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Directors Report of Union Bank of India

Mar 31, 2023

The Board of Directors is pleased to present the 104th Annual Report of your Bank for the Financial Year 2022-23 together with the ''Audited Balance Sheet'', ''Profit & Loss Account'', ''Cash-Flow Statement'', and the report on ''Management Discussion & Analysis''. The ''Corporate Governance Report'' and ''Business Responsibility and Sustainability Report'' also form part of the Annual Report 2022-23.

1. Highlights:

1.1 India''s economic growth remained resilient in FY 2022-23. According to the provisional estimates by National Statistical Office (NSO), India''s gross domestic product (GDP) is estimated to grown at 7.2% for FY 2022-23, driven by private consumption and investment. On the supply side, activity was supported by the agriculture and services sectors, while manufacturing was restrained under the pressure of high input costs. A slew of data, from services activity to bank credit, pointed to a pick-up in demand during FY 2022-23. The growth in GDP at current prices, or nominal GDP, during FY 202223 is estimated at 16.1% on annual basis.

1.2 There was positive growth across all sectors, with services like trade, tourism, and hospitality driving momentum. Enabling government policies are expected to further catapult these sectors towards an upward growth trajectory. Consumer activity was encouraging, with growth in non-food bank credit rising to 15.4% as at end-March 2023 from 9.7% a year ago. Liquidity conditions slipped into periods of the deficit as deposit growth lagged credit. Merchandise exports have registered the highest-ever annual exports of USD 447.46 billion with 6.03% growth during FY 2022-23, surpassing the previous year''s (FY 2021-22) record exports of USD 422.00 billion. Exports are growing despite global challenges such as the rise in raw material prices, restrictions on exports of certain products, and the Russia-Ukraine war.

1.3 Consumer price index (CPI) inflation persisted at elevated levels during FY 2022-23, impacted by a series of adverse supply shocks and the continuing pass-through of high input costs. The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) increased the policy repo rate by 250 basis points from May 2022-February 2023, and monetary policy remains focused on progressively

aligning inflation with the target while supporting growth.

1.4 Going forward, India''s economic rebound faces difficult challenges from the legacy of structural bottlenecks as well as the scars of the pandemic. The Russia-Ukraine conflict has also dampened the momentum of recovery, with its impact transmitting through record-high commodity prices, weaker global growth outlook, and tighter global financial conditions. Concerns surrounding de-globalization impacting future trade, capital flows, and supply chains have amplified uncertainties for the business environment.

1.5 While global economic prospects have improved modestly compared to a few months ago, the outlook is highly uncertain again amid financial sector turmoil, high inflation and ongoing effects of Russia Ukraine war. According to the International Monetary Fund''s (IMF''s) April 2023 update of the World Economic Outlook (WEO), global growth is expected to moderate from 3.4% in 2022 to 2.8% in 2023, and 3.0% in 2024, with a sharper deceleration projected for advanced economies (AEs) relative to Emerging Market And Developing Economies (EMDEs). Global headline inflation is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity prices, but core inflation is likely to decline more slowly. Alongside this, global trade is expected to decelerate in 2023. Elevated inflation levels are a looming challenge complicating the trade-offs that central banks are faced with between containing inflation and boosting economic growth.

1.6 The IMF predicts Asia-Pacific''s GDP to expand by 4.6% in 2023 after growing 3.8% in 2022. China and India are expected to contribute around half of global growth in 2023, with the rest of Asia and the Pacific contributing an additional fifth.

1.7 Notwithstanding economic uncertainties triggered by the Russia-Ukraine war, India will remain the fastest-growing economy in the world. As per the IMF, India is projected to expand by 5.9% in 2023 and further by 6.3% in 2024. The Reserve Bank of India (RBI) has pegged the economic growth estimate for 2023-24 at 6.5%. The higher rabi production has brightened the prospects for the agriculture sector and rural demand. The steady growth in contact-intensive services should be positive for urban demand. The government''s focus on capital

expenditure, capacity utilization above the long-period average, and moderating commodity prices should bolster manufacturing and investment activity. Given the reforms undertaken by the government and the various supportive measures by the RBI, a very strong foundation is being laid for a further rapid increase in economic growth in the coming years. The Union Budget 2023-24 has provided for a sharp increase in public investment and capital expenditure. The various government initiatives are seen to be supporting growth, and credit demand is expected to remain robust in FY 2023-24.

2. Bank''s Performance

Established in the year 1919, your Bank has 8577 domestic branches, 10,835 ATMs across 29 States and 5 Union Territories, and 75,594 employees as on March 31, 2023.

The Bank has 3 overseas Branches at Hongkong, Sydney, Dubai DIFC, 5 wholly owned Subsidiaries, 3 Joint Ventures and 1 Associate Organization.

The global business of your Bank stood at ''19,27,621 crore as on March 31, 2023 which comprises of total deposits of ''11,17,716 crore and gross Advances of ''8,09,905 crore.

The operating profit and net profit of the Bank stood at ''25,467 crore and ''8,433 crore respectively as on March 31, 2023.

3. Digitization:

Project Sambhav: Implementation of Digital Business Platform

To capture the growing digital business & to build a strong digital ecosystem/architecture, your Bank has launched Project Sambhav. As part of Project Sambhav, your Bank has designed a detailed roadmap on Digital Transformation for building a Digital Bank within Bank, which includes:

a. Digital strategy aligned with the business vision and Digital Banking Policy.

b. Vyom upgradation with seamless Omni channel experience & enhanced UI/UX to offer best-inclass journey experience.

c. Ecosystem Partnerships

d. Building Digital Platform with Cloud-ready architecture grounds- up build digital channels, APIs, microservices, and modern engineering practices

e. Data & Analytics Platform Services

f. Collaboration with Fintechs to offer new digital products.

Your Bank has rolled out 20 digital journeys & partnered with 90 fintechs to launch quick Go-to-Market journeys, thus reducing the timelines for rolling out the products.

Thrust was given to projects which are part of regulatory requirements, the EASE Reforms Agenda, as well as requests received from within your Bank.

Launch of Vyom App

Your Bank has given top priority and facelifted the existing Mobile Banking application with feature enhancements, thereby providing ease and comfort to customers.

The mobile banking application of your Bank has been rebranded as "VYOM" and launched on your Bank''s

Foundation Day dated 11.11.2022. VYOM offers 350 features with explorative UI/UX design to increase engagement and offers a unique banking experience. The application offers lifestyle Banking (marketplace), where the customer can book Flight, Cabs, and Bus tickets, purchase Gift Cards, recharge mobile DTH & Data cards and book Hotels, and also make a donation. Your Bank has also incorporated Mutual Funds, Insurance, and various STP journeys in the VYOM app.

More than 21 million Customers are registered on Vyom with 2.1 million daily logins.

Insurance Union Insure

As a one-stop solution for Life, Non-Life, and Health Insurance products, your Bank has launched a digital solution for the Insurance business, and the same is in the initial phase.

CRM Solutions

Your Bank has started implementing Customer Relationship Management (CRM) solution to provide a unified customer experience and better customer satisfaction. As part of the phase-wise implementation of CRM solutions, the Lead Management Solution (LMS) has been made live in Q4 FY 22-23 for all the Marketing Officers, Retail Loan Points, MSME Loan Points, all branches & Admin Offices. The Customer 360o beta testing has been made live for branches of Regional Office Andheri and shall be made live in the Q1 FY 23-24.

Registrations on Vyom

(In lakhs)

Mar-22

During the FY

Cumulative

2022-23

Performance- as on

31.03.2023

164.71

48.43

213.14

Mutual Fund Union Invest

With an objective to increase the fee-based income, your Bank has launched a digital solution for Mutual Funds sales through Bank''s Mobile App and Net-Banking channels (in addition to providing paperless transactions at branches) and the same is in the initial phase.

Account Aggregator

Union Bank of India is the first Public Sector Bank to integrate with Account Aggregator (AA) ecosystem. Your Bank has onboarded 5 AAs. The Bank has taken up two use cases - GeM Sahay and GST Sahay for implementation under the OCEN framework.

Digital Lending & Review/Renewal Journeys

Our Bank has rolled out 20 Digital Journeys covering both assets and liability products. From these journeys, your Bank could sanction '' 2126 Crores & and have renewed/reviewed more than 7.68 lacs Accounts Digitally.

live CBDC- Retail and CBDC - Wholesale - Application for Android and IOS users under CUG.

FinTech & Ecosystem Partnerships

Your Bank is one of the pioneer banks to create a policy framework for engaging with Fintechs and leveraging their solutions for building digital customer journeys. Your Bank Engaged with 150 best-in-class fintechs across 20 next-gen themes and empaneled 90 Fintechs. 8 Fintechs have been onboarded for implementing various digital solutions in Agri, Retail & MSME segments.

Digital Banking Units

Your Bank has operationalized 7 DBUs across 6 districts with a prime objective to increase the digital penetration of financial services by providing cost-effective, convenient access with enhanced experience using a paperless, secured, and connected environment. DBUs are located in Rajahmundry and Machilipatnam in Andhra Pradesh, Palakkad (Kerala), Sagar (Madhya Pradesh), Nagpur (Maharashtra), Patiala (Punjab), and Agartala (Tripura). All the DBUs are equipped with smart capabilities such as interactive tablets, multi-functional kiosks, ATMs, video KYC apparatus, Metaverse, and Internet Banking Kiosks.

Photos taken during the launch of Fresh KCC (1.60 lacs) on pilot basis at Madhya Pradesh & Karnataka state

The following digital lending journeys have been launched during the FY 2022-23:

i. Mudra Kishor STP

ii. Mudra Tarun STP

iii. Education loan

iv. Fresh KCC (1.6L)

v. Loan Against Deposit (LAD)

vi. Nari Shakti

vii. GST Gain

viii. KCC loan renewal

ix. Retail term loan review

x. MSME renewal (assessed)

Central Bank Digital Currency

The Reserve Bank of India has nominated your Bank for implementation of the Central Bank Digital Currency -Retail (CBDC-R) and the Central Bank Digital Currency - Wholesale (CBDC - W) project. Your Bank has made

4.4 Overseas business of your Bank stood at ''36,229 crore as on March 31, 2023, compared to '' 17,429 crore as on March 31, 2022. Your Bank has three overseas branches in Hong Kong, DIFC (Dubai), and Sydney (Australia). Your Bank also operates in the United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd, and operates in Kuala Lumpur (Malaysia) through its Joint Venture - India International Bank (Malaysia) Berhad, which is a Joint Venture with Bank of Baroda and Indian Overseas Bank. The Gross Advance portfolio of the foreign branches has grown by 43.55%, and Operating Profit has grown by 7.46% for the FY 2022-23.

4. Business Highlights:

4.1 The global business of your Bank stood at ''19,27,621 crore as on March 31,2023.

4.2 Total Deposits increased to ''11,17,716 crore as on March 31, 2023. Out of this, CASA share (current account and saving account) stood at 35.26 % as on March 31, 2023.

4.3 Gross Advances stood at '' 8,09,905 crore as on March 31, 2023. RAM segment of your Bank increased by 14.94% YoY. 17.19% growth in Retail, 14.20% growth in Agriculture, and 13.06% growth in MSME advances are achieved on a YoY basis. RAM advances as a percent of Domestic Advances stood at 55.61%.

5. Income and Expenditure:

Table 1: Income and Expenditure Statement

('' in crore)

Sl.

Parameter

FY

2022-23

FY

2021-22

1

Interest Earned

80743

67944

2

Other Income

14633

12525

3

Total Income (1 2)

95376

80469

4

Interest Expended

47978

40157

5

Net Interest Income (1-4)

32765

27786

6

Operating

Expenses

21931

18438

w/w Establishment Expenses

12390

10115

7

Total Expenditure

69909

58596

8

Operating Profit (3-7)

25467

21873

9

Provisions

17034

16641

10

Net Profit/Loss

8433

5232

11

Earnings per share

(in '')

12.34

7.73

6. Profitability and Efficiency:

6.1 Your Bank reported an Operating Profit of ''25,467 crore in FY 2022-23 as compared to '' 21,873 crore in FY 2021-22.

6.2 Net profit of your Bank stood at ''8,433 crore in FY 2022-23.

6.3 Cost-to-income ratio of your Bank stood at 46.27% in FY 2022-23.


8. Asset Quality:

8.1 Gross Non-Performing Assets (GNPA) of your Bank stood at ''60,987 crore as on March 31,2023. GNPA as a percent of gross advances stood at 7.53% as on March 31,2023.

6.4 During FY 2022-23, Return on Average Assets stood at 0.69%, whereas Return on Equity stood at 13.26%.

Table 2: Efficiency Ratios

Parameter (%)

FY

2022-23

FY

2021-22

Return on Average Assets

0.69

0.47

Return on Equity

13.26

10.11

6.5 The following are the key productivity ratios of your Bank for FY 2022-23.

Table 3: Productivity Ratios

Parameter

FY

2022-23

FY

2021-22

Business per Employee ('' in crore)

25.50

23.26

Business per Branch ('' in crore)

224.66

198.91

Gross Profit per Employee ('' in lakh)

33.69

29.09

8.2 Net NPA of your Bank stood at ''12,928 crore as on March 31, 2023, and the Net NPA ratio stood at 1.70% as on March 31,2023.

6.6 Dividend:

The Board of your Bank has recommended a dividend of ''3.00 per share for FY 2022-23.

7. Shareholders'' Return:

7.1 Your Bank''s net worth was ''63,599.34 crore as on March 31, 2023.

9. Capital Adequacy:

9.1 The Capital Adequacy Ratio, as per BASEL III norms, stood at 16.04% as on March 31, 2023. Common Equity Tier I (CET I) capital of your Bank stood at 12.36% in March 2023.

Table 4: Capital Adequacy Ratios - Basel III

(''in crore)

Parameters

RBI

Minimum Benchmark March 31, 2023

March 31, 2023

March 31, 2022

Total Risk-Weighted Assets

NA

5,78,455

545,923

Total Capital Funds

92,778

79,281

CET 1 Capital

71,492

58,049

Tier 1 Capital

80,478

66,589

CRAR(%)

11.50

16.04

14.52

CET 1 (%)

8.00

12.36

10.63

Tier 1 (%)

9.50

13.91

12.20

Tier 2 (%)

NA

2.13

2.32

9.2 Capital Raised by your Bank

Your Bank has issued and allotted Basel III compliant Tier 1 Bonds to the tune of ''1983 crore and Tier II Bonds to the tune of ''2200 crore during the FY 2022-23.

10. Network

The Branch Network of your Bank is widely spread across the country with 8577 branches and 3 overseas branches (Hongkong, Sydney, Dubai) as on March 31, 2023. Out of these, 59 percent of the branches are located in rural and semi-urban centers.

11. Awards & Accolades:

During FY 2022-23, your Bank received awards for various initiatives taken under the areas of Digitization, Financial Inclusion, HR management, Customer Service, etc.

• Awarded DSCI Excellence Awards 2022 under the category of "Best Security Practices in Banking Sector" and CISO of your Bank received an award as "Security Leader of the Year".

• Received award under "IT Risk Management" category from 18th Banking Technology Awards by IBA. Bank has received this award 4 times continuously from 2019-2022.

• Received Best Technology Bank and Best Technology Talent awards in the 18th Banking Technology Awards by IBA.

• Received two awards under the "Enterprise

Security" category in "BFSI Technology Conclave & Awards 2022" conducted by Indian Express group.

• 1st rank in EASE 5.0 Reforms Index for Q3:FY 20222023 (Digitally enabled customer offerings, BIG Data and Analytics)

• Best Fintech Collaboration- Special Prize awarded by IBA Banking Technology Conference, Expo & Awards

• Atal Pension Yojna (APY): Your Bank received awards and recognition certificates from PFRDA in the various campaigns organized by PFRDA. Qualified in the following campaigns in the FY:

o Circle of Excellence trophy for ED. o Beat the best and be the best campaign.

o Rise above the rest for ZH/RH - 10 ZH and 120 RH qualified.

o LEADERSHIP PINNACLE campaign for MD and CEO.

o APY Big Billion campaign for MD and CEO. o APY Big Believers campaign.

• 18 prestigious Kshetriya Rajbhasha Puraskars from the Department of Official Language, Ministry of Home Affairs, GoI.

• 85 Shields for outstanding performance in Official Language Implementation from different TOLICs (Town Official Language Implementation Committees) set up by the Govt. of India, Ministry of Home Affairs, Rajbhasha Vibhag, across the country.

• 1st Position in the category of "Best Guarantee Coverage (Number)" for FY 2022-23 by CGTMSE (Credit Guarantee Fund Trust For Micro And Small Enterprises).

• First position in the categories of Promoting Social Schemes, Implementing COVID-related Schemes, and Government Schemes and runners up in the categories of CSR Initiative Bank and MSME friendly Bank in the event conducted by Chamber of India Micro Small & Medium Enterprises (CIMSME).

• 1st Position in the category of "BEST SME LENDING" in the 9th MSME Excellence Awards by ASSOCHAM.

• Awarded "Best Bank of the Year in the Financial Ecosystem" conferred by Assocham in the Assocham Financial Conclave 2023.

• Awarded Golden Peacock HR Excellence Awards 2022, by the Institute of Directors

• Future of Workplace Disruptor 2022 (Large enterprise) awarded by Mint W3 Champions 2022

• Indian Academia Conference 2023 Corporate Award awarded by M/s People Lab

• Most Preferred Workplaces in BFSI 2022 awarded by Team Marksmen

• Innovation in HR Transformation awarded by BAI Global Innovation Award.

• Role Model Companies awarded by NCPEDP- LTI Mindtree Helen Keller Awards-2022

• Business Excellence through Learning & Development award by BML Munjal Awards

• ISTD 31st National Awards for Innovative Training Practices: 2020-21 awarded by ISTD, New Delhi

• "Pioneering Work in Creating Future Ready Inclusive Organization" awarded by IAC Corporate Awards 2023

• "Best Organization for PWD Inclusion" awarded by Business World People & Ask Insights "Disability Positive Awards."

• Best AI and ML Bank Runner Up award and Best Financial Inclusion Runner Up award in 18th IBA Technology Conference, Expo & Awards.

• FIEO (Federation of Indian Export Organisations) has conferred your Bank with the "Export Excellence Gold Award" for 2 consecutive years for its contribution to promoting Export growth in the country.

• Gold shield has been awarded by the Institute of Chartered Accountants of India in the category "Public Sector Banks" for excellence in Financial Reporting.

• Bank has also received various awards for its contributions in the field of Digital Transformation and Accessibility:

> The NCPEDP- LTIMINDTREE Helen Keller Award

> Business Transformation Awards 2022

> 5th India BFSI Conclave & Awards 2022

> Digital Transformation Summit India 2022

12. Social Media

Your Bank is extending information related to products/ services through its official handles on all major social media platforms, viz. Facebook, Twitter, Instagram, YouTube, and LinkedIn. Users were engaged in business interactions through conversation sessions/ Direct Messaging, customer care support, online contests, Educational posts/ videos, organizing online

events, etc. User interactions were used to understand brand perception and gain competitive intelligence to increase business prospects through social media.

Your Bank has thrived on cost-effective brand publicity through social media and posted dynamic content with attractive static/ video posts, bringing customer awareness of the products, services, and offers. Awareness was also created through posts on cyber security, urging customers to be aware of frauds, cyber scams, and other social engineering, social causes, remembering personalities, significant days/ events, etc.

Your Bank is available 365x24x7 on all handles, which are very responsive and reply instantly. In the last year, 1.70 lakhs queries from social media users were responded ensuring timely guidance, proper redirections, and complaint redressal resulting in customer delight. Your bank brand was well received by the public at large, justified with a whopping 6699.25 lakhs impressions and 932.79 lakhs engagements.

Your Bank has a huge follower base on social media presence which has grown to 41.47 lakhs as on 31st March 2023 against 24.33 lakhs last fiscal scaling a remarkable growth of 70.44% YoY.

Your Bank is continuously measuring the overall sentiment about existing or new products, collecting feedback about initiatives and customer interest to meet the expectations of customers in product offerings and services rendered.

Your Bank has run more than 150 Digital Marketing campaigns on social media handles and targeted ad campaigns on Google Ads, creating buzz for maximum reach on products/ services/ offers and roped in new customers along with improved search engine visibility and enhanced website traffic.

Your Bank has made e-commerce business tie-ups across hospitality, entertainment, and health sectors with key market players like MakeMyTrip, Swiggy, Zomato, BookMyShow, Apollo Pharmacy, Ferns N Petals, Swiggy Instamart, Meesho, GoIbibo, etc. and encouraged cardholders to embrace cashless payments thereby remaining with digital banking ecosystem.

13. Changes in the Directors on the Board of your Bank:

The following changes took place in the Board of Directors of your Bank during the financial year 202223.

• Shri Manas Ranjan Biswal, Executive Director of your Bank, completed his term in office on April 30, 2022

• Shri Rajkiran Rai G, MD & CEO of your Bank, completed his term in office on May 31, 2022.

• Ms. A. Manimekhalai has been appointed as MD & CEO on the Board of your Bank w.e.f. June 3, 2022.

• Shri Srinivasan Varadarajan has been appointed as a Part-Time Non-Official Director and NonExecutive Chairman on the Board of your Bank w.e.f. November 7, 2022.

• Shri Ramasubramanian S has been appointed as an Executive Director on the Board of your Bank w.e.f. November 21, 2022.

14. Directors'' Responsibility Statement

The Directors confirm that in the preparation of the

annual accounts for the year ended 31st March 2023:

• The applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any.

• Accounting Policies had been selected and applied consistently, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Bank at the end of the financial year and of the profit and loss of your Bank for that period.

• Proper and sufficient care was taken for the maintenance of adequate Accounting Records in accordance with the provisions of the relevant Acts for safeguarding the assets of your Bank and for preventing and detecting fraud and other irregularities.

• The Annual Accounts were prepared on a going-concern basis.

• Internal financial controls had been laid down to be followed by your Bank, and such Internal Financial Controls were adequate and were operating effectively. Explanation.— For the purposes of this clause, the term "Internal Financial Controls" means the policies and procedures adopted by your Bank to ensure the orderly and efficient conduct of its business, including adherence to your Bank''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

• Proper systems were in place to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


15. Corporate Governance

The Board of your Bank is committed to adopting good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for the financial year 2022-23 has no audit qualifications.

16. Corporate Social Responsibility (CSR):

16.1 Union Bank of India has been at the forefront of meeting its CSR commitments. Towards this, your Bank established Union Bank Social Foundation Trust (UBSFT) in the year 2006 as an extended arm for carrying out the CSR activities of your Bank. The major CSR activities of your Bank are now being carried out through the UBSFT. Its Board is headed by your Bank''s Managing Director & CEO, with executive directors as Vice Chairman Trustees. Other trustees include your Bank''s Chief General Managers, General Managers, and one independent trustee. The UBSFT Board provides directions in accordance with your Bank''s thrust areas and undertakes review every quarter. The directions of the Board are executed by the Chief Executive of UBSFT. While the Registered office of UBSFT is in Bengaluru, the administrative office is in Mumbai.

Bank''s Stakeholders'' Relationship Committee also monitors and guides the CSR activity of your Bank also that of UBSFT on a quarterly basis.

UBSFT has been incorporated, aiming to support initiatives towards Social upliftment & improving the lives of underprivileged segments.

16.2 The CSR activities undertaken by your Bank / UBSFT in 2022-23

During the FY 2022-23, donations of ''23.38 crores were approved towards 51 projects/programs under various sectors like Education, Healthcare, Sanitation, Community Development, Skill Development, etc.,

Some of the major activities conducted in the area of social responsibility during the FY 2022-23 are as under:

• Towards improving health infrastructure, donated one X-ray machine with a digital upgrade kit & one 33-seater camp van to Tirumalai Medical Mission hospital, Ranipet, Tamilnadu.

• Donated an Ambulance to "SDMH" hospital, one of the prestigious Hospitals in Jaipur, to cater to the patients.

• Donated an ICU Ambulance to Jayadev Memorial Rashtrothana Hospital, one of the prestigious Hospitals in Bengaluru, to cater to the patients

• Donated towards the renovation of the Rajkiya Vriddhashram, Varanasi.

• Donated two food delivery vehicles to Akshaya Patra Foundation, Bengaluru, for their mid-day meal scheme at Mangalagiri, Andhra Pradesh.

• Organized Financial Literacy Camp at RSETI Varanasi

• Provided modern infrastructure in the conference hall at Government First Grade College, Hebri, Karnataka, towards providing of quality & modernized education environment to the college students coming from socially & economically weaker sections of society.

• Conducted Narishakti credit camp for RSETI Chikmagaluru trained women entrepreneurs & credit sanction letters were issued.

17. EASE (Enhanced Access and Service Excellence)

Enhanced Access and Service Excellence (EASE) was launched by the Government of India in the financial year 2018-19 to usher in next-generation reforms in Public Sector Banks. The performance of the banks is measured on a common index on a quarterly basis. The fourth iteration of the EASE agenda for the FY 2021-22 was launched under the theme "Technology-Enabled Collaborative and Simplified Banking," and your Bank was ranked 4th position in EASE 4.0 annual index.

The fifth iteration of EASE under the theme "Enhanced Digital Experience, Integrated and Inclusive Banking" has set forth long-term reforms objectives, which is to be achieved over a period of three years with well-defined annual milestones. The reform focuses on promoting digital banking offerings, enhancing analytical capabilities, broadening PSB''s technological capabilities, broadening and deepening the nature of co-lending partnerships, and enhancing employee engagement and satisfaction, among others.

Your Bank has made considerable progress in EASE Index over the past five years in institutionalising the reforms agenda in your Bank. Major developmental goals accomplished by your Bank towards developing internal capabilities and enhancing the banking experience of the customers in the FY 2022-23 include:

a. Rebranded the Mobile Banking Application as

"VYOM" and launched the new super-app with

350 best-in-class features and an explorative UI/

UX design for a unique banking experience.

b. 38 end-to-end digital journeys were rolled out to enhance the user experience, convenience, and adoption.

c. Quarterly, 1600 cr. of business generated through STP journeys across the RAM segment.

d. Implemented account opening process via video KYC with the objective of making the customer onboarding process simpler.

e. To gather feedback on customer expectations in a frequent manner and to re-engineer the products/ services as per the requirement, your Bank has activated 10 channels for capturing customer sentiment.

f. To have a greater reach to the underserved remotest areas of the country, your Bank has partnered with several NBFCS in RAM segments for its co-lending journey. A separate vertical was created for co-lending, entrusted with the responsibility of expanding the portfolio.

g. Your Bank was the first public sector bank to go live on the Account Aggregator Framework in the month of May last year. Your Bank has registered as both FIP (Financial Information Provider) and FIU (Financial Information User), enabling customers to share data on a real-time basis and providing them with a seamless journey eliminating the need for physical documentation.

h. Your Bank has also undertaken several employee-friendly initiatives such as reimbursement of expenses on Child Care facilities to Women Employees and Single Male Employees (Parents), Collaborating with external partners to cater to the training needs of the employees, introducing an employee grievance redressal portal, creating a forum for career counselling for employees, amongst others.

In the latest EASE 5.0 index for Q3 FY 2022-23, your Bank stood first amongst all PSBs. Your Bank has also set the benchmark under four out of five themes by securing the first rank amongst PSBs. The themes are Digitally-enabled customer offerings, Big data and analytics, Modern technology capabilities, and Employee development & governance.

Your Bank is working in tandem with the reform objectives envisaged to improve customer service through greater flexibility and faster delivery of services. With improved operational efficiency and increased customer engagement, your Bank is committed to creating an inclusive digital finance ecosystem.

18. Acknowledgements:

18.1 The Directors thank the shareholders, valued customers, well-wishers, Share Transfer Agent, and correspondents of your Bank in India and abroad for their goodwill, patronage, and support.

18.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance, and support received from the Government of India, Government of Maharashtra, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission, BSE, NSE, financial institutions, correspondent Banks and Statutory Central Auditors of your Bank, in the functioning of your Bank.

18.3 The Directors place on record their deep appreciation for the dedicated service and valuable contribution made by members of staff in the overall performance of your Bank during the year and look forward to their continued cooperation in the realisation of the corporate goals of your Bank in the years ahead.

18.4 The Directors also express that the staff members stay safe, healthy and maintain good health.

For and on behalf of the Board of Directors,

Place: Mumbai (Srinivasan Varadarajan)

Date: 23.06.2023 Chairman


Mar 31, 2022

The Board of Directors are pleased to present the 103rd Annual Report of the Bank for the Financial Year 202122 together with the ‘Audited Balance Sheet'', ‘Profit & Loss Account'', ‘Cash-Flow Statement'' and the report on ‘Management Discussion & Analysis''. The ‘Corporate Governance Report'' and ‘Business Responsibility & Sustainability Report'' also form part of the Annual Report 2021-22.

1. Highlights:

1.1 India''s economic growth remained resilient in FY 2021-22, as the lifting of most virus containment measures boosted demand, keeping war-induced price pressures from dampening the recovery. A slew of data, from services activity to bank credit pointed to the return of demand in the second half of FY 202122. Consumer activity were encouraging, with bank credit growth at 9.6% in FY 2021-22, up from 5.6% in FY 2020-21. Liquidity conditions also continued to remain in surplus. Having achieved the milestone of over US$ 400 billion of merchandise exports in FY 2021-22, the country is aiming for an ambitious export target of approximately US$ 800 billion for both goods and services for the next year, nearly 19.5% higher than that achieved in 2021-22.

1.2 The COVID-19 pandemic will go down in history as one of the worst health crises the world has ever faced. Its economic impact may linger for many more years and confront us challenges of rebuilding livelihoods, safeguarding businesses and reviving the economy. Economic activity has barely recovered to pre-COVID levels even after two years. India''s economic rebound faces difficult challenges from the legacy of deep-rooted structural bottlenecks as well as the scars of the pandemic. The Russia-Ukraine conflict has also dampened the momentum of recovery, with its impact transmitting through record-high commodity prices, weaker global growth outlook, and tighter global financial conditions. Concerns surrounding de-globalization impacting future trade, capital flows and supply chains have amplified uncertainties for the business environment. The RBI in its latest Report on Currency and Finance, has stated that it may take 12 years for the Indian economy to recover from the losses incurred during Covid-19 pandemic.

1.3 The global economy is in the midst of a geo-political debacle, with heightened uncertainty complicating the outlook. International commodity prices, which were already on an upward spiral amidst demand-supply imbalances, hardened precipitously in early March 2022 and remained volatile at elevated levels thereafter. India too is experiencing tremors from these developments. The fallout of the war and retaliatory sanctions is already evident in inflation prints and balance of payments developments.

1.4 The IMF in its World Economic Outlook had slashed global growth projections from 6.1% in 2021 to 3.6% in both 2022 and 2023. Reasons ascribed include the Ukraine war that has resulted in considerable economic damage coupled with worldwide spillovers through commodity markets, trade, and financial channels. Elevated inflation levels are another looming challenge complicating the trade-offs that central banks are faced with, between containing inflation and boosting economic growth. The war and lockdowns in China have worsened supply disruptions, narrowing the limited fiscal space for countries.

1.5 Notwithstanding economic uncertainties triggered by the Russia-Ukraine war it is quite clear from all accounts that India will remain the fastest growing economy in the world. According to National Statistical Organisation (NSO) estimate, India is projected to grow 8.9% in 2021-22. The Reserve Bank has pegged the economic growth rate for 2022-23 at 7.2%, while IMF in its latest report projected India''s growth at 8.2% for 2022-23 and 6.9% for 2023-24. Given the reforms undertaken by the government and the various supportive measures by the RBI, a very strong foundation is being laid for further rapid increase in economic growth in the coming years. The Union Budget 2022-23 has provided for a sharp increase in public investment and capital expenditure. The various government initiatives are seen to be supporting growth and credit demand is expected to further pick up in FY 2022-23. As per RBI, sustained thrust on capital expenditure by the government, push to digitalization and growing opportunities for new investment in areas like e-commerce, start-ups, renewables, and supply chain logistics could, in turn, contribute to step up the trend growth while closing the formal-informal gap in the economy.


2. Bank''s Performance

Established in the year 1919, your Bank has 8870 branches and 3 overseas branches, 11,232 ATMs across 29 States and 5 Union Territories and 75201 employees as on March 31, 2022.

Key achievements during FY 2021-22:

> Net Interest Income for FY 2021-22 stood at '' 27,786 crore.

> Operating profit for FY 2021-22 stood at '' 21,873 crore.

> PCR stood at 83.61% as on March 31, 2022

> Net NPA ratio stood at 3.68% as on March 31, 2022.

During FY 2021-22, your Bank has undergone many transformations/adopted new processes as given below.

2.1 EASE (Enhanced Access and Service Excellence)

Enhanced Access and Service Excellence (EASE) was launched by Government of India in the financial year 2018-19 to increase efficiency of PSBs across every domain and to measure the performance on a common index on a quarterly basis. Your Bank has registered third rank in EASE 3.0 annual index.

EASE Agenda under its fourth iteration primarily required PSBs to expand their digital portfolio, establish a robust IT infrastructure and onboard strategic partners to leverage their expertise within the overall sphere of banking activities.

Your Bank has continuously striven to adopt & adapt to the reforms recommended by EASE Agenda. To upgrade the banking experience for its customers and embrace the digital transformation as envisioned, the major developmental goals accomplished by your Bank in FY 2021-22 are :

• Retail & MSME portfolio under the straight through processing (STP) channel has been expanded for easy & quick disbursal of loans. Agriculture STP has been launched on a pilot basis to make farm credit easily accessible.

• Under co-lending model, your Bank has tied up with several NBFCs in the Retail & MSME segments. The aim is to leverage their reach to expand our loan book.

• Your Bank has adopted industry leading IT infrastructure to offer uninterrupted banking services.

• While fine-tuning the credit lead generation models, your Bank has further strengthened its analytics-based capabilities to identify potential customers for several non-credit related investment product offers.

• Your Bank has deployed ‘EASE Banking Outlets'' under the banner ‘Digiconnect''. These outlets offer round-the-clock basic banking services. Multi-functional kiosks have been deployed to offer digital banking, cheque deposit, passbook printing & non-financial transactions facilities apart from cash deposits & withdrawal.

• With a mammoth workforce of over 70,000 employees, your Bank has taken several initiatives on the human resources front. It includes quarterly appraisal process to monitor performance throughout the year and a digital Performance Management Tool to lend transparency to the system, amongst others.

• To strengthen compliance mechanism, individual level compliance monitoring tool has been introduced which has been completely developed using in-house IT capabilities.

In the latest EASE 4.0 index for Q3 FY 2021-22, your Bank stood fourth amongst all PSBs. Your Bank was the runner-up in two out of six themes and has registered the third best performance in one theme.

True to the idea of EASE, your Bank is taking concerted efforts to improve financial inclusion, leverage technology to simplify banking experience and effectively monitor asset portfolio by digitalizing collections actions for cleaner loan books. Through active digital adoption, your Bank has geared up to keep up with the rapidly evolving banking landscape.

2.2 Strategy -Business Process Re-engineering (BPR)

Bank embraced the amalgamation process and successfully achieved the harmonisation of products, processes and policies, reorganisation of structure of Central Office as well as field, rollout of various CPCs, communication support to field functionaries for effective integration and road map for realisation of

cost synergy etc. Amalgamation related exercise was carried out by the bank under "Project Samarth".

The Bank during the year endeavored to focus towards designing, implementing and driving the new initiatives required for the process improvements across the Bank in the post amalgamation scenario under Project Samarth 2.0

Brief initiatives undertaken by Bank during the FY 2021-22 are enumerated below:

Project Samarth 2.0

To carry out various post amalgamation transformation initiatives, Project SAMARTH 2.0 has been undertaken. The objective of the project includes Digitization of various products, processes and back offices to achieve operational & cost efficiency along with enhanced customer experience and services. Through these initiatives, Bank aim to create a brand of Digital Union Bank.

The overall scope of work under Project Samarth 2.0 is grouped under 7 Work Streams (WS) as under:

2.3 Continued support and strategy for synergy realization

The bank achieved great milestones in the amalgamation journey. Post amalgamation the focus is on long-term business strategies and leveraging the expanded size to re-tune the entire products and processes on par with emerging competition for desired level of business growth and process efficiency.

r

WS-I

L

• Continued support and strategy for synergy realization

W

S-

II

• Digitization of Customer Journey across asset and liability products segment

S-l

II

• Revamping the CAPS, POS, Credit card business model and implementation to derive benefits

WS-IV

• Designing new branch model for smaller, sales-oriented and digital branches, touch points and Business Banking Branches for MSME advances and revamping of BC Model.

W

S-

• Digitization of Back-office operations and entire reconciliation activities

S-

VI

• Strengthening of the Organization Structure

WS-VII

L-

• Design technology architecture and a roadmap for implementation of ML, AI, and Robotics Process

Long term synergy plan for the Bank - For getting long term synergy, 15 niche areas in 10 segments have been identified with the help of respective verticals for achieving substantial growth in the selected segments.

Digital adoption enhancement

With the objective to enhance digital adoption by customers on various platforms and payment systems (IB, MB, UPI etc) many new changes have been implemented in U-Mobile (Bank''s Mobile banking platform) to enhance user interface and experience. Further, 2 successful campaigns have been launched and complemented with hand in hand marketing efforts which included bulk SMS, Social Media Channels, websites and offline channels like poster & banners for creating awareness. During these campaigns 1.5 million customers were onboarded on U-Mobile.

Redesigning Central Processing Centres (CPC)

For redesigning SARAL, ULP & USK model, multi-prong interventions have been suggested for optimization of process and implementation has been initiated, which includes

• Digitization of processes and transfers between Branch, CPC & borrower

• Optimization of query solving through direct contact between CPC and borrower

• Larger role in compliance monitoring & lead generation

• Optimizing resources and changes in processing to optimize TAT

Collections Improvement

A hybrid model of collection has been launched in our Bank with dedicated structure to take care of end-to-end collections process with Call Centre & Feet on street and Regional Collection Centre structure."Regional Collection Centres (RCoC)" have been opened across all 125 Regional Offices, with deployment of 600 internal staff at these centres to have focused approach on collections.

Pilot of ‘Feet on Street'' (FOS) Model of collections has been launched in 5 FGMOs viz Pune, Vijayawada, Bangalore, Vishakhapatnam & Hyderabad, under which 60 external FOS has been deployed in five zones for affecting collections.

2.4 Digitization of Customer Journey across asset and liability products segment

The main objective has been to create a road map for end-to-end digital journeys across asset and liability products and design the digital journey for assets and liability products. The end-to-end digital journeys aim at substantial reduction in TAT, enhanced customer experience and reduced operational cost.

Retail Asset Journey

Pre-Approved Personal Loan (PAPL) phase-1 was launched in September 2021 where offers were sent to eligible salaried customers on pilot basis. Based on the learnings from Phase-I, new BRE rules have been framed to expand our customers base by covering non-salaried customers also. Subsequently PAPL phase 2 has been launched on 10.03.2022.

The digital journey design for Personal loan, Education loan & Vehicle loan has been completed and implementation is under way.

MSME Journey

To give boost to MSME lending and reduce TAT of loan sanction, following 3 journeys have been prioritized for end-to-end digitization

• Renewal of MSME Loans upto '' 10.00 lacs (WC & Term Loans)

• Union GST Gain (Traders Working Capital) upto '' 2.00 cr

• Union Mudra under ‘Kishor'' and ‘Tarun'' Category

Post pilot launch in 4 regions, the STP journey of MSME renewals upto '' 10.00 lacs is planned to be launched pan India in April 2022. The scheme envisages no/ minimal manual intervention to complete the review/ renewal of Working Capital as well as Term Loan accounts of MSMEs having combined credit limits upto ''10.00 Lakh. The product has been designed to provide much needed relief to the MSMEs by waiving submission of Balance Sheet and assessing the credit limits on the basis of cash flow.

The digital journey design for Union GST Gain & Union Mudra under ‘Kishor'' and ‘Tarun'' Category has been completed and implementation is under way.

Agriculture Journey

Two Agri products, KCC and SHG have been prioritized for end-to-end digitization journeys. The Journey design and Screen field design for these products have been finalized.

For KCC renewal journey upto '' 1.60 lacs, vendor has been onboarded, pilot has been initiated and pan India launch is expected by June 2022. The journey includes features like farm assessment through satellite imagery, auto assessment of limit based on Satellite data & SOF, digitized land record integration with Government portal, etc. The STP journey is expected to reduce the TAT and the workload of Branches as approx. 17 lacs KCC accounts would be eligible under this.

2.5 Cyber Security Operation Centre (CSOC): Bank has implemented cyber security framework and instituted Cyber Security Operation Centre. A dedicated skilled team is deployed to manage the CSOC. The CSOC helps to identify, detect, protect & prevent the cyber threats.

2.6 Cyber Security Centre of Excellence (CCoE): Bank

has established the CCoE (Cyber Security Centre of Excellence) with a vision to create the best in the industry new generation cyber security technologies to protect the Bank and focus on comprehensive awareness & education program for its employees & customers.

3. Revamping the Collection & Payment Services (CAPS), POS, Credit Card business model and implementation to derive the benefits

During harmonisation and rationalization of processes during amalgamation, certain strengths of eCB and eAB were identified such as CAPS, POS and Credit Card Business. Going forward, need was felt to revamp these models to cater the larger customer base by creating a strong and sustainable business model with digital solutions for operational efficiency and synergy.

Collection & payment System (CAPS)

To create a sustainable CAPS business model, Sales acceleration pitching programme has been launched for 1200 plus Corporate Customers and 154 new clients have been onboarded till now. Besides this training has been provided to the CAPS Branches and Tracking template has also been designed as a part of review mechanism. API development for Collection & payment services started for the Corporate clients

Point of Sale (POS)

To Design and implement a sustainable and profitable POS business model with end-to-end digitisation and centralisation of processes, Soft POS product has been launched which provides multiple modes of payment options for merchant (tap to pay, QR scanning, payment through SMS link) with value added services such as Kirana, Khata book etc

Credit Card

To Design and drive implementation of a sustainable and profitable Credit Card business model with end-to-end digitisation of processes including sourcing, analytics-based lead generation, risk profiling, early warning signals, collection, recovery, dispute management and increase the penetration, various initiatives have been taken.

Under the initiative new variant of Credit card, UniCarbon Credit card (co-branded with HPCL) has been launched which has shown good traction. Further Preapproved Credit Card (PACC) has been launched in 2 phases, showing good conversion rate of more than 2.5%.

For Enhancing the customer onboarding journey, pilot of end to end STP journey has been launched and journey will be launched pan India shortly.

4. Designing new branch model for smaller, sales-oriented and digital branches, touch points and Business Banking Branches for MSME advances and revamping of BC Model Digi Connect & Digi Connect Pro Outlets

As a part of long-term synergy, need was felt to adopt lean branches to reduce the cost and increase the efficiency. Accordingly, Bank identified redesigning and digitizing the branch formats as one of the primary avenues of transformation. With changed scenario in banking and adoption of technology, bank expanded its footprints by opening ‘smaller, sales-oriented and digital branches'' which are named as Digi-Connect & Digi-Connect Pro outlets.

As of now, Bank has launched 5 Digi Connect Pro outlets and 1 Digi Connect outlet at different locations as a pilot. These Outlets are in line with the guidance of Government for opening 75 Digital Banking Branches unit in 75 districts of the country.

Union MSME First Branches

(UMFBs) have been designed to have supreme focus on providing customized service to valued MSME customers efficiently as well as cater to the needs of mid and large corporate accounts in the absence of MCBs and IFBs, by suitably modifying the Business Banking Branch model.

UMFB will cater to the needs of MSME customers by providing all services like MSME loans, deposits, forex services, LC/BG, credit cards, insurance products, etc., under one roof dedicated to bringing the synergic value to the customers.These branches have dedicated Relationship Managers who work closely with customers to fulfill their banking needs. The location of these branches has been finalized based on advanced analytics done to determine the MSME potential of the area along with field expertise. As per the aspiration of Bank, already 50 UMFBs have been opened during the Financial Year. These UMFBs are proactively scouting for MSME proposals.

Revamped BC Model

To strengthen the BC channel, additional services have been identified for implementation at BC points under the project. These additional services include-

• Lead generation of third party products

• Assistance of BCs for Mobilizing Sishu Mudra Loans

• Introduction of Fixed BC Points for decongestion of branches

• Collection of SMA Loans

Pilot for the above processes have been launched and showing good traction. Based on the input of the pilot, the initiatives will be launched pan India

5. Digitization of Back Office and Reconciliation Processes

Under Project Samarth 2.0, initiatives have been undertaken to create, design and implement a digitised process for back-office operations which currently employ large manpower for doing routine jobs, so as to release the manpower and to improve the operational efficiency in terms of cost, TAT, tracking capabilities and contain operational risk.

28 Reconciliation activities and 8 Back-office processes from various verticals have been taken up for digitization, in alignment with respective verticals. For Government Business Vertical, their various reports are automated and now the report is generated by single click. For E-Kuber reconciliation process, automation has resulted in saving of time and effort.

6. Strengthening of the Organization Structure

The Revamped Organization Structure needs to be strengthened with digitation of operating models, which should result in increased efficiency and reduced manpower.

Accordingly, more than 98 internal activities of 27 verticals have been taken up for digitization. A strong operating model with clear SOP and process flow has been suggested for these activities which includes use of technology and best practices to increase efficiency of the structure and release the manpower. This automation will potentially save 70-80% man hours for the identified activities with improved TAT and enhanced tracking mechanism.

7. Design technology architecture and a roadmap for implementation of ML, AI, and Robotics Process

Keeping in view the technological advancement and digital interventions in Banking sector, Bank has taken up the initiative of creating a road map for digital architecture considering next 10 years journey with agility to adopt the changed scenarios during the process. Presently the existing API gateway, ESB, EAI, Infrastructure, Digital, CBS, external integration, CRM and other Core applications of the Bank were reviewed and Post review implementation is underway.

Change in Organization Structure

The organization structure is periodically assessed and based on the suggestion of Top management, verticals, committees the desired changes in the structure are being implemented. One such major reorganization was taken up during September''21 where realignment of verticals/functions of verticals for better coordination, monitoring and further strengthening of verticals.

Further Centralized Credit Operations Back-office has been formed to monitor loan accounts opening in Finacle and periodical data management pertaining to credit like CRILIC Cell, BG e-Confirmation, CERSAI Cell, NeSL Cell and Interest table and Limit Node maintenance.

Customer Surveys

BPR vertical has taken up the activity of conducting Periodical customer surveys to assess the customer opinion, feedback and actionable recommendations based on suggestions to improve the products, process and systems.

Bank has empaneled 5 Market Research Agencies in FY 2021-22 for conducting various surveys and 4 Surveys have been conducted during the Financial Year:

1. Customer Satisfaction Survey to assess the satisfaction level of our customers

2. Customer Experience Survey to assess the quality of services provided by Marketing Officers of the Bank to Retail Loan customers.

3. Brand Penetration Survey to access the Brand Penetration of the bank across Country

4. Customer Exit survey to understand the pain points of customer who have closed their Saving Accounts during FY 2021-22.

The insights emerging out of these surveys are being acted upon for better customer experience.

8. Business Highlights:

8.1 The global business of the Bank stood at '' 17,48,800 crore as on March 31, 2022.

8.2 Total Deposits increased to '' 10,32,392 crore as on March 31, 2022. Out of this, CASA share (current account and saving account) stood at 36.54 % as on March 31, 2022.

8.3 Gross Advances stood at '' 7,16,408 crore as on March 31, 2022.The RAM (Retail, Agriculture and MSME) sector stood at '' 3,84,339 crore as on March 31, 2022 compared to '' 3,51,459 crore as on March 31, 2021. RAM Sector as a whole grew at an annual rate of 9.36%.

10. Profitability and Efficiency:

10.1 Your Bank reported an Operating Profit of '' 21,873 crore in FY 2021-22 as compared to '' 19,667 crore in FY 2020-21.

10.2 Net profit of the Bank stood at ''5,232 crore in FY 2021-22.

10.3 Cost-to-income ratio of your Bank stood at 45.74% in FY 2021-22.

10.4 During FY 2021-22, Return on Average Assets stood at 0.47%, whereas Return on Equity stood at 10.11%.

8.4 Overseas business of the Bank stood at '' 17,429 Crore as on March 31, 2022 compared to '' 18,191 Crore as on March 31, 2021. Your Bank has three overseas branches at Hong Kong, DIFC (Dubai) and Sydney (Australia). Your Bank also operates in the United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd.

Table 2: Efficiency Ratios

Parameter (%)

FY

2021-22

FY 202021

Return on Average Assets

0.47

0.27

Return on Equity

10.11

6.68

10.5 The following are the key productivity ratios of the Bank for FY 2021-22.

Table 3: Productivity Ratios

Parameter

FY

2021-22

FY

2020-21

Business

per Employee ('' in crore)

23.26

20.17

Business per Branch ('' in crore)

198.91

169.35

Gross Profit per Employee ('' in lakh)

29.09

25.15


9. Income and Expenditure:

Table 1: Income and Expenditure Statement

('' in crore)

Sr.

Particulars

FY

FY

No.

2021-22

2020-21

1

Interest Earned

67944

68767

2

Other Income

12525

11744

3

Total Income (1 2)

80469

80512

4

Interest Expended

40157

44079

5

Net Interest Income (1-4)

27786

24688

6

Operating Expenses

18438

16766

w/w Establishment Expenses

10115

9284

7

Total Expenditure

58596

60845

8

Operating Profit (3-7)

21873

19667

9

Provisions

16641

16761

10

Net Profit/Loss

5232

2906

11

Earnings per share (in '')

7.73

4.54

10.6 Dividend:

Board of the Bank has recommended dividend of ''1.90 per equity share of face value ''10 each for FY 2021-22.

11. Shareholders'' Return:

11.1 The Bank''s net worth was '' 51,765 crore as on March 31, 2022.

12. Asset Quality:

12.1 Gross Non-Performing Assets (GNPA) of the Bank stood at '' 79,587 crore as on March 31, 2022. GNPA as per cent to gross advances stood at 11.11% as on March 31,2022.

13. Capital Adequacy

13.1 The Capital Adequacy Ratio as per BASEL III norms stood at 14.52% as on March 31,2022. Common Equity Tier I (CET I) capital of the Bank stood at 10.63% in March 2022

12.2 Net NPA of the Bank stood at '' 24,303 crore as on March 31, 2022 and the Net NPA ratio stood at 3.68% as on March 31, 2022.

13.2 Capital raised by the Bank

Bank has raised equity captial of '' 1,447.17 Crore on allotment of 42,79,03,111 equity shares under Qualified Institutions Placement.

Further, the Bank has issued and allotted Basel III compliant Tier 1 Bonds of '' 5,000 Crore and Tier II Bonds of '' 2,000 Crore during the FY2021-22.

14. Network

Branch Network of your Bank is widely spread across the country with 8870 branches and 3 overseas branches (Hongkong, Sydney, Dubai) as on March 31, 2022. Out of these 57 percent of the branches are located in rural and semi-urban centers.

15. Awards & Accolades

During FY 2021-22, your Bank received various awards for its new initiatives taken in Digitization, Financial Inclusion, HR management, Customer Service etc.

Award

Category

Year

Appex India HR & Business Excellence Awards 2020

Best Strategy in HR 2020

Apr-21

HR Oriented CEO Award 2020

Table 4: Capital Adequacy Ratios - Basel III

('' in crore)

Parameters

RBI Minimum Benchmark March 31, 2022

March 31, 2022

March 31, 2021

Total Risk Weighted Assets

545,923

5,51,521

Total Capital Funds

NA

79,281

69,263

CET 1 Capital

58,049

50,001

Tier 1 Capital

66,589

57,091

CRAR (%)

11.50

14.52

12.56

CET 1 (%)

8.00

10.63

9.07

Tier 1 (%)

9.50

12.20

10.35

Tier 2 (%)

NA

2.32

2.21

Award

Category

Year

ET Best Place to work for Women 2021

ET Best place to work for Women 2021

May-21

Golden Peacock

HR Excellence Award - 2020

Jun-21

Ease 3.0 Reform

Governance &

outcome-centric

HR

Aug-21

Deepening Financial Inclusion & customer Protection

Smart lending

Tech enabled ease of banking

Best improvement category

Ease Reform Index Award 2021

Rajbhasha Kirti Puraskar

1st prize in Nationalized bank Category for Implementation of hindi for 2019-20

Sep-21

3rd prize in Nationalized bank Category for Implementation of hindi for 2020-21

2nd prize in House Magazine Category for "Union Srijan" for 2018-19

2nd prize in House Magazine Category for "Rajbhasha Sarita" for 2018-19

2nd prize in Town official language Implementation committee (TOLIC) Vishakhapatnam of Union Bank of India for 2019-20

Award for highest percentage of digital Payment transactions

Digital Payment Utsav

Dec-21

Award

Category

Year

Infosys finacle

Application

Jan-22

Innovation award

Programming

2021

Interface Management Under Process Innovation category

IDC Industry

Application

Jan-22

innovation awards

Programming

Interface

Management

(APIM)under

Innovation in

Operations

category.

16. Social Media

Your bank is extending services through its official handles on all major social media platforms viz. Facebook, Twitter, Instagram, YouTube and LinkedIn. Users were engaged in business interactions through conversation sessions, customer care, contests, educating posts/ videos, organizing online events etc. User interactions were used to understand brand perception and gained competitive intelligence to increase business prospects through social media.

Your bank has thrived on cost-effective brand publicity through social media and posted dynamic content with attractive static/ video posts, bringing customer awareness of the products, services and offers. Awareness was also created through posts on cyber security, urging customers to be aware of frauds, cyber scams and other social engineering, social causes, remembering personalities, significant days/ events etc.

Your bank is available 365x24x7 on all handles which are very responsive and reply instantly. In the last year, 1.37 lakhs queries from social media users were responded ensuring timely guidance, proper redirections and complaint redressal resulting in customer delight. Your bank brand was well received by the public at large, justified with a whopping 399.13 lakhs impressions and 14.17 lakhs engagements.

Your bank has a huge follower base on social media presence which has grown to 24.33 lakhs as on 31st March 2022 against 19.51 lakhs last fiscal scaling a growth of 24.06% YoY.

Your bank is continuously measuring the overall sentiment about existing or new products, collecting feedback about initiatives, customer interest to meet the expectations of customers in product offerings and services rendered.

Your bank has run more than 100 Digital Marketing campaigns on social media handles and targeted ad campaigns on Google Ads creating buzz for maximum reach on products/ services/ offers and roped in new customers along with improved search engine visibility and enhanced website traffic.

Your bank has made e-commerce business tie-ups across hospitality, entertainment and health sectors with key market players like MakeMyTrip, Swiggy, Zomato, BookMyShow, Apollo Pharmacy etc. and encouraged card holders to embrace cashless payments thereby remaining with digital banking ecosystem.

17. Changes in the Directors on the Board of the Bank

The following changes took place in the Board of directors of your Bank during the financial year 2021-22.

• Shri Laxman S. Uppar has been appointed as a Part-Time Non-Official Director on the Board of the Bank on March 21,2022.

• Shri Nidhu Saxena has been appointed as an Executive Director on the Board of the Bank on February 1, 2022.

• Shri Gopal Singh Gusain, Executive Director of the Bank has completed his term in the office on January 31, 2021 upon superannuation.

• Shri Suraj Srivastava has been appointed as a Part-Time Non-Official Director on the Board of the Bank on December 21,2021.

• Shri Sameer Shukla has been appointed as a Government Nominee Director of the Bank on November 08, 2021.

• Shri Rajneesh Karnatak has been appointed as an Executive Director of the Bank on October 21,2021.

• Shri Dinesh Kumar Garg, Executive Director of the Bank has completed his term in the office on September 30, 2021 upon superannuation.

18. Directors'' Responsibility Statement

The Directors confirm that in the preparation of the

annual accounts for the year ended 31st March, 2022:

• The applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any.

• Accounting Policies had been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period.

• Proper and sufficient care was taken for the maintenance of adequate Account Records in accordance with the provisions of the relevant Acts for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities.

• The Annual Accounts were prepared on a going concern basis.

• Internal financial controls had been laid down to be followed by the bank and that such internal financial controls are adequate and were operating effectively.Explanation.-For the purposes of this clause, the term "internal financial controls" means the policies and procedures adopted by the Bank for ensuring the orderly and efficient conduct of its business, including adherence to Bank''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

• Proper systems were in place to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

19. Corporate Governance

The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2021-22 has no audit qualifications.

20. Corporate Social Responsibility (CSR)

20.1 Union Bank of India has been in the forefront in meeting its CSR commitments. Towards this the Bank has established Union Bank Social Foundation Trust (UBSFT) in the year 2006 as an extended arm for carrying out the CSR activities of the Bank. UBSFT has been incorporated aiming to support initiatives towards Social upliftment& improving lives of underprivileged segments. The major CSR activities of the Bank are now being carried out through the UBSFT. Its Board is headed by the Bank''s Managing Director & CEO with Executive Directors as Vice Chairman Trustees, other trustees include the Bank''s General Managers and one independent trustee. The UBSFT Board provides directions in accordance with the Bank''s thrust areas and undertakes review every quarter. The directions of the Board are executed by the Chief Executive of UBSFT. While the Registered office of UBSFT is at Bengaluru, the administrative office is at Mumbai.

20.2 The CSR activities undertaken by the Bank/UBSFT in 2021-22

UBSFT has approved 28 projects involving an amount of ''547.36 lacs during the year 2021-22 under various sectors like Education, Health care, Community Development, Skill Development etc. details of some major projects undertaken by Bank/UBSFT are given below:

• Bankers Institute for Rural & Entrepreneurship Development, Hyderabad have been approved an amount of ''26.80 lacs towards sharing of revenue expenses.

• Swarna Bharat -Soma Institute of Technical training, Venkatachalam have been approved an amount of ''39.73 lacs towards sharing of revenue expenses

• SBT-MRGI -Skill Development Institute, Muchintal have been approved an amount of ''9.75 lacs towards sharing of revenue expenses.

• Corporation Bank Centenary Public Library, Mangalore have been approved an amount of ''25.00 lacs towards meeting the revenue expenses of the Library.

• Corporation Bank Heritage Museum, Udupi have been approved an amount of ''17.00 lacs towards meeting the revenue expenses of the Museum

• Supported District administration Udupi for setting up an Oxygen plant at district hospital at a cost of '' 46.25 lacs for treating COVID 19 patients.

• Supported National Health Mission Ranchi for purchasing one Ambulance at a cost of ''19.21 lacs for transportation of patients.

• Supported Mangalore Jesuit Education Society for procuring educational research equipments for St. Aloysius College, Mangaluru at a cost of ''25.00 lacs.

• Supported King George Hospital, Visakhapatnam for procuring one Doppler machine at a cost of '' 29.50 lacs.

• Supported Akshayapatra Foundation, Bangalore for purchase of two food distribution vehicles (custom built) for supporting food distribution (mid day meal scheme) to schools at Mangalagiri, Vijayawada at a cost of '' 23,36,320/-.

• Saraswati Education & Welfare Trust, Meghalaya have been approved donation of ''24.00 lacs for construction of 3 class rooms in Saraswati Vidya Mandir, Kongong.

• Supported Shraddha Foundation Mumbai for purchase of a mini bus for transportation of cancer patients from shelter to AIIMS Bhubaneswar at a cost of ''20.90 lacs.

• Devbhumi Siksha Prasar Samiti, Rudrapur, Udham Singh Nagar have been approved donation of ''20.00 lacs towards construction of multi purpose hall in their college of pharmacy.

21. Acknowledgements

21.1 The Directors thank the shareholders, valued customers, well-wishers, Share Transfer Agent and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

21.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Maharashtra, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission, BSE, NSE, financial institutions, correspondent Banks and Statutory Central Auditors of the Bank,in the functioning of the Bank.

21.3 The Directors place on record their deep appreciation for the dedicated service and valuable contribution made by members of staff in the overall performance of the Bank during the year and look forward to their

continued co-operation in the realisation of the corporate goals of the Bank in the years ahead.

21.4 The Directors also express that the staff members stay safe, healthy and maintain good health.

For and on behalf of the Board of Directors

(Rajkiran Rai)

Place : Mumbai Managing Director &

Date : 30.05.2022 Chief Executive Officer


Mar 31, 2021

The Board of Directors are pleased to present the 102nd Annual Report of the Bank for the Financial Year 202021 together with the ‘Audited Balance Sheet’, ‘Profit & Loss Account’, ‘Cash-Flow Statement’ and the report on ‘Management Discussion & Analysis’. The ‘Corporate Governance Report’ and ‘Business Responsibility Report’ also form part of the Annual Report 2020-21.

1. Highlights:

1.1 The year 2020-21 was dominated by the COVID-19 pandemic and the resultant global economic downturn, the most severe one since the Global Financial Crisis. The lockdowns and social distancing norms brought the already slowing global economy to a standstill. As per the latest World Economic Outlook of International Monetary Fund (IMF), the Global economic output contracted by 3.3% in 2020.

1.2 Governments and central banks across the world deployed a range of policy tools to support their economies, such as, lowering key policy rates, quantitative easing measures, loan guarantees, cash transfers and fiscal stimulus measures. The global economy is projected to grow at 6% in 2021, moderating to 4.4% in 2022. Among advanced economies, the United States is expected to surpass its pre-COVID GDP level this year, while many others in the group will return to their pre-COVID levels only in 2022. For emerging and developing market economies, China had already returned to pre-COVID GDP in 2020, whereas many others are not expected to do so until 2023.

1.3 For the Indian economy, the year 2020-21 was challenging due to both supply and demand side disruptions, due to the pandemic. The Indian economy entered a technical recession in the first half of FY21 with GDP plunging by 24.4% in Q1 FY21, 7.4% in Q2 FY21. India recognized the disruptive impact of the pandemic and charted its own unique path amidst its huge population, high population density and an overburdened health infrastructure. The intense lockdown implemented at the start of the pandemic characterized India’s unique response in several ways. The Government has ramped up its fiscal spending through Atmanirbhar scheme and a favorable monetary policy ensured support for the economy.

1.4 Union Budget 2021-22 has further provided a strong fillip to the capex momentum with clear emphasis on infrastructure investment, as a key focus area, to revive demand and overall growth.

Setting up the National Bank for Financing Infrastructure and Development (NaBFID), as the principal Development Financial Institution (DFIs) for infrastructure financing and aiming to achieve lending of Rs.5 lakh crore in 3 years to infrastructure projects, is an important measure. It will also dovetail with the ongoing efforts of the government to enhance capital for implementing infrastructure projects under National Infrastructure Pipeline (NIP). Further, the setting up of an Asset Reconstruction and Asset Management Company (ARC&AMC) to clear off the bad loans, privatization of two PSU banks and the enhancement of FDI limits in insurance from existing 49% to 74% are some of the important reform measures announced by the Government in the Budget.

1.5 During the year 2020-21, the RBI undertook several conventional and unconventional measures to ensure ample system-level liquidity as well as targeted liquidity to support vulnerable sectors, institutions and financial instruments. The RBI ensured immediate relief to debtors via temporary loan moratorium, while unclogging monetary policy transmission. Besides this, the regulator has allowed a one-time restructuring scheme to help companies and individuals to manage the financial stress caused by the Covid 19 pandemic.

1.6 Prospects for 2021-22 have strengthened with the progress of the vaccination programme. High frequency indicators point to the growth momentum gaining strength, especially in the fourth quarter of FY 2020-21. The GDP shrugged off the contractions in the preceding quarters and moved into expansion zone in the third and fourth quarter of FY 2020-21. However, the recent surge in infections has imparted greater uncertainty to the outlook, especially as localized and regional lockdowns could dampen the improvement in demand conditions and may delay the return of normalcy.

2. Bank’s Performance

Established in the year 1919, your Bank has 9312 branches and 3 overseas branches, 12957 ATMs across 29 States and 5 Union Territories and 78202 employees as on March 31,2021.

Key achievements during FY 2020-21:

• Net Interest Income for FY 21 stood at Rs.24,688 crore.

• Operating profit for FY 21 stood at Rs.19,259 crore.

• PCR stood at 81.27% as on March 31,2021

• Net NPA ratio stood at 4.62% as on March 31, 2021

During FY 2020-21, your Bank has undergone many transformations/ adopted new processes as given below.

2.1 Amalgamation:

As a part of mega consolidation of Public Sector Banks, Government of India vide gazette dated March 04, 2020 provided approval for amalgamation of Corporation Bank and Andhra Bank into Union Bank of India (Anchor Bank) and announced the said Amalgamation would be effective from April 01, 2020.

The amalgamation has significantly resulted in improving the geographical penetration of Union Bank across the country. With the amalgamation, Union Bank became the 5th largest public sector Bank in terms of business with extensive network of offerings.

Programme Management Consultant, M/s Boston Consultancy Group (BCG) was on-boarded for planning, designing, guiding and ensuring the implementation of all aspects required for successful completion of the amalgamation. AMO, in close coordination with BCG, Corporate Verticals and field functionaries has initiated the amalgamation process with following broad objectives:

The bank has recognized amalgamation as an exercise in change management and leveraged this as an opportunity for such transformation. Accordingly, a detailed integration plan was prepared to ensure smooth transition to Amalgamation Effective Date (AED) with minimum customer disturbance and employee grievances.

Dedicated programme management office in the name of Amalgamation Management Office (AMO) was set up for better coordination with various verticals and smooth drive of Amalgamation process. The project under which entire amalgamation related exercise has been carried out in the Bank is named as “Project Samarth”.

After identification, plan and road map for amalgamation has been defined and strategized. Based on criticality of functions, the amalgamation process was divided into Pre Amalgamation Effective Date (Pre-AED), AED and posts AED phases.

31 functional committees representing the functions of all verticals were created to handle the basic work of harmonization of activities, resolving issues and escalating unresolved issues. Each committee was represented by members of all 3 Banks who met on regular frequency to arrive at a detailed Master Amalgamation Plan (MAP).

For ensuring branches are adequately supported in amalgamation process, a peer based program-Buddy Branch Program- is launched to handhold branches of erstwhile Andhra Bank and erstwhile Corporation Bank. This program was intended to build coordination across branches, quicker resolution of queries and people integration.

Creating awareness about the benefits of amalgamation to customers, employees and other stakeholders about the changes was important for the Bank to address the apprehensions. For this a robust communication plan was activated with multiple channels. Stakeholders are categorised into 3 categories i.e. Customers, Employees and other stakeholders.

With the objective of getting employees to know each other as a team, building a shared understanding and foster culture of one Bank going forward, a series of activities such as leadership summit “Triveni Sangam”, People’s survey, value survey, cultural integration summit for all DGMs, AGMs and Branch Managers, has been conducted for culture integration and change management. Sessions of guest speakers has been arranged for change workforce profoundly on mental and emotional aspect.

Along with the above preparedness at corporate level, various long term approaches were also strategized to handhold branches to ensure AED readiness. Communication channels such as Branch Handbooks, Microsite etc. were set up to ensure single source of communication for all amalgamation updates. FAQs and Branch level dos and don’ts created and circulated based on field experience.

Training Architecture for the Amalgamated entity was defined and various large scale functional training sessions, Soft skills Training sessions and leadership workshops have been arranged for better understanding and working effectively. Key functional trainings through e-learning portal have also been arranged.

With the above preparedness, the Bank has achieved the AED transition smoothly without disruption to customers as planned. The business was continued as usual.

However, there are some of the initiatives which were deferred in view of the COVID-19 pandemic, but rolled out all the deferred activities by 30.06.2020.

Post AED, bank has decided to continue with 4 tier Organization structure for effective monitoring and management. Future ready Organization structure for Central Office and field has been designed to ensure high accountability and fulfilling strategic imperatives for the bank.

After process unification, a clear IT integration road map was formed much before AED. It inter alia included provisions of various hardware requirements, on boarding vendors, dependencies, availability of resources, compatibility of systems etc. This advanced planning helped the bank in concluding one of the fastest IT merger in banking history.

Core Banking Solutions (CBS) along with all CBS and non-CBS applications have been integrated in a structured and well defined manner to ensure minimal disruption to the end users. Bank leveraged this opportunity to improve Bank''s digital offerings to each segment and ensuring better customer experience useful to lay down the foundation of further growth.

Capturing synergy is one of the key rationale for amalgamation of banks. Multiple synergy opportunities in terms of Revenue expansion, cost reduction, business rationalization, have been planned. The plan has identified both recurring and one-time, across functions with estimated cumulative monetary value in the next 3 years.

Field organization structure footprint in the form of 18 FGMO (Field General Manager Office) and 125 RO (Regional Offices), planned to strengthen pan India presence. Structures of RO-FGMO at field are constituted as mirror image of Central Office. RO-FGMO locations evaluated basis a number of dimensions such as Business footprint, Branch spans, Business potential, Geographical layout, Connectivity, Strategic importance including Proximity to service, credit centres, and cost o1 establishment.

With roll out of field organization structure, various specialized structure has also been rolled out for focussed growth under identified areas.

of resources such as Branch & ATM network rationalization, employee alignment, monetization of real estate assets, Vendor rationalization and integration of IT systems.

• Revenue synergy by way of cross sell & sales acceleration, fee income improvement and harmonization of service & penal charges. Thus, the amalgamation has laid the foundation for the Bank to fulfil the vision of “Future Ready Bank”.

2.2 EASE (Enhanced Access and Service Excellence):

Enhanced Access and Service Excellence (EASE) was launched by Government of India in the financial year 2018-19 to increase efficiency of PSBs across every domain and to measure the performance on a common index on quarterly basis.

EASE 3.0, an augmented version of EASE 1.0 and EASE 2.0 set the implementation roadmap for FY 2020-21 with 5 Themes and 27 Action Points. Your bank, with continuous improvement in performance, secured 3rd position in overall ranking for the quarter ended December 2020 as against 8th rank in the baseline quarter ended March 2020. You bank was among top 3 banks in 4 out of 5 themes.

The Bank has taken several initiatives and implemented measures to improve efficiency under EASE agenda including:

• Implemented digital journey for lead generation through 5 channels (SMS, Missed Call, Internet Banking, Mobile Banking and Call Centre) for 6 Products (Personal Loan, Home Loan, Vehicle Loan, Credit Card, MSMe loan and Shishu Mudra).

• Implemented analytical rule based engine to generate offers for Pre-Approved Personal Loans, Housing Loan take over, Housing Loan top-up, and working capital enhancement for MSME with end to end digital journey.

• Launched end-to-end Straight Through Processing for Pre-approved Personal Loans, Shishu Mudra loans and renewal of MSME Loans.

• Implemented lead registration for KCC Loan through Mobile Banking app.

• Re-designed Performance Management System through digital & IT tools with focus on talent management, performance management and Rewards & Recognition.

EASE 4.0 reforms agenda sets implementation roadmap for FY 2021-22 with 6 Themes and 26 Action Points with focus on Technology-Enabled Collaborative & Simplified Banking. Your bank has been fast adopting technology advancements

to benefit its large customer base. Your bank is also contributing in nation building through its improvisation in process and products ranging from financial inclusion to infrastructure lending. Your bank has shown a significant improvement in its performance under EASE 3.0 parameters in FY 2020-21 and will strive to continue its stride in coming days.

2.3 Online Sales of Union Mutual Fund Schemes- In

order to promote digitization, the bank has been working closely with respective channel partners to develop system capabilities which would enable customers to buy third party products like Insurance and Mutual Fund online using the Bank’s technology interfaces. Facility to buy Union Mutual Fund schemes through Bank’s website and U-Mobile App has been commenced.

2.4 New UMobile App based services :

• Option to buy PMJJBY insurance cover through UMobile App has been enabled.

• Mobile Banking services enabled for NRIs.

• Under value added services new features such as Setting of Standing Instructions & Personalize Transaction Limits.

• New Credit Card module providing facility to Make payment, Set PIN.

2.5 Launched the Treasury- FX Retail, an electronic trading platform designed by Clearing Corporation of India Ltd which provides for buying/selling of foreign exchange by retail customers of the bank.

During the current FY 2020-21 the Bank has added 88 new clients in this segment.

2.6 Specialization in Monitoring and Recovery:

Your Bank has taken many proactive steps for monitoring of loans like;

• Specialized cell for monitoring of accounts in the range of Rs.100.00 crore to Rs.250.00 crore and above, both headed by Senior Executives.

• A system of identifying Early Warning Signals(EWS) has been put in place to proactively identify the signals of Stress/ Warnings in the borrowal accounts to facilitate taking timely corrective steps.

• Advanced analytical tools are being utilized to predict Early Stress Signals covering non SMA and non NPA portfolio of the Bank’s advances to facilitate initiating necessary measures to

maintain the health of the Loan Book.

2.7 Your Bank is adopting the centralization /automation /integration of internal business processes in order to enhance quality of IT services. It is taking substantial measures in securing the IT assets of the Bank by implementing best-in-class IT Security and Risk Management Framework.

3.2 Total Deposits increased to Rs.9,23,805 crore as on March 31, 2021. Out of this CASA share (current account and saving account) stood at 36.33 % as on March 31,2021.

2.8 Your Bank is also thriving to streamline the banking services for customers with cutting edge technology. Door step Banking for Financial and Non-financial services including Jeevan Pramaan facility, Government e-Marketplace for Corporate Customers, FASTag integration for individual and corporate customers, Positive pay facility, Real-time integration with PMSVANidhi portal, GREEN PIN facility for all customers of the Bank at all the ATM terminals, Automated e-stamping and e-signing through NSEL, DIAL-A-LOAN facility for various loan products uptoRs. 5 crore, Straight through processing of online retail and MSME loans, implementation of E2E Digitisation for Shishu Mudra Loans upto Rs.50,000, Current account opening from Ministry of Corporate Affairs (MCA) Potal, Mobile Banking for NRIs, facility to apply for PMJJBY through Mobile Banking, NCMC technology in PoS machines for accepting contactless RuPay debit cards, Deposit calculator for calculating of maturity value of deposit, UToken facility through separate mobile app for generation of OTP in addition to the existing mode of OTP on mobile, Credit card module are some of the major initiatives taken during the FY 2020-21.

3.3 Gross Advances stood at Rs. 6,53,684 crore as on March 31,2021.The RAM (Retail, Agriculture and MSME) sector stood at Rs.3,67,825crore as on March 31, 2021 compared to Rs. 3,39,318crore as on March 31, 2020. RAM Sector as a whole grew at an annual rate of 8.40 %.

During 2020-21, the overall digital transactions grew from 74.43% in Mar’20 to 79.11% in Mar’21 registering a growth of around 5% during the year.

2.9 As a part of business process transformation, your Bank has envisaged technology innovations in providing hassle free services by launching HRMS mobile application on android and iOS platform for its valuable employees for immediate sanctioning and disbursement of perks and allowances. This application is secured with OTP based login authentication mechanism to enable the employees 24*7 access to carry out their day-to-day HR related activities on the fly. Bank’s retired employees can also access this mobile app for pension details and medical insurance scheme.

3.4 Overseas business of the Bank stood at Rs.18,191 crore as on March 31, 2021 compared to Rs.24,345 crore as on March 31, 2020. Your Bank has three overseas branches at Hong Kong, DIFC (Dubai) and Sydney

2.10 Cyber Security Operation Centre (CSOC):Bank has implemented cyber security framework and instituted Cyber Security Operation Centre. A dedicated skilled team is deployed to manage the CSOC. The CSOC helps to identify, detect, protect & prevent the cyber threats.

3. Business Highlights:

3.1 The global business of the Bank stood at Rs.15,77,490 crore as on March 31,2021.

(Australia). Your Bank also operates in the United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd

4.

Income and Expenditure:

Table 1: Income and Expenditure Statement

(Rs. in crore)

Sl.

Parameter

FY

2020-21

FY

2019-201

1

Interest Earned

68767

37231

2

Other Income

11337

5261

3

Total Income (1 2)

80104

42492

4

Interest Expended

44079

25794

5

Net Interest Income (1-4)

24688

11437

6

Operating

Expenses

16766

7516

w/w Establishment Expenses

9025

3359

7

Total Expenditure

60845

33311

8

Operating Profit (3-7)

19259

9181

9

Provisions

16353

12079

10

Net Profit/Loss

2906

-2898

11

Earnings per share (in Rs.)

4.54

-12.49

*Figures are related to standalone Union Bank of India financial results for pre amalgamation period, hence not comparable with post amalgamation financial results for the year ended March 31,2021.

5. Profitability and Efficiency:

5.1 Your Bank reported an Operating Profit of Rs.19,259 crore in FY 2020-21 as compared to Rs.9,181crore in FY 2019-20.

5.2 Netprofit of the Bank stood at Rs.2,906 crore in FY 2020-21.

5.3 Cost-to-income ratio of your Bank stood at 46.54 % in FY 2020-21

5.4 During FY 2020-21, Return on Average Assets stood at 0.27%, whereas Return on Equity stood at 6.68%.

Table 2: Efficiency Ratios

Parameter (%)

FY 2020-21

FY 2019-201

Return on Average Assets

0.27

(-) 0.53

Return on Equity

6.68

(-) 12.52

5.5 The following are the key productivity ratios of the Bank for FY 2020-21.

Table 3: Productivity Ratios

Parameter

FY2020-21

FY2019-201

Business per Employee (Rs. in crore)

20.17

21.37

Business per Branch (Rs. in crore)

169.35

186.18

Gross Profit per Employee (Rs. in lakh)

24.63

24.60

5.6 Dividend:

Board of the Bank has not recommended any dividend for FY 2020-21.

6. Shareholders’ Return:

6.1 The Bank’s net worth was Rs. 43,507 crore as

7. Asset Quality:

7.1 Gross Non-Performing Assets (GNPA) of the Bank stood at Rs.89,788 crore as on March 31, 2021. GNPA as per cent to gross advances stood at 13.74 % as on March 31,2021.

8. Capital Adequacy :

8.1 The Capital Adequacy Ratio as per BASEL III norms stood at 12.56% as on March 31, 2021.Common Equity Tier I (CET I) capital of the Bank stood at 9.07% in March 2021.

7.2 Net NPA of the Bank stood at Rs.27,281 crore as on March 31,2021 and the Net NPA ratio stood at 4.62 % as on March 31,2021.

Table 4: Capital Adequacy Ratios - B;

isel III

Rs. in crore)

Parameters

RBI Minimum Benchmark March 31, 2021

March 31, 2021

March 31, 2020

(Pre amalgamation)

Total Risk Weighted Assets

NA

5,51,521

2,94,984

Total Capital Funds

69,262

37,790

CET 1 Capital

50,001

27,714

Tier 1 Capital

57,090

31,714

CRAR (%)

10.875

12.56

12.81

CET 1 (%)

7.375

9.07

9.40

Tier 1 (%)

8.875

10.35

10.75

Tier 2 (%)

NA

2.21

2.06

Note: RBI minimum benchmarks are including CCB (Capital Conservation buffer) of 1.875 per cent in CRAR, CET 1 and Tier 1 ratios. There is no minimum for Tier II ratio.

8.2 Capital raised by the Bank

The Bank has issued and allotted Basel III compliant Tier 1 Bonds of Rs.1705 crore and Tier II Bonds of Rs.2000 crore during the FY 2020-21.

9. Network

Network of your Bank is spread across the country with 9312 branches as on March 31,2021. The Bank also has threefull fledged overseas branches. Out of these 56% of the branches are located in rural and semi-urban centres. The Bank has network of 12957 ATMs as on March 31,2021.

10. Awards & Accolades:

During FY 2020-21, your Bank received various awards for its new initiatives taken in Digitization, Financial Inclusion, HR management, Customer Service etc.

Awarded By

Category

Year

National Feather Award

Hall of Fame Award for MD & CEO

30-Apr-21

Best Advance in Competency Management

Best in Training & Organizational Development

CHRO of the year

Golden Peacock

Golden Peacock HR Excellence Award - 2020

Apr-21

Apex India HR Excellence Awards & Business Excellence Awards

Apex India Best Strategy in HR 2020

Apr-21

Apex India HR Oriented CEO Award 2020

Greentech HR Award

Technology Excellence

Feb-2021

Leading CEO of the year

Global HR Excellence Award by World HRD Congress

Best Service Provider in HR

Feb-2021

Award for Excellence in Learning & Development

CHRO of the Year

World CSR Congress

CEO of the Year

Feb-2021

Best Training solutions during COVID 19 times

The Future of Tech Congress & Awards presents ‘The Internet Entrepreneur Awards

The best Digital Transformation of a training programme in response to Covid 19

Oct-2020

Golden Peacock

Golden Peacock National Training Award 2020

July-2020

11. Social Media:

11.1 Your Bank has expanded the reach across all the major social media platforms like Facebook, Twitter, Instagram, YouTube and LinkedIn under project Union Connect.Your Bank’s official pages are very responsive and reply within minutes.

11.2 As a part of Digital Marketing, your Bank is also engaged in e-commerce business tie-ups to promote Bank’s products & services. Bank conducts campaigns through Google Ads, YouTube and LinkedIn to promote it’s products and services and get more reach on Corporate Website.

The total followers on official Social Media handles of your Bank as at March 2021 stood at 19.51 lakh.

12. Changes in the Directors on the Board of the Bank:

The following changes took place in the Board of

directors of your Bank during the financial year

2020-21.

• Shri Nitesh Ranjan has been appointed as an Executive Director in the Board of the Bank on March 10, 2021.

• Shri Birupaksha Mishra has been appointed as an Executive Director in the Board of the Bank on April 01, 2020 and completed his term in the office on January 31, 2021 upon superannuation.

• Shri Rajiv Kumar Singh, Chartered Accountant Category Director of the Bank has completed his term in the office on February 5, 2021.

• Dr. Madhura Swaminathan, Part-Time NonOfficial Director of the Bank has completed her term in the office on December 26, 2020.

• Shri Kewal Handa, Non-Executive Chairman and Part-Time Non-Official Director of the Bank has completed his term in the office on July 5, 2020.

13. Directors’ Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the year ended 31stMarch, 2021:

• The applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any.

• Accounting Policies had been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period.

• Proper and sufficient care was taken for the maintenance of adequate Account Records in accordance with the provisions of the relevant Acts for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities.

• The Annual Accounts were prepared on a going concern basis.

• Internal financial controls had been laid down to be followed by the bank and that such internal financial controls are adequate and were operating effectively.Explanation.- For the purposes of this clause, the term "internal financial controls" means the policies and procedures adopted by the Bank for ensuring the orderly and efficient conduct of its business, including adherence to Bank''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting recods and the timely preparation of reliable financial information.

• Proper systems were in place to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

14. Corporate Governance

The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2020-21 has no audit qualifications.

15. Corporate Social Responsibility (CSR):

15.1 Union Bank of India has been in the forefront in meeting its CSR commitments. Towards this the Bank has established Union Bank Social Foundation Trust (UBSFT) in the year 2006 as an extended arm for carrying out the CSR

activities of the Bank. The major CSR activities of the Bank are now being carried out through the UBSFT. Its Board is headed by the Bank’s Managing Director & CEO with executive directors as Vice Chairman Trustees, other trustees include the Bank’s General Managers and one independent trustee. The UBSFT Board provides directions in accordance with the Bank’s thrust areas and undertakes review every quarter. The directions of the Board are executed by the Chief Executive of UBSFT. While the Registered office of UBSFT is at Bengaluru, the administrative office is at Mumbai.

Bank has also formed CSR committee of the directors of the Bank to monitor and guide the CSR activity of the bank so also that of UBSFT on quarterly basis. The committee is Headed by MD & CEO, Executive directors and one part time nonofficial Director nominated under 9(3)(h) of the Banking Companies (Acquisition & transfer of Undertaking) Act 1970 and one Share holder director elected under section 9(3)(i) of the Banking Companies (Acquisition & transfer of Undertaking) Act 1970.

UBSFT has been incorporated aiming to support initiatives towards Social upliftment & improving lives of underprivileged segments.

15.2 The CSR activities undertaken by the Bank in 2020-21

UBSFT has approved 6 projects involving an amount of Rs.78.09 lacs during the year 2020-21 under various sectors like Education, Health care, Community Development, Sanitation etc. details of which are given below:

o Supported Narayana Hrudayalaya, Bengaluru Karnataka for purchase of two ventilators at a cost of Rs. 11.20 lakh for treating COVID 19 patients.

o Supported Mulki Sunder Ram Shetty Memorial Charitable trust, Mulki, Karnataka for purchasing of one generator set at a cost of Rs. 14.75 lakh for their convention centre.

o Supported 3 Government schools in Palghar district for construction of toilet blocks at a cost of Rs. 20.32 lakh. Project implemented through Rotary Club of Bombay Queen City Foundation.

o Supported Municipal Corporation Machilipatanam for construction of one RCC

Bus shelter at a cost of Rs. 2.50 lakh.

o Supported Bhavita Special school, Machilipatanam for construction of iron compound wall and purchase of physio therapy equipments at a cost of Rs. 3.82 lakh.

o Approved for setting up of mini science laboratory at a cost of Rs. 25.50 lakh for visually challenged students at NAB Worli centre.

16. Acknowledgement:

16.1 The Directors thank the shareholders, valued customers, well-wishers, Share Transfer Agent and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

16.2 The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Maharashtra, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission, BSE, NSE, financial institutions, correspondent Banks and Statutory Central Auditors of the Bank, in the functioning of the Bank.

16.3 The Directors place on record their deep appreciation for the dedicated service and valuable contribution made by members of staff in the overall performance of the Bank during the year and look forward to their continued co-operation in the realisation of the corporate goals of the Bank in the years ahead.

16.4 The Directors express deep condolences and gratitude for the members of the staff who lost their precious lives during COVID-19 Pandemic. The Directors also express that the staff members stay safe, healthy and maintain good health.

For and on behalf of the Board of Directors

Place : Mumbai (Rajkiran Rai G)

Date : 05.07.2021 Managing Director & CEO

1

Figures are realated to standalone Union Bank of India financial results for post amalgamation period, hence not comparable with pre amalgamation financial results for the year ended March 31,2020.


Mar 31, 2019

Dear Shareholders,

The Board of Directors is pleased to present the 100th Annual Report of the Bank for the Financial Year 201819 together with the ‘Audited Balance Sheet’, ‘Profit & Loss Account’, ‘Cash-Flow Statement’ and the report on ‘Management Discussion & Analysis’. The ‘Corporate Governance Report’ and ‘Business Responsibility Report’ also form part of the Annual Report 2018-19.

1. Highlights:

1.1 Indian economy projected to grow at 7.2 per cent during FY 2018-19. India became 6th largest economy ofthe world. Growth ofthe economy was accompanied by measurable changes in financial service industry. Aggregate flow of funds to the commercial sector from banks (Bank credit) grew at an average 11.0 per cent in FY 2018-19, significantly up from average 6.2 per cent growth in FY 2017-18. Credit flow to industrial sector reported gradual recovery after initial subdued growth.

1.2 Government has remained sanguine in introducing various structural reforms in overall economy including financial sector, following which India climbed up in World Bank’s ease of doing business ranking. Introduction of one-tap loan processing structure for MSMEs was one such landmark change.

1.3 In-line with its objective of growth facilitation, RBI has introduced various measures to overcome the short-term liquidity shortages. RBI also provided timely intervention for NBFCs to prevent any spillover. To support competitive environment, RBI has taken various steps for supporting new entrants in the financial sector. Despite strong credit growth and optimal regulatory environment, banking sector is yet to cope-up with the asset quality challenges. Amid on-going challenges and opportunities, banking sector has been driving the way ahead for developing infrastructure to cater the financial needs of the world’s sixth largest economy.

1.4 Considering the business prospect in the coming year, your Bank has rolled out new design for sourcing of new business through Customer Acquisition Group (CAG), centralized underwriting of credit processing across business lines of corporate, SME, retail and agriculture.

1.5 Further your Bank has leveraged digital technology for monitoring, resolution and recovery. Monitoring has shifted to proactive one, which flows through origination, underwriting, documentation, disbursement and servicing during the life cycle of exposure.

1.6 Established in the year 1919 Union Bank of India has 4,292 branches including 4 overseas branches, 6650 ATMs and 5586 micro ATMs across 29 States and 5 Union Territories as on March 31, 2019. Your Bank serves over 74 million customers and employs more than 37,000 people.

2. Way Ahead- “Vision 2020”

During FY 2018-19 your Bank has undertaken various transformation initiatives to re-engineer and streamline its processes. During the year, the Bank focused on creation of the necessary infrastructure required to achieve the aspirations set by the Bank under “Vision 2020”. The structural initiatives can be divided into four categories.

2.1 Centralization of Credit Underwriting: With a view to bring consistency in processing, to improve credit quality and to create specialized skill-set for quick delivery, your Bank has scaled up a unified credit delivery and processing structure by setting up Centralized Processing Centers (CPCs) for credit underwriting.

- Union Loan Point (ULP) is for processing all the retail loan products. The ULPs are also developed as acquisition centre to mobilize retail loans. Your Bank has 73 ULPs mapped to 1238 branches across 48 regions.

- Union Sammridhi Kendra (USKs): To cater the rural & semi-urban needs, your Bank has implemented new operating model for RuSU (Rural and Semi Urban Areas) by introducing Hub and Spoke model where “Hub” is a Centralized Processing Cell (USK) and “Spoke” is mapped RuSU branch. The USKs are processing all types of advances in RuSU areas. The loan processing at USK is completely digitized with linked branch capturing the borrower data through tablet (a hand held electronic device) and then transferring it directly to USK for processing. Your Bank has 38 USKs mapped with 556 branches in 38 regions.

- SARAL: Though the structure was already in existence, your Bank has further widened the scope of SARAL to accelerate credit flows to MSME, to improve asset quality and to enhance customer service at small centers, SARAL Lite has been established.

2.2 Verticalization of Sourcing: Your Bank has established Customer Acquisition Group (CAG) for verticalization of sourcing of business with an aim to drive sales effort in developing new partnerships for sustained business mobilization, to develop tie-ups with fin-techs for sourcing leads through digital channel, and to develop a vibrant sales culture in the organization for long term growth. The CAG is getting good response and started generating positive result.

2.3 Specialization in Monitoring and Recovery: Your Bank has taken many proactive steps for monitoring of loans like;

- System based triggers and alerts for classification and identification of action required in the stressed assets.

- Developed in house web portal for monitoring purpose. The web portal is providing a comprehensive dashboard to the branches/administrative offices containing the consolidated information along with branch wise position under various parameters like SMAs, CRILIC, Review & Renewal etc and daily progress can be monitored on real time basis.

- Your Bank has also developed in house NPA Recovery App with an aim to aid in NPA recovery by facilitating the staff to have access to the information regarding the borrower like his accounts, address, navigation, visit and follow up report to have better follow up and control.

2.4 Cost Optimization: Your Bank is optimizing the utilization of available resources for improving the overall profitability. Your Bank has a complete bouquet of digital services to cater various financial and non-financial needs of customers like passbook in mobile, loan application through internet banking and mobile banking etc

3. EASE (Enhanced Access and Service Excellence):

To enhance the efficiency of Public Sector Banks across all domains viz; credit underwriting, monitoring, recovery, and to provide best of the service to the customers of banks, the Government of India introduced Reforms Agenda (also known as EASE) during FY 2018-19 which contains 6 themes and 30 Action Points which all the PSBs need to implement in a time bound manner. Based on the implementation of the Action Points PSBs are rated on an index developed by an external agency.

Your Bank was ranked first in one of the themes, “Udhaymitra for PSBs”, which showcased the commitment of Bank in adopting best practices to cater the need of MSMEs in India.

Your Bank is further strengthening its processes across all domains, building and expanding the existing infrastructure to become a Bank of next generation, providing best in class services and customer experience.

The Government of India has now come up with new EASE index 2.0 for FY 2019-20 which is to showcase “results” of the infrastructure set up during FY 201819. With the necessary infrastructure in place, your Bank aspire to emerge among the best banks under EASE index 2.0.

4. Business:

4.1 The global business of the Bank Increased to Rs. 7,41,307 crore as on March 31, 2019 from Rs. 7,22,362 crore as March 31, 2018, reflecting an annual growth of 2.6 per cent.

4.2 Total Deposit increased to Rs. 4,15,915 crore as on March 31, 2019 from Rs. 4,08,502 crore as on March 31, 2018, noting an annual growth of 1.8 per cent. CASA (current account and saving account) share in total deposit stood at 36.1 per cent as on March 31, 2019. The saving deposit grew by 8.3 per cent in FY 2018-19.

4.3 Gross Advances stood at Rs. 3,25,392 crore as on March 31,2019 compared to Rs. 3,13,860 crore as on March 31, 2018 recording an annual growth of 3.7 per cent. The Domestic Advances grew by 7.8 per cent in FY 2018-19. The RAM (Retail, Agriculture and MSME) sector stood at Rs. 1,73,237 crore as on March 31, 2019 compared to Rs. 1,58,642 crore as on March 31, 2018. RAM Sector as a whole grew at an annual rate of 9.2 per cent.

4.4 Overseas business of the Bank stood at Rs. 17,276 crore as on March 31, 2019 compared to Rs. 30,829 as on March 31, 2018. Your Bank has four overseas branches at Hong Kong, DIFC (Dubai), Antwerp (Belgium) and Sydney (Australia). Your Bank also operates in the United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd.

5. Income and Expenditure:

Table 1: Income and Expenditure Statement (Rs.crore)

Sl.

Parameter

FY

FY

Annual Growth

No.

2018-19

2017-18

Absolute

(%)

1

Interest Earned

34067

32748

1319

4.03

2

Other Income

4474

4990

-516

-10.34

3

Total Income (1 2)

38541

37738

803

2.13

4

Interest Expended

23852

23443

409

1.74

5

Net Interest Income (1-4)

10215

9305

910

9.78

6

Operating Expenses

7168

6655

513

7.71

w/w Establishment Expenses

3151

3155

-4

-0.13

7

Total Expenditure

31020

30098

922

3.06

8

Operating Profit (3-7)

7521

7640

-119

-1.56

9

Provisions

10469

12887

-2418

-18.76

10

Net Profit/Loss

-2948

-5247

-

-

11

Earnings per share (Rs.)

-25.08

-69.45

-

-

6. Profitability and Efficiency:

6.1 Your Bank reported an Operating Profit of Rs. 7,521 crore in FY 2018-19 as compared to Rs. 7,640 in FY 2017-18.

6.2 Net loss of the Bank stood atRs. 2,948 crore in FY 201819 compared to loss of Rs. 5,247 crore in FY 2017-18.

6.3 Cost-to-income ratio of your Bank stood at 48.80 per cent in FY 2018-19 compared to 46.56 per cent in FY 2017-18.

6.4 During FY 2018-19, Return on Average Assets stood at -0.59 per cent, whereas Return on Equity stood at -15.57 per cent.

Table 2: Efficiency Ratios

Parameter (%)

FY 2018-19

FY 2017-18

Return on Average Assets

(-) 0.59

(-)1.07

Return on Equity

(-) 15.57

(-) 28.53

6.5 The following are the key productivity ratios of the Bank for FY 2018-19

Table 3: Productivity Ratios

Parameter

FY 2018-19

FY 2017-18

Average Business per Employee (Rs. crore)

18.8

17.8

Average Business per Branch (Rs. crore)

163.2

155.8

Gross Profit per Employee (Rs. lakh)

20.2

20.3

7. Dividend:

Due to higher provisions for NPA, your Bank has reported loss of Rs. 2,948 crore in FY 2018-19. Accordingly, the Board has not declared any dividend.

8. Shareholders’ Return:

8.1 The Bank’s net worth increased to Rs. 18,927 crore as on March 31, 2019 compared to Rs. 18,394 crore as on March 31,2018.

9. Asset Quality:

9.1 Gross Non-Performing Assets (GNPA) of the Bank stood at Rs. 48,729 crore as on March 31, 2019 compared to Rs. 49,370 crore as on March 31, 2018. GNPA as per cent to gross advances decreased to 14.98 per cent as on March 31, 2019 compared to 15.73 per cent as on March 31, 2018.

9.2 Net NPA of the Bank declined to Rs. 20,332 crore as on March 31, 2019 compared to Rs. 24,326 crore as on March 31,2018.

10. Capital Adequacy Ratio:

10.1 The Capital Adequacy Ratio as per BASEL III norms stood at 11.78 per cent as on March 31, 2019. Common Equity Tier I (CET I) capital of the Bank stood at 8.02 per cent in March 2019 which is about 64 basis point higher than the minimum regulatory requirement.

Table 4: Capital Adequacy Ratios -

Basel III (Rs.crore)

Parameters

RBI Minimum Benchmark March 31, 2019

March 31, 2019

March 31, 2018

Total Risk Weighted Assets

278344

286315

Total Capital Funds

NA

32796

32817

CET 1 Capital

22328

21641

Tier 1 Capital

26388

25857

CRAR (%)

10.875

11.78

11.46

CET 1 (%)

7.375

8.02

7.56

Tier 1 (%)

8.875

9.48

9.03

Tier 2 (%)

NA

2.30

2.43

Note: RBI minimum benchmarks are including CCB (Capital Conservation buffer) of 1.875 per cent in CRAR, CET 1 and Tier 1 ratios. There is no minimum for Tier II ratio..

10.2 Capital raised during FY 2018-19: During the FY 2018-19, your Bank raised Rs. 4680.32 crore through the issuance of Equity Capital.

10.2.1 Capital infusion by Government of India: To revitalize capital position of the Bank, Government of India infused Rs. 4112 crore in your Bank during the FY 2018-19.Your Bank has issued and allotted 52.16 crore shares at an issue price of Rs. 78.84 per share including share premium of Rs. 68.84 per equity share on March 28, 2019.

10.2.2 Your Bank has raised Rs. 568.32 crore under the Employee Share Purchase Scheme by issuing and allotting 7.29 crore shares at Rs. 77.98 per share including share premium of Rs. 67.98 per equity share and gave a discount of 25 per cent on calculated price. The effective issue price per share was Rs. 58.49.

Particulars

Details

The details of number of share issued under ESPS

The Bank has issued 7,28,80,275 shares under Employee Share Purchase Scheme.

The price at which such shares are issued

Rs.58.49 per equity share

Employee-wise details of the shares issued to;

(1) Senior Managerial Personnel

Name

Designation

Shares Alloted

Rajkiran Gundyadka Rai

MD & CEO

6725

Raj Kamal Verma

Executive Director

6725

Gopal Singh Gusain

Executive Director

6725

Dinesh Kumar Garg

Executive Director

6725

Gajanan Ramakant Padalkar

General Manager

6725

Dineshkumar Dahyalal Mistry

General Manager

6725

Pankaj Sharma

General Manager

5044

Kishore Pundalik Acharya

General Manager

6725

Hari Chand Mittal

General Manager

6725

Ravinder Kumar Kashyap

General Manager

6725

Purna Chandra Panigrahi

General Manager

6725

Dharam Chand Chauhan

General Manager

6725

Puthenpurayil S Rajan

General Manager

6725

Avinash Kumar Singh

General Manager

6000

R Kandasamy

General Manager

6725

Sanjay Sharma

General Manager

6725

Chandrashekhar S S

General Manager

6044

Venkatesh Muchal

General Manager

6725

Ishraq Ali Khan

General Manager

6725

Atul Kumar

General Manager

6725

Yogendra Singh

General Manager

6725

Satyanarayana Pathuri

General Manager

6725

Brajeshwar Sharma

General Manager

6725

Sangram Keshari Mohapatra

General Manager

6725

Badatala Sreenivasa Rao

General Manager

6725

Jagmohan Singh

General Manager

6725

Shiv Narain Kaushik

General Manager

6725

Lal Singh

General Manager

6725

Kalyan Kumar

General Manager

6725

P R Rajagopal

General Manager

1500

Asheesh Pandey

General Manager

6000

Monika Kalia

General Manager

6725

Pravin Sharma

General Manager

5898

Nitesh Ranjan

General Manager

6725

(ii) any other employee who is issed shares in any one year

amounting to 5% or more shares issued during that year

Nil

(iii) identified employees who were issued shares during any one year equal to or exceeding 1% of the issued capital of the company at the time of issuances

Nil

Consideration recieved against the issuances of shares, if scheme is implemented directly bythe company

Rs. 4,26,27,67,284.75

Loan repaid by the Trust during the year from exercise price recieved

Not Applicable

11. Social Media:

11.1 Your Bank has expanded the reach of the followers across all the social media platforms like the Facebook, Twitter, Instagram and YouTube. Total number offollowers across all the four platforms has increased to 14,05,487.

11.2 Your Bank’s official Facebook page has been rated as “Most Responsive with 100% response rate” by Facebook and Twitter handle has been rated as “ Responsive 24/7”, as the queries are attended on real time basis.

11.3 Your Bank has achieved 2nd position on Facebook and Twitter in respect to followers among the public sector banks (including SBI).

12. Network:

12.1 Network of your Bank is spread across the country with 4,288 branches as on March 31, 2019. The Bank also has four full fledged overseas branches.

12.2 The Bank has Network of 6650 ATMs and 5586 micro ATMs as of March 31, 2019. During FY 2018-19 your Bank has opened 35 e-lobbies and 78 cashless campuses at various locations in the country.

12.3 Your bank has total 5439 Business Correspondents (Bank Mitras) to serve the unbanked areas.

13. Secretarial Audit

Pursuant to the provision of Regulation 24A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2018 and the SEBI circular no. CIR/CFD/CMD1/27/2019 dated February 8, 2019, the Bank had appointed M/s Subhash Kulkarni & Associates, Company Secretaries, Mumbai, to act as the Secretarial Auditor of the Bank for the financial year 2018-19. The secretarial audit of the Bank was conducted for the full year in respect of the matters prescribed in the said circular and as set out in the Secretarial Audit Report for the financial year 2018-19, which is provided as an annexure to this report.

The Secretarial Audit firm has not given any qualification in their report but has given some observations / suggestions to improve the Corporate Governance practices followed by the Bank. A gist of the same is given here below:

- RBI has levied three penalties during the FY 2018-19 for delay in reporting of fraud, delay in exchange of information ofthe borrower and delay in adherence to certain RBI directives.

- As regard to Board proceedings, few instances of delay in placement of agenda items at the meeting was observed and also suggested to adopt procedure ofVideo Conferencing as per Secretarial Standard.

- As regards to composition of Board, it was suggested that the number of Independent Directors on Board should be at least five (1/3 rd of total strength of Directors i.e. 15), against existing number of three.

- Suggested to obtain timely disclosure from Directors and Designated employees of the Bank in prescribed form pursuant to Clause 7(2) of SEBI (Prohibition of Insider Trading) regulation 2015 and the Code of Conduct for Prohibition of Trading by Insiders 2018-19.

- Suggested to incorporate specific time limit for the resolution of compliant in the Whistle Blower Policy.

- Suggested to have detailed compliance check list to monitor periodical / event based return and to have in-house software for the same. Further suggested that the Compliance Department to sample check the compliances done by the other departments and to submit a consolidated confirmation on compliance to MD/ ED.

At the outset the Management is thankful for the comments, observations and suggestions of the Secretarial Audit team. Being a Nationalised Bank incorporated under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the provisions of Corporate Governance mentioned under SEBI (LODR) regulations shall apply to the extent that it does not violate statutes and guidelines or directives applicable to the Bank. Bank will endeavor to adopt and comply with all the suggestions of the Secretarial Audit team to an extent possible and within the given frame work.

14. Awards & Accolades

During FY 2018-19, your Bank received various awards for its new initiatives taken in Digitization, Financial Inclusion, HR management, Customer Service etc.

Awarded By

Awards

Awarded For

Govt of India

UdyamiMitra for MSMEs

Enhanced Access and Service Excellence (EASE) Award under PSB Reforms Agenda

Golden Peacock

National Training Award

Corporate Leadership & Institutional Excellence- National Training Award

Asia Pacific HRM Congress

Asia Pacific HRM Congress Award

Organization with Innovative HR practices

World HRD Congress

Global Training & Development Leadership Award

Best Leadership Development program in Public sector for Top Management

Excellence in Training & Development Award

Best use of Technology for Training

Indian Societyfor Training & Development

Special Commendation Award

Innovative Training Practices in Public Sector Enterprises

IBA

Best Financial Inclusion Initiatives Award

Best Financial Inclusion Initiatives amongst Large Banks

Best Technology Bank Award

Best Technology Bank amongst Large Banks

Best IT Risk Management and Cyber Security Award

Best initiatives taken in IT Risk Management and Cyber Security amongst Large Bank

Banking Financial Services and Insurance

Banking Financial Services and Insurance Award

Leading Financial Inclusion Initiatives

PFRDA

Best Performing Bank

Best Performing Bank - APY Formation

day

Best Performing Bank- Quest for Crown

ASSOCHAM

ASSOCHAM SMEs Excellence Award

“Best SME offering” - Innovative Financial Solution for MSMEs

Central Vigilance Commission, GOI

Vigilance Excellence Award

Outstanding performance in conduct of Vigilance Awareness activities

SKOCH Gold Award

Banking & Finance Gold for Technology - Strategic Transformation (Union Samriddhi Kendra Model)

Cyber Security Gold for Governance Risk Management and Compliance tool

Financial Inclusion Initiatives

SKOCH

Technology: Strategic Transformation & Financial Inclusion initiatives underTop Banking & Finance Project in India

SKOCH Order of Merit

SIEM Tool, Governance Risk Management

Compliance tool & Anti DDOS Solution under Top Cyber Security projects in India

15. Director

The following changes took place in the Board of directors of your Bank during the financial year 2018-19.

15.1 Shri Vinod Kathuria, Executive Director completed his term in the office on July 31, 2018.

15.2 Shri Gopal Singh Gusain. has been appointed as Executive Director of the Bank w.e.f. September 20, 2018 vide Government of India notification no. F. No. 4/5/2018-BO.I dated September 20, 2018.

15.3 Shri Atul Kumar Goel, Executive Director was relieved from the office on November 01, 2018 as he was elevated as MD and CEO of UCO Bank.

15.4 DrRH Dholakia, Shareholder Director completed his term in the office on June 26, 2018.

15.5 Dr. Uttam Kumar Sarkar, Shareholder Director completed his term in the office on June 26, 2018.

15.6 Dr Uttam Kumar Sarkar, was re-elected as Shareholder Director u/s 9(3)(i) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for a period of 3 years from 28.06.2018to 27.06.2021.

15.7 Shri Gopal Krishan Lath, Shareholder Director completed his term in the office on June 26, 2018.

15.8 Shri K Kadiresan, was elected as Shareholder Director u/s 9(3)(i) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for a period of 3 years from 28.06.2018to 27.06.2021.

15.9 Shri Jayadev M, was elected as Shareholder Director u/s 9(3)(i) ofthe Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, for a period of 3 years from 28.06.2018 to 27.06.2021.

15.10 Shri Dinesh Kumar Garg. has been appointed as Executive Director of the Bank w.e.f. November 02, 2018 vide Government of India notification no. F. No. 4/5/2018-BO.I dated September 20, 2018.

15.11 Shri Raj Kamal Verma, Executive Director completed his term in the office on February 28, 2019.

15.12 Shri Manas Ranjan Biswal has been appointed as Executive Director of the Bank w.e.f. March 01, 2019 vide Government of India notification no. F. No. 4/5/2018-BO.I dated September 20, 2018.

16. Directors’ Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2019.

16.1 The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

16.3 Reasonable and prudent judgement and estimates were made so as to give a true and fair view ofthe state of affairs of the Bank at the end of the financial year and of the profit of Bank for the year ended on March 31, 2019.

16.4 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.

16.5 The accounts have been prepared on going concern basis.

17. Corporate Governance

The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2018-19 has no audit qualifications.

18. Corporate Social Responsibility (CSR):

18.1 Your Bank is committed to its Corporate Social Responsibility by contributing to the society. In this endeavor, Bank has set up the ‘Union Bank Social Foundation Trust (UBSFT)’ in the year 2006 for spearheading CSR initiatives. During FY 2018-19, your Bank has contributed Rs. 45.43 lacs as donation to UBSFT for CSR activities.

18.2 UBSFT has donated in 10 projects during the year 2018-19 under various sectors like Education, Health care, Community Development, Sanitation, Disability sector etc.

19. Acknowledgement:

The Board places on record its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission and other institutions for the valuable guidance and support received from them. The Board also acknowledges unstinted support of the financial institutions, correspondent Banks, valuable shareholders, esteemed customers and all other stakeholders. The Board also expresses its deep appreciation for the dedicated service and contribution made by members of staff in the overall performance of the Bank.

For and on behalf of the Board of Directors,

(Rajkiran Rai G.)

Managing Director & CEO

Place: Mumbai

Dated: 14th May, 2019


Mar 31, 2018

DIRECTORS’ REPORT

Dear Shareholders,

The Board of Directors is pleased to present the 99th Annual Report of the Bank for the Financial Year 201718 together with the ‘Audited Balance Sheet’, ‘Profit & Loss Account’, ‘Cash-Flow Statement’ and the report on ‘Management Discussion & Analysis’. The ‘Corporate Governance Report’ and ‘Business Responsibility Report’ also form part of the Annual Report 2017-18.

1. Highlights:

1.1 Emerging from the demonetization, banking industry witnessed a series of shifts and shocks, starting with the Reserve Bank’s directive on resolution of big ticket non-performing assets (NPAs) through Insolvency & Bankruptcy Code (IBC), which warranted frontloaded stress recognition and building of provisions, and followed by the Government’s recapitalization & reform agenda for Public Sector Banks (PSBs) and then revised norms on resolution of stressed assets, which promises to usher a superior credit culture in country. These developments have augured a virtuous cycle of reforms and reinvigoration of PSBs, with all stakeholders making sincere efforts to restore trust, transparency & accountable decision-making.

1.2 Your Bank was able to anticipate and prepare for most of these shifts by building-up provisions and raising growth capital, thereby strengthening the balance-sheet.

1.3 Your Bank continued with transformational changes during the year for enhanced customer service, by increasing centralized processing of loans for improved quality of assets, by pursuing specialization in monitoring & collections and by scaling-up digitalization for all-round business efficiencies. Several capability building initiatives were undertaken to re-skill workforce for new realities of business. All these changes helped your Bank build competitive strengths vis-a-vis peers as well as new age challengers.

1.4 Established in 1919 your Bank has 4,297 domestic branches,4 overseas branches and 7,642 ATMs across 29 States and 5 Union territories as on March 31,2018.

1.5 Your Bank achieved another milestone by crossing a business mix of ''7 trillion during the year while building strengths in focus areas of business. Your Bank has a client base of over 67 million customers and 37,587 employees.

1.6 Your Bank has successfully raised equity capital of Rs,6,524 crore in FY 2017-18.

2. Business:

2.1 Global business of the Bank increased to Rs,7,22,362 crore as on March 31, 2018 from Rs,6,80,076 crore as on March 31, 2017, reflecting an annual growth of 6.22 per cent.

2.2 Total deposit increased to Rs,4,08,502 crore as on March 31, 2018 from Rs,3,78,392 crore as on March 31, 2017, noting a annual growth of 8.0 per cent. CASA (current account and saving account) share in total deposit stood at 34.1 per cent as on March 31, 2018.

2.3 Gross advances stood at Rs,3,13,860 crore as on March 31, 2018 compared to Rs,3,01,684 crore as on March 31, 2017 recording an annual growth of 4.04 per cent. The RAM (Retail, Agriculture and MSME) sector stood at Rs,1,58,642 crore as on March 31, 2018 compared to Rs,1,46,417 crore as on March 31, 2017. RAM Sector grew as a whole at an annual rate of 8.3 per cent.

2.4 Overseas business of the Bank stood at Rs,30,829 crore as on March 31, 2018 compared to Rs,36,062 as on March 31,2017. Your Bank has four overseas branches at Hong Kong, DIFC (Dubai), Antwerp (Belgium) and Sydney (Australia). In addition, your Bank has representative offices in Shanghai, Beijing and Abu Dhabi. Bank also operates in the UKthrough its wholly owned subsidiary, Union Bank of India (UK) Ltd.

3. Income and Expenditure:

Table 1: Income and Expenditure Statement (Rs,crore)

Sl.

No.

Parameter

FY

2017-18

FY

2016-17

Annual Growth

Absolute

(%)

1

Interest Earned

32748

32660

88

0.3

2

Other Income

4990

4965

25

0.5

3

Total Income (1 2)

37738

37625

113

0.3

4

Interest Expended

23443

23757

-314

-1.3

5

Net Interest Income

(1-4)

9305

8903

402

4.5

6

Operating

Expenses

6755

6438

317

4.9

w/w Establishment Expenses

3255

3434

-179

-5.2

7

Total Expenditure

30198

30195

3.0

0.0

8

Operating Profit (3-7)

7540

7430

110

1.5

9

Provisions

12787

6874

5913

86.0

10

Net Profit

-5247

555

-5803

-

11

Earnings per share

-69.45

8.08

-77.53

-

4. Profitability and Efficiency:

4.1 Your Bank reported Operating Profit ofRs,7,540 crore in FY 2017-18 as compared to Rs,7,430 crore in FY 2016

17. Operating Profit of the Bank increased by 1.48 per cent in FY 2017-18.

4.2 Net loss of the bank stood at Rs,5,247 crore in FY 201718 compared to profit of Rs,555 crore in FY 2016-17, on account of increased NPA provisions.

4.3 Cost-to-income ratio of your Bank was 47.26 per cent in FY 2017-18 compared to 46.42 per cent in FY 2016-17.

7. Asset Quality:

7.1 Gross Non-Performing Assets (GNPA) of the Bank stood at Rs,49,370 crore as on March 31, 2018 compared to Rs,33,712 crore as on March 31, 2017.GNPA as per cent to total advances increased to 15.73 per cent in March 2018 compared to 11.17 per cent in March 2017.

4.4 During FY 2017-18, Return on Average Assets stood at (-) 1.07 per cent, whereas Return on Equity stood at (-) 28.53 per cent.

Table 2: Efficiency Ratios

Parameter (%)

FY 2017-18

FY 2016-17

Return on Average Assets

(-)1.07

0.12

Return on Equity

(-) 28.53

2.91

4.5 The following are the key productivity ratios of the Bank for FY 2017-18

Table 3: Productivity Ratios

Parameter

FY 2017-18

FY 2016-17

Average Business per Employee (Rs,crore)

17.8

16.4

Average Business per Branch (Rs,crore)

155.8

141.5

Gross Profit per Employee (Rs,lakh)

20.06

20.2

5. Dividend:

Due to higher provisions for NPA, your Bank has reported loss of Rs,5,247 crore in FY 2017-18. Accordingly, the Board has not declared any dividend for the year.

6. Shareholders’ Return:

The Bank’s net worth stood at Rs,18,395 crore as on March 31, 2018 compared to Rs,19,094 crore as on March 31,2017.

7.2 Net NPA of the Bank remained at Rs,24,326 crore as on March 31, 2018 compared to Rs,18,833 crore as on March 31,2017.

8. Capital Adequacy Ratio:

The Capital Adequacy Ratio as per BASEL III norms stood at 11.50 per cent as on March 31, 2018. Common Equity Tier I (CET I) capital of the Bank stood at 7.60 per cent in March 2018 which is about 22 basis point higher than the regulatory minimum.

Table 4: Capital Adequacy Ratios -

Basel III (Rs,crore)

Parameters

RBI Minimum Benchmark March 31, 2018

March 31, 2018

March 31, 2017

Total Risk Weighted Assets

286344

291204

Total Capital Funds

NA

32939

34334

CET1 Capital

21764

22463

Tier 1 Capital

25980

26280

CRAR (%)

10.875

11.50

11.79

CET 1(%)

7.375

7.60

7.71

Tier 1(%)

8.875

9.07

9.02

Tier 2(%)

NA

2.43

2.77

Note: RBI minimum benchmarks are including CCB (Capital Conservation buffer) of 1.875 per cent in CRAR, CET 1 and Tier 1 ratios. There is no minimum for Tier II ratio.

8.1 Capital raised during FY 2017-18: During the FY 2017-18, your Bank raised Rs,7,024 crore through the issuance of BASEL III compliant Additional Tier I Bonds ( Rs,500 crore), and by raising equity capital through QIP of ''2,000 crore and infusion of ''4,524 crore by Government of India.

8.2 Capital infusion by Government of India: To revitalize capital position of the Bank, Government of India infused Rs,4,524 crore in your Bank during the FY 2017-18.Your Bank has allotted 31.28 crore shares at an issue price Rs,144.62 per share (including premium of Rs,134.62 per share).

8.3 Capital raised from the market: Your Bank has raised Rs,2,000 crore via the Qualified Institutional Placement (QIP) route by allotting 12.93 crore shares at Rs,154.65 per share (including premium of Rs,144.65 per share). Your Bank received significant response of investors and QIP was oversubscribed.

9. Network:

9.1 Your Bank is spread across the country with 4,297 branches as on March 31, 2018. The Bank has four full fledged branches and three representative offices in foreign countries.

9.2 Number of ATMs increased to 7,642 as on March 31, 2018 compared to 7,518 as on March 31, 2017. Your Bank has opened 50 new e-lobbies and 61 new cashless campuses at various locations in the country.

9.3 Your bank has total 5037 Business Correspondents (Bank Mitras) to serve the unbanked areas.

10. Social media presence:

10.1 In FY2016-17your Bank initiated its presence on Twitter and Facebook in order to connect with its customers and other stakeholders. After the overwhelming response to our official pages in Facebook and Twitter, Bank had made official presence in other popular social media platforms like Instagram, LinkedIn and YouTube.

10.2 Your Bank has explained its products/services on these social media platforms which have helped in reaching out to the masses and enhancing brand visibility. Bank has also launched Chatbot, Union Virtual Assistant (UVA) in facebook messenger.

12. Director:

11. Awards & Accolades:

During FY 2017-18, your Bank received various awards for its new initiatives taken in Digitalization, Financial Inclusion, HR management etc.

Table 5: Awards & Accolades received by the Bank during FY 2017-18

Area

Awards

Awarded by

Awarded For

Overall Performance

Best Emerging Bank

IDRBT

Best Emerging Bank Award for the Year 2016-17.

Human Resource

Golden Peacock

Institute of Directors (IOD)

Best HR practices and excelling in HR management for the year 2017 (4th time in a row).

Financial Inclusion

Best Financial Inclusion Initiatives (Winner)

Indian Banks Association (IBA)

Excellent initiatives taken in financial inclusion programs.

Banking Technology

Best Payment Initiative

Indian Banks Association (IBA)

Excellent initiatives taken in payment processing.

Customer Service

Best Customer Service Innovation

Infosys Ltd

Customer Services

The following changes took place in the Board of directors of your Bank during the financial year

2017-18.

12.1 Shri Arun Tiwari, Chairman & Managing Director completed his term of office on June 30, 2017.

12.2 Shri Rajkiran Rai G. has been appointed as Managing Director & CEO of the Bank w.e.f. July 1, 2017 vide Government of India notification no. F. No. 4/4/

(2)2017-B0.l dated May5, 2017.

12.3 Shri Kewal Handa has been nominated on the Board as Non-Executive Chairman and Part-Time NonOfficial Director w.e.f. July 6, 2017 vide Government of India notification no. F. No. 4/7/2016-BO.I dated July

6, 2017.

12.4 Dr. Madhura Swaminathan has been nominated on the Board as Part-Time Non-Official Director w.e.f. December 27, 2017 vide Government of India notification no. F. No. 6/1/2015-BO.I dated December 27, 2017.

12.5 Shri Rajiv Kumar Singh has been nominated on the Board as Chartered Accountant Director w.e.f. February 6,2018 vide Government of India notification no. 6/24/2017-BO.I dated February 6, 2018.

13. Directors’ Responsibility Statement:

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2018.

13.1 The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

13.3 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 Bank for the year ended on March 31,2018.

13.4 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.

13.5 The accounts have been prepared on going concern basis.

14. Corporate Governance:

The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2017-18 has no audit qualifications.

15. Corporate Social Responsibility (CSR):

15.1 Your Bank is committed to its Corporate Social Responsibility by contributing to the society. In this endeavor, Bank has set up the ‘Union Bank Social Foundation Trust (UBSFT)’ in the year 2006 for spearheading your Bank’s CSR initiatives. Your Bank has contributed Rs,467.06 lakhs as donation to UBSFT for CSR activities.

15.2 UBSFT undertook the responsibility of healthcare facilities provision through Bank’s mobile vans to flood affected, hilly and inaccessible areas of Uttarakhand thereby providing relief to 23 villages.

16. Acknowledgement:

The Board places on record its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission and other institutions for the valuable guidance and support received from them. The Board also acknowledges unstinted support of the financial institutions, correspondent Banks, valuable shareholders, esteemed customers and all other stakeholders. The Board also expresses its deep appreciation for the dedicated service and contribution made by members of staff in the overall performance of the Bank.

For and on behalf of the Board of Directors,

(Rajkiran Rai G.)

Managing Director & CEO

Place: Mumbai

Dated: 10th May, 2018


Mar 31, 2017

DIRECTORS’ REPORT

Dear Shareholders,

The Board of Directors is pleased to present the 98th Annual Report of the Bank for the Financial Year 2016-17 together with the ‘Audited Balance Sheet’, ‘Profit & Loss Account’, ‘Cash-Flow Statement’ and the report on ‘Management Discussion & Analysis’. The ‘Corporate Governance Report’ and ‘Business Responsibility Report’ also form part of the Annual Report 2016-17.

1 Highlights

1.1 Your Bank has emerged as a front runner in the on-going Digital India initiatives with two-third of transactions routing through digital channels. During the year, the Bank primarily focused on providing technology driven services to optimize its customer service and enhance product quality. For this, several internal processes were digitalized during the financial year 2016-17. The Bank consistently focused on delivering financial services to various sections of the society with greater ease and efficiency. The challenging banking environment intensified with the onset of demonetization, however your Bank exhibited agility during the entire period and stood up to expectations of the stakeholders.

1.2 The regulatory landscape during the year evolved to impact banking in multiple ways. These included new framework on benchmark lending rate, new monetary policy framework, insolvency and bankruptcy code, phased reduction in statutory liquidity ratios etc. There was also positive impetus from various policy announcements by the Government. Your Bank showed resilience amidst challenging global & domestic macroeconomic environment by continuing to invest in organizational capacity building in order to remain ready to seize future opportunities in emerging India.

2 Business

2.1 Total global business of the Bank increased to Rs, 6,80,076 crore as on March 31, 2017 from Rs, 6,20,445 crore as on March 31, 2016, reflecting an annual growth of 9.6 per cent.

Table 1: Income and Expenditure Statement (Rs, crore)

Sl.

No.

Parameter

FY

2016-17

FY

2015-16

Annual Growth

Absolute

(%)

1

Interest Earned

32660

32199

461

1.4

2

Other Income

4965

3632

1333

36.7

3

Total Income(1 2)

37625

35831

1794

5.0

4

Interest Expended

23757

23886

-129

-0.5

2.2 Total deposits surged to Rs, 3,78,392 crore as on March 31, 2017 from Rs,3,42,720 crore as on March 31, 2016 noting a growth of 10.4 per cent on Y-o-Y basis. CASA (current account & savings account) share in total deposit stood at 34.4 per cent as on March 31, 2017 showing improvement of 210 bps over 32.3 per cent a year ago.

2.3 Gross advances stood at Rs, 3,01,684 crore as on March 31, 2017 compared to Rs, 2,77,725 crore as on March 31, 2016 recording an annual growth of 8.6 per cent. The Bank continued to focus on capital light RAM (Retail, Agriculture & MSME) sectors which contributed more than two-third of incremental credit growth during the year. RAM sector as a whole grew at an annual rate of 15.2 per cent leading to domestic advances growth rate of 8.2 per cent in comparison to 4.3 per cent a year ago.

2.4 Overseas business of the Bank stood at Rs, 36,062 crore as on March 31, 2017 compared to Rs, 32,706 crore as on March 31, 2016. Your Bank has four overseas branches at Hong Kong, DIFC (Dubai), Antwerp (Belgium) & Sydney (Australia).

3 Income and Expenditure

Table 1: Income and Expenditure Statement (Rs, crore)

Sl.

No.

Parameter

FY

2016-17

FY

2015-16

Annual Growth

Absolute

(%)

5

Net Interest Income(1-4)

8903

8313

590

7.1

6

Operating

Expenses

6438

6224

214

3.4

w/w Establishment Expenses

3434

3620

-186

-5.1

7

Total

Expenditure(4 6)

30195

30108

86

0.3

8

Operating Profit (3-7)

7430

5722

1708

29.8

9

Provisions

6874

4291

2583

60.2

10

Net Profit

555.21

1352

-796

-58.9

11

Earnings per Share (Rs,)

8.1

20.4

-12.3

-60.4

3.1 In the challenging environment of excess fund flows and lack of credit demand, Bank’s profit margins remained constrained. Net interest income of the Bank grew to Rs, 8,903 crore in FY 2016-17 from Rs, 8,313 crore in FY 2015-16 with an increase of 7.1 per cent on Y-o-Y basis. Other Income grew by 36.7 per cent to Rs, 4,965 crore in FY 2016-17.

4 Profitability and Efficiency

4.1 Despite the headwinds of demonetization, the Bank reported operating profit of Rs, 7,430 crore in FY 2016 17 with an increase of 29.8 per cent over Rs, 5,722 crore in FY 2015-16.

4.2 Net profit of the Bank stood at Rs, 555.21 crore in FY 2016-17 compared to Rs, 1,352 crore in FY 201516. Owing to various restructuring norms in place, provisioning during FY 2016-17 was at Rs, 6,874 crore compared to Rs, 4,291 crore during FY 2015-16 showing increase of 49.3 per cent.

4.3 Cost-to-Income ratio of your Bank improved to 46.4 per cent in FY 2016-17 compared to 52.1 per cent in FY 2015-16 on account of increase in other income of the Bank and containing operating expenditure.

4.4 During FY 2016-17, Return on Average Assets stood at 0.13 per cent, whereas Return on Equity stood at 2.91 per cent.

Table 2: Efficiency Ratios

Parameter (%)

FY 2016-17

FY 2015-16

Return on Average Assets

0.13

0.35

Return on Equity

2.91

6.84

4.5 The following are the key productivity ratios of the Bank for FY 2016-17:

Table 3: Productivity Ratios

Parameter

FY 2016-17

FY 2015-16

Average Business per Employee (Rs, crore)

16.4

15.5

Average Business per Branch (Rs, crore)

141.5

131.0

Gross Profit per

20.2

16.1

Employee (Rs, lakh)

Net Profit per

1.5

3.8

Employee (Rs, lakh)

Net Profit per Branch (Rs, lakh)

13.0

32.2

5 Dividend

Considering need for augmenting capital adequacy ratio in line with transition arrangement under Basel-

III, the Board of Directors has decided not to declare dividends during FY 2016-17 and instead plough back entire profit to reserves.

6 Shareholders’ Return

6.1 The Bank’s net worth stood at Rs, 19,094 crore as on March 31, 2017 compared to Rs, 19,764 crore as on March 31, 2016. Net worth decreased primarily due to increase in deferred tax assets (DTA). Book value per share stood at Rs, 277.7 for March 2017 and the Earnings per share stood at Rs, 8.08.

7 Asset Quality

7.1 Gross Non-Performing Assets (GNPA) of the Bank stood at Rs, 33,712 crore as on March 31, 2017 compared to Rs, 24,171 crore as on March 31, 2016. GNPA as per cent to total advances increased to

11.17 per cent in March 2017 compared to 8.70 per cent as on March 31, 2016.

7.2 Net NPA of the Bank remained at Rs, 18,833 crore as on March 31, 2017 compared to Rs, 14,026 crore as on March 31, 2016.

8 Capital Adequacy Ratio

8.1. The Capital Adequacy Ratio as per Basel III norms stood at 11.79 per cent as on March 31, 2017. Common Equity Tier I (CET I) capital of the Bank stood at 7.71 per cent in March 2017 which is about 100 basis points higher than the regulatory minimum.

Table 4: Capital Adequacy Ratios -

Basel III (Rs, crore)

Parameters

RBI Minimum Benchmark March 31, 2017

March 31, 2017

March 31, 2016

Total Risk Weighted Assets

291204

273791

Total Capital Funds

NA

34334

28932

CET1 Capital

22463

21768

Tier 1 Capital

26280

22296

CRAR (%)

10.25

11.79

10.56

CET 1(%)

6.75

7.71

7.95

Tier 1(%)

8.25

9.02

8.14

Tier 2(%)

NA

2.77

2.42

Note: RBI minimum benchmarks are including CCB (capital conservation buffer) of 1.25 per cent in CRAR, CET I and Tier I ratios. There is no minimum for Tier II ratio.

8.2 Capital raised during FY 2016-17: During the FY 2016-17, your Bank raised Rs, 5250 crore though issuance of Basel III compliant Additional Tier I & Tier II bonds.

Table 5: Bonds raised during FY 2016-17

Bond Type

Amount (Rs, crore)

Additional Tier I (AT 1)

3500

Tier II

1750

Total

5250

8.3 Capital infusion by Government of India: Under Indradhanush plan to revitalize capital position of the Bank, government of India infused Rs, 541 crore in your Bank during the fiscal. These funds are lying with the Bank in the form of share application money.

9 Social Media

Your Bank is gaining momentum in its social media presence. In FY 2016-17 your Bank launched twitter, face book and Instagram pages and also YouTube channel in order to connect with its customers and other stakeholders. The Bank has derived many opportunities to advertise its new products on its social media platforms. By appropriately channelizing its social media presence, the Bank also received appreciable feedback on its twitter handle. The queries are attended on real-time basis. These type of technological outreach makes your Bank a more customer centric one.

I 0 Network

10.1 Branch network of your Bank is widely spread across the country with 4,278 branches as on March 31, 2017 The Bank has four full fledged branches and three representative offices in foreign countries.

10.2 Number of ATMs increased to 7,518 as on March 31, 2017 compared to 6,883 as on March 31, 2016. During the year FY 2016-17, Bank opened 50 new e-lobbies, and 68 new cashless campuses at various locations in the country.

10.3 As an attempt to maximize its outreach in the country, the Bank has 5407 Business Correspondents to serve unbanked areas. During FY 2016-17, total transactions of Rs, 4892 crore were initiated through business correspondent model.

II Awards & Accolades

11.1 During FY 2016-17, your Bank received various awards for continuous efforts to enhance its digital deepening, HR management and vigilance.

Table 6: Awards & Accolades received by The Bank during FY 2016-17

Area

Awards

Awarded by

Awarded For

Human Resources

Golden Peacock award

10th International Conference Of Corporate Social Responsibility

Excelling in Human Resource Management

Innovative HR practice

Times ascent

Excellent HR practices under top 50 PSU category

Corporate Social Responsibility

Bank with Best CSR practices

World CSR Congress

Contribution for the social upliftment and nation building

CSR Leadership Award

National Association for Blind.

promoting Employment for the Physically Challenged

Advancing Financial inclusion

CNBC TV 18

Channelizing CSR budget into financial aids

Financial Inclusion

Best Financial Inclusion Initiatives

Indian Banks’ Association

Stepping one more stone in the field of technological excellence

Skoch award for Financial Inclusion

Skoch

Merit in Financial Inclusion

MSME

Top performer in Financial Institution

FECO

MSME

Vigilance

Best Corporate Vigilance Excellence Award FY 2016-17

Institute of Public Enterprise

Initiating anti-corruption drive

Technology & Digital

National Payments Excellence Awards 2016

National Payment Corporation of India

Rupay card Issuance & e-commerce transactions

12 Director

The following changes took place in the Board of Directors of your Bank during the financial year 2016-17.

12.1 Shri S.K. Misra, Part time Non-Official Director completed his term of office on April 10, 2016.

12.2 Dr. K. Ramesha was appointed as Part-time Non Official Director w.e.f. April 25,2016 vide Govt. of India Notification No.F.No.6/29/2015-BO-I dated April 25,2016.

12.3 Sushri Anusuiya Sharma, Part time Non official Director completed her term of office on May 5, 2016.

12.4 Shri Rakesh Sethi, Executive Director attained superannuation on June 30,2016.

12.5 Dr. Madnesh Kumar Mishra was appointed as Government Nominee Director, w.e.f. July 22,2016 vide Govt. of India Notification No.F.No.6/3/2012-BO-I dated July 22,2016 in place of Mihir Kumar.

12.6 Shri Raj Kamal Verma was appointed as Executive Director of the Bank, w.e.f. August 9,2016 vide Government of India notification no. F.No.4/5(2)2015-BO.I (pt.)/CNo.76820 dated August 9, 2016.

12.7 Shri Atul Kumar Goel was appointed as Executive Director of the Bank, w.e.f. September 15, 2016 vide Government of India notification no. F.No.4/5(4)2016-BO.I dated September 15, 2016.

12.8 Shri Jag Mohan Sharma, Chartered Accountant Director resigned from the Board w.e.f. October 5, 2016.

12.9 While welcoming all the new Directors, the Board placed on record the valuable contribution rendered by Shri Rakesh Sethi, Shri Mihir Kumar, Shri Jag Mohan Sharma, Shri S. K. Misra and Sushri Anusuiya Sharma.

13 Directors’ Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2017:

13.1 The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

13.3 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 Bank for the year ended on March 31, 2017.

13.4 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,

13.5 The accounts have been prepared on going concern basis.

14 Corporate Governance

The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2016-17 has no audit qualifications.

15 Corporate Social Responsibility (CSR)

15.1 Your Bank has been making seamless efforts to maximize its social outreach. To further its objective of Corporate Social Responsibility, the Bank established Union Bank Social Foundation Trust (UBSFT) in the year 2006 with major objective as social upliftment by way of girl child education, health care services, skill development, sanitation and aid during the natural calamities. Rural development mission under UBSFT also undertook a unique village adoption scheme “Union Adarsh Gram”. This scheme has adopted 1440 villages and provided assistance for school infrastructure development and sanitation facilities.

15.2 UBSFT undertook the responsibility of healthcare facilities provision through Bank’s mobile vans to flood affected, hilly and inaccessible areas of Uttarakhand thereby providing relief to 23 villages.

15.3 Your Bank approved Rs, 5 crore for construction of toilets in 273 schools all over India in previous years in line with the vision of “Swach Bharat”. Your Bank has donated more than 700 tricycles and artificial limbs to physically handicapped persons.

16. Acknowledgement

The Board places on record its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority of India, Central Vigilance Commission and other institutions for the valuable guidance and support received from them. The Board also acknowledges the unstinted support of the financial institutions, correspondent Banks, valuable shareholders, esteemed customers and all other stakeholders. The Board also expresses its deep appreciation for the dedicated service and contribution made by members of staff in the overall performance of the Bank.

For and on behalf of the Board of Directors,

(Arun Tiwari)

Chairman & Managing Director

Place: Mumbai

Dated: 8th May, 2017

1. Global Economy


Mar 31, 2015

Dear Shareholders,

The Board of Directors is pleased to present the 96th Annual Report of the Bank for the Financial Year 2014-15 together with the ''Audited Balance Sheet'', ''Profit & Loss Account'', ''Cash- Flow Statement'' and the report on ''Management Discussion & Analysis''. The ''Corporate Governance Report'' and ''Business Responsibility Report'' also form part of the Annual Report 2014-15.

1. Financial Highlights

1.1. Strategic approach towards balanced growth, profitability and proactive risk management has helped your Bank in achieving the targeted growth, thereby strengthening the Bank''s business base for a more profitable growth in future.

Table 1: Income Statement

(Rs.crore)

Particulars FY FY Annual Growth

2014-15 2013-14

Absolute %

Interest Income 32084 29349 2735 9.3

Interest Expended 23640 21470 2170 10.1

Net Interest Income 8444 7879 565 7.2

Other Income 3523 2822 701 24.8

W/W Core fee based income 1872 1635 237 14.5

Total Income 35607 32171 3436 10.7

Operating Expenses 6144 5483 661 12.1

w/w Establishment Expenses 3786 3308 478 14.4

Operating Profit 5823 5218 605 11.6

Provisions 4042 3522 520 14.8

Net Profit 1782 1696 86 5.1

Earnings Per Share (Rs.) 28.1 28.0 0.1 0.2

1.2. As per the capital conservation and augmentative strategy, the Bank strives to generate higher profits from its operations. The total income of the Bank increased by 10.7 per cent to Rs. 35,607 crore during the financial year. The interest income grew by 9.3 per cent to Rs. 32,084 crore and the interest income on investments grew by 5.5 per cent.

1.3. The interest expenses of the Bank stood at Rs. 23,640 crore for the year ended March 31,2015. Operating expenses of the Bank increased at a decelerated rate of 12.1 per cent as against a growth rate of 21.5 per cent registered last year.

2. Non Interest Income

For enhancing its coverage of operating expenses, your Bank has undertaken several initiatives to boost income through alternative revenue streams which resulted in an increase of 24.8 per cent in Non Interest income of the Bank to Rs. 3,523 crore for the year 2014-15 compared to Rs. 2,822 crore for 2013-14. Fee based income has been one of the focus areas of the Bank for FY 2014-15; and it increased by 14.5 per cent to Rs. 1,872 crore mainly due to increase in commission & exchange, forex income and processing charges. The income from treasury operations also contributed with a growth rate of 44.7 per cent and stood at Rs. 1,334 crore, within which the profit of Rs. 709 crore was on sale of investment for FY 2014-15. Due to your Bank''s continuous efforts to improve the asset quality, the Bank has more than doubled in terms of cash recovery. The same thrust was also seen in recovery in written-off accounts which increased by 19.7 per cent during the year.

3. Provisions and Contingencies

3.1. The allocations for provisions and contingencies for the year 2014-15 amounted to Rs. 4,042 crore compared to Rs. 3,522 crore in FY 2013-14.

3.2. The provisions for non-performing assets stood at Rs. 2,537 crore during 2014-15 compared to Rs. 2106 crore in the previous year. The provision for standard assets was Rs. 246 crore compared to Rs. 310 crore in the previous year.

4. Profitability & Productivity

4.1. The operating profit of your Bank increased by 11.6 per cent during the year and reached Rs. 5,823 crore for FY 2014-15 compared to Rs. 5,218 crore for FY 2013-14.

4.2. The BankRs.s provisions to operating profit ratio at 43.6 per cent for FY 2014-15 as against 40.4 per cent for FY 2013-14.

Chart 2: Movement of Operating Profit and Provisions

4.3. Even after a proportionately higher increase in provisions, the net profit of the Bank increased by 5.0 per cent and reached Rs. 1782 crore for FY 2014-15 compared to Rs. 1696 crore for FY 2013-14.

4.4. Reviving the asset quality has been another focus area of the Bank as one of the causes of declining profits is the deteriorating asset quality. The higher amount of provisions against bad assets has adversely affected the net profits in the past. Your Bank laid special attention on restricting slippages and better recovery, as a result of which the total recovery improved to Rs. 3,060 crore within which the cash recoveries stood at Rs. 1,537 crore as on March 31, 2015 as against Rs. 765 crore as on March 31, 2014, registering a growth of 100.9 per cent during the year. The slippages were also restricted to Rs. 6,527 crore as of March 31,2015; thus, the gross NPA stood at 4.96 per cent of gross advances.

4.5. The following are the key productivity ratios of your Bank as on March 31,2015.

Table 2: Productivity Ratios

FY FY Annual Parameters Growth % 2014-15 2013-14

Average Business Per Employee (Rs. crore) 14.5 13.8 5.1

Average Business Per Branch (Rs. crore) 125.8 120.2 4.7

Net Profit Per Employee (Rs. lakh) 5.0 5.0 0.0

Net Profit per Branch (Rs. lakh) 43.7 43.8 -0.23

5. Spread Analysis

5.1. Your Bank took a pro-active stance in the dynamic macro-economic setting to withstand the pressure on the cost of funds. By rebalancing the portfolio and focusing on risk return trade off, the yield on advances were maintained at 10.4 per cent for FY 2014-15. Though there was no momentum on increase in yield on advances, the advances risk weighted assets to gross advances ratio came down to 75.7 per cent as on March 31, 2015 as against 77.4 per cent as on March 31,2014. Also the Bank was able to restrict the growth in risk weighted assets at a slower pace of 10.5 per cent for March 2015 compared to growth of 12.1 per cent registered by advances for March 2014.

5.2. The cost of deposits improved to 7.3 per cent for March 2015 as against 7.4 per cent for March 2014 and was mainly driven by the reduction in high cost deposits, a 9.9 per cent annual growth in saving deposits and an overall softening of interest rates in the domestic economy.

Table 3: Spreads

Parameters FY FY Growth

2014-15 2013-14 Absolute %

Average Working Funds 361392 328022 33370 10.2

Total Interest Income 32084 29349 2735 9.3

Total Interest Expenditure 23640 21470 2170 10.1

Net Interest Income 8444 7879 565 7.2

Net Interest Income (%) 2.3 2.4 -10 bps -

Yield on Advances (%) 10.4 10.5 -10 bps -

Cost of Deposits (%) 7.3 7.4 -10 bps -

Yield on Funds (%) 8.9 9.0 -10 bps -

Cost of Funds (%) 6.5 6.5 - -

Net Interest Margin (%) 2.5 2.6 -10 bps -

6.1. Your Bank''s approach towards customer acquisition and retention along with a robust human resources management system for ensuring excellence in customer services has resulted in increase in Bank''s total business mix by Rs. 47,620 crore to Rs. 5,79,627 crore as on March 31, 2015 from Rs. 5,32,007 crore as on March 31,2014. Total deposits increased to Rs. 3,16,870 crore, as of March 31, 2015 from Rs. 2,97,675 crore in the previous year, recording an annual growth of 6.4 per cent. During the year, your Bank adjusted the deposit mix by enhancing the CASA at 29.2 per cent of total deposits. Along with this, your Bank also reduced the share of high cost deposits in total deposits from 12.6 per cent as on March 31,2014 to 5.8 per cent as on March 31,2015.

6.2. For FY 2014-15, the banking industry witnessed a decelerated credit growth barring the agriculture and allied activities sector, which reflected a combination of factors such as alternative sources of funding, slack in demand as also an element of risk aversion and balance sheet repair on part of the banks. The credit portfolio registered growth of 12.1 per cent and stood at Rs. 2,62,757 crore as on March 31, 2015 as against Rs. 2,34,332 crore as on March 31, 2014. The credit growth was mainly attributable to a 23 per cent annual growth registered in the productive sectors of the economy i.e. retail, agriculture and micro, small & medium enterprises (MSME) sectors, which we termed as RAM sectors, thus increasing the share of RAM sectors in domestic advances to 48.9 per cent as on March 31,2015 compared to 44.3 per cent as on March 31,2014.

7. Dividend

7.1. In view of overall performance of the Bank and the objective of rewarding shareholders with cash dividends along with ploughing back a part of profit to maintain a healthy capital adequacy ratio (CAR) to support future growth, the Board of Directors has recommended a final dividend of Rs. 6 per equity share of face value of Rs. 10 each which is 50 per cent higher than dividend of Rs. 4 per equity share declared for the previous year. The dividend payout ratio (excluding dividend tax) comes to 21.4 per cent, higher than 14.9 per cent in the previous year.

8. Shareholders'' Return

8.1. Your Bank''s net worth improved by 7.8 per cent to Rs. 18,312 crore during FY 2014-15 from Rs. 16,979 crore in the previous year. Thus, the Book value per share increased to Rs. 288.0 for March 2015 from Rs. 269.4 for March 2014. The Return on Equity stood at 9.7 per cent and the Earnings per share stood at Rs. 28.1 for FY 2014-15.

9. Credit Rating

9.1. The ratings given by various credit rating agencies for the Bank''s Tier-1 & Tier-2 capital instruments point to the highest degree of safety regarding timely servicing of financial obligations and that these instruments carry lowest credit risk.

Table 4: Rating

Rating Perpetual Upper Lower Tier-2 Agency Bonds Tier-2 Tier-2 (Basel III Bonds Bonds compliant)

CRISIL CRISIL AAA CRISIL AAA CRISIL AAA CRISIL AAA

ICRA ICRA AA - ICRA AA -

CARE CARE AA CARE AAA CARE AAA -

India Ratings AA (Ind) AA(Ind) AA (Ind) -

Brickwork BWR AAA BWR AAA BWR AAA -

9.2. Issuer Credit Ratings: International credit rating agencies re-affirmed the Bank''s long-term issuer credit rating, which are equivalent to county''s sovereign rating grade. Standard & Poor''s assigns rating of ''BBB-'' while Moody''s rating for the Bank is ''Baa3''. These ratings denote that the Bank has adequate capacity to meet its financial commitments. In April 2015, Moody''s Investors Services while retaining the long-term ratings of the Bank changed the outlook from ''stable'' to ''positive'' for your Bank. Similarly, Standard & Poor''s upgraded your Bank''s outlook from ''negative'' to ''stable'' during FY 2014-15.

10. Capital Adequacy Ratio

10.1. Capital Adequacy Ratio (CAR), as per Basel III norms, stood at 10.22 per cent as on March 31, 2015. Common Equity Tier-1 (CET 1) capital of the Bank improved to 7.24 per cent as on March 31, 2015, which is well above regulatory minimum requirement of 5.5 per cent. Tier-1 CAR stood at 7.50 per cent and Tier-2 at 2.72 per cent as on March 31,2015.

Table 5: Capital Adequacy Ratios

Basel III

Parameters FY 2014-15 FY 2013-14

Total Risk Weighted Assets 2,53,162 2,29,207

Total Capital Funds 25,885 24,751

CET 1 Capital 18,320 16,465

Tier 1 Capital 18,992 17,272

CRAR 10.22% 10.80%

CET 1 7.24% 7.18%

Tier 1 7.50% 7.54%

Tier 2 2.72% 3.26%

10.2. Conversion of Perpetual Non-Cumulative Preference Shares (PNCPS) held by the Government of India into equity shares during FY 2014-15: Your Bank allotted, on preferential basis, 54,72,563 (Fifty four lakh seventy two thousand five hundred and sixty three) equity shares of '' 10 each at a premium of Rs.192.83 to the Government of India after converting Rs. 111 crore of Perpetual Non- Cumulative Preference Shares (PNCPS) previously held by the Government of India. Consequently, the Government''s shareholding in the Bank increased from 60.13 per cent to 60.47 per cent. Also, Bank''s paid-up equity capital increased to Rs. 636 crore from Rs. 630 crore while Rs. 105.5 crore was added to share premium reserves.

11. Brand Rating

11.1. Brand rating is a breakdown of how the brand performed on various metrics of brand strength and benchmarked against its competitor. According to Brand Finance Plc, world''s leading brand valuation consultancy, brand value of your Bank improved significantly. Among the Scheduled Commercial Banks, Union Bank of India ranked 11th after an increase of 34 per cent in its brand value for 2015 with a Brand rating of ''AA''.

Table 6: Brand Rating

Particulars 2015 2014

Brand Ranking (Global) 274 312

Brand Value ($ millions) 430 321

Brand Rating AA A

Source: Brand Finance Banking 500, February 2015

12. Awards & Accolades

12.1. Your Bank received wide recognition and several awards for its performance and initiatives in multiple domains, particularly human resources, digital banking and financial inclusion.

12.2. The Bank won the prestigious Golden Peacock Award for "HR Excellence" and the training system was conferred with the "Golden Peacock National Training Award" for the fourth time in a row.

12.3. Your Bank won the Indian Banks'' Association''s (IBA) Technology Award under ''Best Payment Initiatives'' category and was the joint winner of Best Initiative to ''Enhance Customer Experience''. The "Tabulous Banking" initiative was recognized by the IDC Insights award.

12.4. The Bank has also received awards from NPCI (National Payments Corporation of India) for maximum number of transactions on IMPS Platform, one of the highest RuPay cards issuing banks among Public Sector Banks, Innovation of Value-added Services in ATMs.

12.5. In the area of financial inclusion, the Bank received three awards at the ''Global Conference by Financial Inclusion & Payment Systems'', and a Platinum award for Financial Inclusion category conducted by SKOCH Consultancy.

12.6. The Bank was also recognized as "Best MSME Bank Award for Large Bank" under MSME Banking Excellence Award - 2014 conducted by Chamber of Indian Micro, Small and Medium Enterprises. Your Bank has won "Best Education Loan Provider" award at "Outlook Money Awards 2014"

12.7. Your Bank actively promotes the usage of Hindi as official language and such efforts were recognized by awards like, Indira Gandhi Rajbhasha Shield (1st Prize; 2013-14), and, the Rashtrapati Puraskar.

13. Directors

13.1. The following changes took place in the Board of Directors of your Bank during the Financial Year 2014-15:

13.1.1. Shri Kishor Kharat was nominated on the Board by the Government under sub-section 3 (a) of section 9 of Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 on March 10, 2015 as the Executive Director in place of Shri S. K. Jain, whose term ended by superannuation on May 31,2014.

13.1.2. Shri Mihir Kumar, presently Director in Department of Financial Services, Ministry of Finance was nominated by the Government as a non-whole time director under sub section 3 (b) of section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. November 25, 2014 in place of Mohammad Mustafa, Joint Secretary, Dept. of Financial Services, Ministry of Finance.

13.1.3. Dr. Atul Agarwal, Part time Non-Official Director completed his term as Director on September 21,2014.

13.1.4. Shri B.N. Bhattacharjee, Officer Nominee Director has completed his term as Director on May 3, 2014. Further, Shri N. Shankar, Workmen Employee Director''s resignation has been accepted by Govt. vide its letter dated April 30, 2014.

13.2. While welcoming all the new Directors, the Board places on record the valuable services rendered by Mohammad Mustafa, Dr. Atul Agarwal, Shri B. N. Bhattacharjee and Shri N.Shankar.

14. Directors'' Responsibility Statement

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

14.1.1. The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

14.1.3. Reasonable and prudent judgement 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 Bank for the year ended on March 31,2015.

14.1.4. 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,

14.1.5. The accounts have been prepared on going concern basis.

15. Corporate Governance

15.1. The Board of the Bank is committed to adopt good corporate governance practices in letter and spirit. A detailed report on corporate governance is given in a separate section of the Annual Report. The corporate governance report for financial year 2014-15 has no audit qualifications.

16. Corporate Social Responsibility (CSR)

16.1. Your Bank is committed to its Corporate Social Responsibility by contributing to the society. In this endeavour, Bank has set up the ''Union Bank Social Foundation'', a Trust established for spearheading your Bank''s CSR initiatives. Through the trust, the Bank is engaged in empowering people through various developmental initiatives.

16.2. Also,while discharging the corporate social responsibilities; the Bank makes a conscious effort to address some of the socio-economic deprivations. This is done by identifying the villages for extending banking facilities and thus improving the quality of life there. The Bank has set up 201 Village Knowledge Centres (VKCs) across the country. Each VKC assists in overall development of Village by coordinating with various developmental agencies / government departments and disseminate knowledge to farmers about latest developments in methods of cultivation, technologies, proper use of fertilizers, pesticides, etc.

16.3. Your Bank patronizes 14 Rural Self Employment Training Institutes (R-SETIs) and 24 Financial Literacy and Credit Counseling Centres (FLCCs) across the country. During the year, 345 training programmes were conducted through these facilities, under which 9,862 persons received training and 6,172 beneficiaries have been settled with gainful employment. Your Bank was the first to open a branch at Jayapur, the village adopted by Prime Minister of India and the branch is functioning exclusively with solar power.

16.4. During the year 2014-15, Bank spent a total of Rs. 20.6 crore by way of donation. This included Rs. 2.6 crore under the Prime Minister''s Relief Fund for helping the flood affected state of Jammu & Kashmir.

17.1. The Board places on record its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority, Central Vigilance Commission and other institutions for the valuable guidance and support received from them. The Board also acknowledges the unstinted support of the financial institutions, correspondent banks, valuable shareholders, esteemed customers and all other stakeholders. The Board also expresses its deep appreciation for the dedicated services and contribution made by members of staff in the overall performance of the Bank.

For and on behalf of the Board of Directors,

(Arun Tlwari) Chairman & Managing Director

Place: Mumbai

Dated: 21st May, 2015


Mar 31, 2014

Dear Shareholders,

The Board of Directors is pleased to present the 95th Annual Report of the Bank for the fi nancial year 2013-14 together with the ''Audited Balance Sheet'', ''Profi t & Loss Account'', ''Cash- Flow Statement'' and the report on ''Management Discussion & Analysis''. The ''Corporate Governance Report'' and ''Business Responsibility Report'' also form part of the Annual Report 2013-14.

1. Business

1.1. Focused approach towards enhanced customer service and network expansion helped your Bank surpass Rs. 5,00,000 crore mark in total business. It increased by Rs. 56,334 crore to Rs. 5,32,007 crore, as of March 31, 2014, showing an annual growth rate of 11.8 per cent.

1.2. Total deposits increased to Rs. 2,97,675 crore, as of March 31, 2014 from Rs. 2,63,762 crore in the previous year, recording an annual growth of 12.9 per cent. During the year, the focus of the Bank remained on enhancing low cost current and savings deposits (CASA) along with containing high cost deposits. The share of CASA in total deposits as on March 31 2014 stood at 29.5 per cent. Credit portfolio increased by 10.6 per cent to Rs. 2,34,332 crore as on March 31, 2014 from Rs. 2,11,911 crore as on March 31, 2013. The credit growth was mainly contributed by the retail, agriculture and micro, small & medium enterprises (MSME) sectors. This also helped the Bank in achieving priority sector targets equivalent to 40.4 per cent of adjusted net bank credit (ANBC) while benchmark stipulated by the Reserve Bank of India is 40 per cent.

2. Revenue and Expenditure

2.1. Your Bank''s total income increased by 16.2 per cent to Rs. 32,171 crore during fi nancial year (FY) 2013-14 from Rs. 27,677 crore in the previous year. The interest income grew by 16.8 per cent to Rs. 29,349 crore. Other income of the Bank stood at Rs. 2,822 crore, registering an annual growth of 10.6 per cent. Within other income, core fee based income increased by 15.0 per cent during the year and stood at Rs. 1,635 crore.

2.2. The interest expenses increased by 22.1 per cent for the year ended March 31, 2014 to Rs. 21,470 crore as from Rs. 17,582 crore in previous year. Operating expenses of the Bank increased by 21.5 per cent, thus taking the total expenses to Rs. 26,953 crore.

2.3. The following is the income statement of your Bank for the year 2013-14:

Table-1: Income Statement

(Rs. crore)

Particulars 2013-14 2012-13 Annual Growth Absolute %

Interest Income 29349 25125 4224 16.8

Interest Expended 21470 17582 3888 22.1

Net Interest Income 7879 7543 336 4.5

Other Income 2822 2552 270 10.6

w/w Core fee based income 1635 1421 214 15.0

Total Income 32171 27677 4494 16.2

Operating Expenses 5483 4512 971 21.5

w/w Establishment 3308 2755 553 20.1 Expenses

Operating Profit 5218 5583 -365 -6.5

Provisions 3522 3425 97 2.8

Net Profit 1696 2158 -462 -21.4

Earnings Per Share (Rs.) 28 39 -11 -28.0

3. Spread

3.1. The banking industry witnessed hardening of interest rates during FY 2013-14 due to a contractionary monetary policy stance of the Reserve Bank of India (RBI) in its fi ght against infl ation. In this backdrop of rising policy rates coupled with tight liquidity conditions, the term deposit rates remained high. However, helped by judicious planning for resources, your Bank was able to restrict cost of deposits to 7.4 per cent, same as in the previous year. The yield on advances stood at 10.5 per cent. The net interest income stood at Rs. 7,879 crore in FY 2013-14, recording an annual growth of 4.5 per cent.

3.2. Yield on investments was 7.5 per cent for FY 2013-14 as against 7.4 per cent for FY 2012-13. Yield on funds of the Bank stood at 9.0 per cent for FY 2013-14 as against 9.2 per cent recorded during FY 2012-13.

Table-2: Spread

(per cent)

Parameters 2013-14 2012-13

Yield on Advances 10.5 11.1

Cost of Deposits 7.4 7.4

Yield on Funds 9.0 9.2

Cost of Funds 6.5 6.4

Net Interest Margin 2.6 3.0

4. Provisions and Contingencies

4.1. The allocations for provisions and contingencies for the year 2013-14 amounted to Rs. 3,522 crore compared to Rs. 3,425 crore for FY 2012-13.

4.2. The provisions for non performing assets stood at Rs. 2,106 crore during 2013-14 compared to Rs. 1556 crore in the previous year. The provision for standard assets was Rs. 310 crore compared to Rs. 222 crore in the previous year. There was accelerated provision on restructured standard advances during the year as per regulatory prescriptions.

5. Profi tability & Ratios

5.1. Operating profi t of the Bank for the year 2013-14 stood at Rs. 5,218 crore. Net Profi t for FY 2013-14 stood at Rs. 1,696 crore.

5.2. Return on equity stood at 10.0 per cent as of March 31, 2014. Bank''s net worth improved to Rs. 16,979 crore during FY 2013-14 from Rs.15,777 crore in the previous year. Thus, book value per share increased from Rs. 264.4 during FY 2012-13 to Rs. 269.4 for FY 2013-14. The earnings per share stood at Rs. 28 as on March 31, 2014 compared to Rs. 39 in the previous year.

5.3. The following are the key productivity ratios of your Bank as on March 31, 2014.

Table 3: Productivity Ratios

Parameters FY FY Annual 2013-14 2012-13 Growth

Average Business Per 13.8 12.2 13.3% Employee (Rs. crore)

Average Business Per 120.2 110.1 9.2% Branch (Rs. crore)

Net Profi t Per Employee 5.0 6.8 -26.1% (Rs. lakh)

Net Profi t per Branch 43.8 61.5 -28.7% (Rs. lakh)

6. Dividend

6.1. In view of overall performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio (CAR) to support future growth, the Board of Directors has recommended a fi nal dividend of 13 per cent for the year 2013-14, in addition to interim dividend of 27 per cent declared during the year. Thus, the total dividend for the year will be 40 per cent, i.e. Rs. 4 per equity share compared to 80 per cent declared in the previous year. The dividend payout ratio (excluding dividend tax) comes to 14.9 per cent compared to 22.1 per cent in the previous year.

7. Rating & Capital Raising

7.1. The ratings given by various credit rating agencies for Bank''s Tier I & Tier II capital instruments point to the highest degree of safety regarding timely servicing of fi nancial obligations and these instruments carry lowest credit risk.

Table 4: Rating

Rating Perpetual Upper Tier Lower Tier Tier II Agency Bonds II Bonds II Bonds (Basel III compliant)

CRISIL CRISIL CRISIL CRISIL CRISIL AAA AAA AAA AAA

ICRA ICRA AA - ICRA AA -

CARE CARE AA CARE AAA CARE AAA -

FITCH AA(Ind) AA(Ind) AA (Ind) -

Brickwork BWR AAA BWR AAA BWR AAA -

7.2. Issuer Credit Ratings: International credit rating agencies have re-affi rmed the Bank''s long term issuer credit rating, which are equivalent to county''s sovereign rating grade. S&P assigns rating of ''BBB-'' while Moody''s rating for the Bank is ''Baa3''. These ratings denote that the Bank has adequate capacity to meet its fi nancial commitments.

7.3. Capital Infusion by the Government of India during FY 2013-14: Your Bank has allotted, on preferential basis, 3,35,12,064 equity shares of Rs. 10 each at a premium of Rs.139.20 to Government of India. Consequently, the Government''s shareholding in the Bank increased from 57.9 per cent to 60.1 per cent. On account of this preferential issue to the Government of India, Bank''s equity capital increased by Rs. 500 crore. Also, Bank''s paid up capital increased to Rs. 630 crore from Rs. 597 crore while Rs. 466.5 crore was added to share premium reserves.

7.4. Basel III compliant Tier 2 Bonds: On November 22, 2013, the Bank raised capital of Rs. 2,000 crore by issue of Basel III compliant unsecured redeemable non- convertible Tier 2 Bonds. The Bonds, having a tenor of 10 years, are rated ''AAA/Stable'' by CRISIL and carry a coupon of 9.8 per cent.

8. Capital Adequacy Ratio

8.1. Capital Adequacy Ratio (CAR), as per Basel III norms, stood at 10.8 per cent as on March 31, 2014. Common Equity Tier I (CET I) capital of the Bank stood at 7.2 per cent as on March 31, 2014, well above regulatory minimum requirement of 5 per cent. Tier I CAR stood at 7.5 per cent and Tier-2 at 3.3 per cent. Basel III norms in India are effective from April 1, 2013 and, therefore, these numbers are not comparable with the previous year.

Table 5: Capital Adequacy Ratios as per Basel III

(Rs. crore)

Parameters FY 2013-14

Total Risk Weighted Assets 229207

Capital Fund 24751

Tier-I Capital 17272

CAR-Basel-III 10.8%

CET I 7.2%

Tier-I 7.5%

Tier-2 3.3%

9. Awards & Accolades

9.1. During the year, your Bank received wide recognition and several awards for its performance and initiatives in multiple domains.

9.2. Your Bank won the ''MSME Banking Excellence Awards-2013'', conferred by ''The Chamber of Indian Micro, Small & Medium Enterprises''. Your Bank bagged special award under Institute of Development and Research in Banking Technology (IDBRT), ''IT Excellence Award'' for innovative technologies introduced in fi nancial inclusion project.

9.3. The Bank received the ''Order of Merit'' Awards from SKOCH Group for implementation of fi nancial inclusion initiative under the category of ''Unique Technology Initiative'' during the 33rd Skoch Summit, conducted by SKOCH Consultancy at Delhi.

9.4. Your Bank was also presented ''Financial Inclusion Technology Initiative'' award in the ''Global Conference on Financial Inclusion & Payment Systems'' held at New Delhi. The award recognized Bank''s initiatives in the areas of biometric smart card system, FI gateway & centralized bio-metric authentication system, AADHAAR enabled payment system, AADHAAR payment bridge system, kiosk banking application, demographic verifi cation of Aadhaar holders, AADHAAR seeding and Direct Benefi t Transfer.

9.5. The Bank won the Indian Banks'' Association''s (IBA) Technology Award under ''Best Payment Initiatives'' category. The Bank was runner-up in IBA Technology awards under the categories of ''Best Technology Bank of the year, ''Use of Mobility Technology'' and ''Internet Banking''.

9.6. Your Bank also received the ''e-INDIA'' award under the category of Green IT Initiatives for its business process re-engineering (BPR) initiative which enhances the customer experience by improving customer service and cutting operational costs.

10. Directors

10.1. The following changes took place in the Board of Directors of your Bank during the fi nancial year 2013-14:

10.1.1. Shri Arun Tiwari was nominated on the Board by the Government under sub-section 3 (a) of section 9 of Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 on December 26, 2013 as the Chairman & Managing Director in place of Shri D. Sarkar whose term ended by superannuation on November 30, 2013;

10.1.2. Shri Rakesh Sethi was nominated as Executive Director on the Board by the Government under sub-section (3) (a) of section 9 of Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980, w.e.f. August 5, 2013.

10.1.3. Shri Mohammad Mustafa, presently Joint Secretary in Department of Financial Services, Ministry of Finance, was nominated by the Government as a non-whole time director under sub section 3 (b) of section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. September 30, 2013 in place of Dr. Achintan Bhattacharya whose term ended by superannuation on September 30, 2013.

10.1.4. Shri Deepak Singhal, Principal Chief General Manager and Regional Director of the Reserve Bank of India, was nominated by the Government as the RBI Nominee Director under sub section 3 (c) of the Banking Companies (Acquisition & Transfer of Undertakings) Act,1970/1980 on May 31, 2013 in place of Shri Chandan Sinha.

10.1.5. Shri Jag Mohan Sharma was nominated as part-time Non-offi cial Director under Chartered Accountant category by the Government of India under sub-section 9 (3)(g) of the Banking Companies (Acquisition & Transfer of Undertakings) Act,1970/1980 on December 5, 2013, in place of Shri B. M. Sharma whose term ended on April 15, 2013.

10.1.6. Shri S.K. Misra and Sushri Anusuiya Sharma were nominated as part time non-offi cial Directors by the Central Government under sub section 3 (h) of Section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. April 11, 2013 and May 6, 2013 respectively.

10.1.7. After March 31, 2014 Shri B.N. Bhattacharjee, Offi cer Nominee Director has completed his term as Director on May 3, 2014. Further, Shri N. Shankar, Workmen Employee Director''s resignation has been accepted by Government vide its letter dated April 30, 2014.

10.1.8. While welcoming all the new Directors, the Board places on record the valuable services rendered by Shri D. Sarkar, Dr. Achintan Bhattacharya, Shri Chandan Sinha, Shri B. M. Sharma, Shri B. N. Bhattacharjee and Shri N.Shankar.

11. Directors'' Responsibility Statement

11.1. The Directors confi rm that in the preparation of the annual accounts for the year ended March 31, 2014:

11.1.1. The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

11.1.3. 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 fi nancial year and of the profi t of Bank for the year ended, March 31, 2014.

11.1.4. Proper and suffi cient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India, and

11.1.5. The accounts have been prepared on going concern basis.

12. Corporate Governance:

12.1. The Board of the Bank is committed to adopt good corporate governance practices in letter and spirit. A detailed report on corporate governance is given in a separate section of the Annual Report. The corporate governance report for fi nancial year 2013-14 has no audit qualifi cations.

13. Corporate Social Responsibility (CSR)

13.1. Your Bank has taken a number of initiatives to discharge its corporate social responsibility by addressing some of the socio-economic deprivations faced by the unreached or underprivileged.

13.2. The Bank has set up 202 Village Knowledge Centres (VKCs) across the country. Each VKC assists in overall development of the village by coordinating with various developmental agencies/government departments and disseminate knowledge to farmers about latest developments in methods of cultivation, technologies, proper use of fertilizers, pesticides, etc.

13.3. ''Union Adarsh Gram Yojana'' is a unique innovative project under which Bank has adopted 210 villages across the country. In these adopted villages, various developmental activities are being undertaken, like, providing safe drinking water, sanitation and solar lamps.

13.4. On International Women''s Day, i.e. March 8, 2014, Bank''s 14 lead districts adopted 210 girl children to support them for completing their education till class XII, and 994 saplings were planted at prominent places.

13.5. Your Bank patronizes 14 Rural Self Employment Training Institutes (R-SETIs) and 24 Financial Literacy and Credit Counseling Centers (FLCCs) across the country. During the year, 1,406 training programs were conducted through these facilities, under which 38,975 persons received training and 25,593 benefi ciaries have been settled with employment.

13.6. During the year, 2013-14, Bank spent a total of Rs. 17.8 crore by way of donation. This included Rs. 2 crore under the Chief Minister''s Relief fund for the calamity affected states of Uttarakhand and Odisha. The Union Bank Social Foundation, a trust set up by the Bank, is spearheading its CSR initiatives. Through the trust, the Bank is engaged in empowering people through various developmental initiatives. During the year, Rs. 15 crore was allocated to the trust for its activities.

14. Acknowledgement

14.1. The Board expresses its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority, Central Vigilance Commission and other institutions for the valuable guidance and support received from them. The Board also thanks the fi nancial institutions and correspondent banks for their co-operation and support. The Board also thanks Bank''s valuable shareholders, esteemed customers and all other stakeholders for their continued patronage. The Board would like to express its appreciation to each employee of the Bank for their dedicated service.

For and on behalf of the Board of Directors,

(Arun Tiwari)

Chairman & Managing Director

Place: Mumbai

Dated: 19.05.2014


Mar 31, 2013

Dear Shareholders, The Directors of your Bank are pleased to present the 94th Annual Report of the Bank for the financial year 2012-13 along with statement of the 'Audited Balance Sheet', 'Profit & Loss Account', 'Cash-Flow Statement' and the report on 'Management Discussion & Analysis'. The Corporate Governance Report also forms part of the Annual Report. 1. Overview 1.1. Your Bank's focus on customer centricity has guided the Bank's performance during the year. With focus on qualitative growth in business, lending to productive sectors and asset quality management, your Bank has once again delivered performance in key business parameters. Human Resource (HR) transformation initiatives aligning HR practices with business goals formed a key differentiator for marked productivity gains by your Bank. 1.2. Your Bank has aptly focused on responding to economy wide challenges, both global and domestic. The business strategies were aimed at consolidating Bank's business in chosen areas, focusing on core & retail business, taking steps for meaningful financial inclusion and strengthening systems & control. 1.3. The thrust areas included strategic positioning of the Bank, developing new ideas to reach client with new technology and deepening our customer relations. Your Bank has taken one more step towards marking its footprint in global arena. Bank's second overseas branch at Dubai International Financial Centre (DIFC), Dubai started its commercial operations during the last financial year. 1.4. The major highlights of business performance are detailed as under: Table - 1 : Key Performance Indicators (Rs. crore) Parameters FY2012 FY2013 Annual Growth Total Business 403900 475673 17.77% Net Interest Income 6793 7543 11.04% Operating Profit 5254 5583 6.26% Provisions 3467 3425 -1.22% Net Profit 1787 2158 20.76% Net Interest Margin (NIM) 3.16% 2.96% -20 bps Capital Adequacy Ratio 11.85% 11.45% -40 bps Gross Profit per 17.04 17.56 3.05% employee (Rs. lakh) Dividend (Rs. per share) 8.0 8.0 No Change Book Value per Share (Rs.) 237.48 264.37 11.32% bps - basis points 2. Business 2.1. Global Business of the Bank stood at Rs. 4,75,673 crore as of 31st March 2013, registering an annual growth rate of 17.77 percent. 2.2. Total Deposits increased to Rs. 2,63,762 crore as of 31st March 2013 recording annual growth of 18.35 percent and Advances increased to Rs. 2,11,911 crore as of 31st March 2013 with annual growth of 17.06 percent. 2.3. The overseas business increased to Rs. 15,780 crore as of 31st March 2013, recording annual growth of 51.90 percent. Deposits increased from Rs. 1,207 crore as of 31st March 2012 to Rs. 2,763 crore as of 31st March 2013 while advances increased from Rs. 9,181 crore as of 31st March 2012 to Rs. 13,017 crore as of 31st March 2013. 3. Revenue 3.1. Total Income of the Bank increased from Rs. 23,476 crore in FY 2011-12 to Rs. 27,677 crore in FY 2012-13, recording annual growth of 17.89 percent. Yield on advances of the Bank stood at 11.05 percent whereas Yield on investments was recorded at 7.38 percent for the financial year 2012-13. Total yield on funds of the Bank stood at 9.19 percent during FY 2012-13. 3.2. Net Interest Income increased from Rs. 6,793 crore in FY 2011-12 to Rs. 7,543 crore in FY 2012-13, recording annual growth of 11.04 percent. Net Interest Income registered a compounded annual growth rate (CAGR) of 21.63 percent during the last three years. 3.3. Non-interest income increased from Rs. 2,448 crore in FY 2011-12 to Rs. 2,552 crore in FY 2012-13, recording annual growth of 4.24 percent. Recovery in written-off accounts stood at Rs. 324 crore in FY 2012-13 compared to Rs. 354 crore during the last financial year. Core fee based income increased from Rs. 1,392 crore in FY 2011- 12 to Rs. 1,421 crore in FY 2012-13. Table - 2 : Non Interest Income (Rs. crore) Parameters FY2012 FY2013 Annual Growth 1. Core Non Interest 1392 1421 2.09% Income 2. Treasury Income 702 807 14.87% within which, - Profit on Sale of 441 477 8.28% investments - Exchange Profit 261 329 25.97% 3. Recovery in Written 354 324 (-) 8.40% off Accounts 4. Total Non-Interest 2448 2552 4.24% Income (1 2 3) 4. Expenses 4.1. Total Expenses of the Bank increased from Rs. 18,222 crore during FY 2011-12 to Rs. 22,094 crore during FY 2012-13 recording annual growth of 21.25 percent. Establishment expenses increased from Rs. 2,479 crore during FY 2011-12 to Rs. 2,755 crore during FY 2012- 13 with annual growth of 11.13 percent. Provision of Rs. 75 crore were made towards pending wage revision of employees of the Bank for FY 2012-13. 4.2. Interest expenses increased by 23.51 percent from Rs. 14,235 crore in FY 2011-12 to Rs. 17,582 crore in FY 2012-13, mainly due to increase in cost of deposits to 7.38 percent in FY 2012-13 as compared to 6.93 percent in the previous year, reflecting elevated interest rate scenario and tight liquidity conditions. Accordingly, total cost of funds also moved up to 6.43 percent in FY 2012-13 compared to 6.33 percent in the previous year. Table - 3: Operating Expenses (Rs. crore) Parameters FY2012 FY2013 Annual Growth Total Operating Expenses 3987 4512 13.17% Within which - Staff Expenses 2479 2755 11.13% - Other Operating 1508 1757 16.51% Expenses 4.3. Cost-to-income ratio marginally increased to 44.70 percent during FY 2013 from 43.15 percent during last financial year mainly due to opening of large number of new branches, provisioning for pending wage revision & pension liabilities. 5. Profitability 5.1. Operating Profit of the Bank increased to Rs. 5,583 crore in FY 2013 from Rs. 5,254 crore during the previous year, contributed by growth in interest income and control in operating expenses. 5.2. Net Profit for FY 2013 stood at Rs. 2,158 crore. Growth in net profit was 20.76 percent over FY 2012. 5.3. NIM stood at 2.96 percent during FY 2013 as against 3.16 percent in the previous year. Return on Average Assets for the year 2012-13 was maintained at 0.79 percent, same as in the previous year. 6. Productivity Ratios 6.1. Average business per employee increased to Rs. 1,215 lakh during FY 2013 recording annual growth of 13.55 percent. The net profit per employee increased to Rs. 6.79 lakh during FY 2013, recording annual growth of 17.07 percent. 6.2. Average business per branch and net profit per branch recorded annual growth of 6.73 percent and 10.08 percent respectively during FY 2013. Table - 4: Productivity Ratios (Rs. lakh) Parameters FY2012 FY2013 Annual Growth Average Business Per 1070 1215 13.55% Employee Average Business Per 10311 11005 6.73% Branch Net Profit Per Employee 5.80 6.79 17.07% Net Profit per Branch 55.83 61.46 10.08% 7. Dividend 7.1. Your Directors are pleased to recommend a dividend of 80 percent for FY 2012-13, i.e., Rs. 8.00 for each share with face value of Rs.10.00. The dividend is maintained at the same percentage as that for FY 2011-12. 8. Shareholders' Return 8.1. The Bank's net worth improved by 20.66 percent to Rs.15,777 crore during FY 2013 from Rs. 13,075 crore in the previous year. Thus, the Book value per share increased to Rs. 264.37 during FY 2013 from Rs. 237.48 in the previous year. Earnings per share increased to Rs. 38.93 during FY 2013 as against Rs. 34.07 in the previous year. Return on Equity stood at 13.68 percent during FY 2013 from 13.67 percent in the previous year. 9. Rating & Capital Raising 9.1. The ratings given by various credit rating agencies for Bank's Tier I & Tier II Capital instruments point to the highest degree of safety regarding timely servicing of financial obligations and these instruments carry lowest credit risk. Table - 5 : Ratings of Bonds (Rs. crore) Rating Perpetual Upper Tier Lower Tier II Agency Bonds II Bonds Bonds CRISIL AAA AAA AAA ICRA AA - AA CARE AA AAA AAA FITCH AA(Ind) AA (Ind) AA (Ind) Brickwork AAA AAA AAA 9.2. During the financial year 2012-13, Bank raised Unsecured Redeemable Non-Convertible Subordinated Lower Tier II Bonds amounting to Rs. 800 crore. 9.3. Bank allotted 4,62,45,174 equity shares of Rs. 10/- each at a premium of Rs. 230.89 aggregating to Rs. 1,114 crore to the Government of India. Consequently the Government's shareholding in the Bank increased from 54.35 percent as on March 31, 2012 to 57.89 percent as on March 31, 2013. 10. Capital Adequacy Ratio 10.1. Capital Adequacy Ratio (CAR), as per Basel II norms stood at 11.45 percent as on March 31, 2013, well above the regulatory benchmark of 9 percent. Tier I CAR stood at 8.23 percent and Tier-2 at 3.22 percent. Table - 6: Capital Adequacy Ratio (Rs. crore) Parameters FY 2012 FY 2013 Total Risk Weighted Assets 168178 203927 Capital Fund 19926 23341 Tier-I Capital 14081 16785 CAR-Basel-II 11.85% 11.45% Tier-I 8.37% 8.23% Tier-2 3.48% 3.22% 11. Delivery Channels 11.1. Your Bank added 309 domestic branches and one foreign branch in Dubai during the financial year 2012-13. This is the highest number of branches opened by the Bank in any particular year. Out of 309 domestic branches, 232 branches (75 percent) were opened in rural and semi- urban centres. Bank opened 33 percent of branches in Tier 5 and Tier 6 centers as against thereshold requirement of 25 percent mandated by the RBI. As a result, total number of branches including two overseas branches increased to 3511 as of 31st March 2013 compared to 3201 branches as of 31st March 2012. Your Bank has also opened its 1st branch at Aizwal in the state of Mizoram. 11.2. The number of ATMs increased from 3801 as on 31st March, 2012 to 4603 as on 31st March, 2013, thereby adding 802 new ATMs during the year. The ratio of ATM to branches further improved to 1.31 during FY 2013, which is one of the best amongst the public sector banks. The bank has installed 100 Talking ATMs as of end-March 2013. The talking ATM solution offered by your Bank is adopted by Indian Banks' Association (IBA) as a standard for accessible ATM for visually challenged persons. 11.3. Your Bank was one of the first bank to launch the RuPay cards in India. All the bank's ATMs are now enabled to accept RuPay Cards. RuPay is the Indian domestic card payment network set up by the National Payment Corporation of India (NPCI). The Bank has also deployed bunch notes accepting machines at select branches. 11.4. Your Bank is the first to start National Electronic Fund Transfer (NEFT) facility for its sponsored regional rural bank. Bank has also started issuing and receiving on-line letter of credit (LCs) through Structured Financial Messaging System (SFMS) since January 2013. All the branches are enabled to send and receive On-line LCs. 11.5. To meet the increasing transaction volumes, the Bank has increased computing capacity of core banking solution (CBS) system. Through middleware application, the Bank has integrated various applications like Foreign Inward Remittances, Treasury, HRM Solution, Swift, RTGS, NEFT, Online Trading Application etc with CBS to facilitate seamless flow of transactions. 11.6. Transactions through electronic channels increased to 60.02 percent as on March 31, 2013 from 54.75 percent as on March 31, 2012. 11.7. Your Bank has successfully implemented Aadhaar Enabled Payment System (AEPS) in 'OFF-US' mode. 11.8. The Bank's Customer Care Unit (CCU) was set up in Mumbai for resolving customer complaints and to eliminate the root causes of complaints across channels. The Integrated Case Management Tool (ICMT) has been put in place to integrate complaints across channels. 12. Awards & Accolades 12.1. Your Bank received several awards during FY 2013 for its consistent and all-round performance, superior management and dedication to excellence. 12.2. The Chairman & Managing Director of your Bank, Mr. D. Sarkar was awarded "Banker of the Year" award by the Skoch Consultancy Services as a part of their Financial Inclusion Awards 2013. Bank also received the Best Bank Award 2012 for Financial Inclusion from IBA. 12.3. Ernakulam district, one of the Bank's lead districts in the state of Kerela, was declared by the RBI Governor, Dr D Subbarao as country's first district to achieve 'Meaningful Financial Inclusion'. Under this project, Bank focused on "need" creation rather than simply opening of accounts. With the help of community-based organizations, Bank sensitized its customers about need for savings and credit. This helped sharp increase in usage of mobile banking and number of operative accounts. 12.4. The Bank won four awards at the IBA Banking Technology Awards function held at Mumbai in the following categories: 12.4.1. Best Financial Inclusion Initiative 12.4.2. Best Technology Bank of the Year 12.4.3. Best Use of Mobility Technology in Banking 12.4.4. Best Use of Business Intelligence 12.5. The Bank received the prestigious ACI Excellence Award 2012 for implementing three remittance products viz. NEFT, IMPS and Union e-Cash on ATMs. This is a global award given by ACI Worldwide Inc. every year for innovative use of its payment system software. Bank received the award for the second year in a row. 12.6. The Bank also won the prestigious IT Innovation Award from the Computer Society of India. The Bank was given this award for launching truly accessible Talking ATMs for the visually challenged. The solution works on normal debit cards for all bank customers. 12.7. The Bank received the Best Bank in public sector category award from the NPCI for operational excellence in national financial switch. These awards are given by NPCI based on excellence in performance in operation of ATMs covering parameters like dispute management, net work uptime, control on transaction declines, DR Drills etc. 12.8. The Bank was awarded with the prestigious Indira Gandhi Rajbhasha Shield for the year 2010-11 by the Hon'ble President of India, Shri Pranab Mukherjee. 12.9. 'Union Dhara', the Bank's in-house journal bagged the prestigious "Champion of the Champions Trophy" at the ABCI Annual Awards 2012. Union Dhara also won 6 trophies for its internal communication viz. 1 Gold, 3 Silver and 2 Bronze under various categories such as Special Column (English), Internal Magazine, Bilingual Magazine, Features (Language), Photo Features and Photography. 13. Directors 13.1. The following changes took place in the Board of Directors of your Bank during the financial year 2012-13. 13.1.1 Shri D. Sarkar was nominated on the Board by the Government under sub-section 3 (a) of section 9 of Banking companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. April 1, 2012 as the Chairman & Managing Director in place of Shri M.V.Nair whose term ended by superannuation w.e.f. March 31, 2012. 13.1.2 Dr. A Bhattacharya, Joint Secretary in the Ministry of Finance, Government of India, was nominated by the Central Government as a non-wholetime director under sub section 3 (b) of section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. July 20, 2012 in place of Shri Rajesh Khullar. 13.1.3 In the Annual General Meeting of the shareholders held on June 26, 2012, Shri R.H. Dholakia, Shri G.K. Lath and Shri D. Chatterji were elected as Shareholder Directors under sub section 3 (i) of section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. June 27, 2012, for a period of 3 years, in place of Shri M.S. Sriram, Shri S. Ravi and Shri A. K. Nanda. 13.1.4 Shri K. Subrahmanyam was nominated on the board by the Central Government, under sub section 3 (a) of Section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f January 21, 2013 as an Executive Director in place of Shri S.S. Mundra who was appointed as the Chairman & Managing Director of Bank of Baroda with effect from the same date. 13.2. After 31st March 2013, Shri S. K. Misra and Smt. A. Sharma were nominated as part time non-official Directors by the Central Government under sub section 3 (h) of Section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. April 11, 2013 and May 6, 2013 respectively. Also, the term of appointment of Shri B.M. Sharma has ended on April 15, 2013. 13.3. While welcoming all the new Directors, the Board places on record the valuable services rendered by Shri Rajesh Khullar, Shri S. S. Mundra, Shri M.S. Sriram, Shri S. Ravi, Shri A. K. Nanda and Shri B M Sharma. 14. Directors' Responsibility Statement 14.1. The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2013: 14.1.1. The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards. 14.1.2. The accounting policies framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied. 14.1.3. 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 Bank for the year ended on March 31, 2013. 14.1.4. 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, 14.1.5. The accounts have been prepared on going concern basis. 15. Corporate Governance 15.1. The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate section of the Annual Report. The Corporate Governance report for financial year 2012-13 has no audit qualifications. 16. Corporate Social Responsibility (CSR) 16.1. Your Bank is committed to the objective of corporate social responsibility (CSR) by creating enablers for social and community development. The Union Bank Social Foundation, a trust set up by the Bank is spearheading its CSR initiatives. Through the trust, the Bank is engaged in empowering people through various developmental initiatives. 16.2. The Bank has set up 202 Village Knowledge Centres (VKCs) across the country. Each VKC assists in overall development of the village by coordinating with various developmental agencies/Government departments and disseminate knowledge to farmers about latest developments in methods of cultivation, technologies, proper use of fertilizers, pesticides, etc. 16.3. The Bank has also adopted 150 villages across the country and is involved in development of these villages through a special scheme known as 'Union Adarsh Gram Yojana'. In these adopted villages, various developmental activities are being undertaken, like, providing safe drinking water, sanitation and solar lamps. In these villages, Bank has adopted 150 Girl children as part of its initiative to increase enrolment of girl child at the schools. 16.4. Your Bank has also 14 R-SETIs (Rural Self- Employment Training Institutes) and 16 FLCCs (Financial Literacy and Credit Counseling Centers) across the country. The R-SETIs and FLCCs extend financial literacy, counseling and training to the needy people so that they become self-reliant. Through these R-SETIs, 28522 persons have been provided training so far and 18709 beneficiaries have been settled with employment. 16.5. During the year 2012-13, Bank spent a total of Rs. 1,23,99,700 by way of donation. This included Rs. 25,00,000 under the Chief Minister's Relief fund for the calamity affected state of Assam, Rs. 6,89,700 for the cancer relief fund, Rs. 28,00,000 for the purchase of two food distribution vehicles and Rs. 26,25,000 to the National Charitable Welfare Society (NCWS) for installation of solar lamps in Barabanki District of Uttar Pradesh. 17. Acknowledgement 17.1. The Board of Directors would like to express their sincere thanks to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority and Central Vigilance Commission for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board also records its sincere gratitude to the Bank's valuable shareholders, esteemed customers and all other stakeholders for their continued patronage. The Board also expresses its appreciation to each employee of the Bank for their dedicated service. For and on behalf of the Board of Directors, (D.Sarkar) Chairman & Managing Director Place: Mumbai Dated: 9th May, 2013


Mar 31, 2012

The Directors of your Bank take immense pleasure in presenting the 93rd Annual Report of the Bank for the year 2011-12 along with statement of the 'Audited Balance Sheet', 'Profit & Loss Account', 'Cash-Flow Statement' on standalone and consolidated basis and the report on 'Management Discussion & Analysis'. The Corporate Governance Report also forms part of the Annual Report.

1. Overview:

a. Your Bank's objective is to create values on sustainable basis for its customers, shareholders and the employees. This is possible through continuously adding strengths in the organization. The prospects of your Bank would depend upon how efficient is its customer acquisition and retention strategy and how strong is its human resource management system for ensuring customer service excellence. Realizing this, during the financial year 2011-12, your Bank focused on two important initiatives directed at achieving 'customer service excellence' and building strong 'human resources'. Significant steps were undertaken in both these areas.

b. Business scenario during 2011-12 was not conducive due to weakness in global demand and challenging macroeconomic conditions in India. Banking sector growth was also subdued as high interest rate on account of RBI's monetary tightening led to fall in investment and consumption demand. Your Bank was also impacted by the slowdown. Even in this backdrop, total Business of your Bank crossed landmark of Rs 4,00,000 crore; Operating Profit crossed landmark of Rs 5,000 crore and Net Interest Margin remained high.

Table - 1:

Key Performance Indicators (Rs crore)

Parameters FY 2011 FY 2012 Annual Change(%)

Total Business 355483 403900 13.62

Net Interest Income 6216 6909 11.15

Operating Profit 4305 5254 22.04

Provisions 2223 3467 55.96

Net Profit 2082 1787 -14.17

Net Interest Margin (NIM) 3.33% 3.21% -12 bps

Capital Adequacy Ratio 12.95% 11.85% -110 bps

Gross Profit per employee 15.52 17.04 9.79 (Rs lakh)

Dividend (Rs per share) 8.0 8.0 No Change

Book Value per Share (Rs) 213.171 237.481 11.40

Brief details on the Bank's performance are as hereunder:

2. Business:

a. The Total Business of the Bank registered an annual growth rate of 13.62% from Rs 3,55,483 crore as on March 31, 2011 to Rs 4,03,900 crore as on March 31, 2012.

b. Deposits increased from Rs 2,02,461 crore as on March 31, 2011 to Rs 2,22,869 crore as on March 31, 2012 with annual growth of 10.08% and Advances increased by 18.30% from Rs 1,53,022 crore as on March 31, 2011 to Rs 1,81,031 crore as on March 31, 2012.

c. The business of Bank's sole overseas branch at Hong Kong registered a growth rate of 59.55% from Rs 6,511 crore as on March 31, 2011 to Rs 10,388 crore as on March 31, 2012. Deposits increased from Rs 590 crore to Rs 1,207 crore while advances increased from Rs 5,941 crore to Rs 9,181 crore during the same period.

3. Profitability:

a. Net Interest Income recorded an annual growth rate of 11.15% from Rs 6,216 crore for the year 2010-11 to Rs 6,909 crore for the year 2011-12. Net Interest Income registered a compound annual growth rate (CAGR) of 21.91% during the last three years.

b. Total Income of the Bank increased by 26.96% from Rs 18,491 crore in 2010-11 to Rs 23,476 crore in 2011- 12. Interest income recorded an annual growth of 28.52%. Yield on advances increased to 11.22% for the year 2011-12 compared to 9.86% for the previous financial year. Yield on investments also increased to 6.96% for the year 2011-12 from 6.55% in the previous year. Thus, total yield on funds recorded an improvement of 107 basis points (bps) from 8.33% to 9.40%.

c. Non-interest income increased by 14.37% from Rs 2,039 crore in 2010-11 to Rs 2,332 crore in 2011- 12. Persistently high rate of Inflation and successive hikes in policy rate by RBI resulted in lower prices of government securities (G-Sec) which adversely affected the Treasury Income during the financial year 2011-12. Recovery in written-off accounts, however, showed a growth of 66.98% during the year. Core non-interest income increased by 12.13% from Rs 1,138 crore in 2010-11 to Rs 1,276 crore in 2011-12.

Table - 2: Non Interest Income

(Rs In crore)

Parameters FY-11 FY-12 Growth%

1. Core Non Interest Income 1138 1276 12.13

2. Treasury Income 689 702 1.89 of which,

Profit on Sale of 464 441 -4.96

Investment

Exchange Profit 225 261 16.00

3. Recovery in Written off 212 354 66.98 Accounts

4. Total Non-Interest Income 2039 2332 14.37 (1 2 3)

d. Total Expenses increased by 28.45% from Rs 14,186 crore during 2010-11 to Rs 18,222 crore during 2011- 12. Interest expenses increased by 39.07% from Rs 10,236 crore to Rs 14,235 crore, mainly due to increase in cost of deposits to 6.93% as compared to 5.53% in the previous year. Total cost of funds also moved up to 6.33% from 5.19% on account of tight liquidity conditions in the financial market and higher policy rates. However, increased costs were offset by higher Yield on Funds.

e. NIM for the year 2011- 2012 stood at 3.21% as against 3.33% in the previous year.

f. Return on Average Assets for the year 2011-12 stood at 0.79% compared to 1.05% for 2010-11.

g. Establishment expenses declined by 4.65% from Rs 2,600 crore during 2010-11 to Rs 2479 crore during 2011-12.

Table - 3: Operating Expenses

(Rs In crore)

Parameters FY-11 FY-12 Growth%

Staff Expenses 2600 2479 -4.65

Other Operating Expenses 1350 1508 11.70

Total Operating Expenses 3950 3987 0.94

h. Cost-to-income Ratio declined to 43.15% from 47.85% reflecting control in establishment expenses and 12% growth in operating income.

i. The Operating Profit for the year 2011-12 crossed the landmark of Rs 5,000 crore. It registered an annual growth rate of 22.04% to Rs 5254 crore from Rs 4,305 crore during the previous year due to strong growth in interest income and control in operating expenses.

j. Net Profit stood at Rs 1787 crore for the year 2011- 12. Net Profit for the year was affected due to higher provisions for restructured accounts to the extent of Rs 507 crore.

4. Productivity Ratios:

a. Average Business per employee recorded CAGR of 15.52% during 2009 to 2012. During the same period, Average Business per branch and Gross Profit per Employee have shown CAGR of 11.39% and 15.01% respectively. Growth in productivity indicators during FY 2009 to FY 2012 is furnished in the table below:

Table - 4: Productivity Ratios:

(Rs In Lakh)

Parameters FY-09 FY-10 FY-11 FY-12 CAGR (%)

Average Business 694 853 1043 1070 15.52 Per Employee

Average Business 7461 8449 9596 10311 11.39 Per Branch

Gross Profit Per 112 13.18 15.52 17.04 15.01 Employee

Gross Profit per 120 130 143 164 10.97 Branch

5. Dividend:

Your Directors are pleased to recommend a dividend of 80% for the year 2011-12, i.e. Rs 8.00 for each share with face value of Rs 10.00. The dividend is maintained at the same percentage as that for FY 2010-11 despite fall in net profit.

6. Shareholders' Return:

The Bank's net worth improved by 16.98% to Rs 13075 crore from Rs 11177 crore in the previous year. Thus, the Book Value per share increased to Rs 237.48 from Rs 213.17 in the previous year. Earnings per share stood at Rs 34.07 as against Rs 39.71 in the previous year. Return on Equity stood at 13.67% for the year 2011-12 from 18.63% in the previous year.

7. Rating & Capital Raising

a. The ratings given by various Credit Rating Agencies for Bank's Tier I & Tier II Capital instruments points to the highest degree of safety regarding timely servicing of financial obligations and these instruments carry lowest credit risk.

Table - 5: Ratings of Bonds:

Rating Perpetual Upper Tier II Lower Tier II Agency Bonds Bonds Bonds

CRISIL AAA AAA AAA

CARE CARE AAA CARE AAA CARE AAA

Brickwork BWR AAA BWR AAA BWR AAA Ratings

ICRA L AA L AA L AAA

Fitch Ratings AA(Ind) AA(Ind) AA (Ind)

b. Bank allotted 2,62,16,620 equity shares of Rs10/- each at a premium of Rs 238.05 aggregating to Rs 650.30 crore on preferential basis to Life Insurance Corporation of India. Consequently the Government shareholding of the Bank has come down from 57.07% as on March 31, 2011 to 54.35% as on March 31, 2012.

8. Capital Adequacy Ratio

Capital Adequacy Ratio (CAR), as per Basel II norms stood at 11.85% as on March 31, 2012, well above the regulatory benchmark of 9%. Tier I CAR stood at 8.37% and Tier-2 at 3.48%.

Table-6: Capital Adequacy Ratio

(Rs In crore)

Parameters FY-11 FY-12

Total Risk Weighted Assets 140095 168178

Capital Fund 18146 19926

Tier-I Capital 12178 14081

CAR-Basel-II 12.95% 11.85%

Tier-I 8.69% 8.37%

Tier-2 4.26% 3.48%

9. Delivery Channels

a. The Bank is having widespread network of branches and ATMs throughout India. During the year 2011- 12, the Bank opened 185 branches and 1167 ATMs. As a result, total number of branches increased from 3016 to 3201 and number of ATMs increased from 2634 to 3801. The ratio of ATM to branches stood at 1.19, which is one of the best in the industry. The bank also introduced remittance product such as NEFT, Interbank Mobile Payment System (IMPS) and E-Cash remittance through ATMs.

b. The Bank is facilitating NEFT and RTGS services to branches across the country. As on March 31, 2012, all branches are NEFT and RTGS enabled.

c. Transactions through electronic channels increased to 54.75% as on March 31, 2012 from 50.49% as on March 31, 2011.

d. The Bank launched an online remittance product, popularly known as UNION FLASH in Dubai on 21st January, 2012. It is a 24 X 7 online remittance solution for Non-Resident Indians (NRIs) in the Gulf who can use the product for instant credit of funds to the resident Indians having account with Union Bank. The Bank became the first public sector Bank in India to introduce such remittance facility under tie-up with UAE exchange.

e. The Bank launched a Customer Care Unit on March 16, 2012 in Mumbai to resolve customer complaints & systematically eliminate the root causes of complaints across channels. The Integrated Case Management Tool (ICMT) has been put in place to integrate complaints across channels.

10. Awards & Accolades:

Your Bank received wide recognition and several awards for its performance and initiatives in many areas.

a. The Bank's Staff College at Bengaluru was selected as the winner of the 'Golden Peacock National Training Award' for the year 2011. This is the 4th occasion the Bank has bagged the prestigious Golden Peacock Award.

b. Bank won ACI Excellence Award 2011 for their project "Customer Empowerment using ACI solution BASE 24" in the Payment Transformation category. ACI Worldwide started ACI Excellence Award in 2010 in recognition of Banks and financial institutions doing most innovative use of their payment system solutions.

c. The Bank received the 'Best Middleware Implementation Award' at the Asian Banker's

Technology Implementation Awards 2011 at the function held in Hongkong on April 7, 2011. The award is given for Enterprise Application Integration solution implemented by the Bank to facilitate seamless integration of different standalone applications being used by the Bank. The Asian Banker has instituted annual IT Implementation Awards programme to determine and award best practices of technological innovation in banking operations.

d. The Bank was awarded a Certificate of Recognition for adopting good Corporate Governance practices as part of the "ICSI National award for Excellence in Corporate Governance" for the year 2011 instituted by the Institute of Company Secretaries of India.

e. Your Bank's in-house journal 'Union Dhara' bagged 7 awards, second time in succession, along with most prestigious "Champion of the Champions Trophy" at 51st Award ceremony of Association of Business Communicators of India (ABCI).

11. Directors:

During the year, the following changes took place in the Board of Directors:

a. Shri B.N.Bhattacharjee was nominated by the Government under sub-section 3 (f) of section 9 of the Banking Companies ( Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. May 4, 2011 as Officer Employee Director.

b. Shri Samir K. Sinha, an official of the Central Government was nominated by the Central Government as a non-wholetime director under sub section 3 (b) nominated on the Board w.e.f July 22, 2011 in place of Shri K.V. Eapen . Further, Shri Rajesh Khullar was nominated in place of Shri Samir K. Sinha w.e.f. November 15, 2011.

c. Shri S.K. Jain was nominated on the Board by the Government under sub-section 3 (a) of section 9 of the Banking Companies ( Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. September 1, 2011 as Executive Director in place of Shri S.C. Kalia whose term ended by superannuation w.e.f. August 31, 2011.

d. Dr. Atul Agarwal Part-time non official Director was nominated by the Government under sub-section 3(h) of section 9 of the Banking Companies ( Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. September 22, 2011.

e. Shri Chandan Sinha, RBI Nominee Director was nominated by the Government under sub-section 3 (c) of section 9 of the Banking Companies ( Acquisition & Transfer of Undertakings) Act ,1970/1980 read with sub clause (1) of clause 3 of the Nationalized Banks ( Management and Miscellaneous Provisions) Scheme 1970/1980 w.e.f. October 13, 2011, in place of Smt. Meena Hemchandra whose term ended on October 12, 2011.

f. Shri N. Shankar, was re-nominated by the Government under sub-section 3 (e) of section 9 of the Banking Companies ( Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. January 19, 2012 as Workmen Employee Director. His earlier term of three years ended on September 14, 2011.

g. Shri D. Sarkar was nominated on the Board by the Government under sub-section 3 (a) of section 9 of Banking companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. April 1, 2012 as the Chairman & Managing Director in place of Shri M.V.Nair whose term ended by superannuation w.e.f. March 31, 2012.

h. Shri Arun Kumar Nanda, Shareholder Director resigned from the Board w.e.f. 28.11.2011 due to his personal reasons.

i. The term of Dr. Gulfam Mujibi came to an end during the year under review w.e.f. January 28, 2012. Appointment for vacancy thereof by the Government is awaited.

j. While welcoming all the new Directors, the Board places on record the valuable services rendered by Shri K.V.Eapen, Shri S.C. Kalia, Smt. Meena Hemchandra, Shri Samir K. Sinha, Shri Arun K. Nanda , Dr. Gulfam Mujibi and Shri M.V. Nair.

12. Directors' Responsibility Statement:

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

a. The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

c. 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 Bank for the year ended on March 31, 2012.

d. 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,

e. The accounts have been prepared on going concern basis.

13. Corporate Governance:

The Board of the bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate Section of the Annual Report. Bank was awarded with "Certificate of Recognition" for excellence in Corporate Governance at the 11th ICSI National Award for the second consecutive year. The Bank was selected as one of the Top 25 companies in India for excellence in Corporate Governance practices by the Institute of Company Secretaries of India partnering with Ministry of Corporate Affairs, Government of India for the years 2008- 09 and 2009-2010.The Corporate Governance report for year 2011-2012 has no audit qualifications.

14. Corporate Social Responsibility:

a. Your Bank is actively engaged in community and social development. Various activities are carried out by this Foundation through a widespread presence of 202 Village Knowledge Centres (VKCs), adoption of 134 villages across the country and is actively involved in development of these villages under a special scheme by name 'Union Adarsh Gram Yojana'. Bank has been taking up various developmental activities in the adopted villages towards drinking water supply, sanitary and lighting. In said model villages, Bank has adopted 123 Girl children as part of the initiative to increase enrolment of girl child at the schools.

b. Further, Bank has 9 Financial Literacy and Credit Counseling Centres (FLCC), 14 R-SETIs (Rural Self-Employment and Training Institutes) across the country.

c. Each VKC assists in overall development of the village by coordinating with various developmental agencies/Government departments and disseminate knowledge to farmers about latest developments in methods of cultivation, technologies, proper use of fertilizers, pesticides, etc. Similarly, R-SETI and FLCC extend financial literacy, counseling and training to the needy people so that they become self-reliant.

d. Your Bank has also associated with TERI (The Energy and Resources Institute) towards the initiative titled 'Lighting a Billion Lives', through which, it aims to bring light into the lives of one billion people living in rural areas by replacing the kerosene and paraffin lanterns used by them, with solar lighting devices. This will facilitate education of children; provide better illumination and kerosene-smoke-free indoor environment for women to do household chores; and provide opportunities for livelihoods both at the individual level and at village level.

e. Bank has also been spearheading its CSR initiative through Union Bank Social Foundation Trust, a public charitable trust which caters to the needs of the poor and marginalized.

f. Besides, your Bank has been supporting various NGOs and other social organizations by donations to social project and initiatives including among other things, initiatives in health, education, sanitation and other social needs. During the year 2011-12, your Bank has spent an amount of Rs 549.81 lacs by way of Donations.

15. Acknowledgement

The Board of Directors would like to express their sincere thanks to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority and Central Vigilance Commission for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co- operation and support. The Board also records its sincere gratitude to the bank's valuable shareholders, esteemed customers and all other stakeholders for their continued patronage. The Board also expresses its appreciation for every employee of the bank for their dedicated service.

For and on behalf of the Board of Directors,

(D.Sarkar)

Chairman & Managing Director

Place: Mumbai

Dated: 26th May, 2012


Mar 31, 2011

The Directors have pleasure in presenting the 92nd Annual Report of your Bank along with statement of Audited Balance Sheet, Profit & Loss Account, Cash-Flow Statement on standalone and consolidated basis and the Report on Management Discussion & Analysis for the financial year ended 31st March 2011. The Corporate Governance Report also forms part of the Annual Report.

1. Overview

a. Your Bank continued with the healthy performance track record during the year 2010-11 while pursuing its broad Vision & Mission objective of becoming the Bank of frst choice in chosen areas. These objectives have short-term as well as long-term goalposts. In the short-run, customer acquisition, business expansion and a profitable growth are the key outcomes while in the long-run Bank pursues a sustainable improvement in the process effciency, product enrichment and people productivity. Our journey towards accomplishing the Vision involves creating values for our customers, our employees and you, our shareholders.

b. During the fiscal year 2010-11, the business environment was not so benign; however, your Bank reported healthy results. Bank also launched two initiatives during the year, for achieving customer service excellence and building a strong human capital chain in the organization. These two initiatives, along with a number of enablers created in the recent years would help your Bank become one of the most preferred banks amongst the existing customer pool and the two emerging customer classes, namely the NextGen customers and new Bankable class. Your Bank is laying a strong foundation for a sustainable growth in the future that would enhance the market share and shareholders value.

Table - 1

Key Performance Indicators (Rs. crore)

FY 2010 FY 2011 Annual Change

Total Business 291289 355483 22.04%

Net Interest Income 4192 6216 48.28%

Operating Profit 3659 4305 17.66%

Provisions 1584 2223 40.34%

Net Profit 2075 2082 0.34%

Net Interest Margin (NIM) 2.71% 3.33% 62 bps

Capital Adequacy Ratio 12.51% 12.95% 44 bps

Gross Profit per employee 13.18 15.52 17.75%

(Rs. lakh)

Dividend (Rs. per share) 5.5 8.0 45.45%

Book Value per Share (Rs.) 173.38 213.17 22.95%

c. The brief highlight of the Banks performance is discussed below, followed by a detailed report on Management Discussion and Analysis.

2. Business Performance

a. Total Business of your Bank increased by 22.04% from Rs. 2,91,289 crore as on March 31, 2010 to Rs. 3,55,483 crore as on March 31, 2011.

b. This comprised Deposit growth of 19.07% from Rs. 1,70,040 crore to Rs. 2,02,461 crore and Advances growth of 26.20% from Rs. 1,21,249 crore to Rs. 1,53,022 crore.

c. Bank has one branch outside India at Hong Kong. The business of Hong Kong branch increased by 94.53%, though on a lower base. Deposits increased from Rs. 370 crore to Rs. 570 crore and advances increased from Rs. 2,977 crore to Rs. 5,941crore.

3. Financial Performance

a. Net Interest Income recorded a growth rate of 48.28% from Rs. 4,192 crore for the year 2009-10 to Rs. 6,216 crore for the year 2010-11.

b. Total Income of the Bank increased by 21.04% from Rs. 15,277 crore to Rs. 18,491 crore. Interest income was the major contributor, within which interest on advances recorded a growth of 24.08% from Rs. 9,696 crore to Rs. 12,031 crore. Interest income on investments increased by 14.93% from Rs. 3,482 crore to Rs. 4,002 crore. Yield on advances stood at 9.86% for the year 2010-11 from 9.94% in the previous year. Yield on investments, however, increased to 6.55% for the year 2010-11 from 6.32% in the previous year, refecting higher coupon on government securities. Total yield on funds also recorded an improvement of 29 basis points (bps) from 8.04% to 8.33%.

c. Non-interest income increased by 3.24% from Rs. 1,975 crore to Rs. 2,039 crore. The major drag was 19.02% fall in income from profit on sale of investments due to volatile and uncertain market conditions prevailing during the year. Excluding this item, non-interest income growth would be 12.34%.

Table - 2

(Rs. In crore)

FY-10 FY-11 Growth%

Inland Commision 352 365 3.69

Treasury Income 573 464 -19.02

Income from Forex 323 429 32.82 transaction

Recovery in Written 183 212 15.85 -off Accounts

Miscellaneous 544 569 4.60

Total 1975 2039 3.24

d. Total Expenses increased by 22.10% from Rs. 11,618 crore to Rs. 14,186 crore. Interest expenses growth was contained at 12.36% by prudent liability management. It increased from Rs. 9,110 crore to Rs. 10,236 crore. The cost of deposits was contained at 5.53% as of March 2011 compared to 5.94% in the previous year. Total cost of funds also declined from 5.51% to 5.19% despite tight liquidity conditions in the financial market and higher policy rates.

e. A decline in cost of funds and increase in yield on funds resulted in 62 bps gain in the Net Interest Margin from 2.71% in the year 2009-10 to 3.33% for 2010-11. NIM remained above 3% for all quarters of the year, and touching 3.44% during the last two quarters of the fscal.

f. However, establishment expenses increased by 91.88% from Rs. 1,355 crore to Rs. 2,600 crore, mainly due to second pension option on account of implementation of bipartite wage settlement and gratuity liabilities due to statutory increase in gratuity limit from Rs. 3.5 lakh to Rs. 10 lakh. The liability on account of pension was Rs. 1,146 crore for the year 2010-11 as against Rs. 178 crore in the previous year. This additional provision impacted the Profitability of the Bank. Further, in accordance with RBI guidelines pension liabilities of Rs. 1,352 crore and Gratuity liability of Rs. 260 crore have been carried forward to be charged over the next four years.

Table - 3

(Rs. In crore)

FY-10 FY-11 Growth%

Staff Expenses 1355 2600 91.88

Other Operating 1153 1350 17.09 Expenses

Total Operating 2508 3950 57.50 Expenses

g. The Operating Profit for the year 2010-11 was Rs. 4,305 crore, an increase of 17.66% over Rs. 3,659 crore recorded in the previous year.

h. Provisions for the year 2010-11 stood at Rs. 2,223 crore, an increase of 40.34% over Rs. 1,584 crore in the previous year. The increased provisions were mainly on account of non-performing assets.

i. The higher pension & gratuity liabilities, provisions for non-performing assets and lower treasury income impacted the Net Profit of the Bank. It stood at Rs. 2082 crore for the year 2010-11 compared to Rs. 2075 crore in the previous year. However, the major hits on the Net Profit of the Bank are one-time in nature.

j. The factors impacting net profit also impacted effciency and Profitability ratios of the Bank. The Return on Average Assets for the year 2010-11 stood at 1.05% compared to 1.25% for 2009-10. During the same period, Cost-to-income Ratio increased to 47.85% from 40.66% reflecting sharp rise in establishment expenses.

4. Productivity Ratios

a. Average Business per employee recorded 18.93% average annual growth rate during the last four years. During the same period Average Business per branch and Gross Profit per Employee have shown average annual growth rate of 12.42% and 15.66% respectively. During the year 2010-11, Bank recorded growth in productivity indicators.

Table - 4

(Rs. In Lakh)

FY-08 FY-09 FY-10 FY-11 CAGR(%)

Average Business 620 694 853 1043 18.93 Per Employee

Average Business 6752 7461 8449 9593 12.42

Per Branch

Gross Profit Per 10.03 11.2 13.18 15.52 15.66 Employee

Gross Profit per 109 120 130 143 9.47 Branch

5. Dividend

Your Directors are pleased to recommend a dividend of 80% for the year 2010-11, i.e. Rs. 8.0 for each share with face value of Rs. 10.0, as compared to 55% in the previous year. Total outflow on account of dividend is Rs. 488.06 crore including dividend tax. The dividend policy of your Bank intends to suitably reward the shareholders while pursuing the objective of adequate capital adequacy ratio for supporting the growth in business.

6. Shareholders Return

Your Banks net worth improved by 27.56% to Rs. 11172 crore from Rs. 8758 crore in the previous year. Thus, the Book Value per share increased to Rs. 213.17 from Rs. 173.38 in the previous year. Earnings per share stood at Rs. 39.71 from Rs. 41.08 in the previous year. Return on Equity was reported at 18.63% for the year 2010-11 from 23.69% in the previous year.

7. Rating and Capital Raising

a. CRISIL assigned AAA/Stable rating to Union Bank of Indias Upper Tier II bonds. The rating factors in Union Banks healthy market position, comfortable resource profle, and adequate earnings profle.

b. Bank raised Capital through issuance of Tier II bonds of Rs. 500 crore during the financial year 2010 -2011.

c. The Bank received an amount of Rs. 111 crore on the 14th July, 2010 towards contribution of the central government in the Perpetual Non Cumulative Preference Shares (PNCPS) of the bank. Bank has allotted 11,10,00,000 Perpetual Non-Cumulative Preference Shares (PNCPS) of Rs. 10/- each to Govt. of India, carrying annual foating coupon benchmarked to Repo Rate with a spread of 100 bps, to be readjusted annually based on the prevailing Repo Rate on the relevant date.

d. Bank also allotted on preferential basis 1,92,14,515 equity shares of Rs. 10/- each at a premium of Rs. 344.94 to Govt. of India. Consequently the Government shareholding in the Bank increased from 55.43% to 57.06%. On account of this preferential issue to Government of India, Banks capital increased by Rs. 682 crore.

8. Capital Adequacy Ratio

Capital Adequacy Ratio (CAR), as per Basel II stood at 12.95% as on March 31, 2011, refecting an increase of 44 basis points from 12.51% in the previous year. The CAR of your Bank is well above the regulatory benchmark of 9%. Tier I CAR stood at 8.69% compared to 7.91% a year ago.

Table-5

(Rs. In crore)

FY-10 FY-11

Total Risk Weighted Assets 122598 140095

Capital Fund 15336 18146

Tier-I Capital 9697 12178

CAR-Basel-II 12.51% 12.95%

Tier-I 7.91% 8.69%

Tier-2 4.60% 4.26%

9. Delivery Channels

a. Your bank crossed a branch network milestone of 3000 during the year. As on March 31, 2011, Banks total branches in India stood at 3015, including 211 new branches opened during the year 2010-11. Besides, Bank also has a branch in Honk Kong. The total number of outlets including extension counters and service branches is 3104 as on March 31, 2011 compared to 2910 outlets in the previous year. Total number of ATMs increased to 2634 during the year, implying an addition of 307 ATMs.

b. Your Bank believes that the customers must get choice of channels including alternative delivery channels. With this objective, Bank has channel facilities of Call Centre, internet banking and mobile banking besides branches and ATMs. There is continuous addition of services offered through these alternative channels and they are fnding favour with the customers.

c. The overseas presence of the Bank includes one branch and fve representative offces at Shanghai, Beijing (both in China), Abu Dhabi (UAE), Sydney (Australia) and London (UK). The offce at London was opened during the year 2010-11.

d. During the year, Bank also received approval from the Reserve Bank of India for converting the representative offce at Sydney into a branch and the representative offce in London (UK) into a subsidiary.

Bank also has approvals for opening a branch in Antwerp (Belgium) and representative offices at Johannesburg (South Africa) and Toronto (Canada). Consequent to RBIs approvals, further processes are at different stages.

10. Brand Building

In todays competitive banking industry, brand building has become imperative for banks. Your Bank regained the brand power through a series of initiatives in the recent years including re-branding exercise undertaken during the year 2008-09. This continued during 2010-11 with various customer centric measures and publicity campaigns. Union Home 10 on 10 media campaign received wide publicity across all media. Similarly, Banks brand power and brand recall gained positively during ICC World Cup. Your Bank is building a brand which is responsive and value creating for the customers and shareholders. Another aspect of brand building that your Bank pursues is becoming a strong employer brand so that the Bank is able to attract and retain talents.

11. Awards & Accolades

Your Bank received recognition and awards for its performance and initiatives in many areas.

a. Dale Carnegie leadership award was conferred on Union Bank of India by Dale Carnegie Training for the Banks transformation initiatives undertaken through project Nav Nirman. With this, your Bank is in the coveted club of previous winners like Ford Motor Company, Coca-Cola, Adidas, Boeing and Wipro Technologies.

b. Award for Excellence in Corporate governance was given at the 10th ICSI National Award for Excellence in Corporate Governance, 2010

c. Outlook Money recognized the Bank as the Best Home Loan Provider

d. Skoch Financial Inclusion Award 2011 was received for innovative work in the area of financial inclusion, particularly fnancing of farmer members of Primary Agriculture Cooperative Societies

e. Bank received Special Prize from IDRBT for excellence in implementing Mobile Banking and Payment application

f. Bank received Asian Banker (Singapore) award for Best Implementation of Middleware

g. Bank received ABCI (Association of Business Communication of India) award for Marketing and Brand communication

h. Banks in-house journal, Union Dhara bagged 7 awards along with most prestigious "Magazine of the year Award" at 50th Award ceremony of ABCI

i. For promotion of Offcial Language, Bank received Reserve Bank Rajbhasha Shield as First Prize under linguistic Region B" for the year 2009-10. Bank also received during the year First Prize under Indira Gandhi Rajbhasha Shield (2008-09) announced by the Government of India.

12. Directors

During the year, the following changes took place in the Board of Directors:

1. Shri B.M. Sharma, Chartered Accountant was nominated by the Government under sub-section 3 (g) of section 9 of Banking companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 w.e.f. April 16, 2010 as Non-Executive Director under Chartered Accountant category.

2. Smt. Meena Hemchandra, RBI Nominee Director was nominated by the Government under clause (c) of sub-section 3 of section 9 of Banking companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 read with sub clause (1) of clause 3 of The Nationalized Banks (Management and Miscellaneous Provisions) Scheme 1970/1980 w.e.f. 30.07.2010, in place of Shri K. Sivaraman whose term ended on 29.07.2010.

3. Shri S. S. Mundra was appointed Executive Director by the Government of India and joined the Bank on September 1, 2010, in place of Shri S. Raman who was appointed as the Chairman & Managing Director of Canara Bank

4. The term of offce of Shri Ashok Singh Part Time Non-offcial Director came to an end during the year under review on his resignation w.e.f. 25.01.2011. Appointment for the vacancy thereof by the Government is awaited.

5. While welcoming all the new Directors, the Board places on record the valuable services rendered by Shri K.Sivaraman, Shri S. Raman and Shri Ashok Singh.

13. Directors Responsibility Statement

The Directors confrm that in the preparation of the annual accounts for the year ended March 31, 2011.

1. The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

3. Reasonable and prudent judgement 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 March 31, 2011.

4. 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,

5. The accounts have been prepared on going concern basis.

14. Corporate Governance

The Board of the bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate Section of the Annual Report. Bank has been awarded with "Certifcate of Recognition" for excellence in Corporate Governance at the 10th ICSI National Award. The Bank was selected as one of the Top 25 companies in India for excellence in Corporate Governance practices by the Institute of Company Secretaries of India partnering with Ministry of Corporate Affairs, Government of India for the years 2008-09 and 2009-2010. The corporate Governance report for year 2010-2011 has no audit qualifcations.

15. Corporate Social Responsibility

a. Your Bank is actively engaged in community and social development and pursues this goal under the aegis of specially set up Union Bank Social Foundation. Various activities are carried out by this Foundation through a widespread presence of 202 Village knowledge Centres (VKCs), 103 Union Adarsh Gram, 8 Financial Literacy and Credit Counseling Centres (FLCC), 13 R-SETIs (Rural Self- employment and Training Institutes) across the country. This includes 1 VKC and 7 FLCC opened during the year.

b. Each VKC assists in overall development of the village by coordinating with various developmental agencies/Government departments and disseminate knowledge to farmers about latest developments in methods of cultivation, technologies, proper use of fertilizers, pesticides etc. Under Union Adarsh Gram Yojana, Bank undertakes a holistic development of the village by converting it into a model village. Similarly, R-SETI and FLCC extend financial literacy, counseling and training to the needy people so that they become part of the mainstream.

c. During the year 2010-11, your Bank extended a donation of Rs. 175.65 lakh to various entities for the purpose of education, health and medical emergency, relief, basic amenities etc. Your Bank is examining the possibility of providing the solar-powered lanterns to the households in the103 Union Adarsh Gram. The objective is to provide illumination to the electricity deprived villages that will facilitate livelihood by increasing the productive hours for rural entrepreneurs, help spread education, improve health, bio-conservation and moreover, a ray of hope for everyone.

16. Acknowledgement

The Board expresses its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority and Central Vigilance Commission for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of customers, shareholders and all other stakeholders. The Board wishes to place on record its appreciation of the dedicated services and contribution made by members of staff in the overall performance of Bank.

For and on behalf of the Board of Directors,

(M. V. Nair)

Chairman & Managing Director

Place: Mumbai Dated: 20th May, 2011


Mar 31, 2010

We are privileged in presenting the 91st Annual Report of the Bank together with audited Balance Sheet, Profit & loss Account, Cash flow Statement and the report on Business and Operation for the year ended March 31, 2010. The Corporate Governance Report also forms part of the Annual Report.

FINANCIAL PERFORMANCE HIGHLIGHT

Table 1: Brief Financial Highlights of the Bank

(Rs.in crore)

FY2009 FY2010 % YOY

Total Business 236968 291289 22.9

- Deposits 138703 170040 22.6

- Advances 98265 121249 23.4 Total Income 13372 15277 14.2

- Interest Income 11889 13302 11.9

- Other Income 1483 1975 33.2 Total Expenses 10290 11618 12.9

- Interest Expense 8076 9110 12.8

- Operating Expense 2214 2508 13.3 Operating Profit 3082 3659 18.7 Provision 1355 1584 16.9 Net Profit 1727 2075 20.2 Dividend 50% 55% 500bps Earnings Per Share (Rs.) 34.18 41.08 20.2 Cost to Income Ratio 41.81 40.66 -115bps

1. As on March 31, 2010, Total Business of the bank stood at Rs. 2.91 lakh crore as against Rs. 2.37 lakh crore as on March 31, 2009, an increase of 22.9%. The business growth was broad-based with contribution from retail and corporate customers, both on assets and liabilities side.

2. The Bank posted a total income and net profit of Rs. 15,277 crore and Rs. 2,075 crore respectively for the financial year ended March 31, 2010 as against Rs. 13372 crore and Rs. 1727 crore respectively in the previous year. The Earning per share (EPS) ratio showed improvement to Rs. 41.08 as against Rs. 34.18 in the previous year, while cost to income ratio declined to 40.66% as against 41.81% in the previous year.

DIVIDEND

1. Your Bank s policy of dividend is to suitably reward the shareholders coupled with ploughing back a part of the profit in order to maintain a healthy capital adequacy ratio for supporting future growth. Accordingly, your Directors are pleased to recommend for a dividend of 55% for the year ended March 31, 2010 as compared to dividend of 50% in the preceding year. The total outflow on account of dividend is Rs. 325 crore including dividend tax. This dividend shall be sub ect to approval of the Government of India.

AWARDS AND ACCOLADES

During the period under review, your Bank continued to receive awards and gain recognition from leading organizations. Some of them are as follows:

i. The Asian Banker ranked Union Bank, the 7th Strongest Bank in Asia-Pacific Region in 2009. The Bank was ranked at No. 3 amongst banks in India.

ii. Winner of Association of Business Communicators of India (ABCI) Gold Award for marketing and Brand Communications, 2010. The award is in recognition of the transformation process undertaken by the Bank.

iii. Bank was awarded the prestigious “Skoch Challenger Award” 2009 for excellence in capacity building through innovative concept of “Village Knowledge Centre” as part of financial inclusion initiatives.

iv. Your Bank is the recipient of National Awards for Excellence in lending to Micro Enterprises during the year 2008-09.

v. Bank also received numerous awards and recognition in IT space as well, some of them are as follows

a. IBA TFCI s Banking Technology Award 2009: Bank has participated in the prestigious Banking Technology Awards 2009 conducted by IBA-TFCI award and bagged best user of Business Intelligence award.

b. Bank completed a ma or IT security implementation and obtained ISO 27001 certificate for its data centre. Union Bank is one of the few banks in country to have this certification, which is a hallmark of IT security processes and their implementation by an organization.

vi. Your Bank was ranked at 275th most valuable global banking brand for calendar year 2009, up from 351st rank in 2008. The ranking is carried by Brand Finance Plc, an independent intangible asset valuation and brand strategy global firm. The brand value rating for Union Bank is A+ (A means strong) compared to BB (BB means Average) in previous year. Bank s brand value increased by 148% during the calendar year 2009.

FINANCIAL PERFORMANCE

A. BUSINESS

1. Your Bank s first phase of transformation process – Nav Nirman - started in the year 2006-07. Bank s focused approach towards enhanced customer service, efficient processes, network expansion and new products since then has resulted in healthy growth in top-line and bottom- line.

2. Bank s compound annual growth rate (CAGR) of business during the financial year 2006-07 to 2009-10 has been 25.1% deposits grew at a 26.0% CAGR and advances at 23.9% CAGR. Thus, Bank s market share in business of scheduled commercial banks (SCBs) has increased by 25 basis points (bps) between last reporting Friday of March 2007 (3.20%) and March 2010 (3.45%).

3. The growth of 29.4% in low cost Current and Saving Bank deposits (CASA) contributed on the liability side, and Total Deposits grew at 22.6% to Rs. 170040 crore as on March 31, 2010. CASA ratio, as a result, has moved up from 30.07% to 31.73%.

4. Bank s credit portfolio grew at 23.4% to Rs. 1,21,249 crore as on March 31, 2010. Thus, Bank s credit to deposits ratio increased by 49bps to 73.71% as on March 31, 2010 from 73.22% during the previous year.

5. Bank s Overseas branch (Hong Kong) mobilized deposits of Rs. 369.78 crore and has a credit portfolio of Rs. 2976.61 crore as on March 31, 2010.

B. PROFITABILITY

1. Your Bank s total income grew by 14.25% to Rs. 15277 crore as on March 31, 2010 from Rs. 13372 crore in the previous year. Total expenses grew at a lesser rate of 12.91% to Rs. 11618 crore as on March 31, 2010 from Rs. 10290 crore in the previous year.

2. During the year, lower credit demand and higher liquidity in the system impacted yield on investment as well as yield on advances. The yield on advances stood at 9.94% as against 11.06% in the previous year. This has resulted in modest interest income growth of 11.88% to Rs. 13302 crore as on March 31, 2010 as against Rs. 11889 crore in the previous year. The interest on advances grew at 9.03% to Rs. 9696 crore from Rs. 8893 reported during last year. The interest on investment saw a growth of 23.0% to Rs. 3482 crore at a yield of 6.32%.

3. Bank has leveraged technology to lower transaction costs and invested in capacity building for future earnings. Bank s total expenses was contained at Rs. 11618 crore as compared to Rs. 10290 crore during the previous year, resulting in an increase of 12.91%. The focus on low-cost deposits resulted in reduction in cost of deposits by 56 bps. The interest expenses increased by 12.8% compared to 26.96% during the previous year.

4. Net interest income increased to Rs. 4192 crore from Rs. 3813 crore in the previous year, a growth of 9.94%.

5. The Bank s Nav Nirman transformation has also supported fee based income growth. The non interest income saw growth of 33.18% to post Rs. 1975 crore compared to Rs. 1483 crore during the previous year. Core fee based income (excluding income from treasury, forex and recovery in written-off accounts) grew by 32.74% to Rs. 896 crore as against Rs. 675 crore in the previous year. Treasury Income also saw a growth of 78.18% to Rs. 572.78 crore as compared to Rs. 321.4 crore in the previous year.

Table 2: Non Interest Income (Rs.in crore)

FY07 FY08 FY09 FY10 %CAGR

Core Fee Based Income 279 505 675 896 46.80

Treasury Income 199 510 517 730 53.56

Income from forex transaction 108 128 143 166 15.92

Recovery in Written Off Accounts 101 177 148 183 21.01

Total Non Interest Income 687 1320 1483 1975 42.19

6. The operating expenses stood at Rs. 2508 crore compared to Rs. 2214 crore, relatively a lower growth of 13.28% compared to 38.98% growth in previous year.

7. The operating profit of the Bank registered a growth of 18.72% to Rs. 3659 crore from Rs. 3082 crore in the previous year.

8. The allocation for provisions and contingencies was Rs.1584 crore during 2009-10 compared to Rs.1355 crore in the previous year. The provision for non- performing assets increased from Rs.546 crore in the previous year to Rs.699 crore, including floating provision of Rs. 158 crore in order to strengthen the Balance sheet.

9. RBI mandates that bank should maintain a minimum provision coverage ratio of 70% effective September 2010. As per the revised norm of RBI, the provision coverage ratio stood at 74.02%. During the year, the provision for standard assets stood at Rs.21 crore (including Rs.13 crore over & above regulatory requirements for unsecured personal loans) and provision for Tax stood at Rs. 758 crore.

9. Profit after tax net profit increased to Rs. 2075 crore compared to Rs. 1727 crore achieved during last year. Buoyancy in the core business operations supported by a healthy growth in Non-Interest Income helped Bank achieve a 20.15% growth in net profit. Bank s operating profit and net profit CAGR during the financial year 2006- 07 to 2009-10 is at 22.3% and 34.9% respectively.

C. SPREAD ANALYSIS

1. Amidst mild economic recovery, lower credit demand and high liquidity, Bank reduced its benchmark prime lending rate (BPLR) twice during the year, a total reduction of 75bps, which reduced yield on advances and yield on fund. Further, hike in cash reserve ratio (CRR) by 50 bps during February 2010 accentuated pressure on yield. The yield on funds decreased to 8.04% from 8.78% registered during last fiscal.

2. Your Bank s average working fund increased to Rs.1,65,519 crore from Rs.1,35,452 crore. Bank s focus on low cost deposits helped reduce the cost of deposits, and hence the cost of fund. The cost of fund during the year reduced from 5.96% as on March 31, 2009 to 5.51% as on March 31, 2010 marking a decrease of 45bps.

3. Thereby, the Net Interest Margin (NIM) saw a decline of 53bps to register 2.71% for the financial year 2009-10 from 3.24% recorded in previous fiscal. The decline in NIM is reflective of trend in credit growth during the year, which remained subdued during the first two quarters. The overall credit growth was lower than the previous year. However, due to prudent funds management, the NIM of your Bank has consistently improved on a sequential basis: from 2.32% in Q1, to 2.42% in Q2, 2.77% in Q3 and 3.39% in Q4.

RATING & CAPITAL RAISING

1. Your Bank received good rating for its Tier 1- Perpetual Bond, Upper Tier II Bond, Lower Tier II Bond. CRISIL has assigned its rating of ‘AAA Stable . The ratings continue to reflect Union Bank s healthy market position, comfortable resource profile, adequate earnings profile, and the support it is likely to receive from its ma ority owner, the Government of India (GOI), in the event of distress. Bank has also received ‘BBB- A-3 - Stable outlook for counter party credit rating by Standard & Poors (S&P).

2. ICRA has upgraded the rating assigned Lower Tier II bonds of the Bank from LAA+ to LAAA with stable outlook. ICRA has also upgraded the rating assigned to Hybrid Tier I bonds programme of the Bank from LAA to LAA+ with stable outlook.

3. Bank raised capital through Tier I & Tier II bonds worth Rs. 1200 crore during the financial year 2009-10.

CAPITAL ADEQUACY RATIO

Your Bank s total Capital Adequacy ratio (CAR), calculated in line with Basel II framework, stood at 12.51%, well above the regulatory benchmark of 9%. Bank s Tier-I CAR was 7.91%.

Table 3: Capital Adequacy Ratio (Rs.in crore)

FY09 FY10

Total Risk Weighted Assets 95245 122598

Capital Fund 12639 15336

Tier 1 Capital 7794 9697

CAR - Basel II 13.27% 12.51%

Tier 1 8.19% 7.91%

Tier 2 5.08% 4.60%

SHAREHOLDERS’ RETURN

Your Bank s Net-worth improved by 25.76% to Rs. 8758 crore from Rs. 6964 crore as reported during last year. The book value per share increased to Rs. 173.38 from Rs. 137.87. The return on equity stood at 23.69% and earning per share increased to Rs. 41.08 from Rs. 34.18 reported during last year. The earning per share grew at CAGR of 34.9% during FY07 to FY10.

EFFICIENCY & PROFITABILITY RATIOS

1. Efficient utilization of assets is reflected through higher than industry average and stable Return on Average Assets and reduction in cost to income ratios. The return on average assets is maintained at a healthy rate of 1.25% as on March 31, 2010. Cost to Income ratio has decreased by 115bps to 40.66% as compared to 41.81% reported during last year, even though Bank continued to invest in capacity building for future earnings including investment in delivery channels and human resources. Operating Expenses to Average Working Fund has also reduced to 1.52% from 1.63% recorded during last year.

2. The following ratios reflect the productivity per employee and branch each ratio shows significant improvement over a period of three years.

Table 4: Productivity Ratios (Rs. in crore)

FY07 FY08 FY09 FY10 %CAGR

Average Business Per Employee 509 620 694 853 18.8

Gross Profit Per Employee 7.7 10.03 11.2 13.18 19.6

Average Business Per Branch 5994 6752 7461 8449 12.1

Gross Profit per Branch 91 109 120 130 12.6

Note: Average Business excludes Average Bank deposits

REACH

1. Your Bank opened 247 new branches & 536 ATMs during the year, taking the total to 2805 branches and 2327 ATMs as on March 31, 2010. The total outlets including extension counters and services branches stood at 2910.

2. As part of its global expansion initiatives, the Bank opened two representative offices during 2009-10 – in Sydney (Australia) & Beiing (China). The representative office in London was opened on April 1, 2010. The Bank already has representative Offices in Shanghai (China) and Abu Dhabi (UAE). The Bank also has a full-fledged branch in Hong Kong. Bank has received approval from RBI for opening of branches at Shanghai (China) and Antwerp (Belgium) and representative offices at Johannesburg (South Africa) and Toronto (Canada).

DIRECTORS

During the year, the following changes took place in the Board of Directors

1. In the Extra Ordinary General Meeting of the Shareholders held on June 22, 2009 to fill up three vacancies of shareholder Directors, Prof. M.S. Sriram was re-elected for another term of three years. Shri Arun Kumar Nanda and Shri S. Ravi were elected for a period of three years in place of Shri R.R. Nair and Prof. N.L. Sarda.

2. Shri S.C. Kalia was appointed Executive Director in place of Shri T.Y. Prabhu by the Government of India and oined Bank on November 21, 2009.

3. Shri K.S. Sreenivasan, part-time non-official Director under Chartered Accountant Category completed his term on October 10, 2009. In his place, Shri B.M. Sharma, Chartered Accountant Director was nominated by the Government under sub-section 3(g) of section 9 of Banking Companies (Acquisition & Transfer of Undertakings) Act 2970 1980 w.e.f. April 16, 2010.

4. The term of office of the following Directors also came to end during the year under review and appointment for the vacancy thereof by the Government is awaited.

1. Shri Debasis Ghosh, Officer Employee Director completed his term on September 25, 2009.

2. Smt. Rani Satish, part-time non-official Director completed her term on January 1, 2010.

While welcoming all the new Directors, the Board places on record the valuable services rendered by Shri R.R. Nair, Prof. N.L. Sarda, Shri T.Y. Prabhu, Shri K.S. Sreenivasan, Shri Debasis Ghosh & Smt. Rani Satish.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2010

1. The applicable accounting standards have been followed and there are no material departures from prescribed accounting standards.

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

3. Reasonable and prudent udgment and estimates were made so as to give a true and fair view of the state of affairs of Bank at the end of the financial year and of the profit of Bank for the year ended on March 31, 2010.

4. 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

5. The accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE

The Board of the Bank is committed to adopt good Corporate Governance practices in letter and spirit. A detailed report on Corporate Governance is given in a separate Section of this Annual Report. Bank was shortlisted amongst Top 25 corporate by the Institute of Company Secretaries of India for National Award for excellence in Corporate Governance. The Corporate Governance report for year 2009-10 has no audit qualifications.

CORPORATE SOCIAL RESPONSIBILITY

1. Your Bank believes in Corporate Social Responsibility by contributing to Society. In this endeavor, Bank has earmarked 1% of its profit for social pro ects which can facilitate visible change in the society and environment in which the Bank operates.

2. In discharging corporate social responsibility, Bank is making a conscious effort to address some of the socio- economic deprivations by identifying new villages and extending banking services to these villages to provide quality of life. Your Bank has expanded its branchless banking operations using biometric smart card technology to 2.42 million rural urban beneficiaries across 2527 locations in 26 districts across the country Covering wage-seekers under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), pensioners under Social Security Pension schemes, the milk pourers under NDDB and the hawkers. Your bank is providing all the basic banking services – Saving Bank account, Micro Credit, Micro Insurance and Remittance.

3. The Bank s Union Adarsh Gram (UAG) Yo ana implemented in 103 villages is showing results in transforming them into model villages by integrated visible development and by empowering the rural populace to lead quality life.

4. Financial literacy is the key to building entrepreneurial capabilities amongst the rural populace. We have opened 201 Village Knowledge Centers (VKCs), 13 Rural Self Employment Training Institute (R-SETIs), 90 Union Mitr centers and 1 Financial Literacy & Credit Counseling Centers (FLCC) to impart knowledge using information technology. These tools broadly provide Financial Education, Credit counseling and Debt management on one-on-one basis and also vocational training for income generating activities.

5. Bank has established Union Bank Social Foundation Trust to carry out its CSR activities. Through this foundation Bank has established chair-professorships at ma or educational institutions enabling them to undertake research for the betterment of mankind.

6. Bank donated Rs.6 lakh to Cochin Child Foundation – for assistance of under privileged children, Rs.11 lakh to Ramakrishna Mission, Nagpur for building Vivekananda Vidyarthi Bhavan, Rs.20 lakh to Bhagwan Mahaveer Viklang Sahayata Samiti, Jaipur for providing Artificial Limbs to 3000 physically challenged people.

7. The Bank has given Rs. 50 lakh each to the state of Karnataka and Andhra Pradesh for supporting the flood victims in the two states.

8. Bank Board has approved adoption of 50 schools in its Lead Districts to fulfill the educational needs of the children and an outlay of Rs.1.5 crore is allotted for this purpose.

9. Union Bank Social Foundation Trust had disbursed Rs.67.77 lakh as grants to its Union Adarsh Grams for carrying out various infrastructural developmental activities for up-liftment of the lifestyle of the villagers.

ACKNOWLEDGEMENT

The Board expresses its gratitude to the Government of India, Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and Development Authority and Central Vigilance Commission for the valuable guidance and support received from them. The Board also thanks the financial institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers, shareholders and other stakeholders. The Board wishes to place on record its appreciation of the dedicated services and contribution made by members of staff for the overall performance of Bank.

For and on behalf of the Board of Directors,

Place: Mumbai (M. V. Nair)

Dated: May 31, 2010 Chairman & Managing Director

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