Message from the Chairman
I hope and pray that you all are well and keeping yourselves safe amidtimes that have proven tough for mankind. FY 2020-21 has been a year of learning. Evenamid the global disruption of 2020 your Bank remained steadfast on partnering itscustomers to help them transform their lives as the Bank entered its sixth year ofoperations. This has been possible because of your Bank's unwavering focus on its purpose.
India is in a state of transformation and your Bank is geared to ridethis wave of transformation with the nation. The Bank is on the cusp of anall-encompassing transformation focussed on further asset product and geographicaldiversifications and technological and digital transformations in line with Vision 2025to continue being relevant to consumers' choices and people's transformations to achievethe goal.
MACRO-ECONOMIC ENVIRONMENT AMID COVID-19
The year in review was a difficult one for economies and industriesacross the globe. The Indian economy witnessed one of its worst years. However economicactivities had started turning around by the second half of the financial year partlyreflecting a series of strong contra- cyclical policy initiatives. Reflecting the pandemicimpact India's growth rate fell from 6.5% in FY 2018-19 to 4% in FY 2019-20 and furtherto a contraction of 7.3% during FY 2020-21. However the inherent strength of India'seconomy is evident in the fact that despite this unprecedented pandemic and the views ofimpending recession the economy seems to have absorbed the shock partly reflecting thetimely intervention by the Government of India and the Reserve Bank of India.
Though downgraded from 10.5% earlier the RBI's forecast for India's FY2021-22 GDP is still a healthy 9.5%. Almost all rating agencies and leading banks andbrokerages predict a high single digit growth rate for India's GDP in FY 202122 despite asevere second wave of COVID-19.
INDIA'S INITIAL RESPONSE TO THE PANDEMIC
The Indian government had imposed a nationwide lockdown in March 2020.It was sudden and stringent; something that worked to contain the spread of the pandemicin India at a time when very little was known about the virus and the fatality rate wasvery high. The government rightly put lives before livelihoods and the result was evidentin the contained numbers in India during the lockdown where other nations were seeing avery rapid increase in COVID-19 infections.
The Bank is on the cusp of an all-encompassing transformation focussedon further asset product and geographical diversifications and technological and digitaltransformations in line with Vision 2025.
The lockdown though came with its anticipated side-effects. Economicactivity came to a standstill. There was a loss of earning for a vast population andbarring essential services businesses had to suspend operations and therefore theirrevenues were drastically reduced. Even after the easing of the national lockdown therewere local lockdowns in many states of the country. This prolonged the adverse impact onthe economy.
However the subsequent targeted interventions of the centralgovernment and the RBI which started early in the pandemic period helped stabilise thesituation and facilitate a recovery by the economy.
MEASURES TO STIMULATE RECOVERY
The RBI's Targeted Long-Term Repo Operations (TLTRO) gave banks accessto long-term funds from the central bank. The 6-month loan moratorium announced by the RBIbrought in some relief during the most difficult initial months of the pandemic in 2020.Further as part of the Atmanirbhar Bharat Package the Centre also launched an EmergencyCredit Line Guarantee Scheme (ECLGS) to support small entrepreneurs which wassubsequently extended to twenty-six of the most stressed sectors.
Reduction in Cash Reserve Ratio (CRR) as well as TLTROs for freshdeployment and investment in investment-grade corporate bonds commercial paper etc.helped sustain faith of investors to an extent. Increase in banks' limit to enable thebanking system to avail additional liquidity at reduced Marginal Standing Facility (MSF)rate special refinance facilities for NABARD SIDBI and NHB special liquidity facility(SLF) for mutual funds easing of working capital financing by reducing margin were amongother focussed measures initiated by India's central bank as part of its operational andbusiness continuity measures for the banking sector.
THE ROAD AHEAD
At the start of FY 2021-22 the RBI indicated that it intended tocontinue supporting the economy through various liquidity and other measures like GSAPsOMOs to help manage the market borrowing programme smoothly and efficiently. This bodeswell for the banking sector which is also expected to benefit from enhanced spending oninfrastructure speedy implementation of projects and continuation of reforms coupledwith advancements in technology leading to enhanced customer engagement and experience.
In June 2021 the Finance Minister of Government of India announcedseveral new schemes to boost an economy direly impacted by COVID-19. The measures includeda Rs. 1.1 lakh crore loan guarantee scheme for the COVID affected and an additional Rs.1.5 lakh crore under ECLGS that was launched as part of Atmanirbhar Bharat packageearlier in 2020. The announcements are welcome reforms with the country emerging from adevastating second wave and bracing for a possible third wave.
During the last financial year the government also redefined the slabsfor MSME. This redefinition has brought a number of businesses into the definition ofMSME. The Atmanirbhar Bharat package of the Government of India along with various otherstimulus incentives announced in the wake of the pandemic impact are expected to continueto push economic growth across the key sectors of economy particularly among the MSMEs.Your Bank's endeavour in creating micro entrepreneurs at the bottom of the pyramid hasaligned well with the government's priority of supporting MSMEs.
OUR STRATEGIC PRIORITIES
At your Bank the focus going forward shall continue to be onstrengthening asset quality liquidity and capital adequacy backed by continued riskmitigation measures to minimise the impact of COVID-19 on our business. Expansion ofnetwork investments in strengthening human capital as well as scaling up technology anddigitalisation drives remain high on the priority agenda for the Bank. In line with thetransformation agenda to create more touchpoints for customer engagement your Bank shallcontinue to strengthen its portfolio of products to fulfil the evolving and aspirationalneeds of customers across markets segments and regions.
Led by the Bank's optimistic outlook with confidence in the overallgrowth promise of the Indian economy and the banking sector your Bank remains dedicatedand focussed on moving actively forward on its transformation trajectory.
Led by the Bank's optimistic outlook with confidence in the overallgrowth promise of the Indian economy and the banking sector your Bank remains dedicatedand focussed on moving actively forward on its transformation journey. The overarchinggoal of this transformation is to ensure sustainable growth coupled with sustained valuecreation for all stakeholders. Inclusive banking remains the key strategic priority ofthis journey and we look forward to your continued support in successfully taking usforward to achieve your Bank's Vision 2025.
|Warm regards |
|Dr. Anup Kumar Sinha |
|Non-Executive (Independent) Chairman |