Directors Report of IndusInd Bank Ltd.
Mar 31, 2023
The Board of Directors of the Bank have pleasure in presenting the Twenty-Ninth Annual Report of IndusInd Bank Limited (the Bank) covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31, 2023.
The financial performance for the year ended March 31, 2023 is summarized as under:
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('' in crores) |
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Particulars |
As on March 31, 2023 |
As on March 31, 2022 |
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Deposits |
3,36,438.14 |
2,93,681.35 |
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Advances |
2,89,923.68 |
2,39,051.53 |
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Operating Profit (before Provisions and Contingencies) |
14,346.48 |
12,775.75 |
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Net Profit |
7,389.72 |
4,611.12 |
The Bank demonstrated traction in operating performance metrics, like disbursements, resource mobilization through deposits, growth in operating profit, and better asset quality.
Our deposits grew by 14.56% while loan growth accelerated to 21.28% for the year. Balance sheet footage crossed ''4.5 trillion mark as of March 31, 2023.
The Bank maintained healthy profitability amidst a challenging operating environment, with improvement in operating profit before provisions and contingencies by 12.29% (i.e., ''14,346.48 crores from ''12,775.75 crores in Previous Year). Net Interest Margin of the Bank stood at 4.27%. Further, total Provisions and Contingencies decreased by 14.79% from ''8,164.63 crores to ''6,956.77 crores. The net profit increased to ''7,389.72 crores, as against ''4,611.12 crores in the Previous Year.
The Directors recommend appropriation of Profit as under:
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('' in crores) |
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Operating Profit before Provisions and Contingencies |
14,346.48 |
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Less: Provisions and Contingencies inclusive of Income Tax |
6,956.76 |
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Net Profit |
7,389.72 |
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Profit Brought Forward |
18,923.15 |
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Amount available for Appropriation |
26,312.87 |
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Transfer to Statutory Reserve |
1,847.43 |
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Transfer to Capital Reserve |
10.19 |
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Dividend Paid |
658.89 |
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Transfer to investment fluctuation reserve account |
3.00 |
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Total Appropriations |
2,519.51 |
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Balance carried over to Balance Sheet |
23,793.36 |
The Earning Per Share (EPS) of the Bank during the year showed an improvement to ''95.32 compared to ''59.57 in the Previous Year.
The Board of Directors, in their meeting held on April 24, 2023, have recommended dividend of ''14.00 per equity share of ''10 each (140% of Face Value) for the year ended March 31, 2023 (Dividend for the year 2021-22 was ''8.50 per equity share of ''10 each). This proposal is subject to the approval of the shareholders at the ensuing 29th Annual General Meeting.
Dividend declared in the current year is in line with the Dividend Distribution Policy of the Bank. The Dividend Distribution Policy of the Bank can be accessed from Bank''s website at:
https://www.indusind.com/content/dam/indusind-corporate/
investor-resource/PoliciesoftheBank/IndusInd-Bank-Limited-
Dividend-Distribution-Policy.pdf
Financial performance and state of the affairs of the Bank
The year under review was the last year of the Triennial Planning Cycle of the Bank, (Planning Cycle 5, for Financial Years 2020-23) with the theme "Digitize to Differentiate, Diversify and Create Domain Expertise Underscored by Sustainability (4D S)".The focus of the Bank during the year under review was towards building resilience, fortifying the Balance Sheet, Scaling up Domains of Expertise, Investing in New Growth Engines, Loan Disbursement acceleration driven by retail businesses, Expanding Network, Human Capital mobilization, Maintaining Credit Quality, Building Robust Retail Deposit Franchise, Leveraging Deep Rural Distribution and Leapfrog Digital Banking. While Deposits grew by 14.56% year-on-year (with CASA improving by 7.47%), Advances grew by 21.28% over the Previous Year, and the Bank continued to maintain Liquidity Coverage Ratio above statutory requirements.
Total Income (net of interest expense) of the Bank for the year under review grew by 15.33% to ''25,758.49 crores from ''22,335.04 crores during the Previous Year. Net Interest Income increased by 17.27% to ''17,592.12 crores from ''15,000.84 crores during the Previous Year.
Given the economic activities that has almost "recouped" what it lost, "renewed", and "re-energized" what had stalled during the pandemic, the Non-Interest Income increased by 11.35% to ''8,166.37 crores from ''7,334.20 crores a year ago. Core Fee Income such as, commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business increased by 30.64% to ''7,685.33 crores from ''5,882.89 crores during the Previous Year.
With long-term inflation, borrowing costs remained higher for longer period and lengthen the tightening cycle. While Yield on Advances rose to 11.68% as compared to 11.56% in the Previous Year, the Cost of Deposits increased to 5.32% from 4.78% a year ago.
The Bank expanded its branch network and has 2,606 branches/ banking outlets, as against 2,265 branches/ banking outlets at the beginning of the year. The extended network of the Bank included 2,878 ATMs, 3,303 branches of Bharat Financial Inclusion Ltd. ("BFIL"), and 582 outlets of IndusInd Marketing and Financial Services Private Limited, an associate entity. Revenue (net of interest expense) per employee stood at ''67.47 lakhs.
The Net Non-Performing Assets of the Bank improved to 0.59% as on March 31,2023 as compared to 0.64% a year ago.
During the year business performance of the Bank improved due to which, Return on Assets for the year stood at 1.81% as against 1.28% in the Previous Year.
Some of the significant events during the year are listed below:
⢠The Bank has reported highest ever profit since inception. Also, Balance Sheet size surpassed ''4.5 trillion mark as of March 31, 2023.
⢠The Bank has exercised call option and redeemed Additional Tier 1 Bonds of ''1,000 crores on April 18, 2022.
⢠The Bank has launched Home Loan product. The end-toend process for the product launch was implemented including the customer service related processes for Home Loan product.
⢠The Bank is live on RBI''s pilot project of Central Bank Digital Currency (CBDC).
⢠2 DBUs (Digital Banking Units) one being PPR Market Jalandhar - DBU and other being Chengalpattu - DBU were launched with 23 services.
⢠CBDT TIN 2.0 Collection of Direct Taxes:
TIN 2.0 is an initiative by Income Tax Department of India (ITD) which will be part of IEC (Integrated e-Filing and CPC) for tax collection, processing, monitoring and accounting of direct taxes. IndusInd Bank has been authorized for collection of direct taxes under the Agency Bank License. As an Agency Bank, IndusInd Bank will perform collection of Taxes, Reporting and Remittance to the regulators. The tax collection process for CBDT will cover online modes of payment and at branches of the bank.
⢠IndusInd Bank has been certified "Great Place to Work".
⢠Bank has finalized The Triennial Business Plan for Planning Cycle 6 covering 2023-26 with 3G Stategy i.e., Growth, Granularity, Governance.
Change in the Nature of Business
During the year under review, there has been no change in the nature of business of the Bank.
Performance of Subsidiary and Associate Company
During the year under review, Bharat Financial Inclusion Limited ("BFIL"), the wholly owned subsidiary of the Bank, earned revenue of ''1,735.53 crores as against ''1,637.21crores earned during the Previous Year. The Net Profit for the year under review amounted to ''53.42 crores as against ''193.52 crores a year ago. As a Business Correspondent undertaking, the strength of BFIL lies in its talent pool of trained and motivated employees that stood at 36,842 as on March 31, 2023.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank as 30% of its share capital is held by the Bank. IMFS is engaged in the business of providing manpower services, and during the year under review, earned a revenue of ''475.55 crores as against ''419.72 crores earned in the Previous Year. The net profit earned by IMFS during the year under review amounted to ''1.21 crores as against ''1.33 crores earned in the Previous Year. IMFS had 12,828 employees on its rolls as on March 31, 2023.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up Consolidated Financial Statements including the Financial Statements of its Subsidiary Company and financial results of Associate Company, and such Consolidated Financial Statements are included in this Annual Report.
In accordance with the fourth proviso to Section 136(1) of the Companies Act, 2013, the Standalone Financial Statements and the Consolidated Financial Statements, including audited accounts of BFIL and IMFS and all other documents required to be attached thereto have been hosted on the website of the Bank at: https://www.indusind.com/in/en/investors/investor-landing/ investor-resources.html
A statement containing the salient features of the financial position of the Subsidiary and Associate Company in Form AOC-1 is enclosed as ''Annexure'' to the Financial Statements.
The Bank does not have any joint venture company and the subsidiary is not a material subsidiary in terms of SEBI (LODR) Regulations.
During the year, authorized capital of the Bank was at ''1,000.00 crores.
The issued, subscribed and paid-up share capital of the Bank as at March 31, 2023 is ''775.90 crores comprising of 77,58,95,198 equity shares of face value of ''10 each.
During the year under review, the Bank has allotted 12,32,035 equity shares of ''10 each pursuant to exercise of options by option holders under its various Employee Stock Option Schemes (''ESOS''). The equity shares allotted under ESOS ranks pari-passu with the existing equity shares issued and allotted by the Bank. The share capital of the Bank increased by ''1.23 crores and share premium by ''84.48 crores on account of the said allotment.
The Bank has not issued any equity shares with differential voting rights.
Being a Scheduled Commercial Bank, compliance with SEBI Circular No.: SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018 on fund-raising by issuance of Debt Securities by Large Entities is not applicable to the Bank.
In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names of the Debenture Trustees with their contact details are given below:
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Trustee I: |
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Name of Debenture Trustee |
: Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.) |
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Address |
: GDA House, S. No.94/95, Plot No.85, Bhusari Colony (Right), Paud Road, Pune - 411038, Maharashtra, India |
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Website |
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Trustee II: |
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Name of Debenture Trustee |
: Beacon Trusteeship Limited |
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Address |
: 4C&D, Siddhivinayak Chambers, Gandhi Nagar, Opp. MIG Club, Bandra (East), Mumbai - 400 051. |
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Website |
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During the current year, the Bank has not raised any non-equity Tier 1 capital. The Bank has redeemed unsecured, redeemable, subordinated Tier 1 Basel III compliant non-convertible taxable Bonds by exercising the call option on April 18, 2022 of ''1,000 crores.
Tier 2 CapitalDuring the current year, the Bank has not raised any Tier 2 capital. As on March 31, 2023, the value of outstanding Tier 2 Capital instruments is ''2,800 crores.
DepositsThe Bank is a banking company governed by the Banking Regulation Act, 1949, and as such, the provisions under the Companies Act, 2013 relating to acceptance of Public Deposits are not applicable.
Capital AdequacyThe Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:
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Particulars |
March 31, 2023 |
March 31, 2022 |
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i) Capital Adequacy Ratio (CRAR) |
17.86% |
18.42% |
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ii) CRAR- Common Equity Tier 1 Capital |
15.93% |
15.96% |
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iii) CRAR- Tier 1 Capital |
16.37% |
16.80% |
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iv) CRAR- Tier 2 Capital |
1.49% |
1.62% |
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Credit Ratings |
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Instruments |
Rating |
Rating Agency |
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Domestic Ratings |
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Infra Bond program/Tier II Bonds |
AA |
CRISIL |
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Additional Tier I Bond Program |
AA |
CRISIL |
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Certificates of Deposit Program |
A1 |
CRISIL |
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Short Term FD Program |
A1 |
CRISIL |
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Senior Bonds program /Tier II Bonds |
AA |
India Ratings and Research |
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Additional Tier I Bond Program |
AA |
India Ratings and Research |
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International Ratings |
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Senior Unsecured MTN Programme |
Ba1 |
Moody''s Investors Service |
The Bank''s Board comprised ten Directors as on March 31, 2023,
i.e., nine Non-Executive, Independent Directors, viz., Mr. Sunil Mehta, Part-time Chairman, Mr. Shanker Annaswamy, Dr. T. T. Ram Mohan, Mrs. Akila Krishnakumar, Mr. Rajiv Agarwal, Mr. Sanjay Asher, Mrs. Bhavna Doshi, Mr. Jayant Deshmukh, Mr. Pradeep Udhas, and Mr. Sumant Kathpalia, Managing Director & CEO.
(a) Non-Executive, Independent Directors
All Independent Directors have submitted a declaration that they meet the criteria of independence as laid down under sub-section (6) of Section 149 of the Companies Act, 2013. In compliance with Regulation 25 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI Listing Regulations], and based on these Declarations, the following NonExecutive Directors continue to be identified as Independent Directors as on March 31, 2023:
1. Mr. Sunil Mehta
2. Mr. Shanker Annaswamy
3. Dr. T. T. Ram Mohan
4. Mrs. Akila Krishnakumar
5. Mr. Rajiv Agarwal
6. Mr. Sanjay Asher
7. Mrs. Bhavna Doshi
8. Mr. Jayant Deshmukh
9. Mr. Pradeep Udhas
Pursuant to Regulation 25(9) of SEBI Listing Regulations, the Bank''s Board of Directors have also obtained a Certificate from M/s Alwyn Jay & Co., Practicing Company Secretaries, that the aforesaid Directors meet the ''Criteria of Independence'' and are independent of the Management. The said Certificate is furnished at Annexure I, and forms an integral part of this Report.
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of SEBI Listing Regulations, specified companies are required to have at least one Woman Director on their Board.
Details of the Women Independent Directors are as under:
Mrs. Akila Krishnakumar (DIN: 06629992), who joined the Board on August 10, 2018, is a Non-Executive, Independent Woman Director of the Bank. Mrs. Akila Krishnakumar is the Chairperson of the Compensation and Nomination & Remuneration Committee, Customer Service Committee, Vigilance Committee and Corporate Social Responsibility & Sustainability Committee. Mrs. Akila Krishnakumar is also a Member of the I.T. Strategy Committee and the Review Committee (for identification of Non-Cooperative Borrowers and Wilful Defaulters).
Mrs. Bhavna Doshi (DIN: 00400508), who joined the Board on January 14, 2020, is a Non-Executive, Independent Woman Director of the Bank. Mrs. Bhavna Doshi is the Chairperson of the Audit Committee of the Board, and a Member of the Finance Committee, Stakeholders'' Relations'' Committee, Risk Management Committee, and Special Committee (for monitoring large value frauds).
⢠Appointment/ Re-appointment of Directors
Pursuant to the recommendation of the Compensation and Nomination & Remuneration Committee (C&NRC), the Board of Directors have appointed/ re-appointed the following Directors:
⢠Mr. Pradeep Udhas (DIN: 02207112):
The Shareholders of the Bank had, at the 28th Annual General Meeting held on August 19, 2022, approved the appointment of Mr. Pradeep Udhas as Non-Executive, Independent Director of the Bank, for a period of four consecutive years, with effect from June 9, 2022 up to June 8, 2026 (both days inclusive). In accordance with Section 149(13) of the Companies Act, 2013, Mr. Pradeep Udhas is not liable to retire by rotation.
⢠Mrs. Akila Krishnakumar (DIN: 06629992): The
Shareholders of the Bank had, at the 28th Annual General Meeting held on August 19, 2022, approved the re-appointment of Mrs. Akila Krishnakumar as Non-Executive, Independent Director of the Bank, for a second term of four consecutive years, with effect from August 10, 2022 up to August 9, 2026 (both days inclusive). In accordance with Section 149(13) of the Companies Act, 2013, Mrs. Akila Krishnakumar is not liable to retire by rotation.
⢠Mr. Rajiv Agarwal (DIN: 00336487): The Board of Directors had, at their meeting held on January 18, 2023, approved the re-appointment of Mr. Rajiv Agarwal as Non-Executive, Independent Director of the Bank, for a second term of four consecutive years, with effect from March 15, 2023 up to March 14, 2027 (both days inclusive), subject to the approval of the Shareholders of the Bank.
The Shareholders of the Bank had, on February 27, 2023, approved the re-appointment of Mr. Rajiv Agarwal as Non-Executive, Independent Director, by passing of a Special Resolution through Postal Ballot. In accordance with Section 149(13) of the Companies Act, 2013, Mr. Rajiv Agarwal is not liable to retire by rotation.
⢠Mr. Sunil Mehta (DIN: 00065343): The Board of Directors had, at their meeting held on January 30, 2023, approved the appointment of Mr. Sunil Mehta as Additional Director in the capacity of Non-Executive, Independent Director and Part-time Chairman of the Bank, with effect from January 31, 2023 up to January 30, 2026 (both days inclusive), i.e., for a tenure of 3 years, as approved by Reserve Bank of India vide letter dated January 25, 2023.
The Shareholders of the Bank had, on April 6, 2023, approved the appointment of Mr. Sunil Mehta as Non-Executive, Independent Director and Parttime Chairman of the Bank, for a period of 3 years, with effect from January 31, 2023 up to January 30, 2026 (both days inclusive), by passing of a Special Resolution through Postal Ballot. In accordance with Section 149(13) of the Companies Act, 2013, Mr. Sunil Mehta is not liable to retire by rotation.
⢠Mr. Sumant Kathpalia (DIN: 01054434): The Board of Directors of the Bank had, at their meeting held on September 15, 2022, approved the re-appointment of
Mr. Sumant Kathpalia as Managing Director & CEO of the Bank with effect from March 24, 2023, subject to approval of Reserve Bank of India and the Shareholders of the Bank.
Reserve Bank of India had, vide letter dated March 10, 2023, approved the re-appointment of Mr. Sumant Kathpalia as the Managing Director & CEO of the Bank for a further period of 2 years, with effect from March 24, 2023 up to March 23, 2025 (both days inclusive).
The Shareholders of the Bank had, on June 6, 2023, approved the re-appointment of Mr. Sumant Kathpalia as Managing Director & CEO of the Bank, with effect from March 24, 2023 up to March 23, 2025 (both days inclusive), by passing of an Ordinary Resolution through Postal Ballot. Mr. Sumant Kathpalia being a Non-Independent Director, is liable to retire by rotation.
⢠Mr. Arun Khurana (DIN: 00075189): The Board of Directors had, at their meeting held on June 28, 2023, recommended the appointment of Mr. Arun Khurana, Deputy CEO of the Bank, as Additional Director, in the capacity of Executive Director, (i.e., Whole-time Director) of the Bank, for a period of 3 years, with effect from such date or such other period, subject to approval of Reserve Bank of India, at a remuneration as may be approved by Reserve Bank of India and subject to approval of the Shareholders of the Bank.
⢠Retirement by Rotation
In compliance with Section 152 of the Companies Act, 2013, Mr. Sumant Kathpalia (DIN: 01054434), Managing Director & CEO of the Bank, will retire by rotation at the ensuing Annual General Meeting, and is eligible for re-appointment.
A resolution seeking approval of the Shareholders for Mr. Sumant Kathpalia''s re-appointment, forms part of the Notice of this Annual General Meeting. A brief Resume of Mr. Kathpalia is furnished in the Report on Corporate Governance for information of the Shareholders.
As required under Regulation 36(3) of the SEBI Listing Regulations, particulars of Directors seeking appointment/ re-appointment, as aforesaid, are given in the Annexure to the Statement attached to the Notice convening the 29th Annual General Meeting, which forms part of the Annual Report.
Pursuant to the provisions of Section 164 of the Companies Act, 2013, none of the Directors have been disqualified from being appointed as ''Director'' of the Bank.
In terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, the Bank has obtained a Certificate from M/s Alwyn Jay & Co., Practicing Company Secretaries, confirming that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors of the companies, either by the SEBI or the MCA or any other statutory/ regulatory authorities. The said Certificate is attached as Annexure II to this Report.
STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR:
The Independent Directors appointed/re-appointed during the year were subject to due diligence by the Compensation and Nomination & Remuneration Committee, based on parameters of qualification, expertise, track record, integrity and such other parameters as stipulated under the extant norms prescribed by the Reserve Bank of India.
Based on the recommendation of the Compensation and Nomination & Remuneration Committee, the Board of Directors have, after conducting their own assessment, opined that the Independent Directors, appointed/ re-appointed during the year, possess the necessary integrity, expertise and experience, and that their appointment/ re-appointment, is in the interest of the Bank.
⢠Cessation of Directors during the year under review
Mr. Arun Tiwari (DIN: 05345547) ceased to be Part-time Chairman of the Bank on conclusion of his tenure on January 30, 2023.
The Board places on record its sincere appreciation for Mr. Tiwari''s leadership, and the contribution made by him as Chairman of the Board.
⢠Cessation of Directors after the end of the year under review and up to the date of this Report
None of the Directors have demitted office after the end of the financial year 2022- 2023, and up to the date of this Report.
Board and Committee Meetings
During the year, 23 meetings of the Board of Directors and 19 meetings of the Audit Committee of the Board were held, the details of which are given in the Corporate Governance Report, which forms part of the Annual Report.
Mr. Pradeep Udhas was appointed Non-Executive, Independent Director on the Board of the Bank for a period of four consecutive years, from June 9, 2022 up to June 8, 2026 (both days inclusive), and was inducted as a Member of the Audit Committee of the Board.
As on March 31, 2023, the Audit Committee of Board comprised the following Independent Directors, Mrs. Bhavna Doshi (Chairperson), Mr. Sanjay Asher, Mr. Shanker Annaswamy and Mr. Pradeep Udhas.
During the year, there were no instances where the recommendations of the Audit Committee were not accepted by the Board.
Details of composition of the Board and its Committees, Meetings held, and Attendance of the Directors at such Meetings, are provided in the Corporate Governance Report, which forms part of the Annual Report.
The intervening gap between the meetings of the Board and Committees, was within the period as prescribed under the provisions of the Companies Act, 2013 and the SEBI Listing Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Compensation and Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board, as well as the process for such evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI as per Circular dated January 5, 2017.
The Bank has engaged an external Independent Professional agency for conducting the Performance Evaluation exercise.
The Board of Directors has carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board.
The performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Director, the Chairman and the Committees of the Board have been evaluated/ reviewed by the Compensation and Nomination & Remuneration Committee, by the Independent Directors and by the Board of Directors.
The Board has formulated a policy on Performance Evaluation which details the various aspects that are to be considered for evaluating the performance of the Board, including but not limited to attendance, participation in the meeting, contribution towards strategies of the Board, etc.
The policy on Performance Evaluation provides a guideline for the individual Directors to evaluate the Board, its Committees and individual directors.
The policy on Performance Evaluation is available on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/
The Statement indicating the manner in which the evaluation exercise was conducted is included in the Corporate Governance Report, which forms part of this Annual Report.
Policy for Selection and Appointment of Directors
The Board of Directors are at the helm of the Bank and an enlightened Board creates a culture of leadership and provides a long-term policy approach to improve the quality of governance.
The policy for Selection and Appointment of Directors has been formulated and adopted by the Bank, in terms of Section 178 of the Companies Act, 2013, the relevant provisions of the SEBI Listing Regulations, Section 10A of the Banking Regulation Act, 1949 and the Guidelines issued by the RBI, in this regard, from time to time.
The policy for Selection and Appointment of Directors shall act as a guideline for the Compensation and Nomination & Remuneration
Committee for determining the qualifications, positive attributes, independence of Directors and matters related thereto, to recommend appointment and removal of Directors, to the Board of the Bank.
The policy for Selection and Appointment of Directors has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/
Familiarization Programs for Independent Directors
Various programs were undertaken for familiarizing the Independent Directors of the Bank, details of which are disclosed in the Corporate Governance Report, which forms part of the Annual Report.
Change in Key Managerial Personnel
During the financial year 2022-23, the following changes took place in Key Managerial Personnel of the Bank:
i) Company Secretary:
Mr. Girish Koliyote had, for personal reasons, resigned as Company Secretary and Key Managerial Personnel (KMP) of the Bank, with effect from the close of business hours on Friday, June 17, 2022.
Mr. Anand Kumar Das was designated as the ''Deputy Company Secretary'' of the Bank with effect from June 9, 2022. He was also appointed as the ''Compliance Officer of the Bank'' with effect from June 20, 2022, in terms of Regulation 6 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and under the relevant provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and as the Nodal Officer of the Bank, in terms of Rule 2A of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
The Board of Directors had, at their meeting held on December 16, 2022, approved the appointment of Mr. Anand Kumar Das as ''Company Secretary'' and ''Key Managerial Personnel'' (''KMP'') of the Bank with effect from December 16, 2022. Mr. Anand Kumar Das shall continue to be the ''Compliance Officer of the Bank'' in terms of Regulation 6 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and under the relevant provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, and as the Nodal Officer of the Bank, in terms of Rule 2A of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
Adequacy of internal financial controls related to financial statements
The Bank operates in a fully computerized environment with a Core Banking Solution system, supported by diverse application platforms for handling special businesses, such as Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as, in-built system checks,
Maker - Checker authorizations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent. This unit does not originate accounting entries except for limited matters such as, Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy and technology absorption pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with the Rule 8 (3) of the Companies (Accounts) Rules, 2014, is mentioned below.
Conservation of Energy:
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy, details of which are furnished in Principle 6 of Section E of the Business Responsibility and Sustainability Report which has been hosted on the Bank''s website at: https://www.indusind.com/in/en/sustainability.html
Technology Absorption:
The Bank has made optimum use of Information Technology in its operations. Details pertaining to Technology Absorption have been explained in the Management Discussion and Analysis Report which forms an integral part of the Annual Report.
Foreign Exchange Earnings and Outgo:
The provisions relating to 134 (3) (m) of the Companies Act, 2013, on particulars relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company and as such, no disclosure is being made in this regard.
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The integrated Risk Management Department covers, Credit Risk, Market Risk, Assets-Liabilities Management (ALM) and Operational Risk across all verticals, independent of business functions.
Risk Management functions in the Bank have been aligned with best industry practices, supported by advanced risk measurement and analytical systems which enable proactive risk management and monitoring. Risk Management is continually enhanced in line with changes in operating environment and regulations.
The Bank has a comprehensive framework of Risk Management Policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., ''Risk Management Committee'' to examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios/ products/ segments.
Details of Risk Management Models and Frameworks implemented by the Bank are mentioned under ''Management Discussion and Analysis''.
Vigil Mechanism/ Whistle Blower Policy
The Bank has in place the ''Whistle Blower Policy'' since 2009. The policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI Listing Regulations. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors. The policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least thrice a year.
The Bank''s Whistle Blower Policy is in sync with all statutory and regulatory guidelines.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance and the Whistle Blower Policy of the Bank has been hosted on the Bank''s website at: https://www.indusind.com/in/en/investors/investor-landing/ investor-resources.html > Policies & Codes >> Whistle Blower Policy
Reporting of Fraud, by the Auditors
During the year under review, pursuant to Section 143(12) of the Companies Act, 2013 neither the statutory auditors nor the secretarial auditor of the Bank have reported any instances of frauds committed in the Bank by its officers or its employees.
M/s M S K A & Associates, Chartered Accountants (ICAI Firm Registration Number 105047W) and M/s M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W), were the Joint Central Statutory Auditors of the Bank for the year ended March 31,2023.
The Joint Central Statutory Auditors have not made any qualification/ reservation/ adverse remarks or disclaimer in their report for FY 2022-23.
As per RBI guidelines issued on April 27, 2021, a Statutory Auditor can conduct audit of a Scheduled Commercial Bank for a maximum period of 3 years at a time. Statutory Auditor would not be eligible for re-appointment in the same Entity for six years (two tenures) after completion of full or part of one term of the audit tenure.
Members may note that appointment of M/s. M. P. Chitale & Co., Chartered Accountants was approved by the members in the 27th AGM of the Bank held on August 26, 2021, for a period of three (3) consecutive years, i.e., until the conclusion of the 30th AGM, subject to approval from the RBI on annual basis.
M/s. M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W) are re-appointed as Joint
Statutory Auditors of the Bank for FY 2023-24, being their third year of appointment.
Appointment of M/s M S K A & Associates, Chartered Accountants (ICAI Firm Registration Number 105047W) was approved by the members in the 28th AGM of the Bank held on August 19, 2022, for a period of three (3) consecutive years, i.e., until the conclusion of the 31st AGM, subject to approval from the RBI on annual basis.
M/s M S K A & Associates, Chartered Accountants (ICAI Firm Registration Number 105047W) are re-appointed as Joint
Statutory Auditors of the Bank for FY 2023-24, being their second year of appointment.
M/s M S K A & Associates and M/s M. P. Chitale & Co., Joint Central Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2022-23 and their Report is enclosed and forms part of the Annual Report. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Joint Central Statutory Auditors have also reported on the adequacy and operating effectiveness of internal financial controls system over financial reporting, which has been enclosed as ''Annexure A'' to the Independent Auditors'' Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditors'' Report.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank had appointed M/s Alwyn Jay & Co., Company Secretaries in Practice, to undertake Secretarial Audit of the Bank for the FY 2022-23. The Secretarial Audit Report submitted by M/s Alwyn Jay & Co. is furnished at Annexure III, and forms an integral part of this Report. There are no qualifications, reservations, adverse remarks or disclaimers made by the secretarial auditor of the Bank, in its Report.
The Bank had instituted the Employees Stock Option Scheme (ESOS-2020) to enable its employees, including Whole-time Directors, to participate in the capital appreciation and future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of a number of shares up to 7% of the aggregate number of paid-up equity shares of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation and Nomination & Remuneration Committee of the Board of Directors.
An aggregate of 5,33,77,879 Options, comprising 6.88% of the Bank''s paid-up Equity Capital, have been granted under the Scheme. Statutory disclosures as required under Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 are given at Annexure IV, and form an integral part of this Report.
The Annual Certificate on compliance with the SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021 issued by the Secretarial Auditor of the Bank shall be hosted on the Bank''s website, as the 29th Annual General Meeting will be held through Video Conference facility.
The Employees Stock Option Plan is administered by the Compensation and Nomination & Remuneration Committee of the Board.
Statutory disclosures as mandated under Regulation 14 of the SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021, have been hosted on the website of the Bank at:
https://www.indusind.com/in/en/investors/investor-landing/
Compliance with Secretarial Standards
The Bank has complied with the provisions of the applicable Secretarial Standards issued by the Institute of Company Secretaries of India, and has put in place systems which are adequate and are operating effectively.
Being a banking company, provisions of Section 148(1) of the Companies Act, 2013, relating to maintenance of cost records is not applicable to the Bank.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the
following statement in terms of Section 134(3)(c) and 134 (5) of the Companies Act, 2013:
(a) that in the preparation of the Annual Accounts for the year ended March 31, 2023, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2023, and of the profit of the Bank for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(d) that the Annual Financial Statements have been prepared on a ''going concern'' basis;
(e) t hat proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013, the Annual Return of the Bank as on March 31, 2023, in the prescribed Form MGT-7 is available on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/
The Bank had 38,179 employees on its rolls as on March 31, 2023.
101 employees employed throughout the year were in receipt of remuneration of ''1.02 crores per annum or more, and 17 employees employed for the part of the FY 2023 were in receipt of remuneration of ''8.50 lakh per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above details are not being sent along with this Annual Report to the Members of the Bank in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the details may please send an email to the Secretarial Team at [email protected].
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Share Capital of the Bank.
Details of remuneration of Directors and Employees 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 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure V which forms an integral part of this Report.
Policy on Remuneration to Non-Executive Directors
The Bank has formulated and adopted a policy on Remuneration to Non-Executive Directors of the Bank in accordance with the guidelines prescribed in RBI Circular dated April 26, 2021, on compensation of Non-Executive Directors of private sector banks.
The Independent Non-Executive Directors of the Bank were paid Fixed Remuneration of ''20 lakhs per annum, and Sitting Fees for attending meetings of the Board and various Board Committees held during the year under review.
During the year under review, Mr. Arun Tiwari, Part-time Chairman of the Bank, was paid fixed remuneration on pro rata basis, @ ''30 lakhs per annum, as approved by the Reserve Bank of India and the Shareholders, as well as Sitting Fees for attending meetings of the Board and various Board Committees, up to his tenure, which concluded on January 30, 2023.
During the year under review, Mr. Sunil Mehta, Part-time Chairman of the Bank, was paid fixed remuneration on pro rata basis, @ ''30 lakhs per annum, with effect from January 31,2023, i.e., from the date of his appointment as Chairman of the Bank, as approved by the Reserve Bank of India, and the Shareholders through Postal Ballot. Mr. Sunil Mehta was also paid Sitting Fees for attending meetings of the Board and various Board Committees from the date of his appointment on the Board of the Bank. Mr. Sunil Mehta has also been provided with a car for official use.
The annual remuneration payable to a single Non-Executive Director of the Bank did not exceed 50% of the total annual remuneration payable to all Non-Executive Directors.
No Stock Options were granted to the Non-Executive Directors.
The ''Policy on Remuneration to Non-Executive Directors'' has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/ investor-resources.html #policies-and-codes
Details on remuneration paid to the Managing Director of the Bank, are given under the Corporate Governance Report, which forms part of the Annual Report.
Particulars of Loans, Guarantees or Investments outstanding
Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with ''Related Parties'' during the year under review were conducted on an ''arm''s length basis'' and in the ''ordinary course of business'' of the Bank, and therefore does not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially significant Related Party Transactions entered by the Bank during the year under review, with any of its Related Parties, viz., Promoters, Directors, Key Management Personnel, Subsidiary and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.
In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.
The policy on Related Party Transactions as approved by the Board of Directors has been hosted on the Bank''s website at: https://www.indusind.com/in/en/investors/investor-landing/ investor-resources.html >>Policies & Codes >> Related Party Transaction Policy
Consolidated Financial Statements
In accordance with Section 129 (3) of the Act, Consolidated Financial Statements comprising financial statements of IndusInd Bank Limited (''the Bank''), Bharat Financial Inclusion Limited (formerly known as IndusInd Financial Inclusion Limited) ("BFIL") ("the Subsidiary") and IndusInd Marketing and Financial Services
Private Limited ("IMFS") ("the Associate") has been prepared and is included in the Annual Report.
In accordance with Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its standalone financial statements and the consolidated financial statements and all other documents required to be attached thereto has also been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/
Further, the audited annual accounts of the Subsidiary of the Bank has been hosted on the Bank''s website at: https://www.indusind.com/in/en/investors/investor-landing/ investor-resources.html
In the preparation of the Consolidated Financial Statements, the Standalone Financial Statements of BFIL, the wholly-owned subsidiary for the year ended March 31, 2023, have been considered on a line by line basis by adding together like items of assets, liabilities, income and expenses, in accordance with AS 21.
In accordance with AS 23, the Standalone Financial Statements of IMFS, an associate in which the Bank has a 30% stake, has been considered in the Consolidated Financial Statements by adopting ''Equity Method''.
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued a circular in February 2016, requiring Scheduled Commercial Banks to implement Indian Accounting Standards (Ind AS) from April 1, 2018. Vide a press release dated April 5, 2018 the implementation was deferred by one year. The legislative amendments recommended by the Reserve Bank towards implementation of Ind AS are still under consideration of the Government of India. Accordingly, RBI had, through a notification dated March 22, 2019, deferred the Ind AS implementation until further notice.
Pursuant to the RBI Circular dated February 11, 2016, the Bank formed a Steering Committee, comprising members from crossfunctional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank had set up a Working Group under the guidance of the Steering Committee and has conducted Gap Assessment and identified the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption. The Bank had engaged the services of a professional firm with international experience in the field, to assist in the project of implementation of Ind AS. The Bank has obtained licenses for IT systems to automate Expected Credit Losses and Effective Interest Rate calculations towards implementation of Ind AS and the project is currently under implementation. The Bank continues to organize trainings for its teams across business and support functions. The Audit Committee of the Board of Directors has an oversight on the progress of the Ind AS implementation. Further, there may be regulatory guidelines and/or clarifications in some of the critical areas with respect to application of Ind AS, which the Bank will need to incorporate in its implementation project as and when those are issued.
In accordance with RBI directions, the Bank has been submitting standalone pro forma Ind- AS financial statements along with other computations to the RBI, from time to time.
Corporate Social Responsibility and Sustainability Corporate Social Responsibility
The Bank is committed to various interventions through multiple CSR projects and programs that have long-term and sustainable impact, in line with its CSR strategy. As per the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has a Board-level CSR & Sustainability Committee to look after the CSR initiatives. The Committee is headed by Mrs. Akila Krishnakumar as the Chairperson, Mr. Rajiv Agarwal, Mr. Sanjay Asher and Mr. Sumant Kathpalia as Members.
The composition of the CSR & Sustainability Committee is in accordance with Section 135 of the Companies Act, 2013.
Continuing with the CSR policy and strategy under Sattvam, the brand name, under which the Bank conducts all its CSR activities, under the Bank''s projects now encompass the length and breadth of India, enabled by deep collaboration with NGOs and community-based groups.
The CSR framework is built on the following Key Principles:
⢠Long-term commitment: 3-5 years'' commitment on systemic changes, objectives and outcomes.
⢠Scale for Impact: Create scalable and replicable models/ theory of change.
⢠Community Ownership: Ensuring accountability, relevance, awareness and empowerment of local communities through their continuous engagement.
⢠Collaboration: Establishing a multi-stakeholder forum, bringing together local institutions, district officials, sectoral experts and community influencers to ensure increased collaboration.
⢠Convergence: Bringing together of Knowledge and Resources to ensure existing support mechanisms (such as Government Schemes) are leveraged effectively for community-centric development and rapid scale and achievement of outcomes.
⢠Technology & Innovation: Integrating innovative solutions into the Program for enhanced project delivery, efficient reporting and better scalability.
The meticulous design of our CSR strategy ensures that it seamlessly aligns with the National Development Agenda and the United Nation''s 2030 Sustainable Development Goals.
We have a two-pronged approach to CSR implementation - the Flagship CSR Programme is designed to improve the quality of life of rural communities in the selected districts aligned with the Government''s Aspirational Districts Programme. In parallel, the Strategic Projects comprise of short-term to mid-term projects that empower and benefit marginalised groups, vulnerable populations and weaker sections of society. By combining our flagship and strategic programmes, we have adopted a truly holistic approach towards the nation''s development.
Our Flagship CSR Programme is a ''Holistic Rural Development Programme'' and aims to improve the income levels and standard of living in the selected Aspirational Districts of Niti Aayog, over a period of 5-10 years, in multiple focus areas, including enhancing and creating Livelihood in Agriculture, Water, allied & non-farm value chains, FPO (Farmer Producer Organizations), Skilling, collaborative efforts in Health, Education & Basic Infrastructure. Climate-resilience and women''s socio-economic development is
at the core of the Flagship CSR Programme. It seeks to achieve this goal by impacting economic empowerment of communities and improving efficiency in natural resource management.
Strategic Projects, which comprise of projects of short-term to mid-term duration projects, continue to work in line with the Bank''s commitment to social upliftment and environmental sustainability. These projects focus on three overarching themes: Environment, Education and Sports and include biodiversity conservation, renewable energy, water stewardship, scholarships, remedial classes, foundational literacy & numeracy, inclusive sports for women, the differently-abled and the underprivileged.
Under ''Other Areas of Special Interest'', the Bank supports various healthcare, livelihood & skilling programs and also extends support to Armed Forces Veterans, Widows and their families.
Furthermore, the Bank supports CSR initiatives of Bharat Financial Inclusion Limited, its wholly-owned subsidiary. Two major initiatives, viz., Bharat Sanjeevani (on livestock care) and Pragat (Integrated Development Program including Water, Healthcare and Education) are supported by the Bank.
The CSR Initiatives/ Projects that are undertaken by the Bank are in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank spent ''108.51 crores against adjusted budget of ''107.52 crores, towards various CSR activities specified in Schedule VII of the Companies Act, 2013.
The Report on CSR activities undertaken by the Bank during the year under review, is set out in Annexure VI and forms an integral part of this Report.
The CSR Policy, is framed basis the activities permitted under Schedule VII of the Companies Act, 2013. Details of the CSR Policy and initiatives adopted by the Bank on CSR, are available on Bank''s website at:
https://www.indusind.com/in/en/csr-home/our-approach/csr-
The Bank understands that the inclusion of sustainable practices is key for surviving and thriving in the long run and therefore, the Bank is diligently looking at adopting business products, practices, processes and operations that reflect its long-standing view - "Good Ecology is Good Economics".
The Bank upholds sustainability in every aspect of its functioning, devising various board committees, councils and teams and the sustainability theme is embedded across our diverse Businesses, Risk and Operations units. At the apex lies the CSR and Sustainability Committee of the Board, followed by the Sustainability Council and the Sustainability Unit. The centralized Sustainability unit works closely with various stakeholders in developing the ESG strategy for each department.
The Bank prepares its strategic objectives in 3-year planning cycles, which are further segmented into yearly and quarterly
ambitions. One of the key pillars of the three-year (FY24 to FY26) Planning Cycle-6 (PC6) is ''Imbibing ESG into Business''.
ESG targets are also being included in the targets of Business Units (BUs) to demonstrate Bank''s commitment towards promoting sustainability-linked initiatives in its business and banking operations. These business targets are discussed and approved by Bank''s Board and then integrated with the KPIs of the BUs and KMPs (Key Managerial Persons).
As a responsible lender, the Bank has also integrated ESG considerations into its Credit Appraisal process. Various ESG linked products and solutions have been offered to our retail and corporate clients. This comprehensive approach has resulted in the Bank maintaining its leadership position in the FY 2022 rankings by CDP and S&P Global within the cohort of the top five private sector banks in India as well as maintaining its inclusion in the S&P Dow Jones Sustainability Yearbook 2022 for a third consecutive year.
Business Responsibility and Sustainability Report (BRSR)
As per SEBI Listing Regulations, the Business Responsibility and Sustainability Report ("BRSR") shall form part of the Directors'' Report.
The Bank has provided BRSR, which indicates the Bank''s performance against the principles of the ''National Guidelines on Responsible Business Conduct''. This would enable the Members to have an insight into environmental, social and governance initiatives of the Bank.
In view of the above, and in compliance with Regulation 34(2) of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report forms part of this Annual Report and is also hosted on the Bank''s website at:
https://www.indusind.com/in/en/sustainability/esg-ratings-and-
The Bank believes that Corporate Governance is a reflection of its value system, encompassing its culture, its policies, and its relationships with the stakeholders. Responsible and ethical corporate conduct is integral to the way the Bank does its business.
The Bank also believes that consistent implementation of good corporate governance practices contributes towards developing and sustaining the best operating systems and processes.
Integrity, transparency and accountability are the basic tenets of Corporate Governance. The Bank acknowledges the need to uphold the integrity of every transaction it enters into, and believes that honesty in its internal conduct would be judged by its external behavior.
The Bank has adopted the industry best practices of Corporate Governance and aims to continue banking on the highest principles of governance and ethics. At IndusInd, Corporate Governance is more than just adherence to the statutory and regulatory requirements. It is equally about focusing on voluntary practices that underlie the highest levels of transparency.
The Governance framework is driven by the objective of enhancing long-term stakeholder value, without compromising on Ethical Standards and Corporate Social Responsibilities.
The Bank''s guiding principles are also articulated through its Code of Business Conduct and various initiatives taken to maintain transparency by communicating with the Shareholders on developments in the Bank. The Bank has also set up various sub-Committees of the Board to bring in more efficacy and transparency in the workings.
The Bank continues to focus on better, complete and timely disclosures to the Stock Exchanges for dissemination to the Stakeholders. Detailed disclosures regarding corporate governance are provided in the Corporate Governance Report, which forms part of the Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2)(e) of the SEBI Listing Regulations, forms part of the Annual Report.
Significant and Material Orders Passed by Regulators or Courts or Tribunal Impacting the ''Going Concern'' Status and Operations of the Bank
During FY 2022-23, no significant and/ or material order was passed by any regulator, court or tribunal against the Bank, which could impact its going concern status or future operations.
Material Events that have happened after the Balance Sheet date
No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year of the Bank to which the Financial Statements relate and the date of this Report.
Awards and Accolades
1) DIGITAL CX AWARD
⢠IndusInd Bank was bestowed with highly Acclaimed award for Outstanding Digital CX Payments & Collection Services" at the Digital CX Awards 2022
2) ASIAMONEY BEST BANK AWARD 2022
⢠IndusInd Bank was adjudged as the BEST BANK FOR ESG -INDIA at the ASIAMONEY BEST BANK AWARD 2022
3) CELENT MODEL BANK 2022
⢠IndusInd Bank recognized as ''Celent Model Bank'' award under the category-''Payments System Transformation'' for building a best-in class Enterprise Payments Hub (EPH)
4) ET CX AWARD 2022
⢠IndusInd Bank was recognized as one of the most customer centric brand and was awarded at the 3rd Edition of ET CX Summit 2022
5) Governance Now 5th India BFSI Conclave & Awards
⢠IndusInd Bank awarded by ''Governance Now'' under the category - ''SME Connect'' for initiating ''Indus Credit for Business''.
6) The Asset Triple Asian Awards 2022
⢠I ndusInd Bank was awarded Best SCF Solution for various clients at The Asset Triple Asian Awards 2022
7) MeitY-Digidhan Dashboard for Digital Payments
⢠MeitY has ranked IndusIndBank #1 amongst Private Banks for FY22 on its Digidhan Dashboard for Digital Payments
8) Marksmen
⢠I ndusInd Bank was honored as "Most Preferred Workplace 2022-23 by Marksmen"
9) Euro money 2022 Market Leaders Award
⢠IndusInd Bank is proud to be ranked as a Market Leader for ESG in India by Euromoney 2022
10) Global Transaction Banking Innovation Awards 2022
⢠Best Transaction Banking Innovation Lab
⢠Best ERP Integration Initiative
⢠Outstanding Use of Technology in Cash and Liquidity Management
11) Escorts Kubota Ltd
⢠Escorts Kubota Ltd. recently awarded IndusInd Bank - TFE Team for being the Number 1 Financier for 2 consecutive Financial years
12) Bharat FinTech Summit 2023
⢠IndusInd Bank won the Best CIO award at the recently concluded Bharat FinTech Summit 2023
13) 10th Payments Industry Awards, 2023
⢠IndusInd Bank''s Indus Merchant Solutions App was awarded the Best Merchant Acquirer of the Year at the 10th Payments Industry Awards, 2023
⢠EazyDiner IndusInd Bank Credit Card has been awarded the Best co-brand card at the 10th Edition Payments Industry Awards, 2023
Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Bank has complied with the extant provisions relating to the constitution of Internal Committees under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The disclosures relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, is included in the Corporate Governance Report, which forms an integral part of the Annual Report.
Cautionary Statement
Certain statements in the Directors'' Report and in the Management Discussion and Analysis document describing the Bank''s objectives, estimates and expectations may be ''forwardlooking statements'' within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws/ Regulations, and other incidental factors.
The following documents are annexed to the Directors'' Report:
(i) Certificate on Declaration of Independence of Directors from Company Secretary in Practice.
(ii) Certificate from Secretarial Auditor on disqualification of directors pursuant to Regulation 34(3) of the SEBI Listing Regulations.
(iii) Secretarial Audit Report of the Bank, for the financial year ended March 31,2023.
(iv) Statutory Disclosures regarding administration of ESOPs for the financial year ended March 31,2023.
(v) Disclosure on remuneration pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
(vi) Annual Report on CSR activities undertaken by the Bank during the financial year ended March 31, 2023, in terms of Notification dated January 22, 2021, issued by the MCA.
The Directors are grateful to the Shareholders for the trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and the Stock Exchanges, for the guidance and support extended by them to the Bank.
The Board thanks its valued Customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and untiring commitment, which qualities have contributed to the Bank''s continued progress in a challenging environment.
Mar 31, 2022
The Board of Directors of the Bank have pleasure in presenting the Twenty-eighth Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31,2022.
The financial performance for the year ended March 31,2022 is summarized as under:
|
('' in crores) |
||
|
Particulars |
As on March 31, 2022 |
As on March 31, 2021 |
|
Deposits |
2,93,681.35 |
2,56,204.96 |
|
Advances |
2,39,051.53 |
2,12,595.41 |
|
Operating Profit (before Provisions and Contingencies) |
12,838.60 |
11,726.67 |
|
Net Profit |
4,611.12 |
2,836.39 |
The financial year 2021-22 witnessed volatility with economic activity impacted by COVID second and third wave. The economic impact, however, has not been as severe due to effective policy responses by the Regulator and the Government along with vaccination program. The activity levels are bouncing back to pre COVID levels across various segments.
The Bank demonstrated traction in operating performance metrics, like disbursements, resource mobilization through deposits, Basel III compliant Tier II capital, growth in operating profit, and better asset quality with receding COVID impact.
Our deposits grew by 14.63% while loan growth accelerated to 12.44% for the year. Balance sheet footage crossed '' 4 trillion mark as of March 31,2022.
The Bank maintained healthy profitability with improvement in operating profit before provisions and contingencies by 9.48% (i.e., '' 12,838.60 crores from '' 11,726.67 crores in previous year). Net Interest Margin of the Bank stood at 4.11%. Further, total Provisions and Contingencies decreased by 7.46% from '' 8,890.28 crores to '' 8,227.48 crores. As a result, the net profit increased to '' 4,611.12 crores, as against '' 2,836.39 crores in the previous year.
The Directors recommend appropriation of Profit as under:
|
('' in crores) |
|
|
Operating Profit before Provisions and Contingencies |
12,838.60 |
|
Less: Provisions and Contingencies inclusive of Income Tax |
8,227.48 |
|
Net Profit |
4,611.12 |
|
Profit Brought Forward |
15,928.61 |
|
Amount available for Appropriation |
20,539.73 |
|
Transfer to Statutory Reserve |
1,152.78 |
|
Transfer to Capital Reserve |
76.81 |
|
Dividend Paid |
386.99 |
|
Total Appropriations |
1,616.58 |
|
Balance carried over to Balance Sheet |
18,923.15 |
The Earning Per Share (EPS) of the Bank during the year showed an improvement to '' 59.57 compared to '' 38.75 in the previous year.
The Board of Directors, in their meeting held on April 29, 2022, have recommended dividend of '' 8.50 per equity share of '' 10 each (85% of Face Value) for the year ended March 31,2022 (Dividend for the year 2020-21 was '' 5.00 per equity share of '' 10 each). This proposal is subject to the approval of the shareholders at the ensuing 28th Annual General Meeting.
Dividend declared in the current year is in line with the Dividend Distribution Policy of the Bank. The Dividend Distribution Policy of the Bank can be accessed from Bank''s website at:
Dividend-Distribution-Policy.pdf
Financial performance and state of the affairs of the Bank
The year under review was the second year of the new Triennial Planning Cycle of the Bank, (Planning Cycle 5, for Financial Years 2020-23) with the theme "Digitize to Differentiate, Diversify and Create Domain Expertise Underscored by Sustainability (4D S)". In view of the pandemic, the focus of the Bank during the year under review was in building resilience, fortifying the balance sheet, improving the loan book profile alongwith credit quality, granularising the deposit franchise and build enriched digital value proposition stacks. While Deposits grew by 14.63% year-on-year (with CASA improving by 17.30%), Advances grew by 12.44% over the previous year, and the Bank continued to be liquid.
Total Income of the Bank for the year under review grew by 11.51% to '' 22,397.89 crores from '' 20,086.50 crores during the previous year. Net Interest Income increased by 10.89% to '' 15,000.84 crores from '' 13,527.89 crores during the previous year.
In view of the recovery in economic activities, the Non-Interest Income increased by 12.78% to '' 7,397.05 crores from '' 6,558.61 crores a year ago. Core Fee Income such as, commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business increased by 25.73% to '' 5,883.33 crores from '' 4,679.22 crores during the previous year.
Abundant liquidity available in the system kept the interest rates in a narrow range. While Yield on Advances fell to 11.56% as compared to 11.84% in the previous year, the Cost of Deposits registered a decline to 4.76% from 5.38% a year ago.
The Bank expanded its branch network and has 2,265 branches / banking outlets, as against 2,015 branches / banking outlets at the beginning of the year. The extended network of the Bank included 2,767 ATMs, 2,795 branches of Bharat Financial Inclusion Ltd. ("BFIL"), and 816 outlets of IndusInd Marketing and Financial Services Private Limited, an associate entity. Revenue per employee stood at '' 66.70 lakhs.
The Net Non-Performing Assets of the Bank improved to 0.64% as on March 31,2022 as compared to 0.69% a year ago.
During the year business performance of the Bank improved due to which, Return on Assets for the year stood at 1.28% as against 0.90% in the previous year.
Some of the significant events during the year are listed below:
⢠The Bank has reported highest ever profit since inception. Also Balance Sheet size surpassed '' 4 trillion mark as of March 31, 2022.
⢠Assets disbursals gradually inched back to pre-COVID levels across all products / segments of the Bank.
⢠The Bank has raised unsecured, redeemable, subordinated Tier 2 Basel III compliant non-convertible taxable Bonds through private placement basis at par aggregating to total size of '' 2,800.00 crores on October 29, 2021 with a tenor of 10 years at interest rate of 8.11% p.a. which will augment Capital Funds of the Bank as well as enhance long-term resources of the Bank.
⢠The Bank redeemed unsecured, redeemable, subordinated Tier 1 Basel III compliant non-convertible taxable Bonds by exercising the call option on March 22, 2022 at ''1,000.00 crores at its Fifth anniversary (First call option date).
⢠The Bank focused on digitization by launching "IndusEasyCredit", a comprehensive digital lending platform enabling customers to meet their financial requirements from the comfort of their homes. With this, both existing as well as non-IndusInd Bank customers can instantly avail personal loans or credit cards on a single platform in a completely paperless and digital manner.
⢠The Bank has launched the Green Fixed Deposits that provide its customers with an opportunity to contribute in the development of projects that can have a positive impact on the environment and the society at large. Green Fixed Deposits to both retail and corporate customers where the deposit proceeds will be allocated to finance projects and firms supporting the United Nations Sustainable Development Goals (SDGs). The Bank, will use the proceeds from these
deposits to finance wide array of sectors falling under the SDG themes including energy efficiency, renewable energy, green transport, sustainable food, agriculture, forestry, waste management, and greenhouse gas reduction.
⢠The Bank is the first Indian bank to go live on UPI for cross-border payment.
⢠The Bank has received a final report in March 2022 from an external agency on its assessment and findings in the matter of allegations made by anonymous individuals related to Bank''s wholly owned subsidiary and business correspondent for microfinance loans, Bharat Financial Inclusion Limited ("BFIL"). Bank''s Board of Directors after review of the findings have constituted a committee to look into staff accountability in this regard. The Bank wishes to reiterate that there is a strong risk management and control framework in place, which will be further strengthened basis the findings of independent review.
Change in the Nature of Business
During the year under review, there has been no change in the nature of business of the Bank.
Performance of Subsidiary and Associate Company
During the year under review, Bharat Financial Inclusion Limited ("BFIL"), the wholly owned subsidiary of the Bank, earned revenue of '' 1,637.21 crores as against '' 1,316.66 crores earned during the previous year. The Net Profit for the year under review amounted to '' 193.52 crores as against '' 153.48 crores a year ago. As a Business Correspondent undertaking, the strength of BFIL lies in its talent pool of trained and motivated employees that stood at 31,373 as on March 31,2022.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank as 30% of its share capital is held by the Bank. IMFS is engaged in the business of providing manpower services, and during the year under review, earned a revenue of '' 419.72 crores as against '' 371.70 crores earned in the previous year. The net profit earned by IMFS during the year under review amounted to '' 1.33 crores as against '' 0.74 crores earned in the previous year. IMFS had 13,054 employees on its rolls as on March 31,2022.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up Consolidated Financial Statements including the Financial Statements of its Subsidiary Company and financial results of Associate Company, and such Consolidated Financial Statements are included in this Annual Report.
In accordance with the fourth proviso to Section 136(1) of the Companies Act, 2013, the Standalone Financial Statements and the Consolidated Financial Statements, including audited accounts of BFIL and IMFS and all other documents required to be attached thereto have been hosted on the website of the Bank at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
A statement containing the salient features of the financial position of the Subsidiary and Associate Company in Form AOC-1 is enclosed as ''Annexure'' to the Financial Statements.
The Bank does not have any joint venture company and the subsidiary is not a material subsidiary in terms of SEBI (LODR) Regulations.
During the year, authorized capital of the Bank was increased from '' 857.00 crores to '' 1,000.00 crores after obtaining required approvals from the shareholders at the 27th Annual General Meeting held on August 26, 2021.
The issued, subscribed and paid-up share capital of the Bank as at March 31,2022 is '' 774.66 crores comprising of 77,46,63,163 equity shares of face value of '' 10 each.
During the year under review, the Bank has allotted 12,90,864 equity shares of '' 10 each pursuant to exercise of options by option holders under its various Employee Stock Option Schemes (''ESOS''). The equity shares allotted under ESOS ranks pari-passu with the existing equity shares issued and allotted by the Bank. The share capital of the Bank increased by ''1.29 crores and share premium by '' 84.79 crores on account of the said allotment.
The Bank has not issued any equity shares with differential voting rights.
Being a Scheduled Commercial Bank, compliance with SEBI Circular No.: SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018 on fund-raising by issuance of Debt Securities by Large Entities is not applicable to the Bank.
In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names of the Debenture Trustees with their contact details are given below:
Trustee I:
Name of Debenture Trustee : Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House, S. No.94/95, Plot No.85, Bhusari Colony (Right),
Paud Road, Pune - 411038, Maharashtra, India.
Website : www.catalysttrustee.com
E-mail : [email protected]
Trustee II:
Name of Debenture Trustee : Beacon Trusteeship Limited
Address : 4C&D, Siddhivinayak Chambers, Gandhi Nagar, Opp. MIG Club,
Bandra (East), Mumbai - 400 051.
Website : www.beacontrustee.co.in
E-mail : [email protected]
The Bank has redeemed unsecured, redeemable, subordinated Tier 1 Basel III compliant non-convertible taxable Bonds by exercising the call option on March 22, 2022 of '' 1,000 crores.
The Bank has raised unsecured, redeemable, subordinated Tier 2 Basel III compliant non-convertible taxable Bonds through private placement basis at par aggregating to total size of '' 2,800 crores on October 29, 2021 with a tenor of 10 years which will augment Capital Funds of the Bank as well as enhance long-term resources of the Bank. As on March 31,2022, the value of outstanding Tier 2 Capital instruments is '' 2,800 crores.
The Bank is a banking company governed by the Banking Regulation Act, 1949, and as such, the provisions in the Companies Act, 2013 relating to acceptance of Public Deposits are not applicable.
The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:
|
Particulars |
March 31, 2022 |
March 31, 2021 |
|
i) Capital Adequacy Ratio (CRAR) |
18.42% |
17.38% |
|
ii) CRAR- Common Equity Tier 1 Capital |
15.96% |
15.55% |
|
iii) CRAR- Tier 1 Capital |
16.80% |
16.83% |
|
iv) CRAR- Tier 2 Capital |
1.62% |
0.55% |
|
Credit Ratings |
||
|
Instruments |
Rating |
Rating Agency |
|
Domestic Ratings |
||
|
Infra Bond program/ Tier II Bonds |
AA |
CRISIL |
|
Additional Tier I Bond Program |
AA |
CRISIL |
|
Certificates of Deposit Program |
A1 |
CRISIL |
|
Short Term FD Program |
A1 |
CRISIL |
|
Senior Bonds program / Tier II Bonds |
AA |
India Ratings and Research |
|
Additional Tier I Bond Program |
AA |
India Ratings and Research |
|
Short Term Debt instruments |
A1 |
India Ratings and Research |
|
International Ratings |
||
|
Senior Unsecured MTN Program |
Ba1 |
Moody''s Investors Service |
The Board of the Bank comprised of nine Directors as on March 31,2022, viz., Mr. Arun Tiwari, Non-Independent Non-Executive, Part-time Chairman, seven Non-Executive Independent Directors, viz., Mr. Shanker Annaswamy, Dr. T. T. Ram Mohan, Mrs. Akila Krishnakumar, Mr. Rajiv Agarwal, Mr. Sanjay Asher, Mrs. Bhavna Doshi and Mr. Jayant Deshmukh, and Mr. Sumant Kathpalia, Managing Director & CEO.
(a) Non-Executive, Independent Directors
All Independent Directors have submitted the declarations that they meet the criteria of independence as laid down under sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 25 of the SEBI Listing Regulations. Based on the said declarations, the following Non-Executive Directors continue to be classified as Independent Directors of the Bank:
1. Mr. Shanker Annaswamy
2. Dr. T. T. Ram Mohan
3. Mrs. Akila Krishnakumar
4. Mr. Rajiv Agarwal
5. Mr. Sanjay Asher
6. Mrs. Bhavna Doshi
7. Mr. Jayant Deshmukh
In addition, the Bank''s Board of Directors have, pursuant to Regulation 25(9) of SEBI Listing Regulations, obtained a Certificate from M/s Alwyn Jay & Co., Practicing Company Secretaries that the aforesaid Directors meet the ''Criteria of Independence'' and are independent of the Management. The said certificate is furnished as Annexure I, and forms an integral part of this Report.
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of SEBI Listing Regulations, specified companies are required to have at least one Woman Director on their Board. Details of the Women Independent Directors of the Bank, are as under:
Mrs. Akila Krishnakumar (DIN: 06629992), who joined the Board on August 10, 2018, is a Non-Executive, Independent Director of the Bank. Mrs. Akila Krishnakumar is the Chairperson of the Compensation and Nomination & Remuneration Committee, Customer Service Committee, Vigilance Committee and Corporate Social Responsibility & Sustainability Committee. Mrs. Akila Krishnakumar is also Member of IT Strategy Committee and Review Committee (for identification of Non-Cooperative Borrowers & Wilful Defaulters).
Mrs. Bhavna Doshi (DIN: 00400508), who joined the Board on January 14, 2020, is a Non-Executive, Independent Director of the Bank. Mrs. Bhavna Doshi is the Chairperson of the Audit Committee of the Board and a Member of the Finance Committee, Risk Management Committee, Special Committee for monitoring of Large Value Frauds, Stakeholders'' Relations Committee and Inquiry Committee.
(c) Chairman of the Board
Mr. Arun Tiwari (DIN: 05345547) was appointed as the Non-Independent Non-Executive, Part-time Chairman of the Bank, for a period of three years, with effect from January 31, 2020 up to January 30, 2023 (both days inclusive), as approved by the Reserve Bank of India.
Mr. Arun Tiwari''s appointment as the Non-Independent Non-Executive, Part-time Chairman of the Bank was approved by the Shareholders at the 26th Annual General Meeting of the Bank held on September 25, 2020.
(d) Managing Director & CEO
Mr. Sumant Kathpalia (DIN: 01054434) was appointed as the Managing Director & CEO of the Bank, for a period of three years, with effect from March 24, 2020 up to March 23, 2023 (both days inclusive), as approved by the Reserve Bank of India.
Mr. Sumant Kathpalia'' s appointment as the Managing Director & CEO was approved by the Shareholders at the 26th Annual General Meeting of the Bank held on September 25, 2020.
(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring by rotation at the forthcoming AGM.
(i) Appointment
Mr. Pradeep Udhas (DIN: 02207112) was appointed as ''Additional Director'' in the category of Non-Executive, Independent Director of the Bank, by the Board of Directors at their meeting held on June 9, 2022, to hold office until the date of the ensuing Annual General Meeting, and as the Non-Executive, Independent Director of the Bank, for a period of four consecutive years, from June 9, 2022 up to June 8, 2026 (both days inclusive), subject to the approval of the shareholders of the Bank.
Approval of the shareholders is being sought for the appointment of Mr. Pradeep Udhas as Non-Executive Independent Director of the Bank by means of a Special Resolution at the ensuing Annual General Meeting.
(ii) Re-appointment
Mrs. Akila Krishnakumar (DIN: 06629992) was appointed as Non-Executive, Independent Director of the Bank, for a period of four years, with effect from August 10, 2018 up to August 9, 2022 (both days inclusive), and her appointment was approved by the Shareholders at the 25th Annual General Meeting held on August 16, 2019.
Pursuant to the recommendation of the Compensation and Nomination & Remuneration Committee of Directors, the Board of Directors at its meeting held on July 18, 2022, approved the re-appointment of Mrs. Akila Krishnakumar as the Non-Executive, Independent Director of the Bank, for her second term of four consecutive years, with effect from August 10, 2022 up to August 9, 2026 (both days inclusive), subject to the approval of the shareholders of the Bank.
Approval of the Shareholders is being sought for the re-appointment of Mrs. Akila Krishnakumar as Non-Executive, Independent Director by means of a Special Resolution at the ensuing 28th Annual General Meeting.
(iii) Retirement by Rotation
Section 152 of the Companies Act, 2013 provides that unless the articles provide for the retirement of all directors at every annual general meeting, not less than two-thirds of the total number of directors of a public company shall be persons whose period of office is liable to determination by retirement of directors by rotation and one-third of such of the directors for the time being as are liable to retire by rotation and whose tenure is longest shall retire from office.
Accordingly, Mr. Sumant Kathpalia (DIN: 01054434), Managing Director & CEO of the Bank, is liable to retire by rotation at the ensuing Annual General Meeting.
Approval of the shareholders is being sought for re-appointment of Mr. Sumant Kathpalia, who retires by rotation, and being eligible, has offered himself for re-appointment.
As required under Regulation 36(3) of the SEBI Listing Regulations, particulars of the Directors seeking appointment/ re-appointment, as aforesaid are given in the annexure to the Statement attached to the Notice convening the 28th Annual General Meeting, which forms part of the Annual Report.
None of the Directors have been disqualified from being appointed as ''Director'' of the Bank, pursuant to the provisions of Section 164 of the Companies Act, 2013.
The Board of Directors have received a Certificate from M/s Alwyn Jay & Co., Practicing Company Secretaries, pursuant to Regulation 34(3) read with Schedule V, Para C, Clause 10 (i) of the SEBI Listing Regulations, that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors on the Board, by SEBI, Ministry of Corporate Affairs or any other Statutory/ Regulatory Authority. The said certificate is furnished as Annexure II, and forms an integral part of this Report.
STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR:
The Independent Directors appointed/re-appointed during the year were subject to the due-diligence by the Compensation and Nomination & Remuneration Committee, based on parameters of qualification, expertise, track record, integrity and such other parameters as stipulated under extant norms prescribed by the Reserve Bank of India.
The Board of Directors, based on recommendation of the Compensation and Nomination & Remuneration Committee, and after conducting its own assessment, were of the opinion that the Independent Directors appointed/ re-appointed during the year, possesses the necessary integrity, expertise and experience, and that their appointment/ re-appointment, is in the interest of the Bank.
(f) Cessation of Directors
None of the Directors have demitted office during the FY 2021-22.
(g) Cessation of Director after the end of the year and upto the date of the Report
None of the Directors have demitted office after the end of the financial year 2021- 2022 and up to the date of this Report.
During the year, 26 meetings of the Board of Directors and 17 meetings of the Audit Committee of the Board were held, the details of which are given in the Corporate Governance Report, which forms part of the Annual Report.
In compliance with RBI Circular dated April 26, 2021 on Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board, Mr. Arun Tiwari, stepped down as a Member of the Audit Committee of Board, Mr. Sanjay Asher stepped down as Chairman of the Audit Committee of Board and Mrs. Bhavna Doshi was appointed as the Chairperson of the Audit Committee of Board, with effect from October 1,2021.
As on March 31,2022, the Audit Committee of Board comprised the following Independent Directors, viz., Mrs. Bhavna Doshi (Chairperson), Mr. Sanjay Asher, and Mr. Shanker Annaswamy.
There have not been any instances during the year where the recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and of all its Committees, the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report, which forms part of the Annual Report.
The intervening gap between the meetings of the Board and Committees, were within the period as prescribed under the provisions of the Companies Act, 2013 and the SEBI Listing Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Compensation and Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board, as well as the process for such evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI as per Circular dated January 5, 2017.
Pursuant to the recommendation of the Compensation and Nomination & Remuneration Committee, the Board of Directors have engaged an external Independent Professional for conducting the Performance Evaluation exercise.
The Board of Directors has carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board.
The performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board have been evaluated / reviewed by the Compensation and Nomination & Remuneration Committee, by the Independent Directors and by the Board of Directors.
The Board has formulated a Policy on Performance Evaluation which details the various aspects that are to be considered for evaluating the performance of the Board, including but not limited to attendance, participation in the meeting, contribution towards strategies of the Board, etc.
The Policy on Performance Evaluation provides a guideline for the individual Directors to evaluate the Board, its Committees and individual directors.
The Statement indicating the manner in which the evaluation exercise was conducted is included in the Corporate Governance Report, which forms part of this Annual Report.
Policy for Selection and Appointment of Directors
The Board of Directors are at the helm of the Bank and an enlightened Board creates a culture of leadership and provides a long-term policy approach to improve the quality of governance.
The Policy for Selection and Appointment of Directors has been formulated and adopted by the Bank, in terms of Section 178 of the Companies Act, 2013, the relevant provisions of the SEBI Listing Regulations, Section 10A of the Banking Regulation Act, 1949 and the Guidelines issued by the RBI, in this regard, from time to time.
The Policy for Selection and Appointment of Directors shall act as a guideline for the Compensation and Nomination & Remuneration Committee for determining the qualifications, positive attributes, independence of Directors and matters related thereto to recommend appointment and removal of Directors to the Board of the Bank.
The Policy for Selection and Appointment of Directors has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
Familiarization Programs for Independent Directors
Various programs were undertaken for familiarizing the Independent Directors of the Bank, details of which are disclosed in the Corporate Governance Report, which forms part of the Annual Report.
Change in Key Managerial Personnel
During the financial year 2021-22, the following changes took place in Key Managerial Personnel of the Bank:
i) Chief Financial Officer: Mr. S. V. Zaregaonkar stepped down as the Chief Financial Officer of the Bank, with effect from closing hours of September 29, 2021. He shall however, continue to discharge his responsibilities as the Chief Operating Officer of the Bank, until the date of his superannuation.
Mr. Gobind Jain has assumed charge as the Chief Financial Officer of the Bank, with effect from September 30, 2021.
ii) Company Secretary: Mr. Haresh Gajwani stepped down as the Company Secretary and Key Managerial Personnel of the Bank, with effect from November 26, 2021, in view of his impending superannuation on December 31,2021.
Mr. Girish Koliyote was appointed as the Company Secretary and Key Managerial Personnel of the Bank, w.e.f. November 27, 2021. Due to personal reasons, Mr. Girish Koliyote has resigned as the Company Secretary and Key Managerial Personnel of the Bank, with effect from the close of business hours on Friday, June 17, 2022.
Mr. Anand Kumar Das was designated as the ''Deputy Company Secretary'' of the Bank with effect from June 9, 2022. With effect from June 20, 2022, he was also appointed as the ''Compliance Officer of the Bank'' in terms of Regulation 6 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and under the relevant provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and as the Nodal Officer of the Bank, in terms of Rule 2A of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerized environment with a Core Banking Solution system, supported by diverse application platforms for handling special businesses, such as Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as, in-built system checks, Maker - Checker authorizations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent. This unit does not originate accounting entries except for limited matters such as, Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy and technology absorption pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with the Rule 8 (3) of the Companies (Accounts) Rules, 2014, is mentioned below.
Conservation of Energy:
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy, details of which are furnished in Principle 6 of Section E of the Business Responsibility and Sustainability Report which has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/sustainability.html Technology Absorption:
The Bank has made optimum use of Information Technology in its operations. Details pertaining to Technology Absorption have been explained in the Management Discussion and Analysis Report which forms an integral part of the Annual Report.
Foreign Exchange Earnings and Outgo:
The provisions relating to 134 (3) (m) of the Companies Act, 2013, on particulars relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company and as such, no disclosure is being made in this regard.
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The integrated Risk Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management (ALM) and Operational Risk across all verticals, independent of business functions.
Risk Management functions in the Bank have been aligned with best industry practices, supported by advanced risk measurement and analytical systems which enable proactive risk management and monitoring. Risk Management is continually enhanced in line with changes in operating environment and regulations.
The Bank has a comprehensive framework of Risk Management Policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., ''Risk Management Committee'' to examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios / products / segments.
Details of Risk Management Models and Frameworks implemented by the Bank are mentioned under ''Management Discussion and Analysis''.
Vigil Mechanism / Whistle Blower Policy
The Bank has in place the ''Whistle Blower Policy'' since 2009. The Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI Listing Regulations. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors. The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least thrice a year.
The Bank''s Whistle Blower Policy is in sync with all statutory and regulatory guidelines on Vigil Mechanism.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html > Policies & Codes >> Whistle Blower Policy
Reporting of Fraud, by the Auditors
During the year under review, there were no instances of fraud reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.
M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 103523W / W100048) and M/s M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W), were the Joint Central Statutory Auditors of the Bank for the year ended March 31,2022.
The Joint Central Statutory Auditors have not made any qualification/ reservation/ adverse remarks or disclaimer in their report for FY 2021-22.
As per RBI guidelines issued on April 27, 2021, a Statutory Auditor can conduct audit of Scheduled Commercial Bank for a maximum period of 3 years at a time. Statutory Auditor would not be eligible for re-appointment in the same Entity for six years (two tenures) after completion of full or part of one term of the audit tenure.
Members may note that appointment of M/s. M. P. Chitale & Co., Chartered Accountants was approved by the members in the 27th AGM of the Bank held on August 26, 2021, for a period of three (3) consecutive years, i.e., until the conclusion of the 30th AGM, subject to approval from the RBI on annual basis.
In terms of RBI communication dated October 12, 2021, M/s Haribhakti & Co. LLP, Chartered Accountants, have not undertaken any type of audit assignment for the period commencing from April 1,2022, until the conclusion of the 28th Annual General Meeting of the Bank.
M/s. M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W) are proposed to be re-appointed as Joint Statutory Auditors of the Bank for FY2022-23, being their second year of appointment.
M/s MSKA & Associates, Chartered Accountants (ICAI Firm Registration Number 105047W) are proposed to be appointed as one of the Joint Statutory Auditors of the Bank for a period of three years commencing from the conclusion of this AGM, until the conclusion of the 31st Annual General Meeting that would be held during FY 2025-26, subject to the approval of the RBI on annual basis from the conclusion of the 29th AGM.
M/s Haribhakti & Co. LLP. and M/s M. P. Chitale & Co., Joint Central Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2021-22 and their Report is enclosed and forms part of the Annual Report. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Joint Central Statutory Auditors have also reported on the adequacy and operating effectiveness of internal financial controls system over financial reporting, which has been enclosed as ''Annexure A'' to the Independent Auditors'' Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditors'' Report.
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Alwyn Jay & Co., Company Secretaries in Practice, to undertake Secretarial Audit of the Bank for the FY 2021-22. The Secretarial Audit Report submitted by M/s Alwyn Jay & Co. is furnished at Annexure III, and forms an integral part of this Report.
The Secretarial Audit Report submitted by M/s Alwyn Jay & Co. for FY 2021-22 does not contain any qualification, reservation or adverse remark.
The Bank had instituted the Employee Stock Option Scheme (ESOS-2020) to enable its employees, including Whole- time Directors, to participate in the capital appreciation and future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of a number of shares up to 7% of the aggregate number of paid-up equity shares of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation and Nomination & Remuneration Committee of the Board of Directors.
An aggregate of 5,19,25,433 Options, comprising 6.70% of the Bank''s paid-up Equity Capital, have been granted under the Scheme. Statutory disclosures as required under Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 are given at Annexure IV, and form an integral part of this Report.
The Annual Certificate on compliance with the SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021 issued by the Secretarial Auditor of the Bank shall be hosted on the Bank''s website, as the 28th Annual General Meeting will be held through Video Conference facility.
The Employees Stock Option Plan is administered by the Compensation and Nomination & Remuneration Committee of the Board.
Statutory disclosures as mandated under Regulation 14 of the SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021, have been hosted on the website of the Bank at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
Compliance with Secretarial Standards
The Bank has complied with the provisions of the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and has put in place systems which are adequate and are operating effectively.
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.
Proceedings under Insolvency and Bankcruptcy Code
Details of application made or any proceedings pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review, along with their status as at the end of the financial year:
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134 (5) of the Companies Act, 2013:
(a) that in the preparation of the Annual Accounts for the year ended March 31,2022, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31,2022, and of the profit of the Bank for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(d) that the Annual Financial Statements have been prepared on a ''going concern'' basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013, the Annual Return of the Bank as on March 31,2022, in the prescribed Form MGT-7 is available on the Bank''s website at: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
The Bank had 33,582 employees on its rolls as on March 31,2022.
78 employees employed throughout the year were in receipt of remuneration of '' 1.02 crores per annum or more, and 27 employees employed for the part of the FY 2022 were in receipt of remuneration of '' 8.50 lakh per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above details are not being sent along with this Annual Report to the Members of the Bank in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the details may please send an email to the Secretarial Team at [email protected].
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Share Capital of the Bank.
Details pursuant to remuneration of Directors and Employees 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 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure V which forms an integral part of this Report.
Policy on Remuneration to Non-Executive Directors
The Bank has formulated and adopted a Policy on Remuneration to Non-Executive Directors of the Bank, in terms of the guidelines prescribed in RBI Circular dated April 26, 2021, on compensation of Non-Executive Directors of private sector banks.
During the year under review, the Independent Non-Executive Directors of the Bank were paid Fixed Remuneration of '' 10 lakhs per annum, and Sitting Fees for attending meetings of the Board and various Board Committees held during the year under review.
Mr. Arun Tiwari, Non-Independent, Non-Executive, Part-time Chairman of the Bank was paid fixed remuneration of ''30 lakhs per annum, in terms of the approval granted by the Shareholders and the Reserve Bank of India, and Sitting Fees for attending meetings of the Board and various Board Committees held during the year under review.
The annual remuneration payable to a single Non-Executive Director of the Bank did not exceed 50% of the total annual remuneration payable to all Non-Executive Directors.
No Stock Options were granted to the Non-Executive Directors.
The ''Policy on Remuneration to Non-Executive Directors'' has been hosted on the Bank''s website at: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html #policies-and-codes
Details on remuneration paid to the Managing Director of the Bank, are given under the Corporate Governance Report, which forms part of the Annual Report.
Particulars of Loans, Guarantees or Investments outstanding
Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with ''Related Parties'' during the year under review were conducted on an ''arm''s length basis'' and in the ''ordinary course of business'' of the Bank, and therefore does not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially significant Related Party Transactions entered by the Bank during the year under review, with any of its Related Parties, viz., Promoters, Directors, Key Management Personnel, Subsidiary and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.
In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.
The Policy on Related Party Transactions as approved by the Board of Directors has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html >>Policies & Codes >> Related Party Transaction Policy
Consolidated Financial Statements
In accordance with Section 129 (3) of the Act, Consolidated Financial Statements of IndusInd Bank Limited (''the Bank''), Bharat Financial Inclusion Limited (formerly known as IndusInd Financial Inclusion Limited) ("BFIL") ("the Subsidiary") and IndusInd Marketing and Financial Services Private Limited ("IMFS") ("the Associate") has been prepared and is included in the Annual Report.
In accordance with Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its standalone financial statements and the consolidated financial statements and all other documents required to be attached thereto has also been hosted on the Bank''s website at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
Further, the audited annual accounts of the Subsidiary of the Bank has been hosted on the Bank''s website at: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
In the preparation of the Consolidated Financial Statements, the Standalone Financial Statements of BFIL, the wholly-owned subsidiary for the year ended March 31,2022, have been considered on a line by line basis by adding together like items of assets, liabilities, income and expenses, in accordance with AS 21.
In accordance with AS 23, the Standalone Financial Statements of IMFS, an associate in which the Bank has a 30% stake, has been considered in the Consolidated Financial Statements by adopting ''Equity Method''.
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued a circular in February 2016, requiring Scheduled Commercial Banks to implement Indian Accounting Standards (Ind AS) from April 1,2018. Vide a press release dated April 5, 2018 the implementation was deferred by one year. The legislative amendments recommended by the Reserve Bank towards implementation of Ind AS are still under consideration of the Government of India. Accordingly, RBI had, through a notification dated March 22, 2019, deferred the Ind AS implementation until further notice.
Pursuant to the RBI Circular dated February 11,2016, the Bank formed a Steering Committee, comprising members from crossfunctional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank had set up a Working Group under the guidance of the Steering Committee and has conducted Gap Assessment and identified the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption. The Bank had engaged the services of a professional firm with international experience in the field, to assist in the project of implementation of Ind AS. The Bank has obtained licenses for IT systems to automate Expected Credit Losses and Effective Interest Rate calculations towards implementation of Ind AS and the project is currently under implementation. The Bank continues to organize trainings for its teams across business and support functions. The Audit Committee of the Board of Directors has an oversight on the progress of the Ind AS implementation. Further, there may be regulatory guidelines and/or clarifications in some of the critical areas with respect to application of Ind AS, which the Bank will need to incorporate in its implementation project as and when those are issued.
In accordance with RBI directions, the Bank has been submitting standalone pro forma Ind- AS financial statements along with other computations to the RBI, from time to time.
Corporate Social Responsibility and Sustainability
In line with the CSR strategy, the Bank is committed to various long term community development projects that have a large positive impact. Consistent with the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a Board-level CSR & Sustainability Committee to look after the CSR initiatives. The Committee is headed by Mrs. Akila Krishnakumar as the Chairperson, Mr. Rajiv Agarwal, Mr. Sanjay Asher and Mr. Sumant Kathpalia as Members.
The composition of the CSR & Sustainability Committee is in accordance with Section 135 of the Companies Act, 2013.
The Bank revised its CSR Policy and strategy to align with National priorities and SDGs focused on long term approach with programs which provide maximum societal impact, aligning with the CSR mission of designing sustainable CSR programs and leveraging the Brand.
In FY 2021-22, the Bank designed a Holistic Rural Transformation Flagship program initiative with a mission to improve the income levels and standard of living of the rural communities aligning with NITI Aayog Aspirational Districts. It would have a long term perspective of 5-10 years, with impact on:
⢠Economic Empowerment of communities
⢠Improved efficiency in natural resource management
A significant allocation of CSR spends would be towards this as the program scales up and stabilizes.
The Bank continued its emphasis on Sustainable Environment, Education, Healthcare, Sports. These are mid-term programs designed to solve critical issues in the ecosystem. These programs include water stewardship, afforestation, renewal energy, climate adaptation, remedial education, school/college interventions, assisted learning, fellowship/scholarship, non-formal education, setting up of healthcare clinics, treatment of children suffering from cancer, affordable healthcare to marginalized community, mother & child care, sports for women/people with disabilities/underprivileged, employable skill development, etc.
Under Other Areas of Special Interest, the Bank supported with COVID relief to various stakeholders, livelihood and skilling programs and supported Armed Forces Veterans, Widows and their families. These were need based programs and short term in nature.
The Bank has supported CSR initiatives of Bharat Financial Inclusion Limited, its wholly- owned subsidiary. Two major initiatives, viz., Bharat Sanjeevani (on livestock care) and Pragat (Integrated Development Program including Water, Healthcare and Education) are supported.
The CSR Initiatives / Projects undertaken by the Bank are in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least Two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank spent '' 108.69 crores against budget of ''107.41 crores, towards various CSR activities specified in Schedule VII of the Companies Act, 2013.
The Report on CSR activities undertaken by the Bank during the year under review, is set out at Annexure VI and forms an integral part of this Report.
The CSR Policy, amended during the year, is framed basis the activities permitted under Schedule VII of the Companies Act, 2013. Details of the CSR Policy and initiatives adopted by the Bank on CSR, are available on Bank''s website at: https://www.indusind.com/in/en/csr-home/our-approach/csr-policy.html
The Bank has adopted a comprehensive approach to improve its triple bottom line (i.e., People, Planet and Profit) performance by integrating sustainability considerations in its business practices, decision-making, operations and products. The Bank understands that inclusion of sustainable practices is key for surviving and thriving in the long run and therefore, the Bank is diligently looking at adopting business products, practices, processes, risk and operations that reflect its long-standing view -"Good Ecology is Good Economics".
The Bank upholds sustainability in every aspect of its functioning, devising various board committees, councils and teams. At the apex lies the CSR and Sustainability Committee of the Board, followed by the Sustainability Council and the Sustainability Team. Sustainability theme is embedded across our diverse Businesses and Operations units. The centralized Sustainability unit works closely with various stakeholders in developing the ESG strategy for each department. This rolls up to form the overall Bank''s ESG strategy, which underpins the Bank''s overall Planning Cycle-5 Business Strategy. IndusInd has embedded sustainability across all 3 major areas - Business, Risk, and Banking Operations.
As a responsible lender, the Bank has also integrated ESG considerations into its Credit Appraisal process. Various ESG linked products and solutions have been offered to our retail and corporate clients. This comprehensive approach showcases our leadership position in the industry as a sustainable Bank. This has helped IndusInd Bank win the Asiamoney Best Bank for ESG India 2022 Awards and Bank''s inclusion in the S&P Dow Jones Sustainability Yearbook 2022 consecutively for a second year, which showcases that the Bank clearly looks beyond profits to focus on its people, the society and the planet.
The Bank has adopted various reporting platforms and guidance frameworks laid out by ''Standard Setters'' such as, International Integrated Reporting Council (IIRC), Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Dow Jones Sustainability Index (DJSI), etc., for assessment and accountability in sustainability performance.
Business Responsibility and Sustainibility Report (BRSR)
As per SEBI Listing Regulations, the Business Responsibility and Sustainability Report ("BRSR") form part of the Directors''Report.
The Bank has provided BRSR, in lieu of the Business Responsibility Report which indicates the Bank''s performance against the principles of the ''National Guidelines on Responsible Business Conduct. This would enable the Members to have an insight into environmental, social and governance initiatives of the Bank.
In view of the above and in compliance with Regulation 34(2) of the SEBI Listing Regulations, the BRSR, has been hosted on the Bank''s website at:
https://www.indusind.com/in/en/sustainability.html
The Bank believes that Corporate Governance is a reflection of its value system, encompassing its culture, its policies, and its relationships with the stakeholders. Responsible and ethical corporate conduct is integral to the way the Bank does its business.
The Bank also believes that consistent implementation of good corporate governance practices contributes towards developing and sustaining the best operating systems and processes.
Integrity, transparency and accountability are the basic tenets of Corporate Governance. The Bank acknowledges the need to uphold the integrity of every transaction it enters into, and believes that honesty in its internal conduct would be judged by its external behavior.
The Bank has adopted the industry best practices of Corporate Governance and aims to continue banking on the highest principles of governance and ethics. At IndusInd, Corporate Governance is more than just adherence to the statutory and regulatory requirements. It is equally about focusing on voluntary practices that underlie the highest levels of transparency.
The Governance framework is driven by the objective of enhancing long-term stakeholder value, without compromising on Ethical Standards and Corporate Social Responsibilities.
The Bank''s guiding principles are also articulated through its Code of Business Conduct and various initiatives taken to maintain transparency by communicating with the Shareholders on developments in the Bank. The Bank has also set up various subCommittees of the Board to bring in more efficacy and transparency in the workings.
The Bank continues to focus on better, complete and timely disclosures to the Stock Exchanges for dissemination to the Stakeholders. Detailed disclosures regarding corporate governance are provided in the Corporate Governance Report, which forms part of the Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2)(e) of the SEBI Listing Regulations, forms part of the Annual Report.
Significant and Material Orders Passed by Regulators or Courts or Tribunal Impacting the ''Going Concern'' Status and Operations of the Bank
During FY 2021-22, there were no significant and material Orders passed by the Regulators / Courts / Tribunal that would impact the ''going concern'' status of the Bank and its future operations.
Material Events that have happened after the Balance Sheet date
No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year of the Bank to which the Financial Statements relate and the date of this Report.
1) Bank was bestowed with the Asset Asian Triple Awards 2021:
a) Treasury, Payment and Working Capital Category
⢠Best in Treasury and Working Capital Public Sector India
⢠Best Payment and Collection Solution India AutoPe Payment Solution
⢠Best Payment and Collection Solution India Cashfree Payments India
⢠Best Payment and Collection Solution India - Nupay
⢠Best Payment and Collection Solution India - Maharashtra State Cooperative Cotton Growers Marketing Federation
b) Supply Chain Finance Category
⢠Best Service Provider (India) Distribution Finance - 3rd Year in a row
⢠Best Supply Chain Solution: India - Dell India
⢠Best Supply Chain Solution: India - Haler Appliances (India) P. Ltd
⢠Best Supply Chain Solution: India - APL Apollo Tubes Ltd.
⢠IndusInd Bank ranked 2nd in the Ashok Leyland Product Funding during the year 2020 at Annual Financier Award 2020 from Ashok Leyland.
2) FICCI CSR Awards 2019-20:
In the category of Environment Sustainability for the Bank''s Drain Restoration Project, Gurgaon and in the category of Inclusive Development of PWDs for the Bank''s Para-Champions Programme.
3) ASIAMONEY FX Survey 2021:
The Bank was adjudged as the Market Leader, India in ASIAMONEY Foreign Exchange Survey 2021.
4) BNY MELLON STP Award 2020:
The CGMO Trade & Remittance Operations team of the Bank received 2020 BNY Mellon STP award in recognition of achieving exceptional STP rate of 96.37%.
5) VMware Customer Excellence Award for Improved Customer Experience (October 2021) :
The Bank was awarded with the Global VMware Customer Excellence Award.
6) Finacle Innovation Awards 2021 (November 2021)
The Bank was winner in the following categories:
a) COVID Response Innovation (for the initiative - Indus Easycredit for Individuals)
b) Ecosystem-led Innovation (for the initiative - Account Aggregator Framework)
7) DigiDhan Awards 2020-21
The Bank has been awarded with the Utkarsh Puraskar of DigiDhan Award 2020-21 for achieving 1st highest percentage of digital payment transactions (Category: Large & Medium Private Sector Banks)
8) The Bank has been awarded the global''Celent Model Bank''award under the category of''Payments System Transformation'' for building a best-in-class Enterprise Payments Hub (EPH).
9) The Bank has been awarded as #1 - Best Financier for 2021 at JCB India Annual Financiers Awards 2021. IndusInd Bank has won this award for 5 years in a row.
10) The Bank has been adjudged the winner in the category of ''Best Savings Product'' at the FE Best Banks Awards 2020-21.
11) The Bank has been awarded with the ''Outstanding Digital CX - SME Payments'' for its flagship mobile application for merchants - ''Indus Merchant Solutions''
12) CSR Awards 2021:
a) The Bank has been awarded the CSR TIMES Award 2021 for: (i) CSR Project Water Resource Development & Management in Environment, Climate, Forest, River/Water Waves Category; and (ii) School Academic Improvement Program in Education Category.
b) The Bank has been awarded the CSR Universe COVID Response Impact Awards 2021 - ''Award of Excellence in Promoting Sports.''
c) The Bank has been awarded the CII National Awards for Excellence in Water Management 2021 for the Project PRAGAT - Implemented by BFIL.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Bank has complied with provisions relating to the constitution of Internal Complaints Committees under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The disclosures relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, is included in the Corporate Governance Report, which forms an integral part of the Annual Report.
Certain statements in the Directors'' Report and in the Management Discussion and Analysis document describing the Bank''s objectives, estimates and expectations may be ''forward-looking statements'' within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.
The following documents are annexed to the Directors'' Report:
(i) Certificate on Declaration of Independence of Directors from Company Secretary in Practice.
(ii) Certificate from Secretarial Auditor on disqualification of directors pursuant to Regulation 34(3) of the SEBI Listing Regulations.
(iii) Secretarial Audit Report of the Bank, for the financial year ended March 31,2022.
(iv) Statutory Disclosures regarding administration of ESOPs for the financial year ended March 31,2022.
(v) Disclosure on remuneration pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
(vi) Annual Report on CSR activities undertaken by the Bank during the financial year ended March 31,2022, in terms of Notification dated 22 January, 2021, issued by the MCA.
The Directors are grateful to the Shareholders for the trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and the Stock Exchanges, for the guidance and support extended by them to the Bank.
The Board thanks its valued Customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and untiring commitment, which qualities have contributed to the Bank''s continued progress in a challenging environment.
For and on behalf of the Board of Directors
Sd/-
Place : Mumbai Arun Tiwari
Date : July 18, 2022 Chairman
DIN: 05345547
Mar 31, 2021
The Board of Directors of the Bank have pleasure in presenting the Twenty-seventh Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31,2021.
The financial performance for the year ended March 31,2021 is summarized as under:
|
('' in crores) |
||
|
Particulars |
As on March 31, 2021 |
As on March 31, 2020 |
|
Deposits |
256,204.96 |
202,039.81 |
|
Advances |
212,595.41 |
206,783.17 |
|
Operating Profit (before Depreciation and Provisions and Contingencies) |
12,032.08 |
11,050.68 |
|
Net Profit |
2,836.39 |
4,417.91 |
The financial year under review was severely impacted by the COVID-19 pandemic, as the entire world was affected in a manner unseen for more than a century. The beginning of the financial year witnessed a country-wide lockdown which was lifted in phases since June 2020. From the unprecedented low level of economic activity and a technical recession in H1 FY 2020-21, the economy started a swift recovery on the back of fiscal measures taken by the Government of India and monetary policy support and regulatory forbearances provided by the Reserve Bank of India. While the economic recovery was progressing well, towards the end of the year a second and more virulent wave of the pandemic has affected some parts of the country.
During the year, the Bank embarked on multiple initiatives to fortify the Balance Sheet such as expanding and granularising the deposit franchise, rebalancing the loan book with a moderate growth year on year, improving the rating and tenor profile of the loan book, and augmenting capital and provision buffers to build resilience. The business of the Bank improved with Deposits growing by 26.81% and Advances by 2.81% over the previous year.
Operating Profit (before Depreciation and Provisions and Contingencies) rose by 8.88% to '' 12,032.08 crores, as compared to '' 11,050.68 crores in the previous year.
The Bank significantly increased the provision buffers prudentially so as to mitigate any potential impact arising out of the pandemic. The total Provisions and Contingencies recognised in the Profit and Loss account during the year were '' 8,890.28 crores, an increase of 40% over '' 6,354.80 crores recognized during the previous year. Consequently, the Net Profit of the Bank for the year under review, after considering all expenses and Provisions and Contingencies, amounted to '' 2,836.39 crores, as against '' 4,417.91 crores in the previous year.
i he Directors recommend appropriation or Profit as under:
('' in crores)
Operating Profit before Depreciation and Provisions and Contingencies 12,032.08
Less: Depreciation on Fixed Assets 305.41
Less: Provisions and Contingencies inclusive of Income Tax 8,890.28
Net Profit 2,836.39
Profit Brought Forward 13,483.66
Amount available for Appropriation 16,320.05
Transfer to Statutory Reserve 709.10
Transfer to Capital Reserve 130.01
Dividend (including Tax on Dividend) -
Deduction during the year (480.44)
Total Appropriations 391.45
Balance carried over to Balance Sheet 15,928.61
The Directors recommend appropriation of Profit as under:
The Earning Per Share of the Bank during the year amounted to '' 38.75.
The RBI vide its Circular dated April 22, 2021, advised that banks may pay dividend on equity shares from the profits for the financial year ended March 31, 2021 subject to the quantum of dividend being not more than fifty percent of the amount determined as per the dividend payout ratio prescribed in Circular dated May 4, 2005. Accordingly, the Board of Directors, in their meeting held on April 30, 2021, have proposed dividend of '' 5 per equity share. This proposal is subject to the approval of the shareholders at the ensuing 27th Annual General Meeting.
Members may note that the Bank did not declare dividend for the year ended March 31,2020, in compliance with RBI Circulars dated April 17, 2020 and December 4, 2020.
Financial Performance and state of the affairs of the Bank
The year under review was the first year of the new Triennial Planning Cycle of the Bank, (Planning Cycle 5, for Financial Years 2020-23) with the theme "Digitize to Differentiate, Diversify and Create Domain Expertise Underscored by Sustainability (4D S)". In view of the pandemic, the focus of the Bank during the year under review was in building resilience, fortifying the balance sheet, improving the loan book profile, and granularising the deposit franchise. While Deposits grew by 26.81% year-on-year, the Advances grew only by 2.81% over the previous year and the Bank continued to be liquid. A large part of the retail customers and some of the corporate customers who were impacted by the pandemic availed of the moratorium offered by the Bank on payment of instalments and interest in accordance with the RBI guidelines, and the loan origination activity was largely subdued.
The Total Income of the Bank for the year under review grew by 5.66% to '' 20,086.51 crores from '' 19,010.05 crores. Net Interest Income increased by 12.18% to '' 13,527.89 crores from '' 12,058.74 crores.
In view of the low level of economic activity, the Non-Interest Income fell 5.65% to '' 6,558.61 crores from '' 6,951.31 crores. Core Fee Income such as, commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business declined by 19.13% to '' 4,679.22 crores from '' 5,785.83 crores during the previous year.
Abundant liquidity available in the system kept the interest rates in a narrow range. While Yield on Advances fell marginally to 11.84% as compared to 11.98% in the previous year, the Cost of Deposits registered a sharper decline to 5.38% from 6.51% a year ago. Consequently, the Net Interest Margin for the year improved to 4.17%.
The Bank expanded its branch network to reach 2,015 branches / banking outlets, as against 1,911 branches / banking outlets at the beginning of the year. The extended network of the Bank comprised 2,872 ATMs, 2,289 branches of Bharat Financial Inclusion Limited (BFIL), and 828 outlets of IndusInd Marketing and Financial Services Private Limited, an associate entity. Revenue per employee during the year improved to '' 67.72 lakhs.
On account of the significant prudential provision buffers added during the year, the Net Non-Performing Assets of the Bank improved to 0.69% as on March 31,2021 as compared to 0.91% a year ago. Return on Assets for the year stood at 0.90%.
Some of the significant events during the year are listed below:
⢠In June 2020, consequent to the rating downgrade of the issuer rating of the Government of India by a notch, Moody''s Investors Service downgraded the long-term local and foreign currency deposit ratings of IndusInd Bank to Ba1 from Baa3, the Baseline Credit Assessment to ba2 from ba1, and the outlook was considered negative. Driven by improvement in the capital and funding franchise, and marginal asset quality deterioration because of the economic disruptions from the pandemic, in March 2021, Moody''s affirmed the long term local and foreign currency deposit rating of the Bank at Ba1, while adjusting the Baseline Credit Assessment to ba2, and revising the outlook to stable from negative.
⢠Reserve Bank of India made multiple policy interventions, aimed at the macro economy as well as diverse groups of borrowers, so as to mitigate the adverse effect of the COVID pandemic. In accordance with RBI Circulars dated March 27, 2020, April 17, 2020 and May 23, 2020, a moratorium on loan instalments and interest payable up to six months during the period March 1,2020 until August 31,2020 was offered to eligible borrowers. The moratorium period led a freeze in the days-past-due status and NPA classification. In order to facilitate revival of real sector activities and mitigate the
impact on the ultimate borrowers, RBI Circular dated August 6, 2020 provided a window under the Prudential Framework enabling the Bank to implement a Resolution Plan in respect of eligible corporate exposures, while classifying such exposures as Standard, subject to certain specified conditions.
⢠On September 3, 2020, vide an interim order, the Hon''ble Supreme Court of India barred banks from recognizing new NPA accounts. On March 23, 2021, the Hon''ble Supreme Court pronounced its judgment in the matter, and ordered waiver of interest on interest during the moratorium period on all loan accounts irrespective of whether moratorium was extended or not, and the embargo on NPA recognition vide the interim order was also vacated. In conformity with the SC judgement, RBI on April 7, 2021 advised that all lending institutions shall put in place a Board approved policy to refund/adjust the interest on interest, compound interest and / or penal interest charged to the borrowers during the moratorium period, i.e. between March 1,2020 and August 31,2020. As suggested in the RBI Circular, the Indian Banks Association provided a common methodology for calculation of the amount to be refunded / adjusted for different facilities, and accordingly, the Bank assessed the impact and created a provision of '' 30 crores, to be refunded / credited to various borrower accounts.
⢠In order to provide relief to retail borrowers in select segments, the Department of Financial Services, Govt. of India, announced on October 23, 2020, an ex-gratia scheme for payment of difference between compound interest and simple interest for six months between March 1,2020 and August 31,2020. Accordingly, by the due date of November 5, 2020, the Bank credited the borrower accounts for an amount of '' 121 crores to eligible borrowers and filed a claim with the State Bank of India, the nodal agency. On March 31,2021, the Government of India reimbursed the Bank fully.
Performance of Subsidiary and Associate Company
During the year under review, Bharat Financial Inclusion Limited (BFIL), the wholly-owned subsidiary of the Bank, earned revenue of '' 1,316.66 crores as against '' 881.63 crores earned during the previous year. The Net Profit for the year under review amounted to '' 153.48 crores as against '' 39.95 crores for the previous year. As a Business Correspondent undertaking, the strength of BFIL lies in its talent pool of trained and motivated employees, that stood at 27,561 as on March 31,2021.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank as 30% of its share capital is held by the Bank. IMFS is engaged in the business of providing manpower services, and during the year under review, earned a revenue of '' 300.59 crores as against '' 329.23 crores earned in the previous year. The net profit earned by IMFS during the year under review amounted to '' 0.88 crores as against '' 1.05 crores earned in the previous year. IMFS had 12,255 employees on its rolls as on March 31,2021.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including the Financial Statement of its Subsidiary Company and Associate Company, and such Consolidated Financial Statement is included in this Annual Report.
In accordance with the fourth proviso to Section 136(1) of the Companies Act, 2013, the Standalone Financial Statements and the Consolidated Financial Statement, including audited accounts of BFIL and IMFS and all other documents required to be attached thereto have been hosted on the website of the Bank at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
A Statement containing the salient features of the financial position of the Subsidiary and Associate Company in Form AOC-1 is enclosed as ''Annexure'' to the Financial Statements.
The Bank does not have any joint venture company and the subsidiary is not a material subsidiary in terms of SEBI (LODR) Regulations.
In the Extraordinary General Meeting held on August 25, 2020, the members approved Preferential Allotment of equity shares of ''10 each, fully paid, at a price of '' 524 per equity share, to five Qualified Institutional Buyers and two corporate entities including one of the promoters. Accordingly, in compliance with the applicable laws and regulations, 4,76,29,768 equity shares were allotted on September 2, 2020 to the Qualified Institutional Buyers and 1,51,17,477 equity shares were allotted on September 4, 2020 to two corporate entities, pursuant to the approval of the Finance Committee on the respective dates.
Consequently, the equity share capital of the Bank increased by '' 62.75 crores and share premium account by '' 3,196.39 crores, net of share issue expenses.
Pursuant to the Composite Scheme of Arrangement with Bharat Financial Inclusion Limited, the Bank allotted 1,57,70,985 Share Warrants to the Promoters of the Bank on July 6, 2019, on receipt of the subscription amount at 25% of the price of '' 1,709 per Share Warrant. Each Share Warrant was convertible to one equity share of the Bank fully paid, upon exercise of the option by paying the remaining amount. On February 18, 2021, the promoters exercised the option of conversion and paid '' 2,021.45 crores, being the remaining consideration of 75% of the price of Share Warrants. Consequently, the Bank allotted 1,57,70,985 equity shares of '' 10 each fully paid at a price of '' 1,709 per equity share, and the share capital increased by '' 15.77 crores and share premium by '' 2,679.49 crores.
During the year, 13,18,331 equity shares of '' 10 each fully paid were allotted on various dates to the employees who exercised their stock options, and consequently, the share capital of the Bank increased by '' 1.32 crores and share premium by '' 53.05 crores.
The Bank has not issued any equity shares with differential voting rights.
The Bank did not issue any debentures during the year under review.
Being a Scheduled Commercial Bank, compliance with SEBI Circular No.: SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018 on fund-raising by issuance of Debt Securities by Large Entities is not applicable to the Bank.
In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names of the Debenture Trustees with their contact details are given below:
Trustee I:
Name of Debenture Trustees: Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House, S. No. 94/95, Plot No. 85, Bhusari Colony (Right), Paud Road, Pune - 411038,
Maharashtra, India.
Website : www.catalysttrustee.com
E-mail : [email protected]
Trustee II:
Name of Debenture Trustees : Beacon Trusteeship Limited
Address : 4C&D, Siddhivinayak Chambers, Gandhi Nagar, Opp. MIG Club, Bandra (East),
Mumbai - 400 051.
Website : www.beacontrustee.co.in
E-mail : [email protected]
The Bank did not issue any Tier 2 Capital instruments during the year. As on March 31,2021, the value of outstanding Tier 2 Capital instruments is Nil.
The Bank is a banking company governed by the Banking Regulation Act, 1949, and as such, the provisions of the Companies Act, 2013 relating to acceptance of Public Deposits are not applicable.
The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:
|
Particulars |
March 31, 2021 |
March 31, 2020 |
||
|
i) Capital Adequacy Ratio (CRAR) |
17.38% |
15.04% |
||
|
ii) CRAR- Common Equity Tier 1 Capital |
15.55% |
13.22% |
||
|
iii) CRAR- Tier 1 Capital |
16.83% |
14.57% |
||
|
iv) CRAR- Tier 2 Capital |
0.55% |
0.47% |
||
|
Credit Ratings |
||||
|
Instruments |
Rating |
Rating Agency |
||
|
Domestic Ratings |
||||
|
Infra Bond program |
AA |
CRISIL |
||
|
Additional Tier I Bond Program |
AA |
CRISIL |
||
|
Certificates of Deposit Program |
A1 |
CRISIL |
||
|
Short Term FD Program |
A1 |
CRISIL |
||
|
Senior Bonds program |
AA |
India Ratings and Research |
||
|
Additional Tier I Bond Program |
AA |
India Ratings and Research |
||
|
Short Term Debt instruments |
A1 |
India Ratings and Research |
||
|
International Ratings |
||||
|
Senior Unsecured MTN Programme |
Ba1 |
Moody''s Investors Service |
||
The Bank''s Board comprised eight Directors as on March 31, 2021, viz., Mr. Arun Tiwari, Non-Independent Non-Executive, Part-time Chairman, six Independent, Non-Executive Directors, viz., Mr. Shanker Annaswamy, Dr. T. T. Ram Mohan, Mrs. Akila Krishnakumar, Mr. Rajiv Agarwal, Mr. Sanjay Asher, and Mrs. Bhavna Doshi, and Mr. Sumant Kathpalia, Managing Director & CEO.
Mr. Sanjeev Kumar Asthana had resigned from the Bank''s Board with effect from the close of business hours on July 27, 2020, owing to his acceptance of a new role as the CEO of a corporate, impacting his being a Director in the Bank''s Board with specialised knowledge / practical experience in Agriculture & Rural Economy, as laid down in the Banking Regulation Act, 1949.
(a) Non-Executive, Independent Directors
All Independent Directors have submitted Declarations that they meet the criteria of independence as laid down under sub-section (6) of Section 149 of the Companies Act, 2013. In compliance with Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and based on these Declarations, the following Non-Executive Directors continue to be identified as Independent Directors as on March 31,2021:
(i) Mr. Shanker Annaswamy
(ii) Dr. T. T. Ram Mohan
(iii) Mrs. Akila Krishnakumar
(iv) Mr. Rajiv Agarwal
(v) Mr. Sanjay Asher
(vi) Mrs. Bhavna Doshi
In addition, the Bank''s Board of Directors have, pursuant to Regulation 25(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, obtained Certificate from M/s Bhandari & Associates, Practicing Company Secretaries that the aforesaid Directors meet the ''Criteria of Independence'' and are independent of the Management. The Certificate submitted by M/s Bhandari & Associates is furnished at Annexure I, and forms an integral part of this Report.
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, specified companies are required to have at least one Woman Director in their Board.
Mrs. Akila Krishnakumar (DIN: 06629992), who joined the Board on August 10, 2018 is a Non-Executive, Independent Woman Director, and Chairs some important Committees of the Board.
Mrs. Bhavna Doshi (DIN: 00400508), who joined the Board on January 14, 2020, is a Non-Executive, Independent Woman Director, and Chairs the Stakeholders'' Relationship Committee.
(c) Chairman of the Board
Mr. Arun Tiwari (DIN: 05345547) assumed charge as Part-time, Non-Executive Chairman of the Bank with effect from January 31,2020, and shall hold office for a period of three years, up to January 30, 2023, as approved by the Reserve Bank of India.
Mr. Tiwari was earlier appointed as Independent, Non-executive Director in the Board of the Bank, on August 10, 2018. Mr. Arun Tiwari''s directorship was reclassified as Non-Executive, Non- Independent with effect from October 15, 2019.
The Shareholders had, at the Bank''s 26th Annual General Meeting, held on September 25, 2020, approved the appointment of Mr. Arun Tiwari as Non-Executive, Non-Independent, Part-time Chairman, for a period of three years with effect from January 31,2020.
(d) Managing Director & CEO
Mr. Sumant Kathpalia (DIN: 01054434) was appointed as Managing Director & CEO of the Bank with effect from March 24, 2020.
The Shareholders had, at the Bank''s 26th Annual General Meeting, held on September 25, 2020, approved the appointment of Mr. Sumant Kathpalia as Managing Director & CEO of the Bank, for a period of three years with effect from March 24, 2020.
(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring by rotation at the forthcoming AGM
(i) Appointment
Mr. Jayant Deshmukh (DIN: 08697679) was appointed ''Additional Director'' in the category of Non-Executive, Independent Director in the Bank''s Board on July 24, 2021.
Approval of the shareholders is being requested by the Board for the appointment of Mr. Jayant Deshmukh as Non-Executive, Independent Director in the Board of the Bank by passing of an Ordinary Resolution at the ensuing Annual General Meeting.
(ii) Re-appointment
None of the Directors of the Bank are liable for re-appointment at the ensuing AGM.
STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR:
The Bank did not appoint Independent Directors during the year 2020-21.
(iii) Retirement by Rotation
Section 152(6) of the Companies Act, 2013 provides that not less than two-thirds of the total number of directors of a public company shall be liable to retire by rotation, and that one-third of such directors shall retire from office at every Annual General Meeting (AGM) of the Bank.
In accordance with the provisions of the Companies Act, 2013, Mr. Arun Tiwari (DIN: 05345547), Non-Executive, Non-Independent, Part-time Chairman of the Bank, shall be the Director liable to retire by rotation.
Approval of the shareholders is requested by the Board for the re-appointment of Mr. Arun Tiwari, who retires by rotation, and being eligible, offers himself for re-appointment.
As required under Regulation 36(3) of the Listing Regulations, particulars of the Directors retiring by rotation and seeking appointment, re-appointment on retirement by rotation are given in the annexure to the Explanatory Statement attached to the Notice of the AGM.
None of the Directors have been disqualified from being appointed as ''Director'', pursuant to Section 164 of the Companies Act, 2013 or under any other law.
The Board of Directors have received a Certificate from M/s. Bhandari & Associates, Practicing Company Secretaries, pursuant to Regulation 34(3) read with Schedule V para C clause 10 (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors on the Board by SEBI, Ministry of Corporate Affairs or any other Statutory Authority.
(f) Cessation of Directorship
Mr. Sanjeev Kumar Asthana (DIN: 00048958) had resigned from the Bank''s Board with effect from the close of business hours on July 27, 2020, owing to acceptance of a new role as the CEO of a corporate, impacting his being Director in the Bank''s Board with specialised knowledge / practical experience in Agriculture & Rural Economy, as laid down in the Banking Regulation Act, 1949.
The Board of Directors wish to place on record their appreciation for the valuable contributions made by Mr. Sanjeev Kumar Asthana in the deliberations in the Board meetings during his tenure as Director of the Bank.
(g) Cessation of Director after the end of the year and upto the date of the Report
None of the Directors had demitted office after the end of the year and up to the date of this Report.
During the year, nineteen meetings of the Board of Directors and twelve meetings of the Audit Committee of the Board were held, the details of which are given in the Corporate Governance Report, which forms an integral part of this Report.
Mrs. Bhavna Doshi was appointed as Member of the Audit Committee with effect from May 9, 2020. As on March 31,2021, the constitution of the Audit Committee comprised, Mr. Sanjay Asher as Chairman, Mr. Arun Tiwari, Mr. Shanker Annaswamy and Mrs. Bhavna Doshi, as Members.
There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and of all its Committees, the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (LODR) Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman, as well as the process of evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI as per Circular dated January 5, 2017.
The Board of Directors have, on the recommendation of the Nomination & Remuneration Committee, engaged an external Independent Professional for conducting the Performance Evaluation exercise.
The Board of Directors has carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Chairman and the Committees of the Board.
The performance of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman has been evaluated / reviewed by the Nomination & Remuneration Committee, Committee of Independent Directors and by the Board of Directors.
The Board has formulated a Policy on Performance Evaluation which details the various aspects that are to be considered for evaluating the Directors including but not limited to attendance, participation in the meeting, contribution towards strategies of the Board, etc.
The Policy provides guidelines for the individual Directors to evaluate the Board, its Committees and individual directors.
The Policy on Performance Evaluation is available on the website of the Bank at: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
The Statement indicating the manner in which the evaluation exercise was conducted is included in the Report on Corporate Governance, which forms an integral part of this Annual Report.
Policy on Appointment and Selection of Directors
The Board of Directors are at the helm of the Bank and an enlightened Board creates a culture of leadership and provides a long-term policy approach to improve the quality of governance.
The Policy on Appointment & Selection of Directors has been framed in compliance with Section 178 of the Companies Act, 2013, and other applicable regulations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Banking Regulation Act, 1949.
The Policy shall act as a guideline for the Nomination & Remuneration Committee for determining the qualifications, positive attributes, independence of Directors and matters related thereto to recommend appointment and removal of Directors to the Board of the Bank.
The Policy on Appointment & Selection of Directors is hosted on the website of the Bank at: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
Familiarization Programs for Independent Directors
Various programs were undertaken for familiarizing the Independent Directors of the Bank, details of which are disclosed in the Corporate Governance Report, which forms part of this Report.
Change in Key Managerial Personnel
During the financial year 2020-21, there was no change in Key Managerial Personnel.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerised environment with a Core Banking Solution, supported by diverse application platforms for handling special businesses, such as Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as in-built system checks, Maker - Checker authorisations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent. This unit does not originate accounting entries except for limited matters such as, Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy and technology absorption pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 is mentioned elsewhere in this Report. The other Statutory Information / Disclosures required to be given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to the Bank, have been laid out in the Schedules / Notes attached and forms part of the Balance Sheet and the Profit and Loss Account.
Conservation of Energy:
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy, details of which are furnished in Principle 6 of Section E of the Business Responsibility Report.
Technology Absorption:
The Bank has made optimum use of Information Technology in its operations. Details pertaining to Technology Absorption have been explained in the Management and Discussion Analysis Report which forms an integral part of the Annual Report.
Foreign Exchange Earnings and Outgo:
The provisions relating to 134(3)(m) of the Companies Act, 2013, on particulars relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company and as such, no Disclosure is being made in this regard.
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The integrated Risk Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management (ALM) and Operational Risk across all verticals, independent of business functions.
Risk Management functions in the Bank have been aligned with industry best practices, supported by advanced risk measurement and analytical systems which enable proactive risk management and monitoring. Risk Management is continually enhanced in line with changes in operating environment and regulations.
The Bank has a comprehensive framework of Risk Management Policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., ''Risk Management Committee'' to examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios / products/ segments.
Details of Risk Management Models and Frameworks implemented by the Bank are mentioned in the ''Management Discussion and Analysis Report''
Vigil Mechanism / Whistle Blower Policy
The Bank has in place the ''Whistle Blower Policy'' since 2009.
The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors.
The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least twice a year.
The Bank''s Whistle Blower Policy is in synchrony with all statutory and regulatory guidelines on Vigil Mechanism.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank is available on the Bank''s website at the under-mentioned link:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html > Policies & Codes >> Whistle Blower Policy
Reporting of Fraud, by the Auditors
During the year under review, there were no instances of fraud reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.
M/s Haribhakti & Co. LLP, Chartered Accountants were appointed Statutory Auditors in the 26th Annual General Meeting held on September 25, 2020 for a period of one year, until the conclusion of the next Annual General Meeting. In accordance with extant Guidelines, they are eligible to be reappointed for one more year, and accordingly, it is proposed to reappoint M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 103523W / W100048) as one of the Joint Statutory Auditors of the Bank from the conclusion of this AGM until the conclusion of the next AGM.
Further, M/s M. P. Chitale & Co., Chartered Accountants (ICAI Firm Registration Number 101851W) are proposed to be appointed as one of the Joint Statutory Auditors of the Bank for a period of three years commencing from the conclusion of this AGM, until the conclusion of the 30th Annual General Meeting that would be held during FY 2024-25, subject to the approval of the RBI on annual basis from the conclusion of the 28th AGM.
M/s Haribhakti & Co. LLP., Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2020-21 and their Report is annexed. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of internal financial controls system over financial reporting, which has been enclosed as ''Annexure'' to the Independent Auditors'' Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditors'' Report.
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari & Associates, Company Secretaries in Practice, to undertake Secretarial Audit of the Bank for FY 2020-21. The Secretarial Audit Report submitted by M/s Bhandari & Associates is furnished at Annexure II, and forms an integral part of this Report.
The Secretarial Audit Report submitted by M/s Bhandari & Associates for FY 2020-21 does not contain any qualification, reservation or adverse remark.
The Bank had instituted the Employees Stock Option Scheme (ESOS-2020) to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of a number of shares upto 7% of the issued Equity Capital of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors.
Pursuant to a Composite Scheme of Arrangement with the erstwhile Bharat Financial Inclusion Limited, the shareholders of the Bank approved the IBL Special Incentive ESOS for BFIL Merger 2018 (ESOS 2018) on December 11,2018. ESOS 2018 was approved with a pool of 57,50,000 options which are equity settled 50% of the options vest over a period of three years from the grant date and the remaining options vest over a period of three years from the first anniversary of the grant date. Upon vesting, the options have to be exercised within a maximum period of five years.
As at March 31, 2021, the Compensation Committee of the Bank has granted a total of 5,10,15,642 Options that includes 4,57,27,836 options granted under ESOS 2020 and 52,87,806 options granted under ESOS 2018
Statutory disclosures as required by SEBI (Share Based Employee Benefits) Regulations, 2014 are given at Annexure III, and form an integral part of this Report.
The Annual Certificate on compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 issued by Statutory Auditors of the Bank shall be made available on the website of the Bank, on the day of the AGM.
The Employees Stock Option Plan is administered by the Compensation Committee of the Board.
Statutory disclosures as mandated under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, have been hosted on the website of the Bank at:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
Disclosure on compliance with Secretarial Standards
The Bank has complied with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and has systems which are adequate and are operating effectively.
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.
(i) Details of application made or any proceedings pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year under review:
|
Pan No. |
Borrower |
Date of filing |
Date of admission |
Is the case filed under RBI direction |
Resolution status |
Remarks |
|
AAACC1921B |
Cox & Kings Ltd. -(Borrower) Cox and Kings Global Services Pvt Ltd. (Corporate Guarantor) |
29.06.2020 |
No |
Yet to be admitted |
In the matter of Cox & Kings Limited (borrower), the Bank has filed an application u/s 7 of IBC against the Corporate Guarantor - Cox & Kings Global Services Ltd. for Principal Liability of Borrower on 29.06.2020 before Mumbai NCLT, which is pending for admission. |
|
|
AAACG0108J |
Gallium Industries Ltd |
30.06.2017 |
21.07.2017 |
No |
Liquidation order passed |
The liquidation Order was passed on 1 7.1 2.201 8. The liquidator has sold all the assets and distributed the amount to the stakeholders as per claims. The liquidator is in the process of closure of all accounts and dissolution of the company. The matter is scheduled for hearing on August 26, 2021. |
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013:
(a) that in the preparation of the Annual Accounts for the year ended March 31,2021, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31,2021 and of the profit of the Bank for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(d) that the Annual Financial Statements have been prepared on a ''going concern'' basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return of the Bank as on March 31,2021, in the prescribed Form MGT-7 is available on the Bank''s website at the link: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
The Bank had 29,661 employees on its rolls as on March 31,2021.
58 employees employed throughout the year were in receipt of remuneration of '' 1.02 crore per annum or more, and 12 employees employed for the part of FY 2021 were in receipt of remuneration of '' 8.50 lakh per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the information is not being sent along with this Annual Report to the Members of the Bank in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the Annexure may please send an email to the Company Secretary at [email protected].
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Shares of the Bank.
Details pursuant to remuneration of Directors and Employees 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 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure IV and form an integral part of this Report.
Policy on Remuneration to Non-Executive Directors
In line with the guidelines contained in RBI Circular dated June 1,2015 on compensation of Non-Executive Directors of private sector banks, and the approval of the Board of Directors, of the Shareholders and of the Reserve Bank of India, wherever applicable, remuneration of '' 10 lakhs per annum was paid to Non-Executive Directors in the form of Profit-related Commission in addition to Sitting Fees paid for attending meetings of the Board and of various Board Committees.
In line with the guidelines contained in the above-referred RBI Circular, Mr. Arun Tiwari, Non-Independent, Non-Executive, Parttime Chairman of the Bank is paid remuneration of '' 30 lakhs per annum, as approved by the Nomination & Remuneration Committee of the Board, the Board of Directors and by the Reserve Bank of India.
The annual remuneration payable to a single Non-Executive Director does not exceed 50% of the total annual remuneration payable to all Non-Executive Directors.
No Stock Options were granted to the Non-Executive Directors.
The ''Policy on Remuneration to Non-Executive Directors'' is hosted on the Bank''s website at the link given below: https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html
Details on compensation to Whole-time Directors are given under the Report on Corporate Governance, which forms an integral part of this Report.
RBI, vide its Circular dated April 26, 2021 has permitted for higher payment of compensation to Non-Executive Directors (NEDs) in the form of a fixed remuneration commensurate with an individual Director''s responsibilities and demands on time and which are considered sufficient to attract qualified competent individuals, subject to maximum of '' 20,00,000 per annum.
A proposal for payment of compensation to each Non-Executive Director [excluding the Non-Executive (Part-time) Chairperson] of the Bank, by way of fixed remuneration not exceeding Rupees '' 20,00,000/- (Rupees Twenty Lakhs) per annum, with effect from the Financial Year 2021-2022, is being placed for approval of the Shareholders at the ensuing AGM.
Particulars of Loans, Guarantees or Investments outstanding
Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with ''Related Parties'' during the year under review were on ''arm''s length basis'' and in the ''ordinary course of business'' and therefore do not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially significant Related Party Transactions during the year with any of the Related Parties, viz., Promoters, Directors and Key Management Personnel, Subsidiary and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.
In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.
The Policy on Related Party Transactions as approved by the Board of Directors is hosted on the Bank''s website at the below given link:
https://www.indusind.com/in/en/investors/investor-landing/investor-resources.html >>Policies & Codes >> Related Party Transaction Policy
Consolidated Financial Statements
In accordance with Section 129(3) of the Act, Consolidated Financial Statement of IndusInd Bank Limited (''the Bank''), Bharat Financial Inclusion Limited (formerly known as IndusInd Financial Inclusion Limited) (BFIL) ("the Subsidiary") and IndusInd Marketing and Financial Services Private Limited (IMFS) ("the Associate") has been prepared and is included in the Annual Report.
In the preparation of the Consolidated Financial Statement, the Standalone Financial Statements of BFIL, the wholly-owned subsidiary, for the year ended March 31,2021, have been considered on a line by line basis by adding together like items of assets, liabilities, income and expenses, in accordance with AS 21.
In accordance with AS 23, the Standalone Financial Statements of IMFS, an associate in which the Bank has a 30% stake, has been considered in the Consolidated Financial Statement by adopting ''Equity Method''.
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued a circular in February 2016, requiring Scheduled Commercial Banks to implement Indian Accounting Standards (Ind AS) from April 1,2018. Vide a press release dated April 5, 2018 the implementation was deferred by one year. The legislative amendments recommended by the Reserve Bank towards implementation of Ind AS are still under consideration of the Government of India. Accordingly, RBI had, through a notification dated March 22, 2019, deferred the Ind AS implementation until further notice.
Pursuant to the RBI Circular dated February 11,2016, the Bank formed a Steering Committee, comprising members from crossfunctional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank had set up a Working Group under the guidance of the Steering Committee and has conducted Gap Assessment and identified the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption. The Bank had engaged the services of a professional firm with international experience in the field, to assist in the project of implementation of Ind AS. The Bank has obtained licenses for IT systems to automate Expected Credit Losses and Effective Interest Rate calculations towards implementation of Ind AS and the project is currently under implementation. The Bank continues to organize trainings for its teams across business and support functions. The Audit Committee of the Board of Directors has an oversight on the progress of the Ind AS implementation. Further, there may be regulatory guidelines and/or clarifications in some of the critical areas with respect to application of Ind AS, which the Bank will need to incorporate in its implementation project as and when those are issued.
In accordance with RBI directions, the Bank has been submitting standalone pro forma Ind- AS financial statements along with other computations to the RBI, from time to time.
Corporate Social Responsibility
In line with its CSR focus areas, the Bank is committed to various long term community development projects that have a large positive impact. Consistent with the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a Board-level CSR Committee to look after the CSR initiatives. The Committee is headed by Mrs. Akila Krishnakumar as the Chairperson, and Mr. Rajiv Agarwal, Mr. Sanjay Asher and Mr. Sumant Kathpalia are the Members.
The composition of the CSR Committee is in accordance with Section 135 of the Companies Act, 2013. The Board at its meeting held on April 7, 2020, approved the integration of sustainability function with the CSR function in CSR Committee and the Committee was renamed as ''Corporate Social Responsibility & Sustainability Committee''
The Bank''s CSR Policy and strategy direct and govern the Bank''s activities in focus areas, namely, Environmental Sustainability, Healthcare, Education, Sports, Skills/Livelihood Development and other areas.
In FY 2020-21 the Bank continued its flagship initiative under the water stewardship wherein it undertook water resource development and management through watershed and springshed management, restoration of water bodies like lakes, ponds, tanks, roof rain water harvesting by reviving traditional structures, harvesting of river water and availability and accessibility of safe drinking water through installation of water ATMs. The Bank also extended projects towards environmental sustainability like Urban afforestation, Renewable energy solutions and Waste management.
Under the theme Education, the Bank implemented Academic Improvement Programs in government schools viz., Road to school, Early Language learning which is expected to change the way in which education is delivered. Education centers of Assisted Learning Program helps children cope with their learning gaps and pass the 10th grade. To encourage excellence, the Bank also provides Scholarship support for higher education like engineering, school education and for deserving Young India Fellows.
IndusInd Bank supported inclusiveness of the differently-abled alongwith gender inclusiveness / equality in Sports. The Bank had a separate non-business vertical for Sports which undertook spreading the culture of inclusivity and excellence in sports within and outside the organisation. Currently five excellence programmes namely, IndusInd Para Champions, IndusInd Blind Cricket, IndusInd Girl Power, IndusInd Hockey for her Excellence & Nurturing Rural Champions are being supported.
Under the focus area of Healthcare, IndusInd Bank supported an intervention on reducing cancer burden by providing care, treatment, awareness and prevention services with supply of radiology equipment. The Bank also supports the treatment of children with cancer in Rajasthan, Maharashtra and Goa. IndusInd Bank has set up e-Health Clinics, Mobile Medical Units, etc.,
to provide affordable primary healthcare to individuals from poor and lower Income Group families. 2 special programs on Mother and Child care and Adolescent Girls Menstrual Health were also rolled out this year.
To promote livelihood, the Bank supports skill development of disabled from marginalized communities in various districts of Karnataka. Similarly, youth from Assam and Rajasthan are trained for an employable skill and placed. The Bank supports long term residential rehabilitation program including skill training for substance abusing street children/ youth. A program on livestock development is also newly launched.
The Bank has continued CSR initiatives of Bharat Financial Inclusion Limited, its wholly- owned subsidiary. Two flagship initiatives, viz., Bharat Sanjeevani (on livestock care) and Pragat (Integrated Development Program including Water, Healthcare and Education) are supported.
In response to COVID, the Bank carried out several activities ranging from distribution of essential supplies to poor families, medical supplies / equipment for health workers and hospitals to contribution to State and Central Government Disaster Relief Funds, etc.
The CSR Initiatives / Projects undertaken by the Bank are in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least Two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank spent '' 94.72 crores towards various CSR activities specified in Schedule VII of the Companies Act, 2013. '' 26 crores are earmarked on several ongoing projects whose expenditure was delayed due to COVID and will be spent in the subsequent year totaling to '' 120.72 crores.
The Report on CSR activities undertaken by the Bank is set out at Annexure V and forms an integral part of this Report.
The CSR Policy, amended during the year, is framed basis the activities permitted under Schedule VII of the Companies Act, 2013. Details of the CSR Policy and initiatives adopted by the Bank on CSR are available on Bank''s website at the link given below:
https://www.indusind.com/in/en/csr-home/our-approach/csr-policy.html
In its endeavor to incorporate sustainability in to business, the Bank is diligently setting up processes that reflect its long standing view - "Good Ecology is Good Economics". The Bank recognizes the fact that aligning its products, services and operations with its ESG strategy contributes towards betterment of the environment and society at large and also presents a good business case. The sustainability policy of the Bank lays out guidelines and targets in key areas of the environmental, social, economic and governance aspects. The Bank has committed targets on Environmental, Social and Governance (ESG) aspects and continues to improve the sustainability performance to surpass the ESG targets.
As a socially and environmentally responsible organization, the Bank seeks to specialize the lending portfolio by increasing investments in development sectors and integration of ESG aspects in corporate and consumer banking. The Bank has strengthened financial Inclusion with initiatives like livelihood financing, microfinance, vehicle financing for livelihood and agribusiness. The Bank keeps abreast with latest research on corporate citizenship and responsible banking both globally and locally. The Bank has adopted various reporting platforms and guidance frameworks laid out by ''Standard Setters'' such as, International Integrated Reporting Council (IIRC), Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Dow Jones Sustainability Index (DJSI), etc., for assessment and accountability in sustainability performance.
The Bank is determined to mitigate climate change impact which is evidenced through committing long term targets and deploying climate strategy to invest in energy efficiency projects and greening the IT systems. The Bank promotes sustainable and ethical procurement practices through selection and on-boarding criteria on ESG compliance for vendors and suppliers. The Bank has demonstrated accountability and transparency through disclosure on materiality analysis, ethical business practices, cyber-security strategy and data privacy management.
This comprehensive sustainability approach has helped IndusInd Bank''s inclusion in the S&P Dow Jones Sustainability Yearbook 2021, which showcases that the Bank clearly looks beyond profits to focus on its people, the society and the planet.
The Securities & Exchange Board of India have, with effect from December 26, 2019, vide SEBI (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2019, mandated the top 1,000 listed entities to include the ''Business Responsibility Report'' (BRR) as part of the Annual Report, describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by SEBI.
In view of the above and in compliance with Regulation 34(2) of the Listing Regulations, BRR has been hosted on the Bank''s website at the link below: https://www.indusind.com/in/en/sustainability.html
Corporate Governance is essentially a set of standards, systems, and procedures aimed at effective, honest, transparent, and responsible management of a company within the applicable statutory and regulatory structures.
The Bank has adopted the industry best practices of Corporate Governance and aims to continue banking on the highest principles of governance and ethics. At IndusInd, Corporate Governance is more than just adherence to the statutory and regulatory requirements. It is equally about focusing on voluntary practices that underlie the highest levels of transparency.
The Governance framework is driven by the objective of enhancing long-term stakeholder value, without compromising on Ethical Standards and Corporate Social Responsibilities.
The Bank''s guiding principles are also articulated through its Code of Business Conduct and various initiatives taken to maintain transparency by communicating with the Shareholders on developments in the Bank. The Bank has also set up various subcommittees of the Board to bring in more efficacy and transparency in the workings.
The Bank continues to focus on better, complete and timely disclosures to the Stock Exchanges for dissemination to the Stakeholders. Detailed disclosures regarding corporate governance are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2)(e) of the SEBI (LODR) Regulations, forms part of this Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There were no significant and material Orders passed by the Regulators / Courts that would impact the ''going concern'' status of the Bank and its future operations.
Material Events that have happened after the Balance Sheet date
No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year of the Bank to which the Financial Statements relate and the date of this Report. For the impact of Covid-19 on the performance of the Bank and the Group, refer "Note No. 5.13 of Schedule 18 - Notes forming part of the accounts" of financial statements of the Bank and "Note No. 12 of Schedule 18 - Notes forming part of the accounts" of consolidated financial statements of the Bank.
IndusInd Bank was recognized for its excellence through a number of awards and accolades, across a range of categories. The Bank started off its winning streak with 2 awards at the Finacle Innovations Awards 2020 for technology implementations -Product Innovation and Transformation Excellence. The Bank was awarded with the Infosys Finacle Client Innovations Awards 2020 for Alexa and Chatbot Implementations.
The Bank ended Q1 on a high note, with the Best Financier Award 2019 at the JCB India Annual Financiers'' Award 2019, along with being ranked 2nd in the Ashok Leyland Product Funding during the year 2020 at Annual Financier Award 2020 from Ashok Leyland.
The Bank was awarded ''Outstanding Response to COVID-19, Branchless Banking'' in Global Retail Banking Innovation Awards 2020 - The Digital Banker.
The Bank was bestowed Silver Category in ''Best Mobile Search Campaign'' in 11th India Digital Awards - Internet and Mobile Association of India.
The Bank was honoured with the 2020 APAC Innovation Award - Red Hat.
The Bank was also honoured with ''Most Innovative Company''for Multi-cloud platform in Business Impact Awards 2020 -Economic Times and vmware.
The Bank was also bestowed with two awards at the CSR Times Awards 2020-21, for the Bank''s efforts in ''Rainwater Harvesting'' in Rajasthan and ''Road To School'' Programme in Odisha.
In the fourth quarter, the Bank was featured in the Carbon Disclosure Project (CDP) list for the 6th Consecutive year - the only Bank in India with this honour. Some other honours the Bank was bestowed with in this quarter include, Indus OnTheGo Mobile LOS at Banking Frontiers FINNOVITI Awards 2021 and an inclusion in the S&P DJSI Sustainability Yearbook.
Certain statements in the Directors'' Report and in the Management Discussion and Analysis document describing the Bank''s objectives, estimates and expectations may be ''forward-looking statements'' within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace
The Bank has complied with provisions relating to the constitution of Internal Complaints Committees under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The disclosures relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, is included in the Corporate Governance Report, which forms an integral part of this Report.
The Directors are grateful to the Shareholders for the trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and the Stock Exchanges, for the guidance and support extended by them to the Bank.
The Board thanks its valued Customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and untiring commitment, which qualities have contributed to the Bank''s continued progress in a challenging environment.
For and on behalf of the Board of Directors
Sd/-
Place: Mumbai Arun Tiwari
Date: July 24, 2021 Chairman
DIN: 05345547
Mar 31, 2019
The Board of Directors of the Bank have pleasure in presenting the Twenty-fifth Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31, 2019.
The financial performance for the year ended March 31, 2019 is summarized as under:
(Rs. in crores)
|
Particulars |
As on March 31, 2019 |
As on March 31, 2018 |
|
Deposits |
194,867.91 |
151,639.17 |
|
Advances |
186,393.50 |
144,953.66 |
|
Operating Profit (before Depreciation and Provisions and Contingencies) |
8,317.07 |
6,867.75 |
|
Net Profit |
3,301.10 |
3,605.99 |
Despite the deceleration in growth rate in the Indian economy and a challenging macroeconomic environment, the Bank improved its business, with Deposits growing by 28.51% and Advances by 28.59% over the previous year.
The Bank continued to focus on increasing earnings from its core banking business, strengthening the fee income streams, and maintaining control on operating costs.
Operating Profit (before Depreciation and Provisions and Contingencies) rose by 21.10% to Rs. 8,317.07 crores, as compared to Rs. 6,867.75 crores in the previous year.
However, the Net Profit for the year under review was adversely impacted when a large exposure to a group in the infrastructure sector turned non-performing towards end of the year; in an unprecedented move, the Govt. of India replaced the entire Board of Directors and the reconstituted Board initiated a resolution plan, and in the interim, the National Company Law Tribunal ordered a moratorium on all recovery actions.
When adjusted for the one off impact related to infrastructure sector, Operating Profit (before Depreciation and Provisions and Contingencies) would have been placed at Rs. 8,470.07 crores showing growth of 23.33% y-o-y.
The Net Profit of the Bank for the year under review, after considering all expenses and necessary Provisions and Contingencies, amounted to Rs. 3,301.10 crores, as against Rs. 3,605.99 crores in the previous year. If adjusted for the impact of the one off group account in the infrastructure sector which became NPA, the Net Profit would be placed at Rs. 4,475.10 crores showing growth of 24.10% y-o-y.
Appropriations
The Directors recommend appropriation of Profit as under:
(Rs. in crores)
|
Operating Profit before Depreciation and Provisions and Contingencies |
8,317.07 |
|
Less: Depreciation on Fixed Assets |
228.85 |
|
Less: Provisions and Contingencies inclusive of Income Tax |
4,787.12 |
|
Net Profit |
3,301.10 |
|
Profit Brought Forward |
9,311.49 |
|
Amount available for Appropriation |
12,612.59 |
|
Transfer to Statutory Reserve |
825.27 |
|
Transfer to Capital Reserve |
39.53 |
|
Transfer to Investment Fluctuation Reserve Account |
115.12 |
|
Dividend (including Tax on Dividend) (24th Annual General Meeting of members held on July 26, 2018 approved the payment of Dividend for the year 2017-18 for the Equity Shares outstanding as on that date.) |
542.94 |
|
Deduction during the year |
(17.21) |
|
Total Appropriations |
1,505.65 |
|
Balance carried over to Balance Sheet |
11,106.94 |
Dividend
The Earning Per Share (EPS) of the Bank amounted to Rs. 54.90 during the year 2018-19.
The Board of Directors recommend Dividend of Rs. 7.50 per Equity Share of Rs. 10 each (at 75%) for the year ended March 31, 2019 (Dividend for the year 2017-18 was Rs. 7.50 per Equity Share of Rs. 10 each).
Considering the Equity Shares outstanding as at March 31, 2019, the total amount of dividend payable including Taxes to be borne by the Bank amounts to Rs. 544.93 crores. An amount of Rs. 92.91 crores would be paid as Dividend Distribution Tax by the Bank on the Dividend.
Consequent upon the amalgamation of Bharat Financial Inclusion Ltd. with the Bank, Shareholders of Bharat Financial Inclusion Ltd. whose names appear in the Register of Members of the Bank as on the Record Date (July 4, 2019) shall also be entitled to the Dividend.
In accordance with the revised AS 4, viz., âContingencies and events occurring after the Balance Sheet Dateâ, this amount is not accounted as a liability as at March 31, 2019. The members may kindly note that the Bank proposes Record Date of August 9, 2019 for the purposes of Dividend, and all the shareholders as at the Record Date would be entitled to Dividend for the year 2018-19. The Dividend Pay-out is in accordance with the Bankâs Dividend Distribution Policy.
Financial Performance and state of the Affairs of the Bank
The year under review was the second year of the new Triennial Planning Cycle of the Bank, (Planning Cycle 4, for Financial Years 2017-20) with the theme of âDigitize to Differentiate, Diversify and Create Domain Leadershipâ with a strategy to gain âMarket Share with Profitability (4D)â
Backed by improved volumes, the Total Income of the Bank for the year under review grew by 26.68% to Rs. 27,907.87 crores from Rs. 22,030.85 crores.
The healthy rise in profitability was the result of growth in Net Interest Income as well as Non-Interest Income. Net Interest Income improved by 17.99% to Rs. 8,846.18 crores from Rs. 7,497.45 crores while Non-Interest Income rose to Rs. 5,646.72 crores from Rs. 4,750.10 crores, registering growth of 18.88%.
Core Fee Income such as commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business grew by 21.33% to Rs. 5,067.57 crores from Rs. 4,176.75 crores earned during the previous year.
Yield on Advances increased to 11.26% during the year, as against 11.21% in the previous year, while the Cost of Deposits rose to 6.58% from 5.98% in the previous year. The Net Interest Margin was 3.80% in FY 2018-19.
The Bank expanded its branch network steadily to reach 1,665 branches (including 65 banking outlets), as against 1,400 branches at the beginning of the year. Revenue per employee during the year improved to Rs. 52 lakhs.
On account of a large exposure to the group in the infrastructure sector turning into NPA, the Net Non-Performing Assets ratio of the Bank stood at 1.21% as of March 31 2019 and the Provisioning Coverage Ratio (PCR) stood at 43.04% as compared to 56.26% in the previous year.
The year under review witnessed a number of significant events, some of which are listed below::
- The Bank is on its silver jubilee year and the celebration journey â#Just 25â is launched.
- Mixed Business (Deposits plus Advances) crossed Rs. 3.81 trillion mark.
- The Bank established its first Euro Medium Term Notes Programme with a size of USD 1 billion on March 27, 2019; MTNs issued by the Bank subsequently on April 15, 2019 are listed in Singapore Exchange Securities Trading Limited and India International Exchange (IFSC) Limited (India INX which is Indiaâs first international exchange in IFSC GIFT City); on March 28, 2019, Moody assigned first-time Baa3 issuer rating to the Bank with a stable outlook.
- On March 28, 2019, Bank issued a third tranche of Basel III compliant Additional Tier 1 Bonds (AT1) for Rs. 1,489.90 crores; CRISIL assigned AA / Stable and India Ratings Research assigned IND AA / Stable ratings.
- USD 100 million additional borrowing from OPIC with 8 year tenor; USD 75 million from JP Morgan with 1.5 year tenor; rollover of existing USD 300 million from SBI NY were some of the marquee FCY loans drawn down during the year. In addition, a syndicated facility of USD 320 million (limit of USD 500 million) was arranged with drawdown in early April 2019.
- RBI Supervisory Programme for Assessment of Risk and Capital completed during the year, pertaining to the year ended March 31, 2018, did not warrant any disclosure relating to divergence in identification of NPAs or provisions for the same.
- CFD ranks No. 1 player in AL vehicles, No. 1 financier for JCBs and Small Commercial Vehicles.
- In respect of a large group in the infrastructure sector, the Bank had an exposure to the holding company, which is a Core Investment Company, amounting to Rs. 2,000 crores and an amount of Rs. 1,004 crores to a few operating companies and SPVs. Further to defaults in loan servicing, in an unprecedented move, the Govt. of India replaced the entire Board of Directors, and the reconstituted Board initiated a Resolution Plan given the large size of the overall exposure to the market and the number of operating companies and SPVs belonging to the Group. On October 12, 2018, the National Company Law Tribunal (NCLT) placed the entire recovery proceedings under a moratorium and National Company Law Appellate Tribunal (NCLAT) restrained banks from declaring the exposure as NPA. The Bank made contingency provisions towards the exposure, during the year. In March 2019, when NCLAT withdrew its earlier order of restraint, the entire exposure became NPA. This one-off event caused a significant impact for the quarter as well as year. As at March 31, 2019, the Bank classified the exposure to the group as âNon-performing-sub-standardâ and made an accelerated provision, taking the provision against holding company exposure to 70% and operating companies / SPVs to 25%.
- Composite Scheme of Arrangement involving merger of BFIL was heard on April 23, 2019, and was reserved for order. Since the NCLT sanction for the Scheme was not available by then, on May 22, 2019 the Board adopted the Standalone and Consolidated Financial Statements of the Bank for the year ended March 31, 2019, without giving effect to the Scheme.
- On June 10, 2019, the NCLT passed a final Order sanctioning the Scheme and the Bank is in the process of giving effect to the Order. Since the Appointed Date for the Scheme is January 1, 2018, had the Scheme been sanctioned by the NCLT before the financial statements for FY 2018-19 were approved by the Board, the financial statements of the Bank would have incorporated the impact of BFILâs financials as of the Appointed Date and transactions from the said Appointed Date of January 1, 2018.
Performance of Subsidiary and Associate Company
The Bank has incorporated a wholly-owned subsidiary named âIndusInd Financial Inclusion Limitedâ during the financial year ended March 31, 2019. This subsidiary was incorporated so that the Business Correspondent Undertaking, post-merger of BFIL, would be transferred to the subsidiary, as a part of the Scheme. Since the Scheme was not effective, the aforesaid subsidiary company did not commence its operations as on March 31, 2019.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank, and is engaged in the business of providing manpower services. During FY 2018-19, IMFS earned Revenue of Rs. 285.43 crores as against Revenue of Rs. 243.09 crores in the previous year. IMFS earned a Profit of Rs. 0.90 crores in FY 2018-19.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including the Financial Statement of its Subsidiary Company and Associate Company, which also forms a part of this Annual Report.
In accordance, with the third proviso to Section 136(1) of the Companies Act, 2013, the Annual Accounts of the Bank, containing therein its Standalone Financial Statements and the Consolidated Financial Statements and all other documents required to be attached thereto have also been hosted on the website of the Bank at: www.indusind.com
Further, in accordance with the fourth proviso to Section 136(1) of the Companies Act, 2013, the Audited Annual Accounts of IndusInd Financial Inclusion Ltd., wholly-owned subsidiary of the Bank, have been hosted on the website of the Bank at: https://www.indusind.com/content/home/investor/reports-and-presentation/annual-reports.html
Any Shareholder interested in obtaining a physical copy of the Financial Statements may write to the Company Secretary. The said financials would also be made available for inspection by shareholders of the Bank and Debenture Trustees at the Registered Office of the Bank during business hours from 11:00 a.m. to 1:00 p.m. on all working days, except Saturdays, Sundays, Bank holidays and National holidays
Statement containing the salient features of the financial position of the Subsidiary and Associate Company in Form AOC-1 is enclosed as âAnnexureâ to the Financial Statements.
The Bank does not have any material subsidiary / joint venture company.
Share Capital
The Paid-up Equity Capital of the Bank as at March 31, 2019 consisted of 60,26,86,868 Equity Shares of Rs. 10/- each.
During the year under review, the Bank allotted 24,63,681 Equity Shares of Rs. 10/- each pursuant to Exercise of Options under its Employees Stock Option Scheme, 2007.
The Bank has not issued any Equity Shares with Differential Voting Rights.
Debentures
On March 28, 2019, the Bank allotted, on private placement basis, 14,899 rated, listed, non-convertible, perpetual, subordinated and unsecured Basel III compliant Additional Tier 1 Bonds in the nature of debentures of Face Value of Rs. 10,00,000 (Rupees Ten Lakhs each) for cash at par amounting to Rs. 1,489.90 crores.
Compliance with SEBI Circular No.: SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018 on Fund-raising by issuance of Debt Securities by Large entities is not applicable to the Bank, being a Scheduled Commercial Bank.
In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), the names of the Debenture Trustees with their contact details are given below:
Trustee I:
Name of Debenture Trustees : Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House, S. No. 94/95, Plot No. 85, Bhusari Colony
(Right), Paud Road, Pune - 411038, Maharashtra, India.
Website : www.catalysttrustee.com
E-mail : [email protected]
Trustee II:
Name of Debenture Trustees : Beacon Trusteeship Limited
Address : 4C&D, Siddivinayak Chambers, Gandhi Nagar, Opp. MIG Club,
Bandra (East), Mumbai - 400 051
Website : www.beacontrustee.co.in
E-mail : [email protected]
Tier 2 Capital
The Bank did not issue any Tier 2 Capital instruments during the year. As on March 31, 2019, the value of outstanding Tier 2 Capital instruments is Nil.
Deposits
The Bank is a banking company governed by the Banking Regulation Act, 1949, and as such, the provisions in the Companies Act, 2013 relating to acceptance of Public Deposits are not applicable.
Capital Adequacy
The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:
|
Particulars |
March 31, 2019 |
March 31, 2018 |
|
i) Capital Adequacy Ratio (CRAR) |
14.16% |
15.03% |
|
ii) CRAR- Common Equity Tier 1 Capital |
12.07% |
13.42% |
|
iii) CRAR- Tier 1 Capital |
13.70% |
14.58% |
|
iv) CRAR- Tier 2 Capital |
0.46% |
0.45% |
Credit Ratings
|
Instruments |
Rating |
Rating Agency |
|
Domestic Ratings |
||
|
Infra Bond program |
AA |
CRISIL |
|
Additional Tier I Bond Program |
AA |
CRISIL |
|
Certificates of Deposit Program |
A1 |
CRISIL |
|
Senior Bonds program |
AA |
India Ratings and Research |
|
Additional Tier I Bond Program |
AA |
India Ratings and Research |
|
Short Term Debt instruments |
A1 |
India Ratings and Research |
|
International Ratings |
||
|
Long Term Issuer, Long Term Bank Deposits and Senior Unsecured MTN |
Baa3 |
Moodyâs Investors Service |
|
Short Term Issuer |
P3 |
Moodyâs Investors Service |
Bankâs Directors
The Bankâs Board comprised ten Directors as on March 31, 2019, viz., Mr. R. Seshasayee, Non-Executive Part-time Chairman, three Non-Executive Independent Directors, viz., Mrs. Kanchan Chitale, Mr. Shanker Annaswamy, Dr. T. T. Ram Mohan, four Additional Directors in the category of Non-Executive Independent, viz., Mrs. Akila Krishnakumar, Mr. Arun Tiwari, Mr. Siraj Chaudhry, Mr. Rajiv Agarwal, Mr. Yashodhan M. Kale, Non-Executive Non-Independent Director, and Mr. Romesh Sobti, Managing Director & CEO.
(a) Non-Executive Independent Directors
All Independent Directors have submitted Declarations that they meet the criteria of independence as laid down under sub-section (6) of Section 149 of the Companies Act, 2013. In compliance with Regulation 16 of Listing Regulations, the Declarations were placed before the Board of Directors at their meeting held on May 22, 2019, and based on these Declarations, the following Non-Executive Directors continue to be identified as meeting criteria of Independent Directors as on March 31, 2019:
(i) Mrs. Kanchan Chitale
(ii) Mr. Shanker Annaswamy
(iii) Dr. T. T. Ram Mohan
(iv) Mrs. Akila Krishnakumar (Additional Director)
(v) Mr. Arun Tiwari (Additional Director)
(vi) Mr. Siraj Chaudhry (Additional Director)
(vii) Mr. Rajiv Agarwal (Additional Director)
In addition, the Bankâs Board of Directors have pursuant to Regulation 25(9) of Listing Regulations obtained a Certificate from M/s Bhandari & Associates, Practicing Company Secretaries that the aforesaid Directors meet the âcriteria of independenceâ and are independent of the Management. The Board in its meeting held on July 12, 2019 took note of the Certificate. Copy of the certificate is enclosed as Annexure-I to this report.
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of Listing Regulations, specified companies are required to have at least one Woman Director in their Board.
Mrs. Kanchan Chitale (DIN: 00007267), who joined the Board on October 18, 2011 is an Independent Woman Director, and Chairs some important Committees.
Mrs. Akila Krishnakumar (DIN: 06629992), who joined the Board on August 10, 2018 is appointed as Additional Director in the category of Non-Executive, Independent Director.
(c) Chairman of the Board
Mr. R. Seshasayee, (DIN: 00047985) has been Non-Executive Part-time Chairman of the Bank since July 24, 2007.
Shareholders of the Bank had, in the 23rd AGM held on July 26, 2017, approved the re-appointment of Mr. R. Seshasayee as Non-Executive Part-time Chairman for a period of 2 years.
RBI had conveyed approval for the re-appointment of Mr. R. Seshasayee as a Non-Executive Part-time Chairman for a period of 2 years, i.e., up to July 24, 2019.
(d) Managing Director & CEO
Mr. Romesh Sobti, (DIN: 00031034) has been the Managing Director & CEO of the Bank since February 1, 2008.
RBI had conveyed their approval for re-appointment of Mr. Romesh Sobti up to March 23, 2020.
Shareholders of the Bank had, in the 24th AGM held on July 26, 2018, approved the re-appointment of Mr. Romesh Sobti as the Managing Director & CEO of the Bank for a period from February 1, 2018 up to March 23, 2020.
(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring by rotation at the forthcoming AGM
(i) Appointment
- Mrs. Akila Krishnakumar (DIN: 06629992) was appointed âAdditional Directorâ in the category of âNonExecutive Independent Directorâ in the Bankâs Board on August 10, 2018.
Approval of the shareholders is being requested by the Board for the appointment of Mrs. Akila Krishnakumar as Non-Executive Independent Director in the Board of the Bank.
- Mr. Arun Tiwari (DIN: 05345547) was appointed âAdditional Directorâ in the category of âNon-Executive Independent Directorâ in the Bankâs Board on August 10, 2018.
Approval of the shareholders is being requested by the Board for the appointment of Mr. Arun Tiwari as Non-Executive Independent Director in the Board of the Bank.
- Mr. Siraj Chaudhry (DIN: 00161853) was appointed âAdditional Directorâ in the category of âNon-Executive Independent Directorâ in the Bankâs Board on January 3, 2019.
Approval of the shareholders is being requested by the Board for the appointment of Mr. Siraj Chaudhry as Non-Executive Independent Director in the Board of the Bank.
- Mr. Rajiv Agarwal (DIN: 00336487) was appointed âAdditional Directorâ in the category of âNon-Executive Independent Directorâ in the Bankâs Board on March 15, 2019.
Approval of the shareholders is being requested by the Board for the appointment of Mr. Rajiv Agarwal as Non-Executive Independent Director in the Board of the Bank.
(ii) Retirement by Rotation
Section 152(6) of the Companies Act, 2013 provides that not less than two-thirds of the total number of directors of a public company shall be liable to retire by rotation, and that one-third of such directors as are liable to retire by rotation shall retire from office at every Annual General Meeting (AGM) of the Bank.
In accordance with the provisions of the Companies Act, 2013, Mr. Romesh Sobti (DIN: 00031034), Managing Director & CEO of the Bank, being longest in Office, retires by rotation, and being eligible, offers himself for reappointment at the AGM.
Approval of the shareholders is being requested by the Board for re-appointment of Mr. Romesh Sobti as Managing Director & CEO of the Bank.
As required under Regulation 36(3) of the Listing Regulations, particulars of the Directors seeking appointment, re-appointment, on retirement by rotation are given in the Annexure to the Explanatory Statement attached to the Notice of the AGM.
None of the Directors have been disqualified from being appointed as âDirectorâ, pursuant to Section 164 of the Companies Act, 2013 or under any other law.
The Board of Directors have obtained a Certificate from Bhandari & Associates, Practicing Company Secretaries, pursuant to Regulation 34(3) read with Schedule V para C clause 10 (i) of the Listing Regulations that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors on the Board by SEBI, Ministry of Corporate Affairs or any other Statutory Authority.
(f) Cessation of Directorships
Mr. T. Anantha Narayanan (DIN: 00007227) who had been âNon-Executive Independent Directorâ in the Bankâs Board since April 15, 2015, ceased to hold office with effect from June 23, 2018, upon completion of his tenure.
Mr. Ranbir Singh Butola (DIN: 00145895) who had been âNon-Executive Independent Directorâ in the Bankâs Board since January 13, 2015, ceased to be Director in the Board, following his untimely demise on December 17, 2018.
The Directors wish to place on record their appreciation for the valuable contributions made by Mr. T. Anantha Narayanan and Mr. Ranbir Singh Butola towards the deliberations in the meetings of the Board.
(g) Cessation of Director after the end of the year and upto the date of the Report
Mr. Yashodhan M. Kale (DIN: 00013782) who had been a Non-Executive Non-Independent Director in the Bankâs Board since April 16, 2015, ceased to hold office with effect from April 15, 2019.
Board and Committee Meetings
During the year, twelve meetings of the Board of Directors and ten meetings of the Audit Committee of the Board were held, the details of which are given in the Corporate Governance Report, which forms an integral part of this Report.
The Board has constituted the Audit Committee with Mrs. Kanchan Chitale as Chairperson and Mr. Shanker Annaswamy, Mr. Yashodhan M. Kale, Mr. Arun Tiwari and Mr. Siraj Chaudhry as Members.
There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and all its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman, as well as the process of evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI, under their Circular dated January 5, 2017.
The Board of Directors have, on the recommendation of the Nomination & Remuneration Committee, engaged an external independent professional agency of global repute for conducting the Performance Evaluation exercise.
The Board of Directors have carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Managing Director & CEO, and the Chairman and the Committees of the Board.
The performance of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman has been evaluated / reviewed by the Nomination & Remuneration Committee, Committee of Independent Directors and by the Board of Directors in their meeting held on July 12, 2019.
The Board has formulated a Policy on Performance Evaluation which details the various aspects that are to be considered for evaluating the Directors including but not limited to attendance, participation in the meeting, contribution towards strategies of the Board etc.
The Policy provides a guideline for the individual Directors to evaluate the Board, its Committees and individual directors.
The Policy on Performance Evaluation is available on the website of the Bank at: https://www.indusind.com/content/home/ investor/shareholders-corner/policies-of-the-bank.html
The Statement indicating the manner in which the evaluation exercise was conducted is included in the Report on Corporate Governance, which forms an integral part of this Annual Report.
Policy on Appointment & Selection of Directors
The Board of Directors are at the helm of the Bank and an enlightened Board creates a culture of leadership and provides a long-term policy approach to improve the quality of governance.
The Policy on Appointment & Selection of Directors has been framed in compliance with Section 178 of the Companies Act, 2013, and other applicable regulations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Banking Regulation Act, 1949.
The Policy shall act as a guideline for the Nomination & Remuneration Committee for determining the qualifications, positive attributes, independence of Directors and matters related thereto to recommend appointment and removal of Directors to the Board of the Bank.
The Policy on Appointment & Selection of Directors is hosted on the website of the Bank at: https://www.indusind.com/ content/home/investor/shareholders-corner/policies-of-the-bank.html
Familiarization Programs for Independent Directors
Various programs were undertaken for familiarizing the Independent Directors of the Bank, details of which are disclosed in the Corporate Governance Report, which forms part of this Report.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerised environment, with a Core Banking Solution, supported by diverse application platforms for handling special businesses, such as, Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as in-built system checks, Maker - Checker authorisations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent of business, risk, audit or other functions. This unit does not originate accounting entries except for limited matters such as Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is mentioned elsewhere in this Report. The other Statutory Information / Disclosures required to be given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to the Bank, have been laid out in the Schedules / Notes attached and forms part of the Balance Sheet and the Profit and Loss Account.
Conservation of Energy:
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy, details of which are furnished in Principle 6 of Section E of the Business Responsibility Report.
Technology Absorption:
The Bank has made optimum use of Information Technology in its operations. Details pertaining to Technology Absorption have been explained in the Management and Discussion Analysis Report which forms an integral part of the Annual Report.
Foreign Exchange Earnings and Outgo:
The provisions relating to Section 134(3)(m) of the Companies Act, 2013 on particulars relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company and as such no disclosure is being made in this regard.
Risk Management
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The integrated Risk Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management (ALM) and Operational Risk across all verticals, independent of business functions.
Risk Management functions in the Bank have been aligned with best industry practices, supported by advanced risk measurement and analytical systems which enable proactive risk management and monitoring. Risk Management is continually enhanced in line with changes in operating environment and regulations.
The Bank has a comprehensive framework of Risk Management Policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., âRisk Management Committeeâ to examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios / products / segments.
Details of Risk Management Models and Frameworks implemented by the Bank are mentioned in âManagement Discussion and Analysis Reportâ .
Vigil Mechanism / Whistle Blower Policy
The Bank has in place the âWhistle Blower Policyâ since 2009.
The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the Listing Regulations. The Vigil mechanism at the Bank requires submission of Quarterly Reviews to the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors.
The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least twice a year.
The Bank has been awarded the âCertificate of Commitmentâ by the Central Vigilance Commission.
The Bankâs Whistle Blower Policy is in synchrony with statutory and regulatory guidelines on Vigil Mechanism.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank is available on the Bankâs website at the under-mentioned link:
http://www.indusind.com/important-links/other-useful-information.html
Reporting of Fraud by the Auditors:
During the year under review, there were no instances of fraud reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.
Statutory Auditors
M/s S.R. Batliboi & Co. LLP, (ICAI Firm Registration Number 301003E / E300005), Statutory Auditors of the Bank have Audited the accounts of the Bank for the Financial Year 2018-19. It is now proposed to appoint M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 103523W / W100048) as Statutory Auditors of the Bank to Audit the accounts of the Bank for the Financial Year 2019-20.
Independent Auditorsâ Report
M/s S.R. Batliboi & Co. LLP, Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2018-19 and their Report is annexed. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of internal financial controls system over financial reporting, which has been enclosed as âAnnexure-1â to the Independent Auditorsâ Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditorsâ Report.
Secretarial Audit
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari & Associates, Company Secretaries in Practice, to undertake Secretarial Audit of the Bank for the FY 2018-19. The Secretarial Audit Report submitted by M/s Bhandari & Associates is furnished as an Annexure-II, and forms an integral part of this Report.
The Secretarial Audit Report submitted by Bhandari & Associates for FY 2018-19 does not contain any qualification, reservation or adverse remark.
Employees Stock Option Scheme
The Bank had instituted the Employee Stock Option Scheme (ESOS - 2007) to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of shares up to 7% of the issued Equity Capital of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors.
An aggregate of 4,18,91,300 Options, comprising 6.95% of the Bankâs Equity Capital, have been granted under the Scheme. Statutory disclosures as required by SEBI (Share Based Employee Benefits) Regulations, 2014 are given as an Annexure-III, and form an integral part of this Report.
The Annual Certificate on compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, issued by Statutory Auditors of the Bank is being placed before Members in the ensuing AGM.
The Employees Stock Option Plan is administered by the Compensation Committee of the Board.
Statutory disclosures as mandated under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended, have been hosted on the website of the Bank at https://www.indusind.com/content/home/investor/reports-and-presentation/annual-reports.html
Disclosure on compliance with Secretarial Standards
The Bank has complied with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and has systems which are adequate and are operating effectively.
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.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013:
(a) that in the preparation of the Annual Accounts for the year ended March 31, 2019, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2019 and of the profit of the Bank for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(d) that the Annual Financial Statements have been prepared on a âgoing concernâ basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, are included in this Report as an Annexure-IV and forms an integral part of the Annual Report.
The Annual Return of the Bank in the prescribed Form MGT-7 is available on the website of the Bank at the link https://www.indusind.com/content/home/investor/reports-and-presentation/annual-reports.html.
Particulars of Employees
The Bank had 27,739 employees on its rolls as on March 31, 2019.
71 employees employed throughout the year, were in receipt of remuneration of Rs. 1.02 crores per annum or more, and 10 employees employed for the part of the FY 2019 and are in receipt of remuneration of Rs. 8.50 lakhs per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above Annexure-V is not being sent along with this Annual Report to the Members of the Bank in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the particulars may please write to the Company Secretary at the Secretarial and Investor Services Office of the Bank. The aforesaid Annexure is also available for inspection by Members at the Registered Office of the Bank up to the date of this Annual General Meeting during business hours on working days.
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Shares of the Bank.
Details pursuant to remuneration of Directors and Employees 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 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given as an Annexure and forms an integral part of this Report.
The information relating to employees required to be furnished under the Companies Act, 2013 and the Rules made thereunder is given under the head âParticulars of Employeesâ in this Report.
Policy on Remuneration to Non-Executive Directors
Until the Financial Year 2015-16, all Non-Executive Directors, including the Non-Executive Part-time Chairman, received remuneration only by way of Sitting Fees for attending the meetings of the Board and of various Board Committees.
In line with the guidelines contained in RBI Circular dated June 1, 2015 on compensation of Non-Executive Directors of Private Sector Banks, the Board of Directors, on the basis of the recommendations of the Human Resource & Remuneration Committee (since re-named as âNomination & Remuneration Committeeâ), in their meeting held on May 12, 2016, approved the payment of remuneration of Rs. 25 lakhs per annum with effect from April 1, 2016 to Mr. R. Seshasayee, Non-Executive Part-time Chairman (subject to approval of Reserve Bank of India, which has since been received), and to the Non-Executive Directors (other than the Non-Executive Part-time Chairman) in the form of Profit-related Commission of Rs. 10 lakhs per annum for each Director, in such manner as may be decided by the Board of Directors.
Shareholders had, in the 22nd Annual General Meeting of the Bank held on July 1, 2016, accorded their approval for payment of the above mentioned remuneration in the form of Profit-related Commission to the Non-Executive Directors, including to the Non-Executive Part-time Chairman, w.e.f. FY 2016-17. The Non-Executive Directors, including the Non-Executive Parttime Chairman, accordingly received remuneration in the form of Profit-related Commission, in addition to Sitting Fees for attending meetings of the Board and of various Board Committees.
No Stock Options were granted to the Non-Executive Directors.
During FY 2016-17, the Board of Directors have, on the recommendations of the HR & Remuneration Committee (since renamed as âNomination & Remuneration Committeeâ) formulated the âPolicy on Remuneration to Non-Executive Directorsâ, including the Non-Executive Part-time Chairman.
During the Financial Year 2018-19, the Board reviewed the âPolicy on Remuneration to Non-Executive Directorsâ. The Policy is hosted on the Bankâs website at the link given below:
https://www.indusind.com/content/home/investor/shareholders-corner/policies-of-the-bank.html
The Board of Directors have also formulated a Policy in relation to Key Management Personnel and Senior Management personnel of the Bank. The said Policy is given under âDisclosure on Remunerationâ at Note No. 12.7 of the Notes in Schedule 18 to the Financial Statements, which forms an integral part of this Annual Report.
Details on compensation to Whole-time Directors are given under the Report on Corporate Governance, which forms an integral part of this Report.
Particulars of Loans, Guarantees or Investments outstanding
Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with âRelated Partiesâ during the year under review were on âarmâs length basisâ and in the âordinary course of businessâ, and therefore do not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially significant Related Party Transactions during the year with any of the Related Parties, viz., Promoters, Directors and Key Management Personnel, Subsidiary and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.
In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.
The Policy on Related Party Transactions as approved by the Board of Directors is hosted on the Bankâs website at the below given link:
http://www.indusind.com/content/home/important-links/other-useful-information.html
Consolidated Financial Statements
In accordance with Section 129(3) of the Companies Act 2013, Consolidated Financial Statement of IndusInd Bank Limited (âthe Bankâ), IndusInd Financial Inclusion Limited (IFIL) (âthe wholly-owned Subsidiaryâ) and IndusInd Marketing and Financial Services Private Limited (âthe Associateâ) has been prepared and is included in the Annual Report.
In terms of AS 21, the Bank has prepared the Consolidated Financial Statements for the year ended March 31, 2019, wherein the Standalone Financial Statements of the Bank as of that date are consolidated with that of IFIL, a subsidiary in which the Bank has a 100% stake, on a line by line basis by adding together like items of assets, liabilities, income and expenses.
In terms of AS 23, the Standalone Financial Statements of the Bank as of that date are consolidated with that of IMFS, an associate in which the Bank has a 30% stake, by adopting âEquity Methodâ.
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued a circular in February 2016, requiring scheduled commercial banks to implement Indian Accounting Standards (Ind AS) from April 1, 2018. RBI, vide a press release dated April 5, 2018, deferred the implementation of Ind AS by one year. The legislative amendments recommended by the Reserve Bank towards implementation of Ind AS are still under consideration of the Government of India. Accordingly, RBI through a notification dated 22 March 2019, has deferred the Ind AS implementation till further notice.
Pursuant to the RBI Circular dated February 11, 2016, the Bank formed a Steering Committee, comprising members from cross functional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank set up a Working Group under the guidance of the Steering Committee and has conducted Gap Assessment and identified the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption. The Bank has engaged the services of a professional firm with international experience in the field, to assist in the project of implementation of Ind AS. The Bank has obtained licenses for IT systems to automate Expected Credit Losses and Effective Interest Rate calculations towards implementation of Ind AS and the project is currently under implementation. The Bank continues to organize trainings for its teams across business and support functions. The Audit Committee of the Board of Directors has an oversight on the progress of the Ind AS implementation.
Some of the areas of significant accounting impact pursuant to the application of Ind AS are summarized below:
(a) Accounting impact on account of application of Ind AS at the date of transition, i.e. at transition date will be recognized in equity or other components of equity.
(b) The classification and measurement of financial assets will be driven by the business model of the Bank for managing those assets and the characteristics of the contractual cash flows of the assets. All financial assets will be classified as subsequently measured at amortised cost, Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit or Loss (FVTPL).
(c) Financial Instruments would be derecognised on transfer of significant risks and rewards, and not based on the legal form of the arrangement.
(d) Interest will be recognised in the Income Statement using the effective interest method and any directly attributable fees and costs would be considered to be an adjustment to the effective interest rate.
(e) All Derivatives would be required to be fair-valued and recognised on the Balance Sheet.
(f) Expense for Stock Options will be recognised in the Statement of Profit and Loss based on the Fair Value of the Options.
(g) Impairment requirements for financial assets carried at amortised cost or at fair value through other comprehensive income, including certain off Balance Sheet items are based on an Expected Credit Loss (ECL) model. The Bank will be required to recognise either a 12-monthsâ or lifetime ECL, depending on whether there has been a significant increase in Credit Risk since initial recognition. This will be significantly different from the current methodology for calculating the provision for Standard Assets and Non-Performing Assets (NPAs). The Bank has developed models for computation of ECL and is testing the same.
In accordance with RBI directions, the Bank has been submitting standalone pro forma Ind AS financial statements along with other computations to the RBI, from time to time.
Corporate Social Responsibility
In line with its CSR focus areas, the Bank is committed to various long-term community development projects that have a large positive impact. Consistent with the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a Board-level CSR Committee to look after the CSR initiatives. The Committee is headed by Mrs. Kanchan Chitale as the Chairperson, Mr. Yashodhan M. Kale, Mrs. Akila Krishnakumar (inducted in the Committee on October 15, 2018) and Mr. Romesh Sobti as Members.
The composition of the CSR Committee is in accordance with Section 135 of the Companies Act, 2013.
The Bankâs CSR Policy and strategy direct and govern the Bankâs activities in focus areas, namely, Environmental Sustainability, Rural Development and Inclusiveness, Preventive Healthcare and Other areas of special interest that include Education, Sports and Heritage.
In FY 2018-19, the Bank initiated its flagship initiative of water stewardship wherein water conservation through watershed management, restoration of natural water bodies and availability & accessibility of safe drinking water with installation of water ATMs.
The Bank has implemented enhanced education programme, conducted legal literacy programme, and digital literacy under PMGDISHA programme of Government of India. The Bank provides mid-day meals to children in Municipal schools in Odisha.
IndusInd Bank supports inclusiveness of the differently-abled and of different gender in Sports. The Bank has a separate non-business vertical for Sports which undertakes to spread the culture of inclusivity and excellence in sports within and outside the organisation. Currently three excellence programmes namely IndusInd Para Champions, IndusInd Blind Cricket and IndusInd Girl Power is being supported.
IndusInd Bank has undertaken setting up of Mini Health Clinics to provide affordable primary healthcare to individuals from poor & lower Income Group families. The Bank also supports the treatment of children with cancer from rural Rajasthan, whose parents canât afford the treatment. Under the Stree Swabhimaan initiative, school girls are provided with sanitary pads in the State of Madhya Pradesh. These pads are manufactured by trained Village Level Entrepreneurs, thus encouraging their livelihoods as well.
To promote livelihood, the Bank supports skill development courses at Jaitaran, Rajasthan. The Bank supports long term residential rehabilitation program for substance abusing street children/youth. The two-pronged approach involves rehabilitation (medical and psychological) from substance abuse and then skill development for employability.
The CSR Initiatives / Projects undertaken by the Bank are in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least Two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank spent Rs. 55.46 crores towards various CSR activities specified in Schedule VII of the Companies Act, 2013. The programmes are of large scale and hence the absorption of funds is milestone linked for larger impact.
The Bank continues to deliver consistently greater value to the stakeholders while mainstreaming sustainability in to the business practices. The Bank has committed targets on Environmental, Social and Governance (ESG) aspects and continues to improve the sustainability performance to surpass the ESG targets.
The Bank consistently works to mitigate and reduce the impact of our business and activities on the natural environment. The environmental policy of the Bank lays out guidelines and targets in key areas of environmental sustainability within which the Bank has undertaken and implemented programs and activities in the domains of sustainable supply chain, green procurement, energy efficiency, water conservation, waste management, climate change mitigation etc.
The Bank continues to invest in energy efficiency, water conservation and greening the IT systems. The Bank promotes sustainable and ethical procurement practices through selection and on-boarding criteria for vendors and suppliers and emphasizes the importance of environmental sustainability, human rights & labour laws, and adherence to standardised environmental norms by the upstream and downstream supply chain partners.
The Report on CSR activities undertaken by the Bank is set out as an Annexure-VI and forms an integral part of this Report. The CSR Policy is framed basis the activities permitted under Schedule VII of the Companies Act, 2013.
Details of the CSR Policy and initiatives adopted by the Bank on CSR are available on Bankâs website at the link given below:
http://www.indusind.com/content/csr-home/our-approach/csr-policy.html
Business Responsibility Report (BRR)
The Securities & Exchange Board of India have, vide their Circular dated December 22, 2015, mandated Top 500 Listed entities to include the âBusiness Responsibility Reportâ (BRR) as part of the Annual Report, describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by SEBI.
In view of the above and in compliance with Regulation 34(2) of the Listing Regulations, BRR has been hosted on the Bankâs website at:
https://www.indusind.com/content/home/investor/reports-and-presentation/annual-reports.html.
Corporate Governance
Corporate Governance is essentially a set of standards, systems, and procedures aimed at effective, honest, transparent, and responsible management of a company within the applicable statutory and regulatory structures.
The Bank has adopted the industry best practices of Corporate Governance and aims to continue banking on the highest principles of governance and ethics. At IndusInd, Corporate Governance is more than just adherence to the statutory and regulatory requirements. It is equally about focusing on voluntary practices that underlie the highest levels of transparency.
The Governance framework is driven by the objective of enhancing long-term stakeholder value, without compromising on Ethical Standards and Corporate Social Responsibilities.
The Bankâs guiding principles are also articulated through its Code of Business Conduct and various initiatives taken to maintain transparency by communicating with the Shareholders on developments in the Bank. The Bank has also set up various sub-Committees of the Board to bring in more efficacy and transparency in the workings.
The Bank continues to focus on complete and timely disclosures to the Stock Exchanges for dissemination to the Stakeholders.
Further complete disclosures regarding Corporate Governance is provided in the Corporate Governance Report, which forms an integral part of this Annual Report
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2)(e) of the Listing Regulations, which forms part of the Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There are no Significant and Material Orders passed by the Regulators / Courts that would impact the âgoing concernâ status of the Bank and its futures operations.
Awards and Accolades
During the year under review, the Bank has received many awards and accolades for excellence in managing IT Risk and Cyber Security Initiatives, Digital Payment Facilitator, Financial inclusion and CSR Initiatives, Safety and Security, Best Data quality and Information Technology and for Innovations, etc.
Mr. Romesh Sobti, Managing Director & CEO, was awarded as the âBanker of the Yearâ at the Business Standard Annual Awards 2018. He was also bestowed with the âBanker of the YearâAward at Financial Express Indiaâs Best Banks Awards 2018.
Brief details of various awards are covered in the initial pages and in the Management Discussion and Analysis Report which forms an integral part of this Annual Report.
Cautionary Statement
Certain statements in the Directorsâ Report and in the Management Discussion and Analysis document describing the Bankâs objectives, estimates and expectations may be âforward-looking statementsâ within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.
Material events that have happened after the Balance Sheet date
Scheme of Arrangement amongst Bharat Financial Inclusion Ltd., the Bank and Bankâs Wholly-Owned subsidiary was approved by the NCLT, Mumbai Bench vide Order dated June 10, 2019.
The Scheme was given effect to on July 4, 2019.
Accordingly, the Bank on receipt of funds amounting to 25% of the Warrant Subscription from its Promoters has allotted 1,57,70,985 Share Warrants by way of Private Placement:
|
Name of the Allottee |
Date of Allotment |
Issue Price Rs. |
25% of the amount received on July 3, 2019 in Rs. |
|
IndusInd International |
4,925,869,562.75 |
||
|
Holdings Ltd. |
July 6, 2019 |
1,709 |
|
|
IndusInd Ltd. |
1,785,283,778.50 |
The Warrants have a lock-in period of 3 years, and the Promoters are required to infuse 75% of the amount within the next 18 months.
The Bank has on July 6, 2019 allotted 8,96,17,781 Equity Shares of Rs.10 each to shareholders of Bharat Financial Inclusion Limited (BFIL) whose names appeared in the Register of Members as on the Record Date, i.e., July 4, 2019, as per the pre-determined Share Exchange Ratio of 639 shares of the Bank for every 1,000 shares of BFIL.
The Business Correspondent business of Bharat Financial Inclusion Ltd. was transferred from the Bank to IndusInd Financial Inclusion Ltd. (IFIL), the Bankâs Wholly-Owned Subsidiary for value appearing in the books as on the Appointed Date i.e., Rs.43,70,35,000 (Rupees Forty-three crores seventy lakhs and thirty-five thousand) as Transferred Undertaking Value in consideration of which IFIL has allotted 4,37,03,500 Equity Shares to the Bank of Face value of Rs.10 each fully paid-up which is equivalent to value of the Transferred Undertaking in accordance to the Scheme.
The Bank has engaged Catalyst Trusteeship Ltd. for the purpose of determining the Fractional Entitlements arising from the effectiveness of the Scheme as on the Record Date, viz., July 4, 2019, for identifying and paying such shareholders of Bharat Financial Inclusion Ltd.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace
The Bank has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The disclosures relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is included in the Corporate Governance Report, which forms an integral part of this Report.
Acknowledgements
The Directors are grateful to the shareholders for the trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and the Stock Exchanges, for the guidance and support extended by them to the Bank.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and untiring commitment, which qualities have contributed to the Bankâs continued progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
For and on behalf of the Board of Directors
Place : Mumbai R. Seshasayee
Date : July 12, 2019 Chairman
(DIN: 00047985)
Mar 31, 2018
The Board of Directors of the Bank have pleasure in presenting the Twenty-fourth Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31, 2018.
The financial performance for the year ended March 31, 2018 is summarized as under:
(Rs. in crores)
|
Particulars |
As on March 31, 2018 |
As on March 31, 2017 |
|
Deposits |
151,639.17 |
126,572.22 |
|
Advances |
144,953.66 |
113,080.51 |
|
Operating Profit (before Depreciation and Provisions and Contingencies) |
6,867.75 |
5,641.71 |
|
Net Profit |
3,605.99 |
2,867.89 |
During the year under review, despite the disruption in growth rate in the Indian economy and a persistently challenging macroeconomic environment, the Bank improved its business, with Deposits growing by 19.80% and Advances by 28.19% over the previous year.
The Bank continued to focus on increasing earnings from its core banking business, strengthening the fee income streams, and maintaining control on operating costs.
Operating Profit (before Depreciation and Provisions and Contingencies) rose by 21.73% to Rs. 6,867.75 crores, as compared to Rs. 5,641.71 crores in the previous year.
The Net Profit of the Bank, after considering all expenses and necessary Provisions and Contingencies, was higher by 25.74% at Rs. 3,605.99 crores, as against Rs. 2,867.89 crores in the previous year.
Appropriations
The Directors recommend appropriation of Profit as under:
(Rs. in crores)
|
Operating Profit before Depreciation and Provisions and Contingencies |
6,867.75 |
|
Less: Depreciation on Fixed Assets |
211.64 |
|
Less: Provisions and Contingencies inclusive of Income Tax |
3,050.12 |
|
Net Profit |
3,605.99 |
|
Profit Brought Forward |
7,118.38 |
|
Amount available for Appropriation |
10,724.37 |
|
Transfer to Statutory Reserve |
901.50 |
|
Transfer to Capital Reserve |
7.62 |
|
Dividend (including Tax on Dividend) (23rd Annual General Meeting of members held on July 26, 2017 approved the payment of Dividend for the year 2016-17 for the Equity Shares outstanding as on that date.) |
432.24 |
|
Deduction during the year |
71.52 |
|
Total Appropriations |
1,412.88 |
|
Balance carried over to Balance Sheet |
9,311.49 |
Dividend
The Earning Per Share (EPS) of the Bank rose to Rs. 60.19 during the year 2017-18, from Rs. 48.06 in the previous year.
In view of the overall improvement in performance as well as the need to conserve Capital for continued growth, the Directors recommend Dividend of Rs. 7.50 per Equity Share of Rs. 10 each for the year ended March 31, 2018. (Dividend for the year 2016-17 was Rs. 6.00 per Equity Share of Rs. 10 each).
Considering the Equity Shares outstanding as at March 31, 2018, the total amount of dividend payable including Taxes to be borne by the Bank amounts to Rs. 542.70 crores. In accordance with the revised AS 4 - âContingencies and events occurring after the Balance Sheet Dateâ, this amount is not accounted as liabilities as at March 31, 2018.
Financial Performance and State of Affairs of the Bank
The year under review was the first year of the new Triennial Planning Cycle of the Bank, (Planning Cycle 4, for Financial Years 2017-20) with the theme of âDigitize to Differentiate, Diversify and Create Domain Leadership (4D)â with a strategy to gain âMarket Share with Profitabilityâ
Backed by improved volumes, the Total Income of the Bank for the year under review grew by 18.59% to Rs. 22,030.85 crores from Rs. 18,577.16 crores.
The healthy rise in profitability was the result of growth in Net Interest Income (NII) as well as Non-Interest Income. Net Interest Income improved by 23.67% to Rs. 7,497.45 crores from Rs. 6,062.60 crores while Non-Interest Income rose to Rs. 4,750.10 crores from Rs. 4,171.49 crores, registering growth of 13.87%.
Core Fee Income such as commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business grew by 19.73% to Rs. 4,176.75 crores from Rs. 3,488.59 crores earned during the previous year.
Yield on Advances dropped to 11.21% during the year, as against 11.71% in the previous year, while the Cost of Deposits fell to 5.98% from 6.41% in the previous year. The Bank was able to maintain its Net Interest Margin at the same level as of previous year at 3.99%.
The Bank expanded its branch network steadily to reach 1,400 branches, as against 1,200 branches at the beginning of the year. Revenue per employee during the year improved significantly to Rs. 48 lakhs.
The Net Non-Performing Assets ratio of the Bank stands at 0.51% in current year. The Provisioning Coverage Ratio (PCR) stands at 56.26% as compared to 58.39% in the previous year.
The year under review witnessed a number of significant events, some of which are listed below:
- On April 18, 2017, the Bank issued Basel III-compliant Additional Tier 1 Bonds (AT1/ PDI) for Rs. 1,000 crores, in addition to Rs. 1,000 crores mobilized during March 2017.
- On October 14, 2017, the Board of Directors of the Bank and the Board of Directors of Bharat Financial Inclusion Limited (BFIL) (formerly known as SKS Microfinance Limited) approved Amalgamation of BFIL with the Bank through a Composite Scheme of Arrangement. The Competition Commission of India has granted approval to the proposed Scheme, and the RBI has accorded their âNo Objectionâ for the Amalgamation.
In this regard, as on date of this report:
- The Scheme has âno adverse remarksâ in the Observation Letters from the Securities and Exchange Board of India (SEBI) / National Stock Exchange of India Limited vide letter dated June 1, 2018 and BSE Limited vide letter dated June 4, 2018.
- RBI vide letter dated June 8, 2018 conveyed their approval for incorporating of the Wholly-Owned-Subsidiary to act as Business Correspondent of the Bank as part of Bankâs Amalgamation with BFIL.
- The Scheme is awaiting, approval from the respective Shareholders and Creditors of the Bank and BFIL, the National Company Law Tribunal (NCLT), and is subject to compliance with the conditions specified by RBI.
- Equity Shares of the Bank have been included in the bellwether 30 Member BSE Sensex Index. They have been part of Nifty 50, the bellwether index of NSE since April 2013.
- RBI have granted approval on April 3, 2018 for the proposed acquisition of IL&FS Securities Services Limited, the securities services arm of IL&FS, as a Wholly-Owned Subsidiary of the Bank. This transaction is conditional on definitive agreements and other regulatory approvals.
Performance of Subsidiary and Associate Company
The Bank does not have a subsidiary.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank and is engaged in the business of providing manpower services. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including the Financial Statement of its Associate Company, which also forms a part of this Annual Report.
During FY 2017-18, IMFS earned Revenue of Rs. 243.09 crores as against Revenue of Rs. 217.21 crores in the previous year. IMFS earned Profit of Rs. 0.44 crores in FY 2017-18.
Statement containing the salient features of the financial position of the Associate Company in Form AOC-1 is enclosed as âAnnexureâ to the Financial Statements.
Share Capital
The Paid-Up Equity Capital of the Bank as at March 31, 2018 consisted of 60, 02,23,187 Equity Shares of Rs. 10/- each.
During the year under review, the Bank allotted 20,74,482 Equity Shares of Rs. 10/- each pursuant to Exercise of Options under its Employees Stock Option Scheme, 2007.
The Bank has not issued any Equity Shares with Differential Voting Rights.
Debentures
On April 18, 2017, the Bank allotted, on Private Placement basis, 10,000 Rated, Listed, Non-Convertible, Perpetual, Subordinated & Unsecured Basel III-compliant Additional Tier I Bonds (âAT1â) in the nature of Debentures of Face Value of Rs. 10,00,000 (Rupees Ten lakhs each) for cash at par amounting to Rs. 1,000 crores.
In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names of the Debenture Trustees with their contact details are given below:
Trustee I:
Name of Debenture Trustees : Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House, Plot No. 85, Bhusari Colony
(Right), Kothrud, Pune - 411 038, Maharashtra, India.
Website : www.catalysttrustee.com
E-mail : [email protected]
Trustee II:
Name of Debenture Trustees : Beacon Trusteeship Limited
Address : Prabhat Kunj, Prabhat Colony 3, Santracruz (East), Mumbai - 400 055
Website : www.beacontrustee.co.in
E-mail : [email protected]
Tier II Capital
The Bank did not issue any Tier II Capital instruments during the year. As on March 31, 2018, the value of outstanding Tier II Capital instruments is Nil.
Deposits
The Bank is a banking company governed by the Banking Regulation Act, 1949, and as such, the provisions in the Companies Act relating to acceptance of Public Deposits are not applicable.
Capital Adequacy
The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:
|
Particulars |
March 31, 2018 |
March 31, 2017 |
|
i) Capital Adequacy Ratio (CRAR) |
15.03% |
15.31% |
|
ii) CRAR- Common Equity Tier 1 Capital |
13.42% |
14.02% |
|
iii) CRAR- Tier 1 Capital |
14.58% |
14.72% |
|
iv) CRAR- Tier 2 Capital |
0.45% |
0.59% |
Credit Ratings
|
Instruments |
Rating |
Rating Agency |
|
Infra Bond program |
AA |
CRISIL |
|
Additional Tier I Bond program |
AA |
CRISIL |
|
Certificates of Deposit |
A1 |
CRISIL |
|
Senior Bonds program |
AA |
India Ratings and Research |
|
Additional Tier I Bond program |
AA |
India Ratings and Research |
|
Short Term Debt instruments |
A1 |
India Ratings and Research |
Directors
The Bankâs Board comprised eight Directors as on March 31, 2018, viz., Mr. R. Seshasayee, Non-Executive Part-time Chairman, five Independent Directors, Mr. Yashodhan M. Kale, Non-Executive Non-Independent Director, and Mr. Romesh Sobti, Managing Director & CEO.
(a) Non-Executive Independent Directors
All Independent Directors have given Declarations that they meet the criteria of independence as laid down under subsection (6) of Section 149 of the Companies Act, 2013. In compliance with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Declarations were placed before the Board of Directors in their meeting held on April 19, 2018, and based on the Declarations, the following Non-Executive Directors continue to be identified as Independent Directors as on March 31, 2018:
(i) Mrs. Kanchan Chitale
(ii) Mr. T. Anantha Narayanan
(iii) Mr. Ranbir Singh Butola
(iv) Mr. Shanker Annaswamy
(v) Dr. T. T. Ram Mohan
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, specified companies are required to have at least one Woman Director in their Board.
Mrs. Kanchan Chitale (DIN: 00007267), who joined the Board on October 18, 2011, is an Independent Woman Director in the Board, and Chairs some important Committees.
(c) Chairman of the Board
Mr. R. Seshasayee, (DIN: 00047985) has been Non-Executive Part-time Chairman of the Bank since July 24, 2007.
Shareholders of the Bank had, in the 23rd AGM held on July 26, 2017, approved the re-appointment of Mr. R. Seshasayee as Non-Executive Part-time Chairman for a period of 2 years,
RBI have conveyed approval for the re-appointment of Mr. R. Seshasayee as a Non-Executive Part-time Chairman for a period of 2 years, i.e., up to July 24, 2019.
(d) Managing Director & CEO
Mr. Romesh Sobti, (DIN: 00031034) has been Managing Director & CEO of the Bank since February 1, 2008.
Shareholders of the Bank had, in the 21st AGM held on August 17, 2015, approved the re-appointment of Mr. Romesh Sobti as the Managing Director & CEO for a period of three years with effect from February 1, 2015.
Reserve Bank of India have conveyed their approval for re-appointment of Mr. Romesh Sobti up to March 23, 2020.
(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring by rotation at the forthcoming AGM
Appointment
Mr. Yashodhan M. Kale (DIN: 00013782), completed his tenure in the Board on November 3, 2017. Reserve Bank of India have, vide their letter dated December 20, 2017, conveyed approval for continuance of Mr. Yashodhan M. Kale in the Board upto April 15, 2019.
The Board of Directors had, in their meeting held on January 11, 2018, accordingly approved the appointment of Mr. Yashodhan M. Kale as âAdditional Directorâ in the category of âNon-Executive Non-Independent Directorâ in the Board.
Approval of the shareholders is being requested for the appointment of Mr. Yashodhan M. Kale as Director in the Board of the Bank.
Re-appointment
Mr. Romesh Sobti (DIN: 00031034) has been the Managing Director & CEO of the Bank since February 1, 2008.
Shareholders of the Bank had, in the 21st AGM held on August 17, 2015, approved the re-appointment of Mr. Romesh Sobti as the Managing Director & CEO for a period of three years with effect from February 1, 2015.
The Nomination & Remuneration Committee of the Board had recommended to the Board of Directors the reappointment of Mr. Romesh Sobti as Managing Director & CEO with effect from February 1, 2018.
Reserve Bank of India have, vide their letter dated January 16, 2018, conveyed their approval for the re-appointment of Mr. Romesh Sobti as âManaging Director & CEOâ from February 1, 2018 until March 23, 2020.
Approval of the shareholders is being requested for re-appointment of Mr. Romesh Sobti as Managing Director & CEO of the Bank up to March 23, 2020.
Retirement by Rotation
Section 152 (6) of the Companies Act, 2013 provides that not less than two-thirds of the total number of directors of a public company shall be liable to retire by rotation, and that one-third of such directors as are liable to retire by rotation shall retire from office at every Annual General Meeting (AGM) of the company.
In accordance with the provisions of the Companies Act, 2013, out of the Non-Independent Directors, Mr. R. Seshasayee (DIN: 00047985), Non-Executive Part-time Chairman of the Bank, being longest in Office, retires by rotation, and being eligible, offers himself for re-appointment at the AGM.
Approval of the shareholders is being requested for re-appointment of Mr. R. Seshasayee as Non-Executive Part-time Chairman of the Bank.
As required under Regulation 36(3) of the Listing Regulations, particulars of the Directors seeking appointment, reappointment, and retirement by rotation are given in the Explanatory Statement and attached to the Notice of the forthcoming AGM.
None of the Directors have been disqualified from being appointed as âDirectorâ, pursuant to Section 164 of the Companies Act, 2013.
(f) Cessation of Director
Mr. Vijay Vaid, (DIN: 00219709), who had been a member of the Board as âNon-Executive Independent Directorâ since October 18, 2011, ceased to hold office with effect from February 3, 2018.
The Directors wish to place on record their appreciation for the valuable contributions made by Mr. Vijay Vaid towards the deliberations in the Board Meetings during his tenure as Director of the Bank.
Board and Committee Meetings
During the year, ten meetings of the Board and ten meetings of the Audit Committee were held, the details of which are given in the Corporate Governance Report, which forms an integral part of this Report.
The Board has constituted the Audit Committee with Mr. T. Anantha Narayanan as Chairman and Mrs. Kanchan Chitale, Mr. Ranbir Singh Butola, Mr. Shanker Annaswamy and Mr. Yashodhan M. Kale as Members, There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and all its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman, as well as the process of evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI, under their Circular dated January 5, 2017.
The Board of Directors have carried out the annual evaluation of the performance of the Board as a whole, Individual Directors including Independent Directors, Non-Independent Directors, the Managing Director & CEO and the Chairman and the Committees of the Board.
The performance of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman has been evaluated / reviewed by the Nomination & Remuneration Committee, Committee of Independent Directors and by the Board of Directors in their meetings held on May 8, 2018.
The Statement indicating the manner in which the evaluation exercise was conducted is included in the Report on Corporate Governance, which forms an integral part of this Annual Report.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerized environment, with a Core Banking Solution, supported by diverse application platforms for handling special businesses, such as, Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as in-built system checks, Maker - Checker authorizations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent of business, risk, audit or other functions. This unit does not originate accounting entries except for limited matters such as Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of energy and technology absorption and foreign exchange earnings and outgo Conservation of Energy:
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy and details of which are furnished in Principle 6 of Section E of the Business Responsibility Report.
Technology Absorption:
The Bank has made optimum use of Information Technology in its operations. Details pertaining to Technology Absorption have been explained in the Management and Discussion Analysis Report, which forms an integral part of the Annual Report.
Foreign Exchange Earnings and Outgo:
The provisions relating to 134(3)(m) of the Companies Act, 2013, on particulars relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company, and as such no Disclosure is being made in this regard.
Risk Management
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The Risk Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management (ALM), Operational Risk and Information Security Risk across all verticals, independent of business functions.
Risk Management functions in the Bank have been aligned with best industry practices, supported by advanced risk measurement and analytical systems which enable proactive risk management and monitoring. Risk Management is continually enhanced in line with changes in operating environment and regulations.
The Bank has a comprehensive framework of Risk Management Policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., âRisk Management Committeeâ to examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios / products / segments.
Details of Risk Management Models and Frameworks implemented by the Bank are mentioned under âManagement Discussion and Analysisâ
Vigil Mechanism / Whistle Blower Policy
The Bank has in place the âWhistle Blower Policyâ since 2009.
The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors,
The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least twice a year.
The Bank has been awarded the âCertificate of Commitmentâ by Central Vigilance Commission.
The Bankâs Whistle Blower Policy is in synchrony with all statutory and regulatory guidelines on Vigil Mechanism.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank is available on the Bankâs website at the under-mentioned link: http://www.indusind.com/important-links/other-useful-information.html
Statutory Auditors
M/s Price Waterhouse Chartered Accountants LLP, (PW), Mumbai (Firm Registration No. 012754N / N500016), Statutory Auditors of the Bank have Audited the accounts of the Bank for the Financial Year 2017-18 and will retire at the conclusion of this Annual General Meeting.
M/s Price Waterhouse Chartered Accountants LLP have been associated with the Bank as Statutory Auditors for the past three years,
Independent Auditorsâ Report
M/s Price Waterhouse Chartered Accountants LLP, Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2017-18 and their Report is annexed. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of internal financial controls system over financial reporting, which has been enclosed as âAnnexure Aâ to the Independent Auditorsâ Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditorsâ Report.
Secretarial Audit
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari & Associates, Company Secretaries in Practice, to undertake Secretarial Audit of the Bank for the FY 2017-18. The Secretarial Audit Report submitted by M/s Bhandari & Associates is furnished at Annexure I, and forms an integral part of this Report.
The Secretarial Audit Report submitted by Bhandari & Associates for FY 2017-18 does not contain any qualification, reservation or adverse remark.
Statutory Disclosures
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is given in the Management Discussion and Analysis Report. Also, the other Statutory Information / Disclosures required to be given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to the Bank, have been laid out in the Schedules / Notes attached and form part of the Balance Sheet and the Profit and Loss Account.
Details pursuant to remuneration of Directors and Employees 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 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure II and form an integral part of this Report.
The information relating to employees required to be furnished under the Companies Act, 2013 and the Rules made there under is given under the head âParticulars of Employeesâ later in this Report.
Employees Stock Option Scheme
The Bank had instituted the Employee Stock Option Scheme (ESOS-2007) to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise from time to time could give rise to the issuance of a number of shares up to 7% of the issued Equity Capital of the Bank. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors,
An aggregate of 4,16,33,300 Options, comprising 6.94% of the Bankâs Equity Capital, have been granted under the Scheme. Statutory disclosures as required by SEBI (Share Based Employee Benefits) Regulations, 2014 are given at Annexure III, and form an integral part of this Report.
The Annual Certificate on compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, issued by Statutory Auditors of the Bank is being placed before Members in the ensuing AGM.
The Employees Stock Option Plan is administered by the Compensation Committee of the Board.
Disclosure on compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013:
(a) that in the preparation of the Annual Accounts for the Financial Year ended March 31, 2018, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2018 and of the profit of the Bank for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(d) that the Annual Financial Statements have been prepared on a âgoing concernâ basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, are included in this Report as Annexure IV and form an integral part of the Annual Report.
Particulars of Employees
The Bank had 25,284 employees on its rolls as on March 31, 2018. 59 employees who had been employed throughout the year were in receipt of remuneration of Rs. 1.02 crores per annum or more, and only 1 employee employed for part of the year was in receipt of remuneration of Rs. 8.50 lakhs per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above Annexure is not being sent along with this Annual Report to the Members of the Bank in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the particulars may please write to the Company Secretary at the Secretarial and Investor Services Office of the Bank. The aforesaid Annexure is also available for inspection by Members at the Registered Office of the Bank up to the date of this Annual General Meeting during business hours on working days.
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Shares of the Bank.
Policy on Remuneration to Non-Executive Directors
Until the Financial Year 2015-16, all Non-Executive Directors, including the Non-Executive Part-time Chairman, received remuneration only by way of Sitting Fees for attending the meetings of the Board and of various Board Committees.
In line with the guidelines contained in RBI Circular dated June 1, 2015 on compensation of Non-Executive Directors of Private Sector Banks, the Board of Directors, on the basis of the recommendations of the Human Resource & Remuneration Committee (since re-named as âNomination & Remuneration Committeeâ), in their meeting held on May 12, 2016, approved the payment of remuneration of Rs. 25 lakhs per annum with effect from April 1, 2016 to Mr. R. Seshasayee, Non-Executive Part-time Chairman (subject to approval of Reserve Bank of India, which has since been received) and to the Non-Executive Directors (other than the Non-Executive Part-time Chairman) in the form of Profit-related Commission of Rs. 10 lakhs per annum for each Director, in such manner as may be decided by the Board of Directors,
Shareholders had, in the 22nd Annual General Meeting of the Bank held on July 1, 2016, accorded their approval for payment of the above-mentioned remuneration in the form of Profit-related Commission to the Non-Executive Directors, including to the Non-Executive Part-time Chairman, for FY 2016-17. The Non-Executive Directors, including the Non-Executive Parttime Chairman, accordingly received remuneration in the form of Profit-related Commission, in addition to Sitting Fees for attending meetings of the Board and of various Board Committees.
No Stock Options were granted to the Non-Executive Directors,
During FY 2016-17, the Board of Directors have, on the recommendations of the HR & Remuneration Committee (since re-named as âNomination and Remuneration Committeeâ) formulated the âPolicy on Remuneration to Non-Executive Directorsâ including the Non-Executive Part-time Chairman.
During the Financial Year 2017-18, the Board reviewed the âPolicy on Remuneration to Non-Executive Directorsâ. The Policy is hosted on the Bankâs website at the link given below: http://www.indusind.com/important-links/other-useful-information.html
The Board of Directors have also formulated a Policy in relation to Key Management Personnel and Senior Management personnel of the Bank. The said Policy is given under âDisclosure on Remunerationâ at Note No. 12.6 of the Notes in Schedule 18 to the Financial Statements, which forms an integral part of this Annual Report.
Details on compensation to Whole-time Directors are given under the Report on Corporate Governance, that forms an integral part of this Report.
Particulars of Loans, Guarantees or Investments outstanding
Section 186(11) of the Companies Act, 2013 mandates that the provisions of Section 186 of the Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of loans made, guarantees given and investments made by the Bank are disclosed in the Financial Statements as per the applicable provisions of the Banking Regulation Act, 1949.
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with âRelated Partiesâ during the year under review were on âarmâs length basisâ and in the âordinary course of businessâ and therefore do not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially significant Related Party Transactions during the year with any of the Related Parties, viz., PromoteRs. Directors and Key Management Personnel and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.
In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.
The Policy on Related Party Transactions as approved by the Board of Directors is hosted on the Bankâs website at the below given link: http://www.indusind.com/content/home/important-links/other-useful-information.html
Consolidated Financial Statements
In accordance with Section 129(3) of the Act, Consolidated Financial Statement of IndusInd Bank Limited (âthe Bankâ) and IndusInd Marketing and Financial Services Private Limited (âthe Associateâ) has been prepared and is included in the Annual Report.
In terms of AS 23, the Bank has prepared the Consolidated Financial Statements for the year ended March 31, 2018, wherein the Standalone Financial Statements of the Bank as of that date are consolidated with that of IMFS, an associate in which the Bank has a 30% stake, by adopting âEquity Methodâ
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued Circular No. DBR.BP.BC.No.76/21.07.001/2015-16 on February 11, 2016, requiring scheduled commercial banks to comply with the Indian Accounting Standards (Ind AS) for accounting periods beginning from April 1, 2018 onwards, with comparatives for periods ending on or after March 31, 2018.
RBI, on April 5, 2018, through announcement in its first Monetary Policy Statement for FY 2018-19, deferred Ind AS implementation for the scheduled commercial banks (excluding RRBs) by one year such that the implementation of Ind AS would begin from April 1, 2019 onwards, with comparatives for the year beginning April 1, 2018.
Pursuant to the RBI Circular dated February 11, 2016, the Bank formed a Steering Committee, comprising members from cross functional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank set up a Working Group under the guidance of the Steering Committee to conduct Gap Assessment to identify the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption. Besides augmenting skilled resources within the Financial Reporting team, the Bank also engaged the services of leading professionals with international experience to assist in the project. Training programs were organized for the team members in the Business, Credit and Finance Teams. The Bank is in the process of identifying the changes required to be made to its systems and processes and is evaluating technology solutions.
The Audit Committee of the Bankâs Board of Directors oversees the progress of the Ind AS implementation process.
Some of the areas of significant accounting impact pursuant to the application of Ind AS are summarized below:
(a) Accounting impact on account of application of Ind AS at the date of transition, i.e. April 1, 2018 will be recognized in equity or other components of equity.
(b) The classification and measurement of financial assets will be driven by the Bankâs business model for managing those assets and the characteristics of the contractual cash flows of the assets. All financial assets will be classified as subsequently measured at amortized cost, Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit or Loss (FVTPL).
(c) Financial Instruments would be derecognized on transfer of significant risks and rewards, and not based on the legal form of the arrangement.
(d) Interest will be recognized in the Income Statement using the effective interest method and any directly attributable fees and costs would be considered to be an adjustment to the effective interest rate.
(e) All Derivatives would be required to be fair-valued and recognized on the Bankâs Balance Sheet.
(f) Expense for Stock Options will be recognized in the Statement of Profit and Loss based on the Fair Value of the Options.
(g) Impairment requirements for financial assets carried at amortized cost or at fair value through other comprehensive income, including certain off Balance Sheet items are based on an Expected Credit Loss (ECL) model. The Bank will be required to recognize either a 12-monthsâ or lifetime ECL, depending on whether there has been a significant increase in Credit Risk since initial recognition. This will be significantly different from the current methodology for calculating the provision for Standard Assets and Non-Performing Assets (NPAs). The Bank has developed models for computation of ECL and is testing the same.
In addition to the above, as per Reserve Bank of India directions, the Bank submitted Standalone proforma Ind AS financial statements along with other computations to the RBI for the half-year ended September 30, 2016 in FY 201617 and for the quarter ended June 30, 2017 in FY 2017-18, as required.
Corporate Social Responsibility
In line with its CSR focus areas, the Bank has committed to various long term community development projects that have a large positive impact. Consistent with the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a Board-level CSR Committee to review the CSR initiatives. The Committee is headed by Mrs. Kanchan Chitale as the Chairperson, Mr. Yashodhan M. Kale (inducted in the Committee on March 26, 2018) and Mr. Romesh Sobti as Members, Mr. Vijay Vaid ceased to be a Member, on his retirement from the Board on February 3, 2018.
The composition of the CSR Committee is in accordance with Section 135 of the Companies Act, 2013.
The Bankâs CSR Policy and strategy direct and govern the Bankâs activities in focus areas, namely, Environmental Sustainability, Rural Development and Inclusiveness, Preventive Healthcare and other areas of special interest that include Education, Sports and Heritage.
In FY 2017-18, in line with the agenda on digitization, the Bank pledged support to the PMâs initiative of digitizing Rural India by reaching out to 2 lakh candidates across 275 districts in 11 Indian states of Haryana, Punjab, Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, Jharkhand, Chhattisgarh, West Bengal, Odisha and Uttar Pradesh. The Bank has also initiated a flagship solid waste segregation and management programme in partnership with the Government of Uttarakhand. Adding on to the two on-going flagship sports projects namely the Para-Champions and the Blind Cricket Programme, the Bank introduced the IndusInd Girl Power Programme in FY 2017-18 that supports woman athletes across Judo, Boxing and Wrestling to represent India in reputed sports tournaments.
During the year under review, the Bank has also introduced a unique project involving the rehabilitation and skill development of women rescued from trafficking in Bihar.
The CSR Initiatives / Projects undertaken by the Bank are in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least Two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank spent Rs. 20.47 crores towards various CSR activities specified in Schedule VII of the Companies Act, 2013. The programmes are of large scale and hence the absorption of funds is milestone-linked for larger impact.
The Bank also recognises and addresses environmental issues like climate change and global warming and measures its carbon footprint. The Bank currently features in the âAâ list of the CDP, a platform that is widely referred by global Investors. The Bank is also a front-runner, investing in on-site solar energy solutions and LEED-Certified green buildings. While these investments have not been considered as part of our reported spend this year, it has had substantial impact on the environment, in line with global targets of the UN Sustainable Development Goals.
The Report on CSR activities undertaken by the Bank is set out at Annexure V and forms an integral part of this Report.
Details of the CSR Policy and initiatives adopted by the Bank on CSR are available on Bankâs website at the link given below: http://www.indusind.com/content/csr-home/our-approach/csr-policy.html
Business Responsibility Report (BRR)
The Securities & Exchange Board of India have, vide their Circular dated December 22, 2015, mandated Top 500 Listed entities to include the âBusiness Responsibility Reportâ (BRR) as part of the Annual Report, describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by SEBI.
In view of the above and in compliance with Regulation 34(2) of the Listing Regulations, BRR of the Bank has been furnished at Annexure VI and forms an integral part of this Report.
Corporate Governance
Corporate Governance is essentially a set of standards, systems, and procedures aimed at effective, honest, transparent, and responsible management of a company within the applicable statutory and regulatory structures.
The Bank has adopted the industry best practices of Corporate Governance and aims to continue banking on the highest principles of governance and ethics. At IndusInd, Corporate Governance is more than just adherence to the statutory and regulatory requirements. It is equally about focusing on voluntary practices that underlie the highest levels of transparency.
The Governance framework is driven by the objective of enhancing long-term stakeholder value, without compromising on Ethical Standards and Corporate Social Responsibilities.
The Bankâs guiding principles are also articulated through its Code of Business Conduct and various initiatives taken to maintain transparency by communicating with the Shareholders on developments in the Bank. The Bank has also set up various subcommittees of the Board to bring in more efficacy and transparency in its working.
The Bank continues to focus on better, complete and timely disclosures to the Stock Exchanges for dissemination to the Stakeholders,
Further complete disclosures regarding Corporate Governance are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.
Certificate from M/s Bhandari & Associates, Practising Company Secretaries confirming compliance with the conditions of Corporate Governance stipulated under Schedule V of the Listing Regulations is attached as Annexure VII and forms part of this Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2) of the Listing Regulations, forms part of the Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There are no significant and material Orders passed by the Regulators / Courts that would impact the âgoing concernâ status of the Bank and its futures operations.
Awards and Accolades
During the year under review, the Bank has received many awards and accolades for excellence in managing IT Risk, Marketing and Communications, CSR Initiatives, Safety and Security, Best Data Quality and Information Technology and for Innovations, etc.
Mr. Romesh Sobti, Managing Director & CEO, was awarded as the âBest Bankerâ at the BW Business world Magna Awards 2017. He was also bestowed with the prestigious Business Todayâs âBest CEO Awardâ
Brief details of various awards are covered in the initial pages and in the Management Discussion and Analysis Report which forms an integral part of this Annual Report.
Cautionary Statement
Certain statements in the âDirectorsâ Reportâ and in the âManagement Discussion and Analysisâ describing the Bankâs objectives, estimates and expectations may be âforward-looking statementsâ within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.
Material events that have happened after the Balance Sheet date
No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year of the company to which the Financial Statements relate and the date of this Report.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace
The Bank has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under.
The Policy aims to provide protection to women employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment.
The Bank has also constituted Internal Complaints Committees, to enquire into the complaints of sexual harassment and recommend appropriate action.
The Bank has received 7 complaints alleging sexual harassment at workplace during the financial year 2017-18. The status of the same is as under.
|
No. of cases |
No. of cases |
No. of cases pending for |
|
received during |
closed during |
investigation at the end of |
|
the year |
the year |
the year |
|
7 |
7 |
NIL |
Acknowledgements
The Directors are grateful to the shareholders for the trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate AffaiRs. Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and the Stock Exchanges for the guidance and support extended by them to the Bank.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and untiring commitment, which qualities have contributed to the Bankâs continued progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
For and on behalf of the Board of Directors
Place : Mumbai R. Seshasayee
Date : June 22, 2018 Chairman
(DIN: 00047985)
Mar 31, 2017
DIRECTORS'' REPORT: 2016-17
The Board of Directors of the Bank have pleasure in presenting the Twenty-third Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31, 2017.
The financial performance for the year ended March 31, 2017 is summarized as under:
(Rs, in crores)
|
Particulars |
As on March 31, 2017 |
As on March 31, 2016 |
|
Deposits |
126,572.22 |
93,000.35 |
|
Advances |
113,080.51 |
88,419.34 |
|
Operating Profit (before Depreciation and Provisions and Contingencies) |
5,641.71 |
4,297.94 |
|
Net Profit |
2,867.89 |
2,286.45 |
During the year under review, despite a persistently challenging operating environment, the Bank improved its business, with Deposits growing by 36.10% and Advances by 27.89% over the previous year.
The Bank continued to focus on increasing earnings from its core banking business, strengthening the fee income streams, and maintaining control on operating costs.
Operating Profit (before Depreciation and Provisions and Contingencies) rose robustly by 31.27% to Rs, 5,641.71 crores, as compared to Rs, 4,297.94 crores in the previous year.
The Net Profit of the Bank, after considering all expenses and necessary Provisions and Contingencies, was higher by 25.43% at Rs, 2,867.89 crores, as against Rs, 2,286.45 crores in the previous year.
Appropriations
The Directors recommend appropriation of Profit as under:
(Rs, in crores)
|
Operating Profit before Depreciation and Provisions and Contingencies |
5,641.71 |
|
Less: Depreciation on Fixed Assets |
190.69 |
|
Less: Provisions and Contingencies inclusive of Income Tax |
2,583.13 |
|
Net Profit |
2,867.89 |
|
Profit Brought forward |
5,013.45 |
|
Amount available for Appropriation |
7,881.34 |
|
Transfer to Statutory Reserve |
716.97 |
|
Transfer to Capital Reserve |
45.54 |
|
Dividend (including Tax on Dividend) (pertaining to shares allotted after March 31, 2016 until Record Date for the 22nd AGM held on July 1, 2016) |
0.45 |
|
Total Appropriations |
762.96 |
|
Balance carried over to Balance Sheet |
7,118.38 |
Dividend
The Earning Per Share (EPS) of the Bank rose to Rs, 48.06 during the year 2016-17, from Rs, 39.68 in the previous year.
In view of the overall improvement in performance as well as the need to conserve Capital for continued growth, the Directors recommend Dividend of Rs, 6.00 per Equity Share of Rs, 10 each for the year ended March 31, 2017. (Dividend for the year 2015-16 was Rs, 4.50 per Equity Share of Rs, 10 each).
Considering the Equity Shares outstanding as at March 31, 2017, the total amount of Dividend payable, including Taxes to be borne by the Bank, amounts to Rs, 431.95 crores. In accordance with the revised AS 4 â Contingencies and events occurring after the Balance Sheet Dateâ, this amount is not accounted for as âLiabilitiesâ as at March 31,2017.
Financial Performance and State of Affairs of the Bank
The year under review marked the end of the third Planning Cycle (2014-17), themed âMarket Share with Profitabilityâ to Double the Bank in 3 years. The Bank has now commenced implementation of Planning Cycle 4, covering the period 2017-20 with the theme: âDigitize to Differentiate, Diversify and Create Domain Leadershipâ with a strategy to gain âMarket Share with Profitabilityâ.
Backed by improved volumes, the Total Income of the Bank for the year under review grew by 22.47% to Rs, 18,577.16 crores from Rs, 15,168.69 crores.
The healthy rise in profitability was the result of growth in Net Interest Income (Nil) as well as Non-Interest Income. Net Interest Income improved robustly by 34.23% to Rs, 6,062.60 crores from Rs, 4,516.57 crores, while Non-Interest Income rose to Rs, 4,171.49 crores from Rs, 3,296.95 crores, registering growth of 26.53%.
Core Fee Income such as commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third-party products, and earnings from foreign exchange business grew by 24.17% to Rs, 3,488.59 crores from Rs, 2,809.59 crores earned during the previous year.
In view of the softening of interest rates, yield on Advances dropped to 11.71% during the year, as against 12.24% in the previous year, while the Cost of Deposits fell to 6.41% from 7.25% in the previous year. The Net Interest Margin (NIM) for the year improved to 3.99% as compared to 3.81% in the previous year, due to the composition of the Asset Portfolio, benign interest rate movements during the year, and judicious mobilization of funding resources through deposits and borrowings, including overseas borrowings and refinance from institutions.
The Bank expanded its branch network steadily to reach 1,200 branches, as against 1,000 branches at the beginning of the year. Revenue per employee during the year remained steady at Rs, 40 lakhs.
The quality of the Loan Book remained stable with Net Non-Performing Assets (Net NPAs) standing at 0.39% as at March 31, 2017 as against 0.36% a year ago. The Provisioning Coverage Ratio (PCR) stood at 58.39% as compared to 58.58% in the previous year.
The year under review witnessed a number of significant events, some of which are listed below:
- International Financial Services Center (IFSC) Banking Unit (IBU) went live on June 28, 2016atthe GIFT City.
- Upper Tier II Bonds issued in 2006 were redeemed in November 2016 and January 2017, as these bonds are not Basel Ill-compliant and carried a stepped up coupon after the initial run of 10years.
- A follow-on issue of Rated, Listed, Senior Unsecured, Redeemable, Non-Convertible Long-Term Infrastructure Bonds for Rs, 1,500 crores was made in December 2016.
- The first issue of Basel Ill-compliant Additional Tier I Non-Convertible, Perpetual, Subordinated, Unsecured Bonds for Rs, 1,000 crores was made in March 2017.
Digitization initiatives continued to be a key thrust area of the Bank during the year under review, amplifying the agility in responding to market forces. The IndusPay application on the Unified Payments Interface (UPI) platform, a step to boost Digital and Mobile Banking service was launched during the year. The Bank introduced several new products and services for select client segments through its Consumer Banking, Transaction Banking and Global Markets Groups. The Bank kept up its focus on deepening as well as strengthening of the fee-based income streams, resulting in smart growth in Non-Interest Income.
Performance of Subsidiary and Associate Company
ALF Insurance Services Private Limited, a wholly owned subsidiary of the Bank which was set up to do the business of Insurance Broking, was under Voluntary Winding-up. On February 24, 2016, the Liquidator had approved repayment of the entire Share Capital and subsequently, the Company was liquidated vide Order dated June 14, 2016 issued by the Honâble Madras High Court.
Induslnd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank and is engaged in the business of providing manpower services. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including the Financial Statement of its Associate Company, which also forms a part of this Annual Report.
During FY2016-17, IMFS earned Revenue of the 217.21 crores, as against Revenue of '' 179.43 crores in the previous year. IMFS earned Profit of the 0.93 crore in FY 2016-17.
A statement containing the salient features of the financial position of the Subsidiary and the Associate Company in Form AOC-1 is enclosed as an Annexure to the Financial Statements.
During the year under review, the Bank has agreed with Infrastructure Leasing & Financial Services Ltd. (IL&FS), the Promoter shareholder of IL&FS Securities Services Ltd. (ISSL), to acquire 100% of ISSL along with acquisition of the securities financing portfolio from IL&FS Financial Services Ltd. (IFIN).
The above transaction is subject to execution of definitive agreements, respective Board approvals, and regulatory approvals, including from Reserve Bank of India.
Share Capital
The Paid-up Equity Capital of the Bank as at March 31, 2017 consisted of 59,81,48,705 Equity Shares ofof the 10 each.
During the year under review, the Bank allotted 31,62,370 Equity Shares of '' 10/- each pursuant to exercise of Options under its Employee Stock Option Scheme, 2007.
The Bank has not issued any Equity Shares with differential voting rights.
Debentures
During the year, the Bank issued Long-Term Bonds and Additional Tier I Bonds in the nature of Debentures on private placement basis. The details are as under:
(i) 15,000 Rated, Listed, Senior Unsecured, Redeemable, Non-Convertible Long-Term Infrastructure Bonds in the nature of Debentures of Face value of Rs, 10,00,000 (Rupees Ten Lakhs each) for cash at par amounting to Rs, 1,500 crores, allotted on December 9, 2016.
(ii) 10,000 Rated, Listed, Non- Convertible, Perpetual, Subordinated, & Unsecured Basel Ill-Compliant Additional Tier I Bonds in the nature of Debentures of Face Value of Rs, 10,00,000 (Rupees Ten Lakhs each) for cash at par amounting to Rs, 1,000 crores, alloted on March 22, 2017.
Pursuant to Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names of the Debenture Trustees and their contact details are given below:
Trustee I:
Name of Debenture Trustees : Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House, S. No.94/95, Plot No.85, Bhusari Colony (Right), Kothrud,
Pune-411 038, Maharashtra, India.
Website : www.catalysttrustee.com
E-mail : [email protected]
Trustee II:
Name of Debenture Trustees : Beacon Trusteeship Limited
Address : Prabhat Kunj, Prabhat Colony, 3, Santa Cruz (East), Mumbai - 400 055
Website : www.beacontrustee.co.in
E-mail : [email protected]
Trustee III:
Name of Debenture Trustees : IDBI Trusteeship Services Limited*
Address : AsianBuilding,GroundFloor,17,R.KamaniMarg,
Ballard Estate, Mumbai - 400 001
Website : www.idbitrustee.com
E-mail address : [email protected]
*IDBI Trusteeship Services Ltd. acted as Trustee for Upper Tier II Bonds issued in 2006 amounting to Rs, 308.90 crores. During the year under review, these Bonds were redeemed by the Bank pursuant to exercising Call Option.
Tier II Capital
The Bank did not raise any Tier II Capital during the year.
Upper Tier II Bonds (Series VIII, IX and X) amounting to Rs, 308.90 crores, issued in 2006, were redeemed during the year by exercising the Call Option after obtaining necessary approvals.
Deposits
The Bank is a banking company governed by the Banking Regulation Act, 1949 and as such, the provisions in the Companies Act relating to acceptance of Public Deposits are not applicable.
Capital Adequacy
The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out below:
|
Particulars |
March 31, 2017 |
March 31, 2016 |
|
i) Capital Adequacy Ratio (CRAR) |
15.31% |
15.50% |
|
ii) CRAR- Common EquityTier 1 Capital |
14.02% |
14.92% |
|
iii) CRAR- Tier 1 Capital |
14.72% |
14.92% |
|
iv) CRAR- Tier 2 Capital |
0.59% |
0.58% |
Credit Ratings
|
Instruments |
Rating |
Rating Agency |
|
Infra Bond program |
AA |
CRISIL |
|
Additional Tier 1 Bond program |
AA |
CRISIL |
|
Certificates of Deposit |
A1 |
CRISIL |
|
Senior Bonds program |
AA |
India Ratings and Research |
|
Additional Tier 1 Bond |
AA |
India Ratings and Research |
|
Short-Term Debt instruments |
A1 |
India Ratings and Research |
Directors
Bankâs Board comprised nine Directors as on March 31, 2017, viz., Mr. R. Seshasayee, Part-time Non-Executive Chairman, six Independent Directors. Mr. Yashodhan M. Kale, Non-Executive Non-Independent Director, and Mr. Romesh Sobti, Managing Director & CEO.
(a) Independent Non-Executive Directors
In terms of Regulation 16 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and based on the declarations received under Section 149(7) of the Companies Act, 2013 by the Bank for the financial year ended March 31, 2017, the following Non-Executive Directors continue to be identified as Independent Directors as on March 31, 2017:
(i) Mrs. Kanchan Chitale
(ii) Mr. VijayVaid
(iii) Mr. T. Anantha Narayanan
(iv) Mr. Ranbir Singh Butola
(v) Mr. Shanker Annaswamy
(vi) Dr. T. T. Ram Mohan.
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 read with Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014, and Regulation 17 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, specified companies are required to have at least one Woman Director in their Board.
Mrs. Kanchan Chitale (DIN: 00007267), who joined the Board on October 18, 2011, is an Independent Woman Director in the Board and, Chairs some important Committees.
(c) Chairman of the Board
Mr. R. Seshasayee (DIN: 00047985), has been Part-time Non-Executive Chairman of the Bank since July 24, 2007.
Shareholders of the Bank had, in the 21st AGM held on August 17, 2015, approved the re-appointment of Mr. R. Seshasayee as Part-time Non-Executive Chairman for a period of 2 years with effect from July 24, 2015 and accordingly, his current term shall expire on July 23, 2017.
Approval of the shareholders is requested for re-appointment of Mr. R. Seshasayee as Part-time Non-Executive Chairman of the Bank for a period of two years with effect from July 24, 2017, subject to approval of the Reserve Bank of India.
(d) Managing Director & CEO
Mr. Romesh Sobti (DIN: 00031034), has been Managing Director & CEO of the Bank since February 1, 2008.
Shareholders of the Bank had, in the 21st AGM of the Bank held on August 17, 2015, approved the re-appointment of Mr. Romesh Sobti as Managing Director & CEO of the Bank for a period of three years w. e. f. February 1, 2015.
Reserve Bank of India have also conveyed their approval for the re-appointment of Mr. Romesh Sobti as Managing Director and CEO of the Bank for a further period of three years, w.e.f. February 1, 2015 until January 31, 2018.
(e) Retirement of Directors by rotation and Appointment / Re-appointment of Directors
(i) In order to ensure compliance with Section 152(6) of the Act, the Board has considered Mr. Romesh Sobti, Managing Director & CEO, as liable to retire by rotation.
Mr. Romesh Sobti (DIN: 00031034), Managing Director & CEO shall accordingly retire at the ensuing AGM and being eligible, offers himself for re-appointment.
(ii) In terms of requirements of the Companies Act, 2013, applicable provisions of the Banking Regulation Act, 1949, and guidelines issued by the Reserve Bank of India, approval of the shareholders by way of Ordinary Resolution is requested for re-appointment of Mr. R. Seshasayee (DIN: 00047985) as âPart-time Non-Executive Chairmanâ of the Bank, for a period of two years with effect from July 24, 2017, subject to approval of the Reserve Bank of India.
In terms of provisions of Regulation 36(3) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and SS-2 issued by the Institute of Company Secretaries of India, brief profile of the Directors seeking appointment / re-appointment at the ensuing Annual General Meeting, have been furnished in the Notice convening the 23rd AGM.
During the year under review, Dr. T. T. Ram Mohan (DIN: 00008651), was appointed as âAdditional Directorâ in the category of âIndependent, Non-Executiveâ bythe Board in its meeting held on May 12, 2016.
In terms of requirements of the Companies Act, 2013, approval of the shareholders has been obtained in the 22nd AGM of the Bank held on July 1, 2016, for appointment of Dr. T. T. Ram Mohan in the category of âIndependent Non-executive Directorâ for a period of four years, to hold office up to May 11, 2020.
Board and Committee Meetings
During the year, nine meetings of the Board and six meetings of the Audit Committee were held, the details of which are given in the Corporate Governance Report, which forms an integral part of the Annual Report.
The Board has constituted the Audit Committee of the Board, with Mr. T. Anantha Narayanan as Chairman and Mrs. Kanchan Chitale, Mr. Ranbir Singh Butola, Mr. Yashodhan M. Kale and Mr. Shanker Annaswamy as Members. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and all its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.
Performance Evaluation of the Board and its Committees
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Nomination & Remuneration Committee of the Board had laid down the criteria for Performance Evaluation of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman, as well as the process of evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on Board Evaluation issued by SEBI, under their Circular dated January 5, 2017.
The Board of Directors have carried out annual evaluation of its own performance (Board as a whole), Individual Directors including Independent Directors, Non-Independent Directors and Managing Director & CEO, and of the Chairman and the Committees of the Board.
The performance of the Board as a whole, Committees of the Board, Directors individually, and of the Chairman has been evaluated by the Committee of Independent Directors, Nomination & Remuneration Committee, and by the Board of Directors in their meeting held on May 9, 2017.
The Statement indicating the manner in which the evaluation exercise was conducted along with other relevant details is included in the Report on Corporate Governance, which forms an integral part of the Annual Report.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerized environment, with a Core Banking Solution supported by diverse application platforms for handling special businesses such as Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as in-built system checks, Maker - Checker authorizations, independent post-transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. The responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent of business, risk, audit or other functions. This unit does not originate accounting entries except for limited matters such as Share Capital, taxes and transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of energy and technology absorption and foreign exchange earnings and outgo
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy and technology absorption, thus ensuring compliance with the provisions of Section 134 (3) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014. Details of the same are furnished in the Management and Discussion Analysis Report, which forms part of the Annual Report. The Bank has made optimum use of Information Technology in its operations. The details of foreign exchange earnings and outgo are also mentioned in the section on Management and Discussion Analysis.
Risk Management
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The integrated Risk Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management (ALM), Operations Risk and Information Security Risk across all verticals, independent of business functions.
Risk Management functions in the Bank have been aligned with best industry practices, supported by advanced risk measurement and analytical systems, which enables proactive risk management and monitoring.
The Bank has a comprehensive framework of risk management policies which specify the risk appetite, risk measurement methodologies, and monitoring and control measures for the respective business segments. The policies have been designed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., âRisk Management Committeeâ to examine risk policies and procedures developed by the Bank and monitor adherence to risk parameters and prudential limits set for different portfolios / products / segments.
Details of Risk Management models and frameworks implemented by the Bank are mentioned under âManagement Discussion and Analysisâ.
Vigil Mechanism / Whistle Blower Policy
The Bank has in place the âWhistle Blower Policyâ since 2009.
The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors.
The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least twice a year.
The Bank has been awarded âCertificate of Commitmentâ by the Central Vigilance Commission.
The Bankâs Whistle Blower Policy is in sync with all statutory and regulatory guidelines on Vigil Mechanism.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank is available on the Bankâs website at the under-mentioned link:
http://www.indusind.com/important-links/other-useful-information.html Statutory Auditors
M/s Price Waterhouse Chartered Accountants LLR Chartered Accountants, Mumbai (Firmâs Regn. No. 012754N / N500016), who have audited the accounts of the Bank for the year 2016-17, shall retire at the conclusion of the ensuing Annual General Meeting, and are eligible for re-appointment.
Members are requested to consider the re-appointment of M/s Price Waterhouse Chartered Accountants LLR Chartered Accountants, as the Statutory Auditors of the Bank from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, at a remuneration to be decided by the Board of Directors based on the recommendations of the Audit Committee. Approval of the Reserve Bank of India for their appointment has been received . A certificate has been received from M/s Price Waterhouse Chartered Accountants LLP (PW) to the effect that their appointment, if made, would be within the prescribed limits under Section 141 of the Companies Act, 2013.
Independent Auditorsâ Report
M/s Price Waterhouse Chartered Accountants LLR Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2016-17 and their Report is annexed. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of the internal financial controls system over financial reporting, which has been enclosed as âAnnexure Aâ to Independent Auditorsâ Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditorâs Report. Secretarial Audit
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari & Associates, Company Secretaries in Practice, to undertake Secretarial Audit of the Bank for the FY 2016-17. The Secretarial Audit Report submitted by M/s Bhandari & Associates is furnished at Annexure I, and forms an integral part of this Report.
The Secretarial Audit Report submitted by M/s Bhandari & Associates for FY 2016-17 does not contain any qualification, reservation or adverse remark.
Statutory Disclosures
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is given in the Management Discussion and Analysis Report. Also, the other Statutory Information / Disclosures required to be given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to the Bank, have been laid out in the Schedules / Notes attached and forms part of the Balance Sheet and the Profit and Loss Account.
Details pursuant to remuneration of Directors and employees 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 including the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure II and form an integral part of this Report.
Information relating to employees required to be furnished under the Companies Act, 2013 and the Rules made there under is given under the head âParticulars of Employeesâ later in this Report.
Employee Stock Option Scheme
The Bank had instituted the Employee Stock Option Scheme (ESOS- 2007) to enable its employees, including Whole-1 time Directors, to participate in the future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of a number of shares up to 7% of the issued Equity Capital of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors.
An aggregate of 3,98,39,800 Options, comprising 6.66% of the Bankâs Equity Capital, have been granted under the Scheme. Statutory disclosures as required by SEBI (Share Based Employee Benefits) Regulations, 2014are given at Annexure III, and form an integral part of this Report.
The Annual Certificate on compliance with SEBI (Share Based Employee Benefits) Regulations, 2014, issued by Statutory Auditors of the Bank, is being placed before Members in the ensuing AGM.
The Employees Stock Option Plan is administered by the Compensation Committee of the Board.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013:
(i) that in the preparation of the Annual Accounts for the year ended March 31, 2017, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(ii) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31,2017 and of the profit of the Bank for the year ended on that date;
(iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(iv) that the Annual Financial Statements have been prepared on a âgoing concernâ basis;
(v) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively:
(vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, are included in this Report as Annexure IV and form an integral part of the Annual Report.
Particulars of Employees
The Bank had 25,314 employees on its rolls as on March 31, 2017. 51 employees who had been employed throughout the year were in receipt of remuneration of Rs, 1.02 crores per annum or more, and 6 employees employed for part of the year were in receipt of remuneration of Rs, 8.50 lakhs per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above Annexure is not being sent along with this Annual Report to the Members of the Bank in line with provisions of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the particulars may please write to the Company Secretary at the Secretarial and Investor Services Office of the Bank. The aforesaid Annexure is also available for inspection by Members at the Registered Office of the Bank up to the date of this Annual General Meeting during business hours on working days.
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Shares of the Bank.
Policy on Remuneration to Non-Executive Directors
Until the Financial Year ended 2015-16, all Non-Executive Directors including Part-time Chairman of the Bank received remuneration only by way of Sitting Fees for attending the meetings of the Board and of various Board Committees.
In view of the guidelines contained in RBI Circular dated June 1, 2015 on compensation of Non-Executive Directors of private sector Banks, the Board of Directors have, on the basis of the recommendations of Human Resource and Remuneration Committee (since named as âNomination & Remuneration Committeeâ), in their meeting held on May 12, 2016, approved the payment of remuneration of Rs, 25 lakhs per annum w.e.f. April 1, 2016 to Mr. R. Seshasayee, Part-time Non-Executive Chairman of the Bank (subject to approval of Reserve Bank of India), which has since been received, and to the Non-Executive Directors (other than the Part-time Chairman) in the form of Profit-related Commission not exceeding Rs, 10 lakhs per annum for each Director, in such manner as may be decided by the Board of Directors.
Shareholders had, in the 22nd Annual General Meeting of the Bank held on July 1, 2016, accorded their approval for payment of above-mentioned remuneration in the form of Profit-related Commission to the Non-Executive Directors, including to the Part-time Non-Executive Chairman of the Bank, for FY 2016-17, effective from April 1, 2016.
Accordingly, during the year under review, all the Non-Executive Directors, including Part-time Chairman of the Bank, received remuneration in the form of Profit-related Commission in addition to Sitting Fees for attending meetings of the Board and of various Board Committees.
As per the Bankâs policy, no Stock Options were granted to the Non-Executive Directors.
During the year, the Board of Directors have, on the recommendations of the HR and Remuneration Committee (since renamed as âNomination & Remuneration Committeeâ) formulated the âPolicy on Remuneration to Non-Executive Directorsâ, including the Part-time Non-Executive Chairman.
The âPolicy on Remuneration to Non-Executive Directorsâ as approved by the Board of Directors is hosted on the Bankâs website at the below given link:
http://www.indusind.com/important-links/other-useful-information.html
The Board of Directors have also formulated a Policy in relation to Key Managerial Personnel and Senior Management personnel of the Bank. The said Policy is given under âDisclosure on Remunerationâ at Note No. 12.6 of the Notes in Schedule 18 to the Financial Statements, which forms an integral part of this Annual Report.
Details on compensation to Whole-time Directors are given under Report on Corporate Governance, and form an integral part of this Report.
Particulars of Loans, Guarantees or Investments outstanding
Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186 of the Companies Act, 2013 except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of loans made, guarantees given and investments made by the Bank are disclosed in the Financial Statements as per the applicable provisions of Banking Regulation Act, 1949.
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with âRelated Partiesâ during the year under review were on âarmâs length basisâ and in the âordinary course of businessâ and therefore do not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially significant Related Party Transactions during the year with any of the Related Parties viz., Promoters, Directors and Key Managerial Personnel and other related entities including IMFS, an Associate Company, which may have potential conflict with the interest of the Bank at large.
In view of the above, disclosure under Form AOC-2 is not applicable to the Bank.
The Policy on Related Party Transactions as approved by the Board of Directors is hosted on the Bankâs website at the below given link :
http://www.indusind.com/content/home/important-links/other-useful-information.html Consolidated Financial Statements
In accordance with Section 129(3) of the Act, Consolidated Financial Statement of the Group, comprising Induslnd Bank Limited (âthe Bankâ) and Induslnd Marketing and Financial Services Private Limited (âthe Associateâ), has been prepared and is included in the Annual Report.
In terms of AS 23, the Bank has prepared the Consolidated Financial Statements for the year ended March 31, 2017, wherein the Standalone Financial Statements of the Bank as of that date are consolidated with that of IMFS, an associate in which the Bank has a 30% stake, by adopting the âEquity Methodâ.
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued Circular No. DBR.BRBC.No.76/ 21.07.001/ 2015-16 on February 11, 2016, requiring scheduled commercial banks to comply with the Indian Accounting Standards (Ind AS) for accounting periods beginning April 1, 2018 onwards, with comparatives for periods ending on or after March 31, 2018. Ind AS would be applicable to both Standalone Financial Statements and Consolidated Financial Statements.
The Circular reiterates the timeline for Ind AS implementation by banks that was issued by the Ministry of Corporate Affairs (MCA) in its Press Release dated January 18, 2016. The MCA notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015. On September 29, 2015, RBI recommended a roadmap to MCA for implementation of Ind AS from 2018-19 onwards for banks and Non-Banking Financial Companies (NBFCs). Further, in October 2015, RBI issued the Report of its Working Group on implementation of Ind AS by banks in India, which provided recommendations on key areas with a focus on financial instruments, as well as formats for financial statements.
Pursuant to the RBI Circular, the Bank has formed a Steering Committee headed by the Chief Financial Officer, comprising members from cross-functional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank has set up a Working Group under the guidance of the Steering Committee to conduct
Gap Assessment to identify the differences between the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS 101, First Time Adoption.
Besides augmenting skilled resources within the financial reporting team, the Bank has also engaged the services of leading professionals with international experience to assist in the project. Training programs have been organized for the team members in the Business, Credit and Finance Teams. The Bank is also in the process of identifying the changes required to be made to its systems and processes.
The Audit Committee of the Bankâs Board of Directors oversees the progress of the Ind AS implementation process. Some of the areas of significant accounting impact pursuant to the application of Ind AS are summarized below:
(a) Accounting impact on account of application of Ind AS at the date of transition, i.e., April 1, 2017 will be recognized in equity or other components of equity.
(b) The classification and measurement of financial assets will be driven by the Bankâs business model for managing those assets and the characteristics of the contractual cash flows of the assets. All financial assets will be classified as subsequently measured at amortized cost, Fair Value through Other Comprehensive Income (FVOCI) or Fair Value Through Profit or Loss (FVTPL).
(c) Financial Statements would be derecognized on transfer of significant risks and rewards, and not based on the legal form of the arrangement.
(d) Interest will be recognized in the Income Statement using the effective interest method and any directly attributable fees and costs would be considered to be an adjustment to the effective interest rate.
(e) All Derivatives would be required to be fair-valued and recognized on the Bankâs Balance Sheet.
(f) Expense for Stock Options will be recognized in the Statement of Profit and Loss based on the Fair Value of the Options.
(g) Impairment requirements for financial assets carried at amortized cost or at fair value through other comprehensive income, including certain off Balance Sheet items are based on an Expected Credit Loss (ECL) model. The Bank will be required to recognize either a 12-monthsâ or lifetime ECL, depending on whether there has been a significant increase in Credit Risk since initial recognition. This will be significantly different from the current methodology for calculating the provision for Standard Assets and Non-Performing Assets (NPAs). The Bank has developed models for computation of ECL and is testing the same.
Corporate Social Responsibility
The Bank has voluntarily undertaken various initiatives in the area of Corporate Social Responsibility (CSR) by focusing on sustainability-driven growth.
In terms of the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a Board-level CSR Committee to look after the CSR initiatives of the Bank. The Committee is headed by Mrs. Kanchan Chitale as Chairperson, with Mr. Vijay Vaid and Mr. Romesh Sobti as Members. The composition of the CSR Committee is in accordance with Section 135 of the Companies Act, 2013.
The Bank has also framed the CSR Policy and strategy that will guide and govern the Bankâs activities in focus areas, namely, rural development and inclusiveness, environmental sustainability, preventive healthcare, and other areas of special interest.
During the year under review, the Bank has introduced non-banking Sports Vertical âInduslnd for Sportsâ through which the Bank supported the Para-Champions representing the country at the Paralympics and adopted the Indian Blind Cricket Team who won accolades for the country.
The CSR Initiatives / Projects undertaken by the Bank are largely in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least Two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank was required to spend Rs,55.27 crores towards CSR activities during FY 2016-17, out of which Rs,33.81 crore (i.e., 1.22% of the Average Net Profits) was utilized on activities specified in Schedule VII of the Companies Act, 2013. Some of the CSR projects are being executed in a phased manner.
Our social and community outreach programmes are gaining scale and momentum every year and hence the absorption of CSR Spend will be better in the coming years as most of the projects are long-term.
The Report on CSR activities undertaken by the Bank is set out at Annexure V and forms an integral part of this Report.
Details of the CSR Policy and initiatives adopted by the Bank on CSR are available on Bankâs website at the link mentioned below:
http://www.indusind.com/content/csr-home/our-approach/csr-policv.html Business Responsibility Report (BRR)
The Securities & Exchange Board of India have, vide their Circular dated December 22,2015, mandated Top 500 Listed entities to include the âBusiness Responsibility Reportâ (BRR) as part of the Annual Report, describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by the Board.
In view of the above and in compliance with Regulation 34(2) of the Listing Regulations, the Business Responsibility Report (BRR) of the Bank has been enclosed as Annexure VI and forms an integral part of this Report.
Corporate Governance
Pursuant to Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section on Corporate Governance practices followed by the Bank, together with a Certificate from M/s Bhandari & Associates, Practicing Company Secretaries confirming compliance with the conditions of Corporate Governance as stipulated in the Listing Regulations, forms an integral part of this Report.
A copy of Certificate issued by the Practicing Company Secretary is attached as Annexure VII and forms an integral part of this Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2) of the Listing Regulations, forms part of the Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators / Courts that would impact the âgoing concernâ status of the Bank and its future operations.
Awards and Accolades
During the year under review, the Bank has received many awards and accolades for excellence in managing Risk, in marketing and communications, CSR initiatives, Information Technology and for Innovations, etc.
Mr. Romesh Sobti, Managing Director & CEO won the most prestigious Business Award âThe Best CEO (BFSI)â at the Business Today Best CEO Awards 2016.
He also received the âBanker of the Yearâ award by FE Indiaâs Best Bank Awards 2016.
Brief details of various awards are covered in the initial pages of this Annual Report.
Cautionary Statement
Certain statements in the âDirectorsâ Reportâ and in the âManagement Discussion and Analysisâ describing the Bankâs objectives, estimates and expectations may be âforward-looking statementsâ within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.
Material events that have happened after the Balance Sheet date
No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year of the company to which the Financial Statements relate and the date of the Report.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace
The Bank has zero tolerance for sexual harassment at the workplace and has adopted a âPolicy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplaceâ, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under.
The Policy aims to provide protection to women employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment.
The Bank has also constituted the Internal Complaints Committees, to enquire into the complaints of sexual harassment and recommend appropriate action.
The Bank received 9 complaints alleging sexual harassment at work place during the financial year 2016-17. The status of the same is as under.
|
No. of cases |
No. of cases |
No. of cases pending for |
|
received during |
closed during |
investigation at the end of |
|
the year |
the year |
the year |
|
9 |
9 |
Nil |
Acknowledgements
The Directors are grateful to the shareholders of the Bank for the trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and the Stock Exchanges for the guidance and support extended by them to the Bank.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and unswerving commitment, which qualities have contributed to the Bankâs continued progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
For and on behalf of the Board of Directors
Place: Mumbai R. Seshasayee
Date:May9,2017 Chairman
Mar 31, 2015
Dear Members,
The Bank's Directors have pleasure in presenting the Twenty-first
Annual Report covering business and operations of the Bank, together
with the Audited Financial Statements for the year ended March 31,2015.
The financial performance for the year ended March 31,2015 is
summarized as under:
(Rsin crores)
As on As on
March 31, 2015 March 31,2014
Deposits 74,134.36 60,502.29
Advances 68,788.20 55,101.84
Operating Profit (before Depreciation
and Provisions & Contingencies) 3,225.07 2,694.11
Net Profit 1,793.72 1,408.02
During the year under review, despite a weak growth in the Indian
economy and a persistently challenging operating environment, the Bank
improved its business, with Deposits growing by 22.53% and Advances by
24.84% over the previous year.
The Bank continued to focus on increasing earnings from core banking
business, and on strengthening the fee income streams.
Operating Profit (before Depreciation and Provisions & Contingencies)
rose by 19.71% to Rs. 3,225.07 crores, as compared to Rs. 2,694.11 crores
in the previous year.
The Net Profit of the Bank, after considering all expenses and
necessary Provisions & Contingencies, was higher by 27.39% atRs. 1,793.72
crores as againstRs. 1,408.02 crores in the previous year.
Appropriations
The Directors recommend appropriation of Profit as under:
(Rs in crores)
Operating Profit before Depreciation and
Provisions & Contingencies 3,225.07
Less: Depreciation on Fixed Assets 126.85
Less: Provisions & Contingencies inclusive of Income Tax 1,304.50
Net Profit 1,793.72
Profit Brought Forward 2,623.33
Amount available for Appropriation 4,417.05
Transfer to Statutory Reserve 448.43
Transfer to Capital Reserve 12.28
Transfer to Investment Reserve Account 37.16
Proposed Dividend 212.01
TaxonDividend 43.15
Balance carried over to Balance Sheet 3,664.02
Total Appropriations 4,417.05
Dividend
The Earning Per Share (EPS) of the Bank rose to Rs. 33.99 during the year
2014-15, from Rs. 26.85 in the previous year.
Looking at the overall improvement in performance coupled with the need
to conserve capital for continued growth, the Directors recommend a
Dividend ofRs. 4.00 per equity share ofRs. 10 each for the year ended March
31,2015. (Dividend for the year 2013-14 was Rs. 3.50 per equity share ofRs.
10 each).
In terms of the extant laws, the Bank shall pay tax on the amount of
Dividend paid, so that the Dividend becomes tax- free in the hands of
the shareholders.
During the year, unclaimed dividend pertaining to the financial year
2006-07 was transferred to the Investor Education and Protection Fund
(IEPF) after giving due notice to the members whose names were
appearing in the list of unpaid recipients.
Financial Performance
Despite benign WPI inflation, softening oil prices in the latter half
of the year, and manageable levels of Current Account Deficit, the
domestic interest rate scenario remained at elevated levels, especially
for Deposits. During the last quarter of the financial year, RBI
reduced Repo Rate to 7.50% from 8.00% while CRR was kept unchanged at
4.00% during the year.
The year under review was the first year of new triennial planning
cycle for the Bank (Planning Cycle 3, for Financial Years 2015-17) with
the theme of 'Intelligent Domination and Specialization' with a
strategy to gain 'Market Share with Profitability' through
Dominance, Diversification and Differentiation (3D). The Bank continued
to leverage its business on the three performance planks of
Productivity, Profitability and Efficiency.
Backed by improved volumes, the Total Income of the Bank grew by 19.24%
to Rs.12,095.84 crores from Rs. 10,144.06 crores.
The healthy rise in profitability was the result of growth in Net
Interest Income as well as Non-Interest Income. Net Interest Income
improved by 18.32% to Rs. 3,420.28 crores from Rs. 2,890.71 crores, while
Non-Interest Income rose to Rs. 2,403.87 crores from Rs. 1,890.53 crores, a
rise of 27.15%.
Yield on Advances dropped to 13.12% during the year as against 13.56%
in the previous year, even as the Cost of Deposits fell to 7.92% as
against 8.17% in the previous year. Net Interest Margin (NIM) dropped
to 3.65% during the year, as compared to 3.71% in 2013-14.
Fee and Miscellaneous Income at Rs. 2,403.87 crores, as compared to Rs.
1,890.53 crores in the previous year, showed strong annual growth of
27.15%. Core Fee Income such as commission, exchange, loan processing
and account management fees, fees on Investment Banking and
distribution of third-party products and earnings from foreign exchange
business grew by 29.63% to Rs. 2,086.66 crores from Rs. 1,609.71 crores
earned during the previous year.
The Bank expanded its branch network rapidly to reach 801 branches, as
against 602 branches at the beginning of the year. Revenue per employee
during the year remained steady atRs. 30 lakhs.
The quality of the Loan Book remained stable, with Net Non-Performing
Assets (Net NPAs) at 0.31% as at March 31, 2015 as against 0.33% last
year. The Provisioning Coverage Ratio (PCR) stood at 62.61% as compared
to 70.35% previous year.
On the Liabilities side, the emphasis continued to be on broad-basing
and deepening the deposit franchise. This was facilitated through
leveraging the expanded branch network and the pan-India marketing
setup, introduction of innovative products and service propositions,
sustained promotional campaigns and enabling customers with alternate
channels such as Video Branch, Mobile Banking, Internet Banking, ATMs,
etc., as well as improving delivery of products online and client
engagement through Digital channels. The Bank enhanced customer delight
through more than 50 tie-ups in e-Commerce and Cards that also helped
to drive spends.
The Bank introduced several new products and services for select client
segments through its Consumer Banking, Transaction Banking and Global
Markets Groups. The Consumer Banking Group expanded its product range
with the launch of Loans Against Credit Card Receivables (LACR), Loans
against Securities (LAS), Commercial Cards, Agri Loans, etc. Deeper
understanding of client requirements and the ability to put technology
to efficient use formed the edifice on which new products and service
propositions were built.
The Bank kept up its focus on deepening as well as strengthening the
fee-based income streams, resulting in smart growth in Non-Interest
Income. Going forward, the Bank plans to upscale the growth momentum
through further
enhancements in diverse revenue streams such as foreign exchange
business, investment banking, structured trade and treasury products,
distribution of third-party products like mutual funds and insurance,
international remittances, Bullion operations and Transaction Banking
activities, including the Depository business and financing the
Commodity Market segment.
Performance of Subsidiary and Associate Company
ALF Insurance Services Pvt. Ltd., the Bank's subsidiary company which
was set up to do the business of Insurance Corporate Broking, is
currently under voluntary winding up.
Induslnd Marketing and Financial Services Private Limited (IMFS) is an
Associate Company of the Bank and is engaged in the business of
providing manpower services.
A statement containing the salient features of the financial position
of the Subsidiary and Associate Company in Form AOC-1 is enclosed as
Annexure I.
During the year under review, no company has become or ceased to be, a
subsidiary, a joint venture or an associate company of the Bank.
Share Capital
The Paid-up Share Capital of the Bank as at March 31,2015 consisted of
52,94,50,209 equity shares ofRs. 10 each.
During the year under review, the Bank allotted 40,03,725 shares
pursuant to exercise of Options under its Employees Stock Option
Scheme, 2007.
Accordingly, the Paid-up Share Capital and Share Premium Account
increased by Rs. 4.00 crores and Rs. 62.25 crores, respectively.
During the year under review, as an efficient housekeeping exercise,
the Bank cancelled the shares forfeited till date. Consequently, the
moneys collected on forfeited shares amounting to Rs. 0.86 crores,
consisting of Rs. 0.19 crores lying in the Share Forfeiture Account and Rs.
0.67 crores lying in the Share Premium Account, were transferred to the
Capital Reserve Account.
Debentures
During the year under review, the Bank had issued and allotted 5,000
Rated, Listed, Senior, Unsecured, Redeemable, Non-convertible Bonds in
the nature of Debentures for Face Value ofRs. 10,00,000 (Rupees Ten Lakhs
only) each, on March 31,2015to identified investors on Private
Placement basis, for an aggregate amount ofRs. 500 crores.
Details of Debenture Trustees
Trustee I:
NameofDebentureTrustee : GDATrusteeshipLimited
Address 'GDA House', S. No.94/95, Plot
No.85, Bhusari Colony
: (Right), Kothrud, Pune -411 038,
Maharashtra, India
Email address : [email protected]
Trustee II:
NameofDebentureTrustee : IDBITrusteeshipServicesLimited
Address : Asian Building, Ground Floor,
17, R. Kamani Marg, Ballard Estate,
Mumbai - 400 001
Website : www.idbitrustee.com
Tier II Capital
The Bank did not raise any Tier II Capital during the year.
Deposits
Being a banking company, we are governed by the Banking Regulation Act,
1949 and as such, the provisions of the Companies Act, 2013 relating to
acceptance of Public Deposits are not applicable.
Capital Adequacy
The Bank continues to be adequately capitalized. The Capital Adequacy
Ratio of the Bank, calculated under the Basel III Capital Regulations
mandated by RBI, is set out below:
March 31, 2015 March 31, 2014
i) Capital Adequacy Ratio (CRAR) 12-09% 13.83%
ii) CRAR - Core Equity Tier 1 Capital 11-22% 12.71%
iii) CRAR - Tier 2 Capital 0.87% 1.12%
Credit Ratings
Instruments Rating Rating Agency
Lower Tier II Subordinate Debt program AA ICRA
Upper Tier II Bond program AA ICRA
CertificatesofDeposit A1 CRISIL
Lower Tier II Subordinate Debt program AA CARE
ShortTermDebtlnstruments A1 IndiaRatings
and Research
Lower Tier II Subordinate Debt program AA India Ratings
and Research
Upper Tier II Bond program AA India Ratings
and Research
Senior Bonds program AA India Ratings
and Research
Directors
The Bank had seven Directors as on March 31, 2015, consisting of five
Independent Directors, the Chairman (Non-executive Non-independent),
and the Managing Director & CEO.
(a) Independent Non-Executive Directors
In terms of the definition contained in Section 149(6) of the Companies
Act, 2013, Clause 49 of the Listing Agreement, and based on the
Declarations received in this regard, the following Non-executive
Directors are classified as Independent Directors as on March 31,2015:
(i) Mr. T. Anantha Narayanan
(ii) Mr. Ashok Kini
(iii) Mrs. Kanchan Chitale
(iv) Mr. Vijay Vaid
(v) Mr. Ranbir Singh Butola
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013
and Clause 49 of the Listing Agreement, specified companies are
required to have at least one Woman Director in their Board.
Mrs. Kanchan Chitale, who joined the Board on October 18, 2011, is an
Independent Director in the Board, and chairs some of the important
Committees.
(c) Chairman of the Board
Mr. R. Seshasayee (DIN 00047985) has been Part-time Non-executive
Chairman of the Bank since July 24, 2007.
Approval of the shareholders is requested for his re-appointment as
Part-time Non-executive Chairman of the Bank for a period of 2 years
with effect from July 24, 2015.
(d) Managing Director & CEO
Mr. Romesh Sobti (DIN 00031034) has been the Managing Director & CEO
ofthe Bank since February 1,2008.
Shareholders of the Bank had, in the 19th AGM held on June 28, 2013,
approved the re-appointment of Mr. Romesh Sobti as the Managing
Director & CEO for a period of three years with effect from February
1,2014. Reserve Bank of India had approved the re-appointment of Mr.
Romesh Sobti as Managing Director & CEO of the Bank for a period of one
year, upto January 31,2015.
Reserve Bank of India have since conveyed their approval for the
re-appointment of Mr. Romesh Sobti as Managing Director and CEO of the
Bank for a further period of three years, with effect from February
1,2015 until January 31,2018.
(e) Appointment / Re-appointment / Resignation / Retirement of
Directors
Mr. Ranbir Singh Butola (DIN 00145895) was appointed as an
'Additional Director' in the category of'Independent
Non-Executive' by the Board in its meeting held on January 13, 2015,
and shall hold office up to the date of the ensuing Annual General
Meeting.
In terms of requirements ofthe Companies Act, 2013, approval ofthe
shareholders is requested for the appointment of Mr. Ranbir S. Butola
as an "Independent Non-Executive Director".
Mr. T. Anantha Narayanan (DIN 00007227) was appointed as an
'Independent Non-executive Director' at the AGM ofthe Bank held on
June 27, 2014, for a period upto April 8,2015, in view of his attaining
the age of 70 years, the maximum age limit prescribed by Reserve Bank
of India (RBI).
In response to the Bank's request, RBI have conveyed their approval
for continuance of Mr. Anantha Narayanan on the Board of the Bank as an
'Independent Non-Executive Director' for a period of four years
w.e.f. June 24, 2014.
The Board had accordingly, at its meeting held on March 30, 2015,
approved the appointment of Mr. Anantha Narayanan as an 'Additional
Director' with effect from April 9, 2015 in the category of
"Independent Non-executive Director". In terms of the Companies
Act, 2013, Mr. Anantha Narayanan holds office up to the date of the
ensuing AGM.
Since Mr. Anantha Narayanan has completed his initial term in the Board
of the Bank as Independent Director, in compliance with Section 149 of
the Companies Act, 2013, approval of the shareholders is requested, by
passing of a Special Resolution for the appointment of Mr. Anantha
Narayanan as "Independent Non-executive Director" for another term,
as approved by the Reserve Bank of India, i.e., up to June 23, 2018.
Approval ofthe shareholders was obtained in the Annual General Meeting
held on June 27,2014 for the appointment of Mrs. Kanchan Chitale (DIN
00007267) and Mr. Vijay Vaid (DIN 00219709) in the category of
"Independent Non-executive Director" for a period of four years
with effect from the original date of their appointment, viz., October
18, 2011.
The Board had, at its meeting held on April 16, 2015, approved the
appointment of Mrs. Kanchan Chitale in the category of "Independent
Non-executive Director" with effect from October 18, 2015 for another
term of four years, and of Mr. Vijay Vaid in the category of
"Independent Non-executive Director" up to February 3, 2018, i.e.,
the date of his attaining the age of 70 years.
Members are requested to approve the re-appointment of Mrs. Kanchan
Chitale and of Mr. Vijay Vaid by passing of Special Resolution in the
ensuing Annual General Meeting.
Mr. Ajay Hinduja (DIN 00642192), who had been a member of the Board as
'Non-executive Director' from October 31, 2006, ceased to hold
office with effect from October 30, 2014, on completion of the maximum
permissible tenure of eight years.
Mr. Yashodhan M. Kale (DIN 00013782), who had been appointed as
'Alternate Director' by Mr. Ajay Hinduja, ceased to hold that
position with effect from October 30, 2014.
The Directors wish to place on record their appreciation for the
valuable contributions made by Mr. Ajay Hinduja towards the
deliberations in the Board Meetings during his tenure, and to Mr.
Yashodhan M. Kale, Alternate Director, towards the deliberations in the
Board Meetings attended by him in place of Mr. Ajay Hinduja.
Mr. Yashodhan M. Kale (DIN 00013782) was appointed as an 'Additional
Director' in the category of 'Non-Independent Non-Executive' by
the Board at its meeting held on April 16, 2015, and shall hold office
up to the date ofthe ensuing Annual General Meeting.
In terms of requirements ofthe Companies Act, 2013, approval ofthe
shareholders is requested for the appointment of Mr. Yashodhan M. Kale
as "Non-Independent Non-Executive Director".
Mr. Sushil Chandra Tripathi (DIN 00941922), who was associated with the
Bank as 'Independent Non-executive Director' since February 14,
2007, ceased to hold office from February 13, 2015, on completion of
the maximum permissible tenure of eight years.
The Directors wish to place on record their appreciation for the
valuable contributions made by Mr. S. C. Tripathi towards the
deliberations in the Board Meetings during his tenure as Director of
the Bank.
Brief profiles of the Directors seeking appointment / re-appointment at
the ensuing Annual General Meeting has been furnished in the Report on
Corporate Governance under the Section titled 'Board of Directors',
which forms an integral part of this Report.
The Bank has received notices from Members pursuant to Section 160
ofthe Companies Act, 2013, signifying their intention to propose the
candidature of the respective persons for the office of Director.
Board and Committee Meetings
During the year, six meetings each, of the Board and of the Audit
Committee were held, the details of which are given in the Corporate
Governance Report, which forms an integral part of this Report.
The Board has constituted the Audit Committee with Mr. T. Anantha
Narayanan as Chairman and Mrs. Kanchan Chitale, Mr. Ashok Kini and Mr.
Ranbir S. Butola as Members. There have not been any instances during
the year when recommendations of the Audit Committee were not accepted
by the Board.
Details of the composition of the Board, its Committees, the Meetings
held and attendance of the Directors at such Meetings, are provided in
the Corporate Governance Report. The intervening gap between the
Meetings was within the period prescribed under the Companies Act,
2013and the Listing Agreement.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out annual evaluation of
its own performance (Board as a whole), of the Directors individually,
of the Chairman, and of the working of its Committees.
The statement indicating the manner in which the evaluation exercise
was conducted is included in the Report on Corporate Governance, which
forms an integral part of this Report.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerized environment with a Core
Banking System supported by diverse application platforms for handling
special businesses such as Treasury, Trade Finance, Credit Cards,
Retail Loans, etc. The process of recording of transactions in each of
the application platforms is subject to various forms of controls such
as in-built system checks, Maker-Checker authorizations, independent
post-transaction reviews, etc. The Financial Statements are prepared
based on computer system outputs. Responsibility of preparation of
Financial Statements is entrusted to a dedicated unit which is
completely independent of business, risk, audit or other functions.
This unit does not originate accounting entries except for limited
matters such as share capital, taxes and transfers to reserves.
Conservation of energy and technology absorption and foreign exchange
earnings and outgo
Considering the nature of activities as an entity in the financial
services sector, the provisions of Section 134 (3) of the Companies
Act, 2013 and the Rules framed thereunder relating to conservation of
energy and technology absorption do not apply to the Bank. The Bank
has, however, made optimum use of Information Technology in its
operations.
The Bank has voluntarily taken steps towards conservation of energy and
technology absorption, the details of which are highlighted in the
Management Discussion and Analysis Report, which forms part of this
Report. Details of foreign exchange earnings and outgo are also
mentioned in the section on Management Discussion and Analysis.
Risk Management
The Bank has an integrated Risk Management Department, independent of
business functions, covering Credit Risk, Market Risk,
Assets-Liabilities Management (ALM), Operational Risk, and Information
Security Riskfunctions.
Risk Management functions in the Bank have been aligned with best
industry practices, and are being enhanced progressively, adapting to
dynamic business environment and market conditions.
The Bank has implemented "Internal Capital Adequacy Assessment
Process" (ICAAP) in line with Basel III requirements. The Bank has
set up a Board-level Committee, viz., "Risk Management Committee"
to examine risk policies and procedures developed by the Bank and to
monitor adherence to various risk parameters and prudential limits by
different operating departments.
More details on Risk Management framework/models adopted by the Bank
are given in the section on 'Management Discussion and Analysis'.
Vigilance Mechanism
In compliance with RBI guidelines, the Bank has in place a "Whistle
Blower Policy" since 2009. The Board of Directors of the Bank have
constituted a Board-level Committee, viz., the Vigilance Committee,
which conducts overview of cases of vigilance nature on the part of
employees of the Bank. The Committee meets at least twice a year.
During the year under review, in compliance with provisions of the
Companies Act, 2013, the Board of Directors have reviewed the Whistle
Blower Policy of the Bank so as to make it compliant with the
Regulations.
The current Whistle Blower Policy of the Bank is available on the
website of the Bank at the undermentioned link:
http://www.indusind.com/content/dam/indusind/PDF/wbp final draft1.pdf
Auditors
M/s BSR & Co. LLP, Chartered Accountants, Statutory Auditors of the
Bank, who have audited the accounts of the Bank for the year 2014-15,
will retire at the conclusion of the ensuing Annual General Meeting.
They have been associated with the Bank as Statutory Auditors for the
past four financial years and are not eligible for re-appointment in
accordance with RBI's policy of rotation and resting. The Board
places on record its appreciation of the professional services rendered
by M/s BSR& Co. LLP during their association with the Bank.
M/s Price Waterhouse Chartered Accountants LLP (PW), Mumbai (Firm's
Regn. No. (012754N / N500016)) are proposed to be appointed as the
Statutory Auditors for audit of the accounts of the Bank for FY
2015-16. Members are requested to consider the appointment of M/s Price
Waterhouse Chartered Accountants LLP , as the Statutory Auditors of the
Bank to hold office from the conclusion of this Annual General Meeting
till the conclusion of the next Annual General Meeting at remuneration
to be decided by the Board of Directors based on the recommendations of
the Audit Committee. Their appointment is subject to the approval of
the Reserve Bank of India. A certificate has been received from M/s
Price Waterhouse, Chartered Accountants LLP to the effect that their
appointment, if made, would be within the limits prescribed under
Section 141 of the Companies Act, 2013.
Independent Auditor's Report
M/s BSR & Co.LLP, Chartered Accountants, have audited the accounts of
the Bank for the year 2014-15 and their Report is annexed. There is no
qualification in the Auditor's Report.
Secretarial Audit
In terms of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Bank has appointed Mr. S. N. Bhandari of M/s Bhandari & Associates,
Company Secretaries in Practice (CP. No. 366), to undertake Secretarial
Audit. The Secretarial Audit Report submitted by M/s Bhandari &
Associates is furnished at Annexure II, and forms an integral part of
this Report.
The Secretarial Audit Report submitted by M/s Bhandari & Associates for
FY 2014-15 does not contain any qualification, reservation or adverse
remark.
Material events that have happened after the Balance Sheet date:
On April 10, 2015, the Bank entered into an agreement with Royal Bank
of Scotland N.V. to acquire on a 'slump sale' basis its Diamond and
Jewellery financing business in India, of approximately Rs. 4,500 crores
in size, along with related deposit portfolio, subject to certain
regulatory approvals. The process of taking over of the business is
under way and until ownership of the loans-transfer takes place, the
day-to-day management of the loan portfolio will remain with Royal Bank
of Scotland N.V. Once the formalities related to the transaction are
completed, the business will be integrated with that of the Bank, and
the advances and related deposit portfolio of the Bank will increase to
the extent of acquisition.
Other than the above, there are no material changes and commitments
affecting the financial position of the Bank, which have occurred
between the end of the Financial Year 2014-15 to which the Balance
Sheet relates and the date of this Report.
Statutory Disclosures
Information, wherever required under the Banking Regulation Act, 1949
or the Companies Act, 2013 as applicable to the Bank, has been laid out
in the Schedules attached and forms part of the Balance Sheet and the
Profit and Loss Account.
The details pursuant to remuneration of Directors and employees 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 given at Annexure III and form an integral
part of this Report.
Employees Stock Option Scheme
The Bank had instituted an Employee Stock Option Scheme (ESOS - 2007)
to enable its employees, including Whole- time Directors, to
participate in the future growth of the Bank. Under the Scheme, Options
can be granted, which upon exercise could give rise to the issuance of
a number of shares upto 7% of the issued equity capital of the Bank
from time to time. The eligibility and number of Options to be granted
to an employee is determined on the basis of criteria laid down in the
Scheme and is approved by the Compensation Committee of the Board of
Directors.
An aggregate of 3,45,67,700 Options, comprising 6.53% of the Bank's
equity capital, have been granted under the Scheme. Statutory
disclosures as required by SEBI Guidelines on Employee Stock Options
are given at Annexure IV to this Report.
The Employees Stock Option Plan is administered by the Compensation
Committee of the Board.
Directors' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statement in terms of Section 134 (3) (c) and 134 (5) of the
Companies Act, 2013:
(i) that in the preparation of the Annual Accounts for the year ended
March 31, 2015, the applicable Accounting Standards have been followed
along with proper explanation relating to material departures, if any;
(ii) that such accounting policies as mentioned in the notes to the
Financial Statements have been selected and applied consistently and
that judgements and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Bank as at March 31,2015 and of the profit of the Bank for the year
ended on that date;
(iii) that proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Bank and for preventing and detecting frauds and other
irregularities;
(iv) that the Annual Financial Statements have been prepared on a
'going concern' basis;
(v) that proper internal financial controls were in place and that the
financial controls were adequate and operating effectively;
(vi) that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form
MGT-9, as required under Section 92 of the Companies Act, 2013, are
included in this Report as Annexure V and form an integral part of this
Report.
Particulars of Employees
The Bank had 19,121 employees on its rolls as on March 31,2015.
The information containing particulars of employees pursuant to Section
197 of the Companies Act, 2013 read with Rule 5 (2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014
forms part of this Report. In terms of Section 136 of the Act, the
Report and Accounts are being sent to the Members and others entitled
thereto, excluding the information on employees' particulars which is
available for inspection by the Members at the Registered Office /
Secretarial and Investor Services Office of the Bank during business
hours on working days of the Bank up to the date of the ensuing Annual
General Meeting. Any Member interested in obtaining a copy thereof, may
write to the Company Secretary at the Secretarial and Investor Services
Office for the same.
Remuneration Policy
The Board of Directors has, on the recommendations of the HR &
Remuneration Committee framed a policy in relation to remuneration of
Directors, Key Management Personnel and Senior Management of the Bank.
The detailed remuneration Policy of the Bank is given under "Disclosure
on Remuneration" at Note no. 12.5 of the notes forming of the Financial
Statements and forms an integral part of this Report.
Particulars of Loans, Guarantees or Investments outstanding
Details of Loans, Guarantees and Investments made by the Bank are given
in the Notes to Financial Statements.
Corporate Social Responsibility
The Bank has voluntarily undertaken various initiatives in the area of
Corporate Social Responsibility (CSR) by focusing on
sustainability-driven growth.
In terms of the requirements of Section 135 of the Companies Act, 2013
and CSR Rules 2014, the Bank has set up a Board-level CSR Committee to
look after the CSR initiatives of the Bank. The Committee is headed by
Mrs. Kanchan
Chitale as Chairperson, with Mr. Ashok Kini, Mr. Vijay Vaid and Mr.
Romesh Sobti as Members.
The Bank has also framed the CSR Policy and strategy that will guide
and govern the Bank's activities in focus areas namely, rural
development and inclusiveness, environmental sustainability, preventive
healthcare and other areas of special interest.
During the year under review, the Bank has committed to Prime
Minister's Swachh Bharat Abhiyan and worked towards financial
inclusion and legal literacy. The CSR initiatives / projects undertaken
by the Bank are largely in accordance with Schedule VII ofthe Companies
Act, 2013.
The Report on CSR activities undertaken by the Bank is set out at
Annexure VI and forms an integral part of this Report.
Related Party Transactions
All transactions entered with 'Related Parties' during the year
under review were on 'arm's length basis' and in the 'ordinary
course of business' and therefore do not attract the provisions of
Section 188 of the Companies Act 2013. Further, there are no
materially significant Related Party Transactions during the year with
any of the Related Parties viz., Promoters, Directors and Key
Management Personnel or other related entities which may have a
potential conflict with the interest of the Bank at large.
The Policy on Related Party Transactions as approved by the Board of
Directors is available on the website ofthe Bank at the link given
below:
http://www.indusind.com/content/home/important-links/other-useful-information.html.
Business Responsibility Report (BRR)
The Securities and Exchange Board of India, vide their circular dated
August 13, 2012 have mandated top 100 listed entities, based on their
market capitalization on BSE Limited and National Stock Exchange of
India Ltd., to include the 'Business Responsibility Report' (BRR)
as part of the Annual Report.
In view of the above and in compliance with Clause 55 of the Listing
Agreement with Stock Exchanges, the Business Responsibility Report of
the Bank has been enclosed as Annexure VII to this Report, and forms an
integral part of this Report.
Corporate Governance
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance practices followed by the
Bank, together with a Certificate from Practising Company Secretary
confirming compliance, forms an integral part of this Report.
A copy of Certificate issued by M/s Bhandari & Associates is attached
as Annexure VIII to this Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report as required under Clause
49 of the Listing Agreement, forms part of the Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators /
Courts that would impact the going concern status of the Bank and its
future operations.
Awards and Accolades
During the year under review, your Bank has received many awards and
accolades for excellence in managing the Risk, Information Technology
and for innovations, etc. Mr. Romesh Sobti, Managing Director and CEO
received 'Banker of the Year' award from "Business Standard", a
leading financial newspaper.
Brief details of various awards are covered under Management Discussion
and Analysis Report.
Cautionary Statement
Certain statements in the "Directors' Report" and in the section
on "Management Discussion and Analysis" describing the Bank's
objectives, estimates and expectations may be 'forward-looking
statements' within the meaning of applicable Securities Laws and
Regulations. Actual results could differ substantially from those
expressed or implied. Important factors that could make a difference
include economic conditions in the domestic and overseas markets,
changes in Laws / Regulations, and other incidental factors.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment of
Women at Workplace
The Bank has zero tolerance for sexual harassment at workplace and has
adopted a 'Policy on Prevention, Prohibition and Redressal of Sexual
Harassment of Women at the Workplace', in line with the provisions of
the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013and the Rules made thereunder.
The Policy aims to provide protection to women employees at the
workplace and prevent and redress complaints of sexual harassment and
for matters connected or incidental thereto, with the objective of
providing a safe working environment.
The Bank has also constituted an 'Internal Complaints Committee',
to enquire into the complaints of sexual harassment and recommend
appropriate action.
The Bank received 6 complaints of sexual harassment during the
financial year 2014-15, status of the same is as under.
No. of cases received No. of cases closed No. of cases pending for
during the year during the year investigation attheend of
the year
6 5 1
Acknowledgements
The Directors are grateful to the shareholders of the Bank for the
trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the
Ministry of Corporate Affairs, Securities and Exchange Board of India,
Insurance Regulatory and Development Authority, Stock Exchanges and the
Depositories for the guidance and support extended by them to the Bank.
The Board expresses its appreciation to all employees for their
excellent performance, strong work ethic, and unswerving commitment,
which qualities have contributed to the Bank's continued progress in
a challenging environment.
The Board thanks its valued customers for their patronage, and looks
forward to the growing of this mutually supportive relationship in
future.
For and on behalf of the Board of Directors
Sd/-
Place : Mumbai R. Seshasayee
Date :May22,2015 Chairman
Mar 31, 2013
The Bank''s Directors have pleasure in presenting the Nineteenth
Annual Report covering business and operations of the Bank, together
with the audited financial accounts for the year ended March 31, 2013.
The financial performance for the year ended March 31, 2013 is
summarized as under:
(Rs. in crores)
March 31, 2013 March 31, 2012
Deposits 54,116.72 42,361.55
Advances 44,320.61 35,063.95
Operating Profit (before Depreciation
and Provisions and Contingencies) 1,912.89 1,447.99
Net Profit 1,061.18 802.61
During the year, despite the deceleration in growth rate in the Indian
economy and a challenging macroeconomic environment, the Bank''s
deposits grew by 27.75% and advances increased by 26.40%.
The focus during the year continued to be on increasing the earnings
from core banking business and on strengthening the fee income streams.
The Operating Profit (before Depreciation and Provisions and
Contingencies) during the year under review rose by 32.11% to Rs.
1,912.89 crores, from the level of Rs. 1,447.99 crores in the previous
year.
The Bank''s Net Profit, after considering necessary provisions and
contingencies and all expenses, was higher by 32.22% at Rs. 1,061.18
crores as against Rs. 802.61 crores in the previous year.
Appropriations
The Directors recommend appropriation of profit as under:
(Rs. in crores)
Operating Profit before Depreciation and Provisions
& Contingencies 1,912.89
Less: Depreciation on Fixed Assets 73.43
Less: Provisions & Contingencies inclusive of Income Tax 778.28
Net Profit 1,061.18
Profit Brought forward 1,187.59
Amount available for Appropriation 2,248.77
Transfer to Statutory Reserve 265.30
Transfer to Capital Reserve 8.36
Transfer to Investment Reserve Account 0.40
Proposed Dividend 157.09
Tax on Dividend 26.69
Balance carried over to Balance Sheet 1,790.93
Total Appropriations 2,248.77
Dividend
The Earning per Share (EPS) of the Bank has risen to Rs. 21.83 during
the year 2012-13, from Rs. 17.20 in the previous year.
Looking to the overall improvement in performance, the Directors
recommend dividend of Rs. 3/- per equity share of Rs. 10/- each for the
year ended March 31, 2013. (Dividend for the year 2011-12 was Rs. 2.20
per equity share of Rs. 10/- each).
The Bank shall pay tax on the amount of dividend paid, which will be
tax-free in the hands of the shareholders.
Financial Performance
The operating environment in the Indian economy witnessed significant
turbulence throughout the year, incorporating worsening liquidity
conditions and inflationary pressures coupled with volatility in
currency exchange rates. During the year, RBI reduced Repo Rate to
7.50% from 8.50% and CRR rates were reduced to 4.00% from 4.75%.
During the year 2012-13, the Bank continued to leverage its business on
the three performance planks of Productivity, Profitability and
Efficiency, which helped the Bank to significantly improve its
profitability.
The Bank''s Total Income grew by 31.00% to Rs. 8,346.19 crores from Rs.
6,370.98 crores, backed by improved business.
The sharp rise in profitability was the result of a healthy increase in
core earnings of the Bank through Net Interest Income (Nil) and robust
growth in Non-Interest Income streams. Net Interest Income improved by
31.02% to Rs. 2,232.87 crores from 1 1,704.25 crores while Non-Interest
Income rose to Rs. 1,362.96 crores from Rs. 1,011.78 crores, a rise of
34.71%.
The year 2012-13 has been one of sustained hardening of interest rates
and shrinking of lending margins. The Yield on Advances remained steady
at 13.77% during the year, even as the Cost of Deposits showed an
increase to 8.49% as against 8.06% in the previous year (an increase of
43 basis points). However, the Net Interest Margin (NIM) increased to
3.43% during the year, as compared with 3.33% in 2011-12, owing to
reduction in the total cost of funds.
Fee and Miscellaneous Income at Rs. 1,362.96 crores as compared to Rs.
1,011.78 crores in the previous year showed strong annual growth of
34.71%. Core Fee Income such as commission, exchange, fees on
distribution of third-party products and earnings from foreign exchange
business, etc. grew by 36% to Rs. 1,239.34 crores from the level of t
913.24 crores last year.
The Bank expanded its branch network rapidly to reach 500 branches, as
against 400 branches at the beginning of the year. Revenue per
employee during the year remained steady at Rs. 31.26 lakhs.
Quality of the Bank''s assets remained stable, with Net Non-Performing
Assets (Net NPAs) at 0.31 % as at March 31,2013 from 0.27% last year.
The Provisioning Coverage Ratio (PCR) stood at 70.13% as compared to
72.72% previous year.
On the liabilities side, the emphasis continued to be on broadbasing
the deposit franchise. This task was accomplished by leveraging the
expanded branch network and the pan-India marketing setup, offering
innovative products and service propositions, sustained promotional
campaigns, and enabling customers with alternate channels like ATMs,
Internet Banking, etc.
The Bank introduced several new products and services for its chosen
client segments, through its Transaction Banking Group and Global
Markets Group. Deeper understanding of client requirements and the
ability to put technology to efficient use formed the bedrock on which
new products and service propositions were created.
The Bank kept up its focus on deepening as well as strengthening the
fee-based income streams, resulting in a smart growth in non-interest
income. Moving forward, the Bank plans to upscale the growth momentum
through further enhancements in diverse revenue streams such as foreign
exchange business, investment banking, structured trade and treasury
products, distribution of third party products like mutual funds and
insurance, international remittances, bullion operations and
transaction banking activities, including the depository business and
the commodity market business.
Share Capital
On December 5, 2012, the Bank issued 5,21,00,000 equity shares of Rs.
10/- each at a price of 1384.00 per share, aggregating to t 2,000.64
crores through a Qualified Institutions Placement (QIP).
During the year under review, the Bank allotted 30,67,705 shares
pursuant to the exercise of Options under its Employees Stock Option
Scheme, 2007.
Pursuant to the above, the Paid-up Share Capital and Share Premium
Account increased by Rs. 55.17 crores and Rs. 1,962.85 (net) crores
respectively.
As at March 31, 2013, the Paid-up Equity Capital of the Bank consisted
of 52,26,77,706 shares of Rs. 10/- each, excluding forfeited shares.
Tier II Capital
The Bank did not raise any Tier II Capital during the year.
Capital Adequacy
The Bank is adequately capitalized. The Capital Adequacy Ratio of the
Bank, calculated as per the New Capital Adequacy Framework (Basel II
norms) of RBI, is set out below:
March 31, 2013 March 31, 2012
i) Capital Adequacy Ratio (CRAR) 15.36% 13.85%
ii) CRAR- Tier I Capital 13.78% 11.37%
iii) CRAR- Tier II Capital 1.58% 2.48%
Ratings
Instruments Rating Rating Agency
Lower Tier II Subordinate Debt program AA ICRA
Upper Tier II Bonds AA- ICRA
Certificates of Deposit A1 CRISIL
Lower Tier II Subordinate Debt program AA CARE
Long Term Debt Instruments AA- India Ratings
and Research
Short Term Debt Instruments AA India Ratings
and Research
Subsidiary Company
ALF Insurance Services Pvt. Ltd., the Bank''s subsidiary company which
was set up to do the business of Insurance Corporate Broking, is
currently under voluntarily winding up, and the process is expected to
be completed soon.
Directors
Mr. S. C. Tripathi and Dr. T. T. Ram Mohan, Directors, retire by
rotation, and being eligible, have offered themselves for re-
appointment.
Mr. R. Seshasayee was appointed Part-time Non-executive Chairman of the
Bank on July 24, 2007 for a period of two years. The Reserve Bank of
India had approved the re-appointment of Mr. R. Seshasayee as Part-time
Chairman of the Bank for a further period of two years in July 2009 and
July 2011. Re-appointment of Mr. R. Seshasayee as Part-time Chairman of
the Bank for a period of two years w.e.f. July 24, 2013 is proposed,
subject to approval of the Reserve Bank of India.
Mr. Romesh Sobti was appointed Managing Director & CEO of the Bank for
a period of three years with effect from February 1, 2008 and requisite
approval as required u/s 35B of the Banking Regulation Act, 1949 was
obtained. The said appointment was approved by the shareholders in the
General Body meeting held on September 22, 2008. Mr. Sobti was
thereafter re-appointed as Managing Director & CEO of the Bank in the
Annual General Meeting held on June 28, 2010 for a further period of
three years, w.e.f. February 1, 2011. Re-appointment of Mr. Romesh
Sobti as Managing Director & CEO of the Bank for a period of three
years w.e.f. February 1, 2014 is proposed, subject to approval of the
Reserve Bank of India.
Brief resume of Directors proposed to be re-appointed have been
furnished in the section on ''Corporate Governance''. Auditors
M/s B S R & Co., Chartered Accountants, the Statutory Auditors of the
Bank, who have audited the accounts of the Bank for the year 2012-13,
will retire at the conclusion of the ensuing Annual General Meeting and
are eligible for re-appointment. Members are requested to consider
their re-appointment and authorise the Board to fix their remuneration.
The appointment of the Statutory Auditors will be subject to the
approval of Reserve Bank of India.
Auditors'' Report
M/s B S R & Co., Chartered Accountants, have audited the accounts of
the Bank for the year 2012-13 and their Report is annexed. There are no
qualifications in the Auditors'' Report.
Statutory Disclosures
Information, wherever required under the Banking Regulation Act, 1949
or the Companies Act, 1956 as applicable to a banking company, has been
laid out in the schedules attached and forms part of the Balance Sheet
and the Profit and Loss Account.
There are no material changes and commitments affecting the financial
position of the Bank, which have occurred between the end of the
financial year 2012-13 to which the Balance Sheet relates and the date
of this Report.
Considering the nature of activities as an entity in the financial
services sector, 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. The Bank has, however, made optimum use of
information technology in its operations.
The Bank had 11,502 employees on its rolls as on March 31, 2013. The
information required under Section 217(2A) of the Companies Act, 1956
and the rules made thereunder is given in the annexure appended hereto
and forms part of this Report. In terms of Section 219(1 )(b)(iv) of
the Companies Act, this Report and the Accounts are being sent to the
shareholders excluding the aforesaid annexure. Any shareholder
interested in obtaining a copy of the said annexure may write to the
Company Secretary at the Registered Office of the Bank.
Employee Stock Option Scheme
The Bank had instituted Employee Stock Option Scheme (ESOS - 2007) to
enable its employees, including Whole-time Directors, to participate in
the future growth of the Bank. Under the Scheme, Options can be
granted, which upon exercise could give rise to the issue of a number
of shares upto 7% of the issued equity capital of the Bank from time to
time. The Employee Stock Option Scheme is in accordance with the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility
and number of Options to be granted to an employee is determined on the
basis of criteria laid down in the Scheme and is approved by the
Compensation Committee of the Board of Directors.
An aggregate of 2,79,55,200 Options, comprising 5.35% of the Bank''s
equity capital, have been granted under the Scheme. Statutory
disclosures as required by the SEBI Guidelines on ESOS are given at
Annexure "I" to this Report.
Corporate Governance
The Bank continues its endeavour to adopt the best prevalent Corporate
Governance practices.
A separate Report on the status of implementation of Corporate
Governance, as required under Clause 49 of the Listing Agreement with
the relevant Stock Exchanges, is included in the section on
''Corporate Governance'' which forms part of this Report. M/s
Bhandari & Associates, Company Secretaries have certified that the
conditions of Corporate Governance as stipulated in Clause 49 of the
Listing Agreements with the Stock Exchanges have been complied with by
the Bank. A copy of their Certificate is also attached at Annexure
''II'' to this Report''.
Directors'' Responsibility Statement
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors hereby certify and confirm that:
(i) in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Bank as at March 31, 2013 and of the profit of the Bank for the
year ended on that date;
(iii) the Directors have taken proper and sufficient 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 Bank and for preventing and
detecting frauds and other irregularities; and
(iv) the Annual Accounts have been prepared on a ''going concern''
basis.
Acknowledgements
The Directors are grateful to the shareholders of the Bank for the
trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the
Ministry of Corporate Affairs, Securities and Exchange Board of India,
Insurance Regulatory and Development Authority, and the Stock Exchanges
for the guidance and support extended by them to the Bank.
The Board expresses its deep sense of appreciation to all employees for
their excellent performance, strong work ethic and unswerving
commitment, which qualities have contributed to the Bank''s continued
progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks
forward to the growing of this mutually supportive relationship in
future.
For and on behalf of the Board of Directors
Place : Mumbai R. Seshasayee
Date : May 8, 2013 Chairman
Mar 31, 2012
The Bank's Directors have pleasure in presenting the Eighteenth
Annual Report covering business and operations of the Bank,
together with the audited accounts for the year ended March 31, 2012.
The financial performance for the year ended March 31, 2012 is
summarized as under:
(Rs in crores)
As on As on
March 31,
2012 March 31,
2011
Deposits 42,361.55 34,365.37
Advances 35,063.95 26,165.65
Operating Profit (before Depreciation and
Provisions and Contingencies) 1,447.99 1,142.22
Net Profit 802.61 577.32
During the year, the Bank's deposits grew by 23.27% and advances
increased by 34.01%, despite the deceleration in growth rate in the
Indian economy and a challenging macroeconomic environment.
The focus during the year continued to be on increasing the earnings
from core banking business and on strengthening the fee income streams.
The Operating Profit (before Depreciation and Provisions and
Contingencies) during the year under review rose by 26.77% to Rs1,447.99
crores, from the level ofRs1,142.22 crores in the previous year.
The Bank's Net Profit, after considering necessary provisions and
contingencies and all expenses, was higher by 39.02% at Rs802.61 crores
as against Rs577.32 crores in the previous year.
Appropriations
The Directors recommend appropriation of profit as under:
(Rs in crores)
Operating Profit before Depreciation and Provisions
& Contingencies 1,447.99
Less: Depreciation on Fixed Assets 74.96
Less: Provisions & Contingencies 570.42
Net Profit 802.61
Profit Brought forward 714.36
Amount available for Appropriation 1,516.97
Transfer to Statutory Reserve 200.65
Transfer to Capital Reserve 8.63
Transfer to Investment Reserve Account 0.52
Proposed Dividend 102.89
Tax on Dividend 16.69
Balance carried over to Balance Sheet 1,187.59
Total Appropriations 1,516.97
Dividend
The Earning per Share (EPS) of the Bank has risen to Rs 17.20 during the
year 2011-12, from Rs 13.16 in the previous year.
Looking to the overall improvement in performance, the Directors
recommend a dividend ofRs 2.20 per equity share ofRs 10/- each for the
year ended March 31, 2012. (Dividend for the year 2010-11 was Rs 2.00 per
equity share ofRs 10/- each).
The Bank shall pay tax on the amount of dividend paid, which will be
tax-free in the hands of the shareholders.
Financial Performance
During the year 2011-12, the Bank continued to leverage its business on
the three performance planks of Productivity, Profitability and
Efficiency, which helped the Bank to improve its profitability
significantly.
The Bank's Total Income grew by 48.06% to Rs 6,370.98 crores from Rs
4,303.02 crores, backed by improved business.
The sharp rise in profitability was the result of a healthy increase in
the core earnings of the Bank through Net Interest Income (Nil) and
robust growth in Non-Interest Income streams. Net Interest Income
improved by 23.81% to Rs 1,704.25 crores from Rs 1,376.50 crores while
Non-Interest Income rose to Rs 1,011.78 crores from Rs 713.66 crores, a
rise of41.77%.
The operating environment in the Indian economy witnessed significant
turbulence throughout the year, incorporating worsening liquidity
conditions and inflationary pressures coupled with volatility in
currency exchange rates. RBI continued with a staunch anti-inflationary
stance until December 2011, and raised policy rates in every review.
However, to mitigate the liquidity crunch, RBI had reduced CRR by 125
basis points in Q4FY12 and has deferred policy rate reductions to
fiscal 2012-13.
The year 2011-12 has been one of sustained hardening of interest rates
and shrinking of lending margins. Although the Yield on Advances
improved to 13.77% during the year as against the yield of 12.36% in
2010-11 (an increase of 141 basis points), the Cost of Deposits showed
a sharper increase to 8.06% as against 6.32% in the previous year (an
increase of 174 basis points). Accordingly, the Net Interest Margin
(NIM) declined to 3.33% during the year, as compared with 3.47% in
2010-11.
Fees and Miscellaneous Income at Rs 1,011.78 crores as compared with Rs
713.66 crores in the previous year showed strong annual growth of 42%.
Increase in Core Fee Income such as commission, exchange, fees on
distribution of third-party products and earnings from foreign exchange
business, etc. grew about 45% to Rs 913.24 crores from the level ofRs
629.44 crores last year.
The Bank expanded its branch network rapidly to reach 400 branches, as
against 300 branches at the beginning of the year. Revenue per employee
during the year remained steady atRs 30 lakhs.
Quality of the Bank's assets improved further, with Net Non-Performing
Assets (Net NPAs) falling to 0.27% as at March 31, 2012 from 0.28% last
year. The Provisioning Coverage Ratio (PCR) improved marginally to
72.72% as compared with 72.61% in the previous year.
On the liabilities side, the emphasis continued to be on broad basing
the deposit franchise and on reduction in the overall cost of deposits.
This task was accomplished by leveraging the expanded branch network
and the pan-India marketing setup, offering innovative products and
service propositions, sustained promotional campaigns, and enabling
customers with alternate channels like ATMs, Internet Banking, etc.
The Bank introduced several new products and services for its chosen
client segments, through its Transaction Banking Group and Global
Markets Group. Deeper understanding of client requirements and the
ability to put technology to efficient use formed the bedrock on which
new products and service propositions were created.
Towards consolidating itself as a full service 'Universal Bank',
the Bank acquired the Indian operations of the Credit Cards business of
Deutsche Bank AG, as a going concern on a slump sale basis. The
acquisition was fully funded from internal accruals of the Bank. A
seamless take-over of the business was completed on June 1, 2011.
The Bank kept up its focus on deepening as well as strengthening the
fee-based income streams, resulting in a smart growth in non-interest
income. Moving forward, the Bank plans to upscale the growth momentum
through further enhancements in diverse revenue streams such as foreign
exchange business, investment banking, structured trade and treasury
products, distribution of third party products like mutual funds and
insurance, international remittances, bullion operations and
transaction banking activities, including the depository business and
the commodity market business.
Share Capital
During the year under review, the Bank allotted 17,36,166 shares
pursuant to the exercise of Options under its Employees Stock Option
Scheme, 2007.
Pursuant to the above, the Paid-up Share Capital and Share Premium
Account increased by Rs 1.73 crores and Rs 9.78 crores respectively.
As at March 31, 2012, the Paid-up Equity Capital of the Bank consisted
of 46,75,10,001 shares ofRs 10/- each, excluding forfeited shares.
Tier II Capital
The Bank did not raise any Tier II Capital during the year.
Capital Adequacy
The Bank is adequately capitalized. The Capital Adequacy Ratio of the
Bank, calculated as per the New Capital Adequacy Framework (Basel II
norms) of RBI, is set out below:
March 31, 2012 March, 31, 2011
i) Capital Adequacy Ratio (CRAR) 13.85% 15.89%
ii) CRAR - Tier I Capital 11.37% 12.29%
iii) CRAR - Tier II Capital 2.48% 3.60%
Ratings
Instruments Rating Rating Agency
Lower Tierll Subordinate Debt program AA ICRA
Upper Tierll Bonds AA- ICRA
Certificate of Deposit A1 CRISIL
Lower Tierll Subordinate Debt program AA CARE
Lower Tierll Debt Instruments AA-(ind) FITCH
Upper Tierll Debt Instruments A(ind) FITCH
Short Term Debt Instruments A1 FITCH
Subsidiary Company
ALF Insurance Services Pvt. Ltd., the Bank's subsidiary company was
set up to do the business of Insurance Corporate Broking. The Bank has
since decided against entering the Insurance Broking business, and the
subsidiary is being voluntarily wound up.
Directors
Mr. Ajay Hinduja and Dr. T. T. Ram Mohan, Directors, retire by
rotation, and being eligible, have offered themselves for re-
appointment.
Mrs. Kanchan Chitale was appointed Additional Director by the Board at
its meeting held on October 18, 2011, and will hold office as
Additional Director upto the ensuing Annual General Meeting.
Mr. Vijay Vaid was appointed Additional Director by the Board at its
meeting held on October 18, 2011, and will hold office as Additional
Director upto the ensuing Annual General Meeting.
Mr. R. S. Sharma was appointed Additional Director by the Board at its
meeting held on April 19, 2012, and will hold office as Additional
Director upto the ensuing Annual General Meeting.
The Bank has received notices from members pursuant to Section 257
Of the Companies Act, 1956 signifying their intention to propose the
candidature of Mrs. Kanchan Chitale, Mr. Vijay Vaid and Mr. R. S.
Sharma for the office of Director.
Brief profiles of Mrs. Kanchan Chitale, Mr. Vijay Vaid and Mr. R. S.
Sharma are furnished in the Report on Corporate Governance.
Mr. Premchand Godha, who had joined the Bank's Board on October 31,
2006, expressed a desire to step down from the Board of our Bank owing
to his professional preoccupations. Mr. Godha's resignation was
accepted by the Board on August 18, 2011.
The Directors wish to place on record their sincere appreciation for
the valuable contributions made by Mr. Godha towards the deliberations
in the Board during his tenure as Director of the Bank.
Mr. T. Anantha Narayanan, who had joined the Bank's Board on March
18, 2004, ceased to hold office from March 18, 2012 on completion of
the maximum permissible tenure of 8 years laid down in Section
10A(2A)(i) of the Banking Regulation Act, 1949.
The Directors wish to place on record their sincere appreciation for
the valuable contributions made by Mr. Anantha Narayanan towards the
deliberations in the Board during his tenure as Director of the Bank.
Auditors
M/s BSR & Co., Chartered Accountants, the Statutory Auditors of the
Bank, who have audited the accounts of the Bank for the year 2011-12,
will retire at the conclusion ofthe ensuing Annual General Meeting and
are eligible for re-appointment. Members are requested to consider
their re-appointment and authorise the Board to fix their remuneration.
The appointment of the Statutory Auditors will be subject to the
approval of Reserve Bank of India. The members are further requested to
authorise the Board to appoint Branch Auditors of the Bank in
consultation with the Statutory Auditors and to fix their remuneration.
Auditors' Report
M/s BSR & Co., Chartered Accountants, have audited the accounts of the
Bank for the year 2011-12 and their Report is annexed. There are no
qualifications in the Auditors' Report.
Statutory Disclosures
Information, wherever required under the Banking Regulation Act, 1949
or the Companies Act, 1956 as applicable to a banking company, has been
laid out in the schedules attached and forms part of the Balance Sheet
and Profit and Loss Account.
There are no material changes and commitments affecting the financial
position of the Bank, which have occurred between the end of the
financial year 2011-12 to which the Balance Sheet relates and the date
of this Report.
Considering the nature of activities as an entity in the financial
services sector, 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. The Bank has, however, made optimum use
of information technology in its operations.
The Bank had 9,370 employees on its rolls as on March 31, 2012. The
information required under Section 217(2A) of the Companies Act, 1956
and the rules made there under is given in the annexure appended hereto
and forms part of this Report. In terms of Section 219(1)(b)(iv) of the
Companies Act, this Report and the Accounts are being sent to the
shareholders excluding the aforesaid annexure. Any shareholder
interested in obtaining a copy of the said annexure may write to the
Company Secretary at the Registered Office of the Bank.
Employees Stock Option Scheme
The Bank had instituted an Employees Stock Option Scheme to enable its
employees, including Whole-time Directors, to participate in the future
growth of the Bank. Under the Scheme, Options which upon exercise or
conversion could give rise to the issue of a number of shares not
exceeding in the aggregate 7% of the issued equity capital of the Bank
from time to time can be granted. The Employees Stock Option Scheme is
in accordance with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999. The eligibility and number of options to be granted to an
employee is determined on the basis of criteria laid down in the Scheme
and is approved by the Compensation Committee of the Board of Directors.
An aggregate of 2,72,45,700 Options, comprising 5.82% of the Bank's
equity capital, have been granted under the Scheme. Statutory
disclosures as required by the revised SEBI Guidelines on ESOS are
given in the Annexure to this Report.
Corporate Governance
The Bank continues its endeavour to adopt the best prevalent Corporate
Governance practices.
A separate Report on the status of implementation of Corporate
Governance, as required under Clause 49 of the Listing Agreements with
the relevant Stock Exchanges, is included in the section on
'Corporate Governance' which forms part of this Report. M/s
Bhandari & Associates, Company Secretaries have certified that the
conditions of Corporate Governance as stipulated in Clause 49 of the
Listing Agreements with the Stock Exchanges have been complied with by
the Bank. A copy of their Certificate is also attached to the section
on 'Corporate Governance'.
Directors' Responsibility Statement
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors hereby certify and confirm that:
(i) in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Bank as at March 31, 2012 and of the profit of the Bank for the
year ended on that date;
(iii) the Directors have taken proper and sufficient 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 Bank and for preventing and detecting
frauds and other irregularities; and
(iv) the Annual Accounts have been prepared on a 'going concern'
basis.
Acknowledgements
The Directors are grateful to the shareholders of the Bank for the
trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Stock
Exchanges, the Ministry of Corporate Affairs, and the Securities and
Exchange Board of India for the guidance and support extended by them
to the Bank.
The Board expresses its deep sense of appreciation to all employees for
their excellent performance, strong work ethic and unswerving
commitment, which qualities have contributed to the Bank's continued
progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks
forward to the growing of this mutually supportive relationship in
future.
For and on behalf of the Board of Directors
Place : Mumbai R. Seshasayee
Date : May 25,2012 Chairman
Mar 31, 2011
The Banks Directors have pleasure in presenting the Seventeenth Annual
Report covering business and operations of the Bank, together with the
audited accounts for the year ended March 31, 2011.
The financial performance for the year ended March 31, 2011 is
summarized as under:
(Rs. in crores)
As on As on
March 31, 2011 March 31, 2010
Deposits 34,365.37 26,710.17
Advances 26,165.65 20,550.59
Operating Profit
(before Depreciation and
Provisions and Contingencies) 1,142.22 749.19
Net Profit 577.32 350.31
During the year, the Banks deposits grew by 28.66% and advances
increased by 27.32%, despite the mixed growth signals
Contents
in the Indian economy and the tentative recovery witnessed in the
global outlook.
The focus during the year continued to be on increasing the earnings
from core banking business and on strengthening the fee income streams.
Operating Profit (before Depreciation and Provisions and Contingencies)
during the year under review rose by 52.46% to Rs. 1,142.22 crores,
from the level of Rs. 749.19 crores in the previous year.
The Banks Net Profit, after considering necessary provisions and
contingencies and all expenses, was higher by 64.80% at Rs. 577.32
crores as against Rs. 350.31 crores in the previous year.
Appropriations
The Directors recommend appropriation of profit as under:
(Rs. in crores)
Operating Profit before Depreciation
and Provisions & Contingencies 1,142.22
Less: Depreciation on Fixed Assets 60.55
Less: Provisions & Contingencies 504.35
Net Profit 577.32
Profit Brought forward 391.51
Amount available for Appropriation 968.83
Transfer to Statutory Reserve 144.33
Transfer to Capital Reserve 1.10
Transfer to Investment Reserve Account 0.69
Proposed Dividend 93.23
Tax on Dividend 15.12
Balance carried over to Balance Sheet 714.36
Total Appropriations 968.83
Dividend
The Earning per Share (EPS) of the Bank has risen to Rs. 13.16 during
the year 2010-11 from Rs. 9.01 in the previous year.
Looking to the overall improvement in performance and the growth
outlook for the current year, the Directors recommend a dividend of Rs.
2.00 per equity share of Rs. 10/- each for the year ended March 31,
2011. (Dividend for the year 2009-10 was Rs. 1.80 per equity share of
Rs.10/- each). The Bank shall pay tax on the amount of dividend paid,
which will be tax-free in the hands of the shareholders.
Financial Performance
During the year 2010-11, the Bank continued to leverage its business on
the three performance planks of Productivity, Profitability and
Efficiency, which brought about a significant change in the
year-on-year performance. There has been substantial and all-round
improvement in various financial parameters during the year.
The Banks Total Income grew by 31.98% to Rs. 4,303.02 crores from Rs.
3,260.47 crores last year.
The sharp rise in profitability was the result of a healthy increase in
the core income streams. Net Interest Income improved by 55.29% to Rs.
1,376.49 crores from Rs. 886.41 crores while the Non-Interest Income
rose to Rs. 713.66 crores from Rs. 553.48 crores, a rise of 28.94%.
Yield on advances was marginally lower at 12.36% during the year, as
against the yield of 12.61% in 2009-10. Cost of deposits, however,
decreased more sharply to 6.32% as against 6.82% in the previous year.
Accordingly, the Net Interest Margin (NIM) rose to 3.47% during the
year, as compared with 2.88% in 2009-10.
Though the Bank expanded its branch network substantially to reach 300
branches as against 210 at the beginning of the year, higher revenue
growth and better cost management resulted in Cost / Income
(Efficiency) Ratio improving to 48.25% in 2010-11 as against 51.12% in
2009-10. Revenue per employee during the year improved to `29.83 lakhs
from Rs.26.75 lakhs in the previous year.
Quality of the Banks assets improved further, with Net Non-Performing
Assets (Net NPAs) falling to 0.28% as at March 31, 2011 from 0.50% last
year. The Provisioning Coverage Ratio (PCR) improved significantly to
72.61% as compared to 60.14% last year.
On the liabilities side, the emphasis continued to be on broadbasing
the deposit franchise and on reduction in the overall cost of deposits.
This task was accomplished by leveraging on the expanded branch network
and the pan-India marketing setup, offering innovative products and
service propositions, sustained promotional campaigns, and enabling
customers with alternate channels like ATMs, Internet Banking, etc. The
strengthened infrastructure was leveraged to boost the Current and
Savings Account (CASA) balances to 27.15% from the level of 23.67% last
year.
The Bank introduced several new products and services for its chosen
client segments, through its Transaction Banking Group and Global
Markets Group. Deeper understanding of client requirements and the
ability to put technology to efficient use formed the bedrock on which
new products and service propositions were created.
The Bank kept up its focus on broadbasing as well as strengthening the
fee-based income streams, resulting in a smart growth in non-interest
income. Moving forward, the Bank plans to upscale the growth momentum
through further enhancements in diverse revenue streams such as foreign
exchange business, investment banking, structured trade and treasury
products, distribution of third party products like mutual funds and
insurance, international remittances, bullion operations and
transaction banking activities, including the depository business and
the commodity market business.
Share Capital
On September 24, 2010, the Bank issued 5,00,00,000 equity shares of Rs.
10/- each through a Qualified Institutional Placement (QIP), at a
premium of Rs. 224.55 per share. During the year under review Bank
allotted 53,19,195 equity shares to employees pursuant to the exercise
of Options under its Employees Stock Option Scheme, 2007.
Pursuant to the above, the Paid-up Share Capital and Share Premium
Account increased by Rs. 55.32 crores and Rs. 1129.19 crores
respectively.
As at March 31, 2011, the Paid-up Equity Capital of the Bank consisted
of 46,57,73,835 shares of Rs. 10/- each, excluding forfeited shares.
Tier II Capital
In view of the Tier I capital infusion through the issue of equity
shares, the Bank did not raise any Tier II capital during the year.
There is substantial headroom available to the Bank to raise Tier II
Capital in future.
Capital Adequacy
The Bank is adequately capitalized. The Capital Adequacy Ratio of the
Bank, calculated as per the New Capital Adequacy Framework (Basel II
norms) of RBI, is set out below:
March 31, 2011 March 31, 2010
i) Capital Adequacy Ratio (CRAR) 15.89% 15.33%
ii) CRAR- Tier I Capital 12.29% 9.65%
iii) CRAR- Tier II Capital 3.60% 5.68%
Ratings
Given below are some of the ratings assigned by Credit Rating Agencies
to the Banks deposit and borrowing programmes:
- P1+ rating for Fixed Deposits and Certificate of Deposits (upto 1
year contracted maturity) by CRISIL.
- ÃLAA- for Lower Tier II Subordinate Debt program and ÃLA+ for Upper
Tier II Bond program by ICRA.
- ÃCARE AA- for Lower Tier II Subordinate Debt program by CARE.
- ÃAA-(ind) for Lower Tier II Subordinate Debt program, ÃA(ind) for
Upper Tier II bond program and F1+ for Short Term program by Fitch
Ratings.
Directors
Mr. R. Seshasayee was re-appointed Non-executive Chairman of the Bank
in July 24, 2009 for a further period of two years. Mr. Seshasayees
tenure accordingly concludes on July 23, 2011.
Re-appointment of Mr. Seshasayee as Non-executive Chairman of the Bank,
for a further period of two years with effect from July 24, 2011 is
accordingly proposed, subject to approval of the Reserve Bank of India.
Mr. Ashok Kini and Mr. T. Anantha Narayanan, Directors, retire by
rotation, and being eligible, have offered themselves for
re-appointment.
Mr. Romesh Sobti was appointed Managing Director and CEO of the Bank
w.e.f. February 1, 2008 for a period of three years. Since Mr. Sobtis
tenure would conclude on January 31, 2011, approval of the Members for
his re-appointment was sought in the 16th Annual General Meeting of the
Bank held on June 28, 2010, subject to the approval of the Reserve Bank
of India.
The Bank has since received the approval from Reserve Bank of India for
re-appointment of Mr. Romesh Sobti as Managing Director and CEO for a
period of three years, w.e.f. February 1, 2011, vide RBI letter dated
January 13, 2011 on the terms and conditions indicated therein.
Mr. R. Sundararaman, who had joined the Banks Board on October 30,
2002, ceased to hold office from October 30, 2010 upon completion of
the maximum permissible tenure of 8 years on the Board of the Bank vide
Section 10A(2A)(i) of the Banking Regulation Act, 1949. The Directors
wish to place on record their sincere appreciation for the valuable
services rendered by him during his tenure as Director of the Bank.
Auditors
M/s M. P. Chitale & Co., Chartered Accountants are the Auditors of the
Bank and will retire at the conclusion of the ensuing Annual General
Meeting. They have been associated with the Bank as Statutory Auditors
for the past four financial years, and are not eligible for
re-appointment in accordance with the RBIs policy of rotation and
resting. The Board places on record its deep appreciation of the
professional services rendered by M/s M. P. Chitale & Co., during their
association with the Bank.
M/s B S R & Co., Chartered Accountants are proposed to be appointed as
the Statutory Auditors of the Bank for the year 2011-12. Members are
requested to consider the appointment of M/s B S R & Co., as the
Statutory Auditors of the Bank till the conclusion of the next Annual
General Meeting at a remuneration to be decided by the Board of
Directors. Their appointment is subject to the approval of the Reserve
Bank of India. A certificate from M/s B S R & Co. has been received to
the effect that their appointment, if made, would be within the
prescribed limits under Section 224(1) of the Companies Act, 1956.
Auditors Report
M/s. M. P. Chitale & Co., Chartered Accountants, have audited the
accounts of the Bank for the year 2010-11 and their Report is annexed.
There are no qualifications in the Auditors Report.
Statutory Disclosures
Information, wherever required under the Banking Regulation Act, 1949
or the Companies Act, 1956 as applicable to a banking company, has been
laid out in the schedules attached and forms part of the Balance Sheet
and Profit and Loss Account.
There are no material changes and commitments affecting the financial
position of the Bank, which have occurred between the end of the
financial year 2010-11 to which the Balance Sheet relates and the date
of this Report.
Considering the nature of activities as an entity in the financial
services sector, 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. The Bank has, however, made optimum use of
information technology in its operations.
The Bank had 7008 employees on its rolls as on March 31, 2011. The
information required under Section 217(2A) of the Companies Act, 1956
and the rules made thereunder is given in the annexure appended hereto
and forms part of this Report. In terms of Section 219(1)(b)(iv) of
the Companies Act, this Report and the Accounts are being sent to the
shareholders excluding the aforesaid annexure. Any shareholder
interested in obtaining a copy of the said annexure may write to the
Company Secretary at the Registered Office of the Bank.
Employee Stock Option Scheme
The Bank had instituted an Employee Stock Option Scheme (ESOS) to
enable its employees, including Whole-time Directors, to participate in
the future growth of the Bank. Under the Scheme, Options which upon
exercise or conversion could give rise to the issue of a number of
shares not exceeding in the aggregate 7% of the issued equity capital
of the Bank from time to time can be granted. The Employee Stock Option
Scheme is in accordance with the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999. The eligibility and number of options to be granted
to an employee is determined on the basis of criteria laid down in the
Scheme and is approved by the Compensation Committee of the Board of
Directors.
An aggregate of 2,36,25,450 Options have been granted under the Scheme.
Statutory disclosures as required by the revised SEBI Guidelines on
ESOS are given in the Annexure to this Report.
Corporate Governance
The Bank continues its endeavour to adopt the best prevalent Corporate
Governance practices. A separate report on the status of implementation
of Corporate Governance, as required under Clause 49 of the Listing
Agreements with the relevant Stock Exchanges, is included in the
section on ÃCorporate Governance which forms part of this Report. M/s.
Bhandari & Associates, Company Secretaries have certified that the
conditions of Corporate Governance as stipulated in Clause 49 of the
Listing Agreements with the Stock Exchanges have been complied with by
the Bank. A copy of their Certificate is also attached to the Section
on ÃCorporate Governance.
Directors Responsibility Statement
Pursuant to the provisions of Section 217(2AA) of the Companies Act,
1956, the Directors hereby certify and confirm that:
(i) in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Bank as at March 31, 2011 and of the profit of the Bank for the
year ended on that date.
(iii) the Directors have taken proper and sufficient 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 Bank and for preventing and
detecting fraud and other irregularities; and
(iv) the Annual Accounts have been prepared on a Ãgoing concern basis.
Acknowledgements
The Directors are grateful to the shareholders of the Bank for the
trust and confidence reposed by them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the
Ministry of Corporate Affairs, the Securities and Exchange Board of
India and the Stock Exchanges for the guidance and support extended by
them to the Bank.
The Board expresses its deep sense of appreciation to all employees for
their excellent performance, strong work ethic and unswerving
commitment, which qualities have contributed to the Banks continued
progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks
forward to the growing of this mutually supportive relationship in
future.
For and on behalf of the Board of Directors
R. Seshasayee
Chairman
Place : Mumbai
Date : May 23, 2011
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