Dear Shareholders,

The Board of Directors are pleased to present the 101^st Annual Report of the Bank for the Financial Year 2019-20 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 2019-20.

1. Economy Overview:

1.1 In the year 2019-20, global growth recorded its weakest pace since the global financial crisis a decade ago, registering a growth of 2.9% in 2019 compared to 3.6% in the previous year. Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. Both emerging and developing market economies as well as advanced economies slowed down. 1.2 Towards end of the financial year, global growth has hit unprecedented depths of despair amidst

Covid-19 outbreak. Global Lockdown due to the pandemic saw major indices of manufacturing and services across countries declining to record lows on the back of supply-side disruptions. Global energy prices plunged, Equity and debt markets saw sell-offs dramatically in March 2020 which led to crashing of benchmark equity indices and tightening of bond yields. Governments and Central Banks have taken unprecedented fiscal and monetary policy measures to mitigate the adverse impact of Covid-19. International Monetary Fund (IMF) projects global output in 2020 to contract by 3 per cent with output of advanced countries contracting more than emerging market and developing economies. 1.3 Turning to Indian economy, even before the onset of Covid-19 pandemic, the country was experiencing slowdown. The countrys GDP grew at 4.2% in FY 20 lower than that of 6.1% in FY19. Several fiscal and monetary actions were initiated by the Government and RBI respectively, to lessen the adverse impact on financial system due to COVID-19 related disruptions. 1.4 On the policy front, the year saw many measures undertaken by the government and the regulator. On part of the government, a mega amalgamation exercise was undertaken and 10 Public Sector Banks (PSBs) were amalgamated into 4 large entities, and your Bank is poised to emerge as the 5^th largest PSB in the country with amalgamation of Andhra Bank and Corporation Bank into Union Bank of India, with effect from 01.04.2020. Similarly, on the regulatory front, the introduction of External Benchmark Linked Lending Rates (EBLR) to all Retail Segments will go a long way in improving the monetary transmission.

2. Banks Performance

Established in the year 1919, your Bank has 4,284 & branches including 3 overseas branches, 6895 ATMs across 29 States and 5 Union Territories and 37,318 employees as on March 31, 2020.

Key achievements during FY 2019-20:

• Net Interest Income for FY 20 increased by 12% Y-o-Y to Rs.11437 crore.

• Operating profit for FY 20 increased by 22% Y-o-Y to Rs.9181 crore.

• PCR improved to 73.64% as on March 31, 2020 compared to 66.24% as on March 31, 2019.

• Net NPA ratio declined to 5.49% as on March 31, 2020 from 6.85% as on March 31, 2019.

During FY 2019-20, your Bank has undergone many transformations/ adopted new processes as given below.

2.1 Amalgamation:

Initiating major reforms in the PSBs, a mega amalgamation exercise had been taken up in FY 2020. Accordingly, 10 PSBs have been amalgamated into 4 Banks. As part of this initiative, Andhra Bank and Corporation Bank have been amalgamated into Union Bank of India, w.e.f. 01.04.2020, making the amalgamated entity, the 5th largest PSB in the country.

The amalgamation exercise aims to reap the economies of scale from increased branch network, customer base and synergies on account of cost rationalization & technological assimilation. After amalgamation, your Bank shall become stronger with more than 9500 Branches, 13300 plus ATMs, an employee strength of over 75,000 and with a customer base of over 120 million. The amalgamation will also provide impetus for adoption of the best practices among the banks to improve customer service, productivity, leading to higher profitability.

2.2 EASE(Enhanced Access and Service Excellence):

Enhanced Access and Service Excellence (EASE) was launched by Government of India in 2018-19 to increase the efficiency of PSBs across every domain and being measured on quarterly basis. For FY 2019-20, EASE 2.0 was launched by Government of India which is built on the foundation of EASE 1.0 and introduces new reform Action Points across 6 themes to strengthen processes and systems. Under EASE 2.0. your Bank secured 4^th position in December 2019 quarter.

The Bank has worked on number of areas to improve efficiency under EASE like:

Providing a comprehensive and robust risk management system.

Introduced an online digital OTS platform for settlement of NPA accounts.

Improving on Early warning signal system introduced in last financial year for monitoring of loan accounts.

Forging tie ups with ‘Agencies for Specialised Monitoring for post sanction monitoring of large value accounts.

Delivering better banking services through alternate channels by increasing the services being offered through mobile, internet, call centre or Bank Mitras.

Strengthened credit underwriting and cyber security measures.

For EASE 2.0 December 2019 ranking, your bank was among top three under the themes "Credit Off-take" and "UdyamiMitra for MSME" which displays banks commitment for nation building by providing necessary support to the MSME sector.

The Government of India has launched new EASE index EASE 3.0 for FY 2020-21 with the theme "Banking of the Future". Under EASE 3.0 focus would be on Smart, tech-enabled banking which aims to transform PSBs into digital & data driven organizations and alter the mass banking landscape. Your Bank is further strengthening its processes across all domains, building and expanding the infrastructure to become the Bank of next generation, providing best in class services and customer experience

2.3 Online sales of Union Mutual Fund Schemes-

In order to promote digitization, the bank has been working closely with respective channel partners to develop system capabilities to enable customers buy third party products like Insurance and Mutual Fund online using the Banks technology interfaces. Facility to buy Union Mutual Fund schemes through Banks website and U-Mobile App has been commenced.

2.4 U-mobile App based enrolment for PMSBY Scheme

– Facility to buy PMSBY insurance cover through UMobile App has been enabled. This is in addition to an option to buy PMSBY insurance cover through corporate website for Banks net banking customers. More than 9800 customers have enrolled under PMSBY through U-Mobile.

2.5 Launched the Treasury

- FX Retail, an electronic trading platform designed by Clearing Corporation of India Ltd(CCIL) which provides for buying/selling of foreign exchange by retail customers of the bank.

2.6 Specialization in Monitoring and Recovery

- Your Bank has taken many proactive steps for monitoring of loans like;

Specialised cell for monitoring of accounts in the range of Rs 100.00 cr to Rs 250.00 cr and Rs 250.00 cr and above, both headed by Senior Executives.

Dynamic review of High value accounts is being done with updated developments/analysis covering financials. The external data/information is being used leveraging Fintech platforms.

RPA (Robotic Process Automation), machine learning and use of Oracle Data base is being used for analytics. 85% of non-NPA and non-SMA portfolio of Bank advances covering RAM & Corporate advances has now been covered under PSA (Potential Stress Assets).Concept of PSA involves rigorous analysis of accounts/portfolio based on Early Stress Signals(ESS).

2.7 Your Bank is adopting the centralization /automation / integration of internal business processes in order to enhance quality of IT services. It is taking substantial measures in securing the IT assets of the Bank by implementing best-in-class IT Security and Risk Management Framework. 2.8 Your Bank is also striving to streamline the banking services for customers with cutting edge technology. Migration of Core Banking from version 7.x to 10.x, Central KYC mobile application to centralize the multiple KYC submission process, e-Learning mobile application for delivery of banking knowledge through digital mode, implementation of UPI 2.0. an all-in-one mobile banking application- UMobile, integration of Rajasthan State Beverages Corporation Ltd., Government eMarketplace (GeM), Haj fee collection service, Debit Card Management System (DCMS),Aadhaar Seeding/De-seeding, Pradhan Mantri Shram Yogi Mandhan (PMSYM) enrolment with APIM solution, and integration of transaction channels i.e. Internet Banking, ATM, Mobile Banking, BC channels with Enterprise Fraud Risk Management Solution are some of the major initiatives taken during the FY 2019-20.

2.9 As a part of business process transformation, your Bank has envisaged technology innovations in providing hassle free services by launching HRMS mobile application on android and iOS platform for its valuable employees for immediate sanctioning and disbursement of perks and allowances. This application is secured with OTP based login authentication mechanism to enable the employees 24*7 access to carry out their day-to-day HR related activities on the fly. Banks retired employees can also access this mobile app for pension details and medical insurance scheme.

2.10 CSOC - Threat Intelligence Solution:

The Bank has instituted Advanced Cyber Threat Hunting Program and deployed a dedicated team of experts to monitor the activities.

3. Business Highlights:

3.1 The global business of the Bank Increased to Rs. 7,97,589 crore as on March 31, 2020 from Rs. 7,41,307 crore as March 31, 2019, reflecting an annual growth of 7.6 per cent.

3.2 Total Deposits increased to Rs.4,50,668 crore as on March 31, 2020 from Rs.4,15,915 crore as on March 31, 2019, noting an annual growth of 8.4 per cent. CASA (current account and saving account) share in total deposit stood at 35.6 per cent as on March 31, 2020. The saving deposit grew by 8.4 per cent in FY 2019-20.

3.3 Gross Advances stood at Rs. 3,46,921 crore as on March 31, 2020 compared to Rs. 3,25,392 crore as on March 31, 2019 recording an annual growth of 6.6 per cent.The RAM (Retail, Agriculture and MSME) sector stood at Rs. 1,80,510 crore as on March 31, 2020 compared to Rs. 1,73,237 crore as on March 31, 2019. RAM Sector as a whole grew at an annual rate of 4.1 per cent.

2.4 Overseas business of the Bank stood at Rs.24,345 crore as on March 31, 2020 compared to Rs.17,276 crore as on March 31, 2019. Your Bank has three overseas branches at Hong Kong, DIFC (Dubai) and Sydney (Australia). Your Bank also operates in the United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd.

4. Income and Expenditure:

(Rs.crore)

Table 1: Income and Expenditure Statement

Sl.	Parameter	FY 2019-20	FY 2018-19	Annual Growth
				Absolute	(%)
1	Interest Earned	37231	34067	3164	9.29
2	Other Income	5261	4474	787	17.59
3	Total Income (1+2)	42492	38541	3951	10.25
4	Interest Expended	25794	23852	1942	8.14
5	Net Interest Income (1-4)	11437	10215	1222	11.96
6	Operating Expenses	7516	7168	348	4.85
	w/w Establishment Expenses	3359	3151	208	6.60
7	Total Expenditure	33311	31020	2291	7.39
8	Operating Profit (3-7)	9181	7521	1660	22.07
9	Provisions	12079	10469	1610	15.38
10	Net Profit/Loss	-2898	-2948	-	-
11	Earnings per share	-12.49	-25.08	-	-

5. Profitability and Efficiency:

5.1 Your Bank reported an Operating Profit of Rs. 9181 crore in FY 2019-20 as compared to Rs 7,521 crore in FY 2018-19.

5.2 Net loss of the Bank stood at Rs. 2898 crore in FY 2019-20 compared to loss of Rs. 2,948 crore in FY 2018-19.

5.3 Cost-to-income ratio of your Bank stood at 45.0 per cent in FY 2019-20 compared to 48.80 per cent in FY 2018-19.

Table 4: Capital Adequacy Ratios - Basel III

Parameters	RBI Minimum Benchmark March 31, 2020	March 31, 2020	March 31, 2019
Total Risk Weighted		294984	278344
Assets
Total Capital Funds	NA	37790	32796
CET 1 Capital		27713	22328
Tier 1 Capital		37790	26388
CRAR (%)	10.875	12.81	11.78
CET 1 (%)	7.375	9.4	8.02
Tier 1 (%)	8.875	10.75	9.48
Tier 2 (%)	NA	2.06	2.3

 

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.

8.2 Capital infusion by Government of India:

The Bank issued and allotted 165,98,02,538 equity shares on preferential basis to the Government of India, against the Capital infusion of Rs.11,768 crore at an issue price of Rs. 70.90 per share (including a share premium of Rs. 60.90 per share) on November 30,2019. The shareholding of GoI now stands at 86.75% as on March 31,2020.

9. Network

Network of your Bank is spread across the country with 4,281 branches as on March 31, 2020. The Bank also has three full fledged overseas branches. The Bank has network of 6895 ATMs as on March 31, 2020. Your Bank sponsors Kashi Gomti Samyut Gramin Bank (KGSGB), Varanasi. It has network of 459 branches, spread over 8 districts of Eastern U.P. namely Varanasi, Azamgarh, Jaunpur, Ghazipur, Chandauli, Mau, Bhadohi and Ambedkar Nagar. However, as per the notification by the Government of India, KGSGB has been merged with Baroda U.P Bank, w.e.f April 01, 2020.

10. Secretarial Audit:

Pursuant to provisions of Regulation 24A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("Listing Regulation") and the SEBI circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019, the Bank had appointed M/s Bhandari & Associates, practicing Company Secretaries to act as the Secretarial Auditor of the Bank for the financial year 2019-20. The secretarial audit of the Bank was conducted for the full year in respect of the matters as prescribed in the said circular and as set out in the Secretarial Audit Report for the financial year 2019-20, 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 under:

There were two vacancies on the Board of the Bank w.r.t. Workmen Employee Director and Officer Employee Director to be nominated by the Government of India under section 9(3)(e) and 9(3)(f) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

The Bank had appointed Ms. Monika Kalia, a Company Secretary and CAIIB as Chief Financial Officer (CFO) of the Bank with effect from June 03, 2019. However, in accordance with the Reserve Bank of India guidelines, the Bank was required to appoint a qualified Chartered Accountant as its CFO.

The Reserve Bank of India has imposed penalty of Rs. 10 lac and Rs. 1.50 crore for delay in fraud identification and reporting and non-compliance of RBIs directions in relation to Discontinuing/ Rediscounting of Bills during the FY 2019-20.

At the outset the management is thankful for the comments, observations and suggestions of the Secretarial Audit team. Being a Nationalised Bank, the composition of the Board is governed by the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 and the subject vacancy is required to be filled in by the Government of India. The position of vacancies on the Board is being intimated on regular basis to Government of India. Further, the Bank has appointed Mr. Prafulla Kumar Samal, General Manager a qualified Chartered Accountant as its CFO w.e.f. May 28, 2020.

11. Awards & Accolades:

During FY 2019-20, your Bank received various awards for its new initiatives taken in Digitization, Financial Inclusion, HR management, Customer Service etc.

Awarded By	Awards	Awarded For
World HRD Congress	Global Citation & Award	CEO with HR Orientation Sustainable HR Leadership
Knowledge Management Leadership Awards	Use of Best Training Methods for Knowledge Management	Best Training Methods for Knowledge Management
ET Now "Stars of the Industry Awards"	Excellence in Training & Development Award: An Overall Award for Best Result Based Training Best Training Initiative for Banking Sector	Excellence in Training & Development
People Labs SKOCH Awards	Training Provider of the Year IAC2020 Corporate Awards Honey Net - GOLD, as Semi-finalist for SKOCH	Creating Workplace of Tomorrow Banking
	GOLD, as Semi-finalist	Cyber Security Awareness Solution
	GOLD, as Semi-finalist	Data Security
	SILVER, as Semi-finalist	Vulnerability Management
IDG Security	CSO 100 AWARDS	CSO 100 AWARDS
Finnovity Award 2020	Finnovity Award 2020	Innovation in cyber security for "Cyber Defence Centre
DSCI (Data Security Council of India)	Special Jury award	Best Security Practices in organization December 2019
IBA (Indian Banks Association)	Banking Technology Award 2020	IT Risk Management & Cyber Security Initiative. 20th Feb 2020
Infosys Client Innovation Awards 2020	Runner up in ‘Modern Technologies led innovation	Application Programming Interface Management (APIM) technology.
SKOCH Group	GOLD (Under MSME Category)	Leadership in MSME
ASSOCHAM	Winner in "Best MSME Bank (Public Sector Bank)"	Best MSME Bank (Public Sector Bank)

12. Social Media:

12.1 Your Bank has expanded the reach across all the major social media platforms like Facebook, Twitter, Instagram, LinkedIn and YouTube under project Union Connect.

12.2 Your Banks official Facebook page has been rated as "Very Responsive with 98% response rate and 5 minutes response time" by Facebook. Banks Twitter handle has been rated as "immediate response" and "Responsive 24/7".

13. Changes in the Directors on the Board of the Bank:

The following changes took place in the Board of directors of your Bank during the financial year 2019-20.

Shri K Ramesha, Part Time Non Official Director completed his second term in the office on March 31, 2020.

Shri Anil Kumar Mishra, RBI Nominee Director completed his term in the office on April 24, 2019.

Shri Arun Kumar Singh has been appointed as RBI Nominee Director of the Bank w.e.f. April 24, 2019 by the Central Government.

14. Directors Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2020:

The applicable accounting standards have been followed and there is no material departure from prescribed accounting standards.

The accounting policies framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied.

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, 2020.

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.

The accounts have been prepared on going concern basis.

15. 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 2019-20 has no audit qualifications.

16. Corporate Social Responsibility (CSR):

16.1 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 activities. During FY 2019-20, your Bank was unable to contribute any fund towards CSR as the Bank suffered a loss during FY 2018-19.

16.2 However, UBSFT has disbursed donations amounting to Rs.163.49 lacs during FY 2019-20 from the surplus funds of the previous years. 16.3 The major activities undertaken by UBSFT during the year are under sectors such as Rural Development, Healthcare, Community development, Education, Environment, Skill development & Heritage preservation.

17. Acknowledgement:

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.