To the Members
Your Directors take pleasure in presenting the 91st AnnualReport on the business and operations of The Federal Bank Limited ("the Bank")together with the audited accounts for the Financial Year (FY) ended March 312022.
Financial results are presented in the table below: (? in Crore)
|Financial Parameters for the year ended ||March 31 2022 ||March 31 2021 |
|Net Interest Income ||5961.96 ||5533.71 |
|Fee and Other Income ||2089.09 ||1958.70 |
|Net Revenue ||8051.05 ||7492.41 |
|Operating Expense ||4293.20 ||3691.72 |
|Operating Profit ||3757.85 ||3800.69 |
|Net Profit ||1889.82 ||1590.30 |
|Profit brought forward ||3305.38 ||2616.67 |
|Total Profit Available for appropriation ||5195.21 ||4206.97 |
|Appropriations: || || |
|Transfer to Revenue Reserves ||266.72 ||229.57 |
|Transfer to Statutory Reserves ||472.46 ||397.57 |
|Transfer to Capital Reserves ||87.40 ||153.45 |
|Transfer to Special Reserve ||123.34 ||120.99 |
|Dividend pertaining to previous year paid during the year ||139.74 ||- |
|Balance Carried over to Balance Sheet ||4105.55 ||3305.39 |
|Financial Position (as on ) || || |
|Deposits ||181700.59 ||172644.48 |
|Advances ||144928.33 ||131878.60 |
|Total Business (Deposits + Advances) ||326628.92 ||304523.08 |
|Other Borrowings ||15393.12 ||9068.50 |
|Investments ||39179.46 ||37186.21 |
|Total Assets (Balance Sheet Size) ||220946.31 ||201367.39 |
|Equity Capital ||420.51 ||399.23 |
|Ratios || || |
|Return on Total Assets (%) ||0.94 ||0.85 |
|Return on Equity (%) ||10.87 ||10.38 |
|Earnings Per Share (?) ||9.13 ||7.97 |
|Book value per share (?) ||88.75 ||80.71 |
|Operating cost to Income (%) ||53.32 ||49.27 |
|Capital Adequacy Ratio (%) Basel (III) ||15.77 ||14.62 |
Previous year figures have been regrouped / reclassified wherenecessary to conform to current year's classification.
HIGHLIGHTS OF PERFORMANCE
During the year 2021-22 your Bank delivered steady performance amidstthe volatile environment in the market. Total business of your Bank improved by 7.26 % toreach ' 326628.92 Cr as on March 31 2022. 5.25 % growth in deposits and 9.90% growth inadvances (net) helped your Bank to clock this number. Total deposits reached ' 181700.59Cr and advances (net) reached 144928.33 Cr and on averages deposit portfolio of yourBank grew by 8.54% to reach ' 169339.74 Cr and advance portfolio grew by 9.03% to reach' 134478.77 Cr.
On the NR side NRE deposits had a growth rate of 5.41% to reach '67416.25 Cr and NRE Savings clocked a growth of 6.18% to reach ' 19442.33 Cr. The totalNR business of your Bank stood at ' 72636.98 Cr with a growth of 6.69%.
GROWTH IN BUSINESS
On CASA front Savings deposit touched ' 54509.67 Cr with 14.30%growth and Current deposits stood at ' 12611.54 Cr. Your Bank registered a healthy CASAgrowth of 14.99% to reach ' 67121.21 Cr. CASA ratio of your Bank stood at 36.94%.
The investment portfolio of your Bank has reached ' 39179.46 Cr as onMarch 312022 and the average investment as on March 312022 is ' 37909.01 Cr.
The Bank delivered an annual operating profit of ' 3757.85 Cr as onMarch 31 2022. The annual net profit is at ' 1889.82 Cr as on March 31 2022 up from '1590.30 Cr as on March 312021. Net Interest Income improved by 7.74% to ' 5961.96 Crwhile the Non-Interest Income stood at ' 2089.09 Cr.
Total income of your Bank during the fiscal touched ' 15749.85 Cr andIncome from advances reached ' 10829.75 Cr. The yield on advances stood at 8.05% and theyield on Investments (excluding trading gain) at 6.17%. The Net Interest Margin for thefiscal year is at 3.20 % as against 3.16% in the previous year.
Return on Average Total Assets stood at 10.87%. Book value per sharehad increased to ' 88.75 during FY 22.
The total expenses of your Bank reached ' 11992.00 Cr and interestexpenses reduced by 6.39% to ' 7698.80 Cr in FY 22. Operating Expenses of the Bank duringthe fiscal year grew to ' 4293.20 Cr.
The cost of deposits of the Bank reduced to 4.33% as on March 31 2022.The Interest expenses as percentage to total income stood at 48.88 %.
During the fiscal year the Bank's spread on advances (gross) stood at3.72% and spread on investments (gross) at 2.85%. The Spread (net of provisions) onadvance stood at 3.27%
The Gross NPA of your Bank as on March 31 2022 stood at ' 4136.74 Cr.Gross NPA as a percentage to Gross Advances is 2.80%. The Net NPA stood at ' 1392.62 Crand Net NPA percentage is at 0.96% as on March 31 2022. The Provision Coverage Ratiostood at 65.54% as on March 312022.
NET WORTH & CAPITAL ADEQUACY
The Net Worth of your Bank grew by 15.83% to ' 18660.98 Cr as against' 16111.20 Cr in the previous year. Historically your Bank has been strong on capitaladequacy. CRAR of the Bank calculated in line with Basel III norms stood at 15.77% whichis considerably higher than the RBI stipulation. Of this Tier 1 CRAR is at 14.43%.
Your Bank continued its consistent performance during FY 2021-22 withthe total business of the Bank increasing by 7.26 % to reach ' 326628.92 Cr.
There is no change in the nature of business of the Bank for the yearunder review. Further information on the business overview and outlook and state of theaffairs of the Bank is discussed in detail in the Management Discussion & AnalysisReport.
Business per employee of your Bank is at ' 25.79 Cr during the fiscalan improvement of 6.22% and the profit per employee of the Bank is at ' 14.92 Lakh animprovement of 17.68%.
EXPANSION OF NETWORK
The Bank has 1282 branches 1885 ATMs/Recyclers as on March 31 2022.The Bank also has its Representative Office at Abu Dhabi & Dubai and an IFSC BankingUnit (IBU) in Gujarat International Finance Tec-City (GIFT City).
Earnings per Share (face value ' 2 /- each) of your Bank have improvedto ' 9.13 from ' 7.97 during the year under review. Return on Equity during the yearreached 10.87% in the fiscal year ended March 31 2022.
(' in Thousands)
| ||FY 2021-22 ||FY 2020-21 |
|Transfer to Revenue Reserve ||2667208 ||2295718 |
|Transfer to Statutory Reserve ||4724554 ||3975743 |
|Transfer to Capital Reserve ||874033 ||1534458 |
|Transfer to Special Reserve ||1233400 ||1209900 |
|Dividend pertaining to previous year paid during the year ||1397396 ||- |
|Balance carried over to Balance Sheet ||41055453 ||33053829 |
|TOTAL ||51952044 ||42069648 |
Material Changes and Commitments if any affecting the FinancialPosition of the Bank which have occurred between the end of the Financial Year of the Bankto which the financial statements relate and the date of the report
No material changes and commitments which could affect your Bank'sfinancial position have occurred between the end of the financial year of your Bank anddate of this report.
CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES
The subscribed and paid-up share capital of the Bank as on March312022 is ' 4205092746/- divided into 2102546373 equity shares of '2/- each. TheBank's equity shares are listed on the National Stock Exchange of India Limited (NSE) andBSE Limited (BSE). During the year 104846394 equity shares of '2/- each were allottedto International Finance Corporation ("IFC") IFC Financial Institutions GrowthFund LP ("FIG") and IFC Emerging Asia Fund LP ("EAF") underpreferential allotment and 1547231 equity shares of '2/- each were allotted underEmployee Stock Option scheme (ESOP) of the Bank. All the above equity shares were admittedfor trading in NSE and BSE.
As on March 31 2022 Bank has an outstanding of 3700 units ratedunsecured redeemable non-convertible Basel III compliant tier II subordinated bondsaggregating to ' 1000 crores.
Important changes which have occurred after the close of Financial Year
After the close of Financial Year 945492 equity shares of '2/- eachwere allotted under ESOP scheme of the Bank and have been admitted for trading on NSE andBSE as on June 30 2022. Further 17500 equity shares were allotted against rightsentitlements released from abeyance in accordance with the order of Honorable High Courtof Kerala. Accordingly the paid-up share capital of the Bank as on June 302022 is'4207018730 divided into 2103509365 equity shares of '2/- each. The shares areactively traded on NSE and BSE and have not been suspended from trading.
Continuing the Bank's policy of striking a fine balance betweenretained earnings and dividend distribution the Board of Directors have recommended adividend of 90% i.e. ' 1.80 per Equity Share on face value of ' 2/- each for the year2021-22 (previous year: 35%) subject to the approval of the members in the 91stAnnual General Meeting. Protecting shareholders' value has always been a guidingphilosophy of the Bank.
As per the prevailing provisions of the Income Tax Act 1961 thedividend if declared will be taxable in the hands of the shareholders at the applicablerates. For details shareholders are requested to refer to the Notice of 91stAnnual General Meeting of the Bank.
The details of Credit Ratings of your Bank as on March 312022 are asfollows;
CRISIL A1 + for the Certificate of Deposit Programme of the Bank
CRISIL A1+ for the Short-Term Fixed Deposits of the Bank
CARE AA (Stable) [Double A Outlook: Stable] for the Tier IIbonds (Under Basel III)
IND AA/Stable by India Rating and Research for the Tier II bonds(Under Basel III)
During the year under review there were no revisions in the creditratings obtained by the Bank.
EMPLOYEE STOCK OPTION SCHEME (ESOS)
The Bank has instituted Employee Stock Option Schemes duly approved bythe shareholders of the Bank to enable its employees including Whole Time Directors toparticipate in the future growth and financial success of the Bank. The Employee StockOption Schemes are formulated in accordance with the SEBI guidelines as amended from timeto time. The eligibility and number of options to be granted to an employee is determinedon the basis of various parameters such as scale designation performance grades periodof service Bank's performance and such other parameters as may be decided by theNomination Remuneration Ethics and Compensation Committee of the Board from time to timein its sole discretion.
The Bank's shareholders had approved the Employee Stock Option Scheme2010 (ESOS 2010) on December 24 2010 and Employee Stock Option Scheme 2017 (ESOS 2017) onJuly 14 2017.
Under ESOS 2010 the Nomination Remuneration Ethics and CompensationCommittee granted 34720200 options during the year 2011-12 24484750 options duringthe year 2012-13 26094250 options during the year 2013-14 11156450 options during2014-15 1025000 options during the year 2015-16 965000 options during the year2016-17 and 100000 options during the year 2017-18. The options granted which arenon-transferable with vesting period of 1 to 5 years subject to standard vestingconditions must be exercised within five years from the date of vesting. During theFinancial Year FY 22 918047 options had been exercised and 8277686 options were inforce as on March 31 2022.
Under ESOS 2017 the Nomination Remuneration Ethics and CompensationCommittee granted 22318348 options during the year 2017-18 37231307 options duringthe year 2018-19 30524986 options during the year 2019-20 16884159 options duringthe year 2020-21 and 3733250 options during the year 2021-22. The options granted whichare non-transferable with vesting period of 1 to 4.25 years subject to standard vestingconditions must be exercised within five years from the date of vesting. During theFinancial Year FY 22 629184 options had been exercised and 77129660 options were inforce as on March 312022.
Other statutory disclosures as required Regulation 14 of Securities andExchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations 2021and Rule 12 of Companies (Share Capital and Debentures) Rules 2014 on ESOS are given inwebsite of the Bank in the link: https:Zwww.federalbank.co.in/web/guest/shareholder-information.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Transfer of Unpaid/ Unclaimed Dividend to IEPF
Pursuant to Sections 124 and 125 of the Act read with InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 ('IEPF Rules') all unpaid or unclaimed dividends are required to be transferred bythe Bank to the Investor Education and Protection Fund ("IEPF" or"Fund") established by the Central Government after completion of seven yearsfrom the date the dividend is transferred to unpaid/ unclaimed account. As a result theunclaimed/unpaid dividend for the year 2013-14 amounting to ' 10023822/- which remainedunpaid and unclaimed for a period of 7 years has already been transferred by your Bank tothe IEPF.
Further the unpaid dividend amount pertaining to the financial year2014-15 will be transferred to IEPF during the Financial Year 2022-23 within statutorytimelines. Members are requested to ensure that they claim the dividends referred abovebefore they are transferred to the said Fund. The due dates for transfer of unclaimeddividend to IEPF are provided in the section report on Corporate Governance.
Your Bank has uploaded the details of unclaimed/ unpaid dividend forthe financial year 2014-15 onwards on its website viz. www.federalbank.co.in and on thewebsite of IEPF Authority viz. www.iepf.gov.in and the same gets revised/updated fromtime to time pursuant to the provisions of IEPF (Uploading of Information Regarding Unpaidand Unclaimed Amount lying with Companies) Rules 2012.
Transfer of Shares to IEPF
Pursuant to the provisions of Section 124(6) of the Act and theInvestor Education and Protection Fund (IEPF) Authority (Accounting Audit Transfer andRefund) Rules 2016 notified by the Ministry of Corporate Affairs on September 7 2016 andbased on subsequent amendments if any all the equity shares of the Bank in respect ofwhich dividend amounts have not been paid or claimed by the shareholders for sevenconsecutive years or more are required to be transferred to demat account of IEPFAuthority. The said requirement does not apply to shares in respect of which there is aspecific Order of Court Tribunal or Statutory Authority restraining transfer of theshares.
Upon transfer of such shares all benefits (like dividend bonussplit consolidation etc.) if any accruing on such shares shall also be credited to theAccount of IEPF and the voting rights on such shares shall remain frozen till the rightfulowner claims the shares. Shares which were transferred to the demat account of IEPFAuthority can be claimed back by the shareholder by following the procedure prescribedunder the aforesaid rules.
Accordingly 155899 equity shares of 182 members of your Bank weretransferred to demat account of IEPF Authority. Your Bank had sent individual notice toall the aforesaid 182 members and has also published the notice in the leading English andMalayalam newspapers.
The details of the nodal officer appointed by the Bank under theprovisions of IEPF are disseminated in the website of the Bank viz.https:/www.federalbank.co.in/unclaimed-dividend-warrants.
As on March 31 2022 Bank's Board consists of 11 members with richexperience and specialized knowledge in various areas of relevance to the Bank includingAccountancy Agriculture and Rural Economy Banking Co-Operation Information TechnologyCredit Treasury Operations Human Resources Governance Compliance Economics FinanceSmall - Scale Industry Law Payment & Settlement systems Risk Management andBusiness Management. Besides the Chairman the Board comprises seven Non-ExecutiveIndependent Directors including one woman Independent Director and three ExecutiveDirectors.
During the year Reserve Bank of India vide their letter DOR. GOV. No.S289/08.38.001/2021-22 dated July 09 2021 had approved the re-appointment of Mr. ShyamSrinivasan as Managing Director & Chief Executive Officer (MD & CEO) (DIN:02274773) of the Bank for a period of three years w.e.f. September 23 2021 till September22 2024. Accordingly approval of the shareholders for re-appointment of Mr. ShyamSrinivasan as MD & CEO of the Bank through ordinary resolution is being sought at theensuing AGM of the Bank.
During the year RBI had vide their letter DOR. GOV. No. S1019/08.38.001/2021-22 dated September 09 2021 accorded its approval for the appointmentof Mr. C Balagopal (DIN- 00430938) Independent Director as Part Time Chairman of theBank with effect from November 22 2021 till June 28 2023 consequent to retirement ofMs. Grace Elizabeth Koshie (DIN- 06765216) Chairperson and Non-Executive NonIndependentDirector from the Board of the Bank with effect from the closure of business hours onNovember 21 2021 upon completion of her tenure of 8 years on the Board of the Bank inaccordance with the regulatory requirements.
Mr. Ashutosh Khajuria (DIN: 05154975) was re-appointed as ExecutiveDirector of the Bank for a period of one year with effect from w.e.f. May 01 2022 tillApril 30 2023 with the approval of Reserve Bank of India vide letter DOR. GOV. No.S441/08.38.001/2022-23 dated April 212022. Accordingly approval of the shareholders forre-appointment of Mr. Ashutosh Khajuria as Executive Director of the Bank throughOrdinary Resolution is being sought at the ensuing AGM of the Bank.
In accordance with the provisions of the Act and the Articles ofAssociation of the Bank Mr. Ashutosh Khajuria (DIN: 05154975) Executive Director of theBank is liable to retire by rotation at the ensuing Annual General Meeting and beingeligible have offered himself for re-appointment.
Pursuant to the recommendation of the Nomination Remuneration Ethicsand Compensation Committee the Board of Directors of the Bank approved the appointment ofMr. Sankarshan Basu (DIN: 06466594) and Mr. Ramanand Mundkur (DIN:03498212) as anAdditional Non-Executive Independent Director of the Bank with effect from October012021. Pursuant to the provisions of Section 161 of the Act the said directors continueto hold office as an Additional Director of the Bank up to the date of the ensuing AGM orthe last date on which the AGM should have been held whichever is earlier. Your Bank hasreceived notices in writing from members proposing the candidature of Mr. Sankarshan Basuand Mr. Ramanand Mundkur as a Directors (Non-Executive Independent) on the Board of theBank. Further the NRC and the Board of Directors of the Bank have also recommended theirappointment as an Independent Director not liable to retire by rotation to theShareholders at the ensuing AGM for a period of five years with effect from October012021.
The Board is of the opinion that the Independent Directors appointedduring the year possesses necessary integrity expertise and experience (including theproficiency).
The Shareholders in the 90th AGM had approved thereappointment of Mr. Shyam Srinivasan (DIN: 02274773) as Managing Director & ChiefExecutive Officer of the Bank for a period of one year with effect from September 23 2020to September 22 2021 and Mr. Ashutosh Khajuria as an Executive Director for the periodfrom April 012021 to April 30 2022.
Mr. K Balakrishnan (DIN:00034031) Independent Director of the Bankretired from the Directorship of the Bank effective from September 24 2021 uponcompletion of his tenure as Independent Director.
Necessary information pursuant to SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 in respect of Directors to be appointed andre-appointed at the ensuing Annual General Meeting are given in the Annexure to the Noticeconvening the 91st Annual General Meeting scheduled to be held on July 272022.
None of the Directors of your Bank are disqualified for being appointedas Directors as specified in Section 164(2) and Rule 14(1) of Companies (Appointment andQualification of Directors) Rules 2014.
KEY MANAGERIAL PERSONNEL
As on March 31 2022 the following Directors/Executives continued asKey Managerial Personnel of the Bank:
Mr. Shyam Srinivasan - Managing Director & Chief Executive Officer
Mr. Ashutosh Khajuria -Executive Director Ms. Shalini Warrier -Executive Director Mr. Venkatraman Venkateswaran - Chief Financial Officer Mr. Samir PRajdev - Company Secretary
During the year Mr. Shyam Srinivasan MD & CEO of the Bank who isKey Managerial Personnel was re-appointed as MD & CEO of the Bank for a period ofthree years w.e.f. September 23 2021 till September 22 2024.
The Board of Directors of the Bank at its meeting held on May 17 2021has approved the appointment of Mr. Venkatraman Venkateswaran as Chief Financial Officerand Key Managerial Personnel of the Bank with effect from Tuesday May 18 2021.
As Chief Financial Officer Mr. Venkatraman Venkateswaran will reportdirectly to Managing Director & CEO of the Bank.
After the end of the financial year and up to the date of the Report.
Mr. Ashutosh Khajuria (DIN: 05154975) Executive Director of the Bankwho is also a Key Managerial Personnel was re-appointed as Executive Director of the Bankfor a period of one year with effect from May 01 2022 till April 30 2023 with theapproval of Reserve Bank of India.
DECLARATION BY INDEPENDENT DIRECTORS
The Bank has received declaration from all the Independent Directorsthat they continue to meet the criteria of independence as provided under the CompaniesAct 2013 (the Act) and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and comply with the Code for Independent Directors as specified underSchedule IV of the Act. In terms of the Companies (Creation and Maintenance of databank ofIndependent Directors) Rules 2019 read with the Companies (Appointment and Qualificationof Directors) Fifth Amendment Rules 2019 the
Independent Directors of the Bank has enrolled his/ her name in theonline databank of Independent Directors maintained by the Government.
The Independent Directors have also confirmed that they are not awareof any circumstance or situation which exists or may be reasonably anticipated thatcould impair or impact their ability to discharge their duties with an objectiveindependent judgement and without any external influence.
In the opinion of the Board the Independent Directors are persons ofhigh repute integrity and possess the relevant expertise and experience in theirrespective fields. They fulfil the conditions specified in the Act and the Rules madethereunder and are independent of the Management.
The Board meets at regular intervals to discuss and decide on Bank/business policy and strategy apart from other items of business. A tentative calendar ofthe Board and Committee meetings is circulated to the Directors well in advance tofacilitate them to plan their schedule and to ensure meaningful participation in themeetings. However in case of a special and urgent business need the approval of theBoard/Committee is taken by passing resolutions by circulation as permitted by law whichare noted and confirmed in the subsequent Board/Committee meeting.
The notice of Board and Committee meetings are given in advance to allthe Directors. The agenda and pre-reads are circulated well in advance before each meetingto all Directors for facilitating effective discussion and decision making. Considerabletime is spent by the Directors on discussions and deliberations at the Board and Committeemeetings.
During the financial year nineteen (19) Board Meetings sixteen (16)Audit Committee Meetings and other Committee Meetings were convened and held the detailsof which are given in the Corporate Governance report. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013.
The details of the constitution of the Board and its Committees aredetailed in the Corporate Governance report.
SUBSIDIARIES OF THE BANK
As on March 31 2022 the Bank has one unlisted wholly ownedsubsidiary M/s. Federal Operations and Services Limited and one unlisted subsidiary M/s.Fedbank Financial Services Limited.
Federal Operations and Services Limited
Federal Operations and Services Limited (FedServ) is a wholly ownedsubsidiary company of The Federal Bank Limited (the Bank) incorporated on October 262018. FedServ received approval from RBI on November 09 2018 for commencing itsoperations. FedServ started its operations w.e.f. December 01 2018. FedServ providesoperational and technology-oriented services to the Bank.
As on March 312022 FedServ's Board of Directors has following fivemembers-
Mr. C Balagopal Chairman
Mr. Ajith Kumar K K Non- Executive Director
Mr. Johnson K Jose Non- Executive Director
Mr. Prashant Preman Wholetime Director
Mr. Venkatraman Venkateswaran Non- Executive Director
During the year ended on March 31 2022 FedServ has taken significantoperational activities of the Bank which includes technical helpdesk VC & Assetmanagement. FedServ is carrying out 109 operational activities of the Bank as on March 312022.
Company does not deal in loans and advances neither it acceptsdeposits. FedServ is operating from two locations:- Kochi in Kerala and Visakhapatnam inAndhra Pradesh.
The total revenue of FedServ for the year ended on March 31 2022 was'44.10 Crores. '42.67 Crores pertains to services provided by the Company to the Bank and'1.43 Crores relates to the indirect incomes. The Company had a net profit of '3.46 Croresfor the year ended on March 31 2022. The Net worth of FedServ at the beginning of theyear was '12.82 Crores and closing net worth of FedServ as on March 312022 was '16.27Crores.
FedServ will help the Bank in serving the customers better and reducingthe cost of operations significantly. FedServ will also help the Bank to improveturnaround time of various operational processes improve First Time Right (FTR) rate andenable the Bank to become FIRST CHOICE Bank of customers.
The Profit after tax of the Company for the year ended March 31 2022increased to '3.46 Crores from '1.84 Crores for the year ended March 31 2021. The totalassets of the Company increased to '19.83 Crores as on March 31 2022 from '14.96 Croresas on March 312021.
Fedbank Financial Services Limited
Fedbank Financial Services Limited (Fedfina) is a subsidiary company ofThe Federal Bank Limited (the Bank) incorporated on April 17 1995. Fedfina receivedapproval from RBI on August 24 2010 for the business of a non-banking financialinstitution without accepting public deposits. It is a Non-deposit taking &Systemically Important (ND-SI) NBFC. Fedfina has a well-tailored suite of productstargeted to match the customers' needs which includes housing loans small ticket loanagainst property ("LAP") medium ticket LAP unsecured business loans and goldloans. It also distributes loan products of the Bank. It has over 516 branches acrossIndia providing multiple loan products to various segments of borrowers.
Fedfina's Board of Directors comprises following six members
Mr. K Balakrishnan - Chairman & Independent Director
Mr. Anil Kothuri - Managing Director & Chief Executive Officer
Mr. Shyam Srinivasan - Non Executive Director
Ms. Gauri Rushabh Shah - Independent Director
Mr. Maninder Singh Juneja - Nominee Director
Mr. Ashutosh Khajuria - Nominee Director
As on March 31 2022 the Bank has two Associate Companies named M/s.Ageas Federal Life Insurance Company Limited (Formerly known as IDBI Federal LifeInsurance Co Ltd.) and M/s. Equirus Capital Private Limited.
Joint Venture in Life Insurance Business
The Bank's Joint Venture Life Insurance Company in association withIDBI Bank Limited and Ageas Insurance International N.V.
(formerly known as Fortis) namely Ageas Federal Life Insurance CompanyLimited ("formerly known as IDBI Federal Life Insurance Company Limited")commenced operations in March 2008. As on March 312022 the Bank has a total stake of'208 Crores in the equity of the Company holding 26% of the equity capital. The totalpremium collected by Ageas Federal Life Insurance Company Limited during the period endedMarch 31 2022 was ' 2207.30 Crores. The Company has declared final dividend of 3.5% forthe FY 2021-22.
Mr. Shyam Srinivasan Managing Director and Chief Executive Officer andMs. Shalini Warrier Executive Director of the Bank are Non-Executive Directors in AgeasFederal Life Insurance Company Limited.
Investment Banking Associate
As of March 31 2022 Bank holds 19.89% equity stake in Equirus CapitalPrivate Limited. Pursuant to the right of proportionate representation on the Board aswell as the power to participate in the financial operational matters like approval ofthe business plans policies budgets managerial remuneration change in KMP etc. thesame has been treated as an associate concern as per AS 23 Accounting for Investments inAssociates in Consolidated Financial Statements. Equirus Capital Private Limited is aprivate company domiciled in India and is engaged in the business of Investment banking.It has 3 subsidiaries named Equirus Securities Private Limited Equirus Insurance BrokingPrivate Limited and Equirus Wealth Private Limited. The total turnover of Equirus CapitalPrivate Limited on a consolidated basis was '152.23 Crores in FY 2022 against '65.42Crores for FY 2021.
Mr. Harsh Dugar Group President & Country Head - Wholesale Bankingof the Bank is a Nominee Director on the Board of Equirus Capital Private Limited.
Being a Banking Company the disclosures required as per Rule 8(5) (v)& (vi) of the Companies (Accounts) Rules 2014 read with Section 73 and 74 of theCompanies Act 2013 are not applicable to the Bank.
LOANS GUARANTEES OR INVESTMENTS IN SECURITIES
Pursuant to Section 186 (11) of the Companies Act 2013 loans madeguarantees given securities provided or acquisition of securities by a banking Company inthe ordinary course of its business are exempted from the disclosure requirement underSection 134(3) (g) of the Companies Act 2013.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered during the financialyear were in the ordinary course of the business of the Bank and were on arm's lengthbasis. There were no materially significant related party transactions entered by the Bankwith Related parties which may have a potential conflict with the interest of the Bank.All Related Party Transactions were placed before the Audit Committee of the Board forapproval. Prior omnibus approval for transactions which are of repetitive nature isobtained from the Audit Committee and accordingly the required disclosures are made to theCommittee on quarterly basis in terms of the approval of the Committee.
The policy on Related Party Transactions as approved by the AuditCommittee and the Board of Directors is uploaded on the website of the Bank and the linkfor the same is https:/www.federalbank. co.in/our-commitments.
Since all related party transactions entered into by the Bank were inthe ordinary course of business and were on an arm's length basis disclosures as per FormAOC-2 is not applicable to the Bank. There were also no material contracts or arrangementor transactions with related parties during the period.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) has been an inherited &inbuilt element of our fundamentals right from the day the Bank was founded. Ourfounder's values & ethos based on trust got embedded in the Bank's policies &principles. CSR in Federal Bank began with the first act of cultivating banking habits inthe agrarian society to effectively utilize idle money for productive purposes.
The details of the CSR initiatives undertaken during the financial yearended March 312022 and other details required to be given under section 135 of theCompanies Act 2013 read with rule 8(1) of the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 are given in Annexure I forming part of this Report.
The CSR Policy as recommended by the CSR Committee and as approved bythe Board is available on the website of the Bank and can be accessed athttps:Zwww.federalbank.co.in/ documents/10180/45777/Corporate+Social+Responsibility++Policy. pdf/2d979fe6-8723-4210-a2ff-136784690413?t= 1509453008436.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO
The Bank is very conscious about the need for energy management and asa team endeavours to contribute to low carbon economy and acknowledges that it is acontinuous process. Your Bank has taken various initiatives to reduce its carbon footprintand improve resource efficiency. It ranges from using better technology to improve energyefficiency recycling and generating energy from renewable sources. For more detailsplease refer ESG section of the Annual Report and Business Responsibility andSustainability Report forming part of the Annual Report. The Bank prides itself oncontinuous investment in technology upgrades that are designed to deliver cost effectivebest in class customer service.
The Bank has used information technology extensively in its operationsfor more details please refer the section on Technology and Digital Updates portion ofDirectors Report and Management Discussion & Analysis Report forming part of theAnnual Report. Through its export-financing operations the Bank supports and encouragesthe country's export efforts.
The Bank's Risk Management framework is based on a clear understandingof various risks robust risk assessment and measurement procedures and constantmonitoring. The Board of Directors oversees all the risks assumed by the Bank. SpecificCommittees are constituted to facilitate focused oversight of various functions. The RiskManagement Committee of the Board sets the standards and governs the risk managementfunctions thereby bringing in a top to down focus on risk management. The Risk ManagementCommittee of the Board reviews all risk management policies of the Bank. The Committeereviews the Risk Appetite framework Internal Capital Adequacy Assessment
Process (ICAAP) and Stress testing. The Committee oversees setting upof risk limits and exposure ceilings implementation of Basel III guidelines and theactivities of the executive level risk management committees. The Committee assesses thelevel and direction of major risks pertaining to credit market liquidity operationalreputation technology information security compliance and capital as a part of the riskdashboard. In addition the Committee oversees risks of subsidiaries covered under theGroup Risk Management Framework.
The Risk Management Policies approved by the Board of Directors andreviewed from time to time with updated regulatory and internal guidelines form thegoverning framework for each type of risk.
The Integrated Risk Management Department of the Bank coordinates andadministers the risk management functions in the Bank. The Department has three divisionsfor managing the main risk streams Credit risk Market risk and Operational risk.Dedicated teams within the divisions are responsible for assessment monitoring andreporting of various material risks. Default risk and asset quality of loan portfolio aremonitored and managed by the Credit Risk Division. Market Intelligence Unit (MIU) formedfor the purpose of monitoring large value accounts is linked to Credit Risk Division. TheBank has established an independent Mid Office as part of Market Risk Division formonitoring and management of risks in Bank's Treasury portfolios. Business ContinuityManagement Information and Cyber Security measures and Information Technology Risk formspart of Operational Risk Management. The Bank has set up a robust information in cybersecurity framework for securing its IT infrastructure and systems. The InformationSecurity Team is headed by the Chief Information Security Officer (CISO) who reports tothe CRO. A Security Operations Center (SOC) which performs security monitoring round theclock is also functioning under the leadership of CISO. All the three divisions areindependent of business operations and coordinate with representatives of the businessunits to implement the Bank's risk management Policies and frameworks. Executive levelrisk management Committees namely Credit Risk Management Committee Asset LiabilityManagement Committee Operational Risk Management Committee and Information SecurityCommittee regularly assess the respective risks and direct corrective actions whereverrequired. The risk management functions are coordinated by a Senior Executive designatedas Chief Risk Officer who reports directly to the Managing Director & CEO. Allmaterial risks of the Bank emerging in the course of its business are identified assessedand monitored in the Internal Capital Adequacy Assessment Process (ICAAP). In our viewall the material risks of the Bank are identified assessed and managed adequately.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
Fraud risk is managed by the Bank methodically in line with the robustFraud Risk Management Policy of the Bank which covers all significant aspects like variousmitigation measures and the surveillance mechanism that complements prevention detectioninvestigation and monitoring of both internal and external frauds. Public and employeesare sensitised on different fraud prevention techniques. With a view to create anatmosphere of alertness Vigilance Communications (Alerts) are issued on a regular basisthat disseminates various modus operandi of frauds in the banking industry along withsuggestions on safeguards and precautions to be adopted to prevent such frauds. PreventiveVigilance Workshop is a flagship program designed flawlessly by Vigilance Department foremployees which explicates different gaps exploited by miscreants to perpetrate fraud inthe banking industry and the program also ensures deliverance of strategies to be taken toavert such frauds. Preventive Vigilance Audits are conducted at select branches and alsoensures periodic conduct of Fraud Prevention Committee meetings at branches with a view toprevent frauds. Customer awareness on fraudulent activities is another area that is wellcovered by the Bank through various effective communication channels including SMSE-Mails posters at Branches ribbon messages on Bank website internet banking webpageetc. All cases reported in the Bank are investigated in detail as part of detectivevigilance activity. Need for process refinements/ systemic corrections if any observedduring the course of investigation are highlighted in the forums concerned for correctivemeasures/necessary directions. Process refinements/ systemic corrections are implementedto avert similar incidents in future.
Bank has a robust Whistle Blower Policy termed as Protected DisclosureScheme (PDS) with a view to enhance public confidence in the Bank and also in complianceof RBI directions in this regard. The policy aims at establishing an effective vigilmechanism in the Bank to quickly spot aberrations and deal with it at the earliest. It isdisseminated among the employees assuring confidentiality and protection to the whistleblower against any personal vindictive actions such as humiliation harassment or anyother form of unfair treatment. Directors and Employees of the Bank employeerepresentative bodies customers stakeholders non-governmental organizations (NGO) andmembers of the public can lodge complaints / disclosures under this scheme. A dedicatede-mail ID is provided for sending complaints/disclosures under PDS. Investigation isconducted in all complaints /information received through the PDS mechanism andinvestigation reports are placed before MD & CEO. The details of the complaints andfindings are also placed before the Audit Committee of the Board on a quarterly basis forreview. The scheme is popularised through various measures such as preventive vigilanceclasses internal circulars alerts etc. No personnel have been denied access for givingany information as envisaged in the Protected Disclosure Scheme. PDS policy is madeavailable in Bank's website and Intranet. Website link to Bank's Whistle Blower Policy ishttps:Zwww.federalbank.co.in/ documents/10180/45777/Whistle+Blower+policy/558aea51-1335-4546-9c9a-28c5030377a1.
Details regarding Internal Complaints Committees (Information under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal Act 2013)has been separately captured in this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
During the financial year 2021-22 the Bank has not received anysignificant or material orders passed by any Regulatory Authority Court or Tribunal whichshall impact the going concern status and Bank's operations in future.
The Shareholders in the 89th AGM held on July 16 2020approved the appointment M/s. Varma & Varma Chartered Accountants (Registration No.004532S) Kochi for a period of four (4) years together with M/s. Borkar & MuzumdarChartered Accountants (Registration No. 101569W) Mumbai for a period of three (3) yearsas Joint Statutory Central Auditors of the Bank from the conclusion of 89th AGMtill the conclusion of 93rd and 92nd AGM respectively.
RBI vide circular dated DoS.CO.ARG/SEC.01/08.91.001/2021 - 22 datedApril 27 2021 brought in "Guidelines for Appointment of Statutory Central Auditors(SCAs)/Statutory Auditors". As per Para 8.1 of the said circular in order to protectthe independence of the auditors/audit firms entities will have to appoint the SCAs/ SAsfor a continuous period of three years subject to the firms satisfying the eligibilitynorms each year.
To comply with the requirements of the aforesaid RBI Circular datedApril 27 2021 the Shareholders in the 90th AGM held on July 9 2021 approvedrevision of tenure of appointment of M/s. Varma & Varma one of the Joint StatutoryCentral Auditors as three years with effect from FY 2020-21.
RBI vide its letter DOS.ARG.No. PS-100 /08.09.005/2021-2022 dated July20 2021 had granted approval for appointment of M/s. Varma & Varma CharteredAccountants and M/s. Borkar & Muzumdar Chartered Accountants as the Joint StatutoryCentral Auditors of the Bank for FY 2021-22 for their second year.
Pursuant to the amendment made to Section 139 of the Companies Act2013 by the Companies (Amendment) Act 2017 effective from May 07 2018 the requirementof seeking ratification of the members for the appointment / re-appointment of theStatutory Auditors has been withdrawn from the Statute. Hence the resolution seekingratification of the members for re-appointment at the ensuing AGM is not being sought forthe reappointment of M/s. Varma & Varma Chartered Accountants and M/s. Borkar &Muzumdar Chartered Accountants as Joint Statutory Central Auditors of the Bank.
There is no qualification or adverse remark in Auditors' Report. Thereis no incident of fraud requiring reporting by the Auditors under Section 143(12) of theAct.
SECRETARIAL AUDIT AND SECRETARIAL COMPLIANCE REPORT
Pursuant to the provisions of Section 204 of The Companies Act 2013your Bank has appointed CS EP Madhusudhanan (COP: 21874) Partner of SEP & AssociatesCompany Secretaries Kochi as Secretarial Auditor to conduct Secretarial Audit of the Bankfor the FY 2021-22. Accordingly the Secretarial Audit Report for FY 2021-22 is annexed tothis report as Annexure II. There are no reservations adverse remark or disclaimer in theSecretarial Audit Report.
No offence of fraud was reported by the Secretarial Auditor of theBank.
Pursuant to Regulation 24A of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 read with SEBI Circular No. CIR/CFD/CMD1/27/2019 datedFebruary 08 2019 the Bank has obtained Secretarial Compliance Report certified by CSPuzhankara Sivakumar (COP: 2210) SEP & Associates Company Secretaries Kochi forFinancial Year ended March 31 2022 on compliance of all applicable SEBI Regulations andcirculars/ guidelines issued thereunder and the copy of the same was submitted with theStock Exchanges.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
The Bank has complied with Secretarial standards issued by theInstitute of Company Secretaries of India on Board Meetings and General Meetings.
The Annual Return for the Financial Year ended March 31 2022 asrequired under Section 92 and Section 134 of the Companies Act 2013 read with Rule 12 ofthe Companies (Management and Administration) Rules 2014 is available on the Bank'swebsite https:/www.federalbank.co.in/shareholder-information.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129(3) of the CompaniesAct 2013 read with Rule 8 of Companies (Accounts) Rules 2014 the Bank has prepared itsConsolidated Financial Statement including its subsidiaries M/s. Fedbank FinancialServices Limited and M/s. Federal Operations and Services Limited and Associates M/s.Ageas Federal Life Insurance Company Limited (Formerly known as IDBI Federal LifeInsurance Co Ltd.) and M/s. Equirus Capital Private Limited which is forming part of thisAnnual report. The financial position and performance of its subsidiaries & Associatesare given in Form AOC-1 the statement containing salient features of the financialstatements of the subsidiaries/Associate Companies/Joint Venture.
In accordance with third proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report of the Bank containing therein its Standalone and theConsolidated Financial Statements has been hosted on its website www.federalbank.co.in.Further as per fourth proviso to the said Section the Audited Annual Accounts of thesaid Subsidiary Companies of the Bank considered as part of the Consolidated FinancialStatements have also been hosted on the Bank's website www.federalbank.co.in. The saiddocuments have been hosted on the website of the Subsidiary Companies of the Bank also incompliance with the said Section.
The documents/details available on the Bank's website (www.federalbank.co.in) will also be available for inspection by any Member at its RegisteredOffice. Further pursuant to the provisions of Accounting Standard ('AS') 21 ConsolidatedFinancial Statements notified under Section 133 of the Companies Act 2013 read togetherwith Rule 7 of the Companies (Accounts) Rules 2014 issued by the Ministry of CorporateAffairs the Consolidated Financial Statements of the Bank along with its Subsidiaries andAssociates for the year ended March 31 2022 forms part of the Annual Report.
REQUIREMENT FOR MAINTENANCE OF COST RECORDS
The Bank is not required to maintain cost records as specified by theCentral Government under section 148(1) of the Companies Act 2013.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In compliance with the Regulation 34 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulation 2015 separate Section on Management Discussionand Analysis as approved by the Board which includes details on the state of affairs ofthe Bank forms part of this Annual Report.
Corporate Governance has been an integral part of the way your Bank hasbeen doing business since inception. The Bank believe that good Corporate Governanceemerges from the application of the best and sound management practices and compliancewith the laws coupled with adherence to the highest standards of transparency and businessethics.
Your Bank seeks to embed and sustain a culture that will enable us toachieve our objectives through effective corporate governance and enhance transparentengagement with key stakeholders.
A separate report on Corporate Governance setting out the governancestructure principal activities of the Board and its Committees and the policies andpractices that enable the Board to fulfil its stewardship responsibilities together with aCertificate from the Secretarial Auditor of the Bank regarding compliance of conditions ofCorporate Governance as stipulated under Listing Regulations forms part of this Annualreport.
INTERNAL COMPLAINTS COMMITTEES (INFORMATION UNDER THE SEXUAL HARASSMENTOF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013)
The Bank had constituted Internal Complaints Committee as per letterand spirit contained in the provisions of "The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013" at 9 Zones and HeadOffice to prevent and redress the complaints relating to sexual harassment and to organizeworkshops/ awareness programs to empower women employees while handling cases relating tosexual harassment. Workshops/ awareness programs regarding women empowerment wereconducted at various locations pan India. The data with regard to the redressal ofcomplaints by the Internal Complaints Committee are as follows:
|No. of complaints received for the year FY-2021-22 ||1 |
|No. of complaints disposed off during FY-2021-22 ||1 |
|No. of cases pending for more than 90 days ||Nil |
|No. of workshops/ awareness program against sexual harassment carried out ||14 |
|Nature of action taken by the employer/ District Officer ||Appropriate action taken |
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 the Bank hasformulated a Dividend Distribution Policy. The policy has been displayed on the Bank'swebsite at https:/www.federalbank.co.in/our-commitments.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Bank has through the years developed and stabilized an effectiveinternal control system calibrated to the risk appetite of the Bank and aligned to thescale size and complexity of its operations. The scope and authority of the internalaudit function is defined in the Audit and Inspection Policy of the Bank duly approved bythe Board of Directors. In order to help Bank achieve its mission of adopting the bestprofessional practices prevailing in the industry while framing the policy substantialinputs are taken from - RBI guidance note on Risk Based Internal Audit 'The internalaudit function in banks' published by Basel Committee on Banking Supervision and RBICircular on 'Concurrent Audit System'. Audit and Inspection Policy is reviewed annually.Policy is reviewed considering various guidelines of RBI Basel Committee recommendationsICAI guidelines other statutory / regulatory guidelines directions of Board / AuditCommittee of the Board issued from time to time and periodic internal guidelines /instructions issued by the Bank. At the enterprise level the Inspection and AuditDepartment on a continuous basis assesses and monitors the effectiveness of the controlsystems and its adequacy to meet the growing complexities. The audit function essentiallyvalidates the compliance of Bank's processes and operations with regulatory guidelinesaccounting procedures and Bank's own internal rules and guidelines. A department levelgroup meets on periodical intervals to discuss latest internal / RBI / regulatoryguidelines for ensuring that the required changes are implemented for making the auditfunction updated and dynamic.
The Bank has a robust system towards escalating the audit findings toappropriate levels in the hierarchy of Management and discussions are held in variousCommittees covering corrective actions to reduce the incidence of audit findings withadequate follow up of the implementation thereof. The Bank in compliance of therequirements of Section 138 of the Companies Act 2013 has designated the Head ofInspection and Audit Department as Internal Auditor of the Bank. Internal Auditor of theBank directly reports to the Managing Director & CEO of the Bank. Audit Committee ofthe Board reviews the adequacy and effectiveness of the Internal Audit Function. The Bankhas various types of audit which inter-alia include Risk Based Internal Audit InformationSystem Audit Third Party Risk Audit Offsite Audit (audit through use of technology anddata analysis) Concurrent Audit Gold Loan Audit and Management Audit. Branches /Departments are risk rated and the frequency of Risk Based Internal Audit / ManagementAudit is decided based on the Risk Rating of the unit. Significant Audit findings andobservations are presented to Inspection Review Committee of Executives and a report onthe meetings of Inspection Review Committee of Executives along with significant auditfindings directions / suggestions of the Committee and action taken in such cases areplaced to the Audit Committee of the Board for review periodically. Other findings areplaced before a department level committee called the 'Inspection Department ReviewCommittee' for review and its observations are placed before Inspection Review Committeeof Executives.
As per the requirement of Companies Act 2013 Bank has formulatedInternal Financial Controls Framework. Risk and Controls associated with each process inthe Bank are documented under the Internal Financial Controls Framework. Inspection andAudit Department plays a significant role in testing the control effectiveness for eachprocess under the framework.
The Internal Audit function provides independent assurance to the Boardof Directors and Senior Management on the quality and effectiveness of the Bank's internalcontrol risk management and governance systems and processes thereby helping the Boardand Senior Management protect the Bank and its reputation.
POLICY ON BOARD DIVERSITY
Policy on Board Diversity of the Bank mainly depends on thequalifications for appointment of Directors of the Bank as contained in the BankingRegulation Act 1949 and satisfying the Fit and Proper Criteria for directors as per theregulatory requirement of RBI.
The Bank continuously seeks to enhance the effectiveness of its Boardand to maintain the highest standards of corporate governance and recognizes and embracesthe benefits of diversity in the boardroom. Diversity is ensured through consideration ofa number of factors including but not limited to skills regional and industryexperience background and other qualities. In forming its perspective on diversity theBank also takes into account factors based on its own business model and specific needsfrom time to time.
Board Diversity enhances the quality of performance of the Board;ushers in independence in the performance of the Board; eradicates the gender bias in theBoard; achieves sustainable and balanced performance and development; supports theattainment of strategic objectives & also ensures compliance of applicable law/s andgood corporate practices.
Nomination Remuneration Ethics and Compensation Committee has theresponsibility for leading the process for Board appointments and for identifying andnominating for approval by the Board candidates for appointment to the Board. Thebenefits of diversity continue to influence succession planning and continue to be the keycriteria for the search and nomination of directors to the Board. Board appointments willbe based on merit and candidates will be considered against objective criteria having dueregard for the benefits of diversity on the Board including gender. While making Boardappointments the regulatory requirements for appointment of at least one WomanIndependent Director on the Board of the Bank is also considered.
BANK'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDINGCRITERIA FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTORAND OTHER MATTERS PROVIDED UNDER SUB-SECTION (3) OF SECTION 178 OF COMPANIES ACT 2013
a. Qualifications Experience and knowledge
1. The Board should bring to their tasks a balanced mix of knowledgeskills experience and judgment relevant to the Bank's policies operations and needs.Not less than fifty-one percent of the total number of Directors shall be persons havingspecial knowledge skills or valuable experience in one or more fields such as bankingfinance management economics law accountancy agriculture and rural economicscooperative movement trade industry infrastructure engineering and technology. Atleast two Directors shall be persons having special knowledge or practical experience inagriculture and rural economy cooperation or small-scale industry. The Bank shall ensureto include in its Board need based representation of skills such as marketing riskmanagement strategic planning treasury operations credit recovery informationtechnology payment & settlement systems human resources and business management. TheBoard should also have at least One Woman Independent Director in its composition.
2. The directors should be able to devote sufficient time and attentionto the discharge of their duties to the Bank.
3. The age limit of Managing Director and Chief Executive
Officer and Whole Time Directors shall be in the range of 35-70 years.
4. The age limit of Non- Executive Directors shall be in the range of35-75 years.
b. Disqualification / Conflicts of interest
1. The Bank's Directors shall be subject to the disqualifications /prohibitions contained in the Companies Act 2013 and the Banking Regulation Act
1949 with respect to directorship of companies in general or bankingcompanies in particular.
2. A Director shall not be a director of any other company or partneror proprietor of a firm where such directorship partnership or proprietorship involvesor is likely to involve actual or potential conflicts of interest as a Director of theBank. A Director shall promptly inform the Board / committee of any actual or potentialconflicts of interest with respect to any matter that may come up for the consideration ofthe Board or of any Committee of which he is a member and shall refrain fromparticipating in a discussion on the matter.
c. Suggested criteria for determining attributes of a director asrequired to be specified under Companies Act 2013 include
1. Integrity in personal and professional dealings.
2. Wisdom and ability to take appropriate decisions.
3. Ability to read and understand financial statements
4. Ability to deal with others with a sense of responsibilityfirmness and cooperation.
5. Refrain from any action that would lead to loss of his independence.
d. Suggested criteria for determining Independence of a director
The criteria of independence of a director are determined based on theconditions specified in Section 149 (6) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The independent director shallat the first meeting of the Board in which he participates as a director and thereafter atthe first meeting of the Board in every financial year or whenever there is any change inthe circumstances which may affect his status as an independent director give adeclaration that he/ she meets the criteria of independence. The terms and conditions ofappointment of Independent Director are disclosed on the website of the Bank and a weblink thereto is: https:Zwww.federalbank.co.in/shareholder-information.
POLICY ON REMUNERATION
Policy on Remuneration to Non-Executive Directors/ IndependentDirectors
The Policy of the Bank for the payment of remuneration to Non-Executive Directors / Independent Directors of the Bank is explained in the ComprehensiveCompensation Policy for NonExecutive Directors / Independent Directors (other than PartTime Chairman) as approved by the Board of Directors and is disclosed on the website ofthe Bank and a web link thereto is: http:/www. federalbank.co.in/shareholder-information.
As required under Banking Regulation Act 1949 prior approval of RBI isrequired to give remuneration to Non-Executive Part Time Chairman of the Board.
As per the Policy during FY 2021-22 Non-Executive Director/Independent Directors of the Bank are paid sitting fees for attending Board/ Committeesmeetings and in addition profit linked commission for FY 2020-21 was also paid during theyear. Non- Executive Part Time Chairman was paid remuneration in addition to sitting feeswith the approval of RBI.
POLICY ON REMUNERATION TO MD & CEO EXECUTIVE DIRECTORS KEYMANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The Compensation / Remuneration Policy of the Bank as approved by theBoard contains the policy for payment of remuneration to MD & CEO ExecutiveDirectors Key Managerial Personnel and for all the other employees of the Bank.
As per the guidelines given by RBI Compensation/Remuneration Policyhas been designed with the following Core Principles:
1. Effective governance of Compensation.
2. Alignment of Compensation with Prudent Risk Taking.
3. Effective Supervisory Oversight and Stakeholder Engagement.
Compensation of Managing Director & CEO Whole Time Directors andMaterial Risk Takers (MRTs)
The compensation paid out to the referred functionaries is divided intotwo components:
The fixed compensation is determined based on the relevant factors suchas industry standards the exposure skill sets talent and qualification attained by theofficial over his/her career span and adherence to statutory requirements. All the fixeditems of compensation including the perquisites will be treated as part of fixed pay.Perquisites that are reimbursable would also be included in the fixed pay so long as thereare monetary ceilings on these reimbursements. Contributions towards superannuation/retiral benefits will also be treated as part of fixed pay. (Approval from RBI to be takenas per section 35B of the Banking Regulation Act while deciding the fixed and variablecompensation part for Managing Director & CEO and Whole Time Directors)
The variable compensation for Whole Time Directors Managing Director& Chief Executive Officer and Material Risk Takers is fixed based on organizationalperformance (both business-unit and firm-wide) and KPAs set for the official. Theorganization's performance is charted based on Performance Scorecard which takes intoaccount various financial indicators like revenue earned cost deployed profit earnedNPA position and other intangible factors like leadership and employee development. TheScore Card provides a mix of Financial and Non-Financial Quantitative and QualitativeMetrics. The variable pay is paid in the form of share-linked instruments or a mix ofcash and share-linked instruments. While considering/ recommending the variable pay inrespect of Managing Director & CEO and Whole Time Directors serious supervisoryobservations (if any) shall be factored which will be ensured through suitable processes.
Risk Control and Compliance Staff
Members of staff engaged in financial and risk control includinginternal audit are compensated in a manner that is independent of the business areas theyoversee and commensurate with their key role in the Bank. The total fixed and variablecompensation paid out to the employees in the Risk Control and Compliance Function isdecided independent of business parameters. The mix of fixed and variable compensation forcontrol function personnel is weighted in favour of fixed compensation to ensure autonomyand independence from business goals.
Other categories of Staff
The compensation package applicable to Executives in Level IV to VIIwas fixed and governed based on the periodical industry level settlements under IBApattern. To make the Compensation Structure market driven and competitive a newperformance based compensation package called "Grander Compensation Package" hasbeen introduced for Executives in Level IV and above with effect from May 01 2017 whichconsists of both fixed and variable compensation. The Compensation Package of Executivesunder Non Grander Compensation Package comprises of fixed compensation (determined basedon the relevant factors such as industry standards the exposure skill sets talent andqualification attained by the official over his/her career span) and variable compensation(comprising of cash share-linked instruments or a mix of both cash and share-linkedinstruments).
The compensation paid to Award Staff and Officers coming under Scale Ito III is fixed based on the periodic industry level settlements with Indian Banks'Association. The present scale of pay and other service conditions applicable toemployees whose compensation package is governed under IBA package is as per provisionsof 11th Bipartite Settlement/ Joint note dated November 11 2020.
Limit on Variable Pay and Deferred compensation
Managing Director & CEO Whole Time Directors and Material RiskTakers (MRTs): In order to have a proper balance between fixed pay and variable pay atleast 50% of the total compensation would be variable. Deferral arrangements wouldinvariably exist for the variable pay regardless of the quantum of pay. For suchexecutives of the Bank a minimum of 60% of the total variable pay must invariably beunder deferral arrangements. Further if cash component is part of variable pay at least50% of the cash bonus would also be deferred. However in cases where the cash componentof variable pay is under ' 25 lakh deferral requirements would not be necessary. Thedeferral period would be minimum of three years.
Risk Control and Compliance Staff: At least 25% of the totalcompensation would be variable and the total variable pay will be limited to a maximum of100% of the fixed pay (for the relative performance measurement period). Deferralarrangements would invariably exist for the variable pay if the Variable Pay exceeds 75%of the fixed pay. In such cases a minimum of 60% of the total variable pay must invariablybe under deferral arrangements. Further if cash component is part of variable pay atleast 50% of the cash bonus would also be deferred. However in cases where the cashcomponent of variable pay is under '25 lakh deferral requirements would not be necessary.
Other categories of Staff: The variable pay would be in the form ofcash share-linked instruments or a mix of both cash and share-linked instruments. Thetotal variable pay will be limited to a maximum of 300% of the fixed pay (for the relativeperformance measurement period). Deferral arrangements would invariably exist for thevariable pay if the Variable Pay exceeds 200% of the fixed pay. In such cases a minimumof 60% of the total variable pay must invariably be under deferral arrangements. Furtherif cash component is part of variable pay at least 50% of the cash bonus would also bedeferred. However in cases where the cash component of variable pay is under '25 lakhdeferral requirements would not be necessary.
Severance Pay and Guaranteed Bonus
Severance pay (other than gratuity or terminal entitlements or asentitled by statute) is not paid to any official of the Bank.
Guaranteed Bonus on joining in the form of Cash/equities/ deposits/bonds/debentures etc. or multiyear guaranteed bonus (like retainer fees) is not paid toany official in the organization. However to attract talent sign on bonus or joiningbonus can be paid but this will be limited to the first year only and it will be given asEmployee Stock Options only.
No compensation scheme or insurance facility would be provided by theBank to employees to hedge their compensation structure to offset the risk alignmentmechanism (deferral pay and claw back arrangements) embedded in their compensationarrangement. Compliance arrangements are in place to ensure that employees do not insureor hedge their compensation structure.
Malus / Claw back arrangement
The variable compensation is covered under Malus / Claw backarrangements in case of all categories of employees. In the event of subdued or negativecontributions of the bank and/or the relevant line of business in any year the deferredcompensation will be subjected to:
Malus arrangement wherein Bank shall withhold vesting of all orpart of the amount of deferred remuneration.
Claw back arrangement wherein the employees shall be liable toreturn previously paid or vested remuneration to the bank. The deferred compensation ifany paid to such functionaries shall be subject to Claw back arrangements which willentail the Bank to recover proportionate amount of variable compensation from suchfunctionaries on account of an act or decision taken by the official which has broughtforth a negative contribution to the Bank at a prospective stage.
The malus and claw back provisions would cover the deferral andretention periods. If an Official covered under these provisions is responsible for anyact or omission or non-compliance of regulatory guidelines resulting in a penalty beingimposed by any Regulators or engages in a detrimental conduct the Bank would be entitledto recover proportionate amount of variable compensation from such functionaries within 48months from the date of payment/vesting of variable compensation. The Bank has put inplace appropriate modalities performance thresholds and detailed framework to cover thetrigger points with or invoking malus/claw back taking into account relevant statutoryand regulatory stipulations as applicable.
Executive Director (ED) level Committee for reviewing the linkage ofRisk based performance with Remuneration
a) The Committee shall review the Compensation paid vis-avis risktaking by the Executives to ensure that prudent risk taking is recognized in thecompensation framework
b) The Committee shall analyse the risk reward correlation and ensurethat excess risk taking is not encouraged
c) The Committee shall review the performance based variablecompensation paid every year and ensure that an optimum risk reward balance is maintained.
d) Linkage of performance during a performance measurement period withlevels of remuneration.
e) Bank's policy on deferral and vesting of variable remuneration andcriteria for adjusting deferred remuneration before vesting and after vesting.
f) The Committee shall establish appropriate compliance arrangements toensure employees do not insure or hedge their compensation structure.
g) The Committee shall update the details to the Nomination andRemuneration Committee on an annual basis.
FAMILIARIZATION PROGRAMMES FOR INDEPENDENT DIRECTORS
The details of familiarization programmes are disclosed on the Bank'swebsite https/www.federalbank.co.in/shareholder- information
Pursuant to the provisions of the Companies Act 2013 and Regulation17(10) and other applicable Regulations of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has carried out an annual performanceevaluation of its own performance and of the directors individually as well as theevaluation of the working of its various Committees for the year under consideration.
The evaluation process was initiated by putting in place a structuredquestionnaire after taking into consideration inputs received from the Directors coveringvarious aspects of the Board's functioning such as adequacy of the composition of theBoard and its Committees Board culture execution and performance of specific dutiesobligations and governance.
Thereafter a separate exercise was carried out in digital mode using aboard evaluation software to evaluate the performance of individual Directors includingthe Chairman of the Board who were evaluated on specified parameters. The performanceevaluation of the Independent Directors was carried out by the entire Board other thanthe Independent Director concerned. The performance evaluation of the Chairman and theNonIndependent Directors were carried out by the Independent Directors. The Directorsexpressed their overall satisfaction with the evaluation process.
1. Performance Evaluation of Independent Directors
Criteria for evaluation include:
a. Attendance at the Board and Committee meetings
b. Study of agenda in depth prior to meeting and active participationat the meeting
c. Contributes to discussions on strategy as opposed to focus only onagenda
d. Participate constructively and actively in the
Committees of the Board in which they are
Chairpersons or Members
e. Exercises his skills and diligence with due and reasonable care andbrings an independent judgement to the Board
f. Knowledge and Competency:
i) How the person fares across different competencies as identified foreffective functioning of the entity and the Board
ii) Whether the person has sufficient understanding and knowledge ofthe entity and the sector in which it operates
g. The Director remains abreast of developments affecting the companyand external environment in which it operates independent of his being apprised atmeetings
h. Whether person is independent from the entity and the otherdirectors and there are no conflict of interest
i. Whether the person demonstrates highest level of integrity(including conflict of interest disclosures maintenance of confidentiality etc.)
2. Performance Evaluation of Chairman
Criteria for evaluation include:
a. Works effectively with the Board as a whole
b. Ability to elicit inputs from all Board Members and steer thediscussions to a logical conclusion
c. Works with the Board and directs the management for creating aneffective process for long-range or strategic planning for the Company
d. Whether the Chairperson displays efficient leadership isopen-minded decisive courteous displays professionalism able to coordinate thediscussion etc. and is overall able to steer the meeting effectively
e. Whether the Chairperson is able to keep shareholders' interest inmind during discussions and decisions
f. Whether the Chairperson is impartial in conducting discussionsseeking views and dealing with dissent etc
g. Handling of critical situations concerning the Bank
h. Thinks strategically to promote growth improve financialperformance and gain competitive advantage.
i. Understands financial planning budgeting and management of theorganization's investments and overall organization financial perspective.
3. Performance Evaluation of Non-Independent Directors
(MD & CEO and Executive Directors)
Criteria for Evaluation include:
a. Achievements of performance against targets set
a. Apprises the Board regarding the organization's financial positionand operational budget so as to enable the Board to make informed financial decisions
b. Provides Leadership in developing strategies and organizationalplans with the management and the Board of Directors
c. Ensures that the Board is kept informed about all issues concerningthe Bank
d. Media interaction and ability to project positive image of theCompany
e. Effectively pursues the performance goals in relation to mission andobjective of the organization
f. Motivating employees providing assistance & directions andsupervising & safeguard of confidential information
g. Establishment of internal control processes monitoring policies andencouraging suggestions
h. Cultivates effective Relationship with Industry Fora Community andbusiness leaders and Regulatory Bodies and Public Officials
i. Ensures compliance with all legal and regulatory requirements
j. Undertaking of various Developmental initiatives within theorganisation
k. Compliance with ethical standards & code of conduct andexercising duties diligently
4. Performance Evaluation of Board and Committees
I. Criteria for Evaluation of Board include:
a. If Board is of appropriate size and has the appropriate balance anddiversity of background business experience industry knowledge skills and expertise inareas vital to the Bank's success representing sectors laid down by the regulators givenits current and future position
b. New Board members participate in an orientation program to educatethem on the organization their responsibilities and the organization's activities theBoard encourages a culture that promotes candid communication
c. The Board oversees management's procedures for enforcing theorganization's code of conduct Action Taken Reports on the discussion/directions of theBoard are submitted at regular intervals to the Board
d. The Board oversees risk management through inputs from the RiskManagement Committee
e. The Board considers the quality and appropriateness of financialreporting including the transparency of disclosures
f. The Board ensures compliance with the relevant provisions of theCompanies Act and other regulatory provisions as applicable to the Bank
g. The Board oversees the compliance processes
h. The Board views the organization's performance from the competitiveperspective - industry and peers performance industry trends and budget analysis and withreference to areas where significant differences are apparent etc.
i. The Board ensures compliance with the relevant provisions of theCompanies Act and other regulatory provisions as applicable to the Company
j. The Board has defined an effective Code of Conduct for the Board andSenior Management
k. Whether the Board monitors and manages potential conflicts ofinterest of management members of the board of directors and shareholders includingmisuse of corporate assets and abuse in related party transactions Criteria for Evaluationof Committees include
a. The Committee Terms of Reference and composition continue to beappropriate
b. The mandate composition and working procedures of committees of theBoard of Directors is clearly defined and disclosed
c. Committee meetings are organized properly in number timing andlocation
d. The Committee is effective in carrying out its mandate
e. The Committee members receive adequate material in advance ofCommittee meetings in sufficient time and detail to permit members to effectivelyconsider issues to be dealt with
f. The Committee allocates the right amount of time for its work
g. Whether the Committee has fulfilled its functions as assigned by theBoard and laws as may be applicable
h. Whether adequate independence of the Committee is ensured from theBoard
i. Whether the Committee's recommendations contribute effectively todecisions of the Board
5. Assessment of Flow of Information Criteria for evaluation include:
The agenda and related information are circulated in advance ofmeetings to allow board members sufficient time to study and understand the informationInformation on the annual operating plans and budgets and other updates are provided tothe Board; Updates on operating results of the Bank is furnished to the Boardperiodically etc. Update on the compliance with the regulatory statutory or listingrequirements are placed before the Board.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
In July 2011 the Ministry of Corporate Affairs Government of Indiacame out with the 'National Voluntary Guidelines on Social Environmental and EconomicResponsibilities of Business. These guidelines contain certain principles that are to beadopted by companies as part of their business practices and require disclosures regardingthe steps taken to implement these principles through a structured reporting format viz.Business Responsibility Report. Pursuant to Regulation 34(2)(f) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the requirement of submittinga Business Responsibility Report shall be discontinued after the financial year 2021-22and thereafter with effect from the financial year 2022-23 the top one thousand listedentities based on market capitalization shall submit a Business Responsibility andSustainability report in the format as specified by the SEBI from time to time: Providedfurther that even during the financial year 2021-22 the top one thousand listed entitiesmay voluntarily submit a Business Responsibility and Sustainability Report in place of themandatory Business Responsibility Report. Your Bank has voluntarily adopted BusinessResponsibility and Sustainability Report for FY 22 and forms part of this Annual Report.
TECHNOLOGY AND DIGITAL UPDATES AND MEASURES TAKEN IN IT GOVERNANCEINFORMATION SECURITY IT AUDIT IT OPERATIONS IT SERVICES OUTSOURCING Technology andDigital updates
IT provides the strong foundation that enables your Bank to growextensively and gain market share. In the following paragraphs we provide more details ofthe entire governance structure over IT with focus on information security.
IT governance comprise processes that ensure the effective andefficient use of IT in enabling our organization to achieve its goals. It is an integralpart of corporate governance and consists of the organizational structures leadership andprocess that ensure IT sustains and extends the organization's strategy and objectives.
The governance of IT is effectively supervised by the Board ofDirectors through the IT & Operations Sub-Committee consisting of minimum threeDirectors with at least one Independent Director. All members of the Committee haveextensive experience in IT & Operations and are able to provide effective guidance anddirection to the management team.
Executive Level Committee which oversee the IT governance functioninclude the Operations Risk Management Committee (ORMC) the Information SecurityCommittee (ISC) and the Project Steering Committee (PSC).
Your Bank has a well-defined Information System Security Policy and aCyber Security Policy. The effective implementation of these policies is supervised by theInformation Security Committee and by the IT & Operations Committee of the Board.
In recognition of the need for enhanced systems security your Bankconducts a wide range of system audits using internal and external auditors. These rangefrom the quarterly Vulnerability Assessments (VA) and Penetration Testing (PT) toconcurrent audits to an annual end to end audit of IT infrastructure. All theapplications both web based and mobile based apps exposed to internet are subjected toexternal penetration testing (PT) before releasing to use.
Bank has deployed best in the class infrastructure to provideavailability of service to users and customers without fail. The installed infrastructureis tested for its reliability and robustness by periodic audits. In addition periodicDisaster Recovery Tests are conducted to ensure the ability to move to the DisasterRecovery infrastructure in the event of downtime in the main production capability.
More details on digital initiatives of the Bank are available in theManagement Discussion and Analysis Report forming part of this Annual Report.
PARTICULARS OF EMPLOYEES
In terms of Section 136 of the Companies Act 2013 the copy of thefinancial statements of the Bank including the consolidated financial statements theauditor's report and relevant annexures to the said financial statements and reports arebeing sent to the Members and other persons entitled thereto excluding the information inrespect of the employees of the Bank containing the particulars as specified in Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Thestatement containing particulars of employees as required under Section 197(12) of the Actread with Rule 5 (2) of the said Rules is available on the website: https:/www.federalbank.co.in/shareholder-information.
The ratio of the remuneration of each Director to the medianremuneration of the employees of the Bank and other details in terms of Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are forming part of this report as Annexure III.
DIRECTOR'S RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to theinformation and explanations obtained to us the Directors make the following statementsin terms of Section 134 (3) (c) of the Companies Act 2013:
1. that in the preparation of the annual financial statements for theyear ended March 31 2022 the applicable accounting standards have been followed alongwith proper explanation relating to material departures if any;
2. that such accounting policies as mentioned in the Notes to theFinancial Statements have been selected and applied consistently and judgment andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Bank as at March 31 2022 and of the profit of theBank for the year ended on that date;
3. that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Bank and for preventing and detecting fraud andother irregularities;
4. that the annual financial statements have been prepared on a goingconcern basis;
5. that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively;
6. that systems to ensure compliance with the provisions of allapplicable laws were in place and were adequate and operating effectively;
AWARDS AND ACCOLADES
Your Bank has won various awards and accolades in the Financial Year2021-22. Technology and digital have taken centre stage and your Bank continues to focuson innovation with customer convenience. The awards are a testimony to the Bank'scommitment on the digital front. The various initiatives to establish digital at the forehave brought in acclaim for the Bank.
Your Bank has been recognised as the 'Best mid-sized Bank' in the 26th'Business Today - KPMG Annual Survey.
Your Bank emerged winner of Plaque at the prestigious ICAI Awards forExcellence in Financial Reporting for the year ended March 312021.
Your Bank won Ministry of Electronics and Information Technology(MeitY) Award for achieving 2nd Position for the Digital Payment Performance for the FY2020-21 among the Indian Banks.
Your Bank was the winner of the Utkrisht Puraskar at the Digi DhanAwards for overall performance in Digital Payments.
On the HR front your Bank has been recognized as a 'Great Place toWork' in a study conducted by the Great Place to Work? Institute for second time in arow. Great Place to Work? Institute works with companies around the world to build aHigh-Trust High- Performance Culture that drives better business performance.
Your Bank was conferred with multiple awards in Infosys Finacle ClientInnovation Awards in the mid-size bank segment under 5 categories namely Corporate BankingDigitization (Automatic Opening of Accounts through BPM) Customer Journey Reimagination(Fed-e-Point self-service customer portal) Modern Technologies-led Innovation (AI basedDigital Lending Platform) Process Innovation (Be Your Own Master - Top Up Demand Loan)and Product Innovation (Cross Border Remittance Automation and InstaDemat).The Bank hasalso emerged as a runner up in the category Ecosystem-led Innovation (NeoBanking).
Your Bank was conferred with 3 awards by IBA. The Bank is the winner of'Best Fintech Adoption runner up for 'Best Technology Bank of the Year' and received aspecial mention award for 'Best Cloud Adoption.
Your Bank won an award for Best use of Cloud in Banking at the 3rdAnnual BFSI Technology Excellence Awards 2022.
Your Bank won the prestigious Finnoviti Award instituted by BankingFrontiers for "Fed-E-Studio" the self-service Banking kiosk for customers.
Your Bank won 'Private Sector Bank of the Year' Award (Gold Category )at the 20th edition of Outlook Money Awards.
Your Directors place on record their deep appreciation to every memberof Federal family for their hard work dedication and commitment to whom the credit forthe Bank's achievements goes particularly during this unprecedented year.
The Board of Directors take this opportunity to express their deepsense of gratitude to Government of India Reserve Bank of India various StateGovernments and regulatory authorities in India and overseas for their valuable guidancesupport and cooperation. The Directors also wish to express their gratitude to InvestmentBanks Rating Agencies and Stock Exchanges for their wholehearted support. The Directorsrecord their sincere gratitude to the esteemed customers and all other well-wishers fortheir continued patronage.
And to you our shareholders we are deeply grateful for the confidenceand faith that you have always reposed in us.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Mr. C Balagopal |
|Place: Aluva ||Chairman of the Board |
|Date:30.06.2022 ||(DIN-00430938) |