Dhanlaxmi Bank Ltd Directors Report.
It gives the Board pleasure to place before you the highlights of your Banks performance during the financial year 2017 - 18. Details of the achievements and initiatives taken by the Bank are provided in the 91st Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2018 and the Profit and Loss Account for the year ended on that date. It has been a challenging year with the Bank focusing on working towards improving its performance in the medium term.
Your banks operating environment remained a cause for concern with the private investment climate and economic sectors under same pressure.
The salient features of the Banks performance for the financial year ended March 31,2018 are:
1. Major Developments in the Bank
Operating Profit improved by 55.39% from 94.07 crore to 146.18 crore, which is the ever highest in the history of the bank
Net interest income grew by 4.28% from 331.60 crore to 345.80 crore
Net Interest Margin improved from 2.76% to 2.90%
CRAR improved from 10.26% to 13.87%
Total expenses reduced by 14.06% from 1106.00 crore to 969.61 crore
Interest expenditure reduced by 13.47% from 757.45 crore to 667.52 crore
Operating expenses reduced by 15.37% from 348.55 crore to 302.09 crore
Cost of deposits reduced by 64bps, from 6.48% to 5.84%
Cost of funds also reduced by 63bps (Y-o-Y basis), from 6.61% to 5.98%
Cost income ratio reduced from 78.75% to 67.39%
Provision coverage ratio as on 31.03.2018 is 80.02%.
Bank achieved an operating profit of 146.18 crore for the year ended March 31, 2018. In view of higher provisions, Bank incurred Net Loss of 24.87 crore. On a conservative basis, Bank provided in full for gratuity liability of 7.61 crore, mark-to-market losses on investments of 1 9.81 crore and full provision for an account in the Gems & Jewellery sector of 50 crore.
In the current financial year, Bank is mainly focusing on the growth of retail loans, non interest income, current and savings bank deposit and reduction of non performing assets.
Capital and Reserves
The Banks Paid up capital and reserves was 749.46 crore as on 31.03.2018. The capital adequacy ratio as per Basel II and Basel III was 14.15% and 13.87% respectively,
The total Business of the Bank as on 31 .03.201 8 stood at 17436.06 crore as against 17976.69 crore as on 31.03.2017.
The total Deposits of the Bank stood at 10919.66 crore as on 31.03.2018 as against 11293.68 crore as on 31.03.2017.
The Banks total advance stood at 6516.40 crore as on 31.03.2018 as against 6683.01 crore as on 31.03.2017.
The banks operating profit during the year was 1 46.1 8 crore as against 94.07 crore during the previous year. The bank declared a net loss of 24.87 crore during the year under report and for the previous year, the bank has net profit of 12.38 crore.
The Board has not recommended any dividend in the financial year 2017-2018.
Vision & Mission
Our Vision: "Banking on Relationships forever".
Our Mission: To Become a Strong and Innovative Bank with Integrity and Social Responsibility to Maximize Customer Satisfaction as well as that of the Employees, Shareholders and the Society,
Non - Performing Assets
Recovery in the current financial year was 202.42 crores (including cash recovery & upgradation) against the previous year figures of 109.12 crores.
The provision requirement for current year was 127.29 crores as against 76.42 crores in the previous financial year.
During the year the new slippage to NPA in the Bank was 358,33 crores in comparison with the figure of 154,76 crores of the previous year,
Gross NPA and Net NPA percentage stood at 7.35% & 3.19% respectively in the current year against 4.78% to and 2.58% in the previous year,
The provision coverage ratio (PCR) which was 79.99% as on 31.03.2017 stood at 80.02% in the current year.
The Bank attaches very high importance to the quality of customer service rendered across its branches / offices, It has taken a series of measures during the year through deployment of technology and for significantly enhancing service quality, A well defined and full-fledged Customer Grievance Redressal Mechanism is put in place in the Bank,
The Customer Service Committees comprising of Bank personnel as well as our constituents monitors the implementation of customer service measures periodically, Customer Service Committee of the Board have been formed at the apex level and at branches also for monitoring service quality and bringing about improvements in this area on an ongoing basis, The Bank has a 24x7 Phone Banking Call Centre at Thrissur as an outsourced model to cater to customer needs across the country,
The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI,
During the financial year 2017-18, the Bank received 13,233 complaints as against a total of 8211 complaints received in the previous financial year, The organized structure for handling complaints at Branches, Regional Offices, ATM Reconciliation Desk, Call Centre and Corporate Office who are in turn handling all transactions and services for the customers has helped the Bank in better customer service and early resolution of complaints,
|Particulars||Contact Centre||ATM Recon||RO & CO||Banking Ombudsman||Total|
|No, of complaints outstanding at the beginning of the year||11||25||2||3||41|
|No, of complaints received during the year||3627||9507||79||20||13233|
|No, of complaints resolved during the year||3631||9529||77||21||13258|
|No, of complaints pending during the year||7||3||4||2||16|
Customer Touch Points
The Banks customer outlets stood at 617 as on 31,03,2018, comprising 258 branches, 346 ATMs, 11 RPCs, CPC & Treasury, We have concentrated on consolidating our operations across the country and thereby aiming at utilizing our branches to their fullest potential,
The following important products and services were introduced during the year for the benefit of the customers:
Tie up with Bajaj Allianz Life Insurance Company Limited:
We have renewed the tie-up with M/s Bajaj Allianz Life Insurance Company (BALIC) Limited for distribution of Life Insurance (LI) policies as per new IRDAI guidelines, As the tie up has been activated, we have advised our branches to commence marketing of life insurance policies, The marketing activities will focus on sales of traditional LI policies, as branches were doing earlier, We have advised our branches to extend all possible support to the officials of BALIC for proper exhibition of publicity materials within branch premises,
New Insurance Tie-Ups with Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. (CHOICe) and DHFL Pramerica Life Insurance Company Ltd. (DPLI) :
As an endeavour to provide more choices on Life Insurance solutions for our customers, Bank has entered into corporate agency tie-up with Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. (CHOICe) and DHFL Pramerica Life Insurance Company Ltd, (DPLI), CHOICe was launched in June 2008 as a joint venture owned by two of Indias largest public sector banks - Canara Bank (Holding 51%) and Oriental Bank of Commerce (23%) along with HSBC Insurance (Asia Pacific) Holdings Ltd. (26%). DPLI is a joint venture between Dewan Housing Corporation Ltd, (DHFL), Indias second largest private sector housing finance company and Prudential International Insurance Holdings Ltd, (PIIH), a fully owned subsidiary of Prudential Financial, Inc, (PFI) which is a financial service leader headquartered in the U,S,
CHOICe has been conferred with significant accolades and recognition on its journey, which includes, Masters of Modern Marketing Awards 2017 (mCube Awards), Golden Peacock Award for Corporate Ethics - 2016, Golden Peacock Award for Corporate Social Responsibility - 2016 etc, This reflects the companys inherent strength and success of the Bancassurance model, DHFL Pramerica Life Insurance Company Limited is one of the fastest growing life insurance companies in India. The company is headquartered in Gurgaon, having 79 branches across India. Presently they have 2107 Cr asset under management and 8 million lives are insured with them. We are sure that these new tie ups will empower us to satisfy our customers life insurance needs better and explore more cross sell opportunities.
Setting up Aadhaar Enrolment, update and authentication facilities inside the Bank Premises: As per the provisions of amendment made to Prevention of Money Laundering (Maintenance of Records) Rules, 2005, each Bank is required to seed and verify the Aadhaar number for all eligible Bank accounts / relationship of individuals as prescribed under Aadhaar authentication process, before December 31, 2017, failing which all such accounts will become inoperative.
To ensure that account holders / public are not facing any difficulty in linking their Aadhaar number with their bank accounts and also verifying them through Aadhaar authentication, Banks need to provide Aadhaar enrolment, Aadhaar update and authentication facilities inside the Branch premises latest by September 30, 2017. All our branches have the Biometric machine. Our Bank has also been appointed as Registrar authorised by Unique Identification Authority of India (UIDAI) for the purpose of enrolling individuals under the Aadhaar (Enrolment and Update) Regulations, 2016. To facilitate the same, Bank has chosen to avail the services of empanelled Enrolling Agency authorised by UIDAI for the enrolment and update process. Bank has identified 26 Branches to act as Aadhaar enrolment/ update centers. We have displayed the details of the same in our branches for the convenience of our customers and general public.
Introduction of Dhanam Customer Acquisition and Management System (DCAMS) : With a view to take care of the regulatory and compliance requirements especially in the backdrop of new regulations including FATCA/CRS, CKYCR, etc. and to enable the Bank officials access customer information in a hassle-free manner for smooth conduct of the business, redefining and evolving a new approach for creation of Customer ID and customer on-boarding was necessary, It is christened as DCAMS (Dhanam Customer Acquisition and Management System).
With the introduction DCAMS, Bank aims to capture digitalized images of all documents submitted by the customer and its identification details including number, expiry date, date of issue, place of issue, etc. to comply with the various instructions/ guidelines issued by the regulator. set centralized repository of all kind of forms and documents related to customer ID creation and account opening, which any authorized users can access.
Bank aims to set centralized repository of all kind of forms and documents related to customer ID creation and account opening, which any authorized users can access. Bank aims to ensure various data validations and checks on customer acquisition and prepare effective MIS and address the requirements under Central KYC Records Registry (CKYCR).
Our Banks 91st Foundation Day (Navathi) Celebrations: Our
Bank completed 90 years of glorious service to society on November 14th, 2017. As we step into our 91st year of operations, anniversary celebrations are conducted in a grand manner from 14.11.2017 to 13.12.2017 at all our Branches and Offices with a special focus on new business acquisitions and customer service delivery, We instructed all our branches to conduct public function on the anniversary day and our prominent customers were invited as Chief Guest for the function at all our branches throughout the country.
Western Union Money Transfer Service: Our Bank has a tie-up arrangement with Weizmann Forex Ltd. (WFL) which is a principal agent to Western Union. Western Union provides Money Transfer Services across the globe, popularly known as Western Union Money Transfer Service (WUMT). We have directed our branches to do maximum transactions through Western Union Money Transfer Service, which is very convenient to our customers and adds to non interest income of the Bank. We have also advised our branches to ensure that Western Union Money Transfer Service customers are provided prompt and quick service.
Revised Demat Account Opening Forms: To comply with the various circulars issued by Government of India and SEBI/NSDL on KYC and Nomination facilities, the Demat account opening form has been revised with effect from 01st February, 2018. The new account opening form has three parts namely KYC Form, Account Opening Form and Nomination Form.
NRO Recurring Deposit: In order to empower our branches to improve NR Portfolio, we have introduced a new product named "Dhanam Recurring Deposit (NRO)" Product Code (24) - an exclusive Recurring Deposit account to cater to the needs of our NR Customers. The main objective of this new product introduction is to attract, acquire and retain the NR segment resulting in a spurt of our Recurring Deposit portfolio. The main features of NRO Recurring Deposit is as follows:
NRO RD can be opened and maintained by Non Resident Indians (NRIs) in Indian Rupees only,
Deposit period ranges from 12 months to 120 months.
Minimum monthly instalment of 500/-.
Normal NRO deposit rates are applicable.
No interest will be paid if closed before one year.
Maturity value will be mentioned in the NRO RD Pass Book.
Credit of proceeds will be given to NRO account only,
Interest earned on the account is taxable as per Double Taxation Avoidance Agreement (DTAA).
Internal Ombudsman of the Bank: The Bank has appointed Sri Bhasi K. V,, Deputy General Manager & Chief Financial Officer (CFO) as the new Internal Ombudsman of the Bank, The contact details of the Internal Ombudsman will be made available to customers approaching for resolutions, The Internal Ombudsman functions as a third person in resolving customer complaints and his view will be unbiased, The details of Internal Ombudsman have been incorporated in our website as well as notice board in our branches.
Restriction on Usage of Toll Free Customer Care Number and Stoppage of Call Back Facility: Based on the inferences from a cost effective study, the usage of our existing Toll Free No. 1800 425 1747 has been restricted with effect from 01st March, 2018. The Toll Free Number will be henceforth exclusively used only for Grievance/Complaints. For all other purpose, 0487 6613000 will be used for contacting the Customer Care. With effect from 21st January, 2014, we had introduced Missed Call - Call Back services. Based on an analysis, we have withdrawn the Missed Call - Call Back Service with effect from 01st March, 2018.
International Womens Day: International Womens Day (IWD) is celebrated on 8th March every year, On the occasion of International Womens day, we have conducted a BIG DAY in all our Branches and Offices, As a part of the Big Day, we issued instruction to our branches to greet all female customers who visited our branches / offices on this day and honour minimum five prominent women personalities in every branches. We canvassed 1121 Dhanam Vanitha accounts with value 62 lakh as a part of the Big Day.
Launch of Aadhaar Enrolment and update Activities in Identified Branches (Aadhaar Enrolment and Update Centres):
We have started the enrolment centres at all our identified 26 branches with the UIDAI Certified staff members as Operators and Supervisors for the benefit of our esteemed customers and general public.
Reduction in maximum loadable amount in Gift Card for individual applicants, from 50,000/- to 10,000/- : Our Bank is offering rupee denominated prepaid gift card - Dhanlaxmi Bank Gift Card - suitable for all gifting purposes. The gift card can also be used for corporate gifting to employees, vendors, clients etc. The gift cards shall be available off-the-shelf at all our branches and are ready to use once purchased from the Banks branch. As per the latest Master direction from RBI, the maximum amount that can be loaded in gift card for individual applicants is reduced from 50,000/- to 10,000/-. For Corporates, the maximum loadable amount is capped at 5,000/- per card, which remains the same as earlier.
New Tie-up for deploying PoS Machines (PSTN, Mobile PoS, Digital and Paper based GPRS PoS Machines): Our Bank has entered into an arrangement with new vendor M/s. India Transact Services Limited for the management and servicing of PoS terminals to our customers. At present, we are carrying out the PoS Migration from M/S BTI Payments to M/s.Bijlipay, Since M/s.Bijlipay doesnt have the PSTN terminals, we have tied up with M/s. India Transact Services Limited. Through this arrangement with M/s. India Transact Services Limited, deployment of latest version of PSTN, MPoS, Digital and Paper based GPRS PoS terminals will be available to our customers.
Investor Education and Protection Fund
During the year, the Bank transferred 8,67,331/-, being the unclaimed / unpaid dividend for the financial year 2009-10, to the investor Education and Protection Fund (IEPF) in accordance with the provisions of Section 125 of the Companies Act, 2013.
In terms of Section 124 (6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time to time, it may be noted that if the dividends have been unpaid or unclaimed for seven consecutive years or more the underlying shares shall be transferred to the IEPF Demat Account maintained with depositories. Upon transfer of such shares to IEPF account, all benefits (e.g. bonus, spilt, etc.), if any, accruing on such shares shall also be credited to the IEPF Demat Account and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. The members/claimants whose shares, unclaimed dividend etc. have been transferred to IEPF authority may claim the shares or apply for refund by making an application to IEPF authority as per the procedure prescribed in the IEPF Rule. Letters were sent to shareholders whose dividend amount for FY 2010-11 were outstanding indicating a timeline to claim the outstanding dividend amounts.
Listing on Stock Exchanges
The Equity shares of the Bank are listed on BSE Ltd. and National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the financial year 2018-19.
Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013
The Bank has zero tolerance approach towards any action on the part of any executive/employee which may fall under the ambit of "Sexual Harassment" at work place, and is fully committed to uphold and maintain the dignity of woman staff working in the Bank. The policy provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy,
Number of complaints pending as on the beginning of the financial year - Nil
Number of complaints filed during the financial year - 01 Number of complaints pending as on the end of the financial year - Nil
Particulars of employees
The Bank has no employee whose particulars are required to be given in terms of Section 197 of the Companies Act, 2013 read with Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The ratio of the remuneration of each Director to the median employees remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report.
Green Initiatives in Corporate Governance
The Bank supports and pursues the Green Initiative of the Ministry of Corporate Affairs. All the documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directors Report and Auditors Report is being sent electronically to all shareholders who have registered their e-mail addresses with their Depository Participants or with the Banks Registrar & Transfer Agents. Shareholders holding shares in electronic form are requested to update their e-mail addresses in their respective DP accounts. Shareholders holding shares in physical form are requested to update their e-mail addresses with Banks Registrar and Transfer Agents by a written request if they require electronic delivery of documents.
The composition of the Board of Directors of the Bank is in accordance with the Banking Regulation Act, 1 949, the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the best practices of Corporate Governance. As on March 31, 2018, the Board comprises 11 Directors including Managing Director & CEO, 7 non-executive Directors and 3 nominee Directors. All the Directors have rich experience and specialized knowledge in various sectors like banking, economics, co-operation and accountancy. The remuneration / sitting fees paid to the Directors during the year is disclosed in Report on Corporate Governance.
There are 6 independent Directors on the Board of the Bank as on March 31,2018. Declarations have been taken from Independent Directors as required under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines.
Changes in the Board
Sri Sajeev Krishnan (DIN-08066443) was appointed as additional Director (independent category) by the Board of Directors of the Bank w.e.f. February 08, 2018. Subsequently, Sri Sajeev Krishnan has been appointed as part-time Chairman of the Board of the Bank for a period of three years w.e.f. May 23, 2018, with the prior approval of Reserve Bank of India (RBI).
Sri Gopinathan C. K. (DIN-01236752) was re-appointed as nonindependent Director of the Bank, liable to retire by rotation, at the 90th Annual General Meeting of the Bank held on September 30, 2017.
Sri P S. Sreekumar (DIN-07555178) was re-appointed as independent Director of the Bank, not liable to retire by rotation, at the 90th Annual General Meeting of the Bank held on September 30, 2017, for a period of two years with effect from the date of the Annual General Meeting, i.e., September 30, 2017.
Ms. N. Sara Rajendra Kumar (DIN-07854519) and Sri E. Madhavan (DIN-07373376) were appointed by Reserve Bank of India as Additional Directors on the Board of the Bank for a period of two years with effect from May 11,2017 to May 10, 2019 or till further orders.
Sri Arun Rao M. G. (DIN-07547651) has been appointed as Additional Director (non-independent category) by the Board of Directors of the Bank w.e.f. May 15, 2018. Previously he was Director of the Bank till September 28, 2017.
Sri K. N. Murali (DIN-07902366) has been appointed as Additional Director (independent category) by the Board of Directors of the Bank w.e.f. June 07, 2018.
RBI has approved the appointment of Ms. T. Latha (DIN-07491803) as Managing Director & CEO of the Bank for three years from the date of taking charge. Ms. T. Latha assumed charge as Managing Director & CEO w.e.f. July 2, 2018 in place of Sri G. Sreeram (DIN-05143385) who retired from office on July 01,2018 on completion of his tenure.
Dr. Jayaram Nayar (DIN-07395031) ceased to be part-time Chairman of the Board of the Bank w.e.f. January 04, 2018. Sri G. Vijaya Raghavan (DIN-0000029021) was appointed as independent Director of the Bank, not liable to retire by rotation, at the 90th Annual General Meeting of the Bank held on September 30, 2017, for a period of two years with effect from the date of the Annual General Meeting, i.e., September 30, 2017. Sri G. Vijaya Raghavan ceased to be Director on the Board of the Bank w.e.f. May 16, 2018. Sri Ft Mohanan (DIN-01463603) ceased to be Director on the Board of the Bank w.e.f. April 20, 2018 on completion of tenure of office. The Board places on record its appreciation for the invaluable services rendered by them during their tenure as Directors on the Board of the Bank.
Composition of Audit Committee
The Board of the Bank has constituted a seven member Audit
Committee. All the seven members of the Committee are non-executive Directors, with Sri Chella K. Srinivasan, who is a Chartered Accountant, as its Chairman and Sri Ft Mohanan, Sri Ft S. Sreekumar, Sri G. Vijaya Raghavan, Sri S. T. Kannan, Ms. N. Sara Rajendra Kumar and Sri E. Madhavan as the other members. The Committee has been constituted in accordance with regulatory requirements. The terms of reference of the Committee are in accordance with the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines.
Declaration by Independent Directors
The Bank has duly obtained necessary declarations from each independent Director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence as laid down in the Section 146(6) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The Bank has also obtained the Fit & Proper declaration as prescribed by the Reserve Bank of India.
Policy on appointment and remuneration of Directors
The Nomination & Remuneration Committee recommends the appointment / reappointment / continuation of Directors to the Board after conducting due diligence of the Directors on the basis of the "fit & proper" criteria prescribed by RBI along with the provisions of the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Nomination Policy approved by the Board. The Board will take the appropriate action based on the recommendations of the Nomination & Remuneration Committee.
The criteria for determining qualifications, positive attributes and independence of Directors to be appointed/re-appointed or for continuation of Directors include, inter-alia, the following:
Ensuring that the appointment/re-appointment/continuation is in conformity with the provisions of the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;
Ensuring that the criteria for independence of Directors as stated in the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is complied with, in case of independent Directors;
Ensuring that the person does not attract any disqualification as per the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;
Special knowledge or practical experience in various fields as enumerated in Section 1 0A(2)(a) of the Banking Regulation Act, 1949 or any other field which may be useful to the Bank;
Professional knowledge and experience;
Experience in the field of banking / finance sectors;
Interest in NBFCs and other entities;
Relatives connected with the Bank;
Fund and non-fund facilities availed from the Bank;
Defaults, if any, by the Director or interested entities with respect to the credit facilities availed from any Bank;
Professional achievements relevant to the office of Directorship;
Prosecution, if any, pending or commenced or resulting in conviction in the past against the director and / or against any of the interested entities for violation of economic laws and regulations;
Criminal prosecution, if any, pending or commenced or resulting in conviction in the past against the Director;
Any other factors as the Nomination & Remuneration Committee may think fit for the purpose of considering the appointment / re-appointment / continuation as Director
The Bank has a Board approved Compensation Policy which deals with the compensation & benefits of the Employees of the Bank.
The objectives of the Compensation Policy of the Bank inter-alia includes, to provide a fair and persistent basis for motivating, inspiring and rewarding the employees appropriately, according to their jobs/role size, performance, accomplishments, contribution, skill, aptitude and competence to implement standards on sound compensation practices and incentives and to provide effective governance of compensation payable to the employees, alignment of compensation with prudent risk taking and effective supervisory oversight. The disclosure requirement of the remuneration is separately provided in "Disclosure under Basel III norms."
The Board considers the recommendations of the Nomination & Remuneration Committee and approves the remuneration, with or without modifications, subject to regulatory approvals. The remuneration payable to Whole-time Directors/MD & CEO is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration to Whole-time Directors/MD & CEO is payable only after receipt of the approval from RBI.
The non-executive Directors are paid sitting fees for attending each meeting of the Board of Directors or any Committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending any change in the sitting fees considers various factors like size and complexity of organization, comparison with the peer banks and regulatory guidelines as applicable. Apart from sitting fees, the Bank does not pay any other remuneration to the non-executive Directors.
The total remuneration paid to MD & CEO and non-executive Directors for the financial year 2017-18 is included in the Report on Corporate Governance forming part of this Report.
The Remuneration Policy of the Bank is hosted on the website of the Bank http://www.dhanbank.com/investor_relations/inv_stat_ policy,aspx.
Board Level Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation of the Board as a whole, the individual Directors and various Committees of the Board are undertaken annually, The evaluation of the individual Directors is being done in the absence of the Director being evaluated.
A separate meeting of independent Directors evaluates the performance of non-independent Directors, Chairman and the Board as a whole. The separate meeting of independent Directors is held once in a year.
The criteria for performance evaluation of Directors, Board and its Committees include, inter-alia, the following:
Attendance at Board and various Committee meetings;
Participation and contribution in Board and Committee meetings;
Composition of the Board and its diversity;
Roles of various Committees of the Board;
Compliance and understanding of regulatory requirements;
Contribution to effective corporate governance and transparency in the Banks operations;
Updation of Knowledge and familiarization programmes conducted for Directors;
Appropriateness of decisions made by the Board and its Committees;
Quality, quantity and timeliness of flow of information to the Board;
Understanding by individual Directors for their roles and responsibilities as Director;
Contributions towards the performance and strategies of the Bank;
Conduct of Meetings;
Professionalism in the Board and Committees
Changes in Key Managerial Personnel (KMP)
There were no changes in Key Managerial Personnel (KMP) in the financial year 2017-18.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Companies Act, 2013, the Board had appointed Sri M. Vasudevan, Practicing Company Secretary, Thrissur as the Secretarial Auditor to conduct the Secretarial Audit of the Bank for the financial year 2017-18. The Bank has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The report of the Secretarial Auditor is annexed to this report. The Secretarial Audit Report for the financial year 2017-18 does not contain any qualification.
A separate report on Corporate Governance as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and certificate from Sri M. Vasudevan, Practicing Company Secretary certifying compliance with the conditions of Corporate Governance are annexed to this report.
Number of Board Meetings
A total of 10 Board Meetings were held during the year. The Board meetings were held in accordance with the regulatory requirements. The details of the meetings held are provided in the Corporate Governance Report that forms part of this Annual Report.
Extracts of Annual Return
Pursuant to Section 92 (3) of the Companies Act, 2013 read with Rule 12 (1) of the Companies (Management and Administration) Rules 2014, Extract of Annual Return as on the financial year ended March 31, 2017 in Form No. MGT - 9 is annexed to this report.
Related Party Transactions
The Bank has adopted the "Policy on materiality of related party transactions and dealing with related party transactions" in accordance with the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy is hosted on the website of the Bank www.dhanbank.com/ investor_relations/inv_stat_policy,aspx.
During the financial year, the Bank did not enter into any related party transactions with its Directors or their Relatives that would potentially conflict with and / or adversely affect the interests of the Bank, except the rent advance to Company Secretary and the remuneration paid to the Managing Director & CEO, Chief Financial Officer and Company Secretary, There was no related party transaction for which Form AOC-2 was applicable,
Material Changes and Commitments affecting Financial Position of the Bank
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., March 31, 2018 and the date of Directors Report, i.e., August 06, 2018.
The Bank does not have any subsidiary companies.
Strictures and Penalties
During the last three years, there were no penalties or strictures imposed on the Bank by the Stock exchanges(s) and/or SEBI and/ or any other statutory authorities on matters relating to capital market.
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank or the future operations of the Bank.
Management Discussion and Analysis Report
This has been dealt with in a separate section in the Annual Report.
Directors Responsibility Statement
Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013 with respect to the Directors Responsibility Statement, it is hereby confirmed that:-
(a) in the preparation of the annual accounts for the year ended March 31,2018, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) 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 Bank at the end of the financial year 2017-18 and of the profit and loss of the Bank for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively
Annexure to Directors Report for the year ended March 31, 2018
PARTICULARS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013
The ratio of the remuneration of each director to the median employees remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
|I The ratio of the remuneration of each director to the median remuneration of the employees for the financial year||Mr, G, Sreeram, Managing Director & CEO -||5,66:1|
|II The percentage increase in remuneration of each director, CEO, CFO, CS in financial year||Mr, G, Sreeram, Managing Director & CEO||Nil|
|Mr, Bhasi K, V,, Chief Financial Officer||12,57%|
|Mr. Santosh Kumar Barik, Company Secretary||6,42%|
|III The percentage increase in the median remuneration of employees in the financial year||5,47%|
|IV The number of permanent employees on the rolls of the Bank||There were 1883 employees as on March 31,2018|
|V The explanation on the relationship between average increase in remuneration and Bank performance Banks being part of Bipartite settlement entered into by IBA with workmen and officers, calculation of yearly increase in employee remuneration is done based on this and increase in dearness allowance is linked to consumer price index|
|VI Comparison of the remuneration of the Key Managerial Personnel against the performance of the Bank Performances of the Key Managerial Personnel were very good|
|VII||Variations in the market capitalization of the Bank, price earnings ratio as at the closing date of the current FY and previous FY and percentage increase over decrease in the market quotations of the shares of the Bank in comparison to the rate at which the Bank came out with the last public offer||The market capitalization of the Bank as on March 31, 2018 was 541.44 crore vis-a-vis 623.24 crore as on March 31, 2017|
|Market price per share as on March 31,2018 is 21.25 in BSE and 21.40 in NSE|
|VIII Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration There was no increase in salaries of employees other than managerial personnel except for normal annual increments and increase in dearness allowance which is linked to consumer price index and paid across banks as per the industry level wage settlement|
|IX Comparison of each remuneration of the Key Managerial Personnel against the performance of the Bank Performances of the Key Managerial Personnel were very good|
|X The key parameters for any variable component of remuneration availed by the directors Not Applicable as none of the directors have been paid any variable remuneration during the financial year 2017-18|
|XI The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year Not Applicable as there are no employees who received remuneration in excess of the highest paid director during the year|
|XII Affirmation that the remuneration is as per the remuneration policy of the Bank Yes, it is confirmed|
1. The median salary of the staff members is arrived by taking 12 months comparable gross salary,
2. Remuneration of MD and CEO is regulated by RBI guidelines.
The Board of Directors places on record its gratitude to the Government of India, Reserve Bank of India, State Governments, Securities and Exchange Board of India and other Regulatory bodies including stock exchanges where the Banks shares are listed for their support and guidance. The Board also places on record its gratitude to the Banks customers, shareholders, other stakeholders and well wishers for their valued patronage. The Board further places on record its appreciation for the valuable services rendered by M/s Sridhar & Co., Statutory Central Auditors of the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.
|By Order of the Board|
|Place : Thrissur||Sd/|
|Date : 06.08.2018||(Sajeev Krishnan)|