DIRECTORS' REPORT The Board of Directors have pleasure in presenting the Bank's Annual Report along with audited accounts for the year ended 31st March 2016. BUSINESS OPERATIONS The Business of the Bank stood at Rs.362554.20 crore as on 31.03.2016 as against Rs.352048.72 crore as on 31.03.2015. Total deposits of the Bank stood at Rs.208914.82 crore, registering a growth of 2.40%. The gross advances as at end- March 2016 stood at Rs.153639.38 crore, registering a growth of 3.78%. The credit deposit ratio of the Bank, as at end - March 2016, stood at 73.61%. The Bank ensured adequate flow of credit to the productive sectors of the economy. The Loans & Advances portfolio of the Bank is well diversified and balanced. Bank's retail term deposits increased by 12.27% and the retail credit increased by 17.94% during FY 2015-16. Net interest margin for FY 2015-16 was 2.66% as against 2.61% for FY 2014-15. CAPITALS RESERVES During the year 2015-16, the Paid-up capital of the bank increased by Rs.21.55 crore and Share Premium by Rs.156.85 crore respectively byway of preferential allotment of 21548758 equity shares of face value of Rs.10/- each to LIC@ Rs.82.79 per share (including premium). The capital & reserves as on March 31, 2016 have gone upto Rs.14941.15 crore as against Rs.13779.34 crore as at end March 2015 and the ratio of Capital & Reserves to average working funds stood at 6.54% as on 31.03.2016 as against 6.36% as on 31st March 2015. Further the Bank received a sum of Rs.300.00 crore on 30.03.2016 as contribution of the Central Government for preferential allotment of equity shares pending allotment. The shareholders of the Bank in the Extraordinary General Meeting held on 02.05.2016 approved, through special resolution, the issue and allotment of 24772914 equity shares of face value of Rs.10/- each to the Government of India @ Rs.121.10 per share (including premium). During the year, the Bank has issued Basel III Compliant Tier 11 Bonds aggregating to Rs.1000 crore. CAPITAL ADEQUACY RATIO The Bank's Capital Risk Weighted Assets Ratio (CRAR) as on 31.03.2016 under Basel III guidelines stood at 11.76% as against 11.41% as on 31.03.2015. The Bank's Capital Risk Weighted Assets Ratio (CRAR) under Basel II stood at 12.80% as against 12.28% as on 31.03.2015. DIVIDEND Bank's policy of declaring dividend is to reward the share holders as well as to plough back profit for maintaining a healthy capital adequacy ratio & for supporting future growth. Accordingly, your Directors are pleased to propose a dividend of 7.00% (i.e. Rs.0.70 per share) for the financial year ended 31st March, 2016. CORPORATE SOCIAL RESPONSIBILITY Corporate Philosophy • Bank is a corporate citizen, with resources at its command and benefits, which it derives from operating in society in general. It therefore has a commitment to give back to the community where it operates and owes a solemn duty to the less fortunate and underprivileged sections of the society. • Staff members are encouraged to make contributions by understanding the aspirations of underprivileged sections and endeavoring to evolve measures to remove indisputable social and development lacunae. This leads to their self development and improvement of Bank's image besides development of the community. • Under the community service banking various welfare and social activities are undertaken by the bank both in Banking and non Banking areas to raise the quality of life of the downtrodden and under privileged sections of the society. • Providing assistance on education, health, sports and environment services are the focus areas. Major initiatives undertaken by the Bank in FY 2015-16 The CSR initiatives undertaken by the Bank are as under:- • Donation to KISS (Kalinga Institute of Social Sciences) Bhubaneshwar Orissa for providing free education to 15 poor and needy Tribal Students for a period of one year. • Donation of Ceiling Fans to Umang Bal Vikas, Patna, 'S.C Secondary School, Thiruvalla', Banglore, 'Karamveer Patil Vidyalaya', Vada Village, Khed Taluka- Pune & Nagarparishad Shikshan Mandal School, Talegaon Dabhade, Mumbai. • Donation of mattresses, Bed Sheets, Pillow, covers and other utility items to poor and needy students of 'Shrimad Dayanand Vedharsh Mahavidyalya Nyas', Gautam Nagar, New Delhi. • Donation of Computers, Printer, Inverter along with Batteries, Wall Fans, to 'Asha Kiran', Dharuhera, Haryana. 'Asha Kiran' is a home for destitute Girls. • Donation of LCD Projector and Screen to 'Manasa Rehabilitation Centre & Training Centre' (School for Special Children), Banglore. • Donation of utility items i.e School Bags, Water Bottles & food items to orphan children at 'Bal Sahyog', Connaught Place, New Delhi • Donation of Computers to Byculla jail, Mumbai for skill training amongst the Jail inmates. • Donation of chairs to TEARS, an Institute of mentally handicapped children, Agra • Donation for establishment of a Dialysis Unit in Civil Hospital, Gurgaon in coordination with 'District Administration, Gurgaon'. • The Bank along with 'Dr. Rajendra Prasad Centre for Ophthalmic Sciences, AIIMS, New Delhi took the initiative for treatment of Retinoblastoma (Eye Cancer). The patients coming from far-off areas on Pan-India basis specially those belonging to poor background, shall be benefited. • For the treatment of Eye ailments the Bank donated a Vitrectomy Machine to 'Arunodaya Charitable Trust (ACT), Gurgaon'. The machine is being used for the treatment of Eye ailments for poor and needy patients of far-flung areas of Guragon District. • Donation of "Laser with Scanner SS 500" physiotherapy machine to 'Guru Vishram Vridh Ashram' run by 'Saint Hardayal Educational & Orphans Welfare Society', Delhi (SHEOWS), for the treatment and cure of poor and needy senior citizens. • The Bank also made efforts for the treatment of Cancer diseases in association with 'Indian Cancer Society, Mumbai'. • The Bank made donations in association with 'Haryana State Fencing Association', Gurgaon for purchase of sports equipment for promoting Fencing Sports Activity. • Donation of Tricycles to differently able persons in Lucknow which acts as a means of livelihood. • Adopted Dashashwamedh-ghat for 'Clean & Green' Ganga in coordination with 'Gangotri Sewa Samiti', Varanasi. Bank has also taken initiatives for Cleaning of 'Lal Ghat' & 'Hanuman Garhi Ghat' at river Ganga, Varanasi by adopting these holy areas. Further the Bank has constructed toilets in various Govt. schools on priority and as focused CSR activity, as a step towards achieving the dream of a "Clean and Safe" India. In the Swachch Vidyalaya Campaign (FY 2015-16), the Bank constructed 119 Toilets in which 87 Toilets are in rural areas and 32 in Semi-urban areas. These Toilets were constructed in 83 Government Schools. BOARD OF DIRECTORS During 2015-2016, 11 meetings of Board of Directors, 17 meetings of Management Committee of Board and 9 meetings of Audit Committee of Board, were held. Sh. Arunish Chawla joined the Board of the Bank as Government of India Nominee Director on 15.06.2015 in place of Sh. Rajan Kumar in terms of under Section 9(3)(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (the 'Act'). Sh. Rajkiran Rai G. joined the Board of the Bank on 22.01.2016 as Executive Director in terms of Section 9(3)(a) of the Act. Sh. Bhupinder Nayyar and Sh. Suresh N Patel, Executive Directors of the Bank vacated office as Directors on the Board of the Bank on 30.06.2015 and 02.11.2015 due to superannuation and elevation as MD&CEO of Andhra Bank, respectively. Sh. Paras Mal Chopda vacated the office on 17.01.2016 on completion of tenure as Director of the Bank. EXPLANATIONS/COMMENTS BY THE BOARD OF DIRECTORS IN RESPONSE TO MODIFIED OPINION / ADVERSE REMARKS / EMPHASIS OF MATTER, IF ANY, IN THE INDEPENDENT AUDITORS' REPORT In respect of Emphasis of matter drawn w.r.t. Note No. 9(c) of Schedule 18, the Bank has amortised Rs.13.44 crore during the year ended 31st March 2016 and balance unamortized amount of Rs.40.33 crore shall be amortised as per timelines permitted by RBI. DIRECTORS" RESPONSIBILITY STATEMENT The Directors confirm that, in preparation of the Annual Accounts for the year ended 31st March, 2016: • the applicable accounting standards have been followed along with proper explanation relating to material departures, if any, • the accounting policies framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied, • reasonable and prudent judgment and estimates were made so as to give true and fair view of the state of affairs of the Bank at the end of financial year and of the profits of the Bank for the year ended on 31st March, 2016, • 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 • Internal financial controls were laid down and these were adequate and operating effectively • Proper systems were in place to ensure compliance of all laws applicable to the Bank and these were adequate and operating effectively • The accounts have been prepared on a going concern basis. ACKNOWLEDGMENTS The Board of Directors expresses its gratitude to the Government of India, Ministry of Finance, Department of Economic Affairs, Reserve Bank of India (RBI), Securities and Exchanges Board of India (SEBI) and other Government & Regulatory Agencies for their valuable guidance and continued support provided to the Bank throughout the year. The Board of Directors are also grateful to the valued customers, esteemed stakeholders and also wish to place on record its great appreciation of the staff members for their involvement and dedication in the overall development, growth and prosperity of the Bank. For and on behalf of the Board (ANIMESH CHAUHAN) MANAGING DIRECTOR & CEO Place: Gurgaon Date: 11.05.2016 |