Union Bank of India Management Discussions.
A. Macro- economic outlook:
1. Global Economy
1.1 During the financial year 2018-19, global economic condition remained volatile mainly due to trade war between the US and China and higher oil prices. The global expansion continues to lose momentum and projected to ease on account of various down-side risks. Weaker Emerging Market (EM) demand is a key driver ofthe downturn in global industrial production and world trade. Economic activity also slowed down in some major Emerging Market Economies (EMEs).
1.2 The International Monetary Fund (IMF) in its latest update of World Economic Outlook (WEO) expects global growth to be around 3.3 per cent & 3.6 per cent in 2019 and 2020 respectively, slightly revised downward from its earlier projections, citing risks from increasing trade tensions and tighter monetary policy by the Federal Reserve. Although a 3.3 per cent global expansion is still reasonable, the outlook for many countries is very challenging, with considerable uncertainties in the short term, especially as advanced economy growth rates converge toward their modest long-term potential.
1.3 The US economic growth is expected to decline to
2.3 per cent in 2019 and soften further to 1.9 per cent in 2020 with the unwinding of fiscal stimulus. Growth in the euro area is set to moderate from 1.8 per cent in 2018 to 1.3 per cent in 2019 and 1.5 per cent in 2020. Japans economy is set to grow by 1.0 per cent in 2019. Economic growth in China, despite fiscal stimulus and no further increase in tariffs from the United States relative to those in force as of September 2018, is projected to slow on an annualized basis in 2019 and 2020. The monetary policy stances of the US Fed and central banks in other major advanced economies (AEs) have turned dovish.
1.4 Crude oil prices have risen on production cuts by OPEC. If oil supply becomes constricted due to geopolitical tensions and continuing OPEC production cuts, there could be a sudden and large upward pressure on oil prices.
2. Domestic Economy
2.1 India noted softening of consumption, which has been conventionally mainstay of domestic demand. Improved net exports and investments notwithstanding, high frequency indicators such as passenger car sales, consumer durables and domestic air passenger traffic reflect a slowdown in urban demand while tractor sales and fast moving consumer goods sales signal weaker rural demand. Since the inflation is well within the comfort zone there is room for further monetary accommodation.
2.2 IMF trimmed growth forecasts for India to 7.3 per cent for FY 19-20 and 7.5 per cent for the next fiscal. RBI also lowered GDP growth forecast to 7.2 per cent for FY 2019-20 in April 2019 monetary policy from earlier forecast of 7.4 per cent.
2.3 As per the advanced estimates, released by Central Statistics Office (CSO), Indias GDP growth during FY 2018-19 is estimated at 7.0 per cent from 7.2 per cent estimated earlier. Slowdown in growth is mainly accounted by mining, manufacturing, public administration, defence and other services.
2.4 The government revised its FY 2018-19 fiscal deficit targets to 3.4 per cent from earlier 3.3 per cent due to sharp rise in expenditure for welfare schemes. The government has retained its fiscal deficit target at the same level for FY 2019-20 assuming nominal GDP growth at11.5 per cent. Budget allocation to various sectors reflected increased focus towards agriculture and industry. Vision 2030 collectively included all the domains of the growth that will lead to sustainable development ofthe economy in medium to long run.
3. Price scenario
3.1 Headline inflation softened during the second half of the FY 2018-19 owing to many domestic and global factors. Retail inflation as measured by Consumer Price Index (CPI) came down to 2.4 per cent in December 2018 from 5.0 per cent in June 2018. However core inflation (inflation excluding food and fuel) remained sticky upward at around 5.0 per cent in FY 2018-19. Indices of fruits, vegetables, pulses and products and Sugar and confectioneries reported the largest decrease to negative zone in second half of FY 2018-19. Wholesale price inflation remained volatile during FY 2018-19. WPI was 5.8 per cent in June 2018 and reached to as low as 2.8 in January 2019. It would be pertinent to note that CPI inflation remained well within the monetary policy mandate of 4 per cent.
4. Stock market performance
4.1 Indian equity markets performed well during FY2018- 19 due to various financial and political developments. The equity market, which was buoyant till August 2018, fell sharply during September, triggered by the unfolding of negative events in NBFC sector. The downturn got exacerbated in October as market sentiment was dented by the liquidity tightness in the sector, coupled with global trade tensions. The market staged a short-lived turnaround in November 2018 mainly due to easing of liquidity concerns in the NBFC sector. Since then, markets have exhibited two-way movement, but rallied sharply in the month of March 2019 leading to India outperforming most of its peers among major EMEs and some AEs. All the three major market indicators Sensex, Bankex and Nifty have recorded annual growth of 17.3 per cent,
25.5 per cent and 14.9 per cent respectively during FY 2018-19.
5. Bond market performance
5.1 Yield on 10-year benchmark has witnessed remarkable hardening during the first half of FY 2018-19 and reached a level of 8.18 per cent in September 2018 before softening to a level of 7.47 per cent as at the end of the financial year. The spread between short term and long term yields reduced in the second half of the financial year in response to global spillovers and domestic factors such as lower crude oil prices, moderation in the domestic inflation outlook, monetary policy measures and shift in the stance. The reduction in the repo rate in February resulted in a perceptible downward shift of the yield curve, both at the short and medium tenor segments (up to 7 years) and at the longer end (beyond 20 years).
6 External Sector
6.1 Slowdown in global growth outlook has impacted the performance of external sector. Current account deficit stood at 2.5 per cent of GDP in Q3 (Oct- Dec) FY 2018-19 as against 2.9 per cent in the immediately preceding quarter. Export growth remained weak in FY 2018-19 mainly due to exports of petroleum products decelerating in response to a fall in international crude oil prices. Among nonoil exports, engineering goods, chemicals, leather and marine products recorded either sequentially lower or negative growth. As in the case of imports, lower international crude oil prices downsized the oil import bill. The trade deficit narrowed in FY 1819 - both sequentially and on a year-on-year basis - to its lowest level in 17 months. This, along with the increase in services exports and lower outgo of income payments, resulted in narrowing of the current account deficit sequentially.
6.2 On the financing side, net FDI inflows were strong in FY 2018-19. Foreign Portfolio Investors (FPIs) have turned net buyers so far this year, aided by the central banks liberalization of the FPI framework, along with its announcement of a $5-billion foreign exchange swap to boost liquidity. Net purchases by Mutual Funds and FPIs in equities amounted to Rs 326 billion and Rs 288 billion, respectively, during H2:2018-19. Interestingly, foreign investors have bought bonds to the tune of $2.03 billion in March alone, clocking the biggest monthly buy since October 2017. The narrowing of the trade deficit, benign inflation outlook and recovery in FPI investment flows helped ease pressure on the domestic foreign exchange market. Outstanding foreign exchange reserves reported to 412 US$ mn in March-19 from 399 US$ mn in Feb-19.
7. Liquidity conditions
7.1 During FY 2018-19, RBI injected and absorbed liquidity as per the market requirements so as to bring the system level neutrality in the economy. Currency in circulation expanded sharply during last quarter. Total durable liquidity injected by the Reserve Bank through OMOs aggregated Rs 2,98,500 crore Rs 2,985 billion) for 2018-19. Besides Liquidity Adjustment Facility (LAF) and Open Market Operations (OMO), the RBI also conducted variable rate repo and reverse repo auctions in order to manage the day to day liquidity situation. Furthermore, the RBI also conducted long-term foreign exchange buy/sell swap of US$5 billion for a tenor of 3 years, thereby injecting durable liquidity of Rs 34,561 crore (Rs346 billion) into the banking system, easing the current liquidity crunch. The 10 years G-sec yield traded in the range of 7.2 per cent to 8.2 per cent during FY 2018-19.
7.2 Gross borrowings of the government during the H1FY 2019-20 would be Rs 4.42 lakh crore, which works out to 62.3 per cent of the total target for the entire year at the rate of 17,000 crore per week for 26 weeks of the first half of the year. The remaining Rs 2.68 lakh crore will be the borrowing programme for the second half of FY20. This borrowing of 7.10 lakh crore as against the previous financial year borrowing of 5.71 lakh crore. Indias FY20 planned gross borrowing is the highest in at least nine years as Government poured extra money into support for farmers and a tax cut for low- income worker.
8 RBIs policy decisions
8.1 During FY 2018-19, RBI changed its policy stance from "calibrated tightening to "neutral" and price stability target at 4 per cent. RBI has reduced repo rate by 25 bps during FY 2018-19 and maintained policy rate at 6 per cent driven by many factors like Inflation (ranging between 5.0 per cent in June 2018 and 2.0 per cent in Jan 2019), low growth predictions, volatile oil prices and expansionary fiscal policies.
8.2 In FY 19-20, RBI in its first Bi-monthly policy has reduced the policy repo rate by 25bps to 6.00 per cent. The MPC decided to maintain the neutral monetary policy stance but lowered the Inflation and Growth projections due to the expectation of low inflation over the next few months and the concerns of a slowdown in the global and domestic economy. The Monetary Policy Committee (MPC) remain watchful of Monsoon, which together with fiscal risks entail that further rate cuts may well have to wait till August Bimonthly Review.
9. Banking environment:
9.1 The banking sector continued to face the challenges of poor asset quality, sluggishness in profitability as well as lower corporate demand. Despite global headwinds, Credit portfolio of the banking industry managed to grow by 13.1 per cent in FY 2018-19 whereas, aggregate deposits reached double digit figure of 10.0 per cent during FY 2018-19. SCBs investment in SLR securities noted 1.9 per cent annual growth. Credit-Deposit Ratio for the SCBs stood at 77.7 per cent. Reduction in Repo rate, gradual decrease in SLR rates, narrowed monetary policy corridor and change in monetary policy stance to "neutral" from "calibrated tightening", have been recognized as the vital reforms impacting the banking industry during the current and next financial year.
9.2 As on March 31,2019, non-food credit grew by 13.2 per cent compared to previous year. The growth was primarily driven by demand from agriculture and allied activities while industrial credit off take remained subdued. Credit to the services sector increased by 23.7 per cent in March 2019. Personal loans and retail loans have improved reflecting a situation of prospering demand conditions of the economy.
B. Performance of Union Bank of India:
10. Resources management:
10.1 Despite a challenging macroeconomic environment, the Bank has made significant progress with sustained improvements in deposits to Rs 4,15,915 crore as on March 31,2019 compared to Rs 4,08,502 crore as on March 31,2018. Owing to the Banks continued effort towards providing enhanced customer service, the Savings deposits (SB) increased by 8.27 per cent. The current deposit of the Bank stood at Rs 26,513 crore as on March 31,2019 and saving deposit stood at 1,23,628 crore, thus taking the CASA deposits to Rs 1,50,141 crore compared to Rs 1,39,241 crore as on March 31,2018.
Table 1 : Composition of Deposits
(Rs in crore)
|Parameter||As of March 31st , 2019||As of March 31st , 2018||
10.2 Your Bank will continue this steady progress by upgrading its banking landscape with new products, new channels and new service experiences. New initiatives like Union Micro Digital Current Account for micro/small customers and Motor Accident Claims Annuity Deposit (MACAD) & MACT Claims SB Account will enhance banks business. .
11 Credit Management
In view of the present demand conditions prevailing in the economy, your Bank maintained a robust retail loan portfolio growth. Your Banks retail lending portfolio has seen a growth of 15.5% in the FY 2018-19. The loan portfolio grew from Rs 49,446 crore as on March 31,2018 to Rs 57,093 crore as on March 31,2019. The increase in retail loan portfolio is primarily backed by growth in home loans and secured mortgage loans. Bank has introduced a differentiated pricing in Home loans, based on CIBIL score to ensure acquisition of quality Home loans. To strengthen due diligence process, Bank has introduced standardized CPV Format. To ensure the quality of advances granted to purchase two wheeler & old four wheelers, Bank has introduced threshold CIBIL score and increased margin. To improve the Market share and acquisition of quality business, Bank has increased its DSA payout.
11.1.1 The Bank has undertaken many strategies for business maximization in FY 2019-20 like (i) end to end digitisation in Personal, Vehicle and Home loans by leveraging digital initiatives, (ii) Leverage of business analytics for predictive lead generation, (iii) to improve the share of processing by centralised processing centers (ULPs).
11.2.1 Banks Agriculture advances as on March 31,2019 were at Rs 52,517 crore. Agriculture advances constituted 18.20 per cent of Adjusted Net Bank Credit (ANBC) as of March 31, 2019 on quarterly average basis.
11.2.2 Advances to small and marginal farmers as of March 31, 2019 stood at Rs 28,770 crore which constituted
10.01 per cent of ANBC on quarterly average basis against the benchmark of 8 per cent of ANBC. During FY 2018-19, total disbursement of 16735 crore was made under special agriculture credit plan (SACP) which is 66.94 per cent of the target of 25000 crore. During the FY 2018-19, 4.44 lakh new farmers were added to banking fold and 2.11 lakh fresh kisan credit cards were issued with credit facility of over Rs 3458 crore.
11.3 Micro, Small & Medium Enterprises (MSME):
11.3.1 There are multiple products and schemes in your Bank to meet credit needs of MSMEs who are served through all branches including business banking branches (BBBs), 35 SARALs and 10 SARAL Lite for speedy appraisal and sanction of MSME loans. The SARAL structure was comprehensively reviewed and revamped in order to enhance underwriting standards and improve Turn-Around-Time.
11.3.2 MSME portfolio stood at Rs 67,174 crore as on March 31,2019 registering an annual growth of 6.0 per cent. MSE portfolio stood at Rs 50,424 crore, as on March 31,2019, registering a growth of 4.64 per cent.
Table 2: Breakup of MSME Portfolio
(Rs in crore)
|Parameter||As of March 31st , 2019||As of March 31st , 2018||
11.3.3 Your Bank has been one of the pioneers in adopting the TReDS platform for lending to MSME segment. Bank is already on board with 3 RBI registered TReDS platforms: RXIL, A.Tredsand MIxchange.The throughout bidding on the 3 platforms has crossed the figure of Rs 438.34 Crore for March 2019. These unique online platforms have inbuilt hassle free processes for ensuring adequate financial support to MSMEs which will be easier for businesses to adopt.
11.3.4 Your Bank has also been one of the best performing banks on "psbloansin59minutes.com" portal. As of March 2019, the number, of MSMEs where Inprinciple sanction is given stood at 3503. Of which the final sanction is given to 1896 proposals amounting to Rs 538.44 Crore.
11.3.5 During FY 2018-19, your Bank has also formulated eight newcluster specific schemes for boosting MSME advances like financing chemical traders, Financing wood based plywood, financing auto ancillary, financing transformer manufacturing & allied units, and financing Auto Ancillary Manufacturing Units etc. As of March 31, 2019, total no. of clusters specific schemes for lending to MSME segment stood at 37.
11.3.6 The Bank is having many schemes like Union Enterprises, Union Parivahan, Union Mudra etc to cater the need of MSME.
11.4 Large Corporate Credit:
During FY 2018-19, the large corporate advances stood at 1,37,695 crore recording growth of 6.17 per cent on Y-o-Y basis. Eight Industrial Financial Branches (IFBs) across the country are catering exclusively to the needs of large corporate clientele. The Bank has made judicious disbursements to investment grade projects of large corporate, thus participating in the growth opportunities in the Indian economy and its global linkages.
Table 3: Large corporate advances
(Rs in crore)
|Parameters||As of March 31st , 2019||As of March 31st, 2018||
|w/w Total Advances to IFBs||104994||90186||14808||16.42|
11.5 Priority Sector Advances:
11.5.1 Under priority sector advances, your bank has registered a growth of 4.9 per cent, which stood at Rs 1,40,530 crore as on March 31,2019. Priority sector constituted 48.33 per cent of the Adjusted Net Bank Credit (ANBC) on quarterly average basis. During Q4 FY19, Bank have traded surplus portfolio of Rs 2000 crore under PSLC- Small & Marginal farmer.
Table 4: Priority Sector Advances
|(Rs in crore)|
|Parameters||31.03.19||31.03.18||Y-o-Y (%)||% to ANBC||Benchmark FY 2019 (% of ANBC)|
|Priority Sector Credit*||140530||133922||4.9||#48.33||40%|
|Small & Marginal Farmers*||28770||27235||5.64||#10.0||8%|
|Credit to Women Beneficiaries||20751||19022||9.1||6.9||5%|
*Excluding PSLC sale of Rs.2000 crore
# On quarterly average basis.
11.5.2 During FY 2018-19, total disbursement of Rs 16735 crore was made under special agriculture credit plan (SACP) which is 66.94 per cent of the target of Rs 25000 crore. During the financial year 2018-19, 4.44 lakh new farmers were added to banking fold and 2.11 lakh fresh kisan credit cards were issued with credit facility of over 3458 crore.
Specific Lending for Social Upliftment
11.5.3 Your Bank has continued to keep its focus on social development and equal opportunities for all segments of the society, accordingly the Bank extended credit facilities to various weak and unreserved sections of the society specifically women, minority community and self help group.
11.5.4 Women Beneficiaries: With a view to promote entrepreneurs among the women and to make them self reliant, your Bank encourages credit to women entrepreneurs. During FY 2018-19, the Bank has financed 10.22 lakh women beneficiaries. Total outstanding loans to women beneficiaries has increased from Rs 19022 crore to Rs 20751 crore i.e. 6.97 per cent of ANBC against benchmark of 5.0 per cent. Growth of 9.08 per cent was achieved under this category.
11.5.5 Minority Communities: Your Bank is extending finance to the minority communitys viz. Sikhs, Muslims, Christians, Zoroastrians, Buddhists and Jains in line with Government of India directives on welfare of minority communities. As on March 31,2019 the outstanding to minority stood at 12402 crore, which constitutes 8.70 per cent of Priority sector advances.
11.5.6 Weaker Section: Your Bank has been actively participating in financing for weaker sections of society. Finance to weaker section has improved from Rs 36430 crore to Rs 39971 crore, as on March 31, 2019, registering a growth of 9.72 per cent to reach a level of 13.4 per cent of ANBC on quarterly average basis against benchmark of 10 per cent.
11.5.7 Rural Self Employment training Institute (RSETI):
With the aim of mitigating the employment problem among the rural youth, the Bank has established 14 RSETIs in districts where the bank has "Lead Bank Responsibility". As of March 31,2019, total number of candidates trained in our RSETIs is 73540, out of which 47495 candidates have been settled. As per assessment of the Ministry of Rural Development during FY 2017-18 out of our 14 RSETIs, 1 RSETI received "AA" grade, 9 RSETIs received "BA" grade and 4 RSETI was given "BB" Grade.
11.5.8 Regional Rural Banks (RRBs): 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. Business of KGSGB has increased to Rs 15739.58 crore with a growth of 8.98 per cent during FY 2018-19. Deposit stood at Rs 11779.16 crore with 61.16 per cent as CASA deposits. Advances stood at Rs 3960.42 crore, out of which priority sector advances contributes 81.32 per cent and agriculture contributes 46.95 per cent. KGSGB has introduced ATM enabled KCC for the benefit of framer RTGS/NEFT service and Digital Authority Cheque system have also been introduced to facilitate faster service delivery.
Key Initiatives to strengthen Priority sector:
11.5.9 Union Samridhi Kendra (USK): The Hub & Spoke model, Union Samridhi Kendra (USK), was initially launched as pilot project at RO Karnal and RO Nasik. During the year 2018-19 these Centralized Processing centre are processing Retail.Agri and MSME loans in Rural & Semi-urban areas. The Rural development officers (Acting as spoke) reach out to borrowers in rural & Semi-urban areas capture required data on tab and transmit the same to these USKs (acting as Hub) for processing. These USKs have significantly reduced the processing time of loan and results are very much encouraging. As on March 31,2019 total 38 USKs are established and Bank is planning to scale up to 68 USKs by the end of March 2020.
11.5.10 Pradhan Mantri Fasal Beema Yojana (PMFBY):
Your Bank is implementing PMFBY for the benefit of farmers who face climatic adversities very often and suffer a lot. All farmers including sharecroppers and tenant farmers growing the notified crops in the notified areas covered under PMFBY From April 2018, Bank has initiated working in PMFBY portal to enter all coverage details of policy holder. Bank has formulated 37 Area Specific Schemes based on the available potential for the benefit of the farmers in the respective area.
11.5.11 Area Specific Schemes: Bank has formulated 37 Area Specific Schemes based on the available potential for the benefit of the farmers in the respective area.
11.5.12 ANKUR: "ANKUR" e-bulletin is published on monthly interval to bring out the latest development, products of the Bank under Agriculture to the field functionaries/ RDOs.
11.6 Financial Inclusion: Empowering the underserved: Your Bank has ensured that the poor and needy populace has access to affordable credit. With the JAM (Jandhan, Aadhar and Mobile) trinity gaining ground, the Bank has been in its mission to reduce leakages in financial transfers via innovative banking methods as well as to effectively garner small savings towards productive investmentthroughout FY 2018-19.
Table 5 : Progress under Financial Inclusion
|(Rs in crore)|
|Particulars||31.03.19||31.03.18||Progress FY 2018-19||Progress % FY 2018-19|
|Total PMJDY A/Cs||9811604||8622117||1189487||13.80%|
|Balance in PMJDY A/Cs||2404||1931||473||24.5%|
|Aadhaar Seeded PMJDY A/Cs||8117145||6925858||1191287||17.20%|
|% ofAadhaar Seeded PMJDY A/Cs||82.73||80.33||2.40%|
|Mobile Seeding- PMJDYA/Cs||5654308||4585447||1068861||23.31%|
|% of Mobile Seeded PMJDY A/Cs||59.70||53.18||6.52%|
|RuPay Cards issued in PMJDY A/Cs||5615288||4884692||730596||14.96%|
11.6.1 During the year, the Bank has undertaken many initiatives for enhancing the performance under financial inclusion like the facility for opening PMJDY account instantly was made live at all BC points. Now all the Bank Mitrs can open instant e-KYC PMJDY account of citizens through the Micro ATM, Mobile or Kiosk then & there at BC point and even transaction facility is provided through AePS to such instant accounts. Bank Mitrs can also enroll customers to Social security schemes viz. APY, PMSBY and PMJJBY Facility has also been provided for customers to apply for overdraft up to Rs 10,000/- through ATMs and BC points.
11.6.2 Aadhaar Enrollment Centre: - As per UIDAI guidelines, all commercial banks have been instructed by UIDAI to open Aadhaar Enrollment Centre in 10 % of Bank Branches. Accordingly Your Bank opened Aadhaar Enrolment Centre in 429 Branches across
India. At present all 429 Bank Branches are activated for enrolling Aadhaar.
12 International Banking
12.1 Overseas advances of the Bank declined by 43.3 per cent during FY 2018-19. Export credit stood lower at Rs 9,081 crore as on March 31,2019 compared to Rs 9,895 crore as on March 31, 2018. The Banks NRI deposits stood at 18,428 crore as on March 31,2019 compared to Rs 19,072 crore as on March 31,2018.
Table 6: Overseas Operations
(Rs in crore)
|Parameters||As of March 31st , 2019||As of March 31st, 2018||
|Total Overseas Business||17276||30829||-13553||-43.9%|
13 Treasury Operations:
13.1 The treasury division includes domestic and foreign exchange operations for the clients as well as on proprietary basis. Treasury is equipped with the state- of-the art dealing room with facilities to extend various types of treasury services to its clients. Treasury has experienced team with certifications and diplomas in Treasury related functions. The proprietary trading desk continuously engages in arbitrage and trading opportunities.
13.2 The key objective of Treasury is to effectively manage liquidity and adhere to regulatory reserve ratios. As an Authorized Dealer - Category- I Bank, it also provides forex related services to its customers.The Bank offers customized solutions using productsviz. Interest Rate Swaps (IRS), Currency Swaps.lnterest Rate Futures, Forwards and Options tocater to the Interest Rate and Foreign Exchange riskmitigation requirements of its corporate clients.
13.3 For the year 2018-19, Bank has also bagged the "Corporate Treasurer of the Year"award givenby Kamikaze B2B Media.
14 Asset quality:
14.1 Despite challenging environment, during FY 2018-
19, your Bank made a cash recovery of 4509 crore in addition to up gradation of accounts to the tune of Rs 1938 crore. Control over slippages and better reduction was possible through continuous efforts and well designed strategy for NPA management. Movement of NPAfor FY 2018-19 is as under:
Table 7: Movement of NPA
|(Rs in crore)|
|Parameters||FY 2018-19||FY 2017-18|
|Gross NPA (Opening)||49370||33712|
|Gross NPAs (Closing)||48729||49370|
14.2 To accelerate recovery efforts, your Bank actively participating in lok adalat along with prompt swift action under SARFASIA. Your bank is leveraging digital tools in its recovery arsenal. In house developed "union recovery app" is helping field functionary to reach out NPA borrowers effectively. Further the Bank has already launched "Online OTS facility" which will ensure faster resolution in accounts, eligible for settlement.
14.3 During the FY 2018-19, Slippage has reduced to Rs 13577 crore from Rs 21369 crore in FY 2017-18. Delinquency ratio has reduced from 8.84 per cent in FY 2017-18 to 4.95 per cent in FY 2018-19.
14.4 Proactive Monitoring :
14.4.1 Launch of CMRD Web Portal: Your Bank has launched single point source of accessing data by branches / ROs/FGMOs on all parameters related to Credit Monitoring. On line updating / reporting of progress made by branches on each Credit Monitoring parameter.
14.4.2 Repository of Defaulters List containing more than 3.50 lakh records: Contains Willful Defaulter, RBI-Cancellation of NBFC Licenses, Caution Advices issued by PBOD under RBI Norms, Central Fraud Registry (CFR), defaulters of Custom, Excise and Service Tax, Income Tax, EPFO, SEBI, Shell Companies and all MCA data. It also has the sub-tab of Defaulting Directors and Company Secretaries.
14.4.3 Shifting approach from Corrective Monitoring to Preventive Monitoring: Your Bank has introduced concept of Potential Stress Asset (PSA) on the basis of Early Stress Signals shown by the borrowal account and close monitoring / resolution of PSA. Formation of Resolution Committee: It is formed at all ROs/ FGMOs and also at Central Office for Resolution of PSA / SMA accounts.
14.4.4 Creation of Special Cells for Monitoring of Large Borrower Accounts: Your Bank has created two special cells for monitoring of Large Borrower Accounts. One for advances with aggregate exposure of Rs 100.00 crore to Rs 250.00 crore and another for AE above Rs 250.00 crore.
15 Wealth management
15.1 Your Bank has launched various new products and taken New Initiative during FY 2018-19, including, Union Suraksha Kavach (in association with Bajaj Allianz General Insurance Co Ltd) and Group Health Insurance product (in association with Chola MS).
Table 8: Income from third party business during FY 2018-19
|(Rs in crore)|
|Business Parameter||31.03.19||31.03.18||% Growth|
|Non Life Insurance||13.43||9.37||43.4%|
15.2 Your Bank has adopted many strategies for business maximization including, (i) Leveraging the strength of other Business Verticals like LCV, MSME, MCV, PBOD, RBD, CAG to generate leads and develop customized products (ii) cross selling Insurance and Investment products to New to Bank acquired as well as existing customers (iii) Improving number of Third Party Products availed by the customer. . (iv) Developing option on Internet Banking and U-Mobile App for purchase of Insurance and Mutual Fund products, (v) Launching of New products to expand the product offerings, (vii) Effective monitoring of Month on Month Activation of Branches under Insurance and Mutual Fund, (viii) Higher usage of Banks Social Media Platforms and e-learning tools to create awareness on various TPPD products and theme/event based promotional activities.
16 Government Businesses:
16.1 The income from Government Business grew to Rs 50 crore from Rs 27 crore in last 3 years at a CAGR of 20.9 per cent.
16.2 New initiatives to increase Government Business:
16.2.1 NPS account: Your Bank started online NPS account opening & subscription to ease of banking to customer, shifting customer to alternate channels and acquisition of customer through digitization. For faster account opening process for customer, your Bank started generation of instant PRAN through PRAN Library implementation in CBS.
16.2.2 Sukanya samridhi account (SSA): Your Bank started online account opening of sukanya samridhi account (SSA) through Banks Internet Banking along with online statement generation for Tax purpose and online view facility for senior citizen saving scheme (SCSS).
17 Human Resource Management
17.1 Your Bank has always been a front runner in adopting HR best practices and proactively investing in its human capital, so as to achieve its corporate objectives. To fortify the HR philosophy, this year, the HR Vision, Mission and Values were laid down to serve as guiding principles for creating an inclusive, enabling, and encouraging environment for employees to realize their full potential professionally and personally. Your Bank set itself the HR vision of being a trend-setter in providing the best employment experience.
17.2 Manpower Strength: The total Manpower of the Bank as on March 31,2019 stood at 37262.
Table 9: Manpower Strength
|2017-18||16215||5019||8716||3267||3734||636||28665||CM CM CD CO||37587|
|2018-19||16557||LO CM LO||8503||3211||3202||574||28262||9000||37262|
17.3 Specialization through Job Families: Your Bank has introduced the Job Family scheme to strengthen the foundations of workplace specialization and enhance productivity. Employees have been given the opportunity to work in their areas of interest based on their qualifications and contributions in their chosen field. This initiative shall help to develop pools of officers with specialized knowledge and expertise in handling core banking functions.
17.4 Learning & Competency Development: Your Bank has infused innovative learning and teaching techniques; it has also increased the reach of training by introducing the E-Learning platform for anytime and anywhere learning. Bank also incorporated mandatory courses for each job role through its E-Learning initiative, for continuous knowledge enrichment and learning. The Training vertical constantly develops training modules to incorporate new developments in the different areas of banking technology.
17.5 During FY 2018-19, 814 in-house training sessions, 197 Locational Programs & 68 Workshops have been conducted covering 28950 employees, and another 548 employees have been sent for external trainings covering different programmes, to gain industry-wide exposure. 26 new programs focusing on Credit, Forex, RABD, CMRD/CRLD, IT etc. have also been added. As an equal opportunity employer with a diverse workforce, the Bank has invested on special training programs to cater the needs of its differently abled employees.
17.6 Union Bhavishya: Banks ambitious leadership development and capacity building program - Union Bhavishya that groomed over 1000 employees as future leaders in FY 2017-18, covered another 294 in FY 2018-19, including a special batch of women officers, with special emphasis on providing a fillip to women leadership.
18 Branch Network
18.1 Branch network of your Bank is widely spread across the country with 4,292 branches as on March 31, 2019, out of these, 59 per cent of the branches are located in rural and semi-urban center.
Table 10: Branches Network As on 31-03-2019
|No of Branches||1249||1287||848||904||4||4292|
19 Measures to enhance Digital Network
19.1 Your Bank has a well spread network of delivery channels across all over India. It offers a choice of channels which is inclusive of traditional branch network as well as mobile banking, internet banking, mobile wallet and 24x7 call centers and is making an attempt towards continuous revamping of the spread of the delivery channels by launching new products.
19.2 Your Bank is well equipped with advanced solutions to provide best services to customer like Cash Recycler Machines, Bunch Note Acceptors, PoS, BHIM Aadhar, cashless campus, cheque Deposit Machines, semi automatic pass book printers and digipurse etc. During FY 2018-19, the Bank has opened 35 new elobbies (24*7 open) where the customers are provided with automated banking solutions.
Table 11: Growth in Digital Channels (Unit absolute)
(Rs in crore)
|w/w Cash Recycler Machines & Bunch Note Acceptors||1041||1016||25||2.5%|
|Semi Automatic Pass Book Printer||2512||1375||1137||82.7%|
|Cheque Deposit Machine||574||574|
* ATM were closed where there were lower hit/ unprofitable
19.3 National Common Mobility Card: This newly launched card variant is based on RuPay Qsparc (Quick Specification for Payment Application of Rupay Chip) debit card specifications to give shape to the Governments initiative of National Common MobilityCard (NCMC).
19.4 Combo Card: Combo Card is a 2-in-1 card that allows the cardholder to enjoy the convenience, flexibility and freedom to choose in a single physical card for debit/credit facility and the cardholder need not to carry two cards. The combo card is specially designed for corporate, salaried & professional category customers, who have monthly salary income and also need credit card for personal needs.
19.5 National Electronic Toll Collection (Union Bank Fastag): National Electronic Toll Collection (NETC) systems enable toll to be collected electronically from vehicles at toll plaza while vehicle is in motion. The technology standard stipulated by the Government of India for NETC is RFID based tags called Fastages. Fastag is affixed on the windscreen of the vehicle and enables the driver to drive through toll plazas, without stopping for cash transactions. The tag is linked to a prepaid account and the vehicle owner needs to recharge/ top up the tag as per his requirement.
19.6 Visa Signature Debit Card: Your Bank has launched Visa Signature Contactless Debit Card to privileged customer.
19.7 On line Debit card Application: On line Debit card Application has been launched to enable the customer to apply for new card or replacement of existing card. Customer can apply for debit card of his/her choice without visiting the branch. The facility has been provided through banks corporate website.
19.8 New U Mobile: Your Bank has launched its new version of Mobile Banking Application with enhanced features and functionalities. It is all in one application through which the customer can avail a series of facilities including opening/ closure of Term & Recurring Deposit Accounts, balance inquiry, mini statement, fund transfer (both within and outside bank), UPI, bill payment, mobile recharge etc.
20 Risk management - A proactive approach towards identifying and mitigating risk:
20.1 Your Bank has a proactive approach towards risk management. Its risk philosophy involves developing and maintaining a healthy portfolio within its risk appetite and regulatory framework. Your Bank constantly endeavours to ensure that business function partners with the risk management function to enhance shareholder value and ensure judicious use of available capital.
20.2 Risk Management is a Board driven function in the bank with the Supervisory Committee of Board on Risk Management and Asset Liability Management (SCR & ALM) at the apex level supported by operational level committees of top executives for managing various risks. The Board of Directors of the Bank approves the Risk strategy and Risk policies for the Bank. The SCR & ALM supervises implementation of the risk strategy and policies, reviews the level and direction of risk, prudential ceilings, portfolio diversification and monitors the risk reporting. The risk strategy and policies are effectively communicated to all branches and offices ofthe Bank.
20.3 Your Bank addresses Credit, Market and Operational risk through appropriate policies, organization structure, risk management techniques, adequate systems, procedures, monitoring and reporting mechanisms. It has a well defined risk appetite statement and the independent risk function to ensure that the Bank operates within its risk appetite.
20.4 Credit Risk Management:
20.4.1 Credit Risk Management Committee (CRMC):
CRMC oversees the credit risk function in the Bank.
In line with its asset quality management objective, Bank strives to maintain a strong asset quality through disciplined credit risk management. Bank has well defined credit appraisal mechanism and risk assessment practices in place for identification, measurement and monitoring. Bank has various instruments for credit risk management, which include credit risk management policies, Credit approval Committee, Prudential exposure limits, Risk Rating system, Risk based pricing and Portfolio Management.
20.4.2 Your Bank has well defined and comprehensive internal rating / scoring models for retail and Corporate Credit risk Assessment. Also, Bank has set up a centralized rating pool at Central Office to improve the rating quality, create a robust rating data base for better administration of rating models. For better management of risk assessment, Centralized rating pool is given the final responsibility of validation of credit rating of the corporate borrowers whose rating process was initiated at the branch level.
20.4.3 Bank has a standardized and well defined approval process for all advances. It adopts a committee approach for credit sanctions and has central approval committees at various levels.
20.4.4 RWA computation Methodologies: Credit RWA for loan & advances is computed under the Standardised Approach prescribed by RBI.
20.5 Market Risk Management:
20.5.1 Asset Liability Committee (ALCO): ALCO puts in place Asset Liability Management Policy, Treasury Policy and Market Risk Management Policy to mitigate market risk in the banking and trading books. The ALCO meets regularly to review the size, mix, tenor and composition of various assets and liabilities. ALCO also decides on the pricing of Assets and Liabilities. ALCO does the identification, measurement, monitoring and management of liquidity and interest rate risk. Bank ensures proactive liquidity management, market risk management, stress testing and also put in place contingency funding plan.
20.5.2 Liquidity management strategies: Your Bank has adopted the liquidity risk management guidelines issued by RBI pursuant to the Basel III framework on liquidity standards. Bank monitors liquidity risk through liquidity coverage ratio & structural liquidity position on daily basis.
20.5.3 Market Risk Capital Charge computation Methodologies: Market risk capital is computed under the Standardised Measurement Method (SMM).
20.6 Operational Risk Management:
20.6.1 The comprehensive systems and procedures, internal control system and audit are used as primary means for managing Operational risk. The bank has in place a Board approved Operational Risk Management Policy based on Reserve Bank of India guidelines. All new products introduced by the bank pass through a New Product Approval Process to identify and address operational risk issues. Variations in existing products as well as risks in outsourcing activities are also reviewed. The Bank has compiled data relating to operational losses incurred during the last thirteen years and it is analyzed for taking corrective measures so that these losses do not recur. Process has also been put in place to conduct Risk and Control SelfAssessment (RCSA) for assessing the residual risks in the processes of the various products of the Bank. Key Risk Indicators have been identified for various processes and the threshold limits have been fixed.
20.6.2 Your Bank is currently following the Basic Indicator (BIA) for capital computation under Operational Risk. The Bank has received approval from RBI for adoption of "The Standardized Approach (TSA)" for Operational Risk on parallel run basis since March 2015. However, RBI have issued guidelines for discontinuance of submission of the operational risk capital charge calculations for banks under parallel run. Due to revision in Basel III framework by Basel Committee on Banking Supervision, for Operational Risk Capital calculation, Standardized Measurement Approach has been proposed. The Bank will be migrating to this approach, once necessary guidelines are issued by the regulator. Till such time, Basic Indicator Approach (BIA) will continue to be used to calculate the capital charge under Operational Risk.
20.6.3 As a good corporate governance measure, the Bank has formulated a Disclosure Policy to have greater transparency in its working. Recognizing the importance of Business Continuity Planning (BCP), for minimizing the adverse effects of business disruption and system failure, the Bank has also put in place a BCP policy which provides a blueprint detailing a wide range of responses under disruptive environment to protect the interest of its staff, customers and assets of the Bank.
20.7 Group Risk Management
20.7.1 Your Bank has participated in diversified financial services like banking, securities and capital markets, insurance and retail asset businesses. Bank has put in place a framework / policy for assessment of risks in its Group entities, internal controls and mitigation measures, and capital assessment, under normal and stressed conditions with the assistance of a reputed external Consultant. The bank through its Group Risk Management Policy, aims to achieve a group-wide approach to ensure that key aspects of risk that have a group-wide impact are considered in its conduct of business.
20.8 Fraud Risk Management
20.8.1 Your Bank has a Board approved Fraud Risk Management Policy in place. Bank has Fraud Review Council to examine all the cases of frauds/ attempted frauds and suggests implementable action plan to verticals for keeping in place strong systems and procedures. Apart from reporting all the frauds cases of Rs 1.00 lakh and above to the Board, the Bank also reports all the fraud cases of 1.00 crore and above to the Special Committee on Monitoring of Fraud of the Board.
20.8.2 Your Bank has implemented Memento module (CBS/Treasury transactions) under Enterprise-wide Fraud Risk Management Solution (EFRM), with a view to ensure 360 degree view of suspicious/ fraudulent transactions and to ensure prevention / early detection of frauds. The other modules, i.e. RSA (Mobile Banking/lnternet Banking transactions) & Fraud Navigator (Card transactions) will go Live in a phased manner.
21.1 Your Bank has implemented a robust compliance system along with a well documented compliance policy. The focus of compliance function is to adherence to regulatory compliance, statutory compliance, compliance with fair practice codes and other codes prescribed/suggested by self regulatory organisations, government policies, the Banks internal policies and prevention of money laundering and funding of illegal activities.
21.2 Your Bank has established a compliance package to monitor, control &follow up communications received from Regulators/ Ministry. Periodic compliance test checks put in place for effective implementation of mandatory guidelines. The role & responsibility of compliance function is clearly defined for every tier in the Bank. Your Bank has a well established reporting system to ensure regulatory and statutory compliance through self certification process; compliance certificate is submitted by branches to the higher offices.
22.1 Your Bank has put in place a well defined Audit Policy for risk based internal audit, management audit, concurrent audit, information security audit and foreign branches audit which have been revamped time and again by the Audit Committee of Board.
22.2 Regular Audit and IS audit of 3978 branches was conducted as against the set target of 3897 branches. Number of "High Risk" branches reduced from 210 branches in the FY 2017-18 to 58 branches in FY 2018-19. Income leakage of Rs 131.34 crore were detected however no branch was rated "Extremely High Risk" and one branch namely labbipet branch is rated under "Very High Risk".
22.3 The offsite monitoring system has been improved with the implementation of newly developed software
both at Central OMC (Offsite Monitoring Cell) and Regional OMCs. Your Bank conducted training program for internal auditors in March 2019 so as to cover almost 100% of auditors working in Audit Department along with -performance evaluation.
22.4 The Audit committee of Board of Directors (ACB) met 12 times and the Audit Committee of Executives (ACE) met 6 times during the year.
22.5 Your Bank has shifted to Web Based Audit Management Solution (WBAMS) from the Financial Year 2018-19 covering all audits such as Risk Based Internal Audit, Management Audit, Concurrent Audit, Information System Audit, Audit of Currency Chest, Service Branch etc. with effect from April, 2018.
23 Cyber Security
23.1 Your Bank has position of Chief Information Security Officer (CISO) directly reporting to Executive Director of the Bank. Your Bank has deployed dedicated skilled team of more than 54 resources for Cyber Security function. Bank is also certified ISMS ISO 27001 & BCMS ISO 22301. Bank has deployed technological Security Solutions to proactively help Bank in identifying any abnormality in network both internal as well as perimeter.
23.2 Your Bank has created Cyber Security Governance structure comprising of policies and executive level and Board level Committees to oversee the development of Cyber Security posture of the Bank. Your Bank has formulated Cyber Security Policy & Information Security Policy and developed Standard Operating Procedure for each area of Cyber & Information Security. Bank has also developed Cyber Play book to handle the incident response.
23.3 Cyber Security Awareness Program (CCSAP):
Your Bank has developed CCSAP program to enhance the level of cyber security awareness among its customers and employees, which has led to an increase in the overall cyber resilience.
23.4 Cyber Security Operation Centre (CSOC): Your Bank has fully operationalised Next Generation Integrated Operation Centre (NG IOC) as front line defence against cyber threat. This centers houses 24x7 Next Generation Cyber Security Operation Centre and Information Technology Operation of the Bank. Bank has established state of art technology on premise Cyber Security Operation Centre by deploying & integrating latest Next Generation 30 Security Solutions. CSOC provide single view of Cyber Security posture ofthe Bank on 24*7 basis.
23.5 Cyber Risk Insurance: Your Bank has taken Cyber Liability Insurance of Rs 325 Crore to mitigate cyber risks.
23.6 Vulnerability Assessment and Management (VAM) Programme: Your Bank has formulated comprehensive (VAM) Programme which includes Vulnerability Assessment, Penetration Testing, Red Team and Threat Hunting exercises for internal and external critical applications, systems and IT infrastructure of the bank.
23.7 Cyber Threat Hunting Programme: Your Bank has instituted Cyber Threat Hunting Programme and performs mock drill at a regular periodicity. In order to identify hackers, it is very essential to analyze logs of various security systems for any suspicious activity, in a systematic manner for detecting, understanding or recovering from a cyber attack. Threat Hunting is an active cyber defense activity involving analysis of various security systems & network logs to proactively search through networks to detect and isolate advanced threats that evade existing security solutions.
24 Technology Up gradation:
24.1 Information Technology vertical of your Bank lays roadmap to ensure timely, personalized and error free delivery of all services to the best satisfaction of customer. Information Technology empowers modern banking with new ideas, breakthrough innovations &caters customers with rapid, dependable and hassle-free banking experience. Your Bank is also taking substantial & innovative measures in simplifying banking for customers with cutting edge technology and dynamic workforce. Bank is taking innovative approach towards banking with the objective of creating more values for customer.
24.2 Your Bank implemented feature-rich Finacle e-Banking Application (FEBA), All-in-one Mobile Banking application, Cyber Security Operation Center (CSOC) implementation, DR automation for On-premises private cloud, Green Pin Generation for Debit Cards, Tablet application for Mudra and Agricultural Loans, Implementation of Centralized Cheque Truncation System (CTS) with data enrichment facility, Mobile application for Customer Acquisition Group (CAG), Integration with SIDBI for in-principle approval of MSME loans in 59 minutes are some of the major initiatives taken during the FY 2018-19.
24.3 Your Bank has taken Various measures for digitization of business process and boosting administrative efficiency like providing free Wi-Fi at branches/ administrative offices, Bandwidth upgradation for all branches to minimum 2 Mbps and for all offices to minimum 4 Mbps, High speed dedicated bandwidth of minimum 1 Mbps for VSAT branches, Alternate MPLS connectivity with minimum 512 Kbps bandwidth to all branches, expansion of centralized account opening under Document Management System, implementing Mandate Management, Audit Management, NPA monitoring portal for credit recovery, integration with TREDS platform to lodge inland bills, SMS alerts to the customers for Union Green Card (UGC) and Gold loan renewal which helped your Bank to deliver better products to the end users through various seamless channels.
24.4 While your Bank is in process of upgrading the Core Banking Solution for providing smooth and pleasant branchless experience, Bank is also taking measures to ensure that customers can enjoyseamless24X7 banking by providing best-in-class mobile applications and immersive Internet banking experience. Banking nowadays is experiencing multiple challenges like diverging regulations, ever- changing technology environment, new competitors and customers with higher expectations.
24.5 New Initiatives: Core banking application upgradation: In order to respond quickly to the dynamics of varying digital banking scenario, bank has undertaken initiatives namely Core banking application upgradation to latest version that supports APIs for digital payment eco-system, Green Data Center facility to reduce its energy footprints, implementation of Global Payments Innovation (GPI) for efficient tracking of SWIFT messages and upgradation of Loan application module for system based processing of MSME loans.
24.6 Enterprise Data Warehousing (EDW): Your Bank is rapidly transitioning towards data-driven decisionmaking augmented by Statistical Analysis and implementation of Enterprise Datawarehousing (EDW).
24.7 Your bank has developed Customer Relationship Management (CRM) application with integrated service request management and sales management which will enable branch users to take decisions through customer segmentation, fraud detection, and portfolio management.
24.8 Your bank has taken measures to improve governance with greater transparency. With the increasing number and frequency of sophisticated attacks on Banking industry, comprehensive cyber security program has been implemented with the right level of governance, risk and compliance standard.
24.9 As part of Business Continuity Planning & Disaster Recovery Management strategy, the Bank has implemented DR automation solution for critical applications hosted on Banks on-premise private cloud infrastructure, thus encouraging Banks readiness in responding to exigent situation.
25.1 Vigilance is an essential tool to bring about excellence in the organization as it plays an important and positive role in creating an ethical climate with discipline and safety of the operations. A well structured Vigilance system is in place in the Bank, covering all areas of operations and in tune with the guidelines issued by the Central Vigilance Commission. Vigilance set-up in the Bank aspires to inculcate and nurture a sense of alertness and awareness for meticulous compliance with systems and procedures in the daily functioning of the Bank at the grass root levels and acting as
a catalyst for eliminating system weaknesses and thereby partnering with business growth.
25.2 Vigilance Awareness Initiatives: Your Bank has conducted activities in 1647 schools and 238 colleges to spread the message of eradicating corruption among students and teachers, where 1,82,556 students participated. To intensify the Preventive Vigilance Visits, Vigilance Department has opened six new Regional Vigilance Cells during the year viz. Surat, Nagpur, Trivendrum, Vijaywada & Agra, Coimbatore, and Allahabad. Your Bank has introduced online Off-site surveillance system for proactive detection of abnormal transactions and flagging the same to controllers for taking appropriate corrective actions.
25.3 "Lets be Alert": A new knowledge series "Lets be Alert" was circulated on a daily basis during Vigilance Awareness Week, wherein various case studies on different areas of banking from different organizations and the learning points thereon were provided in a simple and lucid manner.
26.1 GDP growth is expected to recover in 2019-20. Private consumption is likely to remain its mainstay and investment activity is expected to remain strong. The Banking sector gradually appears to be coming out of the operations bottleneck with the clear deceleration seen in the growth of non-performing loans. The new insolvency and bankruptcy law and the machinery evolved for a faster resolution of bad debts has given teeth to the recovery process in banks. Moreover, with the recent capital infusion received by public sector banks, are expected to show a good credit growth and should see a significant improvement in the revenues. The flow of credit to corporate which was stagnant for long is expected to pick up during FY 2019-20. The low domestic inflation and the recent reduction in benchmark repo rate by a total of 50 basis points in the previous two monetary policy pronouncements are likely to accelerate revival of the economy and support business growth of the banks.
26.2 Your Bank is fully geared to take advantage of this environment and has been taking a number of growth initiatives. Your Bank has adopted a balanced approach to growth, profitability and risk management. This strategy has helped your Bank to further strengthen its position with continued improvements in the key financial parameters, a strong deposit portfolio, a large and expanding distribution network and a healthy capital position; thereby creating a platform for robust growth in subsequent year The Bank already initiated various measures at process redesigning; upliftment of the sale performance, analytics based campaign management and improvising the digital channels. Your Bank continues to re-balance its asset and liability portfolios to generate margins and optimize capital requirements. The Bank is committed to add significant value for its various stakeholders.