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Dhanlaxmi Bank Ltd.

BSE: 532180 Sector: Financials
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OPEN 13.90
VOLUME 308922
52-Week high 17.93
52-Week low 7.42
P/E 7.67
Mkt Cap.(Rs cr) 338
Buy Price 13.35
Buy Qty 192.00
Sell Price 13.40
Sell Qty 7.00
OPEN 13.90
CLOSE 13.54
VOLUME 308922
52-Week high 17.93
52-Week low 7.42
P/E 7.67
Mkt Cap.(Rs cr) 338
Buy Price 13.35
Buy Qty 192.00
Sell Price 13.40
Sell Qty 7.00

Dhanlaxmi Bank Ltd. (DHANBANK) - Director Report

Company director report

Dear Shareholders

It gives the Board pleasure to place before you the highlights of your Bank'sperformance during the financial year 2017 - 18. Details of the achievements andinitiatives taken by the Bank are provided in the 91st Annual Report of theBank along with the Audited Balance Sheet as at March 31 2018 and the Profit and LossAccount for the year ended on that date. It has been a challenging year with the Bankfocusing on working towards improving its performance in the medium term.

Your bank's operating environment remained a cause for concern with the privateinvestment climate and economic sectors under same pressure.

Performance Highlights

The salient features of the Bank's performance for the financial year ended March312018 are:

1. Major Developments in the Bank

• Operating Profit improved by 55.39% from '94.07 crore to '146.18 crore which isthe ever highest in the history of the bank

• Net interest income grew by 4.28% from '331.60 crore to '345.80 crore

• Net Interest Margin improved from 2.76% to 2.90%

• CRAR improved from 10.26% to 13.87%

• Total expenses reduced by 14.06% from '1106.00 crore to '969.61 crore

• Interest expenditure reduced by 13.47% from '757.45 crore to '667.52 crore

• Operating expenses reduced by 15.37% from '348.55 crore to '302.09 crore

• Cost of deposits reduced by 64bps from 6.48% to 5.84%

• Cost of funds also reduced by 63bps (Y-o-Y basis) from 6.61% to 5.98%

• Cost income ratio reduced from 78.75% to 67.39%

• Provision coverage ratio as on 31.03.2018 is 80.02%.

Bank achieved an operating profit of '146.18 crore for the year ended March 31 2018.In view of higher provisions Bank incurred Net Loss of '24.87 crore. On a conservativebasis Bank provided in full for gratuity liability of '7.61 crore mark-to-market losseson investments of '1 9.81 crore and full provision for an account in the Gems &Jewellery sector of '50 crore.

In the current financial year Bank is mainly focusing on the growth of retail loansnon interest income current and savings bank deposit and reduction of non performingassets.

Capital and Reserves

The Bank's Paid up capital and reserves was '749.46 crore as on 31.03.2018. The capitaladequacy ratio as per Basel II and Basel III was 14.15% and 13.87% respectively

Total Business

The total Business of the Bank as on 31 .03.201 8 stood at '17436.06 crore as against'17976.69 crore as on 31.03.2017.


The total Deposits of the Bank stood at '10919.66 crore as on 31.03.2018 as against'11293.68 crore as on 31.03.2017.


The Bank's total advance stood at '6516.40 crore as on 31.03.2018 as against '6683.01crore as on 31.03.2017.


The bank's operating profit during the year was '1 46.1 8 crore as against '94.07 croreduring the previous year. The bank declared a net loss of '24.87 crore during the yearunder report and for the previous year the bank has net profit of '12.38 crore.


The Board has not recommended any dividend in the financial year 2017-2018.

Vision & Mission

Our Vision: "Banking on Relationships forever".

Our Mission: To Become a Strong and Innovative Bank with Integrity and SocialResponsibility to Maximize Customer Satisfaction as well as that of the EmployeesShareholders and the Society

Non - Performing Assets

Recovery in the current financial year was '202.42 crores (including cash recovery& upgradation) against the previous year figures of '109.12 crores.

The provision requirement for current year was '127.29 crores as against '76.42 croresin the previous financial year.

During the year the new slippage to NPA in the Bank was '35833 crores in comparisonwith the figure of '15476 crores of the previous year

Gross NPA and Net NPA percentage stood at 7.35% & 3.19% respectively in the currentyear against 4.78% to and 2.58% in the previous year

The provision coverage ratio (PCR) which was 79.99% as on 31.03.2017 stood at 80.02% inthe current year.

Customer Service

The Bank attaches very high importance to the quality of customer service renderedacross its branches / offices It has taken a series of measures during the year throughdeployment of technology and for significantly enhancing service quality A well definedand full-fledged Customer Grievance Redressal Mechanism is put in place in the Bank

The Customer Service Committees comprising of Bank personnel as well as ourconstituents monitors the implementation of customer service measures periodicallyCustomer Service Committee of the Board have been formed at the apex level and at branchesalso for monitoring service quality and bringing about improvements in this area on anongoing basis The Bank has a 24x7 Phone Banking Call Centre at Thrissur as an outsourcedmodel to cater to customer needs across the country

The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and isactively implementing the Code of Commitment to Customers as also the Code for Micro andSmall Enterprises formulated by the BCSBI

During the financial year 2017-18 the Bank received 13233 complaints as against atotal of 8211 complaints received in the previous financial year The organized structurefor handling complaints at Branches Regional Offices ATM Reconciliation Desk CallCentre and Corporate Office who are in turn handling all transactions and services for thecustomers has helped the Bank in better customer service and early resolution ofcomplaints

Particulars Contact Centre ATM Recon RO & CO Banking Ombudsman Total
No of complaints outstanding at the beginning of the year 11 25 2 3 41
No of complaints received during the year 3627 9507 79 20 13233
No of complaints resolved during the year 3631 9529 77 21 13258
No of complaints pending during the year 7 3 4 2 16

Customer Touch Points

The Bank's customer outlets stood at 617 as on 31032018 comprising 258branches 346 ATMs 11 RPCs CPC & Treasury We have concentrated on consolidating ouroperations across the country and thereby aiming at utilizing our branches to theirfullest potential

The following important products and services were introduced during the year for thebenefit of the customers:

Tie up with Bajaj Allianz Life Insurance Company Limited:

We have renewed the tie-up with M/s Bajaj Allianz Life Insurance Company (BALIC)Limited for distribution of Life Insurance (LI) policies as per new IRDAI guidelines Asthe tie up has been activated we have advised our branches to commence marketing of lifeinsurance policies The marketing activities will focus on sales of traditional LIpolicies as branches were doing earlier We have advised our branches to extend allpossible support to the officials of BALIC for proper exhibition of publicity materialswithin branch premises

New Insurance Tie-Ups with Canara HSBC Oriental Bank of Commerce Life Insurance CompanyLtd. (CHOICe) and DHFL Pramerica Life Insurance Company Ltd. (DPLI) :

As an endeavour to provide more choices on Life Insurance solutions for our customersBank has entered into corporate agency tie-up with Canara HSBC Oriental Bank of CommerceLife Insurance Company Ltd. (CHOICe) and DHFL Pramerica Life Insurance Company Ltd(DPLI) CHOICe was launched in June 2008 as a joint venture owned by two ofIndia's largest public sector banks - Canara Bank (Holding 51%) and Oriental Bank ofCommerce (23%) along with HSBC Insurance (Asia Pacific) Holdings Ltd. (26%). DPLIis a joint venture between Dewan Housing Corporation Ltd (DHFL) India's secondlargest private sector housing finance company and Prudential International InsuranceHoldings Ltd (PIIH) a fully owned subsidiary of Prudential Financial Inc (PFI) whichis a financial service leader headquartered in the US

CHOICe has been conferred with significant accolades and recognition on itsjourney which includes Masters of Modern Marketing Awards 2017 (mCube Awards) GoldenPeacock Award for Corporate Ethics - 2016 Golden Peacock Award for Corporate SocialResponsibility - 2016 etc This reflects the company's inherent strength and success ofthe Bancassurance model DHFL Pramerica Life Insurance Company Limited is one ofthe fastest growing life insurance companies in India. The company is headquartered inGurgaon having 79 branches across India. Presently they have '2107 Cr asset undermanagement and 8 million lives are insured with them. We are sure that these new tie upswill empower us to satisfy our customers life insurance needs better and explore morecross sell opportunities.

Setting up Aadhaar Enrolment update and authentication facilities inside the BankPremises: As per the provisions of amendment made to Prevention of Money Laundering(Maintenance of Records) Rules 2005 each Bank is required to seed and verify the Aadhaarnumber for all eligible Bank accounts / relationship of individuals as prescribed underAadhaar authentication process before December 31 2017 failing which all suchaccounts will become inoperative.

To ensure that account holders / public are not facing any difficulty in linking theirAadhaar number with their bank accounts and also verifying them through Aadhaarauthentication Banks need to provide Aadhaar enrolment Aadhaar update and authenticationfacilities inside the Branch premises latest by September 30 2017. All our branches havethe Biometric machine. Our Bank has also been appointed as 'Registrar' authorised byUnique Identification Authority of India (UIDAI) for the purpose of enrolling individualsunder the Aadhaar (Enrolment and Update) Regulations 2016. To facilitate the same Bankhas chosen to avail the services of empanelled 'Enrolling Agency' authorised by UIDAI forthe enrolment and update process. Bank has identified 26 Branches to act as Aadhaarenrolment/ update centers. We have displayed the details of the same in our branches forthe convenience of our customers and general public.

Introduction of Dhanam Customer Acquisition and Management System (DCAMS) : With aview to take care of the regulatory and compliance requirements especially in the backdropof new regulations including FATCA/CRS CKYCR etc. and to enable the Bank officialsaccess customer information in a hassle-free manner for smooth conduct of the businessredefining and evolving a new approach for creation of Customer ID and customeron-boarding was necessary It is christened as DCAMS (Dhanam Customer Acquisition andManagement System).

With the introduction DCAMS Bank aims to capture digitalized images of all documentssubmitted by the customer and its identification details including number expiry datedate of issue place of issue etc. to comply with the various instructions/ guidelinesissued by the regulator. set centralized repository of all kind of forms and documentsrelated to customer ID creation and account opening which any authorized users canaccess.

Bank aims to set centralized repository of all kind of forms and documents related tocustomer ID creation and account opening which any authorized users can access. Bank aimsto ensure various data validations and checks on customer acquisition and prepareeffective MIS and address the requirements under Central KYC Records Registry (CKYCR).

Our Bank's 91st Foundation Day (Navathi) Celebrations: Our

Bank completed 90 years of glorious service to society on November 14th2017. As we step into our 91st year of operations anniversary celebrations areconducted in a grand manner from 14.11.2017 to 13.12.2017 at all our Branches andOffices with a special focus on new business acquisitions and customer service deliveryWe instructed all our branches to conduct public function on the anniversary day and ourprominent customers were invited as Chief Guest for the function at all our branchesthroughout the country.

Western Union Money Transfer Service: Our Bank has a tie-up arrangement withWeizmann Forex Ltd. (WFL) which is a principal agent to Western Union. Western Unionprovides Money Transfer Services across the globe popularly known as Western Union MoneyTransfer Service (WUMT). We have directed our branches to do maximum transactions throughWestern Union Money Transfer Service which is very convenient to our customers and addsto non interest income of the Bank. We have also advised our branches to ensure thatWestern Union Money Transfer Service customers are provided prompt and quick service.

Revised Demat Account Opening Forms: To comply with the various circulars issued byGovernment of India and SEBI/NSDL on KYC and Nomination facilities the Demat accountopening form has been revised with effect from 01st February 2018. The newaccount opening form has three parts namely KYC Form Account Opening Form and NominationForm.

NRO Recurring Deposit: In order to empower our branches to improve NR Portfolio wehave introduced a new product named "Dhanam Recurring Deposit (NRO)" ProductCode (24) - an exclusive Recurring Deposit account to cater to the needs of our NRCustomers. The main objective of this new product introduction is to attract acquire andretain the NR segment resulting in a spurt of our Recurring Deposit portfolio. The mainfeatures of NRO Recurring Deposit is as follows:

• NRO RD can be opened and maintained by Non Resident Indians (NRIs) in IndianRupees only

• Deposit period ranges from 12 months to 120 months.

• Minimum monthly instalment of '500/-.

• Normal NRO deposit rates are applicable.

• No interest will be paid if closed before one year.

• Maturity value will be mentioned in the NRO RD Pass Book.

• Credit of proceeds will be given to NRO account only

• Interest earned on the account is taxable as per Double Taxation AvoidanceAgreement (DTAA).

Internal Ombudsman of the Bank: The Bank has appointed Sri Bhasi K. V DeputyGeneral Manager & Chief Financial Officer (CFO) as the new Internal Ombudsman of theBank The contact details of the Internal Ombudsman will be made available to customersapproaching for resolutions The Internal Ombudsman functions as a third person inresolving customer complaints and his view will be unbiased The details of InternalOmbudsman have been incorporated in our website as well as notice board in our branches.

Restriction on Usage of Toll Free Customer Care Number and Stoppage of Call BackFacility: Based on the inferences from a cost effective study the usage of ourexisting Toll Free No. 1800 425 1747 has been restricted with effect from 01stMarch 2018. The Toll Free Number will be henceforth exclusively used only forGrievance/Complaints. For all other purpose 0487 6613000 will be used forcontacting the Customer Care. With effect from 21st January 2014 we hadintroduced Missed Call - Call Back services. Based on an analysis we have withdrawn theMissed Call - Call Back Service with effect from 01st March 2018.

International Women's Day: International Women's Day (IWD) is celebrated on 8thMarch every year On the occasion of International Women's day we have conducted a BIGDAY in all our Branches and Offices As a part of the Big Day we issued instruction toour branches to greet all female customers who visited our branches / offices on this dayand honour minimum five prominent women personalities in every branches. We canvassed 1121Dhanam Vanitha accounts with value 62 lakh as a part of the Big Day.

Launch of Aadhaar Enrolment and update Activities in Identified Branches (AadhaarEnrolment and Update Centres):

We have started the enrolment centres at all our identified 26 branches with the UIDAICertified staff members as Operators and Supervisors for the benefit of our esteemedcustomers and general public.

Reduction in maximum loadable amount in Gift Card for individual applicants from '50000/-to '10000/- : Our Bank is offering rupee denominated prepaid gift card -Dhanlaxmi Bank Gift Card - suitable for all gifting purposes. The gift card can also beused for corporate gifting to employees vendors clients etc. The gift cards shall beavailable off-the-shelf at all our branches and are ready to use once purchased from theBanks branch. As per the latest Master direction from RBI the maximum amount that can beloaded in gift card for individual applicants is reduced from '50000/- to '10000/-. ForCorporates the maximum loadable amount is capped at '5000/- per card which remains thesame as earlier.

New Tie-up for deploying PoS Machines (PSTN Mobile PoS Digital and Paper based GPRSPoS Machines): Our Bank has entered into an arrangement with new vendor M/s. IndiaTransact Services Limited for the management and servicing of PoS terminals to ourcustomers. At present we are carrying out the PoS Migration from M/S BTI Payments toM/s.Bijlipay Since M/s.Bijlipay doesn't have the PSTN terminals we have tied up withM/s. India Transact Services Limited. Through this arrangement with M/s. India TransactServices Limited deployment of latest version of PSTN MPoS Digital and Paper based GPRSPoS terminals will be available to our customers.

Investor Education and Protection Fund

During the year the Bank transferred '867331/- being the unclaimed / unpaiddividend for the financial year 2009-10 to the investor Education and Protection Fund(IEPF) in accordance with the provisions of Section 125 of the Companies Act 2013.

In terms of Section 124 (6) of the Companies Act 2013 read with Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 as amendedfrom time to time it may be noted that if the dividends have been unpaid or unclaimed forseven consecutive years or more the underlying shares shall be transferred to the IEPFDemat Account maintained with depositories. Upon transfer of such shares to IEPF accountall benefits (e.g. bonus spilt etc.) if any accruing on such shares shall also becredited to the IEPF Demat Account and the voting rights on such shares shall remainfrozen till the rightful owner claims the shares. The members/claimants whose sharesunclaimed dividend etc. have been transferred to IEPF authority may claim the shares orapply for refund by making an application to IEPF authority as per the procedureprescribed in the IEPF Rule. Letters were sent to shareholders whose dividend amount forFY 2010-11 were outstanding indicating a timeline to claim the outstanding dividendamounts.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on BSE Ltd. and National Stock Exchange ofIndia Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchangesfor the financial year 2018-19.

Number of cases filed if any and their disposal under Section 22 of the SexualHarassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013

The Bank has zero tolerance approach towards any action on the part of anyexecutive/employee which may fall under the ambit of "Sexual Harassment" at workplace and is fully committed to uphold and maintain the dignity of woman staff working inthe Bank. The policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All the employees (permanentcontractual temporary trainees) are covered under this policy

Number of complaints pending as on the beginning of the financial year - Nil

Number of complaints filed during the financial year - 01 Number of complaints pendingas on the end of the financial year - Nil

Particulars of employees

The Bank has no employee whose particulars are required to be given in terms of Section197 of the Companies Act 2013 read with Rule 5 (2) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

The ratio of the remuneration of each Director to the median employees' remunerationand other details in terms of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are annexed to this report.

Green Initiatives in Corporate Governance

The Bank supports and pursues the 'Green Initiative' of the Ministry of CorporateAffairs. All the documents including the notice and explanatory statement of AnnualGeneral Meeting Audited Financial Statements Directors' Report and Auditors' Report isbeing sent electronically to all shareholders who have registered their e-mail addresseswith their Depository Participants or with the Bank's Registrar & Transfer Agents.Shareholders holding shares in electronic form are requested to update their e-mailaddresses in their respective DP accounts. Shareholders holding shares in physical formare requested to update their e-mail addresses with Bank's Registrar and Transfer Agentsby a written request if they require electronic delivery of documents.


The composition of the Board of Directors of the Bank is in accordance with the BankingRegulation Act 1 949 the Companies Act 2013 Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 and the best practicesof Corporate Governance. As on March 31 2018 the Board comprises 11 Directors includingManaging Director & CEO 7 non-executive Directors and 3 nominee Directors. All theDirectors have rich experience and specialized knowledge in various sectors like bankingeconomics co-operation and accountancy. The remuneration / sitting fees paid to theDirectors during the year is disclosed in Report on Corporate Governance.

There are 6 independent Directors on the Board of the Bank as on March 312018.Declarations have been taken from Independent Directors as required under the CompaniesAct 2013 Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and RBI guidelines.

Changes in the Board

Sri Sajeev Krishnan (DIN-08066443) was appointed as additional Director (independentcategory) by the Board of Directors of the Bank w.e.f. February 08 2018. SubsequentlySri Sajeev Krishnan has been appointed as part-time Chairman of the Board of the Bank fora period of three years w.e.f. May 23 2018 with the prior approval of Reserve Bank ofIndia (RBI).

Sri Gopinathan C. K. (DIN-01236752) was re-appointed as nonindependent Director of theBank liable to retire by rotation at the 90th Annual General Meeting of theBank held on September 30 2017.

Sri P S. Sreekumar (DIN-07555178) was re-appointed as independent Director of the Banknot liable to retire by rotation at the 90th Annual General Meeting of theBank held on September 30 2017 for a period of two years with effect from the date ofthe Annual General Meeting i.e. September 30 2017.

Ms. N. Sara Rajendra Kumar (DIN-07854519) and Sri E. Madhavan (DIN-07373376) wereappointed by Reserve Bank of India as Additional Directors on the Board of the Bank for aperiod of two years with effect from May 112017 to May 10 2019 or till further orders.

Sri Arun Rao M. G. (DIN-07547651) has been appointed as Additional Director(non-independent category) by the Board of Directors of the Bank w.e.f. May 15 2018.Previously he was Director of the Bank till September 28 2017.

Sri K. N. Murali (DIN-07902366) has been appointed as Additional Director (independentcategory) by the Board of Directors of the Bank w.e.f. June 07 2018.

RBI has approved the appointment of Ms. T. Latha (DIN-07491803) as Managing Director& CEO of the Bank for three years from the date of taking charge. Ms. T. Latha assumedcharge as Managing Director & CEO w.e.f. July 2 2018 in place of Sri G. Sreeram(DIN-05143385) who retired from office on July 012018 on completion of his tenure.

Dr. Jayaram Nayar (DIN-07395031) ceased to be part-time Chairman of the Board of theBank w.e.f. January 04 2018. Sri G. Vijaya Raghavan (DIN-0000029021) was appointed asindependent Director of the Bank not liable to retire by rotation at the 90th AnnualGeneral Meeting of the Bank held on September 30 2017 for a period of two years witheffect from the date of the Annual General Meeting i.e. September 30 2017. Sri G.Vijaya Raghavan ceased to be Director on the Board of the Bank w.e.f. May 16 2018. Sri FtMohanan (DIN-01463603) ceased to be Director on the Board of the Bank w.e.f. April 202018 on completion of tenure of office. The Board places on record its appreciation forthe invaluable services rendered by them during their tenure as Directors on the Board ofthe Bank.

Composition of Audit Committee

The Board of the Bank has constituted a seven member Audit

Committee. All the seven members of the Committee are non-executive Directors with SriChella K. Srinivasan who is a Chartered Accountant as its Chairman and Sri Ft MohananSri Ft S. Sreekumar Sri G. Vijaya Raghavan Sri S. T. Kannan Ms. N. Sara Rajendra Kumarand Sri E. Madhavan as the other members. The Committee has been constituted in accordancewith regulatory requirements. The terms of reference of the Committee are in accordancewith the Companies Act 2013 Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 and RBI guidelines.

Declaration by Independent Directors

The Bank has duly obtained necessary declarations from each independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independenceas laid down in the Section 146(6) of the Companies Act 2013 and Regulation 16 of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015. The Bank has alsoobtained the 'Fit & Proper' declaration as prescribed by the Reserve Bank of India.

Policy on appointment and remuneration of Directors

The Nomination & Remuneration Committee recommends the appointment / reappointment/ continuation of Directors to the Board after conducting due diligence of the Directorson the basis of the "fit & proper" criteria prescribed by RBI along with theprovisions of the Companies Act 2013 Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 and the Nomination Policyapproved by the Board. The Board will take the appropriate action based on therecommendations of the Nomination & Remuneration Committee.

The criteria for determining qualifications positive attributes and independence ofDirectors to be appointed/re-appointed or for continuation of Directors include inter-aliathe following:

• Ensuring that the appointment/re-appointment/continuation is in conformity withthe provisions of the Banking Regulation Act 1949 RBI guidelines Companies Act 2013and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015;

• Ensuring that the criteria for independence of Directors as stated in theCompanies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is complied with in case of independentDirectors;

• Ensuring that the person does not attract any disqualification as per theBanking Regulation Act 1949 RBI guidelines Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015;

• Special knowledge or practical experience in various fields as enumerated inSection 1 0A(2)(a) of the Banking Regulation Act 1949 or any other field which may beuseful to the Bank;

• Professional knowledge and experience;

• Experience in the field of banking / finance sectors;

• Interest in NBFCs and other entities;

• Relatives connected with the Bank;

• Fund and non-fund facilities availed from the Bank;

• Defaults if any by the Director or interested entities with respect to thecredit facilities availed from any Bank;

• Professional achievements relevant to the office of Directorship;

• Prosecution if any pending or commenced or resulting in conviction in the pastagainst the director and / or against any of the interested entities for violation ofeconomic laws and regulations;

• Criminal prosecution if any pending or commenced or resulting in conviction inthe past against the Director;

• Any other factors as the Nomination & Remuneration Committee may think fitfor the purpose of considering the appointment / re-appointment / continuation as Director

The Bank has a Board approved Compensation Policy which deals with the compensation& benefits of the Employees of the Bank.

The objectives of the Compensation Policy of the Bank inter-alia includes to provide afair and persistent basis for motivating inspiring and rewarding the employeesappropriately according to their jobs/role size performance accomplishmentscontribution skill aptitude and competence to implement standards on sound compensationpractices and incentives and to provide effective governance of compensation payable tothe employees alignment of compensation with prudent risk taking and effectivesupervisory oversight. The disclosure requirement of the remuneration is separatelyprovided in "Disclosure under Basel III norms."

The Board considers the recommendations of the Nomination & Remuneration Committeeand approves the remuneration with or without modifications subject to regulatoryapprovals. The remuneration payable to Whole-time Directors/MD & CEO is subject toprior approval of the Reserve Bank of India (RBI). Therefore the remuneration or anyrevision in remuneration to Whole-time Directors/MD & CEO is payable only afterreceipt of the approval from RBI.

The non-executive Directors are paid sitting fees for attending each meeting of theBoard of Directors or any Committee thereof as approved by the Board within thepermissible limit prescribed under the Companies Act 2013 Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 and otherregulatory guidelines as amended from time to time. The Board while recommending anychange in the sitting fees considers various factors like size and complexity oforganization comparison with the peer banks and regulatory guidelines as applicable.Apart from sitting fees the Bank does not pay any other remuneration to the non-executiveDirectors.

The total remuneration paid to MD & CEO and non-executive Directors for thefinancial year 2017-18 is included in the Report on Corporate Governance forming part ofthis Report.

The Remuneration Policy of the Bank is hosted on the website of the Bank policyaspx.

Board Level Performance Evaluation

Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 theperformance evaluation of the Board as a whole the individual Directors and variousCommittees of the Board are undertaken annually The evaluation of the individualDirectors is being done in the absence of the Director being evaluated.

A separate meeting of independent Directors evaluates the performance ofnon-independent Directors Chairman and the Board as a whole. The separate meeting ofindependent Directors is held once in a year.

The criteria for performance evaluation of Directors Board and its Committees includeinter-alia the following:

• Attendance at Board and various Committee meetings;

• Participation and contribution in Board and Committee meetings;

• Composition of the Board and its diversity;

• Roles of various Committees of the Board;

• Compliance and understanding of regulatory requirements;

• Contribution to effective corporate governance and transparency in the Bank'soperations;

• Updation of Knowledge and familiarization programmes conducted for Directors;

• Appropriateness of decisions made by the Board and its Committees;

• Quality quantity and timeliness of flow of information to the Board;

• Understanding by individual Directors for their roles and responsibilities asDirector;

• Contributions towards the performance and strategies of the Bank;

• Conduct of Meetings;

• Professionalism in the Board and Committees

Changes in Key Managerial Personnel (KMP)

There were no changes in Key Managerial Personnel (KMP) in the financial year 2017-18.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013 the Board had appointed Sri M.Vasudevan Practicing Company Secretary Thrissur as the Secretarial Auditor to conductthe Secretarial Audit of the Bank for the financial year 2017-18. The Bank has providedall assistance and facilities to the Secretarial Auditor for conducting their audit. Thereport of the Secretarial Auditor is annexed to this report. The Secretarial Audit Reportfor the financial year 2017-18 does not contain any qualification.

Corporate Governance

A separate report on Corporate Governance as required under the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 andcertificate from Sri M. Vasudevan Practicing Company Secretary certifying compliance withthe conditions of Corporate Governance are annexed to this report.

Number of Board Meetings

A total of 10 Board Meetings were held during the year. The Board meetings were held inaccordance with the regulatory requirements. The details of the meetings held are providedin the Corporate Governance Report that forms part of this Annual Report.

Extracts of Annual Return

Pursuant to Section 92 (3) of the Companies Act 2013 read with Rule 12 (1) of theCompanies (Management and Administration) Rules 2014 Extract of Annual Return as on thefinancial year ended March 31 2017 in Form No. MGT - 9 is annexed to this report.

Related Party Transactions

The Bank has adopted the "Policy on materiality of related party transactions anddealing with related party transactions" in accordance with the provisions of theCompanies Act 2013 and the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015. The Policy is hosted on the website of theBank investor_relations/inv_stat_policyaspx.

During the financial year the Bank did not enter into any related party transactionswith its Directors or their Relatives that would potentially conflict with and / oradversely affect the interests of the Bank except the rent advance to Company Secretaryand the remuneration paid to the Managing Director & CEO Chief Financial Officer andCompany Secretary There was no related party transaction for which Form AOC-2 wasapplicable

Material Changes and Commitments affecting 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 312018 and the date of Directors' Report i.e. August 06 2018.

Subsidiary Companies

The Bank does not have any subsidiary companies.

Strictures and Penalties

During the last three years there were no penalties or strictures imposed on the Bankby the Stock exchanges(s) and/or SEBI and/ or any other statutory authorities on mattersrelating to capital market.

There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status of the Bank or the future operations of theBank.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies Act 2013 with respectto the Directors' Responsibility Statement it is hereby confirmed that:-

(a) in the preparation of the annual accounts for the year ended March 312018 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;

(b) the Directors had 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 2017-18 andof the profit and loss of the Bank for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by the Bankand that such internal financial controls are adequate and were operating effectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively

Annexure to Directors' Report for the year ended March 31 2018


The ratio of the remuneration of each director to the median employee's remunerationand other details in terms of sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014:

Requirements Disclosure
I The ratio of the remuneration of each director to the median remuneration of the employees for the financial year Mr G Sreeram Managing Director & CEO - 566:1
II The percentage increase in remuneration of each director CEO CFO CS in financial year Mr G Sreeram Managing Director & CEO Nil
Mr Bhasi K V Chief Financial Officer 1257%
Mr. Santosh Kumar Barik Company Secretary 642%
III The percentage increase in the median remuneration of employees in the financial year 547%
IV The number of permanent employees on the rolls of the Bank There were 1883 employees as on March 312018
Requirements Disclosure
V The explanation on the relationship between average increase in remuneration and Bank performance Banks being part of Bipartite settlement entered into by IBA with workmen and officers calculation of yearly increase in employee remuneration is done based on this and increase in dearness allowance is linked to consumer price index
VI Comparison of the remuneration of the Key Managerial Personnel against the performance of the Bank Performances of the Key Managerial Personnel were very good
VII Variations in the market capitalization of the Bank price earnings ratio as at the closing date of the current FY and previous FY and percentage increase over decrease in the market quotations of the shares of the Bank in comparison to the rate at which the Bank came out with the last public offer The market capitalization of the Bank as on March 31 2018 was '541.44 crore vis-a-vis '623.24 crore as on March 31 2017
Market price per share as on March 312018 is '21.25 in BSE and '21.40 in NSE
VIII Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration There was no increase in salaries of employees other than managerial personnel except for normal annual increments and increase in dearness allowance which is linked to consumer price index and paid across banks as per the industry level wage settlement
IX Comparison of each remuneration of the Key Managerial Personnel against the performance of the Bank Performances of the Key Managerial Personnel were very good
X The key parameters for any variable component of remuneration availed by the directors Not Applicable as none of the directors have been paid any variable remuneration during the financial year 2017-18
XI The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year Not Applicable as there are no employees who received remuneration in excess of the highest paid director during the year
XII Affirmation that the remuneration is as per the remuneration policy of the Bank Yes it is confirmed


1. The median salary of the staff members is arrived by taking 12 months comparablegross salary

2. Remuneration of MD and CEO is regulated by RBI guidelines.


The Board of Directors places on record its gratitude to the Government of IndiaReserve Bank of India State Governments Securities and Exchange Board of India and otherRegulatory bodies including stock exchanges where the Bank's shares are listed for theirsupport and guidance. The Board also places on record its gratitude to the Bank'scustomers shareholders other stakeholders and well wishers for their valued patronage.The Board further places on record its appreciation for the valuable services rendered byM/s Sridhar & Co. Statutory Central Auditors of the Bank. The Board expresses itssincere appreciation for the dedicated services rendered by officers and employees of theBank at all levels.

By Order of the Board
Place : Thrissur Sd/
Date : 06.08.2018 (Sajeev Krishnan)