To the Members
Your Directors take pleasure in presenting the 90th Annual Report onthe business and operations of The Federal Bank Limited ("the Bank") togetherwith the audited accounts for the Financial Year (FY) ended March 31 2021.
Financial results are presented in the table below: Rs( in crores)
|Financial Parameters for the year ended ||March 31 2021 ||March 31 2020 |
|Net Interest Income ||5533.70 ||4648.90 |
|Fee and Other Income ||1944.91 ||1931.41 |
|Net Revenue ||7478.61 ||6580.31 |
|Operating Expense ||3691.71 ||3375.61 |
|Operating Profit ||3786.90 ||3204.70 |
|Net Profit ||1590.30 ||1542.78 |
|Profit brought forward ||2616.67 ||2174.28 |
|Total Profit Available for appropriation ||4206.97 ||3717.07 |
|Appropriations: || || |
|Transfer to Revenue Reserves ||229.57 ||147.46 |
|Transfer to Statutory Reserves ||397.57 ||385.70 |
|Transfer to Capital Reserves ||153.45 ||135.83 |
|Transfer to Special Reserve ||120.99 ||96.00 |
|Dividend pertaining to previous year paid during the year ||- ||278.22 |
|Tax on dividend ||- ||57.19 |
|Balance Carried over to Balance Sheet ||3305.39 ||2616.67 |
|Financial Position (as on) || || |
|Deposits ||172644.48 ||152290.08 |
|Advances ||131878.60 ||122267.91 |
|Total Business (Deposits + Advances) ||304523.08 ||274557.99 |
|Other Borrowings ||9068.50 ||10372.43 |
|Investments ||37186.21 ||35892.68 |
|Total Assets (Balance Sheet Size) ||201367.39 ||180638.05 |
|Equity Capital ||399.23 ||398.53 |
|Ratios || || |
|Return on Total Assets (%) ||0.85 ||0.94 |
|Return on Equity (%) ||10.38 ||11.10 |
|Earnings Per Share (Rs ) ||7.97 ||7.76 |
|Book value per share (Rs ) ||80.77 ||72.86 |
|Operating cost to Income (%) ||49.36 ||51.30 |
|Capital Adequacy Ratio (%) Basel (III) ||14.62 ||14.35 |
Previous year figures have been regrouped / reclassified wherenecessary to conform to current year's classification.
HIGHLIGHTS OF PERFORMANCE
During the year 2020-21 your Bank delivered steady performance amidstthe disruptions caused by the pandemic. Total business of your Bank improved by 10.91% toreach Rs 304523.08 Cr as on March 31 2021. 13.37% growth in deposits and 7.86% growth inadvances (net) helped your Bank to clock this number. Total deposits reached Rs 172644.48Cr and advances (net) reached Rs 131878.60 Cr and on averages deposit portfolio of yourBank grew by 13.31% to reach
Rs 156016.40 Cr and advance portfolio grew by 8.10% to reach
Rs 123337.38 Cr.
On the NR side NRE deposits had a growth rate of 11.77% to reach Rs63958.84 Cr and NRE Savings clocked a growth of 18.61% to reach Rs 18310.99 Cr. The totalNR business of your Bank stood at Rs 68083.20 Cr with a growth of 12.19%.
GROWTH IN BUSINESS
On CASA front Savings deposit touched Rs 47686.29 Cr with 21.66%growth and Current deposits stood at Rs 10684.19 Cr. Your Bank registered a healthy CASAgrowth of 25.66% to reach
Rs 58370.48 Cr. CASA ratio of your Bank stood at 33.81%.
The investment portfolio of your Bank has reached Rs 37186.21 Cr as onMarch 31 2021. The average investment as on March 31 2021 is Rs 35731.82 Cr.
The Operating Profit of your Bank increased by 18.17% to
Rs 3786.90 Cr and Net Profit of your Bank is up by 3.08% to
Rs 1590.30 Cr. Healthy traction in core business streams has helpedyour Bank to have a good momentum in core operating performance. Net Interest Incomeimproved by 19.03% to Rs 5533.70 Cr while the Non-Interest Income stood at
Rs 1944.91 Cr.
Total income of your Bank during the fiscal year 2021 recorded 3.70%growth to reach Rs 15702.81 Cr. Income from advances increased by 1.16% to reach Rs10795.12 Cr. The yield on advances stood at 8.75% and the yield on Investments (excludingtrading gain) at 6.57%. The Net Interest Margin for the fiscal year is at 3.16% as against3.05% in the previous year.
Return on Average Equity and Return on Average Total Assets stood at10.38% and 0.85% respectively. Earnings per Share (face value of Rs 2 each) of the Bankas on March 31 2021 were Rs 7.97. Book value per share had increased to Rs 80.77 duringFY 21.
The total expenses of your Bank reduced by 0.18% to reach
Rs 11915.91 Cr and by a reduction of 3.94% interest expenses reducedto Rs 8224.20 Cr in FY 21. Operating Expenses of the Bank during the fiscal year grew toRs 3691.71 Cr.
The cost of deposits of the Bank reduced to 5.00% as on March 31 2021.The Interest expenses as percentage to total income stood at 52.37%.
During the fiscal year the Bank's spread on advances (gross)stood at 3.75% and spread on investments (gross) increased to 3.28%. The Spread (net ofprovisions) on advance stood at 2.52%.
The Gross NPA of your Bank as on March 31 2021 stood at
Rs 4602.39 Cr. Gross NPA as a percentage to Gross Advances is 3.41%.The Net NPA stood at Rs 1569.28 Cr and this as a percentage to Net Advances is 1.19%. TheProvision Coverage Ratio (including technical write-offs) stood at 77.65%.
NET WORTH & CAPITALA DEQUACY
The Net Worth of your Bank grew by 11.06% to Rs 16123.61 Cr as againstRs 14517.61 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 14.62% whichis considerably higher than the RBI stipulation. Of this Tier 1 CRAR is at 13.85%.
Your Bank continued its consistent performance during FY 2020-21 withthe total business of the Bank increasing by 10.91% to Rs 304523.08 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 during the period stood at
Rs 24.28 Cr an improvement of 9.32% for the year and the profit peremployee of the Bank stood at Rs 12.68 Lakh during the fiscal.
EXPANSION OF NETWORK
The Bank has 1272 branches 1947 ATMs/Recyclers and 10 Mobile ATMs ason March 31 2021. The Bank also has its Representative Office at Abu Dhabi & Dubaiand an IFSC Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT City).
Earnings per Share (face value Rs 2 /- each) of your Bank have improvedto Rs 7.97 from Rs 7.76 during the year under review. Return on Equity during the yearreached 10.38% in the fiscal year ended March 31 2021.
( Rs in Thousands)
| ||FY 2020-21 ||FY 2019-20 |
|Transfer to Revenue Reserve ||2295718 ||1474611 |
|Transfer to Statutory Reserve ||3975743 ||3856953 |
|Transfer to Capital Reserve ||1534458 ||1358289 |
|Transfer to Special Reserve ||1209900 ||960000 |
|Dividend pertaining to previous year paid during the year ||0.00 ||2782229 |
|Tax on dividend ||0.00 ||571895 |
|Balance carried over to Balance Sheet ||33053829 ||26166675 |
|TOTAL ||42069648 ||37170652 |
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
There are no material changes affecting the financial position of theBank which have occurred between the end of the financial year of the Bank to which thefinancial statements relate and the date of the report.
CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES
The subscribed and paid up share capital of the Bank as on March 312021 is Rs 3992305496/- divided into 1996152748 equity shares of Rs 2/- each. TheBank's equity shares are listed on the National Stock Exchange of India Limited (NSE)and BSE Limited (BSE). During the year 3488176 equity shares of Rs 2/- each wereallotted under Employee Stock Option scheme (ESOP) of the Bank and admitted for trading inNSE and BSE.
As on March 31 2021 Bank has an outstanding of 3000 units ratedunsecured redeemable non-convertible Basel III compliant lower tier II subordinatedbonds aggregating to Rs 300 crore.
Important changes which have occurred after the close of Financial Year
After the close of Financial Year 130990 equity shares of Rs 2/-each were allotted under ESOP scheme of the Bank and have been admitted for trading on NSEand BSE. Accordingly the paid up share capital of the Bank as on May 31 2021 is Rs3992567476 divided into Rs 1996283738 equity shares of Rs 2/- each. Theshares are actively 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 35% i.e. Rs 0.70 per Equity Share on face value of Rs 2/- each for the year2020-21 (previous year: Nil) subject to the approval of the members in the ensuing AnnualGeneral Meeting. Protecting shareholders' value has always been a guiding philosophyof the Bank.
The details of Credit Ratings of your Bank as on March 31 2021 are asfollows;
CRISIL A1+ (Reaffirmed) for the Certificate of Deposit
Programme of the Bank
CRISIL A1+ (Reaffirmed) for the Short Term Fixed Deposits of the Bank
CARE AA (Stable) (Reaffirmed) [Double A Outlook: Stable] for the TierII bonds (Under Basel III)
IND AA/Stable (Affirmed) by India Rating and Research for the Tier IIbonds (Under Basel III) During the year under review there were no revisions in thecredit ratings 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 OptionScheme 2010 (ESOS 2010) on December 24 2010 and the Federal Bank Limited Employee StockOption Scheme 2017 (ESOS 2017) on July 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. As on March 312021 69591185 options had been exercised and 9196193 options were in force.
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 and 16884159 optionsduring the year 2020-21. The options granted which are non-transferable with vestingperiod of 1 to 4.25 years subject to standard vesting conditions must be exercised withinfive years from the date of vesting. As on March 31 2021 557062 options had beenexercised and 74926966 options were in force. Other statutory disclosures as requiredby the SEBI guidelines/ Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 on ESOS are given in website of the Bank in the link:https://www.federalbank.co.in/web/guest/ shareholder-information.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
Transfer of Unpaid/ Unclaimed Dividend
As per Sections 124 and 125 of the Act read with Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (IEPFRules') dividend if not claimed for a consecutive period of 7 years from the dateof transfer to Unpaid Dividend Account of the Company are liable to be transferred to theInvestor Education and Protection Fund (IEPF'). The said requirement does notapply to shares in respect of which there is a specific Order of Court Tribunal orStatutory Authority restraining transfer of the shares.
As a result the unclaimed/unpaid dividend for the year 2012-13amounting to Rs 95.44 lakhs which remained unpaid and unclaimed for a period of 7 yearshas been already transferred by your Bank to the IEPF.
Further the unpaid dividend amount pertaining to the financial year2013-14 will be transferred to IEPF during the Financial Year 2021-22.
Your Bank has uploaded the details of unclaimed/ unpaid dividend forthe financial year 2013-14 onwards on its website viz. www. federalbank.co.in and onwebsite of the Ministry of Corporate Affairs viz. www.iepf.gov.in and the same getsrevised/updated from time to time pursuant to the provisions of IEPF (Uploading ofInformation Regarding Unpaid and Unclaimed Amount lying with Companies) Rules 2012.
Transfer of Shares underlying Unpaid Dividend
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 andsubsequently amended vide notification dated February 28 2017 all the equity shares ofthe Bank in respect of which dividend amounts have not been paid or claimed by theshareholders for seven consecutive years or more are required to be transferred to demataccount of IEPF Authority. Upon transfer of such shares all benefits (like dividendbonus split consolidation etc.) if any accruing on such shares shall also be creditedto the Account of IEPF and the voting rights on such shares shall remain frozen till therightful owner claims the shares. Shares which were transferred to the demat account ofIEPF Authority can be claimed back by the shareholder by following the procedureprescribed under the aforesaid rules.
Accordingly 271586 equity shares of 180 members of your Bank weretransferred to Demat Account of IEPF Authority. Your Bank had sent individual notice toall the aforesaid 180 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 on the website of the Bank viz.https://www.federalbank.co.in/unclaimed-dividend-warrants.
As on March 31 2021 Bank's Board consists of 11 members withrich experience and specialized knowledge in various areas of relevance to the Bankincluding banking accountancy MSME finance small scale industry agriculturestrategic planning risk management information technology and Payment and SettlementSystems. Besides the Chairperson a Non-Executive Non-Independent Woman Director theBoard comprises seven Non-Executive Independent Directors including one woman independentdirector and three Executive Directors.
During the year Reserve Bank of India vide their letter dated July 162020 had approved the re-appointment of Mr. Shyam Srinivasan as Managing Director &Chief Executive Officer (MD
& CEO) (DIN: 02274773) of the Bank for a period of one year w.e.f.September 23 2020 till September 22 2021. Accordingly approval of the shareholders forre-appointment of Mr. Shyam Srinivasan as MD & CEO of the Bank through ordinaryresolution is being sought at the ensuing AGM of the Bank.
Pursuant to the recommendation of the Nomination Remuneration Ethicsand Compensation Committee the Board of Directors of the Bank approved the appointment ofMs. Varsha Purandare (DIN- 05288076) as an Additional Independent Director of the Bankwith effect from September 08 2020. Pursuant to the provisions of Section 161 of the Actshe continues to hold office as an Additional Director of the Bank up to the date of theensuing AGM or the last date on which the AGM should have been held whichever isearlier. Your Bank has received a notice in writing from a member proposing thecandidature of Ms. Varsha Purandare as a Director (Non-Executive Independent) on the Boardof the Bank. Further the NRC and the Board of Directors of the Bank have also recommendedher appointment 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 September 082020.
The Nomination Remuneration Ethics and Compensation Committee at itsmeeting held on June 09 2021 after taking into account the performance evaluation of Mr.A P Hota during his first term of three years and considering the knowledge acumenexpertise and experience in respective fields and the substantial contribution made by himduring his tenure as Independent Director since his appointment has recommended to theBoard that continued association of him as Independent Director would be in the interestof the Bank. Based on the above the Nomination Remuneration Ethics and CompensationCommittee and the Board has recommended the re-appointment of Mr. A P Hota as IndependentDirector on the Board of the Bank to hold office for the second term commencing from dateof 90th Annual General Meeting upto January 14 2026 and not liable to retire by rotation.Accordingly approval of the shareholders for re-appointment of Mr. A P Hota throughSpecial Resolution is being sought at the ensuing AGM of the Bank.
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. April 01 2021 tillApril 30 2022 with the approval of Reserve Bank of India. Accordingly approval of theshareholders for re-appointment of Mr. Ashutosh Khajuria as Executive Director of theBank through Ordinary Resolution is being sought at the ensuing AGM of the Bank.
In terms of the provisions of Section 152 of the Companies Act 2013Ms. Shalini Warrier Executive Director (DIN: 08257526) being longest in office shallretire at the ensuing AGM and being eligible offers herself for re-appointment. The Boardrecommends her re-appointment.
Mr. Sudarshan Sen (DIN: 03570051) was appointed as Additional Non-Executive Independent Director on the Board of the Bank effective from February 11 2020.The Shareholders in the 89th AGM held on July 16 2020 had approved the appointment of Mr.Sudarshan Sen as Independent Director of the Bank for a term of five (5) consecutive yearswith effect from the date of his appointment by the Board. Further the Shareholders ofthe Bank at the 89th AGM approved the appointment of Ms. Grace Koshie (DIN: 06765216)Part Time Chairperson as NonExecutive Non-Independent Director of the Bankwith effect from July 17 2020 to November 21 2021 and also took on record the approvalreceived from RBI for the appointment of Ms. Grace Koshie as Part-Time Chairperson of theBank with effect from November 07 2019 to November 21 2021.
The Shareholders in the 89th AGM had also approved the re-appointmentof Mr. Shyam Srinivasan (DIN: 02274773) as Managing Director & Chief Executive Officerof the Bank for a period of one year with effect from September 23 2019 to September 222020 and Mr. Ashutosh Khajuria as an Executive Director of the Bank designated asExecutive Director and Chief Financial Officer of the Bank for the period from January 282020 to March 31 2021. Further the Shareholders of the Bank at the 89th AGM approved theappointment of Ms. Shalini Warrier as Executive Director of the Bank for a period ofthree (3) years with effect from January 15 2020.
Ms. Shubhalakshmi Panse (DIN- 02599310) Independent Director of theBank retired from the Directorship of the Bank effective from July 17 2020 uponcompletion of two terms as Independent Director in accordance with the regulatoryrequirements of RBI.
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 Annual General Meeting scheduled to be held on July 09 2021.
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 MANAGEMENT PERSONNEL
As on March 31 2021 the following Directors/Executive continued asKey Managerial Personnel of the Bank:
Mr. Shyam Srinivasan Managing Director & Chief ExecutiveOfficer Mr. Ashutosh Khajuria Executive Director & Chief Financial Officer
Ms. Shalini Warrier Executive Director & Chief OperatingOfficer Mr. Samir P Rajdev Company Secretary & Vice President
During the year Mr. Shyam Srinivasan MD & CEO of the Bank who isKey Managerial Personnel was reappointed as MD & CEO of the Bank for a period of oneyear w.e.f. September 23 2020 till September 22 2021
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 April 01 2021 till April 30 2022 with theapproval of Reserve Bank of India.
The Board of Directors of the Bank at its meeting held on May 17 2021approved the appointment of Mr. Venkatraman Venkateswaran as Chief Financial Officer andKey Managerial Personnel of the Bank with effect from Tuesday May 18 2021. Mr. AshutoshKhajuria Executive Director who was also the CFO after the transition made responsiblefor Treasury Credit & Collections Strategic initiatives and establish the ESGjourney of the Bank.
DECLARATION BYI NDEPENDENT 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 hasenrolled his/ her name in the online databank of Independent Directors maintained by theGovernment.
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 possess therequisite expertise and experience and are the persons of high integrity and repute. Theyfulfil the conditions specified in the Act and the Rules made thereunder and areindependent 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. The Board exhibits strongoperational oversight with regular presentations by business heads to the Board. The Boardand Committee meetings are prescheduled and a tentative annual calendar of Board andCommittee Meetings is circulated to the Directors well in advance to help them plan theirschedule and to ensure meaningful participation at the meetings.
During the year under review fifteen (15) Board Meetings. Twelve (12)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 OFTH E BANK
As on March 31 2021 the Bank has one unlisted wholly ownedsubsidiary M/s. Federal Operations and Services Limited and one unlisted subsidiary namedM/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 31 2021 FedServ's Board of Directors has followingfour members-
Mr. C Balagopal Chairman
Ms. Shalini Warrier Non- Executive Director Mr. Ajith Kumar K K Non-Executive Director Mr. Johnson K Jose Whole-time Director
During the year ended on March 31 2021 FedServ has taken significantoperational activities of the Bank which includes Call Centre Operations. FedServ iscarrying out 87 operational activities of the Bank as on March 31 2021. Company does notdeal in loans and advances neither it accepts deposits. FedServ is operating from twolocations:- Kochi in Kerala and Visakhapatnam in Andhra Pradesh.
The total revenue of FedServ for the year ended on March 31 2021 wasRs 26.38 Crores. The full revenue pertains to services provided by the Company entirely tothe Bank. The Company had a net profit of Rs 1.84 Crores for the year ended on March 312021. The Net worth of FedServ at the beginning of the year was
Rs 10.98 Crores and closing net worth of FedServ as on March 31 2021was Rs 12.82 Crores.
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 2021increased to Rs 1.84 Crores from Rs 1.27 Crores for the year ended March 31 2020. Thetotal assets of the Company increased to Rs 14.96 Crores as on March 31 2021 from Rs13.69 Crores as on March 31 2020.
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 commencing its operations. It is a Non-deposittaking & Systemically Important (ND-SI) NBFC. Fedfina provides various multiple loanproducts such as Loan against Property (LAP) Structured Finance and Loan against pledgeof Gold ornaments. It also distributes loan products of the Bank. It has over 359 branchesacross India 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 ManagingDirector & Chief Executive Officer Mr. Shyam Srinivasan Non Executive DirectorMs. Gauri Rushabh Shah Independent Director Mr. Maninder Singh Juneja Nominee Director Mr. Ashutosh Khajuria Nominee Director
The total revenue of Fedfina for the year ended on March 31 2021 is Rs696.41 Crores as against Rs 471.27 Crores for the year ended March 31 2020. Revenue grewby 48% on the back of growth of 23% in loan book during the year. The net profit of theCompany grew by 48% to Rs 58.60 Crores for the year ended March 31 2021 as against Rs39.54 Crores for the year ended March 31 2020. The Net worth of Fedfina at the beginningof the year was Rs 694.04 Crores and closing Net worth of Fedfina as on March 31 2021 wasRs 832.08 Crores. During the year Bank has invested in equity shares of Company amountingto Rs 58.61 Crores.
The total loan portfolio of Fedfina as on March 31 2021 was Rs4491.75 Crores as against Rs 3650.75 Crores as on March 31 2020. The total assets ofthe Company increased to Rs 5409.89 Crores as on March 31 2021 from Rs 4035.10 Croresas on March 31 2020.
Note: The figures reported above for Fedfina are as per the auditedfinancial statements prepared for the consolidation as per AS 21 Consolidated FinancialStatements.
As on March 31 2021 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 associationwith IDBI Bank Limited and Ageas Insurance International N.V. (Formerly known as Fortis)namely Ageas Federal Life Insurance Company Limited (erstwhile IDBI Federal Life InsuranceCompany Limited) commenced operations in March 2008. Currently the Bank has a total stakeof Rs 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 2021 was Rs 1958.64 Crores. The Company has declared & paid final dividendof 13% for the FY 2020-21.
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.
I nvestment Banking Associate
As of March 31 2021 Bank holds 19.90% stake in Equirus CapitalPrivate Limited. Pursuant to the right of proportionate representation on Board as well aspower to participate in the financial operational matters like approval of business planpolicies budgets managerial remuneration change in KMP etc. the same has been treatedas an associate concern as per AS 23 Accounting for Investments in Associates inConsolidated Financial Statements. Equirus Capital Private Limited is a private companydomiciled in India and is engaged in the business of Investment banking. It has 3subsidiaries named Equirus Securities Private Limited Equirus Insurance Broking PrivateLimited and Equirus Wealth Private Limited. Total turnover of Equirus Capital Private
Limited on a consolidated basis was Rs 65.42 Crores in FY 2021 againstRs 45.06 Crores for FY 2020.
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 ORINVESTMENTS 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 materiality of Related Party Transactions and also ondealing with Related Party Transactions as approved by the Audit Committee and the Boardof Directors is uploaded on the website of the Bank and the link for the same ishttps://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 perForm AOC-2 is not applicable to the Bank. There were also no material contracts orarrangement or 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 in theagrarian society to effectively utilize idle money for productive purposes.
The details of the CSR initiatives undertaken during the financial yearended March 31 2021 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://www.federalbank.co.in/corporate-social-responsibility.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO
The Bank is very conscious about the need for energy management and asa team endeavour to contribute to low carbon economy and acknowledges that it is acontinuous process. The Bank is introducing energy-efficient systems and leveragingtechnology to boost energy efficiency in Bank's operations. For more details ofvarious initiatives undertaken by the Bank for energy conservation at its premises pleaserefer ESG section of the Annual Report and Principle 6 of Section E of the BusinessResponsibility Report. The Bank prides itself on continuous investment in technologyupgrades that are designed to deliver cost effective best 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 clearunderstanding of various risks robust risk assessment and measurement procedures andconstant monitoring. The Board of Directors oversees all the risks assumed by the Bank.Specific Committees are constituted to facilitate focused oversight of various functions.The Risk Management Committee of the Board sets the standards and governs the riskmanagement functions thereby bringing in a top to down focus on risk management. The RiskManagement Committee of the Board reviews risk management Policies of the Bank pertainingto credit market liquidity operational and business continuity management. TheCommittee reviews the Risk Appetite framework Internal Capital Adequacy AssessmentProcess (ICAAP) and Stress testing. The Committee oversees setting up of limits on anysector or country implementation of Basel III guidelines and the activities of theexecutive level risk management committees. The Committee assesses the level and directionof major risks pertaining to credit market liquidity operational reputationtechnology information security compliance and capital as a part of the risk dashboard.In addition the Committee oversees risks of subsidiaries covered under the Group RiskManagement Framework. In addition a Compliance Risk Assurance Cell (CRAC) is functioningin the Department which is established with the aim to ensure total compliance with theregulatory and internal guidelines as well.
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 co-ordinates and administersthe risk management functions in the Bank. The Department has three divisions for managingthe main risk streams Credit risk Market risk and Operational risk. Dedicated teamswithin the divisions are responsible for assessment monitoring and reporting of variousmaterial risks. Default risk and asset quality of loan portfolio are monitored and managedby the Credit Risk Division. MIU unit formed with the purpose of monitoring large valueaccounts is linked to Credit Risk Division. The Bank has established an independent MidOffice as part of Market Risk Division for real time monitoring of Treasury activities.Business Continuity Management Information and Cyber Security measures and InformationTechnology Risk form part of Operational Risk Management. 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. Executivelevel risk 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.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Bank has a robust mechanism for fraud risk management and themeticulously drafted Fraud Risk Management Policy elucidates the numerous mitigationmeasures and the surveillance mechanism that complements prevention detectioninvestigation and monitoring of both internal and external frauds. Vigilance Departmentplays a dynamic role in all the activities related to fraud and it also shoulders theresponsibility in sensitizing public as well as employees at all levels on trending modusoperandi of frauds as part of the pre-emptive strategy. With a view to create anatmosphere of vigil and alertness Vigilance Department issues Vigilance Communications(Alerts) to all employees on regular basis that disseminates various modus operandi offrauds in the banking industry and also suggesting safeguards and precautions to beadopted to prevent such frauds. Preventive Vigilance Workshops are conducted every year tosensitise and equip the field level staff to prevent frauds and at selected branchespreventive Vigilance Audits are also conducted. Further Fraud Prevention Committee at thebranches conducts meetings periodically with a view to spread awareness among theemployees on potential fraudulent activities and to keep them alert. Customer awareness onfraudulent activities is another area that is well covered by the Bank through variouseffective communication channels including SMS E-Mails posters at Branches ribbonmessages on Bank website internet banking webpage etc. All cases of frauds reported inthe Bank are investigated in detail as part of detective vigilance activity. Lacunae ifany observed during the course of investigation are plugged and cases where processrefinements are warranted are presented before relevant forums for correctivemeasures/necessary directions.
Bank has a robust Whistle Blower Policy termed as Protected DisclosureScheme (PDS) with a view to enhancing public confidence in the Bank and also in complianceof RBI directions in this regard. The policy aims at establishing an efficient 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 complains/disclosures under PDS. Vigilance Departmentconducts investigation of all complaints /information received through the PDS and submitsreport to MD & CEO. The details of the complaints and findings are also placed beforethe Audit Committee of the Board on a quarterly basis. The scheme is popularised throughvarious measures such as preventive vigilance classes internal circulars alerts etc. Nopersonnel have been denied access for giving any information as envisaged in the ProtectedDisclosure scheme. The PDS Document is made available in Bank's website and Intranet.Website link to Bank's Whistle Blower Policy is https://www.federalbank.co.in/our-commitments
SIGNIFICANT AND MATERIAL ORDERS PASSED BYTH E REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
During the financial year 2020-21 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 2020 approved theappointment M/s. Varma & Varma Chartered Accountants (Registration No. 004532S)Kochi for a period of four (4) years together with M/s. Borkar & Muzumdar CharteredAccountants (Registration No. 101569W) Mumbai for a period of three (3) years as JointStatutory Central Auditors of the Bank from the conclusion of 89th AGM till the conclusionof 93rd and 92nd AGM respectively.
RBI vide its letter DOS. ARG. No. PS-8/08.09.005/2019-20 dated June042020 had granted approval for appointment of M/s. Varma & Varma CharteredAccountants and M/s. Borkar
& Muzumdar Chartered Accountants as Joint Statutory CentralAuditors of the Bank for FY 2020-21 for their first year.
RBI vide circular dated DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April27 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 period of appointment of one of the Joint Statutory Central Auditorsof the Bank M/s Varma and Varma Kochi needs to be reduced from four years to threeyears. The Board of the Bank at its meeting dated June 11 2021 recommended to theshareholders of the Bank the revision in the tenure of appointment of M/s. Varma andVarma one of the Joint Statutory Central Auditors of the Bank as three years with effectfrom FY 2020-21. Accordingly the revision of tenure of M/s. Varma and Varma one of theJoint Statutory Central Auditors of the Bank is placed for the shareholders'approval in the ensuing AGM.
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. Borkar & Muzumdar Chartered Accountants as one of the JointStatutory Central Auditors of the Bank.
There is no qualification or adverse remark in Auditors' Report.There is no incident of fraud requiring reporting by the Auditors under Section 143(12) ofthe Act.
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 2020-21. Accordingly the Secretarial Audit Report for FY 2020-21 is annexed tothis report as Annexure II. There are no reservations adverse remark or disclaimerin the Secretarial 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 2021 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 2021 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.
InaccordancewiththirdprovisotoSection136(1)oftheCompanies Act 2013the Annual Report of the Bank containing therein its Standalone and the ConsolidatedFinancial Statements has been hosted on its website www.federalbank.co.in. Further asper fourth proviso to the said Section the Audited Annual Accounts of the said SubsidiaryCompanies of the Bank considered as part of the Consolidated Financial Statements havealso been hosted on the Bank's website www.federalbank.co.in. The said documentshave 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') 21Consolidated Financial Statements notified under Section 133 of the Companies Act 2013read together with Rule 7 of the Companies (Accounts) Rules 2014 issued by the Ministryof Corporate Affairs the Consolidated Financial Statements of the Bank along with itsSubsidiaries and Associates for the year ended March 31 2021 forms part of the AnnualReport.
REQUIREMENTFOR MAINTENANCE OFCO ST 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 ANDA NALYSIS 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 board 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-2020-21 ||1 |
|No. of complaints disposed of during FY -2020-21 ||1 |
|No. of cases pending for more than 90 days ||Nil |
|No. of workshops/ awareness program against sexual harassment carried out ||2 |
|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 and the same is annexed herewith as AnnexureIII. The policy has been displayed on the Bank's website atwww.federalbank.co.in.
INTERNAL CONTROL SYSTEMS ANDTH EIRAD EQUACY
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 andModel Audit Manual on Internal & Concurrent Audit Systems in Public Sector Banks.Audit and Inspection Policy is reviewed annually. Policy is reviewed considering variousguidelines of RBI Basel Committee recommendations ICAI guidelines other statutory /regulatory guidelines directions of Board / Audit Committee of the Board issued from timeto time and periodic internal guidelines / instructions issued by the Bank. At theenterprise level the Inspection and Audit Department on a continuous basis assesses andmonitors the effectiveness of the control systems and its adequacy to meet the growingcomplexities. The audit function essentially validates the compliance of Bank'sprocesses and operations with regulatory guidelines accounting procedures and Bank'sown internal rules and guidelines. A department level group meets on periodical intervalsto discuss latest internal / RBI / regulatory guidelines for ensuring that the requiredchanges are implemented for making the audit function updated and dynamic.
The Bank has a robust system towards escalating the audit findings toappropriate levels in the hierarchy of Management and discussions in various committeestowards suggesting corrective action and its follow up. 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 who directly reports to the ManagingDirector & CEO of the Bank. The Bank has various types of audit which inter-aliainclude Risk Based Internal Audit Information System Audit Concurrent Audit Gold LoanAudit and Management Audit. Branches are risk rated and the frequency of Risk BasedInternal
Audit is decided based on Risk Audit Matrix defined in Audit andInspection Policy. Significant Audit findings and observations are presented to InspectionReview Committee of Executives and a report on the meetings of Inspection Review Committeeof Executives along with significant audit findings directions / suggestions of theCommittee and action taken in such cases are placed to the Audit Committee of the Boardfor review periodically. Other findings are placed before a department level committeecalled the Inspection Department Review Committee' for review and itsobservations are placed before Inspection Review Committee of 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'sinternal control risk management and governance systems and processes thereby helpingthe Board and Senior Management protect the bank and its reputation.
POLICYO N 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 take 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 will also be considered.
BANK'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATIONINCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF ADIRECTOR AND OTHER MATTERS PROVIDED UNDER SUB-SECTION _3_ OFS ECTION 178 OFCOMP ANIES ACT2013 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 andneeds. Not less than fifty -one percent of the total number of Directors shall be personshaving special knowledge skills or valuable experience in one or more fields such asbanking finance management economics law accountancy agriculture and ruraleconomics cooperative movement trade industry infrastructure engineering. The Bankshall ensure to include in its Board need based representation of skills such asmarketing risk management strategic planning treasury operations credit recoveryinformation technology payment & settlement systems human resources and businessmanagement. At least two Directors shall be persons having special knowledge or practicalexperience in agriculture and rural economy cooperation or small-scale industry. TheBank should ensure that Board members with requisite skill sets as prescribed byregulations are there in the Board of the Bank.
2. The Board to have at least One Woman Independent Director in itscomposition.
3. The directors should be able to devote sufficient time and attentionto the discharge of their duties to the Bank.
4. The directors shall preferably be in the range of 35-70 years ofage. 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 1949with respect to directorship of companies in general or banking companies 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 determiningattributes of a director as required 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://www.federalbank.co.in/our-commitments.
POLICYO N 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 Non-Executive 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 2020-21 Non-Executive Director/Independent Directors of the Bank are paid sitting fees for attending Board/ Committeesmeetings and reimbursement of expenses for participation in Board/Committee meetings andin addition profit linked commission for FY 2019-20 was also paid during the year. Non-Executive Part Time Chairman was paid remuneration in addition to sitting fees with theapproval of RBI.
POLICYO N REMUNERATION TO MD & CEO EXECUTIVE DIRECTORS KEYMANAGERIAL PERSONNEL AND OTHEREMP LOYEES
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 4 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 Rs 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 Rs 25 lakh deferral requirements would not benecessary.
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 Rs 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 or part ofthe amount of deferred remuneration.
Claw back arrangement wherein the employees shall be liable to returnpreviously paid or vested remuneration to the bank. The deferred compensation if anypaid to such functionaries shall be subject to Claw back arrangements which will entailthe Bank to recover proportionate amount of variable compensation from such functionarieson account of an act or decision taken by the official which has brought forth a negativecontribution 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 entailedto 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 theCompensation paid vis-a-vis risk taking by the Executives to ensure that prudent risktaking is recognized in the compensation framework b. The Committee shall analyse the riskreward correlation and ensure that excess risk taking is not encouraged c. The Committeeshall review the performance based variable compensation paid every year and ensure thatan optimum risk reward balance is maintained. d. Linkage of performance during aperformance measurement period with levels of remuneration. e.Bank'spolicyondeferralandvestingofvariableremuneration and criteria for adjustingdeferred remuneration before vesting and after vesting. f. The Committee shall establishappropriate compliance arrangements to ensure employees do not insure or hedge theircompensation structure. g. The Committee shall update the details to the Nomination andRemuneration Committee on an annual basis.
FAMILIARIZATION PROGRAMMES FOR INDEPENDENT DIRECTORS
The familiarising programme for the Independent Directors are disclosedin the Report on Corporate Governance that forms part of this Annual Report. The detailsof such familiarization programmes are also disclosed on the Bank's website www.federalbank.co.inunder section "Shareholders 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 ofthe Board and its Committees Board culture execution and performance of specific dutiesobligations and governance.
Thereafter a separate exercise was carried out to evaluate theperformance of individual Directors including the Chairman of the Board who wereevaluated on specified parameters. The performance evaluation of the Independent Directorswas carried out by the entire Board other than the Independent Director concerned. Theperformance evaluation of the Chairman and the Non Independent Directors were carried outby the Independent Directors. The Directors expressed their overall satisfaction with theevaluation process.
1. Performance Evaluation of Independent Directors includingNon-Executive Director Criteria for evaluation include: a. Attendance at the Board andCommittee 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 whichthey are Chairpersons or Members e. Exercises his skills and diligence with due andreasonable care and brings an independent judgement to the Board f. Knowledge andCompetency: i) How the person fares across different competencies as identified foreffective functioning of the entity and the Board ii) Whether the person has sufficientunderstanding and knowledge of the entity and the sector in which it operates g. TheDirector remains abreast of developments affecting the company and external environment inwhich it operates independent of his being apprised at meetings h. Whether person isindependent from the entity and the other directors and there are no conflict of interesti. Whether the person demonstrates highest level of integrity (including conflict ofinterest disclosures maintenance of confidentiality etc.
2. Performance Evaluation of Chairperson Criteria for evaluationinclude: a. Works effectively with the Board as a whole b. Ability to elicit inputsfrom all Board Members and steer the discussions to a logical conclusion c. Works with theBoard and directs the management for creating an effective process for long-range orstrategic planning for the Company d. Whether the Chairperson displays efficientleadership is open-minded decisive courteous displays professionalism able tocoordinate the discussion etc. and is overall able to steer the meeting effectively e.Whether the Chairperson is able to keep shareholders' interest in mind duringdiscussions and decisions f. Whether the Chairperson is impartial in conductingdiscussions seeking views and dealing with dissent etc g. Handling of criticalsituations concerning the Bank h. Thinks strategically to promote growth improvefinancial performance and gain competitive advantage. i. Understands financial planningbudgeting and management of the organization's investments and overall organizationfinancial perspective.
3. Performance Evaluation of Non-Independent Directors (MD &CEO and Executive Directors) Criteria for Evaluation include:
Quantitative Targets: a. Achievements of performance against targetsset
Qualitative Targets: a. Apprises the Board regarding theorganization's financial position and operational budget so as to enable the Board tomake informed financial decisions b. Provides Leadership in developing strategies andorganizational plans with the management and the Board of Directors c. Ensures that theBoard is kept informed about all issues concerning the Bank d. Media interaction andability to project positive image of the Company e. Effectively pursues the performancegoals in relation to mission and objective of the organization f. Motivating employeesproviding assistance & directions and supervising & safeguard of confidentialinformation g. Establishment of internal control processes monitoring policies andencouraging suggestions h. Cultivates effective Relationship with Industry ForasCommunity and business leaders and Regulatory Bodies and Public Officials i. Ensurescompliance with all legal and regulatory requirements j. Undertaking of variousDevelopmental initiatives within the organisation k. Compliance with ethical standards& code of conduct and exercising duties diligently
4. Performance Evaluation of Board and Committees Criteria forEvaluation of Board include: a. The Board is of appropriate size and has theappropriate balance and diversity of background business experience industry knowledgeskills and expertise in areas vital to the Bank's success representing sectors laiddown by the regulators given its current and future position b. New Board membersparticipate in an orientation program to educate them on the organization theirresponsibilities and the organization's activities the Board encourages a culturethat promotes candid communication c. The Board oversees management's procedures forenforcing the organization's code of conduct Action Taken Reports on thediscussion/directions of the Board are submitted at regular intervals to the Board d. TheBoard oversees risk management through inputs from the Risk Management Committee e. TheBoard considers the quality and appropriateness of financial reporting including thetransparency of disclosures f. The Board ensures compliance with the relevant provisionsof the Companies Act and other regulatory provisions as applicable to the Bank g. TheBoard oversees the compliance processes h. The Board views the organization'sperformance from the competitive perspective - industry and peers performance industrytrends and budget analysis and with reference to areas where significant differences areapparent etc. i. The Board ensures compliance with the relevant provisions of theCompanies Act and other regulatory provisions as applicable to the Company. j. The Boardhas defined an effective Code of Conduct for the Board and Senior Management. k. Whetherthe Board monitors and manages potential conflicts of interest of management members ofthe board of directors and shareholders including misuse of corporate assets and abuse inrelated party transactions.
Criteria for Evaluation of Committees include a. The CommitteeTerms of Reference and composition continue to be appropriate b. The mandate compositionand working procedures of Committees of the Board of Directors is clearly defined anddisclosed c. Committee meetings are organized properly in number timing and location d.The Committee is effective in carrying out its mandate e. The Committee members receiveadequate material in advance of Committee meetings in sufficient time and detail topermit members to effectively consider issues to be dealt with f. The Committee allocatesthe right amount of time for its work g. Whether the Committee has fulfilled its functionsas assigned by the Board and laws as may be applicable h. Whether adequate independence ofthe Committee is ensured from the Board i. Whether the Committee's recommendationscontribute effectively to decisions of the Board
5. Assessment of Flow of Information Criteria for evaluation include:
The agenda and related information are circulated in advance of meetingsto allow board members sufficient time to study and understand the informationInformation on the annual operating plans and budgets and other updates areprovided to the Board; Updates on operating results of the Bank is furnished to theBoard periodically etc. Update on the compliance with the regulatory statutoryor listing requirements are placed before the Board.
BUSINESS RESPONSIBILITY REPORT
In July 2011 the Ministry of Corporate Affairs Government of Indiacame out with the National Voluntary Guidelines on Social Environmental andEconomic Responsibilities of Business'. These guidelines contain certain principlesthat are to be adopted by companies as part of their business practices and requiredisclosures regarding the steps taken to implement these principles through a structuredreporting format viz. Business Responsibility Report. Pursuant to Regulation 34(2)(f) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 your Bank hasprepared the Business Responsibility Report and forms part of this Annual Report.
TECHNOLOGY AND DIGITAL UPDATES AND MEASURES TAKEN IN IT GOVERNANCEINFORMATION SECURITY I T AUDIT IT OPERATIONS IT SERVICES OUTSOURCING
Technology and Digital 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 andobjectives.
The governance of IT is effectively supervised by the Board ofDirectors through the IT & Operations Sub-Committee of the Board. Besides theChairman an Independent Director the Committee comprises one Independent Director andtwo Executive Directors. All members of the Committee have extensive experience in IT& Operations and are able to provide effective guidance and direction to themanagement 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 class infrastructure to provide availabilityof service to users and customers without fail. The installed infrastructure is tested forits reliability and robustness by periodic audits. In addition periodic Disaster RecoveryTests are conducted to ensure the ability to move to the Disaster Recovery infrastructurein 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 OFEMP LOYEES
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 reportsare being sent to the Members and other persons entitled thereto excluding theinformation in respect of the employees of the Bank containing the particulars asspecified in Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014. The statement containing particulars of employees as requiredunder Section 197(12) of the Act read with Rule 5 (2) of the said Rules is available onthe 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 IV.
DIRECTOR'S RESPONSIBILITYST ATEMENT
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 2021 the applicable accounting standards have been followed alongwith proper explanation relating to material departures if any; 2. that such accountingpolicies as mentioned in the Notes to the Financial Statements have been selected andapplied consistently and judgment and estimates have been made that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Bank as at March31 2021 and of the profit of the Bank for the year ended on that date. 3. that proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Bank and for preventing and detecting fraud and other irregularities; 4. that theannual financial statements have been prepared on a going concern basis; 5. that properinternal financial controls were in place and that the financial controls were adequateand were operating effectively; 6. that systems to ensure compliance with the provisionsof all applicable laws were in place and were adequate and operating effectively.
AWARDS ANDA CCOLADES
Your Bank has won various awards and accolades in the Financial Year2020-21. 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 with various initiatives which brought in acclaim fromvarious stakeholders.
Your Bank's MD & CEO Shyam Srinivasan was conferred with thetitle Business Standard Banker of the year'. Through his ableleadership your Bank has transitioned into an organisation that regularly punches aboveits weight.
Your Bank has been declared winner in the Private Sector Bankof the Year' Gold category at the 20th edition of Outlook Money Awards.
Your Bank emerged winner of Business Today KPMG Best Bankaward in the category "Indian Bank with balance sheet above
Rs 1 Trillion and below Rs 3 Trillion" for the year 2019-20.
On the HR front your Bank has been recognized as a Great Placeto Work' in a study conducted by the Great Place to Work Institute. GreatPlace to Work Institute works with companies around the world to build a High-TrustHigh-Performance Culture that drives better business performance.
Your Bank was declared winner among medium sized banks for the MostInnovative Project and runner up in the categories
Best IT & Cyber Security I nitiatives' and BestTechnology Bank of the Year' by Indian Banks' Association at its NationalTechnology Awards.
Your Bank was recognized winner at Infosys Finacle ClientInnovation Awards program in the category "Customer Journey Reimagination" andwas recognized runner up in the category
Your Bank won SKOCH Award' for Silver Category in BFSI inrecognition of the versatility and excellence of FedMobile App. The Bank was adjudged byState Forum of Bankers Clubs Kerala as the Best Bank Among Old Private Sector Banksof the Country.'
Your Bank won the prestigious Finnoviti Award 2021'instituted by Banking Frontiers for the Artificial Intelligence based Digital LeadingPlatform by creating new benchmarks in the entire BFSI & Financial ecosystem.
The Board of Directors places on record its sincere thanks to theGovernment of India Reserve Bank of India various State Governments and regulatoryauthorities in India and overseas for their valuable guidance support and cooperation.The Directors wish to express their gratitude to Investment Banks Rating Agencies andStock Exchanges for their support. The Directors record their sincere gratitude to theBank's shareholders esteemed customers and all other well-wishers for theircontinued patronage. The Directors express their appreciation for the contribution made byevery employee of the Bank.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Grace Koshie |
|Date: June 16 2021 ||(DIN-06765216) |
|Place: Aluva ||Chairperson of the Board |