You are here » Home » Companies » Company Overview » Syndicate Bank

Syndicate Bank.

BSE: 532276 Sector: Financials
NSE: SYNDIBANK ISIN Code: INE667A01018
BSE LIVE 15:54 | 15 Dec 83.90 1.15
(1.39%)
OPEN

84.40

HIGH

84.90

LOW

83.50

NSE 15:55 | 15 Dec 83.75 1.10
(1.33%)
OPEN

83.50

HIGH

84.90

LOW

83.50

OPEN 84.40
PREVIOUS CLOSE 82.75
VOLUME 198579
52-Week high 95.65
52-Week low 59.20
P/E 190.68
Mkt Cap.(Rs cr) 7,589
Buy Price 0.00
Buy Qty 0.00
Sell Price 83.90
Sell Qty 1867.00
OPEN 84.40
CLOSE 82.75
VOLUME 198579
52-Week high 95.65
52-Week low 59.20
P/E 190.68
Mkt Cap.(Rs cr) 7,589
Buy Price 0.00
Buy Qty 0.00
Sell Price 83.90
Sell Qty 1867.00

Syndicate Bank. (SYNDIBANK) - Director Report

Company director report

The Board of Directors have immense pleasure in presenting the Bank's Annual Reportalong with the Audited Balance Sheet as at 31st March 2017 and the Profit &Loss Account statement for the year ended 31st March 2017.

MANAGEMENT DISCUSSION AND ANALYSIS

Macro Economic Scenario Global economy

Stagnant global trade subdued investment and heightened policy uncertainty markedanother difficult year for the world economy. While the final figures are yet to bepublished as per assessment of IMF's World Economic Outlook Report global growth hasbeen estimated at 3.1 percent in 2016.

Growth in Advanced economies is estimated at 1.6 percent in 2016. The growth in UnitedStates United Kingdom Euro Area and Japan is estimated at 1.6 percent 2.0 percent 1.7percent and 0.9 percent in 2016 respectively. Growth in emerging market and developingeconomies (EMDEs) is estimated at 4.1 percent in 2016 reflecting receding obstacles toactivity in commodity exports and continued solid domestic demand in commodity imports.Growth in China is estimated at 6.7 percent in 2016. Weak investment and productivitygrowth are however weighing on medium-term prospects across many EMDEs.

However global trade remains subdued due to an increasing tendency towardsprotectionist policies potential volatility from divergent interest rate paths anddisconnects between market valuations and real activity hang over the outlook.

Rebuilding policy space addressing vulnerabilities and enhancing internationalintegration by promoting services trade and foreign direct investment would boostresilience and improve growth prospects of the world economy.

Domestic economy

Against the headwinds of global economy the domestic economy is performing as one ofthe fastest growing and emerging market economies in the world. As per IMF's WorldEconomic Outlook Report the domestic economy growth has been estimated at 6.6 percent in2016 and 7.2 percent in 2017.

The Reserve Bank of India (RBI) in its first bi-monthly monetary policy announced on 8thFebruary 2017 has been projected country's GDP growth in the fiscal 201617 at 6.9 percentand expects to recover sharply at 7.4 percent in 2017-18.

The country's growth momentum is accompanied by strong aggregate demand low commodityand oil prices & solid agricultural output structural reforms export recovery and onthe back of an up stick in global economic activity and high elasticity of real exportgrowth.

As per the second advanced estimates of national income and quarterly estimates ofGross Domestic Product (GDP) released by CSO (February 28th 2017) country'sGross Domestic Product for the third quarter (Q3) of financial year 2016-17 grew at 7percent after taking into consideration the impact of demonetization. It was the feeblestin over nine quarters but still stronger than expected considering the impact ofgovernment's decision to withdraw high- value currency notes during the third quarter.Further the CSO expects the country's GDP growth during 2016-17 at 7.1 percent ascompared to 7.9 percent in 2015-16.

Growth in Index of Industrial Production during 2016-17 recorded at 5.0 percent asagainst 3.4 percent of the corresponding period of last year. The cumulative growth ofeight core industries having combined weight of 37.90 percent in IIP grew by 4.5 percentduring Apr-Mar 2016-17 as compared to 4.0 percent in 2015-16. Manufacturing sector grewby 4.9 percent in comparison to 3.0 percent in the corresponding period of a year ago. Theindustrial sector experienced slow growth mainly due to lackluster performance of thecapital goods industry. Service sector activities are expected to expand in trade hotelstransport and communication services and construction sector.

Inflation is expected to be transitory and seasonal. Both Wholesale Price Index (WPI)and Consumer Price Index (CPI) remained under control throughout FY 2016-17. The WPI basedinflation reached at 5.70 percent in March 2017 as compared to -0.85 percent recorded inMarch 2016. Consumer Price Index (Retail Inflation) dipped at 3.81 percent in March 2017as compared to 4.83 percent in March 2016.

Money supply increased by 7.3 percent y-o-y to Rs. 128390.8 billion as on March 31st2017 as against Rs. 116176.2 billion in the corresponding period of previous year.

External sector growth

External sector growth remained moderate during 201617 mainly on account of slowdown inglobal trade decline in commodity prices and weak global demand. During Apr-Mar 2016-17cumulative total exports (merchandise trade) increased by 4.71 percent to US$274645.10million from US$262290.11 million during corresponding period of last year. On otherhand cumulative total imports during Apr-Mar 2016-17 valued at US$380367.65 millionregistered a negative growth of 0.17 percent in dollar terms in comparison withUS$381006.64 million during corresponding period of previous year. Country's

overall foreign trade for Apr-Mar 2016-17 has improved and is estimated at US$46420.55million which was 14.49 percent lower than the level of US$54287.53 million incorresponding period of previous year.

Total foreign exchange reserves recorded US$369955 million as on March 31st2017 which was inched by 2.83 percent as against US$359760 million reported during March2016. Whereas foreign currency assets grew by 3.17 percent to US$ 346319 million as on31st March 2017.

The rupee appreciated by 2.25 percent against US Dollar 14.94 percent against GBP 7.79percent against Euro and 1.86 percent against Japanese Yen during Mar 2017 over theprevious year.

Banking Scenario

Indian Scheduled Commercial Bank's deposits increased by 11.76 percent y-o-y to Rs.108051.52 billion during March 2017 as against an increase of 9.13 percent ('96681.85billion) during the corresponding period of the previous year. On the contrary ScheduledCommercial Bank's credit growth rose by 5.08 percent to Rs. 78818.87 billion during March2017 as compared to 10.26 percent ('75004.97 billion) recorded during the correspondingperiod of the previous year.

Scheduled Commercial Bank's investment in government and other approved securitiesincreased by 17.85 percent y-o-y to Rs. 30436.59 billion during the March 2017 ascompared to a growth of 1.80 percent ('25826.33 billion) recorded during thecorresponding period of a year ago.

Inline with the Government's digital India mission all banks are endeavouring to makeavailable their services online and digital and also waived merchant discount rate up toMarch 2017. In a move to step closer towards becoming a cashless economy NPCI with RBIlaunched the Unified Payment Interface (UPI) & USSD and Government of India launchedBHIM app to ensure hassle free & seamless banking through mobile phones. Governmentalso announced incentives to promote digital transactions among individuals andbusinessmen in the country.

The increasing stress in banking sector appeared to be continued as the BankingStability Indicator (BSI) shows that the risks to the banking sector remained elevated dueto continuous deterioration in asset quality low profitability and liquidity. Thechallenges faced by the industries predominantly in iron & steel infrastructurepower mining and textiles led to deterioration in asset quality of the large borrowers.Therefore it adversely affected the bank's profit return on assets (RoA) and return onequity (RoE) due to higher provisioning for NPAs. However the Banking industry

is going through a turnaround period with steps and measures from the regulator and thegovernment.

VISION & MISSION AND VALUE STATEMENTS

Bank has a Vision & Mission Statement which acts as a guiding force not only forpursuing long term corporate goals but also paving way to acquire new business improvingcustomer service visualize and sizing future market potentials and converting theseopportunities into a long term business goal and advantages.

Our Vision

"Be a leading financially strong universal bank creating value for stakeholdersthrough customer centric technology driven and employee friendly approach"

Our Mission

• Be a leading provider of banking solutions providing range of financial servicesto all strata of society.

• Be a highly recognized and visible brand known for its customer service.

• Be the most preferred place to work where employees feel proud and motivated.

• Have state of the art technology & infrastructure creating delight among allstakeholders.

• To deliver strong financial and operational performance.

Our Value Statement

While vision & mission statements deal with business & corporate aspirations ofthe Bank value statements are declarations about how organization values our stakeholdersincluding customers & employees and inform them about it's core ethical values andreminds its employees about the values and beliefs. Accordingly Bank adopted "valuestatement" during the financial year 2016-17 which underlines as under.

"Good Corporate Governance through transparency in dealings in undertaking ethicalbusiness"

CORPORATE STRATEGY FOR 2016-17

In order to improve the business level customer service governance and compliance andaddress the key issues with an anticipation of meeting future goal and changing marketconditions Bank is prudently pursuing corporate strategies to be ahead in race of itsrivals.

Bank conducted strategy meet on 6th & 7th April 2016 atBengaluru to discuss the strategies to be adopted for achieving the business goals of FY2016-17 and identify and realize opportunities for future growth.

CORPORATE THEME FOR 2016-17

The corporate theme of the Bank is "ASPIRE" which signifies as under:

Acquire Quality Business Sustainable Growth Perform 360 Degree Improve GovernanceReduced Stressed Assets Excellence in Customer Service

STRATEGIC ALLIANCES & JOINT VENTURES

Bank has been continuing strategic alliances & joint ventures with M/s LIC of India(for selling life insurance products) M/s United India Insurance Company (UIIC) (fordistribution of General Insurance product) with 9 AMCs (for distribution of their MutualFund Products) M/s SBI Life Insurance Company (for providing life insurance cover to SBa/c holders) M/s HDFC Standard Life Insurance Co Ltd (for providing free Life Insurancecover to Housing Loan borrowers) and M/s SBI Life Insurance Co Ltd (for providing GroupLife Insurance cover to Education Loan Borrowers).

New Arrangements

Bank has entered into new arrangements (MOU) with the following agencies to facilitatefee based income and enhanced & secured flow of credit during the year 2016-17.

• M/s HDFC Standard Life Insurance Co Ltd: Bank has entered into MOU with M/s HDFCStandard Life Insurance Co Ltd since 15.05.2016 for providing free life insurance cover tohousing loan borrowers under special package.

• Collateral Management Companies: Bank has entered MOU with M/s National BulkHandling Corporation (NBHC) M/s Star Agri-Warehousing and Collateral Management ServicesLtd (STARAGRI) & M/s National Collateral Management Services Ltd (NCML) M/s CNXCorporation Ltd for extending pledge loans to farmers and other borrowers againstNegotiable Warehouse Receipt issued for agricultural produce stored in the warehouses andcold storages owned by corporations or managed by them.

• National Small Industries Corporation Ltd (NSIC):

Bank had executed Memorandum of Understanding (MoU) with NSIC for sponsoring the MSMEapplications which was renewed for three years from 10.06.2016 to 10.06.2019.

• M/s Bajaj Auto Ltd: Bank has entered into pan India tie- up arrangement with M/sBajaj Auto Ltd for financing three wheelers auto rickshaws for a period of 2 years

from 24.01.2017 to 23.01.2019 for acting as a preferred financier for sourcing the loanapplications from the customers of the company and financing them.

• M/s Eicher Polaris Pvt Ltd (EPPL): Bank has entered into pan India tie-uparrangement with M/s Eicher Polaris Pvt Ltd (EPPL) for financing various models ofcommercial vehicles manufactured by them for a period of 2 years from 31.01.2017 to30.01.2019 for acting as a preferred financier for sourcing the loan applications from thecustomers of the company financing them.

• M/s Piaggio Vehicles Private Ltd: Bank has entered into a pan India tie-uparrangement with M/s Piaggio Vehicles Private Ltd for financing three wheelers autorickshaws three & four wheeler light transport vehicles for a period of 2 years from05.12.2016 to 05.12.2018 for acting as a preferred financier for sourcing the loanapplications from the customers of the company and financing them.

• M/s SAERA Electric Auto Private Ltd: Bank has entered into tie-up arrangementfor financing E-Rickshaw with M/s SAERA Electric Auto Private Ltd for a period of 2 yearsfrom 06.12.2016 to 05.12.2018 for acting as a preferred financier for sourcing the loanapplications from the customers of the company and financing them.

New Tie-ups

Bank also entered into various strategic tie-ups for business

development with the following agencies during the year

2016-17.

• Micro Finance Institutions: A tie-up arrangement with Shree Kshetra DharmasthalaRural Development Project Dharmasthala (SKDRDP) & Initiatives for DevelopmentFoundation (IDF) Tumkur where Bank provides credit facility to SHGs promoted by SKDRDP& IDF.

• Tobacco Board: A tie-up arrangement with Tobacco Board Guntur is made tofinance tobacco farmers both for construction of tobacco barns and crop- production inAndhra Pradesh.

• Sugar Factories: Bank has entered into tie-up with sugar factories to facilitatefarmers to avail sugarcane crop loans at higher level without collateral securities.

• NSFDC NSTFDC and NSKFDC: Bank has tie-up with NSFDC NSTFDC and NSKFDC forfinancing eligible Scheduled Caste Scheduled Tribe and Safai Karamcharis and theirdependents for income generating activities with concessional rates of interest.

* NPCI for National Electronic Toll Collection (NETC) Project: Bank has tie-up withNPCI for National Electronic Toll Collection (NETC) to facilitate automated Road Tollcollection electronically using RFID (Radio Frequency Identification) tag. Bank isparticipating as an issuer Bank facilitating Tag issuance and providing Top Up facilitythrough multiple channels. Apart from brand visibility the project will boostnon-interest income for the Bank.

BUSINESS PROMOTION CAMPAIGNS

Bank considers business promotional strategies as a tool to make continuous effort topopularize various products and garner more business. During the course bank hasinitiated number of promotional campaigns during the year 2016-17. Few of them are asunder.

• Agriculture lending campaign: In order to increase advance underagriculture Bank had organized agriculture lending campaign from 11.07.2016 to31.07.2016. The campaign was also launched for term loan and issuance of Rupay cards toKCC holders from 05.09.2016 to 24.09.2016. A campaign was organized for agriculture termloans and SHG/ JLG bank linkage from 30.01.2017 to 28.02.2017 and from 01.03.2017 to18.03.2017.

• Retail lending campaign: Bank has organized SyndCarnival campaign from06.06.2016 to

31.07.2016 for mobilizing retail loans. During Retail Business Carnival 37559 retailloans were mobilized amounting to Rs. 1004 crore.

• Home Loan Star campaign: In order to capitalize the business in housingsector Bank conducted Home Loan Star campaign from 07.10.2016 to 31.12.2016 & from23.01.2017 to 31.03.2017 for canvassing housing loans with focus on high value proposalsand bringing top builders to Bank's fold. During the star campaign 4898 housing loans aremobilized amounting to Rs. 692.52 crore.

• Retail Deposit and RD (Recurring Deposit) plus campaign: In order to improveperformance under CASA Bank launched Retail Deposit campaign from

01.09.2016 to 30.09.2016 with focus on high value savings & current accounts. Tobuild up the healthy RD Plus portfolio Bank celebrated two days as RD plus login daytwice in FY 2016-17 and opened more than 2.80 lakh RD plus accounts in four days. Thetotal amount mobilized was Rs. 25.25 crore on a monthly basis.

• Synd Vasuli Abhiyan 16-17: Bank organized Synd Vasuli Abhiyan16-17 anincentive scheme to recognize performance of the branches and regions

for maximizing recovery and NPA management through up-gradation and avoidance of freshslippages from 01.07.2016 to 31.03.2017.

• Special Campaign for FI initiatives: A special campaign for FI initiativeswas conducted from

15.09.2016 to 31.10.2016 for giving special emphasis on Aadhaar and Mobile seeding ofaccounts RuPay card distribution and Activation Financial Literacy and other flagshipschemes of Government under Financial Inclusion.

• Aadhaar Seeding Campaign: A mission mode campaign for Aadhaar seeding wasconducted from 04.11.2016 to 30.11.2016 to give impetus on Aadhaar seeding activity and toachieve 100 percent Aadhaar seeding in Central pension accounts PMJDY account and alloperative SB accounts.

• Digitalization Campaign: Post Demonetization

a digitalization campaign was conducted from

15.12.2016 to 31.12.2016 for 100 percent Digitalization of service area villages inBank's lead districts with special focus on instant account opening Aadhaar and Mobileseeding RuPay card distribution and awareness & usage of all Digital Bankingchannels.

• Go Digital Campaign: Bank launched "Go Digital"

campaign from 01.08.2016 to 30.09.2016 to propagate and promote existing AlternateDelivery Channels (ADC) services for swift and secure banking and increase the penetrationof internet banking mobile banking e-passbook etc. services among the Banks customers.During the campaign 70721 new mobile banking registrations; 20120 internet banking and52938 e-passbook registrations were completed.

• LIC Dangal and Mutual fund ELSS Login Days: To

boost fee based income and channelize surge of deposits post demonetization Bankannounced "LIC Dangal" campaign. The campaign was successful with Bankmobilizing 1 1225 LIC policies with a total premium amount of Rs. 13.92 crore. Bank alsorolled out mutual fund ELSS log-in Days on 20th & 21st February2017 in association with all the nine asset management companies. Bank mobilized more than5000 ELSS folio with a total investment amount of Rs. 7.15 crore.

• Monsoon Dhamaka Campaign for Visa Debit and Credit card holders: Banklaunched Monsoon Dhamaka campaign from 20.07.2016 to 30.09.2016 for highest spends on VISADebit/Credit Card POS and e-commerce transactions. The top three spenders of debit cardand credit card were awarded with mobile phones and cash back credits were given to 1100debit cardholders and 300 credit cardholders.

PERFORMANCE HIGHLIGHTS OF THE BANK DURING THE FINANCIAL YEAR 2016-17

Capital & Reserves

Bank's authorized share capital stood at Rs. 3000 crore and the paid-up capital Rs.904.54 crore (904539438 equity shares of Rs. 10 each) during the financial year endedas at March 31st 2017.

The Reserves and Surplus of the Bank increased from Rs. 11635 crore in FY 2015-16 toRs. 13280 crore in FY 201617 registering a y-o-y growth of 14.14 per cent over theprevious year.

Net worth

Tangible Net Worth of the Bank (excluding Revaluation Reserve Foreign CurrencyTranslation Reserve and net DTA) increased from Rs. 11409 crore as at March 31 2016 toRs. 12392 crore as at March 312017.

Dividend

The Bank has reported net profit of Rs. 358.95 crore during the FY 2016-17. Consideringthe need for ploughing back profits for augmenting capital adequacy ratio the Board ofDirectors has not recommended any dividend for the current FY 2016-17.

Business

The global business of the Bank stood at Rs. 467626 crore as at March 31 2017 ascompared to Rs. 468185 crore as at March 31 2016 whereas Bank's domestic businessstood at Rs. 405920 crore as at March 31 2017 as compared to Rs. 403314 crore as atMarch 31 2016.

Deposit Mobilization

Global deposits of the Bank stood at Rs. 260561 crore as at March 312017 as comparedto Rs. 261736 crore as at March 31 2016. Domestic deposits of the Bank stood at Rs.234543 crore as at March 31 2017 as compared to Rs. 235162 crore as at March 312016.

CASA Deposits

Domestic CASA deposits of the Bank increased from Rs. 67925 crore as at March 31 2016to Rs. 75792 crore as at March 31 2017 registering a growth of 11.58 per cent.Percentage of domestic CASA share to domestic deposits stood at 32.32 per cent as at March31 2017.

Credit Deployment

The Bank's global advances increased from Rs. 206449 crore as at March 31 2016 toRs. 207065 crore as at March 31 2017. Domestic advances grew from Rs. 168152 crore asat March 31 2016 to Rs. 171377 crore as at March

31 2017. The global credit deposit ratio stood at 79.47 per cent as at March 31 2017as compared to 78.88 per cent as at March 312016.

Priority Sector Advances increased from Rs. 64413 crore in 2015-16 to Rs. 67905 crorein 2016-17 registering a growth of 5.42 percent and forming 40.04 per cent of ANBC asagainst mandatory level of 40 per cent.

Total Agriculture Advances increased from Rs. 29237 crore in 2015-16 to Rs. 31878crore in 2016-17 registering a growth of 9.03 percent and forming 18.79 per cent of ANBCas against mandatory level of 18 percent.

MSE Advances increased from Rs. 24180 crore in 201516 to Rs. 24516 crore in 2016-17.MSME Advances stood at Rs. 26981 crore as at March 31 2017 as compared to Rs. 27677crore as at March 31 2016.

Profitability

Operating profit of the Bank increased to Rs. 4233.23 crore for the FY 2016-17 fromRs. 3251.31 crore for the FY 201516 registering a growth of 30.20 per cent. Net Profitof the Bank recorded at Rs. 358.95 crore for the FY 2016-17 as against Net Loss of Rs.1643.49 crore for the FY 2015-16.

Employees' Productivity

Business per employee of the Bank stood at Rs. 13.51 crore as at March 312017 ascompared to Rs. 14.61 crore as at March 31 2016. Profit per employee for the year FY201617 was Rs. 1.10 lakh .

Income & Expenditure

The Bank's total income stood at Rs. 26461.18 crore in the FY 2016-17 as compared toRs. 25706.51 crore in the FY 2015-16.

The Bank's interest income stood at Rs. 23003.79 crore in the FY 2016-17 as comparedto Rs. 23197.78 crore in the FY 2015-16.

The non-interest income of the Bank improved by 37.81 per cent from Rs. 2508.73 crorein the FY 2015-16 to Rs. 3457.39 crore in the FY 2016-17.

The Interest expenditure of the Bank declined to Rs. 16727.82 crore in the FY 2016-17as against Rs. 17213.08 crore in the FY 2015-16 recording a decrease of 2.82 per cent.

Operating expenditure of the Bank (including exceptional item of Rs. 882.65 crore in FY2015-16) increased by 4.92 per cent from Rs. 5242.12 crore in the FY 2015-16 to Rs.5500.13 crore in the FY 2016-17.

Important Financial Ratios

a) The Return on Assets of the Bank was at 0.12 percent in the FY 2016-17.

b) The Bank's Net Interest Margin (NIM) improved to 2.37 percent in the FY 2016-17 ascompared to 2.28 per cent in the FY 2015-16.

c) The yield on advances of the Bank stood at 8.34 per cent in the FY 2016-17 ascompared to 8.63 per cent in the FY 2015-16.

d) The cost of deposits of the Bank stood at 5.86 per cent in the FY 2016-17 ascompared to 6.27 per cent in the FY 2015-16.

e) The Earning Per Share (EPS) of the Bank stood at Rs. 4.21 in the FY 2016-17.

f) The Book Value Per Share of the Bank stood at Rs. 154.64 in the FY 2016-17 from Rs.175.41 in the FY 2015-16.

g) Net NPA ratio of the Bank stood at 5.21 per cent as at March 31 2017 as compared to4.48 per cent as at March 31 2016.

h) Gross NPA ratio of the Bank stood at 8.50 per cent as at March 31 2017 as comparedto 6.70 per cent as at March 312016.

i) NPA provision coverage ratio of the Bank stood at 56.37 per cent as at March 312017 as compared to 53.73 per cent as at March 31 2016.

j) The Capital Adequacy Ratio (CRAR) of the Bank as per Basel III improved to 12.03per cent as at March 31 2017 as compared to 11.16 per cent as at March 31 2016.

IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS (IND AS)

Status on Implementation of IND AS within the Bank

IND AS is applicable to the Bank in accordance with the notification issued by theMinistry of Corporate Affairs from FY 2018-19 and Bank has initiated steps forimplementation of IND AS (Indian Accounting Standards) from FY 2016-17 and accordingly putin place well-planned strategy for this implementation and have made good progress duringthis financial year.

In line with the guidance issued by the Reserve Bank of India in August 2016 the Bankhas set up a Steering Committee headed by the Executive Director that monitors theprogress of the implementation. The Steering Committee comprises of General Managers fromvarious functional departments of the Bank. Further Bank's Audit Committee of the Boardhas been reviewing the overall progress of the implementation of IND AS at regularintervals.

Progress made so far

• The Bank has completed a diagnostic study to identify the differences betweenthe current accounting framework and IND AS.

• Based on the diagnostic study the Bank has quantified the impact and filed thepro-forma financial statements for the half year ended September 2016 with the ReserveBank of India.

• The Bank has also drafted significant accounting policies under IND AS.

• The Bank is now performing an assessment of the system changes required in theCore Banking System and has also commenced the design of the Expected Credit Loss Models.

• Once the annual financial statements under the current accounting framework arefinalized the Bank will commence the preparation of the Opening Balance Sheet for the INDAS transition.

EXPANSION OF BRANCH NETWORK

During the year the Bank has added 169 brick and mortar branches to its network andthe total number of branches (including London Branch) were at 3933 as on 31.03.2017.These include 1268 branches in under banked districts and 982 branches in minorityconcentration districts. Out of the above 2 branches were opened in the North EasternStates of India during the year. Bank opened 2 Mid Corporate branches during the year. Asper RBI guidelines banks are required to open 25 per cent of the new branches in ruralunbanked tier 5-6 centers. The domestic branch network consisted of 1190 rural 1091semi-urban 813 urban and 838 metro branches. The total number of ATMs installed up to 31stMarch 2017 was at 3974. The Bank has a customer base of over 52 million as at March 312017.

RETAIL LENDING

Retail sector credit growth plays a pre-dominant role in increasing the total businessof your bank. Hence focus of the Bank has shifted to RAM (Retail Agriculture MSME)sectors on account of spread of risk catering to large population better yield on theadvances and stability of credit portfolio due to longer repayment period. Income streamfrom retail credit portfolio has shown steady improvement and this has contributedprofitability maintaining quality of asset portfolio risk diffusion and improvement ofNet Interest Margin of the Bank. Retail portfolio contributes to 16.14 percent of thedomestic credit of the Bank.

Keeping this in mind a new vertical has been created in Corporate Office as"Retail Business Department" to focus improvement on retail credit portfoliowithin overall domestic credit. The Bank has tweaked the products to suit the variouscategories of borrowers in prevailing market conditions. Retail credit products arecompetitive in the market and also promote growth in retail credit portfolio. Performanceunder retail credit portfolio is as under.

Retail Credit Portfolio Performance

(' in Crore)

Scheme 31.03.2016 31.03.2017

Annual growth

Absolute (%)
Housing loans 14174 14981 807 5.69
Vehicle loans 2767 3001 234 8.46
Education loans 2858 2893 35 1.22
Other retail loans 6730 6789 59 0.88
Total Retail Loans 26529 27664 1135 4.28

Major initiatives

Housing loans

• Bank has set up Central Processing Center (CPC) to standardize and streamlinethe processing for retail mortgage loans and also to reduce the Turn Around Time.

• Bank has introduced the empanelment of Home Loan Counselors (HLC) for canvassinghousing loans.

• Bank has waived processing and documentation charges on housing loans up to31.03.2017.

• Bank has re-introduced scheme of payment of service charges to approved builders/ authorized agent of the builder for sourcing housing loans.

Vehicle loans

• Bank has re-introduced scheme of payment of service charges to dealers &their sales executives for sourcing Vehicle loans.

• Bank has reduced rate of interest and also waived off processing anddocumentation charges during festive seasons from 01.10.2016 to 31.03.2017.

Education loans

• Bank has introduced Synd Vidya-Abroad educational loan scheme. An education loanfacility up to Rs. 200.00 lakhs to students who wish to go abroad for study.

• Bank has reduced rate of interest on SyndSuperVidya (Studies in PremierEducational Institutions) scheme at MCLR.

• Bank also integrated with "Vidyalakshmi Portal" an initiative by theMinistry of Human Resources Development to facilitate students to apply for educationloans online.

• Bank has also implemented the "Credit Guarantee Fund Scheme for EducationLoans" to provide collateral free education loans up to Rs. 7.50 lakh

and "Credit Guarantee Fund Scheme for Skill Development" to providecollateral free education loans for skill development up to Rs. 1.50 lakh to students.

Gold Loans

Bank has introduced new gold loan product "SyndSwarna- EMI" for nonagricultural purposes with EMI facility with enhanced scale of finance at 70% net value ofGold.

ADVANCES TO MICRO SMALL & MEDIUM ENTERPRISES (MSME)

Bank continues to accord greater thrust on financing MSMEs with emphasis on Micro andSmall Enterprises (MSEs). The Bank has sanctioned and disbursed 122181 number of loansamounting to Rs. 4959.17 crore in the year 2016-17. The total outstanding advances to MSEsector stood at Rs. 24886.30 crore as on March 2017. The advances to Micro and SmallEnterprises constitute 92.16% of the total advances under MSME Sector while advances toMedium Enterprises constitute 7.84% under MSME.

Under MUDRA scheme Bank has sanctioned 166221 accounts amounting Rs. 3208.11 croreand disbursed Rs. 2781.87 crore as on 31.03.2017 against target of Rs. 3600 croreallotted by the Ministry of Finance. Bank has issued 14813 Mudra cards amounting to Rs.48.25 crore.

The outstanding advances to Micro Enterprises of the Bank constitute 64.95% of advancesto Micro and Small Enterprises Sector which is above the stipulated target of 60% as onMarch 2017.

Compliance to RBI guidelines on MSE

As per new guidelines of RBI 7.5 percent of ANBC or Credit Equivalent Amount ofOff-Balance Sheet Exposure whichever is higher to be achieved in a phased manner i.e. 7per cent by March 2016 and 7.5 per cent by March 2017.

As on March 2017 ANBC of the Bank is Rs. 169610.82 crore and outstanding advances toMicro Enterprises (priority) is Rs. 15716.95 crore which is 9.27% of the ANBC againstthe stipulated target of 7.5%.

The Bank is having 69 specialized branches for focused lending to MSME sector. Bankpopularized the MSME loan products SyndDoctor SyndMarble SyndTextile SyndTransportSyndContractor SyndMahilaShakthi SyndHotel SyndJeweller SyndTimber andSyndProfessional to mobilize substantial business. Under these products Rs. 979.33 croreswas sanctioned during the year.

MOUs with reputed commercial vehicle manufacturing companies were entered to expandcredit to borrowers for purchase of commercial transport/passenger vehicles under MSEsector. Bank has entered into tie-up with 10 commercial vehicle manufacturers. MSME sectoris the backbone of the nation's economy. They contribute significantly to the GDP of thecountry and also to employment generation besides Export/Forex earnings. Keeping this inmind Bank has organized series of MSME meets/camps at various centers during the year toscout MSME proposals.

PRIORITY SECTOR CREDIT

Based on the Bank's experience in lending to different sectors and keeping in view thedynamics of economic growth Government directives national priorities and socio-economicobligations thrust was given to priority sector lending especially lending to agriculturesector during the year.

Bank has adopted various strategies during the year to achieve sustainable creditgrowth improved asset quality higher earnings and for maintaining well diversifiedcredit portfolio covering all sections of the society to ensure inclusive growth. The Bankhas continued its growth under priority sector lending with added thrust on consolidationof its position and focus on asset quality. The focus areas for credit were agricultureSMEs education housing micro finance and other productive sectors of the economy.

For quick disposal of large number of credit applications and to hasten creditdecisions the bank has introduced the "Online Request" from prospective clientscovering credit requirements under various segments of priority sector. The prospectiveclients can access the Bank's website and submit their request for loan throughapplication form prescribed therein. System generated acknowledgement is providedimmediately to the applicants with unique reference number which they can use to tracktheir applications.

Priority Sector Advances

Priority sector advances of your Bank increased by 5.42 percent to Rs. 67905 crore asat March 2017 (from Rs. 64413 crore as at March 2016) constituting 40.04% of ANBC againstthe mandatory level of 40%. The Bank has covered more than 30 lakh customers underpriority sector advances. Special care was taken to ensure that the credit needs of SC/STminorities weaker sections and women are fully met. Advances to weaker sections havereached a level of Rs. 21144 crore forming 12.47% of ANBC thereby surpassing themandatory requirement of 10%. The advances to women customers increased from Rs. 14342crore as at March 2016 to Rs. 15712 crore as at March 2017 forming 9.26% of ANBC againstthe mandatory level of 5%. Similarly advances to minorities increased from Rs. 10205crore as at March 2016 to Rs. 10611 crore as at March 2017 forming 15.63% of prioritysector advances surpassing the mandatory requirement of 15%.

Agriculture and Allied activities

Credit to agricultural sector increased by 9.03 percent to Rs. 31878 crore as at March2017 (from March 2016 level of Rs. 29237 crore) forming 18.79% of ANBC as against themandatory requirement of 18%. Lending to small and marginal farmers being Rs. 15569 croreconstituted 9.18% of ANBC against the mandatory requirement of 8.00%.

Quarterly Performance during 2016-17

As per RBI revised directions Bank has to achieve the mandatory targets on quarterlybasis. Average of Rs. 29852 crore was achieved under agriculture during the financialyear 2016-17 while Rs. 65398 crore under total priority sector advances. Similarly incase of small and marginal farmers Rs. 63699 crore was achieved against the mandatorylevel of Rs. 52674 crore of four quarters of the FY 2016-17.

Bank has covered more than 20 lakh customers under agricultural advances. Thedisbursement under credit flow to agriculture during the year amounted to Rs. 18214crore. The Bank brought 100711 new farmers into its fold during the year throughrural/semi-urban branches registering an average of 43 new farmers per rural andsemi-urban branch.

Syndicate Kisan Credit Card Scheme (SKCC)

As per the directions of RBI Bank is implementing the revised guidelines of KisanCredit Card under Syndicate Kisan Credit Card (SKCC) Scheme and the revised guidelinesinvolve the following.

• Fixation of staggered limit for five years.

• Provision for issuance of cheque book and ATM / Debit Cards (Rupay Kisan Cards)which will enable the farmers to effectively transact their operations in their SKCCaccounts.

The Bank has issued 4.85 lakh Syndicate Kisan Credit Cards during the year 2016-17amounting to Rs. 6562 crore. As at March 2017 Rupay Kisan Cards have been issued in caseof 7.21 Lakh operative SKCC A/cs.

Government Sponsored Schemes

The Bank continued to participate in poverty alleviation and employment generationschemes sponsored by the Government in full scale. Special emphasis was laid on coverageof SC/ST/OBC women and minority beneficiaries under these schemes. The total amountoutstanding under these schemes viz. NRLM PMEGP SGSY SJSRY and SRMS is Rs. 2956.82crore with 119845 borrowal accounts during the year. National Rural Livelihood Missionscheme is revamped & restructured scheme of Swarna Jayanti Grameen Swarojgar Yojana(SGSY) with effect from the financial year 2015-16.

National Urban Livelihood Mission (NULM) is another revamped scheme of Swarna JayantiSahari Rojgar Yojana during 2015-16 and is implemented in all district headquarters andall other cities with a population of 100000 or more as per 2011 census. Both NRLM andNULM now remodeled as Deen Dayal Antyodaya Yojana on 25 September 2015.

Advances to SC/ST

The coverage of SC/ST beneficiaries under various schemes especially under Govt.Sponsored Schemes is reviewed at regular intervals. Bank has initiated special efforts tocreate awareness about various schemes of the Bank among SC/STs to motivate them to availthe benefits under these schemes.

Advances to SC/ST beneficiaries under priority sector rose from Rs. 4342 crore as atMarch 2016 to Rs. 4520 crore as at March 2017 registering year on year growth of 4.10%.Disbursement and outstanding position of advances to SC/ST under Govt. Sponsored Schemes(i.e. PMEGP NRLM & NULM) are furnished in the following tables:

Advances disbursed to SC/ST beneficiaries under Govt. Sponsored Schemes during 2016-17(as on March 2017)

(Amount Rs. in crore)

Scheme

Total

Disbursement

Of which SC/ST

% to SC/ST against total (For

Accounts)

A/C Amt. A/C Amt.
PMEGP 3485 86.43 952 25.21 27.31%
NRLM 47571 1514.96 12521 485.32 26.32%
NULM 1856 16.27 550 4.20 29.63%

Outstanding advances to SC/ST beneficiaries under Govt. Sponsored Schemes as on March2017.

(Amount Rs. in crore)

Scheme

Balance

outstanding

Of which SC/ST

% to SC/ST against total (For Accounts)
A/C Amt. A/C Amt.
PMEGP 6272 198.20 1925 64.35 30.69%
NRLM 108293 2705.46 36565 835.88 33.76%
NULM 2404 29.71 651 11.32 27.07%
SRMS 334 4.03 320 3.75 95.81%

Advances to Minorities

Bank has taken various measures through Regional Offices and Lead District Offices forpopularizing amongst minority communities the various credit products available for theirbenefit. The advances to minorities rose from Rs. 10204.51 crore as at March 2016 to Rs.10611.29 crore as at March 2017 registering a year on year growth of 3.99%. Theinformation pertaining to credit flow to minority communities and status on implementationof Prime Minister's New 15 point programme for Minorities' community and Sachar Committeerecommendations are placed in the Bank's website. Special interest concession schemeranging from 0.25% to 0.50% was introduced by the Bank during 2010 for the benefit ofminority community under priority sector lending the same was continued during 2016-17.

Credit linkage of Self Help Groups/Joint Liability Groups

The Advance extended to Joint Liability Groups and Self Help Groups as at March 2017was 108250 accounts with an outstanding balance of Rs. 2889.45 crore. A joint farminggroup is informal group comprising 4 to 10 individual farmers who come together to accessinstitutional credit through JLG mode of financing. The Bank is participating in Jana SreeBima Yojana of LIC of India to extend insurance cover to all the women members of SHGscredit linked to Bank wherein the premium is subsidized by GOI. This scheme has an add-onbenefit under Shiksha Sahayog Yojana wherein two children of the insured member of SHG areprovided with scholarship at no additional cost.

Interest subvention benefit to farmers

The Bank has extended crop production credit to 6.04 lakh farmers during 2016-17 underinterest subvention scheme of the Govt. of India. The Bank has extended the interestsubvention benefit @ 2% to the tune of Rs. 173.79 crore and Rs. 144.63 crore as additionalincentive subvention @ 3% for timely repayment during 2016-17 and making the eligiblefarmer derive credit at the effective prescribed interest rate of 4% p.a.

Harnessing Solar Energy

The Bank has been actively promoting solar energy application by implementing theschemes for financing Solar Water Heating Systems and Solar Lighting Systems. The Bank ispresently implementing the scheme to extend finance to Solar Home Lighting Systems andSolar Water Heating Systems with subsidy assistance from Ministry of New and RenewableEnergy (MNRE) under Jawaharlal Nehru National Solar Mission (JNNSM). During the financialyear 2016-17 the Bank extended credit of Rs. 53.57 crore for installing 57 solar unitsunder the soft loan scheme of the Ministry of New and Renewable Energy. The cumulativenumber of units financed since inception of the scheme is 36308 amounting to Rs. 169.13crore.

The Bank financed Rs. 7.17 crore for installing 130 solar lighting units under SyndSolar Jyothi scheme of the Bank during the financial year. The cumulative number of solarlighting units financed as at the end of the quarter since inception of the scheme is12106 involving disbursement of Rs. 35.16 Crore.

Rural Extension Education Programmes

Bank has been organizing Rural Extension Education Programmes mainly through the ruraland semi-urban branches for promoting awareness among the rural people on modernagriculture & rural technologies and bank's credit programmes.

During the financial year 2016-17 the Bank has organized 1949 Rural ExtensionEducation Programmes benefiting 121265 participants with an expenditure of Rs. 17.94lakhs.

Crop Insurance Schemes

Three crop insurance schemes were introduced from Kharif 2016 (From 01.04.2016onwards). These schemes are as under:

• PMFBY (Prime Minister Fasal Bhima Yojana)

• Restructured WBCIS (Weather Based Crop Insurance Scheme)

• UPIS (Unified Package Insurance Scheme)

The eligible KCC holders are covered with respective crop insurance schemes. Bank hasenrolled 2.78 Lakh KCC accounts under these crop insurance schemes and remitted Rs. 52.38crore as premium in Kharif season. In Rabi 2016 0.95 Lakh farmers are covered under cropinsurance schemes.

Rural Development and Self Employment Training Institute (RUDSETI)

Bank has co-sponsored 27 Rural Development and Self Employment Training Institutes(RUDSETIs) across the country. These institutes have trained 26284 candidates during theyear 2016-17. Out of these trained candidates 12678 were women & 7562 were fromSC/ST category. Total candidates trained since inception is 423051. The settlement rateis 71.98%.

Our RUDSETI model has been accepted by Ministry of Rural Development Govt. of India asa role model to be replicated in each district of the country. A Monitoring Cell ofNational Academy of RUDSETIs has been established at Bangalore for monitoring these RSETIinstitutes and their activities pan India.

Syndicate Rural Development Trust (SRDT)

Syndicate Rural Development Trust (SRDT) was established in the year 2000 to promoterural entrepreneurship and self

employment among the rural poor especially women. So far the Bank has established 16SyndRural Self Employment Training Institutes (Synd RSETIs) in 5 States and 1 UnionTerritory for imparting training to rural poor. Bank has been awarded the Best Bank awardunder small bank category (Banks with less than 20 RSETIs) for the FY 2013-14. Theseinstitutes have conducted 444 training programs during the year 2016-17 benefitting 11778 persons of whom 6536 were women and 2988 were from SC / ST category. Totalcandidates trained since inception is 144677. The settlement rate is 66.37 %.

Financial Literacy Centers (FLCs)

Syndicate Bank and Vijaya Bank had jointly established Jnana Jyothi FLCC Trust Manipalon 20.10.2010 to set up Financial Literacy Centres (earlier called Financial Literacy andCredit Counseling Centers) in the Lead Districts of both the Banks. The FLCs areestablished on the lines of Model Scheme for setting up of FLCCs issued by RBI vides theircircular dated 04.02.2009. Vijaya Bank has opted out of the trust in March 2016 andKarnataka Bank Ltd APGB and KVGB have joined as institutional sponsors. The Trust has sofar set up 55 FLCs on behalf of Bank in lead districts in five states and UT ofLakshadweep. During the Financial Year 2016-17 these FLCs have conducted 16561 literacycamps benefitting 70717 persons.

Financial Inclusion Resource Centers (FIRCs)

As advised by RBI Bank has set up 21 Financial Inclusion Resource Centers (FIRCs) in 5States. These FIRCs provide a permanent storehouse of information in the form ofexhibition on various facets of banking banking services and its products RBI and itsfunctions etc.

Lead Bank Scheme

The Bank has been assigned with lead bank responsibilities in 29 districts inclusive ofUT of Lakshadweep across the country. All the Lead District Offices of the Bank haveconducted the District Level Review Committee (DLRC) meetings and District ConsultativeCommittee (DCC) meetings regularly. The credit planning process was completed and DistrictCredit Plan (DCP) 2017-18 was launched as per time schedule envisaged by RBI. The Bank isalso the convener of State Level Bankers' Committee (SLBC) in Karnataka and the UnionTerritory of Lakshadweep and satisfactorily discharged the responsibilities cast on it asthe convener of State Level Bankers' Committee. The SLBC for Karnataka and UTLBC forLakshadweep are implementing the recommendations of the High Level Committee to review theLead Bank Scheme. Under District Credit Plan Bank's lead districts have shown 160.30%achievement under priority sector and 126.91% progress under agriculture as on March 2017in respect of implementation of Annual Credit Plan 2016-17.

REGIONAL RURAL BANKS

There are three Regional Rural Banks sponsored by your Bank. These RRBs are covering 18districts in 3 states with a network of 1563 branches. RRBs sponsored by your Bank are inthe top league among various RRBs of the country in respect of key business parameters.Total business of RRBs sponsored by the Bank stood at Rs. 57161 crore as on

31.03.2017.

The total deposits and advances of the RRBs have reached a level of Rs. 31841 croreand Rs. 25320 crore respectively. The total priority sector advances stood at Rs. 22987crore constituting 90.78 percent of the total advances as at

31.03.2017. Agriculture advance have reached a level of Rs. 18832 crore forming 74.37percent of total advances. All the RRBs have issued 12.21 lakh Kisan Credit Cards tofarmers with an outstanding credit of Rs. 12386 crore. The RRBs are making profitcontinuously from their inception.

All the RRBs sponsored by the Bank have moved towards implementation of CBS and NGRTGSNEFT on boarded with APBS/NACH platform ECs and CPSMS 2.6 version. RRBs have activelyparticipated in PMJDY and have canvassed 2601220 SB accounts and issued 2447165 RuPaycards as on 31.03.2017. System generated NPA is implemented in all the three RRBs. All thethree RRBs sponsored by Bank have implemented FI Plan (2016-2019) as per the direction ofReserve Bank of India and Government of India.

FINANCIAL INCLUSION INITIATIVES

Bank has covered all the allotted 3229 SSAs covering 6953 villages and deployed 2615Bank Mitrs across the country to provide banking services to the villagers.

PRADHAN MANTRI JAN-DHAN YOJANA

"Pradhan Mantri Jan-Dhan Yojana" (PMJDY) was launched by the Hon'ble PrimeMinister on 28.08.2014 with an objective of covering all the uncovered households in thevillages and urban wards with a bank account to provide banking facilities in a missionmode.

Bank has opened 43.47 lakh Basic Savings Bank Deposits (BSBD) accounts under PMJDY ason 31.03.2017 with an outstanding balance of Rs. 1178.29 crore out of which 32.14 lakhPMJDY Accounts (73.95%) have been seeded with Aadhaar against industry average of 60.38%.

Business Correspondent (Bank Mitr)

Bank appointed 2615 Bank Mitrs and all are provided with interoperable Micro ATMs fordoing AEPS and RuPay transactions. No. of transactions through Micro ATMs have increasedconsiderably during 2016-17 and per day transactions have increased from 8 as at31.03.2016 to 12 as at 31.03.2017.

Fifteen additional Bank Mitrs were appointed in Krishna District of Andhra Pradesh inview of new projects/DBT schemes implemented in the district by engaging SHG members asBank Mitrs. Five additional Bank Mitrs were appointed in Gubbi Taluk in Tumkuru districtof Karnataka State as Special Rural Cash Points during the period of demonetization.

Ultra Small Branches

As per RBI roadmap for opening brick & mortar branches in unbanked villages withpopulation of more than 5000 56 new USBs are opened during 2016-17. With this totalnumber of USBs in the Bank have increased to 979. Banking services are extended in USBsthrough Bank Mitr and weekly visits of branch officials to villages.

Integration of Fair Price Shops (FPS) for cashless AePDS

Your Bank has proactively taken the responsibility of integrating all the FPSirrespective of service area of Bank in five lead districts of AP viz. AnantapuramuKadapa Kurnool Nellore and Prakasam for cashless Aadhaar enabled transactions. Bankcould complete the integration and enabled the system in a challenging time frame of just7 days. Bank has launched Aadhaar enabled cashless Public Distribution System (AePDS) inAnantapuramu and Kadapa districts of AP on 09.12.2016. As on 31.03.2017 11009 FPS in APwere integrated for Aadhaar enabled cashless sale of monthly ration and these outlets havestarted doing live cashless transactions from 01.01.2017 and the project is runningsmoothly. Subsequently Bank has started the cashless AePDS in Ambala district of Haryanaand 46 FPS were integrated for Aadhaar enabled cashless transactions.

Full Digitalization of Villages

Under Syndicate Samruddhi Gram Vikas Yojana Bank has adopted 26 villages for overalldevelopment by allotting Rs. 20 lakhs every year. On 09.12.2016 Bank has declared onevillage each in Anantapuramu and Kadapa districts of AP as 100% digitalized. Subsequentlyone village each in Siddipet Nellore Mathura Dharawad Ballari Dakshina KannadaPrakasam and 5 villages in Kurnool districts were declared fully digital in the presenceof district administration.

Financial Literacy

Bank is promoting financial literacy through JJFLCC Trust which has opened 55 FinancialLiteracy Centers (FLC) and 21 Financial Inclusion Resource Centers (FIRC) in the leaddistricts of the Bank and 16561 literacy camps have been conducted benefitting 709179persons from April to March 2017. Being SLBC convenor Bank has organized 4 Digi-Dhanmelas in coordination with State Government in

Karnataka and one mela in Lakshadweep by UTLBC. Bank has trained all FLC/RUDSETImembers in digital channels. Bank has trained about 361 newly recruited officers inFinancial Inclusion.

CORPORATE CREDIT

The bank extends finance to corporates for their short term as well as long termrequirements. Exposure of above Rs. 100.00 crore are handled by corporate creditdepartment. The loans offered are working capital finance term loan finance projectfinance such as commercial real estate infrastructure projects and other projects loanagainst future rent receivable portfolio buyouts interbank participation certificatesetc.

Project Appraisal & Syndication Cell (PAC)

Project Appraisal Cell has been constituted for preparation of detailedappraisal/vetting of TEV study/information memorandum. PAC undertakes detailed appraisalin respect of term loan proposals with project cost of Rs. 70.00 crore and above and Banksexposure of above Rs. 35.00 crore where production/construction/process is involved.

In respect of projects already appraised by PSBs/all India financialinstitutions/leading private sector banks/other reputed agencies vetting is done by PACfor exposures above Rs. 100.00 crore. This initiative will reduce the Turn Around Time(TAT) for credit proposals as well as providing such services to branches at a shortnotice.

A Syndication cell has been constituted for arranging loans under Syndication. Thisinitiative will increase the fee based income for the Bank and also will help in creatingquality high value good assets for the bank and also for improving the NIM of the Bank.

MID CORPORATE CREDIT

Mid Corporate Credit Department has been established at the Corporate Office to caterto the credit requirements of smaller corporates whose credit requirement range betweenRs. 35 crore to Rs. 100 crore including commercial real estate MFIs NBFCsinfrastructure low priority industries and new business group. Bank has 28 Mid Corporatebranches headed by Asst. General Manager/Chief Manager and posted with trained andexperienced credit officers to provide required expertise to handle high value creditproposals. Bank has recorded Rs. 10017.15 crore business from these 28 branches as on31.03.2017.

CREDIT MONITORING AND REVIEW

In order to have a comprehensive system of monitoring the credit on an ongoing basisand to ensure asset quality of advances your Bank has constituted a separate vertical atCorporate Office headed by a General Manager

in which the Special Mention Accounts Cell Credit Monitoring Cell and Corporate DebtRestructuring Cell are merged into Credit Monitoring and Review Department in 2014. Acomprehensive credit monitoring policy has been formulated for implementation to ensureasset quality.

The department is primarily responsible for framing policies related to creditmonitoring. Department is reviewing the sanctions in respect of the advances sanctioned atRegional and Zonal Offices.

For effective and timely monitoring a system based monthly monitoring report (MMR) forborrowal accounts of Rs. 1.00 crore and above is put in place in order to obtainqualitative information in respect of loan accounts such as regularity of the accountrenewal status inspection/audit details unit visits insurance coverage securitycreation performance of the unit banking arrangements rating details etc. The monthlymonitoring report acts as an early warning system and facilitates the top management tohave an overall view on the health of the credit portfolio.

As per the Reserve Bank of India guidelines Bank has introduced a system of legalaudit wherein re-verification of title deeds/fresh legal opinion in respect of advances ofRs. 5.00 crore and above backed by mortgage of properties is done where earlier legalopinion has completed 2 years. Department is monitoring compliance of this process.Department is also monitoring conduct of stock audit in respect of eligible accounts.

Department consists of a stressed asset cell which handles accounts referred to CDR andSDR/S4A schemes pertaining to accounts already referred under CDR.

Special Mention Accounts (SMA)

A separate vertical called special mention accounts cell is functioning under thedepartment. The accounts which are showing sign of irregularities/sickness are known asspecial mention accounts. Major function of SMA cell is to identify the accounts showingearly sign of irregularities sickness so that timely effective action can be taken tomaintain the quality of assets and to prevent them from slipping to NPA.

The department is vested with the responsibility of overall monitoring of stressedaccounts under standard assets. The department is entrusted with the task of devisingappropriate reporting system / MIS and collecting data at regular intervals.

The Bank has followed the RBI regulations both on special mention accounts and onrestructuring of accounts by careful assessment quick detection of weaknesses andtime-bound implementation of restructuring package. The department monitors status ofrestructured account

on the basis of borrowers' keeping up of the restructuring commitments.

The department submits branch-wise size-wise and sector- wise details of SM accountsalong with the details of high value SM accounts of Rs. 1.00 crore & above.

Early recognition of stress and setting up of Central Repository of Information onLarge Credits (CRILC) introduced by RBI from 01.04.2014 named as "Framework forRevitalizing Distressed Assets in the economy - guidelines on Joint Lenders' Forum (JLF)and Corrective Action Plan (CAP)" is also being monitored by the department.Borrowers having aggregate fund-based and non-fund based exposure of Rs. 5 crore and aboveare being reported on quarterly basis and SMA 2 of Rs. 5 crore and above are reportedweekly under CRILC platform by the department. In addition to this the function ofreporting of identified red flagged/fraud accounts of Rs. 50 crore and above under CRILCis also handled by the department.

ASSET QUALITY AND MANAGEMENT OF NPA

Bank's recovery policy is oriented towards addressing the entire gamut of NPAmanagement and enabled the field functionaries in resolving any category of non performingaccounts. The comprehensive recovery policy is being modified from time to time to be inline with the guidelines of RBI/GOI. Bank has introduced/extended special OTS schemes forconsidering proposals of farmers under direct finance to Agriculture & Alliedactivities including agricultural tractor loans OTS Scheme for small NPA accounts underdoubtful and loss assets category with book balance of Rs. 500000/- and below and OTSscheme for Micro and Small Enterprises borrowers. The special OTS scheme for settling NPAeducation loans with original sanctioned limit of Rs. 4.00 lakh & below for thebenefit of education loan borrowers was also renewed. In addition to the above during theyear a special OTS Scheme was formulated to improve recovery under DA-3 and loss assetswith book balance of Rs. 500000/- and below with a limited validity period.

Bank continued to reduce large number of smaller NPA accounts by settling the dues at"Synd Adalats" at all branches throughout the year by meet talk and settleapproach. Four Bruhat Synd Adalats were conducted at regional/cluster/branch level on14.06.16 09.08.16 08.11.16 and 14.02.17 wherein 81457 OTS cases were settled byrecovering a sum of Rs. 244.17 crore with an offer amount of Rs. 749.51 crore.

Bank was able to register a substantial recovery of Rs. 713.17 crore during the year2016-17 by issuing notices and taking possession/auctioning of properties under SARFAESIAct 2002. The efforts at branch level were supplemented by empanelling more enforcementagencies and approved

valuers. Special intensive NPA recovery campaign named "Synd VasuliAbhyan-16-17" was held successfully from 1st July 2016 to 31stMarch 2017 for maximizing recovery.

Top NPAs from each region were identified for giving focused attention in the beginningof the year itself and many accounts were successfully resolved before March 2017.Stressed Tiny Asset Recovery Team (START) stationed at regional offices are beingextensively utilized for assisting the branches having high concentration of specialmonitoring assets/non performing accounts of below Rs. 10.00 lakh. All high value NPAaccounts are monitored and vigorous follow up is made for resolving these accounts. Onaccount of this large number of NPA accounts could be resolved.

The total cash recovery in NPAs amounted to Rs. 2709.39 crore which includesprincipal recovery of Rs. 1548.05 crore in existing NPAs and Rs. 697.28 crore in freshNPAs slipped during the year. The total cash recovery includes Rs. 463.02 crore towardsuncharged interest and Rs. 1.04 crore in written off accounts.

RISK MANAGEMENT

Risk Management Architecture

A robust and comprehensive Risk Management Framework is established in the Bank. TheBoard of Directors assumes the overall responsibility for risk management in the bank. TheRisk Management Committee (RMC) of the Board defines the Risk appetite of the Bank. TheRMC of the Board is ably assisted by Credit Risk Management Committee (CRMC) AssetLiability Management Committee (ALCO) and Operational Risk Management Committee (ORMC).

A technology risk management framework is established to manage technology risks in asystematic and consistent manner. Bank has developed implemented and maintained adocumented comprehensive risk based program based on the ISO 27001 framework within thecontext of the bank's business activities & risk. It includes an InformationTechnology Governance Framework consisting of IT Strategy Committee IT SteeringCommittee Chief Information Officer (CIO) Information Security Management Committee(ISMC) a Chief Information Security Officer (CISO) assisted by various specialist teamsBusiness Continuity Teams and an IS Audit function to initiate implement monitormaintain and improve the information security within the Bank and to make sure that IT isaligned and delivers value to the business.

Risk Management department functioning at Corporate Office oversees the overallimplementation of various risk management initiatives across the Bank with the assistanceof Risk Management Cells (RMCs) at Regional Offices. The Bank has a well documented policyand

processes for management of credit market and operational risks which are periodicallyreviewed so as to adapt to the changing business and market environment.

Basel II Compliance

Bank has been complying with all Basel II norms. The Capital to Risk Weighted AssetsRatio (CRAR) is computed as per Pillar I requirements adhering to New Capital AdequacyFramework (NCAF) guidelines of RBI. Bank has adopted standardized approach for computingcredit risk basic indicator approach for computing operational risk and standardizedduration approach for computing market risk. Bank has migrated to automated model forcomputation of Credit Risk Weighted Assets during the Financial Year 2016-17.

Bank has board approved comprehensive Internal Capital Adequacy Assessment Process(ICAAP) and Stress Test Policy which is reviewed periodically so as to be in line withthe market realities economic environment and regulatory requirement. Bank also preparesthe annual capital plan to augment the capital requirements of the Bank which is reviewedat quarterly intervals. The Bank has a board approved disclosure policy which is reviewedperiodically by adhering to the guidelines issued by RBI and other regulatory bodiesperiodically.

Bank is in the process of putting in place software based identification measurementand mitigation of market and operational risk by way of Integrated Treasury ManagementSolution (ITMS) and Operational Risk Management Solution (ORMS) apart from a scientificFunds Transfer Pricing Mechanism(FTP).

Basel III Guidelines

Basel III guidelines have been introduced for improving the banking sector's ability toabsorb shocks arising from financial and economic stress supplementing the risk- basedcapital requirement with a leverage ratio. Bank is calculating the Liquidity CoverageRatio (LCR) in line with RBI guidelines and submitting the same to RBI on a monthly basis.The weighted average LCR is published on a quarterly basis. During the current year Bankhas taken various capital optimization measures for improving the quality of capital andto improve the common equity Tier 1 capital CRAR of the Bank. Bank has raised totalcapital funds of Rs. 2706 crore during the financial year 2016-17 in various formsnamely

a. Equity capital infusion by Govt. of India for an amount of Rs. 776 crore.

b. Unsecured perpetually fully paid up non-convertible Basel III complaint additionalTier-I bonds for an amount of Rs. 1930 crore.

Bank is taking all measures to improve the CET1 CRAR and Leverage Ratio under BaselIII so as to comply with the capital requirements as per the schedule prescribed by RBIwhile simultaneously achieving the expected growth in business. Bank is also publishing onquarterly basis the required information as per Basel III disclosures in the website sincethe quarter ending September 2013.

Asset Liability Management

The Asset Liability Management Committee consists of members of the top management andregularly meets to manage Liquidity Risk Interest Rate Risk Gaps/Mis-match Risk BasisRisk Re-pricing Risk Forex Risk and Equity Price Risk. It includes product pricing fordeposits as well as advances and the desired maturity profile of assets and liabilities.

The Prudential Regulatory Authority (PRA) UK has approved "Whole FirmModification" approach for London Branch under the liquidity regime of PRA/FCA(Financial Conduct Authority). Subsequently the Bank has put in place a mechanism foreffective monitoring of liquidity at London Branch and for the Bank as a whole. The Bankhas a well documented contingency liquidity funding plan for managing any contingency. TheBank undertakes stress testing on quarterly basis and assesses the impact on liquidity andinterest income of the bank. Bank monitors the Basel-III liquidity ratio of"Liquidity coverage ratio" on monthly basis.

Unhedged Foreign Currency Exposure

The Bank has a policy with regard to capital and provisioning requirements for exposureto entities with Unhedged Foreign Currency Exposure (UFCE) which is based on theguidelines issued by RBI. The position of last 2 years is as under:

(Amount in Rs. Crore)

Particulars FY 2016-17 FY 2015-16
Opening balance of UFCE provision 52.00 35.00
Add: incremental/reversal of provision during the current year 8.00 17.00
Closing balance of UFCE provision 60.00 52.00

TREASURY & INTERNATIONAL BANKING

Bank has accorded importance to treasury functions and efficient management ofIntegrated Treasury Operations. Treasury and International Banking Dept (T&IBD) hastwo

wings viz (a) Foreign Exchange Treasury and (b) Domestic Treasury. Besides T&IBDis also functioning as monitoring and controlling office for the overseas operations ofthe Bank.

Forex Treasury

Treasury and International Banking Dept (T&IBD) is the only Rs. A' category officein your Bank which maintains foreign exchange position Nostro and Vostro Accounts.T&IBD also monitors foreign exchange business correspondent banking relationship andoverseas business operations of London branch.

The Bank's centralized dealing room at T&IBD Mumbai handles the foreign exchangedealing operation of the Bank. The Bank is having 108 designated branches (Category"B") to handle full-fledged foreign exchange transactions and 412 nominatedbranches to handle the FCNR business of the Bank. NRE/NRO deposits are accepted at all the3858 domestic branches of the Bank. The Bank also has one overseas branch at UnitedKingdom. The Bank is a member of Clearing Corporation of India Ltd. (CCIL) for settlementof inter-bank forex deals in USD/ INR segment. Further the Bank also settlescross-currency deals through CCIL with continuous linked settlement (CLS) Bank.

The Bank has become trading-cum-clearing member on three exchanges i.e. MCX-SX NSEand BSE for undertaking proprietary based position in currency futures.

The Bank is offering only plain vanilla derivatives and no complex derivative productsare offered by the Bank. There is no litigation against the Bank in respect of existingderivative transactions. The Bank has implemented Integrated Treasury Management Software(ITMS) which has essential features like integration of domestic and forex treasuryefficient in settlement operations for rupee and foreign exchange treasury and timelyNostro reconciliation. The new system also provides seamless interactions with branchesfor their customer transactions.

The total forex turnover of the Bank was Rs. 1132143 crore for the current financialyear as compared to Rs. 974988 crore for the previous financial year. The inter-Bankturnover of the Bank was Rs. 1078832 crore for the current financial year as compared toRs. 917270 crore for the previous financial year.

Export Finance

Your Bank has initiated various measures to increase the flow of credit to exportsector. The coverage under the Synd Export Gold Card Scheme a unique scheme for eligibleexporters offering concessional and preferential terms was broadened to include morenumber of exporters.

Rupee export credit was offered at very competitive interest rates within the ceilingprescribed by RBI. The Interest Equalization Scheme for Exporters as designed by Govt ofIndia has been made available by the Bank to its customers in certain specified sectorsthus passing on the benefits of concessional interest. Bank also conducted exports/importsmeet at various centers to have direct interaction with the clients.

Exchange Companies

The Bank is managing one Exchange House M/s Musandam Exchange Company Ruwi an exchangecompany at Ruwi in Sultanate of Oman. The Bank is also having Rupee Drawing Arrangements(RDA) with other 7 Exchange Houses for improved and cost-effective funds transfer byIndian diaspora to India from Gulf countries apart from RDA with 06 foreign banks.

Centralised NRI Cell

T&IBD has opened the centralized NRI cell w.e.f. 26th Dec 2012 to enableprompt opening of NRE accounts canvassed by Exchange House managed by Bank namelyMusandam Exchange Company. With a view to increasing the NRE Portfolio of the BankT&IBD is opening the account on behalf of the branches and dispatching the NRE welcomekit containing cheque book ATM card and Internet IDs etc. directly to the Exchange Housefor delivery to the customer.

Product display in EXIM Mitra portal of EXIM Bank

During the current year Bank has taken initiative to display forex products on theEXIM MITRA (www.eximmitra . in) sponsored by Exim Bank for the benefit of exportercommunity. Exporter can conveniently know the feature of all the forex products beingprovided by the Bank from this portal and contact nodal branch for availing thosefacilities.

Export Excellence Award

Federation of India Export Organization (FIEO) has awarded the "Gold Trophy"for the FIEO Export Excellence award of the top financial institution of northern regionfor the year 2014-15.

Special Arrangements with NOSTRO Bank

In order to mitigate the hardship faced by the customer in collection of US Dollarinstruments through US based correspondent Banks T&IBD has established specialarrangements for speedy collection of US Dollar cheques/ draft through USD Nostrocorrespondent for cheques drawn in USA.

Domestic Treasury

The Bank's trading desk booked trading profits in both equity and debt market by takingadvantage of market situation. Domestic trading desk supported by state of art technologywhich is mapped with the trading platforms like CROMS CCIL-CBLO NDS-OM etc. provides theseamless transactions movements.

The bank has also strengthened the non SLR investments by investing in qualitative andrated corporate bonds and debentures commercial paper CDs etc. resulting in improvedyields on investment portfolio. The bank has also earned from arbitrage deals byeffectively making use of windows like CBLO Repo & call market. The bank has managedfunds very efficiently by these money market channels by continuously monitoring the fundflow and the liquidity position and undertaking lending and borrowing transactions. Thedomestic investments of the bank were at Rs. 64766.41 crore as on 31.03.2017 as againstRs. 68285.58 crore for previous year. Total income from investment portfolio (excludingdividend & trading profits) was Rs. 5428.05 crore in the year 2016-17 as against Rs.5350.98 crore in the year 2015-16. Bank's investment in SLR securities amounted to Rs.58646.05 crore which formed 90.55% of Bank's total domestic treasury investments as on31.03.2017. Trading profits for the year 2016-17 was Rs. 1728.69 crore as against Rs.895.84 crore during the FY 2015-16.

Modified duration (indicator of change in prices/values with change in 1 percentInterest Rate) for Bank's total investment portfolio stood at 4.30 for 2016-17 as againstof 4.44 for year 2015-16.

Overseas Operation

Bank's overseas presence is in United Kingdom at London. The Branch is active inwholesale banking operations for Indian corporates in United Kingdom money marketoperations investments and treasury operations. The Branch focuses on syndications andECBs besides bilateral loans for Indian corporates having global presence. The branch hasefficient risk-management system which is approved by regulatory authority of UnitedKingdom. The total business (Deposits and Advances) of the branch stands at GBP 7627.164Million ('61705.66 crore) as at 31st March 2017 as against GBP 6794.687Million ('64870.58 crore) as at 31st March 2016.

MANAGEMENT INFORMATION SYSTEM (MIS)

MIS department provides information on periodical business parameters necessary notonly to manage the organization effectively but also in facilitating the top management indecision making. The regulatory and statutory compliance requirements are being metincluding regular and adhoc

reports during de-monetization of currency in Q3 of 2016. Important and time consumingreports like priority sector reports reports related to income recognition SPARC CRILCreporting Friday data etc. are also generated for better management internally and forsubmission to the regulator.

MIS department is in the process of implementing a robust Enterprise Data Warehousing& Business Intelligence (EDW & BI) by bringing in data from all sources in thebank for generation of required data/reports/analytics/dash boards. EDW & BI is beingleveraged in the functions like Anti Money Laundering (AML) CTR in providing red flagalerts proposed by Financial Intelligence Unit India (FIU- IND) and Analytical CustomerRelationship Management (ACRM).

Risk Based Supervision Cell (RBS Cell)

RBS Cell ensures accuracy of data provided to RBI under SPARC (Supervisory Programmefor Assessment of Risk and Capital). Quarterly/annual submission of tranche I IA II andIII inputs including data points are being consolidated and placed before the topmanagement for necessary review.

Fraud Investigation Cell (FIC)

FIC monitors and does the follow up of fraud cases including CPPR (Claims Paid PendingRecovery) related to frauds with various offices. It also ensures conducting internalinvestigation examination of staff accountability Departmental action recovery andclosure as well. The cell places detailed note for amounts of above Rs. 1 crore/?10 crorebefore Special Committee of the Board/ Government nominee Director on the board of theBank for taking necessary action. The cell reports/updates RBI database including CentralFraud Registry the progress related to criminal action internal investigation actiontaken and also in providing information related to queries and clarifications sought byFinance Ministry. The cell not only reports but also identifies the causative factors andshares with respective departments for initiating corrective actions.

INFORMATION TECHNOLOGY Core Banking Solution (CBS)

The Bank continues to spread its wings with a network of 3933 branches 23 servicebranches 12 ARMBs 979 USBs and 236 other offices covering 34 States and UnionTerritories under the CBS network as on 31.03.2017 and one branch at London. All thebranches/offices under CBS network are currently under centralized server setup.

Infrastructure

Bank has built the best of technology infrastructure by implementing a state-of-the-artdata centre at Mumbai and a Disaster Recovery Site at Bangalore in different seismic zoneand a near site at Mumbai. The technology infrastructure is being upgraded with newhardware additional storage and new higher version of Oracle software.

Bank has acquired new enterprise class storage system based on latest technology &solid state hard disks which will substantially improve the performance and reduce theEOD/BOD window and facilitate having multiple copies of databases for report generationand MIS activities.

CBS for London Branch

Your overseas branch at London has been brought under overseas CBS with the latestsoftware application (Finnacle) having capabilities to support customer focused bankingproduct configuration multi-channel capability etc.

Delivery Channels ATM Network

Bank has operationalised 3974 ATMs as on 31.03.2017 spread across the country. Bankhas a card-base of over 144.30 lakh for global access to ATMs and POS Terminals. Bank hasrecalibrated all ATMs as per post demonetization requirements.

Internet Banking

Bank has upgraded to a new higher version of internet banking solution to providebetter customer service compatible with all internet browsers with new features such asCASA statement on email unlock user id online hotlist/temporary blocking/reactivatedebit card feedback prompt and forgot/reset password option. Internet bankingfacility-user base stands at 11.56 lakhs as on 31.03.2017.

Mobile Banking

Mobile banking application has been upgraded to a new version which has a richer UserInterface (UI) and enhanced User Experience (UX). This application accommodates newerfeatures and facilities such as know your MMID Refer a friend Utility Bill PaymentsTicketing Rewards etc. The number of mobile banking users is increased to 8.33 lakhs ason 31.03.2017.

SMS Banking

Bank has introduced SMS Banking to inform the customer immediately when a transactionoccurs in their account. The number of customers who have availed SMS Banking facility hasgrown up to 34.35 lakh as on 31.03.2017.

Missed Call Banking

Missed call banking facility has been introduced that enable the customers to knowtheir balance outstanding in their latest CASA account through a missed call to thenumber 9241442255. 2.29 lakh users have registered for this facility as on 31.03.2017.

Digital Media Signage

Digital signage is an easy low-cost way to advertising in which video contentadvertisements and messages are displayed on digital media with the goal of deliveringmessages about products in specific locations. Expanded the same in 1500 urban branchesand 1000 semi-urban branches.

Other new Initiatives

• Developed a module to accept requests for Kisan Vikas Patra in GBM (GovernmentBusiness Module). Made live on 01.06.2016 in 70 designated branches. Bank gets commissionof 1% of the amount collected - a non interest income.

• Provided an application USSD based IMPS in mobile banking the first Bank toprovide facility for USSD based IMPS using Aadhaar number.

• Implemented Centralized Positive Payment System (CPPS) the first public sectorbank to implement CPPS for CTS by sharing CPPS data with NPCI.

• Tamil Nadu VAT payment is made available through website.

• Developed mobile apps "NPA Tracker" to assist the bank branches tokeep track of and to prevent slippages of accounts to NPA category and "Geotagging" to keep track of the securities pertaining to loan accounts by linking thedetails of the securities to the collateral IDs of the loan accounts.

• Developed module "Online Fee Collection facility to SmallInstitutions" that supports on-line fee / donation collection to small non-commercialorganizations like schools and temples who do not have a regular IT setup or a dynamicwebsite.

• Developed electronic "ATM Fence" a small electronic device that hidesitself in the ATM creates a virtual Geo Fence and alerts attempts on burglary through SMSetc.

• Introduced simplified mobile banking registration by introducing AutomaticPopulation of Activation code and Online Generation of MPIN (green pin) & through NUUP(National Unified USSD (Unstructured Supplementary Service Data) Platform).

• Launched Synd e-passbook and Synd Guide applications integrated to mobilebanking application.

• Provided facility in CBS for fund transfer through IMPS at branches.

• Introduced Synd UPI & USSD common app.

• Developed *99#. An innovative payment service through basic mobile /smart phone dialing *99# a "common number across all telecom service providers(TSPs)" on their basic mobile phone/smart phone and transact through an interactivemenu displayed on the mobile screen works without internet.

• Introduced Synd UPI a safer innovative quick and secure way to send &collect money using virtual payment address round the clock availability (24X7) use ofVirtual ID is more secure and no credential sharing scan QR code and pay also generateQR code.

• Introduced Bank's website and also mobile banking app in Hindi version.

• Introduced card to card transfer for Syndicate Bank customers available atSyndicate Bank ATMs (24X7). Hassle-free funds transfer instantly. Min. amount Rs. 100/-and Max. amount Rs. 20000 per transaction.

• BHIM like any other android app provides an easy method of payment and fundtransfer to any bank account with virtual payment address or IFSC and

account number or Mobile number and MMID or Aadhaar number. It can be executed viaphone dialer using *99# option. All mobile apps are made available in play store forenabling the customers to download and make use of it.

• Developed "Synd Saheli" a mobile app dedicated to women and womenstaff on occasion of International Women's Day. This app provides information on newtechniques of self-defence bank's branches financials and multipurpose usage.

Customer-centric Initiatives Synd e-Passbook

Synd e-Passbook solution is a smartphone application for r providing DigitalPassbook facility on mobile. It is one of the popular products of the Bank and as on31.03.2017 4.65 [ lakh users have registered for the application.

Bunch Note Acceptors (BNA)

Bank has installed 186 BNAs in select market areas for [ accepting bulk cashfrom the customers. Customers get on-line credit / debit to the account for cashdeposit/withdrawal and issues receipt on 24*7 basis. BNA has the capability to identifyand reject non-bank note counterfeit and suspicious bank notes.

Synd -E- Lounge

Self service kiosks like BNA ATM Passbook cheque deposit and internet kiosks areprovided in identified locations to enable the customers to have access on 24X7 basis. 30Synd Lounges are functional as on 31.03.2017.

On line SB account opening

On line SB account opening facility is available on website. Govt. SponsoredInitiatives

1) Dash Board utility for monitoring Bank Mitra: A

centralized dash board portal is provided for DFS (Department of Financial ServicesGoI) and other user groups (CO/HO/ROs) for effective monitoring and report generation ofday to day transactions done by BC Agents.

2) Online Account Opening through Micro ATMs: The

prospective customer has to provide his/her Aadhaar number and biometric details to theMicro ATM. For those prospective customers who do not possess an Aadhaar card they mayuse this mode of account opening where other Govt. approved KYC documents like voter IDpan card and driving license etc. are available.

3) Solar Powered VSATs for Remote areas with connectivity problems: To providesolar power VSATs in dark/grey areas where there is a connectivity problem. 91 suchlocations have been identified and VSATs and UPS are being installed at the locations.

4) Printing of customer name in the receipt given to the customer for transaction atMicro ATM: New

changes have been made in Bank's FI channel which allows printing of customer's name inthe print slip generated through Micro ATMs.

5) E-PDS (Public Distribution system) for Andhra Pradesh:

The prior focus of this project is to build a cashless Public Distribution System wherethe customers can do Aadhaar based cashless transactions at Rashan stores.

6) Merchant Aadhaar Pay: An unique solution that enables merchants across thecountry to facilitate cashless purchases for customers with just their thumb and Aadhaarlinked bank account.

GREEN INITIATIVES

As a part of the green initiatives Bank introduced various products as a value addedservice to the customers.

• Introduced farmer friendly collateral free loans to purchase solar pumpsets upto Rs. 5.00 Lakh without mortgage of lands to boost farm loans under agriculture.

• Launched Synd e-passbook solution is a convenient and secure mobile app to getaccount details and statements on Smartphone.

• Provided Online SB account opening facility on website.

• Introduced online account opening through Micro ATMs for the customers.

• Implemented Ae-PDS (Aadhaar enabled Public Distribution system) to build acashless public distribution system.

• Introduced Human Resources Management System (HRMS).

• Launched "Syndwasiyat-Ezeewill" online will writing services onwebsite/internet banking application.

OPERATIONS AND GENERAL ADMINISTRATION

Safe Deposit Lockers

• Bank has implemented locker module software in all branches having lockerfacility for efficient management of safe deposit lockers.

• Bank has made locker charges competitive with reasonable rental charges tobenefit cross section of the clientele.

Cash Management

• Cash deposit ratio (CDR) is maintained at a level of 0.40% as on 31.03.2017.

• All the cash vans attached to currency chest cash and pooling centers are GPRSenabled.

Currency Management

• At present there are 48 currency chests.

• Clean note policy as per RBI directions is implemented. Under RBI clean notepolicy banks are required to provide Note Sorting Machines (NSMs) to branches andcurrency chests. Accordingly all currency chests are provided with heavy duty NSMs. Manyof the branches were provided with NSMs/Note Counting Machines. Bank has taken steps toprovide NSMs/Note Counting Machines in all remaining branches.

• During demonetization period cash management was handled efficiently and not asingle piece of SBNs remained with the Bank.

Cheque Truncation System (CTS)

CTS is mandatory from 01.04.2013. In this regard Bank has ensured

• CTS-2010 standard compliant cheque books issued to all branches. Few accountsare left behind to be issued CTS cheques due to non-transaction dormant non maintenanceof minimum balance etc.

• The demand drafts issued to all Branches are also CTS enabled.

• Specific guidelines issued to the branches regarding modus operandi of dealingwith old and new cheque books and also to exchange new cheque books wherever eligible.

CTS clearing activities is Grid-based. This is implemented throughout the country in aphased manner. There are 3 CTS Grids covering throughout the country. They are NorthernGrid- Delhi Western Grid- Mumbai and Southern Grid- Chennai.

NACH platform of NPCI

Bank is in the process of migrating Debit ECS Mandates from NECS to NACH as required.

Depositor Education Awareness Fund (DEAF)

Depositor education awareness fund scheme of Reserve Bank of India has been implementedsince June 2014.

Central Pension Processing Center (CPPC)

CPPC is opertionalised w.e.f. 01.02.2012 for central civil pension. Defence CentralCivil Telecom & Postal Pensions are in operation in centralised system and migrationof railway pensions is in progress which will complete the process of centralized paymentof all Central Government pensions.

Government Transactions Cell

• The Bank has obtained authorisation for 239 branches for collection of directtaxes to add up to the existing designated branches of 322.

• Implemented the sovereign gold bonds scheme of Government of India andparticipated in all tranches of gold bonds issue so far.

• Implemented Pradhan Mantri Garib Kalyan Yojana as per RBI guidelines.

• West Bengal Government Treasury Dept Tax and Other Collection (GRIPS) and TamilNadu State Government Treasury Collection (TNIGRS) have been implemented for onlinepayment.

HUMAN RESOURCE DEVELOPMENT

Human resource development division of the Bank is playing vital role in manpowerplanning recruitment promotions performance appraisal employee development/capacitybuilding through in-house and external training succession planning etc.

Bank is giving more thrust to succession planning wherein necessary competencies isidentified assessed to develop and retain talent pool of employees in order to ensurecontinuity of leadership in all critical areas. Investment in employees' training anddevelopment has enabled the Bank to prepare its staff to handle HR challenges and makethem Rs. future ready'.

The human capital of the Bank as on 31.03.2017 is as under:

Category 31.03.2016 31.03.2017
Officers 14299 16956
Clerks 11008 11339
Sub staff 4508 4253
Sweepers 2282 2441
Total 32097 34989

Recruitment Planning

The main objective of recruitment planning is to have the projected level of staffstrength based on the skill inventory superannuation attrition rates branch expansionplan of the Bank career plan succession planning etc. The recruitment techniquesinclude lateral recruitment of specialist officers and recruitment of probationaryofficers and clerks through the common recruitment process conducted by IBPS. The detailsof specialist officers recruited by the bank during of the year 2016-2017 up to 31.03.2017is shown below:

S.No. Posts Joined
1 Marketing Officers 25
2 OL/Hindi Officers 19
3 Rural Development Officers 366
4 IT Officers 81
Total of Specialist Officers 491

Promotions and Placement

The Bank has placed robust promotion and placement policy to cope with superannuationin various grades/ scales keeping in view of the guidelines received from Government ofIndia from time to time. The promotion policy of the Bank acts as a motivating factor forthe officers to perform and also to take care of succession planning. Promotion withinofficer cadre is ensured every year to avoid any stagnation. Periodical promotionalprocesses and a number of welfare measures are also introduced to retain quality staff.

Talent Grooming & Retention

The HRM policy of the Bank aims at effective personnel management through planningrecruitment & retention practices employees' training & development evaluationand employee benefits. The Bank ensures a congenial environment for the employees wherethey can give their best. Retention of the employees is given priority. The Bank hasadopted hand holding strategy to ensure that the new entrants are properly guided andtrained in their initial 2 years of probation so as to make them feel at home and toretain them in the Bank.

Continuous promotion process through fast track channel and selection of officersinternally through a selection process for key verticals is in place for retaining thetalented staff. Bank is reimbursing examination fees besides paying incentive for passingvarious professional examinations like NISM IRDA CISA CISSP ORACLE risk managementexaminations courses conducted by IIBF etc. with the objective of talent grooming andretention.

Deputation to Other Organizations

The Bank has deputed its officers to Ministry of Finance Department of FinancialServices and other organizations like CBI DRT National Academy of RUDSETI and BharatiyaMahila Bank Ltd as per the request of Ministry of Finance Department of FinancialServices/other organizations.

Reservation to SC/ST/OBC

The Bank follows the reservation policy for SCs STs and OBCs as prescribed byGovernment of India and State Governments from time to time and has been extendingapplicable reservations/concessions to SC/ST/OBC/ PWD employees in recruitment/promotionsstrictly as per Government guidelines.

A separate SC/ST cell and OBC Cell are functioning at Head Office to redress thegrievances of SC/ST/OBC employees working in the Bank and are currently headed by GeneralManagers designated as Chief Liaison Officer. Meetings

with the representatives of the SC/ST welfare associations are held at regularintervals to redress their grievances. The Chief Liaison Officer will participate inmeetings with the members/officials of the National Commission for SC/ST during theirvisits to regional offices. The progress made in the implementation of the reservationpolicy is placed before the Board of Directors once in a year. The post based reservationroster is displayed on the website of the bank in compliance to the directions of theGovernment.

Implementation of HRMS in the Bank

HRMS is being implemented in the Bank. It is a centralized HRMS solution for handlingthe functions of different divisions of personnel department regional offices branchesand other administrative offices covering all employees/ pensioners of the Bank. Annualperformance appraisal report attendance leave modules and few functionalities of salaryemployee record management personnel administration transfer modules have been madelive. Remaining features of these modules and other modules like manpower planningterminal benefits training and development recruitment etc. are in different stages ofimplementation.

STAFF WELFARE MEASURES

Scheme for Compassionate Appointment and Payment of Ex-gratia Lump sum amount in lieuof Compassionate Appointment

The Bank has formulated a scheme for appointment on compassionate grounds and paymentof Ex-Gratia lump sum amount in lieu of compassionate appointment to the dependents of theemployee who dies while in service and employee retiring on medical grounds due toincapacitation before reaching the age of 55 years. The scheme covers all the cases wheredeath of employee occurs on or after 05.08.2014.

The cadre wise ceiling on Ex-Gratia lump sum amount payable is as under:

Cadre Maximum amount
Officers '8.00 lakh
Clerical '7.00 lakh
Subordinate Staff '6.00 lakh

Compensation to Bank Employees Killed in Bank Robberies & Terrorist incidents

Bank has formulated a scheme as per Govt. guidelines for payment of compensation andreward so as to motivate

the Bank employees and members of public resisting Bank robberies terrorist incidentsincluding left-wing extremism. In case of death the family of deceased will be givencompensation by the Bank as follows:

Category Cadre Maximum amount
Bank Employee Officers '20.00 lakh
Clerks /Sub Staff 10.00 lakh
Other than bank employee Customers/ members of the public '3.00 lakh

In case of Bank employees/customers/members of public who actively resist Bankrobberies and terrorist attacks on Banks the Bank may consider a cash reward notexceeding Rs. 2 lakhs.

The Bank will look after educational expenses of the children of the deceased up to andinclusive of graduation and will give immediate employment to one member of the family ofthe deceased as per applicable rules.

TRAINING AND DEVELOPMENT

Syndicate Institute of Bank Management (SIBM) apex training institute at Manipal andthe seven training centres at Bangalore Chennai Delhi Ernakulam Hyderabad Kolkata andMumbai are catering to the training needs of the Bank by conducting various types oftraining programmes for different cadres of employees. To develop team leadership rolesand to align organization vision the performing executives/officers are being deputed toexternal training programmes conducted by NIBM IIM etc.

During the year 2016-17 496 programmes covering 9008 officers and 5742 workmenemployees were conducted by the training system. In addition 1305 officers/ executiveswere deputed to external training programmes conducted by training institutes of repute inIndia and 5 executives/officers were deputed to overseas training programmes. The trainingsystem has imparted induction training to 3322 probationary employees (officers -1791 andclerks -1531) during the year 2016-17. During the same period 7452 employees belonging toSC/ST/OBC category (officers - 4659 and clerks/sub staff - 2793) were trained out ofwhich pre-promotion training to prepare for promotion to the next cadres was imparted to2230 SC/ST/ OBC employees (officers -1166 and clerks - 1064).

Training imparted during the year 2016-17- at a glance

Officers Clerks Total
(a) Internal
General 4830 2949
OBC 1939 1425
SC 1608 1130
ST 631 238
Total 9008 5742 14750
(b) External
General 829
OBC 284
SC 150
ST 47
Total 1310 0 1310
Grand Total 10318 5742 16060

Considering the large scale retirements SIBM has devised new programmes to groom theofficers by motivating and empowering them to assume higher responsibilities. For theidentified executives handling sensitive Regions and Branches SIBM has arranged specialExecutive Development Programmes consisting of mainly soft skills. To bridge the skillgap SIBM & Training Centres have conducted special training programmes on CoreCredit MSME and Priority Sector Lending covering 1605 Officers during the year.

The Bank with the objective of "first day first hour - productive" hasintroduced Strategic Talent Pipeline Building Programme in association with Manipal GlobalEducation Services Pvt. Ltd Bangalore and NITTE Educational International Pvt. Ltd.Mangalore & Noida wherein both the Institutes train the candidates selected throughIBPS process for a period of 12 months' consisting of 9 months' academic input and 3months' internship in the branch. On successful completion of 12 months training thesetrainees are absorbed as probationary officers of the Bank. The first such batch 384candidates completed the training and joined the Bank and second batch of 584 candidatesare undergoing training.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Bank has been displaying a strong and abiding commitment to encourage the greateruse of Hindi in various ways not only because it is the policy of the Government of Indiabut also as an ideal and powerful medium of inclusive banking. With an object of timelyimplementation of important guidelines pertaining to

Official Language issued by the Government of India various types of initiatives havebeen taken up by your Bank for providing assistance to the employees working inbranches/offices in the implementation of official language duly issuing internal annualOL implementation action plan.

The Bank has made noteworthy progress under the implementation of official language andwon prizes at various levels during the year. Your bank was awarded with first prize "RajbhashaKirti Puraskar" by the Government of India Ministry of Home Affairs Dept. ofOfficial Language for its outstanding performance in official language (OL) implementationin Rs. C' region (2015-16) consecutively for second time. Your bank's quarterly Hindimagazine "Jagriti" got 3rd prize in Hindi House Journal Competition(2015-16) conducted by Reserve Bank of India. Some of regional offices and staff membersof the bank have received Rajbhasha shields/awards from respective town official languageimplementation committees. In addition your Bank has received first prize for bestofficial language (OL) Implementation and best publication (Jagriti house journal &let us speak in regional language book) awards from Rajbhasha Seva Sansthan and ParivartanJan Kalyan Samiti New Delhi.

Bank's internal award schemes like cash incentive schemes for Rs. excellent performancein use of Hindi and excellent performance in use of Hindi on computers' for region wiseindividual employees and also Rs. bank level/branch level/ department level shieldcompetitions/essay competitions' are in vogue. Attractive cash incentives are being givento the writers of Hindi articles published in-house magazines

i.e. Giant & Jagriti.

Bank has notified 3251 branches/offices under Rule 10(4) of OL Rule 1976 to ensuremaximum usage of Hindi. Ensured online submission of quarterly Hindi progress reports ofvarious regional offices to the concerned regional implementation offices of MHA.Functional Hindi workshops translation trainings Hindi coordinator/ executive OLseminars Hindi competitions for school children/staff members in connection with Rs.vigilance awareness week independence day/republic day/ teachers' day' and Rs. RajbhashaPrayog-Apasi Samvad- Sardhak Disha' programmes of DFS-MOF were conducted by variousregional offices in addition to attending Govt. guidelines related to OL implementation inday to day official work. In addition to the above Rs. let us speak regional language'guidance programmes at various regions and soft skills programme in Hindi-English mixedmedium for OL officers were conducted.

Bank has launched mobile banking application in Hindi in addition to updating Hinditranslation of revamped website. Bank is the convenor of town official language

implementation committees at Ananthapur Bijapur Karwar Kannur Meerut GhaziabadFaridabad Ongole and Udupi. Official language implementation committees were constitutedin all the branches/offices for the effective implementation of official language. Thethird subcommittee of the Committee of Parliament on Official Language inspected RO Agraat Mathura on 12.04.2016 and the drafting & evidence subcommittee of the Committee ofParliament on Official Language had discussion with R.O. Chennai and RO Ghaziabadrespectively on 06.09.2016 and 20.12.2016.

Dr. Bipin Bihari Joint Secretary Department of Official Language MHA had reviewedOfficial Language (OL) implementation activities of Lakshadweep branches on 13.01.2017 andappreciated their efforts and also effective monitoring of Head Office in the area ofOfficial Language implementation.

The officials of Department of Financial Services MOF and Department of OfficialLanguage MHA had conducted review meeting at Pune & Delhi respectively andappreciated the efforts of the Bank in the area of Official Language implementation.

Special activities conducted during the period: Bank has conducted specialactivities during the period as under.

i. Organized National Level Seminar in Hindi on "Various Important Initiatives ofthe Government in Socio-Economic Development" at SIBM Manipal on 09.01.2017.

ii. Released a book titled "Alternate Delivery Channels: A Boon and Challenge forBankers and Customers" (collection of articles won first prize in the seminarconducted in February 2016).

iii. Your bank has honored Hindi Tamil and Kannad Pracharaks (Hindi: Mrs. MadhaviBhandari & M Sridharan Tamil: Meganadan and Kannada: Sri N Mogasale and Dr. BNarasimha Murthi) on 91st foundation day and Hindi day 2016.

iv. Your bank has honoured ex-staff members Sri Bolwar Mohammad Kunhi and GobindaChandra Majhi in recognition of receiving Kendriya Sahitya Academy Award 2016 for theiroutstanding contribution in Kannada literature and Santali literature respectively on26.01.2017.

v. Conducted All India Hindi Essay Competition for Nationalised Banks/FIs/RRBs.

vi. Conducted Hindi day at London branch and Island branches in addition to regionaloffices.

Bank has paid special attention on providing information related to financial inclusionmatters schemes/products related literature / pamphlets / advertisements / display

material etc. in Hindi and regional language in addition to English. Bank is veryparticular in promoting Hindi and regional languages introducing various innovative modelsto facilitate its proud customers.

CUSTOMER SERVICE

Bank has been constantly reviewing the efficacy of existing system of attaining thecustomer service. Bank's customer centric approach acts as a key differential in shapingfuture business potential and also in acquiring retaining and growing the customer base.

The Bank has policies duly approved by the Board on customer service depositscustomer grievance redressal cheque collection compensation payable on account ofvarious deficiencies in service etc. These are well displayed on the Bank's website forthe convenience of the customers besides displaying at each branches of the Bank.

Branches are celebrating branch opening / foundation day as customer meet day. Meetingwould be attended by executives from HO/CO/RO local Government officials and customers ofthat branch. During the meeting customer were educated about products and services offeredby the bank and customer feedback would be obtained. Matters relating to customer serviceand customer complaints are discussed in the periodical meeting held at branches/regionaloffices with the involvement of customers / senior citizens.

The grievances redressal policy of the Bank is meant for minimizing instances ofcustomer complaints and grievances through proper service delivery and review mechanismand to ensure prompt redressal of customer complaints and grievances.

Customer Service Initiatives taken during 2016-17:

• Bank has ensured display of the comprehensive notice board as per BCSBIguidelines in all the branches.

• With a view to improving the customer service in the branches and sensitize thestaff policy on Rs. customer service' has been adopted based on the following basicprinciples viz. courtesy communication efficiency & timeliness general managementof the branches knowledge etc.

• The Bank is a member of the Banking Codes and Standards Board of India (BCSBI)and committed to implement the provisions of Code of Bank's Commitment to Customers andCode of Bank's Commitment to MSE Customers in letter and spirit.

• Revised code of Bank's commitment to customers BCSBI 2014 and the Rs. Code ofBank's Commitment to Micro and Small Enterprises' 2015 have been

circulated to all branches/offices and a copy of revised code of commitment tocustomers is available for the customers. It also uploaded and displayed in website andin-house application.

• In its continued efforts to spread awareness and to educate/sensitize customersabout provisions of BCSBI Codes Bank has also actively participated in the "customermeets" organized by BCSBI at various regions and branch officials and customers haveinteracted with BCSBI officials.

• Financial inclusion - pictorial presentation of basic rights contained in theCode of Bank's commitment to customers are made available in all the branches for use ofthe customers.

• The guidelines for opening of BSBD (Basic Savings Bank Deposit) accountsissued by BCSBI are exhibited in all branches.

• Executives during their visit to branches interact with customers and reviewmatters relating to customer service/complaints redressal and implementation of BCSBIcodes provisions.

• News letters from BCSBI is made available/updated in website quarterly.

• Standing committee on customer service meet at quarterly intervals at corporateoffice and review the customer service related matters/complaints etc. The customerservice related matters are also deliberated during quarterly meeting of customer servicecommittee of the Board.

• Savings bank account interest payment periodicity is changed from half yearly toquarterly.

• Introduction of Synd PDS (Public Distribution System) - current account withzero balance for PDS distributors.

• At Ananya branches Instant account opening has been introduced with zero balancefor salaried accounts.

• Bank has put in place a robust customer grievance redressal mechanism for quickredressal of customer grievances. Based on number of complaints received and time takenfor redressal of complaints all ROs are being graded A: Outstanding B: Good C:Satisfactory and D: Poor on quarterly basis.

Online Grievance Redressal System

Bank has made online grievance redressal system live

from 18.08.2015. The online grievance system provides for

online registration of grievance through bank's website. The

online grievance system provides access to the customers

for recording the complaint compliant status tracking and receiving response from thebank. The system is running satisfactorily.

Internal Ombudsman

Bank had appointed internal ombudsman (Chief Customer Service Officer) w.e.f.01.08.2015. The bank's internal ombudsman examines the cases where the customers claim iseither rejected or partially accepted.

CORPORATE SOCIAL RESPONSIBILITY

As a sincere corporate citizen your Bank has been fulfilling its socialresponsibilities by actively participating in activities aimed at socio/economictransformation of various facets of society and upliftment of the downtrodden.

The Bank is undertaking CSR activities for -

a. Community development activities in the areas of operation of the Bank.

b. Mitigating natural calamities.

c. Development of health care facilities for poorer sections of the society.

d. Development of educational facilities at institutions not dependent on capitalfees.

e. Promotion of Art and Culture.

f. Activities to encourage research and development in fields related to Banking.

g. "Swachh Bharat Abhiyaan": A national movement launched by Govt. of Indiato achieve total sanitation and cleanliness.

h. "Swachh Vidyalaya Mission": Launched by Govt. of India with a mission toprovide toilets in different schools across the country.

i. Promoting sports and recognizing the performance of outstanding sportspersons.

j. Upkeep of water bodies.

k. Any other worthy social causes.

Some of the major contributions under Corporate Social Responsibility during thefinancial year 2016-17 are: Donation of ambulance construction of toilets under SwachhBharat Abhiyan contribution to National Sports Development Fund (NSDF) Paralympic SportsAcademy of India and Disabled War Veterans. Financial assistance towards study expenses ofchildren providing modern educational aids education of tribal children seniorcitizen's home supporting education of disadvantaged group of children poor studentsstudying in low income schools providing uniforms books stationery items etc.supporting physically challenged blind and poor patients in various hospitals etc.

NEW PRODUCT INITIATIVES

Improving & developing new product is an ongoing task which your Bank isdexterously following keeping in view the changing customer requirements technologicalinnovation and market research.

During the year Bank has come up with several new products for the benefits of itscustomers. On liability side Synd PDS (a current account to meet the PDS customers/distributors day to day business transactions) and Synd Pravasi Poonj an SB product forNRE customers. On asset side are Synd Swarna for non-agricultural purposes with EMIfacility and Synd-Vidya - Abroad to meet requirements of students who would like to pursestudies abroad.

MARKETING AND FEE INCOME PRODUCTS Marketing Vertical

With the compression of spreads from the core activities of banking the necessity isfelt in augmenting fee based income which acts as cushion for Bank's income. In order tohave a focused approach to augment fee based income Bank has a separate vertical atCorporate Office and Regional Offices to accelerate marketing efforts to augment fee basedincome.

Bank's marketing setup is consisted of a team of 168 marketing officers spread acrossthe country with clear thrust on the business development. Bank conducted three daysMarketing Conclave at Syndicate Institute of Bank Management Manipal for skillenhancement of the marketing team. The team was addressed by the top management of theBank highlighting the significance of marketing and brand development. For knowledge basedselling soft copy of the product booklet covering the basic information on all the Bank'sproducts and para banking products was shared with all the staff members of the Bank.

Bancassurance

1. Life Insurance

• Bank has a Corporate Agency tie-up with Life Insurance Corporation of India asa corporate agent for distribution of life insurance products. Bank has a team of 196specified persons for soliciting life insurance business.

• Bank also offers life insurance cover under group policy to educational loanborrowers saving account holders and saving account holders under financial inclusion.

• Bank earned commission of Rs. 914.28 Lakh (inclusive of LIC PMJJBY) during FY2016-17 against a commission

of Rs. 836.45 Lakh (inclusive of LIC PMJJBY) during FY 2015-16.

2. General Insurance

• Bank has a Corporate Agency tie-up with United India Insurance Company Limited(UIICO) for distribution of general insurance products including Synd Arogya (a GroupMediclaim-Cum-Personal Accident Policy with family floater advantage) at competitivepremium for its Account Holders.

• During the FY 2016-17 Bank has earned a commission of Rs. 1009.60 lakh(inclusive of UIICO PMSBY) compared to commission of Rs. 945.84 lakh (inclusive of UIICOPMSBY) during the previous year from general insurance business.

3. Social Security Insurance Schemes (PMJJBY & PMSBY)

a. Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY)

Bank has tie up with LIC of India for providing life insurance cover under PradhanMantri Jeevan Jyoti Bima Yojna (PMJJBY). During FY 2016-17 Bank has enrolled 673113PMJJBY policies.

b. Pradhan Mantri Suraksha Bima Yojna (PMSBY)

Bank has tie-up with United India Insurance Company limited (UIICO) for providingaccidental death insurance under Pradhan Mantri Suraksha Bima Yojna (PMSBY). During FY2016-17 Bank has enrolled 2150094 PMSBY policies.

Mutual Funds (MF)

Acting as a financial supermarket offering various financial products under oneumbrella Bank has tied up with nine leading Asset Management Companies for distributingmutual fund products. As on 31.03.2017 the Bank had a team of 209 NISM (Series-V-A)certified persons and 204 EUIN compliant staff bank facilitating informed selling.

Bank earned commission of Rs. 68.80 lakh during FY 2016-17 against a commission of Rs.38.16 lakh in FY 2015-16 from Mutual Fund business.

Cash Management Services (CMS)

The Bank offers a state-of-the-art technology driven products to corporate private andforeign banks for efficient management of account receivables and payments. The Bank alsooffers CMS services to its clients through all branches across the country. Auto DebitMandates facility and centralized cheque debit facilities are being offered. Payment ofdividend warrants/interest warrants/DD drawing arrangement and remote DD printingfacilities are being offered under payments.

Capital Market Services

Applications Supported by Blocked Amount (ASBA)

The ASBA [Application Supported by Blocked Amount] facility was introduced in the bankduring October 2010. Bank is registered with SEBI as Self Certified Syndicate Bank (SCSB)for providing Applications Supported by Blocked Amount (ASBA) to its customers. Bank hasintegrated ASBA facility with its core banking solution. ASBA process is available in allpublic issues made through the book building route and rights issues. This scheme aims atproviding the facility of blocking of amount to the extent of the bid amount of thecustomers investing in shares and bonds through the IPO/FPO.

Depository Participant Services

Your Bank is holding permanent registration as Depository Participant issued by theSecurities and Exchange Board of India (SEBI). The Bank is a Depository Participant ofCDSL. This facility enables customers to keep their Capital Market Securities inelectronic form. The 3-in-1 account cum online trading facility under the brand name"Synd-e-Trade" was launched by the Bank on October 24 2011. The facilitycomprises of the CASA account Demat account and Trading account for enabling customers totrade in shares online using the funds in the CASA account and dematerialized securitiesin the DP account through the Straight through Process.

During FY 2016-17 Bank has earned an income of Rs. 320.00 lakh from Cash Managementand Capital Market operations against an income of Rs. 239.25 lakh during FY 2015-16.

Other Services

New Pension System (NPS)

The Bank is registered with the Pension Fund Regulatory and Development Authority(PFRDA) as Point of Presence (POP) for offering various services under the New PensionSystem - a scheme introduced by the Government of India for providing old age incomesecurity. 3481 branches of your Bank are registered with NSDL for offering variousservices under the scope of the NPS as Point of Presence - Service Provider (POP-SP).

Atal Pension Yojana (APY)

The Government of India introduced the Atal Pension Yojana (APY) with effect from 1stJune 2015 for creating a universal social security system for all Indians especiallythe poor the under-privileged and the workers in the unorganised sector. APY is beingadministered by the Pension Fund Regulatory and Development Authority (PFRDA) under theoverall administrative and institutional architecture of the National Pension System(NPS). 3819

branches have been registered as NLCCs to offer the services under this scheme tocustomers. Under the APY the subscribers would receive the fixed pension of Rs. 1000 permonth Rs. 2000 per month Rs. 3000 per month Rs. 4000 per month Rs. 5000 per monthat the age of 60 years depending on their contributions which itself would vary on theage of joining the APY.

Card Business

1. Credit Card Product

Bank in association with VISA International offers Gold and Classic Credit Cardswhich can be used at ATMs Point-of Sale Terminals (POS) and Internet w.e.f. 20.10.2003.Bank has issued 93857 credit cards till 31.03.2017. Bank has entrusted end-to-endmanagement of credit card services through M/s Atos Worldline India Pvt. Ltd since04.02.2015.

Introduction of Cardholder's Portal in Bank's website

Card holders can register on-line in the Bank's website portal for Syndicate GlobalCredit Card and by logging in; they can view their transaction details billing details/statement etc. Branches have been facilitated to view the details of credit cards issuedby them through "One View" facility.

2. Debit Card Product

The Bank launched Global Debit Cards in association with VISA on 29.03.2003 and inassociation with Master Card (Maestro Brand) on 22.06.2011. The Bank has been issuing VISAInternational Gold Debit Cards with higher transaction limits w.e.f. 20.10.2012. During2016 the Bank has launched the following new variants of Debit Cards in association withVISA/NPCI.

• RuPay Mudra Cards

• RuPay Platinum Cards

• AEPS RuPay Debit Cards (Aadhaar enabled)

• During the year Bank has enabled NPCI's RuPay Debit Cards for e-commercetransactions through OTP

The Bank has issued 190.52 lakhs Debit Cards as on 31.03.2017 out of which over 46.91lakh RuPay cards were issued under Pradhan Mantri Jan Dhan Yojana.

Issuance of EMV Chip Cards

Bank has commenced issuance of EMV/Chip based credit cards with new PIN with effectfrom 01.09.2015. All the existing Magstripe credit cards are being replaced with EMV/Chipbased Cards.

In compliance to the directives of RBI Bank has commenced issuance of EMV chip DebitCards for VISA and RuPay variants. Certification for issuing EMV chip cards from MasterCard is under process. Bank has enabled

branches for issuance of Instant EMV chip RuPay cards from 01.02.2016.

Point of Sale (POS) Acquiring

Bank ventured into the merchant acquiring business on 02.10.2009. All its POS terminalsdo comply with VISA/ MasterCard/RuPay specified standards and are fully compliant tohandle EMV and PIN based transactions for all types of cards issued by Banks. As on31.03.2017 Bank had installed 4496 POS Terminals out of which 1705 terminals wereinstalled during the year. Bank has also ventured into Indirect POS business by acquiringMaster Card transactions under its membership through POS terminals deployed by LakshmiVilas Bank Ltd. and Dhanalakshmi Bank.

PRODUCT INNOVATION & BUSINESS PROCESS RE-ENGINEERING (BPR)

Bank has Product Innovation and BPR department to carry out product innovation andbusiness process reengineering activities of the Bank.

Product Innovation

Better customer service is the prime focus of the Bank. Bank is continuously upgradingits services to cater to the ever growing needs of customers in the dynamic economicscenario. Keeping in view the dominant Y-gen customers Bank has leveraged its technologyto create need of the hour products and services. Bank actively undertaken productinnovation and the following are products that have been introduced.

1. "Synd Swayam" on-line account opening service has been launched on Bank'swebsite which facilitates customers to open account on-line at ease and convenience bysimply filling their personal data in three simple steps.

2. "Synd WASIYAT" on-line "WILL" writing services under tripartiteagreement with NSDL e-Gov and Warmond Trustees as third party referral services link ismade available on website to the Customers.

3. Fastags: "NETC" Automated National Electronic Toll Collection System: Bankinitiated issue of Radio Frequency Identification Tags (RFID) to the commuters throughNodal Branches which will facilitate automatic collection of toll amount at toll plazasby RFID scanners installed at the tolls making it digital. Bank is issuer of RFID tags onbehalf of NPCI to provide cashless services to the customers at specified toll plazas.

4. Social Media Listening: Lot of people these days are using Social Media platformsfor venting out their criticism or appreciation for products/brands/

institution etc. Social Media Listening is a process of identifying and assessing whatis being said about an institution or a Brand or a Product. Bank also started listeningand analyzing the sentiments of the public on social media platform at large regardingproducts and services and is planning to launch advocacy services shortly through Bank'sofficial social pages.

Project "ANANYA"

In order to face competition emerging from new generation private sector bankspayment Banks Small Finance Banks and Universal Banks it is desired that your Bank alsoembark into a restructuring exercise as being done by other peer Banks including PSUBanks. Bank engaged M/s Boston Consulting Group India Pvt. Ltd. (BCG) as Managementconsultant under RFP process for carrying out Business Process Re-engineering for the Bankas per the Board direction. "Project Ananya" commenced from 15.02.2016 for aperiod of 24 months. The four broad pillars of the project are as outlined below:

• Business Process Re-engineering (BPR)

• Digital Banking

• Sales & CRM

• Human Resource Development

Business Processes Re-engineering

Streamline regular Bank processes like SB account opening retail loan processing SMEloan processing. Aim is to centralize processes through setting up of centralback-offices. Process streamlining and centralization has been proven among private andpublic banking peers to be an important lever to help reduce branch work load so as toenable the branches to focus on sales and customer service. This pillar also aims toachieve branch transformation ensuring focus on branch ambience as a new-age bankcustomer convenience digital services and increased productivity. Accordingly total of372 branches have been transformed as Ananya Branches across India as on 31st March 2017and another 428 branches are targeted to be transformed by 31st Dec. 2017 taking the totalto 800 Ananya Branches. National Processing Centre (South) is established at Manipalcatering to the instant account opening services for 864 branches of the Bank and it willbe extended to 2000 branches by the next financial year. Opened loan processing centers atBangalore and Mangalore for processing of retail loans for respective city branches.

Digital Banking

With the advent of heavy digitization in the life of customers as well as thesignificant digital push by the Government in Banking improving digital banking channelsand driving

adoption among customers is prime pillar of project Ananya. It aims to improve featuresof existing digital channels- internet banking mobile banking simplified on- boardingprocess and drive for better adoption among existing and new customers. Equipped AnanyaBranches with DigiZones powered by self service machines such as ATM Cash DepositMachines and Passbook update Machines for adoption of digital channels.

Sales & CRM

Project Ananya aims to streamline sales and CRM as an end to end process - fromtargeting potential customers to final conversion. An App is developed for comprehensiveLead Management System which would facilitate sales and marketing. In order to achieve allthis and ensure sustainability the project also aims to strengthen and focus on themarketing resources.

HR Transformation

Organizational restructuring to ensure a top to bottom alignment with organizationalobjective while paving the path for a meritocracy based organization keeping employeesmotivated and engaged. This module also aims to address the Bank's performance managementsystem training structure and employee efficiency and productivity.

Project Progress and Impact

The project was undertaken as a two year exercise. It reached its midway mark ofcompletion in February 2017. The first year was spent designing solutions for all the fourpillars of the project and then piloting solutions for part 1 and part 2 initiatives (BPRand Digital Channels). Many milestones have been reached some highlights being:

• Branch transformation completed in 372 Branches and is underway for the next lotof 428 Branches.

• Saving Account Opening process was re-engineered and Instant Account opening isintroduced in 864 branches with issue of instant SB Welcome Kit to the customers.

• National Processing Center Manipal is opened to cater to the back officeoperations centrally facilitating the Branches in Instant account opening.

• Opened loan processing centers at Bangalore and Mangalore for improving thecustomer service with reduced Turn Around Time (TAT) of loan processing. 24 more centerswill be opened by March 2018.

• 12 MSME Loan Centers will be opened to achieve low TAT and better customerservice.

• Contact Centers at Hyderabad/Mohali are opened as a single point of help deskfor the customers.

• New features incorporated in Internet Banking/Mobile Banking.

• New on boarding process designed for Internet Banking/Mobile Banking.

• "Digizones" created in Ananya Branches to encourage uptake of SelfService machines such as ATMs Cash Deposit Machines Passbook Update Machines.

• Organizational structure is redesigned with creation of Zones and Regions forefficient business management.

• Specialized marketing roles created in Regional Offices and Hubs to improveCustomer Service Relations and Sales.

• "Sales Saathi" a Lead Management App is introduced to facilitate everySyndian to scout for the business.

In the next one year of the project the focus will shift in two aspects (i) pilotrollout of remaining initiatives (ii) large scale implementation of piloted initiatives.Phase 2 of branch transformation exercise shall be taken up to extend to next set of 428branches. Similarly next set of 24 Retail Loan Centers and 12 MSME Loan Centers will bemade operational by March 2018. Similarly multiple initiatives under digital strategyshall be driven to completion. Along with the large scale rollout mentioned aboveinitiatives around Sales and CRM and HR Transformation will also be completedsuccessfully.

The said BPR project is expected to help the Bank to reenergize its good oldoperations step up its business and sales plans to enhance profitability unfold thepotential of the human resources and to reduce the overall transaction costs of variousproducts & services offered and help in its endeavors to become the most preferredPublic Sector Bank of India.

COMMITTEES VISITED DURING THE YEAR

• Parliamentary Official Language Committee visited Mathura on 12.04.2016 to havediscussion on use of Official Language in internal work.

• Parliamentary committee on subordinate legislation visited Bengaluru from21.05.2016 to 23.05.2016 to have discussion on RBI Master Circular of 1st July 2015 -Guarantees and Co-acceptances Pradhan Mantri Mudra Yojana & Stand up India Schemeshigh quality counterfeit Indian currency rules 2013.

• Parliamentary standing committee on industry visited Bengaluru from 25.05.2016to 27.05.2016 to have discussion on implementation of RBI guidelines regarding financingMSMEs.

• Parliamentary committee on petition visited Coorg from 31.05.2016 to 02.06.2016to have discussion on the steps to correct the increasing NPAs dealing with NPAs underagriculture and encouraging retail loans to end users or individual home buyers so thateconomic activity is enhanced and NPAs don't increase.

• Parliamentary committee on government assurances visited Bengaluru on 02.06.2016to have discussion on the implementation of guidelines issued by RBI/ Govt. on provisionfor customer induced options for fixing a cap on the value/mode of transactions/beneficiaries.

• Parliamentary standing committee on social justice and empowerment visitedLucknow from 20.06.2016 to 23.06.2016 to have discussion on priority sector lending toscheduled castes scheduled tribes other backward classes persons with disabilities andminorities.

• Parliamentary standing committee on HRD visited Vishakapatnam on 01.07.2016 tohave discussion on education loan facilities and Sukanya Samridhi Yojana steps taken bythe Banks to provide loans to the students pursuing skill development courses.

• Parliamentary committee on government assurances visited Shimla on 04.07.2016 tohave discussion on the extent of implementation of assurances promises undertaking etc.and Bank's credit policy.

• Parliamentary committee on subordinate legislation visited Chandigarh on12.07.2016 to have discussion on performance of Bank under priority sector advancesschemes available for the benefit of the farmers and government sponsored schemes.

• Parliamentary standing committee on finance visited Bengaluru from 13.07.2016 to15.07.2016 to have discussion on the steps/measures being taken by bank to address therising NPAs Bank's specific response to RBI guidelines/instructions on early recognitionof financial distress.

• Parliamentary committee on papers laid on the table visited Bengaluru from29.09.2016 to

30.09.2016 to have discussion on the type of audit procedure available inorganisation selection and appointments of statutory central auditors to the individualpublic sector banks and any case/cases of misappropriation of funds being detected.

• Parliamentary committee on subordinate legislation visited Tirupathi on13.10.2016 to have discussion on (i) Know Your Customer (KYC) Directions 2016 (ii) NREGA(iii) Role of principal officer for ensuring compliance monitoring transactions sharing&

reporting information and (iv) issues related to banking/financial facility to membersof the general public especially those who are financially or socially disadvantaged.

• Parliamentary committee on subordinate legislation visited Vishakhapatnam on15.10.2016 to have discussion on the Reserve Bank of India (relief measures by banks inareas affected by natural calamities) directions 2016.

• Parliamentary committee on government assurances visited Bengaluru from17.10.2016 to 18.10.2016 to have discussion on the use of IT & MIS mechanism onidentification of early detection of distress at account level/segment level &generation of reliable and quality information on asset quality and Identification offraudulent borrowers.

• Parliamentary standing committee on rural development visited Bengaluru &Mysuru from

21.10.2016 to 23.10.2016 to have discussion on role of Banks in rural developmentschemes like MGNREGA NRLM PMAY (G) etc. in the state of Karnataka and in districts beingvisited by the committee.

• Parliamentary committee on subordinate legislation visited Ahmedabad from04.01.2017 to 05.01.2017 to have discussion on (i) RBI master circular on cash reserveratio and statutory liquidity ratio (ii) RBI scheme for sustainable structuring ofstressed assets. (iii) Problems faced by banks due to rising NPA of different categories.(iv) Notification issued on demonetisation and problems/grievances of the customersregarding collection and disbursement of cash by banks due to demonetisation in Gujarat.

• Parliamentary committee on subordinate legislation visited Bengaluru from07.01.2017 to 08.01.2017 to have discussion on (i) RBI master circular on cash reserveratio and statutory liquidity ratio. (ii) RBI scheme for sustainable structuring ofstressed assets. (iii) Problems faced by banks due to rising NPA of different categories.(iv) Notification issued on demonetisation and problems/grievances of the customersregarding collection and disbursement of cash by banks due to demonetisation in Karnataka.

• Parliamentary standing committee on commerce visited Bengaluru from 07.01.2017to 08.01.2017 to have discussion on trade with Association of SouthEast Asian Nations(ASEAN).

• Parliamentary committee on empowerment of women visited Lakshadweep from10.01.2017 to

11.01.2017 to have discussion on sexual harassment for women at workplace and ineducational institutions.

COMPLIANCE DEPARTMENT

Compliance policy approved by the Board of Directors of the Bank articulates that thecompliance function is an integral part of governance along with the internal control andrisk management process. The compliance department headed by a Chief Compliance Officer(in the rank of Deputy General Manager) oversees the compliance functions in the Bank andassists the top management in managing the compliance risk.

Continuing with the Bank's commitment to high compliance standards compliance functionis reviewed regularly for making improvements. The compliance policy is reviewed everyyear and amendments if necessary are carried out based on the experience gained andutility aspect.

RIGHT TO INFORMATION ACT 2005

The Bank has implemented the relevant provisions of the act with effect from October2005. The information related to the Bank as stipulated under the act is displayed on theBank's website.

The Appellate Authorities for the Bank under the act and the Public InformationOfficers (PIOs) and Alternate Public Information Officers (APIOs) at various levels havebeen designated. The Bank has clearly spelt out the roles and responsibilities atdifferent levels under the act. During the year the Bank has designated 24 AppellateAuthorities 71 PIOs and 85 Alternate PIOs and one transparency officer for smoothfunctioning of RTI matters.

As directed by the Parliamentary Committee the Bank has constituted a monitoringcommittee at apex level to oversee the implementation of the RTI Act. During the year thecommittee has reviewed the effectiveness of implementation of the RTI act in the Bank. TheBank has started on-line RTI portal on Bank intranet for assisting AppellateAuthorities/PIOs/Alternate PIOs and Nodal officers handling RTI matters. Bank is alsolinked to the online RTI portal at https://rtionline.gov.in/RTIMIS along with otherPSUs/Public Authorities. The PIOs/FAAs of the Bank are receiving and replying toapplications/appeals through online RTI portal also. The bank has received 3030 No. of RTIapplications and 404 first appeals in the year. During the year the Bank has disposed ofall the applications and all appeals received within the stipulated time.

INTERNAL CONTROL SYSTEM

The Bank has an Inspection Department independent from control process at Head OfficeManipal Karnataka that examines the adherence to systems procedures and policies of theBank. The guidelines received on internal control from RBI GOI Bank's Board ACB and ACEconstitutes part of the internal control system for better Risk Management.

Audit Committee of the Board (ACB) oversees the internal audit function of the Bank andguides the Bank in developing effective internal control systems. It also monitors thefunctioning of the Audit Committee of Executives (ACE) and Inspection Department of theBank.

The ACE comprising of the Executive Director as Chairman and five General Managers ofHead Office & Corporate Office as members is a layer above the Inspection Department.The committee monitors the compliances of the major audit observations and givesdirections for rectification of the deficiencies.

Eight Regional Inspectorates operate as extended arms of the Inspection Department (ID)to carry out various types of audits of the branches and offices to examine adherence tosystems of internal control procedures and policies.

The Bank has a well defined Board approved Internal Audit Policy covering RBIAInformation System Audit Concurrent Audit Credit Audit Special Audits Know YourCustomer/ Anti Money Laundering (KYC / AML) Compliances etc. The Policy is beingreviewed/updated on annual basis.

Bank is the first Bank to implement software driven RBIA among all Public Sector Banks.Bank has also implemented the software driven concurrent audit w.e.f. 01.07.2014. Based onthe feedback received from the concurrent auditors/branches Bank revisited the ConcurrentAudit software has been revamped by introducing more user friendly features.

The Risk Based Internal Audit (RBIA) of all the branches is supplemented withconcurrent audit of high risk areas like specialized branches Treasury &International Banking Division Foreign Exchange Processing Centers (FXPC) Funds andInvestment Management Division Capital Market Services Dept. of Information TechnologyCard Centre and High Volume Business Branches etc.

The Annual Action Plan (AAP) drawn in accordance with the internal audit policyinvolves the schedule & rationale of the audits planned for the year. For the year2016-17 Inspection Department has completed 3898 audits consisting of 2636 RBIA 308Compliance Audit and 954 Credit Audit. Out of the 2636 RBIA of branches held upto31.03.2017 1808 branches were in low risk 826 branches were in medium risk and 02branches were in high risk category.

Similarly bi-annual management audit of Prathama Bank one of the Bank sponsoredRegional Rural Bank is carried out by the Bank during the year 2016-17.

Inspection Department of the Bank conducted IS Audit and Risk Based Audit of the"Outsourced Financial Service Providers" for all 19 outsourced activities of theBank and placed the major observations before the Board of Directors.

Subsequent to withdrawal of legal tender character of Specified Bank Notes (SBNs) ofRs. 500/- and Rs. 1000 in order to check the malpractices in exchange/remittance of SBNsrandom verifications were carried out by Inspection Department. Physical verification ofSBNs in all currency chests of the Bank were also conducted by inspection department. Thescrutiny of SBN transactions was also carried out by the concurrent auditors attached tothe branches.

The Bank has surpassed the Ministry of Finance Govt. of India stipulation of minimumconcurrent audit coverage of 70% of total business. The coverage under concurrent audit at844 branches stood at 75.53 percent of business 86 percent of advances and 66.01 percentof deposits of the Bank as at 31.03.2017.

Orientation and refresher training programmes were conducted for the officials frominspection system during the year. Thirty-five specialist officers inducted for inspectionstream were trained at NIBM Pune and four officers from IS Audit wing were trained underISO 27001 certification during the year.

The Offsite Monitoring System is an effective management tool to strengthen theinternal control mechanism. It comprises of one OMC unit at Head Office and one unit ateach of the eight Regional Inspectorates. STRs were filed with FIU-IND in case ofsuspicious transactions.

The Bank's inspection system has been effectively monitoring the compliance of systems& procedures laid down by the Board the Regulator and the Government of India.

INTERNAL CONTROL AND VIGILANCE

Vigilance administration is a crucial part of the management function aimed atimproving the efficiency and ethical health of the organization. Stress is laid onpreventive vigilance by initiating preventive vigilance studies at branches conductingpreventive vigilance training programmes at SIBM and other training centers of the Bankand constitution of Preventive Vigilance Committees at the branches with a view toensuring strict adherence to systems and procedures.

Systemic Improvements

• To avoid the scope for misuse of the system by unscrupulous persons for gainingundue benefit at the cost of Bank the automatic log out time in CBS has been brought downto 5 Minutes.

• The study on Rs. Legal Audit' has been done as part of preventive vigilanceexercise to examine whether the process of identification of accounts for Legal Audit isappropriate. The improvements suggested have been implemented.

• A study on "SWIFT Messaging-Scope for Improvement" has been conductedas part of preventive vigilance exercise.

During the year under review preventive vigilance exercises were conducted in 620branches and surprise verification of goods hypothecated to Bank was conducted in 1043accounts.

Vigilance Awareness week

Bank observed vigilance awareness week from 26.10.2016 to 31.10.2016. Variousactivities/events/competitions like elocution debate essay writing etc. on issuesrelating to "Corruption/Preventive Vigilance" at schools and collegesGramasabhas targeting youth and customers were conducted by branches/administrativeoffices throughout the country. Prominent personalities from CBI Police GovernmentRetired Judges etc. participated and addressed staff/customers/students.

The three Regional Rural Banks sponsored by your Bank viz. Prathama Bank KarnatakaVikas Grameena Bank and Andhra Pragathi Grameena Bank also observed vigilance awarenessweek.

• On-line quiz competition on preventive vigilance and computer security for allthe staff was conducted on each day of the Vigilance Awareness Week. 18932 staff membersparticipated in the quiz competition.

• Two staff members who were instrumental in averting frauds were felicitated bythe Managing Director & CEO along with the CVO.

• Workshops and Sensitization programmes (564 nos.) were conducted across branchesand offices.

• Vigilance awareness events/programmes were conducted at 1657 gramsabhas and1636 events at educational institutions were held consisting of 66225 participants.

INFRASTRUCTURE SUPPORT

Enhancement in Asset Value of the Bank

Bank has purchased ready built premises from Industrial Finance Corporation of IndiaLtd (IFCI Ltd.) at Bhopal for accommodating Regional Office & Staff Training Center atBhopal. A plot of land at Lucknow was purchased for constructing a building for housingRegional Office Currency Chest Zonal Office and a Branch. Bank has also purchased 2plots of land at Bagalkot under Vijayapura Region allotted by Bagalkot Town DevelopmentAuthority.

Construction of Bank's own building at Jagmara Bhubaneswar Odisha for housingCurrency Chest Branch ATM and RO Bhubaneswar is completed and extension of building for3rd floor is also nearing completion. Construction of Bank owned Building atMannagudda Mangalore for housing Currency Chest Branch with ATM/e-lounge and

residential quarters which could not materialize last year is also taken up during thisfinancial year.

Image Building

Bank has initiated the process of Branch Transformation under Project Ananya forimproving the ambience of Branches for ensuring maximum comfort to the customers likeproviding larger customer space air conditioning following uniform colour scheme at parwith other peer Banks to attract customers and garner new business besides giving comfortto the employees. Bank is also opening e-Lounge for effective utilization of space of thebranches besides attracting new generation customers to our fold. Branch transformationof nearly 370 branches has already been taken up in the first stage. Bank is going foropening of branches in prominent locations to improve the visibility. Branches areinvariably opened on ground floors unless it is not available.

Others

• Under RBI's clean note policy Bank has already floated the tender forprocurement of Desk Top Note Sorting Machines to various branches. The TechnicalEvaluation is under process. On completion of scrutiny of bids reverse auction will beconducted and orders will be placed. In the meantime Bank has procured another 10 HeavyDuty Note Sorting Machines for a few currency chests where huge unsorted cash hadaccumulated on account of demonetization of old Rs. 500/- and Rs. 1000/- notes.

• The in-house on-line web portal developed by DIT for capturing details of leasedpremises of branches offices and ATMs has enabled the Bank to have a realtime status ofpremises leases for better monitoring system to ensure timely renewal apart from gettinguseful MIS reports. Bank has corresponded with the premises owners of Branches identifiedfor Ananya Project and having short unexpired lease period requesting them for earlyrenewal of lease and received good response thus enabling smooth implementation of theproject in identified branches. .

• The Bank has successfully implemented on-line Asset Management Software"Summit" in all the branches/offices to account the furniture fixtureselectric fittings and motor vehicles. The details of all movable assets including thoseavailed by officers under officer's furniture scheme are available on realtime at thepress of a button. This has enabled the Bank to monitor assets at all levels oforganizational hierarchy and generate different types of reports to take managementdecisions.

• The method of application and rate of depreciation has been changed during2016-17 from WDV method

to SLM and the process was successfully completed in time. The changes have been doneto make more appropriate presentation of financial statements by way of even charge ofdepreciation over useful life of assets.

• Bank has also launched in-house on-line web portal developed by DIT to capturethe details of quarters allotted to Officers both on personal lease and those owned by theBank. The application will give a clear picture about quarter facility to officers andadvance rent paid to owners and would go a long way in taking Management decisions throughMIS reports.

Re-organization of Regions

With the aim of business development and better monitoring and control Bank has opened1 new regional office at "Kanpur" by carving out branches from existingAgra Lucknow and Varanasi Regions during the year 2016-17.

INDUSTRIAL RELATIONS

During the year industrial relations in the Bank has been cordial and harmoniousfacilitating all-round growth in the business of the Bank. The Unions/Associations havealso been responsive and proactive to the corporate goals.

ACCOLADES AND AWARDS

The details of various awards and accolades received by your Bank during the year2016-17 which have been mentioned as under.

• Bank has been awarded "Rajbhasha Kirti Puraskar" for 2015-16 withfirst prize in the public sector bank category by the Government of India for itsoutstanding performance in official language implementation in Rs. C' region consecutivelyfor second time.

• First Prize for best official language implementation and best publication("Jagriti" house journal) & Best Reference Book (let us speak in RegionalLanguage) awards for 2015-16 from Rajbhasha Seva Sansthan and Parivartan Jan KalyanSamiti New Delhi.

• Bank's quarterly Hindi magazine "Jagriti" received third prize inHindi House Journal Competition for 2015-16 conducted by Reserve Bank of India.

• Bank has been awarded "Certificate of Commendation" from Ministry ofNew and Renewable Energy Government of India for collateral free farmers friendlyinitiatives for financing of renewable energy projects (during Feb. 2015 to Mar. 2016).

• Bank has conferred "Sterling Trailblazers" award for EconomicEmpowerment of Rural Young Men and Women from Rotary Club Bengaluru.

• Bank has received "FIEO Export Excellence-Gold Trophy" award by theFederation of India Export Organization (FIEO) for the FIEO Export Excellence of the topfinancial institution of Northern Region for the year 2014-15.

• Your bank has received Skoch Awards under the following categories:

• Skoch Smart Technology Award June 2016 for "Online payment solution forDGLL: Bank was awarded "Skoch Order-of-Merit award" for facilitating on-linecollection of light dues (DGLL-Directorate General of Light Houses & Light Ships) fromvessel/cargo consignments.

• Skoch Order of Merit Award December 2016: Bank was received "Skoch Order ofMerit Award 2016" for developing and implementing NPA Tracker Geo Tagging On-lineFee Collection Facility to Small Institutions & ATM Fence for amongst top 100-projectsin India.

• Skoch Smart Technology Silver Award 2016: Bank was awarded the "Skoch SmartTechnology Silver Award 2016" for developing and implementing NPA Tracker GeoTagging & on-line fee collection facility to small institutions applications.

• Bank was conferred "NPCI - National Payments Excellence Award 2016" inrecognition of excellent performance in select parameters of various NPCI products.

• Bank was received "Surya Mitra Award" for Bank's initiatives andperformance under solar financing by SELCO foundation.

SECURITY

The security department of the Bank is making constant efforts to provide effectiveefficient and progressively better security services to all Branches ATMs currencychests and administrative offices based on real time needs. This commitment resulted inthe department obtaining the ISO 9001:2000 certification in May 2007 which was later inSeptember 2010 upgraded to ISO 9001:2008. With the transition to 2015 InternationalStandard department was subjected to an extensive audit of Quality Management Systems(QMS) and was assessed to having conformed with the revised standards. Accordingly thedepartment has been conferred with the ISO 9001:2015 certification with effect from15.09.2016. The department has thus achieved this unique distinction of being the firstand only security department among all the Public Sector Banks to become ISO 9001:2015compliant. The certification is currently valid till 14th September 2019subject to periodic surveillance audits of the Department's Quality Management Systems.

The guidelines on security matters are disseminated to all the Regional Offices forimplementation through annual security action plan. All the guidelines and instructionsreceived from RBI during the year relating to the security of branches ATMs currencychests and administrative offices have been implemented and complied with. As perguidelines security audit has been conducted in respect of currency chests. All currencychests are provided with security and surveillance equipment like CCTVs Automatic TimeLock Biometric Access Control Hotlines Passive Infra Red Devices Automatic FireDetection & Alarm Systems and Auto dialers. All the cash vans of the Bank have beenprovided with Global Positioning Radio System (GPRS) to facilitate real time tracking ofremittance in transit.

To augment the security arrangements at branches and in compliance to the directions ofthe Government CCTV has been installed at all branches. As part of the ongoing process ofstrengthening the security at branch level the system of risk categorization of brancheshas been adopted in line with IBA guidelines so as to provide adequate securityinfrastructure commensurate with the risk category at all branches. In addition in placeswhere the law & order situation deteriorates flexibility to provide security guardstemporarily till security scenario improves has been made.

In view of the increasing crimes on ATMs security has been enhanced and additionalCCTV cameras have been installed to cover the lobby and exterior areas along with soundalarm system with panic switch. The ATMs are being grouted to the ground so that theycannot be easily carted away. Apart from offsite and critically sited ATMs round theclock unarmed guards have been deployed at those ATM centers where the police authoritieshave advised for posting of guards and also at places where the law and order situation sowarrants. Based on the crime scenario and threat perceptions the security arrangementsare periodically reviewed and updated. Suitable pro-active preventive and precautionarymeasures are put in place to adequately safeguard the interests of Bank.

SYND BANK SERVICES LIMITED

SyndBank Services Limited (SBSL) was incorporated under the companies act 1956 on25.01.2006 as a wholly owned subsidiary of SyndicateBank with an authorized capital ofRs. 10 crores and paid up capital of Rs. 25 lakhs to extend back-office services toSyndicateBank its clients and other financial institutions. The company has undertakenthe following activities during the year 2016-17:

I. The company prints and dispatches retail loan follow up notices to SMA borrowers onmonthly basis based on the data received from the Bank apart from sending SMS messages onmonthly basis which

helped the Bank to maintain a healthy retail loan portfolio.

II. The Company made arrangements to print crop loan renewal notices in local languageslike Hindi Kannada Telugu Tamil Marathi Malayalam Bengali Oriya etc. on behalf ofCO: PSCD.

III. The Company has continued the service of managing a small call center service onbehalf of the Bank to tele-call the retail loan borrowers and follow up SMA Accounts ofthe Branches coming under Bengaluru North and South Regions and also few other Regions.There is a good response to this with recovery in over 60% of delinquent accounts.

IV. Pre-shipment/Post-shipment testing of computer hardware procured by SyndicateBankand RRBs sponsored by SyndicateBank and also of other public sector Banks/financialinstitutions by IT officers to ensure that the hardware meets the specifications as perthe purchase order issued by the banks/financial institutions.

V. Debit card personalization services for SyndicateBank and RRBs sponsored by the Bankthrough outsourced model.

VI. Printing & Dispatch of internet banking passwords for customers ofSyndicateBank.

VII. Collection of cheques and cash from BWSSB Kiosks spread across Bengaluru city andpreparing clearing uploadable files on CBS system on behalf of Syndicate Bank throughoutsourced model.

VIII. Outsourcing activities like providing resources for manning 24 x 7 internetbanking help desk at CO: DIT Bengaluru and resources for call desk for State LevelBankers Committee (SLBC) at SyndicateBank's Corporate Office at Bengaluru.

IX. Dispatch of PIN mailers to the branches of SyndicateBank in respect of MobileBanking.

X. During the year the company provided man power service support to CO:DIT to set upMobile Banking Help Desk and ATM Monitoring Desk.

XI. The company during the year has taken up Ad-hoc work from time to time from variousdepartments of the parent Bank and successfully completed the assignments one suchactivity being tele-calling fair price dealers in Andhra Pradesh and to collectinformation on their readiness / compliance level with regard to implementation ofcashless transactions and also educating them on technical issues involved on behalf ofCO: PSCD through outsourced model.

XII. The company also tele called Business Correspondents (BCs) spread across thecountry to ascertain the present status on behalf of CO: PSCD.

SBSL a profit making company since its inception is consistently improving itsrevenues. The performance highlights under key parameters during the last three years isas under -

(' in lakhs)

Particulars March Rs. 15 March Rs. 16 March Rs. 17
Authorised Capital 1000 1000 1000
Paid-Up Capital 25 25 25
Reserves & Surplus 780 978 1270
Fixed Assets (Net) 6 6 3
Total Income 479 555 791
Profit before Tax 235 296 429
Profit after Tax 158 198 291

CHANGES IN THE BOARD

1. Shri CH. S S Mallikarjuna Rao has assumed charge as Executive Director of the Bankon 15.09.2016.

2. Shri Jayant Purushottam Gokhale nominated as CA Director by the Government of Indiahas joined the Board w.e.f. 30.08.2016.

3. Ms. Vandana Kumari Jena nominated as Nominee Director by the Government of India hasjoined the Board w.e.f. 25.04.2016.

4. Shri G Ramesh nominated as Nominee Director by the Government of India has joinedthe Board w.e.f. 25.04.2016.

5. Shri Sunil Vashisht elected as Shareholder Director of the Bank w.e.f. 17.09.2016.

6. Shri Atul A Galande Shareholder Director completed his tenure of Office on25.06.2016.

7. Shri Sanjay A Manjrekar Non-Workmen Director completed his term on 16.07.2016.

8. Shri T K Srivastava Executive Director superannuated on 30.07.2016.

9. Shri Sankaran Bhaskar Iyer Workman Director completed his term on 03.09.2016.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors in preparation of the annual accounts for the year ended March 312017confirm the following: That the applicable accounting standards have been followed in thepreparation of annual accounts along with proper explanation relating to makingdepartures.

That the accounting policies framed in accordance with the guidelines of the ReserveBank of India were consistently applied.

That reasonable and prudent judgments and estimates were made so as to give a true andfair view of the state of affairs of the Bank as at the end of financialy year and of theprofit or loss of the Bank for the year ended March 31 2017.

That proper and sufficient care was taken for maintenance of adequate accountingrecords in accordance with the provision of applicable laws governing banks in India forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities.

That the annual accounts have been prepared on a Rs. going concern' basis.

That proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Directors wish to place on record their sincere appreciation to the publicvaluable customers shareholders and staff members for their continued support andpatronage in India and abroad.

The Directors are also indebted to the Ministry of Finance Government of India RBISEBI and other regulatory authorities various Financial Institutions Banks andCorrespondents in India and abroad for their unflinching and valuable support and guidancefrom time to time.

The Board wishes to welcome Shri CH. S S Mallikarjuna Rao who has been appointed asthe Executive Director of the Bank; Shri Sunil Vashisht who has been elected asShareholder Director of the Bank and Shri Jayant Purushottam Gokhale who has beennominated as Government CA Director of the Bank; Ms. Vandana Kumari Jena who has beennominated as Government Nominee Director of the Bank; Shri G Ramesh who has beennominated as Government Nominee Director of the Bank.

The Board also expresses their indebtedness to Shri T K Srivastava Executive DirectorShri Atual A Galande Shareholder Director Shri Sanjay A Manjrekar Non-Workmen Directorand Shri Sankaran Bhaskar Iyer Workman Director of the Bank who have completed their termduring the year for their able guidance leadership and support that they had providedduring their tenure in the Bank.

For and on behalf of the Board of Directors.

Place : Manipal (Arun Shrivastava)
Date : 25.05.2017 Managing Director & CEO