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Directors Report of Bank of India

Mar 31, 2015

Dear Members,

The Board of Directors have pleasure in presenting the Bank''s Annual Report along with audited statement of accounts for the year ended 31st March, 2015.

PERFORMANCE HIGHLIGHTS - FINANCIAL PARAMETERS

* ''A" Total Business (Deposit Advances) increased to Rs. 9,43,633 crores reflecting a growth of 10.60% (y-o-y).

* Operating Profit and Net Profit were at Rs. 7,488 crores and Rs. 1,709 crores respectively.

* Credit Deposit Ratio stood at 77.41% as against 78.88% during last year.

* Retail Credit as on 31st March 2015 stood at Rs. 34,153 crores, posted a growth of 15.38% constituting 11.80% of your Bank''s Gross Domestic Credit in FY 15.

* MSME Credit as on 31st March 2015 stood at Rs. 54,406 crores posted a growth of 20.68% constituting 18.79% of your Bank''s Gross Domestic Credit in FY 15.

* Net Interest Margin (NIM) for Global Operations was 2.11 % and for domestic Operations was 2.49 % during FY 15.

* Net NPA to Net Advances stood at 3.36% as against 2.00% during last year.

* Capital Adequacy Ratio (CRAR) as per Basel III stood at 10.73%.

* Net Worth improved to Rs. 26,494 crores and registered a rise of 7.95% over last year.

* Book Value improved to Rs. 398.02 from Rs. 381.69 during last year.

*Business Per Employee moved up to Rs. 20.69 crores from Rs. 19.63 crores during last year.

SOME OF THE KEY FINANCIAL RATIOS ARE PRESENTED BELOW:

(In %)

Parameters 2013-14 2014-15

Yield on Advances 8.45 8.36

Yield on Investment 8.12 8.08

Yield on Funds 7.19 7.13

Cost of Deposits 5.62 5.70

Cost of Funds 5.14 5.27

Net Interest Margin 2.34 2.11

Non Interest Income to Operating 64.06 52.33

Expenses

Other Income to Average Working Fund 0.81 0.66

Operating Expenses to Average Working 1.27 1.33

Fund

Staff Expenses to Average Working Fund 0.76 0.82

Other operating Exp. to Average Working 0.51 0.51

Fund

Asset Utilisation Ratio 1.60 1.23

Non-Interest Income to Total Income 10.17 8.88

Non-Interest Income to Net Income 28.38 27.17

Cost to Income Ratio 44.30 51.93

Return on Equity 11.82 6.70

Return on Average Assets 0.51 0.27

KEY FINANCIAL DATA

(Rs. In crore)

Particulars 2013-14 2014-15 Growth (%)

Net Interest Income 10,831 11,344 4.74

Non-Interest Income 4,292 4,233 -1.37

Operating Expenses 6,700 8,089 20.73

Operating Profit 8,423 7,488 -11.10

Provisions / Contingencies 5,694 5,779 1.49

Net Profit 2,729 1,709 -37.38

Earnings per share (Rs.) 44.74 26.57 -40.61

Book value per share (Rs.) 381.69 398.02 4.28

SEGMENT- wISE PERFORMANCE

The Bank earned an Operating Profit of Rs. 7,488 crores during the financial year 2014-15. The contribution made to Net Profit by Treasury operations was Rs. 1,510 crores, wholesale Banking was Rs. 750 crores and Retail Banking was Rs. 132 crores. Your Bank earned a profit after Tax (PAT) of Rs. 1,709 crores, after deducting Rs. 597 crores of un allocated expenditure and Rs. 86 crores towards provision for tax.

DIVIDEND

Your Bank''s Directors have recommend dividend of Rs. 5 /- per share (on the face value of Rs. 10/- per share) subject to GOI approval. The Total dividend payment will amount to Rs. 399.72 crore (including dividend distribution tax).

CAPITAL

Net worth of your Bank has increased to Rs. 26,494 crores from Rs. 24,543 crores during the financial year 2014-15. During the year, the Bank has issued 2,26,45,502 Equity Shares of Rs.10/- each at a price of Rs. 283.50 per share total amounting to Rs. 642 crores ( 2,00,00,000 equity shares to LIC and 26,45,502 equity shares to The New India Assurance Co. Ltd.).

During the year, the Bank has also issued Basel-III Compliant perpetual Additional Tier-I bonds of Rs. 2,500 crores with call option.

CAPITAL ADEQUACY

As per Basel III framework, Bank''s Capital Adequacy Ratio was 10.73% which was higher than the regulatory requirement of 9%. Details of Capital Adequacy (BASEL II & III) are shown as under:

(Rs. In crore)

Particulars 31.03.2014 31.03.2015 (Under BASEL - II)

Amount CRAR Amount CRAR (%) (%)

Tier I Capital 26,248 7.56 29,864 8.23%

Tier II Capital 11,103 3.20 11,554 3.19%

Total Capital 37,351 10.76 41,418 11.42%

Risk Weighted Assets 347,014 .... 362,726 ....

(Rs. In crore)

Particulars 31.03.2014 31.03.2015

(Under BASEL - III) Amount CRAR Amount CRAR (%) (%)

Common Equity Tier-I 23,771 6.84% 26,091 7.17%

Capital (CET 1)

Additional Tier-1 1,389 0.41% 3,618 1.00%

Tier I Capital 25,160 7.25% 29,709 8.17%

Tier II Capital 9,499 2.73% 9,289 2.56%

Total Capital 34,659 9.98% 38,998 10.73%

Risk weighted Assets 347,702 -- 363,523

AWARDS & ACCOLADES

* Bank received "Best MSME bank" and "best bank for Operational Performance" awards.

* Bank received "Outlook Money Award" for "best Home Loan Provider" under Runner up category.

* "Financial Inclusion & Payment System Award" by Elets Media at New Delhi at the hands of Minister of Rural Development.

* Bank received "PMJDY Excellence Award" from Honorable Union Minister.

* Bank received IBA Award for "best Financial Inclusion Technology Initiative" from IDRBT.

* Bank received Skoch Group "Financial Inclusion Deepening Award".

* Bank won "IT excellence award" by ETNOW and VMWare for effectively implementing Virtualization in the Bank.

* Bank received the Award CIO100 2014 for the "Product Startoken NG".

* Bank received "best HR Technology award, 2014" from Banking Frontiers at Mumbai.

Redefining banking standard with Techno Enabled Services

* ATM - Member of National Financial Switch (NFS), Banks Customer can access more than 1,40,000 ATMs across the country.

* Bank has launched chip based Debit and Credit cards.

* BOI has enabled E-commerce transactions of Rupay platform.

* Look and Feel of Internet Banking with two Factor Authentication Implemented for its clientele.

* Online Term Deposit Facility with online nomination facility.

* BOI e-Pay Payment of Utility Bills, Insurance Premia, Credit Card payments of Specified Banks Property Tax of Specified Municipal Corporations etc.

* BOI * Sandesh - on - Line SMS based alerts for ATM Financial Transactions & Internet Banking Funds Transfer.

* As per Finance Ministry Guidelines and recommendations our corporate web-site (English) has been enabled for persons with disabilities.

* Hot listing / reset / unblock / change of Debit-cum-ATM Card pin using Internet Banking Password.

* Self Service Kiosks - Bar-coded passbook printers.

* Missed call facility to know the balance in SB/CD/OD accounts.

* Online Deposit in PPF A/c using internet banking.

* Introduction of IMT - Instant Money Transfer.

* BOI ''* EazyPay - Person to Person Payment Solution launched.

* Payment Gateway Solution.

* mVisa - this is mobile to mobile payment solution from Person to Merchant.

* PayWave - Tap and go (contactless payment system)

* Introducing exclusive Youth Banking Solution with Infosys.

* RuPay Platinum Debit Cards.

* IMPS facility through Branches. * Bill payment facility in Mobile Banking.

* e-Wallet (similar to ICICI - Pocket and HDFC - Chillr).

* Virtual Cards for e-commerce.

DIRECTORS'' Responsibility STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2015:

a) The applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for the year ended March 31,2015;

c) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d) Annual accounts have been prepared on a going concern basis;

e) Internal financial controls system to be followed by the Bank were laid down and that such internal financial controls are adequate and were operating effectively;

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

BANK''S SUBSIDIARY / ASSOCIATES

1. Indo Zambia Bank Ltd.

2. PT. Bank of India (Indonesia) Tbk

3. Bank of India (Tanzania) Ltd.

4. Bank of India (New Zealand) Ltd.

5. Bank of India (Botswana) Ltd.

6. Bank of India (Uganda) Ltd.

7. BOI Shareholding Ltd.

8. BOI AXA Investment Managers Pvt. Ltd.

9. BOI AXA Trustee Services Pvt. Ltd.

10. BOI Merchant Bankers Ltd.

11. STCI Finance Limited.

12. Star Union Dai-ichi Life Insurance Company Ltd.

STRATEGIC INVESTMENT / ALLIANCES

1. Central Depository Services (India) Ltd. (CDSL)

2. ASREC (India) Ltd.

3. Credit Information Bureau (India) Ltd. (CIBIL)

4. National Collateral Management Services Ltd. (NCMSL)

5. SWIFT India Domestic Service Pvt. Ltd.

6. SME Rating Agency of India Ltd. (SMERA)

ACKNOWLEDGEMENT

The Board expresses its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank.

For and on behalf of the Board of Directors

Sd/- Place : Mumbai (Mrs. V. R. Iyer) Date : 28th May, 2015 Chairperson & Managing Director


Mar 31, 2014

The Board of Directors have pleasure in presenting the Bank''s Annual Report along with audited statement of accounts for the year ended 31st March, 2014.

PERFORMANCE HIGHLIGHTS - FINANCIAL PARAMETERS

- Total Business (Deposit Advances) increased to Rs. 853,202 crores reflecting a growth of 26.44 % (y-o-y).

- Operating Profit and Net Profit were Rs. 8,423 crores and Rs. 2,729 crores respectively. Operating Profit registered a growth of 12.94% over last year.

- Credit Deposit Ratio stood at 78.88 % as against 76.73 % during last year.

- Retail Credit posted a growth of 32.44 % constituting 11.20% of your Bank''s Gross Domestic Credit in FY 14.

- MSME Credit posted a growth of 21.09 % constituting 17.06% of your Bank''s Gross Domestic Credit in FY 14.

- Net Interest Margin (NIM) for Global Operations are 2.34 % and for domestic Operations are 2.85 % during FY 14.

- Net NPA to Net Advances stood at 2.00 % as against 2.06 % during last year.

- Capital Adequacy Ratio (CRAR) as per Basel III stood at 9.97%.

- Net Worth improved to Rs. 24,543 crores registering a rise of 13.52% over last year.

- Book Value improved to Rs. 387.53 from Rs. 362.37 during last year.

- Business Per Employee moved up to Rs. 19.63 crores from Rs. 15.82 crores during last year.

KEY FINANCIAL RATIOS:

(In %)

Parameters 2012-13 2013-14

Yield on Advances 8.87 8.45

Yield on Investment 7.81 8.12

Yield on Funds 7.67 7.19

Cost of Deposits 5.94 5.62

Cost of Funds 5.50 5.14

Net Interest Margin 2.38 2.34

Non Interest Income to Operating 70.64 64.06

Expenses

Other Income to Average Working Fund 0.90 0.81

Operating Expenses to Average Working 1.28 1.27

Fund

Staff Expenses to Average Working Fund 0.75 0.76

Other operating Exp. to Average Working 0.53 0.51 Fund

Asset Utilisation Ratio 1.79 1.60

Non-Interest Income to Total Income 10.56 10.17

Non-Interest Income to Net Income 29.45 28.38

Cost to Income Ratio 41.69 44.30

Return on Equity (%) 13.62 11.82

Return on Average Assets (%) 0.65 0.51

KEY FINANCIAL DATA

(Rs. In Crore)

Particulars 2012-13 2013-14 Growth (%)

Net Interest Income 9,024 10,831 20.02

Particulars 2012-13 2013-14 Growth (%)

Non-Interest Income 3,766 4,292 13.97

Operating Expenses 5,332 6,700 25.66

Operating Profit 7,459 8,423 12.94

Provisions / Contingencies 4,709 5,694 20.89

Net Profit 2,749 2,729 -0.73

Earnings per share (Rs.) 47.79 44.74 -

Book value per share(Rs.) 362 387 -

SEGMENT- WISE PERFORMANCE

The Bank earned an Operating Profit of Rs. 8,423 crores during the financial year 2013-14. The contribution made to Net Profit by Treasury operations was Rs. 1,628 crores, wholesale Banking was Rs. 1,271 crores and Retail Banking was Rs. 932 crores. Your Bank earned a proft after Tax (PAT) of Rs. 2,729 crores, after deducting Rs. 286 crores of un allocated expenditure and Rs. 816 crores towards provision for tax.

DIVIDEND

During the year your Bank has paid an Interim dividend of Rs. 5/- per share (on the face value of Rs. 10/- per share). With and view to conserve capital, no final dividend is declared by the Board of Directors. During the year the total dividend payment amounts to Rs. 375.72 crore (including dividend distribution tax).

CAPITAL

Net worth of your Bank has increased to Rs. 24,543 crores from Rs. 21,621 crores during the financial year 2013-14. During the year, the Bank has issued 46,360,686 Equity Shares of Rs. 10/- each at a price of Rs. 215.70 amounting to Rs. 1,000 crores to Government of India. In addition to that an amount of Rs. 1,922 crores was transferred to Reserves from the profits earned.

During the year, the Bank has also issued Basel-III Compliant Tier-II bonds for Rs. 1,500 crores for 10 years maturity, without any call option.

CAPITAL ADEQUACY

As per Basel III framework, Bank''s Capital Adequacy Ratio was 9.97 % which was higher than the regulatory requirement of 9%.

Details of Capital Adequacy (BASEL II & III) are shown as under:

(Rs. In crore) Particulars 31.03.2013 31.03.2014 (Under BASEL – II)

Amount CRAR Amount CRAR (%) (%)

Tier I Capital 23,019 8.20 26,248 7.57

Tier II Capital 7,916 2.82 11,103 3.19

Total Capital 30,935 11.02 37,351 10.76

Risk Weighted Assets 280,637 - 346,754 -

(Rs. In crore)

Particulars 31.03.2014

Amount CRAR (Under BASEL – III) (%)

Common Equity Tier-I Capital (CET 1) 23,770 6.84

Additional Tier-1 1,389 0.40

Tier I Capital 25,160 7.24

Tier II Capital 9,499 2.73

Total Capital 34,659 9.97

Risk weighted Assets 347,702 -



MANAGEMENT DISCUSSION & ANALYSIS

GLOBAL ECONOMIC SCENARIO:

The economic growth in the emerging markets like India and in the developed economies like the USA and the Euro region continues to present divergent scenarios. The growth in India was 4.5 per cent in the financial year 2013-14, mainly on improved performance in the agriculture and allied sectors and the overall growth in emerging markets as per International Monetary Fund (IMF) was about 4.50 to 5 per cent. The average growth of 4.50 to 5.50 per cent is likely to continue in 2014- 15 in the emerging markets backed by solid domestic demand, recovery in exports, and supportive fiscal, monetary and financial conditions. Commodity prices will continue to boost growth in many low-income countries, including those in sub-Saharan Africa.

DOMESTIC ECONOMIC SCENARIO

According to Central Statistical Organization (CSO) Indian economy grew 4.70 per cent in 2013-14. However, the higher headline number came on the back of a lower base, as the CSO revised the 2012-13 growth estimate downwards to 4.5 per cent from 5 per cent estimated earlier. Gross domestic product (GDP) growth was driven by better farm output, which grew at 4.7 per cent.

OUTLOOK FOR FY 2014-15

Estimates by various agencies predicted average growth rate to be around 5.50 per cent in 2014-15, up from average 4.70 per cent in 2013- 14. Slow industrial growth in 2013-14 is likely to improve and pick up during 2014-15. Economy seems to have bottomed out but with structural bottlenecks to be overcome, it is yet to reach its potential.

An Asian Development Bank report has stated that there are weaknesses in terms of persistent inflation, fiscal imbalances, bottlenecks to investment, and inefficiencies that need structural reforms. Growth would have to be led by improved investment and consumption. Inflation will have to be contained or else a continuance of tight monetary stance is inevitable.

BANKING INDUSTRY – DEVELOPMENTS OUTLOOK

The growth of the banking sector is very closely linked to the growth of Indian economy which is estimated to grow at a rate of 5.5-6 per cent between 2015 to 2016. The banking industry will benefit from economic expansion and conducive government policies to shield the economy from ups and downs in the global economy and geo-political disturbances. Further, as per capita income grows and awareness about banking spreads, more populace comes to the banking fold.

BUSINESS REVIEW DEPOSITS

Bank''s total Deposits increased by Rs. 95,134 crores to Rs. 476,974 crores during the year and recording a growth of 24.91%. The growth in domestic deposits was to the tune of Rs. 69,523 crores or 23.64 % over previous year.

Savings Bank deposits grew by 13.12% and Current deposits logged a growth of 9.31%. The share of Low cost deposits (CASA) comprising of Savings and Current deposits to total domestic deposits is 29.97%. The Bank has a well diversifed deposit base with 12% of domestic deposits coming from rural areas, 13% from semi urban, 18% from urban and 57% from metro areas. The bank''s total clientele base of 77.34 million consisted of 71.95 million depositors and 5.39 million borrowers as on 31st of March, 2014.

ADVANCES

Bank''s gross advances increased by Rs. 83,260 crores to Rs. 376,228 crores during the year and recording a growth of 28.42%. The Gross Domestic Credit of the Bank registered a growth of 29.52 % from Rs. 204,036 crores on 31.03.2013 to Rs. 264,260 crores on 31.03.2014 as against the growth rate of 14.66 % in the last financial year 2012-13. Incremental credit disbursement to new and existing accounts in Public Sector Units & Public Sector Entities and NBFCs has contributed in higher growth.

Timely sanctions and prompt disbursements in Large Corporate, Mid Corporate, Retail, SME and Agriculture segments have been instrumental in substantial credit growth.

The Bank also set up a New Business Department during the year to help in new customer acquisition and augment quality credit growth.

Bank added 164 New Corporate customers during the financial year. Bank caters to specialised needs of Corporate/Mid corporate through 10 Large Corporate Banking Branches, 41 Mid Corporate Branches. The needs of other clients from Retail, SME and Agriculture are met through the Network of 4,646 Domestic branches. Bank''s 56 Overseas Centers across 5 continents also caters to credit requirement of exporters and overseas clients.

INFRASTRUCTURE FINANCE

During the year, Bank sanctioned Fund Based Limit of Rs. 16,626 crores and Non Fund Based Limit of Rs. 4,367 crores under infrastructure projects in New and Existing accounts covering Power, Telecommunication, Roads, Ports and other infrastructure.

Bank continued to provide support in this segment with additional disbursement of Rs. 8,863 crores of which 52 % has been to Power sector and 28 % has been to Road and Port Projects.

CORPORATE CREDIT

Bank is extending credit to Corporate Customers through specialized branches which contribute 54 % of Gross Domestic Credit.

10 Large Corporate Branches Located at Major Cities and catering to all the major corporates across country at– Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune. Mid Corporate Branches covers rest of major business centers including above.

For serving corporates at other centres, 21 SME City Centres are equipped with Credit Processing Cells with direct reference to Large Corporate Credit Department at Head Office

LARGE CORPORATE

The advances through Large Corporate Branches constitutes 41 % share in total domestic advances as on 31.03.2014. Advances to Corporate segment through LCBs has increased from Rs. 84,047 crores as on 31.03.2013 to Rs. 110,651 crores as on 31.03.2014, showing a growth of 31.65 % over last year.

MID CORPORATE

Mid Corporate vertical contributes 12.91 % of the total domestic Credit portfolio. During the FY 2013-14, total Credit under Mid Corporate Branches grew from Rs. 30,949 crores to Rs. 34,923 crores registering a growth of 12.84 %.

NEW BUSINESS

During a short period of 3 months, the department has been successful in establishing relationships with large number of Public and Private sector enterprises. There has been a quantum jump in disbursements to leading Public Sector companies. As a Medium Term plan, New Business Department has embarked upon a plan to acquire substantial number of new clients in Mid and Large corporate segment. Department has shortlisted around 950 corporates after analyzing their financials and circulated the list to all the Mid and Large Corporate branches and to Zonal Offices for establishing initial contact, depending upon the geographical presence of the corporates. As a next step, the department shall provide all logistics support to branches/zones by meeting the prospective clients, understanding their needs and structuring the products as per their requirements. Going forward, department also proposes to undertake Syndication and Project Finance business to increase the fee based income of the bank.

FOREX BUSINESS

The Forex business handled by the Bank has shown decent growth on the back of need for foreign exchange from exporters and importers. During the year 2013-14, Merchant and Interbank turnover was Rs. 203,720 crores and Rs. 499,187 crores respectively. The Bank continues to be a leading player in the forex market. The aggregate turnover of Bank''s treasury Branch during the year was Rs. 702,907 crores.

TREASURY OPERATIONS

The Bank continues to play an active role in all segments of the market- Funds, Forex and Bonds during 2013-14. The Bank has churned its investments portfolio and earned profit from trading and sale of securities by taking advantage of the G sec rate movements. Bank has registered 78.08 % growth in profit from sale of securities in FY 2013-14 as compared to FY 2012-13. Bank has taken advantage of arbitrage opportunity within various market segments and could place the excess rupee funds in Certificate of deposits (CD), buy /sell foreign currency swaps, term money markets there by earning a spread of 1 % to 1.50 %. The Bank has built up a portfolio of Rs. 364 crores in CDs by borrowing in CBLO/Repo against ''T'' Bills and surplus securities thereby earning a spread of approximately 0.25 % to 0.75 %.

RURAL BANKING - PRIORITY SECTOR ADVANCES:

Priority sector advances have wide social ramifications apart from presenting a big business opportunity. With its vast network of rural and semi-urban branches and committed personnel, the Bank has always been one of the leaders in servicing to the priority and agriculture sectors. The Bank has registered an outstanding level of Rs. 82,021 crores under Priority Sector which is 40.45 % of Adjusted Net Bank Credit (ANBC).

Under Special Agricultural Credit Plan, Bank could disburse Rs. 19,130 crores during the financial year 2013-14. The outstanding position of priority sector advances under various segments is as under:

(Rs. In Crores)

As on 31st March Growth

2013 2014 Amount % age

1. Agriculture 27,041 36,071 9,030 33.39

2. Small Enterprise 28,913 35,504 6,591 22.80

3. Education 2,329 2,597 268 11.51

4. Housing 6,790 7,517 727 10.71

Total Priority Sector 65,518 82,021 16,503 25.19

FINANCIAL INCLUSION

The progress under Financial Inclusion Plan (FIP) in 2013-14 is:- - No. of Basic Savings Bank Deposit Accounts opened : 107.28 lakhs

- No. of Smart Cards issued : 22.68 lakhs

- GCC/KCC issued : 22.10 lakhs

- Business Correspondents engaged : 6072

- Channel Management Partners engaged : 105

- No. of Villages where 100% FI achieved : 14060

The Bank has achieved 100% Financial Inclusion in all 4,404 allotted villages with population above 2000 as on 31.03.2014. Robust operational systems with adequate risk mitigants and best practices have been built up and are being pursued.

REGIONAL RURAL BANKS

Bank has sponsored 4 (four) Regional Rural Banks (RRBs) namely Jharkhand Gramin Bank (Jharkhand State), Aryavart Kshetriya Gramin Bankt (Uttar Pradesh State), Narmada Jhabua Gramin Bank (Madhya Pradesh State) and Vidarbha Konkan Gramin Bank (Maharashtra State). All RRBs are profit making. All Branches and administrative offices of the Gramin Banks are now on CBS platform. These banks are enabled on RTGS and NEFT and ATM platforms. All RRBs taken together have a branch network of 1,524 outlets and have garnered a business mix of Rs. 30,891 crores.

RETAIL CREDIT

The Bank during the year 2013-14, perused the policy of building up a healthy retail credit portfolio. In the post recessionary period of FY 2013- 14 the spring buds of reviving economy gave ample opportunity for retail credit. The retail credit portfolio of the Bank increased from Rs. 22,350 crores to Rs. 29,600 crores as on 31st March, 2014. During this period the contours of retail credit were also redefined. The growth in respect of major Retail loan schemes was as under:

(Rs. In crores)

As on As on Growth & Scheme 31.03.2013 31.03.2014 %age growth

Star Home Loan 10,267 13,081 2,814 / 27 % Scheme

Star Education 2,412 2,652 240 /10 % Loan Scheme

Star Vehicle 2,037 2,351 314 /15 % loan Scheme

Star Personal 779 927 148 /19 % Loan Scheme

Star Mortgage 2,007 2,971 964 / 48 % Loan Scheme

SME - PERFORMANCE OF THE BANK UNDER MSME

- Business growth : MSME Outstanding -Rs.45,081 crores registering Y-O-Y growth of 21.04 %.

- Performance under MSE: MSE Outstanding - Rs. 38,686 crores registering Y-O-Y growth of 21.15 %.

- MSE manufacturing sector has grown from Rs. 16,031 crores (March 2013 ) to Rs. 20,095 crores ( March 2014), witnessed Y-O-Y growth of 25.35 %.

- Share of Micro sector within MSE has slightly decreased to 47.69 % as at March 2014 from 49.54 % as on March 2013.

- Growth in number of Micro accounts: 93,903 accounts have been sanctioned under Micro segment during 2013-14 registering growth of 18.60 % over accounts as at 31.03.2013 against the mandatory target of 10 %.

- Performance under CGTMSE -33,930 new accounts added under CGTMSE scheme during 2013-14 covering exposure of Rs. 2,351 crores. We continue to remain at No.1 among PSU banks in terms of total coverage under the scheme which has reached to the level of 1.51 lakhs accounts with total exposure coverage ofRs. 9,614 crores as on March 2014.

- Performance under PMEGP : 503 accounts with limit of Rs. 158 crores has been sanctioned during the year 2013-14 under PMEGP.

ASSET RECOVERY & NPA MANAGEMENT

The level of Non Performing Assets (NPA) is key to any bank''s profitability and consequently larger the efforts of a bank to minimise NPAs, the better it is in the long-term. The Bank continued its drive and focus in improving its performance in the area of NPA management in the year 2013-14 as well. NPA reduction has been given utmost priority at the Bank and this function has steadily grown in importance. Substantial measures were initiated to augment recovery and contain NPAs. Efforts were also made to maximize recovery in written off accounts and uncharged / unrealised interest in NPA accounts which contributes to the Bank''s profits significantly. The following table shows management of NPAs during last 3 years:

(Rs. in crores) Item 31.03.12 31.03.13 31.03.14 (Actual) (Actual) (Actual)

GROSS NPA (Opening) 4,812 5,894 8,765

Less:

Cash-Recovery 1,205 1,245 3,066

Upgradations 487 759 938

Write-off_ 2,415 2,415 1,767

Agr. Debt Waiver/Debt

Relief Scheme 2008 0 0 0

Total Reduction 4,107 4,419 5,771

Add:

Slippages 5,401 7,379 8,811

Less Unrealised Interest

(URI) (introduced from

F.Y 2009-10) 212 89 -63

Item 31.03.12 31.03.13 31.03.14 (Actual) (Actual) (Actual)

GROSS NPA (Closing) 5,894 8,765 11,869

Recovery in W/Off A/cs,

UCI/URI 672 1,051 878

Net NPA 3,656 5,947 7,417

% age of Gross NPA 2.34 2.99 3.15

to Gross Advances

% age of Net NPA to Net 1.47 2.06 2.00

Advances

During the year Bank sold assets with o/s Rs. 4,743 crores (Corporate as well as Retail) and both cash & SR basis in which assets sold on absolute cash basis for Rs. 11.53 crores. The component of cash & SR basis and the reserve assets is Rs. 146 crores / Rs. 2,471 crores respectively.

BRANCH NETWORK & EXPANSION

The Bank has a geographically well spread branch network in India and abroad. The Bank had 4,646 branches in India as on 31.03.2014. In the foreign countries, 25 branches and 31 representative offices keep Bank''s presence felt in all time zones and important financial centers of the globe.

During the year 2013-14, Bank opened 354 new branches including 5 Extension Counters converted into full-fedged branches.

Composition of Bank''s Branch Network is as follows :

31.03.2013 31.03.2014 Category No. of Brs. % to Total No. of Brs. % to Total

Metropolitan 787 18.34 833 17.93%

Urban 742 17.29 789 16.98%

Semi-Urban 1,165 27.14 1,258 27.08%

Rural 1,598 37.23 1,766 38.01%

Total Branches 4,292 100.00 4,646 100.00

COMPLIANCE WITH RESERVATION POLICY

The Bank is complying fully with the reservation policy of the Government of India. Special Recruitment and SC/ST Cells at Head Office / Zonal Offices are functioning to monitor the implementation of the reservation policy and redressal of grievances relating to SC/ST/OBC Employees.

REPRESENTATION OF SC/ST/OBCs IN TOTAL STAFF STRENGTH (INDIAN)

March 2014 Officers Clerks Sub-Staff Total

SC 2,958 3,025 2,736 8,719

% to total Staff in Indian Offices 16.82 16.86 35.90 20.21

ST 1,326 1,842 796 3,964

% to total Staff in Indian Offices 7.54 10.27 10.44 9.19

OBC 2,492 2,132 1,226 5,850

% to total Staff in Indian Offices 14.17 11.88 16.09 13.54

COMPLIANCE

Compliance in a regulatory context is of prime importance because of an ever-increasing number of regulations and a fairly widespread lack of understanding about what is required for an organisation to be compliant. Compliance has, thus, increasingly become a concern of corporate governance.

A Compliance Function Policy for the Bank was adopted by the Board as per Reserve Bank of India guidelines. An independent Compliance department, headed by a Chief Compliance Officer of the rank of General Manager, is functioning at Head office. Compliance of statutory, regulatory and internal guidelines of the Bank is the scope of operation of the compliance function of the Bank.

OFFICIAL LANGUAGE DEPT.

Bank''s Official Language Department successfully organized a series of Official Language conferences at Kolkata, Ahmedabad and New Delhi. Work done by our Bank has been appreciated by Govt. of India, Ministry of Home, Offcial Language Department.

Our Bank was the first to implement Rajbhasha model "Rajbhasha Prayog – Aapsi Sanwad – Sarthaki Disha" designed by Finance Ministry, Financial Services department, New Delhi by organizing this program at Lucknow (17.10.2013). A CD about this program was sent to the Head Offices of Nationalized Banks.

BANK''S SUBSIDIARY / ASSOCIATES

1. BOI Shareholding Ltd.

2. BOI AXA Investment Managers Pvt. Ltd.

3. BOI AXA Trusteeship Services Pvt. Ltd.

4. PT. Bank of India (Indonesia) Tbk.

5. Bank of India (Tanzania) Ltd.

6. Bank of India (New Zealand) Ltd.

7. Bank of India (Botswana) Ltd.

8. Star Union Dai-ichi Life Insurance Company Ltd. (SUDLife).

9. STCI Finance Limited.

10. Indo Zambia Bank Ltd. (IZB).

STRATEGIC INVESTMENT / ALLIANCES

1. Central Depository Services (India) Ltd. (CDSL).

2. ASREC (India) Ltd.

3. Credit Information Bureau (India) Ltd. (CIBIL).

4. National Collateral Management Services Ltd. (NCMSL).

5. SWIFT India Domestic Service Pvt. Ltd.

6. SME Rating Agency of India Ltd. (SMERA).

BUSINESS RESPONSIBILITY REPORTING

In terms of SEBI guidelines, text of the Business Responsibility Reporting is available on our website i.e. www.bankofndia.co.in

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2014,

(a) The applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for the year ended March 31, 2014;

(c) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) Annual accounts have been prepared on a going concern basis;

(e) Internal financial controls system to be followed by the Bank were laid down and that such internal financial controls are adequate and were operating effectively;

(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Board expresses its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank.



For and on behalf of the Board of Directors

Sd/-

Place : Mumbai (Mrs. V R Iyer)

Date : 15.05.2014 Chairperson & Managing Director

 
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