You are here » Home » Companies » Company Overview » Dhanlaxmi Bank Ltd

Dhanlaxmi Bank Ltd.

BSE: 532180 Sector: Financials
NSE: DHANBANK ISIN Code: INE680A01011
BSE LIVE 11:13 | 22 Sep 38.55 -0.55
(-1.41%)
OPEN

39.00

HIGH

39.00

LOW

38.25

NSE 10:57 | 22 Sep 38.70 -0.40
(-1.02%)
OPEN

39.00

HIGH

39.00

LOW

38.25

OPEN 39.00
PREVIOUS CLOSE 39.10
VOLUME 13795
52-Week high 44.70
52-Week low 21.00
P/E 66.47
Mkt Cap.(Rs cr) 975
Buy Price 38.30
Buy Qty 199.00
Sell Price 38.55
Sell Qty 1001.00
OPEN 39.00
CLOSE 39.10
VOLUME 13795
52-Week high 44.70
52-Week low 21.00
P/E 66.47
Mkt Cap.(Rs cr) 975
Buy Price 38.30
Buy Qty 199.00
Sell Price 38.55
Sell Qty 1001.00

Dhanlaxmi Bank Ltd. (DHANBANK) - Director Report

Company director report

Dear Shareholders

It gives the Board pleasure to place before you the highlights of your Bank'sperformance during the financial year 2015-16. Details of the achievements and initiativestaken by the Bank are provided in the 89th Annual Report of the Bank along with theAudited Balance Sheet as at March 31 2016 and the Profit and Loss Account for the yearended on that date. It has been a challenging year with the bank focusing on workingtowards improving its performance in the medium term.

Your bank's operating environment remained a cause for concern with the privateinvestment climate and economic sectors under some pressure. The declining oil prices seemto have started impacting on the domestic remittance expecting sectors of the economy ofKerala too. Your bank has experienced subdued deposit and credit growth but has had tograpple with stressed asset quality These factors have weakened profitability andadversely impacted on your bank's capital position.

Performance Highlights

The salient features of the Bank's performance for the financial year ended March312016 are:

• CASA share to Total Deposits reached 25.06% as on 31st March 2016.

• Retail segment advance to total advance increased from 39% as on 31.03.2015 to47% as on 31.03.2016.

• Achieved operating profit of Rs.3.28 crore for the financial year 2015-16.

• Interest expended reduced by Rs.85.15 crore during the financial year 2015-16 ascompared to previous FY 2014-15.

• Net NPA is reduced to 2.78% on 31.03.2016 as against 3.29% as on 31.03.2015 andGross NPA is reduced to 6.36% as against 7.00% as on 31.03.2015.

• Provision for NPA is reduced to Rs.93.74 crore in the Financial Year 2015-16 asagainst Rs.294.77 crore in 2014-15.

• The share of Retail Deposits to Term deposit recorded an increase of 7.86% from52.84% as on 31st March 2015 to 60.70% as on 31st March 2016.

• The Bank has revived the insurance business which has yielded an income ofRs.3.52 crore in Financial Year 2015-16 as against Rs.1.42 crore in 2014-15.

• Book value per share is Rs.28.63.

Capital and Reserves

The Bank's Paid up capital and reserves stood at Rs.507.95 crore as on 31.03.2016.

Total Business

The total Business of the Bank as on 31.03.2016 stood at Rs.18737.77 crore as againstRs.20503.58 crore as on 31.03.2015.

Deposits

The total Deposits of the Bank stood at Rs.11353.76 crore as on 31.03.2016 as againstRs.12381.68 crore as on 31.03.2015.

Advances

The Bank's total advance stood at Rs.7384.01 crore as on 31.3.2016 as againstRs.8121.90 crore as on 31.03.2015.

PRIORITY SECTOR ADVANCES

The Bank continued its constructive approach towards priority sector lending inconformity with the national policies regulatory expectations and fulfillment of socialobjectives. The Bank's priority sector advances stood at 40.27% and its agriculturaladvance is at 16.70% of the adjusted net bank credit. The weaker section advances were at10.42% which is above the prescribed norm of 10%. Lending under various socio-economicschemes has shown satisfactory progress.

Profitability

The bank's operating profit during the year was Rs.3.28 crore as against Rs.16.58 croreduring the previous year. The bank declared a net loss of Rs.209.45 crore during the yearunder report and the same at the previous year was Rs.241.47 crore.

Dividend

In view of the net loss recorded by the Bank during the year no dividend isrecommended.

Non-Performing Assets

The RBI has taken a number of proactive steps to address concerns confronting thebanking sector's NPA accretions. The RBI undertook special asset quality review (AQR)across the banking industry As a result the gross NPA of banks and provisioningrequirements increased significantly affecting their profitability However the variousmonitoring/recovery measures employed by the Bank helped it in restricting furtherslippages into NPA to a considerable extent and ensured reasonable recovery from theexisting NPA accounts. The provision requirement for current year was Rs.93.73 crore asagainst 1294.77 crore in the previous financial year.

During the year the new slippage to NPA in the Bank was 1250.75 crores in comparisonwith the figure of Rs.337.17 crores of the previous year.

The total recovery in NPA which include Cash Recovery and Upgradation during thecurrent fiscal was Rs.176.72 crore. The corresponding figure for the past year wasRs.84.51 crore.

The Bank has sold 2 assets to Assets Reconstruction Company with a gross balance ofRs.61.65 crores (last year-NIL) with a view to reduce NPA.

Both the Gross NPA and Net NPA percentages have reduced from 7% to 6.36% and from 3.29%to 2.78% respectively during the financial year 2015-16.

The Provision Coverage Ratio (PCR) which was 67.82% as on 31.3.2015 has improved to75.67% as on 31.3.2016.

Customer Service

The Bank has taken a series of measures during the year through deployment oftechnology and otherwise for enhancing service quality A well defined and full-fledgedCustomer Grievance Redressal Mechanism is put in place at the Bank.

The Customer Service Committee of the Board monitors the implementation of customerservice measures periodically Customer Service Committees comprising of Bank personnelas well as our constituents have been formed at the apex level and at branches formonitoring service quality and bringing about improvements on an ongoing basis. The Bankhas a 24 x 7 Phone Banking Call Centre at Thrissur.

The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and isactively implementing the Code of Commitment to Customers as also the Code for Micro andSmall Enterprises formulated by the BCSBI. In the annual Compliance survey conducted byBCSBI on implementation of BCSBI Code the Bank has achieved "Above Average"rating for compliance. The Bank has achieved a "High Level" of compliance ratingwith regard to the "Grievance Redressal" segment thereby placing the Bank amongthe top five private sector banks on the said parameter.

During the financial year 2015-16 the Bank resolved 5388 complaints as against oftotal of 5411 complaints received. The organized structure for handling complaints atBranches Regional offices ATM Reconciliation Desk Call Centre and Corporate Office hashelped the Bank in better customer service.

Customer Touch points

The Bank's customer immediate touch points stood at 678 as on 31.03.2016 comprising266 branches 398 ATMs and 14 processing centres.

We have received a total of 107 recommendations from the Reserve Bank of India'sCommittee on Customer Service. Out of the 100 recommendations applicable to your bank wehave implemented 85 recommendations and the implementation of remaining items is inprocess.

Particulars Contact Centre RO & CO ATM Recon Banking Ombudsman Total
Number of complaints outstanding at the beginning of the year 3 0 8 5 16
Number of complaints received during the year 1425 105 3842 39 5411
Number of complaints resolved during the year 1419 103 3824 42 5388
Number of complaints pending during the year 9 2 26 2 39

New Products and Services introduced:

• Facility for Online submission of Social Security Scheme Applications

During the last Financial Year the Bank has developed inhouse a web based softwareapplication accessible by branches to key in/capture the details of applications receivedat branches for Social Security Schemes such as the Prime Minister's Jeevan Jyothi BimaYojana (PMJJBY) Prime Minister's Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana(APY) announced by Central Government.

• Implementation of Sovereign Gold Bond Scheme

Bank has implemented a scheme introduced by RBI where the public can subscribe to goldbonds through scheduled commercial Banks. This has been smoothened with softwareapplication to capture the customer and subscription details and onward upload to RBIE-kuber portal.

'DhanSmart' Mobile Banking Application is extended for iOS & Windows Mobile OS.

As part of Bank's continuous efforts to facilitate its customers with technologyproducts new and enhanced Mobile banking application has been extended to iOS &Windows mobile operating systems.

• Transaction Limit enhancement in Mobile Banking

Recognizing the need to cater to the observed upward trend in Mobile Bankingtransactions and taking in to account customer convenience as also respecting the feedbackreceived from customers the Bank has enhanced the transaction limit in 'DhanSmart'-MobileBanking application from '10000/- to t25000/- with effect from 1st March 2016.

• Introduction of Dhanam Genius-Kids/ Student account

With a view to broaden the product offerings to the savings account segment especiallyin the young/students category bank has introduced a new savings account product- DhanamGenius. This has enriched features like Sweep in/out facility and ATM card withpersonalized photographs.

• Introduction of Dhanam Yuvak Savings account

Bank has introduced new savings account- 'Dhanam Yuvak' which exclusively caters to theneeds of Youth segment with special features like ATM card with personalized photo andmany more conveniences.

• New Application for Wage Protection System- An Initiative by Labour Department

The Bank is empanelled in the implementation of Wage

Protection System (WPS) announced by the Government of Kerala. Bank has developed anapplication to download available data from the Labour Department server based on whichthe system will enable disbursement of salaries to employees.

Investor Education and Protection Fund

In accordance with the provisions of Section 125 of the Companies Act 2013 during theyear the Bank transferred Rs.950056/- being the unclaimed/unpaid dividend for thefinancial year 2007-08 to the Investor Education and Protection Fund (IEPF).

Listing on Stock Exchanges

The equity shares of the Bank are listed on BSE Ltd. and National Stock Exchange ofIndia Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchangesfor the financial year 2016-17.

Particulars regarding conservation of energy Technology Absorption and ForeignExchange Earnings and outgo.

The Bank has supported various initiatives for energy conservation at its variouspremises. The Bank uses information technology extensively in its operation andconsistently pursuing its goal of technological up-gradation in a cost effective mannerfor delivering quality customer service.

The Company being a banking company and an Authorized Dealer in Foreign Exchange hastaken all possible steps to encourage foreign exchange business.

Number of cases filed if any and their disposal under Section 22 of the SexualHarassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013

The Bank has zero tolerance approach towards any action on the part of anyexecutive/employee which may fall under the ambit of "Sexual Harassment" at workplace and is fully committed to uphold and maintain the dignity of woman staff working inthe Bank. The policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All the employees (permanentcontractual temporary trainees) are covered under this policy

Number of complaints pending as on the beginning of the financial year-Nil

Number of complaints filed during the financial year-Nil

Number of complaints pending as on the end of the financial year-Nil

Particulars of employees

The Bank has no employee whose particulars are required to be given in terms of Section197 of the Companies Act 2013 read with Rule 5 (2) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

The ratio of the remuneration of each Director to the median employees' remunerationand other details in terms of Section 197 (12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are annexed to this report.

Green initiatives in Corporate Governance

The Bank supports and pursues the 'Green Initiative' of the Ministry of CorporateAffairs Government of India. All the documents including the notice and explanatorystatement of Annual General Meeting Audited Financial Statements Directors' Report andAuditors' Report are being sent electronically to all shareholders who have registeredtheir e-mail addresses with their Depository Participants or with the Bank's Registrar& Transfer Agents. Shareholders holding shares in electronic form are requested toupdate their e-mail addresses in their respective DP accounts. Shareholders holding sharesin physical form are requested to update their e-mail addresses with Bank's Registrar andTransfer Agents by a written request if they require electronic delivery of documents.

ANTI-MONEY LAUNDERiNG (AML)

Transactions processed through the Core Banking Solution is monitored for detectingsuspicious transaction using Infrasoft Technologies -AML application to discharge theobligation cast on the Bank under Prevention of Money Laundering Act.

The Offsite Monitoring Teams set up for post facto verification of KYC Compliance whileestablishing new customer relationships by the branches are stabilized fully now

The Bank has attached great importance to compliance of KYC/ AML/CFT norms by thecustomers as per the Reserve Bank of India directive.

Directors

The composition of the Board of Directors of the Bank is in accordance with the BankingRegulation Act 1949 the Companies Act 2013 Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 and the best practicesof Corporate Governance. As on March 31 2016 the Board comprises 8 Directors includingManaging Director & CEO 5 non-executive Directors and 2 nominee Directors. All theDirectors have rich experience and specialized knowledge in various sectors like bankingagriculture & rural economy small scale industry economics and accountancy.

Declarations have been taken from Independent Directors as required under the CompaniesAct 2013 Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and RBI guidelines. The remuneration paid to the Directorsduring the year is disclosed in Report on Corporate Governance.

Changes in the Board

Sri T. Y Prabhu ceased to be Part-time Chairman of the Bank on completion of thestipulated period. Sri Jayakumar P G. ceased to be Managing Director & CEO of theBank. Dr. B. Ravindran Pillai and Sri Rohit Jain ceased to be Directors on the Board ofthe Bank.

The Board places on record its appreciation for the invaluable services rendered bythem during their tenure as Directors on the Board of the Bank.

Dr. Jayaram Nayar was appointed as Part-time Chairman and Sri G. Sreeram took over asManaging Director & CEO of the Bank. Sri E. Madhavan was appointed as AdditionalDirector. RBI nominated Sri S. T. Kannan as Additional Director on the Board of the Bankin terms of Section 36AB of the Banking Regulation Act 1949.

Composition of Audit Committee

The Board of the Bank has constituted a five member Audit Committee. All the fivemembers of the Committee are nonexecutive Directors with Mr. Chella K. Srinivasan who isa Chartered Accountant as its Chairman and Dr. Lakshmy Devi K. R. Mr. K. Jayakumar Mr.Susobhan Sinha and Mr. S. T. Kannan as the other members. The Committee has beenconstituted in accordance with regulatory requirements. The terms of reference of theCommittee are in accordance with the Companies Act 2013 Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBIguidelines.

Declaration by independent Directors

The Bank has duly obtained necessary declarations from each Independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independenceas laid down in the Section 146(6) of the Companies Act 2013 and Regulation 16 of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015. The Bank has alsoobtained the 'Fit & Proper' declaration as prescribed by the Reserve Bank of India.

Board Level Performance Evaluation

Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 theperformance evaluation of the Board as a whole the individual Directors and variousCommittees of the Board are undertaken annually. The Nomination & RemunerationCommittee has formulated the criteria for performance evaluation of Directors.

A separate meeting of independent Directors evaluates the performance ofnon-independent Directors Chairman and the Board as a whole. The Board evaluates theperformance of the Directors who are Members of the Nomination & RemunerationCommittee. The Nomination & Remuneration Committee evaluates the performance of theDirectors who are Members of the Board who are not Members of the Committee. Theevaluation of the individual Directors is being done in the absence of the Director beingevaluated.

The Board evaluates the performance of Board level committees. Nomination &Remuneration Committee recommends the appointment/reappointment/continuation of Directorsto the Board. Based on the recommendation of the Committee the Board will take theappropriate action.

The criteria for performance evaluation of Directors Board and its Committees are asunder:

• Attendance at Board and various Committee meetings;

• Participation and contribution in Board and Committee meetings;

• Composition of the Board and its diversity;

• Roles of various Committees of the Board;

• Compliance and understanding of regulatory requirements;

• Contribution to effective corporate governance and transparency in the Bank'soperations;

• Updation of Knowledge and familiarization programmes conducted for Directors;

• Appropriateness of decisions made by the Board and its Committees;

• Quality quantity and timeliness of flow of information to the Board;

• Understanding by individual Directors for their roles and responsibilities asDirector;

• Contributions towards the performance and strategies of the Bank;

• Conduct of Meetings;

• Professionalism in the Board and Committees.

Changes in Key Managerial Personnel (KMP)

Sri Jayakumar FIG. ceased to be Managing Director & CEO of the Bank and Sri G.Sreeram took over as Managing Director & CEO for a period of 3 years w.e.f. April 62015.

Sri Krishnan K.S. who was the Chief Financial Officer & Company Secretary vacatedoffice on September 30 2015. Sri Bhasi K.V was appointed as Chief Financial Officer ofthe Bank w.e.f. October 12015. Sri Santosh Kumar Barik took over as Company Secretary ofthe Bank w.e.f. October 12015.

Explanation for the Auditors' comments in the Report

The Auditors' report for the year 2015-16 does not contain any qualifications. Howeverit includes the following emphasis of matters;

Emphasis of matter

i. Note No.6 (iv) of the financial statements regarding deferment of shortfall arisingfrom the sale of certain Non Performing Assets during the year ended 31stMarch 2016 in terms of RBI Master Circular DBR.No.BPBC.2/21.04.048/2015-16 on PrudentialNorms on Income Recognition Asset Classification and Provisioning pertaining to advancesdated 1st July 2015 and the unamortized balance as at 31st March2016 amounting to Rs.10.97 crores.

ii. Note No.23 of the financial statements regarding retention of deferred tax assetsamounting to Rs.37.06 crores.

Since the above comments read with respective notes are self explanatory noexplanation is offered in this regard.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013 the Board had appointed Sri M.Vasudevan Practicing Company Secretary Thrissur as the Secretarial Auditor to conductthe Secretarial Audit of the Bank for the financial year 2015-16. The Bank has providedall assistance and facilities to the Secretarial Auditor for conducting their audit. Thereport of the Secretarial Auditor for the financial year 2015-16 is annexed to thisreport. The response of the Bank to the observations made in the Secretarial Audit Reportis given below:

Observations of Secretarial Auditor Response of the Bank
1 The Reserve Bank of India had vide its letter dated 13.10.2015 imposed a penalty of Rs.100 lakhs on the Bank for violation of KYC guidelines in the account of M/s. Esesvi Developers (India) Pvt. Ltd. The Bank was fined by the Regulator in respect of some transactions happened during 2012 in the accounts maintained in the Bank by M/s Esesvi Developers (India) Private Limited. There was no terrorist funding/ money laundering involved. The customer (a private limited company promoted by Shri Srikanth Reddy Ex-Director of the Bank) was well associated with the Bank. During the said period our KYC/ AML software was not fully integrated with robust rule engines. Identifying the gaps Bank acquired new KYC/AML software in October 2013 and implemented the same. Now all the regulatory guidelines on the AML alerts prescribed by the Regulators are implemented. Presently we have a very pragmatic and proactive AML desk equipped with qualified personnel and supported by good and efficient software. Proper mechanism has also now been put in place to identify and report attempted suspicious transactions. The AML Software is also upgraded to enable reporting of attempted suspicious transactions online.
For a robust Transaction monitoring in newly opened accounts in addition to other alerts in newly opened accounts the concept of Threshold Limit has also been implemented from the FY 2016-17.
2 The Adjudicating Officer Govt. of Maharashtra had pursuant to Section 46 of the Information Technology Act 2008 issued an order dated 12.01.2015 imposing a compensation of Rs.18 lakhs. An appeal before Cyber Appellate Tribunal New Delhi is pending regarding the said matter. The appellate authority is not yet constituted and the matter is posted to 12.8.2016. We have already obtained stay of the order of Adjudicating Authority from the High Court of Delhi since the appellate authority is not yet constituted.
3 Financial Intelligence Unit under Ministry of Finance Government of India has imposed a fine of Rs.1 lakh for failure in detecting and reporting attempted suspicious transactions pursuant to Section 12 of Prevention of Money Laundering Act 2002. On August 2015 the Bank was fined by the Director Financial Intelligence Unit-India for the reason that Bank failed to have proper internal mechanism for detecting and reporting attempted suspicious transactions based on the sting operations made by online reporting channel M/s Cobra Post. Presently we have been made ONLINE facility to all our branches through our AML software to report any attempted suspicious transactions. Branches are also educated to report the IBA prescribed 22 non transactional alert scenarios. We are also obtaining necessary monthly Certificate from the Branches for Compliance of the same.
4 As per the audited financial statements as on 31.03.2016 the Total Capital Adequacy Ratio of the Bank stood at 7.51%. The Reserve Bank of India vide circular DBR.No.BPBC.1/21.06.201/ 2015-16 dated July 1 2015 has stipulated that all scheduled commercial banks operating in India are required to maintain a minimum Pillar 1 Capital to Risk-weighted Assets Ratio (CRAR) of 9% on an on-going basis. Bank proposes to raise Tier I capital of Rs.140 crore during the current financial year. Out of this Bank is in the process of raising minimum Rs.100 crore by August 31 2016. Bank would be able to meet the CRAR requirements upon infusion of the capital proposed. Moreover Bank has sufficient headroom for raising Tier 2 capital which the Bank could raise for further improvement of CRAR ratio if required.
Corporate Governance number of Board Meetings
A separate report on Corporate Governance as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and certificate from Statutory Auditors certifying compliance with the conditions of Corporate Governance are annexed to this report. A total of 12 Board Meetings were held during the year. The Board meetings were held in accordance with the regulatory requirements. The details of the meetings held are provided in the Corporate Governance Report that forms part of this Annual Report.

Extracts of Annual Return

Pursuant to Section 92 (3) of the Companies Act 2013 read with Rule 12 (1) of theCompanies (Management and Administration) Rules 2014 Extract of Annual Return as on thefinancial year ended March 31 2016 in Form No. MGT-9 is annexed to this report.

Subsidiary Companies

The Bank does not have any subsidiary companies.

Related Party Transactions

The Bank has adopted the "Policy on materiality of related party transactions anddealing with related party transactions" in accordance with the provisions of theCompanies Act 2013 and the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015. The Policy is hosted on the website of theBank www.dhanbank.com .

During the financial year the Bank did not enter into any related party transactionswith its Directors or Senior Management or their Relatives that would potentially conflictwith and/or adversely affect the interests of the Bank except the vehicle loan advancedto the Chief Financial Officer and the remuneration paid to the Managing Director &CEO Chief Financial Officer and Company Secretary There was no related party transactionfor which Form AOC-2 was applicable

Strictures and Penalties

During the last three years there were no penalties or strictures imposed on the Bankby the Stock exchanges(s) and/or SEBI and/ or any other statutory authorities on mattersrelating to capital market.

Disclosure

In November 2015 Bank was fined Rs.1 crore by Reserve Bank of India in respect of KYC/AML violations happened during the year 2012 in one of the accounts maintained with theBank. In order to avoid future recurrence of such cases Bank has put in place a newKYC/AML software in the Year 2013.

In August 2015 Bank was fined Rs.1 lakh by Director Financial IntelligenceUnit-India for the reason that the Bank failed to have proper internal mechanism fordetecting and reporting attempted suspicious transactions based on the sting operationmade by M/s Cobra Post in the Year 2013. Bank has now built in necessary internalmechanism and checks to ensure that such incidents do not recur.

Further details are mentioned in Point No.VII of Form No.MGT-9 Extract of AnnualReturn which is given as Annexure to Directors Report.

The Bank is working under the Prompt Corrective Action Framework of the Reserve Bank ofIndia

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies Act 2013 with respectto the Directors' Responsibility Statement it is hereby confirmed that:

(a) in the preparation of the annual accounts for the year ended March 312016 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;

(b) 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 2015-16 andof 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 this Act for safeguarding theassets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by the Bankand that such internal financial controls are adequate and were operating effectively;

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

Acknowledgements

The Board of Directors places on record its gratitude to the Government of IndiaReserve Bank of India State Governments Securities and Exchange Board of India and otherRegulatory bodies including stock exchanges where the Bank's shares are listed for theirsupport and guidance. The Board also places on record its gratitude to the Bank'scustomers shareholders other stakeholders and well wishers for their valued patronage.The Board further places on record its appreciation for the valuable services rendered byM/s K. Venkatachalam Aiyer & Co. Statutory Central Auditors of the Bank. The Boardexpresses its sincere appreciation for the dedicated services rendered by officers andemployees of the Bank at all levels.

By Order of the Board
Place : Thrissur Sd/
Date : 11.08.2016 (Dr. Jayaram Nayar)
Chairman