I hope you are well. I pray for your safety and wellbeing during these difficult timesprecipitated by the pandemic.
The year 2020 will go down in history as one of the most calamitous years as the novelCovid-19 virus caused widespread devastation by taking lives and livelihoods of millionsacross the world. The global economy was brought to a standstill by the necessary measuresof lockdowns and physical distancing restrictions.
The April 2021 Report of the International Monetary Fund (IMF) projects the growth ofthe global economy by 6.0% in 2021 from an estimated contraction of (-) 3.3% in 2020 andfurther projects a growth of 4.4% in 2022. However the global growth in 2021 is likely tobe uneven. The countries that can open up earlier due to ebbing infections and fasterinoculation are expected to grow faster. The April 2021 Report of the IMF estimatesadvanced economies to grow by 5.1% in 2021 from a contraction of (-) 4.7% in 2020. Amongthe advanced economies the USA is projected to have an impressive growth in 2021 due toseveral measures taken by the government. The emerging markets and developing economiesare projected to grow by 6.7% in 2021 after an estimated contraction of (-) 2.2% in 2020.In 2022 the emerging markets and developing economies are projected to grow by 5.0%.
On the domestic front as per the provisional figures real GDP contracted by (-) 7.3%in 2020-21 despite agriculture showing resilience and registering positive growth. Sectorslike mining manufacturing construction and some other service sectors have witnessednegative growth in 2020-21. The quarterly data shows that the domestic economy slowlystarted to recover from the pandemic. The Q4 2020-21 real GDP grew by (+) 1.6% vis-a-vis(+) 0.5% in Q3 2020-21. However private final consumption expenditure as percentage ofreal GDP softened to 55.4% in Q4 2020-21 as compared to 58.3% in Q3 2020-21. On the otherhand gross fixed capital formation as percentage of real GDP inched up to 34.3% in Q42020-21 vis-a-vis 33.0% in Q3 2020-21.
The second wave of Covid-19 infections in India thwarted the recovery process asseveral states had to impose different restrictions to curb the spread of the virus. Dueto which we expect growth to remain muted in Q1 2021-22. Nonetheless with the rapidvaccination drive and scaling up of healthcare facilities we expect the economicactivities to gain traction.
The Government of India has proactively undertaken various policy measures to boost theeconomy and the "Atmanirbhar Bharat" is one such step towards that. Through the"Atmanirbhar Bharat" the Government of India announced different stimulusmeasures to boost various sectors of Indian economy and provided several relief measures.There were a host of measures for the MSMEs street vendors agriculture infrastructureetc. in the "Atmanirbhar Bharat". Recently in June 2021 the HonbleFinance Minister further announced a slew of measures to provide economic relief frompandemic strengthening public health and impetus for growth and employment. Towards thisend the Honble Finance Minister announced Rs.1.10 lakh crore loan guarantee schemefor Covid affected sectors credit guarantee scheme for micro finance institutions freeone month tourist visa to 5 lakh tourists extension of Atmanirbhar Bharat Rozgar Yojanaextension of tenure of PLI scheme for large scale electronic manufacturing etc.
Your Bank has undertaken many measures to fight the battle against Covid-19 inducedslowdown. The Bank has been actively participating in the Government schemes and willcontinue to do so in the future with enthusiasm. The objective of your Bank is to ensurethat it emerges as one of the top performers in the industry and provide the best customerservices. Your Banks score and performance in EASE 3.0 has improved significantly inQ4 2020-21 vis-a-vis baseline score in Q4 2019-20. Your Bank has linked some of itsportfolios with external benchmarks i.e. repo which has improved transmission. The Bankhas been taking various initiatives for digitization. We have been harnessing our humanresources to enable them to meet the contemporary challenges in the era of technologies.Customer centricity would always remain the core value of your Bank. The current time hasbeen testing for all of us but I am sure that together we can overcome it and take yourBank to new heights and achieve many more milestones going forward. I strongly believethat the Bank will uphold stakeholders interest at every point and will furtherstrengthen its core values to stand tall in the industry.
Performance of the Bank Business
During the Financial Year 2020-21 Business of the Bank stood at Rs. 506886 crore ascompared to Rs. 486007 crore in the Financial Year 2019-20 with 4.30% growth on YoYbasis. Banks business growth has remained robust in FY 2020-21 with deposit growthof 5.17% and advances growth of 2.71%. The Deposit of the Bank stood at Rs. 329973 croreas against
Rs. 313763 crore on March 31 2020 with a growth of Rs. 16210 crore. The CASA shareas a percentage of Total Deposits stood at 49.24% as against 46.83% in the Financial Yearended March 31 2020. Total Advances stood at Rs. 176913 crore in March 31 2021 asagainst Rs. 172244 crore in March 31 2020 registering growth of 2.71% on YoY basis.
The Bank is always keen to maintain a well balanced assets mix encompassing sectorssuch as Agriculture and Micro Small & Medium Enterprises (MSMEs) as well as keeping afocus on other retail assets including Housing Education and Vehicle finance. NotableBanks MSME portfolio has shown double digit growth of 10.62% with growth by 12.22%on YoY basis. Also the Bank has improved RAM (Retails Agriculture and MSME) andcorporate advances mix to 66.72% as on March 31 2021 from 63.73% as on March 31 2020.Advances to MSMEs stood at Rs. 32356 crore and Agriculture at Rs. 36207 crore with agrowth of 10.62% and 5.19% respectively.
The Operating Profit of the Bank stood atRs. 4630 crore in financial year 2020-21 asagainstRs. 4344 crore in financial year 2019-20. With improved performance the net lossreduced from Rs. 1121 crore to Rs. 888 crore for financial over financial Rs. 1529 croreto Rs. year2019-20andfrom 1349 crore during fourth quarter on YoY basis.
Net Interest Income of the Bank increased to Rs. 8245 crore from Rs. 7629 croreduring 2020-21 whereas Non Interest Income decreased to Rs. 3167 crore from Rs. 3637crore during 2019-20. Net Interest Margin (NIM) remained at 2.78% during financial year2020-21 in comparison to previous financial year. The Cost to Income ratio also improvedsignificantly from 61.44% for financial year 2019-20 to 59.43% for financial year 2020-21.The Banks Cost of Deposits reduced financialyear 2019-20.-21asagainst5.11%duringthe 4.35%duringthe
The consistent effort of the Bank on NPA management and garnering high quality assetsimproved the asset quality. Thus gross NPA reduced to 16.55% as of March 31 2021compared to 18.92% as of March 31 2020 and also Net NPA percentage was brought down to5.77% as on March 31 2021 from 7.63% as of March 31 2020. The Banks ProvisionCoverage Ratio improved to 82.54% as on 31.03.2021 from 77.29% as on 31.03.2020 which hasstrengthened the Balance Sheet. We are expecting resolution of certain big NPA accountsthrough NCLT under IBC and outside during 2021-22. We shall continue to have focusedefforts to maximize NPA recovery improve asset quality and earn net profit during theyear 2021-22.
The Capital to Risk Asset Ratio CRAR (Basel-III) improved from 11.72 % as on March 312020 to 14.81% as on March 31 2021. This was on account of fresh equity raise of Rs. 255crore through qualified institutions placement in Sept. 2020 and further President ofIndia (Government of India) capital infusion of Rs. 4800 crore in March 2021. Afterallotment of 2805376972 equity shares at issue price of Rs. 17.11 (including premium ofRs. 7.11) on 29.05.2021 shareholding of the President of India (Government of India)stands at 93.08%.
Priority Sector and Financial Inclusion
Bank is continuously emphasizing on meeting various goals under national priorities.Under various national priorities Bank has credibly achieved the mandated targets asfollows :-
? Total Priority - 51.96% of adjusted net bank credit against norm of 40%
? Agriculture - 21.32 % of adjusted net bank credit against norm of 18%
? Small and Marginal Farmers - 12.72% of adjusted net bank credit against norm of 8%
? Weaker Section - 18.86 % of adjusted net bank credit against norm of 10%
The Bank has sold PSLC to the tune of Rs. 22050 crore in FY 2020-21. These achievementsindeed speak of the Banks commitment to inclusive nation building.
Bank has been actively pursuing the agenda of Financial Inclusion with keyinterventions in offering appropriate financial products making use oftechnologyandenhancingfinancialliteracy.
Bank also performed well under social security schemes launched by the Government ofIndia. 17.49 Lakhs 51.53 Lakhs and 12.32 Lakhs enrolments have been done under PradhanMantri Jeevan Jyoti Bima Yojana Pradhan Mantri Suraksha Bima Yojana and Atal PensionYojana respectively.
Pan India Presence
As on 31st March 2021 Bank has a network of 4608 branches 3644 ATMs 10 satelliteoffices and 1 Extension Counter. The pan India presence covering all 28 States 7 out of 8Union Territories and NCT Delhi 574 District Head Quarters and 638 Districts out of 718districts in the country is the source of strength to the Bank.
Digital Banking & Alternate Delivery Channels
In the age of information and technology the Bank recognizes the changing needs of thecustomers and caters to the needs of the young demographic base of the country.Accordingly the Bank gives thrust on digital footprints and alternate delivery channels.As a result of this the share of digital transactions through alternate delivery channelsincreased from 66.54% for FY 2019-20 to 77.63% for FY 2020-21.
Covid-19 Relief for employees
We are fighting the Covid-19 pandemic with the strength of our customers employees andother stakeholders. Our Bank employees are working hard in this extreme situation todeliver their services to the satisfaction of the customers. Bank appreciates allemployees who are working hard and rendering their best services and assures that the Bankwill take care of the employees befitting of their sacrifices. Management had extended theunder mentioned facilities to staff members to face the challenges of the COVID-19Pandemic :-
? One month Gross Salary as interest free loan subject to Maximum Rs.1 lakh.
? One day Special Leave (PL) to staff members for every six days that they haveattended office/ branch during the Lockdown period (1st Wave).
? During lockdown Work from home facility to pregnant women staff members/ staffmembers suffering from cancer and Special leave without loss of pay to staff members whoare visually impaired and staff members with disabilities.
? Financial Assistance in the form of compensation to the tune of Rs. 20.00 lakhs tothe legal heir of the staff member who expired due to CoronaVirus (COVID-19).
? All officers have been allowed to purchase Oxygen Concentrator under Furniture itemlooking at the current pandemic situation.
Covid-19 Relief for MSMEs/Small Businesses/Corporates
Bank has extended its support to MSMEs/Small Businesses/Corporates through severalschemes to protect them from hardships caused due to the Covid-19 pandemic:-
|Date ||Scheme ||Details |
|23.03.2020 ||COVID 19 Sahayata ||Well before announcement of RBI Regulatory Package on 23.03.2021 Bank has announced a loan scheme allowing 10 % of FBWC limit as WCTL to eligible borrowers including MSME. |
|27.03.2020 ||RBI ||Allowing 6 months (01/03/2020 to 31/08/2020) moratorium (in TL/DL) and deferment of interest (in CC/OD) |
|17.04.2020 ||Regulatory || |
|23.05.2020 ||Package ||For eligible borrowers bank has allowed recalculation of drawing power by reducing the margin as follows:- |
| || ||? 10% reduction in stock and book debts subject to mini margin 10% |
| || ||? Debtors period has been extended by 60 days with resultant maximum period of 270 days |
| || ||Two way interchangeability between FBWC facility and NFBWC facility sanctioned in the form of LC. |
|28.04.2020 ||Liberalised Working Capital Assessment (LWCA) ||For working capital limit up to 5 crore Liberalised Working Capital assessment is made with reduced financial parameters (CR 1:1 ICR 1.25 ACR 1.25 DER 4. With no minimum stipulation of Debt/ EBIDTA). The assessment will be made at 33% of projected annual turnover. |
| || ||For working capital limit of above 5 crore with reduced parameters as above the working capital limit will be reassessed at Traditional Method or Cash Budget method. |
|20.08.2020 ||CGSSD ||Credit Guarantee Scheme for Sub Ordinate Debt to provide personal loan to the Promoters of stressed MSME unit (Restructured SMA 2 & NPA as on 30.04.2020) as equity/quasi equity (post restructuring) facility upto 15% of his stake in the MSME entity (equity plus debt) up to a maximum of 75 lakh. |
|01.06.2020 ||PMSVANidhi ||Prime Ministers Street Vender Atma Nirbhar Nidhi- Collateral Free Loan upto 10000/- to street vendors |
|27.05.2020 ||CGECL 1.0 ||Up to 20% of combined FB outstanding of all lenders as on 29.02.2020 allowed as WCTL for 48 months (12 month moratorium 3 year repayment) as additional working capital for borrowers enjoying total FB limit upto 50 crore 60 days DPD - Maximum 10.0 crore In case of borrowers accounts under CGECL 1.0 who are opting for Restructuring under Resolution Framework the eligible moratorium up to 24 months and extension of tenure accordingly can be allowed. However the interest during the moratorium has to be repaid by the borrower as and when charged. |
|03.12.2020 ||CGECL 2.0 ||Up to 20% of combined FB outstanding of all lenders as on 29.02.2020 allowed as WCTL for 60 months (12 month moratorium 4 year repayment) as additional working capital for borrowers enjoying FB limit above 50 crore and upto 500 crore DPD 60 days Only to 26 sectors under Kamath Committee and and Health Care sector Maximum amount 100 crore. |
|16.04.2021 ||CGECL 3.0 ||Up to 40 % of combined FB outstanding of all lenders as on 29.02.2020 allowed as WCTL subject to a cap of 200 crore for 72 months (2 year moratorium 4 year repayment) as additional working capital 60 DPD Business Enterprises in Hospitality Travel & Tourism Leisure and sporting sector and Civil Aviation (added on 31.05.2021). |
|31.05.2021 ||CGECL 4.0 ||Credit facility upto 2 crore (FB or NFB) to existing hospitals nursing homes clinics medical colleges/units engaged in manufacturing of liquid oxygen oxygen cylinders who have a loan outstanding with the Bank and DPD as on 31.03.2021 up to 90 days. Moratorium 6 months Repayment. |
|06.08.2020 ||RF 1.0 ||Resolution Framework for Covid-19 related stress. |
|07.09.2020 || || |
|05.05.2021 ||RF 2.0 ||Resolution Framework 2.0 : Resolution of Covid-19 related stress of Individuals Small Businesses & MSMEs. |
A business is the result of immense hard work dedication and perseverance however itis not enough to simplify these and then let complacency move in. The key to successfulbusiness is the ability to come up with fresh ideas to keep the operation running and theproduct and services fresh. Considering the thoughts in mind we started some newinitiatives mentioned as follows:-
? Implementation of CPAC - Pre-disbursal Credit Review Mechanism- CreditProcessing & Approval Centre for pre- disbursement approval to branches shallhelp to improve credit quality and also help the field staff for undertaking creditdecisions without fear.
? Management approach shall be in the form of Inverted Pyramid where the top portionshall be the Branches supported by Central Office/Zonal Offices and Regional Offices fromthe bottom which means Central Office/ Zonal Offices Officesshall be supportingthe existence and functioning of Branches and an enabling andRegional environment will beprovided for business growth.
? Reward programs by way of forming of Top Management Clubs shall be introduced torecognize the performers.
? Training Centre equipped to deliver -"BRAND CENTRAL"- i.e. an uniqueidentity for the staff under all categories.
? Special campaigns with the theme- "CENTRAL CONNECT" by visiting existingloyal customers.
? Bank website was revamped on 14.05.2021 with a complete new look sober colour andadded features.
The impact of the transformation initiatives taken by the management are visible withthe Banks better asset quality and profitability in comparison to previous financialyears. We are hopeful with easing restrictions and commercial restriction resuming to fullswing.
I would like to acknowledge and thank all the members of the Board for their valuablesupport guidance and inputs to the management in our endeavors. I also thank theDepartment of Financial services Ministry of Finance and the Reserve Bank of India fortheir support and guidance from time to time.
I am happy to present the Annual Report of the Bank for the year ended on March 312021.
With best wishes
M V Rao
Date: July 15 2021