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City Union Bank Ltd.

BSE: 532210 Sector: Financials
NSE: CUB ISIN Code: INE491A01021
BSE 12:02 | 07 Dec 192.00 -2.60






NSE 11:49 | 07 Dec 192.40 -2.20






OPEN 197.30
VOLUME 82809
52-Week high 200.00
52-Week low 108.60
P/E 15.67
Mkt Cap.(Rs cr) 14,210
Buy Price 192.15
Buy Qty 129.00
Sell Price 192.40
Sell Qty 527.00
OPEN 197.30
CLOSE 194.60
VOLUME 82809
52-Week high 200.00
52-Week low 108.60
P/E 15.67
Mkt Cap.(Rs cr) 14,210
Buy Price 192.15
Buy Qty 129.00
Sell Price 192.40
Sell Qty 527.00

City Union Bank Ltd. (CUB) - Director Report

Company director report

The Board of Directors of your Bank is pleased to present the Annual Report on businessand operations of the Bank together with the Audited Financial Statements for theFinancial Year ended 31 March 2021.


The year gone has left a scar on the global economy. The year 2021 commenced with bothhope and fear. The economies across the world fell off a cliff during the first few monthsof FY 2021 plunging to the depths of contraction not fathomed before but in the later halfof the year the global economy started to climb from the depth to which it had plummetedduring the time of lockdown in the month of April 2020. The Vaccine approvals duringDecember 2020 revived the hopes of turnaround from pandemic but the renewed waves andvariants of the virus posed concerns on outlook. The strength of recovery was projected tovary significantly across countries depending on access to medical facilities policysupport exposure to cross country spillovers etc. The World Economic Outlook hadprojected the global growth at 6% in 2021 moderating to 4.4% in 2022.

Indian Industry's passage through pandemic has been both deep losses and windows ofopportunity. To quote a few the manufacturing sector witnessed worst contraction miningsector continued to be languish crude oil and natural gas production dropped due toinfrastructure & operational difficulties. At the same time the pandemic opened thegates for pharmaceuticals and medical exports. The service sector suffered heavily andcontact intensive sectors like aviation tourism hospitality suffered grievously. Thehealth of the Banking sector emerged as a priority for the Regulator and a number ofmeasures were put in place to mitigate the impact of pandemic which included inter-aliaeasier access to working capital moratorium asset classification standstill restrictionon dividend payouts etc. With India experiencing a second wave since March 2021 there hasbeen localized lockdowns in states where it has impacted the economic activity. Howeverwith Covid-19 second wave showing signs of decline in early June 21 and the availabilityof sufficient vaccines by September 2021 growth in second half of FY 2021-22 is likely topick up which would trigger positive outcome for the Indian economy.

Under the above circumstances the Bank recorded a total business of Rs 81558 crorean increase of 8% over the previous year figure of Rs 75408 crore in FY 2020. The NetProfit of the Bank has increased to Rs 593 crore from Rs 476 crore. The Net InterestIncome of the Bank stood Rs1830 crore a 9% increase over FY 2020 position. The keyperformance indicators i.e. the Return on Assets of the Bank stood at 1.15% Return onEquity stood at 10.73% Net Interest Margin of the Bank stood at 4% and the Cost to Incomeratio stood at 41.45% during the reporting year. The financial performance has beendiscussed in detail in the forthcoming paragraphs. During the year the Bank opened 2additional branches to total 702 branches and has 1724 ATM's as at 31 March 2021. On thedigital front the Bank continued to upgrade and strengthen its Information Technologyframework to ensure smooth and secure customer friendly Banking. Further information onthe State of Affairs of the Bank has been discussed in detail in the Management Discussionand Analysis Report forming part of this Report.

Financial Highlights (Rs in crore)
Particulars 2020-21 2019-20 Growth (%)
Share Capital 74 74
Reserves & Surplus 5769 5222 10%
Deposits 44537 40832 9%
Advances (Gross) 37021 34576 7%
Investments (Gross) 9523 9236 3%
Total Assets / Liabilities 53312 49734 7%
Total Income 4839 4848 -ve
Total Expenses 3356 3507 -ve
Net Interest Income 1830 1676 9%
Operating Profit 1484 1341 11%
Provisions & Contingencies 891 865 3%
Net Profit (A) 593 476 25%
Balance of Profit brought forward (B) 58 57
Amount available for appropriations (A+B) 651 533
Transfers to:
- Statutory Reserve 150 140
- Capital Reserve 105 81
- General Reserve 220 145
- Investment Reserve Account 0 0
- Special Reserve under IT Act 1961 70 65
- Dividend & Dividend Tax* 45 44
- Balance of Profit carried forward 61 58
Total 651 533

*Dividend & Dividend distribution Tax reported as per MCA notification on revisedAS 4 dated 30 March 2016.

The Deposits and Advances for the current year stood at Rs 44537 crore and Rs 37021crore respectively. The total business stood at Rs 81558 crore as compared to Rs 75408crore for the previous year registering a growth of 8%.

The size of the Balance Sheet as on 31 March 2021 is Rs 53312 crore as compared to Rs49734 crore last year recording an increase of 7%.


During the year the Bank earned a Gross profit of 1484 crore as compared to previousyear's figure of 1341 crore registering an increase of 11%. The Net profit of the Bankfor the current year was 593 crore as against 476 crore last year.


The Total Income earned by the Bank marginally declined for FY 2021 at 4839 crore asagainst 4848 crore in FY 2020. The total expenditure of the Bank decreased by 4% torecord 3356 crore as compared to 3507 crore in the previous year due to reduction inoperational expense.


Net Interest Income for the year FY 2021 under review increased by 9% to 1830 crorefrom 1676 crore last year. The non-interest income of the Bank increased from 680 croreto 705 crore registering a growth of 4% on account of increase in treasury income.


The Bank's total Deposits for the year under review increased by 3705 crore to record44537 crore from 40832 crore registering a growth of 9% over previous year. During thecurrent year CASA increased by 2784 crore to record 12981 crore from 10197 croredepicting a growth of 27%. The cost of deposit of the Bank decreased to 5.36% from 6.20%as recorded in the previous year.



Gross Advances of the Bank increased by 2445 crore to 37021 crore from 34576 croreposting a growth of 7%. The yield on advances declined to 9.91% from 10.76% during thereporting year due to introduction of ECLGS Scheme in which interest was capped at 9.25%and gold loans with lower rate of interest. For FY 2021 the Bank had achieved the target/ sub-targets prescribed by RBI for Priority sector Agriculture Micro Enterprises Small/ Marginal farmers and weaker section.


The Gross NPA and Net NPA for the year under review stood at 5.11% and 2.97%respectively as compared to 4.09% and 2.29% in the previous year.

The provision for tax for the reporting year decreased to 100 crore from 110 crore inprevious year. The provision made for NPA for the financial year was 599 crore vis-a-vis631 crore last year. The total provision increased by 26 crore to 891 crore from 865crore.


Domestic Treasury

The Gross Investments increased by 287 crore to 9523 crore as on 31 March 2021 from9236 crore as on 31 March 2020. Out of this the investments in Government bonds aloneaccount to 9333 crore constituting 98% of the total investments. The Non-SLR investmentsdeclined by 107 croremainly on account of redemption of Security Receipts to the extent of105 crore. The Bank utilized the volatile yield movements during the year and through thetimely sale of securities the Bank could book a profit to the tune of 233.41 crore asagainst 159.60 crore made last year.

Forex Treasury

During the financial year 2020-21 Indian Rupee strengthened against USD by 3.70%.Indian rupee against USD opened at 75.95 and closed at 73.10. Major reason attributed forstronger rupee were corporate dollar inflows gain in local equities and upbeat in riskappetite. During the first half of the financial year due to the outbreak of the coronavirus pandemic rupee depreciated. The large FPI inflows throughout the year favoured rupeeamid the pandemic. The Central Bank's reserves during the financial year grew by 22%.During the FY 2020-21 profit on our foreign exchange operation stood at 91.91 crore asagainst 84.62 crore during the previous year.


Net Worth

The paid-up Share Capital of the Bank increased from 73.73 crore as on 31 March 2020to 73.88 crore as on 31 March 2021. During the reporting period the Bank has allotted1502890 equity Shares to employees under Employee Stock Options pursuant to CUB ESOSScheme 2008.

The Net worth of the Bank stands improved to 5798.85 crore as on 31 March 2021 from5253.24 crore as on 31 March 2020.

Capital Adequacy Ratio

As per Basel III regulations banks are required to maintain a minimum Pillar 1 Capital(Tier-I + Tier II) to Risk Weighted Assets Ratio (CRAR) of 9% on an ongoing basis. Besidesthis minimum capital requirement Basel III also requires creation of capital conservationbuffer and countercyclical buffer of 2.50% at the end of March 2018 in a phased mannerbeginning from 31 March 2015 @ 0.625% in each year up to 31 March 2018. RBI had issuedcirculars regarding the extension of transitional period for full implementation of BaselIII Capital Regulations based on the economic situation and also due to the continuingstress on account of COVID-19 crisis. The last tranche of 'Capital Conservation BufferFramework' has been deferred from 1 April 2021 to 1 October 2021 and it shall continueto apply till the CCB attains the level of 2.5% on 1 October 2021.

The CRAR required to be maintained for the period ended is 10.875%. The Bank hasmaintained Tier I CRAR of 18.45% and total CRAR of 19.52% as at 31 March 2021 which arewell above the norm prescribed by RBI.



Pursuant to RBI circular Nos.DOR.BP.BC.No.29/21.02.067 / 2020-21 dt. 4 December 2020and DOR.ACC.REC. 7/21.02.067/2021-22 dt. 22 April 2021 read with Dividend DistributionPolicy of the Bank the Board of the

Bank at its meeting held on 28 May 2021 had declared an Interim Dividend of 0.30 perequity share of Face Value of 1/- each for the year ended 31 March 2021 (previous year0.50 per equity share) and the dividend has been paid within prescribed time to allshareholders subject to applicable taxes as per the amendments introduced by the

Finance Act 2020 w.e.f. 1 April 2020. In case any shareholder has not claimed suchdividend or of previous years they may kindly approach the Bank or its RTA.

The Dividend Distribution Policy of the Bank referred above has been framed in terms ofRegulation 43A of Securities and Exchange Board of India (Listing Obligations andDisclosures Requirements) Regulations 2015 and the same has been uploaded in the websiteof the Bank. Weblink:


Our Bank did not go for any aggressive branch expansion during the year and it addedonly 2 branches to total 702 as on 31 March 2021. The total number of ATMs stood at 1724(includes 766 Bulk Note Recycler Machines (BRM) which performs the job of accepting anddispensing cash).

During the reporting year the Bank has replaced old BRM machines with new ones andclosed loss making o site ATMs the details of which are as follows:

Particulars ATM BRM Total
Opened 33 174 207
Closed 70 206 276

As said earlier considering the lockdown situation the Bank did not resort toexpanding its geographical network. At the same time it also closed some of itsinoperative / loss making ATMs and BRMs.

As on date 90% of the Bank's total branches are operational in South 5% in West 4%in North and 1% in Eastern parts of India.


Financial Inclusion is a concept where the banking financial solution and services areoffered to every individual without any forms of discrimination as was as to ensure eventhe under privileged get easy access to banking channels. The objectives of financialinclusion are to provide the following: l Basic no frills banking account formaking and receiving payments.

Servicing products (including investment and pension)

Simple credit products and overdrafts linked with no frills account

Remittance or money transfer facilities

Micro Insurance (life) and Non-Micro Insurance (non-life)

Micro Pension

The concept of Financial Inclusion is being successfully implemented in your Bank. YourBank is showing tremendous progress in providing basic banking services especially to therural citizens. We have got 108169 No Frills accounts and 47 number of OD linked withsuch accounts. Your Bank has made successful implementation of PMJDY and other Governmentschemes at the villages for connecting the underprivileged with our banking network byconducting frequent campaigns. The Bank has 85952 PMJDY accounts for March 2021.

By way of establishing BC Outlets at the unbanked areas and with the introduction oftechnology products we are able to provide all the banking services to the rural poor. Wehave 9 BC outlets in the unbanked areas and 132 BCs are rendering services to the villagelevel beneficiaries.

Your Bank is very much keen in creating an awareness for the Government schemes forPension Insurance etc. such as Atal Pension Yojana MUDRA PMJJBY PMSBY etc. We have63951 accounts under PMJJBY 103356 accounts under PMSBY and 30255 accounts underPMAPY schemes. The Bank has e-KYC system and Aadhaar enabled Payment System (AePS) whichhelps to render quick services to the rural poor. Besides the Bank has deployed POSmachines at various locations which are very much helpful for doing merchant transactions.

The Customer base of your Bank has recorded an increase through Financial Inclusion andby rendering services through technology products in the unbanked areas we have createdconfidence in the minds of the people to get uninterrupted banking services. The BusinessCorrespondents make regular visits to the Villages and provide the banking services attheir doorstep. Your Bank is proud to extend its contribution to the social welfareschemes of the Government for our Nation building.

‘Financial Literacy Week' is being conducted by the Bank with the aim offurthering _inancial literacy and also for developing credit discipline and encourageavailing credit from formal _inancial institutions by the customers. As per the objectivesof the National Strategy for Financial Education 2020-25 focus will be on the followingthree topics with a view to improve credit and reduce NPAs:

Timely repayment and credit score

Borrowing from Formal Institutions only

Responsible Borrowing

The Bank conducted campaigns at various places for observing the Financial LiteracyWeek in an e ective manner and to educate its customers properly.


Development of Human resources is an important factor for the growth of anyorganisation and it involves various aspects including training for improving managerialskills. Your Bank places great value on developing and nurturing its human capital as acritical resource in its e orts for value creation. All CUBians (Employees) periodicallyundergo in-house and external training programmes for developing their functional andbehavioural skills. The Bank has two Sta Training Colleges one at Kumbakonam and other atChennai both of which has got a state of the art infrastructure facilities and expertfaculty members to impart training. Executives and Of icers are sponsored to undergotraining programmes at IIMs NIBM CAB CAFRAL SIBSTC IDRBT etc. There also exists acapacity building program in the Bank as per which employees are encouraged to qualify /get certi ied in various areas of Banking to grow personally as well as professionallythereby contributing to overall growth of the organization. Further as a part ofsuccession planning recruitment and promotion including lateral entries are undertakenperiodically.

In the context of COVID 19 considering the need to adhere to safety norms & tocontinue the professional development of its employees the Bank has developed ane-learning Management System (LMS). LMS is a software application for administrationdocumentation tracking reporting and delivery of educational courses / trainingprogrammes. It facilitates online learning process at users' convenience.

During November 2020 the Board of the Bank constituted a Settlement Committee toconsider the Charter of demands made by CUB Of icers Association (CUBOA) & CUB StaUnion (CUBSU) and revise the pay structure of Employees. To mention it was even in timesof pandemic the management of the Bank negotiated and agreed for a new Pay Settlement withCUB Of_icers Association (CUBOA) & CUB Sta Union (CUBSU) for the bene it of employees.Further with a view to motivate and boost employee morale it has advanced the PaySettlement in December 2020 itself which was supposed to be taken up for negotiation onlyin September 2021. The new settlement came into e ect from 1 January 2021. Further basedon the recommendations made by the Compensation & Remuneration Committee of the Boardthe Board of the Bank during March 2021 approved a revised pay structure for Executives ofthe Bank to take e ect retrospectively from January 2021.

As in the past the Bank has maintained a cordial and healthy industrial relationshipwith the employees and we are happy to mention here that there has not been even a singleoccasion of employee unrest in the Banking history of CUB.

As on 31 March 2021 the Bank has 5843 on-roll employees comprising of 50 employeesin Executive cadre 2349 in Management cadre 3192 in Clerical cadre and 252 inSubordinate Sta cadre.

Besides above the HR function of the Bank also determines and o ers employee stockoptions to employees to create a sense of ownership the details of which are detailedbelow.

Employees Stock Option Scheme (ESOS)

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 the scheme on 26 April 2008 at an Extra Ordinary General meeting of theBank. The maximum aggregate number of options that may be granted under this scheme is50000000. As per the scheme exercise price of the options shall be decided by theCompensation & Remuneration Committee at the time of grant of stock options. The Banko ers ESOS to its employees which vests over a period of _ive years from the date of grantof options i.e. 15% options each for _irst three years and 25% and 30% for fourth and_ifth year respectively. The shares are o ered at prevailing market prices at the time ofgrant to the employees. However the same shall vary pursuant to corporate action viz.Rights Issue Bonus Issue etc. There were no material changes in the ESOS of the Bankduring the period under review and the same is in compliance with the provisions of SEBI(Share Based Employee Benefits) Regulations 2014 as amended from time to time ("SEBISBEB Regulations"). As at the end of 31 March 2021 the Bank has granted 4.83 croreoptions and only 0.17 crore options are yet to be granted under the scheme.

The disclosures pursuant to Regulation 14 of SEBI SBEB Regulations have been set out inthe website of the Bank and also the same is annexed hereto as Annexure I weblink:

In addition the shareholders of the Bank at its meeting held on 23 August 2017approved new CUB ESOS Scheme 2017 for 30000000 options on terms and conditions similarto previous one. During the reporting year out of 30000000 options 3462000 stockoptions were granted to the eligible employees under CUB ESOS Scheme 2017.


'Technology' has carved a niche place in Bank's service to the customers managing andfulfilling customer demands and providing enhanced quality service. Due to the advancementof Information Technology availability of Internet services through Mobile phones ataffordable cost and customer's inclination particularly the millennials digital bankinghas become the order of the day. Due to COVID-19 pandemic lockdown at various states andsocial distancing technology services enable banks and other service industries deliverthe service to customers through digital channels.

The Bank has implemented various Digital solutions / products to enable customers toremove the time and distance barriers in availing Banking services. The Bank as on 31March 2021 had 702 branches 1724 ATM / BRM (ATMs - 958 BRM - 766) Passbook Kiosk -633 and Cheque deposit Kiosk - 543 for customer use. The bank has also been spreading itsSelf Service Bank branches (e-Lounge) to cater customer needs and enabling our ATMs / BRMsfor cardless deposit and withdrawals.

The Bank is deploying all possible technology enabled & digital payment systems tocater to the needs of customers. One such product was the "Video KYC" basedaccount opening implemented by the Bank which has become handy in the days of pandemic.Further the Bank has introduced Social Media Banking through Whatsapp Facebook Twitterand YouTube. Other products & services include:

All-in-One Mobile Banking app with interactive voice chat which offers avariety of services to its customers.

CUB e-Wallet Wealth Management ASBA Unified Payment Interface (UPI) BHIMand '*99#' a NUUP (National Unified USSD Platform) Bharat Bill Payment System (BBPS)Bharat QR Scan & Pay in BHIM / UPI etc.

Instant account opening through Welcome Kit Video KYC through SelfieBanking enabling DBT Aadhaar Enabled Payment System (AEPS).

The Bank has efficient Fraud / Risk monitoring solution which detectsanomalies in the customer transaction patterns and prevents frauds.

FASTag facility to make payments at Vehicle Toll Plazas.

Chat-bot service powered by 'Artificial Intelligence' (Ask Lakshmi)available.

Green PIN for PIN generation for ATM cards.

Virtual Credit Card through Internet / Mobile banking. SBI co-branded creditcards also available for customers.

Customers can now set their own limit for the ATM POS and E-com channeltransactions. They can enable / disable International usage of the card also through Net /Mobile Banking.

Facility has been provided to customers to block Net-Banking / MobileBanking / UPI by sending SMS to 9281056789 in the prescribed format BLOCK {LOGINID} fromthe registered mobile number.

EMV CHIP cards to enhance additional security for card based transactions.The Bank also offers Prepaid / gift cards and Travel Cards to the customers.

A customer friendly Contact Centre (Call Centre) with Interactive VoiceResponse System (IVRS) is put in place to promote customer support on multi-languages on24x7 basis.

PCI DSS certification for the digital card environment.

Cyber Security Measures

As the convenience in doing banking transactions through digital channels increases soalso the risks in cyber environment. New types of cyber frauds are emerging with theintroduction of new digital channels. As the Bankers are the custodians of Depositors'money we take utmost care to ensure cyber security measures are implemented.

The solutions implemented in our Bank cover the protection detection and response forall cyber security threats and risks. The Bank has established a 24*7 Security OperationCentre (SOC). The SOC takes steps to prevent attempts from the IOC (Indicators ofCompromise) and IOA (Indicators of Attack) which are received from regulators. The Bankparticipates in the quarterly cyber drills conducted by IDRBT to enhance our threatdetection and prevention capabilities.

Efforts are being taken by the Bank to ensure efficient security implementation byeducating & training concerned employees.


During FY 2019 the Bank started the marketing and distribution of Health Insurance andMutual Fund products in tie up with following organizations to offer additional servicesto all its stakeholders.

Star Health and Allied Insurance Co. Ltd. for distribution of HealthInsurance products.

Integrated Enterprises India Ltd. for distribution of Mutual Fund productsthrough online platform to our customers in Demat form and through branch network.

BSE Star Mutual Fund to offer Mutual Fund products through web basedplatform and through branch network.

Finwizard Technology Pvt. Ltd. (widely known as FISDOM) to offer Mobilebased Mutual Fund Investment solution.

The services are fully functional and during the reporting

year the Bank has earned an income of 16.49 crore as against 11.75 crore from suchservices in the previous year.


Your Bank does not have any Subsidiaries or Associates to report during the year underreport.


The 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 Obligations and Disclosure Requirements) Regulations 2015. During theyear 12 (twelve) meetings were held such details along with the constitution of the Boardand its committees are given under report on Corporate Governance forming part of thisreport.


M. Narayanan (DIN 00682297)

Shri. M. Narayanan currently an Independent Director on the Board of the Bank wasco-opted as an Additional Director w.e.f. 3 May 2016 which was duly approved by theshareholders in their meeting held on 22 August 2016. His current term is due to expireon 21 August 2021.

In accordance with the provisions of Section 149(10) of the Companies Act 2013 anIndependent Director can hold office for a maximum term of upto five (5) consecutive yearson the Board of the company and shall be eligible for re-appointment for another term offive years subject to passing of Special Resolution by the members and disclosure of suchappointment on Board's Report. Further in respect of Banking Companies the provisions ofsection 10A(2) of the Banking Regulation Act 1949 ('Banking Act') specify that theoverall tenure of non-executive Directors should not exceed a period of eight (8)consecutive years.

Keeping in view the provisions of both the Companies Act 2013 and the BankingRegulation Act 1949 and pursuant to the recommendations of the Nomination Committee theBoard of Directors of the Bank at its meeting held on 25 June 2021 considered andapproved the proposal to re-appoint Shri. M. Narayanan as Independent Director on theBoard of the Bank w.e.f. 22 August 2021 for the remaining period upto 2 May 2024 aspermitted under the Banking Regulation Act from the date of his first appointment in theBank subject to the approval of Shareholders by means of Special Resolution at the ensuingAnnual General Meeting of the Bank.

Accordingly the Board recommends the re-appointment of Shri. M. Narayanan for a secondterm as an Independent Director on the Board of the Bank (not liable to retire byrotation) for approval by shareholders in the Notice calling this Annual General Meeting.

Dr. N. Kamakodi MD & CEO (DIN 02039618)

As per the provisions of Section 196 of the Companies Act 2013 the terms &conditions for appointment and remuneration payable to Managing / Whole Time Directorrequires the approval of shareholders. The re-appointment of Dr. N. Kamakodi MD &CEO has already been approved by RBI vide its communication dated 20 April 2020 followedby the shareholders at its previous meeting held on 14 August 2020.

The Reserve Bank of India issued guidelines on Compensation to Whole time DirectorsCEOs Material Risk Takers and Control Function Staffs of Private Sector Banks dt. 4November 2019 as per which all Private Sector Banks while computing the total Fixed Payof Whole time Directors and CEOs shall quantify the monetary value of all perquisitesproposed to be paid to them and include the same in salary component. Accordingly theBank made an application to RBI in the prescribed format seeking its approval forremuneration of Dr. N. Kamakodi to take effect upon re-appointment i.e. 1 May 2020.

The Reserve Bank of India vide its letter number DOR.Appt.No.1629/08.42.001/2020-21 dt.3 December 2020 accorded its approval for a fixed pay of Dr. N. Kamakodi MD & CEOof the Bank w.e.f. 1 May 2020. To mention the shareholders at its earlier meetingheld on 14 August 2020 approved the re-appointment as aforesaid together with the termsof remuneration as may be approved by RBI and agreed to by the Board. In view of this theremuneration so approved by RBI as aforesaid is set out in the notice calling this AnnualGeneral Meeting for approval by members.

Shri. S Bernard (DIN : 01719441)

Shri. S. Bernard Independent Director on the Board of the Bank vacated his office ofDirector on the close of business hours of 19 August 2020 on account of completion oftenure in terms of the provisions of Section 10A(2A)(i) of the Banking Regulation Act1949.

The Board hereby places on record its warm appreciation over the excellent servicesrendered by Shri. S Bernard during his tenure.

Directors to retire by Rotation

All directors on the Board except the Managing Director and CEO of the Bank areIndependent Directors. Hence the provisions of Section 152(6) of Companies Act 2013relating to retirement of directors by rotation do not apply considering the presentcomposition of the Board of Directors. Independent Directors are not required to retire interms of Section 149(13) of the said Act. Accordingly no Director including MD & CEOis required to retire by rotation at this Annual General Meeting.

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors underSection 149(6) and 149(7) of the Companies Act 2013 notifications issued by the Ministryof Corporate Affairs and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and the Board is satisfied that the Independent Directors meet thecriteria of independence as stipulated under the aforesaid provisions of the CompaniesAct 2013.

Further in compliance with MCA notification No.G.S.R.805(E) dt. 22 October 2019 allIndependent Directors of the Bank have registered themselves in the Independent Directorsdata bank of Indian Institute of Corporate Affairs.

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 this Annual Report.

Performance Evaluation

In line with the provisions of the Companies Act 2013 SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and relevant notifications / guidelines issuedby SEBI in this regard there exists a structured criterion as approved by the Nominationcommittee of the Board for carrying out the performance evaluation of the Board as awhole its committees as well as Independent Directors MD & CEO and Chairman.

The necessary evaluations / review were carried out by the Board and IndependentDirectors to determine the effectiveness of the Board its Committees MD & CEOChairman and individual Directors. Additional information on performance evaluation is setout in Corporate Governance section forming part of this report.

Key Managerial Personnel

Dr. N. Kamakodi Managing Director & CEO and Shri. V. Ramesh Chief FinancialOfficer & Company Secretary continue to be the "Key Managerial Personnel"of the Bank pursuant to the provisions of Section 2(51) read with Section 203 of theCompanies Act 2013.


Statutory Central Auditor

M/s. Sundaram & Srinivasan Chartered Accountants Chennai the present StatutoryCentral Auditors of the Bank will complete their four (4) years term at the ensuingAnnual General meeting ('AGM') and accordingly in terms of RBI letter No.DOS.ARG.No.PS-13/08.13.005/2019-20 dt. 17 June 2020 read with relevant provisions of Companies Act2013 they will retire at the conclusion of ensuing AGM.

The Reserve Bank of India vide its Circular No. Ref. No. DoS.CO.ARG / SEC.01 /08.91.001 / 2021-22 dated 27 April 2021 notified guidelines for appointment of StatutoryCentral Auditors (SCAs) / Statutory Auditors (SAs) of Commercial Banks (excluding RRBs)UCBs and NBFCs (including HFCs) applicable w.e.f. FY 2021-22 and onwards as per which theBank is subject to appoint minimum two SCAs. In terms of such guideline read with thepolicy of the Bank on appointment of SCAs and the provisions of Section 139 of theCompanies Act 2013 the Board as per the recommendations of Audit Committee hadconsidered & approved the appointment of M/s. Jagannathan & SarabeswaranChartered Accountants (FRN 001204S) and M/s. K Gopal Rao & Co. Chartered Accountants(FRN 000956S) as SCAs of the Bank for FY 2021-22 subject to the approval of RBI. In thisregard an application was made to RBI seeking its approval for appointment of StatutoryCentral Auditors of the Bank for FY 2021-22. The RBI vide its letter no. RefCO.DOS.RPD.No.S201/08-13-005/2021-2022 dt. June 21 2021 has accorded its approval fortheir appointment which will be effective from the conclusion of present AGM.

With respect to the above appointments the Bank has received the consent from suchAuditors and confirmation to the effect that they are not disqualified to be appointed asStatutory Central Auditors of the Bank in terms of Companies Act 2013 & the rulesmade there under. Members are kindly requested to consider and approve their appointmentsas Statutory Central Auditors of the Bank which is recommended as per new guidelines ofRBI for FY 2021-22.

The Statutory Central Auditors have furnished their Report for FY 2021 which forms partof his report and there are no qualifications reservations or adverse remarks made by theAuditors in their report. The Auditors while making reference to the impact of thepandemic COVID-19 on the global economy has mentioned about the relief provided by theBank to some of the borrowers in line with the "COVID-19 Regulatory Package"announced by RBI (Refer Notes on Accounts No.12.14). Further the Auditors of the Bank hasnot reported any fraud under section 143(12) of the Companies Act 2013.

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 Practising Company Secretaries Tiruchirapalli as SecretarialAuditor to conduct the Secretarial Audit of the Bank for the Financial Year 2020-2021. Thereport of Secretarial Auditor 'Secretarial Audit Report' in the prescribed format isannexed to this report as Annexure II.

Pursuant to Regulations 24A of SEBI Listing Regulations 2015 read with relevant SEBIcircular the Bank has obtained Secretarial Compliance Report certified by such auditor forthe financial year ended 31 March 2021 on compliance of all applicable SEBI regulationsand cir culars / guidelines issued thereunder and the copy of the same wassubmitted with the stock exchanges.

There are no observations reservations or adverse remarks made by the SecretarialAuditor in their report.

Cost Audit

The requirement of maintaining cost records u/s 148(1) of the Companies Act 2013 is notapplicable to the Bank.


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 annualaccounts the applicable Accounting Standards have been followed along with properexplanation relating to material departures.

ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the State of Affairs of the Bank as at the end of the financial year and ofthe Profit & Loss of the Bank for that period.

iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of applicable laws governingBanks in India for safeguarding the assets of the Bank and for preventing and detectingfraud and other irregularities.

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

v) The Directors have laid down adequate internal financial controls to be followed bythe Bank and that such internal financial controls are adequate and were operatingeffectively; and

vi) The Directors have 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 / revised the Code of Conduct pursuant to SEBI (Prohibition ofInsider Trading) Regulations 2015 as amended from time to time ("SEBI PITRegulations") to regulate monitor and ensure reporting of trading by the designatedpersons and other connected persons. The said code had been reviewed and amended by theBoard of Directors from time to time.

The code is adopted to maintain highest ethical standards in dealing with securities ofthe Bank by persons to whom it is applicable. The code of conduct and related policy areavailable in the Bank's website. (weblink:

The Bank has taken necessary steps with Integrated Registry Management Services PrivateLimited {the new Registrar & Transfer Agent of the Bank (RTA) w.e.f. 22 January2021} for incorporating the PAN in the database to facilitate reporting of trading bydesignated persons and other connected persons in accordance with SEBI PIT Regulations.Earlier till appointment of new RTA the same was facilitated by KFin Technologies PrivateLimited (the erstwhile RTA).


There are no material changes and commitments affecting the financial position of theBank which has occurred between the end of the financial year of the Bank i.e. 31 March2021 and the date of Directors Report i.e. 25 June 2021.

During the year under review no significant and material orders have been passed bythe Regulators. However during May 2021 the Reserve Bank of India has imposed a monetarypenalty of 1 crore (Rupees One crore only) for non compliance with certain RBI directionsprocedural aspects relating to obtaining of collaterals in respect of some loans to MSMESector & Education and prescribing margin for Agriculture Credit.


Directors Appointments and Remuneration / Compensation Policy

The Bank has formulated and adopted a policy on Board Diversity as per which theNomination Committee of the Board of Directors of the Bank conducts the preliminaryassessment for appointment of Directors on the Board of the Bank and makes suitablerecommendations to the Board for its consideration.

The Nomination Committee identifies and assesses the qualifications and positiveattributes of the proposed candidate for the position of Director based on the disclosures/ declarations received from such person under the Companies Act 2013 the BankingRegulation Act 1949 and also RBI guidelines. The Nomination Committee makes a thoroughscrutiny of the prospective candidate and certifies the fit and proper status to the Boardafter exercising above due diligence process.

Apart from the above the Nomination Committee while appointment of an IndependentDirector also considers the Declaration on Independence furnished by the proposedcandidate for the position of Director u/s 149

(6) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Further the Bank has a Compensation Policy which is in accordance with the directivesissued by the Reserve Bank of India. The Bank has constituted a Compensation &Remuneration Committee which oversees the framing implementation and review of theCompensation Policy of the Bank. The Remuneration Policy of the Bank is briefed underCorporate Governance Report forming part of Annual Report.

Risk Management Policy

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 on the Risk Management framework ofthe Bank is detailed in the Management Discussion and Analysis section appended to thisReport.


As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 your Bank has prepared the Business Responsibility Report describingthe Bank's social environmental and governance aspects. The same is set out as a separatereport forming part of this Annual report.


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 your Bank.


The Bank has put in place adequate internal financial controls commensurate with thesize and scale of operations. The Bank has in all material aspects adequate InternalControl systems over financial reporting and these controls have taken into considerationthe essential components of internal control stated in the guidance note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India. Such Internal Financial Controls over Financial Reporting wereoperating effectively as at the end of the financial year. More details have been set outin Management Discussion and Analysis Report which forms part of this report.


The Board of Directors of the Bank have adopted a policy on Related Party transactionswhich is in line with the Companies Act 2013 and SEBI Listing Regulations 2015. Duringthe reporting year no contracts or arrangements were made by the Bank attracting theprovisions of Section 188 of the Companies Act 2013 or SEBI Listing Regulations. Adetailed policy on the Related Party Transaction is available at the Bank's website.weblink:


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 do not attractany disclosure required under section 134 (3)(g) of the Companies Act 2013.


The web-link for the Annual Return pursuant to Section 92(3) of the Companies Act 2013is as follows. Weblink:


In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 and the related notifications /circulars / guidelines issued by MCA the Bank has established Corporate SocialResponsibility (CSR) Committee. The Bank has established CUB Foundation a non-profitentity to identify suitable deserving projects recommend and oversee the CSR initiativesof the Bank.

A Report on CSR activities as required under Rule 9 of the Companies (Corporate SocialResponsibility) Rules 2014 is furnished under Annexure III to this report.


The Board of the Bank had constituted the Audit Committee under the extant guidelinesof Reserve Bank of India (RBI) provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The details of the compositionof the Audit Committee are furnished in the Corporate Governance Report.


The Bank is committed to achieving the highest standards of Corporate Governance andalso adheres to the Corporate Governance requirements set by the Regulators / applicablelaws. The Corporate Governance practices followed by the Bank aim to ensure value creationfor all its stakeholders through ethical decision making and maintaining transparency.

A detailed report on Corporate Governance standards followed by the Bank as per SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 Companies Act 2013and rules made there under alongwith Certificate of Compliance from the Statutory Auditorsare furnished separately which forms 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 forming part of this Report.


Conservation of Energy and Technology Absorption

In respect of the nature of activities carried out by the Bank w.r.t. the provisionsof Section 134 (m) of the Companies Act 2013 relating to conservation of energy andtechnology absorption the Bank has taken every effort to conserve energy. The Bank hasbeen installing energy efficient equipments at all its branches including installation ofsolar panels wherever feasible and power saving LED bulbs at majority of Branches andCentral Office.

On the technological front the Bank continued to offer reliable and secure bankingservice to its customers by facilitating the latest customer friendly technologicalsolutions.

Foreign Exchange Earnings and Outgo

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


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 IV.

The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is annexed as Annexure V.

Disclosure under Section 22 of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

The Bank is keen in maintaining and upholding the dignity of each and every womanworking in the Bank. The Bank has a policy on Prevention of Sexual Harassment at workplacewhich provides for adequate safeguards and protection for women employees working in theorganization. The Bank has complied with the requirement of constitution of InternalComplaints Committee under the Sexual Harassment of Women at work place (PreventionProhibition and Redressal) Act 2013.

There exists an online Grievance redressal forum for women employees in the intranetserver of the Bank wherein women employees of the Bank can file their Grievance /complaint under the act. No compliant was received in this regard during FY 2020-2021.


Pursuant to the provisions of Section 177(9) and (10) of the Companies Act 2013 avigil mechanism for Directors and employees to report genuine concerns has beenestablished. The Bank has a policy on whistle blower / vigil mechanism which is uploadedin the website of the Bank as well as intranet. weblink:

There exists an online forum for all employees in the intranet server of the Bank toreport genuine concerns under the mechanism. No application / compliant was received inthis regard during FY 2020-21.

All employees and Directors have access to the Chairman of the Audit Committee underextraordinary circumstances.


It is hereby confirmed that the Bank has complied with the Secretarial Standards issuedby the Institute of Company Secretaries of India (SS-1 and SS-2) respectively relating toMeetings of the Board its Committees and Shareholders. Further proper systems are inplace to ensure compliance of all laws applicable to the Bank.


The Board of Directors of the Bank would like to take this opportunity to thank all theCustomers and Stakeholders and wish to place on record its sincere appreciation for theassistance and co-operation received from the Reserve Bank of India (RBI) SEBI IRDAINABARD NHB SIDBI EXIM BANK ECGC DICGC NPCI Stock Exchanges DepositoriesIntegrated Registry Management Services Private Limited KFin Technologies Pvt. Ltd. LifeInsurance Corporation of India United India Insurance New India Assurance Star Healthand Allied Insurance Company Limited BSE Star Mutual Fund FISDOM Tata ConsultancyServices CCIL CIBIL Correspondent Banks Exchange Houses and other authorities.

Your Directors also place on record their warm appreciation for the committed servicesrendered by the Bank's Executives members of the Staff and all other employees.

For and on behalf of the Board
R. Mohan
Place : Kumbakonam DIN: 06902614
Date : 25 June 2021 Chairman