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The Board of Directors is pleased to present the 100th Annual Report of the Bank for the Financial Year 201819 together with the Audited Balance Sheet, Profit & Loss Account, Cash-Flow Statement and the report on Management Discussion & Analysis. The Corporate Governance Report and Business Responsibility Report also form part of the Annual Report 2018-19.
1.1 Indian economy projected to grow at 7.2 per cent during FY 2018-19. India became 6th largest economy ofthe world. Growth of the economy was accompanied by measurable changes in financial service industry. Aggregate flow of funds to the commercial sector from banks (Bank credit) grew at an average
11.0 per cent in FY 2018-19, significantly up from average 6.2 per cent growth in FY 2017-18. Credit flow to industrial sector reported gradual recovery after initial subdued growth.
1.2 Government has remained sanguine in introducing various structural reforms in overall economy including financial sector, following which India climbed up in World Banks ease of doing business ranking. Introduction of one-tap loan processing structure for MSMEs was one such landmark change.
1.3 In-line with its objective of growth facilitation, RBI has introduced various measures to overcome the short-term liquidity shortages. RBI also provided timely intervention for NBFCs to prevent any spillover. To support competitive environment, RBI has taken various steps for supporting new entrants in the financial sector. Despite strong credit growth and optimal regulatory environment, banking sector is yet to cope-up with the asset quality challenges. Amid on-going challenges and opportunities, banking sector has been driving the way ahead for developing infrastructure to cater the financial needs of the worlds sixth largest economy.
1.4 Considering the business prospect in the coming year, your Bank has rolled out new design for sourcing of new business through Customer Acquisition Group (CAG), centralized underwriting of credit processing across business lines of corporate, SME, retail and agriculture.
1.5 Further your Bank has leveraged digital technology for monitoring, resolution and recovery. Monitoring has shifted to proactive one, which flows through origination, underwriting, documentation, disbursement and servicing during the life cycle of exposure.
1.6 Established in the year 1919 Union Bank of India has 4,292 branches including 4 overseas branches, 6650 ATMs and 5586 micro ATMs across 29 States and 5 Union Territories as on March 31, 2019. Your Bank serves over 74 million customers and employs more than 37,000 people.
2. Way Ahead- "Vision 2020"
During FY 2018-19 your Bank has undertaken various transformation initiatives to re-engineer and streamline its processes. During the year, the Bank focused on creation of the necessary infrastructure required to achieve the aspirations set by the Bank under "Vision 2020". The structural initiatives can be divided into four categories.
2.1 Centralization of Credit Underwriting: With a view to bring consistency in processing, to improve credit quality and to create specialized skill-set for quick delivery, your Bank has scaled up a unified credit delivery and processing structure by setting up Centralized Processing Centers (CPCs) for credit underwriting.
Union Loan Point (ULP) is for processing all the retail loan products. The ULPs are also developed as acquisition centre to mobilize retail loans. Your Bank has 73 ULPs mapped to 1238 branches across 48 regions.
Union Sammridhi Kendra (USKs): To cater the rural & semi-urban needs, your Bank has implemented new operating model for RuSU (Rural and Semi Urban Areas) by introducing Hub and Spoke model where "Hub" is a Centralized Processing Cell (USK) and "Spoke" is mapped RuSU branch. The USKs are processing all types of advances in RuSU areas. The loan processing at USK is completely digitized with linked branch capturing the borrower data through tablet (a hand held electronic device) and then transferring it directly to USK for processing. Your Bank has 38 USKs mapped with 556 branches in 38 regions.
SARAL: Though the structure was already in existence, your Bank has further widened the scope of SARAL to accelerate credit flows to MSME, to improve asset quality and to enhance customer service at small centers, SARAL Lite has been established.
2.2 Verticalization of Sourcing: Your Bank has established Customer Acquisition Group (CAG) for verticalization of sourcing of business with an aim to drive sales effort in developing new partnerships for sustained business mobilization, to develop tie-ups with fin-techs for sourcing leads through digital channel, and to develop a vibrant sales culture in the organization for long term growth. The CAG is getting good response and started generating positive result.
2.3 Specialization in Monitoring and Recovery: Your Bank has taken many proactive steps for monitoring of loans like;
System based triggers and alerts for classification and identification of action required in the stressed assets.
Developed in house web portal for monitoring purpose. The web portal is providing a comprehensive dashboard to the branches/administrative offices containing the consolidated information along with branch wise position under various parameters like SMAs, CRILIC, Review & Renewal etc and daily progress can be monitored on real time basis.
Your Bank has also developed in house NPA Recovery App with an aim to aid in NPA recovery by facilitating the staff to have access to the information regarding the borrower like his accounts, address, navigation, visit and follow up report to have better follow up and control.
2.4 Cost Optimization: Your Bank is optimizing the utilization of available resources for improving the overall profitability. Your Bank has a complete bouquet of digital services to cater various financial and nonfinancial needs of customers like passbook in mobile, loan application through internet banking and mobile banking etc
3. EASE (Enhanced Access and Service Excellence):
To enhance the efficiency of Public Sector Banks across all domains viz; credit underwriting, monitoring, recovery, and to provide best of the service to the customers of banks, the Government of India introduced Reforms Agenda (also known as EASE) during FY 2018-19 which contains 6 themes and 30 Action Points which all the PSBs need to implement in a time bound manner. Based on the implementation of the Action Points PSBs are rated on an index developed by an external agency.
Your Bank was ranked first in one of the themes, "Udhaymitra for PSBs", which showcased the commitment of Bank in adopting best practices to cater the need of MSMEs in India.
Your Bank is further strengthening its processes across all domains, building and expanding the existing infrastructure to become a Bank of next generation, providing best in class services and customer experience.
The Government of India has now come up with new EASE index 2.0 for FY 2019-20 which is to showcase "results" of the infrastructure set up during FY 201819. With the necessary infrastructure in place, your Bank aspire to emerge among the best banks under EASE index 2.0.
4.1 The global business of the Bank Increased to Rs 7,41,307 crore as on March 31,2019 from Rs 7,22,362 crore as March 31,2018, reflecting an annual growth of 2.6 per cent.
4.2 Total Deposit increased to Rs 4,15,915 crore as on March 31,2019 from Rs 4,08,502 crore as on March 31, 2018, noting an annual growth of 1.8 per cent. CASA (current account and saving account) share in total deposit stood at 36.1 per cent as on March 31,2019. The saving deposit grew by 8.3 per cent in FY 2018-19.
4.3 Gross Advances stood at Rs 3,25,392 crore as on March 31,2019 compared to Rs 3,13,860 crore as on March 31, 2018 recording an annual growth of 3.7 per cent. The Domestic Advances grew by 7.8 per cent in FY 2018-19. The RAM (Retail, Agriculture and MSME) sector stood at Rs 1,73,237 crore as on March 31,2019 compared to Rs 1,58,642 crore as on March 31,2018. RAM Sector as a whole grew at an annual rate of 9.2 per cent.
4.4 Overseas business of the Bank stood at Rs 17,276 crore as on March 31, 2019 compared to Rs 30,829 as on March 31,2018. Your Bank has four overseas branches at Hong Kong, DIFC (Dubai), Antwerp (Belgium) and Sydney (Australia). Your Bank also operates in the United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd.
5. Income and Expenditure:
Table 1: Income and Expenditure Statement (Rscrore)
|3||Total Income (1+2)||38541||37738||803||2.13|
|5||Net Interest Income (1-4)||10215||9305||910||9.78|
|w/w Establishment Expenses||3151||3155||-4||-0.13|
|8||Operating Profit (3-7)||7521||7640||-119||-1.56|
|11||Earnings per share (Rs)||-25.08||-69.45||-||-|
6. Profitability and Efficiency:
6.1 Your Bank reported an Operating Profit of Rs 7,521 crore in FY 2018-19 as compared to Rs 7,640 in FY 2017-18.
6.2 Net loss of the Bank stood at 2,948 crore in FY 201819 compared to loss of Rs 5,247 crore in FY 2017-18.
6.3 Cost-to-income ratio of your Bank stood at 48.80 per cent in FY 2018-19 compared to 46.56 per cent in FY 2017-18.
6.4 During FY 2018-19, Return on Average Assets stood at -0.59 per cent, whereas Return on Equity stood at -15.57 per cent.
Table 2: Efficiency Ratios
|Parameter (%)||FY 2018-19||FY 2017-18|
|Return on Average Assets||(-) 0.59||(-)1.07|
|Return on Equity||(-) 15.57||(-) 28.53|
6.5 The following are the key productivity ratios of the Bank for FY 2018-19
Table 3: Productivity Ratios
|Parameter||FY 2018-19||FY 2017-18|
|Average Business per Employee (Rs crore)||18.8||17.8|
|Average Business per Branch ( crore)||163.2||155.8|
|Gross Profit per Employee (Rs lakh)||20.2||20.3|
Due to higher provisions for NPA, your Bank has reported loss of Rs 2,948 crore in FY 2018-19. Accordingly, the Board has not declared any dividend.
8. Shareholders Return:
8.1 The Banks net worth increased to Rs 18,927 crore as on March 31,2019 compared to Rs 18,394 crore as on March 31,2018.
9. Asset Quality:
9.1 Gross Non-Performing Assets (GNPA) of the Bank stood at Rs 48,729 crore as on March 31, 2019 compared to Rs 49,370 crore as on March 31, 2018. GNPA as per cent to gross advances decreased to 14.98 per cent as on March 31, 2019 compared to 15.73 per cent as on March 31,2018.
9.2 Net NPA of the Bank declined to Rs 20,332 crore as on March 31,2019 compared to Rs 24,326 crore as on March 31,2018.
10. Capital Adequacy Ratio:
10.1 The Capital Adequacy Ratio as per BASEL III norms stood at 11.78 per cent as on March 31, 2019. Common Equity Tier I (CET I) capital of the Bank stood at 8.02 per cent in March 2019 which is about 64 basis point higher than the minimum regulatory requirement.
Table 4: Capital Adequacy Ratios - Basel III pcrore)
|Parameters||RBI Minimum Benchmark March 31, 2019||March 31, 2019||March 31, 2018|
|Total Risk Weighted Assets||278344||286315|
|Total Capital Funds||NA||32796||32817|
|CET 1 Capital||22328||21641|
|Tier 1 Capital||26388||25857|
|CET 1 (%)||7.375||8.02||7.56|
|Tier 1 (%)||8.875||9.48||9.03|
|Tier 2 (%)||NA||2.30||2.43|
Note: RBI minimum benchmarks are including CCB (Capital Conservation buffer) of 1.875 per cent in CRAR, CET 1 and Tier 1 ratios. There is no minimum for Tier II ratio..
10.2 Capital raised during FY 2018-19: During the FY 2018-19, your Bank raised Rs 4680.32 crore through the issuance of Equity Capital.
10.2.1 Capital infusion by Government of India: To
revitalize capital position of the Bank, Government of India infused 4112 crore in your Bank during the FY 2018-19.Your Bank has issued and allotted 52.16 crore shares at an issue price of Rs 78.84 per share including share premium of Rs 68.84 per equity share on March 28, 2019.
10.2.2 Your Bank has raised Rs 568.32 crore under the Employee Share Purchase Scheme by issuing and allotting 7.29 crore shares at Rs 77.98 per share including share premium of Rs 67.98 per equity share and gave a discount of 25 per cent on calculated price. The effective issue price per share was Rs 58.49.
|The details of number of share issued under ESPS||The Bank has issued 7,28,80,275 shares under Employee Share Purchase Scheme.|
|The price at which such shares are issued||Rs.58.49 per equity share|
Employee-wise details of the shares issued to;
|(1) Senior Managerial Personnel||Name||Designation||Shares Alloted|
|Rajkiran Gundyadka Rai||MD & CEO||6725|
|Raj Kamal Verma||Executive Director||6725|
|Gopal Singh Gusain||Executive Director||6725|
|Dinesh Kumar Garg||Executive Director||6725|
|Gajanan Ramakant Padalkar||General Manager||6725|
|Dineshkumar Dahyalal Mistry||General Manager||6725|
|Pankaj Sharma||General Manager||5044|
|Kishore Pundalik Acharya||General Manager||6725|
|Hari Chand Mittal||General Manager||6725|
|Ravinder Kumar Kashyap||General Manager||6725|
|Purna Chandra Panigrahi||General Manager||6725|
|Dharam Chand Chauhan||General Manager||6725|
|Puthenpurayil S Rajan||General Manager||6725|
|Avinash Kumar Singh||General Manager||6000|
|R Kandasamy||General Manager||6725|
|Sanjay Sharma||General Manager||6725|
|Chandrashekhar S S||General Manager||6044|
|Venkatesh Muchal||General Manager||6725|
|Ishraq Ali Khan||General Manager||6725|
|Atul Kumar||General Manager||6725|
|Yogendra Singh||General Manager||6725|
|Satyanarayana Pathuri||General Manager||6725|
|Brajeshwar Sharma||General Manager||6725|
|Sangram Keshari Mohapatra||General Manager||6725|
|Badatala Sreenivasa Rao||General Manager||6725|
|Jagmohan Singh||General Manager||6725|
|Shiv Narain Kaushik||General Manager||6725|
|Lal Singh||General Manager||6725|
|Kalyan Kumar||General Manager||6725|
|P R Rajagopal||General Manager||1500|
|Asheesh Pandey||General Manager||6000|
|Monika Kalia||General Manager||6725|
|Pravin Sharma||General Manager||5898|
|Nitesh Ranjan||General Manager||6725|
|(ii) any other employee who is issed shares in any one year amounting to 5% or more shares issued during that year||Nil|
|(iii) identified employees who were issued shares during any one year equal to or exceeding 1% of the issued capital of the company at the time of issuances||Nil|
|Consideration recieved against the issuances of shares, if scheme is implemented directly bythe company||4,26,27,67,284.75|
|Loan repaid by the Trust during the year from exercise price recieved||Not Applicable|
11. Social Media:
11.1 Your Bank has expanded the reach of the followers across all the social media platforms like the Facebook, Twitter, Instagram and YouTube. Total number offollowers across all the four platforms has increased to 14,05,487.
11.2 Your Banks official Facebook page has been rated as "Most Responsive with 100% response rate" by Facebook and Twitter handle has been rated as " Responsive 24/7", as the queries are attended on real time basis.
11.3 Your Bank has achieved 2nd position on Facebook and Twitter in respect to followers among the public sector banks (including SBI).
12.1 Network of your Bank is spread across the country with 4,288 branches as on March 31,2019. The Bank also has four full fledged overseas branches.
12.2 The Bank has Network of 6650 ATMs and 5586 micro ATMs as of March 31,2019. During FY 2018-19 your Bank has opened 35 e-lobbies and 78 cashless campuses at various locations in the country.
12.3 Your bank has total 5439 Business Correspondents (Bank Mitras) to serve the unbanked areas.
13. Secretarial Audit
Pursuant to the provision of Regulation 24A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2018 and the SEBI circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019, the Bank had appointed M/s Subhash Kulkarni & Associates, Company Secretaries, Mumbai, to act as the Secretarial Auditor of the Bank for the financial year 2018-19. The secretarial audit of the Bank was conducted for the full year in respect of the matters prescribed in the said circular and as set out in the Secretarial Audit Report for the financial year 2018-19, which is provided as an annexure to this report.
The Secretarial Audit firm has not given any qualification in their report but has given some observations / suggestions to improve the Corporate Governance practices followed by the Bank. A gist of the same is given here below:
RBI has levied three penalties during the FY 2018-19 for delay in reporting of fraud, delay in exchange of information ofthe borrower and delay in adherence to certain RBI directives.
As regard to Board proceedings, few instances of delay in placement of agenda items at the meeting was observed and also suggested to adopt procedure ofVideo Conferencing as per Secretarial Standard.
As regards to composition of Board, it was suggested that the number of Independent Directors on Board should be at least five (1/3 rd of total strength of Directors i.e. 15), against existing number of three.
Suggested to obtain timely disclosure from Directors and Designated employees of the Bank in prescribed form pursuant to Clause 7(2) of SEBI (Prohibition of Insider Trading) regulation 2015 and the Code of Conduct for Prohibition of Trading by Insiders 2018-19.
Suggested to incorporate specific time limit for the resolution of compliant in the Whistle Blower Policy.
Suggested to have detailed compliance check list to monitor periodical / event based return and to have in-house software for the same. Further suggested that the Compliance Department to sample check the compliances done by the other departments and to submit a consolidated confirmation on compliance to MD/ ED.
At the outset the Management is thankful for the comments, observations and suggestions of the Secretarial Audit team. Being a Nationalised Bank incorporated under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the provisions of Corporate Governance mentioned under SEBI (LODR) regulations shall apply to the extent that it does not violate statutes and guidelines or directives applicable to the Bank. Bank will endeavor to adopt and comply with all the suggestions of the Secretarial Audit team to an extent possible and within the given frame work.
14. Awards & Accolades
During FY 2018-19, your Bank received various awards for its new initiatives taken in Digitization, Financial Inclusion, HR management, Customer Service etc.
|Awarded By||Awards||Awarded For|
|Govt of India||UdyamiMitra for MSMEs||Enhanced Access and Service Excellence (EASE) Award under PSB Reforms Agenda|
|Golden Peacock||National Training Award||Corporate Leadership & Institutional Excellence- National Training Award|
|Asia Pacific HRM Congress||Asia Pacific HRM Congress Award||Organization with Innovative HR practices|
|World HRD Congress||Global Training & Development Leadership Award||Best Leadership Development program in Public sector for Top Management|
|Excellence in Training & Development Award|
|Best use of Technology for Training|
|Indian Society for Training & Development||Special Commendation Award||Innovative Training Practices in Public Sector Enterprises|
|Best Financial Inclusion Initiatives Award||Best Financial Inclusion Initiatives amongst Large Banks|
|IBA||Best Technology Bank Award||Best Technology Bank amongst Large Banks|
|Best IT Risk Management and Cyber Security Award||Best initiatives taken in IT Risk Management and Cyber Security amongst Large Bank|
|Banking Financial Services and Insurance||Banking Financial Services and Insurance Award||Leading Financial Inclusion Initiatives|
|PFRDA||Best Performing Bank||Best Performing Bank - APY Formation day|
|Best Performing Bank- Quest for Crown|
|ASSOCHAM||ASSOCHAM SMEs Excellence Award||"Best SME offering" - Innovative Financial Solution for MSMEs|
|Central Vigilance Commission, GOI||Vigilance Excellence Award||Outstanding performance in conduct of Vigilance Awareness activities|
|NPCI||NPCI Award||Excellent performance in RuPay cards|
|SKOCH Gold Award||Banking & Finance Gold for Technology - Strategic Transformation (Union Samriddhi Kendra Model)|
|Cyber Security Gold for Governance Risk Management and Compliance tool|
|Financial Inclusion Initiatives|
|SKOCH||Technology: Strategic Transformation & Financial Inclusion initiatives underTop Banking & Finance Project in India|
|SKOCH Order of Merit||SIEM Tool, Governance Risk Management|
|Compliance tool & Anti DDOS Solution under Top Cyber Security projects in India|
The following changes took place in the Board of directors of your Bank during the financial year 2018-19.
15.1 Shri Vinod Kathuria, Executive Director completed his term in the office on July 31,2018.
15.2 Shri Gopal Singh Gusain. has been appointed as Executive Director of the Bank w.e.f. September 20, 2018 vide Government of India notification no. F. No. 4/5/2018-BO.I dated September 20, 2018.
15.3 Shri Atul Kumar Goel, Executive Director was relieved from the office on November 01,2018 as he was elevated as MD and CEO of UCO Bank.
15.4 DrRH Dholakia, Shareholder Director completed his term in the office on June 26, 2018.
15.5 Dr. Uttam Kumar Sarkar, Shareholder Director completed his term in the office on June 26, 2018.
15.6 Dr Uttam Kumar Sarkar, was re-elected as Shareholder Director u/s 9(3)(i) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for a period of 3 years from 28.06.2018to 27.06.2021.
15.7 Shri Gopal Krishan Lath, Shareholder Director completed his term in the office on June 26, 2018.
15.8 Shri K Kadiresan, was elected as Shareholder Director u/s 9(3)(i) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for a period of 3 years from 28.06.2018to 27.06.2021.
15.9 Shri Jayadev M, was elected as Shareholder Director u/s 9(3)(i) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for a period of 3 years from 28.06.2018 to 27.06.2021.
15.10 Shri Dinesh Kumar Garg. has been appointed as Executive Director of the Bank w.e.f. November 02, 2018 vide Government of India notification no. F. No. 4/5/2018-BO.I dated September 20, 2018.
15.11 Shri Raj Kamal Verma, Executive Director completed his term in the office on February 28, 2019.
15.12 Shri Manas Ranjan Biswal has been appointed as Executive Director of the Bank w.e.f. March 01, 2019 vide Government of India notification no. F. No. 4/5/2018-BO.I dated September 20, 2018.
16. Directors Responsibility Statement
The Directors confirm that in the preparation of the annual accounts for the year ended March 31,2019.
16.1 The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.
16.2 The accounting policies framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied.
16.3 Reasonable and prudent judgement and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of Bank for the year ended on March 31,2019.
16.4 Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing Banks in India.
16.5 The accounts have been prepared on going concern basis.
17. Corporate Governance
The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2018-19 has no audit qualifications.
18. Corporate Social Responsibility (CSR):
18.1 Your Bank is committed to its Corporate Social Responsibility by contributing to the society. In this endeavor, Bank has set up the Union Bank Social Foundation Trust (UBSFT) in the year 2006 for spearheading CSR initiatives. During FY 2018-19, your Bank has contributed Rs 45.43 lacs as donation to UBSFT for CSR activities.
18.2 UBSFT has donated in 10 projects during the year 2018-19 under various sectors like Education, Health care, Community Development, Sanitation, Disability sector etc.
The Board places on record its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission and other institutions for the valuable guidance and support received from them. The Board also acknowledges unstinted support of the financial institutions, correspondent Banks, valuable shareholders, esteemed customers and all other stakeholders. The Board also expresses its deep appreciation for the dedicated service and contribution made by members of staff in the overall performance of the Bank.
For and on behalf of the Board of Directors,
|(Rajkiran Rai G.)|
|Managing Director & CEO|
|Dated: 14th May, 2019|