Systems are exposed to various types of operational risks. The I.S. Audit Cell conducted I.S. Audits of 331 branches during the year covering 305 Branches & 26 Administrative Offices (Regional Offices & Central / Corporate Office Departments besides software audit of KYC-AML, CMS Software & parameter audit of RIMS Software for Basel II compliance and offsite non-intrusive Penetration Testing of Network at Data Centre. Out of total 331 Audits, 7 Branches & Administrative Offices were assessed as Medium Risk and remaining were assessed as Low Risk. Reserve Bank of India appointed M/s Deloitte and Touche Consulting India Private Ltd. (DCIPL) in terms of provisions of section 30(1B) of the Banking regulation Act 1949 for conducting IS Audit of the Bank. As part of their engagement DCIPL tested controls in various domains viz. IT Governance, Application Controls, Infosec Governance, System and Infrastructure Life Cycle Management and Record Maintenance. As per the report there are 65 high impact findings, 106 medium impact findings and 25 low impact findings. The Bank is taking up necessary measures for rectification of the findings. PUBLICITY: A P R agency has been appointed for image building. Besides this is reinforced by the Banks brand ambassador Ms.Hema Mahni, a high profile personality as a brand building exercise to ramp up its business. The Bank continued to maintain its presence on all the popular entertainment, Business and News Channels of Radio and TV throughout the year. Besides usual advertisements through hoardings on Trains, Roadways Buses, Railway Stations, new locations were explored during the year by way of advertising in Bus Stands, Local Trains etc. Branch premises were also used for communication with customers / visitors by providing display through flex banners, posters and translite scrollers with slides of bank products. The bank continued maintenance of wards at Swai Man Singh Hospital and J. K. Loan Hospital Jaipur to demonstrate its commitment as a responsible corporate citizen. STATUTORY DISCLOSURE UNDER SEC.217 (2A) OF THE COMPANIES ACT, 1956: Particulars of Employees as required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the companies (Particulars of Employees) Rules 1975, are as under: Name & Period Amount Remark Designation paid (Rs.) 1. Sh. PL. Ahuja, 01.04.09 2271489 Retired on MD & CEO to completion of 20.11.09 his term 2. Sh. G. 20.11.09 1357525 Appointed by Padmanabhan, to RBI MD & CEO 31.03.10 STATUTORY DISCLOSURES UNDER SEC.217 (1) (e) OF THE COMPANIES ACT, 1956: The Bank has been making all possible attempts to reduce energy consumption on its operations. The company, being a banking company and authorized dealer in foreign exchange, is taking all steps to augment its foreign exchange business and has computerized most of its operations. The Bank has also taken up adequate measures for innovation, adaptation and absorption of state of the art technology in its business. PROPOSED AMALGAMATION WITH ICICI BANK LIMITED: The Board of Directors in its meeting held on 23.05.2010 have approved Scheme of Amalgamation of the Bank with ICICI Bank Limited. The share exchange ratio has been approved at 25 shares of ICICI Bank Limited for 118 shares of The Bank of Rajasthan Limited which works out to a swap ratio of 1:4.72. Extraordinary General Meeting of Shareholders has been convened on 21st June, 2010 to approve the amalgamation scheme in terms of Section 44A of Banking Regulation Act, 1949. After approval by shareholders, application for necessary approval would be submitted to RBI. STATUTORY AUDITORS: The Statutory Auditors M/S Gokhale & Sadie, Chartered Accountants, Mumbai will retire at the conclusion of the ensuing Annual General Meeting. AUDIT COMMITTEE: The composition of Audit Committee is given in the Report on Corporate Governance. SUBSIDIARY COMPANY: The name of the erstwhile subsidiary of the Bank namely Rajasthan Bank Financial Service Ltd., (RBFSL) has been struck off from the register of Registrar of Companies u/s 560 of the Companies Act 1956. The Subsidiary Company stands merged with the Bank. BOARD OF DIRECTORS: During the period under report, following changes have taken place in the Board of Directors: 1. Reserve Bank of India vide order dated 19th November, 2010 appointed Shri G. Padmanabhan as the Managing Director & Chief Executive Officer of the Bank we.f. 20th November 2009 for a period of two years or till further orders. 2. Shri PL. Ahuja relinquished the office of MD & CEO on 19th November, 2010 after expiry of his term. 3. Reserve Bank of India vide order dated 14th December, 2009 appointed Shri M. Ravindra Vikram, Chartered Accountant, and Shri V Seshadri, as additional directors w.e.f. 14th December 2009 in exercise of powers conferred under section 36AB of the Banking Regulation Act, 1949. 4. Shri V.P. Khurana, an independent and non executive director, has resigned from the Board w.e.f. 12th May 2010. The Board places on record its appreciation for valuable contribution made by Shri PL. Ahuja and Shri VPlhurana during their tenure on the Board of the Bank. The Board welcomes new Managing Director Shri G.Padmanabhan and new Directors Shri MR.Vikram and Shri VSeshadri and looks forward to their guidance to the Bank. REPORT ON CORPORATE GOVERNANCE: A detailed report on the status of implementation of the corporate governance guidelines has been furnished as an Annexure-I to this Report. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors of the Company hereby state and confirm that: 1. In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the period; 3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities and; 4. The Directors had prepared the annual accounts on a going concern basis. QUALIFICATIONS IN AUDITORS REPORT AND DIRECTORS EXPLANATION: The Directors refer the qualification Report and as required by section 217(3) of the Companies Act, 1956, give their explanation as under: Auditors Qualification Management Reply Note No. 12.2 of schedule - 18, Base data has been provided by the Notes to Accounts regarding Bank and the assumptions are based provision for long term employee on where, these. Incidentally, they due to variations in base data and are also in line with other private actuarial assumptions and its in sector banks. significant impact on valuation, the loss has been overstated by Rs. 149.58 crores. Note No. 12.3 of Schedule 18, Notes Advance contribution Rs.31.50 to Accounts, a sum of Rs.31.50 crores has been made for purchase crores reflected as an asset of annuity to Pension Fund against through not realisable. provision lying under Liabilities. Accordingly, the sum of Rs.31.50 This is in line with existing crores and the corresponding practice being followed by the Bank Deferred Tax Asset is overstated to the extent of Rs.10.46 crores. Note No, 13 of schedule 18, Notes Final report of special audit is to Accounts, regarding possible awaited. provisioning arising out of the special audit which cannot be presently quantified Note No. 40 of Schedule 18, Notes The accounts are prepared under the to Accounts, regarding proposed going concern assumption as the merger of the bank and consequent business of banking is intended to preparation of financial statements be continued. under the going concern assumption. MANAGEMENT DISCUSSION & ANALYSIS This has been included as a separate Annexure - II to this report. ACKNOWLEDGEMENT: The Board of Directors gratefully acknowledges the continued co-operation and support of the Reserve Bank of India, Government of Rajasthan and other state governments, services rendered by the employees at all levels. For and on behalf of the Board (G. Padmanabhan) Managing Director Place : Mumbai Date : 28th May, 2010. MANAGEMENT DISCUSSION & ANALYSIS: MACRO-ECONOMIC OVERVIEW: The country noticed slowd-own of economic activities in 2008-09 and economic growth decelerated to 6.7 per cent compared to 9 per cent in 2007- 08 and 9.7 per cent in 2006-07 and despite the deepen economic crisis, Indian economy registered an impressive growth indicating that it may expand faster in the current fiscal. The Indian banking system was not directly exposed to the sub-prime mortgage assets hence the public sector and the private sector, remained basically financially sound and well capitalized. The average capital to risk-weighted assets ratio (CRAR) for the Indian banking system, as at end- March 2008, was 12.6 per cent, as against the regulatory minimum of nine per cent and the Basel norm of eight per cent. Even so, the country experienced knock-on effects of the global crisis, through the monetary, financial and real channels all of which came on top of the already expected cyclical moderation in growth. Our financial markets - equity, money, forex and credit markets - came under pressure mainly because of the substitution effect of: (i) drying up of overseas financing for Indian banks and Indian corporate; (ii) constraints in raising funds in a bearish domestic capital market; and (iii) decline in the internal accruals of the corporate. All these factors added to the pressure on the domestic credit market. The up trend in industrial activity continues. The index of industrial production (IIP) recorded a growth of 17.6 per cent in December 2009, 16.7 per cent in January 2010 and 15.1 per cent in February 2010. The recovery has also become more broad-based with 14 out of 17 industry groups recording accelerated growth during April 2009-February 2010. The sharp pick-up in the growth of the capital goods sector, in double digits since September 2009, points to the revival of investment activity. After a continuous decline for eleven months, imports expanded by 2.6 per cent in November 2009, 32.4 per cent in December 2009, 35.5 per cent in January 2010 and 66.4 per cent in February 2010. The acceleration in non-oil imports since November 2009 further evidences recovery in domestic demand. After contracting for twelve straight months, exports have turned around since October 2009 reflecting revival of external demand. Various lead indicators of service sector activity also suggest increased economic activity. On the whole, the economic recovery, which began around the second quarter of 200910, has since shown sustained improvement. Industrial recovery has become more broad-based and is expected to take firmer hold on the back of rising domestic and external demand. After a continuous decline fox nearly a year, exports and imports have expanded since October/November 2009. Flow of resources to the commercial sector from both bank and non- bank sources has picked up. Surveys by the RBI as well as others suggest that business optimism has improved. On balance, under the assumption of a normal monsoon and sustained good performance of the industry and services sectors, for policy purposes, the Reserve Bank projects real GDP growth for 2010-11 at 8.0 per cent with an upside bias. DEVELOPMENTS IN BANKING INDUSTRY: In the Union Budget 2009-10, the Finance Minister had announced as under: - To facilitate flow of credit at a reasonable rates, provided Rs. 4000 crore as a special fund out of Rural Infrastructure Development Fund (RIDE) to Small Industrial Development Bank of India (SIDBI). This will incentives Banks and State Financial Corporations (SFCs) to lend to Micro and Small Enterprises (MSEs) by refinancing 50% of incremental lending to MSEs during the current financial year. - Interest subvention of 2% on pre-shipment credit for seven employment oriented export sectors extended beyond the current deadline of September 2009 to March, 31st, 2010. - Target for agriculture credit flow set at Rs. 325000 crore for the year 2009-10 from Rs. 287000 crore in 2008-09. - Interest subvention scheme for short-term crop loans up to Rs. 3 lacs per farmer at the interest rate of 7 percent per annum to be continued. Additional subvention to be paid from this year, as incentive to those farmers who repay short term crop loans on schedule. - Under Debt Relief for Farmers further time given to the farmers having more than two hectares of land to pay 75 percent of their overdue under Debt waiver and Debt Relief Scheme extended from 30.6.09 to 1.12.09. The banking sector continued to adapt itself to rapid innovations in technology particularly on the information technology front to impart efficiency in providing wide range of products & services to the public at large. Banks endeavored for including their branches on Core Banking Solutions, which enabled anywhere banking services to facilitate quick transfer of funds in an efficient manner and at reasonable cost. MONETARY & CREDIT POLICY: The annual policy statement for 2009-10 is set in the context of a deep global economic slump and financial market turmoil. Governments and central banks around the world have responded to the crisis through both conventional and unconventional fiscal and monetary measures. And there is unprecedented coordinated policy action globally. Like all emerging economies, India too has been impacted by the crisis, and much more than was expected earlier. GDP growth has moderated reflecting lower industrial production, negative exports, deceleration in services activities, dented corporate margins and diminished business confidence. There are some comforting factors - well-functioning financial markets, robust rural demand, low inflation and comfortable foreign exchange reserves - which buffered us from the worst impact of the crisis. The fiscal stimulus packages of the Government and monetary easing and regulatory action of the Reserve Bank have helped to arrest the moderation in growth and keep our financial markets functioning normally. The thrust of the Reserve Banks policy stance since midSeptember 2008 has been aimed at providing ample rupee liquidity, ensuring comfortable dollar liquidity and maintaining continued credit flow to productive sectors. Taken together, the policy measures of the Reserve Bank have ensured that the Indian financial markets continue to function in an orderly manner. These measures have augmented actual/ potential liquidity in the financial system by over Rs.420,000 crore. This should assure financial markets that the Reserve Bank will continue to maintain comfortable liquidity. The main high lights of the policy statement are: I. To ensure price stability, well-anchored inflation expectations and orderly conditions in financial markets while sustaining the growth momentum. II. To focus on credit quality and financial market conditions to support export and investment demand in the economy. III. To respond swiftly on a continuous basis to evolving adverse international and domestic developments through both conventional and unconventional measures. IV. To emphasis on credit quality and credit delivery while pursuing financial inclusion V. To bring inflation around 4.00 per cent by end of March 2010. VI. To achieve GDP growth for 2009-10 around 6.00 percent with the assumption of a normal monsoon. VII. To increase deposits around 18.0 per cent and to increase non-food credit around 20.0 per cent during 2008-09, banks with strong deposit base should endeavour to expand credit beyond 20 per cent. VIII. To increase usages of electronic system of payment nd increase utilization of ATMs. IX. To strengthen rural credit RRBs were allowed to sell loan assets to other banks in excess of prescribed priority sector exposure. X. Policy measures relating to interest rate include constitution of a Working Group to review the present BPLR system to make credit pricing more transparent. XI. Payment of interest on savings bank accounts on a daily product basis with effect from April 1, 2010. The Reserve Bank of India continued with its policy of liquidity management through open market operations including the market stabilization scheme, liquidity adjustment facility, Repo, Reverse Repo and cash reserve ratio. Quarterly reviews of the annual policy statement were undertaken to promote effective and vibrant communication with the various economic agencies. RBI had also acted swiftly to pump out and bring liquidity in financial system as and when required. PERFORMANCE OF THE BANK DURING 2009-10: FINANCIAL PERFORMANCE: The Bank has posted a net loss( after provisions & taxes of Rs. 102.13 crones for the year 2009-10 against a net profit of Rs.117.71 crones for the previous year. The operating loss for the FY 2009-10 amounted to Rs.27.90 crones as against operating profit of Rs. 193.77 crones for the Financial Year 2008-09. The appropriations for the net loss have been effected as shown in the performance highlights. The total income of the Bank remained at Rs.1489.48 crones as compared to an income of Rs. 1507.23 crones for the previous year. DEPOSITS: The total deposits of your Bank decreased from a level of Rs. 15187.15 crones to Rs. 15062.35 crones showing a decrease of 0.82%. The Core Deposits (excluding inter bank deposits) showed an increase from Rs.13832.25 crones as on 31st March 09 to Rs. 14204.23 crones as on 31st March 10. The Bank continued to lay emphasis on a sustained growth in retail deposits by expanding client base with a focus on Savings Bank and Current Account. Saving Deposits, which constitute the core of stable retail liabilities increased by 25% to Rs 3360.00 crones as against Rs.2687.99 crones in the previous year. The cost of deposits decreased from 7.10% in the previous financial year to 6.55 % during the year under review due to the general downward movement in interest rates and increase in savings and current deposits. ADVANCES: The Bank continued its focus on retail loan products. As a result of this strategy the retail advances grew to Rs.1014.18 crones which helped in maintaining reasonable yield and spread. The average yield on advances is 11.68%. Retail Advances constitute 11.95 % of the Banks total advances as on 31st March 2010. The focus on retail also helped the Bank in diversifying the inherent risks in lending. In corporate advances the Bank continued its policy of targeting selected borrowers of high credit standing. The net advances of the Bank during the year under report increased to Rs.8329.47 crones as against Rs. 7780.75 crones in 2008-09. PRIORITY SECTOR: In terms of the directives from the Government of India and the Reserve Bank of India, the Bank is giving utmost importance to lending under Priority Sector and Agriculture Sector. The Banks advances to Priority Sector (inclusive of eligible investments) as a proportion of Adjusted Net Bank Credit at the end of previous year stood at 35.31% as on 31st March 2010. INCOME ANALYSIS: The interest income on advances has decreased from Rs. 917.10 crones in FY 2008-09 to Rs. 906.02 crones in FY 2009-10. The total income of the Bank decreased from Rs. 1507.23 crones in FY 2008-09 to Rs. 1489.48 crones in FY 2009-10. The percentage of non interest income excluding profit on sale of investments to total income for the year worked out to 6.55. SEGMENT-WISE PERFORMANCE: The Bank operates in two segments, namely, banking operations and treasury operations which have been recognized as primary segments .As per RBI guidelines, the Banking operations segment has further been bifurcated into three segments i.e. corporate/ wholesale banking, retail banking and Other banking operations. The working results in respect of the four segments are as under: (Rs. in crores) Business Segment For the For the Particular Year ended Year ended 31st March 10 31st March 09 Segment Revenue: Treasury Operations 485.60 489.73 Corporate / Wholesale 591.59 564.66 Banking Retail Banking 392.89 435.43 Other Banking 19.60 17.51 Operations Total 1489.68 1507.33 Business Segment For the For the Particular Year ended Year ended 31st March 10 31st March 09 Less: Inter Segment Revenue Net Sales/ Income 1489.68 1507.33 from Operations Segment Result Profit / (Loss) before Tax and Interest from each Segment Treasury Operations (15.49) 57.39 Corporate / Wholesale (89.25) 55.71 Banking Retail Banking (59.37) 42.91 Other Banking 19.29 17.18 Operations Total (144.82) 173.19 Add / (less) Other (0.20) (0.10) Unallocated Income / (Expenditure) Net Off Total Profit Before Tax (145.02) 173.09 Capital Employed Treasury Operations 251.28 323.64 Corporate / Wholesale 215.52 225.75 Banking Retail Banking 74.28 93.71 Other Banking 0.26 0.37 Operations Total 541.34 643.47 INTERNAL CONTROL SYSTEM & THEIR ADEQUACY: The Bank has put in place adequate and effective systems & controls, covering all areas in operations such as Credit, Deposits, Depository and other Para-banking Products, to ensure safety of assets, adherence to business strategy, economic use of resources, reliability of M/S, correctness of financial reports, and compliance with laws & regulations. The Audit Committee of Board effectively monitors the working and gives appropriate directions. INSPECTION AND AUDIT: The function of the internal inspection and audit comes under the oversight of the Audit Committee of the Banks Board with the objective of verifying adherence to systems and procedure, quality and value of assets/ liabilities and compliance of various statutory and regulatory requirements at branches which were subject to inspection. The Bank prepares an inspection programme every year and the inspections are carried out in accordance with the programme. Besides this, the Bank conducts an IS Audit with a view to ascertain the compliance with the security aspect related to computerize environment. The Bank also has a mechanism for conducting concurrent audit to keep operations of selected branches under close scrutiny. In addition, Revenue Audit is also conducted for checking revenue leakage at the branches. IS SECURITY: Your Bank has been making extensive use of computers and telecommunications systems to provide safe, secure & continuous best services to its customers at all the offices of the Bank. It has also been our endeavour to cater needs of customers related to financial products which include banking services, multiple delivery channels and value added products by employing latest IT systems. The Bank is taking all necessary measures to minimise the vulnerability of the Information Systems like interruption, disaster, error & abuse and to ensure business continuity. This is being done by deploying the industry standards Firewall, Intrusion Detection System, Anti-virus Softwares and by putting in place IT Security Policy and various controls & procedures related to computerized operations. Monitoring of security status is done through IS Audits & network penetration testing to assess effectiveness & compliance of controls & security measures. To achieve the objective and ensure continuity / restoration of business at Branches, Data Centre, Central Depository and Administrative offices, Business Continuity Plans Disaster Recovery Plans fox computerised functions / operations have been framed & circulated. The plans provide procedures to take care of interruptions and quick recovery to normal business and also defines roles & responsibilities of staff posted at Branches and Administrative Offices. Disaster Recovery Site (DRS of Data Centre with sufficient capacity is functional at different seismic zone to take care of Core Banking operations at branches & other service outlets and mock trials also conducted to assess the preparedness of DRS & BCP External Service Provider undertaking credit card transactions on our behalf is also maintaining DR Site. Data of critical applications running at Data Centre are periodically replicated to DRS and it is also ensured that at the end of day complete data of the day is available at DRS. To create awareness related to IT Security Business Continuity Plans - Disaster Recovery Plans for computerised operations at the grass root level, training sessions for various field functionaries are arranged and instructions are issued through circulars, guidelines & various communications. IT Security Policy Business Continuity Plans - Disaster Recovery Plans for computerised operations at branches and Guidelines for computerised operations are also displayed at Banks internal website (RajBankPortal) for ready availability to the Bank personnel. Moreover, to take care of new developments in the ever changing IT Sector and to ensure Banks preparedness in IT systems, IT Security policy and various plans & guidelines are also periodically reviewed and circulated. VIGILANCE: An elaborate and well-structured vigilance system is in place covering all areas of operations. The system is functioning in a proactive manner and in consonance with Reserve Bank of Indias guidelines to take appropriate steps in controlling and containing fraud, forgery, malpractices etc. to minimize losses arising out of such eventualities. The Bank recognizes vigilance as an integral managerial function. In order to ensure meticulous compliance of the laid down system & procedures at field level, branches are subjected to surprise inspection and visits by controlling authorities on regular basis. In training sessions, due emphasis is laid on compliance of various measures of internal control and preventive vigilance. Expeditious disposal of complaints and resultant vigilance cases are ensured at all levels by effective monitoring and supervision. A Board level special committee has been constituted to review and monitor large value frauds involving Rs.25 lacs and above. RISK BASED SUPERVISION (RBS): The RBS process essentially involves continuous monitoring and evaluation of the Banks risk profile in relation to its business strategy and risk exposures, which is facilitated by the construction of a Risk Matrix. The Bank has made significant progress in critical areas such as quality and reliability of data, soundness of systems & technology, appropriateness of risk control mechanism, etc. for ensuring effectiveness of Risk Based Supervision. The Bank has re-oriented its organizational set up towards RBS and put in place efficient risk management architecture and strengthened the management information system. RISK MANAGEMENT: The Reserve Bank of India has issued guidelines on Risk Management System advising banks to put in place risk management policies, procedures & systems duly approved by their Board. The guidelines require banks to evaluate risks in their portfolios and adopt systems for management of risks keeping in view the size & complexity of their business operations. In compliance with the RBI guidelines the Bank has put in place required risk management framework to actively manage and control risks. The Bank is primarily exposed to three kinds of risks viz., Credit Risk, Market Risk and Operational Risks and for these risks the Bank has devised and implemented policies, procedures, organizational structure and control system. The policies are reviewed keeping in view the developments taking place from time to time and experience gained by the Bank during the operations of the policy. The goal in risk management is to understand, identify, measure, monitor and control various risks that arise in Banks operations with the objective to strike balance between risk and rewards. Risk Management is a Board driven function in the Bank. At the apex level there is a Board level Risk Management Committee of Directors. The Bank has put in place risk management organization structure and has set up high- level committees with participation of Top Management Team, which include Risk Management Committee of Executives (RMC), Asset Liability Management Committee (ALCO), Credit Policy Committee (CPC and Information System Security Committee (ISSC), Investment Committee. With a view to have an integrated view for all kind of risks, the Bank has set up an Integrated Risk Management Department. The Bank has M/S to keep the Board / RMC of Directors / other risk committees informed about the progress achieved by the Bank towards implementation of Risk Management System, identifying the gaps in implementation, steps being taken to bridge the gaps etc. Besides the quarterly progress reports, various other reports are also placed before the Board or RMC of Directors periodically which keep them informed about different types of risks and the actions taken by the Bank to manage the same. Detailed Risk Profile of the Bank, designed by the Reserve Bank of India for the purpose of Risk Based Supervision, is also placed before the Board / RMC of Directors classifying the operations of the Bank in various risk categories, to enable them to take a view about the level of risks and their directions. Risk Profile of the Bank is updated quarterly. The Bank has put in place Loan Review Mechanism to evaluate the quality of its credit portfolio through review of sanctions made, renewal process, submission of monitoring reports and credit related M/S. OUTLOOK, OPPORTUNITIES AND CHALLENGES: OUTLOOK: The up trend in industrial activities continues and flow of resources to the commercial sector from both bank and non bank sources will picked up, survey also suggest that business optimism will improve. Assumption of a normal monsoon and sustained performance of the industry and service sector will provide opportunities, for the Indian banking system to accept challenges for the growth. OPPORTUNITIES: Your Banks strong fundamentals, a country wide network of 463 fully computerized, on line branches, full range of financial products, strong customer franchise in markets served by it around 4000 dedicated employees and services rendered with a traditional, yet modern touch will continue to be key drivers of performance in the coming years. Today, Bank is poised for a major jump in business growth and is looking at facing the challenges with greater confidence through strategic planning and focused action. CHALLENGES: Increasing competition both from domestic and international banks , technological upgradation to meet ever changing customer requirements, managing risk in the context of changing global financial markets, information security, enterprise management systems , benchmarking of services, managing human resources, are some of the key challenges identified by the Bank, for which effective steps have been already initiated. BANKS BUSINESS STRATEGY & INITIATIVES: The Bank has drawn plans in the existing presence to increase its clientele base and business volume and to stress more in the state of Rajasthan. In its attempt to enhance competitive capabilities, the Bank is focusing on adoption of modern technology. The networking of branches and the state-of- art technological platform has enabled the Banks customers to leverage multiple channels for their banking needs. With a view to showcase the rapid progress made by the Bank, the competitive products and services offered and the national presence, the Bank had undertaken an aggressive advertisement campaign with Ms. Hema Malini as Brand Ambassador. The appearance has been ensured through regular adequate visibility on leading national news & entertainment channels, print and other media and on various important websites dealing in finance sectors. HUMAN RESOURCES & INDUSTRIAL RELATIONS: The Bank accords top priority to the development of the Human Resources, which form the core strength of the organization. The Banks HRD strategy is centered around optimum utilization of human resources in-step with the induction of new technology in banking operations and redeployment of staff at new branches, extension counters and administrative offices. Recruitment & promotion policies are accordingly reviewed allowing the individuals to remain motivated and excel in their job responsibilities. The HR efforts are concentrated on skill development and attitudinal change besides knowledge dissemination.