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Bank of Baroda.

BSE: 532134 Sector: Financials
NSE: BANKBARODA ISIN Code: INE028A01039
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VOLUME 544754
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Bank of Baroda. (BANKBARODA) - Director Report

Company director report

Your Directors have pleasure in presenting the One Hundred and Eighth Annual Report ofyour Bank with the audited Balance Sheet Profit & Loss Account and the Report onBusiness and Operations for the year ended March 31 2016 (FY16).

Performance Highlights

Total Business (Deposit+Advances) stood at ' 957808 crore.

Gross Profit and Net Profit were ' 8816 crore and ' (5396)crore respectively.

Capital Adequacy Ratio (CAR) as per Basel III stood at 13.17%.

Retail Credit stood at ' 50850 crore constituting 18% ofyour Bank's Gross Domestic Credit in FY16.

MSME Credit stood at ' 54990 crore constituting 20% ofyour Bank's Gross Domestic Credit in FY16.

Net Interest Margin (NIM) in global operations was 2.05% and indomestic operations at 2.60% during FY16.

While Gross NPAs to Gross Advances stood at 9.99% Net NPAs to NetAdvances were at 5.06%.

Net Worth as on 31.03.2016 was at ' 30586 crore.

Book Value per share at ' 132.74 as on 31.03.2016.

Business per Employee was ' 1680 lac.

Capital Adequacy Ratio (CAR)

Your Bank's Capital Adequacy Ratio (CAR) under Basel

III was comfortable at 13.17% as on 31st March 2016. Tier 1 ratiowas at 10.79% and Common Equity Tier 1 (CET-1) was at 10.29% under Basel IIIframework.

Your Bank's Net Worth as on 31st March 2016 was ' 30586 crore comprisingpaid-up equity capital of ' 462 crore and reserves (excluding revaluation reservesFCTR & Net of Intangible assets) of ' 30123 crore.

Provisions towards Retirement and Other Benefits

During the year FY16 your Bank made provision towards contribution to gratuity('.20.56 crore) pension funds ('.3025.08 crore) which included provision of ' 1563.70crore on account of shifting of mortality table from LICI 1994-96 to IALM 2006-08 leaveencashment (' 259.37 crore) and additional retirement benefits (' 87.23 crore). Totalprovisions under these four categories amounted to ' 3392.24 crore during the year FY16.Total corpus available with your Bank at the end of March 2016 under these heads was: '1346.55 crore (gratuity) ' 11947.17 crore (pension funds) ' 881.23 crore (leaveencashment) and ' 375.96 crore (additional retirement benefit).

Dividend

Bank is not eligible to pay dividend for the financial year 201516 on account of notmeeting the eligibility criteria stipulated by Reserve Bank of India for this purpose.

Management Discussion and Analysis

Indian Economic Overview and Outlook for FY17

India's macroeconomic stability has improved substantially due to fiscal prudencelower inflation lower current account deficit and robust foreign exchange reserves. Asper the advanced estimates of CSO the real GDP (2011-12 prices) for 2015-16 stood at 7.6%and the Gross Value Added (GVA) at basic constant prices (2011-12) stood at 7.3% in2015-16. This growth was achieved despite subdued global demand and two consecutivebelow-normal monsoons that impacted farm output.

While the agriculture sector is expected to grow at 1.1% in 2015-16 the growth inservices sector has moderated slightly to 9.2%. The industrial sector is estimated to growby 7.3% in 2015-16. The index of industrial production (IIP) for April- March 2015-16 wasat 2.4%.

Key Financial Ratios

Particulars FY 16 FY 15
Return on Average Assets (ROAA) (%) (0.78) 0.49
Average Cost of Funds 5.08 5.23
Average Yield (%) 7.09 7.53
Average Interest Earning Assets (' crore) 621234.89 570592.45
Average Interest Bearing Liabilities (' crore) 616002.63 569190.46
Net Interest Margin (%) 2.05 2.31
Cost-Income Ratio (%) 50.30 43.63
Book Value per Share (') 132.74* 166.83*
EPS (') (23.89)* 15.83*

*post split of face value of the share to ' 2/-

The major achievement in 2015-16 has been sharp decline in inflation driven by a numberof factors such as sharp decline in crude oil prices RBI formally targeting inflationastute food supply management and minimal increase in minimum support prices and slowdownin China. The CPI has ranged between 5-6% during the year and WPI stood at - 0.91%. Theoverall inflation remained within the targets set by the RBI. The exports continued tocontract for 15 consecutive months and imports also remained subdued due to slow economicrecovery in the domestic economy and decline in oil prices. The current account deficitremained at 1.3% in Q3 FY16 as against 1.5% in Q 3 FY15. The buoyant inward remittanceslower oil prices and significant FDIs which jumped around 40% resulted in higher foreignexchange reserves above US $ 350 billion. Fiscal deficit retained at 3.9% (RevisedEstimates) for 2015-16 and 3.5% (Budget Estimates) for 2016-17.

The year witnessed the continuation of the reform measures. The reforms aimed atdebottlenecking the economy removing structural constraints promoting industry andenterprise via Make-in-India initiative and the attendant measures to improve the ease ofdoing business improving delivery through direct benefit transfer and deepening ofbanking services and liberalising foreign direct investment policy in various sectors weretaken forward this year. The new initiatives like Public Sector Banks' Revamp Plan(Indradhanush) UDAY (Ujwal DISCOM Assurance Yojana) for ensuring financial turnaround ofthe ailing power distribution companies Start-up India for tapping buddingentrepreneurial potential the Pradhan Mantri Fasal Bima Yojana for crop insurance add tothe ongoing reform measures. The PAHAL scheme of transferring LPG subsidies via DBTreduced leakages by 24 per cent. As announced in the Union Budget the bankruptcy law waspassed in the Parliament. Also the announcement of Smart Cities Housing for all by 2022Make in India and stand up/start-up initiatives are positive developments from bankingperspective. The efforts of the government to improve the ease of doing business wouldfacilitate the growth imperatives. Though Indian economy has emerged as one of the fastestgrowing large economies in the world the external risks to growth such as subdued globalgrowth; slowdown and rebalancing in China's economy; increased volatility in financialmarkets; and gradual tightening in the monetary policy in the United States remain.

Recent Developments in Indian Banking and Outlook for FY17

The RBI effected a shift in its monetary policy stance on January 15 2015 with areduction in repo rate by 25 basis points (bps) to 7.75 per cent and followed it up with acumulative reduction of 125 bps to 6.50 per cent till recently. Correspondingly the bankseffected a cut in their Base rates though the pace of decline in Base Rate was lowerthan that of the policy benchmark rate. The limited transmission of monetary policy becamea cause of concern for the RBI. Given the limited transmission of policy rates the RBIintroduced Marginal Cost of Funds based Lending Rate. With this change the transmissionof policy rates into the lending rates of banks would improve.

The performance of the scheduled commercial banks (SCBs) during 2015-16 remainedsubdued due to sluggish deposit & credit growth and asset quality concerns. Thedeposit growth was 9.7% and the credit growth remained at 10.7%.

Gyan Sangam 2.0 was held at Gurgaon in the first week of March 2016 to review theprogress made on the recommendations of Gyan Sangam-I. Deliberations were held with topmanagement of Public Sector Banks on Restructuring/ Mergers and acquisitions NPAmanagement and recovery technology digital and financial inclusion credit growth andrisk management. Under Project Indradhanush a range of measures were announced forimproving the performance of PSBs including the capitalisation of PSBs to the extent of '70 000 crore till 2019. The Bank Board Bureau has started functioning wef 1stApril 2016 which aims at improving the governance of Public Sector Banks (PSBs) andformulate appropriate strategies for their growth. The Bureau will also recommend forselection of heads of Public Sector Banks and Financial Institutions and help Banks incapital raising plans.

Business Performance

Resource Mobilization and Credit Expansion

During the year your Bank made strategic shift in its approach towards business bymoving to average business concept. The allocation of business targets as well as reviewof performance of all operating units is done on the basis of average business figures(based on daily average). Given below are the details of your Bank's major achievements onbusiness front during FY16.

Composition of Funds - Global

Particulars (' crore) End March 2015 Average Figures March 2015 End March 2016 Average Figures March 2016 Growth on Average Figures (%)
Deposits 617560 534470 574038 578317 8.20
- Domestic 414278 361917 394844 403503 11.49
- Overseas 203282 172553 179194 174814 1.31
Borrowings 35264 - 33471 - -

Global Advances*

Particulars (' crore) End March 2015 Average Figures March 2015 End March 2016 Average Figures March 2016 Growth on Average Figures (%)
Advances 428065 383313 383770 405126 5.69
-Domestic 291870 253788 263268 270108 6.43
-Overseas 136195 129525 120502 135018 4.24

*While end of year numbers are Net Advances average figures are of Gross Advances

Total Average Deposits of your Bank rose from ' 534470 crore to ' 578317crore posting a growth of 8.20% over the previous year. Of this Average Savings BankDeposits grew by 12.71 % from ' 94705 crore to ' 106739 crore. The share of low costdeposits (Current + Savings) or CASA deposits in Total (Domestic + Overseas) Deposits ason Mar'16 was at 26.36 % and in Domestic Deposits at 33.57% as against 26.39% and 33.01%respectively last year. Share of average CASA (domestic) to total average deposits of yourBank increased from 29.31% as on March 2015 to 29.43% as on March 2016. Your Bankcontinues to shed bulk preferential rate term deposits in favour of retail term deposits.Domestic retail term deposits ratio improved to 73.96% as on 31.03.2016 from 62.79% lastyear.

Your Bank's Total Average Advances expanded by 5.69% during FY16 led by 6.43% expansionin Domestic Advances and 4.24% expansion in Overseas Advances. Bank has focused onre-balancing of its loan book after thorough review of the portfolio with a calibratedshift to assets growth where it can improve its earnings and share of overall businesswith customers.

Operating Performance

(' crore)

Particulars End March 2015 End March 2016 Growth (%)
Net Interest Income 13187 12740 -3.39%
Other Income 4402 4999 13.56%
Total Revenue 17589 17739 0.85%
Operating Expenses 7674 8923 16.28%
Operating Profit 9915 8816 -11.08%
Provisions NPAs 3998 13766 244.32%
Other Provisions 497 1748 251.71%
Provisions for Tax 2022 (1303) -
Total Provisions 6517 14211 118.06%
Net Profit 3398 (5396) -

Net Interest Income of your Bank decreased by 3.39% on account of significant increasein non-performing assets which led to interest reversals and cessation of interest incomeof such assets. However Total Revenue increased by 0.85% led by 13.56% increase in otherincome. Operating expenses including employee cost increased by 16.28%. Operating Profitof the Bank at ' 8816 crore was lower by 11.08%.

During the year the Bank made Provisions of ' 14211 crore against '6517 crore in FY 15. These provisions included ' 13766 crore towards NPAs andother provisions of ' 1748 crore. Provisions on NPAs were higher than theregulatory requirements by ' 2954 crore to improve the provision coverage ratio to60.09% against stressed assets and to strengthen the balance sheet. Other provisionsincluded ' 1564 crore provided on account of pension liability arising on accountof moving to mortality table from LICI 1994-96 to IALM of 2006-08. Your Bank has providedfor all known liabilities to ensure that all focus would be to improve earnings goingforward. On account of all these factors Bank posted net loss of ' 5396 croreagainst net profit of ' 3398 crore last year.

Large & Mid Corporate Credit

Bank caters to the needs of corporate credit mainly through 10 Corporate FinancialService branches and 17 Mid Corporate branches. -82- new corporate relationships wereestablished during the year. In view of challenging market conditions prevailing yourBank adopted cautious approach coupled with proper due diligence towards taking freshexposures. Bank initiated following measures to ensure consistent growth of large andmid-corporate credit with quality:

• Monitoring of undrawn exposure to achieve optimum level of capital conservation;

• Introduction of RAROC approach to examine the risk adjusted return of an asset;

• Initiated process of building a team of sectoral expertise;

• Established "Real Estate Desk" to exclusively deal with CRE proposals;

• Setting up market intelligence cell in view of increasing number of Red FlaggedAccounts;

Domestic Foreign Business (DFB) division under Corporate Banking Business verticalsupports Authorised Dealer (AD) branches to deal with Forex Business.

MSME Credit

MSME is a vital sector to the nation's economy and Bank supports credit to this sectorthrough 54 SME Loan factories and wide network of branches. MSME advances of of your Bankwere ' 54990 crore as on March 2016. The advances of ' 29861 crore toMicro Enterprises for FY16 to total MSE credit of ' 55535 crore as of precedingyear stood at 53.70% in FY16. The MSME advances as on 31st March 2016contributed 19.58 % to the gross domestic advances of your Bank. The advances to Micro& Small enterprises were at the level of ' 49571 crore.

Prime Minister Mudra Yojana (PMMY) was launched by Govt of India on 08.04.2015 and yourBank is participating actively in the said scheme. Bank has achieved 24% YOY growth innumber of accounts under Micro Enterprises category as against 10% achievement during thesame period previous year.

Your Bank has set up Baroda Micro Enterprise (BME) Cells concept under which theseexclusive cells cater to Micro Enterprises. Bank has 90 such cells established across thecountry.

Retail Credit

Retail credit of your Bank is dispensed through 66 Retail Loan Factories (RLFs) andwide network of branches. During the year Bank initiated the process of re-designing RLFsinto Specialized Mortgage Stores (SMS) to undertake Sales and Marketing activities ofmortgage loans and centralization of processing of retail loans through CentralizedProcessing Centres. Bank also undertook simplification of application forms for retailloans revamped online home loan application system with instant ‘In principlesanction' and initiated empanelment of direct selling agents.

Your Bank's Retail Loan Book consists of five key products viz. Home Loan Auto LoanEducation Loan Traders Loan and Mortgage Loan which constituted 83.12% of total RetailLoans as on March 2016. Home Loans grew by ' 2427 crore (10.77%) reaching a levelof ' 24968 crore as of March16. Total disbursements of ' 6632 crore weremade during the financial year ended 31st March 2016 as against ' 6335crore during the same period last year. Auto Loans grew by ' 268 crore (6.45%)reaching a level of ' 4428 crore as of March 16. Fresh disbursement of auto loanswere ' 1773 crore during the financial year ended 31st March 2016.Baroda Traders loans Baroda Mortgage Loans and Education Loans were at a level of '8836 crore ' 1914 crore and ' 2123 crore respectively. The other retailloan products included Baroda Personal Loan and other miscellaneous products viz. DoctorsLoan Loan against Government securities etc. Total Retail Loans stood at ' 50850crore as on 31st March 2016 and constituted 18.82% of the Bank's domesticadvances.

During the year your Bank undertook review and redesigning of various retail loanproducts and risk based pricing of loans linked to credit bureau score.

Rural and Agricultural Lending

The Bank has always been a frontrunner in the area of Priority Sector and Agriculturelending. It has been harnessing the potential of the rural market through its wide networkof 1964 rural branches and 1425 semi-urban branches. During FY16 your Bank has opened95 new branches in rural and semiurban areas.

Your Bank is the Convener of State Level Banker's Committee (SLBC) in the states ofUttar Pradesh and Rajasthan. Your Bank shoulders the Lead Bank Responsibility in 48districts of India comprising of 14 in Gujarat 12 in Rajasthan 15 in Uttar Pradesh 2each in Uttarakhand Madhya Pradesh and Bihar and 1 in Delhi.

Priority Sector Advances of your Bank increased from ' 103342.67 crore as onMarch 2015 to '113121.13 crore as on March 2016 and formed 37.05% of the Adjusted NetBank Credit (ANBC). The Direct Agriculture advances of your Bank increased to '28094.12 crore with an absolute growth of ' 1483.20 crore (5.57%) during the year.The total agriculture advances (excl.RIDF) of your Bank has grown by ' 4085.67crore and reached ' 36822.21 crore as at end-March 2016. The Total AgriculturalAdvances were at 14.76% of ANBC.

Under its flagship agriculture loan product "Baroda Kisan Credit Card" yourBank issued as many as 2.29 lac Credit Cards during the financial year. Baroda Kisan RuPayCard an ATM enabled smart card has been issued to 9.32 lac farmers for theirconvenience. Your Bank financed as many as 303436 new farmers during FY16 granting themloans worth ' 5302 crore. As a part of its microfinance initiatives your Bankcredit linked 15170 Self Help Groups by granting loans amounting to ' 163.27 crore duringFY16.

Key Initiatives

Your Bank introduced various initiatives/strategies to harness the emergingopportunities in rural and agriculture lending. Some of the key initiatives are mentionedbelow:

1. To add new farmers to our fold your Bank conducted two special campaigns viz.‘JODEN KISAN' during the Kharif and Rabi seasons under which 1.17 lacs new farmerswere added and were granted loans of ' 2640 crores.

2. Your Bank has identified 482 thrust Branches across India to boost Agriculturelending. These branches contributed 33.01% of the total Agriculture outstanding of theBank as at 31st March 2016.

3. Your Bank formulated various tailor made area- specific schemes to the needs of thelocal farming community with concessions in rate of interest & charges etc. Thirteensuch schemes were approved and implemented during the year.

4. Your Bank has 49 Baroda Swarojgar Vikas Sansthan (BSVS)[Baroda R-SETI Centers]across India training the youth and imparting them knowledge and skills required fortaking up self-employment ventures. During FY16 38274 youth beneficiaries were trained atthese centres.

5. Your Bank has established 51 Financial Literacy Centres (FLCs) across Indiachristened as "SARATHEE" to impart financial literacy and credit counsellingservices to the needy to help them avail financial services from the Banking system andalso to provide counselling services to those under financial distress.

Advances to SC/ST Communities during FY16

The outstanding advances granted by your Bank to SC/ ST communities have been growingyear after year. The outstanding advances granted to these beneficiaries went up from '4997 crore as on March 2015 to ' 5298 crore as at end-March 2016. SC/STcommunities accounted for a share of 21.95% in the total advances granted to weakersections by the Bank. Furthermore a special thrust is laid by your Bank in financingSC/ST under various government sponsored schemes namely National Rural Livelihood Mission(NRLM) etc.

Baroda Swarojgar Vikas Sansthans (BSVS) give preference to SC/ST candidates whileselecting the trainees. So far these centres have trained 14304 youths under the SC/STcategory.

Performance of RRBs Sponsored by your Bank

Your Bank has sponsored three Regional Rural Banks (RRBs) in three states viz. BarodaUttar Pradesh Gramin Bank Baroda Rajasthan Kshetriya Gramin Bank and Baroda GujaratGramin Bank. The aggregate business of these three RRBs rose to ' 42640.52 crore as ofMarch 2016 from ' 37440.67 crore as on March 2015registering a growth of13.89%. The three RRBs together posted a Net Profit of ' 185.41 crore during FY16as against ' 327.20 crore earned during FY15. The decline in profit is due to thepayment of arrears on account of 10th Bipartite settlement. The "NetWorth" of these RRBs put together improved from ' 1851.02 crore as on 31.03.2015 to '2036.43 crore on 31.03.2016 and "Reserves and Surplus" from ' 1394.12crore to ' 1579.53 crore.

Financial Inclusion (FI)

Financial Inclusion aims to provide easy access to financial services to all sectionsof the society who are deprived of it so far at affordable cost thereby bringing them intothe mainstream of society. Financial Inclusion activities are being implemented by theBank since inception through various Governments sponsored programs lending to thepoorest of the poor lending to the minority communities lending to SC/ST lending topriority sectors etc. Bank has approved disaggregated Financial Inclusion Plan for all21526 service area villages of our Bank.

Models used by your Bank for FI

Your Bank has adopted following models for providing banking services under financialinclusion viz. Information and Communication Technology (ICT) based BusinessCorrespondents models like POS based BC Model; KIOSK BC Model and Brick and Mortar branch.

Urban Financial Inclusion

The rural inhabitants have largely remained the focus of our financial inclusionefforts since a large proportion of our villages are still unbanked. Besides peopleliving in rural and far flung areas urban poor who are largely migrants from villages tourban area still have no access to formal financial products and services like savingscredit remittance and insurance forcing them to depend on unscrupulous informal sourcesto meet their personal health and livelihood-related needs. Many of those are normallymigrant labors hawkers slum dwellers from rural areas that generally leave theirvillages for livelihood. In order to cover them under financial inclusion the Governmentof India has completed first phase of Jan Dhan Yojana campaign in all states to bringthese vulnerable groups under mainstream financial system. Your Bank has deployed 4530urban BCs at various locations across the country.

Product/Services offered at our BC Points are Basic Savings Bank Deposit Account within-built OD facility Instant Account Opening E-KYC Account OpeningCash Withdrawal CashDeposit & Fund transfer deposit in Current a/c Cash Credit a/c OD a/c and Loan a/cTerm Deposit & Recurring Deposit Account Enrollment for Micro Insurance - PMJJBY andPMSBY Aadhaar Seeding and Mobile seeding.

Highlights of Performance under Financial Inclusion for the year 2015-16

• All targets of Disaggregated FIP - 2016 were surpassed in December 2014 itself.

• Bank surpassed annual Basic Saving Bank Deposit Account opening and Amounttarget for financial year 2015-16 achievement was 220.18 % & 196.23% respectively.

• The balance outstanding in the "Basic Savings Bank Deposit Account" ofthe Bank is around ' 4925 crore as against a target of ' 2510 crore forFY16.

• Surpassed urban ward coverage targets for financial year 2015-16 (achievement596.05%).

• Surpassed annual target for BC appointment for FY 2015-16 by appointing 11131BCs against target of 5503 (achievement 202.27%).

• Surpassed annual target for number of transactions and amount of transactions inFI accounts opened through BC for FY16 (achievement 403.02% & 1145.41% respectively)

• Surpassed annual target for OD amount disbursed in BSBDA account for financialyear 2015-16 by 848.83%.

Promoting Financial Literacy

The desired objective of Financial Inclusion can be achieved only when enough demandfor banking services is generated from the targeted group of population. In order toinvoke responses amongst villagers it requires financial literacy on various bankingfacilities and its benefits particularly the benefits of savings habit Aadhaar seedingmaintaining minimum balance eligibility for availing Overdraft use and safekeeping ofRuPay cards and its pin USSD facility eligibility of availing accidental & lifeinsurance lodgment of claim under insurance micro insurance products pensions benefitsof KCC GCC prompt repayment availability of other retail and SME loans to them.Financial literacy would be the key to success of financial inclusion initiatives of theBank. Your Bank's link branches and BCs are organizing Financial Literacy campaignregularly by conducting meetings in their service area villages and schools.

The Bank has also taken the following major initiatives towards financial literacy inrural part of the country.

1. Baroda Swarojgar Vikas Sansthan (Baroda RSETI) is a trust formed by the Bank wayback in 2003 for undertaking skill building activities for unemployed rural youth andproviding hand holding support to

them till their settlement in their venture. Bank has established 49 such centers allover the country. They have conducted 1401 training programmes during the FY16 in which38274 candidates were trained. Out of these 20679 candidates established their businessventures successfully.

2. Fifty one Financial Literacy & Credit Counselling Centres (FLCCs)"SAARTHEE" are operational across the country.

3. Mobile Micro Finance Loan Factory has been established with a vision to providecredit and banking facilities to SHGs at their doorstep under the SHG - Bank linkageprogram ensuring hassle free and prompt credit delivery within maximum of 4 days &hassle free credit to the SHGs.

4. "BYST-BoB Entrepreneurship Development Programme" (BYST) providesend-to-end support to disadvantaged young dynamic micro-entrepreneurs in the form ofLoans Business Mentors Training Networking & Marketing.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

PMJDY is a comprehensive financial inclusion plan wherein the ambit of financialinclusion is enlarged to make it more meaningful. PMJDY is a National Mission forFinancial Inclusion. Every household having bank account would gain access to banking andcredit facilities. This will enable them to secure their savings in a better manner andalso to come out from the habit of raising funds from informal sources. As a first stepevery person who opens the account under PMJDY will get a RuPay debit card and would beeligible for ' 100000/- accident insurance cover. After six months ofsatisfactory conduct of account they would be able to get an overdraft facility up to '5000/-. Further the account holders who opened account between 15.08.2014 to 31.01.2015will get additional term insurance of ' 30000/- from LIC. Financial Literacy isanother important aspect of PMJDY

Further Government of India launched Jan Suraksha Yojana on 9th May 2015whereby low premium insurance products like Pradhan Mantri Jeevan Jyoti Bima YojanaPradhan Mantri Suraksha Bima Yojana and pension product like Atal Pension Yojana wereintroduced.

Initiatives under PMJDY:

• Your Bank has been allotted 6829 SSAs by SLBCs covering 22055 villages and 3023wards across the country. Survey has been completed in all allocated SSAs and wards.Accordingly there are total 8891696 households in Bank's service area. It has beenBank's endeavor to provide banking services to each and every household in the servicearea. Bank has since saturated all households in service area by opening atleast oneaccount per household.

Bank has opened 1.25 crore accounts with a deposit of ' 2500 crore and issued1.18 crore RuPay debit cards.

• Your Bank is organizing camps periodically for opening of accounts conductingfinancial literacy sessions distribution of financial literacy materials distribution ofpass books and RuPay Debit cards etc.

• Launched a scheme for engaging Retired Bank Officers ASHA workers Anganwadiworkers fair price shop owners etc as Bank's Direct BCs. Branches have been advised toidentify and recommend performing SHGs and refer to Corporate BCs for appointment.

• Launched new products at our BC points like Instant account opening AadhaarSeeding interoperable RuPay Card Based transactions deposit in Current Account CCaccounts loan accounts Recurring Deposit and Fixed Deposit.

• Implemented automation of Overdraft Facility through ATM and SMS to PMJDYcustomers. The PMJDY customers can avail overdraft without even visiting the branch.

• Enabled Alternate Delivery Channels like ATM Internet Banking SMS and BCpoints for Aadhaar Seeding. Bank has also enabled enrollment of Micro insurance schemessuch as PMSBY & PMJJBY through internet banking SMS and at BC points.

• e-KYC has been implemented at the branches as well as BC points for opening ofAadhaar based accounts.

• Bank has rolled out Aadhaar Enabled Payment System (AEPS) facility at BC Points.

• Bank has rolled out Interoperable RuPay card based transaction facility at BCPoints

• Bank has implemented Unstructured Supplementary Service Data (USSD) for carryingout mobile banking transactions on ordinary mobiles. Facilities available under USSD arebalance enquiry money transfer mini statement knowing Aadhaar link bank a/c.

• Adopted 3266 schools across India for imparting Financial Literacy to SchoolChildren. Regular Financial Literacy Sessions/Camps/chaupals are conducted by branches inschools villages along with BC. Standardized Financial Literacy materials such as comicbooklet audio visual in vernacular language for spreading financial literacy have beenlaunched.

• Bank has implemented Model Village concept by all Rural and Semi Urban brancheswith the sole objective of achieving 100% Aadhaar Seeding 100% mobile seeding 100%coverage under PMSBY PMJJBY & APY 100% funding of zero balance accounts 100%overdraft to eligible customers 100% credit linkage 100% NPA free and skilling ofvillagers.

• Introduced special incentive scheme for BCs for mobilizing deposits and followup & recovery in small loan a/cs including NPA & PWO accounts.

• Standardized Financial Literacy material such as comic booklet audio visual hasbeen supplied to all operating units for spreading financial literacy.

In-house training and certification program for BCs.

• Joint workshops of branch heads and BCs to increase coordination and resolvefield level issues.

Pradhan Mantri Jan Suraksha Yojana

1. Pradhan Mantri Jeevan Jyoti Bima Yojana

• The scheme will be a one year cover Term Life Insurance Scheme renewable fromyear to year offering life insurance cover for death due to any reason.

• All savings Bank account holders in the age 18 to 50 years in participatingbanks will be entitled to join.

' 2 lakhs is payable on a subscriber's death due to any reason. Thepremium payable is ' 330/- per annum per subscriber.

• Your Bank has tie-up arrangement with IndiaFirst Life Insurance Company Ltd forthis scheme.

2. Pradhan Mantri Suraksha Bima Yojana

' 2 lakhs is payable on a subscriber's death or disability due toaccident. The premium payable is ' 12/-per annum per subscriber.

• All savings Bank account holders in the age 18 to 70 years in participatingBanks will be entitled to join. In case of multiple saving Bank accounts held by anindividual in one or different Banks the person would be eligible to join the schemethrough one savings bank account only.

• Your Bank has tie-up arrangement with National Insurance Company Ltd for thisscheme.

Performance of your Bank under PMJJBY and PMSBY as on 31.03.2016 is as under:

• No of Policies enrolled under PMJJBY- 14.42 lacs

• No of Policies enrolled under PMSBY - 40.24 lacs

• Total Insurance Policies enrolled - 54.66 lacs

International Operations

Your Bank has been keeping continuous watch on the emerging trends in the Internationalbanking scenario and adapted itself to the changing environment. Bank had taken review ofassets at overseas centres and moving towards calibrated re-balancing of portfolio toimprove margins. This has led to conscious degrowth in the business levels.

International Presence

Bank's international presence covers -24- countries through its -106- branches/officesas under:

Bank's Overseas Branches/ Offices 60
Bank's Representative Office 1
Branches of Bank's Overseas Subsidiaries 45
TOTAL 106

During the year your Bank has further spread its presence in Africa by opening two newbranches of its subsidiary in Kenya.

The Bank also has following Joint Ventures/ Associates:

1. Indo Zambia Bank Ltd. Zambia having -27- branches

2. India International Bank (Malaysia) Bhd. Malaysia -1- branch

The international business of your Bank continued to support significantly to the totalbusiness of the Bank. As on 31.03.2016 the International business contributed 31.3% ofGlobal Business. Of the total International loan-book 47.92% comprised of Buyer'sCredit/BP/BD portfolio where the exposure is on the Banks. 22.03% of the exposure is toIndia related corporates by way of ECB/ Syndicated Loans. Exposure to non-Indian entitiesby way of syndicated loans is at 4.30% and remaining 25.75% exposure is by way of localcredit.

UK Subsidiary

Your Bank is planning to carve out Retail business in UK in the form of a 100 % ownedsubsidiary which will give boost to the retail business of the Bank as well as complywith the local regulatory guidelines.

Treasury Operations

Your Bank operates its Treasury operations from State of Art Dealing Room at itscorporate Office in Mumbai. Treasury handles domestic treasury operations and is aprominent player in various markets e.g. Foreign Exchange Interest rates Fixed IncomeMoney Market Derivative Equity Currency and Interest Rate Futures and other alternateasset classes. Bank is offering various services like interest rate swaps currency swapsand currency options forward contracts through advanced dealing systems and throughAuthorized branches dealing in Foreign exchange across India.

Your Bank has been able to capitalize on the opportunity offered by higher yields inthe first half of the year and has added bonds to the portfolio. Bank managed itsportfolio efficiently and maintained average yield on SLR investment as on 31.03.2016 at8.01%. During FY 2016 your Bank's realized profit on Sale of Investment and Foreignexchange earnings are ' 1162 crore and ' 612 crore respectively and earned '12144 crore as Interest/ Discount.

Bank's Treasury mid-office monitors market exposures and limits fixed by the Bank onreal time basis. The Risk management parameters including Value-at Risk (VAR) are used tomeasure market risk on all portfolios. The VAR numbers are regularly back tested forevaluating the strength of the model. Stress testing is done on various investments andcurrency positions.

Government Business

Government Business forms an important part of business strategy of your Bank. It isthe Accredited Banker to Ministry of Health & Family Welfare (MHFW) and newly formedMinistry of Ayush. Your Bank has been authorised to collect contribution andadministrative charges on behalf of EPFO (Employees' Provident Fund Organization). Bankhas received approval from IRCTC (Indian Railway Catering & Tourism Corporation) forDebit Card integration implementation of which is under progress. Your Bank undertookspecial efforts for mobilization of PPF accounts during FY16 and opened 91370 new PPFaccounts. Your Bank has been adjudged as the Best Performing Bank among Public SectorBanks (2nd Rank) by PFRDA by opening 155589 Atal Pension Yojana(APY) accountsduring FY16. This has been possible due to concerted efforts put in by all branches of theBank. During the year your Bank conducted workshops on Government & PSU Businesscovering 850 staff members and 150 BCs/ BFs/VLEs at 15 locations.

Your Bank participated in Digital India initiative of Government of India. Your Bank isone of the five Banks associated with Government of India's prestigious e-Biz portalwhich would launch about 50 services along with major state services. Digital LifeCertificate (DLC) is successfully automated. Digitizing the whole process of securing lifecertificates will be beneficial to all pensioners. Your Bank is one of the Authorized Bankto undertake Goods & Service Tax (GST) collection which is likely to be implementedshortly. Work on Digitalization of Pension Payment Order (e-PPO) is under progress forspeedier pension processing and disbursement. Your Bank is being integrated for onlinepayment of MHFW (Ministry of Health & Family Welfare) and DBT (Direct BenefitTransfer) with PFMS (Public Financial Management System). Your Bank is integrated foronline receipt of MHFW with Bharat Kosh portal (Non tax revenue receipts).

Your Bank started providing e-stamping facility in the State of Punjab in -03- branchesin the initial phase. Your Bank started the pilot project of E-panjiyan (a web enabledstandalone system used for stamping and registration of documents developed by Departmentof Registration & Stamps Madhya Pradesh) in -03- branches in the State of MadhyaPradesh.

Your Bank has implemented Sukanya Samriddhi Yojana a small deposit scheme for girlchild launched by Govt. of India w.e.f. 27.05.2015. Sovereign Gold Bond 2015 and GoldMonetization Scheme 2015 were launched on 05.11.2015 with a view to reduce country's goldimport as well as mobilizing idle gold held by households and institutions in the countryfor putting the gold into productive use. Your Bank operationalised Sovereign Gold Bondscheme in all the branches in India to canvass maximum applications.

Wealth Management Services

Your Bank has realised growing aspiration of customers for earning higher returns andsecurity through mutual fund and insurance respectively. Bank is in Wealth ManagementServices since 2004 and Mutual fund Life Insurance Non Life Insurance products are beingdistributed to the customers. Your Bank crossed the mark of 110000 new SIPs in FY16first time ever resulting in increased customer participation. Your Bank has also covered1.71 Lacs lives in addition to coverage under PMJJBY policies. Initiatives/ Strategiesadopted during FY 16 are:

1. Bank created a separate vertical for Wealth Management Services and clubbed it withMarketing to put focus on the importance of Wealth Management Services.

2. Team at Corporate Level is strengthened by placing Wealth Management specialists andproduct managers have been identified for strategic and monitoring role.

3. Bank initiated special focused campaign for Mutual Funds and Life Insurance forcanvassing business.

4. Bank has run pilot at 55 branches and conducted training/ refresher courses forbroadening the vision in prevalent scenario of "Certified Officers" to sourceMutual Fund and Insurance business. Your Bank looked it as a model for enhancement incustomer bonding and fee generation by putting extra focus to draw the mileage.

5. Bank identified 1350 thrust branches for establishing Wealth Management Service deskand "Certified Persons/Officers "for distribution of Mutual Fund and Insuranceshave been attached at these branches.

6. Process initiated for inducting 2 Standalone Health Insurer and 2 General InsuranceCos after open architecture clause.

7. Bank is also in process of implementing integrated Wealth Management Solution to putall Mutual Fund and Insurance related information at one platform.

NPA Management

FY16 was a challenging year for the banking industry in terms of stress in assetquality on account of various macroeconomic and other factors. Fresh slippages were at6.38% of the opening Standard Advances of your Bank. In view of high slippages the ratioof Gross NPA to Gross Advances was at 9.99% as on 31st March 2016 and the ratioof Net NPA to Net Advances was 5.06%. During the year Bank provided '13766 crore towardsNPA provisions (last year ' 3998 crore). These provisions were higher than the regulatoryrequirements by ' 2954 crore to improve the provision coverage against stressed assetsand strengthen the balance sheet. The Provision Coverage Ratio was at 60.09% during March16 including Prudential/Technically Written Off advances.

Your Bank has developed a comprehensive structure for recovery and credit monitoringacross different levels. The Nodal Officer at each DRT centre has been assigned the roleof follow-up of legal cases on daily basis so as to minimize the delay in obtainingdecrees and execution and maximize recoveries. For recoveries in all DRT Suit filed NPAaccounts the assets charged to the Bank are now sold through e-auction to get fair marketvalue. In addition Recovery Agents for assisting in taking possession of assets &other pre/post sale activities and Consultants have been appointed to liaise with OfficialLiquidators (OL) to get the recoveries realized by OLs. The maximum participation inNational Lok Adalats is ensured to expedite recovery in suit filed & non suit filedNPA a/cs. Recovery Camps were regularly conducted by your Bank's branches to recover &reduce long pending cases and expedite recoveries in small accounts.

Your Bank continued emphasis on follow-up mechanism to effect recovery in NPA accounts.The system of monitoring of large value NPA accounts of ' 1 crore and above directly fromcorporate office by way of video conferencing with the Region and Zone have ensuredproactive action by branches advocates recovery agents etc. The action under SARFAESIAct at various levels are also monitored by Bank's Corporate Office.

Your Bank continued its emphasis on sectorwise follow-up mechanism to recover NPAs asunder:

Large and Mid Corporate accounts

1. Engaging reputed senior Advocates/Law firms for high value cases and Fraud matters;

2. Distribution of High value NPA & PNPA accounts amongst Top Management for earlyresolution;

3. Monitoring of high value accounts by Top Management team headed by MD & CEO andEDs;

4. 3 General Managers from Corporate Office have been allocated Zones to monitor NPAand Written off accounts on one to one basis.

MSME Banking

1. Enriching data mining to identify delinquency in the bucket of 0-90 days;

2. Early detection of problem accounts initiation of independent titlere-verification fresh valuation of properties and tracing uncharged assets in SMA-2accounts;

3. Vigorous monitoring & follow up in small bucket accounts Pan India by theofficers engaged in recovery;

4. Engaging dedicated team at ZO/RO/Branch level for Recovery and Monitoring the runrate on daily basis.

Retail Lending

1. Leveraging Technology for Collection and Recovery engaging 150 telecallers;

2. Seizing of vehicles;

3. Enhanced power to branches for compromise;

4. Private treaty early resolution incentive for Recovery Agents;

5. Issuance of soft reminders;

6. Increase in SMS alerts;

7. Out sourcing Hard Buckets collection through FOS;

8. Establishment of Collection centre for FOS at major 100 centers is under process.

Rural Agriculture

1. Optimum utilizations of BCs for recovery in NPA accounts;

2. Incentive scheme (SANKALP 9) for recovery of small NPA accounts.

Pre delinquency Monitoring

• War room is established at Corporate level for collection/monitoring of accountsabove ' 5.00 lacs to ' 1.00 Crs in SME and Retail loan Accounts;

• Team of 10-12 officers in each Region (Total 800 Officers)is working dedicatedlyfor followup for timely collection in all Retail and SME loan accounts to controldelinquency.

Suit filed Accounts

• Nodal Officers for DRTs closely monitor each case and ensure to get the RecoveryCertificate in shortest period. In RC execution the Nodal Officer to ensure that RCexecution process is started as soon as the RC is issued by DRT The Nodal Officermonitors timely compliance of the issues raised in DRT by base branches and concernedAdvocates.

Cash recovery in NPA accounts during FY16 stood at ' 1481 crore and the upgradation stood at ' 533.87 crore.

The asset classification wise breakup of advances portfolio of your Bank is as under-

(Rs. in crore)

Asset Category(Gross) 31st March 2016 31st March 2015
Standard 364996 421019

 

(Rs. in crore)

Asset Category(Gross) 31st March 2016 31st March 2015
Gross NPA 40521 16261
Total 405517 437280
Gross NPA comprising of:
Sub-Standard 11569 4368
Doubtful 25766 10383
Loss 3186 1510
Total Gross NPA 40521 16261

Credit Monitoring

Credit monitoring is one of the most important tools for ensuring asset quality. YourBank has the system of monitoring of advance accounts at various levels (Branch/Region/Zone and Corporate) to prevent slippages and to take timely corrective actions toimprove asset quality. A separate department for Credit Monitoring functions at theCorporate level headed by a General Manager and one at the Regional and Zonal levelstarted functioning since September 2008. The Slippage Prevention Task Force (SPTF) formedat all Zonal and Regional Offices in terms of the Bank's Domestic Loan Policy wasactivated for the purpose of arresting slippages and also for initiating necessarycorrective action plan at an early stage in a time bound manner.

The primary objectives and functions of the Credit Monitoring Department at theCorporate level are as under:

• Identification of weakness/Potential default/incipient sickness in the advanceaccounts at an early stage and initiating suitable and timely corrective actions forpreventing impairment in advance accounts / deterioration in credit quality of theborrowal accounts;

• Based on the RBI guidelines for Revitalizing Distressed Assets accounts withincipient stress are identified under Special Mention Accounts (SMA) categories of SMA0SMA1 and SMA2. All SMA2 accounts are followed up for the formation of the Joint LendersForum and options to resolve stress under Corrective Action Plan are explored by way ofRectification Restructuring and Recovery;

• Prevention of slippages in the Asset Classification and relegation in CreditRatings through vigorous follow up;

• Identification of suitable cases for restructuring/ Strategic Debt Restructuringas well as further financing in deserving and genuine cases with matching contributionfrom the borrower;

• Taking necessary steps / regular follow up for review of accounts andcompliance of terms and conditions thereby improving the quality of credit portfolio;

• Monitoring progress of accounts under Board for Industrial and FinancialReconstruction (BIFR);

• Your Bank has a mechanism of identifying the Red Flagged Accounts (RFA) based onEarly Warning Signals (EWS) as per the RBI guidelines on framework for dealing with loanfrauds and reporting the accounts on CRILC platform. Further investigation into such RFAare made to classify the account as fraud or otherwise.

Monthly Monitoring of Advances accounts

On-line web-based software has been developed by the Bank for Monthly MonitoringReports (MMR) in respect of advance accounts with Fund and Non-Fund Based (FB+NFB)exposure of ' 10 crore and above was launched in January 2013 and is being upgradedfrom time to time. Based on the MMRs the follow up actions are taken for ensuringexpeditious review of accounts rectification of irregularities compliance of terms andconditions in high value advance accounts for improving the quality of your Bank's creditportfolio.

Restructuring of Advances Accounts

In order to improve asset quality your Bank scans the stressed advance portfolio on acontinuous basis industry- wise as well as borrower-wise so as to initiate suitableaction by way of restructuring based on the viability of the project/ activity. During thefinancial year 2015-16 the Bank undertook restructuring of various advances accounts asper the table given below.

Restructuring of Advance Accounts (Global) - 2015-16

Particulars CDR Mechanism SME Others Total
Standard Advances No. of Borrowers 19 564 583
Restructured Amount Outstanding 227 108 975 1310
Sub-standard Advances No. of Borrowers 1 58 332 391
Restructured Amount Outstanding 72 16 57 146
Doubtful No. of Borrowers 1 41 200 242
Advances Restructured Amount Outstanding 1031 60 404 1495
Total No. of Borrowers 2 118 1096 1216
Amount Outstanding 1331 185 1436 2953

Information Technology (IT)

Your Bank has undertaken a total end-to-end business and IT strategy project coveringyour Bank's domestic overseas and subsidiary operations.

• Your Bank has built the best of technology infrastructure by implementing astate-of-the-art Data Centre conforming to Uptime Institute Tier-3 standard and also aDisaster Recovery Site in different seismic zone with redundancy built in every singlepoint of failure to ensure uninterrupted banking service delivery to customers;

• In addition to the Disaster Recovery Centre your Bank has also implemented theNear Disaster Recovery Centre to ensure Near Zero Data Loss as part of its BusinessContinuity Planning and Disaster Recovery strategy;

• Your Bank continued to optimise its technology initiatives like Windows Servervirtualization and backup consolidation as green initiatives and also to improve DataCentre operational efficiency. Application virtualization Automatic Storage Management(ASM) & Real Application Clusters (RAC) Implementation Bandwidth up-gradationprovision of backup link use of new technology based on MPLS (Multi Protocol LabelSwitching) for improving uptime and on demand upgrade are some of the major initiatives;

• Your Bank has been undertaking regular capacity planning upgrade and refresh tosupport growing demand of business at various service delivery channels;

• Your Bank has implemented Enterprise Management System and modules have beendeployed to effectively manage and monitor Bank's growing IT infrastructure;

• Your Bank has deployed centralized IT architecture to provide the Core BankingSolution (CBS) and other application platform to all its domestic branches and 23 overseasterritories providing ease of management & monitoring and optimization of resources.Your Bank's Regional Rural Banks (RRBs) are also on the CBS Platform with deliverychannels;

• You Bank has initiated the upgradation of Core Banking Solution (CBS) to Finacle10.x and e-banking upgradation to 11.x.

Digital Banking Initiatives

Internet Banking - BARODA CONNECT

Your Bank continued to add more facilities under its Internet Banking (Baroda Connect)channels. During FY16 Baroda Connect has been enriched with multiple features to provideease of use and better control for the customers. Steps taken in this regard are:

• Introduction of facility for Self Registration for Baroda Connect using Debitcard for Retail customers. Using this new feature all retail customers who have notregistered for Baroda Connect can do so without visiting the branch;

• A facility for Self Regeneration of Transaction password for Baroda Connect hasbeen introduced for Retail Customers by which the retail customer can reset theirtransaction password by using debit card in case they have forgotten the password/ expiryof password/ password getting disabled due to wrong attempts;

• Facility for self retrieval of User ID wherein the customer can himself get theUser ID on registered email id without visiting the branch or contacting the Toll Freenumber;

• Customers can now link their PPF account to their Baroda Connect portal. Thecustomers can view the account statement and make credits to this account.

• Customers can now register for Pradhan Mantri Bima Yojana using Baroda Connect;

• Customers have also been provided option for linking/ delinking account facilityusing which customer can choose account he wants to get displayed while making payments;

• Customers can now give request for Adhaar Seeding in their bank accounts;

• Facility is provided for investing in Monthly Income Plan Regular Income PlanBaroda MahaUtsav Deposit Baroda Double Dhamaka Deposit Scheme Baroda Tax Saving- RIRDBaroda Tax Saving- MIP Baroda Tax Saving -QIP and Short Deposit ORD.

Mobile Banking - BARODA M-CONNECT & IMPS

Mobile Banking application has been completely revamped in your Bank to attract the newgeneration and techsavvy customers by enhancing its look and feel user-friendliness andexperience. The Mobile Banking platform as an alternate delivery channel offers manyfeatures and facilities to customers viz. icon based user interface balance enquirymini statement fund transfer stop payment cheque status etc. Mobile bankingapplication is made available in all i-Phones Blackberry Android Windows devices.Immediate Payment Services (IMPS) are implemented covering Person to Account (P2A)Merchant Payments (P2M) and Aadhaar based remittance (P2U). On the Mobile platform otherkey facilities like Mobile banking registration through CBS and net banking IMPS throughbranches M-passbook for NRE customers DTH recharge functionality etc. are added tomobile banking.

Baroda Non-Stop Lobby

Baroda Non-Stop Lobby comprises of five self service machines viz. Cash Recycler ATMMulti Function Kiosk Passbook Printer and Digital Signage System for providing 24x7banking services. The lobbies have increased visibility and are receiving encouragingresponse from customers as well as staff members. The number of Baroda Non-Stop lobbiesincreased from -151- as of March 2015 to -252- as of March 2016.

Baroda Express - 24X7 Lobby

"Baroda Express - 24X7" lobby is a lean version of Baroda Non-Stop lobby forsmaller centres by expanding existing ATM cabins with minor changes in the interior andproviding additional services by installing Cash Recycler and Passbook Printer in additionto ATM. Baroda Express Lobby started functioning from September 2015. Bank has -451-Baroda Express-24x7 lobbies as of March 2016.

Contact Centre

Contact Centre is providing most of the banking services through telephone channel. Allcustomers or members of general public/customer can connect with Contact Centre by dialingthe Toll Free Number 1800 22 33 44 or 1800 102 44 55 from anywhere in the country.

A dedicated Toll free no. 1800 102 77 88 is provided for Pradhan Mantri Jan Dhan Yojana(PMJDY) and other Financial Inclusion customers. Services through Contact Centres areavailable throughout the year without any holiday.

Contact Centres are currently providing following services:

• Account Enquiry - Balance enquiry transactions details etc;

• Cheque Services - Stop payment Cheque book request enquiry etc;

• Debit Card Services - Helpdesk Hot-listing Regeneration of PIN Reissuance ofCard Complaint of failed transactions etc;

• Internet Banking - Helpdesk Handholding Activation of password Regenerationof password complaint on failed transactions etc;

• Mobile Banking - Helpdesk handholding etc;

• General Enquiry - Products and services Branch/ATM location interest ratesinformation lead creation for product queries etc;

• Most of these services are also available through Interactive Voice Response(IVR) 24X7. Services through agents are available during 6 AM to 10 PM (except Debit CardHotlisting Webchat & NRI helpdesk which are available 24X7).

SMS Banking

For customers who desire to avail only information based banking services your Bankhas introduced SMS banking for balance enquiry mini statement Cheque status from theregistered mobile number. This is a very simple and easy to use product that a customercan start using without any registration process.

Baroda E Gateway - Internet Payment Gateway

Bank owns entire set up to provide electronic payment platform of its merchant'sbusiness by enabling payment collection using credit card / debit card & Net banking.Bank is having tie-up with payment aggregators viz. BillDesk Citrus Payment SolutionsPvt. Ltd. and PayTm to offer Net Banking of major Banks as additional payment option tocustomers. Your Bank is also in the process of upgrading IPG infrastructure with morerobust and feature so as to offer rich experience to our merchants.

Self Service Pass Book Printer (SSPBP)

Self Service Pass Book Printer is an automated kiosk where customer can print Pass Bookon their own. SSPBP kiosk recognizes the account details from the magnetic strip placed onthe Pass Book through these details kiosk fetches the account transaction and prints iton Pass Book. Customer can use this facility 24x7 from the SSPBP machine installed inElobby/ATM.

ATM

During the year your Bank installed 945 additional ATMs to provide uninterrupted basicbanking facility to the customers at convenient places across India and replaced 206 ATMswhich were older than 7 years. More than 50 ATMs have been redeployed at more convenientlocations for the customers. As on 31.03.2016 Bank has ATM network of 8975 ATMs.

During the year mobile banking registration through ATM on NFS network has beenimplemented. Gujarat Urja Bill payment facility is provided through ATM. Over Draftrequest facility through ATM for PMJDY customers have been provided. Cash withdrawalthrough Micro ATM for Bank's customers including our RRB customers and other Bankcustomers is implemented. Rupay EMV implementation for all our RRBs Lead capture throughATM Bill payment through MFK using card and PIN Multi language receipt printing in ATMand Cash Recycler was enabled. Cardless deposit facility in Cash Recycler Rupay cash atPOS Mudra cards was launched for the customers. Online Baroda Connect user creation andpassword reset using debit card and PIN OTP for registration of Rupay Visa Master e-comtransactionVisa Contact less debit card launched for Domestic and New Zealand territory.All debit card products are migrated to EMV cardsESQ ATM monitoring solution to enablethe Bank to minimize the ATM down time and serve the customer better. First use on POSenabled for Rupay cardsPIN at POS made mandatory for international transactionsDebitcard blocking through SMS and branchVisa EMV for OMAN territory implemented.

Cash Recyclers:-

Your Bank launched its first Cash Recycler on 20th July 2014. Bank hasdeployed 1135 Cash Recyclers/BNAs as on 31.03.2016. Cash Recycler is enabled to acceptcash as well as dispense cash apart from balance enquiry mini statement and PIN changefacilities. Cash recyclers are very popular with retail as well as business customersgiven the ease of operation and 24x7 availability. All successful transactions areimmediately credited or debited in real time and customers are issued an acknowledgmentslip confirming the transaction. Nearly 1.6 lacs transactions are taking place every dayin Cash Recyclers.

Payment Systems

• All branches of your Bank are enabled for interbank remittances through RTGS andNEFT. The RTGS and NEFT have also been interfaced with your Bank's internet bankingportal. The Straight through Processing (STP) of RTGS and NEFT have been implemented forthe Bank as well as RRBs. RTGS & NEFT have also been implemented in Uganda territory.Your Bank has successfully processed 782 lacs NEFT transactions and 74.07 lacs RTGStransactions during FY16.

• The SWIFT facility is provided at Foreign Exchange Authorized Branches in Indiaas also in 22 overseas territories. A new interface ‘XMM' is made available to allFOREX branches in India and also in 22 overseas territories for transmission of swiftmessages with Antimoney Laundering check. The Payment Messaging Solution (PMS) isimplemented in 22 overseas territories & all authorized branches in India. PMSfacilitates validation and formatting of SWIFT messages generated from CBS as per SWIFTstandards and also goes through AML check.

• During FY16 under Cheque Truncation System (CTS) your Bank has migratedadditional MICR centers to respective CTS grid centers of Western Grid (Mumbai) NorthernGrid (Delhi) and Southern Grid (Chennai).

• National Automated Clearing House (NACH) is implemented for both debit andcredit transactions.

Other Customer Centric initiatives

Your Bank has implemented Contactless VISA/Master Cards for Domestic OperationsCustomers Card to Card Transfer for ONUS and NPCI network FI switch and ATM switchintegration. Your Bank has implemented EMV implementation at New Zealand Oman andMauritius. Your Bank has implemented facility to access e-filling account of the IncomeTax Department through Internet Banking portal. Your Bank has implemented Statement ofmore than 6 months in e-Banking and User induced limit set in E-Banking. Your Bank hasprovided Value Added services on Multi function Kiosk and implemented online transactionpassword reset with Debit Card and pin. Your Bank has implemented online account openingfor NRE domestic customers and online remittance to NRE customers.

Information Security

A robust Information Security Management System has been implemented to protect theexisting technology setup against security threat. A Comprehensive Audit by ExternalAgencies is being successfully carried out by your Bank for its Data Centre/DisasterRecovery centre Infrastructure. Biometric Authentication is introduced for CBS Login atBranches.

Your Bank has a Security Operation Centre (SOC) for enhanced IT security. Your Bank'sData Centre as well as Disaster Recovery Centre are recertified and upgraded to ISO/ IEC27001:2013 certification. Your Bank has Implemented Fraud Management Solution for InternetBanking ATM & POS. In order to enhance security and confidence in Internet Bankingyour Bank introduced Fraud Management Solution including two factor authentications inIndia and thirteen Overseas territories by enabling Mobile App (ARCOT) OTP PULL OTP andSMS OTP Your Bank is regularly conducting VAPT (Vulnerability assessment & PenetrationTesting) of external facing applications viz. E banking mail messaging CMS IPG etc.

Your Bank has enabled a Fraud Risk Management system for day-to-day monitoring ofsuspicious transactions at branches for protecting the interests of customers. Whilecyber-attacks have become more unpredictable and electronic payment systems vulnerable tonew types of misuse it is imperative that Banks introduce certain minimum checks andbalances to minimise the impact of such attacks to arrest/minimise the damage. For thisyour Bank has implemented following additional security measures:

• Your Bank has implemented the RBI mandates as part of Risk Mitigation measuresfor card present transactions.

• All new debit and credit cards are issued for domestic usage only unlessinternational usage is specifically sought by the customer.

• Your Bank has enabled PIN at POS.

• Your Bank has enabled Digital signatures in Corporate Internet Banking for loginand transactions providing additional security to corporate customers.

Back Office Operations

Regional Back Offices and City Back Offices

Your Bank is having 13 Regional Back Offices (RBOs) at present. Your Bank has one RBOin each zone for processing of CASA account opening forms and issue of Personalized chequebooks. More than 5281 branches of your Bank as on 31.03.2016 are linked for centralizedaccount opening process through RBOs and issuance of Personalized cheque books. Your Bankis having all 22 erstwhile Service Branches functioning as City Back Office and 62 Mainbranches doing clearing activity and ECS covering 3030 branches at present for processingof inward and outward cheques through clearing. During the year under review 100%migration to CTS (Cheque Truncation System) clearing has taken place in Southern Grid andalso at all the 20 MICR (Magnetic Ink Character Recognition) locations of the WesternGrid.

Also CTS clearing has been implemented in Northern Grid consisting of 21 MICR centers.CTS clearing is functioning in all the 3 Grids viz. Southern Western and Northern Gridssmoothly.

Cash Management & Currency Chest

Your Bank has initiated steps to launch the Door Step Banking Services from and at thedoor step of customers of the Bank on Pan India basis. This will give a boost to Bank'sCurrent Deposit Portfolio. Bank has provided NSMs in all the branches and Chests to complywith the clean note policy of RBI. 4 new currency chests (Dum Dum Karnal Patan &Nipaniya) have been opened during the financial year. Now your Bank has -91- CurrencyChests.

Marketing

During FY16 your Bank focused on promotion of Brand as well as various products andservices through a variety of marketing initiatives. Marketing initiatives involvedeffective utilization of different media vehicles such as Print Electronic (TV / Radio)Digital and Out of Home (OOH) for Above- The-Line (ATL) activities as well as to supportthe Below- The-Line (BTL) activities undertaken at the Zonal / Regional level.

Your Bank launched its presence on Social Media viz; Facebook & Twitter on 1stJanuary of this calendar year. Your Bank appreciates the importance of social media as aplatform to connect with individual customer across demographics and geographies. YourBank also has plans to use social media for conducting a judicious mix of productpromotion and customer education campaigns to gainfully engage with customers and evolvethe relationships. Bank received positive response post the launch by engaging withdesired target audiences.

Bank undertook different campaigns in February and March with each campaign beingdesigned to serve different objective e.g. online brand building awareness with definedtarget segments business acquisition promote Alternate Delivery Channels to reduce costof banking transaction etc. Couple of campaigns are elaborated below:

#OneInALeap

#OneInALeap was a social media contest that was conducted on Facebook and Twitter on 29thFeb 2016. The objective was to capitalize on the Leap Day of the Year and enhance thebrand visibility in the digital space and engage the target group on a single day event.#OneInALeap successfully increased awareness among desired target segments. The daily postvolumes around this campaign are the record highest for a single day since our socialmedia presence.

Baroda SMS (Mortgage linked)

Baroda Specialised Mortgage Store (SMS) Campaign was executed with the dual objectiveof Brand & Product awareness for newly launched One Stop Store - Baroda SpecialisedMortgage Store (SMS) Branch and business acquisition via lead generation for the branchthrough targeted mediums focusing only Mumbai. In a short duration of 15 days more than300 leads were generated for processing sanction and disbursements.

Your Bank also undertook various product promotion campaigns amongst target audiencethrough advertising across different geographies. Besides focusing on providinginformation on various products and services Alternate Delivery Channels (ADCs) wereaggressively promoted. Further special customer segments were also targeted such asspecial offerings for MSMEs Rural &Agri segment NRIs etc. through judicious use ofvarious media channels on pan India basis.

In order to augment the Brand connect with its diverse stakeholders your Bank alsoparticipated in various events such as FICCI-IBA Banking Conference 2015 MINT AnnualBanking Conclave 2016 Dun & Bradstreet - Top BFSI Companies 2016 Standard CharteredMumbai Marathon 2016 India - South Africa Cricket Series 2015 among many others therebyincreasing visibility and Brand recall value.

Branch Network of the Bank

As on 31.03.2016 branch net work of the Bank was as under:

Number of Branches % Share in Total
Domestic: Area Classification
Metro 1008 18.91
Urban 933 17.50
Semi-urban 1425 26.74
Rural 1964 36.85
Total 5330 100.00
Overseas (Including Branches of subsidiaries and one Representative office) 106

Corporate Social Responsibility (CSR)

Bank of Baroda has a long legacy and tradition of contributing actively to the socialand economic development of the communities through various developmental activities.Education health human welfare and other social activities are Bank's main focus areas.In its continued efforts to make

a difference to the society at large Your Bank intensified its efforts further in thisdirection during FY 2015-16. Bank has sanctioned a sum of ' 1940.21 lacs todifferent organizations engaged in various community development and socioeconomic welfareactivities for the benefit of weaker section rural mass and others.

Some of the initiatives in the domain of CSR undertaken by Your Bank are as follows:

Baroda Swarojgar Vikas Sansthan (Baroda R-SETI)

Your Bank has established 49 BSVS (Baroda R-SETI) in six states of the country out ofwhich 45 are in our lead districts and 4 are in non- lead districts for generating selfemployment of Rural and Semi Urban youth through skill development training. It reflectsyour Bank's commitment towards the cause of poverty alleviation through self employment.Till now our BSVSs have conducted 9188 programmes and trained 263378 youth out ofwhich 159731 have already secured either employment or setup their own venture. Thesettlement ratio is at 60.19%.

Financial Literacy & Credit Counselling Centres (FLCC)

Your Bank has also established 51 FLCCs in eight states of the country for providingfinancial counseling services and to educate the people in rural and urban area to variousfinancial products and services available from the formal financial sector. These centersalso take up activities that promote financial literacy awareness about banking servicesfinancial planning and amelioration of debt-related distress of an individual.

Risk Management

To ensure sustainable growth your Bank has developed a sound risk management frameworkso that the risks assumed by the Bank are properly assessed and monitored. Your Bank'sBoard has put in place a robust Enterprise-wide Risk Management architecture so that therisks remain within the risk appetite defined by the Board. Specific committees of theBoard have been constituted to facilitate focused oversight on various risks. The Boardhas also constituted a Risk Management Committee of Board which oversees the interlinkages between different type of risks. Policies approved from time to time by the Boardof Directors or committees of the Board form the governing framework for each type ofrisk. The business activities are undertaken within these policy frameworks. A briefoutline of the mechanism for identifying evaluating and managing various risks withinBank is as follows:-

Asset Liability Management

Your Bank's Asset Liability Management (ALM) is aimed at strategic planningimplementation and control processes that affect the volume mix maturity ratesensitivity quality and liquidity of the Bank's assets and liabilities. Asset LiabilityManagement Committee (ALCO) which comprises of General Managers and Executive Directorsand is headed by the Managing Director & CEO ensures that the risk profile of theBank in terms of Liquidity and Interest Rate risk is within the risk tolerance limits setby the Board.

Liquidity Risk is the inability to meet expected and unexpected cash and collateralobligation at reasonable cost. In your Bank the liquidity risk is measured and monitoredthrough Flow approach and Stock approach and other prudential stipulations as per thelatest guidelines of the Reserve Bank of India. Your Bank has implemented Basel IIIFramework on Liquidity Standards - Liquidity Coverage Ratio (LCR) Liquidity RiskMonitoring Tools and LCR Disclosure Standards. The LCR standard aims to ensure that Banksmaintain an adequate level of unencumbered High Quality Liquid Assets that can beconverted into cash to meet liquidity needs for a 30 calendar day time horizon under asignificantly severe liquidity stress scenario specified by the RBI. Your Bank has alwaysbeen well above the stipulated level of LCR on solo basis as well as on consolidatedbasis.

Interest Rate risk arises due to mismatch between rate sensitive assets and liabilitieswhich adversely impacts the earnings of the Bank with the change in rate of interest inthe market. For measurement and monitoring of Interest rate risk both Traditional Gap andDuration Gap approaches are followed. The short-term impact of interest rate movements onNIM is worked out through "Earnings at Risk" approach taking into considerationYield curve risk Basis risk and Embedded Options Risk. The long-term impact of interestrate movements on Market Value of Equity is also worked out through Duration Gap approach.Advanced techniques such as stress testing of liquidity risk by way of simulationsensitivity and scenario analysis are used at regular intervals and tested against thecontingency funding plan.

Your Bank's comprehensive contingency funding plan has been formalized to foresee andmitigate liquidity crisis both for temporary and long-range liquidity disruptions. With apowerful suite of analytical and reporting tools an efficient liquidity and interest raterisk management has been facilitated enabling strategic decision-making and generatingalerts against potential deviations.

Credit Risk

Credit risk is defined as the possibility of losses associated with diminution in thecredit quality of borrowers or counterparties. In a Bank's portfolio losses stem fromoutright default due to inability or unwillingness of a customer or counterparty to meetcommitments in relation to lending trading settlement and other financial transactions.Alternatively losses result from reduction in portfolio value arising from actual orperceived deterioration in credit quality.

Credit risk is managed in your Bank through a well established Board approved frameworkthat sets out policies procedures and reporting which are in line with international bestpractices. Adequate attention is given to segregate the activities of policy framers withrisk takers. Your Bank has a well structured credit approval process which functionswithin the defined Board approved credit policy.

Credit Risk Rating in your Bank involves a method of systematically classifying creditproposals according to their quality and inherent risk characteristics. Rating is animportant single point indicator of credit quality to the Bank as also to otherstakeholders (viz. regulators analysts auditors etc.). Your Bank has adopted a robustweb based two dimensional credit rating system which consists of borrower rating as wellas facility rating and is named as Bank of Baroda Risk Assessment Module (BOBRAM). ThisBOBRAM system which is in place since 2007 assesses four types of risks (viz. IndustryRisk Business Risk Financial Risk and Management Quality Risk) pertaining to thecharacteristics of a borrower. While the first dimension the borrower rating signifiesthe likelihood of default the second dimension facility rating indicates the likely lossin case the borrower defaults and is expressed in terms of Loss Given Default (LGD).Facility rating depends on type of collateral offered and its coverage. The combinedrating of the borrower is arrived at by the combination of these two dimensions depictingexpected loss.

Over the years your Bank has gained good experience in internal rating and has thusbuilt up data on credit rating migration. This robust platform has enabled your Bank toget an approval of regulator for a parallel run under Foundation Internal Rating Based(FIRB) approach of Credit Risk under Basel II rules from 31st March 2013.Under the IRB approach the banks are allowed to develop their own empirical model toquantify required capital for credit risk. IRB implementation will make your Bank morerisk sensitive and would benefit the Bank with improved risk management systems and strongrisk assessment processes and possibly reduced credit risk capital requirements.

Your Bank's Corporate Research Cell prepares industry report studies through industryexperts to assess the risk prevalent in industries where the Bank has sizable exposure andalso for the identification of sunrise industries. To manage imprudent concentration yourBank has also put in place prudential caps across industries sectors and borrowers. ThePortfolio Review Cell carries out detailed studies on sectoral exposure creditconcentration ratings distribution and migration and charts out credit strategy of theBank based on these studies.

Your Bank has also implemented the Risk Adjusted Return on Capital (RAROC) Frameworkfor all credit exposures. RAROC is defined as the ratio of risk adjusted return to capitalemployed. Implementation of RAROC will facilitate us to evaluate whether the credit riskasset generates adequate profit to add economic value to shareholders' funds.

Market Risk

Market Risk implies the risk of loss of earnings or economic value due to adversechanges in market rates or prices. The change in economic value of different marketproducts is largely a function of change in interest rates exchange rates economicgrowth business confidence etc. Your Bank has clearly articulated policies to control andmonitor its treasury functions. These policies comprise management practices proceduresprudential risk limits review mechanisms and reporting systems. These policies arereviewed regularly in line with changes in financial and market conditions. The Interestrate risk in your Bank is measured through Interest Rate Sensitivity Gap Reports andEarning at Risk. Furthermore your Bank calculates duration modified duration PV01Value at Risk for its investment portfolio consisting of fixed income securities on dailybasis. It monitors the short-term Interest rate risk from the NII (Net Interest Income)perspective and long-term interest rate risk from the EVE (Economic Value of Equity)perspective. Moreover the stress testing of fixed interest investment portfolio throughsensitivity analysis and equities through scenario analysis is regularly conducted in yourBank. The foreign exchange risk and equity price risk is monitored too and measuredthrough daily marking to market stop loss limits VaR limits portfolio size limits IGLAGL etc. The Value at Risk for the treasury positions is calculated through historicalsimulation method for a ten days holding period at 99.0% confidence level.

Operational Risk

Operational Risk is defined (as per BCBS and RBI) as the risk of loss resulting frominadequate or failed internal processes people and systems or from external events. Thisincludes legal risk but excludes strategic and reputational risks. Operational Risk isintegral part of Bank's all activities and business. Hence it is required to be managedwith active engagement.

Operational Risk Management Committee (ORMC) of your Bank has the responsibility ofcontrolling the operational risk losses so that they do not cause material impact to theBank's functioning. The robust management of operational risk is reflected from theeffectiveness of the control environment. The Bank has initiated measures to modify theprocesses and install new systems to improve the control environment. Roll out of key RiskIndicators programme Risk Control and Self Assessment Programme and Root cause analysisduring the current year will further strengthen the control environment.

Your Bank is one of the promoters and initial equity capital subscribers to CordexIndia Private Limited which will be a consortium of Operational Risk loss data in Indiafor the banking industry.

Basel III Implementation

The Basel III capital regulations have been implemented by Indian Banks with effectfrom April 1 2013. This implementation requires enhanced quality and quantity of capitalon one side and more elaborate disclosure on the other. For augmenting and improving CoreCapital of Bank new measures for the inclusion of FCTR DTA and Revaluation Reserves havebeen introduced by RBI in March 2016. Also from March 2016 onwards Bank will startmaintaining CCB in phased manner and will reach 2.5% as per the regulator. The Bank isfully equipped to comply with all regulatory norms with reasonable cushion over theminimum regulatory capital requirements.

Risk Based supervision (RBS)

The Department of Banking Supervision (DBS) at RBI has adopted a Risk Based Supervisory(RBS) approach for Review of Supervisory Processes of Commercial Banks. The RBS frameworkhas been named as "Supervisory Program for Assessment of Risk and Capital(SPARC)" and one of its important components/ tools employed in the process is the"Integrated Risk and Impact Scoring (IRISc)" Model. RBS is driven by Offsite aswell as Onsite supervision which requires a Bank to put in place robust systems for datacollection and compilation process and reporting. RBS was rolled out in your Bank in2012-13 supervisory cycle. SPARC is risk focused and intended to increase theeffectiveness of the supervisory process. The two major areas of assessment under SPARCare Risk and Capital Assessment. The risk assessment for a Bank covers the inherent risksrisks due to gaps in controls for the inherent risks risks due to gaps in the Governance& Oversight as also the culture and degree of compliance to regulatory requirements.These assessments together determine the Aggregate Risk for a Bank. The Aggregate Risk andCapital Available together determine the Risk of Failure Score (RoFS) for a Bank.

Your Bank has successfully completed the third cycle under SPARC and is now wellpositioned to embark on the fourth supervisory cycle of 2015-16.

Internal Control Systems

Audit Committee of the Board oversees overall Internal Audit function of the Bank. Thecommittee guides in developing effective internal audit concurrent audit IS Audit andall other inspection & audit functions of the Bank. The committee monitors thefunctioning of the Audit Committee of Executives and inspection / audit department in theBank. Your Bank has a Central Internal Audit Division (CIAD) that examines the adherenceto systems policies and procedures of the Bank. The guidelines received on various issuesof internal control from Reserve Bank of India Government of India

Board and Audit Committee of the Board have become part of the Internal Control Systemfor better risk management. With rising business levels year after year Central InternalAudit Division is constantly aiming to curb the inherent risks through effective controlmechanism so as to safeguard Bank's interest. CIAD operates through thirteen ZonalInternal Audit Divisions to carry out audit of branches/offices as per the periodicitydecided by the Audit Committee of the Board. All the branches of the Bank are coveredunder Risk Based Internal Audit (RBIA). Out of 4455 branches inspected during 2015-163671 branches (82.40%) were in Low Risk 694 branches (15.58%) were in Medium Risk and 90branches (2.02%) were in High Risk category.

Bank is undertaking an exercise for revamping of system and processes focusing oncentralization of activities by use of technology imaging solutions and digitization. Thewhole gamut of audit approach will undergo a change with extensive use of technologyanalytics sampling and advanced audit methodology. Bank proposes to engage a KnowledgePartner out of leading Audit firms to assist in putting in place an efficient auditmechanism and its implementation.

Operations and Services Customer-Centric initiatives

Your Bank is highly responsive to the customer needs and believes that technologyproducts processes and human resources must be leveraged for delivering superior bankingexperience to its customers. To further enhance customer service delivery and customerredressal ‘Customer Service Department' during the year was strengthened. Your Bankhas taken several measures to improve the customer service at its branches and at the sametime strengthen the customer complaint redressal machinery for fast disposal ofcomplaints.

During the year an online Customer Satisfaction Survey 2015-2016 was launched from08.06.2015 to 30.09.2015 by sending emails to customers to know about their feedback so asto take remedial measures. The findings of the survey and suggested action points toaddress the deficiencies were considered and necessary actions taken.

Efforts to improve Customer Service at Branches

In your Bank the feedback on quality of customer service at branches is obtainedthrough the Branch Level Customer Service Committee meetings that are held every month inwhich customers from various cross sections of the society including senior citizens andpensioners are invited. The suggestions/views generated during the meetings are collatedso as to examine the feasibility to implement the suggestions for improving servicequality.

Your Bank is focused towards providing excellent customer service through all deliverychannels and has been making continuous efforts for enhancing the level of customersatisfaction by leveraging technology to provide e-products and alternative deliverychannels e.g. ATM/Debit cards POS Internet Banking Mobile Banking etc. best suited tothe diverse needs of various customer segments.

Customer Service Committee of the Board

Your Bank has a Sub-Committee of Board for Customer

Service which is headed by your Banks' Managing Director & CEO with the followingmembers as on 31st March 2016 :

1. Shri PS.Jayakumar Managing Director & CEO

2. Shri B B Joshi Executive Director

3. Shri M.K.Mehta Executive Director

4. Shri Prem Kumar Makkar Director

5. Shri Bharat Kumar D. Dangar Director

This Sub-Committee addresses the issues relating to the formulation of policies andassessment of their compliance which brings about consistent improvement in the quality ofcustomer service. It also monitors the status of the number of deceased claims pending forsettlement beyond 15 days pertaining to depositors/locker hirers/depositors of safecustody articles and reviews the status of implementation of awards passed by the BankingOmbudsman

Standing Committee on Customer Service

Your Bank has also set up a Standing Committee on Procedures and Performance Audit onCustomer Services comprising of three eminent public personalities as members along withall the Executive Directors and four General Managers of your Bank. This Committeeoversees timely and effective compliance of the RBI instructions on Customer Service andalso reviews the practices and procedures prevalent in your Bank and takes necessarycorrective steps on an ongoing basis.

The suggestions emanating from the Branch Level Customer Service Committee meetings areobtained by your Bank's Head Office on quarterly basis and placed before the StandingCommittee on Procedure and Performance Audit on Customer Services. The feedback of thecommittee meetings is then put up to the Customer Service Committee of the Board ofDirectors.

Customer-Centric initiatives and Redressal of Complaints

Your Bank has a Board approved Policy on Customer Grievance Redressal and the same isplaced on the Bank's website. Your Bank is also having a well structured CustomerGrievance Redressal Mechanism due to which the outstanding complaints have also come downsignificantly. The General Manager Operations & Services is designated as PrincipalNodal Officer for customer complaints in your Bank. Moreover all Zonal Heads and RegionalHeads are designated as Nodal Officers for their respective Zones and Regions. Furtherthe names of all Nodal Officers along with their contact numbers are displayed in all thebranches of your Bank. A quarterly review note on customer service and grievances isplaced before the Board of Directors comprising breakup and position of the customers'grievances received by your Bank.

Your Bank is also focused on Root Cause Analysis of the complaints and suitableremedial measures including updation of the systems procedures & sensitization ofemployees for enhanced customer service. Your Bank is having a web based online complaintregistration and redressal portal named as Standardized Public Grievance Redress System(SPGRS). An icon is placed on the home page of your Bank's website through which yourBank's customers as well as non customers can lodge their complaint online. The systemgenerates tracker id for tracking the status of the grievances in future. It alsofacilitates the complainant for uploading complaint in pdf or txt format upto a documentsize of 500 kb. Moreover the complainants can re-open their complaints within 15 days ofits redressal if not satisfied with the resolution and the same complaint is escalated tothe next higher authority/functional head for necessary action at their end. SPGRS alsohas a facility to capture suggestions/ feedbacks.

In terms of RBI directives your Bank has appointed a Chief Customer Service Officer(Internal Ombudsman - CCSO) w.e.f. 29.01.2016. As directed by RBI your Bank escalatesthose complaint cases to CCSO where Bank decides to reject a complaint and / or decides toprovide only partial relief to the complainant.

Compliance of Banking codes and Standard Board of India(BCSBI)

Your Bank is a member of the Banking Codes and Standards Board of India (BCSBI) and hasadopted the "Code of Commitment to the Customers" and the "Code of Bank'sCommitment to MICRO and Small Enterprises" prescribed by the BCSBI . These have beenplaced on your Bank's website and also made available to customers at the branches.

KYC/AMLCompliance

Your Bank has well defined KYC-AML-CFT Policy which is the foundation on which theBank's "implementation of KYC norms AML standards CFT measures and obligation ofthe Bank under Prevention of Money Laundering Act (PMLA) 2002" is based.

The major highlights of KYC-AML-CFT implementation across your Bank are as under:

• The Bank electronically generates Cash Transaction Reports (CTRs) for submissionto Financial Intelligence Unit-India (FIU-IND)

• The "AML Solution" for generating system-based alerts on the basis oftransactions in the accounts of the customers is in place. The scope has been furtherwidened with addition of more alert definitions as per recommendations of IBA workinggroup. Your Bank has a designated Director for overall compliance of KYC-AML-CFTguidelines.

• Central Transaction Monitoring Unit (CTMU) has started functioning from18.02.2016 at your Bank's Head Office for exclusively monitoring of the transactions/alerts generated in AML Solution and filing of STRs if found suspicious.

• There is a scrutiny team for detection and submission of Suspicious TransactionReports (STRs) to the Financial Intelligence Unit-India (FIU-IND).

• System-based Risk Categorization (from AML angle) of Bank's customers' accountshas been done half yearly i.e. in July and January.

• The Bank files Counterfeit Currency Reports (CCRs) and Non Profit OrganizationsTransaction Reports

(NTRs) to FIU-IND New Delhi every month. Your Bank generates Cross Border WireTransfer Reports every month through electronic mode for submission to FIU- IND New Delhi

• The Bank is in the process of allotting Unique Customer Identification Code(UCIC) to all its existing customers as per the RBI guidelines.

• Online verification of PAN from NSDL has been operationalised as a major step totackle money laundering activities.

• CBS system has been modified suitably so as not to accept cash deposits of '50000/- and above in absence of PAN / Form No. 60/61.

• Your Bank has implemented Aadhaar based e-KYC in collaboration with UIDAI.Real-time checking of names from UNSCR list is available in all the branches as a steptowards CFT.

• Online scanning of the customer's name with the names of the individuals/entities included in the updated AL Qaida/ Taliban Sanctions list or any other Blacklistissued by Govt. Authorities while opening of accounts and generates the AML Alerts onpredefined criteria.

• Your Bank has successfully participated in Pilot Run of Central KYC Registry andcompleted the process of inclusion of the CKYC mandatory fields in the Account OpeningForm and mapped the CKYC codes with the codes in our CBS system.

For achieving full KYC compliance following measures are taken by the Bank:

• A comprehensive list of KYC documents is uploaded on your Bank's website(www.bankofbaroda.com) for the benefit of customers.

• Mobile based SMS are being sent and notices have been published in local andnational dailies for updation of KYC data in accounts of the customers.

• Regular training sessions are conducted on the KYC-AML-CFT guidelines at theBank's training establishments.

• Training is being arranged for the Bank's senior officials/ executives atvarious institutes/establishments within the Bank and outside.

• Regular On-site and Off-site test checking is carried out to identifyirregularities if any and prompt rectification of the same.

Compliance Function

Your Bank has in place Compliance Policy outlining the compliance philosophy of theBank. Compliance Function in the Bank is an integral part of governance along withinternal control and compliance risk management process supported by a healthy complianceculture in the Bank

Compliance Function ensures observance of Regulatory / Statutory provisions containedin various legislations viz. Banking Regulation Act RBI Act Foreign Exchange ManagementAct Securities and Exchange Board of India Act and Prevention of Money Laundering Act andalso the regulations of the various Regulators where the Bank is having its Offices /Branches in overseas centres. It also ensures Standards and Codes prescribed by BCSBI(Banking Codes and Standard Board of India IBA (Indian Banks Association) FEDAI (ForeignExchange Dealers Association of India) FIMMDA (Fixed Income Money Market and DerivativesAssociation of India).

A robust web based Compliance Management System is being put in place to furtherstrengthen compliance function in the Bank.

In order to keep the compliance staff up-to-date with developments in the areas ofbanking laws rules and standards workshops on Compliance are conducted regularly.Knowledge Management Tools for the purpose have also been uploaded on the Bank's site.Workshops on compliance are also arranged for Branch Managers of selected Branches andRegional / Zonal Compliance Officers wherein various compliance issues with focus onKYC/AML norms at Branch / Regional / Zonal and Corporate levels are discussed so as tocreate awareness about Compliance.

Vigilance

Vigilance machinery in the Bank is effectively performing its proactive role intraditional and emerging risk prone areas in computerised/e-banking environment inaddition to sensitising all categories of staff members with the various preventivemeasures. To bring about greater transparency in procurement and tendering processes inour Bank Notice inviting tenders / details of tenders awarded by the Bank and summary oftenders/ contracts concluded are put on the Bank's website for widest possible publicity.Also Standardized Public Grievance Redress System (SPGRS) as advised by MOF for uniformimplementation in PSBs is made active with effect from 11.01.2013.

Your Bank follows Central Vigilance Commission Guidelines on Whistle Blower Complaintsunder Public Interest Disclosure and Protection of Informers (PIDPI) resolution. A two waylive global web telecast with all employees of the Bank on whistle blower policy wasorganized during the year. Bank has also designed software for lodgments of onlinecomplaints under whistle blower policy by employees.

Human Resources - Key to Business Excellence

Realizing the importance of human resources in the present dynamic and competitiveenvironment with multi-pronged challenges viz. large number of superannuations massiveintake of talent huge training requirements succession planning and engagement forhigher productivity your Bank is remodeling its HR processes through a number ofinitiatives.

Some of the key accomplishments in FY16 are as under:

Strategic workforce planning and Recruitment drive:

A scientific manpower planning model has been put in place for estimating manpowerneeds by level skills and also for strategic workforce planning for the next few years tofeed into various other HR interventions of recruitment planning career progressionvacancies and postings / deployment.

A specially designed ‘Career portal' has been launched on the Bank's website whichdefines this value proposition further with clearly laid out sections related to why yourBank should be the preferred choice for any prospective applicant.

For a smooth and effective integration of the new hires into Baroda family your Bankhas also put in place a very well structured and focused "On-boardingProgramme". Your Bank has also launched a focused Mentoring programme "BarodaSarthee" for the new hires wherein a senior employee - mentor handholds the newentrant to enable his smooth transition into the corporate world.

Baroda Manipal School of Banking"

The Baroda Manipal School of Banking is a unique association of your Bank and ManipalGlobal Education in which students undergo a focused 1 year programme customized to theBank's requirements before they are absorbed in your Bank as Probationary Officers. Theprogramme works on an inverted model of "Train Hire and Deploy" instead of"Hire- Train and Deploy". This innovative resourcing channel was initiatedduring the year FY12 and so far -3586- students have undergone/undergoing this course ofwhich -3120- students have joined the Bank as Probationary Officers.

Recruitment Drive during FY16:

To fulfil the business needs your Bank recruited 1896 officers in various Grades /Scales (both Generalists & Specialists) 2562 Clerks and 749 Subordinate staffthereby inducting a total of 5207 new employees in the Bank during the year 2015- 2016.The recruitment process will continue in the year 2016- 17 also with various recruitmentprojects undertaken for filling up almost 3283 posts of officers and 1000 posts ofclerks. Your Bank has a rich reservoir of Human Resources comprising of over 51000employees.

Engagement of Experts from Market for various Key positions on Contract Basis.

Your Bank has recruited/recruiting professionals/experts having specialized skill setsknowledge & competencies for various critical positions in the Bank viz. Advisor(Credit & Risk) Advisor (Business Development) Trade Products etc. on contractbasis for adopting the best technology/practices/ policies/products/processes existing inthe Market/Industry.

Succession Planning for Various Critical Positions & Mentorship Scheme

Your Bank is addressing the issue of Succession Planning through a very structuredTalent Management Programme. By this initiative the Bank identifies young potentialleaders on specified criteria who can take up various key/critical positions of the Bankand accordingly the developmental plans are prepared for each of the identified futureleaders.

This is an annual exercise and in FY16 your Bank was able to clearly identify around15-20% people in specific scales of Officers viz. in Scales II III IV V and VI as thefuture leaders.

Career Progression

During FY 2015-16 promotion exercise in all cadres were conducted and a total of 3971employees as shown in the table below were promoted to higher grade/scale.

Sub-Staff to Clerk 206
Clerk to Officer 802
JM-I to MM-II (Officer to Manager) 1451
MM-II to MM-III (Manager to Sr Manager) 847
MM-III to SM-IV (Sr. Manager to Chief Manager) 486
SM-IV to SM-V (Chief Manager to Asstt. Gen. Manager) 114
SM-V to TEG-VI (Asstt. Gen. Manager to Dy. Gen. Manager) 48
TEG-VI to TEG-VII (Dy. Gen. Manager to General Manager) 17

HR Automation

Your Bank has put in place a very comprehensive HR technology platform covering HRMTraining and Payroll & Leave modules christened as the "Human Resources Networkfor Employee Services (HRNes)". This technology platform has enabled automation ofvarious HR functionalities and processes. The HR Automation is a key enabler in theimplementation and sustenance of various HR initiatives. Certain processes have beenautomated thereby completely reducing the turnaround time.

Employee Engagement Survey 2016

Your Bank conducted an Employee Engagement Survey in February 2016 to understand theengagement levels of employees particularly their perceptions beliefs views etc so thatit can tailor various HR activities/initiatives suitably in order to address the gaps andto improve the engagement levels of employees further. The survey was launched on22.02.2016 and completed on 20.03.2016. More than 85% of staff members (Officers &Clerks) have participated in the Survey.

Performance linked Incentive Scheme for employees:

A Comprehensive Performance linked incentive Scheme for the Bank encompassing allemployees and all units under its ambit is in place in your Bank. A total of 12846employees received performance incentives covering 1218 Branches 15 Regional offices 4Zones and 39 operating units and a total amount of ' 28.72 crore was disbursed asincentives for the year 2014-15.

Grievance Redressal Mechanism for Existing & Retired Employees

Your Bank has formulated a well defined Grievance Redressal Mechanism in FY 2015-16 foreffective and timely resolution of grievances of any existing employee as well as those ofretired staff. Your Bank endeavors to resolve all grievances of the staff members at theearliest.

Special Thrust on Development of SC/ST/Other Backward Communities

Your Bank is committed to the constitutional safeguards and social objectives fordevelopment and welfare of persons belonging to SCs STs and Other Backward Classes insociety. Your Bank is one of those banks that has the highest number of employeesbelonging to SCs and STs which itself shows the commitment of the Bank towards theirdevelopment and upliftment.

Reservation in Employment

Your Bank observes all guidelines stipulated by the Government of India for reservationof posts in employment in All India and local recruitment. 15 % posts are reserved for SCsand 7.5% posts are reserved for STs in all India recruitments as also for selection toBaroda Manipal School of Banking another channel of resourcing started by the Bank.

The staff strength and representation of SCs and STs as on 31st March 2016is as under

Cadre Total SC SC % ST ST%
Officers 23489 4121 17.54 1875 7.98
Clerks 19542 3140 16.07 1712 8.76
Sub-staff 8206 2630 32.05 843 10.27
Total Local overseas Staff 51237 9891 19.30 4430 8.65
Grand Total 51237 9891 - 4430 -

Reservation Cell

An exclusive Reservation Cell in your Bank has been set up to monitor the reservationand other enabling provisions for SC/ ST employees. An executive in the rank of GeneralManager is appointed as Chief Liaison Officer for SC/ST/PWD &EX- Serviceman employeeswho ensures compliance of various guidelines pertaining to the SC/ST/PWD&EX-Serviceman employees.

Bharat Ratna Dr. BabasahebAmbedkar Memorial Trust

Your Bank has established the "Bharat Ratna Dr. BabasahebAmbedkar MemorialTrust" in 1991 for promoting welfare activities for the benefit of SC/ST employeesand their family members.

Learning and Development

Baroda Academy has taken a large number of initiatives that include fundamental changesin Onboarding programmes to Leadership Development Programmes. Apart from e-learning yourBank has deployed several innovative digital channels for reaching out to each employee.

Baroda Net Academy:

Baroda Net Academy has practical and knowledge enhancing e-learning courses on variedbanking subjects in the areas of Retail Assets and Liabilities Rural & Agri bankingSME Products Operations and ServicesCompliance and Professional Skill Development.

Employees have so far undergone more than 35000 man hours of training on Baroda NetAcademy. This has resulted in substantial savings on training costs.

Mobile Snippets:

Your Bank launched first of a kind Mobile App for the benefit of employees. The app isbeing effectively used to keep the employees updated on areas related to Banking throughDaily News Flash. Your Bank's employees are provided real time alerts on issuance ofimportant circulars and other developments. Employees participate in the quizzes which areheld on Mobile Snippets.

Your Bank has further moved ahead on capacity building initiatives with the foundationstone laid for setting up a Regional Academy at Bangalore. Four new satellite units havebeen operationalised at Muzaffarpur Coimbatore Visakhapatnam and Guwahati during theyear.

Large pool of empanelment of Training Agencies:

Your Bank has engaged reputed institutes for services like training with a uniquetemplate to evaluate intangible like training effectiveness. The entire process wascarried out to focus on role oriented & behavioural programmes with the support ofpartnering agencies. A total of 21 Agencies were taken on board from a large pool ofapplicants that included IIM Ahmedabad ISB Hyderabad MDI Gurgaon etc.

MOU with IIM Ahmedabad :

Your Bank signed MOU with IIM Ahmedabad during the year for developing case studies forBFSI domain. These case studies shall be made available for the Bank's internal trainingsystem.

New Training programmes during the year:

Apart from aligning training to corporate concerns your Bank has introduced newprograms during the year. Your Bank introduced a new program on "Ask forBusiness" for inculcating habits of cross selling at branch level. Dedicatedprogrammes for physically challenged employees were conducted at Baroda Academy to equipwith various tools to uplift their morale and to integrate them with the mainstream. Aspecial programme on Retail "CASA" (Create A Smile Always) for CASA (CurrentAccount and Saving Account) was conducted focusing on customer service and businessdevelopment in effective manner through knowledge upgradation. Your Bank designed aspecial programme christened as "Baroda Gaurav" to cover the entire sweeper cumpeons in your Bank focusing on self esteem customer service business etiquettes dresscode and importance of cleanliness and hygiene at branch level. Your Bank conducted aspecial training programme for officers handling Forex Portfolio making Forex business athrust area true to its image as India's International Bank. Your Bank has for the firsttime arranged training to local staff of overseas centers through video conference whichturned out to be very resourceful in bridging functional and cultural gaps. A two dayprogramme ‘Positive Approach to Vigilance Administration' was conducted forExecutives at Apex Academy for better appreciation of Vigilance. It was presented as atool for risk mitigation and address operational risks. Thus a positive attitude tovigilance is being fostered at the organization level. This has also been extended toother officers of the Bank.

Nurturing Ethics

Bank launched Code of Conduct Module on E-Learning platform with tests that required tobe taken by all officers with a deadline of March 31st 2016. Bank also launchedSocial Media Policy with emphasis on ethical conduct on Social Media.

Mind Gym Series

To broad base learning your Bank has reached beyond the usual formal trainingprogrammes by way of organizing events such as motivational speeches video shows andgroup activities etc under the name Mind Gym Series. Lectures under this series are heldat Baroda Corporate Centre. For building a team of employees with a healthy body mind andsoul ‘Office Chair Yoga' sessions were organized in the corporate office.

External Training

During FY16 3340 staff members were nominated to various external training programmes.Your Bank considers External Training as an integral part of capacity building whereinemployees at all levels are exposed to such programmes to learn and adopt the bestpractices existing in the industry.

Domestic Subsidiaries and Associates

The performance of your Bank's subsidiaries Joint Ventures and Associates wassatisfactory during FY16.

BOBCARDS Limited is a wholly owned subsidiary of Bank established in 1994 forissuance of Credit Card and Merchant Acquiring (ME Business) and also providing supportservices to the Bank for Debit Card Operations. The Company is having 38 Area Officesacross the country. The Company which was incurring losses continuously on account of hugeNPAs turned around during FY11 and has been earning profit since then. The Company hasfocused on all qualitative aspects of business development which has resulted in betterprofitability quality card base and ME base.. The Company re-engineered the process flowresulting in reduction of TAT for issuance of credit card/POS with proper checks andcontrol. The Company is providing range of offers in association with MasterCard and VISA.During the year the Company in association with MasterCard has also initiated rewardprogrammes (Discount Coupon worth ' 2500/-) for onboarding customers opting forMasterCard affiliation. Various other customer centric initiatives have also beenintroduced viz. online application module for tracking credit card/POS applications andstage wise automated status via SMS/E-mail etc. As a part of expansion plan the Companyhas entered into strategic business tie-ups with the Government of Rajasthan D-mart andsome other important tie-ups are in process to enlarge Merchant Base. The Company is inthe process of augmenting its system processes and customer value proposition includingintroduction of co-branded products for achieving substantial growth in its card / ME basein the next year. Recently the company has amended its Memorandum & Article ofAssociation and the Company is exploring the feasibility to enter into new lines ofbusiness within the purview of NBFC along with its existing card business.

BOB Capital Markets Limited is a wholly owned subsidiary established by Bank in1996 for doing Capital Market related business. It has licenses for Merchant BankingInstitutional Broking Retail broking Investment Banking and distribution of financialproducts. The Company has been showing improved performance post hiring of professionalteam. The focus is on investment advisory services Debt & Equity Syndication andCapital market activities. The Company has recently acquired software for promoting onlinetrading platform and has big plans to develop Retail trading business. BOBCAPS's focusremains with institutional broking and distribution of financial products. It has 45 wellknown institutions empanelled with the Company and is in process of setting up softwarefor institutional dealing. It has recently acquired PMS license from SEBI for doingPortfolio Management Services. In FY 2016 BOBCAPS successfully did its first IPO inrecent times of Bharat Wire ropes amounting to Rs 72 Crores.

The Nainital Bank Limited was promoted by Late Bharat Ratna Pandit Govind BallabhPant and others and became Associate Bank of Bank of Baroda in the year 1973. Today theshareholding of Bank of Baroda in Nainital Bank Ltd. is 98.57% and is a subsidiary of theBank. The State of Uttarakhand vide its communique dated August 3 2012 has notifiedthat The Nainital Bank Limited be treated at par with other PSU Banks. Bank has planned toissue debit cards to its customers. Bank is also planning to provide white label ATMservice to its customers in collaboration with TCPSL.

IndiaFirst Life Insurance Company Ltd. a joint venture company with Legal &General group commenced its business operations on 16th November 2009 and hasreceived an overwhelming response for its products across the country. IndiaFirst isamongst the fastest Life Insurance Company to break even in the 5th year ofoperation and its industry ranking is 9th among the private players with marketshare of 4% and AUM (Asset under Management)at 9061/- crores in March 2016. The Companybagged award "Celent Model Insurer Asia Award" in the IT Management BestPractices Category for implementing Disaster Recovery on Cloud.

India Infradebt Limited is a joint venture company with ICICI Bank Limited ICICIHome Finance Company Limited Citicorp Finance (India) Limited and Life InsuranceCorporation of India. The Company was incorporated on October 31 2012 in Mumbai. TheCompany is in operation as an Infrastructure Debt Fund - Non Banking Financial Company(IDF-NBFC). The Company's principal activity is to re-finance part of the debt liabilitiesof the Project Companies. The list of clientele includes Jadcherla Expressway PrivateLimited Navayuga Devanhalli Tollways Private Limited Oriental (Pathways) Indore privateLimited Renew Wind Energy (Jath) Limited apart from -4- toll way companies underumbrella of L & T etc for refinancing / take out financing.

Baroda Pioneer Asset Management Company Ltd. a joint venture with Pioneer GlobalAsset Management SpA is in its sixth year of operation. During the year the Company wasable to increase its average AUM to ' 9656 Crores. The strong focus on theinstitutional segment to grow its debts & money market products coupled with focus onSystematic Investment Plans for retail investors has resulted into satisfactory growth inAUM. The Company continues to focus on B15 (Beyond the top 15 cities of India) to developand promote its business especially on higher value SIPs and lump sum investments andconsequently the share of B15 towns has been growing steadily. The Company is active ininvestor education initiatives.

Entity (with date of registration) Country Owned Funds Total Assets Net Profit Offices Staff
BOBCARDS Ltd. (29.09.1994) India 22281 26385 2397 39 161
BOB Capital Markets Ltd. (11.03.1996) India 16053 16182 1023 1 53
The Nainital Bank Ltd. (31.07.1922) India 51760 608439 4697 126 798
IndiaFirst Life Insurance Co. Ltd. (05.11.2009) India 51532 923634 773 12 1150
India Infradebt Ltd. (31.10.2012) India 37374 262247 2924 1 13
Baroda Pioneer Asset Management Co. Ltd. (05.11.1992) India 4675 6025 -493 3 80
Baroda Pioneer Trustee Co Pvt Ltd. (23.12.2011) India 7 10 1 0 0

Awards and Accolades

During FY16 Bank won several awards and accolades on both business and financialparameters.

Date Awards
22.04.2015 Bank of Baroda was conferred BML Munjal award in Public Sector Category for "Business Excellence Through Learning & Development - 2015" at an award function held in New Delhi on 22.04.2015
19.06.2015 Bank won five prizes under Reserve Bank Rajbhasha Shield Competition 2013-14: First Prize in Linguistic Region ‘B'
Second Prize in Linguistic Region ‘A' & ‘C'
In addition to this the Bank has also received awards under Bilingual House Journal and Hindi House Journal categories.
16.07.2015 Bank was awarded HR Excellence Award by Businessworld for "Best initiative for Engaging Superannuated Employees".
28.08.2015 Bank was conferred the Best Public Sector Bank under the category "Global Business" at the Dun & Bradstreet Banking Awards 2015.
14.09.2015 Bank of Baroda won First Prize under All India Rajbhasha Kriti Purashkar Scheme of Govt. of India for Bank's outstanding performance in Official Language Implementation under the category of nationalized banks in linguistic region "B" for the year 2014-15.
09.02.2016 Bank of Baroda South Gujarat Zone has been awarded the First Prize in Western Region in Bank's category by Government of India Department of Official Language Ministry of Home Affairs for commendable performance in implementing the Official Language Policy during the year 2014-15 on 9th Feb 2016 in Official Language Conference for Central and Western Regions held in NIO Goa.
16.02.2016 Bank of Baroda was awarded as First Runner up for "Best Financial Inclusion Initiative" in the category of Large Banks by IBA during Banking Technology Awards 2016 at Mumbai.
20.02.2016 Bank of Baroda was awarded for "Excellence in Education Loan" at 6th My FM Stars of the Industry awards for Excellence in Finance Banking Insurance and Financial Services held in Mumbai
18.03.2016 Bank of Baroda won -3- Awards at the 55th Association of Business Communicators of India (ABCI) Awards 2016.
Wall Calendar 2015 - Silver
Headlines - Bronze -For NRI Ad - "Exclusive Banking Solutions for the Global Indians"
E-Zine - Silver -BOBMAR-COM

Implementation of Official Language (OL) Policy

During the period under review your Bank made outstanding progress in implementing theOfficial Language Policy of Government of India. Besides compliance of various statutoryrequirements under Official Language Policy of the

Union Government and directives issued by Reserve Bank of India your Bank movedforward to promote Hindi as a tool for business development.

Your Bank adopted a well-structured Annual Action Plan for Official Language in orderto achieve various targets set by the Government of India under its Annual ImplementationProgramme 2015-16 and the assurances given to the Committee of Parliament on OfficialLanguage during its visits to various offices/branches of the Bank. Your Bank couldachieve major targets of the Programme and fulfilled all the assurances given to theCommittee of Parliament on Official Language.

The Meetings of Central Official Language Implementation Committee presided over by MD& CEO/ Executive Director of the Bank were organized regularly on quarterly basis.Under the guidance from the Committee several new initiatives were taken during the yearFY16. Your Bank took initiative of providing Internet Banking services Mobile Pass bookservices to its customers in Hindi. All the alternate delivery channels viz. self servicePass Book printiers cheque deposit machines cash deposit machines Multi function Kiosksetc. were equipped with Hindi user interface for the convenience of customers. All theATMs of the Bank were enabled for printing of transaction slips and mini statements inHindi and major regional languages for the convenience of customers.

Your Bank made significant progress in respect to automation of Quarterly HindiProgress report submission system in the Bank. All the branches/offices are now submittingtheir QPRs through Pragati Online Package which was implemented during the last fiscal.Your Bank has made remarkable progress to provide pass books and other statement ofaccounts in Hindi to all the customers of linguistic region "A" as suggested bythe Parliamentary Committee on Official Language.

Your Bank organized an All India Seminar on "Rural Marketing and New Dimensions ofBanking Business" in Bengaluru during the year wherein representatives from differentbanks took part. An Inter Bank Seminar was organized at Corporate Office Mumbai on"Language Technology and Marketing of Banking Products" which was attended byrepresentatives of various PSBs/FIs in Mumbai. Your Bank celebrated World Hindi Day inJanuary 2016 at its all overseas territories which was attended by eminent personalitiesrelated to Hindi Literature and valued customers and officials of Indian Embassies atrespective overseas territories.

To contribute towards financial inclusion drive and the Pradhan Mantri Jan Dhan Yojanayour Bank continued to prepare and propagate through cartoon booklets animation films inHindi and also in regional languages for inculcating the habit of saving escalating thefeatures of Kisan Credit Card and emphasizing the benefits of timely repayment of loans.These cartoon booklets and animation films in Hindi were christened as "Chhoti Bachatbadi Khushhali" " Aam ke aam guthliyon ke daam" and "Samay Par KarjKa Bhugtan Jindagi Bane Aasaan" "Retail Loan se Khushali". Further yourBank also used the platform of Rajbhasha Karyakrams/ workshops for disseminating thefeatures of Pradhan Mantri Jan Dhan Yojana and other Govt. sponsored schemes.

In its pursuit to be on the forefront in terms of OL implementation your Bankinstituted an award namely "Maharaja Sayajirao Bhasha Samman" in memory of itsfounder Maharaja Sir Sayaji Rao Gaekwad-III. The award consists of a Citation/ Memento andcash award of ' 1.01 lac. During the year under review your Bank honoured ShriPrasoon Joshi the eminent lyricist advertisement maestro and poet with this award. YourBank started regional language training to its employees so that they learn the basics ofthe concerned regional languages which would help them in discharging their duties wellwhile dealing with local customers.

The Third Sub-Committee of parliament on official language visited your Bank'sbranches/offices at Manali Varanasi and Baroda during the period under review. TheCommittee appreciated the efforts put in by your Bank for progressive use of Hindi. Allthe assurances given to the Committee have been fulfilled within the prescribed timeframe.

Your Bank's efforts earned accolades from Government of India and Reserve Bank ofIndia. The Government of India awarded your Bank with the 1st Prize in theRajbhasha Gaurav Shield Competition in Region ‘B'. Further your Bank was awardedfirst prize for ‘ B' Region and second prizes for Region ‘A' and ‘C' byReserve Bank of India (RBI) under the RBI Rajbhasha Shield Competition. Besides yourBank's bilingual house journal "Bobmaitri" and Hindi house journal"Akshayyam" also received awards from RBI. Jaipur Baroda Jodhpur Ahmedabadand Lucknow offices of your Bank also received awards from Govt. of India for theiroutstanding implementation of Rajbhasa. Your Bank also received awards from PublicRelations Society of India Ashirvad and many other organizations.

Your Bank continued with its unique scheme "Medhavi Vidyarthi Samman Yojana"for popularising Hindi amongst the students' community. Under this scheme cash prizes andcommendation certificates are given to two students securing First and Second positions inM.A.(Hindi) examinations. This scheme at present is applicable in 64 universities of thecountry.

Your Bank published books in Hindi viz."Khudara Rin" "Banking Ke VividhAayam" "NPA-Banking Kshetra Ki Sabse Badi Chunauti" and "BadalteParivesh Me Banking" during the year for providing informative reading material inHindi language.

Board of Directors (Appointment /Cessation of Directors during the year)

Appointments

Shri Ravi Venkatesan was appointed as a part time nonofficial director as well asnon-executive Chairman by the Central Government u/s 9(3)(h) of The Banking Companies(Acquisition and Transfer of Undertakings) Act 1970/1980 wef 14.08.2015 for a period of3 years or until further orders whichever is earlier.

Shri P. S. Jayakumar was appointed as Managing Director & CEO by the CentralGovernment u/s 9(3)(a) of The Banking Companies (Acquisition and Transfer of Undertakings)Act 1970/1980 w.e.f 13.10.2015 for a period of 3 years or until further orderswhichever is earlier.

Smt. Usha A. Narayanan after scrutiny of nominations and determination of‘Fit and Proper' status was declared elected as Shareholder Director on the Board ofthe Bank w.e.f. 12.12.2015.

Shri Mayank K. Mehta was appointed as Executive Director by the Central Governmentu/s 9(3)(a) of The Banking Companies (Acquisition and Transfer of Undertakings) Act1970/1980 w.e.f 22.01.2016 up to 30.09.2018 i.e. the date of his attaining the age ofsuperannuation or until further orders whichever is earlier.

Cessations

Shri Ranjan Dhawan Executive Director ceased to be Executive Director w.e.f 1stOctober 2015 on his attaining the age of superannuation from the Bank's service.

Shri K.V. Rama Moorthy Executive Director ceased to be Executive Director w.e.f.29th August 2015 on his appointment as Executive Director of United Bank ofIndia.

Auditors' Compliance Certificate on Corporate Governance:

The Auditors Compliance Certificate regarding the compliance of the conditions ofCorporate Governance for the year 2015-16 is annexed with this report pursuant to"Part "E" of Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Business Responsibility Report

Business Responsibility Report as required by SEBI has been hosted on the website ofthe Bank (www.bankofbaroda. co.in). Any member interested in obtaining a physical copy ofthe same may write to the Company Secretary of the Bank.

Directors' Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the FinancialYear ended 31.03.2016:

a) the applicable accounting standards had been followed along with proper explanationrelating to material departures if any;

b) the accounting policies framed in accordance with the guidelines of Reserve Bank ofIndia were followed and the directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Bank at the end of thefinancial year and of the profit and loss of the Bank for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of applicable laws to the Bank forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities;

d) the directors had prepared the annual accounts on a going concern basis; and

e) the directors had ensured that internal financial controls followed by the Bank arein accordance with guidelines issued by Reserve Bank of India in this regard and that suchinternal financial controls are adequate and were operating effectively.

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Acknowledgement

The Directors express their sincere thanks to the Government of India Reserve Bank ofIndia Securities and Exchange Board of India other regulatory authorities variousfinancial institutions banks and correspondents in India and abroad for their valuableguidance and support.

The Directors acknowledge with appreciation the assistance and cooperation extended byall stakeholders of your Bank like Customers Shareholders and well Wishers in India andabroad.

The Directors place on record deep appreciation for the hard work and dedication of themembers of your Bank's Staff at different levels which enabled your Bank to recordconsistent growth with quality year after year despite economic challenges and consolidateits position as one of the premier banks in the country.

For and on behalf of the Board of Directors

P. S. Jayakumar

Managing Director & CEO

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