On behalf of the Board of Directors the Management and employees of the Bank Iwelcome you all to the 14th Annual General Meeting of the Bank. At the outsetI take this opportunity to express my gratitude to each of our esteemed shareholders forextending their unstinted support all these years.
The financial year 2015-16 has been a year full of challenges in both global and Indianeconomy. Here I would like to enumerate briefly upon the macro-economic environment thatprevailed during the year as it had strong implications for the banking sectorsperformance.
1. GLOBAL ECONOMY :
The world GDP growth decelerated to 3.1% in 2015 from 3.4% in 2014. In 2016 the IMFexpects global uncertainties to prevail and projects a modest recovery in the worldsGDP growth at 3.2%. This will be primarily driven by emerging markets & developingeconomies. Uncertainty has increased & risks to weaker growth scenarios are becomingmore tangible. However decline in oil prices may boost demand in oil-importing countriesas prices are expected to remain lower for longer time.
Presently recovery of global economy remains too slow fragile with the risk thatpersistent low growth can have damaging effects on the social and political fabric of manycountries. Growth in advanced economies will be hampered by weak demand on account ofunresolved crisis legacies as well as unfavourable demographics and low productivitygrowth.
2. INDIAN ECONOMY:
Indias economic growth is projected to grow by 7.6% in FY16 However due toslowdown in public investment stressed corporate balance sheets and declining exportsgrowth could be hampered by these factors. GDP grew at an annual rate of 7.3% inDec15 quarter as compared to 7.4% in Sep15 quarter.
Consumer price inflation (CPI) has evolved along the RBIs projected trajectoryfor Jan16 and the target was met with a marginal undershoot. However in the monthof Apr16 CPI inflation rose to a three-month high of 5.4% due to a sharp rise infood prices. Stability in inflation is expected to continue in this year aided by stableoil prices in the near term and the overall positive sentiment in the domestic market inlieu of expectations of a normal monsoon. The RBI expects CPI inflation to deceleratemodestly and remain around 5% during 2016-17 with small variation.
Exports continued to decline for the seventeenth month in Apr16 by 6.7% due tofalling world prices for commodities including metal and petroleum products. It isexpected to remain weak due to continued moderation in growth in China and the generalslowdown in emerging market economies. Current account deficit (CAD) fell further to 1.3%of the GDP or its value stood at US$ 7.1 billion in the third quarter ending Dec15which is lower than US$ 8.7 billion or 1.7% of GDP in the preceding quarter.
Growth in the Index of Industrial Production (IIP) stood at 0.1% in Mar16 ascompared to 2.5% in the year ago period and 1.99% in the preceding month. The poorperformance of the index was on the back of contraction in both manufacturing and miningsector output.
Improvement in consumption demand in both urban and rural areas is expected to drivethe growth in manufacturing output while capacity additions and govt. initiatives arelikely to give a boost to the electricity and mining sectors. The Seventh Pay Commissionawards are expected to further bolster urban demand in FY17. Further prospects of normalmonsoon after two consecutive droughts are expected to prop up rural demand.
The uneven recovery in economic growth in FY16 is likely to strengthen gradually inFY17 assuming a normal monsoon due to the receding El Nino effect and also a boost inprivate consumption arising out of the implementation of the 7th Pay Commissionthe One Rank One Pension (OROP) and the continuing monetary policy accommodation. In thelight of these the RBI has projected the Gross Value Added (GVA) growth for FY17 at 7.6%with risks evenly balanced out. Asian Development Bank and IMF have forecast Indiasgrowth at 7.4% and 7.5% respectively in FY17.
For the fortnight ended 29th Apr16 credit growth stood at 9.2% ascompared to 10.5% in the same fortnight a year ago. Aggregate deposits Y-o-Y growth forSCBs as a whole declined to 9.3% during the same fortnight as compared to 12.3% in theyear ago period. In the current financial year (FY17) marginal improvement in consumersentiments is expected on account of normal monsoon implementation of 7th PayCommission and OROP. These will provide a fillip to credit demand as the industry will beon expansionary mode on the back of new orders including exports.
4. BANK'S PERFORMANCE :
I would now like to touch upon the highlights of your Banks performance for thefinancial year 2015-16:
4.1 Business Growth
Total business of your Bank reached a level of Rs.358352 crore as on 31stMar16 from Rs. 346519 crore as on 31st Mar15; showing a Y-o-Ygrowth of 3.41%.
Total deposits of the Bank went up by 3.73% to Rs.200644 crore as on 31stMar16 from Rs.193424 crore year ago. Gross credit of the Bank increased toRs.157707 crore from Rs.153095 crore last year. On a Y-o-Y basis it increased by 3.01%.
SB deposits registered a Y-o-Y growth of 11.72% and stood at Rs.62514 crore ason 31st Mar16 and constituted 31.49% of aggregate deposits. Your Bankcontinued to give importance to CASA deposits mobilization and special emphasis was givenon Savings Bank A/c opened per branch per day.
CASA share to aggregate deposits increased to 36.28% as on 31stMar16 from 33.75% in the preceding fiscal year. Total CASA outstanding during FY16stood at Rs.72041 crore thus clocking a Y-o-Y growth of 10.98%.
The operating profit of the Bank stood at Rs.4134 crore during FY16 comparedtoRs.4460 crore during the same period a year ago because of lower net interest income.
Fee income of the Bank during FY16 increased Y-o-Y by 7.30% and stood at Rs.1220crore as against Rs.1137 crore last fiscal year.
The Cost of deposits ratio came down from 7.11% in FY15 to 6.61% in FY16. z NetInterest Margin (NIM) stood at 2.65% in FY16 as against 3.10% during FY15.
Capital Adequacy Ratio improved to 11.02% as on 31st March 2016 underBasel III norms as compared to 10.45% as on 31st March 2015.
The Bank posted a net loss of Rs.743.31 crore in FY16 due to higher provisionsthat increased by 27.05% during the year.
4.3 Asset Quality
The Gross NPA to Gross Advances of your Bank stood at 9.76% and Net NPA to Net Advancesstood at 6.76% as on 31st March 2016. The Provision Coverage Ratio was at48.22% as on 31st March 2016.
The Board of Directors of your Bank have not recommended any dividend for FY16.
4.5 Offices & Branches
As on 31st Mar16 the Bank is having 3209 domestic branches and oneoverseas branch at Hong Kong. Out of 3209 domestic branches 1307 are at Rural 720 atSemi-urban 656 at Urban and 526 at Metropolitan Centres. A total of 108 new branches havebeen opened during the financial year 2015-16 out of which 50 are at Rural 31 at SemiUrban 20 at Urban and 7 at Metro centers. During the year six branches were merged.During the same period a total of 36 branches have been opened in unbanked areas therebycomplying with the RBI norms.
4.6 Retail Credit
Your Banks retail credit portfolio stood at Rs.25894 crore as on 31stMarch 2016 as against Rs.21723 crore a year ago thereby registering a Y-o-Y growth of19.20%. The share of retail credit portfolio against the gross credit has increased from14.19% in FY15 to16.42% in FY16. Housing Loan a key constituent under Retail Credit grewat a pace of 27.39%.
Going forward the Bank is looking at a growth of 20% in the retail credit portfolio.Also major thrust on loans having low capital requirement like housing loan gold loanetc will be given. The Bank has also opened an additional 9 Centralized Retail BankingBoutiques (CRBBs) at different centres during FY16. Your Bank has now a total of 55 CRBBsspread over different parts of the country catering to specified retail loans for quickand hassle free disposal.
4.7 Priority Sector
Priority sector advances of the Bank increased from Rs.53910 crore as on 31stMarch 2015 to Rs.62695 crore as on 31st March 2016 thereby registeringY-o-Y growth of 16.30%. The Bank has surpassed the norm of 40% of ANBC by reaching 42.69%of ANBC as on Mar16.
Agriculture Credit reached a level of Rs.26827 crore as on 31stMarch 2016 from Rs.24680 crore last year registering Y-o-Y growth of 8.70%. Here againthe Bank has achieved more than the 18% of ANBC norm.
4.8 Corporate Social Responsibility
During the financial year 2015-16 your Bank has spent a sum of Rs.1099.10 lacs underCSR activity that included an amount of Rs.210 lacs towards Swachch Bharat Kosh. We havealso effected scholarship for girl child in lead districts and scheme for providingelectric fans in govt. schools in lead districts. A donation of Rs.817 lacs was made toAll Bank Rural Development Trust for organising skill development programmes forunemployed rural youths & imparting finance literacy to the rural masses.
4.9 Financial Inclusion (F.I.)
Your Bank remains committed to implementation of Financial Inclusion initiatives. Ithas successfully achieved all annual targets set under FI. Your Bank has achieved fullcoverage of the allotted 4580 Sub-Service Areas (SSAs) which has been completed bydeploying 4355 Bank Mitras and covering the remaining 225 SSAs through branches.
4.10 Progress under PMJDY & Social Security Schemes
A total of 44.24 lacs accounts has been opened under PMJDY having outstandingbalance of Rs.461.12 crore as on 31st March 2016.
Since its inception the Bank has mobilized 0.54 lac proposals under AtalPension Yojana (APY) as on 31.03.2016 out of which monthly installment of APY has beenremitted to the PFRDA for 0.37 lac customers involving an amount of Rs.170.89 lac up to31.03.2016.
Under PMSBY insurance premium has been remitted to insurer for 18.14 laccustomers involving an amount of Rs.2.18 crore and under PMJJBY it stood at 5.77 laccustomers for an amount of Rs.16.69 crore up to 31.03.2016.
4.11 Overseas Presence
The Bank is having one overseas branch with a dealing room at Hong Kong. The Businessof Hong Kong branch has increased from Rs.10420 crore as on 31.03.2015 to Rs.12519 croreas on 31.03.2016. The Hong Kong branch has earned operating profit of Rs.119.31 crore andnet profit of Rs.44.63 crore in FY16.
4.12 Network & Delivery Channels
Your Bank has made live 185 onsite & 2 offsite e-lobbies 97 mini e-lobbies54 cash deposit kiosks & 43 passbook printing kiosks covering 381 branches in FY16.
The Bank has deployed 42 new ATMs in FY16 and total number of ATMs is 1212 as on31.03.2016.
For opening of account e-KYC facility has been implemented for customerverification without any paper documents. Aadhaar Enabled Payment System(AEPS) for on-us& off-us transaction and RuPay ATM card acceptance at all BC locations have been madeoperational.
Your Banks Internet Banking application has been enhanced with newfacilities like on-line generation of Transaction Password & ATM PIN Card Hotlisting scheduling of Funds Transfer IMPS e-filing of Income tax returns SBI e-payintegration mobile banking registration etc.
New facilities have been provided at branches viz. on-line PAN verificationinstant fund transfer through IMPS introduction of Sovereign Gold Bond Scheme SMS alertbefore debiting the account for cheques presented in CTS.
4.13 New Initiatives
Your Bank has launched RuPay Platinum Debit Card (International) with higherlimits of withdrawals at ATMs (Rs.1.00 lac per day) PoS and e-commerce site (Rs.2.00 lacper day). Accidental insurance coverage of Rs.2.00 lac is also provided by NPCI in thiscard.
Tie-up with Travel aggregator GoIbibo for providing cash discountsat the time of booking train & flight tickets and hotel bookings by the customers ofthe Bank in their portal through alternate delivery channels of the Bank viz. debit cardsand internet banking. z EzeeWill: The Bank has tied up with M/s NSDL e-GovernanceInfrastructure Ltd. for providing the Will preparation services wherein the customers ofthe Bank can get their Will prepared online.
The Bank has signed a MoA with NSFDC for claiming refinance for on-lending toScheduled Caste borrowers at concessional rate of interest having family income less thandouble the poverty line which presently is Rs.98000 p.a. for rural and Rs.120000 p.a.for urban areas.
4.14 Human Resource Development
Your Bank has continued with its focus on overall development of its human assetsthrough manpower planning knowledge enrichment capacity building promotion & careerprogression staff welfare etc. to maintain a high level of productivity. During FY161349 officers/ employees have been recruited by the Bank which includes 166 officers(including specialist officers) 620 clerks and 563 sub-ordinate staff. This has helped tomaintain the average age of workforce at 40.20 years as on 31st Mar16one of the lowest amongst public sector banks.
4.15 Awards & Accolades
Your Bank has been awarded "Second Prize" by Ministry of RuralDevelopment Govt. of India for overall performance of RSETIs. RSETI Sitapur has alsobeen given "Second Prize" in individual category.
Your Bank has also been conferred runner up award for Best MSME Bank & BestEco-Tech Savvy Bank in Mid-sized Bank category for the year 2015 by CIMSME.
The Bank has been ranked "above average" by BCSBI. Within 26 PSBsyour Bank has been ranked 7th.
5. Way Forward & Future Strategies
Global agencies like IMF World Bank etc. have identified India as a bright spot asIndia is projected to overtake China as the fastest growing economy in the near future.Therefore with optimism surrounding Indias economic scenario the banking sectorwill also recover from its present state of tepid credit growth and rising stressedassets. Enhanced spending on infrastructure speedy implementation of projects andcontinuation of reforms are expected to provide further impetus to growth suggesting thatthere will be robust need for credit.
In the above backdrop your Bank will adopt a three-pronged strategy i.e. Recovery ofoverdues achieving healthy growth in retail advances and mobilizing CASA deposits onliability side with emphasis on savings bank accounts.
At the end I would like to place on record the valuable contributions made by theBoard. The Bank is also grateful to the Reserve Bank of India Government of India andother regulatory authorities and financial institutions for their co-operation strongsupport and invaluable guidance. The Board also expresses its deep sense of appreciationfor the commitment shown by the employees in supporting the Bank in its performance in allfronts. Lastly the Board places on record its sincere thanks to its valued customers andshareholders for their continued patronage.
I look forward to your continued support. Thank you.
(Chairman & Managing Director)