It gives me great pleasure to place before you the Annual Report of your Bank for theyear 2017-18.
During the year:
Bank had raised capital of Rs. 401.26 Crore in the month of October 2017 by issue ofEquity shares under Qualified Institutions Placements (QIP) from market.
Government of India has infused an amount of Rs. 3045 Crore as capital. The capitalinfused has helped your Bank in maintaining capital adequacy ratio of 11.09%.
Further Bank has repaid its borrowings through redemption of Tier I IPDI Bonds of Rs.125 Crore and Basel III compliant Additional Tier I bonds of Rs. 1400 Crore by exercisingcall option.
This year your Bank was adjudged as winner in the category of "Best FinancialInclusion Initiatives" amongst small Banks in the IBA Banking Technology Awards 2018a recognition we cherish for the continuous efforts put by your Bank towards progress offinancial inclusion in our country. Before apprising you about other performancehighlights of the Bank for the financial year 2017-18 let me briefly mention the economicenvironment in which your bank is functioning both Global and Indian environments therecent trends in the Indian banking industry its challenges opportunities and RoadAhead.
The recovery in Global Economy has become broader and stronger since mid-2016.According to the World Economic Outlook report the world Economy growth at 3.8% was thefastest since 2011.On the back of improved global investment and trade the growth isexpected to tick upto 3.9% in 2018 & 2019. The future prospects of growth momentum arebright as all countries have room for structural reforms and fiscal policies that raiseproductivity and enhance inclusiveness.
In the financial year 2017-18 the Indian Economy has achieved a milestone in terms ofintroduction of Goods & Services Tax (GST). The GST has helped in increasing the taxbase of the Economy and discipline in tax payment culture. Another achievement is theDigital India programme. It not only helped our country to move towards a less cashdependent economy but also expected to bring in the social benefits to the poor moreeffectively. The recapitalization plan for major public sector banks announced in 2017helped replenish capital buffers and improved the banking sector's ability to supportgrowth. However strong mechanisms need to be brought in to control increasing level ofNPAs and frauds in Banks. The implementation of Insolvency and Bankruptcy Code has createda huge expectation from all stakeholders and is expected to help banking sector in timebound debt recovery mechanisms and to come out of the Corporate NPAs which many Banks aresaddled with. The Economy's Macro fundamentals Inflation and Industrial Production showedmixed picture of growth during financial year 2017-18 with low production and lowinflation levels. The journey of economic reforms during the past few years has beenchallenging but at the same time rewarding. As a result of the reforms undertaken by theGovernment foreign direct investment has gone up. Measures taken by the Government havemade it much easier to do business in India. Natural resources are now allocated in atransparent and honest manner.
Banking Industry Trends
During financial year 2017-18 banks were contended with multiple challenges tied toregulations legacy systems disruptive models technologies new competitors and arestive customer base while pursuing new strategies for sustainable growth. Banks' balancesheets are strained with provisioning from increased NPA levels resulting in lowerprofitability .
Though Banking Industry is experiencing the heat of various challenges the regulatorysteps such as issuance of Recapitalization bonds Revised NPA framework andimplementation of Insolvency & Bankruptcy Code by the Government of India and the RBIis expected to bring Industry out of this stressful scenario. Long-term sustainable growthin the banking industry is expected only through continuous Customer centricityRegulatory recalibrations Technology Management & adoptions mitigating cyber risksand reorganizing our workforce to suit new environments.
Performance of the Bank
The key highlights of your Bank's performance during financial year 2017-18:
- I am glad to inform you that during FY 2017-18 your Bank has achieved and surpassedall regulatory targets given under Priority Sector Agriculture Non- Corporate FarmersSmall & Marginal Farmers Weaker Section and Micro Enterprises.
- Bank continued its stand on shedding high cost deposits and accordingly the CASA % toTotal deposits ratio increased from 37.93% in March 2017 to 40.03 % in March 2018.
- The Credit to Deposit CD ratio of the Bank increased from 68.05% in March 2017 to69.95 % in March 2018.
- Agricultural Advances increased from Rs.16375 Crores as on 31st March 2017 to Rs.18179 Crores as on 31st March 2018 registering a growth of 11.02% and constituted21.38% of Adjusted Net Bank Credit (ANBC) surpassing the regulatory target of 18%.
- Priority Sector advances as of March 2018 stood at Rs. 35949 Crore which is 42.27%of Adjusted Net Bank Credit (ANBC) surpassing the regulatory benchmark of 40%.
- Net interest income of the bank increased from Rs 2408.36 Crore in March 2017 to Rs2475.82 crore in March 2018 and the Net interest margin for the same period increasedfrom 2.00% to 2.19%.
- Cost of Deposits of the bank decreased from 6.43 % in FY 2016-17 to 5.62 % in FY2017-18.
During the financial year 2017-18 Bank made cash recovery of Rs. 931.24 Crore asagainst Rs. 1119.87 Crore during previous year. Your Bank recovered Rs. 146.60 Crore fromWritten-Off accounts as against Rs. 120.08 Crore during previous year.
As on 31st March 2018 Gross NPA stood at Rs. 16361.44 Crores as against Rs.12618.73 Crores during the previous year. Gross NPA percentage is at 22.04% as comparedto 16.27% during the previous year.
As on 31st March 2018 Net NPA stood at Rs. 7838.78 Crores as against Rs. 7735.12Crores during the previous year. Net NPA percentage is at 11.95% as compared to 10.66%during the previous year.
Capital Adequacy Norms
The Capital to Risk (Weighted) Asset Ratio (CRAR) under Basel III norms moved from11.39% as on 31st March 2017 to 11.09% as on 31st March 2018 as against regulatoryrequirement of 10.875%.
Similarly CET 1 capital ratio of the Bank moved from 7.24% as on 31st March 2017 to8.81% as on 31st March 2018 as against regulatory requirement of 7.375%.
With the view to contain the operational expenses and improve efficiency Bank took aconscious stand on new branch was opened during financial year 2017-18. Bank has alsoinitiated Branch Rationalization process. Accordingly Board of Directors of the Bank hasapproved merger of 17 branches with other branches of which 2 branches were merged duringfinancial year 2017-18. As on 31st March 2018 your Bank is having 1872 branches(including 72 satellite branches).
Human Resource Development
During the year 2017-18 the Bank has recruited 21 Probationary
Officers 13 Specialist Officers 128 Clerks and 148 Subordinate Staff
The current Human Capital of the Bank is 13613 of which 3705 are women.
Your Bank has taken various digital initiatives for providing seamless and conveniencesolutions to customers as well as for its staff members. Some of the successfullyimplemented Digital initiatives are
- Digitisation of 29 Villages
- Bank has launched new Mobile Banking Application
- New Internet Banking Application launched
- Launched Unified Payment Interface (UPI) Application
- BHIM Aadhaar Pay application launched and 12796 BHIM Aadhar Deployed to Merchants.
- Bharat QR Code for Issuer (UPI based payments) and acquirer (POS based payments) arelive.
- Successful operationalization of GST Payment module for customers.
- Deployment of 7565 POS Terminals of which 302 POS Terminals are deployed in Tier 5& 6 centres
Bank has partnered with Boston Consulting Group (BCG) for the transformation project "Dena Pragati" and your Bank has introduced host of new products and setin place new systems and processes. centralized account I. Bankhas opened a new CASABack-office opening. II. Lead Management System Dena Sampark' launched pan-India forprocessing of leads III. IVR based Call Center: around 50000 average inbound callsreceived p.m.
IV. Existing Retail Asset Processing Centres were restructured with modified processflow and exclusive usage of Lend Perfect software for retail loan processing V. MSME Hublaunched for 29 branches in Thane zone as pilot VI. Digital Pathshala was organised acrossall branches for increasing registrations across digital channels
1. Dealer Payout scheme for sourcing vehicle loan leads in consumer loan segment
2. Empanelment of Home loan counselors for sourcing Home loan Proposals.
3. New OTS scheme for small borrowers "Dena Rin Mukti Yojana" coveringall sectors including Agriculture and MSME.
4. To provide better product offerings to its customers your Bank has entered intovarious tie-ups such as: a. Tie up with Maruti Suzuki India Ltd for Passenger Car financearrangement. b. Tie up with SMERA Ratings Ltd for sourcing of MSME loan leads c. Toimprove MSME lending Bank has registered with the Receivables Exchange of India Limited(RXIL) on their online platform for Trade Receivables Discounting System (TReDS) businessd. Tie-up with National Housing Bank for implementation of Pradhan Mantri Awas Yojana Credit Linked Subsidy
Scheme (PMAY-CLSS) for beneficiaries of EWS/LIG/MIG and Rural Housing Interest subsidyscheme (RHISS).
In order to reap the benefits of economic growth we need to make it inclusive. Inaddition to being valuable for its own inclusive growth fuels further economic growth. Asalready mentioned Your Bank has done exceptionally well in this area and also receivedrecognition for its initiatives in the area of Financial Inclusion. Your Bank has opened44.06 lac accounts under Pradhan Mantri Jan Dhan Yojana [PMJDY] against the target of18.50 lac accounts and also issued 26.52 lac RuPay Cards.
Your Bank has covered all the allotted 6485 villages under Financial Inclusion ofwhich 746 villages are covered through Brick & Mortar Branches and 5739 villages arecovered through BC model. Your Bank has enrolled 10.60 crore residents for Aadhaar as of31st March 2018 and is having top position among Non-State Registrars to UIDAI.
For the year 2018-19 reduction in NPA will be the top most priority for the Bank. Thisyear your bank is also expecting sizeable recovery from resolution of Corporate NPA casesreferred to the NCLT. In addition bank will also focus to bring down the retail NPAlevels and all out efforts will be made and more particularly in Recovery in written-offaccounts. Your Bank has created a new vertical "Stressed Asset ManagementVertical" with objective to have focused recovery efforts to ensure effectiverecovery process. Bank will continue its focus on CASA Retail MSME and Agricultureadvances.
Bank has introduced various new processes and system modifications through the BPRTransformation Project wherein the actual benefits of this transformation project areexpected to be realized during this financial year.
As I conclude I express my sincere thanks and gratitude to Government of IndiaReserve Bank of India various State Governments Securities and Exchange Board of IndiaInsurance Regulatory and Development Authority of India and all other Stakeholders fortheir valuable patronage guidance support and timely advice and seek their continuedsupport and co-operation.
My profound thanks are also due to all the Shareholders Customers and Well-Wishersfor their valuable patronage and support during this challenging period of financial year2017-18 and hope to receive their continued patronage.
The Board of the Bank has been proactively guiding the Bank during these testing timesand I want to place on record the appreciation for their encouragement and guidance.
I am also thankful to the NABARD SIDBI and other Financial Institutions Banks andCorrespondents for their continued support to the Bank. Last but not least I wish toplace on record the deep appreciation for untiring and relentless efforts put in by allthe staff members of the Bank without whom the progress achieved in these demandingtimes would not have been possible. Family members of the staff also need to beacknowledged for their continued support to the Institution. I look forward for thecontinued cooperation and support from all stakeholders for sustained progress of the Bankin the years to come.
With best wishes
(Ramesh S. Singh)