The Board of Directors have pleasure in presenting the Annual Report together withAudited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31stMarch 2020.
Global Business Performance
Global economy registered a growth rate of 2.9% in FY19 compared to 3.6% in FY18.Sluggish growth across major EMEs and developed nations in Q42019-20 was overwhelmed bythe outbreak of COVID-19 and India has not been spared from the exponential spread ofCOVID-19. India reported GDP growth of 3.1% in Q4 19-20 with the healthy growth ofagriculture at 5.9% compared to 1.6% growth in Q4 18-19.
During FY 2019-20 the major focus of the Bank was to improve the RAM portfolio withspecial emphasis on
Housing Loan and Jewel Loan with a view to mitigate the risk and improve capitalefficiency. The Bank further reduced the concentration of Bulk deposits and improved theshare of low cost deposits. CASA % of the Bank has reached 40.26% a milestone achievementin the history of the Bank. The Global Business of the Bank stood at Rs.357223 Croresas on 31st March 2020 against Rs. 374530 Crores as on 31st March 2019. The globaldeposits and gross advances stood at Rs.222952 Crores and Rs.134771 Croresrespectively as on 31st March 2020 against Rs. 222534 Crores and Rs. 151996Crores respectively as on 31st March 2019.
Bank was relentlessly striving to achieve Net profit at least in Q4 of FY 2019-20 asthe Bank could not accomplish the same continuously for several quarters even thoughoperational efficiency was improved substantially. Constraints on capital has restrictedthe Bank to expand the credit portfolio. However Bank could accelerate the growth underCapital light advances such as Housing and jewel loan in order to protect the interestincome under a falling interest rate regime. Bank continued its efforts to enhance Otherincome and the shortfall during FY 2019-20 was on account of One-off items under OtherIncome received last year. Bank could contain its expenditure despite making additionalprovision on employee wage settlement under negotiation. As a result Bank could achieveoperating profit to the extent of Rs. 3534 Crores for FY-2019-20. Bank could reduce thegross NPA substantially from Rs. 33398 Crores to Rs 19913 Crores and therebybrought down the GNPA% from 21.97% to 14.78% through multi-pronged and focused recoveryinitiatives. Bank has substantially increased the provision for the bad loans with thehelp of Capital infusion from the Govt of India and has cleaned up the Balance sheet tothe extent possible during the first brought down from Rs. 14368 Crores to Rs.6603Crores in absolute terms and from 10.81% to 5.44% in percentage terms. The NNPA% ofthe Bank as on 31.3.2020 is brought down below PCA threshold. PCR of the Bank has improvedsubstantially as on 31.3.2020 from 71.39% to 86.94% one of the highest in industry. As aresult of this approach Bank could register Net profit to the tune of Rs. 144 Crores forQ4 FY-19-20. However for the full financial year net loss was to the extent of Rs. 8527Crores.
Income and Expenditure Analysis
As there were constraints on capital Bank concentrated in expansion of RAM segmentadvances especially housing loan and jewel loan which is evident in growth of
RAM share to domestic advances from 67.19% as of 31st March-2019 to 75.83% as of 31stMarch-2020. Rebalancing of Corporate portfolio has resulted in reduction of overalladvances. Even though recovery was possible in small value advances up to Rs. 3 croresthrough focused OTS poor resolution under NCLT in high value NPA accounts held back themomentum in overall recovery. As a result Interest on advances was limited to Rs.11513Crores as compared to Rs.11727 Crores received previous year. Interest on investments hasimproved from Rs.4922 Crores in FY18-19 to Rs. 5208 Crores in FY-19-20. However overallinterest income has recorded marginal decline due to MCLR reduction and introduction ofRLLR.
Growth under low cost deposits and shedding of high cost deposits has kept the cost ofdeposit under control. CASA has improved from Rs. 85227 Crores as of 31st March-2019 toRs. 89751 Crores as of 31st March-2020 with a growth of 5.31%. CASA% has moved up from38.30% as of 31st March-2019 to 40.26% as of 31st March-2020. Bulk deposit has beenbrought down from Rs. 28285 Crores as of March-2019 to Rs. 17092 Crores as of March-2020with a reduction of 39.57%.
Despite reduction in interest on advances Net interest income has improved from Rs.5279 crores in FY2018-19 to Rs. 5303 Crores in FY-2019-20.
Operating expenses has gone up marginally from Rs 4452 Crores in FY-2018-19 to Rs.5129 Crores in FY-2019-20 due to one-time provision for employee wage arrears undernegotiation.
Yield on Advances has reduced from the level of 7.17% in FY-2018-19 to 7.01% inFY2019-20. However Cost of deposits has been brought down from 5.39% in FY-2018-19 to5.33% in FY-2019-20. NIM has been maintained above the level of 2% (2.03% FY-2019-20).
Capital Raised during FY 2019-20 Capital Infusion by Government of India
For the capital infusion by Government of India during 2019-20 the Bank issued a)3443750000 equity shares of 3 quarters of this financial year. NNPA Rs.10/- each forcash at issue price of Rs.11.20 per equity share (including premium of Rs.1.20 per equityshare) aggregating to Rs.3857 Crore to Government of India on Preferential Basis on28.11.2019 for the capital infusion received from Government of India on 27.09.2019 and b)3851590106 equity shares of Rs.10/- each for cash at issue price of 11.32 per equityshare (including premium of Rs.1.32 per equity share) aggregating to Rs.4360 crore toGovernment of India on Preferential Basis on 27.02.2020 for the capital infusion receivedfrom Government of India on 03.01.2020.
Raising of Tier II Bonds
During the quarter ended 30.09.2019 the Bank had raised Basel III Compliant Tier IIbonds aggregating Rs.500 Crore on private placement basis at a coupon rate of 9.08% withtenor of 10 years from the date of allotment. M/s. CRISIL and M/s. India Ratings haveassigned ratings of CRISIL A+/Stable and IND AA- Negative for the Tier II Bonds Issue ofthe Bank.
Authorized Capital of the Bank was Rs.10000 Crore as of the previous year and duringQ2 the same was increased to Rs.15000 Crore. Subsequently in Q3 once again theauthorized capital was increased to Rs.25000 Crore. During the year under reviewshareholding of Government of India has increased from 92.52% to 95.84% and the Publicshareholding stands at Rs.684.09 Crore (presently 4.16%). The paid-up capital of the Bankhas increased from Rs.9141.65 Crore to Rs.16436.99 Crore.
Capital Adequacy Ratio
The Bank's capital adequacy ratio as on 31st March 2020 stood at 10.72 % as per BaselIII norms.
The Bank has 3270 domestic Branches as on 31st March 2020 as against 3280 Branches ason 31st March 2019 comprising of 912 Rural Branches (27.89%) 960 Semi Urban Branches(29.36%) 670 Urban Branches (20.49%) and 728 Metropolitan Branches (22.26%). The Bankalso has 7 Zonal Offices 48 Regional Offices 2 Extension Counters 2 Satellite Offices3 City Back Offices and Zonal Audit Offices. During the year under review (FY 2019-20)the Bank has merged 10 Branches with other existing branches.
Corporate Governance reflects the built in value system of the Bank in conducting itsday to day affairs. The Bank recognizes the critical importance of effective Corporate
Governance for the safe and sound functioning of the
Bank and lays emphasis on ensuring that structures processes and systems are put inplace to establish strategic objectives to serve the interest of the Bank and itsstakeholders with a view to facilitate effective monitoring.
IOB Code of Conduct for Prohibition of Insider Trading 2019
Pursuant to Regulation 9 of Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 2015 the Bank had formulated IOB Code of Conduct for
Prohibition of Insider Trading 2015 to regulate monitor and report trading bythe Directors employees and other connected persons of the Bank with a view to complywith the provisions of the Regulations.
In view of the subsequent amendments vide SEBI (Prohibition of Insider Trading)(Amendment) Regulations 2018 the Bank had formulated IOB Code of Conduct for Prohibitionof Insider Trading 2019 effective from 01.04.2019. The Code is prescribed to regulatemonitor and report trading by Insiders' limited to only Designated Persons'.
SEBI (Listing Obligations and Disclosure Requirements Regulations) 2015 (LODR)
As per SEBI (LODR)
The Bank is providing remote e-voting facility to its shareholders in all AnnualGeneral Meetings/ Extraordinary General Meetings.
The Code of Conduct is applicable to all members of the Board and the Senior Management(i.e. General Managers of the Bank).
The Bank is submitting a quarterly compliance report on Corporate Governance to theAudit Committee of the Board and to BSE & NSE where the shares of the Bank arelisted.
The Bank is also submitting Quarterly Investor Grievance Report to BSE & NSE.
Investor Education & Protection Fund (IEPF)
As per the guidelines of Ministry of Corporate Affairs (MCA) Government of India theBank transferred Unpaid Dividend amount pertaining to the year 2011-12 to IEPF on04.09.2019. Since there were technical issues with IEPF / MCA portal while initiatingfunds transfer in September 2019 it was reinitiated and finally it was transferred videdemand draft dated 08.11.2019. The unpaid dividend data pertaining to the years 2012-13 to2013-14 has been uploaded in MCA website and is also available at www.iob. in.Accordingly the Bank has complied with the guidelines of Government of India in respectof transfer of unpaid dividend to IEPF. Bank is complying with all guidelines/regulationslaid down by the Regulatory Authorities and Government of India from time to time. TheBank redresses the shareholders grievances without any delay.
Board of Directors
The business of the Bank is vested with the Board of Directors. The MD & CEO and EDfunction under the superintendence direction and control of the Board. The strength as ondate is six directors comprising two whole time Directors one GOI Nominee Director oneRBI nominee director two directors elected from amongst the shareholders to dulyrepresent their interest. The tenure of the Non-Executive Chairman ended in February 2020and since then MD & CEO presides over the meetings of the Board as Chairman. The termsof the following directors ended during the FY 2019-20
|Name ||Date of Joining ||Term Ended on ||Designation |
|Shri T C A Ranganathan ||16.02.2017 ||15.02.2020 ||Non -Executive Chairman |
|Shri R Subramaniakumar ||29.09.2016 ||30.06.2019 ||Managing Director & Chief Executive |
| || || ||Officer |
|Shri K Swaminathan ||17.02.2017 ||16.02.2020 ||Executive Director |
|Shri Nirmal Chand ||13.03.2014 ||12.08.2019 ||RBI Nominee Director |
|Smt Reeny Ajith ||Date of Notification: ||18.08.2019 ||RBI Nominee Director |
| ||13.08.2019 || || |
|Shri K Raghu ||26.07.2016 ||25.07.2019 ||Chartered Accountant Director |
During the FY 2019-20 Shri Deepak Kumar RBI Nominee Director has been nominated tothe Board since 18.08.2019.
The Board of Directors are grateful for the valuable guidance and support received fromthe Government of India Reserve Bank of India Securities and Exchange Board of India(SEBI) Stock Exchanges State Governments Financial Institutions and all OverseasRegulators. The Board of Directors acknowledge with thanks the valued Customers EmployeesUnion Officers Association domestic and international banking group the shareholders& other stake holders for their valued support and continued patronage with the Bank.
The Board also wishes to place on record its profound appreciation for the valuablecontribution of the Bank's Staff at all levels and looks forward to their continuedinvolvement with commitment towards achieving the future goals.
| ||For and on behalf of the Board of Directors |
|Chennai ||Karnam Sekar |
|25th June 2020 ||Managing Director & Chief Executive Officer |