It is my privilege to be addressing the shareholders of this Bank for the first timesince I took charge as its MD & CEO through this message.
The year 2016 - 17 was a challenging year for your Bank. In the midst of thesechallenges your Bank strived to tap the emerging opportunities to enable it to grow itsbusiness especially on the retail and priority sector front as a strategic move tominimise and mitigate concentration risk as well as meet regulatory requirements in thisregard. As your Bank persisted in its efforts to improve its business fundamentals ityielded positive results on some fronts some of which I would like to highlight.
The thrust placed on rebalancing of the business mix has yielded positive results ascan be evidenced from the rising share of retail advances to 43% as at end-March 2017 from33% as at end-March 2016. Your Bank's CASA deposits as well as Retail Term Deposits bothgrew by over 22% during the year. Furthermore the share of CASA Deposits and Retail TermDeposits has been progressively increased to over 31% and 32% respectively during theyear. Correspondingly there has also been reduction in the share of bulk term deposits to36% which has helped in driving down the cost of funds to an extent. CASA per employeealso has risen to Rs. 4.6 crore. The Bank's fee income too has increased by over 6% duringthe year.
During the year under review your Bank continued to make efforts for reimagining thecustomer experience and positioning it for success in an increasingly digital world. Theefforts of the Bank saw introduction of a variety of new digital offerings such as itsUnified Payments Interface (UPI) App PayWiz' Social Media Banking Facebook- iEngage' for retail internet banking customers and digital passbook mPassbook'on Android platform among various other initiatives. Furthermore your Bank partnered theGovernment of India in furthering the objective of financial inclusion by leveraging itsnetwork to enhance enrolments under the Government schemes. In addition to suchinitiatives in the banking space your Bank proactively funded multiple Corporate SocialResponsibility (CSR) interventions in varied areas such as healthcare services educationgender equality sports livelihood opportunities and holistic development of villagesetc.
Since your Bank has accorded excellence in customer service as the crux of its businessstrategy it is imbibed in every employee to serve its customers better and go the extramile to cater to their requirements. This approach of your Bank has earned it aHigh' rating as per the BCSBI Code Compliance Rating 2017 outperforming most of theother banks in the industry.
Your Bank's initiatives in the banking space and beyond have been feted at variousfora. Your Bank has carved a niche for itself as a recognized and trusted brand alsoaffirmed by the Millward Brown's Report Brand Z which has rated it among the Top50 Most Valuable Indian Brands'. For its digital initiatives your Bank was awardedthe NetApp Innovation Awards 2017' under the Trend Setter Award category andSilver Award for its Abhay Card Control App at the 6th Asia Pacific Customer EngagementForum under the Most Admired Customer Engaged Mobile App category. The initiatives in thepriority sector business saw your Bank being awarded the first prize for Excellencein Lending to Micro Enterprises' at National Awards 2016 instituted by the Ministryof Micro Small and Medium Enterprises (MSME) the Government of India and ASSOCHAM SMEExcellence Award 2016 for its performance in Micro Lending.
Even as your Bank continued to perform well on some fronts its performance wasovershadowed by the deterioration in its asset quality which saw rising level ofNon-Performing Assets (NPA) as well as stressed assets. As a consequence of higher NPA andstressed assets the provisioning rose which in turn negatively impacted the bottomlineof your Bank and also raised concerns on the capital adequacy front. These developmentshave led to implementation of Prompt Corrective Action (PCA) framework on your Bank byReserve Bank of India (RBI). We are ensuring that the RBI guidelines relating todistribution of dividend branch expansion capital expenditure investment insubsidiaries etc. are followed. In a way the PCA framework has provided us with anopportunity to benchmark your Bank's performance against the regulatory framework.
In view of the challenges your Bank has devised a comprehensive turnaround strategythat seeks to leverage its strengths and entails identification of areas for costcontainment and revenue maximization that would help in ensuring sustainable growth andprofitability for the Bank. The multi-pronged turnaround strategy broadly focuses on sixareas: aggressive recovery and prevention of further slippages; improvement in CapitalAdequacy Ratio (CAR) in the short and medium term through fresh resource raising as wellas reduction in the risk weighted assets; increase in retail and Priority Sector Lending(PSL) asset base with limited growth in corporate loan book to ensure a more sustainablebusiness mix; reduction in operational cost; sale of select non-core assets and upsellingas well as cross-selling of retail products. This strategy will enable the Bank toidentify and address the existing lacunae capitalize on core strengths and improveexisting products and processes. Your Bank will leverage its inherent core strengths suchas recognized brand identity excellent customer service innovative digital offeringsand talent pool of a young and professionally qualified workforce to strengthen itsposition in the banking space. I am confident that these strategic initiatives inconjunction with the inherent strengths of your Bank will enable it to surmount thechallenges confronting it and tap new opportunities to emerge a better stronger andvaluable bank.
Your Bank's journey so far is a testament to the continued confidence and encouragementof the Bank's shareholders the trust and loyalty of its customers and business partnersand the commitment and professionalism of its employees exhibited over the years forwhich I would like to thank them. With stronger partnerships and your continued support Iam sure that we will position your Bank as a bigger better and stronger bank thatdelivers enormous value to its stakeholders.
With best wishes
Mahesh Kumar Jain
Managing Director & CEO.