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. () - Director Report

Company director report

The Board of Directors has pleasure in presenting the Bank'sAnnual Report along with Audited Balance Sheet and Profit and Loss Account of the Bank forthe year ended 31st March 2019.

Business Operations

The Business of the Bank stood at र404194.84 crore as on31st March 2019 as against 355552.07 crore as on 31stMarch 2018. Total deposits of the Bank stood at र232645.38 crore. The grossadvances as at end-March 2019 stood at र171549.46 crore. The Creditdeposits ratio of the Bank as at end-March 2019 stood at

73.77%. The Bank ensured adequate flow of credit to the productivesectors of the economy. The Loans & Advances portfolio of the Bank is well diversifiedand balanced.

Key Highlights of Bank's Performance in FY 2018-19

• During the financial year 2018-19 the Govt. of India infusedcapital aggregating to र6686 crore in the Bank. The Bank also raised capitalof an amount upto र250 crore from its employees under ESPS Consequently theCapital Adequacy of the Bank improved to 12.73% as on 31st March 2019 from10.50% as at 31st March 2018.

• The restrictions imposed on the Bank by RBI under the PCAframework were lifted on 31st January 2019 in view of its improved performanceand the Bank meeting the benchmark levels as per the PCA framework.

• The Bank reported Net Profit of र55 crore for FY2018-19 as against loss of र5872 crore for FY 2017-18.

• The Gross NPA reduced from 17.63% as at 31st March2018 to 12.66% as on 31st March 2019 while the Net NPA declined from 10.48% asat 31st March 2018 to 5.93% as on 31st March 2019.?? Thedeposits of the Bank witnessed a growth of 12.20% y-o-y and the gross advances increasedby 15.75% y-o-y. CASA deposits as a percentage of total deposits of the Bank stood at29.40% as on 31st March 2019.

• Retail Advances Portfolio increased by 41.62% y-o-y and MSMEAdvances Portfolio increased by 12.63% y-o-y.

• Cash Recovery and Upgradation increased from F3161 crorefor FY 2017-18 to र6597 crore for FY 2018-19 while fresh slippages werecontained to र7066 crore during the reported year against र12429crore of FY 2017-18.

• The Provision Coverage Ratio improved to 75.84% as on 31stMarch 2019 from 64.07% as at 31st March 2018.

• NIM for FY 2018-19 increased to 2.73% from 2.18% for FY2017-18.

• The Cost of Deposits decreased to 5.64% as at March 2019 from5.67% as at March 2018 while yield on Total advances increased to 8.23% as at March 2019from 7.73% as at March 2018.

Capital & Reserves

During the Financial Year 2018-19 the Bank received capital infusionfrom the Government of India in two tranches viz. र5500 crore on 31stDecember 2018 and र1186 crore on 31st January 2019. Accordinglyupon receipt of all requisite approvals the following shares were allotted to theGovernment of India on Preferential basis: (i) 572320499 equity shares at an Issueprice of र96.10 (including premium of र86.10) per shareaggregating to र5500 crore

Financial Performance

The Bank has posted a total income of र20536.77 croreduring the year as against र20181.25 crore last year. The Operating Profitof the Bank increased to 3753.76 crore for the year ended 31stMarch 2019 as against 3703.18 crore for the year ended 31stMarch 2018. The Financial performance of the Bank is given below:-

Financial Performance

(Amt. in र crore)

31.03.2019 31.03.2018
Interest Income 17867.69 17388.89
Other Income 2669.08 2792.36
Total Income 20536.77 20181.25
Interest Paid 12369.57 12888.13
Operating Expenses 4413.44 3589.94
Total Expenses 16783.01 16478.07
Operating Profit 3753.76 3703.18
Provisions & Contingencies 3698.77 9574.92
Net Profit/(Loss) for the Year 54.99 (5871.74)
before Exceptional Item
Less: Exceptional Item 0.00 0.00
Net Profit/(loss) for the year after 54.99 (5871.74)
Exceptional Item
Add-Profit/(Loss) brought forward (5871.74) 0.00
Add-Investment Reserve Account 0.00 0.00
Net Profit/ (loss) available for appropriation (5816.75) (5871.74)
APPROPRIATION (5816.75) (5871.74)
Transferred to Statutory Reserve 13.75 0.00
Transferred to Revenue and Other reserves 0.00 0.00
Transferred to Special Reserve u/s 36(1)(viii) of the Income Tax Act 1961 0.00 0.00
Transferred to Capital Reserve 31.05 0.00
Transferred to Investment Reserve Account 0.00 0.00
Interim Dividend 0.00 0.00
Investment Fluctuation Reserve 10.19 0.00
Proposed Dividend 0.00 0.00
Tax on Dividend 0.00 0.00
Balance carried over to Balance Sheet (5871.74) (5871.74)

*Figures in bracket () denote loss.

** The figures of the previous period/year have been regrouped/rearranged wherever considered necessary to conform to current period/year'sclassification.

Board of Directors

During the year FY 2018-19 14 meetings of Board of Directors 12meetings of Management Committee of Board and 12 meetings of Audit Committee of Boardwere held. Sh. Himanshu Joshi was Executive Director of the Bank till the date of hissuperannuation i.e. upto 31st October 2018. Thereafter Shri Vijay Dube andShri Balakrishna Alse S were appointed in accordance with Section 9(3)(a) of the BankingCompanies (Acquisition and Transfer of Undertakings) Act 1980 and they assumed charge asExecutive Directors of the Bank on 01st November 2018 and 26thDecember 2018 respectively. Shri S.M. Narasimha Swamy recently joined the Bank as RBINominee Director in place of Shri S. Ganesh Kumar w.e.f. 26th April 2019.Further Smt. Mala Srivastava Part-Time Non-Official Director of the Bank laid downoffice on 24 th April 2019 on completion of her tenure.

The Bank places on record its appreciation for the guidance receivedfrom Shri Himanshu Joshi Smt. Mala Srivastava and Shri S. Ganesh Kumar duringdeliberations of the Board/Committees of the Board and also in the conduct of theBank's business during their tenure of office as Directors of the Bank.

Statutory Audit

During the year the Bank has with the approval of the Reserve Bank ofIndia appointed M/s B C Jain & Co. Kanpur; M/s S N Dhawan & Co. LLP New Delhi;M/s S.P. Chopra & Co. New Delhi; M/s Batra Deepak & Associates New Delhi asStatutory Central Auditors of the Bank for FY 2018-19.

Explanations/Comments by the Board of Directors in response toModifiedOpinion/Adverse Remarks/Emphasis of Matter if any in the IndependentAuditors' Report

N.A.

Secretarial Audit

Pursuant to Regulation 24A of the SEBI Listing Regulations read withSEBI Circular dated 08th February 2019 the Board of Directors appointed M/s.Agarwal S. & Associates Company Secretaries as the Secretarial Auditor to conductSecretarial Audit of the Bank for the financial year ended 31st March 2019. TheSecretarial Audit Report of the Bank is annexed to this Report.

Explanations/Comments by the Board of Directors in response toobservation if any in the Secretarial Audit Report

In respect of observation made by M/s. Agarwal S. & AssociatesCompany Secretaries in the Secretarial Audit Report for FY 2018-19 w.r.t. the compositionof the Board of Directors of the listed entity in view of vacancies under section9(3)(e)(f) & (h) of the Banking Companies (Acquisition and Transfer of Undertakings)Act 1980 it is stated that in terms of Section 9(3) of the aforesaid Act all thedirectors on the Board are appointed /nominated by the Central Government other than threedirectors elected by the shareholders of the Bank (other than Central Government). TheBank has through various communications requested the Ministry of Finance Govt. of Indiafrom time to time to nominate directors in respect of the existing vacancies. Further theposition of existing vacancies on the Board is also being apprised to the Ministry onmonthly basis.

Corporate Social Responsibility

Bank's aim is to minimize the impact of business on theenvironment have a positive effect on society and seek to work with other NGOs ornon-profit charities development agencies organizations etc. who embrace theseobjectives. We aim to use natural resources responsibly work with community projects andencourage and educate our employees in these goals. Staff members are encouraged to makecontributions by understanding the aspirations of underprivileged sections and endeavoringto evolve measures to remove indisputable social and development lacunae. Under thecommunity service various welfare and social activities are undertaken by the Bank both inBanking and non-Banking areas to raise the quality of life of the downtrodden and underprivileged sections of the society.

CSR initiatives undertaken by the Bank in FY 2018-19

The Bank undertakes various CSR activities on an ongoing basis whichincludes training programs at RSETIS for self employment generating activities etc. Bankhas also sanctioned TATA ACE TEMPO as a part of community services to NGO for providingassistance to poor and needy.

Directors' Responsibility Statement

The Directors confirm that in preparation of the Annual Accounts forthe year ended 31st March 2019: the applicable accounting standards have beenfollowed along with proper explanation relating to material departures if any theaccounting policies framed in accordance with the guidelines of the Reserve Bank of Indiawere consistently applied reasonable and prudent judgment and estimates were made so asto give true and fair view of the state of affairs of the Bank at the end of financialyear and of the profit and loss of the Bank for the year ended on 31st March2019 proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of applicable laws governing banks in India forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities.

Internal financial controls were laid down and these were adequate andoperating effectively Proper systems were in place to ensure compliance of all lawsapplicable to the Bank and these were adequate and operating effectively. The accountshave been prepared on a going concern basis.

Acknowledgments

The Board of Directors expresses its gratitude to the Government ofIndia Ministry of Finance Department of Economic Affairs Reserve Bank of India (RBI)Securities and Exchanges Board of India (SEBI) and other Government & RegulatoryAgencies for their valuable guidance and continued support provided to the Bank throughoutthe year. The Board of Directors are also grateful to the valued customers esteemedstakeholders and also wish to place on record its great appreciation of the staff membersfor their involvement and dedication in the overall development growth and prosperity ofthe Bank.

For and on behalf of the Board of Directors
Place: Gurugram (Mukesh Kumar Jain)
Date: 13th May 2019 Managing Director & CEO