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Directors Report of South Indian Bank Ltd.

Mar 31, 2023

The Board of Directors is pleased to place before you, the 95th Annual Report on the business and operations of the South Indian Bank Ltd. ("the Bank") along with the audited accounts for the Financial Year (FY) ended March 31, 2023.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2023 are as follows:

Rs. in crore
Key Parameters	2022-23	2021-22
Deposits	91,651.35	89,142.10
Gross Advances	72,092.07	61,815.76
Total Gross Business	1,63,743.42	1,50,957.86
Operating Profit	1,507.33	1,247.57
Net Profit	775.09	44.98
Capital & Reserves	6,674.58	5,853.13
Capital Adequacy (%) - Basel-III	17.25	15.86
Earnings Per Share (EPS)
(a) Basic EPS (in C ) [face value C 1/-]	3.70	0.21
(b) Diluted EPS (in C ) [face value C 1/-]	3.70	0.21
Book Value per Share (in C ) [face value C 1/-]	31.89	27.97
Gross NPA as % of Gross Advances	5.14	5.90
Net NPA as % of Net Advances	1.86	2.97
Return on Average Assets (%)	0.73	0.04

Previous year''s figures have been regrouped / reclassified, wherever necessary to conform to current year''s classification.

BUSINESS ACHIEVEMENTS

The Bank has achieved a total Business of C 1,63,743.42 crore, consisting of Deposits of C 91,651.35 crore and Gross Advances of C 72,092.07 crore as on March 31, 2023.

DEPOSITS

The total Deposits of the Bank as on March 31, 2023 was C 91,651.35 crore as against C 89,142.10 crore as on March 31, 2022, registering a growth of 2.81%. The break-up of the deposits as on March 31, 2023 is as under:

	Amount	% to total
	(C in crore)	Deposits
Current Deposits	C 4,985.98	5.44%
Savings Deposits	C 25,241.08	27.54 %
Term Deposits	C 61,424.29	67.02%
Total	C 91,651.35	100%

The Bank during the year has focused on Retail Advances and CASA.

The CASA has grown from C 29,601.37 crore as on March 31, 2022 to C 30,227.06 crore as on March 31, 2023, with a growth of 2.11%. The Savings Bank Deposits grew by 2.03 % on a year on year basis. Current Deposits grew by 2.56% on a year on year basis. While opening new banking relationships, the Bank has accorded priority to meaningful financial inclusion during the period under reporting.

ADVANCES

The advance portfolio of the Bank grew by 16.62% on a YoY basis to reach C 72,092.07 crore as on March 31, 2023. The focussed strategies implemented by the Bank has facilitated rapid growth in advances.

The Bank has registered a robust recovery and up-gradation of GNPA aggregating to C 1,295.82 crore, during the financial year 2022-23. The Gross NPA of the Bank as on March 31, 2023 as a percentage to gross advance is 5.14 and Net NPA stood at 1.86%. Ensuring the Bank''s vision on asset quality, the underwriting standards are revisited and reviewed from time to time. The GNPA and Net NPA percentage of the new loan book stood only being 0.09 and 0.06 respectively, excluding ''21 Crore of Credit card business that have fully been backed by FLDG and ''5.00 Crore Gold Loan.

During the financial year 2022-23, the Bank could register growth with focus on building quality assets across all Verticals like Corporate, SME, Housing Loan, Auto Loan, Credit Card, Personal Loan, Gold Loan, etc. The Housing Loan policy of the Bank was revamped during the year 2022-23, to make the Housing Loan products more competitive in the market without compromising on credit quality. The technical team embedded with proficiency on valuation of securities also started full-fledged functioning during the financial year.

The Bank has adopted a forward looking approach and envisaged more co-lending arrangements to enhance

priority sector lending. All the priority sector advance targets stands achieved and the Bank was also able to generate additional revenue of C 79.75 crore during the year, through sale of Priority Sector Lending Certificates (PSLCs).

Priority sector target & achievement as on March 31,2023 is as follows:

	% of Target	% of Achievement
Overall PSL	40.00%	53.72%
Agriculture	18.00%	21.16%
Small & Marginal Farmers	9.50%	12.23%
Non-Corporate Farmers	13.78%	15.35%
Micro Enterprises	7.50%	7.66%
Weaker Sections	11.50%	14.42%
Break-up of exposure under Priority Sector 31, 2023 is furnished below:		as on March
Amount ( '' in crore)
A) Agriculture & Allied activities (Net of PSLC)		11,370.03
B) MSME (Net of PSLC)		15,357.50
C) Other Priority Sector		2,141.28
(TOTAL PS (Net of PSLC)		28,868.81

The high quality portfolio growth was channelized by the Relationship Management structure at numerous locations/touch points which helped the Bank in tapping various Retail, SME and cross-sell opportunities. Decentralisation of credit processing centres resulted in speedy disposal of credit facilities.

Endeavours for profitable credit growth through quality credit

To achieve the vision of ''profitable credit growth through quality credit'', the Bank has made an arrangement with Mckinsey & Company India LLP and re-designed the credit underwriting model - SIB MSME Integrated Lending Engine (SMILE) for SME lending up to C 2.00 crore. The banking industry too, witnessed a wave of changes as everything from business models to operations transitioned to a digital world. The Bank is in the process of migrating to an advance suite provided by ''M/s Nucleus Software Exports Ltd'' & ''M/s NewGen Software Technologies Ltd'' which can handle all the procedures from sourcing to collection, including documentation in retail and SME lending digitally.

Profit

The Net Operating Income (Net Interest Income and Other Income) of the Bank increased by C 550.85 crore (16.83%) from C 3,273.86 crore in FY 2021-22 to C 3,824.71 crore in FY 2022-23. The decrease in Non- Interest Income was C 221.47 crore (21.42%) during the year, which was mainly on account of depreciation on security receipts charged during the FY 2022-23. The Operating Profit for the year under review was C 1,507.33 crore (before taxes and provisions) as against C 1,247.57 crore for the financial year 2021-22. The Net Profit for the year was C 775.09 crore as compared to a net profit of C 44.98 crore during the previous year and the profit available for appropriation are as per details given below:

C in crore
Profit before taxes and provisions	1,507.33
Less: Provision for NPI	(137.54)
Provisions for Non- Performing Assets	623.06
Provision for FITL	(22.17)
Provision for Income Tax	258.38
Provision for Deferred Tax	213.00
MAT credit	(138.25)
Provision for Standard Assets	(58.61)
Provision for Restructured Assets	(0.05)
Provision for Other Impaired Assets	(6.53)
Provision for Un-hedged Forex Exposure	1.66
Provision for Non-Banking Asset Provision	(0.71)
Net profit	775.09
Brought forward from previous year	(37.87)
Profit available for appropriation	737.22
Appropriations:
Transfer to Statutory Reserves	193.78
Transfer to Capital Reserves	4.57
Transfer to General Reserves	130.00
Transfer to Investment Fluctuation Reserve	104.39
Transfer to Special Reserve	80.00
Balance carried over to Balance Sheet	224.48
Total	737.22

Dividend

The Board of Directors has recommended a dividend of 30% i.e. C 0.30 per Equity share of face value of C 1/- each per share for the financial year ended March 31, 2023 (previous year Nil).

CAPITAL & RESERVES

The Bank''s issued and paid-up capital stood at C 209.27 crore as on March 31, 2023. The Bank has not issued any securities during the financial year 2022-23.

The capital plus reserves of the Bank has moved up from C 5,853.13 crore, as on March 31,2022 to C 6,674.58 crore as on March 31, 2023, mainly on account of plough back of profits and fixed asset revaluation during the current financial year.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- BASEL III

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank according to Basel III guidelines is 17.25 as on March 31, 2023 as against the statutory requirement of 11.50 (including Capital Conservation Buffer). Tier I CRAR constitutes 14.74 while Tier II CRAR works out to 2.51. The Bank follows Standardized Approach, Standardized Duration Approach and Basic Indicator Approach for measurement of capital charges in respect of credit risk, market risk and operational risk, respectively.

LISTING AGREEMENT WITH STOCK EXCHANGES

The Bank''s shares continue to be listed on BSE Ltd. and The National Stock Exchange of India Ltd. The Tier I/II Bonds issued by the Bank continue to be listed on BSE Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2023-24. The securities of the Bank are actively traded on NSE (Shares only) and BSE (Shares and Bonds) and have not been suspended from trading.

EXPANSION PROGRAMME

The Bank has been successful in widening its network across India with 946 banking outlets (940 Branches, 3 Satellite branches and 3 Ultra small branches) and 1,289 ATMs/CRMs as on March 31, 2023. The Bank has opened 16 new outlets and closed 4 branches. The Bank has also opened 40 new ATMs, 9 CRMs across the country during the financial year 2022-23 and closed 23 ATMs and 8 CRMs. The branch network now covers 26 States and 4 Union Territories. The Bank plans to open 17 banking outlets and 25 ATMs & 10 CRMs during the financial year 2023-24. Construction of Currency Chest at Kannur

has been completed. Construction of Currency Chest at Kakkanad is under progress and the same is expected to be completed in the FY 2023-24, as per the time line permitted.

INVESTMENT

As the pandemic seemed to abate, the Russia-Ukraine conflict caused inflation in India and across the world. Consumer Price Index (CPI) inflation in India persisted at elevated levels during 2022-23, impacted by a series of adverse supply shocks and the continuing pass through of high input costs. To curb the high inflation, the RBI has increased the policy repo rate by 250 basis points (bps) during May 2022-February 2023 to 6.5%, keeping the stance to "accommodative" and monetary policy remaining focused on progressively aligning inflation with the target, while supporting growth. This was preceded by the introduction of the Standing Deposit Facility (SDF) at a rate 40 bps higher than the fixed rate reverse repo. Thus, the effective rate hike since April last year has been 290 bps. These increases have been fully transmitted to the overnight weighted average call money rate (WACR), the operating target of monetary policy, which has gone up from daily average of 3.32% in March 2022 to 6.52% in March 2023.

Meanwhile, in the few weeks during March, 2023, global economy started witnessing a renewed phase of turbulence with fresh headwinds from the banking sector turmoil in some advanced economies. Bank failures and contagion risk have brought financial stability issues to the forefront. Given the stubbornness in inflation, central banks continued to tighten monetary policy, although at a reduced pace. Inflation globally has moderated in the recent months, but its descent to the target is proving to be long and arduous. The RBI projects CPI inflation to moderate to 5.2% for FY24. Looking ahead, India''s headline inflation is likely to moderate at 4-5% in FY24, and this may augur well for RBI to continue the pause. The next move by the RBI will likely to be a cut, albeit conditional on global policy moves.

The nominal exchange rate of the Indian rupee (INR) depreciated from C 75.24 to record low of C 83.26 relative to the US Dollar (USD) in FY23 amidst tightening global financial conditions, an uncertain global environment and portfolio capital outflows.

The Bank''s gross investment portfolio stood at C 26,014.21 crore as on March 31, 2023 compared to C 22,534.01 crore as on March 31, 2022, reported an increase of 15.44%. Investment Deposit Ratio moved to 28.40 as on March 31,

2023 from 25.28 as on March 31, 2022. Profit on sale of investment for the FY 2022-23 stood at C 70.01 crore. Total interest Income (Interest Dividend) from investment for the year was C 1,285.72 crore. Yield on investments (profit interest earned to average investments) during the FY 2022-23 was 5.38%.

During the year, the trading desks in Treasury Department have all managed their portfolios well with data-backed analysis. The SLR trading desk also planned and executed the Bank''s participation in Government''s Securities Market. The desk has successfully managed the held-to-maturity (HTM) book. The equity trading desk took well thought out positions in the secondary market and participated actively in the various primary market offerings. The forex trading desk too contributed actively to overall profits by taking gainful trading positions.

System''s liquidity remained in large surplus especially in the first half of FY23, but it moderated to C 0.4 lakh crore during H2 from C 3.3 lakh crore during H1. The net LAF slipped occasionally into deficit mode in H2, triggered by frictional pressures from festival-related currency demand, month-end GST outflows and quarterly advance tax payments.

The Fund Management and Money Market Desk at Treasury Department successfully managed the liquidity risk by maintaining appropriate levels of surplus funds. The desk also ensured compliance with the regulatory requirements of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

Besides the above, the Forex Merchant Desk in Treasury Department offers to the Bank''s customers solutions for foreign exchange risk hedging and remittance-related services. A significant portion of the total Treasury profits for FY 2022-23 came from Forex Merchant activities. Going forward, Treasury Department intends to focus on Forex Merchant business and other similar offerings to customers for diversifying its revenue mix.

A new Treasury Management Software will be implemented in the Financial Year 2023-24. This will enhance product portfolio and better the customer service. The Treasury Department was able to operate continuously and without interruptions during the year, which demonstrates the resilience of the risk management systems and processes in place.

During the FY 2022-23, as a result of focused and sustained efforts using legal recourse available under the SARFAESI Act, DRTs and Civil Courts, the Bank has been able to improve its overall recovery. The Bank has also relied on expeditious deciding on requests for one-time settlement. The cumulative effect of the sustained action has facilitated the Bank to reach an all-time high recovery figure of C 1,814.69 crore, which is 24% higher than the recovery during the last financial year 2021-22. The recovery was largely in cash and the Bank has recorded its highest ever cash recovery at C 1,570.66 crore. During the financial year 2022-23, in order to improve the quality of assets, special thrust was given to selection and underwriting of credit. Further, focus on building efficiency of collection team, resulted in marked improvement in collections and the Bank reaching its lowest ever SMA2 numbers at C 711.65 crore (against C 892.15 crore in FY2021-22). Incremental NPA was also controlled and addition to GNPA was limited at C 1,513.22 crore, as against C 2,159.23 crore in FY 2021-22. The Gross NPA of the Bank has decreased to 5.14% from 5.90% as on March 31, 2022. The Net NPA has decreased to C 1,293.61 crore, from C 1,777.77 crore as on March 31, 2022. In terms of percentages, the Net NPA has decreased to 1.86 from 2.97 as on March 31, 2022. On the recovery front, the Bank has managed to outperform peer group banks and strives to build capability to sustain the momentum and deliver higher numbers during the years to come.

RISK MANAGEMENT

Risk is an integral part of banking business. In the recent past, the Bank has exerted focused efforts in building a robust, and sustainable risk governance framework and to create risk awareness culture across all tiers of the organization''s hierarchy and continues to do so. Various initiatives such as comprehensive review of Credit Risk Policy and other Risk Management Policies have been initiated along with other process improvements. Liquidity is also actively being managed through the ALCO forum, where the Bank is pursuing actively into increasing the sticky and retail deposits along with operationalizing majority of the wholesale banking financing relationships. As part of the Business Continuity Management, the Bank''s Operational Risk team is working in close coordination with various stakeholders to ensure smooth conduct of operations.

The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement/ improvement of the risk measurement/ management systems, including automation of feasible processes, the Bank aims to ensure regulatory compliance as well as better return on and utilization of the capital in line with the business objectives. The Risk Management Department received Certificate of approval under ISO 9001:2015 Standard during the Financial Year 2022-23. There are no elements of Risk identified, which may, in the opinion of the Board, threaten the existence and stability of the Bank.

RISK MANAGEMENT POLICY FRAMEWORK

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The Bank has put in place an integrated risk management policies which ensures independence of the risk governance structure. The required standard operating procedures also follows the Policies to ensure that all the parameters are well covered while implementing the approved policies. The details of risk management practices are provided in Management Discussion and Analysis Report annexed to the Director''s Report.

COMPLIANCE WITH CAPITAL ADEQUACY FRAMEWORK

In compliance with regulatory guidelines on Pillar I of Basel III norms, the Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address Pillar II risk, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), to integrate capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk, pension obligation risk etc. The Bank has adopted a common framework for additional disclosures under Pillar III for adhering to the market discipline norms of Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and

its capital adequacy to the market in a consistent and comprehensive manner.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO PURSUANT TO SUB SECTION (3)(M) OF SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE (8)(3) OF THE COMPANIES (ACCOUNTS) RULES,2014

The Bank ensures strict compliance with all statutory requirements and voluntarily undertakes several sustainable steps in order to contribute towards a better environment. The Bank has undertaken various initiatives for energy conservation at its premises. The Bank has taken various initiatives to reduce its carbon footprint and improve resource efficiency. It ranging from using better technology to improve energy efficiency, recycling and generating energy from renewable sources. A detailed report on the same is included in the Business Responsibility and Sustainability Report forming part of this annual report. Digital & Technology Department of the Bank has been focusing on the innovation, improvement and implementation of projects on Bank''s digital platforms viz., ATM, Net Banking, Mobile Banking, etc. The Department also ensures the highest level of service and integrity of the internal applications and infrastructural support to enable a seamless growth in the Bank''s business operations. Digital strategy of the Bank is instituted on 4 pillars viz. INPF i.e., Indulge (customer selfservice), Nudge (assistance to be nudged to go digital), Purge (remove redundant processes using automation) and Forge (impactful Fintech partnerships). Enhancing selfservice capability across channels, empowering branches with technology solutions to nudge the customers to go digital, automating manual processes at branches & back-offices to improve customer TAT using AI & RPA and tie up with Fintech''s are an integral part of Bank''s overall strategy. The Bank has grown the share of digital transaction to 95% in the last Financial Year 2022-23. The Bank is planning to increase this share further in the coming Year. Technology strategy focuses on leveraging cloud adoption, high availability, fraud detection, cyber security and modernization of infrastructure to stay competitive and provide better services to the customers. The Bank, being a banking company and an authorized dealer in Foreign Exchange, has taken all possible steps to enhance export credit. Through its export financing operations, the Bank supports and encourages the country''s export efforts.

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

The Bank has zero tolerance towards any action on the part of any executive/employees which may fall under the ambit of ''Sexual Harassment'' at workplace and is fully committed to uphold and maintain the dignity of every women staff working in the Bank. The Bank has complied with provisions relating to the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013]. The Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

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

Number of complaints filed during the financial year - Nil

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

Particulars of Employees

The Bank had 9678 employees as on March 31, 2023. The details of the top 10 employees including the employees who were in receipt of aggregate remuneration of more than C 1.02 crore per annum (employed throughout the year) or who were in receipt of remuneration of C 8.5 lakhs per month (employed for a part of the year ) during the FY 202223, in terms of remuneration drawn pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report (Annexure A). The ratio of the remuneration of each director to the median employees'' remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this report (Annexure B).

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

A brief outline of the Bank''s CSR Policy, including overview of projects or programs to be undertaken.

South Indian Bank''s CSR Policy

The South Indian Bank is grateful to the society that has supported and encouraged the Bank during its long journey of growth and development. The Bank believes that no organization can make sustainable development without the patronage of the society. The Bank is committed to integrate social and environmental concerns in its business operations. The Bank shall continue to have among its objectives, promotion and growth of national economy and shall continue to be mindful of its social and moral responsibilities to the customers, shareholders and the society. The Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment.

In line with the CSR Policy and in accordance with Schedule VII, section 135 of Companies Act, 2013 the Bank undertook various activities during the FY 2022-23, which had significant impact on the society. These activities, inter-alia, include:

â¢ Eradicating hunger, poverty and malnutrition, promoting health care including preventive healthcare and sanitation and making available safe drinking water.

â¢ Promoting Education, including special education and employment enhancing vocational skills and livelihood enhancement projects.

â¢ Empowering women, setting up homes and hostels for women and orphans, setting up old age homes, measures for reducing inequalities faced by socially and economically backward groups.

â¢ Ensuring environmental sustainability, maintaining quality of soil, air and water.

â¢ Rural development activities.

â¢ Training to promote nationally recognized sports.

â¢ Promoting Financial Literacy.

CSR Expenditure

The Bank has always given top priority to fulfilling its obligations under the Corporate Social Responsibility. Diversified Projects in the areas of healthcare, education, sports and sanitation that would benefit the society as a whole are identified and the Bank wholeheartedly supports such initiatives.

The amount to be spent by the Bank towards CSR for FY 2022-23 as per Section 135 of the Companies Act, 2013, comes to ''1.84 crore. The amount spent by the Bank this year towards CSR was ''1.86 crore. The Bank had also embarked on some major projects last year in the field of education, healthcare etc. By choosing long term sustainable projects, the Bank has taken an approach which brings steady and long lasting impact on the society. The details of the CSR activities of the FY 2022-23 are mentioned in Annexure ''C'' to this report.

Web-Link to the CSR Policy

https://www.southindianbank.com/userfiles/file/csr_policy.pdf

FINANCIAL INCLUSION

Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net worth or company size. Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives. Financial inclusion is an effort to make every day financial services available to more of the world''s population at a reasonable cost. It aims to ensure that the poor and marginalised make the best use of their money and attain financial education.

With advances in financial technology and digital transactions, more and more start-ups are now making financial inclusion simpler to achieve. It is all about bringing basic banking facilities to the lower income groups at an affordable cost. The Bank has adopted several financial inclusion initiatives, including appointment of Business Correspondents and Financial Literacy Counsellors. For expanding the Financial Inclusion activities, the Bank has 68 Business Correspondents and 19 Financial Literacy Counsellors as on 31.03.2023, in the States of Kerala and Tamil Nadu. Through corporate business correspondents, the Bank has on-boarded 6,554 borrowers with total outstanding of C 27.62 crore in the FY 2022-23 in the agriculture lending, hence reaching out to the unserved and under served strata of society.

Aadhaar Enabled Payment System (AePS)

controlling AePS operations. AePS offers basic banking services such as Cash Withdrawal, Cash Deposit, Balance Enquiry, Aadhaar to Aadhaar Fund Transfer and Mini Statement. The Bank has also successfully migrated to Aadhaar Enabled Payment System (AePS) for performing transactions through Business Correspondents.

Business Correspondent

In an era of heightened competition, thin profit margins and cost constraints, establishment of conventional bank branches in all locations cannot be a viable proposition. It is, therefore, imperative to explore the possibilities of other cost effective delivery mechanisms to reach out to remote locations and satisfy the financial needs of clientele at an affordable cost. This has evolved the concept of Business Correspondent (BC) in the banking sector. This is also an efficient and effective tool for implementation of Financial Inclusion programme of Government of India.

Though there are manifold challenges like credit risk, operational risk, legal risk, reputational risk, difficulty in assessing the integrity of the BCs, managing cost on low volume of business, and effective supervision and control of the activities, there exists the potential for employment generation, creativity and productivity in rural hinterlands for bringing about a comprehensive economic development and the resultant benefits to the Bank. Bank''s BCs are branded under the name "BANK MITRA".

The wholly outsourced BC model will complement the Bank''s strength to increase business volume and improve efficiency of operation. The Bank is ensuring that the Business Correspondent meets the benchmark performance standards at all stages of delivery of services, without diluting Bank''s values and principles, control mechanisms, business processes or goodwill and reputation.

Financial Literacy Counsellors

to make them more efficient, responsive to the needs of the people. A Board approved policy covering all aspects of Financial Literacy Counsellors has been formulated, giving due consideration to the revised guidelines on FLCs circulated by RBI.

Pradhan Mantri Jan-Dhan Yojana (PMJDY)

Pradhan Mantri Jan-Dhan Yojana (PMJDY), is conceived as a national mission on financial inclusion initiated by Honourable Prime Minister on August 15, 2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme was implemented in the Bank since 2014. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, a basic savings & deposit accounts, remittance, credit, insurance, pension in an affordable manner. Under the scheme, a basic savings bank deposit (BSBD) account can be opened in any bank branch or Business Correspondent (Bank Mitra) outlet, by persons not having any other account.

Atal Pension Yojana (APY)

Atal Pension Yojana (APY), a pension scheme for citizens of India is focused on the unorganized sector workers. Under the APY, guaranteed minimum pension ranging from ''1,000/- to C 5,000/- per month will be given at the age of 60 years depending on the contributions by the subscribers. Any Citizen of India can join the APY scheme.

The prospective applicant may provide Aadhaar and mobile number to the Bank during registration to facilitate receipt of periodic updates on APY account. However, Aadhaar is not mandatory for enrollment.

The benefit of minimum pension under Atal Pension Yojana would be guaranteed by the Government in the sense that if the actual realized returns on the pension contributions are less than the assumed returns for minimum guaranteed pension, over the period of contribution, such shortfall shall be funded by the Government. On the other hand, if the actual returns on the pension contributions are higher than the assumed returns for minimum guaranteed pension, over the period of contribution, such excess shall be credited to the subscriber''s account, resulting in enhanced scheme benefits to the subscribers.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

The Pradhan Mantri Jeevan Jyoti Bima Yojana is available to people in the age group of 18 to 50 years having a

Bank account who give their consent to enable autodebit. Aadhar would be the primary KYC for the Bank account. The life cover of ''2 lakhs shall be for the one-year period stretching from 1st June to 31st May and will be renewable. The PMJJBY offers an annual life coverage of ''2 lakhs in case of the demise of the policyholder during the policy term. The policy can be availed at the lowest premium rate of ''436 per annum.

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Pradhan Mantri Suraksha Bima Yojana (PMSBY) is an accidental insurance scheme that provides one year of accidental death and disability coverage with an annual renewal. With the minimum premium rate of ''20/- per annum, this policy is most beneficial to the poor and low-income section of the society. PMSBY covers people aged between 18 years and 70 years with a Bank account for accidental death and full disability benefits of up to ''2 Lakh and for partial disability for ''1 Lakh.

GREEN INITIATIVE IN CORPORATE GOVERNANCE.

Dispatch of documents in Electronic Form: As a responsible corporate citizen, the Bank supports and pursues the ''Green Initiative'' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives and in terms of Rule 18 of the Companies (Management and Administration) Rules, 2014, the Bank may give notice through electronic mode including e-mail to those Members who have provided their e-mail address either to their Depository Participants (DPs) or to the Registrar/ Company. Pursuant to General circulars dated on December 28,2022 issued by MCA and SEBI Master Circular dated on July 11, 2023 under the Head ''Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in continuation to SEBI circular dated 5th January, 2023, the notice of 95th Annual general Meeting and the Annual Report 2022-23 will be sent via email to all the shareholders and no physical copies will be sent via post.

addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CDSL will be deemed to be their registered e-mail address for serving notices/documents including those covered under Section 136 of the Companies Act, 2013. In case a Member, whose e-mail address has changed, fails to update this new e-mail address, the said documents will be sent to the existing e-mail address and the said documents will be deemed to have been delivered, in compliance with the relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder and the Listing Regulations. Members who have not yet registered their e-mail address are requested to do so, at the earliest. In case of shares held in electronic form and in case of any change in the e-mail address, Members are requested to update the same with their DP and in case of shares held in Physical form, Members are requested to update the same with the RTA/Company. Security holders may please note that, as allowed by MCA and SEBI circulars, the Bank will not be sending physical copies of AGM Notice to shareholders and Annual Report to the security holders unless the same is specifically requested.

Please note that the said documents will also be uploaded on the Bank''s website www.southindianbank.com and copies thereof will be made available for inspection at the Registered Office of the Bank during 10.00 a.m. to 3.00 p.m. on all working days except Saturdays, Sundays, Bank Holidays and Public Holidays up to the date of ensuing AGM. Shareholders have been requested on several occasions to update their e-mail IDs in their folio/ demat A/c to help accelerate the Bank''s migration for paperless compliances. The Bank seeks your support for the said green initiatives, as it is designed to protect our fragile environment.

Further, as a part of green initiative by the Bank, all relevant agenda papers pertaining to the Board/ Committee are being circulated in advance to the Board of Directors through electronic mode to facilitate easy access of agenda which would provide sufficient time to the Board for reading and understanding the proposals placed in a meeting.

ANTI - MONEY LAUNDERING (AML)

Transactions processed through the Core Banking Solution are monitored for detecting suspicious transactions, using an AML application to comply with the provisions under Prevention of Money Laundering Act (PMLA). The Bank already has a Centralized Processing Centre (CPC)

for customer creation with the objective of full KYC compliance and to use KYC as a fraud prevention tool. The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.

FATCA-CRS

The Bank has been registered as a reporting entity under FATCA, under GIIN No. IIK7HU.99999.SL.356, to comply with the reporting requirement under the interGovernmental agreement entered between Indian and US Government and the CRS Multilateral Competent Authority Agreement.

DIRECTORS

The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Code of Conduct on Corporate Governance adopted by the Bank. The Board comprises of 9 Directors as on the date of this report, with rich experience and specialized knowledge in various areas of relevance to the Bank, including Banking, Accountancy, Risk Management, Treasury, Finance, Business Management, Small scale Industry, Agriculture, Law, Human Resources and Information Technology.

Excluding the MD & CEO, all other members of the Board are Non-Executive Directors and six Directors out of the total nine Directors are Independent Directors. Declaration has been obtained from the Independent Directors as required under the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. The remuneration and other benefits paid to MD & CEO of the Bank and other Non-Executive and Independent Directors during the financial year 2022-23 are disclosed in Corporate Governance Report. Vide Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 an online data Bank for the independent directors ("Data Bank") has been rolled out by the Indian Institute of Corporate Affairs, all the Independent Directors of the Bank had registered themselves in the Data Bank in compliance with the same.

During the 94th Annual General Meeting held on July 12,2022 as recommended by the Bank the shareholders accorded their approval for:

â¢ Re-appointment of Sri. Paul Antony (DIN: 02239492) as a Non-Executive Director of the Bank liable to

retire by rotation under Section 152 of Companies Act, 2013.

â¢ Appointment of Sri. Benny P Thomas (DIN: 09448424) as non-executive Director of the Bank, liable to retire by rotation under Section 152 of Companies Act, 2013, who was appointed as an Additional Director pursuant to Section 161(1) of the Companies Act, 2013 on 30th December, 2021 and who holds office up to the date of the 94th Annual General Meeting.

â¢ Revising the remuneration payable to Sri. Murali Ramakrishnan (DIN: 01028298), Managing Director and CEO of the Bank.

â¢ Re-appointment of Sri Salim Gangadharan, (DIN: 06796232) as Independent Director of the Bank upto November 1, 2023 in compliance with section 149 of the Companies Act, 2013, not liable to retire by rotation as Non-Executive Independent - Part time Chairman of the Bank and approval of his remuneration.

â¢ Re-appointment of Sri V.J. Kurian, (DIN: 01806859) as Independent Director of the Bank for a second term as Non-Executive Independent Director of the Bank, not liable to retire by rotation.

â¢ Re-appointment of Sri. Pradeep M Godbole (DIN: 08259944) as Non-Executive Independent Director of the Bank, not liable to retire by rotation.

â¢ Appointment of Smt. Radha Unni (DIN: 03242769) as Independent Director of the Bank, not liable to retire by rotation.

Sri Parayil George John Tharakan (DIN: 07018289), Nonexecutive Independent Director of the Bank, retired from the Board of Directors w.e.f. 24th November 2022 upon completion of his eight-year term, as per Section 10A(2A) of the Banking Regulation Act, 1949.

The Board of Directors has recommended to members:

â¢ To re-appoint Sri. Benny P Thomas (DIN: 09448424) as Non-Executive Director of the Bank, liable to retire by rotation at the 95th AGM, who retires by rotation under Section 152 of Companies Act, 2013 and being eligible, offers himself for reappointment.

â¢ To re-appoint Sri M George Korah (DIN: 08207827)) as Non-Executive Independent Director of the Bank, who was appointed by the Board of Directors on August 31, 2018 and appointed by Shareholders at the 91st AGM held on July 17, 2019 for a period of 5

years, and in respect of whom the Bank has received a notice in writing, proposing his candidature for the office of Director of the Bank, for a second term as ''Non-Executive Independent Director'' of the Bank, for the purpose of Section 149 of the Companies Act, 2013, to hold office for a period not exceeding three consecutive years,not liable to retire by rotation.

Necessary information pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in respect of directors to be appointed, re-appointed and change in terms of appointment at the ensuing Annual General Meeting are given in the Annexure to the Notice convening the Annual General Meeting scheduled to be held on August 24, 2023.

None of the Directors of your Bank are disqualified for being appointed as Directors, as specified in Section 164 (1), Section 164 (2) and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014.

CHANGE IN KEY MANAGERIAL PERSONNEL

There was no change in Key Managerial Personnel during the financial year ended March 31, 2023.

On May 31, 2023, Mr. Joby M C, Joint General Manager, Head of Inspection and Vigilance Department and Head of Internal Audit and Chief of Internal Vigilance and a Key Managerial Personnel of the Bank has retired from the Bank on attaining superannuation. The Board of Directors of the Bank has appointed Mr. Nandakumar G, General Manager as Head of Inspection and Vigilance Department and Head of Internal Audit and Chief of Internal Vigilance of the Bank w.e.f June 01, 2023.

Composition of Audit Committee

The Audit Committee of the Board is chaired by Sri M George Korah, (Non-Executive Independent Director), who is a Chartered Accountant. The other members of the committee are Sri. Pradeep M Godbole (Non-Executive Independent Director), Sri. R A Sankara Narayanan (NonExecutive Independent Director) and Smt. Radha Unni (Non-Executive Independent Director). The constitution of the Committee is in compliance with the regulatory requirements. The terms of reference of the Audit Committee, are in accordance with the SEBI (LODR) Regulations, 2015, Companies Act, 2013 and RBI guidelines.

Independent Directors

In terms of the definition of Independence of Director as prescribed under Regulation 16(1) (b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of Companies Act, 2013 and based on the confirmation/disclosures received from the Directors, the following Directors are Independent Directors of the Bank as on the date of this report

1. Sri.Salim Gangadharan (DIN 06796232)

2. Sri V J Kurian (DIN: 01806859)

3. Sri M George Korah (DIN: 08207827)

4. Sri. R A Sankara Narayanan (DIN: 05230407)

5. Smt. Radha Unni (DIN: 03242769)

6. Sri.Pradeep M Godbole (DIN 08259944)

The Bank has received declaration from all the Independent Directors that they continue to meet the criteria of independence as provided under the Companies Act, 2013 (the Act) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and comply with the Code for Independent Directors as specified under Schedule IV of the Act. In terms of the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 read with the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, the Independent Directors of the Bank have enrolled his/ her name in the online databank of Independent Directors maintained by the Government. Further all the independent directors have either qualified or being eligible obtained exemption from the online proficiency self-assessment test as per Companies (Appointment and Qualification of Directors) Rules, 2014.

The Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are the persons of high integrity and repute. They fulfil the conditions specified in the Act and the Rules made thereunder and are independent of the Management.

Women Directors

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations

2015, the Bank has appointed Smt. Radha Unni (DIN: 03242769) as Woman Director on the Board of the Bank.

Bank''s policy on directors'' appointment and remuneration including criteria for determining qualification, positive attributes, independence of a director and other matters provided under subsection (3) of Section 178.

The nomination policy of the Bank can be accessed at https://www.southindianbank.com/userfiles/file/ nomination_policy.pdf

Criteria for appointment as a Director of the Bank:

The Nomination and Remuneration Committee of the Board shall identify and ascertain the integrity, qualification, expertise and experience of the person who is considered for being appointed/re-appointed as Director of the Bank and apply due diligence in compliance with the Banking Regulation Act, 1949, Reserve Bank of India directives on Fit & Proper Criteria, all other applicable provision of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 including any amendments from time to time and Nomination Policy of the Bank.

Criteria for Determining Qualifications, Positive Attributes

a) The professional and personal ethics, integrity and track record.

b) Special knowledge or practical experience in Banking, accountancy, agriculture and rural economy, co-operation, economics, finance, law, small-scale industry, Information Technology, Payment & Settlement Systems, Human Resources, Risk Management, Business Management or any other matter useful to the Banking Company in the opinion of Reserve Bank of India.

c) Ability to provide insights and practical wisdom based on their experience and expertise relevant to the Bank''s line of business.

d) Details of his/her association with other Companies/ LLPs/ Firms (including NBFC)

e) Details of substantial interest in other Companies/ LLPs/ Firms (including NBFC).

f) Details of financial facilities, if any, availed from the Bank.

g) Details of default in the re-payment of loans, availed from the Bank or any other Bank, if any

h) Commitment to enhancing stockholder value.

i) Ability to develop a good working relationship with members with the Board and contribute to the working relationship with Senior Management of the Bank.

j) Whether he/she suffers from any of the disqualifications envisaged under the provisions of Banking Regulation Act, 1949, Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

k) Any other factors as the Committee may deem fit and in the best interests of the Bank and its stockholders.

Criteria for determining Independence of a director

The Criteria of Independence of a director is determined based on conditions as laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The independent director shall at the first meeting of the Board in which he/she participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his/her status as an independent director, give a declaration that he/she meets the criteria of Independence.

REMUNERATION POLICY:

The Remuneration Policy for Whole-time Directors/Part-time Chairman, Non-Executive Directors and Employees of the Bank:

The Bank has a Board approved Compensation Policy which deals with the Compensation & Benefits of the Whole-time Directors/Part-time Chairman, Non-Executive Directors and Employees of the Bank

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

Remuneration of MD & CEO and Material Risk Takers:

The Board approved Compensation Policy deals with the Compensation & Benefits of the Whole-time Directors/ MD & CEO. The remuneration of the Whole-time Directors/MD & CEO is recommended by the Nomination & Remuneration Committee (NRC) to the Board for approval after considering the factors prescribed under the Compensation Policy. The Compensation Policy factors the guidelines issued by the RBI from time to time.

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

The compensation paid out to the referred functionaries is divided into two components:

The fixed compensation is determined based on the relevant factors such as industry standards, the exposure, skill sets, talent and qualification attained by the official over his/her career span and adherence to statutory requirements. All the fixed items of compensation, including the perquisites, will be treated as part of fixed pay. Perquisites that are reimbursable would also be included in the fixed pay so long as there are monetary ceilings on these reimbursements. Contributions towards superannuation/retirement benefits will also be treated as part of fixed pay.

The variable compensation for Whole Time Directors, Managing Director & Chief Executive Officer and Material Risk Takers is fixed based on organizational performance (both business-unit and firm-wide) and KPAs set for the official. The organization''s performance is charted based on Performance Scorecard which takes into account various financial indicators like revenue earned, cost deployed, profit earned, NPA position and other intangible factors like leadership and employee development. The Performance Parameters provides a mix of Financial and Non-Financial, Quantitative and Qualitative Metrics. The variable pay is paid in the form of a mix of cash and share-linked instruments. While considering/ recommending the variable pay in respect of Managing Director & CEO,

MRTs and Whole Time Directors, serious supervisory and regulatory observations (if any) shall be factored.

Risk, Control and Compliance Staff

Members of staff engaged in financial and risk control, including internal audit, are compensated in a manner that is independent of the business areas they oversee and commensurate with their key role in the Bank. The total fixed and variable compensation paid out to the employees in the Risk Control and Compliance Function is decided independent of business parameters.

Other Categories of the Staff:

For the other employees, the Board, based on the recommendation of the NRC may devise appropriate compensation structure. The compensation paid to other employees that include Award Staff, Officers coming under Scale I to IV and executives coming under Scale V to VII is fixed based on the periodic industry level settlements with Indian Banks Association. The variable compensation paid to employees is based on the Performance Linked Incentive Scheme, which has been formulated on the basis of performance parameters set in Performance Management System.

Limit on Variable pay and Deferred Compensation:

As per the compensation policy of the Bank, the compensation structure for the whole-time directors/ Chief Executive Officers / Material Risk Takers (MRTs)of the Bank is divided into Fixed Pay and Perquisites and Variable pay.

Fixed Pay and Perquisites

Based on the recommendations of the Nomination and Remuneration Committee, and subject to the approval of Reserve Bank of India (for MD & CEO and Executive Directors), Board shall fix the fixed portion of compensation payable which is reasonable, taking into account all relevant factors including adherence to statutory requirements and industry practice.

Variable Pay

In order to have a proper balance between the cash and share-linked components in the variable pay, the variable pay is to be structured in the form of share-linked instrument (including Cash-linked Stock Appreciation Rights (CSARs)), or a mix of cash and share-linked instruments subject to the recommendation of the Nomination and Remuneration Committee of the Board. Only in cases where the compensation by way of share-linked instruments is not permitted by law/regulations,

the entire variable pay can be in cash to be exercised. The assessment of the variable pay will be based on ''Key Performance Indicators'' (KPI) achievement of respective whole-time directors/ Chief Executive Officers / Material Risk Takers (MRTs).

Limit on Variable Pay:

A. For Whole-Time Directors and Chief Executive

Officers

i. In compliance with the RBI Guidelines and other applicable rules and regulations at least 50%, should be variable and paid on the basis of individual, business-unit and firm-wide measures that adequately measure performance. The total variable pay shall be limited to a maximum of 300% of the fixed pay (for the relative performance measurement period).

ii. In case variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case variable pay is above 200%, a minimum of 67% of the variable pay should be via noncash instruments.

iii. In the event that an executive is barred by statute or regulation from grant of share-linked instruments, his/ her variable pay will be capped at 150% of the fixed pay, but shall not be less than 50% of the fixed pay.

iv. The deterioration in the financial performance of the Bank should generally lead to a contraction in the total amount of variable compensation, which can even be reduced to zero.

B. For Material Risk Takers (MRTs)

i. In compliance to the RBI Guidelines and other applicable rules & regulations 50% of total pay for all MRTs should be variable pay and paid on the basis of individual, business-unit and firm-wide measures that adequately measure performance.

ii. 50% of the variable pay should be via noncash instruments.

iii. The deterioration in the financial performance of the Bank should generally lead to a contraction in the total amount of variable compensation, which can even be reduced to zero.

The Board will from time to time specify the Material

Risk Takers (MRTs).

a. Deferral of Variable Pay

(i) For senior executives, including WTDs, and other employees who are MRTs, a minimum of 60% of the total variable pay must invariably be under deferral arrangements. Further, if cash component is part of variable pay, at least 50% of the cash bonus should also be deferred.

(ii) However, in cases where the cash component of variable pay is under C 25lakh, deferral requirements is not applicable.

b. Period of Deferral Arrangement

The deferral period should be for a period of three years. This would be applicable to both the cash and non-cash components of the variable pay arrangements.

c. Vesting:

Deferred remuneration should be spread out over the course of the deferral period on a pro rata basis as follows:

â¢ not more than 33.33 % of the total deferred variable pay should vest at the end of first year.

â¢ Further, not more than 33.33 % of total deferred variable pay should vest at the end of second year.

Additionally, vesting should not take place more frequently than on a yearly basis to ensure a proper assessment of risks before the application of ex-post adjustments.

In case of employee''s death or permanent disability, whole of the deferred variable pay (Cash component) shall immediately vest on the employee''s legal heirs, or the employee, as the case maybe.\

Share-linked Instruments

Such instruments shall be included as a component of variable pay. Norms for grant of share-linked instruments should be framed by banks in conformity with relevant statutory provisions and should form part of the Bank''s compensation policy. The details of share-linked instruments granted should also be disclosed in terms of the disclosure requirements stipulated in these Guidelines. Share-linked instruments should be fair valued on the date of grant by the Bank using Black-Scholes model in compliance with the RBI guidelines.

The Variable pay assessment should be considering the following parameters

â¢ The HR Dept. in consultation with CFM Dept. has to recommend that amount of Variable pool of the Bank each year to the Nomination and Remuneration Committee.

â¢ While recommending the variable Pool HR Dept. should establish the linkage between the variable pool at the Bank level and the performance of the Bank vis-a-vis its financials and risk assumed.

â¢ Further HR Dept. should also detail the linkage between performance of various units/ functions/ divisions to performance of variable pool.

â¢ There should be a prudent basis for distribution of the overall variable pool between various units/ functions / divisions including various control and assurance functions.

â¢ Performance thresholds as defined and assessed by HR Dept. to be attained for being eligible for variable compensation.

The same to be included and form part of the Performance Linked Incentive scheme.

Malus / Clawback

The deferred compensation should be subject to malus/ clawback arrangements in the event of subdued or negative financial performance of the Bank and/or the relevant line of business in any year. The Bank has identified a set of situations which require the invocation of the malus and clawback clauses that may be applicable as detailed below:

i) Applying of Malus / Clawback arrangement on entire variable pay on occurrence of the following Situations:

â¢ Identified fraud / misconduct by the executive (whole-time directors, Chief Executive Officers / Material Risk Takers (MRTs)) pertaining to the corresponding period for which the clause to be applied.

ii) Applying of Malus / Clawback arrangement on unvested portion of deferred variable pay on occurrence of the following situation:

â¢ Reporting of operating loss or more than 50% fall in operating profit in any year

iii) Applying of Malus clause on unvested portion of deferred variable pay on occurrence of the following situation:

â¢ Wherever the assessed divergence in Bank''s provisioning for Non-Performing Assets (NPAs) or asset classification exceeds the prescribed threshold for public disclosure as detailed below: (As referred in RBI circular No. DBR.BP.BC. No.32/21.04.018/2018-19 dated April 1, 2019, as amended from time to time),

a. the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period, and

b. the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period

Further, in such situations, no proposal for increase in variable pay (for the assessment year) shall be entertained. In case the Bank''s post assessment Gross NPAs are less than 2.0%, these restrictions will apply only if criteria for public disclosure are triggered either on account of divergence in provisioning (clause (a)) or both provisioning (clause (a) and asset classification (Clause (b)).

Any other act detrimental to the interest of the Bank including and not restricted to violation of Code of Conduct, violation of Framework for dealing with Conflict of Interest, violation of rules and regulations of the Bank, failure to discharge fiduciary and regulatory duties - and in respect of which the Bank would reserve the right to institute appropriate civil, criminal or other proceedings at the risks, costs and consequences of such individuals.

As part of the criteria for the application of malus and clawback, the following period during which malus and/or clawback can be applied will be 36 months from application of the clause. covering at least deferral and retention periods (a period of time after the vesting of instruments which have been awarded as variable pay during which they cannot be sold or accessed)

In case, the MRT(s) resigns, retires or takes early retirements or has been terminated, the above provisions of clawback shall apply subject to due process for recovery of amounts adjudged.

Guaranteed Bonus

Guaranteed bonus is not consistent with sound risk management or the ''pay for performance'' principles and should not be part of the compensation plan. Therefore, guaranteed bonus should only occur in the context of hiring new staff as joining/sign-on bonus and be limited to the first year. Such bonus will neither be considered part of fixed pay nor part of variable pay. Further, banks will not grant severance pay other than accrued benefits (gratuity, pension, etc.) except in cases where it is mandatory under any statute.

Hedging

The Bank will not provide any facility or funds or permit employees to insure or hedge their compensation structure to offset the risk alignment effects embedded in their compensation arrangement. To enforce the same, the Bank will establish appropriate compliance.

Remuneration of Chairman:

The NRC recommends the remuneration of the nonexecutive Independent Chairman to the Board which is considered and approved by the Board in the same manner subject to Shareholders'' and regulatory approvals. The NRC, while recommending the remuneration of the part-time Chairman considers the Function, Role and Responsibilities of the Chairman and Regulatory guidelines as applicable etc. The remuneration payable to the Chairman is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration of the Chairman is payable only after receipt of the approval from RBI.

Remuneration of Non-Executive Directors (NEDs):

The NEDs are paid sitting fees for attending each meeting of the Board of Directors or any committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending the change in the sitting fees considers various factors like size and complexity of organization, comparison with the peer Banks and Regulatory guidelines as applicable etc. while recommending the change in the sitting fees to the Board.

Policy on Board Diversity:

Pursuant to SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has devised a policy on Board diversity to ensure adequate diversity in its Board of Directors. The Bank believes that diversity underpins the successful operation of an effective Board and embraces diversity as a means of enhancing the business. With a view to achieve sustainable and balanced development, the Bank sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives. A diverse Board includes and makes good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of Directors.

Policy on Board Diversity of the Bank mainly depends on the qualifications for appointment of Directors of the Bank as contained in the Banking Regulation Act,1949 and satisfying the Fit and Proper Criteria for directors as per the regulatory requirement of RBI.

The Bank continuously seeks to enhance the effectiveness of its Board and to maintain the highest standards of corporate governance and recognizes and embraces the benefits of diversity in the Board room. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. In formulating its perspective on diversity, the Bank also takes into account factors based on its own business model and specific needs from time to time.

The NRC has the responsibility to lead the process for Board appointments and for identifying and nominating, candidates for appointment to the Board. The benefits of diversity continue to influence succession planning and continue to be the key criteria for the search and nomination of Directors to the Board.

The Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. The policy of Board Diversity is displayed in Bank''s website: https://www.southindianbank.com/userfiles/file/ rupay/disclosure/policy_on_board_diversity.pdf

Familiarisation Programme

The Bank had conducted various sessions during the financial year to familiarize the Independent Directors of

the Bank, including various topics on Banking Industry, business model, Corporate Law, Risk management system and Cyber Security. Further, the Directors are encouraged to attend the training programmes being organized by various regulators/ bodies/institutions on above matters. The details of such familiarization programmes are displayed on the weblink of the Bank. https://www. southindianbank.com/userfiles/file/disclosure_on_ familiarisation_programme_for_independent_directors. pdf

Board Level Performance Evaluation

The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 stipulates the performance evaluation of the Directors, MD & CEO, Chairman, Board and its Committees. Considering the said provisions, the Bank has devised the process and the criteria for the performance evaluation which has been recommended by the Nomination & Remuneration committee and approved by the Board.

The process for formal annual performance evaluation is as under:

> Committee of Independent Directors at their separate meeting evaluates the performance of NonIndependent Directors, MD & CEO, Chairman of the Bank and the Board as a whole.

> The Board evaluates the performance of the Independent Directors, Non-Executive Directors, Chairman and MD & CEO (excluding the director being evaluated) and submit its report to the Nomination & Remuneration committee.

> The Board and Nomination & Remuneration Committee evaluates the fulfilment of the independence criteria as specified in the regulations and their independence from the management.

> The Board evaluates the performance of Board level committees.

> Nomination & Remuneration Committee evaluates/ reviews the performance of each Director and recommends the appointment/re-appointment/ continuation of Directors to the Board. Based on the recommendation of Nomination & Remuneration Committee, Board will take appropriate action.

The criteria for performance evaluation, inter-alia, include the following:

Performance Evaluation of Non-Executive Directors, MD & CEO and Chairman

Participation at Board/Committee Meetings, Managing Relationship, Knowledge and skill, Personal attributes, Compliance and Corporate Governance; Leadership; Strategy Formulation, Strategy Execution, Financial Planning/ Performance, Relationships with the Board, Human Resource Management and Succession Planning, Personal Qualities; Resources; Conduct of Meetings.

Performance Evaluation of Board

Composition and Diversity; Strategic Foresight, Value Creation, Process and Procedures, Oversight of the Financial Reporting Process and Internal Controls, Oversight of Audit Functions, Corporate Governance, Corporate Culture, monitoring of business activities, Understanding of the business of the Bank and Regulatory environment; Contribution to effective corporate governance and transparency in the Company''s Operations; Deliberations/ decisions on the Company''s strategies, policies, plans and guidance to the Executive Management.

Performance Evaluation of the Board Level Committees

The performance and effectiveness of the Committee; Frequency and duration; Spread of talent and diversity in the Committee; Understanding of regulatory environment and developments; Interaction with the Board.

Outcome of Performance Evaluation

An annual performance evaluation of the Board, Committees of the Board and the individual members of the Board was conducted in June, 2022 as per the aforesaid process and the report on the evaluation were presented at the meeting of the NRC and the Board of Directors. The Directors expressed their satisfaction with the evaluation process.

The feedback of the Board, post completion of the exercise of performance evaluation of the Board and Committees of the Board were as under:

â¢ Need to focus on strategic ideas than managing micro issues.

â¢ Concentrate on advanced technology to go more and more digital.

â¢ Suggest to have more meetings in matters where urgent actions are required.

EMPLOYEE STOCK OPTION SCHEME:

The SIB ESOS 2008 Employee Stock Option Scheme (''the Scheme'') provides for grant of stock options on equity shares of the Bank to employees and Managing Director &CEO of the Bank. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and sweat equity) Regulations, 2021. The Bank followed Black Scholes model for calculating fair value of option to account for its stock based employee compensation plans as per the Guidelines for all the options granted till the accounting period ended 31 March, 2023. The fair value thus arrived were being recognised as expense beginning with the accounting period for which approval has been granted as per RBI circular No. RBI/2021-22/95 DOR.GOV.REC.44/29.67.001/2021-22 dt. August 30, 2021. Till March 2023, 5,69,80,858 stock options were vested, out of which 2,89,49,199 stock options were exercised by eligible employees. The money realized due to exercise of the said options was C 42,74,54,572.64 and consequently 2,89,49,199 shares of C 1/- each have been allotted to the concerned employees/legal heirs.

A Certificate of the Secretarial Auditors pursuant to Regulation 13 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 will be placed to the AGM for the scrutiny of Shareholders. The total options granted under twelve phases of SIB ESOS 2008 works out to 2.97% of the paid-up share capital of the Bank as at March 31, 2023. The scheme has generated the intended motivation amongst the staff. There is no material change in the scheme during the FY 2022-23 and the scheme is in compliance with the applicable regulations. The scheme was last modified at the AGM held on 18.08.2021 in line with the new regulations. Statutory disclosures regarding details of the stock options granted, vested, exercised, forfeited and expired during the year under review is hosted on the website of the Bank and can be viewed at https://www.southindianbank.com/content/annual-report-financial-year-2022-to-2023/3978

AUDITORS

a) Statutory Auditors:

The shareholders at its 93rd Annual General Meeting held on August 18, 2021, has appointed M/s. CNK & Associates LLP, Chartered Accountants, Mumbai (Firm Registration Number: 101961 W/W-100036) and has appointed M/s K Venkatachalam Aiyer & Co, Chartered Accountants, Kochi (Firm Registration Number 004610S) as the Joint Central Statutory Auditors of the Bank at its 94th Annual General

Meeting held on July 12, 2022 for a continuous period of 3 years. Accordingly, the appointment of M/s. CNK & Associates LLP, Chartered Accountants will be until the conclusion of the 96th Annual General Meeting and appointment of M/s K Venkatachalam Aiyer & Co, Chartered Accountants will be until the conclusion of the 97th Annual General Meeting of the Bank.

For the year ended March 31, 2023, fees paid/payable to the Joint Statutory Central Auditors M/s. CNK & Associates LLP Chartered Accountants and M/s K Venkatachalam Aiyer & Co Chartered Accountants are as follows:

( '' in lakh)
Fee paid#	Amount
Limited Review	90.00
Year end audit and ICFR	92.00
Tax Audit, LFAR and other certifications	18.00
Total	200.00

# Excluding out of pocket expenses

There is no qualification or adverse remark in Auditors'' Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Companies Act, 2013.

Secretarial Auditors and Secretarial Audit Report:

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s SVJS & Associates, Practicing Company Secretaries, Kochi as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 202223. The Bank has provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2022-23 is annexed to this report as Annexure D. There are no reservations, adverse remark or disclaimer in the Secretarial Audit Report. No offence of fraud was reported by the Secretarial Auditor of the Bank.

Pursuant to circular no. CIR/CFD/CMD1/27/2019 dated February 08, 2019, issued by SEBI and Regulation 24A of the SEBI (LODR) Regulations, 2015 the Bank has obtained Secretarial Compliance Report from Practicing Company Secretaries on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder and the copy of the Secretarial Compliance Report was submitted with the Stock Exchanges.

INTERNAL CONTROL AND AUDIT/INSPECTION

Internal Control and their Adequacy

The Bank has put in place extensive internal controls and processes to mitigate operational risks, which includes maker checker authentication of CBS transactions, centralized processing of opening and modifications of CASA accounts and loan accounts, centralized sanctioning of loan facilities, etc.

Various Preventive controls viz., Dual custody for cash, gold and other security items, maintenance of daily control registers for security items, finger-scan-authentication for processing of transactions in CBS in addition to login passwords, stringent guidelines on password usage, STP processes between CBS and payment interface systems for transmission of messages etc. are in place.

As per the requirement of Companies Act, 2013, the Bank has formulated an Internal Financial Controls framework. Risk and Controls associated with each process in the Bank are documented under the Internal Financial Controls Framework. Inspection and Vigilance Department plays a significant role in testing the control effectiveness for each process under the framework.

The Internal Audit function provides independent assurance to the Board of Directors and Senior Management on the quality and effectiveness of the Bank''s internal control, risk management and governance systems and processes, thereby helping the Board and Senior Management to protect the Bank and its reputation.

Audit/Inspection

The Bank has an Inspection & Vigilance department which is responsible for independently evaluating the adequacy and effectiveness of all internal controls, risk management systems, governance systems and processes. The Department is manned by appropriately qualified personnel to handle the Risk Based Internal Audit, Management Audits, Information Systems Audit, and Special audits including Investigations. All the internal audits are conducted based on the RBI direction in relation to conducting risk based internal audit, and concurrent audit of branches and identified critical processes of the branches.

Head of Internal Audit & Vigilance is directly reporting to MD & CEO.

Internal inspectors conduct inspection at regular intervals and the inspection reports are placed to Audit Committee at Executive level (Sub Committee of Audit Committee of Executives (SACE)/ Audit Committee of Executives - ACE) for review, which is overseen and controlled by Board Level committee (Audit Committee of Board - ACB).

Audit of Branches

All the branches are subjected to Risk Based Internal Audit (RBIA). This audit is conducted at periodic intervals based on the risk perception. All the audits are conducted based on predefined check points and all the operational areas are covered under this audit. Credit audit is also conducted as part of Risk Based internal audit where aggregate credit exposure of a borrower is C 5 crore and above.

In addition to RBIA of branches, the Bank has concurrent audit system, which covers selected Branches, conducted by qualified Chartered Accountants/retired officers. The selection of branches for concurrent audit is done in such a way that it covers branches having substantial advance or deposit, entire specialized Branches such as ''B'' Category Branches, Corporate Branches etc., and all poorly rated branches as per the latest rating awarded.

In addition to the concurrent and risk based internal audits, the branches are subjected to Surprise Inspection, Flash Inspection, IS Audit, Revenue Inspection, Self-Audit, Gold Loan Inspection/ Asset Verification and compliance inspection during the financial year.

Separate monitoring team - Inspection Monitoring Group (IMG) closely monitors various inspections/audits at the Branches. There are six IMGs who are reporting to Head of IMG. These Monitoring groups are assigned the task of ensuring the compliance and closure of the inspection report of the branches. During the course of inspections, serious issues if any concerning regulatory guidelines, legal requirements and operational processes are found, these are escalated to the Management for timely action.

All the branch related audit are presently automated through system where reporting, risk rating, compliance and closure of the reports are done through software application which provides the Bank with an overall control on various audits conducted in the branches. Continuous improvements are made to the application to automate several activities at HO and digitize the records in a single application.

Audit of Departments and critical process

Management Audit of Regional Offices (RO) and Departments are conducted at periodical intervals based on the risk perception.

In addition to the management audit conducted by inspection department, all the critical operations such as International Banking Division, Treasury Department, Credit Department and Centralized Processing Centers, etc., are subjected to concurrent audit by independent Chartered Accountant firms. All these reports are reviewed by Sub Committee of Audit Committee of Executives (SACE) and corrective steps are taken to rectify the lapses/ irregularities, if any, pointed out in such inspections.

Information System Audit of CBS and major applications are conducted by Internal Audit Department as well as by external audit firm. The IS audit team also undertakes a general scrutiny of the efficiency of the information system at branch level and its rating so as to enhance the internal controls.

New product/process whenever introduced in the Bank is reviewed by Inspection Department and recommendations are made for necessary controls/improvements for deficiencies / gaps observed in existing internal controls.

Inspection Division also carries out independent evaluation of Bank''s internal financial controls in terms of Companies Act, 2013 and also the adequacy of internal financial controls with reference to the Financial Statements.

EXPLANATION FOR AUDITOR''S COMMENT IN THE REPORT

The Statutory Auditor''s Report for the year 2022-23 does not contain any qualification

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 and other applicable provisions of the Banking Regulation Act,1949, the Bank has prepared its Consolidated Financial Statement including its wholly owned subsidiary Company M/s. SIB Operations and Services Limited, which is forming part of this Annual report. The financial position and performance of its subsidiary Company is given in Form AOC-1, the statement containing salient features of the financial statements of the subsidiary Company.

In accordance with third proviso to Section 136(1) of the Companies Act, 2013, the Annual Report of the Bank, containing therein its Standalone and the Consolidated Financial Statements has been hosted on its website, (www. southindianbank.com). Further, as per fourth proviso to the said Section, the Audited Annual Accounts of the said Subsidiary Company of the Bank, considered as part of the Consolidated Financial Statements have also been hosted on the Bank''s website, (www.southindianbank.com). The said documents have been hosted on the website of the Subsidiary Company of the Bank also, in compliance with the said Section. The documents/details available on the Bank''s website (www.southindianbank.com) will also be available for inspection by any Member at its Registered Office. Further, pursuant to the provisions of Accounting Standard (''AS'') 21, Consolidated Financial Statements notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Bank along with its Subsidiary Company for the year ended March 31, 2023 forms part of the Annual Report.

CORPORATE GOVERNANCE

A separate report detailing Corporate Governance as required under applicable regulations of the SEBI (LODR) Regulations 2015 and a certificate from M/s SVJS & Associates Company Secretaries, Secretarial Auditors of the Bank, are annexed to this Report.

Annual Return/Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and subsection (3) of Section 92 of the Companies Act, 2013, read with Rule 11 and 12 of the Companies (Management and Administration) Rules, 2014, copy of Annual Return as at March 31,2023 in Form No. MGT-7 is hosted on the website of the Bank and can be viewed https://www. southindianbank.com/content/annual-report-financial-year-2022-to-2023/3978

Business Responsibility and sustainability Reporting (BRSR)

Environmental, Social and Governance (ESG) matters have become increasingly relevant for companies across the Globe. Being in financial sector, the Bank has focused on promotion of sustainable and environmentally friendly assets by identifying and recognising ESG risks viz-a-viz opportunities.

As part of developing a sustainable financing policy and for implementing ESG benchmarks in lending and also

for addressing issues in Environmental risk management and governance, the Bank has formulated ESMS policy (for governing Lending standards) and ESG Policy (for addressing other ESG issues). During FY 2022-23 the Bank has taken following steps in this regard.

â¢ Corporate Social Responsibility Committee of the Board is made responsible for the overseeing Environmental, Social and Governance (Reporting & review) activities of the Bank under the ESG framework.

â¢ For effective Reporting of BRSR and to review the ESG practices at the Bank, Board has appointed a Professional agency for assisting Business Responsibility and Sustainability Reporting.

â¢ The Bank has conducted a training programme for the Board of Directors and Senior Management

â¢ Further, in order to pass a message throughout the entire organization, the Bank has conducted training programme and a clarification session with stakeholder Departments to ensure that the ESG guidelines are followed in letter and spirit.

â¢ The Bank has introduced a new Term Deposit Product called "Green Deposit". Green Deposit is a fixed-term deposit for investors looking to invest their surplus cash reserves in environmentally friendly projects. These deposits provide investors a platform to fulfil their sustainability goals by investing surplus cash balances in environmentally beneficial projects. Social Media Campaigns were launched for popularizing Green Deposit and ESG Mutual Funds.

â¢ Being a Bank, a sustainable ESG complied lending policy is a base for us to ensure that we equip ourselves for a future oriented and sustainable lending, giving more focus on lending toward projects which are more environmental friendly. In this regard Board has approved Environmental and Social Management System (ESMS) policy for focusing on environment friendly lending.

â¢ MD & CEO has been authorized as the designated Director for implementing ESG in the Bank for BRSR reporting.

â¢ The Bank has published in its fully dedicated Students Economic Forum (a monthly magazine published by Bank) on the Topic "Business Responsibility and Sustainability Reporting, reflecting the subject matter of ESG & BRSR.

â¢ The Board has constituted an Executive Level Committee for ESG implementing in the Bank. Executive Level Committee will be responsible for supervision and implementation of ESG activities in the Bank.

â¢ Human Resources Department has conducted training on "Human Rights under ESG framework in India" in Bank''s E learning platform viz., I-learn, for familiarizing concept of ESG among all employees.

â¢ Tie-up arrangement with authorized E-waste vendors were made for better e-waste management.

â¢ Preventive wellness programs / campaigns / webinars through tie ups with Hospitals and other organizations has been done by Bank for employees.

â¢ The Bank has initiated steps to provide provision for Solar power generation in New Buildings under construction, wherever possible. In this regard, the Bank has issued work order for installation of On-Grid Solar Power Plants of 50 kW each at Platinum Jubilee Building in Ayyanthole and Market Road Building in Ernakulam. Installed 25 kW Solar Power Plant in Kannur RO Building.

â¢ As part of Light Change Project, the Bank has replaced 500 numbers of 2X2 Lights in HO and Annex Buildings to more power saving LED Lights. In continuation to the same, approval has been given for changing 628 lights in Kakkanad Administrative Building, Block I, to LED. Almost 50% of the work is completed.

â¢ The existing practice of using flex vinyl material for Signboards has been discontinued. From now on, the new signboards shall be made with ACP (Aluminium Composite Panel) which is more durable and environment friendly. New arrangement has been made with vendors providing service on Pan India basis.

â¢ As a green initiative, around 350 indoor plant saplings were distributed among HO and Annex Building staffs as part of the New Year Celebrations.

â¢ The Bank has extended financial assistance under CSR for construction of RO Plant in schools.

As stipulated in Listing Regulations, the Business

Responsibility and sustainability Report describing the

initiatives taken by the Bank from environmental, social

and governance perspective is attached as part of the

Annual Report as Annexure-E.

Dividend Distribution Policy

( https://www.southindianbank.com/userfiles/file/ dividend%20distribution%20policy_17.pdf)

Subsidiary Companies/Joint Ventures or Associate Companies

As on March 31, 2023, the Bank has one unlisted wholly owned subsidiary - M/s. SIB Operations and Services Limited, which was incorporated on 28th May, 2021,

M/s SIB Operations and Services Limited is a wholly owned Non-Financial Subsidiary Company of the South Indian Bank Ltd. The RBI has accorded the final approval on 25th March, 2021 for setting up the Subsidiary Company and the Company was incorporated on 28th May 2021 to cater to the operational needs of the South Indian Bank Ltd. Its authorized Capital as on 31st March, 2023 is ''2 crores and the Issued and Paid up Capital is C 50 lakh . The company is providing exclusive services to the Bank in the operational areas of Tele calling, Business Development, Data Entry Operations, I.T. Support and other services permitted by Reserve Bank of India. The Subsidiary Company has reported a profit of C 22.04 lakhs as on March 31, 2023.

There are no companies which have ceased to be bank''s subsidiaries, joint ventures or associate companies during the Financial year 2022-23.

Mr. M George Korah (DIN: 08207827)), Independent Director of the Bank, Mr. Murali Ramakrishnan (DIN: 01028298), MD & CEO of the Bank, Mr Thomas Joseph K (DIN 09186452), EVP and Chief Business Officer of the Bank and Mr. Chakkakkal Abraham John (DIN: 09186451) , Deputy General Manager of the Bank are directors of SIB Operations and Services Limited.

Except Mr. M George Korah (DIN: 08207827), no other directors in the Board of SIB Operations and Services Limited were drawing any remuneration / sitting fee from the subsidiary company. Mr. M George Korah (DIN: 08207827), has received '' 2,00,000/- as sitting fee for attending the Board meeting of the subsidiary company.

The Board of Directors has formulated a policy for determining ''material'' subsidiaries pursuant to the provisions of the Listing Regulations. The same is displayed on the website of the Bank( https://www.

southindianbank.com/content/policy-for-determining-material-subsidiaries/781 )

Related Party Transactions

The Board of Directors has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The same is displayed on the website of the Bank https://www.southindianbank.com/userfiles/ file/rupay/disclosure/policy%20on%20materiality%20 of%20and%20dealing%20with%20relatedparty%20 transactions.pdf

Since the related party transactions are in the ordinary course of business and on an arm''s length basis and not material AOC2 is not applicable.

Material Changes and Commitment Affecting Financial Position of the Bank

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2023 and the date of the Directors'' report i.e. July 31, 2023.

Significant and material orders passed by Regulators

During the year under review, there are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Bank''s operations in future.

Maintenance of Cost Records

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

Details in respect of frauds reported by auditors

There is no fraud reported by auditors under sub-section (12) of section 143 of the Companies Act, 2013 other than those which are reportable to the Central Government.

Compliance to Secretarial Standards

The relevant Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) related to the Board Meetings and General Meeting have been complied with by the Bank.

Strictures and Penalties

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

Deposits

Being a Banking Company, the disclosures required as per Rule 8(5) (v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable to the Bank.

Confirmation with respect to Insolvency and Bankruptcy Code, 2016

Particulars	Details
The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year	NIL
The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.]	NIL

Management Discussion and Analysis Report

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

Particulars of Loans, Guarantees or Investments

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of section 186 of Companies Act, 2013, except subsection (1), do not apply to a loan made, guarantee given or security provided or investment made by a banking company in the ordinary course of business.

Directors'' Responsibility statement

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

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

b) the Directors had selected such accounting policies and applied them consistently and made judgments

and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2022-23 and of the profit of the Bank for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 and other applicable laws for safe guarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

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

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

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

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other State Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Bank''s securities are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Bank''s securityholders and customers for their continued support, patronage and goodwill. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank, the Board acknowledges this fact and thank all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

By Order of the Board

(SALIM GANGADHARAN) (MURALI RAMAKRISHNAN) CHAIRMAN MANAGING DIRECTOR & CEO

DIN:06796232 DIN :01028298

Place : Thrissur Date: July 31, 2023

Mar 31, 2019

To the Members,

The Board of Directors is pleased to place before you, the 91^st Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2019, the Profit and Loss Account and the Cash Flow Statement for the year ended March 31, 2019.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2019 are as follows:

Key Parameters	Rs. in crore
Key Parameters	2018-19	2017-18
Deposits	80,420.12	72,029.59
Gross Advances	63,635.92	55,108.99
Total Gross Business	1,44,056.04	1,27,138.58
Operating Profit	1,238.98	1,480.79
Net Profit	247.53	334.89
Capital &Â Reserves	5,335.33	5,241.22
Capital Adequacy (%) - Basel-III	12.61	12.70
Earnings Per Share (EPS)* :	Â	Â
(a) Basic EPS (in Rs.)	1.37	1.86
[face value Rs.1/-]	Â	Â
(b) Diluted EPS (in Rs.)	1.37	1.85
[face value Rs.1/-]	Â	Â
Book Value per Share (in Rs.)	29.48	28.98
[face value Rs.1/-]	Â	Â
Gross NPA as % of Gross Advances	4.92	3.59
Net NPA as % of Net Advances	3.45	2.60
Return on Average Assets (%)	0.29	0.43

business achievements:

The Bank has achieved a Total Business of Rs.1,44,056.04 crore, consisting of Deposits of Rs.80,420.12 crore and Gross Advances of Rs.63,635.92 crore as on March 31, 2019.

Deposits

The Total Deposits of the Bank has increased from Rs.72,029.59 crore as on March 31, 2018 to Rs.80,420.12 crore registering a growth of 11.65%.

The break-up of the deposits as on March 31, 2019 is as under:

Â	Amount (Rs. in crore)	% to total Deposits
Current Deposits	3,331.87	4.14
Savings Deposits	16,135.28	20.06
Term Deposits	60,952.97	75.80
Total	80,420.12	100.00

The Bank during the year focused on Advances &Â CASA.

CASA has grown from Rs.17,141.74 crore as on March 31, 2018 to Rs.19,467.15 crore as on March 31, 2019, with a growth rate of 13.57%. The savings bank deposits grew by 14.56% and current deposits grew by 8.97% on a year on year basis.

The Bank has accorded priority to meaningful financial inclusion during the period under reporting while opening new deposit relationships.

Advances

During the year, the gross advances of the Bank registered a growth of 15.47%, to touch Rs.63,635.92 crore. In spite of subdued general economic activity, the Bank could do well in the retail segment including MSME.

The Bank is presently focusing on the retail, agriculture and MSME sectors for growth in advance. Retail segment which accounts for 29% of the Loan book registered a growth of 33.88% during the year, while MSME, which accounts 24% of the loan book recorded an annual growth of 16%. The Bank is however moving steadily ahead in its strategy of granularizing and derisking the Balance Sheet.

The Bank has implemented various measures to ensure high credit quality through complete centralization of credit sanction through the new centralized processing centre viz Retail Banking Centralized Processing Centre, Mid-Corporate Centralized Processing Centre and Wholesale Banking Centralized Processing Centre. All major credit sanctions have been brought under various credit committee set up for the purpose.

The Bank is now focusing on the growth of retail lending segment with a view to transforming the Bank into a Retail Banking Power House by 2020. Accordingly, the thrust is given to retail loan products such as Housing loan, Vehicle loan, Gold loan and MsMe loans.

The Bank has taken various steps to achieve the projected growth without compromising on credit quality and pursuing stringent credit underwriting and administration standards.

During the year, the Bank has exceeded the regulatory prescription on the Priority Sector &Â Agricultural Sector. The Bank could even sell off the excess priority sector advances, thereby generating additional revenue.

Break-up of exposure under Priority Sector as on March 31,2019 is furnished below:

Â	Amount (Rs. in crore)
Agriculture &Â Allied activities (Net of PSLC)	10,260.23
MSME	14,769.70
Other Priority Sector	3,124.64
Total Priority Sector	28,154.57
PSLC (General PS)	5,119.50
TOTAL Ps (Net PsLC)	23,035.07

Roll out of a centralised credit monitoring mechanism was another milestone in the improvement of credit administration, which has resulted in continuous monitoring of accounts above Rs.5.00 crore.

Yet another milestone was the setting up of a centralised "collection hub", which ensures continuous follow up of potential impairments, follow up through SMS, telecalls, etc. to enable the Bank to be more proactive in the retail segment.

financial performance

Profit

The net interest income of the Bank has increased by Rs.54.18 crore (2.76%) from Rs.1,965.52 crore to Rs.2,019.70 crore. Non-interest income was Rs.726.21 crore during the year as against ' 837.25 crore in previous year. The decrease was mainly on account of subdued treasury performance due to the adverse market conditions.

The Operating Profit for the year under review was Rs.1,238.98 crore before taxes and provisions as against Rs.1,480.79 crore for the year 2017-18 mainly on account of lower non-interest income and increased employee cost including provision for expected wage revision. Provision other than taxes and contingencies decreased by Rs.122.42 crore (12.48%) from Rs.980.90 crore. The Net profit for the year was Rs. 247.53 crore as compared to a net profit of Rs.334.89 crore during the previous year. The profit available for appropriation was Rs.601.56 crore as per details given below:

(Rs. in crore)

Profit before depreciation, taxes and	Â	1,238.98
provisions	Â	1,238.98
Less: Provision for NPI	3.42	Â
Provisions for Non-Performing Assets	684.30	Â
Provision for FITL	2.19	Â
Provision for Depreciation on Investments	140.23	Â
Provision for Income Tax	132.97	Â
Provision for Standard Assets	27.36	Â
Provision for Restructured Assets	(1.22)	Â
Provision for Other Impaired Assets	(10.02)	Â
Provision for Un-hedged Forex Exposure	1.10	Â
Provision for Non-Banking Asset Provision	11.12	991.45
Net profit	Â	247.53
Brought forward from previous year	Â	354.03
Profit available for appropriation	Â	601.56
Appropriations: Transfer to Statutory Reserves	Â	61.89
Transfer to Capital Reserves	Â	36.37
Transfer to Investment Fluctuation Reserve	Â	22.15
Transfer to Special Reserve	Â	70.00
Transfer to Special Reserve u/s 36(1)(viii) 1	(FY 15-16)	32.37
of Income Tax Act pertaining to earlier -Â years including corresponding DTL J	(FY 16-17)	14.80
Dividend Paid for FY 17-18	Â	72.38
Tax on Dividend Paid for FY 17-18	Â	14.87
Balance carried over to Balance Sheet	Â	276.73

Dividend

The Board of Directors recommends a dividend of 25% (tax-free in the hands of shareholders other than Individuals whose dividend income is above Rs.10 lakh), i.e., @ Rs.0.25 per Equity Share of face value of Rs.1/- per share.

capital &Â reserves

The Bank's issued and paid up capital increased to Rs.180.97 crore as on March 31, 2019.

During the Financial Year 2018-19, 8,51,071 stock options were exercised by the eligible employees granted under the Employee Stock Option Scheme.

The Bank has successfully issued Non-Convertible, Redeemable, Unsecured, Basel III compliant Tier II Bonds worth Rs.250.00 crore during Q4 of FY 2018-19. At the time of issue, CARE had assigned a rating of 'CARE A+' (Outlook: Stable) and India Ratings had assigned a rating of 'IND A+' (Outlook: Stable).

The capital plus reserves of the Bank has moved up from Rs.5,241.22 crore to Rs.5,335.33 crore on account of exercise of options and plough back of profits during the current financial year.

THE CAPITAL TO RisK WEIGHTED AssETs RATIO (CRAR)-Basel III

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2019 according to Basel III guidelines is 12.61 as against the statutory requirement of 10.875 (including Capital Conservation Buffer). Tier I CRAR constitutes 9.97 while Tier II CRAR works out to 2.64.

The Bank follows Standardized Approach, Standardized Duration Approach and Basic Indicator Approach for measurement of capital charge in respect of credit risk, market risk and operational risk respectively.

LISTING AGREEMENT WITH STOCK EXCHANGES

The Bank's shares continue to be listed on BSE Ltd. and The National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2019-20.

EXPANSION PROGRAMME

The Bank has been successful in widening its network across India with 870 Branches 53 Extension counters, 1322 ATMs and 84 CRMs/CDMs. The bank has opened 18 new outlets (16 Branches and 2 Extension counters) 36 ATMs and 7 CRMs across the country during the financial year 2018-19. The branch network now covers 27 States and 3 Union Territories. During the year, the Bank had closed 18 ATMs, 1 CRM and replaced 27 ATMs with CRMs.

The Bank plans to open a maximum of 20 new outlets (Branches &Â Extension counters) and 25 ATMs/CRMs during the financial year 2019-20. With the opening of a Representative Office in Dubai in April 25, 2018, the Bank is now in a better position to serve its NRI customers and other stakeholders in the Middle East.

LOAN ORIGINATION sYsTEM

One of the major achievement during FY 2018-19 was the implementation of Loan Origination System (LOS).

The Bank has implemented an advanced LOS software as one of the major projects, to equip its Central Processing Centres to handle large volumes of proposals, to bring more transparency and control and to reduce the turnaround time (TAT) in processing the loan applications.

The implementation process was carried out in a phased manner and as on date and the Bank has carried out full-fledged implementation of LOS software at its Mid Corporate Central Processing Centre (MCCPC). All loan proposals including modification and renewals are handled through the LOS application and MCCPC is now functioning as a paperless office.

At the Retail Banking Central Processing Centre (RBCPC), the Bank has rolled out four retail products viz. Housing loan, Personal loan, Education loan and Vehicle loan on PAN INDIA level through the above process. LOS for Mortgage loan, SME &Â Agri module is under development.

Trade Receivable Discounting system (TReDs)

From FY 2018-19 onwards the Bank is actively participating in Trade Receivable Discounting System (TReDS) an online electronic institutional mechanism introduced by RBI, for facilitating the financing of trade receivables of MSMEs. In this respect, the Bank has joined hands with two of the RBI authorised platform providers of TReDS, i.e. Mynd Solutions Private Limited &Â A-TREDS.

Trade Finance Central Processing Centre (TFCPC)

Another milestone was setting up of Trade Finance Central Processing Centre (TFCPC). It is an exclusive vertical under Credit Department to establish a professional, proactive and vibrant Trade Finance operational vertical (both Forex and Domestic). With the introduction of TFCPC, the Bank has centralised all Outward remittances and Trade Finance activities and thus streamlined the related procedures.

products

During the FY 2018-19, the Bank has introduced eight new loan products, of which most of them were launched to give thrust to MSME sector.

In addition to the above, the Bank has revamped 'Supply Chain Finance' which is supported by a robust Supply Chain Management Solution, which could be accessed via URL by vendors, dealers and corporates along with the bank user for real time entry, monitoring and disbursement of credits.

investment

Bank's gross investment portfolio stood at Rs.19,524.98 crore as on March 31, 2019 compared to Rs.18,750.57 crore as on March 31, 2018, showing an increase of 4.13%. Investment Deposit ratio declined from 26.03 as on March 31, 2018 to 24.28 as on March 31, 2019. This drop came in the wake of rising growth in advances, falling regulatory SLR requirement and portfolio readjustment in the scenario of hardening interest rates.

Profit on sale of investment for the FY 2018-19 stood at Rs.119.91 crore. Total interest income from investment for the year was Rs.1286.14 crore. Yield on Investment (Profit + interest earned to average investments) during the FY 2018-19 was 7.33%. The financial markets were highly volatile during the FY 2018-19, with USD/INR and crude oil prices making new high during the period. The G sec yields and money market rates experienced wide fluctuations due to mounting fiscal stress, high crude prices, tight liquidity conditions and depreciating exchange rate.

Globally the US Federal Reserve had begun the balance sheet normalization process and had commenced increasing the FED rates in 2018. However, the concerns of slowing global growth may prompt central bankers across the world to ease the rates and adopt an accommodative stance. The Indian financial markets would also take cues from RBI's monetary policy stance, movement in crude prices, the election outcome and stability of the upcoming Central Government and size and frequency of liquidity injection measures such as USD/INR swaps, OMOs etc.

NON-PERFORMING AssETs (NPA)

During the year 2018-19, as a result of focused and sustained efforts for early recovery of NPAs, through prompt and effective measures under the SARFAESI Act, follow up of recovery cases pending before DRTs and Civil Courts, one time compromise settlements of accounts, asset sale to ARC, etc., Bank could recover NPAs to the extent of Rs.506.10 crore (recovery including up-gradation Rs.265.16 crore), as against the target of Rs.500.00 crore. Special thrust was given to selection and underwriting of credit, effective due diligence and improvement in credit administration to ensure improvement in the quality of assets.

During the year, the Gross NPA of the Bank has increased from Rs.1,980.30 crore as on March 31, 2018 to Rs.3,131.67 crore as on March 31, 2019 and Net NPA increased from Rs.1,415.80 crore as on March 31, 2018 to Rs.2,163.62 crore as on March 31, 2019. In spite of the prompt and effective credit risk management and recovery measures, the fresh slippages of accounts from the corporate sector (mostly legacy accounts), resulted in the increase of gross NPA to Rs.3,131.67 crore. In terms of percentages, the GNPA increased from 3.59% as on March 31, 2018 to 4.92% as on March 31, 2019 and Net NPA increased from 2.60% as on March 31, 2018 to 3.45% as on March 31, 2019. As a result of Bank's strong focus on recovery as well as the initiatives taken in underwriting credit, the NPA level is expected to moderate.

DIGITAL AND INFORMATION TECHNOLOGY ENABLED SERVICES

Digitization and Innovative technologies has brought about remarkable transformation in the banking sector. The global banking sector is becoming more strategically focused and technologically advanced to respond to customer expectations and new business models.

The Bank has grown with effective use of the technology by realigning technology and business in order to ensure better growth in present competitive environment. A great deal of emphasis is being placed by the Bank on digitizing core business processes and reassessing organizational structures and internal talent to be better prepared for facilitating enhanced customer satisfaction. The Bank has streamlined its Information Technology organization structure by setting up Digital Banking Department and IT Operations Department. Digital Banking Department has been focusing on the innovation, improvement and implementation of major business oriented projects on the digital front viz., ATM, Net Banking, Mobile Banking and other emerging technologies such as Block chain, AI etc.. IT Operations department provides highest level of integrity of internal applications and furnishes infrastructural needs adequately capacitated to provide a seamless platform for growth of business operations. The last year digital transaction growth was Adoption of new technologies and embracing innovation has been one of the forefront policies of South Indian Bank and it's IT Team. Today the Bank has a robust technology framework which caters to all customer requirements and provides quick turnaround time.

The bank offers the best in class technology services to cater to the diverse requirements of our retail clientele. The technology stack includes well designed customer touch points, and robust back end systems. We are enriching our digital channels with lot of innovative and value added services for better customer experience.

Retail Customers:

- Â Â Â Internet Banking - Sibernet

- Â Â Â Mobile Banking - Mirror +

- Â Â Â Variants of VISA, Mastercard &Â Rupay Debit Cards

- Â Â Â ATM, Cash Recyclers (CRM) other Value added services

- Â Â Â Call Centre Solution catering to customers 24/7

Corporate Customers:

- Â Â Â Internet Banking - Sibernet

- Â Â Â Host to Host Integration facility ("Hi-Hi Banking")

- Â Â Â Supply Chain Management Solution

- Â Â Â Debit cards to the business customers

- Â Â Â API Banking

- Â Â Â Remote Cheque Printing

- Â Â Â FeeBook

- Â Â Â E-Academia

There has been a growth of 131% in Mobile Banking activation, 35% growth in Internet Banking Corporate activation and 25% growth in Internet Banking Retail activation.

Digital/Technology initiatives/solutions embarked during the year

Services/ solutions that the Bank has launched during the year:

- Â Â Â Data Centre and DR Enhancement/ initiatives [DR Management, Disk based Backup solution at DC, Solaris OS Migration at DC &DR and Data Center certification]

- Â Â Â e-Academia allows parents to remit fees online using Debit Card/Credit Card/Net Banking without waiting in a long queue to remit the fees of their children.

- Â Â Â FEEBOOK - online event based fund management/collection portal, with a tagline 'You Decide You Collect' allows organizations/institutions/associations conducting any number of events with fees involved in it to create their own payment portals, do any modifications on their payment portal, and view the payment reports as and when required. Payments can be made through Payment Gateway solution offered by the Bank.

- Â Â Â Supply Chain Finance Scheme, the Bank has introduced (1) Â Â Â Vendor Finance Scheme to address financing the vendors/suppliers of raw-materials, components etc. to manufacturing companies (referred to as corporate) and (2) Â Â Â Dealer Finance Scheme to finance dealers of the products manufactured by corporate.

- Â Â Â Bank also offers Host to Host Integration facility ("Hi-Hi Banking") which handles fund transfer in a seamless fashion by real time interface with ERP solutions of corporates. This facility is available for 365*24*7 and the clients can securely access the system from anywhere.

- Â Â Â Migrated on premise e-mail solution to the cloud based email solution.

- Â Â Â Optimizing infrastructure using Virtual Machines.

- Â Â Â The Bank has implemented second factor authentication in CBS for branch user login to strengthen the user level login security.

- Â Â Â Implementation of Straight Through Processing (STP) between CBS and SWIFT. All types of SWIFT messages are automated and inward processing of SWIFT messages has also been brought into the purview of STP

- Â Â Â Implementation of automated DR management solution -Ensures that applications can be resumed from DR site during any disaster as per the defined RTO (Recovery Time Objective).

- Â Â Â LOS (Loan Origination System) was introduced in the Bank in phased manner for Retail &Â SME loans, for scaling up of loan volumes and quick processing of loan application from centralized hubs with reduced TAT.

- Â Â Â Implementation of Process Automation Solution -Automation solution for converting Non STP processes to STP to ensure Secure, seamless and automated Data Transfer across different nodes.

- Â Â Â Aadhaar linking/seeding enabled across all important customer touch points.

- Â Â Â Implemented NACH H2H automation mechanism by which mandate management &Â ACH processing is happening via STP process.

- Â Â Â Fraud Risk Management (FRM) Solution for CBS &Â channel transactions.

- Â Â Â South Indian Bank is the first bank to be certified as EMV enablement as Issuer on ATMs.

- Â Â Â Lead Capture through ATMs.

- Â Â Â Anti skimming solution in ATMs to safeguard ATMs and especially ATM customers from loss and fraud.

- Â Â Â Introduced MasterCard Business Debit Cards.

- Â Â Â Dynamic Currency Conversion Support for MasterCard International Transactions-Foreign MasterCard card holders will be able to withdraw money from our ATMs by knowing the transaction value in their home currency.

- Â Â Â Introduction of Payment Gateway Service in tie-up with M/s Worldline has become an important tool for acquiring float funds and new business relationships.

- Â Â Â Bharat Bill Payment Systems - BBPS which offers integrated and interoperable bill payment services to customers across geographies with certainty, reliability and safety of transactions.

- Â Â Â NETC - National Electronic Toll Collection - which helps the vehicles with a RFID tag to pass through the toll plazas across the country, seamlessly.

- Â Â Â Bharat QR issuing and acquiring - QR based transactions by making use of debit cards and UPI.

- Â Â Â The Bank has enabled GST Payment, online loan against deposit opening, IT Returns - e filing, online Mutual Fund Service, Funds Transfer to Virtual Accounts through Internet Banking.

- Â Â Â Block Chain Based Cross Border Remittance Solution, an important technology set to completely improve the remittance system and potentially assist and improvise the existing bank settlement system, and active participation on other block chain consortiums focusing on different implementation projects.

- Â Â Â Digital Onboarding - CASA and Insurance. In addition to tab banking and quick opening in branches based on Aadhaar, the Bank has also introduced end to end digital onboarding for insurance products of Banks partners.

Awards and Certifications received on Technology front

- Â Â Â South Indian Bank has won two technology awards during the Indian Banking Association (IBA) Technology Awards 2019.

1. Â Â Â Winner - The Most Customer Centric Bank using technology

2. Â Â Â Runner Up - Best payment initiatives

- Â Â Â South Indian Bank has won IMC Digital Technology Awards 2018 - Award for Excellence through Digital Transformation in End User of IT - BFSI Sector for Large Enterprise.

IT Training

During the year, many training programmes had been attended by the Bank's officers in premier institutions such as IDRBT, NIBM, IBA, UIDAI to keep themselves abreast with the advancements in IT, Information Security, CRM, Databases, Operating Systems, Virtualization, Network, Mobile banking etc.

Business Continuity planning

As per BCP Policy, the Bank has already setup BCP location and DR site at Bangalore. Planned BCP drills are conducted on a half yearly basis to ensure connectivity and functionality test of critical applications. In the context of the flood which happened in Kerala during August 2018, it became necessary for us to invoke the BCP operations from BCP and DR site - Bangalore for our critical applications to continue the operations. Even though the State of Kerala was severely flooded, the Bank was able to continue with the banking services including the customer facing applications unhindered due to the joint efforts taken by IT Operations Department, Digital Banking Department and CISO Office with the necessary support from vendors. The only disruptions were in the local branches/ATMs in flood affected areas of Kerala, which were also restored back to normalcy in the earliest possible time. This BCP exercise was conducted for the first time with all critical applications switching to DR on a single day.

Information security and Risk Management

- Â Â Â As banks adopt sophisticated technology to roll-out the best banking solutions to customers, they are increasingly exposed to technology risks. It is therefore imperative for each bank to work out appropriate IT risk management strategies to secure its most vital information assets and to ensure that related risk management systems and processes are strengthened for smooth and continuous banking operations.

- Â Â Â IT Departments including Data Centre and DR Site are ISO 27001 certified for the implementation of Information Security Management System (ISMS). As a part of ISMS implementation, bank has prepared IS Security Policy and related IT risk management procedures.

- Â Â Â The Bank also ensures that all cyber security requirements as per statutory/regulatory guidelines and best industrial practices are implemented on priority basis.

- Â Â Â The organization structure is revamped with setting up of CISO Office for surveillance on the security architecture/ infrastructure and for coordinating security incident-response activities. Information Security Committee, IT Strategy Committee and the Board of Directors periodically review the cyber security posture of the Bank. The Bank has formulated Cyber Security Policy and Cyber Crisis Management Plan to provide guidance in addressing various cyber threat scenarios. The Bank has also identified various types of IT risks and the required preventive, detective and corrective cyber security controls are being implemented.

- Â Â Â The Bank has ensured that Security Operation Centre (SOC) does 24*7 surveillance and keeps itself regularly updated on the latest nature of emerging cyber threats. Bank is using Security incident and event management (SIEM) monitoring tool, for the process of identifying, monitoring, recording and analyzing security events or incidents within a real-time IT environment.

- Â Â Â The Bank has put in place advanced security solutions to manage any type of cyber-attacks. As part of advanced security solutions, the Bank has implemented AntiAdvanced Persistent Threat (APT) Solution, Server Protection Solution, Network Protection Solution etc. to handle variety of malicious attacks.

- Â Â Â Employees are updated with the latest security threats and the best security practices.

- Â Â Â The Bank provides cyber security awareness to its customers on a continuous basis through various channels like SMS/ Email/Website/Social media etc.

Gopalakrishna Committee Recommendations Management Philosophy &Â Measures for the effective implementation of Cyber security Framework

- Â Â Â Effective measures have been taken to address the identified gaps in each area such as IT Governance, Information Security, IT Service outsourcing, IS Audit, IT Operations, Cyber Frauds, Business Continuity Plan (BCP), Customer Education and Legal issues. The IT Organization setup has been redrawn to suit the functions/roles specified in the recommendations with segregation of duties. Information Security policy is revamped incorporating various guidelines and stipulations mentioned in the report. In addition, other IT Policies such as IT Operation Policy, IT Governance Policy and IT Outsourcing Policy are also enforced.

- Â Â Â IT Strategy Committee of the Board, IT Steering Committee and Information Security Committee are in place. Cyber security preparedness of the Bank is reviewed by Information security Committee, IT Strategy Committee of Board and Board of Directors on a quarterly basis.

Transaction Banking Department [TBD]

The Transaction Banking Department, which has come in to being in August 2015, undertakes the following functional operations in centralized environment with a view to bring standardization of process and procedures, scalability in line with business expansion and compliance to regulatory and statutory requirements, besides enforcement of internal controls.

Functional Division	Functional Operations Covered
Centralized CASA Opening and associated functions	Opening of CASA - SB, CD, NRI Customer Modifications Unification of Customer Accounts Account Level Modifications - Dormant Account Activation and Unfreezing Periodical KYC Updation Central KYC
Centralized Loan Opening	Opening of Loan Accounts (Fund Based) Renewals and Enhancements NPA Upgrading Capturing Risk rate/score Ensuring Collateral entries (SGMS) Income Leakage Identification &Â Recovery
Payment &Â Settlement Operations (PSD)	RTGS/NEFT PFMS - Aadhar Mapping PFMS - DBT PFMS - WPS (Wage Protection System) CTS Operations NACH Operations
Service Operations	Debit Card Internet Banking Mobile Banking Post Open Welcome Kit (POWK)
Support Operations	Channel Reconciliation (Debit Card, Internet Banking, IMPS, UPI, Prepaid Cards, ICD)
Audit &Â Compliance Function	Concurrent Audit (Channel Reconciliation and CPC functions) rectification
Ancillary Operations	ATM cash replenishment outsourcing operations Aadhar Enrolment Operations Door Step Banking Operations Tax Cell Operations

The above centralized operations are driven through approved SOP (Standard Operating Procedure), governed by allotted Job Card/task/functions, adhering to specified TAT (Turn Around Time) leading to increased operational efficiency so as to make this centralized department as a Centre of Excellence. For TBD functions, Kochi is the primary operation centre with Coimbatore and Bangalore as the BCP centres. CTS functions are getting consolidated at CHENNAI as Primary and BANGALORE as BCP centre.

Compliance Department

The Bank has institutionalized a strong compliance culture and mechanism across the organization, pursuant to its strategic goals of transparency and trust, among all its stakeholders. The Bank has a dedicated independent Compliance Department headed by a Deputy General Manager which operates as per a well documented compliance policy for ensuring regulatory compliance, across all its businesses and operations. The key functions of the Department include tracking of regulatory updates affecting the various business verticals of the Bank, dissemination of regulatory updates to functional units, monitoring of timely implementation of regulatory instructions, review of processes from a regulatory compliance perspective, provide guidance on compliance-related matters, impart training to employees on compliance aspects, among others. The Bank is having well defined and structured mechanism to assess the compliance risk and monitor its mitigation measures thereby ensuring the effectiveness of the compliance function in managing the compliance risk. Compliance officials have been appointed in all business units and departments for overseeing the compliance function at various levels. Any new product/ process introduced in the bank is reviewed by the Compliance function to ensure adherence to regulatory guidelines.

Business Development Department

The Business Development Department is providing continuous mentoring to Regional Offices and Branches for the growth of both Deposit and Advance portfolios of the Bank. The Department is reviewing the daily/weekly business position of all Regions, conducting conferences and meetings to promote business growth, compiling the Business Strategy Document of the Bank, following up for compliance, providing potential customer leads to branches, mentoring green channel branches (Potential branches for advances growth) and Purple Branches (Potential branches for CASA and Deposit growth), following up with loss making branches and low advance base branches.

Salient strategies as per Business strategy Plan (FY 2019-20 to FY 2023-24)

In compliance with the SEBI circular, the business strategy plan for the Bank inter-alia, includes the following:

- Â Â Â In order to have a focused growth at branches which are located at distant places from Regional Office headquarters and also considering various other factors, clusters have been formed at 16 centers and Cluster Heads have been posted. Cluster Heads will be following up for growth of Advances, CASA and Term Deposits at the branches under their clusters.

- Â Â Â Large Corporate Group (LCG) has been formed under Credit Deparment for specialized follow up/monitoring of Rs.50 crore and above advances. Hereafter Henceforth, LCG will be taking care of growth and monitoring of Large Corporate Advances of Rs.50 crore and above. Regions will be given target for advances with per borrower / group exposure of less than Rs.50 crore.

- Â Â Â Thrust on MSME, Agri and Retail advances will continue.

- Â Â Â Focus on CASA and term deposits. Within CASA, the focus will be more on improving the current account balances and low cost savings bank account balances. An exclusive vertical under a JGM is created at RBD to focus on deposit growth.

- Â Â Â Increased focus on fee based income from Third party, Digital &Â Para banking products.

- Â Â Â Focus on increasing digital transactions.

- Â Â Â Social media platforms will be effectively utilized for implementing the campaigns that would create customer affinity and brand space on a national level.

- Â Â Â More customer friendly products to increase merchant forex business.

- Â Â Â Increased focus on Food &Â Agri processing units up to a per borrower exposure of Rs.100 crore from the banking system, as they can be classified as priority sector Agri Advances.

- Â Â Â E-mail and SMS campaigns for customers for Retail Loan products.

- Â Â Â Launch of Pre approved Personal Loans, Home Loans and Auto Loans.

- Â Â Â Scaling up of alternative channel/location hubs for on boarding new customers through DSAs &Â DSTs.

business intelligence and analytics

The Business Intelligence and Analytics Department was formed in April 2018, with the primary objective of accelerating and improving decision making, optimizing internal business processes, operational efficiencies, driving new revenues and gaining competitive advantage over business rivals and thereby achieving the pre-determined corporate goals in an engineered manner. A single Centralized Data Repository with data collaborated both from internal systems as well external sources is setup. This repository holds the entire data of the Bank and thereby allowing us to better understand the customer behaviour and thus enabling development of personalized products and targeted marketing. The department has delivered valuable insights to the various stake holders of the Bank by means of interactive &Â intelligent dashboards supported by descriptive analytical models and thus enabled top management for better and quicker decisions. The department uses industry best practices in data analytics and leveraged predictive &Â prescriptive data science tools to improve the Business, Customer Relationship &Â Operational efficiency.

The Bank has rolled out the Pre-approved Personal Loan Product as the first step towards implementation of advanced analytics and machine learning. This fully digital product, which is accessed using SIB Mirror+ and Sibernet, hence paperless with the loan amount getting instantaneously credited to the customer's savings account has made the bank a technology front runner.

risk management

Risk is an integral part of banking business. Risk Management underscores the fact that the survival of an organization depends heavily on its capabilities to anticipate and prepare for the change rather than just waiting for the change and reacting. The objective of risk management is not to prohibit or prevent risk taking activity, but to ensure that the risks are consciously taken with full knowledge, purpose and clear understanding so that it can be measured and effectively mitigated. The essential functions of risk management are to identify, measure and more importantly monitor the profile of the Bank. Managing risk is fundamental to banking and is the key to sustained profitability and stability. Management of risk aims to achieve best trade-off between risk and return and to ensure optimum Risk Adjusted Return on Capital (RAROC). Sound risk management is critical to a bank's success. Business and revenue growth have therefore to be aligned with Risk appetite in the context of the risks embedded in the Bank's business strategy and balance sheet strength. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk, cyber risk and operational risk. The identification, measurement, monitoring and mitigation of risks continue to be key focus areas for the Bank. The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level through quantitative examinations of embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement / improvement of the risk measurement / management systems, including automation of feasible processes, the Bank aims to ensure regulatory compliance as well as better return on and utilization of capital in line with the business objectives. While Non-Performing Assets are the legacy of the past in the present, Risk Management System is the pro-active action in the present for the future.

Risk Appetite

Risk appetite of the Bank refers to the level of risk that the banking organization is prepared to accept in pursuit of its financial and strategic objectives, before action is deemed necessary to reduce the risk. It is determined through the assessment of risk taking capabilities of the Bank in the form of sound risk management capabilities and capital base. Risk Appetite forms a key input to the business and capital planning process by linking business strategy to risk appetite. Risk appetite of the Bank is defined by the Board of Directors through the Risk Appetite Framework which encompasses the general risk appetite of the Bank as well as risk appetite with respect to specific categories of risks. Qualitative and quantitative measures, risk tolerances as well as targeted limits for various categories of risks are included within the risk appetite and are monitored on a quarterly basis. The framework ensures that aggregate risk exposure of the Bank is always within the desired risk bearing capacity.

Risk Management Policy Framework

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The Bank has put in place an integrated risk management policy which ensures independence of the risk governance structure. The details of risk management practices are provided in the Management Discussion and Analysis Report annexed to the Directors' Report.

Compliance with Basel III and Basel II Framework

In compliance with regulatory guidelines on Pillar I of Basel III norms, the Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address the issues of Pillar II, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), to integrate capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk, pension obligation risk etc. The Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline norms of Basel II and Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a consistent and comprehensive manner.

The Bank has taken progressive measures for upgrading its systems, policies and procedures to achieve preparedness in implementation of advanced approaches prescribed by Basel/RBI for credit, market and operational risks. The Bank leverages its Enterprise Wide Integrated Risk Management (EWIRM) solution for measurement and monitoring of capital requirements under standardised/advanced approaches. Further EWIRM solution accelerates the Bank's ability to meet qualitative requirements of advanced approaches such as conduct of RCSA, development of VaR models/B-scorecards etc. in an effective manner.

INTERNATIONAL BANKING

The total forex business turnover for the year ended 31^st March 2019 was Rs.4,95,182.17 crore (comprising Merchant Turnover Rs.15,477.60 crore and Interbank Turnover Rs.4,79,704.57 crore) recording an increase of 24.06% as compared to the previous financial year. Bank earned an exchange profit of Rs.40.63 crore for the year 2018-19.

At present the Bank has Rupee inward remittance arrangement with four banks and 34 Exchange Houses and turnover for the year ended March 2019 was Rs.9,071.68 crore. The Bank has concluded speed remittance arrangement during the FY 2018-19 with the following Exchange Houses:

- Â Â Â Remit International Pty Ltd., Australia

- Â Â Â Buckzy Payments INC, Canada

The Bank has continued providing managerial support to M/s. Hadi Express Exchange, UAE. The Bank has presently deputed 10 officers of the Bank to manage the operations of Hadi Express Exchange. Considering the scope in improving the remittance business through arrangements with EH's, the Bank has deputed eight officers to UAE with UAE Exchange Centre, Al Ansari Exchange, Al Ahalia Money Exchange Bureau, Hadi Express Exchange and Al Fardan Exchange, three officers to Qatar with City Exchange, Doha, Qatar, Al Dar For Exchange Works and M/s AlFardan Exchange LLC, Doha Qatar and one officer to UAE Exchange Centre W.L.L., Kuwait.

Considering the increase in international trade by Indian Exporters and Importers in SAR currency, a Nostro relationship in SAR with Alrajhi Bank, Saudi Arabia has been opened.

NRI PORTFOLIO

NRI segment plays a pivotal role in the total business of the bank. In the current competitive banking scenario it is very important to give individual attention to banking and investment needs of NRI customers considering their geographical limitations. The NRI deposits constitute 26.71% of the total deposits and NRI CASA is 22.92% of the total CASA portfolio. The Bank has a separate NRI Division which works for the growth of NRI business at Retail Banking Department, Kalamassery, Kochi. It is headed by an Assistant General Manager and its functions and working are monitored by Country Head, Retail Banking. Dedicated officers and staff working in NRI Division are rendering exemplary support and assistance to NRIs and in turn all the branches give impetus to the growth of NRI business of the Bank. The Branch level NRI Relationship Officers and the NRI Desk functioning in major NRI Business Branches are giving special care and attention to Bank's NRI clientele.

The Bank has a Representative office in Dubai where at present the Bank has 14 Non-resident Relationship Managers deputed in three different countries viz. UAE, Qatar and Kuwait. Apart from this the Bank is giving managerial support to M/s Hadi Express Exchange from 2006. The Bank has deputed 11 Officers to M/s Hadi Express Exchange House in UAE which is having 8 branches in UAE.

The Bank provides Portfolio Investment Scheme for NRI customers. The Bank is authorized by RBI to administer the Portfolio Investment Scheme for NRIs for which the Bank has a PIS Cell under Retail Banking Department. The Bank has tie-up with M/s Geojit BNP Paribas Financial Services Ltd. for the broking side.

The Bank is providing a wide array of Third party products like Mutual Fund, Life Insurance, Health Insurance, National Pension Scheme and Demat facility to NRI Clientele. Customers can avail online banking facility e-invest to open/invest/redeem in Mutual Funds. PFRDA, a statutory body established by Govt. of India, has designated the Bank as POP agent, authorised to collect and invest in National Pension Scheme.

In this age of digital banking the bank has great focus in pushing the technology products such as mobile banking application 'SIB Mirror +' to NRI customers thereby equipping them with the best of technology for day to day banking transactions. Opening of Fixed Deposit and Recurring Deposit through online mode has also made banking much easier for NRI Patrons. Loans against Fixed Deposit can be availed online through the Internet Banking platform.

The Bank is providing executive transit stay facility to Bank's HNI NRI Customers, in major cities. NRI Meets are being conducted by the bank at various centres in Kerala &Â selected Overseas Centres. The NRI Meets provide a great opportunity for top executives to interact with Bank's beloved HNI NRI customers thereby deepening their existing relationship with the Bank.

TRAINING

The Bank accords utmost importance to enhancement of skills of staff members. Training Programmes are conducted at SIB Staff Training College (SIBSTC), Thrissur and at seven Regional Training Centres (RTCs) for development of professional skills. Training programmes are designed to develop competency of operating personnel while imbibing the SIBIAN's spirit and culture through an effective learning process. The success of these programmes reflects on the enhanced organizational productivity. SIBSTC and the RTCs identify skill gaps in the personnel and provide support for qualitative improvement. Staff members are also nominated to external training centers for being trained in specialized areas as well as to have higher exposure. During the financial year 2018-19, the Bank has imparted training to 4,014 officers, 1,802 clerks and 54 sub staff in various aspects of banking operations. A total of 5,870 staff members were trained during the FY 2018-19, which is about 70% of total staff strength of 8440 as on March 31, 2019. This is in consonance with the Bank's priority of continuous up-gradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations. In addition to this, trainings have also been imparted to 125 FLCs/BCs for better rural banking services or as a measure of expanding financial inclusion initiatives by the Bank.

RETAIL BANKING DEPARTMENT

The Retail Banking Department focuses primarily in increasing retail business for the Bank through customer acquisition and retention. The Retail Banking Department has two verticals Retail Liabilities &Â Retail Assets. The Liability vertical constitutes the entire retail liability portfolio of the Bank including Core Deposits, CASA, NRI Business, Marketing of Third Party and Digital Products. Apart from the above the department also plays a vital role in ensuring continued product development and promotion by creating awareness on products and by driving customer-centric campaigns.

Technology Products of the Bank

Digital technology is transforming the way customer interacts with the Bank. Digitalization in banking industry continued to be in full throttle, fuelled by widespread usage of UPI. In coherence with the changes in the industry, the Bank has also strengthened the digital banking space. The Bank has effectively leveraged technology and introduced several variants of traditional products and new e-based services, tailor-made to the diversified needs of customers. Technology services like ATM/Debit cards, Internet banking, Mobile banking etc. have transformed the customers' digital banking experience from branch banking to anytime, anywhere banking. The Bank has set up a separate Digital Banking Department to take care of product development and process improvement of all technology products.

- Â Â Â SIB ATM cum Debit Cards: The Bank is offering Visa, Master and RuPay debit cards to its customers. For the premium segment the bank is also offering NFC Cards which utilizes the latest technology enabling the Tap &Â Pay feature. Bank has introduced Business Debit Cards exclusively for SME customers with tailor made offers for the business segment.

- Â Â Â The Bank has prepaid cards in RuPay platform and these cards can be used similar to Debit cards for Online/ POS transactions. These cards can be preloaded and are being used by customers as a preferred gifting option. This product has also gained its position in the corporate segment wherein this is used for employee / client gifting.

- Â Â Â The Co-branded Credit Card launched in association with one of the major players in Indian Credit Card industry, M/s SBI cards has gained popularity across the country. Under this arrangement the bank offers two of the most sought after variants - Simply SAVE Credit Card and Platinum Credit Card.

- Â Â Â The Co-branded Foreign Currency Travel Card launched in association with Axis Bank is specifically designed for customers who travel abroad. This Travel Card can be loaded in 16 currencies (USD, EUR, GBP, SGD, AUD, CAD, JPY, CHF, SEK, THB, AED, SAR, HKD, NZD, ZAR, DKK) and to make payments while travelling to multiple countries.

- Â Â Â Internet Banking: The internet banking service under the brand name "SIBerNet" has helped to position the Bank as a technology-driven Bank offering superior banking services to both retail and corporate customers. Instant Net banking activation enables customers to activate SIBerNet instantaneously with a User ID of customer choice. In addition to NEFT/RTGS and within bank fund transfer facility, the Bank has implemented IMPS (Immediate Payment Service) facility which offers 24 x 7 fund transfer facility to all including NRI customers. The Bank has also facilitated various online investment options such as opening of Recurring Deposits (RD), Fixed Deposits (FD) &Â facility to avail Online Loan against Deposits (FSLD). More investment options such as online Mutual Fund are also incorporated which provides added benefits to the customers. The Bank has also introduced Bill Pay &Â Recharge service to help the customers to make payment towards their various bill payments from a single platform. SIBerNet is also enabled with Tax payments including GST Payment and e-Filing of income tax and thereby enables customers to conduct their tax payments and filing of returns at the comfort of their homes/offices.

- Â Â Â Mobile Banking: A lot more features are added to Mobile banking application 'SIB Mirror+' to provide a next generation digital banking experience. SIB Mirror+, which is available to both Domestic and NRI customers, is loaded with features such as Self Registration facility, E-statement, Bill Payment module, within bank, NEFT, IMPS &Â UPI 24X7 fund transfer, e-lock, Mobile/DTH Recharge, Social Money and Scan &Â Pay option using BHARAT QR and uPi etc. Mobile Banking app is also further enhanced with SiberMart (Online Shopping Portal), Fee Book (Online Collection Portal), Online deposit opening, submission of 15G/H form &Â Pre approved personal loan feature rolled out for eligible customers.

- Â Â Â E-Lock: Mobile Banking also has innovative feature, e-Lock, in mobile banking apps which secures the customer account from any kind of fraudulent or unauthorized transactions. The Bank is the first bank in the country to introduce such a product and many in the industry have been bringing out similar products since then.

- Â Â Â unified Payment Interface (uPi), "Future of payments" is transforming the digital payment space. The Bank has introduced UPI features in mobile banking application SIB Mirror+ (BHIM UPI Pay). SIB is the first Bank to upload UPI app in Google Play store. The UPI module is having features such as send money to virtual address, collect money, Aadhaar fund transfer, scan and pay, etc. Bank has also launched a Mobile application for merchants, UPI-POS for accepting payments through UPI channel. UPI has gained wide acceptance among the customers.

- Â Â Â Point of sale (POs): The Bank is offering three types of POS terminals - PSTN (wired terminal), GPRS (wireless) and M-Pos (Mobile Pos) in association with M/s Atos Worldline India Pvt. Ltd., the market leader in India in this segment. The Bank has also introduced paperless GPRS POS terminal.

- Â Â Â FAsTag: The Bank has implemented NETC FASTag (in association with National Highways Authority of India (NHAI) and National Payments Corporation of India (NPCI)) in the month of February 2018 offering, hassle-free movement of vehicles through toll plazas. Any vehicle with a FASTag (RFID) tag can cruise through the Toll gates wherein the toll payment is made digitally. SIB NETC FASTags are available for both SIB Customers and Non-customers.

- Â Â Â siberMart: The Bank has introduced an online shopping portal that enables customer to compare prices between different market places like Amazon, Flipkart, Tatacliq etc. This gives an added advantage to the customer in ensuring the Best Buy. Flight booking was also added to SiberMart which compares the prices of flight tickets in travel portals like clear trip and yatra.

- Â Â Â Payment Gateway: Internet Payment gateway service provides a platform for the online e-payment transaction between a shopper/client and merchant. Payment Gateway can be integrated in the website of the merchant and customer/client can directly pay the amount using Debit Card, Credit Card, Internet Banking, E-Wallets etc.

- Â Â Â Feebook: Feebook is an event based fund management/ collection portal, which can be customized by the organization/ merchant all by themselves. FeeBook, comes with a tagline, 'YOU DECIDE, YOU COLLECT'. In Fee Book, the organization has the flexibility of deciding &Â customizing the entire collection cycle. This can be integrated to the existing Website of the Client or can be provided as a separate Portal. Feebook backed by payment gateway was successfully integrated for CMDRF fund collection during Kerala Floods and tent booking for Kumbhmela 2019.

- Â Â Â Hi - Hi Banking : This is a Host to Host fund transfer application facilitating seamless transfer of funds between accounts that can be initiated by the client from his host system without Banks intervention. This can be integrated to the customers ERP system.

- Â Â Â Remote Cheque Printing: This facility enables corporates to process the bulk issuance of cheques/dividend warrants etc. through a system driven model affixing the facsimile signature of the authorised signatory.

- Â Â Â social Media &Â Digital Marketing: The Bank has made its presence in all major social media platforms like Face book, Twitter, Instagram, Linked In, You Tube etc. The Bank has been instrumental in utilizing these channels in creating better engagement and awareness among customers about its innovative products and services. The latest digital marketing models are being adopted to reach out to customers across the globe in the most cost effective and sought after means.

Third Party Products

Insurance: As per the approvals received from IRDAI, the Bank has opted for Multiple Corporate Agency Model with effect from 1st April 2016. As per this model the Bank is allowed to tie up with three partners in Life, Health and General Insurance streams. The Bank has tied up with Kotak Mahindra Life Insurance Co. Ltd. and SBI Life Insurance Co. Ltd. in addition to the existing partner Life Insurance Corporation of India for soliciting life insurance. As the second and third partner for General Insurance in addition to Bajaj Allianz General Insurance Co. Ltd. the Bank has tied up with The New India Assurance Co. Ltd. and Bharti Axa General Insurance Co. Ltd. The Bank has also tied up with Max Bupa Health Insurance Co. Ltd. and Cigna TTK health Insurance Co. Ltd. for sourcing health insurance business. FY 2017-18 was very fruitful for insurance business and income worth 17.62 crore was generated compared to 12.63 crore for financial year 2017-18.

Mutual Funds: Mutual Fund is a popular form of investment since it provides the advantages of professional portfolio management and dividend reinvestment. The Bank has tied up with 15 leading Mutual Fund companies thereby offering a variety of mutual fund products to customers. Bank's AMFI Registration Number is 3845. Asset Under Management (AUM) of the bank is Rs.94 crore as on March 2019. With the aim of increasing the mutual fund business and thereby increasing third party income, the Bank has launched a new online mutual fund platform 'SIB E-Invest' to facilitate online purchase &Â sale of mutual funds. Customers approaching branches can create investment account and execute purchase/sales of mutual funds through this platform. After the successful launch of 'SIB e-Invest' - Bank's Online Mutual Fund platform in branches, the Bank has extended the facility to all single/individually operated retail SiberNet users also.

Bonds: The Bank has been enrolled as a Channel Partner for the distribution of bonds issued by different companies, through Bank's tie up with IFIN - a subsidiary of IFCI Financial Services Limited. Through this tie-up the Bank has been enrolled as a channel partner of IFCI for the distribution of capital gain bonds and tax free bonds.

Depository services: The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form in demat account with M/s Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank offers SIBerTrade - the online trading facility to buy/sell stocks for its domestic customers from stock exchanges in India through tie-up with M/s Geojit Financial Services Ltd. &Â M/s Religare Securities Ltd. Customers are also having the option of trading through mobile application in their comfort zone where the Demat Account and Bank account will be with us and the trading account will be with either M/s Geojit Financial Services Ltd. or M/s Religare Securities Ltd.

SEBI has also registered the Bank as self Certified syndicate Bank (scsB) for accepting application under Application Supported by Blocked Amount (ASBA) through all the branches of the Bank. ASBA enables the Bank's customers to apply for IPO/FPO, Rights issue etc. by marking a lien on the account instead of actual debit at the time of applying, which is more beneficial for the customers. The Bank has participated in 89 issues (including IPO/FPO/NCD/Rights Issue) in FY 2018-19.

Portfolio Investment scheme (Pis) - An extensive share trading facility for NRI customers through tie-up with M/s Geojit. Under PIS, NRI customers can directly invest in the Indian securities market through recognized stock exchanges under repatriable/non-repatriable basis.

National Pension system (NPs): The Government of India has introduced the National Pension System (NPS) on 01.01.2004 (except for armed forces). NPS was made available to All Citizens of India from 01.05.2009. The Bank has been appointed as a Point of Presence (POP) and since then and all branches are authorized to extend the product and services of NPS. Recently, Government of India has announced the increase of tax exemption limit for NPS to 60%. This has effectively made NPS tax free at maturity and an effective 'EEE' status is attained, i.e. Tax Exempt at Entry, Earning and Exit stages. NPS is a very appealing product for NRIs and in fact, the bank is the topper among the peer-banks and Kerala based banks for both resident and NRI NPS. Only NPS offers the additional tax benefits up to Rs.50,000/- under section 80 CCD(1B) of the Income Tax Act, which is over and above the Rs.1.50 lakh of section 80C investments.

APY was introduced by Govt. of India in place of NPS Lite providing minimum assured pension from Rs.1,000/- to Rs.5,000/to subscribers and is available to Bank's customers.

Cumulative Achievement (Nos) as on 31.03.2019

NPS - All Citizen Model	8155
NPS Corporate (Including Staff)	6883
APY	10270
Total	25308

SIB E-Pay: In association with BSNL, the Bank is facilitating the payment of BSNL Landline bill of its customers through their accounts maintained with the branches. A customer can avail this facility by submitting a mandate form at the branch where the account is being maintained. Once registered, the BSNL landline bill of the customer will be automatically debited from the customer's account every month. The key feature of this facility is that it is totally hassle free and is offered free of cost to the customers.

Cash Management service (Premium Collection): The Bank is offering Cash Management Service (Premium Collection) to customers in association with Exide Life Insurance Co. Ltd. (formerly known as ING Vysya) and ICICI Prudential Life Insurance Co. Ltd. Under this arrangement, Bank's customers as well as walk-in customers can remit life insurance premium through branch counters. This facility is offered free of cost to customers.

Centralized Direct Debit service: The Bank has entered into tie-up with leading aggregator M/s Bill Desk Services for Centralized Direct Debit arrangement. Through this tie-up Bank's customers will be able to make regular payments like monthly/ quarterly/half yearly payments of Mutual Fund SIP investments/ Loan EMIs (Vehicle/Equipment Loans)/Insurance premium etc. by directly debiting their account and thereby making the payments to various billers/institutions. This facility is available to all customers irrespective of their branches being located in ECS/non-ECS locations. The Bank has similar arrangements with 4 companies - TVS Credit Services, Sundaram Finance Ltd. and Shriram City Union Finance and Bajaj Finance Ltd.

Customer Experience Group (CEG)

Financial year 2018-19 witnessed a significant growth in the count of leads generated from various sources and also on the conversion side while comparing YOY basis. Subsequent to the set up of Customer Experience Group in the Bank, all leads generated from various sources provided were being engaged &Â followed up by the CEG team till the end of the lead life cycle.

Customer Experience Group has two divisions with inbound team predominantly concentrating on customer service and outbound team focused on sales. CEG Inbound team is the touch point for customers for all banking needs via call, mail, Chat and Social Media. Inbound team handles all customer queries concerns and complaints. The Bank has a dedicated resource to handle Ibanking and Mirror Plus service and complaints. Inbound call centre provide 24x7 customer service on calls whereby customers calls us and state the nature of their problem. The front line analyst uses call centre software to identify the customer and after collecting the required details responds to the problem. The goal of the agent is to solve the problem to the customer's satisfaction. Agents are required to follow procedures to facilitate moving problems to more advanced and experienced back office teams when initial help levels cannot resolve them. Service team manages CEG's complaint handling processes through various channels like Customer care mails, Ibanking Mails, Mobile Banking Emails, IVR cases, Ibanking grievances lodged through Mirror Plus app and Mobile banking grievances lodged through Mirror Plus app. Complaints regarding staff misbehaviour or charges reversal are sent directly to CRD for action.

Further, outbound teams major responsibility is to on board the customers with first point of service and sales of the Bank's products and TPP products. Leads are created and managed in CRM for the interested customers and further Bank's team follows up with branches or TPP vendors for the conversion of the same. The ultimate vision of the team is to become a sales powerhouse of the bank and develop its channel as a cost neutral unit in the coming years.

Liability

CAsA Initiatives:

- Â Â Â The Bank is among the pioneers in offering Mahila Savings Accounts with unique feature of insurance. Based on the market study the Bank had revamped the existing Mahila Plus scheme adding more customized features for women. In essence, bank is aiming to penetrate more among the women folk and yield a certain amount of revenue by offering comprehensive package and strengthen the CASA portfolio. The salient features and offers of Mahila Delight are comprehensive insurance coverage at a nominal cost, concession in locker rent &Â loan processing fee and much more.

- Â Â Â Trader Smart current accounts were introduced with lot of free facilities and exemptions in cash handling charges to greater extent. The account is embedded with features like sweep in, sweep out, Doorstep banking, POS facilities etc. The account is designed keeping in mind the requirements of Traders in general and the performance is encouraging w. r. to the average balances in the account.

- Â Â Â The Bank has launched SIB Elite Senior and Mahila Elite for catering to the needs of pensioners and Senior citizens in particular. The accounts are having very attractive features like sweep in, sweep out, Door step banking, Unlimited ATM free facility etc.

- Â Â Â The Bank has introduced GSS Smart &Â Executive for salaried class of people. Being a salary saving account, this account has got features of both saving account and salary account, which is basically a Zero-balance account. Salary OD is an attractive feature of this account along with other benefits like concession in loan processing, locker rent, free internet banking, mobile banking, demat account opening and many more.

- Â Â Â Government Business Cell was formed two years before with a focus on canvassing government accounts and for liaison with Government Departments. The Cell was able to canvass substantial fresh CASA in the last financial year and able to bring good number of government accounts in the kitty. In order to scale up the government business portfolio of the Bank to further heights, many new initiatives are being implemented.

- Â Â Â Priority Banking service - South Indian Bank Prime Platinum and Prime are exclusive Priority Banking Services offered to the customers who make their relationship with the bank mutually rewarding with benefits and offerings that enhance the privileges enjoyed by them. As a Priority Banking Customer, they have the advantage of enjoying customized benefits that recognize their total relationship with the Bank and have been tailored to suit their individual needs.

The privileges of SIB Prime Platinum and SIB Prime are not exclusively limited to the customers alone: same of those benefits also get extended to their families as well. As a Priority Banking client, the customer would have access to Red Carpet treatment at SIB Branches across the country. Also with the launch of Priority Banking, it is envisaged to create a comprehensive Personal Economy Management Solution to maintain and diversify the customers' wealth.

Business Development Officers

- Â Â Â The Bank has started the retail business model through Business Development Officers (BDOs) in May 2016 with 72 BDOs. Today BDO stands as a strong arm of the Bank bringing in new Business to the Bank. Moreover, the intensive grass root level experience and learning have helped the BDOs to develop themselves as more confident and promising officers. With concentrated and focused approach, there has been steady improvement in the performance of BDOs which has laid a strong foundation for the vertical.

- Â Â Â Now, in order to make the vertical stronger and to get the desired results for a substantial growth in retail business, the Bank has redeployed the BDOs under the following categories.

Â	savings Account Group (sAG)
Liability BDOs	Current Account Group (CAG)
Liability BDOs	Corporate salary Group (CsG)
Â	GBG/TAsC Group

- Â Â Â In the Financial Year 2018-19 the BDO vertical could source 17502 accounts with total AMB amounting to Rs.166.05 crore, retail advances advances of Rs.213.52 crore and Insurance amount of Rs.1.55 crore.

Visibility Enhancement Initiatives during the FY 2018-19:

During the financial year 2018-19, the Bank had undertaken many brand promotion initiatives in various media like Newspaper, Television, Radio, Outdoor and Online media.

- Â Â Â Through effective PR strategy, major events and financial results pertaining to the Bank were promoted globally across all the media platforms. The Bank had held major Press conferences, in connection with Quarterly results and during the launch of SIB SCHOLAR Edition - III, a prestigious CSR initiative by the bank. Regular press releases were made in connection with the various CSR initiatives, product launch and social associations. Newspaper Advertisement campaign were undertaken in major newspapers on the exclusive loan products for the Kerala flood victims.

- Â Â Â As part of Casual Advertisement, the Bank has partnered with Tie Con Kerala (Rebuilding Kerala Conference), Rashtra Deepika (132^nd Foundation Celebration), Thrissur Management Association (TMA) etc. which fetched us good responses.

- Â Â Â The Bank had also associated with Dhanam Magazine's Retail summit and Award nite at Kochi that had attracted a lot of entrepreneurs.

- Â Â Â In order to inculcate the concept of healthy life style, the Bank had partnered with Thrissur Round Table 88 for a Mini Marathon at Thrissur - "Run Thrissur Run" which attracted a lot of public and sports lovers including youth.

- Â Â Â With a view to make the Bank's presence felt in foreign countries, bank had undertaken some NRI campaigns. The Bank had associated with Malayala Manorama (Parpidam -Gulf), Keli Switzerland (Onam 2018), Thrissur Association of Kuwait (TRASSK Maholsavam 2018), Madhyamam (Come On Kerala), NITCAA, Kuwait (TRISHNA 13) etc.

- Â Â Â As part of the Radio promotions, the Bank had aired advertisements on Gold Loan across South India.

- Â Â Â Outdoor brandings were concentrated in major cities like Mumbai, Chennai, Coimbatore and Kochi through bus shelters and hoardings respectively. The Bank had forayed into the digital product promotion on Volvo buses at Mumbai. Bank had also undertaken a bus shelter campaign at Coimbatore city, which fetched us good response. In order to increase brand visibility the Bank had undertaken hoarding campaign at major cities like Bangalore.

- The Bank's new Corporate Advertisement is based on the theme of Trust, directed by Mr. Prakash Varma was released and was promoted through various Television channels and You Tube on a national basis and has received a good response.

human resource

In a dynamic world where an individual defines the organisation, Human Resource (HR) is the most valuable asset. Achievement of an organisation's objectives depends on the individual and the collective efforts of its workforce. Every employee is a vital factor for the smooth functioning by bridging the gap between the customers and the organisation. The Bank has team of highly motivated, skilled, committed, loyal and empathetic staff members, who strive to meet customer aspirations and organisational goals. A strategic approach towards effective development and management of human resources is of paramount importance. In order to augment the workforce in tune with the Bank's sustained growth and expanding network, major initiatives towards talent acquisition and retention have been continued in the FY 2018-19 also.

MANPOWER

As on March 31, 2019, the Bank had 8,440 personnel on its rolls. Cadre wise break up is as under:

Cadre	Men	Women	Total
Officers	3089	1620	4709
Clerks	1452	1661	3113
Peons	352	26	378
Part-time employees	60	180	240
Total	4953	3487	8440

With the infusion of young personnel, Bank was able to maintain the average age of employees as 33 years as on March 31, 2019.

Staff Members having professional Qualification as on 31.03.2019 are as under:

educational stream	number of staff
Management	1429
Post Graduation	1259
CA	58
CS	5
Engineering	1773
PHD	1
Legal	65
ICWA/CMA	37

MAINTENANCE OF PERSONNEL DATA

Maintenance of staff records were streamlined under "HRMSS" (Human Resources Management Software Solution) System. The data can be accessed by all controlling offices and various reports based on the data can be generated for the quick disposal of staff related matters. To make HRMSS more comprehensive, the Bank has introduced new modules such as Employee Development Module, Staff Advances, facility for capturing Job role for each officer, online TA module with auto credit facility and provision for capturing GST details, introduction of NEFT facility for HRA disbursement in addition to the existing modules like Transfers, Promotion Maintenance, HRA, Leave and LFC, Training, Online Annual Performance Appraisal of Officers, Service Record, Pension Maintenance, Marketing Excellence, Staff Medical Insurance, Staff Allowances, Provident Fund, Staff Attendance, Audit Compliance and so on.

Motivation Initiatives

Some of the initiatives undertaken by the Bank in order to boost the morale of the Bank employees are as under:

a) Â Â Â Promotions: The Bank is offering ample opportunities to its employees for their growth and motivation. During this financial year, 521 clerical staff were promoted to Scale-I officers, 345 Scale-I officers to Scale-II officers and 183 Officers to various senior cadres.

b) Â Â Â The Staff Welfare Study Support Scheme which was introduced in the FY 2016-17 for children of staff members has been successfully continued in the current financial year also. The scheme has proved to be effective in its implementation with the aim of encouraging the children of staff members to soar greater heights.

c) Â Â Â This year 94 staff members availed the benefit of 'The South Indian Bank Staff Welfare Scheme' introduced in December 2008 for availing long leave with reason of child care after maternity, higher education, medical treatment and so on. The scheme ensures the Bank's employee friendly approach towards its employees and the concern for their family members.

d) Â Â Â Employee Development Module for Award Staff is introduced in HRMSS. EDM provides an opportunity for all the confirmed employees in the category of Award staff (which includes clerk and substaff) to place on record all achievements, various training needs, area of interest and suggestions for their improvement.

e) Â Â Â Employee Code of Conduct and Ethics to all employees of the Bank was updated and the same has been incorporated in HRMSS w.e.f. 01.01.2019.

f) Â Â Â Officer's service rules have been updated w.e.f. 01.01.2019 and the same is made available in HRMSS for information to all staff members.

g) Â Â Â Reclassified the branches/offices based on the Census 2011 and approved enhancement of HRA to officers w.e.f. 01.09.2018.

h) Â Â Â PLIS - Performance Linked Incentive Scheme is continued in this financial year also to ensure enhanced productivity and efficiency in all areas of operations and instill motivation among all SIBians to achieve long term growth and profitability.

Industrial Relations

EMPLOYEE sTOCK OPTION sCHEME (Esos)

During the financial year 2008-09, the Bank instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The Bank's shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees.

Till March 2019, 5,44,23,943 stock options were vested, out of which 2,89,09,199 stock options were exercised by eligible employees. The money realized due to exercise of the said options was Rs.42,65,88,572.64 and consequently 2,89,09,199 shares of Rs.1/- each have been allotted to the concerned employees/legal heirs.

A Certificate of Auditors pursuant to Regulation 13 of SEBI (Share Based Employee Benefits) Regulations 2014 will be placed to the AGM for the scrutiny of Shareholders.

The total options granted under nine phases of SIB ESOS 2008 works out to 3.0% of the paid-up share capital of the Bank as at March 31, 2019. The scheme has generated intended motivation amongst the staff.

Statutory disclosures regarding details of the stock options granted, vested, exercised and forfeited and expired during the year under review is annexed to this report as Annexure A.

siB Executive Brief

"SIB Executive Brief" - a daily news update on Banking, Finance, Economy, Industry, Market Rates etc. is being provided by SIB Staff Training College. It is e-mailed on a daily basis to the Board members, Executives and is also made available in SIB-Insight for the benefit of staff members.

E-Learning Tests

The Bank has completed 18 online tests through GIEOM Application during the year 2018-19 for staff members on various topics relevant to Banking. Toppers are recognized and their names are published in Insight. The E-learning platform is being used increasingly for improving the knowledge level of the staff members.

Continuous Assessment Test for Probationary Officers

To facilitate updation and continuous learning by the Probationary Officers, tests are conducted on a monthly basis, covering the products, procedures, instructions etc. through different modules.

E-Circular

The Bank has since migrated to issuance of e-circulars in place of manual circulars. All the circulars of the Bank are uploaded using the 'e-circular software'. In e-circular, Bank's policies, Guidelines and Forms are also uploaded so as to empower the branches with readily accessible pool of information/guidelines.

sib students' economic forum (sibsef)

Students' Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in Economy, Banking and Finance. As on 31.03.2019, 328 themes have been published since the first publication in December 1991. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to provide a learning platform for the student community. The hard copies of the publication numbering about 3,500 are being sent to all the branches/offices, reputed schools/colleges/academic institutions, RBI offices, other Banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The subjects discussed during the Financial Year 2018-19 are - Trade Receivable Discounting System (TReDS), Green Finance, PMAY-Urban, An Insight into Inflation, Project Sashakt, Fraud Risk Management in Banks, Foreign Exchange Rate, Capital Conservation Buffer, Fugitive Economic Offenders Bill 2018, Ayushman Bharat, Budget 2019 Highlights, Artificial Intelligence. These themes are made available in the Bank's Website under the heading Student's Corner.

SIBLINK

A corporate magazine - 'SIBLINK' is published on a quarterly basis. During the Financial Year 2018-19, the Bank has published SIBLINK with the themes -'Compliance in Banks' and 'HR Initiatives in Banks'.

Awards and Accolades

The Bank has received following awards during the Financial Year 2018-19:

1. Â Â Â Corporate Social Responsibility (CSR) Award instituted by Kerala Management Association (KMA) for Banks &Â NBFCs under Education Sector.

2. Â Â Â Best Performing Primary Lending Institution of HUDCO under Credit Linked Subsidy Scheme from HUDCO.

3. Â Â Â National Payments Excellence Award for RuPay instituted by NPCI.

4. Â Â Â Best MSME Bank-Runner Up award instituted by Chamber of Indian Micro, Small &Â Medium Enterprises.

5. Â Â Â Banking Technology 2019 awards instituted by IBA - The Bank emerged winner in the 'Most Customer Centric Bank Using Technology' category and runner up in the 'Best Payments Initiative' category amongst small Banks'.

ISO 270001:2013 certification

The Bank has been awarded ISO 270001:2013 certification for its Information Security Management System (ISMS).

Achievements and milestones:

1. Â Â Â The Bank has shifted Portfolio Investment Scheme (PIS) cell from Ernakulam NRI branch to RBD with a separate SOL ID (8072). This change has resulted in enabling Bank's customers to open their PIS account under their parent sol ID. Earlier PIS account got opened only under the sol ID of Ernakulam NRI branch (0307).

2. Â Â Â During the FY 2018-19, the Bank has started online NPS services like Instant NPS Account opening (e-NPS) and making Subsequent Contribution through the SIB website.

3. Â Â Â Insurance business achieved a YoY growth of 40% in income.

4. Â Â Â Tied up with Bharti AXA as the third general Insurance partner which in turn will provide a better spread of products to customers as well as aid in significantly improving the other income.

5. Â Â Â Mutual Fund SIP business registered a YoY growth of 320% and Mutual Fund Lump sum business registered YoY growth of 130%.

6. Â Â Â The BDO channels is divided into 4 groups, SAG (Savings Account Group), CAG (Current Account Group), CSG (Corporate Salary Group), GBG(Govt. Business Group) for on boarding new to bank customers giving more focus on Salary and Govt. accounts.

7. Â Â Â Introduced Merchant in a Box - Master card business debit card and Bharat QR is provided in a bundled offer to pre identified merchants free of cost.

8. Â Â Â Launched Secured Credit Card - Secured Credit Card is a new product under the digital products catalogue, by which a Credit Card can be issued to Bank's retail customers who maintain a fixed deposit with the Bank. Unlike an unsecured Credit card issued based on the credibility of the applicant, Secured credit card is issued based on the Fixed deposit of the applicant, Lien-marked for the card.

9. Introduced Preapproved Credit Card in tie-up with SBI Credit Card. Bank has identified prospective customers who are eligible for preapproved credit card. This customer data is qualified as per SBI Card criteria like CIBIL Score, Age and PAN.

10. Introduced a new Savings Bank Account-"SIB - RUBY" with Best in Class Features and Higher Interest rate. SIB RUBY is bundled with bouquet of offerings which will satisfy the customer's investment and insurance appetite. SB balance above Rs.3 lakhs will be converted to Flexi Fixed Deposit in multiples of Rs.10,000/- with maximum holding period of 92 days. (Sweep In and Sweep out would be provided based on one time request from customers).

Foreign Exchange Advisory Cell

The Bank has launched Foreign Exchange Advisory Cell to provide advisory services by subject experts on FEMA rules and trade finance related issues to the general public. The complimentary service is available to all Foreign Exchange Trade Fraternity.

PARTICULARS REGARDING CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO PURSUANT TO SUB SECTION(3) (M) OF SECTION 134 OF THE COMPANIES ACT. 2013 READ WITH RULE (8) (3) OF THE COMPANIES (ACCOUNTS) RULES. 2014

Number of cases filed. if any. and their disposal under section 22 of the sexual Harassment of Women at Workplace (Prevention. Prohibition and Redressal) Act. 2013

The Bank has zero tolerance approach towards any action on the part of any executive/employees which may fall under the ambit of 'Sexual Harassment' at workplace, and is fully committed to uphold and maintain the dignity of every women staff working in the Bank. The Bank has complied with provisions relating to the constitution of internal Compliants Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013]. The Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

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

Number of complaints filed during the financial year âNil

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

Particulars of Employees

The Bank had 8,440 employees as on March 31, 2019. Only MD &Â CEO (employed throughout the year) was in receipt of aggregate remuneration of more than Rs.1.02 crore per annum and no other employees was employed for a part of the year was in receipt of remuneration of Rs.8.5 lakhs and above per month. The details of top 10 employees in terms of remuneration drawn pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report (Annexure B).

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

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

A brief outline of the Bank's CSR Policy, including overview of projects or programs to be undertaken.

south indian bank's CSR policy

South Indian Bank is grateful to the society that has supported and encouraged the Bank during its long journey of growth and development. The Bank believes that no organization can make sustainable development without the patronage of the society. The Bank is committed to integrate social and environmental concerns in its business operations. The Bank shall continue to have among its objectives, promotion and growth of national economy and shall continue to be mindful of its social and moral responsibilities to customers, shareholders and the society. The Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment.

In line with the CSR Policy and in accordance with Schedule VII, Section 135 of Companies Act, Bank undertook various activities during FY 2018-19, which had significant impact on the society. These activities include:

- Â Â Â Eradicating hunger, poverty and malnutrition, promoting health care including preventive healthcare and sanitation and making available safe drinking water.

- Â Â Â Promoting Education, including special education and employment enhancing vocation skills and livelihood enhancement projects.

- Â Â Â Empowering women, setting up homes and hostels for women and orphans, setting up old age homes, measures for reducing inequalities faced by socially and economically backward groups.

- Â Â Â Ensuring environmental sustainability, maintaining quality of soil, air and water.

- Â Â Â Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art.

- Â Â Â Training to promote nationally recognized sports.

- Â Â Â Contribution to Prime Minister's National Relief Fund.

- Â Â Â Rural development projects.

- Â Â Â Promoting Financial Literacy.

CSR Expenditure

South Indian bank has always given top priority to fulfilling its obligations under Corporate Social Responsibility. Diversified Projects in the areas of healthcare, education, sports and sanitation that would benefit the society as a whole are identified and the Bank wholeheartedly supports such initiatives. In the Financial Year 2018-19, the Bank spent Rs.12.22 crore (92.01% of the budget) towards CSR activities against Rs.7.28 crore in the Year 2017-18.

The amount to be spent by the Bank towards CSR for FY 2018-19 as per Section 135 of the Companies Act, 2013, comes to Rs.13.28 crores. Amount spent by the Bank this year towards CSR was Rs.12.22 crores. Through various projects which are already sanctioned, the Bank will be thoughtfully spending the CSR funds earmarked for the purpose. The Bank had also embarked on some major projects last year in the field of education, youth engagement, healthcare, infrastructure development, etc. By choosing long term sustainable projects, Bank has taken an approach which brings steady and long lasting impact on the society. The details of the CSR activities of FY 2018-19 are mentioned in Annexure D to this report.

Web-Link to the CsR Policy

https://www.southindianbank.com/UserFiles/file/CSR Policy.pdf

FINANCIAL INCLUSION

Financial inclusion aims to ensure the availability of formal and basic banking services to all Indian households, including those in the un-banked and under-banked areas. South Indian Bank has adopted several financial inclusion initiatives, including Kiosk banking. The Bank has successfully migrated to Aadhaar Enabled Payment System (AePS) in the existing KIOSK Model of Banking, from the earlier mode of customer ID payment service. Now AePS is the only mode by which transactions are taking place in Kiosk Banking solution.

Aadhaar Enabled Payment system (AePs)

Aadhaar Enabled Payment System (AePS) is a payment service, empowering a bank customer to use Aadhaar as his/her identity to access his/her respective Aadhaar enabled bank account and perform basic banking transactions through a Business Correspondent / POS machine. National Payment Corporation of India (NPCI), an umbrella organisation for all retail payments are controlling AePS operations. AePS offers basic banking services such as Cash Withdrawal, Cash Deposit, Balance Enquiry, Aadhaar to Aadhaar Fund Transfer, Mini Statement, and Best Finger Detection. The Bank has implemented Kiosk Banking Model in the state of Kerala through 16 Individual Business Correspondents and in Tamilnadu through 64 Individual Business Correspondents.

Financial Literacy Centres

Financial Literacy is the ability to understand how money works in its day to day life and how someone manages it, how he/she invests it and how a person offers it to others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with their financial resources. The Bank has engaged 12 FLCs in different Blocks of Kerala to disseminate financial literacy to the people and it is functional through retired bank employees and educated youth. In addition to this the Bank has voluntarily appointed 8 FLCs in eight different Districts in Tamilnadu to emphasize the objectives of Financial Literacy. Bank's FLCs are now branded under the name "SIB JYOTHIS". Efforts are on to make them more efficient, responsive to the needs of the people. A Board approved policy covering all aspects of Financial Literacy Centres has been formulated, giving due consideration to the revised guidelines on FLCs circulated by RBI. During the FY 2018-19, FLCs have conducted 1,646 camps covering 1,08,432 participants.

Government of India scheme - PMJDY

Pradhan Mantri Jan DhanYojana (PMJDY), is conceived as a national mission on financial inclusion initiated by Honourable Prime Minister on August 15, 2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme was implemented in the Bank since August 18, 2014.

The Bank has opened 2,00,998 BSBD accounts as on March 31, 2019 with an outstanding balance of Rs.51.81 crore. RuPay Debit Cards are issued in PMJDY accounts providing customers with the benefit of accident insurance coverage of Rs.1.00 Lamr. Social Security schemes in insurance (PMJJBY and PMSBY), were also given high priority by the Bank

AADHAAR ENROLMENT STATION

Department of Financial Services (DFS) under Ministry of Finance, had directed banks to become Enrolment Registrars with UIDAI so as to set up AADHAAR enrolment stations at branch premises. As per DFS advisory, at least 10% of branches should be facilitated for the Aadhaar enrolment facility. In view of the same, 85 Branches across 7 states were identified as Aadhaar Enrolment Station (AES) to provide services in connection with Aadhaar enrolment and update facility.

As on 31.03.2019, all the 85 Aadhaar Enrolment Stations identified were functional.

GREEN INITIATIVEs IN CORPORATE GOVERNANCE

Despatch of documents in Electronic Form: As a responsible corporate citizen, the Bank supports and pursues the 'Green Initiative' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives and in terms of Rule 18 of the Companies (Management and Administration) Rules, 2014, the Bank may give notice through electronic mode including e-mail to those Members who have provided their e-mail address either to their Depository Participants (DPs) or to the Registrar/ Company.

Further, in terms of Regulation 36 of the Listing Regulations, the listed entity is required to send soft copies of its Annual Report to all those shareholder(s), who have registered their email address for this purpose. Accordingly, the documents including the notice and explanatory statement of 91^st Annual General Meeting, Annual Report of the Bank for the financial year 2018-19 including Audited Financial Statements, Directors' Report, Auditors' Report etc., for the year ended March 31, 2019, sent to the e-mail address registered with their Depository Participant (DP)/Registrar/Company. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CDSL will be deemed to be their registered e-mail address for serving notices/documents including those covered under Section 136 of the Companies Act, 2013. In case a Member, whose email address has changed, fails to update this new e-mail address, the said documents will be sent to the existing e-mail address and the said documents will be deemed to have been delivered, in compliance with the relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder and the Listing Regulations. Member who have not yet registered their email address are requested to do so, at the earliest. In case of shares held in electronic form and in case of any change in the email address, Member are requested to update the same with their DP and in case of shares held in Physical form, Members are requested to update the same with the Registrar/Company.

Please note that the said documents will also uploaded on the Bank's website www.southindianbank.com and copies thereof will be made available for inspection at the Registered Office of the Bank during 10.00 a.m. to 3.00 p.m. on all working days except 2nd and 4th Saturdays, Sundays, Bank Holidays and Public Holidays up to the date of ensuing AGM.

Shareholders have been requested on several occasions to update their e-mail IDs in their folio/demat a/c to help accelerate the Bank's migration to paperless compliances. The Bank seeks your support to the said green initiatives, as it is designed to protect the fragile environment.

Further, as a part of green initiative by the Bank, all relevant agenda papers pertaining to the Board/Committee are being circulated well in advance to the Board of Directors through electronic mode to facilitate easy access of agenda on IPad which would provide sufficient time to the Board for reading and understanding the proposals placed in a meeting.

ANTI-MONEY LAUNDERING (AML)

Transactions processed through the Core Banking Solution are monitored for detecting suspicious transactions, using TCS Bancs Compliance, an AML application to comply with the provisions under Prevention of Money Laundering Act (PMLA).

The Bank has set up a Centralized Processing Centre (CPC) for liability side customer creation with the objective of full KYC compliance and to use KYC as a fraud prevention tool. The Bank has brought all branches under the CPC model during the Financial Year 2015-16.

The Bank had implemented UIDAI's e-KYC services for Aadhaar authentication, in all the branches. The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive

FATCA-CRs

The Bank has been registered as a reporting entity under FATCA, under GIIN No. IIK7HU.99999.SL.356, to comply with the reporting requirement under the inter Governmental agreement entered between Indian and US Government and the CRS Multilateral Competent Authority Agreement.

RATING OF VARIOUS DEBT INSTRUMENT

The Bank has successfully raised Non-Convertible, Redeemable, Unsecured, BASEL III compliant Tier II Bonds worth Rs.250.00 crore during Q4 FY 2018-19. At the time of issue, CARE had assigned a rating of 'CARE A+' (Outlook: Stable) and India Ratings had assigned a rating of 'IND A+' (Outlook: Stable). The details of credit rating accorded to various debt instruments issued by the Bank from time to time is as follows:

sl. No.	ISIN	issuance date	Maturity date	Amount Outstanding (Rs.in crore)	Rating
1	INE 683 A 09091	20-08-2009	20-04-2020	200.00	Care A+ &Â Ind A+
2	INE683A 08028	30-09-2015	31-10-2025	300.00	Care A+ &Â Ind A+
3	INE 683 A 08036	28-11-2017	28-05-2028	490.00	Care A+ &Â Ind A+
4	INE 683 A 08044	26-03-2019	26-06-2029	250.00	Care A+ &Â Ind A+

Further, Bank's Certificate of Deposits for Rs.7,500 crores bear a rating of CARE A1+ by CARE ratings.

During the financial year 2018-19 there is no change in the credit rating.

directors

The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the Code of Conduct on Corporate Governance adopted by the Bank. The Board comprises of 10 Directors as on the date of this report, with rich experience and specialized knowledge in various areas of relevance to the Bank, including banking, accountancy, small scale industry, agriculture, and information technology.

Excluding the MD &Â CEO, all other members of the Board are Non-Executive Directors and six Directors out of the total 10 Directors are Independent Directors. Declaration has been obtained from the Independent Directors as required under the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Companies Act, 2013. The remuneration and other benefits paid to MD &Â CEO of the Bank and other Non-Executive and Independent Directors during the financial year 2018-19 are disclosed in Corporate Governance Report.

During the 90th Annual General Meeting held on July 11, 2018 as recommended by the Bank the shareholders accorded their approval for :

- Appointment of Mr. V J Kurian (DIN: 01806859) as an Independent Director for a period of 5 years, not be liable to retire by rotation.

- Â Â Â Re-appointment of Sri Achal Kumar Gupta (DIN: 02192183) as a Director liable to retire by rotation.

- Â Â Â Re-appointment of Dr. John Joseph Alapatt (DIN: 00021735) and Mr. Francis Alapatt (DIN: 01419486) for a period up to 23rd September, 2020 and 31st October, 2021 respectively, not be liable to retire by rotation.

Sri K Thomas Jacob (DIN : 00812892), Non-executive Independent Director of the Bank, retired from the Board of Directors w.e.f. 30^th August, 2018 upon completion of his eight year term, as per Section 10A(2A) of the Banking Regulation Act 1949.

Sri M George Korah (DIN: 08207827) has been appointed as the Additional Independent Director of the Bank representing majority sector w.e.f. 31^st August, 2018 pursuant to section 161(1) of the Companies Act, 2013 and shall hold the office up to the ensuing Annual General Meeting of the Bank. He will be appointed as a Non-Executive Independent Director of the Bank in majority sector (i.e. accountancy), not liable to retire by rotation.

Mr. Pradeep M Godbole (DIN: 08259944) has been appointed as the Additional Director of the Bank w.e.f. 26^th March, 2019 pursuant to Section 161(1) of the Companies Act, 2013 and shall hold the office up to the ensuing Annual General Meeting of the Bank. He will be appointed as a Non-Executive Director of the Bank in minority sector, liable to retire by rotation.

Sri Salim Gangadharan (DIN: 06796232) was appointed as the Non Executive Director of the Bank with effective from January 16, 2014 pursuant to the provisions of Section 161 of the Companies Act, 2013 and appointed as a director liable to retire by rotation in the 90th AGM held on 11 July, 2018.

Smt. Ranjana S Salgaocar (DIN-00120120) and Mr. Parayil George John Tharakan, (DIN-07018289) have been appointed as additional Independent Directors of the Bank w.e.f. 1^st October, 2014 and November 25, 2014 respectively and they have been appointed as Independent Directors of the Bank for a period of five (5) years vide shareholders' resolution dated July 15, 2015 in terms of the provisions of the Companies Act, 2013. Their term of appointment would come to an end on 30th September, 2019 and November 24, 2019. In terms of Section 149(10) of the Companies Act, 2013, an Independent Director shall hold office for a term up to five consecutive years on the Board of a company but shall be eligible for reappointment on passing of a special resolution by the company for a further period of upto five years. In terms of Section 10A(2A) of the Banking Regulation Act, 1949, no director of a banking company, other than its Chairman or whole-time director, by whatever name called, shall hold office continuously for a period exceeding eight years. Hence approval of Shareholders of the Bank is sought for the reappointment of Smt. Ranjana S Salgaocar and Mr. Parayil George John Tharakan for a further term upto 30^th September, 2022 and 24^th November 2022 respectively. Resolution for their reappointment as Independent Directors is included in the AgM Notice.

CHANGE IN KEY MANAGERIAL PERSONNEL

Mr. C P Gireesh, Joint General Manager &Â Chief Financial Officer and Key Managerial Personnel has opted for Voluntary Retirement from the Service of the bank w.e.f.1^st September, 2018 and, the Bank has appointed Ms. Chithra H, Joint General Manager as Chief Financial Officer and Key Managerial Personnel of the Bank with effect from 1^st September, 2018. There was no other change in Key Managerial Personnel during the year ended March 31, 2019.

Composition of Audit Committee

The Audit Committee of the Board is chaired by Sri M George Korah, who is a Chartered Accountant. The other members of the committee are, Sri Achal Kumar Gupta (Non-Executive Director), Sri V J Kurian (Non-Executive Independent Director) and Sri Francis Alapatt (Non-Executive Independent Director). The constitution of the Committee is in compliance with the regulatory requirements. The terms of reference of the Audit Committee, incorporated in the Bank's Code of Corporate Governance, are in accordance with the SEBI (LODR) Regulations, 2015 entered into by the Bank with Stock Exchanges where the Bank's shares are listed, Companies Act, 2013 and RBI guidelines.

Independent Directors

In terms of the definition of Independence of Director as prescribed under Regulation 16(1) (b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of Companies Act, 2013 and based on the confirmation / disclosures received from the Directors, the following Directors are Independent Directors of the Bank as on the date of this report

1. Â Â Â Dr. John Joseph Alapatt (DIN: 00021735)

2. Â Â Â Sri Francis Alapatt (DIN: 01419486)

3. Â Â Â Smt. Ranjana S Salgaocar (DIN: 00120120)

4. Â Â Â Sri Parayil George John Tharakan (DIN: 07018289)

5. Â Â Â Sri V J Kurian (DIN: 01806859)

6. Â Â Â Sri M George Korah (DIN: 08207827)

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations 2015, the Bank has appointed Smt. Ranjana S Salgaocar (DIN: 00120120) as Woman Director on the Board of the Bank.

Bank's policy on directors' appointment and remuneration including criteria for determining qualifications. positive attributes. independence of a director and other matters provided under sub-section (3) of section 178;

Criteria for appointment as Director of the Bank

Nomination and Remuneration Committee of the Board shall identify and ascertain the integrity, qualification, expertise and experience of the person who is considered for being appointed/reappointed as Director of the Bank and apply due diligence in compliance with the Banking Regulation Act, 1949, Reserve Bank of India directives on Fit &Â Proper Criteria, all other applicable provision of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 including any amendments from time to time and Nomination Policy of the Bank.

Criteria For Determining Qualifications. Positive Attributes

a) Â Â Â The professional and personal ethics, integrity and track record.

b) Â Â Â Special knowledge or practical experience in Banking, accountancy, agriculture and rural economy, co-operation, economics, finance, Marketing, Information Technology, law, small-scale industry or any other field useful to the Banking Company in the opinion of Reserve Bank of India.

c) Â Â Â Ability to provide insights and practical wisdom based on their experience and expertise relevant to the Bank's line of business.

d) Â Â Â Details of his/her association with other Companies/LLPs/ Firms (including NBFC).

e) Â Â Â Details of substantial interest in other Companies/LLPs/Firms (including NBFC).

f) Â Â Â Details of financial facilities, if any, availed from the Bank.

g) Â Â Â Details of default in the re-payment of loans, availed from the Bank or any other bank, if any.

h) Â Â Â Commitment to enhancing stockholder value.

i) Â Â Â Ability to develop a good working relationship with members of the Board and contribute to the working relationship with senior management of the Bank.

j) Whether he/she suffers from any of the disqualifications envisaged under the provisions of Banking Regulation Act, 1949, Companies Act, 2013 and SEBI (LODR) Regulations, 2015. k) Any other factors as the Committee may deem fit and in the best interests of the Bank and its stockholders.

Criteria for determining Independence of a Director

The Criteria of Independence of a director is determined based on conditions as laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The independent director shall at the first meeting of the Board in which he/she participates as a Director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his/her status as an independent director, give a declaration that he/she meets the criteria of independence.

REMUNERATION POLICY:

Remuneration Policy for Employees of the Bank:

The Bank has a Board approved Compensation Policy which deals with the Compensation &Â Benefits of the Employees of the Bank and Whole-time Directors.

The disclosure requirement of the remuneration is separately provided in "Disclosure under Basel III norms."

REMUNERATION POLICY OF DIRECTORS:

Remuneration of MD &Â CEO and Other Employees (including Key Managerial Personnel):

The Board approved Compensation Policy deals with the Compensation &Â Benefits of the Whole-time Directors/MD &Â CEO. The remuneration of the Whole-time Directors/MD &Â CEO is recommended by the Nomination &Â Remuneration Committee (NRC) to the Board for approval after considering the factors prescribed under the Compensation Policy.

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

For the other employees (including Key Managerial Personnel and Compliance staff), the Board, based on the recommendation of the NRC may devise appropriate compensation structure. The compensation paid to other employees that include Award Staff, Officers coming under Scale I to IV and executives coming under Scale V to VII is fixed based on the periodic industry level settlements with Indian Banks Association. The variable compensation paid to functionaries is based on the Performance Linked Incentive Scheme, which has been formulated on the basis of performance parameters set in Performance Management System.

Remuneration of Chairman:

The NRC recommends the remuneration of the non-executive Chairman to the Board which is considered and approved by the Board in the same manner subject to Shareholders' and regulatory approvals. The NRC, while recommending the remuneration of the part-time Chairman considers the Function, Role and Responsibilities of the Chairman and Regulatory guidelines as applicable etc.

The remuneration payable to the Chairman is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration of the Chairman is payable only after receipt of the approval from RBI.

Remuneration of Non-Executive Directors (NEDs):

The NEDs are paid sitting fees for attending each meeting of the Board of Directors or any committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, SEBI (LODR) Listing Regulations 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending the change in the sitting fees considers various factors like size and complexity of organization, Comparison with the peer Banks and Regulatory guidelines as applicable etc. while recommending the change in the sitting fees to the Board.

Policy on Board Diversity:

Pursuant to SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has devised a policy on Board diversity to ensure adequate diversity in its Board of Directors. The Bank believes that diversity underpins the successful operation on an effective Board and embraces diversity as a means of enhancing the business. With a view to achieve sustainable and balanced development, the Bank sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives. A diverse Board includes and makes good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of directors.

The Bank continuously seeks to enhance the effectiveness of its Board and to maintain the highest standards of corporate governance and recognizes and embraces the benefits of diversity in the boardroom. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. In informing its perspective on diversity, the Bank also take into account factors based on its own business model and specific needs from time to time.

Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. The Policy of Board Diversity is displayed in Banks website.(https://www. southindianbank.com/UserFiles/file/Rupay/DISCLOSURE/Policy_ on_Board_diversity.pdf)

Board Level Performance Evaluation

The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 stipulates the performance evaluation of the Directors including Chairman, Board and its Committees. Considering the said provisions, the Bank has devised the process and the criteria for the performance evaluation which has been recommended by the Nomination &Â Remuneration committee and approved by the Board.

The process for formal annual performance evaluation is as under:

- Â Â Â Committee of Independent Directors at their separate meeting evaluates the performance of Non-Independent Directors including Chairman of the Bank and the Board as a whole.

- Â Â Â The Board evaluates the performance of the Independent Directors, Non- Executive Directors, Chairman and MD &Â CEO (excluding the director being evaluated) and submit its report to the Nomination &Â Remuneration committee

- Â Â Â The Board and Nomination &Â Remuneration Committee evaluates the ) fulfillment of the independence criteria as specified in the regulations and their independence from the management

- Â Â Â The Board evaluate the performance of Board level committees.

- Â Â Â Nomination &Â Remuneration Committee evaluate/review the performance of each Director recommends the appointment/reappointment/continuation of Directors to the Board. Based on the recommendation of Nomination &Â Remuneration Committee, Board will take the appropriate action.

The criteria for performance evaluation are as under:

Performance Evaluation of Non-Executive Directors. MD &Â CEO and Chairman

Participation at Board/Committee Meetings, Managing Relationship, Knowledge and Skill, Personal attributes, Compliance and Corporate Governance; Leadership; Strategy Formulation, Strategy Execution, Financial Planning/ Performance, Relationships with the Board, Human Resource Management and Succession Planning, Personal Qualities; Resources; Conduct of Meetings.

Performance Evaluation of Board

Composition and Diversity; Strategic Foresight, Value Creation, Process and Procedures, Oversight of the Financial Reporting Process and Internal Controls, Oversight of Audit Functions, Corporate Governance, Corporate Culture, Monitoring of business activities, Understanding of the business of the Bank and Regulatory environment; Contribution to effective corporate governance and transparency in the Company's Operations; Deliberations/decisions on the Company's strategies, policies, plans and guidance to the Executive Management.

Performance Evaluation of the Board Level Committees

Outcome of Performance Evaluation

An annual performance evaluation of the Board, Committees of the Board and the individual members of the Board was conducted in May 2019 as per the aforesaid process and the report on the evaluation were presented at the meeting of the N&RC and the Board of Directors. The Directors expressed their satisfaction with the evaluation process.

The feedback of the Board, post completion of the exercise of performance evaluation of the Board and Committees of the Board were as under:

1. Â Â Â The Board is functioning as a collective body and has performed on all the parameters and the Board of the Bank is well balanced in terms of diversity of experience and skill sets to meet the requirements of the Bank as well as conforming to the Regulatory requirements.

2. Â Â Â The Board and its Committees were effective in achieving their respective Charters and the members acted with diligence and care. Further, important issues are brought up and discussed in the Board/Committee Meetings.

3. Â Â Â Directors qualified to continue on the Board having understood and discharged their responsibilities and also continue to qualify under the 'Policy on Board Diversity and Fit and Proper criteria and Succession Planning' of the Bank.

4. Â Â Â The Board noted that there is a need for more efforts for further improvement on visibility and it is suggested that respective Committee Chairpersons may apprise the Board on key matters that have been discussed in their committees.

auditors

a) statutory Auditors:

The shareholders at its 90^th Annual General Meeting held on July 11, 2018, appointed M/s S. R. Batliboi &Â Co. LLP (ICAI Firm Registration No. 301003E/E300005), Chartered Accountants, Mumbai as Statutory Central Auditors of the Bank for the audit of Bank's accounts for the year 2018-19.

For the year ended March 31, 2019, fees paid/payable to the Statutory Auditor M/s S. R. Batliboi &Â Co. LLP is as follows

Fee paid (excluding taxes)	Amount (Rs. in Lakh)
Statutory Audit/Limited review	71.85
Certification and other attestation services	37.00
Non-audit services	0.00
Total	108.85

M/s S. R. Batliboi &Â Co. LLP, Chartered Accountants, Mumbai, vacates the office at the ensuing Annual General Meeting and are eligible for reappointment subject to the approval of the RBI and shareholders of the Bank.

b) secretarial Auditors and secretarial Audit Report:

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s SVJS &Â Associates, Company Secretaries, Practicing Company Secretaries, Kochi as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2018-19. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2018-19 is annexed to this report as Annexure E.

INTERNAL CONTROL AND AUDIT/INSPECTION

Internal Control

The Bank has put in place extensive internal controls and processes to mitigate operational risks, which includes maker-checker authentication of CBS transactions, centralized processing of opening and modifications of CASA accounts, centralized sanctioning of loan facilities, day end checks to monitor critical issues involving timely renewal of credit reports, closure of Bank Guarantees, timely obtaining of loan documents, EM creation and CERSAI registration, etc.

Various Preventive controls viz, Dual custody for cash, gold and other security items, maintenance of daily control registers for security items, introduction of finger-scan-authentication for processing of transactions in CBS in addition to login passwords, stringent guidelines on password usage, STP processes between CBS and payment interface systems for transmission of messages are in place.

Audit/Inspection

The Bank has an Inspection &Â vigilance department which is responsible for independently evaluating the adequacy and effectiveness of all internal controls, risk management systems, governance systems and processes. The Department is manned by appropriately qualified personnel to handle the Risk based internal audit, Management Audits, Information Systems Audit, and Special audits including Investigations. All the internal audits are conducted broadly based on the RBI direction in relation to conducting risk based internal audit and concurrent audit of branches and identified critical process of the branch.

Reporting structure of Head of Inspection and vigilance is made in such a way that matters relating to Inspection Division, he reports to Executive in charge of administration (presently EVP -Operations) and in relation to the matters of Vigilance Division he directly reports to MD &Â CEO.

Internal inspectors conduct inspection at regular intervals and the inspection reports are placed to Audit Committee at Executive level (Audit Committee of Executives - ACE) for review, which is overseen and controlled by Board Level committee (Audit Committee of Board - ACB).

Audit of Branches

All the branches are subjected to Risk based internal audit. (RBIA). This audit is conducted at periodical intervals based on its risk perception. All the audits are conducted based on check points and all the operational areas are covered under this audit. Credit audit is also conducted as part of Risk Based internal audit for all the major customers where the credit exposure is more than 5 crore, and are audited by specialized/experienced auditors.

In addition to RBIA of branches, the Bank has concurrent audit system which covers selected Branches, Concurrent audit of branches is being conducted by qualified Chartered Accountants/retired officers covering 60% of total business, 70% of total advances and 50% of total deposits of the Bank. The selection of branches for concurrent audit is done in such a way that it covers branches having substantial business, 'B' Category Branches and almost all isolated remote branches irrespective of its business volume.

The Bank has introduced special audit from April 2019, where audit is conducted by qualified Chartered Accountants/retired officers, in the remaining branches where concurrent audit is not done, on the critical areas for a limited period of time in a month.

In additions to the concurrent and risk based internal audit branches are subjected to surprise inspection, Revenue inspection, self-inspection, Gold Loan asset verification and compliance inspection.

During the financial year the Bank has introduced a separate monitoring team called 'Inspection Monitoring Group (IMG)' for closely monitoring various inspections/audits at the Branches. There are four IMGs and each IMG is headed by AGM/CM. These monitoring groups have exclusive responsibility to ensure the compliance and closure of the inspection reports of the branches. During the course of Inspections, any serious issues concerning regulatory guidelines, legal requirements and operational processes are escalated to the Management for timely action.

All the branch related audits are now automated, where reporting, risk rating, compliance and closure of the reports are done through automated system by which the Bank has an overall control related to the various audits conducted in branches. During the current financial year, the Bank has successfully automated credit audit, self-audit, gold asset verification and surprise inspection.

Audit of Departments and critical process

Management Audit of Regional Offices (RO) and Departments is conducted at periodical intervals based on its risk perception. Audit conducted through web based application and the risk assessment, rectification of comments etc. and its evaluation, monitoring and review are automated.

In additional to the Management audit conducted by Inspection Department all the critical operations such as International Banking Division, Treasury Department, and Credit Department and Centralized Processing Centers are subjected to concurrent audit by Chartered Accountants firms. All these reports are reviewed by Audit Committee of Executives and corrective steps are taken to rectify the lapses/irregularities pointed out in such inspections.

Information System Audit of CBS and major applications are conducted by internal audit department and also by external audit firms.

Any new product / process introduced in the Bank is reviewed by Inspection Department from the perspective of existence of internal controls and they recommends improvements for deficiencies in such internal controls.

Inspection Division also carries out independent evaluation of Bank's internal financial controls in terms of Companies Act, 2013 and the details in respect of adequacy of internal financial controls with reference to the Financial Statements.

EXPLANATION FOR AUDITORS' COMMENTS IN THE REPORT

The Statutory Auditors Report for the year 2018-19 does not contain any qualification.

On the observation made by Secretarial auditors in the secretarial audit report as well as Certificate on Corporate Governance, as per Regulation 18 (1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, two-thirds of the members of audit committee are required to be independent directors. For a period of eleven days the audit committee consisted of three Independent Directors out of five members, which is slightly less than the requirement on account of fractional number. This occurred due to the rounding off to the nearest number. The committee was reconstituted on 08.04.2019 pursuant to which three out of four members were independent thereby complying with the requirement. The Exchanges have levied fine which was paid and the bank has represented to the Exchanges to waive the fine and refund the same.

CORPORATE GOVERNANCE

A separate report profiling Corporate Governance as required under applicable regulations of the SEBI (LODR) Regulations 2015 and a certificate from M/s SVJS &Â Associates Company Secretaries, Secretarial Auditors of the Bank, are annexed to this Report.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2019 in form No. MGT-9 is hosted on the website of the Bank and can be viewed https://www.southindianbank.com/content/annual-report-financial-year-2018-to-2019/3759.

Business Responsibility Report

As stipulated in Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Bank from environmental, social and governance perspective is attached as part of the Annual Report as annexure-F.

Dividend Distribution Policy

In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the Policy is hosted on the website of the Bank and can be viewed (https://www. southindianbank.com/content/viewContentLv11.aspx?linkIdLv2 =215&LinkIdLv13=2672&linkId=2672)

Subsidiary Companies/Joint Ventures or Associate Companies

There are no companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year; The Board of Directors has formulated a policy for determining 'material' subsidiaries pursuant to the provisions of the Listing Regulations. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=781 &linkId=781).

Related Party Transactions

The Board of Directors has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=782 &linkId=782). Since there were no Related Party transactions, Form AOC-2 is not applicable to the Bank.

Material Changes and Commitment Affecting Financial Position of the Bank

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2019 and the date of the Directors' report i.e. May 9, 2019.

Significant and material orders passed by Regulators

During the year under review, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Bank's operations in future.

Maintenance of Cost Records

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

Details in respect of frauds reported by auditors

There is no fraud reported by auditors under sub-section (12) of section 143 of the Companies Act, 2013 other than those which are reportable to the Central Government.

Compliance to secretarial standards

The relevant Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) related to the Board Meetings and General Meeting have been complied with by the Bank.

Srictures and Penalties

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

Management Discussion and Analysis Report

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

Particulars of Loans. Guarantees or Investments

Directors' Responsibility statement

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

(a) Â Â Â in the preparation of the annual accounts for the financial year ended March 31, 2019, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) Â Â Â the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2018-19 and of the profit of the Bank for that period;

(c) Â Â Â the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) Â Â Â the directors had prepared the annual accounts for the financial year ended on March 31, 2019, on a going concern basis;

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

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

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other State Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Bank's shares are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Bank's shareholders and customers for their continued support, patronage and goodwill. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank. The Bank gladly acknowledges this fact and thanks all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

By Order of the Board

(SALIM GANGADHARAN) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (V G MATHEW)

CHAIRMAN Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â MANAGING DIRECTOR &Â CEO

DIN : 06796232 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â DIN : 05332797

Place : Cochin

Â Date : May 9, 2019

Mar 31, 2018

DIRECTORS' REPORT TO THE SHAREHOLDERS

To the Members,

The Board of Directors is pleased to place before you, the 90th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2018, Profit and Loss Account and the Cash Flow Statement for the year ended March 31, 2018.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2018 are as follows:

Key Parameters	Rs,in crore
Key Parameters	2017-18	2016-17
Deposits	72029.59	66117.49
Gross Advances	55108.99	46845.69
Total Gross Business	127138.58	112963.18
Operating Profit	1480.79	1214.59
Net Profit	334.89	392.50
Capital &Â Reserves	5241.22	4845.47
Capital Adequacy (%) - Basel-III	12.70	12.37
Earnings Per Share (EPS)* :	Â	Â
(a) Basic EPS (in Rs,)	1.86	2.61
[face value Rs,1/-]	Â	Â
(b) Diluted EPS (in Rs,)	1.85	2.61
[face value Rs,1/-]	Â	Â
Book Value per Share (in Rs,)	28.98	26.88
[face value Rs,1/-]	Â	Â
Gross NPA as % of Gross Advances	3.59	2.45
Net NPA as % of Net Advances	2.60	1.45
Return on Average Assets (%)	0.43	0.57

FINANCIAL PERFORMANCE Profit

The Net Operating Income (Net Interest Income and other income) of the Bank increased by Rs,411.78 Crore (17.22%) from Rs,2390.99 crore to Rs,2802.77 crore. The growth in Non Interest Income was Rs,121.69 crore (17.01%) during the year.

The Operating Profit for the year under review was Rs,1480.79 crore before taxes and provisions as against Rs,1214.59 crore for the year 2016-17. The Net profit for the year was Rs,334.89 crore as compared to a net profit of Rs,392.50 crore during the previous year and the profit available for appropriation was

Rs,690.55 crore as per details given below:	Â	[Rs,in crore]
Profit before depreciation, taxes and	Â	1480.79
provisions	Â	1480.79
Less: Provision for NPI	(7.14)	Â
Provision for Non-Performing Assets	693.46	Â
Provision for FITL	(6.08)	Â
Provision for Depreciation on	316.11	Â
Investments	316.11	Â
Provision for Income Tax	165.00	Â
Provision for Standard Assets	7.38	Â
Provision for Restructured Assets	(4.68)	Â
Provision for General Others	(39.47)	Â
Provision for Other Impaired Assets	21.25	Â
Provision for Un-hedged Forex Exposure	1.03	Â
Provision for Non Banking Asset Provision	(0.96)	1145.90
Net profit	Â	334.89
Brought forward from previous year	Â	355.66
Profit available for appropriation	Â	690.55
Appropriations	Â	(Rs,in crore)
Transfer to Statutory Reserves	Â	83.73
Transfer to Capital Reserves	Â	29.88
Transfer to General Reserves	Â	50.00
Transfer to Special Reserve	Â	86.55
Dividend Paid for FY 16-17	Â	72.14
Tax on Dividend Paid for FY 16-17	Â	14.22
Balance carried over to Balance Sheet	Â	354.03
Total Appropriation	Â	690.55

Dividend

The Board of Directors recommended a dividend of 40% (tax-free in the hands of shareholders other than Individuals whose dividend income is above Rs,10 lakh), i.e., @ Rs,0.40 per Equity Share of face value of Rs,1/- per share.

EXPANSION PROGRAMME

The Bank had been successful in widening its network across India with 854 Branches, 55 Extension Counters, 1331 ATMs and 51 CRMs/CDMs. The Bank has opened 10 new outlets (4 Branches and 6 Extension Counters), 60 ATMs and 4 CRMs across the country during the financial year 2017-18. The branch network now covers 27 States and 3 Union Territories.

The Bank plans to open a maximum of 10 new outlets (Branches and Extension Counters) and 50 ATMs/CRMs during the financial year 2018-19.

CAPITAL &Â RESERVES

The Bank's issued and paid up capital increased to Rs,180.88 crore as on March 31, 2018.

During the Financial Year 2017-18, equity shares granted under the Employee Stock Option Scheme (59,95,121 stock option) were exercised by eligible employees.

The capital plus reserves of the Bank has moved up from Rs,4,845.47 crore to Rs,5,241.22 crore on account of exercise of options, credit back pertaining to charging off of deferred charges/provision on shortfall in sale of assets and fraud accounts which was drawn from reserves during the FY 16-17 and plough back of profits during the current financial year.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)-BASEL-III

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2018 according to Basel III guidelines is 12.70 as against the statutory requirement of 10.875 (including Capital Conservation Buffer). Tier I CRAR constitutes 10.41% while Tier

II CRAR works out to 2.29%.

LISTING AGREEMENT WITH STOCK EXCHANGES

The Bank's shares continue to be listed on BSE Ltd. and The National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2018-19.

BUSINESS ACHIEVEMENTS

The Bank has achieved a Total Business of Rs,1,27,138.58 crore, consisting of Deposits of Rs,72,029.59 crore and Gross Advances of Rs,55,108.99 crore as on March 31, 2018.

Deposits

The Total Deposits of the Bank increased from Rs,66,117.49 crore as on March 31, 2017 to Rs,72,029.59 crore as on March 31, 2018 registering a growth of 8.94%.

The break-up of the deposits as on March 31, 2018 is as under:-

Â	Amount (Rs, in crore)	% to total Deposits
Current Deposits	3,057.63	4.25
Savings Deposits	14,084.11	19.55
Term Deposits	54,887.85	76.20
Total	72,029.59	100.00

The Bank during the year focused on Advances &Â CASA.

CASA has grown from Rs,15,746.34 crore as on March 31, 2017 to Rs,17,141.74 crore as on March 31, 2018, with a growth of 8.86%. The savings Bank deposits grew by 11.08% and current deposits grew by 8.39% on a year on year basis.

The Bank has accorded priority to meaningful financial inclusion during the period under reporting while opening new deposit relationships.

Advances

During the year, the gross advances of the Bank registered a growth of 17.63%, to touch Rs,55,108.99 crore. In spite of subdued general economic activity, the Bank could do well in the retail segment including MSME. The Bank is now focusing on growing the retail lending segment with a view to transforming the Bank into a Retail Power House by 2020. Accordingly, the thrust is given to retail loan products, such as housing loan, vehicle loan, gold loan and MSME loans. The Bank has taken various steps to achieve the projected growth without compromising on quality of advances including centralisation of credit processing and tighter credit underwriting and monitoring standards.

During the year, the Bank has exceeded the regulatory prescription on the Priority sector and Agriculture sector. Hence it was resolved to trade the excess portfolio through Priority Sector Lending certificates (PSLC). As a result of trading in PSLC for an amount of Rs,4,000.00 crore in general Priority Sector and Rs,1,300.00 crore in Agriculture, an Income of (net) Rs,52.15 crore was generated. The total Priority Sector advances (net PSLC) as at the end of the financial year stood at Rs,21,757.12 crore constituting 46.89% of the Adjusted Net Bank Credit (ANBC) as against mandated 40%. Exposure to agriculture sector(net PSLC) amounted to Rs,9029.81 crore forming 19.46% of ANBC as at the end of the financial year as against mandated 18%.

Break-up of exposure under Priority Sector as on March 31, 2018 is furnished below:

Â	Amount (Rs,in crore)
Agriculture &Â Allied activities (including investments in RIDF) (Net PSLC)	9,029.81
MSME	14,406.78
Other Priority Sector	2,320.53
Total Priority Sector	25,757.12
PSLC (General PS)	4,000.00
TOTAL PS (Net PSLC)	21,757.12

Another major improvement was the implementation of Committee approach in credit sanctioning. On account of the same, any credit proposals above Rs,10.00 crore will be discussed and a collective credit decision is taken by a four member Committee. This eliminates individual bias and ensures involvement of a group of executives in the collective decision making process.

Roll out of a centralised credit monitoring mechanism was another milestone in the improvement of credit administration, which has resulted in continuous monitoring of accounts above Rs,5.00 crore.

INVESTMENT

Bank's gross investment portfolio stood at Rs,18,363.08 crore as on March 31, 2018 compared to Rs,19,429.68 crore as on March 31, 2017, shown a decline of 5.49%. Investment Deposit ratio moved from 29.40% as on March 31, 2017 to 25.50% as on March 31, 2018. This came on the backdrop of cut in SLR requirement from 20.00% to 19.50% and portfolio readjustment for hardening interest rate scenario.

Profit on sale of investment for the FY 2017-18 stood at Rs,179.96 crore. Total interest income from investment for the year was Rs,1269.50 crore. Yield on Investment (Profit + interest earned to average investments) during the FY 17-18 was 7.64%. Profitability from investment portfolio moderated during the year on the backdrop of hardening yield for reasons mentioned below.

US Federal Reserve has hiked the policy rate by 75 bps during the financial year 2017-18 and has initiated gradual contraction in its balance sheet size. With further strength in US economy, global investors are concerned about possible increase in inflation forcing US Fed to faster pace of rate hike. This has led to hardening of bond yield in major advanced economies.

On Domestic front, recent data indicates pick up in inflationary trend which has led to pause in accommodative monetary policy. Central Government has readjusted fiscal deficit path to stimulate the economy and of late, there are concerns on supply of Government securities exceeding demand. Resurgent crude oil prices would have negative impact on fiscal deficit, current account deficit and inflation trajectory. This has led to significant hardening in G-Sec Yield.

Rising commodity prices and depreciation of Rupee against US Dollar and increase in the repo rate by 25 bps to 6.25% on June

6, 2018 by MPC, which may lead to higher G-Sec and other Bond yields in the medium term.

NON-PERFORMING ASSETS (NPA)

During the year 2017-18, as a result of focused and sustained efforts for early recovery of NPAs, through prompt and effective measures under the SARFAESI Act, follow up of recovery cases pending before DRTs and civil courts, one time compromise settlements of accounts, asset sale to ARC, etc., Bank could recover NPAs to the extent of Rs,659.55 crore (recovery including up-gradation Rs,215.09 crore), as against the target of Rs,400.00 crore. Special thrust was given to selection and underwriting of credit, effective due diligence and improvement in credit administration to ensure improvement in the quality of assets.

During the year, the Gross NPA of the Bank has increased from Rs,1,149.01 crore as on March 31, 2017 to Rs,1,980.30 crore as on March 31, 2018 and Net NPA increased from Rs,674.56 crore as on March 31, 2017 to Rs,1,415.80 crore as on March 31, 2018. Inspite of the prompt and effective recovery measures, the fresh slippages of Q4 alone stood at Rs,614.00 crores of which major accounts where from the corporate sector, which eventually resulted in the increase of gross NPA to Rs,1,980.30 crore. In terms of percentages, the GNPA increased from 2.45 as on March 31, 2017 to 3.59 as on March 31, 2018 and Net NPA increased from 1.45 as on March 31, 2017 to 2.60 as on March 31, 2018.

DIGITAL AND INFORMATION TECHNOLOGY ENABLED SERVICES

Digital Innovation has brought about tremendous changes across the world in diverse business domains. Banking in India, is now at the cusp of a digital revolution. Bank's IT Vision is to enable technology as a strong strategic support to the Bank, providing value in key organizational initiatives to achieve business goals, offer excellent customer service and to ensure regulatory compliance.

To provide constant focus on customer digital initiatives and emerging technologies, the Bank streamlined its Information Technology organization structure by setting up Digital Banking Department and IT Operations Department. While Digital Banking Dept. focuses on various customer touch points and emerging technologies in the digital landscape, IT Operations Dept. runs all the internal applications. Today, the Bank has a very rich technology framework at the front and back end which caters to all requirements of the retail and corporate customers alike and provides very quick turnaround time.

Retail Customers:

The Bank offers the best of class technology services to cater to the diverse requirements of Bank's retail clientele. The technology stack includes well designed customer touch points, and robust back end systems.

- Â Â Â Full Fledged enterprise level systems.

- Â Â Â Internet Banking - Sibernet.

- Â Â Â Mobile Banking - Mirror +.

- Â Â Â All variants of VISA, Master card & Rupay Debit Cards are offered.

- Â Â Â ATM, Cash Recyclers (CRM) other Value added services.

- Â Â Â Call Centre Solution catering to customers 24/7.

- Â Â Â CRM solution providing 360degree view of customers.

- Â Â Â Business Process Management (BPM) to enable centralization.

- Â Â Â Technology backed Branch Infrastructure.

- Â Â Â Latest version of Core Banking Solution(CBS) from Infosys, viz. Finacle 10.

- Â Â Â Enterprise Risk Management Solution.

- Â Â Â ATM network that spread across the country, which supports Mastercard, VISA and Rupaycards allowing customers quick access to money. All ATMs are interoperable.

- Â Â Â Mobile Banking(with support for other bank money transfer through IMPS, P2A, P2M (issuer), USSD, UPI and Bharat QR.

- Â Â Â Missed call services for retrieving balance through SMS etc.

- Â Â Â Online investment in primary and secondary markets offered to customers through ASBA, e-trade and e-mutual fund modes.

- Â Â Â Portfolio Investment Scheme for NRIs, allowing them to invest in Indian equity market.

- Â Â Â IMPS Facility to Exchange Houses for Foreign Remittance -For international client exchange houses/banks, the Bank has introduced IMPS based fund transfer on a 24*7 basis in addition to NEFT.

- Â Â Â Fraud Risk Management (FRM) Solution for channel transactions.

- Â Â Â Kiosk based Financial Inclusion Solution to enable the Bank to reach nook and corner of the country, even in remote villages using technology enabled tools.

- Â Â Â Payment Options such as Automated Clearing House (NACH) Payment Service, Cheque Truncation System (CTS), RTGS/NEFT etc.

- Â Â Â Account Opening for NRI/MSME directly through Bank's website.

- Â Â Â Instant QR code payments at merchant locations using Bharat QR, where Customers can use debit card (VISA/ MasterCard/Rupay) as virtual card inside Mirror +.

- Â Â Â Introduction of Interoperable Cash Deposit (ICD) Machines to facilitate remittance through recyclers to other bank accounts and vice versa.

- Â Â Â Enhancement in Security Operation Centre Operations.

- Â Â Â Data Center and DR Enhancement/initiatives [DR Management, Disk based Backup solution at DC, Net backup Migration at DC and DR, Solaris OS Migration at DC &Â DR and Data Center certification].

- Â Â Â Automation of procurement and payments.

- Â Â Â Robotic Process Automation.

- Â Â Â Application Program Interface (API) banking.

- Â Â Â Artificial Intelligence based banking services such as bots.

- Â Â Â Central Plan Scheme Monitoring System (CPSMS), which links to the DBT (direct beneficiary transfer) for instant receipt of Govt. subsidies to the beneficiaries of various Govt. schemes.

- Â Â Â Tab based Aadhaar e-KYC instant account opening for individual Savings Accounts.

Corporate Customers

- Â Â Â The Bank has Internet Banking facility, from Infosys which provides all the workflow capabilities required for each corporate. Moreover, it offers the security of Digital certificate integration thereby balancing convenience with security

- Â Â Â The Bank also offers Host to Host Integration facility ("Hi-Hi Banking") which will handle fund transfer in a seamless fashion by real time interface with ERP solutions of corporates. This facility is available for 365*24*7 and the clients can securely access the system from anywhere

- Â Â Â Supply Chain Management Solution caters to the dealer/ vendor financing requirement of corporates

- Â Â Â The Bank has started offering business debit cards to the business customers

- Â Â Â On the business acquiring capabilities the Bank has full suite of payment acquiring including POS terminals, Bharat QR, UPI QR etc. which gives the merchants a whole host of accepting payments instantly from their customers.

Digital/Technology initiatives/solutions embarked during

the year

Services/solutions that the Bank has launched during the year,

- Â Â Â Full-fledged implementation of GST in the CBS. GST collection and flow of invoices from the Bank to the GSTN network is done in a seamless manner

- Â Â Â e-Academia allows parents to remit fees online using Debit Card/Credit Card/Net Banking without waiting in a long queue to remit the fees of their children

- Â Â Â Supply Chain Finance Scheme, the Bank has introduced (1) Vendor Finance Scheme to address financing the vendors/suppliers of raw-materials, components etc. to manufacturing companies (referred to as corporate) and (2) Dealer Finance Scheme to finance dealers of the products manufactured by corporate.

- Â Â Â Migrated on premise e-mail solution to the cloud based email solution

- Â Â Â Optimizing infrastructure using Virtual Machines

- Â Â Â The Bank has implemented second factor authentication in CBS for branch user login. This is to strengthen the user level login security with efforts to curb the practise of credential sharing among employees

- Â Â Â Implementation of automated DR management solution -Ensures that applications can be resumed from DR site during any disaster as per the defined RTO (Recovery Time Objective)

- Â Â Â Implementation of Process Automation Solution -Automation solution for converting Non STP processes to STP to ensure Secure, seamless and automated Data Transfer across different nodes

- Â Â Â Aadhaar linking/seeding enabled across all customer touch points

- Â Â Â Implemented NACH H2H automation mechanism by which mandate management &Â ACH processing is happening via STP process

- Â Â Â SIB is the first Bank to be certified as EMV EMV enablement as Issuer on ATMs.

- Â Â Â Anti skimming solution in ATMs to safeguard ATMs and especially ATM customers from loss and fraud

- Â Â Â Introduced MasterCard Business Debit Cards

- Â Â Â Dynamic Currency Conversion Support for MasterCard International Transactions- Foreign MasterCard card holders will be able to withdraw money from Bank's ATMs by knowing the transaction value in their home currency

- Â Â Â Introduction of Payment Gateway Service in tie-up with M/s World line has become an important tool for acquiring float funds and new business relationships

- Â Â Â Bharat Bill Payment Systems - BBPS which will offer integrated and interoperable bill payment services to customers across geographies with certainty, reliability and safety of transactions

- Â Â Â NETC - National Electronic Toll Collection - which helps the vehicles with a RFID tag to pass through the toll plazas across the country, seamlessly

- Â Â Â Bharat QR issuing and acquiring- QR based transactions by making use of debit cards and UPI

- Â Â Â Enabled GST Payment ,Online Loan against deposit opening, IT Retuns - efiling, Online Mutual Fund Service, Funds Transfer to Virtual Accounts through Internet Banking

- Â Â Â Digital On boarding - CASA and Insurance. In addition to tab banking and quick opening in branches based on Aadhaar, the Bank has also introduced end to end digital on boarding for insurance products of Bank's partners.

Awards and Certifications received on Technology front

> Â Â Â South Indian Bank has won five technology awards during the Indian Banking Association (IBA) Technology Awards 2018.

1. Â Â Â Winner- Best Technology bank of the Year

2. Â Â Â Winner- Best payment initiatives

3. Â Â Â Winner- Best use of Digital and Channel technologies

4. Â Â Â Runner Up- Best Financial Inclusion initiatives

5. Â Â Â Runner Up- Best IT risk and Cyber Security initiatives

- Â Â Â Digital India Excellence Award 2017 for its innovation in mobile app 'Digital e-lock' in the 5th PAN-IIM World Management Awards 2017.

- Â Â Â 'Best Bank Award for Digital Banking among Small Banks' and 'Best Bank Award for High Performance IT Ecosystem among Small Banks' in the thirteenth edition of the IDRBT Banking Technology Excellence Awards 2016-17.

- Â Â Â The Bank is one of the seven banks in the "India Trade Connect âconsortium set up jointly with Edge verve (wholly owned subsidiary of Infosys) to run a project on domestic trade finance. This project was awarded the Celent Model Bank 2018 Award for the Trade Finance and Supply Chain this year.

IT Training

Information Security and Risk Management

- Â Â Â IT Departments including Data Centre and DR Site are ISO 27001 certified for the implementation of Information Security Management System (ISMS). As a part of ISMS implementation, the Bank has prepared IS Security Policy and related IT risk management procedures.

- Â Â Â The Bank also ensures that all cyber security requirements as per statutory/regulatory guidelines and best industrial practices are implemented on priority basis.

- Â Â Â The Bank has also ensured that Security Operation Centre (SOC) does 24*7 surveillance and keeps itself regularly updated on the latest nature of emerging cyber threats.

- Â Â Â The Bank has implemented advanced security solutions to manage any type of cyber-attacks.

- Â Â Â Employees are updated with the latest security threats and the best security practices.

- Â Â Â The Bank provides cyber security awareness to its customers on a continuous basis through various channels like SMS/ Email/Website/Social media etc.

Gopalakrishna_ Committee _Recommendations

Management Philosophy &Â Measures for the effective implementation of Cyber Security Framework

- Â Â Â Effective measures have been taken to address the identified gaps in each area such as IT Governance, Information

Security, IT Service outsourcing, IS Audit, IT Operations, Cyber Frauds, Business Continuity Plan (BCP), Customer Education and Legal issues. The IT Organization setup has been redrawn to suit the functions/roles specified in the recommendations with segregation of duties. Information Security policy is revamped incorporating various guidelines and stipulations mentioned in the report. In addition, other IT Policies such as IT Operation Policy, IT Governance Policy and IT Outsourcing Policy are also enforced.

- IT Strategy Committee of the Board, IT Steering Committee and Information Security Committee are in place. Cyber security preparedness of bank is reviewed by Information security Committee, IT Strategy Committee of Board and Board of Directors on a quarterly basis.

TRANSACTION BANKING DEPARTMENT [TBD]

Transaction Banking Department, which has come in to being in August 2015, undertakes the following functional operations in centralized environment with a view to bring standardization of process and procedures, scalability in line with business expansion and compliance to regulatory and statutory requirements, besides enforcement of internal controls.

Functional Division	Functional Operations Covered
Retail Liability Operations (CPC)	Opening of CASA - SB,CD, NRI Creation of Customer Customer Modifications - Retail &Â Customer Unification of Customer
Retail Asset Operations (CDMC)	Opening of Loan Accounts (FB and NFB limits) Renewals and Enhancements NPA Upgrading Capturing Risk rate/score Ensuring Collateral entries (SGMS) Income Leakage Identification &Â Recovery
Payment &Â Settlement Operations (PSD)	RTGS/NEFT PFMS - Aadhaar Mapping PFMS -DBT PFMS- WPS (Wage Protection System) CTS Operations NACH Operations
Service Operations	Debit Card Internet Banking Mobile Banking Post Open Welcome Kit (POWK)
Support Operations	Channel Reconciliation (Debit Card, Internet Banking, IMPS, UPI, Prepaid Cards) Customer Support Center Operations
Audit &Â Compliance Function	Concurrent Audit (Channel Reconciliation and CPC functions) rectification
Ancillary Operations	ATM cash replenishment outsourcing operations RLO outsourced operations under BC Model Door Step Banking Operations

Consolidation of functional operations under TBD with increased operational efficiency is being carried out to make it as Centre of Excellence. For TBD functions, Kochi will be the primary operation centre with Coimbatore as the BCP centre. CTS functions will get consolidated at CHENNAI.

COMPLIANCE DEPARTMENT

BUSINESS DEVELOPMENT DEPARTMENT

In order to strengthen the focus on business growth, exclusive full-fledged Business Development Dept. has been formed in Jan, 2016.

Business Development Department is providing continuous mentoring for both the Deposit and Advance portfolio of the Bank, review of daily/weekly business position of all ROs/ Branches, conducting of conference &Â meetings to promote Business Growth, Compilation of Business Strategy Document of the Bank &Â follow up for compliance, Providing potential customer leads to Regions and Branches, mentoring of Green channel branches (Potential branches for advances growth), loss making branches &Â low advance base branches, Mentoring of Business campaigns etc.

Salient strategies of the Bank as per Business strategy plan (FY 2017-18 to FY 2021-22).

In compliance with the recent SEBI circular, the Business strategy plan of the Bank inter-alia, includes the following:

- Â Â Â To grow in credit portfolio at a considerable level per annum

- Â Â Â To give more focus on growth in CASA.

- Â Â Â Garnering of more business from Retail, Agri. &Â MSME sectors, rather than focus on large corporate advances.

- Â Â Â Introduction of alternative business channels such as BCs, DSAs &Â DSTs with special emphasis on CASA, Retail, Agri. &Â MSME advances.

- Â Â Â Ensuring that expected recoveries are taking place, by deploying effective collection, monitoring &Â recovery mechanism.

- Â Â Â Opening of more branches in Regions in state where branch network is less.

- Â Â Â Multiple tie ups for third party product business growth, thereby to improve fee based income.

- Â Â Â Promoting Digital on-boarding.

- Â Â Â Usage of latest technologies such as Chat bots, Block chain, Cloud computing etc. for creation of digital products with better features.

- Â Â Â Gradually increase the size of equity portfolio of performing sectors for better treasury profits.

- Â Â Â Introduction of Forex Business Development Officers for improvement of Forex business.

BUSINESS INTELLIGENCE AND ANALYTICS

The Business Intelligence &Â Analytics Department was formed in April 2018 with the prime objective to provide valuable insights to the various stake holders of the Bank by using industry best practices in data analytics and leverage predictive &Â prescriptive data science tools to improve the Business, Customer Relationship, Operational efficiency, Strengthen the reporting systems. A single Centralized Data Repository with data collaborated both from internal systems as well from external sources facilitates to better understand and monitor the customer behaviour thus enabling personalized products and targeted marketing and thereby increasing the revenue and profitability.

RISK MANAGEMENT

Risk is an integral part of banking business. Risk Management underscores the fact that the survival of an organization depends heavily on its capabilities to anticipate and prepare for the change rather than just waiting for the change and react to it. The objective of risk management is not to prohibit or prevent risk taking activity, but to ensure that the risks are consciously taken with full knowledge, purpose and clear understanding so that it can be measured and mitigated. The essential functions of risk management are to identify, measure and more importantly monitor the profile of the Bank. Managing risk is fundamental to banking and is the key to sustained profitability and stability. Management of risk aims to achieve best trade-off between risk and return and to ensure optimum Risk Adjusted Return on Capital (RAROC). Sound risk management is critical to a bank's success. Business and revenue growth have therefore to be aligned with Risk appetite in the context of the risks embedded in the Bank's business strategy and balance sheet. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk and operational risk. The identification, measurement, monitoring and mitigation of risks continue to be key focus areas for the Bank. The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level through quantitative examinations of embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement/improvement of the risk measurement/management systems, including automation of feasible processes, the Bank aims to ensure regulatory compliance as well as better return on and utilization of capital in line with the business objectives. While Non-Performing Assets are the legacy of the past in the

Risk Appetite

Risk appetite of the Bank refers to the level of risk that the banking organization is prepared to accept in pursuit of its financial and strategic objectives, before action is deemed necessary to reduce the risk. It is determined through the assessment of risk taking capabilities of the Bank in the form of sound risk mitigation techniques and capital base. Risk Appetite forms a key input to the business and capital planning process by linking business strategy to risk appetite. Risk appetite of the Bank is defined by the Board of Directors through the Risk Appetite Framework which encompasses the general risk appetite of the Bank as well as risk appetite with respect to specific categories of risks. Qualitative and quantitative measures, risk tolerances as well as targeted limits for various categories of risks are included within the risk appetite and are monitored on a quarterly basis. The framework ensures that aggregate risk exposure of the Bank is always within the desired risk bearing capacity.

Risk Management Policy Framework

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The Bank has put in place an integrated risk management policy which ensures independence of the risk governance structure. The details of risk management practices are provided in Management Discussion and Analysis Report annexed to the Director's Report.

Compliance with Basel III And Basel II Framework

II, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), to integrate capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk, pension obligation risk etc. The Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline norms of Basel II and Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a consistent and comprehensive manner.

INTERNATIONAL BANKING

The total forex business turnover for the year ended 31st March 2018 was Rs,3,99,151.48 Crore (comprising Merchant Turnover Rs,14,992.28 crore and Interbank Turnover Rs,38,4159.20 crores) recording an increase of 49.57% as compared to the previous financial year. Bank earned an exchange profit of Rs,31.63 crores for the FY 2017-18.

At present the Bank is having Rupee inward remittance arrangement with 4 Banks and 34 Exchange Houses and turnover for the year ended March 2018 was Rs,8,481.60 crores. The Bank has concluded speed remittance arrangement during the FY 2017-18 with the following Exchange Houses:

- Â Â Â PFG Forex Pty. Ltd., Australia

- Â Â Â International Exchange Co. (S) Pte. Ltd., Singapore

- Â Â Â Unikremit Financial Services, Hong Kong

- Â Â Â Noor Ahalia Exchange, AbuDhabi

The Bank has continued providing managerial support to M/s Hadi Express Exchange, UAE. The Bank has presently deputed 12 officers of the Bank to manage the operations of Hadi Express Exchange. Considering the scope in improving the remittance business through arrangements with EH's, the Bank has deputed eight officers to UAE with UAE Exchange Centre, Al Ansari Exchange, Al Ahalia Money Exchange Bureau, Hadi Express Exchange and Al Fardan Exchange, three officers to Qatar with City Exchange, Doha, Qatar, Al Dar For Exchange Works and M/s AlFardan Exchange LLC, Doha Qatar and one officer to UAE Exchange Centre W.L.L., Kuwait.

In order to provide more thrust on Trade Finance as a business portfolio, an exclusive centralized operation wing has been formed under TBD named as Centralized Trade Finance Operation Branch and the same has become operational w.e.f. 01.01.2018. Hence all forex operations are now being handled by CFTOB and IBD functions will be more focussed to compliance, policy and business development and nostro vostro relationships.

By centralized trade finance operations at a single location, deploying talented sources, Bank will be able to impart professional services to its customers ensuring strict FEMA/ RBI guidelines. Presently all inward remittances, outward remittances and import transactions have been centralized and centralization of export bills is in progress.

NRI PORTFOLIO

The NRI deposits constitute 26.21% of the total deposits and NRI CASA is 23.31% of total CASA portfolio. The Bank is having a separate NRI Division exclusive for NRI related services, at Retail Banking Department, Kalamassery, Kochi, headed by Assistant General Manager and its functions and working are monitored by Joint General Manager and Country Head Retail Banking. Dedicated officers and staff working in NRI Division are rendering exemplary support and assistance to Bank's NRI's and in turn all the branches give impetus to the growth of NRI business of the Bank. The Branch level NRI Relationship Officers and the NRI Desk functioning in major NRI Business Branches are giving special care and attention to Bank's NRI clientele.

The first Representative Office of the Bank has started functioning in Dubai since 25.04.2018 which is headed by Chief Representative Officer. Presently the Bank has 12 NR Relationship Managers deputed in 3 different countries viz. UAE, Qatar and Oman who are reporting to Representative Office at Dubai. Apart from this, the Bank is giving managerial support to M/s Hadi Express Exchange from 2006 onwards which is presently headed by Scale V officer. 11 Officers of the Bank are deputed to M/s Hadi Express Exchange House in UAE which is having 8 branches in UAE.

South Indian Bank is authorized by RBI to administer the Portfolio Investment Scheme for NRIs for which the Bank has a PIS Cell under Retail Banking Department. The Bank has tie-up with M/s Geojit BNP Paribas Financial Services Ltd. for the broking side. Ernakulam NRI branch (0307) is the RBI designated branch for offering PIS facility.

The Bank is providing a wide array of Third party products like Mutual Fund, Life insurance, Health Insurance, National Pension Scheme and Demat facility to NRI Clientele. Customers can avail online banking facility e-invest to open/invest/Redeem in Mutual Funds. PFRDA, a statutory body established by Govt. of India, has designated the Bank as POP agent, authorised to collect and invest in National Pension Scheme.

Bank's mobile application 'SIB Mirror Plus' created a wide impact among NRI Customers as its beauty has increased with the addition of IMPS facility. Opening of Fixed Deposit and Recurring Deposit through online mode has also made banking much easier for NRI Patrons. Loans against Fixed Deposit can be availed online through Internet Banking platform. The Bank is providing executive transit stay facility to our HNI NRI Customers, in major cities.

In order to have an intimacy and personal interaction, with HNI NRI's, NRI Meets were conducted at various centres in Kerala &Â selected Overseas Centres like Kuwait City and Muscat during the FY 17-18. The NRI Meets was a great opportunity for Bank's top executives to interact with beloved HNI NRI customers. All these efforts coupled with the service and efforts of each and every SIBIAN working all over India and abroad resulted in achieving 12.06% growth in the total NRI Deposit during the financial year 2017-18 and helped in achieving another milestone of crossing '18,500.00 crores of NRI Deposit.

TRAINING

The Bank accords utmost importance to skill enhancement of staff members. Training Programme is conducted at SIB Staff Training College (SIBSTC), Thrissur and at 7 Regional Training Centres (RTCs) for development of professional skills. Training programmes are designed to develop competency of operating personnel while imbibing the SIBIANS' spirit and culture through an effective learning process. The success of these programmes reflects on the enhanced organizational productivity. SIBSTC and the RTCs identify skill gaps in the personnel and provide support for qualitative improvement. Staff members are also nominated to external training centres for being trained in specialized areas as well as to have higher exposure. During the financial year 2017-18, the Bank has imparted training to 4,240 officers, 1,689 clerks and 279 sub staff in various aspects of banking operations. A total of 6,405 personnel were trained during the FY 17-18, which is about 81% of total staff strength of 7,946 as on March 31, 2018. This is in consonance with the Bank's priority of continuous up-gradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations. In addition to six RTCs located at Delhi, Mumbai, Kolkata, Hyderabad, Chennai &Â Bangalore, one more RTC at Coimbatore has started functioning during the Financial Year 2017-18.

RETAIL BANKING DEPARTMENT

Technology Products of the Bank

Digital technology is transforming the way customer interacts with the Bank. Demonetization has brought in a wave of digitalization in the country. In coherence with the changes in the industry, the Bank has also strengthened the digital banking space. The Bank has effectively leveraged technology and introduced several variants of traditional products and new e-based services, tailor-made to the diversified needs of customers. Technology services like ATM/Debit cards, Internet banking, Mobile banking etc. have transformed the customers' digital banking experience from branch banking to anytime, anywhere banking. Bank has set up a separate Digital Banking Department to take care of product development and process improvement of all technology products.

- SIB ATM cum Debit Cards: The Bank is offering Visa, Master and RuPay debit cards to its customers. For the premium

segment the bank is also offering NFC Cards which utilizes the latest technology enabling the Tap &Â Pay feature. Bank has introduced Business Debit cards Exclusively for SME customers with tailor made offers for the business segment.

- Â Â Â Bank has prepaid cards in RuPay platform and these cards can be used similar to Debit cards for Online/POS transactions. These cards can be preloaded and are being used by customers as a preferred gifting option. This product has also gained its position in the corporate segment wherein this is used for employee/client gratification.

- Â Â Â The Co-Branded Credit Card launched in association with one of the major players in Indian Credit Card industry, M/s SBI cards has gained popularity across the country. Under this arrangement the bank offers two of the most sought after variants - Simply SAVE Credit Card and Platinum Credit Card.

- Â Â Â The Co-branded Foreign Currency Travel Card launched in association with Axis Bank is specifically designed for customers who travel abroad. This Travel Card can be loaded in 16 currencies (USD, EUR, GBP, SGD, AUD, CAD, JPY, CHF, SEK, THB, AED, SAR, HKD, NZD, ZAR, DKK) and make payments while travelling to multiple countries.

- Â Â Â Internet Banking: The internet banking service under the brand name "SIBerNet" has helped to position the Bank as a technology-driven Bank offering superior banking services to both retail and corporate customers. In addition to NEFT/ RTGS and within bank fund transfer facility, the Bank has implemented IMPS (Immediate Payment Service) facility which offers 24 x 7 fund transfer facility to all including NRI customers. The Bank has also facilitated various online investment options such as opening of Recurring Deposits (RD), Fixed Deposits (FD) &Â facility to avail Online Loan against Deposits (FSLD). More investment options such as online Mutual Fund is also incorporated which provides added benefits to the customers. The Bank has also introduced Bill Pay &Â Recharge service to help the customers to make payment towards their various bill payment from a single platform. SIBer Net is also enabled with Tax payments including GST Payment and e-Filing of income tax and thereby enables customers to conduct their tax payments and filing of returns at the comfort of their homes/offices.

- Â Â Â Mobile Banking: Bank has introduced its new mobile banking application SIB Mirror+ to provide a next generation digital banking experience. The new app, which is available to both Domestic and NRI customers, is loaded with features such as Self Registration facility, E-statement, Bill Payment module, within bank, NEFT, IMPS &Â UPI 24X7 fund transfer, e-lock, Mobile/DTH Recharge, Social Money and Scan &Â Pay option using BHARAT QR and UPI etc. Mobile Banking app is also further enhanced with Siber Mart (Online Shopping Portal) &Â Fee Book (Online Collection Portal).

- Â Â Â Mobile Banking also has innovative feature, e-Lock, in mobile banking apps which secures the customer account from any kind of fraudulent or unauthorized transaction. The Bank is the first bank in the country to introduce such a product and many in the industry have been bringing out similar products since then.

- Â Â Â Unified Payment Interface (UPI), "Future of payments" is transforming the digital payment space. The Bank has introduced UPI features in Bank's mobile banking application SIB Mirror+ (BHIM UPI Pay). SIB is the first Bank to upload UPI app in Google Play store. The UPI module is having features such as send money to virtual address, collect money, Aadhaar fund transfer, scan and pay, etc. Bank has also launched a Mobile application for merchants, UPI-POS for accepting payments through UPI channel. UPI has gained wide acceptance among the customers.

- Â Â Â Point of Sale (POS): The Bank is offering three types of POS terminals - PSTN (wired terminal), GPRS (wireless) and M-Pos (Mobile Pos) in association with M/s Atos World line India Pvt. Ltd., the market leader in India in this segment. During demonetisation, the Bank could reach out to valuable customers by providing ample number of terminals and thereby mitigating the shortage of cash.

- Â Â Â FASTag: South Indian Bank implemented NETC FASTag (in association with National Highways Authority of India (NHAI) and National Payments Corporation of India (NPCI)) in the month of February 2018 offering, hassle-free movement of vehicles through toll plazas. Any vehicle with a FASTag (RFID) tag can cruise through the Toll gates wherein the toll payment is made digitally. SIB NETC FASTags are available for both SIB Customers and Non-customers.

- Â Â Â SiberMart: The Bank has introduced an online shopping portal that enables customer to compare prices between different market places like Amazon, Flipkart, Tatacliq etc. This gives an added advantage to the customer in ensuring the Best Buy.

- Â Â Â Feebook: FeeBook is an event based fund management/ collection portal, which can be customized by the organization/merchant all by themselves. FeeBook, comes with a tagline, 'YOU DECIDE, YOU COLLECT'. In Fee Book, the organization has the flexibility of deciding &Â customizing the entire collection cycle. This can be integrated to the existing Website of the Client or can be provided as a separate Portal.

- Â Â Â Hi-Hi Banking: This is a Host to Host fund transfer application facilitating seem less transfer of funds between accounts that can be initiated by the client from his host system without Banks intervention. This can be integrated to the customers ERP system.

- Social Media &Â Digital Marketing: The Bank has made its presence in all major social media platforms like Facebook, Twitter, Instagram, Linked In, YouTube etc. The Bank has been instrumental in utilizing these channels in creating better engagement and awareness among customers about its innovative products and services. The latest digital marketing models are being adopted to reach out to customers across the globe in the most cost effective and sought after means.

Third Party Products

Insurance: As per the approvals received from IRDAI the Bank has opted for Multiple Corporate Agency Model with effect from 1st April, 2016. As per this model the Bank is allowed to tie-up with three partners in Life, Health and General Insurance streams. The Bank has tied-up with Kotak Mahindra Life Insurance Co. Ltd. and SBI Life Insurance Co. Ltd. in addition to the existing partner Life Insurance Corporation of India for soliciting life insurance. As the second partner for General Insurance in addition to Bajaj Allianz General Insurance Co. Ltd. the Bank has tied-up with The New India Assurance Co. Ltd. The Bank has also tied-up with Max Bupa Health Insurance Co. Ltd. and Cigna TTK health Insurance Co. Ltd. for sourcing health insurance business. FY 2017-18 was very fruitful for insurance business and income worth 12.62 crores was generated Vs 3.4 crores for financial year 2016-17.

Mutual Funds: Mutual Fund is a popular form of investment since it provides the advantages of professional portfolio management and dividend reinvestment. The Bank has tied up with 15 leading Mutual Fund companies thereby offering a variety of mutual fund products to customers. Bank's AMFI Registration Number is 3845. Asset Under Management (AUM) of the bank is Rs,60 Crores as on March 2018. With the aim of increasing mutual fund business and thereby increasing third party income, the Bank has launched a new online mutual fund platform 'SIB e-Invest' to facilitate online purchase &Â sale of mutual funds has been introduced for branches. Customers approaching branches can create investment account and perform purchase/sales of mutual funds through this platform. After the successful launch of 'SIB e-Invest'- the Online Mutual Fund platform in branches, the Bank has extended the facility for all single/individually operated retail SiberNet users also.

Bonds: The Bank has been enrolled as a Channel Partner for the distribution of bonds issued by different companies, through Bank's tie-up with IFIN - a subsidiary of IFCI (Industrial Financial Corporation of India) Financial services Limited. Through this tie-up the Bank has been enrolled as a channel partner of IFCI for the distribution of capital gain bonds and tax free bonds

Depository Services: The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form in demat account with M/s Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank offers SIBerTrade - the online trading facility to buy/ sell stocks for its domestic customers from stock exchanges in India through tie-up with M/s Geojit Financial Services Ltd. &Â M/s Religare Securities Ltd. Customers are also having the option of trading through mobile application at their comfort zone where the Demat Account and Bank account will be with us and the trading account will be with either M/s Geojit Financial Services Ltd. or M/s Religare Securities Ltd.

SEBI has also registered the Bank as Self Certified Syndicate Bank (SCSB) for accepting application under Application Supported by Blocked Amount (ASBA) through all the branches of the Bank. ASBA enables the Bank's customers to apply for IPO/FPO, Rights issue etc. by marking a lien on the account instead of actual debit at the time of applying, which is more beneficial for the customers. The Bank has participated in 150 issues (including IPO/FPO/NCD/Rights Issue) in FY 17-18.

Portfolio Investment Scheme (PIS) - An extensive share trading facility for NRI customers through tie-up with M/s Geojit. Under PIS, NRI customers can directly invest in the Indian securities market through recognized stock exchanges under repatriable/non-repatriable basis.

New Pension System: The Bank acts as a Point of Presence to provide services to subscribers of New Pension System introduced by Pension Fund Regulatory and Development Authority (PFRDA). All branches of the Bank are designated for collecting NPS applications and contributions. An additional tax benefit of '50000/- under Sec. 80 CCD (1B) was introduced for NPS contributions. APY was introduced by Govt. of India in place of NPS Lite providing minimum assured pension from '1,000/- to '5,000/- to subscribers is also available to Bank's customers.

Cash Management Service (Premium Collection): The Bank is offering Cash Management Service (Premium Collection) to customers in association with Tata AIG, Exide Life Insurance Co. Ltd. (formerly known as ING Vysya) and ICICI Prudential Life Insurance Co. Ltd. Under this arrangement, Bank's customers as well as walk-in customers can remit life insurance premium through branch counters. This facility is offered free of cost to customers.

Centralized Direct Debit service: The Bank has entered into tie-up with leading aggregator M/s Billdesk Services for Centralized Direct Debit arrangement. Through this tie up Bank's customers will be able to make regular payments like monthly/ quarterly/half yearly payments of Mutual Fund SIP investments/ Loan EMIs (Vehicle/Equipment Loans)/Insurance premium etc. by directly debiting their account and thereby making the payments to various billers/institutions. This facility is available to all customers irrespective of their branches being located in ECS/non-ECS locations. The Bank has similar arrangements with 4 companies - TVS Credit Services, Sundaram Finance Ltd. Shriram City Union Finance and Bajaj Finance Ltd.

BUSINESS CORRESPONDENTS

The Bank has started the Corporate Business Correspondent model in the Bank with effect from April 2017. Two vendors M/s Fino Paytech Ltd. and M/s Basix Sub-K iTransactions (later withdrew themselves from the project) were selected as the Corp BCs. The Corp BC provides the BC sub agents who are deployed to various branches, to canvass SB and CD accounts and retail loans, for increasing the CASA portfolio of the Bank. The Bank has started the BC model in Ernakulam region and now it is extended to Mumbai, Pune, Chennai, Bangalore and Ahmedabad.

Customer Support Centre (Call Centre)

As per the Bank's vision to become a retail powerhouse, the customer support centre (call centre) has been elevated to form a customer Experience Group (CEG) to enhance the customer satisfaction. Now, with a focused approach to generate business and thereby to improve customer product ratio, the CEG is expected to become more of a profit centre rather than just a support team.

Liability CASA Initiatives

- Â Â Â The Bank is among the pioneers in offering Mahila Savings Accounts with unique feature of insurance. Based on the market study the Bank had revamped the existing Mahila Plus scheme adding more customized features for women. In essence, bank is aiming to penetrate more among the women folk and yield a certain amount of revenue by offering comprehensive package and strengthen CASA portfolio. The salient features and offers of Mahila Delight are comprehensive insurance coverage at a nominal cost, concession in locker rent &Â loan processing fee and much more.

- Â Â Â Trader Smart current accounts are introduced during the FY with lot of free facilities and exemptions in cash handling charges to greater extend. The account is embedded with features like sweep in, sweep out, Doorstep banking, POS facilities etc. The account is designed keeping in mind the requirements of Traders in general and the performance in the first year is encouraging w.r.t. the average balances in the account.

- Â Â Â During the FY the Bank has launched SIB Elite Senior and Mahila Elite for catering to the needs of pensioners and Senior citizens in particular. The accounts are having very attractive features like sweep in, sweep out, Door step banking, Unlimited ATM free facility etc. the Bank had conducted regional level launch program at 20 Regional offices.

- Â Â Â During the FY the Bank has revamped the existing GSS Accounts and introduced GSS Smart &Â Executive for salaried class of people. Being a salary saving account, this account has got features of both saving account and salary account, which is basically a Zero - balance account. Salary OD is an attractive feature of this account along with other benefits like concession in loan processing, locker rent, free internet banking, mobile banking, demat account opening and many more.

- Â Â Â Government Business Cell was formed two years before with a focus on canvassing Government accounts and for the liaising with Government departments. The Cell was able to canvass substantial fresh CASA in the last financial year and able to bring good number of government accounts in the kitty. In order to scale up the government business portfolio of the Bank to further heights, many new initiatives are being implemented.

- Â Â Â Priority Banking Service - South Indian Bank Prime Platinum and Prime are exclusive Priority Banking Services offered to the customers who make their relationship with the bank mutually rewarding with benefits and offerings that enhance the privileges enjoyed by them. As a Priority Banking Customer, they have the advantage of enjoying customized benefits that recognize their total relationship with the Bank and have been tailored to suit their individual needs.

The privileges of SIB Prime Platinum and SIB Prime are not exclusively limited to the customers alone: some of those benefits also get extended to their families as well. As a Priority Banking client, the customer would have access to Red Carpet treatment at SIB Branches across the country. Also with the launch of Priority Banking, it is envisaged to create a comprehensive Personal Economy Management Solution to maintain and diversify the customers' wealth.

Business Development Officers

- Â Â Â The Bank started the retail business model through Business Development Officers (BDOs) in May 2016 with 72 BDOs. Today BDO stands as a strong arm of the Bank bringing in new Business to the Bank. Moreover, the intensive grass root level experience and learning have helped the BDOs to develop themselves as more confident and promising officers. With concentrated and focused approach, there has been steady improvement in the performance of BDOs which has laid a strong foundation for the vertical.

- Â Â Â Now, in order to make the vertical stronger and to get the desired results for a substantial growth in retail business, the Bank has redeployed the BDOs under the following categories:

Savings Account Group (SAG)

Current Account Group (CAG) Liability BDOs -

Corporate Salary Group (CSG)

GBG/TASC Group

- Â Â Â In the Financial Year 2017-18 the BDO vertical could source 1 1085 accounts with total AMB amounting to Rs,51.97 Crores, retail advances advance of Rs,229.96 Crores and Insurance amount of Rs,9.5 Crores.

BUSINESS CORRESPONDENTS

The Bank has started the Corporate Business Correspondent model in the Bank with effect from April 2017. The Corp BC provides the BC sub agents who are deployed to various branches, to canvass SB and CD accounts and retail loans, for increasing the CASA portfolio of the Bank. The Bank has started the BC model in Ernakulam region and now it is extended to Mumbai, Pune, Chennai, Bangalore and Ahmedabad.

Visibility Enhancement Initiatives during FY 2017-18

The Bank had undertaken many brand promotion initiatives in various media like Newspaper, Television, Radio, Outdoor and Online media.

- Â Â Â Through effective PR strategy, major events and financial results pertaining to the bank were promoted globally across all the media platforms. The Bank had held major Press conferences, in connection with Quarterly results and during the launch of SIB SCHOLAR-II, a prestigious CSR initiative by the Bank. Regular press releases were made in connection with the various CSR initiatives, financial inclusion, product launch, social associations and various arrangements in connection with the foreign remittance. Advertisement campaign was done in Malayala Manorama and Vanitha. On occasion of Onam, Bank had undertaken an advertisement campaign in the major Malayalam newspapers and dailies.

- Â Â Â As part of Casual Advertisement, the Bank has partnered with Mathrubhumi (for International Book Festival, Indian Luxury Expo), Deepika (20th Anniversary), The Hindu &Â Asianet (Budget Talk Show), TMA (Annual Convention), KMA (Annual National Management Convention), XLRI (Maxi Fair) etc., which fetched us good responses.

- Â Â Â The Bank has associated with M/s Maxus - GroupM Media Pvt. Ltd. for promoting the Gold Loan through Road Shows in Coimbatore and with M/s Junction K. (Malayala Manorama Group) for the promotion of Digital e-lock through caravan across cities of Kerala.

- Â Â Â The Annual National Management Convention hosted by

Kerala Management Association (KMA), was partnered by the Bank at Kochi that had witnessed the gracious presence of prominent business houses of the state.

- Â Â Â The Bank had also associated with Dhanam Magazine's Retail summit and Award nite at Kochi that had attracted a lot of entrepreneurs. Patronizing literature and arts, the Bank had supported Kerala Literature Festival conducted by DC Kizhekkamuri Foundation at Kozhikode.

- Â Â Â In order to inculcate the concept of healthy life style, Bank had partnered with Thrissur Round Table 88 for a Mini Marathon at Thrissur - "Run Thrissur Run" which attracted a lot of public and sports lovers.

- Â Â Â With a view to make Bank's presence felt in foreign countries, the Bank had undertaken some NRI campaigns. The Bank had associated with NTV UAE (Snehasandya 2017), AD &Â M International Advertising LLC (Radio Campaign), Thrissur Association of Kuwait (TRASSK Maholtsav), Kuwait Engineers Forum (SMASH - Badminton Competition) etc.

- Â Â Â As part of Bank's Radio promotions, the Bank had aired advertisements on Gold Loan, GSSA, SIB Scholar - II etc. in national and regional basis.

- Â Â Â Outdoor brandings were concentrated in major cities like Mumbai, Chennai, Coimbatore and Kochi through bus shelters and hoardings. The Bank had forayed into the digital product promotion on Volvo buses at Mumbai. The Bank had also undertaken a bus shelter campaign at Coimbatore city, which fetched us with good response. The Bank has undertaken a national level Arch Campaign at selected branches in connection with the 90th year anniversary celebrations. In order to increase the brand visibility, the Bank had undertaken hoarding campaign at major cities like Bangalore, Goa and Kochi. Digital advertisement were also displayed at 6 major railway stations of Kerala. The Bank also undertook the branding of Aluva Muncipal Clock Tower and the Gandhi Statue with an aim to increase the brand visibility.

- Â Â Â The Bank has entered into an agreement with Kochi Metro Rail Limited (KMRL) for the Semi Naming and Branding of Kaloor Metro Station.

- Â Â Â SIB hosted a grand Award Nite - Mahila Achievers Day at Kochi Crowne Plaza and honoured three eminent woman personalities from three different fields, Ms. Meenakshi Gurukkal (Martial Arts), Ms. Anju Bobby George (Sports) and Ms. Sujatha Mohan (Music). The former Brand Ambassador of SIB Sri Bharat Mammootty and Ms. Beena Kannan were also present. The event also witnessed the launch of new credit product, Mahila Udyog.

- Â Â Â In visual media, the Bank has advertised its Digital e-lock commercial in major news and commercial channels. A national campaign was undertaken during the Union Budget period. Wide publicity was given to the CSR activities of the Bank. In Kerala Market, the Bank had associated with various Malayalam channels like Mathrubhumi, Mazhavil

Manorama etc. for advertisement as well as the coverage of major events that had boosted Bank's publicity factor.

- As part of digital products YouTube campaign was initiated in order to promote Bank's Digital e-lock feature in SIB Mirror + app. The inauguration of the Plastic Recycler Machine at Kochi Metro was also aired live on Facebook.

HUMAN RESOURCE

Organizations are made of among others, Human Resources (HR) which is the most valuable asset in today's dynamic world. Indeed, it is the people and not organizations that constitute an organization. Achievement of organization's objectives depends on the individual and collective efforts put in by its work force. Highly motivated, loyal and satisfied employees represent the basis of all successful organizations. Competition has rendered this dimension still more critical. The Bank has a team of committed, self-motivated and empathetic workforce, who strive to meet the customers' aspirations and the organizational goals thereby. An adequate strategy is inevitable to develop and retain HR and also to attract more talents. To augment the manpower in line with the Bank's healthy &Â sustained growth and expansion of network, the Bank continued its initiatives of major talent acquisition and retention policies in the FY 201718 also.

Manpower

As on March 31st, 2018, the Bank had 7,946 personnel on its rolls. Cadre wise break up is as under:

Cadre	Men	Women	Total	Â
Officers	2767	1455	4222	Â
Clerk	1502	1563	3065	Â
Peon	381	25	406	Â
Part-time employees	62	191	253	Â
Total	4712	3234	7946	Â

With the infusion of young personnel, the Bank was able to maintain the average age of employees as 34 years as on March 31, 2018.

Staff Members having professional Qualification as on 31.03.2018 are as under:

EDUCATIONAL STREAM	NUMBER OF STAFF
Management	1407
Post-Graduation	1226
CA	64
CS	5
Engineering	1392
PHD	1
Legal	72
ICWA/CMA	43

MAINTENANCE OF PERSONNEL DATA

Maintenance of staff records were streamlined under "HRMSS" (Human Resources Management Software Solution) System.

The personnel data can be accessed by all controlling offices and various reports based on the data can be generated for the quick disposal of staff related matters. To make HRMSS more comprehensive, the Bank has introduced new modules such as Auto credit of Staff Allowances, Provident Fund, Staff Attendance, Audit Compliance in addition to the existing modules like Transfers, Promotion Maintenance, HRA, Leave and LFC, Training, Online Annual Performance Appraisal of Officers, Service Record, Pension Maintenance, Marketing Excellence, Staff Medical Insurance, TA, and so on. The automation of attendance was successfully completed with the introduction of Biometric attendance marking linked to HRMSS.

Motivation Initiatives

Some of the initiatives undertaken by the Bank in order to boost the morale of the Bank employees are as under:

a) Â Â Â Promotions: The Bank is offering ample opportunities to its employees for their growth and motivation. During this financial year, 301 clerical staff were promoted to Scale I, 160 officers to Scale II and 163 Officers to various senior cadres.

b) Â Â Â Training Programme: An employee is the pillar that an organization relies upon, for its success, growth and achievement. Effective trainings mould the employees to strive against the rising competition of the market and so, is very much necessary for the growth of the business. The Bank has been very keen in this regard. During the financial year, the Bank has provided training to 4249 Officers, 1689 Clerks and 279 Sub-staff in different facets of Bank's operations.

c) Â Â Â The Staff Welfare Study Support Scheme which was introduced in the FY 2016-17 for children of staff members has been successfully continued in the current financial year also. The scheme has proved to be effective in its implementation with the aim of encouraging the children of staff members to soar to greater heights.

d) Â Â Â This year 127 staff members availed the benefit of 'The South Indian Bank Staff Welfare Scheme' introduced in December 2008 for availing long leave with reason of child care after maternity, higher education, medical treatment and so on. The scheme ensures the Bank's employee friendly approach towards its employees and the concern for their family members.

e) Â Â Â Green Initiative: Healthy employees can have an equally positive impact on the productivity and effectiveness of a business. As a part of promoting greener and healthier work environment, the Bank has introduced an interest free Cycle Loan to staff members in all cadres of the Bank.

Industrial Relations

Industrial relations in the Bank have been cordial and harmonious. The representatives of Workmen Union, Officers Association and Management have been working collectively with a sense of ownership for all-round growth and prosperity of the Bank and its employees. On account of the cordial industrial relations with both the associations, Bank has achieved considerable growth over the years. The management of the bank has signed internal settlement with the officers/award staff unions with certain improvements in the existing benefits/service conditions of staff members and the same have been implemented with effect from June 2017.

A jovial and employee friendly approach by the Bank is the only reason to have a very minimal attrition rate of 2.46% as compared to the industry attrition rate of 17.8% [data taken from KPMG's report on Average Voluntary Attrition (2017-18)].

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the financial year 2008-09, the Bank instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The Banks' shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees.

Till March 2018, 5,36,76,080 stock options were vested, out of which 2,80,58,128 stock options were exercised by eligible employees. The money realized due to exercise of the said options was Rs,41,04,05,495.77 and consequently 2,80,58,128 shares of Rs,1/- each have been allotted to the concerned employees/legal heirs.

A Certificate of Auditors pursuant to Regulation 13 of SEBI (Share Based Employee Benefits) Regulations 2014 will be placed to the AGM for the scrutiny of Shareholders.

The total options granted under nine phases of SIB ESOS 2008 works out to 3.39% of the paid-up share capital of the Bank as at March 31, 2018. The scheme has generated intended motivation amongst the staff.

Statutory disclosures regarding details of the stock options granted, vested, exercised and forfeited and expired during the year under review is annexed to this report as Annexure A.

SIB- Executive Brief

"SIB Executive Brief" - a daily news update on Banking, Finance, Economy, Industry, Market Rates etc. is being provided by SIB Staff Training College. It is e-mailed on a daily basis to the Board members, executives and is also made available in SIB-Insight for the benefit of staff members.

E-Learning Tests

The Bank has completed 14 online tests through GIEOM Application during the year 2017-18 for staff members on various topics relevant to Banking. Toppers are recognized and their name published in Insight. The E-learning platform is being used increasingly for improving the knowledge level of the staff members.

Continuous Assessment Test for Prob. Officers

To facilitate updation for and continuous learning by the Prob.

E-Circular

SIB STUDENTS' ECONOMIC FORUM (SIBSEF)

Students' Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in Economy, Banking and Finance. As on 31.03.18, 316 themes have been published since the first publication in December 1991. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to provide a learning platform for the student community. The hard copies of the publication numbering about 3,100 are being sent to all the branches/ offices, reputed schools/colleges/academic institutions, RBI offices, other Banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The Subjects discussed during the Financial Year 2017-18 are - Insolvency and Bankruptcy Code, 2016 - Part I, Insolvency and Bankruptcy Code, 2016 - Part II, Prompt Corrective Action (PCA) by RBI, GST Part - I, GST Part - II, Priority Section Lending Certificate, Fintech, Ind AS Part - I and Part - II, Economic Survey 2017-18: Highlights, Union budget and Railway Budget 2018-19, Legal Entity Identifier. These themes are made available in the Bank's Website under the heading Student's Corner.

SIBLINK

A corporate magazine - 'SIBLINK' is published on a quarterly basis. During the Financial Year 2017-18, the Bank has published SIBLINK with the following themes - 'MSME', 'Fintech', 'IND AS' and 'Compliance in Banks'.

Awards and Accolades

The Bank has received following awards during the Financial Year 2017-18:

1. Â Â Â Dun &Â Bradstreet Award - Best Private Sector Bank Priority Sector (Agri)

2. Â Â Â IDRBT Best Bank Awards - Best Bank Award for Digital Banking among Small Banks' and Best Bank Award for High Performance IT Ecosystem among Small Banks

3. Â Â Â Banking Excellence Award 2017 for Private Sector Bank by State Forum of Bankers Club (Kerala)

4. Â Â Â Digital India Excellence Award for innovation in mobile app 'Digi e-lock'

5. Â Â Â FIEO Export Award 2015-16- Best Financial Services &Â Foreign Exchange Earner in Southern Region (Gold)

6. Â Â Â ASSOCHAM Award - Social Banking Excellence Award 2017 (Priority Sector Lending)

7. Â Â Â IBA Technology Awards 2018 -

a. Â Â Â Winner - Best Technology Bank of the Year

b. Â Â Â Winner - Best payment initiatives

c. Â Â Â Winner - Best use of Digital and Channel technologies

d. Â Â Â Runner up - Best Financial Inclusion initiatives

e. Â Â Â Runner Up - Best IT risk and Cyber Security initiatives

ISO 27001:2013 Certification

The Bank has been awarded ISO 27001:2013 certification for its Information Security Management System (ISMS)

Achievement and milestones:

1. Â Â Â The Bank has started operations of Representative office at Dubai in UAE from 25.04.2018.

2. Â Â Â The Bank has started TAB Based Account opening by instant KYC verification.

3. Â Â Â The Bank has started instant account opening by biometric verification at branches.

4. Â Â Â The Bank has started "Bharat QR" to enable merchants to accept payments Digitally.

5. Â Â Â The Bank has started issuing "FASTAG" to vehicles enabling Toll payments Digitally without waiting at Toll Booths.

6. Â Â Â The Bank has implemented committee approach in credit sanctioning of proposals above Rs,10.00 crore.

7. Â Â Â The Bank has Rolled out a centralised monitoring mechanism for continuous monitoring of accounts above Rs,5.00 crore.

8. Â Â Â Yet another milestone was the setting up of a centralised "collection hub", which ensures continuous follow up of potential impairments, follow up through SMS, telecalls, etc.

Foreign Exchange Advisory Cell

The Bank has launched Foreign Exchange Advisory Cell to Provide advisory services by subject experts on FEMA rules and trade finance related issues to the general public. The complimentary service is available to all Foreign Exchange Trade Fraternity.

2014

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

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

Number of complaints filed during the financial year - Nil

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

Particulars of Employees

Information as required by the provisions of Section 197 of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, is given under:

Name, Qualification and Age (in years)	Designation	Remuneration		Experience (in years)	Date of of Employment	Nature of employment (Contractual/ otherwise)	Last Employment
Name, Qualification and Age (in years)	Â	Gross ('	Net (')¹	Experience (in years)	Date of of Employment	Nature of employment (Contractual/ otherwise)	Last Employment
V. G. Mathew, M.Sc., CAIIB (64 years)	MD &Â CEO	1,28,84,934	89,23,243	39	02.01.2014	Whole-Time	Chief General Manager, SBI
Reghunathan K. N., B.Com., CAIIB (60 years)	EVP	51,34,157	33,23,400	39	14.12.2015	Contractual	GM, Union Bank of India
Siva Kumar G., MBA (Finance), M.Sc., CAIIB, (62 year)	EVP	39,02,026	29,41,419	38	14.12.2015	Contractual	GM, State Bank of India
Thomas Joseph K., B.Sc., (Mechanical Engg.), Diploma in Management, CAIIB (59 years)	EVP	36,75,713	28,02,921	34	15.10.1984	Whole-Time	-
Sanchay Kumar Sinha PG Diploma in Management (50 years)	COUNTRY HEAD - RETAIL BANKING -GM	27,34,967	21,92,796	25	02.09.2017	Contractual	SVP - Head Liabilities and Client Engagement for Consumer Banking - Indusind Bank
John Thomas, B.Sc., MBA, CAIIB (59 years)	SGM	26,19,001	20,71,385	36	15.06.1981	Whole-Time	-
Anto George T. BA, CAIIB-1, MBA-HR (49 years)	GM	24,28,277	19,80,638	28	01.02.1996	Whole-Time	South Malabar Gramin Bank
Raphael T. J., B.Com., CAIIB (57 years)	SGM	22,83,368	19,03,035	34	16.11.1983	Whole-Time	-
Benoy Varghese, B.A., MBA, CAIIB (60 years)	COUNTRY HEAD-WHOLESALE BANKING - SGM	23,10,154	18,26,060	34	21.11.1983	Contractual (w.e.f.01.03.2018)	-
Paul V. L. M.A., JAIIB (59 years)	SGM	22,32,164	18,14,198	37	22.09.1980	Whole-Time	-

- Â Â Â None of the above employees holds together with his relatives two present or more of the total voting power of the Company.

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

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

A brief outline of the Bank's CSR Policy, including overview of projects or programs to be undertaken.

South Indian Bank's CSR Policy

South Indian Bank is grateful to the society that has supported and encouraged the bank during its long journey of growth and development. The Bank believes that no organization can make sustainable development without the patronage of the society. The Bank is committed to integrate social and environmental concerns in its business operations. The Bank shall continue to have among its objectives, promotion and growth of national economy and shall continue to be mindful of its social and moral responsibilities to customers, shareholders and the society. The Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment.

In line with the CSR Policy and in accordance with Schedule VII, Section 135 of Companies Act, Bank undertook various activities during FY 2017-18, which had significant impact on the society. These activities include:

- Â Â Â Promoting education, including special education and employment enhancing vocation skills

- Â Â Â Promoting healthcare including preventive healthcare and sanitation

- Â Â Â Training to promote nationally recognized sports

- Â Â Â Promotion of Swachh Bharat Mission of Central Government

- Â Â Â Setting up of old age homes

- Â Â Â Making available safe drinking water

- Â Â Â Hunger Eradication programs

Â	Â	Sector-wise utilization of CSR funds for FY 2017-18 (Amount in ')				Â	Â
Sl. No.	CSR Project or Activity Identified	Sector in which the project is covered	Projects or Programs (1) Local area or Other (2) Specify the State and District where projects or Programmes was undertaken	Amount outlay (Budget) project or programme wise	Amount spent on the projects or programmes(1) Direct Expenditure on projects (2) overheads	Cumulative Expenditure up to Reporting Period	Amount Spent Direct or through Implementing Agency
1	Deploying Financial Literacy counselors	Financial Literacy	Other 1 All Districts, Kerala	590000	5658347	5658347	Direct
2	Erection of Ground/ Roof water harvesting systems &Â Alteration plants	Making available safe drinking water	Other 1 Alleppy, Kerala & JadayamPalayam, Coimbatore	3511951	2471169	2471169	Direct
3	Providing Ambulances, Dialysis Machines , assistance for Coronary Artery Bypass Grafting (CABG)	Promoting healthcare, including preventive healthcare and sanitation	Other 1 Ernakulam, Trivandrum, Kerala 1 Thane, Maharashtra	25233743	24639434	24639434	Direct

- Â Â Â Women Empowerment programs

- Â Â Â Creating sustainable environment

- Â Â Â Promoting Financial Literacy

Web-Link to the CSR Policy

https://www.southindianbank.com/UserFiles/file/CSR Policy.pdf Composition of CSR Committee

The Bank understands its responsibility towards the society and environment in which it operates. The Bank has constituted Corporate Social Responsibility Committee at the Board level to monitor the CSR activities.

Members of the Committee are

1. Â Â Â Sri Francis Alapatt (Chairman of the Committee)

2. Â Â Â Sri V. G. Mathew (MD &CEO)

3. Â Â Â Smt. Ranjana S. Salgaocar (Member)

4. Â Â Â Sri V. J. Kurian (Member)

The composition is as per Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.

Average net profit before tax of the Company for the last three financial years: '550.17 crore. Prescribed CSR expenditure (two percent of the amount as above): '11.00 crore.

Details of CSR spent during the Financial Year

a) Â Â Â Total amount to be spent for the Financial Year 2017-18 : '11,00,00,000

b) Â Â Â Amount not spent, if any : '3,72,25,562

c) Â Â Â Manner in which the amount spent during the financial year is detailed below:

The Bank's CSR mission is to contribute to the social and economic development of the community. Through a series of interventions, the Bank seeks to mainstream economically, physically and socially challenged groups and to draw them into cycle of growth, development and empowerment.

4	Setting up digital class rooms, Assistance for Technical Skill Development, Providing School bus and renovation of school building	Promoting Education, including special education and employement enhancing vocation skills	Other 1 All Districts, Kerala Sawantwadi, Pune 1 Dona Paula, Goa 1 Uppal, Hyderabad	30668843	26709964	26709964	Direct	Â
5	Assistance to construct a boarding home for accomodating psycho mental rehabilitation patients and old aged destitutes	Setting up old age homes	Other 1 Trivandrum, Kerala	2500000	2500000	2500000	Direct	Â
6	Construction of individual house hold toilets, adoption of cleaning activities of 18th June Road	Swachh Bharat Mission	Other 1 Alapuzha, Kerala &Â Panaji, Goa	1469015	602607	602607	Direct	Â
7	Financial assistance for training budding talents in foot ball, Setting up International Standard Shuttle Court Complex, Synthetic layering of Tennis Court	Training to promote nationally recognized sports	Local Area 1 Parappur, Thrissur Dist, Other 1 Ernakulam , Kerala	7143181	6018317	6018317	Direct	Â
8	Financial assistance to erect 75 KW on grid solar plant	Environmental Sustainability	Local Area 1 Thrissur	3661804	3661804	3661804	Direct	Â
9	Financial assistance to install one steam cooking unit to provide good quality food to general public free of cost	Eradicating Hunger	Other 1 Malappuram	462796	462796	462796	Direct	Â
10	Financial assistance to purchase 10 number of sewing machines to promote women empowerment.	Women Empowerment	Other 1 Ambari, WB	50000	50000	50000	Direct	Â
Â	Â	Â	TOTAL	75291333	72774438	72774438	Â	Â

Reason for not spending the prescribed CSR Expenditure

South Indian Bank has always given top priority to fulfilling its obligations under Corporate Social Responsibility. Diversified Projects in the areas of healthcare, education, sports and sanitation that would benefit the society as a whole are identified and the Bank wholeheartedly supports such initiatives. In the Financial Year 2017-18, the Bank spent Rs,7.28 crore towards CSR activities against Rs,4.03 crore in the Year 2016-17. Apart from the above, an outlay of Rs,9.50 crore has been sanctioned in various projects, pending disbursements as on 31.03.2018. The

Bank expects that this outlay will be positively spent during the forthcoming years. The Bank stays committed to its Corporate Social Responsibility and intends to increase the spend under CSR on Year on Year basis.

Responsibility Statement

The CSR Committee confirms that the implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the Bank.

FINANCIAL INCLUSION

Financial inclusion aims to ensure the availability of formal and basic banking services to all Indian households, including those in the un-banked and under-banked areas. South Indian Bank has adopted several financial inclusion initiatives, including Kiosk banking. During the year 2017-18, the Bank has successfully migrated to Aadhaar Enabled Payment System (AePS) in existing KIOSK Model of Banking, from the earlier mode of customer ID payment service. Now AePS is the only mode by which transactions are taking place in Kiosk Banking solution.

Aadhaar Enabled Payment System (AePS)

Aadhaar Enabled Payment System is a payment service, empowering a bank customer to use Aadhaar as his/her identity to access his/her respective Aadhaar enabled bank account and perform basic banking transactions through a Business Correspondent/POS machine. National Payment Corporation of India (NPCI), an umbrella organisation for all retail payments are controlling AePS operations. AePS offers basic banking services such as Cash Withdrawal, Cash Deposit, Balance Enquiry, Aadhaar to Aadhaar Fund Transfer, MiniStatement, and Best Finger Detection. Customers can open new basic savings account (PMJDY) in Kiosk centres by Bio Metric authentication. The Bank has implemented Kiosk Banking Model in the state of Tamil Nadu through 66 Individual Business Correspondents.

Financial Literacy Centres

Financial Literacy is the ability to understand how money works in our day to day life and how someone manages it, how he/she invests it and how a person offers it to others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with their financial resources. 13 FLCs have been allotted to the Bank by SLBC in the state of Kerala to disseminate financial literacy to the people and it is functional through retired bank employees and educated youth. In addition to this the Bank has voluntarily adopted 5 blocks in Tamilnadu to emphasize the objectives of Financial Literacy. Bank's FLCs are now branded under the name "SIB JYOTHIS". Efforts are on to make them more efficient, responsive to the needs of the people. A board approved policy covering all aspects of Financial Literacy Centres has been formulated, giving due consideration to the revised

Government of India Scheme - PMJDY

Pradhan Mantri Jan Dhan Yojana (PMJDY), is conceived as a national mission on financial inclusion initiated by Honourable Prime Minister on August 15, 2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme was implemented in the Bank since August 18, 2014.

The Bank has opened 2,09,957 BSBD accounts as on March 31, 2018 under PMJDY and balance outstanding in those accounts exceeds Rs,47.62 crore at present. RuPay Debit Cards are issued in PMJDY accounts providing customers with the benefit of accident insurance coverage of Rs,1.00 Lac. Social Security schemes in insurance (PMJJBY and PMSBY), were also given high priority by the Bank resulting in enrolments for over 2Lac customers in FY 2017-18.

AADHAAR ENROLMENT STATION

Department of Financial Services (DFS) under Ministry of Finance, had directed banks to become Enrolment Registrars with UIDAI so as to set up AADHAAR enrolment stations at branch premises before 31.10.2017 under bank's own enrolment agency code. As per DFS advisory, at least l0% of branches should be facilitated for the Aadhaar enrolment facility.

In view of the same, 85 Branches across 7 states were identified as Aadhaar Enrolment Station (AES) to provide services in connection with Aadhaar enrolment and updating facility.

As on 31.03.2018, all the 85 Aadhaar Enrollment Stations identified were functional.

GREEN INITIATIVES IN CORPORATE GOVERNANCE

to be their registered e-mail address for serving notices/ documents including those covered under Section 136 of the Companies Act, 2013. In case a Member, whose email address has changed, fails to update his/her new e-mail address, the said documents will be sent to the existing e-mail address and the said documents will be deemed to have been delivered, in compliance with the relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder and the Listing Regulations. Member who have not yet registered their email address are requested to do so, at the earliest. In case of shares held in electronic form and in case of any change in the e-mail address, Member are requested to update the same with their DP and in case of shares held in Physical form, Members are requested to update the same with the Registrar/Company.

Please note that the said documents will also uploaded on the Bank's website www.southindianbank.com and copies thereof will be made available for inspection at the Registered Office of the Bank during business hours on all working days except 2nd and 4th Saturdays, Sundays, Bank Holidays and Public Holidays up to the date of ensuing AGM.

Shareholders have been requested on several occasions to update their e-mail IDs in their folio/demat a/c to help accelerate the Bank's migration to paperless compliances. The Bank seek your support to the said green initiatives, as it is designed to protect our fragile environment.

ANTI-MONEY LAUNDERING (AML)

The Bank had implemented UIDAI's e-KYC services for Aadhaar authentication, in all the branches. The Board has nominated Mr. V. G. Mathew, MD &Â CEO as the "designated director", as per PMLA Act.

The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.

FATCA-CRS

The Bank has registered as a reporting entity under FATCA, under GIIN No. IIK7HU.99999.SL.356, to comply with the reporting

DIRECTORS

The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations

2015 and the Code of Conduct on Corporate Governance adopted by the Bank. The Board comprises of nine Directors as on the date of this report, with rich experience and specialized knowledge in various areas of relevance to the Bank, including banking, accountancy, small scale industry, agriculture, and information technology.

Excluding the MD &Â CEO, all other members of the Board are Non-Executive Directors and six Directors out of the total nine Directors are Independent Directors. Declaration has been obtained from the Independent Directors as required under the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Companies Act, 2013. The remuneration and other benefits paid to MD &Â CEO of the Bank and other Non-Executive and Independent Directors during the financial year 2017-18 are disclosed in Corporate Governance Report.

Sri Cheryan Varkey (DIN-06884551), Director liable to retire by rotation in the 89th Annual General Meeting held on 11th July 2017, did not offer himself for re-appointment hence not reappointed as a Director of the Bank.

Sri Mohan E. Alapatt (DIN: 00025594), Non-executive Independent Director of the Bank, retired from the Board of Directors w.e.f. 28th February, 2018 upon completion of his 8 year term, as per Section 10A(2A) of the Banking Regulation Act, 1949.

Sri Achal Kumar Gupta (DIN: 02192183) was appointed as the Additional Director of the Bank with effective from January 11,

2017 pursuant to the provisions of Section 161 of the Companies Act, 2013 and appointed as a Director liable to retire by rotation the 89th AGM held on 11 July, 2017. He will be appointed as a Non-Executive Director of the Bank liable to retire by rotation and been eligible, offers himself for re-appointment

Sri Salim Gangadharan (DIN: 06796232), Non-Executive part-time Chairman of the Bank, was originally appointed as Additional Director of the Bank on 16.01.2014 and regularized as Independent Director for a period of 5 years w.e.f. 1st April, 2014 at the 86th AGM held on 16.07.2014 in compliance with the provisions of Companies Act, 2013. Further, he was designated as Non-Executive part-time Chairman of the Bank w.e.f. 02nd November, 2016 for a period of 3 years (till 1st November, 2019) as approved by Reserve Bank of India. The Bank reclassified Mr. Salim Gangadharan as Non-Executive Non-Independent Director w.e.f. 2nd November, 2016 to comply with the provisions of Section 149(6)(c) of Companies Act, 2013. The Bank seeks the appointment of Mr. Salim Gangadharan as Non-Executive Director liable to retire by rotation.

Sri V. J. Kurian (DIN: 01806859) has been appointed as the additional Director of the Bank representing Minority sector w.e.f. 23rd March, 2018 pursuant to Section 161(1) of the Companies Act, 2013 and shall hold the office up to the ensuing Annual General Meeting of the Bank. He will be appointed as a Non-Executive Independent Director of the Bank in Minority sector, who is not liable to retire by rotation.

Dr. John Joseph Alapatt (DIN: 00021735), has been inducted to the Board w.e.f. September 24, 2012 and was appointed as an Independent Director of the Bank for a period of 5 years w.e.f. 01st April, 2014 vide shareholders' resolution dated July 16, 2014 in terms of the provisions of the Companies Act, 2013. His term of appointment would come to an end on 31st March, 2019. In terms of Section 149(10) of the Companies Act, 2013, an Independent Director shall hold office for a term up to five consecutive years on the Board of a Company but shall be eligible for reappointment on passing of a special resolution by the Company for a further period of upto five years. In terms of Section 10A(2A) of the Banking Regulation Act, 1949, no director of a banking Company, other than its Chairman or whole-time director, by whatever name called, shall hold office continuously for a period exceeding eight years. Accordingly his term will expire on 23rd September, 2020. Resolution for his reappointment as Independent Director is included in the AGM Notice.

Mr. Francis Alapatt (DIN: 01419486) has been inducted to the Board of the Bank w.e.f. 01.11.2013 and was appointed as an Independent Director of the Bank with effect from April 1, 2014 for a period of five (5) years vide shareholders' resolution dated July 16, 2014 in terms of the provisions of the Companies Act, 2013. His term of appointment would come to an end on 31st March, 2019. In terms of Section 149(10) of the Companies Act, 2013, an Independent Director shall hold office for a term up to five consecutive years on the Board of a Company but shall be eligible for reappointment on passing of a special resolution by the Company for a further period of upto five years. Hence approval of Shareholders of the Bank is accorded for the reappointment of Sri Francis Alapatt for a further term. In terms of Section 10A(2A) of the Banking Regulation Act, 1949, no director of a banking Company, other than its Chairman or whole-time director, by whatever name called, shall hold office continuously for a period exceeding eight years. Accordingly his term will expire on 31st October, 2021. Resolution for his reappointment as Independent Director is included in the AGM Notice.

Composition of Audit Committee

The Audit Committee of the Board is chaired by Sri K. Thomas Jacob, who is a Chartered Accountant. The other members of the committee are, Sri Achal Kumar Gupta (Non-Executive Director) and Sri V. J. Kurian (Non-Executive Independent Director). The constitution of the Committee is in compliance with the regulatory requirements. The terms of reference of the Audit Committee, incorporated in the Bank's Code of Corporate Governance, are in accordance with the SEBI (LODR) Regulations, 2015 entered into by the Bank with Stock Exchanges where the Bank's shares are listed, Companies Act, 2013 and RBI guidelines.

Independent Directors

In terms of the definition of Independence of Director as prescribed under Regulation 16 (1) (b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of Companies Act, 2013 and based on the confirmation/disclosures received from the Directors, the following Directors are Independent Directors of the Bank as on the date of this report

1. Â Â Â Sri K. Thomas Jacob (DIN: 00812892)

2. Â Â Â Dr. John Joseph Alapatt (DIN: 00021735)

3. Â Â Â Sri Francis Alapatt (DIN: 01419486)

4. Â Â Â Smt. Ranjana S. Salgaocar (DIN: 00120120)

5. Â Â Â Sri Parayil George John Tharakan (DIN: 07018289)

6. Â Â Â Sri V. J. Kurian (DIN: 01806859)

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations 2015, the Bank has appointed Smt. Ranjana S. Salgaocar (DIN: 00120120) as Woman Director on the Board of the Bank.

Criteria for appointment as Director of the Bank

Criteria For Determining Qualifications. Positive Attributes

a) Â Â Â The professional and personal ethics, integrity and track record.

c) Â Â Â Ability to provide insights and practical wisdom based on their experience and expertise relevant to the Bank's line of business.

d) Â Â Â Details of his/her association with other Companies/LLPs/ Firms (including NBFC).

e) Â Â Â Details of substantial interest in other Companies/LLPs/Firms (including NBFC).

f) Â Â Â Details of financial facilities, if any, availed from the Bank.

g) Â Â Â Details of default in the re-payment of loans, availed from the Bank or any other bank, if any.

h) Â Â Â Commitment to enhancing stockholder value.

i) Â Â Â Ability to develop a good working relationship with members of the Board and contribute to the working relationship with senior management of the Bank.

j) Whether he/she suffers from any of the disqualifications envisaged under the provisions of Banking Regulation Act, 1949, Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

k) Any other factors as the Committee may deem fit and in the best interests of the Bank and its stockholders.

Criteria for determining Independence of a Director

The Criteria of Independence of a director is determined based on conditions as laid down in the Companies Act, 2013. The independent director shall at the first meeting of the Board in which he/she participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his/her status as an independent director, give a declaration that he/she meets the criteria of independence.

REMUNERATION POLICY:

Remuneration Policy for Employees of the Bank:

The Bank has a Board approved Compensation Policy which deals with the Compensation &Â Benefits of the Employees of the Bank and Whole-time Directors.

The disclosure requirement of the remuneration is separately provided in "Disclosure under Basel III norms."

Remuneration Policy of Directors:

Remuneration of MD &Â CEO and Other Employees (including Key Managerial Personnel):

The Board approved Compensation Policy deals with the Compensation &Â Benefits of the Whole-time Directors/ MD &Â CEO. The remuneration of the Whole-time Directors/ MD &Â CEO is recommended by the Nomination &Â Remuneration Committee (NRC) to the Board for approval after considering the factors prescribed under the Compensation Policy.

Remuneration of Chairman:

Remuneration of Non-Executive Directors (NEDs):

The NEDs are paid sitting fees for attending each meeting of the Board of Directors or any committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, SEBI (LODR) Listing Regulations 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending the change in the sitting fees considers various factors like size and complexity of organization, Comparison with the peer Banks and Regulatory guidelines as applicable etc. while recommending the change in the sitting fees to the Board.

Policy on Board Diversity:

Pursuant to SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has devised a policy on Board diversity to ensure adequate diversity in its Board of Directors. The Bank believes that diversity underpins the successful operation on an effective Board and embraces diversity as a means of enhancing the business. With a view to achieve sustainable and balanced development, the Bank sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives. A diverse Board includes and makes good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of directors.

The Bank continuously seeks to enhance the effectiveness of its Board and to maintain the highest standards of corporate governance and recognizes and embraces the benefits of diversity in the boardroom. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. In informing its perspective on diversity, the Bank also take into account factors based on its own business model and specific needs from time to time.

Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. The Policy of Board Diversity is displayed in banks website.(https://www. southindianbank.com/User Files/file/Rupay/DISCLOSURE/Policy_ on_Board_diversity.pdf)

Board Level Performance Evaluation

The process for formal annual performance evaluation is as under:

- Â Â Â Committee of Independent Directors at their separate meeting evaluates the performance of Non-Independent Directors including Chairman of the Bank and the Board as a whole.

- Â Â Â The Board evaluates the performance of the Independent Directors (excluding the director being evaluated) and submit its report to the Nomination &Â Remuneration committee.

- Â Â Â The Board evaluate the performance of Board level committees.

The criteria for performance evaluation are as under:

Performance Evaluation of Non-Executive Directors. MD &Â CEO and Chairman

Performance Evaluation of Board

Performance Evaluation of the Board Level Committees

In complaince with the SEBI guidelines the recommendations of Committee of Independent Directors are placed to the Nomination and Remuneration Committee for timely follow-up and necessary actions.

AUDITORS

a) Statutory Auditors:

The shareholders at its 89th Annual General Meeting held on July 11, 2017, conveyed their approval for appointment of any one of the auditor firm from a panel of 3 Audit Firms as decided by the Board. Accordingly the Bank sought the approval of Reserve Bank of India and RBI conveyed their approval for appointment of M/s S. R. Batliboi &Â Co. LLP, Chartered Accountants, Mumbai as the Statutory Auditors for the year 2017-18.

M/s S. R. Batliboi &Â Co. LLP, Chartered Accountants, Mumbai, vacates the office at the ensuing Annual General Meeting but are eligible for re-appointment for the Financial Year 2018-19.

B) Secretarial Auditors and secretarial Audit Report:

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s SVJS &Â Associates, Company Secretaries, Practicing Company Secretaries, Kochi as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2017-18. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2017-18 is annexed to this report as Annexure C.

INTERNAL CONTROL AND AUDIT/INSPECTION

Regular Risk Based Internal Audit (RBIA) of the Branches, Regional Offices (RO) and Departments are conducted at periodical intervals based on its risk perception. RBIA of branches is being conducted through web based application and the risk assessment, rectification of comments etc. and its evaluation, monitoring and review are automated.

In the back drop of rapid technological changes, the Bank has initiated technology based Audit/Inspection for assessing the adequacy of internal controls and ensuring adherence to internal process and procedure as well as regulatory requirements. The Bank is having a full-fledged Inspection and Vigilance Department (IVD) and Inspection Division of IVD ensures adherence to the set rules and regulations by Branches/ Regional Offices/HO Departments.

In addition to RBIA of branches, the Bank has concurrent audit system which covers selected Branches, HO Departments including Critical Departments like International Banking Division, Treasury Department, and Credit Department and Centralized Processing Centres. Concurrent audit of branches is being conducted by qualified Chartered Accountants/retired officers covering 60% of total business, 70% of total advances and 50% of total deposit of the Bank. The selection of branches for concurrent audit is done in such a way that it covers Branches having substantial business, 'B' Category Branches and almost all isolated remote branches irrespective of its business volume. The Bank has automated concurrent audit system in Branches from August, 2017.

The Bank has conducted Credit Audit, KYC/AML Audit, Information System Audit, Revenue Audit, Surprise Inspection of gold &Â Cash and exclusive Gold Loan asset verification at Branches during the financial year. Information System Audit of CBS and major applications are conducted by external audit firms also. Besides this, all the Branches are subjected to statutory audit on yearly basis.

The Bank has a separate Transaction Monitoring Team which monitors transactions using alerts generated from software on certain set of rules. Based on these alerts, clarifications are called for from branches wherever necessary. The branch operations are centrally analyzed for ensuring compliance to KYC/AML/ CFT guidelines with the help of AML software. Fraud Risk Monitoring Cell (FRM Cell) is established to prevent fraudulent activity in the customer accounts through card related activities, by generating rule based alerts with the help of FIS software.

Internal inspectors conduct inspection at regular intervals and the reports are placed to Audit Committee at Executive level (ACE)/Audit Committee of Board (ACB) as the case may be, for review. Corrective steps are taken to rectify the lapses/ irregularities pointed out in such inspections.

During the Financial Year, the Bank has conducted more number of surprise inspections at Branches.

In the month of March 2018, the Bank has revamped Inspection Division in order to strengthen the internal audit processes. Separate monitoring team called 'Inspection Monitoring Group (IMG)' was created for closely monitoring various inspections/ audits at the Branches. There are four IMGs and each IMG is headed by AGM/CM. Self-Audit is being introduced in a phased manner for Branches vide which Branch has to be evaluated themselves.

Current year the Bank is planning to automate Credit Audit, Self-Audit, Gold Loan Inspection, Surprise Inspections and Management Audit. More number of surprise inspections will also be conducted.

EXPLANATION FOR AUDITORS' COMMENTS IN THE REPORT

The Statutory Auditors Report and Secretarial Auditors Report for the year 2017-18 does not contain any qualification.

Corporate Governance

A separate report profiling Corporate Governance as required under applicable regulations of the SEBI (LODR) Regulations

2015 and a certificate from M/s S. R. Batliboi &Â Co. LLP, Chartered Accountants, Statutory Auditors of the Bank, are annexed to this Report.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2018 in form No. MGT-9 is annexed to this report as Annexure D.

Business Responsibility Report

Dividend Distribution Policy

In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the Policy is hosted on the website of the Bank and can be viewed (https://www. southindianbank.com/content/view ContentLvl1 .aspx?linkIdLvl 2=215&LinkIdLvl3=2672&link Id=2672)

Subsidiary Companies

The Bank did not have any subsidiary Company during the previous financial year. The Board of Directors has formulated a policy for determining 'material' subsidiaries pursuant to the provisions of the Listing Regulations. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=781 &Â linkId=781).

Related Party Transactions

The Board of Directors has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=782 &linkId=782). Since there were no Related Party transactions, Form AOC-2 is not applicable to the Bank.

Material Changes and Commitment Affecting Financial Position of the Bank

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2018 and the date of the Directors' report i.e. June 6, 2018.

During the year under review, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Bank's operations in future.

Details in respect of frauds reported by auditors

There is no fraud reported by auditors under sub-section (12) of Section 143 of the Companies Act, 2013 other than those which are reportable to the Central Government.

Compliance to Secretarial Standards

The relevant Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) related to the Board Meetings and General Meeting have been complied with by the Bank.

Strictures and Penalties

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

In terms of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) by an order dated May 14, 2018, has imposed a penalty of Rs,5 crore for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms, Know Your Customer (KYC) norms and treasury function and for deficiencies in its compliance function and compliance culture.

Management Discussion and Analysis Report

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

Particulars of Loans, Guarantees or Investments

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except subsection (1), do not apply to a loan made, guarantee given or security provided by a banking Company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the Financial Statements as per the applicable provisions of Banking Regulation Act, 1949.

Directors' Responsibility Statement

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

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

(b) Â Â Â the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2017-18 and of the profit of the Bank for that period;

(d) Â Â Â the Directors had prepared the annual accounts for the financial year ended on March 31, 2018, on a going concern basis;

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

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

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Bank's shares are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Bank's shareholders and customers for their continued support, patronage and goodwill. The Board further places on record its appreciation for the valuable services rendered by M/s S. R. Batliboi, Statutory Auditors, during their tenure. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank. The Bank gladly acknowledges this fact and thanks all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â By Order of the Board

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (SALIM GANGADHARAN) Â Â Â Â Â Â Â Â Â (V. G. MATHEW)

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â CHAIRMAN Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â MANAGING DIRECTOR &Â CEO

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â DIN : 06796232 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â DIN : 05332797

Place : Nedumbassery

Date : June 6, 2018

Mar 31, 2017

To the Members,

The Board of Directors is pleased to place before you, the 89^th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2017 and the Profit and Loss Account for the year ended March 31, 2017.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2017 are as follows:

Key Parameters	Rs.in crore
Key Parameters	2016-17	2015-16
Deposits	66117.49	55720.73
Gross Advances	46845.69	41470.79
Total Gross Business	112963.18	97191.52
Operating Profit	1214.59	879.28
Net Profit	392.50	333.27
Capital & Reserves	4845.47	3841.93
Capital Adequacy (%) - Basel-III	12.37	11.82
Earnings Per Share (EPS)* :
(a) Basic EPS (in Rs.)	2.61	2.23
[face value Rs.1/-]
(b) Diluted EPS (in Rs.	2.61	2.23
[face value Rs.1/-]
Book Value per Share (in Rs.)	26.88	28.45
[face value Rs.1/-]
Gross NPA as % of Gross Advances	2.45	3.77
Net NPA as % of Net Advances	1.45	2.89
Return on Average Assets (%)	0.57	0.55

* Pursuant to the rights issue, earnings per share (EPS) in respect of previous year has been restated as per Accounting Standard-20 (AS-20) - "Earnings Per Share", prescribed under Section 133 of the Companies Act, 2013.

FINANCIAL PERFORMANCE Profit

The Net Operating Income (Net Interest Income and other income) of the Bank increased by Rs.363.88 crore (17.95%) from Rs.2027.12 crore to Rs.2390.99 crore. The growth in Non Interest Income was Rs.198.14 crore (38.29%) during the year.

The Operating Profit for the year under review was Rs.1214.59 crore before taxes and provisions as against Rs.879.28 crore for the year 2015-16. The Net profit for the year was Rs.392.50 crore as compared to a net profit of Rs.333.27 crore during the previous year and the profit available for appropriation was Rs.566.21 crore as per details given below:

(Rs. in crore)

Profit before depreciation, taxes and		1214.59
provisions		1214.59
Less: Provision for NPI	36.18
Provision for Non- Performing Assets	621.78
Provision for FITL	(58.94)
Provision for Depreciation on	5.97
Investments	5.97
Provision for Income Tax	207.72
Provision for Standard Assets	(1.72)
Provision for Restructured Assets	(29.38)
Provision for General Others	39.47
Provision for Other Impaired Assets	0.15
Provision for Un-hedged Forex Exposure	0.86	822.09
Net profit		392.50
Brought forward from previous year		173.71
Profit available for appropriation		566.21
Appropriations		(Rs. in crore)
Transfer to Statutory Reserves		98.13
Transfer to Capital Reserves		39.55
Transfer to General Reserves		50.00
Transfer to Special Reserve		22.87
Balance carried over to Balance Sheet		355.66
Total Appropriation		566.21

Dividend

The Board of Directors recommended a dividend of 40% (tax-free in the hands of shareholders other than Individuals whose dividend income is above Rs.10 lakh), i.e., @ Rs.0.40 per Equity Share of face value of Rs.1/- per share.

EXPANSION PROGRAMME

The Bank had been successful in widening its network across India with 850 branches, 50 extension counters and 1320 ATMs. The Bank has opened 26 new offices (16 branches and 10 extension counters) and 51 ATMs and 14 CRMs across the country during the financial year 2016-17. The branch network now covers 30 States/Union Territories.

The Bank plans to open a maximum of 35 new offices (with a mix of Branches and Extension Counters) and 87 ATMs/CRMs during the financial year 2017-18.

CAPITAL & RESERVES

The Bank''s issued and paid up capital increased to Rs.180.28 crore as on March 31, 2017.

During the year, the Bank has successfully raised capital by way of issue of Rs.45.07 crore Equity Shares of face value of Re.1/- each for cash at a price of Rs.14/- per Equity Share (including a premium of Rs.13/- per Equity Share) aggregating to Rs.630.99 crores to the eligible equity shareholders of the Bank on rights basis in the ratio of one equity share for every three equity shares held. Further, 18,18,866 stock options granted under Employee Stock Option Scheme were exercised by eligible employees.

The capital plus reserves of the Bank has moved up from Rs.3,841.93 crore to Rs.4,845.47 crore on account of Rights issue, exercise of options and plough back of profits during the year.

In view of the issue of shares under rights basis, the Book Value per share has shown a reduction from 28.45 to 26.88 in absolute number.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)-BASEL III

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2017 according to Basel III guidelines is 12.37 as against the statutory requirement of 10.25 (including Capital Conservation Buffer). Tier I CRAR constitutes 10.88 while Tier II CRAR works out to 1.49.

LISTING AGREEMENT WITH STOCK EXCHANGES

The Bank''s shares continue to be listed on BSE Ltd. and The National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2017-18.

BUSINESS ACHIEVEMENTS

The Bank has achieved a Total Gross Business of Rs.1,12,963.18 Crore, consisting of Deposits of Rs.66,117.49 Crore and Gross Advances of Rs.46,845.69 Crore as on March 31, 2017.

Deposits

The Total Deposits of the Bank increased from Rs.55,720.73 Crore as on March 31, 2016 to Rs.66,117.49 Crore registering a growth of 18.66%.

The break-up of the deposits as on March 31, 2017 is as under:-

	Amount (Rs. in Crore)	% to total Deposits
Current Deposits	2752.57	4.16
Savings Deposits	12993.77	19.65
Term Deposits	50371.15	76.19
Total	66117.49	100.00

The Bank during the year focused on Advances and CASA.

CASA has grown from Rs.12,459 Crore as on March 31, 2016 to Rs.15,746 Crore as on March 31, 2017, with a growth rate of 26.38%. The Savings Bank deposits grew by 24.04% and current deposits grew by 38.80% on a year on year basis.

The Bank has accorded priority to meaningful financial inclusion during the period under reporting while opening new deposit relationships.

Advances

During the year, the gross advances of the Bank registered a growth of 12.96%, to touch Rs.46845.69 crores. In spite of a down turn in the general economic activity, the Bank could do well in the retail segment including MSME and corporate advances of smaller ticket size. Our Bank is now focusing particularly on retail lending segment with a view to transforming the Bank into a Retail Power House in the coming years. While growing, the thrust is given to retail loan products, such as housing loan, vehicle loan, gold loan and MSME loans. A change in the composition of the advance portfolio in the desired direction is evident in the current year''s position as compared to last year.

In spite of the slow growth in Advance portfolio, there was an over achievement in the Priority sector and Agriculture sector throughout the Financial year. So it was resolved to trade the excess portfolio through Priority Sector Lending Certificates (PSLC). As a result of trading in PSLC for an amount of Rs.2500.00 crores in General Priority Sector and Rs.300.00 crores in Agriculture, an additional Income of Rs.19.00 Crores was generated. The total Priority Sector Advances (net of PSLC) as at the end of the financial year stood at Rs.18602.96 crore, constituting 42.06% of the Adjusted Net Bank Credit (ANBC). Exposure to agriculture sector(net of PSLC) amounted to Rs.8155.03 Crore forming 18.44% of ANBC as at the end of the financial year.

Break-up of exposure under Priority Sector is furnished below:

	Amount (Rs. in Crore)
Agriculture & Allied activities	8155.03
(including investments in RIDF)
MSME	9773.65
Other Priority Sector	674.28
Total Priority Sector	18602.96

INVESTMENTS

Bank''s net investment portfolio stood at Rs.19,429.68 crore as on March 31, 2017 compared to Rs.14,743.93 crore as on March 31, 2016, registering a growth of 31.78%. Investment Deposit ratio moved from 26.46 as on March 31, 2016 to 29.39 as on March 31, 2017. Additional SLR requirement consequent to increase in deposits was a major contributor to the increase in Investments.

Profit on sale of investment for FY 2016-17 stood at Rs.252.52 Crore. Total interest income from investments for the year was Rs.1,233.47 Crore. Yield on Investments (Profit interest earned to average investments) during FY 17 was 8.85%. Increase in trading activities coupled with softening yield levels and improved market conditions contributed to the increase in overall profitability.

NON-PERFORMING ASSETS (NPA)

During the year 2016-17, as a result of focused and sustained efforts for early recovery of NPAs, through prompt and effective measures under the SARFAESI Act, follow up of recovery cases pending before DRTs and civil courts, one time compromise settlements of accounts, asset sale to ARC, etc., Bank could recover NPAs to the extent of Rs.1,620.18 crore (recovery including up-gradation Rs.187.10 crore), as against the target of Rs.600.00 crore. Special thrust was given to selection and underwriting of credit, effective due diligence and improvement in credit administration to ensure improvement in asset quality. During the year, the Gross NPA of the Bank has declined from Rs.1,562.36 Crore as on March 31, 2016 to Rs.1,149.01 Crore as on March 31, 2017 and Net NPA declined from Rs.1,185.26 crore as on March 31, 2016 to Rs.674.56 Crore as on March 31, 2017. Apart from prompt and effective recovery measures, sale of asset to ARC for an amount of Rs.1,187.70 Crore led to decrease in the level of gross NPA to Rs.1,149.01 crore. In terms of percentages, the GNPA decreased from 3.77% as on March 31, 2016 to 2.45% as on March 31, 2017 and Net NPA decreased from 2.89% as on March 31, 2016 to 1.45% as on March 31, 2017. The Provision Coverage Ratio has increased from 40.34% as on March 31, 2016 to 55.07% as on March 31, 2017.

INFORMATION TECHNOLOGY (IT) AND IT ENABLED SERVICES

Information Technology and its huge potential to offer innovative solutions have paramount importance for growth and sustenance of Banks. The demand and expectations of the customers have increased and the turnaround time for rolling out a technology product in Banks has visibly diminished, which essentially calls for a robust, agile and adaptable system in place to execute projects right from initiation to execution. The Bank, an early adopter of technology with a view to providing safe, secure and convenient banking facilities to its customers, has introduced a host of services and facilities for enhancing customer satisfaction. The Bank has been successfully functional with Finacle Core Banking Solution (CBS) from Infosys for several years and is the third Bank in the country to have migrated to the latest Finacle 10 version from the old Finacle 7 version. Being one among the first banks to do so, ensures that the Bank would have a very robust and renewed platform, which can be leveraged for better customer service.

In its constant endeavour to ensure customer comfort, the Bank has introduced:

- ATM network across the country, which supports MasterCard, VISA and RuPay cards allowing customers quick access to money.

- All variants of Debit Cards to customers (VISA, MAESTRO and RuPay) ensuring cashless purchases.

- Mobile Banking and M-commerce (with support for other bank money transfer through IMPS, P2A, P2M (issuer), Unstructured Supplementary Service Data (USSD code *99#), Missed call services for retrieving balance through SMS etc. for customers.

- Investment in equity through primary and secondary market using ASBA (Application Supported by Blocked Amount), Demat Accounts and tie-up with leading broking firms for online trade, to help customers to diversify their investment portfolio.

- Foreign inward Instantaneous remittance with own payment Hub system which is real-time integrated with exchange houses abroad, so as to allow Bank''s diaspora to send funds to their near and dear back home.

- Point of Sale (POS) terminals to merchant customers.

- Portfolio Investment Scheme for NRI Community, allowing them to invest in Indian equity market.

- Central Plan Scheme Monitoring System (CPSMS), which links to the DBT (Direct Beneficiary Transfer) for instant receipt of Govt. subsidies to the beneficiaries of various Govt. schemes.

- Kiosk based Financial Inclusion Solution to enable the Bank to reach nook and corner of the country, even in remote villages using technology enabled tools.

- Cash Deposit Machines, for customers who wish to deposit money in their accounts quickly at any time.

- Advanced version of Internet Banking Application with augmented security controls and enhanced customer friendly features, which offers 24/7/365 banking.

- Captive Security Operation Centre (CSOC) in line with Cyber Security Framework and GKC (Gopalakrishna Committee recommendations of RBI for monitoring and management of IT Systems) which does round the clock monitoring of security attacks.

- Fraud Risk Management Solution (FRM) for ATM / POS / CNP channel to ensure customers are alerted when unauthorized transactions happen in their accounts.

- Business Process Management solution leading to a paperless environment.

- Payment Options such as Automated Clearing House (ACH) Payment Service, Cheque Truncation System, RTGS/NEFT etc.

- Account Opening for NRI/MSME directly through Bank''s website.

IT initiatives/solutions embarked during the year

The following list demonstrates a few of the IT enabled services/ solutions that the Bank has launched during the year to serve its Customers in a better and more efficient way.

- Migration of Core Banking Solution (CBS) to Finacle 10 version, with enriched features leading to increased internal efficiency of operations, augmented control over various functions through streamlined processes.

- SIB Mirror mobile application (developed in house) with innovative features such as M-POS for Merchants, NUUP (UPI), UPI Merchant (QR Code) - Mpay, e-Lock in Mirror.

- Mirror mobile application; which help both NRI and domestic customers to have all major Banking services at their fingertip, including seamless fund transfer.

- Issuance of Kissan Credit Cards, Prepaid Cards, Visa contactless cards.

- Introduction of Cash Recyclers.

- Multilingual Screen Integration for ease of customers in usage of ATMs.

- Full EMV Certification with MasterCard/RuPay/ATOS, Dynamic Currency Conversion Support for MasterCard International Transactions.

- Bharat Bill Payment Systems - BBPS which will offer integrated and interoperable bill payment services to customers across geographies with certainty, reliability and safety of transactions.

- IMPS fund transfer through e-banking.

- Prepaid mobile/DTH/Data card/Bill pay and Recharge services through Net Banking.

- Online Opening of Recurring Deposit and Fixed Deposits.

- DIGITAL MISSION 1000 - DIGITAL BANKING FOR ALL - a project for bringing Bank''s services to major institutions and providing digital training thereby promoting the vision of Digital Banking for all.

Awards and Certifications received on Technology front

- Bank has won the prestigious Finnoviti Award for the "The Best Innovation in Banking Technology 2017" organized by Banking Frontiers in association with Deloitte. SIB won the award for its innovative mobile banking application SIB MIRROR, which was developed by the in-house IT team. The unique app feature Digi E-lock, which was introduced recently allows the customers to lock and unlock their account with a single tap and also protects them from the fraudulent transactions perpetrated through online and digital banking. Some of the other advanced features are Augmented Reality, Voice Recognition, QR Code transfer etc.

- The Bank has won Best Technology Bank among Small Banks in the IBA Awards 2016. It was considered based on our recent developments in technology products that include SIB Mirror, cRaYONS (Create Your Own SIBerNet ID (Online SIBer Net User ID creation and activation), Green PIN etc. In addition to the above, we also won the Runner Up award for best use of technology for financial inclusion for technology innovation, KIOSK banking, which is initiated through our Business Correspondents model.

- Bank has won yet another award from NPCI for National Payment Excellence Awards - 2016.

- ISO 27001:2013 Certification: BSI (British Standards Institution) has awarded bank with ISO 27001:2013 certification for Information Security Management System (ISMS). The certification is for IT Department, Data Centre (DC) and Disaster Recovery (DR) Centre.

Information Security and Risk Management

As banks adopt sophisticated technology to face challenges in the emerging realities of banking, they are increasingly exposed to technology risk. It is therefore imperative for each bank to work out appropriate IT risk management strategies to secure its most vital information asset and ensure that related risk management systems and processes are strengthened on continual basis to secure both present and future banking activities.

Bank''s Information Security Policy and other IT Policies - IT Operation Policy, IT Governance Policy, IT outsourcing Policy and Information Security systems has already taken these aspects into consideration. Further, the Information Security of banking IT functions has been strengthened through implementation of a captive SOC (Security Operation Centre).

The Bank has been providing awareness on e-threats to its customers and staff on a continued basis so that both proactive and reactive measures can be initiated, as deemed appropriate, to mitigate potential risks associated with e-threats.

The Bank has been implementing the stipulations and guidelines articulated and issued by RBI on Cyber Security Framework and also based on the working group recommendations on Electronic Banking Technology Risk, Information Security and Cyber Frauds as part of the IT governance programme (Gopalakrishna Committee Report).

IT Training

During the year, many training programmes were attended by the Bank''s officers in premier institutions such as IDRBT, NIBM, etc. to keep themselves abreast with the advancements in IT, Information Security, CRM, Databases, Operating Systems, Virtualization, Network etc.

Gopalakrishna Committee Recommendations Management Philosophy & Measures for the effective implementation of Cyber Security Framework

Gopalakrishna Committee Recommendations on Information Security, Electronic Banking, Technology Risk and Cyber Frauds as applicable to the Bank have been taken up for enforcement and implementation. Effective measures have been taken to address the identified gaps in each areas such as IT Governance, Information Security, IT Service outsourcing, IS Audit, IT Operations, Cyber Frauds, Business Continuity Plan (BCP), Customer Education and Legal issues. The IT Organization setup has been redrawn to suit the functions/roles specified in the recommendations with segregation of duties.

IT Strategy Committee of the Board, IT Steering Committee, Information Security Committee and Chief Information Officer (CIO) are in place, and Chief Information Security Officer (CISO) reports independently to the Head of Risk Management.

Revamped Information Security policy incorporating the various guidelines and stipulations mentioned in the report has been approved by Board and is in place. Presently, the policy has been reviewed and aligned with ISO 27001 guidelines. In addition, other IT Policies such as IT Operation Policy, IT Governance Policy and IT Outsourcing Policy are also enforced.

The progress of implementation of GKC recommendations are reviewed by IT Strategy Committee of the Board and Board of Directors on quarterly basis. The major items which are under process to achieve compliance to GKC recommendations are implementation of IT balance score card, Straight Through Processing (STP), maintaining enterprise information model and data dictionary. The full compliance with the GKC recommendation will be realized in a time bound manner with creation of various infrastructural support required for the same.

The Bank has also formulated Cyber Security Policy and Cyber Crisis Management Plan. The policy will highlight the risks from cyber threats and the measures to address/mitigate these risks. The Bank has also identified the inherent risks and the controls in place to adopt appropriate cyber-security framework. Appropriate preventive, detective and corrective cyber security controls, vendor management and incident management & response are being outlined. The Bank has also ensured that Security Operation Centre (SOC) will have continuous surveillance and keeps itself regularly updated on the latest nature of emerging cyber threats.

TRANSACTION BANKING DEPARTMENT [TBD]

Transaction Banking Department, which has come in to being in August 2015, undertakes the following functional operations in a centralized environment with a view to bring standardization of process and procedures, scalability in line with business expansion and compliance to regulatory and statutory requirements, besides enforcement of internal controls.

Functional Division	Functional Operations Covered
Retail Liability Operations (CPC)	Opening of CASA - SB,CD, NRI Creation of Customer Customer Modifications - Retail & Customer Unification of Customer
Retail Asset Operations (CDMC)	Opening of Loan Accounts (FB and NFB limits) Renewals and Enhancements NPA Upgrading Capturing Risk rate/score Ensuring Collateral entries (SGMS) Income Leakage Identification & Recovery
Payment & Settlement Operations (PSD)	RTGS/NEFT PFMS - Aadhaar Mapping PFMS - DBT PFMS - WPS (Wage Protection System) CTS Operations NACH Operations
Service Operations	Debit Card Internet Banking Mobile Banking Post Open Welcome Kit (POWK)
Support Operations	Channel Reconciliation (Debit Card, Internet Banking, IMPS, UPI, Prepaid Cards) Customer Support Center Operations
Audit & Compliance Function	Concurrent Audit (Channel Reconciliation and CPC functions) rectification
Ancillary Operations	ATM cash replenishment outsourcing operations RLO outsourced operations under BC Model Door Step Banking Operations

Primary functional operation division of TBD is at ERNAKULAM with BCP centers at TBD, COIMBATORE (CPC and CDMC functions) and TBD, BANGALORE (RTGS/NEFT, CTS, and Channel Operations). As part of expansion of TBD Operations, it is envisaged to add up the following functions during the year 2017-18.

- Centralized Trade Finance Cell Operations

- Centralized TAX Management Operations

- Centralized CERSAI Registration Operations

- Centralized KYC Operations

COMPLIANCE DEPARTMENT

BUSINESS DEVELOPMENT DEPARTMENT

In order to support and monitor the existing branch network and to provide continuous focus on Business Development, the Bank has formed an exclusive full-fledged Business Development Department by segregating the "Business Monitoring Cell" from Planning & Development Department.

Business Development Department is providing continuous mentoring for both the Deposit and Advance portfolio of the Bank, monitoring of Green Channel Branches, review of daily/ weekly business position of all ROs/Branches, conducting of conference & meetings to promote Business growth etc.

RISK MANAGEMENT

Risk is an integral part of banking business. Risk Management underscores the fact that the survival of an organization depends heavily on its capabilities to anticipate and prepare for the changes rather than just waiting for the changes and react to them. The objective of risk management is not to prohibit or prevent risk taking activity, but to ensure that the risks are consciously taken with full knowledge, purpose and clear understanding so that it can be measured, monitored and mitigated. The essential functions of risk management are to identify, measure and more importantly monitor the risk profile of the Bank. Managing risk is fundamental to banking and is the key to sustained profitability and stability. Management of risk aims at to achieve best trade-off between risk and return and to ensure optimum Risk Adjusted Return on Capital (RAROC). Sound risk management is critical to a Bank''s success. Business and revenue growth have therefore to be aligned in the context of the risks embedded in the Bank''s business strategy and balance sheet of the various types of risks the Bank is exposed to, the most important are credit risk, market risk, liquidity risk and operational risk. The identification, measurement, monitoring and mitigation of risks continue to be key focus areas for the Bank. The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level through quantitative examinations of embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement/improvement of the risk measurement/management systems, the Bank aims to ensure regulatory compliance as well as better return on and utilization of capital. While Non Performing Assets are the legacy of the past in the present, Risk Management System is the pro-active action in the present for the future.

Risk Appetite

Risk appetite of the Bank refers to the level of risk that a banking organization is prepared to accept in pursuit of its financial and strategic objectives, before action is deemed necessary to reduce the risk. It can be determined through the assessment of risk taking capabilities of the Bank in the form of sound risk mitigation techniques and capital base. Risk Appetite forms a key input to the business and capital planning process by linking business strategy to risk appetite. Risk appetite of the Bank is defined by the Board of Directors through the Risk Appetite Statement which encompasses the general risk appetite of the Bank as well as risk appetite with respect to specific categories of risks. Qualitative elements, quantitative measures, and risk tolerances as well as targeted limits for various categories of risks are included within the risk appetite and are monitored on a quarterly basis. The framework ensures that aggregate risk exposure of the Bank is always within the desired risk bearing capacity.

Risk Management Policy Framework

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The Bank has put in place an integrated risk management policy which ensures independence of the risk governance structure. The details of risk management practices are provided in Management Discussion and Analysis Report annexed to the Director''s Report.

Compliance with Basel III and Basel II framework

In compliance with regulatory guidelines on Pillar I of Basel III norms, Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address the issues of Pillar II risks, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), integrating capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk, pension obligation risk etc. the Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline of Basel II and Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a more consistent and comprehensive manner.

The bank has taken progressive measures for upgrading its systems, policies and procedures to achieve preparedness in implantation of advanced approaches for credit, market and operational risks. The bank leverages its Enterprise Wide Integrated Risk Management (EWIRM) solution for measurement and monitoring of capital requirements under advanced approaches. Further EWIRM solution accelerates the bank''s ability to meet qualitative requirements of advanced approaches such as conduct of RCSA, development of VaR models/B-scorecards etc. in an effective manner.

INTERNATIONAL BANKING

The total forex business turnover for the year ended March 31, 2017 was Rs.2,66,867.10 crore (comprising Merchant Turnover Rs.12,335.48 Crore and Interbank Turnover Rs.2,54,531.62 Crore) recording an increase of 51.26% as compared to the previous financial year. The Bank earned an exchange profit of Rs.43.47 Crores for the FY 2016-17.

At present the Bank is having rupee inward remittance arrangement with 5 Banks and 32 Exchange Houses and turnover for the year ended March 31, 2017 was Rs.7,194.80 crore. The Bank has concluded a speed remittance arrangement from Australia with M/s Flyworld Money Exchange Pty. Ltd., Australia during the FY 2016-17. Bank continued providing managerial support to M/s Hadi Express Exchange, UAE. We have presently deputed 17 officers of our Bank to manage the operations of Hadi Express Exchange. Considering the scope in improving our remittance business through arrangements with EH''s, our Bank has deputed seven officers to UAE with UAE Exchange Centre, Al Ansari Exchange, Al Ahalia Money Exchange Bureau, Hadi Express Exchange and Al Fardan Exchange and one officer to Qatar with City Exchange, Doha, Qatar.

International Banking Division has been awarded the prestigious ISO 9001:2015 Certification for Quality Management Systems implemented in the department during the FY 2016-17. The certification is awarded for implementing the systems and procedures as per the standards laid down by the International Organisation for Standardisation.

IBD has initiated the centralization of foreign exchange operations in stages. By centralized trade finance operations at a single location, deploying talented sources, Bank will be able to impart professional services to its customers ensuring strict compliance with FEMA/RBI guidelines. Presently all inward remittances and outward remittances have been centralized and centralization of import/export bills is in progress.

NRI PORTFOLIO

The NRI deposits constitute 25.45% of the total deposits and 31% of the Core Deposits of the Bank. The Bank is having a separate NRI Division exclusive for NRI related services, at Kalamassery, Kochi, headed by an Assistant General Manager and its functions and working are monitored by a Deputy General Manager and Senior General Manager of the Retail Banking Department of the Bank. The dedicated officers and staff working in NRI Division are rendering exemplary support and assistance to our NRIs and in turn all the Branches give impetus to the growth of NRI business of the Bank. The Branch level NRI Relationship Officers and the NRI Desk functioning in major NRI Business Branches are giving special care and attention to our NRI clientele. In addition a separate desk is started at Regional Level, called NRI Business Coordinators, consisting a team of 2 officers, for supporting Branches to deliver maximum service to our NRI patrons to their full satisfaction.

NRI Division is also taking care of NRE/NRO Welcome Kit account opening through which instantaneous activation and operation of Account is possible. Account opening facilities are available at all the Branches of Hadi Express Exchange, UAE; selected SIB branches and with the Marketing Officers deputed to various Exchange Houses in UAE & Qatar. The welcome kit account opening is widely accepted in the market and added momentum to the NRE/NRO SB Accounts opening, which improves the share of low cost deposits of the Bank. The NRI CASA deposits (NRE/NRO SB and CD) constitute 22% of the total CASA of the Bank.

South Indian Bank is authorized by RBI to administrate the Portfolio Investment Scheme for NRIs and has tie-up with M/s Geojit BNP Paribas Financial Services Ltd. for the broking side. Ernakulam NRI branch is our RBI designated branch for offering PIS facility. The Skype calling (Skype id: talk2nricell) in NRI Division make possible for NRIs for an audio/video chat with officials working in RBD NRI Division.

Since the inception of our Bank, we are providing admirable service to our NRI customers and in continuation to that, we have come up with Online Account Opening System to our valuable NRIs, who wish to open NRE/NRO account with us. The portal has been totally simplified which resulted in a drastic change in the number of online accounts opened. In the current year we introduced a new product in NRI Current accounts with certain freebies, viz Raha & Miza for NRIs who are not interested in availing interest benefit, which gained wide acceptance. Introduction of Mirror Plus created wide impact among our NRI Customers as it''s utility has increased with the addition of IMPS facility. Similarly, introduction of FD/RD opening through Internet Banking has also made Banking much easier for our NRI Patrons. Our Bank started providing executive lounge & transit stay facility to our HNI NRI Customers, at two prominent locations inside Kerala.

In order to have an intimacy and personal interaction, get together of our HNI NRI''s along with the top executives of the Bank was conducted by way of NRI meets at various centres in Kerala & selected Overseas Centres like Dubai, Abudhabi & Doha during the financial year. All these efforts coupled with the service and efforts of each and every SIBIAN working all over India resulted in achieving 17.6% growth in the total NRI Deposit during 2016-17.

TRAINING

The Bank accords utmost importance to skill enhancement of staff members. Training Programme is conducted at SIB Staff Training College (SIBSTC), Thrissur and at 6 Regional Training Centers (RTCs) for development of professional skills. Training programmes are designed to develop competency of operating personnel while imbibing the SIBIANS'' spirit and culture through an effective learning process. The success of these programmes reflects on the enhanced organizational productivity. SIBSTC and the RTCs identify skill gaps in the personnel and provide support for qualitative improvement. Staff members are also nominated to external training centers for being trained in specialized areas as well as to have higher exposure. During the financial year 2016-17, the Bank has imparted training to 3,114 officers, 1,067 clerks and 108 sub staff in various aspects of banking operations. A total of 4,289 personnel were trained during the FY 16-17, which is about 55.86% of total staff strength of 7,677 as on March 31, 2017. This is in consonance with the Bank''s priority of continuous up-gradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations. In addition to six RTCs located at Delhi, Mumbai, Kolkata, Hyderabad, Chennai & Bangalore, one more RTC at Coimbatore will be functional from the Financial Year 2017-18.

MARKETING

The Marketing Department of the Bank plays a critical role in generating new business for the Bank through customer acquisition. The Department also takes initiatives in product development and promotion by creating awareness on products and by driving customer-centric campaigns. In order to give more thrust to the Retail Banking products Marketing Department and Retail Hub is merged to Retail Banking Department and the Liability products both retail and corporate is also shifted to it from Customer Relations Department w.e.f. 01-04-2017.

The products and services under the domain of Marketing Department can be broadly classified as Technology, Third Party Products and Value added services.

Technology Products of the Bank

Digital technology is transforming the way a customer interacts with the Bank. Demonetization has brought a wave of digitalization in the country. In coherence with the changes in the industry, we have also strengthened our digital banking space. The Bank has effectively leveraged technology and introduced several variants of traditional products and new e-based services, tailor-made to the diversified needs of customers. Technology services like ATM/Debit cards, internet banking, mobile banking etc. have transformed the customers'' banking experience from branch banking to anytime, anywhere banking. The Bank has set up a separate Digital Banking Department to take care of product development and process improvement of all technology products.

- Any Branch Banking system: All the branches/offices of the Bank are inter-connected and are capable of providing online, real-time transactions to its customers. As information is centralized and updates are available simultaneously at all places, single-window service has become possible, leading to effective service-delivery to customers.

- SIB ATM cum Debit Cards: The Bank is offering Visa, Master and RuPay debit cards to its customers. Using SIB debit cards, Bank''s customers can withdraw cash through ATMs of any Bank in India and international usage is allowed through EMV chip cards.

- We had launched prepaid cards in RuPay platform These cards can be used similar to Debit cards for Online/POS transactions, but needs to be loaded with money prior to the transactions. These cards can be gifted to a third party and can be used for multiple purchases for as long as value remains on the card and before the card expires.

- Our Bank launched the Reloadable Prepaid Cards which can be used for POS, Online as well as for ATM Transactions. These cards can be reloaded any number of times as per the choice of the customer.

- We had launched the credit cards in association with one of the major players in Indian Credit Card industry, M/s SBI cards co-branded credit cards. Bank can offer the SIB-SBI Co-branded Credit cards to our customers who come under the selected/designated branches across India. The SIB-SBI Co-branded Credit Cards are available in two variants -SimplySAVE Credit Card and Platinum Credit Card.

- We had launched premium variant of Visa Card i.e. Visa Platinum NFC Card which is enabled with NFC technology which permits contactless transactions at NFC enabled POS terminals.

- Co-branded Foreign Currency Travel Card launched in association with Axis Bank is specifically designed for customers who travel abroad. You can carry multiple currencies (USD, EUR, GBP, SGD, AUD, CAD, JPY, CHF, SEK,

THB, AED, SAR, HKD, NZD, ZAR, DKK) on as single card, thereby making it a convenient way to carry forex and make payments while travelling to multiple countries.

- Internet Banking: The internet banking service under the brand name "SIBerNet" has helped to position the Bank as a technology-driven Bank offering superior banking services to both retail and corporate customers. In addition to NEFT/RTGS and within bank fund transfer facility, we have implemented IMPS (Immediate Payment Service) fund transfer facility 24x7. We have also facilitated online opening of Fixed deposits and Recurring deposits. Cyber receipts are issued for such online deposits. We have also introduced Bill Pay & Recharge service to help the customers to make payment towards their various bill payments from a single platform. SIBerNet is also enabled with Tax payments and e-Filing of income tax and thereby enables customers to conduct their tax payments and filing of returns at the comfort of their homes/offices.

- Mobile Banking: Bank has introduced its new mobile banking application SIB Mirror to provide a next generation digital banking experience. The new app, which is available to both Domestic and NRI customers, is packed with features such as Self Registration facility, E-statement, Bill Payment module, within bank, NEFT & IMPS 24X7 fund transfer, e-lock, Mobile/DTH Recharge, Social Money etc.

- We have introduced an innovative feature, E-Lock, in our mobile banking apps which secures your account from any kind of fraudulent or unauthorized transaction. We were the first bank in the country to introduce such a product and many in the industry have been bringing out similar products since then.

- Unified Payment Interface (UPI), "Future of payments" is transforming the digital payment space. We have introduced UPI features in our SIB M-Pay (UPI Pay) application. Our Bank is the first Bank to upload UPI app in Google Play store. The UPI module is having features such as send money to virtual address, collect money, mobile banking registration, Aadhaar fund transfer, scan and pay, etc. Bank has also launched a Mobile application for merchants, UPI-POS for accepting payments through UPI channel.

- Point of Sale (POS): The Bank is offering three types of POS terminals - PSTN (wired terminal), GPRS (wireless) and M-Pos (Mobile Pos) in association with M/s Atos Worldline India Pvt. Ltd., the market leader in India in this segment. During demonetization, we could reach out to our valuable customers by providing ample number of terminals and thereby mitigating the shortage of cash.

Government Business

- For liasoning with Govt. Departments and other corporate we have formed an exclusive division Government Business Cell.

- Government Business Cell has tied up with Income Tax Department for the Income Tax E-filing facility to our customers. Using this facility, all our retail customers can E-file Income Tax through SIBernet.

Third Party Products

To cater to the needs of a diverse customer base, the Bank has made arrangements with several companies to distribute products like insurance, pension and mutual funds to customers.

Insurance (Life/General): The Bank acts as a corporate agent for the distribution of insurance products of both M/s Life Insurance Corporation of India and M/s Bajaj Allianz General Insurance Company for life insurance and general insurance respectively. As per the new regulation by IRDA (which is effective from 1st April, 2016), banks can act as Corporate Agent for more than 1 Insurance provider subject to a maximum of 3 insurance providers - under Life, General and Health each. As per the approvals received from IRDAI we have opted for Multiple Corporate Agency Model with effect from 1st April, 2016. We have tied up with Kotak Mahindra Old Mutual Life Insurance Ltd. and SBI Life Insurance Co. Ltd. in addition to our existing partner Life Insurance Corporation of India. The New India Assurance Co. Ltd. has been selected as the partner for General Insurance in addition to Bajaj Allianz General Insurance Co. Ltd. We have also tied up with Max Bupa Health Insurance Co. Ltd. for sourcing health insurance business.

Mutual Funds: Mutual Fund is a popular form of investment since it provides the advantages of professional portfolio management and dividend reinvestment. The Bank has tie up with leading Mutual Fund companies thereby offering a variety of mutual fund products to customers. We have entered into tie up with M/s Axis Asset Management Co. Ltd. from December 2016, thus making the total number of tie ups to 15.

Bonds: The Bank has been enrolled as a Channel Partner for the distribution of bonds issued by different companies, through Bank''s tie up with IFIN - a subsidiary of IFCI Financial Services Limited. Through this tie up the Bank has been enrolled as a channel partner of IFCI for the distribution of capital gain bonds and tax free bonds.

Depository services: The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form in demat account with M/s Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank offers SIBerTrade - the online trading facility to buy / sell stocks for its domestic customers from stock exchanges in India through tie up with M/s Geojit Financial Services Ltd. & M/s Religare Securities Ltd. Customers are having the option of trading through mobile application "Selfie" at their comfort zone where the Demat Account and Bank account will be with us and the trading account will be with M/s Geojit. SEBI has also registered the Bank as Self Certified Syndicate Bank (SCSB) for accepting application under Application Supported by Blocked

Amount (ASBA) through all the branches of the Bank. ASBA enables the Bank''s customers to apply for IPO/FPO, rights issues etc. by marking a lien on the account instead of actual debit at the time of applying, which is more beneficial for the customers. Bank is also offering Portfolio Investment Scheme.

Portfolio Investment Scheme (PIS) - An extensive share trading facility for our NRI customers through tie up with M/s Geojit. Under PIS, NRI customers can directly invest in the Indian securities market through recognized stock exchanges under repatriable/non-repatriable basis.

New Pension System: The Bank acts as a Point of Presence to provide services to subscribers of New Pension System introduced by Pension Fund Regulatory and Development Authority (PFRDA). All branches of the Bank are designated for collecting NPS applications and contributions. An additional tax benefit of Rs.50000/- under Sec. 80 CCD (1B) was introduced for NPS contributions. APY was introduced by Govt. of India in place of NPS Lite providing minimum assured pension from Rs.1000 to Rs.5000 to subscribers is also available to Bank''s customers.

PAN Application Servicing: The Bank has made arrangement with M/s UTI Technology Services Ltd. (UTITSL) for servicing applications for PAN card. On an average the Bank processes 15,000 applications per year.

SIB E-Pay: In association with BSNL, the Bank is facilitating the payment of BSNL Landline bill of its customers through their accounts maintained with the branches. A customer can avail this facility by submitting a mandate form at the branch where the account is being maintained. Once registered, the BSNL landline bill of the customer will be automatically debited from the customer''s account every month. The key feature of this facility is that it is totally hassle free and is offered free of cost to the customers.

Cash Management Service (Premium Collection): The Bank is offering Cash Management Service (Premium Collection) to customers in association with Tata AIG, Exide Life Insurance Co. Ltd. (formerly known as ING Vysya) and ICICI Prudential Life Insurance Co. Ltd. Under this arrangement, Bank''s customers as well as walk-in customers can remit life insurance premium through branch counters. This facility is offered free of cost to customers.

Centralized Direct Debit Service: The Bank has entered into tie up with leading aggregator M/s Billdesk Services for Centralized Direct Debit arrangement. Through this tie up Bank''s customers will be able to make regular payments like monthly/ quarterly/half yearly payments of Mutual Fund SIP investments/ Loan EMIs (Vehicle/Equipment Loans)/Insurance premium etc. by directly debiting their account and thereby making the payments to various billers/institutions. This facility is available to all customers irrespective of their branches being located in ECS/non-ECS locations. The Bank has similar arrangements with 3 companies - TVS Credit Services, Sundaram Finance Ltd. and Shriram City Union Finance.

TOLL FREE: The Bank has subscribed to toll free numbers from Idea Cellular Ltd. (Toll Free number - 1800 843 1800) and BSNL (Toll Free Number - 1800 425 1809) to enable customers to contact the Bank without incurring any cost. In addition, a land-line connection dedicated for international customers is also available. Toll free centre is now functioning in 4 shifts, 24 x 7 with staff members who are capable of handling multiple languages. In addition to this a channel support team is working 24 x 7 at the same premises who are focused to support and escalation of issues related to technology products.

Marketing and promotional activities of the Bank are vital in identifying customer needs and designing differentiated products to cater to those needs. While the department is keen to introduce new and varied products, facilitating customer adoption and providing customer assistance assumes equal significance during its operation. The Bank strives to comply with regulatory requirements during the entire sales process, and thereafter during support.

Visibility Enhancement Initiatives during 2016-17

The Bank had undertaken many brand promotion initiatives in various media like Newspaper, Television, Radio, outdoor and online media. Outdoor brandings were concentrated in major cities like Mumbai, Chennai, Coimbatore and Kochi through bus shelters and hoardings.

- Innovative branding through advertisement in Ernakulam South Railway station were undertaken and leveraged to promote various products.

- Bank had also forayed into the digital product promotion on Volvo bus at Mumbai.

- Through effective PR strategy, major events and financial results pertaining to the bank were promoted globally through all the media platforms. The bank had held 3 major Press conferences at Kochi and Thrissur in connection with Quarterly results and during the launch of SIBSCHOLAR - a prestigious CSR initiative by the bank.

- Numerous press releases were made in connection with the various CSR initiatives, financial inclusion, product launch, social associations and various arrangements in connection with the foreign remittance.

- TV Commercials starring Brand Ambassador Mammootty were released on Pan India basis in the major financial channels like CNBC, ET Now, NDTV Profit, ABP and ZEE business during national budget sessions.

- Also in Kerala Market we had associated with Manorama News, Asianet News Reporter, Kairali News, Amrita TV, Jai Hind TV, and Jeevan TV for advertisement as well as the coverage of our major events that had a tinge of publicity factor.

- We had released our advertisement in premium theaters across the country and had also timed its screening during the release of the film "Kabali".

- Bank had conducted an innovative Selfie campaign -#SIBSELFIEPOORAM - during the internationally renowned Thrissur Pooram festival which had registered more than 600 contestants and has tremendously boosted the traffic in the official Facebook page of our bank.

- Manorama Indian Open Badminton Championship was partnered by our Bank which had been successfully conducted at Thrissur. As a value addition for associating with this tournament, stall spaces were offered for the All Kerala Property Exhibition - ''Parpidom''. This was conducted in all the districts of Kerala and has fetched us a good mileage.

- The 36^th Annual National Management Convention hosted by Kerala Management Association (KMA), was partnered by the Bank at Kochi that had witnessed the gracious presence of business magnates of the state.

- Bank had also associated with Dhanam Magazine''s Retail summit and Award nite at Kochi that had attracted a lot of entrepreneurs. Patronizing literature and arts, Bank had supported Kerala Literature Festival conducted by DC Kizhekkamuri Foundation at Kozhikode.

- The Kochi Muziris Biennale inauguration and signing of MOU had focused the role of bank in promoting contemporary art having international exposure at Kochi.

- South India Banking conclave conducted by MINT at Bangalore was partnered by the bank, which gave the Bank a good visibility in the banking industry.

- Associating with FIEO, our bank had conducted 10 seminars across Kerala for the benefit of the exporters.

- In order to inculcate the concept of healthy life style, Bank had partnered with Thrissur Round Table 88 for a Mini Marathon at Thrissur - "Run Thrissur Run" which attracted a lot of public and sports lovers.

- MD&CEO was interviewed by leading financial channel CNBC during the Quarter results and also exclusive interview was done by Business Standard, Business Line etc.

HUMAN RESOURCE

Highly motivated, loyal and satisfied employees represent the basis of all successful organizations. Competition has rendered this dimension still more critical. The Bank has a team of committed, self-motivated and empathetic workforce, who strive to meet the customers'' requirements, and at the same time, also meet the Bank''s targets. To augment the manpower in line with the Bank''s healthy & sustained growth and expansion of network, the Bank continued its initiatives of major talent acquisition and retention policies in the FY 2016-17 also.

Manpower

As on March 31, 2017, the Bank had 7,677 personnel on its rolls. Cadre wise break up is as under:

Cadre	Men	Women	Total
Officers	2588	1326	3914
Clerk	1499	1564	3063
Peon	401	27	428
Part-time employees	68	204	272
Total	4556	3121	7677

With the infusion of young personnel, Bank was able to maintain the average age of employees as 34 years as on March 31, 2017.

Staff Members having professional Qualification as on March 31, 2017 is as under:

EDUCATIONAL STREAM	NUMBER OF STAFF
Management	1406
Post Graduation	1217
CA	65
CS	6
Engineering	1025
PHD	1
Legal	80
ICWA/CMA	46

MAINTENANCE OF PERSONNEL DATA

Maintenance of staff records were streamlined under "HRMSS" (Human Resources Management Software Solution) System. The personnel data can be accessed by all controlling offices and various reports based on the data can be generated for the quick disposal of staff related matters. To make HRMSS more comprehensive, we have introduced new modules such as Auto credit of Staff Allowances, Provident Fund, Staff Attendance, Audit Compliance in addition to the existing modules like Transfers, Promotion Maintenance, HRA, Leave and LFC, Training, Online Annual Performance Appraisal of Officers, Service Record, Pension Maintenance, Marketing Excellence, Staff Medical Insurance, TA, etc.

Motivation Plans

Some of the initiatives undertaken by the Bank in order to boost the morale of the Bank employees are as under:

a) Promotions: The Bank is offering good opportunities for growth to its employees. During the financial year, 65 clerical staff were promoted to Scale I, 51 officers to Scale II and 80 Officers to various Senior cadres.

b) Staff Welfare Scheme (SWS) 2016 was implemented in the FY 2016-17, offering job opportunities to the children of staff members in office/clerical cadre. 3 Probationary Officers and 22 Probationary Clerks were selected under this scheme.

c) The Bank has implemented a new group life insurance policy in tie up with SBI Life Insurance Company Ltd that provides better life cover exclusive of savings component at the most competitive rate. Under this scheme, coverage will be Rs.20.00 lakhs or 10 times of annual salary of respective staff at the time of enrolling into the policy, whichever is less.

d) The Bank has introduced Staff Welfare Study Support Scheme 2016-17 for children of staff members as a welfare measure for the FY 2016-17, utilizing Staff Welfare Fund. The scheme aims at recognizing the academic achievement of children of staff members pertaining to the academic year 2015-16 and encouraging them to reach further heights.

Industrial Relations

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the financial year 2008-09, the Bank instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The Banks'' shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees.

Till March 31, 2017, 4,50,94,920 stock options were vested, out of which 2,20,63,007 stock options were exercised by eligible employees. The money realized due to exercise of the said options was Rs.29,72,25,576.85 and consequently 2,20,63,007 shares of Re.1/- each have been allotted to the employees/legal heirs concerned.

A Certificate of Auditors pursuant to Regulation 13 of SEBI (Share Based Employee Benefits) Regulations 2014 will be placed to the AGM for the scrutiny of Shareholders.

The number of options under the scheme was increased at the 85th Annual General Meeting held on June 28, 2013 by creations of additional options such that we aggregate options to be granted under the scheme shall not exceed 5% of the the total number of fully-paid up Equity Shares of the Bank, from time to time, as on the date(s) of Grant of options.

The total options granted under seven phases of SIB ESOS 2008 works out to 3.15% of the paid up share capital of the Bank as at March 31, 2017. The scheme has generated intended motivation amongst the staff. Statutory disclosures regarding details of the stock options granted, vested, exercised and forfeited and expired during the year under review are annexed to this report as Annexure A.

SIB- Executive Brief

"SIB Executive Brief" - a daily news update on Banking, Finance, Economy, Industry, Market Rates etc. is being provided by SIB Staff Training College. It is e-mailed on a daily basis to the Board members, executives and is also made available in SIB-Insight for the benefit of staff members.

E-Learning Tests

The Bank has completed 12 online tests through GIEOM Application during the year 2016-17 for staff members on various topics relevant to Banking. Toppers are recognized and their name published in Insight. The E-learning platform is being used increasingly for improving the knowledge level of the staff members.

Continuous Assessment Test for Prob. Officers

To facilitate updation for and continuous learning by the Prob. Officers, tests are conducted on a monthly basis, covering our products, procedures, instructions etc. through different modules.

E-Circular

The Bank has since migrated to issuance of e-circulars in place of manual circulars. All the circulars of the Bank are uploaded using the ''e-circular software''. In e-circular, Bank''s policies, Guidelines and Forms are also uploaded so as to empower the branches with readily accessible pool of information/guidelines.

SIB STUDENTS'' ECONOMIC FORUM (SIBSEF)

Students'' Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in Economy, Banking and Finance. As on March 31, 2017, 304 themes have been published since the first publication in December 1991. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to provide a learning platform for the student community. The hard copies of the publication numbering about 3,100 are being sent to all the branches/ offices, reputed schools/colleges/academic institutions, RBI offices, other Banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The Subjects discussed during Financial year 2016-17 are - Union budget Part-2, Digital Banking, Peer to Peer Lending, Forensic Auditing, Payment and Settlement Systems in India: Vision-2018, Income Declaration Scheme 2016, ''On Tap'' Licensing of Universal Banks in The Private Sector, Unified Payments Interface (UPI), Demonetization, The Real Estate (Development & Regulation) Bill 2016, Economic Survey 2016-17, Union Budget & Railway Budget 2017-18. These themes are made available in the Bank''s Website under the heading Student''s Corner.

Awards & Accolades

The Bank has received following awards during the financial year:

-National Payments Excellence award 2016 from National Payment Corporation of India.

- The best Technology Banks award among small banks, instituted by Indian Banks Association.

- Best Bank award for Electronic Payment among small banks from IDRBT, technology arm of Reserve Bank of India.

- Export Excellence Award in the best financial Institution category (Southern Region) from Federation of Indian Export Organizations set up by Ministry of Commerce, Govt. of India.

ISO 27001:2013 certification

The bank has been awarded ISO 27001:2013 certification for its Information Security Management System (ISMS).

Achievements and milestones:

- Bank started issuing pre-paid instruments after taking approval from Reserve Bank of India.

- Bank started participating in Unified Payment Interface (UPI) - a unique mobile based interbank real time fund transfer platform set up by National Payment Corporation of India (NPCI).

- Bank received license from Reserve Bank of India for participating in Bharath Bill Payment System (BBPS) set up by NPCI.

- Bank received approval from RBI to open a representative office at Dubai in UAE.

Foreign Exchange Advisory Cell

2014

The Bank has undertaken various initiatives for energy conservation at its premises. Further, the Bank has used information technology extensively in its operations and consistently pursuing its goal of technological up-gradation in a cost effective manner for delivering quality customer service. The Bank, being a banking company and an authorized dealer in Foreign Exchange, has taken all possible steps to encourage exports.

Number of cases filed. if any. and their disposal under section 22 of the sexual harassment of Women at Workplace (Prevention. Prohibition and Redressal) Act. 2013

The Bank has zero tolerance approach towards any action on the part of any executive/employee which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every woman staff working in the Bank. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. All the employees (permanent, contractual, temporary, trainees) are covered under this policy. Number of complaints pending as at the beginning of the financial year - Nil

Number of complaints filed during the financial year - 1

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

Particulars of Employees

Information as required by the provisions of Section 197 of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, is given under:

Name, Qualification and Age (in years)	Designation	Remuneration		Experience (in years)	Date of Employment	Nature of employment (Contractual/ otherwise)	Last Employment
		Gross 0	Net 0
V. G. Mathew, M.Sc. CAIIB (63 years)	MD & CEO	107,66,600.00	73,78,477.00	38	02.01.2014	Whole-time	Chief General Manager, SBI

*Net of Taxes paid

@ As on March 31, 2017 Sri V. G. Mathew does not hold any shares of the Bank and he is not a relative of any Director or Manager of the Bank.

The details of other employees required to be provided in compliance with the provisions of Section 197 of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, is given under:
Name, Qualification and Age (in years)	Designation	Remuneration gross O	Experience (in years)	Date of Employment	Nature of employment (Contractual/ otherwise)	LastEmployment
Reghunathan K. N., B.Com., CAIIB (59 years)	EVP	48,25,510.00	38	14.12.2015	Contractual	GM, Union Bank of India
Sivakumar G., MBA (Finance), M.Sc., CAIIB, (61 years)	EVP	30,21,374.00	37	14.12.2015	Contractual	GM, State Bank of India
Thomas Joseph K., B.Sc., (Mechanical Engg.), Diploma in Management, CAIIB (58 years)	EVP	31,34,189.00	33	15.10.1984	Whole-time
Bobby James, B.Com., CA Inter, JAIIB (60 years)	SGM	23,69,798.00	35	15.06.1981	Whole-time
Raphael T. J., B.Com., CAIIB (56 years)	SGM	22,95,008.00	33	16.11.1983	Whole-time	-
John Thomas, B.Sc., MBA, CAIIB (59 years)	SGM	22,62,010.00	35	15.06.1981	Whole-time	-
Benoy Varghese, B.A., MBA, CAIIB (59 years)	SGM	22,02,877.00	33	21.11.1983	Whole-time	-
Paul V.L., M.A., JAIIB (58 years)	GM	21,78,787.00	36	22.09.1980	Whole-time	-
Paul Thaliath, B.Sc., MSW, CAIIB (57 years)	DGM	21,13,746.00	33	17.11.1983	Whole-time	-

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

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

A brief outline of the Bank''s CSR Policy, including overview of projects or programs to be undertaken.

South Indian Bank''s CSR Policy

South Indian Bank is grateful to the society for the support and encouragement in the Bank''s growth and development. The Bank believes that no organization can make sustainable development without the patronage of the society. The Bank is committed in the integration of social and environmental concerns in its business operations and also in the interactions with its stakeholders. The Bank shall continue to have among its objectives, the promotion and growth of national economy and shall continue to be mindful of its social and moral responsibilities to customers, shareholders and the society. Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment.

Overview of Activities

In line with the CSR Policy and accordance with Schedule VII, section 135 of Companies Act, Bank undertook various activities during FY 2016-17, which had significant impact on the society. These activities include:

- Promoting health care including preventive health care

- Financial Literacy

- Making available safe drinking water

- Promoting education, including special education and employment enhancing vocational skills

- Conservation of natural resources

- Protection of Art and culture

- Training to promote sports

- Setting up old age homes

- Swatch Bharat Kosh by Central Government

Web-Link to the CSR Policy

https://www.southindianbank.com/content/viewContentLvl1.as

pxRs.linkIdLvl2=215&LinkIdLvl3=778&linkId=778

Composition of CSR Committee

Members of the Committee are

1. Sri Francis Alapatt (Chairman of the Committee)

2. Sri V .G. Mathew (MD & CEO)

3. Sri Mohan E. Alapatt (Member)

4. Smt. Ranjana S. Salgaocar (Member)

The composition is as per Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.

Average net profit before tax of the Company for the last three financial years: Rs.571.83 Crore.

Sl. No.	CSR Project or Activity Identified	Sector in which the project is covered	Projects or Programs (1) Local area or Other (2) Specify the State and District where projects or Programmes was undertaken	Amount outlay (Budget) project or programme wise	Amount spent on the projects or programmes(1) Direct Expenditure on projects (2) overheads	Cumulative Expenditure up to Reporting Period	Amount Spent Direct or through Implementing Agency
1	Deploying Financial Literacy counselors	Financial Literacy	Other 1 All Districts (Except Kasaragod), Kerala	5430000	3308937	3308937	Direct
2	Erection of Roof water harvesting systems	Making available safe drinking water	Other 1 Alleppy, Kerala & Jadayam Palayam, Coimbatore	2552000	239218	239218	Direct
3	Providing Ambulances, Dialysis Machines, assistance for Coronary Artery Bypass Grafting (CABG)	Promoting health care, including preventive health care and sanitation	Other 1 Ernakulam, Kollam, Trivandrum, Keralal Thane, Mumbai	31519280	9984330	9984330	Direct
4	Setting up digital class rooms, Assistance for Technical Skill Development, Providing School bus and setting up Speech Therapy unit	Promoting Education, including special education and employement enhancing vocation skills	Other l Ernakulam, Trivandrum, Malapuram, Kannur, Kerala	20827761	13975434	13975434	Direct
5	Partner in Kochi Muziris Biennale 2016	Protection of National heritage, art and culture	Other l Ernakulam, Kerala	10000000	10000000	10000000	Direct
6	Assistance for purchasing 52 goats for distribution among 26 families at Pullu Vilage	Rural Development Project	Local Area l Pullu Village, Thrissur Dist, Kerala	219760	219760	219760	Direct
7	Assistance to construct a boarding home for accomadating psycho mental rehabilitation patients and old aged destitutes	Setting up old age homes	Other l Trivandrum, Kerala	1500000	0	0	Direct
8	Construction of Boys friendly toilet complex	Swach Bharat Kosh	Other l Mettupalayam, Coimbatore l Udupi, Karnataka	2774000	2024000	2024000	Direct
9	Financial assistance for training budding talents in foot ball, Setting up International Standard Shuttle Court Complex	Training to promote nationally recognized sports	Local Area l Parappur, Thrissur Dist., Other l Ernakulam, Kerala	1200000	593719	593719	Direct
	TOTAL			76022801	40345398	40345398

Prescribed CSR expenditure (two percent of the amount as above): Rs.11.44 Crore.

Details of CSR spent during the Financial Year

a. Total amount to be spent for the Financial Year 2016-17: Rs.11,44,00,000/-

b. Amount not spent, if any: Rs.7,40,54,602/

c. Manner in which the amount spent during the financial

year is detailed below:

The Bank''s CSR mission is to contribute to the social and economic development of the community. Through a series of interventions, the Bank seeks to mainstream economically, physically and socially challenged groups and to draw them into cycle of growth, development and empowerment.

Reason for not spending the prescribed CSR Expenditure

In the Financial Year 2016-17, the Bank spent Rs.4.03 crore towards CSR activities, which is 35% of the CSR budget of the year against Rs.2.30 crore in Financial Year 2015-16 (19.90% of the CSR budget for FY 2015-16). Apart from the above, an outlay of Rs.7.12 Crore has been sanctioned in various projects/ initiatives under CSR as on March 31, 2017. We expect that this outlay will be positively spent during the forthcoming years. In certain projects, the total outlay is distributed over a period of 3 to 4.5 years and hence the respective spend got staggered over. The Bank stays committed to its corporate social responsibility and intends to continually increase the impact of its CSR initiatives. The Bank has utilized the reporting year to lay a strong foundation on which to build and plan future projects and is currently in the process of evaluating strategic avenues for CSR expenditure in order to deliver maximum impact. In the years to come, the Bank will maximize its efforts to meet the targeted CSR spends.

Responsibility Statement

The CSR Committee confirms that the implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the Bank.

FINANCIAL INCLUSION

Kiosk Banking Model - Bank Mitra / Business Correspondent (BC)

The Kiosk banking complies with the open standards recommended by the Indian Banks'' Association (IBA) and the Institute for Development and Research in Banking Technology (IDRBT) and is capable of incorporating the Unique Identity Solution being implemented by the Unique Identity Authority of India (UIDAI). Under Kiosk Banking Model, the Bank is able to provide basic banking services in un-banked/under banked areas through outlets such as common service centers,

Individual Business Correspondents [BC], small retail shops, etc. with a laptop based solution.

Kiosk centres offers basic banking services such as customer enrollment, deposits, withdrawal, fund transfers, balance enquiry, FD, RD remittance etc. to potential customers. Customers can open new basic savings account in Kiosk centres (PMJDY) by providing KYC documents and biometrics. The Bank has implemented Kiosk Banking Model in the state of Kerala through 53 Akshaya centers, who are acting as common service centres in the state and 76 Individual BC''s in Tamil Nadu. As on March 31, 2017, 52,412 customers have opened accounts under the Bank''s Kiosk Banking Model.

Financial Literacy Centres

Financial Literacy is the ability to understand how money works in our day to day life and how someone manages it, how he/she invests it and how a person offers it to others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with their financial resources. 12 FLCs have been allotted to the Bank by SLBC in the state of Kerala to disseminate financial literacy to the people and it is functional through retired bank employees, school teachers and retired Government employees. In addition our bank has voluntarily adopted 4 blocks in Kerala to emphasize the objectives of Financial Literacy. Our FLCs are now branded under the name "SIB JYOTHIS". Efforts are on to make them more efficient, and responsive to the needs of the people. A Board approved policy covering all aspects of Financial Literacy Centres has been formulated, giving due consideration to the revised guidelines on FLCs circulated by RBI. During the FY 2016-17, our FLCs have conducted 642 camps attended by 37331 participants.

Pullu - Model Village of South Indian Bank

The Bank has been servicing Pullu Village in Chazhoor Panchayat of Thrissur Dist. in Kerala under Bank''s Financial Inclusion initiative since 2010. In order to ensure meaningful Financial Inclusion and to facilitate BC based operations in the village, Bank has opened Ultra Small Branch at Pullu on November 1, 2013. The village has since adopted by the Bank and various welfare measures were initiated in Pullu. Propagation of Bio farming, conducting financial literacy sessions, providing agricultural credit, organizing medical camps, formation of Farmers Club are few of such initiatives the Bank has undertaken in the village. In addition the first phase of Joint Liability Group formation has also been completed giving way to large number of activities to come.

Government of India Scheme - PMJDY

Pradhan Mantri Jan Dhan Yojana (PMJDY), is conceived as a national mission on financial inclusion initiated by Honorable Prime Minister on August 15, 2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme was implemented in the Bank since August 18, 2014.

The Bank has opened 2,08,340 BSBD accounts as on March 31, 2017 under PMJDY and balance outstanding in those accounts exceeds Rs.44.06 Crore at present. RuPay Debit Cards has been issued in PMJDY accounts providing customers with the benefit of accident insurance coverage of Rs.1.00 Lac. Social Security schemes in insurance (PMJJBY and PMSBY), introduced by the Government of India were also given high priority by the Bank resulting in enrollments for over 2 Lac customers in FY 2016-17.

GREEN INITIATIVES IN CORPORATE GOVERNANCE

As a responsible corporate citizen, the Bank supports and pursues the ''Green Initiative'' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directors'' Report, Auditors'' Report etc., for the year ended March 31, 2017, to the e-mail address which the Shareholders have previously registered with their Depository Participant (DP) as their valid e-mail address. Investors desirous of refreshing / updating their e-mail addresses are requested to do so immediately in their respective DP accounts. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CDSL will be deemed to be their registered e-mail address for serving notices / documents including those covered under Section 136 of the Companies Act, 2013.

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

ANTI-MONEY LAUNDERING (AML)

The Bank had implemented UIDAI''s e-KYC services for Aadhaar authentication, in 50 branches during the Financial Year 2015-16, which was scaled up to cover all the branches during the Financial Year 2016-17. The Board has nominated Mr. V. G. Mathew, MD & CEO as the "designated director", as per PMLA Act.

The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.

FATCA-CRS

The Bank has registered as a reporting entity under FATCA, under GIIN No. IIK7HU.99999.SL.356, to comply with the reporting requirement under the inter-Governmental agreement entered between Indian and US Government.

DIRECTORS

The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the Code of Conduct on Corporate Governance adopted by the Bank. The Board comprises of 10 Directors as on the date of this report, with rich experience and specialized knowledge in various areas of relevance to the Bank, including banking, accountancy, small scale industry, agriculture, and information technology.

Excluding the MD & CEO, all other members of the Board are Non-Executive Directors and Seven Directors out of the total 10 Directors are Independent Directors. Declaration has been obtained from the Independent Directors as required under the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Companies Act, 2013. The remuneration and other benefits paid to MD & CEO of the Bank and other Non-Executive and Independent Directors during the financial year 2016-17 are disclosed in Corporate Governance Report.

Sri Achal Kumar Gupta (DIN: 02192183), who was appointed as a Director pursuant to Sections 149 & 161(1) of the Companies Act, 2013 and who holds office up to the date of this Annual General Meeting and in respect of whom the Bank has received a notice in writing, proposing his candidature for the office of director. He will be appointed as a Non-Executive Director of the Bank in the Majority Sector (i.e. Banking), who is liable to retire by rotation in place of Mr. Cheryan Varkey (DIN-06884551), who retires by rotation under Section 152 of Companies Act, 2013 and does not offer himself for re-appointment.

The tenure of Sri V. G. Mathew, MD & CEO (DIN: 05332797) of the Bank, will expire on September 30, 2017. As recommended by the Board, the Bank seeks the re-appointment of Sri V. G. Mathew as MD & CEO of the Bank for a further period of 3 years w.e.f. October 1, 2017 subject to the approval of Reserve Bank of India and Shareholders of the Bank at the ensuing AGM.

RBI vide letter DBR.Appt. No. 4811/08.51.001/2016-17 dated 27.10.2016 approved the appointment of Sri Salim Gangadharan as Non-Executive Part-time Chairman of the Bank and terms and conditions of appointment. The appointment of Sri Salim Gangadharan (DIN-06796232) is ratified by seeking the consent of the members of the Bank and will be taken on record at the this Annual General Meeting.

Composition of Audit Committee

The Audit Committee of the Board is chaired by Sri K. Thomas Jacob, who is a Chartered Accountant. The other members of the committee are-Sri Cheryan Varkey (Non-Executive Director), Sri Mohan E. Alapatt (Non-Executive Independent Director) and Sri Achal Kumar Gupta (Non-Executive Independent Director). The constitution of the Committee is in compliance with the regulatory requirements. The terms of reference of the Audit Committee, incorporated in the Bank''s Code of Corporate Governance, are in accordance with the SEBI (LODR) Regulations, 2015 entered into by the Bank with Stock Exchanges where the Bank''s shares are listed, Companies Act, 2013 and RBI guidelines.

Independent Directors

In terms of the definition of Independence of Director as prescribed under Regulation 16(1) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of Companies Act, 2013 and based on the confirmation / disclosures received from the Directors, Sri Mohan E. Alapatt (DIN: 00025594), Sri K.Thomas Jacob (DIN: 00812892), Dr. John Joseph Alapatt (DIN: 00021735), Sri Francis Alapatt (DIN: 01419486), Smt. Ranjana S. Salgaocar (DIN: 00120120), Sri Parayil George John Tharakan (DIN: 07018289), Sri Achal Kumar Gupta (DIN: 02192183) are the Independent Directors of the Bank as on the date of this report.

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations 2015, the Bank has appointed Smt. Ranjana S. Salgaocar as Woman Director on the Board of the Bank.

Bank''s policy on directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178;

Criteria for appointment as Director of the Bank

Nomination and Remuneration Committee of the Board shall identify and ascertain the integrity, qualification, expertise and experience of the person who is considered for being appointed/reappointed as Director of the Bank and apply due diligence in compliance with the Banking Regulation Act, 1949, Reserve Bank of India directives on Fit & Proper Criteria, all other applicable provision of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 including any amendments from time to time and Nomination Policy of the Bank.

Criteria for Determining Qualifications. Positive Attributes

a) The professional and personal ethics, integrity and track record.

b) Special knowledge or practical experience in Banking, accountancy, agriculture and rural economy, co-operation, economics, finance, Marketing, Information Technology, law, small-scale industry or any other field useful to the Banking Company in the opinion of Reserve Bank of India.

c) Ability to provide insights and practical wisdom based on their experience and expertise relevant to the Bank''s line of business.

d) Details of his/her association with other Companies/LLPs/ Firms (including NBFC).

e) Details of substantial interest in other Companies/LLPs/Firms (including NBFC).

f) Details of financial facilities, if any, availed from the Bank.

g) Details of default in the re-payment of loans, availed from the Bank or any other bank, if any.

h) Commitment to enhancing stockholder value.

i) Ability to develop a good working relationship with members of the Board and contribute to the working relationship with senior management of the Bank.

j) Whether he/she suffers from any of the disqualifications envisaged under the provisions of Banking Regulation Act, 1949, Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

k) Any other factors as the Committee may deem fit and in the best interests of the Bank and its stockholders.

Criteria for determining Independence of a director

REMUNERATION POLICY:

Remuneration Policy for Employees of the Bank:

The Bank has a Board approved Compensation Policy which deals with the Compensation & Benefits of the Employees of the Bank and Whole-time Directors.

The disclosure requirement of the remuneration is separately provided in "Disclosure under Basel III norms."

Remuneration Policy Of Directors:

Remuneration of MD & CEO and Other Employees (including Key Managerial Personnel):

The Board approved Compensation Policy deals with the Compensation & Benefits of the Whole-time Directors/MD & CEO. The remuneration of the Whole-time Directors/MD & CEO is recommended by the Nomination & Remuneration Committee (NRC) to the Board for approval after considering the factors prescribed under the Compensation Policy.

Remuneration of Chairman:

The NRC recommends the remuneration of the non-executive Chairman to the Board which is considered and approved by the Board in the same manner subject to Shareholders'' and regulatory approvals. The NRC, while recommending the remuneration of the part-time Chairman considers the Function, Role and Responsibilities of the Chairman and Regulatory guidelines as applicable etc.

Remuneration of Non-Executive Directors (NEDs):

The NEDs are paid sitting fees for attending each meeting of the Board of Directors or any committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, SEBI (LODR) Listing Regulations 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending the change in the sitting fees considers various factors like size and complexity of organization, Comparison with the peer Banks and Regulatory guidelines as applicable etc.

Policy on Board Diversity:

Pursuant to SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has devised a policy on Board diversity to ensure adequate diversity in its Board of Directors. The Bank believes that diversity underpins the successful operation on an effective Board and embraces diversity as a means of enhancing the business. With a view to achieve sustainable and balanced development, the Bank sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives. A diverse Board includes and makes good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of directors.

The Bank continuously seeks to enhance the effectiveness of its Board and to maintain the highest standards of corporate governance and recognizes and embraces the benefits of diversity in the boardroom. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. In informing its perspective on diversity, the Bank also take into account factors based on its own business model and specific needs from time to time.

Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. The Policy of Board Diversity is displayed in bankswebsite.(https://www. southindianbank.com/UserFiles/file/Rupay/DISCLOSURE/Policy_ on_Board_diversity.pdf)

Board Level Performance Evaluation

The process for formal annual performance evaluation is as under:

- Committee of Independent Directors at their separate meeting evaluates the performance of MD & CEO, Nonexecutive Directors, Chairman of the Bank and the Board as a whole.

- The Board evaluates the performance of the Independent Directors (excluding the director being evaluated) and submit its report to the Nomination & Remuneration Committee.

- The Board Evaluate the performance of Board level Committees.

- Nomination & Remuneration Committee evaluate/ review the performance of each Director recommends the appointment/reappointment/ continuation of Directors to the Board. Based on the recommendation of Nomination & Remuneration Committee, Board will take the appropriate action.

The criteria for performance evaluation are as under:

Performance Evaluation of Non-Executive Directors. MD & CEO and Chairman

Participation at Board / Committee Meetings, Managing Relationship, Knowledge and skill, Personal attributes, Compliance and Corporate Governance; Leadership; Strategy Formulation, Strategy Execution, Financial Planning/ Performance, Relationships with the Board, Human Resource Management and Succession Planning, Personal Qualities; Resources; Conduct of Meetings.

Performance Evaluation of Board

Composition and Diversity; Strategic Foresight, Value Creation, Process and Procedures, Oversight of the Financial Reporting Process and Internal Controls, Oversight of Audit Functions, Corporate Governance, Corporate Culture, Monitoring of business activities, Understanding of the business of the Bank and Regulatory environment; Contribution to effective corporate governance and transparency in the Company''s Operations; Deliberations/decisions on the Company''s strategies, policies, plans and guidance to the Executive Management.

Performance Evaluation of the Board Level Committees

AUDITORS A) Statutory Auditors:

M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai, who were appointed as Statutory Central Auditors of the Bank for the year 2016-17 at the last Annual General Meeting (held on 8th July 2016) with RBI consent retiring at this ensuing Annual General Meeting and has completed their second consecutive year under the current spell. M/s Deloitte Haskins & Sells and their connected firm M/s Fraser & Ross were the statutory central auditors of the Bank for 2 terms earlier with a tenure of 4 years each with in between cooling period of 4 years each, thereby aggregating to a total period of 10 years, by conclusion of the Audit for the year 2016-17, which is in compliance the RBI circulars/guidelines. However, in the absence of 5 years continuous cooling period, the appointment of Deloitte Haskins and Sells for 2017-18 will be not exactly be in consonance with the provisions of Section 139 of the Companies Act, 2013 read with the underlying rules viz., Companies (Audit and Auditors) Rules, 2014 as regards the terms of appointment and cooling period mentioned therein. Therefore, the Board has decided to approve a panel of 3 Audit Firms for the purpose of seeking approval from the Reserve Bank of India and Share Holders in case of requirement to appoint as Statutory Central Auditor of the Bank as shown below:

1) M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai ((Firm Regn. No. 008072S)

2) M/s S. R. Batliboi & Co. LLP, Chartered Accountants, Mumbai (Firm Regn. No. 301003E/E300005)

3) M/s Walker Chandiok & Co LLP, Chartered Accountants Kochi (Firm Regn. No. 001076N/N500013)

B) Secretarial Auditors and Secretarial Audit Report:

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s SVJS & Associates, Company Secretaries, Practicing Company Secretaries, Kochi as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2016-17. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2016-17 is attached to this report as Annexure-C.

AUDIT/INSPECTION

Regular Risk Based Internal Audit (RBIA) of the Branches, Regional Offices (RO) and Departments are conducted at periodical intervals based on its risk perception. RBIA of branches has been done through web based application and risk assessment, rectification of comments etc. are evaluated, monitored and reviewed in an automated fashion.

In the back drop of rapid technological changes, Bank has initiated technology based Audit/Inspection for assessing the adequacy of internal controls and ensuring adherence to internal process and procedure as well as regulatory requirements. The Bank is having a full-fledged Inspection and Vigilance Department (IVD) and Inspection Division of IVD ensures adherence to the set rules and regulations by Branches/Regional Offices/HO Departments.

In addition to RBIA, Bank has concurrent audit system which covers selected Branches and other HO Departments including critical Departments like International Banking Division, Treasury Department, Credit Department, and other centralized processing centers. Concurrent audit of branches has been done by qualified Chartered Accountants/retired officers covering 61% of total business and 74% of total advances of the bank. The selection of the branches for concurrent audit is done in such a way that it covers Branches having substantial business and almost all isolated remote branches irrespective of its business volume. Bank is in process of implementation of web based concurrent audit system in Branches.

Bank conducts Credit Audit, KYC/AML Audit, Information System Audit, Revenue Audit, Surprise Inspection of gold & Cash and exclusive Gold Loan asset verification at Branches. Information System Audit of CBS and major applications are done by external audit firm. Besides, all the Branches are subjected to statutory audit on yearly basis. Bank has a separate Off Site Monitoring Team which monitors transactions using alerts generated from software on certain rules set. Based on these alerts, clarifications are called for from branches wherever necessary. The branch operations are centrally analyzed for ensuring compliance to KYC/AML/CFT guidelines with the help of AML software. Fraud Risk Monitoring Cell (FRM Cell) is established to prevent fraudulent activity in the customer accounts through card related activities, by generating rule based alerts.

Internal inspectors conduct inspection at regular intervals and such reports are placed to Audit Committee at Executive level/ Audit Committee of Board (ACB) as the case may be for review. Corrective steps are taken to rectify the lapses/irregularities pointed out. Inspection Division also carries out independent evaluation of Bank''s internal financial controls in terms of Companies Act, 2013.

EXPLANATION FOR AUDITORS'' COMMENTS IN THE REPORT

The Statutory Auditors Report and Secretarial Auditors Report for the year 2016-17 does not contain any qualification.

Corporate Governance

A separate report profiling Corporate Governance as required under applicable regulations of the SEBI (LODR) Regulations

2015 and a certificate from M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Bank, are annexed to this Report.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2017 in form no. MGT-9 is attached to this report as Annexure-D.

Business Responsibility Report

Dividend Distribution Policy

In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the same is attached as Annexure F. The Policy is hosted on the website of the Bank and can be viewed (https://www.southindianbank.com/content/ viewContentLvl1.aspxRs.linkIdLvl2=215&LinkIdLvl3=2672&link Id=2672)

Subsidiary Companies

The Bank did not have any Subsidiary/Joint Ventures/Associate Company during the previous financial year. The Board of Directors has formulated a policy for determining ''material'' subsidiaries pursuant to the provisions of the Listing Regulations. The same is displayed on the website of the Bank (https://www. southindianbank.com/content/viewContentLvl1.aspxRs.linkIdLvl2 =215&LinkIdLvl3=781 &linkId=781).

Related Party Transactions

The Board of Directors has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspxRs.linkIdLvl2=215&LinkIdLvl3 = 782&linkId=782). Since there were no Related Party transactions, Form AOC-2 is not applicable to the Bank.

Material Changes and Commitment Affecting Financial Position of the Bank

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2017 and the date of the Directors'' report i.e. May 26, 2017.

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

Strictures and Penalties

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

Management Discussion and Analysis Report

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

Particulars of Loans, Guarantees or Investments

Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except subsection (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the Financial Statements as per the applicable provisions of Banking Regulation Act, 1949.

Directors'' Responsibility statement

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

(a) in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2016-17 and of the profit of the Bank for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts for the financial year ended on March 31, 2017, on a going concern basis;

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

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

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Bank''s shares are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Bank''s shareholders and customers for their continued support, patronage and goodwill. The Board further places on record its appreciation for the valuable services rendered by M/s Deloitte Haskins & Sells, Statutory Auditors, during their tenure. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank. The Bank gladly acknowledges this fact and thanks all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

By Order of the Board

(SALIM GANGADHARAN) (V. G. MATHEW)

CHAIRMAN MANAGING DIRECTOR & CEO

DIN : 06796232 DIN : 05332797

Place : Nedumbassery Date : May 26, 2017

Mar 31, 2016

The Board of Directors is pleased to place before you, the 88th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2016 and the Profit and Loss Account for the year ended March 31, 2016.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2016 are as follows:

Key Parameters Rs. in crore

2015-16 2014-15

Deposits 55720.73 51912.49

Gross Advances 41470.79 37725.65

Total Gross Business 97191.52 89638.14

Operating Profit 879.28 816.26

Net Profit 333.27 307.20

Capital & Reserves 3841.93 3589.40

Capital Adequacy (%) - Basel-III 11.82 12.01

Earnings Per Share (EPS) :

(a) Basic EPS (in Rs.) 2.47 2.28 [face value Rs. 1/-]

(b) Diluted EPS (in Rs.) 2.47 2.27 [face value Rs. 1/-]

Book Value per Share (in Rs.) 28.45 26.59 [face value Rs. 1/-]

Gross NPA as % of Gross Advances 3.77 1.71

Net NPA as % of Net Advances 2.89 0.96

Return on Average Assets (%) 0.55 0.56

FINANCIAL PERFORMANCE

Profit

The Net Operating Income (Net Interest Income and other income) of the Bank increased by Rs.163.82 crore (8.79%) from Rs.1,863.30 crore to Rs.2,027.12 crore. The growth in Non Interest Income was Rs.20.35 crore (4.09%) during the year. The Bank made an Operating Profit of Rs.879.28 crore as against Rs.816.26 crore during the previous year and had made a net profit of Rs.333.27 crore during the year as compared to a net profit of Rs.307.20 crore during the previous year.

The Operating Profit for the year under review was Rs.879.28 crore before taxes and provisions as against Rs.816.26 crore (after considering the impact of policy change in depreciation) for the year 2014-15. Net profit was Rs.333.27 crore and the profit available for appropriation was Rs.428.49 crore as per details given below:

(Rs. in crore)

Profit before depreciation, taxes and provisions 879.28

Less: Provision for NPI 13.40

Provisions for Non- Performing Assets 391.90

Provision for FITL (25.40)

Provision for Depreciation on 29.81 Investments

Provision for Income Tax 176.40

Provision for Standard Assets (0.79)

Provision for Restructured Assets (36.90)

Provision for Other Impaired Assets 2.64

Provision for Un-hedged Forex Exposure (5.05) 546.01

Net profit 333.27

Brought forward from previous year 95.22

Profit available for appropriation 428.49

Appropriations (Rs. in crore)

Transfer to Statutory Reserves 83.32

Transfer to Capital Reserves 24.53

Transfer to General Reserves 50.00

Transfer from Investment Reserve (10.05)

Transfer to Special Reserve 25.72

Proposed Dividend 67.52

Dividend Tax on Proposed Dividend 13.74

Balance carried over to Balance Sheet 173.71

Total Appropriation 428.49

Dividend

The Board of Directors recommended a dividend of 50% (tax- free in the hands of shareholders other than Individuals whose dividend income is above Rs.10 lakh), i.e., @ Rs.0.50 per Equity Share of face value of Rs.1/- per share.

expansion programme

The Bank had been successful in widening its network across India with 834 branches, 42 extension counters and 1287 ATMs. The Bank has opened 29 new offices (12 branches and 17 extension counters) and 87 ATMs across the country during the financial year 2015-16. The branch network now covers 30 States/Union Territories.

The Bank plans to open a maximum of 50 new offices (with a mix of Branches and Extension Counters) and 150 ATMs (including 50 Cash Deposit Machines) during the financial year 2016-17.

CAPITAL & RESERVES

The Bank''s issued and paid up capital stood at Rs.135.03 crore as on March 31, 2016. During the year, 157005 stock options granted under Employee Stock Option Scheme had been exercised by eligible employees.

The capital plus reserves of the Bank has moved up from Rs.3,589.40 crore to Rs.3,841.93 crore on account of exercise of options and plough back of profits during the year.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- BASEL III

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2016 according to Basel III guidelines is 11.82 as against the statutory requirement of 9.625 (including Capital Conservation Buffer). Tier I CRAR constitutes 9.83 while Tier II CRAR works out to 1.99.

The Bank follows standardized approach, Standardized Duration approach and Basic Indicator approach for measurement of capital charge in respect of credit risk, market risk and operational risk respectively.

LISTING AGREEMENT WITH STOCK EXCHANGES

The Bank''s shares continue to be listed on BSE Ltd. and The National Stock Exchange of India Ltd. During the year, the Bank has executed a uniform Listing Agreement with BSE Ltd. and The National Stock Exchange of India Ltd. pursuant to SEBI (LODR) Regulations 2015. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2016-17.

business ACHIEVEMENTS

The Bank has achieved a Gross Business of Rs.97,191.52 crore, consisting of Total Deposit of Rs.55,720.73 crore and Gross Advances of Rs.41,470.79 crore as on March 31, 2016.

Deposits

The total deposits of the Bank increased from Rs.51,912.49 crore as on March 31, 2015 to Rs.55,720.73 crore registering a growth of 7.34%.

The break-up of the deposit as on March 31, 2016 is as under:-

Amount (Rs. in crore) % to total Deposits

Current Deposits 1983.13 3.56

Savings Deposits 10475.84 18.80

Term Deposits 43261.76 77.64

Total 55720.73 100.00

The Bank during the year focused on Core Deposit, the segment witnessed a growth of 14.24%. Savings Bank Deposits grew by 18.12% on a year on year basis. During the financial year 2015-16, the Bank had opened 3.89 lakh new Savings Bank Accounts and 1 1,035 Current Accounts. The Bank, as a part of effective cost management of liabilities, took steps to shed Bulk Deposits and Certificate of Deposit of Rs.2,055.43 crore. NRI Deposits has grown by 25.54% to Rs.14,303.09 crore.

The Bank has accorded priority to meaningful financial inclusion during the period under reporting while opening new deposit relationships.

Advances

During the year, the gross advances of the Bank registered a subdued growth of 9.93%, to touch Rs.41,470.79 crore. Low growth reflects, inter-alia, slow off take of credit and also a focused approach towards credit underwriting to ensure quality of assets. Total Priority Sector advances as at the end of the financial year stood at Rs.19,144.65 crore, constituting 47.44% of the Adjusted Net Bank Credit (ANBC). Exposure to agricultural sector amounted to Rs.7,902.37 crore forming 19.58% of ANBC as at the end of the financial year. Break-up of exposure under Priority Sector is furnished below:

Amount (Rs. in crore)

Agriculture & Allied activities (including 7902.37 investments in RIDF)

MSME 8610.58

Other Priority Sector 2631.70

Total Priority Sector 19144.65

INVESTMENTS

Bank''s gross investment portfolio stood at Rs.14,618.93 crore as on March 31, 2016 compared to Rs.14,086.14 crore as on March 31, 2015, registering a growth of 3.78%. Investment Deposit ratio moved from 27.13 as on March 31, 2015 to 26.24 as on March 31, 2016.

Profit on sale of investment for FY 2015-16 stood at Rs.136.54 crore. Total interest income from investments for the year was Rs.1,007.78 crore. Yield on Investments (Profit interest earned to average investments) during FY 16 was 8.48%.

non-performing ASSETS (NPA)

During the year 2015-16, as a result of focused and sustained efforts for early recovery of NPAs, through prompt and effective measures under the SARFAESI Act, follow up of recovery cases pending before DRTs and civil courts, one time compromise settlements of accounts, asset sale to ARC, etc., Bank could recover NPAs to the extent of Rs.451.38 crore (recovery including up-gradation Rs.134.63 crore), as against the target of Rs.350.00 crore. Special thrust was given on selection and underwriting of credit, adequate due diligence and improvement in credit administration to ensure improvement in the quality of assets.

During the year, the Gross NPA of the Bank has increased from Rs.643.45 crore as on March 31, 2015 to Rs.1,562.36 crore as on March 31, 2016 and Net NPA increased from Rs.357.05 crore as on March 31, 2015 to Rs.1185.26 crore as on March 31, 2016. Despite improvement in recovery of NPAs, fresh slippage to the tune of Rs.1,342.52 crore during the year led to increase in the level of gross NPA to Rs.1,562.36 crore. In terms of percentages, the GNPA increased from 1.71% as on March 31, 2015 to 3.77% as on March 31, 2016 and Net NPA increased from 0.96% as on March 31, 2015 to 2.89% as on March 31, 2016.

INFORMATION TECHNOLOGY (IT) and IT ENABLED SERVICES

Ever growing dependence on technology and digitalization has changed the contour of delivery channels of financial services in the Industry. Customers, today have the convenience of technology to Bank anywhere, anytime.

Information Technology and its huge potential to offer innovative solutions have paramount importance for growth and sustenance of the Banks. The demand and expectations of the customers have increased and the turnaround time for rolling out a technology product in banks has visibly diminished, which essentially calls for a robust, agile and adaptable system in place to execute projects right from initiation to consumption. The Bank, an early adopter of technology with a view to providing safe,secure and convenient banking facilities to its customers, has introduced host of services and facilities for enhancing customer satisfaction. The Bank has been successfully functional with Finacle Core Banking Solution (CBS) from Infosys for several years and is the third Bank in the country to have migrated the latest Finacle 10 version from the old Finacle 7 version. Being one among the first banks to do so, ensures that the Bank would have a very robust and renewed platform, which can be leveraged for great customer service.

In its constant endeavour to ensure customer delight, the Bank has introduced.

- ATM network across the country, which supports MasterCard, VISA and RuPaycards allowing customer quick access to money

- All variants of Debit Cards to customers (VISA, MAESTRO and RuPay) ensuring cashless purchases

- Mobile Banking and M-commerce (with support for other bank money transfer through IMPS, P2A, P2M (issuer), Unstructured Supplementary Service Data (USSD code *99#), Missed call services for retrieving balance through SMS etc) for next generation customers

- Investment in equity through primary and secondary market using ASBA (Application Supported by Blocked Amount), Demat Accounts and tie-up with leading broking firms through online trade, to help customers diversify their investment portfolio.

- Foreign inward Instantaneous remittance with own payment Hub system which is real-time integrated with exchange houses abroad, so as to allow Bank''s diaspora to send funds to their near and dear back home.

- Point of Sale(POS)terminals to merchant customers, who would then be able to digitize their collections, without resorting only to cash receipts.

- Portfolio Investment Scheme for NRI Community, allowing them to invest in Indian equity market

- Central Plan Scheme Monitoring System (CPSMS), which links to the DBT (direct beneficiary transfer) for instant receipt of Govt. subsidies to the beneficiaries of various Govt. schemes

- Kiosk based Financial Inclusion Solution to enable the Bank reach nook and corner of the country, even in remote villages using technology enabled tools.

- Cash Deposit Machines, for customers who wish to deposit money in their accounts quickly at any time.

- Advanced version of Internet Banking Application with augmented security controls and enhanced customer friendly features, which offers 24/7/365 banking.

- Captive Security Operation Centre (CSOC) in line with GKC (Gopalakrishna Committee recommendations of RBI for monitoring and management of IT Systems) which does round the clock monitoring of security attacks.

- Fraud Risk Management Solution (FRM) for ATM / POS / CNP channel to ensure customer is alerted when unauthorized transactions happen in their accounts.

- Business Process Management solution leading to a paperless environment and reduced turnaround time for customer service (Liabilities and Assets Opening)

- Payment Options such as Automated Clearing House (ACH) Payment Service, Cheque Truncation System, RTGS/ NEFT etc.

- Account Opening for NRI/MSME directly from website IT initiatives/Solutions embarked during the year

The following list demonstrates a few of the IT enabled services/ solutions that the Bank has launched during the year to serve its Customers in a better and efficient way.

- Core renewal of CBS to Finacle 10, with enriched features leading to increased internal efficiency of operations, augmented control over various functions through stream lined processes.

- SIB Mirror mobile application (developed in house) with innovative features

- E-KYC solution for direct Aadhar based services

- Graphical Intelligent online manual (GIEOM) for online training of staff

- Loan Origination System to digitize and speed up turnaround time

- Launching Prime Minister Schemes

a. Pradhan Mantri Jeevan Jyothi Bheema Yojana (PMJBY)

b. Pradhan Mantri Suraksha Bheema Yojana (PMSBY)

c. Atal Pension Yojana (APY)

d. Sovereign Gold Bond Scheme (SGB)

- Green PIN Project which allows customers to create their own debit card PIN in any SIB ATM, without the need of a paper based PIN.

- Introducing OTP based 3-D secure services for online purchases using debit cards.

- Institutional Fee Payments - in multiple modes (Branch, Card based, ATM based, Web-Based, Virtual Account Number based etc.)

- Issuance of RuPay EMV Card, being one of the first banks to do so.

- Issuance of MasterCard Titanium

- Issuance of Master Card World

- Enabling e-commerce transactions in Rupay cards

- Enabling Visa Fast Fund transactions for card to card transfer

- Discover Card Acceptance in Bank''s POS machines

- Issuance of Rupay Platinum EMV

- SIB Rewardz, a exciting loyalty program for customers

- NPCI-VAS:Mobile Banking Registration & Aadhaar Number seeding Transaction through ATM

- IRCTC Integration for online ticket booking

- CRAYONS -Online user creation Process for self registration of Internet Banking through website

- Email OTP using Missed Call, for customer convenience

- IMPS Foreign Inward Remittance - to receive funds 24/7 from exchange houses

- Enabled Generate OTP and Change MPIN options through National Unified USSD Platform in mobile banking

- ISO 27001 implementation for DC/DR and IT operations.

- Technology solution for Basel II advanced approach in Risk Management

- 24X7 Toll Free Customer Support Center

Information Security and Risk Management

As banks adopt sophisticated technology to face challenges in the emerging realities of banking, they are increasingly exposed to technology risks. It is therefore imperative for each bank to work out appropriate IT risk management strategies to secure its most vital information asset and ensure that related risk management systems and processes are strengthened on continual basis to secure both present and future banking activities. Bank''s Information Security Policy and other IT Policies - IT Operation Policy, IT Governance Policy, IT outsourcing Policy and Information Security systems have already taken these aspects into consideration. Further, the Information Security of banking IT functions has been strengthened through implementation of a captive SOC (Security Operation Centre).

The Bank has been providing awareness on e-threats to its customers and staff on a continued basis so that both proactive and reactive measures can be initiated, as deemed appropriate, to mitigate potential risks associated with e-threats.

The Bank has been implementing the stipulations and guidelines articulated and issued by RBI based on the working group recommendations on Electronic Banking Technology Risk, Information Security and Cyber Frauds as part of the IT governance programme (Gopalakrishna Committee Report).

IT Training

During the year, many training programmes had been attended by the Bank''s officers in premier institutions such as IDRBT, NIBM to keep themselves abreast with the advancements in IT, Information Security, CRM etc. Further, during the financial year 2015-16, the Bank has conducted training programme on Finacle-10 and imparted training to 1,173 officers and 784 clerks.

Gopalakrishna Committee Recommendations Management Philosophy & Measures

Gopalakrishna Committee Recommendations on Information Security, Electronic Banking, Technology Risk and Cyber Frauds as applicable to the Bank have been taken up for enforcement and implementation. Effective measures have been taken to address the identified gaps in each area such as IT Governance, Information Security, IT Service outsourcing, IS Audit, IT Operations, Cyber Frauds, Business Continuity Plan (BCP), Customer Education and Legal issues. The IT Organization setup has been redrawn to suit the functions/roles specified in the recommendations with segregation of duties. Technology, Development, IT Operations and IT Assurance functions have been clearly divided and now independently headed.

IT Strategy Committee of the Board, IT Steering Committee, Information Security Committee and Chief Information Officer (CIO) are in place, and Chief Information Security Officer (CISO) reports independently to the Head of Risk Management.

Revamped Information Security policy incorporating the various guidelines and stipulations mentioned in the report has been approved by Board and is in place. Presently the policy is under the process of review to make it in alignment with ISO 27001 guidelines. In addition, other IT Policies such as IT Operation Policy, IT Governance Policy and IT Outsourcing Policy are also enforced.

The progress of implementation of GKC recommendations are reviewed by IT Strategy Committee of Board and Board of Directors on quarterly basis. The major items which are under process to achieve compliance to GKC recommendations are as follows:

1. Comprehensive Fraud Risk Management.

2. ISO 27001 Implementation

The full compliance with the GKC recommendation will be realized in a time bound manner with creation of various infrastructural support required for the same.

transaction banking department

The Transaction Banking Department of the Bank has commenced its activities in a modest way under the name and style of CPC - Central Processing Centre in Thrissur in May 2015. The prime objective of CPC is to centralize the back office operations, which had been happening in branches and offices with a view to bring standardization, compliance and scalability. The operations were commenced with liability portfolio - Customer Creation and CASA opening covering SB, CD and NRI. In August 2015, a new Department namely Transaction Banking Department (TBD) has come in to being and CPC got attached to it as one of its divisions. Thereafter TBD has widened its functional operations and at present it has 6 divisions as given below:

Retail Liability Operations (TBD.CPC) - Customer Creation and Opening CASA, PIS

Retail Asset Operations (TBD.CDMC) - Opening Loan Accounts, LC and BG

Payment & Settlement Operations - RTGS/NEFT, Aadhaar (TBD.PSD) Mapping

Service Operations (TBD.Service) - Delivery Channels (Debit Card, Net Banking, Mobile banking, Welcome kit)

Support Operations (TBD. Support) - Channel Reconciliation Audit & Compliance Reporting - Rectification of (TBD.A&C) Internal/External Audit comments

It functions from multiple locations. The main centre is located at Kalamassery, Ernakulam, Kerala and the first alternate centre has been functional in Coimbatore.

COMPLIANCE DEPARTMENT

The Bank has institutionalized a strong compliance culture and mechanism across the organization, pursuant to its strategic goals of transparency and trust, among all its stakeholders. The Bank has a dedicated Independent Compliance Department headed by a Dy. General Manager for ensuring regulatory compliance, across all its businesses and operations. The key functions of this department includes, dissemination of key regulatory updates affecting the various business verticals of the Bank, review of processes from a regulatory compliance perspective, provide guidance on compliance-related matters, impart training to employees on compliance aspects, among others.

BUSINESS DEVELOPMENT DEPARTMENT

In order to support and monitor the existing branch network and to provide continuous focus on Business Development of the Bank, the Bank has formed an exclusive full-fledged Business Development Department by segregating the "Business Monitoring Cell" from Planning & Development Department with effect from January 7, 2016.

Business Development Department is providing continuous mentoring for both the Deposit and Advance portfolio of the Bank, monitoring of Green Channel Branches, review of daily/ weekly business position of all ROs/Branches, conducting of conference & meetings to promote Business Growth etc.

RISK MANAGEMENT

Risk is an integral part of banking business. Managing risk is fundamental to banking and is the key to sustained profitability and stability. Management of risk aims at to achieve best trade-off between risk and return and to ensure optimum Risk Adjusted Return on Capital (RAROC). Sound risk management is critical to a Bank''s success. Business and revenue growth have therefore to be aligned in the context of the risks embedded in the Bank''s business strategy and balance sheet of the various types of risks the Bank is exposed to, the most important are credit risk, market risk and operational risk. The identification, measurement, monitoring and mitigation of risks continue to be key focus areas for the Bank. The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level through quantitative examinations of embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously evaluated and benchmarked against the best practices followed in the industry. Through continuous refinement/improvement of the risk measurement/management systems, the Bank aims to ensure regulatory compliance as well as better return on and utilisation of capital.

Risk Appetite

Risk appetite of the Bank refers to the level of risk that a banking organization is prepared to accept in pursuit of its financial and strategic objectives, before action is deemed necessary to reduce the risk. It can be determined through the assessment of risk taking capabilities of the Bank in the form of sound risk mitigation techniques and capital base. Risk Appetite forms a key input to the business and capital planning process by linking business strategy to risk appetite. Risk appetite of the Bank is defined by the Board of Directors through the Risk Appetite Statement which encompasses the general risk appetite of the Bank as well as risk appetite with respect to specific categories of risks. Qualitative elements, quantitative measures, and risk tolerances as well as targeted limits for various categories of risks are included within the risk appetite and are monitored on a quarterly basis. The framework ensures that aggregate risk exposure of the Bank is always within the desired risk bearing capacity.

Risk Management Policy Framework

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The Bank has put in place an integrated risk management policy which ensures independence of the risk governance structure. The details of risk management practices are provided in Management Discussion and Analysis Report annexed to the Director''s Report.

Compliance with Basel III and Basel II framework

In compliance with regulatory guidelines on Pillar I of Basel III norms, Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address the issues of Pillar II, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), integrating capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk, pension obligation risk etc. the Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline of Basel II and Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a more consistent and comprehensive manner.

The Bank has initiated steps for moving over to Advanced Approach under the Basel II framework for CRAR computation in line with the relevant guidelines issued by Reserve Bank of India. In this regard, consultants and system implementation partners have been engaged and the implementation process has started.

INTERNATIONAL BANKING

The total forex business turnover of the Bank for the year ended 31st March 2016 was Rs.17,7381.86 crore (comprising Merchant Turnover Rs.12,362.72 crore and Interbank Turnover Rs.1,65,019.14 crore). The Bank earned an exchange profit of Rs.45.18 crores recording an increase of 42.67%. The Bank has also earned a profit of Rs.0.32 crores from bullion business and has sold 6.037 kg of gold during the FY 2015-16.

At present the Bank is having rupee inward remittance arrangement with 5 Banks and 31 Exchange Houses and turnover for the year ended March 2016 was Rs.7,390.02 crore registering an increase of 2.92% as compared to the previous financial year. During the FY 2015-16 the Bank continued providing managerial support to M/s. Hadi Express Exchange, UAE. The Bank has presently deputed 19 officers of the Bank to manage the operations of Hadi Express Exchange. Considering the scope in improving Bank''s remittance business through arrangements with EH''s, the Bank has deputed four officers to UAE with UAE Exchange Centre, Al Ansari Exchange and Al Fardan Exchange.

The International Banking Division of the Bank has initiated the centralization of trade finance operations in stages. By centralized trade finance operations at a single location, deploying talented sources, Bank will be able to impart professional services to its trade finance customers ensuring strict FEMA / RBI guidelines. Presently all inward remittances have been centralized and centralization of outward remittances is in progress. Rest of the trade finance operations is scheduled to be completed in due course.

NRI PORTFOLIO

The NRI deposits constitute 26% of the total deposits and 30% of the Core Deposits of the Bank. The Bank is having a separate NRI Division, in Kalamassery, Kochi, headed by an Assistant General Manager and its functions and working are monitored by a Deputy General Manager and General Manager in the Marketing Department of the Bank. The dedicated officers and staff working in NRI Division are rendering support and assistance to NRIs and all the Branches gave an impetus to the growth of NRI business of the Bank. The Branch level NRI Relationship Officers and the NRI Desk functioning in major NRI business Branches are giving special care and attention to all of the Bank''s NRI patrons.

NRI Division is also taking care of NRE/NRO welcome kit account opening through which instant activation and operation of Account is possible. Such accounts are available at all the Branches of Hadi Express Exchange, UAE; selected SIB branches and to the marketing officers deputed to various Exchange Houses in UAE. The welcome kit account opening is widely accepted in the market and added momentum to the NRE/NRO SB Accounts opening, which improves the share of low cost Deposits of the Bank. The NRI CASA deposits (NRE/NRO SB and CD) constitute 24% of the total CASA of the Bank.

The online NRE/NRO account opening facility available in Bank''s website is enabling NRIs across the world in opening NRI accounts in your Bank at the comfort of their home/office. The Skype calling (Skype id: talk2nricell) in NRI Division make possible for NRIs for an audio video talk with officials working in Head Office NRI Division. In order to have a personal interaction and get together with the top executives of the Bank, NRI meets were held at eleven centers in Kerala. All these efforts coupled with the service and efforts of SIBIANs working all over India resulted in achieving 26% growth in the total NRI Deposit during the financial year 2015-16.

TRAINING

The Bank accords utmost importance to the process of skill enhancement. Training Programme are conducted at SIB Staff Training College (SIBSTC), Thrissur and at 6 Regional Training Centres (RTCs) at Regional Office for enhancement of professional skills of the staff. The training programmes are designed to develop competency of operating personnel while imbibing the SIBIANS'' spirit and culture through an effective learning process. The success of these programmes reflects on the enhanced organizational productivity. SIBSTC and the RTCs identify gaps in skill of the personnel and provide learning to them for qualitative improvement. During the financial year 2015-16, the Bank has imparted training to 3,203 officers, 1,358 clerks and 121 sub staff in various aspects of banking operations. Further, during the financial year 2015-16, the Bank has conducted training programme on Finacle-10 and imparted training to 1,173 officers and 784 clerks. Thus, the Bank has provided training to a total of 6,639 personnel, which is about 85.33% of total staff strength of 7,780 as on March 31, 2016. This is in consonance with the Bank''s vision towards continuous up-gradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations.

MARKETING

The Marketing Department of the Bank plays a critical role in generating new business for the Bank through customer acquisition. The department also takes initiatives in product development and promotion by creating awareness on products and by driving customer-centric campaigns.

The products and services under the domain of Marketing Department can be broadly classified as Technology, Third Party Products and Value added services.

Technology Products of the Bank

The Bank has effectively leveraged technology and introduced several variants of traditional products and new e-based services, tailor-made to the diversified needs of customers. Technology services like ATM/Debit cards, internet banking, mobile banking etc. have transformed the customers'' banking experience from branch banking to anytime, anywhere banking. Bank has set up a separate Digital Products Division to take care of product development, process improvement and promotion of all technology products.

- Any Branch Banking System: All the branches of the Bank are inter-connected and are capable of providing online, real-time transactions to its customers. As information is centralized and updates are available simultaneously at all places, single-window service has become possible, leading to effective service-delivery to customers. Customers can Deposit/Withdraw freely without any tariff charge from any branch.

- SIB ATM cum Debit Cards: The Bank is offering Visa, Master and RuPay debit cards to its customers. Using SIB debit cards, Bank''s customers can withdraw cash through ATMs of any Bank in India and international usage is allowed through EMV chip cards. The Bank has also enabled its debit cards for POS/Online transactions.

Co-branded Foreign Currency Travel Card launched in association with Axis Bank is specifically designed for customers who travel abroad and is available in 8 foreign currencies - USD, GBP, AUD, EUR, CHF, CAD, SGD and JPY.

The Bank is issuing only EMV Chip cards, from February 1, 2016 facilitating highly secure international card transactions. Currently Bank issues Visa Classic EMV, RuPay Classic EMV, RuPay Platinum EMV, MasterCard Titanium EMV and MasterCard World EMV cards which can be used both in International and Domestic ATM/POS/ONLINE. Green PIN facility is available for all Debit cards, by Bank''s Customers can Self generate/reset their ATM PIN at any SIB ATM counters and the service is available 24 x 7. This project is part of SIB''s Green initiatives and helps to save paper.

SIB Rewardz is the loyalty program from SIB, by which customers can earn reward points while shopping using their SIB debit cards. These points can be redeemed for a number of exiting products and services through the portal www.sibrewardz.com. and through offline stores.

Customers are also given the option of 3D secure password or One Time Password (OTP) to complete their Online transactions using SIB Debit cards, thus making the process a lot more convenient and secure.

VISA Fast Funds is a service offered to the customers to receive money to their VISA Debit card. Customers can receive money instantly to their VISA Debit card any time 24 x 7 without any additional cost.

- Internet Banking: The internet banking service under the brand name"SIBerNet" has helped to position the Bank as a technology-driven Bank offering superior banking services to both retail and corporate customers. With new online service called CRAYONS, now customers can register and activate for SIBerNet service through online without visiting the branch. Increased transactional limits, Fund Transfers (RTGS/NEFT/Within Bank), online bill payments, Online deposit opening, online offerings to deity and also to avail booking of doctors online, Block Debit card, stop payment of cheque online, Direct IRCTC ticket booking, KSEB bill payments, Apply for IPO (Initial Public offering through SIBerNet-ASBA) retrieval of forgot SIBerNet User ID etc. are a few of the services offered through SIBerNet. In addition to these, the Bank has also introduced Direct and Indirect Tax Payment facility for its retail and corporate Customers.

- Mobile Banking: Banks are in process of transforming Mobile Banking application into a Digital Bank. Your Bank''s Pride,'' SIB Mirror'', an in-house built Mobile banking application, which has become a magic in the Mobile banking space and a symbol of technological excellence among Mobile banking Applications .It has been enriched with lot of Unique features such as Shake to Know Balance, Shake to Transfer funds, Augmented Reality, Click to Share Account Info, along with E-Statement of all accounts (SB/ CD/Loan/Deposit), Fund Transfers, Mobile/DTH recharge, ATM Card Block, Social Money, Cheque status, Clearing cheque info, Complaint module etc. and it is available in all platforms. ''SIB Mirror'' has won third prize in IDRBT Banking Application Contest 2016.

Other mobile banking services offered by the Bank areSIB M-Pay, SMS Banking and SIB missed Call service. SIB M-Pay allows customers to make instant inter/intra Bank fund transfers 24X7. SIB M-Pay uses NPCI''s IMPS fund transfer mechanism to transfer funds instantly to other Bank accounts. Customer are also able to do online/merchant payments, access m-passbook and other value-added services like mobile recharge and DTH recharge. Through SIB Missed call service, the customers are able to know the balance with just a missed call.

- Point of Sale (POS): The Bank, in association with M/s. Atos Worldline India Pvt. Ltd. is offering two types of POS terminals - PSTN (wired terminal) & GPRS (wireless). Atos is the market leader in India in this segment and the primary service provider for POS acquiring services to a number of leading public sector and private sector Banks in the country.

Third Party Products

To cater to the needs of a diverse customer base, the Bank has made arrangements with several companies to distribute products like insurance, pension and mutual funds to customers.

Insurance (Life/General): The Bank acts as a corporate agent for the distribution of insurance products of both M/s Life Insurance Corporation of India and M/s Bajaj Allianz General Insurance Company for life insurance and general insurance respectively.

Mutual Funds: Mutual Fund is a popular form of investment since it provides the advantages of professional portfolio management and dividend reinvestment. The Bank has tie up with 14 leading Mutual Fund companies thereby offering a variety of mutual fund products to customers.

Bonds: The Bank has been enrolled as a Channel Partner for the distribution of bonds issued by different companies, through Bank''s tie up with IFIN - a subsidiary of IFCI (Industrial Financial Corporation of India) Financial services Limited. Through this tie up the Bank has been enrolled as a channel partner of IFCI for the distribution of capital gain bonds and tax free bonds.

Depository Services: The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form in demat account with M/s Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank offers SIBerTrade - the online trading facility to buy /sell stocks for its domestic customers from stock exchanges in India through tie-up with M/s. Geojit BNP Paribas Financial Services Ltd. & M/s. Religare Securities Ltd. SEBI has also registered the Bank as Self Certified Syndicate Bank (SCSB) for accepting application under Application Supported by Blocked Amount (ASBA) through all the branches of the Bank. ASBA enables the Bank''s customers to apply for IPO/FPO, rights issues etc. by marking a lien on the account instead of actual debit at the time of applying, which is more beneficial for the customers. Bank is also offering Portfolio Investment Scheme (PIS) - an extensive share trading facility for its NRI customers through tie-up with M/s. Geojit. Under PIS, NRI customers can directly invest in the Indian securities market through recognized stock exchanges under repatriable/non-repatriable basis.

New Pension System: The Bank acts as a Point of Presence to provide services to subscribers of New Pension System introduced by Pension Fund Regulatory and Development Authority (PFRDA). All branches of the Bank are designated for collecting NPS applications and contributions. An additional tax benefit of Rs. 50000/- under Sec 80 CCD (1B) was introduced for NPS contributions. APY was introduced by Govt. of India in place of NPS Lite providing minimum assured pension from Rs.1000 to Rs.5000 to subscribers is also available to Bank''s customers.

PAN Application servicing: The Bank has made arrangement with M/s UTI Technology Services Ltd. (UTITSL) for servicing applications for PAN card. On an average the Bank processes 15,000 applications per year.

sIB E-Pay: In association with BSNL, the Bank is facilitating the payment of BSNL Landline bill of its customers through their accounts maintained with the branches. A customer can avail this facility by submitting a mandate form at the branch where the account is being maintained. Once registered, the BSNL landline bill of the customer will be automatically debited from the customer''s account every month. The key feature of this facility is that it is totally hassle free and is offered free of cost to the customers.

Cash Management service (Premium Collection): The Bank is offering Cash Management Service (Premium Collection) to customers in association with Tata AIG, Exide Life Insurance Co. Ltd (formerly known as ING Vysya) and ICICI Prudential Life Insurance Co. Ltd. Under this arrangement, Bank''s customers as well as walk-in customers can remit life insurance premium through branch counters. This facility is offered free of cost to customers.

Centralized Direct Debit service: The Bank has entered into tie-up with leading aggregator M/s. Billdesk Services for Centralized Direct Debit arrangement. Through this tie up Bank''s customers will be able to make regular payments like monthly/ quarterly/half yearly payments of Mutual Fund SIP investments/ Loan EMIs (Vehicle/Equipment Loans)/Insurance premium etc. by directly debiting their account and thereby making the payments to various billers/institutions. This facility is available to all customers irrespective of their branches being located in ECS/non-ECS locations. The Bank has similar arrangements with 3 companies - TVS Credit Services, Sundaram Finance Ltd and Shriram City Union Finance.

TOLL FREE: The Bank has subscribed to toll free numbers from Idea Cellular Ltd. (Toll Free number- 1800 843 1800) and BSNL (Toll Free Number- 1800 425 1809) to enable customers to contact the Bank without incurring any cost. In addition, a land-line connection dedicated for international customers is also available. Toll free centre is now functioning in 4 shifts, 24 x 7 with staff members who are capable of handling multiple languages. In addition to this a channel support team is working 24 x 7 at the same premises who are focused to support and escalation of issues related to technology products.

Marketing and promotional activities of the Bank are vital in identifying customer needs and designing differentiated products to cater to those needs. While the department is keen to introduce new and varied products, facilitating customer adoption and providing customer assistance assumes equal significance during its operation. The Bank strives to comply with regulatory requirements during the entire sales process, and thereafter during support.

Visibility Enhancement initiatives

The Bank has undertaken many brand promotion initiatives in various media like Newspaper, Television, Radio, hoarding and online social media. Outdoor branding was mainly focussed in major metros like Bangalore, Delhi, Chennai and Hyderabad by the way of branding bus shelters and by placing hoardings at prime locations. The Bank had branded Ernakulam South Railway station in Kerala and have introduced innovative branding in NMMT Volvo bus in Mumbai. The Bank has conducted two press conferences and more than 10 press releases on major product launch or events done by the Bank. Two television commercials were produced during this financial year starring Bank''s Brand Ambassador Sri Mammootty. These TV commercial were launched in all the prominent TV channels in Kerala and also in the main English Finance/Business channels for Bank''s brand promotion. Subsequently the Bank has also aired its TVC in major high end theatres of metro cities during the launch of Film ''Dilwale''. During the national pre budget and Budget period the Bank has aired its TVC in the channels like CNN IBN, CNBC, Times Now, ET now and Zee Business. FM radio advertisement for gold loan promotion was done in the leading FM stations of the cities Chennai, Coimbatore, Bangalore and Hyderabad. Also the Bank had joined national campaign of CNBC named "Inside Kerala" that has established the Bank''s national brand presence. The Bank had also sponsored the 35th Annual National management Convention of Kerala Management Association. The Bank had published its corporate advertisement starring Sri Mammootty in main dailies during Valentine''s Day and product promotion of SIB mirror. The Bank had associated with Global media events for the programme ''Golden Achievement Awards Dubai'' 3rd Edition 2015 that had good coverage in Middle East. Interview with MD and CEO was done by leading dailies like Business Line, Mathrubhumi and The New Indian Express, which enhanced your Bank''s brand image in the market.

The Social Media arm of the Bank functioning in Marketing Department constantly launches various brand and product promos in the diverse social media platforms maintained by your Bank. Presently your Bank maintains official page in face book, Twitter, YouTube and Google plus. The page gives facility for the customers to input their valuable suggestions/feedbacks and also seek queries regarding new products and services rendered by your Bank.

HUMAN RESOURCE

Human Resource is the single most important catalyst for effective and efficient operation of any organization. Competition has rendered this dimension still more critical. The Bank has a team of committed, self-motivated and empathetic workforce who strive to meet the customers'' requirements. To augment the existing manpower in line with the Bank''s healthy and sustained growth and expansion of network, the Bank has continued its initiatives of major talent acquisition and retention policies in the FY 2015-16.

Manpower

As on March 31, 2016, the Bank had 7,780 personnel on its rolls. Cadre wise break-up is as under:

Cadre Male Female Total

Officers 2634 1354 3988

Clerk 1459 1561 3020

Peon 456 28 484

Part-time employees 71 217 288

Total 4620 3160 7780

Infusion of young personnel has brought down the average age of employees of the Bank to 34 years as on March 31, 2016. Number of Staff Members having Professional Qualification as on March 31, 2016 is as under:

Educational stream Number of staff

Management 1389

Post- Graduation 1234

CA 66

CS 6

Engineering 986

PHD 1

Legal 76

ICWA/CMA 43

Maintenance of Personnel data

Maintenance of staff records was streamlined under "HRMSS" (Human Resources Management Software Solution System). The personnel data can be accessed by all controlling offices and various reports based on the data can be generated for the quick disposal of staff related matters. To make HRMSS more comprehensive, the Bank had introduced new modules such as Travelling Allowance, User feedback and suggestions, Subsistence Allowance etc., in addition to the existing modules like Expense Maintenance, Pension Maintenance, Marketing Excellence, Transfers, Promotion Maintenance, HRA, Leave and LFC, Training, Online Annual Performance Appraisal of Officers upto Chief General Manager cadre, Service Record, etc.

Motivational Initiatives

Some of the initiatives undertaken by the Bank in order to boost the morale of the Bank employees are as under:

a) Promotions: The Bank has been offering healthy career progression opportunities. During the financial year, 234 clerical staff had been promoted to Scale I, 158 officers to Scale II and 124 Officers to various senior cadres.

b) Implementation of the Xth wage revision settlement - Settlement signed between IBA and Officers/Workmen unions on salary revision of Officers and Award staff had been successfully implemented and the revised salary and arrears for the period from November 1, 2012 released to all the eligible staff members on June 29, 2015.

c) New medical insurance scheme in lieu of the existing hospitalisation scheme - The Bank has implemented the new medical insurance scheme formulated by IBA with United India Insurance Company (UIIC) in lieu of the erstwhile hospitalisation scheme on the terms and conditions specified by IBA. Under this scheme the premium amount is borne by the Bank.

Industrial Relations

Industrial relations in the Bank have been cordial and harmonious. The representatives of Workmen Union, Officers Association and Management have been working collectively with a sense of ownership for the shared objective of all- round growth and prosperity of the Bank. On account of the cordial industrial relations with both the associations, Bank has achieved considerable growth over the years.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the financial year 2008-09, the Bank instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The Banks'' shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees.

Till March 31, 2016, 3,80,32,680 stock options were vested, out of which 2,02,44,141 stock options were exercised by eligible employees. The money realized due to exercise of the said options was Rs.26,31,64,978.30/- and consequently 2,02,44,141 shares of Rs.1/- each have been allotted to the employees/legal heirs concerned.

A Certificate of Auditors pursuant to Regulation 13 of SEBI (Share Based Employee Benefits) Regulations 2014 will be placed to the AGM for the scrutiny of Shareholders.

The total options granted under seven phases of SIB ESOS 2008 works out to 4.21% of the paid up share capital of the Bank as at March 31, 2016. The scheme has generated intended motivation amongst the staff.

Statutory disclosures regarding details of the stock options granted, vested, exercised and forfeited and expired during the year under review are annexed to this Report.

SIB- Executive Brief

"SIB Executive Brief" - a daily news update on Banking, Finance, Economy, Industry, Market Rates etc. is being provided by SIB Staff Training College. It is E-mailed on a daily basis to Board members, to the executives and it is also made available at SIB-Insight for access to all the staff members.

E-Learning Tests

The Bank has completed 12 online tests through E-learning Application during the year 2015-16 on various topics such as Manual of Instruction - Documentation, Finacle 10 etc. Prizes were awarded for the toppers in these tests. It is encouraging to note that the learning process is taken up with great enthusiasm and competitive spirit, the fruit of which is visible in the increasing number of branches/offices emerging as toppers. The E-learning platform will be utilized increasingly for improving the knowledge level of the staff members.

E- Learning test for Prob. Officers

From January 2016, onwards the Bank is conducting an E-Learning test for Prob. Officer on a monthly basis to upgrade their knowledge level on a continuous basis.

E-Circular

The Bank has since migrated to issuance of e-circulars in place of manual circulars. All the circulars of the Bank are uploaded using the ''e-circular software''. In e-circular, Bank''s policies, Guidelines and Forms are also uploaded so as to empower the branches with readily accessible pool of information/guidelines.

SIB students'' ECONOMIC forum (SIBSEF)

Students'' Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in Economy, Banking and Finance. So far, 292 themes have been published since the first publication which was launched in December 1991. The publication is celebrating its "Silver Jubilee" year. During the year the Bank has published the fifth volume of compendium, comprising the theme 202 to 280. In response to the requests from readers, the first 201 themes of this publication were compiled in 4 volumes and published. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to provide a learning platform to the student community. The hard copies of the publication numbering about 3,100 are being sent to all the branches/ offices, reputed schools / colleges / academic institutions, RBI offices, other Banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The Subjects discussed during Financial year 2015-16 are - Bitcoin, GIRO, Railway Budget, Economic Survey and Union Budget 2015-16 (Part - I), Railway Budget, Economic Survey and Union Budget 2015-16 (Part - II), Foreign Trade Policy 2015-2020, Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds- Part - I, Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds - Part - II, Gold Monetization Scheme and Sovereign Gold Bonds Scheme, Payment Banks and Small Banks, Ease of Doing Business, Railway Budget and Economic Survey, Union Budget Part - I. These themes are made available in the Bank''s Website.

Awards & Accolades

The Bank has received following awards/rewards during the financial year:

- Social Banking Excellence Award 2015 (Runner up position in Rural Banking-Small Bank) instituted by ASSOCHAM Inspiring Work Places Award 2015 for best HR & Talent Practices among Private Sector Banks instituted by the Banking Frontiers.

- Banking Technology Excellence Award 2014-15 for "Cyber Security Risk Management" from IDRBT, the technical arm of Reserve Bank of India.

- The SIB''s green initiative ''Green PIN'' won award at the MasterCard Payment Strategy Workshop 2015 held in Pune.

- Prize in IDRBT Banking Application Contest for the innovative mobile banking app "SIB Mirror".

ISO certification

The Personnel Department of the Bank received the ISO 9001:2008 Certification. This certification acknowledges that the policies, practices and methods adopted by the department are system oriented and in tandem with international standards.

Achievements and milestones:

The Bank has signed MoU with NSIC, to facilitate loans to MSE and thus promotes the MSME credit portfolio of the Bank.

Foreign Exchange Advisory Cell

The Bank has launched Foreign Exchange Advisory Cell to Provide advisory services by subject experts on FEMA rules and trade finance related issues to the general public. The complimentary service is available to all Foreign Exchange Trade Fraternity.

PARTICULARS REGARDING CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO PURSUANT TO SUB SECTION (3) (m) OF SECTION 134 OF THE COMPANIEs ACT, 2013 READ WITH RULE (8) (3) OF THE COMPANIES (ACCOUNTS) RULES, 2014

The Bank has undertaken various initiatives for energy conservation at its premises. Further, the Bank has used information technology extensively in its operation and consistently pursuing its goal of technological up-gradation in a cost efficient manner for delivering quality customer service. The Bank, being a banking company and an authorized dealer in Foreign Exchange, has taken all possible steps to encourage export credit.

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

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

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

Number of complaints filed during the financial year - Nil

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

Particulars of Employees

Information as required by the provisions of Section 197 of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, is given under:

Name Remuneration Date of Qualification Experience Last Designation commence ment and Aage(in Gross years) (Rs.) Net (Rs.)* (in years) of Employment Emplo yment

V G. Mathew, Chief General

M.Sc CAIIB MD & CEO 83,36, 325.00 55,86, 162.00 38 02.01.2014 Manager, 62 years SBI

*Net of Taxes paid

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

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

A brief outline of the Bank''s CSR Policy, including overview of projects or programs to be undertaken /undertaken.

South Indian Bank''s CSR Policy:

South Indian Bank is grateful to the society for the support and encouragement in the Bank''s growth and development. The Bank believes that no organization can make sustainable development without the patronage of the society. The Bank is committed in the integration of social and environmental concerns in its business operations and also in the interactions with its stakeholders. The Bank shall continue to have among its objectives, the promotion and growth of the national economy and shall continue to be mindful of its social and moral responsibilities to customers, shareholders, employees and society. Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment.

Overview of Activities:

In line with the CSR policy and in accordance with Schedule VII of the Companies Act 2013, South Indian Bank undertook various activities during the FY 2015-16 which had significant impact on the society. These activities include:

- Setting up homes and hostels for women and orphans.

- Training to promote sports.

- Making available safe drinking water.

- Conservation of natural resources.

- Eradicating hunger, poverty and malnutrition.

- Promoting education, including special education and employment enhancing vocational skills especially among children, women, elderly and the differently abled.

- Promoting Preventive healthcare and sanitation.

- Contribution to the Prime Minister''s National Relief Fund.

Web-Link to the CSR Policy:

http://southindianbank.com/content/viewContentLvl1.aspx7lin kIdLvl2=215&LinkIdLvl3=778&linkId=778

Composition of CSR Committee:

The Bank understands its responsibility towards the society and environment in which it operates. The Bank has constituted Corporate Social Responsibility Committee at the board level to monitor the CSR activities.

Members of the Committee are:

1. Sri Francis Alapatt (Chairman of the Committee)

2. Sri V G. Mathew (MD & CEO)

3. Sri Mohan E. Alapatt (Member)

4. Smt. Ranjana S. Salgaocar (Member)

The composition is as per Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.

Average net profit before tax of the Company for the last three financial years: Rs.578.54 crore

Prescribed CSR Expenditure (two per cent of the amount as above): Rs.11.57 crore.

Details of CSR spent during the Financial Year:

a. Total amount to be spent for the Financial Year 2015-16: Rs.11,57,00,000/-.

b. Amount unspent, if any: Rs.9,26,81,520/-.

c. Manner in which the amount spent during the financial year is detailed below:

Projects or Programs (1) Amount outlay Sl CSR Project or Sector in which Local area or other (2) (budget) No. activity identified the Project is Specify the State and project or covered District where projects or programs wise programs was undertaken

(Rs. in 000'')

1 Providing drinking Making available - Other, Palakkad District, 12.00 water facilities safe drinking Kerala water

2 Construction of Setting up homes - Local area, Thrissur 3000.00 houses for women and hostels for District, Kerala and orphans women and orphans

3 Training and Training to - Other, Kottayam District, 1000.00 enhancement promote sports Kerala of sports skill development

4 Providing nutritious Eradicating - Other, Kottayam District, 100.00 meals hunger, poverty Kerala and malnutrition

5 Capital creation Conservation of - Other, Pathanamthitta 1000.00 for conservation of natural resources District, Kerala natural resources

6 Promoting basic Promoting - Local area, Thrissur 36406.48 amenities at schools/ Education District, Kerala colleges, conducting _ Other awareness programs Thiruvananthapuram including financial District, Kerala literacy camps/ activities - Other, North 24 Parganas District, West Bengal

- Other, Udupi District, Karnataka

- Pan India

7 Conducting medical Promoting - Local area, Thrissur 2204.00 camps, investment Preventive District, Kerala in preventive health Heath are and - Other, Coimbatore District, care programs Sanitation Tamil Nadu

- Pan Kerala

Contribution to the Contribution Pan India 15000.00 Prime Minister''s to the Prime

8 National Relief Fund Minister''s National Relief Fund

Total 58722.48

Sl. No. CSR Project or activity identified Amount spent on the Cumulative Expenditure Amount subheads: upto the spent: Direct (1) Direct Expenditure Repporting or through on projects or programs Period impleme nting (2) overheads: agency

(Rs. in 000'') (Rs. in 000'')

1 Providing drinking water facilities 12.00 12.00 Direct

2 Construction of houses fro women and orphans 3000.00 3000.00 Direct

3 Training and enhancement of sports skill development 350.00 1000.00 Direct

4 Providing nutritious meals 100.00 100.00 Direct

5 Capital creation for conseravation of natural resources 1000.00 1000.00 Direct

6 Promoting basic amenties at schools/ colleges, conducting awareness programs including financial litracy camps/activities 3556.48 3556.48 Direct

7 Conducting medical camps, investment in preventive health care programs 0.00 0.00 Direct

8 Contribution to the Prime Minister''s National Relief Fund 15000.00 15000.00 Direct

Total 23018.48 23668.48

The Bank''s CSR mission is to contribute to the social and economic development of the community. Through a series of interventions, the Bank seeks to mainstream economically, physically and socially challenged groups and to draw them into the cycle of growth, development and empowerment.

Reason for not spending the two percent of average net profit of the last three financial years or any part thereof:

In the FY 2015-16, the Bank revamped its CSR activities to fall in line with the new rules and regulations in accordance with the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014. In the FY 2015-16, the Bank spent Rs.2.30 crore towards CSR activities, which constitutes 19.90% of CSR Budget of the year. The Bank stays committed to its corporate social responsibility and intends to continually increase the impact of its CSR initiatives. The Bank has utilised the reporting year to lay a foundation on which to build and plan future projects and currently in the process of evaluating strategic avenues for CSR expenditure in order to deliver maximum impact. In the years to come the Bank will maximise its efforts to meet the targeted CSR spends.

Responsibility Statement:

The CSR Committee confirms that the implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the Bank.

FINANCIAL INCLUSION

Financial inclusion aims to ensure the availability of formal and basic banking services to all Indian households, including those in the un-banked and under-banked areas. South Indian Bank has adopted several financial inclusion initiatives, including Kiosk banking.

Kiosk Banking Model - Bank Mitra / Business Correspondent (BC)

The Kiosk banking complies with the open standards recommended by the Indian Banks'' Association (IBA) and the Institute for Development and Research in Banking Technology (IDRBT) and is capable of incorporating the Unique Identity Solution being implemented by the Unique Identity Authority of India (UIDAI). Under Kiosk Banking Model, the Bank is able to provide basic banking services in un-banked/ under- banked areas through outlets such as common service centres, Individual Business Correspondents [BC], small retail shops, etc. with a laptop based solution.

Kiosk centres offers basic banking services such as customer enrollment, deposits, withdrawal, fund transfers, balance enquiry, FD, RD remittance etc. to potential customers. Customers can open new basic savings account in Kiosk centres by providing KYC documents and biometrics. The Bank has implemented Kiosk Banking Model in the state of Kerala through 53 Akshaya centers, who are acting as common service centres in the state and 76 Individual BC''s in Tamil Nadu. As on March 31, 2016, 39,016 customers have opened accounts under the Bank''s Kiosk Banking Model.

Financial Literacy Centres

Financial Literacy is the ability to understand how money works in our day to day life and how someone manages it, how he/she invests it and how a person offers it to others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with their financial resources. 12 FLCs have been allotted to the Bank by SLBC in the state of Kerala to disseminate financial literacy to the people and it is functioned through retired bank employees, school teachers and retired government employees.

Pullu - Model Village of South Indian Bank

The Bank has been servicing Pullu Village in Chazhoor Panchayat of Thrissur Dist. in Kerala under Bank''s Financial Inclusion initiative since 2010. In order to ensure meaningful Financial Inclusion and to facilitate BC based operations in the village, Bank has opened Ultra Small Branch at Pullu on November 1, 2013. The village was since adopted by the Bank and various welfare measures were initiated in Pullu. Propagation of Bio farming, conducting financial literacy sessions, providing agricultural credit, organizing medical camps are few of such initiatives the Bank has undertaken in the village. The only L.P School in Pullu village which was struggling for survival was given a helping hand by the Bank and they were provided with furniture worth Rs.1.00 lakh. A model poultry unit was set up in the school compound in order to take care of the nutritional needs of the children.

Government of India Scheme - PMJDY

Pradhan Mantri Jan Dhan Yojana (PMJDY), is conceived as a national mission on financial inclusion initiated by Honourable Prime Minister on August 15, 2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme is implemented in the Bank since August 18, 2014.

A survey on 2,68,690 Households was conducted by the Bank under PMJDY to identify Households not having bank accounts. The Bank has opened 1, 03,108 BSBDA accounts as on January 31, 2016 under PMJDY and balance outstanding in those accounts exceeds Rs.14.21 crore at present. Rupay Debit Cards has been issued in PMJDY accounts providing customers with the benefit of accidental insurance coverage of Rs.1.00 Lac.

Social Security schemes in insurance and pension sectors (PMJJBY, PMSBY & APY), introduced by the Government of India were given high priority by the Bank and 2,40,777 customers have already joined the schemes through the Bank. Pradhan Mantri Mudra Yojana (PMMY), Government scheme intended to support the micro enterprises is also implemented in the Bank as part of social banking.

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the ''Green Initiative'' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directors'' Report, Auditors'' Report etc., for the year ended March 31, 2016, to the e-mail address which the Shareholders have previously registered with their Depository Participant (DP) as their valid e-mail address. Investors desirous of refreshing / updating their e-mail addresses are requested to do so immediately in their respective DP accounts. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/ CDSL will be deemed to be their registered e-mail address for serving notices / documents including those covered under Section 136 of the Companies Act, 2013.

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

ANTI - MONEY LAUNDERING (AML)

Transactions processed through the Core Banking Solution are monitored for detecting suspicious transactions, using TCS Bancs Compliance, an AML application to comply with the provisions under Prevention of Money Laundering Act (PMLA).

The Bank has set up a Centralized Processing Centre (CPC) for liability side customer creation with the objective of full KYC compliance and to use KYC as a fraud prevention tool. The Bank has brought all branches under the CPC model during the Financial Year 2015-16.

The Bank had implemented UIDAI''s e-KYC services for Aadhaar authentication, in 50 branches during the Financial Year 2015-16, which will be scaled up to all the branches during the current year.

The Board has nominated Mr. V. G. Mathew, MD & CEO as the "designated director", as per PMLA Act.

The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.

FATCA-CRs

The Bank has registered as a reporting entity under FATCA, under GIIN No. IIK7HU.99999.SL.356, to comply with the reporting requirement under the inter Governmental agreement entered between Indian and US Government.

directors

The composition of the Board of Directors is governed by the Banking Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the Code of Conduct on Corporate Governance adopted by the Bank. The Board comprises of 10 Directors as on the date of this report, with rich experience and specialized knowledge in various areas of relevance to the Bank, including banking, accountancy, small scale industry, agriculture, and information technology.

Excluding the MD & CEO, all other members of the Board are Non-Executive Directors and Seven Directors out of the total 10 Directors are Independent Directors. Declaration has been obtained from the Independent Directors as required under the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Companies Act, 2013. The remuneration and other benefits paid to MD & CEO of the Bank and other Non-Executive and Independent Directors during the finnancial year 2015-16 are disclosed in Corporate Governance Report.

Composition of Audit Committee

The Audit Committee of the Board is chaired by Sri K. Thomas Jacob, who is a Chartered Accountant. The other members of the committee are Sri Salim Gangadharan (Non-Executive Independent Director), Sri Cheryan Varkey (Non-Executive Director) and Sri Mohan E. Alapatt (Non-Executive Independent Director) The constitution of the Committee is in compliance with the regulatory requirements. The terms of reference of the Audit Committee, incorporated in the Bank''s Code of Corporate Governance, are in accordance with the SEBI (LODR) Regulations, 2015 entered into by the Bank with Stock Exchanges where the Bank''s shares are listed, Companies Act, 2013 and RBI guidelines.

Independent Directors

In terms of the definition of Independence of Director as prescribed under Regulation 27(2) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of Companies Act, 2013 and based on the confirmation / disclosures received from the Directors, the following Directors are Independent Directors of the Bank as on the date of this report

1. Sri Mohan E. Alapatt (DIN: 00025594)

2. Sri K.Thomas Jacob (DIN: 00812892)

3. Dr. John Joseph Alapatt (DIN: 00021735)

4. Sri Francis Alapatt (DIN: 01419486)

5. Sri Salim Gangadharan (DIN: 06796232)

6. Smt. Ranjana S. Salgaocar (DIN: 00120120)

7. Sri Parayil George John Tharakan (DIN: 07018289)

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations 2015, the Bank has appointed Smt. Ranjana S. Salgaocar as Woman Director on the Board of the Bank.

Bank''s policy on directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178;

Criteria for appointment as Director of the Bank

Nomination Committee of the Board shall identify and ascertain the integrity, qualification, expertise and experience of the person who is considered for being appointed/reappointed as Director of the Bank and apply due diligence in compliance with the Banking Regulation Act, 1949, Reserve Bank of India directives on Fit & Proper Criteria, all other applicable provision of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 including any amendments from time to time and Nomination Policy of the Bank.

Criteria For Determining Qualifications, Positive Attributes

a) The professional and personal ethics, integrity and track record.

b) Special knowledge or practical experience in Banking, accountancy, agriculture and rural economy, co-operation, economics, finance, Marketing, Information Technology, law, small-scale industry or any other field useful to the Banking Company in the opinion of Reserve Bank of India.

c) Ability to provide insights and practical wisdom based on their experience and expertise relevant to the Bank''s line of business.

d) Details of his/her association with other Companies/LLPs/ Firms (including NBFC).

e) Details of substantial interest in other Companies/LLPs/Firms (including NBFC).

f) Details of financial facilities, if any, availed from the Bank.

g) Details of default in the re-payment of loans, availed from the Bank or any other bank, if any.

h) Commitment to enhancing stockholder value.

i) Ability to develop a good working relationship with members of the Board and contribute to the working relationship with senior management of the Bank.

j) Whether he/she suffers from any of the disqualifications envisaged under the provisions of Banking Regulation Act, 1949, Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

k) Any other factors as the Committee may deem fit and in the best interests of the Bank and its stockholders.

Criteria for determining Independence of a director

The Criteria of Independence of a director is determined based on conditions as laid down in the Companies Act, 2013. The independent director shall at the first meeting of the Board in which he/she participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his/her status as an independent director, give a declaration that he/she meets the criteria of independence.

REMUNERATION POLICY:

Remuneration Policy for Employees of the Bank:

The Bank has a Board approved Compensation Policy which deals with the Compensation & Benefits of the Employees of the Bank and Whole-time Directors.

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

REMUNERATION POLICY OF DIRECTORS:

Remuneration of MD & CEO and Other Employees (including Key Managerial Personnel):

The Board approved Compensation Policy deals with the Compensation & Benefits of the Whole-time Directors/MD & CEO. The remuneration of the Whole-time Directors/MD & CEO is recommended by the Nomination & Remuneration Committee (NRCB) to the Board for approval after considering the factors prescribed under the Compensation Policy.

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

For the other employees (including Key Managerial Personnel and Compliance staff), the Board, based on the recommendation of the NRCB may devise appropriate compensation structure. The compensation paid to other employees that include Award Staff, Officers coming under Scale I to IV and executives coming under Scale V to VII is fixed based on the periodic industry level settlements with Indian Banks Association. The variable compensation paid to functionaries is based on the Performance Linked Incentive Scheme, which has been formulated on the basis of performance parameters set in Performance Management System.

Remuneration of Chairman:

The NRCB recommends the remuneration of the non-executive Chairman to the Board which is considered and approved by the Board in the same manner subject to Shareholders'' and regulatory approvals. The NRCB, while recommending the remuneration of the part-time Chairman considers the Function, Role and Responsibilities of the Chairman and Regulatory guidelines as applicable etc.

The remuneration payable to the Chairman is subject to prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any revision in remuneration of the Chairman is payable only after receipt of the approval from RBI.

Remuneration of Non-Executive Directors (NEDs):

The NEDs are paid sitting fees for attending each meeting of the Board of Directors or any committee thereof as approved by the Board, within the permissible limit prescribed under the Companies Act, 2013, SEBI (LODR) Listing Regulations 2015 and other regulatory guidelines, as amended from time to time. The Board while recommending the change in the sitting fees considers various factors like size and complexity of organization, Comparison with the peer Banks and Regulatory guidelines as applicable etc. while recommending the change in the sitting fees to the Board.

Policy on Board Diversity:

Pursuant to SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has devised a policy on Board diversity to ensure adequate diversity in its Board of Directors. The Bank believes that diversity underpins the successful operation on an effective Board and embraces diversity as a means of enhancing the business. With a view to achieve sustainable and balanced development, the Bank sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives. A diverse Board includes and makes good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of directors.

Policy on Board Diversity of the Bank mainly depends on the qualifications for appointment of Directors of the Bank as contained in the Banking Regulation Act,1949 and satisfying the Fit and Proper Criteria for directors as per the regulatory requirement of RBI.

The Bank continuously seeks to enhance the effectiveness of its Board and to maintain the highest standards of corporate governance and recognizes and embraces the benefits of diversity in the boardroom. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. In informing its perspective on diversity, the Bank also take into account factors based on its own business model and specific needs from time to time.

The NRCB has the responsibility to lead the process for Board appointments and for identifying and nominating, candidates for appointment to the Board. The benefits of diversity continue to influence succession planning and continue to be the key criteria for the search and nomination of directors to the Board.

Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender. The Policy of Board Diversity is displayed in bankswebsite.(https://www. southindianbank.com/UserFiles/file/Rupay/DISCLOSURE/Policy_ on_Board_diversity.pdf)

Board Level Performance Evaluation

The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 stipulates the performance evaluation of the Directors including Chairman, Board and its Committees.

Considering the said provisions, the Bank has devised the process and the criteria for the performance evaluation which has been recommended by the Nomination & Remuneration committee and approved by the Board.

The process for formal annual performance evaluation is as under:

- Committee of Independent Directors at their separate meeting evaluates the performance of Non-Independent Directors including Chairman of the Bank and the Board as a whole.

- The Board evaluates the performance of the Independent Directors (excluding the director being evaluated) and submit its report to the Nomination & Remuneration committee.

- The Board Evaluate the performance of Board level committees.

- Nomination & Remuneration Committee evaluated/ review the performance of each Director recommends the appointment/reappointment/ continuation of Directors to the Board. Based on the recommendation of Nomination & Remuneration Committee, Board will take the appropriate action.

The criteria for performance evaluation are as under:

Performance Evaluation of Non-Executive Directors. MD & CEO and Chairman

Participation at Board/Committee Meetings, Managing Relationship, Knowledge and skill, Personal attributes, Compliance and Corporate Governance; Leadership; Strategy Formulation, Strategy Execution, Financial Planning/ Performance, Relationships with the Board, Human Resource Management and Succession Planning, Personal Qualities; Resources; Conduct of Meetings.

Performance Evaluation of Board

Composition and Diversity; Strategic Foresight, Value Creation, Process and Procedures, Oversight of the Financial Reporting Process and Internal Controls, Oversight of Audit Functions, Corporate Governance, Corporate Culture, Monitoring of business activities, Understanding of the business of the Bank and Regulatory environment; Contribution to effective corporate governance and transparency in the Company''s Operations; Deliberations/decisions on the Company''s strategies, policies, plans and guidance to the Executive Management.

Performance Evaluation of the Board Level Committees

The performance and effectiveness of the Committee; Frequency and duration; Spread of talent and diversity in the Committee; Understanding of regulatory environment and developments; Interaction with the board.

auditors

a) statutory Auditors:

The shareholders at its 87th Annual General Meeting held on July 15, 2015, appointed M/s Deloitte Haskins & Sells, Chartered Accountants, Chennai as Statutory Central Auditors of the Bank for the audit of Bank''s accounts for the year 2015-16.

M/s Deloitte Haskins & Sells, Chartered Accountants, vacates the office at the end of the Annual General Meeting to be held this year but are eligible for re-appointment for the Financial Year 2016-17.

b) secretarial Auditors and secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013, the Bank had appointed M/s KSR & Co., Company Secretaries LLP, Practicing Company Secretaries, Coimbatore as its Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 2015-16. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2015-16 is annexed to this report.

Audit and Inspection

Regular Inspection of the branches is conducted at periodical intervals on the basis of Risk Based Internal Audit approach. From August 2015 onwards, RBIA of branches is being conducted more objectively through audit software. Concurrent audit at branches is done by qualified Chartered Accountants/ retired officers covering 68% of business of the Bank. Bank has brought almost all isolated remote branches under the ambit of concurrent audit, irrespective of the business volume of such branches. Concurrent audit of International Banking Division, Treasury Department, Credit Department and Data Centre is also conducted. In the light of centralization of activities like account opening, retail loan processing, etc., the Bank has implemented concurrent audit system in Transaction Banking Dept. and Retail Hub during the year 2015-16. In addition to the above, the Bank conducts Stock Audit, Credit Audit, KYC/AML Audit, Information System Audit, Revenue Audit, Surprise Inspection of gold & cash, exclusive Gold Loan asset verification etc. at branches. Information System Audit of CBS and major applications for the financial year 2015-16 was done by external audit firm. Besides, all the branches are subjected to statutory audit on yearly basis. Transaction monitoring alerts are generated from software on certain rules set. These alerts are monitored at HO and clarifications are called for from branches wherever necessary. ROs are having facilities for scrutiny of all alerts wherever needed. The branch operations are centrally analyzed for ensuring compliance to KYC/ AML/CFT guidelines with the help of AML software. Fraud Risk Monitoring Cell (FRM Cell) is established to prevent fraudulent activity in the customer accounts in which almost 20 rules have enabled w.r.t. card related activities to generate alerts.

explanation for auditors'' comments in the

REPORT

The Auditors report for the year 2015-16 does not contain any qualification.

CORPORATE GOVERNANCE

A separate report profiling Corporate Governance as required under applicable regulations of the SEBI (LODR) Regulations 2015 and a certificate from M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Bank, are annexed to this Report.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2016 in form no. MGT-9 is annexed to this report.

Subsidiary Companies

The Bank did not have any subsidiary Company during the previous financial year. The Board of Directors has formulated a policy for determining ''material'' subsidiaries pursuant to the provisions of the Listing Regulations. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=781 &linkId=781).

Related Party Transactions

The Board of Directors has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The same is displayed on the website of the Bank (https://www.southindianbank.com/content/viewContentLvl1. aspx?linkIdLvl2=215&LinkIdLvl3=782&linkId=782).

Since there were no Related Party tranctions, Form AOC-2 is not applicable to the Bank.

strictures and Penalties

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

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

Directors'' Responsibility Statement

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

(a) in the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2015-16 and of the profit of the Bank for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts for the financial year ended on March 31, 2016, on a going concern basis;

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

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

acknowledgements

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Bank''s shares are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Bank''s shareholders and customers for their continued support, patronage and goodwill. The Board further places on record its appreciation for the valuable services rendered by M/s Deloitte Haskins & Sells, Statutory Auditors, during their tenure. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank. The Bank gladly acknowledges this fact and thanks all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

By Order of the Board

(AMITABHA GuHA) (V. G. MATHEW)

CHAIRMAN MANAGING DIRECTOR & CEO

DIN : 02836707 DIN : 05332797

Place : Hyderabad

Date : June 1, 2016

Mar 31, 2015

To the Members,

The Board of Directors is pleased to place before you, the 87th Annual Report of the Bank along with the Audited Balance Sheet as at March 31,2015 and the Profit and Loss Account for the year ended March 31, 2015.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2015 are as follows:

Key Parameters Rs. in crore

2014-15 2013-14

Deposits 51912.49 47491.09

Gross Advances 37725.65 36403.10

Total Gross Business 89638.14 83894.19

Operating Profit 816.26 884.35

Net Profit 307.20 507.50

Capital & Reserves 3589.40 3368.05

Capital Adequacy (%) - Basel-II 12.06 12.53

Basel-III 12.01 12.42

Earnings Per Share (EPS) :

(a) Basic EPS (in Rs.) 2.28 3.78

[face value Rs. 1/-]

(b) Diluted EPS ( in Rs.) 2.27 3.77

[face value Rs. 1/-]

Book Value per Share (in Rs.) 26.59 25.06

[face value Rs. 1/-]

Gross NPA as % of Gross Advances 1.71 1.19

Net NPA as % of Net Advances 0.96 0.78

Return on Average Assets (%) 0.56 1.00

FINANCIAL PERFORMANCE Profit

The Net Operating Income of the Bank increased by Rs.96.07 crore (5.44%) from Rs.1767.24 crore to Rs.1863.30 crore. The growth in Non-Interest Income was Rs.128.61 crore (34.90%) during the year. The Bank achieved an Operating Profit of Rs.816.26 crore as against Rs.884.35 crore during the previous year and has achieved a net profit of Rs.307.20 crore during the year against the net profit of Rs.507.50 crore posted during the previous year. The moderation in profit is primarily attributable to increased provisioning requirements emanating from loan loss, Funded Interest Term Loan (FITL), restructured assets, employee benefits based on the recently concluded industry wide wage settlement and actuarial liability on superannuation benefits due to softening of market yield.

The Operating Profit for the year under review was Rs.880.89 crore before depreciation, taxes and provisions as against Rs.928.95 crore for the year 2013-14. Net profit was Rs.307.20 crore and the profit available for appropriation was Rs.347.06 crore as per details given below:

(Rs. in crores)

Profit before depreciation, taxes and provisions 880.89

Less: Depreciation on Fixed Assets@ (1.11)

Provisions for Non-Performing Assets 223.58

Provision for FITL 86.82

Provision for depreciation on investments 13.72

Provision for Income/Wealth Tax 160.75

Provision for standard Assets 31.37

Provision for restructured Assets 32.56

Provision for other Impaired Assets 10.88

Provision for Un-hedged Forex exposure 15.12 573.69

Net profit 307.20

Brought forward from previous year 39.86

Profit available for appropriation 347.06

@ In view of the change in accounting policy, the write back amounting to Rs.65.74 crore off set with current year depreciation Rs.64.63 crore.

Appropriations

(Rs. in crores)

Transfer to Statutory Reserves 76.81

Transfer to Capital Reserves 3.86

Transfer to General Reserves 50.00

Transfer from Investment Reserve (6.79)

Transfer to Special Reserve 30.00

Proposed Dividend 81.01

Dividend Tax on Proposed Dividend 16.95

Balance carried over to Balance Sheet 95.22

Total Appropriation 347.06

Dividend

The Board of Directors recommended a dividend of 60% (tax- free in the hands of shareholders), i.e., @ Rs.0.60 per Equity Share of face value of Rs.1/- per share.

EXPANSION PROGRAMME

The Bank had been successful in widening its network pan India with 822 branches and 1200 ATMs. The Bank has opened 53 new offices (28 branches and 25 extension counters) and 200 ATMs across the country during the financial year 2014-15. The branch network now covers 30 states/union territories.

The Bank further plans to open a maximum of 50 new offices (with a mix of Branches & Extension Counters) and 150 ATMs during the financial year 2015-16.

CAPITAL & RESERVES

The BankRs.s issued and paid-up capital stood at Rs.135.02 crore as on March 31, 2015. During the year, 62,04,475 stock options granted under Employee Stock Option Scheme had been exercised by eligible employees.

The capital plus reserves of the Bank has moved up from Rs.3368.05 crore to Rs.3589.40 crore on account of the above and the plough back of profits during the year.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- Basel III & Basel II

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2015 according to Basel III guidelines is 12.01%, as against the statutory requirement of 9%. Tier I CRAR constitutes 10.43% while Tier II CRAR works out to 1.58%.

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31,2015 according to Basel II guideline is 12.06%, as against the statutory requirement of 9%. Tier I CRAR constitutes 10.46% while Tier II CRAR works out to 1.60%.

The Bank follows standardized approach, Standardized Duration approach and Basic Indicator approach for measurement of capital charge in respect of credit risk, market risk and operational risk respectively.

LISTING AGREEMENT WITH STOCK EXCHANGES

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

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

BUSINESS ACHIEVEMENTS

The Bank has achieved a total Gross Business of Rs.89,638.14 crore, consisting of Total Deposit of Rs.51,912.49 crore and Gross Advances of Rs.37,725.65 crore as on March 31,2015.

Deposits

The total deposits of the Bank increased from Rs.47,491.09 crore as on March 31,2014 to Rs.51,912.49 crore registering a growth of 9.31%.

The break-up of the deposit as on March 31, 2015 is as under:

Amount (Rs. in crore) % to total Deposits

Current Deposits 1817.85 3.50

Savings Deposits 8868.45 17.08

Term Deposits 41226.19 79.42

Total 51912.49 100.00

The Bank during the year concentrated more on Core Deposit, the segment witnessed a growth of 20.61%. Savings Bank Deposits grew by 11.74% on a year to year basis. During the financial year 2014-15, the Bank had been opened 5.77 lakh new Savings Bank Accounts and 13,245 Current Accounts. The Bank, as a part of effective cost management of liabilities, took steps to shed off Bulk Deposits of Rs.2,837.22 crore. NRI Deposits has grown by 29.17% to Rs.1 1,393.15 crore.

The Bank has accorded priority to meaningful financial inclusion exercise during the period under reporting while opening new deposit relationship.

Advances

During the year, the gross advances of the Bank registered a subdued growth of 3.63%, to touch Rs.37,725.65 crore. Low growth indicated earlier reflects, inter-alia, slow off-take of credit and also a pragmatic approach towards due diligence to ensure quality of assets. Total Priority Sector advances as at the end of the financial year stood at Rs.15,597.02 crore, constituting 41.02% of the Adjusted Net Bank Credit (ANBC). Exposure to agriculture sector amounted to Rs.6,281.80 crore forming16.52%* of ANBC as at the end of the financial year. Break-up of exposure under Priority Sector is furnished below:

Amount (Rs. in crore)

Agriculture & Allied activities 6,281.80 (including investments in RIDF)

Small Enterprises 7,287.45

Other Priority Sector 2,027.77

Total Priority Sector 15,597.02

* As per RBI guidelines, indirect lending in excess of 4.5% of ANBC is not reckoned for computing achievement under the sub-target of 18% for the agriculture sector due to which the achievement under the subsector is 11.81%. However, the same is reckoned for computing achievement under the overall priority sector of 40% of ANBC.

INVESTMENTS

Although global economy is improving slowly, Euro Zone Economies are yet to fully recover from the after effects of the global financial crisis. Economic growth in USA is firming up on the backdrop of improving labour and housing market. Even though Quantitative Easing by US Fed came to an end, global liquidity still remains high on the backdrop of quantitative easing by European Union and Japan. Crude oil prices plunged on the backdrop of weak demand outlook and concern over US shale gas supply.

India remains beneficiary of fall in crude oil prices with moderation in inflation, containing fiscal deficit and current account deficit. Considering the easing of inflationary pressures, RBI has cut the policy rate by 50 bps during the year. Industrial activity witnessed marginal recovery with cumulative growth in IIP improving to 2.8% in FY 2015 from contraction of 0.1% during FY 2014. Global rating agency S & P upgraded its outlook on IndiaRs.s sovereign rating to stable from negative. Overall, debt and equity markets remained buoyant during FY 2015.

BankRs.s gross investment portfolio stood at Rs.16,717.16 crore as on March 31, 2015 compared to Rs.14,351.77 crore as on March 31, 2014, registering a growth of 16.48%. Investment Deposit ratio moved from 30.22% as on March 31, 2014 to 32.20% as on March 31, 2015.

Profit on sale of investment registered healthy growth from Rs.69.88 crore in FY 2014 to Rs.164 crore in FY 2015. Total interest income from investments for the FY 2015 was Rs.1,053.73 crore as against Rs.954.48 crore for the FY 2014, registering a growth of 10.40%.

NON-PERFORMING ASSETS (NPA) MANAGEMENT

During the year 2014-15, as a result of the focused and sustained efforts like early recovery of NPAs, through prompt and effective measures under the SARFAESI Act, follow up of recovery cases pending before DRTs and civil courts, one time compromise settlements of accounts, etc., Bank could recover NPAs to the extent of Rs.278.80 crore, (recovery including up- gradation Rs.85.40 crore) as against the target of Rs.250.00 crore. Special thrust was given on selection and underwriting of credit, adequate due diligence and improvement in credit administration to ensure improvement in the quality of assets.

During the year, the Gross NPA of the Bank has increased from Rs.432.62 crore as on March 31, 2014 to Rs.643.45 crore as on March 31, 2015 and Net NPA increased from Rs.281.67 crore as on March 31, 2014 to Rs.357.05 crore as on March 31, 2015. Despite improvement in recovery of NPAs, fresh slippage to the tune of Rs.306.66 crore during the year led to increase in the level of gross NPA to Rs.643.45 crore. In terms of percentages, the GNPA increased from 1.19% as on March 31, 2014 to 1.71% as on March 31, 2015 and Net NPA increased from 0.78% as on March 31, 2014 to 0.96% as on March 31, 2015.

INFORMATION TECHNOLOGY (IT) AND IT ENABLED SERVICES

Ever growing dependence on technology and digitalization has changed the contour of delivery channels of financial services in the Industry. The major players - both domestic and international- have been adopting progressively updated and state of art technology. This has created greater awareness in customers about products and delivery systems.

Indian Banking industry, today is in the midst of IT second phase of revolution. A combination of regulatory and competitive factors has led to increasing dependence on comprehensive automation in the Indian Banking Industry.

Information technology has basically been used under different avenues in Banking like Communication and Connectivity, Business Process Reengineering, new product rollout etc. Information technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets.

Information Technology and its huge potential to offer innovative solutions have paramount importance for growth and sustenance of the Banks. The turnaround time for rolling out a technology product in banks has been visibly diminishing, which essentially calls for a robust, adaptable system in place to execute projects right from initiation to consumption.

The Bank, an early adopter of technology with a view to providing safe and convenient banking facilities to its customers, has introduced host of services and facilities for enhancing customer satisfaction. The Bank has been successfully functional with Finacle Core Banking Solution (CBS) from Infosys for several years. CBS has been the key component in introducing the following latest technology services by the Bank for the benefit of its customers.

- Real time on-line ATMs having affinity with NFS (National Financial Switch), Master, VISA and RuPay payment and settlement agencies.

- Debit Card operations with VISA, MAESTRO and RuPay.

- Mobile Banking and M-commerce (with support for other bank money transfer through IMPS, P2A, P2M (issuer), Unstructured Supplementary Service Data (USSD code *99#), Missed call services for retrieving balance through SMS etc).

- ASBA (Application Supported by Blocked Amount).

- Foreign inward Instantaneous remittance with own payment Hub system.

- De-mat and On-line Trading Facility.

- Point of Sale (POS).

- Portfolio Investment Scheme for NRI Community.

- Central Plan Scheme Monitoring System (CPSMS).

- Kiosk based Financial Inclusion Solution.

- Cash Deposit Machines.

- Advanced version of Internet Banking Application with augmented security controls and enhanced customer friendly features.

- Captive Security Operation Centre (CSOC) in line with GKC (Gopalakrishna Committee recommendations of RBI for monitoring and management of IT Systems).

- Fraud Risk Management Solution (fRm) for ATM/POS/CNP channel.

- Business Process Management solution leading to a paperless environment and reduced turnaround time.

- Mobile Pass Book for customers.

- Automated Clearing House (ACH) Payment Service.

- MSME loan application through website.

- NRI account opening through website.

- Direct Benefits Transfer for transferring Govt. subsidies.

- SIB Mirror mobile application (developed in house).

IT initiatives/Solutions embarked during the year

The following list demonstrates a few of the IT enabled services/ solutions that the Bank has launched during the year to serve its Customers in a better and efficient way.

- Version migration of CBS with enriched features leading to increased internal efficiency of operations, augmented control over various functions through stream lined processes.

- ISO 27001 implementation for DC/DR and IT operations.

- Technology solution for Basel II advanced approach.

- Integrated CRM solution to help business users for better understanding of our customers.

- Foreign Inward Remittance through Mobile Banking.

- Premium variant of ATM Cards (Master Card Platinum, RuPay Platinum MasterCard World EMV Chip Card).

- Prime Minister Social Security Schemes like Atal Pension Yojana (APY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

- Centralized Processing Centre (cPc).

Information Security and Risk Management

As banks adopt progressively sophisticated technology as part of their ongoing strategic tool to face challenges in the emerging realities of banking, they are increasingly exposed to technology risks. It is therefore imperative for each bank to work out appropriate IT risk management strategies to secure its most vital information asset and ensure that related risk management systems and processes are strengthened on continual basis to secure both present and future banking activities. SIBRs.s Information Security Policy and other IT Policies - IT Operation Policy, IT Governance Policy, IT outsourcing Policy and Information Security systems have already taken these aspects into consideration. Further, the Information Security of banking IT functions is getting strengthened through implementation of a captive SOC (Security Operation Centre).

The Bank has been providing awareness on e-threats to its customers and staff on a continued basis so that both proactive and reactive measures can be initiated, as deemed appropriate, to mitigate potential risks associated with e-threats.

The Bank has been implementing the stipulations and guidelines articulated and issued by RBI based on the working group recommendations on Electronic Banking Technology Risk, Information Security and Cyber Frauds as a part of the IT governance programme (Gopalakrishna Committee Report).

IT Training

During the year, many training programmes had been attended by the BankRs.s officers in premier institutions such as IDRBT,

NIBM to keep themselves abreast with the advancements in IT, Information Security, CRM etc.

Gopalakrishna Committee Recommendations Management Philosophy & Measures

Gopalakrishna Committee Recommendations on Information Security, Electronic Banking, Technology Risk and Cyber Frauds as applicable to the bank have been taken up for enforcement and implementation. Effective measures have been taken to address the identified gaps in each area such as IT Governance, Information Security, IT Service outsourcing, IS Audit, IT Operations, Cyber Frauds, Business Continuity Plan (BCP), Customer Education and Legal issues. The IT Organization setup has been redrawn to suit the functions/roles specified in the recommendations with segregation of duties. Technology, Development, IT Operations and IT Assurance functions have been clearly divided and now independently headed.

IT Strategy Committee of the Board, IT Steering Committee, Information Security Committee and Chief Information Officer (CIO) are in place, and Chief Information Security Officer (CISO) reports independently to the Head of Risk Management.

Revamped Information Security policy incorporating the various guidelines and stipulations mentioned in the report has been approved by Board and is in place. Presently the policy is under the process of review to make it in alignment with ISO 27001 guidelines. In addition, other IT Policies such as IT Operation Policy, IT Governance Policy and IT Outsourcing Policy are also enforced.

The progress of implementation of GKC recommendations are reviewed by IT Strategy Committee of Board and Board of Directors on quarterly basis. The major items which are under process to achieve compliance to GKC recommendations are as follows:

1. Comprehensive Fraud Risk Management.

2. ISO 27001 Implementation

3. Near line DR Center Solution

The full compliance with the GKC recommendation will be realized in a time bound manner with creation of various infrastructural support required for the same.

Awards and Accolades:

The Bank has received the following awards/rewards during the financial year

Banking Technology Excellence Award-(tenth edition-2014) for Rs.Best IT TEAMRs.-(Small Bank category) from IDRBT, the technical arm of Reserve Bank of India.

Special Recognition among private sector banks "Banking Frontiers - Inspiring Work Places Award" during the year 2014-15.

Best Bank (Private Sector) in the BFSI (Banking, Financial Services and Insurance) Awards 2015 instituted by ABP News.

RISK MANAGEMENT

Risk is an integral part of the banking business. Management of risk is aiming at achieving best trade-off between risk and return becomes a national corollary. Sound risk management is critical to a bankRs.s success. Business and revenue growth have therefore to be weighed in the context of the risks embedded in the bankRs.s business strategy. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk and operational risk. The identification, measurement, monitoring and mitigation of risk continued to be key focus area for the Bank. The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level through quantitative examinations of embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously monitored and benchmarked against the best practices followed in the industry.

Risk Management Policy Framework

The Bank has a comprehensive policy framework which contains separate policies for identification, measurement and management of all material risks including but not limited to credit, market, operational, liquidity and other Pillar-II risks. The bank has put in place an integrated risk management policy which ensures the independence of the risk governance structure. The details of Risk Management practices are provided in Management Discussion and Analysis Report annexed to the DirectorRs.s Report.

Compliance with Basel III and Basel II framework

In compliance with regulatory guidelines on Pillar I of Basel III norms, Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address the issues of Pillar II, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), integrating capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I, like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk etc. the Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline of Basel II and Basel III guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a more consistent and comprehensive manner.

The Bank has initiated steps for moving over to Advanced Approach under the Basel II framework for CRAR computation in line with the relevant guidelines issued by Reserve Bank of India. To expedite the process, consultants and system implementation partners have since been engaged.

INTERNATIONAL BANKING

The total forex business turnover for the year ended March 31, 2015 was Rs.1,92,534.64 crore (comprising Merchant Turnover of Rs.10,714.35 crore and Interbank Turnover Rs.1,81,820.29 crore) recording an increase of 15.08% as compared to the previous financial year. The Bank earned an exchange profit of Rs.31.59 crore. The Bank has also earned a profit of Rs.1.74 crore from bullion business and has sold 41.56 kg of gold during the FY 2014-15.

At present the Bank is having rupee inward remittance arrangement with 5 Banks and 32 Exchange Houses and turnover for the year ended March 2015 was Rs.7,180.67 crore registering an increase of 23.14% as compared to the previous financial year. During the FY 2014-15, Bank has concluded 2 new Rupee Drawing arrangements under speed remittance from UAE with GCC Exchange and Joyalukkas Exchange. The Bank continued providing managerial support to M/s Hadi Express Exchange, UAE. We have presently deputed 17 officers of the Bank to manage the operations of Hadi Express Exchange. Considering the scope in improving our remittance business through arrangements with EHRs.s, the Bank has deputed 4 officers to UAE with UAE Exchange Centre, Al Ansari Exchange and Al Ahalia Money Exchange.

NRI PORTFOLIO

The NRI Division of the Bank aims at personalized and dedicated services to NRI customers. It also extends support to branches / customers, takes initiatives and closely monitors the growth of NRI Business. In order to improve the NRI business and to ensure better service to NRIs at branch level, NRI relationship officers were selected at all branches having NRI business of Rs.5 crore and above and also set up an NRI desk in all branches having NRI business of Rs.10 crore and above. NRI deposit of the Bank constitutes 28% of the total bankRs.s core deposits and NRE/NRO savings bank deposits amounts 21.99% of the total CASA of the Bank. Total NRI deposit registered a growth of 29.17% during 2014-15.

NRI Division has been successfully implementing Welcome Kits to NRE privilege accounts enabling instant activation. Such accounts are now available at all branches of Hadi Express Exchange, at selected branches of SIB in Kerala and to marketing officers in UAE. The initiative is widely accepted in the market and added momentum in opening of NRE SB accounts, thereby improving the share of low cost deposits of the Bank. The next generation service to the NRI customers "ONLINE NRE/NRO account opening" facilitates NRIs to open NRE/NRO accounts at the comfort of their home/office. A new channel of communication has been introduced in NRI Division through skype (skype id "talk2nricell") to facilitate video/audio calling for NRIs. To accelerate NRI business growth and to retain valued customer in our fold, NRI meets were arranged at all regions in Kerala. The Bank had opened and managed a stall in the Indian Pavilion during the Dubai Shopping Festival, at UAE to promote NRI services. All these efforts resulted in achieving a growth in the total NRI deposit business of the Bank, during 2014-15.

TRAINING

The Bank accords utmost importance to the process of skill enhancement. Training Programmes are conducted at SIB Staff Training College (SIBSTC), Thrissur and at 6 Regional Training Centers (RTCs) at ROs for enhancement of professional skills of the staff. The training programmes are designed to develop competency of operating personnel while imbibing the SIB spirit and culture through an effective learning process. The success of these programmes reflects on the enhanced organizational productivity. SIBSTC and the RTCs identify gaps in skills of the personnel and provide learning to them for qualitative improvement. During the year 2014-15, the Bank has imparted training to 2,416 officers, 1,476 clerks and 147 sub-staff in various aspects of banking operations. Thus, the Bank has provided training to a total of 4,039 of its personnel, which is about 52% of total staff strength of 7,825 as on March 31, 2015. This is in consonance with the BankRs.s vision towards continuous up-gradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations.

MARKETING

The Marketing Department of the Bank plays a critical role in generating new business for the Bank through customer acquisition. The department also takes initiatives in product development and promotion by creating awareness on products and by driving customer-centric campaigns.

The products and services under the domain of Marketing Department can be broadly classified as Technology, Third Party Products and Value added services.

Technology Products of the Bank

The Bank has effectively leveraged technology and introduced several variants of traditional products and new e-based services, tailor made to the diversified needs of customers. Technology services like ATM /Debit cards, internet banking, mobile banking etc. have transformed the customersRs. banking experience from branch banking to anytime, anywhere banking.

- Any Branch Banking System: All the branches of the Bank are inter-connected and are capable of providing online, real-time transactions to its customers. As information is centralized and updates are available simultaneously at all places, single-window service has become possible, leading to effective service-delivery to customers. Customers can Deposit/Withdraw freely without any tariff/charge from any branch.

- SIB ATM cum Debit Cards: The Bank is offering Visa, Master and RuPay debit cards to its customers. Using SIB debit cards, BankRs.s customers can withdraw cash through ATMs of any Bank in India and international usage is allowed through EMV chip cards. The Bank has also enabled its debit cards for POS/Online transactions.

Co-branded Foreign Currency Travel Card launched in association with Axis Bank is specifically designed for customers who travel abroad and is available in 8 foreign currencies - USD, GBP, AUD, EUR, CHF, CAD, SGD and JPY. The Bank launched international EMV Chip and PIN based cards in Visa platform for facilitating highly secure international card transactions. Domestic only RuPay cards are also available to customers for use at domestic ATMs and POS terminals. Bank will be launching its high end variant cards in RuPay and Master card platform in near future.

- Internet Banking: The internet banking service under the brand name "SIBerNet" has helped to position the Bank as a technology-driven Bank offering superior banking services to both retail and corporate customers. Fund Transfer (RTGS/NEFT), online bill payments, Online deposit opening, donations to temples etc. are a few of the services offered through SIBerNet. In addition to these, the Bank has also introduced Direct and Indirect Tax Payment facility for its retail and corporate customers.

- Mobile Banking: Mobile banking services help customers maintain a virtual connection with the Bank at all times. SMS, SIB M-Pay, SIB M-Passbook and SIB missed Call service are the mobile banking based services currently offered by the Bank. SIB Mobile Service (SMS) enables customers to receive instant intimation on their account activities via SMS alerts and also to enquire important information over SMS.

The enhanced mobile banking service of the Bank-"SIB M-Pay", offers 24x7 inter/intra Bank fund transfers, with immediate credit of the beneficiary account. The fund transfer facility is facilitated through the IMPS (Immediate Payment Service) platform of NPCI. In addition to the fund transfer service, SIB M-Pay customers are offered value- added services like mobile recharge, DTH recharge etc. also.

The Bank was a pioneer in introducing SIB M-Passbook application that allows customers to access account transaction details on their smart phones. The app is available in all platforms- iOS (iPhones), Android, Windows and Blackberry.

SIB Missed Call service was launched during November 2014, helping the customers to know the balance with just a missed call.

- Point of Sale (POS): The Bank, in association with M/s Atos Worldline India Pvt. Ltd. is offering two types of POS terminals - PSTN (wired terminal) & GPRS (wireless). Atos is the market leader in India in this segment and the primary service provider for POS acquiring services to a number of leading public sector and private sector Banks in the country.

Third Party Products

To cater to the needs of a diverse customer base, the Bank has made arrangements with several companies to distribute products like insurance, pension and mutual funds to customers.

Insurance (Life/General): The Bank acts as a corporate agent for the distribution of insurance products of both M/s Life Insurance Corporation of India and M/s Bajaj Allianz General Insurance Company for life insurance and general insurance respectively.

Mutual Funds: Mutual Fund is a popular form of investment since it provides the advantages of professional portfolio management and dividend reinvestment. The Bank has tie up with 13 leading Mutual Fund companies thereby offering a variety of mutual fund products to customers.

Bonds: The Bank has enrolled as a Channel Partner for the distribution of bonds issued by different companies, through BankRs.s tie-up with IFIN - a subsidiary of IFCI (Industrial Financial Corporation of India) Financial Services Limited. Through this tie up the Bank has been enrolled as a channel partner of IFCI for the distribution of capital gain bonds and tax free bonds.

Depository Services: The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form in demat account with M/s Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank offers SIBerTrade - the online trading facility to buy /sell stocks for its domestic customers from stock exchanges in India through tie-up with M/s Geojit BNP Paribas Financial Services Ltd. & M/s Religare Securities Ltd. SEBI has also registered the Bank as Self Certified Syndicate Bank (SCSB) for accepting application under Application Supported by Blocked Amount (ASBA) through all the branches of the Bank. ASBA enables the BankRs.s customers to apply for IPO/FPO, rights issues etc. by marking a lien on the account instead of actual debit at the time of applying, which is more beneficial for the customers. Bank is also offering Portfolio Investment Scheme (PIS) - an extensive share trading facility for its NRI customers through tie-up with M/s Geojit. Under PIS, NRI customers can directly invest in the Indian securities market through recognized stock exchanges under repatriable/non-repatriable basis.

New Pension System: The Bank acts as a Point of Presence to provide services to subscribers of New Pension System introduced by Pension Fund Regulatory and Development Authority (PFRDA). All branches of the Bank are designated for collecting NPS applications and contributions.

Pan Application Servicing: The Bank has made arrangement with M/s UTI Technology Services Ltd. (UTITSL) for servicing applications for PAN card. On an average the Bank processes 15,000 applications per year.

SIB E-Pay: In association with BSNL, the Bank is facilitating the payment of BSNL Landline bill of its customers through their accounts maintained with the branches. A customer can avail this facility by submitting a mandate form at the branch where the account is being maintained. Once registered, the BSNL landline bill of the customer will be automatically debited from the customerRs.s account every month. The key feature of this facility is that it is totally hassle free and is offered free of cost to the customers.

Cash Management Service (Premium Collection): The Bank is offering Cash Management Service (Premium Collection) to customers in association with Tata AIG, Exide Life Insurance Co. Ltd. (formerly known as ING Vysya) and ICICI Prudential Life Insurance Co. Ltd. Under this arrangement, BankRs.s customers as well as walk-in customers can remit life insurance premium through branch counters. This facility is offered free of cost to customers.

Centralized Direct Debit Service: The Bank has entered into tie-up with leading aggregator M/s Billdesk Services for Centralized Direct Debit arrangement. Through this tie-up BankRs.s customers will be able to make regular payments like monthly/ quarterly/half yearly payments of Mutual Fund SIP investments/ Loan EMIs (Vehicle/Equipment Loans)/Insurance premium etc. by directly debiting their account and thereby making the payments to various billers/institutions. This facility is available to all customers irrespective of their branches being located in ECS/non-ECS locations. The Bank has similar arrangements with 3 companies - TVS Credit Services, Sundaram Finance Ltd. and Shriram City Union Finance.

TOLL FREE: The Bank has subscribed to toll free numbers from Idea Cellular Ltd. (Toll Free number- 1800 843 1800) and BSNL (Toll Free Number-1800 425 1809) to enable customers to contact the Bank without incurring any cost. In addition, a land-line connection dedicated for international customers is also available. Functioning hours of Toll Free Centre is from 8:30 a.m. to 8:30 p.m. during week days and from 8:30 a.m. to 4:30 p.m. on Saturdays.

Marketing and promotional activities of the Bank are vital in identifying customer needs and designing differentiated products to cater to those needs. While the department is keen to introduce new and varied products, facilitating customer adoption and providing customer assistance assumes equal significance during its operation. The Bank strives to comply with regulatory requirements while taking every endeavour to avoid pitfalls in mis-selling BankRs.s products.

Visibility Enhancement Initiatives

The Bank has undertaken many brand promotion initiatives in various media like Newspaper, Television, Radio, outdoor and online media. Outdoor brandings were concentrated in major metros like Bangalore, Delhi, Chennai, Hyderabad, Coimbatore and Erode through bus shelters and hoardings. All major inaugural events and financial results were covered through print and electronic media. TV Commercials were released on Pan India basis in channels like CNBC, ET Now and in Manorama News, Asianet, Surya, Mazhavil Manorama, Indiavision, Reporter, Kairali, Amrita TV, Jai Hind TV, Jeevan TV in Kerala. Manorama Indian Open Badminton Championship was sponsored by the Bank. Along with the sponsorship of Manorama India Open Badminton Championship, stall space was provided for in the All Kerala Exhibition called Rs.ParpidomRs., which was conducted in all the districts of Kerala. We also ventured into government initiated programmes such as Rs.Clean Campus Safe CampusRs. & Rs.Bhoomigeetham 2014Rs.. Both these programs focused upon various welfare issues in Kerala. South Indian Bank was the title sponsor for National Premier Chess Championship which was organized by CMS College and Kottayam Chess Academy. Also, for the 34th Annual National Management Convention conducted by Kerala Management Association (KMA), South Indian Bank was the title sponsor. Asianet Satellite Communications Ltd. has introduced a fresh and unique branding activity called logo on navigation bar, for which we have associated with Asianet Satellite Communication for the initial launch.

The Bank has its own official fan pages in Facebook, Twitter, YouTube etc. The BankRs.s official Facebook page contains various information about the Bank. The page also gives an opportunity to the customers to provide their valuable suggestions/ feedbacks and also to seek clarifications regarding the products & services by making queries. Also, details of new branches and ATMs opened across the country are updated on a daily basis. BankRs.s official Facebook page also provides general banking information with regard to various products and services. The BankRs.s official Twitter page is integrated with Facebook and the contents shared in the Facebook page are posted as "tweets".

HUMAN RESOURCE

Human Resource is the single most important catalyst for effective and efficient operation of any organization. Competition has rendered this dimension still more critical. The Bank has a team of committed, self-motivated and empathetic workforce, who strive to meet the customersRs. requirements. To augment the existing manpower in line with the BankRs.s healthy & sustained growth and expansion of network, the Bank has continued its initiatives of major talent acquisition and retention policies in the FY 2014-15.

Manpower

As on March 31, 2015, the Bank had 7,826 personnel on its rolls. Cadre wise break-up is as under:

Cadre Men Women Total

Officers 2594 1293 3887

Clerk 1531 1591 3122

Peon 483 30 513

Part-time employees 74 229 303

Total 4682 3143 7825

Infusion of young personnel has brought down the average age of employees of the Bank to 34 years as on March 31, 2015.

Number of Staff Members having professional Qualification as on March 31, 2015 is as under:

Educational Stream Number of Staff

Management 1290

Post Graduation 1095

CA 75

CS 5

Engineering 828

PHD 1

Legal 82

ICWA/CMA 44

Maintenance of Personnel data

Maintenance of staff records was streamlined under "HRMSS" (Human Resources Management Software Solution) System. The personnel data can be accessed by all controlling offices and various reports based on the data can be generated for the quick disposal of staff related matters. To make HRMSS more comprehensive, we have introduced new modules such as Expense Maintenance, Pension Maintenance, Marketing

Excellence, in addition to the existing modules like Transfers, Promotion Maintenance, HRA, Leave and LFC, Training, Online Annual Performance Appraisal of Officers upto Scale IV, Service Record etc.

Motivational Initiatives

Some of the initiatives undertaken by the Bank in order to boost the morale of the Bank employees are as under:

a) Promotions: The Bank has been offering healthy career progressive opportunities. During the financial year, 440 clerical staffs had been promoted to Scale I, 193 officers to Scale II and 189 Officers to various senior cadres.

b) Staff Welfare Scheme (SWS) 2014 was implemented in the FY 2014-15, offering job opportunities to the children of voluntarily retired staff members in officers/clerical/ subordinate cadres. 1 Probationary Officer, 23 Probationary Clerks and 8 Probationary Peons were selected under this scheme based on suitability and through due diligence process.

c) The Bank had introduced SIB Ashwas Plus - an insurance scheme in tie-up with Rs.The New India Assurance Co. Ltd.Rs. for staff members who have retired from the service of the Bank either on superannuation or under VRS/SWS. Under SIB Ashwas Plus, 70% of the premium shall be borne by the Bank, reassuring the BankRs.s concern and support to its staff members even after their retirement.

Industrial Relations

Industrial relations in the Bank have been cordial and harmonious. The representatives of Workmen Union, Officers Association and Management have been working collectively with a sense of ownership for the shared objective of all- round growth and prosperity of the Bank. On account of the cordial industrial relations with both the associations, Bank has achieved considerable growth over the years.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the financial year 2008-09, the Bank had instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The BanksRs. shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees. Compensation and Remuneration Committee of the Board on 27th March, 2015 has recommended to the Board to grand options at a discount of 10% on the closing price of shares quoted on NSE on 26th March, 2015.

Till March 2015, 3,12,55,600 stock options were vested, out of which 2,00,87,136 stock options were exercised by eligible employees. The money realized due to exercise of the said options was Rs.26,01,75,108.20/- and consequently 2,00,87,136 shares of Rs.1/- each has been allotted to the concerned employees/legal heirs.

The total options granted under seven phases of SIB ESOS 2008 consist 4.21% of the paid up share capital of the Bank as at March 31, 2015. The scheme has generated intended motivation amongst the staff.

Statutory disclosures regarding details of the stock options granted, vested, exercised and forfeited and expired during the year under review is annexed to this report.

SIB-Executive Brief

"SIB Executive Brief" - a daily news update on Banking, Finance, Economy, Industry, Market Rates etc. is being provided by SIB Staff Training College. It is E-mailed on a daily basis to Board members, to the executives and it is also made available at SIB- Insight for access to all the staff members.

E-Learning Tests

The Bank has completed 12 online tests through E-learning Application during the year 2014-15. There were various topics covered during these tests such as Banking procedures, BankRs.s Operations Manual-Advance version etc. Prizes were awarded for the toppers in these tests. It is encouraging to know that the learning process is taken up with great enthusiasm and competitive spirit, the fruit of which is visible in the increasing number of branches/offices emerging as toppers. The E-learning platform will be utilized increasingly for improving the knowledge level of the staff members.

E-Circular

The Bank has since migrated to issuance of e-circulars in place of manual circulars. All the circulars of the Bank are uploaded using the Rs.e-circular softwareRs.. In e-circular, BankRs.s policies, Guidelines and Forms are also uploaded so as to empower the branches with readily accessible pool of information/guidelines.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

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

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

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

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

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

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

Particulars of Employees

Information as required by the provisions of Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011], is given under:

#Ceased to be the Managing Director & CEO of the Bank w.e.f. September 30, 2014.

## Appointed as Managing Director & CEO of the Bank w.e.f. 1st October, 2014. The above gross remuneration does not includes Rs.15,75,348/- paid to Mr. V. G. Mathew in the capacity of Executive Vice President during the period 01.04.2014 to 30.09.2014.

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

THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:

A brief outline of the BankRs.s CSR Policy, including overview of projects or programs undertaken / to be undertaken.

South Indian BankRs.s CSR Policy:

The South Indian Bank is grateful to the society for the support and encouragement in the bankRs.s growth and development. The Bank believes that no organization can make sustainable development without the patronage from the society. The Bank is committed in the integration of social and environmental concerns in its business operations and also in the interactions with its stakeholders. The Bank shall continue to have among its objectives, the promotion and growth of the national economy and shall continue to be mindful of its social and moral responsibilities to customers, shareholders, employees and society. Bank is committed to financing the economic and developmental activities of the nation with concern for human rights and environment.

Overview of Activities:

In line with the CSR policy and in accordance with Schedule VII of the Companies Act, 2013, South Indian Bank undertook various activities during the FY 2014-15 which had significant impact on the society. These activities include:

- Livelihood enhancement projects.

- Training to promote sports.

- Setting up old age homes, day care centres and such other facilities for Senior citizens.

- Contribution to technology incubators located within academic institutions which are approved by Central Govt.

- Ensuring environmental sustainability.

- Promoting education, including special education and employment enhancing vocational skills especially among children, women, elderly and the differently abled.

- Promoting Preventive healthcare and sanitation.

Web-Link to the CSR Policy:

http://southindianbank.com/content/viewContentLvl1.aspx?lin

kIdLvl2=215&LinkIdLvl3=778&linkId=778

Composition of CSR Committee:

The Bank understands its responsibility towards the society and environment in which it operates. The bank has constituted Corporate Social Responsibility Committee at the board level to monitor the CSR activities.

Members of the Committee are:

1. Mr. Francis Alapatt (Chairman of the Committee)

2. Mr. V G. Mathew (MD & CEO)

3. Mr. Mohan E. Alapatt (Member)

4. Ms. Ranjana S. Salgaocar (Member)

The composition is as per Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.

Average net profit before tax of the Company for the last three financial years: Rs.599.17 crore

Prescribed CSR Expenditure (two per cent of the amount as above): Rs.11.98 crore.

Details of CSR spent during the Financial Year:

a. Total amount to be spent for the Financial Year 2014-15: Rs.11,98,00,000/-.

b. Amount unspent, if any: Rs.10,52,45,154.50.

c. Manner in which the amount spent during the financial year is detailed below:

BankRs.s CSR mission is to contribute to the social and economic development of the community. Through a series of interventions, the Bank seeks to mainstream economically, physically and socially challenged groups and to draw them into the cycle of growth, development and empowerment.

In the FY 2014-15, the Bank revamped its CSR activities to fall in line with the new rules and regulations in accordance with the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014. The Bank spent a sum of Rs.1,45,54,845.50 under CSR for the FY 2014-15. Through these CSR spent, the Bank were able to touch the lives of many. During the FY 2014-15; additional activities like Swachh Bharat, Clean Ganga and Financial Inclusion were also included in the ambit of CSR. In the FY 2015-16, the Bank is committed to increase its CSR spent so as to increase its continued focus towards sustainable development of social sector.

The CSR Committee confirms that the implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the Bank.

Financial Inclusion

Financial inclusion aims to ensure the availability of formal and basic banking services to all Indian households, including those in the un-banked and under-banked areas. South Indian Bank has adopted several financial inclusion initiatives, including Kiosk banking.

Kiosk Banking Model - Bank Mitra / Business Correspondent (BC)

The Kiosk banking complies with the open standards recommended by the Indian BanksRs. Association (IBA) and the Institute for Development and Research in Banking Technology (IDRBT) and is capable of incorporating the Unique Identity Solution being implemented by the Unique Identity Authority of India (UIDAI). Under Kiosk Banking Model, the Bank is able to provide basic banking services in un-banked/under- banked areas through outlets such as common service centres, Individual Business Correspondents [BC], small retail shops etc. with a laptop based solution.

Kiosk centres offers basic banking services such as customer enrollment, deposits, withdrawal, fund transfers, balance enquiry, FD, RD remittance etc. to potential customers. Customers can open new basic savings account in Kiosk centres by providing KYC documents and biometrics. The Bank has implemented Kiosk Banking Model in the state of Kerala through 53 Akshaya centers, who are acting as common service centres in the state and 64 Individual BCRs.s in Tamil Nadu. As on March 31, 2015, 28,822 customers have opened accounts under our Kiosk Banking Model.

Financial Literacy Centres

Financial Literacy is the ability to understand how money works in our day today life and how someone manages it, how he/she invests it and how a person offers it to others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with their financial resources. 12 FLCs have been allotted to the Bank by SLBC in the state of Kerala to disseminate financial literacy to the people and it is functioned through retired bank employees, school teachers and retired government employees.

Pullu - Model Village of South Indian Bank

The Bank has been servicing Pullu Village in Chazhoor Panchayat of Thrissur Dist. in Kerala under BankRs.s Financial Inclusion initiative since 2010. In order to ensure meaningful Financial Inclusion and to facilitate BC based operations in the village, Bank has opened Ultra Small Branch at Pullu on November 1, 2013. The village was since adopted by the Bank and various welfare measures were initiated in Pullu. Propagation of Bio farming, conducting financial literacy sessions, providing agricultural credit, organizing medical camps are few of such initiatives the Bank has undertaken in the village.

Government of India Scheme - PMJDY

Pradhan Mantri Jan Dhan Yojana (PMJDY), is conceived as a national mission on financial inclusion initiated by Honorable Prime Minister on 15.08.2014. The scheme envisages universal access to banking facilities, with at least one basic banking account for every household. In line with the directives given by Ministry of Finance and SLBC, PMJDY scheme is implemented in our Bank since 18.08.2014.

A survey on 2,68,690 Households was conducted by the Bank under PMJDY to identify Households not having bank accounts. The Bank has opened 1, 02,217 BSBDA accounts as on 31.01.2015 under PMJDY and balance outstanding in those accounts exceeds Rs.10 crore at present. Rupay Debit Cards has been issued in PMJDY accounts providing customers with the benefit of accidental insurance coverage of Rs.1.00 lac.

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the Rs.Green InitiativeRs. of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, DirectorsRs. Report, AuditorsRs. Report etc., for the year ended March 31, 2015, to the e-mail address which the Shareholders have previously registered with their Depository Participant (DP) as their valid e-mail address. Investors desirous of refreshing / updating their e-mail addresses are requested to do so immediately in their respective DP accounts. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/ CDSL will be deemed to be their registered e-mail address for serving notices / documents including those covered under Section 136 of the Companies Act, 2013.

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

SIB STUDENTSRs. ECONOMIC FORUM (SIBSEF)

StudentsRs. Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in Economy,

Banking and Finance. So far, 280 themes have been published since the first publication which was launched in December 1991. In response to the requests from readers, the first 201 themes of this publication were compiled in 4 volumes and published. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to provide a learning platform to the student community. The hard copies of the publication numbering 3,500 are being sent to all the branches/ offices, reputed schools / colleges / academic institutions, RBI offices, other Banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The Subjects discussed during the Financial Year 2014-15 include Corporate Social Responsibility (CSR), Shadow Banking System (SBS), Forex facilities for residents, Take over code, Economic survey: Highlights, Union Budget 2014-15 Part I, Union Budget 2014-15 Part II, Microfinance sector, Charter of Customer Rights; Capacity building in banks, Over-the-counter (OTC) derivatives market reforms, Whistle BlowersRs. Protection bill etc. These themes are made available in the BankRs.s Website.

ANTI - MONEY LAUNDERING (AML)

Transactions processed through the Core Banking Solution are monitored for detecting suspicious transactions, using TCS Bancs Compliance, an AML application to comply with the provisions under Prevention of Money Laundering Act (PMLA).

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

The Bank has initiated steps for starting a Centralized Processing Centre (CPC) for liability side customer creation with the objective of full KYC compliance and to use KYC as a fraud prevention tool. The Bank aims to bring all branches under the CPC model during the Financial Year 2015-16.

The Board has nominated Mr. V. G. Mathew, MD & CEO as the "designated director", as per PMLA Act.

The Bank has attached great importance for compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.

COMPLIANCE DEPARTMENT

The Bank has institutionalized a strong compliance culture and mechanism across the organization, pursuant to its strategic goals of transparency and trust, among all its stakeholders. The Bank has a dedicated Independent Compliance Department headed by a Dy. General Manager for ensuring regulatory compliance, across all its businesses and operations. The key functions of this department includes, dissemination of key regulatory updates affecting the various business verticals of the Bank, review of processes from a regulatory compliance perspective, provide guidance on compliance-related matters, impart training to employees on compliance aspects, among others.

DIRECTORS

During the year, pursuant to the applicable provision of the Companies Act, 2013, Banking Regulation Act, 1949, the provisions of the Articles of Association of the Bank and approval of Reserve Bank of India vide its letter DBOD.Appt. No. 3926/08.51.001/2014-15 dtd. 11.09.2014 Mr. V G. Mathew (DIN-05332797) has been appointed as Managing Director and Chief Executive Officer and he shall also be a Whole-time Key Managerial Person of the Bank for a period of three years from 1st October, 2014 till 30th September, 2017.

Mr. Mathew L. Chakola (DIN-00633502) and Mr. Paul Chalissery (DIN-00836980) have been appointed as an Independent Director of the Bank for the purpose of Section 149(2) of the Companies Act, 2013 with effect from April 1, 2014 for a period of 6 months and they demitted the office of directorship w.e.f. September 30, 2014, upon completion of 8 year term as stipulated under the Banking Regulation Act,1949. The Board places on record its appreciation for the invaluable services rendered by them during their tenure as Directors.

Pursuant to Sections 149, 152 of the Companies Act, 2013 and Section 10A (2A) of the Banking Regulation Act, 1949 and with the approval of the shareholders Dr. John Joseph Alapatt (DIN-00021735) was appointed for a period of five years, Sri Mohan E. Alapatt (DiN-00025594) was reappointed for the period upto February 28, 2018 and Sri K. Thomas Jacob (DIN-00812892) was reappointed for the period upto August 30, 2018, as Independent Directors not liable to retire by rotation w.e.f. April 1, 2014.

Mr. Francis Alapatt (DIN 01419486) and Mr. Salim Gangadharan (DIN-06796232) have been appointed as an Independent Director of the Bank for the purpose of Section 149(2) of the Companies Act, 2013 with effect from April 1, 2014 for a period of five years, and further that they shall not be liable to retire by rotation. Mr. Cheryan Varkey (DIN-06884551) was appointed as Director of the Bank in the 86th Annual General Meeting and his period of office is liable for determination by retirement of directors by rotation.

Smt. Ranjana S. Salgaocar (DIN-00120120) and Mr. Parayil George John Tharakan, (DIN-07018289) have been appointed as additional Directors of the Bank w.e.f. 1st October, 2014 and November 25, 2014 respectively pursuant to Clause 49 of Listing Agreement and Section 149(1) & 161 of the Companies Act, 2013.

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

AUDITORS

a) Statutory Auditors:

The shareholders at its 86th Annual General Meeting held on 16th day of July, 2014, appointed M/s S. R. Batliboi & Associates LLP (formerly known as M/s S. R. Batliboi & Associates), Chartered Accountants, Chennai, as the Central Auditors for the audit of BankRs.s accounts for the year 2014-15. M/s S. R. Batliboi & Associates LLP, Chartered

Accountants, Chennai, will vacate the office at the end of the ensuing Annual General Meeting. Having completed a term of four years of continuous audit, the said firm is not eligible for re-appointment. Therefore, the shareholders will have to appoint a new firm as Statutory Central Auditors for the audit of the BankRs.s accounts for the financial year 2015-16. Based on the application submitted by the Bank the Reserve Bank of India conveyed their approval vide letter No. DBS.ARS. No. 14271/08.21.005/2014-15 dated May 14, 2015 for appointment of M/s Deloitte Haskins & Sells, Chartered Accountants, Chennai as Statutory Central Auditors of the Bank. A resolution will be placed before you at the ensuing Annual General Meeting, seeking approval for appointing M/s Deloitte Haskins & Sells as the Statutory Auditors of the Bank. The Board recommends the appointment of the said firm as the Auditors of the Bank for the financial year 2015-16.

b) Secretarial Auditors and Secretarial Audit Report

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

Audit and Inspection

Regular Inspection of the BankRs.s branches is conducted at periodical intervals on the basis of Risk Based Internal Audit approach. Concurrent audit at branches by qualified Chartered Accountants/retired officers covering 67% of business of the Bank. Concurrent audit of International Banking Division and Treasury Department are also conducted. In addition to the above, the Bank conducts Stock Audit, Credit/Legal Audit, KYC/ AML Audit, Information System Audit, Revenue Audit to check income leakages, Surprise Inspection of gold & cash, Forensic Audit by external agencies in cases where it is found necessary, exclusive Gold Loan asset verification etc. at branches. This year, Bank has brought almost all isolated remote branches under the ambit of concurrent audit, irrespective of the business volume of such branches. Also, the frequency of Gold Loan Inspection has been increased. Information System Audit of CBS and major applications for the current financial year 2014-15 was done by an external approved auditing firm. Besides, all the branches are subjected to statutory audit on yearly basis. RBI conducts Risk Based Supervision of the Bank. An Offsite Monitoring Team is functioning in all Regional Offices mainly to oversee compliance of KYC/AML guidelines in the newly opened operative accounts by branches. Bank is sending alerts (of large value) generated from a software to branches & ROs to facilitate verification of the branch operations, in which some deviations from the laid down procedures / rules are detected by the system. ROs are provided with a terminal of this software for scrutiny of all alerts wherever needed. Above all, all alerts, generated by this system, are analyzed by a central team for the correctness of the branch operations connected to such alerts. The branch operations are analyzed for KYC/ AML/CFT guidelines compliance also centrally with the help of another software and the alerts generated from this are followed up. Statutory reporting of the violations is also done centrally.

EXPLANATION FOR AUDITORSRs. COMMENTS IN THE REPORT

The Auditors report for the year 2014-15 does not contain any qualification.

CORPORATE GOVERNANCE

A separate report profiling Corporate Governance as required under Clause 49 of the Listing Agreement with Stock Exchanges, and a certificate from M/s S. R. Batliboi & Associates LLP, Chartered Accountants, Statutory Auditors of the Bank, are annexed to this Report.

Extracts of Annual Return

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

Subsidiary Companies

The Bank did not have any subsidiary Company during the previous financial year. The Board of Directors has formulated a policy for determining Rs.materialRs. subsidiaries pursuant to the provisions of the Listing Agreement. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=781 &linkId=781).

Related Party Transactions

The Board of Directors has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions pursuant to the provisions of the Companies Act, 2013 and Listing Agreement. The same is displayed on the website of the Bank (https://www.southindianbank.com/ content/viewContentLvl1.aspx?linkIdLvl2=215&LinkIdLvl3=782 &linkId=782).

Strictures and Penalties

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

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

DirectorsRs. Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to the DirectorRs.s

Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year 2014-15 and of the profit of the Bank for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts for the financial year ended on March 31, 2015, on a going concern basis;

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

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

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the BankRs.s shares are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the BankRs.s shareholders and customers for their continued support, patronage and goodwill. The Board further places on record its appreciation for the valuable services rendered by M/s S. R. Batliboi & Associates LLP, Statutory Auditors, during their tenure. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank. The Bank gladly acknowledges this fact and thanks all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the Bank at all levels.

By Order of the Board

(AMITABHA GUHA) (V. G. MATHEW)

CHAIRMAN MANAGING DIRECTOR & CEO

DIN : 02836707 DIN : 05332797

Place: Nedumbassery, Kochi Date : June 2, 2015

Mar 31, 2012

The Board of Directors are pleased to place before you, the 84th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2012 and the Profit and Loss Account for the year ended March 31, 2012.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2012 are as follows:

Rs in crore Key Parameters 2011-12 2010-11

Deposits 36501.00 29721.00

Gross Advances 27473.00 20659.00

Total Gross Business 63974.00 50380.00

Net Profit 401.66 292.56

Capital & Reserves 2167.48 1845.16

Capital Adequacy (%) - Basel-I 11.64 13.17

Basel-II 14.00 14.01

Earning Per Share (EPS) :

(a) Basic EPS (in Rs) [face value Rs 1/-] 3.55 2.59

(b) Diluted EPS ( in Rs) 3.50 2.58 [face value Rs 1/-]

Book Value per Share (in Rs) [face value Rs 1/-] 19.12 16.33

Gross NPA as % of Gross Advances 0.97 1.11

Net NPA as % of Net Advances 0.28 0.29

Return on Average Assets (%) 1.12 1.05

FINANCIAL PERFORMANCE

Profit

The Bank has achieved a record net profit of Rs 401.66 crore during the year registering a growth of 37.29% over the previous year. The Bank could achieve this phenomenal growth in net profit essentially on account of higher scale of operations and better management of assets and liabilities of the Bank. The Operating Profit for the year under review is Rs 682.72 crore before depreciation, taxes and provisions. Net profit is Rs 401.66 crore and the profit available for appropriation is Rs 420.13 crore as per details given below:

(Rs in crore)

Profit before depreciation, taxes & provisions 682.72

Less : Depreciation: 31.20

Provision for NPA/NPIs: 21.34

Provision for depreciation on investments: 14.07

Provision for Income Tax/Wealth Tax: 170.69

Provision for standard advances: 39.75

Provision for restructured advances: 4.01 281.06

Net Profit: 401.66

Brought forward from last year: 18.47

Profit available for appropriation: 420.13

Appropriations (Rs in crore)

Transfer to Statutory Reserve 100.42

Transfer to Capital Reserve 0.51

Transfer to Revenue & Other Reserves 211.52

Transfer to Special Reserve u/s 36(i) (viii) of The 14.00 Income Tax Act, 1961

Transfer to/(from) Investment Reserve (7.13)

Transfer to/(from) present value provision for ADWDRS (1.52)

Proposed Dividend 68.10

Dividend Tax on Proposed Dividend 11.05

Carried over to Balance Sheet 23.18

Total 420.13

Dividend

The Board of Directors has recommended a dividend of 60% (tax-free in the hands of shareholders), i.e., @ Rs 0.60/- per Equity Share of face value of Rs 1/- per share as against 50%, i.e.Rs 0.50/- per share declared last year.

EXPANSION PROGRAMME / POLICY OF THE BANK

During the year, the Bank opened 58 new branches and 174 ATMs across the country. The Bank has been successful in widening its coverage across the country with 700 branches and 2 extension counters transforming it into a pan India institution. The branch network now covers 27 states/union territories and has a network of 663 ATMs.

The Bank plans to open more new branches and ATMs in the current financial year so as to reach the corporate goal of 750 Branches and 750 ATMs by March 31, 2013.

CAPITAL & RESERVES

The Bank was having an issued and paid up capital of Rs 113.37 crore as on March 31, 2012. Capital & Reserves of the Bank has improved from Rs 1,845.16 crore to a healthy level of Rs 2,167.48 crore due to plough back of profits.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- BaseI I & Basel II

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2012 according to Basel I guideline is 11.64% as against the statutory requirement of 9%. Tier I CRAR constituted 9.60% while Tier II CRAR represented 2.04%.

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2012 according to Basel II guideline is 14.00%, as against the statutory requirement of 9%. Tier I CRAR constituted 11.54% while Tier II CRAR worked out to 2.46%.

Pursuant to Reserve Bank of India guidelines, the Bank migrated to new Capital Adequacy framework w.e.f. March 31, 2009. The Bank has adopted Standardized Approach for Credit Risk, Standardised Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk while computing the Capital requirement under Basel II guidelines.

LISTING AGREEMENT WITH STOCK EXCHANGES

The Bank's shares continue to be listed on The Cochin Stock Exchange Ltd., BSE Ltd., and The National Stock Exchange of India Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2012-13.

BUSINESS ACHIEVEMENTS

The Bank achieved a total gross business of Rs 63,974 crore, consisting of total deposit of Rs 36,501 crore and gross advances of Rs 27,473 crore as on March 31, 2012 registering a growth of 26.98% over the previous year.

In CASA segment, the Bank has achieved a year to year growth of 12.11%.

During the year 2011-12, 6.30 Lakh new SB A/cs were opened.

Deposits

The Bank could increase its total deposits to Rs 36,501 crore from Rs 29,721 crore last year, registering a growth of 22.81%.

The break up of the deposits as on March 31, 2012 is as under:-

Amount % to total (Rs in crore) Deposits

Current Deposits 1,261.82 3.46

Savings Deposits 5,917.49 16.21

Term Deposits 29,321.22 80.33

Total 36,500.53 100.00

Advances

Gross advances of the Bank registered an increase of 32.98%, to touch a gross figure of Rs 27,473 crore. Total Priority sector advances as at the end of the financial year stood at Rs 5,221.50 crore, constituting 25.27% of the Adjusted Net Bank credit (ANBC). Exposure to agricultural sector amounted to Rs 1,993.16 crore, forming 9.65% of ANBC as at the end of the financial year.

Split up of exposure under Priority sector is furnished below :

Amount (Rs in crore)

Agriculture & Allied activities 1,993.16

Small Enterprises 1,765.53

Other Priority Sector 1,462.81

Total Priority Sector 5,221.50

INVESTMENTS

Indian GDP growth slowed in the financial year 2011-12 on account of the higher interest rates as well as global volatilities. Higher trade deficit of $185 billion, and increase in external debt burden were putting pressure on INR. Headline Wholesale Price Index (WPI) inflation, which remained above 9 per cent during April-November 2011, moderated to 6.9 per cent by end-March 2012, consistent with the Reserve Bank's indicative projection of 7 per cent.

Liquidity conditions remained in a deficit mode throughout 2011-12. Average net injection of liquidity under the daily Liquidity Adjustment Facility (LAF) increased from around Rs 50,000 crore during April-September 2011 to around Rs 140,000 crore during February 2012 and further to Rs 160,000 crore during March 2012, partly reflecting a build-up in government cash balances. In order to mitigate the liquidity tightness, the Reserve Bank of India conducted Open Market Operations (OMOs) aggregating around Rs 130,000 crore between November 2011 and March 2012. Further, the Cash Reserve Ratio (CRR) was reduced by 125 basis points (50 basis points effective January 28, 2012 and 75 basis points effective March 10, 2012), injecting primary liquidity of about Rs 80,000 crore. RBI continued hiking the LAF repo and reverse repo rates touching a peak of 8.50% and 7.50% respectively in the previous year. The Bond market and the equity market was trading in a range with negative bias throughout the financial year.

Our Bank's gross investment portfolio increased by 5.34% to Rs9 ,399.87 crore as against a deposit growth of 22.81% resulting in a healthy investment deposit ratio of 25.75% as on March 31, 2012.

NON-PERFORMING ASSETS (NPA) MANAGEMENT

During the year 2011-12, the Bank had taken focused steps for recovery of Non-Performing Assets by initiating prompt and effective measures for recovery under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), follow up of recovery cases filed before DRT and civil courts, one time settlement of accounts, conduct of recovery camps etc.

As a result of the various initiatives taken as above, Bank could recover NPAs to the tune of Rs 176.86 crore during the year (up from Rs 167.24 crore as on previous year) as against the target of Rs 192 crore. The Gross and Net NPAs of the Bank as on March 31, 2012 were Rs 267.16 crore and Rs 76.51 crore as against Rs 230.34 crore and Rs 60.02 crore respectively as on March 31, 2011.

Percentage of Gross NPA to Gross Advance declined to 0.97% as on March 31, 2012 from 1.11% as at March 31, 2011 and percentage of net NPA to net Advances also came down from 0.29% as on March 31, 2011 to 0.28% as on March 31, 2012. Both the percentage of GNPA & NNPA are comparable with the best in the industry.

During the year, with effect from quarter ended June 2011 onwards, Bank could smoothly switch over to fully automated NPA classification and provisioning of accounts, much ahead of the RBI stipulated date. As a prudent measure, with a view to build up provision and capital buffer, Bank has adopted a policy for additional provisioning in NPA accounts, which is effective from quarter ended March 31, 2012. NPA provisioning in percentage thus stood at 71.36%.

INFORMATION TECHNOLOGY (IT) AND IT ENABLED SERVICES

Information Technology and its adoption to offer innovative solutions has been paramount importance for sustenance of banks. The turnaround time for rolling out a technology product in banks has been visibly diminishing, which essentially calls for a robust system in place to articulate projects right from conception to execution.

The Bank, an early adopter of technology with a view to providing safe and convenient banking facilities to its customers, has introduced host of services and facilities for enhancing the customer satisfaction. The Bank has been successfully functional with Core Banking Solution (CBS) and achieved 100% roll out in CBS as on March 31, 2007. CBS has been the key component in introducing the following technology services by the Bank for the benefit of its customers.

- Real time on line ATMs having affinity with NFS (National Financial Switch), Master and VISA payment and settlement agencies.

- Global Debit Card operations with VISA and MAESTRO.

- Straight Through Processing (STP) for RTGS and NEFT Payment systems

- Internet Banking & E -Commerce

- Mobile Banking & M-Commerce

- ASBA (Application Supported by Blocked Amount)

- Foreign Inward Instantaneous remittance with own Payment Gateway System

- Demat & On Line Trading Facility

- Point of Sales (POS)

- Bullion Sales

- Portfolio Investment Scheme for NRI community

IT initiatives/Solutions embarked during the year

The Bank has launched following IT enabled services/Solutions during the year to serve its customers in a better and efficient way.

IMPS (Interbank Mobile Payment System): This facilitates instant interbank transfer of funds. This initiative is launched in association with NPCI (National Payment Corporation of India). Both JAVA based (application) and SMS based mode of operations are available. Transactions are validated through registered mobile number and unique MMID (Mobile Money Identifier) with 24X7 availability and instant debit/credit intimation to both sender and receiver.

Point of Sale Solution (POS): Facilitates acceptance of VISA, MASTER and MAESTRO cards. Launched in association with M/s FIS Payment Systems Ltd.

Core Hardware Migration: In line with the capacity planning envisaged by the Bank, the Core hardware has been changed to the latest which can cater to Bank's needs for next 5 years.

Bullion Sales: 24 Carat pure gold of 999.9 purity. Manufactured in Switzerland by PAMP refineries, one of the renowned global gold refiners with purity being ASSAY certified. Currently launched in the states of Kerala, Tamil Nadu, Karnataka and Andhra Pradesh.

Portfolio Investment Solution for NRIs: Enables NRIs to purchase shares from secondary market. Partnering with M/s Geojit BNP Paribas Financial Services Ltd. for this initiative. Facility is offered both in online and offline mode.

Information Security and Risk Management

As banks embrace technology as part of their new strategic agenda to face competition in the emerging realities of banking, they are increasingly exposed to IT risks. It is therefore imperative for any bank to work out appropriate IT risk management strategies to secure its most vital information asset and ensure that related risk management systems and processes are strengthened on continual basis to secure both present and future banking activities. SIB's IS audit system has already factored these aspects into consideration and it includes the new supervisory initiatives in the form of Risk Based Supervision (RBS) and Risk Based Internal Audit (RBIA) under Basle II.

Bank has been providing awareness on e-threats to its customers and staff in an incessant basis so that both proactive and reactive measures can be instituted, as deemed appropriate to thwart risks associated with menace of e-threats.

Bank is in the process of implementing the stipulations and guidelines issued by RBI based on the working group recommendations on Electronic Banking, Technology Risk, Information Security and Cyber Frauds as part of the IT governance programme.

Upcoming Initiatives

Bank would like to introduce the following initiatives to augment the customer convenience in the related areas during the year.

- Online Debit Card Payments

- 2nd Factor Authentication for net banking

- Online Tax Payments

- Prepaid Travel Cards

- Automated Dataflow from Bank to RBI as per the RBI directions on the same

IT Training

During the year under reporting, many IT training programmes in relevant areas were attended by the Bank's resource in premier institutions such as IDRBT, NIBM, IIM etc. to equip themselves abreast with the advancement and rapid changes in IT.

Awards and Accolades

During the year, the Bank bagged the Technology Excellence Award, instituted by IDRBT and the Bank has been designated for the Great Mind Challenge for Business award during the year, given away by IBM, a global IT solution company for implementation of innovative IT solutions.

RISK MANAGEMENT

Risk is an integral part of the banking business and the Bank aims at delivering superior value to shareholders by achieving an appropriate trade-off between risk and return. Sound risk management and balancing risk-return trade-off are critical to a Bank's success. Business and revenue growth have therefore to be weighed in the context of the risks embedded in the Bank's business strategy. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. The identification, measurement, monitoring and mitigation of risks, continued to be a key focus area for the Bank. The risk management function attempts to anticipate vulnerabilities at the transaction level or at the portfolio level, as appropriate, through quantitative examinations of embedded risks. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously benchmarked with the best practices followed in the Industry.

The Bank's risk management structure is overseen by the Board of Directors. Appropriate policies to manage various types of risks are approved by Risk Management Committee (RMC), which provides strategic guidance while reviewing portfolio behaviour. The senior level management committees like Credit Risk Management Committee (CRMC), Market Risk Management Committee (MRMC) and Operational Risk Management Committee (ORMC) develop the risk management policies and vet the risk limits. The Asset Liability Management Committee and Investment Committee ensure adherence to the implementation of the above risk management policies, develop Asset Liability Management Policy and Investment Policy within the above risk framework.

Compliance with Basel II framework

In tune with regulatory guidelines on Pillar I of Basel II norms, Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized

Duration Method and for operational risk as per the Basic Indicator Approach. To address the issues of Pillar II, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process), integrating capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk etc. Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline of Basel II guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a more consistent and comprehensive manner.

INTERNATIONAL BANKING

The total forex business turnover for the year ended 31st March, 2012 was Rs 52,662.15 crore recording an increase of 47.67% as compared to the previous financial year and Bank earned an exchange profit of Rs 31.88 crore showing a year on year increase of 59.87%.

The Bank has successfully implemented online remittance facility with M/s. UAE Exchange Centre, Abu Dhabi and UAE Exchange, Kuwait on Real time basis. This will ensure immediate credit to Bank's customers, with a unique feature of informing the beneficiaries and remitter through SMS within 60 seconds of remittance, branded as "SIB Flash". Bank will be extending this facility to few more exchange houses within a short span.

At present the Bank is having rupee inward remittance arrangement with 4 Banks and 32 Exchange Houses and turnover for the year ended March 2012 was Rs 3,988.02 crore registering an increase of 37.48% as compared to the previous financial year. The Bank continued providing managerial support to M/s Hadi Express Exchange, UAE, with five branches.

NRI PORTFOLIO

The Bank has the unique distinction of opening the first exclusive NRI Branch in Kerala and still occupies the prime position with 7 exclusive NRI Branches in the state. The total NRI Deposit of the Bank as on March 31, 2012 constitutes 20% of the Bank's total retail deposit.

The NRI Division of the Bank has been setup to provide dedicated and personalized service to the Bank's NRI customers. In the FY 2011-12, the Division has successfully co-ordinated NRI Meets in Dubai-UAE, Doha-Qatar, and Jeddah & Riyadh in Saudi Arabia to reach out to Bank's customers in various GCC countries. To build up the momentum of NRI business growth and valued customer retention, the division has successfully co- ordinated NRI Meets with cultural events in all the Regions of the Bank in Kerala. The Bank has deputed officers to Bank's stall at Dubai Shopping Festival (DSF), Global Village to promote

NRI services. NRI Division also extends support to the branches in their NRI related matters and closely monitors the growth of NRI business. In the FY 2011-12, the Bank has recorded a growth of 21.06% as against 6.47% in the FY 2010-11. NRI Newsletter, a quarterly publication from NRI Division continues to provide useful information to the Bank's NRI customers.

TRAINING

The Bank accords utmost importance to human resources development. Training programmes are conducted at SIB Staff Training College (SIBSTC), Thrissur and at 7 Regional Training Centers (RTCs) at ROs for enhancement of professional capabilities of the staff. The training programmes are designed for skill enhancement and also to imbibe SIB culture through an effective learning process. The success of these programmes reflects on the enhanced organizational productivity. SIBSTC and the RTCs identify gaps in skill of the personnel and provide learning to them for qualitative improvement. During the year 2011-12, the Bank imparted training to 2,151 officers, 1,454 clerks and 237 sub-staff in various aspects of banking operations. Thus, the Bank could provide training to a total of 3,842 of its personnel, which is about 65% of total staff strength of 5,879 as on March, 31 2012. This is in consonance with the Bank's vision towards continuous upgradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations.

MARKETING

The Bank has a vibrant and evolving marketing strategy, designed to achieve the overall business objectives. By creating products and services fine tuned to match the varied interests of our patrons, the Bank has ensured customer retention on the one hand, while bringing in a large number of new customers on the other. As in the past, the early mover advantage in technology adoption has helped the Bank to roll out marketing campaigns in an aggressive manner.

Any Branch Banking

The Bank offers a wide range of SB & CD products with Any Branch Banking facility to suit the needs of various customer segments. Through Real Time Gross Settlement/National Electronic Fund Transfer (RTGS/NEFT), customers can transfer/ receive funds to/from accounts with any other Banks in India, who are the members of this payment system. Customers can also send/receive funds to/from abroad through various online real-time remittance services provided by the Bank. The products such as CD Smart (introduced in FY 2011-12) and SIB-Mahila, Youth Plus etc. caters to specific segments of the customer base. The products have been well-received by the customers. Constant innovations are being done on the existing product lines to make it more attractive and customer friendly.

SIB Pure Gold

The Bank has launched bullion banking on September 6, 2011 for sale of gold coins/ingots of denomination 1, 3, 4, 8, 20, 50 & 100 gm, with 999.9 purity branded as "SIB Pure Gold", through Bank's branches in Kerala, Tamil Nadu, Andhra Pradesh and Karnataka. SIB Pure Gold, is packaged in a tamper-proof cover and is sourced from world's renowned refinery PAMP, Switzerland with purity being ASSAY certified.

TECHNOLOGY PRODUCTS Internet Banking

SIBerNet - Internet banking service of the Bank offers Self, Third Party and External Fund Transfer (RTGS/NEFT), which enables our customers to do transaction on a round the clock basis. To facilitate online transaction for Internet Banking customers, Bank has arrangements with 5 leading online payment aggregators like Billdesk, Tech Process, CC Avenues, Times of Money Ltd (TOML) and Atom Technology Ltd. To enable online offering facility to SIBerNet customers, the Bank has established arrangements with famous temples like Attukal Bhagavathy Temple and Sri Padmanabha Swamy Temple, Trivandrum and Sri Krishna Temple, Guruvayur. In order to cater to the needs of Bank's customers in an instantaneous way the Bank introduced Instant Pin Mailers for SIBerNet which enables the customer to receive User Id and Password over the counter instantly when they are applying for internet banking facility. In addition to these the Bank is introducing Direct and Indirect Tax Payment facility for its Retail and Corporate Customers.

The Bank was successful in enrolling 44,314 SIBerNet registrations in the FY 2011-12 with 50% growth compared to 41.27% in FY 2010-11. The growth can be attributed to various campaigns launched round the year to increase the number of registrations.

Mobile Banking

Customers of the Bank enjoy the benefit of mobile banking service wherein the transaction alerts are sent to the customers (including the mobile nos. registered outside India) on a real time basis, using SMS technology. Last year the Bank has launched SIB M-Pay, the enhanced mobile banking services for the benefit of domestic customers which offers 24X7 instant inter/intra Bank fund transfers even on bank holidays. The fund transfer facility is facilitated using the IMPS (Interbank Mobile Payment Service) platform of NPCI. The facility also enables the registered user to enjoy the value added services like mobile recharge, DTH recharge, flight ticket booking, movie ticket booking etc. using their mobile phones. The Bank had planned exclusive marketing strategies for the new product, which resulted in 40,000 registrations in a short span of 2 months.

The SMS registration of the Bank were 1,28,517 in the FY 2011-12 with a growth percentage of 60% compared to 34.78% in FY 2010-11. The Bank has been floating different campaigns to motivate the staff members to create customer awareness about mobile banking.

Debit Cards

The Bank is offering both Visa and Maestro debit cards to its customers. Using SIB debit cards Bank's customers can withdraw cash through ATMs of any Bank in India and also across the globe wherever Visa/Master logo is displayed. Visa cards have three variants namely Classic, Gold and Platinum which offers a wide variety of services such as enhanced cash withdrawal limits, online transaction, POS transaction limits etc. Recently the Bank has enabled its Visa cards for online transactions and Maestro cards will be enabled soon for the same. The Bank is also looking forward to launch travel card soon.

The Bank has issued 4,92,218 debit cards during the FY 2011- 12, registering a growth of 30% over last year. The Bank was successful in increasing card base and card usage on account of innovative marketing campaigns such as Smart Shopper Contest.

THIRD PARTY PRODUCTS

Depository Services

The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form in demat account with Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank offers SIBer Trade - the online trading facility to buy /sell stocks for its domestic customers from stock exchanges in India through a tie-up with M/s Geojit BNP Paribas Financial Services Ltd. SEBI has also registered the Bank as Self Certified Syndicate Bank (SCSB) for accepting application under Application Supported by Blocked Amount (ASBA). ASBA enables the Bank's customers to apply for IPO/FPO, rights issues etc., by marking a lien on the account instead of actual debit at the time of applying, which is more beneficial for the customers. During the year, the Bank has also launched its Portfolio Investment Scheme (PIS) - an extensive share trading facility for its NRI customers through a tie-up with M/s Geojit. Under PIS, NRI customers can directly invest in the Indian securities market through recognized stock exchanges.

Demat services of the Bank has registered a growth of 5% over the year with 765 new registrations.

Insurance (Life/General)

Since June, 2009 the Bank has been acting as a corporate agent of Life Insurance Corporation of India for selling the life insurance products. This year, the Bank has been focusing more on non-single premium products, considering the fact that this is more beneficial for the Bank in terms of revenue on the one hand, while being complementary to Bank's core business growth strategy, on the other.

Various campaigns had been launched during the year by the Bank & LIC to focus on increasing the Regular Premium Business.

General Insurance products such as health policy packages and policies to protect the assets and goods against various perils are also made available to customers. The Bank acts as a corporate agent for the distribution of insurance products of M/s Bajaj Allianz General Insurance Company.

General insurance business of the Bank has recorded growth of 11% over the year with around Rs 11 crore Gross Premium collected during the year. The success can be attributed to the marketing activities of the Bank to generate more business.

New Pension System

The Bank was appointed as a Point of Presence to provide services to subscribers of New Pension System introduced by Pension Fund Regulatory and Development Authority (PFRDA). The Bank has been appointed as an Aggregator for NPS Lite and is the only major bank in this segment. All the branches are designated for collecting NPS Lite applications and contributions. In the last financial year, the Bank has acquired around 5,000 new customers for NPS Lite.

PAN Application Servicing

Based on the representations received from the customers, the Bank had made a direct arrangement with M/s UTI Technology Services Ltd. (UTITSL) for servicing the PAN card applications. This is in addition to the already launched KYC Certification services for the Mutual Fund Investors, in association with M/s CDSL Ventures Ltd. (CVL). On an average the Bank is processing 15,000 applications per year.

Mutual Funds

Mutual Funds are one of the preferred investment options for all those who wish to avoid direct investments in stock markets, yet earn more than what traditional savings avenues offer. The Bank is already having tie up with 13 leading Mutual fund companies to offer variety of mutual fund products to the Bank's customers. The Bank has revamped the services in mutual fund business and will be targeting SIP (Systematic Investment Plan) type products aggressively, in the coming year.

VISIBILITY ENHANCEMENT PROGRAMMES

The Bank has undertaken many brand promotion initiatives in various media like Newspaper, Television, Radio, outdoor and online media during the year 2011-12. The advertisements concentrated in major metros like Bangalore, Delhi, Mumbai, Kolkata, Chennai and Hyderabad and has enhanced the visibility of the Bank at these centres. The Bank was the Title Sponsor and official Bankers to the prestigious Grand Kerala Shopping Festival Season -5.

PERSONNEL

Pacing with the Bank's significant growth, the Bank has engaged itself in major talent acquisition and articulation of retention policies in the FY 2011-12. The Bank is envisaging to have staff complement of 7,500 employees on its rolls by March 31, 2013. To achieve this target, Bank has embarked upon recruitment drive to acquire manpower of required skills. The total number of employees as at the year end was 5,879. This growth in personnel has been dovetailed with the business growth target of the Bank. Of the total 5,879 employees, there are 764 Postgraduates, 700 Management Graduates, 397 Engineers, 88 Law Graduates, 63 Chartered Accountants, 24 Cost Accountants and 2 Ph.Ds.

The major skill acquisition initiatives of the Bank include local/ general recruitments and campus recruitments. During the year the Bank has recruited 294 officers and 346 clerks. Of the officers joined, 174 are MBA graduates, 60 Engineering graduates and 20 Chartered Accountants. The Bank also selected 400 persons through general recruitment as Clerks for the year 2012-13.

Staff position

As on March 31, 2012, the Bank had 5879 personnel on its rolls as against 5619 as on March 31, 2011. Cadre wise break up is as under:

Cadre Male Female Total

Officers 1925 753 2678

Clerk 1241 1154 2395

Peon 533 24 557

Part-time employees 96 153 249

Total 3795 2084 5879

The average age of employees of the Bank is 38 years as on March 31, 2012. Out of the total number of staff members, 46% comes below the age of 30 years.

Maintenance of staff records was streamlined under "HRMSS" (Human Resources Management System Software). The personnel data can be accessed by all controlling offices and various reports based on the data can be generated. To make HRMSS more comprehensive the Bank has included more modules like training, Gratuity, Deputation etc. in it.

Staff Motivation:

In order to motivate and enhance the level of ownership and loyalty of the Bank employees, the Bank has modified the existing service conditions like HRA, Conveyance allowance etc. of all cadres.

Staff Welfare Scheme (SWS) 2011 was introduced in the FY 2011-2012 offering job opportunities to the children of staff members in officers/clerical/subordinate cadres. 17 Probationary Officers, 35 Probationary Clerks and 21 Probationary Peons were selected under this scheme.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the financial year 2008-09, the Bank instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The Banks' shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees. Compensation and Remuneration Committee of the Board on November 21, 2009 has recommended to the Board to grant options at a discount of 10% on the closing price of the shares quoted on NSE on November 20, 2009. Under SIB ESOS 2008 (1st Tranche) the Bank granted 3,07,25,000 options to eligible employees. Further, Compensation and Remuneration Committee of the Board on October 21, 2010 has recommended to the Board to grant options at a discount of 10% on the closing price of the shares quoted on NSE on October 20, 2010. Under SIB ESOS 2008 (2nd Tranche), the Bank granted 5,10,500 options to eligible employees. Further, Compensation and Remuneration Committee of the Board on February 16, 2012 has recommended to the Board to grant options at a discount of 10% on the closing price of the shares quoted on NSE on February 15, 2012. Under SIB ESOS 2008 (3rd Tranche), the Bank granted 9,42,000 options to eligible employees.

Till March 2012, 90,34,050 stock options vested, out of which 36,93,530 stock options were exercised by eligible employees. The money realized due to exercise of the said options was Rs 4,77,57,342.90 and consequently 36,93,530 shares of Rs 1/- each have been allotted to the concerned employees/legal heirs.

The total options granted under three phases of SIB ESOS 2008 works out to 2.84% of the paid up share capital of the Bank as at March 31, 2012. The scheme has generated intended motivation amongst the staff. With a view to maintain highest standards of personal ethics, all the Directors of the Bank including the Chairman and Managing Director & CEO have voluntarily decided not to accept any stock options, though the shareholders of the Bank were gracious enough to permit grant of stock options to all the Directors of the Bank during the 80th Annual General Meeting.

SIBLINK

'SIBLINK', Bank's corporate in-house magazine, has been functioning as an internal PR tool educating and motivating the staff for better performance and is published every quarter.

SIB-Executive Brief

"SIB-Executive Brief" - a daily news update on Banking, Finance, Economy, Industry, Market Rates etc. is being provided by SIBSTC. It is e-mailed on a daily basis to Board members and to the executives and it is also made available at SIB-Insight for access to all the staff members.

E-Learning Tests

The Bank has completed 12 online tests through E-learning Application during the year 2011-12. There were various topics covered during these tests such as Banking procedures, Bank's Operations Manual etc. Prizes were awarded for the toppers in these tests. It is encouraging to know that the learning process is taken up with great enthusiasm and competitive spirit, the fruit of which is visible in the increasing number of branches/ offices emerging as toppers. The E-learning platform will be utilized increasingly for improving the knowledge level of the staff members.

E-Circular

The Bank has since migrated to issuance of e-circulars in place of manual circulars. All the circulars of the Bank are uploaded using the 'e-circular software'. In e-circular, Bank's Policies, Guidelines and Forms are also uploaded so as to empower the branches with readily accessible pool of information/ guidelines.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

The operations of the Bank are not energy intensive. However, the Bank has taken all possible measures to control and reduce consumption of energy. The Bank continues to undertake possible measures for innovation and absorption of technology in banking business.

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

PARTICULARS OF EMPLOYEES

During the year there were no employees in receipt of remuneration covered by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011].

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Bank's CSR policy epitomizes active participation in the social and economic development of the society. The policy on Corporate Social Responsibility strictly conforms to the guidelines of RBI and Ministry of Corporate Affairs on CSR. The Bank necessarily focuses on major areas like Education, Health care, Sustainable Livelihood, Infrastructure Development and Social Causes and a specific budget is allocated for such activities.

Education

The Bank has provided financial assistance to the deserving students of low income family for professional studies. Bank has also supported the low income family students with various study aids and provided free school uniforms & books.

Healthcare

With the objective of supporting marginalized people to meet their diverse needs in healthcare, the Bank has collaborated with various charitable and healthcare institutions. The Bank's efforts included free food distribution to the poor patients of charitable organizations. The Bank has also associated with fund raising program of Lions Club International, Trivandrum 'Suhaani Raat 2011' for supporting the visually challenged and the poor people suffering from heart ailments. The Bank has also extended financial support for the poor and needy with serious heart problems and provided Home care for people who are crippled with terminal heart disease by associating with 'Carithas Heart Foundation'.

Sustainable Development

Sustainable development addresses the needs of the present without compromising the resources of future generations to meet their own needs. For this, it requires the balancing of environmental, social and economic demands. The Bank is committed in the integration of social & environmental concerns in its business operations & also in the interactions with our stakeholders. As a part of the Bank's social obligation, it has partnered with 'Lourdes Metropolitan Cathedral', at Sacred Heart Church, Chembukavu, Thrissur for 'Harithavalkaranam' project concentrating in the re-establishment of green cover, either naturally or artificially. The project will definitely help in the sustainable development of the society ensuring optimum utilization of resources like land & water. Bank has also supported Solar Electrification project in Thane-Raigad district.

Social Causes

The Bank has been supporting various charitable institutions. The Bank has associated with Chetanalaya a registered NGO working for the development of the marginalized section of the society since 1970 for celebrating the 'Ability Utsav'. The purpose of the event was to empower the disabled and to draw public attention towards their rights. The Bank has also supported in the ceiling work of building of 'Amala Care Centre' - Home for Mentally Challenged to resist summer heat. Housing projects for homeless were also undertaken.

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the 'Green Initiative' of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General Meeting (AGM), Audited Financial Statements, Directors' Report, Auditors' Report etc. for the year ended March 31, 2012, to the email address which the Shareholders have previously registered with their Depository Participant (DP) as their valid email address. Investors desirous of refreshing / updating their email addresses are requested to do so immediately in their respective

DP accounts. The email addresses indicated in respective DP accounts which will be periodically downloaded from NSDL / CDSL will be deemed to be their registered email address for serving notices / documents including those covered under Section 219 of the Companies Act, 1956.

Emails are being sent to available email addresses to enable investors to indicate their choice in case they desire to receive printed copies of documents/notices/annual reports. Shareholders holding shares in physical form desirous of availing electronic form of delivery of documents are requested to update their email addresses with our Registrar and Transfer Agents by a written request if they wish to avail this facility. A request format for registering e-mail ids with the Registrar is enclosed. Shareholders holding shares in demat segment are requested to inform their e-mail ids to their respective DPs.

SIB STUDENTS' ECONOMIC FORUM (SIBSEF)

Students' Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in Economy, Banking and Finance. So far, 244 themes have been published since the first publication which was launched in December 1991. In response to the requests from readers and well- wishers, the first 201 themes of this publication were compiled in 4 volumes and published. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to empower the student community. The hard copies of the publication numbering 3000 are being sent to all the branches/offices, reputed schools/colleges/academic institutions, RBI offices, other Banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The subjects discussed during the year 2011-12 include - Emerging Market Economies - EMEs & BRICS; RBI Monetary Policy Statement 2011-2012; Internet Mobile Payment Service; Foreign Contribution (Regulation) Act; The New Pension System; The S&P Downgrade, CIBIL Credit Information Bureau (India) Limited; Deregulation of SB Interest; Entry of New Banks in Private Sector; FDI in Indian Retail Sector; Basel III: RBI's Draft Guidelines and Banks' Preparedness; and Financial Holding Company. The soft copy of this publication is being sent to all the "Youth Plus" account holders by e-mail and it is made available in the Bank's website.

FINANCIAL INCLUSION INITIATIVES

Inclusive growth of all sections of the people is a pre-requisite for the country to achieve the status of a developed country. Financial Inclusion (FI) is one of the major means to achieve all round growth. FI, inter-alia, aims at ensuring the availability of formal and basic banking services to all the households, including those residing in the un-banked/under banked areas. For this purpose the Bank has introduced a smart card based FI project, where the basic banking services are being provided through Business Correspondents duly appointed by the Bank.

As per the Bank's Financial Inclusion plan, the Bank had to cover 39 villages and 5 urban locations by March 31, 2012. Meanwhile, various State Level Bankers' Committee had allotted 42 villages (39 villages with population above 2,000 and 3 villages with population below 2000) to the Bank. These villages are attached to 25 base branches and spread across 4 States in the country - Kerala, Andhra Pradesh, Tamil Nadu and Chhattisgarh. As on March 31, 2012, the Bank has covered 5 urban centers and all the 42 villages allotted by various SLBCs. Out of the 42 villages, 39 villages are being covered through Business Correspondent (BC) model and the remaining 3 villages are being serviced by branches. The Bank has appointed 40 Business Correspondents and opened more than 2,000 Smart card based No-frill accounts through these BCs. As part of the implementation process, the Bank has provided onsite training to the branch officials as well as to the Business Correspondents. In order to popularize the BC model, Bank has also supplied promotional materials, brochures, posters etc. with "sWaBHIMAAN" logo in Tamil Nadu and Kerala.

As a business continuity plan, the Bank has installed 'Master Terminals' in 5 base branches. With this facility, the customers can make smart card based transactions at the base branches, in case of non-availability of BC. The Bank proposes to install the Master Terminals at the other base branches in a phased manner. The Bank had extended a small over draft facility in Smart card accounts. In order to motivate the BCs, the Bank had also hiked the various remuneration/incentives payable to them.

As on date there are 2.66 lakh No-frill accounts opened through branches/Business Correspondents. The total no. of Students accounts stands at 9.33 lakh. These accounts are with very low minimum balance (Rs 0 to Rs 150) and there is no non-commitment charge for not maintaining the minimum balance.

ANTI - MONEY LAUNDERING (AML)

The Bank has attached great importance to Anti-Money Laundering and the transactions of all the branches of the Bank have been brought under the ambit of AML software. The alerts generated from the AML software are monitored on a daily basis and suspicious transactions are reported to FIU-India.

During the year under review, the Bank has migrated to a newer version 4.0 of the AML Software whereby the first level of processing of alerts has been decentralized to the branches.

- In line with the RBI Guidelines, the Bank is strictly following the "Know Your Customer" norms at the time of opening New Accounts.

DIRECTORS

During the year, pursuant to the applicable provisions of the Banking Regulation Act, 1949, the provisions of the Articles of Association of the Bank and approval of RBI vide its letter DB0D.5473/08:51:001/2011-12 dated October 10, 2011 Dr. V. A. Joseph, has been re- appointed as Managing Director and CEO of the Bank for a further period of 3 years with effect from October 1, 2011 to September 30, 2014, on the terms and conditions as mentioned in the approval letter.

Sri Jose Alapatt and Sri Mathew L. Chakola who retired at the 83rd Annual General Meeting held on July 15, 2011 were reappointed as Directors of the Bank. At the said meeting Sri K. Thomas Jacob and Sri H. Suresh Prabhu were appointed as Directors of the Bank, liable to retire by rotation.

In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Sri Paul Chalissery and Dr. N. J. Kurian are the Directors who retire by rotation at the ensuing Annual General Meeting, and being eligible for re- appointment, the Board recommends their re-appointment as the Directors of the Bank.

AUDITORS

The shareholders at its 83rd Annual General Meeting held on July 15, 2011, appointed M/s S R Batliboi & Associates, Chartered Accountants, Chennai, as the Central Auditors for the audit of Bank's accounts for the year 2011-12.

M/s S R Batliboi & Associates, Chartered Accountants, Chennai, vacate office at the end of the Annual General Meeting to be held this year but are eligible for re-appointment for the Financial Year 2012-13.

AUDIT AND INSPECTION

Regular Inspection of the Bank's branches is conducted at periodical intervals on the basis of Risk Based Internal Audit approach. Concurrent audit at branches by qualified Chartered Accountants/Retired Officers covering 59.8% of business of the Bank and concurrent audit of International Banking Division and Treasury Department by external auditors are also conducted. In addition to the above the Bank conducts Stock Audit, Credit Audit, Information System Audit of branches, Revenue Audit to check income leakages, Surprise Inspection and Exclusive Gold Loan Asset Verification etc. at branches. Information System Audit of CBS and major applications for the current year (2011-12) was done by an external approved agency. Besides, all the branches are subjected to statutory audit on yearly basis. In addition, RBI also conducts Annual Financial Inspection of the Bank. The Bank has also implemented online transaction analysis software to oversee the daily activities at branches.

EXPLANATION FOR AUDITORS' COMMENTS IN THE REPORT

The Auditors' Report for the year 2011-12 does not have any qualifications. Hence, no explanation is offered in this regard.

CORPORATE GOVERNANCE

A separate report on the status of implementation of Corporate Governance as required under Clause 49 of the Listing Agreement with Stock Exchanges, and a certificate from M/s S. R. Batliboi & Associates, Chartered Accountants, Statutory Auditors of the Bank, are annexed to the Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declare that:

1. In the preparation of annual accounts for the financial year ended March 31, 2012, the applicable accounting standards have been followed and proper explanation has been furnished to the extent of departures from those standards.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2011-12 and of the profit of the company for that period.

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

4. The Directors have prepared the annual accounts for the financial year ended on March 31, 2012, on a going concern basis.

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Bank's shares are listed and correspondent Banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Bank's shareholders and customers for their continued support, patronage and goodwill. The Board further places on record its appreciation for the valuable services rendered by M/s S R Batliboi & Associates, Statutory Auditors, during their tenure. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a Bank. The Bank gladly acknowledges this fact and thank all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated service rendered by officers and employees of the Bank at all levels.

By Order of the Board

Place : Thrissur (AMITABHA GUHA)

Date : May 7, 2012 CHAIRMAN

Mar 31, 2011

The Directors are pleased to place before you, the 83rd Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2011 and the Profit and Loss Account for the year ended March 31, 2011.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2011 are as follows:

Rs. in Crore Key Parameters 2010-11 2009-10

Deposits 29721.00 23012.00

Gross Advances 20659.00 15970.00

Total Gross Business 50380.00 38982.00

Net Profit 292.56 233.76

Capital & Reserves 1845.16 1484.71

Capital Adequacy (%) ÃBasel-I 13.17 14.73

Basel-II 14.01 15.39

Earning Per Share (EPS) :

(a) Basic EPS (in Rs.) 2.59 2.07 [face value Rs.1/-]

(b) Diluted EPS ( in Rs.) 2.58 2.06 [face value Rs.1/-]

Book Value per Share (in Rs.) 16.33 13.14 [face value Rs. 1/-]

Gross NPA as % of Gross Advances 1.11 1.32

Net NPA as % of Net Advances 0.29 0.39

Return on Average Assets (%) 1.05 1.07

FINANCIAL PERFORMANCE

Profit

The Bank has achieved a record net profit of Rs. 292.56 Crore during the year registering a growth of 25.15% over the previous year. The Bank could achieve this quantitative enhancement in net profit essentially on account of higher scale of operations and better management of assets and liabilities of the Bank.

The Profit and Loss Account shows an Operating Profit of Rs. 548.08 Crore before depreciation, tax and provision as per details given below:

(Rs. in Crore)

Profit before depreciation, taxes & provisions 548.08

Less: Depreciation : 22.82

Provision for NPA/NPIs : 28.84

Provision for depreciation on investments : 9.37

Provision for contingencies : 20.00

Provision for Income Tax/ Wealth Tax : 152.94

Provision for standard advances : 21.60

Provision for restructured advances : (0.05) 255.52

Net Profit : 292.56

Transfer from Investment Reserve : 4.70

Brought forward from last year : 17.03

Profit available for appropriation : 314.29

Appropriations

Transfer to Statutory Reserve 73.15

Transfer to Revenue & Other Reserves 150.00

Transfer to Special Reserve u/s 36(i) (viii) of 7.00 Income Tax Act, 1961

Proposed Dividend 56.50

Dividend Tax on Proposed Dividend 9.17

Carried over to Balance Sheet 18.47

Total 314.29

Dividend

The Board of Directors has recommended a dividend of 50% (tax-free in the hands of shareholders), i.e., @ Rs. 0.50/- per Equity share of face value of Rs.1/- per share as against 40%, i.e. Rs.0.40/- per share declared last year.

EXPANSION PROGRAMME / POLICY OF THE BANK

During the year, the Bank opened 61 new branches and 116 ATMs across the country. The Bank has been successful in widening its coverage across the country with 641 branches and 3 extension counters transforming it to a pan Indian Institution. The branch network now covers 26 states/union territories and has a network of 489 ATMs.

The Bank plans to open more new branches and ATMs in the current financial year so as to reach the corporate goal of 700 Branches and 600 ATMs by March 31, 2012.

CAPITAL & RESERVES

The Bank was having an issued and paid up capital of Rs. 113.01 Crore as on March 31, 2011. Capital & Reserves of the Bank has improved from Rs.1484.71 Crore to a healthy level of Rs. 1845.16 Crore due to plough back of profits and revaluation of premises.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- Basel I & Basel II

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2011 according to Basel I guideline is 13.17% as against the statutory requirement of 9%. Tier I CRAR constituted 10.60% while Tier II CRAR represented 2.57%.

The Capital to Risk Weighted Assets Ratio(CRAR) of the Bank as on March 31, 2011 according to Basel II guideline is 14.01%, as against the statutory requirement of 9%. Tier I CRAR constituted 11.27% while Tier II CRAR worked out to 2.74%.

As per Reserve Bank of India guidelines, the Bank has migrated to new Capital Adequacy framework w.e.f. March 31, 2009. The Bank has adopted Standardised Approach for Credit Risk, Standardised Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk while computing the Capital requirement under Basel II guidelines.

LISTING AGREEMENT WITH STOCK EXCHANGES

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

BUSINESS ACHIEVEMENTS

The Bank could achieve a total gross business of Rs. 50380 Crore, consisting of total deposit of Rs. 29721 Crore and gross advances of Rs. 20659 Crore as on March 31, 2011 registering a growth of 29.24% over the previous year.

In CASA segment, the Bank has achieved a year to year growth of 20%.

During the year 2010-11, 7.51 Lakh new SB A/cs were opened, of which, 2.82 Lakh accounts belong to students. This was specifically aimed at inculcating banking and savings habit among the younger generation.

Deposits

The Bank increased its total deposits to Rs. 29721 Crore from Rs.23012 Crore last year, registering a growth of 29.15%.

The break up of the deposits as on March 31, 2011 is as under:-

Amount % to total (Rs. in Crore) Deposits

Current Deposits 1201.00 4.04

Savings Deposits 5203.00 17.51

Term Deposits 23317.00 78.45

Total 29721.00 100.00

Advances

Total advances of the Bank registered a growth of 29.07%, to touch a gross level of Rs. 20,659 Crore. Total Priority sector advances have improved to Rs. 6,291.76 Crore, constituting 39.40 % of the Adjusted Net Bank Credit (ANBC) as at the end of the financial year. Exposure to agricultural sector amounted to Rs. 3,686.70 Crore, forming 23.09 % of ANBC as at the end of the financial year.

Details of exposure under various sub-heads of the priority sector is furnished below :

Amount (Rs. in Crore)

Agriculture & Allied activities 3686.70

Small Enterprises 1265.75

Other Priority Sector 1339.31

Total Priority Sector 6291.76

INVESTMENTS

Indian economy has continued its broad based growth during the financial year 2010-11 registering an impressive GDP growth rate. But the inflationary pressures persisted both from domestic demand and higher global commodity prices on account of gradual global recovery from financial crisis witnessed in the past years. RBI has moved, in a calibrated manner, in the direction of normalizing the policy prescriptions. Repo and Reverse Repo rates were hiked 175 and 225 basis points respectively. SLR was reduced to 24% from 25% and CRR has been increased from 5.75% to 6.00%. The monetary policy initiatives were intended to moderate inflation by controlling demand pressures and inflationary expectations, creation of a macro environment conducive to sustainable growth, to generate liquidity environment consistent with more effective transmission of policy actions and to reduce the volatility of short-term rates in a narrower corridor. Liquidity in the system got tightened sporadically during the year under review, especially after the 3G / Broad band auctions held in June, 2010. The borrowing under Repo has occasionally crossed 1% of NDTL which was within the comfort level of RBI. The interest rates have risen due to the liquidity tightness and peaked in March 2011. This resulted in pushing up the cost of deposits.

During the first half of the financial year Indian equity market witnessed a consolidation mode. In the second half of the financial year equity market has shown some volatility. The Banks gross investment portfolio has increased by 24.80% to Rs. 8941.06 Crore as against a deposit growth of 29.15% resulting in a more healthy investment deposit ratio of 30.08% against 31.13% on March 31, 2010.

NON-PERFORMING ASSETS (NPA) MANAGEMENT

During the year 2010-11, the Bank had taken focused steps for recovery of Non-performing Assets through recovery camps, issue of notice under Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), One-time settlements, etc.

As a result of the various initiatives taken, the Bank could recover NPAs to the tune of Rs. 167.24 Crore during the year against the target of Rs. 180 Crore. The Gross and Net NPAs of the Bank as on March 31, 2011 were Rs. 230.34 Crore and Rs. 60.02 Crore against Rs. 211.00 Crore and Rs. 61.57 Crore respectively as on March 31, 2010.

The Percentage of Gross NPA to Gross Advance came down from 1.32% as on March 31, 2010 to 1.11% as on March 31, 2011. Another encouraging achievement in NPA management was that the Bank could reduce the percentage of net NPA to net Advances from 0.39% to 0.29% as on March 31, 2011, a level comparable with the best in the industry.

INFORMATION TECHNOLOGY (IT) AND IT ENABLED SERVICES

The Bank has been progressively introducing a host of products and services deploying the best technology available. Rapid advancement in Information Technology (IT) made a paradigm shift in the way business at large has been conducted and banking sector was also not an exception. The fierce competition being experienced in the banking horizon especially from foreign banks as well as new generation private sector banks drove the managements of old generation private sector banks and Public Sector Banks to adopt IT in the most effective and rewarding manner. SIBertech [Deployment of Core Banking Solution (CBS) through networking of branches] was one of the early adopted measures in this direction, by the Bank.

The Bank has been ahead vis-a-vis other players to accomplish 100% CBS status as on March 31, 2007.

Leveraging on the CBS platform, the Bank could introduce a host of IT enabled services such as Anywhere Banking, on line ATMs (VISA, MASTER and NFS), Net Banking, Mobile banking, E commerce, M Commerce, ASBA etc.

Major IT initiatives during the year

The nucleus of CBS (Core Banking Solution) which is the centralized repository of data/information commonly known as Data Center (DC) has been relocated to a new spacious location with most modern facilities and state-of-the-art technologies. The new set up will be able to take care of the Banks business requirements in terms of IT for the next 10 years, at least. The new DC is green-complied as well.

ASBA (Application Supported by Blocked Accounts) has been introduced to enable application for primary market issues, by marking of lien on accounts, enabling the customer to manage their resources better with tangible gain of interest. VISA (Both global debit cum ATM card) operation was launched last year. This is in addition to the tie-ups with Mastercard & NFS ATM networks. Remittance Automation Facility for instantaneous fund transfer from abroad was introduced to enable online real time remittances from middle-east. A major architectural change in network connectivity was also undertaken to ensure more uptime and network resiliency. Straight Through Processing (STP) for fund transfer using RTGS/NEFT and net banking has been introduced which ensures end to end automation of fund transfer from/to other banks without any manual intervention.

Information System Security Awareness As a part of awareness programmes against the threats emanating from Phishing, Spoofing, and other kinds of E-threats details have been published in the Banks web site as well as net banking home page. Further, for educating customers and branches on the impact of E-Threats circulars/

E Mails/customers meets/structured training sessions have been issued/organized. Such initiatives form part of continuing awareness programme of the Bank.

The Banks web site contains guidance column for customers with regard to the safety measures to be undertaken to guard against the possible E-Threats. Mobile alerts are also being sent periodically to make customers vigilant about such eventualities. The Bank has also subscribed to services of an industry expert agency in monitoring the web site and preventing it from being hacked.

IT Training

During the year, several IT Training programmes (both advanced and basic) in relevant areas were organized to keep the operating and other staff informed of the advancement and rapid changes in IT.

RISK MANAGEMENT

Risk is an integral part of the banking business and the Bank aims at delivering superior value to shareholders by achieving an appropriate trade-off between risk and return. Sound risk management and balancing risk-return trade-off are critical to a Banks success. Business and revenue growth have therefore to be weighed in the context of the risks embedded in the Banks business strategy. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. The identification, measurement, monitoring and mitigation of risks, continued to be a key focus area for the Bank. The risk management strategy of the Bank is based on a clear understanding of various risks, disciplined risk assessment, risk measurement procedures and continuous monitoring for mitigation. The policies and procedures established for this purpose are continuously benchmarked with the best practices followed in the Industry.

The Banks risk management structure is overseen by the Board of Directors. Appropriate policies to manage various types of risks are approved by Risk Management Committee (RMC), which provides strategic guidance while reviewing portfolio behavior. The senior level management committees like Credit Risk Management Committee (CRMC), Market Risk Management Committee (MRMC) and Operational Risk Management Committee (ORMC) develop the risk management policies and vet the risk limits. The Asset Liability Management Committee and Investment Committee ensure adherence to the implementation of the above risk management policies, develop Asset Liability Management Policy and Investment Policy within the above risk framework.

Compliance with Basel II framework

The Bank has migrated to Basel II norms during Financial Year

2008-09. In tune with regulatory guidelines on Pillar I of Basel II norms, Bank has computed capital charge for credit risk as per the Standardized Approach, for market risk as per the Standardized Duration Method and for operational risk as per the Basic Indicator Approach. To address the issues of Pillar II, the Bank has implemented ICAAP (Internal Capital Adequacy Assessment Process) during the year integrating capital planning with budgetary planning and to capture residual risks which are not addressed in Pillar I like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk etc. Bank has adopted a common framework for additional disclosures under Pillar III for adhering to market discipline of Basel II guidelines. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a more consistent and comprehensive manner.

INTERNATIONAL BANKING

In its quest for providing quality and hassle free service to the NRI clientele, the Bank has introduced two new products. The Bank has successfully implemented online remittance facility with M/s. UAE Exchange Centre, Abu Dhabi on Real time basis. This will ensure immediate credit to Banks customers, with a unique feature of informing the beneficiaries and remitter through SMS within 60 seconds of remittance, branded as SIB Flash.

Another product branded "SIB eazyRemit" was launched, to provide online cross border remittance in USD that facilitates a remitter in US to transfer funds to India online, using the internet platform, at a nominal cost, in association with M/s. Bank of New York Mellon. This facility has been extended to other bank customers as well.

The Bank has entered into MTSS sub-agency arrangement with M/s. Weizmann Forex Limited towards payment of inward remittances under Western Union Money transfer scheme.

With an objective to provide remittance facilities to NRIs in the gulf, the Bank had entered into Speed Remittance arrangement (SIB Express) with 4 more Exchange Houses in the current fiscal viz. M/s Delma Exchange, AbuDhabi, M/s Muthoot Exchange, Dubai, M/s Alamoudi Exchange, Saudi Arabia and M/s Al Dar For Exchange Works, Doha, Qatar. At present the Bank is having inward remittance arrangement with 4 banks and 31 Exchange Houses.

The Bank continued providing managerial support to Hadi Express Exchange, UAE, with four branches. The Bank had also set up a stall in Global Village Dubai, in connection with Dubai Shopping Festival 2011.

RBI has authorized the Bank as a nominated agency for import of gold. The Bank is on the verge of launching the product "SIB

Pure Gold". The product offers different denominations of pure gold coins, with a fineness of 999.9.

To improve forex business turnover of the Bank, the Bank has received necessary approvals for upgrading 7 more branches to "B" category, bringing the total number of "B" category branches to 32.

NRI PORTFOLIO

The Bank has the unique distinction of opening the first exclusive NRI branch in Kerala and still occupies the prime position with 8 exclusive NRI branches in the state. The total NRI deposit of the Bank as on March 31, 2011 constitutes 19.50 % of the Banks total retail deposit.

The NRI Division of the Bank has since been strengthened to provide dedicated service to the Banks NRI Customers. The Division is also offering WELCOME KIT-Centralized NRI Account Opening facility through Hadi Express Exchange to increase the customer base in UAE. The Division also extends support to the branches in their NRI related matters and closely monitor the growth of NRI business. NRI Newsletter, a quarterly publication from NRI Division continues to provide useful information to the Banks NRI Customers.

TRAINING

The Bank accords utmost importance to human resources development. Training programmes are conducted in SIB Staff Training College (SIBSTC), Thrissur and at 7 Regional Training Centers (RTCs) at ROs for enhancement of professional capabi- lities of the staff. The training programmes are designed to impart knowledge as well as catalyzing a positive attitudinal change in the participants. The improvements made in human resources has refected in enhancement of organizational productivity. SIBSTC and the RTCs identify gaps in skill of the personnel and provide learning to them for qualitative improvement. During the year 2010-11, the Bank imparted training to 1272 officers, 990 clerks and 285 sub staff in various aspects of banking operations. Thus, the Bank could provide training to a total of 2547 of its personnel, which is about 45 percent of total staff strength of 5619 as on March, 31 2011. This is in consonance with the Banks vision towards continuous up-gradation of skills to ensure that the staff members meet the rising expectations of customers and discharge services professionally covering the entire gamut of banking operations.

MARKETING

The Bank has embedded its marketing strategies to ensure all round business growth and to counter the competitiveness in the market. An array of products and services were introduced keeping in view customers preferences and as a result, the Bank was able to live up to their expectations. This exercise has helped the Bank to design each customer contact point as easy

and result oriented as possible. The Bank has leveraged on the Core Banking platform to offer varied financial products and services in a seamless and effective manner.

Any Branch Banking

The Bank offers a wide range of SB & CD products with Any Branch Banking facility to suit the needs of various customer segments. Through Real Time Gross Settlement / National Electronic Fund Transfer (RTGS / NEFT), customers can transfer/ receive funds to/from accounts with any other bank in India, who are the members of this payment system. Customers can also send /receive funds to /from abroad through various online realtime remittance facilities provided by the Bank. The new products launched by the Bank such as SIB-Mahila, Youth Plus etc. caters to specific segments of the customer base. The products have been well received by the customers.

Internet Banking

SIBerNet - the internet banking service of the Bank, facilitates online and any-time banking transactions. During the year, the Bank had launched the facility of RTGS/NEFT for the Banks internet banking customers to transfer the funds to any other bank accounts in India. In addition to the existing arrangements with the three leading online payment aggregators viz., BillDesk, TechProcess and CCAvenues, the Bank has now made arrangements with M/s. Times Of Money Ltd. (TOML) and M/s. ATOM Technologies Ltd. to facilitate online transaction for the internet banking customers. During the year, Bank had also made arrangements with the temples like Attukal Bhagavathi temple, Trivandrum and Sree Padmanabha Swamy temple, Trivandrum, to facilitate online offerings/donations for the internet banking customers. This is in addition to the existing arrangement with Guruvayur Sree Krishna temple in Kerala.

Mobile Banking

Customers of the Bank enjoy the benefit of Mobile Banking Service wherein, transaction alerts are sent to the customers (including NRIs) on a real time basis, using SMS technology. Last year, the Bank had launched M-Commerce facility as a value added service in association with M/s. Paymate. M-commerce is an entirely new breed of secured payment channel, which ensures online and real time payments by debit to the customers bank account which is authenticated through the registered mobile phone number of the customer. Facilities like account based fund transfer, utility bill payments, online recharge etc. are also made available using this facility. The Bank is in the final stage of implementing Interbank Mobile Payment Service (IMPS). IMPS offer an instant, 24X7, interbank electronic fund transfer service through mobile phones.

THIRD PARTY PRODUCTS

Depository Services

The Bank offers Depository services for the benefit of its customers. Through this facility, customers can hold their securities in electronic form with Central Depository Services (India) Ltd. (CDSL). For e-trading, the Bank has launched SIBer Trade - the online trading facility to buy stocks and shares from Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE) through a tie-up arrangement with Geojit BNP Paribas Financial Services Ltd. During the year, SEBI has registered the Bank as Self Certified Syndicate Bank [SCSB] for accepting application under Application Supported by Blocked Amount (ASBA). ASBA enables the Banks customers to apply for IPO/FPO and rights issues by allowing a lien on the account instead of actual payment while applying. The Bank also plans to implement PIS (Portfolio Invest Scheme) service which will enable its NRI customers to directly invest in the secondary market.

New Pension System

The Bank was appointed as a Point of Presence to provide services to subscribers of New Pension System introduced by Pension Fund Regulatory and Development Authority (PFRDA). Currently this service can be availed through 551 designated branches, which will be extended to all branches soon.

PAN Application Servicing

Based on the representations received from the customers, the Bank had made a direct arrangement with M/s. UTI Technology Services Ltd.(UTITSL) for servicing the PAN card applications. This is in addition to the already launched KYC Certification services for the Mutual Fund Investors, in association with M/s. CDSL Ventures Ltd. (CVL).

Mutual Funds

Mutual Funds are one of the preferred investment options for all those who wish to avoid direct investment in stock markets, yet earn more than what traditional saving avenues offer. The bank is already having tie up with 14 leading mutual fund companies to offer variety of mutual fund products to the Banks customers.

Insurance (Life/General/Health)

Since June, 2009 the Bank has acted as a corporate agent of Life Insurance Corporation (LIC) of India for selling the life insurance products. The Bank is No. 1 among the bank channel partners of LIC in terms of growth of number of policies canvassed (67%) during the year as compared to the previous year.

General Insurance products such as health policy packages and policies to protect the assets and goods against various perils are also made available to the customers. The Bank acts as a corporate agent for the distribution of insurance products of M/s. Bajaj Allianz General Insurance Company.

The Bank has entered into an arrangement with M/s. Cholamandalam MS General Insurance Company to offer Health Insurance coverage to the customers at competitive rates of premium and a very efficient after sales service. A discount of 5% was provided to the Banks shareholders availing the policy, and around 5% of such total policies canvassed by the Bank during last year, was from the shareholders.

The Bank had also made arrangements with M/s. Kotak Mahindra Life Insurance Co. Ltd. to provide life insurance coverage for the Banks home loan borrowers under group insurance.

Debit Cards

The Bank has launched VISA International shopping cum debit card during the year. With this, the Banks customers can withdraw cash through ATMs of any bank in India and also across the globe wherever VISA/Master logo is displayed. In addition to the existing Maestro cards, the Bank had introduced three varieties of debit cards under VISA viz. Classic, Gold and Platinum which offers a wide variety of services like enhanced cash withdrawal limits, online transaction limits, POS transaction limits and so on.

The Bank is in the final stages of deploying its own Point Of Sales (POS) terminals at various merchant locations who are maintaining their accounts with the Bank. The Bank is also launching travel cards in association with M/s. Travelex, which will be made available soon.

VISIBILITY ENHANCEMENT PROGRAMMES

The Bank has undertaken many promotional initiatives through print, audio and visual media during the year 2010-11. The advertisements concentrated in major cities like Bangalore, Delhi, Mumbai, Kolkata, Chennai and Hyderabad and has enhanced the visibility of the Bank at these centres.

This year witnessed more outdoor campaigns like outdoor hoardings, exterior train branding, trolley advertisements etc.

PERSONNEL

The Bank is envisaging to have staff complement of 7500 employees on its rolls by March 31, 2013. To achieve this target, Bank has embarked upon recruitment drive to acquire manpower of required skills. The total number of employees as at the year end was 5619. This growth in personnel has been dovetailed with the business growth target of the Bank.

Staff position

As on March 31, 2011, the Bank had 5619 personnel on its rolls as against 5132 as on March 31, 2010. Cadre wise break up is as under:

Designation Male Female Total

Officers 1813 675 2488

Clerks 1160 1092 2252

Sub-staff 596 21 617

3569 1788 5357

Part-time employees 98 164 262

TOTAL STAFF 3667 1952 5619

Maintenance of staff records was streamlined under "HRMSS" (Human Resources Management System Software). The personnel data can be accessed by all controlling offices and various reports based on the data can be generated.

Implementation of terms and conditions of National level bipartite settlement on Wage Revision and Pension

The salary scales of employees and officers were revised in terms of the settlement with arrears w.e.f. November 1, 2007. The Bank had made full provision for arrears of salary and hence there was no impact on account of its payment during the year.

Another option for Pension

Existing employees who were in the service of the Bank prior to September 29, 1995 and had opted for PF earlier were given another opportunity to join the Pension scheme subject to complying with certain terms and conditions. Majority of the employees exercised the option of the pension. Employees who had already retired were also given another option for pension.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

During the financial year 2008-09, the Bank instituted an Employee Stock Option Scheme to enable its employees to be a partner in the future growth and financial success of the Bank. The Banks shareholders approved the plan on August 18, 2008 for the issuance of stock options to the employees. Compensation and Remuneration Committee of the Board on November 21, 2009 has recommended to the Board to grant options at a discount of 10% on the closing price of the shares quoted on NSE on November 20, 2009. Under SIB ESOS 2008 (1st Tranche) the Bank granted 3,07,25,000 options to eligible employees. Further, Compensation and Remuneration Committee of the Board on October 21, 2010 has recommended to the Board to grant options at a discount of 10% on the

closing price of the shares quoted on NSE on October 20, 2010. Under SIB ESOS 2008 (2nd Tranche), the Bank granted 5,10,500 options to eligible employees. The total options granted under two phases of SIB ESOS 2008 works out to 2.76% of the paid up share capital of the Bank as at March 31, 2011. The scheme has generated intended motivation amongst the staff.

With a view to maintaining highest standards of personal ethics, all the Directors of the Bank including the Chairman and Managing Director & CEO have voluntarily decided not to accept any stock options, though the shareholders of the Bank were gracious enough to permit grant of stock options to all the Directors of the Bank during the 80th Annual General Meeting.

Exercise period of the Options

The exercise period under SIB ESOS-2008 commences from the completion of 2 years from the date of grant of options and expires on completion of 1 year from the dates of vesting of options. Further details pertaining to Employee Stock Options has been incorporated in an annexure to this report.

SIBLINK

"SIBLINK, Banks corporate in-house magazine, has been functioning as an internal PR tool educating and motivating the staff for better performance and is published every quarter.

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

The operations of the Bank are generally not energy intensive. However, the Bank has taken all possible measures to control and reduce consumption of energy. The Bank continues to undertake possible measures for innovation and absorption of technology in banking business.

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

PARTICULARS OF EMPLOYEES

During the year there were no employees in receipt of remuneration covered by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011].

DISCLOSURE IN RESPECT OF EXPENDITURE INCURRED ON PENSION FUND AND GRATUITY FUND LIABILITY

During the year, the Bank had re-opened the pension option for those employees who had joined the Bank prior to 29th September, 1995 and had not earlier opted for the pension scheme. Consequently, 2217 employees had exercised their

option for the pension scheme and the Bank had incurred an additional liability of Rs. 135.13 Crore. Further, during the year the limit of gratuity payable to the employees of the bank was also enhanced from Rs. 3.50 Lakh to Rs. 10.00 Lakh, pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank increased by Rs. 21.40 Crore. The additional cost of pension and gratuity to employees works out to Rs. 156.53 Crore.

In compliance of provisions of the Accounting Standard (AS) 15, the entire amount of Rs. 156.53 Crore is required to be charged to the Profit and Loss account of the current year. However, in accordance with the guidelines issued by Reserve Bank of India vide reference number DBOD.BP.BC.80/21.04.018/2010- 11 dated February 9, 2011, and made applicable to the Bank vide DBOD No.BP.BC.15896/21.04.018/2010-11 dated April 8, 2011, the Bank decided to amortise the amount of Rs. 156.53 Crore over a period of five years. Accordingly, Rs. 31.31 Crore (representing one-fifth of Rs.156.53 Crore) has been charged to the profit and loss account of the current year. The residual amount of Rs.125.22 Crore had been carried forward for accounting in next four years. The liability arising on account of retired employees who exercised option for pension amounting to Rs. 3.88 Crore had been charged in full to the Profit and Loss Account of the current year.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Banks CSR policy epitomizes active participation in the social and economic development of the society. The policy on Corporate Social Responsibility strictly conforms to the guidelines of RBI and Ministry of company affairs on CSR.

The Bank necessarily focuses on major areas like Education, Health Care, Sustainable Livelihood, Infrastructure Development and Social Causes and a specific budget is allocated for such activities.

Education

The Bank has supported many low income family students with financial assistance and provided them with free uniform and books. The Bank also conducts various motivational camps as an effort to spark the desire in these students to learn and acquire knowledge.

Healthcare

With the objective of supporting marginalized people through helping them to meet their diverse needs in health care, the Bank has collaborated with various charitable and health care institutions. The Banks efforts included free eye test camps, free food distribution to the poor patients of Govt. health care centres and preventive health through awareness programmes. The Bank has also associated with Lions-Divyakarunya Heart

Project, named as Hridayathalam which offerered free open heart surgeries for 70 or more deserving patients including children suffering from serious heart ailments.

Sustainable Development

Sustainable development addresses the needs of the present without compromising the resources of future generations to meet their own needs. For this, it requires the balancing of environmental, social and economic demands. As a part of the Banks social obligation, it has partnered with Chethanalaya, a Delhi based NGO and ran a campaign in Delhi to bring awareness among the public about the need of environmental protection by avoiding the usage of plastic bags. The campaign has been much acclaimed by various national agencies as it focused on "Go Green". The Bank is promoting energy saving concepts and projects generating electricity through wind mill plants etc.

The Banks new corporate building has got 3 star rating from Bureau of Energy Effciency (BEE) and a 5 star rating is expected on completion of the entire renovation processes. The Bank has been encouraging, financing and setting up of non-conventional energy generation units. The Bank has also concentrated on Infrastructure development and extends assistance for construction of toilet block and community hall. Rain water harvesting tanks of the Banks Head Office building of 80,000 litres capacity is yet another example of eco-friendly processes adopted by the Bank.

Social Causes

The Bank has been supporting various charitable institutions in its efforts to bring awareness about AIDS, early detection of cancer and other chronic diseases. Campaigns against usage of drugs, alcohol and smoking are also given priority.

Inclusive growth of all sections of the people is a pre-requisite for the country to achieve the status of a developed country by the year 2020. Financial Inclusion (FI) is one of the major means to achieve all round growth. FI, inter-alia, aims at ensuring the availability of formal and basic banking services to all the households, including those residing in the un-banked/under banked areas. The Bank has been an early bird in adopting Financial Inclusion initiatives and it is now expanding its wings to uncovered areas. With eight decades of rich experience in personalized banking services the Bank has designed a simple, secure and smart banking product-FINS Card A/C(Financial Inclusion Smart Card Account) to achieve the goals of financial inclusion.

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the Green Initiative of the Ministry of Corporate

Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General Meeting (AGM), Audited Financial Statements, Directors Report, Auditors Report etc. for the year ended March 31, 2011, to the email address which the Shareholders have previously registered with their Depository Participant (DP) as their valid email address. Investors desirous of refreshing / updating their email addresses are requested to do so immediately in their respective DP accounts. The email addresses indicated in respective DP accounts which will be periodically downloaded from NSDL / CDSL will be deemed to be their registered email address for serving notices / documents including those covered under Section 219 of the Companies Act, 1956.

Emails are being sent to available email addresses to enable investors to indicate their choice in case they desire to receive printed copies of documents/notices/annual reports. Shareholders holding shares in physical form desirous of availing electronic form of delivery of documents are requested to update their email addresses with our Registrar and Transfer Agents by a written request if they wish to avail this facility. A request format for registering e-mail ids with the Registrar is enclosed. Shareholders holding shares in demat segment are requested to inform their e-mail ids to their respective DPs.

SIB STUDENTS ECONOMIC FORUM (SIBSEF)

Students Economic Forum is a monthly publication from the SIB Staff Training College and it provides an analysis of contemporary themes relating to developments in economy, Banking and Finance. So far, 232 themes have been published since the first publication which was launched in December 1991. In response to the requests from readers and well wishers, the first 201 themes of this publication were compiled in 4 volumes and published. The objective of this venture is to kindle interest in economic affairs among the younger generation and also to empower the student community. The hard copies of the publication numbering 3000 are being sent to all the branches/ offices, reputed schools / colleges / academic institutions, RBI offices, other banks, government organizations and corporate offices. It has wide acceptance among students, bankers and academic community. The subjects discussed during the year 2010-11 include - RBI Annual Policy Statement 2010-11, Sovereign Debt Crisis, Business of Financial Inclusion Part I & II, Base Rate Ã Basis for Lending Rates Part Ã I & II, Infrastructure Financing Ã Part I & II, Currency War / Competitive Devaluation, New Capital Framework for banks Ã Basel III Ã Part I & II, and Union Budget 2011-12 Ã Growth with Fiscal Correction. The soft copy of this publication is being sent to all the "Youth Plus" account holders by e-mail and it is made available in the Banks website.

FINANCIAL INCLUSION INITIATIVES

As per the Financial Inclusion Plan of the Bank, 100 villages are to be covered under the project through BC model by the year ending March 2013. As per the FIP implementation plan projections, the Bank had to cover 5 villages by March 31, 2011. As on March 31, 2011, the Bank implemented the project in 7 villages. Meanwhile, various State Level Bankers Committees have allotted 39 villages to the Bank, having population above 2000 for Financial Inclusion to be covered by March 2012. These villages are attached to 23 branches and spread across 4 States in the country Ã Kerala, Andhra Pradesh, Tamil Nadu and Chattisgarh. As on March 2011, the Bank has covered all the 3 villages allotted to the Bank in the States of Kerala and Andhra Pradesh. As a part of the implementation process, the Bank has provided onsite training to the branch officials as well as to the Business Correspondents appointed in the above 7 locations. On behalf of the 46 participating member banks in FIP, IBA had launched a National Level Awareness Campaign on Financial Inclusion titled "SWABHIMAAN" on February 10, 2011. The Bank has already contributed its share to meet the expenditure involved.

During the year ended March 31, 2011, the Bank opened 71,000 No frills A/cs through the branches, where there is no penalty for not maintaining the stipulated minimum balance of Rs. 10/-. In addition to this 2.72 Lakh of Students A/cs were also opened, where there is no penalty for non maintenance of the stipulated minimum balance of Rs.150/-. During the year 2010-2011, Bank could roll out the SmartCard based FI project on pilot basis in 7 villages. In addition to the 100 villages to be covered under FIP through BC model, the Bank has committed to cover 10 urban locations through the BC model. Of this, 5 locations will be covered by the year ending March 31, 2012.

ANTI-MONEY LAUNDERING (AML)

The Bank has accorded great importance to Anti-Money Laundering and the transactions of all the branches of the Bank have been provided AML software platform. The alerts generated from the AML software are monitored on a daily basis and suspicious transactions are reported to FIU-India.

In line with the RBI Guidelines, the Bank has developed a culture of compliances of "Know Your Customer" norms.

E-CIRCULAR

The Bank has since migrated to issuance of e-circulars in place of manual circulars. All the circulars of the Bank are uploaded using the e-circular software. In e-circular, Banks policies, Guidelines and Forms are also uploaded so as to empower the branches with readily accessible pool of information/ guidelines.

DIRECTORS

Sri Paul Chalissery and Dr. N. J. Kurian who retired at the 82nd Annual General Meeting held on July 14, 2010 were re- appointed as Directors of the Bank. At the said meeting Sri Mohan E. Alapatt was appointed as Director of the Bank, liable to retire by rotation.

Sri A. S. Narayanamoorthy, Dr. C. J. Jose and Sri Davy K. Manavalan retired from the Board w.e.f. July 18, 2010, August 30, 2010 and March 27, 2011 respectively. The Board places on record its appreciation for the valuable services rendered by them during their tenure as Directors.

Sri K. Thomas Jacob was appointed as Additional Director by the Board of Directors at its meeting held on August 31, 2010.

Sri H. Suresh Prabhu was appointed as Additional Director by the Board of Directors at its meeting held on December 1, 2010.

Sri G. A. Shenai demitted his office as Part-time Non-executive Chairman and Director of the Bank after the closure of business hours on October 22, 2010 on completion of his term. The Board places on record its appreciation for the valuable services rendered by Sri G. A. Shenai during his term of office as Part- time Non-executive Chairman and Director of the Bank.

Sri Amitabha Guha, former Dy. Managing Director of State Bank of India, was appointed as Additional Director of the Bank on August 31, 2010. With the Approval of Reserve Bank of India, he took charge as Part-time Non-executive Chairman of the Bank for a period of 3 years w.e.f. November 2, 2010.

Pursuant to the provisions of Section 260 of the Companies Act, 1956, Sri K. Thomas Jacob and Sri H. Suresh Prabhu vacates their office at the ensuing Annual General Meeting. Two members have expressed their intentions to propose Sri K. Thomas Jacob and Sri H. Suresh Prabhu as candidates to the office of a director of the Bank, and have given notices in writing along with the deposit amount of Rs. 500/- each, in terms of Section 257 of the Companies Act, 1956.

In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Sri Jose Alapatt and Sri Mathew L. Chakola are the directors who retire by rotation at the ensuing Annual General Meeting, and being eligible for re-appointment, the Board recommends their re-appointment as the Directors of the Bank.

AUDITORS

The Statutory Central Auditors M/s Deloitte Haskins & Sells, Chartered Accountants, Chennai will retire at the ensuing Annual General Meeting. Having completed a term of four years of continuous audit, the said firm is not eligible for

re-appointment. Therefore, the shareholders will have to appoint a new firm as Statutory Central Auditors for the audit of the Banks accounts for the year 2011-12. RBI has approved the appointment of M/s S R Batliboi & Associates, Chartered Accountants, Chennai. A resolution will be placed before you at the ensuing Annual General Meeting seeking approval for appointing M/s S R Batliboi & Associates as the Statutory Auditors of the Bank. The Board recommends the appointment of the said firm as the Auditors of the Bank for the Financial Year 2011-12.

AUDIT AND INSPECTION

Regular Inspection of the Banks branches is conducted at periodical intervals on the basis of the rating awarded to the branches. Concurrent audit at branches by qualified Chartered Accountants covering 56% of business of the Bank and concurrent audit of International Banking Division and Treasury Department by external auditors are also conducted. In addition to the above the Bank also conduct Stock Audit, Credit Audit, Information System Audit, Risk based Internal Audit, Revenue Audit to check income leakages, Surprise Inspection and exclusive Gold loan asset verification etc. at branches. Besides, all the branches are subjected to statutory audit on yearly basis. In addition, RBI also conducts an Annual Financial inspection of the Bank. The Bank has also implemented online transaction analysis software to oversee the daily activities at branches.

EXPLANATION FOR AUDITORS COMMENTS IN THE REPORT

The Auditors Report for the year 2010-11 does not have any qualifications. Hence, no explanation is offered in this regard.

CORPORATE GOVERNANCE

A separate report on the status of implementation of Corporate Governance as required under Clause 49 of the Listing Agreement with Stock Exchanges, and a certificate from M/s Deloitte Haskins & Sells, Statutory Auditors of the Bank, are annexed to the Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declare that:

1. In the preparation of annual accounts for the financial year ended March 31, 2011, the applicable accounting standards have been followed and proper explanation has

been furnished to the extent of departures from those standards.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2010-11 and of the profit of the company for that period.

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

4. The Directors have prepared the annual accounts for the financial year ended on March 31, 2011, on a going concern basis.

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where the Bank operates, other Government and Regulatory Authorities, including stock exchanges, where the Banks shares are listed and correspondent banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Banks shareholders and customers for their continued support, patronage and goodwill. The Board further places on record its appreciation for the valuable services rendered by M/s Deloitte Haskins & Sells, Statutory Auditors, during their tenure. The single most important pillar of any Institution is its personnel, more so in the case of a service entity like a bank. The Bank gladly acknowledges this fact and thank all of them for their diligence and loyalty towards the Bank. The Board expresses its sincere appreciation for the dedicated service rendered by employees of the Bank at all levels.

By Order of the Board

(AMITABHA GUHA) CHAIRMAN

Place: Thrissur Date : May 21, 2011

Mar 31, 2010

The Directors are pleased to place before you the 82nd Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2010 and the Profit and Loss Account for the year ended March 31, 2010.

PERFORMANCE OF THE BANK

The performance highlights of the Bank for the financial year ended March 31, 2010 are as follows: -

Key Parameters Rs. in crore

2009-10 2008-09

Deposits 23012.00 18092.00

Gross Advances 15970.00 11965.00

Total Gross Business 38982.00 30057.00

Net Profit 233.76 194.75

Net Worth 1484.71 1304.00

Capital Adequacy (%) - Basel-I 14.73 13.89

Basel-II 15.39 14.76 Earning Per Share (EPS) :

(a) Basic EPS (in Rs.) 20.69 17.23

(b) Diluted EPS ( in Rs.) 20.58 17.23

Book Value per Share (in Rs.) 131.39 115.40 Gross NPA as % of

Gross Advances 1.32 2.18

Net NPA as % of Net Advances 0.39 1.13

Return on Average Assets (%) 1.07 1.09

FINANCIAL PERFORMANCE

Profit

The Bank has achieved a record net profit of Rs.233.76 Crore during the year registering a growth of 20.1% over the previous year. The Bank could achieve this improvement in net profit mainly on account of higher scale of operations and better management of assets and liabilities of the Bank.

The Profit and Loss Account shows an Operating Profit of Rs. 427.33 crore before depreciation, tax and provision as per details given below :

(Rs. in crore)

Profit before depreciation, taxes & provisions 427.33

Less : Depreciation : 16.76

Provision for NPA/NPIs : 37.19

Provision for depreciation on investments : (40.94)

Provision for contingencies : 33.00

Provision for Income Tax/ Wealth Tax : 133.55

Provision for standard advances : 6.43

Provision for restructured advances : 7.58 193.57

Net Profit :233.76

Brought forward from last year : 14.67

Profit available for appropriation : 248.43

Appropriations

Transfer to Statutory Reserve 58.45

Transfer to Capital Reserve 0.69

Transfer to Revenue & Other Reserves 90.00

Transfer to Investment Reserve 20.27

Transfer to Special Reserve u/s 36(i) (viii) of The 9.28 Income Tax Act, 1961

Proposed Dividend 45.20

Dividend Tax on Proposed Dividend 7.51

Carried over to Balance Sheet 17.03

Total 248.43

Dividend

The Board of Directors has recommended a dividend of 40% (tax-free in the hands of shareholders), i.e., @ Rs.4/- per Equity share of face value of Rs.10/- per share as against 30%, i.e. Rs.3/- per share declared last year. This is, however subject to the approval of shareholders at the Annual General Meeting.

EXPANSION PROGRAMME / POLICY OF THE BANK

The Bank has been successful in spreading its coverage across the country from South to North and West to East with 580 branches and 3 extension counters. The branch network now covers 26 states/union territories and has an ATM network at 373 centres. During the year, the Bank opened 50 new branches and 93 ATMs across the country.

The Bank plans to open 60 more new branches and 107 new ATMs in the current financial year so as to reach the corporate goal of 640 Branches and 480 ATMs by March 31, 2011.

CAPITAL & RESERVES

The Bank was having an issued and paid up capital of Rs. 113.01 crore as on March 31, 2010. The Net worth of the Bank has gone up from Rs.1304 crore to Rs.1484.71 crore due to plough back of profits during the year.

THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)-Basel I & Basel II

The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank as on March 31, 2010 according to Basel I and Basel II guidelines was 14.73% and 15.39 % respectively. Tier I CRAR constituted 11.89% and 12.42% while Tier II CRAR constituted 2.84% and 2.97% under Basel I and Basel II respectively. This is against the statutory requirement of 9% stipulated by Reserve Bank of India.

LISTING AGREEMENT WITH STOCK EXCHANGES

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

BUSINESS ACHIEVEMENTS

The Bank could achieve a total gross business of Rs.38982 Crore, consisting of total deposits of Rs.23012 Crore and gross advances of Rs.15970 Crore as on March 31, 2010 registering a total business growth of 29.69% over the previous year.

Deposits: The Bank could increase its total deposits to Rs. 23012 Crore from Rs. 18092 Crore last year, registering a growth of 27.19%.

The break up of the deposits as on March 31, 2010 is as under:-

Amount % to total (Rs. in crore) Deposits

Current Deposits 1052.00 4.57

Savings Deposits 4272.00 18.56

Term Deposits 17688.00 76.87

Total 23012.00 100.00

Advances: Total advances of the Bank registered an increase of 33.47%, to touch a gross figure of Rs. 15970 Crore. Total Priority sector advances have improved to Rs.5090.93 Crore, constituting 41.92% of the Adjusted Net Bank Credit (ANBC) as on March 31, 2010. Exposure to agricultural sector amounted to Rs.2656.80 Crore, forming 21.88 % of ANBC as at the end of the financial year.

Split up of exposure under Priority Sector is furnished below :

Amount (Rs. in crore)

Agriculture & Allied activities (including eligible RIDF investments) 2656.80

Small Enterprises 1094.50

Other Priority Sector 1339.63

Total Priority Sector 5090.93

INVESTMENTS

The fiscal 2009-10 saw a divergent trend in long duration and short duration fixed income securities resulting in a steepening of yield curve. Longer end of the curve was under pressure on account of the higher government borrowing and rising inflationary expectations. The demand for the short term debt instrument was high due to higher liquidity in the system. In the second half of the fiscal, RBI initiated an exit from the soft monetary policy, began by a hike in SLR from 24% to 25%. This was followed by hikes in cash reserve requirements and repo and reverse repo rates. There was a spectacular rally in the equity market in the fiscal backed by a lower base, stable government at the Centre, sign of economic recovery, abundant liquidity and return of risk appetite in the markets.

During the fiscal, our Banks gross investment portfolio increased by 16.97% to Rs. 7164.29 crore as against a deposit growth of 27.19% resulting in a more healthy investment deposit ratio of 31.13% against 33.85% on March 31, 2009. The Statutory Liquidity Ratio (SLR) investments had grown by 38.69%. The Bank made a total trading profit of Rs. 78.02 crore against Rs.35.41 crore in previous year.

DISCLOSURE IN RESPECT OF VOLUNTARY RETIREMENT SCHEME (VRS) EXPENDITURE

The VRS expenditure incurred during the financial year 2006- 07 amounting to Rs. 7.20 crore has been getting amortised over a period of 4 years from the year 2006-07 and the unamortised amount was being carried forward as deferred revenue expenditure. The proportionate expenditure on VRS amounting to Rs. 1.81 crore (Previous year Rs.1.80 crore) has been charged to Profit and Loss account during the current year and hence there is no unamortised amount of VRS expenditure outstanding as at the end of the year as it stands fully absorbed during the last four years.

NON-PERFORMING ASSETS (NPA) MANAGEMENT

During the year 2009-10, the Bank had taken various steps for recovery of non-performing assets by conduct of recovery camps, issue of notice under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) one-time settlements, etc.

As a result of the various steps taken, the Bank could recover NPAs to the tune of Rs. 269.62 Crore during the year against the target of Rs. 225 Crore. The Gross and Net NPAs of the Bank as on March 31, 2010 were Rs. 211 Crore and Rs. 61.57 crore against Rs. 260.56 Crore and Rs.134.31 Crore respectively as on March 31, 2009. The percentage of Gross NPA to Gross Advance came down from 2.18% as on March 31, 2009 to 1.32% as on March 31, 2010.

The most notable achievement in NPA management was that the Bank could reduce the percentage of net NPA to net Advances from 1.13% to 0.39% as on March 31, 2010.

AUTOMATION AND COMPUTERISATION

Rapid advancement in Information Technology (IT) made a paradigm shift in the way business has been conducted and banking was also not an exception. The stiff and fierce competition being experienced in the banking horizon especially from foreign banks as well as new generation private sector banks forced the managements of old generation private sector banks to ponder upon new dimensions of banking, deploying IT in the best possible manner. Our Board of Directors and the Top Management embraced this idea in early 2000 and thus the SIBerTech initiative was born.

SIBerTech was the initiative to deploy Core Banking Solution (CBS) and Bank could achieve 100% CBS status as on March 31, 2007.

Leveraging on the CBS platform Bank could introduce a host of services such as Anywhere Banking, on line ATMs, Net Banking, Mobile Banking, E commerce, M commerce etc.

Information System Security Awareness

The menace of phishing, spoofing, various kinds of e-threats, etc. and precautionary measures to be taken by the users/ customers to thwart such potential perils have been incorporated in our web site as well as net banking home page, besides as ticker message in the home page of web site, as part of Customer Education. Further educating customers and branches on the impact of E-Threats periodically through circulars/e-mail mode/ customers meets/structured training sessions forms part of continuing awareness programme introduced by the Bank during the year.

Our web site is provided with a guidance column for customers in regard to the safety measures to be undertaken to guard against the possible E- Threats. Mobile alerts are also being sent periodically to make customers vigilant about the same. Bank is in the process of introducing two-factor authentication mechanism, which augments the existing security in net banking.

Major IT initiatives during the year

New Pension System was introduced in the Bank as per Pension Fund Regulatory Development Authority (PFRDA) guidelines and South Indian Bank is the only old generation private sector bank included for this purpose as of now. To encourage and smoothen the working of the New Pension Scheme, the entire operations have been computerised with access to the designated branches to upload all the information easily and quickly.

E commerce has been commenced with tie up with various service providers for bill payments, trading etc.

M commerce has been introduced through a tie up with M/s PayMate to facilitate purchase transactions through Mobile banking.

A new data centre with state-of-the-art technology and complying with green building concepts is being set up at Kakkanad, Kochi and the same is expected to be operational during the current year.

Banking Business Intelligent Solution, which is akin to CBS to facilitate various reporting and information processing under distinct subject areas such as Customer Intelligence, Financial Intelligence, Operational Intelligence and Risk Intelligence, is in the process of implementation.

IT Training

During the year, several IT Training programmes (both advanced and basic) in relevant areas to keep the resource abreast with the advancement and rapid changes in IT were arranged for the benefit of our staff at all levels.

RISK MANAGEMENT AND BASEL II

In the present volatile and rapidly changing financial scenario, it is imperative to have good risk management practices not only to manage risks inherent in the banking business but also the risks emanating from financial markets as a whole. During the year the risk management structure of the Bank was further strengthened to enable it to proactively identify and help in controlling the credit, operational and market risks faced by the Bank, while maintaining proper tradeoff between risk and return thereby maximizing the shareholder value.

The Banks risk management structure is overseen by the Board of Directors and appropriate policies to manage various types of risks are approved by Risk Management Committee of Board (RMC), which provides strategic guidance while reviewing portfolio behavior. The senior level management committees like Credit Risk Management Committee (CRMC), Market Risk Management Committee (MRMC) and Operational Risk Management Committee (ORMC) develop the risk management policies and vet the risk limits. The Asset Liability Management Committee, Credit Policy Planning and Intelligence Committee and Investment Committee ensure adherence to the implementation of the above risk management policies, and develop Asset Liability Management policy, Credit policy and Investment policy within the above risk framework. The risk management policies have laid down risk management processes to identify, measure and mitigate the risks to bring the risks within the tolerance level.

The Bank has already migrated to Basel II during FY 08-09 and assesses the capital adequacy for credit risk under Standardized Approach, market risk under Standardized Measurement Method and operational risk under Basic Indicator Approach. To address the issues of Pillar II, the Bank has implemented ICAAP framework (Internal Capital Adequacy Assessment Process) during the year for integrating capital planning with budgetary planning and to capture the residual risks which are not addressed in pillar I like credit concentration risk, interest rate risk in the banking book, liquidity risk, earnings risk, strategic risk, reputation risk etc. For adhering to market discipline as laid down in pillar III of Basel II guidelines, the Bank has adopted a common framework for disclosures. This requires the Bank to disclose its risk exposures, risk assessment processes and its capital adequacy to the market in a more consistent and comprehensive manner.

INTERNATIONAL BANKING

At present the Bank is having inward remittance arrangement with 4 Banks and 27 Exchange Houses. During the year, we had entered into an arrangement with the Commercial Bank of Qatar to improve inward remittances and trade related activities from Qatar. We have also initiated tie up with two banks in Saudi Arabia for participating in the growing trade between the two countries. With a view to improve remittance facilities to NRIs in the Gulf countries, the Bank has entered into Speed Remittance arrangement (SIB Express) with 3 new Exchange Houses and with 5 existing Exchange Houses with whom we already have Draft Drawing Arrangement.

To facilitate real time credit of inward remittances from overseas countries through Exchange Houses and Banks, we have launched a Web based Payment Hub which will provide instant credit to the beneficiarys account not only with our Bank but also for credit of other Banks account through National Electronic Fund Transfer (NEFT) facility provided by Reserve Bank of India. We have also entered into an arrangement with Bank of New York towards online remittance in US Dollar under SIBeazyRemit for Non resident Indians living in U.S.A.

The Bank continued providing managerial support to Hadi Express Exchange, UAE. The Exchange House opened two new branches at Ras Al Khaimah and Deira Dubai during the year, totaling the branch network to four. Bank had also set up a stall in Global Village Dubai, in connection with Dubai Shopping Festival, which attracted a large number of visitors during the festival period.

To improve forex business, Bank had upgraded 11 branches to B" category thus bringing the total number of "B" category branches to 25. The Bank has also started publishing the Exchange rates of all major currencies through our web-site on a daily basis. Bank is presently maintaining 11 nostro accounts in 8 major currencies.

During the year, the Bank has introduced Foreign Currency Non Resident (FCNR) Deposits in Australian Dollar (AUD) to

Non resident Indians residing in Australia, with a view to provide this additional facility of investment of their surplus savings in AUD in India.

Our Bank has signed a MOU with Colombo-headquartered Hatton National Bank and this tie-up is a mutually beneficial agreement that will facilitate cross-border business between India and Sri Lanka.

NRI PORTFOLIO

Our Bank has the unique distinction of opening the first exclusive NRI branch in Kerala and still occupies the prime position with eight exclusive NRI branches in the state. The total NRI deposit of our Bank as on March 31, 2010 constitutes 20.77% of the Banks total retail deposit.

The NRI Division of the Bank has since been strengthened to provide dedicated service to our NRI customers. The Division also offers best support to the branches in their NRI related matters and closely monitors the growth of NRI business. NRI Newsletter, a quarterly publication from NRI Division continues to provide useful information to our NRI customers.

TRAINING

The Bank is giving utmost importance for training and development of its Officers and Staff, as improvements made in human resources directly result in enhancement in organizations productivity. The Banks Staff Training College identifies the gaps in resource capability of the personnel and train them for qualitative improvement. During the financial year, Bank could provide training to 1486 of its Officers, 906 clerks and 116 sub staff in different facets of Banks operations. Hence, the Bank could impart training to a total of 2511 of its personnel during 2009-2010 which is about 49 percent of total staff strength of 5132 as on March 31, 2010. This is in pursuance of the Banks objective to provide opportunities for continuous upgradation of skills to our entire staff to ensure that they meet the rising expectations of our customers in the entire spectrum of banking operations.

MARKETING

Bank has taken various marketing oriented initiatives to ensure business growth and competitiveness in the market. Systems, procedures, products and services are designed from the customers point of view. This exercise has helped the Bank to design each customer touch point as easy and result oriented as possible. Bank has leveraged the Core banking system to offer varied financial products and services in a hassle free and effective manner.

Bank has a range of SB & CD products with Any Branch Banking facility to suit the needs of various customer segments. Through Real Time Gross Settlement / National Electronic Fund Transfer (RTGS / NEFT), customers can send funds to and receive funds from accounts with any other bank in India, who are the members of this payment system. Through the fast money mode of funds transfer, money can be sent / received between 2 customer accounts maintained within the Bank. Customers can also send and receive funds to and from abroad through the arrangements made with Society for Worldwide Inter-bank Financial Telecommunication (SWIFT).

During the year, the Bank has launched a special Savings Bank product exclusively for women called SIB MAHILA. This packaged savings bank product, which is linked to an RD account, is offered along with free insurance cover in respect of house-to-house travel and death due to accident. There are two categories of this product bundled with a variety of free banking / technology services. Targeting the investors in the Stock Market, Bank launched another SB product SB Invest where the customer is free to operate the account without any obligation to keep a minimum balance. This is a zero balance account but with complete banking facilities - at par payable cheques, any branch banking, net banking, mobile banking, online trading and demat service.

Bank offers the depository services for the benefit of the customers. Through this facility, customers can hold their securities in electronic form with Central Depository Services (India) Ltd. (CDSL). For e-trading, Bank has launched SIBer Trade - the online trading facility to buy stocks and shares from Bombay Stock Exchange Ltd (BSE) and National Stock Exchange of India Ltd. (NSE) through a tie-up arrangement with Geojit BNP Paribas Financial Services Ltd.

Pension Fund Regulatory and Development Authority (PFRDA) has launched the New Pension System (NPS) across the country. To cater this service to the subscribers of NPS, PFRDA has identified the Bank as a Point of Presence (POP) and the Bank launched the service w.e.f. May 1, 2009. It is proposed to offer this service through all our branches by the end of June 2010. With effect from April 1, 2010 tax will be deducted at source on interest earned on time deposit with banks at higher rates if Income Tax Permanent Account Number (PAN) is not made available. Based on the representations received from the customers, Bank has made a direct arrangement with M/s. UTI Technology Services Ltd. for servicing the PAN card applications. This is in addition to the already launched KYC Certification services for the Mutual Fund Investors, in association with M/s. CDSL Ventures Ltd. (CVL).

Mutual Funds are one of the preferred investment options for all those who wish to play safe, yet earn more than what traditional saving avenues offer. During the year, Bank entered in to a tie up with LIC Mutual Fund and with this, Bank offers a range of funds from 14 performing Mutual Fund companies.

From June 2009 onwards, Bank acts as a corporate agent of Life Insurance Corporation (LIC) of India for selling the life insurance products. All our branches are equipped to provide customised services to our account holders in the area of life insurance and with the wide and varied life insurance products provided by LIC, our Bank is in an unique position to meet the aspirations of our customers for protecting their families through innovative life insurance products from the countrys largest insurer, namely LIC of India.

General Insurance offers various health packages and policies to protect the assets and goods against various perils. Bank also acts as a corporate agent for the distribution of insurance products of M/s. Bajaj Allianz General Insurance Company. During the year, facility for online purchase of insurance policy is also provided in association with M/s. Bajaj Allianz General Insurance Company. Bank has entered in to an arrangement with M/s. Cholamandalam MS General Insurance Company to offer Health Insurance coverage to all our customers at competitive rates of premium and a very efficient after sales service.

SIBs ATM cum Debit Card (SIB Card) enables withdrawal of cash through ATMs across the globe. Customers can withdraw cash from any ATM displaying the CIRRUS logo of Mastercard International or the INFINET logo of Institute for Development and Research in Banking Technology (IDRBT), the technical arm of RBI (now taken over by National Payments Corporation of India). SIB Card can be used in merchant establishments equipped with Point-of-Sale (POS) terminals in India and abroad, displaying the MAESTRO logo of MasterCard International, for purchase of goods and services worth up to Rs.1 lakh per day. In order to widen the ATM/POS reach, Bank has recently acquired the principal membership of VISA International. With this Visa Internaltional membership, the Bank can issue and acquire the whole range of VISA debit cards and prepaid cards which are expected to be launched during the current year.

Sibernet - the internet banking service of the Bank, facilitates online and any-time banking transactions. Bank has made arrangements with three major aggregators in the country to provide e-commerce / online payment services to the customers. Customers can perform online transfer of funds from one account to another, online bills & utility payments, e-shopping, e-commerce and make offerings & book for Poojas with the famous Guruvayur Sree Krishna temple in Kerala.

Customers of the Bank enjoy the benefit of Mobile Banking Service where, transaction alerts are sent to the customers on a real time basis, using the SMS technology. This facility is available to NRI customers also. This year, the Bank has launched M- Commerce facility as a value added service in association with M/s. Paymate. M-commerce is an entirely new breed of secured payment channel, which involves online and real time payments by debit to the customers bank account which is authenticated through the registered mobile phone number of the customer.

The Banks award winning website provides a host of information to the customers. Customers can locate the branch and ATM in a locality based on State and District filters. Contact details of the branches along with the email ID, branch code, IFSC codes and name of branch managers are available for quick reference. Contact details of Head Office departments and Regional Offices are also available. Direct links to make online bill payments, online shopping and online trading are available in the homepage itself. Visitors can lodge the complaints, send the feedback on customer satisfaction, watch the stock information of the Bank, get the latest Forex rates etc. through the Banks website. Bank has also put in place a Call Centre with Toll Free facility at Kochi, and this has been operational for more than a year now.

PERSONNEL

In line with the growth in business volume as well as its geographical spread, the Bank has embarked upon a major recruitment drive with the primary objective of acquiring manpower of the right quality and numbers. Local recruitments have been made to synchronise with the culture of the particular region. Campus recruitments have also been done so as to retain its competitive edge and also to ensure that required skills are successfully brought on board.

New Software for maintenance of Personnel Data - Human Resources Management Software Solution (HRMSS)

In order to improve the management of Human Resource in the Bank, a new software has been put in place which serves to provide access to the Data Bank of all employees and is accessible through the Banks network by all branches and offices. The service records along with the photographs of the employees are all captured in the Data Bank and is available in HRMSS. To make it more comprehensive, more modules like details of deputation, promotion, leave and LFC records, the training needs of the employees etc. will be added to the Data Bank in the second phase which will be completed during the current year.

Introduction of Online Recruitment

Software for online registration of applications for general recruitment was developed in house. This facilitated online validation of eligibility criteria and invalid applications could be reduced substantially for the last recruitment test in January, 2010.

Talent Acquisition

Campus recruitment has become a thrust area for acquiring talented personnel in Banks workforce. A total number of 95 officers were recruited from campuses of various reputed colleges and universities from different centres during the year under review.

Talent Retention

Job satisfaction is the major morale booster for talent retention. Starting from comfortable posting & proper training, the Performance Linked Incentive Scheme of the Bank is very unique in the industry. They also have opportunity for promotions through fast track promotion policy. The attrition rate of Bank has been brought down below 2%.

Employee Stock Option

During the financial year 2008-09, the Bank has instituted an Employee Stock Option Scheme to enable its eligible employees to participate in the future growth and financial success of the Bank. The Banks shareholders approved the plan on

August 18, 2008 for the issuance of stock options to the employees. Compensation and Remuneration Committee of the Board granted the options on November 21, 2009 at a discount of 10% on the closing price of the shares quoted on NSE on November 20, 2009.

Under the Scheme, Bank has granted 30,72,500 options to eligible employees which works out to 2.72% of the paid up share capital of the Bank as at March 31, 2010. This scheme has been introduced by the management to reward eligible employees with options which when vested and exercised will give rise to acquisition by the said employees of Equity shares equivalent to the option exercised.

With a view to maintain highest standards of personal ethics, all the Directors of the Bank including the Chairman and Managing Director & CEO have voluntarily decided not to accept any stock options, though the shareholders of the Bank were gracious enough to permit grant of stock options to all the Directors of the Bank during the previous Annual General Meeting.

SIBLINK

ÃSIBLINK, Banks corporate house magazine, has been functioning as an internal PR tool educating and motivating the staff for better performance and is published every quarter.

Staff Position

As on March 31, 2010, the Bank had 4860 personnel on its rolls on full time basis as against 4523 as on March 31, 2009. Cadre wise break up is as under:

Officers 2234

Clerks 1973

Sub staff 653

4860 Part-time employees 272

5132

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

The operations of the Bank are not energy intensive. However, the Bank has taken all possible measures to control and reduce consumption of energy. The Bank continues to undertake sufficient measures for innovation and absorption of technology in banking business.

With a view to conserve energy and to protect the environment, the Bank has taken a policy decision to buy only energy efficient equipments bearing 5 star rating of Bureau of Energy Efficiency of Government of India for all our requirements in future.

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

PARTICULARS OF EMPLOYEES

Information as required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given under:-

Name, Designation Remun- Experience Qualification eration (in years) and Age (in years)

Dr. V.A.Joseph, M.Com., LLB, MD & CEO Rs.41.58 38 CAIIB, PhD lakhs (HRD), MPM, 59 Years.

Name , Date of Last Qualification commen- employ- and Age cement ment (in Years) of employ- ment

Dr. V.A.Joseph, M.Com., LLB, CAIIB, PhD (HRD), MPM, 59 Years. General December, Manager 2003 of Syndicate Bank at Mumbai

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Bank has formulated a CSR Policy to guide our strategic planning and provide a roadmap for our CSR initiatives, which is an integral part of overall business policy and is aligned with our business goals.

The CSR Policy covers the following core elements:

Care for all Stakeholders

Ethical functioning

Respect for WorkersÃ Rights and Welfare

Respect for Human Rights

Respect for Environment

Activities for Social and Inclusive Development

Implemented Minimum Wages for Contract workers

The Bank has always been keen in discharging its social responsibility. As part of the continued efforts to be an active player in the field of sustainable development, the Bank has been in the forefront to popularise inclusive growth. Towards achieving the objective, we are one of the pioneers in starting the no frill account for the less privileged. Bank has been making all out efforts in extending finance to small and micro-enterprises and the participation in the government sponsored schemes like SJSRY has been quite impressive. The Bank believes that agriculture and allied activities form an integral part of the development and therefore, emphasis is given to achieve maximum flow of credit to the eligible activities. Considerable assistance by way of finance and non-refundable contributions have been given towards palliative care, AIDS avoidance, general medical care for the under privileged, furtherance of education etc. Bank has adopted a few villages in Kerala with a view to cater to their all-inclusive growth.

The Bank is determined to ensure that environmental sustainability is given the adequate priority. We have been encouraging financing and setting up of non-conventional energy production units such as wind mill, solar energy gadgets etc. More emphasis will continue to be given towards growth of such units. Infrastructure development is a major requirement for the long term development. Accordingly the Bank has been participating in viable projects such as power generation, road and bridge construction, oil exploration etc., referred to for financing. As a long term sustenance strategy, while taking up medium and large scale projects with a threshold limit of Rs.50 crore and above, we are examining the impact on the environmental issues like carbon emission, damage to the eco system, effect on the virginity of the land surface etc.

The Bank has taken a decision that any new construction by the Bank shall conform to the green concept and towards this goal the new Data Centre building being constructed at Ernakulam is expected to get a good Green Rating by the Indian Green Building Council.

SIB STUDENTS ECONOMIC FORUM (SIBSEF)

Students Economic Forum, which has completed 18 years after its first publication was launched in December 1991. It is a monthly publication discussing and analyzing a theme relating to important economic affairs and events. So far 220 themes have been published. In response to the requests from our readers and well wishers, we compiled the first 201 themes of this publication in 4 volumes. The objective of this venture is to kindle interest in economic affairs in the minds of our younger generation and also to empower the student community. Although it is a publication primarily targeted at the student community, the feedbacks received at our end show that the booklet is being well referred to by academicians, administrators, bankers and researchers. It is also a source of reference for the editors of various publications, including banking journals.

The following topics were discussed during the year 2009-2010: IFRS (April-2009), RBI Annual Policy Statement - 2009-10 (May- 2009), Microfinance Part-I (June-2009), Microfinance - Part-II (July-2009), Union Budget 2009-10 (August-2009), Limited Liability Partnerships (September-2009), Interest Rate Futures (October- 2009), MSMEs (November-2009), ASEAN - India Free Trade Agreement (December-2009), Tax Reforms in India- Direct Taxes Code - Part-I (January-2010), Tax Reforms in India - Goods & Services Tax - Part II (February-2010), Union Budget - 2010- 11 - the path of Fiscal Prudence (March-2010). Open access is also made available to this publication through the "Students Corner" page of the Banks website.

FINANCIAL INCLUSION INITIATIVES

As on March 31, 2010, Bank has 580 branches in the country. Out of these, 358 branches are located in rural / semi-urban areas. Out of the proposed 60 new branches to be opened during the financial year 2010-2011, 33 branches (55%) will be opened in rural and semi-urban areas. We have so far opened 1,50,130 no frills accounts (basic SB Accounts facilitating financial inclusion), with a minimum balance requirement of just Rs.10/-. We have opened more than 5 lakh SIB Junior accounts, which is another financial inclusion product being offered by the Bank. This SB account is exclusively for the students.

In addition to this, Bank plans to adopt the Business Correspondent Model (Branchless Banking Model) for financial inclusion as permitted by RBI. As per the scheme, Business

Correspondents appointed by the Bank will facilitate basic banking services using the Hand Held Terminals (HHTs). Authentication will be done using the smart cards issued to the customers along with their finger print matches. It is proposed to implement the scheme on a pilot basis in 5 villages during the financial year 2010-11. As per the financial inclusion plan, the Bank proposes to cover at least 100 under banked villages by the end of financial year 2012-13.

ANTI - MONEY LAUNDERING (AML)

The Bank has attached great importance to Anti-Money Laundering and the transactions of all the branches of our Bank have been brought under the ambit of AML software. The alerts generated from the AML software are monitored on a daily basis and suspicious transactions are reported to Financial Intelligence Unit (FIU-India). In line with the RBI Guidelines, our Bank is strictly following the "Know Your Customer" norms at the time of opening new Accounts.

In order to educate the staff members at all levels, the Bank has provided a hand-book on "KYC/AML Guidelines", incorporating the various RBI Guidelines, to all the branch/ offices. We have also started conducting online tests on KYC/ AML, for the staff members at branches, so as to improve the knowledge level. With the motive of creating customer awareness towards compliance of KYC/AML guidelines, a notice was also published in leading newspapers.

E-CIRCULAR

The Bank has stopped the practice of issuing manual circulars and all the circulars of the Bank are uploaded using the e-circular software. In e-circular, Banks Policies, Guidelines and Forms are also uploaded so as to enable branches to take copies of the same for their immediate requirements.

DIRECTORS

Sri. A. S. Narayanamoorthy, Sri. Davy K. Manavalan and Sri. Mathew L. Chakola who retired at the 81st Annual General Meeting held on August 21, 2009, were re-appointed as Directors of the Bank. Dr. John Joseph retired from the Board w.e.f. February 12, 2010 on completing 8 years of Directorship as stipulated under the Banking Regulation Act, 1949. The Board places on record its appreciation for the invaluable services rendered by him during his tenure as Director. Sri. Mohan E. Alapatt was appointed as additional Director by the Board of Directors at its meeting held on March 1, 2010.

Pursuant to the provisions of Section 260 of the Companies Act, 1956, Sri. Mohan E. Alapatt vacates his office at the ensuing Annual General Meeting. A member of the Bank has expressed his intention to propose Sri. Mohan E. Alapatt as a candidate for being elected as a Director and has given a notice in writing along with a deposit of Rs. 500/-, in terms of Section 257 of the Companies Act, 1956.

In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Sri. Paul Chalissery and Dr. N. J. Kurian are the directors who retire by rotation at the ensuing Annual General Meeting, and being eligible offer themselves for re-appointment, and the Board recommends their re-appointment as the Directors of the Bank.

AUDITORS

The shareholders at its 81st Annual General Meeting held on August 21, 2009, appointed M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai, as the Central Auditors for the audit of Banks accounts for the year 2009-10.

M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai, vacate office at the end of the Annual General Meeting to be held this year but are eligible for re-appointment for the Financial Year 2010-11.

AUDIT AND INSPECTION

In addition to regular inspection of our branches at periodical intervals according to the rating awarded to the branches, we have a system of surprise inspection of branches as well. We also conduct Concurrent Audit in a selected number of branches, Stock Audit, Credit Audit, Revenue Audit to check income leakage etc. Besides, all our branches are subjected to statutory audit on yearly basis. Apart from this RBI also conducts an Annual Financial Inspection of our Bank.

In view of the various comprehensive audits and inspection covering all the areas of banking operations, a separate Management Audit is not considered necessary at present.

EXPLANATION FOR AUDITORS COMMENTS IN THE REPORT

The Auditors Report for the year 2009-10 does not have any qualifications. Hence, no explanation is required to be given in this regard.

CORPORATE GOVERNANCE

A separate report on the status of implementation of Corporate Governance as required under Clause 49 of the Listing Agreement with Stock Exchanges, and a certificate from M/s. Deloitte Haskins & Sells, Statutory Auditors of the Bank, are annexed to the Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217 (2AA) of the Companies Act, 1956, the Board of Directors hereby declare that: -

1. In the preparation of annual accounts for the financial year ended March 31, 2010, the applicable accounting

standards have been followed and proper explanation has been furnished to the extent of departures from those standards.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2009-10 and of the profit of the company for that period.

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

4. The Directors have prepared the annual accounts for the financial year ended on March 31, 2010, on a going concern basis.

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to the Reserve Bank of India, Securities and Exchange Board of India, Government of India, Government of Kerala and all other state Governments where we operate, other Government and Regulatory Authorities, including stock exchanges, where the Banks shares are listed and correspondent banks for their strong support and guidance, during the year. The Board also places on record its gratitude to the Banks shareholders and customers for their continued support, patronage and goodwill. The pillars of any Institution are its staff, executives and administrators, more so in the case of a service institution like our Bank. The Bank has no hesitation in acknowledging this fact and thank all of them for their diligence and loyalty towards the Bank. The Board, therefore, expresses its deep appreciation for the dedicated service rendered by employees of the Bank at all levels.

Thrissur By Order of the Board

May 25, 2010 G.A. SHENAI CHAIRMAN

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