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Andhra Bank.

BSE: 532418 Sector: Financials
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OPEN 19.75
VOLUME 119340
52-Week high 33.30
52-Week low 15.10
Mkt Cap.(Rs cr) 5,790
Buy Price 19.25
Buy Qty 2871.00
Sell Price 19.35
Sell Qty 1967.00
OPEN 19.75
CLOSE 19.60
VOLUME 119340
52-Week high 33.30
52-Week low 15.10
Mkt Cap.(Rs cr) 5,790
Buy Price 19.25
Buy Qty 2871.00
Sell Price 19.35
Sell Qty 1967.00

Andhra Bank. (ANDHRABANK) - Director Report

Company director report

We place before you the Annual Report of the Bank together with the audited Statementof Accounts and Auditors' Report for the financial year ended March 31 2018.


MACRO ECONOMIC DEVELOPMENTS: In the first half of the financial year India'seconomic growth reversed momentum from that of the rest of the world decelerating as therest of the world accelerated. A number of developments like demonetizationimplementation of new GST high and rising real interest rates the Twin Balance sheetchallenge obstructed Indian economic growth. India's GDP growth in 2017-18 at 6.6% waslower than 7.1% in 2016-17. Implementation of GST had a transient effect on urbanConsumption through loss of output and employment in labour intensive unorganised sector.But in the second half of the year the economy witnessed robust signs of revival.Economic growth improved as the transitory phase came to an end and the synchronous globaleconomic recovery boosted exports. Government expenditure provided sustained support toaggregate demand with a pick-up in pace in the second half.

Monetary and Liquidity Conditions: During the financial year 2017-18 Reserve Bankof India (RBI) maintained the stance of monetary policy as neutral in consonance with theobjective of achieving medium term target for CPI inflation of 4%. the Average CPIinflation rate has come down to 3.3% during FY 2017-18 from 4.5% in FY 2016-17. RBI hascut repo rates by 25 bps points between April 2017 and March 2018. RBI has kept ratesunchanged since August 2017 at 6.00%. Liquidity conditions remained favourable for themajor part of the year. However during Q4 pick up in credit demand led to tighterliquidity conditions thereby limiting the fall in the deposit rates as compared to lastyear.

Balance of Payments and External Sector: As observed the deceleration in economicgrowth is on account of decline in the export growth which led to widening of currentaccount deficit (CAD) which worsened to USD 13.5 billion (2% of GDP) during Oct-Dec'17 (Q32017-18) from a level of USD 8 billion (1.4% of GDP) in the corresponding quarter a yearago. Further the surge in crude oil prices which rose by more than 20% YoY increased theimport bill. India's trade deficit widened to USD 44.1 billion during Q3 2017-18 from alevel of USD 33.3 billion in the year-ago period. Despite the soaring CAD the forexreserves grew by USD 9.4 billion due to a stronger capital account surplus. is was incontrast to the deficit of 1.2 billion in the year-ago period.

the capital and financial account surplus rose to USD 12.6 billion in Q3 2017-18 fromUSD 7.3 billion in Q3 2016-17 supported by stronger portfolio investment inflows worthUSD 5.3 billion.With the CAD soaring and concerns over potential fiscal slippage (asfiscal deficit reached 4% of GDP by end Jan'18) the rupee witnessed a downward pressure.the combination of soaring CAD and a high fiscal deficit (twin deficit scenario) willbring in inflationary pressures and likely weigh down the rupee which has already lost1.4% against USD since the beginning of 2018. There was an accretion to foreign exchangereserves taking their level to US $ 424 billion as on March 30 2018. FinancialMarkets (Equity and Bond Markets): Domestic financial market segments have been mainlydriven by idiosyncratic factors barring phases of overwhelming global spill overs thatimpacted equity and forex markets intermittently during FY 2017-18. Excess liquiditywhich had persisted till January following demonetisation turned into deficit towardsclose of the year. Bond markets have experienced some drying up of liquidity as yieldsrose amidst concerns about inflation and the fiscal situation with raising crude prices.the BSE Sensex Equity markets extended their gains in FY 2018 with the Sensex closing ata historic high of 36283 on January 29 2018. A number of factors contributed to themarket's overall buoyancy: strengthening macroeconomic conditions; revival of corporatesales and improving prospects for future earnings; the announcement of PSU banks'recapitalisation; a jump in India's ranking in the World Bank's ease of doing businessindex; the ratings upgrade by Moody's; sustained net investment by domestic institutionalinvestors; and positive cues from global equity markets. However Market conditions andsentiment reversed dramatically in February and selling pressures intensi_ed with avariety of factors in play: global sell-o_s in bonds and equities following stronger thanexpected job and inflation data for the US that prompted market participants to anticipatea faster pace of normalisation of US monetary policy; expectations of tighter liquidityconditions going forward and other domestic policy developments announced in the Budget.During the year the gains from secondary market have reduced as compared to the last year.the BSE SENSEX registered a return of 11.3% while NIFTY registered a return of 11.5% inFY 2017-18.

Bond Markets:

Since the beginning of August 2017 yields in the secondary government securities(G-sec) market hardened almost monotonically driven mostly by domestic factors up toearly March 2018. Among global factors rising international crude prices through thequarter and the increase of 25 basis points in the federal funds target by FOMC pushed upthe G-sec yields. the surge in 10-year G-Sec yields from 6.51 per cent at the end of Q1(April-June) FY2018 to 7.32 per cent at the end of Q3 FY18 also resulted in an increase inyields of corporate bonds and impacted the corporate bond issuances with year-on-yearde-growth in fresh bond issuances by 14 per cent and 24 per cent during Q2(July-September) FY2018 and Q3FY2018 respectively. the yields touched a high of 7.78 percent up 46 basis points from the level of 7.32 per cent at the end of theOctober-December quarter. G-Sec yields cooled off by 28-29 basis points to 7.33-7.34 percent toward March end. the rise in G-sec yield is on account of fiscal concerns owing toincrease crude prices and faster than expected normalization of monetary policy inadvanced economies especially in US.

Trends in Banking Industry:

Impairment in the asset quality of the banking sector remained very high necessitatingsizeable provisioning and deleveraging thereby restricting banks' lending capacityprofitability and capital positions. However the overall credit growth for the financialyear 2017-18 was higher at 10.3% as compared to 5.08 % in 2016-17. Demand has grown forboth corporate & retail loans; particularly the services real estate consumerdurables & agriculture allied sectors have led the growth in credit . the deposits ofthe banking system witnessed a lower growth of 6.7 % during 2017-18 as compared to 11.75%of the last financial year.


Indian economy has recouped from the disruptions and green shoots are visible withinvestment demand picking up supported by Infrastructure spending by the government. thebank recapitalisation plan by Government of India shall provide the necessary impetus tothe banks by providing growth capital to enhance credit supply to the economy withfavourable forward linkages. Enhanced spending on infrastructure implementation of newprojects digital payments revolution and continuation of reforms are expected to providefurther momentum to growth. India's banking sector is also poised for robust growth as therapidly growing business will facilitate banks credit growth. the global growth isexpected to remain robust supporting GDP growth which is projected to increase from 6.6%in 2017-18 to 7.4% in 2018-19. These developments augur well for revival in credit demandin FY 2018-19


Business: For the financial year ended 31st March 2018 Bank's Business stood at _372605 Crores recording an increase of _ 32932 Crore from _ 339673 Crore as on31.03.2017 with a growth rate of 9.70% (y-o-y).

Deposits: Bank's Total Deposits stood at _ 208070 Crore as on 31.03.2018recording an incremental growth of _ 12629 Crore (6.46%) over the previous year. theshare of CASA deposits (Current and Savings) in Total Deposits stood at 31.05%.

? Current Deposits stood at _ 10360 Crore as on 31.03.2018 as compared to _ 8660Crore as on 31.03.2017 registering a growth rate of 19%.

? Savings Bank Deposits increased to _ 54236 Crore as on 31.03.2018 from _ 48655Crore as on 31.03.2017 growing at a rate of 11%.

? Term Deposits increased from _ 138124 Crore as on 31.03.2017 to _ 143469 Crore ason 31.03.2018 registering a growth rate of 4%.

Advances: Gross Bank Credit increased by 14.08% from _ 144232 Crore as on31.03.2017 to _ 164535 Crore as on 31.03.2018.

? Credit to Agriculture Sector (including RIDF & non priority) stood at _30844 Crore as on 31.03.2018 as against _ 27573 Crore as on 31.03.2017 registering agrowth rate of 11.86%.

? MSME portfolio registered a growth of 23.61% YOY basis from _ 27260 Cr to _ 33697Cr

? Retail Credit portfolio registered a growth of 41.53% YoY from _ 27541 Cr to _38979 Cr.

Classification of Advances portfolio (_ in Crore)
Category 31.03.17 31.03.18 Variance
1. Food Credit 1059 825 -234
2. Non-Food Credit (2.1 to 2.4) 143173 163710 20537
2.1 Agricultural Advances 27573 30844 3271
2.2 Advances to MSME Sector 27260 33697 6437
2.3 Retail Credit (incl. DLs) 27541 38979 11438
2.4 Large Industries & Other Advances 60799 60189 -610
GROSS BANK CREDIT (1+2) 144232 164535 20303
Of which Lending to Priority sector 61690 70121 8431

Area-wise distribution of Aggregate Deposits & Advances as on 31.03.2018 is setforth in the following Table.

(_ in Crore)

Sl. No. Category of Branches Deposits 31.03.18 % to total Advances 31.03.18 % to total
1 Rural 14084 7% 16705 10%
2 Semi-Urban 27170 13% 25198 15%
3 Urban 46886 23% 31360 19%
4 Metro 119931 57% 91271 55%
5 TOTAL (1+2+3+4) 208071 100% 164535 100%

Profitability: Total Income for the financial year 2017-18 of the bank stood at _20347 Cr as compared to _ 20336 Cr for FY 2016-17. the Non-interest income of the bankincreased from _ 2308 Cr to _ 2372 Cr registering a YoY growth of 2.76% . Operating Profitof the Bank increased to _ 5361 Crore compared to _ 4388 Crore in the previous yearregistering a growth rate of 22%. However on account of increased provisioning towardsNPAs the Bank incurred a Net Loss of _ 3412 Cr for FY 2017-18 as compared to Net profit of_ 174 Cr for the financial year 2017-18.

the Total interest income of the Bank stood at _ 17974 Cr as compared to _ 18027 Cr ofthe previous year. Of this Interest Income from Advances registered a fall by 5.25% from_ 13598 Cr during 2016-17 to _ 13069 Cr during 2017-18. Interest Income from investmentsincreased by 8.41% from _ 4230 Crore during 2016-17 and stood at _ 4602 Crore during2017-18. Total Expenses during the financial year 2017-18 is _ 14985 Crore against _ 15948Crore during the previous year. Of this Operating Expenses stood at _ 3346 Crore.Establishment Expenditure as a percentage of Total Expenditure stood at 12.40% for thefinancial year ended 31.03.2018.

Highlights of Revenue Expenditure and Profitability- (_ in Crore)

2016-17 2017-18 Absolute Growth Percentage Growth
Total Interest Income 18027.42 17974.54 -52.88 -0.29%
Total Interest Expenditure 12495.78 11639.79 -855.99 -6.85%
Net Interest Income 5531.64 6334.75 803.11 14.52%
Other Income 2308.31 2372.07 63.76 2.76%
Profit on sale of Investments 764.34 489.36 -274.98 -35.98%
Core Other Income 1543.96 1882.71 338.75 21.94%
Operating Expenses 3451.99 3345.79 -106.2 -3.08%
Operating Profit 4387.95 5361.03 973.08 22.18%
Provisions and Contingencies 4213.63 8773.56 4559.93 108.22%
Net Profit 174.32 -3412.53 -3586.85 -2057.62%

APPROPRIATIONS: A_er making various provisions the net loss for the year 2017-18has been arrived at _ 3412.53 Cr. Brought forward balance in P/L Account is _ 1.53 Cr. theappropriations are given below.


(_ in Crore)

2016-17 2017-18
Appropriation out of Net Profit 174.33 -3412.53
Balance brought forward 95.00 1.53
Transfer to Statutory Reserves 43.60 13.02
Transfer to Capital Reserve 129.20 39.07
Transfer to Revenue Reserves 0 0
Transfer to Special Reserve 95.00 0
Transfer to proposed Dividend (incl. Dividend Tax) 0 0
Profit carried over to Balance Sheet 1.53 -3463.09


the Banking Industry as a whole has been passing through a difficult phase and thebank has done well in key financial ratios in the present scenario. Net Interest Margin(NIM) stood at 3.33% compared to 3.07% in the previous year. Cost to Income Ratio stood at38.43% as compared to 44.03% for the previous year. Earnings per Share (EPS) stood at _-42.12 and Book Value per Share (BVPS) stood at _ 60.25. Gross Non-Performing Assets toGross Advances stood at 17.09% and Net Non-Performing Assets to Net Advances stood at8.48% for the financial year ended 31.03.2018.

Key Financial Ratios
Parameter 31.03.2017 31.03.2018
Yield on Advances (%) 9.77 8.84
Cost of Deposits (%) 6.43 5.57
Net Interest Margin (%) 3.07 3.33
Yield on Funds (%) 8.38 7.71
Cost of Funds (%) 5.81 4.99
Cost-to-income Ratio (%) 44.03 38.43
CRAR – Basel III (%) 12.38 11.00
Return on Assets (%) 0.08 -1.46
Earnings Per Share (_ ) 2.56 -42.12
Book Value Per Share (_ ) 153.84 60.25
Net NPA (%) 7.57 8.48
Gross NPAs (%) 12.25 17.09


CAPITAL & NET WORTH (_ in Crore)
Parameter 31.03.2017 31.03.2018
Equity Capital 681 1199
Reserves Surplus 10730 9619
Net worth of the Bank (Tangible) 10479 7223


As per the guidelines issued by Reserve Bank of India the start date forimplementation of Basel III guidelines in India is with effect from April 1 2013.Accordingly the Bank has been assessing its Capital Adequacy as per Basel IIIprescriptions. the total Capital Funds of the Bank are at _ 16707 Cr as on March 31 2018and the Capital Adequacy Ratio at 11.00 % the Bank has put in place an "InternalCapital Adequacy Assessment Process" (ICAAP) for assessing the adequacy of Capitallevels keeping in view the expected increase in business levels and enhanced Capitalrequirements in the Basel III regime. the assessment process also includes a framework forinclusion of Pillar-II risks under Basel-III guidelines such as Credit concentrationrisk interest rate risk in the banking book liquidity risk etc.

CRAR Position 31 March 2018 (Basel III)
CET1 5.61%
AT1 1.83%
Total Tier-I 7.44%
Tier-II 3.56%
Total CRAR 11.00%

Priority Sector Lending: Total Priority sector advances net of PSLC (PrioritySector Lending Certificates) is _ 59285 Cr which constitute about 41.25% of Adjusted NetBank Credit (ANBC) as against the norm of 40%. Bank has made net sale of _ 10836 Cr PSLCGeneral / SF-MF through e-kuber portal of RBI and earned a premium / commission of _ 93.91Cr during the FY 2017-18.

Table 8: Priority Sector Lending (_ in Crore)
Category 2017-18
1. Priority Sector Advances (2 to 7) 70121
2. Agriculture-Priority (2.1 + 2.2) 29637
2.1 Agriculture Loans-Priority 28443
2.2 Eligible Investments (RIDF) 1194
3. Micro Small and Medium Enterprises 29654
4. Educational Loans 1397
5. Housing Loans (includes Indirect Finance& Investment in NHB) 9385
Category 2017-18
5.1 Eligible Investment in NHB 220
6. Social Infrastructure 18
7. Renewal energy and others 30
8. Priority Sector Advances (net of PSLC) 59285
8.1 PSLC Sales (General + SF/MF) 10836
9. Agriculture-Priority (net of PSLC) 27787
9.1 PSLC Sales (SF/MF) 1850
10. NPA under Agri Credit 1269
I. Priority Sector Advances (% to ANBC) 41.25%
II. Agricultural Credit (% to ANBC) 19.33%
III. Small & Marginal Farmers (% to ANBC) 10.76%
IV. Direct Lending to Non-Corporate farmers (% to ANBC) 14.61%
V. NPA under Agri. as on 31.03.18 (% to Gross Agri advances) 4.11%

Credit to Agriculture-Priority: Agricultural advances (Agri-Priority) of the bankstood at _ 29637 Crore at the end of Mar. 2018 registering a growth rate of 11.24%(Y-O-Y). the absolute increase over Mar. 2017 is _ 2994 Crore. Agri. Priority advances(a_er net sale of PSLC SF/MF of _ 1850 Cr) are at _ 27787 Cr which constitutes 19.33% ofas against the norm of 18%.

Lending to Small & Marginal Farmers: Total credit extended to Small &Marginal Farmers as on 31.03.2018 was _ 15463 Cr (a_er net sale of _ 1850 Crs under PSLCSF/MF) i.e. 10.76% of ANBC as against the statutory norm of 8%. Direct Lending toNon-Corporate farmers: As against the statutory norm of 11.78% of ANBC to directlending to non-Corporate farmers for the FY 2017-18 bank has reached 14.61% i.e. _ 21005Cr.

Lending to Self Help Groups: Bank has extended financial assistance to 241431 SelfHelp Groups with total exposure of _ 6565 Cr as on 31.03.2018.

Credit to Weaker Sections: Advances to Weaker sections is at _ 19080 Cr. at the endof Mar. 2018 (a_er net sale of _ 1850 Cr under PSLC SF/MF). Bank surpassed the target of10% of ANBC to weaker section by achieving 13.28% of ANBC as on 31.03.2018.

Credit to Minorities: Total credit extended to minority communities as on31.03.2018 was at _ 6126 Cr i.e. 10.33 % of Priority Sector advances as against norm of15%.

Credit to Women: Total credit extended to women beneficiaries as on 31.03.2018 wasat _ 21104 Cr i.e. 14.58 % of Net Bank Credit as against norm of 5%.

Andhra Bank Rural Development Trust: Andhra Bank Rural Development Trust is running14 Rural Self Employment Training Institutes in A.P (9) Telangana (2) Odisha (2) &Kerala (1) states and imparting need based training for capacity building/entrepreneurialdevelopment and dissemination of knowledge to farmers SHG women Rural unemployed youthand artisans. Since inception 171400 candidates have been trained through 5911 programmesby the Institutes and around 72.30% of the trained candidates are engaged in gainfulventures. 42.10% of settled candidates are credit linked by the Bank branches. During theyear FY 2017-18 the institutes imparted training to 11608 candidates through 454programmes. 11 RSETIs out of 12 RSETIs under RSETI scheme of MoRD awarded with highestrating "AA" by Ministry of Rural Development Govt. of India for the year2016-17.

NIRED Rajam (Srikakulam District Andhra Pradesh State) one of the RSETIs sponsored byAndhra Bank received "Best Performing RSETI" Award (1st place in the countryother than North Eastern & Hilly Region and Union Territories) for 2017-18 fromMinister for Rural Development & Panchayat Raj Govt. of India on 05.05.2018 duringAajeevika Evam Kaushal Vikas Diwas & Mela held at Ranchi Jharkhand. Another RSETIsponsored by the Bank i.e. RSETI Nellore (SPS Nellore District Andhra Pradesh) alsoselected as Best RSETI (4th place in the country other than North Eastern & HillyRegion and Union Territories) for 2017-18.

Financial Literacy and Credit Counselling Centres: Bank has established JanaChetana Financial Literacy and Credit Counselling Trust and running 10 Financial LiteracyCentres in all Lead Districts. These centres are promoting financial literacy activitiesthrough campaign mode and providing service related extension services. Bank has approvedfor opening of 5 new FLCCs one at Sirguppa in Karnataka state one at Srikalahasthi inAndhra Pradesh state and each one at Jagtial Sircilla and Siddipet in Telangana state.All our Rural Branches and RSETIs are organizing Financial Literacy Camps in the villagesby utilizing the services of local artists/magicians and organizing Kala Jataas.

Credit to MSME Sector

Parameter (_ in Crore) 31.03.17 31.03.18 YOY Gr%
Micro 9701.53 11138.13 14.80%
Micro & Small Enterprises 20717.27 23059.08 11.30%
Total MSME 27260.10 33696.89 23.61%

? During the year 296192 MUDRA loans are sanctioned with aggregate total limit of_ 3673 Cr and an amount of _ 3246 Cr is disbursed. Further 4102 applications weresanctioned with a limit of _ 773 Cr under Stand Up India. the cumulative performance underStand UP India is 6002 sanctions with a limit of _ 1055 Cr. the bank taken up thefollowing initiatives under MSME financing in the FY 2017-18 to increase lending to MSMEsector:

? To finance against GST receivables of MSME units – New Product –MSMEMitra had been launched

? Policy has been framed for participation in online digital platform of TReDS andjoined RXIL for financing trade receivables

? To promote digital transactions and to encourage MSEs to move towards cashlesstransactions from cash based transactions to field functionaries to include 30% of thedigital portion of projected turnover instead of 20% while assessment of WC limits to MSEunits under turnover method for limits up to _ 6.00 Crores.

? To MSME borrowers Standby Term Loan is allowed irrespective of credit rating tothe extent of 20% of the Fund Based limits subject to a cap of _ 1.00 Crore for acquiringadditional machinery

? To consider fixing a separate additional working capital limit for MSEs up to 20%of the regular working capital limit at the time of sanction / renewal of working capitallimit specifically for meeting the temporary rise in working capital requirements.

? Presently 9 SME Expresses are functioning at various Centres for scouting the newbusiness and for reducing the TAT. 559 Branches are attached to SME Expresses and cateringthe various needs of MSME borrowers.

? Keeping in view of the importance of MSME sector in the economy our Bankintroduced the following:

? 25% of assessed turnover can be allowed as working capital credit limit underturnover method up to _ 6.00 crores instead of the existing 20% of the projected turnover.

? ABHIVRUDHI Scheme "Financing to MSEs (Micro and Small Enterprises) up to _6.00 Crore against property" wherein assessment of credit limits is simpli_ed andobtention of CMA data is waived.

? the bank has entered into agreement with NCGTC for providing guarantee coverunder Loans sanctioned under PMMY (Mudra) and Stand up India. the bank has entered intoMOU with M/s Bajaj Auto Ltd for financing cargo vehicles

? the bank has launched a new cluster specific product "AB SOLEACE" forfinancing manufacturing/trading units in Footwear Park New Delhi . Further the bank hasidentified 389 clusters were allotted to 240 Branches for focused approach and towardsgrowth under MSME sector.

Retail Lending: the Bank's Retail Credit portfolio stood at _ 38979 crores as on31.03.2018 as against _ 27541 Crores as on 31.03.2017 with year on year growth of _11438 Crs. the segment has registered a growth of 41.53% on YOY basis including depositloans and credit card.

? Housing loans portfolio has increased from _ 13870 Crs as on 31.03.2017 to _17941 Crs as on 31.03.2018 with an absolute growth of _ 4071 Crs registering a growthrate of 29.35% on YOY basis.

? Vehicle Loans portfolio has increased from _ 1337 Crs as on 31.03.2017 to _1730 Crs as on 31.03.2018 with an absolute growth of _ 393 Crs registering a growth rateof 29.42% on YOY basis.

? Education loans portfolio has increased from _ 2469 Crores as on 31.03.2017 to _2504 Crores as on 31.03.2018 with an absolute growth of _ 36 Crores registering a growthrate of 1.44% on YOY basis.

? Property Loans (Loan against property) Portfolio has increased from _ 2692Crores as on 31.03.2017 to _ 4912 Crores as on 31.03.2018 with an absolute growth of _2219 Crores registering a growth of 82.42% on YOY basis.

? Bank has waived processing charges on Housing Loans and Vehicle Loans during thefinancial year to have an edge in the market competition.

Advances – Industry wise Exposure: Bank has loan exposure to various sectorslike Power Housing Loans NBFCs Iron & Steel textiles etc. Exposure to top 10industries constitutes 47.81% of gross bank credit as on 31.03.2018 signifying adiversified loan portfolio.

Sl. Industry Ceilings as % of Total Advances of previous Quarter Actual Fund based exposure as on 31.03.18 Exposure as % of Total Advances of Previous Quarter i.e. 31.12.17
1 Housing Loans 15.00% 19791.64 13.06%
2 Power 12.00% 14605.06 9.64%
3 NBFC 10.00% 11957.44 7.89%
4 Iron & Steel 8.00% 7802.45 5.15%
5 Construction& Contractors 6.00% 6215.95 4.10%
6 Textiles 7.00% 6020.61 3.97%
7 Rice Mills 4.00% 4017.27 2.65%
8 Commercial Real Estates 4.00% 3499.78 2.31%
9 Engineering 3.00% 2416.22 1.59%
10 Drugs Pharmaceuticals 5.00% 2344.35 1.55%
Total 78670.77


In terms of RBI guidelines the Bank is required to invest in SLR securities to theextent of 19.50% of NDTL. Bank's investment decisions are based on risk-return trade-o_and bank is scrupulously following the regulatory and internal guidelines. Statutoryprescriptions relating to Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) arecomplied with and being monitored on a continuous basis. Risk Management in treasuryoperations has been strengthened further by undertaking stress testing and back testing ofthe investment portfolio at quarterly intervals besides daily monitoring of Duration andValue-at-Risk (VaR). External rating migration of the bonds and debentures portfolio isalso being monitored on quarterly basis. As on 31.03.2018 the Investments (net ofdepreciation) increased by 8.50% and stood at _ 64770.30 Crore up from _ 59697.49 Croreas on 31.03.2017. SLR maintained as on 31.03.2018 was _ 55275.26 Crore which constituted26.43% of Net Demand and Time Liabilities (NDTL). Interest income from investmentsincreased from _ 4230.06 Crore in 2016-17 to _ 4488.43 Crore in 2017-18. Profit on sale ofinvestments stood at _ 489.32 Crore during 2017-18 while it was _ 764.62 Cr during2016-17.

Classification of Investments

(_ in Crore)

PARTICULARS 2016-17 2017-18 Var (%)
1. Government Securities 55870.79 59072.74 5.73
2. Other Approved Securities 0.00 0.00 0.00
3. Shares 545.48 796.58 46.03


4. Debentures & Bonds 1967.41 2499.91 27.07
5. Subsidiaries and / or Joint Ventures 361.79 357.63 -1.15
6. Others 952.02 2043.44 114.64
TOTAL (1 to 6) 59697.49 64770.30 8.50

Strategic Investments

Joint Venture Insurance: Our Bank is having Joint venture in insurance with Bank ofBaroda and Legal and General Plc of UK named "India First Life Insurance Co.Ltd". Our stake in the venture is 30% while Bank of Baroda holds 44% and Legal andGeneral Plc holds 26% stake. Our investment in the life insurance venture is _ 187.50Crore.

Banking subsidiary in Malaysia: the Bank along with Bank of Baroda and IndianOverseas Bank has entered into a tie up for setting up a banking subsidiary in Malaysia.the Bank's stake in the venture is 25% amounting to RM 82.50 Million (book value _ 143.28Crore) in a total subscribed capital of RM 330 Million (approximately _ 556.72 Crore @ 1RM = _ 16.8703 as on 31.03.2018). the joint venture viz. INDIA INTERNATIONAL BANK(MALAYSIA) BHD commenced business on 11.07.2012. Treasury & Forex Business: theBank is an ‘Authorised Dealer' to deal in foreign exchange business through 56designated ‘B' category branches of the Bank. the Bank has speed remittancearrangements with an Exchange House based in Gulf. Systems have been put in place formanagement of country risk exchange risk and other foreign exchange risks. the countryrisk exposures for single country risk limit and aggregate risk limits for the group ofcountries under each risk category are fixed and are being monitored on daily basis.

? During the year 2017-18 the Bank recorded a merchant turnover of _ 38811.11Crores in Forex when compared to _ 34820.3 Crores during the year 2016-17.

? During the year 2017-18 the profit on Forex transactions is _ 397.68 Crores whencompared to _ 382.19 Crores during the year 2016-17.

? the Bank recorded Inter-Bank turnover of _ 1014325.95 Crores during2017-18when compared to _ 576024.16 Crores during 2016-17.

? Export finance of the Bank stood at _ 4223.81 Crores as on 31.03.2018 whencompared to _ 4176.23 Crores as on 31.03.2017.

? the bank made a trading profit of _ 10.94 Crores during the year 2017-18 whencompared to _ 9.27 Crores during the year 2016-17.

CREDIT CARD BUSINESS: Our Bank is a Pioneer in Credit Card Business both as Issuerand Acquirer (merchant Business) since 1981. At present our Card base is 236853 asagainst card base of 168393 for the year ended March 2017 showing a growth rate of 40.65%for the year ending March 2018. the turnover of Credit Cards has increased from _ 834.42Cr for the Year ended March 2017 to _ 1170.51 Cr for the Year ended March 2018 showing agrowth rate of 40.27%. the division has made a net profit of _ 37.76 Cr. For the periodended March 2018 as against _ 25.17 Cr. in the previous year showing a growth rate of50.01%. MERCHANT BANKING SERVICES: the Bank is having the following twoRegistrations with SEBI:

1. Debenture Trustees

2. Bankers to an Issue

the Bank is not undertaking any activities as Category-I Merchant Bankers or DebentureTrustees. (Merchant Banking registration cancelled in 2017-18) the Bank is attending tothe requests and redressing the grievances of the shareholders with regard to equity anddividend related issues in coordination with the Bank's Registrars & Share TransferAgents M/s. MCS Share Transfer Agents Limited Mumbai.

Raising of equity capital for the Bank: During 2017-18 the Bank has raised _ 1100Crores and _ 1890 Crores under Equity Capital from Government of India in Preferentialbasis.

Raising of debt capital for the Bank: During the Financial Year 2017-18 the Bankhas raised the following debt bonds:

Additional Tier I Bonds 9.20% _ 500 Cr
Tier II Bonds 7.98% _ 1000 Cr

Rating of Debt Bonds and Certificate of Deposits borrowings of the Bank: the Bankis availing the services of M/s.CARE Ratings India Limited M/s.Brickwork Ratings Pvt.Limited M/s.India Ratings & Research Pvt. Ltd and M/s.CRISIL Limited for rating ofthe Debt Bonds and CD Issues of the Bank.

Holding of General Meetings: the 17th Annual General Meeting of shareholders of theBank was held on 21.07.2017 and obtained their approval for adoption of annual accounts ofthe Bank for the FY ended 31.03.2017 special resolution on raising of capital throughQualified Institutional Placement Follow-on Public O_er etc. Department also conductedEGM on 06.05.2017 for Preferential issue and on 12th March 2018 for Election ofshareholder Directors.

Compliance with SEBI Regulations / Guidelines and provisions of Listing Regulations: theBank has complied with the SEBI Regulations / Guidelines issued from time to time. SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 have come into effectfrom 01.12.2015. Henceforth the same are complied with. the bank is Transferring Unpaid/Unclaimed dividend amount to Investor Education and Protection Fund (IEPF).

Application Supported by Blocked Amount (ASBA): SEBI vide Notification dated10.11.2015 has mandated that all the investors applying in a public issue shall use onlyApplication Supported by Blocked Amount (ASBA) facility for making payment. ASBA facilitywas enabled on August 24th 2009 through our bank. As on March 31st 2018 all branches(2911) of the Bank across pan India were enabled to accept ASBA applications. We have alsoextended the facility through our Net Banking Channel where customers can bid onlinehassle free. BANCASSURANCE & FEE-BASED PRODUCTS: the Bank has been constantlyfocusing on augmenting non-interest income through diversification of income streams bytaking up marketing of life and non-life insurance products Mutual fund ProductsDepository Services Direct taxes Commercial Taxes Municipal taxes Utility paymentsPayment gateway services Auto-Debit facilities etc. Life Insurance: the Bank alongwith Bank of Baroda and Legal & General Group Plc of UK has formed a joint venturelife insurance company named India First Insurance Co Ltd and it was formally launched inthe month of March 2010. During the financial year 2017-18 total New Business premium (including Retail and Group business) of _ 190.88 Crore was mobilized. Renewal premium of _214.31 Crore was collected upto 31.03.2018. Bank earned commission of _ 29.40 Crore fromsale of Life Insurance Policies.

Non-Life Insurance: the Bank has a tie up with M/s United India Insurance Co Ltdfor General Insurance and Health InsuranceM/s Reliance General Insurance Co Ltd forGeneral Insurance and has also tied up with M/s Cigna TTK Insurance Co Ltd for HealthInsurance. During the year the Bank has mobilized the premium of _ 148.25 Crore and earneda commission of _ 23.89 Crore under General and Health Insurance.

Payment Gateways and Mutual Funds: the Bank is having a tie-up with 12 PaymentGateways and 11 Mutual Fund companies. Bank has earned a commission of _ 1.69 Crore.

Fee Based Income: Bank has earned fee based income of _ 241.86 Crore

Depository Services: Bank is offering Depository Services to the public under thebrand name of "AB Demat". the Bank is a Depository Participant (DP) with CentralDepository Services (India) Limited (CDSL) as well as with National Securities DepositoryLimited (NSDL). the Bank has opened 1984 Demat a/cs and 1668 trading accounts in FY2018-19 and earned a commission of _ 38.57 Lakh. IT Initiatives: During FY 2017-18our Bank has taken the following I.T. initiatives to improve Customer Service: AB-TEJ -Mobile Banking Application: the new Mobile app AB-Tej was launched on 29.05.2017. isapp is user friendly and empowered with more security features. Initially the app waslaunched with basic features and subsequently many customer centric features were enabled.Revamping of Internet Banking (FEBA): Bank has upgraded the earlier InternetBanking with the latest version offered by M/s Infosys. is new version has features likeBulk NEFT/RTGS facility widgets & dashboards better User Interface (UI) better usersecurity etc. Bharat Bill Payment System (BBPS): Bharat Bill Payment System (BBPS)was enabled with Internet Banking and released to customers. BBPS is an integrated andinteroperable bill Payment Service for customers across geographies initiated by RBIthrough NPCI.

IMPS through SpeedPay App is enabled for BSNL retailers on 18th April 2017: IMPSservices are extended to Speed Pay App users through new IMPS gateway from 18th April2017. Using this service Speed Pay app users can transfer their money from their wallet/prepaid card to their Bank accounts.

APMIP - AP Micro Irrigation Project Web Integration and Collection: AP MicroIrrigation Project under Department of Horticulture AP sanctions differential subsidy tofarmers on farming equipment's. APMIP will verify the application and approve thepercentage of subsidy then the balance non-subsidy amount to be paid by the farmer.Necessary modalities have been customized for collecting non-subsidy portion and creditingof subsidy upon receipt form APMIP.

UPAVP - UP Awas Vikas Parishad Web Integration and Collection:

Bank has developed Web API integration for receiving payment from customers forregistering for a_ordable housing project. the challan details will be fetched using WebAPI integration between Bank and UPAVP server and payment is made. On verification of thepayment a confirmation is sent to UPAVP.

SB account opening with OTP based e-KYC: As per RBI's amendment to e-KYCguidelines OTP based e-KYC was introduced and to comply with the same a new scheme SBGOThas been created in Finacle for account opening using OTP to the registered mobile numberwith UIDAI.

Aadhaar Authentication through Branch WEB Site ATM Cash Recyclers ABTEJ & MicroATMs: Based on PMLA guidelines issued by KYC AML dept. H.O for Aadhaar authenticationof customers facility is enabled in HEKYC menu for Aadhaar authentication of existing/newcustomers using Biometric/ OTP. Facility has also been enabled for Aadhaar authenticationusing OTP through Alternate Delivery Channels viz. website ATMs Cash Recyclers ABTEJ& Micro ATMs using which customers without visiting the Branch can self-authenticatethemselves using the OTP based e-KYC service provided by UIDAI.

Credit Card Bill Payment by Non AB customers through NEFT/RTGS/IMPS using Card Number: Facilityhas been enabled for payment of Credit Card dues by Non-Andhra Bank customers throughNEFT/RTGS/IMPS using Credit card number in the beneficiary account and IFSC CODE asANDB0000782. is enables credit to the proper card account thereby avoiding any customercomplaints and inconvenience. e-Mandate: e-Mandate is an electronic mandate throughwhich customer by himself provides the authorisation to debit his/her account to anycorporate or financial institution without providing physical mandate or cancelled cheque.Destination bank module for e-Mandate solution has been developed in-House. An SMS alertwill be sent to the customers and Mandate registration charges will be debited to thecustomer's account.

EVC (Electronic Verification Code)- rough Bank Account Number

We have successfully integrated to pre-validate bank account through Andhra Bank whilee-_ling the IT return through http://www. the facility of EVCthrough Bank Account number is extended to all Andhra Bank customers whose Mobile number& PAN number are seeded to customer id.

NETWORK EXPANSION: During the Financial Year 2017-18 Bank opened 4 Branches andadded 80 ATMs/ BNAs/ CRs. With this as on 31.03.2018 Bank had 6958 Delivery Channelsconsisting of 2911 Branches 4 Extension Counters 34 Satellite Offices and 4009 ATMsincluding BNAs/ CRs spread over 26 States and 3 Union Territories. the Bank has 47Specialized Branches catering to the needs of the specific segments of clientele. the Bankalso has ONE Representative (overseas) Office at Dubai (U.A.E) (opened in May 2006).

Population Group Wise classification of Branches

Sl. No. Category Number % to total
1 Rural 745 25.59
2 Semi-Urban 771 26.49
3 Urban 665 22.84
4 Metro 730 25.08
TOTAL 2911 100

the Bank had 47 Specialized Branches as detailed hereunder:

S.No. Category of Specialized Branches No. of Brs.
1 Specialised SME Branches 18
2 Specialised Argicultural Finance Branches 2
3 Specialised Agri - Hitech Branches 6
4 Specialised Housing Finance Branches 4
5 Specialised Personnel Banking Branches 4
6 Specialised NRI Branches 3
7 Corporate Finance Branches 2


8 Auto-Tech Finance Branch 1
9 Overseas Branch 1
10 Asset Recovery Management Branches 5
11 Small B Branch 1

Presence in Minority-Dominated Districts: At the end of 31.03.2018 we are having335 branches in Minority dominated Districts. Of the Bank's total network across thecountry the percentage of Branches in minority dominated Districts stood at 11.50 % as on31.03.2018.


Risk Management: the Bank had a comprehensive "Integrated Risk ManagementPolicy" for the management of Credit risk Market risk and Operational risk as perthe guidance notes/guidelines issued by the Reserve Bank of India. As a part of moving toadvanced approach and as a part of the integrated risk management solution the policy hasbeen divided into the following policies. i. Credit Risk Rating Policy. ii. Model RiskPolicy. iii. Credit Risk Data Management Policy. iv. Credit Risk Management Policy. v.Credit Risk Mitigation and Collateral Management Policy. vi. Loan Recovery & NPAManagement Policy. vii. Risk Based Pricing and Performance Management Policy. viii.Operational Risk Management Policy. ix. Market Risk Management Policy. x. Asset LiabilityManagement Policy. xi. New Product Approval Policy. xii. Integrated Risk ManagementPolicy.

Apart from the above the following policies are also framed by the department:

1. Stress Testing Policy.

2. ICAAP Policy.

3. Disclosure Policy.

4. Policy on Hedging of foreign currency exposures of the borrowers.

5. Outsourcing Policy.

All the policies shall be reviewed annually.

Credit Risk:

? Credit Risk Management Committee is responsible for implementation of the Creditpolicies approved by the Board and RMC.

? the Bank has a well-defined ‘Loan Policy' duly approved by the Boardprescribing standards for presentation of credit proposals financial covenants ratingstandards and benchmarks delegation of credit approving powers prudential limits onlarge credit exposures asset concentrations standards for loan collateral portfoliomanagement loan review mechanism risk concentrations risk monitoring and evaluationpricing of loans provisioning regulatory/legal compliance etc.

? Bank also is having in place the Credit Risk Management Policy Credit RiskMitigation & Collateral Management Policy Credit Risk Rating Policy Loan Recoveryand NPA Management Policy.

? the Bank has in place comprehensive risk rating system for various categories ofexposures. Bank has established a Rating cell for assigning internal ratings for allexposures of _ 5 Crore and above. the Rating cell vets the internal rating given by thebranch / Zonal office / Circle Office and assigns final rating.

? the Rating cell ensures comprehensive rating coverage integrity of ratingprocess and proper data maintenance.

? the Bank utilizes industry reports from CRISIL and the industry risk scoreservice from CRISIL Research.

Market Risk: Market risk implies possibility of loss arising out of adversemovements of market determined rates and prices. the objective of market risk managementis to avoid excessive exposure of Bank's earnings and equity to such losses and to reduceBank's exposure to the volatility inherent in financial instruments such as securitiesforeign exchange contracts equity and derivative instruments as well as balance sheet orstructural positions. the Bank has in place a well-defined ‘Market Risk ManagementPolicy' and an organizational structure for market risk management functions. the Bankmanages market risk through ‘Asset-Liability Management (ALM) policy and‘Investments/Forex policy'.

A high level Executive Committee viz. Asset-liability Committee (ALCO) oversees the ALMin the Bank and deliberates on liquidity and interest rate scenario in the market anddecides upon the pricing of various products. ALCO regularly monitors the identificationmeasurement monitoring and mitigation of market risk in liquidity interest rates equityand forex areas.

the ‘liquidity risk' is measured and managed through ‘gap analysis' formaturity mismatches based on residual maturity. For assets and liabilities which are ofnon-maturity nature Bank is conducting behavioural studies and factoring the observationsin the gap analysis. the behavioural study findings are subjected to back-testing and arevalidated regularly. Prudential limits are fixed for net gaps and also for cumulative gapup to one year and these limits are measured and monitored regularly. Liquidity profile ofthe Bank is also measured regularly through various liquidity ratios and monitoring of thesame is done with the help of prudential limits fixed thereon.

the ‘interest rate risk' is monitored on a regular basis through ‘Maturitygap analysis' and ‘Duration gap analysis'. Tolerance limits have been fixed forimpact on Net Interest Income (NII) due to adverse changes in interest rates. To measurethe impact of interest rate changes on Bank's equity duration gap analysis is done andprudential limit is set for modified duration of equity. Modi_ed duration of equity iswithin the prudential limits set for this purpose. VaR and duration analysis are used formeasuring market risk including treasury operations. the Interest Rate Risk in BankingBook (IRRBB) is also being assessed on a monthly basis. Other market related risks towhich any bank is exposed are foreign exchange risk on foreign currency positionsliquidity or funding risk and price risk on trading portfolios. the Bank has clearlyarticulated policies to control and monitor its treasury functions. These policiescomprise management practices procedures prudential risk limits review mechanisms andreporting systems. These policies are revised regularly at fixed intervals in line withthe changes in financial and market conditions.

Operational Risk: Management of Operational Risk is a part of the ‘IntegratedRisk Management Policy' and the Bank has a focused attention for management of theOperational Risk in the light of the Reserve Bank of India guidelines. Operational RiskManagement Cell is responsible for coordinating all the operational risk managementactivities of the bank and these include building an understanding of the risk profileimplementing tools related to operational risk management and working towards the goals ofimproved controls and lower risk. Operational Risk Management Committee [ORMC] ensuresimplementation and compliance of the Operational Risk policies and reports to theBoard/Risk Management Committee [RMC]. the Bank has been computing capital charge forOperational risk by adopting ‘Basic Indicator Approach' (BIA) as stipulated by theRBI.

Approaches followed for computation of Capital to Risk Weighted Assets Ratio (CRAR): Asper RBI guidelines all Commercial banks in India shall follow the Standardized Approachfor Credit risk Standardized Duration Approach for Market risk and Basic IndicatorApproach for Operational risk under the ‘New Capital Adequacy Framework".

Credit Risk: Bank at present is following the Standardized Approach for estimationof capital requirements for Credit Risk which also includes the HTM portfolio ofInvestments. Bank is gearing itself to move over to Advanced approaches for Credit risk.In this regard Bank has developed a Credit Risk Rating Model (CRRM) with the consultancyassistance of National Institute of Bank Management (NIBM) Pune. is model is furtherstrengthened internally by making it a WAN (Wide Area Network) based CRRM model so that itis accessible from any of the locations of the bank. is model is capable of providingtransition matrices and default probabilities (Probability of default) and would help theBank in moving over to the Advanced Approaches in future. Market Risk: Bank isusing the Standardized Duration method for computing capital charge for Market risk(investments in HFT and AFS categories) as per RBI guidelines.

Operational Risk: Bank is providing capital for Operational risk as per the BasicIndicator Approach (BIA).

Preparation for moving over to Advanced Approaches: Bank is in the process ofmigrating to Advanced Approaches through implementation of an Integrated Risk ManagementSolution.

Bank's compliance to RBI guidelines on Basel requirements:

Pillar – I (Minimum Capital requirements): RBI has introduced in its Basel IIIguidelines the following enhanced capital requirements and has also prescribedtransitional arrangements to confirm to these requirements in a phased manner by March 312019.

Regulatory Capital As % to RWAs
(i) Minimum Common Equity Tier 1 ratio 5.5
(ii) Capital conservation bu_er (comprised of Common Equity) 2.5
(iii) Minimum Common Equity Tier 1 ratio plus capital conservation bu_er [(i) + (ii)] 8.0
(iv) Additional Tier 1 Capital 1.5
(v) Minimum Tier 1 capital ratio [(i) + (iv)] 7.0
(vi) Tier 2 capital 2.0
(vii) Minimum Total Capital Ratio (MTC) [(v) + (vi)] 9.0
(viii) Minimum Total Capital Ratio plus capital conservation bu_er [(vii) + (ii)] 11.5

the Bank is calculating its Capital Adequacy in accordance with Basel II & BaselIII guidelines. the Bank's Capital Adequacy at present is in conformity with thetransitional arrangements for Basel III as prescribed by RBI. However to meet the growingbusiness requirements the Bank may have to supplement its Capital funds especially byincreasing Common equity in future.

Pillar – II (Supervisory Review & Evaluation Process): In compliance withthe Pillar–II guidelines of the RBI under Basel III framework the Bank hasformulated a Policy of Internal Capital Adequacy Assessment Process (ICAAP) to assessinternal capital in relation to various risks that it is exposed to Stress Testing andscenario analysis are used to assess the financial and management capability of the Bankto continue to operate effectively under exceptional but plausible conditions. the bank iscalculating the Concentration risk on a quarterly basis to assess the portfolio levelrisks based on sectoral geographical and borrower wise concentration. Bank is usingstatistical parameters like Herfindahl-Hirshman Index (HHI) Gini Coefficient andRosenbluth Index for determining the Credit Concentration Risk. the Bank has a Boardapproved Stress Testing Policy describing the various techniques used to gauge itspotential vulnerability and also its capacity to sustain such vulnerability. Pillar– III (Market Discipline): the Bank has a Disclosure Policy as per the disclosurerequirements contained in the circular issued by the Reserve Bank of India on theimplementation of the Basel III Capital Regulations. the guidelines therein are adhered toand compliance is reported to the Competent Authorities. Pillar-III (Market discipline) ofBasel III aims to encourage Market discipline by developing a set of disclosurerequirements which allows market participants to assess key pieces of information on thescope of application capital risk exposures risk assessment processes and hence thecapital adequacy of the Bank. the Pillar–III Disclosures are published on a quarterlyand half yearly basis on the Bank's website plus a year-end disclosure as on March ofevery year. the Pillar-III year-end disclosures are also published in the Bank's AnnualReport apart from being available on the Bank's website. In addition to the above RBI hasintroduced several other measures of leverage and liquidity standards viz.

? A minimum Leverage Ratio of 4.5% to curb the excessive leverage of a bank'sbalance sheet; and

? Liquidity standards by way of two ratios viz. Liquidity Coverage Ratio (LCR) andNet Stable Funding Ratio (NSFR).

the LCR requires a bank to hold sufficient high-quality liquid assets to cover itstotal stressed net cash outflows over 30 days. the NSFR requires a bank to hold sufficientamount of stable funds to meet the requirement of stable funding over a one-year period ofextended stress. the Bank is regularly calculating and monitoring the Liquidity ratiostaking as reference the RBI guidelines issued for LCR and dra_ guidelines issued for NSFR.the Bank is also calculating and monitoring the Leverage ratio on a quarterly basis.

Management of Asset Quality: Gross NPAs of the Bank stood at _ 28124.36 Cr as on31.03.2018. Gross NPAs as a percentage to Gross Advances stood at 17.09% while Net NPAs asa percentage to Net Advances stood at 8.48%. the Provision Coverage of NPAs as on31.03.2018 was 60.90%. Total reduction in NPA accounts amounted to _ 3410 Crore.

Position of Non-Performing Assets (_ in Crore)
2016-17 2017-18
Gross NPAs at the beginning of the year 11443.63 17669.98
Additions during the year 9410.34 13864.23
Reduction during the year 3183.99 3409.85
Gross NPAs at the end of the year 17669.98 28124.36
Net NPAs 10354.81 12636.87

the segment-wise distribution of NPAs as on 31.03.2017 is as under:

Segment-wise Non-Performing Assets (_ in Crore)

Segment Amount NPA % to ADV*
I. Agriculture 1269.48 4.14%
II. MSME 4364.92 12.95%
III. Retail Credit 690.85 1.78%
IV. Large & Mid Corporate 21799.11 35.57%
Total 28124.36 17.09%

Provisions held under different classes of NPAs are as under:

Table 17: Provisions held for Non-Performing Assets (Excluding floating Provisions of _13 Cr.)

(_ in Crore)
Nature of Asset Outstanding Provision Held
Sub-Standard Assets 6241.56 1191.01
Doubtful Assets 21072.27 13454.97
Loss Assets 810.53 797.79
Total 28124.36 15443.77

Restructuring mechanism: During FY 2017-18 5 accounts with outstanding amount of _141.11 Cr were restructured in terms of the restructuring packages. the total balances inrestructured accounts as at the end of March 2018 stood at _ 1711.19 Crore in 27 accounts.Lending Practices: the Bank had framed well defined Loan Policy Guidelines with theapproval of the Board. These guidelines are reviewed by the Board at periodical intervalsbased on Reserve Bank of India guidelines Bi-monthly Policy Statement of Reserve Bank ofIndia competitive environment prevailing among the banks for accelerated credit growthenvisaged in certain business segments marketing & development of new products andtaking into account the feedback received from the field level functionaries creditdepartments at Head Office.

Credit Committees have been constituted in the Bank at Head Office Circle Office andZonal Office levels for exercising sanctions of credit proposals and suitable sanctioningpowers have been delegated to these committees in terms of directions of Ministry ofFinance. Further based on feedback received from field level functionaries the delegatedpowers of various sanctioning authorities are reviewed and revised to reduce turnaroundtime in the sanction of credit proposals. the loan review mechanism is furtherstrengthened in the Bank ensuring review of sanctions made by all functionaries by thenext higher committees / competent authorities as the case may be. Techno EconomicViability (TEV) Cell: the Bank has a Techno Economic Viability (TEV) Cell which isindependent of the credit processing & sanctioning Departments. the Cell undertakespreparation of project Information Memorandum (PIM) conducting Techno Economic Viability(TEV) study and Debt arrangement (loan Syndication) for corporate clients. the cell hasearned a fee based income of _ 103.71 lakhs (including ST & GST of _ 11.57 lakhs)during the FY 2017-18. (Previous financial year was _ 120.89 lakhs) ManagementInformation System: Bank has developed a robust Management Information System whichcaptures data essential for vital functions such as risk management and planning and whichserves as an effective tool for the Top Management in decision making. is has facilitatedquick decision making. the Bank is in a position to analyse performance in majorparameters even on a day to day basis using the information system available. Leveragingon the CBS platform of the Bank the MIS has facilitated speedy decision making and itsimplementation. Inspection & Audit: During the audit year 2017-18 departmenthas met the targets prescribed in audit plan and completed:

? Annual RBIA inspection of 1917 branches

? SIFA audits of all controlling offices (HO/CO/ZO) other units like RRB FSCSCentres Service Centres Currency Chests are completed in time.

? I&AD has caused Verification of SWIFT messages in Documentary Credit / tradefinance messages in all B category branches and at IIB by Concurrent auditors.

? Significant changes were effected to RBIA&RBCA audit policies as per thesuggestions of RBS and as per the guidelines of RBI to improve standards of audit systemin our bank.

? To assess the Inherent Risk of the branches Watch List with certain parametersintroduced.

? Introduction of Committee approach for closure of Inspection files of RBIA &RBCA.

? Verification of SWIFT messages and the underlying transactions on daily basis hasbeen introduced.

? Demonetization Audit has been conducted at all branches besides Regular audits.Identification of branches for conducting Concurrent Audit and appointment of freshauditors for more than 200 Branches.

? M/s Digital Age Strategies Pvt Ltd was selected for auditing CBS and SurroundingApplications and Related Infrastructure and Audit is in process. Request for proposalprocess commenced for EFRMS(Enterprise Fraud Risk Management Solution) for selection ofBidder.

O_ Site Monitoring Cell (OSM Cell) formed based on the report submitted by ShriBasanth Seth generates the reports of high value/ critical transactions happened atbranches on previous day scrutinize them and sensitize the controlling offices/Branchesfor taking corrective action wherever defficiencies are noticed in following the laid downsystems and procedures. Besides sending the alerts OSM cell reviews transactions based ondifferent parameters and seek information/clarifications from branches regarding thetransactions which they find critical or suspicious. OSM alerts were implemented for 67items for better monitoring of Transactions. Compliance Policy: the Bank has inplace a comprehensive Compliance Policy. An executive of the Bank in the rank of DeputyGeneral Manager has been appointed as the ‘Chief Compliance Officer'. As per thePolicy adopted by the Bank suitable organizational structure has been laid down definingthe roles and responsibilities for Compliance Officers of various departments at HeadOffice Zonal Offices and Branches. Compliance of statutory and regulatory guidelines isthe scope of operation of the compliance function in the Bank. Suitable reporting systemis put in place to ensure effective implementation of Compliance Policy in the bank.


? SARFAESI Act: During this Financial Year FY 18 243 secured assets weresold and an amount of _ 164.82 Cr was recovered by selling the secured assets underSARFAESI Proceedings. Total cash recovery effected by the bank during the FY 2017-18 underSARFAESI Proceedings is _ 660.41 Cr (inclusive of cash recovery on sale of assets to ARCclosures up- gradations and part recoveries).

? Lok Adalats: Recovered an amount of _ 62.87 lakhs in 464 accounts duringthe FY 18.

? RTI Act: 1203 Requests and 167 Appeals were received under RTI Act duringthe financial year 2017-18. All the Requests and Appeals were disposed off on time.

Customer Service: Bank received 214138 complaints through various channels viz.Public Grievance Redressal System (Portal) Banking Ombudsman and Departments like NEFTCell RTGS Credit Card CPPC Retail Credit MSME MBD Priority Sector ATM CellMarketing & HR (outsourced complaints) and SMS Upset system during the year 2017-18and resolved 212567 (98%) complaints. As on date all the pending complaints pertainingto the year 2017-18 have since been resolved.

Human Resources Management

Manpower Planning: To augment the existing manpower 336 general officers and 550clerks were inducted during the financial year 2017-18.

Induction of new recruits: rough revised ‘PO-On boarding system' the newlyrecruited probationary officers are provided intensive trainings on ‘field and forumapproach'. Competency mapping is done by closely monitoring these POS duly carrying outskill mapping exercise during the training programs conducted at our Apex College. CareerProgression: Bank ensured career progression by considering 1216 promotions in allcadres put together during 2017-18. the entire promotion exercise was successfullycompleted in time as per the directions of the Board. Skill Upgradation & Training:Withan objective to improve the core capabilities and competencies of employees on productawareness so_ skills development and to bridge the skill gaps in key areas like Creditappraisal Credit Monitoring/follow up Recovery Risk Management Forex IT. etcvarious training programmes were conducted and provided in-house training to 10441employees. With an aim to enhance the knowledge and productivity levels of the officers390 Officers were nominated for external trainings conducted by reputed institutes likeNIBM RBI-CAB IDBRDT & FEDAI in addition to the regular trainings conducted at ourApex College Hyderabad and STC Visakhapatnam. In addition 17 Officers were also sent toexternal programmes conducted abroad.

E-learning: For ensuring extensive reach of learning facility and to develop alearning culture among all staff members Bank has developed an ‘E-learning portal'for updating their professional knowledge. Around 200 e-lessons are uploaded into thisportal. Besides this periodical on-line tests on different subjects are being conductedfor continual upgradation of skills of employees.

Industrial Relations: With a view to maintain cordial Industrial relations in thebank and to sort out the issues to enhance the working conditions as well as customerservice Quarterly meetings were held with the representatives of the recognized Officers'Federation and the Award Employees' Union. Succession Planning: As part ofsuccession planning initiative Bank has created a talent pool in various grades and theseofficers are groomed by providing intensive training programmes on various fronts tooccupy the top key posts in the years to come. As per the Capacity Building Policy it hasbeen made mandatory for certification of the staff manning key functional areas. HRDigitalisation: Online implementation of leaves during the financial year 2017-18.

Mentoring: the mentoring concept which has been designed with an objective toimbibe our Bank's culture systems and procedures etc among the new entrants has beensuccessfully implemented during the financial year 2017-18.

Staff Strength as on 31.03.2018:

Category Strength % to total
Officers 11174 56%
Clerks 5723 29%
Sub Staff* 3024 15%
Total 19921

*Excluding Part Time Sweepers.

SC/ST/OBC Profile: Our Bank has been implementing reservation policy for SCs &STs as per Government of India guidelines. the representation of SCs and STs is 4155 and1691 respectively in total workforce of 21099 working in the Bank as on 31st March 2018.Out of the total of 11174 Officers 1982 belong to SC category and 954 belong to STcategory. Bank has nominated a General Manager as Chief Liaison Officer for SCs & STsat Head Office and all Zonal Managers as Liaison Officers at Zonal level to address thegrievances if any of SC & ST employees. Bank has been conducting quarterly jointmeetings with the representatives of Scheduled Castes & Scheduled Tribes Employees'Welfare Association of Andhra Bank. Our Bank has been implementing reservation policy forOther Backward Classes (OBCs) with effect from 08.09.1993 as per Government of Indiaguidelines. the representation of OBCs is 5741 out of the total work force of 21099working in the Bank as on 31st March 2018. Bank has nominated a General Manager as ChiefLiaison Officer for OBCs at Head Office and all second line executives at Zonal Office asLiaison Officers at Zonal level to address the grievances if any of OBC employees. Bankhas been regularly conducting half yearly joint meetings with the representatives of AllAndhra Bank BC Employees' Welfare Association.

Di_erently Abled Persons: Our Bank is providing 3% reservation to the Persons withDisabilities in direct recruitment in all cadres on horizontal basis till 18.04.2017. the3% posts are distributed amongst 3 categories of Persons with Disabilities i.e. Blindnessor low vision (B/LV) - 1%; Hearing Impairment (HI) - 1%; Loco motor disability or cerebralpalsy (LM) - 1%. the representation of Persons with Disabilities is 590 (2.79%) out of thetotal workforce of 21099 as on 31st March 2018. As per new Act " the Rights ofPersons with Disabilities Act 2016 with effect from 19.04.2017 every appropriateGovernment shall appoint in every Government establishment not less than Four per cent(4%) (as against the existing 3%) of the total number of vacancies in the cadre strengthin each group of posts meant to be filled with persons with benchmark disabilities ofwhich one per cent each shall be reserved for persons with benchmark disabilities underclauses (a) (b) and (c) and one per cent for persons with benchmark disabilities underclauses (d) and (e) namely:-(a) blindness and low vision; (b) deaf and hard of hearing;(c) locomotor disability including cerebral palsy leprosy cured dwar_sm acid attackvictims and muscular dystrophy; (d) autism intellectual disability specific learningdisability and mental illness; (e) multiple disabilities from amongst persons underclauses (a) to (f) including deaf-blindness in the posts identified for each disabilities.

Accordingly our Bank's Board approved to adopt the revised guidelines on ReservationPolicy as per the new legislation on " the Rights of Persons with Disabilities Act2016" and implement the same in all the recruitment processes with immediate effect.

OFFICIAL LANGUAGE: Rajbhasha Link in AB Staff Portal has been revamped. Besides‘Rajbhasha Mission' Banking Terminology Administrative Phraseology RajbhashaMargdarshika various formats Important Circulars other related information Hindi HouseMagazine Monthly Hindi e-bulletin Annual Action Plan Daily Hindi Word ought for theweek and Hindi Workshop material etc have also been kept in our Portal. Our Bank won total73 prizes in various Hindi Competitions conducted under the aegis of TOLIC.

Head Office was awarded First Prize in Use of Hindi in Hyderabad by Ministry of HomeAffairs

VIGILANCE: During the Financial Year 2017-18 9696 number of employees wereenlightened on Preventive Vigilance aspects in 316 different training programs/sessionsheld at Apex College-Hyderabad Staff Training College – Vishakhapatnam and ZonalOffices.

? Vigilance Department ensured introduction of 15 major systemic improvements forminimizing the occurrence of frauds.

? Department has investigated into and disposed off 73 complaints received duringthe year.

? Preventive Vigilance Inspection has been conducted in all the branches of theBank to ensure implementation of extant guidelines. Reports were reviewed by thedepartment and necessary instructions have been issued to the branches for compliance.

"Vigilance Awareness Week" Vigilance Department observed "VigilanceAwareness Week" from 30th October to 4th November 2017 as per the directions ofCentral Vigilance Commission. the theme for the Week was "My Vision – Corruptionfree India". As part of the Vigilance Awareness Week Andhra Bank organized a specialprogramme which was attended by all the Bankers and also students of School/Colleges alongwith their parents/teachers at Hyderabad on 3rd November 2017 where Hon'ble CentralVigilance Commissioner Shri K V Choudary graced the occasion. Bank has conducted morethan 3600 programmes to create awareness among the public about ill effects of corruptionand promoting integrity. Bank has conducted 3248 Awareness Gram Sabhas across the countrywhere more than 70000 citizens have participated. 351 Essay Writing/Elocution/Debatecompetitions were organized in schools and colleges to give wide publicity to propagatethe message/theme of Vigilance Awareness Week. Bank conducted Walkathon at Hyderabad andother places during VAW 2017 where a large number of people have participated. A freemedical camp at Hyderabad in coordination with KIMS Hospital was organized for theparticipants. An online test on Preventive Vigilance Measures was conducted where 3936staff members have taken the test. News Bulletin "SAVDHAN" is being publishedquarterly for updating the staff with latest information on frauds and measures tosafeguard themselves as well as Bank. " the Right Direction – A Key Note fromCVO's desk" is being circulated to all branches and offices of the Bank to ensureenhancement of Vigilance Culture and Vigilance Compliance level in the Bank.

Major New Initiatives of Vigilance Department: An Online Compliant RegistrationMechanism (OCRM) – [Whistle Blower Mechanism] has been devised by the VigilanceDepartment to enable the employees to register their complaint online as per Bank's"Whistle Blower Policy" to raise concerns about any allegation of corruption orof misuse of offices directly to the CVO. the OCRM works on Straight rough Processing(STP) system.

A new methodology for ranking performance of Zonal Offices has been devised whereinperformance of Zones in respect of Vigilance Compliance level at Zonal Offices and theBranches under their jurisdiction would be assessed and ranked based on 23 key parameterscovering major aspects in Vigilance Compliance.

Faculty Support: Chief Vigilance Officer interacted with the participants ofvarious programmes at Staff College and expressed his concerns on vigilance compliance.Department has extended faculty support to Apex College Hyderabad on 5 occasions wherein399 participants were imparted inputs to on Vigilance related matters. Broadcastingmessages on Morals & Ethics through SMS amongst all employees to inculcate VigilanceCulture among them which are Essential Behavioral Traits that strengthen theorganization's "Brand Equity".

Vigilance Training: Officers of Vigilance Department and staff from controllingoffices and branches are being deputed for various training programme including ExternalTraining Programmes on Vigilance related matters.

Promotion of Integrity Pledge – New IT initiatives: Taking of Integrity Pledgepropagated though various channel with the use of technology like Interactive VoiceResponse System Placing Integrity Pledge Banner on Internet Intranet ATM Screen andSocial Media (FB & Twitter).

Bank received "Vigilance Excellence Award - 2017 in the category of TimelyCompletion of Disciplinary Proceedings" from Central Vigilance Commission.

LEAD BANK SCHEME: Andhra Bank is the Convener Bank for State Level Bankers'Committee Andhra Pradesh since 1984. Consequent to re-organization of AP into Telangana& Residual Andhra Pradesh w.e.f 2nd June 2014 responsibility of Convenership of SLBCof residual AP continued to be with Andhra Bank. Andhra Bank is having Lead Bankresponsibilities in __een districts viz. Srikakulam East Godavari West Godavari Gunturin Andhra Pradesh Ganjam Gajapathi districts in Odisha Siddipet Sircilla RajannaJagtial Peddapally Mancherial Wanaparty Nagarkurnool Jogulamba Gadwal and Warangalrural in Telangana State. Bank is discharging the responsibilities in implementation ofLead Bank Scheme. So far 202 SLBC meetings have been organized including 19 SLBC Meetingsin the reorganized state of Andhra Pradesh.

During the current year SLBC has conducted various meetings involving RBI NABARDBankers and Govt. Agencies. Besides these meetings the Convener SLBC has participated invarious meetings and Video Conferences that are being organized by Government of IndiaGovernment of Andhra Pradesh RBI NABARD and various other Organizations on differentsubjects. the State Credit Plan for 2017-18 was launched by the Hon'ble Chief Minister ofAndhra Pradesh on 16.06.2017. SLBC has taken proactive role in formulating &organizing the following sub-committee meetings as requested by GoAP.

? Agriculture Horticulture Livestock and Aquaculture Development

? MSME Govt. Sponsored Schemes and SHGs

? Service Sector and Industries

? Digital Transactions (Aadhaar Seeding RuPay Cards distribution etc.)

APSLBC CALL CENTRE: SLBC has established a Call Centre namely ‘APSLBC CALLCENTRE' on behalf of all Banks in the state with toll free telephone Number i.e.18004258525 & 18004251525 exclusively for MUDRA operating from Vijayawada from01.02.2017. Website: An exclusive website is set up for SLBC of Andhra Pradesh with for the information of all the stake holders and general public. thewebsite is being updated at regular intervals with the latest data and information.


Pradhan Mantri Jan Dhan Yojana (PMJDY): Bank has successfully implemented PMJDY in24.01 lakh accounts by 31.03.2018. Total deposits of _ 331.43 Crore have been mobilizedvis--vis _ 326.33 Crores during 2016-'17 with an average balance of _ 1432.33 asagainst _ 1346.57 the previous year. Zero balance accounts stood at 16.09% as against19.73% as on 31.03.2017.

Aadhaar Seeding: Bank has achieved 78.46% of Aadhaar seeding in active PMJDYaccounts. Bank has also achieved 75.12% of Aadhaar seeding in active CASA accounts. Bankhas achieved 64.44% in Aadhaar Authentication which is highest among the industry. Bankhas achieved 74.88% under Mobile seeding in active SB accounts Over Dra_ Facility underPMJDY: the last mile of PMJDY is the financial channel by extending the overdra_ tothe needy. About 350634 customers are eligible for Over Dra_ and bank have sanctionedOver Dra_ to 51299 customers. 14290 customers availed over dra_ to the extent of _192.30 lacs. Our Bank is the pioneer in introducing OD facility through ATMs and MicroATMs.

Atal Pension Yojana (APY): Bank enrolled 234879 accounts during the financialyear and with average per branch enrollment of 81 accounts which is top among all BanksPAN India. Bank earned total commission of _ 446.97 lakhs during the FY 2017-18.

Activation of Bank Mitras: Bank has successfully deployed Bank Mitras in all 1777Sub Service Areas and also deployed 287 Bank Mitras in urban locations and also at OneStop Shop locations in the states of Andhra Pradesh and Telangana. Bank mitras areproviding different Banking Services at these points. All Bank Mitras are provided withinteroperable devices which are capable of taking up Rupay transactions and AEPStransactions. Andhra Bank stands 1st among all Banks in conducting AEPS in the State ofAndhra Pradesh. Aadhaar Enabled Public Distribution System (AEPDS): Bank hassuccessfully implemented Aadhaar Enabled Public Distribution System (AEPDS) in 5 districtsof Andhra Pradesh state (in Krishna and 4 Lead Districts viz; Guntur East Godavari WestGodavari and Srikakulam) in which the Fair Price Shop dealers will provide the provisionsin cashless mode on an average around 216.36 lakh AEPDS transactions were happened duringthe FY 2017-18.

Establishment of Aadhaar Enrolment Centres: DFS Ministry of Finance Govt. ofIndia has advised all Banks to establish 1 enrolment centre for every 10 branchespreferably in the area where more talukas are covered. As per existing branch networkBank needs to establish 290 enrolment centres PAN India. Bank has so far established 275Aadhaar enrolment and updation centres.

Financial Literacy and Credit Counselling Centers: Bank has approved for opening of5 new FLCCs one at Sirguppa in Karnataka state one at Srikalahasthi in Andhra Pradeshstate and each one at Jagtial Sircilla and Siddipet in Telangana state. SUBSIDIARIES& REGIONAL RURAL BANKS: the Bank has one Subsidiary namely Andhra Bank FinancialServices Limited (ABFSL) which is wholly-owned by the Bank. the Company has earned aprofit of _ 169.88 Lacs before Income Tax and a Net Profit of 123.11 Lacs a_er Income taxduring the year ending 31.3.2018 with this the negative net worth of the company has beenbrought down from _ 695.47 Lacs to _ 572.36 Lacs as on 31.03.2018. Bank has one sponsoredRegional Rural Bank namely Chaitanya Godavari Grameena Bank located in Guntur (AndhraPradesh) covering the districts Guntur East Godavari and West Godavari with 204branches. the total business stood at _ 8095.98 Crore and Net Profit A_er Tax is _ 81.90Crore as on 31.03.2018. Percentage of Gross NPA to Average Advances is 1.04%.

SECURITY ARRANGEMENTS: Technology is adapted to up-grade security arrangements atbranches currency chests and ATMs. All branches in the Bank are provided with CCTV systemfor surveillance. Installation of Integrated Intruder Burglar Alarm System (IIBAS) byreplacing conventional alarm system is completed in 91% of branches and is in progress atthe remaining branches. Centralized Alarm Monitoring System is established in Head Officeto monitor functioning of Integrated Intruder Burglar Alarms installed in branches.Installation of e-surveillance replaces physical guarding at ATMs and saves revenueexpenditure. Its installation is completed in 86% of ATMs and is in progress at theremaining ATMs. Night watchman is deployed at non-strong room branches to protect Bank'sassets. E_orts are on to ensure for maintaining all security gadgets in working conditionat all times and minimize crime rate against the Bank. NRI CELL: the NRI Cell wasset up with a view to serve as an effective channel of communication between the Bank andits NRI Clientele thereby increasing NRE Deposits. the Cell supports and guides thebranches & Representative Office in Dubai thereby ensuring betterment in CustomerService. During the Financial year the Bank has closed its representative office in NewJersey. NRI Cell provides usefulinformationrelatedtoBanking&ForeignExchangetoNRIsthroughNRIBulletin(ABConnect)everymonth.Atpresentnearly54915NRICustomers (both existing and prospective) are being connected and accessing theinformation provided in the NRI Bulletin (AB Connect). Total NRI business of the Bankincreased from _ 3163 Cr as on 31.03.2017 to _ 3496 Cr as on 31.03.2018 i.e. a growthrate of 10.53%. the total Deposits under NRE segment comprising of SBNRE TD NRE and FCNR(B) Deposits increased from _ 2862 Cr as on 31.03.2017 to _ 3085 Cr as on31.03.2018 registering an annual growth rate of 7.79%.

BRANDING AND COMMUNICATIONS: the Department has undertaken publicity & brandingduring the financial year to derive good mileage and visibility for the Bank. Some of themajor publicity activities include

? Utilization of Ad Space at Rajiv Gandhi International Airport for publicity onour products & services for a period of one year.

? Full train branding on 5 train rakes (80 coaches) of Narayanadri / FalaknumaExpresses which ply between Tirupati Secunderabad & Howrah – for 6 months.

? Advertisement through Sri Venkateswara Bhakti Channel (SVBC) during liveprogrammes.

? Sponsorship of FIBAC-2017 conducted by FICCI & IBA jointly.

? Sponsorship of Partnership Summit (CII) held at Visakhapatnam and

? Putting up of Bank's Stall at All India Industrial Exhibition at Hyderabad whichrun for 45 days apart from several others.

CORPORATE SOCIAL RESPONSIBILITY (CSR): the Bank sanctioned an amount of Rs1.71crores under Donations Budget to different institutions / trusts during the financial yearand gained substantial mileage for the Bank. the brand image of the bank also enhanced.the donation /CSR budget was distributed among all Zones of the bank with an objective tospread CSR activities pan India. Notable CSR activities of the bank include

? Donation to CM Relief Fund Govt. of AP an amount of _ 31 lakh

? Donation to CM Relief Fund Govt. of Gujarat an amount of _ 25 lakhs.

? Donation of _ 30 lakhs towards cost of 24 Bicycles and Bicycle shelters to set upPublic Bike Sharing System in AP Amaravathi Capital Region

? Donation to Sports Authority of India for development of sports.

the other major CSR activities are donations to charitable trusts orphanagesmunicipalities etc. for undertaking social measures. BANK'S WEB SITE: the Bankmaintains its website in three languages viz. English Hindi andTelugu for providing information about the Bank its services and products offered. theBank has made its WCAG (Web Content Accessibility Guidelines) website accessible to‘visually impaired persons' as per Government of India guidelines. the Bank beingthe Convener of State Level Bankers' Committee Andhra Pradesh maintains separate is website communicates all the proceedings of SLBC Meetings StateGovernment directives instructions to Bankers and public. the Bank follows meticulouslyCERT-In (Indian Computer Emergency Response Team) guidelines issued from time to time inmaintaining Bank's Website securely.

AWARDS AND REWARDS: the bank received the following awards during the FY 2017-18:

? Our bank has been presented " Award of Excellence for RSETIs"(First Prize) by Ministry of Rural Development Govt. of India for FY 2014-15 & FY2015-16 under category ‘C' during National RSETI DIWAS held in New Delhi on07.06.2017.

? the Bank Received "Enterprise Financing Index Award 2017" fromIndustries and Commerce Department Govt. of Andhra Pradesh on the occasion ofInternational MSME Day.

? Awards under APY: Bank got the following awards in campaigns announcedby PFRDA

? APY – Brand Ambassador

? APY – Honor the Best

? APY - People First campaign

? APY - Transformative Leaders-I&II

? APY- Makers of excellence award and

? Best Performing Bank among the PSBs for enrolling maximum number of APY.

? Our bank received the "Best Bank Award for Electronic Payment Systems"among Mid-Sized Banks13th IDRBT Banking Technology Excellence Awards.

? IBA-Our Bank has received IBA award under category ‘IT Risk and CyberSecurity initiatives' for the FY 2017-18 on 23 February 2018.

? Infosys- Finacle Client Innovation Awards 2017: Our Bank has receivedaward under category ‘Process Innovation category Highly Commended' award for‘Optimizing credit card issuance process' on 28th Nov 2017.

? IDRBT- Technology Excellence Award – Our Bank has received ‘BestBank Award for Electronic Payment Systems among Mid-Sized Banks' on 1st Sept2017 at 13th IDRBT Banking Technology Excellence Awards.

Indian Accounting Standards (Ind AS) – Progress: Bank shall comply with theIndian Accounting Standards (Ind AS) for financial statements for accounting period ending31st March 2019 and therea_er in accordance with the guidelines of Reserve Bank ofIndia.In order to facilitate smooth transition to the application of Ind AS Bank is inthe process of identifying the changes required to be made in the IT system & otherpolicies to comply with Ind AS.

CHANGES IN THE BOARD DURING THE YEAR: the following changes took place in theComposition of the Board during the FY 2017-18:

? Tenure of Shri Suresh N Patel Managing Director & CEO of the Bank came to anend on 31.12.2017 on his retirement on superannuation.

? Tenure of Shri SK Kalra Executive Director of the Bank came to an end on31.08.2017 on his retirement on superannuation.

? Tenure of Shri Anandrao Vishnu Patil Govt. Nominee Director came to an end on27.04.2017.

? Ms Anjana Dube Govt. Nominee Director was nominated on the Board of Directors ofthe Bank on 28.04.2017.

? Shri Kul Bhushan Jain Executive Director was appointed on the Board of Directorsof the Bank on 09.10.2017.

? Shri Balgopal Mahapatra Non-o_cial Non-Executive Director (under CA Category)was nominated on the Board of Directors of the Bank on 27.12.2017.

? Shri A. Krishna Kumar Director was re-elected as Director for a period of threeyears w.e.f. 14.03.2018 to 13.03.2021 from amongst shareholders other than CentralGovernment.

? Shri G. Sivakumar Director was re-elected as Director for a period of threeyears w.e.f. 14.03.2018 to 13.03.2021 from amongst shareholders other than CentralGovernment.

Board wishes to place on record its appreciation of services rendered by the abovemembers of the Board during their tenure.


the Board of Directors hereby states that

? the applicable accounting standards have been followed in the preparation of theannual accounts and proper explanations have been furnished relating to materialdepartures.

? Accounting policies have been selected and applied consistently reasonable andprudent judgments and estimates have been made so as to give a true and fair view of thestate of affairs of the Bank as at 31.03.2018 and of the profit and loss of the Bank forthe financial year ended on 31.03.2018.

? Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the relevant regulatory provisions for safeguardingthe assets of the Bank and for preventing and detecting fraud and other irregularities.

? the annual accounts have been prepared on a going concern basis.

? Internal Financial controls to be followed by the Bank have been laid down andsuch internal financial controls are adequate and are operating effectively.

? Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.

ACKNOWLEDGEMENT: Andhra Bank is grateful to the Government of India RBI SEBINABARD and other authorities/agencies Financial Institutions and Correspondent Banks fortheir valuable support and guidance. the Directors also express their deep sense ofappreciation to all the staff members of the Bank for their dedicated service outstandingprofessionalism and commitment towards Bank's vision for a sustainable growth. Finallythe Directors wish to sincerely thank all the customers shareholders and otherstakeholders for their valuable support.

For and on behalf of the Board
Place: Hyderabad Kul Bhushan Jain Ajit Kumar Rath
Date: 22.05.2018 Executive Director Executive Director