It gives me great pleasure to place before you the Annual Report of your Bank for thefifth year in succession.
During the year: i. Government of India infused capital twice in your Bank. In thefirst instance in the month of September 2016 it infused an amount of Rs 446 cr ascapital and in the second instance in the month of March 2017 it infused an amount of Rs600 cr. ii. Life Insurance Corporation of India subscribed Rs 172.33 cr to PreferentialIssue of Shares of the Bank. iii. General Insurance Corporation of India subscribed Rs 20cr to Preferential Issue of Shares of the Bank.
These capital infusions and subscriptions enabled your Bank to post an improved CapitalAdequacy Ratio of 11.39 % even in these stressful times. In its continuous effort to bringdown the cost Bank raised an amount of
Rs 400 cr by issue of Basel III compliant Tier II Bonds at a coupon rate of 8.76% andredeemed Bonds issued at a coupon rate of 9.20% amounting to Rs 300 cr.
For the second year in a row the Banks strong brand image was validated in theEconomic Times Brand Equity survey of "Most Trusted Brands 2016" whereyour Bank was Ranked 10th amongst all Public Sector Banks under the StrongBrand Equity category. As stakeholders of the Bank it is a proud moment for each one ofus.
Before apprising you about other performance highlights of the Bank for the FY 2016-17I wish to touch upon the global and Indian economic environment and Indian bankingindustry trends which outline the challenges and opportunities in the operatingenvironment in which your Bank is functioning.
Global growth is consistently good since summer 2016 which adds up to a brighteningGlobal Outlook. The growth is gaining momentum with buoyant financial markets and along-awaited cyclical recovery in manufacturing and trade. As per IMF estimates GlobalGrowth is projected to grow at 3.5% in 2017 from 3.1% in 2016.
The financial year 2016-17 brought tectonic shift in Indian Economy in the form of"Demonetization Insolvency & Bankruptcy Code and GST Bill". Thesehistorical events coupled with other Regulatory & Structural reforms announcedconjointly by Government of India and Reserve Bank of India has made India a bright spotfor Business and Investment amongst Emerging and Developing Economies.
Major international agencies have continued to pose their confidence in Indian economy.The Asian Development Bank (ADB) has also highlighted that South Asias expansionwould be driven by faster recovery in India. The historic move of Demonetization can beseen as a step towards making India a less Cash Economy. India is rapidly advancingtowards joining the First World Nations and is focusing on new opportunities throughinitiatives such as Digital India Smart Cities Make in India and Startup India etc.
Another significant move of rolling out Goods and Services Tax (GST) will reshape theIndirect Tax structure by subsuming majority of indirect taxes like excise sales andservices levies. It is also expected to boost the Make in India programme asmanufacturers will get substantial input tax credits for capital goods.
Banking Industry Trends
Contours of Banking Industry have started expanding with the commencement of operationsby Payments and Small Finance Banks and Fintech Companies. However challenges remain forthe Banking Industry in the form of ballooning NPAs and sluggish Credit growth.
Enactment of Insolvency & Bankruptcy Code and Amendments to SARFAESI and DRT Actwill create an environment for resolution of Non-Performing assets.
Legislative changes such as Benami Transaction (Prohibition) Amendment Act 2016 RealEstate (Regulation and Development) Act 2016 and on FDI investment in AssetReconstruction Companies (ARCs) will improve investment sentiments.
Demonetization has also paved way for increase in digital transaction in the country.As the Digital Economy starts fiourishing Banks are embracing various Digital Businessmodels and new channels to promote transactions.
Performance of the Bank
The key highlights of your Banks performance during the FY 2016-17 are: I am gladto inform you that as informed in the last AGM Bank focused on and achieved significantgrowth in CASA deposits Retail Agriculture and Priority Sector MSME advances during theFY 2016-17.
Low cost CASA deposits increased both in absolute terms and as a percentage to TotalDeposits. In absolute terms it has increased from
Rs 34369 cr as on 31st March 2016 to Rs 43222 cr as on 31stMarch 2017 and as a percentage to Total Deposits it has improved from 29.27% to 37.93%.
Retail advances registered a growth of 10.35% during the FY 2016-17 and stood at thelevel of Rs 13301 cr as on 31st March 2017 as against Rs 12053 cr as on 31stMarch 2016.
Agricultural Advances increased from Rs 15912 cr as on 31st March 2016 toRs 16375 cr as on 31st March 2017 registering a growth of 2.90% andconstituted 18.02% of Adjusted Net Bank Credit (ANBC) surpassing the regulatory minimumof 18%.
Priority Sector MSME advances increased from Rs 13957 cr as on 31st March2016 to Rs 15316 cr as on 31st March 2017 registering a growth of 9.74%Priority Sector Advances increased from Rs 34117 cr as on 31st March 2016 toRs 36992 cr as on 31st March 2017 registering a growth of 8.43% andconstituted 40.71% of Adjusted Net Bank Credit (ANBC) surpassing the regulatory minimumof 40%.
Your Bank has marginally reduced Total Expenses from Rs 10437 cr for FY 2015-16 to Rs10042 cr for FY 2016-17 and maintained the Operating Expenses at the same level asprevious FY.
Cost of Deposits decreased from 7.20% for FY 2015-16 to 6.43% for FY 2016-17 OperatingProfit of the Bank increased by 50.24% from Rs 925.30 cr for FY 2015-16 to Rs 1390.21 crfor FY 2016-17.
In view of the net loss the Board of Directors of the Bank has not recommended anydividend for FY 2016-17.
Your Bank made intense efforts towards NPA reduction and during the FY 2016-17 madecash recovery of Rs 1120 cr as against Rs 728 cr during previous year.
During the FY 2016-17 an amount of Rs 115 cr was recovered from Written-Off accountsand as against Rs 66 cr during previous year.
As on 31st March 2017 Gross NPA stood at Rs 12619 cr as against Rs 8560cr during the previous year. In percentage terms it is at 16.27% as compared to 9.98%during the previous year.
As on 31st March 2017 Net NPA stood at Rs 7735 cr as against Rs 5230 crduring the previous year. In percentage terms it is at 10.66% as compared to 6.35% duringthe previous year.
Capital Adequacy Norms
The Capital to Risk (Weighted) Asset Ratio (CRAR) under Basel III improved from 11.00%as on 31st March 2016 to 11.39% as on 31st March 2017 as againstregulatory requirement of 10.25% Similarly Tier I capital ratio of the Bank increasedfrom 8.59% as on 31st March 2016 to 9.05% as on 31st March 2017 asagainst regulatory requirement of 8.25%
With a view to enhance the coverage your Bank has opened 30 new Branches during theFinancial Year. As on 31st March 2017 Bank is having 1874 Branches spreadacross the country. 58% of the Branches are in Rural and Semi Urban Area.
Human Resource Development
During the year your Bank recruited 129 Probationary Officers 113 SpecialistOfficers 281 clerks and 224 Sub-staff. The current Human Capital of the Bank is 13985 ofwhich 3750 are women.
Your Bank has taken long strides to facilitate less Cash Economy. The various digitalinitiatives successfully undertaken are:
1. Digitalization of 25 villages;
2. Establishment of 95 E Smart Centres
3. Installation of 5300 Point of Sale machines
4. Launching of new mobile banking channels such as UPI Bhim Bhim Adhaar etc.
5. Introduction of "DenaRewardz" loyalty program
6. Tie-up with Pay U for providing Electronic Payment and Collection services
7. Tie-up with Reliance Jio Money wallet
Your Bank took extraordinary steps to alleviate the post-note-ban cash crunch woes ofcommon people across the country including remote areas by deploying many temporary mobileATMs and Bank staff with POS terminals to enable public to withdraw cash from theiraccounts using debit/credit cards. These facilities were made available not only tocustomers but also to public at large and at crucial places like hospitals housingsocieties education institutions crowded places etc. These innovative initiativesgarnered a huge amount of goodwill and publicity for the Bank.
1. Overdraft and Top-up facilities under Dena Niwas Housing loan Scheme.
2. With a view to address customer requirements in a seamless manner Bank has enteredinto various tie-ups such as: i. Tie up with Chola MS General insurance company forgeneral insurance business and Apollo Munich Health Insurance Company Ltd. fordistribution of health Insurance Products ii. M/s. Star Agri Warehousing and CollateralManagement Limited M/s Edelweiss Agri Value Chain Limited M/s Navjyoti CommodityManagement Services Limited for providing finance to farmers / traders /processors /Arthiyas etc. against pledge of warehouse receipts issued by them. iii. M/s JCB IndiaLimited for financing to farmers for purchase of farm machineries / Exavators etc. iv. M/sTata Motors Limited for financing new commercial vehicles / Earth moving equipment (otherthan 3 wheelers) and Cars v. M/s. AMW Motors Limited for financing to commercial vehicles/ equipment (other than 3 wheelers) vi. M/s. Ashok Leyland Limited for financingcommercial vehicles (3/4 wheelers) under Small Road Transport Operators (SRTO) scheme vii.M/s Mahila Arthik Vikas Mahamandal (MAVIM) for financing Women Self Help Groups identifiedby MAVIM
In order to reap the benefits of economic growth we need to make it inclusive. Inaddition to being valuable for its own sake inclusive growth could actually result in avirtuous cycle of fuelling further economic growth. Your Bank has done exceedingly well inthis area.
Your Bank has opened 39.90 lac accounts under Pradhan Mantri Jan Dhan Yojana[PMJDY]against the target of 18.50 lac accounts and also issued 26.14 lac RuPay Cards.
Your Bank has covered all the allotted 6439 villages under FI. Out of the above 5758villages through BC model and 681 villages through Brick & Mortar Branches Your Bankhas enrolled 9.86 crore residents for Aadhar Number as of March 2017 and having topposition among Non-State Registrars to UIDAI.
For the FY 2017-18 your Bank will primarily focus on reducing NPA. For growth Bankwill continue to focus on CASA deposits and advances to Agriculture Retail & MSMEsectors.
During the year 2007 Bank undertook a technology transformation initiative in the formof implementation of Core Banking Solution. In the process the Bank Branches were broughtunder CBS platform in phases and all the Branches are under CBS since December 2009. Interms of technology your Bank is at par with any of the larger banks in India. This giantstep in technology enabled the Bank to improve its functioning. Now Bank has embarked uponanother significant transformation journey called "Dena Pragati" aimed atimproving productivity profitability and managing risk. The Boston Consulting Group aworld renowned strategic consultancy firm will guide the Bank in this transformationexercise.
As I conclude I express my sincere thanks and gratitude to Government of IndiaReserve Bank of India various State Governments Securities Exchange Board of IndiaInsurance Regulatory and Development Authority of India and all other Stake Holders fortheir valuable patronage guidance support and timely advice and seek their continuedsupport and co-operation.
My profound thanks are also due to all the Shareholders Customers and Well-Wishers fortheir valuable patronage and support during the challenging period of FY 2016-17 and hopeto receive their continued patronage.
The Board of the Bank has been proactively guiding the Bank during these testing timesand I want to place on record the appreciation for their encouragement and guidance.
I am also thankful to the NABARD SIDBI and other Financial Institutions Banks andCorrespondents for their continued support to the Bank. Last but not least I wish toplace on record the deep appreciation for untiring and relentless efforts put in by allthe staff members of the Bank without which the progress achieved in these demandingtimes would not have been possible. Family members of the staff also need to beacknowledged for their continued support to the Institution.
I look forward for continued cooperation and support from all stakeholders forsustained progress of the Bank in the years to come.
With best wishes
( A shwani Kumar)