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City Union Bank Ltd.

BSE: 532210 Sector: Financials
NSE: CUB ISIN Code: INE491A01021
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OPEN 157.80
VOLUME 17913
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P/E 19.60
Mkt Cap.(Rs cr) 10,186
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OPEN 157.80
CLOSE 159.75
VOLUME 17913
52-Week high 182.64
52-Week low 114.64
P/E 19.60
Mkt Cap.(Rs cr) 10,186
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

City Union Bank Ltd. (CUB) - Director Report

Company director report

FOR THE YEAR 2015 - 16

Your Board of Directors is pleased to present the Annual Report on business andoperations of the Bank together with the Audited Financial Statements for the FinancialYear ended 31st March 2016.

Financial Highlights

(Rs. in crore)

Particulars 2015-16 2014-15 Growth (%)
Share Capital 60 60 --
Reserves & Surplus 2992 2636 14%
Deposits 27158 24075 13%
Advances(Gross) 21253 18089 17%
Investments (Gross)* 6326 5872 8%
Total Assets / Liabilities 31252 27871 12%
Net Interest Income 981 807 22%
Operating profit 833 693 20%
Net Profit 445 395 13%

* the figures of the previous year have been regrouped/ reclassified wherevernecessary.

During the year the Bank earned an operating profit of ' 833 crore registering anincrease of 20% as compared to previous year's operating profit of ' 693 crore. The netprofit of the Bank for the current year was ' 445 crore compared to ' 395 crore for thelast year registering a growth of 13%. The deposits and advances for the current yearstood at ' 27158 crore and ' 21253 crore respectively.The Total business stood at '48411 crore as compared to ' 42164 crore for the previous year registering a growth of15%.


The Total Deposits of the Bank for the current year increased by ' 3083 crore to '27158 crore from ' 24075 crore registering a growth of 13%. During the year under reviewCASA increased by ' 902 crore to ' 5533 crore from ' 4631 crore recording a growth of19%. The cost of deposit of the Bank decreased from 8.15% in the previous year to 7.62% inthe current year.


The gross Advances of the Bank increased by ' 3164 crore to ' 21253 crore from '18089 crore posting a growth of 17%. The yield on advances declined marginally from13.18% to 12.83% during the year under review.

The Gross and Net NPA for the current year stood at 2.41% and 1.53% respectively ascompared to 1.86% and 1.30% in the previous year.

Priority Sector advances during the year increased by ' 1960 crore from ' 8312 croreto ' 10272 crore. Your Bank has achieved 55.27% of Adjusted Net Bank Credit (ANBC)against the regulatory prescription of 40% of ANBC on Priority Sector lendingrequirements. The Total agricultural advances stood at ' 3391 crore as at 31stMarch 2016 forming 18.24% of ANBC as against the mandatory requirement of 18%.


The gross investments increased by ' 454 crore to ' 6326 crore as on 31stMarch 2016 from ' 5872 crore as on 31st March 2015 registering a growth of 8%and out of this the investments in Government Bonds alone amounted to ' 5905 crore.

The 10 year GOI benchmark yield softened during the year from a high of 7.89% to 7.46%as GOI securities saw good buying interest from Banks on account of rate cut by RBI.

It is noteworthy to mention that during the year the Bank earned a profit of ' 45 crorefrom treasury operations due to decline in yield on Govt. Securities by 0.43% as comparedto ' 60 crore last year when the yield went down by 1.06%. The average yield oninvestments declined from 8.57% in the previous year to 8.08% in the current financialyear.

Forex Treasury

During the year Indian Rupee witnessed swings against major currencies. The INR againstUSD ranged from ' 62.03 to ' 66.25 and remained comparatively weaker against USD on theback of rate hike in US. The Bank earned an exchange profit of ' 81 crore compared to ' 69crore last year including profit from integrated treasury operations.


Particulars Year ended 31st March 2016 Year ended 31st March 2015
Total Income 3354 3103
Total Expenses 2521 2410
Operating Profit 833 693
Provisions & Contingencies 388 309
Exceptional Items * 0 11*
Net Profit 445 395
Net Interest Income 981 807

* the method of depreciation on fixed assets was changed to straight line methoddetermined on the basis of useful life as against WDV method w.e.f. 1sApril2014 in accordance with Schedule II of Companies Act 2013. Consequent to the change thefixed assets and profit after tax for the FY ended 31s March 2015 were higherby ' 10.89 cr.

The Bank earned a Total income of ' 3354 crore as against ' 3103 crore posting agrowth of 8%. The Total expenditure of the Bank increased by 5% to record ' 2521 crore ascompared to previous year Total expenditure of ' 2410 crore.

The operating profit increased by ' 140 crore to ' 833 crore from ' 693 crore therebyrecording a growth of 20%. The net profit increased to ' 445 crore from ' 395 croreregistering a growth of 13%.

The Net Interest Income for the year under review increased by ' 174 crore from ' 807crore to ' 981 crore. The non-interest income of the Bank increased from ' 404 crore to '410 crore.

The provision for tax for the year increased from ' 126 crore to ' 158 crore. Theprovision for NPA stood at ' 205 crore vis-a-vis ' 165 crore last year. The Totalprovisions increased by ' 79 crore from ' 309 crore to ' 388 crore.

2012 2013 2014 2015 2016


The appropriations from net profit were made as under: /=

Particulars Year ended 31st March 2016 Year ended 31st March 2015
Net Profit 444.69 395.02
Balance of Profit brought forward 6.96 6.87
Amount available for appropriations 451.65 401.89
Transfers to
- Statutory Reserve 115.00 103.00
- Capital Reserve 8.71 7.60
- General Reserve 188.00 173.35
- Special Reserve under IT Act1961 40.00 32.00
- Dividend & Dividend Tax 92.49 78.98
Balance of Profit carried forward 7.45 6.96
Total 451.65 401.89


The paid up Share Capital of the Bank increased from ' 59.66 crore as on 31stMarch 2015 to ' 59.82 crore as on 31st March 2016. During the period the Bankallotted 1623479 equity shares to employees of the Bank pursuant to CUB ESOS Scheme.

The Net Worth of the Bank improved to ' 3033 crore as on 31st March 2016from ' 2666 crore as of 31st March 2015.

Capital Adequacy Ratio:

Minimum Prescribed CRAR 9% 9.625% (9%)
Our Bank CRAR 15.80% (16.59%) 15.58% (16.52%)

The concept of Capital Conservation Buffer (CCB) has been newly introduced under BASELIII norms wherein Bank is required to maintain CCB of 2.50% at the end of March 2019 inphased manner beginning from 31st March 2016 @ 0.625% in each year up to 31stMarch 2019.


The Bank believes in rewarding its shareholders handsomely and at the same timeendeavors to meet the future capital requirements through plough back of profit. Keepingthe twin objective in view the Board of Directors have recommended a final dividend of '0.20 paise per equity share of '1/- each for the year ended 31st March 2016besides having declared and paid an interim dividend of 100% during the year i.e. '1.00/-per equity share of face value of '1/- each. The Total dividend for the year will be 120%as against 110% in the previous year subject to the approval of final dividend by theshareholders at the ensuing Annual General Meeting. The dividend payout ratio works out to19.43%. The dividend is subject to Dividend Distribution tax to be paid by the Bank.

The Board recommends the final dividend for declaration by the shareholders at theensuing Annual General Meeting.


Keeping in mind the twin objectives of business growth and wider customer reach andparticipation the Bank has expanded its branch network by opening 50 more branches and254 ATMs across the country during the Financial Year ended 31st March 2016.The Bank has been successful in widening its presence pan India with 525 branches and1325 ATMs for better service to the customers. The Bank is keen to enlarge its presenceby tapping potential markets in southern India by opening more branches in this region inaddition to opening of branches in other states.


The Government of India and the Reserve Bank of India have been making concertedefforts to promote financial inclusion as one of the important national objectives of thecountry. It is a process through which the weaker / low income groups are brought withinthe ambit of formal banking sector with a main focus to protect their financial wealth.Your Bank following RBI directions has covered all the allotted 43 villages havingpopulation of over 2000 and 96 villages having population of over 1000 and below 2000by introducing ICT (Information Communication & Technology) based services thusproviding efficient and cost-effective banking services in the un-banked and remotevillages of the country paving way for inclusive growth.

Further during the year under review Basic Savings Bank Deposits (BSBD) accountsnumbering 99166 were opened and 91779 biometric smart cards were issued to thebeneficiaries. SB linked overdraft facility micro insurance products Electronic BenefitFund Transfer (EBT) payments have been extended to such account holders.


''Pradhan Mantri Jan-Dhan Yojana' (PMJDY) is a flagship financial inclusion programmeof Govt. of India which was launched by our Hon'ble Prime Minister on 28thAugust 2014 across the country. Under this programme your Bank has been allotted 264 wardsapart from 139 villages already allotted under the Rural Financial Inclusion scheme. YourBank conducted survey of all 180211 households in all these 264 wards.

The Bank has opened 81045 PMJDY accounts as on date through all its branches and Rupaycards were issued for the account holders under the scheme. As the overdraft facility isone of the features under PMJDY scheme Bank is considering the same based on conditionsfixed by IBA to the PMJDY account holders from ' 1000 to ' 5000.


This scheme was launched by our Hon'ble Prime Minister on 09th May 2015.The scheme provides life insurance cover to people in the age group of 18 - 50 years. Riskcover is available up to 55 years subject to payment of premium of ' 330/- p.a. Riskcoverage is ' 2 lakh in case of death due to any reason. The Insurance premium for thescheme is auto debited from the bank account of the respective subscriber. We are havingtie up with LIC for this scheme.


This Scheme provides financial cover against personal accident of the subscribers. Itis open for the age group between 18 - 70 years at a nominal annual premium of ' 12/-.Risk cover is ' 2.00 lakh for death due to accident or full disability and ' 1.00 lakh forpartial disability. The Insurance premium for the scheme is auto debited from the bankaccount of the respective subscriber. We are having a tie up with the New India AssuranceCo. Ltd for this scheme.


The Government of India launched Atal Pension Yojana for the benefit of all citizensespecially for the poor and under privileged. Under APY the subscribers aged 18 - 40 yearswill receive a fixed minimum pension ranging between ' 1000 - ' 5000 per month dependingupon their contribution. Under this Yojana the Government will also contribute minimum of50% of the Total contribution or ' 1000/ per annum whichever is lower to eachsubscriber.

The enrollment in PMJJBY PMSBY and APY schemes as on 31st March 2016 is48550 71167 and 750 respectively.


The Bank implemented an Employee Stock Option Scheme called 'CUB ESOS 2008' for grantof stock options to eligible employees of the Bank. The Shareholders of the Bank approvedthe scheme on 26th April 2008 at an Extra Ordinary General meeting of the Bank.The maximum aggregate number of options that may be granted under this scheme is50000000. As per the scheme exercise price of the options shall be decided by theCompensation Committee at the time of issuing stock options. The Bank offers ESOS to itsemployees which vests over a period of five years from the date of grant of options i.e.15% options each for first three years and 25% and 30% for fourth and fifth yearrespectively. Further the shares are offered at prevailing market prices and no discountis offered. The details of employee stock option are annexed hereto as Annexure I.


The Bank believes that the Human Resource Development is one of the key elements forensuring quality in business growth and profitability of its operations. The presentglobal economy is highly competitive calling for effective and efficient human resourcemanagement.

The Bank aims at optimum utilization of its resources through deploying effectivemanagement tools viz. motivation training enhancing leadership qualities and successionplanning. The Bank offers ESOS to the employees so as to create a sense of ownership amongthem as also the Bank believes that the very success of the Bank depends substantiallyupon its employees.

The Bank has a full fledged training college with experienced faculty and good traininginfrastructure supported by external specialists and in-house certified trainers to trainthe employees at various levels for maximizing the staff potential and sharpen theirskills. The Bank also deputes its employees to various training institutions like SIBSTCNIBM CAB CAFRAL etc. There exists a cordial relationship between the management and theemployees.

As on 31st March 2016 your Bank has 4517 employees comprising of 54Executives in top management cadre 1709 Officers 2436 Clerks and 318 Subordinate staffas compared to 4365 employees in the previous year.


In today's Banking scenario 'Technology' plays a vital role in managing and fulfillingthe growing customer demands.

During the year under review the Bank had widened the ATMs reach to 1325 locationsincluding 660 off-site ATMs. The Bank has also introduced Cash Accepting ATMs (Bulk NoteAcceptor - BNA) numbering 321 and has proposed to install it in all branches which wouldenable the customer to remit cash directly to the credit of their accounts.

Further we have also enabled the recycling facility (Bulk Note Recycler - BRM). Bythis add-on facility the cash deposited by the customers into the machine will be used(recycled) for dispensing also. The burden of manual loading of cash into the machines isconsiderably reduced now.

The Bank has introduced interactive CUB Mobile Banking - mBank Plus mPassbook (MobilePassbook) IMPS in Internet Banking for speedy funds transfer across the Banks and DigitalSignature authentication for Corporates as second factor authentication for safe andsecure Internet Banking.

We have deployed Xpress Desks (Green Channel Counter) across all our bank branches andthe Bank has installed Multi function KIOSKs in select branches and is planning to expandthe same. The KIOSK acts as a Self Service Machine which can be used for funds transferwithin own accounts within CUB accounts and across the Banks open deposit accounts etc.

The bank has also installed cheque acceptor KIOSKs and self passbook printing KIOSKs.Customer Self Service Centre - e-Lounge has been set-up at 17 locations facilitating thecustomers with Bulk Note Acceptor (BNA) Cash Dispenser ATM Multi-function KIOSK Chequedepositing KIOSK and Passbook printing KIOSK. This facilitates independent smartbanking.The bank has also launched CUB mobile wallet which is a mobile based softwareapplication and caters to customer utility services through mobile phone. Anyone (customer/ non-customer of CUB) having a smartphone with Android OS can open and operate CUBmWALLET. The customer can load money send money recharge (Mobile / DTH) and make billpayments.

Our Bank believes in keeping up with the latest trends in technology. In addition theBank promotes efficient use of technology enabled banking facilities among its customers.Through this customer friendly approach our bank could successfully migrate 78% oftransactions to alternative channels.

Our Computer System Department has been certified with ISO/IEC 27001:2013 for providingservices for IT infrastructure & operations support and maintaining and monitoring ofIT Outsources Processes.

A customer friendly Captive Contact Centre (Call Centre) with Interactive VoiceResponse System (IVRS) is in place to promote customer support in multi-languages at 24x7basis.


• Your Bank was awarded Best Small sized Bank for 2014-15 by Business World - PWCBest Banks' Survey 2015.

• Your Bank won "Productivity & Efficiency" award for Small banksconducted by Business Today - KPMG study on Indian Best Banks' survey 2015.

• Your Bank was awarded by Financial Express - EY "Best Old Private SectorBank" for 2015.


Shri. S. Balasubramanian retired as Part-Time Non-Executive Chairman of the Bank on 3rdMay 2016 on account of completion of tenure. Shri. S. Balasubramanian started his journeywith City Union Bank Ltd. during the year 1971 as a Probationary Officer and rose to thehighest position working in all departments and in various capacities.

During the year 2005 Shri. S. Balasubramanian was elevated as the Chairman & CEOof the Bank and thereafter in 2009 he was appointed as the Managing Director and CEO. TheBank under his leadership has grown manifold to meet the stakeholders' ever increasingexpectations and his journey continued with the Bank as Part-Time Non-Executive Chairmansince May 2011.

The Board places on record its warm appreciation for the invaluable services renderedby Shri. S. Balasubramanian during his tenure in the Bank.


a) After vacation of office by Shri. S. Balasubramanian pursuant to the provisions ofSection 35B and Section 10B (1A) of the Banking Regulation Act 1949 Shri. S. MahalingamIndependent Director on the Board of the Bank has been appointed as Part-time Chairman fora period of three years w.e.f 04th May 2016. The Reserve Bank of India hasapproved his appointment terms vide its letter no. DBR.Appt.No.13995/08.42.001/2015-16 dt.6th May 2016. The complete profile of Shri. S. Mahalingam is made available inthe Notice of this Annual General Meeting forming part of Annual Report.

b) In accordance with the provisions of Section 161 of the Companies Act 2013 Shri.M. Narayanan has been co-opted as an Additional Director on the Board of the Bank w.e.f.03rd May 2016 to represent the majority sector having special knowledge inAccountancy Agriculture & Rural Economy. In the opinion of the Board Shri. M.Narayanan is a person of knowledge expertise and competence and hence his appointment isbeing placed before the members for approval. The complete profile of Shri. M. Narayananis made available in the Notice of this Annual General Meeting forming part of AnnualReport.

c) Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri. R.Mohan Director is liable to retire by rotation at the ensuing Annual General Meeting andbeing eligible has offered himself for re-appointment.

Key Managerial Personnel

During the year under review there has been a change in the composition of keymanagerial personnel of the Bank. Shri. S. Sundar retired as the Chief Financial Officer(CFO) of the Bank w.e.f. 30th June 2015 on account of superannuation.Thereafter from 1st July 2015 Shri. V. Ramesh Company Secretary of the Bankwas re-designated as Chief Financial Officer & Company Secretary. At present Dr. N.Kamakodi MD & CEO and Shri. V. Ramesh CFO & CS of the Bank are the KeyManagerial Personnel as per the provisions of the Companies Act 2013 and rules madethereunder.

Declaration by Independent Directors

The Bank has received necessary declaration from each Independent director underSection 149(7) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations) that they meet the criteria ofindependence laid down therein.

Familiarization Program for Independent Directors

The details of programme for familiarization of Independent Directors with the Banktheir roles rights and responsibilities in the Bank and related matters are providedseparately under the Corporate Governance Report forming part of Annual Report.

Performance Evaluation of the Board

In terms of the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 your Bank had laid down criteria forperformance evaluation of Directors Chairperson MD & CEO Board Level Committees andBoard as a whole and also the evaluation process for the same.

The performance of the members of the Board the Board level committees of theIndependent Directors and the Board of Directors were evaluated as per statutoryrequirements.

Board Meetings

All Board meetings of the Bank were held in accordance with the Companies Act 2013the Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI)and SEBI Listing Regulations 2015. The meetings were held to discuss and decide onvarious business policies strategies and other businesses in the best interests of theBank.

During the year under report 15 meetings were duly held. The details of meetings areprovided in the Corporate Governance Report forming part of this Annual Report.


In accordance with Section 134 (5) of the Companies Act 2013 the Board of Directorshereby declares and confirms that:

i) In the preparation of the annual accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures.

ii) The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Bank at the end of the financial year and of theProfit & Loss of the Bank for that period.

iii) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of applicable laws governing banks inIndia for safeguarding the assets of the Bank and for preventing and detecting fraud andother irregularities.

iv) The Directors had prepared the annual accounts on a going concern basis.

v) The Directors had laid down adequate internal financial controls to be followed bythe Bank and that such internal financial controls are adequate and were operatingeffectively; and

vi) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Code of Conduct to regulate monitor and report trading by Insiders in securities ofCity Union Bank Ltd.

The Bank has formulated a Code of Conduct pursuant to SEBI (Prohibition of InsiderTrading) Regulations 2015 to regulate monitor and ensure reporting of trading by theemployees and other connected persons towards attaining compliance with SEBI Regulationsand the same is designed to maintain highest ethical standards of dealing in securities ofthe Bank by persons to whom it is applicable. The code of conduct and related policy areavailable in the Bank's website and can be viewed at

Remuneration / Compensation Policy

The Bank has adopted Compensation Policy in accordance with the directives issued bythe Reserve Bank of India. The Bank has also constituted a Compensation & RemunerationCommittee which also oversees the framing implementation and review of the CompensationPolicy of the Bank. The Remuneration policy is briefed under Corporate Governance Reportforming part of Annual Report.


Statutory Auditors

M/s. P. Chandrasekar Chartered Accountants Bengaluru the present Statutory CentralAuditors will retire at the conclusion of the forthcoming Annual General Meeting andbeing eligible have offered themselves for re-appointment. The Bank has received theconsent from the Auditors and confirmation to the effect that they are not disqualified tobe appointed as Statutory Auditors of the Bank in terms of Companies Act 2013 & therules made there under. The Reserve Bank of India has accorded its approval for there-appointment of M/s. P. Chandrasekar Chartered Accountants to act as Statutory CentralAuditors for the financial Year 2016-17. Members are kindly requested to consider andapprove their re-appointment as Statutory Auditors of the Bank for FY 2016-17.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Bank hasappointed M/s B.K. Sundaram & Associates Practicing Company Secretaries to act asSecretarial Auditor for conducting the Secretarial Audit of the Bank for Financial Year2015-16. The report of Secretarial Auditor 'Secretarial Audit Report' is annexed hereto asAnnexure II.


Considering the nature of activities carried out by the Bank the provision of Section134(m) of the Companies Act 2013 relating to conservation of energy and technologyobservation do not apply to the Bank. However every effort is being made to conserveenergy and absorption of technology.

The Bank continues to encourage country's export promotion by lending to exporters andoffers them forex transaction facilities.

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are furnishedas Annexure III.

The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are furnished as Annexure IV.

It is hereby confirmed that the Bank has proper systems in place to ensure complianceof all laws applicable to the Banks.


The Board of Directors of the Bank has adopted a policy on Related Party transactionswhich is in line with the Companies Act 2013 and SEBI listing regulations 2015. Therewere no significant "Related Party Transactions" of any material financial& commercial nature with the Bank by the Directors and their relatives that would havepotential conflict with the interest of the Bank at large. A detailed policy on theRelated Party Transaction is available at the Bank's website (


Pursuant to Section 134(1)(a) of the Companies Act 2013 (the Act) the extract ofAnnual Return in form MGT - 9 as provided under Sub-section (3) of Section 92 of the Actis appended to this Annual Report as Annexure V.


In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 and the related notifications /circulars / guidelines issued by MCA. As per the above the Bank has established CorporateSocial Responsibility (CSR) Committee. Bank is required to spend 2% of the average netprofit before tax of previous three financial years or any part thereof on CSR activities.During the year the Bank has spent an amount of ' 10.45 crore towards CSR activitieswhich includes an unspent amount of ' 2.40 crore pertaining to FY ended 2015. The Bank hasdisclosed its CSR Policy in the website and the same can be viewed at Annual Report on the CSR activities undertaken during the year forming part of thisReport is annexed hereto as Annexure VI.


Corporate Governance of the Bank is an ethically driven business process that rests onthe fundamental pillar of high ethical values aimed to enhance organization's brand andreputation and to protect the interests of all the stakeholders by taking ethical businessdecisions.

Your Bank is committed to achieve the highest standards of Corporate Governance andadheres to the Corporate Governance requirements set by the Regulators / applicable laws.

Accordingly your Board functions as trustees of the shareholders and seeks to ensurethat the long term economic value for its shareholders is achieved while balancing theinterest of all the stakeholders. All the Directors on the Board have executed "Deedof Covenant and Undertaking" individually in line with the recommendations of Dr.Ganguly Committee Report.

A separate section on Corporate Governance standards followed by your Bank and therelevant disclosures as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Companies Act 2013 and rules made there under aredisclosed separately forming part of this report.


During 2015 global economic activity remained subdued. Growth in emerging market anddeveloping economies declined for fifth consecutive year while a modest recoverycontinued in advanced economies. Global growth estimated at 3.1% in 2015 is projected at3.4% in 2016 and 3.6% in 2017. The picture for emerging market and developing economies isdiverse but in many cases challenging. In the domestic front there were decelerations ofservices sector activities Rabi procurement was lower in April-May 2016 than a year agoweakness in private investment was major concern although public investment especially inroads and railways etc. gained strength. Except for natural gas and crude oil the coresector registered strong growth in April 2016 on account of a seasonal pick-up inindustries like electricity also supported by a low base. Available information on Q4earnings suggest double digit growth in EBIDTA levels for non-financial corporate whichshows signs that corporate performance is improving. RBI has progressively reduced thepolicy rate by 150 basis points since January 2015 to its current level of 6.50%.However the transmission of these reductions by commercial banks to its borrowers hasonly been partially done.

Your Bank a mid-sized old generation private sector bank has made significantprogress over the last few years through measures like increased efficiency upgradationof technology to meet new challenges aspirations and prudent expansion of branches acrossIndia. These steps have helped the Bank in enhancing its market share at a rapid pacedespite competition as well as the various domestic challenges faced by financial andcommercial sectors during the period. A detailed Management Discussion and Analysis Reportfor the year under review as stipulated in SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is presented in a separate section forming part of thisAnnual Report.


The Bank has formed a vigil mechanism to deal with instances of unethical behavioractual or suspected fraud or violation of Bank's code of conduct or ethics policy. Thedetails of this policy have been described in the corporate governance section and thepolicy is available at the Bank's website.


The Board of Directors of the Bank would like to take this opportunity to thank all thestakeholders and wish to place on record its deep & sincere gratitude to the ReserveBank of India NABARD NHB IDBI SIDBI EXIM BANK ECGC DICGC SEBI Stock ExchangesDepositories Karvy Computershare Pvt. Ltd. Life Insurance Corporation of India UnitedIndia Insurance New India Assurance Tata Consultancy Services CCIL CIBILCorrespondent Banks Exchange Houses and other regulatory authorities for theircontinued support guidance and co-operation and also to Shri. S BalasubramanianNon-Executive Part-time Chairman who retired on account of superannuation during thisfinancial year.

The Board hereby appreciates the dedication and the efforts of all the employees fortheir resolute support and commitment in pursuit of organizational growth &excellence.

Place : Chennai S. Mahalingam
Date : 21st June 2016 Non-Executive Part-time Chairman
(DIN : 00121727)


Statutory Disclosures regarding ESOS under Regulation 14 of Securities and ExchangeBoard of India (Share Based Employee Benefits) Regulations 2014 and pursuant to Rule12(9) of Companies (Share Capital and Debentures) Rules 2014

ESOS 2008

Particulars Series I Series II Series III Series IV Series V Series Vl
Total number of options of granted (Including additional grant upon rights issue) 22781250 368408 3123128 4356000 9617000 1500500
Pricing Formula ' 13.00 per option ' 32.00 per option ' 47.00 per option ' 46.95 per option ' 93.20 per option ' 88.05 per option
Revised price pursuant to Right Issue 2013 ' 11.60 per option ' 29.60 per option ' 41.60 per option NA NA NA
No of options outstanding as on 01.04.2015 1772700 185287 1209123 3371950 9617000 0
No of options granted during the year 0 0 0 0 0 1500500
No of options forfeited / lapsed during the year 32172 3240 21832 174500 0 0
No of options exercised during the year 838812 148999 230068 405600 0 0
No of shares arising as a result of exercise of option during the year 838812 148999 230068 405600 0 0
Variation in terms of Options Not Applicable
Money realized by exercise of Options during the year 9730219.20 4410370.40 9570828.80 19042920.00 0 0
Loan repaid by the trust during the year from the exercise price received Not Applicable
Total Number of Options outstanding at the end of the year 901716 33048 957223 2791850 9617000 1500500
Employee wise details of Options granted
i) Senior Management Personnel NIL NIL NIL NIL NIL NIL
Dr. N. Kamakodi 500000
Sri. R. Venkatasubramanian 100000
Sri. S. Sekar (Retired - 31.07.2015) 25000
Sri. S. Sundar (Retired - 30.06.2015) 25000
ii) Any other employee who received a grant in any one year of the options amounting to 5% or more of the options granted during the year NIL NIL NIL NIL NIL NIL


ESOS 2008

Particulars Series I Series II Series III Series IV Series V Series Vl
iii) Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Bank at the time of grant NIL NIL NIL NIL NIL NIL
Allotment of shares made during the year un der ESOS
No of shares issued under ESOS during the year NIL 53460 NIL NIL NIL NIL
The price at which such shares are issued NIL ' 29.60 NIL NIL NIL NIL
Employee wise details of the shares issued to I) Senior Management Personnel Shri. R Venkatasubramanian NIL 53460 NIL NIL NIL NIL
ii) Any other employee who received a grant in any one year of the options amounting to 5% or more of the options granted during the year NIL NIL NIL NIL NIL NIL
iii) Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Bank at the time of grant NIL NIL NIL NIL NIL NIL

Employee compensation cost calculated as per the intrinsic value method for thefinancial year 2015-16 is NIL. If the Employee compensation cost was calculated as perfair value method as prescribed by the SEBI the Total cost to be recognized in thefinancial statement for the Financial Year 2015-16 would be ' 8641250/-. Consequentlynet profit would have been reduced by ' 8641250/- and EPS would have been reduced by '0.02 pershare.

Weighted Average Details
Weighted Average Market Price (In ') 77.04
Weighted Average Exercise Price (In ') 77.04
Weighted Average Risk Free Interest Rate (%) 7.51
Weighted Average Stock Volatility 0.03
Weighted Average Fair Value of Options (In ') 23.53

The Company has adopted Black-Scholes model to arrive value of options granted underESOS 2008 based on the following assumptions.

1. Risk Free Rate - Yield on the appropriate period Government Securities has beenconsidered as the risk-free rate.

2. Expected Volatility - Standard Deviation of the stock returns of City Union Bankover the trailing one year period prior to the date of grant of options has beenconsidered.

3. Expected Dividend - Based on the last dividend payout by the Bank.