Dear Shareholders and Stakeholders
1. The year 2019-20 started with a host of global challenges. To mention a fewUS-China trade tensions macro-economic stress in certain emerging market economiesdisruption in automobile sector in Europe uncertainty around no deal Brexit and tightmoney policy in China. The IMF in its every quarterly review lowered successive growthrate estimates for the year 2019 from 3.9 % in April 2019 to 2.9% in January2020. Theoutbreak of Covid-19 pandemic towards end of the year further clouded the global growthprospects. In fact the spread of Covid-19 across the globe at quick pace and lockdownimposed by many countries virtually altered the global priority from growth' tosurvival'.
2. Domestically the GDP growth which was anticipated at over 7.0% at the beginning ofthe year continued to slip quarter on quarter with stress on manufacturing sector andcontraction in private consumption and investment expenditure. The latest estimate put theGDP growth for FY 2019-20 at 4.2% against 6.1% during FY 2018-19.
3. Reflecting general economic slowdown the deposits and advances of the bankingsystem witnessed lowered growth rate during FY 2019-20. Particularly the advances growthrate halved to 6.1% from 13.3% during FY 2018-19. However the general health of theBanking Sector improved during FY 2019-20 in terms of profitability parametres and assetsquality.
4. Several policy initiatives were taken by the RBI during the year. Notably amongthem which had significant influence on banks are-Prudential framework on StressedAssets revision in Large Exposure Framework linking of rate of interest on retail andMSME segments to external benchmark. The year also saw improvement in transmission ofchanges in policy rates.
5. One of the far reaching developments during FY 2019-20 has been merger of 10 PSBsinto 4 merged entities in order to create large stronger globally competitive new agebanks.
6. The future banking model will essentially be woven around digital innovations.Fin Techs' and Big Techs' have now made significant inroad into the financialeco system. Therefore apart from upgrading technology platform the banks need to have acollaboration with Fin Techs' for expanding their reach and improving deliverymechanism. It is in this context that the EASE reforms agenda of the Government assumessignificance. Your Bank visualizing this is in the path of technology upgradation andexpanding digitization functionalities.
7. During FY 2019-20 although the Net Profit was impacted by higher provisions theinherent strength of your Bank is visible in the form of healthy business growth of 7.56%increase in operating profit by 42.34% reduction in NPAs ratios and improvement in NIM.With the various initiatives being undertaken by the Bank there will be further cementingof financial strength during FY 2020-21.