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Bank of Maharashtra.

BSE: 532525 Sector: Financials
NSE: MAHABANK ISIN Code: INE457A01014
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Bank of Maharashtra. (MAHABANK) - Director Report

Company director report

Your Directors have pleasure in presenting the Annual Report of the

Bank with the audited Balance Sheet Profit & Loss Account and the

Report on Business and Operations for the year ended March 31 2018.

1. MANAGEMENT DISCUSSION AND ANALYSIS

1.1 Economic and Banking Scenario 2017-18:

In 2017-2018 global economic growth is estimated to have reached 3.0per cent a significant acceleration compared to growth of just 2.4 per cent in 2016-2017and the highest rate of global growth recorded since 2011. Labour market indicatorscontinue to improve in a broad spectrum of countries.

India has emerged as the fastest growing major economy in the world asper the Central Statistics Organisation (CSO) and International Monetary Fund (IMF) and itis expected to be one of the top three economic powers of the world over the next 10-15years backed by its strong democracy and partnerships. India's GDP is estimated tohave increased 6.6 per cent in 2017-18 and is expected to grow 7.40 per cent in 2018-19.Steps to abolish of Foreign Investment Promotion Board and reforms in FDI policy have beentaken to attract higher FDI. India's growth story remain robust despite disruptionsduring this financial year like GST Implementation and Demonitization. The bankrecapitalization plan by Government of India is expected to push credit growth in thecountry to 10 per cent.

1.2 Outlook for 2018-19

Global growth forecasts for 2018 and 2019 have been revised upward by0.2 percentage point to 3.9 percent and 4.0 percent respectively on account of strongeractivity and robust global demand. The improvement in global economic conditions offersgreater scope for policymakers to shift from a short-term focus that is inevitably part ofcoping with crises towards addressing longer-term challenges and eliminating deep-rootedbarriers to development.

On the domestic front IMF has projected Indian economy to grow at 7.4%in FY 19 and 7.8% in FY 2020 with inflation expected to be around 4.96%. Economicactivity is expected to accelerate with the strengthening of investment activitysupported by consumption demand and robust credit growth.

The private consumption expenditure is expected to receive a boost fromremonetisation and lower borrowing costs. Rise in crude prices could however play aspoilsport.

Union Budget 2018 was the first budget after big-ticket economicreforms like the Goods and Services Tax dynamic fuel pricing and mega PSU bankrecapitalization. The various proposals in the Union Budget 2018-19 with regards tolaunching of Operation Green doubling farmer's income by 2022 focus onMake-in-India products boosting the rural economy and affordable housing and increase incapital expenditure will act as a catalyst for growth.

Banking sector is also expected to be benefitted by the amendment inInsolvency and Bankruptcy Code 2016 and the innovations in the form of massive adoption ofArtificial intelligence and Blockchain technology being undertaken by the fintechcompanies.

2. Performance Highlights 2017-18

Your Bank was placed under Prompt Corrective Action (PCA) by RBI inJune 2017 in view of its high net NPA. Bank therefor had prepared or Monitorable ActionPlan for FY 17-18 to improve its position.

1. Total Business of your Bank stood at ` 233626 crore as on 31.03.2018as compared to ` 240590 crore last year.

2. Total deposit stood at ` 138981 crore as compared to

` 139053 crore last year.

3. Average Deposits stood at ` 134294 crore as on 31.03.2018 ascompared to ` 133392 crore last year registering a growth of 0.68% over last year.

4. CASA deposit stood at ` 66345 crore against last year figure of `62419 crore (growth of 6.29%). Total CASA percentage stood at 47.74%.

5. Gross advances of the Bank stood at ` 94645 crore as on 31.03.2018in comparison to ` 101537 crore as on 31.03.2017 as a result of Bank's policy tofocus more on retail advances instead of dependence on big corporate advances.

6. Operating Profit of your Bank reached ` 2191.42 crore as on31.03.2018 as compared to ` 1827.07 crore last year.

7. Business per branch is ` 126.56 Crore as on 31.03.2018.

8. Business per employee is ` 18.07 crore as on 31.03.2018.

2.1 Sectoral Deployment of Credit

Particulars

O/s as on 31.03.2018 ` crore

Percentage to total O/s

O/s as on 31.03.2017 ` crore

Percentage to total O/s

Industry

44671.77

47.20%

44811.65

44.13%

Of which
i. Infrastructure

8927.06

9.43%

9931.29

9.78%

ii. Chemicals Dyes Paints etc

1930.20

2.04%

3128.00

3.08%

iii. Petroleum

341.74

0.36%

1018.97

1.00%

iv. Iron and Steel

4699.00

4.96%

4975.65

4.90%

v. NBFCs and Trading

14182.77

14.99%

13784.69

13.58%

vi. Engineering

3246.19

3.43%

3537.38

3.48%

vii. Construction

5.04

0.01%

119.84

0.12%

viii. Other Industries

11339.77

11.98%

8315.83

8.19%

Agriculture

15066.63

15.92%

15491.45

15.26%

MSME

16283.00

17.20%

20419.50

20.11%

Housing

13572.69

14.34%

13595.25

13.39%

Education

995.25

1.05%

891.05

0.88%

Exports

1209.66

1.05%

1212.71

1.19%

Commercial Real estate

3189.00

3.37%

5115.21

5.04%

Gross Advances

94645.00

146.97%

101536.82

144.13%

2.2 Quality and NPA Management

The Bank has set up "Asset Recovery Cells (ARC)""at all zonal offices to ensure focused efforts for upgradation and NPA recovery. TwelveAsset Recovery Branches (ARBs) have also been set up across the Bank's Zones forlarge NPA a/cs more particularly where legal actions are in progress so as to make focusedfollow up.

The Bank has also set up separate Cells at its Head Office foridentification of Wilful Defaulters increasing recovery in Written Off accounts gearingup the actions under DRT / SARFAESI

Acts.

Bank has been implementing Suo Motu non-discriminatory andnon-discretionary One Time Settlement (OTS) Schemes. During 2017-18 the Bank introducedfollowing such OTS schemes:

1) "Ghar Ghar Dastak Yojana" (GGDY) was introduced forSmall NPA borrowers up to ` 10 lakhs.

2) "MahaMukti – 2017-18 (A)" and "MahaMukti– 2017-

18 (B)": These schemes were introduced for NPAs having ledgerbalance above ` 10 lakhs up to ` 1 crore and ledger balance above ` 1 crore up to ` 25crore respectively.

3) "Mahabank Karjmukti Yojana: an OTS scheme for recoveryin Regular Written Off (RWO) a/cs up to Rs 25 lakhs introduced in previous year wascontinued during 2017-18.

4) CSMSSY-2017: The Government of Maharashtra announced a loanwaiver scheme named as "Chhatrapati Shivaji Maharaj Shetkari Sanman Yojana2017" (CSMSSY-2017) for farmers in the State of

Maharashtra. The Bank introduced a scheme for one time settlement ofSpecified NPA accounts under

CSMSSY - 2017 as proposed by Government of Maharashtra.

Resolution Agents are appointed on selective basis in case ofNPA a/cs with dues of ` 1.00 crore to ` 10.00 crore; so as to have an early resolution.For increasing recovery in smaller NPA accounts (up to ` 25 lakhs) the services of RecoveryAgents are engaged.

Bank has also made intensive follow up with the defaulting borrowersthrough visits letters notices Recovery Camps

Lok Adalats actions under SARFAESI / DRT Act. The Bank has alsoinitiated action under the provisions of the Insolvency

& Bankruptcy Code 2016 against various large NPA borrowers.

Position of Non-Performing Assets is as under;

(` in crore)

Amt. as on

Amt. as on

Percentage

Particulars

31.03.18

31.03.17

(+/-)

Gross NPA

18433

17189

7.24%

% to Gross advances

19.48%

16.93%

XXX

Net NPA

9641

11230

(14.14)%

% to Net advances

11.24%

11.76%

XXX

Cash Recovery

1960.51

876.42

123.70%

2.3 Foreign Exchange Business

(` in crore)

Percentage

Particulars

2017-18

2016-17

(+/-)

Total FEX Business Turnover

589806

598503

-1.45%

Merchant Business Turnover

30687.93

36851.97

-16.72%

Profit in FEX Business

110.16

101.91

8.10%

Bank has 35 "B" Category branches across the country cateringto the International business needs of the customers of the

Bank apart from TIBB at Mumbai as "A" category branch.

2.4 Investment

The breakup of Investments into SLR & Non-SLR investments is givenbelow:

The Gross Investments as on 31.03.2018 stood at Rs

44162.86 crore of which ` 34469.75 crore are SLR securities and `9693.11 crore are Non-SLR Securities. The excess SLR securities as on 31.03.2018 stood at

Rs 7085.16 crore.

The net investments (net of provisions) stood at

` 43622.80 crore as on 31.03.2018 as compared to

` 38590.18 crore as on 31.03.2017. Investments under

Held to Maturity (HTM) category consist of 69.82% while

Available for Sale (AFS) comprised of 30.17% of total investmentportfolio as of 31.03.2018. The net interest income from investment activity increased to` 2962.41 crore from ` 2829.47 crore during the last year (growth of 4.70%).

The Non-Performing Investments stood at ` 738.10 crore as on31.03.2018.

2.5 Merchant Banking:

The Bank handled 75 issues (previous year 70 issues) of

Commercial paper amounting to ` 36445 crore (previous year

` 30170 crore) for its clients as an Issuing and Paying Agent (IPA)during the year.

2.6 Borrowings:

The borrowing of the Bank as on 31st March 2018 stood at

` 4063.71 crore including re-finance as under;

Particular

Amount as at

Amount as at

Percentage

(+/-)

31.03.2018

31.03.2017

1. Total Borrowing

4063.71

8136.65

(50.06)

2. Borrowing under CBLO

0.00

0.00

3. Refinance from:
3.1 NABARD

280.00

420.00

(33.33)

3.2 EXIM BANK

67.57

324.25

(79.16)

3.3 RBI

0.00

0.00

0.00

3.4 NHB

185.26

277.89

(33.33)

3.5 MUDRA

182.53

370.81

(50.78)

3.6 SIDBI

0.00

1500.00

(100.00)

4. Borrowings in the form of Bonds & debentures capital instruments

3300.00

5225.00

(36.84)

5. Borrowings outside India

48.31

18.65

159.00

6. Others

0.05

0.05

0.00

During the FY 2017-18 Bank has redeemed Basel II /Basel III CompliantBonds for an amount of ` 1925.00 crore by exercising call option. Bank undertook borrowingas part of its asset liability management.

2.7 Depository Services

Bank is Depository Participant (DP) of Central Depository Services ofIndia Ltd. (CDSL) since September 1999.

The Bank has also introduced Basic Services Demat

Account Facility (BSDA)

2.8 Bancassurance

Bank had added two new partners namely M/s Future Generali (Non-LifeInsurance Company) and M/s Cigna TTK (Standalone Health Insurance Company) underBancassurance in the month of Feb.2018. We have added two more partners in life insurancebusiness i.e.

M/s Aviva Life Insurance Company and M/s Reliance Nippon Life InsuranceCompany during FY 2017-18.

1241 branches are logged in as of 31.03.2018 for LIC

Bancassurance business.

Bank had created portal for Popularization of

Mahaswastya Yojana all new as well as renewal of cases are donethrough the portal in T+3 days. Now the customer having internet banking facility canmake the payment online and generate the policy instantaneously.

This year till 31.03.2018 67 bank branches declared as

BIMA Branch.

During the year 2017-18 5221 life policies and 148480 Non-Lifepolicies were made.

The Bank earned a commission of ` 6.00 crore from life insurance and `9.20 crore from non-life insurance business during the year 2017-18.

2.9 Government Business

During the year 2017-18 692312 challans of Direct Taxes and 97263challans of Indirect taxes were collected by the branches. Our Branches are alsocollecting other State Govt. taxes including GRAS of Maharashtra State and the totalnumber of Challans collected during the

Year is 1074402. Total commission to the tune of ` 7.20 Crore wasreceived on Tax collection business from

Central/State Government in current year compared to

` 5.64 crores collected in previous year.

As a service to senior citizens the Bank is processing and creditingmonthly pension payments of more than 110914 Central Government Defence Railway and

Telecom pensioners at Central Pension Processing Cell (CPPC) Pune. Thecommission on Government

Business (Pension) for the Year 2017-18 is ` 12.16 crore.

2.10 Income Expenditure and Profitability

The total income of the Bank stood at ` 12602 crore in FY 2017-18 ascompared to ` 13570 crore in FY 2016-17 .

The detailed income/ expenditure components are as under:

(` in crore)

Particulars

2017-18

2016-17

Variation (per cent)

Interest / discount on advances / bills

7072.71

8469.96

(16.50)%

Income on investments

2962.41

2829.47

4.70%

Interest on interbank lending & other Interest

1061.30

762.53

39.18%

Total interest income

11096.42

12061.96

(8.00)%

Non-interest income

1506.06

1508.07

(0.13)%

Total Income

12602.48

13570.03

(7.13)%

Interest on deposits

7133.17

8075.59

(11.67)%

Interest on borrowings

11.49

11.61

(1.03)%

Other Interest expenditure

562.02

800.07

(29.75)%

Staff expenses

1618.06

1807.29

(10.47)%

Other Operating expenses

1086.32

1048.40

3.62%

Total Non-interest expenses

2704.38

2855.69

(5.30)%

Total Expenses

10411.06

11742.96

(11.34)%

Operating Profit

2191.42

1827.07

19.94%

Provisions and
Contingencies

3337.05

3199.58

4.30%

Net Profit

(1145.65)

(1372.51)

(16.53)%

2.11 Financial Ratios

Particulars

2017-18

2016-17

EPS (`)

(8.98)

(11.75)

Cost to Income Ratio (percent)

55.24

60.98

Return on assets (percent)

(0.73)

(0.86)

Return on equity (per cent)

(42.43)

(24.92)

Book value per share (`)

23.73

46.96

Profit per Branch (` in lakh)

(62.06)

(72.35)

Profit per employee ( ` in lakh)

(8.86)

(10.58)

Business per Branch (` in crore)

126.56

126.83

Business per employee (` in crore)

18.07

18.54

Interest income as per cent to

7.03

7.55

Average working funds
Non-Interest income as per cent to average working funds

0.95

0.94

Net Interest Margin (per cent)

2.32

2.16

Operating Profit as per cent to average working Funds

1.39

1.14

Staff expenses as a percent to average working funds

1.03

1.13

Net worth (` Crore)

6159.92

5486.47

CRAR (%) (Basel II)

11.00

11.18

Of which Tier I CRAR (%) (Basel II)

9.01

9.01

2.12 Capital from Government of India

The Government of India has infused total additional capital of

` 3173 crore in two tranches; ` 650 crore on 29.12.2017 and

` 2523 crore on 27.03.2018.

2.13 Networth

The Bank's Net Worth increased from ` 5486.47 crore as on31.03.2017 to ` 6159.92 crore as on 31.03.2018.

2.14 Capital Adequacy Ratio

The Capital Adequacy ratio stood at 11.003 % as on 31.03.2018 againstthe minimum of 10.875 % (including CCB) prescribed by RBI in terms of Basel III norms. TheCommon Equity Tier 1

Ratio stood at 8.974 %.

2.15 Dividend : Your Board do not propose any dividend for the FY2017-18 as the Bank has incurred loss.

3. Resources: Branch network Human Resources ITinfrastructure customers responsiveness and others

3 .1 Branch/ATM Network:

As on 31.03.2018 the total branch network comprised of 1846 branchesspread across all the States and 4 union territories.

The branch network includes specialized branches in the area of ForeignExchange Government business Treasury and

International Banking Industrial Finance MSME and Hi-techAgriculture Pension Payment etc.

Area wise classification of branches as on 31.03.2018 is given in thetable below:

Classification

As on 31.03.2018

As on 31.03.2017

1 Rural

616

618

2 Semi-Urban

427

434

3 Urban

329

343

4 Metro

474

502

Total

1846

1897

As part of Bank's endeavor to curtail its operating expenses Bankhas merged 51 branches during the year which were in close vicinity of each otherensuring that no discomfort was caused to the customers.

ATM NETWORK

31.03.2018

31.03.2017

Offsite

559

587

Onsite

1305

1291

Total

1864

1878

3.2 Human Resources Management

The Bank has put in place a comprehensive HRM Policy that provides theroad map for acquiring appropriate & need based human resources its developmentthrough training job enrichment reward and recognition for better performance careerprogression welfare and retention.

Recruitment: During the year 2017-18 the Bank has recruitedemployees as under:

333 Officers in Scale I 6 Security Officers in Scale II 22 CharteredAccountants in Scale II 3 Officers-Admin in Scale II 7 Officers-Admin in Scale III &1 Scale IV officer in Risk Management Dept. The Bank has also recruited 388 Clerks &

13 Sub-staff.

During the year 930 employees ceased to be in service on account ofretirement VRS resignation termination and death. Inter scale promotions of officerswere carried out during 2017-

18. Following number of candidates were promoted.

JMGS-I TO

MMGS-II to MMGS

MMGS-III TO SMGS-

SMGS- IV TO

SMGS-V TO SMGS-

SMGS-VI TO TEGS-

MMGS-II

III

IV

SMGS-V

VI

VII

324

136

53

38

13

5

During the year 2017-18 89 Substaff were promoted to Clerical cadreand 55 Part Time Sub-staff employees were absorbed in Sub-staff cadre 196 Clerks werepromoted to Scale I Officer.

Cadre wise staff position as of 31.3.2018 with sex ratio is as under:

Category

Male

%

Female

%

Total

Officers

4751

72.89

1767

27.11

6518

Clerks

2986

64.37

1653

35.63

4639

Sub-staff

1586

89.35

189

10.65

1775

Total

9323

72.09

3609

27.91

12932

The top three branches in disbursement and recovery of advances toSC/ST community were awarded Rolling Trophy in name of Bharat Ratna Dr. BabasahebAmbedkar.

The Bank has healthy industrial relations.

The Bank has been complying with the reservation policy of Govt. ofIndia. Special Cells at Head Office and all Zonal Offices are functioning to monitor theimplementation of the reservation policies and to redress grievances of SC/ST/OBC &Physically challenged employees as well as ex-servicemen. The Bank has designated ChiefLiaison Officers at Head Office and has set up SC/ST Cells at all Zonal Offices. Duringthe year periodical meetings were held with SC/ST/OBC Employees

Association to discuss implementation of reservation policy and otherconstitutional safe guards and also to facilitate involvement in business growth.

Compassionate Appointments - A Scheme for ‘CompassionateAppointments' / Payment of Ex-gratia lump-sum amount to / of heirs of employees dyingin harness or retiring due to incapacitation framed as per the directives of

Government of India has been implemented. The details of compassionateappointments and payment of Ex-gratia lump-sum amount for the FY 2017-18 is as under:

Compassionate Appointments Payment of Exgratia
Cadre

No.of employees

No.of employees

Amount paid

Clerk

9

Substaff

12

3

` 15.15 Lacs

The Contributory Group Insurance Mediclaim Policy for allemployees including retired employees has been renewed w.e.f. 1.4.2018 and the Suminsured is upto ` 10.00 Lacs for existing employees. The details of renewal of policy areas under:

Employees

No.of Employees

Premium paid

Existing

718

100.38 Lacs

Retired

1661

229.25 Lacs

Total

2379

329.63 Lacs

The reimbursement of examination fees & payment of cashincentive / Honorarium in respect of courses from Indian

Institute of Banking & Finance MBA from reputed Institutions &

CFA has been widened by adding courses in the list of courses forreimbursement of fees thereby making total 27 courses eligible for reimbursement ofexamination fees.

A policy for granting special leave and 100% reimbursement ofhospitalization expenses to officers when he/she meets with an accident / injury whileon duty is in place.

Training Activities:

The Bank has a training system which facilitates attention to regularperiodic assessment of skill gaps at various levels in relation to existing and emergingbusiness opportunities. Skill building in credit Forex customer relationship managementmarketing of products and services credit monitoring and recovery risk managementtechnology based banking branch management complying with statutory legal and policyrequirements and preventive vigilance received special attention during the year.

Training programs were also held on thrust areas like financing MSMEsretail lending agriculture finance soft skills and rural development.

Cadre-wise Break up of Employees trained during the period 01.04.2017to 31.03.2018 are as under-

Cadre

No. of Programmes

Training Days

Employees Trained

Officers

174

677

4852

Clerks

74

242

1637

S/staff

35

81

810

Total

283

1000

7299

3.3 Technology Initiatives

The Year 2017-2018 was a Technology Upscaling year for the Bank. TheBank had taken up & successfully initiated / upscaled various Major IT Projects during2017-18 which are enumerated as under:

1. Bank has implemented 400 Self Update Pass Book Printer

Kiosks & 106 Bunch Note Acceptor Machines at various locationsacross the Bank. The same shall be continued to ensure fulfilment of customerrequirements/satisfaction.

2. CBS Contract has been renewed for a period of 5 years from01/10/2017 to 30/09/2022 with revamped CBS Front-end and additional components viz.Automated Testing Batch Job Automation On-line Training for staffs Revenue Leakage

Monitoring etc.

3. Bank has tied up with BSNL for upgrading the Bandwidth of theexisting Leased Lines to 2 Mbps. As on 31/03/2018 Bandwidth of 1329 leased lines isupgraded to 2 Mbps.

4. Bank is actively promoting BHIM Aadhaar Pay payment channel and28104 Merchants are on-boarded as on 31/03/2018.

5. Centralized e-Surveillance system is implemented at 240 more ATMstaking the total count to 460 ATMs being covered under this system; ensuring safety andsecurity of ATMs & Customers.

6. Integration of SWIFT with CBS System has been done as per RBITimeline.

7. Bank under special project of DBT (Direct Benefit Transfer) hadissued 99764 Prepaid Cards to Pune Municipal Corporation during Apr-June 2017 Quarter fordistribution to students of which 94510 cards are activated. In respect of NagpurMunicipal Corporation 20000 cards were issued of which 11168 cards are activated.

8. Bank has implemented Public Financial Management System (PFMS) whichis used by Government Agencies to make payments directly into the recipients BankAccounts. As on 31/03/2018 Bank had 39395 Accounts under PFMS.

9. ISO 27001:2013 Re-Certification is achieved by the Bank during July2017 for its 4 IT Divisions thereby continuing the

Quality ISMS (Information Security Management System) in our Bank.

Bank has collaborated with VISA for International Debit Cards and withNPCI for Rupay Debit Cards. EMV Chip Debit Cards are being issued to existing customers inplace of Magnetic Stripe Cards as per RBI directives. As on 31/03/2018 69.44

Lakh Debit Cards were issued of which 25.40 Lakh are EMV Cards.Customers can now obtain EMV Cards from any Branch of the Bank.

Various facilities are being provided through our Internet

Banking platform for facilitating online payment of taxes utility billpayments online shopping / e-commerce railway reservation LIC premium payment e-SBTRetc and facility for viewing tax credit statement 26AS and Demat account with the Bank.

Bank has robust Information Security Management System (ISMS) frameworkin place. Bank has also implemented major security initiatives recommended byGopalakrishna Committee for internal and external customers.

Bank has in place a captive Security Operations Centre (SOC) formonitoring Critical IT Infrastructure on 24 x 7 basis. As per

RBI Directives the same is being revamped to Cyber Security OperationsCenter (CSOC) by 31/05/2018.

Centralized Processing Cell Liabilities (CPC-L) is functioning sinceSeptember 2014 & all branches of the Bank are now linked to CPC-L.

3.4 Customer Centric Initiatives taken by the Bank

The Bank has pursued high standards of customer service to ensurecustomer satisfaction throughout the year by implementing all major recommendations ofGoiporia

Committee Dr. S.S. Tarapore Committee and Damodaran

Committee.

As a member of Banking Codes and Standards Board of India (BCSBI) Bankhas adopted Code of Bank's Commitment to Customers and Bank's Code of Commitmentto MSMEs. Bank has printed folder called as "My Folder" containing all customerservice policies information on service charges guidelines on Government SchematicLoans Ombudsman and BCSBI Codes. The same is printed in Marathi Hindi and

English and supplied to all branches and Zones for making the sameavailable to all customers on demand.

Duly documented policies approved by the Board on "Deposit""Collection of Cheques" "Redressal of Grievances""Compensation" "Operational Procedure for Settlement of Claims ofDeceased Depositors" and Customer Rights Policy are in place.

Customer Service Committees are formed at all branches and theirmeetings are conducted regularly on monthly basis. The Standing Committee on CustomerService at Head Office and Zonal Level Customer Service Committees at Zones meetregularly to address and review various customer related matters and to take steps for animprovement on an ongoing basis.

The Committee of the Board on Customer Service meets on quarterly basisto monitor the quality of customer service redressal of customer grievances and to ensurecustomers satisfaction.

Full-fledged grievances Redressal machinery is in place to respondpromptly to customer grievances. The Bank has started internet based mechanism StandardizedPublic Grievances Redressal System (SPGRS) for lodging the complaints or to givesuggestions / feedback on services by the customers and for providing acknowledgement andstatus of their feedback / complaints as per the directions of Government of India.

Particulars

2017-18

2016-17

1 Customer complaints at the beginning of the year

54

73

2 Complaints received during the year

8348

3246

3 Complaints redressed during the year

8014

3265

4 Complaints pending at the end of the year

388

54

3.5 KYC/ AML

Know Your Customer (KYC) norms / Anti Money Laundering (AML) standards/ Combating of Financing of Terrorism (CFT) and Obligation of Bank under Prevention ofMoney Laundering Act (PMLA) 2002.

The Bank has Board approved KYC-AML-CFT Policy in place. The saidPolicy is the foundation on which the Bank's implementation of KYC norms AMLstandards and CFT measures is based. The KYC compliance entails staff education as well ascustomer education for which the following measures are taken by the Bank.

A comprehensive list of KYC documents is uploaded on the

Bank's web site for the benefit of customers. Regular trainingsessions are conducted on KYC-AML-CFT guidelines at the Bank's trainingestablishments to sensitize the employees.

3.6 Risk Management

The Bank has put in place Risk Management Policies and

Strategies to identify measure monitor and manage risk efficientlyand establish control systems in line with the

Bank's aggregate Risk Appetite. Bank has constituted RiskManagement Committee at Board level to monitor the risk at Bank level in accordance withRBI Guidelines. Bank has also constituted sub-committees headed by Top Management of

Bank.

The Bank is Compliant to the RBI guidelines on disclosure requirementsunder Basel III Capital Regulations.

3.7 Brand Image:

Our Bank with a view to develop Brand Image of Bank publicizesBank's various products coupled with Corporate

Social Responsibilities.

Bank has extended Donations under its Corporate SocialResponsilibilities to National Sports Development Fund

(NSDF) Rotary Club Nigdi for the construction of water Tank in NigadeVillage Balewadi Stadium for providing Water Coolers "Shrutakevali EducationTrust" for Bahubali Children's Hospital

Shravanabelagola Karnataka NAAM Foundation famous NGO working onissues like education infrastructure employment food etc.

3.8 Citizen's Charter:

The Bank has adopted the Charter since 2000 01 which details theduties and responsibilities of the Bank towards its customers. The charter is displayed atall the branches and

Bank's website. Some of the important responsibilities of Branches are;

All branches of Banks in all parts of the country should providethe following customer services more actively and vigorously to the members of public;

Meeting the demands for fresh / good quality notes and coins ofall denominations;

Exchanging soiled notes;

Accepting coins and notes either for transactions or exchange;

Separate que for senior citizen.

4. SOCIO/MICRO ECONOMIC DEVELOPMENT.

4.1 Priority Sector Lending

It has been the constant endeavor of the Bank to facilitate equitableand sustainable economic development through timely and hassle-free availability of creditfor productive purposes to Small and Marginal Farmers Micro and Small

Enterprises Retail Traders Professional and Self Employed WomenEntrepreneurs and entrepreneurs from economically weaker sections.

The outstanding advances under Priority Sector (including investment)as of 31st March 2018 aggregate to ` 40709 crore constituting 38.63% of the Adjusted NetBank Credit (ANBC).

4.2 Agriculture

The Bank disbursed ` 5960 Crore for agriculture and allied activitiesduring the year 2017-18. The total outstanding advances to agriculture sector reached alevel of ` 17199 Crore as on 31.03.2018. Bank focused on growth of investment credit underAgriculture during the year 2017-18 and disbursed

` 2627 Crore. Bank also entered into strategic tie-ups with TractorManufacturers Micro Irrigation Companies for promoting farm mechanization and microirrigation activities during the year. Bank has entered into an Agreement for CreditGuarantee with Small Farmers Agri-Business Consortium

(SFAC)for (FPOs).

Bank is successfully implementing farm loan waiver scheme of

Govt of Maharashtra. Till 31st March 2018 bank has credited

` 1070. 93 crore to 1.91 lakh farmers' loan accounts under theaforesaid scheme.

The Bank undertook awareness/sensitization programmes for all thebranches for increasing advances to agriculture by providing hassle free credit tofarmers.

4.2.1 Mahabank Kisan Credit Card (MKCC)

This scheme gained popularity especially in rural areas where it isbeing propagated successfully and vigorously. The Bank has issued total 36495 Kisan CreditCards to farmers. Credit flow to MKCC beneficiaries has reached to the level of ` 7440.04crore as on 31.03.2018.

4.3 Micro Small and Medium Enterprises (MSME)

MSMEs are recognized as a major growth engine for the Indian economy.They generate opportunities for direct and indirect employment by facilitating use ofnatural resources and local skills to stem the tide of migration to urban areas andpromote low investment enterprises. Finance is made available to viable enterprises at anattractive and low rate of interest. Online enquiry portal is made available on the Bank'swebsite.

Our Bank has adopted Simplified Loan Application for MSMEs and the sameis displayed on the Bank's website. The Bank has also adopted Bank's Code of Commitment toMicro and Small Enterprise.

The Bank's lending to Micro Small and Medium Enterprises

(Priority) is ` 16283 Crore as at 31.03.2018. Advances to Microenterprises under priority are 8.68% of ANBC against RBI mandatory target of 7.50% as ofMarch 2018.

For promoting finance under this category Bank has entered intostrategic tie up arrangements with Truck / Vehicle /

Passenger car manufacturers. Bank has also entered into MoU with"Bhartiya Yuva Shakti" Trust and "de-Asra" foundation for

Credit facilitation and hand holding of the Micro entrepreneursespecially under Women and SC/ST categories. Bank has also partnered with"myloanassochem.com" portal for generating leads and converting them intobusiness by financial assistance to MSMEs.

Centralized Processing Cells have been set up at all Zonal Offices forspeedy disposal of MSME proposals.

4.3.1 MUDRA:

With the introduction of Pradhan Mantri MUDRA Yojana

(PMMY) which mainly consists of non-farm enterprises in manufacturingtrading and services whose credit needs are below ` 10.00 lakh. Bank is giving specialattention to this segment. Loans given to this segment for income generation are known as MUDRAloans under Pradhan Mantri MUDRA Yojana (PMMY) and are branded accordingly.

Bank sanctioned ` 2153.10 crore under PMMY against the target of `2325.00 crore as on 31.03.2018. Bank achieved 92.61% of target allotted by Governmentunder PMMY.

Bank has launched MUDRA Card on 16.9.2015 and issued 8621 MUDRA Cardsupto 31.03.2018.

4.3.2 Coverage under CGTMSE Scheme

Under Credit Guarantee Fund Scheme for Micro Small and MediumEnterprises of Government of India credit facilities up to ` 200.00 lakh are coveredwherein no collateral security and third party guarantees are insisted by the Bank. TheBank has sanctioned loans of ` 238.04 Crore to 2325 borrowers under this scheme up toMarch 2018.

4.3.3 Banks exposure to select segments.

Sector

As on 31.03.2018

As on 31.03.2017

% increase (+/-)

1 Micro / SHG Finance

151

155

(2.49)

2 Weaker Sector

11324

12190

(7.10)

3 SC/ST beneficiaries

2333

1738

34.23

4 Minority Community

2887

2921

(1.16)

5. IMPORTANT SCHEMES/ PROJECTS OF THE BANK

5.1. Credit Flow to Retail Sector

The Bank is providing retail loans for salaried persons professionalsbusinessmen and pensioners for purchase of house properties/ plots repair/ renovation ofhouse purchase of consumer durables two/four wheeler vehicles education and loan forother personal needs. The retail loan portfolio of the Bank is ` 16549 crore.

(` in Crore)

Portfolio

Scheme Brief Description

as of

NPA %

Mar'18

1 Maha Super Housing Loan Scheme Housing Sector being the thrust area Bank has various Housing Loan schemes in place to meet the needs of all segments. Bank offers housing loan for "purchase / construction of new / existing house / flat repairs / renovation / alteration of existing house / flat purchase of plot and construction thereon"

13573

3.59

2 Maha Super Car Loan Scheme and M a h a b a n k vehicle Loan scheme Bank has launched scheme for purchase of New four Wheeler i.e. Car Jeep Multi Utility Vehicles (MUVs) Small Utility Vehicles (SUVs) etc. for personal use.(i.e. not for hiring/ ferrying passengers) for individuals (18 years and above).

1068

3.15

3 M o d e l E d u c a t i o n Loan Scheme Bank is implementing Model Education Loan Scheme as per IBA guidelines and provides hassle free Education loan to all meritorious and deserving Students (Indian National) for pursuing higher studies /education in India and abroad

995

8.91

4 M a h a b a n k Top up Loan Scheme In order to extend additional credit support to existing housing loan borrowers as well as takeover of existing housing loan of other banks with additional facility of Top-up Loan Bank has launched "Mahabank Top Up loan Scheme". Under this scheme credit is extended for repair / renovation / furnishing of house children's education Marriage of Children Medical treatment buying a vehicle or hi-tech gadgets etc.

132

1.27

5 M a h a b a n k Gold Loan Scheme With a view to tap the potential of gold loans as a lucrative asset and to cater to the needs of meeting other personal expenses whatsoever which include personal expenditure of varied needs like marriage higher education medical emergencies business travel etc Bank has launched a retail loan product as "Mahabank Gold Loan Scheme" w.e.f. 26.09.2014.

103

2.49

6 M a h a b a n k Aadhar Loan Scheme To cater to the needs of our existing pension account holders to meet their personal expenses pilgrimage medical domestic needs etc. Bank has re-launched "Mahabank Aadhar Loan Scheme".

407

0.95

5.2. Centralized Processing of loans

Bank has established Centralized Processing Cells for retail /commercial advances at all its 30 Zones for hassle free processing and sanctioning loanswith aim to improve turnaround time.

5.3 Door Step Banking Services

Bank has introduced Door Step Banking Services for its High NetworthCustomers and the services include Corporate and Retail Cash pickup and delivery ChequeCollection Services at Client's Doorstep.

5.4 BOM SBI International Credit Card

The BOM-SBI card base is 50064.

The commission received from SBI Card is ` 75.00 Lakhs during theyear 2017-18.

5.5 ALTERNATE DELIVERY CHANNELS 5.5.1 INTERNET /SMS/Phone Banking

In terms of transactions there was an increase of 28% in InternetBanking 31% in Phone Banking and 33% in SMS banking over the previous year.

With continuous follow up and increase in net security through theMahasecure for IBN users substantial rise in users/online transactions is expected.

5.5.2 MOBILE BANKING

Maha Mobile functionality has been customized and simplified forincreasing the enrolments.

A user manual on Internet Banking & New Maha Mobilefunctionality is sent to field staff for ready reference & marketing of the technologybased products.

5.6 Tie Ups

5.6.1 Payment Gateway Services:

Presently Bank is providing the facility of Payment Gateway toall the customers through online aggregators as under:

1 M/s Atom Technologies

2 M/s BILL DESK

3 M/s EBS solutions limited

4 M/s Ibibo i.e. PAYU

5 M/s TimesofMoney Limited

6 M/s Airpay

7 M/s CC Avenues

8 M/s Citrus Payment Solutions Pvt Ltd

9 M/s PayTm

10 M/s Techprocess Payment Solutions

11 M/s SBI e pay

6. CORPORATE SOCIAL RESPONSIBILITY

The Rural Development Centers at Hadapsar- Pune and

Bhigwan in Pune District of Maharashtra have been undertaking variousrural developmental activities for the benefit of farmers' viz. Vermi compostRe-development of Saline Soils Soil Testing etc. Bank has established Soil Testing Lab(STL) through MARDEF Trust at RDC Bhigwan. The Soil Testing Laboratory analyzed 5506 Soiland Water samples in the year

2017-18 and accordingly counseling was done. Farmers from the districtsof Pune Ahmednagar Solapur and Satara are taking benefit of the lab.

A Trust viz. Mahabank Agricultural Research and Rural

Development Foundation (MARDEF) established by the Bank undertakesvarious projects and village improvement programmes. MARDEF is imparting training tofarmers on various subjects in Agriculture. Trust has conducted 156 training programmesfor farmers at RDC Bhigwan and Hadapsar which has benefited 10753 farmers from April 2017to March 2018.

The Bank has established Seven Mahabank Self Employment TrainingInstitutes (MSETI) for providing training to rural youth and women to enable them toacquire skills for self-employment through small business enterprises. The Institute hasseven centers located at Pune Nagpur Aurangabad Amravati

Jalna Thane and Nasik. The Institute has so far conducted 1203training batches & imparted training to 30307 educated unemployed youths. Thesettlement rate is 70%.

Gramin Mahila Va Balak Vikas Mandal (GMVBVM) an NGO formed by Bank ofMaharashtra and National Institute of Bank Management is actively involved in formationnurturing training and ensuring linkage of SHGs to Bank Credit.

The Bank has opened Financial Literacy and Credit Counselling Centers(FLCC) in Seven Lead Districts namely Pune Nasik Aurangabad Satara JalnaThane andPalghar for creating awareness about banking schemes. FLCCs have contacted 77141beneficiaries during FY 2017-18.

Rural Self Employment Training Institutes (RSETIs) have conducted 198training batches and trained 5061 candidates during FY 2017-18.

7. LEAD BANK SCHEME

7.1 Lead Bank Scheme

The Bank has Lead Bank responsibility in seven districts of MaharashtraState viz. Aurangabad Jalna Nasik Palghar Pune Satara and Thane. Every year districtcredit plans for the districts are prepared and implemented with the cooperation of otherbanks as well as in coordination with District Collectors of respective Districts.

7.2 State Level Bankers' Committee

The Bank is the Convenor of State Level bankers' Committee (SLBC)for the State of Maharashtra and prepares State Annual Credit Plan. The Priority Sectorplan for the year 2017-18 was for ` 290829/- crore which is one of the highest in thecountry.

The same was approved in a special meeting held under the Chairmanshipof Hon'ble Chief Minister of Maharashtra. SLBC also ensures holding of quarterlymeetings regularly to oversee the implementation of State Annual Credit Plans PrioritySector lending and Govt. sponsored schemes in the State. Apart from regular SLBC meetingsvarious other meetings are also organized by SLBC to coordinate between various member

Banks State Government Government Agencies Reserve

Bank of India NABARD and the Central Government. SLBC coordinates anetwork of more than 15400 bank branches in the state.

SLBC has always been very proactive in the event of natural calamitiesif any by issuing necessary guidelines in respect of relief measures organizing specialmeetings and guiding the members whenever necessary.

As SLBC convener Bank of Maharashtra coordinated implementation ofPradhan Mantri Jan Dhan Yojana (PMJDY) in the State of Maharashtra. A total of 221 lakhaccounts were opened in the State. The State has already been declared as saturated forthe purpose of opening of accounts. However the process of opening of accounts iscontinued. SLBC also coordinates implementation of other Social Security schemes of theCentral Government in the State.

S L B C Maharashtra has received award for highest Adhar seeding ofPMJDY accounts from Department of Financial Services MOF New Delhi.

7.3. FINANCIAL INCLUSION / PMJDY:

Scheme

Particulars

2017-18

2016-17

FI Plan No of Transactions by BCA (in lakhs)

110.74

109.75

Amount of transactions (` in crore)

5764.23

4702.81

PMJDY No. of PMJDY accounts (in lakhs)

51.57

42.28

Of Which Aadhaar Seeded

42.57

33.18

% of Aadhaar Seeding

82.55%

78.48

Of Which Mobile Seeding

38.97

32.16

% of Mobile Seeding

75.57%

76.06

Balance in PMJDY A/c (in crore)

1148.93

932.05

Average Balance per account actual

2228

2205

Zero Balance PMJDY

16.02

16.34

Accounts
BSBD Accounts Total BSBD Accounts

79.60

71.28

O/S Balance in BSBD A/c (in crore)

1687.18

1410.85

Average balance per account (actual)

2120

1979

Commission Paid for BC Services (in Crore)

25.86

23.07

Bank has a full-fledged call centre with toll free number

1800-102-2636 for redressal of PMJDY grievances.

The Financial Literacy Material has been prepared in vernacularlanguages and supplied to all Branches / Bank Mitrs for supplying the same toaccountholders during FLC camps. Financial Literacy camps are organized different schoolsin districts of Maharashtra. All skilling centers/ITIs are mapped under financial literacyproject Bank has been awarded for excellent performance in the field of financialinclusion by DFS MOF GOI and from prestigious institutes like IBA and Economic Times.

8. SUBSIDIARIES/JOINT VENTURES AND SPONSORED INSTITUTIONS

8.1 Performance of Regional Rural Bank

Maharashtra Gramin Bank (MGB) is a Regional Rural Bank sponsored by theBank having its Head Office at Aurangabad Maharashtra State. Total no of branches as on31.3.2018 stood at 409 in its area of operation covering 17 out of 36 districts ofMaharashtra State.

All 409 branches and controlling offices are now under CBS.

MGB opened 1 new branch during the year 2017-18. Performance highlightsare as under:

Maharashtra Gramin Bank has achieved total business of ` 13047.92crore.

Maharashtra Gramin Bank recorded Oprating Profit of

` 227.29 crore and Net Profit of` 131.27 crore.

Maharashtra Gramin Bank has achieved most of the target under MoUDAP given by sponsor Bank for the financial year 2017-18 The major key performanceparameters are as under: (Amount in Crore)

Performance Parameter

Target FY 2017-18

Actual as on 31.03.2018

1 Growth in Total Deposit (%)

14.63

18.07

2 Cost of Deposit (%)

5.49

5.03

3 Cost of Funds

5.73

5.20

4 Operating Profit

153.00

227.29

5 Net Profit

58.00

131.27

6 Non interest income

55.00

92.22

7 Operating Profit per employee

0.10

0.15

8 Operating Profit per Branch

0.37

0.56

9 Net Profit per employee

0.04

0.09

10 Net profit per branch

0.14

0.32

11 Cost to Income Ratio

56

44

12 Net Interest Margin

3.51

3.74

13 Closing NPA

390.00

319.89

14 Recovery in Write off

0.67

3.37

Under Pradhan Mantri Jan Dhan Yojana surveys of all allotted

898 SSAs and 80 wards were conducted for identification of householdshaving no bank account. The Bank has covered all allotted SSAs by engaging BCAs. Total9.38 lakh PMJDY accounts have been opened till 31.03.2018 and 7.98 lakh

RuPay ATM debit cards have been issued to PMJDY account holders.Maharashtra Gramin Bank has actively participated in the PMJJBY PMSBY APY and PMMYschemes.

8.2 Performance of METCO

Maharashtra Executor & Trustee Company Pvt. Ltd. (METCO) the 100%subsidiary of Bank of Maharashtra was established in 1946 with an aim to provide servicesauxiliary to banking such as:

Consultation Drafting & Execution of will

Consultation Drafting and Management of Private

Trusts / Public Trusts

Management of investments & house properties as attorney

Guardianship of minor's property

Consultation for sale/purchase of property

Filing of I-Tax Returns for individuals

The Company is located at Pune having its branch units at PuneVashi-Mumbai Thane and Nagpur. It is managing about 1090 Public & Private Trusts.During the year additional 32 Wills were added making total 1151 Will in its custody forexecution.

At present the Company manages properties both movable and immovableof 71 clients under the Power of Attorney. The Company also acts as the Trustees inrespect of 101 policies under Married Women's Property Act and as Court appointedGuardian of minor's property in 3 cases. The net profit of METCO for F.Y. 2017-18 is` 76.58 lakh.

9. IMPLEMENTION OF OFFICIAL LANGUAGE POLICY

During the year 2017-18 the Bank has achieved variousremarkable achievements in the field of Official Language implementation:

The Town Official Language Implementation Committee

Mumbai has secured Third Prize from the Rajbhasha

Vibhag Ministry of Home Affairs Government of India for betterimplementation of Hindi at the hands of Hon. Governor Maharashtra State in a grandfunction held at Mumbai. Our Bank is the convenor Bank for the committee.

Our Bank was awarded Second Prize by the Mumbai basedprestigious Institution ‘Aashirvad' for better use of Hindi during theyear.

Hindi day function was arranged at Head Office Pune on 20th September2017. Shri R. P. Marathe MD & CEO of the Bank presided over the function. ShriLeeladhar Mandloi renowned Poet and Director of Bharatiya Jnanpith was the ChiefGuest.

Shri R. K. Gupta Executive Director & Shri M. C. Kulkarni

General Manager were also present in the function. Winners of the AllIndia Internal Rajbhasha Trophy Scheme of the Bank were awarded during the function.

An All India Rajbhasha Seminar was organized in Pune for all theHindi Officers of the Bank.Shri R. P. Marathe Managing Director & CEO of theBank inaugurated the seminar. Shri Rajkiran Bhoir General Manager HRM &Rajbhasha reviewed the performance and guided all the participants. A special issue onRajbhasha of House magazine "Mahabank Pragati" was released in the seminar atthe hands of Hon'ble MD & CEO

Shri R. P. Marathe.

Monthly Rajbhasha E-Magazine ‘Rajbhasha E-Pragati' isbeing regularly published every month. As a new initiative Rajbhasha E-Pragati in Brailscript is also published for the benefit of differently able employees of the Bank.

Bank of Maharashtra is the convenor Bank for Town Official LanguageImplementation Committee (TOLIC) in Mumbai Pune Solapur Latur & Jalgaon. Meetingsof these committees were held regularly during the year and various activities of thecommittees were organized throughout the year as per the schedule.

Committee of Parliament on Official Language visited our

Noida Branch Faridabad Branch Jodhpur Branch and

Delhi Zonal Office during the year and reviewed Official

Language Implementation work of the Bank. The honorable members of theCommittee expressed their satisfaction regarding progressive use of Hindi and theimplementation of new initiatives by the Bank.

Our bank was awarded First Prize by Town official Language

Implementation Committee Patna First Prize by Town officialLanguage Implementation Committee Kota First Prize by Town official LanguageImplementation Committee Amravati Third Prize by Town official LanguageImplementation

Committee Ahmedabad and Third Prize by Town official LanguageImplementation Committee Jaipur for better use of

Hindi during the year.

10. SECURITY.

Proactive steps were taken in view of the security requirements at thebranches after analysis of the threat perception current crime scenario crime patternmodus operandi of Bank robberies the breaches of security and fire incidents besidesequipping and training the security personnel and other bank staff to counter any sucheventuality.

11. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accountsfor the year ended 31.03.2018:

The applicable accounting standards of the Institute of

Chartered Accountants of India have been followed along with properexplanation relating to material departures if any;

The accounting policies framed in accordance with the guidelinesof the Reserve Bank of India are consistently applied and proper disclosures are made forchanges if any;

Reasonable and prudent judgment and estimates were made so as togive a true and fair view of the state of affairs of the Bank at the end of the financialyear and profit of the Bank for the year.

Proper and sufficient care was taken for maintenance of adequateaccounting records in accordance with the provisions of applicable laws governing banksin India; and

The accounts have been prepared on a going concern basis.

12. CHANGES IN THE BOARD OF DIRECTORS

During the year 2017-18 the following changes took place in the Boardof Directors:

Smt. Vandita Kaul was appointed as Director of the Bank by theGovernment of India w.e.f 11.05.2017 in place of Shri Ateesh singh.

Shri Premchandra Amolakchand Sethi ceased to be the ShareholderDirector of the Bank w.e.f 27.06.2017 on completion of his tenure of three years.

13. BUSINESS RESPONSIBILITY REPORT

As per the SEBI (Listing Obligations and Disclosure

Requirements) Regulations 2015 Business Responsibility Report (BRR)2017-18 of the Bank has been hosted on the Bank's website i.e www.bankofmaharashtra.in.Any member interested in obtaining a physical copy of the same may write to the CompanySecretary of the Bank.

14. ACKNOWLEDGEMENT

The Board of Directors wishes to express sincere gratitude to the

Government of India the Reserve Bank of India the Securities andExchange Board of India Insurance Regulatory and Development Authority IndianBanks' Association and Stock Exchanges and

CDSL for their valuable advice and support; to the customers andshareholders for their patronage; to the correspondents and associates for theirco-operation and to all the members of staff of "Mahabank Family" for theirunstinted commitment and contribution to the overall development of the Bank.

For and on behalf of the Board of Directors

Place : Pune

(R. P. Marathe)

Date : 04th May 2018

Managing Director and CEO