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United Bank of India.

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United Bank of India. (UNITEDBNK) - Director Report

Company director report

The Board of Directors have pleasure in presenting the 67thAnnual Report of the Bankalong with the Audited Balance Sheet Profit and Loss Account and the report on Businessand Operations for the year ended March 31 2017 (FY - 201617).


1. Economic Outlook

In spite of the demonetization in November the economy maintained a fairly goodgrowth. International trends are also stronger with Europe and Japan in the recovery mode.The IMF sees the world economic growth accelerating from 3.1% in 2016 to 3.5% in 2017 and3.6% in 2018. Both advanced and emerging economies are poised to do better.

In US unemployment is down to 4.7 per cent and Emerging Market economies are performingbetter. After 74 per cent remonetization by the end of March the Indian monetary systemis nearly back to normal with excess liquidity with banks sponged out. After the April 6meeting of the Monetary Policy Committee (MPC) the RBI left the repo untouched.

Bad Debts in Banks

Non-performing assets (NPAs) or bad loans of public sector banks (PSBs) have reachedhigh levels of over Rs 6 lakh crore the bulk of which are in sectors such as powersteel road infrastructure and textiles. The Government of India has promulgated anordinance which amends section 35A of the Banking Regulation Act 1949 and insertssection 35AA and section 35AB in the Banking Regulation Act. The ordinance authorises the"Reserve Bank to issue directions to any banking company or banking companies toinitiate insolvency resolution process in respect of a default under the provisions of theInsolvency and Bankruptcy Code (IBC) 2016".

It also empowers RBI to set up sector related oversight panels that will shield bankersfrom later action by probe agencies looking into loan recasts. The government had earlierenacted the IBC to consolidate and amend the laws relating to reorganisation andinsolvency resolution of corporate persons partnership firms and individuals in a timebound manner. It was aimed at maximising the value of assets to promote entrepreneurshipavailability of credit and balance the interest of all stakeholders.

These are steps in the right direction to reduce NPA of banks in general and our Bankin particular.


Agriculture Food grains production in 2016-17 may be up about 8 per cent. Except sugarwhich will be short by about 19 per cent all other agricultural products would show ampleimprovement. IMD forecasts above average monsoon rainfall in 2017 as concern over El Ninoimpact has eased. Hence the possibility of food inflation rearing up in the near future issmall.


IIP for February was down 1.2 per cent and in the first 11 months growth was a mere 0.4per cent. In February capital goods production declined. So also of consumer goods. Goingby the Nikkei PMI manufacturing sector activity improved significantly in March. Neworders including from exports expanded leading to higher production additionalemployment and improved business confidence. Even so industry is still loaded with excessproduction capacity and over-leveraged balance sheets.

New investment has consequently been slow. Investment by Public Sector Undertaking wasRs. 1.03 trillion against the target of Rs. 3.98 trillion. In the manufacturing sectorproject valued at Rs. 440 billion were either stalled or abandoned. The service sectoractivity also improved for the second consecutive month in March. Taken together -manufactures and service - growth was significant which perhaps indicates the trend in thefuture.

Capital Market

Sensex in FY17 gained 16 per cent with market cap up by Rs.26 trillion. Fresh capitalissues aggregated Rs.84 billion the highest since FY12 with services companiesaccounting for a half of the IPOs. There was greater recourse to Offer for Sale whichamounted to Rs.197 billion. This underscores shortfall in capital expenditure bycorporates.

Foreign Direct Investment (FDI) in the first 11 months of FY17 was $55.5 billion about7 per cent more than in the same period last year. It is critical that reforms areintroduced expeditiously to create the right environment for FDI since US directinvestment may decline due to changed policy approach of Trump administration.

Investment by FPIs was however negative with the outflow of $1.3 billion in April-Feb2016- 17. In the last quarter however there was a strong inflow which prompted Sensex tojump and rupee to harden.

Interest rate and Inflation

After the first bi-monthly meeting of MPC the RBI did not announce any change in therepo but stepped up reverse repo to mop up excess liquidity with the banks followingdemonetization. The intensive effort made by the Government to substitute cashtransactions by digital would have reduced the demand for currency. Digitalization and GSTwhich will be introduced from July will reduce opportunities for black money and increaserevenues of Central and State Governments.

Inflation at retail level measured by CPI was 3.8 per cent in March. In recent monthsWPI has been more buoyant mainly because of the rise in international commodity prices. Inthe last two years oil prices had substantially dropped giving us advantage by reductionin WPI and current account deficit (CAD) .

The RBI assessment is that inflation will remain above the 4 per cent policy target inthe current year. As such it appears that any reduction in repo may be difficult thoughsome reduction in interest on bank credit may be possible if NPAs are taken care of.

Money and Credit

At the end of February total currency in circulation was Rs.10.6 trillion abouttwo-thirds of the currency a year back. But banks were replete with deposits because ofdemonetization. The increase in deposits was 12.4 per cent. Credit however did notincrease as fast because industrial growth was low and companies resorted to othersources like bonds for short term funds.

It is quite likely that corporates in future will depend more on capital and moneymarkets. The rate of interest in the debt market has come down faster than interest onbank credit. For instance interest on commercial paper ranged between 6 and 14 per centdepending on credit rating.

Foreign Trade

After a long period of decline exports showed improvement in the last two months. Thegrowth in imports was also compressed which resulted in reduction in CAD to 1.4 per centof GDP. For the first time CAD was fully funded from FPI. The advantage from drop in oilprices may not be available in future. Oil prices may average $50-55 per barrel during theyear.

Future Prospects

There are good prospects for the economy to grow in 2017-18. Domestic demand is strongcoming mainly from public sector investment and housing implementation of Seventh PayCommission and possibly increase in minimum wages. Corporate profitability will improveand stock market should remain bullish. That limits the possibility of any reduction ininterest rates. Rupee will be strong and export growth weak. With GST in place and furthereasing of business GDP growth may be around 7.4 percent in FY18 and even higher nextyear.


• The monsoon is likely to be just normal at 96 percent of the Long Period Average(lpa0 this year for the second year in a row the India Meteorological Department (IMD)said on 18th April.

• India's economic growth will be 6.8 per cent in FY17-against the officialadvance estimates of 7.1 per cent - due to the note ban if the projections of theinternational Monetary Fund (IMF) come true.

• Infrastructure one of the most financially stressed sectors is expected to seea spurt in consolidation with the Reserve Bank of India (RBI) being given additionalpowers to deal with non-performing assets.

• The Presidential Ordinance empowering the Reserve Bank of India (RBI) to enforceexpeditious resolution of nonperforming assets (NPAs) of banks should hardly come as asurprise. Finance Minister has been hinting at this legal empowerment of central bank tocrack down on NPAs of banks an area where recovery has been a painfully slow process.

• The Goods and services (GST) can boost India's GDP growth by upto 4.2% - doublethe previous estimate-as lower taxes on manufactured goods will bump up output and makeproducts cheaper a US Federal Reserve paper said.

• The government's move to demonetize Rs.500 and Rs. 1000 notes has helped theauthorities bring 9.1 million people under the tax net.

• India has been placed in the second spot in the renewable energy countryattractiveness index by EY.


• The US Federal Reserve kept interest rates unchanged on 3rd May but downplayedweak first-quarter economic growth and emphasized the strength of the labour market in asign it could tighten monetary policy as early as June. It also said consumer spendingcontinued to be solid and inflation had been "running close" to the Fed'starget.

• Saudi Arabia's oil minister said he is confident that an agreement by producersto curb crude output and shrink a market glut will be extended into the second half of theyear and possibly beyond.

• Euro zone manufacturers began the second quarter at a blistering paceincreasing activity at the fastest rate for six years as demand remained strong despiterising prices a survey showed.

• US rebounded in April as employers added a brisk 211000 jobs a sign that theeconomy's slump in the first three months of the year could prove temporary. Theunemployment rate dipped to 4.44% - its lowest point in a decade- from 4.5% in March.

• The International Monetary Fund (IMF) said Asia's economic outlook faces"significant" uncertainty and downside growth risks from any sudden tighteningin global financial conditions or rise in protectionist trade policies.

• India on 5th May launched a communication satellite that would be jointly usedwith Afghanistan Bangladesh Nepal Bhutan Maldives and Sri Lanka.

• The US economy grew at its weakest pace in three years in the first quarter asconsumer spending almost stalled. But a surge in business investment and wage growthsuggested activity would regain momentum as the year progresses.

• Governments and companies around the world began to gain the upper hand againstthe first wave of an unrivalled global cyber attack. More than 200000 computers in atleast 150 countries have so far infected according to Europol the European Union's lawenforcement agency.


Bank's performance during the year was delimited by setting of priorities for gainingdesired results in the fields of asset quality and recovery of bad assets. The mainperformance indicators of growth profitability efficiency productivity and solvencyare as under:

The Bank has registered an Operating Profit of 1552.89 crore during the financial year2016-17 compared to Rs. 1811.80 crore in the financial year 2015-16 registering a declineof Rs258.91 crore (14.29%). Bank managed its asset portfolio well and earned a Net Profitof Rs.219.51 Crore in FY 2016-17 compared to a Net Profit of Rs -(281.95) crore in FY2015-16. Gross Profit per Employee decreased from Rs. 12.09 lakh as on Mar'16 to Rs10.38lakh as on Mar'17.

Key Financial Ratios (%) March 2016 March 2017
Cost of Funds 6.16 6.12
Yield on Funds 7.99 7.70
Cost of Deposits 6.58 6.00
Yield on Advances 9.93 8.95
Yield on Investments 8.02 7.76
Spread as a % of AWF 1.83 1.57
Net Interest Margin (NIM) 2.01 1.60
Operating Expenses to AWF* 2.39 1.91
Return on Avg. Assets (RoAA) -0.22 0.16
Return on Equity -6.01 4.38
Business per Employee (Rs. In Crore) 12.37 13.04
Net Profit per Employee (Rs. In Lakh) -1.88 1.47
Book Value 50.14 32.94

Income and Expenditure Analysis

Interest income of the Bank declined to Rs.9427.91 crore in 2016-17 compared toRs.9936.67 crore earned during the year 2015-16. Interest income being a direct functionof growth in advances and the rate of interest charged. Bank cut its Base Rate twiceduring the year 2016-17 to pass on the benefit of rate cut made by RBI. Non-interestincome

increased by Rs719.09. crore (49%) from Rs. 1467.53 crore in the financial year 201516to Rs2186.62 crore in the financial year : 2016-17. The Yield on Advancesdeclined to 8.95% as at March 2017 compared to 9.93 % as at March 2016.

Interest Expenditure declined by Rsl55.93 crore to Rs7500.18. crore in 201617 comparedto Rs.7656.11crore in 2015-16. Lower interest expenditure was ensured by slashing of therate of interest on retail tenn deposits in all the brackets. The Cost of _ Deposit camedown from 6.58 % in 2015-16 to 6.00% in 2016-17. The Bank could curtail

its operating expenses by13.84.% (411.32cr) and brought down the operating expense fromRs2972.78Crore in Mar2016 to Rs2561.46 crore in Mar 2017.

Deposits of the Bank reached Rs. 126939 crore as on 31st March 2017 registering aY-o-Y growth of 9.05 %. Bank's Savings deposits grew by21.20% to reach a level ofRs.49462Crore as on March 31 2017. Share of CASA deposits to total deposits stood at47.33 % as on March 31 2017. Bank's retail term deposit stood at Rs.63705 crore with agrowth of 3.05 %Y-oY. Share of Bulk Deposits and deposits at preferential rate in totaldeposits further declined to reach at 2.42 % and0.19 % as on March2017from 4.97%and 1.31%as on March2016 respectively.

The Bank's customer acquisition campaign resulted in growth of customer base of theBank from 3.93 crore as at March 2016 to 4.27 crore as at March 2017.

The total credit portfolio of the Bank has declined in Mar2017. Gross Advances of theBank decreased by Rs909 crore (-1.27%) and reached Rs70502.90 crore as on March 31 2017.Credit deposit ratio stood at 55.54% as on March 2017. Bank achieved the PRISEC Advancetarget of 40% of ANBC. Intensive marketing of retail credit products brought considerablegrowth in Retail Advances supported by increase in Housing Loan.

Bank's non-food credit decreased from Rs.70046 crore to Rs69890 crore while foodcredit came down from Rs.1366 crore as on March 31 2016 to Rs. 613 crore at the end ofMarch 2017.

Total Business

The total business of the Bank reached Rs197442crore. at the end of the currentfinancial year 2016-17.

Productivity as measured by business per employee increased from Rs.12.37 crore as on31.03.2016 to Rs13.04. crore as on 31.03.2017.


Retail Credit has been one of the thrust areas of the Bank during the FY 2016-17. Bankhas laid special emphasis on sanctioning Retail Loans with focus on Housing Loan andMortgage Loan which are the major contributors to growth under Retail Credit &comprised 69.88% of total Retail Credit portfolio of the Bank.


During the FY 2016-17 lending under Retail Credit has witnessed a positive growth ofRs. 569 Crore from Rs. 12652 Crore as on 31st March 2016 to Rs. 13221 Crore as on 31stMarch 2017 registering Y-o-Y growth of 4.50%.

The growth during the period has primarily resulted on account of the Housing Loansegment which has clocked a positive growth from Rs. 5970 Crore as on 31.03.2016 to Rs.7115 Crore as on 31.03.2017 registering an impressive Y-o-Y growth of 19.18%.

Special Initiatives Undertaken:

• Bank has given special emphasis for tie-up with reputed builders to boost upgrowth in Housing Loan. Many upcoming housing projects of reputed builders have been tiedup and Bank's name is being published in their brochure for enhancement of visibility inthe home loan market

• Credit guarantee coverage initiated for the students availing loan underEducation Loan Scheme

• New products in the name of United Affordable Housing Loan Scheme under PrimeMinister Awas Yojana launched with subsidy coverage for the Middle Income Group

• Bank is a member of Interest Subvention Scheme of Govt providing InterestSubvention to eligible education loan borrowers as per guidelines of Govt of India

• Interest rates of Retail Loan Schemes have been modified to make them morecompetitive and attractive

• United Housing Loan Scheme United Mortgage Loan Scheme United Demand LoanScheme have been revamped to make them attractive and market driven

• The online application facility for Retail Loans like Housing and Education wasa major success during the FY2016-17 as many applicants are now actively using this hasslefree system for availing such loans.

• Wide publicity has been given in respect of retail loan products mainlyHousing Mortgage and Car Loan by displaying advertisement in prime locations of city andurban areas banners in and around branch premises and by advertisement in FM radio/ TVChannel

• Bank's official Face book Page has been effective and featuring latestinformation on Bank's products/services and offerings and emerged as a major marketingtool for retail products

• Marketing effort has been intensified with a dedicated marketing team consistingof qualified marketing officials to market retail products of the Bank

• Contest in the name of United Retail League and United Premier Retail League waslaunched with the intent to mobilize CASA Deposit Promotion and delivery of ADC Productsand canvassing and disposal of Retail Loans under United Housing Loan United MortgageLoan and United Car Loan Schemes through engagement of all staff members in mission mode

• Bank has signed a MoU with Bihar State Government and launched a scheme namely"BIHAR STUDENT CREDIT CARD" to provide education loans to those students who areresidents of Bihar and are unable to pursue higher studies after passing 12th standard dueto lack of financial support.

• Launched United Kaushal Rin Yojna for Vocational Education in replacement of anearlier scheme named Skill Loan Scheme

Retail Hubs:

Bank has established Retail Hubs for faster appraisal and professional approach inprocessing of loan proposals thereby making loan sanctioning process hassle free andreducing Turn-Around-Time (TAT). During FY 2016-17 24 Retail Hubs functioning in 24regions of the Bank sanctioned 6969 retail credit proposals amounting to Rs. 1014 Crore


Bank has a Corporate Agency Agreement with both Life and Non Life Insurance CompaniesUnder its Bancassurance arm. Under the agency agreement Bank has made tie up arrangementwith Life Insurance Corporation of India (LICI) for selling life insurance policies andwith Bajaj Allianz General Insurance Company Limited (BAGIC) for non-life insurancebusiness. During the financial year 2016-17 Bank has sold 7392 policies of LICI(life)with a premium collection of Rs.81.15 Crore and paid Rs.35.34 Crore as premium against106790 policies to BAGIC(non-life) during the same period.

Bank has earned a commission of Rs. 3.34 Crore from life insurance business and Rs.3.60Crore from the non-life insurance segment during the FY2016-17 as against Rs.2.87 Croreand Rs. 3.29 Crore respectively during the FY2015-16.

In terms of the new guidelines of Insurance Regulatory and Development Authority ofIndia (IRDAI) on Open Architecture

Model of Corporate Agency arrangement Bank has filed Certificate of Registration withIRDAI which is a statutory requirement for soliciting insurance business under CorporateAgency framework effective from 01.04.2016 to operate with single insurance company ineach vertical of Life (LICI) and Non-life insurance (BAGIC).


The investment portfolio of the Bank increased from Rs.44934 Cr as on 31.03.2016 toRs.53355 Cr as on 31.03.2017 registering a growth of 18.74%. The SLR investment portfolioincreased from Rs.36009 Cr as on 31.03.2016 to Rs.38166 Cr as on 31.03.2017. Portfoliomodified duration has decreased to 3.90 as at March 2017 compared to 4.66 a year ago. Themodified duration of the Available for Sale (AFS) portfolio has also decreased to 2.55 asat March 2017 from 3.73 as at March 2016.

The Bank has earned a total Trading profit of Rs. 1502 Cr from domestic segment ofTreasury during the financial year 16-17 as compared to Rs. 824 Cr. for the financial year15-16 registering a growth of 82.28%. The average return on investment during the year16-17 was 8.67% and Yield on Investment during the year 16-17 was 7.76%.

Foreign exchange Business turnover of the bank aggregated to Rs.16656.44 Cr comprisingof Rs.3743.45 Cr under Exports Rs.4051.96 Cr under Imports and Rs.8861.03 Cr underremittances during the year ended 31.03.2017.

Outstanding export credit of the bank stood at Rs.1151.46 crore as at 31.03.2017.Bankearned exchange profit of Rs.143 Cr during the year 2016-17 against Rs 135 Cr during2015-16.

The bank's overseas presence covered two countries namely Myanmar and Bangladesh withone Representative Office each at Dhaka Bangladesh and Yangoan Myanmar. Indo-Myanmartrade is routed through our Bank. Twenty six (26) banks of Bangladesh maintain forty (40)Vostro account in USD and EUR and seventeen (17) banks of Myanmar maintain Twenty five(25) Vostro accounts in EUR USD and INR with our Bank. Global IME bank Ltd. Nepal ismaintaining Vostro accounts in INR & USD with our Bank.

The bank's International operations are well supported by a wide network of more than620 correspondent relationships and 16 Nostro accounts opened with overseas banks in 8currencies maintained abroad.


Merchant Banking Division managed Bank's issue of Basel-III compliant Additional Tier-Ibonds for Rs.200 Crore on 29.03.2017. Bank holds certificate of Registration issued bySEBI on Banker to an Issue Debenture Trustee and Merchant Banker under which it continuesto discharge defined duties and responsibilities as per regulatory norms


Government Transaction Department undertakes different types of Government BusinessActivities as following:-

• Collection of Central government revenues viz. Direct and Indirect Taxes (CBDTCBECService Tax and customs) through physical mode by Authorised branches and throughe-mode (Internet Banking) by all branches of the bank.

• Collection of State Revenues and Taxes of different states (both on line and offline).

• Mobilisation of Govt. deposits under small savings like Public Provident FundSenior Citizens' Saving Scheme Sukanya Samridhi Accounts different tranches of SovereignGold Bonds Savings Bond etc.

• Handling of Govt.Fund (Departmentalised Ministries'AccountsState Govt.TreasuryOperation in different states)

• Disbursement of different types of pensions of the Central Govt.State govt. anddifferent autonomous organisations like EPFOKolkata Port TrustDamodar Valley Corporationetc

• Implementation of National Pension System (NPS) and Atal Pension Yojana(APY) forenrolment of unorganized sector people in to the scheme for getting old ageannuity/pension as an authorized Point of Presence Service Provider for the Pension FundRegulatory and Development Authority(PFRDA).

• Implemented the Prime Minister's Garib Kalyan Yojana a Govt of India scheme toraise funds for the amelioration of the poverty stricken mass of the country.

• Dissemination of information to the Pensioners through ‘Pensioners charter'being displayed in the banks 'website and on-line pensioners' Grievance portal andPensioners'Pay slip have been customized in the bank's website. Approx 93% of pensionaccounts have been Aadhar seeded excluding the state of Assam and Meghalaya anddigitization of Life Certificate for pensioners through Jeevan Praman has been in popularuse.

• The preparation for collection of Goods and Service Tax with full IT integrationwith the GSTN and RBI according to the requirements of Bank Authorisation Reference Modelunder the new regime of GST to be launched from 1st of July 2017 is on the verge offinalisation.

The total turnover in respect of Government Business handled by the bank and the agencycommission earned on such business during this financial year (2016-17) amounts to:-

TAX 3011.41 2.30
PENSION 5459.29 21.72
TREASURY 3767.02 5.02
P P F SGS$SSA BOND g SDS 1094.35 0.54
DMA 7117.43 2.04
TOTAL 30443.50 31.72


The problem of piling up of bad loans starting due to economic downturn when a slowdownin demand and stalled projects made it difficult for borrowers to repay debt got biggerin size with the Intensive Asset Quality Review (AQR) conducted by the Reserve Bank ofIndia in a bid to start a long overdue clean-up of stressed assets held by the banks.Besides banks were required to ensure that they are all broadly on the same page in termsof recognition and provisioning even though each one had flexibility on individual cases.

Despite constant follow up with the recalcitrant borrowers monitoring of stressedassets and tough measures in hard account the Bank was not able to contain further growthin NPA level which reached a level of Rs10951.99cr. i.e15.53% of gross advances.

The major steps taken by the Bank for recovery of stressed assets during the year werea liberalized limited period offer of one time settlement (OTS) for NPAs with outstandingbalance below Rs.10 lac. To create general awareness among the public the Bank took theinitiative by putting up silent road shows and peaceful demonstrations before theestablishments of defaulting borrowers.

Asset Quality

The Bank has been complying with RBI guidelines relating to Income Recognition AssetClassification and Provisioning in percentage terms gross NPA Ratio of the Bank stood at15.53.% as on 31.03.2017 as against 13.26% at the end of the previous year. In absoluteterms Gross NPA stood at Rs10951.99. cr. as on 31.03.2017. The Net NPA ratio of the Bankstood at 10.02.% as on 31.03.2017 against 9.04 % as on 31.03.2016. In absolute terms theNet NPA stood at as on 31.03.2017. The Bank could contain the fresh slippagesduring the FY 2016-17 to as against Rs. 5011 cr during the FY 2015-16. The cashrecovery during the year was Rs.488 cr and the upgradation during the year was Rs312 cr.The provision coverage ratio of the Bank has improved to 56.45.% as on 31.03.2017 asagainst 56.36 % as on 31.03.2016. The recovery in technically written off accounts during the year 2016-17.

The Bank has a comprehensive Recovery Policy duly approved by the Board covering allavenues for recovery and reduction of NPAs like One time settlement (OTS) sale of chargedassets sale to Asset Reconstruction companies (ARC) etc. The Bank came out withliberalized guidelines during the year for recovery of small value NPA accounts havingoutstanding balance below Rs.10 lac. The Bank preferred to go for sale of NPA to the tuneof '. 563.15 cr to ARCs during the FY 2016-17.

Capital & Reserves

Networth of the Bank was assessed at ' 5005 crore as on March 31 2017. Total paid-upcapital of the Bank was ' 1394.36 crore and reserves and surplus was ' 6349.45 crore. TheGovernment shareholding in the Bank stood at 85.23% at March 2017. Capital Adequacy Ratiounder Basel-III norms assessed at 11.14% with Tier-1 Ratio at 8.94% and CET1 ratio at8.46% as at March 2017. Capital Adequacy Ratio under Basel-II norms assessed at 11.68%with Tier-1 Ratio at 7.93% as at March 2017. The Bank has adequate headroom availableunder both Tier-1 and Tier-2 options to raise capital to support business growth momentum.

Composition of Capital

March 2017

March 2016

Basel-Ill Norms Basel-II Norms Basel-Ill Norms Basel-II Norms
Risk Weighted Assets 71198 66634 73079 69249
Tier 1 Capital 6368 5517 5797 5008
Of which CET1 Capital 6023 NA 5660 NA
Tier 1 Ratio (%) 8.94 8.28 7.93 7.23
Of which CET1 ratio (%) 8.46 NA 7.74 NA
Tier 2 Capital 1563 2264 1572 2235
Tier 2 Ratio (%) 2.20 3.40 2.15 3.23
Total Capital 7931 7781 7369 7243
CRAR (%) 11.14 11.68 10.08 10.46

Risk Management (Capital Adequacy Framework & Future Strategies)

The Bank has an Integrated Risk Management system to ensure that the risks assumed byit are within the defined risk appetites and are adequately compensated. To address thevarious risks to which the Bank is exposed to the Bank has a robust Risk ManagementArchitecture in the Bank comprising Risk Management Structure Risk Management Polices andRisk Management Implementation and Monitoring Systems.

Risk Management Structure:

The overall responsibility of setting the Bank's risk appetite and effective riskmanagement rests with the Board of Directors apex level management of the Bank. Bank hasconstituted a Board level Committee named as Risk Management Committee of Board ofDirectors (RMCBOD) to monitor the implementation of the Risk Management systems of theBank. There are other internal committees of Top Executives like Credit Risk ManagementCommittee (CRMC) Operational Risk Management Committee (ORMC) and Asset LiabilityManagement Committee (ALCO) to supervise various risk management functions and activitiesof the Bank.

Bank's Asset Liability Management Committee (ALCO) is a decision making unitresponsible for the strategic management of interest rate and liquidity risks. ALCO met 14times during the year to review various issues namely interest rates scenario productpricing for both deposits and advances desired maturity profile of the incremental assetsand liabilities demand for Bank funds fixation of Bank's Base Rate cash flows of theBank profit planning and overall balance sheet management.

The Operational Risk Management Committee (ORMC) has the responsibility of monitoringthe operational risk of the Bank and the responsibility of evaluating and taking necessarysteps for mitigation of operational risk by designing and

maintaining an explicit operational risk management process. It also ensures that thenorms policies and guidelines laid down in Operational Risk Management Policy arestrictly adhered to. ORMC met 12 times to discuss various issues from operational riskpoint of view.

The Credit Risk Management Committee (CRMC) monitors various credit risk aspectsrelating to credit policy procedures and to analyse manage and control credit risk on abank wide basis The Committee met 7 times during the year to discuss various issues fromoperational risk point of view.

Risk Management Policies:

To address various risks like credit risk market risk operational risk liquidityrisk forex risk and other Pillar-2 risks the Bank has formulated various risk managementpolicies to identify manage and mitigate such risks that the Bank is exposed to. Themajor policies formulated and approved by the Board of Directors of the Bank to addresssuch risks are Lending Policy Policy on ICAAP Operational Risk Management PolicyBusiness Line Mapping Policy Asset Liability Management Policy Market Risk ManagementPolicy Integrated Treasury Policy Disclosure Policy Credit Audit Policy Stress TestingPolicy and Policy on Credit Risk Mitigation Technique & Collateral Management etc.

Credit Risk:

To address the Credit risk Bank has formulated a Lending Policy which lays down policyguidelines for Credit Management covering all areas of operation where credit Risk isinvolved. The policy enables the Bank to enhance the risk management capabilities byundertaking lending decisions guided by the policy framework for a steady and healthygrowth in its loan portfolio.

The Bank has set various prudential limits to individual borrowers group borrowersentry level exposure norms substantial exposure limits benchmark financial ratiosborrower standards exposure limits/ceilings to industries sensitive sectors ratingcategory etc in alignment with RBI directives. The Board has reviewed such limits duringthe year.

During the year analysis of various exposure norms has been undertaken on half yearlybasis to ensure Bank's various exposures are within the exposure limits/ceilings fixed byRBI/ Bank's Board.

Bank has made its loan appraisal function independent of Risk Rating function. Internalrisk rating of loan accounts is carried through a software based rating model to assessthe credit proposal and rating of a borrower.

During the year Bank conducted the credit portfolio analysis on quarterly interval tostudy the impact of a particular industry / sector on the credit portfolio of the Bank andadopt strategies to improve the quality of credit portfolio and reduce the potentialadverse impact of concentration risk.

During the year Bank has also undertaken the rating migration analysis of itsborrowers on half yearly interval to analyze the stability rate up gradation rate downgradation rate and default rate for a one year two years three years and four years timehorizons and appropriate corrective actions are initiated to protect the portfolioquality.

Market Risk:

For management of Market Risk the Bank has given emphasis on measuring monitoring andmanaging liquidity interest rates foreign exchange and equity risk of the Bank. TheMarket Risk in trading book is monitored and managed as per appropriate control mechanismin place. Market position funding patterns duration counterparty limits and varioussensitive parameters are also monitored by the Bank on regular basis. The advanced RiskManagement tools such as Value at Risk (VaR) Earnings at Risk (EaR) Net Overnight OpenPosition Limits (NOOPL) and modified duration limits are used in managing Market Risk.

The Bank measures and monitors liquidity risk for all items of balance sheet throughstructural liquidity statements and stock ratios on regular basis. The Bank also monitorsits Interest rate risk through interest rate sensitivity gap reports.

The Bank has formulated and reviewed its Integrated Treasury Policy to set operatingguidelines for its treasury functions. The Bank has also put in place an Asset LiabilityManagement Policy and Market Risk Management Policy to address the liquidity riskinterest rate risk and market risk etc. These policies comprise management practicesprocedures prudential risk limits review mechanisms and reporting systems etc. Thesepolicies are reviewed periodically in line with changes in financial and marketconditions.

Bank has an "Integrated Treasury Management System (ITMS)" software tomonitor its investment and treasury portfolio on an ongoing basis along with automatedcomputation of capital charge for Market Risk as well as strengthening the internalcontrol system of investment portfolio of the Bank

Operational Risk:

The Bank has framed an Operational Risk Management Policy for managing the OperationalRisk in an effective manner. The Bank has also formulated Business Line Mapping Policy formapping various products activities and income into different business lines.

Bank's Operational Risk Management Committee (ORMC) has the responsibility ofmonitoring the operational risk of the Bank. ORMC also reviews the operational risk lossevent data new products process and systems adopted by the Bank and provides suggestionsfor taking corrective/preventive measures to strengthen the internal systems andprocedures.

Basel-II and Basel-III Compliance:

In line with guidelines of the Reserve Bank of India the Bank has successfullymigrated to Basel-II framework w.e.f 31st March 2009 by adopting Standardized Approach(SA) for Credit Risk Basic Indicator Approach (BIA) for Operational Risk and StandardizedDuration Approach (SDA) for Market Risk for computing the capital adequacy ratio.

The Bank has also followed Basel-III capital regulation norms w.e.f 1st April 2013 inline with RBI guidelines. The Bank has been computing the Capital to Risk Weighted AssetsRatio (CRAR) on both under Basel-III and Basel-II norms at quarterly interval.

To comply with Pillar 2 guidelines of RBI the Bank has formulated a Policy on InternalCapital Adequacy Assessment Process (ICAAP) for the assessment of all material risks theBank is exposed to and the risk management processes which are put in place to manage andmitigate those risks and also to evaluate its capital adequacy commensurate with suchrisks.

In line with the ICAAP policy the Bank prepares the ICAAP Document on yearly basis andsubmits to RBI after internal validation and approval by the Board of Directors of theBank. The ICAAP document of the Bank for 2016-17 has been submitted to RBI.

The Bank has reviewed its capital requirement both under Basel-II and Basel-III normsand taken necessary steps for strengthening its capital base. The Bank also reviewed itsICAAP on quarterly basis for monitoring both risks and capital requirement of the Bank.

In line with RBI guidelines and as per the Stress Testing Policy of the Bank the Bankconducted Stress Testing analysis on quarterly interval on various risks like LiquidityRisk Interest Rate Risk Forex Risk Credit Risk Market Risk and Operational risk andassessed the impact on capital adequacy & profitability.

For skill development in Risk Management area the Bank also nominates its officers onregular basis for various trainings/ seminars on Risk Management conducted by reputedinstitutions like CAFRAL NIBM IBA IDRBT CAB etc.


Bank's lending to the Priority Sector has reached to Rs.30623 crore as at 31st March2017 which is 40.71% of ANBC. Bank has given special thrust on financing Small &Marginal Farmers Micro Enterprise segment under MSME apart from exploring other potentialavenues of increasing PRISEC advances like engaging Collateral Management Companies forPledge Financing financing Food & Agro Processing Units financing large size Dairy& Poultry units vegetable and flower production under controlled condition (PolyHouse) Plantation etc.

Agriculture Lending:

Bank has disbursed Rs.7147 crore during the FY 2016-17 against a target of Rs.7955crore recording an achievement of target to the tune of 90%. Lending to Agriculture Sectorstands at Rs.12124 crore as on 31st March 2017 which is 16.12% of ANBC against thestipulated target of 18% of ANBC. Lending to Small & Marginal Farmers stands atRs.6124 crore which is 8.14% of ANBC against the stipulated target of 8% of ANBC for theyear 2016-17.

Lending to Weaker Section:

Lending to weaker section reached to Rs.8287 crore as on 31 March 2017 which is 11.02%of ANBC against the stipulated target of 10%.

Lending to Minority Community:Bank's lending to Minority Communities reached to Rs.4609crore as at end of March 2017 which is 15.05% of PSL conforming to the stipulation

Kisan Credit Card:

Bank has organized several special camp for issuance of Kisan Credit Cards to bringmore number of new farmers under KCC net as per revised scheme. Bank has issued 76203fresh KCCs during 2016-17 with credit limits of Rs.469 crore Total number of outstandingKCCs as on 31st March 2017 stands at 565198 with aggregate outstanding balance ofRs.2514.47 crore. In line with the Government guidelines on issuance of Rupay based ATMenabled cards to all the KCC holders Bank has issued 5.35 lakh ATM cards to the KCCholders (excluding the NPA KCCs) till 31.03.2017 achieving the target of full conversionof entire operative KCCs to RUPAY KCC within the time frame set by the Government.

Self Help Group:

Bank has credit linkages with 94488 SHGs with an outstanding balance of Rs.497.32 croreas on 31st March 2017. Bank has been implementing NRLM programme for SHGs by providinginitial credit limit of Rs.1.25 lakh on 1st grading of SHGs as per the decision of SLBCWest Bengal. Bank has started participating in Community Based Recovery Mechanism (CBRM)with the assistance from State Rural Livelihood Mission (SRLM) which has placed BankSakhi/ Bank Mitra at the branches.

Corporate Social Responsibility:

As part of corporate social responsibility Bank has undertaken the followingactivities:

United Bank Rural Self-Employment Training Institute (UBRSETI)

Bank has so far set up 16 RSETIs in the states of West Bengal (6) Assam (8) andTripura (2) to impart training to the potential entrepreneurs from the financially weaksections of the society. RSETIs have been actively engaged themselves in number of specialtraining programmes as directed by the government like PMEGP Life MGNREGA etc.

During the FY 2016-17 these institutes have imparted training to 11027 ruralyouths/women mostly from weaker sections against the target of 8840 candidates of which65% trainees have been settled by establishing own economic venture.

These institutes are providing post training hand holding support to the traineesincluding arrangement of loan from our bank branches to enable them to set up their ownventures.


Bank has also set up 38 Financial Literacy Centre (FLCs) in the states of West BengalAssam Tripura and Manipur to extend financial literacy and credit counseling services tothe poorer section of the society. In the Financial Year 2016-17 these FLCs haveconducted regular outreach programmes which include Outdoor Activities for impartingfinancial literacy.

United Bank Socio-Economic Development Foundation (UBSEDF)

United Bank Socio Economic Development Foundation (UBSEDF) was established on 30thMarch 2007 with the objective of promoting and carrying out social and economicdevelopmental activities and rendering assistance to weaker and under privileged sectionof the society in terms of decision taken by the Board of Directors of the Bank. Bank hasextended financial assistance in 82 various welfare activities involving a total sum ofRs.277 Lakh towards its CSR activities till 31.03.2017. During the financial year 2016-17focus was on extending assistance to the proposals under Swachh Bharat Mission/ SwachhVidyalaya Campaign Safe Drinking Water and Digitization of Adopted Villages. In the yearBank has disbursed Rs.57.42 Lakh for 8 projects for implementation by the respectiveorganizations towards cause of the society.

Performance of the MSME sector of the Bank is furnished below:

Advance under MSME of the Bank has marginally increased from Rs.11884.94 Cr as on31.03.2016 to Rs.12023.29 Cr as on 31.03.2017registering growth of 1.16%. Marginal growthis mainly due to amendment of PRISEC guidelines by RBI for reclassification of Agroprocessing units to Agriculture from MSME and general economic slowdown.


FY 2014-15

FY 2015-16

FY 2016-17

No. of a/cs O/s Amt. (In crore) No. of a/cs O/s Amt (In crore) Growth (Y-o-Y) No. of a/cs O/s Amt (In crore) Growth (Y-o-Y)
Micro 221214 8287.12 240877 7491.53 -9.60 229923 7698.13 2.76
Small 14235 4057.59 16632 3506.50 -13.58 17617 3467.05 (1.13)
MSE 235449 12344.71 257509 10998.03 -10.91 247540 11165.18 1.52
Medium 332 604.42 774 886.91 46.74 939 858.11 (3.25)
MSME 235781 12949.13 258283 11884.94 -8.22 248479 12023.29 1.16

Strategies to increase MSME portfolio of the Bank.

• The Bank is focused on building a quality MSME asset portfolio by credit linkageto quality MSME entrepreneurs/ units recovery in NPA accounts and preventing freshslippages.

• The Bank had set up Centralised MSME - Loan Processing Centre (MSME-LPC) toreduce the turnaround time for loans beyond the Discretionary Power (DP) of RegionalOffices. The Regional Offices are also empowered with enhanced DP for quick disposal ofMSME proposals.

• The Bank has adopted cluster financing under MSME. MSME specialized Branches(Presently 180) and branches having potentiality of MSME advance including those locatedin close proximity to industrial area / clusters have been advised to focus on procuringnew business from the entrepreneurs.

• The Bank is regularly interfacing with the MSME Associations and participatingin their promotional programmes / workshops / seminars and EDP programmes for promotion ofMSME products.

• The Bank has extended Collateral Free MSME loans under CGTMSE guarantee coverageup to Rs. 200 lac under "Credit Guarantee Scheme" for credit linkage toentrepreneurs having no collateral. Bank has also encouraged collateral free loans to MSEsector up to Rs. 10.00 lac under MUDRA category.

• The Bank has implemented "Stand up India" Scheme by providing creditto target group in true spirit.

• Under Capacity Building approach Officers dealing with MSME loans and facultymembers at Staff Training College (s) are provided with training on regular basis forhassle free and dedicated service to MSME entrepreneurs.

• The Bank has been awarded Best bank Award for Promotional Schemes- Winner(Emerging Category) and EcoTechnology Savvy bank Award- Runner Up (Emerging Category) byChamber of Indian Micro Small and Medium Enterprises (CIMSME).

• The Bank has been awarded Runner up in Government Schemes category under MediumBank class and Runner up in Best Social Bank category under Medium Bank class by TheAssociated Chambers of Commerce and Industry of India (ASSOCHAM).


The Lead Bank Scheme was introduced by Reserve Bank of India in December 1969. The LeadBank Scheme envisages assignment of lead roles to individual banks (both in public sectorand private sector) for the districts allotted to them. The lead bank acts as a leader forcoordinating the efforts of all credit institutions in the allotted districts to increasethe flow of credit to agriculture small-scale industries and other economic activitiesincluded in the priority sector in the rural and semi-urban areas with the district beingthe basic unit in terms of geographical area.

The Bank is the Convener of State Level Bankers' Committee (SLBC) in the States of WestBengal & Tripura. The Bank is entrusted with Lead Bank responsibility in 40 districtsspread over four states; 10 districts in West Bengal 14 districts in Assam 8 districtsin Manipur and 8 districts in Tripura.

As Lead Bank of the State the bank remained actively involved in formulation andfinalization of Annual credit Plan (ACP) for the State and has drawn up suitable actionplan for implementation of different socio economic activities keeping close liaison withReserve Bank of India NABARD and State Government Authorities.

The year 2016-17 had been eventful for the Bank as SLBC Convener for both West Bengal& Tripura.

The SLBC meeting organized in Tripura State have been attended regularly by dignitarieslike Shri Sanjeev Ranjan Chief Secretary Government of Tripura Shri. M. Nagaraju Principal Secretary Finance & I & C Government of Tripura General ManagerReserve Bank of India and Senior Executives of Line Department of the State.

Dr. Amit Mitra Hon'ble Finance Minister of Govt. of West Bengal Regional DirectorRBI CGM NABARD Director DFS MoF GoI and the Principal Secretaries of LineDepartments of the State have regularly attended at the SLBC meetings in the State of WestBengal during the year 2016-17 to enrich the level of discussion on important issuesconcerning development of the State.

Under leadership of the Bank the following achievements took place during the year inthe States of West Bengal & Tripura:

• Bankers have done excellent job in West Bengal as far as disbursing credit inMSME sector is concerned. In spite of completely being absorbed in Demonetization relatedwork for close to 2 months all the banks in the State together surpassed the target ofdisbursement set in MSME under Annual Credit Plan.

• Bankers have performed remarkably well in SHG loan segment. Growth in SHGadvances mainly happens in 3rd & 4th quarter of financial year. Inspite ofimplementation of Demonetization on November 8 2016 Banks in West Bengal together havesurpassed the target of disbursement set for the state under SHG.

• Immediately after implementation of Demonetization workers under unorganizedsectors faced trouble to withdraw their daily wages due to severe cash crunch. In WestBengal a large chunk of unorganized workers belong to the Tea Garden workers.

• Taking proactive steps SLBC West Bengal convened a meeting with the Banks whoare present either in Dooras and in Darjeeling area of North Bengal having all the TeaGardens.

• The effort of opening of accounts and activation of the same in the CBS systemof the concerned Banks were followed by issuance of ATM Rupay Card and related PIN andinstallation of either Desktop ATM or a full fledged ATM in a suitable place to beprovided by the Garden management for facilitating payment to the garden workers aftertheir wages is transferred to their newly opened accounts.

• Along with the campaign Rupay Card/ PIN distribution ATM/POS installation theconcerned Bankers took steps to create general financial awareness among the Tea Gardenworkers to enable them to undertake seamless transaction through Micro ATM of BankMitra/ATM/ POS.

• In both the States of West Bengal and Tripura the roadmap for covering theUnbanked Gram Panchayats have duly been allotted to the member banks for opening of Brick& Mortar bank branches within 31.03.2017.

• After creation of 7 new districts in the state of Manipur Bank has beenallotted 4 new districts as lead districts which will definitely improve the businessperformance of the Bank in the state. Total number of Lead districts in the state ofManipur now stands at 8.


With the evolution of digital payment and mobile technology there are means now todeliver advanced products to the population and regions excluded. This in conjunction withlarge BC network of 4252 Bank Mitras established across 13250 un-banked villages equippedwith the latest and best of breed technology has enabled the Bank to deliver various basicbanking services to the excluded population right at their door step.

The highlights of achievements for implementation of Financial Inclusion under PradhanMantri Jan Dhan Yojana (PMJDY) during the F.Y. ended 2016-17 are enumerated hereunder:

• Under PMJDY 105.19 lakh accounts have been opened till end of March'17.

• Rs.7414.03crore deposit has been mobilized in PMJDY Accounts upto March'17.

• Out of 105.19 lakh accounts opened 14.48 lakh accounts (13.78%) are under‘Zero' balance.

• Credit linkage through Bank Mitra channel has been established in 19.32 lakh FIcustomers with an outstanding amount of Rs.439.85 crore.

• Bank has rolled out JLG Loan module through Bank Mitras. FI customers haveavailed JLG loan where outstanding balance is Rs.6626.46 lakh as at 31st Mar'17 withoutany default.

• 100.67 lakh RuPay Debit Cards have been issued.

• 57.26 Lakh PMJDY Accounts have been Aadhaar linked.

• 21.73 Lakh customers have been enrolled under Pradhan Mantri Suraksha BimaYojana (PMSBY).

• 5.63 Lakh customers have subscribed for insurance cover under Pradhan MantriJeevan Jyoti Bima Yojana (PMJJBY).

• Out of 1007 death claims lodged under PMJJBY 965 claims have been settled byLICI.

• Under PMSBY as against 111 accidental insurance claims received NIC hassettled 63 cases and repudiated 28 cases.

• Our Bank has been awarded as Best Bank in West Bengal by Forum for InclusiveFinancial Services (FFIFS) on 06.08.2015 under the category Highest Deposit account openedunder PMJDY.

• Chamber of India Micro Small & Medium Enterprise (CMSME) New Delhi hasrecognized our Bank as Best Bank in 3 categories viz. Best Bank under PMJDY Best Bank forpromotional schemes under emerging Banks and Special Jury award for Turn Around Bank.

Financial inclusion initiatives rest on partnerships which bring together leadershipexpertise experience and funding. Financial inclusion is our collective responsibility.So Bank is collectively leveraging the digital technology for ensuring greater financialinclusion.


Branch Network :

RBI has imposed restriction on opening of branch vide their letter no. DBS.CO.PSBMD IIINO.90/14.01.052/2013-14 dated 14.02.2014 under Prompt Corrective Action (PCA) .

However RBI had accorded permission for opening 51 Branches vide letter Nos:

1) BAPD.16183/22.03.026/2015-16 dt. June 272016 for 36 branches.

2) BAPD.3633/22.03.026/2016-17 dt. September 232016 for 12 branches.

3) BAPD.6398/22.03.026/2016-17 dt. December 062016 for 3 branches.

The Bank has opened 46 branches up to 31.03.2017 and 3 branches are in the process ofopening . The remaining 2 Branches are yet to be opened.

One (1) RETAIL HUB was opened at Ernakulam in Kerala under Southern Region during theFinancial Year as per RBI approval No BAPD.4449/22.03.026/2016-17 dt. October 10 2016

Two (2) LINK OFFICES were opened at PUNE in Maharashtra under Mumbai Region & AGRAin U.P Under Meerut Region as per RBI permission No. BAPD.7991/22.03.026/2016-17 dt.January 10 2017.

One (1) REGIONAL OFFICE was opened in HYDERABAD by bifurcating BANGALORE Region as perRBI Permission No. BAPD.1327/22.03.026/2016-17 dated July 27 2016.

BRANCHES & OFFICES CLOSED/MERGED during the period 01.04.2016 to 31.03.2017

No. Name of the Branch/Office Region State Date of Closing of the office Remarks
1 G H Colony Branch Behala West Bengal 13.06.2016 Merged with South Suburbs branch
2 Sova Bazar Branch Kolkata North West Bengal 11.07.2016 Merged with Hatkhola branch
3 Fariapukur Branch Kolkata North West Bengal 25.07.2016 Merged with Shyambazar Market Branch
4 Retail Loan Hub - Behala Behala West Bengal 20.08.2016 Merged with Retail Loan Hub Kolkata
5 Retail Loan Hub - Bidhannagar Kolkata North West Bengal 20.08.2016 Merged with Retail Loan Hub Kolkata
6 Retail Loan Hub-Pune Mumbai Maharashtra 17.10.2016 Closed

As on 31.03.2017 the total number of branches of the Bank stands at 2053. The bank has5 Extension Counters & 36 Regional offices across the country.

Population group-wise Composition of Total Branch Network


Number of Branches (% of total)

31.03.2016 31.03.2017
Metropolitan 330 (16.41%) 372 (16.12%)
Urban 466 (23.17%) 481(23.43%)
Sami Urban 415 (0-64%) 423 (0-61%)
Rural 300 (39.78%) 777 (37.84%)
Toial 2011 063

Geographical location-wise Composition of Total Branch Network


Number of Branches (% of total)

31.03.2016 31.03.2017
Eastern Region 1169 (58.13%) 1180 (57.47%)
North Eastern Region 356 (17.70%) 364(17.73%)
Western Region 85 (4.23%) 88 (4.29%)
Northern Region 123 (6.12%) 126 (6.14%)
Southern Region 124 (6.16%) 139(6.77%)
Central Region 154 (7.66%) 156 (7.60%)
Total 2011 2053

The Bank has 241 specialized branches catering to the specific clientele segment.

Categories of Specialised Branches 31.03.2017
1. MSME 180
2. Asset Recovery Management 4
3. Retail Hub 24
4. MSME Loan Proc. Hub 1
5. Corporate Finance Branch 4
6. Service Branch 19
7. Women Branch 5
8. Treasury Branch 1
9. Central Pension Processing Centre 1
10.Cash Management Service Hub 1
11. Inward cheques Processing centre 1
Total 241

Out of total 2053 branches as on 31.03.2017 885 (43.10 %) are located in 85 MinorityConcentration Districts (MCDs) throughout the country.


All the branches of the Bank are covered under Core Banking System and various othersurround applications such as Human Resources Management System Government BusinessModule Asset Liability Management Anti Money Laundering and Lending AutomationProcessing System etc have also been implemented to facilitate better customer

service and effective management. The facility of interbank remittance through RTGS andNEFT is available at all the branches of the Bank. This facility is also available throughour internet banking and mobile banking platform. The Bank also offers cross borderremittance through SWIFT network at one ‘A' Category AD Branch and 41 ‘B'Category AD Branches. The Core Banking System has also been integrated with SFMS platformto offer inland Letter of Credit (LC) and inland Bank Guarantee operation using StraightThorough Processing (STP). To prevent incidences of fraud biometric Authentication Systemhas been implemented across all its branches for accessing Core Banking System.

The Bank has revamped its corporate network architecture to next generation MPLStechnology and also upgraded network bandwidth for high availability & betterperformance. Bank has deployed VSATs with dedicated bandwidth and High Speed DataConnectivity using 3G as back up connectivity at Branches to provide network connectivityin the event of cable cut.

The Bank conducts Information Security (IS) audit for its Core Banking and othersurround applications as well as for infrastructure at the Data Centre. This includes VAPT(Vulnerability Assessment & Penetration Testing) for external facing applications atcertain intervals. The Bank also conducts periodic DR (Disaster Recovery) Drills as partof its Business Continuity Plan (BCP).

As part of our other technology initiatives the following systems have been put inplace.

• Centralized Payment Hub solution has been implemented to process alltransactions initiated through NACH and APBS platform with host to host connectivity ofNPCI. Mandate Management Services are also enabled in this platform. In future allcorporate Collection and Payment services and IMPS gateway will be integrated in thiscentralized hub.

• The Bank has boarded Public Fund Management Services (PFMS) platform anddisbursing DBT payments for various sponsored schemes of Central and State Government.Additionally Departmental Ministerial Accounts for two ministries are also being handledin this platform.

• As a part of Green initiative Bank has implemented Board Information System(BIS) for conducting Board level meetings in paperless mode. All agenda and minutes ofvarious Board level committees are uploaded in this portal.

• The MIS solution has been revamped with a new solution and architecture for easyand quick availability of requisite information. Regulatory reports are also beingautomated through this system.

• The Bank has an intranet portal which is used extensively for informationsharing knowledge management and online examinations.

• Self Service kiosk to offer services like Passbook printing Cash deposit andCheque deposit have been installed at selected branches. Bank has also introducedelectronic Passbook (United e-Passbook) facility for the customers as a mobile applicationto view account transactions.

• Bank has deployed some of the next generation tools to prevent various kinds ofcyber attacks and has engaged professional agencies to provide Anti-PhishingAnti-Pharming Anti-Trojan and Anti-Malware Managed Services.

• Bank has implemented Security Operations Centre (SOC) which provides centralizedview of Information Security status and command centre for IS Security operations.

Centralised Payment HUB

1. The Bank has set up a Centralised Payment Hub ( CPH) at Head Office to handle theenormous volume of e-transactions in a secured and reliable manner. The CentralisedPayment HUB has started its operation w.e.f. 3.11.2014.

The department is catering the following services:-

a. NACH Debit

b. NACH Credit

c. APBS (Aadhar Payment Bridge System)

d. Mandate Management System of NPCI as Destination Bank

e. Mandate Management System of NPCI as Sponsor Bank

f. DBTL (Direct Benefit Transfer to LPG Customers)

g. ECS Debit as Destination Bank

h. Reconciliation of Aadhaar Enable Payment System ( AEPS)

i. Digidhan Payment

j. CMS (Cash Management Services)

(i) CMS Payment Services

1. Corporate Bulk Payment

2. GePG (Government e-Payment Gateway)

(ii) CMS Collection Services

1. Indo Nepal Remittance Service

2. Centralized Mandate Based Direct Debit Service

3. Corporate Cash & Cheque Collection Service

(iii) ASBA (Application Supported By Blocked Amount)

1. Core ASBA

2. Syndicate ASBA

3. e-ASBA (through e-banking / Net banking platform)

HR Details

The total staff strength comprises 52.31% officers 30.02% clerks and 17.67% Sub-Staff.Women employees numbering 3238 constitute 21.54% of the Bank's total staff strength.

For 2016-17 Bank recruited 311 Probationary Officers 4 Security Officers 7 LawOfficers 2 Company Secretaries and 246 Clerks. The recruitment process was initiated forfiling up the vacancies to meet effectively succession planning process and man powermanagement for smooth running of the organisation.

Inter cadre and inter scale promotions were successfully conducted during FY 2016-17and in total 599 number of employees were promoted to next higher cadre/scale.

Training /Human Resource Development (HRD)

To meet the emerging challenges in the banking sector the importance of skill upgradation of all categories of employees was keenly felt and as a sequel to this Bankinitiated the following steps in arranging various training programs during the year2016-17.

i) In-House Training: The training courses organized by the Staff Training CollegeKolkata and other four Training centres in which 3047 employees were given in housetraining.

ii) External Training: During the period under review bank has roped in professionaltraining institutes for imparting various training programmes & workshop in which 211employees have been trained externally.

Customer Orientation

The bank has taken several initiatives to remain customer friendly by providing promptservice bringing in diversified technology supported products/ services quicklyresponding to customer queries/ suggestions and redressal of customer complaints. The"code of commitment to customers" issued by BCSBI has been made available at theBank's website and

also sent to all the Branches and Regional Offices across the country. For improvingthe quality of the customer service a toll free contact facility at customer servicesDepartment is provided to facilitate the customers to represent their grievance/suggestions. The toll free facility is available from 8am to 10 pm. For ATM relatedissues a separate toll free contact facility at head office has been provided and isavailable 24*7. The bank has put in place online grievances redressal system through thebanks website where the customers can lodge and track the status of theircomplaints/suggestions..

In order to ensure quicker and non discriminatory redressal of grievances Bank hasintroduced a portal named Comprehensive Complaint Management System (CCMS) by leveragingtechnology. Under this system the complaint received by branches Regional offices anddepartments at Head office are acknowledged on real time basis and status of redressal /settlement is also uploaded on the portal till final redressal. Customer can also lodgecomplaint on the CCMS Portal directly which is automatically added to the outstandingdatabase of CCMS by the system.

The Comprehensive Complaint Management System helps us to track the status of eachcomplaint and to take a comprehensive look with regard to the total complaints received bythe Bank during the period and status thereof. The necessary follow-up measures areimmediately taken up for expeditious disposal of the complaints and grievances withconcerned Branches/RO/Department at Head Office. The system enables the officials of theCustomer Service Department to classify the nature of complaints with respect to theproducts and services to which the complaints are related. The analysis of data aims tohelp the Bank management to take appropriate action to improve service in the areas whichare found deficient. The complaints from various sources like those received through mailsand by post etc. are also entered in the CCMS portal. The consolidation of complaints fromall sources on the CCMS portal helps the management to identify the nature of complaintsareas from which maximum complaints are received and also to take account of the timetaken for the redressal. Such analysis is aimed at improving the standard of customerservice and identifying the areas where staff members are to be trained modification ofproducts and services are required and remedial actions are to be taken for strengtheningof system .

As per recommendation of the Damodaran Committee setup by Reserve Bank of India ourBank has appointed Internal Ombudsman with effect from 07/12/15 to enhance the customerconfidence level..

To have direct feel of the quality of the customer service in the Kolkata basedbranches incognito visits by the officials of Head Office are conducted whichadditionally cover several areas such as ambience discipline punctuality and mattersrelated to preventive vigilance to safeguard the interest of Bank and customers.

Besides to educate the young officers of the Bank about its products and service and tohelp them render quick and improved customer services online application titled"Quest" was started in June 2015.Quest is an application accessible to allmembers of award staff and officers of the Bank for clearing doubts related to bankingoperations The queries are replied by the selected HO officials within a deadline of 24hours. The process of questioning and answering has been going on since inception onregular basis and the response of the officials to quest is overwhelming and stronglypositive.

In financial year 2016-17 customer complaints redressal percentage was 99.63% 315numbers of complaints remained outstanding at the end of year out of which 10 numbers ofcomplaints were outstanding for more than one month .

The ADC related complaints are resolved within the stipulated period.

Out of 1070 Nos of complaints lodged in Government of India Portal (CPGRAM)for thefinancial year ending Mar' 17 1055 Nos complaints got resolved and 15 Nos complaintsremain pending for redressal as on 31/03/2017.

Internal Control

Internal Inspection of all the operational units of the Bank is carried out on acontinuous basis to ensure effectiveness of internal control mechanism and to provide highquality counsel to management on the effectiveness of risk management and internalcontrols including regulatory compliance by the Bank. The bank undertakes Risk BasedInternal Audit (RBIA) which examines and evaluates the adequacy and effectiveness of theBank's internal control system.

The Audit & Inspection department at the apex level along with its extended arms ofseven Regional Inspection Units (RlUs) and a team of Internal Inspectors/External Auditors(CA Firms) at field level is continuously engaged in inspection of Branches/Offices of theBank as per Board approved Audit & Inspection Policy for evaluating the level ofimplementation and adherence to the prescribed procedures and norms and foridentification measurement and mitigation of risk involved in different functional areas.In order to align with changing scenario of the Banking System Inspection Process isupdated and necessary changes are incorporated in Audit & Inspection Policy of theBank from time to time. To achieve these objectives various types of Audits like RiskBased Internal Audit Concurrent Audit Credit Audit Information System Audit SnapAudit Revenue Audit Inspection of HO Departments and Management Audit of RegionalOffices are conducted.

Risk Based Inter Audit (RBIA) of branches have been carried out to focus on effectiveRisk management and internal controls in respect of areas of potential risks and to playan important role in protecting the Bank from various risks. System based RBIA has beenmade operational during the year. During the year 2016-17 Risk Based Internal Audit of1498 branches has been done.

Concurrent Audit by external audit firms have been conducted in branches/offices toensure accuracy authenticity and due compliance with Internal Systems Procedures andguidelines of the Bank. During the year 2016-17 Concurrent Audit of 514 branches havebeen completed covering total deposit of 52% total advance of 86% and total business of65% of the Bank as a whole.

Credit Audit has been undertaken as an effective monitoring tool by identifying thegaps in the credit delivery process at branches and suggesting ways to bridge the gaps andalso monitoring the compliances. During the year 2016-17 credit audit has covered 77% ofthe total credit portfolio as on 31 March 2016 of the bank.

With the increased technology adoption by Bank the complexities within the ITenvironment have given rise to considerable technology related risks. The InformationSystem Audit of Bank's IT infrastructure is being conducted to mitigate and effectivelymanage these technological risks.

Know Your Customer (KYC)

The Bank continues to take appropriate measures for strict adherence to KYC norms incase of all the customers and monitor transactions closely for implementation of AML (AntiMoney Laundering) Standards.

Steps taken to ensure compliance of KYC/AML guidelines are as follows:

• The Bank has put in place an effective AML programme by establishing appropriateprocedures and ensures its strict implementation.

• Cash Transaction Reports (CTRs) Suspicious Transaction Reports (STRs)Non-Profit Organization Transaction Reports (NTRs) Cross Border Wire Transfer Report(CWTRs) and Counterfeit Currency Note Reports (CCRs) are filed with FIUIND in prescribedformats within the time limits.

• The generation of daily alerts for offsite surveillance through our internalweb-based application has been started and monitored by our AML Cell. At present dailyalerts are generated on 13 types of alert parameters.

• Numerous STRs on continuous basis and various reports as and when required byFIU-IND Ministry of Finance was totally taken care by the AML Cell during the period ofdemonetization.

• Officially Valid Documents (OVDs) are being obtained from all the customerstowards identity and address proof. These documents are being captured in CBS system.

• Risk categorization of all the customers and their profile updation is beingdone through the system.

• The bank has completed the process of allotment of Unique CustomerIdentification Code (UCIC) to all individual customers on the basis of PAN Passport andAadhar number.

• Overall KYC compliance of our bank is more than 99%.

• Upload of KYC data in CKYCR portal has been started.

Security Arrangements:-

The Bank has taken necessary steps to strengthen the security arrangement in branchesby installing security gadgets from time to time in conformity to the guidelines issued bythe Reserve Bank of India. Additional security gadgets / services provided at our Bank'sbranches are as follows:-

A. In order to further strengthen the security of the branches all the branches wouldbe equipped with CCTV surveillance system. All the currency chest branches have alreadybeen equipped with CCTV system. Total 1553 branches have been covered with the CCTVSurveillance. The purchase formalities for the CCTV are complete and purchase order hasbeen placed and the installation process in the remaining branches is underway.

B. As an additional safety measure all the Currency Chest branches within thejurisdiction of Kolkata Police have been brought under the Integrated Security Solution(ISS) which has a control monitor at Lal bazar Police Control Room for directly viewing ofthe activities inside the currency chests in case of a distress.

C. In order to implement the Reserve Bank of India Clean note policy 1003 branches havebeen equipped with (1+1) pocket Desk Top Authenticator cum Sorter to help the branch toidentify the Forged Indian Currency Notes (FICN) at the counter itself. This will alsoenable the branches to sort the currency notes in to issuable and non issuable currencynotes for redistribution amongst the customers and members of public.

D. During year 2016-17 the security department pursued and recovered about Rs.603818.00 of the insurance claim dues for the money lost during crime against the bank atdifferent branches pending with the Insurance Company.

E. In order to regulate and monitor visitors to the Bank's Head Office a ComputerizedVisitors' Management System has been installed at the Main Entrance gate of the HeadOffice.



• Purchase of 3BHK Flat at 1st Floor Hindustan House 28 Altamount Road Mumbai- 400026 with garage measuring 153 sft. Built-Up area-3857 sft & Carpet Area-2755 sft.


• Engagement of BSNL (PSU) as Project Management Consultants for variousConstruction and Procurement Projects of United Bank of India in different parts of India.

• Construction of Boundary Wall on Bank's land at CBD-79 International FinancialHub New-Town-Rajarhat Kolkata through BSNL (PSU) as Project Management Consultants.


• Overhauling and repairing of Water Treatment and Softening Plants vis-a-visAnnual Maintenance Contract for their Day-to-Day operation and maintenance for 3 (three)years installed at United Bank of India Head Office Premises.

• Installation of Photo-Voltaic Grid connected 50KWp Solar Plant each at H.O. andStaff Training College Kolkata. Installation and commissioning completed at StaffTraining College and is presently operational.

• Replacement and upgradation of old low tension Air Circuit Breakers at HeadOffice.

• Supply Installation and Commissioning of Eco friendly DG sets at Bank'sOfficers' Quarter at Shantikunj Apartment.

• Electrical Audit of Branches.

• Renovation of newly acquired 5BHK Apartment at Gujrat Vihar New Delhi foraccommodation of participants of Staff Training Centre.

• Updated and circulated "Policy & Operational Guidelines for Acquisitionof Accommodation On Lease/Rental Basis for Bank's Use".

• Formulated and circulated "Manual on Policy and Procedures for procurementof Goods and Services by the Bank" on the basis of relevant guidelines of CVCMinistry of Finance Govt. of India Indian Bank Association & views / feedback ofdepartments at H.O.

• Structural Audit of H.O. Building Central Records/ RSETI Building RajpurKolkata South Region Office Building & Manicktala Branch Building.

• Repair and Renovation of Bank's owned Premises at Siliguri North Bengal Region.

• Phase-Wise conversion of normal light fittings with energy efficient LEDFittings (around 1075 nos. have already been converted).


• Structural Strengthening / Retrofitting and external repair and painting of HeadOffice Building through BSNL (PSU) as Project Management Consultants.

• Construction of B+G+3 Office Building on Bank's Land at Agartala foraccommodating Tripura Regional Office Agartala Branch with RBI "AAA" ClassCurrency Chest through BSNL (PSU) as Project Management Consultants.

• Construction of G+6 Office Building on Bank's Land at Kolkata (Salt Lake) foraccommodating Data Centre Regional Office Branch and e-lounge through BSNL (PSU) asProject Management Consultants.

• Construction of G+1 Office cum Residential Building on Bank's Land at MizoramUniversity in Aizwal with Mizoram University Branch and RBI "B" Class CurrencyChest through BSNL (PSU) as Project Management Consultants.

• Installation of 1 - 1.2 KW Photo-Voltaic solar system aided VSAT operation at1479 BC branches.

Implementation of Official Language

With a view to implement the Official Language Policy of the Government 39 Officerswere trained in regular Hindi of Praveen & Pragya courses at Head Office. Hindiworkshops and Unicode based computer training in Hindi were organized for the Officers& employees of the Bank in each quarter at the Staff Training College Kolkata. Thequarterly meetings of Official Language Implementation Committee of Head Office were heldunder the chairmanship of the Managing Director & CEO. In-house Hindi magazine of theBank "United Darpan" and e-magazine in Hindi were released. Inspection of allthe Regional Offices and departments of Head Office were done in regard to implementationof Official Language.

Hindi Day was celebrated on 14 Sept 2016 and subsequently different Hindi competitionsand seminar were organized during Hindi Week.

The inspection of Head Office was done by the Committee of Parliament on OfficialLanguage in May 2016 & January 2017 regarding implementation of Official Language inthe Bank. The said committee appreciated the Bank for better performance. Some of theRegional Offices of the Bank i.e. Meerut Patna & Burdwan received prizes from theTown Official Language Implementation Committees for best performance in Hindi. Besidesdifferent Branches like Dehradoon & Bikaner had also received prizes from the TOLICfor implementation of Official Language policy successfully.

Regional Rural Banks (RRB)

We have 4 sponsored Regional Rural Banks in 4 states-Bangiya Gramin Vikash Bank in WestBengal Assam Gramin Vikash Bank in Assam Tripura Gramin Bank in Tripura and ManipurRural Bank in Manipur.The total network of branches stands at 1169( including 8non-functional Branches of MRB due to law and order problem).

On 31.03.2017 their total Busines was Rs. 39009.17 Cr with Total Deposit of Rs.27015.00 Cr & Advance of Rs. 11994.17 Cr. Total profit earned by them is Rs. 76.89 Cr.Average Gross NPA was 17.68 %.

Our RRBs are now working on CBS platform and enabled to NEFT RTGS AEPS/ATM throughRupay Card/Nach/ PFMS/NECS/PoS. They are equipped with Locker ALM Fixed Asset ModuleBiometric Authentication & e-kyc etc like technology driven products.

United Demat

The depository services to the Bank's customers are provided on the CDSL and NSDLplatform under the umbrella of "United Demat" which aims at providinghassle-free fast and accurate transactions under depository environment. Some of thebenefits are:

• Easy and convenient way of holding securities

• Immediate transfer of securities without any stamp duty on transfer

• Safer than paper-shares (no chances of bad delivery fake securities delaysthefts etc. are eliminated)

• Reduced paperwork on transfer of securities

• Auto-credit into Demat account

• Expeditious credit of securities and fund resulting from corporate actions anddistribution of corporate benefits;

• A single Demat account can hold investments in both equity and debt instruments.

• Online access through easiest

• Periodic statement of holding and transaction

• Convenience of changing client account details including nomination as and whenrequired hassle-free transmission.

• Direct credit of shares allotted in IPO in Demat Account and credit of Dividendin linked bank account.

• A single Demat account can hold investments in both Equity and Debt instruments.Even Mutual Fund UnitsSovereign Gold Bonds Insurance Policies etc can be held in Dematform in the same Demat Account.

Demat Services are made available touching all aspects of share trading like:

• Opening of Demat account

• Purchase and Sale of Securities

• Dematerialization & Rematerialization

• Destatementization & Restatementization / Redemption of Mutual Fund Unit

• Pledge / Unpledge / Confiscation

• Freeze & Unfreeze

• Transmission & Transposition

U-Connect - Bank's Share Trading Services

United Bank of India facilitates share trading for its customers through two productsunder the umbrella "U-Connect" - one in association with Kotak SecuritiesLimited (KSL) by the brand name ‘Trio' and other with The Calcutta Stock ExchangeLtd. (CSE).

In these products the client opens its Bank and Demat accounts with United Bank ofIndia whereas the trading account is opened with Kotak Securities/ CSE. The products arefeature-rich with facilities of investment trading exposure margin trading fundingIPO applications through ASBA systematic investment placing after market orders andfuture orders valid for 365 days all being made available at an extremely competitivepricing. The investors have flexibility of putting their trades online offline usingmobile app and through dealer. Apart from equities investors can also trade in bonds

ETFs and MF through our products. The investors will also have access to the researchreports and trading tips from the award winning research team

Alternate Delivery Channels

Bank has always been committed to provide convenience based banking and has thus beenintroducing all popular and latest alternate banking channels. The position of Bank'salternative delivery channel product / services for the FY period 16-17 is as below:

Channel Total / User Base
Wallet 89929
United UPI 5 Lac Plus
Debit Cards 10188328
Internet Banking 448469
Mobile Banking 389199

Bank has been regularly upgrading its systems for development of new products and inimprovisation of the processes for operational convenience. The following new initiativeshave been undertaken during the FY 2016-17:

1. On-line SB Account opening facility.

2. Platinum chip based RuPay debit card with higher limits.

3. Mudra RuPay debit card.

4. IMPS based 24X7 funds transfer facility through Internet Banking.

5. Sovereign Gold bond application through Internet Banking.

6. Hindi version of Internet & Mobile Banking.

7. Self registration of Internet Banking through debit cards.

8. Personalized debit card proactive issuance against expired cards.

9. Instant fund transfer to other Banks customer on the basis of Mobile number onlynamed as UFT (United Fund Transfer)

10. Mobile & Internet based Wallet services introduced named United Wallet.

11. Online Loan against FD - Internet Banking

12. Integration with IRCTC for Debit Card Transactions

13. Salary Payment through Internet Banking

14. Image Card Based International Platinum Rupay Card

15. Launch of POS Terminals for Merchant Acquiring

16. Launch of UPI (Unified Payment Interface)

17. Income Tax eFiling through bank account using EVC

18. IMPS through Branch

19. Voice OTP for internet Banking transactions

20. Missed Call Based Account Statement

21. Instant Internet Banking issuance through Insta Pin

22. Physical Rupay Card for United Wallet

23. Self Generation of Debit Card PIN through Internet Banking

24. RuPay Domestic Debit Card Compliance

Based on the RBI Guidelines & as part of its ongoing sound practices the Bank hasalso set up a Compliance Department

whose role is to co-ordinate the identification of compliance issues assessment andmitigation of compliance risks.

Board has adopted Compliance Policy for the Bank. In activity wise areas like deposit& services advances KYC-AML BCSBI Codes compliance issues are identified andremedial measures are taken therefore. Roles & Responsibilities as regards compliancefunctions is defined for every tier in the Bank. A reporting system has also beenintroduced to ensure compliance of regulatory & statutory compliance issues through:

• Self certification

• Random testing through designated Compliance Officers & Officials from H.O.

• Acknowledgement & Compliance of the direction issued by Gol /RBI / IBA fromthe functional departments of Head Office.

• Quarterly statement by Branches and Regional Offices with details of compliancerules covering the important areas

Under Corporate Governance The MD & CEO / Executive Directors periodically reviewscompliance reports to ensure timely submission of regulatory returns by the differentdepartments of the Head Office to the RBI / Gol / IBA on regular basis and adherence toall other applicable provisions of law rules & guidelines.

Corporate Governance:

The report of the Board of Directors on Corporate Governance is covered in theseparated section on the subject (Page 38 to 50.