Your Directors are immensely pleased to present the 98th Annual Reporttogether with the Audited Statement of Accounts of the Bank for the financial year ended31st March 2019.
In the FY 2018-19 the Bank has reported an Operating Profit of Rs. 13.36 crore asagainst Rs. 74.33 crore in FY 2017-18. The reduction was due to increase in operatingexpenses mainly on account of incremental provisioning for retirement benefits ofemployees. The Bank has reported a Net Loss of Rs. 197.42 crore in FY 2018-19 as againstNet Loss of Rs. 97.47 crore in FY 2017-18. The increase in Loss was mainly on account ofincrease in operating expenditure and accelerated provision made for Non-Performing Assetsand depreciation on investments.
Net Interest Income (NII) increased to Rs. 439.95 crore in FY 2018-19 as against Rs.384.81 crore in FY 201718. Non-Treasury Other Income increased to Rs. 127.92 crore in FY2018- 19 from Rs. 122.70 crore in FY 20172018.
Total Assets have increased by '1041.11 crore and stood at Rs. 16911.16 crore as on31st March 2019 (' 15870.05 crore as on 31st March 2018). Total Deposits have Increasedby Rs. 433.22 crore and stood at Rs. 15123.87 crore as on 31st March 2019 (' 14690.65crore as on 31st March 2018). Net Advances have increased by Rs. 1277.87 crore andreached '10615.23 crore as on 31st March 2019 (' 9337.36 crore as on 31st March 2018).
There is no change in the nature of business of the Bank for the year under review.
The financial performance of the Bank for the fiscal 2018-19 is as given below:
|Particulars ||March 31st 2019 ||March 31st 2018 |
|Deposits ||15123.87 ||14690.65 |
|Borrowings-Tier II Bonds ||- ||41.80 |
|Net Advances ||10615.24 ||9337.36 |
|Total Assets/Liabilities ||16911.16 ||15870.05 |
|Net Interest Income (NII) ||439.95 ||384.81 |
|Non-Interest Income ||135.92 ||125.42 |
|Operating Profit/(Loss) ||13.36 ||74.33 |
|Provisions and Contingencies (Other than tax) ||313.46 ||223.69 |
|Profit / (Loss) before Tax ||(300.10) ||(149.36) |
|Provision for taxes ||(102.68) ||(51.89) |
|Net Profit /(Loss) ||(197.42) ||(97.47) |
|Add: Surplus/(Deficit) brought forward from last period ||(316.54) ||(219.07) |
|Amount available for appropriation ||(513.96) ||(316.54) |
|Appropriations || || |
|Statutory Reserve u/s 17 of the Banking Regulation Act 1949. ||- ||- |
|Capital Reserve ||- ||- |
|Balance carried over to Balance Sheet ||(513.96) ||(316.54) |
|Key Performance Indicators || || |
|Capital Adequacy Ratio (CRAR)% Basel - II ||16.77 ||9.92 |
|Capital Adequacy Ratio (CRAR)% Basel - III ||16.70 ||9.91 |
|Earnings per share (in ') ||(23.73) ||(12.04) |
|Book value per share (in ') ||108.79 ||109.81 |
|Net Interest Margin% ||2.51 ||2.32 |
|Cost-Income Ratio% ||97.68 ||85.43 |
|Return On Assets (ROA)% ||(1.13) ||(0.59) |
|Return On Equity (ROE)% ||(26.13) ||(15.80) |
In view of the loss reported for the period under review the Board of Directors of theBank expressed their inability to recommend a dividend for the said period.
Material Changes and Commitments affecting the Financial Position of the Bank
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. March 31st2019 and the date of the Directors' Report i.e. May 232019.
Paid-up Capital and Reserves
As on March 31st 2019 the Paid-up Equity Capital of the Bank stood at Rs. 85.92 crorecomprising Rs. 80962082 fully paid-up Equity Shares of Rs. 10/- each and 19832130partly paid-up Equity Shares of which '2.50 paid up per share.
The free reserves and surplus stood at Rs. 879.95 crore as on March 31st 2019 asagainst Rs. 794.52 crore as on March 31st 2018.
As per the Basel II Capital Adequacy Framework the Capital to Risk Weighted AssetsRatio (CRAR) as assessed by the Bank as on 31st March 2019 is 16.77%. This is muchhigher than the minimum CRAR of 10.875% stipulated by the Reserve Bank of India. The TierI CRAR stood at 16.09% well above the minimum of 7%. As per the Basel III CapitalAdequacy Framework the Capital to Risk Weighted Assets Ratio (CRAR) as assessed by theBank as on 31st March 2019 is 16.70 %. This is much higher than the minimum CRAR of10.875% stipulated by the Reserve Bank of India. The Tier I and Common Equity CRAR stoodat 16.03% well above the minimum of 7% and 5.5%.
Allotment of equity shares and warrants on preferential allotment basis to FIHMauritius Investments Ltd(FIHM).
Pursuant to approval accorded by shareholders by way of special resolution passed inthe Extraordinary General Meeting of the Bank held on March 21 2018 and in terms ofReserve Bank of India approval vide letter DBR.PSBD.No.341/16.1.060/2018-19 dated July 122018 and approval of Department of Financial Services of the Ministry of FinanceGovernment of India vide letter No. F.No.26/5/2018-BOA dated October 9 2018 the Bank onOctober 19 2018 allotted an aggregate number of 19832130 Equity Shares of Rs. 10 eachat an issue price of '140 per share (including premium of Rs. 130 per share) and66463329 Warrants compulsorily convertible into or exchangeable for Equity Shares ofRs. 10 each at an issue price of Rs. 140 (including premium of Rs. 130 per warrant) to FIHMauritius Investments Ltd(FIHM).
Equity shares were allotted on a partly paid up basis and received '35 per shareupfront aggregating of Rs. 694124550/-. Warrants were allotted on a partly paid upbasis and received '56 per warrant upfront aggregating of Rs. 3721946424 andthereafter on March 20 2019 received Rs. 42 per warrant as first call aggregating of Rs.2791459818. Bank as on March 31 2019 has received an amount aggregating of'7207530792 by allotting Warrants and Shares to FIH-M.
Partly paid up equity shares shall be made fully paid up and conversion of warrantsinto equity shares shall be completed as per the terms of Reserve Bank of India approvaland as per the terms of the private placement Offer letter dated October 16 2018.
FIHM is holding 5.77 % in the paid up capital of the Bank and in terms of issuedcapital the same is 19.68%. The said percentage will go up to 51 % on a fully dilutedbasis post conversion of warrants into equity shares and partly paid up equity shares bemade fully paid up.
FIHM is an investment holding company incorporated under the laws of Mauritius. FIHM iswholly owned by Fairfax India Holdings Corporation ("FIHC") an entity listed onthe Toronto Stock Exchange. Fairfax Financial Holdings Limited ("FFH/Fairfax")through its subsidiaries (collectively the "Fairfax Group") controls 93.7% ofthe voting shares of FIHC. FFH is also an entity listed on the Toronto Stock Exchange.
FIHM's investment in the Bank is in tune with Reserve Bank of India vide MasterDirection No.DBR.PSBD.
No.56/16.13.100/2015-16 dated November 19 2015 on 'Prior approval for acquisition ofshares or voting rights in Private Sector Banks and Reserve Bank of India Master DirectionDBR. PSBD. No. 97/16.13.100/2015- 16 May 12 2016 on 'Ownership in Private Sector BanksDirections 2016.
Change of name of the Bank
Present name of the Bank 'The Catholic Syrian Bank Limited' has been a local orientedbrand name. Besides many foreign institutions who are dealing with the Bank misconstruethat the Bank has a foreign orientation. Bank feels that a name which is widely acceptableand recognisable across would be appropriate in many ways. Considering the expansion planenvisaged filled with substantial opportunities both within the country and abroad aname well acceptable across would be appropriate especially in the context oftransformation initiatives in the realms of product people process place and mostimportantly in perception. In this context the Board of Directors considered theproposal to change the name of the Bank from 'The Catholic Syrian Bank Limited' to 'CSBBank Limited'. Reserve Bank of India vide letter DBR. PSBD. No. 8231/16.01.060/2018-19dated April 1 2019 had conveyed their 'no objection' in terms of Section 49B of theBanking Regulation Act 1949 to the change of name of the bank from "The CatholicSyrian Bank Limited" to "CSB Bank Limited". Bank also obtained approval ofshareholders vide postal ballot resolution dated May 4 2019. This process will becompleted once a fresh certificate of incorporation effecting the change of name is issuedby Ministry of Corporate Affairs In terms of Section 13 of the Companies Act 2013 andReserve Bank of India carries out the necessary changes in the Banking license to effectthe change of name as 'CSB Bank Limited'.
Issue of Equity Shares with Differential Voting Rights
As on the date of this Report the Bank has not issued any equity shares withdifferential voting rights.
Issue of Sweat Equity Shares
As on the date of this Report the Bank has not issued any sweat equity shares.
Employees Stock Option Schemes
1. CSB Employees Stock Option Scheme 2013
Pursuant to the requisite approval of the members on August 18 2014 the Bankformulated a stock option scheme called "CSB Employees Stock Option Scheme 2013"("ESOS 2013" or "Scheme"). The scheme is to offer long-term sharebased employee benefits as performance incentive to select employees enable valuecreation for shareholders by aligning employees' interests with that of the Bank and toattract retain and motivate high quality talent.
The scheme will be administered by the Nomination & Remuneration Committee of theBoard. Under the Scheme the Bank can offer issue and allot Equity Shares not exceeding5% of the issued Equity Shares of the Bank at any point of time.
No options have been granted during the financial year 2018-19.
Against the options granted in the earlier year for a term of 10 years (includingvesting period) and against those options remaining in force an equal number of equityshares will be allotted to the beneficiary upon exercise of the option within the saidperiod. As on date no options vested have been exercised by the beneficiaries.
The disclosure required as per rule 12(9) of the Companies (Share Capital andDebentures) Rules 2014 in respect of the stock options granted by the Bank forms part ofthis report as Annexure-I.
2. CSB Employees Stock Option Scheme 2019
Pursuant to the requisite approval of the members on May 4 2019 the Bank hasformulated a stock option scheme called "CSB Employees Stock Option Scheme 2019"("ESOS 2019" or "Scheme").
The scheme is intended to promote the culture of employee ownership and as well as toattract retain motivate and incentivize talents in the Bank. The Scheme shall beadministered through an employee stock option trust ("ESOS Trust") in the natureof an irrevocable employee welfare trust in due compliance
with the applicable laws. Under the Scheme the Bank can allot a maximum of 50 lakhshares to the Trust over a period of time. Under the trust route the Bank allots sharesto the trust and trust will transfer the shares to the eligible employees at the time ofexercise of option by eligible employees on meeting terms of grant fixed by the Nomination& Remuneration Committee. In case of trust route of issuance of ESOPs the trust onits own will not have funds to be able to acquire the shares from the Bank as the trust isnot a business trust and is specifically created with the objective of issuance of ESOPsto the employees. Trust has to find out other avenues for sourcing of fund for purchasingshares from the Bank. In terms of Section 20 of the Banking Regulation Act 1949 the Bankcannot lend to trust to purchase its own shares.
No options have been granted under the scheme and hence no disclosure is required tobe made in terms of rule 12(9) of the Companies (Share Capital and Debentures) Rules2014.
Buy-Back of Shares or Provision of Financial Assistance for purchase of the Bank'sShares.
The Bank has not effected any buy-back of its shares or provided any financialassistance for purchase/ subscription of its shares to any persons including directorsand employees of the Bank in terms of Section 67 of the Companies Act 2013.
Redemption of CSBL Bonds
CSBL Bonds - 2012 - Series-I aggregating of '41.80 crore were due for redemption onMarch 31 2019 and the same was redeemed on March 30 2019 as per FIMMDAdirectives/guidelines in view of March 31 2019 being a Public holiday.
The said bonds were listed in the National Stock Exchange of India. 'CARE' Ratingreassigned a rating of the said bonds to 'CARE A Minus' (A-) from 'CARE BBB Minus (BBB-)during the period under review and the same rating was continued till redemption. CAREvide letter May 10 2019 had withdrawn their rating for the above referred Bond in view ofredemption of the said bonds as per the terms of issue.
M/s. Indian Overseas Bank Merchant Banking Division Anna Salai Chennai-600 002 wasthe debenture trustees to the above said bonds.
Being a banking company the disclosures required as per Rule 8(5)(v)&(vi) of theCompanies (Accounts) Rules 2014 read with Sections 73 and 74 of the Companies Act 2013are not applicable to our Bank.
The Bank does not have any subsidiaries joint ventures or associate companies. Thereare no companies which have become or ceased to be its Subsidiaries joint ventures orassociate companies during the year under review.
Risk Management Policy
The Bank has a comprehensive policy framework which contains separate policies foridentification measurement monitoring & control and mitigation of all material risksincluding but not limited to credit market operational liquidity and other Pillar- IIrisks. The Bank has put in place an integrated risk management policy which ensuresindependence of the risk governance structure. The risk management policy details theprinciples rules and guidelines to be adopted by the Bank for managing and controllingvarious kinds of risks through various sub-policies. The policies are implemented in anuninterrupted reliable and comprehensive manner across the entire bank. The details ofrisk management practices are provided in Management Discussion and Analysis Reportannexed to the Director's Report.
Bank has put in place a Whistle Blower Policy / Vigil Mechanism to report concernsabout unethical behaviour actual or suspected fraud and othe' As per the Policy/Mechanism Directors and employees of the Bank customers stakeholders NonGovernmentalOrganizations (NGO) and members of general public can lodge complaints / disclosures.Besides the Audit Committee of the Board shall oversee the vigil mechanism through theCommittee processes and the Chairman of Audit Committee shall directly hear grievances ofvictimisation of employees and directors who used vigil mechanism to report genuineconcerns. The Bank affirms that no employee has been denied access to the Audit Committeeof the Board under the Whistle Blower/ Vigil Mechanism in the Bank.
A topic on Whistle Blower Policy is available in the Bank and Ethics & Code ofconduct has been included in every session of the training programme conducted at theBank's staff training college for enhancing awareness of fraud risk and for promoting aculture of compliance among the employees. Preventive measures for enhancing awareness offraud risk and for promoting a culture of compliance among the employees preventivevigilance audits vigilance workshops caution advises describing modus operandi of fraudsoccurring in banking industry etc. are being taken/implemented.
Management Discussion and Analysis
The Management Discussion and Analysis Report for the year under review is presented ina separate section forming part of this Annual Report.
Internal Financial Control Systems and their adequacy
Bank has implemented adequate procedures and internal control systems which providereasonable assurance regarding reliability of financial reporting and preparation offinancial statements. Bank is operating in a fully computerized environment with CoreBanking System supported by diverse application platforms for handling special businesssuch as treasury trade finance retail loans etc. The process of recording oftransactions in each application platform is subject to various forms of control such asin-built system checks maker - checker authorisations and independent post transactionreviews etc. The financial statements are prepared based on computer system outputs.Responsibility of preparations of financial statements is entrusted to a dedicated unitwhich is independent of business. Bank has implemented adequate procedures and internalcontrols which provide reasonable assurance regarding reliability of financial reportingand preparation of financial statements and were operating effectively during the year.
Divergence in asset classification and provisioning
Divergence observed by the Reserve Bank of India for financial year 2017-18 in respectof bank's asset classification and provisioning under the extant prudential norms onincome recognition asset classification and provisioning does not exceed the limitprescribed under RBI circular DBR.BP.BC. No. 63/21.04.2018/2016-17 dated April 18 2017and DBR.BP.BC.No. 32/21.04.2018 dated April 1 2019 on "Divergence in the AssetClassification and Provisioning."
Update on IND AS Implementation
The Institute of Chartered Accountants of India had issued IND AS (a revised set ofaccounting standards) which largely converges the Indian accounting standards withInternational Financial Reporting Standards (IFRS). The Ministry of Corporate Affairs(MCA) had notified these accounting standards (IND AS) for adoption in 2015 and issued theroadmap for implementation of new Indian Accounting Standards (IND AS) in January 2016.Banking companies were required to implement Indian Accounting Standards (IND AS) fromApril 1 2018 onwards with comparatives for the year beginning April 1 2017. RBI videFirst Bimonthly Monetary Policy 2018-19 on April 5 2018 had deferred the implementationof IND AS by one year pending necessary legislative amendments to the Banking RegulationAct 1949 as also the level of preparedness of many bank. RBI vide Circular DBR.BP.BC.No.29/21.07.001/2018-19 dated March 22 2019 has further deferred the implementationof IND AS till further notice as the legislative amendments recommended by the ReserveBank of India was under consideration of the Government of India.
The Bank had commenced the process of IND AS implementation from FY 2016-17 itself. Asper RBI Directions the Bank has taken the following further steps towards implementationof IND AS during the year 2018-19:
(a) Submitted quarterly Performa IND AS financial statements for the quarters endedMarch 2018 June 2018 September 2018 and December 2018 as required by RBI.
(b) The Bank will continue its preparedness towards migration to IND AS as perregulatory requirement and to liaise with RBI and industry bodies on various aspectspertaining to IND AS implementation.
The Bank continues its endeavour to adopt the best prevalent Corporate GovernancePractices.
A separate section on Corporate Governance standards followed by the Bank is enclosedas an Annexure to this report. The report on Corporate Governance also contains certaindisclosures required under the Companies Act 2013.
Particulars of Loans Guarantees or Investments by the Bank
Pursuant to Section 186 (11) of the Companies Act 2013 the provisions of Section 186of Companies Act 2013 except sub - section (1) do not apply to a loan made guaranteegiven or security provided or any investment made by a banking company in the ordinarycourse of business.
The particulars of investments made by the Bank are disclosed in Schedule 8 of theFinancial Statements as per the applicable provisions of Banking Regulation Act 1949.
Particulars of contracts or arrangements with related parties
All transactions with related parties were entered/ reported during the financial yearis in the ordinary course of business. However no comparable data were available so as toestablish such transactions were on arm's length basis the Bank has obtained requisiteapprovals for the said transactions as prescribed in the section 188 of the Companies Act2013 as amended and Rule 15 of the Companies (Meetings of Board and its Powers) Rules2014. Bank has also obtained omnibus approval of the Audit Committee for the transactionunder 188 of the Companies Act 2013 and Rule 6A of the Companies (Meetings of Board andits Powers) Rules 2014 though no transaction were consummated during the period endedMarch 31 2019 .
There were no materially significant related party transactions with the Company'sDirectors Management or their relatives which could have had a potential conflict withthe interests of the Company.
As per the policy on dealing with Related Party Transactions Audit Committee shallreview at least on a quarterly basis the details of Related Party Transactions enteredinto by the Company pursuant to each of the omnibus approval given and such omnibusapprovals shall be valid for a period not exceeding one financial year and shall requirefresh approvals after the expiry of such financial year.
Bank has formulated a policy on materiality of related party transactions and also ondealing with related party transactions pursuant to the provisions of the Companies Act2013 and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements)Regulations2015.Thesameisdisplayed on the website of the Bank athttps://csb.co.in/pdf/ PolicyondealingwithRelatedPartyTransactionnew.pdf
The particulars of contracts or arrangements with related parties entered into duringthe year under review in terms of Section 188(1) of the Companies Act 2013 are providedin Form AOC-2 as Annexure -II in terms of 134(3)(h) of the Companies Act 2013.
Corporate Social Responsibility (CSR)
In terms of the requirements of Section 135 of the Companies Act 2013 and CSR Rules2014 the Bank has set up a Board-level CSR Committee to look after the CSR initiatives ofthe Bank.
The Corporate Social Responsibility Committee shall (a) formulate and recommend to theBoard a Corporate Social Responsibility Policy which shall indicate the activities to beundertaken by the Company as specified in Schedule VII of the Companies Act 2013 (b)recommend the amount of expenditure to be incurred on the activities as part of the CSRactivities of the Bank and (c) monitor the Corporate Social Responsibility Policy of theBank from time to time.
CSR Policy of the Bank will guide and govern the Bank's activities in focus areasnamely rural development and inclusiveness and other areas of special interest. Bankcontinued with CSR activity during the period under view in a limited way though it wasnot mandatory to spend for the said period in terms of Section 135 of the Companies Act2013 and CSR Rules 2014. As a responsible citizen the Bank will continue with a slew ofmeasures for fulfilment of its commitment to the society as a whole.
The brief outline of the CSR Policy overview of the programs undertaken by the Bankthe composition of the CSR Committee prescribed CSR expenditure and details of theamounts spent by the Bank on CSR activities during the year under review have beenprovided in Annexure - III to this report.
a) Statutory Auditors
The Statutory Central Auditors viz. "M/s. R G N Price & Co" CharteredAccountants Kochi who were appointed at the 97th Annual General Meeting heldon September 29 2018 will be retiring at the ensuing Annual General Meeting and areeligible for reappointment as per the guidelines of the Reserve Bank of India (RBI).
Bank has received the consent from "M/s. R G N Price & Co" CharteredAccountants Kochi and confirmation to the effect that they are not disqualified to beappointed as the Statutory Central Auditors of the Bank in terms of the provisions of theCompanies Act 2013 and rules made here under. Accordingly the Board of Directorsrecommended the re-appointment of "M/s. R G N Price & Co" CharteredAccountants Kochi as the Statutory Central Auditors of the Bank for a fourth term tohold office from the conclusion of the ensuing Annual General Meeting till the conclusionof the next Annual General Meeting on remuneration to be decided by the Board or Committeethere of subject to the approval of Reserve Bank of India and share holders' approval.
There are no Audit qualifications in the Statutory Auditors' Report which is annexedelsewhere in this Annual Report.
b) Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Companies Act 2013 the Bank appointed "M/s SVJS& Associates" Company Secretaries Kochi as its Secretarial Auditors to conductthe secretarial audit of the Bank for the Financial Year 2018-19. The Report ofSecretarial Auditor for the said period is annexed to this report as Annexure -IV.
There are no Audit qualifications in the Secretarial Audit Report.
Compliance to Secretarial Standards
The relevant Secretarial Standards issued by the Institute of Company Secretaries ofIndia (ICSI) related to the Board Meetings and General Meeting have been complied with bythe Bank.
Transfer of Un-claimed/Un-paid dividend to Investor Education and Protection Fund(IEPF)
Dividend transferred to Unpaid Dividend account and remaining unpaid or unclaimed for aperiod of seven years from the date of such transfer has to be transferred to InvestorEducation and Protection Fund as per Section 124 (5) of the Companies Act 2013.
In compliance with above on November 03 2018 the Bank had transferred Rs. 840015/-to the above Fund being the unclaimed dividend for the financial year 2010-11.
Transfer of Equity shares to Investor Education Protection Fund Authority
In terms of the provisions of the Section 124(6) of the Companies Act 2013 read withthe Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 (as amended) and other applicable rules notifications and circulars
if any every company is required to transfer the shares in respect of which dividendremains unpaid / unclaimed for a period of seven (7) consecutive years to the InvestorEducation Protection Fund (IEPF) Authority.
To comply with the above the Bank had on November 12 2018 transferred 97712 sharescomprising of 633 folios/records to Investor Education and Protection Fund Authoritythrough the CDSL in respect of which dividend was not claimed for consecutive 7 yearsfrom the date of transfer to unpaid dividend account of the Bank for the respectiveyear(s).
Compensation/ Remuneration Policy
The Bank has formulated a Compensation/ Remuneration Policy which deals with theCompensation & Benefits of the employees of the Bank and Directors including Part-timeChairman Managing Director & CEO Executive and NonExecutive Directors The details ofthe same have been included in the Report on Corporate Governance which forms part ofthis Report.
Bank had adopted policy for appointment of Parttime Chairman Managing Director &CEO Directors Key Managerial Personnel and Senior Management team in the Bank. Thedetails of the same have been included in the Report on Corporate Governance which formspart of this Annual Report.
The Nomination policy is displayed on the website of the Bank at:https://csb.co.in/pdf/NominationPolicy. pdf
Details of Directors/Employees Remuneration
The details of Directors/Employees remuneration etc. as required under Sec 197(12) ofthe Companies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms part of this Report as Annexure-V.
Besides the details of remunaration paid to the Managing Director and CEO Directorsand Key Managerial Personnel forms part of this report as Annexure-VI.
Board of Directors
The composition of the Board of Directors is governed by the Banking Regulation Act1949 and the Companies Act 2013 and in accordance with the best practices in corporategovernance. As on the date of this report the Board comprises of Seven Directors Thedirectors possess rich experience and specialized knowledge in various areas of relevanceto the Bank.
The Board functions as the governing body and also through various Committeesconstituted to oversee specific areas. Policy formulation setting up of goals evaluationof performance and control functions vest with the Board. The Committees have oversight ofoperational and supervisory issues assigned to them by the Board from time to time.
Appointment of Non-executive Directors
Mr. Madhavan Menon (DIN : 00008542) and Mr. Sumit Maheshwari (DIN: 06920646) wereappointed as additional directors on September 3 2018 and appointed as Non-executiveDirectors of the Bank at the 97th Annual General Meeting held on September 292018.
Appointment of Independent Directors
Mrs. Bhama Krishnamurthy (DIN: 02196839) was appointed as an additional director onSeptember 3 2018 and appointed as Independent Director of the Bank for a period of threeyears at the 97th Annual General Meeting held on September 29 2018.
Mr. Madhavan Aravamuthan (DIN: 01865555)
was appointed as an Additional Director (NonExecutive Independent) on the Board of theBank w.e.f. December 13 2018 to hold office till the conclusion of the next AnnualGeneral Meeting and subject to the approval of the members in the ensuing General Meetingfor appointment as an Independent Director to hold office for a term up to 3 (three)consecutive years from the date of ensuing general meeting. Necessary resolution seekingapproval of the members in this connection forms part of the notice of the ensuing AnnualGeneral Meeting.
Mr. S. Nagoor Ali Jinnah (DIN : 05238633) was appointed as an Additional Director (Non-Executive Independent) on the Board of the Bank w.e.f. March
06 2019 for a period of three 3 (three) years subject to the approval of Shareholdersin terms of the provisions of Section 149 and 161 of the Companies Act 2013 and Rulesmade thereunder. Necessary resolution seeking approval of the members in this connectionforms part of the notice of the ensuing Annual General Meeting.
Independent Directors- Compliance status
The Bank fully satisfies the requirements of section 149 of the Companies Act 2013 asregards the appointment of Independent Directors and the following Directors areIndependent Directors of the Bank as on the date of this report.
1. Mr. Thomas Mathew (DIN: 01277149)
2. Mrs. Bhama Krishnamurthy (DIN: 02196839)
3. Mr.Madhavan Aravamuthan (DIN: 01865555)
4. Mr. S. Nagoor Ali Jinnah (DIN : 05238633)
The performance of the Independent Directors is subject to evaluation as per Section149(8) of the Companies Act 2013 and read with Schedule IV to the said Act.
All Independent Directors have confirmed having complied with the criteria ofindependence as provided in 149(6) of the Companies Act 2013 and in the opinion of theboard the independent directors fulfil the conditions specified in these regulations andare independent of the management.
The second consecutive tenure of appointment of Mrs. Radha Unni Mr. Madhavan Nambiar Mand Mr. Bobby Jos C as independent Directors of the Bank ended September 26 2018 andaccordingly they ceased to be Independent Directors with effect from September 27 2018.
The Board places on record its appreciation of the commendable services and guidancerendered by Mrs. Radha Unni Mr. Madhavan Nambiar M and Mr. Bobby Jos C during theirtenure as Independent Directors of the Bank.
Declaration by Independent Directors
The Bank received necessary declaration from each Independent Director under Sec 149(6)of the Companies Act 2013 that they met the criteria of independence laid down in theCompanies Act 2013.
Familiarization Programmes of Independent Directors
All Independent Directors are familiar with their roles rights and responsibilities inthe Bank at the time of appointment and also on a recurrent basis. The details of variousprogrammes undertaken for familiarizing the Independent Directors are disclosed inCorporate Governance Report which forms part of this Annual Report.
Mr. Madhavan Menon (DIN: 00008542) was appointed as Part-time Chairman of the Bank fora period of one year effective from April 22 2019 in pursuant to section 10B(1A)(i) ofthe Banking Regulation Act 1949.
Resignation of Directors
Mr. Alok Kochhar (DIN: 07336899) resigned as Independent Director of the Bank on March6 2019. Mr. Alok Kochhar tendered resignation voluntarily so as to accommodate anotherdirector on the Board who would be qualified to represent the specified areas / sectors'Agriculture and Rural Economy' thus bringing the Board to a complied position as far asSection 10A (2) (a) is concerned.
The Board places on record its appreciation of the commendable services and guidancerendered by Mr. Alok Kochhar during his tenure as Independent Director of the Bank.
RBI Nominee Directors
Term of appointment of Reserve Bank of India Nominee Directors Mr. Subbaiah Singalaand Mr. V.G. Venkatachalapathy ended on March 10 2019 and March 13 2019 respectively asper the terms of their appointment vide RBI orders DBR.PSBD.No. 10394/ 16.05.003/2016-17dated March 9 2017 and DBR. PSBD. No.10390/16.05.003/ 2016-17 dated March 9 2017.
The Board places on record its appreciation of the valuable guidance and supportextended by Mr. Subbaiah Singala and Mr. V.G. Venkatachalapathy during their tenure asAdditional Director- RBI Nominee on the Board of the Bank.
In terms of the provisions of Section 149(1) of the Companies Act 2013 the Bank isrequired to have at least one woman Director on the Board. Bank appointed Mrs. BhamaKrishnamurthy (DIN: 02196839) as a Director on the Board since September 3 2018. Thetenure of appointment of Mrs. Radha Unni was ended on September 26 2018.
Directors Retiring by Rotation
In terms of Sec 152 of the Companies Act 2013 Non-Executive Director Mr SumitMaheshwari (DIN: 06920646) shall retire by rotation and being eligible offers him selffor re-appointment at the ensuing Annual General Meeting (AGM).
Mr. Sumit Maheshwari was appointed as an Additional Director of the Bank with effectfrom September 03 2018 under the Section 161(1) of the Companies Act 2013 and wasregularized as the Director of the Bank at 97th AGM held on September 29 2018 liable toretire by rotation.
The detailed profile of Mr. Sumit Maheshwari recommended for reappointment in ensuingAnnual General Meeting is provided in the Notice of the Annual General Meeting for thebenefit of shareholders as per the provisions of the Companies Act 2013.
Appointment/ Changes in Key Managerial Personnel
Mr. C.VR. Rajendran Managing Director & CEO Mrs. V. Maheswari Chief FinancialOfficer and Mr. Sijo Varghese Company Secretary are the Key Managerial Personnel as perthe provisions of the Companies Act 2013.
There were no changes in the Key Managerial Personnel since the date of last year'sreport.
Board and its Committees Number of Meetings of the Board
Regular meetings of the Board are held to discuss and decide on various businesspolicies strategies and other businesses. Due to business exigencies certain decisionsare taken by Board through resolution passed by circulation from time to time.
The Board met Nineteen (19) times during the FY 2018-19. Detailed information on themeetings of the Board is included in the report on Corporate Governance which forms partof this Annual Report.
Committees of the Board
The Bank has various sub-committees of the Board which have been formed as part of thebest corporate governance practices and/or in compliance with the requirements of therelevant provisions of applicable laws and the regulatory prescriptions.
The Bank has the following Sub-Committees of the Board:
1. Audit Committee.
2. Nomination & Remuneration Committee.
3. Corporate Social Responsibility Committee.
4. Risk Management Committee.
5. IT Strategy Committee.
6. Stakeholders' Relationship Committee.
7. Customer Service Committee.
8. Management Committee.
9. NPA Management Committee.
10. Committee for Monitoring Large Value Frauds (CMF)
11. HR Committee.
12. IPO Committee
The details with respect to the compositions powers roles terms of reference etc.of the above Committees are given in detail in the 'Report on Corporate Governance' whichforms part of this Annual Report.
Audit Committee has been constituted in line with Section 177 of the Companies Act2013. The Committee consists of five members. The Committee is chaired by Mr. ThomasMathew Independent Director who is a Chartered Accountant. The other members of theCommittee are Mr. Madhavan Menon (Part-time Chairman) Mr. Madhavan Aravamuthan(Additional Director-Independent) Mrs. Bhama Krishnamurthy (Independent Director) and Mr.Nagoor Ali Jinnah (Additional Director- Independent).
The Committee discharges the functions laid down in the Companies Act and thoseprescribed by the Reserve Bank of India. It also discharges the functions delegated by theBoard of Directors from time to time. The ACB which held eight meetings during the yearhas been closely overseeing and monitoring the Internal Control System and ProceduresInspection and audit functions including follow-up and compliance of inspection/auditreports. It has also interacted with the Auditors The ACB acts as an effective tier to theBoard in the matters of inspection audit and internal control system.
Annual evaluation of performance
In line with Board evaluation policy Bank has put in place a criteria for annualevaluation of performance of Chairperson Managing Director & CEO Directors BoardLevel Committees and the Board as a whole.
The performance of the members of the Board other than independent Directors and theBoard as a whole have to be evaluated at the meeting of the Independent Directors
The performance of the independent Directors will be reviewed by the Board as providedfor under Section 149(8) read with Schedule IV of the Companies Act 2013.
The Statement indicating the manner in which formal annual evaluation of the DirectorsCommittees of the Board and the Board are given in detail in the report on CorporateGovernance which forms part of this Annual Report.
The Board evaluation policy is displayed on the website of the Bank at:https://csb.co.in/pdf/ PolicyonEvaluationoftheBoard.pdf
Particulars regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo
Considering the nature of activities of the Bank with respect to the provisions ofSection 134 (3) (m) of the Companies Act 2013 relating to conservation of energy andtechnology adoption the Bank is constantly pursuing and making all-out efforts to achievethe desired goals as contained in the Act.
a) Conservation of Energy
All attempts are being made to reduce energy consumption to the maximum extentpossible. As part of these measures a few branches/offices of the Bank have been usingsolar power which is aimed at optimum utilisation of power in a cost-effective manner.
b) Technology Absorption
The required technology absorption is being made considering the nature of activities.
c) Foreign Exchange Earnings and Outgo
Foreign Exchange earnings and outgo are part of the normal banking business of theBank. Being an Authorised Dealer in Foreign Exchange the Bank has been taking allpossible steps to augment export credit.
Disclosures under the Sexual Harassment of Women at the workplace (PreventionProhibition & Redressal) Act 2013
As a part of Bank's ethos Bank believes that all the employees of the Bank have theright to be treated with dignity and sexual harassment at workplace or other thanworkplaceis a grave offence and needs to be prohibited as a matter of policy &prevented with appropriate measures.
Bank has zero tolerance towards any action on the part of any employee which may fallunder the ambit of 'Sexual Harassment' at workplace and is fully committed to uphold andmaintain the dignity of every woman working in the Bank. As per the Act the Bank hastaken steps for prevention of sexual harassment and protection of women from sexualharassment at the workplace and for prevention and for redressal of such complaints. Incompliance with Section 4 of the Sexual Harassment of Women at the workplace (PreventionProhibition & Redressal) Act 2013 Bank constitutes Internal Complaints Committee atworkplace.
The disclosure required under section 22 of the Sexual Harassment of Women af theworkplace (Prevention Prohibition & Redressal) Act 2013 are given below
|Number of complaints pending as on the beginning of the financial year ||Nil |
|Number of complaints of sexual harassment received in the year ||3 |
|Number of complaints disposed off during the year ||3 |
|Number of complaints pending as on the end of the financial year ||Nil |
|Number of cases pending for more than ninety days ||Nil |
|Remedial measures taken by the company ||Conducted disciplinary proceedings against one officer and awarded punishment of compulsory retirement from the service. Other two cases after conducting inquiry the Committee held that no case of sexual harassment at workplace was made out. |
|No of workshops or awareness programme against sexual harassment ||14 |
|Nature of action taken by employer/district officer ||The respondent was awarded with the punishment of compulsory retirement from the service of the Bank after initiating Disciplinary Proceedings as per the Catholic Syrian Bank Ltd Officer Employees (Discipline & Appeal) Regulation 1993 |
As a public employer Bank is an equal employment opportunity corporation and iscommitted to creating a work environment that enables employees to work without fear ofprejudice gender bias and sexual harassment. Bank has complied with provisions relatingto the constitution of Internal Complaints Committee under the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 during the period underreview.
a) No significant and material orders were passed by the regulators or courts ortribunals impacting
the going concern status and Bank's operations in future.
b) During the year under report there were no instances of frauds reported /reportable by the Auditors to the Audit Committee the Board of Directors or the CentralGovernment under Section143(12) of the Companies Act 2013.
c) The Bank has not entered into any materially significant transaction during theyear which could have a potential conflict of interest between the Bank and itsdirectors management and/or their relatives etc. other than the transactions carried outin the normal course of business.
d) During the last 3 years there were no penalties or strictures imposed on the Bankby the Stock Exchange(s) and/or SEBI and/or any other statutory authorities on mattersrelating to capital market activities.
e) Being a Banking Company the Bank is not required to make and maintain such accountsand cost records as specified by the Central Government under sub-section (1) of section148 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014.
f) During the FY 2018-19 RBI has imposed penalty of Rs 4 crore on the bank due tonon-adherence to timeline for Time-bound implementation & strengthening of SWIFTrelated operational controls issued by Reserve Bank of India.
Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of theCompanies Act 2013 read with Rule 11 of the Companies (Management and Administration)Rules 2014 the Annual Return as on March 31st 2019 is displayed on the website of theBank at:https://www.csb.co.in/pdf/Annual return.pdf
Directors' Responsibility Statement
Pursuant to the requirement under Section 134(3) (c) of the Companies Act 2013 it ishereby confirmed that:
a. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.
b. 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 at the end of the financial year and of theprofit and loss of the Bank for that period.
c. The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities.
d. The directors have prepared the annual accounts on a going concern basis.
e. The directors have laid down internal financial controls to be followed by the Bankand that such internal financial controls are adequate and were operating effectively.
f. 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 Board of Directors places on record its gratitude to the Reserve Bank of IndiaMinistry of Corporate Affairs The Securities and Exchange Board of India Department ofFinancial Services and other Government and regulatory authorities for their continuedsupport and guidance.
The Board of Directors wishes to place on record its gratitude to the shareholdersbondholders and all business associates for their encouragement support and assistance.
The Board of Directors wishes to place on record its appreciation for the dedicatedservices rendered by the members of the staff at all levels. The Board looks forward totheir continued dedicated and sincere services to take the Bank to greater heights.
The Directors wish to record their deep sense of obligation and gratitude to all thecustomers and well-wishers of the Bank for their patronage and look forward to continuingthis mutually supportive relationship in future as well.
| ||By Order of the Board |
| ||Sd/- |
| ||Madhavan Menon |
|Place: Mumbai ||Chairman |
|Date : May 23 2019 ||(DIN:00008542) |