You are here » Home » Companies » Company Overview » City Union Bank Ltd

City Union Bank Ltd.

BSE: 532210 Sector: Financials
NSE: CUB ISIN Code: INE491A01021
BSE 00:00 | 13 Aug 116.80 -1.15






NSE 00:00 | 13 Aug 116.80 -1.10






OPEN 118.05
VOLUME 151316
52-Week high 249.00
52-Week low 110.10
P/E 18.08
Mkt Cap.(Rs cr) 8,612
Buy Price 116.80
Buy Qty 546.00
Sell Price 117.05
Sell Qty 9.00
OPEN 118.05
CLOSE 117.95
VOLUME 151316
52-Week high 249.00
52-Week low 110.10
P/E 18.08
Mkt Cap.(Rs cr) 8,612
Buy Price 116.80
Buy Qty 546.00
Sell Price 117.05
Sell Qty 9.00

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 2019.


The Bank continued to grow during the reporting year having recorded a total businessof र71513 crore an increase of 17% over the previous year figure of र61092 crore in FY2018. The Bank has shown commendable progress despite various challenges faced by theBanking Industry during the reporting year. The Bank has posted a 15% increase in netprofit figure to record र683 crore as compared to र592 crore during FY 2018. The NetInterest Income of the Bank stood at र1611.50 crore a 13% increase over FY 2018 positionand the Net Interest Margin of the Bank stood at 4.32%. The key performance indicatorsi.e. the Return on Assets of the Bank stood at 1.64% Return on Equity at 15.25% and theCost to Income ratio at 41.67%. The performance of the Bank depicts an overall healthygrowth. The financial performance has been discussed in detail in the forthcoming paras.

During the year the Bank has opened 50 additional branches to total 650 branches andhas 1685 ATM's as at 31 March 2019. In the digital front the Bank continued to upgradeand strengthen its Information Technology framework to ensure smooth and secure customerfriendly Banking. Also measures are being undertaken to comply with the directions issuedby the Reserve Bank of India with respect to strengthening of the Cyber Security andInformation Technology framework of the Bank.

As on the date of this report there have been various changes in the composition ofyour Board. Shri. R. Mohan Independent Director on the Board of the Bank assumed chargeas Part-Time Non-Executive Chairman of the Bank w.e.f. 4 May 2019 pursuant to approvalaccorded by RBI consequent upon the retirement of Shri. S. Mahalingam from the close ofbusiness hours of 3 May 2019. Further Prof. V. Kamakoti retired from the Board on 26April 2019. Shri. K. Vaidyanathan and Shri. T. K. Ramkumar have been co-opted by theBoard of the Bank as Additional Directors w.e.f. 3 May 2019 and 17 June 2019respectively to hold the office upto the ensuing Annual General Meeting. As on date theBoard has a total strength of 10 Directors all Independent except the Managing Director& CEO.

During the year the Bank has taken all possible measures to improve the Asset qualityposition of the Bank. Your Bank had resorted to constant monitoring of advances to reduceslippages and speeded up its recovery process. During the year the recovery standsimproved to र248 crore as against र206 crore in FY 2018. However the Net NPA stood at1.81% as compared to 1.70% in FY 2018 on account of fresh additions in NPA list. Thus onaccount of sustained efforts in the matter of recovery the Bank was able to keep theslippage fairly under control. Based on the Limited Review conducted by Reserve Bank ofIndia for FY 2018 the Bank does not have the requirement of reporting any divergence asper RBI circular

No.RBI/2016-17/283/DBR.BP.BC.No.63/21.04.018/ 2016-17 dated 18 April 2017.

Further informations on the State of Affairs of the Bank have been discussed in detailin the Management Discussion and Analysis Report forming part of this Annual Report.

Financial Highlights (र in crore)
Particulars 2018-19 2017-18 Growth (%)
Share Capital 73 66 11%
Reserves & Surplus 4767 4097 16%
Deposits 38448 32853 17%
Advances (Gross) 33065 28239 17%
Investments (Gross) 7863 8015 -ve
Total Assets / Liabilities 45259 39937 13%
Total Income 4282 3935 9%
Total Expenses 3042 2727 12%
Net Interest Income 1611 1430 13%
Operating Profit 1240 1208 3%
Provisions & Contingencies 557 616 -ve
Net Profit (A) 683 592 15%
Balance of Profit brought forward (B) 37 33
Amount available for appropriations (A+B) 720 625
Transfers to:
- Statutory Reserve 200 150
- Capital Reserve 6 29
- General Reserve 340 334
- Investment Reserve Account 31
- Special Reserve under IT Act 1961 60 50
- Dividend & Dividend Tax* 26 24
- Balance of Profit carried forward 57 38
Total 720 625

*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 र38448 crore and र 33065crore respectively. The total business stood at र 71513 crore as compared to र 61092crore for the previous year registering a growth of 17%.

The size of the Balance Sheet as on 31 March 2019 is र45259 crore as compared to theprevious year position of र39937 crore recording an increase of 13%.

During the year the Bank earned a Gross Profit of र1240 crore registering an increaseof 3% as compared to previous year's figure of र1208 crore.

The Net profit of the Bank for the current year was र 683 crore as against र592 crorefor the previous year registering a growth of 15%.

A total income of र 4282 crore was earned by the Bank in FY 2019 as against र 3935crore in FY 2018 registering a growth of 9%. The total expenditure of the Bank increasedby 12% to record र 3042 crore as compared to previous year figure of र 2727 crore.


The Net Interest Income for the year under review increased by 13% from र1430 crore toर1611 crore. The non-interest income of the Bank decreased from र532 crore to र514 croreregistering 3% decline on account of non availability of opportunity under treasuryoperations.


The Bank's total deposits for the year under review increased by र5595 crore fromर32853 crore to र38448 crore registering a growth of 17% over previous year. During thecurrent year CASA increased by र1741 crore from र7957 crore to र9698 crore recording agrowth of 22%. The cost of deposit of the Bank decreased from 6.29% to 6.17% in thereporting year.

DEPOSITS (र in Cr)


The Gross Advances of the Bank increased by र4826 crore to र33065 crore from र28239crore posting a growth of 17%. The yield on advances declined to 10.95% from 11.46%during the reporting year due to stiff competition among Banks.

The Gross and Net NPA for the year under review stood at 2.95% and 1.81% respectivelyas compared to 3.03% and 1.70% in the previous year.

The provision for tax for the reporting year increased to र242 crore from र198 crore inprevious year. The provision for NPA stood at र270 crore vis-a-vis र303 crore last year.The total provision reduced by र59 crore to र557 crore from र616 crore. During thereporting year your Bank has earned an income of र12.38 crore by way of sale of PrioritySector Lending Certificate.


Domestic Treasury

The yield on 10 year benchmark touched a high of 8.20% and closed at 7.35% in March2019 on account of various factors viz. surging crude oil prices CPI being higher thanRBI target for several months rate hike by the Central Bank of Advanced economiesprotective trade policies by the USA disrupting global trade ties sanctions by US overIran pressure to reduce imports of Iranian Oil depreciation in rupee to historical lowlevel and stance of

Central Bank on inflation targets however yield came off its high on Reserve Bank ofIndia's announcement of series of OMO purchases easing inflation pressure after the sharpfall in global crude oil prices optimism over the policy decisions of RBI sharp fall inUS treasury yields and strengthening rupee on strong domestic data. Through the timelysale of securities the Bank had booked profit to the tune of र32.56 crore despiteunfavourable market conditions. It was र93.83 crore during the previous year.

Forex Treasury

During the financial year 2018-19 the movement of rupee was driven by the globalevents. USD / INR moved from र65.01 in April 2018 to र69.18 in March 2019. Domestic

currency sharply fell to record low level of र74.48 on the

concerns of possible spill over of economic crisis in Turkey Venezuela and Argentinato other emerging markets. Further uncertainty over Brexit negotiations weighed on globalcurrencies. However with sustained intervention by RBI and the softening of global crudeoil prices the rupee regained its strength and closed at र69.18. The profit on exchangestood at र54.46 crore as against र74.35 crore during the previous year.


Net Worth

The paid up share capital of the Bank increased from र66 crore as on 31 March 2018 toर73 crore as on 31 March 2019. During the reporting period the Bank has allotted66535268 bonus equity shares and 3236341 equity shares to employees under EmployeeStock Options pursuant to CUB ESOS Scheme 2008.

The Net worth of the Bank improved to र4808.27 crore as on 31 March 2019 fromर4149.34 crore as of 31 March 2018.

Capital Adequacy Ratio:

Minimum Prescribed CRAR 9.00% 10.875% (P.Y. 10.875%)*
CUB CRAR 15.76% (P.Y. 16.46%) 15.55% (P.Y. 16.22%)

*As per the concept of Capital Conservation Buffer (CCB) under BASEL III norms theBank is required to maintain CCB of 2.50% at the end of March 2019 in a phased mannerbeginning from 31st March 2016 @ 0.625% in st each year up to 31 March 2019. The ReserveBank of India vide notification No. DBR.BP.BC.No.20/21.06.201/ 2018-19 dt. 10 January2019 notified Review of transitional arrangement under Basel III Capital

Regulations under which it has been decided to defer the implementation of the lasttranche of 0.625% of Capital Conservation Buffer (CCB) from 31 March 2019 to 31 March2020. Accordingly minimum capital conservation ratios under Capital Conservation BufferFramework will apply till the CCB attains the level of 2.5% on 31 March 2020. The CCB ason 31 March 2019 is 1.875%. As aforesaid the Bank is maintaining CRAR well above theprescribed minimum by RBI.



The Board of Directors of your Bank are pleased to recommend a dividend of र0.50 perequity share of Face Value of र1/- each for the year ended 31 March 2019 (previous yearर0.30 per equity share) subject to the approval of the shareholders at the ensuing AnnualGeneral Meeting. The dividend is subject to Dividend Distribution tax to be paid by theBank. The dividend payout is in accordance with the Bank's Dividend Distribution Policy.


The Board at its meeting held on 24 May 2018 recommended the issue of Bonus sharessubject to the approval of shareholders through Postal Ballot in the proportion of 1Bonus equity share of face value of र1 each for every 10 equity shares of face value of र1each already held by the shareholders (i.e. 1:10) as on the Record Date i.e. 11 July2018.

Based on the report of the Scrutinizers on the voting process the result of the votingwas announced by the Chairman of the Bank on 3 July 2018 passed with requisite majority.Accordingly 66535268 Bonus equity shares were issued and alloted to the shareholders.

Further as reported in the previous year's Annual Report on the entitlement of dividendon the aforesaid Bonus equity shares the Bank has duly paid the dividend on such shares.


During the financial year the Bank expanded its branch network by adding 50 morebranches and 64 ATM's across the country totaling 650 branches and 1685 ATM's as on 31March 2019. The Bank has a major presence in the State of Tamil Nadu and is spreading itspresence in other states too by taping potential markets. Out of the additional branchesopened during FY2019 the Bank had opened 40 Branches in Tamil Nadu inclusive of 11Banking Outlets 4 branches in Karnataka 4 Branches in

Telangana 1 Branch each in Gujarat and Maharashtra. As on date 90% of the Bank'stotal branches are operational in South 5% in West 4% in North and 1% in Eastern partsof India.

The branches opened during the year were as per the guidelines issued by the RBI onopening of Branches in unbanked and under banked regions.


Financial Inclusion is defined as "the process of ensuring easy access offinancial services to the vulnerable groups such as weaker sections / low income groups inthe society at an affordable cost". It is an attempt for achieving inclusive growthof the society by making availability of finance to the deprived sections.

The concept of financial inclusion is being successfully implemented in the Bank byexpanding its presence in India not only through brick and mortar model of branches butalso through Business Correspondent (BC) outlets in unbanked rural areas in order to havebetter outreach to the needy groups. A new scheme Prime Minister Jandhan Yojana (PMJDY)has been introduced replacing the Basic Savings Deposit Accounts (BSBD). Also insurancelinked schemes such as Pradhan Mantri Jeevan Jyothi Bima Yojana (PMJJBY) and PradhanMantri Suraksha Bima Yojana (PMSBY) have been successfully implemented by us besides theAtal Pension Yojana (APY) and made available to the rural underprivileged poor easyaccess to financial services.

The BC outlets are established with the help of technology "e -lounge" whichcaters to the need of the rural poor by facilitating easy financial access. The Bank alsofacilitates Aadhaar Enabled Payment System (AePS) which helps to reach the rural peoplefor easy cash acceptance transfer and withdrawal system. The Bank has already established21 of such BC outlets and planning to increase to 50 in the current financial year. TheBank not only facilitates opening of savings bank account but also extend overdraftsbesides creating awareness on pension schemes / other welfare schemes.

With the help of the Reserve Bank of India the Bank conducts financial literacycampaigns to promote banking habits in the vulnerable groups. The Bank also conducts withthe help of Banking Correspondents frequent campaigns on an ongoing basis to further scaleup financial inclusion.


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 grant of stock options. The Bank offers ESOS to itsemployees which vests over a period of five years from the date of grant of options i.e.15% options each for first three years and 25% and 30% for fourth and fifth yearrespectively. The shares are offered at prevailing market prices at the time of grant tothe employees however the same shall vary pursuant to corporate action viz. RightsIssue Bonus Issue etc. There were no material changes in the ESOS of the Bank during theperiod under review and the same is in compliance with the provisions of SEBI (Share BasedEmployee Benefits) Regulations 2014. The disclosures pursuant to Regulation 14 of theSEBI (Share Based Employee Benefits) Regulations 2014 have been set out in the website ofthe Bank (weblink: https:// and also the same isannexed hereto as Annexure I. In addition the shareholders of the Bank at itsmeeting held on 23 August 2017 approved new CUB ESOS Scheme 2017 for 30000000 optionson terms and conditions similar to previous one. No options have been granted to anyemployees of the Bank during the reporting year under this scheme.


The human resource agenda of the Bank aims at employee empowerment and orienting themtowards the realization of the Bank's vision. As usual during the year the HR took stepstowards learning & skill development performance appraisal job rotation fast trackpromotions at junior management levels senior management promotions and congenial workingenvironment.

Creation of a work force with a pool of best talent is a challenging task and so alsothe maintaining of working standards over a period of time. In tune with the futureexpansion plans your Bank is constantly upgrading and revisiting its manpower resources.In this endeavor the Bank has recruited people taking into account the businessrequirements. The new recruits were given orientation programme which not only aimed atimparting knowledge to them but also ensured their harmonious integration with theorganization.

There exists a good training infrastructure which seeks to upgrade the operationalefficiency (functional / behavioral skill levels) across all grades through a combinationof both in house and external programmes. The Bank continued to depute its employees tovarious training institutions like SIBSTC NIBM CAB CAFRAL IDRBT etc. Furtherconsidering the need to equip employees in Technology matters in the given Digital Bankingscenario the Bank has during the year imparted Cyber Security Training to identifiedemployees.

There exists a cordial relationship between the management and the employees. It ispertinent to mention here that there has not even been a single occasion of employeeunrest in the Banking history of CUB.

As on 31 March 2019 the Bank has 5518 on roll employees comprising of 53 employeesin Executive cadre 2070 in Management cadre 3126 in Clerical cadre and 269 inSub-ordinate Staff cadre.


'Technology' plays a vital role in managing and fulfilling the current demand andenhanced quality service to the customers. Changes are happening in the Banking technologyand in Digital Payments systems quite frequently. Digital Payment system is a second waveof automation in Banking which encourages self service in Banking system paving way to atransformation of Banking with huge gains. With this the technical level employees canfocus on higher value projects for delivering next wave of productivity to bring about animprovement in customer experiences. The Bank is deploying all possible technology enabled& digital payment systems to cater the needs of the customers. The Bank as on 31March 2019 has put 991 Cash Dispenser Machines 694 Bulk Note Recycling Machines (BRM)420 Passbook Kiosks and 395 Cheque Deposit Kiosks to encourage self service customertransactions. The Bank has also been spreading its Self Service Bank branches (e-Lounge)to cater customer needs and enabling our ATMs / BRMs for cardless deposit and withdrawals.The Bank has deployed CBS BaNCS for transaction processing system developed by M/s. TataConsultancy Services covering 100% of its business which is being used by many major& peer Banks. As on 31 March 2019 the Banking transcations through Alternate Channelsconstitute around 91.84%.

Some of the recent technological initiatives/ advancements are as follows:

• CUB e-Wallet Unified Payment Interface (UPI) BHIM and '*99#' a NUUP (NationalUnified USSD Platform) by taking part in Bharat Bill Payment System (BBPS) and Bharat QR -Scan & Pay made available in BHIM/UPI.

• Instant account opening through Welcome Kit Selfie Banking using eKYC enablingDBT Aadhaar Enabled Payment System (AEPS).

• 'chat-bot' service powered by 'Artificial Intelligence' that interact with thecustomers via chat interface either auditory (Ask Lakshmi) or textual (Chat-Box in websiteand social media) to facilitate general customer queries on Banking.

• FASTag facility for making payments by vehicles in Toll Plazas electronicallythrough rechargeable prepaid instruments.

• Generation of ATM PIN for ATM cards via Green PIN option at the Bank's ATMs withthe help of OTP on customers' registered mobile.

• Customers can apply for Virtual Credit Card through Internet / Mobile Bankingjust by choosing their fixed deposit account.

• Customers are provided the facility to block their Net-Banking / Mobile Banking/ UPI by sending SMS to 9281056789 in the prescribed format – BLOCK {LOGINID} fromtheir registered mobile number.

• Customers can now set their own limit for the ATM POS and Ecomm Channeltransactions. They can disable a particular channel and can enable whenever required fromMobile and Net Banking.

• EMV CHIP card to all its customers to enhance additional security for card basedtransactions. Also the Bank has started accepting EMV CHIP cards by reading CHIP andprocess in secured manner.

• The Bank has initiated process for PCI DSS certification. The Bank has alsoimplemented TSS and Anti-Skimming mechanism in all our ATMs to facilitate secure customertransactions.

A customer friendly Captive Contact Centre (Call Centre) with Interactive VoiceResponse System (IVRS) is put in place to promote customer support on multi-languages24x7 basis.

During the year the Board of Directors of your Bank considering the businesspotential to earn income from Insurance and Mutual Fund sectors has approved a businessplan on marketing and distribution of Health Insurance and Mutual Fund products to offeradditional services to all its stakeholders. The Bank is in the process of makingnecessary tie-ups / agreements with the Insurance and Mutual Fund Companies mentionedhereunder for marketing and distribution of their products subject to necessary regulatoryapprovals.

• Star Health and Allied Insurance Co. Ltd. for distribution of Health Insuranceproducts.

• 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 based platformand through branch network.

• Finwizard Technology Pvt. Ltd. (widely known as FISDOM) to offer Mobile basedMutual Fund Investment solution.


• IBA Banking technology award for Best use of Data and Analytics for BusinessOutcome.

• Aadhaar Excellence Award by UIDAI.


Your Bank does not have any Subsidiaries or Associates to

report during the year under report.


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 Obligations and Disclosure Requirments) Regulations 2015. During theyear fourteen (14) meetings were held the details of which are given under report onCorporate Governance forming part of this report.


Appointment(s) / Re- Appointment(s)

Shri. R. Mohan (DIN: 06902614)

Pursuant to the provisions of Section 35B and Section 10B (1A) of the BankingRegulation Act 1949 Shri. R. Mohan Independent Director was appointed as Part-Time

Chairman of the Bank for a period of three (3) years w.e.f 4 May 2019. The ReserveBank of India approved his appointment vide its letter No. DBR.Appt.No.86308.42.001/2018-19 dt. 10 April 2019. Shri. R. Mohan B.Sc. CAIIB MBA aged 63 yearsjoined the Bank in the year 1975 as probationer and worked his way up in his long careerwith the institution. Shri. Mohan has worked at all level of Banking operations atOperational Executive and Supervisory levels. In the year 2006 he was elevated to theposition of General Manager and thereafter in the year 2011 he was promoted as the ChiefGeneral Manager of the Bank to oversee the entire Banking operations. After his retirementin May 2014 the Board of the Bank considering his proven competency loyal service andhis managerial skills offered him a seat in the Board to have his expert guidance in theareas of Banking Agriculture and SSI.

In the opinion of the Board Shri. R. Mohan is a Banking veteran who can effectivelylead the Board of the Bank and take it to greater heights. The Board recommends hisappointment as the Chairman of the Bank for approval by shareholders in the Notice callingthis Annual General Meeting. The relevant details of Shri. R. Mohan pursuant to SEBI(Listing Obligations and Disclosure Requirments) Regulations 2015 and SecretarialStandard - 2 is disclosed separately in such Notice.

Shri. K. Vaidyanathan (DIN: 07120706)

Shri. K. Vaidyanathan was co-opted as an Additional Director into the Board of the Bankw.e.f. 3 May 2019 to hold the office till the ensuing Annual General Meeting.

Shri. K. Vaidyanathan aged 67 years is a Fellow member of the Institute of CostAccountants of India and also the Institute of Company Secretaries of India. He has over40 years of rich domain experience in Financial and Management Accounting CorporateFinance Taxation Auditing Commercial Regulatory Compliances Secretarial Practice andCorporate Governance. Shri. Vaidyanathan has worked with the Govt. of India CentralPublic Sector Enterprises (CPSEs) and various Private Companies of repute. During hisprofessional journey he has held the position of Chief Finance Officer and CompanySecretary in medium sized IT Services Company General Manager in Reliance IndustriesLtd. Dy. General Manager in Bharat Earth Movers Ltd. Dy. Director in the Oil PricesReview Committee constituted by Govt. of India and Managerial positions in CochinRefineries Ltd. Bongaigaon Refinery and Petrochemicals Ltd. Indian Audit Department.

In the opinion of the Board Shri. K. Vaidyanathan is a competent professional who caneffectively participate and represent in the Board of the Bank. The Board recommends hisappointment 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.The relevant details of Shri. K. Vaidyanathan pursuant to SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Secretarial Standard - 2 is disclosedseparately in such Notice.

Shri. T. K. Ramkumar (DIN: 02688194)

Shri. T. K. Ramkumar was co-opted as an Additional Director into the Board of the Bankw.e.f. 17 June 2019 to hold the office till the ensuing Annual General Meeting.

Shri. T.K. Ramkumar aged 63 years is an Advocate and Partner in M/s Ram and RajanAssociates Chennai. He possess rich experience in Banking Law Civil Law

Intellectual Property Rights etc. Shri. T. K. Ramkumar was earlier in the Board of theBank from 11 June 2009 to 10 June 2017. Pursuant to RBI circularNo.DBOD.No.BC.94/16.13.100/92 dt. 9 March 1992 he has been co-opted for a second term.Shri. Ramkumar is quite a knowledgeable person whose contribution in the first term wasvery much useful to the Bank especially in the area of Law.

In the opinion of the Board Shri. T. K. Ramkumar is a competent professional who caneffectively participate and represent in the Board of the Bank. The Board recommends hisappointment 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.The relevant details of Shri. T. K. Ramkumar pursuant to SEBI (Listing Obligations andDisclosure Requirments) Regulations 2015 and Secretarial Standard - 2 is disclosedseparately in such Notice.


Shri. S. Mahalingam (DIN: 00121727)

Shri. S. Mahalingam Part-Time Chairman of the Bank vacated his office from the closeof business hours of 3 May 2019 on account of completion of tenure as per his appointmentterms approved by RBI vide letter No.DBR.APPT.No.13995/08.42.001/2015-16 dt. 6 May 2016.

Prof. V. Kamakoti (DIN: 03537382)

Prof. V. Kamakoti Independent Director on the Board of the Bank vacated his office ofDirector on the close of business hours of 26 April 2019 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. Mahalingam and Prof. V. Kamakoti during their tenure.

Directors to retire by Rotation - The application of provisions of Section 152(6)arises only when the Board of Directors of the public company comprises of such number ofdirectors who are not prohibited or restricted by the Act to retire by rotation. AllDirectors on the Board except the Managing Director and CEO of the Bank are IndependentDirectors. Hence the provisions of Section 152(6) of Companies Act 2013 relating toretirement of directors by rotation do not apply considering the present composition ofthe Board of Directors. Independent Directors are not required to retire in terms ofSection 149(13) of the said Act. Accordingly no director is required to retire by rotationat this Annual General Meeting.

The shareholders re-appointed Dr. N. Kamakodi as Managing Director & CEO for aperiod of 3 years w.e.f. 1 May 2017 at the AGM held on 23 August 2017. The ManagingDirector & CEO is not liable to retire by rotation at the ensuing AGM.

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 Companies Act2013.

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.

The necessary evaluations / review were carried out by the Board and IndependentDirectors to determine the effectiveness of the Board its Committees Chairman andindividual Directors. Additional information on performance evaluation is set out inCorporate Governance section forming part of this report.

Key Managerial Personnel

Dr. N. Kamakodi Managing Director & CEO and Shri. V. Ramesh CFO & CompanySecretary continue to be the "Key Managerial Personnel" of the Bank pursuant tothe provisions of Section 2(51) read with Section 203 of the Companies Act 2013.


Statutory Auditor

M/s. Sundaram & Srinivasan Chartered Accountants Chennai was appointed as theStatutory Central Auditors of the Bank in the previous Annual General Meeting ('AGM') heldon 1 September 2018. The term of the present Auditor will conclude at the conclusion ofthe Annual General Meeting of the Bank and being eligible has offered themselves forre-appointment. Consent has been received from the present Auditors for theirreappointment and also a confirmation to the effect that they are not disqualified to beappointed as Statutory Central Auditors of the Bank in terms of Companies Act 2013 &the rules made there under has also been received. An application has been made to theReserve Bank of India seeking its approval for the appointment of M/s. Sundaram andSrinivasan Chartered Accountants Chennai to act as Statutory Central Auditors for theFinancial Year 2019-20. Members are requested to consider and approve their appointment asStatutory Central Auditors of the Bank for FY 2019-20.

The Statutory Auditors have furnished their report for FY 2019 which forms part of thisreport and there are no qualifications reservations or adverse remarks made by theAuditors in their report. Further the Auditor of the Bank has not reported any fraud u/s143(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 Practicing Company Secretaries Tiruchirapalli as SecretarialAuditor to conduct the Secretarial Audit of the Bank for the Financial Year 2018-19. Thereport of Secretarial Auditor 'Secretarial Audit Report' in the prescribed format isannexed to this report as Annexure II .

There are no observations reservations or adverse remarks made by the SecretarialAuditor in their report except they have recorded a fact as to the levy of penalty by RBIon account of delay in implementation of time bound and strengthening of Swift RelatedControls.

Cost Audit

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


In accordance with Section 134(5) of the Companies Act 2013 the Board of Directors ofthe 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 as the end of the financial year and of theProfit & Loss of the Bank for that period.

iii) The Directors had taken proper and sufficient 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 financial controls to be followed bythe Bank and that such internal financial controls are adequate and were operatingeffectively; and

vi) The Directors had 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 to regulate monitor and ensure reporting of trading bythe designated persons and other connected persons. The said code had been reviewed andamended by the Board of Directors of the Bank in accordance with the amendments notifiedby SEBI during January 2019.

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 RTA for incorporating the PAN in the databaseto facilitate reporting of trading by designated persons and other connected persons inaccordance with SEBI (Prohibition of Insider Trading) Regulations 2015.



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 March2019 and the date of Directors Report i.e. 17 June 2019.



During the year under review the Reserve Bank of India vide letter dt. 31 January2019 imposed a penalty of र30 million on the Bank for delay in adherence to its directiveson "Time bound implementation and strengthening of Swift Related Controls"contained in the RBI circular of 20 February 2018. Although the Bank complied with suchdirections in true letter and spirit the RBI was not convinced with respect toimplementation of few controls with in the prescribed time and imposed a penalty for thedelay as aforesaid. As on date the said Swift Related Control stands fully implemented.


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 conduct the preliminaryassessment for appointment of Directors on the Board of the Bank and make suitablerecommendations to the Board for its consideration.

The Nomination Committee identifies and assesses the qualifications and positiveattributes of the incumbent based on the disclosures / declarations received from suchperson under the Companies Act 2013 the Banking Regulation Act 1949 and also RBIguidelines. The Nomination Committee makes a thorough scrutiny of the prospectivecandidate and certifies the fit and proper status of the incumbent to the Board afterexercising above due diligence process.

Apart from the above the Nomination Committee while appointment of an IndependentDirector also considers the Declaration on Independence furnished by such incumbent u/s149(6) of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

Further the Bank has 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.


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 set out in the Management Discussion and Analysis section appended to thisReport.


Pursuant to an amendment notification 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 in compliance with Regulation 43A of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and is available atthe website of the Bank weblink:


As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 all top 500 listed entities (as at the end of financial year based onmarket capitalization) shall report a Business Responsibility Report describing the Bank'ssocial environmental and governance aspects. The same is set out as a separate reportforming part of 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 has 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 websiteweblink:


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.

ANNUAL RETURN u/s 92(3) of 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 an Annual Return in formMGT - 9 as provided under Sub-section (3) of Section 92 of the Act is set out as AnnexureIII.


In compliance with the 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 which recommends and oversee the CSR initiatives of the Bank.

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



The Board of the Bank had constituted the Audit Committee under the extant guidelinesof Reserve Bank of India provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The details of the compositionof the Audit Committee is 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 aims to ensure valuecreation for all its stakeholders through ethical decision making and maintainingtransparency.

A detailed section 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 disclosed separately forming part of this Annual 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 Annual 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 ofpower saving LED bulbs at majority of Branches and Central Office. Further to make use ofalternate source of energy the Bank has installed solar power panels at some of itsbranches and has planned to implement the same at other branches too subject tofeasibility.

On the technological front the Bank continued to offer excellent Banking service byfacilitating the latest customer friendly and secure technological solutions to itscustomers. The elaborate details on the same is provided under seperate head"Automation" in 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.


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 V.

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 VI.

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 woman 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 Bank has complied with the requirement ofconstitution of Internal Complaints Committee under the Sexual Harassment of

Women at work place (Prevention Prohibition and Redressal) Act 2013. No compliant wasreceived in this regard during FY 2018-19.

Whistle Blower / Vigil Mechanism

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:

All employees and directors have access to the Chairman of the Audit Committee inappropriate and exceptional circumstances.

Compliance with Secretarial Standards and applicable laws

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 theStakeholders and wish to place on record its sincere appreciation for the assistance andco-operation received from the Reserve Bank of India NABARD NHB IDBI SIDBI EXIM BANKECGC DICGC SEBI IRDA Stock Exchanges Depositories Karvy Fintech Pvt. Ltd. LifeInsurance Corporation of India United India Insurance New India Assurance TataConsultancy Services CCIL CIBIL Correspondent Banks Exchange Houses and otherauthorities.

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

For and on behalf of the Board
R. Mohan
Place : Chennai Chairman
Date : 17 June 2019