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Directors Report of Punjab & Sind Bank

Mar 31, 2016

The Board of Directors has pleasure in presenting the Annual Report of the Bank along with the Balance Sheet & Profit and Loss Account for the year ended 31st March, 2016.

The Banking sector in India is growing, so is our Bank. However, there are some major issues before us. Assets quality remain a serious cause of concern for the Bank and Capital Adequacy, Profitability is under pressure along with greater challenge in increasing the NIM, decreasing the Cost of Deposit and improving the Return on Assets. Different measures at different levels are being taken up to face the challenges.

WORKING RESULTS TOTAL BUSINESS

During the year ended 31.03.2016, total Business of the Bank recorded an increase of 3.31% at Rs.156527 crore as compared to Rs.151511 crore as on 31.03.2015.

PROFIT

The Bank recorded a Net Profit of Rs.335.97 crore for the year 2015-16 as compared to that at Rs.121.35 crore during the FY 2014-15. The Return on Assets (ROA) stood at 0.34% as compared to that at 0.13% in the year 2014-15.

HIGHLIGHTS OF RESULTS FOR THE YEAR ENDED 31ST MARCH 2016

(Rs. in Lac)

Year Ended %age change 31.03.2016 31.03.2015

Interest Income 874434 858855 1.81

Other Income 47848 42875 11.60

Total Income 922282 901730 2.28

Total Expenditure 795293 824185 -3.51

Operating profit 126989 77545 63.76

Net Profit 33597 12135 176.86

ROA 0.34% 0.13%

Net Interest Margin (NIM) 2.22% 1.80%

Gross NPA 6.48% 4.76%

Net NPA 4.62% 3.55%

Capital Adequacy Ratio (Basel II) 11.75% 11.88%

Capital Adequacy Ratio (Basel III) 10.91% 11.24%

EPS (Rs.) 8.39 3.59

CAPITAL & RESERVE

The Net Worth of the Bank has improved from Rs.4811.56 crore as on 31.03.2015 to Rs.5068.08 crore as on 31.03.2016. The Capital Adequacy Ratio (Basel III) of the Bank is 10.91% as on 31.03.2016 against the minimum stipulated requirement of 9.625%.

UNSECURED REDEEMABLE BONDS: (Subordinated Debts for Tier -II Capital)

Total outstanding of Tier II Bonds as on 31.03.2016 remains unchanged at Rs.1,325 crore.

DEPOSIT GROWTH

The total deposit of the Bank registered a growth of 5.23% with net accretion of Rs. 4535.24 crore to reach Rs. 91249.96 crore as on March 31, 2016 from Rs. 86714.72 crore as on March 31, 2015. The average cost of deposits of the bank stood at 7.47% as compared to 8.21% in previous year.

ADVANCES

The Bank''s Advances increased by 0.74% from Rs. 64796.42 crore as on 31.03.2015 to Rs. 65277.22 crore as on 31.03.2016. The average yield on advances stood at 10.70% as on 31.03.2016 compared to 11.12% during the last year.

PRIORITY SECTOR ADVANCES

The Bank continues to accord importance to various goals under national priority. Some of the highlights under Priority Sectors Advances are as under:

- Total Priority Sector Advance increased to Rs. 24508 crore as on 31.03.2016 from Rs. 20234 crore as on 31.03.2015 registering a growth of Rs. 4274 crore (21.12%).

- Total Priority Sector advance increased from 34.55% of ANBC to 36.86% of ANBC on Y-o-Y basis as on 31.03.2016, an increase of 2.31%.

Bank''s Agriculture advance increased by Rs. 2101 crore (23.18%) to Rs. 11165 crore as on 31.03.2016 from Rs. 9064 crore as on 31.03.2015.

- Bank''s advance to Small & Marginal Farmers increased to Rs. 4663 crore which is 7.01% of total advance against the RBI stipulated target of 7.0%.

- Bank''s flow of credit to agriculture for FY 2015-16 was to the tune of Rs. 10012 crore against the target of Rs. 9056 crore (110.56%) registering an Y-o-Y growth of 15.69%.

- The Bank has issued RuPay Debit Cards in 1.84 lac KCC accounts against the total operative KCC accounts of 1.91 lac (94.02%) as on 31.03.2016.

- The Bank has opened another 6 FLCs at block level in Punjab thus raising total number of FLCs to 12 as on 31.03.2016.

- Two of three RSETI i.e. Moga and Faridkot were given highest grade ''AA'' by Ministry of Rural Development for the year ended 31.03.2015 making them eligible for Govt grants for training of rural unemployed youth.

- E-book on Priority Sector guidelines prepared and put on Bank''s website.

- A comprehensive Booklet on documentation and appraisal of MSE loan prepared and put on Bank''s website.

- The Bank has also achieved sub target for lending to Minority Community.

CREDIT MONITORING

The Bank had setup a Control Room for proper and effective monitoring of large accounts and to check fresh slippages, with exposures above Rs. 50 lacs at HO level. To further strengthen the monitoring, separate Control Rooms have now been set up at Zonal Offices level to monitor all standard borrowal accounts from Rs.5.00 lac upto Rs. 50.00 lac. Restructuring of eligible cases are being undertaken as per Bank/RBI guidelines.

In order to supplement the aforesaid, various policy related initiatives have also been taken by the Bank which inter-alia include implementation of Framework for Revitalizing Distressed Assets in the Economy for Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for lenders, guidelines on refinance by way of flexible structuring/take out financing, Classification and reporting of borrower as non-cooperative borrower etc.

COMPLIANCE FUNCTION

Full-fedged Compliance Department is working since 01/10/2009. A comprehensive Compliance-policy is in place. Compliance Manuals of various HO Departments were drafted/updated during the year.

As per RBI guidelines a New Audit format based on Risk Based Supervision for Zonal Offices was introduced during the year duly approved by GMs committee. A short term and long term action plan was approved by the Board for strengthening of Bank''s Compliance functions on the basis of check list sent by IBA. The short term plan has been implemented by Compliance Dept. Consequent to AFI observations RBS cell was merged with Compliance Department. RBI has intimated that our Bank will be migrated from CAMELS supervision to RBS supervision from the supervisory cycle of 2016-2017. For implementation of migration, Bank has submitted Board approved action plan to the RBI.

The Bank has followed various guidelines issued by RBI in its Circular dated April 20, 2007 on Compliance Functions in Bank and other guidelines issued on Compliance Functions. During the year Compliance Department has ensured that Statutory/Regulatory and other mandatory information required by the Regulator/GOI or any other Authority, has been sent. The compliance department also pursued HO Departments for timely submission of returns to RBI/SEBI/MOF. Gists of all RBI circulars and Internal guidelines, issued during the FY 2015-16, were prepared on monthly basis and were placed on the intranet site of the Bank for reference of the staff.

It was also ensured that the functioning of Branches, Zonal Offices and HO Departments is synchronized with their Functional Manuals. This functioning has been regularly checked through Annual Compliance Audits and random cross-checking of some of the branches at regular intervals.

PUBLIC RELATION AND PUBLICITY

During the financial year 2015-16, the Bank adopted a multi-media strategy to build up its image in Public and at the corporate level and accordingly publicity was made through the print media by release of its product, tender, financial and other display/ notice ads in different newspapers, magazines and souvenirs targeting various audiences all over the country.

Bank also used outdoor publicity tools i.e. Sponsorship and Display of Banners & Hoardings on events of high publicity value e.g. Surjit Hocket Tournament, Jawahar Lal Nehru Hockey Tournament, Gala Baisakhi Evening organized by World Punjabi Organization and corporate publicity through hoardings at Amritsar Airport facilitated extension of outreach of the Bank. Bank also received immense publicity through the Bank''s Wall Calendar 2016 which was widely distributed among clients and well wishers of the Bank.

Bank got huge publicity by way of coverage of its press releases by the print media. All these activities facilitated the Bank to rededicate itself to the service of the nation and enabled it to earn a well deserved mileage on the publicity front.

VIGILANCE PREVENTIVE VIGILANCE

As a measure of preventive vigilance and also to sensitze the staff towards a corruption free environment, the Bank organized two days workshop/ training on Vigilance Administration & Disciplinary Proceedings The programme was inaugurated by Shri. Vijay Kumar Dev, IAS, Advisor to the Commissioner, Chandigarh. Shri. R.N Nayak, Director and Shri. Rajesh Verma, Advisor from Hon''ble CVC had also valuable sessions on various aspects.

During "Vigilance Awareness Week", the Bank organized its main function at India International Centre, New Delhi on 26th October, 2015. Sh T M Bhasin, Vigilance Commissioner, Central Vigilance Commission, being Chief Guest graced the occasion and addressed the gathering of students from School /College/Institute and Senior Functionaries of the Bank. A quarterly newsletter namely PSB- Vigil was brought out during this function for the first time. Thereafter, during the week 20 other programmes were also organized in different Schools / Colleges / Institutions in Delhi and one of the programme was presided by Sh J Vinod Kumar, OSD, Central Vigilance Commission. On the occasion, various programmes were organized at the Bank level across the country at 162 schools where 17235 students participated.

In line with this year''s theme observing Vigilance Awareness Week by Hon''ble CVC "Preventive Vigilance as a tool of good governance" and on the basis of information received from various sources / quarters regarding Revenue Leakage in Big Borrowal Accounts, a special drive under the name "Mission Compliance" i.e. checking of the compliance of terms and conditions of sanction in big borrowal accounts by Vigilance Officers on sample basis.

PUNITIVE VIGILANCE

Special thrust was given, to bring down the pendency of disciplinary action cases. In respect of enquiries for more than 6 months old, endeavor was not only to bring down the number of enquiries not only to a single digit but to a minimum possible level and as a result NIL pendency was achieved. The comparative position of such cases is given below:

2012-13 2013-14 2014-15 2015-16

Pending inquiries more than 6 months old 03 07 01 00

Constant monitoring at all levels has yielded positive result as pendency of complaints especially received from CVC / DFS / CBI, has reduced to bare minimum/NIL, as is evident from the data / table given below:

31.03.13 31.03.14 31.03.15 31.03.16

Pending CVC referred Complaints 02 02 01 00

With focus on preventive vigilance and as a result of preventive vigilance measures / awareness efforts amongst the staff members across the organization, the number of issuance of Charge Sheet and number of Vigilance Cases has declined over the period which is evident from the below:

2012 - 13 2013 - 14 2014 - 15 2015 - 16

Vigilance Cases pending 133 75 70 58

Charge Sheet issued 151 102 63 56

With constant monitoring and emphasis on strengthening the internal control mechanism in the Bank, there is considerable decline in fraud, as is evident from table below.

2013-14 2014-15 2015-16

Number of Fresh Frauds Reported during the Financial Year 35 31 12

Total Number of Frauds cumulative over the years 450 446 442

SECURITY

The Bank has a well established Security set-up within the Bank''s organizational structure. The Bank has been regularly reviewing the security arrangements at all Currency Chests and branches and accordingly strengthening the security arrangements to meet prevailing security scenario with effective, modern and unobstructed Security Systems. All the essential and mandatory security arrangements in terms of RBI/ IBA guidelines are provided at almost all branches.

Security Alarm Systems are installed at all branches and currency chests. Strong Room conforming to RBI specification are provided at majority of branches.

Training, including fringe practice, for Armed Guards deployed at currency chests / branches is imparted on an annual basis. Also, all the security officers undergo refresher training on security once in a year.

Keeping in view the threat perception, volume of cash and valuables handled and need for continuous surveillance, CCTV Surveillance System has been installed at all the Currency chest branches and 738 identified High Risk and vulnerable branches in the first phase. CCTV systems shall be installed at remaining branches at the earliest.

IMPLEMENTATION OF OFFICIAL LANGUAGE

Year 2015-16 was the year of achievements in Official Language implementation. Ministry of Finance, Department of Financial Services awarded our Bank with Two Letters of Appreciation for publishing Tri-Language Glossary (English, Hindi & Punjabi) and for promoting Regional Languages.

Some new and innovative experiments were made in Bank''s Magazine "Rajbhasha Ankur". Besides Hindi, the Bank has encouraged Regional Languages in the magazine and this initiative has been richly complemented in banking industry. So far, material in Odiya, Bengali, Santhali and Assamese languages have been published with their Hindi versions. The Bank also had a unique initiative for its executives. "Aaj ka Shabd" and a line on Rajbhasha is being sent to all executives via SMS.

During the financial year 2015-16, the Bank made significant progress in implementation of official language Policy of Govt. of India for promoting and propagating the use of Official Language in the Bank. A total of 60 workshops were organized, in which 847 staff members were trained. Besides this, in 672 Hindi Desk Training Programmes, 2938 staff members were imparted training for using official language and Unicode training on Computers. With the aim of reviewing the progress of Official Language, inspections were conducted in 732 Branches / offices. As per directions of MOF, Department of Financial Services "Mastshk - Manthan" Programmes were organized in 968 offices / branches of the Bank.

SPORTS

The following players of the Bank''s Hockey Team have represented the Country:

Sh. Ramandeep Singh Sh. Harbir Singh Sh. Satbir Singh

Sh. Prabdeep Singh Sh. Harjot Singh

6 players represented Indian Premier League 2016 from different teams, which was organized by Hockey India with the sponsorship of HERO Group.

Sh. Sarvanjit Singh, Sh. Guriqbal Singh, Sh. Gautampal Singh, Sh. Vikramjit Singh represented Punjab state in National Games held at Kerala 2015.

Sh. Baljit Singh Saini (Olympian) was appointed as Coach of Indian Women Hockey Team for 2015-16.

Sh. Sanjeev Kumar (Olympian) was the Chief Coach of Punjab State Hockey team for National Games 2015 held at Kerala.

GENERAL ADMINISTRATION

The Bank is undertaking construction works/projects on its owned premises and is also involved in the procurement of assigned Goods/Services. Projects viz. Construction of Bank building at Gurgaon, Fort Mumbai and Noida have been completed and the offices/branches are functional in the said premises. The remaining projects are in their completion stages and the construction of Bank buildings at Rohini and Ranjit Nagar are likely to be completed in FY 2016-17.

CONSTITUTION OF BOARD OF DIRECTORS

As on 31st March 2016, the Board comprised of three Whole Time Directors viz Chairman & Managing Director and two Executive Directors besides seven other Directors including representatives from Ministry of Finance, Reserve Bank of India, two Share Holder Directors and three Part Time Non Official Directors.

Various Committees constituted under the Board as listed below, oversee the functioning and control the affairs of the Bank:

- Management Committee

- Audit Committee

- Risk Management Committee

- Committee for Monitoring of Large Value Frauds

- Vigilance Committee

- Customer Service Committee

- Stakeholders Relationship Committee

- IT Strategy Committee

- HR Committee

- Committee of Board on Appellate/Reviewing Authority

- Remuneration Committee

- Committee of Board on Executives'' Promotion

- Committee for Monitoring of Recovery

- Election of Shareholders Director Committee voting by Public Sector Bank

During the year 2015-16, nine meetings of the Board of Directors, eleven meetings of the Management Committee and seven meetings of the Audit Committee of the Board were held, besides meetings of other Committees of the Board.

The constitution of Bank''s Board of Directors underwent following changes during the year 2015-16:

INCLUSIONS

- Sh. A. K. Jain was appointed as Executive Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No. F.No. 4/5/2013-BO-I dated 15.12.2015.

- Sh. Atanu Sen was nominated as Part Time Non Official Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/24/2015-BO-I dated 28.01.2016.

CESSATIONS

- Sh. Mahesh Kumar Gupta completed his term as CA Category Director on 29.01.2016

CORPORATE GOVERNANCE

The Bank is committed to good Corporate Governance and is constantly striving to further strengthen the same to ensure greater transparency and better coordination at all levels in the Organizaton. The working of the Bank reflects transparent ownership structure, improved risk management practices, well defined delegation of powers, accountability and an elaborate audit function carried out by both its Inspection & Audit Division and by independent Statutory Central Auditors.

Bank has complied with the guidelines of RBI and SEBI on the maters relating to Corporate Governance which have been examined by the Statutory Central Auditors.

DIRECTORS'' RESPONSIBILITY STATEMENTS

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2016:

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

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

- Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the Profit of the bank for the year ended on 31st March, 2016.

- Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws Governing Banks in India and the accounts have been prepared on a going concern basis.

STAUTORY AUDIT

As approved by Reserve Bank of India, Bank has appointed M/s Dhillon & Associates, Chandigarh; M/s Tiwari & Associates, New Delhi; M/s Dhawan & Co., New Delhi and M/s Davinder Pal Singh & Co., Hoshiarpur as Statutory Central Auditors for the accounting year ended March 2016.

ACKNOWLEDGEMENTS

The Board of Directors of the Bank thanks valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and continued support.

The Directors also acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges of various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

The Directors place on record their deep appreciation for the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realization of the Corporate goals in years ahead.

For and on behalf of Board of Directors

Place: New Delhi Jatnderbir Singh

Date: 10 May, 2016 Chairman & Managing Director


Mar 31, 2015

Dear Members,

The Board of Directors have pleasure in presenting Annual Report of the Bank along with the Balance Sheet & Profit and Loss Account for the year ended 31st March, 2015.

ECONOMIC OUTLOOK

The country''s total population, as recorded in Census 2011, at 1.21 billion, is slightly more than what was forecast. But the population growth rate has decelerated from 1.97 per cent per annum between1991 and 2001, to 1.64 per cent per annum between 2001 and 2011. Reserve Bank of India estimates that the trend/potential growth rate of the Indian economy, which averaged around 5.3 per cent during 2011-12 to 2013-14, dipped gradually thereafter and presently stands at about 4.7 per cent.

Looking at our growth history and our performance vis-a-vis the rest of the World, we can definitely say that the Indian economy has the potential to grow at 9 per cent and above. Therefore, we are currently growing below our potential and closing this negative output gap (i.e., actual growth minus potential growth) should be our highest priority. The next priority would be to raise the potential growth path. However, there are some fundamental problems facing our economy and Government, RBI and other concerned agencies undertaking corrective measures.

The median forecast for fiscal deficit as a percent of GDP for 2014-15 was put at 4.4%, with an indicative range of 4.1% to 5.5%. This is slightly higher than the 4.1% estimate announced recently in the interim budget. The possibility of subsidy bill overshooting leading to a fiscal slippage remains real.

However, the State of economy has improved with decline in inflation by over 6% points since late 2013 and downfalls of current account deficit from a peak of 6.7% of GDP (in Q3 2013) to an estimated 1% in 2014-15.Foreign portfolio flows have stabilized the rupee and with the Government, RBI and other concerned agencies undertaking number of measures real GDP has been growing at 7.2% since 2013-14 after a newly 12 quarter phase of declaration.

Agriculture sector is expected to grow by 3.3% in the next fiscal year. Respondents expect the industry sector to recoup, with a projected growth of 3.3% in 2014-15. The industrial growth estimate ranges between 1.8% (minimum) and 4.4% (maximum). Meanwhile, service sector performance is expected to remain consistent with a growth rate of 7.0% in 2014-15.

The quarterly growth is expected to improve in FY15. Industrial sector is likely to see a better performance, the performance of services sector is also expected moderate growth.

State of Economy:

* CPI inflation projected at 5% by the end of the year, consequently, easing of monetary policy.

* Monetary Policy Framework Agreement with RBI, to keep inflation below 6%.

* GDP growth in 2015-16, projected to be between 8 to 8.5%.

* Accordingly, journey for fiscal deficit target of 3% will be achieved in next 3 years rather than 2 years. The fiscal deficit targets are 3.9%, 3.5% and 3.0% in FY 2015-16, 2016-17 & 2017-18 respectively.

Bank faced the challenges bravely but still throughout the year, asset quality remained a serious cause of concern for the bank and there has been pressure on the profitability with high cost of deposit, low income and lower Net Interest Margin.

WORKING RESULTS

TOTAL BUSINESS

During the year ended 31.03.2015, total Business of the Bank recorded an increase of 6.26% at Rs.151511 crore as compared to Rs.142588 crore as on 31.03.2014.

PROFIT

The Bank recorded a Net Profit of Rs.121.35 crore for the year 2014-15 as compared to that at Rs.300.63 crore during the FY 2013-14. The Return on Assets (ROA) stood at 0.13% as compared that at 0.35% in the year 2013-14.

(Rs in Lac) Year Ended %age 31.03.2015 31.03.2014 change

Interest Income 858855 797271 7.72

Other Income 42875 42728 0.34

Total Income 901730 839999 7.35

Total Expenditure 824185 759945 8.45

Operating profit 77545 80054 (3.14)

Net Profit 12135 30063 (59.63)

ROA 0.13% 0.35% ---

Net Interest Margin (NIM) 1.80% 1.88% ---

Gross NPA 4.76% 4.41% ---

Net NPA 3.55% 3.35% ---

Capital Adequacy Ratio 11.88% 12.10% — (Basel II)

Capital Adequacy Ratio 11.24% 11.04% — (Basel III)

EPS (Rs.) 3.59 10.69 ---

CAPITAL & RESERVE

During the year, the Bank has issued 3,04,36,252 Equity Shares of Rs.10/- each to Life Insurance Corporation of India by way of Preferential Issue at a price of Rs.59.14 per share determined as per SEBI ICDR Regulation after taking necessary approval from RBI/ MOF.

Perpetual Non Cumulative Preference Shares (PNCPS) of Rs.200 crore, Perpetual Cumulative Preference Shares (PCPS) of Rs.200 crore and Innovative Perpetual Debt Instruments (IPDI) of Rs.160 crore held by Government of India have been converted into 9,46,90,563 Equity Shares of Rs.10/- each by way of Preferential Issue at a price of Rs.59.14 per share determined as per SEBI ICDR Regulation after taking necessary approval from RBI/ MOF.

Accordingly, the Equity Share Capital of the Bank has increased by Rs.125.13 crore to Rs.400.41 crore and Share Premium has increased by Rs.614.06 crore (Share Premium Received Rs.614.87 crore minus Share Issue Expenses Rs.0.81 crore) to Rs.1318.04 crore.

The Net Worth of the Bank has improved from Rs.4180.40 crore as on 31.03.2014 to Rs.4811.56 crore as on 31.03.2015.

The Capital Adequacy Ratio (Basel III) of the Bank is 11.24% as on 31.03.2015 against the minimum stipulated requirement of 9%

UNSECURED REDEEMABLE BONDS: (Subordinated Debts for Tier -II Capital)

During the Year, the Bank has redeemed Tier II Bonds of Rs.40.00 crore. Thereby, total outstanding of Tier II Bonds was Rs.1325.00 crore.

DEPOSIT GROWTH

The total deposit of the Bank registered a growth of 2.34% with Net accretion of Rs.1984.55 crore to reach at Rs.86714.71 crore as on March 31, 2015 from Rs.84730.16 crore as on March 31, 2014. The average cost of deposit of the bank stood at 8.21% as compared to 8.22% in previous year.

ADVANCES

The Bank''s Advances increased by 11.99% from Rs.57857.74 crore as on 31.03.2014 to Rs.64796.42 crore as on 31.03.2015. The average yield on Advances stood at 11.12% as on 31.03.2015 compared to 11.34% during the last year.

PRIORITY SECTOR ADVANCES

Bank continues to accord top priority to varied goals under national priorities, including Agriculture, Micro & Small Enterprises, Housing, Education, Micro-credit, Weaker sections, SC/STs and Minority communities

Priority Sector advances of the Bank increased by Rs. 2554 Crore (14.45%) from Rs.17680 Crore as on 31.3.2014 to Rs. 20234 Crore as on 31.3.2015.

SPECIAL AGRICULTURE CREDIT PLAN (SACP)

Bank has disbursed Rs. 8654 crore under Special Agriculture Credit Plan (SACP) achieving 104% of target of Rs 8290 Crore for the financial year 2014-15.

RUPAY KISAN DEBIT CARDS

During the year 2014-15, the bank issued ATM enabled ''RuPay Kisan Debit Cards'' to 160563 KCC holders covering 99.38% of eligible KCC holders till 31.03.2015.

WELFARE OF MINIORITY COMMUNITY

Advances to specified minority communities aggregated to Rs.7658.59 crore accounting for 37.85% of the total priority sector advances against the stipulated target of 15%.

ADVANCES TO ECONOMICALLY WEAKER SECTION

Bank''s advances to weaker section aggregated to Rs. 5857 crore, achieved target of 10% of ANBC.

NEW INITIATIVES

* To widen the spread of Electronic Delivery Channels, the Bank has installed 260 new ATMs during the year 2014-15. Total number of ATMs of the Bank as on 31.03.2015 is thus 1268 as compared to 1008 as on 31.03.2014

* Bank has implemented bilingual receipt printing (Hindi & English) in ATMs

* Bank has installed 8 Bunched Note Acceptor machines in e-lobbies across the Country.

* Bank has implemented solution for Visually Impaired (Talking facility) in 360 Capex ATMs. Implementation of the same in the remaining Capex ATMs is under process.

* Introduced Miller Card for Millers of Punjab State. (Total of 316 cards were issued).

* Implemented RuPay e-commcerce in the Bank for online purchases through Rupay Debit Card.

* Bank has opened 126 new branches during the year 2014-15. Out of these, 59 branches have been opened under Financial Inclusion. S To facilitate the aging customers, the Bank has launched a scheme "VRIDHJAN VISHESH SAMMAN YOJNA".

* E-Book on Priority Sector Lending compiled and published.

* MSE Booklet including documentation issued for field functionaries.

* Bank introduced new scheme "PSB Kisan Suvidha Scheme" for boosting Term Lending to agriculture sector.

* The system generated Interest Subvention on Crop Loan implemented through Finacle.

* In addition to existing 29 specialized MSME branches, 22 more general branches have been categorized as specialized MSME branch, taking the total to 51.

* Out of three, two RSETIs moved in newly constructed Bank''s own premises.

CREDIT MONITORING

Credit Monitoring Department continues to give direction to its Loan Assets portfolio so that it is in conformity with Corporate Business Plan , in line with RBI/Government of India directions.

For proper and effective monitoring of High value acccounts and to check fresh slippages, the Control Room set up in the year 2013, has since stabilised and monitoring high value accounts at HO level. To further strengthen the monitoring, seperate Control Rooms have now been set up at Zonal Offices level to monitor all standard borrowal accounts from Rs. 5.00 lac upto Rs. 50.00 lac .

Timely restructuring of loan assets, which were under stress due to economic downturn and required financial support under Sole Banking as well as CDR, has also been undertaken, to prevent slippage and impairment in credit quality.

In order to suppliment the aforesaid, various policy related initiatives have also been taken by the Bank which inter-alia include implimentation of Framework for Revitalising Distressed Assets in the Economy for Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for lenders, guidelines on refinance by way of flexible structuring/ take-out financing, Classification and reporting of borrower as non-cooperative borrower etc.

PRADHAN MANTRI JAN DHAN YOJNA

PM launched "Pradhan Mantri Jan Dhan Yojna (PMJDY) on 28th August 2014 nation wide - a comprehensive Financial Inclusion Plan on Mission Mode and fixed time lines were set for 100% coverage of SSAs and opening of accounts upto 26.01.2015. PMJDY is a flagship project of Government of India and it has been decided at the level of Hon''ble Prime Minister to cover every habitation in SSA''s allotted to our Bank by opening of atleast one bank account per household. All the households should have access to Banking services within 5 km area by 26th January 2015.

The present PMJDY scheme cover following in Pillar 1 phase from 16.08.2014 to 26.01.2015

* Universal access to banking facilities

* Financial Literacy Programme

* Providing Basic Banking account

* Micro Insurance

In Pillar 2 following will be covered

* Unorganized sector pension schemes like ''Atal Pension Scheme''

* Micro Credit availability (Overdraft facility of Rs.5000/.)

Excellence Award:-

Bank has won an Excellence Award for Achievement in PMJDY parameters on 25.03.2015. The Award was given by Shri Kalraj Mishra, Union Cabinet Minister (MSME) .

Bank is making a good progress under PMJDY as under:-

* Survey in all 961 SSAs and 535 Wards is completed

* All households as per Survey report have since been covered by opening at least one account per household.

* Bank has opened nearly 12.39 lac accounts under PMJDY and issued 12.03 lac RuPay cards to them from 15.08.2014 to 31.03.2015.

* Bank is also doing Aadhaar seeding in these accounts and as on 31.03.2015, 6.13 lac (49%) accounts are Aadhaar seeded under PMJDY

* Bank is issuing passbooks to account holders and as on 31.03.2015, 11.70 lac (94.5%) passbooks have been issued to the customers.

* Bank has successfully appointed its own 383 BCAs, provided them with PoS machines to work exclusively in the villages. Nearly 0.62 lac enrollments have been done through PoS machines and about 1.22lac transactions have been done successfully by BCAs, upto 31.03.2015.

* AEPS (Aadhaar Enabled Payment System) has already been implemented on PoS machines and the Bank is in the process of implementing RuPay card inter-operability on the PoS machines.

* Now the Bank is in the process of implementing Overdraft facility of Rs.5000/- in PMJDY accounts, as per the guidelines.

* Directly receiving subsidies/payments (including DBTL) into the account based on both Aadhaar number and account.

* In DBTL, Bank has received a total number of 20.54 lac entries w.e.f. 15.11.2014 and total amount received is Rs. 71.46 crore.

RETAIL MARKETING

The Bank accorded top priority to Retail Lending and declared it as ''Niche'' area, the products under the Retail Lending segment have been customized to be competitive in the market, undertook specific marketing initiatives including organization of more than 800 Retail Lending Camps.

Further, Festival Bonanza Scheme was launched for Housing Loan, Auto Loan and Consumer Loan borrowers. A new Retail Lending product exclusively for younger staff of the Bank named "PSB Family Bonding Scheme" was launched during the year.

An incentive scheme for the top performers in Retail Lending in the field was also launched during the year.

The growth in fresh Retail disbursement lending was above 52% over previous year.

Retail Lending Outstanding grew at the rate of 25% over previous Year.

Further, the Bank participated in the booking schemes launched by various Development Authorities viz. DDA, PUDA, GMADA for financing of the earnest money and received an encouraging response.

ASSETS QUALITY

The Bank continued to make concerted efforts to contain NPAs and has used all available tools of recovery including negotiations, settlements and legal means. The provisions of "The Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act -2002" were used effectively. The Bank also organized Recovery Camps during the year at various centers. During the year, two short term schemes for settlement of NPAs were formulated under Agriculture Sector and unsecured T.W.O. accounts apart from Bank''s Recovery Management Policy. In all 1371 cases were settled at Rs. 97.42 crore.

The performance of the Bank under recovery of NPAs during the year continued to be good. The aggressive and focused efforts could result in the total recovery of over Rs. 832.52 crore including recovery of Rs. 73.21 crore in Technically Written Off Accounts.

Bank has been able to contain fresh slippage. As a result our gross NPAs and net NPAs as on 31.03.2015 have been contained at Rs. 3082.19 crore and Rs. 2266.00 crore respectively against Rs. 2553.52 crore and Rs. 1918.60 crore as on 31.03.2014.

The position of Gross and Net NPAs as on 31.03.2015 vis-a-vis previous year is as under (Rs. in crore) NPA As on 31.03.2014 As on 31.03.2015

Gross 2553.52 4.41 % 3082.19 4.76%

"Net 1918.60 3.35 % 2266.00 3.55%

The Provision Coverage Ratio of the Bank (including T.W.O.A/cs), as on 31.03.2015 stood at 46.81 %

INVESTMENT & FOREIGN EXCHANGE

The Bank''s total gross investment as on 31.03.2015 was Rs 26791.69 Crore, with a portfolio composition consistent with the corporate requirement, risk perception, and investment policy of the Bank.

The profit on sale of securities for the year has increased from Rs. 125.37 crore for year ended March 2014 to Rs. 133.66 crore for the year ended 31.03.2015 on account of trading activities in G-sec and Non SLR securities.

Exchange profit in Forex transactions for the year 2014-15 was Rs 26.51 crore (forex treasury).

RISK MANAGEMENT

The Bank has put in place a robust and integrated Risk Management system to ensure that the risks assumed by it are within the defined risk appetites and are adequately monitored. The overall responsibility of setting the Bank''s risk appetite and effective risk management rests with the Board and apex level management of the Bank.

Risk is managed through following Apex committees viz.

1. Risk Management Committee (RMC)- a Board level subcommittee

2. Credit Risk Management Committee (CRMC)

3. Asset and Liabilities Management Committee (ALCO)

4. Operational Risk Management Committee (ORMC)

5. Market Risk Management Committee (MRMC) and

6. Capital Planning Committee as per ICAAP

These committees work within the overall guidelines and policies approved by the Risk Management Committee (RMC) / Board.

POLICY FRAMEWORK

The Bank has Board approved policies and procedures in place to measure, manage and control various risks that the Bank is exposed to.

Integrated Risk Management Policy has been formulated with the objective of analyzing the overall risk profile of the bank and to integrate all the risks of the Bank. The other important risk policies comprise of Asset-Liability Management (ALM) Policy, Credit Risk Management Policy, Market Risk Management Policy, Operational Risk Management (ORM) Policy, Business Continuity Planning (BCP) & Disaster Recovery Management (DRM) Policy, Stress Testing Policy, Policy on Utilization of Credit Risk Mitigation Techniques & Collateral Management, ICAAP Policy. The policies are reviewed annually by the RMC / Board.

BANK''S COMPLIANCE WITH BASEL-II

In terms of Regulatory Guidelines of Reserve Bank of India, the Bank has adopted the New Capital Adequacy Framework w.e.f. 31.03.2009. Based on Basel II norms, the Bank has adopted Standardized Approach for Credit Risk, Modified Duration approach for Market Risk and Basic Indicator approach for Operational Risk for computing the capital charge. The Bank has also implemented Basel III Guidelines and has started computing CRAR w.e.f. June 2013. The CRAR position of the Bank is reviewed by the Board on quarterly basis. Bank has geared up for moving towards advanced approaches under BASEL II as suggested by RBI. Bank has also appointed a Consultant for setting up Enterprise Wide Integrated Risk Management System (EIRMS) in the Bank for moving to Advance approaches of Basel II and implementation of Basel III Guidelines.

ICAAP POLICY

In compliance with the Reserve Bank of India guidelines on Basel II & Basel III - Pillar 2- Supervisory Review and Evaluation Process (SREP), the Internal Capital Adequacy Assessment Process (ICAAP) Policy has been formulated to assess the capital requirement commensurate with the size, level of complexity, risk profile and scope of operations of the Bank. Various residual risks are assessed and additional capital is provided for wherever required. The capital adequacy of the Bank is assessed based on the analysis of current and projected financial/capital position as well as the headroom available.

Stress Testing exercises are also undertaken to assess the likely impact of various stress situations in relation to capacity of Bank''s profitability to absorb the shock and consequent impact on Bank''s capital. The ICAAP outcome is prepared on half yearly basis and is reviewed by RMC.

DISCLOSURE:

In compliance with the Reserve Bank of India guidelines on Basel II & Basel III - Pillar 3 - Market Discipline, the Bank has put in place a Disclosure Policy duly approved by the Board and the disclosures on quarterly / Half yearly / Annual basis, as per the policy, are displayed on the Bank''s Website / Annual Report.

CREDIT RISK

Credit risk management processes involve identification, measurement, monitoring and control of credit exposures. Credit risk and its policy formulation is managed by Credit Risk Management Committee (CRMC). It regularly monitors prudential caps in different loan segments including industry, corporate, retail and individual/group borrowers.

Comprehensive credit rating framework comprising of Credit Risk Rating Models for Corporate and Retail Loans, pricing of loans linked to risk assessment and credit rating, study & analysis of industries/portfolio, migration of credit ratings is undertaken.

Awareness of Basel II norms at the operating level is created and continuously enhanced to achieve the aim of conservation and optimum use of capital.

MARKET RISK

The Bank''s portfolio is exposed to market risk on account of changes due to interest rates and currency rates.

The Asset and Liabilities Management Committee (ALCO) is overseeing the functions relating to market risk. The Bank has put in place a variety of market risk measurement systems and tools. Strict adherence to various limits and proper escalation of breaches, if any, are followed. Moreover, a Mid Office is also in place.

The Liquidity Management Framework is well established, which safeguards the ability of the Bank to meet all payment obligations when they become due. It is designed to identify measure and manage the liquidity risk position of the Bank.

The Bank is computing the market risk capital charge as per the Modified Duration approach, by using Modified duration method, as per the regulator''s guidelines. The Bank also calculates Value at Risk (VaR) on its foreign exchange portfolio.

The Bank periodically undertakes stress test exercise to highlight the potential risks, on account of liquidity & interest rate risk that may arise due to events that are rare but plausible. The impacts of shock on account of different risk factors that may generate worst case scenario are studied and to counter the impact possible solutions are derived.

OPERATIONAL RISK

The Operational Risk Management Committee (ORMC) oversees the matters relating to risks associated with operations and ensures the continuity / restoration of business in the event of contingency / exigencies. Presently, capital charge on operational risk is calculated as per Basic Indicator Approach. The Bank is in the process of strengthening its ORM Framework & ORM systems so as to be able to migrate to advance approaches of calculation of Operational Risk Capital.

HUMAN RESOURCE MANAGEMENT

The cadre wise staff strength as on 31.03.2015 is as under:-

Category 31st March 2014 31st March 2015

Officers 6062 6409

Clerks 2029 2113

Sub-staff 779 658

Total 8870 9180

WOMEN IN EMPLOYMENT: -

Out of the total strength of 9180 as on 31.03.2015, the women employees are 2082 constituting 22.68% of the total strength.

EMPLOYMENT TO RESERVED CATEGORY EMPLOYEES:-

Bank is committed to the constitutional safeguard and social objectives for the development and welfare of persons belonging to SC, ST and other backward classes of the society. The Bank observes all guidelines stipulated by the Govt. of India in respect of Reservation Policy for reservation of Posts in all India, local recruitments.

A special SC/ST cell has been set up in the Bank to monitor the Reservation & other provisions for SC/ST employees. An executive in the rank of General Manager has been designated as Chief Liaison Officer for SC/ST employees who ensures compliance of various guidelines pertaining to SC/ST employees & takes care of all matters of grievance redressal of SC/ST employees of the Bank.

The staff strength of SC/ST employees stood at 1572 and 533 respectively on 31.03.2015. The staff strength under various reserved categories viz OBC/EX-SM/PH is as under:-

CATEGORY SC ST OBC Ex-SM PH

OFFICERS 952 439 994 48 86

CLERKS 420 71 410 136 40

SUB-STAFF 200 23 29 128 14

Total 1572 533 1433 312 140

FINANCIAL ASSISTANCE TO THE DEPENDENTS OF DECEASED EMPLOYEES:-

During the Financial year 2014-15, the Bank made total payment of Rs 37,21,633/- in 6 cases towards financial assistance to the dependants of the deceased employees under the scheme for the payment of EX Gratia in lieu of appointment on compassionate grounds.

PROMOTIONS: -

Bank is regularly promoting people almost in all cadres year after year to keep on rewarding its top performers and make them assume higher responsibilities. Special drive was made during the year under review to fulfill the growing aspirations of the employees for fast career progression thereby motivating employees for higher productivity.

Following promotions have been affected during the year:-

Promotions DGM AGM CM SRM MGR OFFICER CLERK SUBSTAFF TOTAL TO TO TO TO TO TO TO TO From GM DGM AGM CM SRM MGR OFFICER CLERK

General 5 18 35 122 269 741 196 30 1416

Specialist - - - 12 63 9 - - 84

Total 5 18 35 134 332 750 196 30 1500

TRAINING & HUMAN RESOURCES DEVELOPMENT:-

Training is an integral part of human resource development. In the current competitive environment in the Banking industry, it is all more important to keep the staff abreast of the latest developments in technology, system and procedures, legal aspects etc., especially amongst the peers.

Training and grooming are important steps in creating a vibrant organizational culture in which employees are encouraged & motivated to perform better. It helps in augmenting the competencies of employees & equip them with the right skills & knowledge for meeting ever changing business needs of customers in different segments. The training programs organized by the Bank are geared towards integrating the new recruits into the Bank & in enhancing the skills, knowledge and for reorienting the attitude of its existing work force to the organizational objectives so as to transform the Bank to a technology & service driven Bank of the country.

Newly recruited POs were addressed by Chairman and Managing Director to introduce them to Bank''s history, Ethics, Structure, Business and Future Plans. The objective was to familiarize them with the Banking environment so that they get an overview and adapt to the Bank''s system quickly apart from getting the knowledge inputs. They were made familiar with their career & succession plans in the Bank. The newly recruited staff was provided Orientation Training on Advances at Branch Level.

The Bank endeavored to provide training to 50% of its employees during the Financial Year 2014-15. With this in view, 269 programmes were conducted in General Banking & Computer related programmes at CBRT Chandigarh, NIBSCOM, Noida & Locational trainings conducted at Zonal Offices in various fields from 1st April 2014 to 31st March 2015, in which training was imparted to 7144 employees of different cadres.

With a view to sensitize the top executives of our the Bank with the fast changing scenario in the Banking Industry and to assume leadership role to carry forward the institution''s vision/goals, a five days Management Development Programme for newly promoted GMs, DGMs, AGMs and other executives was conducted in June 2014 at NIBM, Pune. 60 Executives attended the same.

Besides 180 Officers were also imparted training at Apex Level.

INDUSTRIAL RELATIONS: -

The industrial relations in the Bank remained cordial throughout the year. The representatives from Workers and Officers unions participated in various discussions on developmental and other issues with the management at various levels and efforts were made to resolve the same. A grievance Redressal Committee has also been formulated as per the guidelines received from Ministry of Finance to redress the grievances raised by staff members.

DIRECT RECRUITMENT: -

The Bank launched a special recruitment drive to cater to the challenges of superannuation, sustained business growth and rapid branch expansion in the FY 2014-15. Recruitment of both the Specialist Officers and Probationary Officers was done to address the diverse manpower requirement of the Bank.

During the year, 6 CAs in Scale II, 9 Law Officers in Scale -II, 913 Probationary Officers, 53 AFO in Scale -I, 5 HR/IR Officers in Scale I and 448 Single Window Operators-A in Clerical cadre have joined the Bank under Bank''s Recruitment Project 2014-15.

STAFF WELFARE

In order to motivate and encourage the staff for effective participation in development activities, the Bank is maintaining various welfare schemes for the staff. During 2014-15, welfare schemes of the bank were successfully implemented.

INFORMATION TECHNOLOGY

* As on 31.03.15, all the branches/ offices are on Core Banking Solution.

* Electronic fund transfer facility through RTGS & NEFT is available in 1449 branches.

* Biometric based Authentication for employees'' login into CBS application has been introduced to prevent the incidence of frauds taking place on account of password theft/sharing of CBS users. Bank is presently enabled for Biometric Authentication for Finacle users. All the new branches are being opened in the ambit of Biometric Authentication.

* Bank launched Inter-bank fund transfer service USSD facility using NUUP on 28.08.2014, with two fund transfer options: P2P (Mobile to Mobile) and P2A (Mobile to Account). Through this facility customers can access their bank accounts and make interbank fund transfers on 24*7 basis without logging in through the portal.

* Bank on 28.08.2014 launched an Aadhaar Based ''Know Your Customer (E-KYC) Service'' of Unique Identification Authority of India (UIDAI). The service is available in all the branches using Biometric system.

* Five e-lobbies have since been opened

INTERNAL CONTROLS

The well-established Inspection & Audit Deptt (IAD) ensures review of institutional performance, to maintain financial discipline, check productivity levels in the Bank through the teams of internal/external auditors. The IAD constantly aims at checking the inherent risks through its effective control mechanism, to protect the Bank''s interest by conducting RBIA and Inspection of branches/offices and Endeavour to minimize perpetration of frauds.

The Audit Committee of the Board (ACB), which met on 8 occasions during FY 14-15, oversees the Internal Audit function of the Bank as well as the functioning of the Audit Committee of Executives (ACE), which is a first tier Committee to oversee Inspection and Audit function in the bank.

During FY 2014-15, Risk Based Internal Audit was conducted in 808 branches of the Bank,435 branches were brought under Concurrent Audit System; the Information System Audit was conducted in 591 branches and Zonal Offices and Departments at Head Office have been subjected to Management Audit & Inspection.

The Inspection and Audit Department is also monitoring redressal of the customer grievances/complaints. During FY 2014-15, 1432 complaints were received, of which 1349 complaints have been disposed off. The Banking Ombudsman passed 5 awards against the Bank out of which the Bank has preferred appeal against one award.

During the year the Inspection and Audit Department formulated ''Legal Audit Policy'' to ensure better supervision & thus covering an important aspect to exercise proper control by the field functionaries to fall in line with RBI directives.

To summarize, Bank''s Inspection and Audit Department has been effectively monitoring the compliance of Systems and Procedures laid down by Bank''s Board, the Regulator and Government of India.

COMPLIANCE FUNCTION

The compliance cell was upgraded into a full-fledged Compliance Department wef.01/10/2009.

A comprehensive Compliance-policy was drafted during FY 2013-14, which was reviewed during 2014-15. Further, Compliance Manuals of Zonal Offices and Various HO Departments were drafted/updated during the year. HO P&D Department also drafted the Functional Manual of the bank and placed it on the intranet site of the bank.

The Bank has followed various guidelines issued by RBI regarding Compliance Functions in bank. During the year, the bank has ensured that Statutory/Regulatory and any other mandatory information required to be sent to the Regulator/GOI or any other Authority has been sent. Further, gists of all RBI circulars and Internal guidelines, issued during the FY 2014-15, were prepared month-wise and placed on the intranet site of the bank for reference of the staff.

It was also ensured that the functioning of Branches, Zonal Offices and Departments is synchronized with their Functional Manuals. This functioning has been regularly checked through Annual Compliance Audits and random cross-checking of some of the branches at regular intervals.

PUBLIC RELATION AND PUBLICITY

During the financial year 2014-15, the Bank adopted a multi-media strategy to build up its image in Public and at the corporate level and accordingly publicity was made through the print media by release of its product, tender, financial and other display/ notice ads in different newspapers, magazines and souvenirs targeting various audiences all over the country.

Bank also used outdoor publicity tools i.e. Sponsorship and Display of Banners & Hoardings on events of high publicity value e.g. Surjit Hocket Tournament, Jawahar Lal Nehru Hockey Tournament ,T20 Cricket Tournament and Annual function of Bhai Vir Singh Sahitya Sadan facilitated extension of outreach of the Bank. Bank also received immense publicity through the Bank''s Wall Calendar 2015 which was widely distributed among clients and well wishers of the Bank.

Bank got huge publicity by way of coverage of its press releases by the print media. All these activities facilitated the Bank to rededicate itself to the service of the nation and enabled it to earn a well deserved mileage on the publicity front.

VIGILANCE

During the year, number of initiatives on Preventive as well as on Punitive Vigilance were taken to strengthen the vigilance administration.

The Vigilance Manual was updated and revised Manual was released during the year. The updated Vigilance Manual was released by Shri J.M.Garg, Vigilance Commissioner.

Special thrust was given, to bring down the pendency of disciplinary action cases more than 6 months old, not only to a single digit but to a minimum possible level, as evident from the last four year position given as under:

2010-11 2011-12 2012-13 2013-14 2014-15

Pending inquiries more 19 12 03 07 01 old than 6 months

As regards, pending cases of sanction for prosecution, it is matter of satisfaction that no case is pending for sanction of prosecution as on 31.03.2015 in the Bank. In all such cases received from CBI, the Bank had either given the sanction for prosecution or has declined the sanction for prosecution with the valid reasons and after intervention by Hon''ble Commission, where required.

Further, monitoring at all levels has yielded positive result as pendency of complaints especially received from CVC / DFS / CBI, has reduced significantly, as is evident from the data / table given below :

31.03.2011 31.03.2012 31.03.2013 31.03.2014 31.03.2015

Pending CVC 10 07 02 02 01* referred Complaints

With constant monitoring and emphasis on strengthening the internal control mechanism in the Bank, there is considerable decline in fraud, as is evident from the table below. In view of the fact that when almost all the Banks and Financial Institutions are having steep increase in frauds during the last 3/4 years, with effective control mechanism, the bank has been able to reverse the upward trend in frauds in the Bank.

(Rs. in crore) 2012 - 13 2013 - 14 2014 - 15

Amount Amount Amount

Frauds Reported 102.94 68.93 30.99

With effective internal controls, initiation of fresh RDA (Regular Disciplinary Action Cases) cases have declined considerably.

As on 31st March 2013 2014 2015

Vigilance Cases Pending 133 75 70

The bank is focusing more on the preventive vigilance and as a result of preventive vigilance measures / awareness efforts amongst the staff members across the organization, the number of issuance of Charge Sheet has declined over the period, as depicted hereunder:

2012 - 13 2013 - 14 2014 - 15

Charge Sheet issued 151 102 63

SECURITY

The Bank has a well established Security set-up within the Bank''s organizational structure. The H.O. Security department has been regularly reviewing the security arrangements at all the Currency Chests and branches and accordingly strengthening the security arrangements to meet prevailing security scenario with effective, modern and unobstructed Security Systems. All the essential and mandatory security arrangements in terms of RBI/ IBA guidelines are provided at almost all branches.

The Zonal Security Officers periodically carry-out Security audit of branches to assess the security arrangements in vogue and recommend implementation of additional preventive security measures wherever desired. They maintain close liaison with the law enforcing and administrative authorities. Besides, the Chief Security Officer and other officials from Head Office are also carrying out the security audit of the Currency Chests and also undertake random visits of the vulnerable branches of the Bank.

The Access Control System at all the Bank''s Currency Chests has been strengthened in terms of RBI guidelines. A proper system of regulating access to Currency Chest Strong Rooms and proper records of entry into / exit from the Vault Room of the chest is being maintained.

Security Alarm Systems are installed at all branches and currency chests. Strong Room conforming to RBI specification are provided at majority of the branches.

The Bank has a total of 12 (twelve) currency chests. Police guards have been provided at 11 currency chests. The Bank has outsourced round the clock guarding of Bhilai Currency Chest to a Private Security Agency sponsored by DGR. Efforts are continuing for deployment of Armed Police Guards at this Currency Chest. All the branches of the Bank are provided with armed guards and all the cash remittances are escorted by the armed guards.

Training, including firing practice, for Armed Guards deployed at currency chests / branches is imparted on an annual basis. Also, all the security officers undergo refresher training on security once in a year.

Keeping in view the threat perception, volume of cash and valuables handled and need for continuous surveillance, CCTV Surveillance System have been installed at all the Currency chest / branches and 507 identified High Risk and vulnerable branches in the first phase. CCTV systems shall be installed at the remaining branches in a phased manner.

IMPLEMENTATION OF OFFICIAL LANGUAGE

During the financial year 2014-15, the Bank made significant progress in implementation of Official Language Policy of Govt. of India for promoting and propagating the use of Official Language in the Bank. A total of 71 workshops were organized, in which 986 personnel were trained. Besides this, in 715 Hindi Desk Training Programmes, 2123 staff members were imparted training for using official language and Unicode training on Computers. With the aim of reviewing the progress of Official Language, inspections were conducted in 609 Branches/Offices. During the year, as per directions of the Finance Ministry, Rajbhash Vibhag, 461 "Aapsi Samvad-Sarthak Disha" and 266 "MastishkManthan", programmes were organized in different offices/branches of the Bank.

This year the Bank won Rajbhasha Shield (IInd prize) from Ministry of Home Affairs for implementation of Official Language Policy in Bank''s B region in Bank''s category. The Bank also won Rajbhasha Shield (consolation prize) from Reserve Bank of India. Apart from this, Delhi Town Official Language Implementation Committee (TOLIC), awarded Consolation Prize to our Bank In- House Hindi Magazine "Rajbhasha Ankur". Bank staff members also won six prizes in various interbank competitions organized by different banks under auspices of Delhi Bank TOLIC.

SPORTS

The Bank has a Sports Academy which nurtures the Bank''s Hockey Team at National Level, besides Hockey Academy for age group of 15-18 years. During the year, the Bank''s Hockey Team won the following National Tournament:

* All India Martyrs Hockey Tournament

The following players of the Bank''s Hockey Team and Hockey Academy have represented Indian Hockey Team in various International Tournaments during the year 2014-15:

Sh. Ramandeep Singh Sh. Harbir Singh Sh. Satbir Singh

Sh. Gurmail Singh Sh. Harjot Singh

6 players represented Indian Premier League from different teams which was organized by Hockey India with the sponsorship of HERO Group.

Presently 3 players are in the Indian Hockey Team for Azlan Shah Cup 2015 at Malaysia.

Savajit Singh, Guriqbal Singh, Gautampal Singh, Vikramjit Singh & one player from Hockey academy represented Punjab state in National Games held at Kerala.

Team from the Bank''s Hockey Academy (Age Group 15 to 18 Years) won the following tournaments during 2014-15

* All India Baba Farid Hockey Tournament

* All India Sat Guru Jagjit Singh Hockey Tournament

* Inter College Hockey Tournament ( Our 8 players played for Lyallpur Khalsa College, Jalandhar)

Apart from these, other contributions are as under:

Sh. Jaskaran Singh of Banks'' academy represented both Senior & Junior Nationals from Punjab State Hockey Team.

Sh. Sanjeev Kumar (Olympian) of our Bank was the Chief Coach of Punjab Team at National Games held at Kerala.

4 players represented GNDU Hockey Team in All India University Hockey Championship and won the Silver medal.

RECONCILIATION

Total outstanding in IBR & DD as on 31.03.2015 has been reduced by 99% during the financial year 2014-15. The efforts are being continued to reduce the old outstanding entries also.

GENERAL ADMINISTRATION

Various building projects viz staff Training College, Rohini, renovation of the Bank House building, Noida are in progress and likely to be completed in the next year 2015-16. Construction work at Fort Mumbai and Gurgaon has already been completed and work at East Kidwai Nagar and Possangipur is in progress.

CONSTITUTION OF BOARD OF DIRECTORS

As on 31st March 2015, the Board comprised of two Whole Time Directors viz Chairman & Managing Director and one Executive Director besides seven other Directors including representatives from Ministry of Finance, Reserve Bank of India, Non Official Director (Chartered Accountant Category), two Share Holders Directors and two Part Time Non Official Directors.

Various Committees constituted under the Board as listed below, oversee the functioning and control the affairs of the bank:

* Management Committee

* Audit Committee

* Risk Management Committee

* Committee for Monitoring of Large Value Frauds

* Vigilance Committee

* Customer Service Committee

* Stakeholders Relationship Committee

* IT Strategy Committee

* Nomination Committee

* HR Committee

* Committee of Board on Appellate/Reviewing Authority

* Remuneration Committee

* Committee of Board on Executives'' Promotion

* Committee for Monitoring of Recovery

* Election of Shareholders Director Committee Voting by Public Sector Bank

During the year 2014-15, Nine meetings of the Board of Directors, Twelve meetings of the Management Committee and Nine meetings of the Audit Committee of the Board were held, besides Meetings of other committees of the Board.

The constitution of Bank''s Board of Directors underwent following changes during the year 2014-15:

INCLUSIONS

* Sh. M M Dawla was nominated as MOF Nominee Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/3/2012-BO-I dated 07.05.2014.

* Sh. S R Mehar was nominated as MOF Nominee Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/3/2012-BO.1 dated 24.09.2014.

* Sh. M S Sarang was appointed as Share Holder Director of the Punjab & Sind Bank on 01.07.2014

* Sh. S P Babuta was appointed as Share Holder Director of the Punjab & Sind Bank on 01.07.2014

CESSATIONS

* Sh. S C Das MOF Nominee Director was on the Board of the Bank up to 07.05.2014.

* Sh. S P Babuta completed his term as Share Holders Director on 02.06.2014

* Sh. N Rajendran completed his term as Share Holders Director on 02.06.2014

* Sh. Suresh Thakur completed his term as Non Official Director on 12.07.2014

* Sh. Sanjeev Arora completed his term as Non Official Director on 14.07.2014

* Sh. M M Dawla MOF Nominee Director was on the Board of the bank up to 24.09.2014

* Sh. S P S Virk completed his term as Workman Director on 22.11.2014.

* Sh. Kishore Kumar Sansi, Executive Director of the Bank was appointed as Managing Director & CEO, Vijaya Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No. F.No.4/4/2013-BO-I

(i) dated 31.12.2014.

CORPORATE GOVERNANCE

The Bank is committed to good Corporate Governance and is constantly striving to further strengthen the same to ensure greater transparency and better coordination at all levels in the Organization. The working of the Bank reflects transparent ownership structure, improved risk management practices, well defined delegation of powers, accountability and an elaborate audit function carried out by both its Inspection & Audit Division and by independent Statutory Central Auditors.

Bank has complied with the guidelines of RBI and SEBI on the matters relating to Corporate Governance which have been examined by the Statutory Central Auditors.

DIRECTORS'' RESPONSIBILITY STATEMENTS

The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2015:

* The applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

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

* Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the bank for the year ended on 31st March, 2015.

* Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws Governing Banks in India and the accounts have been prepared on a going concern basis.

STAUTORY AUDIT

As approved by Reserve Bank of India, bank has appointed M/s B K Shroff & Co., Kolkata, M/s R Kothari & Co., Kolkata; M/s Dhillon & Associates, Chandigarh and M/s Tiwari & Associates, New Delhi as Statutory Central Auditors for the accounting year ended March 2015.

ACKNOWLEDGEMENTS

The Board of Directors of the Bank thanks valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and continued support.

The Directors also acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges of various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

The Directors place on record their deep appreciation for the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realization of the Corporate goals in years ahead.

For and on behalf of the Board of Directors

Place : New Delhi Jatinderbir Singh Date : 12th May 2015 Chairman & Managing Director


Mar 31, 2014

DIRECTORS'' REPORT 2013-14

The Board of Directors have pleasure in presenting Annual Report of the Bank along with the Balance Sheet & Profit and Loss Account for the year ended 31st March, 2014.

ECONOMIC OUTLOOK

Indian economy continued to face challenging times during 2013-14. The slowdown of the economy that began in 2011-12 continued during this year. The sluggish growth and inflationary pressure remained serious concern of the economy throughout the year. In fact, since Sep 2009 the state of the world economy has been the most decisive factor impacting the economy of every developing country including India. Among India''s major trading partners, USA is showing signs of recovery from a long recession, Japan''s economy is responding to stimulus, Euro zone is reporting a fractional growth of 0.2% and China''s growth slowed during 2013-14. The challenges faced by India are common to all emerging economies. However, India coped with these challenges in a better way than other emerging economies during 2013-14.

The Govt. of India had declared fiscal consolidation, price stability, self sufficiency in food, revival of good environment in investment, promotion of manufacturing, encouragement to exports, quicker implementation of projects as its objectives. However, infrastructure, petroleum, power, coal and textiles continued to remain stressed sectors of the economy.

While the Government successfully contained the Current Account Deficit , controlling inflation proved to be difficult. However, economy once again proved its resilience.

The performance of Indian agriculture was better than industry. The industry continued to be a stressed sector of the economy. The deceleration in investment in manufacturing has remained particular area of concern. Though exports recovered sharply, however, imports remained down which did not augur well either for manufacturing or domestic trade.

The exchange rate affected the Rupee adversely. However, the Government, RBI and other concerned agencies undertook number of measures to improve capital inflow and stabilize foreign exchange market.

However, the state of the economy improved during Q3-Q4 of 2013-14 and growth is expected to be at least 5.2% against growth in Q1 and Q2 of 2013-14 at 4.4% and 4.8% respectively. The economy is more stable today. The fiscal deficit is declining, CAD has been contained, inflation has moderated, the exchange rate is stable, exports have increased and growth rate is on the rise.

In the given scenario of the economy, Bank faced the challenges bravely, even though the asset quality remained a serious cause of concern throughout the year and there has been pressure on the profitability of the Bank with high cost of deposit, rise in NPAs, low income and lower Net Interest Income.

WORKING RESULTS

TOTAL BUSINESS

During the year ended 31.03.2014, total Business of the Bank recorded an increase of 16.41% at Rs.142588 crore as compared to Rs.122485 crore as on 31.03.2013.

HIGHLIGHTS OF RESULTS FOR THE YEAR ENDED 31ST MARCH 2014

(Rs in Lacs)

Year Ended

31.03.2014 31.03.2013

%age change

Interest Income 797271 734012 8.62

Other Income 42728 39422 8.39

Total Income 839999 773434 8.61

Total Expenditure 759945 679549 11.83

Operating proft 80054 93885 (14.73)

Net Proft 30063 33922 (11.38)

Return on Assets (ROA) 0.35% 0.44% -

Net Interest Margin (NIM) 1.88% 2.15% -

Gross NPA% 4.41% 2.96% -

Net NPA(%) 3.35% 2.16% -

Capital Adequacy Ratio (%) (Basel II) 12.10% 12.91% -

Capital Adequacy Ratio(%) (Basel III) 11.04% NA -

EPS 10.69 13.49 -

PROFIT

The Bank recorded a Net Profit of Rs.300.63 crore for the year 2013-14 as compared to that at Rs.339.22 crore during the FY 2012-13.

CAPITAL AND RESERVE

During the year, Bank has issued 2,12,63,023 Equity Shares of Rs.10/ each to Government of India by way of Preferential Issue at a price of Rs.47.03 per share determined as per ICDR Regulation of SEBI after taking necessary approval from RBI/ MOF. Accordingly, the Equity Share Capital of the Bank has increased by Rs.21.26 crore to Rs.275.28 crore and Share Premium has increased by Rs.78.52 crore (Share Premium Received Rs.78.74 crore minus Share Issue Expenses Rs.0.22 crore) to Rs.703.98 crore.

The Net Worth of the Bank has improved from Rs.3897.25 crore as on 31.03.2013 to Rs.4180.40 crore as on 31.03.2014.

The Capital Adequacy Ratio (Basel III) of the Bank is 11.04% as on 31.03.2014 against the minimum stipulated requirement of 9%.

UNSECURED REDEEMABLE BONDS: (Subordinated Debts for Tier -II Capital)

Total outstanding of Tier II Bonds as on 31.03.2014 remains unchanged at Rs.1,365 crore .

DEPOSITS

The total deposit of the Bank registered a growth of 19.94% with Net accretion of Rs.14088.66 crore to reach Rs.84730.16 crore as on March 31, 2014 from Rs.70641.50 crore as on March 31, 2013. The average cost of deposits of the bank stood at 8.22% as compared to 8.32% in previous year.

ADVANCES

The Bank has registered qualitative credit growth of 11.60% during the FY 2013-14. The Gross Advances of the Bank increased from Rs.51843.35 crore as on 31.03.2013 to Rs.57857.74crore as on 31.03.2014. The average Yield on Advances stood at 11.34% as on 31.03.2014 as compared to 11.86 % as on 31.03.2013.

Non Fund Advances business of the bank stood at Rs.3433.42 crore as on 31.03.2014 as against Rs.3578.73 crore as on 31.03.2013.

The Bank has a diversified portfolio of Advances and has extended credit to all sectors i.e Industry, Services, Agriculture, Retail Lending etc; as per vibrant Loan Policy of the Bank. There was notable credit growth to preferred sectors like Agriculture, Construction, Housing sector, Education, Small & Medium Enterprises (MSME) etc. Advances to Housing Sector increased by 18.40% (from Rs.2360.33 crore as on 31.03.13 to Rs.2795.18 crore as on 31.03.14). Credit growth in MSME Sector was 39.50% (from Rs.10113.01 crore as on 31.03.13 to Rs.14107.89 crore as on 31.03.14). Credit exposure to industry other than infrastructure increased by 8.58% (from Rs.9000.80 crore on 31.03.2013 to Rs.9773.05 crore on 31.03.2014) which mainly comprised of sectors viz: Food processing (28.10%) from Rs.683.98 crore to Rs.876.19 crore etc. growth of credit to Textiles during FY 2013-14 was (3.17%) from Rs.1369.15 crore on 31.03.2013 to Rs 1412.67 crore on 31.03.2014. Credit growth to infrastructure sector was in Energy (2.21%) (Earlier Power & Electricity) from Rs.12164.55 crore to Rs.12433.73 crore. Exposure in Energy Sector has increased due to restructuring of accounts of DISCOMS with additional funding.

To strengthen its credit appraisal, the Bank has recruited Chartered Accountants and Technical personnel i.e; Engineers. For improving credit off-take and expeditious disposal of loan proposals, Bank has introduced concept of New Business Proposal Committee, where all proposals of High Value are given in principle sanction /expression of interest for ensuring expeditious processing.

PRIORITY SECTOR ADVANCES

Bank continues to accord importance to varied goals under National priorities, including Agriculture, Micro & Small Enterprises, Housing, Education, Micro-credit, Weaker sections, SC/STs and Minority communities.

Priority Sector advances of the Bank increased by Rs.4096 crore, up from Rs.13605 crore as on 31.3.2013 to Rs 17701 crore as on 31.3.2014 thereby registering a growth of 30% on year to year basis.

AGRICULTURE ADVANCES

Bank''s advances under agriculture portfolio stood at Rs.7919 crore as on 31.3.2014 registering a growth of Rs.3007 crore. The major accretion under Agriculture has been under Direct Agriculture and these advances increased to Rs.5537 crore with an absolute growth of Rs.1151 crore registering a growth rate of 26 % over the previous year.

SPECIAL AGRICULTURAL CREDIT PLAN (SACP)

Bank maintained credit flow to Agriculture achieving more than 100%. Bank has disbursed Rs.7271 crore under Special Agriculture Credit Plan (SACP) against the target of Rs.7055 crore, achieving 103% during the FY 2013-14.

KISAN CREDIT CARD (KCC)

During the year 2013-14, the total number of KCCs of the Bank increased by 19125 showing growth rate of 14%. As at March 2014, the credit outstanding under KCCs was Rs.4503 crore. As at March 2014, 99265 KCC holders have been provided with ATM enabled ''RuPay Kisan Debit Cards'' covering 86% of eligible KCC holders.

MICRO, SMALL & MEDIUM ENTERPRISES (MSMEs)

Micro, Small & Medium Enterprises is a thrust area of the Bank in credit dispensation. Advances to MSME sector increased by Rs.3996 crore registering a growth rate of 40% in 2013-14 and stood at Rs.14108 crore as on 31.03.2014.

WELFARE OF MINIORITY COMMUNITY

As at March 2014, advances to specified minority communities aggregated to Rs.6737 crore, registering a growth of 18% and accounting for 38% of the total priority sector advances against the stipulated level of 15%.

CREDIT TO WOMEN ENTREPRENEURS:

Bank''s credit to women entrepreneurs stood at Rs.2414 crore as on 31.03.2014 registering a growth of Rs.231 crore accounting for 5% of ANBC.

ADVANCES TO SC/ST BORROWERS

In support of the underprivileged sections of the society, the Bank''s advances to SC/ST beneficiaries reached Rs.357 crore as at March 2014 from Rs.327 Crore as at March-2013.

ADVANCES TO ECONOMICALLY WEAKER SECTIONS

Advances to weaker sections aggregated to Rs.5578 crore, with a y-o-y growth of 17%. Advances to weaker sections formed 11% of ANBC against the minimum norm of 10%.

Special thrust was laid by the Bank in financing weaker sections including SC/STs under various Government sponsored schemes namely Ajeevika under National Rural Livelihood Mission (NRLM), Rajiv Rinn Yojana, Swarna Jayanti Shahari Rojgar Yojana (SJSRY) and Prime Minister Employment Generation Programme (PMEGP).

CREDIT MONITORING

The Bank through its well-established Credit policy Department continues to give directions to its Advances Portfolios by preparing vibrant Loan Policy of the Bank and also monitor its Advances portfolio to maintain its quality and performance.

In order to have proper and effective monitoring to check fresh slippages and devise a strategy for their minimization, the department has started monitoring individual High Value Accounts at HO level.

Towards this end Bank has set up a control room at HO Credit Monitoring Department for monitoring of Credit Portfolio which is manned by a team of CAs and experienced officials. The team identifies emerging credit related issues in borrowable accounts and puts up the position before Top Management on daily basis for taking proactive corrective steps.

NEW INITIATIVES

Bank has opened 202 new branches during the year 2013-14 as against 101 new branches opened in last fiscal. Out of these, 72 branches were opened in unbanked rural centers including 40 Ultra Small Branches.

- To widen the spread of Electronic Delivery Channels, Bank installed 829 additional ATMs during the year. Total number of ATMs of the Bank as on 31.03.2014, stood at 1008 as compared to 179 as on 31.03.2013.

- Government Business Modules (PPF, NPS & SCSS) have been made operational.

- To facilitate customers, Bank has introduced 24*7 Call Center facility through Toll free number.

- Bank has launched Debit Card in tie up with Master Card during the year 2013-14.

- In order to outreach masses, Bank has opened 115 rural branches and recruited 37 Agriculture Field Officers in 2013-14 in addition to existing 97 Agriculture Field Officers.

- Bank has introduced new scheme for Financing Seed production and processing units and scheme for Financing of Agriculture Input dealers (Seeds, fertilizers, pesticides etc).

- As on 31.03.2014, Bank has 29 MSME branches as against 11 MSME branches as on 31.03.2013.

- To give boost to MSE credit, Bank signed a MOU with CRISIL for credit rating of MSE units at concessional rate to have rationalized mechanism of rate of interest on MSME advances.

- There has been a quantum jump in lending under Priority Sector through special drives. An amount of Rs.3851 crore was disbursed in 43152 accounts under Priority Sector during the Special Drives / Mega Credit Campaign/ Core Credit plus campaign held from 1st September, 2013 to 31st March, 2014.

RRB SPONSORED BY THE BANK

Sutlej Gramin Bank, Bhatinda, the RRB sponsored by the Bank, covers six districts of Punjab viz. Bhatinda, Faridkot, Mansa, Muktsar, Moga and Ludhiana and is in profit since its inception. The progress made by the RRB in various parameters is as under:

(Amount in Crore)

Parameter 31.3.2013 31.03.2014

Deposits 264.73 306.46

Advances 203.56 256.14

Priority Sector Advances 194.81 198.23

Agriculture Advances 175.28 181.79

Net Profit 1.55 2.36

LEAD BANK RESPONSIBILITY/SETTING UP OF FINANCIAL LITERACY AND CREDIT COUNSELLING CENTRES (FLCCs)

Bank has lead bank responsibilities in 3 districts of Punjab viz., Moga, Faridkot and Ludhiana. Pursuant to the directions of Reserve Bank of India, Bank has set up FLCCs in the name of "PSB Suvidha Centres" in all three lead

districts to impart free Financial Literacy/Credit Counseling Services to the needy persons to help them avail financial services from Banking system and also to provide counseling services to those who are under fnancial distress due to debt burden.

CONTRIBUTION TO RURAL DEVELOPMENT

''PSB Trust for Development of Agriculture and Rural Employment ''(PSB Trust for DARE) has been established with the objectives of setting up training institutes for imparting trainings to farmers and for capacity building of the rural youth/women/economically weaker sections and also organizing tractor maintenance, animal welfare camps etc. through Rural Development Centers.

As per initiative of Ministry of Rural Development (MoRD), Govt. of India, Bank under the aegis of ''PSB Trust for Development of Agriculture and Rural Employment has established ''Rural Self Employment Training Institutes

(RSETIs)'' in three of its lead districts Moga, Faridkot and Ludhiana in Punjab to promote entrepreneurship development among rural youth and encourage them taking up self-employment activities. The operational expenditures, salary to support staff and infrastructure facility of these RSETIs are fully met by Trust for Development of Agriculture and Rural Employment (DARE). During 2013-14, these training institutes have trained 1410 unemployed candidates, taking the tally to 4729 trained youths since inception.

As per MoRD guidelines, Government of Punjab allotted land for setting up Rural Self Employment Training Institutes (RSETIs). With the financial assistance of MoRD/Bank''s CSR fund assistance, the construction of RSETI Building at Moga is completed. The construction work at Faridkot is in full swing and at Ludhiana the work is under progress.

FINANCIAL INCLUSION

Financial Inclusion is not only a process but a Mission for the Bank to empower deprived and underserved sections of the population and the endeavor of the bank has been to connect these people with the banking system i.e. "inclusion of the excluded" and make them a productive asset of the society. Key initiatives of the bank are as under:

- Bank has been allotted 400 unbanked villages with population above 2000 and 2316 unbanked villages with population below 2000. These villages have been covered by the bank either by opening regular Brick and Mortar Branches or through Information Communication Technology (ICT) based Business Correspondent (BC) model. As on 31.03.2014, out of the 400 villages with population above 2000, 359 villages have been covered by deployment of BCAs and enrolment have already been started, 38 villages have been covered by opening Rural Branches. Out of 2316 villages with population less than 2000, 334 villages have been covered by deployment of 193 BCAs.

- Bank has planned to open 120 USBs over a period of 3 years i.e. 40 each in 2013-14, 2014-15 and 2015- 16. Bank has achieved the 2013-14 targets for opening of 40 USBs. These branches have been opened on CBS platform of the bank and are managed by permanent staff of the bank.

- FI Gateway has been successfully implemented and Bank has made Ist CSC Kiosk live on 31.01.2014 at Kurali (Punjab).

- During the year, Bank has opened 65,000 additional No-Frill Accounts through BCs and total No-frill accounts opened up to March 2014 are 1.45 Lacs with total outstanding of Rs. 0.26 crore. The Cumulative figure of No Frill Account is 10.86 Lac with total outstanding of Rs.61.84 Crore.

- Bank has issued 154570 KCCs with a total outstanding of Rs. 4503.31 crore.

- Bank has provided Over Draft facility of Rs. 500/- per account availed in 2.88 lacs No-frill Accounts with overdraft amount of Rs. 12.72 crore.

All FI accounts have been migrated to CBS Server and total system has since been operationalised.

IMPLEMENTATION OF DIRECT CASH TRANSFER (DCT) & DBTL

- In terms of the directions of Ministry of Finance, Direct Cash Transfer (DCT) has been implemented in 43 districts in a phased manner w.e.f. 01.01.2013 and has been extended to 78 more districts in Phase II w.e.f. 01.07.2013. The DCT Scheme is already implemented in 121 districts.

- The DBTL scheme for LPG beneficiaries has already been implemented in 289 districts and it will be rolled out in rest of the country in phased manner. Our Bank has a lead role in District Ludhiana, Faridkot and Moga. Bank is in the process of seeding Aadhaar number of LPG beneficiaries in their Bank accounts. District wise details of number of beneficiaries and Aadhaar seeding as on 31st March2014 is appended below :

Name of District Total beneficiaries Aadhaar seeded by OMCs Aadhaar seeded by bank

Faridkot 116811 88853 (76.07%) 82116 (70.30%)

Ludhiana 958241 647610 (67.58%) 554230 (57.84%)

Moga 181195 89654 (49.48%) 63981 (35.31%)

RETAIL MARKETING

The Bank aggressively pursued Retail Lending through liberalization of policy for products under the Retail segment, rationalized the interest rates to make the products most competitive in the market and undertook specific marketing initiatives to provide depth to the Loan book of the Bank.

Further, Special Festival Bonanza Scheme was launched for providing Housing Loan, Auto Loan and Consumer Loan to existing and new customers. New innovative Retail products were also launched during the year. The growth in fresh Retail lending was above 6% over previous year.

The percentage of Retail loans to gross advances was 6.91% as on 31-03-14.

Further, the Bank participated in the booking schemes launched by various Housing Development Authorities of State Governments for financing of the earnest money.

The Bank has introduced a facility of online submission of application form by prospective borrowers for Retail Loans with a facility to track the status online.

The Bank also initiated the process for entering into MOU with major commercial and passenger car manufactures to boost Auto lending.

ASSETS QUALITY

The Bank continued to make concerted efforts to contain NPAs and has used all available tools of recovery including negotiated settlements and legal means. The provisions of "The Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act – 2002" were used effectively. The Bank also organized Recovery Camps during the year at various centers. During the year, two short term schemes for settlement of NPAs were formulated under Agriculture Sector and unsecured T.W.O accounts apart from Bank''s Recovery Management Policy. In all 1554 cases were settled at Rs.85.87 Crore.

The performance of the Bank under recovery of NPAs during the year continued to be good. The aggressive and focused efforts could result in the total recovery of over Rs.493.72 Crore including recovery of Rs.95.21 crore in Technically Written Off accounts.

However, despite higher slippage, the gross and net NPAs as on 31.03.2014 have been contained at Rs.2553.52 crore and Rs.1918.60 crore as against Rs. 1536.90 crore and Rs. 1110.38 crore as on 31.03.2013 respectively.

The position of Gross and Net NPAs as on 31.03.2014 vis-à-vis previous year is as under:

(Amount in crore)

NPA As on 31.03.2013 As on 31.03.2014

GROSS 1536.90 2.96% 2553.52 4.41%

NET 1110.38 2.16% 1918.60 3.35%

The Provisioning Coverage Ratio of the Bank (including T.W.O a/cs), as on 31.03.2014 stood at 45.51%.

INVESTMENT & FOREIGN EXCHANGE

The Bank''s total investment increased by 25.48% during current financial year to Rs.28346.61 crore with a portfolio composition consistent with the corporate requirement, risk perception and investment policy of the Bank.

The profit on sale of securities for the year increased from Rs. 62.98 crore for year ended March 2013 to Rs. 125.37 crore for the year ended 31.03.2014 on account of trading activities in G-sec and Non-SLR securities.

Exchange profit in Forex transactions for the year 2013-14 was Rs 26.91crores (Forex Treasury).

RISK MANAGEMENT

The Bank has put in place a robust and integrated Risk Management system to ensure that the risks assumed by the Bank are within the defined risk appetites and are adequately monitored. The overall responsibility of setting the Bank''s risk appetite and effective risk management rests with the Board and apex level management of the Bank. The implementation of Integrated Risk Management System in the Bank is monitored by HO Risk Management Department (RMD) which is headed by General Manager.

Risk is managed through following Apex committees viz.

- Risk Management Committee (RMC)- a Board level Committee

- Credit Risk Management Committee (CRMC)

- Asset and Liabilities Management Committee (ALCO)

- Operational Risk Management Committee (ORMC) and

- Capital Planning Committee as per ICAAP

These committees work within the overall guidelines and policies approved by the Risk Management Committee (RMC) / Board.

POLICY FRAMEWORK

The Bank has Board approved policies and procedures in place to measure, manage and control various risks that the Bank is exposed to.

Integrated Risk Management Policy has been formulated with the objective of analyzing the overall risk profile of the bank and to integrate all the risks of the Bank. The other important risk policies comprise of Asset-Liability Management (ALM) Policy, Investment Policy, Loan Policy, Risk Based Internal Audit (RBIA), Credit Audit, Country Risk Management Policy, Derivatives Policy, Operational Risk Management Policy, Business Continuity Planning (BCP) & Disaster Recovery Management (DRM) Policy, Stress Testing Policy, Policy on Utilization of Credit Risk Mitigation, ICAAP Policy. The policies are reviewed annually by the RMC / Board.

BANK''S COMPLIANCE WITH BASEL-II

In terms of Regulatory Guidelines of Reserve Bank of India, the Bank has adopted the New Capital Adequacy Framework w.e.f. 31.03.2009. Based on Basel II norms, the Bank has adopted Standardized Approach for Credit Risk, Modified Duration approach for Market Risk and Basic Indicator approach for Operational Risk for computing the capital charge. The Bank has also implemented Basel III Guidelines and has started computing CRAR w.e.f. June 2013. The CRAR position of the Bank is reviewed by the Board on a quarterly basis. Bank is geared for moving towards advanced approaches under BASEL II as suggested by RBI. Bank has also appointed a Consultant for setting up Enterprise Wide Integrated Risk Management System (EIRMS) in the Bank for moving to Advance approaches of Basel II and implementation of Basel III Guidelines.

ICAAP POLICY

In compliance with the Reserve Bank of India guidelines on Basel II & Basel III - Pillar 2- Supervisory Review and Evaluation Process (SREP), the Internal Capital Adequacy Assessment Process (ICAAP) Policy has been formulated to assess the capital requirement commensurate with the size, level of complexity, risk profile and scope of operations of the Bank. Various residual risks are assessed and additional capital is provided for wherever required. The capital adequacy of the Bank is assessed based on the analysis of current and projected financial/capital position as well as the headroom available.

Stress Testing exercises are also undertaken to assess the likely impact of various stress situations in relation to capacity of Bank''s profitability to absorb the shock and consequent impact on Bank''s capital. The ICAAP outcome is prepared on half yearly basis and is reviewed by RMC.

DISCLOSURE

In compliance with the Reserve Bank of India guidelines on Basel II & Basel III - Pillar 3 - Market Discipline, the Bank has put in place a Disclosure Policy duly approved by the Board and the disclosures on quarterly / Half yearly / Annual basis, as per the policy, are displayed on the Bank''s Website / Annual Report.

CREDIT RISK

Credit risk management processes involve identification, measurement, monitoring and control of credit exposures. Credit risk and its policy formulation is managed by Credit Risk Management Committee (CRMC). The Committee regularly monitors prudential caps in different loan segments including industry, corporate, retail and individual/ group borrowers.

Comprehensive credit rating framework comprising of Credit Risk Rating Models for Corporate and Retail Loans, pricing of loans linked to risk assessment and credit rating, study & analysis of industries/portfolio, migration of credit ratings is undertaken.

MARKET RISK

The Bank''s portfolio is exposed to Market Risk on account of change of Interest rates and Currency rates.

The Asset and Liabilities Management Committee (ALCO) is overseeing the functions relating to market risk. The Bank has put in place a variety of market risk measurement systems and tools including a Mid office in Treasury Department. Strict adherence to various limits and proper escalation of breaches, if any, are followed.

The Liquidity Management Framework is well established, which safeguards the ability of the Bank to meet all payment obligations when they become due. It is designed to identify measure and manage the liquidity risk position of the Bank.

The Bank is computing the Market Risk Capital charge as per the Modified Duration approach, by using Modified duration method, as per the guidelines received from the regulator. The Bank also calculates Value at Risk (VaR) on its foreign exchange portfolio at prescribed intervals.

The Bank periodically undertakes stress test exercise to highlight the potential risks, on account of liquidity and Interest rate risk that may arise due to events that are rare but conceivable. The impacts of shock on account of different risk factors that may generate worst case scenario are studied and to counter the impact possible solutions are derived.

OPERATIONAL RISK

The Operational Risk Management Committee (ORMC) oversees on matters relating to risks associated with operations and ensures the continuity / restoration of business in the event of contingency / exigencies. Presently, capital charge on operational risk is calculated as per Basic Indicator Approach. The Bank is in the process of strengthening its ORM Framework & ORM systems to migrate to advance approaches for calculation of Operational Risk Capital.

Bank has posted Risk Managers in all the Zonal Offices and also at Top 10 branches for ensuring compliance of Basel norms at the operating level and with the aim of conservation and optimum use of capital.

HUMAN RESOURCE DEVELOPMENT

The cadre wise staff strength as on 31.03.2014 is as under:-

Category 31st March 2013 31st March 2014

Officers 5932 6062

Clerks 1640 2029

Sub-staff 961 779

Total 8533 8870

WOMEN IN EMPLOYMENT:- Out of the total strength of 8870 as on 31.03.2014, the women employees are 1738 constituting 19.60% of the total strength.

EMPLOYMENT TO RESERVED CATEGORY EMPLOYEES:- Bank is committed to the constitutional safeguard and social objectives for the development and welfare of persons belonging to SC, ST and other backward classes of the society. The Bank observes all guidelines stipulated by the Govt. of India in respect of Reservation Policy for reservation of Posts in all India and local recruitments.

A special SC/ST cell has been set up in the Bank to monitor the Reservation and other provisions for SC/ST employees. An executive at the rank of General Manager has been designated as Chief Liaison Officer for SC/ST employees who ensures compliance of various guidelines pertaining to SC/ST employees and takes care of all matters of grievance redressal of SC/ST employees of the Bank.

The staff strength of SC/ST employees stood at 1382 and 436 respectively on 31.03.2014. The staff strength under

various reserved categories viz OBC/EX-SM/PH is as under:-

CATEGORY SC ST OBC EX-SM PH

OFFICERS 813 348 692 43 71

CLERKS 342 60 334 121 44

SUB-STAFF 227 28 32 173 15

TOTAL 1382 436 1058 337 130

FINANCIAL ASSISTAN CE TO THE DEPENDENTS OF DECEASED EMPLOYEES

During the Financial year 2013-14 the Bank made total payment of Rs.55,06,108/- in 9 cases received from the dependants of the deceased employees under the scheme for the payment of ex-Gratia in lieu of appointment on compassionate grounds.

PROMOTIONS

Bank is regularly promoting employees almost in all cadres year after year to keep rewarding its top performers and make them assume higher responsibilities. Special drive was made during the year under review to fulfill the growing aspirations of the employees for fast career progression thereby motivating employees for higher productivity.

Following promotions have been effected during the year:

Promotions from DGM to GM AGM to CM to DGM AGM SRM to CM MGR to SRM OFFICER Total to MGR

General 6 5 3 95 59 128 296

Specialist - - 1 4 2 5 12

Total 6 5 4 99 61 133 308

TRAINING

Training is an integral part of Human Resource development. In the current competitive environment in the Banking Industry, it is all the more important to keep the staff abreast of the latest developments in technology, system and procedures, legal aspects etc., especially amongst the peers.

The training programs organized by the Bank are focused towards integrating the new recruits into the Bank and in enhancing the skills, knowledge and for reorienting the attitude of its existing work force to achieve the organizational objectives.

The Bank endeavored to provide training to 50% of its employees during the Financial Year 2013-14. With this in view, 236 programmes were conducted by PSB Centre for Banking Research & Training at Chandigarh in General Banking & Computer related programmes at NIBSCOM, NOIDA in various fields from 1st April 2013 to 31st March 2014, in which training was imparted to 4654 employees of different cadres.

7 Special Training Programmes were conducted at NIBSCOM on Credit Appraisal, Foreign Exchange and Security Workshop in which 219 officials were imparted training.

Besides 213 officers were also imparted training at Apex Level. Bank also deputed four officials in various cadres for overseas trainings.

INDUSTRIAL RELATIONS:- The industrial relations in the Bank remained cordial throughout the year. The representatives from Workers and Officers unions participated in various discussions on developmental and other issues with the management at various levels and efforts were made to resolve the same.

DIRECT RECRUITMENT:- The Bank launched a special recruitment drive to cater to the challenges of superannuation, sustained business growth and rapid branch expansion in the FY 2013-14. Recruitment of both the Specialist Officers and Probationary Officers was done to address the diverse manpower requirement of the Bank.

During the year, 1 Chief Security Officer in Scale -V, 3 CAs in Scale -III, 22 CAs in Scale II, 8 Law Officers in Scale -II,772 Probationary Officers, 38 AFO in Scale -I, 10 HR/IR Officers in Scale I and 495 Single Window Operators-A in Clerical cadre have joined the Bank under Bank''s Recruitment Projects.

STAFF WELFARE

In order to motivate and encourage the staff for effective participation in development activities, the Bank is maintaining various welfare schemes for the staff.

During 2013-14, Bank introduced new schemes for the welfare of staff. Also improvement / betterment in the existing schemes of Housing Loans, Mediclaim Policy for retired employees etc. have been made for the welfare of staff.

INFORMATION TECHNOLOGY

- As on 31.03.14, all 1330 branches of the Bank are on Core Banking Solution.

- Bank has implemented Anti Money Laundering Solution which facilitates generation of Cash Transaction Report (CTR), Suspicious Transaction Reports (STR) and Non-profit Transaction Report (NTR).

- Cheque Truncation System has been implemented across the country and bank is participating in all the grids i.e. Southern, Western and Northern Grids.

- Biometric based Authentication for employees'' login into CBS application has been introduced to prevent the incidence of frauds taking place on account of password theft/sharing of password. As on 31.03.2014, rollout in 445 branches has been completed. Rollout in the remaining branches shall be completed by June 2014.

- Video Conferencing Facility has been extended to 74 centers, which includes Head Office, Zonal Offices and top Business Branches.

INTERNAL CONTROL

The Internal control function like many other functions of the management is carried out in the Bank through a well- established Inspection & Audit Dept.(IAD), which ensures examination & verification of adherence to systems, policies and procedures of the Bank. The IAD constantly aims at checking the inherent risks through its effective control mechanism, enforced through five Zonal Inspectorates, to protect Bank''s interest and endeavors to prevent frauds by conducting RBIA and Inspection of branches/ offices as per risk prioritised Annual Audit Plan (AAP) approved by the Audit Committee of the Bank.

The Audit Committee of the Board (ACB) oversees the internal Audit function of the Bank for improving the efficiency of systemic controls. The ACB, which met 8 times during FY 2013-14, also monitors the functioning of the Audit Committee of Executives (ACE), which is a first tier Committee to oversee Inspection and Audit function in the bank.

During FY 2013-14, Risk Based Internal Audit was conducted in 876 branches of the Bank; 496 branches were brought under Concurrent Audit System; the Information System audit was conducted in 288 branches; Post migration audit was conducted in 600 branches, and Zonal Offices and Departments at Head Office have been subjected to Management Audit & Inspection.

The Inspection and Audit Department is also assigned the responsibility of monitoring redressal of the customer grievances/ complaints. The Bank has implemented Standardized Public Grievances Redressal System (SPGRS), a web-based customer complaint redressal module. During FY 2013-14, 1810 complaints were received, of which 1775 complaints have been disposed off. The Banking Ombudsman passed 5 awards against the Bank out of which against 2 awards bank has gone into appeal.

During the year, the Inspection and Audit Department formulated ''Risk Based Internal Audit Policy'' and revised & devised computer aided reporting formats of Risk Based Internal Audit & Concurrent Audit.

To summarize, Bank''s Inspection and Audit Dept. has been effectively monitoring the compliance of systems and procedures laid down by Board, the Regulator and the Government of India.

COMPLIANCE FUNCTION

During the financial year 2013-14, Bank reviewed the Compliance-policy. Compliance Manuals of Zonal Offices and various HO Departments were drafted /updated during the year. Functional Manual of the bank has also been placed on the Intranet site of the bank.

Bank complied with the various guidelines issued by the RBI on Compliance functions. The Compliance Department ensures that the functioning of Zonal Offices, Branches and Departments is synchronized with their Functional Manuals. Annual Compliance Audits of branches/offices are conducted at regular intervals.

PR and PUBLICITY

During the financial year 2013-14, the Bank adopted a multi-media strategy to build up its image in Public and at the corporate level and accordingly publicity was made through the print media by release of its product, tender, financial and other display/notice ads in different newspapers, magazines and souvenirs targeting various audiences all over the country.

Bank also used effective outdoor media signifying display of Balloon at Chandigarh and Amritsar Airports. Bank''s banners, hoardings displayed on events of high publicity value facilitated extension of outreach of the Bank.

Bank also received immense publicity through Bank''s Wall Calendar & Table Calendar 2014 which was widely distributed among clients and well wishers of Bank.

Bank got huge publicity by way of coverage of its press releases by the print media.

All these activities facilitated the Bank to rededicate itself to the service of the Nation and enabled it to earn a well deserved mileage on the publicity front.

VIGILANCE PREVENTIVE VIGILANCE

During the year, the Vigilance Department has taken number of initiatives on Preventive as well as on Punitive Vigilance to strengthen the vigilance administration and also to instill compliance culture within the organization.

To educate staff across the organization to work with utmost sincerity, honesty and uniformity in a most transparent manner and to spread awareness about stronger compliance culture and strengthening vigilance administration, series of programmes, conferences and workshops were organized. These programmes were participated by senior officials of the Bank and also presided over by the Top officials of the Central Vigilance Commission and CBI.

VALUE ADDITION TO THE ORGANIZATION

In line with this year''s theme observing Vigilance Awareness Week by Hon''ble CVC "Promoting Good Governance – Positive Contribution of Vigilance" and on the basis of information received from various sources, quarters regarding Revenue Leakages in Big Borrowal Accounts, Bank started a special drive under the name "Mission Compliance" i.e. checking of the compliance of terms and conditions of sanction in big borrowal accounts on sample basis.

OBSERVANCE OF VIGILANCE AWARENESS WEEK FROM 28.10.2013 TO 02.11.2013

As desired by Hon''ble Commission, the Bank undertook number of initiatives during "Vigilance Awareness Week" w.e.f. 28.10.2013 to 02.11.2013 for observing the same in a befitting manner. Besides, a programme for all the senior functionaries of Delhi based Zones was also organized. The programme was inaugurated by Vigilance Commissioner, Central Vigilance Commission.

SECURITY ARRANMGEENT

The Bank has a well established Security set-up within the Bank''s organizational structure. Security department of the Bank has been regularly reviewing the security arrangements at all Currency Chests and branches and accordingly strengthening the security arrangements to meet prevailing security scenario with effective, modern and unobstructed Security Systems. All the essential and mandatory security arrangements in terms of RBI/ IBA guidelines are provided at most of the branches.

The Zonal Security Officers periodically carry-out Security audit of branches to assess the security arrangements in vogue and recommend implementation of additional preventive security measures wherever desired. They maintain close liaison with the law enforcing and administrative authorities. Besides, the Chief Security Officer, other offcials from Head Office are also carrying out the security audit of the Currency Chests and also undertake random visits of the vulnerable branches of the Bank.

The Access Control System at all Banks'' Currency Chests has been strengthened in terms of RBI guidelines. Security Alarm Systems are installed at all branches and currency chests.

All the branches of Bank are provided armed guards and all the cash remittances are escorted by armed guard. Training, including fringe practice, for Armed Guards deployed at currency chests / branches is imparted on an annual basis. Also, all the security officers undergo refresher training on security once in a year.

CCTV Surveillance System has been installed at all the Currency chest branches and 237 identified High Risk and vulnerable branches in the first phase, keeping in view the threat perception, volume of cash and valuables handled and need for continuous surveillance. CCTV systems shall be installed at remaining branches in a phased manner.

IMPLEMENTATION OF OFFICIAL LANGUAGE

During the financial year 2013-14, Bank made significant progress in implementation of Official Language Policy for promoting and propagating the use of Official Language in the Bank. During the year 2013-14, a total of 84 workshops were organized, in which 1039 personnel were trained. Besides, 3203 personnel were trained during 705 Hindi Desk Training Programmes and 286 personnel were imparted training for using Unicode on Computers. With the aim of reviewing the progress of Official Language, inspections were conducted in 705 Branches/Offices.

This year ''Delhi Town Official Language Implementation Committee'' (TOLIC), awarded ''Consolation Prize'' to our Bank In-House Hindi Magazine ''Rajbhasha Ankur''. Apart from this five employees of our Bank won eight prizes in various competitions organized by different banks under the auspices of Delhi Bank TOLIC.

SPORTS

The Bank has a Sports Academy which nurtures Bank''s Hockey Team at National Level, besides Hockey Academy for age group of 15-18 years. During the year, Bank''s Hockey Team won the following three National Tournaments:

- All India Gurmit Hockey Tournament

- All India Surjit Hockey Tournament

- All India Nehru Hockey Tournament

The Bank''s Hockey Academy also brought laurels to the Bank by winning All India Level Tournaments.

The following players of the Bank''s Hockey Team and Hockey Academy have represented Indian Hockey Team in various International Tournaments during the year 2013-14:

Sh. Harbir Singh Sh. Harjot Singh Sh. Satbir Singh Sh. Ramandeep Singh

Sh. Gurmail Singh Sh. Prabhdeep Singh Sh. Talwinder Singh

Sh. Baljit Singh Saini Olyampian was appopinted as coach of the Indian Hockey Team and

Sh. Rajinder Singh Olyampian was appointed as coach of Indian University Team.

In addition to the above said achievements, the officials attached with Bank''s Hockey Team have also worked for the deposit mobilization during this financial year.

RECONCILIATION

Total outstanding in Inter Bank Reconciliation (IBR) & Demand Draft as on 31.03.2014 has been reduced by 99% from the level as on 31-03-2013.

GENERAL ADMINISTRATION

Various building projects viz Staff Training College, Delhi, Fort Mumbai, Gurgaon, Noida etc. are in progress and are likely to be completed this year. During the year, Bank has gone for revaluation of Bank owned properties after a gap of three years.

CONSTITUTION OF BOARD OF DIRECTORS

As on 31st March 2014, the Board comprised of three Whole time Directors viz Chairman & Managing Director and two Executive Directors besides ten other Directors including representatives from Ministry of Finance, Reserve Bank of India, Non Official Director (Chartered Accountant Category), two Share Holders Directors and five Part Time Non Official Directors.

Various Committees constituted under the Board as listed below, oversee the functioning and control the affairs of the bank:

- Management Committee

- Audit Committee

- Risk Management Committee

- Committee for Monitoring of Large Value Frauds

- Vigilance Committee

- Customer Service Committee

- Shareholders''/Investors Grievance Committee

- IT Strategy Committee

- Nomination Committee

- HR Committee

- Appellate Committee

- Remuneration Committee

- Committee of Directors on Executives'' Promotion

- Committee for Monitoring of Recovery

- Concurrent Audit Committee

During the year 2013-14, sixteen meetings of the Board of Directors, twenty one meetings of the Management Committee and eight meetings of the Audit Committee of the Board were held besides meetings of other Committees of the Board.

The constitution of Bank''s Board of Directors underwent following changes during the year 2013-14:

INCLUSIONS

- Sh. Pradipta K Jena was nominated as RBI Nominee Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F. No. 6/34/2013-BO.1 dated 31.05.2013.

- Sh. Kishore Kumar Sansi was appointed as Executive Director of Punjab & Sind Bank, vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 4/5/2012- BO.1 dated 05.08.2013.

- Sh. Mukesh Kumar Jain was appointed as Executive Director of Punjab & Sind Bank, vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 4/5/2012- BO.1 dated 05.08.2013.

- Sh. Sanjay Verma was nominated as Non-official Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/16/2011-BO.1 dated 12.08.2013.

- Sh. S C Das was nominated as Ministry of Finance Nominee Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/3/2012- BO.1 dated 22.10.2013.

- Smt. Anita Karnavar was nominated as Non-official Director of the Bank vide Government of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 6/56/2013-BO.1 dated 30.01.2014.

- Sh. Jatinderbir Singh-IAS was appointed as Chairman & Managing Director of Punjab & Sind Bank vide Government

of India, Ministry of Finance, Department of Financial Services, New Delhi Notification No.F.No. 4/7/2013-BO.1 dated 31.01.2014.

CESSATIONS

Sh. Devinder Pal Singh, Chairman & Managing Director attained the age of superannuation and thus retired on 31.01.2014.

Sh. Rajat Sachar, MOF Nominee Director was on the Board of the Bank up to 21.10.2013.

Sh. Karanpal Singh Sekhon completed his term as Non-Official Director on the Board of the Bank on 04.07.2013.

Sh. B P Kanungo, RBI Nominee Director was on the Board of the Bank up to 30.05.2013.

Sh. P K Anand, Executive Director attained the age of superannuation and thus retired from the service of the bank on 31.05.2013.

CORPORATE GOVERNANCE

The Bank is committed to good Corporate Governance and is constantly striving to further strengthen the same to ensure greater transparency and better coordination at all levels in the Organization. The working of the Bank reflects transparent ownership structure, improved risk management practices, well defined delegation of powers, accountability and an elaborate audit function carried out by both its Inspection & Audit Division and by independent Statutory Central Auditors.

Bank has complied with the guidelines of RBI and SEBI on the matters relating to Corporate Governance which have been examined by the Statutory Central Auditors.

DIRECTORS'' RESPONSIBILITY STATEMENTS

- The Directors confirm that in the preparation of the Annual Accounts for the year ended 31st March, 2014:

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

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

- Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the bank for the year ended on 31st March, 2014

- Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws Governing Banks in India and the accounts have been prepared on going concern basis.

STATUTORY AUDIT

As approved by Reserve Bank of India, Bank has appointed M/s.R.M.Lall & Co., Lucknow, M/s.O.P Tulsyan & Co, New Delhi; M/s B K Shroff & Co., Kolkata; and M/s R Kothari & Co., Kolkata as Statutory Central Auditors for the accounting year ended March 2014.

ACKNOWLEDGEMENTS

The Board of Directors of the Bank thanks valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and continued support.

The Directors also acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, various State Governments, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

The Directors place on record their deep appreciation for the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realization of the Corporate goals in years ahead.

For and on behalf of Board of Directors

Sd/-

Place: New Delhi (Jatinderbir Singh)

Dated:10.05.2014 Chairman &

Managing Director

 
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