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Directors Report of Dhanlaxmi Bank Ltd.

Mar 31, 2023

It gives the Board pleasure to place before you the highlights of your Bank''s performance during the financial year 2022-23. Details of the achievements and initiatives taken by the Bank are provided in the 96^th Annual Report of the Bank along with the Audited Balance Sheet as at March 31,2023 and the Profit and Loss Account for the year ended on that date.

Performance Highlights

Bank''s performance Highlights for the financial year ended March 31,2023 are as follows:

Rs. in Crore
	March 31,2023	March 31,2022
Total Business	23,205.38	20,846,47
Deposits	13,351.65	12,402,89
Advance (Gross)	9,853.73	8,443,58
Total Income	1145.75	1,085,76
Total Expenditure	1,022.55	951,46
Net Interest Income	475.76	362,31
Operating Profit	123.20	134,30
Net Profit	49.36	35,90
Gross NPA %	5.19	6,32
Net NPA %	1.16	2,85
Provision Coverage Ratio %	90.61	80,64
CRAR %	12.32	12,98
Return on Assets %	0.34	0,27
Return on Equity %	5.14	3,99
Earnings Per Share (in '')	1.95	1,42
Book Value Per Share (in '')	37.99	35,57

Bank''s Geographical Spread & Expansion Programme

> Bank has 253 branches as on 31st March, 2023 spread across 14 States and 1 Union Territory (Chandigarh).

> Out of 253 branches, 19 branches are in rural category, 110 in Semi Urban, 66 in Urban and 58 in Metropolitan Category,

> Bank had 270 ATMs and 17 Business Correspondents as on March 31,2023,

> Bank opened 8 new branches during the financial year -Manathavady, Cherpulassery, Koyilandy and Mattannur in Kerala State, Thanjavur and Tirunelveli in Tamil Nadu State, Karimnagar in Telangana State and Kurnool in Andhra Pradesh State,

> Bank has obtained in-principle approval from Reserve Bank of India for opening of 12 more branches,

Total Business

Total business of the Bank improved by 11,32% to reach ''23,205,38 Crore as on 31,03,2023, from t20,846,47 Crore as on 31,03,2022,

Deposits

Deposits recorded a growth of 7,65 % to reach ''13,351,65 Crore as on 31^st March 2023 against ''12,402,89 Crore as on 31^st March 2022, CASA to Total deposits as on 31^st March 2023 was 31,90%,

Gross Advances

Bank''s Gross advance stood at ''9853,73 Crore as on 31,3,2023 against ''8443,58 Crore as on 31,03,2022, registering a growth of 16,70%, CD Ratio improved from 68,08% to 73,80% on Y-o-Y basis,

Profitability

Annual Net Interest Income increased from ''362,31 Crore as on 31^st March 2022 to ''475,76 Crore, as on 31^st March 2023 registering a growth of 31,31%, Non-Interest income as on 31^stMarch 2023 was at ''74,51 Crore against ''169,12 Crore as on 31^st March 2022, The reduction was due to Mark to Market (MTM) depreciation on revaluation of investments of ''40,08 crore as on March 31, 2023 against write back of MTM of ''67,35 crore as on March 31, 2022, NIM improved from 3,00% to 3,60% on Y-o-Y basis, Total Income (Interest Income Other Income) increased by ''59,99 Crore with growth of 5,53% on Y-o-Y basis, Cost to Income Ratio as on March 31,2023 was 77,61% against 74,73% as on March 31,2022,

Operating profit during the year was ''123,20 Crore as against ''1 34,30 Crore during the previous year, The Bank declared a net Profit of ''49,36 Crore during the year under report and for the previous year, the Bank had declared a net profit of ''35,90 Crore,

Capital and Reserves

Bank''s Paid-up capital and reserves was ''961,15 Crore as on 31,03,2023, The capital adequacy ratio as per Basel III was 12,32% with Core CRAR of 10,55%,

Dividend

The Board had not recommended any dividend for the financial year 2022 - 2023,

Non-Performing Assets

Gross NPA and Net NPA percentage stood at 5,19% and 1,16% respectively as on 31,03,2023 against 6,32% and 2,85% as on 31,03,2022,

The provision coverage ratio (PCR) as on 31.03.2023 was 90.61% which was 80.64% in the previous year.

Vision & Mission

Our Vision: âBanking on Relationships foreverâ.

Our Mission: To Become a Strong and Innovative Bank with Integrity and Social Responsibility to Maximize Customer Satisfaction as well as that of the Employees, Shareholders and the Society,

Customer Service

The Bank accords high importance to the quality of customer service rendered across its branches/offices. The Bank initiated a series of measures during the year through deployment of technology and significantly enhancing service quality, A well-defined and full-fledged Customer Grievance Redressal Mechanism has been put in place in the Bank.

The Customer Service Committees comprising of Bank personnel as well as our constituents monitor the implementation of customer service measures periodically. Customer Service Committee of the Board has been formed at the apex level and committees at branches for monitoring service quality and bringing about improvements in this area on an ongoing basis. The Bank has a 24 x 7 Phone Banking Call Centre at Chennai to cater to customer needs across the country.

During the financial year 2022-23, the Bank received 6,101 complaints as against a total of 14,005 complaints received in the previous financial year.

The following important products and services/initiatives were introduced during the year for the benefit of the customers:

â¢ Bank entered into Fintech based business for micro lending, under priority sector lending.

â¢ Revamped internet banking platform ''Dhan Delight'' and mobile banking platform ''Dhan Smart'' launched with enhanced security via multi-factor authentication, biometric login and Self-registration functionalities.

â¢ In-app authentication (Smart ID) mechanism to authenticate transactions without relying on SMS based OTP for digital transactions.

â¢ E-Mandate using AADHAAR authentication of recurring payment mandates to customers.

â¢ Public Funds Management System and Wage Protection System platform integrated with new application for Realtime processing of govt. and wage protection system transactions.

â¢ Launched new Education Loan Scheme âDhanam Vidya Kiranâ.

â¢ Bank introduced RuPay Classic EMV Chip Debit Cards to customers which provides exclusive benefits and convenience to the Debit Card users.

â¢ Bank integrated with ICEGATE portal for customs duty payments through retail internet banking platform.

â¢ Signed MOU with Ministry of Agriculture & Farmers Welfare (MoA & FW), Delhi for lending under Agriculture Infrastructure Development Scheme.

â¢ Bank has installed E-Kanika/E-Hundi at selected temples for hassle free offerings for devotees.

Investor Education and Protection Fund

The Bank transferred the entire pending unclaimed dividend amount to the Investor Education and Protection Fund (IEPF) during the financial year 2018-19. There was no amount of dividend pending to be transferred to the fund in the financial year 2022-23.

In terms of Section 124 (6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time to time, it may be noted that if the dividends have been unpaid or unclaimed for seven consecutive years or more the underlying shares shall be transferred to the IEPF Demat Account maintained with depositories. Upon transfer of such shares to IEPF account, all benefits (eg. bonus, spilt, etc.), if any, accruing on such shares shall also be credited to the IEPF Demat Account and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. The members/claimants whose shares, unclaimed dividend etc., have been transferred to IEPF may claim the shares or apply for refund by making an application to IEPF Authority as per the procedure prescribed in the IEPF Rule.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on BSE Ltd., and National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the financial year 2023-24.

Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank has zero tolerance approach towards any action on the part of any executive/employee which may fall under the ambit of âSexual Harassmentâ at work place, and is fully committed to uphold and maintain the dignity of woman staff working in the Bank. The policy provides for protection against sexual harassment of women at work place, prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy,

Number of complaints pending at the beginning of the financial year - Nil

Number of complaints filed during the financial year - Nil

Number of complaints pending at the end of the financial year -Nil

Particulars of Employees

The Bank has no employee whose particulars are required to be given in terms of Section 197 of the Companies Act, 2013 read with Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The ratio of the remuneration of each Director to the median employees'' remuneration and other details in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report.

Green Initiatives in Corporate Governance

The Bank supports and pursues the ''Green Initiative'' of the Ministry of Corporate Affairs. All the documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directors'' Report and Auditors'' Report are being sent electronically to all shareholders who have registered their e-mail addresses with their Depository Participants or with the Bank''s Registrar & Transfer Agents. Shareholders holding shares in electronic form are requested to update their ''e-mail'' addresses in their respective DP accounts. Shareholders holding shares in physical form are requested to update their ''e-mail'' addresses with Bank''s Registrar and Transfer Agents by a written request for enabling the Bank to ensure electronic dispatch the aforesaid documents.

Directors

The composition of the Board of Directors of the Bank is in accordance with the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Banking Regulation Act, 1949, guidelines issued by the Reserve Bank of India and the best practices of Corporate Governance. As on March 31,2023, the Board comprised of 10 Directors including Managing Director & CEO, 7 non-executive Directors and 2 nominee Directors. All the Directors have rich experience and specialized knowledge in various sectors like banking, risk management, agriculture & rural economy, small scale industry, information technology, economics, accountancy, etc. The remuneration/sitting fees paid to the Directors during the year are disclosed in the Report on Corporate Governance.

There were 6 independent Directors on the Board of the Bank as on March 31, 2023. Declarations have been taken from Independent Directors as required under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines.

Changes in the Board during the year

1. Dr. (Capt.) Suseela Menon R., Independent Director of the Bank, resigned from the Board of Directors of the Bank w.e.f. May 01 , 2022 due to personal reasons and professional

commitments and there were no other material reasons for the resignation.

2. RBI has appointed Sri Yarasi Jayakumar as Additional Director on the Board of the Bank, in place of Dr. G. Jagan Mohan, for a period of two years from May 30, 2022 to May 29, 2024 or till further orders, whichever is earlier.

3. RBI had extended the tenure of Sri D. K. Kashyap for a period of 2 years w.e.f. 28.09.2022 to 27.09.2024 or till further orders of RBI, whichever is earlier.

4. Sri K. N. Madhusoodanan, Sri Sreesankar Radhakrishnan and Dr. Nirmala Padmanabhan were appointed as Additional Directors (Independent Category) on the Board of the Bank w.e.f. 09.1 1 .2022. Sri Sridhar Kalyanasundaram was appointed as Additional Director (Independent Category) on the Board of the Bank w.e.f. 05.12.2022. The Shareholders approved their appointment as Independent Directors at the Annual General Meeting held on December 30, 2022, for a period of 5 years w.e.f. December 30, 2022.

5. Ms. Vardhini Kalyanaraman was appointed as Additional Director (Independent Category) on the Board of the Bank w.e.f. 21 .02.2023. The Shareholders approved the appointment of Ms. Vardhini Kalyanaraman as Independent Director of the Bank for a period of five years with effect from May 19, 2023 vide postal ballot.

Composition of Audit Committee

As on March 31 , 2023, the Bank has an 8 member Audit Committee (including 2 RBI Additional Directors). All the eight members of the Committee were non-executive Directors, with Sri Sreesankar Radhakrishnan as its Chairperson and Sri Gopinathan C. K., Sri G. Rajagopalan Nair, Sri K. N. Madhusoodanan, Dr. Nirmala Padmanabhan, Sri Sridhar Kalyanasundaram, Sri D. K. Kashyap and Sri Yarasi Jayakumar as the other Members. The Committee was constituted in accordance with regulatory requirements. The terms of reference of the Committee are in accordance with the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines.

Declaration by Independent Directors

The Bank has duly obtained necessary declarations from each Independent Director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence as laid down in the Section 149(6) of the Companies Act, 2013 and Regulation 1 6 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The Bank has also obtained the ''Fit & Proper'' declarations from all Directors as prescribed by the Reserve Bank of India. Pursuant to the notification of the Ministry of Corporate Affairs dated October 22, 2019, an online data bank for the independent directors (âData Bankâ) has been rolled out by the Indian Institute of Corporate Affairs. All the Independent Directors of the Bank as on March 31, 2023 have registered themselves in the Data Bank.

Policy on appointment and remuneration of Directors

The Nomination & Remuneration Committee recommends the appointment/reappointment/continuation of Directors to the Board after conducting due diligence of the Directors on the basis of the âfit & properâ criteria prescribed by RBI along with the provisions of the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Nomination Policy approved by the Board. The Board will take the appropriate action based on the recommendations of the Nomination & Remuneration Committee.

The criteria for determining qualifications, positive attributes and independence of Directors to be appointed/re-appointed or for continuation of Directors include, inter-alia, the following:

â¢ Ensuring that the appointment/re-appointment/continuation is in conformity with the provisions of the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

â¢ Ensuring that the criteria for independence of Directors as stated in the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is complied with, in case of Independent Directors;

â¢ Ensuring that the person does not attract any disqualification as per the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

â¢ Special knowledge or practical experience in various fields as enumerated in Section 10A(2)(a) of the Banking Regulation Act, 1949 or any other field which may be useful to the Bank;

â¢ Professional knowledge and experience;

â¢ Experience in the field of banking/finance sectors;

â¢ Interest in NBFCs and other entities;

â¢ Relatives connected with the Bank;

â¢ Fund and non-fund facilities availed from the Bank;

â¢ Defaults, if any, by the Director or interested entities with respect to the credit facilities availed from any Bank;

â¢ Professional achievements relevant to the office of Directorship;

â¢ Prosecution, if any, pending or commenced or resulting in conviction in the past against the director and/or against any of the interested entities for violation of economic laws and regulations;

â¢ Criminal prosecution, if any, pending or commenced or resulting in conviction in the past against the Director;

â¢ Any other factors as the Nomination & Remuneration Committee may think fit for the purpose of considering the appointment/re-appointment/continuation as Director.

The Bank has a Board approved Compensation Policy which deals with the compensation & benefits of the Employees of the Bank.

The objectives of the Compensation Policy of the Bank inter-alia includes, to provide a fair and persistent basis for motivating, inspiring and rewarding the employees appropriately, according to their jobs/role size, performance, accomplishments, contribution, skill, aptitude and competence to implement standards on sound compensation practices and incentives and to provide effective governance of compensation payable to the employees, alignment of compensation with prudent risk taking and effective supervisory oversight. The disclosure requirement of the remuneration is separately provided in âDisclosure under Basel III norms.â

The Board considers the recommendations of the Nomination & Remuneration Committee and approves the remuneration, with or without modifications, subject to regulatory approvals. The remuneration payable to Whole-time Directors/MD & CEO is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration to Whole-time Directors/MD & CEO is payable only after receipt of the approval from RBI.

The non-executive Directors are paid sitting fees for attending each meeting of the Board of Directors or any Committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending any change in the sitting fees considers various factors like size and complexity of organization, comparison with the peer banks and regulatory guidelines as applicable. Apart from sitting fees, the Bank does not pay any other remuneration to the non-executive Directors.

The total remuneration paid to MD & CEO and non-executive Directors for the financial year 2022-23 is included in the Report on Corporate Governance forming part of this Report.

The Remuneration Policy of the Bank is hosted on the website of the Bank http://www.dhanbank.com/investor_relations/inv_stat_ policy,aspx.

Board Level Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation of the Board as a whole, the individual Directors and various Committees of the Board are undertaken annually. The evaluation of the individual Directors is being done in the absence of the Director being evaluated.

A separate meeting of independent Directors evaluates the performance of non-independent Directors, Chairman and

the Board as a whole. The separate meeting of independent Directors is held once in a year.

The criteria for performance evaluation of Directors, Board and its Committees include, inter-alia, the following:

â¢ Attendance at Board and various Committee meetings;

â¢ Participation and contribution in Board and Committee meetings;

â¢ Composition of the Board and its diversity;

â¢ Roles of various Committees of the Board;

â¢ Compliance and understanding of regulatory requirements;

â¢ Contribution to effective corporate governance and transparency in the Bank''s operations;

â¢ Updation of Knowledge and familiarization programmes conducted for Directors;

â¢ Appropriateness of decisions made by the Board and its Committees;

â¢ Quality, quantity and timeliness of flow of information to the Board;

â¢ Understanding by individual Directors for their roles and responsibilities as Director;

â¢ Contributions towards the performance and strategies of the Bank;

â¢ Conduct of Meetings;

â¢ Professionalism in the Board and Committees

Changes in Key Managerial Personnel (KMP)

Ms. Kavitha T. A. has been given additional charge as Chief Financial Officer of the Bank in place of Mr. Ramesh A. J., who voluntarily retired from the services of the Bank on August 08, 2022.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, the Board of Directors of the Bank appointed M/s. V, Suresh Associates, Practicing Company Secretaries, Chennai as the Secretarial Auditors to conduct the Secretarial Audit of the Bank for the financial year 2022-23. The Bank has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The report of the Secretarial Auditor is annexed to this report. The Secretarial Audit Report for the financial year 2022-23 does not contain any qualification.

Corporate Governance

A separate report on Corporate Governance as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and certificate from Sri V. Suresh, Practicing Company Secretary certifying compliance with the conditions of Corporate Governance are annexed to this report.

Number of Board Meetings

A total of 1 7 Board Meetings were held during the year. The Board meetings were held in accordance with the regulatory

requirements. The details of the meetings held are provided in the Corporate Governance Report that forms part of this Annual Report.

Annual Return

Pursuant to Section 92 (3) of the Companies Act, 2013 and Section 1 34 (3) (a), the Annual Return is hosted on the Bank''s website at https://www.dhanbank.com/investor relations/inv financials. aspx.

Related Party Transactions

The Bank has adopted the âPolicy on Materiality of Related Party Transactions and Dealing with Related Party Transactionsâ in accordance with the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy is hosted on the website of the Bank www.dhanbank.com/ investor_relations/inv_stat_policv.aspx.

During the financial year, the Bank did not enter into any related party transactions with its Directors or Key Managerial Personnel or their Relatives that would potentially conflict with and/or adversely affect the interests of the Bank, except the remuneration paid to the Managing Director & CEO, Chief Financial Officer and Company Secretary. There was no related party transaction for which Form AOC-2 was applicable.

Material Changes and Commitments affecting 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, i.e., March 31, 2023 and the date of Directors'' Report, i.e., September 04, 2023.

Maintenance of Cost Records

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013.

Subsidiary Companies

The Bank does not have any subsidiary companies.

Strictures and Penalties

During the last three years, there were no penalties or strictures imposed on the Bank by the Stock exchanges(s) and/or SEBI and/ or any other statutory authorities on matters relating to capital market except as disclosed in the Secretarial Audit Report. There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank or the future operations of the Bank.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Corporate Social Responsibility

The brief outline of the CSR policy of the Bank, overview of the projects taken up by the Bank and other mandatory disclosures are annexed to this Report.

Directors'' Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013 with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(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 2022-23 and of the profit and 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 this Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(iv) the Directors had prepared the annual accounts for the financial year ended March 31, 2023 on a going concern basis;

(v) the Directors had laid down 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 had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Business Responsibility Report

The regulatory provisions relating to the Business Responsibility Reporting are not applicable to the Bank for the financial year ended March 31,2023.

Acknowledgements

The Board of Directors places on record its gratitude to the Government of India, the governments of various States, the Reserve Bank of India, the Securities and Exchange Board of India, the Registrar of Companies, other regulatory bodies and the Stock Exchanges, where the Bank''s shares are listed, for their support and guidance. The Board also places on record its gratitude to the Bank''s customers, shareholders, other stakeholders and well-wishers for their valued patronage. The Board further places on record its appreciation for the valuable services rendered by M/s Krishnamoorthy & Krishnamoorthy, Statutory Central Auditors of the Bank and M/s V, Suresh Associates, Secretarial Auditors of the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

Mar 31, 2022

Figures for the previous period have been re-grouped and re-classified in adherence to RBI Master Direction on Financial Statements - Presentation and Disclosure dated 30.08.2021, wherever necessary to conform to current year''s classification.

Bankâs Geographical Spread & Expansion Programme

â¢ Bank had 245 branches as on 31st March, 2022 spread across 14 States and 1 Union Territory (Chandigarh).

â¢ Out of 245 branches, 19 branches were in rural

It gives the Board pleasure to place before you the highlights of your Bank''s performance during the financial year 202122. Details of the achievements and initiatives taken by the Bank are provided in the 95th Annual Report of the Bank along with the Audited Balance Sheet as at March 31,2022 and the Profit and Loss Account for the year ended on that date.

Performance Highlights

Bank''s performance Highlights for the financial year ended March 31,2022 are as follows

Rs. in Crore
	March 31, 2022	March 31, 2021
Total Business	20846.47	18834.16
Deposits	12402.89	11711.90
Advance(Gross)	8443.58	7122.26
Total Income	1085.76	1052.97
Total Expenditure	951.46	967.14
Operating Profit	134.30	85.83
Net Profit	35.90	37.19
Cost to Income Ratio%	74.73	81.01
Gross NPA%	6.32	9.23
Net NPA%	2.85	4.76
Provision Coverage Ratio%	80.64	74.20
CRAR%	12.98	14.47
Return on Assets%	0.27	0.29
Book Value Per Share (in Rs.)	35.57	34.15

population, 106 in Semi Urban, 62 in Urban and 58 in Metropolitan Category.

â¢ Bank has 258 ATMs and 17 Business Correspondents as on March 31,2022

â¢ Bank opened a new Regional Office at Hyderabad w.e.f. March 16, 2022.

â¢ Bank received in-principle approval from Reserve Bank of India for opening of 20 new branches in Kerala, Tamil Nadu, Karnataka, Pondicherry, Andhra Pradesh and Telangana states. Bank opened Mananthavady Branch in Wayanad Kerala on September 05, 2022, Thanjavur branch in Tamil Nadu on September 16, 2022, Tirunelveli Branch in Tamil Nadu on October 17, 2022 and Karimnagar branch in Telangana on November 28, 2022.

Total Business

Total Business of the Bank as on 31.03.2022 stood at Rs.20846.47 Crore as against Rs.18834.16 Crore as on 31.03.2021.

Deposits

Deposits recorded a growth of 5.90 % to reach Rs.12402.89 Crore as on 31st March 2022 against Rs. 11711.90 Crore as on 31st March 2021. Bank''s CASA deposits grew by 8.80% during the year and reached Rs.4252.34 Crore as on 31st March.2022 which was Rs.3908.42 Crore as on 31st March.2021. CASA to Total deposits as on 31st March.2022 improved to 34.29%.

Gross Advances

Bank''s Gross advance stood at Rs.8443.58 Crore as on 31.3.2022 against Rs.7122.26 Crore as on 31.03.2021, registering growth of 18.55%.CD Ratio improved from 60.81% to 68.08% on Y-o-Y basis.

Profitability

Annual Net Interest Income increased from Rs.329.65 Crore as on 31st March 2021 to Rs. 362.32 Crore, as on 31stMarch 2022 registering growth of 9.91%. Non-Interest income increased from Rs. 122.22 Crore as on 31st March 2021to Rs. 169.12 Crore as on 31st March 2022, registering a growth of 38.37%. NIM improved from 2.82% to 3.00% on Y-o-Y basis. Total Income increased by Rs.32.79 Crore with growth of 3.11% on Y-o-Y basis. Cost to Income Ratio reduced from 81.01% to 74.73% on Y-o-Y basis.

Operating profit during the year was Rs.134.30 Crore as against Rs.85.83 Crore during the previous year. The Bank declared a net Profit of Rs.35.90 Crore during the year under report and for the previous year, the Bank had declared a net profit of Rs.37.19 Crore.

Capital and Reserves

Bank''s Paid up capital and reserves was Rs.900 Crore as on 31.03.2022. The capital adequacy ratio as per Basel III was 12.98% with Core CRAR of 10.31%.

Dividend

The Board has not recommended any dividend in the financial year 2021 - 2022.

Non - Performing Assets

Gross NPA and Net NPA percentage stood at 6.32% and 2.85% respectively as on 31.03.2022 against 9.23% and 4.76% as on 31.03.2021.

The provision coverage ratio (PCR) as on 31.3.2022 was 80.64% which was 74.20% in the previous year.

Vision & Mission

Our Vision: âBanking on Relationships foreverâ.

Our Mission: To Become a Strong and Innovative Bank with Integrity and Social Responsibility to Maximize Customer Satisfaction as well as that of the Employees, Shareholders and the Society.

Customer Service

The Bank accords high importance to the quality of customer service rendered across its branches / offices. It instated a series of measures during the year through deployment of technology and significantly enhancing service quality. A well-defined and full-fledged Customer Grievance Redressal Mechanism has been put in place in the Bank.

During the financial year 2021-22, the Bank received 14,005 complaints as against a total of 15,178 complaints received in the previous financial year. As on 31-03-2022 the number of complaints pending was 1 1 3 and the same was also closed within TAT.

The following important products and services / initiatives were introduced during the year for the benefit of the customers:

â¢ Bank entered into agreement with SBI General Insurance Company Limited for distribution of general insurance products.

â¢ Bank introduced online Trading facility through arrangement with SMC Global Securities Limited.

â¢ Bank introduced Rupay Platinum Debit Cards for Domestic Customers.

â¢ Bank introduced âDhan Namasteâ Credit Card with Contactless payment facility.

â¢ Bank introduced Business Debit Cards for Business entities and HUF.

â¢ Bank introduced Dhanam Treasury Bill Linked Prime Loan facility to match the lending rates with market.

â¢ Bank introduced âDhanam Paddy Receipt Sheet Loanâ in tie up with âSUPPLYCOâ.

â¢ Bank re-introduced the Govt of Kerala Bill Discounting Scheme for clearing the bills of contractors of work departments through digital platform.

â¢ Bank entered into agreement with NORKA ROOTS for funding to returned NRIs for starting of businesses.

â¢ Bank entered into agreement with NREDCAP, state Nodal Agency, for funding to Electric Two Wheelers to Government Employees in the State of Andhra Pradesh.

â¢ Bank increased the number of B category branches from 17 to 35 for improving the Forex business.

â¢ Bank made arrangement with BSE for providing BSEiBBS platform for bidding in IPO, NCD & Right issues.

â¢ RBI empanelled the Bank as agency Bank for Government Agency Business.

â¢ Bank signed MOU with Central Board of Direct Taxes and Central Board of Indirect Taxes for collection of Direct, Indirect Taxes and Customs Duty.

Investor Education and Protection Fund The Bank transferred the entire pending unclaimed dividend amount to the Investor Education and Protection Fund (IEPF) during the financial year 2018-19. There was no amount of dividend pending to be transferred to the fund in the financial year 2021-22.

depositories. Upon transfer of such shares to IEPF account, all benefits (eg. bonus, spilt, etc.), if any, accruing on such shares shall also be credited to the IEPF Demat Account and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. The members/ claimants whose shares, unclaimed dividend etc. have been transferred to IEPF may claim the shares or apply for refund by making an application to IEPF Authority as per the procedure prescribed in the IEPF Rule.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on BSE Ltd. and National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the financial year 2022-23.

Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank has zero tolerance approach towards any action on the part of any executive / employee which may fall under the ambit of âSexual Harassmentâ at work place, and is fully committed to uphold and maintain the dignity of woman staff working in the Bank. The policy provides for protection against sexual harassment of women at work place, prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

Number of complaints pending as on the beginning of the financial year - Nil

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

Particulars of employees

Green Initiatives in Corporate Governance

The Bank supports and pursues the âGreen Initiative'' of the Ministry of Corporate Affairs. All the documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directors'' Report and Auditors'' Report are being sent electronically to all shareholders who have registered their e-mail addresses with their Depository Participants or with the Bank''s Registrar & Transfer Agents. Shareholders holding shares in electronic form are requested to update their e mail addresses in their respective DP accounts. Shareholders holding shares in physical form are requested to update their e mail addresses with Bank''s Registrar and Transfer Agents by a written request if they require electronic delivery of documents.

Directors

The Board of Directors of the Bank as on March 31, 2022 had 4 Directors, comprising of the Managing Director & CEO, 2 independent non-executive Directors and one nonexecutive non-independent Director. In addition, there were 2 additional Directors appointed by the Reserve Bank of India under Section 36AB of the Banking Regulation Act, 1949. The matter with regard to the appointment of directors on the Board of the Bank was pending before the Hon''ble High Court of Kerala. Consequently, the Annual General Meeting (AGM) held on 29.09.2021 was also adjourned in deference with the directions of the Hon''ble High Court of Kerala, after considering all the other Agenda items listed in the Notice of AGM. Necessary disclosures in this regard were made by the Bank to the Stock Exchanges. As the matter on appointment of Directors was sub-judice, the Bank was not in a position to appoint new Directors. As such, the regulatory provisions w.r.t the composition of the Board and various mandatory Committees of the Board were not complied with as on 31.03.2022.

The petitions against the Bank on the appointment of Directors were held non-maintainable by the Hon''ble High Court on 25.10.2022. The Bank appointed 3 Additional Directors in Independent Category and 1 Additional Director in Independent Category on 09.11.2022 and 05.12.2022 respectively. As on the date of this Report, the composition of the Board of Directors of the Bank and its mandatory Committees is in accordance with the provisions of the Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Banking Regulation Act, 1949 and the RBI guidelines.

All the Directors have rich experience and specialized knowledge in various sectors like banking, agriculture and rural economy, economics, risk management, information technology, etc. The remuneration / sitting fees paid to the Directors during the year are disclosed in the Report on Corporate Governance. Declarations have been taken from Independent Directors as required under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines.

Changes in the Board during the year

1. Sri. PK Vijayakumar retired from the Board of the Bank on September 13, 2021 on completion of tenure of office.

2. Sri. Gopinathan C.K was re-appointed as NonIndependent Director liable to retire by rotation at Annual General Meeting held on September 29, 2021.

3. Sri. G. Subramonia Iyer resigned from the Board of the Bank w.e.f December 31,2021, due to personal reasons and there are no other material reasons other than those provided.

4. Shareholders of the Bank have approved the resolution for the re-appointment of Sri. G. Rajagopalan Nair as Independent Director of the Bank through postal ballot for a period of five years w.e.f January 17, 2022 and he shall not be liable to retire by rotation.

5. Changes in the Board from April 01,2022 to till date are as follows:-

(a) Dr. (Capt.) Suseela Menon R, Independent Director of the Bank, resigned from the Board of Directors of the Bank w.e.f May 01, 2022 due to personal reasons and professional commitments and there were no other material reasons for the resignation.

(b) RBI has appointed Shri. Yarasi Jayakumar as Additional Director on the Board of the Bank, in place of Dr. G Jagan Mohan, for a period of two years from May 30, 2022 to May 29, 2024 or till further orders, whichever is earlier.

(c) RBI had extended the tenure of Shri D.K Kashyap for a period of 2 years w.e.f 28.09.2022 to 27.09.2024 or till further orders of RBI, whichever is earlier.

(d) Sri. K.N Madhusoodhanan, Sri.Sreesankar Radhakrishnan and Dr. Nirmala Padmanabhan were appointed as Additional Directors (Independent Category) on the Board of the Bank w.e.f 09.11.2022. Sri. Sridhar Kalyanasundaram was appointed as Additional Director (Independent Category) on the Board of the Bank w.e.f 05.12.2022.

Composition of Audit Committee

As on March 31, 2022, the Bank had a five-member Audit Committee. All the five members of the Committee were non-executive Directors, with Sri. G. Rajagopalan Nair, as its Chairman and Gopinathan C.K, Dr. (Capt.) Suseela Menon R, Dr. G Jagan Mohan and Sri. D.K Kashyap as the other Members. The Committee was constituted in accordancewith regulatory requirements. The terms of referenceof the Committee are in accordance with the Companies Act, 201 3, Securities and Exchange Board of

India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines.

Declaration By Independent Directors

The Bank has duly obtained necessary declarations from each independent Director under Section 1 49(7) of the Companies Act, 2013 that he/she meets the criteria of independence as laid down in the Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The Bank has also obtained the âFit & Proper'' declarations from all Directors as prescribed by the Reserve Bank of India. Pursuant to the notification of the Ministry of Corporate Affairs dated October 22, 2019, an online data bank for the independent directors (âData Bankâ) has been rolled out by the Indian Institute of Corporate Affairs. All the Independent Directors of the Bank as on March 31,2022 have registered themselves in the Data Bank.

Policy on appointment and remuneration of Directors

The Nomination & Remuneration Committee recommends the appointment / reappointment / continuation of Directors to the Board after conducting due diligence of the Directors on the basis of the âfit& properâ criteria prescribed by RBI along with the provisions of the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Nomination Policy approved by the Board. The Board will take the appropriate action based on the recommendations of the Nomination & Remuneration Committee.

The criteria for determining qualifications, positive attributes and independence of Directors to be appointed / re-appointed or for continuation of Directors include, inter-alia, the following:-

â¢ Ensuring that the appointment / re-appointment / continuation is in conformity with the provisions of the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

â¢ Special knowledge or practical experience in various

fields as enumerated in Section 10A(2)(a) of the Banking Regulation Act, 1949 or any other field which may be useful to the Bank;

â¢ Professional knowledge and experience;

â¢ Experience in the field of banking / finance sectors;

â¢ Interest in NBFCs and other entities;

â¢ Relatives connected with the Bank;

â¢ Fund and non-fund facilities availed from the Bank;

â¢ Defaults, if any, by the Director or interested entities with respect to the credit facilities availed from any Bank;

â¢ Professional achievements relevant to the office of Directorship;

â¢ Prosecution, if any, pending or commenced or resulting in conviction in the past against the director and / or against any of the interested entities for violation of economic laws and regulations;

â¢ Criminal prosecution, if any, pending or commenced or resulting in conviction in the past against the Director;

â¢ Any other factors as the Nomination & Remuneration Committee may think fit for the purpose of considering the appointment / re-appointment / continuation as Director.

The Bank has a Board approved Compensation Policy which deals with the compensation & benefits of the Employees of the Bank.

The Board considers the recommendations of the Nomination & Remuneration Committee and approves the remuneration, with or without modifications, subject to regulatory approvals. The remuneration payable to Wholetime Directors/MD & CEO is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration to Whole-time Directors/MD & CEO is payable only after receipt of the approval from RBI. The non-executive Directors are paid sitting fees for attending each meeting of the Board of Directors or any Committee thereof as approved by the Board, within the permissible limit

prescribed under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending any change in the sitting fees considers various factors like size and complexity of organization, comparison with the peer banks and regulatory guidelines as applicable. Apart from sitting fees, the Bank does not pay any other remuneration to the non-executive Directors.

The total remuneration paid to MD & CEO and non-executive Directors for the financial year 2021-22 is included in the Report on Corporate Governance forming part of this Report. The Remuneration Policy of the Bank is hosted on the website of the Bank https://www.dhanbank.com/bank-policies/

Board Level Performance Evaluation

A separate meeting of independent Directors evaluates the performance of non-independent Directors, Chairman and the Board as a whole. The separate meeting of independent Directors is held once in a year.

The criteria for performance evaluation of Directors, Board and its Committees include, inter-alia, the following:

â¢ Attendance at Board and various Committee meetings;

â¢ Participation and contribution in Board and Committee meetings;

â¢ Composition of the Board and its diversity;

â¢ Roles of various Committees of the Board;

â¢ Compliance and understanding of regulatory requirements;

â¢ Contribution to effective corporate governance and transparency in the Bank''s operations;

â¢ Updation of Knowledge and familiarization programmes conducted for Directors;

â¢ Appropriateness of decisions made by the Board and its Committees;

â¢ Quality, quantity and timeliness of flow of information to the Board;

â¢ Understanding by individual Directors for their roles and responsibilities as Director;

â¢ Contributions towards the performance and strategies of the Bank;

â¢ Conduct of Meetings;

â¢ Professionalism in the Board and Committees

Changes in Key Managerial Personnel (KMP)

There were no changes in Key Managerial Personnel (KMP) in the financial year 2021-22.

Corporate Governance

A separate report on Corporate Governance as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and certificate from M/s. V. Suresh Associates, Practicing Company Secretaries certifying compliance with the conditions of Corporate Governance are annexed to this report.

Number of Board Meetings

A total of 15 Board Meetings were held during the year. The Board meetings were held in accordance with the regulatory requirements. The details of the meetings held are provided in the Corporate Governance Report that forms part of this Annual Report.

Annual Return

Pursuant to Section 92 (3) of the Companies Act, 2013 and Section 134 (3) (a), the Annual Return is hosted on the Bank''s website at https://www.dhanbank.com/sebi-disclosure/

Related Party Transactions

During the financial year, the Bank did not enter into any related party transactions with its Directors or Key Managerial Personnel or their Relatives that would potentially conflict with and/ or adversely affect the interests of the Bank, except the remuneration paid to the Managing Director & CEO, Chief Financial Officer and Company Secretary. There was no related party transaction for which Form AOC-2 was applicable.

Material Changes and Commitments affecting 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, i.e., March 31,2022 and the date of Directors'' Report, i.e, December 05. 2022

Maintenance of Cost Records

Being a Banking Company, the Bank is not required to maintain cost records as per sub-section(1) of Section 148 of the Companies Act, 2013

Subsidiary Companies

The Bank does not have any subsidiary companies. Strictures and Penalties

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank or the future operations of the Bank.

Corporate Social Responsibility

The brief outline of the CSR policy of the Bank, overview of theprojects taken up by the Bank and other mandatory disclosuresare annexed to this Report.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Directorsâ Responsibility Statement

Pursuant to the provisions of Section 1 34 (5) of the Companies Act, 2013 with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:-

(i) in the preparation of the annual accounts for the financial year ended March 31, 2022, 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 2021-22 and of the profit and loss of the Bank for that period.;

(iv) the Directors had prepared the annual accounts for the financial year ended March 31,2022 on a going concern basis;

(v) the Directors had laid down 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 had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, the

Board of Directors of the Bank appointed M/s. V. Suresh Associates, Practicing Company Secretaries, Chennai as the Secretarial Auditors to conduct the Secretarial Audit of the Bank for the financial year 2021-22. The Bank has provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The report of the Secretarial Auditors is annexed to this report. The observations in the Secretarial Audit Report for the financial year 2021-22 along with the response of the Board of Directors of the Bank on the same are furnished below:-

Sl. No.	Observations in the Secretarial Audit Report	Responses of the Board
1	During the period under audit, The Composition of Board	Two Writ Petitions with regard to the appointment
	is not in compliance of Regulation 17 of the Securities	of directors on the Board of the Bank was pending
	and Exchange Board of India (Listing Obligations and	against the Bank before the Hon''ble High Court of
	Disclosure Requirements) Regulations, 2015.	Kerala. As the matter on appointment of Directors
	The Board of Directors of the Bank had only 4 Directors,	was sub-judice, the Bank was not in a position to
	excluding 2 Nominee Directors of Reserve Bank of India.	appoint new Directors. However, on 25.10.2022, the
	The matter with regard to the appointment of directors	Hon''ble High Court held that the Writ Petitions were
	on the Board of the Bank is pending before the Hon''ble	not maintainable. Subsequently, on 09.11.2022,
	High Court of Kerala. Consequently, the Annual General	the Bank had appointed 3 Additional Directors in
	Meeting (AGM) held on 29.09.2021 was also adjourned	Independent Category. Presently, the Composition of
	in deference with the directions of the Hon''ble High	Board / mandatory Committees are in compliance of
	Court of Kerala, after considering all the other Agenda	Regulation 17 of the Securities and Exchange Board of
	items listed in the Notice of AGM.	India (Listing Obligations and Disclosure Requirements)
2	The provisions of the RBI Circular RBI/2021-22/24 DOR. GOV.REC.8/29.67.001/2021 -22 dated 20.04.2021 on composition of the Board and various mandatory Committees of the Board are not complied with.	Regulations, 2015 and the provisions of the said RBI circular. After the Hon''ble High Court Order of 25.10.2022, the Bank had informed the Stock Exchanges that the 94th AGM stood concluded and closed.

Business Responsibility Report

The regulatory provisions relating to the Business Responsibility Reporting are not applicable to the Bank for the financial year ended March 31,2022.

Acknowledgements

The Board of Directors places on record its gratitude to the Government of India, Reserve Bank of India, State Governments, Securities and Exchange Board of India and other Regulatory bodies including Stock Exchanges where the Bank''s shares are listed for their support and guidance. The Board also places on record its gratitude to the Bank''s customers, shareholders, other stakeholders and well-wishers for their valued patronage. The Board further places on record its appreciation for the valuable services rendered by M/s Krishnamoorthy & Krishnamoorthy, present Statutory Central Auditors of the Bank as well as M/s. PB Vijayaraghavan & Co., the previous Statutory Central Auditors of the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

Sd/- Sd/- Sd/-

Gopinathan C.K Shivan J.K G. Rajagopalan Nair

(Director) (Managing Director & CEO) (Independent Director)

Place: Thrissur Place:Thrissur Place:Thrissur

Date:05.12.2022 Date: 05.12.2022 Date: 05.12.2022

Mar 31, 2018

Dear Shareholders,

It gives the Board pleasure to place before you the highlights of your Bankâs performance during the financial year 2017 - 18. Details of the achievements and initiatives taken by the Bank are provided in the 91st Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2018 and the Profit and Loss Account for the year ended on that date. It has been a challenging year with the Bank focusing on working towards improving its performance in the medium term.

Your bankâs operating environment remained a cause for concern with the private investment climate and economic sectors under same pressure.

Performance Highlights

The salient features of the Bankâs performance for the financial year ended March 31, 2018 are:

1. Major Developments in the Bank

- Operating Profit improved by 55.39% from Rs.94.07 crore to Rs.146.18 crore, which is the ever highest in the history of the bank

- Net interest income grew by 4.28% from Rs.331.60 crore to Rs.345.80 crore

- Net Interest Margin improved from 2.76% to 2.90%

- CRAR improved from 10.26% to 13.87%

- Total expenses reduced by 14.06% from Rs.1106.00 crore to Rs.969.61 crore

- Interest expenditure reduced by 13.47% from Rs.757.45 crore to Rs.667.52 crore

- Operating expenses reduced by 15.37% from Rs.348.55 crore to Rs.302.09 crore

- Cost of deposits reduced by 64bps, from 6.48% to 5.84%

- Cost of funds also reduced by 63bps (Y-o-Y basis), from 6.61% to 5.98%

- Cost income ratio reduced from 78.75% to 67.39%

- Provision coverage ratio as on 31.03.2018 is 80.02%.

Bank achieved an operating profit of Rs.146.18 crore for the year ended March 31, 2018. In view of higher provisions, Bank incurred Net Loss of Rs.24.87 crore. On a conservative basis, Bank provided in full for gratuity liability of Rs.7.61 crore, mark-to-market losses on investments of Rs.1 9.81 crore and full provision for an account in the Gems & Jewellery sector of Rs.50 crore.

In the current financial year, Bank is mainly focusing on the growth of retail loans, non interest income, current and savings bank deposit and reduction of non performing assets.

Capital and Reserves

The Bankâs Paid up capital and reserves was Rs.749.46 crore as on 31.03.2018. The capital adequacy ratio as per Basel II and Basel III was 14.15% and 13.87% respectively,

Total Business

The total Business of the Bank as on 31 .03.201 8 stood at Rs.17436.06 crore as against Rs.17976.69 crore as on 31.03.2017.

Deposits

The total Deposits of the Bank stood at Rs.10919.66 crore as on 31.03.2018 as against Rs.11293.68 crore as on 31.03.2017.

Advances

The Bankâs total advance stood at Rs.6516.40 crore as on 31.03.2018 as against Rs.6683.01 crore as on 31.03.2017.

Profitability

The bankâs operating profit during the year was Rs.1 46.1 8 crore as against Rs.94.07 crore during the previous year. The bank declared a net loss of Rs.24.87 crore during the year under report and for the previous year, the bank has net profit of Rs.12.38 crore.

Dividend

The Board has not recommended any dividend in the financial year 2017-2018.

Vision & Mission

Our Vision: âBanking on Relationships foreverâ.

Our Mission: To Become a Strong and Innovative Bank with Integrity and Social Responsibility to Maximize Customer Satisfaction as well as that of the Employees, Shareholders and the Society,

Non - Performing Assets

Recovery in the current financial year was Rs.202.42 crores (including cash recovery & upgradation) against the previous year figures of Rs.109.12 crores.

The provision requirement for current year was Rs.127.29 crores as against Rs.76.42 crores in the previous financial year.

During the year the new slippage to NPA in the Bank was Rs.358,33 crores in comparison with the figure of Rs.154,76 crores of the previous year,

Gross NPA and Net NPA percentage stood at 7.35% & 3.19% respectively in the current year against 4.78% to and 2.58% in the previous year,

The provision coverage ratio (PCR) which was 79.99% as on 31.03.2017 stood at 80.02% in the current year,

Customer Service

The Bank attaches very high importance to the quality of customer service rendered across its branches / offices, It has taken a series of measures during the year through deployment of technology and for significantly enhancing service quality, A well defined and full-fledged Customer Grievance Redressal Mechanism is put in place in the Bank,

The Customer Service Committees comprising of Bank personnel as well as our constituents monitors the implementation of customer service measures periodically, Customer Service Committee of the Board have been formed at the apex level and at branches also for monitoring service quality and bringing about improvements in this area on an ongoing basis, The Bank has a 24x7 Phone Banking Call Centre at Thrissur as an outsourced model to cater to customer needs across the country,

The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI,

During the financial year 2017-18, the Bank received 13,233 complaints as against a total of 8211 complaints received in the previous financial year, The organized structure for handling complaints at Branches, Regional Offices, ATM Reconciliation Desk, Call Centre and Corporate Office who are in turn handling all transactions and services for the customers has helped the Bank in better customer service and early resolution of complaints,

Particulars	Contact Centre	ATM Recon	RO & CO	Banking Ombudsman	Total
No, of complaints outstanding at the beginning of the year	11	25	2	3	41
No, of complaints received during the year	3627	9507	79	20	13233
No, of complaints resolved during the year	3631	9529	77	21	13258
No, of complaints pending during the year	7	3	4	2	16

Customer Touch Points

The Bankâs customer outlets stood at 617 as on 31,03,2018, comprising 258 branches, 346 ATMs, 11 RPCs, CPC & Treasury, We have concentrated on consolidating our operations across the country and thereby aiming at utilizing our branches to their fullest potential,

The following important products and services were introduced during the year for the benefit of the customers:.

Tie up with Bajaj Allianz Life Insurance Company Limited: We have renewed the tie-up with M/s Bajaj Allianz Life Insurance Company (BALIC) Limited for distribution of Life Insurance (LI) policies as per new IRDAI guidelines, As the tie up has been activated, we have advised our branches to commence marketing of life insurance policies, The marketing activities will focus on sales of traditional LI policies, as branches were doing earlier, We have advised our branches to extend all possible support to the officials of BALIC for proper exhibition of publicity materials within branch premises, New Insurance Tie-Ups with Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. (CHOICe) and DHFL Pramerica Life Insurance Company Ltd. (DPLI) : As an endeavour to provide more choices on Life Insurance solutions for our customers, Bank has entered into corporate agency tie-up with Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. (CHOICe) and DHFL Pramerica Life Insurance Company Ltd, (DPLI), CHOICe was launched in June 2008 as a joint venture owned by two of Indiaâs largest public sector banks -Canara Bank (Holding 51%) and Oriental Bank of Commerce (23%) along with HSBC Insurance (Asia Pacific) Holdings Ltd. (26%). DPLI is a joint venture between Dewan Housing Corporation Ltd, (DHFL), Indiaâs second largest private sector housing finance company and Prudential International Insurance Holdings Ltd, (PIIH), a fully owned subsidiary of Prudential Financial, Inc, (PFI) which is a financial service leader headquartered in the U,S,

CHOICe has been conferred with significant accolades and recognition on its journey, which includes, Masters of Modern Marketing Awards 2017 (mCube Awards), Golden Peacock Award for Corporate Ethics - 2016, Golden Peacock Award for Corporate Social Responsibility - 2016 etc, This reflects the companyâs inherent strength and success of the Bancassurance model, DHFL Pramerica Life Insurance Company Limited is one of the fastest growing life insurance companies in India, The company is headquartered in Gurgaon, having 79 branches across India. Presently they have Rs.2107 Cr asset under management and 8 million lives are insured with them. We are sure that these new tie ups will empower us to satisfy our customers life insurance needs better and explore more cross sell opportunities,

Setting up Aadhaar Enrolment, update and authentication facilities inside the Bank Premises: As per the provisions of amendment made to Prevention of Money Laundering (Maintenance of Records) Rules, 2005, each Bank is required to seed and verify the Aadhaar number for all eligible Bank accounts / relationship of individuals as prescribed under Aadhaar authentication process, before December 31, 2017, failing which all such accounts will become inoperative,

To ensure that account holders / public are not facing any difficulty in linking their Aadhaar number with their bank accounts and also verifying them through Aadhaar authentication, Banks need to provide Aadhaar enrolment, Aadhaar update and authentication facilities inside the Branch premises latest by September 30, 2017, All our branches have the Biometric machine. Our Bank has also been appointed as âRegistrarâ authorised by Unique Identification Authority of India (UIDAI) for the purpose of enrolling individuals under the Aadhaar (Enrolment and Update) Regulations, 2016, To facilitate the same, Bank has chosen to avail the services of empanelled âEnrolling Agencyâ authorised by UIDAI for the enrolment and update process, Bank has identified 26 Branches to act as Aadhaar enrolment/ update centers, We have displayed the details of the same in our branches for the convenience of our customers and general public,

Introduction of Dhanam Customer Acquisition and Management System (DCAMS) : With a view to take care of the regulatory and compliance requirements especially in the backdrop of new regulations including FATCA/CRS, CKYCR, etc, and to enable the Bank officials access customer information in a hassle-free manner for smooth conduct of the business, redefining and evolving a new approach for creation of Customer ID and customer on-boarding was necessary, It is christened as DCAMS (Dhanam Customer Acquisition and Management System),

With the introduction DCAMS, Bank aims to capture digitalized images of all documents submitted by the customer and its identification details including number, expiry date, date of issue, place of issue, etc, to comply with the various instructions/ guidelines issued by the regulator, set centralized repository of all kind of forms and documents related to customer ID creation and account opening, which any authorized users can access,

Bank aims to set centralized repository of all kind of forms and documents related to customer ID creation and account opening, which any authorized users can access, Bank aims to ensure various data validations and checks on customer acquisition and prepare effective MIS and address the requirements under Central KYC Records Registry (CKYCR),

Our Bankâs 91st Foundation Day (Navathi) Celebrations: Our Bank completed 90 years of glorious service to society on November 14th, 2017, As we step into our 91st year of operations, anniversary celebrations are conducted in a grand manner from 14.11.2017 to 13.12.2017 at all our Branches and Offices with a special focus on new business acquisitions and customer service delivery, We instructed all our branches to conduct public function on the anniversary day and our prominent customers were invited as Chief Guest for the function at all our branches throughout the country,

Western Union Money Transfer Service: Our Bank has a tie-up arrangement with Weizmann Forex Ltd, (WFL) which is a principal agent to Western Union, Western Union provides Money Transfer Services across the globe, popularly known as Western Union Money Transfer Service (WUMT), We have directed our branches to do maximum transactions through Western Union Money Transfer Service, which is very convenient to our customers and adds to non interest income of the Bank, We have also advised our branches to ensure that Western Union Money Transfer Service customers are provided prompt and quick service,

Revised Demat Account Opening Forms: To comply with the various circulars issued by Government of India and SEBI/NSDL on KYC and Nomination facilities, the Demat account opening form has been revised with effect from 01st February, 2018, The new account opening form has three parts namely KYC Form, Account Opening Form and Nomination Form,

NRO Recurring Deposit: In order to empower our branches to improve NR Portfolio, we have introduced a new product named âDhanam Recurring Deposit (NRO)â Product Code (24) -an exclusive Recurring Deposit account to cater to the needs of our NR Customers, The main objective of this new product introduction is to attract, acquire and retain the NR segment resulting in a spurt of our Recurring Deposit portfolio, The main features of NRO Recurring Deposit is as follows:

- NRO RD can be opened and maintained by Non Resident Indians (NRIs) in Indian Rupees only,

- Deposit period ranges from 12 months to 120 months,

- Minimum monthly instalment of Rs.500/-,

- Normal NRO deposit rates are applicable,

- No interest will be paid if closed before one year,

- Maturity value will be mentioned in the NRO RD Pass Book,

- Credit of proceeds will be given to NRO account only

- Interest earned on the account is taxable as per Double Taxation Avoidance Agreement (DTAA),

Internal Ombudsman of the Bank: The Bank has appointed Sri Bhasi K. V,, Deputy General Manager & Chief Financial Officer (CFO) as the new Internal Ombudsman of the Bank, The contact details of the Internal Ombudsman will be made available to customers approaching for resolutions, The Internal Ombudsman functions as a third person in resolving customer complaints and his view will be unbiased, The details of Internal Ombudsman have been incorporated in our website as well as notice board in our branches.

Restriction on Usage of Toll Free Customer Care Number and Stoppage of Call Back Facility: Based on the inferences from a cost effective study, the usage of our existing Toll Free No. 1800 425 1747 has been restricted with effect from 01st March, 2018. The Toll Free Number will be henceforth exclusively used only for Grievance/Complaints. For all other purpose, 0487 6613000 will be used for contacting the Customer Care. With effect from 21st January, 2014, we had introduced Missed Call - Call Back services. Based on an analysis, we have withdrawn the Missed Call - Call Back Service with effect from 01st March, 2018.

International Womenâs Day: International Womenâs Day (IWD) is celebrated on 8th March every year, On the occasion of International Womenâs day, we have conducted a BIG DAY in all our Branches and Offices, As a part of the Big Day, we issued instruction to our branches to greet all female customers who visited our branches / offices on this day and honour minimum five prominent women personalities in every branches. We canvassed 1121 Dhanam Vanitha accounts with value 62 lakh as a part of the Big Day.

Launch of Aadhaar Enrolment and update Activities in Identified Branches (Aadhaar Enrolment and Update Centres):

We have started the enrolment centres at all our identified 26 branches with the UIDAI Certified staff members as Operators and Supervisors for the benefit of our esteemed customers and general public.

Reduction in maximum loadable amount in Gift Card for individual applicants, from Rs.50,000/- to Rs.10,000/- : Our Bank is offering rupee denominated prepaid gift card - Dhanlaxmi Bank Gift Card - suitable for all gifting purposes. The gift card can also be used for corporate gifting to employees, vendors, clients etc. The gift cards shall be available off-the-shelf at all our branches and are ready to use once purchased from the Banks branch. As per the latest Master direction from RBI, the maximum amount that can be loaded in gift card for individual applicants is reduced from Rs.50,000/- to Rs.10,000/-. For Corporates, the maximum loadable amount is capped at Rs.5,000/- per card, which remains the same as earlier.

New Tie-up for deploying PoS Machines (PSTN, Mobile PoS, Digital and Paper based GPRS PoS Machines): Our Bank has entered into an arrangement with new vendor M/s. India Transact Services Limited for the management and servicing of PoS terminals to our customers. At present, we are carrying out the PoS Migration from M/S BTI Payments to M/s.Bijlipay, Since M/s.Bijlipay doesnât have the PSTN terminals, we have tied up with M/s. India Transact Services Limited. Through this arrangement with M/s. India Transact Services Limited, deployment of latest version of PSTN, MPoS, Digital and Paper based GPRS PoS terminals will be available to our customers.

Investor Education and Protection Fund

During the year, the Bank transferred Rs.8,67,331/-, being the unclaimed / unpaid dividend for the financial year 2009-10, to the investor Education and Protection Fund (IEPF) in accordance with the provisions of Section 125 of the Companies Act, 2013.

In terms of Section 124 (6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time to time, it may be noted that if the dividends have been unpaid or unclaimed for seven consecutive years or more the underlying shares shall be transferred to the IEPF Demat Account maintained with depositories. Upon transfer of such shares to IEPF account, all benefits (e.g. bonus, spilt, etc.), if any, accruing on such shares shall also be credited to the IEPF Demat Account and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. The members/claimants whose shares, unclaimed dividend etc. have been transferred to IEPF authority may claim the shares or apply for refund by making an application to IEPF authority as per the procedure prescribed in the IEPF Rule. Letters were sent to shareholders whose dividend amount for FY 2010-11 were outstanding indicating a timeline to claim the outstanding dividend amounts.

Listing on Stock Exchanges

Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 .

The Bank has zero tolerance approach towards any action on the part of any executive/employee which may fall under the ambit of âSexual Harassmentâ at work place, and is fully committed to uphold and maintain the dignity of woman staff working in the Bank. The policy provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy

Number of complaints pending as on the beginning of the financial year - Nil

Number of complaints filed during the financial year - 01

Number of complaints pending as on the end of the financial year - Nil

Particulars of employees

The ratio of the remuneration of each Director to the median employeesâ remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report.

Green Initiatives in Corporate Governance .

The Bank supports and pursues the âGreen Initiativeâ of the Ministry of Corporate Affairs. All the documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directorsâ Report and Auditorsâ Report is being sent electronically to all shareholders who have registered their e-mail addresses with their Depository Participants or with the Bankâs Registrar & Transfer Agents. Shareholders holding shares in electronic form are requested to update their e-mail addresses in their respective DP accounts. Shareholders holding shares in physical form are requested to update their e-mail addresses with Bankâs Registrar and Transfer Agents by a written request if they require electronic delivery of documents.

Directors

The composition of the Board of Directors of the Bank is in accordance with the Banking Regulation Act, 1 949, the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the best practices of Corporate Governance. As on March 31, 2018, the Board comprises 11 Directors including Managing Director & CEO, 7 non-executive Directors and 3 nominee Directors. All the Directors have rich experience and specialized knowledge in various sectors like banking, economics, co-operation and accountancy. The remuneration / sitting fees paid to the Directors during the year is disclosed in Report on Corporate Governance.

There are 6 independent Directors on the Board of the Bank as on March 31, 2018. Declarations have been taken from Independent Directors as required under the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines,

Changes in the Board

Sri Sajeev Krishnan (DIN-08066443) was appointed as additional Director (independent category) by the Board of Directors of the Bank w.e.f. February 08, 2018. Subsequently, Sri Sajeev Krishnan has been appointed as part-time Chairman of the Board of the Bank for a period of three years w.e.f. May 23, 2018, with the prior approval of Reserve Bank of India (RBI).

Sri Gopinathan C. K. (DIN-01236752) was re-appointed as nonindependent Director of the Bank, liable to retire by rotation, at the 90th Annual General Meeting of the Bank held on September 30, 2017.

Sri P S. Sreekumar (DIN-07555178) was re-appointed as independent Director of the Bank, not liable to retire by rotation, at the 90th Annual General Meeting of the Bank held on September 30, 2017, for a period of two years with effect from the date of the Annual General Meeting, i.e., September 30, 2017.

Ms. N. Sara Rajendra Kumar (DIN-07854519) and Sri E. Madhavan (DIN-07373376) were appointed by Reserve Bank of India as Additional Directors on the Board of the Bank for a period of two years with effect from May 11, 2017 to May 10, 2019 or till further orders.

Sri Arun Rao M. G. (DIN-07547651) has been appointed as Additional Director (non-independent category) by the Board of Directors of the Bank w.e.f. May 15, 2018. Previously he was Director of the Bank till September 28, 2017.

Sri K. N. Murali (DIN-07902366) has been appointed as Additional Director (independent category) by the Board of Directors of the Bank w.e.f. June 07, 2018.

RBI has approved the appointment of Ms. T. Latha (DIN-07491803) as Managing Director & CEO of the Bank for three years from the date of taking charge. Ms. T. Latha assumed charge as Managing Director & CEO w.e.f. July 2, 2018 in place of Sri G. Sreeram (DIN-05143385) who retired from office on July 01, 2018 on completion of his tenure.

Dr. Jayaram Nayar (DIN-07395031) ceased to be part-time Chairman of the Board of the Bank w.e.f. January 04, 2018. Sri G. Vijaya Raghavan (DIN-0000029021) was appointed as independent Director of the Bank, not liable to retire by rotation, at the 90th Annual General Meeting of the Bank held on September 30, 2017, for a period of two years with effect from the date of the Annual General Meeting, i.e., September 30, 2017. Sri G. Vijaya Raghavan ceased to be Director on the Board of the Bank w.e.f. May 16, 2018. Sri P Mohanan (DIN-01463603) ceased to be Director on the Board of the Bank w.e.f. April 20, 2018 on completion of tenure of office. The Board places on record its appreciation for the invaluable services rendered by them during their tenure as Directors on the Board of the Bank.

Composition of Audit Committee

The Board of the Bank has constituted a seven member Audit Committee. All the seven members of the Committee are non-executive Directors, with Sri Chella K. Srinivasan, who is a Chartered Accountant, as its Chairman and Sri FI Mohanan, Sri F S. Sreekumar, Sri G. Vijaya Raghavan, Sri S. T. Kannan, Ms. N. Sara Rajendra Kumar and Sri E. Madhavan as the other members. The Committee has been constituted in accordance with regulatory requirements. The terms of reference of the Committee are in accordance with the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and RBI guidelines,

Declaration by Independent Directors

Policy on appointment and remuneration of Directors

The Nomination & Remuneration Committee recommends the appointment / reappointment / continuation of Directors to the Board after conducting due diligence of the Directors on the basis of the âfit & properâ criteria prescribed by RBI along with the provisions of the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Nomination Policy approved by the Board. The Board will take the appropriate action based on the recommendations of the Nomination & Remuneration Committee.

The criteria for determining qualifications, positive attributes and independence of Directors to be appointed/re-appointed or for continuation of Directors include, inter-alia, the following:

- Ensuring that the appointment/re-appointment/continuation is in conformity with the provisions of the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

- Ensuring that the criteria for independence of Directors as stated in the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is complied with, in case of independent Directors;

- Ensuring that the person does not attract any disqualification as per the Banking Regulation Act, 1949, RBI guidelines, Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

- Special knowledge or practical experience in various fields as enumerated in Section 1 0A(2)(a) of the Banking Regulation Act, 1949 or any other field which may be useful to the Bank;

- Professional knowledge and experience;

- Experience in the field of banking / finance sectors;

- Interest in NBFCs and other entities;

- Relatives connected with the Bank;

- Fund and non-fund facilities availed from the Bank;

- Defaults, if any, by the Director or interested entities with respect to the credit facilities availed from any Bank;

- Professional achievements relevant to the office of Directorship;

- Prosecution, if any, pending or commenced or resulting in conviction in the past against the director and / or against any of the interested entities for violation of economic laws and regulations;

- Criminal prosecution, if any, pending or commenced or resulting in conviction in the past against the Director;

- Any other factors as the Nomination & Remuneration Committee may think fit for the purpose of considering the appointment / re-appointment / continuation as Director

The Bank has a Board approved Compensation Policy which deals with the compensation & benefits of the Employees of the Bank.

The total remuneration paid to MD & CEO and non-executive Directors for the financial year 2017-18 is included in the Report on Corporate Governance forming part of this Report.

The Remuneration Policy of the Bank is hosted on the website of the Bank http://www.dhanbank.com/investor_relations/inv_stat_ policy.aspx,

Board Level Performance Evaluation

The criteria for performance evaluation of Directors, Board and its Committees include, inter-alia, the following:

- Attendance at Board and various Committee meetings;

- Participation and contribution in Board and Committee meetings;

- Composition of the Board and its diversity;

- Roles of various Committees of the Board;

- Compliance and understanding of regulatory requirements;

- Contribution to effective corporate governance and transparency in the Bankâs operations;

- Updation of Knowledge and familiarization programmes conducted for Directors;

- Appropriateness of decisions made by the Board and its Committees;

- Quality, quantity and timeliness of flow of information to the Board;

- Understanding by individual Directors for their roles and responsibilities as Director;

- Contributions towards the performance and strategies of the Bank;

- Conduct of Meetings;

- Professionalism in the Board and Committees

Changes in Key Managerial Personnel (KMP)

There were no changes in Key Managerial Personnel (KMP) in the financial year 2017-18.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, the Board had appointed Sri M. Vasudevan, Practicing Company Secretary, Thrissur as the Secretarial Auditor to conduct the Secretarial Audit of the Bank for the financial year 2017-18. The Bank has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The report of the Secretarial Auditor is annexed to this report. The Secretarial Audit Report for the financial year 2017-18 does not contain any qualification.

Corporate Governance

A separate report on Corporate Governance as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and certificate from Sri M. Vasudevan, Practicing Company Secretary certifying compliance with the conditions of Corporate Governance are annexed to this report.

Number of Board Meetings

A total of 10 Board Meetings were held during the year. The Board meetings were held in accordance with the regulatory requirements. The details of the meetings held are provided in the Corporate Governance Report that forms part of this Annual Report.

Extracts of Annual Return

Pursuant to Section 92 (3) of the Companies Act, 2013 read with Rule 12 (1) of the Companies (Management and Administration) Rules 2014, Extract of Annual Return as on the financial year ended March 31, 2017 in Form No. MGT - 9 is annexed to this report.

Related Party Transactions

The Bank has adopted the âPolicy on materiality of related party transactions and dealing with related party transactionsâ in accordance with the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy is hosted on the website of the Bank www.dhanbank.com/ investor_relations/inv_stat_policy,aspx.

During the financial year, the Bank did not enter into any related party transactions with its Directors or their Relatives that would potentially conflict with and / or adversely affect the interests of the Bank, except the rent advance to Company Secretary and

the remuneration paid to the Managing Director & CEO, Chief Financial Officer and Company Secretary, There was no related party transaction for which Form AOC-2 was applicable,

Material Changes and Commitments affecting 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., March 31, 2018 and the date of Directorsâ Report, i.e., August 06, 2018,

Subsidiary Companies

The Bank does not have any subsidiary companies,

Strictures and Penalties

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Bank or the future operations of the Bank.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Directorsâ Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013 with respect to the Directorsâ Responsibility Statement, it is hereby confirmed that:-

(a) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) 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 2017-18 and of the profit and loss of the Bank for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

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

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Annexure to Directorsâ Report for the year ended March 31, 2018,

PARTICULARS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013

The ratio of the remuneration of each director to the median employeeâs remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Notes:

1. The median salary of the staff members is arrived by taking 12 months comparable gross salary,

2. Remuneration of MD and CEO is regulated by RBI guidelines.

Acknowledgements

The Board of Directors places on record its gratitude to the Government of India, Reserve Bank of India, State Governments, Securities and Exchange Board of India and other Regulatory bodies including stock exchanges where the Bankâs shares are listed for their support and guidance. The Board also places on record its gratitude to the Bankâs customers, shareholders, other stakeholders and well wishers for their valued patronage. The Board further places on record its appreciation for the valuable services rendered by M/s Sridhar & Co., Statutory Central Auditors of the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels,

By Order of the Board

Place : Thrissur Sd/

Date : 06.08.2018 (Sajeev Krishnan)

Chairman

Mar 31, 2015

The Board of Directors is pleased to place before you, the 88th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2015 and the Profit and Loss Account for the year ended on that date.

Performance Highlights

The salient features of the Bank's performance for the financial year ended March 31, 2015 are:

- The total Deposits of the Bank increased from Rs.12133.21 crore as on 31.03.2014 to Rs.12381.68 crore as on 31.03.2015.

- The Bank's total advance stood at Rs. 8121.90 crore as on 31.03.2015 as against Rs. 8205.76 crore as on 31.03.2014.

- Achieved operating profit of Rs. 16.58 Crore for the financial year 2014-15.

- Interest expended reduced by Rs.27.08 Crore during the financial year 2014-15 as compared to previous FY 2013-14.

- Net NPA at 3.29% and gross NPA at 7.00%.

- Basel II CRAR at 9.71% and Basel III CRAR at 9.59%.

- Book value per share is Rs. 58.47.

Capital and Reserves

The Bank's Paid up capital and reserves was Rs. 723.85 crore as on 31.03.2015. The capital adequacy ratio as per Basel II and Basel III was 9.71% and 9.59% respectively.

During the year the Bank had issued and allotted 5,15,07,000 Equity shares of Rs.10 each for an aggregate amount of Rs. 229.63 crore (including premium) by way of Preferential issue of shares to augment capital funds to further improve our Capital Adequacy Ratio.

Total Business

The total Business of the Bank as on 31.03.2015 stood at Rs. 20503.58 crore as against Rs. 20338.97 crore as on 31.03.2014 and registered a growth of 0.81%.

Deposits

The total deposits of the Bank increased to Rs.12381.68 crore from Rs. 12133.21 crore as on March 31, 2014 registering a growth of 2.05%.

Advances

The Bank's total advance stood at Rs.8121.90 crores as on 31.03.2015 as against Rs. 8205.76 crores as on 31.03.2014.

Priority Sector Advances

Your Bank continued its prudent approach towards priority sector lending in conformity with the national policies, regulatory expectations and fulfillment of social objectives. The Bank's priority sector advances stood at 35.18% and its agricultural advance reached 18.73% of the adjusted net bank credit. The weaker section advances was at 12.40%, thus surpassing the prescribed norm of 10% Lending under various socio- economic schemes has shown satisfactory progress.

Profitability

The bank's operating profit during the year was Rs. 16.58 crore as against Rs. 6.07 crore during the previous year. The bank declared a net loss of Rs. 241.47 crore during the year under report and the same at the previous year was Rs. 251.82 crore.

Dividend

In view of the net loss recorded by the Bank during the year, regrettably no dividend could be recommended to the shareholders.

Non-Performing Assets

There has been an increase in non-performing assets during the year under report.

During the year, the new slippage to NPA was Rs. 337.18 crore, in comparison with the slippages of Rs. 488.08 crore for the previous year.

The total recovery in NPA during the year was Rs. 84.51 crores. The corresponding figure for the previous year was Rs. 212.20 crores, excluding the Sale of assets to ARC. The lower recovery for this year is on account of the Corporate NPAs.

Bank has resorted to all effective monitoring/recovery measures permitted under Law. This has helped us to restrict further slippages into NPA and make recovery from the existing NPA accounts. By constant monitoring/recovery measures, Bank is optimistic of achieving better results in the next year.

Customer Service

The Bank attaches the highest importance to the quality of customer service rendered across its branches / offices. It has taken a series of measures during the year through deployment of technology and otherwise for significantly enhancing service quality. A well defined and full-fledged Customer grievance Redressal Mechanism is put in place in the Bank.

The Customer Service Committee of the Board monitors the implementation of customer service measures periodically. Customer Service Committees comprising of Bank personnel as well as our constituents have been formed at the apex level and at branches for monitoring service quality and bringing about improvements in this area on an ongoing basis. The Bank has a 24 x 7 Phone Banking Call Centre at Thrissur as an outsourced model to cater to customer needs across the country.

The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI. In the annual Compliance survey conducted by BCSBI on implementation of BCSBI Code, the Bank has achieved "Above Average" rating for compliance amidst total 48 banks (including public sector, private sector and foreign banks) surveyed across the major parameters such as customer centricity, information dissemination, customer feedback and transparency. Also the Bank has been successful in achieving a "High Level" of compliance with regard to the "grievance Redressal" segment thereby placing us amongst the top five private sector banks on the said parameter.

During the financial year 2014-15, the Bank received 4738 complaints as against a total of 6462 complaints received in the previous financial year. The organized structure for handling complaints at Branches, Regional offices, ATM Reconciliation Desk, Call Centre and Corporate Office who are in turn handling all transactions and services for the customers has helped the Bank in better customer service and reduction in number of complaints.

Branch Expansion

The Bank's customer outlets stood at 678 as on 31.03.2015, comprising 266 branches, 398 ATMs and 12 processing centres. The Bank had opened two new ATM's during the year. We have concentrated on consolidating our operations across the country and thereby aiming at utilizing our branches to their fullest potential.

Damodaran Committee on Customer Service

The Reserve Bank of India had constituted a Committee under the Chairmanship of Shri M. Damodaran, former Chairman, SEBI to interalia:

- Examine the functioning of Banking Ombudsman Scheme- its structure, legal framework and recommend steps to make it more effective and responsive.

- Review the role of Board of Directors of banks and the role of Regulators in customer service matters.

- Evaluate the existing system of grievance redressal mechanism prevalent in banks, its structure and efficacy and recommend measures for expeditious resolution of complaints. The committee may also lay down a suitable time frame for disposal of complaints including last escalation point within that time frame.

- Examine the possible methods of leveraging technology for better customer service with proper safeguards including legal aspects in the light of increasing use of Internet and IT for bank products and services and recommend measures to enhance consumer protection.

- Review the existing system of attending to customer service in banks Âapproach, attitude and fair treatment to customers from retail, small and pensioners segments.

We have received a total of 107 recommendations from the Committee since inception. Out of the 100 recommendations applicable to your bank, we have implemented 85 recommendations and the implementation of remaining items is in process.

Contact ATM Banking Particulars RO & CO Total Centre Recon Ombudsman

No. of Complaints Outstanding at the beginning of the Year 9 7 35 2 53

No. of Complaints Received during the year 1525 178 2973 62 4738

No. of Complaints Resolved during the year 1531 185 3000 59 4775

No. of Complaints Pending during the year 3 0 8 5 16

The following important products and services were introduced during the year for the benefit of the customers:

- During the last FY, your Bank had introduced the facility where by the account balances are sent to the customers' mobile number as SMS within 8 seconds. Consequent to the warm acceptance of this facility, we have extended the missed call facility for E-Statement of Accounts, One Day Statement, Connect with our Call centre and Instant A/c Balance SMS on an Unsuccessful ATM Transaction.

- Acceptance of the NEFT/RTGS payment via Virtual Accounts - Bank has introduced a new collection facility to accept inward NEFT/RTgS payments of student fees, chits & loan installments from the students, chittalans and loanee of educational institutions, chitty companies and lenders who are Bank's customers. Through this, institutions can initiate various collections from their clients who are not holding an account with our Bank using a unique identifier of their clients as account number (virtual) to recognize the payments individually. This virtual account number can be used by the students, chittalans, loanee to carry out any NEFT/RTgS transactions.

- Launch of Upgraded Version of Mobile Banking Platform - Bank's Mobile Banking platform has been revamped and as a part of it, we have launched a native application for the Android Mobile OS which has been widely accepted for its aesthetics, user friendliness and intuitive screens.

- Additional security for Online Net Banking transactions - One such initiative the Bank has started is ending SMS and Email alert on every successful Retail Net Banking logins to warn/caution the customers during the event of any unauthorized Internet Banking access. Further, Bank also introduced additional securities like velocity check there by alerting the customer on a bunch of transactions where the total amount involved or the number of transactions per day for the scenarios such as NEFT Transaction (1 lac. and above) and 1RTgS Transactions (3 lac. and above).

- The committee appointed by Hon. Supreme court of India has nominated your Bank to take care of the entire Hundi collection of the famous Sri Padmanabha Swami Temple, Thiruvananthapuram.

- Provided sandwich posters containing information on the Bank's various products and services for displaying in all branches/ATMs to make aware of the customers and general public about facilities offered by the Bank.

- Special Banking services at Sabarimala like last year with additional facilities such as Facility of online advance booking of Pooja and Prasadam through payment gateway provided by the Bank. All pilgrims booking Pooja/Prasadam were serviced at exclusive counters opened for the purpose by the Bank at Sannidhanam. Newly introduced Prasadam Kits containing Appam, Aravana, Manjal, Kunkumam and Vibhuthi were distributed through Bank counters at Sannidhanam.

- Bank has introduced new savings account- Dhanam Vanitha Savings account which exclusively caters to the needs for woman segment with special features like Sweep in/out facility and nominal minimum balance requirement.

Investor Education and Protection Fund

- During the year there is no amount required to be transferred to the investor Education and Protection Fund (IEPF) constituted under Section 125 of the Companies Act, 2013.

Listing on Stock Exchanges

- The Equity shares of the Bank continue to be listed on the BSE Ltd., and National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2015-16.

- The Cochin Stock Exchange Ltd. where the shares of the Bank were listed, had been exited from the Equity Trading Business w.e.f. 23rd December, 2014 vide SEBI order No. WTM/RKA/MRD/163/2014 dated 23rd December, 2014.

Particulars regarding conservation of energy, Technology Absorption and Foreign Exchange Earnings and outgo

The Bank has undertaken various initiatives for energy conservation at its premises. Further, the Bank has used information technology extensively in its operation and consistently pursuing its goal of technological up-gradation in a cost effective manner for delivering quality customer service.

The Company, being a banking company and an Authorised Dealer in Foreign Exchange, has taken all possible steps to encourage export credit.

Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank has zero tolerance approach towards any action on the part of any executive/employee which may fall under the ambit of "Sexual Harassment" at work place, and is fully committed to uphold and maintain the dignity of woman staff working in the Bank. The policy provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

Number of complaints pending as on the beginning of the financial year Â Nil

Number of complaints filed during the financial year Â Nil

Number of complaints pending as on the end of the financial year Â Nil

Particulars of employees

There are no such employees whose particulars are required to be given in terms of Section 134 of the Companies Act, 2013 read with the Companies (Particulars of Employees) Rules 1975 as amended vide gSR 289(E) dated March 31, 2011 [Companies (Particulars of employees) Amendment Rules 2011].

The ratio of the remuneration of each director to the median employees' remuneration and other details in terms of Sub section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed to this report.

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the 'green Initiative' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will affect electronic delivery of documents including the notice and explanatory statement of Annual general Meeting, Audited Financial Statements, Directors' Report, Auditors' Report etc., for the year ended March 31, 2015, to the email address which the shareholders have previously registered with their Depository Participant (DP) as their valid e mail address. Investors desirous of refreshing/updating their e mail addresses are requested to do so immediately in their respective DP accounts. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CSDL will be deemed to be their registered e mail address for serving notices/documents including those covered under Section 219 of the Companies Act, 1956.

Shareholders holding shares in physical form desirous of availing electronic form of delivery of documents are requested to update their e mail addresses with Bank's Registrar and Transfer Agents by a written request if they wish to avail this facility. A request format for registering e-mail ids with the Registrar is enclosed. Shareholders holding shares in demat segment are requested to inform their e-mail ids to their respective DPs.

ANTI-MONEY LAUNDERING (AML)

Transactions processed through the Core Banking Solution is monitored for detecting suspicious transaction using Infrasoft Technologies Â AML application, to discharge the obligation cast on the Bank under Prevention of Money Laundering Act.

The Offsite Monitoring Teams set up for post facto verification of KYC Compliance while establishing new customer relationships by the branches are stabilized fully now.

The Bank has attached great importance to compliance of KYC/ AML/CFT norms by the customers as per the Reserve Bank of India directive, in the interest of nation.

Directors

Mr. K. Srikanth Reddy (DIN Â 01433626) appointed as an independent Director of the Bank for the purpose of Section 149(2) of the Companies Act, 2013 w.e.f. 01.04.2014 resigned on 15.11.2014 and ceased to be a member of the Board w.e.f. the said date. Mr. K. Vijayaraghavan (DIN Â 06419305) ceased to hold office of Director w.e.f. 20.09.2014. The Board places on record its appreciation for the invaluable services rendered by them during their tenure as Directors.

Mr. P. Mohanan (DIN Â 01463603), Mr. Chella K. Srinivasan (DIN Â 01460198) and Mr. K. Jayakumar (DIN Â 01955260) were appointed as Independent Directors of the Bank for the purpose of Section 149(2) of the Companies Act, 2013 w.e.f. 01.04.2014 for a period upto 30.09.2015.

Dr. K.R. Lakshmy Devi (DIN Â 07003258) was appointed as an Additional Director of the Bank w.e.f. 11.11.2014 pursuant to Clause 49 of the Listing Agreement and Section 149 and 161(1) of the Companies Act, 2013.

Mr. Harihar Mishra was appointed by Reserve Bank of India as Additional Director w.e.f. 09.12.2014 in place of Mr. Raja Selvaraj and he held office till 13.02.2015. Mr. Rohit Jain was appointed by Reserve Bank of India as Additional Director w.e.f. 13.02.2015 in place of Mr. Harihar Mishra. Further Mr. Susobhan Sinha was appointed by Reserve Bank of India as second Additional Director w.e.f. 02.03.2015.

The Board represents various domain skill and also addresses the issue of diversity.

Auditors

The present Statutory Central Auditors M/s Sagar and Associates, Chartered Accountants, Hyderabad, vacate office at this Annual general Meeting and are not seeking reappointment. The following three firms of Chartered Accountants have submitted their application for appointment as Statutory Central Auditors of the Bank:

(i) M/s K. Venkatachalam Aiyer & Co., Chartered Accountants, Kochi

(ii) M/s Sankar & Moorthy, Chartered Accountants, Calicut

(iii) M/s Sridhar & Co., Chartered Accountants,

Thiruvananthapuram

The Bank has sought approval from Reserve Bank of India for appointment of any one of the above firms as the Statutory Central Auditors of the Bank for the period commencing from the conclusion of this Annual general Meeting until the conclusion of the next Annual general Meeting on such remuneration as shall be decided by the Board of Directors.

Explanation for Auditors' comments in the Report

(a) The Auditors' report for the year 2014-15 contains the following qualifications:

We draw attention to Note No. 30 of the financial statements, regarding funds of Rs. 7938 Lakhs not provided to pension trust for purchase of annuities for payment of pension/increase in dearness allowance. Had this provision been made in the accounts, operating expenses and loss would have increased by Rs. 7938 Lakhs.

Explanation

In respect of 259 employees who had opted for VRS in 2000 & 2004 and 424 retired employees, the Bank has not provided to the Pension Trust, funds required amounting to around Rs.7938 Lakhs for purchase of annuities for payment of pension/increase in Dearness Allowance respectively. However, pension/increase in dearness allowance is paid by the Bank by debiting Profit and Loss account.

(b) The following are the matters of expressions in the Auditor's report:

Without qualifying we draw attention to

(a) Note No. 29(a) of the financial statements, in terms of RBI guidelines, banks are required to provide, in case of fraud, the entire amount due to the Bank over a period not exceeding four quarters commencing from the quarter in which the fraud has been detected. However, as a prudent measure, the Bank has provided the entire amount during the year, thereby; the loss reported by the Bank is overstated by Rs. 4944 Lakhs.

(b) Note No. 29(b) of the financial statements, though a special dispensation is given by RBI for providing the amount due to the Bank over a period of three quarters commencing from March, 2015 in respect of a borrowal account, the Bank, as a prudent measure, has provided for the entire amount during the year, thereby the loss reported by the Bank is overstated by Rs. 4524 Lakhs.

(c) Note No. 25 of the financial statement regarding reconciliation of rent advance/security deposit for premises occupied by branches/offices, etc. (as per Schedule No. 11), and physical verification of fixed assets (Schedule No. 10) is in progress.

Since the above comments are self explanatory, no explanation is offered in this regard.

Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013 the Bank has appointed M/s KSR & Co, Company Secretaries, LLP, Practicing Company Secretaries, Coimbatore as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2014-15. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The report of Secretarial Auditor for the FY 2014-15 is annexed to this report.

Corporate Governance

A separate report profiling Corporate governance as required under clause 49 of the Listing Agreement with Stock Exchanges and a certificate from M/s Sagar and Associates, Chartered Accountants, Statutory Central Auditors of the Bank, are annexed to this report.

Extracts of Annual Return

Pursuant to sub section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with rule 12 of the Companies (Management and Administration) Rules 2014, the extracts of the Annual Return as at March 31, 2015 is annexed to this report.

Subsidiary Companies

The Bank does not have any subsidiary companies.

Strictures and Penalties

During the last three years, there were no penalties or strictures imposed on the Bank by the Stock exchanges(s) and/or SEBI and/ or any other statutory authorities on matters relating to capital market.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report.

Directors' Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, it is hereby confirmed that

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) 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 and of the profit and loss of the company for that period;

c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The directors had prepared the annual accounts on a going concern basis; and

e) The directors, in case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgements

The Board of Directors places on record its gratitude to the government of India, Reserve Bank of India, State governments, Securities and Exchange Board of India and other Regulatory bodies including stock exchanges where the Bank's shares are listed for their support and guidance. The Board also places on record its gratitude to the bank's customers, shareholders, other stakeholders and well wishers for their valued patronage. The Board further places on record its appreciation for the valuable services rendered by M/s Sagar and Associates, Statutory Central Auditors. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the bank at all levels.

By Order of the Board

Place : Thrissur Sd/

Date : 12.08.2015 (Tekkar Yashwanth Prabhu)

Chairman

Mar 31, 2014

To The Members,

The Board of Directors is pleased to place before you, the 87th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2014 and the Profit and Loss Account for the year ended on that date.

Performance Highlights

The salient features of the Bank''s performance for the financial year ended March 31, 2014 are:

The total Deposits of the Bank increased from Rs. 11202.13 crore as on 31.03.2013 to Rs. 12133.21 crore as on 31.03.2014

The total Advances of the Bank increased from Rs. 7954.00 crore as on 31.03.2013 to Rs. 8205.76 crore as on 31.03.2014

Achieved operating Profit of Rs. 6.07 Crore for the financial year 2013-14

Interest expended reduced by Rs. 19.75 Crore during the financial year 2013-14 as compared to previous FY 2012-13

Net NPA at 3.80% and Gross NPA at 5.98%.

Basel II CRAR at 10% and Basel III CRAR at 8.67%.

Book value per share is Rs. 58.47.

Capital and Reserves

The Bank''s Paid up capital and reserves is Rs. 736.32 crore as on 31.03.2014. The capital adequacy ratio as per Basel II and Basel III was 10% and 8.67% respectively.

During the year the Bank had issued and allotted 4,07,98,300 Equity shares of Rs. 10 each for an aggregate amount of Rs. 183.98 crore (including premium) by way of qualified Institutional Placement and Preferential issue of shares to augment capital funds to further improve our Capital Adequacy Ratio.

Total Business

The Total Business of the Bank as on 31.03.2014 stood at Rs. 20338.97 crore as against Rs. 19156.13 crore as on 31.03.2013 and registered a growth of 6.17%.

Deposits

The total deposits of the Bank increased to Rs. 12133.21 crore from Rs. 11202.13 crore as on March 31,2013 registering a growth of 8.31%

Advances

The Bank''s total advance increased from Rs. 7954.00 crores as on 31.03.2013 to Rs. 8205.76 crores as on 31.03.2014 registering a growth of 3.17%.

Priority Sector Advances

The Bank continued its efforts during the year in facilitating the growth of the productive sectors of the economy. Priority sector advances increased from Rs. 2572.65 crore as at the end of March 2013 to Rs. 2933.93crore as at the end of March 2014. The Bank''s priority sector advances stood at 36.14% (an increase of 7.07% over March 2013) and its agricultural advance reached 19.19% of the adjusted net bank credit. The weaker section advances was at 13.62%, thus surpassing the prescribed norm of 10%. Lending under various socio- economic schemes has shown satisfactory progress.

Profitability

The bank''s operating Profit during the year was Rs. 6.07 crore as against Rs. 51.40 crore during the previous year. The bank declared a net loss of Rs. 251.91 crore during the year under report as against net Profit of Rs. 2.62 crore during the previous year.

Dividend

In view of the net loss recorded by the Bank during the year, regrettably no dividend could be recommended to the shareholders.

Non-Performing Assets

The continued global recession during the FY 2013-14 had its adverse impact on Indian Economy. This, along with some issues Specific to the Bank, affected the borrowers of the bank, leading to an unprecedented rise in non-performing assets. The various monitoring/recovery measures employed by Bank helped it much in restricting further slippages into NPA and ensuring good recovery from the existing NPA accounts. During the year the new slippage to NPA in our Bank was.

Rs. 488.08 crore, in comparison with the fgure of Rs. 504.78 crore during the previous year. The total recovery in NPA during the current fiscal was. Rs. 312.20 crores. The corresponding fgure for the previous year was Rs. 227.71 crore. The current year recovery includes assignment of 32 assets of 14 borrowers to Assets Reconstruction Company with gross NPA of value Rs. 102.86 crore. from the books of the Bank. The process will continue, studying each case individually. The automation process in NPA identifcation has turned to be a complete success due to concerted efforts of Recovery and IT Teams.

Customer Service

The Bank attaches the highest importance to the quality of customer service rendered across its branches / offices. It has taken a series of measures during the year through deployment of techonology for significantly enhancing service quality. A well Defined and full-fedged Customer Grievance Redressal Mechanism is put in place in the Bank.

The Customer Service Committee of the Board monitors the implementation of customer service measures periodically. Customer Service Committees comprising of Bank personnel as well as our constituents have been formed at the apex level and at branches for monitoring service quality and bringing about improvements in this area on an ongoing basis. The Bank has a 24 x 7 Phone Banking Call Centre at Thrissur as an outsourced model to cater to customer needs across the country.

The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI. In the annual Compliance survey conducted by BCSBI on implementation of BCSBI Code, the Bank has achieved "Above Average" rating for compliance amidst total 48 banks (including public sector, private sector and foreign banks) surveyed across the major parameters such as customer centricity, information dissemination, customer feedback and transparency. Also the Bank has been successful in achieving a "High Level" of compliance with regard to the "Grievance Redressal" segment thereby placing us amongst the top five private sector banks on the said parameter.

During the financial year 2013-14, the Bank received 6462 complaints as against a total of 8686 complaints received in the previous financial year. The organized structure for handling complaints at Branches, Regional offices, ATM Reconciliation Desk, Call Centre and Corporate office who are in turn handling all transactions and services for the customers has helped the Bank in better customer service and reduction in number of complaints.

Branch Expansion

The Bank''s customer outlets stood at 676 as on 31.03.2014, comprising 266 branches, 396 ATMs and 12 processing centres 1 treasury 1 ARB. No branch or ATM was opened during the year. We have concentrated on consolidating our operations across the country and thereby aiming at utilizing our branches to their fullest potential

Damodaran Committee on Customer Service

The Reserve Bank of India had constituted a Committee under the Chairmanship of Shri. M Damodaran, former Chairman, SEBI to interalia:

Examine the functioning of Banking Ombudsman Scheme-its structure, legal framework and recommend steps to make it more effective and responsive

Review the role of Board of Directors of banks and the role of Regulators in customer service matters.

Evaluate the existing system of grievance redressal mechanism prevalent in banks, its structure and effcacy and recommend measures for expeditious resolution of complaints. The committee may also lay down a suitable time frame for disposal of complaints including last escalation point within that time frame.

Examine the possible methods of leveraging technology for better customer service with proper safeguards including legal aspects in the light of increasing use of Internet and IT for bank products and services and recommend measures to enhance consumer protection.

Review the existing system of attending to customer service in banks - approach, attitude and fair treatment to customers from retail, small and pensioners segments.

We have received a total of 107 recommendations from the Committee since inception. Out of the 100 recommendations applicable to your bank, we have implemented 85 recommendations and the implementation of remaining items is in process.

Particulars Contact RO & CO ATM Banking Total Centre Recon Ombudsman

No. of Complaints Outstanding At the Beginning of the Year 12 1 0 4 17

No. of Complaints Received during the year 3138 372 2897 55 6462

No. of Complaints Resolved during the year 3141 366 2862 57 6426

No. of Complaints Pending during the year 9 7 35 2 53

The following important products and services were introduced during the year for the benefit of the customers:

New Retail Internet Banking facility was launched to serve the customers in a better way. The salient features of this facility include NEFT/RTGS Payments facility, option to do loan repayment, online password generation facility, fund transfer facility within the bank, online deposit process, ATM/ Debit card related request facility, payment gateways, payment history, standing instructions view/modification, opening of Term deposits and recurring deposits, multiple browser support and new look and feel by way of Graphical User Interface changed across all pages also One Time Password (OTP) for consummating all the financial transactions to make it more safe and secure.

Single Point Contact (SPC) has been identified at branches for Internet banking related issues to ensure that the customer issues are attended properly in time. Have also introduced registration for internet banking via scanned Channel Request Form (CRF).

Phase II of Mobile Banking facility has been launched with enhanced features, Mobile and DTH Recharge facility, Mobile Shopping and Bill Payments system, ATM Card Hotlisting facility, Reissuance request facility for debit card, facility to request debit card pin and facility to view details and payment data of Dhanlaxmi Bank Credit cards with enhanced daily and monthly transaction limits for financial transactions.

M/s. KSCEWWFB has authorized our bank to collect the subscription amounts from their 12 district offices linked to our branches. All the 12 linked branches were advised to collect the subscription amount from the district offices of Kerala Shops and Commercial Establishments Workers Welfare Fund Board (KSCEWWFB). The process will enhance the growth under CASA.

The Bank has launched PoS (Point of Sale) machine facility for our customers, effective from 1st January, 2014. We have partnered with M/s BTI Payments (P) Ltd, Bangalore, for deploying POS machines.

Flashremit tie up with UAE Exchange Centre LLC AbuDhabi was entered, which facilitates instantaneous credit to our customer''s account and provides credits to non- bank customers account within the cut- off time for NEFT payments.

In order to meet the working capital requirements of Traders segments, we have launched Dhanam Business Loan product. This is a demand loan repayable in maximum of 5 years, subject to annual review or running account repayable on demand in the form of secured CC/overdraft subject to annual review/renewal. The limit for lending to Priority sector has also been enhanced.

Daily ATM Cash Withdrawal limit and POS Limit for Classic 1 Debit Cards issued towards normal CASA Accounts was enhanced.

A new on-line Business Correspondent model using the latest "tablet" technology has been launched.

The Bank is now Aadhaar complied and offers Aadhaar based payment services. We facilitate Direct Transfer of cash subsidy / benefits from various government schemes.

To ensure that service to our valued customers is not affected for want of PAN, we have entered into an arrangement with UTI-ITSL (UTI Infrastructure Technology and Services Ltd) for obtaining PAN number for our valued customers as well as walk-in customers. We have been enrolled as Pan Service Agent (PSA) and the Agency Code Number allotted to us is 3KRV 1057.

Special Banking services at Sabarimala like last year with additional facilities like managing a multilingual information center (4 southern languages) at Sannidhanam to make the pilgrims aware about the various facilities available at Sabarimala. POS machines and Payment gateways to help the devotees for making donations.

Online Portal was launched by Travancore Devaswom Board (TDB) in alliance with our Bank through which devotees can do online booking / reservation of accommodation and poojas at Sannidhanam. The site provides with the payment modes like DD, Cash, NEFT, and Payment Gateway (agreement process underway).

The Bank has introduced w.e.f. 21.01.2014, a new facility to customers for knowing their account balance through a missed Call. The customer will get an SMS alert informing his account balance when he / she gives a missed call to the given number from his / her registered mobile number. This is a less time consuming, effortless and costless and speedy way for a customer to know his balance in the account.

We have launched Pay - Smart to facilitate Fee / Chit collection for our clients. Pay Smart enables smart management of the customer''s collections and there are smart options for payments.

Investor Education and Protection Fund

During the year the Bank had transferred the unclaimed, unpaid dividend for the year 2005-06, an amount of Rs. 6, 20,149/- to the Investor Education and Protection Fund (IEPF) constituted under Section 205C of the Companies Act, 1956.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on the Bombay Stock Exchange Ltd., National Stock Exchange Ltd., and Cochin Stock Exchange Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2013-14.

The Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1968

The provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. However, the Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

The Company, being a banking company and an Authorised Dealer in Foreign Exchange, has taken all possible steps to encourage export credit.

There are no such employees whose particulars are required to be given in terms of Section 217(2A) of the Companies Act,1956 read with the Companies (Particulars of employees) Rules 1975 as amended vide GSR 289(e) March 31, 2011[Companies (particulars of Employees) Amendment Rules 2011]

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the ''Green Initiative'' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General

Meeting, Audited Financial Statements, Directors'' Report, Auditors'' Report etc., for the year ended March 31, 2014, to the email address which the shareholders have previously registered with their Depository Participant (DP) as their valid e mail address. Investors desirous of refreshing /updating their e mail addresses are requested to do so immediately in their respective DP accounts. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CSDL will be deemed to be their registered e mail address for serving notices/documents including those covered under section219 of the Companies Act, 1956.

Shareholders holding shares in physical form desirous of availing electronic form of delivery of documents are requested to update their e mail addresses with Bank''s Registrar and Transfer Agents by a written request if they wish to avail this facility. A request format for registering e-mail ids with the Registrar is enclosed. Shareholders holding shares in demat segment are requested to inform their e-mail ids to their respective DPs.

ANTI-MONEY LAUNDERING (AML)

Transactions processed through the Core Banking Solution is monitored for detecting suspicious transaction using Infrasoft Technologies - AML application, to discharge the obligation cast on the Bank under Prevention of Money Laundering Act.

The Offsite Monitoring Teams set up for post facto verifcation of KYC Compliance while establishing new customer relationships by the branches are stabilized fully now.

The Bank has attached great importance to compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive, in the interest of nation.

Change in the Board

Mr. Chella K Srinivasan and Mr. K. Jayakumar were inducted to the Board of Directors w.e.f 17.05.2013 as Additional Directors. Mr. K. Vijayaraghavan and Mr. P. Mohanan, who were Additional Directors, were appointed to the office of Director liable to retire by rotation along with Mr. Chella K Srinivasan and Mr. K. Jayakumar at the 86th Annual General Meeting of the Bank held on 27.08.2013.

Mr. Manoranjan Dash was appointed by Reserve Bank of India as Additional Director from 23.05.2013 and he held office till 31.10.2013. Mr. Raja Selvaraj was appointed by Reserve Bank of India as Additional Director from 01.11.2013.

Auditors

The shareholders at the 86th Annual General Meeting held on August27, 2013 appointed M/S Sagar and Associates,

Chartered Accountants, Hyderabad as the Central Auditors for the audit of Bank''s account for the year 2013-14

M/S Sagar and Associates, Chartered Accountants, Hyderabad vacate office at the end of Annual General Meeting to be held this year but are eligible for reappointment for the financial year 2014-15.

Explanation for Auditors'' comments in the Report.

The Auditors'' report for the year 2013-14 does not contain any Qualifications. However, there are following matters of expressions.

Expression of matter

Without Qualifying our opinion, we draw attention to :

(a) Note No.19 of the Schedule 18 to the financial statements, regarding deferment of pension liability and gratuity liability of the Bank, pursuant to the exemption granted by the Reserve Bank of India from application of the provisions of Accounting Standard (AS) 15, Employees benefits vide circular No. DBOD.BP.BC/80/21.04.018/2010- 11,Dated 09-02-2011 on ''Re-opening of Pension Option to the employees and Enhancement in Gratuity Limits- Prudential Regulatory Treatment". Accordingly, out of the unamortized amount of. Rs. 10.21 crore as on 01/04/2013, the Bank has amortized. Rs. 3.15 crore for pension and Rs. 1.96 crore for Gratuity being proportionate amount for the year ended March31,2014 and balance amount to be amortized in future periods for Pension is Rs. 3.14 core and Gratuity is Rs. 1.96 crore.

(b) Note No. 26 of the Schedule 18 to the financial statements, which describes creation of Deferred Tax Liability (DTL) on Special Reserve under section 36(1)(viii)of the Income Tax Act,1961 pursuant to RBI''S Circular No.DBOD.No.BP. BC.77/21.04.018/2013-14 dated December 20,2013, whereby the DTL of Rs. 2.03 crore pertaining to periods upto March 31,2013 has been adjusted to the general reserve of the Bank in accordance with the accounting treatment prescribed by the Reserve Bank of India.

(c) Note No. 27 of the Schedule 18 to the financial statements, regarding reconciliation of few general ledger balances in Other assets(Schedule No:11) Exchange fuctuations (Schedule No:5) and physical verifcation of Fixed Assets (Schedule No:10) is in progress

Since the above comments are self explanatory, no explanation is offered in this regard.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report

Director''s responsibility statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act,1956 with respect to the Director''s Responsibility Statement, it is hereby confirmed that :

1. In the preparation of annual accounts for the financial year ended March 31,2014, the applicable accounting standards have been followed and proper explanation has been furnished to the extent of departures from these standards.

2. 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 Company at the end of the financial year 2013-14 and of the Profit/loss of the Company for that period.

3. The Directors have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and Banking Regulation Act, 1949 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts for the financial year ended on March31, 2014 on a going concern basis.

Acknowledgements

The Board of Directors places on record its gratitude to the Government of India, Reserve Bank of India, State Governments, Securities and Exchange Board of India and other Regulatory bodies including stock exchanges where the Bank''s shares are listed for their support and guidance. The Board also places on record its gratitude to the bank''s customers, shareholders, other stakeholders and well wishers for their valued patronage. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the bank at all levels.

By Order of the Board

Place: Thrissur Sd/

Date : 14.08.2014 (Tekkar Yashwanth Prabhu)

Chairman

Mar 31, 2013

The have pleasure in presenting the Bank''s 86th Annual Report along with the Audited Balance Sheet and Profit and Loss Account for the year ended 31.03.2013.

Performance Highlights

The salient features of the Bank''s performance for the year 2013 are:

- Achieved Operating Profit of Rs.51.40 crores for FY 13 against Operating Loss of Rs.97.90 crores for FY 12.

- Yield on Advance improved from 11.34% in FY 12 to 12.69% in FY 13.

- Interest expenses declined by 10% during FY 13 as compared to FY 12.

- Net Interest Income grew by 11.67% during the year.

- Net Interest Margin (NIM) improved to 2.33% from 1.81% in the previous year.

- Achieved Non-Interest Income of Rs.114.30 crores.

- Employee cost declined by 31.83% in FY 13.

- Other operating expenses declined by 29.08% during the year.

- In FY 13, out of the gross slippage of NPA of Rs.504.78 crores, we could recover Rs.228.78 crores during the year, thereby containing the level.

- Cost to income ratio declined from 125.03% for FY 12 to 86.85% for FY 13. The ratio came down from 209.49% in Q4 of FY 12 to 68.45% in Q4 of FY 13.

- CRAR of the Bank under Basel II as on 31.03.2013 stood at 11.06% against 9.49% as at 31.03.2012.

- Bank raised Equity Capital of Rs.35.40 crores in the year and another Rs.69.85 crores in April 2013. Taking into account the additional infusion in April 13, CRAR of the Bank would be 11.91%.

Capital and Reserves

The Bank''s Capital and Reserves increased from Rs.728.25 crores as on 31.03.2012 to Rs.765.99 crores as on 31.03.2013.

The capital adequacy ratio as per Basel I was 9.89% as on 31.03.2013 as against 8.79% as on 31.03.2012. Under Basel II, it was 11.06% as on 31.03.2013 against 9.49% as on 31.03.2012. The benchmark prescribed by RBI is 9%.

Branch Expansion

The Bank''s customer outlets stood at 676, as on 31.03.2013, comprising 268 branches, 396 ATMs and 12 processing centres. We have concentrated on consolidating our operations across the country and thereby aiming at utilizing our branches to their fullest potential.

Deposits

Total deposits of the Bank as on 31.03.2013 stood at Rs.11202.13 crores, in which net Inter Bank Deposits were only Rs.494 crores. Total Deposits as on 31.03.2012 were Rs.11804.41 crores wherein Inter Bank Deposits and Certificates of Deposit were Rs.1185 crores. The decrease of Rs.602.28 crores was mainly on account of repayment of Inter Bank Deposits & Certificates of Deposit during FY 13 consequent to the Bank''s decision to shed high cost and bulk deposits.

Advances

Total advances of the Bank stood at Rs.7954.00 crores as on 31.03.2013, in which retail assets bought out was Rs.323 crores only, Against this, the total advances as on 31.03.12 was Rs.8830.85 crores, in which the retail assets bought out was Rs.961 crores. The decline of Rs.876 crores in total advances was mainly on account of the repayment of low yielding bought out loan portfolio to the tune of Rs.638 crores. During the year, the Credit Deposit Ratio declined from 74.19% to 69.42%. Yield on Advance improved from 11.34% in FY 12 to 12.69% in FY 13.

Total Business

During the FY 13, there was a rationalization of the business portfolio in order to reduce the cost of funds and improve the yield on advances. The total business of the Bank stood at Rs.19156.13 crores as on 31.03.2013 as against Rs.20635.26 crores as on 31.03.2012. The growth in total business achieved during the year was eclipsed by the repayment of high cost Inter Bank Deposits/Certificates of Deposit and repayment of low yielding corporate advances along with bought out loan portfolio.

Priority Sector Advances

The Bank continued its efforts during the year in facilitating the growth of the productive sectors of the economy, Priority sector advances decreased from Rs.2810,34 crores as at the end of March 2012 to Rs.2572,65 crores as at the end of March 2013 - a fall of Rs.237,69 crores during 2012-13, mostly due to repayment of bought out advances in bulk, Direct agricultural outstanding grew from Rs.781,71 crores to Rs.1217,19 crores during the same period, The share of priority sector advances and agricultural credit in adjusted net bank credit was 29,07% and 15,87% vis-a-vis the RBI mandated targets of 40% and 18% respectively, The outstanding under the credit to weaker sections of society was Rs.1134,89 crore representing 12,82% of adjusted Net Bank Credit vis-a-vis the guideline of 10% set by RBI,

Profitability

As against a net loss of Rs.115,63 crores for the previous year, the Bank posted a net profit of Rs.2,62 crores in the current year, Bank achieved operating profit of Rs.51,40 crores against operating loss of Rs.97,90 crores in the previous year,

Dividend

In its journey to prosperity, Bank has made progress and posted net profit, However, no dividend could be recommended to the shareholders as the Bank needs to garner more profits to do so,

Non-Performing Assets

The Indian economy faced continued slowdown in the activities at the back of rising interest rate regime and recessionary scenario globally during the FY 2013, The economic condition affected the borrowers of our Bank also, particularly those in the industrial and infrastructure sector, During the year, accounts having balance of Rs.504,78 crores turned into NPA which was abnormally high compared to previous years slippage of Rs.87,76 crores, However, through concerted efforts, the Bank could recover Rs.227,71 crores (Rs.52,97 crores for the corresponding previous year), The Bank could successfully utilize all recovery measures open to it under law including the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) for achieving this record performance, Further the Bank re-empowered its branches for quality credit dispensations and management aiming to bring down the NPA and build up healthy advance portfolio,

Customer Service

The Bank attaches top priority to the quality of service rendered across its branches/offices, It has taken several measures during the year through deployment of technology and otherwise for significantly enhancing service quality,

A Customer Service Committee of the Board monitors the implementation of customer service measures periodically, Customer Service Committees comprising of Bank personnel as well as our constituents have been formed at the apex level and at branches for monitoring service quality and bringing about improvements in this area on an ongoing basis, The Bank is member of the Banking Codes and Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI, The Bank has 24 x 7 phone banking call centre at Bangalore as an outsourced model, which is functioning satisfactorily,

During the current FY 2012-13, Bank received 8686 complaints as against a total of 13100 complaints received in the previous FY 2011-12, The empowerment of branches for handling all transactions and services for the customers has helped the Bank in better customer service and reduction in number of complaints,

Contact ZO & CO ATM Banking Total Particulars Centre Recon Ombudsman

No, of Complaints Outstanding at the Beginning of the FY 2012-13 14 7 4 3 28

No, of Complaints Received during the FY 2012-13 3488 476 4661 61 8686

No, of Complaints Resolved during the FY 2012-13 3490 482 4665 60 8697

No, of Complaints Pending at close of FY 2012-13 12 1 0 4 17

Damodaran Committee on Customer Service

The Reserve Bank of India had constituted a Committee under the Chairmanship of Shri M. Damodaran, former Chairman, SEBI to interalia:

- Examine the functioning of Banking Ombudsman Scheme - its structure, legal framework and recommend steps to make it more effective and responsive.

- Review the role of Board of Directors of banks and the role of Regulators in customer service matters.

- Evaluate the existing system of grievance redressal mechanism prevalent in banks, its structure and efficacy and recommend measures for expeditious resolution of complaints. The committee may also lay down a suitable time frame for disposal of complaints including last escalation point within that time frame.

- Examine the possible methods of leveraging technology for better customer service with proper safeguards including legal aspects in the light of increasing use of Internet and IT for bank products and services and recommend measures to enhance consumer protection.

- Review the existing system of attending to customer service in banks - approach, attitude and fair treatment to customers from retail, small and pensioners segments.

We have received a total of 107 recommendations from the Committee since inception. Out of the 100 recommendations applicable to your Bank, we have implemented 80 recommendations and the implementation of remaining items is in process.

The following important products and services were introduced during the year for the benefit of the customers:

- Foreclosure charges/pre-payment penalties on home loans on floating interest basis were waived.

- Penalty interest on premature closure of all fixed deposits was completely withdrawn.

- Credit of NEFT proceeds directly to the loan accounts of the customers was enabled.

- Forex and Loan Modules were enabled for our Corporate Internet Banking customers thereby facilitating corporate users to access features viz. Card Rates, Outstanding Forex Contracts, Forex Transaction History, Loan Summary, Loan Detail, Loan Repayment Schedule etc.

- Withdrawal slips were reintroduced for better customer facilitation.

- Popularized ''AADHAAR'' card as a proof of identity and address thereby paving the way for easy account opening process.

- Initialized provision for Statement of account in SWIFT format for corporate customers to upload the statements directly into their ERP system.

- Provided MICR, IFSC code and branch contact details in passbooks for customers to have easy access to the branches and the alternate channels.

- Displayed the list of unclaimed deposit accounts on the Bank''s website as a proactive initiative to reach out to customers Process guidelines detailing the steps to be taken by customers in claiming the unclaimed deposits have also been issued.

- Facilitated printing of gross interest paid and tax deducted separately in the customer passbook and savings account statements thereby making it easy for customers to understand interest earnings and tax deductions separately,

- Introduced "Dhanam Green Loan" product for funding purchase of solar power equipment with a view to promote use of non-conventional energy sources among our customers. This loan has a subsidy scheme under the Jawaharlal Nehru National Solar Mission managed by NABARD.

- Released the revised Kissan Credit Card Scheme with an innovative measure of providing interest at Savings Bank Interest rate for credit balances in the account.

- Introduced a new gold loan product that facilitates greater flexibility through provision for partial release of ornaments and redeposit of ornaments without any restrictions.

- Started an evening counter for the convenience of customers at our High Road Branch, Thrissur with effect from 17th August, 2012.

- Enabled online Income Tax Return Filing Module for our customers in collaboration with TaxSpanner.com.

Investor Education and Protection Fund

During the year, there is no unclaimed amount transferred for the year 2004-05.

Listing on Stock Exchanges

The equity shares of the Bank are listed on the Bombay Stock Exchange Ltd., National Stock Exchange Ltd., and Cochin Stock Exchange Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2012-13.

Conservation of energy

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

Technology Absorption

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

Foreign Exchange Earnings and Outgo

Being an authorized dealer in Foreign Exchange, all possible measures are taken by the Bank to increase foreign exchange earnings.

The Companies (Disclosure of Particulars in respect of Board of Directors) Rules, 1968

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 and the rules thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank

Director''s Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the year ended 31 Mar. 2013:

- the applicable accounting standards have been followed along with proper explanation relating to material departures, if any

- the accounting policies, framed in accordance with the guidelines of the Reserve Bank of India were applied consistently

- reasonable and prudent judgement and estimates were made wherever required so as to present a true and fair view of the state of affairs of the Bank as at the end of the financial year and profit of the Bank for the year ended 31st March 2013

- proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing Banks in India

- the accounts have been prepared on a ''going concern'' basis

- that proper systems are in place to ensure compliance of all laws applicable to the Bank.

Change in the Board

Shri Ghanshyam Dass, Director resigned with effect from 16.07.2012 and Shri Shailesh V, Haribhakti, Director retired at the 85th Annual General Meeting of the Bank held on 27.09.2012. Shri S. Santhanakrishnan and Shri Sateesh Kumar Andra, Directors resigned with effect from 31.10.2012. Shri Ghyanendra Nath Bajpai, Chairman resigned with effect from 06.11.2012 following completion of his term as Non-Executive Chairman. The Board places on record its appreciation for the valuable services and guidance rendered by them to the Bank during their tenure. Shri Jayakumar R G. had been appointed as MD & CEO of the Bank for a period of one year from 18.05.2012. Further RBI has given him extension for one more year as MD & CEO with effect from 18.05.2013. Shri K. Vijayaraghavan and Shri R. Mohanan have been appointed as Additional Directors with effect from 31.10.2012. Shri Tekkar Yashwanth Rrabhu has been appointed as Director and Rart-time Chairman of the Bank for a period of 3 years with effect from 07.11.2012. Mr. Chella K. Srinivasan and Mr. K. Jayakumar have been appointed as Additional Directors with effect from 17.05.2013. Mr. Manoranjan Dash has been appointed as Additional Director on the Board by Reserve Bank of India.

Acknowledgements

The Board places on record its gratitude to:

- The Reserve Bank of India, The Ministry of Finance, Government of India, State Governments, Securities and Exchange Board of India, Indian Bank''s Association, Insurance Regulatory and Development Authority, Stock Exchanges and other regulatory bodies for their continued assistance and guidance.

- The customers, shareholders, other stakeholders and well wishers for their valued patronage.

- The clerical and officer associations for their active participation through feedback, suggestions and support.

- The employees for their active involvement and contribution to the Bank''s growth and development.

By Order of the Board

Sd/-

Rlace : Kochi Tekkar Yashwanth Prabhu

Date : 17.07.2013 Chairman

Mar 31, 2012

The have pleasure in presenting the Bank's 85th Annual Report along with the Audited Balance Sheet and Profit and Loss Account for the year ended 31.03.2012.

Capital and Reserves

The Bank's Capital and Reserves declined from Rs.844.64 crore as on 31.03.2011 to Rs.725.25 crore as on 31.03.2012. The Capital Adequacy Ratio as per Basel I was 9.49% as on 31.03.2012 as against 10.81% as on 31.03.11. Under Basel II, it was 9.49% as on 31.03.12 as against 11.80% as on 31.03.11. The benchmark prescribed by RBI is 9%.

Branch Expansion

The Bank's customer outlets stood at 680, as on 31.03.12, comprising 268 branches, 400 ATMs and 12 processing centres. No branch or ATM was opened during the year. The top 5 States where the Bank has presence are (number of customer outlets given in brackets): Kerala (307), Tamil Nadu (114), Maharashtra (78), Andhra Pradesh (54) and Karnataka (53).

Deposits

The total deposits of the Bank stood at Rs.11,804.41 crore as on 31.03.2012 as against Rs.12,529.63 crore as on 31.03.2011. The decline is largely attributable to the withdrawal/non-renewal of bulk deposits under Certificate of Deposits and Inter Bank Deposits during the year. The Bank consciously discouraged mobilization of bulk funds from a cost and ALM perspective. CASA balances as on 31.03.2012 accounted for 19.35% of total deposits.

The Bank launched incentive based campaigns during the year for strengthening its resources base with special emphasis on CASA accounts. The number of deposit accounts increased from 13.20 lac as on 31.03.2011 to 14.61 lac as on 31.03.2012.

Advances

Total advances of the Bank stood at Rs.8,830.85 crore as on 31.03.2012 as against Rs.9,121.61 crore as on 31.03.2011. The decline is largely attributable to shedding of low yielding advances. There was also a conscious shift in focus during the year from corporate segment to SME and Retail sectors. During the year, the Credit Deposit Ratio rose from 72.80% to 74.81%. The number of borrowal accounts stood at 2.17 lac as on 31.03.12 as compared to 2.29 lac as on 31.03.11.

Total Business

The total business of the Bank stood at Rs.20,635.26 crore as on 31.03.2012 as against Rs.21,651.24 crore as on 31.03.2011.

Priority Sector Advances

The Bank continued its efforts during the year in facilitating the growth of the productive sectors of the economy. Priority Sector Advances increased from Rs.2,565.23 crore as at the end of March 2011 to Rs.2,810.34 crore as at the end of March 2012 - a rise of Rs.245.11 crore during 2011-12. Direct agricultural outstandings grew from Rs.704.09 crore to Rs.781.71 crore during the same period. The share of priority sector advances and agricultural credit in net bank credit was 30.87% and 9.97% vis-a-vis the RBI mandated targets of 40% and 18% respectively. The outstandings under credit to weaker sections of society was Rs.738.78 crore representing 8.11% of Net Bank Credit vis-a-vis the guideline of 10% set by RBI.

The Bank has chalked out a set of aggressive strategies in the current year for reaching the prescribed targets under the above segments. A key aspect of this strategy is the popularizing of gold loan especially agricultural gold loan and focus on micro lending, the training for which is in full swing across all our branches in the country.

Profitability

As against a profit of Rs.26.06 crore for the previous year, the Bank posted a loss of Rs.115.63 crore in the current year due to a sharp increase in manpower cost, other operational expenses and higher NPA provisioning. A number of income generation and cost reduction endeavours were put in place in the last quarter of the year to strengthen the bottomline, which have started yielding results.

Dividend

In view of the net loss recorded by the Bank during the year, regrettably no dividend could be recommended to the shareholders.

Non-Performing Assets

Concerted efforts were taken during the year to reduce the level of non-performing assets. However, owing to fresh accretion and a decline in total advances, the percentage of gross NPAs to gross advances increased from 0.74% to 1.18% during the year, while the net NPA ratio increased from 0.30% to 0.66% during the period. The total cash recoveries, including upgradation and recoveries in written-off accounts, during the year was Rs.64.15 crore (Rs.59.30 crore in 2010-11) surpassing the annual target of Rs.63.49 crore. Increase in Net NPA was to the extent of Rs.30.53 crore during the year. The Provision Coverage Ratio stood at 45.59% as at the end of 31.03.12.

The Bank could achieve good recovery during the year through a set of measures, viz. action under SARFAESI Act, litigation, settlement through negotiation etc. The health of the borrowal accounts was continuously monitored with a view to constantly improving the asset quality and to facilitate faster recycling of funds.

Customer Service

The Bank attaches top priority to the quality of service rendered across its branches / offices. It has taken several measures during the year through deployment of technology and otherwise for significantly enhancing service quality,

A Customer Service Committee of the Board, comprising of 5 Directors, monitors the implementation of customer service measures periodically, Customer Service Committees comprising of Bank personnel as well as our constituents have been formed at the apex level and at Branches for monitoring service quality and bringing about improvements in this area on an ongoing basis. The Bank is a member of the Banking Codes and Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI. The Bank has 24 x 7 phone banking call centre at Bangalore as an outsourced model, which is functioning satisfactorily.

Damodaran Committee on Customer Service

The Reserve Bank of India had constituted a Committee under the Chairmanship of Shri M. Damodaran, former Chairman, SEBI to interalia:

- Review the existing system of attending to customer service in banks - approach, attitude and fair treatment to customers from retail, small and pensioners segments.

- Evaluate the existing system of grievance redressal mechanism prevalent in banks, its structure and efficacy and recommend measures for expeditious resolution of complaints. The committee may also lay down a suitable time frame for disposal of complaints including last escalation point within that time frame.

- Examine the functioning of Banking Ombudsman Scheme - its structure, legal framework and recommend steps to make it more effective and responsive.

- Examine the possible methods of leveraging technology for better customer service with proper safeguards including legal aspects in the light of increasing use of Internet and IT for bank products and services and recommend measures to enhance consumer protection,

- Review the role of the Board of Directors of banks and the role of Regulators in customer service matters,

The recommendations of the Committee were studied by the IBA and a list of 77 recommendations were advised to banks for implementation, The Bank has already implemented 64 of these and the remaining items are in process,

The following important products and services were introduced during the year for the benefit of the customers:

1, Speed Clearing in 193 locations

2, Insta-PIN facility for Debit Cards

3, Launch of one time registration bill payment feature

4, New features added in mobile banking

5, Introduction of mobile banking for NRI customers

6, Online Tax return filing facility for customers

7, Introduction of Dhanlaxmi Bank Gold and Platinum debit cards

8, Introduction of Dhanlaxmi Bank Forex Cards

9, Launch of short code for Lead Generation and SMS based ATM / Branch Locator

10, Launch of Interactive Voice Response (IVR) at Call Centre

11, One Time Registration Bill Payment module - through Internet Banking

12, E-Commerce enablement of Visa Debit Card

13, Corporate Internet Banking

14, IMPS (Interbank Mobile Payment Service) via Mobile Banking

15, Retail Gold Sales - Corporate Deals

16, Shabarimala Accident Policy

17, Gold Bullion and Dhan Silver Bar sales

18, Decentralisation of opening of Fixed Deposit and Loan Against Deposits

In addition to the above, there were value adds in several existing products in line with the Bank's constant endeavours to cater to growing customer needs,

The position of customer complaints during 2011 - 12 is as under:

Particulars Contact Centre ZOs & CO ATM Banking Total Recon. Ombudsmen

No, of complaints pending at the beginning of the 24 11 0 10 45 year

No, of complaints received during the year 3731 622 8673 74 13100

No, of complaints redressed during the year 3741 626 8669 81 13117

No, of complaints pending at the end of the year 14 7 4 3 28

Out of the 28 complaints pending for resolution as on 31.03.2012, 23 complaints including all Ombudsman complaints have been closed since till date.

Investor Education and Protection Fund

During the year, the Bank had transferred the unclaimed, unpaid dividend for the year 2003-04 an amount of Rs.5,34,425 to the Investor Education and Protection Fund (IEPF) constituted under Section 205C of the Companies Act, 1956.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on the Bombay Stock Exchange Ltd., National Stock Exchange Ltd., and Cochin Stock Exchange Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2011-12.

Conservation of energy

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

Technology Absorption

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

Foreign Exchange Earnings and Outgo

Being an authorised dealer in Foreign Exchange, all possible measures are taken by the Bank to increase foreign exchange earnings.

The Companies (Disclosure of Particulars in respect of Board of Directors) Rules, 1968.

"The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary of the Registered Office of the Bank."

Directors' responsibility statement

The Directors confirm that in the preparation of the annual accounts for the year ended 31 March 2012:

- the applicable accounting standards have been followed along with proper explanation relating to material departures, if any

- the accounting policies, framed in accordance with the guidelines of the Reserve Bank of India, were applied consistently

- reasonable and prudent judgment and estimates were made wherever required so as to present a true and fair view of the state of affairs of the Bank as at the end of the financial year and the profit of the Bank for the year ended 31st March 2012

- proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing Banks in India

- the accounts have been prepared on a 'going concern' basis and

- that proper systems are in place to ensure compliance of all laws applicable to the Bank.

Changes in the Board

Shri Amitabh Chaturvedi demitted office on 06.02.2012 as Managing Director & Chief Executive Officer.

Shri. Vidyadhara Rao Chalasani, Director resigned on 14.12.2011.

Shri. Ghanshyam Dass, Director resigned on 16.07.2012.

The Board places on record its appreciation for the valuable services.

Mr. P G. Jayakumar, was appointed as Managing Director and CEO on 6.02.2012 and assumed charge as regular MD & CEO on 18.5.2012 on receipt of approval of his appointment by RBI.

All the Non-Executive Directors of the Bank have certified that apart from receiving the Director's remuneration / sitting fees, they have not entered into any material pecuniary relationship or transactions with the Bank, its promoters, its Directors, its senior management, which may affect the independence of their directorship.

All Directors except Managing Director and CEO are Non-Executive and Independent Directors.

Acknowledgements

The Board places on record its gratitude to:

- The Government of India, the Reserve Bank of India, State Governments, Securities and Exchange Board of India and other regulatory bodies for their continued assistance and guidance.

- The customers, shareholders, other stakeholders and well wishers for their valued patronage.

- The officers and staff for their active involvement and contribution to the Bank's growth and development.

By Order of the Board

Sd/-

Place : Mumbai G. N. Bajpai

Date : 25.08.2012 Chairman

Mar 31, 2011

The Directors have pleasure in presenting the Banks 84th Annual Report along with the Audited Balance Sheet and Profit and Loss account for the year ended 31.03.2011.

Performance Highlights

The salient features of the Banks performance for the year 2010-11 are:

- 5 branches and 179 ATMs were opened taking the customer outlets to 734 as on 31 st March 2011.

- Total deposits rose from Rs. 7,098.48 crore to Rs. 12,529.63 crore, an increase of Rs. 5,431.15 crore at a growth rate of 76.51 %.

- CASA balances increased from Rs. 1,551.54 crore to Rs. 2,869.21 crore, an increase of Rs. 1,317.67 crore at a growth rate of 84.93 %.

- Total advances increased from Rs. 5,056.49 crore to Rs. 9,121.62 crore, an increase of Rs. 4,065.13 crore at a growth rate of 80.39 %.

- Total business rose from Rs. 12,154.97 crore to Rs. 21,651.25 crore at a growth rate of 78.13%. This is much higher vis-a-vis the business growth of the banking industry at 18.33 %.

- Credit Deposit Ratio increased from 71.23 % as on 31.03.2010 to 72.80 % as on 31.03.11.

- Priority Sector Advances as a percentage to Net Bank Credit was 50.90 % as at the end of March 2011 as against the RBI benchmark of 40 %.

- Agricultural outstandings as a percentage to Net Bank Credit was 18.30 % as at the end of March 2011 as against the RBI prescription of 18 %.

- Weaker Section Advances as a percentage to

Net Bank Credit was 16.15 % as at the end of March 2011 as against the RBI norm of 10 %.

- Gross NPA ratio declined from 1.54 % to 0.74 % and Net NPA percentage came down from 0.84 % to 0.30 %.

- Provision Coverage Ratio increased from 47.95 % to 60.50 %.

Dividend

The Board has recommended a dividend of 5 % to the shareholders subject to the approval of the Reserve Bank of India.

Capital and Reserves

The Banks Capital and Reserves increased from Rs. 440.08 crore as on 31.03.2010 to Rs. 844.64 crore as on 31.03.2011. The Capital Adequacy Ratio as per Basel I was 10.81 % as on 31.03.2011 as against 12.47% as on 31.03.10. Under Basel II, it was 11.80 % as on 31.03.11 as against 12.99% as on 31.03.10. The benchmark prescribed by RBI is 9 %.

Strengthening the Capital Base

The Bank has successfully raised Rs. 380.73 crore through a Qualified Institutional Placement (QIP) in July 2010 by placing 2,10,00,000 Equity Shares of face value Rs. 10 (Equity Shares) at Rs. 181.30 per Equity Share, including a premium of Rs. 171.30. The market capitalisation of the Bank as at 31.03.11 stood at Rs. 965.01 crore.

Branch Expansion

During the year, 5 new branches were opened at

Vasai, Andheri & Prabhadevi in Mumbai, Jodhpur in Rajasthan and Bareilly in UP, taking the number of branches from 270 as on 31.03.10 to 275 as on 31.03.11. The number of ATMs increased from 280 to 459 during the year. Consequently, the Banks customer outlets rose from 550 as on 31.03.10 to 734 as on 31.03.11. The top 5 States where the Bank has presence are (number of customer outlets given in brackets) Kerala (317), Tamilnadu (114), Maharashtra (78), Andhra Pradesh (54) and Karnataka (53).

Deposits

The total deposits of the Bank increased from Rs. 7098.48 crore as on 31.03.2010 to Rs. 12,529.63 crore as on 31.03.2011, recording an increase of Rs. 5,431.15 crore at a rate of 76.51 %. This level of growth is the highest in the Banks history, It compares very favourably with the growth of the banking industry at 15.8 %. The Bank laid considerable emphasis during the year on mobilization of low cost funds on account of which CASA balances increased from Rs. 1,551.54 crore as on 31.03.2010 to Rs. 2,869.21 crore as on 31.03.2011, showing an increase of Rs. 1,317,67 crore at 84.93 %. The emphasis on CASA enabled the Bank to reduce the average cost of deposits from 6.80 % in 2009-10 to 6.51 % in 2010-11. CASA as a percentage to total deposits increased from 21.86 % as on 31.03.10 to 22.90 % as on 31.03.11. The Bank launched a number of incentive based campaigns during the year for employees as well as

customers for strengthening its resources base with special reference to CASA accounts. The number of deposit accounts increased from 11.41 lacs as on 31.03.10 to 13.20 lacs as on 31.03.11.

Advances

Total advances of the Bank increased from Rs. 5,056,49 crore as on 31,03.2010 to Rs. 9,121.62 crore as on 31.03.2011, an increase of Rs. 4,065.13 crore at a growth rate of 80.39 %. This level of credit growth is the highest ever for the Bank and compare enviously with that of the growth of the banking industry at 21,55 %. During the year, the Credit Deposit Ratio rose from 71.23 % to 72.80 %. The number of borrowal accounts increased from 2.09 lacs as on 31.03.10 to 2.29 lacs as on 31.03.11.

Market Share

The total business of the Bank increased by 78.13 % during 2010 - 11 with deposits clocking 76.51 % and advances recording 80.39 %. This level of growth resulted in a sharp increase in the Banks market share on an all India basis. The market share of the Bank in deposits increased from 0.153 % to 0.225 % during the period 26.03.10 - 25.03.11 while the market share in advances rose from 0.153 % to 0.223% during the same period. The following table portrays the Banks business growth vis-d-vis the industry during the year.

(Rs. in crore)

Head Deposits(Actuals) Advances(Actuals) Growth(%)

26.03.10 25.03.11 26.03.10 25.03.11 Depostis Advances

Our Bank 6848 11696 4964 8801 70.79 77.30

All Scheduled 4486574 5204703 3240399 3938659 16.01 21.55 Commercial Banks

Market Share (%) 0.15 0.22 0.15 0.22

Priority Sector Advances

The Bank continued its endeavours during the year in assisting the growth of the productive sectors of the economy. Priority Sector Advances increased from Rs. 1,409.28 crore as on 31.03.2010 to Rs. 2,585.86 crore as on 31.03.2011, recording a growth of 83.49 %. The priority sector ratio as on 31.03.2011 was 50.90 %, well above the RBI benchmark of 40 %, The Bank also surpassed the RBI norm of 18 % in respect of agricultural credit by recording 18.30 % as on 31.03.2011. Agricultural outstandings increased from

Rs. 765.16 crore as on 31.03.10 to Rs. 922.27 crore as on 31.03.11, an increase of Rs. 115.17 crore at 20.53 %. Weaker Section advances as on 31.03,11 stood at Rs. 814.29 crore as against Rs. 477.14 crore on 31.03.10. Weaker Section Advances outstandings as a % of Net Bank Credit was 16.15% as on 31.03.11 vis-d-vis the RBI benchmark of 10 %.

No Frill Accounts

The number of No Frill SB accounts opened by the Bank as part of our financial inclusion endeavours

increased from 1,00,010ason31.03.10to 1,09,711 as on 31.03.11. The outstanding balances under this head as on 31.03.11 were Rs. 26.05 crore which works out to Rs. 2,374 per account even though no frills accounts can be opened and operated with zero balance.

Profitability

The Banks net profit for the year ended March 31, 2011 stood at Rs. 26.06 crore, against Rs. 23.30 crore for the year ended March 31, 2010. The relatively subdued rise in net profit is attributable to expenditure incurred in creating additional capacities during 2010-11 in the form of additional manpower, physical infrastructure and technology upgradation. The expenditure on such additional capacity creation translated itself into productive gains with the Bank recording its highest ever growth in business of 78.13 % during 2010-11. The business per employee too rose sharply from Rs. 3.70 crore as on 31.03.10 to Rs. 5.08 crore as on 31.03.2011.

Non-Performing Assets

Focussed measures were taken during the year to reduce the level of existing non-performing assets, as well as preventing fresh accretion of NPAs. This became necessary in the context of rapid asset expansion during the year, The percentage of gross NPAs to gross advances declined from 1.54 % to 0.74 % during the year, while the net NPA ratio fell encouragingly from 0.84 % to the lowest ever level of 0.30 % during the period. The total cash recoveries, including upgradation and recoveries in written-off accounts, during the year was to Rs. 59.30 crore (Rs. 44.86 crore in 2009-10) surpassing the annual target by a margin of Rs. 19.30 crore. The Provision Coverage Ratio also increased sharply from 47.95 % in 2009-10 to 60.50 % in 2010-11.

The Bank could achieve a record recovery during the year through a set of measures, viz., action under SARFAESI Act, litigation, settlement through negotiation etc. The health of the borrowal accounts was continuously monitored with a view to constantly improving the asset quality and to facilitate faster recycling of funds.

Customer Service

The Bank attaches the highest importance to the quality of service rendered across its branches /

offices. It has taken a series of measures during the year through deployment of technology and other- wise for significantly enhancing service quality.

The Customer Service Committee of the Board, comprising of 6 Directors, monitors the implementation of customer service measures periodically. Customer Service Committees comprising of Bank personnel as well as our constituents have been formed at the apex level and at Branches for monitoring service quality and bringing about improvements in this area on an ongoing basis. The Bank is a member of the Banking Codes and Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI. In addition to introduction of a number of products and services, two key developments in this area relate to the upgradation of the software to the latest version for widening the range of services to the customers and establishment of a 24x7 Phone Banking Call Centre at Bangalore as an outsourced model to cater to customer needs across the country.

The following important products and services were introduced during the year for the benefit of the customers:

- Salary Multiplier account

- Special Savings account for educational institutions &. Co-operative Societies

- Premium Current account

- USDhan2lndia

- Instapay

- Mobile Banking

- Bill payment module on internet banking

- Internet banking kiosks

- Gift Cards

- Credit Cards

- Money Transfer Service Scheme (MTSS)

In addition to the above, there were value adds in a number of existing products in line with the Banks customer centric outlook.

The Bank took several measures during the year to technologically upgrade its grievance redressal mechanism with a view to accelerating the speed and enhancing the quality of response to customer complaints especially in an era of rapid growth.

The position of customer complaints during 2010-11

is as under:

No of complaints received : 246

No of complaints resolved : 247

No of complaints pending : 11

(as on 31.03.11)

The above pending complaints were closed subsequently.

Investor Education and Protection Fund

During the year, the Bank had transferred the unclaimed, unpaid dividend for the year 2002-03, an amount of Rs. 10,91,890/- to the Investor Education and Protection Fund (IEPF) constituted under Section 205C of the Companies Act, 1956.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on the Bombay Stock Exchange Ltd,, National Stock Exchange Ltd., and Cochin Stock Exchange Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2010-11.

Conservation of energy

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

Technology Absorption

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

Foreign Exchange Earnings and Outgo

Being an authorised dealer in Foreign Exchange, all possible measures are taken by the Bank to increase foreign exchange earnings.

The Companies (Disclosure of Particulars in respect of Board of Directors) Rules, 1968

The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank."

Directors responsibility statement

The Directors confirm that in the preparation of the annual accounts for the year ended 31 March 2011:

- the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- the accounting policies, framed in accordance with the guidelines of the Reserve Bank of India, were applied consistently;

- reasonable and prudent judgment and estimates were made wherever required so as to present a true and fair view of the state of affairs of the Bank as at the end of the financial year and the profit of the Bank for the year ended 31st March 2011;

- proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing Banks in India;

- the accounts have been prepared on a "going concern basis: and

- that proper systems are in place to ensure compliance of all laws applicable to the Bank.

Changes in the Board

There was no change in the composition of the Board during the year. All the Non-Executive Directors of the Bank have certified that apart from receiving the Directors remuneration / sitting fees, they have not entered into any material pecuniary relationship or transactions with the Bank, its promoters, its Directors, its senior management, which may affect the independence of their directorship.

All Directors except Managing Director and CEO are Non-Executive Independent Directors.

Acknowledgements

The Board happily places on record its gratitude to:

- The Government of India, the Reserve Bank of India, State Governments, Securities and Exchange Board of India and other regulatory bodies for their continued assistance and guidance.

- The customers, shareholders, other stakeholders and well wishers for their valued patronage.

- The officers and staff for their active involvement and contribution to the Banks growth and development.

Mar 31, 2010

The Directors have pleasure in presenting the Banks 83rd Annual Report, along with the audited Palance sheet and profit and loss account, for the year ended March 31, 2010

PERFORMANCE HIGHLIGHTS

The highlights of the Banks performance for 2009-10 are

- 63 Pranches (including 2 processing centres) and 208 ATMs opened during the year

- Number of customer outlets nearly doubled from 279 to 550 in 12 months

- Total deposits rose from Rs. 4,968.81 crore to Rs. 7,098.48 crore, an increase of Rs. 2,129.67 crore at a growth rate of 42.86%

- CASA balances increased from Rs. 1,207.63 crore to Rs. 1,551.54 crore, an increase of Rs. 343.91 crore, ndicating a growth rate of 28.48%

- Total advances increased from Rs. 3,245.30 crore to Rs. 5,056.49 crore, an increase of Rs.1,811.19 crore at a growth rate of 55.81 %

- The business growth rates recorded by the Bank were much higher when compared to the growth of the banking industry

- Credit deposit ratio increased from 65.31 % as on March 31, 2009, to 71.23% as on March 31, 2010

- Priority sector advances, as a percentage to Net Bank Credit (NBC), stood at 43.61 % against RBIs benchmark of 40% by the end of March 2010

- Agricultural outstandings as a percentage of NBC stood at 23.68% against the RBI prescription of 18% by the end of March 2010

- Weaker section advances, as a percentage of NBC, was 14.76% by March end, 2010, against the RBI norm of 1 0%

- Gross NPA percentage declined from 1.99% to 1.54%, and the net NPA figure declined from 0.88% to 0.84% during the year

- A new brand identity was launched during the year while retaining the original name The Dhanalakshmi Bank Limited

Dividend

The Board has recommended a dividend of 10% subject to RBI approval

Capital and Reserves

The Banks capital and reserves increased from Rs. 424.48 crore as on March 31, 2009, to Rs. 440.08 crore on March 31, 201 0. The Capital Adequacy Ratio (CAR) as per Basel I norms was 1 2.47% on March 31, 201 0, agtSgsFS: 1 4.44% on March 31, 2009. Under Basel-ll, it was 1 2.99% on March 31, 201 0, against 1 5.38% on March 31, 2009. The benchmark prescribed by RBI is 9%.

Strengthening the Capital Base

The Bank raised Rs. Ml-bxjnds during the year in the international market through private placement,

Branch Expansion

The Bank recorded significant progress in this area during the year by nearly doubling its customer outlets from 279 on March 31, 2009, to 550 as on March 31, 2010. The highlights in the area of branch expansion are as under

- Opened 63 branches (including two processing centres at Hyderabad and Thrissur), covering 14 states

- Opened 208 additional ATMs across 13 states

- Upgraded 26 extension counters into full fledged branches

- Extended footprint to six more states during the year - Haryana, Punjab, Rajasthan, Uttar Pradesh, Madhya Pradesh and Goa, making the Bank a truly pan-India entity. It currently operates in 136 centres across the country,

- Opened a "B" class currency chest and a small coin depot at Thiruvananthapuram in Kerala

- Converted asset recovery branches at Coimbatore and Chennai into general category branches

- Opened regional offices at Thrissur, Thiruvananthapuram & Palakkad during the year and at Ernakulam & Kozhikode thereafter

- Re-designated 5 service branches at Thiruvananthapuram, Ernakulam, Thrissur, Chennai and Mumbai as regional processing centres during 2009-10 to take on a wider range of functions

Deposits

Total deposits of the Bank increased from Rs. 4,968.81 crore on March 31, 2009, to Rs. 7,098.48 crore (March 31, 2010) - an increase of Rs. 2,129.67 crore at a rate of 42.86%. This is the highest growth ever recorded by the Bank and compared very favourably with the banking industrys growth. The Bank laid special emphasis during the year on mobilisation of low-cost funds, resulting in CASA balances increasing from Rs. 1,207.63 crore as on March 31, 2009, to Rs. 1,551.54 crore (March 31, 201 0) - an increase of Rs. 343.91 crore at 28.48%. The stress on CASA enabled the Bank to reduce the average cost of deposits from 7% in 2008-09 to 6.8% in 2009-10

As part of its on-going attempts to improve customer service, convenience and delivery, the Bank introduced three new age, innovative products with sweep facility during the year - MaxiGain Current, MaxiGain Savings and MaxiGain FD, which offer customers the dual advantages of easy liquidity and high interest

The Bank conducted several incentive-based campaigns during the year to strengthen its resource base with special reference to CASA accounts. The number of deposit accounts surpassed the 10-lakh-mark and stood at 11,41,425 on March 31, 201 0

Advances

Total advances on March 31, 2010, amounted to Rs. 5,056.49 crore, compared to Rs. 3,245.3Crore on march. 31, 2009, an increase of Rs. 1,811.19 crore showing a growth of 55.81 %. This growth is the highest ever for the: Bank and compares very favourably with that of the industry. During the year, the credit/deposit ratioimproved from 65.31 % to 71.23%. The number of borrowal accounts surpassed the two-lakh-mark and stood at 2,08,962332as

Market Share

Our Banks growth during year 2009-10 was well ahead of the industrys growth on a continuous basis under both deposits and advances. The Banks market share in deposits increased from 0.119% to 0.153% while that in advances rose from 0.111% to 0.153% during the period. The following table captures the above performance

Head Deposits Advances Growth (Actuals) (Actuals) (%)

27.03.09 26.03.09 27.03.09 26.03.09 Deposits Advances

Dhanlaxmi Bank 4,569 6,848 3,080 4,964 49.87 61.17

All Scheduled

Commercial

Banks 38,30,322 44,86,574 27,70,012 32,40,399 17.13 16.98

Revised Business Model

During 2008-09 and 2009-10, the Banks business growth rates were far higher than the industrys. This was possible only through the gradual adoption of a strategic business model, the essentials of which are as under

1. Back office functions were progressively centralised, allowing branches to concentrate on customer acquisition, sales and customer service. This has helped accelerate growth as well as improve service quality This centralisation process is continuing and will cover more areas, with the anticipated introduction of the upgraded Flexcube software in the current year

2. The new model shifts the focus of business expansion from a geographical, branch-based approach to a segment-based, vertical approach. In the area of asset management, four such verticals were created - wholesale banking, trade & advances group, micro finance & agriculture, and retail assets. Wholesale banking will cater to corporates with a net worth of Rs. 50 crore and above. The trade & advances group (TAG) will look into all cases other than those coming under wholesale banking and cases in the non-individual category Agri/micro finance will cater to all activities falling in this segment. Retail assets will cover all advances to ndividuals. While the first three verticals have established themselves firmly during the year, retail assets is currently taking off and is expected to go full stream by September 2010. As part of this revised approach, a number of leading corporates in the country with triple-A ratings established business relationships with the Bank,

3. The revised model also encompasses credit disbursement at the field level through 81 identified thrust branches across the country, while the remaining branches would be linked to them as cluster units

4. In the HR area, the approach has been to impart the requisite thrust to the growth process through recruiting personnel with appropriate specialisation, both at the operational and aqministrative levels

It may be noteb that the Bank went through a period of transformation in the past 18 months, covering the entire spectrum of its activities. The transformation has been manageb professionally and with a sense of clear purpose

Priority Sector Advances

The Bank continued its stress on channeling creqit to the productive sectors of the ecenerny. prtorty sector aqvances increaseq from Rs. 1,147.62 crore as at the enq of March 2009,2009 fo Rs 1.409.28 crare as at the end of March 2010, recorqing a growth of 22.8%. The priority sector ratio as at March end 2010,was 43.01%well above The RBI benchmark of 40% The-Bank also-surpassed the RBI norm of 1 8% in respect of agricultural credit by recording 23,68%

Weaker section advances as at March end 2010, stood at Rs. 477.14 crore against Rs. 205.40 crore (March end 2009). Weaker section advances outstandings, as a percentage of net bank credit was 14.76% as at March end 2010, against the RBI benchmark of 10%

Financial Inclusion and Micro Credit

As part of the overall efforts towards financial inclusion, the Bank is in the process of opening around 50 Customer Service Points (CSP) in Kerala and reaching out to over 50,000 no-frill accounts customers through these service points. Each CSP, known as the business correspondent location, will have a representative from the Bank to guide and educate customers on various banking services. These CSPs will be responsible for sourcing no-frills accounts and service the deposit and withdrawal requirements of the customer after opening of these accounts. The Bank will facilitate the use of biometric cards for day-to-day operations

Other banking services, such as insurance and loan products, will also be offered from the CSP location. The CSPs are being offered marketing, technology and training support required to deliver the above services. The Bank has tied up with NGOs - such as the Nair Service Society, Sree Narayana Dharma Paripalana Yogam, Kudumbasree, etc. - for deepening its overall inclusion activities

The number of no-frill savings bank accounts opened by the Bank as part of our financial inclusion endeavours ncreased from 83,046 as on March 31, 2009, to 1,00,010 (March 31, 2010). The balance under this head as on March 31, 2010, was Rs. 23.46 crore, which works out to Rs. 2,345 per account, even though no- frills accounts can be opened and operated with zero balance

The Bank also continued its thrust on micro credit as an instrument of inclusive banking. The outstandings under this sector more than doubled from Rs. 124.40 crore as on March 31, 2009, to Rs. 270.62 crore (March 31, 2010), thereby showing a growth of 11 7.54%. The Bank enhanced its product suite under this portfolio by investing in structured products - such as pass-through and portfolio buy-out - during the year

Operations

A key component of the revised business model adopted by the Bank during the year related to shifting all back office operations to a centralised location. This was implemented to free the branches to focus on customer-facing activities - such as, customer acquisition, sales anq customer service, resulting in accelerateq growth anq improved profitability. Considerable progress was made in this area, the highlights of which are as under

- Setting up of Dhanam Centralised Solutions (DCS) at Thrissur to handle

a) opening of all deposit/loan accounts and NRI,

b) centralised issue of combi pack (cheque book + debit carb),

c) centraliseq processing of service requests, internet banking operations (retail & corporate) and RTGS & NEFT,

d) NOSTRO reconciliation, FCNR qeposits, forex cheque collection,

- Setting up of trade finance desk at seven locations to handle: C, bank guafantees and letter of credit related transactions.

- A string of other functions - FD processing (new and renewals), Electronic Clearing Services (ECS), clearing (inward and outward), outstation cheque for collection and corporate salary processing - were also centralised at processing centres

- The Bank has launched a new project -"Customer First"- that envisages a relook into the entire gamut of branch processes from the customer as well as operations perspectives. There will be 10 revised processes in place in a few months that will significantly change the way customer needs are perceived and addressed by the Bank

The DCS has established a record by processing over two lakh applications since it came into being in February 2009,

Credit Cards

With a view to providing a bouquet of products to the customers, the Bank has launched platinum and gold credit cards during the year under the VISA banner with unique features - such as, pay by transaction, which provides 45 days of interest-free credit period to customers, for every individual purchase. The other facilities include cash back on purchase, priority pass and concierge services. The credit cards are targeted at premium customers and will facilitate the Banks business growth, promote our brand, improve customer loyalty and widen the client base

Credit Monitoring

The Bank has considerably strengthened the credit follow up endeavours during the year through the following measures

- Full-fledged vertical for credit monitoring established

- Credit monitoring policy revised

- A new software "Loanflo" deployed to facilitate quick turnaround of creqit proposals and for efficient monitoring

- Centraliseq monitoring of overqrawals introquced

- Follow up of financial follow-up and stock audit reports streamlined

The Bank has established a Credit Mid Office Group (CMOG) during the year to ensure, among other things, compliance of sanction stipulations, execution of security documents, validity of title deeds, mortgage creation, registration of charge with ROC, conduct of stock audit book debts inspection, valuation of securities and insurance of assets. This has considerably helped in laying better focus on credit monitoring

Profitability

The Banks net profit for the year ended March 31, 2010, stood at Rs. 23.30 crore, against Rs. 57.45 crore for the year ended March 31, 2009. The decline in net profit reflects the on-going capacity creation during the year in the form of recruitments and physical infrastructure to meet current and future needs. Productivity gains from such capacity creation have already started accruing and should stand the Bank in good stead in the coming years

Non-Performing Assets

Concerted efforts were taken during the year to reduce the level of existing Non-Performing Assets (NPAS), as well as preventing fresh accretion of NPAs. This became necessary in the cortex of rapid asset expansion and prevalence of recessionary conditions in the first half of the year. The percentage of gross NPAs to gross advances declined encouragingly from 1.99% to 1.54% during the year, While the net NPA ratio Fell margindly from 0.88% to 0.84% during the period Total Cash reecoveries, including upgrade and recoverles in written off accounts during the year was Rs.44.86

Treasury Management

The Banks treasury operations are categorised into (a) SLR management, (b) liquidity management and (c) proprietary trading and distribution activities. As SLR investments of the Bank form over 90% of the Banks investments, optimising the yield on portfolio attracted top priority. Net investments of the Bank increased from Rs.1,567.36 crore to Rs. 2,027.79 crore during the year at nearly 30%, whereas the yield on investments rose encouragingly from 6.54% to 6.82% during the same period. The proprietary trading desk ended the year with increased profits despite yields on government securities rising significantly from around 7% as on March 31, 2009 to 7.85% (March 31,2010). The distribution business for corporate bonds was a new line of activity undertaken during the year and contributed well to the bottomline. Another new line of business added was trading in certificates of deposit of various banks. The Bank also entered into interest rate swap deals to hedge its own market risk with banking counterparties,

Foreign Exchange Business

During 2009-10, the Bank laid special stress on this sector with focus on corporate, mid-market and retail segments. The requirements of these segments were analysed and our products/services aligned with the market. The Bank brought on board well trained professionals to provide the requisite impetus to accelerate growth and build the forex business across various verticals.

On the operattanal front the Bank has centralsedr^^^^^r^^sed its foreign exchange operations to scale up efficiencies and centrols. Dedicated trade processing:Centres and non-resident account operations were::set up at seven locations during the year to to cater to the regional business requirements and provide customer- centric services and solutions. the Bank is in the process of deploying the latest technology and processes to bring about service differentiation, which is vital for accelerating growth.

From an international banking (treasury) perspective, the Indian equity markets recovered from their lows during the year, quite in line with global equity markets. This led to a sharp appreciation in the rupee, which rose against the US dollar by almost 11.5% in FY 10. The Bank sharpened the focus on forex business and volumes grew almost two-fold. The Bank added new clients across all segments (including co-operative banks) It also actively participated in the inter-bank market and has become a market-maker quoting two-way prices

Special facilities to NRIs

Keeping in view the growing involvement of the Indian qiaspora in the growth of our economy, the Bank focused the spotlight on widening its NRI base through special measures. The number of new to bank NRi accounts increased by 11,000 buring the year, taking our base from 22,000 as on March 31, 2009, to 33,000 (March 31, 2010). Outstanbing NRI balances moved up well during this period from Rs. 298.28 crore as on March 31, 2009, to Rs. 349.81 crore (March 31, 2010)

The Bank entered into a new geography by tying up with exchange house Majan Exchange IIC, Sultanate of Oman, for speedy remittance under rupee drawing arrangement. Arrangements with four other exchange houses were activated during the period. It further operationalised the Remit World tie-up for online remittance from USA to India with Bank of New York Mellon. As part of our overall endeavours in this regard, the Bank deputed seven NRI relationship managers to three exchange houses in UAE

Information Technology

Extensive deployment of technology to enhance service quality enjoys the pride of place in the Banks scheme of things. The year was marked by rapid strides in this area to harness the potential of IT as a productivity lever and a growth driver. The Bank has tied up with renowned IT corporations to deploy the best in class technology,

The key measures taken to strengthen the Banks IT infrastructure were

- Extensive replacement of old and obsolete equipment with new generation IT hardware

- Upgrading the current fixed leased line and ISDN combination network to a powerful "MPLS " network to ensure superior connectivity

- Upgrabing the servers in line with the latest technology to facilitate hanqiing far higher data volumes

- Upgrading the existing Flexcube software into a feature-rich offering, thereby enabling high-end MIS, automation and other facilities

- Moving to an efficiently managed data centre of international standarqs in partnership with IBM

- Migrating to the enterprise wipe advanced IBM Lotus Notes mail system, thereby facilitating seamless communication

- Improving efficacy of communication across branches/offices through IP telephony and other modern equipment. During the year, the Bank also Peployed the following IT packages/measures aimed at boosting productivity and improving operational efficiency

- Oracle Financial GLS - an integrated financial accounting, reporting package.

- Loanflo - credit sanction and workflow management software.

- Connect - a communication and collaboration platform that brings employees to gether (Banks omtramet

- Progressively using intranet as a business enabling tool.

- Grabually transforming intranet into a multi-utility platform for learning,business and workflow,

- Spine Payroll - for centralised processing of payroll.

- DP Secure and online broking-top of the line depositary plattern andbing the offer of three in one account.

- Secretarial informati

The Bank is fully conscious that deployment of modern technology is indispensable to bring about accelerated growth across multiple verticals. The IT structure is therefore periodically reviewed to be in line with latest trends,

Human Resources Development

The performance under HR rested on two pillars - innovation and team building. The Bank recruited over 2,000 employees during the year to take the employee strength to 3,275 as on March 31, 2010, from 1,402 as on March 31, 2009. The staff strength comprises 2,525 officers, 665 clerks and 85 subordinate staff. Further, we have also recruited sales executives across branches and 805 such personnel were on our rolls as on March 31, 2010,

During the year, the Bank successfully attracted talent from some of the well-known organisations in the country, Several channels were utilised for recruitment - lateral recruits from new generation banks/institutions, trained entry level officers through Institute of Finance, Banking and Insurance (IFBI), absorption of data entry operators and marketing executives at the branches, hiring of immediate relatives of employees, etc,

The entire organisational structure has been revamped to take on the new challenges. As part of organisational strategy, the Bank has created 16 functional verticals either by forming new ones or transforming existing verticals,

Keeping in view the Banks objective to share the fruits of success with employees and to provide them an opportunity to participate in the Banks growth story, the board approved the introduction of Employee Stock Option Scheme (ESOP), subject to a ceiling of 6% of total shares. The Bank granted stock options to existing employees based on their past association with the Bank/service rendered to the Bank. For the new employees, ESOPs were granted to a select few as part of their joining compensation. Going forward, the scheme would be linked to performance. The statuary information to be published in this connection is furnished in Annexure III. In order to create the best-in-class work environment, the Bank has adopted the best practices of the industry and undertaken a series of initiatives during the year. Introduction of performance management system, balanced score card, comprehensive mediclaim insurance cover to all employees, extension of retirement age of officers, centralised salary payroll and attendance management are a few among them,

The Banks own Staff Training College conducted 54 programmes for 1,369 participants during the year, Keeping in view the substantial branch and business expansion, the initial training of newly recruited staff was a major activity for the college during the year. In addition, orientation programmes were conducted for staff internally promoted as clerks and junior officers. Other programmes held covered branch operations managers in Kerala, inspectors, concurrent auditors, credit monitoring officers and officers of the newly formed trade and advances group. Long duration training was also arranged for junior officers at the Institute of Finance Banking and Insurance (IFBI).

Corporate Social Responsibility (CSR)

The Bank firmly believes that, as a responsible corporate citizen, its ability to successfully compete largely depends on the way it identifies itself with societal needs and concerns.

As a ke step in this dirction theBank gifted to the citizens of Thrissur a free ambulance on the Banks 82nd ammoversary, the gesture was well received by the local citizens. A two-day health/eye camp for vichicte drivers was organised as part of the anniversary celebrations that attracted over 600 participants. The Bank has also actively contributed to causes of national concern. As the flood fury swept Andhra Pradesh and Karnataka, our employees swung into action. In association with SERUDS, an organisation working towards relief for the flood-hit, the Banks representatives personally delivered relief material

Looking to promote the cause of education, our Bank and the Trichur Management Association (TMA) jointly aunched a Merit Scholarship Scheme for management students studying in colleges in areas falling under TMAs purview. Under the scheme, the Bank will sponsor up to Rs.50,000 each for a deserving male and a female student each for a two-year management course. The selected student can do his or her project with the Bank, besides availing of the option of joining the Bank on a preferential basis. The selection will be jointly done by the Bank and TMA on a holistic basis, rather than on the basis of mere academic excellence

The Bank has chalked out a wider range of involvement in CSR in the current year

Risk Management

The Bank has adopted an integrated approach for the management of risks. The risk management policies - asset liability policy, stress testing policy, operational risk management policy, credit policy, credit monitoring policy and integrated risk management policy - were evolved in tune with the business requirements and best practices and addressed requirements relating to credit/market/operational risks

The Bank is Basel II compliant and assesses capital adequacy as per RBI guidelines. It has put in place the ICAAP framework to integrate capital planning with budgetary planning and to capture the residual risks that were not aqqressed in the earlier dispensation

A new credit rating model for rating assets of Rs. 2 lakhs and above to below Rs. 50 lakhs was introbuced. A majority of the Banks portolfio has now been brought under credit rating. Further, the scope of rating validation was extended to all accounts of Rs. 25 lakh and above from the current financial year. Credit risks inherent in investments in non-SLR bonds are also assessed independently using the internal rating models

During the year, the asset liability committee met 31 times to beliberate on various issues that have a vita bearing on effective management of funds. The Bank has complied with both the regulatory as well as the nternal prudential limits set for Iiquidity mismatches during all fortnights of the financial year. The Bank has a comprehensive policy on operational risk management to ensure that all operational risks within the Bank are dentified and monitored in a structured manner. To mitigate operational risks arising from frauds, the Bank has put in place "fraud risk management policy" that lays down the steps to be adopted for preventive vigilance

The Bank has rolled out the risk control self assessment (RCSA) to pro-actively identify emerging risks at operational level for devising mitigating factors at the source itself. It has deployed sophisticated technology in risk management in line with market trenss and emerging needs

Inspection & Vigilance

Keeping in view the rapid expansion in business and consequent need to strengthen the inspection & vigilance machinery, the Bank has widened the scope of these processes through the following

- Revising the inspection policy in line with changing needs, modifying business rating model for branches and also the risk assessment templates.

- Introducing a new practice of enlisting the services of internal officers for under taking enoncurent audit

- Initiating a process for off-site surveillance of accounts

- Bringing Dhanam Centralised Solutions (DCS) under the purview of concurrent audit

It may be noted that nearly 80% of the Banks business is covered under concurrent audit spread across 76 branches. Further, during the year, Risk-Based Internal Audit (RBIA) of branches and the integrated treasury were completed and the reports were reviewed by the audit committee of the board

Customer Service

Extending the highest quality in service to its constituents attracts top priority in the Banks scheme of things. A customer service committee of the Board, comprising six Directors, monitors the implementation of customer service measures periodically. Customer service committees have been formed at the corporate, zonal and branch levels to monitor service quality and bring about improvements in this area on an ongoing basis. The Bank is also a member of the Banking Codes and Standards Board of India (BCSBI) and is actively implementing the code of commitment to customers (revised in August 2009) as also the code for micro and small enterprises formulated by the BCSBI. The implementation of customer service measures at branches is monitored during the visits of executives to branches

The position of customer complaints during 2009-10 is as under No. of complaints handled : 174 No. of complaints resolved : 162 No. of complaints pending : 12

The Bank has put in motion a process of implementing customer relationship management, bringing within its orbit various processes relating to customer services. For the first time, the bank extended doorstep banking facilities for retail customers and is in the process of extending it to corporates

Marketing and Corporate Communication - New Brand Identity

As part of its vision to be among the top five private banks in India, the Bank launched a major rebranding exercise during the year, changing with times to go modern, vibrant and contemporary. It unveiled its new brand identity "Dhanlaxmi" in January 2010, retaining in the process the core values of trust and heritage built by the Bank since inception. The new identity reflects the Banks growth aspirations in the context of the evolving demographics of a young India. Retaining the Banks core strengths and values, the new identity is aligned to attitudinal positions of todays youth. It is, thus, modern yet rooted in tradition. The Bank has also evolved new approaches in the area of marketing and communication during the year to motivate its personnel to excel in a highly competitive environment

Product and Process Approval Committee (PPAC)

The Bank has formed a Product and Process Approval Committee (PPAC) comprising senior executives from operations and administration evaluate all proposls received introduction of new products/services/processes from diverse sources. The idea is to be in line with emerging trends and market needs and to bring about professionation in this which has a vital bearing on the growth of the

Alternate Channels

Keeping in view the growing preference of our existing as well as emerging clientele for executing banking transactions from the comfort of their home or office or while on the move, the Bank created a separate vertical - "Alternate Channels" - to meet this need. This vertical focused on ATMs, tele banking, mobile banking and internet banking services. The performance highlights during the year were

- Increasing the number of ATMs from 72 as on March 31, 2009, to 280 as on March 31, 2010, through a cost-effective outsourcing model

- Launch of phone banking as a home-grown contact centre

- Launch of retail internet banking to facilitate account viewing, funds transfer, fixed deposit opening etc

- A completely new website with a distinct, user-friendly look and feel that attracted a sharp increase in hits

- Launch of corporate internet banking

- Establishment of Dhanlaxmi Bank payment gateway to facilitate bill payments

- Installation of 15 cash sorting machines with good fake note detection capability in branches with high cash inflow, in line with RBI guidelines. This process is ongoing in nature and more branches will be covered in the current year. The Bank is finalising an ambitious plan to create additional touchpoints through self service terminals, coin vending machines, dynamic queue management system and Internet Banking machines

Wholesale Banking Group

Wholesale Banking Group at Dhanlaxmi came into existence in April 2009 with the joining of WBG head and has been on a growth trajectory since then

WBG has achieved steady growth and impressive profits during the first year of its existence. The first step in the direction of growth was taken with the launch of Corporate Banking Group (CBG). The initial strategy of CBG was aimed at achieving high-volume low-risk business by lending to large corporates with high creditworthiness and thereby building a pan India franchisee network by geographical diversification of asset book. CBG successfully expanded its businesses and today spans across various locations like Mumbai, Delhi, Ahmedabad, Hyderabad, Bangalore, Kerala and Chennai. Corporate Banking book has grown by over 120% with approximately 80% of the portfolio being invested in A rated companies and above

The Group encompasses several verticals apart from CBG in order to provide an entire gamut of products and services to clients. The key verticals are

- Government and PSU Banking Group (GBG): The group was established with the need identification of servicing government entities. It focused on increasing the deposit and advances base, and was able to increase the advances by 100% and successfully empanelling few marquee names for advances and deposits.

- Investment Banking Group (IBG): IBG team works in close association with the Corporate Banking team on mandates for CPs, NCDs, private placements, public offers etc.

- Trade Finance and Cash Management Group: The group works in association with corparate and government banking group and has initiated CMS services for few large corparate in kerala and chennai.

- The most recent vertical introduced under WBG was Capital and commodity Markets Group it targers a whole new set of clionts which from the broker Fraternity. The group in a short spon of time has been able to empanel the bank with Bank advanced stages.

FEE-BASED BUSINESS Insurance Business

As part of our efforts to increase fee income, the Bank tied up with Bajaj Allianz during the year for Poth life and general insurance business. The licence was received in September 2009. The Bank mobilised a premium of Rs 93 crore during the year. A series of incentive-based campaigns were held under both life and general nsurance during the year in which over 500 employees were rewarded

Cash Management Services (CMS)

The Bank has been extending speedy cheque collection facilities to customers by entering into appropriate tie-ups with other banks. The idea is to utilise their network at places where we dont have branches and vice versa with a view to improving the speed of cheque collection. During the year, we entered into correspondent banking arrangements with the Union Bank of India and Federal Bank for collection of outstation cheques. We known corporates such as Berger Paints, Sundaram Finance, Sri Ram City Union Finance and Madras Cements have been roped into the CMS fold during the year, besides Tamil Nadu Mercantile Bank. The Bank is laying considerable emphasis both on retail and corporate businesses for improving CMS business

Depository Services

Our Bank is a depository participant of NSDL (National Securities Depository Limited). It carries out DP operations through its branches in compliance with SEBI/NSDL guidelines deploying sophisticated technology

Mutual Fund Distribution

The Bank entered into full fledged distribution of Mutual Fund (MF) products this year. During 2009-10, the Bank tied up with two more companies - ICICI Prudential AMC and Kotak Mahindra AMC. The MF segment is poised to grow significantly in the current year with the deployment of product specialists to drive growth in a competitive environment

Online Broking

The Bank has launched online broking by entering into an arrangement with Destimoney Securities and will provide bank account and demat account to the customer. The customer will get three accounts through one application form - a bank account, a demat account and a trading account. The Bank will extend this service across its branches in the current year and has ambitious plans to foray into new areas such as IPO, MF investments and trading opportunities in the Futures & Options segment - through the online trading platform. During the year, the Bombay Stock Exchange entered into an agreement empanelling the Bank as a clearing and settlement bank. Through this arrangement, the Bank will provide a seamless interface to all BSE customers to enable safe and easy transactions on a day-to-day basis

Listing on Stock Exchanges

The equity shares of the Bank are listed on the Bombay Stock Exchange, National Stock Exchange, and Cochin Stock Exchange. The Bank has paid the listing fees to all stock exchanges for the year 2009-10.

Investor Education and Protection Fund

During the year, the Bank transferred the unclaimed, unpaid dividend for the year 2001-02 an amount of Rs. 6,79,603 - to the Investor Education and Protection Fund (IEPF) constituted under Section 205C of the

During the year, the Bank also trensferredsferred to the IEPF share application money amounting to Rs. 1,25,070 that remained unclaimed partaning to the refund of application money in respect of the rights issue allotment made on September 14, 2002.

I II III IV V Name Salaries Allowances Sitting Bonus Employees & Fees Disigantion

Mr.Amitabh Rs. Chaturvedi 36.00.000 (Managing Director & Chief Executive Officer)

V VI VII Total of Name Employees Payment Monetary Item to VII

& Designation

Contribution to by way of value of

PF, Pension gratuity any other

Fund or any pension or benefits

other otherwise in or

Superannuation excess ofthe perquisites

fund employers

contribution & interest thereon

Mr. Amitabh Rs.

Chaturvedi 36,00,000

(Managing

Director &

Chief

Executive

Officer)

Information relating to personnel who have drawn Rs. 2 Lakh per month or Rs. 24 Lakh per annum during 2009-10 is given in Annexure I to the report

DIRECTORS RESPONSIBILITY STATEMENT

Conservation of energy

All efforts are Peing made to reduce energy consumption as much as possiPle

Technology Absorption

Being a banking company, the required technology is deployed keeping in view the nature of activities

Foreign Exchange Earnings and Outgo

Being an authorised dealer in foreign exchange, all possible measures are taken by the Bank to increase forex earnings, the details of which are given separately under the head Forex Business

Directors responsibility statement

The directors confirm that in the preparation of the annual accounts for the year ended March 31, 2010

- The applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

- The accounting policies, framed as per RBI guidelines, were applied consistently.

- Reasonable and prudent judgment and estimates were made wherever required so as to present a true and fair view of the state of affairs of the Bank at the end of FY 2010 and the profit of the Bank for the year ended 31st March 2010

- Proper and sufficient care was taken for maintenance of adequate accounting records in accordance with provisions of applicable laws governing banks in India

- The accounts have been prepared on a going concern basis

- Proper systems are in place to ensure compliance of all laws applicable

Appointment of Auditors

The statutory audit of the Bank was conducted by M/S Walker Chandiok & Co, New Delhi, and M/S Shah Gupta & Co., Mumbai

Changes in the Board

Ms. Nandini Rangaswamy demitted office as Director with effect from May 13, 2009. The Board places on record its appreciation for the valuable services and guidance rendered by her to the Bank during her tenure

The shareholders elected Mr. Ghanshyam Dass and Mr. Sateesh Kumar Andra as Directors on the Board at the 82nd Annual General Meeting held on July 31, 2009

All non-executive Directors of the Bank have certified that, apart from receiving the Directors remuneration/sitting fees, they have not entered into any material pecuniary relationship or transactions with the Bank, its promoters, its Directors, or senior management, which may affect the independence of their Directorship

All Directors except Managing Director and CEO are non-executive and independent Directors,

Acknowledgements

The Board is happy to place on record its gratitude to:

- The Government of India, the Reserve Bank of India, State Governments, Securities and Exchange Board of India and other regulatory bodies for their support and guidance,

- The customers, shareholders, other stakeholders and well wishers for their valued patronage,

- The officers and staff for their commitment and contribution to the Banks growth and development,

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