RBL Bank Ltd Management Discussions.

1. ECONOMIC OVERVIEW

1.1 Global Economy

The second half of 2018 saw global economic activity slow down considerably following the cyclical upswing that continued since the last guarter of 2016. While still expanding at over 3.5%, economic momentum across geographies began to peter out due to a confluence of factors such as elevated trade tensions, tighter financial conditions, geo-political uncertainties and tepid growth in some systemically important economies.

Protracted trade tensions and concerns over Brexit continue to erode the confidence of consumers and businesses in both advanced and developing economies. IMF expects global growth to moderate in the near term to 3.3% in 2019, before returning to 3.6% in 2020. Ongoing trade tensions among major global economies cloud the world trade outlook as well driving softer commodity prices and sluggish demand and thereby creating benign inflationary conditions across geographies. According to the IMF, in a global scenario fraught with uncertainties and downside risks, the need of the hour is to implement synchronised,

country-specific policy stimulus across economies, complemented by an accommodative monetary policy.

Financial markets faced several disconcerting developments in 2018, including strengthening of the US dollar, trade disputes and sanctions, bouts of volatility and eguities sell-off towards the end of the year as adverse macroeconomic and geopolitical developments gained prominence. The result is that financial conditions tightened across markets globally.

Plowever, some of these headwinds ebbed and markets entered relatively calmer waters in 2019, as Central Banks signalled accommodation. The regulatory authorities across geographies have responded to the slowdown by

IMF expects global growth to moderate in the near term to 3.3% in 2019, before returning to 3.6% in 2020.

adopting a largely dovish stance in monetary policy. This includes limiting their regulatory tightening, injecting liquidity through cuts in bank reserve reguirements, and applying fiscal stimulus to kick-start growth. Accommodative policy stances and benign crude prices are gradually reviving sentiments in financial markets in 2019.

1.2 Risks to global growth

With sluggish global economic momentum and policy space getting restricted in many countries, risks to global growth remain skewed to the downside. Worldwide trade, investment, and output may suffer from policy uncertainty, continuing trade tensions or a deeper-than-envisaged slowdown in China.

While global growth could surprise favourably, if trade differences are resolved guickly, possibility of sharp deterioration in market sentiment and generally tighter financial conditions remain high. Global growth and trade concerns are expected to remain the dominant theme of 2019, which may have a bearing on market performance, consumer confidence and policies of regulators and governments across geographies.

1.3 Indian Economy

Although India continued to be one of the worlds fastest growing major economies in FY2018-19, domestic economic activities remained sluggish in the second half of the year. Just when the economy began recovering from the twin impacts of demonetisation and Goods and Services Tax (GST) related transition, the crisis related to the performance of Non-Banking Financial Companies (NBFC) cast its shadow on consumption demand and market sentiments, putting economic growth offtrack. As economic activities decelerated towards the end of 2018 due to a slowdown in both public and private consumption, expectations for the real GDP growth were sequentially revised downwards.

It is heartening to note that investment growth is gradually gaining momentum, supported primarily by the governments focus on the formalisation of the economy, infrastructure revamp and affordable housing. Plowever, it must be admitted that weaker agricultural output and consumption slowdown have dragged GDP growth rate expectations from 7.2% to 7% for FY 2018-19.

Despite the sluggish pace of economic growth, the recent pick-up in capex cycle and the revival in construction and financial services, bode well for the sustainability of Indias economic growth, going forward. Private investments are already seeing green shoots of recovery. Government-led

IMF thus expects real GDP growth to recover to 7.3% in 2019-20 and 7.5% in 2020-21, supported by the continued recovery of investment and robust consumption, amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy.

infrastructure spending should help to support domestic demand, further strengthening investment and improving income growth in the year ahead.

Additional supporting factors such as an increase in investments in the commercial sector, improving capacity utilisation, stabilisation of crude prices and other commodity prices, consumption- and public spending in rural areas are likely to bolster economic activities as well. Private consumption is likely to remain the mainstay of growth and a pick-up in investment activities should lend additional support.

The monetary and fiscal easing bend should also boost aggregate demand in the economy. IMF thus expects real GDP growth to recoverto 7.3% in 2019-20 and 7.5% in 2020- 21, supported by the continued recovery of investment and robust consumption, amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy.

Nevertheless, several downside risks, both on the domestic and global fronts, persist for now. Private sector impetus is not picking up fast and greater than expected moderation in global growth or unanticipated volatility in global financial markets could derail domestic pick up. Domestic financial markets continued to be influenced by global developments, especially volatile capital flows and the direction of capital flows remains unpredictable, posing macroeconomic and liguidity challenges.

2. BANKING SECTOR OVERVIEW

Fiscal year 2018-19 was one of the most challenging years for the banking sector. Credit growth remained muted, asset guality continued to deteriorate, liguidity concerns following NBFC credit sgueeze hit banks and stricter provisions and governance issues kept regulatory activities dominant in the sector.

Banking sector growth stayed lopsided as industrial credit growth continued to remain anaemic. Monetary transmission to the deposit and lending rates of commercial banks was partial and delayed as credit growth continually exceeded deposit growth.

The government raised its capital infusion into the sector to T 1.06 Lakh Crore in FY 2018-19 to expedite the recapitalisation of public sector banks and proposed to merge three state-owned banks. Public sector banks, however, still struggled with inadeguate capital buffer and Non-Performing Assets (NPA) provisioning pressures.

While FY 2018-19 might not have been good for Indias overall banking sector, the year has set the foundation for a stronger banking ecosystem, as we begin the new fiscal year. In the new fiscal year, there is an apparent reversal in two of the biggest challenges to the sector - credit offtake and asset guality.

There are ample signs that asset guality concerns for the banking sector are peaking. As we entered 2019, NPA formation has slowed significantly across sectors and recoveries from recent NPAs are streaming in. Lower incremental slippages to NPAs and drop in special mention accounts reflect significant reduction in the guantum of potential stressed assets.

Incremental delinguencies are likely to be lower this year. We, thus expect, a continuing improvement in asset guality and bad loans ratios to move lower in the current fiscal year. The RBI in its latest Financial Stability Report has also acknowledged that gross bad loans would slide in fiscal 2019-20, the first since 2015. Resolution of stressed assets and plateauing of NPA levels on banking balance sheets will further improve credit flows, boost economic activities and in turn support banking sectors growth as well in this year.

Credit flows from banks continue to improve and are increasingly broad-based since February 2019. Banking credit hit double-digit growth, registering over 13% year- on-year growth in March 2019. RBI expects banking sector credit to grow by 13-14% annually in fiscal year

Credit flows from banks continue to improve and are increasingly broad-based since February 2019.

2019-20, driven by strong retail credit growth, higher disbursements to non-banks, exemption of six banks from Prompt Corrective Action (PCA) framework and resolution of big-ticket stressed assets.

A pick-up in credit offtake will provide a springboard for the overall banking sectors recovery. Private banks, supported by stronger balance sheets and significant presence in the retail segment, will likely grow at almost twice the rate than the systemic credit growth.

As the economy recovers and the capex cycle begins to move upwards, corporate lending will pick up as well, particularly for infrastructure, commodities and consumption companies. The Governments continued focus on the recapitalisation of public sector banks and the RBIs efforts to keep the funding costs low stack up in favour of strengthening the banking sector further. With some moderation in interest rates on new loans and focus on improved transmission, enhanced regulatory oversight would help the banking ecosystem.

As economic fundamentals get stronger and more issues get resolved giving banks more leeway for operations, the regulatory climate stays favourable, and transformation technologies are more readily accessible, 2019 will likely be a turning point for Indias banking sector.

3. REVIEW OF BUSINESS SEGMENTS AND OPERATIONS AT RBL BANK

RBL Banks operations span across various business segments comprising:

• Corporate and Institutional Banking (C&IB)

• Commercial Banking (CB)

• Branch and Business Banking (BBB)

• Retail Assets

• Development Banking and Financial Inclusion (DB&FI)

• Treasury and Financial Markets Operations

3.1 Corporate and Institutional Banking (C&IB)

The Banks Corporate and Institutional Banking (C&IB) business segment offers extensive services to enterprises and corporate entities, especially large-sized corporations (i.e. companies with over T 1,500 Crore annual turnover).

Sub-segments within C&IB have sectoral coverage and include: a) Financial Institutions - both multinational and local; b) Government undertakings that cater to public sector undertakings (PSUs), Government boards and c) Multinational clients.

Also, the C&IB team has industry specialised product verticals (i.e. Gems and Jewellery, Real Estate and Infrastructure) that focus on such sectors and offer their expertise on a pan- bank basis.

C&IB aims to be primarily a working capital bank for its clients focussed on transactional businesses and uses term exposure where the overall relationship reguires. C&IB products and services include various fund-based and non-fund-based products, including liability products such as current accounts, term deposits and salary accounts; loan products such as term loans, structured loans, working capital facilities, letter of credit, stand-by letter of credit and guarantees; cash management, and treasury risk management solutions.

C&IB further cross-sells the Banks various other products and services such as corporate salary accounts, credit cards and other retail loan and agri-finance products and also distributes life insurance products, general insurance products and mutual funds to customers, their promoters and employees.

In addition to regular coverage, the Financial Institutions (FI) team engages with counterparties to facilitate interbank dealing, inter-bank trade support arrangements and inter-bank liguidity generation both onshore and offshore.

The C&IB segment recorded a year of high growth, both in terms of financial performance and offerings.

Key highlights of FY 2018-19:

1. During FY 2018-19, the unit saw steady growth in its client base and crossed the milestone of 750 client relationships through new offerings, establishment of focussed sub-verticals and strategic use of the Banks branch network.

2. The unit also increased its on-ground location coverage to nine cities as per its target market. Going forward, it intends to further expand its reach to a few more cities primarily in northern and eastern India.

3. The unit continued to selectively broaden the wholesale banking portfolio with bespoke products that fit the Banks growth strategy and are relevant to its marketplace. It also launched several product upgrades on the transaction banking space, such as the new corporate internet banking platform, trade finance related products and digital solutions, especially for its Foreign Institutional (FI) clients.

4. During the year, the C&IB business placed its focus on two major segments:

a) Multinational Companies (MNCs): As core international banks are catering to MNCs, they are beginning to broaden their horizons and deal with local banks. RBL Bank initiated a focussed segmental coverage for MNCs and onboarded more than 20 reputed and well-established clients in the year. The Bank will continue to strengthen its coverage and offerings for clients in this domain, which are largely value accretive, given the lower risk profile and more liability- and fee-based products the clients

The GIFT CITY branch at the International Financial Services Centre (IFSC) in Gandhinagar, Gujarat, India continued its growth trajectory touching ? 1,500 Crore of business during the year.

require. Going forward, the intent is to offer customised solutions to large MNC processors, exchange houses and ecommerce companies by leveraging on the existing digital transaction processing capabilities.

b) Government Sector: While the dedicated

government banking unit was set up in the previous financial year, this year was focussed on growing the liability base; and this contributed significantly towards the overall current and saving account balances of the bank.

5. The C&IB unit continued its focus on two dedicated product sectoral teams (Real Estate and Infrastructure) within the Corporate Finance Group that are responsible to evaluate the Banks position both from a risk management and value-add perspective, offering mutually beneficial solutions for its clients.

6. The GIFT CITY branch at the International Financial Services Centre (IFSC) in Gandhinagar, Gujarat, India continued its growth trajectory touching T 1,500 Crore of business during the year.

The focus in the coming financial year is to continue the broadening of client reach by penetrating unexplored geographies and deepening its existing client relationships by offering more value-added solutions.

3.2 Commercial Banking (CB)

This segment of the Bank finances the business needs of Small and Medium-sized Enterprises (SMEs) (i.e. companies and firms with annual revenue from T 35 Crore to T 250 Crore) and mid-sized companies (i.e. enterprises and companies with annual revenue from T 250 Crore to T 1,500 Crore). The units focus is to serve the banking requirements of fast-growing enterprises, sunrise sector businesses and industry segments of Indias economy like logistics, e-commerce, consumer services and organised retail. It has presence across 11 cities including Mumbai, Delhi & NCR, Kolkata, Bengaluru, Chennai, Hyderabad, Pune, Coimbatore, Ahmedabad, Vadodara and Kolhapur.

The units predominant objective is to be the bank of choice for transaction banking requirements of its clients through cash, trade and forex services. In the SME segment, where exposures are largely backed by significant collaterals, the strategy is to build a highly granular portfolio. It further aims to be the dominant player for all transaction banking requirements of clients to achieve higher returns on the capital invested. The Bank is also keen to develop and maintain promoter level relationships in this segment to cross-sell products and services to promoters and their families and provide timely and comprehensive banking solutions.

For this purpose, the group uses dedicated relationship managers with deep industry knowledge. These relationships have helped the Bank stay ahead in terms of understanding clients requirements and supplement the Banks growth. The unit aims to encourage competence in sectors, which involve intensive transaction banking and offer innovative financial solutions to capture the transaction banking wallet. In addition, the CB segment focuses on utilising relationships and understanding of larger established companies to foster enduring bonds with suppliers or distributors.

During FY 2018-19, the CB team improved the granularity of its portfolio and right sized its ticket size from a client materiality perspective. The unit placed significant importance on building a strong deposit franchise on the corporate side. The focus was to be the transaction bankers to the clients and the Bank placed considerable focus on maximising risk-adjusted return and profitability by charging the customer according to the risk involved. The other goal was to foster customer relationships through enhanced cross-selling activities for increased penetration and stickiness of customers.

Key highlights of FY 2018-19

1. The CB business continued to demonstrate strong performance throughout FY 2018-19. The unit contributed significantly to the Banks key advances growth. At present, 19% of the Banks advances book is sourced by CB and the unit reported an advances growth of 12% y-o-y.

2. The unit was successful in capturing 10-15% of the wallet share of its clients in the mid-corporate sector in FY 2018-19. The Bank is also one of the top three banks for its clients in the SME segment.

3. As an important step towards facilitating inclusive and digital discounting for MSMEs operating in India, RBL Bank has signed a TReDS (Trades receivable discounting system) agreement with Ml exchange & Invoice Mart.

4. The Commercial Banking unit has signed an Moll with NASSCOM to boost MSME ecosystem by providing customised solutions and be the banking partner for all NASSCOM members.

5. RBL Bank and Dun & Bradstreet collaborated for a unigue awards initiative, titled, Dun & Bradstreet - RBL Bank Limited SME Excellence Awards 2018. These awards were designed to recognise the spirit of entrepreneurship and felicitate SMEs that have demonstrated exemplary performance in their respective fields. The theme for this initiative was Its

The CB business continued to demonstrate strong performance throughout FY 2018-19. The unit contributed significantly to the Banks key advances growth.

At present, 19% of the Banks advances book is sourced by CB and the unit reported an advances growth of 12% y-o-y.

Time to let the World Know and the awards spanned ten sectors: i) Chemicals and Pharmaceuticals; ii) Electrical and Electronic Goods; iii) Engineering and Machinery; iv) Food Processing and Agro Products; v) IT and ITeS; vi) Plastic and Plastic Products; vii) Professional and Business Services; viii) Textiles and Garments; ix) Transportation and Logistics and Travel; and x) Tourism and Hospitality. Additionally, the awards initiative featured four theme-based categories, including Best Global Business, Best Woman Entrepreneur, Most Innovative Company of the Year and Emerging SME of the Year.

In FY 2019-20, the focus of the CB unit will be to expand its sourcing channels, adding digital and innovative alternatives to customer segments and underwriting methods, while penetrating unexplored geographies.

Going forward, the team will continue to foster strong partnerships and new strategic alliances to enable the Bank to tap new customer segments and diversify its portfolio. This includes collaborations with Fintechs, payment companies and companies that have a large network of service points. The team will also concentrate on improving its cross-selling practices, along with return on assets through expansion of margins.

3.3 Transaction Banking

3.3.1 Cash Management Services

The Transaction Banking unit straddles the entire financial value chain for customers, with the primary focus to provide clear value-adds both in the domestic and international operations. Driven by the principle of Follow the Money, the division plays a pivotal role in driving the Banks overall CASA strategy. With a pan-India presence, the division services diverse client segments across services & distribution, manufacturing, financial & capital markets, government banking, among others spanning the banks retail and wholesale business segments.

The Bank has invested in a state-of-the-art transaction management framework that complements its expanding branch network, including technologically advanced customer-facing internet and mobile-based applications. It has further enhanced its product suite to span the entire spectrum across the traditional and digital space. Some of the key offerings include bulk payment processing (across supplier and vendor payments), corporate salary processing, dividend and interest payout, tax payments, escrow services, NACH (National Automated Clearing House); virtual accounts and traditional collections for cash, chegues, among others.

The division specialises in providing structured Receivables, Payables & Liquidity Management solutions, encompassing bespoke offerings leveraging its strong product and service delivery abilities. It has been a strong CASA driver on both, growth of existing franchise and also on-boarding new client relationships.

3.3.2 Transaction Banking Trade

The RBL Bank trade franchise continues to grow as it extends trade services to all the clients, supported by four separate processing centres, handling domestic and international trade. This year, the Bank launched trade products from its GIFT City branch. It was one of the first banks to offer offshore buyers credit funding, following changes in the regulatory environment.

Key highlights of FY 2018-19

1. RBL Bank has played a leading role to promote the usage of blockchain technology for meeting the trade requirements of customers. The Bank believes that blockchain has the potential to revolutionise the paper intensive manner in which trade is currently conducted in India. The Bank led the creation of a first-of-its-kind consortium of 14+ private and public sector banks to digitise inland trade as a Make in India initiative in co-creating a comprehensive trade ecosystem, which uses blockchain and other innovative technologies as its backbone. This initiative was also recognised with the Celent Model Bank Award 2018 in the Emerging Innovation category for pioneering initiatives in the application of blockchain in the trade finance and supply chain segments.

2. The Bank continued to innovate its cash management and transaction banking offerings, especially for non-banking financial institution clients, thereby sustainably growing its liability base.

3. The Bank has tied up with various domestic and foreign banks for reimbursement structure to provide funding for importers; and has established correspondent banking relationships with large global banks.

3.4 Banking as a Service (BaaS)

The unit Banking as a Service (BaaS) was established around three years ago. It primarily focuses on technology development and an enhanced service delivery, offering a seamless banking experience to customers.

The Unit provides industry-specific innovative solutions for businesses in the field of payment APIs, Unified Payments

Interface (UPI), prepaid cards, merchant acquiring, nodal accounts, Aadhaar-Enabled Payment System (AEPS) and Domestic Money Transfer (DMT).

The BaaS unit has partnered with several fintech innovators to create an advanced digital ecosystem for its customers. It has successfully customised transaction flows to meet client and end-user expectations through diligent authentication processes around onboarding and customer transactions, payouts, timely reconciliation and effective payment processing models. This has helped improve customer experience in terms of lower TAT and enhanced quality at a lower cost.

Through this unit, the Bank aims to promote an open banking culture where clients can use the Banks systems and data to perform their businesses better and faster. This has been achieved through the development of a platform using an Application Programming Interface (API) that allows clients to plug and play into the Banks systems, thus enabling faster transaction processing, faster reconciliations and better account management.

Key highlights of FY 2018-19:

• With 6.90 Lakh PoS machines through merchant acquired channels, RBL Bank stands first in India for the total number of PoS machines deployed.

• In the year, business Correspondents helped the Bank in expanding the network to remote locations and successfully process transactions worth T 30,000 Crore through AEPS and DMT.

3.5 Branch & Business Banking (BBB)

RBL Bank offers a wide array of products and services to its clients through the Branch & Business Banking segment.

The unit caters to the requirements of individuals and small businesses across rural and urban India.

The Bank provides several products and services through traditional branch outlets and multi-channel electronic banking system that comprises ATMs, internet banking, phone banking and account services.

3.5.1 Digital Banking

a) MoBank2.0

Digitisation is perhaps most pervasive in the banking and financial sector worldwide; and there is an increased focus on digital interfaces, especially mobile banking as a core consumer touchpoint. In line with this trend, the Bank has revamped its mobile banking platform and launched MoBank 2.0 last year. The new application has an attractive and intuitive user interface with industry-first features, making it a highly rated banking application.

Apart from regular payment features, MoBank 2.0 provides a comprehensive 360-degree view of the customers relationship with the Bank just by switching screens. The application has a debit card control module to enhance the customers card security. Also, it is integrated with an in- app intelligence engine with notification capabilities. This engine shares consumer usage behaviour, enabling the Bank with real-time data to solve customer experience issues instantly.

The Bank has launched an online investments module i.e. INVEST FIRST on MoBank 2.0, thus enabling its clients to invest in online mutual funds and other products digitally and on the go without any need for documentation or branch visits. Through INVEST FIRST, clients can purchase mutual funds, redeem investments, transfer funds and download reports on MoBank 2.0 anywhere, anytime and in a convenient manner.

The Bank has witnessed a high adoption of digital platforms by retail investors and the investment AUM has seen 26% growth during the year.

The MoBank 2.0 has significantly improved customer experience through the following features:

• Instantly book term deposits, invest in mutual funds, apply for a loan and a credit card seamlessly.

• Access to a multifaceted account statement module to slice and dice and download account statements in one click.

• Request a call back from a relationship manager by using the Click2Call feature.

• Change debit card pin, manage limits and block card in case of an SOS.

• The application includes a feedback module too, to share direct feedback on the Banks products, technology and customers banking experience.

• The Bank offers virtual cards for digital savvy customers on the Mobank app, thus not requiring the customers to carry a physical card in their wallet.

b) Internet Banking

Following the revamp of Retail Internet Banking in March 2017 and Corporate Internet Banking in March 2018, the Bank has seen a surge of customers migrating to these digital banking channels.

During the year, the customers transacting through these channels grew by 130% and the value of the transactions has grown by 68%. This is attributed to the consistent improvement in the user journey and enhanced security measures built within these applications.

c) Digital Savings Account

Continuing with the efforts towards paperless onboarding, the Bank has introduced one-click digital products across credit cards and health insurance business for liability customers. This has driven digital cross-selling of products and has improved the average product holding of the portfolio.

The Bank introduced an exclusive digital offer for women called the Womans First Savings Account, which comes

with a specially designed debit card with multiple benefits for women.

While adapting to the change in regulatory environment on the usage of Aadhaar, the Bank has managed to grow the deposit book of digitally sourced accounts by over 110% in the last year.

3.5.2 Insurance

To provide insurance coverage across client segments, the Bank has introduced a host of new insurance products, catering to the reguirements of customers in rural branches and the customers managed through the agri channel. There has also been a build-up of the existing insurance product offerings in the BBB and Retail Assets segments with multiple insurance providers, enriching the Banks product bouguet on protection, savings, retirement planning and loan cover, among others.

The Bank leverages data analytics to gauge client behaviour and corresponding reguirements. The analytics model enables relationship managers to help their customers purchase the life and health insurance products, basis their aspirations and lifestyles.

The unit continues to leverage technology-enabled platforms to integrate with the Banks insurance service partners and help customers purchase insurance products digitally. All primary insurance products are now available on the Banks website and net-banking platform. Customers are increasingly educated on various online channels, resulting in them migrating from traditional channels to online platforms. This has led to a growth in the premium collection across products by 60% this year.

Customers have access to insurance covers across all variants against loss, fraudulent activities, personal accidents, among others.

3.5.3 Client Segments

RBL Bank has strengthened its positioning in each of its managed programmes i.e. Insignia, Signature and Aspire. These segments were launched to cater to different groups of customers with similar characteristics, needs, interests and lifestyles.

These business divisions engage with diverse clients more efficiently and in a more structured manner to suit their personal and business banking reguirements. The Banks most premium offering, Insignia Preferred Banking, has expanded across most of the key urban centres. In FY 2018-19, assets under management in this segment has seen a robust 52% growth.

Concurrently, the Banks distribution and service setup has strengthened across all centres, where Insignia is offered. The Bank follows a regimented programme for client on- boarding and life-cycle management, which is unigue in the industry.

During the year, upskilling has been a clear focus of the business to distinguish the relationship management team vis-a-vis competition. Special emphasis has been laid on both internal and external partnerships for skill-building in relationship management and service teams. These cover training sessions related to products, skill development, behavioural science, relationship management, with an alignment to the best-in-class training institutes across industry on service parameters.

3.5.4 Debit Cards

The Banks 11 debit card variants and propositions are designed towards addressing clients reguirements and to create positive experiences.

As a part of its client engagement strategy, the Bank introduces, educates and trains clients on products and services as well as updates them on keeping their banking transactions safe and secure. Be it planned and/ or unplanned, the Banks debit card based payments are available 24/7 through POS/swipe machines, ATMs and internet banking.

The Bank offers choices to customers across all three card networks Mastercard, Visa and RuPay. The focus is to encourage digital payments while adding value to the proposition offered.

RBL Bank is Indias only bank to offer foreign currency debit card services to diplomats. In the coming year, the Bank will also introduce industry-first options to its existing and prospective customers with enhanced security features, such as the vertical card. The features will provide additional flexibility to customers to enable and disable overseas transactions, manage limits and use contact-less cards.

Key highlights of FY 2018-19

• The card spends grew by 41% in comparison to Industry growth of 23%

• The transactions on POS and online grew by 54% while industry has grown at 27%.

• The transactions increased by 51% in calendar year 2018 vis-a-vis 2017.

3.5.5 TASC (Trust, Association, Society and Club):

TASC remains one of the key segments towards achieving the overall growth under Branch & Business Banking. With its competitive interest rate offering in Savings Account and Fixed Deposits along with a host of value added products under Digital banking and CMS, this segment has successfully garnered incremental business from key segments namely educational institutes, religious trusts and local bodies.

Under the TASC segment, Deposits (CASA & TD) grew by 46% in FY 19 over FY 18. The Bank will continue to focus on enhancing its the product proposition, sales approach and relationship management to make strongholds in this segment.

3.5.6 Diplomatic missions

The Banks diplomatic segment continues to expand its market share and has become a high revenue-generating business unitwith good potential across liability and foreign exchange streams. Additionally, this influential segment has great potential for lead generation for associated businesses of the Bank.

The Banks experienced team offers bespoke solutions, customised products and an excellent service spectrum to this segment.

The Bank increased its market share in the diplomatic segment targeted base to 49%, maintaining a dominant market share. Currently, 70 embassies bank with RBL Bank, establishing it as a dominant player in this segment. The Bank works with Embassies, Consulates, Division (Defence, Cultural, Trade, Tourism and so on) of over 109 countries

The Bank increased its market share in the diplomatic segment targeted base to 49%, maintaining a dominant market share.

and caters to about 900 diplomats, increasing penetration across Chennai and Flyderabad, while expanding market share across Delhi, Mumbai and Kolkata.

During FY 2018-19, the Bank explored related business opportunities and made inroads into airlines, tourism offices, foundation accounts, international organisations and education accounts. Besides, existing trade commission relationships helped generate leads in foreign companies for corporate banking. Moving ahead, the focus in FY 2019-20 will be to penetrate further into the business across locations in India and focus on other related business opportunities.

3.5.7 India Start-up Club

RBL Banks focus on start-ups and emerging enterprises segment has increased over the last few years. This year has been instrumental as 1,000+ start-ups are banking with the Bank. Enabling start-ups to scale up and continuously innovate through digital solutions, has played a key role in building this franchise. The Banks start-up customers have leveraged the API and CMS solutions to facilitate faster pay-outs through IMPS, NEFT and RTGS, APIs and collection through NACFI and Virtual Accounts solutions.

RBL Bank is increasing its focus on this segment through multiple offerings and tailor-made solutions for start-ups belonging to different stages of the entrepreneurial journey.

3.6 Retail Assets

Retail Assets business has seen robust growth continuing from previous years. The segments core to Retail Assets such as credit cards, loan against property and business instalment loans have seen strong demand and continue to expand. Apart from the traditional lending products, the Bank, through its partnership with Fintechs, caters to new customer segments that have added to the granularity of the portfolio. Additionally, through its partnerships the Bank has also launched new products, expanded to new geographies and has been using alternative/big data driven risk models.

a) Secured Loans

• Secured Loans are primarily extended to SMEs, wherein the eligibility is derived, based on the cash

flows of the business. These loans are primarily backed by self-occupied property as a collateral. Secured portfolio has continued to multiply with a y-o-y growth of 51 % during FY 2018-19.

• The Bank has also taken initial steps in building an affordable housing segment through strategic partnerships.

b) Unsecured Loans

• The Bank offers unsecured loans to individuals and small businesses by assessing their cash flows. The unsecured business loans are extended on the principle of driving financial inclusion by providing collateral-free loans, based on the various methods of assessing credit worthiness. The Bank witnessed healthy growth in its business lending book with AUM growing by over 39% y-o-y during FY 2018-19.

• Active collaboration with multiple Fintech partners for new unsecured products; and customer segments was witnessed in FY 2018-19. In a short span, the partnerships AUM grew by over 106% with disbursals growing by 184% y-o-y.

c) MSME

RBL Bank offers small business loans of up to T 25 Lakh in the MSME segment through a business correspondent model, largely through its wholly owned subsidiary, RBL Finserve Limited. The book size in this business has crossed T1,000 Crore in FY 2018-19 with 76% y-o-y growth. Around 75% of these loans fall under the MUDRA scheme of the Government of India, called Kishore and Tarun loans. The Mudra loan growth has been 63 % y-o-y.

d) Credit Cards

The Banks credit cards portfolio continues to grow and deepen the franchise. With over 1.7 Million customers, the fifth largest in the country, the Bank is also one of the fastest-growing credit card issuers. The cards division also saw the highest growth in y-o-y spends in the domestic industry, with overT 16,500 crore of total spends made by customers.

The number of cards increased by 119% in FY 2018-19, with more than 1.1 Million customers acguired this year. The book size grew to T 5,311 Crore, approximately 10% of the total advances of the Bank.

New Products

Growth in the credit cards division has been driven largely through partnerships, on the back of a powerful product

experience. The portfolio saw exciting new additions in FY 2018-19:

1.1 BFL RBL SuperCards

The Bajaj Finserv - RBL Bank partnership grew stronger with the addition of 3 new cards foraying into niche customer segments. These include:

1. Doctors SuperCard, aimed at medical practitioners.

2. TravelEasy SuperCard, added with travel benefits.

3. ValuePlus SuperCard, added with fuel benefits.

1.2 Credit Line Products

RBL Bank continues to be the partner of choice for fintechs, both medium and large. The Bank launched two new credit line products, ETMoney LoanPass in partnership with ETMoney, and the RBL Bank Paisa On Demand Credit Line in association with PaisaBazaar.

These power-packed products offer seamless digital application journey. They have the added feature of chat-based guery resolution and also offer a personal loan and a credit card bundled into a single product.

1.3 Cookies

The Cookies Credit Card, launched in March 2019, is a new-age product with a gamified user journey. It is aimed at the tech-savvy, online-centric customer segment that allows users to unlock exciting discounts in the form of passes at BookMyShow, Zomato and Uber.

2.1 Digitising Customer Journey through chat bots:

For service excellence and greater transparency, the cards division is focussing attention on seamless digital customer journeys. As a part of this move, following chat bots have been deployed:

1. Know your credit card bot: To educate customers about everyday processes related to their credit cards; topics covered include pin setup and bill payments among others, in multiple languages.

For service excellence and greater transparency, the cards division is focussing attention on seamless digital customer journeys.

2. Upgrade bots: To offer best suitable credit card variants to customers, while maintaining transparency and guick processing of reguests.

3. Cross-sell bots: To make services such as shortterm personal loans and balance transfers more accessible, transparent and guick.

4. Voice of Customer (Feedback) hot: To collect customer feedback on interactions with the Bank, which plays a crucial role in gathering insight about customer issues and introducing process improvements.

Impact of bots:

Around 45% of the sourcing for short-term personal loans is now being done via chatbots; chatbots have enabled reaching twice the number of customers at half the cost.

Key Highlights for FY 2018 -19

3.1 Over a Million Card Customers

In July 2018, the division issued its 1 Millionth credit card. The card count currently stands at 1.7 Million for the entire cards portfolio, with over 1.1 Million cards sourced in FY 2018-19 alone.

3.2 BFL SuperCard Portfolio crosses 1 Million

The Bajaj Finserv RBL Bank Cards became the first co-branded Credit Cards in the Indian market to cross the 1 Million milestone, with 8,00,000+ cards sourced in FY 2018-19.

3.3 Digital Footprint

As the industry continues to go digital, there has been a significant behavioural change in the retail banking experience. The Bank is making greater use of technology to further reduce account opening time. Digital acguisition now accounts for 45% of all the sourcing for RBL Bank proprietary credit cards, leading to a 26% reduction in acguisition cost.

e) Agri Business Banking

FY 2018-19 was a mixed year for agribusiness. The growth was subdued on account of natural calamities and unseasonal rains in many geographies, falling commodity prices and debt waivers being announced in multiple states. The Bank worked with the government on providing relief and waiver to the farmers. Additionally, the Bank continued to support in activities such as agriculture, horticulture and livestock rearing, and worked with farmer producer

organizations and Agritech companies to finance regular and progressive agricultural activity.

Key highlights of FY 2018-19

• RBL Bank became the leading financier for sugarcane harvesters in FY 2018-19 on the back of its strategy to promote farm mechanisation.

• The Bank continued to strengthen its agri-customer base through value-added offerings and customer engagement initiatives by offering diversified products for credit needs across the stages of sowing, growing, harvesting, warehousing, processing and distribution.

• Digital initiatives have been intrinsic to streamline the processes. The Banks loan origination system was further strengthened by bringing in a tablet-based system to provide door-to-door banking.

• Over 8,000 households in the energy-deprived rural areas of Uttar Pradesh, Odisha and Bihar have benefitted under the Banks initiative to provide solar home solutions.

3.6.1 Development Banking & Financial Inclusion (DB&FI)

RBL Bank addresses the reguirements of financial services in semi urban and rural India by developing an insight into customer needs, understanding the uncertainty and unevenness of cash-flows, and customising products to suit the reguirements of each customer segment. It has its presence in the financial Inclusion space since 2010.

The Banks DB&FI segment provides access to basic financial products to underserved rural customers for various income-generating activities through a network of business correspondent branches. The Banks business correspondent network is set up in a hub-and-spoke

framework, with RBL Bank branch being the hub and the spokes being the business correspondent outlet in the vicinity of customers village or small town.

RBL Bank offers a comprehensive suite of financial services such as loan products, savings accounts, deposits, insurance and transactional facility to underserved customers, contributing 100% to its priority sector lending.

Portfolio Growth

RBL Bank is servicing 40 lac customers under the Financial Inclusion segment. Out of this 33 lac customers have savings account and 27 lac have loan accounts with the Bank as on Marl 9. During FY 2018-19, the micro-banking portfolio grew by 42% as compared to last financial year. 60% of the accounts are active and 85% are aadhaar linked.

RBL Finserve Pvt. Ltd. ("RBL Finserve", formerly known as Swadhaar Finserve Pvt. Ltd.) has become the Banks fully owned subsidiary in this financial year. This will help the Bank to create a Bank within the Bank by maximising the outreach, creating new financial products for existing clients and enabling cross-sell opportunities. RBL Finserve has crossed T 2500 crore AUM in this year.

Distribution Network

The Banks exclusive BC Branch network touched 833 branches in FY 2018-19 with a customer base of 40 Lakh. The Bank opened 171 new BC branches, most of them in unexplored geographies. It now has a presence in 20 states covering 319 districts, Meghalaya being the new state addition this year by RBL Finserve.

New Products

The Bank propelled individual business loans using direct/ BC branch channel, leveraging the existing customer base as well as new customers, offering them higher ticket size loans for income generation purpose. The product has been bought by 3,000+ customers in FY 2018-19. The Bank piloted the consumer durable loan product as well, providing access to finance for the purchase of consumer durables such as mobile phones, solar lights, among others.

With a customer-centric approach, RBL Bank has designed a unigue health insurance product for its JLG customers, keeping in mind the specific reguirements of this clientele. This product provides financial protection against any health-related issue, resulting in hospitalisation. Health insurance product Hospicash was launched in June 2017, under which both borrower and spouse can be

covered for a cash benefit of T 1,000 for up to 30 days for hospitalisation. The product enjoys 68.5% penetration across all geographies.

The unigue proposition of Hospicash insurance is its simplicity in terms of product understanding, processing and claim documentation.

Banking Outlets

RBL Bank has classified 226 BC branches as banking outlets. Through these banking outlets the Bank can reach out to the unbanked population and provide basic banking facilities such as transactions through Micro ATMs, savings account, insurance products and other loan products.

Financial Literacy

An important aspect of inclusive growth is creating awareness about financial discipline and educating customers about the use of right financial product for the right purpose. Therefore, financial literacy is one of the core pillars of RBL Banks Financial Inclusion offering.

The Banks financial literacy programme UNNATI was launched in collaboration with CDC group in Bihar. Over 31,000 women were provided a two-day location-based training. These women were trained to help understand a wide range of financial products, importance of savings, rights and responsibilities of customers, concept of over indebtedness, importance of Credit Bureaus and Grievance redressal mechanism. From this programme almost 2,500 of them have linked themselves to formal sources of banking and financial services.

The use of digital methods remains one of the key highlights of this project. Post training, women are made aware of Swadhaar Sathi App, a one-stop destination for any information on financial literacy topics or financial

products. It is an interactive app in vernacular language, user-friendly with the effective use of audio visuals.

Technology Initiatives

The Bank has invested in robust technology platform and innovation, which are critical for scale and last-mile delivery. RBL is the only bank having dedicated core banking software, Ganaseva for its FI clients from the very first day of its operations in this space. The Bank has evolved as one of the significant players in the financial inclusion space by offering diversified liability and asset products to the target segment.

The Bank currently serves 33.2 Lakh saving account customers whose balances crossed 100 Crore in FY 2018- 19. It has introduced m-ATM devices, where clients can transact in their saving banks account at BC outlets with the help of Aadhaar based biometric authentication. These small saving accounts are also Aadhaar seeded, hence linked to DBT schemes of Government.

RBL Bank has enabled 570 Micro ATMs across BC locations facilitating withdrawals of T 32 Crore in FY 2018- 19. This transaction facility is also available at the banking outlets.

The Bank has also started end-to-end sourcing of JLG Loans through an Aadhaar based QR code scanning by tablet-based application for its BC partners. This initiation will help reduce customer onboarding time significantly, which is a paper-intensive process with manual intervention. This will help capture, real-time information and collections, credit bureau checks, thereby transmitting client information digitally to main systems. Intervention of these applications help reduce rejection rates because of in-built product level checks and balances before onboarding the customer completely.

3.7 Treasury and Financial Markets Operations

The Banks treasury operation includes interfacing with the financial markets and performing broad functions like managing statutory reserves; day-to-day fund management and asset-liability management; investment and trading activities; and interest rate and exchange rate risk management. In addition, this segment also provides

The Bank continues to maintain sufficient liquidity and contingency buffer in the wake of volatile markets.

coverage through the Banks centralised dealing room in Mumbai supported by sales staff in Delhi, Chennai, Flyderabad, Bengaluru and Kolkata branches.

3.7.1 Domestic Markets

The unit continued to perform well during FY 2018-19. The focus of the unit is day-to-day management of funds for the Bank; Asset Liability Management; complying with the cash and statutory reserves reguirements; deployment of the Banks liguidity in high-guality earning securities; maximising the Banks revenue by taking proprietary positions (in rates and currency trading); managing the Banks interface with professional inter-bank market and augmentation of counter-party lines.

3.7.2 Securities Trading

The Bank has a proprietary desk dealing in interest rates trading through government bonds, corporate bonds and interest rate futures and swaps. FY 2018-19 was a very volatile year on the back of higher oil prices, currency depreciation, fears of fiscal slippage and liguidity deficit. The Banks trading desk took advantage of the volatility in fixed income markets, managing proprietary positions appropriately, which led to healthy trading profits for the Bank.

3.7.3 Liquidity Management

The Bank continues to maintain sufficient liquidity and contingency buffer in the wake of volatile markets. Through FY 2018-19, domestic liquidity came under strain due to increased cash in circulation, volatility in forex markets and NBFC liquidity crisis, but the bank was able to minimise the cost impact through prudent choice of liabilities. The Bank continues to strengthen and diversify its liquidity profile in view of the additional regulatory requirements - increased Liquidity Coverage Ratio (LCR) - and anticipation of the stringent liquidity management framework of Basel III. It has achieved this through a prudent mix of foreign currency

borrowings, long-term deposit mobilisation and rupee borrowings in the form of re-finance from various financial institutions.

The Bank continued the use of derivatives to hedge the interest rate risk associated with assets and liabilities in light of volatility in interest rates.

3.7.4 Foreign Exchange, Derivatives and Bullion Business

Foreign exchange and derivatives offer various hedging products, including interest rate swaps, currency swaps, options and currency derivatives, to facilitate effective risk management for foreign currency and interest rate exposures faced by clients. The team backed by experienced professionals provides advisory services to corporate, institutional and commercial banking and consumer banking customers.

The unit also caters to the forex needs of Resident as well as Non-Resident Individuals (NRI), as per the RBI guidelines. The team proactively assists clients by informing them about the risks they face with respect to capital raising, investments, exports, imports and other market risks. With service excellence as the primary objective the Bank has upgraded its core Treasury Derivative Application.

The Bank has a well laid-out set of operational policy guidelines, risk management policies including client suitability policy and appropriate systems support to monitor transactions and risks real time.

The Bank is among the 17 banks licensed by the Reserve Bank of India to import bullions for its clients. It has been undertaking this business on a consignment basis for its bullion clients and is a significant supplier of Bullion in the domestic market. The Bank ranks among the top

3 Banks supplying Bullion to the domestic market. The bullion business involves importing gold on metal loan for domestic manufacturers and exporters

3.7.5 Capital Markets

Capital Markets team focuses on Debt Capital Markets (DCM), Loan syndication and Structured Finance (SF) distribution business. As part of DCM, it is involved in origination, trading and distribution of bonds, ranging from vanilla corporate bonds and commercial papers across tenors and across the rating scale. The desk worked closely with asset managers, insurance companies, other banks and investors to understand their reguirements and originate transactions, as well as for sell-down of underwritten positions.

In the loan syndication front, the Bank concentrated on participating in mid-ticket size transactions across infrastructure, renewable energy and other sectors. Due to the upward trend in interest rates and volatility in the fixed income market, the desk concentrated in lending to entities, which are more liguid and easily marketable.

The SF desk has now added capabilities to offer Structured Finance distribution solutions to its clients and has relationships across investor base including NBFCs, domestic and global credit funds. All syndication mandates run by the desk had significant cross-sell in terms of foreign exchange flow, current account floats, and trade finance business, among others.

RBL Banks Financial Overview

The Bank continues to be one of Indias fastest growing scheduled commercial banks in the private sector. During FY 2018- 19, the Bank continued to gain momentum and recorded strong performance, focussing on enhancing businesses across its branches and coverage network, while widening its product and service offerings. The Bank continued to improve and refine its operating and risk management infrastructure with a view to create a reliable, scalable institutionalised banking franchise during FY 2018-19.

Deposits and Borrowings

The Bank has continued to display healthy and robust growth in deposits, a key balance sheet parameter, for the year ended March 31,2019. The total deposits of the Bank grew by 33.01% toT 58,394.42 Crore as againstT 43,902.26 Crore in the previous year. Led by a differentiated interest rate strategy, savings account deposits increased by 54.41 % to T 8,244.76 Crore vis-a-vis T 5,339.47 Crore in the last

The total deposits of the Bank grew by 33.01 % to ? 58,394.42 Crore as against ? 43,902.26 Crore in the previous year.

financial year. During FY 2018-19, current account deposits rose by 18.80% to T 6,342.72 Crore compared to T 5,338.79 Crore in the previous year. The proportion of current and savings deposits to total deposits was at 24.98% as on March 31, 2019, despite the external environment being highly competitive. The Banks term deposits recorded a surge of 31.85% to T 43,806.94 Crore as on March 31, 2019 as against T 33,224.01 Crore on the same date of the previous year.

Advances

Net advances surged 34.87% from T 40,267.84 Crore in FY

2017- 18 to T 54,308.24 Crore in FY 2018-19. The rise was driven by a comprehensive increase in the Banks advances across business verticals. The Bank also added new client relationships and introduced more products and services during the year under review.

Revenue and Profit Growth

The Banks Net Total Income (defined as the sum of interest income and other income less interest expense) increased by 40.48% from T 2,834.47 Crore in FY 2017-18 to T 3,981.85 Crore in FY 2018-19. The increase was driven by growth in net interest income and other incomes. In FY

2018- 19, the Bank earned a net profit of T 866.95 Crore as against T 635.09 Crore in FY 2017-18, an increase of 36.51%. Operating expenses increased from T 1,503.41 Crore in FY 2017-18 to T 2,042.02 Crore in FY 2018-19, primarily due to increase in employee costs, outsourcing costs, new branch establishment, depreciation, technology, branding and communication expenses.

RBL Banks Key Ratio Analysis

Profitability ratios Return on assets:

The return on assets has increased from 1.21 % in FY 2017- 18 to 1.27% in FY 2018-19.

Asset Quality Ratios Gross NPA ratio:

During FY 2018-19, Gross NPA decreased to 1.38% from 1.40% in FY 2017-18.

Net NPA ratio:

The Banks net NPA decreased to 0.69% in FY 2018-19 compared to 0.78% in FY 2017-18. In the backdrop of

credit guality concerns across the financial sector, the Bank continues to enjoy a robust credit guality.

Earnings/Book value Per Share Ratios Earnings Per Share (EPS) (basic):

The Banks earning capacity increased with its EPS touching T 20.47 in FY 2018-19 from T 15.79 per share in FY 2017-18. This was mainly due to increase in net profit for the year under review.

Book value per share:

Book value per share rose to T 171.93 in FY 2018-19 from T 155.99 in FY 2017-18. This ratio reflects increased shareholders value in return for their investment.

Update on Ind AS Implementation

The Institute of Chartered Accountants of India (ICAI) has issued a revised set of accounting standards Indian Accounting Standards (Ind AS) which largely converges the existing Accounting Standards (AS) as issued by ICAI and further notified by Ministry of Corporate Affairs (MCA) with global accounting standards, named, International Financial Reporting Standards (IFRS). The Ministry of Corporate Affairs (MCA), Government of India notified the Companies (Indian Accounting Standards (Ind AS)) Rules, 2015 on February 16, 2015 for adoption and outlining the roadmap for implementation of Ind AS for banking companies. The Reserve Bank of India (RBI) vide its latest circular on Ind AS implementation dated March 22, 2019 has further deferred the implementation of Ind AS for scheduled commercial banks till further notice.

The Bank has formed a Steering Committee for Ind AS implementation. The Steering Committee (SC) comprises Plead - Risk and Governance (Chairman), Chief Risk Offer, Chief Credit Officer, Plead - Strategy, Chief Financial Officer (interim), Plead - Treasury, Plead - Retail Assets, Business Banking, Financial Inclusion and Cards and Plead - Technology as its members and senior personnel from Finance, Risk, Technology, Business and Treasury Operations as invitees. The Committee closely reviews the progress of implementation and provides guidance and necessary directions on critical aspects like technology, people, business impact and project management. An update on Ind AS implementation is also placed before the Audit Committee on a guarterly basis.

The Bank has successfully submitted Pro-forma Ind AS financial statements to RBI for the periods as reguired by RBI from time to time. The Bank has evaluated various technology solutions to automate Effective Interest Rate (EIR), Expected Credit Loss (ECL) and other accounting

changes required under Ind AS to improve controls and robustness of the reporting process.

4. RISK REPORT

4.1 Risk Management Framework

The Bank operates in a rapidly evolving environment and hence is exposed to various risks that are inherent to the business and environment in which it operates. The goal of risk management is to mitigate the impact of risk and ensure that the Bank takes calculated risks keeping in mind its risk appetite, thereby minimising unexpected outcomes.

At the apex level, the Board of Directors define the Banks risk appetite, which is then disseminated to various business functions through policies, processes, limits, controls and procedures. The Board of Directors also maintain oversight on the effective management of various risks.

The Bank has a governance framework in place to ensure strict compliance to policies, procedures and controls established to monitor, mitigate and manage these risks. The Banks risk management framework covers key areas like capital adequacy ratio risk, credit risk, market risk, operational risk, liquidity risk, compliance risk, cyber security risk and all other risks.

4.2 Risk Management Committees

The Risk Management Committee of the Board (RMCB) monitors the risk management function of the Bank. The RMCB prescribes risk management policies, processes, systems and strategies for monitoring and managing the entire gamut of risks faced by the Bank, viz. credit risk, concentration risk, liquidity risk, interest rate risk, off-balance sheet and operational risks and regulatory & compliance. It is supported by various executive committees:- the Enterprise Risk Committee (ERC); Management Credit Committee (MCC); Asset Liability Management Committee (ALCO); Product Approval Committee (PAC); the Operational Risk Management Committee (ORMC); the Business Operations & Technology Committee (BOT); Compliance Implementation Committee (CIC) and the Environmental & Social Risk Governance Committee (ESGC).

The Board Investment and Credit Committee (BICC) monitors the Banks investment performance and reviews investment policy. The committee also approves credit proposals as defined in the Banks credit policy.

The Information Technology Strategy Committee of the Board oversees the overall IT strategy of the Bank, including cyber security risk. This committee prescribes policies and

procedures with respect to cyber security and is supported by the Information Security Steering Committee (ISSC).

Details and brief terms of reference of the various executive committees are as follows:

• ERC is responsible for identifying, monitoring and managing both current and emerging risks at the enterprise level, to ensure a holistic view of all risks. This committee reviews the adequacy of the enterprise risk management framework, policies and procedures towards this end.

• MCC is responsible for operationalising the credit policy and implementing credit framework as approved by the Board and RMCB. The committee recommends policies on standards for presentation of credit proposals, financial covenants, ratings, prudential limits on large credit exposures, standards for loan collaterals, etc. MCC also oversees portfolio risk management, loan review mechanism, risk concentrations, pricing of loans, provisioning and other regulatory/legal compliances. The committee also approves credit proposals as defined in the Banks credit policy.

• ALCO is responsible for managing market risks (including rates risk, forex risk, equity risk and credit risk), liquidity risk, interest rate risk in the banking book, currency risk, funding policy and the pricing of deposits and advances.

• PAC is a cross-functional committee of senior executives to review and approve new product launches. The objective of this committee is to consider all risks in a holistic manner.

• ORMC is a cross-functional committee of senior management that oversees operational risk management across the Bank.

• The BOT oversees all aspects of technology across business, operations and control functions.

• The CIC oversees regulatory compliances.

• The ESGC oversees the implementation of the environmental and social risk management system across the Bank.

• The ISSC oversees implementation of cyber security and information security risk policies, procedures and controls across the Bank.

4.3 Risk Management Policies

The Enterprise Risk Management (ERM) policy of the Bank is based on best practices and provides a summary of its principles regarding risk taking and risk management. The Risk Appetite Framework, Internal Capital Adeguacy Assessment Process (ICAAP) and Stress Testing Framework are integral pillars of the Banks enterprise risk policy.

The Bank has various policies such as Liguidity Risk & Asset Liability Management (ALM) Policy; Commercial Credit Policy; Retail Assets Credit Policy; Investment Policy; Liguidity and Contingency Plan; FX & Derivatives Policy; Customer Suitability and Appropriateness Policy; Recovery Policy; KYC and AML Policy; Operational Risk Management Policy;

Risk-based Internal Audit Policy; Sustainability Policy; Policy on Transfer of Assets through Securitisation and Direct Assignment of Cash Flow, Cyber Security Policy, Information Security Management Policy, etc. These policies prescribe various methods for risk identification, measurement, grading, monitoring, reporting, risk control and mitigation technigues and management of problem loans and credit. They are reviewed annually by the Board.

4.4 Risk Management System

The Bank has a robust framework, whereby risk MIS is presented to senior executives and risk committees in the form of dashboards and reports. This aids in the identification, measurement, mitigation and monitoring of risks in all its activities. New products are launched after a detailed analysis of various risks.

The stringent credit framework helps the Bank maintain lower NPA ratios.

Portfolio-level risk is assessed with the help of various reports on credit, market, operational, liguidity and interest rate risk, among others. The same are reviewed by the Board/ RMCB/ Risk Committees/ Senior Management on an on-going basis.

4.5 Risk and Mitigation

4.5.1 Capital Adequacy Risk

The Bank maintains a strong capital position with the capital ratios well above the thresholds defined by the regulatory authorities. The Bank has strengthened its Tier I capital structure through continuous and timely capital infusion.

4.5.2 Credit Risk

Credit risk is defined as the probability of losses associated with reduction in credit quality of borrowers or counterparties. In a Banks portfolio, losses may arise due to outright default or due to inability or unwillingness of a customer or counterparty to meet commitments in relation to lending, trading settlements, or any other financial transaction. Alternatively, losses occur from reduction in portfolio value due to deterioration in credit quality.

The Banks credit policies prescribe sanction and monitoring procedures for various categories of loans. The Bank has separate credit origination and appraisal processes for wholesale and retail segments. Within the wholesale segment, Bank has adopted underwriting standards for different client segments that is based, inter alia, on internal risk ratings, availability of security and other risk parameters. The credit sanctions are provided by experienced credit professionals and/or credit committees with delegated approval authorities, basis detailed appraisal memorandum that takes into account business and financial risks of the proposal. The Retail segment, on the other hand, relies largely on standardised product programme for credit risk assessments and approvals.

The Bank also monitors credit concentration of exposures to a single borrower, group of borrowers, sensitive industry exposures, geography products, among other.

The stringent credit framework helps the Bank maintain lower NPA ratios.

4.5.3 Market Risk

Market Risk is defined as the risk of losses in on-balance sheet and off-balance sheet positions arising from movements in market prices. It is the risk of adverse deviation of the mark to market value of the trading portfolio, due to market movements, during the period reguired to liguidate the transactions.

The Bank manages market risk in accordance with the Board-approved investment policy, market risk management policy, foreign exchange & derivatives policy, and customer suitability and appropriateness policy. These policies are part of a well-defined organisational structure for market risk management function and processes, whereby the market risks of the Bank are identified, measured, monitored and controlled within the confines of its risk appetite.

The Market Risk Policy identifies all the risk factors, which arise out of treasury activities across products and risks, such as forex rates, interest rates, credit spreads, and volatilities, among others. Limits have been defined at position, product and portfolio level to ensure that all market risk is measured and monitored according to the risk appetite set by the Board.

The Investment Policy lays down the instruments that are permitted to be held as investments; and also defines prudential limits for various categories of instruments such as debentures & bonds, certificate of deposits, commercial paper, units of mutual funds, eguities and venture capital funds, among others.

New products are approved after detailed assessment of various associated risk factors/ sensitivities including assessment of operational aspects related to the measurement and monitoring of limits and controls to manage these positions.

4.5.4 Liquidity Risk

Liquidity risk is the risk that the Bank faces if it is unable to meet its obligations as they become due. This could be due to reasons, including difficulty in liquidating assets (market liquidity risk) or in obtaining adequate funding (funding liquidity risk). The Bank lays special emphasis on the management of funding Liquidity Risk, as it is the most potent of risks.

RBL Bank has a comprehensive Liquidity Risk and ALM policy that incorporates RBI guidelines and industry best practices. The Bank maintains Liquidity Coverage Ratio (LCR) as per RBI guidelines and manages liquidity risk

through the traditional gap analysis, based on the residual maturity/behavioural pattern of assets and liabilities as prescribed by the RBI. The Bank also monitors mismatches using a duration gap analysis. It monitors prudential (tolerance) limits set for different residual maturity time buckets, large deposits and loans, and various liquidity ratios. The Bank has also put in place a mechanism of short-term dynamic liquidity and contingency plan as a part of liquidity risk management. Contingency Funding Plan (CFP), approved by the Board sets forth a process of dealing with crisis situations in the event of liquidity crunch or a run on the Bank.

4.5.5 Compliance Risk

Compliance risk is the risk that the Bank may suffer in the event of material financial loss or damage to reputation, as a result of failure to comply with laws, regulations, rules, self-regulatory organisational standards and codes of conduct applicable to its activities.

The Bank has an independent compliance function for effective management of compliance to regulatory guidelines. The Chief Compliance Officer has direct access to the Board of Directors. The Bank practices zero tolerance to compliance breaches and has also included adherence to regulatory and internal guidelines into the code of conduct, which every employee must sign during onboarding.

The Bank has also adopted a code for the prevention of insider trading, which is applicable to its Board members and employees, as well as their dependent family members. Under the supervision of the Managing Director and CEO, the Company Secretary is tasked with the setting forth of policies and procedures and monitoring compliance with the rules related to the disclosure of price sensitive information.

4.5.6 Cyber Security Risk

Cyber security or information technology security risk is defined as the potential of loss or harm to the Bank, resulting from breaches to, attacks on, or unauthorised access to the Banks information systems. This include computers, networks, hardware, software, switches, routers, mobile devices, applications, websites, data, information, among others.

Cyber security incidents can result in large financial losses, damage to reputation, legal liabilities and regulatory issues. Therefore, mitigating this risk is an integral aspect of enterprise risk management. The Bank has robust policies, procedures, controls and monitoring tools to manage and

mitigate cyber security risk. The framework covers people, processes and technology.

The Board approved policies which govern this risk include the cyber security policy and the information security management policy. The Bank also has a robust cyber crisis management plan to establish strategic framework and actions to prepare for, respond to, and recover from a cyber-incident, should it occur.

4.5.7 Sustainability/Environment & Social Risk Management (E&S)

RBL Bank is committed to sustainable development; and has embedded it as an integral part of its business practices including risk management. Managing Environmental and Social (E&S) risk is an integral part of its risk management strategy. The system is implemented and overseen by the Environmental and Social Risk Governance (ESG) Committee, which also provides periodic updates to the Board.

The key objectives of the Banks ESG framework are as follows:

• Setting strategic E&S objectives, such as offering new products that address E&S sustainability

• Incorporating E&S risk considerations into all financing activities and developing client awareness on this subject

• Excluding financing clients whose business activities do not meet the Banks principles - the Bank has adopted the IFC Exclusion List

• Communicating E&S expectations to all staff, clients and other external stakeholders

• Committing to improving the overall E&S performance of its portfolio through enhanced risk management

RBL Bank has a dedicated E&S expert group within the risk team, which provides the necessary tools and templates to assist the transaction teams in performing E&S due diligence.

• Building consistently the Bank employees capacity to identify E&S risks

• Developing and delivering financial products and services that enable more sustainable agricultural practices; and results in resource conservation/ enhancement of resource efficiency

• Conducting financial inclusion programmes for marginalised, economically weaker and business- wise less attractive sections in various states across the country.

E&S risk assessment is an integral part of the credit appraisal and sanction process.

All transactions are screened against the exclusion list. An illustrative list of activities, which the Bank does not fund, includes production or trade in weapons and munitions; production or trade in alcoholic beverages excluding beer and wine; production or trade in tobacco; activities of gambling, casinos and eguivalent enterprises, among others.

The transactions are then screened for E&S risks. This begins by risk categorisation, based on inherent risks associated with the business activities of a client. It may be noted that several factors influence the categorisation including scale, location, sensitivity and magnitude of impacts.

Additionally, the Bank engages with the client to perform a detailed E&S due diligence and to identify, assess and mitigate potential E&S risks, including impact to climate change. This is performed through discussions with the client and/or visits to clients operating sites. In case material unmitigated risks are identified, the Bank reguires the client to mitigate it in a time-bound manner through a Corrective Action Plan (CAP), which are discussed and agreed with the client. These are also incorporated into the legal documentation with the client. The CAPs are tracked and monitored by the Bank.

RBL Bank has a dedicated E&S expert group within the risk team, which provides the necessary tools and templates to assist the transaction teams in performing E&S due diligence. The group also reviews the E&S due diligence reports prepared by transaction teams for guality standards. The group provides updates on E&S risks to Senior Management and the Board at periodic intervals.

5. TECHNOLOGY AT RBL BANK

The Banks technology unit complements the varied and growing business lines across portfolios and segments. The technology systems used by the Bank are best-in- class and are highly responsive and scalable. The solutions offered by the Bank are provided by well-known partners such as Infosys, IBM, Oracle, Ebixcash, Nucleus Software and First Data, among others.

The Bank has a service-oriented architecture and all realtime integrations across solutions are implemented as Web Service. The online integrations are routed through the Enterprise Service Bus (ESB). RBL Bank is one of the first movers in the space of API Banking and has a basket of APIs that are available for consumption by partners. Access to APIs is granted through a developer portal. This architecture allows the Bank to integrate guickly for new partner(s).

The infrastructure used within the Banks data centre are completely virtualised and runs on an open architecture. This leads to better management and utilisation of available capacity. The Bank currently has its data centre in Mumbai and a Disaster Recovery Site in Chennai. It is further looking to implement Continuous Availability Architecture, which will involve multi-site deployment of applications resulting in higher uptime and resilience.

The Banks made significant progress in cloud adoption and is working with AWS and Azure as the public cloud providers. Use cases on Big Data and Analytics on customer insights are helping the Bank grow its business by offering better and competitive products.

Key highlights of FY 2018-19

Risk and Vigilance domain for SAS Platform

The Bank has collaborated with SAS Institute Pvt. Ltd. for creating a single platform to ensure Risk and Capital Management as well as Regulatory Compliance as per its vision. The Platform approach helps in efficient maintenance and stability of the application. Some of the key vigilance and risk domains being implemented on this platform are Fraud Risk and Operational Risk.

Foreign Inward Remittance

RBL Bank introduced capability in Foreign Inward Remittance through NPCI, which will make customer connections stronger and improve its brand acceptance as a banking partner. The Bank is now a certified bank from NPCI - IMPS for processing Foreign Inward Remittance transactions and collaborating through registered money

transfer partners like Western Union/Money Gram, among others.

Credit Card System Upgrade

To support the rapidly growing credit card business, the current credit card system is being upgraded to new edge system to support digital solutions, handling large volumes in less processing time. The new system, implemented during the year, is a highly reliable, robust and scalable system. It offers extensive features and best-in-class services that will enhance customer experience, help prevent fraud, upgrade risk governance and implement real time services. Standardisation of the API layer was also conducted to achieve better turnaround time for the business.

Launch of One View Report for Trade Customers

One View provides important information to all the trade clients through automated e-mailers triggered daily to the registered email ID of the customer. This enables the customer to have all information relating to his relationship with the Bank first thing in the morning in a single excel file.

CCMS application

CCMS application helps in migrating the excel based calculations process at the branches and the currency chest to application based.

E-TD Advices

To offer enhanced customer experience and also to move a step closer towards digitisation, E-Advice is sent by the Bank for the FDs booked or renewed via Branch, Net Banking & Mobile Banking. Through this initiative the Bank reduces the usage of paper in the form of FD receipts and the cost of sending FD receipts to customer is saved too.

Abacus - Digital Savings Account

The Banks online account opening process (Abacus) has undergone major technology changes during the year to match up with changing regulatory norms and varying business demand. The system had been refurbished to handle alerts, risk monitoring, KYC check in real time basis including shorter time to market. The account opening process has been moved to an application to promote account opening through TABs with a biometric authentication.

AADHAAR Data Vault:

As per the RBI guidelines, RBL Bank maintains the customers Aadhaar number in a data vault; each Aadhaar number is to be referred by an additional key called reference

key. Mapping of Aadhaar number and reference key is to be maintained in the Aadhaar data vault. All the downstream and upstream customers with their demographics from all the source systems have been upgraded to accommodate the Aadhaar vault within the Bank.

Hyper converged Infrastructure

The Bank has adopted hyper converged infrastructure, which is simple yet fully scalable and a high-performing platform. It is used to run on the latest version of virtualisations infrastructure and other critical applications of the Bank.

RBL Mobank 2.0

As part of the Banks channel strategy, it had launched a new version of mobile banking application, MoBank 2.0 during the year. The new MoBank 2.0 has attractive and agile user journeys and several new features. The app provides a bank-wide relationship snapshot and tracks user journeys for better servicing. The user interface was created after taking basic feedback from a cross-section of user base across age and income buckets. With this app launch, the Bank has embarked on the journey of omni channel integration.

Digital Lending

The Bank launched digital lending by developing an entire loan acguisition journey over digital channels. Innovative functions like Call me now on Web, Instant calls, Continuous journey link, e-agreement are few of the examples. Rapid prototyping methods were used to deliver the core product and subseguent deliveries.

Finassure on Cloud

RBL Bank along with EdgeVerge announced Finacle Assure (Core banking Preventive Maintenance on AWS Cloud) launch during FY 2018-19. This service will help RBL Bank to prevent and address IT incidents early on; and enhance its applications performance. It will also allow the Bank to optimise costs and be more agile in ensuring uninterrupted operations. This service is part of RBL Banks digital transformation programme on which the Bank wants to ensure zero-disruption, 100% availability of IT systems and steps towards cloud adaption.

6. HUMAN RESOURCES (HR)

RBL Banks human resources are driven by their passion and commitment to build an institution of scale, eminence, and impact. The Bank is constantly investing in its employees and empowering them to achieve its Vision using the three pillars - STRENGTH. SPEED. SCALE. These

RBL Bank along with EdgeVerge announced Finacle Assure (Core banking Preventive Maintenance on AWS Cloud) launch during FY 2018-19.

pillars allow the Bank to create a Best-in-class institution, highly respected for its governance and professional standards and for providing its employees with immense growth opportunities.

In line with its ethos of empowering employees, the Bank embarked on a journey of becoming future ready by investing in People, Processes and Systems.

• Culture - RBL Bank engages and develops its employees by creating a One RBL culture focussed on encouraging people to be open and honest in communication, strengthening the connection with its community and providing growth opportunities. These are underpinned by the Banks integrated Vision and Values framework.

• Digitisation

In line with the changing technological landscape and to create a single, cohesive HR information and management system, the Bank has implemented a cloud based HRMS system - Empower powered by Oracle. The Bank implemented Empower, taking cognisance of the need for an end-to-end integrated system which seamlessly blends existing internal and third-party systems and provides employees with end-to-end HR services under one roof. The Bank will leverage on Empower s robust predictive analytics tool and its multiple role based, contextual analytical reports and dashboards to aid key decision making to plan meaningful interventions in the employees journey at RBL.

• The Bank also partnered with Zeta towards making reimbursement processes technologically savvy and cost-effective. With the Zeta Interface, employees can submit bills on a real-time basis via a digital application or a web-based interface.

Total Reward

• As the Bank embarks on the Total Reward journey, it has initiated the Job Sizing Project in partnership

with Mercer Consulting. This will complement the earlier Job Sizing exercise the Bank had undertaken in 2016-17 and ensure continuity and standardisation. The Job Sizing project provides a basis for comparing and grading all senior jobs, helping the Bank in making better decisions on succession planning, talent management and career progression.

• The Bank has once again commissioned AON Hewitt Consulting to do a remuneration benchmarking survey to set up an overall rewards philosophy to attract, retain and motivate employees. The survey enables the Bank to implement the best practices and policies and to take informed decisions during hiring, promotions and general remuneration budget planning while remaining competitive in the market.

• In its annual reward and recognition event for the employees called the CEOs Supreme League, the Bank recognised those who have truly made a difference to the organisation either for being exemplars of the Banks values, or for accomplishment of cross- departmental tasks that had a bank-wide impact.

Building Talent

• The Bank continues to leverage and invest in innovative digital platforms to reach out to young talent and create a talent pool for the future. Through its investment in specific programmes like the Management Trainee Programme, the Bank hired talent from reputed premier business Schools to work on various projects. With its RBL Probationary Officer Programme, the Bank intends to attract best-in- class talent, train them to be job ready and eventually onboard them. The Banks investment in digital platform for attracting and managing the life cycle of candidates has resulted in enhanced candidate experience and helped build a strong employer brand.

• The Bank initiated a formal Talent Management process through its Talent Management Council to identify, build and nurture leaders. An integrated talent management framework combines development & progression of talent in line with their aspirations and ensures the delivery of business results.

• Under the Technology Trainees programme, the Bank hired technology trainees from premier institutes like I IT Bombay, I IT Patna & ISM Dhanbad who will be joining different teams to provide innovative

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Women mentoring circles called ‘Breaking Out Circles were held in FY 2018-19. These have been initiated by the employees of RBL Bank.

• People are the highest priorities at the Bank, and it believes in continuously investing in employees to enhance the organisational capabilities and effectiveness. Its integrated Leadership Development Programme aims at strengthening the Banks competencies to develop future Leaders. The programmes conducted in PY 2018-19 emphasised on the competencies of team leadership, strategic thinking and innovation.

• The Bank constantly focuses on creating a culture of learning and builds in-house skills which are aligned to customer needs. Its learning programmes are based on the principle of 3Es i.e. learning through formal Education, Experience & Exposure.

• The Capacity & Capability Building interventions are designed to deliver customer-centric solutions, nurture leaders, and cultivate deep domain skills.

• The Bank has also instituted a rigorous certification process for knowledge & skills that any role-holder must possess to do his/her work competently. This is delivered through departmental learning roadmaps. The learning journeys are created and mapped to employee life cycle and employs a host of methodologies and mediums e.g. Digital, Social, Informal, Peer Learning, Projects, Study Missions, Assessments, Networking, Coffee Sessions, Skills- Showcase, Mentoring & Buddying etc.

• The Bank while ensuring the promotion and sustenance of compliance has successfully rolled out and executed various initiatives as mandated by regulatory bodies including Capacity Building, IT & Cyber Security, BC Certification. These form a part of the Banks approved learning policy.

• Women mentoring circles called Breaking Out Circles were held in FY 2018-19. These have been initiated by the employees of RBL Bank. It is a Women Mentoring programme created as a way to pay-it-forward to other women in the Bank in various locations. The aim

is to build a culture of nurturing where seniors support juniors and provide examples of encouragement to inspire them to aspire for more.

• To support working mothers, the Bank tied up with The Learning Curve (TLC), an established chain of pre-school and day care facility in Mumbai, Pune, Bengaluru, Hyderabad and Ahmedabad, for women employees with children in the age group of 6 months to 6 years.

• Diversity & Inclusion - With a pan-India presence, embracing diversity is vital for long-term success. The Bank is committed to create an inclusive culture that respects and embraces the diversity of employees, clients and communities.

7. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Banks CSR vision is to be the most admired, compassionate and respected organisation that delivers value to all its stakeholders through eguitable and inclusive growth. This is done through various initiatives that are focussed on promotion of education, preventive healthcare, women empowerment and sustainable livelihood. These focus areas, in turn, help catalyse growth and reduce social ineguality. The Bank does this together with like- minded partners from the public and private sectors and with the commitment of its own highly skilled workforce. It encourages its employees to volunteer, fundraise and support its efforts in making a difference.

The Banks CSR efforts are headed by the CSR Committee of the Board, which is supported by an executive steering committee and the working committee. The key objective of the Banks CSR policy is to ensure an increased level of commitment in the organisation, to operate its business in an economically, socially and environmentally sustainable manner, while recognising the interests of all its stakeholders and create a positive impact.

The Bank undertook 28 projects in FY 2018-19 that have impacted more than 45,000 direct beneficiaries. It has been successful in building and deepening its partnerships with new and existing NGO partners to address larger social issues around sustainable livelihood, education and preventive healthcare.

Key priorities

The Bank supported Persons With Disabilities (PWDs) through its education & sustainable livelihood programme. Following are few other initiatives:

Over 192 girls have received quality education and all-round growth and development at a nominal fee of ? 100 to ? 150 per month.

1. An advanced centre to support physiotherapy and hydrotherapy treatment for children with hearing and speech impairment, in partnership with Rotary Samaj Seva Kendra, Kolhapur.

2. Special education for children with learning difficulties (e.g. dyslexia), teacher training and capacity building for parents through Dr. Shanta Vaidya Memorial Foundation, Pune.

3. Providing IT & ITES skill development training to youth with visual impairment, to eguip them with livelihood opportunities through Samarthanam Trust.

Further highlights under the Banks thrust areas are:

Preventive Healthcare

The Bank, in partnership with Aditya Jyot Foundation, is working towards spreading mass awareness and conducting screening for people who are susceptible to Diabetic Retinopathy (retina damage due to diabetes) across Mumbai. The Bank has adopted two eye care centres. The Bank also supports the screening, detection and surgery of underprivileged children suffering from retinoblastoma (eye cancer) in partnership with Iksha Foundation. These projects have impacted more than 35,000 lives this year.

On its 75th Year anniversary in 2018, the Bank has donated four ambulances in Kolhapur and two shredding machines in Sangli, to provide accessibility to healthcare services.

Promoting access to education

The Bank has supported Udbhav School in Rasoolpura Hyderabad, which was set-up by the IIMAAA charitable trust in 2014. Over 192 girls have received guality education and all-round growth and development at a nominal fee of T 100 to T 150 per month. Books and uniforms are also provided to the children at subsidised rates.

The Bank intends to take its learning from here and set up another school in the coming year in Fathenagar,

Hyderabad It was successful in raising 2.5 Crore under the 5th edition of Umeed 1,000 Cyclothon, its annual flagship fundraiser and will be using the proceeds raised to support the new school.

The Umeed 1,000 Cyclothon, which was flagged off in Mumbai covering 1,000 kms, involved cycling across 10 major cities including Mumbai, Pune, Satara, Kolhapur, Belagavi, Hubballi, Ranibennuru, Chitradurga, Tumakuru and Bengaluru to raise awareness and funds for the education of underprivileged girls. It saw participation from 30 employees of RBL Bank, who braved the 1,000 kms journey. The initiative was undertaken in association with Udbhav School. Fifty participants from Karnataka Special Reserve Police also joined from Belagavi to extend their support. A number of other RBL Bank employees, Cyclist Clubs, MBA Students, clients and their families participated actively in this initiative.

Other initiatives taken by the Bank includes supporting fifty children of soldiers who were martyred and would have to forgo their education in the absence of financial support. This was done in partnership with Gautam Gambhir Foundation. It also initiated a teacher training programme with Muktangan school in partnership with Paragon charitable trust. This programme involves training 30 teachers, who will further train other teachers in government schools apart from teaching at Muktangan schools, thereby increasing the capacity for primary and secondary school education.

Building resilience through Sustainable Livelihood

Under this pillar, the Bank has pledged to support farmers working in the rural regions of Maharashtra, Gujarat & Madhya Pradesh.

The Bank continues to support farmers in the drought prone regions of Marathwada and Konkan for the third year successively, to increase their income through innovative System of Rice Intensification (SRI) and cultivation of medicinal plants. The project, undertaken in partnership with Dilasa Janvikas Pratishthan, has impacted 2,574 farmers this year through the doubling of the rice yields.

Another long-term project for the Bank is the Bees for Poverty Reduction (BPR), which has resulted in increased income for 463 farmers. This initiative has been undertaken in partnership with Under the Mango Tree foundation, RBL employees participated in the annual Tata Marathon in Mumbai. The BPR programme has helped farmers to increase their income by 40%.

The Bank continues to support farmers in the drought prone regions of Marathwada and Konkan for the third year successively, to increase their income through innovative System of Rice Intensification (SRI) and cultivation of medicinal plants.

Women Empowerment

The Bank has undertaken four new projects to ensure economic empowerment for underprivileged women:

1. Creation of a digital course on fashion designing with Natarajan Education Society (NES) to upskill women engaged in tailoring to increase their income. A pilot batch for this was organised in partnership with Atul Rural Development Fund in Valsad, Gujarat with 33 women. The items stitched by these women were exhibited in RBL premises.

2. Home Chef, is another initiative with NES, which upskills housewives in professional cooking technigues to sell their produce and set-up their own venture in future. The project will also create market linkages for these women.

3. The Bank partnered a Mobile Van project with Mann Deshi Foundation in Hubli, Karnataka, which provides skill-development on the go, to enable women to set up their own enterprises.

4. Providing training & seed capital to spouses of migrant workers to set-up small enterprises (with Shram Sarathi). These projects are aimed at creating alternative livelihoods, which will enable them to lead a dignified life.

Working together to create a positive impact

Employees participated actively in the volunteering opportunities organised by the Bank across geographies this year. In all, 682 employees have given their time in supporting various causes resulting in overall 5,430 volunteering hours. Approximately 50% of the employees have contributed through direct deduction in their salary.

The CSR Policy was amended to diversify the theme and geographies to achieve speed and scale while implementing various CSR initiatives. A CSR Workshop was conducted for the CSR committee to stay abreast with the CSR practices, law, compliance, implementation and reporting norms.

RBL Bank will continue to invest in its business, people and communities, listen to its partners and associates, and do things differently, build more strategic partnerships with NGOs and other stakeholders to impact more lives in need.

8. OPERATIONS

During FY 2018-19, RBL Bank continued to simplify and digitise end to end processes to reduce costs, increase operational efficiency and improve overall customer experience. The Bank focussed on data management and its analytical capabilities to achieve customer excellence and enhance operational efficiency.

The other areas of focus during the year was scalability, talent management, automation and robust risk control architecture. This was made possible by creating Centre of Excellence teams, focussed on project delivery, process re-engineering, smooth implementation and improving process guality.

8.1 Branch Operations

A centralised Branch Monitoring Unit (BMU) was set up last year to build procedural controls. The governance structure too was strengthened to ensure consistency and oversight in the increasing number of branches.

The BMU team in close coordination with the Technology, Regional & Zonal Branch Operations Heads worked towards enhancing controls in core banking systems and branches to ensure a strong and independent assessment of process adherence and control, thus ensuring superior customer experience.

8.2 Retail, Financial Inclusion and Agri Operations

The Bank has centralised its retail operations through the National Operation Centre (NOC) in Mumbai which is supported by two Regional Processing Centres (RPO) in Delhi and Kolhapur. Additionally, the Bank has a host of hubs created in different states that specialise in specific product offerings. These units are built to scale and support the increasing business acguisitions of the bank.

A. Financial Inclusion

The Financial Inclusion (FI) business continued to lay its focus on undertaking inclusive Government

schemes such as Pradhan Mantri Jan Dhan Yojana (PMJDY), Atal Pension Yojana (APY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

Robust processes, scalable technology solutions and an experienced operations team helped the FI Business in on-boarding over 17 Lakh customers sourced through the Business Correspondent branches.

B. Agri Operations

During the year, RBL Bank successfully launched the agri Loan Origination Software (LOS), which is eguipped with gualitative credit screening at the origination stage and an automated account opening process.

The Bank also launched a technology enabled platform Vahan for online verification of vehicle details, and another analytics driven platform for downloading of land records online to ensure appropriate credit decisioning on sanction of agri loans.

C. Retail Assets Operations

• Strategic tie-up with key partners in Maharashtra and Gujarat has helped RBL Bank to enter into the affordable housing loan business.

• An end to end loan booking system Indus, was introduced for onboarding business loans and small business loans to achieve faster TAT with minimal operational costs.

• The launch of Artoo a digitised platform ensured seamless integration and smooth transitioning for RBL Finserve, a wholly owned subsidiary of RBL Bank.

The Bank has implemented robust risk management framework by adopting global standards like Malcolm Baldrige model and role model culture in people, service and partnerships.

Additionally, key initiatives such as digitisation of loan documents and document management system helped achieve process simplification. The Bank also centralised disbursement of loans sourced by digital partners, thus enhancing operational efficiency.

8.3 Retail Liabilities

The Bank has automated existing workflows of account opening to reduce the cost per transaction. Customer touch point processes have also been simplified and self- service options are being launched to improve service delivery. The capabilities of central operations team have been strengthened to achieve speed and scale. The Bank has implemented robust risk management framework by adopting global standards like Malcolm Baldrige model and role model culture in people, service and partnerships. A holistic automation journey has been initiated which aims to significantly improve client experience and improve efficiency.

8.4 Credit Card Operations

During the year, the Bank continued to explore new channels and collaborated with various partners for credit cards.

The recently added feature of chat-based guery resolution, while bundling a personal loan and a credit card into a single product has helped improve customer acguisition. Automation of the entire payment application process has reduced the Turnaround Time (TAT) from one day to a few minutes across channels. Also, upgrading of core Vision Plus system with seamless migration of its customers to the new robust platform has enabled to offer an improved customer journey.

8.5 Transaction Banking Operations

Transaction banking operations achieved significant traction during FY 2018-19, with continued focus on client offerings, customised products, stronger multi-layered security architecture, robust process controls and safe & secure environment.

On the digital operations front, the Bank rolled out cobranded prepaid cards and mobile wallets and managed seamless operationalising, reconciliation, settlement and partner servicing standpoint through effective payment processing network tie-ups.

8.6 Global Trade Services

The Bank follows a three-fold strategy of scale, specialisation and agility to drive a high-growth trajectory. It on-boarded specialised resources and invested in scalable technology for Trade Finance.

GIFT City Operations that commenced last year saw a sixfold rise in volumes this fiscal. Capital account transactions including the liaison office, branch office and project office consultancy continued to maintain strong momentum. The Bank also continued to consistently grow in the advisory space on account of leveraged operational efficiency.

8.7 Cash Management Services (CMS)

Despite being a recent entrant, the Cash Management Services business has shown a significant increase in the client base and is servicing more than 500+ locations through the Banks branch network and the correspondent bank network.

Customer-centric and cost-effective solutions such as customer-end chegue printing solutions, positive pay systems and efficient management of cash across locations through timely and cost-effective disposal mechanisms catering to tier 3 and tier 4 locations have been implemented.

The Bank has tied-up with correspondent banks for same day withdrawal of funds, thus reducing float days for better managementof cash. Also, the Public Financial Management System (PFMS), an initiative of the Government of India was introduced to monitor programmes in the social sector and tracks funds disbursed, to ensure that the money is spent according to its intended purpose and accounted appropriately.

8.8 Services & Infrastructure

The Bank is expanding its offices across various locations to cater to the growing business reguirements. It has also invested in a state-of-the-art technology & infrastructure in the contact centre to capitalise on the growth opportunities.

Cost efficiency initiatives such as re-negotiation of contracts and rental agreements, reverse auction/e-auction & enhanced productivity in procurement of goods and services for business functions have been implemented.

Also, in an effort to be a sustainable organisation, the Bank implemented energy and resource saving projects such as the usage of solar power and implementation of water conservation in few of the Banks sites and locations.

8.9 Security & Business Continuity Management

RBL Bank has invested in robust automated security surveillance systems that operates round the clock for security, monitoring, management, reporting, and audits. Additionally, the Bank has invested significantly in a robust Business Continuity Programme. This robust and resilient business continuity plan ensures adeguate corroboration for providing infrastructure and ensuring the safety of employees, clients and shareholders.

9. CUSTOMER SERVICE

RBL Bank believes in creating value for its customers through its differentiated service experience. In FY 2018- 19, the Bank continued its focus on providing guality service to its customers through its dedicated central and regional services teams.

The Bank strives to provide Service Beyond Excellence to keep the human element alive while focussing on the automation of services. This creates a fine blend of standardised with personalised and replaces transaction with emotion and empathy.

Some initiatives that were taken up in order to create awareness amongst its customers on its Codes of Commitment to Customers programme included educational workshops that were conducted across the geographic presence of the Bank. It also observed Financial Literacy Week in June 2018 educating

customers on various topics including Risk Vs Returns, Grievance Redressal Mechanism, Customer Liability for Unauthorised Electronics Transactions and Good Practices for a Safe Digital Banking Experience.

The Bank got its processes ISO 9001:2015 certified to provide simplified and uniform customer experience to the Wholesale Clients when dealing with its Client Service Ambassadors.

RBL Bank, has also received a high rating by Banking Codes and Standards Board of India (BCSBI) as per its Code Compliance Rating done for banks. The code compliance rating, which is based on five parameters - information dissemination, transparency, grievance redressal, customer-centricity, and customer feedback is considered as an indicator of the level of implementation of important code provisions at the grassroot level of the bank.

As a people-centric organisation, one of the key aims of the Bank is to have happy employees. It strives to maintain a work environment that reinforces motivation and innovation. The Bank improved the workplace environment for its Xperience Centre agents by inaugurating its first Xperience Centre for Banking in Malad, Mumbai, which in turn will enhance the service experience for its customers.

At RBL Bank, the voice of the customer plays an important role in the development and improvisation of products, processes and channels. Taking an Outside In approach, the Bank included a few customers in the testing phase of its Corporate Internet Banking channel during FY 2018-19. Several suggestions were taken into consideration, which benefitted a large set of customers when the channel went live. It further enhanced and refined its ways & means of capturing the Voice of Customers to help it further improvise its service delivery.

Customer Centricity at the Heart and Employees as the Pillar are two of the important tenets of the Banks mission. Taking the same into consideration, the Bank felicitates employees who strive and deliver Service Beyond Excellence to clients, with awards dedicated to services viz. Quest for Excellence & Service Excellence.

The Bank has consistently ensured that it provides service of the highest standards to its customers and places their needs as a top priority in all the functions that it performs.