I have great pleasure in welcoming you all to the 22nd Annual General Meeting of yourBank and present the Annual Report for the year ended 31st March 2016. Before I presentthe performance highlights of the bank I would like to place before you the generalmacroeconomic environment within which your bank has performed in FY15-16.
The global economic environment remained subdued due to various factors Chinaseconomic growth remained impacted by low industrial production and capital outflows andthe weak domestic fundamentals of emerging market economies continue to restrain theirgrowth.
Amidst this background the Indian economy has shown a GDP growth rate of 7.6% for theFinancial Year 2015-16. Fiscal deficit current account deficit and inflation weregenerally contained. However industrial production grew by only 2.4% and exports declinedby 15.85% (in dollar terms) during FY15-16. Further certain key sectors likeInfrastructure Power and Iron and Steel continued to remain under stress though theGovernment of India has initiated various steps for early resolution of these sectors.Credit demand also remained subdued due to low capex opportunities.
During the year the Reserve Bank of India conducted an Asset Quality Review (AQR) andbased on their findings advised banks to classify certain big ticket borrowal accounts asnon-performing and also build up additional provisions in potentially weak accounts whichare presently in the standard category. Further Reserve Bank of India had also advisedbanks having exposure under Food Credit to one of the state governments to makeadditional provisions in view of certain irregularities observed in the reconciliation ofthe value of stock against which bank finance was outstanding.
Due to this challenging backdrop the growth of Indian Banking Sector remained underpressure in FY15-16. Asset quality was adversely impacted provisioning requirementsincreased and thereby profitability of most of the banks has been substantially reduced.
Your bank complied with all the regulatory directions of RBI and adopted the policy ofconsolidating the balance sheet of the bank with focus on increasing retail business andmove away from corporate bulk business.
Now I would like to present before you the business highlights of the Bank for theFY15-16:
During FY 15-16 your Bank achieved a business mix of Rs 362554 crore at theend of March 2016 registering a growth of 2.98%. Deposits and Gross Advances grew by 2.40%and 3.78% respectively. CASA deposits have grown by 6.74% and Retail Term Deposits (below1 crore) Rs have grown by 12.27%. Other Term Deposits (1crore and above) was reduced by9.72%. Accordingly the cost of deposits was reduced from 7.69% in FY14-15 to 7.19% in FY15-16. The net interest margin improved from 2.61% to 2.66% during the same period.
The thrust areas for finance have been Retail Agriculture & MSME whichtogether constitute 46% of the total advances portfolio. The balance 54% is Corporate andother Credit which is fulfilling the credit needs of the productive sectors of theeconomy. The Priority Sector (PS) Advances of your Bank was above the minimum regulatoryrequirement of 40% and stood at 41.05% of Adjusted Net Bank Credit (ANBC). Retail Creditgrew by 17.94% and constituted 12.12% of the total Advances as of March 2016 as against10.66% the previous year.
In view of the various factors mentioned earlier the gross NPA level ofMar 2016 increased to 9.57% and the net NPA increased to 6.70%.
The Operating Profits stood at 3682 crore and Net Profit Rs stood at Rs 156crore. Business per Employee was Rs 16.89 crore Business per Branch was Rs 154.21 croreand Book value per share of the bank was 416.72 as of March 2016.
During 2015-16 the Bank has raised Basel III compliant Tier II capitalinstrument in nature of debt amounting to Rs 1000 crore. Further capital of 300 croresand 178.40 Rs crore has been raised from Government of India and LIC of India respectivelythrough allotment of equity shares on preferential basis. The Capital Adequacy of yourbank has increased from 11.41% (Tier-1 8.73%) as on 31.03.2015 to 11.76% (Tier-I 9.10%) ason 31.03.2016.
Your bank has identified increasing transactions under alternate deliverychannels as one of the top priorities of the bank. Various new products and services havebeen launched to achieve these objectives. The percentage transactions under digitalchannels is showing a continuous increase and the same stands at 54.43% in March 2016compared to 50.60% the previous year while transactions of branch channels have decreasedto 45.57% in March 2016 from 49.40% the previous year.
During FY15-16 100 new Branches were opened and 78 new ATMs were installed.Presently your Banks total delivery channels stand at 4917 comprising of 2351Branches and 2566 ATMs.
Your Bank has focused on Capacity Building to impart learning to all its employees andduring the year has taken several steps to achieve the desired results. Training andDevelopment has been created as separate Vertical under the Chief Learning Officer (CLO)who is in the rank of General Manager and is the Principal of the Banks apex HumanResources Development Institute (HRDI) at Noida. All the five HRDIs are now adopting newage training methodology such as case studies role plays group presentations e-learningand discussions by the participants . As a result of this focused approach all the HRDIstogether put in 85047 Training Man Days during FY15-16 as against 58564 during theprevious year. The Bank also organized specialized Leadership Development and ExecutiveDevelopment Programs through reputed Institutes for Executives in Scale-IV and above.
The Apex Training Institute of the Bank HRDI Noida has been awarded ISO 9001:2008Certification for In-House Trainings of Bank Employees in Banking Business through QualityManagement System. The Bank plans to have Quality Management Certification for all theHRDIs in a phased manner.
FINANCIAL INCLUSION PROGRAMME
Your Bank has been implementing the financial inclusion objectives of the Government ofIndia and Reserve Bank of India. As on 31.03.2016 36.71 lac accounts have been openedunder Pradhan Mantri Jan Dhan Yojana (PMJDY) and in more than 97% of these accounts RuPaycards have been issued. Further your Bank has surpassed the allocated target of 1295 Rscrores in the Pradhan Mantri Mudra Yojana (PMMY) to fund the unfunded and extendingaffordable credit upto 10 lakh to them. R
TECHNOLOGY FOR BETTER CUSTOMER SERVICE
Your Bank continues to give prime importance to the up gradation of the ITInfrastructure and aligning the same with the present day r equirements. To strengthen theBank's commitment towards uninterrupted service to its customers Bank has built a robustCorporate Network using Leased Lines MPLS and VSATs with sufficient redundancy to achievehighest level up time. The new version of net Banking application-FEBA has been launched.Various other attractive value added services with latest technologies have also beenintroduced to provide next generation customer service.
Your Directors are pleased to propose a dividend of 7.00% (i.e. Rs 0.70 per share) forthe financial year ended 31st March 2016.
The Indian economy is expected to show positive turnaround with the implementation ofthe various policy initiatives of Government of India and Reserve Bank of India. It isexpected that banking sector growth will also rebound. Your Bank intends to intensifyfocus on reducing the cost of resources increasing the CASA deposits RAM credit (RetailAgriculture & MSME advances) maximizing recovery and up gradation and increase theusage of alternate delivery channels during FY 16-17.
I would like to take this opportunity to welcome Shri Arunish Chawla (Government ofIndia Nominee Director) and Shri Rajkiran Rai G. ( Executive Director) who joined asDirectors on the Board during the year. I also welcome Smt. Mala Srivastava (Part time NonOfficial Director) who has recently joined the Board of the Bank wef. 11.05.2016.
I also appreciate the contribution of Shri Rajan Kumar (Government of India NomineeDirecor) Shri Paras Mal Chopda (Part Time Official Director) Shri Bhupinder Nayyar andShri Suresh N. Patel (both Executive Directors) who laid down office as Directors on theBoard of the bank during FY15-16 for their valuable contributions to the bank.
On behalf of the Board of Directors and on my own behalf I express my sincere thanksand gratitude to a ll the Shareholders of the Bank for reposing their faith in the Bankand the Management. I also thank every employee of the Bank for their dedication and ourloyal customers for their continued support and patronage. My sincere thanks to theMinistry of Finance Govt. of India and Reserve Bank of India for their continued guidanceand support. I solicit your continued cooperation and patronage in future also.
Managing Director & Chief Executive Officer