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 31 March, 2021.


The year gone has left a scar on the global economy. The year 2021 commenced with both hope and fear. The economies across the world fell off a cliff during the first few months of FY 2021 plunging to the depths of contraction not fathomed before but in the later half of the year, the global economy started to climb from the depth to which it had plummeted during the time of lockdown in the month of April 2020. The Vaccine approvals during December 2020 revived the hopes of turnaround from pandemic but the renewed waves and variants of the virus posed concerns on outlook. The strength of recovery was projected to vary significantly across countries depending on access to medical facilities, policy support, exposure to cross country spillovers etc. The World Economic Outlook had projected the global growth at 6% in 2021 moderating to 4.4% in 2022.

Indian Industrys passage through pandemic has been both deep losses and windows of opportunity. To quote a few, the manufacturing sector witnessed worst contraction, mining sector continued to be languish, crude oil and natural gas production dropped due to infrastructure & operational difficulties. At the same time the pandemic opened the gates for pharmaceuticals and medical exports. The service sector suffered heavily and contact intensive sectors like aviation, tourism, hospitality suffered grievously. The health of the Banking sector emerged as a priority for the Regulator and a number of measures were put in place to mitigate the impact of pandemic which included inter-alia easier access to working capital, moratorium, asset classification standstill, restriction on dividend payouts etc. With India experiencing a second wave since March 2021, there has been localized lockdowns in states where it has impacted the economic activity. However, with Covid-19 second wave showing signs of decline in early June 21 and the availability of sufficient vaccines by September 2021, growth in second half of FY 2021-22 is likely to pick up which would trigger positive outcome for the Indian economy.

Under the above circumstances, the Bank recorded a total business of Rs 81,558 crore, an increase of 8% over the previous year figure of Rs 75,408 crore in FY 2020. The Net Profit of the Bank has increased to Rs 593 crore from Rs 476 crore. The Net Interest Income of the Bank stood Rs1,830 crore, a 9% increase over FY 2020 position. The key performance indicators i.e., the Return on Assets of the Bank stood at 1.15%, Return on Equity stood at 10.73%, Net Interest Margin of the Bank stood at 4% and the Cost to Income ratio stood at 41.45% during the reporting year. The financial performance has been discussed in detail in the forthcoming paragraphs. During the year the Bank opened 2 additional branches to total 702 branches and has 1,724 ATMs as at 31 March, 2021. On the digital front, the Bank continued to upgrade and strengthen its Information Technology framework to ensure smooth and secure customer friendly Banking. 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 Report.

Financial Highlights (Rs in crore)
Particulars 2020-21 2019-20 Growth (%)
Share Capital 74 74
Reserves & Surplus 5,769 5,222 10%
Deposits 44,537 40,832 9%
Advances (Gross) 37,021 34,576 7%
Investments (Gross) 9,523 9,236 3%
Total Assets / Liabilities 53,312 49,734 7%
Total Income 4,839 4,848 -ve
Total Expenses 3,356 3,507 -ve
Net Interest Income 1,830 1,676 9%
Operating Profit 1,484 1,341 11%
Provisions & Contingencies 891 865 3%
Net Profit (A) 593 476 25%
Balance of Profit brought forward (B) 58 57
Amount available for appropriations (A+B) 651 533
Transfers to:
- Statutory Reserve 150 140
- Capital Reserve 105 81
- General Reserve 220 145
- Investment Reserve Account 0 0
- Special Reserve under IT Act, 1961 70 65
- Dividend & Dividend Tax* 45 44
- Balance of Profit carried forward 61 58
Total 651 533

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

The Deposits and Advances for the current year stood at Rs 44,537 crore and Rs 37,021 crore respectively. The total business stood at Rs 81,558 crore as compared to Rs 75,408 crore for the previous year registering a growth of 8%.

The size of the Balance Sheet as on 31 March, 2021 is Rs 53,312 crore as compared to Rs 49,734 crore last year recording an increase of 7%.


During the year the Bank earned a Gross profit of 1,484 crore as compared to previous years figure of 1,341 crore registering an increase of 11%. The Net profit of the Bank for the current year was 593 crore as against 476 crore last year.


The Total Income earned by the Bank marginally declined for FY 2021 at 4,839 crore as against 4,848 crore in FY 2020. The total expenditure of the Bank decreased by 4% to record 3,356 crore as compared to 3,507 crore in the previous year due to reduction in operational expense.


Net Interest Income for the year FY 2021 under review increased by 9% to 1,830 crore from 1,676 crore last year. The non-interest income of the Bank increased from 680 crore to 705 crore registering a growth of 4% on account of increase in treasury income.


The Banks total Deposits for the year under review increased by 3,705 crore to record 44,537 crore from 40,832 crore registering a growth of 9% over previous year. During the current year CASA increased by 2,784 crore to record 12,981 crore from 10,197 crore depicting a growth of 27%. The cost of deposit of the Bank decreased to 5.36% from 6.20% as recorded in the previous year.



Gross Advances of the Bank increased by 2,445 crore to 37,021 crore from 34,576 crore, posting a growth of 7%. The yield on advances declined to 9.91% from 10.76% during the reporting year due to introduction of ECLGS Scheme in which interest was capped at 9.25% and gold loans with lower rate of interest. For FY 2021, 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 5.11% and 2.97% respectively as compared to 4.09% and 2.29% in the previous year.

The provision for tax for the reporting year decreased to 100 crore from 110 crore in previous year. The provision made for NPA for the financial year was 599 crore vis-a-vis 631 crore last year. The total provision increased by 26 crore to 891 crore from 865 crore.


Domestic Treasury

The Gross Investments increased by 287 crore to 9,523 crore as on 31 March, 2021 from 9,236 crore as on 31 March, 2020. Out of this, the investments in Government bonds alone account to 9,333 crore constituting 98% of the total investments. The Non-SLR investments declined by 107 croremainly on account of redemption of Security Receipts to the extent of 105 crore. The Bank utilized the volatile yield movements during the year and through the timely sale of securities, the Bank could book a profit to the tune of 233.41 crore as against 159.60 crore made last year.

Forex Treasury

During the financial year 2020-21, Indian Rupee strengthened against USD by 3.70%. Indian rupee against USD opened at 75.95 and closed at 73.10. Major reason attributed for stronger rupee were corporate dollar inflows, gain in local equities and upbeat in risk appetite. During the first half of the financial year, due to the outbreak of the corona virus pandemic rupee depreciated. The large FPI inflows throughout the year favoured rupee amid the pandemic. The Central Banks reserves during the financial year grew by 22%. During the FY 2020-21, profit on our foreign exchange operation stood at 91.91 crore as against 84.62 crore during the previous year.


Net Worth

The paid-up Share Capital of the Bank increased from 73.73 crore as on 31 March, 2020 to 73.88 crore as on 31 March, 2021. During the reporting period the Bank has allotted 15,02,890 equity Shares to employees under Employee Stock Options pursuant to CUB ESOS Scheme 2008.

The Net worth of the Bank stands improved to 5,798.85 crore as on 31 March, 2021 from 5,253.24 crore as on 31 March, 2020.

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 2018 in a phased manner beginning from 31 March, 2015 @ 0.625% in each year up to 31 March, 2018. RBI had issued circulars regarding the extension of transitional period for full implementation of Basel III Capital Regulations based on the economic situation and also due to the continuing stress on account of COVID-19 crisis. The last tranche of Capital Conservation Buffer Framework has been deferred from 1 April, 2021 to 1 October, 2021 and it shall continue to apply till the CCB attains the level of 2.5% on 1 October, 2021.

The CRAR required to be maintained for the period ended is 10.875%. The Bank has maintained Tier I CRAR of 18.45% and total CRAR of 19.52% as at 31 March, 2021 which are well above the norm prescribed by RBI.



Pursuant to RBI circular Nos.DOR.BP.BC.No.29/21.02.067 / 2020-21 dt. 4 December, 2020 and DOR.ACC.REC. 7/21.02.067/2021-22 dt. 22 April, 2021 read with Dividend Distribution Policy of the Bank, the Board of the

Bank at its meeting held on 28 May, 2021 had declared an Interim Dividend of 0.30 per equity share of Face Value of 1/- each for the year ended 31 March, 2021 (previous year 0.50 per equity share) and the dividend has been paid within prescribed time to all shareholders subject to applicable taxes as per the amendments introduced by the

Finance Act, 2020 w.e.f. 1 April, 2020. In case any shareholder has not claimed such dividend or of previous years, they may kindly approach the Bank or its RTA.

The Dividend Distribution Policy of the Bank referred above has been framed in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same has been uploaded in the website of the Bank. Weblink:


Our Bank did not go for any aggressive branch expansion during the year and it added only 2 branches to total 702 as on 31 March, 2021. The total number of ATMs stood at 1,724 (includes 766 Bulk Note Recycler Machines (BRM) which performs the job of accepting and dispensing cash).

During the reporting year, the Bank has replaced old BRM machines with new ones and closed loss making o site ATMs, the details of which are as follows:

Particulars ATM BRM Total
Opened 33 174 207
Closed 70 206 276

As said earlier considering the lockdown situation, the Bank did not resort to expanding its geographical network. At the same time it also closed some of its inoperative / loss making ATMs and BRMs.

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.


Financial Inclusion is a concept where the banking financial solution and services are offered to every individual without any forms of discrimination as was as to ensure even the under privileged get easy access to banking channels. The objectives of financial inclusion are to provide the following: l Basic no frills banking account for making and receiving payments.

Servicing products (including investment and pension)

Simple credit products and overdrafts linked with no frills account

Remittance or money transfer facilities

Micro Insurance (life) and Non-Micro Insurance (non-life)

Micro Pension

The concept of Financial Inclusion is being successfully implemented in your Bank. Your Bank is showing tremendous progress in providing basic banking services, especially to the rural citizens. We have got 1,08,169 No Frills accounts and 47 number of OD linked with such accounts. Your Bank has made successful implementation of PMJDY and other Government schemes, at the villages for connecting the underprivileged with our banking network, by conducting frequent campaigns. The Bank has 85,952 PMJDY accounts for March 2021.

By way of establishing BC Outlets, at the unbanked areas and with the introduction of technology products, we are able to provide all the banking services to the rural poor. We have 9 BC outlets in the unbanked areas and 132 BCs are rendering services to the village level beneficiaries.

Your Bank is very much keen in creating an awareness for the Government schemes for Pension, Insurance etc., such as Atal Pension Yojana, MUDRA, PMJJBY, PMSBY etc. We have 63,951 accounts under PMJJBY, 1,03,356 accounts under PMSBY and 30,255 accounts under PMAPY schemes. The Bank has e-KYC system and Aadhaar enabled Payment System (AePS) which helps to render quick services to the rural poor. Besides, the Bank has deployed POS machines at various locations which are very much helpful for doing merchant transactions.

The Customer base of your Bank has recorded an increase through Financial Inclusion and by rendering services through technology products in the unbanked areas, we have created confidence in the minds of the people to get uninterrupted banking services. The Business Correspondents make regular visits to the Villages and provide the banking services at their doorstep. Your Bank is proud to extend its contribution to the social welfare schemes of the Government for our Nation building.

‘Financial Literacy Week is being conducted by the Bank with the aim of furthering _inancial literacy and also for developing credit discipline and encourage availing credit from formal _inancial institutions by the customers. As per the objectives of the National Strategy for Financial Education 2020-25, focus will be on the following three topics with a view to improve credit and reduce NPAs:

Timely repayment and credit score

Borrowing from Formal Institutions only

Responsible Borrowing

The Bank conducted campaigns at various places for observing the Financial Literacy Week in an e ective manner and to educate its customers properly.


Development of Human resources is an important factor for the growth of any organisation and it involves various aspects including training for improving managerial skills. Your Bank places great value on developing and nurturing its human capital as a critical resource in its e orts for value creation. All CUBians (Employees) periodically undergo in-house and external training programmes for developing their functional and behavioural skills. The Bank has two Sta Training Colleges one at Kumbakonam and other at Chennai both of which has got a state of the art infrastructure facilities and expert faculty members to impart training. Executives and Of icers are sponsored to undergo training programmes at IIMs, NIBM, CAB, CAFRAL, SIBSTC, IDRBT etc. There also exists a capacity building program in the Bank as per which employees are encouraged to qualify / get certi ied 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.

In the context of COVID 19, considering the need to adhere to safety norms & to continue the professional development of its employees, the Bank has developed an e-learning Management System (LMS). LMS is a software application for administration, documentation, tracking, reporting and delivery of educational courses / training programmes. It facilitates online learning process at users convenience.

During November 2020, the Board of the Bank constituted a Settlement Committee to consider the Charter of demands made by CUB Of icers Association (CUBOA) & CUB Sta Union (CUBSU) and revise the pay structure of Employees. To mention, it was even in times of pandemic the management of the Bank negotiated and agreed for a new Pay Settlement with CUB Of_icers Association (CUBOA) & CUB Sta Union (CUBSU) for the bene it of employees. Further, with a view to motivate and boost employee morale, it has advanced the Pay Settlement in December 2020 itself which was supposed to be taken up for negotiation only in September 2021. The new settlement came into e ect from 1 January, 2021. Further, based on the recommendations made by the Compensation & Remuneration Committee of the Board, the Board of the Bank during March 2021 approved a revised pay structure for Executives of the Bank to take e ect retrospectively from January 2021.

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 31 March, 2021, the Bank has 5,843 on-roll employees comprising of 50 employees in Executive cadre, 2,349 in Management cadre, 3,192 in Clerical cadre and 252 in Subordinate Sta cadre.

Besides above, the HR function of the Bank also determines and o ers employee stock options to employees to create a sense of ownership, the details of which are detailed below.

Employees Stock Option Scheme (ESOS)

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 26 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 o ers ESOS to its employees which vests over a period of _ive years from the date of grant of options i.e., 15% options each for _irst three years and 25% and 30% for fourth and _ifth year respectively. The shares are o ered 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 Regulations"). As at the end of 31 March, 2021, the Bank has 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 Regulations have been set out in the website of the Bank and also the same is annexed hereto as Annexure I weblink:

In addition, the shareholders of the Bank at its meeting held on 23 August, 2017 approved new CUB ESOS Scheme 2017 for 3,00,00,000 options on terms and conditions similar to previous one. During the reporting year out of 3,00,00,000 options 34,62,000 stock options were granted to the eligible employees under CUB ESOS Scheme 2017.


Technology has carved a niche place in Banks service to the customers, managing and fulfilling customer demands and providing enhanced quality service. Due to the advancement of Information Technology, availability of Internet services through Mobile phones at affordable cost and customers inclination, particularly the millennials, digital banking has become the order of the day. Due to COVID-19 pandemic, lockdown at various states and social distancing, technology services enable banks and other service industries deliver the service to customers through digital channels.

The Bank has implemented various Digital solutions / products to enable customers to remove the time and distance barriers in availing Banking services. The Bank, as on 31 March, 2021, had 702 branches, 1,724 ATM / BRM (ATMs - 958, BRM - 766), Passbook Kiosk - 633 and Cheque deposit Kiosk - 543 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.

The Bank is deploying all possible technology enabled & digital payment systems to cater to the needs of customers. One such product was the "Video KYC" based account opening implemented by the Bank which has become handy in the days of pandemic. Further, the Bank has introduced Social Media Banking through Whatsapp, Facebook, Twitter and YouTube. Other products & services include:

All-in-One Mobile Banking app with interactive voice chat which offers a variety of services to its customers.

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.

Instant account opening through Welcome Kit, Video KYC through Selfie Banking, enabling DBT, Aadhaar Enabled Payment System (AEPS).

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

FASTag facility to make payments at Vehicle Toll Plazas.

Chat-bot service, powered by Artificial Intelligence (Ask Lakshmi) available.

Green PIN for PIN generation for ATM cards.

Virtual Credit Card through Internet / Mobile banking. SBI co-branded credit cards also available for customers.

Customers can now set their own limit for the ATM, POS and E-com channel transactions. 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.

EMV CHIP cards to enhance additional security for card based transactions. 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 multi-languages on 24x7 basis.

PCI DSS certification for the digital card environment.

Cyber Security Measures

As the convenience in doing banking transactions through digital channels increases so also, the risks in cyber environment. New types of cyber frauds are emerging with the introduction of new digital channels. As the Bankers are the custodians of Depositors money, we take utmost care to ensure cyber security measures are implemented.

The solutions implemented in our Bank cover the protection, detection and response for all cyber security threats and risks. The Bank has established a 24*7 Security Operation Centre (SOC). The SOC takes steps to prevent attempts from the IOC (Indicators of Compromise) and IOA (Indicators of Attack) which are received from regulators. The Bank participates in the quarterly cyber drills conducted by IDRBT to enhance our threat detection and prevention capabilities.

Efforts are being taken by the Bank to ensure efficient security implementation by educating & training concerned employees.


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.

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.

The services are fully functional and during the reporting

year the Bank has earned an income of 16.49 crore as against 11.75 crore from such services in the previous year.


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 12 (twelve) meetings were held, such details along with the constitution of the Board and its committees are given under report on Corporate Governance forming part of this report.


M. Narayanan (DIN 00682297)

Shri. M. Narayanan currently an Independent Director on the Board of the Bank was co-opted as an Additional Director w.e.f. 3 May, 2016, which was duly approved by the shareholders in their meeting held on 22 August, 2016. His current term is due to expire on 21 August, 2021.

In accordance with the provisions of Section 149(10) of the Companies Act, 2013, an Independent Director can hold office for a maximum term of upto five (5) consecutive years on the Board of the company and shall be eligible for re-appointment for another term of five years subject to passing of Special Resolution by the members and disclosure of such appointment on Boards Report. Further, in respect of Banking Companies, the provisions of section 10A(2) of the Banking Regulation Act, 1949 (Banking Act) specify that the overall tenure of non-executive Directors should not exceed a period of eight (8) consecutive years.

Keeping in view the provisions of both the Companies Act, 2013 and the Banking Regulation Act, 1949 and pursuant to the recommendations of the Nomination Committee, the Board of Directors of the Bank at its meeting held on 25 June, 2021 considered and approved the proposal to re-appoint Shri. M. Narayanan as Independent Director on the Board of the Bank w.e.f., 22 August, 2021 for the remaining period upto 2 May, 2024 as permitted under the Banking Regulation Act from the date of his first appointment in the Bank subject to the approval of Shareholders by means of Special Resolution at the ensuing Annual General Meeting of the Bank.

Accordingly, the Board recommends the re-appointment of Shri. M. Narayanan for a second term as an Independent Director on the Board of the Bank (not liable to retire by rotation) for approval by shareholders in the Notice calling this Annual General Meeting.

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

As per the provisions of Section 196 of the Companies Act, 2013, the terms & conditions for appointment and remuneration payable to Managing / Whole Time Director requires the approval of shareholders. The re-appointment of Dr. N. Kamakodi, MD & CEO, has already been approved by RBI vide its communication dated 20 April, 2020 followed by the shareholders at its previous meeting held on 14 August, 2020.

The Reserve Bank of India issued guidelines on Compensation to Whole time Directors, CEOs, Material Risk Takers and Control Function Staffs of Private Sector Banks dt. 4 November, 2019, as per which all Private Sector Banks while computing the total Fixed Pay of Whole time Directors and CEOs, shall quantify the monetary value of all perquisites proposed to be paid to them and include the same in salary component. Accordingly, the Bank made an application to RBI in the prescribed format seeking its approval for remuneration of Dr. N. Kamakodi, to take effect upon re-appointment i.e. 1 May, 2020.

The Reserve Bank of India vide its letter number DOR.Appt.No.1629/08.42.001/2020-21 dt. 3 December, 2020 accorded its approval for a fixed pay of Dr. N. Kamakodi, MD & CEO of the Bank w.e.f. 1 May, 2020. To mention, the shareholders at its earlier meeting held on 14 August, 2020, approved the re-appointment as aforesaid together with the terms of remuneration as may be approved by RBI and agreed to by the Board. In view of this, the remuneration so approved by RBI as aforesaid, is set out in the notice calling this Annual General Meeting for approval by members.

Shri. S Bernard (DIN : 01719441)

Shri. S. Bernard, Independent Director on the Board of the Bank vacated his office of Director on the close of business hours of 19 August, 2020 on account of completion of tenure in terms of the provisions of Section 10A(2A)(i) of the Banking Regulation Act, 1949.

The Board hereby places on record its warm appreciation over the excellent services rendered by Shri. S Bernard during his tenure.

Directors 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. 22 October, 2019, all Independent Directors of the Bank have registered themselves in the Independent Directors data bank 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, MD & CEO and Chairman.

The necessary evaluations / review were carried out by the Board and Independent Directors to determine the effectiveness of the Board, its Committees, MD & CEO 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, the present Statutory Central Auditors, of the Bank will complete their four (4) years term at the ensuing Annual General meeting (AGM) and accordingly in terms of RBI letter No.DOS.ARG.No.PS- 13/08.13.005/2019-20 dt. 17 June, 2020 read with relevant provisions of Companies Act, 2013, they will retire at the conclusion of ensuing AGM.

The Reserve Bank of India vide its Circular No. Ref. No. DoS.CO.ARG / SEC.01 / 08.91.001 / 2021-22 dated 27 April, 2021 notified guidelines for appointment of Statutory Central Auditors (SCAs) / Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) applicable w.e.f. FY 2021-22 and onwards as per which, the Bank is subject to appoint minimum two SCAs. In terms of such guideline read with the policy of the Bank on appointment of SCAs and the provisions of Section 139 of the Companies Act, 2013, the Board, as per the recommendations of Audit Committee had considered & approved the appointment of M/s. Jagannathan & Sarabeswaran, Chartered Accountants (FRN 001204S) and M/s. K Gopal Rao & Co., Chartered Accountants (FRN 000956S) as SCAs of the Bank for FY 2021-22 subject to the approval of RBI. In this regard an application was made to RBI seeking its approval for appointment of Statutory Central Auditors of the Bank for FY 2021-22. The RBI vide its letter no. Ref CO.DOS.RPD.No.S201/08-13-005/2021-2022 dt. June 21, 2021 has accorded its approval for their appointment which will be effective from the conclusion of present AGM.

With respect to the above appointments, the Bank has received the consent from such Auditors and 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. Members are kindly requested to consider and approve their appointments as Statutory Central Auditors of the Bank which is recommended as per new guidelines of RBI, for FY 2021-22.

The Statutory Central Auditors have furnished their Report for FY 2021 which forms part of his 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 under section 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, Practising Company Secretaries, Tiruchirapalli as Secretarial Auditor to conduct the Secretarial Audit of the Bank for the Financial Year 2020-2021. The report of Secretarial Auditor Secretarial Audit Report in the prescribed format is annexed to this report as Annexure II.

Pursuant to Regulations 24A of SEBI Listing Regulations 2015, read with relevant SEBI circular the Bank has obtained Secretarial Compliance Report certified by such auditor for the financial year ended 31 March, 2021, on compliance of all applicable SEBI regulations and cir culars / guidelines issued thereunder and the copy of the same was submitted with the stock exchanges.

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; and

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 as amended from time to time ("SEBI PIT Regulations") 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 Integrated Registry Management Services Private Limited, {the new Registrar & Transfer Agent of the Bank (RTA) w.e.f. 22 January, 2021} 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. Earlier till appointment of new RTA, the same was facilitated by KFin Technologies Private Limited (the erstwhile RTA).


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., 31 March, 2021 and the date of Directors Report i.e., 25 June, 2021.

During the year under review, no significant and material orders have been passed by the Regulators. However, during May 2021 the Reserve Bank of India has imposed a monetary penalty of 1 crore (Rupees One crore only) for non compliance with certain RBI directions procedural aspects relating to obtaining of collaterals in respect of some loans to MSME Sector & Education and prescribing margin for Agriculture Credit.


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 proposed candidate for the position of Director 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 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 the proposed candidate for the position of Director 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 detailed 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, your Bank has prepared the Business Responsibility Report describing the Banks social, environmental and governance aspects. The same is set out as a separate report forming part of this 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 Section 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 have 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. weblink:


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.


The web-link for the Annual Return pursuant to Section 92(3) of the Companies Act, 2013 is as follows. Weblink:


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 suitable deserving projects, recommend and oversee 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 III to 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 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 solar panels wherever feasible and power saving LED bulbs at majority of Branches and Central Office.

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 IV.

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 V.

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.

There exists an online Grievance redressal forum for women employees in the intranet server of the Bank wherein women employees of the Bank can file their Grievance / complaint under the act. No compliant was received in this regard during FY 2020-2021.


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. weblink:

There exists an online forum for all employees in the intranet server of the Bank to report genuine concerns under the mechanism. No application / compliant was received in this regard during FY 2020-21.

All employees and Directors have access to the Chairman of the Audit Committee under extraordinary 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, NPCI, Stock Exchanges, Depositories, Integrated Registry Management Services Private Limited, KFin Technologies Pvt. Ltd., Life Insurance Corporation of India, United India Insurance, New India Assurance, Star Health and Allied Insurance Company Limited, 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 all other employees.

For and on behalf of the Board
R. Mohan
Place : Kumbakonam DIN: 06902614
Date : 25 June, 2021 Chairman