Punjab & Sind Bank Directors Report.

The Board of Directors have pleasure in presenting the 11th Annual Report of the Bank together with the Balance Sheet as on March 2021 and Profit and Loss Account for the year ended 31st March 2021.

Highlights of Banks financial performance are given below:

• The total business of the Bank increased by 7.68% reached at Rs.163919.35 crore as on 31.03.2021, from Rs.1,52,231.75 crore as on 31.03.2020.

• CASA deposits increased by 18.90% on Y - o - Y and stood at Rs.31530.39 crore as on 31.03.2021,as compared to Rs.26517.30 crore as on 31.03.2020.

• The total deposits of the Bank stood at Rs.96108.18 crore as on 31.03.2021 as compared to Rs.89667.55 crore as on 31.03.2020. The average cost of deposits of the bank stood at 5.06% (FY 2020-21) as compared to 6.04% (FY 2019-20) in previous year.

• The Banks Advances registered a growth of 8.39% from Rs.62564.20 crore as on 31.03.2020 to Rs.67811.17 crore as on

31.03.2021. The average yield on Advances stood at 7.78% (FY 2020-21) as compared to 8.54% (FY 2019-20) during the last year.

• Total Priority Sector Advances increased from Rs. 27872 crore (37.40% of ANBC) as on 31.03.2020 to Rs.28228 Crore (43.95% of ANBC) as on 31.03.2021.

• The Retail Lending portfolio of the Bank grew to Rs.18579 crore as on 31.03.2021and registered a growth of 12.25 % over the previous year Rs.16552 crore. The percentage of Retail credit (Rs.18579 crore) to Gross Advances (Rs.67811 crore) was 27.39 % as on 31.03.2021 compared to 26.45% as on 31.03.2020.

• MSME Credit grew by 7.07% from Rs.10738 crore as on 31.03.2020 to Rs. 11497 crore (Including PSLC of Rs. 2130 crore) as on

31.03.2021. The share of MSME Credit to total Advances was 16.95% as on 31.03.2021.

Financial Parameters:

• Operating profit stood at Rs.771.22 crore as on 31.03.2021 against Rs.1096.91 crore as on 31.03.2020.

• Net loss stood at Rs.2732.90 crore as on 31.03.2021 as compared to Rs.990.80 crore as on 31.03.2020.

• After posting net loss consecutively for eight quarters, the Bank registered a Net Profit of Rs. 161 crore for the quarter ended March 2021

• The Return on Assets (ROA) stood at (-) 2.55% (FY 2020-21) as compared to that at (-) 0.91% (FY 2019-20).

• During the financial year 2020-21 Government of India infused Rs.5500.00 crore towards preferential allotment of Equity shares. Accordingly, the bank has allotted 335,16,14,868 equity shares of Rs.10/- each fully paid up at an issue price of Rs.16.41 (including premium of Rs.6.41 per equity share) Consequently, Government of Indias holding in the bank has increased to 97.07% as on 31st March 2021.

• Net Worth of the Bank stood at Rs.5126.25 crore as compared to Rs.2917.44 crore as on 31.03.2020.

• Capital Adequacy Ratio (Basel III) of the Bank is 17.06 % as on 31.03.2021 against the minimum stipulated requirement of 10.875%.

• Gross NPAs of the Bank is Rs.9334.00 crore (13.76%) as on 31.03.2021 as compared to Rs.8874.57 crore (14.18%) as on 31.03.2020

• Net NPAs of the Bank is Rs.2461.95 crore as on 31.03.2021 as compared to Rs.4684.15 crore as on 31.03.2020.

• Net NPA percentage improved to 4.04% as on 31.03.2021 from 8.03% as on 31.03.2020

• The Board has not recommended any dividend for the year 2020-21.

The Financial performance of the Bank for the year 2020-21 is summarized as below:

(Rs. Crores)
Particulars 2020-21
Net Interest Income 2261.91
Non-Interest Income 902.81
Operating Expenses 2393.50
Operating Profit 771.22
Provisions / Contingencies 3504.12
Net Profit/ Loss (2732.90)
Earnings per share (Rs.) (35.71)
Book Value per share (Rs.) 12.65

Key Financial Ratios for the year 2020-21 are as under:

(Percentage - %]
Particulars 2020-21
Yield on Advances 7.78
Yield on Investments 7.17
Cost of Deposits 5.06
Net Interest Margin 2.11
Cost to Income Ratio 75.63

MANAGEMENT DISCUSSION AND ANALYSIS Global Outlook:

Global growth is gradually recovering from the slowdown, but it remains uneven across countries and is supported by ongoing vaccination drives, sustained accommodative monetary policies and further sizeable fiscal stimulus. World output is projected by the Organization for Economic Co-operation and Development (OECD) to reach its pre-pandemic level by mid-2021, though it will be largely contingent on the pace of vaccine distribution and its efficacy against emerging variants of the virus.

The International Monetary Fund projected strong economic recovery in 2021 and expects world economy to grow by 6% in 2021 and 4.4% in 2022.

Domestic Outlook:

The rebound from the COVID-19 induced slump has been sharper than anticipated. Real GDP growth turned positive in Q3, 2020-21. RBI projected real GDP growth for 2021-22 at 10.5 % from contraction of 8% (2020-21). Going forward, rural demand is likely to remain resilient, which is a good prospect for the agriculture sector. Urban demand and demand for contact-intensive services is also expected to strengthen with the spread of vaccination.

At present, second wave has disrupted the entire system of our country, impacting health and economic condition of everyone. There are record number of daily cases, curfews and lockdowns in most of the states that poses a risk to the domestic growth outlook. But fiscal and monetary authorities stand ready to act in a coordinated manner to limit its spillovers to the economy at large and contain its fallout on the ongoing recovery. RBI on May 5th, 2021 took some steps to support Health sector and initiated some steps to support MSMEs and Individual borrowers.

Though second wave of COVID-19 has posed a downside risk to economic activity in the first quarter of FY 2021-22, yet there are reasons to expect a muted economic impact as compared to the first wave. Learning to "operate with COVID-19", as borne by international experience, provides a silver lining of economic resilience amidst the second wave.

Banking Sector:

SCBs registered a credit growth of 5.56% and Deposit growth of 11.3% in 2020-21. Credit off take was minimal due to disruption caused by COVID-19. Our Bank registered a credit growth of Rs.5247.00 crore and Deposit growth of Rs.6440.00 crore in 2020-21.

SCBs Bank Credit is expected to be normal this financial year too with the second and expected third wave of COVID-19. SCBs deposits are expected to grow moderately in 2021-22.

Capital and Reserves:

During the year, Bank has raised fresh capital of Rs 5500 crore by issue of preferential shares to the Government.

Date of issue No. of shares Price Amount (Crores) Details
25.03.2021 335,16,14,868 16.41 (including premium of 5500 Preferential issue to the
Rs.6.41 per equity share) Govt. of India

Capital Adequacy

• As per Basel III framework, the Banks Capital Adequacy Ratio is 17.06% which is higher than the regulatory requirement of 10.875%

• Details of Capital Adequacy (BASEL III) are:

(Rs. In Crores)

Particulars

BASEL - III

31.03.2020

31.03.2021

CET 1 CRAR 3806 7.59 6243 12.05%
AT1CRAR 1000 1.99 1000 1.93%
Tier I Capital 4806 9.58 7243 13.98%
Tier II Capital 1592 3.18 1598 3.08%
Total Capital 6398 12.76 8841 17.06%
Risk Weighted Assets 50138 - 51790 -

Business Initiatives:

During the current financial year Bank has implemented various initiatives as to enhance customer convenience and boost

competitive edge of the Bank. The prominent among them are:

• The Project "CBS Upgrade", i.e. upgradation of technology platform from Finacle 7 to Finacle 10, which is already in process, will be rolled out during FY 2022-23. Among others, two significant IT enabled solutions i.e. tracking of "Real Time Transaction Monitoring System (RTTS)" and "OMNI CHANNEL" a single platform for all digital channels like Internet Banking/Mobile Banking/UPI, are in the process of implementation and will be activated soon.

• Inhouse developed Application for Public Financial Management System (PFMS) having Integration with PAHAL - Direct Benefit Transfer for LPG (DBTL) Account Validation Service, Sukanya Samridhi Yojna, Senior Citizens Saving Scheme, Pension Provident Fund and National Small Saving Fund.

• Bank has launched LOS (Loan Originating System) for retail banking products to ease the loan process for customers and minimize the turnaround time.

• New Rupay Platinum Debit Card has been launched with Cash withdrawal limit in ATMs Rs.40,000/- and Transaction limit at POS & ECOM Rs.1,50,000/-.

• Bank rolled out and implemented various COVID - 19 Relief schemes for its customers whose operations have been impacted by Covid-19 pandemic.

• Bank extended the benefits of RBIs Regulatory Package for Covid-19 related stress by providing moratorium benefit from 01.03.2020 to 31.08.2020 to all eligible customers.

• Creation of War Room for focussed monitoring of NPA/ TWO (Technically Written Off) accounts and to curtail fresh slippage and improve recovery.

• Initiating a campaign on the basis of ABC analysis of NPA, captioned as started Mission 520, in which each zone including SAMverT has selected majorly focussed 20 accounts of their zones for recovery.

• Observing every working Saturday as Recovery Day to make focussed efforts for recovery in bad assets by organising Recovery Camps, Mega Auctions etc.

• Creating a non-discriminatory & non-discretionary, liberalized scheme captioned PSB Krishi Samadhan, which deals exclusively with the settlement of NPA and TWO agriculture accounts.

• Conducting Mega E-auctions on Pan-India basis to fast forward the process of recovery.

• The Bank adopted a Multi-media strategy to build up its image in public. The Publicity Budget was centralized to decide proper utilization and effective control. Bank launched Digital Calendar 2021.

• Bank introduced "PSB KRISHI RAKSHAK RIN", an instant credit for farming community to meet the emergency requirements for Agriculture and allied activities and Household needs for tiding over temporary difficulties arose due to COVID-19 outbreak.

• Bank introduced "PSB SHG TATKAL RIN" to meet emergent needs of SHG (Self Help Group) members in the wake of COVID-19 outbreak.

• Bank introduced a centrally sponsored Scheme "PM Formalization of Micro Food Processing Enterprises Scheme (PM FME Scheme)" for providing financial, technical and business support for up gradation of existing micro food processing enterprises.

• Bank introduced a central Sector Scheme, "PSB Scheme for Animal Husbandry Infrastructure Development (PSB-AHID)" for

incentivizing investments by individual entrepreneurs, private companies, MSME, Farmers Producers Organizations (FPOs) etc.

• Bank introduced a central Sector Scheme, "PSB Agriculture Infrastructure Fund (PSB-AIF)" to mobilize a medium - long term debt financing facility for investment in viable project relating to post-harvest management infrastructure and community farming assets through incentives and financial support.

• In order to bring Agri jewel loan customers to bank and to meet working capital requirements of the farmers, bank launched "PSB Krishi Swarn Kanti Scheme".

• Bank introduced a new scheme "PSB Scheme for Financing Poultry Farming (PSB Poultry)" for meeting working capital and investment credit requirements of the farmers who are directly engaged in Poultry Farming.

• A new scheme "PSB Scheme on Financing Piggery Units (PSB Piggery)" was launched for meeting working capital and investment credit requirements of the farmers who are directly engaged in Pig Farming.

• "PSB Scheme on Financing Apiculture/Bee Keeping (PSB Apiculture)" was launched for meeting working capital and investment credit requirements of the farmers who are directly engaged in apiculture (Bee keeping).

• Bank has launched a new Scheme for Financing Solar Projects under PM KUSUM with an objective of increasing farmers income, provide reliable source for irrigation and de-dieselise the farm sector.

• A new scheme "PSB Scheme for Financing Minor Irrigation" was launched to meet the term loan requirement of the farmers associated with minor irrigation activities.

• A new MSME Loan product "PSB Professional Assist" was launched for providing opportunities to professionally qualified persons to set up/ enhance their practice/ business or to take up self- employment.

• A new MSME Loan product "PSB GST Ease Loan" was launched for providing hassle free credit to GST registered units to meet their working capital requirement.

• Post outbreak of COVID-19, Bank has introduced the following products for COVID-19 affected MSME borrowers:

a) PSB Guaranteed Emergency Credit line (PSB -GECL) for business enterprises / MSMEs".

b) PM street vendors Atma Nirbhar Nidhi (PM SVANidhi)" scheme.

c) PSB Credit Guarantee Scheme for Subordinate Debt (PSB-CGSSD).

• Bank launched special Home Loan and Vehicle Loan products for Government/PSU employees with attractive features including concession in Rate of Interest (ROI).

• This FY Bank has introduced PSB Digital Learning Portal and has digitized process for Performance Appraisal Management.

• The Bank has also launched PSB Performers League (PPL) as a motivational campaign to create competitive environment amongst branches and to generate more Retail Lending business during the campaign period.

• Bank has put in place a comprehensive Credit Risk Management Policy to manage the credit risk effectively. It has introduced a robust system for appraisal of loan / credit proposals, a software based internal rating modal, internal limits and triggers for monitoring of credit concentration across products and segments. Steps have been taken to improve underwriting standards and strategy to arrest slippages, and credit monitoring mechanisms.

Awards & Achievements

Bank has been awarded with

1. Shine & Succeed Campaign organized for the General Manager of the Banks by PFRDA for promoting APY (Atal Pension Yojana). The achievement of the Campaign was 101%.

2. Makers of Excellence 4.0 Campaign organized for the Executive Director of the Banks by PFRDA. The achievement of the Campaign was 108%.

3. Leadership Capital 3.0 Campaign organized for MD & CEO of the Banks by PFRDA. The achievement of the Campaign was 105%.

4. Best Digital Financial Inclusion Initiatives in 2019 -20 by IBA for in Small Bank Category in March2021.

5. Kirti Award by GOI, Ministry of Home Affairs, Department of Official Language of Region A under the category of Banks and Financial Institutions for the best implementation of the Official Language Policy in the financial year 2019-20.

6. Banks quarterly Hindi e-magazine "Rajdeep" got the first position in the Inter Bank Hindi E-magazine Competition 2019-20. Vision and Strategy of the Bank

Vision - To be a Strong Bank with commitment to excellence and focus on adding value to stakeholders with adherence to best practices and core institutional values shared throughout the organization.

During the Financial Year 2020-21, Bank has adopted a Strategy to turnaround the Bank and rebuild confidence among its investors. In the past few years, Banks performance has remained subdued due to a variety of reasons. Further, the FY 2020-21 was dominated by an external seminal event i.e. COVID-19 which has affected the global economy and also the Banks performance adversely. The Bank faced inherent issues which plagued the growth of the Bank.

In order to turnaround the Bank, an appropriate long-term strategy has been drawn to achieve the projected business plan. The

Bank has prepared a business plan and strategy on different business parameters and an action plan for achieving the same.

Through its strategy Bank has tried to shape all the specific activities undertaken by it to overcome the challenges and has defined

all the logical steps that Bank will take from end to end.

The Turnaround strategy aims at achieving the vision of Bank by taking following actions:

• Shifting the business focus from Liability to Asset base via addressing asset quality concerns, opting cost reduction measures, conserving resources, improving non - interest income and containing NPA.

• Special Focus on MSME, Accelerating Agriculture and Revitalising Retail Credit.

• Leveraging Technology through defined short term and long-term initiatives.

• Better Risk Management through RWA Optimisation resulting in improvement of CRAR, building Capital Lite Model, rationalization of existing Risk Management Policies and Spreading Risk Culture across the organization.

• Organisational restructuring and better Human Resource Management

DIRECTORS RESPONSIBILITY STATEMENT:

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2021:

a) The applicable accounting standards have been followed along with proper explanation relating to material departures, if any,

b) The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied. Reasonable and prudent judgments and estimates were made 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 the year ended March 31, 2021.

c) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities,

d) Annual accounts have been prepared on a going concern basis,

e) Internal financial controls system to be followed by the Bank were laid down and that such internal financial controls are adequate and were operating effectively,

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.