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City Union Bank Ltd.

BSE: 532210 Sector: Financials
NSE: CUB ISIN Code: INE491A01021
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OPEN 151.75
VOLUME 294317
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P/E 19.28
Mkt Cap.(Rs cr) 11,426
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OPEN 151.75
CLOSE 151.75
VOLUME 294317
52-Week high 199.80
52-Week low 115.55
P/E 19.28
Mkt Cap.(Rs cr) 11,426
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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 31st March 2020.


The year 2019 - 2020 was an extremely challenging period for the Banks in India.Although COVID 19 emerged during the fag end of the financial year the Industry had itsimpact on account of factors like mergers of PSBs NBFC crisis involving some privatesector banks also. The pandemic did not spare the financial services sector even and theregulators moved swiftly to secure the system. During May 2020 the Government announced aspecial economic package under Aatma Nirbhar Bharat Abhiyan with a view to making thecountry Independent against tough competition in global supply chain and to help inempowering the poor labourers migrants who have been adversely affected by COVID 19. Themeasures under this package have certainly improved the domestic Banking outlook involvingcredit booster to MSMEs liquidity support to NBFCs HFCs and MFIs focusing on rural andsocial segment power sector reforms etc. The stimulus package is expected to be the keydriver of revival and structural reforms going forward.

Under the above odd circumstances the Bank recorded a total business of ' 75408crore an increase of 5% over the previous year figure of '71513 crore in FY 2019. TheNet Profit of the Bank has decreased to ' 476 crore from

'683 crore on account of COVID provision made during the fourth quarter of FY2020. TheNet Interest Income of the Bank stood '1676 crore a 4% increase over FY 2019 positionand the Net Interest Margin of the Bank stood at 3.98%. The key performance indicatorsi.e. the Return on Assets of the Bank stood at 1% Return on Equity at 9.47% and the Costto Income ratio at 43.04%. The financial performance has been discussed in detail in theforthcoming paragraphs.

During the year the Bank has opened 50 additional branches to total 700 branches andhas 1793 ATM's as at 31st March 2020. On the digital front the Bank continuedto upgrade and strengthen its Information Technology framework to ensure smooth and securecustomer friendly Banking. The Bank has introduced "CUB EASY" a video KYC basedaccount opening App. Also measures are being undertaken to comply with the directionsissued by the Reserve Bank of India with respect to strengthening of the Cyber Securityand Information Technology framework of the Bank.

Further information on the State of Affairs of the Bank has been discussed in detail inthe Management Discussion and Analysis Report forming part of this Annual Report.

Financial Highlights

Particulars 2019-20 2018-19 Growth (%)
Share Capital 74 73 1%
Reserves & Surplus 5222 4767 10%
Deposits 40832 38448 6%
Advances (Gross) 34576 33065 5%
Investments (Gross) 9236 7863 17%
Total Assets / Liabilities 49734 45259 10%
Total Income 4848 4282 13%
Total Expenses 3507 3042 15%
Net Interest Income 1676 1611 4%
Operating Profit 1341 1240 8%
Provisions & Contingencies 865 557 55%
Net Profit (A) 476 683 -ve
Balance of Profit brought forward (B) 57 37
Amount available for appropriations (A+B) 533 720
Transfers to:
- Statutory Reserve 140 200
- Capital Reserve 81 6
- General Reserve 145 340
- Investment Reserve Account 0 31
- Special Reserve under IT Act 1961 65 60
- Dividend & Dividend Tax* 44 26
- Balance of Profit carried forward 58 57
Total 533 720

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

The Deposits and Advances for the current year stood at ' 40832 crore and ' 34576crore respectively. The total business stood at ' 75408 crore as compared to ' 71513crore for the previous year registering a growth of 5%. The size of the Balance Sheet ason 31st March 2020 is ' 49734 crore as compared to ' 45259 crore last yearrecording an increase of 10%.

During the year the Bank earned a Gross profit of ' 1341 crore registering an increaseof 8% as compared to previous year's figure of ' 1240 crore. The Net profit of the Bankfor the current year was ' 476 crore as against ' 683 crore last year. The Bank hadregistered a net loss of ' 95 crore for Q4 FY 2020 because of the precautionary additionalprovision of ' 102 crore made over and above the requirement prescribed by RBI to meetthe requirements on account of possible slippage in the loans likely to be impacted by theCOVID 19.

Total income earned by the Bank for FY 2020 was at '4848 crore as against '4282 crorein FY 2019 registering a growth of 13%. The total expenditure of the Bank increased by 15%to record '3507 crore as compared to '3042 crore in the previous year.

Net Interest Income for the year FY 2020 under review increased by 4% to ' 1676 crorefrom ' 1611 crore last year. The non-interest income of the Bank increased from ' 514crore to ' 680 crore registering a growth of 32% mainly on account of increase in treasuryincome.


The Bank's total Deposits for the year under review increased by ' 2384 crore from '38448 crore to ' 40832 crore registering a growth of 6% over previous year. During thecurrent year CASA increased by ' 499 crore from ' 9698 crore to ' 10197 crore recordinga growth of 5%. The cost of deposit of the Bank marginally increased from 6.17% to 6.20%in FY 2020.


Gross Advances of the Bank increased by '1511 crore to '34576 crore from '33065crore posting a growth of 5%. The yield on advances declined to 10.76% from 10.95% duringthe reporting year on account of the due transmission of the cut in the interest rates tothe

borrowers. For FY 2020 the Bank had achieved the target/ sub-targets prescribed by RBIfor Priority sector Agriculture Micro Enterprises Small / Marginal farmers and weakersection.

The Gross NPA and Net NPA for the year under review stood at 4.09% and 2.29%respectively as compared to 2.95% and 1.81% in the previous year.

The provision for tax for the reporting year decreased to '110 crore from '242 crore inprevious year. The provision made for NPA for the financial year was '631 crore vis-a-vis'270 crore last year. The total provision increased by '308 crore to '865 crore from '557crore.


The Bank had utilized the volatile yield movement during the year and through thetimely sale of securities the Bank could book a profit to the tune of '159.60 crore asagainst '32.56 crore made last year.

The Gross Investments increased by '1373 crore to '9236 crore as on 31stMarch 2020 from '7863 crore as on 31st March 2019. Out of this theinvestments in Government Bonds alone account to '8939 crore constituting 97% of thetotal investments. The non- SLR investments declined by '90 crore mainly on account ofpartial redemption of Security Receipts to the extent of '78 crore.


During the financial year 2019-20 Indian Rupee weakened against USD by 9.4%. IndianRupee against USD opened at ' 69.15 and closed at ' 75.66. Major reasons for weaker rupeewere US China trade war and the Corona Virus outbreak. The large FPI outflows towards the

second half of FY aggravated the situation. Compared to other currencies Indian Rupeeperformed better with RBI's intervention. The low crude oil prices kept the rupee fromweakening further. With a healthy foreign exchange reserves the Indian Rupee remained ata comfort zone against USD. During FY 2019-20 profit on our foreign exchange operationsstood at '84.62 crore as against '54.46 crore during the previous year.


The paid-up Share Capital of the Bank increased from '73.45 crore as on 31stMarch 2019 to '73.73 crore as on 31st March 2020. During the reporting periodthe Bank has allotted 2818403 Equity Shares to employees under Employee Stock Optionspursuant to CUB ESOS Scheme 2008.

The Net worth of the Bank stands improved to ' 5253.24 crore as on 31stMarch 2020 from '4808.27 crore as on 31st March 2019.

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 2019 in a phased mannerbeginning from 31st March 2016 @ 0.625% in each year up to 31stMarch 2019. The Reserve Bank of India vide Notification No. DBR.BP.BC.No.20/21.06.201/2018-19 dt.10th January 2019 - "Review of transitionalarrangement under Basel III Capital Regulations" deferred the implementation of thelast tranche of 0.625% of Capital Conservation Buffer (CCB) from 31st March2019 to 31st March 2020.

Again RBI by its Notification No.DOR.BP.BC. No.45/21.06.201/2019-20 dated 27thMarch 2020 "Basel III Capital Regulations - Review of transitionalarrangements" further deferred the implementation of last tranche of 0.625% ofCapital Conservation Buffer to 30th September 2020. Accordingly CRAR requiredto be maintained for the period ended is 10.875%. The Bank maintained Tier I CRAR of15.80% and total CRAR of 16.76% as at 31st March 2020 which are well above thenorm prescribed by RBI.


The Board of the Bank at its meeting held on 19th March 2020 had declared aninterim dividend of '0.50 per equity share of Face Value of '1/- each for the year ended31st March 2020 (previous year '0.50 per equity share).

The Bank as a dividend distribution policy in terms of Regulation 43A of Securities andExchange Board of India (Listing Obligations and Disclosures Requirements) Regulations2015 which is uploaded in the website of the Bank.


As per the statement of RBI Governor followed by RBI circularno.DOR.BP.BC.No.64/21.02.067/2019-20 dt.17th April 2020 in the wake ofheightened uncertain environment due to COVID-19 all Scheduled Commercial Banks (SCBs)were advised on the importance of conserving capital and to retain their capacity forabsorbing losses and supporting the economy. Accordingly all SCBs were directed not tomake any dividend payouts from the profits pertaining to financial year 2020 till furtherdirections and hence no final dividend is recommended to the shareholders for FY 2020.


During the financial year the Bank expanded its branch network by adding 50 morebranches and 108 ATM's across the country totaling 700 branches and 1793 ATM's as on 31stMarch 2020. The Bank has a major presence in the State of Tamil Nadu and expanded itspresence in other states by identifying potential centers. Out of the additional branchesopened during FY2020 the Bank had opened 30 Branches in Tamil Nadu 6 in Andhra Pradesh2 in Telangana and the rest in other states. As on date 90% of the Bank's total branchesare operational in South 5% in West 4% in North and 1% in Eastern parts of 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. During the period the Bankopened 14 branches in unbanked rural centers and complied with relevant RBI norms.


The Bank has been successful in implementing the concept of Financial Inclusion over along period and has shown tremendous progress in providing basic banking servicesespecially to the rural citizens.

The Bank is very much keen in creating awareness on various Government schemes viz.Atal Pension Yojana MUDRA PMJJBY PMSBY etc. Such schemes have been made available tothe villages for connecting the underprivileged areas within the Banking network byconducting frequent campaigns. The services to the rural poor are not confined to theopening of Bank accounts alone but also rendering other services such as creditoverdraft facilities etc. to accelerate country's economic growth.

Further by way of establishing BC Outlets at the unbanked areas and with theintroduction of technology products and issue of jewel loans the Bank has been able toprovide all the Banking services to the rural poor.

The Bank offers e-KYC and Aadhaar enabled Payment System (AePS) to render quickservices to the rural poor. The Bank has deployed POS machines at various rural locationswhich is very much helpful for doing merchant transactions.

Further during the last year the Bank has actively participated in the "CustomerOutreach Initiative" of the Government of India with the objective of providing easyaccess to credit which includes Retail Agriculture

Vehicle Home MSME Education and Personal Consumer loans. In coordination with theLead Bank the Bank has conducted financial literacy campaigns and put stalls forpromotion and publicity of the social welfare schemes and Agriculture products availablefor the farmers. The outreach helped us to connect with the farmers in true spirit forcreating awareness among the farmers.

By rendering services through our technology products in the unbanked areas we havecreated confidence in the minds of the people to get uninterrupted Banking services. TheBusiness Correspondents also make regular visits to the Villages and do the Bankingservices at their doorstep.


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 26th April 2008 at an Extra Ordinary General meeting of the Bank. Themaximum aggregate number of options that may be granted under this scheme is 50000000.As per the 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 ESOSto its employees which vests over a period of five years from the date of grant of optionsi.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 as amended from time to time ("SEBI SBEBRegulation"]. As at the end of 31st March 2020 we have so far granted'4.83 crore options and only '0.17 crore options are yet to be granted under the scheme.

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

weblink: https://cityunionbankcom/downloads/CUB_ESOS_Report_2020pdf

In addition the shareholders of the Bank at its meeting held on 23rdAugust 2017 approved new CUB ESOS Scheme 2017 for 30000000 options on terms andconditions similar to previous one. No options have been granted to any employees of theBank during the reporting year under this new scheme.


The Bank is committed to create a congenial working environment involving mutual trustand respect duly recognizing the talents rights and dignity of each employee. Your bankplaces great value on developing and nurturing its human capital as a critical resource inits efforts for value creation. All CUBians (Employees] periodically undergo trainingprogrammes in-house or in reputed institutions like IIM NIBM CAB CAFRAL SIBSTC IDRBTetc. for developing their functional and behavioral skills as also to align with the fastchanging business needs. There exists a capacity building program in the Bank as per whichemployees are encouraged to qualify / get certified in various areas of Banking to growpersonally as well as professionally thereby contributing to overall growth of theorganization. Further as a part of succession planning recruitment and promotionincluding lateral entries are undertaken periodically.

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 31st March 2020 the Bank has 5741 on-roll employees comprising of54 employees in Executive cadre 2270 in Middle Management cadre 3159 in Clerical cadreand 258 in Subordinate Staff cadre.


'Technology' plays a vital role in servicing the customers managing and fulfilling thecustomer demands and providing enhanced quality service to the customers. In the backdropof COVID-19 pandemic and when social distancing has become the order of the daytechnology enables banks and other service industries deliver service to customers throughdifferent channels.

The Bank has implemented various Digital solutions/products to fulfil customersatisfaction availability of services at all times reduction of work pressure atbranches and for providing efficient MIS information to Bank's management. The digitalstrategy encompasses initiatives focusing on Omni-channel experience Self-service modelreal-time analytics lean footprint operation efficiency and host of value added servicesto enrich and enhance customer experience. The Bank is deploying all possible technologyenabled & digital payment systems to cater to the needs of the customers.

The Bank has deployed CBS (Core Banking Solution) BaNCS for transaction processingsystem developed by M/s Tata Consultancy Services covering 100% of its business which isbeing used by many major banks and other peers.

The Bank as on 31st March 2020 has deployed 2847 self service touchpoints comprising of ATMs - 993 BRM - 799 Passbook Kiosk - 570 and Cheque deposit Kiosk- 485 for customer use. 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 andwithdrawals in addition to e-KYC processes.

Some of the recent technological developments are detailed below:

• The Bank introduced All-in-One Mobile Banking app with interactive voice chatavailable in four languages. It is the first of its kind in India. Bank's Internet Bankingsolution offers a variety of services to our customers.

• The Bank has obtained PCI DSS certification for the digital card environmentwhich only very few banks have obtained.

• Various services like CUB e-Wallet Wealth Management ASBA Unified PaymentInterface (UPI) BHIM and '*99#' a NUUP (National Unified USSD Platform) Bharat BillPayment System (BBPS) Bharat QR - Scan & Pay in BHIM/UPI etc. are made available toour customers.

• The bank offers instant account opening through Welcome Kit Video KYC thoughSelfie Banking enabling DBT Aadhaar Enabled Payment System (AEPS).

• Bank has efficient Fraud / Risk monitoring solution which detects anomalies inthe customer transaction patterns and prevents frauds.

• Bank also provides facility for new generations - Banking via facebook.Customers can transact via facebook messenger while on chat.

• The Bank has rolled out FASTag facility for making payments by vehicles in TollPlazas electronically through rechargeable prepaid instruments.

• The Bank introduced 'chat-bot' service powered by 'Artificial Intelligence'that interact with the customers via chat interface either auditory (Ask Lakshmi) ortextual (Chat-Box in website and social media).

• As a green initiative Green PIN is enabled for PIN generation for ATM cardsthrough OTP on customers' registered mobile. The bank also issues Credit Card and thecustomers are facilitated to get Virtual Credit Card through Internet / Mobile bankingjust by choosing their fixed deposit account. Customers have the option of availing SBIco-branded credit cards also.

• Customers can now set their own limit for the ATM POS and Ecom channeltransactions. They can disable a particular channel and can enable whenever required frommobile and net banking. They can enable/disable International usage of the card alsothrough Net/Mobile Banking.

• Facility has been provided to customers to block Net- Banking/Mobile banking/UPI by sending SMS to 9281056789 in the prescribed format - BLOCK {LOGINID} from theregistered mobile number.

• Bank has provided EMV CHIP cards to all its customers to enhance additionalsecurity for card based transactions. All our ATMs are accepting EMV CHIP cards by readingCHIP and process the transactions in secured manner. The Bank also offers Prepaid / giftcards and Travel Cards to the customers.

• A customer friendly Contact Centre (Call Centre) with Interactive Voice ResponseSystem (IVRS) is put in place to promote customer support on multilanguages on 24x7basis.


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. The same is fully functional at present.

• 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.


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 14 (fourteen) meetings were held the details of which are given under report onCorporate Governance forming part of this report.


Since last reporting to the members of the Bank there were no changes in the Board /KMP positions to the date of this report except Dr. N. Kamakodi who was reappointed byRBI as the Managing Director & CEO of the Bank w.e.f. 1st May 2020. for afurther period of three years. The relevant disclosures on his re-appointment are set-outin this report as well as the notice calling this Annual General Meeting.

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

Pursuant to the provisions of Section 35B of Banking Regulation Act 1949 the ReserveBank of India vide its communication dated 20th April 2020 accorded its

approval for the re-appointment of Dr. N. Kamakodi as the Managing Director & CEOof the Bank for a further period of 3 years w.e.f. 1st May 2020.

As per the relevant provisions of Section 196 of the Companies Act 2013 there-appointment of Managing / Whole Time Director requires the approval of shareholders.The Board therefore recommends the reappointment of Dr. N. Kamakodi as Managing Director& CEO of the Bank for approval by the shareholders in the Notice calling this AnnualGeneral Meeting. The relevant details pursuant to SEBI Listing Regulations 2015 andSecretarial Standard-2 of ICSI are disclosed separately in such notice.

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 including MD & CEO isrequired 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.22nd October2019 all Independent Directors of the Bank have registered themselves in the IndependentDirectors databank 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

provided separately under the Corporate Governance Report forming part of this AnnualReport.

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 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 was appointed as theStatutory Central Auditors of the Bank in the previous Annual General Meeting ('AGM') heldon 29th August 2019. The term of the present Auditor will conclude at theconclusion of the ensuing Annual General Meeting of the Bank and being eligible hasoffered themselves for re-appointment. Consent has been received from the present Auditorsfor their reappointment and also a confirmation to the effect that they are notdisqualified to be appointed as Statutory Central Auditors of the Bank in terms ofCompanies Act 2013 & the rules made there under. An application was 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 2020-21. Based on the above RBI vide its letter No. Dos.ARG.No.PS-13/08.13.005/2019-20 dt.17.06.2020 has given its approval for their appointment. Members arerequested to consider and approve their appointment as Statutory Central Auditors of theBank for FY 2020-21.

The Statutory Central Auditors have furnished their Report for FY 2020 which forms partof this report and there are no qualifications reservations or adverse remarks made bythe Auditors 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 has not reported any fraud u/s 143(12) of theCompanies 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 2019-20. Thereport of Secretarial Aud itor 'Sec retar ia l 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.

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 annual accounts the applicable Accounting Standards havebeen followed along with proper explanation 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.

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 has amended from time to time ("SEBI PITRegulation") 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 KFin Tecnlologies Private Limited (Registrarand Transfer Agents of the Bank) for incorporating the PAN in the database to facilitatereporting of trading by designated persons and other connected persons in accordance withSEBI PIT Regulations.


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. 31stMarch 2020 and the date of Directors Report i.e. 18st June 2020.


During the year under review no significant and material orders have been passed bythe Regulators.


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 preliminary assessment for appointment ofDirectors on the Board of the Bank and makes suitable recommendations to the Board for itsconsideration.

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 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 set out 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 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 Sections 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 website.



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.


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 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 oversees 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 members are aware that in light of COVID 19 pandemic during the initial stages ourGovernment launched a mobile App. "Aarogya Setu" which is India's official track the COVID-19 spread by registered users. The Bank takes pride in informing itsshareholders that as part of its CSR initiatives during the reporting year it has fundedIIT Madras to facilitate the pre-launch Security Audit of Aarogya Setu mobile App. Anappreciation letter given by Prof. V. Kamakoti Associate Dean IC & SR - IIT MadrasMember of National Security Advisory Board and also former Board member of our Bank isset-out in page no. 45 of 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 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 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 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 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 the organization. The Bank has complied withthe requirement of constitution of Internal Complaints Committee under the SexualHarassment of Women at work place (Prevention Prohibition and Redressal) Act 2013. Nocompliant was received in this regard during FY 2019-20.


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.


All employees and directors have access to the Chairman of the Audit Committee inappropriate and exceptional 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 Stock Exchanges Depositories KFinTechnologies Pvt. Ltd. Life Insurance Corporation of India United India Insurance NewIndia Assurance Star Health BSE Star Mutual Fund FISDOM Tata Consultancy ServicesCCIL 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 other employees.

For and on behalf of the Board
Place : Kumbakonam R. Mohan
Date : 18nd June 2020 Chairman