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City Union Bank Ltd.

BSE: 532210 Sector: Financials
NSE: CUB ISIN Code: INE491A01021
BSE 00:00 | 20 Jul 169.20 -0.75






NSE 00:00 | 20 Jul 169.50 0.25






OPEN 169.95
52-Week high 189.82
52-Week low 133.64
P/E 20.91
Mkt Cap.(Rs cr) 12,384
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OPEN 169.95
CLOSE 169.95
52-Week high 189.82
52-Week low 133.64
P/E 20.91
Mkt Cap.(Rs cr) 12,384
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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City Union Bank Ltd. (CUB) - Director Report

Company director report


The Board of Directors is pleased to present the Annual with the Audited FinancialStatements for the Financial Report on business and operations of the Bank together Yearended 31 March 2017.

Financial Highlights ( Rs. in crore)
Particulars 2016-17 2015-16 Growth (%)
Share Capital 60 60 --
Reserves & Surplus 3510 2992 17%
Deposits 30116 27158 11%
Advances (Gross) 24112 21253 13%
Investments (Gross) * 7082 6828 4%
Total Assets / Liabilities 35271 31804 11%
Net Interest Income 1199 981 22%
Operating Profit 994 833 19%
Net Profit 503 445 13%

* the figures of the previous year have been regrouped / reclassified wherevernecessary.

During the year the Bank earned an operating profit of Rs. 994 crore registering anincrease of 19% as compared to previous year's figure of Rs. 833 crore. The net profit ofthe Bank for the current year was Rs. 503 crore as against Rs. 445 crore of last yearregistering a growth of 13%. The deposits and advances for the current year stood at Rs.30116 crore and Rs. 24112 crore respectively. The total business stood at Rs. 54228crore as compared to Rs. 48411 crore of the previous year registering a growth of 12%.The size of the balance sheet as on 31 March 2017 was Rs. 35271 crore as compared to theprevious year position of Rs. 31804 crore showing an increase of 11%.


The Bank's total deposits for the year under review increased by Rs. 2958 crore fromRs. 27158 crore to Rs. 30116 crore registering a growth of 11% over previous year.During the current year CASA increased by Rs. 1506 crore to Rs. 7039 crore from Rs.5533 crore recording a significant growth of 27% primarily due to the impact ofdemonetization of higher denomination currencies in November 2016. The cost of deposit ofthe Bank decreased from 7.62% in the previous year to 6.82% in the current year.


The Gross Advances of the Bank increased by Rs. 2859 crore to Rs. 24112 crore fromRs. 21253 crore posting a growth of 13%. The yield on advances declined to 12.10% from12.83% during the financial year due to stiff competition among Banks.

The Gross and Net NPA for the year under review stood at 2.83% and 1.71% respectivelyas compared to previous year figure of 2.41% and 1.53%.

Priority Sector Advances stood at Rs. 11813.52 crore as at 31 March 2017 as comparedto previous year amount of Rs. 10272 crore. The Bank has achieved 51.57% of Adjusted NetBank Credit (ANBC) against the regulatory prescription of 40% of ANBC on Priority Sectorlending

requirements on an average basis as prescribed by RBI.

The total agricultural advances stood at Rs. 3707.09 crore as at 31 March 2017 asagainst Rs. 3391 crore as on 31 March 2016. The Bank has achieved 18.13% of ANBC againstthe RBI prescribed level of 18% on an average basis.


Domestic Treasury

The gross investments increased by Rs. 254 crore to Rs. 7082 crore as on 31 March2017 from Rs. 6828 crore as on 31 March 2016 registering a growth of 4% and out of thisthe investments in Government Bonds alone amounted to Rs. 6698 crore.

During the financial year 2016-17 the yield on Government of India (GOI) securitiesmoved down. The yield on 10 year benchmark security moved from 7.41% to 6.69% on accountof rate cut announced by RBI during the first half of the FY. During the month of November2016 it dropped down sharply and touched a low of 6.12% on account of demonetizationannounced by GOI. The yield reversed its course and rose upto 6.95% during February 2017after RBI took measures to suck out the excess liquidity and also on change in RBI'spolicy stance from accommodative to neutral .

It is noteworthy to mention that during the year the Bank earned a profit of Rs. 108crore by taking advantage of yield movement on Govt. Securities as compared to Rs. 45crore last year. The average yield on investments declined from 7.45 % in the previousyear to 7.23 % in the current financial year.

Forex Treasury

Indian Rupee witnessed swings during the period under review. USD / INR opened at Rs.66.26 and closed at Rs. 64.84 after touching a high of Rs. 68.86 during the course of thefinancial year. Indian Rupee against USD strengthened on the back of inflows in equity anddebt markets. The Bank earned an exchange profit of Rs. 98 crore compared to Rs. 81 crorelast year.

Particulars Year ended 31 March 2017 Year ended 31 March 2016
Total Income 3658 3354
Total Expenses 2664 2521
Operating Profit 994 833
Provisions & Contingencies 491 388
Net Profit 503 445
Net Interest Income 1199 981

A total income of Rs. 3658 crore was earned by the Bank as against Rs. 3354 croreposting a growth of 9%. The total expenditure of the Bank increased by 6% to record Rs.2664 crore as compared to previous year figure of Rs. 2521 crore.

The operating profit increased by Rs. 161 crore to Rs. 994 crore from Rs. 833 crorethereby recording a growth of 19%. The net profit increased from Rs. 445 crore to Rs. 503crore achieving a growth rate of 13%.

The Net Interest Income for the year under review increased by Rs. 218 crore from Rs.981 crore to Rs. 1199 crore. The non-interest income of the Bank increased to Rs. 484crore from Rs. 410 crore.

The provision for tax for the year increased to Rs. 190 crore from Rs. 158 crore. Theprovision for NPA stood at Rs. 252 crore vis-a-vis Rs. 205 crore last year. The totalprovisions increased by Rs. 103 crore to Rs. 491 crore from Rs. 388 crore.

The appropriations from net profit were made as under: ( Rs. in crore)
Particulars Year ended 31 March 2017 Year ended 31 March 2016
Net Profit 502.77 444.69
Balance of Profit brought forward 7.44 6.96
Amount available for appropriations 510.21 451.65
Transfers to
- Statutory Reserve 130.00 115.00
- Capital Reserve 27.53 8.71
- General Reserve 275.00 188.00
- Special Reserve under IT Act 1961 45.00 40.00
- Dividend & Dividend Tax 0.00 92.49
- Balance of Profit carried forward 32.68 7.45
Total 510.21 451.65

In accordance with the revised accounting standards AS-4 contingencies and eventsoccurring after the balance sheet date notified by the Ministry of Corporate Affairs on 30March 2016 the proposed dividend including corporate dividend tax has not been shown asan appropriation from the Profit and Loss appropriation account as of 31 March 2017 andconsequently not reported the same under Other Liabilities and Provisions as of 31 March2017. For computation of Capital Adequacy Ratio as at 31 March 2017 Bank has adjustedthe proposed dividend and tax thereon for determining Capital Funds.


The paid up share capital of the Bank increased from Rs. 59.82 crore as on 31 March2016 to Rs. 60.11 crore as on 31 March 2017. During the period the Bank has allotted2873602 equity shares arising out of the exercise of Employee Stock Options to employeesof the Bank pursuant to CUB ESOS Scheme.

The Net worth of the Bank improved to Rs. 3556 crore as on 31 March 2017 from Rs.3033 crore as of 31 March 2016.

Capital Adequacy Ratio:
Minimum Prescribed CRAR 9% 10.25% (PY. 9.625%)
CUB CRAR 16.09% (PY. 15.80%) 15.83% (PY. 15.58%)

The concept of Capital Conservation Buffer (CCB) has been newly introduced under BASELIII norms wherein Bank is required to maintain CCB of 2.50% at the end of

March 2019 in a phased manner beginning from 31 March 2016 @ 0.625% in each year up to31 March 2019.

During the current nancial year i.e. 2017-18 the Bank redeemed the entire NonConvertible Debentures of Rs. 10 lakh each issued under private placement route on 30March 2007 carrying a coupon rate of interest @10% with tenure of 121 months representingTier II Capital - Series II totalling Rs. 10 crore that matured on 30 April 2017.



Your Directors are pleased to recommend a dividend of Rs. 0.30 per equity share of facevalue of Rs. 1/- each (previous year Rs. 1.20 per equity share) for the year ended 31March 2017.


During the month of May 2017 the Board of Directors of your Bank recommended the issueof 1 bonus equity share for every 10 equity shares of face value of Rs. 1/- each (1:10)already held by the shareholders on a record date subject to shareholders' approval byPostal Ballot. Further as resolved by the Board the shares allotted to the shareholderspursuant to bonus issue are also eligible to participate in dividend to be declared by theshareholders at the ensuing Annual General Meeting. The dividend payout ratio works out to4.32% which is in accordance with the Dividend Distribution Policy of the Bank. The Boardrecommends the dividend for approval by the shareholders at the ensuing Annual GeneralMeeting.


During the nancial year the Bank has expanded its branch network by adding 25 morebranches and 161

ATM's across the country totalling to 550 branches and 1486 ATM's as on 31 March2017. The Bank has a major presence in the state of Tamil Nadu and is keen to furtherenlarge its presence by tapping potential markets not only in Tamil Nadu but in otherstates too.



There have been persistent efforts made by the Government of India and the Reserve Bankof India in promoting nancial inclusion as one of the important national objectives of thecountry. In line with the directions issued by the Govt. of India and RBI the Bank hasadopted Financial Inclusion as one of the key business measures to promote socialinclusion by serving the un-served and the under-served population.

The Bank following RBI directions has covered all the allotted 45 villages havingpopulation of over 2000 and 101 villages having population of over 1000 and below 2000by introducing ICT

(Information Communication & Technology) based services thus providing ef cientand cost-effective banking services in the un-banked and remote villages of the countrypaving the way for the inclusive growth. Further during the year under review BasicSavings Bank Deposits (BSBD) accounts numbering 104794 were opened and 94203 biometricsmart cards were issued to the bene ciaries. Savings Bank linked overdraft facility microinsurance products Electronic Bene t Fund Transfer (EBT) payments have been extended tosuch account holders.



'Pradhan Mantri Jan-Dhan Yojana' (PMJDY) is a agship nancial inclusion programme ofGovt. of India which was launched by our Hon'ble Prime Minister on 28 August 2014 acrossthe country. Under this programme the Bank has been allotted 264 wards apart from 146villages already allotted under the Rural Financial Inclusion scheme. The Bank hadconducted survey of all 180211 households in all these 264 wards.

The Bank has opened 85759 PMJDY accounts as on date through all its branches and Rupaycards were issued for the account holders under the scheme. As the overdraft facility isone of the features under PMJDY scheme Bank is considering the same based on conditionsxed by IBA to the PMJDY account holders from Rs. 1000 to Rs. 5000.



This scheme was launched by Hon'ble Prime Minister on 9 May 2015. The scheme provideslife insurance cover to people in the age group of 18 - 50 years. Risk cover is availableup to 55 years subject to payment of premium of Rs. 330/- p.a. Risk coverage is Rs. 2lakh in case of death due to any reason. The

Insurance premium for the scheme is auto debited from the bank account of therespective subscriber. The Bank has a tie up with LIC for this scheme.



This Scheme provides nancial cover against personal accident of the subscribers. It isopen for the age group between 18 - 70 years at a nominal annual premium of Rs.12/-. Risk cover is Rs. 2.00 lakh for death due to accident or full disability and Rs.1.00 lakh for partial disability. The Insurance Premium for the scheme is auto debitedfrom the bank account of the respective subscriber. The Bank is having a tie up with theNew India Assurance Co. Ltd for this scheme.


Government of India launched Atal Pension Yojana for the bene t of all citizensespecially for the poor and under privileged. Under APY it is open for the age groupbetween 18-40 years. After completion of 60 years of age the subscribers will be givenguaranteed minimum pension ranging between Rs. 1000 - Rs. 5000 per month depending upontheir contribution. The enrollment as on 31 March 2017 in the schemes is 49369(PMJJBY)72460 (PMSBY) and 3842 (APY) respectively.


The Bank believes lack of nancial literacy among rural population is primarilyresponsible for low penetration of nancial services. As a measure the Bank has given moreimportance in schools and rural villages where the Bank's personnel have personallyvisited for imparting nancial education.

During the reporting cycle the Bank has conducted such literacy programmes in fourteen(14) villages around Tamil Nadu and twelve (12) meetings in schools. Adequate measureshave been taken under this process to impart nancial education for the underprivilegedsections including educational institutions. Further the Bank has tied up with twoagencies viz. Common Wealth Inclusive Growth Foundation and Bharathi Women DevelopmentCentre which has engaged the services of 146 Business Correspondents to serve the remoteand unbanked regions in Tamilnadu. The villagers were educated about the Indian Bankingsystem the use of technology digital products security aspects etc.


The Bank implemented an Employee Stock Option Scheme 'CUB ESOS 2008 for grant of stockoptions to eligible employees of the Bank. The Shareholders of the Bank approved thescheme on 26 April 2008 at an Extra Ordinary General Meeting of the Bank. The maximumaggregate number of options that may be granted under this scheme is 50000000. As perthe scheme exercise price of the options shall be decided by the Compensation &Remuneration Committee at the time of issuing stock options. The Bank offers ESOS to itsemployees which vests over a period of ve years from the date of grant of options i.e.15% options each for rst three years and 25% and 30% for fourth and fth year respectively.Further the shares are offered at prevailing market prices and no discount is offered.The details of employee stock option are appended hereto as Annexure I.


The Bank has enhanced the focus to drive customer experience and service quality withinterventions in back of ce functions. The Bank has been improving productivity throughprocess simpli cation automation and continuous training. The Bank continues its focus onengagement and retention through initiatives that provide a holistic environment whereemployees get opportunities to realize their potential. Talent management being anintegral part of overall performance management process in the bank aims to provide longterm sustained and meaningful careers to employees across the organization. The Bank iscommitted to developing its capabilities as an organization and as individuals to meetcurrent and future business challenges. The Bank also deputes its employees to varioustraining institutions like SIBSTC NIBM CAB CAFRAL IDRBT etc. There exists a cordialrelationship between the management and the employees. Further during the reporting cyclethe management of the Bank has entered into a pay settlement with CUB Of cers' Associationand CUB Staff Union for the bene t of its employees with attractive pay structure and benets at par with Industry peers.

As on 31 March 2017 the Bank has 4689 employees comprising of 54 Executives in topmanagement cadre 1690 Of cers 2635 Clerks and 310 Subordinate staff as compared to 4517employees in the previous year.


In today's Banking scenario Technology plays a pivotal role in managing and ful llingthe growing customer demand. The Bank has been at the forefront of this digital revolutionamong banks in India.

In the use of Information and Communication Technology (ICT) the Bank has focused uponthe following aspects:

1. Bring in advanced products in the area of Automation and Artificial Intelligence:The Bank has been a pioneer in installing 'CUB Lakshmi' First Banking Robot at T. NagarBranch Chennai. Currently the Robot interacts with customers to answer queries. Infuture the Robot will handle more tasks.

2. Enhance the service levels and productivity: Customers can now perform a largenumber of tasks through CUB Net Banking and CUB Mobile Banking use ATMs for regulartransactions and visit e-Lounges in many branches to carry out a number of bankingtransaction. Through these facilities 83 % of Customers' transactions are now beingcarried out outside of the branches.

3. Offer new mobile based products such as e Wallet and support the Government inushering a cashless environment: The Bank has also helped in creating a cashlessenvironment in SASTRA University using smart cards of CUB which also serves as their IDCard.

4. Be in the forefront on creating a cyber security environment and ensureuninterrupted services to customers.

5. Run an efficient IT operations using Open Source environment and in managing a largenetwork.

A Separate section in this Annual Report has details on the extensive TechnologicalBanking activities carried out by the Bank.


• Best Small sized Bank for FY. 2015-16 by Business World - PWC Best Banks' Survey2016.

• Financial Express Best Bank award in the category "Top old Private SectorBank" for FY. 2015-16.


All Board meetings of the Bank were held in accordance with the Companies Act 2013the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI)and SEBI Listing Regulations 2015. The meetings were held to discuss and decide onvarious business policies strategies and other businesses in the best interests of theBank.

During the year under report 15 meetings were duly held. The complete details on suchmeetings are provided in the Corporate Governance Report as part of this Annual Report.



Pursuant to the approval accorded by the Reserve Bank of India Dr. N. Kamakodi wasappointed as the Managing Director & CEO of the Bank for a period of three yearsw.e.f. 1 May 2014 till 30 April 2017. In view of this the Board of Directors of theBank based on the recommendations made by the Nomination Committee and taking into recordthe continued achievements made by the Bank under the able leadership of Dr. N. Kamakodiresolved that Dr. N. Kamakodi be re-appointed as the Managing Director & CEO of theBank for a further term subject to approval by the RBI under the provisions of Section35B of the Banking Regulation Act 1949.

The RBI vide its letter no.DBR.Appt.No.12580/ 08.42.001/2016-17 dt. 24 April 2017conveyed its approval for the re-appointment of Dr. N. Kamakodi as the Managing Director& CEO of the Bank for a further period of three years w.e.f. 1 May 2017 till 30April 2020. Further as per the relevant provisions of Section 196 of the Companies Act2013 the re-appointment of Managing / Whole Time Director requires the approval ofshareholders. Accordingly the re-appointment of Dr. N. Kamakodi is being recommended forapproval by the shareholders in the Notice calling this Annual General Meeting. Therelevant details pursuant to SEBI Listing Regulations 2015 are disclosed separately insuch notice.

In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Bank Justice (Retd.) S.R. Singharavelu Non-Executive Director of theBank retire by rotation at the ensuing Annual General Meeting of the Bank and beingeligible has offered himself for re-appointment.

Shri. Subramaniam Narayanan who is having specialized knowledge on Accountancy andFinance was co-opted as Additional Director on the Board of the Bank on 20 June 2017 torepresent the minority sector subject to approval by the Reserve Bank of India. In theopinion of the Board Shri. Subramaniam is a dynamic and competent person who caneffectively participate and represent in the Board of our Bank. The Board recommends hisappointment as Independent Director on the Board of the Bank for approval by shareholdersin the Notice calling this Annual General Meeting. The relevant details of Shri.Subramaniam Narayanan pursuant to SEBI Listing Regulations 2015 is disclosed separatelyin such Notice.

Shri. R. Mohan is currently a Non-Executive Director on the Board of the Bankrepresenting the majority sector Banking Agriculture and SSI. He was appointed asNon-Executive Director on 28 June 2014 and at present as per the provisions of Section149(6) of the Companies Act 2013 he is eligible to represent the Board as an IndependentDirector. The Director meets the criteria prescribed therein to become an IndependentDirector and has furnished a declaration to that effect. Accordingly the appointment ofShri. R. Mohan as Independent Director is being recommended for approval by theshareholders in the Notice calling this Annual General Meeting. The relevant details ofShri. R. Mohan pursuant to SEBI Listing Regulations 2015 is disclosed separately in suchNotice.


Shri. R.G. Chandramogan retired as an Independent Director from the Board of the Bankon 29 July 2016 on account of completion of two terms of 8 years each with a prescribedcooling period as per the provisions of Banking Regulation Act 1949.

This was his second tenure of service on the Board of Bank.

Shri. T. K. Ramkumar retired as Independent Director of the Bank on 10 June 2017 onaccount of completion of 8 years tenure as per the provisions of Banking Regulation Act1949.

The Board hereby places on record its warm appreciation over the excellent servicesrendered by Shri. R. G. Chandramogan and Shri. T. K. Ramkumar during their tenure.

Key Managerial Personnel

The following of cials of the Bank continue to be the "Key ManagerialPersonnel" pursuant to the provisions of Section 203 of the Companies Act 2013 :

Sl.No. Name Designation
1. Dr. N. Kamakodi MD & CEO
2. Shri. V. Ramesh General Manager - CFO & CS

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors underSection 149(7) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations') and the Board is satisfied thatthe Independent Directors meet the criteria of independence as mentioned in Section 149(6)of the Companies Act 2013.

Familiarization Program for Independent Directors

The details of programme for familiarization of Independent Directors with the Banktheir roles rights and responsibilities in the Bank and related matters are providedseparately under the Corporate Governance Report forming part of Annual Report.

Performance Evaluation of the Board

In line with the provisions of the Companies Act 2013 and SEBI Listing Regulations2015 there exists a structured criterion as approved by the Nomination committee of theBoard for carrying out the performance evaluation of the Board as a whole its committeesas well as Independent Directors.

During the year under review the Securities and Exchange Board of India (SEBI) hasissued a detailed guideline on Board Evaluation to bring more clarity in the evaluationprocess. Accordingly the criteria were aligned by the Nomination committee to meet therequirements of such guidelines and the necessary evaluations/ review were carried out bythe Board / Independent Directors in their separate meeting to determine the effectivenessof the Board its Committees Chairman and individual Directors.

Additional information on performance evaluation is given in Corporate Governancesection forming part of this report.


Statutory Auditor

M/s. P. Chandrasekar Chartered Accountants Bengaluru the present Statutory CentralAuditors will complete their four (4) years term at the ensuing Annual General meeting(AGM) and accordingly in terms of RBI letter no. DBS.ARS No/08.13.005/2015-16 dt. 9 June2016 they will retire at the ensuing AGM. In terms of Section 139 of the Companies Act2013 read with Companies (Audit and Auditors) Rules 2014 the Board of Directors hasrecommended the appointment of M/s. Sundaram & Srinivasan Chartered AccountantsChennai as Statutory Central Auditors of the Bank subject to the approval by RBI to holdoffice from the conclusion of ensuing AGM on such remuneration to be decided by the Board.

The Bank has received the consent from the proposed Auditor and confirmation to theeffect that they are not disqualified to be appointed as Statutory Central Auditors of theBank in terms of Companies Act 2013 and the rules made there under. Members are kindlyrequested to consider and approve the appointment as Statutory Central Auditors of theBank for FY. 2017-18.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act 2013 read with Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Bank has appointed M/s B.K.Sundaram & Associates Practicing Company Secretaries as Secretarial Auditor toconduct the Secretarial Audit of the Bank for the Financial Year 2016-17. The report ofSecretarial Auditor 'Secretarial Audit Report' is annexed to this report as Annexure II.


In accordance with Section 134 (5) of the Companies Act 2013 the Board of Directorsof the Bank hereby declares and confirms that:

i) In the preparation of the annual accounts the applicable Accounting Standards hadbeen followed along with proper explanation relating to material departures.

ii) The Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Bank at the end of the nancial year and of thePro t & Loss of the Bank for that period.

iii) The Directors had taken proper and suf cient care for the maintenance of adequateaccounting records in accordance with the provisions of applicable laws governing banks inIndia for safeguarding the assets of the Bank and for preventing and detecting fraud andother irregularities.

iv) The Directors had prepared the annual accounts on a going concern basis.

v) The Directors had laid down adequate internal nancial controls to be followed by theBank and that such internal nancial controls are adequate and were operating effectively;and

vi) The Directors has devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


The Bank has formulated a Code of Conduct pursuant to SEBI (Prohibition of InsiderTrading) Regulations 2015 to regulate monitor and ensure reporting of trading by theemployees and other connected persons to comply with the provisions of SEBI ListingRegulations. Such policy is adopted to maintain highest ethical standards in dealing withsecurities of the Bank by persons to whom it is applicable. The code of conduct andrelated policy are available in the Bank's website (weblink:


There are no material changes and commitments affecting the nancial position of theBank which has occurred between the end of the nancial year of the Bank i.e. 31 March2017 and the date of Directors Report i.e. 20 June 2017.


During the year under review no signi cant and material orders were passed by theRegulators or courts or tribunals impacting the going concern status and Bank's operationin future.


The Bank has adopted a Compensation Policy in accordance with the directives issued bythe Reserve Bank of India. The Bank has constituted a Compensation & RemunerationCommittee which oversees the framing implementation and review of the Compensation Policyof the Bank. The Remuneration policy of the Bank is briefed under Corporate GovernanceReport as part of Annual Report.


The bank has in place an integrated Risk Management framework supported by detailedpolicies and processes for management of Credit Risk Market Risk Liquidity RiskOperational Risk and various other Risks.

The details of identi cation assessment mitigations monitoring and the management ofall risks are mentioned in the Management Discussion and Analysis section appended to thisReport.


Pursuant to an amendment noti cation issued by the Securities Exchange Board of Indiaduring the year 2016 the Bank has framed a policy on Dividend Distribution taking intoaccount the guidelines prescribed by the Reserve Bank of India on 'Declaration of Dividendby Scheduled Commercial Banks'.The same is available at the website of the Bank. (weblink: DistributionPolicy.pdf).


As per SEBI Listing Regulations 2015 a Business Responsibility Report describing theBank's social environmental and governance aspects are attached as part of this AnnualReport.


Being a Banking company the disclosures as required pursuant to Rule 8(5)(v) &(vi) of the Companies (Accounts) Rules 2014 read with Section 73 & 74 of theCompanies Act 2013 are not applicable to the Bank.


The Bank has put in place adequate internal nancial controls commensurate with the sizeand scale of operations. The Bank has in all material aspects adequate internal controlsystems over nancial reporting and these controls have taken into consideration theessential components of internal control stated in the guidance note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India. Such internal nancial controls over nancial reporting were operatingeffectively as at the end of the nancial year.


Conservation of Energy and Technology Absorption

Considering the nature of activities carried out by the Bank the provision of Section134(m) of the Companies Act 2013 relating to conservation of energy and technologyobservation do not apply to the Bank.

However every effort is being made to conserve energy. On the technological front theBank continues to offer excellent service to its customers by adopting the latest andproviding innovative technological solutions. A seperate report on technology is furnishedas part of this report.

Foreign Exchange Earnings and Outgo

The Bank continues to encourage country's export promotion by lending to exporters andoffering them forex transaction facilities.

Employees and Related Disclosures

Disclosures under Section 197 of the Companies Act 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are furnishedas Annexure III.

During the nancial year there are no employee(s) of the Bank who were in receipt ofremuneration either employed throughout the nancial year or part thereof was in receiptof remuneration for that year which in the aggregate or as the case may be at a rate whichis not less than the limits speci ed under Section 197 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended.

Further the Bank do not have any employee(s) who was employed throughout the nancialyear or part thereof and was in receipt of remuneration in that year which in theaggregate or as the case may be at a rate which in the aggregate is in excess of thatdrawn by the Managing Director and holds by himself or along with his spouse and dependentchildren not less than 2% of equity shares of the Bank.

Disclosure under Section 22 of Sexual Harassment of women at workplace (PreventionProhibition and Redressal) Act 2013.

The Bank gives utmost importance towards maintaining and upholding the dignity of eachand every women working in the Bank. The Bank has a policy on Prevention of SexualHarassment at workplace which provides for adequate safeguards and protection for womenemployees working in the organization. The details of complaints received and disposedunder such policy is as follows:

Number of complaints pending as on the beginning of the financial year Nil
Number of complaints filed during the financial year 1
Number of complaints pending as on the end of the financial year Nil


The Board of Directors of the Bank has adopted a policy on Related Party transactionswhich is in line with the Companies Act 2013 and SEBI listing regulations 2015. Therewere no significant "Related Party Transactions" of any material financial& commercial nature with the Bank by the Directors and their relatives that would havepotential conflict with the interest of the Bank at large. A detailed policy on theRelated Party Transaction is available at the Bank's website. (weblink: ts/CUB_Related_Party_Transaction.pdf)


All loans guarantees or investments made in securities by the Bank are exempt pursuantto the provisions of section 186 (11) of the Companies Act 2013 and hence does notattract any disclosure required under section 134 (3)(g) of the Companies Act 2013.


Pursuant to Section 134(3)(a) of the Companies Act 2013 (the Act) read with Rule12(1) of Companies (Management & administration) Rules 2014 the extract of AnnualReturn in form MGT - 9 as provided under

Sub-section (3) of Section 92 of the Act is appended to this Annual Report as AnnexureIV.


In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 and the related noti cations /circulars / guidelines issued by MCA the Bank has established a Corporate SocialResponsibility (CSR) Committee. The statutory disclosures on the committee composition anda Report on CSR activities undertaken during the year is annexed as Annexure V to thisreport.


Corporate Governance of the Bank is an ethically driven business process that rests onthe fundamental pillar of high ethical values aimed at enhancing organization's brand andreputation and to protect the interests of all the stakeholders by taking ethical businessdecisions. The Bank is committed to achieving the highest standards of CorporateGovernance and also adheres to the Corporate Governance requirements set by the Regulators/ applicable laws. Accordingly the Board functions as trustees of the shareholder's andseeks to ensure that the long term economic value for its shareholders is achieved whilebalancing the interest of all the stakeholders.

A separate section on Corporate Governance Standards followed by the Bank and therelevant disclosures as stipulated under SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Companies Act 2013 and rules made there under aredisclosed there at as part of this report.


A detailed Management Discussion and Analysis Report for the year under review asstipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ispresented as a separate section as part of this Annual Report.


A vigil mechanism has been implemented through the adoption of Whistle Blower Policywith an objective to enable any employee or Director raise genuine concern or reportevidence of activity by the Bank or its employee or Director that may constitute:Instances of corporate fraud; unethical business conduct; a violation of Central or StateLaws rules regulations and / or any other regulatory or judicial directives; anyunlawful act whether criminal or civil; malpractice; serious irregularities; improprietyabuse or wrong doing; deliberate breaches and non-compliance with the Bank's policies;questionable accounting / audit matters / financial malpractice.

Safeguards to avoid discrimination retaliation or harassment and confidentialityhave been incorporated in the policy. All employees and directors have access to theChairman of the Audit Committee in appropriate and exceptional circumstances.

The Policy has been uploaded on the Bank's intranet as well as website (weblink:http://investor.cityunionbank. com/downloads/ Whistleblower%20Policy.pdf).


The Board of Directors of the Bank would like to take this opportunity to thank all thestakeholders and wish to place on record its deep and sincere gratitude to the ReserveBank of India NABARD NHB IDBI SIDBI EXIM BANK ECGC DICGC SEBI Stock ExchangesDepositories Karvy Computershare Pvt. Ltd. Life Insurance Corporation of India UnitedIndia Insurance New India Assurance Tata Consultancy Services CCIL CIBILCorrespondent Banks Exchange Houses and other regulatory authorities for their continuedsupport guidance and co-operation and also to Shri. R. G. Chandramogan and Shri. T. K.Ramkumar Independent Directors who retired on account of completion of tenure.

The Board hereby appreciates the dedication and the efforts of all the employees fortheir resolute support and commitment in pursuit of organizational growth &excellence.

For and on behalf of the Board
Place : Chennai S. Mahalingam
Date : 20 June 2017 Chairman