<dhhead>DIRECTORS’ REPORT </dhhead>
by eight Asset Recovery Branches spread across India for effective recovery. Your bank has also engaged recovery agencies to assist the Asset recovery Branches to reach the end customers and for continuous follow-up.
The Gross NPAs of your Bank downsized by Rs 1,972.89 Crore and dropped to Rs 1,458.15 Crore as on MarcRs 31, 2023, from the level of Rs 3,431.04 Crore as on MarcRs 31, 2022. Correspondingly, Net NPA of your Bank downsized by Rs 792.64 Crore and dropped to Rs 468.15 Crore as on MarcRs 31, 2023 from the level of Rs 1,260.79 Crore as on MarcRs 31, 2022. In terms of percentage, your Banks Gross Non-Performing Assets (Gross NPA) and Net Non-Performing Assets (Net NPA) downsized at 2.27% and 0.74% as against 6.03% and 2.31% of the previous year respectively. Further, your Banks SMA30+ levels has been well contained and confined to 0.56% as against 0.82% of previous year. Your Bank has carried out focused recovery drive on a continuous basis which resulted in improved recovery performance during the past three years. The Provision Coverage Ratio stood at 92.14% and your Bank is continuously strengthening the ratio for the past five years. Your Bank will take all possible steps to curtail slippages and expedite recovery in existing SMA / NPAs.
Your bank has implemented several measures to minimize slippages and enhance recovery, including strengthening credit risk assessment processes, implementing proactive monitoring systems, offering timely restructuring options for stressed borrowers, collaborating with specialized recovery agencies, leveraging data analytics for early warning signals, and streamlining legal and recovery frameworks. These steps ensure proactive identification of potential defaults, prompt action for resolution, and efficient recovery processes, ultimately contributing to the reduction of slippages and improved recovery rates.
Your Banks investment portfolio increased by RS 1,656.64 Crore and stood at RS 19,411.72 Crore as on MarcRs 31, 2023, registering a growth of 9.33% on RS 17,755.08 Crore as on MarcRs 31, 2022. The average investment for the financial year 2022-23 stood at RS 18,966.08 Crore. The investment portfolios composition is consistent with the Investment Policy of the Bank and lays stress on liquidity and regulatory management besides providing gains.
Interest income earned on investments during the financial year 2022-23 was RS 1,099.13 Crore as against RS 924.79 Crore in financial year 2021-22. Profit made on sale of investments was at ^ 17.27 Crore for the fiscal 2022-23. With a view to prevent large volatility, Modified Duration of overall portfolio including Held to Maturity
(HTM) was maintained at a lower level of 2.86 years. Liquidity position was maintained at comfortable levels throughout the financial year 2022-23.
FOREIGN EXCHANGE TRANSACTIONS
During the financial year 2022-23, Banks merchant turnover stood at RS 23,345 Crore as compared to the previous financial years level of RS 21,623 Crore. Banks Export credit was RS 1,270.50 Crore for the financial year 2022-23 as against RS 1,352.85 Crore of the previous financial year due to reduced demand from cotton export borrowers. Total Income earned through foreign exchange transactions was RS 65.12 Crore for the financial year 2022-23 as against RS 66.02 Crore for the previous financial year due to subdued revaluation gains on account of shrink in forward premiums. Exchange Profit of RS 33.82 Crore and Commission & others of RS 31.30 Crore forms part of total Income earned through foreign exchange transactions.
Your Banks Interest Income sizably increased by RS 928.88 Crore and reached RS 6,516.55 Crore for the financial year 2022-23, registering a growth of 16.62% on RS 5,587.67 Crore for the financial year 2021-22. Net Interest Income of your Bank increased by RS 633.44 Crore and reached to RS 3,348.81 Crore for financial year 2022-23, an increase of 23.33% on RS 2,715.37 Crore for the financial year 2021-22. The growth in Net Interest Income is in tandem with the topline growth in loan books of the Bank. Further, your Banks Non-Interest Income increased by RS 389.88 Crore and reached RS 1,158.94 Crore for the financial year 2022-23, an increase of 51 % on RS 769.06 Crore for the financial year 2021-22. The Yield on Advances and Investment stood at 8.93% and 5.80% respectively.
Your Banks Interest expenditure increased to RS 3,167.74 Crore during the financial year 2022-23, an increase of RS 295.44 Crore (10.29%), over the previous year Interest Expenditure of RS 2,872.30 Crore. The Operating expenses also increased to RS 2,031.96 Crore during the financial year 2022-23 from RS 1,854.22 Crore of the previous financial year in line with the business growth. Your Bank regularly monitored both its operating and establishment expenses during the year and tight controls were exercised on the expenditures.
Your Banks Cost of Deposits eased to 4.27% as against 4.31% of the previous financial year. The Net Interest Margin (NIM) improved by 46 bps and stood at 4.18% over the previous year position of 3.72%, Cost of Deposits decreased by 4 bps while yield on Advances has improved by 37 bps and Investment by 39 bps. Thus, cost of funds was lower by 3 bps whereas yield improved by 42 bps, aiding the spread improving by 48 bps to 3.50%.
Your Banks Operating Profit increased by RS 845.58 Crore and reached RS 2,475.79 Crore for the financial year 2022-23, registering a significant growth rate of 51.87% on RS 1,630.21 Crore for the financial year 2021-22.
The Net Profit of your Bank surpassed the historical milestone of RS 1,000 Crore and registered RS 1,106.09 Crore for the financial year 2022-23, a remarkable growth rate of 64.29% on RS 673.27 Crore for the financial year 2021-22.
The Net Profit of RS 1,106.09 Crore along with RS 2.39 Crore brought forward from the previous financial year, aggregating to RS 1,108.49 Crore, was appropriated as follows:
|Appropriation - Transfer to Reserves
Amount (Rs in Crore)
|Investment Fluctuation Reserve
|Balance carried to Balance Sheet (including Proposed Dividend of RS 160.41 Crore)
Your Bank has formulated the Dividend Distribution Policy as per the requirements of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("SEBI LODR") and guidelines issued by Reserve Bank India. The objective of the Policy is to ensure an equitable balance between rewarding the shareholders through dividend and retaining sufficient funds for future growth of the Bank subject to compliance with the dividend pay-out ratio matrix prescribed as per extant guidelines issued by Reserve Bank of India. The Dividend Distribution Policy is available on the Banks website at https://www.kvb.co.in/docs/dividend- distribution-policv.pdf
Accordingly, considering the capital position of the Bank and the quantum of dividend pay-out permitted, Board of Directors of the
Bank are pleased to recommend a Dividend of RS 2/- per equity share of face value of RS 2/- each i.e., 100%, for the financial year 202223. Your Bank has notified closure of Register of Members and Share Transfer Books from Tuesday, August 08, 2023 to Wednesday, August 23, 2023 (both days inclusive) for determining the names of members eligible for dividend on Equity shares. The Dividend pay-out is in accordance with Banks Dividend Distribution Policy and is subject to the approval of the shareholders at the ensuing 104th Annual General Meeting and also any regulatory/statutory authorities, if required.
In accordance with Accounting Standards 4 - Contingencies and Events occurring after the Balance Sheet date - notified by the MCA on MarcRs 30, 2016, the proposed dividend amounting to RS 160.41 Crore has not been shown as an appropriation from the Profit and Loss account as of MarcRs 31, 2023 and correspondingly not reported under Other Liabilities and Provisions as at MarcRs 31, 2023 (is reported under balance of profit).
The Authorised share capital of the Bank stood at RS 200 Crore divided into 100 Crore equity shares with a face value of RS 2/- each as on MarcRs 31, 2023. During the financial year under review, there has been no change in the Authorised share capital of the Bank.
During the financial year under review, Bank has allotted 20,41,791 Equity Shares of face value RS 2/- each to the employees who exercised their options under KVB ESOS 2011 Scheme and KVB ESOS 2018 Scheme during financial year 2022-23. Post allotment of the aforesaid equity shares, the Issued Share Capital increased from RS 160,13,55,212 to RS 160,54,38,794 comprising 80,27,19,397 equity shares with a face value RS 2/- each and the Paid-up Share Capital increased from RS 160,00,23,344 to RS 160,41,06,926 comprising 80,20,53,463 equity shares with a face value RS 2/- each. Other than the aforementioned, there is no change in capital structure of the Bank during the year under review.
The Banks Net owned funds grew to RS 8,584.05 Crore as on MarcRs 31, 2023 from RS 7,596.20 Crore of the previous financial year. The Market Capitalisation of the Bank stood at RS 8,370.96 Crore as on MarcRs 31, 2023.
EARNINGS PER SHARE/BOOK VALUE
Banks Earnings Per Share (Basic) stood at RS 13.81 for the financial year 2022-23 as against RS 8.42 for the financial year 2021-22. The Book Value of shares was RS 105.03 per equity share of face value RS 2/- each (fully paid up) as on MarcRs 31, 2023 as against previous year position of RS 94.95.
DEBT INSTRUMENTS & CREDIT RATING
The Bank had issued Basel III Compliant Unsecured, Redeemable Non-Convertible Tier II Bonds to the value of ^ 487 Crore with a coupon rate of 11.95% p.a. and a tenor of 123 months (maturing on June 12, 2029) in MarcRs 2019 through Private Placement, having a call option at 5th Coupon Payment date i.e., MarcRs 12, 2024 or on any Coupon Payment date thereafter. The fourth coupon interest has been duly paid to the Debenture holders on MarcRs 12, 2023. Bank has not issued any Debt instruments during the year under review.
|Date of Revision
|Basel III Tier II Bonds - Issue of RS 1,200
|November 30, 2022
|Crore where RS 487 Crore was utilised
|India Ratings & Research
|February 03, 2023
|Certificate of Deposits Programme -
|[ICRA] A1 +
|September 22, 2022
|RS 3,000 Crore
|[ICRA] A1 +
|[ICRA] A1 +
|December 29, 2022
|[ICRA] A1 +
|MarcRs 31, 2023
|CRISIL A1 +
|April 22, 2022
|CRISIL A1 +
|June 22, 2022
|CRISIL A1 +
|August 29, 2022
|CRISIL A1 +
|October 28, 2022
|CRISIL A1 +
|January 06, 2023
|CRISIL A1 +
|MarcRs 09, 2023
As per ICRA ratings schedule: ICRA A+: instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.
ICRA A+(Stable): instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
As per CRISIL ratings schedule: CRISIL A1+: instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.
As per India Ratings & Research schedule: !ND A+ZStabie: instruments with this rating are considered to have an adequate degree of safety with respect to the timely servicing of financial obligations. Such instruments carry a Sow credit risk.
The Banks Capital Adequacy Ratio stood at 18.56% as on MarcRs 31, 2023, as per BASEL III norms. This is well above the statutory limit of 11.50% (9% plus Capital Conservation Buffer of 2.50% is required to be maintained as of MarcRs 31, 2023) as prescribed by the Reserve Bank of India Guidelines.
SUBSIDIARIES AND ASSOCIATES
Your Bank does not have any Subsidiaries or Associates/JVs to report during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to provisions of the Regulation 34(2) (e) of SEBI LODR, the Management Discussion and Analysis Report for the year is forming part of this Annual Report.
NETWORK OF BRANCHES
Whilst geographical presence of your Bank has been widening throughout the country year on year, the digital presence is spreading without any boundaries, which will provide improved access and proximity to the banks services. The Digital Banking
Unit is yet another recent initiative of your Bank that will not only
enhance customer experience but also environment friendly which
is a core focus area of the banks ESG initiatives.
Your Bank has added Ten (10) Regular Branches, One (1) Retail Asset & Personal Banking Branch, Two (2) Asset Recovery Branches (ARBs) and Eleven (11) NEO Offices during the financial year 2022-23. Further, Consumer Banking Department was established during the year under review. The branch network including Corporate Business Units, Business Banking Units, Asset Recovery Branches, NEO and Precious Metal Division totals to 833 as on MarcRs 31, 2023, excluding three Extension Counters and five Satellite Offices.
During the year under review, your Bank has installed 88 new ATMs, 23 Bunch Note Recycler Machines (BNRM) and 14 Self Service Passbook Kiosks. As of MarcRs 31, 2023, 1,643 ATMs, 597 Bunch Note Recycler Machines (BNRM) and 192 Self-Service Passbook Kiosks are providing uninterrupted Banking services to customers.
As on MarcRs 31, 2023, your Bank has eight Currency Chests across different locations in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka to supply adequate cash to Branches & ATMs in its respective areas and the Clean Note Policy of RBI is being adhered to. Currency Chests also support the branches maintain cash within the retention limit for smooth operations. Your Bank also conducted soiled note exchange melas and distribution of coins through Currency Chest linked branches.
Financial Inclusion ensures availability of basic banking services and products to all, thereby reaching the unreached, un-banked and under-banked areas. Bank has been actively pursuing the agenda of Financial Inclusion with key interventions in offering appropriate financial products, using technology and financial literacy. Bank is providing various Business Correspondents (BCs) services & implementing comprehensive Financial Inclusion Program through effective utilisation of BCs in Sub Service Area (SSA). SSA is a cluster of few villages and is linked to one base branch of the Bank.
Your Bank has reached the underprivileged segment of the society and extended its focused financial services througRs 147 Bank Mitras in rural villages, 3 Bank Mitras in urban locations including 39 Ultra Small Branches. The Bank Mitra use Micro ATM for providing the banking services to the customers.
Your Bank continues to provide basic financial products including Basic Savings Bank Deposit Account (BSBDA), Social security schemes of Insurance and Pension products and thereby support the Government in implementation of various social welfare schemes.
Pradhan Mantri Jan Dhan Yojana (PMJDY):
Your Bank has opened 1,008 PMJDY accounts during the year under review. The balances outstanding in the PMJDY accounts as on MarcRs 31, 2023 was RS 19.57 Crore. The Bank has issued 1,008 Rupay Debit Cards under PMJDY accounts during the year. Micro ATM devices are provided to Bank Mitras for facilitating payments, which are enabled for accepting Rupay Card transactions/Aadhaar enabled Payment system (AePs)/Third Party deposit, Balance enquiry, Mini statement. Bank Mitras have done 5.39 Lakh transactions, amounting to RS 67.25 Crore during the year under report which includes of DBT/Old Age Pension/MGNREGS transactions.
Micro credit (SHGS Bank linkage):
Your Bank is providing credit facilities to Self-Help Groups (SHG) / Joint Liability Groups (JLG) to meet the credit needs of the poor. As on MarcRs 31, 2023, the Bank has 6,564 JLG loans with outstanding of RS 27.65 Crore.
Financial Literacy campaigns are intended to provide basic banking knowledge to people across various corners of the Society. Your Bank has been in the forefront in creating awareness to the rural mass on the financial services and products through the Financial Literacy Campaigns. During the financial year 2022-23, your Bank has conducted 85 financial literacy campaigns in Rural, Semi Urban/Urban areas.
In line with Reserve Bank of Indias emphasis on propagating financial literacy and cyber security measures, the Bank organized Financial Literacy Awareness campaign by way of street corner plays in 580 locations reaching out to 34,000 rural adult population across Tamilnadu under CSR Activity.
Your Bank is always inclined to plan and implement latest trends, technological advancements and innovations. Such long term projects are initially taken up as a study projects. Based on its technical feasibility, these study projects are converted to regular action plan projects to reap benefit to our customers. Presently, your bank is exploring adaption to, contactless / wearable payment solutions, digitalisation of back offices, virtual debit card.
DIGITAL TRANSFORMATION PROJECT
Web based online business loans:
Your bank has digitised its entire range of products in the Loan Portfolio viz. Retail, Commercial, and Agricultural Advances. Your Bank is making the best use of its technological infrastructure to manage operations from on-boarding of borrowers till disbursement of loans, resulting in better portfolio performance. Your Bank is the first to implement a complete end-to-end digitised loan sanction process flow and has been consistently redefining the Business Rule Engine with underwriting models on an ongoing basis. Bank is poised to grow its market share by leveraging the digital capabilities and has also digitised Credit, Risk and Monitoring activities for better internal control. During the year, your Bank has implemented the digital journeys for commercial & agricultural products. Your Bank has integrated its digital journeys with CERSAI portal for Registration of Security Interest (Land, Building).
Retail loans on Mobile/Tablet:
During the year, the Retail Loan segment of your bank was strengthened further by including more loan products on the tablet- based application, as a part of its Digital Transformation. The Retail Lending Digital application is now equipped with Housing Loans, Personal Loans, Vehicle Loans, Education Loans, Loan against Sovereign Gold Bonds, OD against property and thus empowering the branches/business units to source quality applications from the market. This digital system will also enable your bank to fetch the bank statement via Account Aggregator Eco System for all Retail loans with ease. Also, your Bank has added the Pre-Approved Personal loan journey via Dlite Mobile Banking App. Customers spanning across all geographies are now offered various loan products with quicker turnaround time and best-in-class user experience on the digital platform.
Your Bank has commenced co-lending activities with Non-Banking Finance Companies in the Commercial Vehicle and Construction Equipment segments. In the Retail segment, your Bank has on- boarded and sanctioned consumer durable loans to 34.77 Lakh of customers during this fiscal year. Going forward, your Bank will continue to focus new business opportunities under this model for widening its horizons and regularly upgrading the existing digital lending system to adhere the compliance norms and by adding functionalities for business growth.
The Board and Senior Management of your Bank have envisaged the Risk associated with the Cyber and Information Security in the modern world. They have established an Information Security Group headed by Chief Information Security Officer (CISO) who is specialised in Information and Cyber Security to protect the Banks Information Assets.
Your Bank has approved Security Policies and procedures to protect the Information Assets in accordance with the determined risk profile of the assets. Your Bank understands the importance of Cyber Security and enhanced requirements in the connected world. Information Security function designs, develops, implements, maintains and monitors the Information Security Management System (ISMS), to handle the continuously evolving threat vectors.
Your Banks Information & Cyber Security Framework is derived from ISO27001, Regulator Guidelines and Industrial Standards. The Policy and Procedure is designed not just to focus on CIA Triad viz Confidentiality, Integrity and Availability of Information; but also, on the other principles such as Authenticity, Non-Repudiation and Accountability in order to ensure the following:
• Safety and privacy of sensitive customer and Bank information.
• Prevent IT Assets and Information System from Unauthorized Access.
• Protect the Data / IT Systems from Phishing, Ransomware, and other Malware, Security threats across using Cloud and integrated systems in multiple locations over the Internet and zero-day attacks.
• Ensuring the Data / IT Systems availability to the authorised users.
Your Bank has established fully functional Security Operations Centre (SOC) to monitor and defend the cyber combat in 24 x 7 x 365 days to protect the Bank Information and also invested in Artificial Intelligent based monitor and defence solution against Dark web cyber combat to protect the Bank Information. Apart from technology tools and solution to safeguard the Banks Information, Bank contributes equally to up skill the awareness of employees about new threats in the cyber security landscape.
Your Bank is maintaining the ISO/IEC 27001 Certification issued by M/s TUV SUD since 2018, which is the international standard that is recognised globally for managing risks to the Information Security.
The Call Centre of your Bank is a one stop Contact point of the bank which addresses queries / requests from customers, and works seamlessly round the clock.
INBOUND CONTACT CENTRE:
Phone Banking - Customers contact the Phone Banking through various modes such as IVRS, Email & Chat to register their queries / requests related to banking services. Your Bank has a dedicated team assigned for the above channels to honour the customers requirements in best in class service. EFRM calling - to verify the rightness of transactions of customers through outbound calls based on the data available from NPCI portal for fraud transaction monitoring. Video-KYC - This activity is performed inorder to convert Dlite accounts which are opened under Low KYC to Full KYC. Mobile number change verification - verification calls for the changes in registered Mobile number requested through Dlite & Internet Banking. Door-step banking services feedback calls - Calls are made to the customers to obtain their feedback on the services rendered to them through door step banking.
OUTBOUND CONTACT CENTRE:
At Outbound Contact Center an agent outcalls the customer on behalf of the Bank, for Sales / Service and collection activities. All the Tele Conversations are recorded for Quality and Monitoring Purposes. Activities undertaken are Welcome Calling for CASA and Newly Opened Loan accounts, Tele Sales to generate Revenue and to service our existing and potential customers. Your Bank has two types of Credit Cards viz., Corporate and Retail Credit Cards - For Customers who had availed Corporate Credit Card, the activities such as Welcome Calling, Statement Generation, Pre due, and Post due Collections calling are performed. Tele Collections - Calling is primarily done to remind Individual / Corporate customers of their Equated Monthly Instalments / Payments. Tele-collections for SMA 0 / 1 / 2 for CBD and SBG products are performed by Outbound Contact Centre. Reminder calling with Nominal intensity are practiced for ABG accounts. Based on the Unpaid Data spooled from the backend, two type of activities viz.,; a) PREDUE calling b) POSTDUE calling are performed. PREDUE Calling is initiated to remind customers of their due date and the EMI amount which is due to be paid. This calling helps the customer to ensure that the EMIs are serviced on time. Post Due Date calling is initiated to customers who have missed to pay their dues on the acceptable payment date. Payment Missed Data is spooled and segregated on the basis of (i) Severity of delinquency (ii) No of Days Past Due (iii) Track on repayment (iv) Relationship with bank & the available data base. Centralised Collections - Collections Data is analysed based on the risk pattern, and accounts are allocated to the field collections team. SMS / Email is initiated to Post due customers as reminder to pay their pending arrears. ADHOC activities - Apart from the above regular outbound activities, Adhoc calling request from different departments to outcall customers are also performed.
CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the Bank during the financial year under review.
SYSTEM FOR INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
The Bank has strong and time-tested computerized solutions to serve its customers in respect of all banking requirements. Adequate infrastructure has been established in processing the day to day transactions. "Flexcube" is the CBS platform used in the Bank which is commonly used in several well-known banks in the Country. The CBS platform has well defined set-up to ensure
internal financial controls viz maker-checker requirements with adequate credentials. Automation of interest & charges application and accounting transactions ensures necessary internal financial control. IT audit in respect of CBS is also being conducted as per the stipulated periodicity which ensures adherence to the regulatory and mandatory guidelines. Exclusive unswerving reporting software is used by Bank with appropriate systems and protocols which have periodical review. The same ensures reporting of Banks business without any ambiguity. The Bank has standardised operating procedures in monitoring the account operations to have effective internal controls. Separate monitoring team has been identified to prevent and detect frauds and errors in the Bank. Compliance of regulatory/mandatory requirements are being taken care by an individual team which has its exclusive procedure in adhering to regulated and framed policies besides reporting of financial information in a disciplined manner. These systems enable the Bank to have established internal control over financial information reporting.
The Bank has Board approved policies in respect of various banking activities like lending, investment, borrowing etc. with well-defined hierarchy of officials vested with sanctioning powers. Inspection Department and Risk Management Department review various aspects of internal control, adherence to procedure and review credit assessment protocols periodically.
Internal Financial controls of the branches are verified by the Statutory Branch Auditors during their branch audit and covered in the report. Statutory Central Auditors of the Bank audit the internal controls over financial reporting of the Bank and submit a separate report containing the salient features of their observations to the Board of directors. Thus, the Bank ensures that the Internal Financial Controls placed are operating effectively.
Risks are inherent in any business and banking is not an exception to this. Bank has adopted a multi-layered risk management process to identify, assess, monitor and manage risks through the effective use of processes and information technology.
Objective of risk management of the Bank is to balance between risk and return, and ensure that the Bank operates within the Board approved risk appetite statement. An independent risk management function ensures that the risk is managed through policies and processes approved by the Board of Directors encompassing independent identification, measurement and management of risks across the various businesses of the Bank. The risk management function in the Bank strives to proactively anticipate vulnerabilities at the transaction as well as at the portfolio level, through quantitative
or qualitative examination of the risks. The Bank continues to focus on refining and improving its risk measurement systems including automation of processes, not only to ensure compliance with regulatory requirements, but also to ensure optimal capital utilisation with a better risk-adjusted return. The Board reviews the risk profile of the Bank at periodic intervals and ensures that risk levels are within the defined risk appetite.
The independent risk management structure in the Bank is responsible for managing the credit risk, market risk, liquidity risk, operational risk, other Pillar II risks like reputational risk and strategic risk.
The Board is responsible for overseeing the overall risk management framework by approving various policies relating to the Risk functions and has delegated powers to Board Level Risk Management and Asset Liability Management Committee (RM & ALM) for monitoring the implementation of Risk Governance Framework, compliance to various policies & processes. The RM & ALM Committee ensures the same by closely monitoring & guiding the functions through Executive Level Credit Risk Management Committee, Market Risk Management Committee, Operational Risk Management Committee and Fraud Risk Management Committee, Asset Liability Management Committee, which regularly assess the functional efficiency of the Banks risk management processes. Minutes of these Committee meetings are placed to the RM & ALM Committee of the Board for its perusal and further guidance.
Risk Management department maintains different policies covering inter alia credit, credit risk rating, market, liquidity, treasury, operational risk, risk culture, strategic risk management, Reputational risk and integrated risk management functions and other risk related policies.
Banks risk management objectives broadly cover proper identification, assessment, measurement, monitoring, controlling, mitigation and reporting of the risks across various business segments of the Bank. The risk management strategy adopted by the Bank is based on a clear understanding of the risks and level of risk appetite, which is dependent on the willingness of the Bank to take risks in the normal and stressed course of business operations.
Bank is viewing risk management as a core competency and tries to ensure that the Bank takes only calculated risks, which it can understand, monitor, mitigate and control, thereby minimizing unexpected outcomes. All material risks of the Bank emerging in the course of its business are identified, assessed, monitored, managed and mitigated with the effective control measures in place.
Bank is well capitalized; CRAR stands at 18.56% as on MarcRs 31, 2023. Capital provides the required buffer to manage and meet any unexpected risks / losses that materialize in spite of prudent and timely risk management actions. In view of foregoing, apparently there are no material risks which threaten the existence of the Bank.
VIGIL MECHANISM/WHISTLE-BLOWER POLICY
In compliance with RBI Guidelines, provisions of the Companies Act, 2013, the SEBI LODR and SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended, your Bank has in place robust "Whistle-Blower Policy" since 2011. The Policy also incorporates the Protected Disclosure Scheme (PDS) for Private Sector Banks, instituted by the Reserve Bank of India. The Audit Committee of the Board reviews the complaints received through Vigilance Mechanisms on quarterly basis. The Banks Whistle-Blower Policy is in synchronisation with all statutory and regulatory guidelines on Vigilance Mechanism. The details of the Whistle-Blower Policy is made available on the website of the Bank. https://www.kvb.co.in/ docs/whistle-blower-policv.pdf
Bank is encouraging the staff to share all kinds of unlawful/unethical instances/practices followed by any employees to take appropriate action upon review. Further, bank is ensuring that the details shared are kept confidential and protection of staff who blown the whistle.
DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The details related to Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 are furnished in the Corporate Governance Report that forms part of this Annual Report.
RELATED PARTY TRANSACTIONS
All transactions entered into by your Bank with related parties are repetitive in nature in ordinary course of business and on an arms length basis. Omnibus approval is obtained from the Audit Committee for transactions which are repetitive in nature and the same are reviewed on periodic basis. The Banks policy on Related Party Transactions can be viewed at: https://www.kvb.co.in/docs/ related-party-transactions-policy.pdf.
During the year, your Bank has not entered into any materially significant transactions with the related parties, which could lead to potential conflict of interest. Therefore, pursuant to Section 134(3)(h) of the Act Companies Act, 2013 with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no related party transactions to be reported under Section 188(1) of the Companies Act, 2013 and Form AOC-2 is not applicable to the Bank.
AUDIT COMMITTEE RELATED DISCLOSURE UNDER SUB-SECTION 8 OF SECTION 177 OF THE COMPANIES ACT, 2013
The Bank has constituted a Board level Audit Committee in line with the requirements of the Companies Act, 2013, SEBI LODR and Reserve Bank of India guidelines, as amended from time to time. Board has accepted all the recommendations of the Audit Committee. The details of the composition of the Audit Committee is disclosed in the Corporate Governance Report that forms part of this Annual Report.
DISCLOSURE RELATED TO DETAILS OF DEPOSITS ACCEPTED UNDER RULE 8(5) (V) OF COMPANIES (ACCOUNTS) RULES, 2014
Being a Banking company, the disclosures required as per Rule 8(5) (V) of Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of the Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided or any investment made by a banking company in the ordinary course of business. Hence, the particulars of loan and guarantees as required under Section 134(3)(g) of the Companies Act, 2013 are not disclosed. The particulars of investments made by the Bank are disclosed in the Financial Statements as per the applicable provisions of the Banking Regulation Act, 1949.
In terms of Section 139 of the Companies Act, 2013 read with Section 30(1A) of the Banking Regulation Act, 1949, it is proposed to re-appoint, M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S) as Joint Statutory Central Auditors of the Bank, who are retiring at the conclusion of the ensuing 104th Annual General Meeting (AGM), subject to the approval of Reserve Bank of India and shareholders of the Bank. The Bank has received consent from the Auditors on their reappointment and confirmation to the effect that they are not disqualified to be reappointed as the Auditors of the Bank in terms of the provisions of the Companies Act, 2013 and the rules made thereunder.
Accordingly, the Board of Directors have recommended to the shareholders, the reappointment of M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S) as Joint Statutory Central Auditors of the Bank, to hold office from the conclusion of the ensuing 104th AGM till the conclusion of the next AGM. Fee payable to Statutory Auditors is proposed at RS 1,21,00,000 (Rupees One Crore Twenty One Lakh only) plus applicable taxes and out of pocket expenses with a cap of 10% of fees for the financial year 2023-24, subject to the approval of Reserve Bank of India and Shareholders of the Bank.
Members are requested to consider the re-appointment of M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S) as Joint Statutory Central Auditors of the Bank.
Pursuant to the Regulation 33(1)(d) of the SEBI LODR, the Statutory Auditors have confirmed that they are subjected to the peer review process of the Institute of Chartered Accountants of India (ICAI) and that they hold a valid certificate issued by the Peer Review Board of ICAI.
Independent Auditors Report
The Joint Statutory Central Auditors of the Bank viz., M/s R G N Price & Co., Chartered Accountants (Registration No. FRN 002785S) together with M/s Sundaram & Srinivasan, Chartered Accountants (Registration No. FRN 004207S), have audited the accounts of the Bank for the financial year 2022-23 and their Report forms part of this Annual Report. Pursuant to Section 143(3) (i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of the internal financial controls system over financial reporting, which has been enclosed as "Annexure A" to Independent Auditors Report.
There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their report for the financial year 2022-23.
During the period under review, no frauds were reported by the Auditors under sub-section (12) of Section 143 of the Companies Act, 2013.
Secretarial Audit and secretarial compliance report
In line with Section 204 of the Companies Act, 2013 and Regulation 24A (1) of the SEBI LODR your Bank has appointed M/s S.A.E. & Associates LLP, Company Secretaries, Chennai to undertake the Secretarial Audit of the Bank for the financial year 2022-23. The Bank produced all necessary records to the Secretarial Auditors for smooth conduct of their Audit. The Secretarial Audit Report for the financial year 2022-23 is annexed to this report as Annexure - 1.
There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors in their report for the financial year 2022-23.
Pursuant to regulation 24A (2) of the SEBI LODR and SEBI circular No. CIR/CFD/CMD1/27/2019 dated February 09, 2019, the Bank has obtained Secretarial Compliance Report, from the Secretarial Auditors of the Bank on compliance of all applicable SEBI Regulations and circulars/guidelines issued thereunder and the copy of the same was submitted to Stock Exchange within the prescribed timelines.
Implementation of Indian Accounting Standards (Ind AS)
As per RBI guidelines, Proforma IndAS statements have to be submitted on half-yearly basis and accordingly the same is submitted to RBI. During the current year, RBI has issued discussion paper on introduction of Expected Credit Loss Framework for provisioning by banks. Final guidelines are awaited. Further details are given in Schedule 18 - Notes to Account of the Balance Sheet.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year 2022-23, your Bank is in compliance with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India.
Disclosures relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 are detailed as under:
Conservation of Energy
Your Bank owns a 850 KW Wind Turbine Generator at Govindanagaram, Theni District in Tamil Nadu and the said Wind Turbine generated 13,69,932 units during the year under review. The Bank is utilising the power generated by Wind Turbine Generator for its Registered & Central Office at Karur and also premises of Divisional Office at Chennai.
Your Bank has implemented the following customer centric projects during the financial year 2022-23:
WhatsApp Banking - The Bank has enabled its customers, an additional service channel for catering to their non-financial services such as Balance enquiry, mini statement, Term / Recurring deposit interest rate enquiry, cheque book request, debit card blocking, net banking block / unblock.
Chat bot - "Kaaru" an interactive chat bot leveraging Artificial Intelligence and Machine Learning technologies has been hosted in our corporate web site to assist the customers with banking queries on 24 X 7 basis.
IRCTC integration in Dlite app.- Train ticket booking through direct account debit facility without involving payment gateway.
Face ID login, e-Deposit loan through Dlite app.- Customer can use face id to login in Dlite similar to fingerprint login. Further customer can avail deposit loan without visiting branches through Dlite app.
Bharat Bill payment system integration in Dlite App.- With
BBPS implemented, customers have the convenience of payment by cataloguing various utility providers under one platform
Government business (GST and CBDT) payment through branch and Internet Banking - Payment of GST and CBDT enabled through internet banking facilitates customer to pay their taxes on time and to stay complied with Government norms.
Implementation of e-Mandate for debit cards - Customers can now provide e-Mandate / standing instruction on his/her Debit Card for regular/recurring payment transactions.
Card tokenisation as per regulatory guidelines - Tokenisation refers to replacement of actual card details with an alternate code called the "token", which shall be unique for a combination of card, token requestor and device. A tokenised card transaction is considered safer as the actual card details are not shared with the merchant (card not present transaction) during transaction processing.
Foreign Exchange Earnings And Outgo
Your Bank continuously supports and encourages the countrys export efforts through its export financing operations. The details on foreign exchange earnings and outgo are furnished in the Foreign Exchange Transactions section that forms part of this report.
MATERIAL EVENTS THAT HAVE OCCURRED AFTER THE BALANCE SHEET DATE
There are no material events/changes and commitments, which affect the financial position of the Bank between the end of the financial year of the Bank and the date of the Directors Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
During the financial year 2022-23, no significant and material orders were passed by the Regulators or Courts or Tribunals against the Bank which impacts its going concern status and Banks operations in future.
MAINTENANCE OF COST RECORDS
Being Banking Company, your Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013
The Annual Return for the financial year ended MarcRs 31, 2023, as required under Section 92 (3) and Section 134(3)(a) of the Companies Act, 2013 is available on the Banks website at https://www.kvb.co.in/investor-corner/annual-eeneral-meetine/ annual-return/.
DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR
Bank has been filing cases in NCLT under IBC, 2016 as a part of its recovery mechanism and the status of the cases as at the end of the financial year 2022-23 is furnished as below:
|No of cases
|Book Balance J in Crore
|Case filed by KVB against Corporate Debtors under IBC
|Case filed against Individual Guarantors of Corporate Debtors
|Filed and Pending
DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF
Being Banking Company, the aforesaid provision is not applicable to your Bank.
PARTICULARS OF EMPLOYEES
The information as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report as Annexure - 2.
EMPLOYEE STOCK OPTION SCHEME
Your Bank has formulated and adopted Employee Stock Option Schemes to provide a platform to employees for participating in the ownership of the Bank and in its long-term growth. Bank uses stock options as a compensation tool to attract and retain critical talent and encourage employees to align individual performances with that of Banks objectives. Currently, the Bank has the following Schemes in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB & SE Regulations") erstwhile SEBI (Share Based Employee Benefits) Regulations, 2014.
• Karur Vysya Bank Employees Stock Option Scheme 2011 ("KVB- ESOS-2011")
• Karur Vysya Bank Employees Stock Option Scheme 2018 ("KVB-ESOS-2018")
During the period under review, your Bank has granted 4,42,161 options under KVB-ESOS-2018 to Key Managerial Personnel (Managing Director & CEO and President & COO) of the Bank and Senior Management towards their variable pay as a part of non-cash component. The said variable pay is in accordance with Banks Compensation policy read with Reserve Bank of India circular DOR.Appt.BC.No.23/29.67.001/2019-20 dated November 04, 2019. As a part of their non-cash component of variable pay for the financial year 2020-21 in terms of compensation structure, your Bank has allotted 24,635 Equity Shares to Shri B Ramesh Babu, MD & CEO and 18,539 Equity Shares to Shri J Natarajan, President & COO, under KVB ESOS 2018 during the year under review. Further Bank has allotted 19,98,617 Equity Shares of face value RS 2 each to the employees who
have exercised their options under KVB ESOS 2011 Scheme and KVB ESOS 2018 Scheme during the year under review.
Your Banks Secretarial Auditors, M/s S.A.E. & Associates LLP, Company Secretaries, have certified that the Banks above- mentioned Schemes have been implemented in accordance with the Resolutions passed by Shareholders for 2011 & 2018 Schemes and the SEBI SBEB & SE Regulations. Disclosures as required under the SEBI SBEB & SE Regulations are available on Banks website at https://www.kvb.co.in/investor-corner/other-disclosures/esos- disclosures/.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
As per Sections 124 and 125 of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘IEPF Rules), the dividend remaining unclaimed for consecutive period of 7 years and its corresponding shares are liable to be transferred to the Investor Education and Protection Fund (‘IEPF). The said requirement does not apply to shares in respect of which there is a specific Order of Court, Tribunal or Statutory Authority, restraining transfer of the shares. Further details are provided in the Corporate Governance Report that forms part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Articles of Association of the Bank drafted in 1916, provided for setting aside of one percent of the annual profits to a "Charity Account", which would be used to support the needy for their health and education requirements. The Bank continues with that tradition even today after 106 years in the modern avatar of Corporate Social Responsibility. A Corporate Social Responsibility (CSR) Committee has been constituted in accordance with the provisions of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.
During the year under review, your bank had CSR budget of RS 11.58 Crore, against which the Bank spent RS 12.84 Crore. Further in line with the CSR policy of the Bank, spends have been spread across the core focus areas viz., health, sanitation, clean drinking water, education, skill development, women empowerment and environment protection, as defined in Schedule VII of the Companies Act, 2013.
The brief outline of the CSR policy of the Bank, CSR spends and other mandatory disclosures are annexed to this Report as Annexure - 3.
BUSINESS RESPONSIBILITY & SUSTAINABILITY BOARD OF DIRECTORS REPORTING (BRSR)
ESG has been the forefront of your Banks business activities. We strongly believe the significance of environmental, social and governance aspects on the Banks performance and have been proactively taking initiatives in this regard. Due credit must be given to the Indian capital markets regulator, the Securities & Exchange Board of India (SEBI) for taking the lead in putting together the Business Responsibility & Sustainability Reporting (BRSR) framework. We believe it is the right step towards making ESG disclosures consistent and measureable across entities to facilitate better benchmarking.
In terms of Regulation 34(2)(f) of the SEBI LODR read with SEBI circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562, the filing of BRSR shall be mandatory for the top 1000 listed companies (by market capitalisation) and accordingly Bank would file BRSR for financial year 2022-23. It is to be noted that your Bank has published business responsibility and sustainability report from the financial year 202122 itself on voluntary basis in order to adapt to the regulatory requirements and build transparency among our stakeholders.
The Business Responsibility & Sustainability Reporting (BRSR) of the Bank for the financial year 2022-23 is annexed to this Report as Annexure - 4.
The composition of the Board of Directors is in compliance with all the relevant applicable statutory regulations. The Board meets at regular intervals to discuss and decide on Banks business policy and strategy, apart from other items of business. During the year under review, Fifteen Board Meetings were conducted and the relevant periodicity for holding the meetings was complied. The schedule of the meetings of the Board is circulated in advance to the Members of the Board, for their consideration and approval. Details of the composition of Board, Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report which forms part of Annual Report.
Pursuant to Section 134(3) (p) of the Companies Act, 2013, Regulation 17(10) of SEBI LODR and other applicable regulations, Board has carried out annual evaluation of its own performance (Board as a whole), Committees of the Board, all its Directors including NonExecutive Chairperson and MD & CEO. The manner of evaluation conducted during the financial year 2022-23 is furnished in the Corporate Governance Report that forms part of this Annual Report.
The Board comprises of Nine Directors as on the date of this report, with rich experience and specialised knowledge in various areas of relevance to the Bank including Accountancy, Agriculture and Rural Economy, Banking, Economics, Finance, Law, MSME, Information Technology, Payment & Settlement Systems, Human Resources, Risk Management, Business Management, Strategic Planning, Credit Recovery, Marketing, Credit, Cyber Security, Treasury Operations, Audit, Taxation, Governance, Supervision and Business Analytics.
Dr Meena Hemchandra (DIN: 05337181), was co-opted as an Additional Director of the Bank under "Non-Executive Independent Director" category by the Board in its meeting held on May 26, 2022 and subsequently appointed as Non-Executive Independent (Parttime) Chairperson with effect from July 25, 2022 with the approval of Reserve Bank of India. The said appointment was approved by the shareholders at the 103rd AGM held on August 03, 2022, for a period of three (3) years with effect from May 26, 2022, not liable to retire by rotation.
Shri Murali Ramaswami (DIN: 08659944), was co-opted as an Additional Director of the Bank under "Non-Executive Independent Director" category by the Board in its meeting held on June 14, 2022. The said appointment was approved by the shareholders at the 103rd AGM held on August 03, 2022 for a period of three (3) years with effect from June 14, 2022, not liable to retire by rotation .
CA Chinnasamy Ganesan (DIN: 07615862), was co-opted as an Additional Director of the Bank under "Non-Executive Independent Director" category by the Board in its meeting held on April 25, 2023, subject to the approval of the Shareholders of the Bank. In terms of Regulation 17 (1C) of SEBI LODR, the listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors at the next general meeting or within a time period of three (3) months from the date of appointment, whichever is earlier. Accordingly, the said appointment was approved by the shareholders through postal ballot having Remote e-Voting process on June 30, 2023, for a period of three (3) years with effect from April 25, 2023, not liable to retire by rotation.
Shri K G Mohan (DIN: 08367265) was re-appointed as an Additional Director of the Bank under Independent Category, for second term of three (3) years, w.e.f. October 12, 2022 in the Board Meeting held on September 22, 2022 subject to the approval of shareholders of the Bank. In terms of Regulation 17 (1C) of SEBI LODR, the listed entity shall ensure that approval of shareholders for reappointment of a person on the Board of Directors at the next general meeting or within a time period of three (3) months from the date of appointment, whichever is earlier. Accordingly, the said reappointment was approved by the shareholders through postal ballot having Remote e-Voting process on December 30, 2022, for a period of three (3) years with effect from October 12, 2022, not liable to retire by rotation.
Previously, Shri K G Mohan was co-opted as an Additional Director under Independent Category on February 01, 2020 and elected as Non-Executive Independent Director for a period from February 01, 2020 to October 11, 2022 for the first term in the 101st AGM of the Bank held on September 23, 2020.
Shri B Ramesh Babu (DIN: 06900325) was re-appointed as the Managing Director & CEO of the Bank, for the second term of three (3) years, with effect from July 29, 2023, subject to the approval of Reserve Bank of India and Shareholders of the Bank. The said reappointment was approved by the shareholders through postal ballot having Remote e-Voting process on June 30, 2023.
The Reserve Bank of India vide its letter dated July 14, 2023 approved the reappointment of Shri B Ramesh Babu, Managing Director and CEO of the Bank for second term of three years with a revised fixed pay of RS 1.80 Crore per annum with effect from July 29, 2023. The Variable pay shall be based on the achievement of performance parameters of the respective financial years subject to the approval of RBI.
Previously, Shri B Ramesh Babu was appointed as Managing Director & CEO of the Bank for a period of (3) three years from July 29, 2020 to July 28, 2023 for the first term in the 101st AGM of the Bank held on September 23, 2020.
Dr Harshavardhan R (DIN: 01675460) was re-appointed as NonExecutive Independent Director of the Bank in the Board Meeting held on May 15,2023, subject to the approval of shareholders of the Bank. The said reappointment was approved by the shareholders through postal ballot having Remote e-Voting process on June 30, 2023, for a period of Five (5) years with effect from July 30, 2023, not liable to retire by rotation.
Previously, Dr Harshavardhan R was co-opted as an Additional Director under Independent Category in the Board Meeting held on July 30, 2020 and elected as Non-Executive Independent Director for a period of three (3) years from July 30, 2020 to July 29, 2023 for the first term in the 101st AGM of the Bank held on September 23, 2020.
Opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed during the year:
In the opinion of the Board, the Independent Directors appointed during the year possess requisite qualifications, proficiency, expertise, track record, integrity, independence, vast and rich experience in the field of Banking. Independent Directors appointed during the year have qualified the online proficiency self-assessment test/have undertaken to comply with the requirements relating to passing of online proficiency self-assessment test for Independent Directors Databank, within the timelines prescribed.
Retirement by rotation
Shri R Ramkumar (DIN: 00275622), Non-Executive NonIndependent Director, retires by rotation at the ensuing 104th Annual General Meeting (AGM) and being eligible, offers himself for re-appointment in terms of Section 152 of the Companies Act, 2013. He hails from the promoters family and was on the Board since June 25, 2018 and would be representing "Minority Sector- Business Management, Finance, Human Resources". Approval of the shareholders is being requested for reappointment of Shri R. Ramkumar as Non-Executive Non-Independent Director of the Bank, liable to retire by rotation.
The brief profile and details in terms of Regulation 36 (3) of SEBI LODR and the Secretarial Standard on General Meetings, in respect of the Director seeking re-appointment has been annexed to the Notice of the ensuing AGM and also in the Corporate Governance Report that forms part of this Annual Report.
Retirement on completion of tenure
Shri N S Srinath (DIN: 01493217), Non-Executive (Independent) Part-time Chairman of the Bank, demitted office consequent to completion of his three years tenure at the close of office hours on May 26, 2022.
Dr V G Mohan Prasad (DIN: 00002802), Non-Executive Independent Director of the Bank, demitted offce at the close of office hours on June 14, 2022 consequent to completion of his eight years tenure in terms of Section 10A(2A)(1) of the Banking Regulation Act, 1949.
Shri M K Venkatesan (DIN: 00032235) and Shri A K Praburaj (DIN:07004825), Non-Executive Non-Independent Directors of the Bank, demitted office at the close of office hours on December 08, 2022 consequent to completion of their eight years tenure in terms of Section 10A(2A)(1) of the Banking Regulation Act, 1949.
CA K L Vijayalakshmi (DIN:07116809), Non-Executive Independent Director of the Bank demitted office on MarcRs 21, 2023 consequent to completion of her eight years tenure in terms of Section 10A(2A)(1) of the Banking Regulation Act, 1949.
Board placed on record its sincere appreciation for the valuable services rendered and contribution made by them during their tenure as Directors of the Bank.
Apart from the above, there were no changes in the Board of Directors of the Bank.
KEY MANAGERIAL PERSONNEL
There were no changes in the Key Managerial Personnels during the year under review.
CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES FOR APPOINTMENT/ REAPPOINTMENT OF DIRECTORS
Pursuant to provisions of Section 178(3) of the Companies Act, 2013 and relevant guidelines of RBI, the Nomination and Remuneration Committee (NRC) formulated the criteria for determining qualifications, positive attributes and independence of a Director to adhere the various provisions and guidelines as detailed below:
• ‘Fit and Proper criteria as per Dr. Ganguly Committee Norms which stipulates age, qualification, experience, track record, integrity, etc., and various circular instructions and guidelines issued by Reserve Bank of India from time to time.
• Norms laid down by the Banking Regulation Act, 1949 as amended from time to time which stipulates substantial interest, sectorial representation as per Section 10A(2) (a), restrictions as per Section 16 and 20 of the Banking Regulation Act, 1949, etc.,
• Disqualification/Conflict of Interest of Directors, and other norms as per the provisions of the Companies Act, 2013 and rules made thereunder from time to time.
• Criteria of Independence of a Director as per the provisions of the Companies Act, 2013 and rules made thereunder and other applicable provisions as amended from time to time.
• Applicable listing regulations as amended from time to time.
• Articles of Association of the Bank.
• Any other factors as the NRC may deem fit and in the best interest of the Bank and its stakeholders.
The terms and conditions of appointment of Independent Director are available on the website of the Bank at https://www.kvb.co.in/ docs/terms-and-conditions-of-appointment-of-independent- directors.pdf. Your Banks Nomination and Remuneration Committee (NRC) oversees matters of succession planning of its Directors, Senior Management and also Key Managerial Personnel & the Board of the Bank ensures that proper plans are put in place for orderly succession of appointment to the Board and to Senior Management of the Bank including KMPs.
Policy on remuneration of directors
The remuneration of Directors is governed by the Compensation Policy of the Bank in terms of RBI circular no. DOR.Appt. BC.No.23/29.67.001/2019-20 dated November 04, 2019, which covers the aspects of remuneration payable to Board of Directors, Whole Time Directors/ Chief Executive Officers/Material Risk Takers, Key Managerial Personnels, Control Function Staff and all other employees. This Policy is in tune with the guidelines issued by the Reserve Bank of India, provisions of the Companies Act, 2013 and the SEBI LODR amended from time to time. Your Bank has adopted a board approved compensation policy on the basis of the aforesaid regulatory guidelines and the Policy is available on the Banks website at https://www.kvb.co.in/docs/investor-compensation-policv.pdf.
DECLARATION BY INDEPENDENT DIRECTORS
Your Bank has received necessary declarations from all the Independent Directors under Section 149(7) read witRs 149(6) of the Companies Act, 2013 and Regulation 25(8) read with Regulation 16(1)(b) of the SEBI LODR, that they meet the criteria of independence laid down thereunder. As required under Schedule IV of the Companies Act, 2013, Board has reviewed the declarations submitted by the Independent Directors and opined that, they fulfil all the conditions specified in the Companies Act, 2013 and SEBI LODR, and are independent of the management.
FAMILIARISATION PROGRAMMES OF INDEPENDENT DIRECTORS
All Directors including Independent Directors are made familiar with their rights, roles and responsibilities in the Bank at the time of appointment and also on a recurrent basis. Details of familiarisation programmes attended by all Directors including Independent Directors are provided at https://www.kvb.co.in/investor-corner/, pursuant to regulation 46 of SEBI LODR. Other details on the same are also covered in Corporate Governance Report forming part of Annual Report.
The details on Corporate Governance standards followed by your Bank and the relevant disclosures as stipulated under SEBI LODR and the Companies Act, 2013 and the rules made thereunder are deliberated in Corporate Governance Report that forms part of this Annual Report. A certificate from M/s S.A.E. & Associates LLP, Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under SEBI LODR is annexed to Corporate Governance Report which forms part of this Annual Report.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to 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, 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 judgements 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 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 the Companies Act, 2013 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 devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; and
f) 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.
AWARDS AND ACCOLADES
Your Bank received the following awards during financial year 2022-23, majority of the same for implementation of innovative technologies:
|Name of the Award
|Best MSME Friendly Bank (Private Sector), 2021 - Runner up
|Chamber of Indian Micro Small & Medium Enterprises
|Best Innovative Bank (Private Sector) - Runner up
|Chamber of Indian Micro Small & Medium Enterprises
|Tech Enable Ease of Banking
|APAC BFSI Innovation
|Banking RPA Integrator of the Year
|Synnex Group & India Banking Summit
|Data Centre Company of the Year
|Synnex Group & India Banking Summit
|Tech Enabled Ease of Banking Award
|KRYPTON BFSI LEADERSHIP AWARDS
|Bank with Best Technology Orientation - Economic Times Ascent
|Asia Pacific HRM Congress Awards, 2021
|Digital Bank - India BFSI Awards 2022
|Digital Transformation of Bank
|Sri Adhikari Brothers Group
|Intelligent Automation (AL, ML, RPA)
|Design Management (Infrastructure Management)
|Innovation - New Initiatives (Infrastructure Management)
|CIO of the Year
|Digitalisation from Application to Disbursement won in the Best in Future of Digital Infrastructure
|IDC future enterprise Awards
|The Best Technology Bank of the Year (Winner)
|The Best Fintech collaboration ( Runner-up)
|The Best AI ML adoption (Special Prize)
|Name of the Award
|The Best Digital Financial Inclusion (Special Prize)
|Best Use of Technology
|Synnex Group & India Banking Summit
|Business Transformation Awards 2022 for competitive edge with workforce transformation
|Mint & Techcircle
|Best bank for promoting social schemes
|Chamber of Indian Micro Small & Medium Enterprises
|Best Government Scheme Implementing Bank - Runner up
|Chamber of Indian Micro Small & Medium Enterprises
|Best Innovative Bank - Runner up
|Chamber of Indian Micro Small & Medium Enterprises
|Best CSR Initiative & Business Responsibility Bank - Runner Up
|Chamber of Indian Micro Small & Medium Enterprises
|Best Bank in implementation of COVID Scheme - Runner up
|Chamber of Indian Micro Small & Medium Enterprises
|Best Digital Customer Experience initiative of the year
|ASSOCHAM - Financial Conclave 2023 & Excellence Award
|Product Quality Management
|Dun & Bradstreet - ESG Leadership Summit 2023
|Best Technology Enabler of the Year - Winner
|Best SME lending - Runner-up
|Emerging Bullion Bank for the year 2022
|India Gold Conference (IGC Excellence Award 2022)
The Board of Directors place on record their thankfulness to the Government of India, Reserve Bank of India, Securities Exchange Board of India (SEBI), Ministry of Corporate Affairsairs (MCA), National Stock Exchange of India Limited and BSE Limited, Rating Agencies, Statutory Auditors, Secretarial Auditors, various State Governments & Union Territories and other regulatory authorities in India for their valuable guidance and strong support.
The Board expresses its sincere thanks to the Banks valued shareholders, debenture holders esteemed customers, and all other stakeholders and well-wishers for their continued faith, confidence and patronage on us and look forward for their continuous support.
The Board also appreciates entire staff for their sincere and dedicated services rendered for overall performance of the Bank during the year and look forward to their continued cooperation in the realisation of the corporate goals of the Bank in the years ahead.
|For and on behalf of the Board of Directors
|Place: Karur Date: July 17, 2023
|Dr Meena Hemchandra (DIN: 05337181) Non-executive Independent (Part-time) Chairperson
|B Ramesh Babu(DIN: 06900325) Managing Director & CEO