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Punjab & Sind Bank.

BSE: 533295 Sector: Financials
NSE: PSB ISIN Code: INE608A01012
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VOLUME 5921
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VOLUME 5921
52-Week high 56.90
52-Week low 27.00
P/E
Mkt Cap.(Rs cr) 1,650
Buy Price 29.20
Buy Qty 63.00
Sell Price 29.45
Sell Qty 500.00

Punjab & Sind Bank. (PSB) - Director Report

Company director report

The Board of Directors has pleasure in presenting Annual Report of the Bank along withthe Balance Sheet and Profit and Loss Account for the year ended 31st March2018.

MANAGEMENT DISCUSSION AND ANALYSIS:

ECONOMIC OUTLOOK

Major reforms were undertaken over the past year which in the short term has impactedthe growth trajectory. However it is expected that the benefit of the reforms will accruein the days to come. The transformational Goods and Services Tax (GST) was launched at thestroke of midnight on July 1 2017. The long-festering Twin Balance Sheet (TBS) issue isnearing resolution with bank recapitalization package in place to strengthen the publicsector banks and the auction of defaulting companies by sending the major stressedcompanies for resolution under the new Indian Bankruptcy Code. The global economymeanwhile is experiencing a broad-based cyclical upturn which is expected to besustained over the next couple of years although downside risks persist.

The economic turnaround is expected to gain further traction this financial year and itcould accelerate from 6.75% this year to 7-7.5% in 2018-19 as a result of the dissipatingeffects of earlier policy and the export uplift from the global recovery. Agriculturegrowth was at 2.1% for financial year 2018 sharply lower than 4.9% a year earlierfollowed by industry at 4.4% and services at 8.3%. Inflation in the country continued tomoderate during 2017-18. Consumer Price Index (CPI) based headline inflation averaged 3.3%during April-December 2017-18 the lowest in the last six financial years while WholesalePrice Index (WPI) based inflation stood at 2.9%. Fiscal Deficit as a percentage of GDP isthe most important factor to judge the health of an economy and budget. It has gone downsteadily over the past four years i.e. 3.2% in 2017-18. The target is to bring it below2%. The current account deficit is estimated at a modest 1.5% of GDP well below the 3%rate at which economics turn vulnerable. Foreign exchange reserves have soared to $424billion. Headwinds however remain with prices moving northwards and global politicaluncertainties.

Growth is picking up partly because the temporary impact of demonetisation and GST hasdissipated and corrective actions have been taken. Exports have picked up andmanufacturing sector growth is about 11.3%. India's external sector to remain strong onlikely improvement in global trade though WTO concerns remain.

The banks are the lifelines of the economy and play a catalytic role in activating andsustaining economic growth especially in developing countries and India is no exception.Indian banks face different kinds of problems which have affected their profitability andfinancial stability. The biggest risk to Indian banks is the rise in bad loans. The assetquality deterioration continues leading to slowdown in the economy in the last few yearsand banks are not able to raise money easily especially public-sector banks which havehigh percentage of bad loans. If banks do not shore up their capital soon some could failto meet the minimum capital requirement set by the RBI.

Banks face sustained competitive pressure to increase efficiency and productivity byleveraging on technological developments and product innovations. In this regard bankingwith the unbanked may probably give banks an edge over other financial intermediaries byleveraging on their branch networks. Customers at the bottom of the pyramid especially inSME and Agriculture may hold the key to big business opportunities. The availability oflarge digital database on potential borrowers mobile density e-commerce and usage ofsmart-phone based services is likely to reduce the cost of assessing creditworthiness ofSMEs which are the thrust area of the Bank. Bank will adopt technology as an enabler todifferentiate itself and shall have an edge over its competitors.

WORKING RESULTS

TOTAL BUSINESS: During the year ended 31.03.2018 total Business of the Bank stood atRsl71464.95 crore as compared to Net Profit of Rs. 145803.25 crore as on 31.03.2017.

PROFIT: The Bank recorded a Net Loss of Rs 743.80 crore for the year 2017-18 ascompared to Net Profit of Rs. 201.08 crore during the FY 2016-17. The Return on Assets(ROA) stood at -0.69% as compared to that at 0.20% in the year 2016-17.

DIVIDEND: The Board has not recommended any dividend for the year 2017-18.

CAPITAL & RESERVE: The Net Worth of the Bank stood at Rs 4733.96 crore as comparedto Rs. 5046.39 crore as on 31.03.2017.

The Capital Adequacy Ratio (Basel III) of the Bank is 11.25% as on 31.03.2018 againstthe minimum stipulated requirement of 10.875%.

Issue of Basel III Compliant Additional Tier I Bonds:

During the Year Bank issued Basel III Compliant Additional Tier I Bonds amounting toRs 1000 crore at 10.90% p.a. These Bondsare perpetual in nature.

DEPOSITS : The total deposits of the Bank stood at Rs 101726.17 crore as on 31.03.2018as compared to Rs. 85540.16 crore as on

31.03.2017. The average cost of deposits of the bank improved to 5.93% as compared to6.73% in previous year.

ADVANCES: The Bank's Advances stood at Rs 69738.78 crore as on 31.03.2018 as comparedto Rs. 60263.09 crore as on 31.03.17.

The average yield on Advances stood at 8.80% % as compared to 9.73% during the lastyear.

ACHIEVEMENTS UNDER PRADHAN MANTRI JAN DHAN YOJNA

• The Bank has opened 10.78 lac Pradhan Mantri Jan Dhan Yojna (PMJDY) accountsthrough Branches and 351 Bank Mitr and mobilized CASA/FD/RD deposit of Rs. 635 Crore withaverage deposit per account Rs. 5890.

• During this financial year 2017-18 business brought by Bank Mitrs is Rs.359Crores which include Recovery in 2180 NPA/TWO accounts amounting to Rs.11.83 Crore.

• The Bank has introduced a system of awarding 10 Outstanding performing BankMitrs every quarter with cash rewards of Rs. 1100/- and an appreciation letter.

• Total Zero Balance accounts in PMJDY are atl% against industry average of 20 %

• Total Aadhaar seeding in Active PMJDY Accounts is 84%.

• Bank in coordination with the FLCs took the initiative to spread financialliteracy among rural population by conducting Financial Literacy Camps in the villageswhere Basic Banking services along with other financial schemes like PMJDY PMJJBY PMSBYAPY and OD discussed with the customers/villagers so that they are able to avail theseservices as per their requirements. During this financial year 2017-18 Bank hassuccessfully organized 1192 Financial Literacy Camps.

• The Bank has successfully implemented PMJDY OD through ATMs/MicroATMs. Atpresent 70605 ODs have been sanctioned. Total amount sanctioned is Rs.10.86 Crores.

• Our all MicroATMs are AEPS & Rupay PINPAD enabled helping rural customersto do intra and inter Bank transactions using their biometrics or Rupay Debit Cards.

• Bank has successfully opened 141 Aadhaar enrolment Centers during 2017-18against the target of 155. Bank has purchased its own kits and our own staff is working asSupervisor/Operators.

MARKETING AND INSURANCE

• The Bank has presently a Corporate Agency tie-up with LIC and SBI Life for lifeinsurance business and 3981 policies has been done with total Insurance business of Rs.8.81 crore.

• Total number of 14 tranches of Sovereign Gold Scheme successfully handled andCommission of Rs.61.19 Lac earned.

NEW INITIATIVES

• Implementation of SMS "Reply" facility to registered customers fordebit freeze their operative accounts for Electronic Banking Transactions.

• Implementation ofUPI/POS/ Aadhaar-Pay/ Bharat-QR Code.

• Implementation of PSB-BHARAT QR Code. Bharat QR Code scan and pay functionalityhas been implemented in BHIM PSB App.

• Implementation of Green PIN functionality for ATM cards.

• Implementation of RuPay Pre-paid card.

• Implementation of Bharat Bill Payment System (BBPS)(Pre-login)

• Implementation of JAWS software for supporting the visually challenged staff.

• Bank has opened 14 new branches out of which 50% branches i.e. 7 new brancheswere opened in Unbanked Rural Centre.

• Acquiring ofJapan Credit Bureau (JCB) and Union Pay International (UPI)Customers' transactions at PSB ATMs

• Display of Aadhaar E-verificati'on status on PSB ATMs

AWARDS & ACHIEVEMENTS

• Bank was awarded CIMSME Excellence Award 2016-17 for contribution to MicroCredit by Hon'ble Union Minister of State for Finance and Corporate Affairs Sh. Arjun RamMeghwal

• The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has awardedBank "Agriculture Banking & Government Schemes in the Small Bank Class"ASSOCHAM Social Banking Excellence Award" by Sh. Shiv Pratap Shukla Hon'ble Ministerof State for Finance Govt of India for contribution in growth of Agriculture & MSMESegment.

• Bank has received CIMSME Excellence Award 2016 under Financial Inclusion throughBC Model on 20.04.2017 Governance Now Financial Inclusion Casebook Award on 18.01.2018and SKOCH Award for BC Model on 10.03.2018 during this financial year.

• Bank's Junior hockey team won Inter College Hockey Tournament held at Amritsar.

PRIORITY SECTOR ADVANCES

• Total Priority Sector Advances increased from Rs. 24928 crore as on 31.03.2017to Rs. 28685 crore as on 31.03.2018.

• Bank's Agriculture advances increased from Rs. 11355 crore as on 31.03.2017 toRs.12697 crore as on 31.03.2018 i.e by Rs. 1342 crore.

• Bank's advances to Small & Marginal Farmers increased to Rs. 6464 crorewhich is 9.76% of March 2017 ANBC against the RBI stipulated target of 8.0%.

• Bank made advances to the tune of Rs.1009.79 crore against the target of Rs.1040 crore under Pradhan Mantri Mudra Yojana which is 97.09% against the target.

• Bank has issued RuPay Debit Cards in 2.12 lac KCC accounts out of the totaloperative KCC accounts of 2.17 lac (97.69%) as on 31.03.2018.

• Bank has 19 Financial Literacy Centres (FLCs) at block level in Punjab &Haryana to spreadfinancial literacy among people.

• One of three RSETIs i.e. Moga was given highest grade 'AA' by Ministry of RuralDevelopment for the year ended 31.03.2017 making it eligible for Govt grants for trainingof rural unemployed youths.

• Bank signed MoU with Central Warehousing Corporation National CollateralManagement Services Limited and Prestige Bulk Handling Corporation (P) Ltd for Financingagainst warehouse receipt under Agri-produce Pledge Loan scheme.

• Bank has signed MoU with Ml Exchange on TReDS platform for bill discounting ofMSME.

RETAIL LENDING

• The Retail Lending portfolio of the Bank as on 31.03.2018 stands at Rs 14894.90Cr and thereby Retail Lending has registered a business growth of 13.48% over theprevious year.

• The percentage of Retail Advances to Gross Advances was 21.33% as on 31.03.2018.

• The Bank has rationalized the Retail Lending products to make them moreattractive and competitive. During the FY three new products viz. PSB Mortgage Loan PSBVyapar Loan and PSB SME Liquid plus were launched.

• The Bank has empanelled External Due Diligence Agencies across the Zones toimprove quality of lending.

ASSET QUALITY:

The Bank continued to make concerted efforts to contain NPAs and has used all availabletools of recovery including negotiated settlements and legal means. The provisions of"The Securitization & Reconstruction of Financial Assets & Enforcement ofSecurity Interest Act -2002" were used effectively. The Bank had also organizedRecovery Camps during the year at various centers.

The performance of the Bank under recovery of NPAs during the year remained reasonable.The aggressive and focused efforts could result in the total recovery of over Rs. 806.05Crore including recovery of 66.93 Crore in Technically Written Off Accounts.

Bank has made sincere and earnest efforts to contain fresh slippage. As a result ourgross NPAs and net NPAs as on 31.03.2018 have been contained at Rs.7801.65 Crore andRs.4607.87 Crore respectively against Rs. 6297.59 Crore and Rs. 4375.08 Crore as on31.03.2017.

The position of Gross and Net NPAs as on 31.03.2018 vis-a-vis previous year is asunder;

NPA

As on 31.03.2017

As on 31.03.2018

Gross 6297.59 10.45% 7801.65 11.19%
Net 4375.08 7.51% 4607.87 6.93%

The Provision Coverage Ratio ofthe Bank (includingT.W.O.A/Cs) as on 31.03.2018 stoodat 54.41 %.

CREDITMONITORING

"The Department had already set up a Control Room for proper and effectivemonitoring of large accounts with exposure above Rs.25 Lac at HO and accounts upto Rs.25Lac by separate Control Rooms at Zonal Offices. These Control Rooms have undertaken closefollow-up with zones and branches on an ongoing basis to ensure reduction in slippage ofaccounts to a large extent. Restructuring of eligible cases is being done as per RBI andMinistry guidelines including Revised Framework for Resolution of Stressed Assets.

Department has entered into Tie -ups with other agencies like Experian and alsoenrolled for other products of CIBIL like e-verify for enhanced Due Diligence. As acontrol mechanism various functionalities have been developed by the department to easereporting/put a check on revenue leakage with the help of automation.

INVESTMENT & FOREIGN EXCHANGE

• The Bank's total gross investment as on 31.03.2018 was Rs.33150.03 crore with aportfolio composition consistent with the organization requirement risk perception andinvestment policy ofthe Bank.

• Bank made highest ever trading profit of Rs. 266.82 crore with a increase of1.8% over March 2017 profit of Rs. 261.97 crore on account of active trading in G-sec andNon SLR securities

• The total profit of Foreign Exchange Department is Rs. 34.08 Crore and dealingroom exchange profit for the year 2017-18 is Rs. 19.68 crore.

• The Department has created a forex marketing team which regularly visits thecurrent and prospective customers to increase the foreign exchange business of the Bank.

RISK MANAGEMENT: The Bank has put in place a robust and integrated Risk Managementsystem to ensure that the risks assumed by it are within the defined risk appetites andare adequately monitored. The overall responsibility of seffing the Bank's risk appetiteand effective risk management rests with the Board and apex level management of the Bank.The implementation of Integrated Risk Management System in the Bank is monitored by HORisk Management Department (RMD) headed by General Manager.

The Risk Management Function is managed through Risk Management Committee (RMC)- aboard level subcommittee. Other committees are Credit Risk Management Committee (CRMC)Asset and Liabilities Management Committee (ALCO) Operational Risk Management Committee(ORMC) Market Risk Management Committee (MRMC) and Capital Planning Committee as perICAAP.

POLICY FRAMEWORK: The Bank has Board approved policies and procedures in place tomeasure manage and control various risks that the Bank is exposed to. The various policesare Integrated Risk Management Policy Asset-Liability Management (ALM) Policy CreditRisk Management Policy Market Risk Management Policy Operational Risk Management (ORM)Policy Business Continuity Planning (BCP) & Disaster Recovery Management (DRM)Policy StressTesti'ng Policy Policy on Utilization ofCredit Risk Mitigation Techniques& Collateral Management ICAAP Policy Integrated Risk Management Policy Policy onManagement of Intra GroupTransacti'ons & Exposures and Loss Data Management Framework.

BANK'S COMPLIANCE WITH BASEL-II: In terms of Regulatory Guidelines of Reserve Bank ofIndia the Bank has adopted the New Capital Adequacy Framework w.e.f. 31.03.2009. Based onBasel II norms the Bank has adopted Standardised Approach for Credit Risk ModifiedDuration approach for Market Risk and Basic Indicator approach for Operational Risk forcomputing the capital charge. The Bank has also implemented Basel III Guidelines and hasstarted computing CRAR w.e.f. June 2013. The CRAR position of the Bank is reviewed by theBoard on a quarterly basis. Bank has geared for moving towards advanced approaches underBASEL II as suggested by RBI. Bank has also appointed a Consultant for seffing upEnterprise Wide Integrated Risk Management System (EIRMS) in the Bank for moving toAdvance approaches of Basel II and implementation of Basel III Guidelines.

ICAAP POLICY: In compliance with the Reserve Bank of India guidelines on Basel II &Basel III - Pillar 2- Supervisory Review and Evaluation Process (SREP) the InternalCapital Adequacy Assessment Process (ICAAP) Policy has been formulated to assess thecapital requirement commensurate with the size level of complexity risk profile andscope of operations of the Bank. Various residual risks are assessed and additionalcapital is provided for wherever required. The ICAAP outcome is prepared on half yearlybasis and is reviewed by RMC.

DISCLOSURE: In compliance with the Reserve Bank of India guidelines on Basel II&Basel III - Pillar 3 - Market Discipline the Bank has put in place a Disclosure Policyduly approved by the Board and the disclosures on quarterly / Half yearly / Annual basisas per the policy are displayed on the Bank's Website / Annual Report.

CREDIT RISK: Credit risk management processes involve identification measurementmonitoring and control of credit exposures. Credit risk and its policy formulation ismanaged by Credit Risk Management Committee (CRMC). It regularly monitors prudential capsin different loan segments including industry corporate retail and individual/groupborrowers.

Comprehensive credit rating framework comprising of Credit Risk Rating Models forCorporate Exposure NBFC Exposure Real Estate Exposure and Retail Exposure pricing ofloans linked to risk assessment and credit rating study & analysis of industries/portfolio migration of credit ratings is undertaken.

MARKET RISK: The Bank's portfolio is exposed to market risk on account of changes dueto interest rates and currency rates.

The Asset and Liabilities Management Committee (ALCO) is overseeing the functionsrelating to market risk. The Bank has put in place a variety of market risk measurementsystems and tools. Strict adherence to various limits and proper escalation of breachesif any are followed. Moreover a Mid Office is also in place.

The Liquidity Management Framework is well established which safeguards the ability ofthe Bank to meet all payment obligations when they come due. It is designed to identifymeasure and manage the liquidity risk position of the Bank.

The Bank is computing the market risk capital charge as per the Modified Durationapproach by using Modified duration method as per the regulator's guidelines. The Bankalso calculates Value at Risk (VaR) on its foreign exchange portfolio.

OPERATIONAL RISK: The Operational Risk Management Committee (ORMC) oversees the mattersrelating to risks associated with operations and ensures the continuity / restoration ofbusiness in the event of contingency / exigencies. Presently capital charge onoperational risk is calculated as per Basic Indicator Approach. The Bank is in the processof strengthening its ORM Framework & ORM systems so as to be able to migrate toadvance approaches of calculation of Operational Risk Capital. The Bank has Board approvedFramework for Loss Data Management to set minimum standards for management of Bank'sOperational Loss Data in order to comply with the overall Operational Risk Management(ORM) Policy of the Bank and facilitate creation of a robust and comprehensive OperationalLoss Database.

HUMAN RESOURCE MANAGEMENT

The cadre wise staff strength as on 31.03.2018 is as under:

Category 31st March 2017 31st March 2018
Officers 6663 6545
Clerks 2241 2346
Sub-staff 496 429
Total 9400 9320

Women in employment: Out of the total strength of 9320 as on 31.03.2018 the womenemployees are 2570 constituting 27.58% of the total strength.

Sabbatical Leave Scheme forthe Women Employees: To facilitate a smooth careerprogression and conducive working environment for the women employees of the Bank theBoard of the Bank has approved the Sabbatical Leave Scheme for all permanent full timeWomen employees of the Bank for maximum of 2 years during their entire career.

Women Empowerment The Bank has taken specific steps to empower its women employees andto plan their career growth. HO HRD Women Cell at Head Office looks after feedback/suggestions requests and complaints/grievances received from women staff of the Bank forquick disposal and Welfare of all Women Staff Members of the Bank. On 8th March 2018 onthe occasion of International Women's Day Executive Directors addressed the womenemployees and motivated them to excel.

Promotions: Bank is regularly promoting people almost in all cadres year after year tokeep on rewarding its top performers and make them assume higher responsibilities.Following promotions have been effected during the year:-

Promotions from DGM to GM AGM to DGM CM to AGM SRM to CM MGR to SRM OFF to MGR CLKto OFF SUBSTF to CLK Total
General 1 - 3 16 26 304 233 - 583
Specialist - 1 - 2 36 23 - - 62
Total 1 1 3 18 62 327 233 - 645

Training & Human Resources Development: Training is an integral part of humanresource development. In the current competitive environment in the Banking Industry itis all the more important to keep the staff abreast of the latest developments intechnology system and procedures legal aspects etc.

Training and grooming are important steps in creating a vibrant organizational culturein which employees are encouraged & motivated to perform better. It helps inaugmenting the competencies of employees & equip them with the right skills &knowledge for meeting ever changing business needs of customers in different segments. Thetraining programs organized by the Bank are geared towards integrating the new recruitsinto the Bank & in enhancing the skills knowledge and for reorienting the attitude ofits existing workforce to the organizational objectives so as to transform the Bank to atechnology & service driven Bank of the country.

The newly recruited POs were provided Orientation Training Training on Advances atBranch Level Training Programme on Credit Management Credit Appraisal NPA Management& Recovery of NPAs.

To encourage staff members to upgrade their professional skills Bank has incentivizedre-imbursement of the full course fee of 19 Certified and Diploma Courses offered by IIBF.Bank has also tied up with IIBF for e-learning material for JAIIB & CAIIB which hasbeen placed on Bank's intranet underthe head "HRD Initiative: E-Learning".

Capacity Building in Banks: Compliance with the recommendations of the "Committeeon Capacity Building" of Reserve Bank of India: In compliance with the directions of'Committee on Capacity Building' of Reserve Bank of India the Bank has made it mandatoryfor the staff working in the specialized areas such as Treasury operations Riskmanagement Accounting Credit management._The Bank shall consider posting of staffmembers who obtain required certifications in the related specialized Departments/ on thedesks at Head Office. Bank will reimburse a lump sum amount of course fee (excluding GST)upto a maximum of Rs. 15000/- for one course only to those who attain the certificationprescribed under Capacity Building in Banks.

In view of MoF guidelines Bank regularly conducts Webinars to reach out to all staffmembers of all branches/offices at the same time to train them in a short span.

The Bank endeavored to provide training to 50% of its employees during the FinancialYear 2017-18. With this in view 400 programmes were conducted in General Banking &Computer knowledge at CBRT Chandigarh NIBSCOM Noida STC Delhi & Locational Trainingswere conducted at Zonal Offices in various fields from 1st April 2017 to 31stMarch 2018 in which training was imparted to 7601 employees of different cadres. 115Officers were imparted training at Apex Level.

Management Development Programme for newly promoted Senior Mangers Managers &Officers was conducted at NIBSCOM & STC Delhi.

Direct Recruitment: The Bank launched recruitment drive to cater to the challenges ofsuperannuation sustained business growth and rapid branch expansion during the financialyear 2017-18. Recruitment of both the Specialist Officers and Probationary Officers wasdone to address the diverse manpower requirement of the Bank. During the year 2017-18 3Official Language Officer 1 IT Officer 134 Probationary Officers in Scale -I and 445Single Window Operators-A in Clerical cadre have joined the Bank.

Industrial Relations: The Industrial relations in the Bank remained cordial throughoutthe year. The representatives from Workers and Officers unions participated in variousdiscussions on developmental and other issues with the management at various levels andefforts were made to resolve the same. A Grievance Redressal Committee has beenconstituted as per the guidelines received from Ministry of Finance to redress thegrievances raised by staff members. Proper monitoring of service matter cases pending invarious courts/tribunals was done to safeguard Bank's interest.

Employment to Reserved Category Employees: Bank is committed to the constitutionalsafeguards and social objectives for the development and welfare of persons belonging toSC ST and Other Backward Classes of the society. The Bank observes all guidelinesstipulated by the Govt of India in respect of Reservation Policy for reservation of postsin recruitments.

A special SC/ST cell has been set up in the Bank to monitor the Reservation & otherprovisions for SC/ST employees. An executive in the rank of General Manager has beendesignated as Chief Liaison Officer for SC/ST employees who ensures compliance of variousguidelines pertaining to SC/ST employees and takes care of all matters of grievanceredressal of SC/ST employees of the Bank.

The staff strength of SC/ST employees stood at 1884 and 595 respectively on 31.03.2018.The staff strength under various reserved categories is as under:-

CATEGORY SC ST OBC EX-SM PWD
OFFICERS 1176 498 1373 59 144
CLERKS 557 81 563 167 35
SUB-STAFF 151 16 28 42 9
TOTAL 1884 595 1964 268 188

Compassionate Appointments and Financial Assistance to the Dependents of DeceasedEmployees

Our Bank is having scheme for compassionate appointment on compassionate grounds orpayment of ex-gratia amount in lieu of compassionate appointment to eligible family of thedeceased employee who dies while in service. During the financial year 2017-18 Bank hasmade total payment of Rs.4.06 lac towards financial assistance to the families of thedeceased employees in eligible cases.

Staff Welfare: In order to motivate and encourage the staff for effective participationin development activities the Welfare Trust of Employees is maintaining various welfareschemes for the staff.

Memento/Token of Recognition To All Employees of the Bank on their Birthdays on behalfof the Bank.

Employee engagement plays an important role in the success and growth of anorganization. One of the various tools of employee engagement is Recognition. Recognitionsends a powerful message to the individual as well as to the rest of the team. The Bankstrongly believes that an engaged employee performs at a higher level and bring passionand interest to his/her job. Accordingly with a view to motivate the employees and as agoodwill gesture the Bank with the approval of the Board has launched a new schemetowards employee engagement in the Bank. The Bank with approval of the Board introduced ascheme of giving a memento/ token of recognition of approx. Rs.200 (maximum limit) onbehalf of the Bank to each and every employee irrespective of his/her cadre on his/herBirthday.

Enhancement in quantum of Retirement Token amount being given to Officers in SMGS-IVand Above and Presenting Retirement Memento/Trophv to all Employees on Retirement: In viewof honoring the stalwarts of the Bank who have worked tirelessly to work for the growth ofthe Bank by shouldering the responsibilities their position demands the Board approved toenhanced the quantum of retirement token amount given to officers in SMGS-IV and above.Further as a step ahead it was approved to present a metallic memento/trophy/plaque ofPunjab & Sind Bank for amount not exceeding Rs.2000/- (Inclusive of taxes) to allstaff members on their superannuation irrespective of their cadre. The trophy will also bepresented to Executive Directors and Chairman & Managing Director on theirsuperannuation.

INFORMATION TECHNOLOGY

• "Enable/Activate Internet Banking" functionality has been provided forcustomers to activate their user accounts whose Internet Banking is disabled due to wrongattempts.

• Implementation of E-KYC version 2.1.

• Internet Banking for Mudra Accounts has been started/enabled.

• NEFT/RTGS facility in CCAccountshasbeenprovidedforcustomers.

INTERNAL CONTROLS

"The Bank has in-built control systems with well-defined responsibilities at eachlevel. It conducts internal audit through its Inspection & Audit Department. AuditCommittee of Executives being first tier Committee oversees the Inspection & Auditfunction.

The inspection & audit system plays an important role in identification controland management risks through internal audit functions. The Bank carries out audits-likeRisk Based Internal Audit (RBIA) Concurrent Audit (CCA) IS Audit Management Audit &Inspection (MAI) and Credit Audit through which different facets of Internal Auditrequirements are covered. The Bank's business units/offices are subjected to RBIA CCA& IS Audit and Bank's Management Audit & Inspection covers 24 Zonal Offices &29 Administrative Offices and examines policies and procedures besides quality ofexecution thereof and credit exposures of Rs. 3.00 crore & above are subjected toCredit Audit by external Auditors. The Bank conducts the legal audit through empaneledlegal advisors. The Inspection and Audit Department has special cell for monitoring datathrough Offsite Monitoring Unit (OMU).

During FY 2017-18 Risk Based Internal Audit was concluded in 1261 branches of theBank 423 branches/offices were brought under Concurrent audit system Information SystemAudit was conducted in 126 branches/offices and 822 Branches were subjected to Revenueaudit by engaging services of CAs/CA firms and internal staff.

The Inspection Department is monitoring redressal of public grievances/complaints.During FY 2017-18 5837 complaints were received of which 46 complains are in process forredressal. The Banking ombudsman no award against the Bank during the year.

To summarize Bank's Inspection & Audit Department has been effectively monitoringthe compliance of the system & procedures laid down by its own Board the Regulatorand Government of India.

COMPLIANCE FUNCTION: Compliance Department is working under the guidance andsupervision of Chief Compliance Officer. The independent Compliance Department works asper Board approved Compliance Policy. Compliance Department disseminates the regulatoryguidelines to respective business departments and places the status of compliance beforeBoard/ ACB. Compliance Department ensures the compliance of various regulatory/statutoryguidelines & codes by the way of self-certification and compliance testing.

During the FY 2017-18 RBI SSM team conducted on-site Inspection for SupervisoryEvaluation (ISE) from May 22 to July 07 2017 submitted its Risk Assessment Report (RAR)as on 31.03.2017 along with Risk Mitigation Plan (RMP). Bank is working in coordinationwith the SSM Reserve Bank of India (RBI) to implement the Risk Mitigation Plan (RMP).

During the FY 2017-18 no regulatory penal action was taken against the Bank by RBI orany other regulatory bodies.

PUBLIC RELATION AND PUBLICITY

During the financial year 2017-18 the Bank adopted a multi-media strategy to build upits image in Public at corporate level and accordingly publicity was made through theprint media by release of its product tender financial and other display/notice ads indifferent newspapers magazines and souvenirs targeting various audiences all over thecountry. The publicity budget and its utilization was decentralized empowering the ZonalHeads to decide the means of the publicity depending upon the business potential of thelocal area to sanction the deserving cases under their discretionary powers for properand effective control.

The Bank at HO level used outdoor publicity tools i.e. Sponsorship and Display ofBanners & Hoardings on events of high publicity value e.g. Gurpurab celebrationsSurjit Hockey Tournament participation in Exhibition organized by Bhai Vir Singh SahityaSadan on Sri Guru Gobind Singh Ji at Patna Sahib Bihar participation at National TalentOlympiad for students with special needs participation at SARAS Mela and also corporatepublicity through hoardings at Amritsar Airport and at Wagha International Borderfacilitated extension of outreach of the Bank. The Bank also received immense publicitythrough Bank's traditional Wall Calander 2018 which was widely distributed among clientsand well wishers of the Bank and the Bank also earned well deserved publicity by way ofcoverage of its press releases by the print media.

All these activities facilitated the Bank to rededicate itself to the service of thenation and enabled it to earn a well deserved mileage on the publicity front.

VIGILANCE

With the aim to sensitize and enrich the knowledge of Vigilance Administration and inorder to inculcate and nurture a culture of alertness at the ground level and to educatethe operating staff for curbing non-observance of the laid down procedures or othermalpractices. Various measures like lectures on Preventive Vigilance in trainingprogrammes release of PSB Vigil (IIIrd Volume) incorporating various articleson Preventive Vigilance etc. were implemented.

During the year 2017-18 the Bank observed Vigilance Awareness Week with the centraltheme 0My vision - Corruption Free IndiaH from 30.10.2017 to 04.11.2017 in true spirit.During the programme Vigilance News Letter 0 DOs & DONTs 0 was also released. Besidesdifferent programmes were also organized at the Bank level across the country at GramSabhas / schools and colleges which were attended by over one lakh participants. Variousactivities were performed during Vigilance Awareness Week including -Debates ElocutionQuiz programmes Rallies Seminars / Workshops Walkathons Cyclothons Road showsAwareness through Mobile Vans health camps Distribution of Pamphlets/Banners Issue ofJournal/ Newsletter Slogan Competition Essay Writing Competition etc. These programmeswere graced by eminent personalities of the society. The staff members / customers of theBank/ general public were encouraged to have E-Pledge through URL provided on Bank's website which resulted in participation of more than 15000 people and availed E-Pledgefacility across the nation.

On recommendations of Vigilance Department Bank has decided to nominate two nodalofficers for each zone who will regularly monitor transactions in Nominal heads Dormantaccounts Inoperative Accounts at Branch level as Preventive vigilance measure.

PUNITIVE VIGILANCE

As in vogue this year also special thrust was given to reduce the pendency ofdisciplinary action cases with the active involvement of all the Disciplinary Authorities(DAs) / Controllers and with proper coordination with the Hon'ble CVC / other Govt.Agencies which is evident from the following details:

2014-15 2015-16 2016-17 2017-18
Vigilance (RDA) Cases pending 70 58 49 54*
Pending CVC referred Complaints 01 00 00 00
Charge Sheet issued 63 56 53 62
No. ofofficials in the ODI List 120 98 81 75

*Out of these 54 cases 2nd stage advices have been conveyed in 5 cases tothe respective Disciplinary Authorities before 31.03.2018 and the same shall be disposedoff shortly after following the due process.

SECURITY: The Bank has a well established Security set-up within the Bank'sorganizational structure. The H.O. Security department has been regularly reviewing thesecurity arrangements at all Currency Chests and branches and accordingly strengtheningthe security arrangements to meet prevailing security scenario with effective modern andunobstructed Security Systems. All the essential and mandatory security arrangements interms of RBI/ IBA guidelines are provided at almost all branches.

The Zonal Security Officers periodically carry-out Security audit of branches to assessthe security arrangements in vogue and recommend implementation of additional preventivesecurity measures wherever desired. They maintain close liaison with the law enforcing andadministrative authorities. Besides the Chief Security Officer and other officials fromHead Office are also carrying out the security audit of the Currency Chests and alsoundertake random visits of the vulnerable branches of the Bank.

The Access Control System at all Currency Chests of the Bank has been strengthened interms of RBI guidelines. A proper system of regulating access to Currency Chest StrongRooms and proper records of entry into / exit from the Vault Room of the chest is beingmaintained.

Security Alarm Systems are installed at all branches and currency chests. Strong Roomconforming to RBI specification are provided at majority of branches.

The Bank has a total of 12 (twelve) currency chests and all of them are being guardedby the State Police guards. All the branches ofthe Bank are provided with armed guards.All cash remittances are escorted by armed guards.

All the Security Officers undergo refresher training on security once in a year.

Keeping in view the threat perception volume of cash and valuables handled and needfor continuous surveillance CCTV Surveillance System have been installed at all theCurrency chests Branches & ATMS.

IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS

The Reserve Bank of India issued a circular DBR.BP.BC.No.76/21.07.001/2015-16 onFebruary 11 2016 requiring scheduled commercial banks to comply with the IndianAccounting Standards (Ind AS) for accounting periods beginning from April 1 2018 onwardswith comparatives for periods ending on or after March 31 2018. Ind AS would beapplicable to both Standalone Financial Statements and Consolidated Financial Statements.

RBI on April 52018 through its first monetary policy statement for FY2018-19deferred Ind AS implementation for the scheduled commercial banks (excluding RRBs) by oneyear such that the implementation of Ind AS would begin from April 1 2019 onwards withcomparatives for the year beginning April 1 2018.

The Bank is currently in the process of identifying the changes required to be made toits systems and processes and is evaluating technology solutions.

Further as per Reserve Bank of India (RBI) directions the Bank submitted Standaloneproforma Ind AS financial statements along with other computations to the RBI for thehalf-year ended September 30 2016 and for the quarter ended June 30 2017 in FY 2017-18as required.

IMPLEMENTATION OF OFFICIAL LANGUAGE: The year 2017-18 was a year of achievements inview of implementation of official language. This year our bank received the highestaward Kirti Shield (first prize) for implementation of official language in A region. On14.09.2017 at Vigyan Bhawan in the grand ceremony our bank's Chairman and ManagingDirector Mr. Jatinderbir Singh (IAS) received the award from Hon'ble President Shri RamKovind ji. Simultaneously the bank's Hindi magazine 'Rajbhasha Ankur' was awarded secondprize by the committee formed for all the banks of Delhi (Delhi Bank Nagar OfficialLanguage Implementation Committee) and also received an incentive award for theimplementation of official language at Head office. During the year our bank received atotal no. of 16 awards in different interbank competitions organized by different banksunder Delhi Bank Nagar Official Language Implementation Committee is a record. Besidesthis Bank was also awarded Rajbhasha Shields in Ludhiana Delhi Bareilly BhopalPatiala Chandigarh Gandhi Nagar and Durg (Bhilai) Chhaffisgarh by respective TownOfficial Language Implementation Committees for better Implementation of Official Languagein banking sector.

During the financial year 2017-18 Bank made significant progress in implementation ofofficial language Policy of Govt of India for promoting and propagating the use ofOfficial Language in the Bank. The implementation of official language was prevalented andextended on the basis of the principles of project implementation by taking out Hindi fromthe balustrade of translation. A total of 85 workshops were organized in which 1496 staffmembers were trained. Besides this in 603 Hindi Desk Training Programmes 2793 staffmembers were imparted training for using official language and Unicode training onComputers. With the aim of reviewing the progress of Official Language inspections wereconducted in 691 Branches / offices.

The special achievement of financial year 2017-18 is that from the financial year2018-19 the honorarium amount given to the writers for writing in Rajbhasha AnkurMagazine has been enhanced as per experience. In the year 2017-18 at Head office levelattractive cash prizes were also given to the winners participated in differentcompeti'tons for initiating implementation of official language. Similarly this system isproposed to be started at the Zonal office level also.

GENERAL ADMINISTRATION:

Construction of Office Building at Ranjit Nagar was completed by April'2017 and as ondate B/O Ranjit Nagar &RCC Delhi has shifted to the premises and renovation of BankHouse Building (except basement) was completed by July'2017. The tender for the renovationof Basement and External beautification of the HO Building was floated and renovation/External beautification work is in process

CONSTITUTION OF BOARD OF DIRECTORS

As on 31st March 2018 the Board comprised of two Executive Directorsbesides seven other Directors including representatives from Ministry of Finance ReserveBank of India two Share Holder Directors and one Part Time Non Official Director under CAcategory and two other Part Time Non Official Directors.

The constitution of Bank's Board of Directors underwent following changes during theyear 2017-18:

INCLUSIONS

• Sh. Govind N Dongre was appointed as Executive Director of the Bank videGovernment of India Ministry of Finance Department of Financial Services New DelhiNotification No. F.No. 4/5(2)/2017-BO.I dated 09.10.2017.

• Sh. S Selvakumar was nominated as MOF Nominee Director of the Bank videGovernment of India Ministry of Finance Department of Financial Services New DelhiNotification No. F.No. 6/3/2012-BO.I dated 17.08.2017.

• Sh. S R Ghedia was nominated as Non Official Part Time Director under CAcategory vide Government of India Ministry of Finance Department of Financial ServicesNew Delhi Notification No. F.No. 6/1/2015-BO.I dated 27.12.2017

• Sh. Madhu Sudan Dadu was nominated as Non Official Part Time Director videGovernment of India Ministry of Finance Department of Financial Services New DelhiNotification No. F.No. 6/1/2015-BO.I dated 27.12.2017

• Sh. Harsh bir Singh was elected as Director from amongst the Shareholders ofPunjab and Sind Bank on 01.07.2017

• Sh.TR Mendiratta was elected as Director from amongst the Shareholders of Punjaband Sind Bank on 01.07.2017

CESSATIONS

• Sh. Jatinderbir Singh completed his term as Chairman and Managing Director ofthe Bank on 31.12.2017 i.e. the last day of the month in which he attained the age ofsuperannuation.

• Sh. Mukesh Kumar Jain Executive Director of the Bank was appointed as ManagingDirector & CEO Oriental Bank of Commerce vide Government of India Ministry ofFinance Department of Financial Services New Delhi Notification No. F. No.4/4/2016-BO/l(Vol.ll)

• Sh.SR Mehar MOF Nominee Director was on the Board of the Bank upto 17.08.2017

• Sh.MS Sarang completed his term as Shareholder Director on 30.06.2017.

• Sh.SP Babuta completed his term as Shareholder Director on 30.06.2017.

CORPORATE GOVERNANCE

The Bank is committed to good Corporate Governance and is constantly striving tofurther strengthen the same to ensure greater transparency and better coordination at alllevels in the Organization. The working of the Bank reflects transparent ownershipstructure improved risk management practices well defined delegation of powersaccountability and an elaborate audit function carried out by both its Inspection &Audit Division and by independent Statutory Central Auditors.

The Bank has complied with the guidelines of RBI and SEBI on the matters relating toCorporate Governance which have been examined by the Statutory Central Auditors.

DIRECTORS' RESPONSIBILITY STATEMENTS

The Directors confirm that in preparation of the Annual Accounts for the year ended 31stMarch 2018:

• The applicable accounting standards have been followed along with properexplanation relating to material departures if any.

• The accounting policies framed in accordance with the guidelines of the ReserveBank of India were consistently applied.

• Reasonable and prudent judgment and estimates were made 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 of the bank for the year ended on 31st March 2018.

• Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of applicable laws Governing Banks in India andthe accounts have been prepared on a going concern basis.

STAUTORY AUDIT: As approved by Reserve Bank of India the Bank has appointed M/s Dhawan& Co. New Delhi and M/s Davinder Pal Singh & Co. Mohali M/s S Mann & CoNew Delhi and M/s Baldev Kumar & Co Chandigarh as Statutory Central Auditors for theaccounting year ended March 2018.

ACKNOWLEDGEMENTS

The Board of Directors of the Bank thanks valued customers shareholders well-wishersand correspondents of the Bank in India and abroad for their goodwill patronage andcontinued support.

The Directors also acknowledge with gratitude the valuable and timely advice guidanceand support received from Government of India Reserve Bank of India Securities andExchange Board of India (SEBI) Stock Exchanges of various State Governments FinancialInstitutions and the Statutory Central Auditors of the Bank in the functioning of theBank.

The Directors place on record their deep appreciation for the valuable contribution ofthe members of the staff at all levels for the progress of the Bank during the year andlook forward to their continued co-operation in realization of the corporate goals inyears ahead.

For and on behalf of Board of Directors
Place: New Delhi Fareed Ahmed
Date: 16 May 2018 Executive Director