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Bank of Baroda.

BSE: 532134 Sector: Financials
NSE: BANKBARODA ISIN Code: INE028A01039
BSE 11:11 | 16 Dec 100.75 -1.00
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NSE 10:59 | 16 Dec 100.60 -1.15
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OPEN 102.55
PREVIOUS CLOSE 101.75
VOLUME 534913
52-Week high 143.60
52-Week low 85.70
P/E 50.12
Mkt Cap.(Rs cr) 46,552
Buy Price 100.70
Buy Qty 315.00
Sell Price 100.80
Sell Qty 4948.00
OPEN 102.55
CLOSE 101.75
VOLUME 534913
52-Week high 143.60
52-Week low 85.70
P/E 50.12
Mkt Cap.(Rs cr) 46,552
Buy Price 100.70
Buy Qty 315.00
Sell Price 100.80
Sell Qty 4948.00

Bank of Baroda. (BANKBARODA) - Director Report

Company director report

DIRECTORS' REPORT

Your Directors have pleasure in presenting the One Hundred and Eleventh Annual Reportof your Bank with the audited Balance Sheet Profit & Loss Account and the Report onBusiness and Operations for the year ended March 31 2019 (FY 2019).

Financial Performance

A snapshot of the Bank's financial performance is as below:

Rs. in crore
Growth
Particulars 31.03.18 31.03.19 (%)
Deposits 591314.8 638689.7 8.0%
of which- Domestic
Deposits 466973.8 517966.6 10.9%
International Deposits 124341.0 120723.2 (2.9%)
Domestic Deposits 466973.8 517966.6 10.9%
of which- Current
Account Deposits 31193.1 34327.6 10.1%
Savings Bank Deposits 161130.0 174076.2 8.0%
CASA Deposits 192323.1 208403.8 8.4%
Domestic CASA to

41.2

40.2

Domestic Deposits (%)
Advances 427431.8 468818.7 9.7%
of which- Domestic
Advances 324238.5 370185.0 14.2%
International Advances 103193.3 98633.8 (4.4%)
Total Assets 719999.8 780987.4 8.5%
Net Interest Income
(NII) 15521.8 18683.8 20.4%
Other Income 6657.2 6090.9 (8.5%)
of which-Fee Income 3249.7 3576.1 10.0%
Forex Income 909.2 693.2 (23.8%)
Trading Gains 1877.6 989.5 (47.3%)
Recovery from PWO 620.7 832.0 34.0%
NII + Other Income 22179.0 24774.7 11.7%
Operating Expenses 10173.4 11288.0 11.0%
Operating Profit 12005.6 13486.8 12.3%
Provisions 14796.4 12788.7 (13.6%)
of which-
Provisions for NPAs & 14211.7 12192.4 (14.2%)
Bad debts written off
Profit Before Tax (2790.7) 698.2
Provision for Tax (358.9) 264.6
Net Profit (2431.8) 433.5
Appropriations/ Transfers
Statutory Reserve 0 108.4
Capital Reserve 0 210.4
Revenue and Other
Reserves

I) General Reserve (2431.8) 0

II) Special Reserve u/s 36 (I) (viii) of the 0 182.1 Income Tax Act1961 Proposed Dividend 0 0

Rs. in crore
Key Performance Indicators 31.03.18 31.03.19
Average Cost of Funds (%) 4.56 4.83
Average Yield (%) 6.84 7.28
Average Interest Earning Assets 637987.0 686743.0
Average Interest Bearing
616243.9 648495.6
Liabilities
Net Interest Margin (%) 2.43 2.72
Cost-Income Ratio (%) 45.87 45.56
Return on Average Assets
(0.34) 0.06
(ROAA) (%)
Return on Equity (%) (7.64) 1.18
Book Value per Share (Rs.) 120.28 138.42
Basic EPS (Rs.) (10.53) 1.64

The benefit of structural changes undertaken by the Government andReserve Bank of India (RBI) finally bore fruit in FY 2019. The implementation of theInsolvency and Bankruptcy Code (IBC) has led to improvement in cash recovery in thebanking system. In addition the ratio of non-performing loans to advances for ScheduledCommercial banks (SCBs) has also started to come down and now stands at 10.8% as onSeptember 2018 from 11.5% as on March 2018. The steady uptick in credit growth during theyear in conjunction with decline in non-performing loans implies underlying improvement inthe operating performance of the banking system. However deposit growth continues toremain a challenge. Banks have raised interest rates on deposits to mobilise them and thiswill lead to higher inflow of resources to the banking system. Domestic deposits of theBank increased by 10.9% in FY 2019 compared with an increase of 6.1% in FY 2018. Domesticcredit growth was above industry growth at 14.2% which led to a 20.4% increase in netinterest income (NII). Both domestic as well as international margins expanded. The netinterest margin (NIM) improved from 2.43% to 2.72% in FY 2019. The cost to income ratiodecreased marginally to 45.56%.

The Bank posted an operating profit of Rs. 13486.8 crore registeringan increase of 12.3%. Total provisions (other than tax) and contingencies decreased by13.6% and provisions for NPAs reduced by 14.2%. The Bank posted a net profit of Rs. 433.5crore.

Capital Adequacy Ratio (CAR)

Ratios in %
31.03.18 31.03.19
Capital Adequacy Ratio –
12.13 13.42
Basel III
CET-I 9.23 10.38
Tier – I 10.46 11.55
Tier – II 1.67 1.87

The Capital Adequacy Ratio (CAR) and CET-1 of the Bank stood at 13.42%and 10.38% respectively as on March 31 2019. The consolidated group capital adequacyratio was higher at 14.52%. The Bank's net worth as of March 31 2019 was Rs. 36620crore comprising of paid-up equity capital of Rs. 530 crore reserves of Rs. 31047 crore(excluding revaluation reserves foreign currency translation reserves and otherintangible assets) and share application money pending allotment worth Rs. 5042 crore.The book value of the share (FV Rs. 2) was Rs. 138.42.

Dividend

Bank is not eligible to pay dividend for the financial year 2018-19 onaccount of not meeting the eligibility criteria stipulated by RBI for this purpose.

Management Discussion and Analysis Global Economy

The global economy slowed down to 3.6% in Calendar Year (CY) 2018 aftergrowing at 3.8% in CY17. The slowdown was markedly visible in the second half of thecalendar year. According to IMF global growth is likely to slip further to 3.3% in CY19before picking up to 3.6% in CY20. The dip in global growth was largely on account of aslowdown in growth in Europe and China. The US housing sector has also seen somedeceleration after yields increased as a result of successive rate hikes by US FederalReserve. Other factors that have contributed to the global slowdown are Brexit impositionof tariffs by US and China and run-off of US fiscal stimulus. According to IMF growth islikely to pick-up in H2CY19 on the back of accommodative monetary policies by majorcentral banks prospects of a positive US-China trade deal and China's fiscalstimulus to boost domestic consumption. Growth in Emerging Market and Developing Economies(EMDEs) is expected to rebound to 4.8% in CY20 from 4.5% in CY18 and 4.4% in CY19.Advanced Economies (AEs) will continue to witness modest growth which is expected to levelat 1.7% in CY20 versus 2.2% in CY18 and 1.8% in CY19. Downside risks to global growth mayemerge from escalating trade tension between US and other countries a no-deal Brexit andgeopolitical risks driving oil prices higher.

Indian Economy

The Indian economy witnessed a growth of 7% in FY 2019 down from 7.2%in FY 2018. This is the slowest pace of growth in over 5 years. The drop is primarily onthe back of a slowdown in the agriculture sector which is expected to clock only 2.7%growth in FY 2019 much lower than the 5% growth in FY 2018. The area sown under bothKharif and Rabi declined due to spatially distributed and below normal rainfall.Manufacturing which was hitherto driving growth in the larger part of the year is alsoseeing a slowdown now as both external and domestic demand seems to have slowed down.Construction is the only bright spot on the back of higher spending by state governments.

With growth coming off retail inflation has also fallen to 3.4% in FY2019 as compared to 3.6% in FY 2018. This was led by benign food inflation at around 0.2%in FY 2019 compared to 1.8% in FY 2018. Core inflation on the other hand remained elevatedat 5.8% in FY 2019 as against 4.6% in the previous year. Higher oil prices in H1FY 2019and stickiness in the health and education components drove the core CPI higher. Howevercore inflation has been steadily coming off towards the end of the year. Domesticconsumption has seen a cyclical slowdown with drop in auto sales and non-oil-non-gold andelectronic imports. However the announcement of measures such as "Pradhan MantriKisan Samman Nidhi (PM-KISAN) and expected upturn in government spending in the nextquarters may provide the requisite boost to the economy. In addition thegovernment's effort towards providing affordable housing and building infrastructureare also likely to support investment demand in the economy in the near term.

Developments in Indian Banking

With growth and inflation coming-off RBI has reduced policy rates. Theanticipation of change in stance and reduction in policy rates did lead to decline in10-year government bond yields which had increased substantially in H1FY 2019 and hadpeaked at 8.18%. This was driven by increasing liquidity deficit on the back of FPIoutflows. Higher oil prices and NBFC liquidity woes also contributed to upward pressure onyields. As a result the RBI undertook durable liquidity infusion in the form of OpenMarket Operation (OMO) purchases of Rs. 2.99 lakh crore and US$ swap. These measurescoupled with the slowdown in global growth and the dovish outlook by major global centralbanks led to decline in yields in the latter half of FY 2019. Credit growth of the bankingsystem continued to improve in the year from 10.0% as on March 31 2018 to 13.2% as onMarch 31 2019. Deposit growth that was lagging behind also showed an improvement to 10.0%as in March 2019 compared with 5.8% as in March 2018. This has been possible due to higherinterest rates offered by banks.

The increase in credit growth is driven by government'srecapitalisation to the extent of Rs. 1.06 lakh crore in Public Sector Banks (PSBs) in FY2019. The structural reforms undertaken by the government and RBI are also visible inunderlying improvement in stressed assets of the banking system. RBI has projected thatthe gross NPA ratio for the SCBs would fall to around 10.3% in March 2019 from 11.5% inMarch 2018. The slippage ratio has declined from 7.6% in March 2018 to 4.1% in September2018. The Provision Coverage Ratio (PCR) has also increased significantly from the levelsin March 2018. All these indicators point to a much stronger recovery in the bankingsystem in the coming years.

Another significant reform in the year was further consolidation of thebanking system which a number of Committees have recommended in the past from NarsimhamCommittee to Nayak Committee. The Government moved in this direction by way of a three-waymerger between Bank of Baroda and Dena Bank and Vijaya Bank. With this amalgamation Bankof Baroda has now become the second largest PSB in the country.

In view of the reforms undertaken by the government and RBI not onlyfor resolution and recovery of non-performing assets but also a digital driven lendingpush and consolidation the banking system is likely to see underlying improvement inprofitability in the medium-term.

Business Performance

The highlights of business performance of the Bank are as below:

Resource Mobilisation and Credit Expansion

Rs. in crore

Particulars 31.03.18 31.03.19 Growth
(%)
Deposits 591314.8 638689.7 8.0%
of which- Domestic
Deposits 466973.8 517966.6
10.9%
International Deposits 124341.0 120723.2 (2.9%)
Domestic Deposits 466973.8 517966.6 10.9%
of which- Current
Account Deposits 31193.1 34327.6
10.1%
Savings Bank 161130.0 174076.2
Deposits 8.0%
CASA Deposits 192323.1 208403.8 8.4%
Domestic CASA
41.2 40.2
Deposits (%)
Advances 427431.8 468818.7 9.7%
of which- Domestic
Advances 324238.5 370185.0 14.2%
International Advances 103193.3 98633.8 (4.4%)
Total Assets 719999.8 780987.4 8.5%

Domestic CASA balances registered a growth of 8.4% over the previousyear. The CASA Ratio was maintained well above 40.0% for the financial year. Term Depositsposted a growth of 12.7% which is almost twice as much as the previous year. In order toaugment the CASA portfolio the Bank has opened 9452510 new CASA accounts during FY2019. The Bank has taken several steps to improve its processes and strengthen the productproposition to meet the increasing requirements of customers. The account opening processfor savings account has been digitised through tablets leading to a turnaround time of afew minutes. More than 70% accounts (Non FI) are opened digitally through tablets. TheBank has also initiated issuance of non-personalised debit cards. The Bank is planning tocommence opening of current accounts through tablets. The Bank also introduced newsegmented offerings for women senior citizens expats and the salaried class to augmentdeposits. These schemes have received a encouraging response from our customers. Bank ofBaroda has also rolled out Doorstep Banking Service for retail customers on a pilot basis.The Bank has launched online opening of Demat and Trading Account this year and has becomea pioneer among other scheduled Banks to extend such facility to the customers. InApplication Supported by Blocked Amount (ASBA) the Bank was awarded by the Bombay StockExchange (BSE) for being a top performer in the primary market segment of IPO/FPO bids forFY 2018 .

Credit Expansion:

During FY 2019 the Bank continued to gain market share with awell-diversified credit portfolio. Domestic advances of the Bank increased by 14.2% duringthe year compared with an industry growth of 13.2%. The growth was led by retail and waswell spread across other business verticals. Retail loan growth was 24.2% led by home andauto loans at 22.2% and 49.4% respectively while corporate loan growth was 15.6%. Theratio of retail loans to total domestic loans increased from 19.6% to 21.5% during theyear. The international loan book declined by 4.4% on account of continued focus of theBank on re-balancing of assets and decline of Buyers' Credit book.

The total assets of the Bank increased by 8.5% from Rs.719999.8 crore on March 31 2018 to Rs. 780987.4 crore as on March 31 2019.

Operating Performance:

The highlights of operating performance of the Bank are as below:

( Rs. in crore)
Particulars 31.03.18 31.03.19 Growth
(%)
Interest Earned 43648.5 49974.1 14.5%
Interest Expended 28126.8 31290.3 11.2%
Net Interest Income (NII) 15521.8 18683.8 20.4%
Other Income 6657.2 6090.9 (8.5%)
of which- Fee Income 3249.7 3576.1 10.0%
Forex Income 909.2 693.2 (23.8%)
Trading Gains 1877.6 989.5 (47.3%)
Recovery from PWO 620.7 832.0 34.0%
Operating Income 22179.0 24774.7 11.7%
(NII + Other Income)
Operating Expenses 10173.4 11287.9 11.0%
Employee Expenses 4606.9 5039.1 9.4%
Other Operating Expenses 5566.5 6248.9 12.3%
Operating Profit 12005.6 13486.8 12.3%
Provisions 14796.4 12788.7 (13.6%)
of which- 14211.7 12192.4 (14.2%)
Provisions for NPAs & Bad debts written off
Provision for Standard (369.0) (35.49)
Advances
Provision for Depreciation on 768.2 138.5 (82.0%)
Investment
Other Provisions 185.5 493.3 166.1%
Profit Before Tax (2790.7) 698.2
Provision for Tax (358.9) 264.6
Net Profit (2431.8) 433.5

 

Key Performance Indicators 31.03.18 31.03.19
Cost of Deposits - Global (%) 4.50 4.68
Cost of Deposits - Domestic (%) 5.48 5.33
Cost of Deposits - International (%) 1.33 1.89
Yield on Advances – Global (%) 7.13 7.65
Yield on Advances (Domestic) (%) 8.87 8.67
Yield on Advances (International) (%) 2.70 4.12
Net Interest Margin – Global (%) 2.43 2.72
Net Interest Margin – Domestic (%) 2.88 2.93
Net Interest Margin – International (%) 1.10 1.71
Cost-Income Ratio (%) 45.87 45.56
Return on Average Assets (ROAA) (%) (0.34) 0.06
Return on Equity (%) (7.64) 1.18

The interest income of the Bank increased by 14.5% from

Rs. 43648.5 crore in FY 2018 to Rs. 49974.1 crore in FY 2019. Theyield on advances increased to 7.65% from 7.13%. The yield on domestic advances was 8.67%during FY 2019 against 8.87% during FY 2018. The reduction was on account of underlyingchange in credit mix to high quality borrowers. The yield on international loan bookincreased reflecting the run-off of low margin products such as Buyers' Credit. Totalinterest expenses stood at Rs. 31290.3 crore in FY 2019 as against Rs. 28126.8 crore inFY 2018. The domestic cost of deposits decreased to 5.33% in FY 2019 from 5.48% in FY2018. The cost of deposits in the international book increased from 1.33% to 1.89% in linewith the global interest rate environment. NII of the Bank increased by 20.4% from Rs.15521.8 crore during FY 2018 to a level of Rs. 18683.8 crore during FY 2019. The NIMimproved from 2.43% to 2.72% during FY 2019. The domestic and international NIM improvedfrom 2.88% to 2.93% and 1.10% to 1.71% respectively. Other income of the Bank decreased by8.5% to Rs. 6090.8 crore on account of decline in treasury gains by 47.3% to Rs. 989.5crore. Recovery from written-off accounts was higher at Rs. 832 crore registering anincrease of 34%. Operating expenses increased by 11.0% to Rs. 11287.8 crore in FY 2019.Employee cost increased by 9.4% during the year to Rs. 5039.1 crore and other operatingexpenses increased by 12.3% to Rs. 6248.9 crore. The operating profit of the Bank grew by12.3% to Rs. 13486.8 crore during FY 2019. Total provisions (other than tax) andcontingencies decreased by 13.6% to Rs. 12788.7 crore while provision for NPAs decreasedby 14.2% to Rs. 12192.4 crore in FY 2019. As a result the Bank posted a net profit ofRs. 433.5 crore in FY 2019 against a net loss of Rs. 2431.8 crore in FY 2018.

Medium and Long-Term Strategy of the Bank

The Bank continues to pursue a multi-pronged strategy to build afuture-ready world class banking institution. The Bank believes in the power of datadigitisation and technology to transform banking. Bank of Baroda continues to invest innot only enhancing its IT backbone but also in creating cutting-edge digital platforms andpartnering with leading technology players and/or fintech startups to provide the nextgeneration of products and experience to customers. The Bank has established twostate-of-the-art Centres of Excellence for Analytics and IT to help in rapidly scaling itscapabilities in these areas. The Bank aims to build platforms wherein customers can do arange of transactions online and have access to information at their fingertips. Bank ofBaroda is creating a learning organisation and investing in enhancing the skills of itsworkforce. The Bank also emphasises on centralisation and digitisation of operations toensure that employees become more focused on customer facing roles.

Project Navoday – The Bank's Transformation Journey Thus Far

For achieving medium and long-term strategic goals the ProjectManagement Office (PMO) of Project Navoday tracks all multidimensional initiativesundertaken across Business Units and Support Functions such as IT HR Operations &Services. As part of the transformation journey in addition to the strategic initiativestaken under various businesses a pivotal role is being played out by Shared ServicesCentre in terms of centralisation and digitisation which eventually leads to bettercustomer experience in the form of lower turnaround time for customers. The Bank is makinga paradigm shift in facilitating the operating units to shift focus towards a ‘Salesand Service' model. Deposit accounts are opened with Tablets in digital mode andprocessing of loans is being done in Centralised Processing Centres. Back-office work hasmoved away from branches which opens up time for branches to focus on more productiveactivities such as sales and marketing. The Bank benefits in the form of higherproductivity and a better control environment. Strategic tie-ups with market players inthe field of agriculture E-commerce and Fintech are enabling the Bank to augment itsbusiness besides improving market share. Strategic rationalisation of InternationalOperations along with fungible credit limits have paved the way for more profitableoperations across overseas territories. A revamped Rewards Recognition and Employeeengagement framework reinforces the philosophy of ensuring that employees grow with theBank. The Bank has put in place customer segmentation with a focus on hyperpersonalisation to cross-sell products. Centres of Excellence in IT and Analytics aredriving technological adoption and cutting-edge tools to improve business performance. TheBank is leveraging the impetus gained to widen the spectrum of these initiatives in thebackdrop of the amalgamation w.e.f. 1st April 2019.

Corporate Credit

Corporate credit in the bank is serviced through 10 Corporate FinancialServices (CFS) branches and 4 Emerging Corporate Branches which manage about 80% of thetotal corporate credit portfolio of the bank. The corporate credit portfolio of the Bankincreased by 15.6% during FY 2019 to Rs. 185943 crore. During the year under review thecorporate credit portfolio reaped the benefits of transformation initiated in precedingyears. With this revamp in approach towards corporate credit delivery the risk profile ofthe portfolio further improved during the FY 2019 as observed in the rating distributionof domestic credit portfolio as below:

Credit 31.03.2017 31.03.2018 31.12.2018
Rating Distribution*
A & above 39.27% 52.37% 60.21%
BBB 15.77% 14.90% 13.82%
Below BBB 21.80% 19.72% 15.86%
Unrated 23.16% 13.01% 10.11%

*External rating distribution of advances above Rs. 5 crore.

Target Market approach: FY 2020

During the year the target market approach has been further sharpenedbased on the objectives of improving credit performance ensuring profitable deployment ofcapital optimising overall yield and profitability and increasing bank's marketshare in the performing and growing sectors. The structural framework adopted for the sameis as follows:

Identification of industries / sectors based on industry outlook i.e.the combined output of various industry parameters including market size growth indicesdemand-supply outlook cost structure competition financial performance govt. policiesand investment outlays.

Sector-wise business plan for target market lending based on exposurecaps existing exposures and further appetite for fresh acquisitions for the currentfinancial year.

Identification of corporates with defined pre-selection criteria suchas ratings financial parameters i.e. revenue profit after tax (PAT) net worth grosscapital financial ratios viz. leverage ratio (debt-equity ratio Net Debt / EBITDAprofitability ratio (Net profit/Sales gross profit/Sales) operating profit margin cashaccrual / debt etc. and due diligence.

Precise Account Planning with structured calling plans for meetingsidentifying business opportunities approval and closure.

Execution of the business plan under target market approach throughdedicated relationship managers across the Bank. Under the above approach adopted by theBank nine sectors with 476 corporates were identified and 121 leads were generated out ofwhich 87 leads amounting to Rs. 33127 crore were converted into business. Moving aheadwith this strategy 809 corporates (including mid-corporate clients) have been listed astarget in FY 2020.

With a view to provide enhanced customer experience for InternationalTrade Customers and also to ensure seamless transactions management from initiation ofrequests to successful execution the Bank launched a fully digitised and integrated tradesystem - BarodaINSTA (Baroda Integrated Solution for Trade Finance Access) which iscompliant with SWIFT. BarodaINSTA provides secure online access via a front-end portal toclients for initiating transaction requests resulting in operational consistency andbetter governance with enhanced security and validations. It is a user-friendlyapplication with attractive and convenient dashboards providing real time tracking oftransactions for customers with multiple features like comprehensive MIS reports couriertracking calendar (for due date maintenance) etc.

MSME Credit

The Bank targets the MSME sector through 42 dedicated SME ProcessingCells named ‘SME loan factories' and a wide network of branches servicing theMSME segment with a target market approach. Supporting the Government's efforts underMUDRA scheme on employment generation the Bank lent Rs. 6023 crore to the sector. TheBank has also extended credit of Rs. 1154 crore to SC ST and women entrepreneurs underthe Stand-up India programme since the launch of the scheme. The MSME credit portfolio ofthe Bank increased to Rs. 55455 crore as on March 31 2019 from Rs. 51730 crore as onMarch 31 2018. The Bank has added 93994 new MSME customers to its base in FY 2019. Toprovide access to working capital to MSMEs at competitive rates on Trade Receivableselectronic Discount System (TReDS) the Bank has onboarded itself on all the three TReDSplatforms. As on March 31 2019 the TReDS business accounted for Rs. 223 crore. Insupport of the Government's initiative to augment MSME units by speedy sanction ofMSME loans through the ‘PSBloansin59minutes' portal the Bank was ranked firstout of all PSBs as on March 31 2019. To ease working capital constraints of MSMEarising out of GST implementation the Bank has devised a special product for financingagainst GST receivables for the MSME segment. The supply chain business has an outstandingbook of Rs. 452 crore as on March 31 2019 and is backed by a fully digitised supply chainfinancing product which has provided a new vehicle for sourcing of MSME customersspecifically vendors and suppliers of anchor corporates. In addition the Bank has 6 AreaSpecific Schemes for financing SME clusters. The total number of products increased to 26including specialised products to cater to MSME units during the last financial yeardenoting the thrust of the Bank on this segment. We have also adopted a new pricingstrategy named CIBIL MSME Rank (CMR) based pricing for MSME enterprises with creditexposure above Rs. 25 lakh and up to Rs. 5 crore which enables MSME businesses to haveaccess to bank finance at competitive rates starting from as low as MCLR plus 0.05%. Toreach out to newer business segments and to deliver the benefit of lower interest rates incomparison to NBFCs the Bank is co-originating with different NBFCs and entered intoco-origination arrangements with certain NBFCs.

The Bank has commissioned a dedicated team for financing commercialvehicles and construction and mining equipment for the MSME segment. For this purposeBank has entered into a strategic alliance with Tata Motor Finance Ltd. for capturing newbusiness in the commercial vehicles segment. Further the Bank has on-boarded clientsunder a new scheme ‘Value Chain Finance' which is specifically designed forcustomers with maximum turnover of up to Rs. 2000 crore. To ensure better reach to MSMEmarket segments the Bank has established a separate specialised team dedicated to salesand loan processing deployed at SME Loan Factories. To ensure consistency inunderwriting faster turnaround time and timely collections the Bank has implementedcentralisation of MSME loan processing through Integrated SME Loan Factory (ISMELF) at 2centres viz. Mumbai and New Delhi. The Bank is also participating in MSME schemes such as‘One District One Product' promoted by the Uttar Pradesh Government to ensurehigher penetration. Government Schemes Processing Cells (GSPC) have been set up acrossIndia to enable seamless processing of Pradhan Mantri Mudra Yojana Standup India PradhanMantri Employment Generation Programme National Urban Livelihoods Mission andState-specific Government sponsored schemes. Under the Support & Outreach Campaign forMSMEs a GoI initiative launched on November 2018 the Bank was assigned 100 districtsand 100 days with key deliverables.

Retail Credit

The Bank has been undertaking a number of transformational initiativesto improve its market share in retail segment. Foreseeing the importance of retail lendingin the economy the Bank adopted a focused approach in the retail lending space sinceApril 2016 and considerably increased the retail book from Rs. 68765 crore in March 2018to Rs. 85390 crore as on March 31 2019.

The initiatives include redesigning of products and processes toenhance the customer satisfaction by allowing higher eligibilities lower pricing andstandardised processing. Some of the steps undertaken by the Bank are as mentioned below.

• Risk Based Pricing

• Setting up of Centralised Processing Cell at Gandhinagar andHyderabad

• Empanelment of Direct Selling Agents (DSAs)

• Empanelment of Contact Point Verification (CPV) agencies

• Implementation of Loan Lifecycle Processing Systems

• Focused and strategic approach on takeovers

• Implementation of a pre-approved credit programme

Setting up of a dedicated call centre for collections The Home Loanbook has grown by 22.2% to Rs. 54612 crore as on March 31 2019. The continued efforts onincreasing Auto Loans has resulted in a growth of 49.4% with an increase in market sharefrom less than 1% to approximately 3%. The disbursement of Auto Loans has also grown by169.2%. Fresh sanctions for Education Loans have grown by 106.8%. The target given by theMinistry for Education Loans has been surpassed by 48%. In case of mortgage loans thebook has grown by 74.3%.

Rural and Agricultural Lending

The Bank has a network of 1845 branches in rural and 1546 branches insemi-urban areas which are leveraged for priority sector and agriculture lending. DuringFY 2019 the Bank opened 22 new rural and semi-urban branches. The Bank's agricultureadvances grew by 14.2% from Rs. 49583 crore as on March 31 2018 to Rs. 56623 crore ason March 31 2019. The Bank achieved all mandatory targets under Agriculture PrioritySector Small and Marginal Farmers (S&MF) Micro Enterprises Loans to Non-corporateFarmers and weaker sections of the society during FY 2019 and earned a net commission ofRs. 33.0 crore by selling net Priority Sector Lending Certificates (PSLC) worth Rs. 7700crore.

The Bank is the Convener of State Level Bankers' Committee (SLBC)in the states of Uttar Pradesh and Rajasthan and shoulders the Lead Bank responsibility in48 districts across the country.

The Bank continues to be a leader in lending to the agriculture sectorwhich received an impetus with the Government's target of doubling the income of thefarmers by FY 2022. The Bank has moved beyond granting simple farm credit to a morediversified rural lending strategy by focusing on new products across rural customersegments like farm mechanisation horticulture loans warehouse receipt financing foodand agro-processing and adopting a community-based lending model for the small farmers andcommunities.

During the year Bank issued 2.29 lakh Kisan Credit Cards. Baroda KisanRuPay Card an ATM enabled smart card was issued to 13.46 lakh farmers. As a part of itsmicrofinance initiatives the Bank linked 26630 Self Help Groups (SHGs) by granting loansamounting to Rs. 482.69 crore. To facilitate credit linkages of Farmer ProducerOrganisations (FPOs) the Bank tied up with the Small Farmers' AgribusinessConsortium (SFAC) for providing Credit Guarantee for collateral free loans and also as apreferred bank for the state of Maharashtra. The total Agricultural Advances as on March31 2019 were well above the regulatory requirements.

The Bank's agriculture and rural strategy continues to focus ondeveloping an ecosystem of alliances and partnerships with multiple players with theobjective of increasing farm productivity; enhancing the income of farmers and serving therural economy. The Bank is developing an agri-digital platform – ‘BarodaKisan'. The platform in partnership with strategic players aims to become a one-stopshop to cater to all major needs of a farmer ranging from notifications weather forecastinformation crop health soil moisture pest infection information mandi prices cropspecific advisory input buying (like seeds fertilizers pesticides) equipment rentingadvisory services and innovative financing options for sale of agriculture produce.

Bank of Baroda observed a Kisan Pakhawada' from October 1 2018 toOctober 16 2018 and celebrated the last day of the fortnight as Baroda Kisan Diwas tocoincide with the International Food Day. In FY 2019 a total of 8018 choupals werecovered with participation of 238974 farmers through 1621 Kisan Melas 339 Health Camps(soil / animal / farmer) 4884 farmer meetings and 310 financial literacy camps. The Bankhas been awarded the Inclusive Finance India Award for Innovation and Inclusiveness inPriority Sector Lending by Bank (Public Sector) for 2018 by Access Assist. The Bank alsoreceived 4 awards including the Runner up in Overall Best Social Bank under the LargeBanks category during the 14th ASSOCHAM Annual Banking Summit cum Social BankingExcellence Awards - 2018.

Priority Sector Lending

Priority sector advances of the Bank stood at Rs.147109 crore as ofMarch 31 2019. The Bank was well above the mandated levels of priority sector advancesand its other sub-components.

Advances to SC/ST Communities

The outstanding advances to SC/ST communities went up from

Rs. 5765 crore as of March 31 2018 to Rs. 7212 crore as of March 312019. The SC/ST communities accounted for 18.31% share in total advances granted to weakersections by the Bank. Furthermore special thrust is laid by the Bank in financing SC/ STcommunities under various Government sponsored schemes such as National Rural LivelihoodMission (NRLM) MUDRA Loan Start-up India and Stand-up India. During this year the Bankentered into various tie-ups with State Rural Livelihood Missions (SRLMs) in Tamil NaduOdisha Chhattisgarh Punjab and Uttar Pradesh for providing finance to women SHGs tofurther the mission of women empowerment. The Bank also tied up with SEWA for financingsolar units for women salt workers (members of SEWA) in the Rann of Kutch Gujarat.

Financial Inclusion (FI)

The Bank has increased the FI coverage by deploying 15356 BC agentscatering to 21895 villages and other semi-urban and urban areas and also through 583Branches in under-banked areas across the country. Total number of Basic Savings BankDeposit (BSBD) accounts under financial inclusion stand at 372.6 lakh with an aggregatebalance of Rs.12690 crore as on March 31 2019. The number of zero balance accounts havereduced from 11.53% in the previous year to 9.21% this year. The Bank has taken a numberof initiatives to harness the power of digitisation to deepen financial inclusion in theyear.

Digitised instant account opening through eKYC authentication andAadhaar seeding with PIN generation through tablets account opening kiosks and businesscorrespondent (BC) outlets with instant enrollment under Micro Insurance and debit cardissuance.

Deployed micro and table-top ATMs in rural areas through BCs andexpanded the Business Correspondent using Information and Communication (BC-ICT) model byadding 700 agents during the year.

Enabled increased utilisation of bank accounts expansive cash-incash-out network comprising 15356 BCs who use 8823 PINPAD and 1882 portable Micro ATMdevices.

Provision of 185 VSATs to BC agents functioning in grey areas acrossthe country.

FY 2019 Performance Highlights under Financial Inclusion

101.2% of target achieved in respect of total BC outlets.

91.3% and 132.4% of targets achieved for BSBD account opening andamount under the same through branches respectively

The Bank achieved 233.9% and 284.6% of the target set for FY 2019 forBSBD account opening and amount under the same through BC points respectively.

Highlights of Performance under Pradhan Mantri Jan Dhan Yojana (PMJDY)

The Bank had 300.83 lakh accounts under PMJDY as on March 31 2019 asagainst 239.29 lakh at the end of previous year an increase of 25.7%. The Bank'smarket share in incremental PMJDY accounts and outstanding deposits was 10.7% and 11.9%respectively. Outstanding balance in PMJDY accounts was Rs. 9312 crore as of March 312019 as against Rs. 6595 crore at the end of previous year an increase of 41.2%. RuPaydebit Cards issued under PMJDY accounts increased to 276.62 lakh from 221.50 lakh. Aadhaarseeding in PMJDY accounts increased to 88.0% during the year from 83.9% last year.

Coverage through Social Security Schemes

The position of enrollment under social security schemes of theGovernment as on March 31 2019 is as under:

31.03.2018 31.03.2019
Pradhan Mantri Suraksha 59.52 90.37
Bima Yojana (in lakh)
Pradhan Mantri Jeevan Jyoti 18.14 25.30
Bima Yojana (in lakh)

Setting up Aadhaar Enrollment Centres

Banks vide Gazette notification dated July 14 2017 of Government ofIndia have been mandated to set up Aadhaar enrollment and update centres inside thebranch premises with at least one centre in every 10 branches. Accordingly the Bank hasset up 608 Aadhaar enrollment centres as of March 31 2019.

Performance of RRBs Sponsored by Bank of Baroda

The Bank has sponsored three Regional Rural Banks (RRBs): Baroda UttarPradesh Gramin Bank Baroda Rajasthan Kshetriya Gramin Bank and Baroda Gujarat GraminBank. The aggregate business of these three RRBs rose to Rs. 62298 crore as of March 312019 from Rs.55063 crore as of March 31 2018 registering a growth of 13.1%. The threeRRBs together posted a net profit of Rs. 208.61 crore during FY 2019 against Rs. 208.55crore in the previous year. The net worth of these RRBs put together improved from Rs.2401.78 crore as of March 31 2018 to Rs. 2620.57 crore as of March 31 2019.

International Operations

The Bank has 100 overseas branches/offices across 21 countriescomprising of 45 overseas branches in 13 countries 54 branches of the Bank's eightoverseas subsidiaries and one International Banking Unit (IBU) in GIFT City (SEZ)Gandhinagar Gujarat India which deals exclusively in foreign currency. In addition theBank has one Joint Venture viz. India International Bank (Malaysia) Bhd. in Malaysia andone associate bank viz. Indo Zambia Bank Ltd. in Zambia with 30 branches. During FY 2018and FY 2019 the Bank has undertaken strategic rationalisation of its overseas presencebased on a comprehensive evaluation framework. During the year Bank closed down itsOffshore Banking Unit at Bahamas wholesale banking unit in Bahrain and surrenderedbanking license of subsidiary at Ghana which had three branches. Further Muttrah branchat Oman was merged with the Greater Muttrah branch and Durban branch was merged withJohannesburg branch in South Africa. The rationalisation of operations based on thestrategic review is continuing. The Bank has presence in the world's major financialcentres of New York London Singapore Brussels and Dubai. In the international arenaour Bank pursues a strategy of driving growth and value by meeting the internationalbanking requirements of Indian corporates; catering to India linked cross-border tradeflows for Indian and locally incorporated companies or firms and being the preferred Bankfor NRIs/ Persons of Indian Origin. The Bank is continuously consolidating andreorganising its International Operations in line with the new global environment andfocused on rebalancing the portfolio with a view to manage risks shed low-yield assetsand increase profitability. As of March 31 2019 the Bank's total business frominternational branches was Rs. 219356 crore and constituted 19.8% of the globalbusiness. Total deposits were at Rs. 120723 crore while net advances were Rs. 98633crore. It was a year of consolidation for the international operations. The total depositswere lower by 2.9% whereas total advances fell by 4.4%. The reduction in business ismainly on account of rationalisation of the Bank's overseas centres UKsubsidiarisation and run-off of Buyers' Credit.

Incorporation of Subsidiary in UK

The Bank's wholly owned new retail subsidiary at UK viz. Bank ofBaroda (UK) Ltd. has been operationalised with effect from 17.12.2018. The retail businessof the UK operations has shifted to the new subsidiary and wholesale business is retainedunder branch mode. The UK operations now comprise of 1 branch of the Bank and 10 branchesof subsidiary.

Treasury Operations

The Bank operates its Treasury operations from a state-of-the-artdealing room at its Corporate Office in Mumbai. The Treasury is a prominent player invarious markets e.g. Foreign Exchange Interest rates Fixed Income Money MarketDerivative Equity Currency and Interest rate Futures and other alternate asset classes.The Bank is offering various services like interest rate swaps currency swaps andcurrency options forward contracts through authorised branches dealing in foreignexchange across India.

The treasury is responsible for managing the funds position of the Bankand ensuring safety liquidity and optimal yield on these funds. It maintains StatutoryReserve Requirements and invests in corporate bonds commercial papers equity venturecapital mutual funds etc. as a part of the fund management operations. The total size ofthe Bank's Domestic Investment Book as of March 31 2019 stood at Rs. 172412 crore.The share of SLR securities in total investments was 85.89%. The percentage of SLRsecurities (unencumbered) to NDTL at March 31 2019 was at 27.98%.

The Bank demonstrated its capabilities in effectively dealing withextreme adverse circumstances in the market. The Bank has been able to capitalise on theopportunities offered by yield movements. The Bank managed its portfolio efficiently andmaintained average yields on interest bearing investment for FY 2019 at 8.13% (includingprofit on sale). During FY 2019 the profit on Sale of Investment and Foreign exchangeearnings are Rs. 994 crore and Rs. 445 crore respectively.

Government Business

The Government Business is an important part of the Bank'sstrategy. It caters to the banking requirements of Central/ State Government and PSUsacross India. The Bank is authorised to collect direct taxes through its designatedbranches and is an accredited banker to the Ministry of Health and Family Welfare.

The Bank is partnering with various departments at the Central andState levels in developing e-solutions in-line with the digital initiatives of theGovernment of India leading to transparency and efficiency. MOUs with EPFOEmployees' State Insurance Corporation IRCTC National Agriculture MarketGovernment e-Marketplace and Inland Waterways Authority of India have been signed toenhance fresh business opportunities.

During the year Bank has developed customised software for the e-LCsolution for Ministry of Defence. Bank of Baroda is the only Public Sector Bank to launche-KVP utility through banks. The Bank has integrated itself on the e-PCS portal of IndianPort Association for all the 3 major ports across India. An MOU with the Kandla Port hasbeen signed.

The Bank has been recognised by Pension Fund Regulatory

Development Authority for the Achievement of the Targets under APY.

Wealth Management

During the year the Wealth Management Department has been at theforefront in providing investment and insurance services to our customers. The Bank'sflagship programme ‘Baroda Radiance' continues to cater to the requirements ofHigh Net Worth Individuals through a dedicated structure of relationship managers. TheBank aims at providing best-in-class solutions and services to its customers for which itis building digital solutions. Some of the initiatives taken during the year are:

'Baroda Wealth Solution' a digital platform is implemented to enableseamless distribution of investment and insurance products to all customers. This platformwill also be available to Bank's customers in Mobile Banking and Internet Banking.

Bank extended the coverage of the product 'Group Credit Life' and'Group Criti Care' to its retail borrowers covering the credit risk in case ofeventuality (life or critical illness).

Bank launched five health insurance products with portability andcontinuity benefits. This enables customers to migrate their health insurance policies toan insurer of their choice.

Stressed Asset Management

With an increase in non-performing loans over the years the Bank hasrevamped its strategy to augment recoveries and reduce slippages. For this the Bank hascreated a ‘Stressed Assets Management Vertical' where all major and mediumsized NPA accounts of Rs. 10 lakh and above and all SARFAESI eligible accounts are handledby specialised units called Stressed Assets Recovery Branches (SARB) set up at Zonal andRegional level. The remaining accounts i.e. accounts below Rs. 10 lakh are handled byrespective branches with the help of Business Correspondents and outsourced Call Centres.Non-performing loans continued to decline for the Bank with gross NPA ratio declining to9.61% as on March 31 2019 from 12.26% as on March 31 2018. Similarly Net NPA ratioimproved to 3.33% in March 2019 as compared to 5.49% in March 2018.

The movement of NPAs during the last two years are as under:

(Rs. in crore)
Particulars 31.03.2018 31.03.2019
Gross NPA 56480 48233
Gross NPA (%) 12.26 9.61
Net NPA 23483 15609
Net NPA (%) 5.49 3.33
Additions to NPAs 24239 13614
Recovery/ Upgradations 5530 8759
Write offs including TWOs 4948 13102
Recoveries in written off accounts 621 832
Provision Coverage Ratio (including TWO) (%) 67.21 78.68
Provision Coverage Ratio (excluding TWO) (%) 58.42 67.64

As per asset classification the bifurcation of loan book is as givenbelow:

( Rs. in crore)
Asset Category 31.03.2018 31.03.2019
Standard advances 404264 453473
Gross NPA 56480 48233
Total Gross Advances 460744 501706
Gross NPAs comprising of
Sub-standard 13131 9014
Doubtful 35447 32398
Loss 7903 6821
Total Gross NPA 56480 48233

In order to address a large number of small NPA accounts the Banklaunched OTS schemes viz. Lakshya I and II (Lakshya Agriculture Retail & MSME) duringFY 2019. The Bank settled 109327 accounts under these schemes with an aggregatesettlement amount of Rs. 639 crore and recovery and upgradation of Rs. 543 crore. Anapplication called One Time Settlement Tracking System has been implemented whereincustomers can initiate settlement proceedings online. The Bank has also set up a legalwar-room for real-time tracking of recovery proceedings and to aid accelerated decisionmaking (378 high value suit-filed accounts were being monitored by the War Room).

The Bank has set up a solution provider cell to augment recoveries toensure minimal slippages and to provide resolution strategies for large NPA accounts withexposure above Rs. 30 crore. For timely collections from retail and SME customers a350-member call centre with multi-lingual support has been set up. This is supported byfeet-on-street staff to drive on-ground collections. A special taskforce of about 800officials of the Bank has been deployed for recovery of small NPA and potential NPAaccounts. Business Correspondents are incentivised for collections in crop loans.

The Bank has strengthened its NPA management with daily dashboards likeDays Past Due (DPD) Report NPA Movement Chart and Mock Runs for forecasting degradationsto ensure reduction in slippages and improvement in collections. Further the Bank is inthe process of developing a mobile application which would enable the collection agents onthe field to collect the amount based on data fed from the system and also update recoverydetails.

The Bank is in the process of implementing an Integrated LitigationManagement system (ILMS) a pilot run of which has been completed. With this system allthe cases filed in DRT suit filed cases with other courts and the status of actioninitiated by Bank under SARFAESI Act etc. can be monitored on a real time basis.

In addition the Bank has put in place the following measures on anongoing basis to facilitate recovery of non-performing assets:

Assigning Nodal Officers at each DRT for follow-up of legal cases on adaily basis so as to minimise the delay in obtaining decrees and execution and to maximiserecoveries.

Taking assistance from Advocates/Consultants to liaise with OfficialLiquidators (OL) to get the recoveries realised by OLs.

Liasoning with Official Liquidators organising Recovery Camps acrossbranches close monitoring of stressed accounts and recovery agents at all levels andmonthly e-auctions especially in DRT suit filed NPA accounts.

Number of Wilful Defaulters declared during the current FY 2019 is 399increasing the aggregate numbers substantially to 750. This number stood at 303 as onMarch 31 2018.

Information Technology (IT)

The Bank is constantly evolving its products systems and structure tomeet the growing aspirations of the customers. Digitisation of banking services is drivingcontinuous upgradation of the IT infrastructure. Some of the major initiatives during theyear include:

The Bank has upgraded its erstwhile Loan Management System (LMS) with anew Loan Lifecycle Processing System. This new system streamlines loan origination andtracking processes to enable faster loan disbursals and end-to-end processing of loanproposals using image-based workflow and Business Process Management (BPM) tool to improveTurn Around Time (TAT).

The Bank is implementing a Decision Management System which providesbusiness policy owners with the ability to author test execute and maintain scoremodels strategies and rules integrated with the LMS. This will substantially improvedecision quality consistency and efficiency of operations.

The Bank is in the process of upgrading the existing Internet Banking(Baroda Connect) with an advanced version an enhanced user interface and a basket of newfunctionalities.

The Bank is in the process of implementing Oracle CRM for BranchesContact Centres (CCs) Retail Loan Factories (RLFs) Small Medium Enterprise LoanFactories (SMELFs) City Sales Offices (CSOs) and Regional Offices.

In order to handle large volumes the Bank upgraded to Unified PaymentsInterface (UPI) version 2.0. It aims to simplify and provide a single interface across allNPCI systems besides creating interoperability and providing superior customer experience.

The Bank has implemented a Centralised Communication Management (CCM)solution which facilitates automation of various communication/e-communication tocustomers on a monthly basis.

The Bank is in the process of implementing an API Banking platform toaccelerate digital transformation and build capabilities to unlock the true value ofdigital assets create business agility and promote innovation and collaboration.

The Bank has implemented an automated reconciliation platform calledUniversal Transaction Reconciliation System (UTRS). This platform offers the capability toquickly configure two-way or multi-way reconciliation thereby reducing risk andincreasing compliance.

The Bank has embarked upon the journey of cloud adoption. The Bank hasimplemented e-mail e-learning Management services and collaboration technology solutionson the public/ community cloud. The Bank has also implemented archival solution for emailcommunication to strengthen compliance.

The Bank is in the process of implementing a Mobile Device Managementsolution (MDM) which will enable employees to securely access various banking applicationsusing corporate-owned and employee-owned (BYOD) mobile devices from remote locations thusincreasing productivity and efficiency. This will also help the Bank in reducing cost ofoperations and business risks.

The Bank has best-in-class technology infrastructure for Data Centreconforming to Uptime Institute Tier-3 standards. The Bank has also built a DisasterRecovery Site in different seismic zones with redundancy built in every single point offailure to ensure uninterrupted service delivery to our customers. Bank of Baroda hasadditionally built Near Disaster Recovery Centre for Core Banking (Domestic &International) System and Treasury system to ensure zero data loss as part of its BusinessContinuity Planning and Disaster Recovery strategy.

The Bank has implemented state-of-the-art Data Centre tools for NetworkManagement at its Data Centre and branches/offices. In addition the Bank has alsoimplemented application performance management for synthetic monitoring of internetbanking and core banking applications. The Bank has set up two centres of excellence tobuild a future ready organisation.

IT Centre of Excellence (ITCoE)

The Bank has setup an ITCoE which works closely with business units toidentify and implement related technologies for driving revenues and gaining efficiencies.The ITCoE aims to develop differentiated market-leading technology solutions whiledriving business outcomes. ITCoE is bringing together a wide variety of cutting-edgeskills such as design thinking mobility DevOps Business Process Management and emergingtechnologies like Robotics Process Automation API & Platform banking to execute onthe twin mandates of improving business efficiency and taking new use-cases to market atspeed.

Analytics and Artificial Intelligence Centre of Excellence(A&AICoE)

Under the ACoE the Bank has established an enterprise-wide data andanalytics technology platform with petabyte scale - the Big Data Lake. Powered by leadingdata technologies and techniques like Data Lake Machine Learning and IT the ACoE aims athelping the Bank in traversing the journey from Data to Insights and from Actions toResults. ACoE is working with multiple lines of businesses to identify and realise newvalue-creation opportunities and to build the Bank's capability in leveraging analyticsto increase revenue reduce costs and improve risk profiling.

Cyber Security

Over the years the Bank has built a strong foundation for cybersecurity comprising of a comprehensive set of information security measures to countercyber-attacks. The Bank has a well-defined cyber security governance framework in placethat is operated through a combination of management structure policy framework andoperational controls.

In order to detect and prevent cyber incidents the Bank has upgradedits Captive Security Operations Centre to Cyber Security Operations Centre (C-SOC) whichoperates on a 24x7 basis. During the year the Bank has further added new technologies toC-SOC to identify manage respond and resolve cyber security incidents quickly and moreefficiently. Further the Bank has placed the following controls to enhance cybersecurity:

Data Centre and Disaster Recovery operations are ISO 27001:2013certified - (set of international best practices related to Information Security).

• Implemented multi-layered security architecture to protect ITAssets.

Periodic audits of applications and infrastructure to identifyweaknesses in the existing system and to take steps to rectify deficiencies.

Phishing sites rouge mobile apps and social media sites are monitoredfor malicious activities/contents and the same are taken down on detection throughanti-phishing and brand protection services.

Advanced security solution implemented to detect and preventBank's critical infrastructure from persistent threats and zero-day attacks.

Data Leakage Prevention solution to detect and prevent unauthorisedusage or misuse of business sensitive information.

Technology for detection of anomaly in network traffic and itsbehaviour to detect network level attacks.

Implemented technology to protect the systems from Distributed Denialof Service (DDoS) and obtained clean pipe to ensure uninterrupted customer service.

The Bank has also taken various initiatives for educating customersthrough various channels such as SMS ATM slips ATM screens Digital Displays Websiteetc. Employees are sensitised in the field of cyber security through circulars mandatoryE-Learning courses quarterly IS awareness magazine "Cyber Chunks" and AudioVisual Film among others. The Bank participates in the cyber security drills conducted byagencies such as IDRBT CERT-In to test its capabilities and further strengthen defenceagainst cyber-attacks. The Bank has an emergency response team and cyber crisis managementplan in place and their effectiveness is periodically tested through drills.

Digital Transformation

The Bank is committed to digitisation and continuously strives tomigrate transactions to digital channels which lead to better customer experience. Asagainst a target of 50 crore digital Transactions allotted to the Bank for FY 2019 by theMinistry of Electronics and Information Technology (MeitY) the Bank achieved 107.6% ofits target in February 2019.

The major focus of Digital Banking is to make our products available tocustomers through digital and mobile channels such as Mobile banking Unified PaymentInterface BHIM Aadhaar Multi-Function Kiosk Self Service Passbook Printers etc. Theprogress on digital initiatives is as follows:

Mobile Banking: The Bank's new Mobile banking applicationMConnectPlus is available in 13 languages and has been extended to NRI customers. The userbase has grown by 116% with 108% increase in transactions. Overall transaction amountincreased by 120% to Rs. 42162 crore.

Unified Payment Interface (UPI): The Bank has extended its UPIapplication to all its RRBs .The Bank has tied up with

TrueCaller app for providing UPI facility in September 2018. Toincrease customer convenience the Bank went live on UPI 2.0 as an issuer on 20.03.2019.Overall transactions increased to Rs. 122408 crore.

Baroda Pay Point: During the year the Bank launched Baroda Pay Point -a mobile/web-based fee collection portal for the payment and administrative needs ofeducational institutes and to help in canvassing additional CASA business and revenueincome.

Debit Cards: The Bank offers a wide range of chip-based Debit Cardswith customised offers to meet the changing lifestyles of the customers. The Bank hasissued more than 72 million debit cards (including 44 million Rupay cards). The Banklaunched RuPay qSPARC card - the National Common Mobility Card (NCMC) to enable customersto have a single card instead of a Debit and a Prepaid card separately.

Bharat Bill Payment System (BBPS): The BBPS System of the Bank has beencertified both as a Customer Operating Unit (COU) and a Biller Operating Unit (BOU) byNPCI. The Bank is providing BBPS services in Mobile Banking BHIM UPI Net Banking andUMANG application through Net banking. The volume and value of transactions under BBPSincreased by 296% and 261% during the year respectively.

Baroda FASTag (National E Toll Collection - NETC): The Bank hasimplemented and launched NETC on 12.07.2018 and branded it as Baroda FASTag.

ATMs: The Bank has 8166 ATMs and 1406 Cash Recyclers in India andwith an availability of 95%. Our multi-function ATMs are focused on making banking asmooth experience.

Hi-Tech Digital Branch: The Bank has evolved an innovative concept bysetting up Hi-tech Digital branches equipped with advanced gadgets like ArtificialIntelligence Robot named Baroda Brainy and Digital Lab with free Wi-Fi services. Inaddition the digital branches have self-service kiosks and an expert area which isequipped with Remote Tellers (Video Assistants) to assist the customers in a moreinteractive manner.

NACH eMandate: Bank of Baroda went live for eMandate Internet Bankingon March 21 2018. The Bank also went live with API Mandate (Internet Banking) as adestination bank on February 6 2019.

Baroda Prepaid Card: The Bank offers three types of Prepaid cards toits customers. a. Baroda Gift Card: A perfect gifting option which can be used to makepurchases or payments across the country. b. Baroda TravelEasy Card: A prepaidinternational currency card which is available in three currencies i.e. US Dollars (USD)Euro Sterling Pound (GBP). It is a reloadable and competitively priced card and can beissued to resident customers travelling abroad. c. Baroda Reloadable Card: A prefundedcard that is ideal for recurring overheads like pocket money travel allowancesdaily/monthly wages meal allowances etc.

Cashless Villages: The Bank has transformed 281 villages into cashlessvillages by providing various digital products like Debit card Mobile Banking InternetBanking UPI BHIM QR BHIM Aadhaar POS machines etc.

Digitisation of Records: As a step towards moving to paperless bankingand freeing space at branches to make way for customer friendly lay out digitisation ofrecords has been undertaken by setting up a Document Management System (DMS). This is anambitious project of the Bank under which around 22 crore papers have already been scannedcovering over 3200 branches. Over 2 lakh sq. ft. of space has been unlocked in theidentified Branches.

FinTech

The Bank is cognisant of the transformational impact of FinTech onfinancial services industry. The Bank has played a pioneering role in collaborating withthese players by becoming the first PSB to establish a dedicated FinTech vertical in 2016.As of March 2019 the Bank had 40+ partnerships with diverse FinTech startups workingacross lending payments and innovative services. Some of our major initiatives during theyear included:

Payments: The Bank became the first PSB to go live on Truecaller Payfor enabling digital payments using BHIM Baroda Pay UPI services. This tie-up gives usaccess to over 60 million tech-savvy customers across the country. The Bank generatedtransactions of Rs. 166 crore in first 6 months of going live.

BoB Innovation Centre: The Bank signed an MOU for setting up the BoBInnovation Centre (BoBIC) in collaboration with IIT Mumbai at their campus. BoBIC is afirst of its kind BFSI– Academia partnership which is powered by a strong ecosystemand aims to promote a culture of innovation and entrepreneurship in India.

Shared Services

The Bank has set-up a wholly owned subsidiary Baroda Global SharedServices Ltd. (BGSS) to focus on four core areas: ‘customer service efficiencyspeed & managing risk'. The Bank's digitisation and centralisation strategyis embedded with shared services. A number of processes have moved to back-officeoperations at the state-of-the-art Shared Services Centre (SSC) in GIFT City Gandhinagarand Hyderabad. Centralisation has not only reduced the cost of transactions but enhancedrisk management controls and compliance practices.

During the year the SSC made significant progress on centralisation ofback office processes and enhancing risk management framework for the Bank. Thecentralisation of following functions has been undertaken at SSC:

1. Migration of all deposit account opening trade and forextransactions (foreign) and retail mortgage loans processing.

2. Pension operations.

3. Digital Banking and Credit Card Operations.

4. Call centre for customers.

A pilot for agriculture operations domestic trade other branchtransactions (FD account maintenance etc.) and MSME Operations with selective branches/region is underway. The SSC has more than 800 full time employees (FTEs) in non-voice(transaction processing) and ~ 750 FTEs in its call centre at GIFT City with BusinessContinuity Planning (BCP) presence in Mumbai and Hyderabad centralising more than 65% ofidentified processes and activities.

During FY 2019 SSC has started a state of the art 24X7 facilityserving customers with focus on digital processing

There has been an improvement in turnaround time (TAT) along withreduction in error rates with specialisation of roles and enforcement of improved‘First Time Right' (FTR).' Time and motion studies have been conducted ofeach transaction/ product in order to help in continuously improving the utilisation andproductivity.

Operational Highlights:

1. BGSS is operational round the clock and ISO Certified.

2. Focus on automation of repeated tasks for better productivity acrosssegments and setting up of express channels for priority processing. SSC is working onRobotics AI and machine learning based applications in conjunction with the IT team.

3. More than 650 Bank staff were released to the branches for sales andother services.

4. Automation of cheque book welcome kit email/ SMS alerts has beenactivated for trade & forex customers.

SSC also enhances the risk management framework of the Bank byinstituting stronger controls at every stage of a transaction/ process.

Marketing

The Bank has adopted an integrated marketing strategy across productsand services that spans multiple customer touch points. We create narratives thatemphasise on services rendered by us and help in engaging with our customers to strengthentheir relationship with the brand. During FY 2019 Bank was present across all mediums ofcommunication including print digital out-of-home (OOH) television and radio with ahost of both brand and product led campaigns to increase both aided and unaided recall forthe brand. The Bank continues to create awareness by showcasing real life inspirationalstories of its beneficiaries on two sponsored shows – ‘Hunnarbaaz' on DDNational and "Hum Hain Hunnarbaaz – Koshish Hamari Safalta Aapki" on CNBCAwaaz. Our brand ambassadors P. V. Sindhu and K. Srikanth helped us in reaching out todiverse audiences.

During the year the Bank conceptualised and executed an extremely wellreceived campaign with the themes – ‘‘Behtar Se Behtareen" and"Power of Three" to announce the tripartite amalgamation of Vijaya Bank and DenaBank with Bank of Baroda. The creative execution with children as protagonists is not onlyendearing but also stresses on the shared heritage of the three brands which enhance brandrecall.

In line with our focus on digitisation and the large base of Gen Ycustomers the department continues to leverage the digital marketing ecosystem to put upthe building blocks for data-led and metric-driven digital marketing. The Bank ran 50+digital campaigns through the year with the objective of establishing Bank of Baroda as anaspirational brand which engages empowers and educates digital audiences by providingrelevant content and fulfills banking needs by constantly analysing measuring andimproving experience response and capabilities. The Bank is focussed on both SearchEngine Optimisation and organic growth on social media channels to cover netizens andengage with them. The Bank's Social Media Presence is summarised below:

No of likes / Followers as on
Social Media Channels
31.03.2019
Facebook Likes 1052000+
Twitter Followers 68000+
YouTube Subscribers 24300+
LinkedIn Followers 48000+
Instagram Followers 49200+

Branch Network

As of March 31 2019 the branch network of the Bank is as under:

31.03.2018 31.03.2019
Number of Branches % Share in Total Number of Branches % Share in Total
Domestic
Branches
Metro 1167 21.35% 1203 21.66%
Urban 930 17.01% 959 17.27%
Semi-urban 1537 28.11% 1546 27.84%
Rural 1833 33.53% 1845 33.23%
Total 5467 100.00 5553 100.00
Overseas 106 100
Branches/ Offices
(including branches of overseas subsidiaries)

The Bank opened 92 new domestic branches and merged six of them withexisting branches.

Currency Chests

The number of currency chests with the Bank increased from 98 to 100with the addition of two currency chests at Vadakara (Kerala) and Kennedy Avenue(Amritsar) during the year. These chests support effective cash management in the Bank aswell as vaulting cash on behalf of RBI. All the currency chests as well as branches areprovided Note Sorting Machines (NSMs). Moreover these currency chests have also helpedthe Bank in efficient management of cash at branches.

Corporate Social Responsibility (CSR)

The Bank has a long legacy and tradition of contributing actively tothe social and economic development of the communities through various developmentalactivities. The Bank as a responsible corporate citizen continuously strives to contributeto the welfare of the society particularly the upliftment of the underprivileged sectionsof the society to make sustainable social changes in their lives. Skill developmentthrough training for gainful employment human welfare and other social activities forwomen and farmers continue to remain the Bank's key focus areas. The Bank is helpingdifferent organisations engaged in various community development and socio-economicwelfare activities for the benefit of weaker sections and rural citizens.

The Bank has established 49 Baroda Swarojgar Vikas Sansthan (BSVS) andRSETI centres in seven states of the country. These centres impart skill developmentprogrammes to youth from rural and semi-urban areas for generating self-employment. Tilldate these centres have conducted 12990 training programmes and imparted training to364995 youth out of which 237507 have already secured employment or setup their ownventures. The settlement ratio is at 65%. Our 25 BSVS centres have been graded as"AA/A" (outstanding) based on the overall performance/functioning of the RSETIsduring FY 2018. 20 Baroda RSETIs operate from the Bank's own premises. The Bank hasset up 51 Financial Literacy and Credit Counseling Centres (FLCCs) in eight states whichprovide financial counseling services and education to the people in rural and urban areasabout various financial products and services available from the formal financial sector.These centres also take up activities that promote financial literacy awareness aboutbanking services digital banking financial planning and amelioration of debt-relateddistress of an individual.

Risk Governance and Internal Controls

The increased focus on risk and the supporting governance frameworkincludes identifying the responsibilities of different parts of the Bank for addressingand managing risk. Often referred to as the ‘three lines of defence' each ofthe three lines has an important role to play. These are:

i. First line of defence – This comprises of all the Bank'semployees as they are required to own and ensure the effective management of risk andcompliance with regulations the Bank's policies and guidelines.

ii. Second line of defence – This comprises of the risk controlowners the risk management function and the compliance function. It is responsible foridentifying measuring monitoring and reporting risk on an enterprise-wide basisindependently from the first line of defence.

iii. Third line of defence - An independent assurance is provided bythe internal audit function by conducting internal risk-based and other audits. Thereviews provide assurance to the Board that the overall governance framework including therisk governance framework is effective and that policies and processes are in place andconsistently applied. The role of the audit function is defined and overseen by the AuditCommittee of the Board.

Risk Management and Compliance

Risk is an integral part of the banking business and the Bank aims toachieve an appropriate trade-off between risk and returns. To ensure sustainable andconsistent growth the Bank has developed a sound risk management framework so that therisks assumed by the Bank are properly assessed and monitored. The Bank undertakesbusiness activities within the defined risk appetite limits and policies approved by theBoard of Directors of the Bank. Specific committees of the Board have been constituted tofacilitate focused oversight on various risks. The Board has also constituted a RiskManagement Committee of the Board which oversees the interlinkages among different type ofrisks. It is supported by onboarding specialists in the area. Policies approved from timeto time by the Board of Directors or committees of the Board form the governing frameworkfor each type of risk.

The Bank has a comprehensive Internal Capital Adequacy AssessmentProcess and stress test policy. The Pillar 2 risks such as Liquidity Risk Interest RateRisk Concentration Risk and Capital Adequacy under both normal and stressed conditionsare assessed as per the extant policies. A brief outline of the mechanism for identifyingevaluating and managing various risks within the Bank is as follows.

Enterprise Risk Management and Risk Appetite Statement

The diversity of our lines of business requires a comprehensiveEnterprise Risk Management approach to promote a bank-wide strong risk management cultureto help in the early identification assessment measurement aggregation and managementof all risks and to facilitate capital allocation among various lines of business. Allrisks are approved within the overarching Risk Management Framework and are adequatelyhedged. The Bank is constantly endeavouring to create a strong risk awareness culture byimparting trainings to the employees at all levels.

Credit Risk

Credit Risk is managed through a Board approved framework that sets outpolicies procedures and reporting which is inline with international best practices.Adequate attention is given to the independence of the risk evaluators and businessfunctions for establishing a sound credit culture and a well-structured credit approvalprocess. Credit risk measurement models are validated by independent model validators fortheir discriminatory power accuracy and stability. The Bank's experience in internalratings over the years has enabled the Bank to obtain the regulator's approval forrunning the Foundation Internal Rating (F-IRB) approach of credit risk under Basel IIguidelines from March 31 2013. Under the IRB approach the banks develop their ownempirical model to quantify required capital for credit risk. The Bank has put in placeprudential caps across industries sectors and borrowers to manage credit concentrationrisk. The portfolio review cell carries out detailed reviews on sectoral exposure creditconcentration rating distributions and migration. The Bank has also implemented the RiskAdjusted Return on Capital (RARoC) framework for corporate credit exposures for evaluatingcredit risk exposures from the point of ‘economic value addition' to theshareholders.

Market Risk

Market Risk implies the risk of loss of earnings or economic value dueto adverse changes in market rates or prices of trading portfolio. The change in economicvalue of different market products is largely a function of change in factors such asinterest rates exchange rates economic growth and business confidence. The Bank has welldefined policies to control and monitor its treasury functions which undertake Market Riskpositions. The Bank measures and monitors interest rate risk in its trading book throughduration modified duration PV01 and Value at Risk (VaR) on a daily basis. The foreignexchange risk is measured and monitored in terms of net overnight open position limits(NOOPL) VaR limits Aggregate Gap Limits (AGL) Individual Gap Limits (IGL) on a dailybasis. Equity price risk is measured and monitored through VaR limits and portfolio sizelimits etc. At a transaction level stop loss limits and dealer-wise limits have beenprescribed and implemented. Under its stress testing framework the Bank conductscomprehensive stress tests of its trading book portfolio on a quarterly basis.

Asset Liability Management

Liquidity Risk is the inability to meet expected and unexpected cashand collateral obligations at reasonable cost. At the Bank the liquidity risk is measuredand monitored through Flow Approach and Stock Approach and other prudential stipulationsas per RBI's extant guidelines. The Bank has implemented the Basel III Framework onLiquidity Standards - Liquidity Coverage Ratio (LCR) Liquidity Risk Monitoring Tools andLCR Disclosure Standards. The LCR Standard aims to ensure that banks maintain an adequatelevel of unencumbered High - Quality Liquid Assets that can be converted into cash to meetliquidity needs for a 30-calendar days' time horizon under a significantly severeliquidity stress scenario specified by supervisors. The Bank has always been well abovethe stipulated level of LCR on a solo basis as well as on a consolidated basis. InterestRate Risk in the Banking Book (IRRBB) arises due to mismatch between rate sensitive assetsand liabilities which may adversely impact the earnings/economic value of equity of theBank with the change in interest rates. The Bank uses risk management tools such asTraditional Gap Analysis Earning at Risk and Modified Duration of Equity for themeasurement and monitoring of Interest rate risk in the banking book. The short-termimpact of interest rate movements on Net Interest Income [NII] is calculated through the‘Earnings at Risk' approach by taking into consideration parallel shift in yieldcurve yield curve risk basis risk and embedded options risk. The long-term impact ofinterest rate movements is measured and monitored through change in Market Value of Equity(MVE).

Operational Risk

The Bank has implemented a web-based Operational Risk Management systemcalled SAS Enterprise Governance Risk and Compliance (EGRC) for systemic and integratedmanagement of Operational Risk. To mitigate and control operational risk at a transactionlevel Bank of Baroda has established a Centralised Transaction Monitoring Unit formonitoring of all domestic transactions from the KYC/ AML/ CFT perspective. The Bank hassegregated customer interface (front office) from the execution of transactions (backoffice) by centralising a number of back office functions. The Centralised Trade FinanceBack Office (TFBO) for forex transactions has been set up to minimise operational risk inforex transactions. Roll out of Key Risk Indicators Programme (KRI) Risk Control andSelf-Assessment Programme (RCSA) and root-cause analysis has further strengthened thecontrol environment. For improved fraud risk management the Bank has completed theimplementation of the first phase of Enterprise Fraud Risk Monitoring Solution (EFRMS) andthe second phase is under implementation.

Basel III Implementation

The Basel III capital regulations have been implemented by Indian bankswith effect from April 1 2013. This implementation requires enhanced quality and quantityof capital on one side and enhanced disclosures on the other. For augmenting and improvingthe core capital of Banks new measures for the inclusion of FCTR DTA and RevaluationReserves were introduced by RBI in March 2016. The Bank has started maintaining CapitalConservation Buffer (CCB) from March 2016 onwards and will reach the minimum prescribedlevel of 2.5% by FY 2020.

The Bank also maintains the regulatory mandated liquidity coverageratio (LCR) as per the transitional arrangements prescribed by RBI.

Compliance

The compliance function is one of the key elements in the Bank'scorporate governance structure. The Bank has put in place a robust compliance systemincluding a well-documented Compliance Policy outlining the compliance philosophy of thebank role and set up of the Compliance Department composition of its staff and theirspecific responsibilities. The compliance function advises senior management and the Boardon the Bank's compliance with applicable laws rules and global standards and keepsthem informed of developments in the area. It also educates employees about complianceissues by conducting periodic trainings and workshops for business staff and designatedcompliance officers. Knowledge management tools for this purpose have also been uploadedon the Bank's site. The Bank has implemented a web-based compliance managementsolution for certification and monitoring of various regulatory statutory and internalguidelines at each level in the Bank for further strengthening the compliance function.

KYC/ AML Compliance

The Bank has a well-defined KYC-AML-CFT Policy. On the basis of thisPolicy KYC norms AML standards and CFT measures and obligations of the Bank underPrevention of Money Laundering Act (PMLA) 2002 are implemented in the Bank. The Bank haselaborate systems to generate Cash Transaction Reports (CTRs) electronically forsubmission to Financial Intelligence Unit-India (FIU-IND). The Bank electronically filesCounterfeit Currency Reports (CCRs) Non-profit Organisations Transaction Reports (NTRs)and cross border wire transfer (EFT) reports to FIU-IND New Delhi on its portal everymonth within prescribed timelines.

The Bank has established a Central Transaction Monitoring Unit (CTMU)and put in place an AML Solution for monitoring and detection of unusual transactionpatterns in customers' accounts and generation of system-based transaction alerts onthe basis of predefined alert parameters in the system. System-based risk categorizationof customers' accounts is done on half yearly basis. Re-KYC of High Risk Customers isbeing done on half yearly basis after carrying out Money Laundering Risk CategorizationExercise as per extant guidelines of the RBI. For this purpose Bank has developedautomated process flow for identification and generation of Notices for such customers tonotify them for submission of requisite KYC Documents. The Bank has also implementedAadhar based e-KYC in collaboration with UIDAI on voluntary declaration of customers fore-KYC authentication. The Bank is in the process of allotting Unique CustomerIdentification Code (UCIC) to all its existing customers as per the RBI guidelines and hasimplemented a Central KYC Registry for allotment of CKYC Numbers to individual customersas per prescribed RBI guidelines. The guidelines in respect of beneficial owners arescrupulously followed.

Internal Audit

The Bank's Central Internal Audit Division (CIAD) is responsiblefor internal audit. CIAD administers various streams of audits besides Risk Based InternalAudit (RBIA) of branches and offices. The Audit Committee of the Board oversees overallinternal audit function and guides in developing effective internal audit concurrentaudit IS Audit and all other audit functions of the Bank. The committee monitors thefunctioning of the Audit Committee of executives and internal audit department in theBank. CIAD operates through thirteen Zonal Internal Audit Divisions to carry out internalaudit of branches/offices as per the periodicity decided by the Risk Based Internal AuditPolicy. All branches of the Bank are covered under Risk Based Internal Audit. Out of the4881 branches audited during FY 2019 4151 branches (85.0%) were in Low Risk 627branches (12.9%) were in Medium Risk 101 branches (2.1%) were in High Risk and 2 branches(0.04%) were in Very High-Risk category. The Bank had engaged an independent firm as aknowledge partner for comprehensive review of the Audit function in-line with theprocesses focusing on centralisation of activities by use of technology imaging solutionsand digitisation. The audit transformation process was completed and audits under therevised approach commenced during the financial year.

Customer Service

The Bank is focused towards providing excellent customer experiences.It has been our constant endeavour to set industry benchmarks and pioneer innovationsacross products processes and service delivery that are imperative to providing seamlessexperiences to our customers. We have been actively engaged in understanding andidentifying gaps between customer needs and expectations through the Voice of thecustomers and employees embedding customer experience goals in the organisation'sgoals building a "Client First Culture" and redesigning experiences (productdesign systems and processes) for enhanced customer delight. This year the focus hasbeen on "EASE of Banking" to improve experiences across every customer touchpoint. Several initiatives were undertaken round the year to ensure EASE – EnhancedAccess and Service Excellence. The Bank has secured the second place among public sectorbanks in the ‘EASE of Banking Index a strategic initiative undertaken by Governmentof India to imbibe best practices and provide superior customer experiences in Publicsector Banks. Some of the steps taken in this direction by the Bank are:

The Bank has a wide array of financial services including Insurance andInvestments and provides one-stop shop access to customers. The Bank has customised theservice and marketing strategy for select customer segments in order to meet theirexpectations. "Baroda Radiance" has been launched across all major cities andinvestment and wealth management services are now available to all our customers. Bank hason-boarded best-in-class investment advisors and relationship managers. A dedicated phonebanking team also is now available for assisting Baroda Radiance customers.

• Banking from home and mobile has been made more comfortable withthe addition of multiple frequently used options and functionalities (nominationregistration request for account transfer closure of term deposits new one glanceaccount statement across relationships) to the Bank's popular mobile banking application.The internet and various other digital applications are being enhanced with newfunctionalities to provide better user experience.

• Bank's Contact Centre supports six regional languages inaddition to English & Hindi. It is available 24*7 to handle emergencies (cardblocking reissuance stop payments) enquiries or grievances. We also support fouroverseas locations – Mauritius Botswana Oman and Uganda.

• The Bank has undertaken an end-to-end revamp of the grievancemachinery with more convenience for customers. Some of the features include acomprehensive and well- established policy real-time complaint status tracking timebound auto escalation options to attach documents option to provide feedback onresolution quality and also an option to reopen a complaint.

At the apex level the Bank has formed the Customer Service Committeea sub-committee of the Board which addresses the issues relating to the formulation ofpolicies and assessment of their compliance with the aim of consistent improvement in thequality of customer service. The Bank has also set up a Standing Committee on Proceduresand Performance Audit of Customer Service. Its members include two eminent publicpersonalities all Executive Directors and the seven Functional Heads of the Bank. ThisCommittee reviews practices and procedures prevalent and takes timely and effectivecompliance of the RBI instructions on Customer service. In addition there are BranchLevel Customer Service Committees for directly getting feedback from customers.

While the Bank is focused on enhancing the convenience of banking fromhome the Bank is also monitoring the service levels across the network of branchesthrough mystery shopping/service audits. The Bank is ensuring better ambience moreseating area and better basic amenities to all customers with special focus on"EASE" for senior citizens and the differently abled. Some of the flagshipbranches are undergoing a facelift and are being deliberately designed to provide acompetitive edge while enhancing customer experience.

The Bank is driving hassle-free banking through alternate deliverychannels (apart from ATMs and cash re-cyclers)- self-service pass books multi-functionalkiosks tab banking Baroda Pay Point tie ups with BHIM Aadhar enhanced UPI app andother initiatives of national importance such as Bharat Bill Payment System.

• The Bank has transformed 281 villages into cashless villages byproviding various digital products like Debit Cards Mobile Banking Internet BankingUPI BHIM QR BHIM Aadhaar and POS machines.

• As mentioned earlier the Bank is continuously upgrading its ITinfrastructure and driving digitisation in its processes. The Bank has launched a new loanprocessing system making end-to-end tracking of applications and loan disbursals faster.An enterprise wide CRM will also be rolled out shortly to improve quality of interactionsand experiences at every touch point.

The Bank has an ongoing ‘Client-First' drive and continuousfeedback is sought from customers and employees on experiences delivered at various touchpoints. The Bank publishes a Client-First Newsletter "Pratham" which discussesbest practices in the service industry and features stories on Barodians "living theclient-first" values.

A customer's journey with a bank involves multiple stages fromqueries about the Bank's offerings to delivery of products and services. The Bankendeavours to meet the customer's expectations at each stage of the journey and toensure customer "wow". The Bank secured the 4th position in Forrester'sIndia CX Index 2018 Rankings of Indian Banks. The Forrester's CX Index scoremeasures how successfully a company delivers customer experiences that create and sustainloyalty.

Vigilance

The vigilance function in the Bank aims at proactively supporting bonafide decisions and simultaneously acting as a deterrent for ensuring that no wrongdoingtakes place. The thrust remains on identifying leakages within the organisation that maylead to financial losses and taking corrective and preventive action to plug them. Regularvigilance audits are undertaken for sensitive branches and employees are sensitized onpreventive aspects of vigilance through newsletters circulars meetings etc. The numberof staff accountability cases has been brought down by ensuring speedy disposal ofvigilance matters. An exclusive portal ‘BoB e-Vigil' incorporating onlinevigilance clearance disciplinary proceedings status and complaint management system hasbeen operationalised.

Human Resources

The Bank has a rich talent pool with over 55000+ employees on itsrolls. The Bank continuously undertakes multiples initiatives for strengthening anddeveloping its human resources viz. recruitment addressing training needs of employeesemployee engagement and capability building.

The second ‘Voice of Barodians' Survey witnessed 87% employeeparticipation where the Bank's workforce expressed their perceptions views andsuggestions on a wide range of aspects impacting them. As a result of various HRinterventions initiated by the Bank the overall employee engagement level has increasedfrom 55% in the last survey to 63%. The Bank has been awarded among the Best 50 PCI(People Capital Index) Companies by Jombay. The following initiatives have been takenduring the year which have direct and significant impact on Bank's performance:

Manpower Planning and Recruitment

The Bank has built a new scientific manpower planning model designed toestimate skill-based manpower needs at various levels. This would help the Bank in takingkey strategic decisions viz. recruitment deployment promotions trainings etc. The Bankrecruited 1281 Officers and 1617 in Clerical Cadre as Business Associates through directrecruitment during FY 2019. The Bank also hired specialised staff with expertise in nicheand key focus areas to strengthen its capabilities and bench strength.

Baroda GEMS Growth and Empowerment Management System The Bank hasintroduced a scientifically measurable Performance Management System (PMS) for allofficers on a digital platform - Baroda GEMS (Growth and Empowerment Management System) toestablish a transparent and performance driven culture. The role perquisites for BranchHeads are also linked with Baroda GEMS to enable accurate measurement of achievement ofKRAs.

Job Family

During the year the concept of allocating employees to job familieshas been introduced in the Bank to enable well-rounded grooming of the employees and toprovide them with better career opportunities through flexibility of movements acrossroles which are mapped out for each job family and ensure structured and timelydeployment exposure and development.

Baroda Rewards for Individual & Team Excellence – BRITE

The Bank has always been a front-runner in acknowledgingemployees' contribution and believes that employees are strategic partners in questfor excellence. To instill the spirit of the core values and cover multiple dimensions ofemployee performance and motivation a comprehensive suite of rewards and recognitionprogrammes named as ‘Baroda Rewards for Individual & Team Excellence- BRITE'has been institutionalised during the year to recognise both outstanding individual andteam performance.

Baroda Anubhuti Programme

It is an employee engagement programme designed to foster the spirit ofteam bonding and collaboration and creating a happy and fun workplace. Variousinitiatives like employee of the month spot recognition –capturing ‘WoW'moments fun hour at all branches/offices local community service/ social activities areundertaken to enhance the overall employee engagement levels. Mandatory community serviceprogrammes are carried out through all branches/offices once in six months.

Under the banner of Baroda Anubhuti the Bank has been also conductingAnnual Sports Day on the 4th Saturday in November and six Inter Zonal Sports &Cultural Tournaments in various disciplines across the country.

Wellness and Fitness Drives

The Bank has launched many initiatives for managing employee health andwell-being which include a mandatory health checkup scheme for employees and theirspouses. During the year through a Group Term Insurance cover the Bank offered allpermanent employees with the Life Insurance cover of Rs 20 lakh. The medical treatmentneeds of employees are met through a Group Medical Insurance Policy. The Bank regularlyconducts Health checkup camps fitness drives yoga sessions etc. to promote the healthand well-being of our employees.

Crche facility

During the year as part of its employee friendly welfare measures theBank set up a state-of-the-art onsite crche facility at its Corporate Office in Mumbaiin order to provide day care facilities for small children of employees. The Bank plans toextend this facility at the Head Office Baroda and other select centres.

Learning and Development

The Bank's approach to training identifies the functionalmandatory and behavioral training needs for employees at different levels of careerdevelopment and addresses these requirements in a systematic manner. Mandatory traininghas been aligned to specific and critical job roles. The Bank also runs mandatorycertification programs that are necessary before deployment in critical roles. The Bank isalso investing in sharpening soft skills of its employees. The Bank has undertaken variousinitiatives to build a learning environment through various innovative and digitalchannels like Baroda Gurukul Baroda Margdarshak Baroda Radio Barodapedia BarodaYouTube a digital library and weekly quizzes for knowledge updation. Our e-learningplatform hosts more than 280 modules and more than 8 lakh courses were completed byemployees during FY 2019.

‘We Lead' – Comprehensive Leadership DevelopmentProgramme

The Bank has identified over 2700 potential leaders to take overleadership positions in future through four distinctive programmes:

• Baroda Senior Leadership Programme- for officers in Scales VI& VII

• Baroda Emerging Leaders Programme- for officers in Scales IV

• Baroda Rising Stars Programme- for officers in Scales IV

• Sayaji Rao Gaekwad Scholars Programme – for Officers inScales I II & II

The first phase of the comprehensive leadership development programme– ‘We Lead' has been completed and actions have been initiated for the nextphase to extend the coverage of the programme.

Baroda Alok Chandra Bravery Award

During the year the Bank instituted the ‘Baroda Alok ChandraBravery Award' to recognise exemplary acts of bravery beyond the call of duty bydisplaying courage for furthering safeguarding and protecting the interests of the Bank.The Award is named in the memory of Late Shri Alok Chandra who during the year laid downhis life while protecting Bank's interests while posted in Arwal Branch PatnaRegion.

Career Progression

Concerted efforts have been taken by Bank for fostering careerprogression of employees for rewarding them for their performance and motivating them.Horizontal movement of Officers across different functions is encouraged to provide themwith wider exposure. During the FY 2019 promotion exercises were completed and 3564employees promoted in all scales and cadres.

HR policies and systems

The Bank is constantly updating its policies and systems to make them‘Best in Class'. During FY 2019 various policies viz. Transfer Promotionpolicy on Equal Opportunities were put in place / updated to keep up with the changingtimes. Under the aegis of Staff Welfare Fund the Bank has standardised the facilities atthe Bank's Holiday Homes and also opened five more Holiday Homes during the year inMunnar Panchmarhi Shillong Dharmshala and Baroda. The total number of Holiday Homes nowstand at 50. The Bank's Human Resource Centralised Processing Cell (HRCPC) departmentprocesses all staff loan applications and other online TA/DA claims on the same day ofreceiving the applications maintaining the TAT and contributing to employee satisfaction.

The Bank has continuously improved its HR technology platform"Human Resources Network for Employee Services (HRNes)". In order to addressemployees' concerns and grievances Bank has also put in place an online employeegrievance redressal mechanism named as "Baroda Samadhan".

Thrust on Diversity

The Bank follows a non-discriminatory and equal opportunity policy forall its employees. The Bank is transparent in all issues relating to promotion careerpath transfer policy and employee benefit / welfare schemes. The Bank has also introduced‘Job Roles' for visually impaired employees. Further the Bank has beenincreasing its recruitment of women employees. The percentage of women in the overallstaff composition has increased to 23.7% in FY 2019 from 23.0% in FY 2018 and 22.7% in FY2017.

In order to retain women employees at all levels and in recognition ofthe concomitant responsibilities of women the Bank has also put in place variousfacilities to support women employees such as sabbatical leave and health check-upprogrammes for women employees among other initiatives. Besides a day-care crchefacility has been operationalised as mentioned earlier.

Reservation Cell

An exclusive Reservation Cell has been set up to monitor thereservation and other enabling provisions for SC/ST/PWD/ Ex-Serviceman and OBC employees.Executives in the rank of General Manager are appointed as Chief Liaison Officers forSC/ST/PWD and ex-serviceman employees and OBC employees respectively who ensurecompliance of various guidelines pertaining to them. With effect from February 1 2019reservation of 10% for Economically Weaker Sections (EWSs) in all exercises for directrecruitment in the Bank is implemented. The Bank provides reservations for Persons withDisabilities (PWDs) at the rate of 4% of the total vacancies arising in Officer(identified posts) Clerical and Sub-Staff Cadre in a year as per Government guidelines.

Caste Category wise Count as on 31.03.2019
Cadres SC ST OBC Ex - SM
Officer 4975 2292 7831 377
Clerk 3116 1780 4844 1742
Sub-staff 2303 831 2133 577
Grand Total 10394 4903 14808 2696
% to Total 18.9 8.9 27.0 4.9
Employees

Periodical Meetings: The Bank holds Quarterly Meetings with therepresentatives of All India Bank of Baroda SC/ST Employees' Welfare Association and halfyearly meeting with the representatives of All India Bank of Baroda OBC Employees'Welfare Association as per the Government Guidelines.

Workshops & Training Programmes:

Bank conducts following training programmes every year for members ofAIBOBSCST Employees' Welfare Association and AIBOBOBC Employees' WelfareAssociation and Liaison Officers of SC/ STs and OBCs at Apex Academy Gandhinagar:

Pre-Promotion Training for SC/ST candidates

Workshop on Reservation Policy

Training programme on Disciplinary proceedings The Standing Committeeon Social Justice and Empowerment met our Bank's representatives on 15th January2019 at Jamnagar on priority sector lending to SCs STs OBCs Minorities and Persons withDisabilities.

Premises Re-engineering

In an effort to improve the ambience of customer touch points 360identified branches across the country are being refurbished with special emphasis onmaintaining a uniform look and feel in all branches. An Ambience Manual has been issued tostandardise the ambience of branch premises keeping in view the ease of bankingoperations use of new technology and customer convenience. The Bank has also undertaken anumber of green initiatives during the year and successfully completed the construction ofthe new Regional office at Udaipur and a Disaster Recovery centre at Hyderabad. Bank in anattempt to reduce carbon footprint uses energy efficient equipment solar energy and LEDlight fixtures in its branches. Use of recycled waste water and production of bio gas fromsolid waste are also explored in Bank's major commercial buildings.

Implementation of Official Language (OL) Policy

The Bank continued to make exemplary progress in the implementation ofthe Official Language Policy of the Government of India and fulfilled all the assurancesgiven to the Committee of Parliament on Official Language. Use of Hindi and other Indianlanguages for business growth as well as for providing digital products to the customersis a significant characteristic of the language policy adopted by our Bank. This has beenappreciated by regulatory authorities.

Our initiatives included organising an All India seminar for bankingfaculties on ‘Opportunities for Credit Flow to Agriculture Sector' publishinge-books/ books on various topics like Agricultural Best Practices Baroda Kisan Diwasrelated literature as well as active participation in the 11th Vishwa Hindi Sammelan heldat Mauritius.

This year the Bank instituted one more award namely "MaharajaSayajirao Lok Bhasha Samman" for honouring an eminent personality from other than theHindi speaking community for contributing in the promotion and preservation ofHindi/Regional/Tribal languages in addition to the "Maharaja Sayajirao BhashaSamman" scheme of the Bank. During the year the Bank was awarded the First Prize bythe Government of India under linguistic region ‘B'. Similarly TOLIC Varanasiwas awarded with First Prize. Besides this our Faizabad Regional Office Zonal OfficeLucknow TOLIC Jaipur TOLIC Baroda and TOLIC Rajkot also received awards fromGovernment of India through its Regional Implementation Offices. The Bank's HouseJournal ‘BoBMaitri' and Hindi Patrika ‘Akshayyam' received awards fromAssociation of Business Communicators of India (ABCI) during the year in three differentcategories.

Domestic Subsidiaries and Joint Ventures

BOB Financial Solutions Ltd.

BOB Financial Solutions Limited (BFSL) formerly known as BobcardsLimited is a wholly owned subsidiary of the Bank. It is a non-banking financial companyand its primary business lines include credit cards personal loans and merchantacquiring. During the year it revamped its business strategy. BFSL's credit cardsbase grew 84% YoY helped largely by a 1200 strong field force deployed across 1700+branches of the Bank. BFSL introduced value added features in the form of rewards pointsand various schemes through marketing partnerships with leading consumer brands whichresulted in a 37% increase in spends on credit cards in H2 vs H1 (FY 2019). BFSL enteredinto a tripartite agreement with the Bank and TransUnion-CIBIL for launching‘Project Nirmaan' – an initiative to pre-approve Bank's customers forcredit cards. More than 66000 credit cards were issued under this programme. Further apersonal loan product was piloted for the BFSL employees and a select set of pre-approvedcredit card customers during FY 2019. A plethora of technology initiatives were taken bythe company to improve customer experience (like EMI on Card Green Pin Chabot lendingsolution revamped website and customer service portal) to reduce customer serviceturnaround times (robotics based solution customer originations platform) and to enhanceemployee experience (HR Platform centralised Help Desk).

BOB Capital Markets Ltd.

BOB Capital Markets Ltd. (BOBCAPS) a wholly owned subsidiary is theinvestment banking arm of the Bank. It is a SEBI registered Category-I merchant banker.BOBCAPS offers the entire spectrum of financial services that include Initial PublicOfferings Private Placement of Debt Corporate Restructuring Business Valuation Mergers& Acquisitions Project Appraisal and Loan Syndication. BOBCAPS also undertakesadvisory services on Securitisation and Structuring of Debts. It has five lines ofbusinesses viz. Investment Banking – Equity; Investment Banking

– Debt; Institutional Broking Retail Broking and Wealth

Management.

During FY 2019 BOBCAPS completed five debt syndication transactionsamounting to Rs.4196 crore while the Stressed Asset Resolution team executed 5transactions. The Company has secured 10 mandates for IPOs / FPOs

/ OFS PE fund raise and M&A transaction resulting in a robust dealpipeline in equities. Institutional broking has ramped up its new client empanelments andrevenue run rate during the year. It has recently commenced coverage of foreigninstitutional investors based outside India. In retail broking rise in clientacquisitions and business volumes are being driven by enhanced products and services like3-in-1 Demat Trading and Bank Account Prepaid brokerage online account opening platformand quality research. The Company's investment advisory team supports the WealthManagement vertical of the Bank.

The Nainital Bank Ltd.

The Nainital Bank Limited (NBL) originally promoted by Late BharatRatna Pandit Govind Ballabh Pant and others in 1922 became a subsidiary of Bank of Bankof Baroda in the year 1973.The Bank's holding in Nainital Bank Ltd. is 98.57%. The totalbusiness of NBL increased to Rs. 10931 crore on March 31 2019 from Rs. 10772.10 croreas on March 31 2018. The net profit of the Bank was Rs. 26.89 crore in FY 2019 against aprofit of Rs. 48.90 crore during the previous year. The Bank opened 2 new branches duringFY 2019. During the year NBL was ranked 3rd in the category of the Best PerformingPrivate Bank in terms of average Aadhar generation and update by UIDAI for The AadhaarExcellence Awards 2018.

Baroda Global Shared Services Ltd.

Established during FY 2017 Baroda Global Shared Services Ltd. (BGSS)a wholly owned subsidiary of the Bank commenced its operations during last financialyear. BGSS's strategy is to focus on four core sectors - customer serviceefficiency speed & managing risk. It is providing services to the Bank by helping itin digitising and centralising its back-office operations at the state-of-the-art SharedServices Centre (SSC) GIFT City Gandhinagar and at a second centre at Hyderabad.Centralisation has not only reduced the cost of transactions but enhanced risk managementcontrols and compliance practices.

Baroda Asset Management India Ltd.

Baroda Asset Management India Limited ("Baroda AMC") became awholly owned subsidiary of the Bank with effect from September 28 2018 after buying outthe 51% stake by the bank from its joint venture partner UniCredit S.p.A. (the parentcompany of Pioneer Global Asset Management S.p.A.). The Baroda AMC acts as the investmentmanager to Baroda Mutual Fund ("Baroda MF") a mutual fund registered with theSecurities and Exchange Board of India. The Average Assets under Management (AUM) ofBaroda MF for FY 2019 were Rs. 12345 crore registering an annual growth of 7%. Growth inaverage AUM under equity schemes was over 40%. Baroda AMC continues to expand itsthird-party distribution network with particular focus on IFAs. The AUM from this segmenthas been growing steadily. With the completion of rationalisation and the schemecategorisation exercise and the regulatory changes around Total Expense Ratio Baroda AMCwill be better positioned to compete in the market.

IndiaFirst Life Insurance Company Ltd.

Headquartered in Mumbai IndiaFirst Life Insurance is one of thecountry's youngest life insurance companies with a paid-up share capital of Rs. 625crore. The company is promoted by two of India's largest public-sector banks - Bank ofBaroda and Andhra Bank which hold 44% and 30% stake in the company respectively. Duringthe year IndiaFirst Life's erstwhile founding partner Legal and General UKdivested the 26% stake it held in the company. This stake was acquired by Carmel PointInvestments India Private Limited incorporated by Carmel Point Investment Ltd a bodycorporate incorporated under the laws of Mauritius and owned by private equity fundsmanaged by Warburg Pincus LLC. The company's is currently ranked 12th in IndividualNew Business (Annual Premium Equivalent) among the private players with Assets underManagement (AUM) at Rs. 15039 crore as on March 31 2019.

IndiaFirst Life was named the "Most Innovative Life Insurer of TheYear (2018) - International" by Life Insurance International UK a body dedicated tooffering benchmark intelligence centered exclusively on the global life insurancefraternity besides being recognised among the "Best Brands 2018" by theEconomic Times and being certified as a "Great Place to Work".

India Infradebt Ltd.

India lnfradebt is the first Infrastructure Debt Fund (IDF) - NBFC andwas sponsored by Bank of Baroda along with ICICI Bank. Citicorp Finance (India) Limitedand LIC of India are other shareholders. It has been rated AAA by CRISIL ICRA and IndiaRatings since its inception. It finances the relatively safe completed infrastructureprojects which have achieved one year of commercial operations and enjoys 100% income-taxexemption. The synergy with the Bank arises from its focus on lending to strong stableinfrastructure projects - mainly NHAI road projects and renewable energy projects. Thecompany has delivered healthy growth in its first full five years of operations. Its loanbook as on March 31 2019 was Rs. 9809.5 crore and net profit for FY 2019 was Rs. 223.7crore.

Barodasun Technologies Ltd.

Barodasun Technologies Ltd. is a wholly owned IT subsidiaryincorporated on 05.07.2017. The Bank has set-up a Centre of Excellence (CoE) to identifynew emerging trends and provide technology differentiation. The CoE would provide designthinking skills process design architectural skills and core development capacity incurrent and future technologies to help businesses in leveraging technology for realisingbusiness outcomes.

A brief summary of domestic subsidiaries and Joint Ventures is asbelow:

(Rs. in crore)
Entity (with date of registration) Owned funds Total assets Net profit Offices Staff
BOB Financial Solutions Ltd 247.7 441.6 4.1 38 446
BOB Capital Markets Ltd. 153.8 161.33 (2.92) 1 114
The Nainital Bank Ltd. 624.0 8101.8 26.9 4 916
Baroda Global Shared Services Ltd. 12.0 14.1 1.5 3 locations (Gift City Gandhi- nagar/ Hyderabad / Mumbai) 424
Baroda Asset Management India Ltd. 64.2 76.4 4.9 5 70
Baroda Trustee India Pvt. Ltd. 0.1 0.2 0.0 1 0
IndiaFirst Life Insurance Company Ltd. 663.5 15626.3 61.6 29 2101
India Infradebt Ltd. 1636.6 10403.4 189.9 1 21

Awards and Accolades

Date Awards 2018-19
17.03.2019 "Best Banking & Finance Legal Team of the Year" award at the 8th Annual Indian Legal Era Awards 2018-19.
08.03.2019 Business Today Jury award for best Fintech Engagements.
Multiple honours at the IBA Banking Technology 2019 Awards:
Winner - Most Customer Centric Bank Using Technology"
20.02.2019
Runners Up - "Best Payment Initiatives"
Baroda Rajasthan Gramin Bank adjudged ‘Best Technology Bank of the Year'
18.02.2019 CSR Excellence Award - TV9.
30.01.2019 Ms. Nikita Raut Chief Manager HR and Head Mumbai Academy topped Jombay's Top 40 under 40 award for HR Professionals
25.01.2019 Finnoviti Award for ‘Fintech Initiatives' at the Banking Frontiers' Finnoviti Conference 2019.
28.01.2019 Leadership Capital and Out Performers awards at Atal Pension Yojana Awards 2018-19.
18.01.2019 5 honours at the 58th Association of Business Communicators of India (ABCI) Awards in the following categories - Indian Language Publications Features (English) Features (Language) Headlines and Corporate Film.
11.01.2019 ‘Best Home Loan Products 2018' at FE Best Banks Award 2018.
11.12.2018 ‘Inclusive Finance India Award-Best Bank in Priory Sector Lending' for innovation & inclusiveness in PSBs category at Inclusive Finance Summit 2018.
08.12.2018 ‘Best Bank in Supply Chain Finance" in the 4th edition of Asian Supply Chain Thought Leadership Summit & Awards -2018 held by the Institute of Supply Chain Management.
10.11.2018 "Best PSU Bank under MSME" & Best Bank Agriculture' finance at Divya Bhaskar Eminence Awards 2018.
19.11.2018 Fiji Territory received the Business Excellence Award 2018 from President of Fiji.
16.11.2018 APY "Rise Above Rest Campaign" Award and APY "Best Performing Bank Award" for the campaign" Maker of Excellence" - PFRDA Government Of India.
04.10.2018 Best Performing Bank at the UIDAI's Aaadhar Excellence Awards 2018.
14.09.2018 Kirti Award – First Prize for official language implementation for the year 2017-18.
28.06.2018 Shri P. S.Jayakumar MD & CEO was conferred with "CEO of the Year" and the Bank bagged the "Retail Bank of the Year" at India Banking Summit & Awards 2018.
27.06.2018 The bilingual in-house journal ‘BoBMaitri' and Hindi Magazine ‘Akshayyam' were awarded with First and Special prizes respectively under All India House Journal Competition organised by RBI.
29.05.2018 "Apex India CSR Excellence Award 2017" for CSR Activities for BSVS (RSETI) Project.
11.05.2018 Recipient of National Award for Best Performance in SHG- Bank Linkages 2017-18 Public Sector Banks by Deendayal Antodaya Yojana National Rural Livelihoods Mission.
14.05.2018 Appreciation & Honour from the World Trade Centre for launching" Digitised Supply Chain Finance" at 7th Global Economic Summit 2018.
13.04.2018 Winner of "Litigation Dept of the Year 2018" and First Runners Up - "In House Dept of the Year" at the 7th Edition of IDEX Legal Awards.

Dividend Distribution Policy

As required under Regulation 43A of the SEBI (listing Obligations andDisclosure Requirements) 2015 the Bank has a dividend distribution policy in place whichsets out the parameters and circumstances that will be taken into account by Board indetermining distribution of dividend to its shareholders. The policy is given in thisAnnual Report and is also available on the Bank's website athttps://www.bankofbaroda.com/policy-documents.htm.

Board of Directors (Appointment /Cessation of Directors during theyear) Appointments

Shri Debasish Panda was nominated as Government Nominee Directorw.e.f. 5th April 2018 by the Central Government u/s 9 (3) (b) of The Banking CompaniesAcquisition and Transfer of Undertakings) Act 1970 to hold the post until furtherorders.

Shri Shanti Lal Jain was appointed as Executive Director w.e.f.20th September 2018 by the Central Government u/s 9 (3) (a) of The Banking CompaniesAcquisition and Transfer of Undertakings) Act 1970 for a period of -3- years i.e. up to19th September 2021.

Shri Vikramaditya Singh Khichi was appointed as Executive Directorw.e.f. 1st October 2018 by the Central Government u/s 9 (3) (a) of The Banking CompaniesAcquisition and Transfer of Undertakings) Act 1970 for a period of -3- years i.e. upto30th September 2021.

Shri P.S. Jayakumar continues to be the Managing Director & CEOon extension of the term of his office w.e.f. 13th October 2018 for a period of -1- yeari.e. till 12th October 2019. Shri Srinivasan Sridhar was elected as ShareholderDirector under section 9 (3) (i) of The Banking Companies Acquisition and Transfer ofUndertakings) Act 1970 for a period of -3- years from 12th December 2018 to 11thDecember 2021 Dr. Hasmukh Adhia was appointed as Non-Executive Chairman w.e.f. 1stMarch 2019 by the Central Government u/s 9 (3) (h) of The Banking Companies Acquisitionand Transfer of Undertakings) Act 1970 for a period of -3- years.

Cessations

Shri Lok Ranjan ceased to be a Government Nominee Director w.e.f.5th April 2018 on the appointment of Shri Debasish Panda in his place.

Shri Ashok Kumar Garg ceased to be Executive Director w.e.f. 30thJune 2018 upon attaining the age of superannuation. Shri Ravi Venkatesan ceasedto be Non-Executive Chairman w.e.f. 14th August 2018 on completion of his tenure of 3years.

Shri Mayank K. Mehta ceased to be Executive Director w.e.f. 30thSeptember 2018 upon attaining the age of superannuation.

Smt. Usha A. Narayanan Director ceased to be a ShareholdersDirector w.e.f. 12th December 2018 on completion of her tenure of 3 years.

Board Evaluation

With the objective to continuously improve Board governance anevaluation of the Board's performance; performance of its committees and individualdirectors including independent directors is being conducted by an external consultingfirm. The parameters of evaluation have been aligned with the provisions of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and new SEBI GuidanceNote on Board Evaluation dated January 5 2017.

Auditors' Compliance Certificate on Corporate Governance:

The Auditors' Compliance Certificate regarding the compliance ofthe conditions of Corporate Governance for the year 2018-19 is annexed with this reportpursuant to "Part "E" of Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

Business Responsibility Report

Business Responsibility Report as required by SEBI has been hosted onthe website of the Bank (www.bankofbaroda. co.in). Any member interested in obtaining aphysical copy of the same may write to the Company Secretary of the Bank.

Directors' Responsibility Statement

The Directors confirm that in the preparation of the annual accountsfor the Financial Year ended March 31 2019: a) The applicable accounting standards hadbeen followed along with proper explanation relating to material departures if any;

b) The accounting policies framed in accordance with the guidelines ofRBI were followed and the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Bank at the end of the financialyear and of the profit and loss of the Bank for that period;

c) The directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of applicablelaws to the Bank for safeguarding the assets of the Bank and for preventing and detectingfraud and other irregularities;

d) The directors had prepared the annual accounts on a going concernbasis; and

e) The directors had ensured that internal financial controls followedby the Bank are in accordance with guidelines issued by RBI in this regard and that suchinternal financial controls are adequate and were operating effectively.

Explanation: For the purposes of this clause the term "internalfinancial controls" means the policies and procedures adopted by the Bank forensuring the orderly and efficient conduct of its business including adherence toBank's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information;

f) The directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

Acknowledgements

The Directors place on record their appreciation for the contributionsmade by the outgoing Chairman and Non-Executive Director Shri Ravi Venkatesan and otheroutgoing Directors viz. Shri Lok Ranjan Shri Ashok Kumar Garg Shri Mayank K. Mehta andSmt. Usha A. Narayanan.

The Directors express their sincere thanks to the Government of IndiaRBI Securities and Exchange Board of India other regulatory authorities and the overseasregulators for their continued co-operation guidance and support.

The Directors would like to take this opportunity to express sincerethanks to our valued clients for their continued patronage and support.

The Directors acknowledge with deep appreciation the cooperationextended by all shareholders banks and financial institutions rating agencies stockexchanges and all well-wishers in India and abroad. The Directors also take thisopportunity to place on record deep appreciation for the hard work and dedication of theemployees of the Bank.

For and on behalf of the Board of Directors

P. S. Jayakumar

Managing Director & CEO