Punjab & Sind Bank Directors Report

1. Global Economic Outlook:

In calendar year 2023, global economy demonstrated resilience despite facing various challenges and achieved a growth rate of 3.2%, showing a slight decrease from 3.5% in 2022. Projections for calendar year 2024 indicate that the global growth will remain steady, with varying trends across different countries.

The International Monetary Fund (IMF) forecasts that the world economy will maintain a growth rate of 3.2% during calendar years 2024 and 2025. This stability is primarily attributed to the higher interest rates set by central banks to curb inflation and a gradual reduction in fiscal support.

In most regions, global inflation is declining at a faster pace than initially anticipated, propelled by the resolution of supply-side challenges and the implementation of tighter monetary policies. According to the IMF, global headline inflation has been forecasted to decrease from 6.8% in 2023 to 5.9% in 2024 and further to 4.5 % in 2025.

2. Domestic Economic Outlook:

The domestic economy is gaining strong momentum, with inflation beginning to ease. In March 2024, retail inflation fell to 4.85%, from 5.09% in February 2024. The GDP grew by 8.2% in the fiscal year 2023-24, driven by mining, manufacturing and financial sectors. This marks the third consecutive year of GDP growth at 7% or higher, with GDP growth of 9.7% in FY 2021-22 and 7.0% in FY 2022-23.

The Reserve Bank of India (RBI) has projected a GDP growth of 7.2% for the fiscal year 2024-25, citing several supportive factors. These include healthier balance sheets of banks and corporates, progress in fiscal consolidation, manageable external balance, and ample forex reserves acting as a safeguard against external uncertainties. Further, on the demand side, there is sustained growth in manufacturing, the construction sector is thriving, and rural growth is strong.

3. Banking Sector:

Recent global banking events and impact on Indian Banking

The shocks experienced by the global banking sector in early 2023 have prompted industry leaders to re-evaluate their strategies. While significant attention is being directed towards proposed regulatory adjustments concerning capital, liquidity, and risk management for US banks, there remains a considerable amount of work to be undertaken in order to adapt and innovate business models.

Overall, banks are currently in a stable position, but their revenue models are facing challenges. Organic growth is expected to be modest, compelling institutions to explore alternative sources of value in an environment where capital is scarce.

The rapid advancement of new technologies, coupled with the convergence of various trends, is reshaping how

banks function and meet customers demands. The influence of Artificial Intelligence, machine learning, open data and digital currency are expected to increase in 2024. Banks are preparing to address these challenges by leveraging their robust mechanisms and risk management tools.

4. Indian Banking Scenario:

According to the Reserve Bank of India (RBI), Indias banking sector is adequately capitalized and effectively

regulated.

The Indian banking sector has experienced significant growth, fuelled by robust economic expansion, higher disposable incomes, growing consumerism, and improved credit accessibility. Key drivers of this growth include the vast consumption market, rural digitization initiatives, and the proliferation of digital products and solutions. Scheduled Commercial Banks (SCBs) exhibit robust balance sheets, indicating their health and soundness. During FY 23-24, Schedules Commercial Banks registered deposits and advances growth of 13.50% and 20.20% respectively. In FY 24-25 Scheduled Commercial Banks are expected to grow by 13-14% under credit segment.

MANAGEMENT DISCUSSION AND ANALYSIS

We are pleased to inform that on 1^st July 2023 the Honble Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman inaugurated the New Corporate Office of the Bank at NBCC Office Complex, East Kidwai Nagar, New Delhi in the presence of Dr. Bhagwat Kishanrao Karad, Honourable Minister of State (Finance) and Dr. M P Tangirala, Additional Secretary, DFS.

Performance of the Bank

Highlights of the Banks performance during the FY 2023-24 is as under:

Business

The Total Business increased by 7.72% and stood at Rs.205374 crore as on 31.03.2024 as compared to Rs.190647 crore as on 31.03.2023. The Business growth was aided by Deposit growth of 8.89% and Advances growth of 6.15%.

Deposits

The Total Deposits increased by 8.89% abd stood at Rs.119410 crore as on 31.03.2024 as compared to Rs.109665 crore as on 31.03.2023.

The Cost of Deposits of the Bank stood at 5.55% for the FY 2023-24 as compared to 4.53% for the FY 2022-23.

CASA deposits increased by 5.09% and stood at Rs.38708 crore as on 31.03.2024, as compared to Rs.36833 crore as on 31.03.2023.

Advances

The Total Advances increased by 6.15% and stood at Rs.85964 crore as on 31.03.2024 as compared to Rs.80982 crore as on 31.03.2023.

The Yield on Advances stood at 8.66% for the FY 2023-24 as compared to 7.67% for the FY 2022-23.

The Advances Mix as on 31.03.2024 comprised of RAM (Retail, Agri and MSME) advances of 51.73% and Corporate Advances of 48.27%.

Priority Sector Advances

Total Priority Sector Advances increased by 19.28% and stood at Rs.39120 crore as on 31.03.2024 as compared to Rs.32795 crore as on 31.03.2023. The detailed performance in the RAM segment is as under:

Retail: The Retail Advances increased by 14.96% and stood at Rs.16034 crore as on 31.03.2024 as compared to Rs.13947 crore as on 31.03.2023. The percentage of Retail credit (Rs.16035 crore) to Gross Advances (Rs.85964 crore) was 18.65% as on 31.03.2024 as compared to 17.22% as on 31.03.2023.

Agri: The Agri Advances increased by 6.25% and stood at Rs.12524 crore as on 31.03.2024 as compared to Rs.11787 crore as on 31.03.2023.

MSME: The MSME advances grew by 7.08% and stood at Rs.15909 crore as on 31.03.2024 as compared to Rs.14857 crore as on 31.03.2023. The share of MSME Credit to total Advances was 18.50% as on 31.03.2024.

Profitability

• The Operating profit stood at Rs.1131 crore as on 31.03.2024 as compared to Rs.1450 crore as on 31.03.2023.
• Net profit stood at Rs.595 crore as on 31.03.2024 as compared to Rs.1313 crore as on 31.03.2023.
• Return on Assets (ROA) stood at 0.41 % in FY 2023-24 as compared to 0.98% in FY 2022-23.
• The Earnings per share stood at Rs.0.88 per share as compared to Rs.1.94 per equity share.
• The Net Interest Income stood at Rs.2841 crore as on 31.03.2024 as compared to Rs.2973 crore as on 31.03.2023.
• The Net Interest Margin stood at 2.45% as on 31.03.2024 as compared to 2.91% as on 31.03.2023
• The Cost to Income ratio of the Bank stood at 72.16% as on 31.03.2024 as compared to 62.95% as on

31.03.2023.

Dividend

The Board of your Bank has declared a dividend of Rs.0.20/- per equity share for the Financial Year ended March 31, 2024 subject to the approval of the shareholders at the ensuing AGM.

Net Worth and Capital Adequacy

The Net Worth stood at Rs.7836 crore as on 31.03.2024 as compared to Rs.6786 crore as on 31.03.2023. The Book

Value per share of the Bank stood at Rs.11.56 per share as compared to Rs.10.01 per equity share.

The Total Capital Adequacy Ratio stood at 17.16% as on 31.03.2024 as compared to 17.10% as on 31.03.2023 The CET-1 Ratio stood at 14.74% as on 31.03.2024 as compared to 14.32% as on 31.03.2023.

Asset Quality

Gross NPAs of the Bank stood at Rs.4665 crore (5.43 %) as on 31.03.2024 as compared to Rs.5648 crore (6.97%) as on 31.03.2023.

Net NPAs of the Bank stood at Rs.1350 crore (1.63%) as on 31.03.2024 as compared to Rs.1412 crore (1.84%) as on 31.03.2023.

Business Initiatives

During the financial year 2023-24, the Bank has implemented various initiatives to enhance customers convenience and to boost competitive edge. Some of the significant initiatives are as follows:

Tie-ups and Collaborations

1. Your Bank signed a memorandum of understanding with The Warehousing Development Regulatory Authority (WDRA) to facilitate farmers and traders in providing low interest rate loans.
2. PSB IGNITE, a tie up with Poornatha for supporting the MSME and Agri sector aims to empower entrepreneurs with financial and managerial knowledge in vernacular languages, through practical and simplified courses for effective implementation.
3. Your Bank has implemented the DSA Model which will not only improve our competitive edge in the market but also increase our market share in Retail Credit products and helps in penetration of the new customer segment at lower cost.

Information Technology

1. Bank has upgraded its CBS platform from Finacle 7 to Finacle 10 during the year which will enable us to offer a wider array of services through the Banks digital platforms.
2. Bank has migrated to ITMS Treasury software which will improve efficiency and will help in compliance of the

guidelines issued by Reserve Bank of India.

Financial Inclusion & Government Business Business Correspondents

Your Bank is strongly working on the implementation of the BC network in the Bank. Presently, we are having

1,709 BCs as against 357 BCs as on March 23.

Rural Self Employment Training Institutes (RSETIs)

During the financial year 2023-24, our RSETIs have conducted 66 training programs wherein 2120 candidates have been trained. Out of 2120 candidates, 1627 candidates belong to SC/ ST category, 1849 belong to BPL & 1538 candidates are women beneficiary. During the current Financial Year 1550 candidates have settled out of which 986 candidates have been settled through credit linkage from different Banks.

Financial Literacy Centres (FLCs) and Centre for Financial Literacy

Bank in coordination with 24 Financial Literacy Centres (FLCs) took the initiative to spread financial literacy among rural population by conducting Financial Literacy Camps in the villages where Basic Banking Services along with other financial schemes like PMJDY, PMJJBY, PMSBY, APY, OD, Digital Banking etc. are discussed with the villagers, so that they are able to avail these services as per their requirements. A total of 266 camps were organized in FY 2023-24 wherein 10081 people actively participated.

RBI has associated our Bank as a sponsor Bank to implement the Phase 1 of the scaled up Centre for Financial Literacy (CFL) project to be set up in 12 CFLs in 12 blocks in the state of Punjab to serve 36 blocks wherein 8074 camps were organized and training were imparted to 138160 individuals.

Performance of Government Schemes:

Human Resource Initiatives

SC / ST / OBC representation in the organisation

The staff strength under various reserved categories as on 31.03.2024 is as under:

Promoting gender diversity

With a view to promote gender diversity in the Bank following women centric initiatives have been taken by the

Bank:

• Webinar on providing ‘Post Maternity Counselling and supports to women employees.
• Creche allowance: A total of 425 women employees have availed the benefits under the scheme.
• Launch of ‘Women Mentorship Programme-PSB Sakhi, aligning with this years theme, "Invest in women:

Accelerate Progress".

EASE Reforms

• In Ease 5.0 Citation for FY 2022-23:
• The Bank received the Top Improvers award for its notable improvement of 145% in total score from the baseline of March 22.
• The Bank also achieved the First Runner up Award in Theme 4- "Collaborative and Development focused Banking".

Corporate Social Responsibility (CSR)

Your Bank undertook the following CSR Initiatives during the year:

1. Distribution of 125 Wheel Chairs on the occasion of Banks 116th Foundation Day.
2. Funds allocated to promote Paralympic Sports (specially-abled athletes) in India through a registered Society, Boccia Sports Federation of India. Funds will be used for critical equipments for disabled players such as Boccia Balls, Boccia Ramp and other related sports kits as Track Suits, T Shirts and shoes etc
3. Fund allocated to M/s Gujarat Foundation for Entrepreneurial Excellence towards iCreates Corpus Funds. Funds will be used to transform the business ideas into successful enterprises by supporting technology- led startups at all stages and Nurture more than 1000 startups in the next five years.
4. Fund allocated for installation of Water cooler at the Graduate School and College for women, Jamshedpur.
5. Fund allocated for installation of Sanitary pad vending machine at Shaheed Sheikh Bhikhari College of Education,

Ranchi

6. Fund allocated for installation of one water R.O System and Water Cooler at Bus Stand, Pathankot, Gurdaspur
7. Nimbark Math Seva Samiti Trust doing charitable work for relief to the poor and destitute, medical aid, running

blind school, old age homes, Gaushala etc.

8. Fund allocated to a registered trust Hare Krishna Movement for providing education and food to under privileged children of AIKYA VIDYA CENTRES.
9. Installation of solar lights at common places like temple, chaupal and panchayat ghar in village Batori under CSR.

Branch & ATM Expansion

• Your Bank continued to focus on branch expansion and keeping in mind the geographical skewedness of our branches, 33 branches were opened during the FY 2023-24 in areas other than the northern region. The total branches of the Bank stood at 1564 as on 31.03.2024.
• Your Bank opened 198 ATMs during the year and total number of ATMs stood at 1033 as on 31.03.2024.

Call Centre

Your Bank has set up a dedicated Call Centre to cater to its customers queries, monitoring and customer acquisition & lead management. We are strongly focusing on revamping the call-centre to further improve on the quality of services.

Official Language

Bank has received the first prize in the Official Language Shield Competition-2023 organized by the Delhi Bank Town Official Language Implementation Committee and the Banks Hindi quarterly magazine "Rajbhasha Ankur" received the second prize in the Home Magazine category.

Other achievements

The External Credit Rating of the Basel III compliant Tier II Bonds has been upgraded by CRISIL Ratings from AA (negative) to AA (Stable) and by CARE Ratings from AA- (Stable) to AA- (positive).

Directors Responsibility Statement:

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2024:

1. The applicable accounting standards have been followed along with proper explanation relating to

material departures, if any.

2. 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 to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of its profit and loss for the year ended March 31, 2024.
3. Proper and sufficient care has been taken 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.
4. Annual accounts have been prepared on a going concern basis.
5. Internal financial controls system, to be followed by the Bank were laid down and such internal financial controls are adequate and are operating effectively,
6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and

such systems are adequate and operating effectively.

Acknowledgement

We would like to thank Sh Kollegal V Raghavendra, Executive Director, Ms Rshmi Khetrapal, Non-Executive Director and all the members of the Board, past and present, for their valuable support, guidance and inputs to the management in all our endeavours. We sincerely thank all the stakeholders, customers for their continued support and trust in our Bank. We would also like to take this opportunity to thank Reserve Bank of India and the Government of India for their support and guidance.