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IDBI Bank Ltd.

BSE: 500116 Sector: Financials
NSE: IDBI ISIN Code: INE008A01015
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VOLUME 1864979
52-Week high 65.80
52-Week low 23.55
P/E
Mkt Cap.(Rs cr) 19,109
Buy Price 24.75
Buy Qty 199.00
Sell Price 24.90
Sell Qty 100.00
OPEN 24.45
CLOSE 24.45
VOLUME 1864979
52-Week high 65.80
52-Week low 23.55
P/E
Mkt Cap.(Rs cr) 19,109
Buy Price 24.75
Buy Qty 199.00
Sell Price 24.90
Sell Qty 100.00

IDBI Bank Ltd. (IDBI) - Director Report

Company director report

Your Bank's Board of Directors is pleased to present the Report on its Business andOperations for the financial year ended March 31 2019.

India's economic growth decelerated in 2018-19 as compared to the previous year onaccount of slowdown in agriculture and services sector. While deceleration in the economicactivity in India was partly on account of domestic factors such as deficient and unevenmonsoon muted consumption and investment demand among others global volatilities alsoimpacted the overall growth momentum. Banks play a major role in India's growth story asthey continue to remain the major source of debt funding by a large margin compared to anyother source. Taking this into consideration various reform measures such asrecapitalisation of public sector banks resolution of stressed assets under theInsolvency and Bankruptcy Code among other measures were initiated to strengthen thebanking sector. These measures are expected to improve the financial health of banks andsubsequently lead to credit off-take in the economy. While these measures are enablingbanks to improve their financial position the overall turnaround in the banking sectorperformance will be realised with a lag. It is crucial to view the performance of yourBank in this context.

Financial Highlights

As on March 31 2019 your Bank's aggregate deposits and advances touched र227372crore and र146790 crore respectively. Your Bank's business highlights for the periodunder review are presented in Table 1:

Table 1: Key Financials

(In रcrore)
As on March 31 2018 As on March 312019
Capital 3083.86 7736.30
Reserves & Surplus 18125.87 29875.40
Deposits 247931.61 227371.72
Borrowings 63185.53 4528772
Other Liabilities & Provisions 17758.85 10013.35
Total Liabilities 350085.72 320284.49
Cash & Balances with RBI 13163.69 12730.47
Balances with Banks & Money at Call & Short Notice 20522.40 8503.23
Investments 91606.06 93072.63
Advances 171739.94 146790.43
Fixed & Other Assets 53053.63 5918773
Total Assets 350085.72 320284.49
For the period 2017-18 2018-19
Total Income 30040.11 25371.53
Total Expenses (other than provisions) 22130.90 21319.41
Provisions (other than tax) 20501.74 26879.29
Profit/ (Loss) Before Tax (12592.53) (2282717)
Provision for Tax* (4354.61) (7710.87)
Profit/ (Loss) After Tax (823792) (15116.30)

* Net of Current Income Tax and Deferred Income Tax

During the year under review your Bank's total income amounted to र25372 crorecomprising interest income of र22071 crore and other income of र3300 crore. Interestexpenses stood at र16166 crore and operational expenses at र5154 crore accountingfor total expenditure of र21319 crore (excluding provisions and contingencies).

Total provisioning of your Bank increased in view of continued stress in the Bank'scorporate loan portfolio. The provisions include र25747 crore towards provision fornon-performing assets bad debts written-off and investments. As a result your Bankincurred a net loss of र15116 crore during FY 2018-19.

While the Earnings per Share (EPS) during the year was negative due to the losses theBook Value per Share (excluding intangible assets) stood at र14.40 per Share as atend-March 2019. In view of the losses incurred the Board of Directors have notrecommended any dividend for the year.

Report on the Performance and Financial Position of Subsidiaries and Joint Ventureincluded in the Consolidated Financial Statement as on March 312019

Name of the entity

Net Assets i.e. total assets minus total liabilities

Share in profit or (loss)

As % of consolidated net assets Amount (In रcrore) As % of consolidated profit or (loss) Amount (In रcrore)
1 2 3 4 5
Parent : IDBI Bank Ltd. 9709 37611.70 (101.00) (15116.30)
Subsidiaries:
Indian:
1. IDBI Capital Markets & Securities Ltd. 0.81 314.91 0.00 0.26
2. IDBI Intech Ltd. 0.15 56.34 0.06 8.84
3. IDBI Asset Management Ltd. 0.28 108.09 (0.03) (4.34)
4. IDBI MF Trustee Company Ltd. 0.00 1.47 0.00 0.04
5. IDBI Trusteeship Services Ltd. 0.54 20737 0.25 3751
Foreign: NA NA NA NA
Minority Interests in all subsidiaries 0.25 96.98 0.11 16.99
Associates (Investment as per the equity method)
Indian: j
1. Biotech Consortium India Ltd. NA NA 0.00 0.51
2. National Securities Depository Ltd. NA NA 0.19 28.78
3. North Eastern Development Finance Corporation Ltd. NA NA 0.09 13.92
4. Pondicherry Industrial Promotion Development & Investment Corporation Ltd. (PIPDICL)* NA NA NA NA
Foreign: NA NA NA NA
Joint Venture (as per proportionate consolidation/ investment as per the equity method)
Indian:
1. IDBI Federal Life Insurance Company Ltd. 1.13 438.06 0.43 63.73
Foreign: NA NA NA NA
TOTAL 100 3873794 (100.00) (1496704)
Elimination (101) (391.23) (0 13) (19.71)
Net Total 98.99 38346.71 (100.13) (14986.76)

*- In respect of PIPDICL the Bank has not received any financial statements andtransaction details from the company hence information not consolidated in the above. TheBank has written down investment in PIPDICL to Rupee one.

Material changes and commitments if any affecting financial position of IDBI Bankwhich have occurred during the end of financial year and the date of Board Report.

There are no material changes and commitments affecting the financial position of theBank which have occurred between the end of the financial year of the Bank i.e. March 312019 and the date of the Directors' Report.

The details in respect of adequacy of internal financial controls with reference to thefinancial statements.

According to Section 143(3)(i) of the Companies Act 2013 w.e.f. Financial Year2015-16 the report of the Statutory Auditors shall state whether the Bank has adequateInternal Financial Control (IFC) system in place and the operating effectiveness of suchcontrols in the context of the financial statements. IFCs as referred to in Section143(3)(i) of the Companies Act relates to Internal Financial Controls Over FinancialReporting (IFC-FR).

The Bank's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Bank considering the essential components of internal control stated inthe Guidance Note on Audit of IFC-FR issued by the Institute of Chartered Accountants ofIndia. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Bank's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 the BankingRegulation Act 1949 and the guidelines issued by the Reserve Bank of India.

Your Bank has put in place an IFC-FR Framework for evaluation of the existing internalfinancial controls system and appointed a Consultant for validating the compliances withrespect to the documentation certification reporting process of the controls across allbusiness verticals/ departments and ascertaining the adequacy and effectiveness of thecontrols in the Bank in all material respects with respect to financial reporting.

During 2018-19 the Consultant submitted the Internal Compliance Certificate for thequarters ended June 2018 to March 2019 after carrying out the testing and validation ofall the underlying processes as per the Bank's IFC-FR framework.

Details of Significant changes (i.e. change of 25% or more as compared to theimmediately previous financial year) in key financial ratios along with a detailedexplanation thereof including:

In terms of compliance with the SEBI (Listing Obligations & DisclosureRequirements) (Amendment) Regulations 2018 the key financial ratios for the Bank are asfollows:

Particulars 2017-18 2018-19 Comments
Return on Average Net Worth (58.30%) (155.20%) The Net Loss for the year has increased to र15116.30 crore in FY 2018-19 from र823792 crore in FY 2017-18 mainly on account of additional provisioning on NPAs. The Net Worth as on March 31 2019 was र11140.35 crore as against र12031.01 crore as on March 31 2018.
Return on Average Assets (2.46%) (4.68%)
Gross NPA % to Gross Advances 2795 27.47 Total NPA Provisions have increased by र3266.10 crore from र19126.14 crore for FY 2017-18 to र22392.24 crore for FY 2018-19.
Net NPA % to Net Advances 16.69 10.11
Provision Coverage Ratio (including Technical Write-offs) 63.40% 82.88%
CASA to % of total deposits 3715% 42.54% CASA balance increased to र96730.41 crore as on March 312019 as against र92102.09 crore as on March 31 2018 and Total Deposits have reduced to र227371.72 crore as on as on March 31 2019 from र247931.61 crore as on as on March 31 2018.

Capital Adequacy

Your Bank computes regulatory capital requirement for credit market and operationalrisks as prescribed under the Pillar 1 guidelines of the Basel III framework on aquarterly basis. Your Bank's ‘Total Capital + Capital Conservation Buffer (CCB)'ratio was 11.58% as on March 31 2019. Similarly your Bank's ‘Common Equity Tier 1(CET1) + CCB' ratio was 8.91% as against the regulatory requirement of 7375%. Your Bank's‘Tier 1 + CCB' ratio stood at 9.13% as on March 31 2019 as against the regulatoryrequirement of 8.875%.

Your Bank has a Board-approved policy on Internal Capital Adequacy Assessment Process(ICAAP) in line with the Pillar 2 norms of the Basel III framework. This policy enablesyour Bank to internally assess and quantify those risks which are not covered under Pillar1 as well as to develop appropriate strategies to manage and mitigate risks under normaland stressed conditions. In line with the RBI's guidelines on stress testing your Bankhas also put in place a comprehensive stress testing framework. This framework enablesyour Bank to assess its performance under exceptional but plausible events and facilitatesappropriate proactive strategies to meet unforeseen contingencies.

The framework has been strengthened during the period under review by inclusion ofscenario analysis and reverse stress testing. Your Bank has adopted a Disclosure Policy inaccordance with the Pillar 3 requirements under the Basel norms. Accordingly disclosuresas at the end of each quarter are hosted on your Bank's website thereby exhibiting highdegree of transparency. Your Bank follows the Standardised Approach under Credit Risk forcomputation of capital charge Basic Indicator Approach (BIA) to compute regulatorycapital charge for Operational Risk and Standardised Measurement Method (SMM) to computeregulatory capital requirement for market risk.

Business Strategy

During the year your Bank embarked on a strategic initiative to position itself as aretail-focused bank. Towards this end the business strategy of the Bank was focussed ondriving growth through accretion of a low-cost deposit base and granular asset mix throughgrowth in retail asset book. Measures to enhance CASA and retail deposit base has aided incontaining the cost of deposits. Additionally augmenting growth in Retail Agri and MSME(RAM) advances has enabled the Bank to reduce its Risk Weighted Assets (RWA).Simultaneously your Bank consciously restricted its corporate portfolio therebyfurthering the process of de-risking its business portfolio mix.

The majority stake acquisition by Life Insurance Corporation of India (LIC) has openedup several business avenues for your Bank. The Bank and LIC through its collectivenetwork of branches offices and workforce have been leveraging on the mutual businesssynergies especially in various revenue generating areas such as bancassurance cashmanagement and premium collection services investment and advisory services amongothers.

To capitalise on these synergies your Bank has created dedicated teams overseen bythe top management to drive its business growth. Additionally your Bank has also put inplace necessary business enablers to bring the convenience of banking and insuranceservices at one stop for all its customers.

As a customer-centric bank the Bank is scaling up its capabilities especially inInformation Technology (IT). Digitalisation is a prominent feature of your Bank's strategyas it would help in ensuring greater degree of customer convenience as well as enable yourBank to enhance its operational efficiency. Your Bank is making efforts to furtherstrengthen its Customer Relationship Management (CRM) and business intelligencecapabilities that will help in better understanding of customer preferences and therebyprovide an impetus to targeted sales. Furthermore your Bank remains committed to theGovernment of India's PSB Reforms Agenda aimed at Enhanced Access and Service Excellence(EASE) and is taking necessary steps towards its implementation.

In addition to putting in place necessary business enablers the Bank continues toremain focussed on improving its asset quality. Towards this end your Bank has set up aCollection & Recovery War Room to bring focused and accelerated efforts towardscollection and recovery in consonance with the Bank's objective to drive improvement inits asset quality. Furthermore your Bank is in the process of putting in place EarlyWarning Signals to ensure close monitoring of advances to preclude further slippages.

Underpinning these strategic endeavours the Bank is proactively reinforcing its riskmanagement practices to ensure a stable growth path. Simultaneously the Bank is fosteringa robust compliance culture to meet key regulatory/ policy objectives and consequentlyprotect interest of all stakeholders.

Key Business Initiatives

In line with the business strategy of positioning itself as a retail-focussed bankyour Bank has initiated measures to broad-base the products and services offering to itsdiversified customer base. Your Bank continued to introduce new products and upgraded itsexisting products to cater to the evolving industry trends regulatory landscape andcustomer preferences. Additionally your Bank also offered various value-added productsand services to its customers keeping in view their risk profile and financial goals.Subsequent to stake acquisition by LIC your Bank has also introduced specially designedproduct variants to cater to the banking and investment requirements of employees agentsand subsidiaries of LIC.

Your Bank served its customers through its network of 1892 branches 3700 ATMs and 58e-lounges. The Bank also extended a wide range of digital offerings to make banking moreconvenient and inclusive to the needs of its customers.

In line with the Government's DigiDhan Mission of promoting seamless digital paymentsyour Bank has designated one officer from every retail branch as 'Digital Guru' to act asa single point of contact for all digital product related queries.

Acknowledging the significance of promoting the priority sector segment your Bank hasbeen actively contributing to Priority Sector Lending (PSL) thereby also adhering to theRBI's mandate. Your Bank has also been proactive in furthering the national objective ofinclusive growth by ensuring access to financial products and services to the vulnerablesections of the society at affordable cost in a fair and transparent manner. Apart fromoffering appropriate financial products and expanding its reach by making intensive use oftechnology your Bank also placed emphasis on financial literacy to ensure an inclusiveand holistic growth. Your Bank leveraged the Business Correspondents (BCs)/ BusinessFacilitators (BFs) network to increase penetration in rural and semi-urban areas to ensuregreater financial inclusion as also provide an added impetus to its PSL business.

Your Bank conducts its Trade Finance (TF) business through its 39 Category B AuthorisedDealer TF centres and 177 designated retail TF branches in various locations pan-India.During the year your Bank got approval from the GoI for dealing in Indo-Iran tradesettlements in Indian Rupee for both oil and non-oil transactions. As part of your Bank'songoing digital transformation various IT initiatives have been taken during the yearunder review to automate the process flow of transaction with a view to enhance securitycontrol measures as well as to improve operational efficiency and productivity.

Your Bank also acts as an agent for Central and State Governments to manage theirreceipts and payments. Your Bank is authorised to collect Central Government taxes (directand indirect) Goods & Services Tax (GST) Government receipts online collection forEmployee Provident Fund Organisation (EPFO) and Employee State Insurance Corporation(ESIC) offer Small Saving Schemes and extend facility to submit Life Certificate forCentral Government pensioners digitally among others.

Your Bank offers a wide array of collection and payment products as part of its CashManagement Services (CMS). Your Bank is authorised to participate in e-freight paymentsystem of Indian Railways. Your Bank is also authorised to facilitate utility billpayments through Bharat Bill Payment (BBPS).

Your Bank has laid special emphasis on the upgrade and overhaul of many of its criticalIT hardware systems and committed long-term investments in enrichment of its assets toensure that the deployed hardware meets the business needs. Furthermore your Bank is alsoembracing technological innovation to ensure seamless customer service and highest levelof user experience. Your Bank has also responded to the industry-wide information securityconcerns by installing various high-end security solutions.

In order to promote analytics driven sales your Bank has setup a Centre of Excellence(COE) for Data Analytics with the objective of achieving higher customer wallet share bydelivering the right product at the right time.

Your Bank strived to identify and digitise activities as part of its objective toautomate the existing processes and thereby enhance service delivery as well asrationalise related costs.

Your Bank has a Board-approved CSR policy which underscores the Bank's inclination tomake a meaningful contribution towards the welfare of the society. Your Bank through itsvarious interventions aims to create long-term social and economic value for the society.

The detailed description of the Bank's initiatives undertaken during the year isoutlined in the Management Discussion and Analysis section of the Annual Report.

Board of Directors

Your Bank's Board of Directors is broad-based and its constitution is governed by theprovisions of the Banking Regulation Act 1949 the Companies Act 2013 the Articles ofAssociation of the Bank and the requirements of corporate governance as envisaged in theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 [LODRRegulations]. The Board functions directly as well as through various board committeesconstituted to provide focussed governance in the important functional areas of the Bank.

Post-acquisition of 51% controlling stake by LIC the Board of your Bank has beenreconstituted in accordance with the amended Article 116(1) of the Articles of Associationand is also in compliance with section 10A of the Banking Regulation Act 1949. The Boardof Directors as per the amended Articles of Association of the Bank includes 15 memberswith the Chairman of LIC as Non-Executive Non Whole-Time Chairman of the Bank MD &CEO and two DMDs nominated by LIC one Official Nominee Director of LIC two NomineeDirectors of GOI and eight Independent Directors including one Woman Director.

As on March 31 2019 the Board comprised of thirteen Directors including ManagingDirector and CEO (MD & CEO) two Deputy Managing Directors (DMDs) three Non-ExecutiveDirectors and seven Independent Directors. Shri Rakesh Sharma MD & CEO Shri K. PNair & Shri G. M. Yadwadkar DMDs as Whole Time Directors; Shri Pankaj Jain & ShriSudhir Shyam Central Government official Nominees and Shri Rajesh Kandwal LIC NomineeDirector as NonExecutive Directors; Shri Gyan Prakash Joshi Dr. Ashima Goyal ShriBhuwanchandra B. Joshi Shri Samaresh Parida Shri N. Jambunathan Shri Deepak Singhal andShri Sanjay Gokuldas Kallapur as Independent Directors constituted the Board. The presentstrength of 13 (thirteen) Directors on the Board meets the requirement provided underArticle 114(a) of the Articles of Association.

Apex Committees

The Board has a total of fourteen committees to oversee various functional areas ofyour Bank's business and operations. The Board committees include Audit Committee of theBoard Executive Committee Nomination and Remuneration Committee Stakeholders'Relationship Committee HR Steering Committee Frauds Monitoring Committee RecoveryReview Committee Risk Management Committee Independent Directors' Committee CorporateSocial Responsibility Committee Non-Cooperative Borrowers' Review Committee CustomerService Committee Wilful Defaulters' Review Committee and Information Technology StrategyCommittee.

Corporate Governance

Your Bank is committed to adoption of best corporate governance practices. It believesthat effective corporate governance is not just a requirement for regulatory compliancebut also a facilitator for enhancement of stakeholders' value. The details of your Bank'scorporate governance practices are given in this Annual Report as a separate section underCorporate Governance Report.

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) vide its notification dated December22 2015 has mandated the inclusion of Business Responsibility (BR) Report as part of theAnnual Report for Top 500 listed entities based on market capitalisation at BSE and NSE.The BR Report should describe initiatives taken by the listed entity from anenvironmental social and governance perspective. The Bank's Business ResponsibilityReport has been hosted on the website of the Bank (www.idbibank.in).

Dividend Distribution Policy

Your Bank has a Board-approved Dividend Distribution Policy which is hosted on thewebsite of the Bank (www.idbibank.in).

Statement under Section 134 of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014

There were no personnel in your Bank's services during the financial year underreview who received remuneration of over र1.02 crore annually. Besides there were nopersonnel in the service of the Bank for a part of the year who received remuneration inexcess of र8.50 lakh per month. Further there was no personnel employed throughout thefinancial year or part thereof who was in receipt of remuneration at a rate which in theaggregate was in excess of that drawn by Managing Director & CEO or Deputy ManagingDirector of the Bank and who held by himself or along with his spouse and dependentchildren not less than 2% of the equity shares of the Bank.

Statement under Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 for year ended March 312019 - Details of Top Ten Employees

The statement indicating details of top ten employees of the Bank in terms ofremuneration drawn during FY 2018-19 is as follows:

Sr. No. Name Desig nation Remu neration received () Nature of employment whether contractual or otherwise Qualifications and experience of the employee Date of commencement of employment The last employment held by such employee before joining the company The age of such employee
1 Shri Umesh Jain CGM 4211622 Confirmed Employee M.Tech. CAIIB Diploma in Business Finance M.D.B.A. 31 yrs. 2 months 17-Mar-1988 Voltas Ltd. 59 yrs 11 months
Sr. No. Name Desig nation Remu neration received () Nature of employment whether contractual or otherwise Qualifications and experience of the employee Date of commencement of employment The last employment held by such employee before joining the company The age of such employee
2 Smt. Maya Chakravorty CGM 3867042 Confirmed Employee B.Sc. (Engg) M.M.S. C.F.A. 25 yrs. 9 months 17-Aug-1993 Oil & Natural Gas Commission 53 yrs 11 months
3 Shri Rajeev Kumar CGM 3760017 Confirmed Employee B.Tech. M.B.A. CAIIB 25 yrs. 8 months 17-Sep-1993 State Bank of India 56 yrs 5 months
4 Shri Krishnan Srinivasan GM 3715869 Confirmed Employee B.Com. ICWA (Inter) CAIIB 34 yrs 5 months 17-Dec-1984 Modella Woollens Ltd. 58 yrs 2 months
5 Shri K. R. Murali Mohan CGM 3708185 Confirmed Employee B.Com. CAIIB 31 yrs 27-May-1988 Indian Overseas Bank 60 yrs
6 Shri Sunit Sarkar CGM 3698482 Confirmed Employee B.Tech. ICWA CAIIB Post Graduate Diploma in Business Management 25 yrs 8 months 1-Sep-1993 ESAB India Ltd. 52 yrs 9 months
7 Shri Shankar V. GM 3685908 Confirmed Employee B.Sc. M.D.B.A. P.G.D.F.M. JAIIB 34 Yrs. 8 months 24-Sep-1984 NABARD 56 yrs 9 months
8 Shri Swapan Kumar Bagchi CGM 3677071 Confirmed Employee M.Sc. in Exploration Geophysics M.Tech. PG.D.M. CAIIB 25 yrs 4 months 25-Jan-1994 Perfect Computers Ltd. and then Self Employed 59 yrs 3 months
9 Shri Nagraj Garla CGM 3631806 Confirmed Employee B.Com. M.Com. MBA ICWA (Inter) CAIIB 19 yrs 3 months 17-Feb-2000 The Vysya Bank Ltd. 50 yrs 1 month
10 Shri Krishnendu Banerjee CGM 3571071 Confirmed Employee M.A. JAIIB 31 yrs 6 months 2-Nov-1987 State Bank of India 58 yrs 5 months

Notes:

1. None of the employees listed above hold 2% or more of the paid-up share capital ofthe Bank as at March 312019.

2. None of the employees listed above is a relative of any director of the Bank.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

a) Conservation of Energy

Various initiatives taken by Bank towards conservation of energy are as follows:

• All conventional light fixtures at the Head Office Mumbai and Annexe buildingat CBD-Belapur Navi Mumbai have been replaced with energy efficient LED lightfixtures/lamps/tubes to save power consumption. Occupant sensors have been used to controlcabin lighting to save power consumption.

• Lifts with variable frequency drive have been installed at the Head OfficeMumbai and Annexe building at CBD-Belapur Navi Mumbai.

• Energy efficient screw chillers have been installed for air-conditioning at HeadOffice Mumbai and Annexe building at CBD-Belapur Navi Mumbai.

• Solar panels have been installed to cater to common lighting at Annexe buildingat CBD-Belapur Navi Mumbai. Installation of solar panels is in progress at JawaharlalNehru Institute of Banking and Finance (JNIBF) Hyderabad.

• Solar water heaters are installed at the JNIBF campus. In addition to the abovethe Bank is adopting water and energy conservation measures in all its new projects andrenovation of existing premises. Further LED light fixtures are being used for powersaving in the new branch furnishing and old branch relocation process.

b) Technology Absorption

Your Bank has been proactively scrutinising and absorbing the latest technology-basedinnovations which have potential to empower its business functions enrich its customerexperience and optimise its readiness towards opportunities and challenges of the future.A few technology-driven reforms adopted recently by your Bank include deployment ofsolutions for automation and monitoring of DC/ DR drills from centralised consolesimplementation of enterprise-level proxy solution and upgrades to the Active Directory(AD) and Security Operations Centre (SOC) to strengthen the security posture of the Bankenhancement of capacity under the private cloud architecture to adequately provide forfuture business growth and digitisation of processes like onetime settlement of debt andover-the-counter investments in third party financial instruments aimed at ease ofbusiness. Your Bank has also taken steps to increase digital foot-prints/ touch-points byintroducing new All in one' mobile banking app for giving various services to customers.

While your Bank has already embarked upon implementation of various solutions likeEarly Warning Signal System (EWS) to contain fresh slippages and an

Online Loan Review System for automation of the lending related processes the Bank isalso in the process of implementing many security initiatives like Enterprise DLP and DataClassification Solution Honeypot Solution Backup Solution for endpoints and encryptionDistributed Denial-of-Service (DDoS) prevention tool to protect internal threats etc. TheBank is also evaluating and exploring the absorption of nascent technologies like ChatBots/Voice Bots Block Chain Technology API Layer Integration Artificial Intelligenceand Robotic Process Automation to its competitive advantage in the near future. Details ofother initiatives taken in the Information Technology ecosphere have been provided in theManagement Discussion & Analysis section of this Annual Report.

c) Foreign Exchange Earnings and Outgo

During the year the total foreign exchange earned by the Bank was र53.38 crore(excluding foreign currency cash flows in derivatives and foreign currency exchangetransactions) and the total foreign exchange outgo was र8716 crore towards the operatingand capital expenditure requirements.

RBI's Prompt Corrective Action (PCA)

The RBI vide its letter dated May 05 2017 initiated PCA for your Bank in view of itshigh net Non-Performing Assets (NPA) and negative Return on Assets (ROA). The Bank hasbeen taking necessary actions to comply with the RBI's directive in this regard. The Bankhas also put in place a comprehensive turnaround strategy to improve its financialposition. Furthermore in compliance with the RBI directive with regard to restriction onfresh corporate exposure the Bank has reviewed its internal credit policy and has beenworking towards limiting its corporate exposure.

Directors' Responsibility Statement

The Board of Directors hereby declares and confirms that:

a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. The Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Bank at the end of the financial year and of theprofit and loss of the Bank for that period;

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

d. The Directors had prepared the annual accounts on a going concern basis;

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

f. The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Acknowledgements

Your Bank's Board of Directors is sincerely grateful to the Government of IndiaReserve Bank of India (RBI) all other statutory/ regulatory authorities and LifeInsurance Corporation of India (LIC) for their valuable cooperation and guidance. TheBoard also acknowledges with gratitude the co-operation and support received fromvarious State Governments and other banks/financial institutions. The Board thanks variousmultilateral institutions and international banks/ institutions for their support. TheBoard takes this opportunity to put on record its deep sense of gratitude to its loyalshareholders and customers for extending their support during the year and looks forwardto their continued association in the years ahead. The Board appreciates the sincere anddevoted services rendered by its entire staff and highly values their commitment towardsthe Bank.

[G.M. Yadwadkar] [Rakesh Sharma]
Deputy Managing Director Managing Director & CEO
Place: Mumbai
Date: May 30 2019