The Board of Directors of RBL Bank Limited ("the Bank") take great pleasurein presenting the 77th Annual Report of the Bank along with the Auditedstatement of accounts for the financial year ended March 312020.
A. FINANCIAL PERFORMANCE
The comparative standalone financial performance of the Bank for the financial yearended March 312020 with that of March 312019 is summarized in the following table:
|Particulars ||FY 20 ||FY19 ||Change(%) |
|Advances (Net) ||58019.05 ||54308.24 ||6.83% |
|Deposits ||57812.22 ||58394.42 ||(1.00)% |
|Net interest income ||3629.64 ||2539.48 ||42.93% |
|Other income ||1910.25 ||1442.37 ||32.44% |
|Net total income ||5539.89 ||3981.85 ||39.13% |
|Operating expenses ||2788.26 ||2042.02 ||36.54% |
|Provisions and contingencies ||2245.96 ||1072.88 ||109.34% |
|Net profit ||505.67 ||866.95 ||(41.67)% |
|Gross NPA ratio ||3.62% ||1.38% ||- |
|Net NPA ratio ||2.05% ||0.69% ||- |
|Capital Adequacy Ratio ||16.45% ||13.46% ||- |
|Business per employee ||16.04 ||19.29 ||(16.84)% |
|Business per branch ||300.08 ||347.85 ||(13.73)% |
|Appropriations || || || |
|Transfer to Statutory Reserve ||127.00 ||217.00 ||- |
|Transfer to Capital Reserve ||29.00 ||9.00 ||- |
|Transfer to Revenue and Other Reserves ||175.00 ||400.00 ||- |
|Transfer to Investment Fluctuation Reserve ||51.50 ||78.36 ||- |
|Transfer from Investment Reserve ||8.00 ||- ||- |
|Dividend for the year including tax thereon ||231.21 ||107.00 ||- |
The Bank posted a net total income of R 5539.89 crore and net profit of R 505.67 crorefor financial year ended 2019-20 as against a net total income of R 3981.85 crore and netprofit of R 866.95 crore for financial year ended 2018-19 which is an increase of 39.13%and decrease of 41.67% respectively over financial year ended 2018-19.
Appropriations from net profit have been done as detailed herein above.
B. BUSINESS UPDATE AND STATE OF AFFAIRS OF THE BANK
The details on state of affairs of the Bank and the business update are separatelyprovided in Management Discussion and Analysis Report which forms an integral part of theAnnual Report.
C. FINANCiAL DISCLOSURES
Pursuant to the approval of the Board of Directors on March 17 2020 an interimdividend of R 1.50/- per equity share (i.e. 15%) of face value of R 10/- each was paid byyour Bank for financial year ended 2019-20 to the shareholders whose names appeared in theRegister of Members as on March 25 2020 being the record date fixed for the said purposein accordance with the Dividend Distribution Policy of the Bank. Your Bank had paid afinal dividend of R 2.70/- per equity share (i.e. 27%) for financial year ended 2018-19.
The Bank did not declare Final Dividend for financial year ended 2019-20 pursuant toRBI circular no. DOR.BPBC.No.64/21.02.067/2019-20 dated April 17 2020 directing all banksnot to make any further dividend payouts from the profits pertaining to the financial yearended March 312020 until further instructions. Thus the total dividend for the financialyear ended 2019-20 remains R 1.50/- per equity share.
The Dividend Distribution Policy formulated in accordance with the provisions ofRegulation 43A of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") asapproved by the Board is available on the website of the Bank at https://ir.rblbank.com.
During financial year ended 2019-20 your Bank raised capital to the tune of R 2775.87crore as detailed hereunder:
raised capital to the tune of R 2025.27 crore by way of issuance of 57700000equity shares of R 10/- each fully paid-up through Qualified Institutional Placement at aprice of R 351/- per equity share (including premium of R 341/- per equity share).
raised capital to the tune of R 675.80 crore by way of issuance of 19835610equity shares of R 10/- each fully paid-up on Preferential basis ("PreferentialIssue") at a price of R 340.70/- per equity share (including premium of R 330.70/-per equity share).
During the year under review your Bank also added R 74.80 crore (including sharepremium) to its paid-up equity capital by issuance/allotment of equity shares pursuant toexercise of stock options by the employees of the Bank under various Employees StockOption Plans.
Consequent to the above issuances the paid-up equity share capital of your Bankincreased by R 81.99 crore and share premium increased by R 2672.22 crore (afteradjusting the share issue expense of R 21.67 crores). The issuances were made pursuant tothe Board Shareholders and regulatory approvals wherever applicable. This has resultedin strengthening of the Bank's capital structure.
The paid up Equity Share Capital of the Bank as on financial year ended March 31 2020stood at R 508.70 crore divided into 508698564 equity shares of R 10/- each.
During the financial year under review there has been no change in the Authorizedshare capital of the Bank. The Authorized share capital of the Bank as at March 31 2020stood at R 700 crore divided into 700000000 equity shares of R 10/- each.
The Equity shares of your Bank continue to remain listed on BSE Limited and NationalStock Exchange of India Limited. The Unsecured Redeemable Non-Convertible Debenturesissued by the Bank on a private placement basis are listed on BSE Limited.
The Bank has paid the listing fees as payable to the BSE Limited and National StockExchange of India Limited for the financial year ended 2019-20 within the stipulated time.
Capital Adequacy Ratio
Your Bank is well capitalized with a Capital Adequacy Ratio ("CAR") of 16.45%as on March 312020 as against the minimum requirement of 10.875%. Your Bank complies withthe Capital Adequacy guidelines of Reserve Bank of India ("RBI") also known as'Basel III Guidelines'.
Your Bank's net worth as on March 312020 is R 10290.64 crore. It comprises ofpaid-up equity share capital of R 508.70 crore and reserves of R 9781.94 crore (excludingRevaluation Reserve Investment Reserve Foreign Currency Translation Reserves andIntangible and Deferred Tax assets).
D. CORPORATE GOVERNANCE
Your Bank's philosophy on Corporate Governance is aimed at efficient conduct ofbusiness operations and meeting its obligations towards the stakeholders. Your Bank iscommitted to transparent and merit-based organization and ensures fairness transparencyand responsiveness in all transactions.
A detailed Corporate Governance Report as envisaged under Regulation 34(3) of the SEBIListing Regulations is annexed as Annexure I to this Report.
The Certificate issued by M/s. Alwyn Jay & Co. Practicing Company Secretaryconfirming compliance with the conditions of Corporate Governance as stipulated in SEBIListing Regulations is annexed as Annexure IA and forms an integral part of thisReport.
e. business responsibility report
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations a BusinessResponsibility Report ("BRR") has to be furnished by top One Thousand listedcompanies based on market capitalization in the format prescribed by SEBI. Accordinglythe report describing the initiatives taken by the Bank from an environmental social andgovernance perspective is presented in a separate section forming part of this AnnualReport. The BRR is also available on the website of the Bank at https://ir.rblbank.com.
Any Member interested in obtaining a copy of BRR may write to the Company Secretary ofthe Bank at the Registered Office of the Bank or by email email@example.com.
F. STATUTORY DISCLOSURES
Extract of Annual Return
In accordance with the Companies (Amendment) Act 2017 read with Section 134(3) of theCompanies Act 2013 the Annual Return in the prescribed Form MGT-7 under Section 92(3)of the Companies Act 2013 can be accessed on the website of the Bank at https://ir.rblbank.com/and pursuant to rule 12(1) of the Companies (Management and Administration) Rules 2014the extract of the Annual Return in Form MGT-9 is provided as an Annexure ii tothis report.
Conservation of Energy and Technology Absorption
Summary of measures taken by your Bank with respect to conservation of energy andtechnology are covered in Management Discussion and Analysis Report and BusinessResponsibility Report forming part of this Annual Report. Your Bank is constantly pursuingits goal of upgrading technology to deliver quality services to its customers in acost-effective manner.
Foreign Exchange Earnings and outgo
During the financial year ended March 312020 your Bank earned R 264.87 crore andspent R 163.40 crore in foreign currency. This does not include foreign currency cashflows in derivatives and foreign currency exchange transactions.
Board of Directors
The Board of Directors ("Board") of your Bank is constituted in accordancewith the provisions of the Companies Act 2013 the Banking Regulation Act 1949("the BR Act 1949") SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("SEBI Listing Regulations") and the Articles of Associationof the Bank. The Board consists of eminent persons with considerable professionalexpertise inter-alia in Accountancy Agriculture and Rural Economy Banking EconomicsFinance Law Information Technology Payment & Settlement Systems Human ResourcesRisk Management Business Management which are useful to the Bank's business. Theirexperience and professional credentials have helped to gain insights for strategyformulation and direction setting for the Bank thus adding value to its growthobjectives.
The Bank adheres to the process and methodology prescribed by the Reserve Bank of Indiain respect of the 'Fit & Proper' criteria as applicable to Private Sector Bankssigning of deed of covenants which binds the Directors to discharge their responsibilitiesto the best of their abilities individually and collectively in order to be eligible tobe appointed/re-appointed as a Director of the Bank. The said declarations are obtainedfrom all the Directors on an annual basis and also at the time of their appointment /re-appointment in compliance with the said laws. An assessment on whether the Directorsfulfil the said criteria is also carried out by the Nomination and Remuneration Committee('erstwhile Nomination Committee & Human Resources and Remuneration Committee') andthe Board on an annual basis and before considering their candidature for re-appointment.
As on March 312020 the Board comprises eight (8) Directors out of which two (2)Directors are Executive/Whole-time Directors (one of whom is a Managing Director and ChiefExecutive Officer) four (4) Directors are Non-Executive Independent Directors (one ofwhom is also the part-time Chairman of the Board and one being an Independent WomanDirector) and Two (2) Directors are Non-Executive Non Independent Directors.
During the year under review Mr. Jairaj Purandare (DIN: 00159886) Non - ExecutiveIndependent Director and Mr. Palepu Sudhir Rao (DIN: 00018213) Non - ExecutiveIndependent Director ceased to be the Directors of the Bank due to completion of theirtenure of eight years as prescribed under section 10A of the Banking Regulation Act1949 w.e.f. closing of business hours of September 15 2019 and January 29 2020respectively. The Board places on record their sincere appreciation for the invaluablecontribution made and services rendered by Mr. Jairaj Purandare and Mr. Palepu Sudhir Raoduring their tenure as Directors of the Bank.
During the year under review the Board of Directors of your Bank appointed Ms. VeenaMankar (DIN: 00004168) as Non - Executive (Additional) Non Independent Director of theBank at their meeting held on October 22 2019 on the recommendation of Nomination andRemuneration Committee of the Bank ('erstwhile Nomination Committee & Human Resourcesand Remuneration Committee'). The Ordinary Resolution in respect of her appointment as aNon-Executive Non Independent Director has been included in the Notice of the ensuingAnnual General Meeting ('AGM') for approval of the Members of the Bank.
Ms. Ranjana Agarwal (DIN: 03340032) was appointed as Non - Executive (Additional)Independent Director of the Bank by the Board of Directors at their meeting held onNovember 30 2019 on the recommendation of Nomination and Remuneration Committee('erstwhile Nomination Committee & Human Resources and Remuneration Committee'). TheOrdinary Resolution in respect of her appointment as a Non-Executive Independent Directorhas been included in the Notice of the ensuing AGM for approval of the Members of theBank.
The Members of the Bank at 73rd AGM had approved the appointment of Mr.Rajeev Ahuja (DIN: 00003545) as an Executive Director of the Bank for a period of threeyears from the date of approval of the Reserve Bank of India ('RBI') i.e. three years fromFebruary 21 2017 to February 20 2020. The Board of your Bank had at its meeting held onJanuary 22 2020 on the recommendation of Nomination and Remuneration Committee ('theCommittee') ('erstwhile Nomination Committee & Human Resources and RemunerationCommittee') approved the re-appointment of Mr. Rajeev Ahuja as an Executive Director witheffect from February 21 2020 for a period of 3 years subject to the approval of theMembers of the Bank on such terms and conditions as detailed in the Notice of the ensuingAGM of the Bank. Further the Bank has also received approval from RBI for the saidappointment.
The Members of the Bank at 75th AGM had approved the appointment of Mr.Prakash Chandra (DIN: 02839303) as a Non-Executive Part Time Chairman of the Bank for aperiod of two years. The said appointment was approved by RBI. The Board of your Bank atits meeting held on March 20 2020 on the recommendation of Nomination and RemunerationCommittee ('erstwhile Nomination Committee & Human Resources and RemunerationCommittee') has approved the reappointment of Mr. Prakash Chandra as a Non-Executive PartTime Chairman of the Bank for such period as may be approved by the RBI and revision inhis remuneration subject to the approval of RBI. Further your Bank has already submittedan application to the RBI for their approval in this regard. The said appointment issubject to the approval of the Members of the Bank at the ensuing AGM.
In terms of Section 152 of the Companies Act 2013 and Articles of Association of theBank Mr. Vijay Mahajan (DIN: 00038794) Non-Executive Non Independent Director of theBank retires by rotation and being eligible offers himself for re-appointment at theensuing AGM.
The appointment/reappointment of the Directors is based on the performance evaluationcarried out by the Board in terms of the applicable provisions of the Companies Act 2013.
The brief profile and details in terms of Regulation 36 (3) of SEBI Listing Regulationsand the Secretarial Standard on General Meetings (SS-2) in respect of the directorsseeking appointment/ re-appointment has been annexed to the Notice of the ensuing AGM.
Mr. Sivanandhan Dhanushkodi (DIN: 03607203) Mr. Ishan Raina (DIN: 00151951) Mr.Prakash Chandra (DIN: 02839303) are Independent Directors and Ms. Ranjana Agarwal (DIN:03340032) is a Non-Executive Additional (Woman) Independent Director on the Board of theBank as on March 31 2020. All the Independent Directors and Additional IndependentDirector have submitted their respective declarations stating that they meet the criteriaprescribed for independence under Section 149 of the Companies Act 2013 & Rules madethereunder and Regulation 16 of the SEBI Listing Regulations. In the opinion of the Boardthe Independent Directors fulfill the conditions relating to their status as IndependentDirectors as specified in Section 149 of the Companies Act 2013 and the Rules madethereunder and Regulation 16 of the SEBI Listing Regulations and are independent of themanagement.
The Board has appointed Ms. Ranjana Agarwal as a Non-Executive (Additional) IndependentDirector w.e.f. November 30 2019 and pursuant to the Companies (Accounts) AmendmentRules 2019 vide Ministry of Corporate Affairs ('MCA') Notification dated October 222019 the Board is of the opinion that Ms. Agarwal upholds the highest level of integrityand has the requisite expertise and experience in various fields and functional areaswhich are beneficial to the Bank.
All the Independent Directors of the Bank have registered their name in the Data Bankmaintained with the Indian Institute of Corporate Affairs Manesar ('IICA').
Board Level Performance Evaluation
The performance evaluation of the Board as a whole as well as that of its CommitteesDirectors (including Independent Directors) and Chairman of the Board was carried out bythe Board based on the criteria for evaluation/ assessment as laid down by the Nomination& Remuneration Committee in accordance with the relevant provisions of the CompaniesAct 2013 the relevant Rules made thereunder and the SEBI Listing Regulations.
The manner in which the said performance evaluation has been carried out is outlined inthe Corporate Governance Report forming part of this Report as an Annexure I.
Key Managerial Personnel
Mr. Vishwavir Ahuja Managing Director & CEO (DIN: 00074994) Mr. Rajeev AhujaExecutive Director (DIN: 00003545) Mr. Amrut Palan Chief Financial Officer (w.e.f.October 22 2019) and Ms. Niti Arya Company Secretary (w.e.f. October 22 2019) of theBank are the Key Managerial Personnels (KMP) as per the provisions of Section 203 (1) ofthe Companies Act 2013.
Mr. Amrut Palan was appointed as the Chief Financial Officer and Key ManagerialPersonnel in terms of the provisions of Section 203 of the Companies Act 2013 with effectfrom October 22 2019 upon Mr. Deepak Ruiya demitting office as Chief Financial Officer(interim) from the said date.
Ms. Niti Arya was appointed as the Company Secretary & Compliance Officer and KeyManagerial Personnel in terms of the provisions of Section 203 of the Companies Act 2013with effect from October 22 2019. Mr. Vinay Tripathi was Company Secretary &Compliance Officer and Key Managerial Personnel up to April 30 2019. However Mr. RupeshSaraiya who was to take charge from May 1 2019 did not assume charge as Company Secretary& Compliance Officer.
Particulars of Employee Remuneration
A. The ratio of the remuneration of each director to the median employee's remunerationand other details in terms of Section 197(12) of Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended by the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules 2016 are given below:
1. The ratio of the remuneration of each director to the median remuneration of theemployees of the Bank for the financial year.
|Sr. No. ||Name of the Director ||Designation ||Ratio |
|1 ||Mr. Prakash Chandra ||Non-Executive Independent Director (Part-time Chairman) ||5.10x |
|2 ||Mr. Vishwavir Ahuja ||Managing Director & CEO ||42.45x |
|3 ||Mr. Rajeev Ahuja ||Executive Director ||30.42x |
2. The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer and Company Secretary of the Bank for the financial year.
|Sr. No. ||Name of the Director / KMP ||Designation ||% Increase |
|1 ||Mr. Prakash Chandra ||Non-Executive Independent Director (Part-time Chairman) ||N.A. |
|2 ||Mr. Vishwavir Ahuja ||Managing Director & CEO ||14% |
|3 ||Mr. Rajeev Ahuja ||Executive Director ||10% |
|4 ||Mr. Deepak Ruiya* ||Chief Financial Officer (interim) ||18% |
|5 ||Mr. Vinay Tripathi@ ||Company Secretary ||15% |
|6 ||Mr. Amrut PalanA ||Chief Financial Officer ||N.A. |
|7 ||Ms Niti AryaA ||Company Secretary ||N.A. |
* upto October 22 2019.
@ upto April 30 2019.
A from October 22 2019.
3. The percentage increase in the median remuneration of employees in the financialyear.
The percentage increase in the median remuneration of employees in the financial yearwas 10%.
4. The number of permanent employees on the rolls of Bank.
The number of permanent employees on the rolls of Bank as on March 312020 was 7221.
5. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration.
Average increase in remuneration is 8.7% for employees other than managerial personneland 12.5% for managerial personnel (Executive Directors including Managing Director &CEO Chief Financial Officer and Company Secretary).
It is hereby affirmed that the remuneration paid to Directors and KMPs is as per theremuneration policy of the Bank.
Note: 'x' denotes the median remuneration of the employees.
B. The statement containing particulars of employees as required under Section 197(12)of Companies Act 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended by the Companies (Appointmentand Remuneration of Managerial Personnel) Amendment Rules 2016 forms part of this report.In terms of Section 136 of Companies Act 2013 read with second proviso of Rule 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theAnnual Reports are being sent to the Members of the Bank excluding the information asrequired under Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended as mentioned aforesaid and the same is open forinspection electronically on all working days between 11:00 a.m. to 01:00 p.m. upto thedate of AGM. A copy of this statement may be obtained by the Members by writing to theCompany Secretary of the Bank at the Registered Office of the Bank or by email firstname.lastname@example.org.
Remuneration policy for employees
Your Bank's compensation policy keeps in mind the strategy ethos and financialperformance of the Bank and market compensation trends at any given time. Your Bankrecognizes that talent is critical to the long-term growth and success of the Bank and itis a pre-requisite to have a compensation structure comparable with the industry.
Your Bank has set out its Compensation Policy based on the concept of CTC (Cost toCompany) and TEC (Total Employee Compensation) to make compensation packages for officersacross all grades competitive enough to attract nurture and retain high calibreprofessionals in the Bank and have an organization structure that reflects specializationfocus and scale.
Your Bank's Compensation Policy is designed and aimed at attracting and retaining bestpossible / available talent that it requires to effectively grow the business and beconsidered a highly respected institution. It comprises of a balanced mix of Fixed &Variable cash and non-cash compensation and benefits / perquisites to deliver maximumvalue to the employee and other stakeholders.
Your Bank strongly believes that an equity component in the compensation goes a longway in aligning the objectives of employees with those of the Bank. The underlyingphilosophy of stock options is to enable the employees present and future to get a sharein the value that they help to create for the Bank over a certain period of time.
Remuneration Policy for Directors
In terms of the provisions of Companies Act 2013 and SEBI Listing Regulations theBoard has on recommendation of the Nomination and Remuneration Committee ('erstwhileNomination Committee & Human Resources and Remuneration Committee') framed aCompensation policy for Non-Executive Directors ("Policy") which inter aliadeals with remuneration structure and criteria for selection and appointment of directors.During the financial year under review amendment to the "Structure of Remunerationfor Non-Executive Directors" section of the said Policy was done with the approval ofthe Board. The said Policy is available on the website of the Bank athttps://ir.rblbank.com.
Remuneration of Executive Directors
The Board considers the recommendations of Nomination and Remuneration Committee('erstwhile Nomination Committee & Human Resources and Remuneration Committee') andapproves the remuneration of Executive Directors (including of Managing Director &CEO) with or without modifications subject to the approval of Members of the Bank andapplicable regulatory approvals.
The remuneration payable to Executive Directors (including of Managing Director &CEO) is subject to prior approval of the RBI. Therefore the remuneration or any revisionin remuneration to Executive Directors (including of Managing Director & CEO) ispayable only after receipt of the approval from RBI.
Remuneration of Chairman
The Nomination and Remuneration Committee ('erstwhile Nomination Committee & HumanResources and Remuneration Committee') recommends the remuneration of the Chairman to theBoard which is considered and approved by the Board subject to the approval of Members ofthe Bank and applicable regulatory approvals.
The remuneration payable to the Chairman is subject to prior approval of the RBI.Therefore the remuneration or any revision in remuneration of the Chairperson is payableonly after receipt of the approval from RBI.
However the Chairperson is paid sitting fees for attending each meeting of the Boardof Directors or any Committee thereof. The Chairperson is also entitled to reimbursementof expenses for participation in the meeting of the Board and Committee thereof.
Remuneration of Non-Executive Directors (NEDs)
The NEDs are paid sitting fees for attending each meeting of the Board of Directors orany Committee thereof. The NEDs are also entitled to reimbursement of expenses forparticipation in the meeting of the Board and Committee thereof.
RBI vide Circular No. DBR. No.BC.97/29.67.001/2014-15 dated June 1 2015 issuedGuidelines on Compensation of Non-Executive Directors of Private Sector Banks emphasizingthat in order to enable banks to attract and retain professional directors it isessential that such directors are appropriately compensated. Pursuant to the aforesaid RBICircular the maximum amount that can be paid as Commission was capped at R 10.00 Lakh perdirector per annum. Also section 197 of Companies Act 2013 permits payment of profitbased commission to the Directors who are neither Managing Directors nor Whole-timeDirectors not exceeding One per cent (1%) of the net profits of the company if there is aManaging or Whole-time Director or Manager or three per cent (3%) of the net profits inany other case.
The Members of the Bank at their 74th AGM had approved the payment ofremuneration to NEDs (excluding the Chairman of the Bank) in the form of commission basedon profit earned by the Bank w.e.f. financial year ended 2017-18. The commission forfinancial year ended 2018 - 19 which was paid in financial year ended 2019-20 isappropriately disclosed in the Corporate Governance Report annexed as Annexure I tothis Report.
The Bank does not grant any Stock Options to NEDs.
Employees Stock Option Plan (ESOP)
Your Bank has formulated and adopted ESOP plan in compliance with the relevantprovisions of Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 as amended ("SEBI SBEB Regulations").
The underlying philosophy of the Bank's ESOP is to enable the present and futureemployees to share the value that they help to create for the Bank over a period of time.ESOP is also expected to strengthen the sense of ownership and belonging among therecipients. The ESOP has been designed and implemented in such a manner that thecompensation structure goes a long way in aligning the objectives of an individual withthose of the Bank. In addition during the year your Bank continued with its plan ofrewarding long-serving employees with ESOPs thus making them true partners in the Bank'sgrowth.
The Nomination and Remuneration Committee ('erstwhile Nomination Committee & HumanResources and Remuneration Committee') of the Board inter alia administers and monitorsthe ESOP in accordance with SEBI SBEB Regulations.
The certificate from the Statutory Auditors of the Bank certifying that the Bank'sEmployees Stock Option Plans are being implemented in accordance with the provisions ofthe SEBI SBEB Regulations and the respective resolutions passed by the Members of theBank shall be available electronically for inspection by the Members at the AGM.
More details of the ESOP are given in the notes to accounts in the attached financialstatements and the statutory disclosure as mandated under Regulation 14 of SEBI SBEBRegulations is annexed as Annexure III to this report and the said details are alsoavailable electronically on the website of the Bank at https://ir.rblbank.com.
Further the Board at its meeting held on June 4 2020 had basis the recommendations ofthe Nomination and Remuneration Committee of the Board approved few amendments to ESOPPlan 2018 of the Bank and the Special Resolutions with respect to the amendments in ESOPPlan 2018 has been included in the Notice of the ensuing Annual General Meeting ('AGM')for approval of the Members of the Bank.
Your Bank holds atleast four Board meetings in a year one in each quarter inter-aliato review the financial results of the Bank and the dates of the Board meetings arefinalized well in advance after seeking concurrence of all the Directors. All thedecisions and urgent matters approved by way of circular resolutions are placed numberedand noted at the subsequent Board meeting. In case of urgent matters additional Boardmeetings are held in between the quarterly meetings.
During the financial year under review eight (8) Board meetings were convened andheld. The intervening gap between the Board meetings was within the period prescribedunder the Companies Act 2013 and SEBI Listing Regulations. The details of the Boardcomposition its meetings held during the year alongwith the attendance of the respectiveDirectors thereat are set out in the Corporate Governance Report forming part of thisReport as Annexure I.
Audit Committee and other Board Committees
Your Bank has a duly constituted Audit Committee as per the provisions of Section 177of the Companies Act 2013 and provisions of the SEBI Listing Regulations.
The Board of Directors have constituted other committees namely Stakeholders'Relationship Committee Board Investment & Credit Committee Anti - Fraud CommitteeCustomer Service Branding and Marketing Committee Nomination Committee and HumanResources and Remuneration Committee merged to form Nomination and Remuneration CommitteeRisk Management Committee Capital Raising Committee Corporate Social ResponsibilityCommittee IT Strategy Committee Non - Cooperative Borrower Review Committee and WilfulDefaulter Review Committee.
The details of the composition of the Audit Committee and that of other BoardCommittees their terms of reference and other details are set out in the CorporateGovernance Report forming part of this Report as Annexure I.
The Audit Committee and other Board Committees meet at regular intervals and ensure toperform the duties and functions as entrusted upon them by the Board.
Related Party Transactions
Your Bank has in place a Policy on Dealing with the Related Party Transactions as perthe provisions of the Companies Act 2013 read with the rules made thereunder and SEBIListing Regulations.
The Bank obtains approval of the Audit Committee before entering into any Related PartyTransactions. Approval of the Board of Directors in terms of Section 188 of the CompaniesAct 2013 is also obtained for entering into Related Party Transactions by the Bankwherever applicable. A quarterly update on the Related Party Transactions is provided tothe Audit Committee and Board of Directors for their review and consideration.
All Related Party Transactions entered during the financial year under review were inthe ordinary course of business and on an arms length basis. There were no materialtransactions entered into by the Bank with any related party during the financial yearunder review. Thus the disclosure as per section 134(3)(h) of the Companies Act 2013 inthe prescribed form AOC-2 is not applicable to the Bank.
Details of related party transactions as per Accounting Standard 18 ('AS-18') enteredinto during the year ended March 31 2020 are given in Note No. 14 in Schedule 18forming part of 'Notes to Accounts'.
The Policy on Dealing with the Related Party Transactions of the Bank is available onthe website of the Bank at https://ir.rblbank.com.
As on March 31 2020 your Bank has one wholly owned subsidiary i.e RBL FinserveLimited (formerly Swadhar Finserve Private Limited). RBL Finserve Limited is a dedicatedBusiness Correspondent (BC) for the Bank in the financial inclusion segment servicing theMicro Finance (MF) clients and Micro and Small enterprises (MSME) segment with loanssavings and insurance products. It operates in 19 states and 2 Union Territories.
Pursuant to Section 129(3) of Companies Act 2013 read with Rules made thereunder yourBank has prepared consolidated financial statements of the Bank with its SubsidiaryCompany RBL FinServe Limited in the same form and manner as that of the Bank which formspart of this Annual Report and shall be laid before the ensuing AGM of the Bank along withthe laying of the Bank's Standalone Financial Statement under Section 129(2) of theCompanies Act 2013.
A statement containing the salient features of the financial statement of theSubsidiary Company in Form AOC-1 pursuant to the provisions of Companies Act 2013 readwith the Companies (Accounts) Rules 2014 is annexed to the Financial Statements formingpart of the Annual Report.
Further in accordance with the fourth proviso of Section 136(1) of the Companies Act2013 read with the applicable rules the audited annual accounts of the said subsidiarycompany of the Bank have been hosted on the Bank's website at https://ir.rblbank.com/. AnyMember interested in obtaining a physical copy of the said financial statement may writeto the Company Secretary at the Registered Office of the Bank or by email email@example.com. The same is also open for inspection by the Members of theBank and Trustees of the Debenture holders electronically on all working days between11:00 a.m. to 01:00 p.m. upto the date of AGM.
Adequacy of Internal Financial Controls
Proper internal financial controls were in place and that the financial controls wereadequate and were operating effectively. Further the statutory auditors have incompliance with the requirements of Companies Act 2013 issued an opinion with respect tothe adequacy of the internal financial controls over financial reporting of the Bank andthe operating effectiveness of such controls details of which may be referred to in theIndependent Auditor's Report attached to the financial statements of financial year ended2019-20.
Material changes and commitments affecting the financial position of the Bank
There are no material changes and commitments affecting the financial position of theBank that have occurred between the end of the financial year of the Bank i.e. March 312020 and the date of the Directors' Report i.e. June 4 2020 except as disclosed in thisAnnual Report.
Being a Banking company the disclosures required as per Rule 8(5)(v)&(vi) of theCompanies (Accounts) Rules 2014 read with Section 73 and 74 of Companies Act 2013 arenot applicable to your Bank.
Nature of Business
Your Bank has not changed its nature of business during the financial year underreview.
Particulars of Loans Guarantees and investments
Pursuant to Section 186(11) of Companies Act 2013 read with Section 134(3)(g) of theCompanies Act 2013 the particulars of loans guarantees and investments by a Bankingcompany in the ordinary course of its business are exempted from disclosure in the AnnualReport thus no disclosure is being made in this regard.
The Members at the 75th AGM of the Bank had subject to the approval of RBIappointed M/s. B SR & Co. LLP Chartered Accountants (Firm Registration No.101248W/W100022) as Statutory Auditors for a period of two (2) years to hold office tillthe conclusion of 77th AGM.
As the term of M/s. B S R & Co. LLP Chartered Accountants will expire at theconclusion of the ensuing 77th AGM of the Bank it is proposed to appoint M/s.Haribhakti & Co LLP Chartered Accountants (Firm Registration No. 103523W/W100048) asthe Bank's new Statutory Auditor subject to the approval of the Members of the Bank.Accordingly on the basis of the recommendation of the Audit Committee the Board hasproposed the appointment of M/s. Haribhakti & Co LLP Chartered Accountants (FirmRegistration No. 103523W/W100048) as Statutory Auditors of the Bank for a period of Two(2) years from the conclusion of the Seventy Seventh (77th) AGM until theconclusion of the Seventy Ninth (79th) AGM subject to the approval of RBI.
M/s. Haribhakti & Co LLP Chartered Accountants have confirmed their eligibilityunder Section 141 of Companies Act 2013 to be appointed as Statutory Auditors of theBank. Further as required under the relevant provisions of the SEBI Listing Regulationsthe Statutory Auditors have also confirmed that they had subjected themselves to the peerreview process of the Institute of Chartered Accountants of India (ICAI) and they hold avalid certificate issued by the Peer Review Board of ICAI.
The Board of Directors places on record their appreciation for the professionalservices rendered by M/s. B S R & Co. LLP Chartered Accountants during their tenureas the Statutory Auditors of the Bank.
Pursuant to Section 204 of Companies Act 2013 the Board had appointed M/s. Alwyn Jay& Co. Practicing Company Secretaries Mumbai as its Secretarial Auditors forfinancial year ended 2019-20. The Bank provided all assistance and facilities to theSecretarial Auditor for conducting their audit as prescribed under Companies Act 2013.The Secretarial Audit Report for the financial year ended 2019-20 is annexed to thisreport as Annexure IV.
During the financial year under review your Bank has complied with the applicableSecretarial Standards issued by the Institute of Company Secretaries of India.
Qualifications in Statutory and Secretarial Audit Reports
There were no adverse observations or qualifications made by the Statutory Auditors inthe Auditor's Report.
Further there were no adverse observations or qualifications made by the SecretarialAuditor in its Report.
Disclosure under Section 22 of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
Your Bank has Zero tolerance towards any action on the part of any executive which mayfall under the ambit of 'Sexual Harassment' at workplace and is fully committed to upholdand maintain the dignity of every woman executive working in the Bank. The Bank hasformulated a Policy and has complied with provisions relating to the constitution ofInternal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The Policy provides for protectionagainst sexual harassment of women at workplace and for prevention and redressal of suchcomplaints. As a part of Anti Sexual Harassment initiatives the Bank created a mandatorye-learning module for all the employees called "Prevention of Sexual Harassment(POSH)". The information relating to complaints received and disposed-off /resolved/action taken during the financial year ended 2019-20 is disclosed under CorporateGovernance Report annexed as Annexure I to this Report.
Whistle Blower Policy (vigil Mechanism)
Details required to be disclosed in this regard has been provided under CorporateGovernance Report annexed as Annexure I to this Report.
Significant and material order passed by regulators or courts or tribunals impactingthe going concern status and operations of the Bank
During financial year ended 2019-20 there were no significant/ material orders passedby the Regulators / Courts/ Tribunals etc. which would impact the going concern status ofthe Bank and its future operations.
Risk Management Policy
The Board of the Bank has constituted a Risk Management Committee in accordance withthe provisions of Regulation 21 of the SEBI Listing Regulations. The details with respectto its terms of reference composition and meetings held during the last financial yearare set out in the Corporate Governance Report forming part of this Report as AnnexureI.
Your Bank has a robust Risk Management framework and a comprehensive Risk ManagementPolicy in place. The details of Risk Management Policy and its framework are separatelyprovided in Management Discussion and Analysis Report which forms an integral part of thisAnnual Report.
g. other disclosures code of conduct for Employees
For a financial institution trust is the most important asset. To this end your Bankstrives to ensure that its actions are in accordance with the highest standards ofpersonal and professional integrity and highest level of ethical conduct. Your Bank hasadopted a Code of Conduct which all its employees have to adhere to. The employees have toconduct duties according to the aforesaid Code and avoid even the appearance of improperbehaviour. Some of the areas which are covered by the Code of Conduct are fairness ofemployment practices protection of intellectual property integrity customerconfidentiality conflict of interest prevention of insider trading etc.
Bribery and corruption
Your Bank has a responsibility both to the Members and to the communities in which wedo business to be transparent in all our dealings. Your Bank's Code of Conduct requiresthat we do not engage in bribery or corruption in any form and explicitly mentions thatthe Bank will not pay or procure the payment of a bribe or unlawful fee to encourage theperformance of a task or one which is intended or likely to compromise the integrity ofanother. Your Bank will not accept any payment gift or inducement from a third partywhich is intended to compromise our own integrity. The Code of Conduct also includesprocedures dealing with Gifts & Entertainment Conflicts of Interest and otherimportant matters.
Corporate Social Responsibility (CSR)
Your Bank strives to proactively encourage inclusive growth and development therebyparticipating towards building a sustainable future.
Your Bank has a duly constituted CSR Committee of the Board consisting of majority ofIndependent Directors as per the provisions of Section 135 of the Companies Act 2013.The composition of the CSR Committee and its terms of reference are detailed in theCorporate Governance Report forming part of this report as Annexure i. Your Bankalso has a Board approved Policy on Corporate Social Responsibility ("CSRPolicy") in place. In alignment with the CSR Mission Statement the Bank has focusedon various initiatives for financial year ended 2019-20 the details of CSR activitieswith the brief outline of CSR Policy including overview of the programs/ Projectsundertaken by the Bank amount spent and other relevant details are furnished in Annexurev to this report.
The CSR Policy of the Bank is available on the website of the Bank athttps://ir.rblbank.com.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the financial year under review asper Regulation 34(2)(e) of the SEBI Listing Regulations is presented in a separate sectionforming part of this Annual Report.
Awards and Recognitions
During the year under review your Bank was recipient of the following awards:
Asset Triple A Awards - Best Core System Project
Asset Triple A Awards - Best Cloud Based Project
The Banking & Finance Post - BFSI Gamechanger Award
India International Gold Convention Awards - Best Nominated Bank for Silver
Digital Payments Award by MeitY - Outstanding Performance in POS Deployment inNortheast
TISS LeapVault CLO Award - Best Program For Sales Enablement
The Asian Banker Financial Technology Innovation Awards - Best Self ServiceBanking Initiative Application
TransUnion CIBIL Awards - Best Data Quality Award Ratings
Your Bank's Basel III Tier II Bonds have been rated as "AA- hyb" and"AA-" with Stable Outlook by ICRA Limited (ICRA) and CARE Ratings Limited (CARE)respectively. Instruments rated with this rating are considered to have high degree ofsafety regarding timely servicing of financial obligations.
Your Bank's Certificate of Deposits carries a rating of "A1+" by ICRA whichindicates the lowest short term credit risk. Further your Bank's Medium Term FixedDeposit programme carries rating of "ICRA MAA (Stable)" which indicates lowcredit risk and the Bank's short term fixed deposit programme carries a rating of"ICRA A1+" which indicates lowest credit risk.
Your Bank's ratings were reaffirmed by ICRA in January 2020 and by CARE in October2019.
Know Your Customer (KYC)/Anti-Money Laundering (AML) measures
Your Bank complies with the RBI's KYC/AML guidelines. The Bank's KYC/ AML Policy isprepared in accordance with the Prevention of Money Laundering Act 2002 and RBI/IBA(Indian Banks' Association) guidelines. Various regulatory reporting requirements as setout by the Financial Intelligence Unit (FIU) of the Government of India are complied withby the Bank. Your Bank uses automated transaction monitoring system under supervision ofcentralised AML team. Further your Bank's employees are being imparted training onKYC/AML aspects on a regular basis. Executives of the Bank also attend periodicworkshops/seminars organised by FIU RBI IBA Centre for Advanced Financial Research& Learning (CAFRAL) and College of Agricultural Banking (CAB) Pune to enhance theirawareness in evolving KYC AML issues.
Requirement for maintenance of cost records
The Bank is not required to maintain cost records as specified by the CentralGovernment under section 148(1) of the Companies Act 2013.
Pursuant to the provisions of Regulation 17(8) of SEBI Listing Regulations. Thecertificate issued by MD & CEO and CFO of the Bank for the financial year ended2019-20 was placed before the Board of Directors at its meeting held on May 7 2020.
The said certificate is forming part of this Report as an Annexure IB toCorporate Governance Report.
h. Directors' responsibility statement
Pursuant to the requirement under Section 134(3)(c) and 134(5) of the Companies Act2013 with respect to the Directors' Responsibility Statement it is hereby confirmedthat:
i. The applicable accounting standards have been followed in the preparation of theannual accounts for financial year ended 2019-20 and there have been no materialdepartures;
ii. Accounting policies have been selected and applied consistently and reasonably andprudent judgments and estimates have been made to give a true and fair view of the Bank'sstate of affairs and of its profit for financial year ended 2019-20;
iii. Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities;
iv. The annual financial statements have been prepared on a going concern basis;
v. Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively;
vi. Systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
The Board is grateful to the Government of India RBI SEBI IBA other RegulatoryAuthorities Rating Agencies Financial Institutions banks and correspondents in Indiaand abroad for their valuable and unflinching support as well as co-operation and guidanceto the Bank from time to time.
The Members have been the key partners in the Bank's progress. The Board of Directorsappreciates their support and is grateful for the confidence that they have placed in theBoard of Directors and the Bank's management.
The Bank's customers have always supported the Bank in all its endeavours. The Bankwould like to take this opportunity to express sincere thanks to its valued clients andcustomers for their continued patronage.
The Bank has undertaken a number of initiatives on the technology and business front inthe recent years. Successful translation of these initiatives into business and earningsgrowth has been primarily due to the employees of the Bank who have embraced thephilosophy of change to help the Bank emerge as a modern and customer-centric institution.We are grateful to the employees for their continued commitment and dedication towards theBank. The Board appreciates the healthy relationship with the Officer's Association andEmployee Union which has facilitated the growth and development of the Bank and hascreated a positive work environment.
| ||For and on behalf of the Board of Directors |
|Prakash Chandra ||Vishwavir Ahuja |
|Chairman ||Managing Director & CEO |
|(DIN: 02839303) ||(DIN: 00074994) |
|Place : Mumbai || |
|Date : June 4 2020 || |