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Directors Report of United Bank of India

Mar 31, 2016

Dear members,

Bank''s performance during the year was delimited by setting of priorities for gaining desired results in the fields of asset quality and recovery of bad assets. The main performance indicators of growth, profitability, efficiency, productivity, and solvency are as under:

The Bank has registered an Operating Profit of Rs.1811.80 crore during the financial year 2015-16 compared to Rs.2427.94 crore in the financial year 2014-15, registering a decline of Rs.616.14 crore (25.37%). Net profit of the bank for the year 2015-16 stands at Rs.(-281.96) crore compared to a Net Profit of Rs.255.99 crore inp FY 2014-15. Gross Profit per Employee decreased from Rs.15.98 lakh as on Mar''15 to Rs. 12.09 lakh as on Mar''16.

Key Financial Ratios (%) March 2015 March 2016

Cost of Funds 6.38 6.16

Yield on Funds 8.44 7.99

Cost of Deposits 6.88 6.58

Yield on Advances 10.80 9.93

Yield on Investments 8.04 8.02

Spread as a % of AWF 2.07 1.89

Net Interest Margin (NIM) 2.21 2.01

Operating Expenses to AWF* 1.50 1.61

Return on Avg. Assets (RoAA) 0.21 (-)0.22

Return on Equity 5.16 (-)6.01

Business per Employee (Rs. In Crore) 11.53 12.37

Net Profit per Employee (Rs. In Lakh) 1.69 (-)1.88

Book Value 59.20 50.14

*AWF – Average Working Fund

Income and Expenditure Analysis

Interest income of the Bank reached Rs.9936.67 crore in 2015-16 compared to Rs.10180.48 crore earned during the year 2014-15. Interest income being a direct function of growth in advances and the rate of interest charged. Bank cut its Base Rate twice during the year 2015-16 to pass on the benefit of rate cut made by RBI. Non-interest income decreased by Rs.279.38 crore (15.99%) from Rs. 1746.91 crore in the financial year 2014-15 to Rs.1467.53 crore in the financial year 2015- 16. The Yield on Advances declined to 9.93% as at March 2016 compared to 10.80% as at March 2015.

Interest Expenditure declined by Rs.33.71 crore to Rs.7656.11 crore in 2015-16 compared to Rs.7689.82 crore in 2014-15. Lower interest expenditure was ensured by slashing of the rate of interest on retail term deposits in all the brackets. The Cost of Deposit came down from 6.88% in 2014-15 to6.58% in 2015-16. The Bank contained its increase in operating expenses at 7.00% amounting to Rs.126.66 crore.

BUSINESS GROWTH Deposits

Deposits of the Bank reached Rs. 116401 crore as on 31st March, 2016 registering a Y-o-Y growth of 6.97%. Bank''s Savings deposits grew by 10.86 per cent to reach a level of Rs.40810 crore as on March 31, 2016. Share of CASA deposits to total deposits stood at 41.92% as on March 31, 2016. Bank''s retail term deposit stood at Rs.61822 crore with a growth of 8.28%. Share of Bulk Deposits and deposits at preferential rate in total deposits further declined to reach at 4.97% and 1.31% respectively.

The Bank''s customer acquisition campaign resulted in growth of customer base of the Bank from 3.60 crore as at March 2015 to 3.93 crore as at March 2016.

The total credit portfolio of the Bank has started looking up. Gross Advances of the Bank increased by Rs.2342 crore (3.39%) and reached Rs.71412 crore as on March 31, 2016. Credit deposit ratio stood at 61.35% as on March 2016. Bank achieved the PRISEC Advance target of 40% of ANBC. Intensive marketing of retail credit products brought considerable growth in Retail Advances supported by increase in Housing Loan.

Bank''s non-food credit increased from Rs.67667 crore to Rs.70046 crore, while food credit came down from Rs.1403 crore as on March 31, 2015 to Rs.1366 crore at the end of March, 2016.

Total Business

The total business of the Bank reached Rs.187813 crore at the end of the current financial year 2015-16. The total business of Rs.187813 crore consists of Rs.116401 crore of deposit and Rs.71412 crore of advance with a CD Ratio of 61.35%.

Productivity, as measured by business per employee, increased from Rs.11.51 crore as on 31.03.2015 to Rs12.37 crore as on 31.03.2016.

RETAIL LENDING OPERATIONS

Retail Credit has been one of the thrust area of the Bank during the FY 2015-16. Bank has laid special emphasis on sanctioning Retail Loans with focus on Housing Loan and Mortgage Loan which are the major contributors to growth under Retail Credit & comprised 65.03% of total Retail Credit portfolio of the Bank.

Performance:

During the FY 2015-16, lending under Retail Credit has witnessed a positive growth of Rs. 601.41 Crore from Rs. 12050.95 Crore as on 31st March, 2015 to Rs. 12652.36 Crore as on 31st March, 2016, registering a Y-o-Y growth of 4.99%.

The growth during the period has primarily resulted on account of the Housing loan segment which has clocked a positive growth from Rs.5092.74 Crore as on 31.03.2015 to Rs.5969.67 Crore as on 31.03.2016 registering an impressive growth of 17.22%.

Special Initiatives Undertaken:

- Bank has given special emphasis for tie-up with reputed builders to boost up growth in Housing loan. Many upcoming housing projects of reputed builders have been tied up and Bank''s name is being published in their brochure for enhancement of visibility in the home loan market.

- Bank has made tie-up with reputed educational institutions to boost up growth in Education Loan segment.

- A special loan scheme for the brightest and most talented students studying in premier educational institutes of India was offered with various extra special benefits and reduced rate of interest. The list of such institutes was also widened to offer these benefits to a larger section of students.

- Credit Guarantee coverage initiated for the students availing loan under Education loan scheme.

- New products in the name of United Affordable Housing Loan scheme under Prime Minister Awas Yojana launched with subsidy coverage for the Economically Weaker Sections and Low Income Groups and Roof Top Solar Lighting scheme has been launched to popularize it as a part of Housing loan.

- United Two Wheeler Loan Scheme for Salaried, Professional and Self employed and Businessmen and Agriculturists and Bank Mitras has been launched during the financial year.

- Bank has integrated with Vidya Lakshmi Portal in consonance with the Govt guidelines to enable students to apply Online and avail Education loan with ease.

- Bank is a member of Interest Subvention Scheme of Govt. providing Interest Subvention to eligible education loan borrowers as per guidelines of Govt. of India.

- Interest rate of retail loan schemes have been modified to make them more competitive and attractive.

- The online application facility for Retail Loans like Housing and Education was a major success during the FY 2015-16 as many applicants are now actively using this hassle free system for availing such Loans. Online Education Loan applications are being provided with In principle sanction instantly.

- SMS facility has been introduced for facilitating Housing, Car and Two Wheeler loans.

- Wide publicity has been given in respect of retail loan products mainly, Housing, Mortgage and Car loan by displaying advertisement in prime locations of city and urban areas, banners in and around branch premises and by advertisement in FM Radio / TV channel.

- Bank''s official Facebook Page has been launched which features latest information on Bank''s products / services and offerings and emerged as a major marketing tool for retail products.

- Marketing effort has been intensified with a dedicated marketing team consisting of qualified marketing officials to market retail products of the Bank.

Retail Hubs

Bank has established Retail Hubs for faster appraisal and professional approach in processing of loan proposals, thereby making loan sanctioning process hassle free and reducing Turn Around Time (TAT). During FY 2015-16, 24 Retail Hubs functioning in 23 Regions of the Bank sanctioned 6955 retail credit proposals amounting to Rs.1028.83 Crore as against 5373 proposals amounting to Rs.756.93 Crore during the FY 2014-15

TREASURY AND INTERNATIONAL OPERATIONS

The investment portfolio of the Bank increased from Rs.43440 Cr as on 31.03.2015 to Rs.44934 Cr as on 31.03.2016 registering a growth of 3.44%. The SLR investment portfolio increased from Rs.35020 Cr as on 31.03.2015 to Rs.36009Cr as on 31.03.2016 .

Portfolio modified duration increased to 4.66 as at March 2016 compared to 4.62 a year ago. The modified duration of the Available for Sale (AFS) portfolio has also increased to 3.73 as at March 2016 from 3.59 as at March 2015.

The Bank had earned a total trading profit of Rs.824Cr from domestic segment of Treasury during the year 15-16.The average return on investment during the year 15-16 was 8.28% and Yield on Investment during the year 15-16 was 8.02% .

Foreign exchange Business turnover of the bank aggregated to Rs.15089.59 Cr comprising of Rs.3606.59 Cr under Exports, Rs.4430.40 Cr under Imports and Rs.7052.60 Cr under remittances during the year ended 31.03.2016.

Outstanding export credit of the bank stood at Rs.1207.27crore as at 31.03.2016.Bank earned exchange profit of Rs.135 Cr during the year 2015-16 against Rs 97 Cr during 2014-15 .

The bank''s overseas presence covered two countries namely Myanmar and Bangladesh with one Representative Office each at Dhaka, Bangladesh and Yangoan, Myanmar. Indo-Myanmar trade is routed through our Bank. Twenty five (25)banks of Bangladesh maintain thirty eight(38) Vostro accounts in USD and EUR and fifteen(15) banks of Myanmar maintain Twenty three(23) Vostro accounts in EUR, USD, INR & SGD with our Bank. Global IME bank Ltd., Nepal is maintaining Vostro accounts in INR & USD with our Bank.

The bank''s International operations are well supported by a wide network of more than 616 correspondent relationships and 18 Nostro accounts opened with overseas banks in 8 currencies maintained abroad.

OTHER SERVICES

Merchant Banking Division managed Bank''s issue of Basel-III compliant Additional Tier-I bonds for Rs.150 Crore on 29.09.2015. Bank holds certificate of Registration issued by SEBI on Banker to an Issue, Debenture Trustee and Merchant Banker under which it continues to discharge defined duties and responsibilities as per regulatory norms.

GOVERNMENT BUSINESS

Under Government Business, the Bank undertakes the following types of Government Business Activities like:

- Collection of Central Government Revenue viz. Direct and Indirect Taxes (CBDT, CBEC and Customs) through physical mode by Authorised branches and through e-mode (Internet Banking) by all branches of the Bank.

- Collection of State Revenues and Taxes (Sales Tax, VAT, Professional Tax etc), both on line and off line.

- Mobilization of Govt deposits as also Social Security Scheme under PMJDY (PPF, SCSS, Sukanya Samriddhi Account, Savings Bond, Inflation Index Bond, Sovereign Gold Bond, Atal Pension Yojana etc.)

- Handling of Govt Fund ( Departmentalized Ministries'' Accounts, State Govt Treasury Operation)

- Payment of School Teachers'' Salary and all types of pension (Central Govt, State Govt and different autonomous organizations).

The Bank has been authorized to act as Point of Presence (POP) by the Pension Fund Regulatory and Development Authority (PFRDA) and 1094 Branches have been registered as Point of Preference-Service Provider (POP-SP) in Central Recordkeeping Agency, NSDL system for implementation of subscribers'' registration process in National Pension System (NPS) for all citizens of India.

The Bank has also been authorized to act as Aggregator by PFRDA and 1400 branches of the Bank have been registered as NPS lite Collection Centres (NL-CCs) in Central Recordkeeping Agency, NSDL system for implementation of subscribers'' registration process in NPS lite / Swavalamban Yojana for unorganized sector and economically disadvantaged people. The Bank has registered 8356 subscribers from unorganized section of the society under NPS/ NPS lite / Swavalamban Yojana.

A new Social Security Scheme namely Atal Pension Yojana (APY), has been introduced by the Govt. of India on June, 2015 especially a defined pension scheme for the unorganized sectors of the society between the age group (18-40) years to secure their old age income by way of monthly pension ranging between Rs.(1000-5000) on attaining 60 years of age.

All our branches are authorized to enroll subscribers under this new pension scheme. Nearly 35000 subscribers are enrolled into this scheme during this year. This scheme replaced the existing Swavalamban Scheme.

Central Pension Processing Centre (CPPC) set up at H.O. is handling disbursement of Pension to more than 1.04 lac Central Civil, Telecom, Postal, Political, Railway and Defence Pensioners.

To facilitate dissemination of relevant information to the Pensioners, "Pensioners'' Charter" has been displayed in Bank''s website and also in all pension disbursing branches. Bank has also introduced the Digital Life Certificate facility for the pensioners where they can submit their yearly life certificate digitally without visiting the branch, if their account is seeded with AADHAAR.

On-line pension grievance redressal mechanism is available on Bank''s website. Pensioners'' pay-slip are also available in the website of the Bank.

Turnover in respect of Government Business handled by the Bank and Agency Commission earned on such business during the financial year amounted to Rs.42,693.21 Crore and Rs.42.93 Crore respectively. Agency commission earned from Government business during financial year 2015- 16 was as follows:

I BUSINESS TYPE Turn Over Commission (TOC) Earned (Rs. crore)

2015 - 16

TAX 2.32

PENSION 19.92

SCHOOL SALARY 12.69

TREASURY 6.60

PPF,SCSS, SSA, APY, BOND & SDS 0.75

DMA 0.65

TOTAL 42.93

ASSET QUALITY AND RISK MANAGEMENT

The problem of piling up of bad loans starting due to economic downturn when a slowdown in demand and stalled projects made it difficult for borrowers to repay debt, got bigger in size with the Intensive Asset Quality Review (AQR) conducted by the Reserve Bank of India in a bid to start a long overdue clean-up of stressed assets held by the banks. Besides, banks were required to ensure that they are all broadly on the same page in terms of recognition and provisioning, even though each one had flexibility on individual cases.

Despite constant follow up with the recalcitrant borrowers, monitoring of stressed assets and tough measures in hard account, the Bank was not able to contain further growth in NPA level which reached a level of Rs9471crore i.e13.26% of gross advances.

The major steps taken by the Bank for recovery of stressed assets during the year were a liberalized limited period offer of one time settlement (OTS) for NPAs with outstanding balance below Rs.5 lac. To create general awareness among the public the Bank took the initiative by putting up silent road shows and peaceful demonstrations before the establishments of defaulting borrowers.

Asset Quality

The Bank has been complying with RBI guidelines relating to Income Recognition, Asset Classification and Provisioning in percentage terms, gross NPA Ratio of the Bank stood at 13.26% as on 31.03.2016 as against 9.49% at the end of the previous year. In absolute terms Gross NPA stood at Rs9471crore as on 31.03.2016. The Net NPA ratio of the Bank stood at 9.04% as on 31.03.2016 against 6.22% as on 31.03.2015. In absolute terms, the Net NPA stood at Rs.6111crore as on 31.03.2016. The fresh slippages during the FY 2015-16 increased to Rs5011crore as against Rs.4087crore during the FY 2014-15. The cash recovery during the year was Rs.541crore and the up gradation during the year was Rs349crore. The provision coverage ratio of the Bank stood at 53.36% as on 31.03.2016 as against 58.50% as on 31.03.2015. The recovery in technically written off accounts was Rs110 crore during the year 2015-16.

The Bank has a comprehensive Recovery Policy duly approved by the Board covering all avenues for recovery and reduction of NPAs like One time settlement (OTS), sale of charged assets, sale to Asset Reconstruction companies (ARC) etc. The Bank came out with liberalized guidelines during the year for recovery of small value NPA accounts having outstanding balance below Rs.5 lac. The Bank preferred to go for sale of NPA to the tune of Rs.553 crore to ARCs during the FY 2015-16.

CAPITAL & RESERVES

Net Worth of the Bank was assessed at Rs.4685.14 crore as on March 31, 2016. Total paid-up capital of the Bank was Rs.839.52 crore and reserves and surplus was Rs.4999.67 crore. The Government shareholding in the Bank stood at 82% at March 2016.

Composition of Capital March 2016 March 2015

Basel-III Norms Basel-II Norms Basel-III Norms Basel-II Norms

Risk Weighted Assets 73079 69249 66798 65882

Tier 1 Capital 5797 5008 5021 5117

Of which CET1 Capital 5660 NA 5021 NA

Tier 1 Ratio (%) 7.93 7.23 7.52 7.77

Of which CET1 ratio (%) 7.74 NA 7.52 NA

Tier 2 Capital 1572 2235 2034 2404

Tier 2 Ratio (%) 2.15 3.23 3.05 3.65

Total Capital 7369 7243 7055 7521

CRAR (%) 10.08 10.46 10.57 11.42

Capital Adequacy Ratio under Basel-III norms assessed at 10.08% with Tier-1 Ratio at 7.93% and CET1 ratio at 7.74% as at March 2016. Capital Adequacy Ratio under Basel-II norms assessed at 10.46% with Tier-1 Ratio at 7.23% as at March 2016. The Bank has adequate headroom available under both Tier-1 and Tier-2 options to raise capital to support business growth momentum.

Risk Management

The Bank has an Integrated Risk Management system to ensure that the risks assumed by it are within the defined risk appetites and are adequately compensated. To address the various risks to which the Bank is exposed to, the Bank has a robust Risk Management Architecture in the Bank comprising Risk Management Structure, Risk Management Policies and Risk Management Implementation and Monitoring Systems.

Risk Management Structure:

The overall responsibility of setting the Bank''s risk appetite and effective risk management rests with the Board of Directors, apex level management of the Bank. Bank has constituted a Board level Committee named as Risk Management Committee of Board of Directors (RMCBOD) to monitor the implementation of the Risk Management systems of the Bank. There are other internal committees of Top Executives like Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Asset Liability Management Committee (ALCO) to supervise various risk management functions and activities of the Bank.

Bank''s Asset Liability Management Committee (ALCO) is a decision making unit responsible for the strategic management of interest rate and liquidity risks. ALCO met 12 times during the year to review various issues namely interest rates scenario, product pricing for both deposits and advances, desired maturity profile of the incremental assets and liabilities, demand for Bank funds, fixation of Bank''s Base Rate, cash flows of the Bank, profit planning and overall balance sheet management.

The Operational Risk Management Committee (ORMC) has the responsibility of monitoring the operational risk of the Bank and the responsibility of evaluating and taking necessary steps for mitigation of operational risk by designing and maintaining an explicit operational risk management process. It also ensures that the norms, policies and guidelines laid down in Operational Risk Management Policy are strictly adhered to. ORMC met 8 times to discuss various issues from operational risk point of view.

The Credit Risk Management Committee (eCRMC) monitors various credit risk aspects relating to credit policy, procedures and to analyse, manage and control credit risk on a bank wide basis . The Committee met 7 times during the year to discuss various issues from operational risk point of view.

Risk Management Policies:

To address various risks like credit risk, market risk, operational risk, liquidity risk, forex risk and other Pillar-2 risks, the Bank has formulated various risk management policies to identify, manage and mitigate such risks that the Bank is exposed to. The major policies formulated and approved by the Board of Directors of the Bank to address such risks are Lending Policy, Policy on ICAAP, Operational Risk Management Policy, Business Line Mapping Policy, Asset Liability Management Policy, Investment Policy, Disclosure Policy, Credit Audit Policy, Stress Testing Policy, and Policy on Credit Risk Mitigation Technique & Collateral Management etc.

Credit Risk:

To address the Credit risk, Bank has formulated a Lending Policy which lays down policy guidelines for Credit Management covering all areas of operation where credit Risk is involved. The policy enables the Bank to enhance the risk management capabilities by undertaking lending decisions guided by the policy framework for a steady and healthy growth in its loan portfolio.

The Bank has set various prudential limits to individual borrowers, group borrowers, entry level exposure norms, substantial exposure limits, benchmark financial ratios, borrower standards, exposure limits/ceilings to industries, sensitive sectors, rating category etc in alignment with RBI directives. The Board has reviewed such limits during the year.

During the year, analysis of various exposure norms has been undertaken on half yearly basis to ensure Bank''s various exposures are within the exposure limits/ceilings fixed by RBI/ Bank''s Board.

Bank has made its loan appraisal function independent of Risk Rating function. Internal risk rating of loan accounts is carried through a software based rating model to assess the credit proposal and rating of a borrower.

During the year, Bank conducted the credit portfolio analysis on quarterly interval, to study the impact of a particular industry / sector on the credit portfolio of the Bank and adopt strategies to improve the quality of credit portfolio and reduce the potential adverse impact of concentration risk.

During the year, Bank has also undertaken the rating migration analysis of its borrowers on half yearly interval to analyze the stability rate, up gradation rate, down gradation rate and default rate for a one year, two years, three years and four years time horizons and appropriate corrective actions are initiated to protect the portfolio quality.

Market Risk:

For management of Market Risk, the Bank has given emphasis on measuring, monitoring and managing liquidity, interest rates, foreign exchange and equity risk of the Bank. The Market Risk in trading book is monitored and managed as per appropriate control mechanism in place. Market position, funding patterns, duration, counterparty limits and various sensitive parameters are also monitored by the Bank on regular basis. The advanced Risk Management tools such as Value at Risk (VaR), Earnings at Risk (EaR), Net Overnight Open Position Limits (NOOPL) and modified duration limits are used in managing Market Risk.

The Bank measures and monitors liquidity risk for all items of balance sheet through structural liquidity statements and stock ratios on regular basis. The Bank also monitors its Interest rate risk through interest rate sensitivity gap reports.

The Bank has formulated and reviewed its Investment Policy to set operating guidelines for its treasury functions. The Bank has also put in place an Asset Liability Management Policy to address the liquidity risk, interest rate risk etc. These policies comprise management practices, procedures, prudential risk limits, review mechanisms and reporting systems etc. These policies are reviewed periodically in line with changes in financial and market conditions.

Bank has an "Integrated Treasury Management System (ITMS)" software to monitor its investment and treasury portfolio on an ongoing basis along with automated computation of capital charge for Market Risk as well as strengthening the internal control system of investment portfolio of the Bank.

Operational Risk:

The Bank has framed an Operational Risk Management Policy for managing the Operational Risk in an effective manner. The Bank has also formulated Business Line Mapping Policy for mapping various products, activities, and income into different business lines.

Bank''s Operational Risk Management Committee (ORMC) has the responsibility of monitoring the operational risk of the Bank. ORMC also reviews the operational risk loss event data, new products, process and systems adopted by the Bank and provides suggestions for taking corrective/preventive measures to strengthen the internal systems and procedures.

Basel-II and Basel-III Compliance:

In line with guidelines of the Reserve Bank of India, the Bank has successfully migrated to Basel-II framework w.e.f 31st March 2009 by adopting Standardized Approach (SA) for Credit Risk, Basic Indicator Approach (BIA) for Operational Risk and Standardized Duration Approach (SDA) for Market Risk for computing the capital adequacy ratio.

The Bank has also followed Basel-III capital regulation norms w.e.f 1st April 2013 in line with RBI guidelines. The Bank has been computing the Capital to Risk Weighted Assets Ratio (CRAR) on both under Basel-III and Basel-II norms at quarterly interval.

To comply with Pillar 2 guidelines of RBI, the Bank has formulated a Policy on Internal Capital Adequacy Assessment Process (ICAAP) for the assessment of all material risks the Bank is exposed to and the risk management processes which are put in place to manage and mitigate those risks and falso to evaluate its capital adequacy commensurate with such risks.

In line with the ICAAP policy, the Bank prepares the ICAAP Document on yearly basis and submits to RBI after internal validation and approval by the Board of Directors of the Bank. The ICAAP document of the Bank for 2015-16 has been submitted to RBI.

The Bank has reviewed its capital requirement both under Basel-II and Basel-III norms and taken necessary steps for strengthening its capital base.

The Bank also reviewed its ICAAP on quarterly basis for monitoring both risks and capital requirement of the Bank.

In line with RBI guidelines and as per the Stress Testing Policy of the Bank, the Bank conducted Stress Testing analysis on quarterly interval on various risks like Liquidity Risk, Interest Rate Risk, Forex Risk, Credit Risk, Market Risk, and Operational Risk and assessed the impact on capital adequacy and profitability.

For skill development in Risk Management area, the Bank also nominates its officers on regular basis for various trainings/seminars on Risk Management conducted by reputed institutions like CAFRAL, NIBM, IBA, IDRBT, CAB etc.

PRIORITY SECTOR ADVANCES

Bank''s lending to the Priority Sector has reached to Rs.29809 crore as at 31st March 2016 which is 41.16% of ANBC. After issuance of revised guidelines on Priority Sector Lending by Reserve Bank of India, with an objective to surpass the stipulated targets, Bank has given special thrust on financing Small & Marginal Farmers, Micro segment under MSME apart from exploring other potential avenues of increasing PRISEC advances like engaging Collateral Management Companies for Pledge Financing, financing large size units of Dairy, Poultry units, vegetable and flower production under controlled condition (Green House/ Poly House), Plantation etc.

Agriculture Lending:

Bank has disbursed Rs.7401 crore during the FY 2015-16 against a target of Rs.7698 crore recording an achievement of target to the tune of 96%. Lending to Agriculture Sector stands at Rs.12605 crore as on 31st March 2016 which is about 17.40% of ANBC against the stipulated target of 18% of ANBC. Lending to Small & Marginal Farmers stands at Rs.5477 crore which is 7.56% of ANBC against the stipulated target of 7% of ANBC for the year 2015-16.

Lending to Weaker Section:

Lending to weaker section reached to Rs.7733 crore as on 31 March 2016 which is 10.68% of ANBC against the stipulated target of 10%.

Lending to Minority Community:

Bank''s lending to Minority Communities reached to Rs.4474 crore at the end of March 2016 which is 15% of PSL conforming to the stipulation.

Kisan Credit Card:

Bank has organized several special camp for issuance of Kisan Credit Cards to bring more number of new farmers under KCC net as per revised scheme. Bank has issued 94799 fresh KCCs during 2015-16 with credit limits of Rs.538 crore. Total number of outstanding KCCs as on 31st March 2016 stands at 559923 with aggregate outstanding balance of Rs.2266.56 crore. In line with the Government guidelines on issuance of Rupay based ATM enabled cards to all the KCC holders, Bank has issued 3.60 lakh ATM cards to the KCC holders till 31.03.2016 which is 93% of eligible KCC holders (excluding illiterate, unwilling and NPA KCC holders).

Self Help Group:

Bank has credit linkages with 87015 SHGs with an outstanding balance of Rs.366.62 crore as on 31st March 2016. Bank has been implementing NRLM programme for SHGs by providing initial credit limit of Rs.1.25 lakh on 1st grading of SHGs as per the decision of SLBC, West Bengal. Bank has started participating in Community Based Recovery Mechanism (CBRM) with the assistance from State Rural Livelihood Mission (SRLM) which has placed Bank Sakhi/ Bank Mitra at the branches.

Corporate Social Responsibility:

As part of corporate social responsibility, Bank has undertaken the following activities:

United Bank Rural Self-Employment Training Institute (UBRSETI)

Bank has so far set up 14 RSETIs in the states of West Bengal, Assam and Tripura to impart training to the potential entrepreneurs from the financially weak sections of the society. RSETIs have been actively engaged themselves in number of special training programmes, as directed by the government like PMEGP, MGNREGA etc.

During the FY 2015-16, these institutes have imparted training to 11333 rural youths/women, of which 55% trainees have been settled by establishing own economic venture. Out of the total self employed trainees about 75% belong to women and weaker sections communities. These institutes are providing post training hand holding support to the trainees including arrangement of loan from our bank branches to enable them to set up their own ventures.

FLCC

Bank has also set up 38 Financial Literacy Centre (FLCs) in the states of West Bengal, Assam, Tripura and Manipur to extend financial literacy and credit counselling services to the poorer section of the society. In the Financial Year 2015-16, these FLCs are conducting regular outreach programmes which include Outdoor Activities for imparting financial literacy.

United Bank Socio-Economic Development Foundation (UBSEDF)

United Bank Socio Economic Development Foundation (UBSEDF) was established on 30th March 2007 with the objective of promoting and carrying out social and economic developmental activities and rendering assistance to weaker and under privileged section of the society in terms of decision taken by the Board of Directors of the Bank. Bank has extended financial assistance in 71 various welfare activities involving a total sum of Rs.213.00 Lakh towards its CSR activities till 31.03.2016. During the financial year 2015-16, focus was on extending assistance to the proposals under Swachh Bharat Mission/ Swachh Vidyalaya Campaign. In the year, Bank has disbursed Rs.20.59 Lakh for 5 projects for implementation by the respective organizations towards cause of the society.

MSME ADVANCES

Performance of the MSME sector of the loan is furnished below:

FY 2013-14 FY 2014-15

Category No. of a/cs O/s Amt. No. of a/cs O/s Amt. Growth

Micro 234888 7259 221214 8287.12 14.16

Small 14807 4225 14235 4057.59 -3.96

MSE 249695 11484 235449 12344.71 7.49

Medium 372 600 332 604.42 0.74

MSME 250067 12084 235781 12949.13 7.16

Category FY 2015-16

No. of a/cs O/s Amt. Growth (Y-o -Y)

Micro 240877 7,491.53 -9.60

Small 16632 3,506.50 -13.58

MSE 257509 10,998.03 -10.91

Medium 258283 11,884.94 -8.22

Advances under MSME of the Bank has decreased from Rs.12949crore as on 31-03-2015 to Rs.11885crore as on 31-03-2016.

MSME target could not be achieved due to i) Amendment of PRISEC guidelines by RBI thereby reclassification of Agro processing units to Agriculture from MSME ii) General economic slowdown iii) Withdrawal of CGTMSE guarantee coverage.

Strategies to attain MSME target.

Initiatives to increase flow of credit to MSME sector :

- Keeping in view the MSME target of Rs.14000 Crore for this financial year and the corresponding NPA, our entire attempt is focused on building a quality MSME asset portfolio by credit linkage to quality MSME entrepreneurs/ units, recovery in NPA accounts and preventing fresh slippages.

- To reduce the turnaround time and to create quality asset portfolio a Centralised MSME - Loan Processing Centre (MSME-LPC) has been set up at Head Office. The MSME-LPC will process and sanction the eligible MSME loan proposals of Rs 1.00 Cr and above received from all the locations across country.

- The Regions have been given quarterly and annual MSME targets for Branches under their control. MSME specialized branches and branches having potentiality of MSME advance including those located in close proximity to industrial area / clusters have been advised to focus on procuring new business from the entrepreneurs. Regular follow up in this regard is being done on weekly basis from Head Office.

- Bank considers MSME as one of the thrust areas of the lending and Bank has re-designated 100 additional branches as MSME Specialized Branches and the total number of MSME Specialized Branches now stands at 180 from 87.

- Regular interface with the MSME Associations / Tie up with NSIC and participation in their promotional programmes / workshops / seminars and EDP programmes.

- CGTMSE guarantee coverage for the Bank, which was discontinued from October''2014 has now been restored w.e.f. 01.04.2016 based on Differential Rate Structure of Annual Service Fee (ASF).

- Under Capacity Building approach, Officers dealing with MSME loans and faculty members at Staff Training College (s) are provided training on regular basis for hassle free and dedicated service to MSME entrepreneurs.

- Bank has adopted cluster based approach for MSME financing.

- Bank has encouraged collateral free loan to MSE sector up to Rs. 10.00 lac.

LEAD BANK DIVISION

The Lead Bank Scheme was introduced by Reserve Bank of India in December 1969. The Lead Bank Scheme envisages assignment of lead roles to individual banks (both in public sector and private sector) for the districts allotted to them. The lead bank acts as a leader for coordinating the efforts of all credit institutions in the allotted districts to increase the flow of credit to agriculture, small-scale industries and other economic activities included in the priority sector in the rural and semi-urban areas, with the district being the basic unit in terms of geographical area.

The Bank is the Convener of State Level Bankers'' Committee (SLBC) in the States of West Bengal & Tripura. The Bank is entrusted with Lead Bank responsibility in 34 districts spread over four states; 10 districts in West Bengal, 12 districts in Assam, 4 districts in Manipur and 8 districts in Tripura.

As Lead Bank of the State, the bank remained actively involved in formulation and finalization of Annual credit Plan (ACP) for the State and has drawn up suitable action plan for implementation of different socio economic activities keeping close liaison with Reserve Bank of India, NABARD and State Government Authorities.

The year 2015-16 had been eventful for the Bank as SLBC Convener for both West Bengal & Tripura.

The SLBC meeting organized in Tripura State have been attended regularly by dignitaries like Mr. Yashpal Singh, Chief Secretary, Government of Tripura, Dr. G.S.G. Ayyangar , Principal Secretary, Finance, RD & Agriculture, Government of Tripura, General Manager, Reserve Bank of India and Senior Executives of Line Department of the State.

Dr. Amit Mitra, Hon''ble Finance Minister of Govt. of West Bengal, Regional Director, RBI, CGM, NABARD, Director, DFS, MoF, GoI and the Pricipal Secretaries of Line Departments of the State have regularly attended at the SLBC meetings in the State of West Bengal during the year 2015- 16 to enrich the level of discussion on important issues concerning development of the State.

Under leadership of the Bank the following achievements took place during the year in the States of West Bengal & Tripura:

- In both the States under the leadership of the Bank as SLBC Convener, three Social Security Schemes viz. Pradhan Mantri Jivan Jyoti Bima Yojona (PMJJBY), Pradhan Mantri Suraksha Bima Yojona (PMSBY) and Atal Pension Yojona (APY) were launched in a befitting manner on 9th May 2015. Sri Narendra Modi, Hon''ble Prime Minister inaugurated all three Social Security Schemesthon 9 May 2015 from Kolkata.

- In both the States of West Bengal and Tripura, the roadmap for covering the villages having population more than 5000 have been allotted to member banks for opening of Brick & Mortar bank branches within 31.03.2017.

- Recognition of the contribution made as SLBC Convener of TRIPURA for securing FIRST rank in maximum coverage of Sub Service Areas under Pradhan Mantri Jan-Dhan Yojana.

- Recognition of the contribution made as SLBC Convener of WEST BENGAL for securing FIRST rank in maximum percentage achievements of identified household coverage under Pradhan Mantri Jan-Dhan Yojana.

- Recognition of the contribution made as Lead District Manager, Bankura (West Bengal) of United Bank of India for securing FIRST rank in maximum coverage of sub service areas under Pradhan Mantri Jan-Dhan Yojana.

- Under the Leadership of the Bank, Nagaon district of Assam & North 24 Parganas district of West Bengal have been awarded as Best Districts for implementation of PMJDY by Sri Narendra Modi, Hon''ble Prime Minister of India.

FINANCIAL INCLUSION

With the evolution of digital payment and mobile technology there are means now to deliver advanced products to the population and regions excluded. This in conjunction with large BC network of 4252 Bank Mitras established across 13250 un-banked villages equipped with the latest and best of breed technology, has enabled the Bank to deliver various basic banking services to the excluded population right at their door step.

The highlights of achievements for implementation of Financial Inclusion under Pradhan Mantri Jan Dhan Yojana (PMJDY) during the F.Y. ended 2015-16 are enumerated hereunder:

- Under PMJDY, 72.99 lakh accounts have been opened till end of March''16. Rs.4244.37 crore deposit has been mobilized in PMJDY Accounts upto March''16.

- Out of 72.99 lakh accounts opened, 11.05 lakh accounts (15.15%) are under ''Zero'' balance.

- Credit linkage through Bank Mitra channel has been established in 18.78 lakh FI customers with an outstanding amount of Rs.337.64 crore.

- Bank has rolled out JLG Loan module through Bank Mitras. 26510 FI customers have availed JLG loan where outstanding balance is Rs.3434.17 lakh as at 31st Mar''16, without any default.

46.97 lakh RuPay Debit Cards have been issued.

21.10 Lakh PMJDY Accounts have been Aadhaar linked.

20.98 Lakh customers have been enrolled under Pradhan Mantri Suraksha Bima Yojana (PMSBY).

3.77 Lakh customers have subscribed for insurance cover under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

- Out of 385 death claims lodged under PMJJBY, 242 claims have been settled by LICI.

- Under PMSBY, as against 47 accidental insurance claims received, NIC has settled 24 cases and repudiated 5 cases.

- Our Bank has been awarded as Best Bank in West Bengal by Forum for Inclusive Financial Services (FFIFS) on 06.08.2015 under the category Highest Deposit account opened under PMJDY.

- Chamber of India Micro Small & Medium Enterprise(CMSME), New Delhi has recognized our Bank as Best Bank in 3 categories viz. Best Bank under PMJDY, Best Bank for promotional schemes under emerging Banks and Special Jury award for Turn Around Bank.

Financial inclusion initiatives rest on partnerships which bring together leadership, expertise, experience, and funding. Financial inclusion is our collective responsibility. So, Bank is collectively leveraging the digital technology for ensuring greater financial inclusion.

ORGANIZATION & SUPPORT SERVICES BRANCH EXPANSION

As on 31.03.2016 the total number of branches of the Bank stands at 2011. The bank has 5 Extension Counters & 35 Regional offices across the country.

Population group-wise Composition of Total Branch Network

Number of Branches (% of total)

Location 31.03.2015 31.03.2016

Metropolitan 330 (16.47%) 330 (16.41%)

Urban 463 (23.10%) 466 (23.17%)

Semi-Urban 411 (20.51%) 415 (20.64%)

Rural 800(39.92%) 800 (39.78%)

Total 2004 2011

Geographical location-wise Composition of Total Branch Network

Number of Branches (% of total)

Location 31.03.2015 31.03.2016

Eastern Region 1169 (58.33%) 1169 (58.13%)

North Eastern Region 352 (17.56%) 356 (17.70%)

Western Region 85 (4.24%) 85 (4.23%)

Northern Region 123 (6.14%) 123 (6.12%)

Southern Region 121 (6.05%) 124 (6.16%)

Central Region 154 (7.68%) 154 (7.66%)

Total 2004 2011

The Bank has 242 specialized branches, catering to the specific clientele segment.

Categories of Specialised Branches 31.03.2016

MSME 180

- Asset Recovery Management 4

- Retail Hub 24

- MSME Loan Proc. Hub 1

- Corporate Finance Branch 4

- Service Branch 19

- Women Branch 5

- Treasury Branch 1

- Central Pension Processing Centre 1

- Cash Management Service Hub 1

T O T A L 240

Out of total 2011 branches as on 31.03.2016, 885 (44.01%) are located in 85 Minority Concentration Districts (MCDs) throughout the country. CBS:

All branches are covered under Core Banking Solution (Finacle) system and deployed other applications to facilitate customer service and effective management. As part of its Business Continuity Plan (BCP), Bank conducts periodic DR (Disaster Recovery) Drills.

Network :

Bank is revamping its existing traditional network architecture from Point-to-Point to next generation MPLS technology and also upgrade network bandwidth for higher availability & better performance. Bank has deployed VSATs, ISDN, High Speed Data Connectivity using 3G as back up connectivity at Branches to provide network connectivity in the event of cable cut, failure of BSNL Exchange etc. Bank has implemented WAN optimization solution in all Branches to improve network performance for smooth functioning of bandwidth rich banking application.

Payment Systems:

All branches of the Bank and sponsored RRBs are enabled for interbank fund transfer through Next Generation RTGS and NEFT using Straight Thorough Processing (STP). RTGS/NEFT facilities are also available through Internet Banking for Retail and Corporate customers. Our Mobile Banking customer can also avail NEFT facility. The SWIFT services are seamlessly being offered for worldwide inter-bank financial communication through one ''A'' Category AD Branch and 39 ''B'' Category AD Branches. Bank has also made strategic Business Continuity Planning (BCP) for uninterrupted delivery of services. In order to make continuous effort to improvise the system, Bank has migrated inland Letter of Credit (LC) operation using Straight Thorough Processing (STP) between SFMS & CBS.

Bank Website and Intranet:

Bank''s Intranet portal is used extensively for information sharing, knowledge management and online examinations. Bank has implemented Grievance online, Housing loan, Car loan, Personal Loan on Bank''s website as per directions of Ministry of Finance. These applications enable customers to make all requests online and to keep online tracking of the fate of their applications. Bank has made its Websites IPv6 compliant and DDoS protected. Bank has also setup DR site for its Websites.

Self-service Kiosk:

A new technology initiative of self-service kiosk services has been deployed in the selected branches. The services offered are Passbook printing, Cash deposit and Cheque deposit services.

Mail Messaging System:

Corporate Mail Messaging System with centralized archival solution covering all offices is in place.

SOC & IT Security:

With the growing dependence on IT systems and exponential increase in transactions through electronic delivery channels, Bank has identified Information Security as the key area for sustenance of business. RBI guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds are taken as the guiding principles for management of Information Security in the Bank. Bank is actively pursuing to mitigate gaps to fully comply with RBI guidelines. Bank has engaged professional agency for providing Anti-Phishing, Anti-Pharming, Anti-Trojan and Anti-Malware Managed Services for Bank Websites. Bank has implemented Security Operations Centre (SOC) by integrating all critical devices deployed in data center and disaster recovery center for recording and monitoring of logs. SOC provides the centralized view of Information Security status and command centre for IS Security operations.

Biometric:

Department of Financial services, Ministry of Finance directed all the Public Sector Banks to introduce biometric log-in for employees of the Bank to prevent incidences of authentication frauds. Bank has implemented Biometric Authentication Solution across all its branches.

IS AUDIT

Bank is conducting VAPT (Vulnerability Assessment & Penetration Testing) of external facing applications in certain intervals and mitigates the vulnerabilities, if any observed. Information Security (IS) audit is carried out by External agencies for its Core Banking Solution and all other applications as well as for Data Centre/Disaster Recovery Centre Infrastructure.

Electronic Passbook:

With an aim to leverage technology, the Bank has introduced electronic Passbook (United ePassbook) facility for the customers as a mobile application to view account transactions. A customer can download mobile application from Google Play Store to see transaction history and many other unique features like adding personalized remarks to transactions, creating personalized ledger, maintaining historical transactional data, receiving the account statement through e-mail.

Centralised Payment HUB

The Bank has set up a Centralised Payment HUB at Head Office to handle high volume of transaction of different payment system in a secured, efficient and reliable manner. The Centralised Payment HUB has started its operation w.e.f. 3.11.2014.

The department is catering the following services:- - NACH Debit

- NACH Credit

- ABPS (Aadhar Bridge Payment System)

- Mandate Management System of NPCI

- DBTL (Direct Benefit Transfer to LPG Customers)

- DBT ( Direct Benefit Transfer to beneficiaries for different scheme of Govt of India)

- ECS Credit as Sponsor Bank centrally at CPH, H.O. (migrated from RBI to NACH on 17.02.2015 which was earlier being processed by branches / service branch before coming on NACH platform)

- ECS Debit as Sponsor Bank including Mandate Management System migrated from RBI to NACH platform .

- AEPS ( Aadhar Enabled Payment System) Reconciliation .

- CMS Payment Services

- Corporate Bulk Payment

- GePG (Government e-Payment Gateway)

- CMS Collection Services

- Indo Nepal Remittance Service

- Centralized Mandate Based Direct Debit Service

- Corporate Cash & Cheque Collection Service

- Core ASBA (Application Supported By Blocked Amount)

- Syndicate ASBA

- e-ASBA (through e-banking / Net banking platform)

MANPOWER PROFILE

The total staff strength of the bank stood at 14981 as on March 31,2016 as against 15192 last year.

Category of employees Mar -15 Mar - 16

Total no of employees 15192 14981 Officers 7355 7687

Clerks 5428 5018

Sub - staff 2409 2276

*Excludes part time employee

The total staff strength comprises 51.31% officers, 33.49% clerks and 15.20% Sub-Staff. Women employees numbering 3334 constitute 22.25% of the Bank''s total staff strength.

For 2015-16 Bank recruited 552 Officers and 326 Clerks through IBPS. The recruitment process was initiated for filing up the vacancies to meet effectively succession planning process and man power management for smooth running of the organization.

Inter cadre and inter scale promotions were successfully conducted during FY 2015-16 and in total 885 numbers of employees were promoted to next higher cadre/scale.

Training /Human Resource Development (HRD)

First time United Bank of India has launched a Mentoring process. Top executives shall guide the newly recruited 552 POs.

Bank signed MOU with NIIT - IFBI for a period of three years to train the SWOs for induction and refresher course.

Special Training programmes were conducted with focus on creation of talent pool of officers in critical areas like Credit Risk Management, Financial Inclusion, Management Development, Fraud Analysis, Forex etc. During the year total 231 training programmes were conducted with 4999 employee participants comprising 3409 officers and 850 clerks of the Bank to attend in-house training.

As per Govt guidelines pre-promotion training for employees belonging to SC/ST candidates were conducted for 900 employees at Staff Training College, Kolkata, Regional Training Centres and other different locations. Bank has also conducted in-company training programmes during the year wherein 25 officer employees have participated. Bank had sent 1225 office employees for 71 different external training programmes. During the year Bank had sent one top executive for overseas training programme.

Establishment of HRMS Back Office

- A dedicated HRMS back office has been set up at HO to take care of all staff related payments like :

- Centralized salary payment for all branches/offices.

- Centralized TA / LFC /Medical bill processing and payment

CUSTOMER ORIENTATION

The bank has taken several initiatives to remain customer friendly by providing prompt services, bringing in diversified technology supported products/ services, quickly responding to customer queries/ suggestions and redress of customer complaints. The Code of Commitment to customers issued by BCSBI has been made available at the Bank''s website and also sent to all the Branches & Regional Offices across the country in the form of printed booklet. In order to improve the quality of customer service, a Toll free contact facility at Customer services Department is provided to facilitate the customers to represent their grievances/ suggestions. The toll free facility is made available from 8 AM to 10 PM. With a view to expediting receipt and redressal of complaints/grievances from the customers, no. of toll free desks have since been increased. For AT M related issues a separate Toll free contact facility at Head Office is provided to facilitate the customers. Notably the bank has implemented online grievance redress system through the Bank''s website where the customers can track the status of their complaints also.

In order to facilitate quicker and fair non–discriminatory redress of grievances, Bank has introduced a portal styled as Comprehensive Complaint Management System (CCMS) by leveraging technology. Under this system the complaints received by Branches, Regional offices and Departments at Head office are uploaded/entered by the concerned Branch/Regional Office /Head office Department on the "On line Grievance Redressal" (CCMS) Portal, available at intranet link and the status of redressal/settlement is also uploaded on real Time Basis. The complaint can be lodged on the CCMS Portal directly by the customer also which is added by the system in the outstanding data base of CCMS.

The comprehensive Complaint Management System has helped us track the status of each complaint and to take a comprehensive look with regard to the total complaints received by the Bank during the period and status thereof. The necessary follows–up measures are immediately taken up for expeditious disposal of the complaints and grievances with the concerned Branch/RO/Department of Head Office. The system enables the officials of the Customer Service Department to classify the nature of complaints with respect to the products and services to which the complaints are related. The analysis of data aims to help the bank management to take appropriate action to improve service in the areas which are found deficient. The complaints from various sources, like those received through mails of the officers of Customer Service Department and from the Banking Ombudsman are also entered on the CCMS Portal. The consolidation of complaints from all the ends on the CCMS portal has helped the management in their analysis so as to be able to identify their nature, areas from which maximum complaints are received as also the time taken for the redressal. Such analytical study is aimed at improving the standard of customer service and identifying the areas where staff members are to be trained, products and services are to be suitably modified and communication with the customers is to be strengthened besides bringing about remedial action on systemic issues.

As per recommendations of the Damodaran Committee set up by Reserve Bank of India, our Bank has appointed a C.C.S.O. (Chief Customer Service Officer) w.e.f. 07.12.2015 to enhance the customer confidence and hasten the process of complaints redressal making it more transparent. The customers, if not fully satisfied by the redressal of their complaint by the Bank, are provided with an additional tier to escalate their grievance to CCSO (Internal Ombudsman).

To have a direct feel of the quality of customer service in Kolkata based Branches, incognito visits by the officials of Head Office were conducted which additionally covered several issues such as ambience, discipline, punctuality and matters related to preventive vigilance to safeguard the mutual interest of Bank and customers.

Besides, to educate the young officers of the Bank about its products and services and to help them render quick and improved customer service, an online application titled as ''Quest'' was started in June 2015. ''Quest'' is an application accessible to all the members of award staff and officers of the Bank for raising queries related to Operational Banking on the ''Intranet''. The queries are replied by the select HO officials within a deadline of 24 hours. The process of questioning and answering has been going on since inception on regular basis. The response of the officials to ''Quest'' has been overwhelming and strongly positive.

In financial year 2015–16, percentage of customer complaint redressal has been 99.01%. 472 nos. of complaints were outstanding as at the end of the year out of which 4 nos. of complaints were outstanding for more than one month. 219 nos. of complaints were related to cases filed with the consumer forum. 99.40% of ADC related complaints were resolved within the stipulated period.

No complaint on the GOI Portal (CPGRAMS) was pending for redressal as on 31/03/2016.

INTERNAL CONTROL

Internal Inspection of all the operational units of the Bank is carried out on a continuous basis to ensure effectiveness of internal control mechanism and to provide high quality counsel to management on the effectiveness of risk management and internal controls including regulatory compliance by the Bank. The bank undertakes Risk Based Internal Audit (RBIA) which examines and evaluates the adequacy and effectiveness of the Bank''s system of internal control.

The Audit & Inspection department at the apex level along with its extended arms of seven Regional Inspection Units (RIUs) and a team of Internal Inspectors / External Auditors( CA Firms) at field level is continuously engaged in inspection of Branches / Offices of the Bank as per Board approved Audit & Inspection Policy, for evaluating the level of implementation and adherence to the prescribed procedures and norms, and for identification, measurement and mitigation of risks involved in different functional areas. In order to align with changing scenario of the Banking System, Inspection Process is updated and necessary changes are incorporated in Audit & Inspection Policy of the Bank from time to time. To achieve these objectives, various types of Audits like Risk Based Internal Audit, Concurrent Audit, Credit Audit, Information System Audit, Snap Audit, Revenue Audit, Inspection of HO Departments and Management Audit of Regional offices are conducted.

Risk Based Internal Audit (RBIA) of branches is carried out to focus on effective Risk management and internal controls in respect of areas of potential risks and to play an important role in protecting the Bank from various risks. During the year 2015-16, Risk Based Internal Audit of 1296 branches has been completed.

Concurrent Audit by external audit firms is conducted in branches/offices to ensure accuracy, authenticity and due compliance with Internal Systems, Procedures and guidelines of the Bank. During the year 2015-16, Concurrent Audit of 512 branches have been completed covering total deposit of 53% , total advance of 86% and total business of 66% of the Bank as a whole.

Credit audit is undertaken as an effective monitoring tool by identifying the gaps in the credit delivery process at branches and suggesting ways to bridge the gaps and also monitoring the compliances. During the year 2015-16, the credit audit has covered 91% of the total credit portfolio as on 31 March, 2015 of the bank.

With the increased technology adoption by Bank, the complexities within the IT environment have given rise to considerable technology related risks. The Information System Audit of Bank''s IT infrastructure is conducted to mitigate and effectively manage these technological risks.

KNOW YOUR CUSTOMER (KYC)

The Bank continues to take appropriate measures for strict adherence to KYC norms in case of all the customers and monitor transactions closely for implementation of AML (Anti Money Laundering) standards.

Steps taken to ensure compliance of KYC/AML guidelines are as follows:

- The Bank has put in place an effective AML programme by establishing appropriate procedures and ensures its strict implementation.

- Cash Transaction Reports (CTRs), Suspicious Transaction Reports (STRs),Non-Profit Organization Transaction Reports(NTRs),Cross Border Wire Transfer Reports(CWTRs) and Counterfeit Currency Note Reports(CCRs) are filed with FIUIND in prescribed formats within the time limits.

- Officially Valid Documents (OVDs) are being obtained from all the customers towards identity and address proof. These documents are being captured in CBS system.

- Risk categorization of all the customers and their profile updation is being done through the system.

- The Bank has completed the process of allotment of Unique Customer Identification Code (UCIC) to all the customers on the basis of PAN, Passport and Aadhar number.

SECURITY ARRANGEMENTS

The Bank has taken necessary steps to strengthen the security arrangement in branches by installing security gadgets from time to time in conformity to the guidelines issued by the Reserve Bank of India. Additional security gadgets / services provided at our Bank''s branches are as follows:- - In order to further strengthen the security of the branches all the branches would be equipped with CCTV surveillance system. All the currency chest branches have already been equipped with CCTV system. In addition CCTV System has also been already provided in 751 non currency chest branches. Total 835 branches have been covered with the CCTV Surveillance. Purchase order has been placed and the installation process in the remaining branches is underway.

- As a safeguard against loss of money in the event of cutting of cash safe, 90 most vulnerable branches have been supplied with a higher class of cash safe.

- As an additional safety measure all the Currency Chest branches within the jurisdiction of Kolkata Police have been brought under the Integrated Security Solution (ISS) which has a control monitor at Lal bazar Police Control Room for directly viewing of the activities inside the currency chests in case of a distress.

- In order to implement the Reserve Bank of India Clean note policy all the branches are being equipped with (1 1) pocket Desk Top Authenticator cum Sorter to help the branch to identify the Forged Indian Currency Notes (FICN) at the counter itself. This will also enable the branches to sort the currency notes in to issuable and non issuable currency notes for redistribution amongst the customers and members of public.

- During year 2015-16 the security department pursued and recovered about Rs. 86,55,608 of the insurance claim dues, for the money lost during crime against the bank at different branches, pending with the Insurance Company.

- In order to regulate and monitor visitors to the Bank''s Head Office a Computerized Visitors'' Management System has been installed at the Main Entrance gate of the Head Office.

- To combat the growing menace of cheque frauds, the Bank has redesigned its cheques by incorporating additional security features which include elaborate U V Bands. The number of attempts of frauds through use of fabricated/tampered cheques has come down drastically as a result of it.

PREMISES Purchase:

- Purchase of Land at Agartala under Tripura Region from State Govt. of Tripura for Construction of Bank''s own Building with Currency Chest.

- Purchase of 4BHK Flat at Neelamber Apartment, 28B Shakespeare Sarani, Kolkata-700017 and used as Office-cum-residence of Executive Director

- Purchase of 5BHK Apartment at Gujrat Vihar, New Delhi for Staff Training Centre.

Construction:

- Bank''s own multi-storied building was constructed at Bank''s Commercial Plot192D, Block-B, Sector-52, NOIDA, UP having total construction area of 6249.42 sft spread across Basement, Stilt, Upper Ground Floor, 1st Floor and 2nd Floor.

Upgradation:

- Renovation of the Main Entrance Lobby of Head Office for providing a Corporate Ambience.

- Renovation of Bank''s Flat no.7G, 7th floor, Neelamber Apartment, 28B Shakespeare Sarani.Kolkata-700017 for usage as Office-cum-residence of Executive Director.

- Modification of existing Water Treatment Plant, its Triennial Overhauling, Annual Maintenance and its Day-to-Day Operation at Bank Officer''s quarters at Shantikunj Apartment, Bansdroni, Kolkata.

- Initial Damage Assessment & Structural Audit Report of our Head Office Building in view of the frequently occurring earthquakes and preparation of estimate on Structural Repairs of our Head Office Building as per remedial actions suggested in the Structural Audit Report.

- Supply and installation of solar garden lights at 5th floor terrace garden at UBI Head Office.

Ongoing:

- Expression of Interest (EOI) obtained from Central Government Agencies / State Government Agencies / Public Sector Units for Engagement as Project Management Consultant on "Deposit Works Basis" for various Construction and Procurement Projects of United Bank of India in different parts of India .

- Installation of Photo-Voltaic Grid connected 100KWp Solar Plant at H.O. and STC, Kolkata.

- Phase-Wise conversion of normal light fittings with energy efficient LED Fittings (around 700 nos. have already been converted)

- Replacement and upgradation of old low tension Air Circuit Breakers at Head Office.

- Supply, Installation and Commissioning of Eco friendly DG sets at Bank''s Officers'' Quarter at Shantikunj Apartment.

- Electrical Audit of Branches.

- Overhauling and repairing of Water Treatment and Softening Plants vis-à-vis Annual Maintenance Contract for their Day-to-Day operation and maintenance for 3 (three) years installed at United Bank of India, Head Office Premises.

Initiative taken for implementation of SWACHH BHARAT Mission during the Bank s 66 Foundation Day Celebration on 18-12-2015 for improved ambience at Branches and Offices. Distribution of dust-bins amongst the vendors located around H.O. and increasing their awareness towards cleaner surroundings.

IMPLEMENTATION OF OFFICIAL LANGUAGE

With a view to implement the Official Language Policy of the Government, 31 Officers were trained in regular Hindi of Praveen & Pragya courses at Head Office. Hindi workshops and Unicode training in Hindi were organized for the Officers & employees of the Bank in each quarter at the Staff Training College, Kolkata. The quarterly meetings of Official Language Implementation Committee of Head Office was held under the chairmanship of the Managing Director & CEO. Two issues of in-house Hindi magazine of the Bank were released. Inspection of different Regional Offices and department of Head Office were done to ensure implementation of Official Language.

Head Office has received First Prize from Town Official Language Implementation Committee (Bank) Kolkata for best performance in Hindi. Different regions of the Bank i.e. Patna, Paschim Medinipur, Bhubaneswar, & Mumbai and different Branches like- Nagpur, Pune, Dehradoon, Bhopal & Banaras were received prizes from the TOLIC for implementation of Official Language policy successfully.

REGIONAL RURAL BANKR S R (B)

Bank has sponsored 4 Regional Rural Banks - Bangiya Gramin Vikash Bank (BGVB) in West Bengal, Assam Gramin Vikash Bank (AGVB) in Assam, Tripura Gramin Bank (TGB) in Tripura and Manipur Rural Bank (MRB) in Manipur. The total network of branches stands at 1169 ( including 8 non-functional Branches of MRB due to law and order problem) .

On 31.03.2016 their total Business was Rs.35213 crore with total Deposit of Rs 23678 cr & Advance of Rs.11535 crore. Total profit earned by them is Rs.97.56 crore including Rs.3.23 crore loss of MRB. Average Gross NPA was 13.61 %.

All the RRBs are now working on CBS platform and enabled to NEFT, RTGS, AEPS/ATM through Rupay Card/Nach/PFMS/NECS/PoS. They are equipped with Locker, ALM, Fixed Asset Module, Biometric Authentication & e-kyc etc like technology driven products.

United Demat

"United Demat" is a Demat Service designed to give hassle-free, fast and accurate transactions in capital market. Bank is offering Demat services to its customers since 2007-08 as Depository participant (DP) of Central Depository Services (India) Limited (CDSL).

Benefits:

- Easy and convenient way to hold securities

- Immediate transfer of securities and No stamp duty on transfer of securities

- Safer than paper-shares (earlier risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. are eliminated)

- Reduced paperwork for transfer of securities

- Automatic credit into Demat account for shares arising out of bonus/split, consolidation/merger etc.

- Direct credit of shares allotted in IPO in Demat A/c and Credit of Dividend in linked bank account

- A single Demat account can hold investments in both Equity and Debt instruments. Even Mutual Fund Units, Sovereign Gold Bonds, Insurance Policies etc can be held in Demat form in the same Demat Account.

Services available:

- Opening of Demat account

- Purchase and Sale of Securities

- Dematerialization & Rematerialization

- Pledge & Unpledge

- Freeze & Unfreeze

- Transmission & Transposition

- Redemption of Mutual Fund Units

Bank had launched its share trading product U-Connect-Trio" on 14 th October, 2015 in association with M/s Kotak Securities Ltd. "U-Connect Trio" offers the convenience of opening 3-in-1 account (Savings / Current Account, Demat Account & Trading A/c), wherein, Savings & Demat Account is maintained with United Bank of India while the Trading account is opened with Kotak Securities Ltd.

Customer can invest in Equity market as well as in Mutual Fund schemes online using trading platform of KSL.

ALTERNATE DELIVERY CHANNELS

Bank has always been committed to provide convenience based banking and has thus been introducing all popular and latest alternate banking channels. Bank has been regularly upgrading its systems for development of new products and in improvisation of the processes for operational convenience. The following new initiatives have been undertaken during the FY 2015-16:

- On-line SB Account opening facility.

- Platinum chip based RuPay debit card with higher limits.

- Mudra RuPay debit card.

- IMPS based 24X7 funds transfer facility through Internet Banking.

- Sovereign Gold bond application through Internet Banking.

- Hindi version of Internet & Mobile Banking.

- Self registration of Internet Banking through debit cards.

- Personalized debit card proactive issuance against expired cards.

- Instant fund transfer to other Banks customer on the basis of Mobile number only, named as UFT (United Fund Transfer)

- Mobile & Internet based Wallet services introduced, named United Wallet.

With the above roll out of new products / features, Bank is able to increase the e-mode based transactions to 53%. Bank also remained in the top 5 position in terms of ATM acquiring transactions amongst peer group.

COMPLIANCE

Based on the RBI guidelines and as part of its ongoing sound practices, the bank has also set up a Compliance Department whose role is to co-ordinate the identification of compliance issues, assess and mitigation of compliance risk. Board adopted Compliance Policy has been framed and in activity wise areas like deposit and services, advances, KYC-AML, BCSBI Codes , compliance issues are identified . Role responsibility as regards compliance functions is defined for every tier in the bank. Bank has introduced On-Line Compliance system as a part of green initiative through which all Branches are submitting the compliance, covering important areas of the guidelines from Regulator/Bank. The system facilitates a real time position of Compliance which could be monitored by RO & HO.

Further through random testing by Designated Compliance Officers of Regional Offices and Officers from Compliance Department, the Compliance status is being monitored Under Corporate Governance, the Board of Directors periodically reviews compliance reports to ensure timely submission of regulatory returns by the different departments of the Head office to the GOI / RBI / IBA on regular basis and adherence to all applicable provisions of law, rules and guidelines.

Awards/ Accolades

- Our Bank has been awarded as Best Bank in West Bengal by Forum for Inclusive Financial Services (FFIFS) on 06.08.2015 under the category Highest Deposit account opened under PMJDY.

- Chamber of India Micro Small & Medium Enterprise(CMSME), New Delhi has recognized our Bank as Best Bank in 3 categories viz. Best Bank under PMJDY, Best Bank for promotional schemes under emerging Banks and Special Jury award for Turn Around Bank.

Corporate Governance:

The report of the Board of Directors on Corporate Governance is covered in the separate section on the subject.

Proposed Dividend:

In view of the loss incurred by the Bank for the FY 2015-16, the Board of Directors abstained from declaring any dividend.

Acknowledgement:

The Board of Directors wishes to place on record its appreciation to the patronage and cooperation received from all the stakeholders. The Board also likes to place on record the valuable guidance and excellent support extended by the Reserve Bank of India, Government of India, State Government of West Bengal, other regulatory agencies and all other state level financial institutions. The Board of Directors appreciates the commendable services of the employees at all levels.


Mar 31, 2014

DIRECTORS'' REPORT

The Board of Directors have pleasure in presenting the 64th Annual Report of the Bank along with the Audited Balance Sheet, Profit and Loss Account and the report on Business and Operations for the year ended March 31, 2014 (FY – 2013-14).

FINANCIAL PERFORMANCE

Bank''s performance during the year was in line with the slackened business growth and increase in stressed assets at the industry level. The main performance indicators of growth, profitability, efficiency, productivity, and solvency are as under:

The Bank has registered an Operating Profit of 2061.74 crore during the financial year 2013- 14 compared to Rs. 2049.91crore in the financial year 2012-13, registering a growth of Rs.11.83 crore (0.58%). However, due to higher provisioning requirement for rise in NPA and staff pension and gratuity requirement, Bank suffered a Net Loss of Rs (-)1213.45 crore in FY 2013-14 compared to a net profit of Rs. 391.90 crore earned last year. Gross Profit per Employee worked out to Rs.12.50 lakh for the year.

Key Financial Ratios (%) March 2013 March 2014

Cost of Funds 7.24 7.23

Yield on Funds 9.73 9.44

Cost of Deposits 7.08 7.14

Yield on Advances 11.31 10.83

Yield on Investments 7.91 8.00

Spread as a % of AWF 2.39 2.10

Net Interest Margin (NIM) 2.67 2.28

Operating Expenses to AWF 1.45 1.40

Return on Avg. Assets (RoAA) 0.38 -0.99

Return on Equity 7.20 -35.56

Business per Employee (Rs. In Crore) 10.83 10.67

Net Profit per Employee (Rs. In Lakh) 2.53 -7.35

Book Value 115.83 84.88

AWF – Average Working Fund Income and Expenditure Analysis

Interest income of the Bank during 2013-14 increased by Rs.1347.79crore (14.57%) from Rs. 9251.50 crore in the year 2012-13 to Rs. 10599.29crore. Non-interest income increased by Rs.140.3crore (13.15%) from Rs.1066.57crore in the financial year 2012-13 to Rs.1206.87crore in the financial year 2013-14. The Cost of Deposits increased to 7.14% due to uptrend in interest rates during the year. The Yield on Advances declined to 10.83% as at March 2014 compared to 11.31% as at March 2013.

Interest Expenditure increased to Rs. 8036.47 crore with a lower Y-o-Y increase of 18.8% compared to 23.4% registered during last year. The Bank contained its increase in operating expenses at 13.57% amounting to Rs.1707.95 crore. The Net interest income recorded a growth of Rs.75.6 crore (3.04%) during the year and the Net Interest Margin (NIM) worked out at 2.28%.

Capital & Reserves

Net Worth of the Bank was assessed at Rs.4188 crore as on March 31, 2014. Total paid-up capital of the Bank was Rs.1355 crore 1 while the reserves and surplus stood at Rs.3928 crore. The Government shareholding in the Bank accounted for at 88% at March 2014.

(Rs.in crores) Composition of Capital March 2013 March 2014

Basel-II Norms Basel-II Norms Basel-III Norms

Risk Weighted Assets 62429 60060 61007

Tier 1 Capital 5242 4359 3987

Of which CET1 Capital NA NA 3987

Tier 1 Ratio (%) 8.40 7.26 6.54

Of which CET1 ratio (%) NA NA 6.54

Tier 2 Ratio (%) 2037 2523 1994

Tier 2 Capital 3.26 4.20 3.27

Total Capital 7279 6882 5981

CRAR (%) 11.66 11.46 9.81

Capital Adequacy Ratio under Basel-III norms was assessed at 9.81% with Tier-1 Ratio reaching 6.54% as at March 2014. Capital Adequacy Ratio under Basel-II norms was assessed at 11.46% with Tier-1 Ratio at 8.40% in the same period. The Bank has adequate headroom available under both Tier-1 and Tier-2 options to raise capital to support business growth momentum.

BUSINESS GROWTH Deposits

During the year 2013-14, Total Deposits of the Bank increased from Rs. 100651 crore as on 31stMarch, 2013 to Rs. 111510 crore, registering a growth of 10.79 per cent. Bank''s Savings deposits grew by 9.16 per cent and Bank''s share of CASA at 36.98 per cent as on March 31, 2014. With a view to reduce the cost of deposits, the Bank shed a substantial amount of bulk deposits including certificate of deposits. Thrust had also been given to maintain the share of CASA deposits to total deposits at 40%. The Bank''s customer acquisition campaign resulted in growth of customer base of the Bank from 2.72 crore as at March 2013 to 3.05 crore as at March 2014.

Advances

The total credit portfolio of the Bank went down by Rs.1726 crore (-2.48%) and reached Rs. 67982 crore as on March 31, 2014. Credit deposit ratio stood at 60.96% as on March 31, 2014. Bank achieved the PRISEC Advance target of 40% of ANBC. Intensive marketing of retail credit products brought considerable growth in Retail Advances. The muted growth in Advances is mainly due to the restrictions on disbursement of loans beyond Rs.10 crore to any single borrower or group as advised by RBI in November 2013 considering the deterioration in the asset quality and capital adequacy position.

The Bank is taking all necessary steps to recoup its asset quality. The bank has adequate capital buffer for provision purposes. Moreover, bank is taking necessary steps to improve and strengthen its capital adequacy position and will be approaching RBI for relaxation in credit dispensation.

Bank''s non-food credit declined from Rs.68154 crore to Rs.66480 crore, while food credit came down from Rs.1554 crore as on March 31, 2013to Rs.1502 crore at the end of March, 2014.

Total Business

During 2013-14, the total business of the Bank grew by 5.36% to reach Rs.179492 crore as against Rs.170359 crore during the previous financial year. Productivity, as measured by business per employee, increased to Rs.10.83 crore compared to Rs.9.87 crore a year ago.

SWOT analysis of the Bank STRENGTHS

- Bank has a Pan India presence spread in 28 states and 5 union territories

- Maintaining healthy CASA Ratio of 37% - 40% year after year.

- Customer acquisition remains a top priority of the Bank and customer base crossed the milestone of 3 crore this financial year.

- Strong customer loyalty in the ethnic areas of East & North East India has provided the Bank with stability and has won appreciation and awards in Customer Service on national platform

- Growing fee based and other non-interest income provides better overhead efficiency.

WEAKNESSES

- Bank''s advance has posted a negative growth but non- performing assets have increased. Despite good recovery and upgradation, the Gross NPA to Total Advances ratio still continues to remain high and affects earnings.

- Capital base needs to be strengthened further to support credit expansion and ensure compliance to BASEL-III norms.

- Low credit off take due to industrial downturn in Eastern and North Eastern part of the country where bank is having strong presence

OPPORTUNITIES

- Recent branch expansion in industrially active states will open new vistas for business expansion

- Growth in demand for housing sector opens up scope for Retail Credit expansion

- Industrial climate is likely to improve with stable government in place.

THREATS

- Bank is trying hard to retain borrower base, in view of restrictions on further financing.

- Bank is tackling the issue of retirement of experienced manpower by fresh recruitment

Retail Lending Operations

Retail Credit has been one of the thrust areas of the Bank for growth of credit during the FY 2013-14. Bank has laid special focus on sanctioning of Retail Loans like Housing Loan, Auto Loan and Mortgage Loan which were the major engines of growth under Retail Credit comprising of 65.07% of total Retail Credit Portfolio.

Performance during FY 2013-14:

Lending under Retail Credit witnessed a positive growth of Rs. 308.32 Crore from Rs. 10048.50 Crore as on March 31st, 2013 to Rs. 10356.82 Crore as on March 31st, 2014, registering a Y-o-Y growth of 3.07 %. The growth during the period was primarily accounted for by the following segments: Housing 24.89 %; Car 20.91 % and Mortgage 14.39 %.

- Housing Loan had shown an impressive positive growth during the FY 2013-14. It registered a growth of Rs. 873.28 Crore (24.89%) from Rs. 3508.22 Crore as on 31.03.2013 to Rs. 4381.50 Crore as on 31.03.2014.

- Car Loan also registered a satisfactory growth of 20.91% during FY 2013-14. It surged from Rs 536.97 Crore as on 31.03.2013 to Rs. 649.24 Crore as on 31.03.2014.

- With repackaging of the scheme, the Mortgage Loan registered substantial growth to reach Rs. 1708.16 Crore as on 31.03.2014 compared to Rs.1493.29 Crore as on 31.03.2013 recording a growth of 14.39 % during the period.

Retail Hubs

With a view to promote hassle free credit delivery with reduced turn around time, Bank has set up 26 Retail hubs all over the country In these retail hubs, retail credit proposals are processed electronically. During FY 2013-14, these 26 Retail Hubs functioning in 21 Regions of the Bank sanctioned 9522 retail credit proposals amounting to Rs.1087 crore.

During the Financial Year 2013-14 Bank has launched an innovative scheme for Business Correspondents namely "United Sanyog Paribahan Scheme" to enable them to buy two wheelers to facilitate the cause of financial inclusion.

Besides most other loans like Housing Loan, Auto Loan, Consumer Loan, Education Loan, Mortgage Loan etc. were offered at very competitive rates of interest with various customer friendly features to boost up consumer demand in line with the objectives of Govt. of India. Housing Loan and special Education Loan for premier institutes were offered at Base Rate.

During the Financial Year, the Bank has extended interest subsidy scheme to eligible Education Loan borrowers and interest subvention schemes to eligible Housing Loan accounts as per the Govt. Guidelines.

The online application facility for Retail Loans like Housing and Education has been a major success in FY 2013-14 with many applicants having taken advantage of this hassle free system. Online Education Loan applications facility are also being extended to the prospective tech savvy students.

TREASURY AND INTERNATIONAL OPERATIONS

The investment portfolio of the Bank increased from Rs. 33659 cr as on 31.03.2013 to Rs. 45127 cr as on 31.03.2014 registering a growth of 34%. The SLR investment portfolio increased from Rs. 25672 cr as on 31.03.2013 to Rs. 35100 cr as on 31.03.2014 registering a growth of 36.7%. Portfolio modified duration came down to 4.11 as at March 2014 compared to 4.90 a year ago. The modified duration of the Available for Sale (AFS) portfolio has decreased to 1.96 as at March 2014 from 4.14 as at March 2013.

The Bank had earned a total trading profit of Rs 526 Cr during the year as compared to Rs467 Cr during the previous year.

The average return on investment during the year was 8.05% (8.04% during previous year) and the Yield on Investment increased from 7.91% as on 31.03.2013 to 8.00% as on 31.03.2014.

Foreign business turnover of the Bank aggregated to Rs.16361 crore comprising of Rs. 5838 crore under exports, Rs. 3384 crore under Imports and Rs. 7139.37 crore under remittances as on March,2014.

Outstanding export credit of the Bank stood at Rs. 1191 crore as at March, 2014. Bank earned exchange income of Rs. 155.98 crore during the year 2013-14.

The Bank''s overseas presence covered two countries namely Myanmar and Bangladesh with one Representative Office each at Dhaka, Bangladesh and Yangoan, Myanmar. Indo-Myanmar trade is routed through our Bank. Twenty banks of Bangladesh maintain thirty (30) Vostro accounts in USD and EUR currency and thirteen(13) banks in Myanmar maintain sixteen (16) Vostro accounts in EUR, USD, SGD with our Bank. One Vostro account of Global IME Bank Ltd & one vostro account of Commerz Bank Ltd. is maintained in INR.

The Bank''s International operations are well supported by a wide network of more than 616 Correspondent relationships opened with overseas Banks with 25 Nostro accounts in ten(10) Currencies maintained abroad.

OTHER SERVICES

Merchant Banking Division managed Bank''s first-ever issue of Basel III compliant Tier II Bonds for Rs.500 Crore on 25.06.2013 amongst PSU Banks. Bank holds Certificate of Registration issued by SEBI on Banker to an Issue, Debenture Trustee and Merchant Banker under which it continues to discharge defined duties and responsibilities as per regulatory norms.

The Bank has tie-up arrangements in both life and non-life insurance segments under its ''Bancassurance'' arm. The Bank earned a commission income of Rs. 6.23 crore from the life insurance segment and Rs. 3.78 crore from the non-life insurance segment.

Bank is providing the service of Inward Money Transaction from overseas locations working as an agent of Western Union, Moneygram and Xpress Money Bank earned a commission of Rs.11.56 lakh in this segment.

Under Government Business, the Bank undertakes different types of Government Business Activities like

- Collection of Central Government Revenue viz. Direct and Indirect Taxes (CBDT, CBEC and Customs) through physical mode by Authorized branches and through e-mode (Internet Banking) by all branches of the Bank

- Collection of State Revenue and Taxes (Sales Tax, VAT, Professional Tax etc), both on line and off line.

- Mobilization of Govt deposit (PPF, SCSS, Savings Bond, Inflation Linked Index Bonds etc.)

- Handling of Govt Fund ( Departmentalized Ministries'' Accounts, State Govt Treasury Operation)

- Payment of School Teachers'' Salary and different types of pension (Central Govt, State Govt and different autonomous organizations).

The Bank has been authorized to act as Point of Presence (POP) by the Pension Fund Regulatory and Development Authority (PFRDA) and 1093 Branches have been registered as Point of Preference-Service Provider (POP-SP) in Central Record keeping Agency (CRA) system for implementation of subscribers'' registration process in National Pension System (NPS) for all citizens of India.

The Bank has also been authorized to act as Aggregator by PFRDA in January, 2013 and 1400 branches of the Bank have been registered as NPS lite Collection Centers (NL-CCs) in Central record keeping agency system for implementation of subscribers'' registration process in NPS lite / Swavalamban Yojana for unorganized sector and economically disadvantaged people. The Bank has registered 8356 subscribers from unorganized section of the society under NPS/ NPS lite / Swavalamban Yojana.

Central Pension Processing Centre (CPPC) set up at H.O. is handling disbursement of Pension to nearly 1.00 lac Central Civil, Telecom, Political, Railway and Defense Pensioners. The Bank has also been authorized to disburse Postal Pension w.e.f 01.01.2013.

To facilitate dissemination of relevant information to the Pensioners, "Pensioners'' Charter" has been displayed in Bank''s website and also in all pension disbursing branches. On-line pension grievance redressal mechanism is available on Bank''s website.

Total Turnover in respect of Government Business handled by the Bank and Agency Commission earned on such business during the financial year amounted to Rs. 25756.20 Crore and Rs.66.22 Crore respectively. Agency commission earned from Government business during financial year 2013-14 was as follows:

BUSINESS TYPE Turn Over Commission (TOC) Earned (Rs. in crore)

2012 -13 2013 -14

TAX 3.25 2.27

PENSION 16.94 15.90

SCHOOL SALARY 32.26 40.67

TREASURY 9.16 6.21

PPF, SCSS, BOND & SDS 0.47 0.41

DMA 0.83 0.76

TOTAL 62.91 66.22

ASSET QUALITY AND RISK MANAGEMENT

Asset Quality

The Bank has been complying with RBI guidelines relating to Income Recognition, Asset Classification and Provisioning In percentage terms, gross NPA Ratio of the Bank stood at 10.47% as on 31.03.2014 as against 4.25% at the end of the previous year. In absolute terms Gross NPA stood at Rs. 7118 crore as on 31.03.2014. The Net NPA ratio of the Bank stood at 7.18% as on 31.03.2014 against 2.87% as on 31.03.2013. In absolute terms, Net NPA stood at Rs. 4664 crore as on 31.03.2014. There was fresh generation of NPA of Rs.8007 crore during the FY 2013-14. However, the Bank could effect a NPA reduction of Rs. 3853 crore during the FY 2013-14 which included Rs. 1084 crore of cash recovery and Rs.2288 crore of up gradation. The cash recovery in technically written off accounts was Rs. 95 crore during the year.

Bank''s Recovery Policy has been revised to facilitate quick settlement in existing NPA accounts. The Regional Offices are now empowered with more discretionary power to settle existing NPA accounts and even Branch Heads have been delegated with discretionary power to allow write off in eligible cases. The Bank also came out with a liberalized guidelines during the year for recovery of small value NPA accounts having outstanding balance below Rs.10 lac. The Bank has a well settled policy for sale of assets to Asset Reconstruction Companies. However, no sale of NPA was made during the FY 2013-14.

Risk Management

Capital Adequacy framework and future strategies

The Bank has a robust and integrated Risk Management system to ensure that the risks assumed by it are within the defined risk appetites and are adequately ring fenced. The Bank has a robust Risk Management Architecture comprising Risk Management Structure, Risk Management Polices and Risk Management Implementation and Monitoring Systems in order to address the various risks to which Bank is exposed.

Risk Management Structure:

The overall responsibility of setting the Bank''s risk appetite and effective risk management rests with the Board of Directors, apex level management of the Bank. Bank has constituted a Board level Committee named as Risk Management Committee of Board of Directors (RMCBOD) to monitor the implementation of the Risk Management system of the Bank. There are other internal committees of Top Executives like In-House Risk Management Committee (Credit Risk Management Committee), Asset Liability Management Committee (ALCO) and Operational Risk Management Committee to supervise respective risk management functions.

Bank''s Asset Liability Management Committee (ALCO) is a decision making unit responsible for the strategic management of interest rate and liquidity risks. ALCO met 14 times during the year to review various issues namely interest rates scenario, product pricing for both deposits and advances, desired maturity profile of the incremental assets and liabilities, demand for Bank funds, fixation of Bank''s Base Rate, cash flows of the Bank, profit planning and overall balance sheet management.

The Operational Risk Management Committee (ORMC) has the responsibility of monitoring the operational risk of the Bank and the responsibility of evaluating and taking necessary steps for mitigation of operational risk by designing and maintaining an explicit operational risk management process. It also ensures that the norms, policies and guidelines laid down in Operational Risk Management Policy are strictly adhered to. ORMC met 13 times to discuss various issues from operational risk point of view.

The In-House Risk Management Committee (Credit Risk Management Committee) monitors various credit risk aspects of the Bank by monitoring Bank''s credit risk management functions, apart from market risk and other risks. The Committee met 2 times during the year to monitor the credit risk, market risk and Pillar 2 risks etc.

Risk Management Policies:

To address various risks like credit risk, market risk, operational risk, liquidity risk, Forex risk and Pillar-2 risks, the Bank has formulated various risk management policies to measure, manage and mitigate such risks that the Bank is exposed to. The major policies developed and approved by the Board of Directors of the Bank to address such risks are Lending Policy, Policy on ICAAP, Operational Risk Management Policy, Business Line Mapping Policy, Asset Liability Management Policy, Investment Policy, Disclosure Policy, Credit Audit Policy, Stress Testing Policy, and Policy on Credit Risk Mitigation Technique & Collateral Management etc. All such policies have been reviewed during the year and approved by the Board.

Credit Risk:

To address the Credit risk, Bank has formulated a Lending Policy which lays down policy guidelines for Credit Management covering all areas of operation where credit Risk is involved. The policy enables the Bank to enhance the risk management capabilities by undertaking lending decisions guided by the policy framework for a steady and healthy growth in its loan portfolio.

The Bank has set various prudential limits to individual borrowers, group borrowers, entry level exposure norms, substantial exposure limits, benchmark financial ratios, borrower standards, exposure limits/ceilings to industries, sensitive sectors, rating category etc in alignment with RBI directives. The Board has reviewed such limits during the year.

During the year, analysis of various exposure norms has been undertaken on half yearly basis to ensure Bank''s various exposures are within the exposure limits/ceilings fixed by RBI/ Bank''s Board.

Bank has made its loan appraisal function independent of Risk Rating function. Internal risk rating of loan accounts is carried through a software based rating model to assess the credit proposal and rating of a borrower.

During the year, Bank conducted the credit portfolio analysis on quarterly interval, to study the impact of a particular industry / sector on the credit portfolio of the Bank and adopt strategies to improve the quality of credit portfolio and reduce the potential adverse impact of concentration risk.

During the year, Bank has also undertaken the rating migration analysis of its borrowers on half yearly interval to analyze the stability rate, up gradation rate, down gradation rate and default rate for one year, two year, three year and four year time horizons and appropriate corrective actions are initiated to protect the portfolio quality.

The Bank has put in place a Loan Review Mechanism to improve the quality of loan assets and to ensure adherence to the policies, procedures and other statutory requirements. The Bank also undertakes on-site credit audit for accounts having credit limit over Rs.40.00 lacs to improve the quality of credit portfolio.

Market Risk:

For management of Market Risk, the Bank has given emphasis on measuring, monitoring and managing liquidity, interest rates, foreign exchange and equity risk of the Bank. The Market Risk in trading book is monitored and managed as per appropriate control mechanism in place. Market position, funding patterns, duration, counterparty limits and various sensitive parameters are also monitored by the Bank on regular basis. The advanced Risk Management tools such as Value at Risk (VaR), Earnings at Risk (EaR), Net Overnight Open Position Limits (NOOPL) and modified duration limits are used in managing Market Risk.

The Bank measures and monitors liquidity risk for all items of balance sheet through structural liquidity statements and stock ratios on regular basis. The Bank also monitors its Interest rate risk through interest rate sensitivity gap reports.

The Bank has formulated and reviewed its Investment Policy to set operating guidelines for its treasury functions. The Bank has also put in place an Asset Liability Management Policy to address the liquidity risk, interest rate risk etc. These policies comprise management practices, procedures, prudential risk limits, review mechanisms and reporting systems etc. These policies are reviewed periodically in line with changes in financial and market conditions.

Bank has procured "Integrated Treasury Management System (ITMS)" software to monitor its investment and treasury portfolio on an ongoing basis along with automated computation of capital charge for Market Risk as well as strengthening the internal control system of investment portfolio of the Bank.

Operational Risk:

The Bank has framed an Operational Risk Management Policy for managing the Operational Risk in an effective manner. The Bank has also formulated Business Line Mapping Policy for mapping various products, activities, and income into different business lines.

Bank''s Operational Risk Management Committee (ORMC) has the responsibility of monitoring the operational risk of the Bank. ORMC also reviews the operational risk loss event data, new products, process and systems adopted by the Bank and provides suggestions for taking corrective/preventive measures to strengthen the internal systems and procedures.

As a step towards implementation of advanced approaches for computation of Capital Charge under Operational Risk, Bank has submitted its application to RBI for migration to The Standardized Approach (TSA).

Basel-II and Basel-III Compliance:

In line with guidelines of the Reserve Bank of India, the Bank has successfully migrated to Basel-II framework w.e.f 31st March 2009 by adopting Standardized Approach (SA) for Credit Risk, Basic Indicator Approach (BIA) for Operational Risk and Standardized Duration Approach (SDA) for Market Risk for computing the capital adequacy ratio.

The bank has also followed Basel-III capital regulation norms w.e.f 1st April 2013 in line with RBI guidelines. The Bank has been computing the Capital to Risk Weighted Assets Ratio (CRAR) on both under Basel-III and Basel-II norms at quarterly interval.

To comply with Pillar 2 guidelines of RBI, the Bank has formulated a Policy on Internal Capital Adequacy Assessment Process (ICAAP) for the assessment of all material risks the Bank is exposed to and the risk management processes which are put in place to manage and mitigate those risks and also to evaluate its capital adequacy commensurate with such risks.

In line with the ICAAP policy, the Bank prepares the ICAAP Document on yearly basis and submits to RBI after internal validation and approval by the Board of Directors of the Bank. The ICAAP document of the Bank for 2013-14 has been submitted to RBI.

The Bank has reviewed its capital requirement both under Basel- II and Basel-III norms and taken necessary steps for strengthening its capital base. The Bank also reviewed its ICAAP on quarterly basis for monitoring both risks and capital requirement of the Bank.

In line with RBI guidelines and as per the Stress Testing Policy of the Bank, the Bank conducted Stress Testing analysis on quarterly interval on various risks like Liquidity Risk, Interest Rate Risk, Forex Risk and Credit Risk and assessed the impact on capital adequacy and profitability.

For skill development in Risk Management area, the Bank also nominates its officers on regular basis for various trainings/seminars on Risk Management conducted by reputed institutions like NIBM, IBA, IDRBT, NIBSCOM, SBI etc.

NATIONAL PRIORITIES

Priority Sector Advances

Lending under Priority Sector has been increased by Rs. 774 crore (from Rs.25604 crore in March 2013 to Rs. 26378 crore in March 2014) representing a growth of 3.02% on a Y-O-Y basis. The percentage share of lending to priority sector was 40.05% of ANBC as on 31.03.2013 and the same stands at 40.11% as on 31.03.2014.

Agriculture Lending:

Lending to Agriculture has increased by Rs.154 crore from Rs. 9571 crore in March 2013 to Rs.9725 crore in March 2014 representing a growth of 1.61% on a Y -o -Y basis. The percentage share of lending to agriculture constitutes 13.62% of ANBC as on 31.03.2014.The percentage share of lending to direct agriculture constitutes 9.12% of ANBC as on 31.03.2014, while the Bank has crossed the stipulated target of Indirect Agriculture which is 4.5% of ANBC.

The Bank disbursed fresh loan of Rs.5080 crore in agriculture covering 3.85 lakh farmers during the financial year registering an increase of 18.63%.

Lending to MSE

Lending under MSE sector has increased by Rs.166 crore

(from Rs. 11072 crore in March 2013 to Rs. 11249 crore in March 2014) representing a growth of 1.50 % only on a Y-O-Y basis. Growth in MSE advances was subdued due to slowdown in economy.

Lending to Weaker Section:

Lending to weaker section stood at Rs.7495 crore as on 31stMarch, 2014. The share of weaker section to ANBC stood at 10.75% as on 31st March 2014 against a national target of 10%.

Lending to Minority Community:

Bank''s lending to Minority Communities increased from Rs.3,859 crore as at end of March 2013 to Rs. 3949 crore as at the end of March 2014. The share of lending to Minority Communities in the Priority Sector lending of the Bank stood at 15.02% as on 31st March 2014.

Lending to Women Beneficiaries:

Lending to women beneficiaries increased by Rs.156 Crore during 2013-14 (from Rs. 3395 Crore as on 31.03. 2013 to Rs. 3551 Crore as on 31.03.2014) representing a growth of 4.5%. As on 31.03.2014, the percentage share of lending to women beneficiaries stood at 5.09% of ANBC as against national target of 5%.

Kisan Credit Card:

Bank issued 164756 fresh Kisan Credit Cards during the year 2013-14 involving total credit limits of Rs.808.60 crore against 152502 KCCs involving Rs. 704 crore disbursed during the financial year 2012-13. As on 31.03.2014, the total number of KCCs issued by the Bank stood at 526883 which involve total credit limit of Rs.1802.06 crore against 466712 KCC holders enjoying a total credit of Rs.1454.26 crore as on 31.03.2013.The growth of KCC in amount during the year 2013-14 is 23.92%

In line with the Government guidelines on issuance of RuPay based ATM enabled cards to all the KCC holders, the Bank has issued 193104 such ATM cards to KCC holders in 2013-14.

Self Help Group:

During 2013 -14 the Bank has established credit linkages with 8529 SHGs providing credit support to the extent of Rs.46.05 crore .

MSME LENDING

The Bank''s credit to Micro, Small and Medium Enterprises (MSMEs) reached Rs.12083 crore in FY 13-14 compared to Rs.11822 crore for FY12-13.

The highlights of the Bank''s lending to MSME Sector as on 31.03.2014 are as under:-

- Total credit to MSME sector as on 31.03.2014 stood at Rs.12083 crore which accounted for 16.74% of Adjusted Net Bank Credit (ANBC).

- Credit to MSE sector increased to Rs.11484 crore as on 31.03.2014 from Rs.11072 as on March 2013 with a Y-O-Y growth of 3.71%.

- Out of this Rs.11484 crore, amount eligible to be classified under Priority Sector is Rs.11249 crore.

- Credit to MSE constitutes 15.91% of ANBC and 43% of Priority Sector lending of the Bank as on 31.03.2014

- Credit to Micro Enterprises has increased from Rs.7089 crore as on 31.03.2013 to Rs.7259 crore as on 31.03.2014 registering a Y-o-Y growth of 2.40%

- The share of lending to Micro Enterprises in total Micro & Small Enterprises stands at 63.21% as against the target of 60% stipulated by RBI.

Performance of Bank in Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):

Bank is one of the Member Lending Institutions (MLI) of Credit Guarantee Fund Trust of Micro and Small Enterprises (CGTMSE) for the purpose of making credit available to Micro and Small Enterprises without collateral security and /or third party guarantee. Bank has registered substantial growth in credit guarantee coverage under CGTMSE in the FY 2013-14.

The performance of our bank under Credit Guarantee Scheme for the year ended on March, 2014 vis-à-vis corresponding period of March 2013 has been given below:

Performance in CGTMSE Sector Amount (Rs. Cr.)

Category Fresh Coverage Cumulative

During FY 2012-13 During FY 2013-14 Growth As on YO-Y 31.03.13 As on 31.03.14 Growth YO-Y

Nos. 8232 10259 25 30839 41098 33

Amount 405.40 479.99 19 1308.88 1788.87 37

Performance of Specialized MSME Branches

As per RBI guidelines, Bank has designated 87 Branches as Specialized MSME Branches where 60% of total advance of the Branch has been extended to MSME Sector, Branch is situated in a cluster of MSEs and / or the branch is located in a District where Bank is the Lead Bank. The total credit extended through these Specialized MSME Branches amounted to Rs.1908 crore as on 31st March 2014.

Progress under various Tie-ups

Bank has entered into / renewed the tie-up arrangement during the year 2013-14 with various renowned manufacturers of Commercial Vehicle, Construction equipment, Solar System Manufactures/Dealers such as Tata Motors, Hindustan Motors, Volvo Eicher, USG Automobiles (Dealer of Force Motors for West Bengal), Piaggio, Kirti Solar, Hyundai Construction Equipments & Tata Power Solar, for extending credit to buy equipment. Further, Bank has signed MoU with NSIC, SIDBI & IIE, Guwahati, leading players in MSME Sector for sponsoring quality MSME proposals to our Branches.

Financial Inclusion

With the objective of bringing the large un-served population under the banking mainstream, the Bank is striving towards a more inclusive growth by making financial products and services available to the poor at their door step through the Business Correspondent Model. As per the Government of India and the Reserve Bank of India directives, the Bank has been actively pursuing the agenda of Financial Inclusion, with key interventions in four areas viz. expanding banking infrastructure, offering appropriate financial products, making extensive and intensive use of technology and through advocacy and active stakeholder participation.

With a view to furthering the financial inclusion initiative, Bank has expanded its reach in more than 9900 villages across the country through the Business Correspondent model during the F.Y.2013-14. The achievements have been summarized below:

Branch opening under ABEP 2013-14:

As per the Annual Branch Expansion Plan (ABEP) for the F.Y.2013-14, Bank has already opened 271 new Branches. Out of the above, 78 Branches have been opened in un-banked rural centers.

BC Outlets: Bank has opened BC outlets in 7337 un-banked villages having population of less than 2000 during the F.Y. 2013- 14. A total of 9921 BC outlets are now operational in the un- banked villages. 4058 BC Agents are engaged to service the FI customers in these villages.

Ultra Small Branches: Bank has opened 1758 Ultra Small Branches in the CSP locations where the Branch officials are visiting with Laptops having VPN connectivity to the CBS.

On-line transaction in BC outlets:

-Bank has rolled out real time ''On-line'' transaction facility in 2290 BC Outlets opened in the 1st phase. New BC Outlets have been opened with ''Online'' services only.

-2.5 Million no frill accounts have been opened with the help of these BC Agents who have mobilized Rs. 24.34 crore deposits as at the end of March''14.

Direct Benefit Transfer:

Leveraging the Aadhaar platform and using the BC infrastructure Bank has successfully rolled out Direct Benefit Transfer (DBT) in 121 identified Districts. Cash subsidy to the tune of Rs.23.77 crore has been disbursed through APBS/NACH channel.

Lead Bank Scheme

The Bank is the Convener of State Level Bankers'' Committee (SLBC) in the State of West Bengal and Tripura. It has assumed lead responsibility in 34 districts spread over four states; 10 districts in West Bengal,12 districts in Assam, 4 districts in Manipur and 8 districts in Tripura.

As Lead Bank of the State, the Bank has been actively involved in formulation and finalization of Annual Credit Plan( ACP) for the State which is embedded in the Lead Bank Scheme and has been taking up suitable action plans for implementation of different socio economic activities keeping close liaison with the State Government authorities

The year 2013-14 had been eventful for the bank as SLBC Convener for both West Bengal and Tripura. The SLBC meetings organized in Tripura State have been attended by dignitaries like Shri Manik Sarkar, Hon''ble Chief Minister and Shri Badal Choudhury, Honorouble Finance Minister of the State, Regional Director, RBI and the Principal Secretaries of Line Department of the State.

DrAmit Mitra , Hon''ble Finance Minister of West Bengal, Regional Director, RBI, CGM, NABARD, Director, DFS, MoF, GoI and the Principal Secretaries of Line Deptts. of the State attended all the SLBC meetings organized in the West Bengal State during the year 2013-14.

Under leadership of the Bank the following achievements took place during the year in the State of West Bengal and Tripura.

- In both the states of West Bengal & Tripura the unbanked villages identified and allotted to banks under FIP having population of less than 2000 have been covered under the target set during the year 2013-14 by opening of banking outlets. In West Bengal, out of target of 8405 villages, all the banks have covered 11602 villages through banking outlets during the year 2013-14 and in Tripura all the identified villages numbering 619 have already been covered through banking outlets during the year 2013-14.

- The Roadmap for covering the villages through banking outlets have been prepared and uploaded in the SLBC (West Bengal) websites.

- The Annual Credit Plan for 2014-15 for both West Bengal and Tripura were finalized during the year and made effective right from 1stApril, 2014.

CORPORATE SOCIAL RESPONSIBILITY

CSR has been assuming greater importance in the corporate world, including the banking sector. Over the years, we at United Bank of India, have integrated CSR principles with the Bank''s financial, promotional and development assistance to the Priority Sector, industrial growth, infrastructure development, as well as our own internal functioning through good corporate governance practices. Our CSR pillars are Sustainable Banking, Environment, Social Commitments, Human Resources Development and Stakeholders Engagements.

We acknowledge that lending to MSME sector, Priority Sector including Education Loans has significant sustainability impact. Responsible banking, along with realization of economic benefits and protection of environment form an integral part of our CSR strategy. For instance, we do not provide credit to Ozone depleting industries. We extend credit to industrial units only after they obtain ''No Objection Certificate'' from the Pollution Control Board, wherever required.

An important plank of our CSR framework has been to widen and deepen the process of financial inclusion by way of purveying micro credit to the disadvantaged sections, such as women minorities and backward classes in rural, unorganized and weaker section of the society.

Rural Self-Employment Training Institute (RSETI) : Bank has so far set up 12 RSETIs in the states of West Bengal, Assam and Tripura to impart training to the prospective entrepreneurs from the downtrodden community of the society.

Up to 31.03.2014, these institutes have imparted training to 33445 rural youths /women of which 23600 trainees are self employed and 2198 trainees are wage employed. Out of 23600 self employed trainees 13338, trainees have got loan from Banks. These institutes are providing post training support (Escort Services) including arrangement of loan from our Bank branches to enable the trainees to set up their own ventures.

FLCC: Bank has also set up 38 Financial Literacy Centers in the states of West Bengal, Assam, Tripura and Manipur to extend financial literacy and credit counseling services to the poorer section of the society. In the Financial Year 2013-14, these FLCs conducted 1612 no of Outdoor Activity, wherein 40489 persons participated and also conducted regular Indoor activity wherein 12771 persons participated.

United Bank Socio Economic Development Foundation (UBSEDF) was established on 30th March 2007 with the objective of promoting and carrying out social and economic developmental activities and rendering assistance to weaker and under privileged section of the society in terms of decision taken by the Board of Directors of the Bank in its meeting held on 18th December, 2006, towards discharging corporate social responsibility of the Bank.

Till the Financial Year 2013-14, the Trust has undertaken various welfare activities involving total assistance of Rs. 138.02 Lac in 62 cases, Year wise break up of which is furnished below.

Year No. of Units Amount of Assistance (Rs/lacs)

2007-08 8 6.50

2008-09 8 7.21

2009-10 7 8.05

2010-11 16 49.39

2011-12 6 17.40

2012-13 9 16.45

2013-14 8 33.02

TOTAL 62 138.02

A few important projects assisted through UBSEDF are, setting up of Arsenic free drinking water plant at Dharampur, 24 Parganas (North), construction of concrete roof of the class rooms of Dakshin Kamarpole F.P.School at 24 Parganas (South) district, setting up Diagonistic Clinic for economically weaker section of the society at Khardah, 24 Parganas (North), self employment unit for the women life convicts of Alipur Correctional Home (Kolkata), construction of Hostel Building and purchase of furniture for physically and mentally challenged children at Duliajan, Assam, providing computers to Kamala Devi Saraswati Shishu Mandir, Meerut for girls students.

Assisting Bharat Sevashram Sangha, Varanasi for purchase of an ambulance and assisting Bijoy krishna Ashram Relief Society, Netaji Eye Hospital, Sarsuna for purchase of one ophthalmological Ultra sound A/B Scan instrument etc.

ORGANIZATION & SUPPORT SERVICES

Branch Network

With the opening of 272 branches during the year 2013-14, the total number of branches stands at 2001 as on 31.03.2014 spreading across all the States of the country consisting of 799 Rural (39.93%), 409 Semi-urban (20.44%), 461 Urban (23.04%) and 332 Metro (16.59%) branches. The Bank has also 4 Extension Counters. The Bank has 35 Regional Offices across the country. State wise position of opening of branches during 2013- 14 is as under:

State No. of State No. of branches branches opened opened

Assam 50 Chhattisgarh 6

Arunachal Pradesh 1 Maharashtra 2

Tripura 10 Gujarat 9

West Bengal 64 Tamil Nadu 15

Bihar 9 Dadra & NH 1



State No. of State No. of branches branches opened opened

Orissa 8 Kerala 6

Jharkhand 6 Karnataka 10

Rajasthan 16 Andhra Pradesh 10

Uttar Pradesh 27 Himachal Pradesh 2

Haryana 9 Madhya Pradesh 1

Nagaland 1 Punjab 6

Uttarakhand 3 TOTAL 272

Out of 272 Branches opened during the year 2013-14, 78 Branches (28.68%) have been opened in unbanked rural centers and 83 branches (30.51%) in Minority Concentration Districts (MCDs). The Bank has also opened 2 Regional offices at Ahmedabad and Jaipur during the year. Out of total 2001 Branches as on 31.03.2014, 884 Branches (44.18%) are located in 85 Minority Concentration Districts (MCDs) throughout the country. 60.37% of total Branches are located at rural and semi urban centers to cater to the people living in hinterland.

Population group-wise Composition of Total Branch Network

Location Number of Branches (% of total)

31.03.2013 31.03.2014

Metropolitan 330 (19.09%) 332 (16.59%)

Urban 397 (22.96%) 461 (23.04%)

Semi-Urban 324 (18.74%) 409 (20.44%)

Rural 678 (39.21%) 799 (39.93%)

Total 1729 2001

Geographical location-wise Composition of Total Branch Network

Location Number of Branches (% of total)

31.03.2013 31.03.2014

Eastern Region 1081 (62.52%) 1168 (58.37%)

North Eastern Region 289 (16.71%) 351(17.54%)

Western Region 73 (4.22%) 85 (4.25%)

Northern Region 92 (5.33%) 125 (6.25%)

Southern Region 77 (4.45%) 118 (5.90%)

Central Region 117 (6.77%) 154 (7.69%)

Total 1729 2001

Special Category Branches

Branch Category Number of Branches

31.03.2013 31.03.2014

Service Branch 19 19

Retail Hub 26 26

ARM Branch 4 4

Corporate Finance Branch 3 4

Treasury Branch 1 1

CPPC 1 1

Cash Management Service Hub 1 1

InfoTech Progress

Virtualisation – KC

Bank has taken a green initiative by consolidating few physical servers into virtual environment for non-critical applications. By enabling virtual services, Bank has reduced the power consumption, carbon footprint and thereby enabling better server management in the Data Centre.

Self-service Kiosk –KC

A new technology initiative of self-service kiosk services has been deployed in the selected branches. The services offered for Passbook printing, Cash deposit and Cheque deposit services.

Payment Systems –AB

RTGS facility is extended to Bank sponsored RRBs through Bank''s Participant Interface Facility of direct credit to loan account by Inward NEFT messages and additional Settlement Batch of 0800 hrs has been successfully incorporated at our end as per IDRBT/RBI instructions. One ''B'' Category AD branch (Treasury Branch, Head Office) has been upgraded to ''A'' Category AD branch during the FY 2012-2013. Also, 40 ''B'' category branches are using SWIFT facility. New SWIFT DC & DR setup has been implemented at Bank''s DR Site (Vashi) and Bank''s DC (Kolkata) respectively during the FY 2012-2013. Risk Module for Treasury operation using ITMS has been made operational. LC Operation has been made Live via SFMS in selected branches and all Regional Offices across the country. Around 485 Branches across the country are using MDSS system for collection of mini deposits for small investors through our authorized agents.

CMS – AS

Bank has launched U-Connect an integrated portal for online registration for dematerialization of shares and a unique trading platform

CTS –KSR

Bank has implemented CTS solution at Southern Grid covering all branches in the Southern Region. Also, a centralized inward cheque processing centre has been operational in Kolkata for handling all inward clearing instruments under Southern Grid. In addition to the above, 6 outward cheque scanning hubs are established for clearing outward instruments at the Regional Offices in and around Kolkata.

Network –KC

Bank has implemented WAN optimization solution in all Branches to improve network performance. Bank has implemented VSAT links as second backup at selected single centre branches to provide network connectivity in situations like cable cut, exchange failure etc. Also, Bank has implemented High Speed Data connectivity using 3G at selected branches using latest mobile technology.

Mail Messaging System –KC

Corporate Mail Messaging System with centralized archival solution covering all offices is in place.

Bank Website and Intranet – KC

Bank''s Intranet portal is used extensively for information sharing, knowledge management and online examinations. Bank has implemented Grievance online, Housing loan, Car loan and Personal loan on Bank''s website as per directions of Ministry of Finance. These applications enable customers to make all requests online and permit online tracking.

SOC & IT Security – KC

With the growing dependence on IT systems and exponential increase in transactions through electronic delivery channels, Bank has identified Information Security as the key area for sustenance of business. RBI guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds are taken as the guiding principles for management of Information Security in the Bank. Bank is actively pursuing to mitigate gaps to fully comply with RBI guidelines. Bank has engaged professional agency for providing Anti-Phishing, Anti- Pharming, Anti-Trojan and Anti-Malware Managed Services for Bank websites. Bank has implemented Security Operations Centre (SOC) by mapping all devices accessed in data centre and disaster recovery centre for 24x7 monitoring and recording of logs. The Database Activity Monitoring (DAM) management server and Database Firewall (X2500) has been installed and configured at both DC and DRC. Internet banking, CMS database, Finacle Core database in Data Centre and in Disaster Recovery Centre has been integrated with DAM server. SOC provides the centralized view of Information Security status and command centre for IS Security operations.

Following enhancement has been made as part of fine tuning of Security Operations Centre:

a. Generation of Internet Banking transaction count status on hourly basis to monitor availability of Internet Banking System.

b. Generation of Internet Banking Beneficiary registration within Bank and other banks count status on hourly basis.

c. Real-time rules have been created to detect presence of BOT (a type of malware) in network, which are communicating with their command control centre.

d. Real-time dashboard has been created to monitor the critical link like DC-DR replication and ATM link.

e. Privilege user monitoring for database access is enabled and reported to concerned team for review.

f. Antivirus daily update status monitored through SOC.

g. Phishing dashboard is created to track any direct attack towards Bank''s Internet Banking Web server.

Biometric -KC

Department of Financial services, Ministry of Finance directed all the Public Sector Banks to introduce biometric log-in for employees of the Bank to prevent incidence of authentication frauds. 1662 Branches have been successfully rolled out and implementation in remaining branches is in progress.

ADC

The Bank provides all the popular alternate delivery channels available in the industry, enabling its customers 24X 7 banking. The status of the channels as on 31.03.14 is as under:

ATMs:

685 ATMs have been deployed in the FY 13-14, thereby taking the total ATM count to 1602. Apart from this network, our customers can access all NFS / VISA ATMs in the country and abroad.

Debit Cards:

The total active debit card base of the Bank stood at 27.43 lac. The Bank is issuing both VISA & RuPay brand of cards. The cards are enabled for transactions at ATMs, shops & at e- commerce sites. Apart from this the Bank is issuing KCC debit cards for all its KCC borrowers and has also forayed in to chip based debit cards (EMV) for extra security.

Internet Banking:

A total of 1.70 lakh customers have been registered for internet banking through which they can perform a host of activities such as self user registration, account view, funds transfer, bill payments, purchases, tax payments, opening of term deposits etc on a round the clock basis from the comfort of their home / office.

Mobile Banking:

The mobile bank registration base of the Bank as on 31.03.14 stood at 39,726, consisting of an array of features like account view, funds transfer (including IMPS), bill payments, purchases etc on a round the clock basis.

SMS based Account balance:

Customers can know their account balance at any point of time through SMS by giving a missed call at 9015431345.

Manpower Profile

The total Staff strength of the Bank stood at 16499 as on March 31, 2014 as against 15479 last year.

Category of Employees March 2013 March 2014

Total No. of Employees 15479 16499

Officers 6445 7550

Clerks 6056 6306

Sub -Staff 2978* 2643*

*Excludes part-time employee

The total staff strength comprises of 45.76% Officers, 38.22% Clerks and 16.02% Sub-Staff. Women employees numbering 3073 constitute 18.63% of the Bank''s total staff strength.

As a part of the effective succession planning, process for recruitment of Probationary Officers, Specialist Officers & Clerks were undertaken successfully during the year 2013-14, and 1232 Probationary Officers, 64 Specialist Officers and 1166 Clerks joined the bank.

Inter cadre and inter scale promotions were successfully conducted during the FY 2013-14 and in total 851 number of employees were promoted to next higher cadre/scale.

Training / Human Resource Development (HRD)

Banking technologies are evolving at a rapid pace and Competence Development is the prime need of the bank by reinforcing the traditional banking skills with the new technology based skills. Major steps have been initiated to augment the capacity of the in house training system both quantitatively and qualitatively. Presently the Bank is having one Staff Training College at Kolkata and four Regional Training Centres at Guwahati, Bhubaneswar, Delhi and Mumbai where full time faculties are posted to conduct regular courses throughout the year. For the specialized subject like Government Transaction and Cash Management, Effective Delivery of Rural Credit, Micro Enterprises Development, Forex etc., training has been arranged during the year under the auspices of reputed institutes like RBI, IIBF Mumbai, BIRD, IDRBT, NIRD, IIBM Guwahati, FEDAI etc.

Special Training Programmes were conducted with focus on creation of talent pool of officers in critical areas like Credit, Risk Management, Financial Inclusion, Management Development, Fraud Analysis, Forex etc. During the year 7414 employees comprising 5225 officers, 1832 clerks and 357 subordinate staff of the Bank attended in-house training.

As per Govt of India guidelines, pre-promotion training for employees belonging to Scheduled Castes and Scheduled Tribes were conducted for 333 employees at Staff Training College, Kolkata, Regional Training Centers and other different locations. Bank has also conducted in-company Training Programmes during the year wherein 77 employees have participated. Bank had sent 107 officer employees for 69 different external training programmes. During the year Bank had sent 7 senior officers/top executives for 4 different overseas training programmes.

Employee Welfare

As a welfare measure, considering the aspect of health care for working employees along with dependent members of their families as also the retired employees of the Bank along with their spouse, the Bank has renewed the existing Mediclaim insurance schemes. Besides , the Bank has entered into tie-up arrangements with Vasan Eye Care taking the total number of such arrangements to 80 Hospitals and Diagnostic Centers located all over India to meet hospitalization / health check-up / diagnostic requirements of employees / retired employees at a concessional / competitive rate. The Bank has also renewed the tie up arrangement with Apollo Gleneagles Hospital, Ruby General Hospital, B.P. Poddar and Pulse Diagnostic Centre at Kolkata

Reservation Policy in respect of SC and ST

The Bank has been meticulously following the government guidelines for reservation in employment/promotion in respect of specific reserved categories. All backlog vacancies in recruitment in all cadres have been filled up and at present there is no backlog vacancy in recruitment.

The representation of SC and ST employees in total staff stood at 3058 (19%) and 1075 (7%) respectively as on 31.03.2014.

During the year, 234 employees belonging to SC/ST category were promoted to next higher cadre. They constituted 29% of the total number of promotions, wherever reservation is applicable, effected during the year. The Bank had organized pre-promotion training programmes for the eligible employees from reserved categories prior to holding inter-cadre promotions in different cadres.

Dependents of 16 deceased employees belonging to SC/ST category who died while in service were paid ex-gratia lump-sum amount to the tune of Rs. 88 lakh during the financial year. Quarterly meetings between the Top Management and SC/ST Employees Welfare Council of the Bank were held on regular basis during the year. Complaints received from individuals/organizations on SC/ST matters were looked into for early redressal of grievances.

Saral Samadhan

It is a unique employee grievance redressal scheme wherein a special portal has been made available on the Bank''s Intranet Website so that all employees can conveniently register their grievances on-line. A reference serial number is being generated on registering a grievance and the employee can track the status. The HRM Department at Head Office takes up the issue with the concerned deptt. at HO/RO/branch for speedy redressal of grievance. Once the grievance is redressed the concerned employee is communicated about the same. Till date the success rate of grievance redressal is 83%.

Customer Orientation

The bank has taken several initiatives to remain customer friendly through providing prompt service, bringing in diversified technology supported products/services, responding to customer queries/ suggestions and redressal of customer complaints. The ''code of commitment to customers'' issued by BCSBI is made available at bank''s website. In order to improve the quality of customer service, a Toll free contact facility at Customer Service Department is provided to facilitate the customer to represent their grievances / suggestions. The Toll free facility is made available from 8.00 AM to 10 PM. For ATM related issues, a separate Toll free contact facility at Head Office is provided to facilitate the customer. Notably the bank has implemented online grievance redressal through the bank''s website, where the customers can track the status of their complaints also. In financial year 2013-14 percentage of customer complaint redressal was 97.30%. All complaints were redressed within stipulated period. As far as cases referred to Banking Ombudsman is concerned, the percentage redressal of complaints was 96.60%. The bank has implemented 112 of 116 recommendations of Damodran Committee accepted by Indian Bank'' Association.

To facilitate customers to lodge complaints, the Bank started lodgment of complaints by sending SMS, which will be responded by bank officials within 24 hours.

For customer awareness, the bank has actively participated and organized number of outreach programmes in association with Banking Ombudsman (West Bengal & Sikkim) during the financial year 2013-14.

Systems and Procedures

Internal Inspection of all the operational units of the Bank is carried out on a continuous basis to ensure effectiveness of internal control mechanism and to provide high quality counsel to management on the effectiveness of risk management and internal controls including regulatory compliance by the Bank.

The Audit & Inspection department at the apex level along with its extended arms of five Regional Inspection Units (RIUs) and a team of Internal Inspectors/External Auditors at field level is continuously engaged in inspection of Branches / Offices of the Bank as per Board approved Inspection & Audit Policy, for evaluating the level of implementation and adherence to the prescribed procedures and norms, and for identification, measurement and mitigation of risks involved in different functional areas. In order to align with changing scenario of the Banking System, Inspection Process is updated and necessary changes are incorporated in Inspection & Audit Policy of the Bank from time to time. To achieve these objectives, various types of Audits like Risk Based Internal Audit, Concurrent Audit, Information system audit, Snap Audit, Revenue Audit, Inspection of Regional Offices and HO Departments and Management audit of Regional offices are conducted.

Risk Based Internal Audit (RBIA) of branches is carried out to focus on effective risk management and internal controls in respect of areas of potential risks and to play an important role in protecting the Bank from various risks. During the year 2013-14, RBIA of 1023 branches has been completed.

Concurrent Audit by external audit firms is conducted in branches/offices to ensure accuracy, authenticity and due compliance with Internal Systems, Procedures and guidelines of the Bank. During the year 2013-14, Concurrent Audit of 439 branches have been completed covering total deposit of 57% and total advance of 89% of the Bank as a whole.

With the increased technology adoption by Bank, the complexities within the IT environment have given rise to considerable technology related risks. The Information System Audit is conducted to mitigate and effectively manage these technological risks. The Information System Audit has been conducted in 200 branches during the year 2013-14 covering 54% of Bank''s business and 19 Regional Offices. Information System Audit also covers the Bank''s IT Infrastructure.

Know Your Customers (KYC)

The Bank took several measures for effective implementation of Know Your Customer (KYC) and Anti Money Laundering

(AML) guidelines and for ensuring KYC compliance by all the branches.

To ensure better compliance of guidelines on KYC/ AML, following steps have been initiated.

- The Bank has ensured 100% submission of Cash Transaction Reports (CTRs) and Non Profit Organizations Transaction Report (NTR) to Financial Intelligence Unit (FIU).

- Suspicious Transaction Reports (STRs) and Counterfeit Currency Reports (CCRs) are submitted to FIU as and when received from branches.

- Bank completed the Special KYC audit as advised by the Reserve Bank of India within the stipulated schedule.

- The Bank has already adopted a policy on customer risk categorization and the exercise of risk profiling of customers through system is being undertaken.

Security Arrangements

The Bank has taken necessary steps to strengthen the security arrangement in branches by installing security gadgets from time to time in conformity with the guidelines issued by Reserve Bank of India. All 84 Currency Chest branches have been provided with CCTV systems with 90 days recording facilities and also Access Control system. In addition, the processes for installation of CCTV system in 490 non-currency chest branches have been completed.

On completion of the process, the remaining branches will be provided with CCTV systems in phased manner. All Currency Chest branches within the jurisdiction of Kolkata Police have been brought under Integrated Security Solution (ISS) system which has a control monitor at Lalbazar Police Control Room and is functioning effectively.

About 150 Desktop Sorting Machines have been provided to the branches located in border areas and branches receiving cash of Rs. 25 lakhs and above per day. The process for procurement of another 1003 Desktop Sorters has been initiated and all branches will be provided with Desktop Sorters in phased manner.

Security Department has been sensitizing the officers and staff members posted in the branches regarding detection and impounding of forged notes. In this regard awareness training on detection and impounding of FICN and features of genuine Indian currency notes is imparted regularly at our Training Colleges to the new entrants of our bank.

The Security Officers posted at Head Office as well as Regional Offices have participated actively in the Recovery Drive of the Bank in 2013-14.

During 2013-14 the Security Department pursued and recovered about Rs.1.2 Crores of the old insurance claim dues of Dacoities / Robberies of branches pending with the Insurance Company.

The Bank is maintaining constant liaison with the Police Department Police patrolling is done in most of the trouble prone Districts of Purulia Bankura, Paschim Medinipur and crime prone districts of Malda, Uttar Dinajpur, Dakshin Dinajpur, Murshidabad and Nadia on a regular basis.

Premises

During the year 2013-14, Bank has purchased plots of land at (i) Naya Raipur, proposed capital city of Chhattisgarh- Commercial (0.87 Acre)-for administrative office and Residential (2.03 Acres)-for officer/staff quarters (ii) NOIDA –Commercial (3,165 sqft)-for shifting of Sector-33, Noida Branch from domestic to commercial area (iii) New Town, Rajarhat, Kolkata – Commercial (2.548 Acres)-for proposed administrative office at second Financial Hub of the country.

During the year 2013-14, Bank also purchased five residential flats for Top Executives and 10 flats for Senior Executives in Kolkata. Besides, Bank purchased 11 flats for Senior Executives in Bhubaneswar .

Bank has already initiated the work of renovation/ refurbishing/ air-conditioning to improve the aesthetics/ ambience of all the branches under different Regions, in a phased manner, way back from 2010-11. There are 1411 refurbished (including newly opened) branches as on 31.03.2014. Bank has also completed the job of furbishing work for setting up of Debts Recovery Tribunals – I, II & III at 9th, 7th & 8th Floors respectively at "Jeevan Sudha Building", Kolkata.

The major ongoing projects are (a) Construction of Building on Bank''s own commercial Plot No.192D, Block B, Sector 52, Noida-UP, (b) Construction of Branch Building at Bidhannagar Branch, Durgapur, (c) Construction of Data Center at Bank''s own land at Salt Lake, Sector-III, Kolkata, (d) Construction of new Building for RUDSETIs at Ambassa and Udaipur in Tripura,

(e) Triennial Overhauling and Modifications of Water Treatment Plant at Officer''s Quarters at Shantikunj, Kolkata,

(f) Maintenance of Central A.C., Transformers and generators and other electrical installations.

Implementation of Official Language

With a view to create an atmosphere in the Bank, many steps have been initiated to promote the Official Language Policy of the Government. Conference, workshop and awareness programmes were arranged at Head Office of the Bank from time to time. For effective implementation of Hindi, computer training in Hindi and regular training of Hindi Praveen & Pragya courses were organized. An All India Official Language Conference for the Official Language Officers of the Bank was held during the month of September, 2013 at Head Office. In addition to this many Regional Offices of the Bank were inspected to review the position of implementation of Hindi.

For promotion of Hindi among the employees of the Bank, Hindi magazine United Darpan and E-Magazine were published regularly.

During the period the quarterly meetings of the Official Language Implementation Committee were held at Head Office and performance of implementation of Official Language of different departments were reviewed. Hindi Day was celebrated on 14thSeptember, 2013 at Head Office and a multilingual poetry recitation programme was organized during the same. With a view to create awareness among the employees, different Hindi Competitions were organized and prizes were distributed to the winners.

During the said period the Bank has been awarded with 4th Prize in

Rajbhasha Governor Shield for implementation of Official Language in region C of the Bank

Being the convener of the Town Official Language Implementation Committee of Banks at Kolkata, the Bank had organized 2 (two) regular meetings during the year. The designated officers of Official Language Department and different Banks were present during the said meeting. The Committee received 2nd Prize in East & North Eastern Region for implementation of Official Language in the Bank.

Regional Rural Banks (RRBs)

The bank has four sponsored RRBs namely Assam Gramin Vikash Bank (AGVB) in Assam, Bangiya Gramin Vikash Bank (BGVB) in West Bengal, Tripura Gramin Bank (TGB) in Tripura and Manipur Rural Bank (MRB) in Manipur operating in 53 districts with total number of 1144 branches as on 31.03.2014. All the four sponsored RRBs have posted net profit during this fiscal and Total Net profit stands at Rs140.20 Crores.

The combined aggregate business positions of the RRBs are as follows:

(Rs/crore)

Parameters Position as on Growth (%) during the year ended on

31.03.13 31.03.14 31.03.13 31.03.14

Total No. of Branches 1,109 1,144 1.37 3.15

Total Business 24,767 28,814 16.93 16.38

Deposit 16,330 19,060 12.85 16.71

Advance 8,437 9,753 16.08 15.72

All of our RRBs are providing NEFT, RTGS, SMS and Debit Card facility to their customers by sponsored Bank''s gateway.

Under Financial inclusion plan 2717 villages having population over 2000 were allotted to our 4 RRBs, of which 529 villages were covered by Brick and Mortar Branches and 2139 villages by BC Model. RRBs were allotted 9392 villages having population below 2000, of which 306 villages are covered by Brick and Mortar Branches and 2689 villages by BC Model.

All RRBs have opened 1281450 accounts under Financial Inclusion and issued 842219 Smart Cards.

Awards/ Accolades

Bank has received the following awards and accolades during the year 2013-14

- National Award for outstanding performance in implementation of PMEGP scheme in Eastern Zone of the country for the year 2012-13 by Ministry of MSME, Govt. of India.

- RSETI, Howrah, sponsored by the Bank, chosen as top performing institute in the country based on overall performance of the RSETI.

- Best Banker''s Award by The Sunday Standard under the categories ''customer friendliness'' and ''priority sector lending''.

- Reserve Bank of India Rajbhasha Shield Competition Incentive Award in the linguistic region ''C for the year 2011-12.

- National Award (First Prize) for outstanding performance in MSE lending under "National Awards for Excellence in MSE Lending" and Second Prize for excellent performance in lending to micro enterprises under "National Awards for Excellence in Lending to Micro Enterprises" during the year 2011-12.

Compliance

Based on the RBI guidelines and as part of its ongoing sound practices, the bank has also set up a Compliance Department whose role is to co-ordinate the identification of compliance issues, assess and mitigation of compliance risk. Board adopted Compliance Policy has been framed and in activity wise areas like deposit and services, advances, KYC-AML, BCSBI Codes, compliance issues are identified . Role responsibility as regards compliance functions is defined for every tier in the bank. A reporting system has also been introduced to ensure compliance of regulatory and statutory compliance issues through:

(i) Self- certification,

(ii) Random testing through Designated Compliance Officers,

(iii) Quarterly statement by the Branches and Regional Offices, indicating the compliance status of all circulars received from RBI IBA & GoI.

(iv) Quarterly statement with details of Compliance rules covering the important areas.

Under Corporate Governance, the Board of Directors periodically reviews compliance reports to ensure timely submission of regulatory returns by the different departments of the Head office to the GOI / RBI on regular basis and adherence to all applicable provisions of law, rules and guidelines. Further, Bank is taking all steps to comply to regulatory instructions with a view to make realistic assessment of the quality of its assets, improve its asset portfolio, make adequate provisioning and arrest impairment to profits and capital adequacy

Corporate Governance

The Bank endeavors to attain highest standard of Corporate Governance and remains committed to its responsibilities towards all its Stakeholders including the Customers, Shareholders, Employees, General Public, Society, Patrons, the Government and Regulators. The Bank has adopted the best practices in terms of disclosure, transparency, business ethics that is aimed at adding to the intrinsic value of the stakeholders of the Institution.

The Bank defines Corporate Governance as a systematic process by which an organization is directed and controlled to maintain a set of well defined ethical standards and at the same time enhance its wealth generating capacity. The Bank on one hand is extremely mindful about shareholder''s values while on the other hand responsibly upholds the needs of the economy, national priorities and corporate growth. It recognizes high standards of ethical values, financial discipline and integrity in achieving excellence in all fields of activities. The Bank seeks to proclaim corporate excellence by -

- Upholding shareholder''s values within the principles and legal framework of the Nation;

- Extending best of facilities and services to the customers;

- Proclaiming congenial environment for employees, customers and the society at large;

- Ensuring pro-active management, free from any bias.

Thus the Bank considers itself a Trustee to the Shareholders and Stakeholders and acknowledges the fiduciary responsibility towards them by creating and safeguarding their wealth. The Bank adopts this through nimble and transparent corporate strategies, proactive business plans, effective policies, efficient and simplified procedures, rigid ethical standards, strict legal responsibilities and overall professional approach in managing its affairs.

Unclaimed Shares

Shares outstanding/unclaimed as on 01.04.2013 - 7107

Shares transferred to beneficiaries till 31.03.2014 - 400

Shares outstanding/unclaimed as on 31.03.2014 - 6707

The voting rights in respect of the unclaimed/outstanding shares shall remain frozen till claimed by the rightful owner.

Constitution of Board of Directors:

The Board is constituted in accordance with The Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and Miscellaneous Provisions) Scheme,1970, which satisfies the requirements of Corporate Governance.

Smt. Archana Bhargava, Chairperson and Managing Director tendered her voluntary retirement due to health reasons on 20th February 2014 which was duly accepted by the Government.

BOARD OF DIRECTORS AS ON MARCH 31, 2014

Sl. No. Name of Designation Nature of Date of Director Directorship Assuming Office

1. Sri. Deepak Executive Executive 01.03.2012 Narang Director

2. Sri. Sanjay Exective Exective 18.06.2012 Arya Director

3. Sri Mihir Nomimee-GOI Non 30.09.2013 Kumar Executive

4. Smt. Parvathy Nominee -RBI Non- 13.03.2014 V Sundaram Independent

5. Sri. Sunil Non-Official Non- 22.07.2011 Goyal Director under Executive Independent

6. Sri Hiranya Non-Official Non- 05.04.2011 Bora Director Executive Independent

7. Sri. Kiran B Non-Official Non- 28.11.2011 Vadodaria Director Executive Independent

8. Smt. Renuka Non-Official Non- 24.01.2014 Muttoo Director Executive Independent

Sl. No. Name of Designation Nature of Date of Director Directorship Assuming Office

9. Sri. Pijush Officer Non- 19.12.2011 Kanti Ghosh Employee Executive Director

10. Sri. Sanjib Workmen Non- 06.05.2014 Pati Employee Executive Director

11. Sri. Pratyush Shareholder Non- 14.09.2013 Sinha Director Executive Independent

Board & Committee Meetings held during the Year

Type of Meeting Number

Board of Directors 14

Management Committee of the Board of Directors 15

Audit Committee of the Board of Directors 12

Shareholders'' Committee 4

Risk Management Committee of the Board of Directors 2

Special Committee to Review High Value Frauds 2

Board Level Customer Service Committee 2

Directors'' Promotion Committee 1

Remuneration Committee 1

High Powered Committee 2

IT Sub Committee of the Board 4

Nomination Committee 1

Special Committee to Monitor Officers above 55 Years -

Election Committee of the Board of Directors -

Recovery Committee of the Board of Directors 4

Board Level HR Steering Committee 1

Director''s Responsibility Statements

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

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

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

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

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

Proposed Dividend

In view of the net loss incurred the Board of Directors did not recommend any dividend on equity shares or PNCPS for 2013-14.

Acknowledgement

The Board of Directors wishes to place on record its appreciation to the patronage and cooperation received from all the stakeholders. The Board also likes to place on record the valuable guidance and excellent support extended by the Reserve Bank of India, Government of India, State Government of West Bengal, other regulatory agencies and all other State level financial institutions. The Board of Directors appreciates the commendable services of the employees at all levels.



For and on behalf of the

Board of Directors



Deepak Narang Sanjay Arya

(Executive Director) (Executive Director)



Place: Kolkata

Date: 20thMay, 2014


Mar 31, 2013

The Board of Directors have pleasure in presenting the 63rd Annual Report of the Bank along with the Audited Balance Sheet, Profit and Loss Account and the report on Business and Operations for the year ended March 31, 2013 (FY-2012-13).

CORPORATE SOCIAL RESPONSIBILITY

CSR has been assuming greater importance in the corporate world, including the banking sector. Over the years, we at United Bank of India, have integrated CSR principles with the Bank''s financial, promotional and development assistance to the Priority Sector, industrial growth, infrastructure development, as well as our own internal functioning through good corporate governance practices. Our CSR pillars are Sustainable Banking, Environment, Social Commitments, Human Resources Development and Stakeholders Engagements.

We acknowledge that lending to MSME sector, Priority Sector including Education Loans has significant sustainability impact. Responsible banking, along with realization of economic benefits and protection of environment form an integral part of our CSR strategy. For instance, we do not provide credit to Ozone depleting industries. We extend credit to industrial units only after they obtain ''No Objection Certificate'' from the Pollution Control Board, wherever required.

An important plank of our CSR framework has been to widen and deepen the process of financial inclusion by way of purveying micro credit to the disadvantaged sections, such as women, minorities and backward classes in rural, unorganized and weaker section of the society.

Rural Self-Employment Training Institute (RSETI) : Bank has so far set up 11 RSETIs in the states of West Bengal, Assam and Tripura to impart training to the prospective entrepreneurs from the downtrodden community of the society.

Up to 31.03.2013, these institutes have imparted training to 25094 rural youths /women of which 18565 trainees are self employed and 1195 trainees are wage employed. Out of 18565 self employed trainees 10472, trainees have got loan from Banks. These institutes are providing post training support (Escort Services) including arrangement of loan from our Bank branches to enable the trainees to set up their own ventures.

FLCC: Bank has also set up 38 Financial Literacy Centres in the states of West Bengal, Assam, Tripura and Manipur to extend financial literacy and credit counseling services to the poorer section of the society. In the Financial Year 2012-13, these FLCs conducted 539 no of Outdoor Activity, wherein 15099 persons participated and also conducted regular Indoor activity wherein 6510 Persons participated.

United Bank Socio Economic Development Foundation (UBSEDF) was established on 30 th March 2007 with the objective of promoting and carrying out social and economic developmental activities and rendering assistance to weaker and under privileged section of the society in terms of decision taken by the Board of Directors of the Bank in its meeting held on 18th December, 2006, towards discharging corporate social responsibility of the Bank.

Till the Financial Year 2012-13, the Trust has undertaken various welfare activities involving total assistance of Rs. 106.25 Lac in 53 cases, Year wise break up of which is furnished below.

Year No. of Units Amount of Assistance (Rs/lacs)

2007-08 8 6.50

2008-09 8 7.21

2009-10 7 8.05

2010-11 16 49.39

2011-12 6 17.40

2012-13 10 21.45

TOTAL 55 110.00

Some of the important projects are, installation of two water hand pumps in Muirei village and Hamlei Khong Humdung at Ukhrul District of Manipur State, construction of concrete roof of the class rooms of Dakshin Kamarpole F.P.School at 24 Parganas (South) district and construction of one Residential Farmers'' Training Centre, Chaltaberia, 24 Parganas (North) district, setting up Diagonistic Clinic for economically weaker section of the society at Khardah, 24 Parganas (North), self employment unit for the women life convicts of Alipur Correctional Home (Kolkata), setting up of free/subsidized Dialysis Centre at Maharaja Agrasain Hospital Charitable Trust, Rhotak, New Delhi, construction of Hostel Building and purchase of furniture for physically and mentally challenged children at Duliajan, Assam, adoption of 2 scheduled tribe girl child in Jharkhand and setting up of Arsenic free drinking water plant at Dharampur, 24 Parganas (North).

ORGANIZATION & SUPPORT SERVICES

Branch Network

With the opening of 49 branches during the year 2012-13, the total number of branches stands at 1729 as on 31.03.2013 spreading across all the States of the country consisting of 678 Rural (39.2%), 324 Semi-urban (18.7%), 397 Urban (23.0%) and 330 Metro (19.1%) branches. The Bank has also 4 Extension Counters. The Bank has 33 Regional Offices across the country. State wise position of opening of branches during 2012-13 are as under:

State No. of State No. of branches branches Opened opened

Assam 5 Chhatisgarh 1

Meghalaya 1 Maharashtra 3

Tripura 3 Gujrat 2

West Bengal 4 Tamil Nadu 1

Bihar 2 Pondicherry 1

Orissa 8 Kerala 1

Jharkhand 2 Karnataka 2 Rajasthan 5 Andhra Pradesh 2

Uttar Pradesh 6 TOTAL 49

The bank has opened 14 Branches in unbanked rural centres. The Bank has also opened its Representative office at Myanmar. Out of total 1729 Branches, 796 Branches (16%) are located in 68 Minority Concentration Districts (MCDs) throughout the country. 58% of total Branches are located at rural and semi urban centres to cater to the people living in hinterland.

Composition of Branch Network Geographical location-wise

Number of Branches Location 31.03.2012 31.03.2013

Eastern Region 1065 1081

% of Total 63.4 62.5

North Eastern Region 280 289

% of Total 16.7 16.7

Western Region 68 73

% of Total 4.0 4.2

Northern Region 87 92

% of Total 5.2 5.3

Southern Region 70 77

% of Total 4.2 4.5

Central Region 110 117

% of Total 6.5 6.8

Total 1680 1729

Composition of Branch Network Population group-wise

Number of Branches 31.03.2012 31.03.2013

Metropolitan 322 330

% of Total 19.2 19.1

Urban 384 397

% of Total 22.9 23.0

Semi-Urban 310 324

% of Total 18.5 18.7

Rural 664 678

% of Total 39.5 39.2

Total 1680 1729

Special Category Branches

Number of Branches

Branch Category 31.03.2012 31.03.2013

Service Branch 19 19

Retail Hub 26 26

ARM Branch 2 4

Corporate Finance Branch 3 3

Treasury Branch 1 1

CPPC 1 1

Cash Management Service Hub 1 1

InfoTech Progress

In order to leverage CBS platform and robust IT infrastructure implemented in preceding years, many new initiatives are taken during 2012-13. Internal efficiency, availability, customer service, business process reengineering as well as Information Security were the focus areas.

CBS

Core Banking Application (Finacle) has been migrated to a higher version. Data base servers are upgraded to superdome model to reduce the transaction timing.

MIS

MIS/ADF project has already been implemented in the Bank as per the guidelines issued by RBI. Bank has procured a solution and created a Central Data Repository (CDR) for storage of all information from various data sources and for generation of ADF & MIS reports from it without any type of manual intervention. Further, Bank has also created a few BI Dashboards which will aid in management decision making process. The CDR & its BI components are expected to be fully operational during current Financial Year.

ADC

Bank provides Anytime, Anywhere Banking facility to its customers through its alternate delivery channel initiatives like ATMs, Internet Banking, Mobile Banking & Telebanking etc. 115 new ATMs have been added during the year taking the total number of ATMs to 917. Bank has ATM sharing arrangements with networks like NFS, CashTree & VISA enabling customers'' access to ATM services at other banks'' ATMs also. Further value have been added to Internet banking services during the year by enabling the same for online trading and online term deposit opening, adding in the existing services of online shopping, utility bill payment, railway & air ticketing, mobile top-up online, ASBA demat holding details query etc. During the year the Mobile Banking Channel has been enhanced with immediate payment system (P2P and P2A) for its customers. At present services like balance query, last ten transaction view, stop cheque, fund transfer (intra & interbank), mobile top-up, IMPS (P2P & P2A) etc are enabled. Complying to mandatory requirements bank has in place real-time SMS based transaction alerts for all transactions.

Virtualisation

Bank has taken a green initiative by consolidating 25 physical servers into virtual environment for non-critical applications. By enabling virtual services, Bank has reduced the power consumption, carbon footprint and thereby enabling better server management in the Data Centre.

Self-service Kiosk

A new technology initiative of self-service kiosk services has been deployed in the selected branches. Initially the services offered for Passbook printing, Cash deposit and Cheque deposit services. This new initiative will enable customers to obtain the Banking services during the non- business hours.

Payment Systems

RTGS facility is extended to Bank sponsored RRBs through Bank''s Participant Interface Facility of direct credit to loan account by Inward NEFT messages and additional Settlement Batch of 0800 hrs has been successfully incorporated at our end as per IDRBT/RBI instructions. One ''B'' Category AD branch (Treasury Branch, Head Office) has been promoted to ''A'' Category AD branch during the FY 2012-2013. Also, 40 ''B'' category are using SWIFT facility. New SWIFT DC & DR setup has been implemented at Bank''s DR Site (Vashi) and Bank''s DC (Kolkata) respectively during the FY 2012-2013. Risk Module for Treasury operation using ITMS made operational. LC Operation has been made Live via SFMS in selected branches and all regional offices across the country. Around 485 Branches across the country is using MDSS system for collection of mini deposits for small investors through our authorized agents.

Bilingualization

Bilingual have been successfully deployed at production during last FY-2012-13 for passbook printing in Hindi.

CMS

Bank has launched U-Connect an integrated portal for online registration for dematerialization of shares and a unique trading platform

CTS

Bank has implemented CTS solution at Southern Grid covering all branches in the southern region. Also, a centralized inward cheque processing centre has been operational in Kolkata for handling all inward clearing instruments under southern grid. In addition to the above, 6 outward cheque scanning hubs are established for clearing outward instruments at the regional offices in and around Kolkata.

Network

Bank has implemented WAN optimization solution in all Branches to improve network performance. Bank has implemented VSAT links as second backup at selected single centre Branches to provide network connectivity in situations like cable cut, Exchange failure etc. Also, Bank has implemented High Speed Data connectivity using 3G at selected branches using latest mobile technology.

Mail Messaging System

Corporate Mail Messaging System with centralized archival solution covering all offices is in place and upgraded during the year.

Bank Website and Intranet

Bank''s Intranet portal is used extensively for information sharing, knowledge management and online examinations. Bank has implemented Grievance online, Housing loan, Car loan, Personal Loan on Bank''s website as per directions of Ministry of Finance. These applications enable customers to make all requests online and keep online tracking.

SOC & IT Security

With the growing dependence on IT systems and exponential increase in transactions through electronic delivery channels, Bank has identified Information Security as the key area for sustenance of business. RBI guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds are taken as the guiding principles for management of Information Security in the Bank. Bank is actively pursuing to mitigate gaps to fully comply RBI guidelines. Bank is regularly conducting IS Security audit of critical IT infrastructure through Cert-in empanelled agency. Bank has engaged professional agency for providing Anti-Phishing, Anti-Pharming, Anti-Trojan and Anti-Malware Managed Services for Bank Websites. Bank has implemented Security Operations Centre (SOC) by mapping all devices accessed in data center and disaster recovery center for 24x7 monitoring and recording of logs. The Database Activity Monitoring (DAM) management server and Database Firewall (X2500) has been installed and configured at both DC and DRC. Internet banking and CMS database in Data center and in Disaster recovery center has been integrated with DAM server. SOC provides the centralized view of Information Security status and command centre for IS Security operations.

Biometric

Department of Financial services, Ministry of Finance directed all the Public Sector Banks to introduce biometric log-in for employees of the Bank to prevent incidences of authentication frauds. Roll out of the solution in the branches has been started.

Manpower Profile

The total Staff strength of the Bank stood at 15354 as on March 31, 2013 as against 15500 last year.

Category of Employees March 2012 March 2013

Total No. of Employees 15500 15479

Officers 6305 6445

Clerks 6228 6056

Sub -Staff 2967* 2978

Excludes part-time employee

The Bank''s staff comprised 41.64% Officers, 39.12% Clerks and 19.24% Sub-Staff. Women employees comprising 2337 constituted 15.10% of the Bank''s total staff.

As a part of the effective succession planning, process for recruitment of probationary officers, specialist officers & clerks were undertaken successfully during the year 2012-13, and 281 probationary officers, 27 specialist officers and 529 clerks joined the bank. Inter scale promotion of all grades were successfully completed during the year through which a total of 1340 officers were promoted to their next higher scale.

Employee Welfare

As a welfare measure, considering the aspect of health care for working employees along with dependent members of their families as also the retired employees of the Bank along with their spouse, the Bank has renewed the existing Mediclaim insurance schemes. Besides , the Bank has entered into tie-up arrangements with eight more Hospitals viz. Belle View Clinic, Zoom Health Care , Suraksha Diagnostic Pvt Ltd., Medical Superspeciality Hospital, Kothari Medical Centre, Charnock Hospitals Pvt. Ltd, Merdica North Bengal Clinic, Siliguri & Mission Hospital, Durgapur taking the total number of such arrangements to 79 Hospitals and Diagnostic Centres located all over India to meet hospitalization / health check-up / diagnostic requirements of employees / retired employees at a concessional / competitive rate. The Bank has also extended the Annual Health Check up of the officers in the rank of Scale IV & above along with their spouse.

Reservation Policy in respect of SC and STs

The Bank has been meticulously following the government guidelines for reservation in employment/promotion in respect of specific reserved categories. All backlog vacancies in recruitment in all cadres have been filled up and at present there is no backlog vacancy in recruitment. The representation of SC/ST employees in total staff stood at 3918 as on 31.03.2013 constituting 25.51% of the total employees. During the year, 413 employees belonging to SC/ST category were promoted to next higher cadre. They constituted 23% of the total number of promotions effected during the year. The Bank had organized pre-promotion training programmes for the eligible employees from reserved categories prior to holding inter-cadre promotions in different cadres. Dependents of 17 deceased employees belonging to SC/ST category who died while in service were paid ex-gratia lump-sum amount to the tune of Rs. 99 lacs during the financial year. Dependants of two employees belonging to SC community were also given employment in the Bank. Quarterly meetings between the Top Management and SC/ST Employees Welfare Council of the Bank were held on regular basis during the year. Complaints received from individuals/organizations on SC/ST matters were looked into for early redressal of grievances.

Training / Human Resource Development (HRD)

Banking technologies are evolving at a rapid pace and Competence Development is the prime need of the bank by reinforcing the traditional banking skills with the new technology based skills. Major steps have been initiated to augment the capacity of the in house training system both quantitatively and qualitatively.

Bank has opened Regional Training Centres at Guwahati (Residential) and Bhubaneswar besides Delhi, Mumbai and Kolkata as full fledged training centres where full time faculties are posted to conduct regular courses throughout the year. For the specialized subject like Government Transaction and Cash Management, Effective Delivery of Rural Credit, Micro Enterprises Development, Forex etc, training has been arranged during the year under the auspices of reputed institutes like RBI, IIBF Mumbai, BIRD, IDRBT, NIRD, IIBM Guwahati, FEDAI etc.

Special Training Programmes were conducted with focus on creation of talent pool of officers in critical areas like Credit, Risk Management, Financial Inclusion, Management Development, Fraud Analysis, Forex etc.

During the year 7128 employees comprising 4385 officers, 2237 clerks and 123 subordinate staff of the Bank attended in-house Training Programmes besides 158 RRB employees and 225 Officers of RRB attended Special Programmes conducted at the Bank''s Staff Training College, Kolkata.

As per Govt of India guidelines, pre-promotion trainings for employees belonging to Scheduled Castes and Scheduled Tribes were conducted at Staff Training College, Kolkata, Regional Training Centres and other different locations.

Bank has also conducted in-company Training Programmes during the year wherein 618 employees have participated. Bank had sent 318 officer employees for 133 different external training programmes. During the year Bank had sent 12 senior officers for ten different overseas training programmes.

Two non-official directors on the Boards of the bank attended the conference held on 05.11.2012 at Mumbai by CAFRAL (Centre for Advanced Financial Research and Learning) - an organization promoted by Reserve Bank of India providing opportunity to acquaint the participants with the latest thinking amongst the financial sector practitioners, regulators, policy makers and academics on subject of current interest through meaningful discussion.

Customer orientation

The bank has taken several initiatives to remain customer friendly through providing prompt service, bringing in diversified technology supported products / services, responding to customer queries / suggestions and redressal of customer complaints. The ''code of commitment to customers'' issued by BCSBI is made available at bank''s website. In order to improve the quality of customer service, a Toll free contact facility at Customer Service Department is provided to facilitate the customer to represent their grievances / suggestions. The Toll free facility is made available from 8.00 AM to 10 PM. For ATM related issues, a separate Toll free contact facility at Head Office is provided to facilitate the customer. Notably the bank has implemented online grievance redressal through the bank''s website, where the customers can track the status of their complaints also. In financial year 2012-13, percentage of customer complaint redressal was 97.30%. all complaints were redressed within stipulated period. As far as cases referred to Banking Ombudsman is concerned, the percentage redressal of complaints was 96.60%. The bank has implemented 112 of 116 recommendations of Damodran Committee accepted by Indian Bank'' Association.

To facilitate customers to lodge complaints, the Bank started lodgment of complaints by sending SMS, which will be responded by bank officials within 24 hours.

For customer awareness, the bank has actively participated and organized number of outreach programme in association with Banking Ombudsman (West Bengal & Sikkim) during the financial year 2012-13.

Systems and Procedures

Internal Inspection of all the operational units of the bank is carried out on a continuous basis to ensure effectiveness of internal control mechanism and to provide high quality counsel to management on the effectiveness of risk management and internal controls including regulatory compliance by the Bank.

The Audit & Inspection department at the apex level along with its extended arms of five Regional Inspection Units (RIUs) and a team of Internal Inspectors / External Auditors at field level is continuously engaged in inspection of Branches / Offices of the bank as per Board approved Inspection &Audit Policy, for evaluating the level of implementation and adherence to the prescribed procedures and norms, and for identification, measurement and mitigation of risks involved in different functional areas. In order to align with changing scenario of the Banking System, Inspection Process is updated and necessary changes are incorporated in Inspection & Audit Policy of the bank from time to time. To achieve these objectives, various types of Audits like Risk Based Internal Audit, Concurrent Audit, Information system audit, Snap Audit, Revenue Audit, Inspection of Regional Offices and HO Departments and Management audit of Regional offices are conducted.

Risk Based Internal Audit (RBIA) of branches are carried out to focus on effective Risk management and internal controls to anticipate areas of potential risks and to play an important role in protecting the bank from various risks. During the year 2012-13, RBIA of964 branches has been completed.

Concurrent Audit by external audit firms is conducted in branches / Offices to ensure accuracy, authenticity and due compliance with Internal Systems, Procedures and guidelines of the Bank. During the year 2012-13, Concurrent Audit of 435 branches have been completed covering total deposit of 55% and total advance of 90% ofthe bank as a whole.

With the increased technology adoption by Bank, the complexities within the IT environment have given rise to considerable technology related risks. The Information System Audit is conducted to mitigate and effectively manage these technological risks. The Information System Audit has been conducted in 210 branches during the year 212-13 covering 60% of Bank''s business.

Know Your Customers (KYC)

The Bank took several measures for effective implementation of Know Your Customer (KYC) and Anti Money Laundering (AML) guidelines and for ensuring KYC compliance by all the branches.

To ensure better compliance of guidelines on KYC/ AML, following steps have been initiated.

- TheBank has ensured 100% submission of Cash Transaction Reports (CTRs) and Non Profit Organizations Transaction Report (NTR) to Financial Intelligence Unit (FIU)

- Suspicious Transaction Reports (STRs) and Counterfeit Currency Reports (CCRs) are submitted to FIU as and when received from branches.

- Bank completed the Special KYC audit as advised by the Reserve Bank of India within the stipulated schedule.

- The Bank has already adopted a policy on customer risk categorization and the exercise of risk profiling of customers through system is being undertaken.

Security Arrangements

The Bank has taken necessary steps to strengthen the security arrangement in branches by installing security gadgets from time to time in conformity with the guidelines issued by Reserve Bank of India. All currency chest branches have been provided with CCTV systems with 90 days recording facilities and 82 out of 83 currency chest branches have been provided with Access Control system. In addition, the processes for installation of CCTV system in 490 non-currency chest branches are in progress. On completion of the process, the remaining branches will be provided with CCTV systems.

During the year 2012-13, 108 newly recruited Armed Guards have joined the bank and they have been posted to the branches for the purpose of guarding as well as effective cash remittance. All currency chest branches within the jurisdiction of Kolkata Police have been brought under Integrated Security Solution (ISS) system which has a control monitor at Lalbazar Police Control Room and is functioning effectively.

We have been sensitizing the officers and staff members posted in the branches regarding detection and impounding of forged notes. 150 Desktop Sorting Machines have been provided to the branches located in border areas and branches receiving Rs. 25 lacs and above per day. The process for procurement of another 671 Desktop Sorters has been initiated and all branches will be provided with Desktop sorters in phased manner

The training of Armed Guards have been carried out in Staff Training College, Kolkata, during the month of March and September, as per schedule and by Regional Security Officers wherever posted at different locations.

The Bank is maintaining constant liaison with the Police Department. Police patrolling is done in most of the trouble prone Districts of Purulia, Bankura, Paschim Medinipur and crime prone Districts of Malda, Uttar Dinajpur, Dakshin Dinajpur, Murshidabad, Nadia, on regular basis.

Premises

During the year 2012-13, Bank could complete the work of Bank''s own building at Bhubaneshwar. This newly built four storied building with all the amenities was inaugurated by the Chairman & Managing Director in the presence of dignitaries from the state of Odisha at a glittering function on 21st November, 2012. Bhubaneshwar Regional Office, Retail Hub, Staff Training Centre, Malishahi Branch and the Currency Chest operate from this building. The Bank has initiated the work of Data Centre at Salt lake in our land held on long term lease. A plot of land measuring 295 sqm. has been purchased from Noida Authority on long term lease for shifting of our Sector-33, Noida Branch and the process of construction of Bank''s building has also been initiated. The Bank has purchased a plot of land on long term lease measuring 2.548 acres in the Financial Hub at New Town, Kolkata for construction of Bank''s building there at. The Bank has also purchased two plots of land measuring 0.88 acres and 2.00 acre of land on long term lease from Raipur Development Authority for construction of Bank''s Office building and residential complex respectively.

Implementation of Official Language

Bank has taken many steps to promote awareness through organizing conferences, workshops, awareness camps and training sessions.

All India Official Language Conference was held in the Bank during the month of July, 2013 at Head Office.

Being the convenor of Town official Language Implementation Committee of Bank''s in Kolkata, the Bank organized an Awareness Progamme for the executives of the Member Banks in the presence of The Deputy Director (Implementation), Regional Implementation Office (East). The Committee has been awarded second best prize for best performance in Hindi.

To encourage effective implementation of Official Language in the Bank, Hindi Workshops, computer training in Hindi and Hindi training Classes for ''Praveen'' and ''Pragya'' courses are being held. Also, Many Regional offices were inspected to assess the position of Official Language implementation.

A translation training program was organized at Staff Training College, Kolkata for the benefit of the newly posted and senior level Official Language Officers of the Bank with the help of faculty from Central Translation Bureau, Govt of India, New Delhi and Hindi Teaching Scheme, Kolkata.

For promotion of Hindi among the employees of the Bank, a Hindi Magazine "United Darpan" was published on quarterly basis regularly.

Bank''s website in bilingual and process of bilinguality in Finacle system is in progress which is expected to be completed very shortly. Various types of bilingual forms and standard letters are uploaded in Bank''s portal for wide publicity and official use.

Regional Rural Banks (RRBs)

The Bank has four sponsored RRBs viz., Bangiya Gramin Vikash Bank in West Bengal, Assam Gramin Vikash Bank in Assam, Tripura Gramin Bank in Tripura & Manipur Rural Bank in Manipur. The combined aggregate business positions of all the four-sponsored RRBs are as follows:

(Rs/crore)

Parameters Position as on Growth (%) during the year ended on 31.03.12 31.03.13 31.03.12 31.03.13

Total No. of Branches 1093 1109 3.7 1.37

Total Business 21,839 24,767 16.9 13.93

Deposit 14,470 16,330 13.8 12.85

Advance 7,369 8,437 23.6 16.08

Manipur Rural Bank has achieved profit for the first time in its history. As a result all our sponsored RRBs are earning profit since this financial year. RTGS facility along with NEFT facility through sponsored Bank is available to customers of RRBs.

Awards/ Accolades

The bank has received FINWIZ 2012 Best banker''s award for customer friendliness.

Bank has been awarded

1. National award as the Best Bank for lending to Small Sector by the Ministry ofMSME, Govt. ofIndia for the year 2011-12.

2. National award for outstanding performance in implementation of PMEGP in North Eastern Sector of the Country for the year 2011-12 Ministry of MSME, Govt. of India.

3. National award as the 2nd best Bank for lending to Micro Sector by the Ministry ofMSME, Govt. ofIndia for the year 2011-12.

4. National award as the Second best Bank for the performance of coverage of MSE accounts under CGTMSE scheme in North Eastern States for the year 2011-12 by CGTMSE.

Compliance

Based on the RBI guidelines and as part of its'' ongoing sound practices, the Bank has also set up a Compliance department whose role is to co-ordinate the identification of compliance issues, assess and mitigation of compliance risk. Board adopted Compliance Policy has been framed and compliance issues in activity wise areas like deposit and services, advances, KYC-AML, BCSBI Codes, are identified. Role responsibility as regards compliance functions is defined for every tier of the Bank. A reporting system has also been introduced to ensure compliance of regulatory and statutory compliance issues through:

- Self- Certification,

- Random testing through Designated Compliance Officer,

- Quarterly statement by the Branches and Regional Offices, indicating the Compliance status of all circulars received from RBI, IBA & Govt of India.

- Quarterly statement with details of Compliance rules covering the important areas.

Under Corporate Governance, the Board of Directors periodically reviews compliance reports to ensure timely submission of regulatory returns by the different departments of Head Office to the GOI/ RBI on regular basis and adherence to all applicable provisions of law, rules and guidelines.

Corporate Governance

The Bank endeavors to attain highest standard of Corporate Governance and remains committed to its responsibilities towards all its Stakeholders including the Customers, Shareholders, Employees, General Public, Society, Patrons, the Government and Regulators. The Bank has adopted the best practices in terms of disclosure, transparency, business ethics that is aimed at adding to the intrinsic value of the stakeholders of the Institution.

The Bank defines Corporate Governance as a systematic process by which an organization is directed and controlled to maintain a set of well defined ethical standards and at the same time enhance its wealth generating capacity. The Bank on one hand is extremely mindful about shareholder''s values while on the other hand responsibly upholds the needs of the economy, national priorities and corporate growth. It recognizes high standards of ethical values, financial discipline and integrity in achieving excellence in all fields of activities. The Bank seeks to proclaim corporate excellence by -

- Upholding shareholder''s values within the principles and legal framework of the Nation;

- Extending best of facilities and services to the customers;

- Proclaiming congenial environment for employees, customers and the society at large;

- Ensuring pro-active management, free from any bias.

Thus the Bank considers itself a Trustee to the Shareholders and Stakeholders and acknowledges the fiduciary responsibility towards them by creating and safeguarding their wealth. The Bank adopts this through nimble & transparent corporate strategies, proactive business plans, effective policies, efficient and simplified procedures, rigid ethical standards, strict legal responsibilities and overall professional approach in managing its affairs.

Unclaimed Shares

Shares outstanding/unclaimed as on 01.04.2012 - 7107

Shares transferred to beneficiaries till 31.03.2013 - Nil

Shares outstanding/unclaimed as on 31.03.2013 - 7107

The voting rights in respect of the unclaimed/outstanding shares shall remain frozen till claimed by the rightful owner.

Constitution of Board of Directors:

The Board is constituted in accordance with The Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and Miscellaneous Provisions) Scheme,1970, which satisfies the requirements of Corporate Governance.

Sri Sanjay Arya, Executive Director, joined the Board during the year and the Board of Directors extends warm welcome to him.

Sri Bhaskar Sen, Chairman & Managing Director demitted office on attaining the age of superannuation on 31st December 2013. Sri Soumitra Talapatra, Workmen Employee Director demitted office on completion of his tenure, and the Board wished them best for all their future endeavors.

BOARD OF DIRECTORS AS ON MARCH 31, 2013

Sl. No. Name of Designation Nature of Date of Director Directorship Assuming Office

1. Sri. Deepak Executive Executive 01.03.2012 Narang Director

2. Sri. Sanjay D Executive Executive 18.06.2012 Arya Director

3. Sri. Sandeep Nominee -GOI Non- 02.12.2011 Kumar Executive

4. Smt. Surekha Nominee -RBI Non- 30.07.2010 Marandi Executive Independent

5. Sri. Sunil Non-Official Non- 22.07.2011 Goyal Director under Executive CA category Independent

6. Sri. Srenik Sett Non-Official Non- 06.10.2010 Director Executive Independent

7. Sri. Hiranya Non-Official Non- 05.04.2011 Bora Director Executive Independent

8. Sri. Kiran B Non-Official Non- 28.11.2011 Vadodaria Director Executive Independent

9. Sri. Pijush Officer Non- 19.12.2011 Kanti Ghosh Employee Executive Director

10. Sri. Saumen Shareholder Non- 27.11.2010 Majumder Director Executive Independent

Board & Committee Meetings held during the Year

Type of Meeting Number

Board of Directors 14

Management Committee of the Board of Directors 19

Audit Committee of the Board of Directors 9

Shareholders'' Committee 4

Risk Management Committee of the Board of Directors 4

Special Committee to Review High Value Frauds 2

Board Level Customer Service Committee 2

Departmental Promotion Committee 2

Remuneration Committee 1

High Powered Committee 3

IT Sub Committee of the Board 4

Nomination Committee -

Special Committee to Monitor Officers above 55 Years 1

Election Committee of the Board of Directors 2

Recovery Committee of the Board of Directors 3

Board Level Rights Issue Committee 1

Director''s Responsibility Statements

The Directors confirm that in the preparation of Annual Accounts for the year ended 31st March 2013 -

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

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

- 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 the profit of the Bank for the year ended on 31st March 2013.

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

Proposed Dividend

The Board at its meeting held on May 10th 2013 has recommended, subject to the approval of the shareholders and appropriate regulatory authorities, final dividend at the rate of 21% i.e. Rs.2.10 per equity share of face value of Rs.10/- each, to all equity shareholders of the Bank whose name appear on the Register of Members on the date of the Book Closure. This will entail an outgo of Rs. 171.62 cr. on account of Dividend and Dividend Tax.

17. Acknowledgement

The Board of Directors wishes to place on record its appreciation to the patronage and cooperation received from all the stakeholders. The Board also likes to place on record the valuable guidance and excellent support extended by the Reserve Bank of India, Government of India, State Government of West Bengal, other regulatory agencies and all other State level financial institutions. The Board of Directors appreciates the commendable services of the employees at all levels.

For and on behalf of the

Board of Directors

Place : Kolkata (Smt Archana Bhargava)

Date : 6th May, 2013 Chairperson & Managing Director

 
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