City Union Bank Ltd Directors Report.

The Board of Directors of your Bank is pleased to present the Annual Report on business and operations of the Bank together with the Audited Financial Statements for the Financial Year ended 31st March, 2020.


The year 2019 - 2020 was an extremely challenging period for the Banks in India. Although, COVID 19 emerged during the fag end of the financial year, the Industry had its impact on account of factors like mergers of PSBs, NBFC crisis involving some private sector banks also. The pandemic did not spare the financial services sector even and the regulators moved swiftly to secure the system. During May 2020, the Government announced a special economic package under Aatma Nirbhar Bharat Abhiyan with a view to making the country Independent against tough competition in global supply chain and to help in empowering the poor, labourers, migrants who have been adversely affected by COVID 19. The measures under this package have certainly improved the domestic Banking outlook involving credit booster to MSMEs, liquidity support to NBFCs, HFCs and MFIs focusing on rural and social segment, power sector reforms etc. The stimulus package is expected to be the key driver of revival and structural reforms going forward.

Under the above odd circumstances, the Bank recorded a total business of 75,408 crore, an increase of 5% over the previous year figure of 71,513 crore in FY 2019. The Net Profit of the Bank has decreased to 476 crore from

683 crore on account of COVID provision made during the fourth quarter of FY2020. The Net Interest Income of the Bank stood 1,676 crore, a 4% increase over FY 2019 position and the Net Interest Margin of the Bank stood at 3.98%. The key performance indicators i.e., the Return on Assets of the Bank stood at 1%, Return on Equity at 9.47% and the Cost to Income ratio at 43.04%. The financial performance has been discussed in detail in the forthcoming paragraphs.

During the year the Bank has opened 50 additional branches to total 700 branches and has 1,793 ATMs as at 31st March 2020. On the digital front, the Bank continued to upgrade and strengthen its Information Technology framework to ensure smooth and secure customer friendly Banking. The Bank has introduced "CUB EASY" a video KYC based account opening App. Also, measures are being undertaken to comply with the directions issued by the Reserve Bank of India with respect to strengthening of the Cyber Security and Information Technology framework of the Bank.

Further information on the State of Affairs of the Bank has been discussed in detail in the Management Discussion and Analysis Report forming part of this Annual Report.

Financial Highlights

Particulars 2019-20 2018-19 Growth (%)
Share Capital 74 73 1%
Reserves & Surplus 5,222 4,767 10%
Deposits 40,832 38,448 6%
Advances (Gross) 34,576 33,065 5%
Investments (Gross) 9,236 7,863 17%
Total Assets / Liabilities 49,734 45,259 10%
Total Income 4,848 4,282 13%
Total Expenses 3,507 3,042 15%
Net Interest Income 1,676 1,611 4%
Operating Profit 1,341 1,240 8%
Provisions & Contingencies 865 557 55%
Net Profit (A) 476 683 -ve
Balance of Profit brought forward (B) 57 37
Amount available for appropriations (A+B) 533 720
Transfers to:
- Statutory Reserve 140 200
- Capital Reserve 81 6
- General Reserve 145 340
- Investment Reserve Account 0 31
- Special Reserve under IT Act, 1961 65 60
- Dividend & Dividend Tax* 44 26
- Balance of Profit carried forward 58 57
Total 533 720

*Dividend & Dividend Distribution Tax reported as per MCA notification on revised AS 4 dated 30th March, 2016.

The Deposits and Advances for the current year stood at 40,832 crore and 34,576 crore respectively. The total business stood at 75,408 crore as compared to 71,513 crore for the previous year registering a growth of 5%. The size of the Balance Sheet as on 31st March, 2020 is 49,734 crore as compared to 45,259 crore last year recording an increase of 10%.

During the year the Bank earned a Gross profit of 1,341 crore registering an increase of 8% as compared to previous years figure of 1,240 crore. The Net profit of the Bank for the current year was 476 crore as against 683 crore last year. The Bank had registered a net loss of 95 crore for Q4 FY 2020 because of the precautionary additional provision of 102 crore made over and above the requirement prescribed by RBI, to meet the requirements on account of possible slippage in the loans likely to be impacted by the COVID 19.

Total income earned by the Bank for FY 2020 was at 4,848 crore as against 4,282 crore in FY 2019 registering a growth of 13%. The total expenditure of the Bank increased by 15% to record 3,507 crore as compared to 3,042 crore in the previous year.

Net Interest Income for the year FY 2020 under review increased by 4% to 1,676 crore from 1,611 crore last year. The non-interest income of the Bank increased from 514 crore to 680 crore registering a growth of 32% mainly on account of increase in treasury income.


The Banks total Deposits for the year under review increased by 2,384 crore from 38,448 crore to 40,832 crore registering a growth of 6% over previous year. During the current year CASA increased by 499 crore from 9,698 crore to 10,197 crore recording a growth of 5%. The cost of deposit of the Bank marginally increased from 6.17% to 6.20% in FY 2020.


Gross Advances of the Bank increased by 1,511 crore to 34,576 crore from 33,065 crore, posting a growth of 5%. The yield on advances declined to 10.76% from 10.95% during the reporting year on account of the due transmission of the cut in the interest rates to the

borrowers. For FY 2020, the Bank had achieved the target/ sub-targets prescribed by RBI for Priority sector, Agriculture, Micro Enterprises, Small / Marginal farmers and weaker section.

The Gross NPA and Net NPA for the year under review stood at 4.09% and 2.29% respectively as compared to 2.95% and 1.81% in the previous year.

The provision for tax for the reporting year decreased to 110 crore from 242 crore in previous year. The provision made for NPA for the financial year was 631 crore vis-a-vis 270 crore last year. The total provision increased by 308 crore to 865 crore from 557 crore.


The Bank had utilized the volatile yield movement during the year and through the timely sale of securities, the Bank could book a profit to the tune of 159.60 crore as against 32.56 crore made last year.

The Gross Investments increased by 1,373 crore to 9,236 crore as on 31st March 2020 from 7,863 crore as on 31st March 2019. Out of this, the investments in Government Bonds alone account to 8,939 crore constituting 97% of the total investments. The non- SLR investments declined by 90 crore mainly on account of partial redemption of Security Receipts to the extent of 78 crore.


During the financial year 2019-20, Indian Rupee weakened against USD by 9.4%. Indian Rupee against USD opened at 69.15 and closed at 75.66. Major reasons for weaker rupee were US China trade war and the Corona Virus outbreak. The large FPI outflows towards the

second half of FY aggravated the situation. Compared to other currencies, Indian Rupee performed better with RBIs intervention. The low crude oil prices kept the rupee from weakening further. With a healthy foreign exchange reserves, the Indian Rupee remained at a comfort zone against USD. During FY 2019-20, profit on our foreign exchange operations stood at 84.62 crore as against 54.46 crore during the previous year.


The paid-up Share Capital of the Bank increased from 73.45 crore as on 31st March, 2019 to 73.73 crore as on 31st March, 2020. During the reporting period the Bank has allotted 28,18,403 Equity Shares to employees under Employee Stock Options pursuant to CUB ESOS Scheme 2008.

The Net worth of the Bank stands improved to 5,253.24 crore as on 31st March, 2020 from 4,808.27 crore as on 31st March, 2019.

Capital Adequacy Ratio

As per Basel III regulations, Banks are required to maintain a minimum Pillar 1 Capital (Tier I + Tier II) to Risk Weighted Assets Ratio (CRAR) of 9% on an ongoing basis. Besides this minimum capital requirement, Basel III also requires creation of capital conservation buffer and countercyclical buffer of 2.50% at the end of March 2019 in a phased manner beginning from 31st March, 2016 @ 0.625% in each year up to 31st March, 2019. The Reserve Bank of India vide Notification No. DBR.BP.BC. No.20/21.06.201/2018-19 dt.10th January, 2019 - "Review of transitional arrangement under Basel III Capital Regulations" deferred the implementation of the last tranche of 0.625% of Capital Conservation Buffer (CCB) from 31st March, 2019 to 31st March, 2020.

Again, RBI by its Notification No.DOR.BP.BC. No.45/21.06.201/2019-20 dated 27th March 2020 "Basel III Capital Regulations - Review of transitional arrangements", further deferred the implementation of last tranche of 0.625% of Capital Conservation Buffer to 30th September 2020. Accordingly, CRAR required to be maintained for the period ended is 10.875%. The Bank maintained Tier I CRAR of 15.80% and total CRAR of 16.76% as at 31st March, 2020 which are well above the norm prescribed by RBI.


The Board of the Bank at its meeting held on 19th March 2020 had declared an interim dividend of 0.50 per equity share of Face Value of 1/- each for the year ended 31st March, 2020 (previous year 0.50 per equity share).

The Bank as a dividend distribution policy in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 which is uploaded in the website of the Bank.


As per the statement of RBI Governor followed by RBI circular no.DOR.BP.BC.No.64/21.02.067/2019-20 dt.17th April 2020, in the wake of heightened uncertain environment due to COVID-19, all Scheduled Commercial Banks (SCBs) were advised on the importance of conserving capital and to retain their capacity for absorbing losses and supporting the economy. Accordingly, all SCBs were directed not to make any dividend payouts from the profits pertaining to financial year 2020 till further directions and hence no final dividend is recommended to the shareholders for FY 2020.


During the financial year, the Bank expanded its branch network by adding 50 more branches and 108 ATMs across the country totaling 700 branches and 1,793 ATMs as on 31st March, 2020. The Bank has a major presence in the State of Tamil Nadu and expanded its presence in other states by identifying potential centers. Out of the additional branches opened during FY2020, the Bank had opened 30 Branches in Tamil Nadu, 6 in Andhra Pradesh, 2 in Telangana and the rest in other states. As on date, 90% of the Banks total branches are operational in South, 5% in West, 4% in North and 1% in Eastern parts of India.

The branches opened during the year were as per the guidelines issued by the RBI on opening of Branches in unbanked and under Banked regions. During the period the Bank opened 14 branches in unbanked rural centers and complied with relevant RBI norms.


The Bank has been successful in implementing the concept of Financial Inclusion over a long period and has shown tremendous progress in providing basic banking services, especially to the rural citizens.

The Bank is very much keen in creating awareness on various Government schemes viz., Atal Pension Yojana, MUDRA, PMJJBY, PMSBY etc. Such schemes have been made available to the villages for connecting the underprivileged areas within the Banking network, by conducting frequent campaigns. The services to the rural poor are not confined to the opening of Bank accounts alone, but also rendering other services such as credit, overdraft facilities, etc., to accelerate countrys economic growth.

Further, by way of establishing BC Outlets at the unbanked areas and with the introduction of technology products and issue of jewel loans, the Bank has been able to provide all the Banking services to the rural poor.

The Bank offers e-KYC and Aadhaar enabled Payment System (AePS) to render quick services to the rural poor. The Bank has deployed POS machines at various rural locations, which is very much helpful for doing merchant transactions.

Further, during the last year, the Bank has actively participated in the "Customer Outreach Initiative" of the Government of India, with the objective of providing easy access to credit which includes Retail, Agriculture,

Vehicle, Home, MSME, Education and Personal Consumer loans. In coordination with the Lead Bank, the Bank has conducted financial literacy campaigns and put stalls for promotion and publicity of the social welfare schemes and Agriculture products available for the farmers. The outreach helped us to connect with the farmers in true spirit for creating awareness among the farmers.

By rendering services through our technology products, in the unbanked areas, we have created confidence in the minds of the people, to get uninterrupted Banking services. The Business Correspondents also make regular visits to the Villages and do the Banking services at their doorstep.


The Bank implemented an Employee Stock Option Scheme CUB ESOS 2008 for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on 26th April 2008 at an Extra Ordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme, exercise price of the options shall be decided by the Compensation & Remuneration Committee at the time of grant of stock options. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years and 25% and 30% for fourth and fifth year respectively. The shares are offered at prevailing market prices at the time of grant to the employees. However the same shall vary pursuant to corporate action viz., Rights Issue, Bonus Issue etc. There were no material changes in the ESOS of the Bank during the period under review and the same is in compliance with the provisions of SEBI (Share Based Employee Benefits] Regulations, 2014 as amended from time to time ("SEBI SBEB Regulation"]. As at the end of 31st March, 2020, we have so far granted 4.83 crore options and only 0.17 crore options are yet to be granted under the scheme.

The disclosures pursuant to Regulation 14 of SEBI SBEB Regulation have been set out in the website of the Bank and also the same is annexed here to as Annexure I.

weblink: https://cityunionbank,com/downloads/CUB_ESOS_Report_2020,pdf

In addition, the shareholders of the Bank at its meeting held on 23rd August, 2017 approved new CUB ESOS Scheme 2017 for 3,00,00,000 options on terms and conditions similar to previous one. No options have been granted to any employees of the Bank during the reporting year under this new scheme.


The Bank is committed to create a congenial working environment involving mutual trust and respect duly recognizing the talents, rights and dignity of each employee. Your bank places great value on developing and nurturing its human capital as a critical resource in its efforts for value creation. All CUBians (Employees] periodically undergo training programmes in-house or in reputed institutions like IIM, NIBM, CAB, CAFRAL, SIBSTC, IDRBT etc., for developing their functional and behavioral skills as also to align with the fast changing business needs. There exists a capacity building program in the Bank as per which employees are encouraged to qualify / get certified in various areas of Banking to grow personally as well as professionally, thereby contributing to overall growth of the organization. Further, as a part of succession planning, recruitment and promotion including lateral entries are undertaken periodically.

As in the past the Bank has maintained a cordial and healthy industrial relationship with the employees and we are happy to mention here that there has not been even a single occasion of employee unrest in the Banking history of CUB.

As on 31st March, 2020, the Bank has 5,741 on-roll employees comprising of 54 employees in Executive cadre, 2,270 in Middle Management cadre, 3,159 in Clerical cadre and 258 in Subordinate Staff cadre.


Technology plays a vital role in servicing the customers, managing and fulfilling the customer demands and providing enhanced quality service to the customers. In the backdrop of COVID-19 pandemic and when social distancing has become the order of the day, technology enables banks and other service industries deliver service to customers through different channels.

The Bank has implemented various Digital solutions/products to fulfil customer satisfaction, availability of services at all times, reduction of work pressure at branches and for providing efficient MIS information to Banks management. The digital strategy encompasses initiatives focusing on Omni-channel experience, Self-service model, real-time analytics, lean footprint, operation efficiency and host of value added services to enrich and enhance customer experience. The Bank is deploying all possible technology enabled & digital payment systems to cater to the needs of the customers.

The Bank has deployed CBS (Core Banking Solution) BaNCS for transaction processing system developed by M/s Tata Consultancy Services, covering 100% of its business, which is being used by many major banks and other peers.

The Bank, as on 31st March, 2020, has deployed 2,847 self service touch points comprising of ATMs - 993, BRM - 799, Passbook Kiosk - 570 and Cheque deposit Kiosk - 485 for customer use. The Bank has also been spreading its Self Service Bank branches (e-Lounge) to cater customer needs and enabling our ATMs / BRMs for cardless deposit and withdrawals in addition to e-KYC processes.

Some of the recent technological developments are detailed below:

• The Bank introduced All-in-One Mobile Banking app with interactive voice chat available in four languages. It is the first of its kind in India. Banks Internet Banking solution offers a variety of services to our customers.

• The Bank has obtained PCI DSS certification for the digital card environment, which only very few banks have obtained.

• Various services like CUB e-Wallet, Wealth Management, ASBA, Unified Payment Interface (UPI), BHIM and *99# a NUUP (National Unified USSD Platform) , Bharat Bill Payment System (BBPS) , Bharat QR - Scan & Pay in BHIM/UPI etc. are made available to our customers.

• The bank offers instant account opening through Welcome Kit, Video KYC though Selfie Banking, enabling DBT, Aadhaar Enabled Payment System (AEPS).

• Bank has efficient Fraud / Risk monitoring solution which detects anomalies in the customer transaction patterns and prevents frauds.

• Bank also provides facility for new generations - Banking via facebook. Customers can transact via facebook messenger while on chat.

• The Bank has rolled out FASTag facility for making payments by vehicles in Toll Plazas electronically through rechargeable prepaid instruments.

• The Bank introduced chat-bot service, powered by Artificial Intelligence that interact with the customers via chat interface either auditory (Ask Lakshmi) or textual (Chat-Box in website and social media).

• As a green initiative, Green PIN is enabled for PIN generation for ATM cards through OTP on customers registered mobile. The bank also issues Credit Card and the customers are facilitated to get Virtual Credit Card through Internet / Mobile banking just by choosing their fixed deposit account. Customers have the option of availing SBI co-branded credit cards also.

• Customers can now set their own limit for the ATM, POS and Ecom channel transactions. They can disable a particular channel and can enable whenever required from mobile and net banking. They can enable/disable International usage of the card also through Net/Mobile Banking.

• Facility has been provided to customers to block Net- Banking/Mobile banking/ UPI by sending SMS to 9281056789 in the prescribed format - BLOCK {LOGINID} from the registered mobile number.

• Bank has provided EMV CHIP cards to all its customers to enhance additional security for card based transactions. All our ATMs are accepting EMV CHIP cards by reading CHIP and process the transactions in secured manner. The Bank also offers Prepaid / gift cards and Travel Cards to the customers.

• A customer friendly Contact Centre (Call Centre) with Interactive Voice Response System (IVRS), is put in place to promote customer support on multilanguages on 24x7 basis.


During FY 2019, the Bank started the marketing and distribution of Health Insurance and Mutual Fund products in tie up with following organizations, to offer additional services to all its stakeholders. The same is fully functional at present.

• Star Health and Allied Insurance Co. Ltd., for distribution of Health Insurance products.

• Integrated Enterprises India Ltd., for distribution of Mutual Fund products through online platform to our customers in Demat form and through branch network.

• BSE Star Mutual Fund to offer Mutual Fund products through web based platform and through branch network.

• Finwizard Technology Pvt. Ltd. (widely known as FISDOM) to offer Mobile based Mutual Fund Investment solution.


Your Bank does not have any Subsidiaries or Associates to report during the year under report.


The Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the year 14 (fourteen) meetings were held, the details of which are given under report on Corporate Governance forming part of this report.


Since last reporting to the members of the Bank, there were no changes in the Board / KMP positions to the date of this report except Dr. N. Kamakodi, who was reappointed by RBI as the Managing Director & CEO of the Bank w.e.f. 1st May, 2020. for a further period of three years. The relevant disclosures on his re-appointment are set-out in this report as well as the notice calling this Annual General Meeting.

Dr. N. Kamakodi, MD & CEO (DIN 02039618)

Pursuant to the provisions of Section 35B of Banking Regulation Act, 1949, the Reserve Bank of India vide its communication dated 20th April, 2020, accorded its

approval for the re-appointment of Dr. N. Kamakodi as the Managing Director & CEO of the Bank for a further period of 3 years w.e.f. 1st May, 2020.

As per the relevant provisions of Section 196 of the Companies Act, 2013, the re-appointment of Managing / Whole Time Director requires the approval of shareholders. The Board therefore recommends the reappointment of Dr. N. Kamakodi as Managing Director & CEO of the Bank for approval by the shareholders in the Notice calling this Annual General Meeting. The relevant details pursuant to SEBI Listing Regulations 2015 and Secretarial Standard-2 of ICSI are disclosed separately in such notice.

Directors to retire by Rotation - The application of provisions of Section 152(6) arises only when the Board of Directors of the public company comprises of such number of directors who are not prohibited or restricted by the Act to retire by rotation. All directors on the Board, except the Managing Director and CEO of the Bank are Independent Directors. Hence the provisions of Section 152(6) of Companies Act, 2013 relating to retirement of directors by rotation do not apply considering the present composition of the Board of Directors. Independent Directors are not required to retire in terms of Section 149(13) of the said Act. Accordingly no Director including MD & CEO is required to retire by rotation at this Annual General Meeting.

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors under Section 149(6) and 149(7) of the Companies Act, 2013, notifications issued by the Ministry of Corporate Affairs and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Board is satisfied that the Independent Directors meet the criteria of independence as stipulated under the aforesaid provisions of the Companies Act, 2013.

Further, in compliance with MCA notification no.G.S.R.805(E) dt.22nd October 2019, all Independent Directors of the Bank have registered themselves in the Independent Directors databank of Indian Institute of Corporate Affairs.

Familiarization program for Independent Directors

The details of programme for familiarization of Independent Directors with the Bank, their roles, rights and responsibilities in the Bank and related matters are

provided separately under the Corporate Governance Report forming part of this Annual Report.

Performance Evaluation

In line with the provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and relevant notifications / guidelines issued by SEBI in this regard, there exists a structured criterion as approved by the Nomination committee of the Board for carrying out the performance evaluation of the Board as a whole, its committees as well as Independent Directors.

The necessary evaluations / review were carried out by the Board and Independent Directors to determine the effectiveness of the Board, its Committees, Chairman and individual Directors. Additional information on performance evaluation is set out in Corporate Governance section forming part of this report.

Key Managerial Personnel

Dr. N. Kamakodi, Managing Director & CEO and Shri. V. Ramesh, Chief Financial Officer & Company Secretary, continue to be the "Key Managerial Personnel" of the Bank pursuant to the provisions of Section 2(51) read with Section 203 of the Companies Act, 2013.


Statutory Central Auditor

M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai was appointed as the Statutory Central Auditors of the Bank in the previous Annual General Meeting (AGM) held on 29th August, 2019. The term of the present Auditor will conclude at the conclusion of the ensuing Annual General Meeting of the Bank and being eligible has offered themselves for re-appointment. Consent has been received from the present Auditors for their reappointment and also a confirmation to the effect that they are not disqualified to be appointed as Statutory Central Auditors of the Bank in terms of Companies Act, 2013 & the rules made there under. An application was made to the Reserve Bank of India seeking its approval for the appointment of M/s Sundaram and Srinivasan, Chartered Accountants, Chennai to act as Statutory Central Auditors for the Financial Year 2020-21. Based on the above, RBI vide its letter No. Dos.ARG.No.PS-13/ 08.13.005/2019-20 dt.17.06.2020 has given its approval for their appointment. Members are requested to consider and approve their appointment as Statutory Central Auditors of the Bank for FY 2020-21.

The Statutory Central Auditors have furnished their Report for FY 2020 which forms part of this report and there are no qualifications, reservations or adverse remarks made by the Auditors in their report. The Auditors while making reference to the impact of the pandemic COVID 19 on the global economy, has mentioned about the relief provided by the Bank to some of the borrowers, in line with the "COVID 19 Regulatory Package" announced by RBI (Refer Notes on Accounts No.12.14).

Further, the Auditors of the Bank has not reported any fraud u/s 143(12) of the Companies Act, 2013.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank has appointed M/s. B. K. Sundaram & Associates, Practicing Company Secretaries, Tiruchirapalli as Secretarial Auditor to conduct the Secretarial Audit of the Bank for the Financial Year 2019-20. The report of Secretarial Aud itor Sec retar ia l Audit Report in the prescribed format is annexed to this report as Annexure II.

There are no observations, reservations or adverse remarks made by the Secretarial Auditor in their report.

Cost Audit

The requirement of maintaining cost records u/s 148(1) of the Companies Act 2013 is not applicable to the Bank.


In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors of the Bank hereby declares and confirms that :-

i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

ii) The Directors have 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 Bank as at the end of the financial year and of the Profit & Loss of the Bank for that period.

iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing Banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the annual accounts on a going concern basis.

v) The Directors have laid down adequate internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively.

vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


The Bank has formulated / revised the Code of Conduct pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015 has amended from time to time ("SEBI PIT Regulation") to regulate, monitor and ensure reporting of trading by the designated persons and other connected persons. The said code had been reviewed and amended by the Board of Directors from time to time.

The code is adopted to maintain highest ethical standards in dealing with securities of the Bank by persons to whom it is applicable. The code of conduct and related policy are available in the Banks website.

weblink :

The Bank has taken necessary steps with KFin Tecnlologies Private Limited (Registrar and Transfer Agents of the Bank) for incorporating the PAN in the database to facilitate reporting of trading by designated persons and other connected persons in accordance with SEBI PIT Regulations.


There are no material changes and commitments affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e., 31st March, 2020 and the date of Directors Report i.e., 18st June, 2020.


During the year under review, no significant and material orders have been passed by the Regulators.


Directors Appointments and Remuneration / Compensation Policy

The Bank has formulated and adopted a policy on Board Diversity as per which the Nomination Committee of the

Board of Directors of the Bank conducts the preliminary assessment for appointment of Directors on the Board of the Bank and makes suitable recommendations to the Board for its consideration.

The Nomination Committee identifies and assesses the qualifications and positive attributes of the incumbent based on the disclosures / declarations received from such person under the Companies Act, 2013, the Banking Regulation Act, 1949 and also RBI guidelines. The Nomination Committee makes a thorough scrutiny of the prospective candidate and certifies the fit and proper status of the incumbent to the Board after exercising above due diligence process.

Apart from the above, the Nomination Committee while appointment of an Independent Director also considers the Declaration on Independence furnished by such incumbent u/s 149 (6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Further, the Bank has a Compensation Policy which is in accordance with the directives issued by the Reserve Bank of India. The Bank has constituted a Compensation & Remuneration Committee which oversees the framing, implementation and review of the Compensation Policy of the Bank. The Remuneration Policy of the Bank is briefed under Corporate Governance Report forming part of Annual Report.

Risk Management Policy

The Bank has in place an Integrated Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other Risks. The details on the Risk Management framework of the Bank is set out in the Management Discussion and Analysis section appended to this Report.


As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all top 500 listed entities (as at the end of financial year based on market capitalization) shall report a Business Responsibility Report describing the Banks social, environmental and governance aspects. The same is set out as a separate report forming part of Annual report.


Being a Banking company, the disclosures as required pursuant to Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014 read with Sections 73 & 74 of the Companies Act, 2013 are not applicable to your Bank.


The Bank has put in place adequate internal financial controls commensurate with the size and scale of operations. The Bank has, in all material aspects, adequate Internal Control systems over financial reporting and these controls have taken into consideration, the essential components of internal control stated in the guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Such Internal Financial Controls over Financial Reporting were operating effectively as at the end of the financial year. More details have been set out in Management Discussion and Analysis Report which forms part of this report.


The Board of Directors of the Bank has adopted a policy on Related Party transactions which is in line with the Companies Act, 2013 and SEBI Listing Regulations, 2015. During the reporting year, no contracts or arrangements were made by the Bank attracting the provisions of Section 188 of the Companies Act, 2013 or SEBI Listing Regulations. A detailed policy on the Related Party Transaction is available at the Banks website.



All loans, guarantees or investments made in securities by the Bank are exempt pursuant to the provisions of Section 186 (11) of the Companies Act, 2013 and hence do not attract any disclosure required under Section 134 (3)(g) of the Companies Act, 2013.


Pursuant to Section 134(3)(a), of the Companies Act, 2013 (the Act), read with Rule 12(1) of Companies (Management & Administration) Rules, 2014 an Annual Return in form MGT - 9 as provided under Sub-section (3) of Section 92 of the Act is set out as Annexure III.


In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, and the related notifications / circulars / guidelines issued by MCA, the Bank has established Corporate Social Responsibility (CSR) Committee. The Bank has established CUB Foundation, a non-profit entity to identify, which

recommends and oversees the CSR initiatives of the Bank.

A Report on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 is furnished under Annexure IV to this report.

The members are aware that in light of COVID 19 pandemic, during the initial stages our Government launched a mobile App. "Aarogya Setu" which is Indias official App. to track the COVID-19 spread by registered users. The Bank takes pride in informing its shareholders that as part of its CSR initiatives during the reporting year, it has funded IIT Madras to facilitate the pre-launch Security Audit of Aarogya Setu mobile App. An appreciation letter given by Prof. V. Kamakoti, Associate Dean IC & SR - IIT Madras, Member of National Security Advisory Board and also, former Board member of our Bank, is set-out in page no. 45 of this report.


The Board of the Bank had constituted the Audit Committee under the extant guidelines of Reserve Bank of India (RBI), provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of the composition of the Audit Committee are furnished in the Corporate Governance Report.


The Bank is committed to achieving the highest standards of Corporate Governance and also adheres to the Corporate Governance requirements set by the Regulators / applicable laws. The Corporate Governance practices followed by the Bank aim to ensure value creation for all its stakeholders through ethical decision making and maintaining transparency.

A detailed report on Corporate Governance standards followed by the Bank as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 and rules made there under alongwith Certificate of Compliance from the Statutory Auditors are furnished separately which forms part of this report.


A detailed Management Discussion and Analysis Report for the year under review as stipulated in SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 is presented as a separate section forming part of this Annual Report.


Conservation of Energy and Technology Absorption

In respect of the nature of activities carried out by the Bank, w.r.t. the provisions of Section 134 (m) of the Companies Act, 2013 relating to conservation of energy and technology absorption, the Bank has taken every effort to conserve energy. The Bank has been installing energy efficient equipments at all its branches including installation of power saving LED bulbs at majority of Branches and Central Office. Further, to make use of alternate source of energy, the Bank has installed solar power panels at some of its branches and has planned to implement the same at other branches too subject to feasibility.

On the technological front, the Bank continued to offer reliable and secure banking service to its customers by facilitating the latest customer friendly technological solutions.

Foreign Exchange Earnings and Outgo

The Bank continues to encourage countrys export promotion by lending to exporters and offering them forex transaction facilities.


Disclosures under Section 197 of the Companies Act, 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure V.

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure VI.

Disclosure under Section 22 of Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank is keen in maintaining and upholding the dignity of each and every woman working in the Bank. The Bank has a policy on Prevention of Sexual Harassment at workplace which provides for adequate safeguards and

protection for women employees working in the organization. The Bank has complied with the requirement of constitution of Internal Complaints Committee under the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013. No compliant was received in this regard during FY 2019-20.


Pursuant to the provisions of Section 177(9) and (10) of the Companies Act 2013, a vigil mechanism for Directors and employees to report genuine concerns has been established. The Bank has a policy on whistle blower / vigil mechanism which is uploaded in the website of the Bank as well as intranet.


All employees and directors have access to the Chairman of the Audit Committee in appropriate and exceptional circumstances.


It is hereby confirmed that the Bank has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India (SS-1 and SS-2) respectively relating to Meetings of the Board, its Committees and Shareholders. Further proper systems are in place to ensure compliance of all laws applicable to the Bank.


The Board of Directors of the Bank would like to take this opportunity to thank all the Customers and Stakeholders and wish to place on record its sincere appreciation for the assistance and co-operation received from the Reserve Bank of India (RBI), SEBI, IRDAI, NABARD, NHB, SIDBI, EXIM BANK, ECGC, DICGC, Stock Exchanges, Depositories, KFin Technologies Pvt. Ltd., Life Insurance Corporation of India, United India Insurance, New India Assurance, Star Health, BSE Star Mutual Fund, FISDOM, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses and other authorities.

Your Directors also place on record their warm appreciation for the committed services rendered by the Banks Executives, members of the Staff and other employees.

For and on behalf of the Board
Place : Kumbakonam R. Mohan
Date : 18nd June, 2020 Chairman