On my personal behalf and on behalf of Board of Directors it is my privilege to placethe highlights of your Bank's performance for FY21. The Annual Report for the FinancialYear ended 31st March 2021 details the progress made and initiatives taken byyour Bank during the year.
At the outset I sincerely pay my homage to those employees who have lost their livesto the Covid pandemic while serving the Bank. I would also like to thank all the employeesfor their relentless efforts and all stakeholders for their unstinted support during thesetesting times.
Before I proceed to present the performance highlights of your Bank let me brieflydwell upon the macro-economic scenario.
Global economic growth suffered a setback during last year due to the pandemicdisrupting business activities for a longer than expected duration. With the surge invaccination economies are opening up and growth is likely to be visible in the secondhalf of the year and gain momentum gradually. However the new variants of the viruscausing recurring waves in few countries raise concerns to be managed promptly andefficiently.
Global growth is expected to be 6.0% in the year 2021. The emerging marketeconomies and developing countries are most affected due to the pandemic requiring supportfrom other countries in getting their population vaccinated.
Indian economy was no exception to the pandemic scenario with businessactivities severely effected during FY21. There was some respite due to the unlocking andgrowth was seen in few sectors like steel cement and electricity generation in the lastquarter of the financial year.
With the second Covid-19 wave there has been a severe setback and the localrestrictions may slow down what was a promising recovery.
The service sector has been affected the most. The recent data of the formalsector also exhibit slowdown in the short term.
Domestic economic activity is expected to rebound in FY22. Government'sintention to vaccinate every single resident has raised hopes of an eventual turnaround inthe economy later this year.
RBI expects inflation to remain around 5.1% and real GDP growth at 9.5% in FY22.An active monsoon and pick up in vaccination give cause for hope on this front. The ruraland urban demand should also improve giving a positive impact on growth of the economy.
Banking Sector FY21
In FY21 SCBs witnessed a better growth in deposits at 12.32% than credit whichwas at 5.6%. There was ample liquidity in the system and despite low deposit ratesprevailing there was consistent growth in deposits. The demand for loans however remainedsubdued due to the localized restrictions. The CASA ratio for SCBs stood at 44.1% onaccount of growth in the overall savings deposit at the end of Q4FY21.
In response to Covid related disruptions RBI took several measures includingmaintaining an accommodative stance on rates introduction of LTRO TLTRO Operation Twistand OMOs to improve the liquidity position in the system. Govt. of India also came to thesupport of the borrowers by providing many relief measures to the stressed borrowers. Thefacilities of moratorium on repayment of loans restructuring facility guaranteedemergency loans (GECLS) gave necessary support to borrowers across the industry providingsuccor to the needy sectors. Banks were able to manage the stress on asset quality andcapital ratios also improved across the sector.
Indian Bank: Major events during FY21
Amalgamation of Allahabad Bank with Indian Bank
The financial year was eventful for the amalgamated entity with considerable progressin various processes involved in the integration happening throughout the year. All theproducts processes and policies were harmonized from day one.
CBS Integration between the two core banking systems was completed on 14th February2021. All the 3000+ branches of the e-ALB were seamlessly integrated on the Indian Bank'sCBS platform in one go using "Big Bang" approach.
Continuous communication with employees and customers was maintained throughout theprocess of amalgamation.
Bank has rationalised 203 Branches 25 Zonal offices 12 Currency Chests 3 LargeCorporate Branches 4 FGMOs 5 Service branches 6 Staff Training centers and 6 StressedAsset Management branches.
Organisational structure has been revamped to centralize loan processing in retail andMSME segments. Strengthened control functions Focused monitoring by two teams ofCredit Monitoring and Recovery one each from Kolkata and Chennai.
The Bank is now poised to take off on a growth trajectory and would reap the synergiesout of amalgamation in both balance sheet size and strength.
Bank's performance - FY21
Against this backdrop I would like to present a snapshot of the Bank's performance inkey parameters.
Bank's foot print:
Your Bank has pan-India network with 20593 touch points including 6004 Brick &Mortar branches 5428 ATMs/BNAs 9161 Business Correspondents and 3 overseas offices.
Bank's business crossed `9.2 lakh Cr to reach `928388 Cr. of the total businessDeposits were at `538071 Cr and Advances at `390317 Cr.
The share of low-cost Current Account and Savings Account (CASA-Domestic) deposits intotal deposits stood at healthy 42%.
RAM and Corporate:
Loan Book is well diversified with RAM Sector constituting 58% (`218942 Cr) andCorporate sector 42% (`160595 Cr). The growth in advances was driven mainly by the growthin RAM Sector (12%).
Earnings and Profitability:
Operating Profit registered a growth of 19% touching ` 11396 Cr for FY 21.
Net Profit for FY 21 was at `3005 Cr a record for the Bank.
NIM was at 2.81% for FY21.
Return on Assets (ROA) consistently improved during the quarters and stood at0.50% for FY21.
Cost to Income ratio was at 47.59%.
Priority Sector Advances were at 3130274 Crore as on 31.03.2021. Priority sector as apercentage to quarterly average Adjusted Net Bank Credit (ANBC) for 2020-21 stood at43.38% as against the mandatory target of 40.00%.
Agriculture Credit was at 360869 Cr as on 31.03.2021 and the percentage to quarterlyaverage ANBC for 2020-21 stood at 19.84% as against the mandatory target of 18.00%.
Robust capital structure:
Capital Adequacy Ratio as per Basel III guidelines was at 15.71 %.
Tier-I CAR was at 11.93%.
Risk weighted Assets were at `298097 Cr. Credit risk density wasmaintained at 65%.
Gross NPAs and Net NPAs were at 9.85% and 3.37% respectively as on 31st March2021. The provision coverage ratio (PCR) was at 82.12%.
Forerunner in lending to SHGs:
During FY21 SHG portfolio of Bank registered a growth of 25% YoY with outstanding at37785 Cr to 3.39 lakh SHGs (44 lakh members).
Bank received several awards and accolades for its performance under SHG lending:
First among PSBs for Excellence in performance under "SHG Bank LinkageProgramme in Tamil Nadu" for FY 2019-20 from NABARD.
Bank has been bagging the Best Bank award for 11 consecutive years in "SHGBank linkage Programme" from Govt. of Tamil Nadu.
Performance of Bank in SHG lending in the State of West Bengal for FY 2019-20was recognized by West Bengal State Rural Livelihood Mission.
Financial Inclusion initiatives:
Bank continued to excel under financial inclusion during FY21 with:
260 lakh BSBD accounts.
Average monthly transaction done per Business Correspondent (BCs) at 103lakhsOne of the best in the Industry in terms of number of transactions.
27 Lakh customers enrolled under PMJJBY and 73 Lakh customers under PMSBY.
19 lakh APY subscribers. Persistency ratio under APY is 60% one of the best inthe industry.
Business Correspondents (BCs) reaching the rural customers during pandemic:
During the Covid pandemic situation followed by unprecedented lockdown in the countrythe BC force played a pivotal role in supporting the poor especially through delivery ofDirect Benefit Transfer (DBT) funds from Government.
Bank extended support to BCs in the form of PPE insurance coverage and financial aid.
CSR for COVID-19:
Employees of the Bank contributed an amount of `8.10 Cr to PM CARES Fund.Further `7.24 Cr was contributed to CM Relief fund of various States as a humble attemptto fight Covid pandemic.
Bank continued to extend helping hand to the covid frontline workers by way ofdistribution of safety accessories PPE kits face masks sanitizers and financial supportto various hospitals.
Bank also conducted a series of webinars on wellness by reputed doctors tocreate an awareness on the precautionary measures to be taken during Covid.
Transaction through Digital channels increased by 13% during the year.
An integrated Mobile app IndOASIS having various functionalities withBiometric/Face ID login was launched. New features such as PPF account openingsubscription to Mutual funds Insurance e-NPS etc. have been introduced.
Staff welfare measures such as reimbursement of COVID testing expenses interestfree advance ex gratia payment to family of deceased were extended.
To protect the employees Bank conducted vaccination Camps in collaboration withleading hospitals at various centres.
As a part of capacity building initiative Leadership Development Programme(LDP) for Senior Management was undertaken. Under the programme assessment of leadershipqualities was carried out for 373 executives of the Bank through a set of psychometrictests group discussions and evaluation matrix.
Following the strong financial results Bank has paid Performance LinkedIncentive amount equivalent to 15 days' pay to the employees.
Indian Bank launched an out of the box initiative MSME Prerana an onlinebusiness mentoring programme for MSME entrepreneurs in coordination with M/s Poornatha anEntrepreneurial Development Organization. It is a Pan India Programme in vernacularlanguages (in all States / UTs). The programme was launched on 06th Oct'20 by Hon'bleMinister of Finance Ms. Nirmala Sitharaman from the Corporate Office of the Bank.
The Bank also launched Ind Spring Board an initiative to fund the start-ups.Bank entered into MOU with IIT Madras Incubation Cell and IISC Bangalore for identifyingthe eligible Start-ups for finance under this scheme.
As a part of enhancing customer experience Bank has launched "ADYA"(Automated Dost for Your Assistance) Chatbot. It is a web based chatbot that is integratedin the Indian Bank's website as an additional mobile-friendly customer interface foranswering customer queries.
RBI has mandated the positive pay system for high value cheque payments. Theinternet banking customers are given facility to confirm their cheque details. This hasbeen introduced to stop fraudulent activities through cheques.
The amalgamation process being successfully completed the Bank is poised togrow on both business and profitability fronts. The emphasis will be to leverageoperational efficiencies cost synergies and new opportunities in terms of Brand and reachto deliver enhanced customer experience.
The focus will be on increasing the CASA share in deposits while looking atdiversified growth in credit. Cost optimization and increasing revenue with focus on feeincome improving recovery and containing NPAs will be levers to improve bottom line.
A "Transformation Roadmap" has been identified for the Bank to becarried out over the next 2-3 years. Various high level initiatives and other initiativesare planned to be implemented across various functions.
We are sure that with recovery in the economic in the coming days and with yourpatronage as well as support the Bank will continue to show strong performance in thecoming years as well.
I would like to take this opportunity to thank all members of the Board for theirvaluable support guidance and inputs to the Management during the course of this year'sjourney. I would also like to acknowledge the unstinted support of our loyal customers. Iwould like to express my sincere appreciation for the untiring efforts of the dedicatedand devoted work force of the Bank who performed exceedingly well in a challenging time.
I also wish to sincerely thank the Govt. of India RBI and all our valuableshareholders and other stakeholders for their continued confidence and support to the Bankin all its endeavours.
We would continue to look forward for your support goodwill and patronage.
With best wishes
MD & CEO