Enter the first few characters of Company and click 'Go'

Directors Report of City Union Bank Ltd.

Mar 31, 2023

The Board of Directors of your Bank is pleased to present the Annual Report on business and operations of the Bank together with the Audited Financial Statements for the Financial Year ended March 31, 2023.

ECONOMY OVERVIEW

In the beginning of the year 2023 the Global economic activity remained subdued amidst turmoil in the banking system in some advanced economies, tight financial conditions and lingering geopolitical hostilities, supply chain disruptions and inflation in food, energy and commodities. The Central Banks across the globe remained cautious and continued to withdraw their accommodative stance in a calibrated manner which led to tight liquidity conditions across world markets accompanied by an increase in interest rates. The Financial Year FY 2023 was largely affected by the Global Banking crisis such as the collapse of Silicon Valley Bank ("SVB"] and Signature Bank in US and Credit Suisse of Switzerland which was caused by a rapidly rising interest rates, high levels of uninsured deposits and regulatory rollbacks in the US and elsewhere and the negative impact of the prolonged Russia Ukraine war. These macroeconomic and geopolitical factors had significant ramifications on global growth. Weakening external demand, spillovers from the banking crisis in some Advanced Economies, volatile capital flows and debt distress in certain vulnerable economies weighed on growth prospects. Going forward, weak external demand, elevated debt levels and geo economic disintegration amidst tighter external financial conditions pose risks to growth prospects for several Emerging Market Economies ("EMEs"] although capital flows in such economies are slowly returning on renewed risk appetite.

Indian Economy

In India, the real GDP recorded a growth of 7.2 per cent in FY 2023 surpassing the previous estimate of 7.0 per cent primarily aided by fixed investment and higher net exports. The easing of inflation was observed across food,

fuel, and core categories (CPI excluding food and fuel]. During the FY 2023, the manufacturing sector registered single digit growth as against 11% during previous year due to factors such as high raw material prices and weak external demand. India''s service sector exhibited a strong rebound since the pandemic driven by increase in demand for sectors such as tourism, retail trade, hotel, entertainment and recreation. India''s service exports recorded a high of USD 333 billion during FY 2023 which boosted India''s Balance of Trade. The private final consumption expenditure recorded robust growth of over 7% during FY 2023 primarily due to recovery in rural consumption post the pandemic.

India''s growth story has been aided by a healthy and robust banking sector which has managed to record steady recovery post pandemic. The RBI data depicts that the Bank deposits expanded at 9.6% compared to 8.9% during the previous year. The credit growth which is vital for output, stood at 15%. The credit growth to MSME sector continued to be robust while it accelerated for large Industries and the credit growth to service sector

accelerated to 19.8% in March 2023 from 8.7% a year ago due to improved credit off take in NBFCs and trade. Retail loan segment recorded a growth of 20.6% in March 2023 compared to 12.6% a year ago primarily driven by Housing loans. The recovery in both gross NPAs and net NPAs showed positive signs in FY 2023. The Banking sector remains a crucial component for the success of Indian economy.

Outlook

For 2023-24, domestic demand conditions remain supportive of growth on the back of improving household consumption and investment activity. The Urban demand remains resilient with indicators such as passenger vehicle sales, domestic air passenger traffic and credit cards outstanding posing double digit expansion and Rural demand is also on a revival path with an increase in two-wheeler and three-wheeler sales although tractor sales remained subdued. Growth in steel consumption, cement output and production and import of capital goods reflects buoyancy in investment activity. Higher Rabi crop production backed by a normal monsoon should augment household consumption. Robust government capital expenditure is also expected to nurture investment and manufacturing process. Taking all these factors into reckoning, the real GDP growth for

2023-24 is projected at 6.5 per cent with Q1: 2023-24 at 8.0 per cent; Q2 at 6.5 per cent; Q3 at 6.0 per cent and Q4 at 5.7 per cent with the risks evenly balanced.

BANK''S PERFORMANCE

Under the above circumstances, your Bank recorded a total business of '' 96,369 crore, an increase of '' 7,523 crore over the previous year figure of '' 88,846 crore in FY 2022, a 8% increase over FY 2022 position.

The Net Profit of the Bank has increased to '' 937 crore from '' 760 crore, a 23% increase over FY 2022 position. The Net Interest Income of the Bank stood at '' 2,163 crore, as against '' 1,916 crore during the previous year, a 13% increase over FY 2022 position. The key performance indicators i.e., the Return on Assets of the Bank stood at 1.46%, Return on Equity stood at 13.42%, the Net Interest Margin of the Bank stood at 3.89% and the Cost to Income ratio stood at 38.85% during the reporting year. The financial performance has been discussed in detail in the forthcoming paragraphs. During the year the Bank opened 25 additional branches to total 752 branches and has 1,678 ATM''s as at March 31, 2023. Further information on the state of affairs of the Bank has been discussed in detail in the Management Discussion and Analysis Report forming part of this Report.

Financial Highlights			(''in crore)
Particulars	2022-23	2021-22	Growth (%)
Share Capital	74	74	-
Reserves & Surplus	7,383	6,512	13%
Deposits	52,398	47,690	10%
Advances (Gross)	43,971	41,156	7%
Investments (Gross)	14,360	12,294	17%
Total Assets / Liabilities	66,595	61,531	8%
Total Income	5,525	4,864	14%
Total Expenses	3,707	3,269	13%
Net Interest Income	2,163	1,916	13%
Operating Profit	1,818	1,595	14%
Provisions & Contingencies	881	835	6%
Net Profit (A)	937	760	23%
Appropriations
Balance of Profit brought forward (B)	100	61	-
Amount available for appropriations (A B)	1037	821	-
Transfers to:
- Statutory Reserve	250	200	-
- Capital Reserve	4	4	-
- General Reserve	480	405	-
- Investment Reserve Account	40	1	-
- Special Reserve under IT Act, 1961	80	75	-
- Dividend	74	37	-
- Balance of Profit carried forward	109	99	-
Total	1037	821	-

The Deposits and Advances for the current year stood at '' 52,398 crore and '' 43,971 crore respectively. The total business stood at '' 96,369 crore as compared to '' 88,846 crore for the previous year registering a growth of

8%. The size of the Balance Sheet as on March 31, 2023 is '' 66,595 crore as compared to '' 61,531 crore last year recording an increase of 8%.

PROFIT

During the year the Bank earned a Gross profit of '' 1,818 crore as compared to previous year''s figure of '' 1,595 crore registering an increase of 14%. The Net profit of the Bank for the current year was '' 937 crore as against '' 760 crore last year, registering an increase of 23%.

NET INTEREST INCOME

The Net Interest Income for FY 2023 stood at '' 2,163 crore as compared to '' 1,916 crore in the last year recording an increase of 13%.

DEPOSITS

The Bank''s total Deposits for the year under review increased by '' 4,708 crore to record '' 52,398 crore from '' 47,690 crore registering a growth of 10% over previous year. During the current year CASA increased by '' 128 crore to record '' 15,657 crore from '' 15,529 crore. The cost of deposit of the Bank marginally decreased to 4.66% from 4.68% in the previous year.

TOTAL INCOME

The Total Income earned by the Bank increased for FY 2023 to record '' 5,525 crore as against '' 4,864 crore in FY 2022, registering an increase of 14%. The non-interest income of the Bank increased from '' 759 crore to '' 810 crore registering a growth of 7% on account of recoveries made from technical write off accounts. The total expenditure of the Bank increased to '' 3,707 crore as compared to '' 3,269 crore, in the previous year, registering an increase of 13%.

ADVANCES

Gross Advances of the Bank increased by '' 2,815 crore to '' 43,971 crore from '' 41,156 crore, posting a growth of 7%. The yield on advances declined to 9.23% from 9.36% during the reporting year. The Bank achieved the target / sub-targets prescribed by the RBI for Priority sector, Agriculture, Micro Enterprises, Small / Marginal farmers and weaker section.

The Gross NPA and Net NPA for the year under review stood at 4.37% and 2.36% respectively as compared to 4.70% and 2.95% in the previous year.

The provision for tax for the reporting year increased to '' 240 crore from '' 225 crore in previous year. The provision made for NPA for the financial year was '' 690 crore vis-a-vis '' 554 crore last year. The total provision increased by '' 46 crore to '' 881 crore from '' 835 crore in the previous year.

TREASURY OPERATIONS Domestic Treasury

The gross Investments increased by '' 2,066 crore to ''14,360 crore as on March 31 2023 from ''12,294 crore as on March 31 2022. Out of this, the investments in Government Bonds alone remained at ''14,268 crore constituting 99.36% of the total Investment. The Non-SLR investments declined by ''65 crore mainly on account of reduction in Security Receipts. The financial year began with rising interest rate cycle as central banks tightened policy rate to combat high inflation. During the year, the Reserve Bank of India delivered a series of back-to-back rate hikes by 250 bps in total, taking the repo rate to 6.50%. The Monetary Policy Committee also raised CRR rate by 50 bps during the year while retaining the policy stance at ''focus on withdrawal of accommodation''. The US Federal Reserve hiked interest rate by 4.50% from the beginning of FY23 amid high CPI inflation. US Treasury yield curve remained deeply inverted throughout the year. Indian bond yields moved in line with its global peers on a hardening note. Towards the end of the financial year, the bond yield cooled off on the collapse of one of the largest banks in USA and its impact on Federal Reserve rate decision. Strong GST collections and retail credit growth

signaled healthy consumption demand in Indian economy. During the year the bank booked a profit of ''7.63 crore by sale of securities.

Forex Treasury

During the financial year 2022-23, Indian Rupee weakened against USD by 8.44%. Indian Rupee against USD opened at '' 75.77 and closed at '' 82.165. Major reason attributed for weaker Rupee was continuous rate hike by Federal Reserve to contain record high inflation. Geopolitical tension caused by the war between Ukraine and Russia impacted the local currency and favoured US dollar. Central banks all over the world were forced to hike rates due to higher inflation. The presence of the RBI reduced the pace of the depreciation of the Rupee. During the FY 2022-23, profit on our foreign exchange operation stood at '' 151.60 crore as against '' 194.74 crore during the previous financial year.

NET WORTH & CAPITAL ADEQUACY RATIONet Worth

The paid-up Share Capital of the Bank increased to '' 74.04 crores as on March 31, 2023 from '' 73.96 crore as on March 31, 2022. During the reporting period the Bank has allotted 8,31,472 equity Shares to employees under Employee Stock Options pursuant to CUB ESOS Scheme 2008 & CUB ESOS Scheme 2017.

The Net worth of the Bank stands improved to '' 7420.92 crore as on March 31, 2023 from '' 6,549.75 crore as on March 31, 2022.

Capital Adequacy Ratio

As per Basel III regulations, banks are required to maintain a minimum Pillar 1 Capital (Tier-I Tier II) to Risk Weighted Assets Ratio (CRAR) of 9% on an ongoing basis. Besides this minimum capital requirement, Basel III also required creation of capital conservation buffer and countercyclical buffer of 2.50% at the end of March 2018 in a phased manner beginning from March 31, 2015 @

0.625% in each year up to March 31, 2018. The RBI had issued circulars on various dates extending the transitional period for full implementation of Basel III Capital Regulations due to the unfavorable economic situation. Now the minimum regulatory requirement under Basel III with Capital Conservation Buffer ("CCB") is 11.50% (9.00% 2.50%) with effect from 01.10.2021. The CRAR required to be maintained for the period ended March 31, 2023 is 11.50%. The Bank has maintained Tier I CRAR of 21.27% and total CRAR of 22.34% as at March 31, 2023 which are well above the norms prescribed by the RBI.

The Board of the Bank at its meeting held on May 26, 2023 had recommended a Dividend of 100% (i.e Re.1/- per equity share on face value of Re.1/- each fully paid up) for the year ended March 31, 2023 subject to the approval of shareholders at the ensuing Annual General Meeting (''AGM"). The dividend, if declared at the AGM will be paid to the shareholders as on the record date specified for such purpose, within the prescribed time. The dividend payout for FY 2023 is in accordance with the Dividend Distribution Policy ("the Policy") of the Bank framed in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same has been uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/assets/frontend/pdf/others/DividendDistributionPolicy.pdf

In case any shareholder has not claimed dividend(s) for previous year(s), they may kindly approach the Bank or its Registrar and Transfer Agents ("RTAâ). The details on Unclaimed Dividends and transfers to IEPF is given in a separate report on Corporate Governance forming part of this report.

BRANCH EXPANSION

Our Bank continued with a slower pace of branch expansion during the year and it added only 25 New branches to total 752 as on March 31, 2023. The total number of ATMs stood at 1,678 (includes 822 Bulk Note Recycler Machines (BRM) which performs the job of accepting and dispensing cash). As on March 31, 2023 the Bank had a total of 1,124 onsite ATMs and 554 offsite ATMs.

During the reporting year, the Bank has opened 171 ATMs / BRMs, replaced 127 old ATMs / BRMs with new ones and closed 225 loss making off-site ATMs / BRMs, the details of which are as follows:

Particulars	ATM	BRM	Total
Opened	109	62	171
Replaced	102	25	127
Closed	196	29	225

As for the Branch spread, as on date 89% of branches are operational in South, 5% in West, 4% in North and 1% in Central and 1% in Eastern parts of India.

Financial Inclusion is a concept where the banking financial solution and services are offered to every individual without any form of discrimination as well as to ensure even the under privileged get easy access to banking channels. The objective of financial inclusion is to facilitate the following:

â¢ Basic savings bank deposit accounts

â¢ Servicing products (including investment and pension)

â¢ Simple credit products and overdrafts linked with no frills account

â¢ Remittance and money transfer facilities

â¢ Pension and Insurance products

Your bank has witnessed tremendous progress in the successful implementation of financial inclusion, especially to the citizens in rural areas. The Bank has already implemented Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme and there are 84,545 accounts as on March 2023. The Bank has 2,98,236 Basic Savings Bank Deposit accounts, including 1,07,323 accounts sourced through Business Correspondents (BCs). To cater the needs of customers of unbanked areas, the bank has established BC Outlets in those places and is providing Basic banking services through Business Correspondents (BCs). Your bank has 135 BCs and 3 BC outlets for rendering services to the village level beneficiaries. The Business Correspondents of the bank make regular visits to the villages and provides doorstep banking services.

Your Bank is very much keen in creating awareness on Financial Inclusion and also on the promotion of Government schemes for social welfare, Pension, Insurance viz Atal Pension Yojana (APY), MUDRA, PMJJBY, PMSBY etc., The Bank has 43,744 APY Accounts, 43,654 PMJJBY Accounts 85,992 PMSBY Accounts under the scheme.

Your Bank has got e-KYC facility and Aadhaar enabled Payment System (AePS), for rendering quick services to the rural public. Besides the bank has deployed POS machines, at various locations, which are very much helpful for doing merchant transactions. The bank has continuously ensured uninterrupted Banking services in the unbanked areas with the help of digital banking services. Your bank is proud of extending contribution to the social welfare schemes of the Government, for our Nation building.

As done in the past, ''Financial Literacy Week'' is being conducted by the Bank with the aim of furthering financial literacy, developing credit discipline and encourage availing credit from formal financial institutions by the customers.

As per the objectives of the National Strategy for Financial Education 2020-2025, focus of the Bank will be on the following three topics with a view to promote digital transactions in a more secured manner:

â¢ Convenience of digital transactions

â¢ Security of digital transaction

â¢ Protection of customers

Your Bank has conducted campaigns at various places for observing the Financial Literacy Week in an effective manner and to educate its customers properly.

HUMAN RESOURCE DEVELOPMENT

Human Resource Development and cordial Industrial atmosphere play a prominent role in an organization''s growth and your Bank has always maintained cordial relation with its employees. As a part of HR strategy, the Bank offers its employees various monetary and nonmonetary benefits based on their performance in the form of ESOP, Performance Linked Pay (PLP) & Ex-gratia and ensures that each employee feels part of the Bank and strives to deliver to the best of his/her abilities. It is pertinent to note here that there has not even been a single occasion of employee unrest in the Banking history of CUB. Continuous efforts are being made to enhance the quality of existing personnel and to attract new talent.

In line with the Bank''s expansion plans, 25 new branches were opened in various states for which the Human Resources Department provided adequate manpower. Specific efforts were made towards talent acquisition, skill development, and manpower training and knowledge updation. Employees are identified and imparted trainings at various areas of banking. Job rotation is being followed to ensure every employee gains experience in all the areas of banking.

In tune with the future expansion, the bank is constantly upgrading and revisiting its manpower requirements through developing a talent pool. The members of the talent pool are being groomed by giving trainings at various centers of excellence in our staff college at Chennai and Kumbakonam apart from SIBSTC, NIBM, CAFRAL, IRDBT etc.

As on March 31, 2023, the Bank has 6,019 on-roll employees, comprising of 66 employees in Executive cadre, 2,444 in Management cadre and 3,509 in Clerical and Subordinate cadre.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank implemented Employee Stock Option Scheme ''CUB ESOS 2008'' for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on 26th April, 2008 at an Extra Ordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme, exercise price of the options shall be decided by the Compensation & Remuneration Committee at the time of grant of stock options. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years and 25% and 30% for fourth and fifth year respectively. The options are offered at prevailing market prices at the time of grant to the employees. However the same shall vary pursuant to corporate action viz., Rights Issue, Bonus Issue etc. There were no material changes in the ESOS of the Bank during the period under review and the same is in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 as amended from time to time ("SEBI SBEB Regulations"). As at the end of March 31, 2023, the Bank has 16,91,260 options to be granted out of 5,00,00,000 options under the scheme.

In addition, the shareholders of the Bank at its meeting held on 23rd August, 2017 approved new CUB ESOS Scheme 2017 for 3,00,00,000 options on terms and conditions similar to previous one.

As on March 31, 2023, 2,59,38,250 options are yet to be granted under the CUB ESOS 2017 Scheme.

The disclosures pursuant to Regulation 14 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 has been hosted in the website of the Bank and also the same is annexed hereto as Annexure I. weblink:

https://www.cityunionbank.com/filemanager/PDF/ESOP_Genicon_CUB_Valuation%20Report_FY%202022-23.pdf

AUTOMATION / DIGITAL BANKING

Banking service now-a-days moved from branch banking to palm of customer to do banking on their convenience and comfort. The advent of digital payment due to advancement of information technology, availability of easy access of network through mobile, encourage more cashless transactions and brings it into the Bank''s system. As on date 97.51% of the Bank''s transactions are carried out through Alternate Channels. Thus digital banking has become the order of the day.

â¢ The Bank has been spreading its Self Service Bank branches (e-Lounge) and enabling our ATMs / BRMs for cardless deposit and withdrawals, self-service kiosk for passbook and cheque deposit machine.

â¢ The Bank has established Digital Banking Unit as per digital initiatives of Government of India.

â¢ Bank also set-up neo-bank as digital front line so as to enable our customer to open banking relationship.

â¢ Customers can manage their digital payments / transactions by setting their own limit for the ATM, POS and E-com channel transactions. They can enable / disable International usage of the card also through Net / Mobile Banking

â¢ Bank has made its presence in Social Media Banking through Whatsapp, Facebook, Twitter and YouT ube.

â¢ Our customers are enjoying CUB e-Wallet, Unified Payment Interface (UPI), BHIM and ''¹99#'' a NUUP (National Unified USSD Platform), Bharat Bill Payment System (BBPS), Bharat QR - Scan & Pay in BHIM / UPI, ASBA and Aadhaar Enabled Payment System (AEPS).

â¢ Bank is running V-Chip (VKYC) for customer on-boarding and account opening across India

â¢ FASTag facility to make payments at Vehicle Toll Plazas

â¢ A customer friendly Contact Centre (Call Centre) with Interactive Voice Response System (IVRS), is put in place to promote customer support on Multilanguage on 24x7 basis.

â¢ Bank has PCI DSS certification for the digital card environment

NEW TECHNOLOGY INITIATIVES

Wearable Keychain and CUBFit Watch

â¢ In order to make payment on the go, CUB has introduced its payment mode to their customers through wearables. To begin with CUB has made tie up with RuPay to make the tap and go payments through a key chain and CUBFit watch.

CUB UPI123 Pay

â¢ In the series of its innovation, CUB has now introduced UPI Payment solution for feature phones -''CUB UPI 123PAY''. Customers of any bank can now perform UPI transactions using feature phone / smart phone through CUB BHIM Voice IVR by calling 08045163581.

â¢ The feature phone solution is expected to help in offering payment services to the unserved and underserved segment of the population.

Apply Card Online

â¢ Introduced facility to apply debit card online through net banking and mobile banking without visiting branch. Customers can apply for a fresh card or for a replacement card against their lost /blocked card. Card status can also be tracked online.

Easy Buy

â¢ As enrichment to our CUB All in one Mobile app, we have now integrated ''EasyBuy'', a shopping platform comprising marketplace module like Flipkart, Bigbazaar, Myntra, Netmeds, etc. ''EasyBuy'' is built to meet shopping needs of the consumers and to use a single app for all their online shopping needs instead of downloading multiple apps for specific purpose.

Dhi Credit Card (Credit Card Issuance with 42CS)

During the financial year 2022-23, Bank tied up with M/s. 42 Card Solutions Pvt. Ltd., to issue CUB brand credit card ''Dhi''. A soft launch was made with our own staff and executives and found satisfactory. Bank is expanding the credit card network to our customers also.

Voice Bio-Metric based Login for Retail mobile banking - "Your Voice is your Passwordâ

Bank developed a new functionality ''Voice-Biometric'' in retail mobile banking for login to have different customer experience. Currently customers can log in to bank''s retail mobile banking application via MPIN or Fingerprint / Face ID.

One more login option is introduced through ''Voice -biometric''. Through this method, customer initially needs to register his / her voice in the mobile banking.

Post successful registration, for subsequent logins, customers can choose their ''Voice'' as authentication mechanism and login. During the login, the customers can talk in different languages and different text. An enable/ disable option for voice biometric is provided to the customer.

Soft Token for Retail customers for transaction approval

The Bank has provided Digital Signature (DSC) Hard token and Soft token for our corporate customers for transaction approval. Similarly for retail customers also DSC Soft token is introduced for transaction approval. This would be a seamless process of approval and avoids delay due to SMS delivery.

Cyber Security Measures

As the convenience in doing banking transactions through digital channels increases, the risks in cyber environment also get increased. New types of cyber frauds are emerging with the introduction of new digital channels. As the Bankers are the custodians of Depositors'' money, we take utmost care to ensure necessary security measures to protect public interest and necessary mitigation measures are implemented.

â¢ The Bank has implemented latest technology tools in our Bank to cover the protection, detection and response for all cyber security threats and risks.

â¢ The Bank has established Security Operation Centre (SOC) working by 24 X 7 on all calendar days. The SOC takes steps to prevent the attempts from the IOC (Indicators of Compromise) and IOA (Indicators of Attack).

â¢ The Bank participates in the cyber drills conducted by IDRBT on quarterly rests to enhance our threat detection and prevention capabilities. During this review period, bank detected all the attacks successfully in the cyber drills.

â¢ The Bank is giving training on information security and cyber security to employees of the bank. ²

National Cyber Coordination Center (NCCC)

Cert-In and Ministry of Electronics and Information Technology (MeitY) proposed to implement a national level project called National Cyber Coordination Centre (NCCC). Your Bank actively participates in the project.

Brand Indicator for Message Identification (BIMI) Implementation

BIMI is an emerging standard that will help establish branch identity and trust on email channels. CUB has adopted this emerging standard to help the customer to easily identify the email emanated from CUB by displaying our logo in the recipient inbox. This will help the customer to easily ensure the genuineness of email and to avoid phishing mails that may impersonate CUB.

OTHER BUSINESS ACTIVITY

During FY 2022-23, our Bank has entered into Corporate Agency tie-up with six Insurance Companies in addition to the existing tie ups with LIC of India and Star Health & Allied Insurance Company, for augmenting the Noninterest Income. This has been done in accordance with the "Open Architecture" Regulation of IRDAI. The six new Insurance Companies with whom we have tied up with are given below:

A) Life Insurance Business

1. Bajaj Allianz Life Insurance Company

2. TATA AIA Life Insurance Company

B) Standalone Health Insurance Business

1. Aditya Birla Health Insurance Company

2. Care Health Insurance

C) General Insurance Business

1. Royal Sundaram General Insurance Company

2. Shriram General Insurance Company

The above tie ups are fully functional and we are now offering Insurance products of all the above companies to our Customers. During the reporting year the Bank has earned a Fee income of '' 26.72 crores as against '' 21.03 crores in the previous year, through cross selling of Insurance Products.

Bank is also offering the following additional services to all our Customers through Net Banking & Mobile Banking Platforms:

â¢ Demat A/c from our own DP with NSDL

â¢ Trading A/c from our tie up with Integrated Enterprises India Ltd.,

â¢ Mutual Fund investment solution from our Tie up with Finwizard Technology Pvt. Ltd. (widely known as FISDOM)

SUBSIDIARIES AND ASSOCIATES

Your Bank does not have any Subsidiaries or Associates to report during the year under this report.

BOARD MEETING

The Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the year under review, 12 (Twelve) meetings were held. The details of such meetings along with the constitution of the Board and its committees are given under Report on Corporate Governance forming part of this report.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNELRetirement(s):Shri. R. Mohan (DIN 06902614)

Shri. R. Mohan, Part-Time Chairman of the Bank had completed his tenure on May 03, 2022 as per his appointment terms approved by RBI vide its letter no. DBR.APPT.NO.8631 /08.42.001/2018-19 dt.10th April 2019. Further, as per the provisions of Section 10A(2A)(i) of the Banking Regulation Act, 1949, Shri. R Mohan, has vacated his office of Director as Independent Director on the close of business hours of 27th June, 2022 on account of completion of tenure (8 years).

The Board hereby places on record its warm appreciation over the excellent services rendered by Shri. R Mohan during his tenure.

Smt. Abarna Bhaskar (DIN 06971635)

Smt. Abarna Bhaskar (DIN 06971635) retired as an Independent Director from the Board of the Bank on

October 24, 2022 on account of completion of tenure (8 years) as per Banking Regulation Act, 1949 and the Companies Act, 2013.

The Board hereby places on record its warm appreciation over the excellent services rendered by Smt. Abarna Bhaskar during her tenure.

Appointment / Re-appointment:Shri. M. Narayanan (DIN 00682297)

During the reporting year, the RBI vide its letter no. DOR.GOV.No.S663/08.42.001/2022-23 dated May 04,

2022 had approved the appointment of Shri. M. Narayanan (DIN 00682297) as the Part-time NonExecutive Chairman of the Bank w.e.f. May 04, 2022 for a period of two (2) years. His appointment was also approved by the Shareholders at the Annual General Meeting held on August 18, 2022.

Prof. Veezhinathan Kamakoti (DIN 03537582) and Shri. Gurumoorthy Mahalingam (DIN 09600723)

During the reporting year, Prof. V. Kamakoti and Shri. G. Mahalingam were appointed as Independent Directors of the Bank w.e.f May 27, 2022 and July 06, 2022 respectively. Their appointments were approved by the Shareholders at the Annual General Meeting held on August 18, 2022.

Shri. Narayanan Subramaniam (DIN 00166621)

During the reporting year, the Shareholders of the Bank at the Annual General Meeting held on August 18, 2022 had approved the re-appointment of Shri. Narayanan Subramaniam as an Independent Director on the Board of the Bank for the remaining period upto June 19, 2025 as permitted under the Banking Regulation Act, 1949.

Smt. Lalitha Rameswaran (DIN 02326309)

Smt. Lalitha Rameswaran was initially co-opted as Additional Director on the Board of the Bank on November 04, 2022 representing Majority Sector "Finance, Accountancy, Banking and Information Technology". The shareholders of the Bank have approved her appointment as an Independent Woman Director on the Board of the Bank for a period of five years w.e.f November 4, 2022 which was duly passed on January 29,

2023 through Postal Ballot by way of remote e-voting.

Dr. N. Kamakodi (DIN 02039618)

The Reserve Bank of India vide its letter dated April 26, 2023 had granted its approval for the re-appointment of Dr. N. Kamakodi as the Managing Director & CEO of the Bank for a period of three years w.e.f May 01, 2023. The appointment is subject to approval by shareholders. The Notice seeking the approval of shareholders has been circulated to all concerned through postal ballot for voting by way of remote e-voting. The members may check the stock exchange communications for updates on this.

Shri. V.N. Shivashankar (DIN 00929256)

Shri. V.N. Shivashankar currently an Independent Director on the Board of the Bank and his appointment as Independent Director was duly approved by the shareholders at their meeting held on September 01, 2018 for a period of five years. In accordance with the provisions of Section 149(10) of the Companies Act, 2013, an Independent Director can hold office for a maximum term of upto five (5) consecutive years on the Board of the company and shall be eligible for re-appointment for another term of five years subject to passing of Special Resolution by the members and disclosure of such appointment on Board''s Report. Further, in respect of Banking Companies, the provisions of section 10A(2) of the Banking Regulation Act, 1949 (''Banking Act'') specify that the overall tenure of non-executive Directors should not exceed a period of eight (8) consecutive years.

Keeping in view the provisions of both the Companies Act, 2013 and the Banking Regulation Act, 1949 and pursuant to the recommendations of the Nomination Committee, the Board of Directors of the Bank had approved a proposal to re-appoint Shri. V.N. Shivashankar as Independent Director on the Board of the Bank to hold the office till the remaining period upto February 06, 2026 as permitted under the Banking Regulation Act, 1949 from the date of his first appointment in the Bank, subject to approval of Shareholders by means of Special Resolution at the ensuing Annual General Meeting of the Bank. Accordingly, the Board recommends the re-appointment of Shri. V. N. Shivashankar for a second term as an Independent Director on the Board of the Bank (not liable to retire by rotation) for approval by shareholders in the Notice calling the ensuing Annual General Meeting. The relevant details of Shri. V.N. Shivashankar pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard - 2 is disclosed separately in such Notice.

Dr. T. S. Sridhar (DIN 01681108)

Dr. T. S. Sridhar currently an Independent Director on the Board of the Bank and his appointment as Independent Director was duly approved by the shareholders at their meeting held on September 01, 2018 for a period of five years. In accordance with the provisions of Section 149(10) of the Companies Act, 2013, an Independent Director can hold office for a maximum term of upto five (5) consecutive years on the Board of the company and shall be eligible for re-appointment for another term of five years subject to passing of Special Resolution by the members and disclosure of such appointment on Board''s Report. Further, in respect of Banking Companies, the provisions of section 10A(2) of the Banking Regulation Act, 1949 (''Banking Act'') specify that the overall tenure of non-executive Directors should not exceed a period of eight (8) consecutive years.

Accordingly, the Board recommends the re-appointment of Dr. T. S. Sridhar for a second term as an Independent Director on the Board of the Bank (not liable to retire by rotation) for approval by shareholders in the Notice calling the ensuing Annual General Meeting. The relevant details of Dr. T. S. Sridhar pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard - 2 are disclosed separately in such Notice.

Directors to retire by Rotation

All directors on the Board except the Managing Director and CEO of the Bank are Independent Directors. Hence the provisions of Section 152(6) of Companies Act, 2013 relating to retirement of directors by rotation do not apply considering the present composition of the Board of Directors. Independent Directors are not required to retire in terms of Section 149(13) of the said Act. Accordingly no Director including MD & CEO is required to retire by rotation at the ensuing Annual General Meeting.

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors under Section 149(6), 149(7) of the Companies Act, 2013, notifications issued by the Ministry of Corporate Affairs and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board is satisfied that the Independent Directors meet the criteria of independence as stipulated under the aforesaid provisions of the Companies Act, 2013.

Further, in compliance with MCA notification no.G.S.R.805(E) dt.22nd October, 2019, all Independent Directors of the Bank have registered themselves in the Independent Directors databank of Indian Institute of Corporate Affairs and are qualified / exempt from undertaking Self Assessment Exam.

Familiarization program for Independent Directors

The details of programme for familiarization of Independent Directors with the Bank, their roles, rights and responsibilities in the Bank and related matters are provided separately under the Corporate Governance Report forming part of this Annual Report.

Performance Evaluation

In line with the provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and relevant notifications / guidelines issued by SEBI in this regard, there exists a structured criterion as approved by the Nomination committee of the Board for carrying out the performance evaluation of the Board as a whole, its committees as well as Independent Directors, MD & CEO and Chairman.

The necessary evaluations / review were carried out by the Board and Independent Directors to determine the effectiveness of the Board, its Committees, MD & CEO, Chairman and individual Directors. Additional information on performance evaluation is set out in Corporate Governance section forming part of this Annual Report.

Key Managerial Personnel

Dr. N. Kamakodi, Managing Director & CEO continues to be a Key Managerial Person. Shri. V. Ramesh, Chief Financial Officer & Company Secretary of the Bank, was a Key

Managerial Personnel (''''KMP'''') of the Bank till February 11, 2023. Further, with effect from the close of business hours of February 11, 2023, Shri. V Ramesh vacated the office of Chief Financial Officer and Company Secretary. He was assigned the whole-time role of Chief Compliance Officer and re-designated by the Board as SGM & Chief Compliance Officer of the Bank to be in line with RBI circular no. DoS.CO.PPG./SEC.02/11.01.005/2020-21 dt.11.09.2020.

The Board of Directors at its meeting held on February 11, 2023 appointed Shri. J Sadagopan as a KMP designated as Chief Financial Officer (" CFO" ) and Shri. Venkataramanan S as a KMP designated as the Company Secretary ("CS'''') of the Bank w.e.f. February 12, 2023 respectively pursuant to the provisions of Section 2(51) read with Section 203 of the Companies Act, 2013.

As on the date of this report there are 3 KMPs viz. Managing Director & CEO, CFO and CS.

AUDITORSStatutory Central Auditor

M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai and M/s. K Gopal Rao & Co., Chartered Accountants, Chennai were re- appointed as the Joint Statutory Central Auditors ("SCAs'''') of the Bank in the previous Annual General Meeting (''AGM'') held on 18th August, 2022. The term of the present SCAs will conclude at the conclusion of the ensuing Annual General Meeting of the Bank and being eligible has offered themselves for re-appointment in line with RBI guideline dated 27th April, 2021. Consent has been received from the SCAs for their re-appointment and also a confirmation to the effect that they are not disqualified to be appointed as Statutory Central Auditors of the Bank in terms of Companies Act, 2013 & the rules made there under. An application was made to the Reserve Bank of India seeking its prior approval for the re- appointment of M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai and M/s. K Gopal Rao & Co. Chartered Accountants, Chennai to act as Joint Statutory Central Auditors for the FY 2023-24. In response, the RBI vide its letter No. CO.DOS.RPD.No. S2229/08.13.005/2023-24 dt. June 22, 2023 has accorded its approval for the re-appointment of M/s Jagannathan & Sarabeswaran, Chartered Accountants, Chennai (FRN 001204S) and M/s K. Gopal Rao & Co., Chartered Accountants, Chennai (FRN 000956S) as the Joint Statutory Central Auditors of the

Bank for a third term for FY 2023-24. The Members are requested to consider and approve their re-appointment as the Joint Statutory Central Auditors of the Bank as per the agenda set out in the Notice calling this Annual General Meeting.

The Statutory Central Auditors have furnished their Report for FY 2023 which forms part of this report and there are no qualifications, reservations or adverse remarks made by the Auditors in their report. Further, the Auditors of the Bank has not reported any fraud under section 143(12) of the Companies Act, 2013.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank had appointed M/s. B. K. Sundaram & Associates, Practising Company Secretaries, Tiruchirapalli as Secretarial Auditor to conduct the Secretarial Audit of the Bank for the Financial Year 2023. The report of Secretarial Auditor ''Secretarial Audit Report'' in the prescribed format is annexed to this report as Annexure II.

Pursuant to Regulations 24A of SEBI Listing Regulations 2015, read with relevant SEBI circular, the Bank has obtained Secretarial Compliance Report certified by such Auditor for the financial year ended March 31, 2023, on compliance of all applicable SEBI regulations and circulars / guidelines issued thereunder and the copy of the same was submitted with the stock exchanges within due timelines.

There are no observations, reservations or adverse remarks made by the Secretarial Auditor in their report except they have recorded a fact as to the levy of penalty by the Stock Exchanges BSE Ltd., and the National Stock Exchange of India Limited and the divergence reported by RBI. The members may refer Annexure II for more details.

CostAudit

The requirement of maintaining cost records u/s 148(1) of the Companies Act 2013 is not applicable to the Bank.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors of the Bank hereby declares and confirms that:

i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

iii) The Directors have taken 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.

iv) The Directors have prepared the annual accounts on a going concern basis.

v) The Directors have laid down adequate internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INSIDER TRADING NORMS

The Bank has formulated / revised the Code of Conduct pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended from time to time ("SEBI PIT Regulations") to regulate, monitor and ensure reporting of trading by the designated persons and other connected persons. The said code had been reviewed and amended by the Board of Directors from time to time.

The code is adopted to maintain highest ethical standards in dealing with securities of the Bank by persons to whom it is applicable. The code of conduct and related policy are available in the Bank''s website. weblink:

https://www.cityunionbank.com/assets/frontend/pdf/others/CUB_Code_of_Conduct.pdf

All listed companies are required to maintain an in-house Structured Digital Database ("SDD") under Regulation 3(5) and 3(6) of SEBI (PIT) Regulations, 2015 through which Unpublished Price Sensitive Information (UPSI) are to be reported. In this regard our Bank has purchased a software application from M/s GNSA, Infotech, Chennai

which has been integrated in the Bank''s server. The trades of all Designated and Connected persons ("Insiders") are monitored on a continuous basis.

Further, in order to exercise additional vigil on the trades conducted by all Insiders, the PAN of all the Insiders are linked in the database of RTA and thereby the RTA furnishes a weekly report to the Bank on trades conducted by the Insiders. The violations, if any, are reported to the Audit Committee and the Board.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK AND SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS

There are no material changes and commitments affecting the financial position of the Bank which occurred between the end of the financial year of the Bank i.e., March 31, 2023 and the date of Directors Report i.e., June 26, 2023.

During the year under review, no significant and material orders have been passed by the Regulators except the Reserve Bank of India, which as per its final Report on Risk Assessment for the period March 2022 has inter-alia reported divergence in additional gross NPA amounting to ''259 Crores. As per such Report the Bank had to make an additional provisioning towards Bad & Doubtful debts to the tune of ''40 Crores. The Bank had complied with the directions of RBI.

POLICIES

Directors Appointment(s) and Remuneration / Compensation Policy

The Bank has formulated and adopted a policy on Board Diversity as per which the Nomination Committee of the Board of Directors of the Bank conducts the preliminary assessment for appointment of Directors on the Board of the Bank and makes suitable recommendations to the Board for its consideration.

Act, 1949 and also RBI guidelines. The Nomination Committee makes a thorough scrutiny of the prospective candidate and certifies the fit and proper status to the Board after exercising above due diligence process.

Apart from the above, the Nomination Committee while appointment of an Independent Director also considers the Declaration on Independence furnished by the proposed candidate for the position of Director u/s 149 (6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Further, the Bank has a Compensation Policy which is in accordance with the directives issued by the Reserve Bank of India. The Bank has constituted a Compensation & Remuneration Committee which oversees the framing, implementation and review of the Compensation Policy of the Bank. The Remuneration Policy of the Bank is briefed under Corporate Governance Report forming part of Annual Report.

RISK MANAGEMENT POLICY

The Bank has in place an Integrated Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other risks. The details on the Risk Management framework of the Bank is detailed in the Management Discussion and Analysis section appended to this Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Bank has prepared the Business Responsibility and Sustainability Report setting out the Bank''s Social, Environmental and Governance aspects. The same is furnished as a separate report forming part of this Annual Report.

DEPOSITS UNDER CHAPTER V OF COMPANIES ACT, 2013

Being a Banking company, the disclosures as required pursuant to Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014 read with Section 73 & 74 of the Companies Act, 2013 are not applicable to your Bank.

INTERNAL FINANCIAL CONTROLS SYSTEMS & ADEQUACY

The Bank has put in place adequate internal financial controls commensurate with the size and scale of operations. The Bank has, in all material aspects, adequate Internal Control systems over financial reporting and these controls have been taken into consideration, the essential components of internal control stated in the guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Such Internal Financial Controls over Financial Reporting were operating effectively as at the end of the financial year. More details have been set out in Management Discussion and Analysis Report which forms part of this report.

RELATED PARTY TRANSACTIONS

The Board of Directors of the Bank has adopted a policy on Related Party transactions which is in line with the Companies Act, 2013 and SEBI Listing Regulations, 2015. During the reporting year, no contracts or arrangements were made by the Bank attracting the provisions of Section 188 of the Companies Act, 2013 or SEBI Listing Regulations. A detailed policy on the Related Party Transaction is available at the Bank''s website. Weblink: https://www.cityunionbank.com/filemanager/PDF/RPT-policy-26%20June-2023.pdf

LOANS, GUARANTEES OR INVESTMENTS

The Loans, Guarantees or Investments made in securities by the Bank are exempt pursuant to the provisions of section 186 (11) of the Companies Act, 2013 and hence do not attract any disclosure required under section 134 (3)(g) of the Companies Act, 2013.

ANNUAL RETURN u/s 92(3) OF COMPANIES ACT, 2013

The Annual Return pursuant to Section 92(3) of the Companies Act, 2013 is uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/filemanager/PDF/MGT-7_2022.pdf CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended and the related notifications / circulars / guidelines issued by MCA, the Bank has established Corporate Social

Responsibility (CSR) Committee. The Bank has established CUB Foundation, a non-profit entity to identify suitable deserving projects, recommend and oversee the CSR initiatives of the Bank.

The Annual Return on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 is furnished under Annexure III to this report.

DISCLOSURE TO BE MADE UNDER SECTION 177(8) OF COMPANIES ACT, 2013

The Board of the Bank had constituted the Audit Committee under the extant guidelines of Reserve Bank of India (RBI), provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of the composition of the Audit Committee are furnished in the Corporate Governance Report which forms part of this Report.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of Corporate Governance and it also adheres to the Corporate Governance requirements set by the Regulators / applicable laws. The Corporate Governance practices followed by the Bank aim to ensure value creation for all its stakeholders through ethical decision making and maintaining transparency.

A detailed report on Corporate Governance standards followed by the Bank as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 and Rules made there under alongwith Certificate of Compliance from the Statutory Auditors are furnished separately which forms part of this report.

MANAGEMENT DISCUSSION & ANALYSIS

A detailed Management Discussion and Analysis Report for the year under review as stipulated in SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 is presented as a separate section forming part of this Report.

OTHER DISCLOSURESConservation of Energy and Technology Absorption

In respect of the nature of activities carried out by the Bank, w.r.t. the provisions of Section 134 (m) of the

Companies Act, 2013 relating to conservation of energy and technology absorption, the Bank has taken every effort to conserve energy. The Bank has been installing energy efficient equipments at all its branches including installation of Solar panels wherever feasible and power saving LED bulbs at majority of Branches and Central Office. The members may refer the Business Responsibility and Sustainability Report for more details on this aspect.

On the technological front, the Bank continued to offer reliable and secure banking service to its customers by facilitating the latest customer friendly technological solutions. A separate para on Technology matters has been set out elsewhere in this report.

Foreign Exchange Earnings and Outgo

The Bank continues to encourage country''s export promotion by lending to exporters and offering them forex transaction facilities.

EMPLOYEES / OTHER DISCLOSURESDisclosures under Section 197 of the Companies Act, 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure IV.

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure V.

Disclosure under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank is keen in maintaining and upholding the dignity of each and every woman at the work place. The Bank has a policy on Prevention of Sexual Harassment at workplace which provides for adequate safeguards and protection for women at the work place in the organization. The Bank has complied with the requirement of constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013.

Whistle Blower / Vigil Mechanism

Pursuant to the provisions of Section 177(9) and (10) of the Companies Act 2013, a vigil mechanism for Directors and employees to report genuine concerns has been established. The Bank has a policy on whistle blower / vigil mechanism which is uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/assets/frontend/pdf/others/Whistleblower-Policy.pdf

There exists an online forum for all employees in the intranet server of the Bank to report genuine concerns under the mechanism. No application / compliant was received in this regard during FY 2022-2023.

All employees and Directors have access to the Chairman of the Audit Committee under extraordinary circumstances.

Compliance with Secretarial Standards and applicable laws

It is hereby confirmed that the Bank has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India (SS-1 and SS-2) relating to Meetings of the Board, its Committees and Shareholders. Further proper systems are in place to ensure compliance of all laws applicable to the Bank.

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all its Customers and Stakeholders and wish to place on record its sincere appreciation for the assistance and co-operation received from the Reserve Bank of India, SEBI, IRDAI, NABARD, NHB, SIDBI, EXIM BANK, ECGC, DICGC, NPCI, Stock Exchanges, Depositories, Integrated Registry Management Services Private Limited, Life Insurance Corporation of India and all other authorities.

Your Directors also place on record their deep sense of appreciation for the committed services rendered by the Bank''s Executives, members of the Staff and all other employees.

This is an advanced technology by embedding chip into the wearable to make payments. Contactless card can be tapped at the merchant PoS devices and transactions upto '' 5,000 can be performed without entering PIN.

Bank is regularly conducting Readiness Assessment among employees to detect and respond for a cyberincident.

Mar 31, 2022

ECONOMY OVERVIEW

In the beginning of the year 2022, as the World was emerging out of the pandemic which had ravaged the globe for the past two years, the global economy was once again exposed to turbulence with the emergence of the war in Europe, followed by sanctions on Russia by the Western Allies, and escalating geopolitical tensions. This has crippled the financial architecture with the Russian banks not participating in International Payment and Settlement systems as the fear of de-globalization looms large with various protectionist trade barriers. The expected positive benefits from the declining Omicron wave has been offset by the sharp escalation in geo political tensions. Global commodity and financial markets have been rattled on account of geopolitical tensions which includes the prices of crude oil, Gold, global food, etc. The Equity markets have seen sharp corrections since January 2022 amidst the global tensions with the market volatility index rising to one year high. The resurgence of the Covid-19 pandemic in some major economies such as China and Korea in March 2022, followed by the associated lockdowns severely impacted their domestic manufacturing leading to shortage of essential components in the global markets. The emergence of Russia Ukraine war in early March 2022 further dented the global trade.

In India, the real GDP rose by 8.9% in FY 2021-22 as per estimates revised by the National Statistical Office (NSO). During 2021-22, weakness in economic activity resurfaced in Q3 and aggravated further due to the emergence of the Omicron variant in January 2022. There was a gradual turnaround in February and March 2022 with an increase in urban demand for domestic air traffic due to ease in restrictions. Several high frequency service sector parameters viz; railway freight, GST Collections, toll collections, electricity & fuel consumption and capital goods imports showed a robust year-on-year expansion in February - March 2022. Merchandise exports remained buoyant and clocked double digit growth in March 2022. The Food grains production touched a new record in 2021-22. Capacity utilization in the manufacturing sector recovered to 72.4 percent in Q3 2021-22. Our country''s foreign exchange reserves increased by US$30.3 billion to US$607.3 billion in 2021-22. The ongoing Russian-Ukraine war has increased the prices of International crude oil due to which our currency has also slumped over 5% this year. India''s rupee is likely to stabilize at around 79-80 against the US dollar in the near term. Taking all these factors into consideration the real GDP growth for FY 2022-23 is projected at 7.2% with Q1 at 16.25%, Q2 at 6.2%, Q3 at 4.1% and Q4 at 4.0%.

BANK''S PERFORMANCE

Under the above circumstances, the Bank recorded a total business of '' 88,846 crores, an increase of 9% over the previous year figure of '' 81,558 crores in FY 2021. The Net Profit of the Bank has increased to '' 760 crores from '' 593 crores. The Net Interest Income of the Bank stood at '' 1,916 crores, a 5% increase over FY 2021 position.

The key performance indicators i.e., the Return on Assets of the Bank stood at 1.35%, Return on Equity stood at 12.31%, the Net Interest Margin of the Bank stood at 3.98% and the Cost to Income ratio stood at 40.37% during the reporting year. The financial performance has been discussed in detail in the forthcoming paragraphs. During the year the Bank opened 25 additional branches to total 727 branches and has 1,732 ATM''s as at

31^st March 2022. On the digital front, the Bank had introduced debit card embedded smart watch and key chain - first time in India. It also continued to upgrade and strengthen its Information Technology framework to ensure smooth and secure customer friendly Banking. Further information on the state of affairs of the Bank has been discussed in detail in the Management Discussion a nd Analysis Report forming part of this Report.

Financial Highlights			(''in crore)
Particulars	2021-22	2020-21	Growth (%)
Share Capital	74	74	-
Reserves & Surplus	6,512	5,769	13%
Deposits	47,690	44,537	7%
Advances (Gross)	41,156	37,021	11%
Investments (Gross)	12,294	9,523	29%
Total Assets / Liabilities	61,531	53,312	15%
Total Income	4,864	4,823	1%
Total Expenses	3,269	3,356	-
Net Interest Income	1,916	1,830	5%
Operating Profit	1,595	1,468	9%
Provisions & Contingencies	835	815	-
Net Profit (A)	760	593	28%
Appropriations
Balance of Profit brought forward (B)	61	58	-
Amount available for appropriations (A B)	821	651	-
Transfers to:
- Statutory Reserve	200	150	-
- Capital Reserve	4	105	-
- General Reserve	405	220	-
- Investment Reserve Account	1	0	-
- Special Reserve under IT Act, 1961	75	70	-
- Dividend	37	45	-
- Balance of Profit carried forward	99	61	-
Total	821	651	-

The Deposits and Advances for the current year stood at '' 47,690 crores and '' 41,156 crores respectively. The total business stood at '' 88,846 crores as compared to '' 81,558 crores for the previous year registering a growth of 9%.

The size of the Balance Sheet as on 31st March, 2022 is '' 61,531 crores as compared to '' 53,312 crores last year recording an increase of 15%.

PROFIT

During the year the Bank earned a Gross profit of ''1,595 crores as compared to previous year''s figure of ''1,468 crores registering an increase of 9%. The Net profit of the Bank for the current year was ''760 crores as against '' 593 crores last year.

NET INTEREST INCOME

The Net Interest Income for FY 2022 stood at ''1,916 crores as compared to ''1,830 crores in the last year recording an increase of 5%.

DEPOSITS

The Bank''s total Deposits for the year under review increased by ''3,153 crores to record ''47,690 crores from ''44,537 crores registering a growth of 7% over previous year. During the current year CASA increased by ''2,548 crores to record ''15,529 crores from ''12,981 crores depicting a growth of 20%. The cost of deposit of the Bank decreased to 4.68% from 5.36% in the previous year.

TOTAL INCOME

The Total Income earned by the Bank marginally increased for FY 2022 to record '' 4,864 crores as against '' 4,823 crores in FY 2021. The non-interest income of the Bank increased from '' 689 crores to '' 759 crores registering a growth of 10% on account of recoveries made from NPA. The total expenditure of the Bank decreased by 3% to record '' 3,269 crores as compared to '' 3,356 crores, in the previous year due to decrease in cost of deposits.

ADVANCES

Gross Advances of the Bank increased by '' 4,135 crores to '' 41,156 crores from '' 37,021 crores, posting a growth of 11%. The yield on advances declined to 9.36% from 9.91% during the reporting year. The decline in yield is due to reduction in rate of interest given to many borrowers on account of stiff competition and increase in Jewel loan & ECLGS portfolio which comprises of lower ROI. For FY 2022, the Bank achieved the target / subtargets prescribed by the RBI for Priority sector, Agriculture, Micro Enterprises, Small / Marginal farmers and weaker section.

The Gross NPA and Net NPA for the year under review stood at 4.70% and 2.95% respectively as compared to 5.11% and 2.97% in the previous year.

The provision for tax for the reporting year increased to '' 225 crores from '' 100 crores in previous year. The provision made for NPA for the financial year was '' 554 crores vis-a-vis '' 599 crores last year. The total provision decreased by '' 40 crores to '' 835 crores from '' 875 crores in the previous year.

TREASURY OPERATIONS

Domestic Treasury

The gross Investment increased by ''2,771 crores to ''12,294 crores as on 31^st March 2022 from ''9,523 as on 31^st March 2021. Out of this, the investments in Government bonds alone remained at ''12,137 crores constituting 98.72% of the total investment. The Non-SLR investments declined by ''33 crores mainly on account of reduction in Security Receipts. In first half of financial year, yields were range bound as Regulator kept the system in surplus liquidity and through conducting Government Securities acquisition programme. In the second half, the withdrawal of Government Securities Acquisition programme ("G-SAP") and subsequent high borrowing projected in FY2023, led the yields to spike. Towards the end of financial year global uncertainties clouded the market with high inflation and commodities prices started to drag the global growth. During the year, the Bank utilized the volatile yield movements and through timely sale of securities, booked a profit to the tune of ''62.10 crores.

Forex Treasury

During the financial year 2021-22, Indian Rupee weakened against USD by 3.21%. Indian rupee against USD opened at ''73.42 and closed at ''75.78. Major reasons

attributed for weaker rupee were hawkish fed amid rising inflation, persistent surge in crude oil price, rising bond yields and weak risk appetite. During the fourth quarter of the FY 2021-22, outbreak of the war between Ukraine and Russia impacted the local currency and favoured US dollar. The intervention of the RBI at timely intervals through its monetary policy reduced the pace of depreciation of the rupee. During the FY 2021-22, profit on our foreign exchange operation stood at ''194.74 crores as against ''91.91 crores during the previous financial year

NET WORTH & CAPITAL ADEQUACY RATIO Net Worth

The paid-up Share Capital of the Bank increased to '' 73.96 crores as on 31^st March, 2022 from '' 73.88 crores as on 31^stMarch, 2021. During the reporting period the Bank has allotted 7,62,802 equity Shares to employees under Employee Stock Options pursuant to CUB ESOS Scheme 2008 & CUB ESOS Scheme 2017.

The Net worth of the Bank stands improved to '' 6,549.75 crores as on 31^st March, 2022 from '' 5,798.85 crores as on 31^stMarch, 2021.

Capital Adequacy Ratio

As per Basel III regulations, banks are required to maintain a minimum Pillar 1 Capital (Tier I Tier II) to Risk Weighted Assets Ratio (CRAR) of 9% on an ongoing basis. Besides this minimum capital requirement, Basel III also required creation of capital conservation buffer and countercyclical buffer of 2.50% at the end of March 2018 in a phased manner beginning from 31^st March, 2015 @ 0.625% in each year up to 31^st March, 2018. The RBI had issued circulars on various dates extending the transitional period for full implementation of Basel III Capital Regulations due to the unfavorable economic situation and also due to the continuing stress on account of COVID-19 crisis. Now the minimum regulatory requirement under Basel III with Capital Conservation Buffer (CCB) is 11.50% (9.00% 2.50%) with effect from 01.10.2021. The CRAR required to be maintained for the period ended 31.03.2022 is 11.50 %. The Bank has maintained Tier I CRAR of 19.78% and total CRAR of 20.85% as at 31^st March, 2022 which are well above the norms prescribed by the RBI.

DIVIDEND

The Board of the Bank at its meeting held on 27^th May, 2022 had recommended Dividend of 100% (i.e ^ 1/- per equity share on face value of ^ 1/- each fully paid up) for the year ended 31^st March, 2022 subject to the approval of shareholders at the ensuing Annual General Meeting ("AGM"). The dividend, if any, declared at the AGM will be paid to the shareholders as on the record date specified for such purpose, within the prescribed time. The dividend payout for FY 2022 is in accordance with the Dividend Distribution Policy ("the policy") of the Bank framed in terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same has been uploaded in the website of the Bank. Weblink:

https://www.cityunionbank.com/downloads/DividendDistributionPolicy.pdf

In case any shareholder has not claimed dividend(s) for previous year(s), they may kindly approach the Bank or its Registrar and Transfer Agents ("RTA").

BRANCH EXPANSION

Our Bank did not go for any aggressive branch expansion during the year and it added only 25 branches to total 727 as on 31^st March, 2022. The total number of ATMs stood at 1,732 (includes 789 Bulk Note Recycler Machines (BRM) which performs the job of accepting and dispensing cash). As on 31^st March, 2022 the Bank had a total of 1,110 onsite ATMs 622 offsite ATMs.

During the reporting year, the Bank has replaced old BRM machines with new ones and closed loss making off site ATMs, the details of which are as follows:

Particulars	ATM	BRM	Total
Opened	55	72	137
Closed	70	49	119

As for the branch spread, as on date, 89% of branches are operational in South, 6% in West, 4% in North and 1% in Eastern parts of India.

FINANCIAL INCLUSION

Financial Inclusion is a concept where the banking financial solution and services are offered to every individual without any forms of discrimination as well as to ensure even the under privileged get easy access to

banking channels. The objectives of financial inclusion are to provide the following:

â¢ Basic savings bank deposit accounts

â¢ Servicing products (including investment and pension)

â¢ Simple credit products and overdrafts linked with no frills account

â¢ Remittance and money transfer facilities

â¢ Pension and Insurance products

Your bank has witnessed tremendous progress in the successful implementation of financial inclusion, especially to the citizens in rural areas. The Bank has already implemented Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme and there are 85,477 accounts as on March 2022. The Bank has 3,75,425 Basic Savings Bank Deposit accounts, including 1,07,859 accounts sourced through Business Correspondents (BCs). To cater to the needs of customers of unbanked areas, the bank has established BC Outlets in those places and is providing all banking services through Business Correspondents (BCs). Your bank has 131 BCs and 6 BC outlets for rendering services to the village level beneficiaries. The Business Correspondents of the bank make regular visits to the villages and provides doorstep banking services.

Your Bank is very much keen in creating awareness on Financial Inclusion and also on the promotion of Government schemes for social welfare, Pension, Insurance viz Atal Pension Yojana (APY), MUDRA, PMJJBY, PMSBY etc., The bank has 41,292 APY accounts, 69,521 PMJJBY accounts and 1,12,306 PMSBY accounts under the schemes.

Your Bank has got eKYC facility and Aadhaar enabled Payment System (AePS), for rendering quick services to the rural public. Besides, the bank has deployed POS machines, at various locations, which are very much helpful for doing merchant transactions. The bank has continuously ensured uninterrupted Banking services in the unbanked areas with the help of digital banking services. Your bank is proud of extending contribution to the social welfare schemes of the Government, for our Nation building.

customers. As per the objectives of the National Strategy for Financial Education 2020-2025, focus of the Bank will be on the following three topics with a view to promote digital transactions in a more secured manner:

â¢ Convenience of digital transactions

â¢ Security of digital transaction

â¢ Protection of customers

Your Bank has conducted campaigns at various places for observing the Financial Literacy Week in an effective manner and to educate its customers properly.

HUMAN RESOURCE DEVELOPMENT

Human Resource Development and Industrial atmosphere plays a prominent role in an organization''s growth and your Bank has always maintained cordial relations among its employees at all times. As a part of HR strategy, the Bank offers its employees various monetary and nonmonetary benefits based on their performance in the form of ESOP, Performance Linked Pay (PLP) & Ex-gratia and ensures that each employee feels part of the Bank and strives to deliver to the best of his abilities.

During the year, Human Resource function played a pivotal role to provide a cordial safe work atmosphere to all employees by implementing the COVID guidelines issued by health ministry and state guidelines on staff strength at workplace. Further, awareness is being created on regular basis with regard to precautions and safety measures to be adopted by employees while on and off the work place.

In line with the Bank''s expansion plans, 25 new branches were opened in various states for which the Human Resources Department provided adequate manpower. Specific efforts were made towards talent acquisition, skill development, and manpower training. Employees are identified and imparted trainings at various areas of banking. Job rotation is being followed to ensure every employee gains experience in all the areas of banking.

has not even been a single occasion of employee unrest in the Banking history of CUB. Continuous efforts are being made to enhance the quality and efficiency of existing personnel.

As on 31^st March, 2022, the Bank has 5,367 on-roll employees, comprising of 59 employees in Executive cadre, 2,271 in Management cadre and 3,037 in Workmen cadre.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank has implemented Employee Stock Option Scheme ''CUB ESOS 2008'' for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on 26^th April, 2008 at an Extra Ordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme, exercise price of the options shall be decided by the Compensation & Remuneration Committee at the time of grant of stock options. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years and 25% and 30% for fourth and fifth year respectively. The options are offered at prevailing market prices at the time of grant to the employees. However the same shall vary pursuant to corporate action viz., Rights Issue, Bonus Issue etc. There were no material changes in the ESOS of the Bank during the period under review and the same is in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 as amended from time to time ("SEBI SBEB Regulations"). As at the end of 31^st March, 2022, the Bank has granted 4,83,08,740 options and only 16,91,260 options are yet to be granted under the scheme.

In addition, the shareholders of the Bank at its meeting held on 23rd August, 2017 approved new CUB ESOS Scheme 2017 for 3,00,00,000 options on terms and conditions similar to previous one. During the reporting year 5,12,800 stock options were granted to the eligible employees under CUB ESOS Scheme 2017. As on

31^st March, 2022, the Bank has granted 39,74,800 options (including 34,62,000 options granted during previous year) and 2,60,25,200 options are yet to be granted under the scheme.

Banking service now-a-days has moved from branch banking to palm of customer to do banking on their convenience and comfort. With the advancement of information technology and availability of easy access of network through mobile phones, there has been a surge in the use of digital payments in the economy which is encouraging cashless transactions. Thus digital banking has become the order of the day.

Banking services through digital banking has embraced major section of the public across the globe which gained momentum since the beginning of the pandemic.

â¢ The bank as on 31st March 2022 had 727 branches and 1,732 ATMs (includes 789 Bulk Note Recycler Machine).

â¢ Bank also deployed 610 passbook kiosk and 589 cheque deposit kiosk across its branches.

â¢ The bank has also been spreading its Self Service Bank branches (e-Lounge) and enabling our ATMs / BRMs for cardless deposit and withdrawals, self-service kiosk for passbook and cheque deposit machine.

â¢ Bank has made its presence in Social Media Banking through WhatsApp, Facebook, Twitter and YouT ube.

System (BBPS), Bharat QR - Scan & Pay in BHIM / UPI, ASBA and Aadhaar Enabled Payment System (AEPS).

â¢ Bank is utilising V-CIP (VKYC) for customer on-boarding and account opening across India

â¢ FASTag facility to make payments at Vehicle Toll Plazas

â¢ A customer friendly Contact Centre (Call Centre) with Interactive Voice Response System (IVRS), is put in place to promote customer support on Multi-language on 24x7 basis.

â¢ Bank has PCI DSS certification for the digital card environment

Wearable Keychain and CUBFit Watch

â¢ In order to make payment on the go, your bank has introduced its payment mode to their customers through wearables. To begin with, CUB has made tie up with RuPay to make the "tap and go" payments through a key chain and CUBFit watch.

â¢ This is an advanced technology by embedding chip into the wearables to make payments. Contactless card can be tapped at the merchant PoS devices and transactions upto ''5,000/- can be performed without entering PIN.

CUB UPI123 Pay

â¢ In the series of its innovation, your bank has now introduced UPI Payment solution for feature phones -''CUB UPI 123PAY''. Customers of any bank can now perform UPI transactions using feature phone / smart phone through CUB BHIM Voice IVR by calling 08045163581.

â¢ The feature phone solution is expected to help in offering payment services to the unserved and underserved segment of the population.

â¢ The Bank''s Customers can get more details from the Bank''s website. (Weblink: https://www.cityunionbank.com/upi-123pay)

Enhanced UI of CUB BHIM UPI application

â¢ We have enhanced our CUB BHIM UPI Application with added features like Pay to contact, Self Pay etc.

Apply Card Online

â¢ Introduced the facility to apply debit card online through net banking and mobile banking without

visiting branch. Customers can apply for a fresh card or for a replacement card against their lost /blocked card. Card status can also be tracked online.

Easy Buy

â¢ In an enrichment to our CUB All in one Mobile app, the Bank has now integrated ''Easy Buy'', a shopping platform in the mobile app comprising marketplace modules like Flipkart, Bigbazaar, Myntra, Netmeds, etc. ''EasyBuy'' is built to meet shopping needs of the consumers and to use a single app for all their online shopping needs instead of downloading multiple apps for specific purpose.

RuPay Credit Card

â¢ The Bank has acquired BIN (Bank Identification Number) from RuPay for issuance of secured RuPay Discover Credit Card which can be used internationally with features like lounge access, insurance coverage upto '' 2 Lakhs and other applicable offers issued by RuPay.

Cyber Security Measures

As the convenience in doing banking transactions through digital channels increases, the risks in cyber environment also increase. New types of cyber frauds are emerging with the introduction of new digital channels. As the Bankers are the custodians of Depositors'' money, the bank takes utmost care to ensure the implementation of necessary security measures to protect public interest and necessary mitigation measures.

â¢ The Bank has implemented latest technology tools to cover the protection, detection and response for all cyber security threats and risks.

â¢ The Bank has established a 24*7 Security Operation Centre (SOC). The SOC takes steps to prevent the attempts from the IOC (Indicators of Compromise) and IOA (Indicators of Attack).

â¢ The Bank participates in the cyber drills conducted by IDRBT to enhance our threat detection and prevention capabilities.

â¢ The Bank provides training on information security and cyber security to the concerned employees of the bank.

â¢ The Bank conducts Readiness Assessment among

employees to detect and respond for a cyber-incident. OTHER BUSINESS ACTIVITY

During FY 2019, the Bank started the marketing and distribution of Health Insurance and Mutual Fund products in tie up with following organizations, to offer additional services to all its stakeholders.

â¢ Star Health and Allied Insurance Co. Ltd., for distribution of Health Insurance products.

â¢ Integrated Enterprises India Ltd., for distribution of Mutual Fund products through online platform to our customers in Demat form and through branch network.

â¢ BSE Star Mutual Fund to offer Mutual Fund products through web based platform and through branch network.

â¢ Finwizard Technology Pvt. Ltd. (widely known as FISDOM) to offer Mobile based Mutual Fund Investment solution.

The above services are fully functional. During the reporting year the Bank has earned an income of '' 21.03 crores as against '' 16.49 crores in the previous year from Bancassurance income.

Further, taking benefit of the revised the IRDAIâs guidelines on "Open Architecture Policy on Insurance Distribution", for augmenting the Bankâs Non-Interest income, it is proposed by the Board on this report date that the Bank would be signing agreements as Corporate Agent in Life Insurance, General Insurance and Health Insurance business for marketing / distribution of their products through the Branch network of the Bank, the details of which is set out below:

Life Insurance

Tata AIA Life Insurance Company Bajaj Allianz Life Insurance Company

General Insurance

Shriram General Insurance Company Royal Sundaram General Insurance Company

Health Insurance

Care Health Insurance Company

Aditya Birla Health Insurance Company

SUBSIDIARIES AND ASSOCIATES

Your Bank does not have any Subsidiaries or Associates to report during the year under this report.

BOARD MEETING

The Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the year under review 12 (twelve) meetings were held. The details of such meetings along with the constitution of the Board and its committees are given under report on Corporate Governance forming part of this report.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Retirement(s)

Shri. R. Mohan (DIN : 06902614)

Shri. R. Mohan, Part-Time Chairman of the Bank has completed his tenure on 03rd May, 2022 as per his appointment terms approved by RBI vide its letter no.

DBR.APPT.NO.8631 /08.42.001/2018-19 dt.10th April 2019. Further, as per the provisions of Section 10A(2A)(i) of the Banking Regulation Act, 1949, Shri. R Mohan, has vacated his office of Director as Independent Director on the close of business hours of 27th June, 2022 on account of completion of tenure (8 years).

The Board hereby places on record its warm appreciation over the excellent services rendered by Shri. R Mohan during his tenure.

Appointment / Re-appointment

Shri. M. Narayanan (DIN 00682297)

Pursuant to the provisions of Section 35B and Section 10B (1A) of the Banking Regulation Act, 1949, Shri. M. Narayanan, Independent Director, has been appointed as the Part-Time Chairman of the Bank for a period of two (2) years w.e.f 04th May 2022. After the retirement of Shri R. Mohan, the Reserve Bank of India has accorded its approval in this regard vide its letter no. DOR.GOV. No.S663/08.42.001/2022-23 dated 04th May, 2022.

Shri. M Narayanan, aged 63 years is a graduate in Mathematics (B.Sc) from Loyola College, Chennai and is a qualified Chartered Accountant ("CA") , Cost Accountant

and System Auditor (DISA). Presently he is practicing as a Chartered Accountant since 2003, handling Taxation, providing virtual CFO and Management Consultancy services to MSME companies, undertaking Internal Audit of corporates in all segments (MSME to Large). Prior to taking up CA Practice, he served in Industry for over 20 years in companies of repute like BHEL, Dalmia Cements, Fenner, RAMCO Cements and Dishnet whereat he has handled Finance, Accounts & Taxation at various levels up to CFO. Recently, he had completed the certification programme in IT & Cyber security for Board members conducted by Institute for Development and Research in Banking technology (IDRBT), Hyderabad. Shri. M Narayanan hails from an Agricultural family and he has been actively involved in Agriculture for over 30 years.

The Board recommends his appointment as the Part-Time Chairman of the Bank for approval by shareholders in the Notice calling this Annual General Meeting. The relevant details of Shri. M. Narayanan pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended and Secretarial Standard - 2 is disclosed separately in such Notice.

Professor Veezhinathan Kamakoti (DIN 03537382)

Prof. V Kamakoti was co-opted as Additional Director on the Board of the Bank w.e.f 27th May, 2022 to hold office till the ensuing Annual General Meeting of the Bank.

Prof. V Kamakoti, B.E., M.S., Ph.D, aged 53 years is the Director of IIT Madras. He has special knowledge in secured system engineering & security in information technology. Being a professor in Computer Science he will add more value to the Bank on improvement and development in technology front. Further he has done a project titled "Re-generative Agriculture Stack Architecture (RASA)" executed by IIT Madras. Earlier he was on the Board of the Bank from 27th April, 2011 to 26th April, 2019. Pursuant to RBI circular no.DOR.GOV.REC.8/29.67.001/2021-22 dated 26th April, 2021, he has been co-opted for a second term on completion of the mandatory cooling period. He is quite a knowledgeable person whose contribution in the first term was very useful to the Bank, especially in the area of Information Technology and cyber security.

In the opinion of the Board, Prof. V Kamakoti, can effectively participate and represent in the Board of the Bank. The Board recommends his appointment as an Independent Director on the Board of the Bank (not liable to retire by rotation) for approval by shareholders in the

Notice calling the ensuing Annual General Meeting. The relevant details of Prof. V Kamakoti pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard - 2 is disclosed separately in such Notice.

Shri. Gurumoorthy Mahalingam (DIN 09660723)

Shri. G Mahalingam was co-opted as an Additional Director on the Board of the Bank w.e.f 06th July, 2022 to hold office till the ensuing Annual General Meeting.

Shri. G. Mahalingam, M.Sc. (Stat.), MBA., CAIIB., aged 65 years is a career Regulator in the Financial Sector having worked for 34 years in RBI holding the position of Executive Director at the time of retirement and 5 years in Securities and Exchange Board of India ("SEBI"). He holds a Masters degree in Statistics and Operations Research from IIT Kanpur and MBA in International Banking from the UK. Shri. Mahalingam has extensive experience in Banking Regulation and Supervision as also in market regulation and operations. His stint with SEBI as a Member of the Board paved the way for his dealing with Mutual funds, FPIs, Listed companies and securities law enforcement. As a quasi judicial member, he has passed more than 500 orders during his tenure in SEBI dealing with a variety of subjects in capital markets.

The appointment of Shri. G Mahalingam, a person who has served in two important regulatory institutions at a senior position and who has an indisputably wholesome experience in financial sector, would be most beneficial to the Bank particularly in Regulatory matters, Finance, Forex & Treasury etc.

The Board recommends his appointment as an Independent Director on the Board of the Bank (not liable to retire by rotation) for approval by shareholders in the Notice calling the ensuing Annual General Meeting. The relevant details of Shri. G Mahalingam pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended and Secretarial Standard -2 are disclosed separately in such Notice.

Shri. Narayanan Subramaniam (DIN : 00166621)

Shri. Narayanan Subramaniam currently an Independent Director on the Board of the Bank was co-opted as an Additional Director w.e.f. 20th June, 2017, which was duly approved by the shareholders in their meeting held on 23rd August, 2017. His current term is due to expire on 22nd August, 2022.

In accordance with the provisions of Section 149(10) of the Companies Act, 2013, an Independent Director can hold office for a maximum term of upto five (5) consecutive years on the Board of the company and shall be eligible for re-appointment for another term of five years subject to passing of Special Resolution by the members and disclosure of such appointment on Board''s Report. Further, in respect of Banking Companies, the provisions of section 10A(2) of the Banking Regulation Act, 1949 (''Banking Act'') specify that the overall tenure of non-executive Directors should not exceed a period of eight (8) consecutive years.

Keeping in view the provisions of both the Companies Act, 2013 and the Banking Regulation Act, 1949 and pursuant to the recommendations of the Nomination Committee, the Board of Directors of the Bank at its meeting held on 06th July, 2022 considered and approved a proposal to reappoint Shri. Narayanan Subramaniam as Independent Director on the Board of the Bank w.e.f., 23rd August, 2022 for the remaining period up to 19th June, 2025 as permitted under the Banking Regulation Act, 1949 from the date of his first appointment in the Bank subject to the approval of Shareholders by means of Special Resolution at the ensuing Annual General Meeting of the Bank.

Accordingly, the Board recommends the re-appointment of Shri. Narayanan Subramaniam for a second term as an Independent Director on the Board of the Bank (not liable to retire by rotation) for approval by shareholders in the Notice calling the ensuing Annual General Meeting. The relevant details of Shri. Narayanan Subramaniam pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended and Secretarial Standard - 2 are disclosed separately in such Notice.

Directors to retire by Rotation - All directors on the Board except the Managing Director and CEO of the Bank are Independent Directors. Hence the provisions of Section 152(6) of Companies Act, 2013 relating to retirement of directors by rotation do not apply considering the present composition of the Board of Directors. Independent Directors are not required to retire in terms of Section 149(13) of the said Act. Accordingly no Director including MD & CEO is required to retire by rotation at the ensuing Annual General Meeting.

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors under Section 149(6), 149(7) of the Companies Act, 2013, notifications issued by the

Ministry of Corporate Affairs and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board is satisfied that the Independent Directors meet the criteria of independence as stipulated under the aforesaid provisions of the Companies Act, 2013.

Familiarization program for Independent Directors

Performance Evaluation

Key Managerial Personnel

Dr. N. Kamakodi, Managing Director & CEO and Shri. V. Ramesh, Chief Financial Officer & Company Secretary of the Bank, continue to be the "Key Managerial Personnel" of the Bank pursuant to the provisions of Section 2(51) read with Section 203 of the Companies Act, 2013.

AUDITORS

Statutory Central Auditor

M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai and M/s. K Gopal Rao & Co., Chartered Accountants, Chennai were appointed as the

Joint Statutory Central Auditors of the Bank in the previous Annual General Meeting (''AGM'') held on 19th August, 2021. The term of the present Joint Auditors will conclude at the conclusion of the ensuing Annual General Meeting of the Bank and being eligible has offered themselves for re-appointment in line with RBI guideline dated 27th April, 2021. Consent has been received from the present Auditors for their re-appointment and also a confirmation to the effect that they are not disqualified to be appointed as Statutory Central Auditors of the Bank in terms of Companies Act, 2013 & the rules made there under. An application was made to the Reserve Bank of India seeking its approval for the appointment of M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai and M/s. K Gopal Rao & Co., Chartered Accountants, Chennai to act as Joint Statutory Central Auditors for the FY 2022-23. Based on the above, RBI vide its letter no. ARG. No.S1077/08.13.005/2022-23 dated 3rd June, 2022 has given its approval for their appointment for FY 2022-23. Members are requested to consider and approve their appointment as the Joint Statutory Central Auditors of the Bank for FY 2022-23.

The Statutory Central Auditors have furnished their Report for FY 2022 which forms part of this report and there are no qualifications, reservations or adverse remarks made by the Auditors in their report. Further, the Auditors of the Bank has not reported any fraud under section 143(12) of the Companies Act, 2013.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank has appointed M/s. B. K. Sundaram & Associates, Practising Company Secretaries, Tiruchirapalli as Secretarial Auditor to conduct the Secretarial Audit of the Bank for the Financial Year 2021-2022. The report of Secretarial Auditor ''Secretarial Audit Report'' in the prescribed format is annexed to this report as Annexure II.

Pursuant to Regulations 24A of SEBI Listing Regulations 2015, read with relevant SEBI circular the Bank has obtained Secretarial Compliance Report certified by such auditor for the financial year ended 31^st March, 2022, on compliance of all applicable SEBI regulations and circulars / guidelines issued thereunder and the copy of the same was submitted with the stock exchanges.

There are no observations, reservations or adverse remarks made by the Secretarial Auditor in their report

except they have recorded a fact as to the levy of penalty of Rs.1 crores by RBI on account of non-compliance of its direction relating to waiver of margin / security requirements.

CostAudit

The requirement of maintaining cost records u/s 148(1) of the Companies Act 2013 is not applicable to the Bank.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors of the Bank hereby declares and confirms that :-

i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Bank as at the end of the financial year and of the Profit & Loss of the Bank for that period.iii) The Directors have taken 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.

iv) The Directors have prepared the annual accounts on a going concern basis.

v) The Directors have laid down adequate internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INSIDER TRADING NORMS

https://www.cityunionbank.com/downloads/InsiderTrading_Mar2020.pdf

The Bank has taken necessary steps with Integrated Registry Management Services Private Limited, for incorporating the PAN in the database to facilitate reporting of trading by designated persons and other connected persons in accordance with SEBI PIT Regulations.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK AND SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS

There are no material changes and commitments affecting the financial position of the Bank which occurred between the end of the financial year of the Bank i.e., 31st March, 2022 and the date of Directors Report i.e., 06 July, 2022.

During the year under review, no significant and material orders have been passed by the Regulators. However, in May, 2021, the Reserve Bank of India has imposed a monetary penalty of Rs.1 crore (Rupees One crore only) for non compliance with certain RBI directions (procedural aspects) relating to obtaining of collaterals in respect of some loans to MSME Sector & Education, and prescribing margin for Agriculture Credit.

POLICIES

Directors Appointment(s) and Remuneration / Compensation Policy

The Nomination Committee identifies and assesses the qualifications and positive attributes of the proposed candidate for the position of Director based on the disclosures / declarations received from such person under the Companies Act, 2013, the Banking Regulation Act, 1949 and also RBI guidelines. The Nomination Committee makes a thorough scrutiny of the prospective candidate and certifies the fit and proper status to the Board after exercising above due diligence process.

RISK MANAGEMENT POLICY

The Bank has in place an Integrated Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other Risks. The details on the Risk Management framework of the Bank is detailed in the Management Discussion and Analysis section appended to this Report.

BUSINESS RESPONSIBILITY REPORT

As per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Bank has prepared the Business Responsibility Report describing the Bank''s social, environmental and governance aspects. The same is set out as a separate report forming part of this Annual report.

DEPOSITS UNDER CHAPTER V OF COMPANIES ACT, 2013

INTERNAL FINANCIAL CONTROLS SYSTEMS & ADEQUACY

control stated in the guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Such Internal Financial Controls over Financial Reporting were operating effectively as at the end of the financial year. More details have been set out in Management Discussion and Analysis Report which forms part of this report.

RELATED PARTY TRANSACTIONS

(weblink: https://www.cityunionbank.com/downloads/documents/CUB_Related_Party_Transaction.pdf)

LOANS, GUARANTEES OR INVESTMENTS

All loans, guarantees or investments made in securities by the Bank are exempt pursuant to the provisions of section 186 (11) of the Companies Act, 2013 and hence do not attract any disclosure required under section 134 (3)(g) of the Companies Act, 2013.

ANNUAL RETURN u/s 92(3) OF COMPANIES ACT, 2013

The Annual Return pursuant to Section 92(3) of the Companies Act, 2013 is uploaded in the website of the Bank.

(Weblink: https://www.cityunionbank.com/downloads/FY%202019-2020.pdf)

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, and the related notifications / circulars / guidelines issued by MCA, the Bank has established Corporate Social Responsibility (CSR) Committee. The Bank has established CUB Foundation, a non-profit entity to identify suitable deserving projects, recommend and oversee the CSR initiatives of the Bank.

The Annual Return on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 is furnished under Annexure III to this report.

DISCLOSURE TO UNDER SECTION 177(8) OF COMPANIES ACT, 2013

The Board of the Bank had constituted the Audit

Committee under the extant guidelines of Reserve Bank of India (RBI), provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of the composition of the Audit Committee are furnished in the Corporate Governance Report which forms part of this report.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance standards followed by the Bank as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 and rules made there under alongwith Certificate of Compliance from the Statutory Auditors are furnished separately which forms part of this report.

MANAGEMENT DISCUSSION & ANALYSIS

OTHER DISCLOSURES

Conservation of Energy and Technology Absorption

In respect of the nature of activities carried out by the Bank, w.r.t. the provisions of Section 134 (m) of the Companies Act, 2013 relating to conservation of energy and technology absorption, the Bank has taken every effort to conserve energy. The Bank has been installing energy efficient equipments at all its branches including installation of Solar panels wherever feasible and power saving LED bulbs at majority of Branches and Central Office.

On the technological front, the Bank continued to offer reliable and secure banking service to its customers by facilitating the latest customer friendly technological solutions.

Foreign Exchange Earnings and Outgo

The Bank continues to encourage country''s export promotion by lending to exporters and offering them forex transaction facilities.

EMPLOYEES / OTHER DISCLOSURES

Disclosures under Section 197 of the Companies Act, 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure IV.

Disclosure under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

There exists an online Grievance redressal forum for women employees in the intranet server of the Bank wherein women employees of the Bank can file their Grievance / complaint under the act. During the reporting period, the ICC received 3 complaints out of which 2 complaints have been duly resolved by the ICC and 1 complaint has been withdrawn by the complainant. As on 31st March, 2022 no complaints are pending.

Whistle Blower / Vigil Mechanism

(weblink: https://www.cityunionbank.com/downloads/Whistleblower%20Policy.pdf)

All employees and Directors have access to the Chairman of the Audit Committee under extraordinary circumstances.

Compliance with Secretarial Standards and applicable laws

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all its Customers and Stakeholders and wish to place on record its sincere appreciation for the assistance and co-operation received from the Reserve Bank of India (RBI), SEBI, IRDAI, NABARD, NHB, SIDBI, EXIM BANK, ECGC, DICGC, NPCI, Stock Exchanges,

Depositories, Integrated Registry Management Services Private Limited, Life Insurance Corporation of India and all other authorities.

Your Directors also place on record their warm appreciation for the committed services rendered by the Bank''s Executives and all other employees.

Mar 31, 2018

Dear Shareholderâs

Financial Highlights (Rs. in crore)

Particulars	2017-18	2016-17	Growth (%)
Share Capital	66	60	10%
Reserves & Surplus	4,097	3,510	17%
Deposits	32,853	30,116	9%
Advances (Gross)	28,239	24,112	17%
Investments (Gross) *	8,015	7,082	13%
Total Assets / Liabilities	39,937	35,271	13%
Total Income	3,935	3,658	8%
Total Expenses	2,727	2,664	2%
Net Interest Income	1,430	1,199	19%
Operating Profit	1,208	994	22%
Provisions & Contingencies	616	491	25%
Net Profit (A)	592	503	18%
Appropriations
Balance of Profit brought forward (B)	33	7	â
Amount available for appropriations (A B)	625	510	â
Transfers to:
- Statutory Reserve	150	130	â
- Capital Reserve	29	27	â
- General Reserve	334	275	â
- Special Reserve under IT Act, 1961	50	45	â
- Dividend & Dividend Tax	** 24	0	â
- Balance of Profit carried forward	38	33	â
Total	625	510	â

* the figures of the previous year have been regrouped / reclassified wherever necessary.

** Paid during FY 2018 pertaining to FY 2017 as per MCA notification on revised AS 4 dated 30^th March, 2016.

The deposits and advances for the current year stood at Rs.32,853 crore and Rs.28,239 crore respectively. The total business stood at Rs.61,092 crore as compared to Rs.54,228 crore for the previous year registering a growth of 13%. The size of the Balance Sheet as on 31^st March, 2018 was Rs.39,937 crore as compared to the previous year position of Rs.35,271 crore recording an increase of 13%.

During the year the Bank earned an operating profit of Rs.1,208 crore registering an increase of 22% as compared to previous yearâs figure of Rs.994 crore. The net profit of the Bank for the current year was Rs.592 crore as against Rs.503 crore for the previous year, registering a growth of 18%.

A total income of Rs.3,935 crore was earned by the Bank as against Rs.3,658 crore in the previous FY 2017 posting a growth of 8%. The total expenditure of the Bank increased by 2% to record Rs.2,727 crore as compared to previous year figure of Rs.2,664 crore. The Net Interest Income for the year under review increased by 19% from Rs.1,199 crore to Rs.1,430 crore. The non-interest income of the Bank increased to Rs.532 crore from Rs.484 crore registering 10% growth.

Your Bank has earned an income of Rs.21.91 crore by way of selling PSLC certificate and expended Rs.5.87 crore towards the purchase of PSL certificate to meet out the short fall in agriculture category. With that your Bank has earned a net income of Rs.16.04 crore. The provision for tax for the year increased to Rs.198 crore from Rs.190 crore. The provision for NPA stood at Rs.303 crore vis-a-vis Rs.252 crore last year. The total provisions increased by Rs.125 crore to Rs.616 crore from Rs.491 crore.

DEPOSITS

The Bankâs total deposits for the year under review increased by Rs.2,737 crore from Rs.30,116 crore to Rs.32,853 crore registering a growth of 9% over previous year. During the current year CASA increased by Rs.918 crore to Rs.7,957 crore from Rs.7,039 crore recording a growth of 13%. The cost of deposit of the Bank decreased from 6.82% to 6.29% in the current year.

ADVANCES

The Gross Advances of the Bank increased by Rs.4,127 crore to Rs.28,239 crore from Rs.24,112 crore, posting a growth of 17%. The yield on advances declined to 11.46% from 12.10% during the financial year due to stiff competition among Banks. The Gross and Net NPA for the year under review stood at 3.03% and 1.70% respectively as compared to 2.83% and 1.71% previous year.

Asset Quality

During the year the Banking industry witnessed turmoil on asset quality and NPAs were on the rise. However, your Bank resorted to constant monitoring of advances to reduce slippages and speeded up its recovery process to reduce the NPA level. The Bank continued to concentrate on lending to MSMEs especially of small ticket loans.

The Bank has fourteen Credit Processing Centers covering almost all branches. A thorough credit appraisal is done at these centers before final clearance is issued by the Administrative office. Thus the marketing approach, rigor in credit evaluation and the managersâ intimate knowledge of customers - all help in keeping your Bankâs level of NPA moderate.

During the year, the recovery stands improved to Rs.206 crore as against Rs.146 crore in FY 2017. Thus, through the process of sustained recoveries the Bank was able to maintain slippage level around 2% of advances. Priority Sector Advances stood at Rs.12,463.76 crore as at 31^st March, 2018 as compared to previous year amount of Rs.11,813.52 crore. The Bank has achieved 58.59% of Adjusted Net Bank Credit (ANBC) against the regulatory prescription of 40% of ANBC in Priority Sector lendings on an average basis as prescribed by RBI. The total agricultural advances stood at Rs.4,797.62 crore as at 31^st March, 2018 as against Rs.3,707.09 crore as on 31^st March, 2017. The Bank had achieved 22.55% of ANBC against the RBI prescribed level of 18% on an average basis in respect of agriculture advances.

TREASURY OPERATIONS

Domestic Treasury

The gross investments increased by Rs.933 crore to Rs.8,015 crore as on 31^st March, 2018 from Rs.7,082 crore as on 31^st March, 2017 registering a growth of 13%. Out of the total investments, the investments in Government Bonds alone amounted to Rs.7,638 crore.

The year 2017-18 witnessed tremendous changes in bond yields. As the effects of demonization began to fade away during the last quarter of previous year, yield on benchmark security stabilized at 6.80% levels. During the first half of financial year 2017-18, implementation of GST and rate cut by RBI resulted in a market rally with the benchmark yield settling at 6.50%. However, during the second half of the financial year, bond yield turned bearish following few significant national and international events. Global cues were also weak on account of geopolitical tensions in Korean peninsula and increasing crude prices. The benchmark yield closed at 7.41% as markets cooled down after the Government announced lower borrowing in first half of next financial year.

It is noteworthy to mention that during the times of hardening of the bond yield the Bank had earned Rs.94 crore by timely booking of profit in Government securities as compared to Rs.108 crore in last year. The average yield on investments decreased to 6.95% in the current financial year from 7.23% in the previous year.

Forex Treasury

Indian Rupee witnessed a volatile movement during the financial year 2017-18. USD-INR opened at 64.80 and closed at 65.17 after touching a high of 65.90 and low of 63.24 during the period. Indian Rupee strengthened in the middle against USD on account of weak economic and political indications in both USA and Europe. However, towards the end of the financial year, Rupee lost most of its gains as the result of bearish trend in Domestic Markets and tensions over trade war between USA and China. By judiciously dealing with volatility, the bank earned a profit of Rs.9.17 crore out of the total exchange profit of Rs.64.95 crore.

NET WORTH & CAPITAL ADEQUACY RATIO

Net Worth

The paid up share capital of the Bank increased from Rs.60 crore as on 31^st March, 2017 to Rs.66 crore as on 31^st March, 2018. During the reporting period the Bank has allotted 6,01,06,488 bonus equity shares and also, 35,57,840 equity shares as Employee Stock Options to employees of the Bank pursuant to CUB ESOS Scheme 2008.

The Net worth of the Bank improved to Rs.4,149 crore as on 31^st March, 2018 from Rs.3,556 crore as of 31^st March 2017.

Capital Adequacy Ratio:

CRAR	BASEL II	BASEL III
Minimum Prescribed CRAR	9%	10.875% (PY. 10.25%)*
CUB CRAR	16.46% (PY. 16.09%)	16.22% (PY. 15.83%)

*As per the concept of Capital Conservation Buffer (CCB) under BASEL III norms, the Bank is required to maintain CCB of 2.50% at the end of March 2019 in a phased manner beginning from 31^st March, 2016 @ 0.625% in each year up to 31^st March, 2019. The framework of CCB is intended to strengthen the ability of banks to withstand adverse economic environment conditions and provide the mechanism for rebuilding capital during early stages of economic recovery. Thus by retaining a greater portion of earnings during the period of upturn, the Banks will be able to support ongoing business operations / lending activities during the period of stress. The Bank is maintaining CRAR well above the prescribed minimum by RBI.

SHAREHOLDERSâ RETURN

A. DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.0.30 per equity share of Face Value of Rs.1/- each for the year ended 31^st March, 2018 (previous year Rs.0.30 per equity share) subject to the approval of the Shareholders.

B. BONUS

During May 2018, the Board of Directors of your Bank recommended the issue of 1 bonus equity share for every 10 equity shares of face value of Rs.1/- each (1:10) already held by the shareholders on a record date subject to shareholdersâ approval by Postal Ballot. Further as resolved by the Board, the shares allotted to the shareholders pursuant to bonus issue are also eligible to participate in dividend to be declared by the shareholders at the ensuing Annual General Meeting. The Board recommends the dividend for approval by the shareholders at the ensuing Annual General Meeting.

BRANCH EXPANSION

During the financial year the Bank had expanded its branch network by adding 50 more branches and 141 ATMâs across the country totalling 600 branches and 1,621 ATMâs as on 31^st March, 2018. The Bank has a major presence in the state of Tamil Nadu and is enlarging its presence in other states too by taping potential markets. Out of the additions aforesaid during FY 2018, the Bank has opened 2 branches in Maharashtra, 4 in Rajasthan, 6 in Karnataka, 1 in Telengana, 1 in Seemandhra and 36 branches in Tamilnadu including 10 Banking outlets manned by Business Correspondents. The branches opened were as per the guidelines issued by the RBI on opening of Branches in unbanked and under-banked regions.

SOCIAL BANKING A. FINANCIAL INCLUSION

The Government of India and the Reserve Bank of India continued its efforts in promoting financial inclusion as one of the important national objectives of the country and to spread the reach of banking services to the un-banked rural population of India. The Bank as in the past continued to support the above by serving the un-served with various financial inclusion programs announced by the Govt. of India.

The Bank, following RBI directions, has covered all the allotted 45 villages having population of over 2.000 and 101 villages having population of over 1.000 and below 2,000 including unbanked and remote villages by introducing ICT (Information, Communication & Technology) based services using hand held devices, Multifunction Kiosk, ATMs and Bulk Note Acceptor. The services are offered by engaging of Business Correspondents (BC) / Customer Service Providers (CSP). This ensures offering Banking service at the door steps of customers in a cost effective manner. Further during FY 2018 the Bank has opened 10 branches under âBanking Outletâ model managed by BCs and their activities are monitored by the branches to which they are attached. It is ensured that they cater to business areas within 8-10 km from the base branch. The usage through ICT model has paved way for cost reduction in opening of bank accounts instead of establishing a branch. While the concept of financial inclusion is usually regarded as a regulatory prescription, your Bank has viewed it as a viable business opportunity for Banks, as it enhances the ability of the Bank to rapidly expand its presence without too much increase in cost factor. The Bank has performed well across all financial inclusion parameters.

Further, during the year under review, Basic Savings Bank Deposits (BSBD) accounts numbering 1,10,533 were opened and 96,362 Biometric Smart Cards were issued to the beneficiaries. Savings Bank Linked Overdraft Facility, Micro Insurance Products, Electronic Benefit Fund Transfer (EBT) payments have been extended to such account holders.

i. PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY)

âPradhan Mantri Jan-Dhan Yojanaâ (PMJDY) is a flagship financial inclusion programme of Govt. of India which was launched by our Honâble Prime Minister on 28^th August, 2014 across the country.

Under this programme, the Bank has been allotted 264 wards apart from 146 villages already allotted under the Rural Financial Inclusion scheme. The Bank had conducted survey of all 1,80,211 households in all these 264 wards.

The Bank has opened 84,370 PMJDY accounts till 31^st March, 2018 through all its branches from the date of launch and Rupay cards were issued for the account holders under the scheme. As the overdraft facility is one of the features under PMJDY scheme, Bank is considering the same based on conditions fixed by IBA to the PMJDY account holders from Rs.1,000 to Rs.5,000.

ii. PRADHAN MANTRI JEEVAN JYOTHI BIMA YOJANA (PMJJBY)

This scheme was launched by Honâble Prime Minister, on 9^th May, 2015. The scheme provides life insurance cover to people in the age group of 18 - 50 years. Risk cover is available up to 55 years, subject to payment of premium of Rs.330/- p.a. Risk coverage is Rs.2 lakh in case of death due to any reason. The Insurance premium for the scheme is auto debited from the bank account of the respective subscriber. The Bank has a tie up with LIC for this scheme and the number of persons enrolled under the scheme as on 31^st March, 2018 was 48,442.

iii. PRADHAN MANTRI SURAKSHA BIMA YOJANA (PMSBY)

This Scheme provides financial cover against personal accident of the subscribers. It is open for the age group between 18 - 70 years at a nominal annual premium of Rs.12/-. Risk cover is Rs.2.00 lakh for death due to accident or full disability and Rs.1.00 lakh for partial disability. The Insurance Premium for the scheme is auto debited from the bank account of the respective subscriber. The Bank is having a tie up with the New India Assurance Co. Ltd for this scheme. The enrollment under the scheme as on 31^st March, 2018 numbered 74,196.

iv. ATAL PENSION YOJANA (APY)

The Government of India launched Atal Pension Yojana for the benefit of all citizens especially for the poor and under privileged. Under APY, it is open for the age group between 18 - 40 years. After completion of 60 years of age, the subscribers will be given guaranteed minimum pension ranging between Rs.1,000 - Rs.5,000 per month depending upon their contribution. The subscriber through our Bank numbered 6,609 as on 31^st March, 2018.

B. FINANCIAL LITERACY

During the year under review the Bank continued to conduct financial education programmes to impart financial literacy to the rural population. The Bankâs personnel have personally visited the villages and schools in rural areas for imparting financial education.

During the reporting cycle, the Bank has conducted such literacy programmes in fourteen (14) villages around Tamil Nadu and twelve (12) meetings in schools. Adequate measures have been taken under this process to impart financial education for the underprivileged sections including educational institutions. Further the Bank has tied up with two agencies viz., Commonwealth Inclusive Growth Foundation and Velicham Finance Pvt. Ltd which have engaged the services of 146 Business Correspondents to serve the remote and unbanked regions in Tamil Nadu. The villagers were educated about the Indian Banking system, the use of technology, digital products, security aspects etc.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank implemented an Employee Stock Option Scheme âCUB ESOS 2008â for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on 26^th April 2008 at an Extra Ordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme, exercise price of the options shall be decided by the Compensation & Remuneration Committee at the time of grant of stock options. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years and 25% and 30% for fourth and fifth year respectively. The shares are offered at prevailing market prices at the time of grant to the employees, however the same shall vary pursuant to corporate action viz., Rights Issue, Bonus Issue etc. There were no material changes in the ESOS of the Bank during the period under review and the same is in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014. The disclosures pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 have been set out in the website of the Bank (weblink: https://www.cityunionbank.com/investor) and also the same is annexed hereto as Annexurel.

In addition, the shareholders of the Bank at its meeting held on 23^rd August, 2017 approved new CUB ESOS Scheme 2017 for 3,00,00,000 options on terms and conditions similar to previous one. No options have been granted to any employees of the Bank during the previous year under this scheme.

HUMAN RESOURCE DEVELOPMENT

The Bank continued its effort to improve the quality of the employees which is the key success for achieving the preset goals / standards of the organization and is committed to equip them with expertise enabling them to seamlessly move with ongoing technological advancements. The Bank aims to provide long term, sustained and meaningful careers to employees across the organization through talent management. The Bank continued to depute its employees to various training institutions like SIBSTC, NIBM, CAB, CAFRAL, IDRBT etc., to enhance knowledge and operational efficiency. The Bank has implemented various employee benefit measures as agreed with the Staff Union during the year 2016 viz., Performance Linked Pay (PLP), Efficiency Bar mechanism to identify resource persons, Group Medi-claim benefits, enhanced ex-gratia based on performance parameters etc., which has motivated the employees to focus on standard of service and customer satisfaction.

There exists a cordial relationship between the management and the employees. It is pertinent to note here that there has not even been a single occasion of employee unrest in the Banking history of CUB. Continuous efforts are being made to enhance the quality of existing personnel and to attract new talents.

As on 31^st March, 2018, the Bank has 5,319 employees, comprising of 54 Executives in top management cadre, 2,010 Officers (including Special Assistants), 2,950 Clerks and 305 Subordinate Staff as compared to 4,689 employees in the previous year.

AUTOMATION

âTechnologyâ plays a vital role in managing and fulfilling the current demand and enhanced quality service to the customers. Changes are happening in the Banking technology and in digital payments systems. The Bank is deploying all possible technology enabled & digital payment systems to cater the needs of the customers.

The Bank has deployed CBS BaNCS for transaction processing system developed by M/s Tata Consultancy Services, which is being used by few major & peer Banks.

During the year under review, the Bank has widened the ATMs to 1,621 locations which includes 700 off-site ATMs. The Bank has deployed 987 Cash Dispenser ATMs and 634 Cash Deposit (Bulk Note Acceptors) which are having recycling of deposited cash (BRM) facility.

The Bank has opened 44 self service Bank branches (e-Lounge) having Bulk Note Acceptor, Cash dispenser, Multi functional KIOSK, Cheque deposit KIOSK and Self Passbook KIOSK.

The Bank is offering personal and corporate internet banking and mobile Banking services to the customers. All financial transactions are carried out with second factor authentication. DSC (Digital Signature Certificate) is also available as second factor authorization and is made mandatory for online transactions of Rs.10.00 lakhs and above for Corporate Customers. Apart from deposits, funds transfer, the Bankâs internet & mobile banking is having âutility bill paymentâ services, online Term Deposit opening and online âloan against depositâ. The Bank has also introduced Aadhar seeding, validating the same from UIDAI through OTP on their registered mobile. The Bank also enabled the Digital Payment âAadhar Enabled Payment Systemâ to their customers. The Bank has introduced e-Kyc account opening and Selfie account opening schemes also which eliminates time taken for account opening.

The customers of the Bank also enjoy CUB e-Wallet, Unified Payment Interface (UPI) and â*99#â a NUUP (National Unified USSD Platform) an innovative payment service launched by NPCI working on Unstructured Supplementary Service Data (USSD). The Bank also is part of Bharat Bill Payment System (BBPS) as Bharat Bill Payment System Operating Unit (BBPOU) and launched Bharat QR. Scan and Pay - Bharat QR option is also made available in BHIM UPI.

A customer friendly Captive Contact Centre (Call Centre) with Interactive Voice Response System (IVRS), is put in place to promote customer support on multi-languages 24x7 basis.

The Bank introduced âchat-botâ service, powered by âArtificial Intelligenceâ that intract with the customers via chat interface either auditory (Ask Lakshmi) or textual (Chat-Box in website and social media), which will work round the clock without any human intervention and answers customer queries. This has been deployed in five centers so far.

The Bank has rolled out FASTag facility for making payments by vehicles in Toll Plazas electronically through rechargeable prepaid instruments.

As a green initiative, Green PIN for ATM card is implemented, by which the customers can themselves set the PIN in the ATM with OTP verification to the registered mobile number. The Bank has introduced Spend Analyser in our Net Banking through which the customers can view their spending pattern of the amounts remitted through Net / Mobile Banking. Customers are provided with the option of enabling / disabling their cards through Net / Mobile Banking and to set their own limits for ATM / POS / e-Com transactions.

Now, CUB customers can get their credit card (virtual) instantaneously and start doing transactions. Customer can login to Net banking account and apply for credit card in a few clicks. Customer has to choose a Fixed Deposit account, link it to credit card and fix own credit limit on the card. Customer gets credit card (virtual) instantaneously. The FD continues to earn you the interest.

AWARDS & ACCOLADES

The Bank has been awarded the Best Small sized bank for FY 2015-16 by Business World - PWC Best Banksâ Survey 2016 (Second Year in a row).

The Bank won Financial Express Best Bank award in the category âTop Old Private Sector Bankâ for FY 2015-16 (Third Year in a row).

SUBSIDIARIES AND ASSOCIATES

Your Bank does not have any Subsidiaries or Associates to report during the year under report.

BOARD MEETINGS

All Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and SEBI Listing Regulations, 2015. During the year thirteen meetings were held, the details of which are given under report on Corporate Governance forming part of this report.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Appointments

Shri. V.N. Shiva Shankar was co-opted as an Additional Director into the Board of the Bank on 7^th February, 2018 to hold the office till the conclusion of the ensuing Annual General Meeting. He is a qualified lawyer, Company Secretary and Cost / Management Account with over 25 years of rich experience in the Indian corporate sector. Pursuant to the provisions of the Companies Act, 2013 and the Banking Regulation Act, 1949, Shri. Shiva Shankar has specialized knowledge in the areas of Corporate Laws, Mergers, Capital Markets and allied subjects. In the opinion of the Board Shri. Shiva Shankar is a dynamic and competent professional who can effectively participate and represent in the Board of the Bank. The Board recommends his appointment as an Independent Director on the Board of the Bank for approval by shareholders in the Notice calling this Annual General Meeting. The relevant details of Shri. Shiva Shankar pursuant to SEBI Listing Regulations, 2015 are disclosed separately in such Notice.

Dr. T.S. Sridhar, M.A., Ph.D, is a retired I.A.S officer was co-opted as an Additional Director into the Board of the Bank on 7^th February, 2018 to hold the office till the conclusion of the ensuing Annual General Meeting. He has held top positions in the Government including Additional Chief Secretary, Commissioner of Revenue Administration etc. He has successfully led various Govt. programs / schemes. Dr. T.S. Sridhar has specialized knowledge in Rural Economy, Agriculture, Co-operation, MSME, Banking, Small Savings and Industry & Finance sector. Pursuant to the provisions of the Companies Act, 2013 and the Banking Regulation Act, 1949, Dr. Sridhar in the opinion of the Board, is a person with diverse knowledge and experience who can effectively participate and represent in the Board of the Bank. The Board recommends his appointment as Independent Director on the Board of the Bank for approval by shareholders in the Notice calling this Annual General Meeting. The relevant details of Dr. Sridhar pursuant to SEBI Listing Regulations 2015 are disclosed separately in such Notice.

Cessation

Shri. C.R. Muralidharan and Justice (Retd.) S.R. Singharavelu retired from the Board of the Bank on 24^th February, 2018 on account of completion of 8 years term as per the provisions of Banking Regulation Act, 1949.

The Board hereby places on record its warm appreciation over the excellent services rendered by Shri. C.R. Muralidharan and Justice (Retd.) S.R. Singharavelu during their tenure.

Besides the above appointments and cessations, the appointment of Shri N. Subramaniam and cessation of Shri T.K. Ramkumar occurred during FY 2017 - 18 and the same were duly reported to the shareholders in the previous AGM held on 23^rd August, 2017.

Directors to retire by Rotation - The application of provisions of Section 152(6) arises only when the Board of Directors of the public company comprises of such number of directors who are not prohibited or restricted by the Act to retire by rotation. All directors on the Board, except the Managing Director and CEO of the Bank are Independent Directors. Hence the provisions of Section 152(6) of Companies Act, 2013 relating to retirement of directors by rotation do not apply considering the present composition of the Board of Directors. Independent Directors are not required to retire in terms of Section 149(13) of the said Act. Accordingly no director is required to retire by rotation at this annual general meeting.

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013, notifications issued by the Ministry of Corporate Affairs and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulationsâ), and the Board is satisfied that the Independent Directors meet the criteria of independence as stipulated under statutory laws.

Familiarization program for Independent Directors

Performance Evaluation

In line with the provisions of the Companies Act, 2013, SEBI Listing Regulations, 2015 and relevant notifications / guidelines issued by SEBI in this regard, there exists a structured criterion as approved by the Nomination committee of the Board for carrying out the performance evaluation of the Board as a whole, its committees as well as Independent Directors.

The necessary evaluations / review were carried out by the Board and Independent Directors to determine the effectiveness of the Board, its Committees, Chairman and individual Directors. Additional information on performance evaluation is set out in Corporate Governance section forming part of this report.

Key Managerial Personnel

The following officials of the Bank continue to be the âKey Managerial Personnelâ pursuant to the provisions of Section 2(51) read with Section 203 of the Companies Act, 2013 :

Sl.No.	Name	Designation
1.	Dr. N. Kamakodi	MD & CEO
2.	Shri. V. Ramesh	General Manager - CFO & CS

AUDITORS Statutory Auditor

M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai was appointed as the Statutory Central Auditors of the Bank in the previous AGM held on 23^rd August, 2017. The term of the present Auditor will conclude at the ensuing Annual General Meeting of the Bank and being eligible has offered themselves for re-appointment.

Consent has been received from the present Auditors for their re-appointment and also a confirmation to the effect that they are not disqualified to be appointed as Statutory Auditors of the Bank in terms of Companies Act, 2013 & the rules made there under. The Reserve Bank of India has accorded its approval for the appointment of M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai to act as Statutory Central Auditors for the Financial Year 2018-19. Members are requested to consider and approve their appointment as Statutory Central Auditors of the Bank for FY 2018-19.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank has appointed M/s B.K. Sundaram & Associates, Practicing Company Secretaries, Tiruchirapalli as Secretarial Auditor to conduct the Secretarial Audit of the Bank for Financial Year 2017-18. The report of Secretarial Auditor âSecretarial Audit Reportâ is annexed to this report as Annexure ll.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors of the Bank hereby declares and confirms that:-

I) In the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

ii) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent 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 & Loss of the Bank for that period.

iii) The Directors had taken 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.

iv) The Directors had prepared the annual accounts on a going concern basis.

v) The Directors had laid down adequate internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi) The Directors has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INSIDER TRADING NORMS

The Bank has formulated a Code of Conduct pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015 to regulate, monitor and ensure reporting of trading by the employees and other connected persons to comply with the provisions of SEBI Listing Regulations. Such policy is adopted to maintain highest ethical standards in dealing with securities of the Bank by persons to whom it is applicable. The code of conduct and related policy are available in the Bankâs website (weblink: https://www.cityunionbank.com/downloads/Inside r_trade_code_2015.pdf ).

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK

There are no material changes and commitments affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e., 31^st March, 2018 and the date of Directors Report i.e., 22^nd June, 2018.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the Regulators or courts or tribunals impacting the going concern status and Bankâs operation in future.

POLICIES

Remuneration / Compensation Policy

The Bank has adopted a Compensation Policy in accordance with the directives issued by the Reserve Bank of India. The Bank has constituted a Compensation & Remuneration Committee which oversees the framing, implementation and review of the Compensation Policy of the Bank. The Remuneration Policy of the Bank is briefed under Corporate Governance Report forming part of Annual Report.

Risk Management Policy

The Bank has in place an Integrated Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other Risks. The details on the Risk Management framework of the Bank is set out in the Management Discussion and Analysis section appended to this Report.

DIVIDEND DISTRIBUTION POLICY

Pursuant to an amendment notification issued by the Securities Exchange Board of India during the year 2016, the Bank has framed a policy on Dividend Distribution taking into account the guidelines prescribed by the Reserve Bank of India on âDeclaration of Dividend by Scheduled Commercial Banksâ. The same is available at the website of the Bank (weblink: https://www.cityunionbank.com/downloads/Divide ndDistributionPolicy.pdf ).

UNCLAIMED DIVIDEND AND SHARES

Your Bank, in compliance with the provisions of Section 125 of the Companies Act, 2013 together with the applicable rules and circulars issued thereunder by the Ministry of Corporate Affairs, has transferred 15,83,197 equity shares to the IEPF Authority, in respect of which no claim of dividend has been made continuously for a period of seven years.

Further, in terms of the said provisions, consequent to expiry of seven years period:

a. Unclaimed amounts pertaining to Dividend declared during FY 2009-10 has been transferred to IEPF during the financial year under review, and

b. Unclaimed amount pertaining to Dividend declared during FY 2010-11 together with shares will be transferred during financial year 2018-19 within the stipulated time.

BUSINESS RESPONSIBILITY REPORT

As per SEBI Listing Regulations, 2015 a Business Responsibility Report describing the Bankâs social, environmental and governance aspects are attached as part of this Annual report.

DEPOSITS

INTERNAL FINANCIAL CONTROLS

The Bank has put in place adequate internal financial controls commensurate with the size and scale of operations. The Bank has, in all material aspects, adequate internal control systems over financial reporting and these controls have taken into consideration, the essential components of internal control stated in the guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Such internal financial controls over financial reporting were operating effectively as at the end of the financial year. More details have been set out in Management Discussion and Analysis Report which forms part of this report.

RELATED PARTY TRANSACTIONS

The Board of Directors of the Bank has adopted a policy on Related Party transactions which is in line with the Companies Act, 2013 and SEBI Listing Regulations, 2015. There were no significant âRelated Party Transactionsâ of any material, financial & commercial nature with the Bank by the Directors and their relatives that would have potential conflict with the interest of the Bank at large. A detailed policy on the Related Party Transaction is available at the Bankâs website (weblink: https://www.cityunionbank.com/downloads/docu ments/CUB_Related_Party_Transaction.pdf ).

LOANS, GUARANTEES OR INVESTMENTS

All loans, guarantees or investments made in securities by the Bank are exempt pursuant to the provisions of section 186 (11) of the Companies Act, 2013 and hence does not attract any disclosure required under section 134 (3)(g) of the Companies Act, 2013.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a), of the Companies Act, 2013 (the Act), read with Rule 12(1) of Companies (Management & Administration) Rules, 2014 an extract of Annual Return in form MGT - 9 as provided under Subsection (3) of Section 92 of the Act is appended to this report as AnnexureHI.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with the Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, and the related notifications / circulars / guidelines issued by MCA, the Bank has established Corporate Social Responsibility (CSR) Committee. The Bank has established CUB Foundation, a non-profit entity to identify, recommend and oversee the CSR initiatives of the Bank.

A Report on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 is furnished under Annexure IVto this report.

DISCLOSURE TO BE MADE UNDER SUB SEC (8) OF SEC 177 OF COMPANIES ACT, 2013

The Board of the Bank had constituted the Audit Committee under the extant guidelines of Reserve Bank of India (RBI), provisions of the Companies Act, 2013 and Listing Regulations, 2015. The details of the composition of the Audit Committee is furnished in the Corporate Governance Report.

CORPORATE GOVERNANCE

Corporate Governance of the Bank is an ethically driven business process that rests on the fundamental pillar of high ethical values aimed at enhancing organizationâs brand and reputation and to protect the interests of all the stakeholders by taking ethical business decisions. The Bank is committed to achieving the highest standards of Corporate Governance and also adheres to the Corporate Governance requirements set by the Regulators / applicable laws. Accordingly, the Board functions as trustees of the shareholderâs and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A detailed section on Corporate Governance standards followed by the Bank as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 and rules made there under alongwith Certificate of Compliance from the Statutory Auditors are disclosed separately forming part of this report.

MANAGEMENT DISCUSSION & ANALYSIS

OTHER DISCLOSURES

Conservation of Energy and Technology Absorption

Considering the nature of activities carried out by the Bank, the provisions of Section 134 (m) of the Companies Act, 2013 relating to conservation of energy and technology observation do not apply to the Bank. However every effort is being made to conserve energy. The Bank has put Solar Panels at various branches as part of energy conservation besides installation of power saving LED bulbs at majority of branches and Central Office. Further, it is proposed to set up Inverter technology based Air Conditioners to support the cause.

On the technological front, the Bank strives to offer excellent banking service by facilitating the latest customer friendly and secure technological solutions to its customers. However, as informed to the Stock Exchanges on 8^th December, 2017, during the third quarter, there were certain improper transactions amounting to Rs.31.55 cr through VISA, MASTER & NPCI networks through ATM switch which were approved outside the Bankâs network. The Bank has a cyber insurance cover for Rs.25 cr and insurance claim has been lodged. The Bank has provided a sum of Rs.7 cr during the third quarter. Further as informed to the Stock Exchanges on 17^th February, 2018, three fraudulent remittances amounting to Rs.12.13 cr had gone through our SWIFT system which were not initiated by us. Since your Bank reconciliation system was very tight your Bank could catch the attack in 3 attempts. Out of this, the Bank received back Rs.3.25 cr. An amount of Rs.2.22 cr have been blocked and for getting back the remaining amount the Bank is taking efforts. During the fourth quarter, the Bank has made a provision of Rs.6.66 cr.

Foreign Exchange Earnings and Outgo

The Bank continues to encourage countryâs export promotion by lending to exporters and offering them forex transaction facilities.

Employees and Related Disclosures Disclosures under Section 197 of the Companies Act, 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure V.

Disclosure under Section 22 of Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act 2013

The Bank gives utmost importance towards maintaining and upholding the dignity of each and every woman working in the Bank. The Bank has a policy on Prevention of Sexual Harassment at workplace which provides for adequate safeguards and protection for women employees working in the organization. No compliant was received in this regard during the year 2017-18.

Confirmation has to compliance of applicable laws

It is hereby confirmed that the Bank has proper systems in place to ensure compliance of all laws applicable to the Banks.

Whistle Blower / Vigil Mechanism

All employees and directors have access to the Chairman of the Audit Committee in appropriate and exceptional circumstances.

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all the Stakeholders and wish to place on record its sincere appreciation for the assistance and co-operation received from the Reserve Bank of India, NABARD, NHB, IDBI, SIDBI, EXIM BANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, Karvy Computer share Pvt. Ltd., Life Insurance Corporation of India, United India Insurance, New India Assurance, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses and other authorities.

Your Directors also place on record their warm appreciation for the committed services rendered by the Bankâs Executives, Staff and Workers.

For and on behalf of the Board

Place : Chennai S. Mahalingam

Date : 22^nd June, 2018 Chairman

Mar 31, 2017

The Board of Directors is pleased to present the Annual Report on business and operations of the Bank together with the Audited Financial Statements for the Financial Year ended 31^st March, 2017.

Financial Highlights (Rs. in crore)

Particulars	2016-17	2015-16	Growth (%)
Share Capital	60	60	--
Reserves & Surplus	3,510	2,992	17%
Deposits	30,116	27,158	11%
Advances(Gross)	24,112	21,253	13%
Investments (Gross) *	7,082	6,828	4%
Total Assets / Liabilities	35,271	31,804	11%
Net Interest Income	1,199	981	22%
Operating Profit	994	833	19%
Net Profit	503	445	13%

* the figures of the previous year have been regrouped / reclassified wherever necessary.

During the year the Bank earned an operating profit of Rs.994 crore registering an increase of 19% as compared to previous year''s figure of Rs.833 crore. The net profit of the Bank for the current year was Rs.503 crore as against Rs.445 crore of last year, registering a growth of 13%. The deposits and advances for the current year stood at Rs.30,116 crore and Rs.24,112 crore respectively. The total business stood at Rs.54,228 crore as compared to Rs.48,411 crore of the previous year registering a growth of 12%. The size of the balance sheet as on 31^st March, 2017 was Rs.35,271 crore as compared to the previous year position of Rs. 31,804 crore showing an increase of 11%.

DEPOSITS

The Bank''s total deposits for the year under review increased by Rs.2,958 crore from Rs.27,158 crore to Rs.30,116 crore registering a growth of 11% over previous year. During the current year CASA increased by Rs.1,506 crore to Rs.7,039 crore from Rs.5,533 crore recording a significant growth of 27% primarily due to the impact of demonetization of higher denomination currencies in November 2016. The cost of deposit of the Bank decreased from 7.62% in the previous year to 6.82% in the current year.

ADVANCES

The Gross Advances of the Bank increased by Rs.2,859 crore to Rs.24,112 crore from Rs.21,253 crore, posting a growth of 13%. The yield on advances declined to 12.10% from 12.83% during the financial year due to stiff competition among Banks.

The Gross and Net NPA for the year under review stood at 2.83% and 1.71% respectively as compared to previous year figure of 2.41% and 1.53%.

Priority Sector Advances stood at Rs.11,813.52 crore as at 31^st March, 2017 as compared to previous year amount of Rs.10,272 crore. The Bank has achieved 51.57% of Adjusted Net Bank Credit (ANBC) against the regulatory prescription of 40% of ANBC on Priority Sector lending requirements on an average basis as prescribed by RBI. The total agricultural advances stood at Rs.3,707.09 crore as at 31^st March, 2017 as against Rs.3,391 crore as on 31^stMarch, 2016. The Bank has achieved 18.13% of ANBC against the RBI prescribed level of 18% on an average basis.

TREASURY OPERATIONS

Domestic Treasury

The gross investments increased by Rs.254 crore to Rs.7,082 crore as on 31^st March, 2017 from Rs.6,828 crore as on 31^st March, 2016 registering a growth of 4% and out of this, the investments in Government Bonds alone amounted to Rs.6,698 crore.

During the financial year 2016-17, the yield on Government of India (GOI) securities moved down. The yield on 10 year benchmark security moved from 7.41% to 6.69% on account of rate cut announced by RBI during the first half of the FY During the month of November 2016, it dropped down sharply and touched a low of 6.12% on account of demonetization announced by GOI. The yield reversed its course and rose upto 6.95% during February 2017 after RBI took measures to suck out the excess liquidity and also on change in RBI''s policy stance from accommodative to neutral .

It is noteworthy to mention that during the year the Bank earned a profit of Rs.108 crore by taking advantage of yield movement on Govt. Securities as compared to Rs.45 crore last year. The average yield on investments declined from 7.45 % in the previous year to 7.23 % in the current financial year.

Forex Treasury

Indian Rupee witnessed swings during the period under review. USD / INR opened at ''66.26 and closed at ''64.84 after touching a high of Rs.68.86 during the course of the financial year. Indian Rupee against USD strengthened on the back of inflows in equity and debt markets. The Bank earned an exchange profit of Rs.98 crore compared to Rs.81 crore last year.

OPERATING RESULTS HIGHLIGHTS (Rs. in crore)

Particulars	Year ended 31^st March 2017	Year ended 31^st March 2016
Total Income	3658	3354
Total Expenses	2664	2521
Operating Profit	994	833
Provisions & Contingencies	491	388
Net Profit	503	445
Net Interest Income	1199	981

A total income of Rs.3,658 crore was earned by the Bank as against Rs.3,354 crore posting a growth of 9%. The total expenditure of the Bank increased by 6% to record Rs.2,664 crore as compared to previous year figure of Rs.2,521 crore.

The operating profit increased by Rs.161 crore to Rs.994 crore from Rs.833 crore thereby recording a growth of 19%. The net profit increased from Rs.445 crore to Rs.503 cro re achieving a growth rate of 13%.

The Net Interest Income for the year under review increased by Rs.218 crore from Rs.981 crore to Rs.1,199 crore. The non-interest income of the Bank increased to Rs.484 crore from Rs.410 crore.

The provision for tax for the year increased to Rs.190 crore from Rs.158 crore. The provision for NPA stood at Rs.252 crore vis-a-vis Rs.205 crore last year. The total provisions increased by Rs.103 crore to Rs.491 crore from Rs.388 crore.

APPROPRIATIONS

The appropriations from net profit were made as under: (Rs. in crore)

Particulars	Year ended 31^st March 2017	Year ended 31^st March 2016
Net Profit	502.77	444.69
Balance of Profit brought forward	7.44	6.96
Amount available for appropriations	510.21	451.65
Transfers to
- Statutory Reserve	130.00	115.00
- Capital Reserve	27.53	8.71
- General Reserve	275.00	188.00
- Special Reserve under IT Act, 1961	45.00	40.00
- Dividend & Dividend Tax	0.00	92.49
- Balance of Profit carried forward	32.68	7.45
Total	510.21	451.65

In accordance with the revised accounting standards AS-4 contingencies and events occurring after the balance sheet date notified by the Ministry of Corporate Affairs on 30^th March, 2016, the proposed dividend including corporate dividend tax has not been shown as an appropriation from the Profit and Loss appropriation account as of 31^st March, 2017 and consequently not reported the same under Other Liabilities and Provisions as of 31^st March, 2017. For computation of Capital Adequacy Ratio as at 31^st March, 2017, Bank has adjusted the proposed dividend and tax thereon for determining Capital Funds.

NET WORTH & CAPITAL ADEQUACY RATIO

The paid up share capital of the Bank increased from Rs.59.82 crore as on 31^st March, 2016 to Rs.60.11 crore as on 31^stMarch, 2017. During the period the Bank has allotted 28,73,602 equity shares arising out of the exercise of Employee Stock Options to employees of the Bank pursuant to CUB ESOS Scheme.

The Net worth of the Bank improved to Rs.3,556 crore as on 31^st March, 2017 from Rs.3,033 crore as of 31^st March, 2016.

Capital Adequacy Ratio:

As per BASEL	II		III
Minimum Prescribed CRAR		9%	10.25% (PY. 9.625%)
CUB CRAR	16.09% (PY. 15.80%)		15.83% (PY. 15.58%)

The concept of Capital Conservation Buffer (CCB) has been newly introduced under BASEL III norms wherein Bank is required to maintain CCB of 2.50% at the end of March 2019 in a phased manner beginning from 31^st March, 2016 @ 0.625% in each year up to 31^st March, 2019.

During the current financial year i.e., 2017-18, the Bank redeemed the entire Non Convertible Debentures of Rs.10 lakh each issued under private placement route on 30^th March, 2007 carrying a coupon rate of interest @10% with tenure of 121 months representing Tier II Capital - Series II totaling Rs.10 crore, that matured on 30^th April, 2017.

REWARD TO SHAREHOLDERS

A. DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.0.30 per equity share of face value of Rs.1/- each (previous year Rs.1.20 per equity share) for the year ended 31^st March, 2017.

B. BONUS

During the month of May 2017, the Board of Directors of your Bank recommended the issue of 1 bonus equity share for every 10 equity shares of face value of Rs.1/- each (1:10) already held by the shareholders on a record date subject to shareholders'' approval by Postal Ballot. Further as resolved by the Board, the shares allotted to the shareholders pursuant to bonus issue are also eligible to participate in dividend to be declared by the shareholders at the ensuing Annual General Meeting. The dividend payout ratio works out to 4.32% which is in accordance with the Dividend Distribution Policy of the Bank. The Board recommends the dividend for approval by the shareholders at the ensuing Annual General Meeting.

BRANCH EXPANSION

During the financial year the Bank has expanded its branch network by adding 25 more branches and 161 ATM''s across the country totaling to 550 branches and 1,486 ATM''s as on 31^st March, 2017. The Bank has a major presence in the state of Tamil Nadu and is keen to further enlarge its presence by tapping potential markets, not only in Tamil Nadu but in other states too.

SOCIAL BANKING

A. FINANCIAL INCLUSION

There have been persistent efforts made by the Government of India and the Reserve Bank of India in promoting financial inclusion as one of the important national objectives of the country. In line with the directions issued by the Govt. of India and RBI, the Bank has adopted Financial Inclusion as one of the key business measures to promote social inclusion by serving the un-served and the underserved population.

The Bank, following RBI directions, has covered all the allotted 45 villages having population of over 2.000 and 101 villages having population of over 1.000 and below 2,000 by introducing ICT (Information, Communication & Technology) based services, thus providing efficient and cost-effective banking services in the un-banked and remote villages of the country, paving the way for the inclusive growth. Further, during the year under review, Basic Savings Bank Deposits (BSBD) accounts numbering 1,04,794 were opened and 94,203 biometric smart cards were issued to the beneficiaries. Savings Bank linked overdraft facility, micro insurance products, Electronic Benefit Fund Transfer (EBT) payments have been extended to such account holders.

i. PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY):

''Pradhan Mantri Jan-Dhan Yojana'' (PMJDY) is a flagship financial inclusion programme of Govt. of India which was launched by our Hon''ble Prime Minister on 28^th August, 2014 across the country. Under this programme the Bank has been allotted 264 wards apart from 146 villages already allotted under the Rural Financial Inclusion scheme. The Bank had conducted survey of all 1,80,211 households in all these 264 wards.

The Bank has opened 85,759 PMJDY accounts as on date through all its branches and Rupay cards were issued for the account holders under the scheme. As the overdraft facility is one of the features under PMJDY scheme, Bank is considering the same based on conditions fixed by IBA to the PMJDY account holders from Rs.1,000 to Rs. 5,000.

ii. PRADHAN MANTRI JEEVAN JYOTHI BIMA YOJANA (PMJJBY):

This scheme was launched by Hon''ble Prime Minister, on 9^th May, 2015. The scheme provides life insurance cover to people in the age group of 18 - 50 years. Risk cover is available up to 55 years, subject to payment of premium of ''330/- p.a. Risk coverage is Rs.2 lakh in case of death due to any reason. The Insurance premium for the scheme is auto debited from the bank account of the respective subscriber.

The Bank has a tie up with LIC for this scheme.

iii. PRADHAN MANTRI SURAKSHA BIMA YOJANA (PMSBY):

iv. ATAL PENSION YOJANA (APY):

Government of India launched Atal Pension Yojana for the benefit of all citizens especially for the poor and under privileged. Under APY, it is open for the age group between 18-40 years. After completion of 60 years of age, the subscribers will be given guaranteed minimum pension ranging between Rs.1,000 - Rs. 5,000 per month depending upon their contribution.

The enrollment as on 31^st March, 2017 in the schemes is 49,369 (PMJJBY),72,460 (PMSBY) and 3,842 (APY) respectively.

B. FINANCIAL LITERACY

The Bank believes lack of financial literacy among rural population is primarily responsible for low penetration of financial services. As a measure, the Bank has given more importance in schools and rural villages where the Bank''s personnel have personally visited for imparting financial education.

During the reporting cycle, the Bank has conducted such literacy programmes in fourteen (14) villages around Tamil Nadu and twelve (12) meetings in schools. Adequate measures have been taken under this process to impart financial education for the underprivileged sections including educational institutions. Further the Bank has tied up with two agencies viz., Common Wealth Inclusive Growth Foundation and Bharathi Women Development Centre which has engaged the services of 146 Business Correspondents to serve the remote and unbanked regions in Tamilnadu. The villagers were educated about the Indian Banking system, the use of technology, digital products, security aspects etc.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank implemented an Employee Stock Option Scheme ''CUB ESOS 2008 for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on 26^th April, 2008 at an Extra Ordinary General Meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme, exercise price of the options shall be decided by the Compensation & Remuneration Committee at the time of issuing stock options. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years and 25% and 30% for fourth and fifth year respectively. Further, the shares are offered at prevailing market prices and no discount is offered. The details of employee stock option are appended hereto as Annexure I.

HUMAN RESOURCE DEVELOPMENT

The Bank has enhanced the focus to drive customer experience and service quality with interventions in back office functions. The Bank has been improving productivity through process simplification, automation and continuous training. The Bank continues its focus on engagement and retention through initiatives that provide a holistic environment where employees get opportunities to realize their potential. Talent management being an integral part of overall performance management process in the bank aims to provide long term, sustained and meaningful careers to employees across the organization. The Bank is committed to developing its capabilities as an organization and as individuals to meet current and future business challenges. The Bank also deputes its employees to various training institutions like SIBSTC, NIBM, CAB, CAFRAL, IDRBT etc. There exists a cordial relationship between the management and the employees. Further, during the reporting cycle the management of the Bank has entered into a pay settlement with CUB Officers'' Association and CUB Staff Union for the benefit of its employees with attractive pay structure and benefits, at par with Industry peers.

As on 31^st March, 2017, the Bank has 4,689 employees, comprising of 54 Executives in top management cadre, 1690 Officers, 2635 Clerks and 310 Subordinate staff as compared to 4,517 employees in the previous year.

AUTOMATION

In today''s Banking scenario, Technology plays a pivotal role in managing and fulfilling the growing customer demand. The Bank has been at the forefront of this digital revolution among banks in India.

In the use of Information and Communication Technology (ICT), the Bank has focused upon the following aspects:

1. Bring in advanced products in the area of Automation and Artificial Intelligence: The Bank has been a pioneer in installing ''CUB Lakshmi'', First Banking Robot at T. Nagar Branch, Chennai. Currently, the Robot interacts with customers to answer queries. In future, the Robot will handle more tasks.

2. Enhance the service levels and productivity: Customers can now perform a large number of tasks through CUB Net Banking and CUB Mobile Banking, use ATMs for regular transactions and visit e-Lounges in many branches to carry out a number of banking transaction. Through these facilities, 83 % of Customers'' transactions are now being carried out outside of the branches.

3. Offer new mobile based products such as e Wallet and support the Government in ushering a cashless environment: The Bank has also helped in creating a cashless environment in SASTRA University using smart cards of CUB, which also serves as their ID Card.

4. Be in the forefront on creating a cyber security environment and ensure uninterrupted services to customers.

5. Run an efficient IT operations using Open Source environment and in managing a large network.

A Separate section in this Annual Report has details on the extensive Technological Banking activities carried out by the Bank.

AWARDS & ACCOLADES

- Best Small sized Bank for FY 2015-16 by Business World - PWC Best Banks'' Survey 2016.

- Financial Express Best Bank award in the category "Top old Private Sector Bank" for FY. 2015-16.

BOARD MEETINGS

All Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and SEBI Listing Regulations, 2015. The meetings were held to discuss and decide on various business policies, strategies and other businesses in the best interests of the Bank.

During the year under report, 15 meetings were duly held. The complete details on such meetings are provided in the Corporate Governance Report as part of this Annual Report.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Appointments

Pursuant to the approval accorded by the Reserve Bank of India, Dr. N. Kamakodi was appointed as the Managing Director & CEO of the Bank for a period of three years w.e.f., 1^st May, 2014 till 30^th April, 2017. In view of this, the Board of Directors of the Bank based on the recommendations made by the Nomination Committee and taking into record the continued achievements made by the Bank under the able leadership of Dr. N. Kamakodi, resolved that Dr. N. Kamakodi be re-appointed as the Managing Director & CEO of the Bank for a further term, subject to approval by the RBI under the provisions of Section 35B of the Banking Regulation Act, 1949.

The RBI vide its letter no.DBR.Appt.No.12580/ 08.42.001/2016-17 dt. 24^th April, 2017 conveyed its approval for the re-appointment of Dr. N. Kamakodi as the Managing Director & CEO of the Bank for a further period of three years w.e.f., 1^st May, 2017 till 30^th April, 2020. Further, as per the relevant provisions of Section 196 of the Companies Act, 2013, the re-appointment of Managing / Whole Time Director requires the approval of shareholders. Accordingly, the re-appointment of Dr. N. Kamakodi is being recommended for approval by the shareholders in the Notice calling this Annual General Meeting. The relevant details pursuant to SEBI Listing Regulations 2015 are disclosed separately in such notice.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Bank, Justice (Retd.) S.R. Singharavelu, Non-Executive Director of the Bank, retire by rotation at the ensuing Annual General Meeting of the Bank and being eligible, has offered himself for re-appointment.

Shri. Subramaniam Narayanan, who is having specialized knowledge on Accountancy and Finance, was co-opted as Additional Director on the Board of the Bank on 20^th June, 2017 to represent the minority sector, subject to approval by the Reserve Bank of India. In the opinion of the Board, Shri. Subramaniam is a dynamic and competent person who can effectively participate and represent in the Board of our Bank. The Board recommends his appointment as Independent Director on the Board of the Bank for approval by shareholders in the Notice calling this Annual General Meeting. The relevant details of Shri. Subramaniam Narayanan pursuant to SEBI Listing Regulations, 2015 is disclosed separately in such Notice.

Shri. R. Mohan, is currently a Non-Executive Director on the Board of the Bank representing the majority sector Banking, Agriculture and SSI. He was appointed as Non-Executive Director on 28^th June, 2014 and at present as per the provisions of Section 149(6) of the Companies Act, 2013 he is eligible to represent the Board as an Independent Director. The Director meets the criteria prescribed therein to become an Independent Director and has furnished a declaration to that effect. Accordingly, the appointment of Shri. R. Mohan as Independent Director is being recommended for approval by the shareholders in the Notice calling this Annual General Meeting. The relevant details of Shri. R. Mohan pursuant to SEBI Listing Regulations, 2015 is disclosed separately in such Notice.

Cessation

Shri. R.G. Chandramogan retired as an Independent Director from the Board of the Bank on 29^th July, 2016, on account of completion of two terms of 8 years each with a prescribed cooling period as per the provisions of Banking Regulation Act ,1949.

This was his second tenure of service on the Board of Bank.

Shri. T. K. Ramkumar retired as Independent Director of the Bank on 10^th June, 2017, on account of completion of 8 years tenure as per the provisions of Banking Regulation Act, 1949.

The Board hereby places on record its warm appreciation over the excellent services rendered by Shri. R. G. Chandramogan and Shri. T. K. Ramkumar during their tenure.

Key Managerial Personnel

The following officials of the Bank continue to be the "Key Managerial Personnel" pursuant to the provisions of Section 203 of the Companies Act, 2013 :

Sl.No.	Name	Designation
1.	Dr. N. Kamakodi	MD & CEO
2.	Shri. V. Ramesh	General Manager - CFO & CS

Declaration by Independent Directors

The Bank has received relevant declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations''), and the Board is satisfied that the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Companies Act, 2013.

Familiarization Program for Independent Directors

Performance Evaluation of the Board

In line with the provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015, there exists a structured criterion as approved by the Nomination committee of the Board for carrying out the performance evaluation of the Board as a whole, its committees as well as Independent Directors.

During the year under review, the Securities and Exchange Board of India (SEBI) has issued a detailed guideline on Board Evaluation to bring more clarity in the evaluation process. Accordingly the criteria were aligned by the Nomination committee to meet the requirements of such guidelines and the necessary evaluations/ review were carried out by the Board / Independent Directors in their separate meeting to determine the effectiveness of the Board, its Committees, Chairman and individual Directors.

Additional information on performance evaluation is given in Corporate Governance section forming part of this report.

AUDITORS

Statutory Auditor

M/s. P. Chandrasekar, Chartered Accountants, Bengaluru, the present Statutory Central Auditors, will complete their four (4) years term at the ensuing Annual General meeting (AGM) and accordingly in terms of RBI letter no. DBS.ARS No/08.13.005/2015-16 dt. 9^th June, 2016, they will retire at the ensuing AGM. In terms of Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors has recommended the appointment of M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai as Statutory Central Auditors of the Bank subject to the approval by RBI, to hold office from the conclusion of ensuing AGM on such remuneration to be decided by the Board.

The Bank has received the consent from the proposed Auditor and confirmation to the effect that they are not disqualified to be appointed as Statutory Central Auditors of the Bank in terms of Companies Act, 2013 and the rules made there under. Members are kindly requested to consider and approve the appointment as Statutory Central Auditors of the Bank for FY. 2017-18.

Secretarial Auditor

Pursuant to Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank has appointed M/s B.K. Sundaram & Associates, Practicing Company Secretaries, as Secretarial Auditor to conduct the Secretarial Audit of the Bank for the Financial Year 2016-17. The report of Secretarial Auditor ''Secretarial Audit Report'' is annexed to this report as Annexure II.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors of the Bank hereby declares and confirms that:

i) In the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

ii) The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent 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 & Loss of the Bank for that period.

iv) The Directors had prepared the annual accounts on a going concern basis.

v) The Directors had laid down adequate internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi) The Directors has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INSIDER TRADING NORMS

The Bank has formulated a Code of Conduct pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, to regulate, monitor and ensure reporting of trading by the employees and other connected persons to comply with the provisions of SEBI Listing Regulations. Such policy is adopted to maintain highest ethical standards in dealing with securities of the Bank by persons to whom it is applicable. The code of conduct and related policy are available in the Bank''s website (weblink: http://investor.cityunionbank.com/about-cub/insider-trading).

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE BANK

There are no material changes and commitments affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e., 31^st March, 2017 and the date of Directors Report i.e., 20^th June, 2017.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the Regulators or courts or tribunals impacting the going concern status and Bank''s operation in future.

REMUNERATION / COMPENSATION POLICY

The Bank has adopted a Compensation Policy in accordance with the directives issued by the Reserve Bank of India. The Bank has constituted a Compensation & Remuneration Committee which oversees the framing, implementation and review of the Compensation Policy of the Bank. The Remuneration policy of the Bank is briefed under Corporate Governance Report as part of Annual Report.

RISK MANAGEMENT POLICY

The bank has in place an integrated Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other Risks.

The details of identification, assessment, mitigations, monitoring and the management of all risks are mentioned in the Management Discussion and Analysis section appended to this Report.

DIVIDEND DISTRIBUTION POLICY

Pursuant to an amendment notification issued by the Securities Exchange Board of India during the year 2016, the Bank has framed a policy on Dividend Distribution taking into account the guidelines prescribed by the Reserve Bank of India on ''Declaration of Dividend by Scheduled Commercial Banks''.The same is available at the website of the Bank. (weblink: http://investor.cityunionbank.com/downloads/Dividend DistributionPolicy.pdf).

BUSINESS RESPONSIBILITY REPORT

As per SEBI Listing Regulations, 2015, a Business Responsibility Report describing the Bank''s social, environmental and governance aspects are attached as part of this Annual Report.

DEPOSITS

INTERNAL FINANCIAL CONTROLS

STATUTORY DISCLOSURES

Conservation of Energy and Technology Absorption

Considering the nature of activities carried out by the Bank, the provision of Section 134(m) of the Companies Act, 2013 relating to conservation of energy and technology observation do not apply to the Bank.

However every effort is being made to conserve energy. On the technological front, the Bank continues to offer excellent service to its customers by adopting the latest and providing innovative technological solutions. A seperate report on technology is furnished as part of this report.

Foreign Exchange Earnings and Outgo

The Bank continues to encourage country''s export promotion by lending to exporters and offering them forex transaction facilities.

Employees and Related Disclosures

Disclosures under Section 197 of the Companies Act, 2013

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure III.

During the financial year there are no employee(s) of the Bank who were in receipt of remuneration either employed throughout the financial year or part thereof, was in receipt of remuneration for that year which in the aggregate or as the case may be at a rate which is not less than the limits specified under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended.

Further, the Bank do not have any employee(s) who was employed throughout the financial year or part thereof and was in receipt of remuneration in that year which in the aggregate or as the case may be at a rate, which in the aggregate, is in excess of that drawn by the Managing Director and holds by himself or along with his spouse and dependent children not less than 2% of equity shares of the Bank.

Disclosure under Section 22 of Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act 2013.

The Bank gives utmost importance towards maintaining and upholding the dignity of each and every women working in the Bank. The Bank has a policy on Prevention of Sexual Harassment at workplace which provides for adequate safeguards and protection for women employees working in the organization. The details of complaints received and disposed under such policy is as follows:

Number of complaints pending as on the beginning of the financial year	Nil
Number of complaints filed during the financial year	1
Number of complaints pending as on the end of the financial year	Nil

RELATED PARTY TRANSACTIONS

The Board of Directors of the Bank has adopted a policy on Related Party transactions which is in line with the Companies Act, 2013 and SEBI listing regulations, 2015. There were no significant "Related Party Transactions" of any material, financial & commercial nature with the Bank by the Directors and their relatives that would have potential conflict with the interest of the Bank at large. A detailed policy on the Related Party Transaction is available at the Bank''s website. (weblink: http://investor.cityunionbank.com/downloads/documen ts/CUB_Related_Party_Transaction.pdf)

LOANS, GUARANTEES OR INVESTMENTS

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a), of the Companies Act, 2013 (the Act), read with Rule 12(1) of Companies (Management & administration) Rules, 2014 the extract of Annual Return in form MGT - 9 as provided under

Sub-section (3) of Section 92 of the Act is appended to this Annual Report as Annexure IV.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, and the related notifications / circulars / guidelines issued by MCA, the Bank has established a Corporate Social Responsibility (CSR) Committee. The statutory disclosures on the committee composition and a Report on CSR activities undertaken during the year is annexed as Annexure V to this report.

CORPORATE GOVERNANCE

Corporate Governance of the Bank is an ethically driven business process that rests on the fundamental pillar of high ethical values aimed at enhancing organization''s brand and reputation and to protect the interests of all the stakeholders by taking ethical business decisions. The Bank is committed to achieving the highest standards of Corporate Governance and also adheres to the Corporate Governance requirements set by the Regulators / applicable laws. Accordingly, the Board functions as trustees of the shareholder''s and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance Standards followed by the Bank and the relevant disclosures, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 and rules made there under are disclosed there at as part of this report.

MANAGEMENT DISCUSSION & ANALYSIS

WHISTLE BLOWER / VIGIL MECHANISM

A vigil mechanism has been implemented through the adoption of Whistle Blower Policy with an objective to enable any employee or Director, raise genuine concern or report evidence of activity by the Bank or its employee or Director that may constitute: Instances of corporate fraud; unethical business conduct; a violation of Central or State Laws, rules, regulations and / or any other regulatory or judicial directives; any unlawful act, whether criminal or civil; malpractice; serious irregularities; impropriety, abuse or wrong doing; deliberate breaches and non-compliance with the Bank''s policies; questionable accounting / audit matters / financial malpractice.

Safeguards to avoid discrimination, retaliation, or harassment, and confidentiality have been incorporated in the policy. All employees and directors have access to the Chairman of the Audit Committee in appropriate and exceptional circumstances.

The Policy has been uploaded on the Bank''s intranet as well as website (weblink: http://investor.cityunionbank. com/downloads/ Whistleblower%20Policy.pdf).

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all the stakeholders and wish to place on record its deep and sincere gratitude to the Reserve Bank of India, NABARD, NHB, IDBI, SIDBI, EXIM BANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, Karvy Computershare Pvt. Ltd., Life Insurance Corporation of India, United India Insurance, New India Assurance, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses and other regulatory authorities for their continued support, guidance and co-operation and also, to Shri. R. G. Chandramogan and Shri. T. K. Ramkumar, Independent Directors who retired on account of completion of tenure.

The Board hereby appreciates the dedication and the efforts of all the employees for their resolute support and commitment in pursuit of organizational growth & excellence.

For and on behalf of the Board

Place : Chennai S. Mahalingam

Date : 20^th June, 2017 Chairman

Mar 31, 2015

Dear Members,

The Board of Directors are pleased to present the Annual Report together with the audited accounts for the financial year ended 31st March 2015.

Financial Highlights (Rs. in crore)

Particulars 2014-2015 2013-2014 Growth(%)

Share Capital 60 54 11

Reserves & Surplus 2,636 1,971 34

Deposits 24,075 22,017 9

Advances (Gross) 18,089 16,224 12

Investments (Gross) 6,367 5,955 7

Total Assets / Liabilities 27,871 24,994 12

Net Interest Income 807 759 6

Operating profit 693 581 19

Net Profit 395 347 14

During the year, the Bank earned an operating profit of Rs. 693 crore representing an increase of 19.28% as compared to previous year figure of Rs. 581 crore. The net profit of the Bank for the current year is Rs. 395 crore as compared to Rs. 347 crore for the last year registering a growth of 13.83%. The deposits and advances figure for the current year stood at Rs. 24,075 crore and Rs. 18,089 crore respectively.

DEPOSITS

The total deposits of the Bank for the current year increased by Rs. 2,058 crore to Rs. 24,075 crore from Rs. 22,017 crore witnessing a growth of 9.35%. During the year under review, the CASA grew from Rs. 3,917 crore to Rs. 4,631 crore recording a growth of Rs. 714 crore. The cost of deposit of the Bank marginally decreased from 8.37% in the previous year to 8.15% in the current year.

ADVANCES

The Bank has shown a growth of Rs. 1,865 crore in advances from Rs. 16,224 crore to Rs. 18,089 crore, posting a growth of 11.50%. The yield on advances declined marginally from 13.43% to 13.18% during the year under review.

The Gross and Net NPA for the current year stood at 1.86% and 1.30% respectively as compared to 1.81% and 1.23% in the previous year.

Priority sector advances during the year, has increased by Rs. 902.38 crore from Rs. 7,409.84 crore to Rs. 8,312.22 crore. Your Bank has achieved 49.80% of Adjusted Net Bank Credit (ANBC) against the regulatory prescription of 40% of ANBC on priority sector lending requirements. The total agricultural advances stood at Rs. 3,041.31 crore as at 31st March, 2015 forming 18.22% of ANBC against mandatory level of 18%. The advances to weaker section were Rs. 1,836.22 crore representing 11% of ANBC (mandatory level 10%).

TREASURY OPERATIONS

Domestic Treasury

The gross investments increased from Rs. 5,955 crore as on 31st March 2014 to Rs. 6,367 crore in 31st March 2015, out of this, the investments in Government Bonds alone amounted to Rs. 5,488 crore. The benchmark yield softened during this year from a high of 8.80% to 7.74%. The Bank earned a profit of Rs. 60.32 crore as compared to Rs. 22.83 crore last year from the domestic treasury operations mainly on account of softening of yield and the total yield on investments increased from 7.71% in the previous year to 8.33% in the current fiscal year.

Forex Treasury

During the year Indian Rupee witnessed swings against major currencies. The INR against USD ranged from Rs. 58.33 to Rs. 63.89 and remained comparatively weaker against USD on account of global economic factors. The Bank earned an exchange profit of Rs. 68.89 crore compared to Rs. 32.67 crore last year, with integrated treasury operations contributing substantially.

OPERATING RESULTS HIGHLIGHTS (Rs. in crore)

Year ended Year ended Particulars 31st March,2015 31st March, 2014

Total Income 3,103 *2,826

Total Expenses 2,410 *2,245

Operating Profit 693 581

Provisions & Contingencies 309 234

Exceptional Items ** 11 0

Net Profit 395 347

Net Interest Income 807 759

* the figures of the previous year have been regrouped / reclassified wherever necessary.

** the method of depreciation on Fixed Assets has been changed to Straight Line Method determined on the basis of useful life as against WDV method w.e.f. 1st April, 2014, in accordance with Schedule II of Companies Act, 2013 being used hitherto. Consequent to the change, the Fixed Assets and Profit after Tax for the FY ended 31st March, 2015 are higher by Rs. 1,088.93 lakh.

The Bank has earned a total income of Rs. 3,103 crore as against Rs. 2,826 crore posting a growth of 9.80%. The total expenditure of the Bank increased to Rs. 2,410 crore as compared to previous year figure of Rs. 2,245 crore.

The Net Interest Income for the year under review increased by 6.32% from Rs. 759.39 crore to Rs. 807.37 crore. The non-interest income of the Bank increased from Rs. 279.86 crore to Rs. 404.10 crore registering a growth of 44.39%. The Bank has earned an income of Rs. 4.24 crore from Bancassurance business in tie up with Life Insurance Corporation of India.

The operating profit increased to Rs. 692.65 crore from Rs. 580.97 crore. The net profit increased from Rs. 347.07 crore to Rs. 395.02 crore recording a growth of 13.82%. The provision for tax for the year has increased from Rs. 66.50 crore to Rs. 126 crore. The provision for NPA stood at Rs. 165 crore vis-a-vis Rs. 148.50 crore last year. The total provisions increased by Rs. 74.62 crore from Rs. 233.90 crore to Rs. 308.52 crore.

APPROPRIATIONS

The summary of net profit appropriations is as follows: (Rs. in crore)

Year ended Year ended Particulars 31st March, 2015 31st March, 2014

Net Profit 395.02 347.07

Balance of Profit brought forward 6.87 6.87

Amount available for appropriations 401.89 353.94

Transfers to Statutory Reserve 103.00 88.00

Capital Reserve 7.60 0.57

General Reserve 173.35 165.00

Special Reserve under IT Act,1961 32.00 30.00

Proposed Dividend 65.62 54.27

Corporate Dividend Tax and Surcharge 13.36 9.23

Balance of Profit carried forward 6.96 6.87

Total 401.89 353.94

NET WORTH & CAPITAL ADEQUACY RATIO

The Net worth of the Bank improved to Rs. 2,666.39 crore as on 31st March, 2015 from Rs. 2,006.38 crore as of 31st March, 2014.

The paid up share capital of the Bank has increased from Rs. 54.27 crore to Rs. 59.66 crore as on 31st March, 2015. During the period the Bank allotted 4,66,35,576 equity shares to Qualified Institutional Buyers (QIB) through QIP (Qualified Institutions Placement) route and 71,91,961 equity shares to employees under CUB ESOS Scheme 2008, aggregating to 5,38,27,537 equity shares.

The BASEL II norm prescribes the minimum capital adequacy ratio to be maintained at 9% against which our Bank has attained 16.59%. The capital adequacy under BASEL III worked out to 16.52% for the year ended 31st March, 2015 as against 15.01% for the last year.

DIVIDEND

Your Bank has entered its 110th year and to commemorate this proud moment your Bank has recommended a dividend of 110% i.e., Rs. 1.10/- per equity share of face value of Rs. 1/- each. The diluted earning per share for 2014-15 is Rs. 6.63 as against Rs. 6.64 last year due to capital infusion.

BRANCH EXPANSION

Keeping in mind the business growth and wider customer participation, the Bank has expanded its branch network by opening 50 more branches and 121 ATMs across the country during the financial year ended 31st March 2015. The Bank has been successful in widening its presence pan India with 475 branches and 1,071 ATM''s. The Bank is focusing to enlarge its presence by tapping potential markets in southern India by opening majority of branches in this region besides other states.

FINANCIAL INCLUSION

The Government of India and the Reserve Bank of India have been making concerted efforts to promote financial inclusion as one of the important national objectives of the country. It is a process through which the weaker / low income groups are brought within the ambit of formal banking sector with a main focus to protect their financial wealth and other resources in exigent circumstances. Your Bank, as per RBI directions, in order to provide efficient and cost-effective banking services in the un-banked and remote villages of the country, have covered all the allotted 43 villages having population of over 2,000 by introducing ICT (Information, Communication & Technology) based services. Your Bank has also covered all the allotted 96 villages having population of over 1,000 and below 2,000 by introducing ICT based services paving way for the inclusive growth.

Further, during the year under review, Basic Savings Bank Deposits (BSBD) accounts numbering 93,856 were opened and 89,599 biometric smart cards were issued to the beneficiaries. SB linked overdraft facility, micro insurance products, Electronic Benefit Fund Transfer (EBT) payments have been extended to such account holders.

PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY)

''Pradhan Mantri Jan-Dhan Yojana'' (PMJDY) is a flagship financial inclusion program of Govt. of India which was launched by our Hon''ble Prime Minister on 28th August, 2014 across the country. Under this program our Bank has been allotted 264 wards apart from 139 villages already allotted under the Rural Financial Inclusion scheme. Your Bank conducted survey of all 1,51,722 households in all these 264 wards and opened 76,707 Basic Savings Bank Deposit accounts and 59,331 Rupay Cards were issued under PMJDY scheme.

The Bank has opened 76,455 PMJDY accounts as on date through all our branches. As the overdraft facility is one of the features under PMJDY scheme, our Bank is considering the same based on the eligibility conditions fixed by IBA to the PMJDY account holders from Rs. 1,000 to Rs. 5,000.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank implemented an Employee Stock Option Scheme called ''CUB ESOS 2008'' for the grant of stock options to eligible employees of the Bank. The shareholders of the Bank approved the scheme on 26th April, 2008 at Extra Ordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme exercise price of the options shall be decided by the Compensation Committee at the time of issuing stock options. There is no lock-in period for shares issued under the scheme upon exercise of stock options. The details of employee stock option are annexed hereto as Annexure I.

HUMAN RESOURCE DEVELOPMENT

The Bank believes that, the Human Resource development is one of the key elements for ensuring qualitative business growth and profitability for any organization. The present global economy is highly competitive which necessitates efficient human resource management.

The Bank aims at optimum utilization of resources through deploying effective management tools viz. motivation, training, enhancing leadership qualities and succession planning. The Bank offers ESOPs to the employees so as to create a sense of ownership among them as the Bank believes that the very success of the Bank depends upon its employees only.

The Bank has a full fledged training college with experienced faculty and good training infrastructure supported by external specialists apart from in-house certified trainers to train the employees at various levels for maximizing the staff potential and to sharpen their skills. The Bank also deputes its employees to various training institutions like SIBSTC, NIBM, CAB, CAFRAL etc. There exists a cordial relationship between the management and the employees.

As on 31st March, 2015, your Bank has 4,365 employees, comprising of 48 Executives, 1,600 Officers, 2,380 Clerks and 337 Subordinate staff as compared to 4,215 employees in the previous year.

AUTOMATION

In today''s Banking scenario, ''Technology'' plays a vital role in managing and fulfilling the growing customer demands.

During the year under review, the Bank has widened the ATMs reach to 1,071 locations including 618 off-site ATMs. The Bank has also introduced Cash Accepting ATMs (Bulk Note Acceptor - BNA) numbering 122 and has proposed to install it in other branches, which would enable the customer to remit cash directly to the credit of their account.

The Bank has introduced CUB Mobile Banking, M Passbook (Mobile Passbook), IMPS in Internet Banking and Mobile Banking for speedy funds transfer across the Banks and Digital Signature authentication for Corporates as second factor authentication for safe and secure Internet Banking. Apart from 569 Xpress desk (Green Channel Counter) across the Bank branches, the Bank has installed 57 Kiosk in selective branches and planning to expand the same. This Kiosk acts as Self Service Machine, which can be used for funds transfer within own accounts, within CUB accounts and across the Banks, open deposit, etc. The Bank has obtained ISO/IEC 27001:2013 Certification from QSCert on IT Infrastructure & Operations Support, Maintaining and Monitoring of IT Outsourced Process.

A customer friendly Captive Contact Centre (Call Centre) with Interactive Voice Response System (IVRS), is in place to promote customer support on multi-languages 24x7 basis.

Your Bank has participated in the ''National Payments Excellence Awards 2014'' by NPCI and has been awarded as Runner up in recognition for excellent performance in National Automated Clearing House (NACH), under the category ''Small Banks'' on 3rd December, 2014.

AWARDS & ACCOLADES

* Your Bank has been adjudged as the Best Old Private Sector Bank for the financial year 2014 by the Financial Express / Ernst & Young Survey on 30th March, 2015.

weblink: (http://epaper.financialexpress.com/469135/fe-Indias-Best-Banks/ March-2015#page/4/2).

* Your Bank has been ranked the "Third Best Bank of the year 2014" by First Post e-Magazine on 31st December, 2014.

weblink: (http://www.firstpost.com/business/best-banks-2014-axis-citibank- surprise-city-union-bank-2024773.html).

BOARD OF DIRECTORS

Shri. N. Kantha Kumar, retired from Directorship on the Board of the Bank on 29th September, 2014, on completion of his tenure. The Board places on record its warm appreciation for the valuable services rendered by Shri. N. Kantha Kumar during his tenure as Director of the Bank.

In accordance with the provision of Section 161 of the Companies Act, 2013, Smt. CA. Abarna Bhaskar was co-opted as an Additional Director by the Board of Directors at its meeting held on 25th October, 2014. The Bank has received a notice in writing from a member pursuant to Section 160 of the Companies Act, 2013, signifying his intention to propose the candidature of Smt. CA. Abarna Bhaskar as Director.

In line with the provisions of Companies Act, 2013 read with the amended Clause 49 of the listing agreement, the position of Justice (Retd.) S.R. Singharavelu as an Independent Director on the Board of the Bank has been changed to Non-Executive Non-Independent Director, liable to retire by rotation. He retires at this Annual General Meeting and stands for re-election. The Board recommends his re-election as Non-Executive Non-Independent Director, liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149 (6) of the Companies Act, 2013 and Clause 49 of the listing agreement.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the listing agreement, the Board has carried out a formal annual performance evaluation of its own performance, the directors individually as well as the functioning of its committees. A detailed explanation has been given in Corporate Governance Report.

Remuneration / Compensation Policy

The Bank has adopted Compensation Policy in accordance with the directives issued by the Reserve Bank of India and also, the Bank has constituted a Compensation & Remuneration Committee which oversees the framing, implementation and review of the compensation policy of the Bank.

Board Meetings

During the year under report, 15 meetings were duly held which is in compliance with Section 173 (1) of the Companies Act, 2013 and Clause 49 of the listing agreement.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors hereby declares and confirms that:-

i) The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures.

ii) Accounting policies have been selected, and applied consistently and reasonably, and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31st March, 2015.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

v) The Bank has laid down adequate internal financial controls and such internal controls are operating effectively.

vi) The Bank has in place a system to ensure compliance of all laws applicable to the Bank.

AUDITORS

Statutory Auditors

M/s. P. Chandrasekar, Chartered Accountants, Bangalore, the present Statutory Central Auditors, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Reserve Bank of India has accorded its approval for the re-appointment of M/s. P. Chandrasekar, Chartered Accountants, to act as Statutory Central Auditors for the financial year 2015-16. Members are kindly requested to consider their re-appointment on a remuneration to be decided by the Audit Committee of the Board / Board, for the ensuing financial year 2015-16.

Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank has appointed M/s B.K. Sundaram & Associates, Practicing Company Secretaries, to act as Secretarial Auditor for conducting the Secretarial Audit of the Bank. The report of secretarial auditor ''Secretarial Audit Report'' is annexed hereto as Annexure II.

STATUTORY DISCLOSURES

Considering the nature of activities carried out by the Bank, the provisions of Section 134 (m) of the Companies Act, 2013 relating to conservation of energy and technology observation do not apply to the Bank.

The Bank continues to encourage country''s export promotion by lending to exporters and offers them forex transaction facilities.

The disclosures required to be furnished under the provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration) Rules, 2014 are furnished as Annexure III.

The statement containing particulars of employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration) Rules, 2014, are furnished as Annexure IV.

It is hereby confirmed that the Bank has proper systems in place to ensure compliance of all laws applicable to the Banks.

RELATED PARTY TRANSACTIONS

The Board of Directors of the Bank has adopted a policy on Related Party Transactions in line with the Companies Act, 2013 and the equity listing agreement. There were no significant "Related Party Transactions" of any material, financial & commercial nature with the Bank by the directors and their relatives that would have potential conflict with the interest of the Bank at large. A detailed policy on the Related Party Transaction is available at the Bank''s website.

EXTRACT OF ANNUAL RETURN

The extract of annual return as prescribed in form MGT - 9 is annexed hereto as Annexure V.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Bank has adopted a policy on Corporate Social Responsibility which is in strict compliance with the guidelines issued by the Ministry of Corporate Affairs.

The Annual Report on CSR activities is annexed hereto as Annexure VI.

CORPORATE GOVERNANCE

The Bank is committed to adopt and follow highest working standards in ensuring good governance. The corporate governance practices followed by the Bank are disclosed separately forming part of this report.

COMPLIANCE REPORTING UNDER EQUITY LISTING AGREEMENT

A. DELISTING from the Madras Stock Exchange Ltd. (MSE)

The Bank pursuant to Regulations 6 and 7 of SEBI (Delisting of Equity Shares) Regulations 2009 ''the regulations'', applied to Madras Stock Exchange Ltd., (MSE) for voluntary Delisting of equity shares as the Bank''s equity shares are not traded in MSE since the year 1998. The MSE accorded its approval to withdraw the name of the Bank from the list of listed securities in terms of the regulations and the admission granted to the Bank for dealing in Equity Shares was withdrawn w.e.f. 4th February 2015.

B. Details of Stock Exchanges where Bank''s shares are listed:

a. BSE Ltd., Scrip Code - 532210 Phiroze Jeejeebhoy Towers, 25th Floor, Dalal Street, Mumbai - 400 023

b. The National Stock Exchange of India Ltd., Scrip Code - CUB Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra - Kurla Complex, Bandra (E), Mumbai - 400 051

It is confirmed that the bank has paid annual listing fees to each of the above stock exchanges within due timelines as provided under law.

WHISTLE BLOWER / VIGIL MECHANISM

The Bank has formed a vigil mechanism to deal with instances of unethical behavior, actual or suspected fraud or violation of Bank''s code of conduct or ethics policy. The details of this policy have been described in the corporate governance section and the policy is available at the Bank''s website.

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all the stakeholders and wish to place on record its deep & sincere gratitude to the Reserve Bank of India, NABARD, NHB, IDBI, SIDBI, EXIM BANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, Karvy Computershare Pvt. Ltd., Life Insurance Corporation of India, United India Insurance, New India Assurance, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses and other regulatory authorities for their continued support, guidance and co-operation and also, to Shri. N. Kantha Kumar, Director who completed his term during this financial year.

The Board hereby appreciates all the employees for their resolute support and commitment in pursuit of organizational growth & excellence.

FOR AND ON BEHALF OF THE BOARD

Place : Chennai S. Balasubramanian Date : 22nd June, 2015 Chairman

Mar 31, 2014

Dear Members,

The Board of Directors take immense pleasure in presenting the Annual Report and Audited financial statements for the year ended 31st March, 2014.

Performance Highlights in key business areas : (Rs. in crore)

Particulars 2013-2014 2012-2013 Growth

Share Capital 54 47 14.89%

Reserves & Surplus 1971 1593 23.73%

Deposits 22017 20305 8.43%

Advances ( Net) 16097 15246 5.58%

Investments (Net) 5954 5267 13.04%

Total Assets / Liabilities 24994 22977 8.78%

Net Interest Income 759 624 21.63%

Operating profit 581 523 11.09%

Net Profit 347 322 7.76%

During the year the growth of business was subdued due to the general slow-down in the economy. The deposit crossed Rs. 22,000 crore and the advances exceeded Rs. 16,000 crore. The net profit of the Bank increased from Rs. 322 crore to Rs. 347 crore registering a growth of 7.76% during the financial year 2013-14.

DEPOSITS

The total deposits of the Bank increased by Rs. 1,712 crore to cross the 22,000 mark to end up at Rs. 22,017 crore registering a growth of 8.43% over the last year. Low cost deposit, CASA deposits increased by 15.06% on account of persistent efforts and measures initiated by the Bank. The cost of deposit of the bank decreased to 8.37% from 8.44% as compared to previous year.

ADVANCES

The gross advances portfolio of the bank increased by 5.74% from Rs. 15,343 crore to Rs. 16,224 crore. However the average advances during the year was higher by 15.95% as compared to previous year. There was a marginal fall in the yield on advances also from 13.49% to 13.43%. The prime focus of the Bank remained towards growth in advances without comprising on the quality.

The gross NPA of the bank increased from 1.13% to 1.81% on the back of the slow down in GDP growth affecting the profits and margins of various units in different sectors. The net NPA was at 1.23% as against 0.63% in the previous year. The priority sector advances comfortably stood at 46.72 % (including NABARD RIDF) as against the regulatory prescription of 40%.

The bank has continued its policy of lending to retail segments to achieve a better return with minimum credit risk.

TREASURY OPERATIONS

Forex Treasury

During the year Indian Rupee witnessed wild swing against major currencies and more particularly against USD. From a high of Rs. 53.66 it touched a low of Rs. 68.85 prompting RBI to step in to keep the volatility in check. Host of measure by RBI like hike in mark up over LIBOR for FCNR B Deposits, swap facilities for FCNR B Deposits / Overseas Borrowings, separate USD window for oil companies, reduction in ODI limits etc., reduced the volatility in USD/INR and consequent to these measures Indian Rupee against USD gradually strengthened to Rs. 59.91 from Rs. 68.85. The high volatility in a way offered more opportunity for trading and the forex treasury made a profit of Rs. 32.67 crore which was 77.75% higher than the previous year.

Domestic Treasury

The gross investments increased from Rs. 5,268 crore at the end of last financial year to Rs. 5,955 crore. Out of these, the investments in Government Bonds alone amounted to Rs. 5,319 crore which were made to maintain statutory reserve requirements on enlarged resources. The G-sec market was also very volatile. The yield softened in the first quarter of the financial year. However in the second quarter yields shot up as a consequence to the steps taken by RBI to control Forex volatility and falling Rupee and the banks were faced with the huge depreciation. The RBI permitted the banks as a special case to transfer the securities from AFS to HTM category for the second time in a financial year and to provide for depreciation in a staggered manner during the year. Your bank treasury managed the situation in the best possible manner to record lowest depreciation and provided for the same in a single shot without availing itself of the benefit offered by RBI to stagger the same. The domestic treasury earned a profit of Rs. 22.83 crore which was higher by 33.88% compared to last year.

Operating results:

The highlights of operating results of your Bank for the current and previous financial year are at a glance as mentioned below:-

(Rs. in crore)

Current Year ended Previous Year ended Particulars 31st March, 2014 31st March, 2013

Total Income 2847 2462

Total Expenses 2266 1939

Operating Profit 581 523

Provisions & Contingencies 234 201

Net Profit 347 322

Net Interest Income 759 624

The total income of the bank increased to Rs. 2,847 crore from Rs. 2,462 crore registering a growth of 15.64% reflecting the higher growth in average advances. The total yield on investments increased from 7.52% in the previous year to 7.71% in the current year. The total expenditure of the Bank increased by 16.88% as compared to previous year increase of 31.29%.

The operating profit increased from Rs. 523 crore to Rs. 581 crore. The net profit marginally increased from Rs. 322 crore to Rs. 347 crore due to higher provisioning for NPAs and taxation. The Net Interest Income increased from Rs. 624 crore to Rs. 759 crore by 21.63% as compared to previous year. The non-interest income of the bank increased from Rs. 274 crore to reach Rs. 301 crore. The Bank continues successively to maintain its top position in the Southern Zone in its bancassurance business in partnership with the Life Insurance Corporation of India.

APPROPRIATIONS:

The summary of net profit appropriations is as follows:

(Rs. in crore)

Current Year ended Previous Year ended Particulars 31st March, 2014 31st March, 2013

Net Profit 347.07 322.02

Balance of Profit brought forward 6.87 6.60

Amount available for appropriations 353.94 328.62 Transfers to

- Statutory Reserve 88.00 82.00

- Capital Reserve 0.57 1.90

- General Reserve 165.00 142.00

- Investment Reserve 0.00 0.34

- Special Reserve under IT Act,1961 30.00 40.00

- Proposed Dividend 54.27 0.00

- Interim Dividend 0.00 47.45

- Corporate Dividend Tax and Surcharge 9.23 8.06

- Balance of profit carried forward 6.87 6.87

Total 353.94 328.62

Net worth & Capital Adequacy Ratio

The Net worth of the Bank improved to Rs. 2006.38 crore as on 31st March, 2014 from Rs. 1631.37 crore as on 31st March, 2013.

The paid up capital of the bank increased to Rs. 54.27 crore from Rs. 47.44 crore on receipt of balance of call money of Rs. 10/- from the Rights Issue of 12,89,87,972 Equity Shares in the ratio of one share for every four shares held of face value Rs. 1 each at an issue price of Rs. 20 per share (including a premium of Rs. 19 per share) in the last year.

During the financial year 37,70,366 equity shares of Rs.1/- each at a premium of Rs. 10.60 per share under CUB ESOS - 2008 Series I and 30,039 equity shares of Rs. 1/- each at a premium of Rs. 28.60 per share under CUB ESOS - 2008 Series II was issued to the employees of the Bank.

The total paid up face value of equity share capital of the Bank after the Rights Issue went up to Rs. 53,89,39,858 and after issue of shares under ESOS to Rs. 54,27,40,263 as on 31st March, 2014.

The Capital Adequacy Ratio as at 31st March 2014 stood at 15.11% as per BASEL - II norms well above the prescribed regulatory norm of 9% and the same worked out to 15.01% as per BASEL - III.

DIVIDEND

The bank has been consistently rewarding the shareholders through regular & higher dividend payments. The diluted earning per share for 2013-14 has risen from Rs. 6.59 to Rs. 6.64. The Profit after Tax for the year 2013-14 was Rs. 347.07 crore as against Rs. 322.02 crore last year. Considering the overall performance and growth of the bank and the necessity of retaining profits for future growth, the Board of Directors has recommended a dividend of 100% i.e. Rs. 1 per equity share of face value Rs. 1, the same as paid during the last year. The dividend is subject to payment of Dividend Distribution tax to be paid by the bank.

BRANCH EXPANSION

Keeping in mind the future business growth and customer acquisition, the Bank has expanded its branch banking network by opening 50 more branches across the country to reach a total of 425 branches at the end of financial year 2013-14. 14 out of 50 branches were opened in Urban & Metro areas which have resulted in achieving a continuous growth in low cost CASA Deposits and higher fee income by cross selling of financial related products. The Bank proposes to open 75 more branches in the current year to take the tally to 500.

FINANCIAL INCLUSION

As informed in our last year''s report your Bank has complied with RBI directive on financial inclusion by covering all the 43 villages having population of over 2000 by introducing ICT (Information, Communication & Technology) based services within the stipulated time.

Your Bank has also covered all the 96 villages having population of over 1000 and below 2000 by introducing ICT based services as on 31st March, 2014.

During the financial year ended 31st March, 2014, Basic Savings Bank Deposits accounts numbering 86224 were opened and 75868 biometric smart cards were issued to the beneficiaries. SB linked overdraft facility, micro insurance products, Electronic Benefit Fund Transfer (EBT) payments have been extended to such account holders.

EMPLOYEES STOCK OPTION SCHEME

Statutory disclosures regarding ESOS under Clause 12 of the SEBI guidelines are provided in Annexure - 1 attached to this report.

HUMAN RESOURCE DEVELOPMENT

Human Resource Development is a key element of your Bank''s overall strategy for ensuring qualitative business growth and profitability. Meritocracy assumes great significance in the era of competition and therefore the Bank is dedicated to empower its employees with knowledge, adequate skill-set and right attitude.

The human resource policy is very flexible and aims to motivate employees through training, rewards and performance linked bonus. Career growth prospects are high as the bank is in high growth path. The Bank provides optimum opportunities to its employees to rise up in their career and shoulder higher responsibilities. "Fast Track Promotion" process has been institutionalized in the bank to meet the aspiration level of its employees, simultaneously catering to the manpower requirements of the Bank by identifying future potential leaders for taking up new challenges and business prospects. Bank is constantly imparting orientation programme for knowledge, soft skill development and on the job training to the new recruits.

The bank has a full fledged training college with experienced faculty and good training infrastructure supported by external specialists to impart and train employees at various levels for maximization of the potentiality of the staff and to sharpen their skills.

As on 31st March 2014, your Bank has 4215 employees, comprising of 54 Executives, 1465 Officers, 2335 clerks and 361 sub-ordinate staff.

AUTOMATION

In today''s Banking scenario Technology plays a vital role in meeting the growing demands of the customers. The bank has upgraded the software from Quartz to Bancs with the help of TCS to offer services on par with the industry standards. To enhance reach of customers and to offer more banking services the Bank has been pursuing a policy of installing more ATM''s with new features ensuring availability of banking services to customers on 24/7 basis. As on 31st March, 2014 the ATM network of bank is 950 of which, 390 are onsite while the balance of 560 is offsite ATM''s. The Bank has provided Xpress desks in 69 branches facilitating customers to do transactions without waiting in queues. Kiosks were just 5 in number last year increased to 29 in the year 2013-14. "Any Counter Any Transaction" implemented in 425 branches received high applause from customers as most of the transactions are done at single point interaction. Point of Sale (POS) Terminals have been installed in several merchant establishments for the benefit of the customers to do shopping with our VISA Debit Card without any hassle. The Bank has installed during the financial year 22 cash deposit machines to accept cash from customers for directly crediting to their own account or to third party account at select branches. Interactive Voice Response System (IVRS) with captive Contact Centre at Abhiramapuram, Chennai has been introduced to promote customer support on multi-languages on 24/7 basis.

BOARD OF DIRECTORS

Shri. S. Balasubramanian, was appointed as Non Executive (Part-time) Chairman of the Bank, with the prior approval of the Reserve Bank of India, for an initial period of three years with effect from 6th May, 2011. Now, he is re-appointed as Non Executive (Part-time) Chairman of the Bank for a further period from 6th May, 2014 to 3rd May, 2016 vide RBI approval letter No. DBOD.18032/08.42.001/2013-14 dated 5th May, 2014. Approval of members is sought for the re-appointment of Shri. S. Balasubramanian, as Non Executive (Part-time) Chairman of the Bank at the ensuing Annual General Meeting as per details provided in the Notice.

Dr. N. Kamakodi, was appointed as the Bank''s Managing Director & CEO for a period of three years from 1st May, 2011 to 30th April, 2014, with the prior approval of Reserve Bank of India. Now, he is re-appointed as the Managing Director & CEO of the Bank for a period of three years commencing 1st May, 2014 and ending on 30th April, 2017. RBI has vide its letter no. DBOD.16916/08.42.001/2013-14 dated 7th April, 2014, accorded its approval for the re-appointment as recommended by the Board of the Bank. Approval of members is sought for the re-appointment of Dr. N. Kamakodi, as Managing Director & CEO of the Bank at the ensuing Annual General Meeting as per details provided in the Notice.

Pursuant to Section 149 and 152 of the Companies Act, 2013, Section 10A and other applicable provisions of the Banking Regulation Act 1949, approval of the shareholders have been sought for the appointment of Shri. R. Mohan as Non Independent Non Executive Director of the Bank, liable to retire by rotation.

Pursuant to Section 149 and 152 of the Companies Act, 2013, Section 10A and other applicable provisions of the Banking Regulation Act 1949, approval of the shareholders have been sought for the appointment of following persons as Independent Non Executive Director(s) of the Bank, not liable to retire by rotation for the number of tenure specified against their respective names.

a. Shri. R. G. Chandramogan - 2 years

b. Shri. T.K.Ramkumar - 3 years

c. Justice (Retd.) S.R.Singharavelu - 4 years

d. Shri. C.R.Muralidharan - 4 years

e. Prof.V.Kamakoti - 5 years

f. Shri. S.Mahalingam - 5 years

Shri. N. Kantha Kumar, is an Independent Non Executive Director of the Bank, who will be completing his eight year term on 29th September, 2014 in terms of Section 10A(2A)(i) of the Banking Regulation Act, 1949.

Shri. S. Bernard has vacated his office as Director of the Bank on 30th June, 2014 on completion of his eight years term in terms of Section 10A(2A)(i) of the Banking Regulation Act, 1949. Further, the Board wishes to place on record its gratitude for the valuable contribution rendered by him during his tenure as Director on the Board.

AUDITORS

M/s. P. Chandrasekar, Chartered Accountants, Bangalore, the present Statutory Central Auditors, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. We have received the approval from Reserve Bank of India for their re-appointment. Members are requested to consider their re- appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2014-15.

STATUTORY DISCLOSURES

Considering the nature of the activities of the Bank the provision of Sec 217 (1)(e) of the Companies Act, 1956, relating conservation of energy and technology observation do not apply to the Bank. However every effort is made to conserve energy. The Bank is constantly pursuing its goal of technological upgradation in a cost effective manner for delivering quality customer service and offer innovative products.

The bank encourages country''s export promotion by lending to exporters and offers them forex transaction facilities.

As required under the provisions of Sec 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended your directors report that during the fiscal year 2013-14 none of the employees were in receipt of remuneration requiring disclosure.

It is hereby confirmed that the bank has proper systems in place to ensure compliance of all laws applicable to the Bank.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of corporate governance. The corporate governance practices followed by the Bank are enclosed as an annexure to this report.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Sec 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declares and confirms that:- i) The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures.

ii) Accounting policies have been selected, and applied consistently and reasonably, and prudent judgments

and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31st March, 2014.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

v) The Bank has in place a system to ensure compliance of all laws applicable to the Bank.

ACKNOWLEDGEMENT

The Board of Directors places on record to express their deep and sincere gratitude to RBI, NABARD, NHB, IDBI, SIDBI, EXIM BANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, the Share Transfer Agents, Life Insurance Corporation of India, National Insurance Company Limited, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses, other government and regulatory authorities for their continued support, guidance and co-operation.

The Board also acknowledges the profound support and patronage of its shareholders and all its valued clients and customers in supporting the Bank towards achieving a good progress during the year 2013-14 in a challenging environment that prevailed throughout the year.

The Board records the appreciation for all its employees for their total commitment, strong work ethics and their initiatives in the progress of the bank during the year 2013-14.

FOR AND ON BEHALF OF THE BOARD

Place : Bengaluru S. Balasubramanian

Date : 28th June, 2014 Chairman

Mar 31, 2013

The Directors take great pleasure in presenting their report and the audited financial statements of your bank for the year ended March 31, 2013

Performance Highlights in key business areas :

(Rs.in crore) Particulars 2012-2013 2011-2012 Growth

Own Funds 1641 1243 32.02%

Deposits 20305 16341 24.26%

Advances ( Net) 15246 12137 25.62%

Investments (Net) 5267 4586 14.85%

Total Assets / Liabilities 22977 18351 25.21%

Net Interest Income 624 500 24.80%

Operating profit 523 427 22.48%

Net Profit 322 280 15.00%

During the year the bank had crossed a new mile stone of Rs. 20,000 crore in deposits and Rs. 15,000 crore in advances. The pace of growth in the business achieved by the bank in the last few years has been maintained in the year under reporting also.

DEPOSITS

The total deposit increased by Rs. 3,964 crore to cross the 20,000 mark to end up at Rs. 20,305 crore which is higher by 24.26% over the last year. CASA, the low cost component of the deposit increased by 15%. In the year of rising interest rate scenario the bank was able to contain the cost of deposit to a marginally higher level at 8.44% compared to 8.11% in the previous year. Steps are being taken on an ongoing basis to ensure that there is steady growth in deposits with an eye on the cost factor also.

ADVANCES

The gross advances of the bank increased by 25.54% from Rs.12,222 crore to Rs.15,343 crore while the yield on advances fell marginally from 13.56% to 13.49%. The banking industry has been witnessing difficulty in lending as the growth of economy slowed down considerably to touch a record low of 5% in the decade.

Thus when the credit off-take was sluggish in the banking industry your bank has managed to achieve a growth of 25.54%. The gross NPA of the bank increased marginally from 1.01% to 1.13%. The net NPA was at 0.63% as against 0.44% in the previous year. The provision coverage ratio stood at 71% and is above the prescribed level of 70%. The priority sector advances stood at 46.93% as against the regulatory prescription of 40% and the sub- targets set for agriculture & weaker sections have also been met.

The bank has continued its policy of lending to retail segments to achieve a better return with minimum credit risk. The bank has also issued Inter Bank Participation Certificate of Rs. 85 crore to other banks for the first time from out of its surplus in priority sector and agricultural lending.

TREASURY OPERATIONS

Forex Treasury

The rupee which was at Rs. 50.68 against US dollar at the beginning of the year depreciated due to the twin effects of slower growth of the domestic economy and the signs of positive growth of the US economy. The rupee reached a peak of Rs. 57.32 to an all time low but recouped later to reach the level of Rs. 54.30 at the end of the year still being 8% lower than which was at the beginning of the year. The two way movement facilitated active trading and the forex treasury took full advantage of the movements in its proprietary as well as in merchant trading to increase the profit to Rs. 18.37 crore which is 20.70% higher than as compared with last year.

Domestic Treasury

The gross investments increased from Rs. 4,594 crore as reported at the end of last year to Rs. 5,268 crore. Out of these, the investments in Government Bonds alone amounted to Rs. 4,564 crore which were made to maintain the statutory reserve requirements on enlarged resources. The G-Sec yields started declining gradually from December 2012 onwards. The Yield to Maturity (YTM) on the 10 year Government of India bond stood at 7.95% as on 31.03.2013 as against 8.57% a year ago. Stock market indices, Sensex and Nifty gained 8.20% and 7.30% respectively. During the year, the treasury department handled the trading/investment functions efficiently and earned a profit of Rs. 17.05 crore as against Rs. 7.77 crore in the previous year.

Operating results :

The highlights of operating results of your Bank for the current and previous financial year are at a glance as mentioned below:-

(Rs.in crore)

Current Year ended Previous Year ended Particulars 31st March, 2013 31st March, 2012

Total Income 2462 1904

Total Expenses 1939 1477

Operating Profit 523 427

Provisions & Contingencies 201 147

Net Profit 322 280

Net Interest Income 624 500

The total income of the bank increased to Rs. 2,462 crore from Rs. 1,904 crore registering an increase of 29.31%. This increase was achieved on the back of higher advances and investments coupled with increase in other income. The total expenditure also increased by 31.29% due to higher cost of deposit and increase in other operational expenditure resulting from large expansion in the number of branches.

The operating profit increased by a healthy 22.48%. The Net Interest Income recorded an impressive growth of 24.80%. The non-interest income of the bank increased by 32.11% to reach Rs. 274 crore. After provisioning for NPAs and taxation the net profit grew by 15% from Rs. 280 crore to Rs. 322 crore.

APPROPRIATIONS:

The summary of net profit appropriations is as follows:

(Rs.in crore) Current Year ended Previous Year ended Particulars 31st March, 2013 31st March, 2012

Net Profit 322.02 280.25

Balance of Profit brought forward 6.60 5.56

Amount available for appropriations 328.62 285.81

Transfers to

- Statutory Reserve 82.00 71.00

- Capital Reserve 1.90 0.00

- General Reserve 142.00 140.00

- Investment Reserve 0.34 0.73

- Special Reserve under IT Act,1961 40.00 20.00

- Proposed Dividend 0.00 40.82

- Interim Dividend 47.45 0.00

- Corporate Dividend Tax and Surcharge 8.06 6.66

- Balance of profit carried forward 6.87 6.60

Total 328.62 285.81

OWNED FUNDS & CAPITAL ADEQUACY RATIO

Owned funds of the Bank has increased from Rs. 1,243.10 crore as on 31.03.2012 to Rs. 1,640.67 crore as on 31.03.2013 due to Issue of Shares under Rights basis and plough back of profit. The paid up capital of the bank increased to Rs. 47.44 crore from Rs. 40.82 crore as a result of the Rights Issue of 12,89,87,972 Equity Shares ( partly paid ) in the ratio of one share for every four shares held at a face value of Rs. 1 each at a price of Rs. 20 per share (including a premium of Rs. 19 per share) of which Rs. 10 was received as application money during the year and the balance of Rs. 10 is to be received in the next fiscal. During the year, the bank allotted 17,39,237 shares to employees who have exercised their options under the Employee''s Stock Option Scheme, 2008.

The Capital Adequacy Ratio as at 31st March 2013 stood at 13.98 % as per BASEL - II norms well above the prescribed regulatory norm of 9%.

DIVIDEND

The bank continued its policy of rewarding the shareholders with high dividend payments by declaring an interim dividend @ 100% i.e Rs. 1 per equity share with a face value of Rs. 1 per share and Rs. 0.50 paise per partly paid equity share with a face value of Rs. 1 each on which Rs. 0.50 paise is paid up and the same was paid on 06.06.2013. The dividend is subject to payment of dividend tax. No final dividend is recommended by the Board in order to conserve capital for future growth and in view of the higher interim dividend declared and paid.

BRANCH EXPANSION

The bank has opened 75 more branches during the year to reach a total of 375 branches. In the last three years 153 new branches were added. The bank continued its focus on semi urban and rural areas which are the core business contributors to the bank by opening 80% of the new branches in these areas while not losing sight on metro and urban areas where 15 branches were opened. The policy of increased presence through more number of branches has resulted in continuous growth in business.

FINANCIAL INCLUSION

As informed in our last year report, your Bank has complied with RBI directive on financial inclusion by covering all the 42 villages having population of over 2000 by introducing ICT (Information, Communication & Technology) based services within the stipulated time.

Your Bank has also covered 58 villages out of 96 villages allotted having population of over 1000 and below 2000 by introducing ICT based services as on 31/03/2013 and the remaining 38 villages will be covered in the FY 2013-14.

During the financial year ended 31.03.2013, Basic Savings Bank Deposits Accounts numbering 54,197 were opened and 39,748 Biometric Smart Cards were issued to the beneficiaries. SB linked overdraft facility, micro insurance products, Electronic Benefit Fund Transfer (EBT) payments have been extended to such account holders.

EMPLOYEES STOCK OPTION SCHEME

Statutory disclosures regarding ESOS under Clause 12 of the SEBI guidelines are provided in Annexure - 1 attached to this report.

HUMAN RESOURCE DEVELOPMENT

Human resource occupies the centre stage in any organization and more so in a service industry like banking. The bank has been following a well defined accommodative and innovative HR policy. The innovative approach includes performance appraisal on an on going basis, identification of skill gap and imparting the required training and optimize the ability of the staff.

As on 31st March 2013, your Bank has 3785 employees comprising of 54 Executives, 1236 Officers, 2124 Clerks and 371 Subordinate staff.

The bank adopted the unique way of rewarding all the permanent employees on uniform basis by granting rights issue with consent of the share holders to increase the stake of employees in the bank and to make them proudly realize that the ownership rest with them also.

The bank has a regular training college which trains all cadres and the freshers. In addition employees are also deputed to other training colleges, seminars, and workshop conducted by reputed organization to sharpen their skills.

AUTOMATION

Technology plays a key role in banking industry today, Realising the importance of leveraging technology for improving customer service, upgradation is done constantly in tune with the requirements.

To satisfy the basic banking needs of customers on 24/7 basis, more number of ATMs are added with new features, we have with us such ATMs also to offer enhanced more banking services. From mere cash delivery machines the ATMs of the day are giving more value added services like money transfer, payment of bills etc. As on 31/03/2013 there were 788 ATMs compared to 500 ATMs as on 31/03/2012 an increase of 57.60% as compared to previous year.

As a part of the efforts to deliver the most convenient way of banking for its customers, the facilities like opening of fixed deposit for individual customer through net banking, availing loan on these deposit, facility for pre closing of deposit and a host of other facilities have been made available through net banking.

"Any Counter Any transaction" was introduced in 161 branches where all needs of customers" are met at a single point interaction. Xpress desks are provided in 50 branches in which customers can deposit cash, with draw cash and make funds transfer without waiting in queues. Kiosks have been introduced in 5 branches where customers can transfer funds within CUB branches, make RTGS/NEFT payments, obtain mini statements, make requests for cheque book, etc.

BOARD OF DIRECTORS

Shri. S. Mahalingam has been co-opted as additional director at the meeting of the Board of Directors held on 22/07/2013 pursuant to Sec. 260 of the Companies Act, 1956. Your bank has received a notice from a member pursuant to Sec. 257 of the Companies Act, 1956 signifying his intention to propose the candidature of Shri. S. Mahalingam as Director.

Shri. K. S. Raman retired from the Directorship of the Bank on 07/12/2012. The Board wishes to place on record its deep sense of appreciation for his invaluable contribution to the growth and development of the Bank during his association with the Bank.

Prof. V Kamakoti, Shri. S R Singharavelu & Shri. C R Muralidharan are the directors retiring by rotation at the ensuing Annual General Meeting and are eligible and offer themselves for re-appointment.

AUDITORS

In accordance with the policy of rotation and resting the present Statutory Central Auditor ( SCA ) M/s Jagannathan & Sarabeswaran, Chartered Accountants, Chennai, retires at the conclusion of this Annual General Meeting. It is proposed to appoint a new Statutory Central Auditor (SCA) fully complying with the eligibility norms issued by the Reserve Bank of India.

In this regard, your Bank has received a special notice from the members under Sec 225 of the Companies Act, 1956 to appoint M/s. P Chandrasekaran, Chartered Accountants, Bangalore as the Statutory Central Auditor of the Bank at the ensuing Annual General Meeting in place of the above retiring auditor.

STATUTORY DISCLOSURES

Considering the nature of the activities of the Bank, the provision of Sec 217 (1) (e) of the Companies Act 1956 relating to conservation of energy and technology observation do not apply to the Bank. However, every effort is made to conserve energy. The Bank is constantly pursuing its goal of technological upgradation in a cost effective manner for delivering quality customer service and offer innovative products.

The Bank supports and encourages the Country''s export efforts through its export financing operations.

As required under the provisions of Sec. 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, your Directors report that during the fiscal 2012-13, none of the employees were in receipt of remuneration requiring disclosure.

It is hereby confirmed that the bank has proper systems in place to ensure compliance of all laws applicable to the Bank.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of corporate governance. The corporate governance practices followed by the Bank are enclosed as an annexure to this report.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Sec 217 ( 2AA) of the Companies Act, 1956, the Board of Directors hereby declares and confirms that :- i) The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures.

ii) Accounting policies have been selected, and applied them consistently and reasonably, and prudent judgements and reasonable estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31st March 2013.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies (Amendment) Act, 2000 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

v) The Bank has in place a system to ensure compliance of all laws applicable to the Bank.

ACKNOWLEDGEMENT

The Board of Directors take this opportunity to express their deep and sincere gratitude to RBI, NABARD, NHB, IDBI, SIDBI, EXIM BANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, the Share Transfer Agents, Life Insurance Corporation of India, National Insurance Company Limited, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses, other government and regulatory authorities for their continued support, guidance and co-operation.

The Board records its deep sense of appreciation to the shareholders and all the customers in supporting the Bank in its endeavour to achieve a good progress during the year 2012-13 in a challenging environment that prevailed in the year.

The Board appreciates all its employees for their stellar performance with full commitment, strong work ethics, and professionalism, which have been making the Bank progress year after year and to reward the shareholders, stakeholders and the employees also.

FOR AND ON BEHALF OF THE BOARD

Place : Chennai S. Balasubramanian

Date : 22.07.2013 Chairman

Mar 31, 2012

The Directors take great pleasure in presenting their report and the audited financial statements for the year ended March 31, 2012

Financial Results : 2011-12

(Rs. in crore)

Particulars 2011-2012 2010-2011 Growth

Deposits 16341 12914 26.53%

Advances (Net) 12137 9255 31.14%

Investments (Net) 4586 3616 26.83%

Total Assets / Liabilities 18351 14592 25.76%

Net Interest Income 500 420 19.05%

Operating profit 427 361 18.28%

Net Profit 280 215 30.23%

It is gratifying to report that the Bank's high growth pattern was sustained in succession for the year ended 2011- 2012 also. The net profit increased to Rs. 280 crore from Rs. 215 crore in the previous year registering a growth of 30.23% during the financial year 2011-12.

DEPOSITS

The total deposits of the Bank increased by Rs. 3,427 crore to reach Rs. 16,341 crore as on 31-03-2012 which is 27% higher than the previous year. The low cost Current Accounts & Savings Bank (CASA) deposits increased by 18% to Rs. 2,972 crore on account of sustained efforts and measures initiated by the bank. The year witnessed an increasing interest rate scenario in which our cost of deposits too rose higher to 8.11% when compared to 6.94% prevailed in the previous year.

ADVANCES

The advances portfolio of the Bank increased by 31% from Rs. 9,329 crore to Rs. 12,222 crore. Corresponding with the increase in the cost of deposits, the Bank could enhance the yield on advances by 1.09% to 13.56% from 12.47%.

The prime focus of the bank remained towards growth in advances without compromising on the quality. The strict monitoring of advances portfolio coupled towards with early identification of potential slippages and aggressive recovery of bad loans helped the bank achieve a remarkable improvement in its quality of advances portfolio by bringing down the Gross NPA by 20 basis points to 1.01% from 1.21%. The percentage of Net NPA at 0.44% and the provision coverage ratio of 76.81% at the end of March, 2012 may be regarded as very good performance by the bank.

The Bank's priority sector advances stood at 47% and its agricultural finance reached 17% of the adjusted net bank credit.

TREASURY OPERATIONS Domestic Treasury

The gross investments increased from Rs. 3,625 crore at the end of last year to Rs. 4,594 crore. Out of these, the investments in Government Bonds alone amounted to Rs. 3,853 crore to maintain statutory reserve requirements on enlarged resources. The bond market was bearish during most part of the year with steady rise in market interest rates offering limited opportunities to trade and earn profits. The Yield to Maturity (YTM) on the 10 year Government of India bond stood higher at 8.57% as on 31.03.2012 as against 7.98% as on 31.03.2011. The equity market also reflected similar sentiments. Despite such difficult trading conditions, the treasury desk handled the trading functions efficiently and earned a profit of Rs. 7.77 crore, which is 17.55% higher over the previous year.

Forex Treasury

During the year there were two way movements of appreciation and depreciation for the rupee against major currencies. The rupee opened at 44.53 against US dollar to touch a high/low of 43.85/54.30 during the year and closed at 50.87 to a US dollar on. The currency market was volatile for most part of the year. The forex treasury made full use of the two way movements and market volatility in its proprietary trading deals and the profit from forex treasury operations touched Rs.15.22 crore registering a steep growth of 44% compared to the previous year.

FINANCIAL RESULTS

A snap shot of the working results for the current year and previous year is appended below :-

(Rs. in crore)

For the Current For the Previous Year ended Year ended Particulars 31st March, 2012 31st March, 2011

Total Income 1904 1376

Total Expenses 1477 1015

Operating Profit 427 361

Provisions & Contingencies 147 146

Net Profit 280 215

The higher yield on advances coupled with a growth in advances and investments has resulted in bank's total income rising by 38% to Rs. 1,904 crore. Similarly the total expenses increased to Rs. 1,477 crore on higher deposit interest and other operating expenses.

The expansion in the balance sheet size and improved efficiency of core banking operations culminated in the Net Interest Income (NII) attaining a mile stone of Rs. 500 crore, a significant mile stone for the Bank translating into a growth of 19% over the previous year.

The non interest income of the Bank increased by 32% from Rs. 157 crore to Rs. 207 crore. The Bank continues to maintain its top position in the Southern Zone in its banc assurance partnership with the Life Insurance Corporation of India.

The Bank achieved an operating profit of Rs. 427 crore against Rs. 361 crore recorded in the previous year recording a growth of 18%. The net profit too increased by 30% from Rs. 215 crore to Rs. 280 crore. The return on average assets for the year was also higher at 1.71% when compared to 1.67% last year reflecting better utilization of assets.

APPROPRIATIONS:

The summary of net profit appropriations is as follows:

(Rs. in crore)

For the Current For the Previous Particulars Year ended Year ended 31st March, 2012 31st March, 2011

Net Profit 280.25 215.05

Balance of Profit brought forward 5.56 5.56

Amount available for appropriations 285.81 220.61

Transfers to

- Statutory Reserve 71.00 56.00

- Capital Reserve 0.00 0.00

- General Reserve 140.00 98.40

- Investment Reserve 0.73 0.00

- Special Reserve under IT Act,1961 20.00 20.50

- Proposed Dividend 40.82 34.43

- Corporate Dividend Tax and Surcharge 6.66 5.72

- Balance of profit carried forward 6.60 5.56

Total 285.81 220.61

NETWORTH & CRAR

The Bank's paid-up capital was Rs. 40.82 crore as on 31st March, 2012 and the Net worth improved from Rs. 1,006.62 crore as on 31st March, 2011 to Rs. 1,243.09 crore as on 31st March, 2012. During the year the bank allotted 31,81,646 shares to employees who have exercised their options under the Employees' Stock Option Scheme, 2008. The Capital Adequacy Ratio as at 31st March, 2012 stood at 12.57% as per BASEL-II norms well above the regulatory norm of 9%.

DIVIDEND

The Bank has been pursuing a constant philosophy of rewarding shareholders through regular and higher dividend payments. The diluted earning per share (EPS) for 2011-2012 has risen to Rs. 6.82 from Rs. 5.30 last year. In view of the overall good performance of the Bank and with the objective of rewarding shareholders with higher cash dividends while retaining profits to maintain a healthy Capital Adequacy Ratio to support future growth, the Board of Directors has recommended a higher dividend of 100% i.e. Rs. 1.00 per equity share compared to Rs. 0.85 per equity share paid last year. This dividend shall be subject to tax on dividend to be paid by the Bank.

BRANCH EXPANSION

As one of the key planks for business growth and customer acquisition, the bank continued to enlarge its distribution network. Widening geographical reach is critical for extending service delivery and for tapping growth opportunities in newer markets, especially in the areas of low cost CASA deposits, lending to borrowers in the retail segment, agriculture and cross selling of financial related products. This year the Bank has added 54 branches to its network by opening new branches at various centers and the distribution network now covers 300 branches as on 31st March 2012. Of these 149 branches are in semi-urban and rural areas and 151 branches are in Metropolitian and Urban areas covering a total of 15 states in India.

FINANCIAL INCLUSION PROGRAMME

Your Bank has complied with RBI direction of financial inclusion of covering all the 42 villages having population of over 2000 by introducing ICT (Information, Communication & Technology) based services within the stipulated time frame.

Your Bank has also covered 26 villages having population over 1000 and below 2000 by introducing ICT based services during the financial year 2011-12.

During the financial year ended 31.03.2012, 19189 "no frills" accounts were opened and 8120 biometric smart cards were issued to the beneficiaries. SB linked overdraft facility has also been permitted to all such account holders.

EMPLOYEES STOCK OPTION SCHEME

Statutory disclosures regarding ESOS under Clause 12 of the SEBI guidelines are provided in Annexure - I attached to this Report.

HUMAN RESOURCE DEVELOPMENT

The bank aims to create and develop human capital to realize its vision of nurturing a mutually beneficial relationship with its employees. The bank's human resources policy is very flexible and aims to motivate the employees through training, rewards and performance linked bonus. As the bank is in the high growth path the opportunities for career growth prospects are very bright. HR objective during the year occupied centre stage by employee engagement and learning, effective leadership development, productivity enhancement and building communication platforms.

A strong work force with a pool of best talent is a dream of any organization. It is a challenging task for any organization to attain the dream and more so for the service industry like banking. Your bank is constantly upgrading and revisiting its human resources policy. Your bank has embarked on a massive pan India campus recruitment to suit its needs. The induction of freshers into system throws up challenges. The new recruits are given orientation programme for knowledge and soft skill development, followed by on job training to further their domain knowledge.

The bank has a full fledged training college with a good training infrastructure and experienced faculty supported by external specialists to impart and train employees at various levels. Employees are also deputed to external training centres for up-dating and up-grading their knowledge skills

As on 31st March, 2012, your Bank has 3347 employees comprising of 47 executives, 1006 officers, 1906 clerks and 388 sub-ordinate staff.

AUTOMATION

Technology is used to create better delivery systems for the old products and introduce new products to meet the demands of the customers. The bank has been consistently upgrading its technological platforms to offer services on par with the industry standards. To enhance reach of customers and to ensure availability of banking services to customers at all times, the bank has been aggressively pursuing a policy of installing more ATMs. As on 31.03.2012 the ATM network of bank is 500 of which, 234 are onsite while the balance of 266 are offsite ATMs. The bank has been offering a host of technology aided services like internet banking, mobile banking including on line funds transfer and fixed deposit operations.

BOARD OF DIRECTORS

Shri. P. Vaidyananthan demitted his office of Non Executive Chairman of the Bank on 26th April 2011 and also tendered his resignation from the directorship of the Bank. Shri. S. Balasubramanian took over as the Non- Executive Chairman of the Bank on 6th May 2011. Shri. S. Balasubramanian demitted office of MD & CEO on 30th April 2011 consequent to the expiry of his term of office. Dr. N. Kamakodi took over as MD & CEO on 1st May 2011. Prof. V. Kamakoti has been appointed as Director of the Bank on 27th April 2011. It may be noted that the above terms of appointment were already approved by the share holders in the AGM held on 27th August 2011.

Shri N. Sankaran has resigned as Director of the Bank on 26th April 2011.

The Board wishes to place on record its deep sense of appreciation for their invaluable and immeasurable contribution to the growth and development of the Bank during their association with the Bank.

Shri. T K Ramkumar, Shri. S Bernard and Shri. N Kantha Kumar are the directors retiring by rotation at the ensuing Annual General Meeting are eligible and offer themselves for re-appointment.

AUDITORS

M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai, the present Statutory Central Auditors, retire at the conclusion of this Annual General Meeting and they, being eligible, offer themselves for re- appointment. The Bank has received a certificate from the Statutory Central Auditors to the effect that the re- appointment, if made, will be in accordance with the limits prescribed under Section 224 (1B) of the Companies Act, 1956. The Board of Directors places on record their appreciation of the professional services rendered by M/s. Jagannathan & Sarabeswaran as the Statutory Central Auditors of the Bank.

CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY, FOREIGN EXCHANGE EARNINGS AND OUTGO

Considering the nature of the activities of the Bank the provision of Sec. 217 (1)(e) of the Companies Act 1956 relating to conservation of energy and technology observation do not apply to the Bank. However every effort is made to conserve energy. The Bank is constantly pursuing its goal of technological up gradation in a cost effective manner for delivering quality customer service and offer innovative products.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of corporate governance. The corporate governance practices followed by the Bank are enclosed as an annexure to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with Sec. 217(2AA) of the Companies Act, 1956, the Board of Directors hereby declares and confirms that :-

(i) The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures.

(ii) Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit and Loss of the Bank for the financial year ended 31st March 2012.

(iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies (Amendment) Act, 2000 for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities.

(iv) The annual accounts have been prepared on a going concern basis.

(v) The Bank has in place a system to ensure compliance of all laws applicable to the Bank.

ACKNOWLEDGEMENT

The Board of Directors places on record its sincere appreciation and gratitude to RBI, NABARD, SIDBI, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, the Share Transfer Agents, Life Insurance Corporation of India, National Insurance Company Limited, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses, other Government and Regulatory Authorities for their continued support, guidance and co-operation.

The Board recognizes the support of the shareholders and sincerely thanks all its valued clients and customers for their continued support. The Board greatly appreciates all its employees for their strong work ethic, excellent performance, professionalism, team work, commitment and initiative which has enabled the Bank to achieve commendable progress during 2011-12 amidst stiff competition and challenges in the banking environment.

FOR AND ON BEHALF OF THE BOARD

Place : Chennai S. Balasubramanian

Date : 22.06.2012 Chairman

Mar 31, 2011

Dear Members,

The Directors take immense pleasure in presenting their report on the financial results of the Bank along with the Audited Balance Sheet as on 31st March, 2011 and Profit and Loss account for the year ended 31st March, 2011.

PERFORMANCE HIGHLIGHTS

The performance of the Bank in key financial areas during the year under review in comparison with those of the last year is as under:

(Rs. in Crore)

Particulars 2010-11 2009-10

Deposits 12914 10285

Advances 9255 6833

Investments 3616 3210

Net Interest Income 420 278

Operating Profit 361 256

Net Profit 215 153

You would be happy to observe that the performance on all areas has improved during the year and that the Bank has crossed yet another milestone of Rs.22000 crores of total business during the Financial Year 2010-11 as compared to Rs.17000 crores for the last year. The growth rate is healthy at 30%, as reflected by the enlarged Balance Sheet size of Rs.14592 crores.

DEPOSITS

The total deposits of the Bank stood impressively at Rs.12914 crores as on 31-03-2011 having grown by Rs.2629 crores or 26% over the last year. A welcome feature of the growth is the concurrent increase of the low cost deposits comprising Current Account & Savings Account (CASA) by 12% to Rs.2528 crores. The cost of total deposits was also contained at 6.94% during the year when compared to 7.73% that prevailed in the last year. Considering the beneficial saving in costs and other cross selling revenues arising from CASA, the Bank has initiated a series of measures to reach a significant share of CASA in total deposits in the next year.

ADVANCES

The robust GDP growth and the sustained drive of the Bank to tap business opportunities resulted in an impressive growth of 35% over the last year and the aggregate outstanding Gross Advance stood at Rs.9329 crores as on 31.03.2011. Despite the pressures of a stiff and competitive market as well as a lower interest rates scenario- particularly during the first half of the last year, the Bank could maintain the yield on advances at 12.47% though at a slightly lower level than the rate of 13.04% in the year before.

The quality of loan portfolio was always accorded prime focus, despite the fast growth witnessed in credit expansion. This coupled with the vigorous efforts to monitor the recovery of bad loans, yielded favourable results and the Bank maintained a healthy credit portfolio with a lower level of bad loans. As a result of relentless steps taken in recovery, the level of Gross Non-Performing Assets has been brought down to 1.21% from 1.36% of the Gross advances and the Net Non-Performing Assets got reduced to 0.52% from 0.58% to the Net advances. The Bank has also achieved a Provision Coverage Ratio of 76.69% well above the regulatory prescription of minimum 70%.

The Bank could comfortably cross the priority sector loan target of 40% by achieving 49%. Lending to agriculture sector constituted 17% of its adjusted net credit.

INVESTMENTS/TREASURY OPERATIONS

During the year under review, the gross investments increased from Rs.3218 crores to Rs.3625 crores. The investment in Government Bonds moved higher from Rs.2577.49 crores to Rs.2892.27 crores to maintain statutory reserve requirements on enlarged resources. While the yield on Govt. Bonds softened in the first half of the year, it moved up subsequently mainly driven by excess supply resulting from enhanced borrowings of the Government on one hand and on the other by the tight liquidity conditions witnessed in the second half of the year. The bearish market conditions were not conducive to earn higher trading profits either from fixed income securities or equity shares.

FOREX OPERATIONS

In comparison with the steep fall against US dollar witnessed last year, the Rupee staged some recovery in the year and the bank could convert the narrow currency movements both in spot and forwards into reasonable profits. For the year ended 31st March, 2011, your Bank's turnover in Foreign Exchange Business stood at Rs.2413.85 Cr.

FINANCIAL RESULTS

Your Directors are pleased to give hereunder the highlights of the working results for the year ended 31st March 2011 vis-a-vis those of 2009-10.

(Rs. in crore)

For the Current For the Previous

Year ended Year ended

Particulars 31st March, 2011 31st March, 2010

Total Income 1375.81 1100.11

Total Expenses 1014.78 844.32

Operating Profit before Provisions & Contingencies 361.03 255.79

Provisions & Contingencies 145.98 103.03

Net Profit 215.05 152.76

Despite a fall of 57 basis points in the yield on advances,the bank's total income was higher by 25% at Rs.1375.81 crores thanks to a good quantum of growth in business. The escalating cost emanating from rise in wages and other operating expenses led to a 20% increase in total expenditure which to some extent was mitigated by 79 basis points reduction in the interest cost on deposits.

The Net Interest Income being the contribution arising directly from efficiency of core banking operations recorded a smart growth of 51% over the last year to reach Rs.420.03 crores. The cost to income ratio of the Bank lowered to 37% from 39% last year on the back of higher net interest income.

The fee based income of the Bank increased by 44% from Rs 69.04 crores to Rs.99.22 crores. The Bank continues to maintain its top position in the Southern Zone in its bancassurance partnership with the Life Insurance Corporation of India.

The Bank achieved an operating profit of Rs.361.03 crores against Rs.255.79 crores recorded in the previous year translating into a rise of 41%. The net profit too increased by 41% from Rs.152.76 crores to Rs 215.05 crores. The return on average assets for the year was also higher at 1.67% when compared to 1.52% last year reflecting better utilization of assets.

APPROPRIATIONS:

The summary of net profit appropriations is as follows:

(Rs. in crore)

For the Current For the Previous

Particulars Year ended Year ended

31st March, 2011 31st March, 2010

Net Profit 215.05 152.76

Balance of Profit brought forward 5.56 5.01

Amount available for appropriations 220.61 157.77

Transfers to

- Statutory Reserve 56.00 39.00

- Capital Reserve 0.00 5.73

- General Reserve 98.40 67.00

- Special Reserve under IT Act,1961 20.50 5.50

- Proposed Dividend 34.43 30.00

- Corporate Dividend Tax and Surcharge 5.72 4.98

- Balance of profit carried forward 5.56 5.56

Total 220.61 157.77

NETWORTH & CRAR

The Bank's paid-up Capital was Rs.40.50 Cr as on 31st March, 2011 and the Net worth improved from Rs.825.64 Cr as on 31.03.2010 to cross a significant milestone and reach Rs.1006.62 Cr as on 31.03.2011. The Capital Adequacy Ratio as at 31st March, 2011 stood at 12.75% as per BASEL-II norms well above the regulatory norms of 9%.

DIVIDEND

The Bank has been pursuing a constant philosophy of rewarding shareholders through rich dividend payments. At the same time it becomes absolutely imperative to retain a reasonable portion of profit in order to have a comfortable Capital Adequacy Ratio when higher volume of business is expected in the current growth phase of the Bank. Striking a proper balance between these two factors, your Directors have immense pleasure to recommend a dividend of 85% on the equity shares for the financial year 2010-2011 as against 75% paid out last year.

BRANCH EXPANSION

During the year under review, your Bank has expanded its network by opening new branches at the various centres, thus taking our network to 246 branches as on 31.03.2011. During the current year 24 branches have been opened so far and 38 more new branches are proposed to be opened before the end of 2011.

FINANCIAL INCLUSION PROGRAMME

Financial inclusion programme is a Government of India's Mission to provide banking services in the un-banked regions of the country. Towards this mission, RBI directed banks to provide banking services to 73000 villages having more than 2000 population by March 2012 and simultaneously to cover villages having 1000 plus population.

As for 42 villages allotted to our bank in Tamil Nadu, we have completed coverage of 22 villages by March 2011 in the first phase and efforts are on to cover the remaining villages by December 2011 well before the deadline of March 2012. The Scheme has been successfully implemented in our Bank with technology support from Tata Consultancy Services and the NGOs, who act as BCs.

EMPLOYEES STOCK OPTION SCHEME

The Shareholders of the Bank had approved the Employees Stock Option Scheme at the Extraordinary General Meeting held on 26.04.2008 to grant upto 5,00,00,000 stock options to the eligible employees both present and future. Of this, 2,02,50,000 options were granted to 1275 eligible employees at an exercise price of Rs.13 per share on 06.12.2008. Out of the above, 50,31,003 shares were exercised by the employees during this year.

Further during the FY 2010-11, the bank had granted 3,46,000 options at Rs.32/- per option on 26.05.2010 and 28,00,000 options at Rs.47/- per option on 05.10.2010.

Statutory disclosures regarding ESOS under Clause 12 of the SEBI guidelines are provided in Annexure - I attached to this Report.

HUMAN RESOURCE DEVELOPMENT

The human resource agenda of the Bank aims at employees empowerment and orienting them towards the realization of the Bank's vision. During the year, some of the key HR issues that were in focus related to learning & skill development, management of performance, ensuring a good working environment in the organization. The employee engagement initiatives focused on providing opportunities to staff to meet their aspirations through internal job postings and periodic job rotations. The more competitive compensation structure would help in streamlining the performance linked rewards and incentives thus sending a clear message of meritocracy.

Creation of a work force with a pool of best talent is a challenging task and more so maintaining the standard over a period of time. In tune with the future expansion, your bank is constantly upgrading and revisiting its manpower planning policy. In this endeavor we have recruited personnel taking into account the new business needs. The new recruits were given orientation programme which not only aimed at imparting knowledge to them but ensured their harmonious integration into the organization.

The bank has also built a good training infrastructure which seeks to upgrade the operational efficiency (functional/behavioral skill levels) across all grades through a combination of both in house and external programmes.

As on 31st March, 2011, your Bank has 2836 employees comprising of 38 executives, 847 officers, 1544 clerks and 407 sub-ordinate staff.

AUTOMATION

As one of the key plans for business growth and customer acquisition, the bank continued to enlarge its distribution network. Widening geographical reach is critical for extending service delivery and for tapping growth opportunities in newer markets, especially in the areas of low cost CASA deposits, lending to borrowers in the retail segment, agriculture and cross selling of financial related products. The distribution network now covers 246 branches as on 31st March 2011. Of these 119 branches are in semi-urban and rural areas and 127 branches are in Metropolitan and Urban areas covering a total of 13 states in India. To enhance reach of customers and to ensure availability of banking services to customers at all times, the bank has been aggressively pursuing a policy of installing more off-site ATMs. As on 31.03.2011, the ATM network of bank is 231 of which, 183 are Onsite while the balance of 47 are Offsite ATMs. The Bank is determined to install more number of ATMs during the current financial year for operational convenience of the customer and to ensure availability of alternative channels for delivery of products.

BOARD OF DIRECTORS

Shri. S. Balasubramanian has demitted his office of Managing Director & CEO of the Bank on 30.04.2011. Reserve Bank of India, on the recommendation of the Board of Directors conveyed its approval for the appointment of Shri. S. Balasubramanian as the Non Executive Part-time Chairman of the Bank for a period of three years effective from the date of assuming his office . He has assumed office of Non Executive Part-time Chairman of the Bank on 06.05.2011.

Further Reserve Bank of India, on the recommendation of the Board of Directors conveyed its approval for the appointment of Dr. N. Kamakodi as Managing Director and Chief Executive Officer of the Bank for a period of three years effective from 01.05.2011. He has assumed office of Managing Director and Chief Executive Officer of the Bank on 01.05.2011.

Prof. V. Kamakoti has been co-opted as additional director at the meeting of the Board of Directors held on 27.04.2011 pursuant to section 260 of the Companies Act, 1956. Your Bank has received notice from a member pursuant to section 257 of the Companies Act, 1956 signifying his intention to propose the candidature of Prof. V. Kamakoti as Director.

Shri. P. Vaidyananthan demitted his office of Non Executive Chairman of the Bank on 26.04.2011 and also tendered his resignation from the directorship of the Bank.

Shri. V. Jayaraman & Shri. M. Naganathan and Shri. N. Sankaran has tendered their resignation from the directorship of the Bank on 03.09.2010 and 26.04.2011 respectively on attaining the age ceiling in terms of Ganguly Committee recommendation.

The Board wishes to place on record its deep sense of appreciation for their invaluable and immeasurable contribution to the growth and development of the Bank during their association with the Bank.

Justice S.R. Singaravelu, Shri. C.R. Muralidharan and Shri. R.G. Chandramogan, directors retiring by rotation at the ensuing Annual General Meeting are eligible and offer themselves for re-appointment.

AUDITORS

M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai, the present Statutory Central Auditors, retire at the conclusion of this Annual General Meeting and they, being eligible, offer themselves for re- appointment. The Bank has received a certificate from the Statutory Central Auditors to the effect that the re- appointment, if made, will be in accordance with the limits prescribed under Section 224 (1B) of the Companies Act, 1956. The Board of Directors place on record their appreciation of the professional services rendered by M/s. Jagannathan & Sarabeswaran as the Statutory Auditors of the Bank.

CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY, FOREIGN EXCHANGE EARNINGS AND OUTGO

All efforts are being made to reduce energy consumption to the maximum extent possible.

Being a Banking Company, the required technology is deployed keeping in view the nature of activities.

Your Bank, being a Banking company and an Authorised Dealer in foreign exchange, has been taking all steps to improve forex earnings by active consideration of need based credit limits of exporters and extending all facilities and services to NRIs and remitters of foreign exchange to our country. The bank has operationalised number of arrangements for remittances from abroad with Exchange Houses and Banks.

CORPORATE GOVERNANCE

The Bank is committed to achieving the highest standards of corporate governance. The corporate governance practices followed by the Bank are enclosed as an annexure to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) of the Companies Act, 1956, the Board of Directors hereby declares and confirms that :- (i) The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures.

(ii) Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit and Loss of the Bank for the financial year ended 31st March 2011.

(iii) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities.

(iv) The annual accounts have been prepared on a going concern basis.

(v) The Bank has in place a system to ensure compliance of all laws applicable to the Bank.

ACKNOWLEDGEMENT

The Board of Directors places on record its sincere appreciation and gratitude to RBI, NABARD, NHB, IDBI, SIDBI, EXIMBANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, the Share Transfer Agents, Life Insurance Corporation of India, National Insurance Company Limited, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses, other government and regulatory authorities for their strong and continued support, guidance and co-operation.

The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, team work, commitment, and initiative which has enabled to make the Bank commendable progress during 2010-11 amidst stiff competition and challenges in the banking environment.

FOR AND ON BEHALF OF THE BOARD

Place : Chennai S . Balasubramanian

Date : 24.06.2011 Chairman

Mar 31, 2010

The Directors have great pleasure in presenting their report on the financial results of the Bank along with audited Balance Sheet as on 31st March, 2010 and Profit & Loss Account for the year ended 31st March, 2010.

ECONOMY AND BANKING SCENARIO

The Indian economy exhibited clear momentum in recovery, and despite the impact of a deficient monsoon on agricultural production, the GDP growth for the year 2009-2010 has been estimated at 7.2%, up from 6.7% recorded in the previous year on the back of double digit expansion in the manufacturing sector and not so dismal show by the farm sector. The monetary and fiscal stimulus measures initiated in the wake of the global financial crisis played an important role, first in mitigating the adverse impact from contagion and then in ensuring that the economy recovered quickly.

The service sector, exhibited significant recovery in the second quarter of 2009-10, with growth in the output of the sub-groups viz., construction and trade, hotel, transport & communication, accelerating while growth in community, social & personal services slowed down and the growth in this sector would be 8.5%.

Aggregate Deposits of banks as on March 31, 2010 showed a year-on-year growth of 17%, compared to 19.90% in the previous year. Deposits of the banking system slowed down mainly due to the gradual decline in interest rates on time deposits in lagged response to the lower policy rates. With the increasing demand for credit from the banking system, deposit mobilisation gained strength, and deposit rates also moved up towards the end of the year. Even after the absorption of Rs.36,000 crore through the 75 basis points hike in CRR effected in February, 2010, liquidity conditions have remained comfortable, as evident from the reverse repo operations under the Liquidity Adjustment Facility (LAF).

PERFORMANCE OF YOUR BANK

The Performance Highlights for the financial year in the key financial areas are as under :

(Rs. in crore) Particulars 2009-10 2008-09

Deposits 10285 8207

Advances 6833 5645

Investments 3210 2397

Your Bank crossed yet another milestone of Rs.17,000 cr in total business during the Financial Year 2009-10 with all-round growth in various parameters above the industry benchmarks.

The Bank achieved an operating profit of Rs.255.79 cr against Rs.226.72 cr recorded in the previous year. The net profit increased by 25.08% from Rs.122.13 cr to Rs.152.76 cr. The Net Interest Income rose from Rs.242.57 cr to Rs. 278.14 cr registering a growth of 15%. The return on average assets worked out at 1.52% when compared to 1.50% last year.

DEPOSITS

During the year, the deposits increased to Rs.10285 cr as on 31-03-2010 from Rs.8207 cr as on 31-03-2009 growing at the rate of 25.32%. The cost of deposits decreased from 7.98% to 7.73%.

ADVANCES

The advances increased from Rs.5645 cr as on 31-03-2009 to Rs.6833 cr as on 31-03-2010 registering a growth rate of 21.05%. The yield on advances decreased from 13.46% to 13.04%. The priority sector advances aggregated to 44.26% of the banks adjusted net credit.

NON-PERFORMING ASSETS

Your bank devotes highest attention to reduce non-performing assets and as a result of relentless efforts on recovery, the level of Gross Non-Performing Assets has been brought down to 1.36% from 1.80% and the Net Non- Performing Assets have been steeply reduced to 0.58% from 1.08%. The bank is taking continuous efforts to reduce the level of non-performing assets.

INVESTMENTS/TREASURY OPERATIONS

During the year under review gross investments increased from Rs.2405 cr to Rs.3218 cr to maintain statutory reserve requirements on enlarged resources. The total yield on investments worked out to 7.84%. While the yield on Govt. Bonds softened in the first half of the year, it moved up subsequently mainly driven by excess supply resulting from enhanced borrowings of the Government despite abundant liquidity available in the system. The Rupee staged some recovery in the year when compared to the steep fall against US dollar witnessed last year and the bank could convert the narrow currency movements both in spot and forward into reasonable profits.

FINANCIAL RESULTS

Your Directors are pleased to give hereunder the highlight of the working results for the year ended 31st March 2010.

(Rs. in crore) For the Year ended For the Year ended Particulars 31st March, 2010 31st March, 2009

Gross Income 1100.11 928.08

Total Expenses 844.32 701.36

Profit before Provisions & Contingencies 255.79 226.72

Provisions & Contingencies 103.03 104.59

Net Profit 152.76 122.13

APPROPRIATIONS:

The summary of net profit appropriations is given hereunder: (Rs. in crore) For the Year ended For the Year ended Particulars 31st March, 2010 31st March, 2009 Net Profit 152.76 122.13 Balance b/f from previous year 5.01 4.88 Total 157.77 127.01 Appropriations - Transfer to - Statutory Reserve 39.00 31.25 - Capital Reserve 5.74 21.36 - General Reserve 67.00 37.00 - Investment Reserve Account 0.00 1.31 - Special Reserve Account under IT Act 5.50 3.00 - Proposed Dividend Account 30.00 24.00 - Dividend distribution tax including surcharge 4.98 4.08 - Balance carried forward 5.55 5.01 Total 157.77 127.01

NETWORTH & CRAR

The Banks paid-up capital was Rs.39.96 cr as on 31st March, 2010 and the net worth improved from Rs.660.92 cr as on 31-03-2009 to Rs.825.64 cr as on 31-03-2010. The bank successfully completed its Rights Issue of 8,00,00,000 equity shares during the year offering one equity share for every four held at an issue price of Rs.6/- per share including the premium. The Capital Adequacy Ratio as at 31st March, 2010 stood at 12.09% (BASEL-I) and 13.46% (BASEL-II) well above the stipulated regulatory norms.

DIVIDEND

Your Directors have immense pleasure to recommend a dividend of 75% on the enlarged equity shares for the financial year 2009-2010 in pursuance of the constant philosophy of rewarding shareholders.

BRANCH EXPANSION

During the year under review, your Bank has expanded its network by opening new branches at the following centres, so far taking our network to 222 branches. Further the Bank has proposed to open 56 more branches before the end of the current financial year.

Sl. Name of the Branch State Date of Opening No. 1 SRIPERUMBUDUR TAMIL NADU 10.07.2009

2 AURANGABAD MAHARASTRA 03.08.2009

3 RAMANATHAPURAM - COIMBATORE TAMIL NADU 03.08.2009

4 KINATHUKADAVU TAMILNADU 03.08.2009

5 KOLHAPUR MAHARASTRA 03.08.2009

6 THONDAMUTHUR TAMILNADU 03.08.2009

7 VALASARAVAKKAM - CHENNAI TAMILNADU 03.08.2009

8 LUDHIANA PUNJAB 07.08.2009

9 INDORE MADHYA PRADESH 10.08.2009

10 JAIPUR RAJASTAN 17.08.2009

11 BILWARA RAJASTAN 19.08.2009

12 DOMBIVILI - MUMBAI MAHARASTRA 24.08.2009

13 BHAVANAGAR GUJARAT 26.08.2009

14 SURAT II GUJARAT 26.08.2009

EMPLOYEES STOCK OPTION SCHEME

The Shareholders of the Bank had approved the Employees Stock Options Scheme at the Extraordinary General Meeting held on 26.04.2008 to grant upto 5,00,00,000 stock options to the eligible employees both present and future. Of this, 2,02,50,000 options were granted to 1275 eligible employees at an exercise price of Rs.13/- per share. Consequent upon the Rights Issue, the exercise price got reduced from Rs.13/- to Rs.11.60 per option and accordingly the number of options was increased to 2,27,81,250. The Exercise period in respect of 15% of the stock options granted in 2008 commenced on 06.12.2009 and shall be open for 3 years there from. The process of exercising the vested options by the employees has started.

Statutory disclosures regarding ESOS under Clause 12 of the SEBI guidelines are provided in Annexure - I attached to this Report.

HUMAN RESOURCE DEVELOPMENT

The bank has been periodically recruiting qualified and experienced personnel to meet the requirements arising from branch expansion and retirement of existing staff. Considering the significant role played by staff in converting the corporate goals to achievements, your bank has been sponsoring them to various training programmes, workshops and seminars conducted in house and by other agencies as well. As the service industry calls for better interpersonal skills, these programmes are oriented towards sharpening and improving their functional behaviour skills. As on 31st March, 2010, your Bank has 2628 employees comprising of 31 executives, 771 officers, 1437 clerks and 389 sub-ordinate staff.

The information required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is attached to this report as Annexure-II

AUTOMATION

In response to meeting the growing demand of customers for technology based services, your bank has installed 30 onsite ATMs thus taking the total to 152. Your Bank has plans to install more ATMs both onsite & off site at different centres. The integration of bank branches has led to enhanced customer service and has paved the way for enlarging the customer base.

INTERNATIONAL BANKING

As at 31st March, 2010, your Banks turnover in Foreign Exchange Business stood at Rs. 2187.42 cr. The non- resident deposits as on 31st March, 2010 stood at Rs.148.86 cr.

BOARD OF DIRECTORS

Shri C.R. Muralidharan and Justice S.R. Singharavelu have been co-opted as Additional Directors in the meeting of the Board of Directors held on 25.02.2010 pursuant to section 260 of the Companies Act. They will hold office upto the date of ensuing Annual General Meeting. Your Bank has received notices from some of the members pursuant to Section 257 of the Companies Act, 1956 signifying their intention to propose the candidature of Shri C.R. Muralidharan and Justice S.R. Singharavelu as Directors.

AUDITORS

M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai, the present Statutory Central Auditors, retire at the conclusion of this Annual General Meeting and they, being eligible, offer themselves for re-appointment. The Bank has received a certificate from the Statutory Central Auditors to the effect that the re-appointment, if made, will be in accordance with the limits prescribed under Section 224 (1B) of the Companies Act, 1956.

CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY, FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank, being a Banking company and an authorised dealer in foreign exchange, has been taking all steps to improve forex earnings by active consideration of need based credit limits of exporters and extending all facilities and services to NRIs and remitters of foreign exchange to our country. The bank has operationalised arrangements for remittances from abroad with Exchange Houses and Banks.

CORPORATE GOVERNANCE

The Bank complies with the requirements of Clause 49 of the listing agreement entered into with Madras, National and Mumbai Stock Exchanges where its shares are listed. The reports on Corporate Governance & Management Discussion and Analysis are attached.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) of the Companies Act, 1956,

(i) the Directors of the Bank hereby state that in the preparation of the annual accounts for the financial year

ended 31st March, 2010, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

(ii) the Directors had selected such accounting policies and applied them consistently and made judgments and

estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2009-10 and of the profit of the company for that period.

(iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

(iv) the Directors had prepared the annual accounts for the financial year ended 31st March, 2010 on a going

concern basis.

ACKNOWLEDGEMENT

The Board expresses its sincere appreciation to all the shareholders, customers and well wishers of the Bank for their excellent co-operation and unstinted support extended to the Bank and looks forward to their continued patronage in the years to come.

The Board also takes on record its sincere appreciation and gratitude to RBI, NABARD, NHB, IDBI, SIDBI, EXIMBANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, the Share Transfer Agents, Life Insurance Corporation of India, National Insurance Company Limited, Tata Consultancy Services, CCIL, CIBIL,

Correspondent Banks, Exchange Houses and various Government Agencies for their patronage and support.

The Board also places on record the significant contribution made by the employees at all levels and conveys its appreciation for their dedication, devotion to duty and their exemplary involvement in all the developmental activities.

FOR AND ON BEHALF OF THE BOARD Chennai P. Vaidyanathan 29th June, 2010 Chairman

Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article