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Allahabad Bank.

BSE: 532480 Sector: Financials
NSE: ALBK ISIN Code: INE428A01015
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OPEN 68.50
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VOLUME 441476
52-Week high 88.25
52-Week low 39.50
P/E
Mkt Cap.(Rs cr) 5216.99
Buy Price 70.15
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Sell Price 0.00
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OPEN 68.50
CLOSE 67.90
VOLUME 441476
52-Week high 88.25
52-Week low 39.50
P/E
Mkt Cap.(Rs cr) 5216.99
Buy Price 70.15
Buy Qty 69.00
Sell Price 0.00
Sell Qty 0.00

Allahabad Bank. (ALBK) - Director Report

Company director report

1. ECONOMIC SCENE IN FY16 & OUTLOOK FOR FY17

1.1 OVERVIEW OF INDIAN ECONOMY & OULTOOK

Economic growth is projected to dip marginally in FY16 due to slowdown in publicinvestment stressed corporate balance sheets and declining exports. GDP grew at an annualrate of 7.3% in Dec'15 quarter as compared to 7.4% in Sep'15 quarter and for FY16 it isprojected at 7.6%.

Consumer price inflation (CPI) has evolved along the projected trajectory by the RBIfor Jan'16 and the target was met with a marginal undershoot. It fell to a six-month lowof 4.83% in Mar'16 from 5.18% in the previous month. Stability in inflation is expected tocontinue during this year aided by stable oil prices in the near term and the overallpositive sentiment in the domestic market in lieu of expectations of a normal monsoon. TheRBI expects CPI inflation to decelerate modestly and remain around 5% during 2016-17 withsmall variations.

Exports continued to decline for the sixteenth month in Mar'16 by 5.5% due to fallingworld prices for commodities including metal and petroleum products. It is expected toremain weak due to continued moderation in growth in China and the general slowdown inemerging markets economies.

Current account deficit (CAD) fell further to 1.3% of the GDP or its value stood at US$7.1 billion in the third quarter ending Dec'15 which is lower than US$ 8.7 billion or1.7% of GDP in the preceding quarter.

After three straight months of fall the Index of Industrial Production (IIP) posted amodest expansion of 1.99% in output in Feb'16 as compared to -1.48% in the previous month.Improvement in consumption demand in both urban and rural areas is expected to drive thegrowth in manufacturing output while capacity additions and govt. initiatives are likelyto give a boost to the electricity and mining sectors. The Seventh Pay Commission awardsare expected to further bolster urban demand in FY17. Further prospects of normal monsoonafter 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 from the implementation of the 7th Pay Commission and the OROP andalong with the continuing monetary policy accommodation. In the light of these the RBIhas projected the GVA growth for FY17 at 7.6% with risks evenly balanced out. AsianDevelopment Bank and IMF have forecasted India's growth at 7.4% and 7.5% respectively inFY17.

Additional steps in relaxing long-standing supply bottlenecks especially in the miningand power sectors as well as further labour market reforms to increase labour marketflexibility in the formal sector will be crucial in achieving faster and more inclusivegrowth. Higher levels of public infrastructure investment and government measures toreignite investment projects would help crowd-in private investment.

1.2 OVERVIEW OF GLOBAL ECONOMY & OUTLOOK

In 2015 global economic activity remained subdued. Growth in emerging market anddeveloping economies while still accounting for over 70% of global growth- declined forthe fifth consecutive year though a modest recovery continued in advanced economies.Three key transitions continue to influence the global outlook: (1) the gradual slowdownand rebalancing of economic activity in China away from investment and manufacturingtoward consumption and services (2) lower prices for energy and other commodities and(3) a gradual tightening in monetary policy in the United States.

Overall financial conditions within advanced economies remained very accommodative.Prospects of a gradual increase in policy interest rates in the United States as well asbouts of financial volatility amid concerns about emerging market growth prospects havecontributed to tighter external financial conditions declining capital flows and furthercurrency depreciations in many emerging market economies.

The baseline projection for global growth in 2016 is a modest 3.2 percent broadly inline with last year and a 0.2 percentage point downward revision relative to the January2016 World Economic Outlook Update. The recovery is projected to strengthen in 2017 andbeyond driven primarily by emerging market and developing economies as conditions instressed economies start gradually to normalize. But uncertainty has increased and risksof weaker growth scenarios are becoming more tangible. The fragile conjuncture increasesthe urgency of a broad-based policy response to raise growth and manage vulnerabilities.

Commodity markets pose two-sided risks. On the downside further declines in commodityprices would worsen the outlook for already-fragile commodity producers and increasingyields on energy sector debt threaten a broader tightening of credit conditions. On theupside the recent decline in oil prices may provide a stronger boost to demand by oilimporters than currently envisaged including consumers' possible perception that priceswill remain lower for longer.

1.3 BANKING OVERVIEW & OUTLOOK

The RBI in its first bi-monthly policy 2016-17 announcement has introduced a slew ofmeasures to address the liquidity condition in the banking system apart from reducing therepo rate by 25 bps from 6.75% to 6.50%. The change in stance on maintaining liquiditycloser to a neutral position rather than a deficit and the halving of the policy ratecorridor would also aid in softening interest rates at least in the short term.

The reduction in small savings rates by the central government has brought them at parwith the term deposit rates offered by the banks. This will help banks to reacquireaccounts especially that of pensioners and new customers as well. Also substantialrefinements in the liquidity management framework and the introduction of marginal cost offunds based lending rate (MCLR) is expected to improve policy transmission. Your Bank hasalready implemented the MCLR framework.

Aggregate deposits Y-o-Y growth for SCBs as a whole declined to 9.91% as on 18th Mar'16from 11.03% a month ago. On the other hand credit off take marginally slowed by 11.34% inthe same period from 11.62% a month ago. In the current financial year (FY17) marginalimprovement in consumer sentiments is expected on account of normal monsoon which willboost rural demand and implementation of 7th Pay Commission and OROP. These measures willprovide a fillip to the industry to continue in expansionary mode on the back of neworders including exports.

The Indian economy is on the brink of a major transformation with several policyinitiatives set to be implemented shortly. Enhanced spending on infrastructure speedyimplementation of projects and continuation of reforms are expected to provide furtherimpetus to growth. All these factors suggest that banking sector is also poised for robustgrowth as the rapidly growing business would turn to banks for their credit needs.

2. PERFORMANCE OF ALLAHABAD BANK

The performance of the Bank is to be analyzed concomitantly with the aforesaidmacroeconomic and banking environment during FY16.

2.1 OPERATING RESULTS

The Bank's performance in key business parameters is presented below:

Parameter Mar’14 Mar’15 Growth (%) Mar’16 Growth (%)
(Y-O-Y)
Total Business 331748 346519 4.45 358352 3.41
Total Deposits 190843 193424 1.35 200644 3.73
Total Advances 140905 153095 8.65 157707 3.01
Gross Investments 64348 55283 (14.08) 56034 1.36
Net Profit 1172 620.90 (47.02) (743.31) (219.71)
Operating Profit 4020 4460 10.93 4134 (7.31)
Operating Profit Ex. Trading Profit 3733 3890 4.21 3720 (4.37)
Provisions & Contingencies 2848 3839 34.77 4877 27.05
Total Income 20913 21712 3.82 20795 (4.22)
Total Expenditure (Excl. Prov.) 16892 17252 2.13 16661 (3.43)
Interest Spread 5311 6178 16.32 5898 (4.52)

2.2 PERFORMANCE HIGHLIGHTS

• Total business of the Bank increased to Rs. 358352 crore as on March 2016 asagainst Rs. 346519 crore in previous year registering a Y-o-Y growth of 3.41%.

• Operating profit stood at Rs. 4134 crore as on Mar'16.

• Total deposits of the Bank increased to Rs. 200644 crore during Mar'16 fromRs.193424 crore last year thereby registering a Y-o-Y growth of 3.73%.

• Gross credit surged to Rs. 157707 crore during Mar'16 from Rs. 153095 crorelast year. On a Y-o-Y basis it increased by 3.01%.

• Credit- Deposit ratio stood at 79.43% as on March 2016.

• Retail credit surged to Rs.25894 crore recording a Y-o-Y growth of 19.20%.

• Non-Fund Non-Interest Income during FY16 stood atRs. 1220 crore as againstRs.1137 crore last year.

• Capital Adequacy Ratio stood at 11.02% as on 31.03.2016 under Basel III norms.

2.3 CAPITAL & RESERVES

During FY16 the Bank has issued and allotted equity shares of face value of Rs.10 eachas under:

Sl. No. No. of Equity Shares allotted Issue price per share (Rs.) Share Premium per Share (Rs.) Allotted to Allotted on Capital infused (Rs. crore)
1. 29181274 96.98 86.98 Govt. of India 30.09.15 283.00
2. 13244282 43.42 33.42 LICI 31.03.16 57.51

Consequently paid up capital of the Bank has increased to Rs. 613.80 crore andshareholding of the Govt. of India (GOI) stood at 61.38% as on 31.03.2016.

Further the Bank has received an amount of Rs. 690 crore from GOI on 30.03.2016towards their further capital infusion in the Bank for FY16 by way of preferentialallotment of equity in favour of GOI. As preferential issue & allotment of shares toGOI against their said capital infusion has to be made in compliance with the SEBI (Issueof Capital & Disclosures Requirements) Regulations 2009 the Bank is maintaining thecapital infusion fund received from the GOI as "Share Application Money pendingallotment" as on 31.03.2016. However with specific permission of RBI vide theirletter DBR. No. BP. 12713/ 21.01.002/2015-16 dated 06.04.2016 the Bank has included theentire amount of capital infusion fund received from GOI on 30.03.2016 into its CommonEquity Tier 1 (CET 1) capital as on 31.03.2016.

The reserves and surplus went up to Rs.13450.23 crore as on 31.03.2016 fromRs.12071.40 crore as on 31.03.2015.

2.4 DIVIDEND

The Board of Directors have not recommended any dividend for FY16.

3. BUSINESS OVERVIEW

The Bank's total business reached a level of Rs. 358352 crore as on 31.03.2016thereby registering a Y-o-Y growth of 3.41% and an absolute increase of Rs. 11832 Crore.

3.1 DEPOSIT MOBILISATION

Total deposits of the Bank showed a growth of 3.73% to Rs. 200644 crore as on31.03.2016 as against a growth of 1.35% a year ago. Although the Bank has continued toshed part of high cost bulk deposits and CDs during FY16 still it could register a higherY-o-Y growth as against the previous year. SB deposits grew by 11.72% to Rs. 62514 croreas on 31.03.2016 constituting 31.49% of aggregate deposits. The Bank lay emphasis on CASAdeposits mobilization especially on Savings Bank A/c opened per branch per day as resultof which CASA ratio improved to 36.28% as on 31.03.2016.

3.2 CREDIT DEPLOYMENT

Total advances of the Bank went up by 3.01% to Rs. 157707 crore as on 31.03.2016.Credit-Deposit ratio stood at 79.43% as against 79.60% last financial year. Your Bank hasadopted the Marginal Cost of Funds Based Lending Rate which will be the internalbenchmark to calculate interest on advances as per RBI guidelines w.ef. 01.04.2016. Yieldon advances for the Bank stood at 10.01% as on 31.03.2016 as against 10.91% during lastfiscal.

The Bank has major thrust on faster delivery and adoption of best practices in creditadministration. During the year efforts were made to improve the speed of decision makingwithout compromising on quality. As a part of its ongoing business strategy to improve thequality of assets the Bank analyzes the prevailing position problems foreseen in nearfuture and identifies weaknesses/ potential defaults at any stage. This enables the Bankto take corrective steps to prevent impairment in credit quality which includesrestructuring in deserving cases.

3.2.1 RETAIL CREDIT

The portfolio under Retail Credit as on 31.03.2016 stood at Rs. 25894 crore as againstRs. 21723 crore a year ago registering Y-o-Y growth of 19.20%. The Bank gave thrust onretail lending in FY16. As a result the share of retail credit portfolio against GrossCredit increased to 16.42% in FY16 from 14.19% during last fiscal. Housing Loan a keyconstituent under Retail Credit grew at 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 continue to be given. The Bank has also opened additional 9 Centralized RetailBanking Boutiques (CRBBs) at different centres during FY16. Your Bank has now a total of55 CRBBs spread over different parts of the country specially catering to specified retailloans for quick & hassle free disposal.

3.2.2 PRORITY SECTOR CREDIT

• Priority Sector Credit increased to Rs.62695 crore as on 31.03.2016 fromRs.53910 crore as on 31.03.2015 registering Y-o-Y growth of 16.30%. The Bank hascomfortably achieved the norm of 40% of ANBC by reaching 42.69% of ANBC as on Mar'16.

• Agriculture Credit increased from Rs.24680 crore as on Mar' 15 to Rs.26827crore as on Mar'16 registering an absolute Y-o-Y growth of 8.70%. Bank has achieved18.27% of ANBC as on Mar'16.

• The Bank's performance under Priority Sector and Weaker Sections as on31.03.2016 is presented below:

Sub-Sector Mar 2015 Mar 2016 Growth (Y-O-Y) March 16 Over March '15
Amt.(Rs.) Amt.(Rs.) mt.(Rs.) %
Total Agriculture (% to ANBC) 24680 26827 2147 8.70
(Norm 18%) (18.11%) (18.27%)
Micro Small & Medium Enterprise (MSME) 22359 27798 5439 24.33
Other PSC 6871 8070 1199 17.45
Total PSC (% to ANBC) 53910 62695 8785 16.30
(Norm 40%) (39.56%) (42.69%)
Weaker Section (% to ANBC) 14307 19972 5665 39.60
(Norm 10%) (10.50%) (13.60%)
Women Beneficiaries (% to ANBC) 6949 9869 2920 42.02
(Norm 5%) (5.10%) (6.72%)

3.2.3 RUPAY KISAN CARDS ( RKC )

• A sum of Rs.5641 crore was disbursed by the Bank during FY16 in 5.69 lacs numberof KCC accounts out of which disbursal of Rs.2359 crore was made in 1.74 lacs fresh KCCaccounts.

• Bank is now processing all KCC loan applications under Akshay Krishi-KisanCredit Card Scheme digitally.

• RuPay Kisan Card providing ATM facility in KCC accounts has been launched on09.02.2013. As per instructions of Government of India the Bank has started issuing RuPayKisan Cards to all eligible KCC account holders.

• Bank has issued 575271 Cards during this Financial Year.

3.2.4 MSME SECTOR FINANCING

Credit to MicroSmall and Medium Enterprises (MSME) grew from Rs. 22359 crore as onMarch 2015 to Rs. 27798 Crore as on March 2016 registering an absolute Y-o-Y growth ofRs. 5439 crore (24.33%).

3.2.5 COLLATERAL FREE LOANS VIS-A-VIS COVERAGE

UNDER CGTMSE

The Bank has given much thrust on (credit delivery) to collateral free loans coveredunder CGTMSE. As on 31.03.2016 collateral free loans to Micro and Small Enterprises underCGTMSE was Rs.1653 Crore.

3.2.6 BANK'S EXPOSURE TO MICRO FINANCE

INSTITUTIONS (MFIs)

As on 31.032016 total outstanding credit to MFI is Rs.98.83 crores in 13 MFIaccounts.

3.2.7 LEAD BANK SCHEME:

• Bank is having Lead Bank responsibility in 17 districts 13 in Uttar Pradesh 2in Jharkhand and one each in Madhya Pradesh and West Bengal. z The Bank disbursed Rs.4053crore under Priority Sector Credit against a target of Rs.4161 crore under District CreditPlan 2015-16 achieving 97.40% of the target.

• As Lead Bank your Bank took initiatives in implementing all State and CentralGovernment programmes including PMJDY APY & other social insurance schemes.

3.2.8 Pradhan Mantri MUDRA Yojana

Under the scheme Bank has disbursed total Rs.1768 crore in 160041 accounts as on31.03.2016.

3.2.9 School Bank Champ Project

Under the project total 2557 schools have been mapped by our Bank across pan India.The Bank has organized 2489 literacy camps under the project and opened 85400 childrenaccounts as on 31.03.2016.

3.3 FEE BASED INCOME

The Bank has earned fee based income of Rs.1220 crore in March 2016 as compared toRs.1137 crore last year registering a growth of 7.32%. The Bank has achieved 86% of itstotal budget of earnings from TPP in March 2016. The total income across services likeTPP DP & online trading and CMS has amounted to Rs. 28.04 crore in Mar'16 as comparedto Rs. 24.58 crore in Mar'15.

3.4 OFFICES & BRANCHES

The Bank is having 3209 domestic branches and one overseas branch at Hong Kong. Out of3209 domestic branches 1307 are at Rural 720 at Semi-urban 656 at Urban and 526 atMetropolitan Centres. A total of 108 new branches have been opened during FY16 out ofwhich 50 are at Rural 31 at Semi Urban 20 at Urban and 7 at Metro centers. The ruralbranches includes opening of 36 branches in unbanked rural centres. Further 6 Metrobranches have been merged to consolidate business of close by located centres.

3.5 INTERNATIONAL BANKING

The Bank carries out its international business in India through its 53 authorised/designated branches which includes five international branches & through its overseasbranch at Hong Kong. The Bank also has a centralised fully equipped forex dealing room atFCTM Branch Mumbai which handles forex transactions in 9 currencies and maintains 14Nostro accounts and 1 Vostro account. Export Credit of the Bank as on 31.03.2016 stood atRs. 2539.80 crores. The Bank is taking all steps to increase the credit flow to exporters.Exporters' meets are arranged at various centres to explain various facilities availableto them. The Bank maintains correspondent relationship with prime banks abroad. The Bankis also catering to the needs of Non-Resident Indians through its branches.

3.6 OVERSEAS PRESENCE

Bank is having one overseas branch with a dealing room at Hong Kong. The business ofHong Kong has increased from Rs.10420 crore as on 31.03.2015 to Rs.12519 crore as on31.03.2016. The Hong Kong branch has earned operating profit of Rs. 119.31 crore and netprofit of Rs. 44.63 crore in FY16.

4. FINANCIAL INCLUSION

Pradhan Mantri Jan Dhan Yojona (PMJDY) was launched on 28.08.2014 with basic objectiveof achieving inclusive growth in Mission Mode through the following Six Pillars:

Pillar-1: Universal access to Banking facilities

• The Bank was allocated 17732 villages across the country for coverage bydeploying Bank Mitra in these villages. These villages have been regrouped into 4580 SubService Areas (SSAs). Each SSA comprises of 2 to 6 villages based on population of thesevillages i.e. maximum 5000-6500 population within a radius of 5 Km area.

• These 4580 SSAs has been fully covered by our Bank by deploying 4355 Bank Mitrasand covering remaining 225 SSAs through Branches.

Pillar-2: Financial Literacy Programme

• The Bank provides financial literacy through Financial Literacy Centers (FLC)located in all our Lead Districts and camps are organized at regular intervals through FLCcounsellors.

• Financial Literacy is also provided by Bank Mitra located in villages throughtheir Kiosks various meetings and camps are also organized to educate rural population.

Pillar-3: Providing Basic Banking Accounts z A total of 21.84 lac account holderswho were not having bank accounts (out of 56.24 lac household falling under the villagesand wards allocated to our Bank.) were covered by Bank as on 31.12.2014. z Status ofopening of PMJDY accounts as on 31.03.2016 is as under:

Particulars 31.03.2015 31.03.2016 % Variation
1. No. of A/Cs opened under PMJDY (in lac) 27.69 44.24 59.77%
2. Balance in A/Cs (Rs. in crore) 114.96 461.12 301.11%
3. No. of A/Cs with balance (in lac) 12.33 35.44 187.43%
4. No. of account with zero balance (in lac) 15.36 8.80 (-)42.71%
5. % of Zero Balance accounts 55.47% 19.89% (-)35.58%

Pillar-4: Micro Credit Availability

Status of Overdraft facility to PMJDY customers is as under:

Eligible A/Cs OD Sanctioned OD Availed A/C OD Availed Amt (Lac)
120663 44487 28115 897.87

Pillar-5: Micro Insurance (PMJJBY & PMSBY)

• Social Security Schemes (SSS) viz. Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) were launched on 09.05.2015 byHon'ble Prime Minister of India in Kolkata.

• Insurance Premium has been remitted to the Insurer for 18.14 lac customersinvolving amount of Rs.2.18 crore under PMSBY and for 5.77 lac customers involving amountof Rs.16.69 crore under PMJJBY up to 31.03.2016.

Pillar-6: Unorganised Sector Pension schemes like Atal Pension Yojana (APY) z APYwas also launched with other two Social Security Schemes (SSS) viz. PMJJBY and PMSBY. zSince inception we have mobilized 0.54 lac proposals under APY as on 31.03.2016 out ofwhich monthly installment of APY has been remitted to the PFRDA for 0.37 lac customersinvolving amount of Rs. 170.89 lac up to 31.03.2016.

5. NON-PERFORMING ASSETS (NPA) MANAGEMENT

The Gross NPA and Net NPA stood at Rs.15385 crore and Rs.10293 crore as on 31.03.2016respectively. The Gross NPA ratio stood at 9.76% and Net NPA ratio stood at 6.76% as on31.03.2016. The provision coverage ratio was 48.22% as on 31.03.2016.

6. CREDIT MONITORING & RESTRUCTURED DEBTS

A separate vertical headed by General Manager (Credit Monitoring) has been functioningat Head Office level for close monitoring and supervising the Bank's loan assets. TheDepartment alerts guides and follows up with the field functionaries for retaining theasset quality preventing down gradation and slippages and advises suitable measures /corrective actions in case of delinquent assets. In order to maintain stringent monitoringover large borrowal accounts in the Banking system (Rs. 5.00 crore & above) ReserveBank of India introduced reporting of SMA-2 Accounts to Central Repository of Informationon Large Credits (CRILC) w.e.f. April 2014 which is being meticulously complied by theBank including formation of Joint Lenders' Forum (JLF) in eligible cases and resolving thedelinquency issues through adoption of suitable Corrective Action Plan (CAP).

6.1 RESTRCUTURED DEBT

Towards revitalizing the distressed assets per guidelines from the Reserve Bank ofIndia the gross restructuring of debts has been considered by Bank as under:

Type of Restucturing No. of cases 31.03.2016
Amount Outstanding %to Gross Credit Sacrifice
CDR cases 29 3678.94 2.33 230.68
Non-CDR Cases 5287 4653.78 2.95 79.62
Non-CDR SME debt 1022 647.20 0.41 6.14
Non-CDR Others 4265 4006.58 2.54 73.48
Total Restructuring 5316 8332.72 5.28 310.30

The quantum of restructured debts is 5.28% of Gross Credit as on 31.03.2016 as against10.92% as on 31.03.2015.

7. GOVERNMENT BUSINESS

In response to the Prime Minister's mission of "Jan Dhan se Jan Suraksha"the Bank extended the coverage area for APY by getting authorization of 3163 branchesduring the FY16 in order to address the old age income security needs of the citizen in anaffordable manner.

During FY16 Bank participated in three tranches of Sovereign Gold Bond Schemelaunched by Govt. of India aiming to reduce the holding of the yellow metal and also toreduce import of Gold.

Central Government's initiative of rationalisation of Defence Pension through OROP hasbeen implemented by the Bank in Feb'16 to all the eligible pensioners.

During the FY16 we have started many processes on e-platform doing away with physicalprocess and made changes in the existing e-applications viz. IFMIS of MP

Government Integration of internet banking with Bharat Kosh Portal TNIGRS online andoffline for TN Government Property Tax collection for Municipal Corporation of GurgaonCollection on behalf of EPFO etc.

8. PUBLICITY ENDEAVOURS

The Bank has gone for nation-wide campaign in newspapers/ magazines hoardings whereinretail products and Bank's rich legacy were popularized. Small campaigns were alsoundertaken in radio and television.

9. CORPORATE SOCIAL RESPONSIBILITY

During FY16 the Bank has spent a sum of Rs. 1099 lacs under CSR activity. The detailsare as under:

Particulars Amounts(Rs. in lacs)
All Bank Girl Child Scholarship Scheme in Lead Districts 55
Scheme for providing Electric Fans in Govt. Schools of Lead Districts 12
Swachh Bharat Kosh 210
Udayan Care-Udayan Ghar 5
Donation to All Bank Rural Development Trust 817
Total 1099

10. INFORMATION TECHNOLOGY: CBS & ALTERNATE DELIVERY CHANNELS

• Under Financial Inclusion Project the Bank has provided Banking Facilitiesthrough Online Inter-operable Kiosk Banking Solution at 5041 BC locations using MicroATMs.

• 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.

• Bank's Internet Banking Application has been enhanced with new facilities andlook & feel. Facility for on-line generation of Transaction Password & ATM PINCard Hot listing scheduling of Funds Transfer IMPS e-filing of Income tax returns SBIe-pay integration mobile banking registration etc. have been introduced.

• Bank has deployed 42 new ATMs in FY16 and total ATM count is 1212 as on31.03.2016.

• The Bank has launched new variants of RuPay cards viz RuPay Platinum MUDRA andPUNGRAIN during FY16.

All RuPay cards are enabled for POS & e-Commerce transactions. Bank has introducedInsta PIN facility to provide ATM PIN instantly to customers in case of urgency. EMV Chipbased card has been introduced for RuPay and VISA cards.

• Mobile Banking system has been enhanced with new features like IMPS for instantfunds transfer and instant recharge of DTH & Mobile.

• New facilities for enhanced customers' experience have been provided at branchesviz. on-line PAN verification instant fund transfer through IMPS introduction ofSovereign Gold Bond Scheme SMS alert before debiting the account for cheques presented inCTS.

10.1 e-DELIVERY

• Growth in Mobile Banking Registration increased from 1.48 lac as on 31.03.2015to 10.87 lac as on 31.03.2016 during FY16.

• Increase in IMPS transactions approx. by 179% from Mar'15 to Mar'16 therebyincreasing NFNI income of Bank from Rs. 7.49 lac in Mar'15 to Rs. 54.03 lac in Mar'16(increase of 620%).

• Internet Banking increased to 5.57 lac from 3.55 lac (increase 46.88%) in FY16.

• Customer base for Debit Cards grew to 98.50 lac from 67.06 lac (increase of46.88%) during FY16

• Increase in percentage of electronic mode transaction over manual transactions.i.e; from 15.90% to 30.28%.

• The Bank has made live 185 onsite e-Lobbies 2 offsite e-Lobbies 97 minie-Lobbies 54 Cash Deposit Kiosks and 43 Pass Book Printing Kiosks covering 381 branches.

• To create awareness amongst bank staff regarding various alternate deliverychannels with specific emphasis on Mobile Banking classes in Staff Training College(STC)/workshops were conducted pan India.

11. BUSINESS PROCESS RE-ENGINEERING (BPR)

Business Process Re-engineering (BPR) Cell is functioning with the purpose of bringingdesired changes in the existing systems and processes products and business of the bankon a continuous basis for maximizing performance mainly productivity and efficiency.

In order to provide better customer service the Bank has taken up actions/ introduced/amended its business processes during the reporting year 2015-16.

12. AUTOMATED DATA FLOW (ADF)

In line with RBI requirements ADF cell has developed in-house project and establishedan automated system of creation and updation of Centralized Data Repository (CDR) byseamless data flow from various sources. Accordingly reports are now generated withoutany manual interventions.

13. RISK MANAGEMENT

The Bank has put in place comprehensive and well-defined policies & procedures inaccordance with the guidelines prescribed by the regulator for identification monitoringand mitigating the risks associated with business of the Bank.

The risks are managed through a well defined risk management architecture functioningat Head Office which also takes measures to enhance risk management capabilities acrossthe Bank. The overall risk undertaken by the Bank is monitored at the top most level ofthe Board of Directors. Various subcommittees viz. Risk Management Committee (RMC) of theBoard Asset-Liability Management Committee (ALCO) Credit Risk Management Committee(CRMC) Operational Risk Management Committee (ORMC) and Market Risk Management Committee(MRMC) have been formed to review various aspects of risk arising from the businessesundertaken by the Bank. The Bank has also put in place the Internal Capital AdequacyAssessment Process (ICAAP) for assessing significant risks associated with variousbusinesses. The Bank continues to focus on refining and improving its risk measurementsystems not only to ensure compliance with regulatory requirements but also to ensurebetter risk-adjusted return and optimal capital utilization.

14. HUMAN RESOURCE DEVELOPMENT

With a stable human resource policy in place your Bank is constantly endeavouring toensure availability of personnel well equipped with requisite skill sets and exposure tocope up with present day challenges arising from the continued higher trend of retirementson superannuation in the Bank. Your Bank has adopted balanced strategy to create acomposite and responsible human resource that can adequately meet the present daychallenges in the -Bank. The Bank has continued with its focus on overall development ofits human assets through manpower planning knowledge enrichment capacity buildingpromotion & career progression staff welfare etc. to maintain a high level ofproductivity.

14.1 RECRUITMENT & MANPOWER MIX

Your Bank's Human Resource Department has continued with its need based approach ininfusing new recruits to the system to maintain the optimal strength of the existingmanpower. During FY16 total 1349 officers/employees have been recruited by the Bankwhich includes 166 officers (including specialist officers) and 620 SWO-A in clericalcadre. This has helped to maintain the average age of workforce which stood at 40.20years as on 31.03.2016 and is one of the lowest in the public sector banks. Further theBank is in the process

14.2 Manpower Mix Of The Bank Is As Under:

Category As on 31.03.2015 As on 31.03.2016
Officer 12771 12641
Clerk 7289 6909
Sub-staff (including part-time sweepers) 4171 4587
Total Manpower 24231 24137
Out of which
Scheduled Castes 6270 6502
Scheduled Tribes 1748 1825
Other Backward Class 3907 4363
Women 4253 4432
Others (MC PH & XSM) 2204 2287

of recruiting 685 officers (including specialist officers) and 839 SWO-A during FY17.This is in addition to two compassionate appointments made in the clerical cadre onaccount of death of employees while in service and considered under the Scheme forCompassionate Appointment introduced during the last year in the light of directivereceived from the Government of India.

SC/ST and OBC Cells are set up in the Bank at Head Office and Zonal Offices under theChief Liaison Officer and the Liaison Officers respectively. Besides dealing with thegrievances of SC/ST and OBC employees of the Bank the Cells look after the implementationof Government guidelines issued from time to time in this regard.

14.3 LEARNING & DEVELOPMENT

Keeping in tune with the corporate priorities Recovery and Retail Banking have beenthe prime focus areas in capacity building during FY16. With a view to reaching out tovarious cross sections of employees the training programmes were conducted for carefullyselected target groups viz. new recruits first time Branch Managers new promoteesofficers who have not undergone any training programme in the last three years POs(Refresher course) Promotee officers (Refresher course) and Clerical staff who have notundergone training in the last one year. Exclusive credit programmes were two pronged: onetargeted for Branch Heads and the other for officers in second line or iSMART officers.

During the aforesaid financial year 4984 number of officers and 1465 number ofClerical staff were trained through our in-house training establishments.

Short duration programmes of one/two days were conducted by faculties of our TrainingEstablishments at various locations in coordination with the ZOs. These programmes were offocused nature and topics were selected according to the needs of the target groups.

During FY16 1023 number of officers were trained through the locational programmes

15. NEW INITIATIVES

• Golbibo: Tie-up with the Travel aggregator Golbibo for providing the cashdiscounts at the time of booking train and flight tickets and Hotel bookings by thecustomers of the 'Bank in their portal through the Alternate delivery Channels of the Bankviz. Debit Cards' and Internet Banking.

• EzeeWill: Tie-up with the M/s. NSDL e-Governance Infrastructure Ltd. forproviding the Will preparation services wherein the customers of the Bank can preparetheir' WILL' online.

• The Bank has signed a Memorandum of Agreement (MoA) with NSFDC for claimingrefinance for on lending to Schedule Caste borrowers at concessional rate of interesthaving family income less than double poverty line (presently Rs. 98000 p.a. for rural andRs. 120000 p.a. for urban areas.) z Launch of RuPay Platinum Debit Card (International)with higher limits of withdrawals at ATMs (Rs. 1.00 lac per day) PoS and e-Commerce site(Rs. 2.00 lac per day).

Accidental Insurance coverage by NPCI for this card is Rs. 2.00 lac.

16. INTERNAL CONTROL SYSTEM

16.1 KNOW YOUR CUSTOMER (KYC) & ANTI-MONEY LAUNDERING (AML)

The Bank has implemented revised comprehensive policy guidelines on 'Know Your Customer(KYC) norms/Anti Money Laundering (AML) standards /Combating Financing of Terrorism (CFT)/ Obligations of Bank under PMLA 2002' for the period 2015-16 in pursuance with thedirectives of Reserve Bank of India.

Under AML measures the Bank is reporting to Financial Intelligence Unit India(FIU-IND) in terms of the provisions of Prevention of Money-Laundering Act (PMLA) 2002 andPrevention of Money-Laundering (Maintenance of Records) Rules 2005 through CashTransaction Report (CTR) NonProfit Organization Transaction Report (NTR) Cross-borderWire Transfer Report (CWTR) Suspicious Transaction Report (STR) and Counterfeit CurrencyReport (CCR). The reporting is made online by the designated Principal Officer of the Bankas per the guidelines of FIU-IND and all the reports are uploaded on their portal withinprescribed time schedule.

16.2 INSPECTION & AUDIT

With the implementation of Risk Based Internal Audit & Risk Based Concurrent Auditthe Annual Audit Plan is prepared as per the Risk profile of the branches. The auditresources are prioritized towards high risk areas. This provides a reasonable assurance tothe Board and Top Management about the adequacy and effectiveness of the Risk Managementand control framework in the Bank's operations. 2581 branches across the country weresubjected to internal inspection during FY16. We have implemented the Risk BasedConcurrent Audit (RBCA) wherein 1421 of our Branches are under concurrent audit covering92% of our total business as against 70% coverage stipulated by RBI. By convergence ofconcurrent audit & internal inspection it is ensured that all the inherent risks aremanaged within the acceptable levels.

All our 49 Zones 7 FGM offices & other offices are subjected to internal auditonce in a year.

Offsite monitoring cell at Head Office & different Zones have been in operation tokeep a track of business operations with a bird's eye view. The scope and coverage of theCell have since been structured and broad based. The Cell is now reviewing the MIS oncritical items like high value/abnormal transactions and sensitizing the ControllingOffices / Branches/ Departments for corrective action if any deviations are observed.

The Bank has also identified certain areas as 'Zero Tolerance Areas' & 'FraudSensitive Area'. These will foster and ensure further robustness of the system and controlin the branches as well as to keep the lapses and irregularities at minimum level.Inspection Policy Inspection Module RBIA Module Management Audit format & ZICformats have been modified /reviewed by the Operational Risk Management Committee. Certainnew initiatives have been introduced in the system prominent among which is the"DeVA" (Document electronic Verification and Approval).

All our Inspecting officials are subjected to a refresher course once in a yearSimilarly all our Concurrent Auditors are also given interactive locational training bytop executives from Zones/Head office.

All efforts are being made to strengthen our Inspection & Audit function bydeploying adequate & quality man power in the system.

16.3 VIGILANCE z Knowledge Hub: Information rules & regulations on differentareas of Banking are uploaded at Bank's Intranet Portal on regular basis. We urge uponmaintenance of alertness vigil and ethics so that the Organization remains safe. zWorkshop at Zones: The importance of direct interaction with the staff in branches hasbeen a set priority and thus workshops at various zones have been conducted to explain thecommon irregularities to be taken care of by the field functionaries. z Workshop at H.O: Aworkshop on 'Emerging Crime Trends in Advance & in CTS Clearing System' was conductedat Head Office wherein a senior official from Fraud Section Detective Deptt KolkataPolice took the session.

17. THE RIGHT TO INFORMATION ACT 2005

In pursuance of the enactment of Right to Information Act 2005 the Bank hasdesignated 50 Central Public Information Officers at all its Zonal Offices including HeadOffice and an Appellate Authority at Head Office. Further as per the directions ofCentral Information Commission (CIC) a Transparency Officer for the Bank has also beendesignated. The Bank is providing information to the citizens of India through suo-motodisclosures on website as well as through disposal of requests for information receivedunder the Act. During FY16 the Bank received 3262 requests for information and 706 FirstAppeals under the Act out of which 3171 RTI applications and 627 First appeals weredisposed of & remaining applications and appeals were under process as on 31.3.2016.However these were well within the stipulated period of disposal as allowed under theprovisions of the Act.

18. OFFICIAL LANGUAGE

Compliance of various provisions under the Official Language Policy of Govt. of Indiawas ensured in order to achieve the targets stipulated in the Annual Programme 2015-16.Accordingly statutory requirements with regard to issuance of documents in bilingual formunder Section 3(3) of Official Language Act reply of Hindi letters in Hindi bilingualpublication of Manuals & Codes bilingualisation of stationery items was ensured.During the year a large number of officers and employees not having working knowledge ofHindi were nominated for various Hindi Teaching Courses conducted by the Govt. of India.During the year 109 Hindi Workshops and 205 Desk Training Programmes were organizedthroughout the country to impart practical training for use of Hindi in day to dayinternal work.

Various Town Official Language Implementation Committee( TOLICS )across the countryawarded our various offices for remarkable implementation of Official Language Hindi. OurZonal Office(ZO) Ranchi was awarded "First Prize" by TOLIC (Bank) Ranchi foroutstanding implementation of Official Language. Nasik Branch under ZO Pune was alsoawarded "First Prize" by TOLIC(Bank) Pune. ZO Jabalpur was awarded "SecondPrize" by the TOLIC Jabalpur. ZO Agra was awarded with "Third Prize" byTOLIC(Bank) Agra for outstanding implementation of official language Hindi.

Your Bank is convener of TOLIC(Bank) Ranchi. During this year our ZO Gonda has beenassigned the responsibility of TOLIC (Bank) Gonda by Deptt. of Official Language MHAGovt. of India.

The 3rd Sub-committee of the Committee of Parliament on Official Language inspected ZOAllahabad on 22.09.2015 and ZO Agra on 13.02.2016. The Hon'ble Committee lauded the workdone by respective zonal offices.

19. SUBSIDIARY & JOINT VENTURE

AllBank Finance Ltd. a wholly owned subsidiary of Allahabad Bank engaged in CorporateAdvisory Services Project Appraisal Issue Management Loan Syndication DebentureTrusteeship and Underwriting posted a net profit of Rs. 5.75 crore in FY16.

The Bank holds 27.04% equity stake in Asset Management Company "ASREC (India)Ltd." along with other Banks/ Institutions.

The Bank holds 30% equity stake in joint venture company "Universal Sompo GeneralInsurance Company Limited" for general insurance along with Indian Overseas BankKarnataka Bank Ltd. Dabur Investment Ltd. and Japanese insurance major "Sompo".

20. SECURITY z The Bank adopted the best security arrangement with theimplementation of the state of the art technology as per RBI and IBA guidelines. All thenewly opened branches have been equipped with fire alarm systems/ integrated Fire cumBurglary alarm system. z The Bank is dedicated to ensure secured environment for thecustomers at the ATMs branches and e-lobbies.

All the high-risk branches have been provided with CCTV systems of latestspecifications. z Dedicated counters have been established for exchange of soiled notesand distribution of coins in identified branches. Coin melas at public places also havebeen organized. z Coin vending machines have also been installed at important locationsboth on-site and off-site. To arrest the influx of counterfeit notes in the country'ssystem and to implement clean note policy of RBI the Bank has provided more than 600 NoteSorting Machines to the Branches and currency chests.

21. CUSTOMER SERVICE

21.1 BANKING CODES & STANDARDS BOARD OF INDIA (BCSBI)

Your Bank is a member of BCSBI. For ensuring good customer service we have alreadyimplemented the codes evolved by BCSBI viz. "Code of Bank's Commitment to Customers" and "Code of Bank's Commitment to Micro & Small Enterprises".

The Bank has been ranked at 28th position among 47 member banks. Within 26 PSBs yourBank has been ranked 7th.

21.2 CITIZEN'S CHARTER

The Bank has a Citizen's Charter wherein major activities include:

a) To bring about awareness amongst customers regarding services offered as perstandards laid down in the BCSBI promote fair banking practices by maintainingtransparency in various products and services offered by the Bank by making banking anenriching experience.

We also give a copy of BCSBI codes to customers at the time of opening accounts. b)Give service to special customers like pensioners senior citizens customers in rural andsemi-urban areas.

c) Operational activities like payment of balance in accounts of the deceased customersto survivors/ claimants exchange of soiled/slightly mutilated currency notes safedeposit vaults (lockers).

d) Grievance redressal mechanism for improvement in services.

Training is imparted to the staff members emphasizing the importance and the means ofputting the Charter into practice.

21.3 CUSTOMER RIGHTS POLICY

The Bank's Customer Rights Policy spells out the rights of the customer and theresponsibilities of the Bank. The Policy applies to all products and services offered bythe Bank or its agents whether provided across the counter over phone by post throughinteractive electronic devices on internet or by any other method. The Policy covers thefollowing aspects: i Right to Fair Treatment ii Right to Transparency Fair and HonestDealing iii Right to Suitability iv Right to Privacy v Right to Grievance Redress andCompensation

21.4 CUSTOMER GRIEVANCES CELL

Customers can lodge their complaint through a separate link provided on Bank's website.For expeditious redressal of customer complaints the Bank has Customer GrievanceRedressal Cell at Head Office. Complaints received from customers are redressed within thetime lines and suitable replies are sent to the customers. Customer complaints which areforwarded by Ministry of Finance DPG RBI VIPs are resolved on priority basis.

Several initiatives were also taken to remain customer focussed by providing fastservice bringing in diversified products/ services responding to customers' queries andredressal of customer complaints.

Customer Service Committees have been formed at each and every branch and at Zonaloffices. The Customer Service Committee meets once a month to study complaints/suggestionscases of delay difficulties faced/reported by customers/members of theCommittee and evolve ways and means of improving customer service. The members include asenior citizen too.

21.5 INTERNAL OMBUDSMAN

As per direction of Damodaran Committee Recommendations the Bank has appointed anInternal Ombudsman (Chief Customer Service Officer) for speedy transparent and qualityredressal of complaints internally. Several initiatives were also taken to remain customerfocussed by providing fast service bringing in diversified products/services respondingto customer3s' queries and redressal of customer complaints.

22. FUTURE PLANS

The Bank is focusing on retail business and leveraging banking technology in additionto other core banking activities. Focus areas of business for FY17 will be growth inRetail Business Improving Asset Quality and credit monitoring customer acquisition andmaximizing usage of e-delivery channels to reduce costs.

23. BOARD OF DIRECTORS

The details of meetings of the Board and its Committees during FY16 are as under:

Sl. No. Board/Committee(s) Number of meetings held
1 Board of Directors 11
2 Management committee of the Board (MCBOB) 13
3 Audit Committee of the Board (ACB) 09
4 Directors’ Promotion Committee (DPC) 04
5 Stakeholders' Relationship Committee (SRC) 01
6 IT committee of the Board (IT-Comm) 04
7 Fraud Monitoring Committee (FMC) 05
8 Customer Service Committee (CSC) 04
9 Willful Defaulters Review Committee (WDRC) 01
10 Risk Management Committee (RMC) 05
11 Share Issue & Allotment Committee (SIAC) 03
12 Credit Approval Committee (CAC) 54
13 Recovery Committee of the Board (RCB) 09

Prof. Radha R. Sharma joined the Bank as Part-Time Non-Official Director on28.01.2016. Prof. Sharma is Raman Munjal (Hero Motor Corp) Chair Professor and Professorof Organizational Behavior & HRD at Management Development Institute GurgaonHaryana. She has been ICCR Chair Professor at HHL Leipzig Graduate School of ManagementGermany & visiting Professor to ESCP Europe (Torino) European Business SchoolGermany and Guest Professor to Leipzig University etc.

24. AWARDS & ACCOLADES z Your Bank has been conferred with "SecondPrize" by Ministry of Rural Development Government of India for overall performanceof RSETIs. RSETI Sitapur has also been given "Second Prize" in Individualcategory. z Your Bank has also been conferred runner up award for Best MSME Bank &Best Eco-Tech Savvy Bank in Midsized Bank category for the year 2015 by CIMSME.

25. ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of IndiaSecurities Exchange Board of India and Government of India and other regulatoryauthorities and financial institutions for their co-operation strong support andguidance. The Board acknowledges the support of shareholders and also places on record itssincere thanks to its valued clients and customers for their continued patronage. TheBoard also expresses its deep sense of appreciation for the commitment shown by theemployees in supporting the Bank in its performance on all fronts.

For and on behalf of the Board of Directors

(Rakesh Sethi)

Chairman and Managing Director

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