DIRECTORS’ REPORT 2015-16 The Board of Directors has pleasure in presenting the Annual Report of the Bank along with the Balance Sheet & Profit and Loss Account for the year ended 31st March, 2016. MANAGEMENT DISCUSSION AND ANALYSIS: ECONOMIC OUTLOOK Since the Economic Survey and Budget were presented a year ago, the Indian economy has continued to consolidate the gains achieved in restoring macroeconomic stability. Inflation, the fiscal deficit, and the current account deficit have all declined, rendering India a relative haven of macro stability in these turbulent times. Economic growth appears to be recovering, albeit at varying speeds across sectors and the growth of Economy expected having accelerated to 7.6% as against 7.2% in 2014-15. Agriculture is likely to perform better than last year and expected to record a growth of 1.7% in 2015-16. Industry has shown significant improvement primarily on account of acceleration in manufacturing and the median growth forecast for IIP has been put at 4.3% for 2015-16. Meanwhile, services continue to expand rapidly. The CPI based Inflation remains under control with a median forecast of 5.0% for 2015-16 and the Wholesale Price Index (WPI) based inflation has been put at (-1.8%), remaining in Negative territory since November 2014. The fiscal deficit has been expected to decline from 4.2% of GDP in 2014-15 to 4% of GDP in 2015-16. Confidence in price stability has improved, gold imports have largely stabilized. The current account deficit has declined and Foreign Exchange reserves touched highest ever level of about 350 billion US Dollars. FDI inflows have grown from 21.9 billion dollar in April-December 2014-15 to 27.7 billion dollar to the same period in 2015-16. Our country has been held as a ‘bright spot’ amidst a slowing global economy by IMF. This growth has been achieved despite very unfavorable global conditions and two consecutive years shortfall in Monsoon by 13%. However, there are challenges before the growth in future. Risks of further global slowdown and turbulence, future movements in the commodity prices, especially oil, ability of developed as well as developing economies to once again initiate investments in aggregate demand besides the likely additional fiscal burden due to seventh pay commission. However, the Government, RBI and other concerned agencies are undertaking suitable measures for facing the same. The Banking sector in India is growing, so is our Bank. However, there are some major issues before us. Assets quality remain a serious cause of concern for the Bank and Capital Adequacy, Profitability is under pressure along with greater challenge in increasing the NIM, decreasing the Cost of Deposit and improving the Return on Assets. Different measures at different levels are being taken up to face the challenges. WORKING RESULTS TOTAL BUSINESS During the year ended 31.03.2016, total Business of the Bank recorded an increase of 3.31% at Rs.156527 crore as compared to Rs.151511 crore as on 31.03.2015. PROFIT The Bank recorded a Net Profit of Rs.335.97 crore for the year 2015-16 as compared to that at Rs.121.35 crore during the FY 2014-15. The Return on Assets (ROA) stood at 0.34% as compared to that at 0.13% in the year 2014-15. CAPITAL & RESERVE The Net Worth of the Bank has improved from Rs.4811.56 crore as on 31.03.2015 to Rs.5068.08 crore as on 31.03.2016. The Capital Adequacy Ratio (Basel III) of the Bank is 10.91% as on 31.03.2016 against the minimum stipulated requirement of 9.625%. UNSECURED REDEEMABLE BONDS: (Subordinated Debts for Tier –II Capital) Total outstanding of Tier II Bonds as on 31.03.2016 remains unchanged at Rs.1,325 crore. DEPOSIT GROWTH The total deposit of the Bank registered a growth of 5.23% with net accretion of Rs. 4535.24 crore to reach Rs. 91249.96 crore as on March 31, 2016 from Rs. 86714.72 crore as on March 31, 2015. The average cost of deposits of the bank stood at 7.47% as compared to 8.21% in previous year. ADVANCES The Bank’s Advances increased by 0.74% from Rs. 64796.42 crore as on 31.03.2015 to Rs. 65277.22 crore as on 31.03.2016. The average yield on advances stood at 10.70% as on 31.03.2016 compared to 11.12% during the last year. PRIORITY SECTOR ADVANCES The Bank continues to accord importance to various goals under national priority. Some of the highlights under Priority Sectors Advances are as under: - Total Priority Sector Advance increased to Rs. 24508 crore as on 31.03.2016 from Rs. 20234 crore as on 31.03.2015 registering a growth of Rs. 4274 crore (21.12%). - Total Priority Sector advance increased from 34.55% of ANBC to 36.86% of ANBC on Y-o-Y basis as on 31.03.2016, an increase of 2.31%. - Bank’s Agriculture advance increased by Rs. 2101 crore (23.18%) to Rs. 11165 crore as on 31.03.2016 from Rs. 9064 crore as on 31.03.2015. - Bank’s advance to Small & Marginal Farmers increased to Rs. 4663 crore which is 7.01% of total advance against the RBI stipulated target of 7.0%. - Bank’s flow of credit to agriculture for FY 2015-16 was to the tune of Rs. 10012 crore against the target of Rs. 9056 crore (110.56%) registering an Y-o-Y growth of 15.69%. - The Bank has issued RuPay Debit Cards in 1.84 lac KCC accounts against the total operative KCC accounts of 1.91 lac (94.02%) as on 31.03.2016. - The Bank has opened another 6 FLCs at block level in Punjab thus raising total number of FLCs to 12 as on 31.03.2016. - Two of three RSETI i.e. Moga and Faridkot were given highest grade ‘AA’ by Ministry of Rural Development for the year ended 31.03.2015 making them eligible for Govt grants for training of rural unemployed youth. - E-book on Priority Sector guidelines prepared and put on Bank’s website. - A comprehensive Booklet on documentation and appraisal of MSE loan prepared and put on Bank’s website. - The Bank has also achieved sub target for lending to Minority Community. CREDIT MONITORING The Bank had setup a Control Room for proper and effective monitoring of large accounts and to check fresh slippages, with exposures above Rs. 50 lacs at HO level. To further strengthen the monitoring, separate Control Rooms have now been set up at Zonal Offices level to monitor all standard borrowal accounts from Rs.5.00 lac upto Rs. 50.00 lac. Restructuring of eligible cases are being undertaken as per Bank/RBI guidelines. In order to supplement the aforesaid, various policy related initiatives have also been taken by the Bank which inter-alia include implementation of Framework for Revitalizing Distressed Assets in the Economy for Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for lenders, guidelines on refinance by way of flexible structuring/take out financing, Classification and reporting of borrower as non-cooperative borrower etc. Achievements under Pradhan Mantri Jan Dhan Yojna & MUDRA Yojna • The Bank has opened 12.76 lac accounts through Branches and 351 BCs and mobilized CASA/FD/RD deposit of Rs.468.43 crore , with average deposit per account Rs.3672. • Total Business generated by BCs is about Rs. 187 Crore, which include Recovery in 1659 NPA/TWO accounts amounting to Rs.6.96 crore. • All our BCs worked whole heartedly to bring Insurance Business under three Social Security Schemes (PMJJBY, PMSBY & APY) and brought 1,41,101 policies during 2015-16 and also earned Rs.10.94 lac as commission for bringing this business. • The Bank has received 107 lac entries under DBT/DBTL and amount received is Rs.407 crore, which forms part of CASA deposits and that too without any front end efforts. Bank has earned a revenue of Rs. 27 lacs up to March 2016 , under DBT/DBTL. • During the financial year 2015-16, the Bank received sum of Rs.32.80 lacs as Miscellaneous income for 5.46 lac enrollments done through M/s Matrix Processing House. • The Bank has so far received subsidy amount of Rs.27.45 lacs from UIDAI for 183 MicroATMs and subsidy claim for 27 more machines for Rs.4.05 lacs is under process with UIDAI. Our bank is one of few Public Sector Bank to receive such Subsidy from UIDAI for PoS machines. Out of 351 BC, 210 i.e. about 60% BCs have completed more than 2000 transactions. • The Bank has introduced a system of awarding ten star performing BCs every quarter with cash rewards of Rs.1100/- and an appreciation letter. • Some of our women BCs (out of total 351 BCs, 57 are women BCs) having outstanding performance. • Total Zero Balance accounts in PMJDY are at 0.35% against industry average of 27% (lowest among all banks). • Director, Mission office, DFS/MOF shared with all CMD/CEOs of bank, that PSB has achieved some remarkable milestones in PMJDY. Further our bank is appreciated many times during the weekly/fortnightly VC meetings for reducing zero balance accounts, BC transactions and Certification of BCs by IIBF. • 100% BCs of our RRB are certified through IIBF and 98% BCs of our Bank are certified through Indian Institute of Banking & Finance (highest among all banks). • The IBA has also congratulated Punjab & Sind Bank for achieving 100% certification of RRB BCs and 95% BCs certification of our Bank and exhorted other banks to emulate the achievements of the Punjab & Sind Bank. • The Bank has so far organized more than 516 Camps for Financial Literacy in FI allotted villages covering 32600 rural persons. Further Bank has started campaign to cover all the FI allotted villages by imparting financial literacy through Financial Literacy Camps. • The Bank has successfully implemented PMJDY OD through automation i.e. through ATMs/MicroATMs. At present 81524 ODs are sanctioned by the branches. • Our MicroATMs are AEPS & RuPay PINPAD enabled, helping rural customers to do intra and inter Bank transactions using their biometrics or RuPay Debit cards. • The Bank made advance to the tune of Rs. 465.85 crore against the target of Rs. 570 crore under Pradhan Mantri Mudra Yojana which is 81.73% against the KPI target of 75%. Bank made disbursement to the tune of Rs. 95.93 crore against the target of Rs. 60 crore under Shishu category of MUDRA loans, surpassing the given target. RETAIL MARKETING The Bank aggressively ventured into Retail Lending and liberalized the policy for products under the Retail segment and rationalized the interest rates to make the products most competitive in the market. The Bank launched three new innovative schemes viz. PSB Housing Loan Top-up Scheme, PSB ‘Grow & Pay’ Housing Loan Scheme & Skill Loan Scheme during the FY 2015-16. Further, Festival Bonanza Scheme offering concessions under the Housing Loan, Auto Loan and Consumer Loan segments was launched. The Retail Lending outstanding as on 31.03.2016 is Rs 6492 crore and thereby, Retail Lending has registered a business growth of 24% over the previous year. The percentage of Retail advances to gross advances was 9.93% as on 31.03.2016. MARKETING AND INSURANCE The Bank participated in the Sovereign Gold bond Scheme of Government of India. Bank was on sixth position among the receiving agencies in terms of subscription amount in Trenche-II and in Trenche-III the Bank secured the fifth position. Bank had the distinction of stealing march over very big Banks, PSBs as well as private. Bank formulated the policy on Corporate Agency Business as per the IRDAI’s latest guidelines. NEW INITIATIVES • Bank has implemented solution for Visually Impaired (Talking facility) in all Capex ATMs. • Bank has Introduced Mudra Card for small scale units. • Bank has Implemented e-commerce in the Bank for online purchase through RUPAY Debit Card and Master Debit Card. • Bank has started issuing EMV Chip cards as per RBI guidelines in all variants of Rupay & Master Debit Cards. • Bank has started SMS alerts on Overdue FDR, Dormant / Inoperative CASA/KYC expiry reminder / Loan installment due alerts/ Loan ROI change Alerts. • Bank has implemented “Jeevan Praman” - biometric authentication by the pensioner, remote point and creation of digital life certificate which is maintained in a central repository in NIC. • Bank designated 58 branches as Specialized MSME branches thus raising total specialized MSME branches to 108. • A comprehensive Booklet on documentation and appraisal of MSE loan prepared and put on Bank’s website. • New Scheme launched on financing of Farm Mechanization i.e. financing of Tractor/Combine Harvester/Power Tiller/Reaper/ Trolley/Old Tractors/implements etc. • New scheme on financing Two wheeler/Jeep/Car/Special Utility Vehicles (SUV) for Agriculturist introduced. • Bank launched a new scheme on “Financing of E-Rickshaw under MUDRA Scheme” • Bank rationalized rate of interest on MUDRA loans and KCC limits and waived processing fee on KCC upto Rs. 3.00 lac. • Discretionary lending powers of Branch Manager (Scale I, II and III) were increased substantially to facilitate disposal of maximum number of loan applications at branch level itself. • FLC/RSETI Web Portal launched at Bank’s website www.psbindia.com • Bank has opened 32 new branches in FY 2015-16. • Bank celebrated the FY 2015-16 as “YEAR OF CASA” and CASA % to Deposits has increased from 21.53% as on 31.03.2015 to 22.72% as on 31.03.2016. AWARDS & ACHIEVEMENTS • Social Banking Excellence Award -2015 was conferred on the Bank by ASSOCHAM under Small Bank Class & Rural Banking category for providing Rural Banking services. • The Bank received Joint Runners up award in Small Banks category for NFS product from Sh. R Gandhi. Deputy Governor, RBI at National Payment Excellence Awards 2015. • In Government’s Sovereign Gold Bond Scheme, Bank figured among top 10 receiving agencies in terms of subscription. • Ministry of Rural Development awarded Certificate of Excellence to Bank sponsored RSETI, Faridkot and Moga securing “AA” grade under category II for the year 2013-14. • Bank’s Hindi Magazine ‘RAJBHASHA ANKUR’ was awarded 1st Prize by Delhi Bank Town Official Language Implementation Committee. Magazine was also awarded ICE Award for the year 2015. • For Official Language Implementation, Bank was awarded Rajbhasha Shields in Delhi, Patna, Bengluru, Chennai, Jodhpur, Kolkata, Bhilai and Panjim(Goa) by respective Town Official Language Implementation Committees. • The Bank’s Hockey Team won: a. All India S.N. Vohra Gurmit Singh Hockey Tournament b. All India Nehru Hockey Tournament ASSETS QUALITY The Bank continued to make concerted efforts to contain NPAs and has used all available tools of recovery including negotiated settlements and legal means. The provisions of “The Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act -2002” were used effectively. The Bank also organized Recovery Camps during the year at various centers. During the year, two short term schemes for settlement of NPAs were formulated under Agriculture Sector and unsecured T.W.O. accounts apart from Bank’s Recovery Management Policy. In all 1366 cases were settled at Rs. 39.28 crore. The performance of the Bank under recovery of NPAs during the year continued to be good. The aggressive and focused efforts could result in the total recovery of over Rs. 945.90 crore including recovery of Rs. 49.68 crore in Technically Written Off Accounts. Bank has been able to contain fresh slippage. As a result our gross NPAs and net NPAs as on 31.03.2016 have been contained at Rs. 4229.05 crore and Rs. 2949.47 crore respectively against Rs. 3082.19 Crore and Rs. 2266.00 Crore as on 31.03.2015. INVESTMENT & FOREIGN EXCHANGE The Bank’s total gross investment as on 31.03.2016 was Rs. 27693.40 crore, with a portfolio composition consistent with the corporate requirement, risk perception and investment policy of the Bank. The profit on sale of securities for the year has increased from Rs. 133.60 crore for year ended March 2015 to Rs. 140.10 crore for the year ended 31.03.2016 on account of trading activities in G-sec and Non SLR securities. The Exchange profit for the year has increased from Rs.26.51 crore in 2014-15 to Rs. 30.34 crore in 2015-16, registering a growth of 14.45%. RISK MANAGEMENT The Bank has put in place a robust and integrated Risk Management system to ensure that the risks assumed by it are within the defined risk appetites and are adequately monitored. The overall responsibility of setting the Bank’s risk appetite and effective risk management rests with the Board and apex level management of the Bank. The implementation of Integrated Risk Management System in the Bank is monitored by HO Risk Management Department (RMD) headed by General Manager. Risk is managed through following Apex committees viz. 1. Risk Management Committee (RMC)- a board level subcommittee 2. Credit Risk Management Committee (CRMC) 3. Asset and Liabilities Management Committee (ALCO) 4. Operational Risk Management Committee (ORMC) 5. Market Risk Management Committee (MRMC) 6. Capital Planning Committee as per ICAAP These committees work within the overall guidelines and policies approved by the Risk Management Committee (RMC) / Board. POLICY FRAMEWORK The Bank has Board approved policies and procedures in place to measure, manage and control various risks that the Bank is exposed to. Integrated Risk Management Policy has been formulated with the objective of analyzing the overall risk profile of the bank and to integrate all the risks of the Bank. The other important risk policies comprise of Asset-Liability Management (ALM) Policy, Credit Risk Management Policy, Market Risk Management Policy, Operational Risk Management (ORM) Policy, Business Continuity Planning (BCP) & Disaster Recovery Management (DRM) Policy, Stress Testing Policy, Policy on Utilization of Credit Risk Mitigation Techniques & Collateral Management, ICAAP Policy. The policies are reviewed annually by the RMC / Board. BANK’S COMPLIANCE WITH BASEL-II In terms of Regulatory Guidelines of Reserve Bank of India, the Bank has adopted the New Capital Adequacy Framework w.e.f. 31.03.2009. Based on Basel II norms, the Bank has adopted Standardized Approach for Credit Risk, Modified Duration approach for Market Risk and Basic Indicator approach for Operational Risk for computing the capital charge. The Bank has also implemented Basel III Guidelines and has started computing CRAR w.e.f. June 2013. The CRAR position of the Bank is reviewed by the Board on a quarterly basis. Bank has geared for moving towards advanced approaches under BASEL II as suggested by RBI. Bank has also appointed a Consultant for setting up Enterprise Wide Integrated Risk Management System (EIRMS) in the Bank for moving to Advance approaches of Basel II and implementation of Basel III Guidelines. ICAAP POLICY In compliance with the Reserve Bank of India guidelines on Basel II & Basel III – Pillar 2- Supervisory Review and Evaluation Process (SREP), the Internal Capital Adequacy Assessment Process (ICAAP) Policy has been formulated to assess the capital requirement commensurate with the size, level of complexity, risk profile and scope of operations of the Bank. Various residual risks are assessed and additional capital is provided for wherever required. The capital adequacy of the Bank is assessed based on the analysis of current and projected financial/capital position as well as the headroom available. Stress Testing exercises are also undertaken to assess the likely impact of various stress situations in relation to capacity of Bank’s profitability to absorb the shock and consequent impact on Bank’s capital. The ICAAP outcome is prepared on half yearly basis and is reviewed by RMC. DISCLOSURE: In compliance with the Reserve Bank of India guidelines on Basel II& Basel III – Pillar 3 – Market Discipline, the Bank has put in place a Disclosure Policy duly approved by the Board and the disclosures on quarterly / Half yearly / Annual basis, as per the policy, are displayed on the Bank’s Website / Annual Report. CREDIT RISK Credit risk management processes involve identification, measurement, monitoring and control of credit exposures. Credit risk and its policy formulation is managed by Credit Risk Management Committee (CRMC). It regularly monitors prudential caps in different loan segments including industry, corporate, retail and individual/group borrowers. Comprehensive credit rating framework comprising of Credit Risk Rating Models for Corporate Exposure, NBFC Exposure, Real Estate Exposure and Retail Exposure , pricing of loans linked to risk assessment and credit rating, study & analysis of industries/ portfolio, migration of credit ratings is undertaken. Awareness of Basel II norms at the operating level is created and continuously enhanced to achieve the aim of conservation and optimum use of capital. MARKET RISK The Bank’s portfolio is exposed to market risk on account of changes due to interest rates and currency rates. The Asset and Liabilities Management Committee (ALCO) is overseeing the functions relating to market risk. The Bank has put in place a variety of market risk measurement systems and tools. Strict adherence to various limits and proper escalation of breaches, if any, are followed. Moreover, a Mid Office is also in place. The Liquidity Management Framework is well established, which safeguards the ability of the Bank to meet all payment obligations when they come due. It is designed to identify measure and manage the liquidity risk position of the Bank. The Bank is computing the market risk capital charge as per the Modified Duration approach, by using Modified duration method, as per the regulator’s guidelines. The Bank also calculates Value at Risk (VaR) on its foreign exchange portfolio. The Bank periodically undertakes stress test exercise to highlight the potential risks, on account of liquidity & interest rate risk that may arise due to events that are rare but plausible. The impacts of shock on account of different risk factors that may generate worst case scenario are studied and to counter the impact possible solutions are derived. OPERATIONAL RISK The Operational Risk Management Committee (ORMC) oversees the matters relating to risks associated with operations and ensures the continuity / restoration of business in the event of contingency / exigencies. Presently, capital charge on operational risk is calculated as per Basic Indicator Approach. The Bank is in the process of strengthening its ORM Framework & ORM systems so as to be able to migrate to advance approaches of calculation of Operational Risk Capital. The Bank has Board approved Framework for Loss Data Management to set minimum standards for management of Bank’s Operational Loss Data in order to comply with the overall Operational Risk Management (ORM) Policy of the Bank and facilitate creation of a robust and comprehensive Operational Loss Database. WOMEN IN EMPLOYMENT : - Out of the total strength of 9403 as on 31.03.2016, the women employees are 2331 constituting 24.78% of the total strength. EMPLOYMENT TO RESERVED CATEGORY EMPLOYEES : - Bank is committed to the constitutional safeguards and social objectives for the development and welfare of persons belonging to SC, ST and other backward classes of the society. The Bank observes all guidelines stipulated by the Govt. of India in respect of Reservation Policy for reservation of Posts in recruitments. A special SC / ST cell has been set up in the Bank to monitor the Reservation & other provisions for SC / ST employees. An executive in the rank of General Manager has been designated as Chief Liaison Officer for SC / ST employees who ensures compliance of various guidelines pertaining to SC / ST employees & takes care of all matters of grievance redressal of SC / ST employees of the Bank. COMPASSIONATE APPOINTMENTS AND FINANCIAL ASSISTANCE TO THE DEPENDENTS OF DECEASED EMPLOYEES : - During the Financial year 2015-16, the Bank gave appointment to 2 persons on compassionate grounds on unfortunate death of employees. Further, the Bank made total payment of Rs 79,53,090/- in 13 cases towards financial assistance to the dependants of the deceased employees under the scheme for the payment of Ex-Gratia in lieu of appointment on compassionate grounds. TRAINING & HUMAN RESOURCES DEVELOPMENT : - Training is an integral part of human resources development. In the current competitive environment in the Banking industry, it is all the more important to keep the staff abreast of the latest developments in technology, system and procedures, legal aspects etc. Training and grooming are important steps in creating a vibrant organizational culture in which employees are encouraged & motivated to perform better. It helps in augmenting the competencies of employees & equip them with the right skills & knowledge for meeting ever changing business needs of customers in different segments. The training programs organized by the Bank are geared towards integrating the new recruits into the Bank & in enhancing the skills, knowledge and for reorienting the attitude of its existing work force to the organizational objectives so as to transform the Bank to a technology & service driven Bank of the country. To give further impetus to the training and development and enhance knowledge base of employees, bank has tied up with Indian Institute of Banking & Finance (IIBF) to provide e-learning material for JAIIB & CAIIB. The study material has been placed on bank’s Intranet site under the portal “HRD Initiative: E-learning”. All staff members have access to the e-learning materials. To encourage staff members at continually upgrading their professional skills Bank has extended offer of incentives by reimbursement of the Full Course Fee of 21 Certified and Diploma courses offered by the IIBF. In view of MoF guidelines Bank has conducted several Webinars to reach out to all staff members of all branches / offices at the same time to train them in a short span of time. The newly recruited staff were provided Orientation Training on Advances at Branch Level. The Bank has taken specific steps to empower its women employees and to plan their career growth. The Bank endeavored to provide training to 50% of its employees during the Financial Year 2015-16. With this in view, 266 programs were conducted in General Banking & Computer related programs at CBRT Chandigarh, NIBSCOM, Noida & Locational trainings conducted at Zonal Offices in various fields from 1st April 2015 to 31st March 2016, in which training was imparted to 7712 employees of different cadres. Besides, 138 Officers were also imparted training at Apex Level. Hence, Bank has imparted training to 7850 employees of different cadres during the financial year 2015-16. INDUSTRIAL RELATIONS : - The industrial relations in the Bank remained cordial throughout the year. The representatives from Workers and Officers unions participated in various discussions on developmental and other issues with the management at various levels and efforts were made to resolve the same. A grievance Redressal Committee has also been formulated as per the guidelines received from Ministry of Finance to redress the grievances raised by staff members. Top Management of the Bank held an interactive meeting with all the women staff working at Head Office on the occasion of the International Women’s Day. A Women Cell has been created at Head Office HRD Department to look after the newly conceived Women Empowerment Box Portal in the intranet site. The Box is created for women employees of the bank with a view to encourage them to participate more in the growth of the Bank and motivate them towards taking up higher responsibilities. Further, the portal contains Banking Knowledge, Feedbacks / Suggestions, Requests, Complaints, Grievance Redressal and Training Requests of Women employees of the Bank. DIRECT RECRUITMENT : - The Bank launched recruitment drive to cater to the challenges of superannuation, sustained business growth and branch expansion during the financial year 2015-16, recruitment of both the Specialist Officers and Probationary Officers was done to address the diverse manpower requirement of the Bank. During the financial year 2015-16, 14 Official Language Officers, 634 Probationary Officers, 2 Agriculture Field Officers in JMGS-I and 468 Single Window Operators-A in Clerical cadre have joined the Bank. STAFF WELFARE In order to motivate and encourage the staff for effective participation in development activities, the Bank is maintaining various welfare schemes for the Staff. During Financial Year 2015-16, welfare Schemes of the Bank were successfully implemented. INFORMATION TECHNOLOGY • As on 31.03.2016, all 1481 branches are on Core Banking Solution. • Electronic fund transfer facility through RTGS & NEFT is available in 1477 branches. • New functionalities developed in Internet Banking :- a) View Online Tax Statement 26 AS b) On Line Cheque Book Request c) SMS Alerts on addition of Beneficiary for NEFT Payment d) E-Verification of Income Tax Returns through Net Banking e) Temple donation in Internet Banking f) TNVAT Tax Implementation g) PKI functionality as 2FA. • Bank has added six new Aggregator - PAYU, PAYTM, CITRUS, ATOM, TIMEMONEY, NUSPAY in internet Banking. • Bank has increased the Limit of Fund Transfer in E-Banking from Rs 75,000.00 to Rs.2,00,000.00 • Value added services in Mobile Banking:- a) Mobile Recharge/DTH Recharge/ Bill Payment b) IMPS c) Temple Donation d) Mobile Banking app in Hindi • Nine E-lobbies have since been opened • To widen the spread of Electronic Delivery Channels, the Bank has installed 71 new ATMs during the Year 2015-16. Total number of ATMs of the Bank as on 31.03.2016 is 1341. INTERNAL CONTROLS The Bank has in-built internal control systems with well–defined responsibilities at each level. It conducts internal audit through its Inspection & Audit Department. Audit Committee of Executives, being first tier Committees oversees the Inspection & Audit function. The Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the Inspection & Audit Department. The inspection & audit system plays an important role in identification, control and management of risks through internal audit functions. The Bank carries out audits- like Risk Based Internal Audit (RBIA), Concurrent Audit (CCA), IS Audit, Management Audit & Inspection (MAI) and Credit Audit, through which different facets of Internal Audit requirements are covered. The Bank’s business units/offices are subjected to RBIA CCA & IS Audit and Bank’s Management Audit & Inspection covers 22 Zonal Offices & 27 Administrative Offices and examines policies and procedures, besides quality of execution thereof and credit exposures of Rs. 3 crore & above are subjected to Credit Audit by external Auditors. During FY 2015-16, Risk Based Internal Audit was concluded in 926 branches of the Bank, 456 branches/offices were brought under Concurrent audit system, the Information System Audit was conducted in 628 branches/offices and 676 Branches were subjected to Revenue audit be engaging services of CAs/CA firms. The Inspection & Audit Department is monitoring redressal of public grievances/ complaints. During FY 2015-16, 1566 complaints were received of which 33 complaints are in process for redressal. The Banking ombudsman did not pass any award against the Bank during the year. To summarize, Bank’s Inspection & Audit Department has been effectively monitoring the compliance of the system & procedures laid down by its own Board, the Regulator and the Government of India. COMPLIANCE FUNCTION Full-fledged Compliance Department is working since 01/10/2009. A comprehensive Compliance-policy is in place. Compliance Manuals of various HO Departments were drafted/updated during the year. As per RBI guidelines a New Audit format based on Risk Based Supervision for Zonal Offices was introduced during the year duly approved by GMs committee. A short term and long term action plan was approved by the Board for strengthening of Bank’s Compliance functions on the basis of check list sent by IBA. The short term plan has been implemented by Compliance Deptt. Consequent to AFI observations RBS cell was merged with Compliance Department. RBI has intimated that our Bank will be migrated from CAMELS supervision to RBS supervision from the supervisory cycle of 2016-2017. For implementation of migration, Bank has submitted Board approved action plan to the RBI. The Bank has followed various guidelines issued by RBI in its Circular dated April 20, 2007 on Compliance Functions in Bank and other guidelines issued on Compliance Functions. During the year Compliance Department has ensured that Statutory/Regulatory and other mandatory information required by the Regulator/GOI or any other Authority, has been sent. The compliance department also pursued HO Departments for timely submission of returns to RBI/SEBI/MOF. Gists of all RBI circulars and Internal guidelines, issued during the FY 2015-16, were prepared on monthly basis and were placed on the intranet site of the Bank for reference of the staff. It was also ensured that the functioning of Branches, Zonal Offices and HO Departments is synchronized with their Functional Manuals. This functioning has been regularly checked through Annual Compliance Audits and random cross-checking of some of the branches at regular intervals. PUBLIC RELATION AND PUBLICITY During the financial year 2015-16, the Bank adopted a multi-media strategy to build up its image in Public and at the corporate level and accordingly publicity was made through the print media by release of its product, tender, financial and other display/ notice ads in different newspapers, magazines and souvenirs targeting various audiences all over the country. Bank also used outdoor publicity tools i.e. Sponsorship and Display of Banners & Hoardings on events of high publicity value e.g. Surjit Hocket Tournament, Jawahar Lal Nehru Hockey Tournament, Gala Baisakhi Evening organized by World Punjabi Organization and corporate publicity through hoardings at Amritsar Airport facilitated extension of outreach of the Bank. Bank also received immense publicity through the Bank’s Wall Calendar 2016 which was widely distributed among clients and well wishers of the Bank. Bank got huge publicity by way of coverage of its press releases by the print media. All these activities facilitated the Bank to rededicate itself to the service of the nation and enabled it to earn a well deserved mileage on the publicity front. VIGILANCE PREVENTIVE VIGILANCE As a measure of preventive vigilance and also to sensitize the staff towards a corruption free environment, the Bank organized two days workshop/ training on Vigilance Administration & Disciplinary Proceedings The programme was inaugurated by Shri. Vijay Kumar Dev, IAS, Advisor to the Commissioner, Chandigarh. Shri. R.N Nayak, Director and Shri. Rajesh Verma, Advisor from Hon’ble CVC had also valuable sessions on various aspects. During “Vigilance Awareness Week”, the Bank organized its main function at India International Centre, New Delhi on 26th October, 2015. Sh T M Bhasin, Vigilance Commissioner, Central Vigilance Commission, being Chief Guest graced the occasion and addressed the gathering of students from School /College/Institute and Senior Functionaries of the Bank. A quarterly newsletter namely PSBVigil was brought out during this function for the first time. Thereafter, during the week 20 other programmes were also organized in different Schools / Colleges / Institutions in Delhi and one of the programme was presided by Sh J Vinod Kumar, OSD, Central Vigilance Commission. On the occasion, various programmes were organized at the Bank level across the country at 162 schools where 17235 students participated. In line with this year’s theme observing Vigilance Awareness Week by Hon’ble CVC “Preventive Vigilance as a tool of good governance” and on the basis of information received from various sources / quarters regarding Revenue Leakage in Big Borrowal Accounts, a special drive under the name “Mission Compliance” i.e. checking of the compliance of terms and conditions of sanction in big borrowal accounts by Vigilance Officers on sample basis. PUNITIVE VIGILANCE Special thrust was given, to bring down the pendency of disciplinary action cases. In respect of enquiries for more than 6 months old, endeavor was not only to bring down the number of enquiries not only to a single digit but to a minimum possible level and as a result NIL pendency was achieved. SECURITY The Bank has a well established Security set-up within the Bank's organizational structure. The Bank has been regularly reviewing the security arrangements at all Currency Chests and branches and accordingly strengthening the security arrangements to meet prevailing security scenario with effective, modern and unobstructed Security Systems. All the essential and mandatory security arrangements in terms of RBI/ IBA guidelines are provided at almost all branches. Security Alarm Systems are installed at all branches and currency chests. Strong Room conforming to RBI specification are provided at majority of branches. Training, including firing practice, for Armed Guards deployed at currency chests / branches is imparted on an annual basis. Also, all the security officers undergo refresher training on security once in a year. Keeping in view the threat perception, volume of cash and valuables handled and need for continuous surveillance, CCTV Surveillance System has been installed at all the Currency chest branches and 738 identified High Risk and vulnerable branches in the first phase. CCTV systems shall be installed at remaining branches at the earliest. IMPLEMENTATION OF OFFICIAL LANGUAGE Year 2015-16 was the year of achievements in Official Language implementation. Ministry of Finance, Department of Financial Services awarded our Bank with Two Letters of Appreciation for publishing Tri-Language Glossary (English, Hindi & Punjabi) and for promoting Regional Languages. Some new and innovative experiments were made in Bank’s Magazine “Rajbhasha Ankur”. Besides Hindi, the Bank has encouraged Regional Languages in the magazine and this initiative has been richly complemented in banking industry. So far, material in Odiya, Bengali, Santhali and Assamese languages have been published with their Hindi versions. The Bank also had a unique initiative for its executives. "Aaj ka Shabd" and a line on Rajbhasha is being sent to all executives via SMS. During the financial year 2015-16, the Bank made significant progress in implementation of official language Policy of Govt. of India for promoting and propagating the use of Official Language in the Bank. A total of 60 workshops were organized, in which 847 staff members were trained. Besides this, in 672 Hindi Desk Training Programmes, 2938 staff members were imparted training for using official language and Unicode training on Computers. With the aim of reviewing the progress of Official Language, inspections were conducted in 732 Branches / offices. As per directions of MOF, Department of Financial Services “Mastishk - Manthan” Programmes were organized in 968 offices / branches of the Bank. SPORTS The following players of the Bank’s Hockey Team have represented the Country: Sh. Ramandeep Singh Sh. Harbir Singh Sh. Satbir Singh Sh. Prabdeep Singh Sh. Harjot Singh 6 players represented Indian Premier League 2016 from different teams, which was organized by Hockey India with the sponsorship of HERO Group. Sh. Sarvanjit Singh, Sh. Guriqbal Singh, Sh. Gautampal Singh, Sh. Vikramjit Singh represented Punjab state in National Games held at Kerala 2015. Sh. Baljit Singh Saini (Olympian) was appointed as Coach of Indian Women Hockey Team for 2015-16. Sh. Sanjeev Kumar (Olympian) was the Chief Coach of Punjab State Hockey team for National Games 2015 held at Kerala. GENERAL ADMINISTRATION The Bank is undertaking construction works/projects on its owned premises and is also involved in the procurement of assigned Goods/Services. Projects viz. Construction of Bank building at Gurgaon, Fort Mumbai and Noida have been completed and the offices/branches are functional in the said premises. The remaining projects are in their completion stages and the construction of Bank buildings at Rohini and Ranjit Nagar are likely to be completed in FY 2016-17. CONSTITUTION OF BOARD OF DIRECTORS As on 31st March 2016, the Board comprised of three Whole Time Directors viz Chairman & Managing Director and two Executive Directors besides seven other Directors including representatives from Ministry of Finance, Reserve Bank of India, two Share Holder Directors and three Part Time Non Official Directors. Various Committees constituted under the Board as listed below, oversee the functioning and control the affairs of the Bank: • Management Committee • Audit Committee • Risk Management Committee • Committee for Monitoring of Large Value Frauds • Vigilance Committee • Customer Service Committee • Stakeholders Relationship Committee • IT Strategy Committee • HR Committee • Committee of Board on Appellate/Reviewing Authority • Remuneration Committee • Committee of Board on Executives’ Promotion • Committee for Monitoring of Recovery • Election of Shareholders Director Committee Voting by Public Sector Bank During the year 2015-16, nine meetings of the Board of Directors, eleven meetings of the Management Committee and seven meetings of the Audit Committee of the Board were held, besides meetings of other Committees of the Board. The constitution of Bank’s Board of Directors underwent following changes during the year 2015-16: INCLUSIONS • Sh. A. K. Jain was appointed as Executive Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No. F.No. 4/5/2013-BO-I dated 15.12.2015. • Sh. Atanu Sen was nominated as Part Time Non Official Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/24/2015-BO-I dated 28.01.2016. CESSATIONS • Sh. Mahesh Kumar Gupta completed his term as CA Category Director on 29.01.2016 CORPORATE GOVERNANCE The Bank is committed to good Corporate Governance and is constantly striving to further strengthen the same to ensure greater transparency and better coordination at all levels in the Organization. The working of the Bank reflects transparent ownership structure, improved risk management practices, well defined delegation of powers, accountability and an elaborate audit function carried out by both its Inspection & Audit Division and by independent Statutory Central Auditors. Bank has complied with the guidelines of RBI and SEBI on the matters relating to Corporate Governance which have been examined by the Statutory Central Auditors. DIRECTORS’ RESPONSIBILITY STATEMENTS The Directors confirm that in the 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 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 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 and the accounts have been prepared on a going concern basis. STAUTORY AUDIT As approved by Reserve Bank of India, Bank has appointed M/s Dhillon & Associates, Chandigarh; M/s Tiwari & Associates, New Delhi; M/s Dhawan & Co., New Delhi and M/s Davinder Pal Singh & Co., Hoshiarpur as Statutory Central Auditors for the accounting year ended March 2016. ACKNOWLEDGEMENTS The Board of Directors of the Bank thanks valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and continued support. The Directors also acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges of various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank. The Directors place on record their deep appreciation for the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realization of the Corporate goals in years ahead. For and on behalf of Board of Directors Jatinderbir Singh Chairman & Managing Director Place: New Delhi Date: 10 May, 2016 |