Directors Report of Syndicate Bank [Merger]

Mar 31, 2019

The Board is pleased to present Directors’ Report of the Bank along with the Audited Balance Sheet as at 31^st March 2019 and the Profit & Loss Account Statement for the Financial Year ended 31^st March 2019.

Financial Performance

The snapshot of your Bank’s financial performance is as below:

(Rs. in crore)

Particulars	31.03.2018	31.03.2019	Variation (%)
Total Deposits	272776	259897	-4.72
Of which-Domestic Deposits	241092	230092	-4.56
Overseas Deposits	31684	29805	-5.93
Domestic Deposits	241092	230092	-4.56
Of which-Current Account Deposits	12016	10660	-11.28
Savings Deposits	68346	73955	8.21
CASA Deposits (Domestic)	80362	84615	5.29
Domestic CASA to Domestic Deposits (%)	33.33	36.77
Advances	223346	217149	-2.77
Of which-Domestic Advances	181477	174822	-3.67
Overseas Advances	41869	42327	1.09
Total Assets	323977	311279	-3.92
Net Interest Income (NII)	6552	6648	1.47
Other Income	2806	2224	-20.74
Of which-Fee Income	710	729	2.68
Profit on sale of Investment	946	364	-61.52
Recovery from Prudential written-off accounts	488	570	16.80
NII Other Income	9358	8872	-5.19
Operating Expenses	5494	6053	10.17
Operating Profit	3864	2819	-27.04
Provisions (Other than Tax)	8253	5922	-28.24
Of which; Provisions for NPAs & Bad debts written-off	7707	6169	-19.96
Profit Before Tax	-4389	-3103	29.30
Provision for Tax	1166	515	-55.83
Net Profit/ (Loss)	-3223	-2588	19.70
Appropriations/Transfers
Statutory Reserve	-	-
Capital Reserve	62	17
Revenue and other Reserves	-	-
(i) General Reserve	-3285	-2605
(ii) Special Reserve u/s 36(l)(viii) of the Income Tax Act 1961	-	-
(iii) Investment Reserve Account	-	-
(iv) Transfer from Excess Appropriation of previous year	-	-
Key Performance Indicators
Average Cost of Funds	4.94	5.05
Average Yield on Funds(%)	7.06	7.28
Average Earning Assets	268375	274924
Net Interest Margin (%)	2.44	2.42
Cost-Income Ratio (%)	58.71	68.23
Return on Assets (ROA) (%)	-1.05	-0.87
Return on Equity (%)	-26.68	-21.34
Book Value per share (Rs.)	105.43	66.60
Book Value per share (Rs.)(inclusive of revaluation reserve, FCTR & Net DTA	83.05	50.20
Basic EPS (Rs.)	-34.00	-17.12
Diluted EPS (Rs.)	-34.00	-17.11

*Face value of the share Rs.10/-

The total business of your Bank stood at Rs.477046 crore as of 31.03.2019.

The Net Interest Income (NII) has improved by 1.47% from Rs.6552 crore in FY 2017-18 to Rs.6648 crore in FY 2018-19.

Your Bank posted an operating profit of Rs.2819 crore during FY 2018-19. Total provision decreased by 24% and as a result net loss reduced from Rs.3223 crore in FY 2017-18 to Rs.2588 crore in FY 2018-19.

For the year ended March 31, 2019, the return on average assets was (0.87)% while return on equity was (21.34)%. The Basic Earnings Per Share (FV Rs.10/-) were Rs.(17.12). The Book Value of Share (FV Rs.10) was Rs.66.60.

Bank’s Net Worth as of March 31, 2019 was Rs.12488 crore (excluding share application money pending for allotment, revaluation reserves, FCTR & Net of Intangible assets).

Capital Adequacy Ratio (CAR)

(Rs. in %)

	31.03.2018	31.03.2019
CRAR	12.24	14.23
CET-I	7.56	9.31
Tier-I	9.41	11.36
Tier-II	2.83	2.87

Capital to Risk Assets Ratio (CRAR), at 14.23% under Basel III was well above the regulatory requirements as of March 31, 2019. Tier-1 ratio was at 11.36% and common equity Tier-1 (CET-1) was at 9.31% under Basel III framework.

a. During the year, the Bank has allotted equity shares to Government of India (“GOI”) on preferential basis as detailed below:

- 18,36,99,217 Equity Shares were allotted on 19.12.2018 under preferential basis at face value of Rs.10 each at a premium of Rs.29.63 aggregating Rs.728 Crore.

- 43,23,17,880 Equity Shares were allotted on 27.02.2019 under preferential basis at face value of Rs.10 each at a premium Rs.27.75 aggregating Rs.1,632 Crore.

- 45,46,22,802 Equity Shares were allotted on 29.03.2019 under preferential basis at face value of Rs.10 each at a premium of Rs.25.26 aggregating Rs.1,603 Crore.

b. During the year, the Bank has exercised Call option for Basel III Non-compliant IPDI Bonds of Rs.339 Crore carrying coupon rate of 9.40% p.a.

c. During the year, the Bank has paid maturity of Lower Tier-II Bond Series X of Rs.300 Crore carrying coupon rate of 8.60% p.a.

d. The capital of Rs.500 Crore raised though ESPS treated as Share application money pending allotment which is not considered for capital adequacy purposes.

TRAINING AND DEVELOPMENT

The Bank is extending training facilities to Officers and Executives on the relevant areas of skill-set through various reputed Educational/Management organizations such as Southern India Bankers Staff Training College, Bengaluru, National Institute of Bank Management Pune, CAFRAL Mumbai, IDRBT Hyderabad, Indian Institute of Banking and Finance Mumbai, College of Agricultural Banking, Pune, etc.

For the identified executives handling sensitive Regions and Branches, Bank has arranged Special Executive Development Programmes, primarily on Quality Credit Expansion. To bridge the skill gap, Bank conducted special training programmes on Retail, MSME, Priority Sector Lending, Credit & Risk Management, Foreign Exchange etc. During the year 2018-19, the training system has conducted 531 Internal Training Programmes covering 10419 Officers and 5021 Workmen Employees.

In addition to the above Internal Programmes, 773 Workmen/Officers/Executives were deputed to External Training Programmes conducted by various Training Institutes of Repute in India on finer leadership skills. Further 5 Executives/Officers were also deputed to overseas Training Programmes.

Syndicate Institute of Bank Management (SIBM) and 8 Training Centers spread across the country are catering to the training needs of the employees, with the 8^th being the TC opened at Bhopal during the year. For filling up the skill gap, various Skill Development Programmes have been conducted by the Bank’s Training system during the year 2018-19 apart from regular Induction / Refresher Training/ Pre-promotion training Programmes as per the Training Policy.

E-Learning

Bank has implemented of E-learning system on various topics in 215 modules. Bank is engaging the Retired Executives/Officers for assisting in development of E-learning Modules. The employees Annual Performance Appraisal Report also carries a weightage up to 1 0 marks on continuous learning under e-learning Module, while making it available 24x7 through internet as well as proxy server, so as to enable the employees to learn uninterruptedly. A total number of 18495 employees including 687 Executives, 12813 Officers and 4995 Clerks have attempted the e-learning model.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Bank has been displaying a strong and abiding commitment to encourage the greater use of Hindi in various ways not only because it is the policy of the Government of India but also as an ideal and powerful medium of inclusive banking. Bank issues Internal Annual OL implementation Action Plan.

Your Bank’s 13 Regional Offices and staff members have received Rajbhasha Shields/Awards from respective Town Official Language Implementation Committees.

Bank’s Internal Award Schemes like Cash Incentive Schemes for ‘Excellent Performance in use of Hindi and Excellent performance in use of Hindi on Computers’ for Region wise individual employees and also Bank level/ Branch level/Department level Shield Competitions/Essay Competitions’ are in vogue.

Bank has notified 3567 branches/offices under Rule 10(4) of OL Rule, 1976 to ensure maximum usage of Hindi. Ensured online submission of quarterly Hindi Progress Reports of various Regional Offices to the concerned Regional Implementation Offices of MHA.

Bank is the convenor of Town Official Language Implementation Committees at Ananthapur, Bijapur, Karwar, Kannur, Meerut, Ghaziabad, Faridabad, Ongole, Baghpat, Shivamogga, Kamareddy & Sangareddy and Udupi. Official Language Implementation Committees were constituted in all the branches/offices for the effective implementation of Official Language.

The Third Sub Committee of the Committee of Parliament on Official Language inspected our Rudraprayag Branch, RO Coimbatore, Surat Branch and Nagercoil Branch respectively on 03.05.2018, 15.06.2018, 24.10.2018 & 22.01.2019 and The Drafting & Evidence Sub Committee of the Committee of Parliament on Official Language had discussion with our RO Delhi II on 08.12.2018 and Thane Naupada Branch on 16.02.2019.

In addition, 1 8 Regional Offices have been inspected/ visited by our AGM (OL) from OL implementation perspective. By such inspection we could create a positive environment of OL implementation at operational level during April 2018 to till date.

CUSTOMER SERVICE

Bank has been constantly striving hard to improve the customer service and making it a delightful banking experience for them. Bank’s customer centric approach acts as a key component in shaping future business potential and also in acquiring, retaining and growing the customer base.

The Bank has policies duly approved by the Board on customer service, deposits, customer grievance redressal, cheque collection, compensation policy etc. These are displayed on the Bank’s website for the convenience of the customers, besides being available at each branch of the Bank for the use of the customers.

Matters relating to customer service and customer complaints are discussed in the periodical meetings held at Banking Outlets/Regional Offices/Zonal Offices/ Corporate Office where senior citizen customers are also invited apart from other customers.

Bank has made online grievance redressal system live from 18.08.2015 for easy resolution of complaints where all the complaints are registered online in the OGRS portal.

The online grievance system provides for online registration of grievance through Banks website, it provides compliant status tracking and receiving response from the Bank. The system is running effectively.

Bank has initiated steps to study the issues raised in the complaint in light of the relevant internal guidelines on products and services, standards of delivery and BCSBI Fair practices code to ascertain the deficiencies. If any deficiency is observed, Bank will rectify the error and compensate the customer, as per the Bank’s Compensation policy.

INTERNAL OMBUDSMAN

As per recommendation of the Damodaran Committee setup by Reserve Bank of India, our Bank has appointed Internal Ombudsman with effect from 01.08.2015 to enhance the customer confidence level.

CORPORATE SOCIAL RESPONSIBILITY

As a sincere Corporate Citizen, the Bank has been fulfilling its social responsibilities by actively participating in activities aimed at socio/economic transformation of various facets of society and upliftment of the downtrodden.

Some of the major contributions under Corporate Social Responsibility during the financial year 2018-19 are

- Donation of water purifier to govt. school at Mysuru on the occasion of 127^th birth centenary of Dr. B. R. Ambedkar, Karnataka.

- Providing drinking water facility at Ariyancode Scheduled Tribe Colony, Kannur, Kerala.

- Providing an inverter battery to orphanage on the occasion of Ambedkar Jayanthi at Vijayapura, Karnataka.

- Financial assistance to Bharathiya Vikas Trust, Shivalli, Udupi for organising entrepreneurship training programmes for women, Karnataka.

- Providing LCD projector for smart class rooms for GLPS School, Maravanthe.

- Construction of houses for Koraga families, Karnataka

- Rashivanam, Planting of saplings/trees in Kamareddy Town, Nizamabad Dist., Telangana.

- Donation of water coolers to Govt. Senior Sec school, Mohali, Punjab.

- Mapusa Muncipal Council - Plastic Free City, Cloth Bag Distribution, Goa.

- Ambulance to SWETCHA GORA Eye Bank, Vijayawada, Andhra Pradesh.

- Drinking Water Tank facility at Govt. Model School at Mohali, Punjab.

- Construction toilets under Swachh Bharat Abhiyan in Sambhal Dist., Uttar Pradesh.

- Financial support to girl students for education, Kalinga Inst of Social Service, Orissa.

- Providing IHHL to Mannargudi Municipality, Madurai, Tamil Nadu.

- Providing water cooler and books to school library, Ghaziabad, Uttar Pradesh.

MARKETING AND FEE INCOME PRODUCTS

Bank has a separate marketing vertical at Corporate Office and Regional Offices to accelerate marketing efforts to augment income from various products and services provided by Bank.

Bank’s marketing setup is consisting of a team of 202 marketing officers spread across the country, with clear thrust on the business development.

A few of the products & services are briefed below:

BANCASSURANCE

1. Life Insurance

- Bank has a Corporate Agency tie-up with Life Insurance Corporation of India, as a Corporate

Agent for distribution of Life Insurance Products. Bank has a team of 327 Specified Persons for soliciting life insurance business.

- Bank also offers life insurance cover under group policy to educational loan borrowers.

- Bank has recently tied up with SBI life insurance company as a Corporate agent for distribution of SBI life insurance products from 01.01.2019 to 31.12.2019 on POC basis in four regions viz. Bangalore central, Bangalore east, Kannur & Madurai.

- Bank earned commission of Rs.5.78 crore (inclusive of LIC PMJJBY) during FY 2018-19 against a commission of Rs.8.51 crore (inclusive of LIC PMJJBY) during FY 2017-18.

2. General Insurance

- Bank has a Corporate Agency tie-up with United India Insurance Company Limited (UIICO) for distribution of general insurance products, including Synd Arogya (a Group Mediclaim-Cum-Personal Accident Policy with family floater advantage) at competitive premium for its account holders.

- During the FY 2018-19, Bank has earned a commission of Rs.14.97 crore (inclusive of UIICO PMSBY), compared to commission of Rs.13.56 crore (inclusive of UIICO PMSBY) during the previous year, from general insurance business.

3. Social Security Insurance Schemes (PMJJBY & PMSBY)

a. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Bank has tie-up with LIC of India for providing life insurance cover under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). During FY 2018-19, Bank has enrolled 63040 fresh policies taking the total number of policies under PMJJBY to 611463.

b. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Banks has tie-up with United Insurance Company Limited (UIICO) for providing accidental death insurance cover under Pradhan Mantri Suraksha Bima Yojana (PMSBY). During FY 2018-19, Bank has enrolled 124290 fresh policies taking the total number of policies under PMSBY to 2082019.

The total income from the Bancassurance Business during the year 2018-19 is Rs.20.55 Crore as against Rs.22.07 Crore in the previous year. Business in year 2018-19 comprises of Rs.5.78 Crore from Life Insurance business and Rs.14.97 Crore from Non Life Insurance business.

Mutual Funds

Acting as a financial supermarket, offering various financial products under one umbrella, Bank has tied up with nine leading Asset Management Companies for distributing Mutual Fund products. As on 31.03.2019, the Bank had a team of 513 NISM (Series-V-A) Certified Persons and 326 EUIN compliant staff Bank facilitating informed selling. Bank earned commission of Rs.92 lakh during FY 2018-19 against a commission of Rs.107.44 lakh in FY 2017-18 from Mutual Fund business.

Cash Management Services (CMS)

The Bank offers a state-of-the-art technology driven products to corporate, private and foreign banks for efficient management of account receivables and payments. The Bank also offers CMS services to its clients through all branches across the country. Auto debit mandates facility and centralized cheque debit facilities are being offered. Payment of dividend warrants/interest warrants/DD drawing arrangement and remote DD printing facilities are being offered under payments.

Applications Supported by Blocked Amount (ASBA)

The ASBA (Application Supported by Blocked Amount) facility was introduced in the Bank during October 2010. This scheme aims at providing the facility of blocking of amount to the extent of the bid amount of our customers investing in shares and bonds through the IPO/FPO.

Depository Participant Services

Your Bank is holding permanent registration as Depository Participant issued by the Securities and Exchange Board of India (SEBI). The Bank is a Depository Participant of CDSL. This facility enables customers to keep their Capital Market Securities in electronic form. Your Bank provides 3-in-1 account cum on-line trading facility, in collaboration with M/s. Asit C Mehta Investment Intermediates Ltd., under the brand name “Synd-e-Trade”. Bank has also entered into agreement with M/s Kotak Securities Ltd. for launching of 3-in-1 account cum on-line trading facility under the brand name “Synd-Trinity”. The facility will comprise of the CASA account, demat account and trading account for enabling our customers to trade in shares online, using the funds in the CASA account and dematerialized securities in the DP account through the Straight through Process. Further Bank is also moving for tying up similar facility with better branded security dealers.

During FY 2018-19, Bank has earned an income of Rs.789.10 lakh from Cash Management and Capital Market operations against an income of Rs.632.95 lakh during FY 2017-18.

New Pension System (NPS)

3481 branches of your Bank are registered with NSDL for offering various services under the scope of the NPS as Point of Presence - Service Provider (POP-SP).

Atal Pension Yojana (APY)

The Government of India introduced the Atal Pension Yojana (APY), with effect from 1^st June, 2015, for creating a universal social security system for all Indians, especially the poor, the under-privileged and the workers in the unorganised sector. 3915 branches of your Bank have been registered as NPS Lite Collection Centers (NLCCs) to offer the services under this scheme to customers ranging from Rs.1000 per month to Rs.5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY.

CARD BUSINESS

Syndicate Bank Global Debit Cards

Bank has launched various types of Debit Cards in association with various Payment Networks to provide 24x7 banking facility to its customers through Debit Cards. The Bank launched Global Debit Cards in association with VISA on 29.03.2003 and Master Card (Maestro Brand) on 22.06.2011. The Bank has been issuing VISA International Gold Debit Cards with higher transaction limits w.e.f. 20.10.2012.

The Bank has also launched the following new variants of Debit Cards in association with VISA/NPCI/Master Card: RuPay Mudra Cards, RuPay Platinum Cards, AEPS RuPay Debit Cards (Aadhaar enabled), NPCI’s RuPay Debit Cards for e-commerce transactions through OTP

The Bank has launched Visa Platinum Business Debit Card exclusively for Sole Proprietorship, Partnership, Private and Public Limited Companies. The Bank is in the process of launching Braille Debit Card for visually impaired persons.

For providing Secured Transaction experience to customers, the Bank has complied with RBI directions on issuing EMV Debit Cards. As on 1^st January 2019, the Bank has blocked all its Magstripe Cards and issuing EMV Cards only. The Bank has issued 79.98 lakh EMV based debit cards as on 31.03.2019.

Credit Card

Bank, in association with VISA International, offers Gold and Classic Credit Cards which can be used at ATMs, Point-of Sale Terminals (POS) and Internet, w.e.f 20.10.2003. Bank has issued 45722 credit cards till 31.03.2019. Bank has entrusted end-to-end management of credit card services through M/s Atos Worldline India Pvt. Ltd. Since 04.02.2015. In Association with NPCI, Bank has launched Rupay Select Credit Card on 11.03.2019 for HNIs (High Net worth Individuals).

POS Business by the Bank

All POS terminals of the Bank comply with VISA / MasterCard / RuPay specified standards and are fully compliant to handle EMV and PIN based transactions for all types of cards issued by various banks.

As on 31.03.2019, Bank has installed 8453 POS terminals out of which 3709 terminals were installed during the year. The Bank has introduced two new POS linked CA products to increase demand for POS machines and boost Current Account portfolio.

The Bank has on-boarded a Fintech Company for deployment of POS terminals and for immediate installation. As per the new arrangement, the Merchants are facilitated to activate their account through a mobile app.

Delivery Channels ATM Network

Bank is providing ATMs and Bunch Note Acceptors (BNA) to branches on their request. Bank has operationalized 4509 ATMs and 472 BN As as on 31.03.2019. Your Bank customers can deposit cash into their accounts or third party accounts in our Bank using BNAs.

Internet Banking

Our Bank’s Internet Banking has 14.53 Lakh registered users as on 31.03.2019. Bank has revamped the Internet Banking Application Web Interface Application. The UI/UX (User Interface/User Experience) has been enhanced to ease the Net-Banking experience. The customers now can choose his/her fancied username instead of the traditional Customer-ID.

Mobile Banking

Bank’s Mobile Banking application is becoming more popular and is having a registered user base of 22.29 Lakh as on 31.03.2019. Mobile Banking application is provided with links to open SB account through Synd Swayam and to apply loans. The Mobile Application now extends to its users the facility to open Term Deposits and Recurring Deposits.

SMS Banking

Mandatory and non-mandatory SMSs are sent to customers. Mandatory SMSs are not chargeable whereas non-mandatory SMSs are chargeable. The registered SMS Banking users are 111.26 Lakh.

Missed Call Banking

Customers who wish to avail this facility may register their mobile number by sending specified text message from his registered mobile number to Bank’s Missed call number 9210332255.

After successful registration, customer can get balance alert for their account by giving missed call to the specified number. Missed Call Banking registered users as on 31.03.2019 is 3.00 lakh.

Synd UPI

Synd UPI is a Mobile Application that facilitates customers to make simple, easy and quick payment transactions using Unified Payments Interface (UPI). Direct bank to bank payments can be made instantly using Virtual Payment Address or Aadhaar Number or Account Number and IFSC. The number of registrations with Bank is 1.19 Lakh as on 31.03.2019.

COMPLIANCE POLICY

Compliance policy approved by the Board of Directors of the Bank articulates that the compliance function is an internal part of governance along with the internal control and risk management process. The Compliance Department is headed by a Chief Compliance Officer. He oversees the compliance functions in the Bank and assists the top management in managing the compliance risk.

Continuing with the Bank’s commitment to high compliance standards, compliance function is reviewed regularly for making improvements. The compliance policy is reviewed every year and amendments, if necessary, are carried out based on the experience gained and utility aspect.

Risk Based Supervision Cell (RBS Cell):

RBI’s revised supervisory approach is called SPARC (Supervisory Programme for Assessment of Risk and Capital). RBS cell was formed in the Bank during May 2016 in order to be a single point collation, submission of Tranche data to RBI. RBS Cell ensures the submission of Tranche 1, 1 A, 1B (quantitative data), Tranche II and Tranche III (qualitative data) data to RBI. At present the cell is attached to Compliance Department, Corporate Office.

RIGHT TO INFORMATION ACT 2005

Our Bank has implemented the relevant provisions of the Act with effect from October 2005. The information related to the Bank as stipulated under the Act is displayed in the Bank’s website. The Appellate Authorities for the Bank under the Act and the PIOs and Alternate PIOs at various levels have been designated. The Bank has clearly spelt out the rules and responsibilities at different levels under the Act.

INTERNAL CONTROL SYSTEM

The Bank has a well-defined, Board approved Comprehensive Internal Audit Policy (CIAP) covering RBIA, Information System Audit, Concurrent Audit, Credit Audit, Compliance Audit, Special Audit, Know Your Customer/ Anti Money Laundering (KYC/AML) Compliances, Offsite Monitoring, Empanelment of Retired Officers for assisting in internal audit, disputed seepage of income, procurement Audit etc. The policy is being reviewed/updated on annual basis.

Your Bank is the first Bank to implement software driven RBIA among all Public Sector Banks. Bank has also implemented the software driven concurrent audit w.e.f. 01.04.2018. Bank has upgraded the existing software module to a new version which will ensure more objective risk rating of branches/offices, so that special attention can be given to monitoring of branches from compliance angle, based on risk assessment.

The Risk Based Internal Audit (RBIA) of all the branches is supplemented with concurrent audit of branches having high volume business with special reference to advances, high risk areas like specialized branches, Treasury & International Banking Division, Foreign Exchange Processing Centers (FXPC), Funds and Investment Management Division, Capital Market Services, Dept. of Information Technology, Card CENTER, High Volume Business Branches etc.

The Annual Audit Plan (AAP), drawn in accordance with the Internal Audit Policy involves the schedule & rationale of the audits planned for the year.

Similarly, RBIA of all ROs and ZOs, bi-annual management audit of 3 Regional Rural Banks and annual management audit of all functional departments of Corporate Office and Registered Office and Zonal Offices is also being conducted by CO: A&ID Manipal. During the year 201819, Bank has completed Management Audit of 1 Regional Rural Bank and of all functional departments of Corporate Office, Registered Office, Bengaluru and Manipal wing and Zonal Offices.

Orientation and refresher training programmes were conducted for field level officials from Inspection system during the year. IS Audit Team was trained under VAPT certification by IBDRT, Hyderabad. Bank has also trained officials from all the ZICs who are handling KYC/AML and Offsite Monitoring.

Offsite Monitoring Cell and KYC/AML Cell

Bank has policy on Business Line Mapping, Fraud Risk Management Policy, KYC, and AML policies to prevent KYC and AML violations. Bank has created off-site monitoring cell at Corporate Office, Manipal wing and one OMC unit each at all the eight zonal inspection Centers to monitor sensitive transactions on a daily basis which serves as an early warning system.

Fraud Risk Management Cell (FRMC)

FRMC monitors and follows up of fraud cases including CPPR (Claims Paid Pending Recovery) related to frauds with CO; Operations, Manipal Wing. It also ensures conducting internal investigation, examination of staff accountability, Departmental action, and recovery is followed up and position is updated in the data base. The cell places detailed note for amounts of above Rs.1 crore/Rs.10 crore before Special Committee of the Board/Government nominee Director on the board of the Bank for taking necessary action. The cell reports/updates RBI database including Central Fraud Registry, the progress related to criminal action, internal investigation and action taken and provides information related to queries and clarifications sought by Finance Ministry/RBI. The cell not only reports but also identifies the causative factors and share the same with respective departments for initiating corrective measures.

VIGILANCE

Vigilance function in a Bank is one of the Management’s tools for upholding ethics among employees. Vigilance in any organization including the Bank is an integral part of the Management. One of the objectives of the Vigilance machinery is to enhance efficiency and effectiveness in decision making. Vigilance Department plays an active role in preventive measures to avoid misuse of systems, and suggesting systemic improvements at various levels.

The Vigilance Awareness Week was observed from 30^th October to 4^th November, 2018 with the theme “My Vision-Corruption Free India”. As per the instructions received from the Commission, various activities were conducted at administrative offices, branches and RRBs. Also outreach activities were conducted by our Bank through all ROs and RRBs.

Preventive Vigilance initiatives taken by the organization during the year 2018-19

- Preventive Vigilance exercises were conducted in 636 branches and surprise inspection in 1 1 23 accounts during the calendar year 2018. Whenever irregularities of procedural in nature observed matter is being referred to branch/controlling Offices for timely rectification to safeguard the interest of the Bank. Wherever irregularities of serious in nature observed the detail investigation was conducted/the matter is referred to the Audit & Inspection Department of the Bank for further action at their end.

- A booklet on pre and post sanction due diligence for each products/category of advances were released/ provided to branches for improving the quality of retail advances.

- A checklist on Post-Sanction Credit Monitoring of High Value Advances (Fund Based) has been prepared for the investigating Officials and branch officials.

A dedicated E-mail ID - whistle blower@syndicatebank. co.in - is provided to enable staff members/general public to file complaints relating to corruption/unethical practices at various levels under whistle blower policy. Telephone number for staff members is in place under Whistle Blower Policy.

INDUSTRIAL RELATIONS

During the year industrial relations in the Bank has been cordial and harmonious facilitating all-round growth in the business of the Bank. The Unions/Associations have also been responsive and proactive to the corporate goals.

ACCOLADES AND AWARDS

The details of various awards and accolades received by your Bank during the year 2018-19 which have been mentioned as under.

- Bank has received “National Payments Excellence Awards 2017” from NPCI in recognition of excellent performance in NFS ATM Network at Mumbai during 2018-19.

- Bank has received “Skoch Award - Cyber Security 2018” for developing and implementing Network Access Control solution during 2018-19.

- Bank has been awarded “Skoch Order of Merit award 2018” for qualifying amongst the top ranking Cyber Security projects during 2018-19.

- Bank has been awarded ASOCHAM awards for FY 2017-18 under Large Bank Category during FY 2018-19.

- Bank has been awarded “Best Social Bank - 2^nd runner up in ASSOCHAM awards under large Bank Category.

- Bank has been awarded Aadhaar Excellence Award by UIDAI under following categories

- Best performing Public Sector Bank - 3^rd Rank in terms of total Aadhaar Generation & Update.

- Best performing Public Sector Bank - 2^nd Rank in terms of average Aadhaar Generation & Update.

- Achievers award - 6^th Rank in highest percentage of Aadhaar Centers against targets.

SECURITY

The security department of the Bank is making constant efforts to provide effective, efficient and progressively better security services to all Branches, ATMs, currency chests and administrative offices based on real time needs. This commitment resulted in the department obtaining the ISO 9001:2000 Certification in May 2007 which was later in September 2010 upgraded to ISO 9001:2008. With the transition to 2015 International Standard, the Department was subjected to an extensive audit of its

Quality Management Systems (QMS) and was assessed to having conformed with the revised standards. Accordingly, the Security Department has been conferred with the ISO 9001:2015 Certification with effect from 15.09.2016. The Department has thus achieved the unique distinction of being the first and only Security Department among all the Public Sector Banks to become ISO 9001:2015 compliant. The Certification is currently valid till 14^th September 2019 subject to periodic surveillance audits of the Department’s Quality Management Systems.

SYNDBANK SERVICES LIMITED

Synd Bank Services Limited (SBSL) was incorporated under the Companies Act, 1956, on 25.01.2006, as a wholly owned subsidiary of SyndicateBank, with an authorized capital of Rs.10 crore and paid up capital of Rs.25 lakh to extend back-office services to Syndicate Bank, its clients and other financial institutions.

The company has undertaken the following activities during the year 2018-19:

I. The Company prints and dispatches retail loan follow up notices to SMA borrowers on monthly basis based on the data received from the Bank apart from sending SMS messages on monthly basis.

II. Pre-shipment/Post-shipment testing of computer hardware procured by SyndicateBank and RRBs sponsored by SyndicateBank and also of other public sector Banks/financial institutions by our IT officers to ensure that the hardware meets the specifications, as per the Purchase Order issued by the Banks/Financial institutions.

III. Printing & Dispatch of Internet Banking Passwords for customers of Syndicate Bank.

IV. Providing man power for manning help desk for Internet banking, Mobile banking and ATM monitoring on behalf of CO: DIT and call desk at State Level Bankers Committee (SLBC) at Corporate Office, Bengaluru. SBSL has stopped providing man power to the above help desks as all the help desks was moved to call CENTER set up by SyndicateBank.

V. Collection of Cheques and cash from BWSSB Kiosks spread across Bangalore city and preparing clearing up-loadable files on CBS system on behalf of Syndicate Bank, BWSSB Branch through outsourced model.

As per the Board directions, all the activities of SBSL were stopped with effect from 01.09.2018. Now under the instructions from Syndicate Bank Board, CO: RBU (Retail Business Unit) has been given directions to revive activities of SBSL by taking up marketing of Housing and other Retails loan products, initially on pilot basis in Bengaluru. Other job is to take up following up of SMA and NPA accounts under Retail & MSME sector by setting up call center.

The performance highlights under key parameters during the last three years is as under:

(Rs. in lakh)

Particulars	March - 18	March -19
Authorised Capital	1,000	1000
Paid Up Capital	25	25
Reserves & Surplus	1456	1513
Fixed Assets (Net)	2	1
Total Income	435	183
Profit Before Tax	258	78
Profit After Tax	187	57

CHANGES IN THE BOARD

1. Shri Mrutyunjay Mahapatra has assumed charge as Managing Director & Chief Executive Officer of the Bank on 21.09.2018.

2. Shri Ajay K Khurana has assumed charge as Executive Director of the Bank on 20.09.2018.

3. Dr. Sanjay Kumar has been nominated as GOI Nominee Director, w.e.f. 05.04.2018.

4. Shri Kamal Kishore Singhal has been elected as Shareholder Director, w.e.f. 31.10. 2018.

5. Shri Melwyn O Rego, ceased to be Managing Director & Chief Executive Officer w.e.f. 13.08.2018 on completion of his tenure.

6. Shri CH S. S. Mallikarjuna Rao, ceased to be Executive Director, w.e.f. 20.09.2018 on his appointment as Managing Director & Chief Executive Officer of Alahabad Bank.

DIRECTORS’ RESPONSIBILITY STATEMENT

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

That the applicable accounting standards have been followed in the preparation of annual accounts along with proper explanation relating to making departures if any.

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

That reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank as at the end of financial year and of the profit or loss of the Bank for the year ended March 31, 2019.

That proper and sufficient care was taken for maintenance of adequate accounting records in accordance with the provision of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

That the annual accounts have been prepared on a ‘going concern’ basis.

That proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Directors wish to place on record their sincere appreciation to the public, valuable customers, shareholders and staff members for their continued support and patronage in India and abroad.

The Directors are also indebted to the Ministry of Finance, Government of India, RBI, SEBI and other regulatory authorities, various Financial Institutions, Banks and Correspondents in India and abroad for their unflinching and valuable support and guidance from time to time. The Board wishes to welcome Shri Mrutyunjay Mahapatra who has assumed charge as Managing Director & Chief Executive Officer of the Bank and Shri Ajay K. Khurana who has assumed charge as Executive Director of the Bank.

The Board also wishes to welcome Dr. Sanjay Kumar and Shri Kamal Kishore Singhal who have been nominated as GOI Nominee Director and as Shareholders’ Director of the Bank respectively.

The Board expresses sincere gratitude to Shri Melwyn O Rego, Managing Director & Chief Executive Officer completed tenure on 13.08.2018 for his able guidance, leadership and support that he had provided during their tenure.

The Board also acknowledges the valuable contributions of Shri CH S. S. Mallikarjuna Rao during as Executive Director of the Bank and who has been appointed as Managing Director & Chief Executive Officer of Alahabad Bank.

For and on behalf of the Board of Directors.

Place : Manipal (Mrutyunjay Mahapatra)

Date : 10.05.2019 Managing Director & CEO

---

Mar 31, 2018

DIRECTORS’ REPORT

The Board is pleased to present Directors' Report of the Bank along with the Audited Balance Sheet as at 31^st March, 2018 and the Profit & Loss Account Statement for the Financial Year ended 31^st March, 2018.

Financial Performance

The snapshot of your Bank's financial performance is as below:

                                                                                                                  (Rs, in crore)

Particulars	31.03.2017	31.03.2018	Variation (%)
Total Deposits	2,60,561	2,72,776	4,69
Of which-Domestic Deposits	2,34,543	2,41,092	2,79
Overseas Deposits	26,018	31,684	21,78
Domestic Deposits	2,34,543	2,41,092	2,79
Of which-Current Account Deposits	11,535	12,016	4,17
Savings Deposits	64,257	68,346	6,36
CASA Deposits (Domestic)	75,792	80,362	6,03
Domestic CASA to Domestic Deposits (%)	32.32	33.33	Â
Advances	2,07,065	2,23,346	7,86
Of which-Domestic Advances	1,71,377	1,81,477	5,89
Overseas Advances	35,688	41,869	17,32
Total Assets	3,23,977	2,99,073	-7,69
Net Interest Income (NII)	6,276	6,552	4,40
Other Income	3,457	2,806	-18,83
Of which-Fee Income	757	710	-6,21
Profit on sale of Investment	1,740	946	-45,63
Recovery from Prudential written off accounts	376	488	29,79
NII+ Other Income	9,733	9,358	-3,85
Operating Expenses	5,500	5,494	-0,11
Operating Profit	4,233	3,864	-8,72
Provisions	3581	8253	130,47
Of which; Provisions for NPAs & Bad debts written off	3,694	7,707	108,64
Profit Before Tax	652	-4,389	-
Provision for Tax	293	-1,166	-
Net Profit	359	-3,223	-
Appropriations/Transfers	Â	Â	Â
Statutory Reserve	90	0	Â
Capital Reserve	96	62	Â
Revenue and other Reserves	-	-	Â
(i) General Reserve	0	-3,285	Â
(ii) Special Reserve u/s 36(l)(viii) of the Income Tax Act 1961	173	0	Â
(iii) Investment Reserve Account	0	0	Â
(iv) Transfer from Excess Appropriation of previous year	0	0	Â
Key Performance Indicators	Â	Â	Â
Average Cost of Funds	5,53	4,94	Â
Average Yield on Funds(%)	7,60	7,06	Â
Average Earning Assets	2,65,325	2,68,375	Â
Net Interest Margin (%)	2,37	2,44	Â
Cost-Income Ratio (%)	56,51	58,71	Â
Return on Assets (ROA) (%)	0,12	-1,05	Â
Return on Equity (%)	3,02	-26,68	Â
Book Value per share (Rs,) inclusive of revaluation reserve, FCTR& Net DTA	154,64	105,43	Â
EPS (Rs,)	4,21	-34,00	Â

*Face value of the share Rs,10/-

The financial year 2017-18 had been a mix of opportunities and challenges, Despite the challenges, your Bank performed well during the year leveraging various market opportunities,

The total business of your Bank increased from Rs,4,67,626 crore as of March 31, 2017 to Rs,4,96,122 crore, as of March 31, 2018 posting a growth of 6,09% over the previous year,

The net interest income (NII) of the bank increased by 4,40% to Rs,6,552 crore as of March 31, 2018, while other income decreased by 18,83% to Rs,2,806 crore,

Your Bank posted an operating profit of Rs,3,864 crore during FY 2017-18, registering a decline of 8,72%, The provision cost (other than taxes) increased by 130,47% to Rs,8,253 crore compared to Rs,3,581 crore last year,

For the year ended March 31, 2018, the return on average assets was -1,05% while return on equity was -26,68%, The earnings per share (FV Rs,10/-) were Rs,-34,00,

Capital Adequacy Ratio (CAR)    (in %)

Â	31.03.2017	31.03.2018
Capital Adequacy-Basel III	12,03	12,24
CET-I	7,50	7,56
Tier-I	9,26	9,41
Tier-II	2,77	2,83

Capital Adequacy Ratio at 12,24% under Basel III was well above the regulatory requirements as of March 31, 2018, Tier1 ratio was at 9,41% and common equity Tier 1 (CET-1) was at 7,56% under Basel III framework, Bank raised Rs,450 crore of debt capital by way of AT-1 bonds, Rs,500 crore of debt capital by way of Tier II bonds and equity capital through QIP of Rs,1,150,80 crore followed by Government of India infusion of Rs,2,839 crore in the month of March 2018, Bank's Net Worth as of March 31, 2018 was Rs,11,771 crore comprising paid-up equity capital of Rs,1,417 crore and reserves (excluding revaluation reserves, FCTR & Net of Intangible assets) of Rs,10,354 crore, The book value of share (FV Rs,10/-) was Rs,105,43,

MANAGEMENT DISCUSSION AND ANALYSIS Macro-Economic Scenario Global Economy

Global economy strengthened in 2017 to 3,8 per cent, with a notable rebound in global trade, which is expected to tick up to 3,9 per cent in both 2018 and 2019 supported by strong momentum, favorable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States,

According to IMF, while upside and downside risks to the short-term outlook are broadly balanced, risks beyond the next several quarters clearly lean to the downside, Downside concerns include a possibly sharp tightening of financial conditions, waning popular support for global economic integration, growing trade tensions and risks of a shift toward protectionist policies, and geopolitical strains,

Domestic Economy

On the domestic front, the economy recovered after the initial slowdown post demonetisation and implementation of GST, India registered an impressive GDP growth of 7,7 per cent in the fourth quarter (Q4) of financial year 2017-18 as against 5,6 per cent, 6,3 per cent and 7,0 per cent respectively, in the first three quarters, Q1 , Q2 and Q3 of 2017-18, Rapid growth in agriculture (4,5%), manufacturing (9,1%) and construction sectors (11,5%) contributed to the overall growth, CSO in its provisional estimates has projected GDP growth rate at 6,7 per cent for the FY 2017-18,

IMF in its World Economic Outlook (WEO) report has projected India's GDP growth at 6,7 per cent in 2017, 7,4 per cent in 2018 and 7,8 per cent in 2019 supported by strong private consumption as well as fading transitory effects of the currency exchange initiative and implementation of the national goods and services tax, Over the medium term, growth is expected to gradually rise with continued implementation of structural reforms that raise productivity and incentivize private investment,

Surge in oil & food prices, and increased wages on account of HRA revision resulted in a sharp increase in inflation, The CPI inflation stood at 4,28 per cent as on March 2017-18 as against to 3,89 per cent in March 2016-17,

Money supply increased by 9,6 per cent y-o-y to Rs,140,144,8 billion as on March 30, 2018 as against Rs,127,919,4 billion as on March 31, 2017,

External sector growth

During 2017-18, exports (merchandise trade) increased by 9,78 per cent to USD 302,84 Billion, from USD 275,85 Billion during the corresponding period of previous year, On the other hand, imports also increased by 19,59 per cent to USD 459,67 Billion from USD 384,36 Billion during the corresponding period of a year ago,

Taking merchandise and services together, overall trade deficit for Apr-Mar 2017-18 is estimated at USD 87,17 Billion as compared to USD 47,70 Billion during Apr-Mar 2016-17,

Foreign exchange reserves stood at USD 424,36 Billion as on March 30, 2018 as against USD 369,96 Billion as on March 31, 2017 registering a growth of 14,71 per cent, Whereas foreign currency assets stood at USD 399,12 Billion as on March 30, 2018 as against USD 346,32 Billion as on March 31, 2017 registering a growth of 15,25 per cent,

The rupee depreciated by 0,32 per cent against US Dollar, 14,10 per cent against Great Britain Pound, 16,42 per cent against Euro and 6,18 per cent against Japanese Yen during March 2018 over the previous year,

Banking Scenario

The deposits of Scheduled Commercial Banks in India increased by 6,7 per cent y-o-y to Rs,114,749,89 billion as on March 30, 2018 as against an increase of 11,3 per cent (Rs,1,07,576,56 billion) as on March 31, 2017,

On the other hand, credit growth of Scheduled Commercial Banks increased by 10,3 per cent y-o-y to Rs,86,507,14 billion as on March 30, 2018 as against an increase of 4,5 per cent (Rs,78,414,66 billion) as on March 31, 2017,

The year 2017-18 saw the following changes in the key policy measures as announced by the RBI,

-    Repo rate reduced by 25 basis points (bps) to 6,00 per cent and Reverse Repo rate by 25 basis points (bps) to 5,75 per cent,

-    Cash Reserve Ratio (CRR) remained unchanged at 4 per cent of Net Demand and Time Liabilities (NDTL),

-    Statutory Liquidity Ratio (SLR) was decreased by 1 per cent to 19,50 per cent,

The year 2017-18 was challenging for the Indian banking sector, Mounting NPAs cast a negative impact on the balance sheets of many PSBs, Most of the PSBs were constrained to meet their capital requirements on account of huge amount of provisioning on stressed assets, In an attempt to improve their capital position, some PSBs resorted to QIP placements and selling of stakes in investments made in their subsidiaries/non-core assets,

The Government and the RBI undertook key measures to strengthen the banking sector, It unveiled a two-year plan to strengthen the public sector banks through reforms and capital infusion of Rs,2,11 lakh crore (USD 32,43 Billion), The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill was passed to speed up the recovery process under stressed assets,

VISION, MISSION AND VALUE STATEMENTS

Bank has a Vision & Mission Statements which act as a guiding force not only for pursuing long term corporate goals but also paving way to acquire new business, improving customer service, visualize and seizing future market potentials and converting these opportunities into a long term business goals and advantages,

Our Vision

"Be a leading financially strong universal bank, creating value for stakeholders through customer centric, technology driven and employee friendly approach".

Our Mission

-    Be a leading provider of banking solutions providing range of financial services to all strata of society,

-    Be a highly recognized and visible brand, known for its customer service,

-    Be the most preferred place to work where employees feel proud and motivated,

-    Have state of the art technology & infrastructure creating delight among all stakeholders,

-    To deliver strong financial and operational performance,

Our Value Statement

"Good Corporate Governance through transparency in dealings in undertaking ethical business".

CORPORATE STRATEGY FOR 2017-18

In order to improve the business level, customer service, governance and compliance and address the key issues with an anticipation of meeting future goal and changing market conditions, Bank is prudently pursuing corporate strategies to improve its competitiveness,

Bank conducted strategy meet on 23^rd March, 2017 at Bengaluru involving Zonal Managers along with functional General Managers and select Regional Managers to discuss the strategies to be adopted for achieving the business goals of FY 2017-18 and identify and realize opportunities for future growth, The few of the major strategies adopted for the FY 2017-18 are as under:

1.    CASA growth: Canvass institutional & government accounts, salary accounts, popularize ASBA accounts, activate inactive and dormant accounts, focus on digital banking products for reduction in transaction cost, improve operating efficiency and also to attract younger generation,

2.    Agriculture: Identify & focus on investment credit areas, have regular village contact program, engagement of BCs for using their services for financial inclusion, business development and recovery, liaison with National Rural Livelihood Mission (NRLM) to generate good leads for SHG and JLG bank linkage, Tie up with NGOs and agri processing centers,

3.    Retail & MSME: Focus on marketing housing loans, high value education loans, mapping of authorized dealers with the nearby branches/RLCs, Disburse jewel loans on all working days, Generate leads to increase Retail & MSME,

4.    Recovery & Resolution: Target reduction of NPA level by minimum of 10% over March 2017 level, Constant follow up of SMA accounts to arrest fresh slippage, lodge CGTMSE claims in all eligible cases, Engage recovery/enforcement agents for seizure and sale of vehicles/ assets,

5.    Non Interest Income & Fee based income: Focus on increasing non fund based business, Cross selling banks and third party products, refrain from recommending for concession in charges, reduce operating expenses through concerted efforts in cost cutting,

6. Compliance: Development of excellent compliance culture, Undertake proper rectification/ compliance of audit observations, Ensure tallying of all GL heads, Compliance of all regulatory directions meticulously,

For the FY 2018-19, your Bank has realigned its Business Strategy as per the reforms agenda of the Government of India under Enhanced Access and Service Excellence (EASE) focusing on the six themes, (i) Customer Responsiveness- Ease for customer comfort (ii) Financial stability, improved Governance and Ease for clean & prudent Business, (iii) Proactive delivery of credit, (iv) Ease of Financing and bill realization for MSMEs, (v) Deepening of Financial Inclusion & Digitalization and (vi) Developing personnel for brand PSBs,

Your Bank is committed to implement the reforms agenda as advised by the Government of India for which the Board meeting to discuss Business Strategy was held at Manipal on 15^th March, 2018 to lay down road map and strategy to enhance business in defined areas, optimize capital, improve operational efficiency and increase stakeholders' value,

BUSINESS PROMOTION CAMPAIGNS

Bank considers business promotional strategies as a tool to make continuous effort to popularize various products and garner more business, Bank had initiated number of promotional campaigns during the year 2017-18, Few of them are as under,

-    CASA campaign: To achieve significant growth in low cost deposits which has many fold advantages including reduction in cost of deposits, Bank launched CASA campaign,

-    Home Loan Star campaign: Keeping in view the stiff competition in Housing loan sector, Bank has conducted Home Loan Star campaign,

-    Agriculture lending campaign: In order to increase advance under agriculture, Bank had organized agriculture lending campaign, During the campaign, thrust was given to increase crop production credit, investment credit and linkage of SHGs/JLGs,

-    Gold loan campaign: In order to tap the full potential under Gold loan portfolio, Bank organized Gold loan campaign,

-    Digital Promotional Campaign: In order to have a focused approach to drive Digital Transactions, your Bank launched Digital Promotional Campaign, for customer adoption of digital channels and on boarding of merchants,

-    LIC Campaign: To boost fee based income and also to provide to insurance coverage to customers, Bank launched “LIC Vijayotsav” campaign, in tie - up with LIC of India,

-    Synd Vasuli Abhiyan 1718: Bank organized Synd Vasuli Abhiyan17-18, an incentive scheme to recognize performance of the branches and regions for maximizing recovery and NPA management through up-gradation and avoidance of fresh slippages,

PERFORMANCE HIGHLIGHTS OF THE BANK DURING THE FINANCIAL YEAR 2017-18

Net worth

Tangible Net Worth of the Bank (excluding Revaluation Reserve, Foreign Currency Translation Reserve and net DTA) decreased from Rs,12,392 crore as at March 31, 2017 to Rs,11,771 crore as at March 31, 2018,

Dividend

The Bank has incurred net loss of Rs,3,223 crore during the financial year 2017-18, As the Bank does not conform to the eligibility criteria prescribed by RBI for declarations of dividend, the Board has not recommended any dividend,

Capital & Reserves

Bank’s authorized share capital stood at Rs,3,000 crore and the paid-up capital Rs,1,417crore (141,72,72,053 equity shares of Rs,10/- each) during the financial year ended as at March 31, 2018,

The Reserves and Surplus of the Bank increased from Rs,13,280 crore in FY 2016-17 to Rs,13,525 crore in FY 201718, registering a y-o-y growth of 1,84 per cent over the previous year,

Capital Adequacy Ratio, under Basel III, improved to 12,24% as at March 2018 against the regulatory requirement of 10,875%, including capital conservation buffer of 1,875%, Within the capital adequacy ratio, CET I ratio was at 7,56% and Tier I capital ratio was at 9,41%,

Composition of Capital	March 2017 Basel-III	March 2018 Basel-III
Risk Weighted Assets	1,77,481	1,83,091
CET I	13,298	13,843
CET I (%)	7,50%	7,56%
AT I	3,127	3,390
AT I (%)	1,76%	1,85%
Tier I Capital	16,425	17,233
CRAR (%) (Tier I)	9,26%	9,41%
Tier II Capital	4,922	5,180
CRAR % (Tier II)	2,77%	2,83%
Total Capital	21,347	22,413
CRAR (%)	12,03%	12,24%

During 2017-18, the Bank raised Rs,4,940 crore capital comprising equity capital of Rs,3,990 crore from QIP and

preferential allotment to Government of India and Rs,450 crore additional tier I capital and Rs,500 crore tier II capital by issuing Basel III compliant Tier I and Tier II bonds, The Bank is comfortable in the capital front, Government of India's shareholding in the Bank is at 73,07%,

Business

The global business of the Bank stood at Rs,4,96,122 crore as at March 31, 2018 as compared to Rs,4,67,626 crore as at March 31, 2017 whereas, Bank's domestic business stood at Rs,4,22,569 crore as at March 31, 2018 as compared to Rs,4,05,920 crore as at March 31, 2017,

Deposits

Global deposits of the Bank stood at Rs,2,72,776 crore as at March 31, 2018 as compared to Rs,2,60,561 crore as at March 31, 2017,    Domestic deposits of the Bank stood at Rs,2,41,092 crore as at March 31, 2018 as compared to Rs,2,34,543 crore as at March 31, 2017,

CASA Deposits

Domestic CASA deposits of the Bank increased from Rs,75,792 crore as at March 31, 2017 to Rs,80,362 crore as at March 31, 2018,    registering a growth of 6,03 per cent, Per centage of domestic CASA share to domestic deposits stood at 33,33 per cent as at March 31, 2018,

Credit Deployment

The Bank's global advances increased from Rs,2,07,065 crore as at March 31, 2017 to Rs,2,23,346 crore as at March 31 , 201 8, Domestic advances grew from Rs,1,71,377 crore as at March 31, 2017 to Rs,1,81,477 crore as at March 31, 2018, The global credit deposit ratio stood at 81,88 per cent as at March 31, 2018 as compared to 79,47 per cent as at March 31, 2017,

Priority Sector Advances increased from Rs,67,905 crore in 2016-17 to Rs,72,762 crore in 2017-18 registering a growth of 7,15 per cent and forming 42,41 per cent of ANBC as against mandatory level of 40 per cent,

Total Agriculture Advances increased from Rs,31,878 crore in 2016-17 to Rs,33,822 crore in 2017-18 registering a growth of 6,09 per cent and forming 19,28 per cent of ANBC as against mandatory level of 18 per cent, MSE Advances stood at Rs,24,888 crore as at March 31, 2018 as compared to Rs, 24,866 crore as at March 31, 2017, MSME Advances increased from '26,981 crore in 2016-17    to Rs,27,306 crore in 2017-18 registering a growth of 1,20%,

Profitability

Operating profit of the Bank decreased to Rs,3,864 crore for the FY 2017-18 from Rs,4,233 crore for the FY 2016-17, a decline of 8,72 per cent, Net loss of the Bank stood at Rs,3,223 crore for the FY 2017-18 as against Net Profit of Rs,359 crore for the FY 2016-17,

Employees’ Productivity

Business per employee (excluding Bank Deposits) of the Bank stood at '14,39 crore as at March 31, 2018 as compared to Rs,13,51 crore as at March 31, 2017, Profit per employee for the year FY 2017-18 was Rs,(9,91) lakh,

Income & Expenditure

The Bank's total income stood at Rs,24,582 crore in the FY 2017-18    as compared to Rs,26,461 crore in the FY 2016-17,

The Bank's interest income stood at Rs,21,776 crore in the FY 2017-18 as compared to Rs,23,004 crore in the FY 2016-17,

The non-interest income of the Bank declined by 18,83 per cent from Rs,3,457 crore in the FY 2016-17 to Rs,2,806 crore in the FY 2017-18,

The Interest expenditure of the Bank decreased to Rs,15,224 crore in the FY 2017-18 as against Rs,16,728 crore in the FY 2016-17, recording a decrease of 9 per cent,

However, the Bank's Net Interest Income (NII) increased by 4,40 per cent from '6,276 crore in the FY 2016-17 to '6,552 crore in the FY 2017-18,

Operating expenditure of the Bank decreased by 0,11 per cent from '5,500 crore in the FY 2016-17 to '5,494 crore in the FY 2017-18,

Important Financial Ratios

a)    The Bank's Net Interest Margin (NIM) improved to 2,44 per cent in the FY 2017-18 as compared to 2,37 per cent in the FY 2016-17,

b)    The yield on advances of the Bank stood at 7,51 per cent in the FY 2017-18 as compared to 8,34 per cent in the FY 2016-17,

c)    The cost of deposits of the Bank stood at 5,10 per cent in the FY 2017-18 as compared to 5,86 per cent in the FY 2016-17,

d)    The Book Value Per Share of the Bank stood at '105,43 in the FY 2017-18 from '154,64 in the FY 2016-17,

e)    Net NPA ratio of the Bank stood at 6,28 per cent as at March 31, 2018 as compared to 5,21 per cent as at March 31, 2017,

f)    Gross NPA ratio of the Bank stood at 11,53 per cent as at March 31, 2018 as compared to 8,50 per cent as at March 31, 2017,

g)    NPA provision coverage ratio of the Bank stood at 60,71 per cent as at March 31, 2018 as compared to 56,37 per cent as at March 31, 2017,

h)    The Capital Adequacy Ratio (CRAR) of the Bank, as per Basel III improved to 12,24 per cent as at March 31, 2018 as compared to 12,03 per cent as at March 31, 2017,

Financial Performance

Key Financial Ratio (%)	March 2017	March 2018
Cost of Funds	5,53	4,94
Yield of Funds	7,60	7,06
Cost of Deposits	5,86	5,10
Yield on Advances	8,34	7,51
Yield on Investments	7,87	7,61
Net Interest Margin (NIM)	2,37	2,44
Return on Assets (RoA)	0,12	-1,05
Return on Equity (ROE)	3,02	-26,68
Cost to Income Ratio	56,51	58,71
Earning Per Share (EPS) '	4,21	-34,00
Book Value Per Share '	154,64	105,43
Net NPA Ratio	5,21	6,28
Gross NPA Ratio	8,50	11,53
Provision Coverage Ratio	56,37	60,71

EXPANSION OF BRANCH NETWORK

During the year, the Bank has added 105 Banking Outlets to its network and the total number of Banking Outlets were at 4013 as on 31^st March, 2018 and Banking Outlets network consists 1239 rural, 1127 semi-urban, 813 urban, 833 metro and 1 overseas Banking Outlet at London, These include 1,305 outlets in under banked districts and 996 outlets in minority concentration districts,

As per RBI guidelines, banks are required to open 25 per cent of the new Banking Outlets in rural unbanked tier 5-6 centers, During the FY 2017-18, 26 new Banking Outlets are opened in Unbanked Rural Centres (URC)/Left-wing Extremism (LWE) districts, In addition, Bank has 979 Part-time Banking Outlets (Ultra Small branches) as on 31,03,2018, The Bank also merged 25 unviable Banking Outlets, The Bank has opened 9 Regional Offices (ROs) and 14 Retail & MSME Loan Centers (RMLCs) during the FY 2017-18,

The total number Automated Teller Machines (ATMs)/ Bunch Note Acceptors (BNAs) installed up to 31^st March, 2018 was at 4248, The Bank adopted the New Branch Expansion Policy as per RBI Notification dated 18,05,2017, The Bank has a customer base of over 55 million as at March 31, 2018,

RETAIL LENDING

Retail lending continues to be the thrust area of the Bank on account of spread of risk, better yield of advances and stability of credit portfolios due to longer repayment period, Income stream from retail credit portfolio has shown steady improvement and this has contributed to profitability, maintaining quality of asset portfolio, risk distribution and improvement of Net Interest Margin of the Bank, Retail portfolio contributes nearly 19,79 per cent of domestic credit of the Bank,

Retail Business & MSME Department has been consistently making efforts to design new products and modify the existing products in tune with market trend, Performance under retail credit portfolio is as under,

(Rs, in crore)

Scheme	31.03.2017	31.03.2018	Annual growth
			Absolute	(%)
Housing loans	14,981	17,309	2,328	16
Vehicle loans	3,001	3,065	64	2
Education loans	2,893	3,032	139	5
Other retail loans	6,789	7,796	1,007	15
Total	27,664	31,202	3,538	13
LD & ODD up to Rs, 5 crore and staff loans	6,052	4,717	(1,335)	(22)
Total	33,716	35,919	2,203	7

Major initiatives Housing loans

- Bank has introduced central processing centers for processing, strengthening quality advances under Retail and MSME loans, Bank has converted all the existing 1 3 central processing centers (CPCs) to Retail and MSME Loan Centers (RMLCs) and 14 new RMLCs have also been opened in potential centers to standardize and streamline processing of the Retail & MSME loans without delay,

-    With the introduction of RMLCs, branches will be free to act as selling agents with focused approach, Bank is in the process of identifying such RMLCs in other potential centers, as well,

-    Bank has introduced the empanelment of Home Loan Counselors (HLC) for canvassing/mobilizing housing loans,

-    Bank has waived processing and documentation charges on housing loans up to 31,03,2018,

-    Bank has introduced Housing loan (CRE) scheme for financing of third house onwards with interest i,e at MCLR+1,10 per cent,

Home Loan Star campaign: Keeping in view of stiff competition in Housing loan sector, Bank has conducted Home Loan Star campaign from 01,08,2017 to

31,03,2018, During the star campaign 19,116 housing loans were mobilized amounting to Rs,2,901 crore.

Vehicle Loans

-    Bank has reduced rate of interest and also waived processing and documentation charges during festive seasons from 27,09,2017 to 31,01,2018,

-    Bank has also implemented 50% waiver of processing and documentation charges during financial year 2017-18,

Education loans

-    Bank has introduced Synd Vidya-Abroad educational loan scheme, an education loan facility above Rs,20,00 lakhs and up to '200,00 lakhs to students who wish to go abroad for study,

-    Bank also integrated with "Vidyalakshmi Portal", an initiative by the Ministry of Human Resources Development to facilitate students to apply for education loans online,

-    Bank has also implemented the "Credit Guarantee Fund Scheme for Education Loans", to provide collateral free education loans up to Rs,7,50 lakh and "Credit Guarantee Fund Scheme for Skill Development" to provide collateral free education loans for skill development up to Rs,1,50 lakh to students,

Gold Loans

Bank has introduced new gold loan product "SyndSwarna"-Half yearly bullet repayment as well as EMI repayment facility with enhanced scale of finance at 70% net value of gold, Half yearly bullet repayment facility to mitigate emergency financial needs of rural people,

Strength in Rural Retail Lending:

Bank has 59% of Rural and Semi urban branches which are contributing 37% of total Retail portfolio of the Bank,

Bank is having "SyndKutteer" scheme to improve flow of credit for housing needs of the Economically Weaker Sections(EWS) and Low Income Groups (LIGs) segment in Rural/Semi Urban areas to accomplish Govt of India Mission of "Affordable Housing to All",

In certain states, Education loans are also extended by considering agriculture properties as collateral security, Bank has also introduced different schemes like Housing loans, Vehicle loans, Personal loans, Mortgage loans, Retail trade for small vendors, shopkeepers and Retail traders and loans for transport operators besides lending to Agriculture,

ADVANCES TO MICRO, SMALL & MEDIUM ENTERPRISES (MSME)

Bank continues to accord greater thrust on financing MSMEs with emphasis on Micro and Small Enterprises (MSEs), The Bank has sanctioned 1,17,422 MSME loans and disbursed amounting to Rs,4,708 crore in the year 2017-18, The advances to Micro and Small Enterprises constitutes 90,45 per cent of the total advances under MSME sector while advances to Medium Enterprises constitutes 9,55 per cent under MSME,

MSE Advances increased from Rs, 24,866 crore in 2016 17 to 24,888 crore in 2017-18, MSME Advances stood at Rs,27,306 crore as at March 31, 2018 as compared to Rs, 26,981 crore as at March 31, 2017,

Under MUDRA scheme, Bank has sanctioned 1,85,377 accounts amounting to Rs,3,945 crore against target of Rs,4400 Crore allotted by the Ministry of Finance and disbursed Rs,3,272 crore as on 31,03,2018,

Bank has sanctioned 701 accounts amounting to Rs,178 crore and disbursed Rs,110 crore as on 31,03,2018 under Stand up India Scheme, The outstanding advances to Micro Enterprises of the Bank constitute Rs,17,705 crore of advances to Micro and Small Enterprises Sector at Rs,27,306 crore which is above the stipulated target of 60% as on March 2018,

Other Initiatives taken to increase credit flow to MSME Sector

In order to increase credit flow to MSME sector, the following initiatives have been taken by the Bank,

- Trade Receivables Discounting System (TReDS):

Bank has executed MoU with Receivables Exchange of India Ltd (RXIL) on 11,01,2018 for on boarding their TReDS platform, Presently, Large Corporate Branch, Mumbai is designated as Authorized Branch for operations with effect from 30,03,2018, Trade Receivable Discounting System (TReDS) is an institutional mechanism set up for financing of trade receivables of MSMEs from corporate and other buyers including Government Departments and Public Sector Undertakings (PSUs) through multiple financiers,

-    Bank has taken steps to rationalize MSME products, In order to simplify the process at operational level, 6 MSME products are modified and 8 products are discontinued, bringing down the number of MSME products from 14 to 6, as anchor products,

-    Bank has organized MSME meets & MUDRA camps to augment business under MSME,

-    Bank has entered into MOU with reputed Manufacturers of Commercial vehicles like Tata Motors, Bajaj Auto, TVS Motors, Force Motors, Ashok Leyland, Piaggio Vehicles Pvt Ltd, Saera Electric Auto Pvt Ltd, Eicher Polaris Pvt Ltd and BEML Ltd for preferred financier for financing customers of the companies for purchase of various models of commercial vehicles to increase credit under transport sector,

-    76 MSME branches renamed as UdyamiMitra branches,

PRIORITY SECTOR CREDIT

Based on the Bank's experience in lending to different sectors and keeping in view the dynamics of economic growth, Government directives, national priorities and socio-economic obligations, thrust was given to priority sector lending,

The Bank has adopted various strategies during the year to achieve sustainable credit growth, improved asset quality, higher earnings and for maintaining well diversified credit portfolio covering all sections of the society to ensure inclusive growth, The Bank has continued its growth under priority sector lending with added thrust on consolidation of its position and focus on asset quality, The focus areas for credit were agriculture, SMEs, education, housing, micro finance and other productive sectors of the economy,

Priority Sector Advances

Priority sector advances of your Bank increased by 7,15 per cent to Rs,72,762 crore as at March 2018 (from Rs,67,905 crore as at March 2017) constituting 42,41 per cent of Adjusted Net Bank Credit (ANBC) against the mandatory level of 40 per cent, The Bank has covered more than 33,39 lakh customers under priority sector advances, Special care was taken to ensure that the credit needs of SC/ST, minorities, weaker sections and women are fully met, Advances to weaker sections have reached a level of Rs,24,710 crore forming 14,40 per cent of ANBC, thereby surpassing the mandatory requirement of 10 per cent, The advances to women customers increased from Rs,18,778 crore as at March 2017 to Rs,20,455 crore as at March 2018, forming 11,92 per cent of ANBC against the mandatory level of 5 per cent, Similarly, advances to minorities increased from Rs,10,611 crore as at March 2017 to Rs,11,060 crore as at March 2018, forming 15,20 per cent of priority sector advances surpassing the mandatory requirement of 15 per cent,

Agriculture and Allied activities

Credit to agricultural sector increased by 6,09 per cent to Rs,33,822 crore as at March 2018 (from March 2017 level of Rs,31,878 crore) forming 19,28 per cent of ANBC as against the mandatory requirement of 1 8 per cent, Lending to small and marginal farmers being Rs,18,328 crore constituted 10,68 per cent of ANBC against the mandatory requirement of 8,00 per cent,

Bank has covered more than 23,82 lakh customers under agricultural advances, The disbursement under credit flow to agriculture during the year amounted to Rs, 20,475 crore, The Bank has brought 1,36,298 new farmers into its fold during the year through rural/semi-urban branches, registering an average of 58 new farmers per rural and semi-urban branch,

Your Bank has been consistently surpassing the mandatory targets under small & marginal farmers category and lending to non-corporate farmers, Your Bank has sold the surplus amount of Rs,2,000 crore to peer banks under small and marginal farmer category,

Syndicate Kisan Credit Card Scheme (SKCC)

As per the directions of RBI, Bank is implementing the Kisan Credit Card under Syndicate Kisan Credit Card (SKCC) Scheme and the revised guidelines involve the following,

-    Fixation of staggered limit for five years,

-    Provision for issuance of cheque book and ATM / Debit Cards (Rupay Kisan Cards) which will enable the farmers to effectively transact their operations in their SKCC accounts,

The Bank has sanctioned 5,63 lakh SKCC A/cs amount involving Rs,8149,01 crore during the year 2017-18, As at March 2018, Rupay Kisan Cards have been issued in 7,59 lakh operative SKCC A/cs,

Government Sponsored Schemes:

The Bank continued to participate in poverty alleviation and employment generation schemes sponsored by the Government in full scale, Special emphasis was laid on coverage of SC/ST/OBC, women and minority beneficiaries under these schemes, The total amount outstanding under these schemes viz, National Rural Livelihood Mission(NRLM), National Urban Livelihood Mission (NULM), Prime Minister Employment Guarantee Programme (PMEGP), and Self Employmentr Scheme for

Rehabilitation of Manual Scavengers (SRMS) is Rs,3531,24 crore with 1,33,495 borrowal accounts during the year, NRLM Scheme has been revamped & restructured as Swarna Jayanti Grameen Swarojgar Yojana (SGSY) with effect from the financial year 2015-16, NULM scheme has been revamped as Swarna Jayanti Sahari Rojgar Yojana during 2015-16 and is implemented in all district headquarters and all other cities with a population of 100,000 or more as per 2011 census, Both NRLM and NULM now remodeled as Deen Dayal Antyodaya Yojana from 25^th September 2015,

Advances to SC/ST

The coverage of SC/ST beneficiaries under various schemes, especially under Govt, Sponsored Schemes is reviewed at regular intervals, Bank has initiated special efforts to create awareness about various schemes of the Bank among SC/STs to motivate them to avail the benefits under these schemes,

Advances to SC/ST beneficiaries under Priority Sector, rose from Rs,4,520 crore as at March 2017 to Rs,4,581 crore as at March 2018, Disbursement and outstanding position of advances to SC/ST beneficiaries under Govt, Sponsored Schemes (i,e,PMEGP NRLM & NULM) are furnished in the following tables:

Advances disbursed to SC/ST beneficiaries under Govt, Sponsored Schemes during 2017-18 (as on March 2018)

(Amount Rs, in crore)

Scheme	Total Disbursement		Of which SC/ST		% to SC/ST against total (For Accounts)
	A/C	Amt.	A/C	Amt.
PMEGP	3,090	107,83	566	19,75	18,32%
NRLM	74,966	2,232,09	22,145	659,36	29,54%
NULM	1,088	15,35	356	5,02	32,68%
SRMS	120	2,11	106	1,86	88,33%

Outstanding advances to SC/ST beneficiaries under Govt, Sponsored Schemes (as on March 2018)

(Amount Rs, in crore)

Scheme	Balance outstanding		Of which SC/ST		% to SC/ST against total (For Accounts)
	A/C	Amt.	A/C	Amt.
PMEGP	7,531	241,89	1,766	56,72	23,45%
NRLM	1,22,146	3,245,98	45,060	1197,44	36,89%
NULM	3,351	37,60	1,041	11,69	31,08%
SRMS	467	5,77	450	5,57	96,36%

Advances to Minorities

Bank has taken various measures through Regional Offices and Lead District Offices for popularizing amongst minority communities the various credit products available for their benefit, The advances to minorities rose from Rs,10,611 crore as at March 2017 to Rs,11,060 crore as at March 2018, registering a year on year growth of 4,23 per cent, Special interest concession scheme ranging from 0,25 per cent to 0,50 per cent was introduced by the Bank during 2010 for the benefit of minority community under priority sector lending and the same is continued during 2017-18,

Credit linkage of Joint Liability Groups and Self Help Groups

The advances extended to Joint Liability Groups and Self Help Groups as at March 2018 was 1,30,736 accounts with an outstanding balance of Rs,3,402 crore, A joint liability group is an informal group comprising 4 to 10 individual farmers who come together to access institutional credit through JLG mode of financing, Bank has been lending to SHG/JLGs both directly as well as through MFIs/NGOs,

-    Bank has tied up with M/s IDF foundation under “Save the Farmers Campaign” in Karnataka for credit linking the JLG/SHGs, This Project includes formation of JLGs/ SHGs from the Small Farmers, Marginal Farmers, and Oral lessees, Share croppers, mentoring them through financial literacy and imparting sustainable farm livelihood technologies to de-risk the farm production, enable access to affordable Bank finance for Agriculture through KCC and other products through the Business Correspondents/Business Facilitators channel, promoting thrift culture and regular follow up for repayments, During the FY 2017-18, Bank has sanctioned 8,773 SKCC loans amounting to Rs,30,86 crore to JLG members,

-    Bank has entered into a tie-up with M/s. Vrutti Livelihood Resource Centre, for implementation of a Wholesome Financial Inclusion Project in the States of Madhya Pradesh (MP), Telangana & Karnataka by promoting Joint Liability Groups (JLGs) & Women Self Help Groups (SHGs) on a pilot basis, The main objective of this tie-up arrangement is to provide access to Banking services to the organized Small Farmers, Marginal Farmers, Tenant Farmers, Oral Lessees & Share Croppers through Joint Liability Groups & Women SHGs, During the FY 201718, Bank has sanctioned 368 SKCC loans amounting to Rs,1,10 crore to JLG members,

Interest subvention benefit to farmers

The Bank has extended crop production credit to 5,63 lakh farmers during 2017-18 under interest subvention scheme of the Govt, of India, The bank has extended the interest subvention benefit @ 2 per cent to the tune of '182 crore and Rs,193 crore as additional incentive of interest subvention @ 3 per cent for timely repayment during 2017-18 and making the eligible farmer derive credit at the effective prescribed interest rate of 4 per cent p,a,

Renewable Energy

The Bank has been actively promoting solar energy application by implementing the schemes for financing Solar Water Heating Systems and Solar Lighting Systems, The Bank is presently implementing the scheme to extend finance to Solar Home Lighting Systems and Solar Water Heating Systems with subsidy assistance from Ministry of New and Renewable Energy (MNRE) under Jawaharlal Nehru National Solar Mission (JNNSM), During the financial year 2017-18, the Bank has extended credit to 380 customers amounting to Rs,3,77crore under renewable energy category,

Rural Extension Education Programmes

Bank has been organizing Rural Extension Education Programmes mainly through the rural and semi-urban branches for promoting awareness among the rural people on modern agriculture & rural technologies and Bank's credit programmes,

During the financial year 2017-18, the Bank has organized 3,592 Rural Extension Education Programmes benefiting 1,73,901 participants with an expenditure of Rs, 21,91 lakhs,

Crop Insurance Schemes

The following three crop insurance schemes were introduced by Govt of India from Kharif 2016 (From 01,04,2016 onwards), These schemes are as under:

-    PMFBY (Pradhan Mantri Fasal Bhima Yojana)

-    Restructured WBCIS (Weather Based Crop Insurance Scheme)

-    UPIS (Unified Package Insurance Scheme)

The eligible KCC holders are covered with respective crop insurance schemes, Bank has enrolled 3,02,588 KCC accounts under these crop insurance schemes in Kharif-2017 season, In Rabi 2017-18, 1,18,714 farmers are covered under crop insurance schemes,

Relief to drought/calamity affected farmers

Bank is taking necessary steps as per RBI guidelines to extend immediate relief to farmers affected by natural calamities such as restructuring of existing crop loans and term loans, extending fresh loans, relaxing security and margin norms, moratorium of minimum 1 year, no penal interest in respect of current dues in default, etc, Interest subventions provided by Govt, of India for the restructured accounts on account of natural calamities are being extended to all the eligible cases,

Rural Development and Self Employment Training Institute (RUDSETI)

Bank has co-sponsored 27 Rural Development and Self Employment Training Institutes (RUDSETIs) across the country.

These institutes have trained 24,074 candidates during the year 2017-18, Out of these trained candidates11,350 are women & 6,873 are from SC/ST category. Total candidates trained since inception is 4,47,125, The settlement rate is 73 per cent,

Our RUDSETI model has been accepted by Ministry of Rural Development, Govt, of India as a role model to be replicated in each district of the country. A Monitoring cell of National Academy of RUDSETIs has been established at Bengaluru for monitoring these RSETI institutes and their activities pan India,

Syndicate Rural Development Trust (SRDT)

Syndicate Rural Development Trust (SRDT) was established in the year 2000 to promote rural entrepreneurship and self-employment among the rural poor, especially women, So far, the Bank has established 16 SyndRural Self Employment Training Institutes (Synd RSETIs) in 5 States and 1 Union Territory for imparting training to rural poor, During the Financial Year 2016-17, out of the 16 SyndRSETIs, 12 RSETIs have secured ”AA" rating, Your Bank has been conferred with an Award of Excellence (First Prize) from Ministry of Rural Development, in recognition of exemplary leadership given to the RSETIs sponsored by the Bank for the years 2014-15 and 2015-16 consecutively. During the year 2017-18, 451 training programs were conducted benefitting 11,219 persons, of whom 6,055 were women and 2,759 were from SC / ST category.

Lead Bank Scheme

The Bank has been assigned with lead bank responsibilities in 29 districts inclusive of UT of Lakshadweep across the country, All the Lead District Offices of the Bank have conducted the District Level Review Committee (DLRC) meetings and District Consultative Committee (DCC) meetings regularly, The credit planning process was completed and District Credit Plan (DCP) 2017-18 was launched as per time schedule envisaged by RBI, The Bank is also the convener of State Level Bankers' Committee (SLBC) in Karnataka and the Union Territory of Lakshadweep and satisfactorily discharged the responsibilities cast on it as the convener of State Level Bankers' Committee, The SLBC for Karnataka and UTLBC for Lakshadweep are implementing the recommendations of the High Level Committee to review the Lead Bank Scheme,

Under District Credit Plan, Bank's lead districts have shown 82,98 per cent achievement under priority sector and 82,54 per cent progress under agriculture as on March 2018 in respect of implementation of Annual Credit Plan 2017-18,

REGIONAL RURAL BANKS

There are three Regional Rural Banks sponsored by our Bank, These are Andhra Pragathi Grameena Bank in Andhra Pradesh, Karnataka Vikas Grameena Bank in Karnataka and Prathama Bank in Uttar Pradesh, These RRBs are covering 18 districts in 3 states with a network of 1598 branches & 236 ATMs, RRBs sponsored by our Bank are in the top league among various RRBs of the country, in respect of key business parameters, Total Business of RRBs sponsored by our Bank stood at Rs,62,741 crore as on 31.03.2018,

The total deposits and advances of the RRBs have reached a level of Rs,34,550 crore and Rs,28,190 crore respectively. Total Priority sector advances stood at Rs,25,523 crore constituting 90,54 per cent of the total advances as at 31.03.2018,    Agriculture advance have reached a level of Rs,21,003 crore forming 74,50 per cent of total advances, All the RRBs have issued 12,60 lakh Kisan Credit Cards to farmers with an outstanding credit of Rs,13,828 crore, Auto movement of NPAs is implemented in all the three RRBs, The RRBs are making profit continuously since their inception,

All the branches of our sponsored RRBs are under CBS platform with RTGS and NEFT facilities, RRBs are on-boarded with APBS/NACH platform, ECS, CPSMS, Mobile Banking, IMPS, e-commerce, e-pass book, UPI & BHIM, RRBs have actively participated in PMJDY and have canvassed 25,72 lakhs SB accounts and issued 24,73 lakhs RuPay Cards as on 31,03,2018, These RRBs enrolled 17,69 lakh under PMSBY, 6,11 lakh under PMJJBY and 1,28 lakh under APY schemes respectively. Aadhaar seeding & Aadhaar authentication is achieved to the extent of 91,83 per cent & 61,83 per cent respectively. All the three RRBs sponsored by your Bank have implemented FI Plan (20162019) as per the direction of the Reserve Bank of India and Government of India,

FINANCIAL INCLUSION

Bank has covered all the allotted 3229 Sub Service Areas (SSAs) covering 6953 villages, and deployed 2,630 Bank Mitrs across the country to provide Banking services to the villages, Pradhan Mantri Jan-Dhan Yojana

"Pradhan Mantri Jan-Dhan Yojana" (PMJDY) was launched by the Hon'ble Prime Minister on 28,08,2014 with an objective of covering all the uncovered households in the villages and urban wards with a bank account to provide banking facilities, in a mission mode,

Bank has opened 44,38 lakh Basic Savings Bank Deposit (BSBD) under PMJDY as on 31,03,2018 with an outstanding balance of Rs,1,264,15 crore out of which 35,48 lakh PMJDY accounts (79,95 per cent) have been seeded with Aadhar against industry average of 78 per cent,

Business Correspondent (Bank Mitr)

Bank has appointed 2630 Bank Mitrs and all are provided with interoperable Micro ATMs for undertaking AEPS and RuPay card transactions, 2552 Bank Mitrs have actively performed transactions during the year, The number of transactions through Micro ATMs increased considerably during 2017-18 and per day, per micro ATM transactions have increased from 13 as at 31,03,2017 to 20 as at 31,03,2018,

Banking Outlet:

The Bank's authorization policy on Branch expansion has been approved by Board and adopted by the Bank as per revised guidelines issued by RBI on 18,05,2017,

According to the above revised RBI guidelines, a “Banking Outlet" is a fixed point service delivery unit, manned by either bank's staff or its Business Correspondent where services of acceptance of deposits, encashment of cheques/ cash withdrawal or lending of money are provided for a minimum of 4 hours per day for at least five days a week, It carries uniform signage with name of the bank and authorization from it, contact details of the controlling authorities and complaint escalation mechanism and uninterrupted service, The working hours/ days need to be displayed prominently,

A banking outlet which does not provide delivery of service for a minimum of 4 hours per day and for at least 5 days a week will be considered a 'Part-time Banking Outlet', Necessary guidelines have been issued by the bank in this regard,

Establishing Aadhaar Seva Kendra

Bank has set up 564 Aadhaar Seva Kendras as against the target of 403 centers, Besides, 677 officers of the Bank have successfully taken the UIDAI certification exam for functioning as supervisors cum verifiers in the Aadhaar Seva Kendras established by the Bank,

Technology Initiatives

During the year 2017-18, the Bank has undertaken following technology initiatives for the ease of doing the business under Financial Inclusion activities,

-    Dual Authentication of SHG in Micro ATMs

-    Aadhaar Authentication through Micro ATMs by eKYC

-    OTP based Aadhaar Authentication facility in Bank Website

Financial Literacy Centers (FLCs)

Bank is promoting Financial Literacy through Jeevan Jyoti Financial Literacy & Counselling Centres (JJFLCC) Trust which has opened 55 Financial Literacy Centers (FLC) and 21 Financial Inclusion Resource Centers (FIRC) in the lead districts of the Bank, During the year 16481 literacy camps have been conducted benefitting 764531 persons, As advised by RBI, your Bank has set up 21 Financial Inclusion Resource Centers (FIRCs) in 5 states, FIRCs provide a permanent storehouse of information in the form of exhibition on various facets of banking services and its products, RBI and its functions, Currency Notes etc,

Centre for Financial Literacy (CFL)

Bank has set up Centre for Financial Literacy (CFL) in all the allotted 15 blocks in 4 districts viz Ballari, Nellore, Gurgaon & Mewat districts, where your Bank is having lead bank responsibilities,

CORPORATE CREDIT

The Bank extends finance to corporate for their short term as well as long term requirements, Exposure of above Rs,100,00 crore are handled by corporate credit department, The loans offered are working capital finance, term loan finance, project finance such as commercial real estate, infrastructure projects and other projects, loan against future rent receivable, etc,

Project Appraisal Cell (PAC)

Project Appraisal Cell has been constituted for preparation of detailed appraisal/ vetting of TEV study/ Information Memorandum, PAC undertakes detailed appraisal in respect of term loan proposals with project cost of Rs,70,00 crore and above and Banks exposure of above Rs, 35,00 crore where production / construction / process is involved,

In respect of projects already appraised by PSBs/ all India financial institutions/ leading private sector banks/ other reputed agencies, vetting is done by PAC for exposures above Rs,100,00 crore, This initiative will reduce the Turn Around Time (TAT) for credit proposals as well as providing such services to our branches at a short notice,

MID CORPORATE CREDIT

Mid Corporate Credit Department of the Bank caters to the credit requirements of smaller corporate whose credit requirement range between Rs,35 crore to '100 crore, The Mid Corporate Credit Department handles such credit proposals received from all branches across the country, which includes sectors such as manufacturing, services, commercial real estate, MFIs, NBFCs, infrastructure, proposals under low priority industries etc, As on 31,03,2018, Bank has 23 Mid Corporate branches with business volume of Rs,7,869,87 crore, These branches are provided with trained and experienced credit officers to handle high value credit proposals,

CREDIT MONITORING AND REVIEW

In order to have a comprehensive system of monitoring the credit on an ongoing basis and to ensure asset quality of advances, Bank has constituted a separate vertical Credit Monitoring and Review Department (CMRD) at Corporate Office headed by a General Manager, in which the Special Mention Accounts Cell, Credit Monitoring Cell and Corporate Debt Restructuring Cell are merged into Credit Monitoring and Review Department in 2014, Bank has formulated a comprehensive Credit Monitoring Policy, which is being fine-tuned from time to time,

The Department is primarily responsible for framing policies related to Credit Monitoring, Further, the Department is reviewing the sanctions in respect of the advances sanctioned by Regional and Zonal Offices,

For effective and timely monitoring, a system based monthly monitoring report (MMR) for borrowal accounts of Rs,1,00 crore and above is put in place in order to obtain qualitative information pertaining to regularity of the account, renewal status, inspection/audit details, unit visits, insurance coverage, security creation, performance of the unit, banking arrangements, rating details etc, The monthly monitoring report acts as an early warning system and facilitates the top management to have an overall view on the health of the credit portfolio,

As per the Reserve Bank of India guidelines, Bank has introduced a system of legal audit wherein re-verification of title deeds/fresh legal opinion in respect of advances of Rs,5,00 crore and above, backed by mortgage of properties, is done, where earlier legal opinion has completed 2 years, Department is also monitoring compliance of this process, Further, the Department is also monitoring conduct of stock audit in respect of eligible accounts,

Department consists of a stressed asset cell which handles accounts referred to CDR and SDR / S4A schemes pertaining to accounts already referred under CDR, The department handles accounts referred under Insolvency and Bankruptcy Code 201 6 for resolution of Stressed Assets, Department of Financial Services, Ministry of Finance, Government of India has directed all Banks to create a separate vertical to manage stressed assets and high value Special Mention Accounts as part of Reforms Agenda for Responsive & Responsible PSBs,

Accordingly, the Bank has created a “Stressed Assets Management Vertical" to monitor all the stressed assets of the Bank,

SPECIAL MENTION ACCOUNTS (SMA)

A separate cell called "special mention accounts cell" is functioning under the department, The accounts which are showing sign of irregularities / sickness are known as special mention accounts, Major function of SMA cell is to identify the accounts showing early sign of irregularities, sickness so that timely effective action can be taken to maintain the quality of assets and to prevent them from slipping to NPA,

The Department is vested with the responsibility of overall monitoring of Special Mention Accounts (SMA), Department is entrusted with the task of devising appropriate reporting system/MIS and collecting data at regular intervals, for maintaining the asset quality,

The department is also entrusted with the collection of data / MIS at regular intervals in respect of restructured and DCCO extended accounts, The department gets account-wise details of restructured accounts directly from MIS on quarterly basis and maintains database of such accounts for further reference and information to regulator, The Bank has followed the RBI regulations both on Special Mention Accounts and on restructuring of accounts by careful assessment, quick detection of weaknesses and time-bound implementation of restructuring package,

The department monitors the status of restructured accounts by contacting Regional/Zonal Offices and branches to contain the restructured accounts from further slippage and to maintain the status-quo, The department also monitors the status of achievement of DCCO extended accounts and makes special provisions at every quarter end for DCCO extended accounts beyond the prescribed period, The department consolidates the data of restructured accounts, FITL accounts and DCCO extended accounts at every quarter end for making final provisions and to submit the data to the Regulator, Rating Agencies, branches and other departments of Corporate Office,

Borrowers having aggregate fund-based and non-fund based exposure of Rs,5 crore and above were hitherto reported to RBI on quarterly basis As per RBI new Notification No.RBI/2017-18/131/DBR.No.BP.BC. 101/21.04.048/2017 18 dated 12/02/2018, all Rs,5 crore and above borrowal accounts are to be reported on monthly basis instead of quarterly under the CRILC platform with effect from 01,04,2018,

Also, SMA2 accounts of Rs,5 crore and above were reported on daily basis hitherto which has been modified and as per new guidelines, all the default accounts (SMA 0,1 and 2) have to be reported on weekly basis at the close of business on every Friday and the first such report was submitted on 23,02,2018,

In addition to this, the function of reporting of identified Red flagged / Fraud accounts of Rs,50 crore and above under CRILC, is also handled by the department,

ASSET QUALITY AND MANAGEMENT OF NPAs

Bank's Recovery Policy is oriented towards addressing the entire gamut of issues concerning NPA management and the bank has empowered the field functionaries in resolving any category of non performing accounts by bringing out a booklet on "Comprehensive Recovery Policy for Non Performing Assets" in the year 2013, The comprehensive recovery policy is being modified from time to time to be in line with the guidelines of RBI/GOI, Bank has introduced / extended special OTS schemes for considering proposals of farmers under direct finance to Agriculture & Allied activities including agricultural tractor loans, OTS Scheme for small NPA accounts under doubtful and loss assets category with book balance of Rs,5,00,000/and below, and OTS scheme for Micro and Small Enterprises borrowers, The Special OTS scheme for settling NPA education loans with original sanctioned limit of Rs,4,00 lakh & below for the benefit of education loan borrowers was also renewed, In addition to the above, during the year, a special OTS scheme to improve recovery under DA-3 and Loss Assets with book balance of Rs,5,00,000/and below with a limited validity period was also renewed up to 31,03,2018,

Also, in line with the relief/ waiver schemes announced by some of the states like, Uttar Pradesh, Maharashtra, Kerala and Goa, your Bank also introduced

-    A special One Time Settlement Scheme for settlement of non performing crop and agricultural loans in the State of Uttar Pradesh and Maharashtra respectively,

-    A special Loan Repayment Support cum OTS Scheme for settlement of education loans in the State of Kerala,

-    A special One Time Settlement Scheme for settlement of nonperforming loans of mining related activity in the State of Goa,

Bank continued to reduce large number of smaller NPA accounts by settling the dues at "Synd Adalats" at all branches throughout the year by meet, talk and settle approach, Four Bruhat Synd Adalats were conducted at regional/cluster/branch level on 13,06,2017, 22,08,2017,

14,11,2017 & 14,02,2018 wherein 75,428 OTS cases were settled, by recovering a sum of Rs,276,98 crore with an offer amount of Rs,977,53 crore,

Bank was able to register a substantial recovery of Rs,580,32 crore during the year 2017-18 by issuing notices and taking possession/auctioning of properties under SARFAESI Act 2002, The efforts at branch level were supplemented by empanelling more enforcement agencies and approved valuers,

Special intensive NPA recovery campaign named "Synd Vasuli Abhiyan-17-18" was held successfully from 1^st August, 2017 to 31^st March, 2018 for maximizing recovery.

Top NPAs from each region were identified for giving focused attention in the beginning of the year itself and many accounts were successfully resolved before March

2018, Stressed Tiny Asset Recovery Team (START) stationed at regional offices are being extensively utilized for assisting the branches having high concentration of special monitoring assets/non performing accounts of below Rs,10,00 lakh, All high value NPA accounts are monitored personally by Managing Director and CEO /Executive Directors and vigorous follow up is made for resolving these accounts, On account of this, large number of NPA accounts could be resolved,

The Cash Recovery in existing NPA towards Principal is Rs,2,202,17 crore and Rs,630,55 crore in Prudentially written off accounts, The total cash recovery under NPA during Financial year was Rs,3,330,75 crore,

RISK MANAGEMENT

Risk Management Architecture

A robust and comprehensive Risk Management Framework is established in the Bank, The Board of Directors assumes the overall responsibility for Risk Management in the bank, The Risk Management Committee (RMC) of the Board defines the risk appetite of the Bank, The RMC of the Board is ably assisted by Credit Risk Management Committee (CRMC), Asset Liability Management Committee (ALCO), and Operational Risk Management Committee (ORMC),

The Bank is having a well defined Cyber Security Policy including an information Technology Governance Framework consisting of IT Strategy Committee, IT Steering Committee, Chief Information Officer (CIO), Information Security Management Committee (ISMC), a Chief Information Security Officer (CISO) assisted by various specialist teams, Business Continuity Teams and an IS Audit function to initiate, implement, monitor, maintain and improve the information security within the Bank and to make sure that IT is aligned and delivers value to the business, Bank has ISO/IEC 27001:2013 certification for CISO functions, core banking application, DBA, Network Operations, ATM, Internet Banking & Mobile Banking with various support functions,

Risk Management Department functioning at Corporate Office oversees the overall implementation of various risk management initiatives across the Bank with the assistance of Risk Management Cells (RMCs) at Zonal Offices and Regional Offices, The Bank has a well-documented policy and processes for management of credit, market and operational risks which are periodically reviewed, so as to adapt to the changing business and market environment,

Basel II Compliance

Bank has been complying with all Basel II norms, The Capital to Risk Weighted Assets Ratio (CRAR) is computed as per Pillar I requirements adhering to New Capital Adequacy Framework (NCAF) guidelines of RBI, Bank has adopted standardized approach for computing credit risk, basic indicator approach for computing operational risk and standardized duration approach for computing market risk,

Bank has a Board approved comprehensive Risk Appetite Framework, Internal Capital Adequacy Assessment Process (ICAAP) and Stress Test Policy which is reviewed periodically so as to be in line with the market realities, economic environment and regulatory requirement, Bank also prepares the annual capital plan to augment the capital requirements of the Bank which is reviewed at quarterly intervals or as per requirements, The Bank has a board approved Disclosure policy which is reviewed periodically by adhering to the guidelines issued by RBI and other regulatory bodies periodically,

Basel III Guidelines

Basel III guidelines have been introduced for improving the banking sector's ability to absorb shocks arising from financial and economic stress, supplementing the Risk-based capital requirement with a leverage ratio, Bank is calculating the Liquidity Coverage Ratio (LCR) in line with RBI guidelines and submitting the same to RBI on a monthly basis, The weighted average LCR is published on a quarterly basis, During the current year, Bank has taken various capital optimization measures for improving the quality of capital and to improve the CET 1 ratio, Tier 1 ratio & CRAR of the Bank, Bank has raised total capital funds of Rs,4,940 crore during the financial year 2017-18 in various forms, namely

a,    Equity Capital infusion by Govt, of India for an amount of Rs,2,839 crore,

b,    Equity Capital (including Share Premium) raised through QIP of Rs,1,150,80 crore on 15,12,2017,

c,    Basel III compliant AT 1 Bonds at coupon rate of 9,80% of Rs,450 Crore on 25,07,2017,

d,    Basel III compliant Tier 2 Bonds at coupon rate of 8,00% of Rs,500 Crore on 03,05,2017,

Bank is taking all measures to improve the CET1 ratio, Tier 1 ratio, CRAR and Leverage Ratio under Basel III so as to comply with the capital requirements as per the schedule prescribed by RBI while simultaneously achieving the expected growth in business, Bank is also publishing on quarterly basis the required information as per Basel III disclosures in the website since the quarter ending September 2013,

Asset Liability Management

The Asset Liability Management Committee consists of members of the top management and regularly meets to manage Liquidity Risk, Interest Rate Risk, Gaps/Mismatch Risk, Basis Risk, Re-pricing Risk, Forex Risk and Equity Price Risk, It includes product pricing for deposits as well as advances and the desired maturity profile of assets and liabilities,

The Bank has a well-documented contingency liquidity funding plan for managing any contingency, The Bank undertakes stress testing on quarterly basis and assesses the impact on liquidity and interest income of the bank, Bank monitors the Basel-III "Liquidity Coverage Ratio",

Un hedged Foreign Currency Exposure:

The Bank has a policy with regard to capital and provisioning requirements for exposure to entities with Un hedged Foreign Currency Exposure (UFCE) which is based on the guidelines issued by RBI, The position of last 2 years is as under,

(Amount in Rs, Crs)

Particulars	FY 2017-18	FY 2016-17
Opening Balance of UFCE provision	60,00	52,00
Add: incremental/reversal of provision during the current year	(9,00)	8,00
Closing Balance of UFCE provision	51,00	60,00

TREASURY & INTERNATIONAL BANKING

Bank has accorded importance to treasury functions and efficient management of Integrated Treasury Operations, Treasury and International Banking Department (T&IBD) has two wings viz, (a) Foreign Exchange Treasury and (b) Domestic Treasury, Besides, T&IBD is also functioning as monitoring and controlling office for the overseas operations of the Bank,

Forex Treasury

Treasury and International Banking Dept (T&IBD) is the only 'A' category office in the Bank which maintains foreign exchange position, Nostro and Vostro Accounts, T&IBD also monitors foreign exchange business, correspondent banking relationship and overseas business operations of London branch,

The Bank's centralized dealing room at T& IBD, Mumbai handles the foreign exchange dealing operation of the Bank, The Bank is having 1 1 6 designated branches (Category "B") to handle all types of foreign exchange transactions and 41 4 nominated branches to handle the FCNR business of the Bank, NRE/NRO deposits are accepted at all the 4012 domestic branches of the Bank, The Bank also has one overseas branch at United Kingdom, The Bank is a member of Clearing Corporation of India Ltd, (CCIL), for settlement of inter-bank forex deals in USD/ INR segment, Further, the Bank also settles cross-currency deals through CCIL with continuous linked settlement (CLS) Bank,

The Bank is a trading-cum-clearing member on three exchanges, i.e., MCX-SX, NSE and BSE for undertaking proprietary based position in currency futures,

The Bank is offering only plain vanilla derivatives and no complex derivative products are offered by the Bank, There is no litigation against the Bank in respect of existing derivative transactions, The Bank has implemented Integrated Treasury Management Software (ITMS) which has essential features like integration of domestic and forex treasury, efficient settlement operations for rupee and foreign exchange treasury and timely Nostro reconciliation, The new system also provides seamless interactions with branches for their customer transactions,

The total forex turnover of the Bank was Rs,10,91,020 crore for the current financial year 2017-18, as compared to Rs,11,32,142 crore for the previous financial year, The inter-Bank turnover was Rs,10,23,209 crore for the current financial year 2017-18 as compared to Rs,10,78,832 crore for the previous financial year,

Export Finance

Your Bank has efficient Export Finance services to improve cash flows of exporter with wide network of correspondent relationships and competitive rates for remittances, Export Finance was made in Indian Rupees as well as in foreign currency, Rupee export credit was offered at very competitive interest rates within the ceiling prescribed by RBI, The Interest Equalization Scheme for Exporters, as designed by Govt of India, has been made available by the Bank to its customers in certain specified sectors, thus passing on the benefits of concessional interest, Bank also conducted exports/imports meet at various centers to have direct interaction with the clients,

Exchange Companies

The Bank is managing one Exchange House M/s Musandam Exchange Company Ruwi, an exchange company at Ruwi in Sultanate of Oman, The Bank is also having Rupee Drawing Arrangements (RDA) with other 7 Exchange Houses for improved and cost-effective funds transfer by Indian diaspora to India from Gulf countries, apart from RDA with 06 foreign banks,

Centralised NRI Cell

T&IBD has opened the centralized NRI cell w.e.f. 26^th Dec 2012 to enable prompt opening of NRE accounts canvassed by Exchange House managed by Bank, namely, Musandam Exchange Company, With a view to increasing the NRE Portfolio of the Bank, T&IBD is opening the account on behalf of the branches and dispatching the NRE welcome kit containing cheque book, ATM card and Internet IDs etc, directly to the Exchange House for delivery to the customer,

Multi - Currency Co-Branded Forex Pre Paid Card

The Multi-Currency Co-Branded forex pre-paid card in association with Thomas Cook India Ltd and Master Card was launched on 23^rd June, 2017, This borderless Prepaid Card has the option of loading eight currencies on a single card-US Dollars, British Pounds, Euro, Australian Dollars, Canadian Dollars, Swiss Francs, Singapore Dollars and Japanese Yen, There are 6 Foreign Exchange Processing Centres and 57 branches designated to issue this card,

Special Arrangements with NOSTRO Bank

In order to mitigate the hardship faced by the customer in collection of US Dollar instruments through US based correspondent Banks, T&IBD has established special arrangements for speedy collection of US Dollar cheques/ draft through USD Nostro correspondent for cheques drawn in USA,

Domestic Treasury

Domestic trading desk supported by state- of- art-technology which is mapped with the trading platforms provided by CCIL like CROMS, CBLO, NDS-OM, NDS-Call etc are interfaced with ITMS, provides the seamless transactions movements, The major portfolio of the treasury comprises of SLR investments and is in the form of bonds of central Government securities & state Government securities,

The bank has also strengthened the non SLR investments by investing in qualitative and rated corporate bonds and debentures, commercial paper, CDs, etc., resulting in improved yields on investment portfolio, The bank has also earned from arbitrage deals, by effectively making use of windows like CBLO, Repo & Call market with that of overnight FX market, The bank has managed funds very efficiently by these money market channels by continuously monitoring the fund flow and the liquidity position and undertaking lending and borrowing transactions,

During the year, the Bank's treasury has raised Capital Funds by way of Subordinate Tier II Bond ('500 Cr), Additional Tier I Bond (Rs,450 Cr) and Qualified Institutional Placement (QIP) amounting to Rs,1,150,80 Cr after complying with all the due procedures, The Government has infused capital through equity to the tune of Rs,2,839 Cr, The bank has invested in Recapitalization Bond for the same amount, During the year, the Bank has set up an equity research department and has started trading in equity

The domestic investments of the bank were at Rs,79,204,17 crore as on 31,03,2018 as against Rs,64,766,41 crore for previous year, Total income from investment portfolio (excluding dividend & trading profits) was Rs,5,410,37 crore in the year 2017-18 as against Rs,5,428,05 crore in the year 2016-17, Bank's investment in SLR securities amounted to Rs,70,349,94 crore which formed 88,82 per cent of Bank's total domestic treasury investments as on 31,03,2018, Trading profits for the year 2017-18 was Rs,926,48 crore as against Rs,1,728,69 crore during the FY 2016-17,

Modified duration (indicator of change in prices/values with change in 1 per cent Interest Rate) for Bank's total investment portfolio stood at 4,43 per cent for 2017-18 as against of 4,30 per cent for year 2016-17,

Overseas Operation

Bank's overseas presence is in United Kingdom with a Branch at London, The Branch is active in wholesale banking operations serving Indian Corporate in United Kingdom, money market operations, investments and treasury operations, The Branch focuses on syndications and ECBs, besides bilateral loans for Indian Corporate having global presence, The branch has efficient risk-management system which is approved by regulatory authority of United Kingdom, The total business (Deposits and Advances) of the branch stands at Great Britain Pound (GBP) 7968,770 million (Rs,73,533,82 crore) as at 31^st March, 2018 as against GBP 7627,164 million (Rs,61,705,66 crore) as at 31^st March, 2017,

MANAGEMENT INFORMATION SYSTEM (MIS)

Management Information System (MIS) department provides information on business parameters to the top management, administrative offices and branches aiding in data analysis and decision making, The department also provides reports to meet the Regulatory and Statutory compliances, The data quality, accuracy, consistency and timeliness is ensured by the department,

Apart from generating the regular and adhoc reports, the department is also providing data for various requirements such as: SPARC for RBI, CAM and ALM-FTP for Risk Management dept, CRILC /SMA for Credit Monitoring & SMA Dept, IFRS data for Central Accounts Dept, FATCA data for International Division, Mumbai, eTHIC data for HO:Inspection, Project Ananya for Product Innovation & BPR Dept, Data for Credit Bureau such as CIBIL, Data for FIBAC & for various campaigns launched by the Bank,

The department is in the process of revamping the Enterprise Data Warehousing & Business Intelligence Solution by redefining the scope of the work, additional reports development and integration of various new sources systems of the Bank for generation of required data, reports, and analytics and dash boards, EDWBI is currently being leveraged in the functions like Anti Money Laundering (AML), Cash Transaction Report (CTR) and Analytical Customer Relationship Management (ACRM), The Department has enabled menu based reports generation option for various functional departments to self-generate some of the routine reports at their end for the required periods,

Data Analytics

The Department has initiated Data Analytics activities by forming a team and the analytical use cases relevant to the bank are being identified by the team, The department has enabled Dashboards on daily position of key business parameters for Branches/ROs/ZOs for review of performance and analyzing the gaps in achieving targets,

INFORMATION TECHNOLOGY Core Banking Solution (CBS)

The Bank continues to spread its wings with a network of 4012 branches, 8 zonal offices, 60 regional offices, spread across India and one branch at London, All branches of the bank are connected with Centralized Banking Solutions (CBS),

Infrastructure

Bank holds the best infrastructure with state-of-the-art data center at Mumbai and Disaster Recovery Site at Bangalore located in different seismic zones and also a near-site at Mumbai,

Bank owns new enterprise class servers and storage systems bringing significant improvement in performance, reducing the Day End Batch processing window and with capacity to create multiple backup copies of CBS database for MIS and reporting,

CBS for London Branch

Your overseas branch at London has been brought under overseas CBS with the latest software application (Finnacle) having capabilities to support customer focused banking, product configuration, multi-channel capability etc,

New Initiatives

Bank has implemented the following IT initiatives during the year 2017-18,

-    Developed an in-house Aadhaar Re-verification portal linked to Bank's website,

-    Monthly E-statement facility for loan and CASA customers, Registered customers can now receive their monthly CASA/Loan account statements to their email ID in pdf format,

-    Lead Generation System through website: Prospective customers can now apply for retail and MSME loans through Bank's website,

-    Acceptance of online requests for Corrective Action Plan from stressed MSE customers through Bank's website,

Customer Protection Limiting Liability:

In terms of RBI guidelines, customer is to be given option to respond transaction alert, if the transaction is found to be suspicious by the customer, Facility to reply to transaction alert in respect of debit card, internet banking, mobile banking and UPI transactions is provided, Customers are empowered to reply and block debit card, IB channel, MB channel or UPI based on the transaction alert reply submitted by the customer, Blocking of channel/card is automated and for activation of the channel or debit card, customer is required to visit branch,

Green PIN Implementation through ATM

As part of providing enhanced customer service, your Bank has implemented "Green PIN" Project, which provides an option to customers to generate new / reset existing ATM Debit Card PIN, through ATM at any point of time, Further, with this facility, customers can also generate ATM Debit Card PIN instantly, if their mobile number is linked to the account,

UPI application for the iOS Platform of Mobile Phones

Bank has launched the UPI application for the iOS Platform of Mobile Phones, Customers can use Synd UPI on both android and iPhones platforms and can send and collect money. Synd UPI uses Virtual Payment Address which is an abstract form to represent account details, The account details remain confidential, By adding accounts of different Banks, Customers can manage all accounts in a single application, Synd UPI is already available for android platform of mobile phones,

Implementation of Dual fingerprint based authentication for SHG Transactions

This facility is made available for assisting Self Help Group customers to withdraw or deposit through Micro ATM / BC Channel of your Bank,

Bilingual Screens in Internet Banking

Customer can select the language of their choice either English or Hindi while doing their Internet Banking,

SyndBharat QR

Bank has launched a new mobile application called Synd Bharat QR so as to encourage cashless transactions and to promote Digital India initiative, the Government of India has launched Bharat QR Code to simplify digital transactions for merchants and for the customers, It eliminates the need of a POS machine and supports Rupay, MasterCard and VISA debit card payments,

Govt. Sponsored Initiatives -    GST Software

Bank has installed GST Software to facilitate for Online & Offline Collection of Goods & Service Tax (GST),

-    Software for Electronic Toll Collection (ETC)

Software is provided in Middleware -NETC issuer Platform,

-    Bharat Bill Payment System Solution (BBPS)

Application provided to support Bharat Bill Payment System Solution, This is an integrated bill payment system in India offering interoperable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes and providing instant confirmation of payment,

-    Solution for APY accounts

Bank has provided a new solution for the Subscribers to open APY accounts through NSDL portal,

-    Software for Collection of Registration and Stamp Duty Fees

Bank has provided a software for Online & Offline collection of Registration and Stamp Duty Fees in Tamil Nadu state, (TNIGRS)

Cyber Security in Your Bank:

Considering the number, frequency and impact of cyber incidents and attacks with increased manifold during the recent past, in financial sectors, Bank has put in place a robust cyber security resilience mechanism, As per the guidelines issued by RBI on cyber security framework, Bank has ensured that adequate cyber security preparedness is put in place and reviewed on a continuous basis,

Bank has put in place an effective cyber-Security policy elucidating the strategy containing an appropriate approach to combat cyber threats which is duly approved by our Board, In addition to that, Bank has developed its own Cyber Crisis Management Plan (CCMP) for countering Cyber Attacks and Cyber Terrorism with a coordinated, multi-disciplinary and broad based approach, To recover from malicious cyber related incidents impacting critical business functions immediate remedial actions are taken to mitigate and recover from the attacks, Bank effectively participated in the cyber drill conducted by IDRBT and table top exercise by RBI,

The field of cyber security is technology intensive and new vulnerabilities emerge with progress in technology giving rise to new types of incidents, Hence to combat those vulnerabilities Bank has implemented Cyber security projects like Active Directory, Application Whitelisting, Regular Anti-virus and Patch update, Data Leakage Prevention at network and end point level, Privilege Identity Management, Anti- Distributed Denial of service (DDoS), ATM Fraud Risk Management, Red Team formation, Cyber Forensic Services etc.,

The projects like Network Access Control (NAC), Network Behavioral Anomaly Detection (NBAD), Advanced Persistent threat (APT), Packet capture are in implementation phase, Bank has setup its own Security Operating Centre (SOC),

OPERATIONS AND GENERAL ADMINISTRATION Currency Management

-    At present there are 48 currency chests catering to the cash needs of branches across the country,

-    All the cash vans attached to our currency chest and cash pooling centers are GPRS enabled,

-    Clean Note Policy as per RBI directions is implemented at all the currency chests and branches, Under RBI clean note policy, all the currency chests and the select branches are provided with heavy duty Note Sorting Machines (NSMs),

-    Bank has provided Note Counting and Note Authenticating Machines in all the remaining branches,

Cheque Truncation System (CTS)

CTS is mandatory from 01,04,2013, In this regard, Bank has ensured that,

-    CTS-2010 standard compliant cheque books and DDs have been supplied to all branches,

-    Specific guidelines issued to the branches regarding modus operandi of dealing with old and new cheque books and also to exchange new cheque books wherever eligible,

CTS clearing activities are grid based, This is implemented throughout the country in a phased manner, There are 3 CTS grids covering throughout the country, They are Northern Grid- Delhi, Western Grid- Mumbai and Southern Grid- Chennai,

NACH platform of NPCI

Bank has commenced operations of Legacy Electronic Clearing Service (ECS) Mandates in manual mode to the NACH platform of NPCI,

Depositor Education Awareness Fund (DEAF)

-    Depositor Education Awareness Fund Scheme launched by Reserve Bank of India has been implemented since June 2014,

-    The Dormant deposits as per the specified norms are transferred to RBI on a monthly basis and whenever the customers approach the branches, they are refunded immediately and the same is claimed from RBI on a monthly basis,

Central Pension Processing Centre (CPPC)

-    Central Pension Processing Centre (CPPC) is operational zed w.e.f. 01,02,2012 for central pensions, Civil, Defence, Telecom and Postal pensions and migration of Railway pensions is in progress which will complete the process of centralized payment of all central Government pensions,

-    The Pensioners coverage during the year is increased by 29 per cent over the previous year,

-    During the year fourth and final Installment of One Rank One Pension (OROP) Arrears has been paid to Defence pensioners, Aadhar seeding is completed for more than 98 per cent of pensioners,

-    Pension slips and SMS alert on pension payment sent to all registered pensioners, Pensioners Grievance redressal unit is functioning in CPPC and all the grievances of pensioners are promptly resolved,

Government Transactions Cell

-    Bank is an accredited Bank for Ministry of Road Transports & Highways & Ministry of Shipping,

-    Bank is authorized for conducting various bonds issued by Government of India (GOI) such as 7,75 per cent savings bonds and sovereign gold bonds schemes,

-    To facilitate Online & Offline Collection of Goods & Service Tax (GST), Bank has installed GST Software,

-    Bank has implemented Public Financial Management System (PFMS) as per the financial reform initiative undertaken by Ministry of Finance (MoF), Govt, of India (GoI) to monitor the programme in the social sector and track the disbursement of Government grant funds, GOI decided to undertake National rollout of PFMS to link all financial networks of Central, State Governments and the agencies of State Governments under this platform,

-    Bank has implemented the Non- Tax Receipt Portal (NTRP) for collection of Non- Tax revenue, It is also known as Bharatkosh,

-    Bank has obtained authorization for implementation of small savings schemes such as Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), Sukanya

Samrudhi Scheme (SSS) & Kisan Vikas Patra (KVP) in all branches which shall be implemented shortly with a dedicated online software,

Electronic Payments and Settlements Office (EPSO)

-    Bank has established a centralized office viz Electronic Payments and Settlements Office (EPSO) to cater to the back-end operations related to electronic payments like NEFT, RTGS, IMPS, UPI, NACH, NETC (National Electronic Toll Collection), BBPS (Bharat Bill Payment System), MMS (Mandate Management System) and also to resolve related customer grievances,

-    There is an increase of 130 per cent in the Net income earned from the above activity ('17,70 crore) as on 31-03-2018 over the previous year ('7,70 crore),

Image Building

Bank has continued the process of branch transformation under project Ananya, which was initiated in the previous financial year, for improving the ambience of branches for ensuring maximum comfort to the customers like providing larger customer space and air conditioning, For maintaining distinct identity, uniform colour scheme has been followed, The ambience has been improved on par with peer banks to attract new customers and to garner new business, Bank also opened e-Lounge for the benefit of tech-savvy customers and to extend 24 X 7 Digital Banking to customers through ATM, Bunch Note Acceptor and Pass Book Kiosk under one roof for better customer service, besides attracting new generation customers to our fold,

Others

-    As part of Swachh Bharath Abhiyan, Bank has taken steps to maintain hygiene at all its branches/offices premises by providing good sanitation facilities to its customers and staff in addition to keeping the premises neat and clean for ensuring better ambience, Going a step further in this direction, Bank has also initiated periodic Hygiene and Ambience Audit in all branches/ offices,

-    Bank conducted the Swachhta Pakhwada from 16^th to 31^st January 2018 across all offices/branches creating awareness regarding importance of cleanliness among staff members and customers, On the occasion of 69^th Republic Day, MD & CEO and ED along with other staff members from Corporate Office, Zonal/Regional Offices I & II Bengaluru undertook the cleaning activity in the vicinity of Corporate Office and staff quarters at Nandini Layout, Bengaluru, Similarly, ED along with staff members from HO, ZO Manipal, local branches and SIBM participated in the Swachhata Abhiyan cleaning the surroundings of Head Office and Bank quarters,

HUMAN RESOURCES MANAGEMENT

Human Resources Management Department (HRMD) of the Bank is playing vital role in manpower planning, recruitment, promotions, performance appraisal, employee development/capacity building through in-house and external training, succession planning, etc,

Bank is constantly focusing on HR functions by developing and retaining the workforce to meet the future HR challenges in the Banking Sector, The Bank is geared up to achieve the same through pragmatic interventions in training and development and creating career growth opportunities,

Bank is giving more thrust to succession planning through identification of necessary competencies and then works to assess, develop and retain a talent pool of employees, in order to ensure continuity of leadership in all critical areas, Investment in employees' training and development has enabled the Bank to prepare the staff members to handle new HR challenges and make them 'future ready',

The Human Capital of the Bank as on 31,03,2018 is as under:

Category	31.03.2017	31.03.2018
Officers	16,956	17,421
Clerks	11,339	11,279
Sub staff	4,253	3,906
Sweepers	2,441	2,405
Total	34,989	35,011

RECRUITMENT PLANNING

The main objective of recruitment planning is to have required staff strength based on the skill inventory, superannuation, attrition rates, branch expansion plan of the Bank, career plan, succession planning, etc, The recruitment techniques include lateral recruitment of specialist officers and recruitment of probationary officers and clerks through the common recruitment process conducted by IBPS,

The details of recruitment made by the bank during the year 2017-2018 up to 31,03,2018 is shown below:

S. No.	Post	No. of candidates joined
1	DGM(Security)	1
2	Manager (Law)	11
3	Manager (CA)	10
5	Manager (Security)	12
6	Technical Officer (Civil)	14
7	Technical Officer (Electrical)	6
8	Probationary officers	4 3
9	I.T.Officers	20
10	Asst.Manager (R D)	115
11	Marketing Officers	88
12	Probationary officers through PGDBF	584
13	Probationary Clerks	713
Â	Total	1,921

Recruitment of officers in JMGS-I after undergoing one year PG Diploma in banking & finance (PGDBF)

The Bank, with the objective of “first day, first hour productive” has introduced strategic talent pipeline building programme in association with Manipal Global Education Services Pvt Ltd (MaGE) Bangalore and NITTE Institute of Banking and Finance Noida (NEIPL) and Mangalore, Both the institutes will train candidates for the period of 1 2 months consisting of 9 months' academic input and 3 months' internship in the branch, On successful completion of 1 2 months training, these trainees will be absorbed as probationary officers of the Bank,

Promotions and Placement

The Bank has placed robust promotion and placement policy to cope with superannuation in various grades/ scales keeping in view of the guidelines received from Government of India from time to time, The Promotion policy of the Bank acts as a motivating factor for the officers to perform and also to take care of succession planning, Promotion within officer cadre is ensured every year to avoid any stagnation, Periodical promotional processes and a number of welfare measures are also introduced to retain the quality staff,

Talent Grooming & Training

The Bank continued to invest in developing employee's competence, Syndicate Institute of Bank Management (SIBM) and 7 training centers spread across the country are catering to the training needs of the employees, Considering the large scale retirements and developing skills, the Bank has undertaken process of augmenting its training for skill building, which will groom the officers/ executives in various specialized activities as well as motivate them to assume role of Branch/Regional Heads, For the identified executives handling sensitive regions and branches, Bank has arranged special executive development programmes, consisting of mainly on soft skills, During the year 2017-18, the training system has conducted 493 internal training programmes covering 7,921 Officers and 6,717 workmen employees, 380 Synd Samarth locational training programmes covering 10,106 officers were conducted under Project Ananya, branch transformation, In addition, 971 officers/executives were deputed to external training programmes conducted by training institutes of repute in India on finer leadership skills, Further 8 executives/officers were also deputed to overseas training programmes,

Bank has also taken various steps for introduction of E-learning system, Bank is engaging the retired executives/ officers for assisting in development of E-learning modules,

Retention

Retention of skilled and well groomed manpower is being ensured by addressing their diverse needs/grievances, developing a positive inter se relationship, providing challenging task, involving them in decision making process, offering periodical training, conducting periodical promotion process and by devising innovative & creative staff welfare schemes,

Competency mapping

Bank has conducted competency mapping and skill assessment exercise in association with National Institute of Bank Management (NIBM), Pune for 38 executives in Scale-V and 159 executives in Scale-IV who are having more than 3 years of residual service during the FY 20171 8, The concerned executives have been posted to critical positions as a part of succession planning,

Identification of key departments and key persons

As a part of succession plan, Bank has identified Treasury & International Banking Department, Risk Management Department, Credit Department, Audit & Tax Cell, Department of Information Technology, Human Resources Department, NPA Management & Legal Department and Investor Relations Centre as key departments and the executives who are second in command and having requisite competency and skill have been identified as key person of the respective departments, Further, before relief of the existing key person on promotion/ transfer/ superannuation etc, from the respective vertical, the new incumbent having requisite qualification, competency and skill will be identified internally/externally (through lateral recruitment) and posted well in advance for necessary knowledge transfer and to have handholding in the respective department/vertical so as to ensure proper succession planning,

Capacity building

Bank has introduced mandatory certification for the staff mapping of following specialized areas

a,    Treasury operations (dealers, mid office operations)

b,    Risk Management (credit risk, market risk, operational risk, enterprise wide risk, information security, liquidity risk)

c,    Accounting (preparation of financial results, audit function)

d,    Credit Management (credit appraisal, rating, monitoring, credit administration)

e,    Foreign exchange operations

Systemic Improvements and IT initiatives

Annual Performance Appraisal Report (APAR): Implemented revised APAR with quarterly assessment w.e.f. December 201 7 quarter, Re-designed APAR system to have more measurable and objective scoring system, APAR system aims at and includes, high proportion of budgetary and measurable KRAs for all officers, Automatic scoring for objective parameters, Weightage based on branch type, etc,

Capturing APAR details: Department has developed portal to capture the scoring on-line and successfully implemented the same in tune with the re-designed APAR system,

Bank has developed and implemented software for centralized tax deduction at source, capturing Annual Property Returns online, Fitment of Basic Pay on promotion up to Scale-III, etc,

Succession planning

Four pillars for succession planning are formed, ie,,(a) Short listing of candidates and setting up talent committee,

(b) Indentifying high potential candidates (c) Creating individual development plan (d) Create succession plan for critical roles,

Further, Bank has taken following steps for smooth succession in various key areas:

-    Conducted competency mapping exercise in association with NIBM, Pune for 38 AGMs and 159 CMs,

-    Initiated Capacity Building exercise as a part of succession planning/filling up skill gap, by way of customized trainings, mentoring, e-learning, focused attention for achievement and motivation, certification courses, etc,

-    Introduction of sales focused roles like sales officer, CRM etc,

-    Lateral recruitment of specialist officers,

Reservation to SC/ST/OBC/PWD

The Bank follows the reservation policy for SCs, STs, OBCs and PWDs as prescribed by Government of India and State Governments from time to time and has been extending applicable reservations/concessions to SC/ST/ OBC/PWD employees in recruitment/promotions strictly as per the Government of India guidelines, A separate SC/ ST Cell and OBC Cell are functioning at Head Office to redress the grievances of SC/ST/OBC employees working in the Bank and are currently headed by General Managers designated as chief liaison officers, Meetings with the representatives of the SC/ST/OBC welfare associations are held at regular intervals to redress their grievances, The chief liaison officer will participate in meetings with the members /officials of the National Commission for SC/ ST during their visits to our Regional Offices, The progress made in the implementation of the reservation policy is placed before the Board once in a Year, The post based reservation roster is displayed on the website of the bank in compliance to the directions of the Government,

IMPLEMENTATION OF HRMS IN YOUR BANK

HRMS is implemented in the Bank, It is a centralized HRMS solution for handling the functions of different divisions of personnel department, Zonal offices, Regional offices, branches and other administrative offices covering all employees/pensioners of the Bank, Annual performance appraisal report, attendance, leave modules and few functionalities of salary, employee record management, personnel administration, transfer modules have been made live, Remaining features of these modules and other modules like manpower planning, terminal benefits, training and development, recruitment etc., are in different stages of implementation,

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Bank has been displaying a strong and abiding commitment to encourage the greater use of Hindi in various ways not only because it is the policy of the Government of India but also as an ideal and powerful medium of inclusive banking, With an object of timely implementation of important guidelines pertaining to Official Language issued by the Government of India, various types of initiatives have been taken up by your Bank for providing assistance to the employees working in branches/offices in the implementation of official language duly issuing internal annual O L implementation action plan,

The Bank has made noteworthy progress under the implementation of Official Language and won prizes at various levels during the year, Your bank was awarded with First prize “Rajbhasha Kirti Puraskar” for 2016-17 by

the Ministry of Home Affairs, Dept, of Official Language, Government of India, for its Hindi House Journal 'Jagriti" among all the Nationalized Banks/FIs situated in 'C' region, Sri Melwyn Rego, MD & CEO received the award from Hon'ble President of India Sri Ramnath Kovind on 14,09,2017 at Vigyan Bhavan, New Delhi,

Your Bank's In-house Journal JAGRITI was awarded as Second Best In-house Magazine for the F.Y 2016-17 by Reserve Bank of India,

Town Official Language Implementation Committee (TOLIC) Karwar and TOLIC Faridabad (both conveners of your bank) have won the Second prize and third prize respectively for best TOLIC among the South West region and North region respectively from Regional Implementation Office, Dept, of Official Language, Ministry of Home Affairs, Government of India for the year 2016-17, Some of our Regional Offices and staff members have received Rajbhasha Shields/Awards from respective Town Official Language Implementation Committees,

Bank's Internal Award Schemes like Cash Incentive Schemes for 'Excellent Performance in use of Hindi and excellent performance in use of Hindi on Computers' for Region wise individual employees and also bank level/ branch level/department level shield competitions/essay competitions' are in vogue, Attractive Cash Incentives are being given to the writers of Hindi articles published in our house magazines i.e. Giant & Jagriti,

Bank has notified 3,434 branches/offices under Rule 10(4) of O, L, Rule, 1976 to ensure maximum usage of Hindi, Ensured online submission of quarterly Hindi progress reports of various Regional Offices to the concerned regional implementation offices of MHA, Functional Hindi workshops, translation trainings, Hindi Coordinator/ executive OL seminars, Hindi competitions for school children/staff members in connection with 'Vigilance Awareness Week, Independence Day/Republic Day/ Teachers' Day' and 'Rajbhasha Prayog-Apasi Samvad-Sarthak Disha' programmes of DFS-MOF were conducted by various regional offices in addition to attending Govt, guidelines related to OL implementation in day to day official work, In addition to the above 'Let us Speak Regional Language' guidance programmes were conducted,

Bank has launched Mobile Banking application in Hindi in addition to updating Hindi translation of revamped website, Bank is the convenor of Town Official Language Implementation Committees at Ananthapur, Bijapur, Karwar, Kannur, Meerut, Ghaziabad, Faridabad, Ongole and Udupi, Official Language Implementation Committees were constituted in all the branches/offices for the effective implementation of Official Language,

The Third Sub Committee of the Committee of Parliament on Official Language inspected our Nainital Branch and Kavaratii branch and Regional Office Delhi I respectively on 08,05,2017, 14,10,2017 & 17,02,2018 and The Drafting & Evidence Sub Committee of the Committee of Parliament on Official Language had discussion with our R.O. Faridabad on 06,09,2017,

The officials of Department of Financial Services, MOF had inspected our Head Office, Corporate Office, RO: Delhi

I, RO Meerut, TC Delhi, RO Vijayawada and reviewed OL Implementation activities and appreciated the efforts of the Bank in the area of Official Language Implementation,

Special activities conducted during the period:

i,    Bank conducted All India Hindi Essay Competition for

Nationalised Banks/FIs/RRBs.

ii,    Bank conducted Hindi Day at London Branch and Island branches in addition to Regional Offices,

iii,    Bank has released a book titled "Various important initiatives of the Government in Socio-Economic Development" (collection of articles won first prize in the seminar conducted in January 2017),

iv.    Bank has released a book titled “^T^ ^T^fa WT ^

II which includes various languages enshrined in the 8^th Schedule of the Constitution of India,

v,    Bank has conducted National Level Seminar in Hindi on "Contribution of Priority Sector in Social Development" for Nationalized Banks/FIs/RRBs at SIBM Manipal on 06^th March 2018,

Bank has paid special attention on providing information related to financial inclusion matters, schemes/ products related literature / pamphlets / advertisements / display material etc, in Hindi and Regional languages in addition to English, Bank is committed in promoting Hindi and Regional Languages by introducing various innovative models to facilitate its proud customers,

CUSTOMER SERVICE

Bank has been constantly striving hard to improve customer service, Bank's customer centric approach acts as a key component in shaping future business potential and also in acquiring, retaining and growing the customer base,

The Bank has policies duly approved by the Board on customer service, deposits, customer grievance redressal, cheque collection, compensation policy etc, These are displayed on the Bank's website for the convenience of the customers, besides being available at each branch of the Bank for the use of the customers,

Branches are celebrating branch opening / foundation day as customer meet day, Meeting would be attended by executives from HO/CO/RO, local Government officials and customers of that branch, During the meeting customer are educated about products and services offered by the bank and customer feedback would be obtained, Matters relating to customer service and customer complaints are discussed in the periodical meeting held at branches/regional offices where apart from customers/ senior citizens are also invited,

The grievances redressal policy of the Bank is meant for prompt redressal of customer complaints and grievances through well defined roles & responsibilities,

The Customer Service Committee (CSC) meeting was reconstituted at ROs with head of the Region as Chairman, Executives of ROs, Officers' and Workmen Association / Union representatives and a retired employee and other Customers,

Customer Service Initiatives taken during 2017-18

-    Bank has ensured display of the comprehensive notice board as per BCSBI guidelines in all the branches,

-    With a view to improving the customer service in the branches and sensitize the staff, policy on 'customer service' has been adopted based on the following basic principles viz., courtesy, communication, efficiency & timeliness, general management of the branches, knowledge, etc,

-    The Bank is a member of the Banking Codes and Standards Board of India (BCSBI) and committed to implement the provisions of Code of Bank's Commitment to Customers and Code of Bank's Commitment to MSE Customers in letter and spirit,

-    Code of Bank's commitment to customers January 2018-BCSBI has been circulated to all branches/offices and a copy of the same is made available for the customers, It has also been uploaded and displayed in our website and in-house application,

-    In its continued efforts to spread awareness and to educate/sensitize customers about provisions of BCSBI Codes, Bank has also actively participated in the "customer meets" organized by BCSBI at various regions and branch officials and customers have interacted with BCSBI officials,

-    BCSBI has imparted training to few Officers of the Bank to enable them to conduct Customers Awareness Meet before 31/12/2018,

-    Executives during their visit to branches interact with customers and review matters relating to customer service/complaints redressal and implementation of BCSBI codes provisions,

-    News letters from BCSBI is made available/updated in website quarterly,

-    Standing committee on customer service meet at quarterly intervals at corporate office and review the customer service related matters/ complaints etc, of the Bank as a whole the customer service related matters are also deliberated,

-    Introduction of new savings bank account- "SYND SUPREME" and Multi Currency Co-branded Forex prepaid card with Thomas Cook India Limited,

-    Introduction of levy of penal charges for no maintenance of Minimum Average Balances in Savings Bank accounts which is directly proportionate to the extent of short fall observed,

-    Introduction of Door Step Banking facility for Senior Citizens of more than 70 years of age and Differently Abled or Infirm Persons (having medically certified chronic illness or disability) including those who are Visually Impaired,

-    Banking Facility/Service for Senior Citizens, Differently abled and Visually Impaired Persons by providing separate dedicated counters in the branches has been introduced,

Online Grievance Redressal System (OGRS)

Bank has made online grievance redressal system live from 18,08,2015, The online grievance system provides for online registration of grievance through bank's website, The online grievance system provides access to the customers for recording the complaint, compliant status tracking and receiving response from the bank, The system is running satisfactorily,

Internal Ombudsman

Bank had appointed internal ombudsman w,e,f 01,08,2015, The bank's internal ombudsman examines the cases where the customers claim is either rejected or partially accepted,

CORPORATE SOCIAL RESPONSIBILITY

As a sincere corporate citizen, your Bank has been fulfilling its social responsibilities by actively participating in activities aimed at socio/economic transformation of various facets of society and upliftment of the downtrodden,

The Bank is undertaking various CSR activities for-

(a)    Community development activities in the areas of operation of the Bank,

(b)    Mitigating natural calamities,

(c)    Development of health care facilities for poorer sections of the society,

(d)    Development of educational facilities at institutions, not dependent on capital fees,

(e)    Promotion of art and culture,

(f)    Activities to encourage research and development in fields related to Banking,

(g)    "Swachh Bharat Abhiyaan": A national movement, launched by Government of India to achieve total sanitation and cleanliness,

(h)    "Swachh Vidyalaya Mission": launched by Government of India with a mission to to provide toilets in different schools across the country,

(i)    Promoting sports and recognizing the performance of outstanding sportspersons,

(j) Upkeep of water bodies,

(k) Creation of public financial distribution infrastructure using Aadhaar Interoperable Micro ATMs under rural development project,

(l) Promoting gender equality, empowering women etc, (m) Any other worthy social causes,

Bank has sanctioned total of Rs,1,40 crore under corporate social responsibility (CSR) in FY 2017-18, Some of the major contributions under corporate social responsibility (CSR) during the financial year 2017-18 are as under:

-    Donation to Blind Organization for providing education curriculum to Blind students,

-    Donated school bags to needy students on the occasion of Dr, Ambedkar Jayathi,

-    Donated water cooler at civil hospital, Chandigarh,

-    Donated for cleaning roads and drainage in Karaikal Municipality, falling under Regional Office Madurai,

-    Financial assistance to meritorious students, Hubballi & women Cricketer,

-    Donated for free nutrition supplements to children with cancer,

-    Donation of cargo rickshaw to Grama Panchayat, Hejamady for disposal of waste under Swachch Bharat Abhiyan,

-    Donated for organizing free cancer check-up camp for women, at Ludhiana,

-    Donated battery operated garbage vehicle to Hosur Municipality, RO Salem,

-    Donated toilet chairs to disabled & senior citizens under Swachh Bharat Abhiyan, RO Moradabad,

-    Bank has adopted 26 villages for undertaking development work under Synd Samagra Gram Vikas Yojana (SSGVY) in FY 2015-16 and is still continuing the development activities in these adopted villages,

NEW PRODUCT INITIATIVES

Improving & developing new product is ongoing task which your Bank is dexterously following keeping in view of the changing customer requirements, technological innovation and market research, During the year, Bank has come up with several new products for the benefits of its customers, Following are the new products introduced by the Bank,

On liability side

(a)    Synd Supreme: Bank has introduced a new product Synd Supreme, It is a new Savings Bank product designed to attract customers maintaining Monthly Average Balance of Rs,1,00 lakh and above, The product has got inbuilt features like Free Accidental Insurance Cover up to Rs,1 0 lakhs, Free Remittance Facilities (RTGS/NEFT), Free Issuance of Debit/Credit cards, Mobile Banking, Internet Banking to attract new customers as well as to provide facilities to existing customers who maintain Monthly Average Balance (MAB) of Rs,1 lakh & above, Bank has opened 3,077 accounts involving a deposit of Rs,193 crore under the new product as on 31,03,2018,

(b)    Multi-Currency Co-branded Forex pre-paid Card:

Bank has introduced Multi- Currency Co branded Forex Prepaid Cards in association with Thomas Cook India Ltd, The card enables travelers with the option of loading eight currencies on a single card-US Dollars, British Pounds, Euro, Australian Dollars, Canadian Dollars, Swiss Francs, Singapore Dollars, and Japanese Yen, The prepaid card is accepted at over 35,2 million merchant establishments and also gives card holders an option to withdraw cash from ATM located overseas,

MARKETING AND FEE INCOME PRODUCTS Marketing Vertical

Bank has a separate marketing vertical at Corporate Office, Zonal Offices and Regional Offices to accelerate marketing efforts to augment income from below mentioned activities:

1,    Asset & Liabilities Products,

2,    Fee based income products like lockers & third party products like insurance & mutual funds etc,

3,    Social security schemes,

4,    CMSC products like ASBA, Demat etc,

5,    Card center products like credit card, debit card and POS,

6,    Promotion of digital banking channels,

Bank's marketing setup is consisting of a team of 203 marketing officers spread across the country, with clear thrust on the business development, Bank conducted three days' marketing conclave at Syndicate Institute of Bank Management, Manipal for skill enhancement of the marketing team, The team was addressed by the Top Management of the Bank highlighting the significance of marketing and brand development, Department is handling one session in every training program to improve the marketing skills among branch managers and other officers, who are attending the training program,

BANCASSURANCE 1.    Life Insurance

-    Bank has a Corporate Agency tie-up with Life Insurance Corporation of India, as a Corporate Agent for distribution of Life Insurance Products, Bank has a team of 250 Specified Persons for soliciting life insurance business,

-    Bank also offers life insurance cover under group policy to educational loan borrowers and saving account holders,

-    Bank earned commission of Rs,867,35 lakh (inclusive of LIC PMJJBY) during FY 2017-18 against a commission of Rs,914,28 lakh (inclusive of LIC PMJJBY) during FY 2016-17,

2.    General Insurance

-    Bank has a Corporate Agency tie-up with United India Insurance Company Limited (UIICO) for distribution of general insurance products, including Synd Arogya (a Group Mediclaim -Cum -Personal Accident Policy with family floater advantage) at competitive premium for its account holders,

-    During the FY 2017-18, Bank has earned a commission of Rs,1,372,89 lakh (inclusive of UIICO PMSBY), compared to commission of Rs,1,009,60 lakh (inclusive of UIICO PMSBY) during the previous year, from general insurance business,

3. Social Security Insurance Schemes (PMJJBY & PMSBY)

a.    Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Bank has tie up with LIC of India for providing life insurance cover under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), During FY 2017-18, Bank has enrolled 6,25,387 PMJJBY policies,

b.    Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Banks has tie up with United Insurance Company Limited (UIICO) for providing accidental death insurance cover under Pradhan Mantri Suraksha Bima Yojana (PMSBY), During FY 2017-18, Bank has enrolled 20,91,857 PMSBY policies,

Mutual Funds

Acting as a financial supermarket, offering various financial products under one umbrella, Bank has tied up with nine leading Asset Management Companies for distributing Mutual Fund products, As on 31,03,2018, the Bank had a team of 488 NISM (Series-V-A) Certified Persons and 400 EUIN compliant staff facilitating informed selling,

Bank earned brokerage of Rs,107,40 lakh during FY 2017-18 against a brokerage of Rs,68,80 lakh in FY 2016-17 from Mutual Fund business,

Cash Management Services (CMS)

The Bank offers a state-of-the-art technology driven products to corporate, private and foreign banks for efficient management of account receivables and payments, The Bank also offers CMS services to its clients through all branches across the country, Auto debit mandates facility and centralized cheque debit facilities are being offered, Payment of dividend warrants / interest warrants / DD drawing arrangement and remote DD printing facilities are being offered under payments,

Capital Market Services

Applications Supported by Blocked Amount (ASBA)

The ASBA [Application Supported by Blocked Amount] facility was introduced in the Bank during October 2010, Bank is registered with SEBI as Self Certified Syndicate Bank (SCSB) for providing Applications Supported by Blocked Amount (ASBA) to its customers, Bank has integrated ASBA facility with its core banking solution, ASBA process is available in all public issues made through the book building route and rights issues, This scheme aims at providing the facility of blocking of amount to the extent of the bid amount of our customers investing in shares and bonds through the IPO/FPO,

Depository Participant Services

Your Bank is holding permanent registration as Depository Participant issued by the Securities and Exchange Board of

India (SEBI), The Bank is a Depository Participant of CDSL, This facility enables customers to keep their Capital Market Securities in electronic form, Your Bank provides 3-in-1 account cum on-line trading facility, in collaboration with M/s Asit C Mehta Investment Intermediates Ltd, under the brand name "Synd-e-Trade", Further Bank is also moving for tying up similar facility with better branded security dealers,

Other Services

New Pension System (NPS)

The Bank is registered with the Pension Fund Regulatory and Development Authority (PFRDA) as Point of Presence (POP) for offering various services under the New Pension System

- a scheme introduced by the Government of India for providing old age income security, 3481 branches of your Bank are registered with NSDL for offering various services under the scope of the NPS as Point of Presence - Service Provider (POP-SP),

Atal Pension Yojana (APY)

The Government of India introduced the Atal Pension Yojana (APY), with effect from 1st June, 2015, for creating a universal social security system for all Indians, especially the poor, the under-privileged and the workers in the unorganised sector, APY is being administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the overall administrative and institutional architecture of the National Pension System (NPS), 4012 branches of your Bank have been registered as NPS Lite Collection Centers (NLCCs) to offer the services under this scheme to the customers ranging from Rs,1,000 per month to Rs,5,000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY,

CARD BUSINESS Global Debit Cards:

The Bank launched Global Debit Cards in association with VISA on 29,03,2003 and in association with Master Card (Maestro Brand) on 22,06,2011, In 2012, the Bank started issuing RuPay Debit Cards in association with NPCI, The Bank has been issuing VISA International Gold Debit Cards with higher transaction limits w.e.f 20,10,2012,

During 2016, the Bank has launched the following new variants of Debit Cards in association with NPCI,

- RuPay Mudra Cards

- RuPay Platinum Cards

- AEPS RuPay Debit Cards (Aadhar enabled)

- During the year, we have enabled NPCIRs,s RuPay Debit Cards for e-commerce transactions through OTP

The Bank has issued 213,76 lakhs Debit Cards till 31,03,2018, out of which 160,37 lacs Debit Cards are active as on 31,03,2018,

Credit Card:

Bank, in association with VISA International, offers Gold and Classic Credit Cards which can be used at ATMs, Point-of Sale Terminals (POS) and Internet, w.e.f 20,10,2003, Bank has issued 1,46,157 credit cards till 31,03,2018, Bank has entrusted end-to-end management of Credit Card services through M/s Atos Worldline India Pvt Ltd since 04,02,2015,

Green PIN Implementation for Debit Cards:

The Green PIN facility for resetting the Debit Card PINs in Syndicate Bank’s ATMs through OTP delivery on customer's registered mobile numbers is presently extended to active debit cards, The Debit Card Issuance Application is customized to extend this facility for new Debit Cards also, With this customization, Branches are enabled to issue new Debit Cards without physical delivery of PINs,

Point of Sale (POS) Acquiring:

Bank ventured into the Merchant Acquiring business on 02,10,2009, All its POS terminals do comply with VISA / Master Card / RuPay specified standards and are fully compliant to handle EMV and PIN based transactions for all types of Cards issued by Banks, As on 31,03,2018, Bank had installed 8140 POS Terminals in total, out of which 3,644 terminals were installed during the year,

Bank launched 2 new current account products linked to POS terminals, The features are devised to give rent free POS terminals based on the Monthly Average Balance (MAB) maintenance of Rs,1,00 lakh and Rs,2,00 lakhs in the current accounts,

The force settlement to process the POS transactions wherever the merchant does not settle the transactions in the terminal is reduced to 2 days from the existing 5 days and credit processed to the Merchant accounts

Delivery Channels ATM Network

Bank has operationalised 3907 ATMs and 341 BNAs as on 31,03,2018, Your Bank customers can deposit cash into their accounts or third party accounts in Bank using BNAs,

Internet Banking

Bank's Internet Banking has 13,11 Lakhs registered users as on 31,03,2018, Bank has added new features like transfer of funds using RTGS option in Internet Banking, reduction of ATM card withdrawal limit through online, reduction in Debit Card purchase transaction limit through online and Mobile Banking PIN reset, Hindi version of Internet Banking site is also made available,

Mobile Banking

Bank's Mobile Banking application is becoming more popular and is having a registered user base of 14,98 Lakhs as on 31,03,2018, Mobile Banking application is provided with links to open SB account through Synd Swayam and to apply loans, These facilities can be accessed by a noncustomer also after downloading our Mobile Banking app,

SMS Banking

Mandatory and non-mandatory SMSs are sent to customers. Mandatory SMSs are not chargeable whereas non-mandatory SMSs are chargeable, The registered SMS Banking users are 73,05 Lakhs,

Missed Call Banking

Customers who wish to avail this facility may register their mobile number by sending specified text message from his registered mobile number to Bank's Missed call number 9210332255,

After successful registration, customer can get balance alert for their account by giving missed call to the specified number, Missed call Banking registered users as on 31,03,2018 is 2,61 Lakhs,

Synd UPI

Synd UPI is a Mobile Application that facilitates customers to make simple, easy and quick payment transactions using Unified Payments Interface (UPI), Direct bank to bank payments can be made instantly using Virtual Payment Address or Aadhaar Number or Account Number and IFSC, The number of registrations with Bank is 64,159 as on 31,03,2018,

Bharat QR

Customers who have registered their mobile numbers with Bank and having Debit Cards (RuPay cards as of now) can avail the facility of making payment at merchant locations through Bharat QR, Bharat QR allows merchants to receive payments digitally without the use of Point-Of-Sale machines, Customers can open the app installed in their Smart Phones, scan the Bharat QR Code available at merchant location to make the payment, Number of users for Bharat QR Code is 2404,

PRODUCT INNOVATION & BUSINESS PROCESS REENGINEERING (BPR)

Bank has Product Innovation and BPR department to carry out Digital Banking, product innovation and business process re-engineering activities of the Bank,

Product Innovation

In order to cater to individual needs of all customers, including dominant Gen-Y customers, Bank has leveraged its Technology to create need of the hour products and services, During the year, Bank has introduced innovative products viz, Synd Supreme and Multi-Currency Cobranded Forex Pre-paid Cards,

Project Ananya:

The Bank has embarked into Business Process Reengineering under the brand name Project Ananya, The four broad pillars of the project are:

- Business Process Re-engineering (BPR)

- Digital Banking

- Sales & Customer Relationship Management (CRM)

- Human Resource Development

1. Business Processes Re-engineering:

Process streamlining and centralization has been proven among private and public banking peers to be an important lever to help reduce branch work load, so as to enable the branches to focus on sales and customer service, Bank has streamlined regular processes like SB Account opening, retail loan processing, SME loan processing by centralizing processes through central back-offices,

Branch Transformation

This pillar also aims to achieve branch transformation, ensuring focus on branch ambience as a new-age Bank, customer convenience, digital services and increased productivity, Accordingly, a total of 600 branches have been transformed as Ananya Branches across India as on 31,03,2018 and another 200 branches are targeted to be transformed by 30^th September, 201 8 taking the total to 800 Ananya Branches,

National Processing Centre (NPC)

The process of instant account opening activity through National Processing Centre, Manipal is extended to 1029 branches pan India, It is envisaged to link all the Branches by 30^th June 2018 by expanding the NPC at Manipal and opening two more centres at Bhubaneswar and Delhi, More than one lakh fifty thousand accounts are activated since establishment of NPC at Manipal,

Retail and MSME Loan Center (RMLC)

Bank has setup Retail & MSME Loan Centers (RMLC) in 27 potential centers as on 31,03,2018 for processing of all mortgage based Retail loans and MSME proposals of '10 lakhs and above, The setup is designed to smoothen the backend office work of processing, sanctioning, documentation, releases and follow-up through well trained staff to reduce the TAT as well as to ensure quality and uniform processing of loans, Branches will be free to act as selling agents with focused approach, Bank is in the process of identifying such RMLCs in other potential centers,

Contact Centre

Contact Centres at Hyderabad and Mohali have started providing a 24 hour in-bound services for the customers and public, apart from out-bound call activity,

2.    Digital Banking

With the advent of heavy digitization in the life of customers, as well as the significant digital push by the Government in banking, improving our digital banking channels and driving adoption among customers is prime pillar of project Ananya, It aims to improve features of existing digital channels viz internet banking, mobile banking, simplified on-boarding process and drive for better adoption among existing and new customers, Equipped Ananya branches with Digi Zones powered by self-service machines such as ATM, Bunch Note Acceptor (BNA) and Passbook update Machines for adoption of digital channels, We have also provided Online Saving Account opening and Online Loan application request for the convenience of the customers,

3.    Sales & CRM

Project Ananya aims to streamline Sales and CRM as an end to end process- from targeting potential customers to final conversion, An App is developed for comprehensive Lead Management System which would facilitate sales and marketing, Further Bank data is used to drive Big Data Analytics to achieve targeted marketing, In order to achieve all this, and ensure sustainability, the project also aims to strengthen and focus on the marketing resources,

4.    Human Resource Development

Organizational restructuring to ensure a top to bottom alignment with organizational objective, while paving the path for a meritocracy based organization, keeping employees motivated and engaged, This module also aims to address the Bank's performance management system, Training structure and employee efficiency and productivity, To give confidence to employees by motivating them so that they feel your bank is the best Bank to work with,

COMMITTEES VISITED DURING THE YEAR 2017-18

1. Parliamentary Committee on Subordinate Legislation to Jamnagar, Mumbai, & Bhubaneswar from 15^th to 22^nd April, Subject- RBI (Frauds classification and reporting by commercial banks and select FIs) Directions, 201 6 and detection, Confiscation and prevention of counterfeit notes of the new denominations reentering the banking system/economy, Our bank had attended the Meeting at Jamnagar on 16,04,2017, Mumbai on 19,04,2017 and at Bhubaneshwar on 20,04,2017,

2.    Parliamentary Committee on Government Assurances visited Ooty & Coimbatore from 5^th-13^th May 2017, Subject - UsQ No.727 dated 22,11,2016 regarding Cyber attack on ATM System of Public and Private Banks and USQ 1516 dated 29,11,2016 regarding RBI guidelines on safety of Bank customers, Our bank had attended the meeting at Coimbatore on 12,05,2017,

3.    Parliamentary Committee on Official Language visited to Nainital from 2^nd - 9^th May 2017, Subject -Implementation of Official Language, Our Bank had attended meeting at Nainital on 8,5,2017,

4.    Parliamentary Standing Committee on finance visited Mumbai, Pune & Kochi from 11th - 16th May 2017, Subject-Banking sector in India - challenges and way forward, Financial Inclusion-schemes, targets and achievements, Transformation towards a digital economy, Our Bank had attended the meeting at Kochi on 15,5,2017,

5.    Parliamentary Committee on Petition visited Kochi & Munnar from 30^th May to 02^nd June, 2017, Subject

- Petition praying to check sudden surge in NPAs in Public Sector Banks, Our Bank had attended meeting at Munnar on 1,6,2017, (Our Bank was Nodal Agency),

6.    Parliamentary Committee on Urban Development visited Bengaluru, Chennai, Kochi & Munnar from 06^th - 11^th June 2017, Subject - Urban Development, Our Bank had attended meeting at Bangalore on

6,6,2017, (Our Bank was Nodal Agency),

7.    Parliamentary Committee on Subordinate Legislation to Vijayawada, Chennai, & Kolkata from 21^st to 26^th June 2017, Subject - Reserve Bank of India Master circular on Mobile Banking Transaction in India -Operative guidelines for Banks dated 1^st July 2016 & Detection, confiscation and prevention of counterfeit notes in new currency post demonetization in the states of Andhra Pradesh, Tamil Nadu and West Bengal, Our Bank had attended the meeting at Vijayawada on 22,6,2017, Chennai on 23,6,2017 and at Kolkatta on 25,06,2017,

8.    Parliamentary Committee on Government Assurances visited Bhubaneshwar & Hyderabad from 27^th Aug- 1^st Sep 2017, Subject - In connection with the Assurance arising from USQ No, 2175 dated 21,03,17 regarding irregularities in sanctioning loans by PSBs, Our Bank had attended meeting at Hyderabad on 1,9,2017,

9.    Parliamentary Committee on Subordinate Legislation to Hyderabad, Jaipur & Lucknow from 27^th to 02^nd Sept 2017, Subject - Master direction-RBI {Lending to Micro, Small & Medium Enterprises (MSME) sector}-Directions 2017; RBI scheme for sustainable structuring of stressed Assets, problems faced by Banks due to rising NPA of different categories; Detection, confiscation and prevention of counterfeit notes in new currency post demonetisation in the states of Uttar Pradesh, Rajasthan & Telangana, Our bank had attended meeting at Hyderabad on 28,8,2017 (Our Bank was Nodal Agency), and on 30,8,2017 at Jaipur,

10.    Parliamentary Committee on Official Language visited Delhi, Mumbai, Kochi, Thrissur, Agatti & Kavrati from 10^th - 17^th Oct 2017, Our bank had attended meeting at Kavaratti on 14,10,2017,

11.    Parliamentary Committee on Subordinate Legislation to Bengaluru, Vishakhapatnam and Mumbai from 04^th to 09^th Nov 2017, Subject - Stand Up India Scheme; RBI Master circular on Detection and Impounding Counterfeit Notes; and detection, confiscation and prevention of counterfeit notes of the new currency in the state of Karnataka, RBI Master Direction - Priority Sector Lending - Targets and classification, RBI Master circular on Detection and Impounding Counterfeit Notes; and detection, confiscation and prevention of counterfeit notes of the new currency in the state of Karnataka and Andhra Pradesh, Our Bank had attended the meeting at Bangalore on 4,11,2017, Vishakhapatnam on 6,11,2017 and Mumbai on 8,11,2017,

12.    Parliamentary Committee on Commerce to Surat, Mumbai, Hyderabad & Bengaluru from 14^th to 19^th January 201 8, Subject - Impact of cheap Chinese consumer goods on Indian Industry, Our Bank had attended the Meeting at Bengaluru on 19,1,2018,

13.    Parliamentary Committee on Industry to Bengaluru, Tirupathi & Chennai from 1 5^th - 19^th January 201 8, Subject - Issue in implementation of Credit Linked Capital Subsidy Scheme (CLCSS), Our Bank had attended the meeting at Bengaluru on 16,1,2018,

14.    Parliamentary Committee on Labour to Ahmedabad & Bengaluru 23^rd to 24^th January 2018, Subject -Suggestions/views on the 'Code on Wages Bill 2017' and 'Deployment of Contract/Casual/Sanitation workers for Perennial nature of jobs in Government/PSU offices/Establishments, Our Bank had attended the meeting on 24^th January 2018, (Our Bank was Nodal Agency),

COMPLIANCE POLICY

Compliance policy approved by the Board of Directors of the Bank articulates that the compliance function is an integral part of governance along with the internal control and risk management process, The compliance department headed by a Chief Compliance Officer, He oversees the compliance functions in the Bank and assists the top management in managing the compliance risk,

Continuing with the Bank's commitment to high compliance standards, compliance function is reviewed regularly for making improvements, The compliance policy is reviewed every year and amendments, if necessary, are carried out based on the experience gained and utility aspect,

RIGHT TO INFORMATION ACT 2005

Your Bank has implemented the relevant provisions of the act with effect from October 2005, The information related to the Bank as stipulated under the act is displayed on the Bank's website,

The Appellate Authorities for the Bank under the act and the Public Information Officers (PIOs) and Alternate Public Information Officers (APIOs) at various levels have been designated, The Bank has clearly spelt out the roles and responsibilities at different levels under the act, During the year the Bank has designated 22 Appellate Authorities, 87 PIOs and 98 Alternate PIOs and one transparency officer for smooth functioning of RTI matters,

As directed by the Parliamentary Committee, the Bank has constituted a monitoring committee at apex level to oversee the implementation of the RTI Act, During the year, the committee has reviewed the effectiveness of implementation of the RTI act in the Bank, The Bank has started online RTI portal on Bank's intranet for assisting Appellate Authorities/ PIOs/Alternate PIOs and Nodal officers handling RTI matters, Bank is also linked to the online RTI portal along with other PSUs/Public Authorities, The PIOs/FAAs of the Bank are receiving and replying to applications/ appeals through online RTI portal also, The bank has received 3,121 No, of RTI applications and 429 first appeals in the year, During the year, the Bank has disposed of all the applications and all appeals received, within the stipulated time,

INTERNAL CONTROL SYSTEM

The Bank has an Audit and Inspection Department, which is independent of everyday activities of the Bank located at Head Office, Manipal, Karnataka that examines the adherence to systems, procedures, and policies of the Bank, The guidelines received on internal control from RBI, GoI, Bank's Board, Audit Committee of the Board (ACB) and Audit Committee of Executives (ACE) constitutes part of the internal control system for better Risk Management,

Audit Committee of the Board (ACB) oversees the internal audit function of the Bank and guides the Bank in developing effective internal control systems, It also monitors the functioning of the Audit Committee of Executives (ACE) and Audit and Inspection Department of the Bank,

The ACE, comprising of the Executive Director in charge of the Audit & Inspection Department as Chairman and the General Managers of Head Office & Corporate Office as members is a layer above the Audit and Inspection Department, The other Executive Director also participates in the meeting as invitee, The committee reviews all the notes to be placed before the ACB and monitors the compliances of the major audit observations and gives directions for rectification of the deficiencies, policy changes, procedural improvements in internal control system for better Risk management,

Eight Zonal Inspection Centres (ZICs) operate as extended arms of the Audit and Inspection Department (A&ID) to carry out various types of audits of the branches and offices to examine adherence to systems of internal control, procedures and policies,

The Bank has a well-defined, Board approved Comprehensive Internal Audit Policy (CIAP) covering RBIA, Information System Audit, Concurrent Audit, Credit Audit, Compliance Audit, Special Audit, Know Your Customer/ Anti Money Laundering (KYC / AML) Compliances, Offsite Monitoring, Empanelment of Retired Officers for assisting in internal audit, detecting seepage of income, procurement Audit etc, The policy is being reviewed/updated on annual basis,

Your Bank is the first Bank to implement software driven RBIA among all Public Sector Banks, Bank has also implemented the software driven concurrent audit w.e.f, 01,07,2014, Based on the feedback received from the concurrent auditors/branches, Bank revisited the Concurrent Audit software and revamped it by introducing more user friendly features, Bank has upgraded the existing software module to a new version which will ensure more objective risk rating of branches/ offices, so that special attention can be given to monitoring of branches from compliance angle, based on risk assessment,

The Risk Based Internal Audit (RBIA) of all the branches is supplemented with concurrent audit of branches having high volume business with special reference to Advances, high risk areas like specialized branches, Treasury & International Banking Division, Foreign Exchange Processing Centres (FXPC), Funds and Investment Management Division, Capital Market Services, Dept, of Information Technology and Card Centre,

The Annual Audit Plan (AAP), drawn in accordance with the Internal Audit Policy involves the schedule & rationale of the audits planned for the year, For the year 201718, Inspection Department has completed 3,548 audits consisting of 2,908 RBIA, 488 Compliance Audit and 1,052 Credit Audit,

Similarly, RBIA of all ROs and ZOs, bi-annual management audit of 3 Regional Rural Banks and annual management audit of all functional departments of Corporate Office and Head Office is also being conducted by HO: A&ID, During the year 2017-18, Bank has completed Management Audit of 2 Regional Rural Banks and of all functional departments of Corporate Office and Head Office and Zonal Offices,

Audit and Inspection Department of the Bank conducted 16 IS, Audit and Risk Based Audit of the "Outsourced Financial Service Providers for all out sourced activities of the Bank,

The Bank has surpassed the Ministry of Finance, Govt, Of India stipulation of minimum concurrent audit coverage of 70% of total business, The coverage under concurrent audit at 825 branches stood at 71,29 per cent of business, 77,01 per cent of advances and 65,58 per cent of deposits of the Bank as at 31,03,2018,

Orientation and refresher training programmes were conducted for field level officials from Inspection stream during the year, Thirty-five specialist officers inducted for inspection stream were trained at NIBM, Pune and IS Audit Team was trained under VAPT certification by IBDRT, Hyderabad, Bank has also trained officials from all the ZICs who are handling KYC/AML and Offsite Monitoring,

Offsite Monitoring Cell and KYC/AML Cell

The Offsite Monitoring System is an effective management tool to strengthen the internal control mechanism, It comprises of one OMC unit at Corporate Office, and one unit each at all the eight zonal inspection centres, All the alerts generated by KYC/AML Cell and Offsite Monitoring Cell are continuously monitored, followed up and ZICs coordinates with Regions for closure of these alerts, STRs were filed with FIU-IND in case of suspicious transactions, The Bank's Inspection System has been effectively monitoring the compliance of systems & procedures laid down by the Board, the Regulator and the Government of India,

Risk Based Supervision Cell (RBS Cell)

RBI's revised Supervisory Approach is called SPARC (Supervisory Programme for Assessment of Risk and Capital), In order to have an institutional mechanism to ensure accuracy of data, centralized ownership of data, to check consistency and also to be a single point of collation and submission of RBS data to RBI, RBS cell was formed in Bank during May 2016, RBS Cell ensures the submission of Tranche 1 , 1 A, 1 B (quantitative data), Tranche II and Tranche III (qualitative data) data to RBI, At present, the cell is attached to Audit and Inspection Department,

Fraud Risk Management Cell (FRMC)

FRMC monitors and follows up of fraud cases including CPPR (Claims Paid Pending Recovery) related to frauds with various offices, It also ensures conducting internal investigation, examination of staff accountability, Departmental action, recovery and closure, The cell places detailed note for amounts of above Rs,1 crore/Rs,10 crore before Special Committee of the Board/

Government nominee Director on the board of the Bank for taking necessary action, The cell reports/updates RBI database including Central Fraud Registry, the progress related to criminal action, internal investigation, action taken and provides information related to queries and clarifications sought by Finance Ministry, The cell not only reports but also identifies the causative factors and share the same with respective departments for initiating corrective actions,

INTERNAL CONTROL AND VIGILANCE

Vigilance function in a Bank is one of the Management's tools for upholding ethics among employees, Vigilance in any organization including the Bank is an integral part of the Management, One of the objectives of the Vigilance machinery is to enhance efficiency and effectiveness in decision making, Vigilance Department plays an active role in preventive measures to avoid misuse of systems, and suggesting systemic improvements at various levels,

The Vigilance Awareness Week was observed from 30^th October to 4^th November, 2017 with the theme “My Vision-Corruption Free India”. As per the instructions received from the Vigilance Commission, various activities were conducted at administrative offices, branches and RRBs,

Bank has conducted the following activities during vigilance awareness week 2017,

-    Bank has reached approximately One Crore, Thirty three lakh customers through SMS requesting them to take e Pledge,

-    Besides that, http://www.cvc.nic.in, the link to e-pledge was made available in Bank's website,

-    Bank has conducted on-line quiz programme for all the staff members of Syndicate Bank on all days during the Vigilance Awareness week and 13,033 staff members participated,

-    324 Workshops and sensitization programmes were organized by Regional offices and ZOs and 9895 staff members participated,

Outreach activities conducted by the Bank during vigilance awareness week-2017

-    As a part of activities under vigilance awareness week 2017, Bank has organized a Human Chain to create vigilance awareness among public at Corporate Office on 03,11,2017 at 10,00 am, MD&CEO, EDs, CVO, GMs and staff members from Corporate Office, and branches with a total of 328 people participated in the event, Similarly a Human chain was also organized on the same day at Head office, In total 143 events such as Human Chain, Walkathon, processions, and events among staff members were conducted in all major cities and towns in which 6,224 people participated,

-    589 Customer grievance redressal camps were organized by various branches and 1 1,722 customers benefitted in the same,

-    Elocution, Quiz and essay competitions were conducted by various branches and Regional offices in 1,470 schools and 632 colleges and total number of 45,765 students participated in the events,

-    1,783 Gram sabhas were organized by the branches across the country, by involving 32,403 participants,

-    Formations of 183 Integrity clubs, as suggested by CVC, were initiated in the schools and colleges by various branches with 6,332 students as its members,

-    The RRBs, sponsored by Bank, also have conducted 439 programmes at schools and colleges with a participation of 39,718 students, 562 gram sabhas with a participation of 25,470 customers and 22 other events like human chain, procession etc,, with a participation of 3,525 people,

During the year, preventive Vigilance exercises were conducted in 818 branches and surprise verification of goods hypothecated to Bank was conducted in 1 456 accounts,

RE-ORGANIZATION OF REGIONS

With the aim of business development and better monitoring and control, Bank has opened 9 new regional offices namely Siliguri, Chennai-II, Raipur, Noida, Ranchi, Bhubaneshwar-II, Thirupathi, Nizamabad and Udaipur during 2017-18, With the operationalization of these 9 new Regions the total number of Regions of the Bank has reached 60,

INDUSTRIAL RELATIONS

During the year industrial relations in the Bank has been cordial and harmonious facilitating all-round growth in the business of the Bank, The Unions/Associations have also been responsive and proactive to the corporate goals,

ACCOLADES AND AWARDS

The details of various awards and accolades received by your Bank during the year 2017-18 which are as under,

-    Bank has been awarded “Rajbhasha Kirti Puraskar”

for 2016-17 with first prize by the Government of India for its Hindi House Journal "Jagriti" among all the Nationalized Banks/FIs situated in 'C' region,

-    Bank has been awarded with Second Prize by the Reserve Bank of India for its Hindi House Journal "Jagriti" among the all Nationalized Banks/FIs for the FY 201617,

-    Bank has been awarded under "Priority sector lending in Large Bank category” by Assocham for the FY 2016-17,

-    Bank has been awarded with Runner-up under “Best Social Banking in Large Bank Class” by Assocham for the FY 2016-17.

-    Bank has been awarded “Award of Excellence” from Ministry of Rural Development, Government of India, on 07,06,2017 in recognition of exemplary leadership given to the RSETIs sponsored by Bank for FY 2014-15 and 2015-16,

-    Bank has been awarded Skoch Awards 201 7 under financial inclusion category for developing and implementing Privilege Identity Management, Aadhar ePDS, Aadhar Pay, eKYC Online Account Opening, Save the Farmer Campaign and Card Limit Management by Skoch group for the FY 2016-17,

-    Bank has received Skoch Smart Technology Award 2017 for developing and implementing Security Operations Centre (SOC) Tools, Distributed Denial of Service (DDoS) and Security Information & Event Management (SIEM) by Skoch group for the FY 201617,

-    Bank has received Skoch Award-Mudra Performance for Employment Generation Under Pradhan Mantri Mudra Yojana by Skoch group on 8^th September 2017

-    Bank has received third prize for the overall performance under SHG-Bank Linkage and JLG-Bank Linkage programme for FY 2016-17 among commercial Banks operating in Karnataka from NABARD,

SYNDBANK SERVICES LIMITED

Synd Bank Services Limited (SBSL) was incorporated under the Companies Act, 1956, on 25,01,2006, as a wholly owned subsidiary of Syndicate Bank, with an authorized capital of '10 Crore and paid up capital of '25 Lakh to extend back-office services to Syndicate Bank, sponsored RRBs, its clients and other financial institutions, The company has undertaken the following activities during the year 2017-18:

I,    The Company prints and dispatches retail loan follow up notices to SMA borrowers on monthly basis based on the data received from the Bank apart from sending SMS messages on monthly basis which helped the Bank to maintain a healthy retail loan portfolio,

II,    The Company has continued the service of managing a small call center service on behalf of the Bank to tele-call the retail loan borrowers and follow up SMA accounts of the branches coming under Bengaluru I and II Regions and also few other Regions, There was a good response to this with recovery in over 60% of delinquent accounts,

III,    Pre-shipment/Post-shipment testing of computer hardware procured by SyndicateBank and RRBs sponsored by Syndicate Bank and also of other Public

Sector Banks / Financial Institutions by SBSL I T officers to ensure that the hardware meets the specifications, as per the Purchase Order issued by the Banks/Financial Institutions,

IV,    Printing & dispatch of Internet Banking Passwords for customers of Syndicate Bank,

V,    Collection of cheques and cash from Bengaluru Water Supply & Sewage Board kiosks spread across Bengaluru city and preparing clearing up loadable files on CBS system on behalf of SyndicateBank, BWSSB Branch, Bengaluru,

VI,    Out sourcing activities like Providing Resources for manning 24 x 7 Internet Banking Help Desk, ATM Monitoring Desk and Mobile Banking Help Desk on behalf of CO: DIT and resources for call desk for State Level Bankers Committee (SLBC), Karantaka,

SBSL is a profit making company since its inception, The performance highlights under key parameters during the last three years are as under -

                                                          (Rs, in lakhs)

Particulars	March ’16	March ’17	March ’18
Authorized Capital	1,000	1,000	1,000
Paid Up Capital	25	25	25
Reserves & Surplus	978	1,270	1,456
Fixed Assets (Net)	6	3	2
Total Income	555	791	435
Profit Before Tax	296	429	258
Profit After Tax	198	291	187

CHANGES IN THE BOARD:

1,    Shri Ajay Vipin Nanavati has assumed charge as Non Executive Chairman of the Bank on 22,08,2017,

2,    Shri Melwyn O Rego has assumed charge as Managing Director & Chief Executive Officer of the Bank on

01.07.2017,

3,    Shri S Krishnan has assumed charge as Executive Director of the Bank on 01,11,2017,

4,    Shri Arun Shrivastava, Managing Director & Chief Executive Officer superannuated on 30,06,2017,

5,    Shri Ravi Shanker Pandey, Executive Director superannuated on 31,10,2017,

6,    Shri Rudra Narayan Kar, Nominee Director, Reserve Bank of India, deputed to another institution w.e.f, 01.07.2017,

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors, in preparation of the annual accounts for the year ended March 31, 2018, confirm the following: That the applicable accounting standards have been followed in the preparation of annual accounts along with proper explanation relating to making departures,

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

That reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank as at the end of financial year and of the profit or loss of the Bank for the year ended March 31, 2018,

That proper and sufficient care was taken for maintenance of adequate accounting records in accordance with the provision of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities,

That the annual accounts have been prepared on a 'going concern' basis,

That proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively,

ACKNOWLEDGEMENT

The Directors wish to place on record their sincere appreciation to the public, valuable customers, shareholders and staff members for their continued support and patronage in India and abroad,

The Directors are also indebted to the Ministry of Finance, Government of India, RBI, SEBI and other regulatory authorities, various Financial Institutions, Banks and Correspondents in India and abroad for their unflinching and valuable support and guidance from time to time,

The Board extends a heartly welcome to Shri Ajay Vipin Nanavati who has been appointed as Non-Executive Chairman of the Bank, Shri, Melwyn O Rego, who has been appointed as Managing Director & Chief Executive Officer of the Bank and Shri, S Krishnan, who has been appointed as Executive Director of the Bank,

The Board also expresses its sincere gratitude to Shri Arun Shrivastava, Managing Director & Chief Executive Officer and Shri Ravi Shanker Pandey, Executive Director, who had superannuated, for their able guidance, leadership and support that they had provided during their tenure,

The Board also acknowledges the valuable contributions and support of Shri Rudra Narayan Kar, RBI Nominee Director of the Bank during his tenure in the Bank,

                                                       For and on behalf of the Board of Directors. [l

Place: Manipal                               (Melwyn Rego)

Date: May 31, 2018                      Managing Director & CEO

 

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Mar 31, 2017

DIRECTORS’ REPORT

The Board of Directors have immense pleasure in presenting the Bank''s Annual Report along with the Audited Balance Sheet as at 31^st March 2017 and the Profit & Loss Account statement for the year ended 31^st March 2017.

MANAGEMENT DISCUSSION AND ANALYSIS

Macro Economic Scenario Global economy

Stagnant global trade, subdued investment and heightened policy uncertainty marked another difficult year for the world economy. While the final figures are yet to be published, as per assessment of IMF''s World Economic Outlook Report, global growth has been estimated at 3.1 percent in 2016.

Growth in Advanced economies is estimated at 1.6 percent in 2016. The growth in United States, United Kingdom, Euro Area and Japan is estimated at 1.6 percent, 2.0 percent, 1.7 percent and 0.9 percent in 2016 respectively. Growth in emerging market and developing economies (EMDEs) is estimated at 4.1 percent in 2016 reflecting receding obstacles to activity in commodity exports and continued solid domestic demand in commodity imports. Growth in China is estimated at 6.7 percent in 2016. Weak investment and productivity growth are, however, weighing on medium-term prospects across many EMDEs.

However, global trade remains subdued due to an increasing tendency towards protectionist policies, potential volatility from divergent interest rate paths and disconnects between market valuations and real activity hang over the outlook.

Rebuilding policy space, addressing vulnerabilities and enhancing international integration by promoting services trade and foreign direct investment would boost resilience and improve growth prospects of the world economy.

Domestic economy

Against the headwinds of global economy, the domestic economy is performing as one of the fastest growing and emerging market economies in the world. As per IMF''s World Economic Outlook Report, the domestic economy growth has been estimated at 6.6 percent in 2016 and 7.2 percent in 2017.

The Reserve Bank of India (RBI) in its first bi-monthly monetary policy announced on 8^th February 2017, has been projected country''s GDP growth in the fiscal 201617 at 6.9 percent and expects to recover sharply at 7.4 percent in 2017-18.

The country''s growth momentum is accompanied by strong aggregate demand, low commodity and oil prices & solid agricultural output, structural reforms, export recovery and on the back of an up stick in global economic activity and high elasticity of real export growth.

As per the second advanced estimates of national income and quarterly estimates of Gross Domestic Product (GDP) released by CSO (February 28^th 2017), country''s Gross Domestic Product for the third quarter (Q3) of financial year 2016-17 grew at 7 percent after taking into consideration the impact of demonetization. It was the feeblest in over nine quarters but still stronger than expected considering the impact of government''s decision to withdraw high-value currency notes during the third quarter. Further, the CSO expects the country''s GDP growth during 2016-17 at 7.1 percent as compared to 7.9 percent in 2015-16.

Growth in Index of Industrial Production during 2016-17 recorded at 5.0 percent as against 3.4 percent of the corresponding period of last year. The cumulative growth of eight core industries having combined weight of 37.90 percent in IIP grew by 4.5 percent during Apr-Mar 2016-17, as compared to 4.0 percent in 2015-16. Manufacturing sector grew by 4.9 percent in comparison to 3.0 percent in the corresponding period of a year ago. The industrial sector experienced slow growth mainly due to lackluster performance of the capital goods industry. Service sector activities are expected to expand in trade, hotels, transport and communication services and construction sector.

Inflation is expected to be transitory and seasonal. Both Wholesale Price Index (WPI) and Consumer Price Index (CPI) remained under control throughout FY 2016-17. The WPI based inflation reached at 5.70 percent in March 2017 as compared to -0.85 percent recorded in March 2016. Consumer Price Index (Retail Inflation) dipped at 3.81 percent in March 2017 as compared to 4.83 percent in March 2016.

Money supply increased by 7.3 percent y-o-y to Rs,1,28,390.8 billion as on March 31^st 2017 as against Rs,1,16,176.2 billion in the corresponding period of previous year.

External sector growth

External sector growth remained moderate during 201617 mainly on account of slowdown in global trade, decline in commodity prices and weak global demand. During Apr-Mar 2016-17 cumulative total exports (merchandise trade) increased by 4.71 percent to US$2,74,645.10 million from US$2,62,290.11 million during corresponding period of last year. On other hand, cumulative total imports during Apr-Mar 2016-17 valued at US$3,80,367.65 million, registered a negative growth of 0.17 percent in dollar terms in comparison with US$3,81,006.64 million during corresponding period of previous year. Country''s overall foreign trade for Apr-Mar 2016-17 has improved and is estimated at US$46,420.55 million which was 14.49 percent lower than the level of US$54,287.53 million in corresponding period of previous year.

Total foreign exchange reserves recorded US$3,69,955 million as on March 31^st 2017 which was inched by 2.83 percent as against US$3,59,760 million reported during March 2016. Whereas, foreign currency assets grew by 3.17 percent to US$ 3,46,319 million as on 31^st March 2017.

The rupee appreciated by 2.25 percent against US Dollar, 14.94 percent against GBP, 7.79 percent against Euro and 1.86 percent against Japanese Yen during Mar 2017 over the previous year.

Banking Scenario

Indian Scheduled Commercial Bank''s deposits increased by 11.76 percent y-o-y to ''1,08,051.52 billion during March 2017 as against an increase of 9.13 percent (''96681.85 billion) during the corresponding period of the previous year. On the contrary, Scheduled Commercial Bank''s credit growth rose by 5.08 percent to ''78,818.87 billion during March 2017 as compared to 10.26 percent (''75,004.97 billion) recorded during the corresponding period of the previous year.

Scheduled Commercial Bank''s investment in government and other approved securities increased by 17.85 percent y-o-y to ''30,436.59 billion during the March 2017 as compared to a growth of 1.80 percent (''25,826.33 billion) recorded during the corresponding period of a year ago.

In line with the Government''s digital India mission, all banks are endeavoring to make available their services online and digital, and also waived merchant discount rate up to March 2017. In a move to step closer towards becoming a cashless economy, NPCI with RBI launched the Unified Payment Interface (UPI) & USSD and Government of India launched BHIM app to ensure hassle free & seamless banking through mobile phones. Government also announced incentives to promote digital transactions among individuals and businessmen in the country.

The increasing stress in banking sector appeared to be continued as the Banking Stability Indicator (BSI) shows that the risks to the banking sector remained elevated due to continuous deterioration in asset quality, low profitability and liquidity. The challenges faced by the industries predominantly in iron & steel, infrastructure, power, mining and textiles led to deterioration in asset quality of the large borrowers. Therefore, it adversely affected the bank''s profit, return on assets (RoA) and return on equity (RoE) due to higher provisioning for NPAs. However, the Banking industry is going through a turnaround period with steps and measures from the regulator and the government.

VISION & MISSION AND VALUE STATEMENTS

Bank has a Vision & Mission Statement which acts as a guiding force not only for pursuing long term corporate goals but also paving way to acquire new business, improving customer service, visualize and sizing future market potentials and converting these opportunities into a long term business goal and advantages.

Our Vision

"Be a leading financially strong universal bank, creating value for stakeholders through customer centric, technology driven and employee friendly approach",

Our Mission

- Be a leading provider of banking solutions providing range of financial services to all strata of society.

- Be a highly recognized and visible brand, known for its customer service.

- Be the most preferred place to work where employees feel proud and motivated.

- Have state of the art technology & infrastructure creating delight among all stakeholders.

- To deliver strong financial and operational performance.

Our Value Statement

While vision & mission statements deal with business & corporate aspirations of the Bank, value statements are declarations about how organization values our stakeholders including customers & employees and inform them about it''s core ethical values and reminds its employees about the values and beliefs. Accordingly, Bank adopted "value statement" during the financial year 2016-17 which underlines as under.

"Good Corporate Governance through transparency in dealings in undertaking ethical business",

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Mar 31, 2015

Dear Members,

The Board is pleased to present the Bank''s Directors'' Report along with the Audited Balance Sheet as at 31st March 2015 and the Profit & Loss Account Statement for the Financial Year ended 31st March 2015.

CORPORATE CREDIT DEPARTMENT

The bank extends finance to corporates for their short term as well as long term requirements. Exposures of above Rs.100 crore are handled by Corporate Credit Department. The loans offered are Working capital finance, Term Loan finance, Project finance such as Commercial real estate, Infrastructure projects and other projects, Loan against future rent receivable, Portfolio buyouts etc.

Project Appraisal & Syndication Cell

Project Appraisal Cell has been constituted for preparation of Detailed Appraisal/ Vetting of TEV study/ Information Memorandum. PAC undertakes detailed appraisal in respect of Term Loan proposals with project cost of Rs.70 crore and above and Banks exposure of above Rs.35 crore where production / Construction / process is involved.

In respect of projects already appraised by PSBs/ All India Financial Institutions/ leading Private Sector Banks/ other reputed agencies, vetting is done by PAC for exposures above Rs.100 crore. This initiative will reduce the Turn Around Time (TAT) for credit proposals as well as providing such services to our branches at a short notice.

A Syndication Cell has been constituted for arranging loans under Syndication. A few Information Memorandums were prepared by PAC during the current FY for Syndication purpose. This initiative will increase the fee based income for the Bank and also will help in creating quality high value good assets for the bank and also for improving the NIM of the Bank.

MID CORPORATE DEPARTMENT

Mid Corporate Department at Corporate Office is handling proposals between Rs.35 crore and Rs.100 crore including Commercial Real Estate, MFIs, Infrastructure, Low Priority Industries and New Business Group. 198 branches of the Bank in various places in the country have been designated for handling high value advances.

During 2014-15, Bank has opened 22 new specialized Mid Corporate Branches in key cities of the country to have focused attention to the Mid Corporate Clientele. As on 31.03.2015, the Bank is having 24 such specialized Mid Corporate Branches. These specialized branches are posted with trained and experienced people upto the cadre of Asst.General Manager and are focusing only on high value credit growth and no retail business is being entertained in these branches. Bank has achieved incremental business of Rs.5029 crore from these 24 branches for 2014-15. During the year 2015-16, we expect to add Rs.8500 crore new business from these branches.

ASSET QUALITY & MANAGEMENT OF NPAS

Bank''s Recovery Policy is oriented towards addressing the entire gamut of NPA management and enabled the field functionaries in resolving any category of Non Performing Accounts by bringing out a booklet on "Comprehensive Recovery Policy for Non Performing Assets" during 2014-15. The Comprehensive Recovery Policy is being modified from time to time to be in line with the guidelines of RBI/GOI.

Bank has introduced/extended special OTS schemes for considering proposals of farmers eligible under agricultural tractor loans, small NPA accounts under doubtful and loss assets category with book balance of Rs.5,00,000/- and below, and of Micro and Small Enterprises borrowers. During the year, a special OTS scheme for settling NPAs of farmers under direct finance to Agriculture & allied activities was introduced for the benefit of distressed farmers and a Special OTS Scheme was also formulated for settling NPA education loans with original sanctioned limit of Rs.4.00 lakh & below for the benefit of education loan borrowers. Bank continued to reduce large number of smaller NPA accounts by settling the dues at "Synd Adalats" at all branches throughout the year by meet, talk and settle approach. Four Bruhat Synd Adalats were conducted at regional/cluster/branch level on 10.06.2014, 19.08.2014, 18.11.2014 and 10.02.2014 and 57779 OTS cases were settled, by recovering a sum of Rs.169.23 crore with an offer amount of Rs.613.04 crore.

Bank was able to register a substantial recovery of Rs.577.99 crore during the year 2014-15 by issuing notices and taking possession/auctioning of properties under SARFAESI Act 2002. The efforts at branch level were supplemented by empanelling more enforcement agencies and approved valuers.

Special intensive NPA recovery campaign named "Synd Vasuli Abhyan-1415" was held successfully from 15th July 2014 to 31st March 2015 for maximizing recovery.

Top NPAs from each Region were identified for giving focused attention in the beginning of the year itself and many accounts were successfully resolved before March 2015. Stressed Tiny Asset Recovery team (START) stationed at Regional Offices are being extensively utilized for assisting the branches having high concentration of Special Monitoring Assets / Non Performing Accounts of below Rs.10.00 lakh.

All high value NPA accounts are monitored personally by Chairman & Managing Director/ Executive Directors and vigorous follow up is made for resolving these accounts. On account of this, large number of NPA accounts could be resolved.

The Total cash recovery in NPAs amounted to Rs.2214.34 crore, which includes principal recovery of Rs.1054.19 crore in existing NPAs & Rs.631.68 crore in fresh NPAs slipped during the year. The total cash recovery includes Rs.527.55 crore towards uncharged interest.

FINANCIAL INCLUSION INITIATIVES

The Bank has covered all the allotted 4827 villages of less than 2000 population by 31.12.2014, as against the target date of 26.01.2015, by engaging 1396 BCAs and opening 41 branches and 2 Satellite Offices.

Our Bank has 103.80 lakh Basic Savings Bank Deposit Accounts and has extended 7.34 lakh KCCs, 0.43 lakh GCCs and issued 6.28 lakh Smart cards / mobile enabled accounts.

Bank has established 942 USBs in the villages having population of over 2000 which are provided with the services of BCAs. A designated Officer from the Base Branch is visiting the USB on a pre-determined fixed day to provide non-financial services like issue of statement of accounts, balance enquiry etc. Designated Officers are provided with laptop facility and they will be guiding the BCAs for making the USBs as viable banking outlet.

PRADHAN MANTRI JAN-DHAN YOJANA: The Scheme, National Mission on Financial Inclusion, was launched as "Pradhan Mantri Jan-Dhan Yojana" by the Hon''ble Prime Minister on 28.08.2014 with an objective of covering all the uncovered households in the villages and urban wards with a bank account to provide banking facilities so that the left out people who are deprived of basic banking facilities are included into the mainstream of financial system and the account holders derive benefits from a range of financial products, such as RuPay Debit Cards with Rs.1.00 lakh Insurance cover, Micro-pension products, Overdraft facility upto Rs.5000/- after completion of 6 months and subject to satisfactory transactions in the accounts. Life insurance cover of Rs. 30,000/- was also made available for the customers who have opened accounts up to 31.03.2015 under PMJDY, subject to some eligibility conditions.

GOI has been reviewing the Bank''s progress under PMJDY during weekly Video Conference meetings on the action points such as opening of BSBD accounts, Issue of RuPay Debit cards, Survey of households in the villages, organizing weekly account opening camps on Saturdays and monthly Mega account opening camps on last Saturday of every month, establishing Grievance Redressal Mechanism at the State level, providing Uniform to Bank-Mitras etc.

Bank has opened 3496559 BSBD accounts under PMJDY from 16.08.2014 to 31.01.2015.

Compliance by the Bank on the guidelines suggested by DFS are as follows:

1. Coverage of Households: Bank has been allotted 3146 SSAs and 1923 Urban Wards under PMJDY for coverage of households with Bank accounts. Survey was completed in all these SSAs and Wards as per the timeline. Out of 45,84,549 total households, Bank accounts were opened in 45,84,045 households (99.99%) as on 31.03.2015 and 504 households have remained without Bank accounts due to migration of the families.

2. Saturation in Coverage of Households in the Lead Districts of the Bank: 100% saturation has been achieved in the 27 districts where Bank has got Lead Bank responsibility. All the 27 Lead Districts have been declared as fully saturated in coverage of all the households with Bank accounts and Saturation Certificates are obtained from the District Magistrates / Collectors of these dstricts, as per the directions of DFS.

3. Issue of RuPay Cards, Activation of RuPay Cards: Bank is issuing RuPay cards to all the eligible account holders. Out of total 34,96,559 PMJDY accounts opened as on 31.03.2015, RuPay cards are issued in repsect of 33,50,302 accounts and 22,87,262 cards are activated. An Incentive scheme has been formulated on activation of RuPay cards by branches and also launched a Campaign for quick activation of cards.

4. Financial Literacy: Bank is promoting Financial Literacy through JJFLCC Trust which has opened 46 Financial Literacy Centers (FLC) and 21 Financial Inclusion Resource Centre (FIRC) in the Lead Districts of the Bank. These FLCs have conducted 14,196 Literacy Camps benefitting 5,74,176 persons during the year 2014-15. Bank has also taking up various financial literacy activities, such as printing and distribution of Brochures, Pamphlets in vernacular languages, display of Posters and Banners at prominent places in the villages.

5. Modified DBTL: GoI has launched Modified DBTL (PAHAL – Pratyaksha Hastantarik Labh) in all the districts from 01.01.2015. Bank has implemented the First Phase of DBTL through 678 branches in 54 select districts, covering 11 States from 15.11.2014, and Bank is now implementing DBTL through 3551 branches in 515 districts, covering 35 States/Union Territories from 01.01.2015. EPSO, Mumbai is the Nodal Center for DBTL. We have Lead Bank responsibility in 27 districts.

Bank has implemented both Option-I (Verification of Consumer information data- Name and account number- given by OMCs through NPCI) and Option-II (Linking of LPG Consumer numbers to accounts in our branches) for Non-Aadhaar Gas consumers.

Our Bank has received 4302985 DBTL credits, amounting to Rs.142.15 crore during the period from 15.11.2014 to 31.01.2015, out of which an amount of Rs.141.92 crore has been credited successfully in respect of 42,96,599 accounts and an amount of Rs.0.23 crore is returned in respect of 6386 accounts due to closure of accounts and mismatch of account numbers/names of the account holders.

6. Meaningful & Holistic Financial Inclusion (MHFI): Bank has implemented Meaningful & Holistic Financial Inclusion in 7 select villages, i.e., P M Budni (Bijapur RO), Herawada (Karwar RO), New Bimbliton (Andaman Nicobar Islands), Firozpur Namak (Faridabad RO), Tigadoli (Belgaum RO), Sivaramapuram (Nellore RO) and Sulta (Hubli RO), by implementing need based developmental activities as part of ''Corporate Social Responsibility'' to transform these villages into Model villages. The Bank aims at undertaking activities such as construction of SHG work shed, toilets in Government schools, providing drinking water facility, free health check up camps, providing e-learning aids, training and capacity building, solar street lighting etc. in the villages.

7. Overdraft facility: As per IBA guidelines on providing Overdraft facility up to Rs.5000/- under PMJDY, Bank has started providing OD facility to PMJDY account holders.

8. Insurance Claims under PMJDY: Bank has got 7 insurance claims settled (One Accidental and 11 Natural death claims), against 12 claims lodged under PMJDY up to 31.03.2015.

TREASURY & INTERNATIONAL BANKING DEPARTMENT

Bank has accorded importance to treasury functions and efficient management of Integrated Treasury Operations.

Treasury and International Banking Dept. (T&IBD) has two wings viz,(1) Foreign Exchange Treasury and (2) Domestic Treasury. Besides, T&IBD is also functioning as monitoring and controlling office for the Overseas Operations of the Bank.

FOREX TREASURY

Treasury and International Banking Dept. T&IBD is the only ''A'' Category Office in our Bank which maintains Foreign Exchange Position, Nostro and Vostro Accounts. T&IBD also monitors Foreign Exchange Business, Correspondent Banking Relationship and Overseas Business Operations of our London Branch.

The Bank''s centralized dealing room at T&IBD, Mumbai handles the Foreign Exchange Dealing operation of the Bank.

The Bank is one of the first to undertake Web-based trading with Overseas counter party Banks by using state-of-the- art Web platforms. The Bank is having 102 designated Branches (Category "B") to handle full-fledged Foreign Exchange transactions and 389 nominated branches to handle the FCNR business of the Bank. NRE/NRO deposits are accepted at all the 3551 Domestic branches of the Bank.

The Bank is a member of Clearing Corporation of India Ltd., (CCIL) for settlement of Inter- Bank Forex Deals in USD/ INR Segment. Further, the Bank also settles Cross-Currency Deals through CCIL with Continuous Linked Settlement (CLS) Bank.

The Bank has become Trading-cum-Clearing Member on three exchanges, i.e., MCX-SX, NSE and USE (merged with BSE) for undertaking Proprietary based position in Currency Futures.

The Bank is offering only plain vanilla derivatives and no complex derivative products are offered by the Bank. There is no litigation against the Bank in respect of existing derivative transactions.

The Bank has implemented Integrated Treasury Management Software (ITMS) which has essential features like integration of Domestic and Forex Treasury, simplicity in Settlement operations for Rupee and Foreign Exchange Treasury and timely Nostro Reconciliation. The new system also provides seamless interactions with branches for their trades.

The total Forex Turnover of the Bank was Rs. 1106779 crore for the current financial year, as compared to Rs.938085 crore for the previous financial year. The Inter-Bank turnover of the Bank was Rs.1064587 crore for the current financial year as compared to Rs.899727 crore for the previous financial year.

Export Finance

The Bank has initiated various measures to increase the flow of credit to export sector. The coverage under the SyndExport Gold Card Scheme, a unique scheme for eligible exporters offering concessional and preferential terms, was broadened to include more number of exporters. Rupee export credit was offered at very competitive interest rates within the ceiling prescribed by RBI. The Interest Subvention Scheme, as designed by Reserve Bank of India, has been made available by the Bank to its customers in certain specified sectors, thus passing on the benefits of concessional interest. Bank also conducted Exports/Imports meet at various centers to have direct interaction with the clients.

Exchange Companies

The Bank is managing One Exchange House M/s. Musandam Exchange Company, an exchange Company in Sultanate of Oman. The Bank is also having Rupee Drawing Arrangements (RDA) with other 7 Exchange Houses for improved and cost-effective funds transfer to India from Gulf countries, apart from RDA with 10 foreign banks.

Centralised NRI Cell

With a view to increasing the NRE Portfolio of our Bank, T&IBD has opened the Centralized NRI Cell w.e.f 26th Dec 2012 to enable prompt opening of NRE Accounts canvassed by Exchange House managed by our Bank, namely, Musandam Exchange Company. T&IBD is opening the account on behalf of the Branches and dispatching the NRE kit containing cheque book, ATM card and Internet IDs etc directly to the Exchange House for delivery to the customer.

DOMESTIC TREASURY

The Bank''s Trading desk booked trading profits in both equity and debt market by taking advantage of efficient market.

The bank has also strengthened the non SLR investments by investing in qualitative and rated corporate bonds and debentures, commercial paper, CDs etc, resulting in improved yields on investment portfolio.

The bank has also earned from arbitrage deals, by effectively making use of windows like CBLO, Repo & Call Market. The bank has managed funds very efficiently by these money market channels by continuously monitoring the fund flow and the liquidity position and undertaking lending and borrowing transactions.

The domestic investments of the bank were at Rs.69260.99 crore as on 31.03.2015 as against Rs.55462.03 crore for previous year. Total income from investment portfolio (excluding dividend & trading profits) was Rs.4919.89 crore in the year 2014-15 as against Rs.3832.50 crore in the year 2013-14. Bank''s investment in SLR securities amounted to Rs.62218.57 crore which formed 89.83% of Bank''s aggregate investments as on 31.03.2015. Trading profits for the year 2014-15 was Rs.644.30 crore.

Modified Duration (indicator of change in prices/values with change in 1% Interest Rate) for Bank''s Total Investment Portfolio stood at 4.57 for 2014-15 as against the value of 4.31 for year 2013-14.

OVERSEAS OPERATIONS

Bank''s overseas presence is in United Kingdom at London. The Branch is active in Wholesale Banking Operations for Indian corporates in United Kingdom, Money market operations, Investments, and Treasury operations. Bank has successfully raised Funds in form of Medium Term Notes (MTN) to the tune of USD 400.00 Million at very competitive rates during the financial year. The funds have been deployed at Overseas Branch for expansion of Assets.

The Branch focuses on syndications and ECBs, besides bilateral loans for Indian Corporates having global presence. The branch has efficient risk-management system which is approved by regulatory authority of United Kingdom.

The total business (Deposits and Advances) of the branch stands at GBP 7638.146 Million (Rs.70629.94 crore) as at 31st March 2015 as against GBP 5801.602 Million (Rs.57880 crore) as at 31st March 2014.

RISK MANAGEMENT

Risk Management Architecture

The bank has implemented a robust and comprehensive Risk Management Framework. The Board of Directors assumes the overall responsibility for risk management initiatives in the bank. The risk appetite of the bank is defined by the Risk Management Committee (RMC) of the Board, which is a subcommittee of the board. The RMC of the Board is ably assisted by Credit Risk Management Committee (CRMC) which takes care of the Credit Risk, Asset Liability Management Committee (ALCO) looking after the Asset Liability and Liquidity Risk, while Operational Risk Management Committee is taking care of operational risk aspects.

A technology risk management framework is established to manage technology risks in a systematic and consistent manner. Bank has developed, implemented and maintained a documented comprehensive risk based program based on the ISO 27001 framework within the context of the bank''s business activities & risk.

It includes an Information Technology Governance Framework consisting IT Strategy Committee, IT Steering Committee, Chief Information Officer (CIO), Information Security Management Committee (ISMC), a Chief Information Security Officer (CISO) assisted by various specialist teams, Business Continuity Teams and an IS Audit function to initiate, implement, monitor, maintain and improve the information security within the Bank and to make sure that IT is aligned and delivers value to the business.

Risk Management Department functioning at Corporate Office oversees the overall implementation of various risk management initiatives across the Bank, with the assistance of Risk Management Cell (RMC) at Regional Offices.

Basel II Compliance

Bank has been complying with all Basel II norms. The Capital to Risk Weighted Assets Ratio (CRAR) is computed as per Pillar I requirements adhering to New Capital Adequacy Framework (NCAF) guidelines of RBI. Bank is adopting Standardized Approach for Credit Risk, Basic Indicator Approach for Operational Risk and Standardized Duration Approach for Market Risk.

Bank has, Board approved comprehensive Internal Capital Adequacy Assessment Process (ICAAP) and Stress test Policy which is reviewed periodically, so as to be in line with the market realities, economic environment and regulatory requirement. Bank is preparing the Annual Capital Plan which is reviewed quarterly based on actual working results so as to assess both Pillar I and Pillar II Risks.

The Bank has a Board approved Disclosure policy which is reviewed periodically by adhering to the guidelines issued by RBI periodically.

The Bank has a well documented policy and processes for management of Credit, Market and Operational Risks which are periodically reviewed, so as to adapt to the changing business and market environment.

The Bank is in the process of putting in place software based identification, measurement and mitigation of Market and Operation Risk by way of Integrated Treasury Management Solution (ITMS) and Operational Risk Management Solution, (ORMS) apart from a scientific Funds Transfer Pricing Mechanism(FTP).

Asset Liability Management

The Asset Liability Management Committee consists of members of the Top Management and regularly meets to manage Liquidity Risk, Interest Rate Risk, Gaps/Mis-match Risk, Basis Risk, Re-pricing Risk, Forex Risk and Equity Price Risk. It includes product pricing for deposits as well as advances and the desired maturity profile of assets and liabilities.

With the Prudential Regulatory Authority (PRA), UK approving "Whole Firm Modification" approach for our London Branch under the liquidity regime of PRA/FCA (Financial Conduct Authority), the Bank has put in place a mechanism for effective monitoring of liquidity at London Branch and for the Bank as a whole.

The Bank has a well documented Contingency Liquidity Funding Plan for managing any contingency. The Bank is undertaking stress test on quarterly basis and assess the impact on liquidity and interest income of the Bank.

Basel III Guidelines

Basel III guidelines have been introduced with a view to improve the banking sector''s ability to absorb shocks arising from financial and economic stress, supplementing the Risk-based capital requirement with a Leverage Ratio.

During the current year, Bank has taken various capital optimization measures for improving the quality of capital and improve the Common Equity, Tier 1 capital, CRAR, by plough back of internal accruals and infusion of capital by Government of India.

Thus the Bank is in a fairly comfortable position as regards Capital and adhere to the ratios prescribed by RBI. Bank is taking all measures to improve the CET, CRAR and Leverage Ratio under Basel III so as to comply with the Basel III requirements in a phased manner as per the schedule prescribed by RBI while simultaneously achieving the expected growth in business. Bank is also publishing on quarterly/half yearly basis the required information on Basel III disclosures in the website from the quarter ending September 2013.

MANAGEMENT INFORMATION SYSTEM

A sound MIS system is placed in CBS system in respect of all borrowal accounts. The MIS details have been captured in around 35 Lakh accounts and the required correction of the same has been completed. The necessary reports / data are being generated through system. The capturing / correction of MIS details at customer level are being launched for effective implementation of ACRM (Analytical Customer Relation Management). In EDWBI, around 200 reports have been moved to production and fine tuning of other reports which are already developed is in progress. 145 regulatory reports have been moved to production in ADF (Automated Data Flow) project.

The process of de-duplication of customer ID at the Bank level is initiated with the help of Inspection Department.

Storage upgradation at Data Centre & DR Site: Bank has acquired new Enterprise class Storage system based on latest technology & solid state hard disks which will substantially improve the performance and reduce the EOD/BOD window and facilitate having multiple copies of databases for report generation and MIS activities.

INFORMATION TECHNOLOGY

CORE BANKING SOLUTION (CBS):

The Bank continues to spread its wings with a network of 3551 Branches and 130 Offices in 2192 centres covering 34 States and Union Territories under the CBS Network as on 31.03.2015. All the branches / offices are currently under Centralized Server Setup.

DELIVERY CHANNELS:

ATM Network:

Bank has operationalised 3427 ATMs as at 31.03.2015, spread across 2126 Centres across the country. Bank has a Card-base of over 106.75 lakh for global access to ATMs and POS Terminals.

Innovative services in ATMs:

Bilingual screens are made available in ATMs of Hindi speaking areas. All the ATMs in the States of Karnataka and Kerala are having multi-lingual screens. ATM screens in Telugu, Malayalam, Oriya, Bengali etc are under process.

SMS for ATM Transactions: As per RBI guidelines, SMS is being sent to the customer''s registered mobile number for all ATM transactions.

ATM/Cash Dispenser to each Branch of the Bank by 31.03.2015:

Bank has procured 3400 Cash Dispensers to provide CDs under one ATM/CD to each branch and replacement of old ATMs. Bank has already installed 2865 Cash Dispensers to comply with the directions of DFS for providing to branches where there is no ATM/CD and in remaining about 80 locations also installation is in progress. Bank has replaced 813 old ATMs. Total ATMs as on 31.03.2015 in our Bank are 3488 which has 79.23% growth on Year to Year basis.

Internet Banking:

Bank has upgraded to a new higher version of Internet Banking Solution. The new version is compatible with all Browsers (like Chrome, Firefox, opera, Safari) apart from Internet Explorer. This also comes with Corporate module that is rich in various features like Viewing of LCs and BGs and handling of bulk transactions through file upload.

Salient features of the Corporate Module are :

- Dual Authorisation facilities using multiple user IDs

- Facility for NEFT / RTGS remittances

- Single Debit – Multiple Credit option through file upload for NEFT/Third Party Transfer

- Online Opening and Redemption of Term Deposit

- Online repayment towards Loan Account

- Viewing of Letters of Credits of the customer

- Viewing of Outstanding Bank Guarantees of the Customer

- Payment of Taxes and Bill payments

- Support for multiple Browsers

Internet Banking facility-User base now stands at 9.02 Lakhs as on 31.03.2015.

"Synd Protect" - Two-Factor Authentication using RSA SecurID: It is an Advanced Solution for internet banking transactions by customers, through hard/soft tokens, to prevent transfer of Funds fraudulently. This has been introduced with a view to enhance the security of internet based transactions by our customers.

SMS Banking:

Bank has introduced SMS Banking to inform the customer immediately when a transaction occurs in their account. The number of customers who have availed SMS Banking facility has grown from 1050955 as at March 31, 2014 to 1489117 as on 31st March 2015.

Mobile Banking:

Bank has implemented Mobile Banking Services, whereby customers can conduct their banking transactions through mobile phones. The number of mobile banking users is increased to 151781 as on 31.03.2015 from 24781 as on 31.03.2014.

Missed Call Banking:

Missed Call Banking facility has been introduced that enable the customers to know the Balance Outstanding in their latest CASA Account, through a missed call to specific number.

Centralized Payments System of RBI - RTGS/NEFT:

The Bank is offering NEFT and RTGS, the Fund Transfer facility among the Banks, under the RBI''s Centralised Payments System, through 3658 branches/Offices for both RTGS and NEFT. During 2014-15, there were 2.14 crore NEFT transactions and 34.34 lakhs RTGS transactions. Also bank has enabled LC / BG through SFMS from 15 May 2014.

Enterprise-class Mailing Solution:

Bank has switched over to new mailing solution which is based on latest technology and user friendly.

MPLS Connectivity:

As on 31.03.2015, MPLS has commissioned 2908 as primary links and 1550 as Secondary links to Branches/ Offices and migrated 700 Links from HSD Technology to UBR Technology to improve the stability and network performance in these locations.

Bank has initiated upgrading the bandwidth of Links from 512 kbps to 1 mbps/2 mbps bandwidth as per requirement of the branch / business volume, in view of additional Modules / products being introduced in CBS.

Biometric Login for Staff to CBS:

Biometric Login has been implemented to provided access to staff to work in CBS system. The rollout is in progress and operational in about 2700 branches. This will prevent identity theft & consequential frauds.

New CBS Software for London Branch:

Bank is in the process of migrating London branch software to CBS platform and Testing of various modules is under progress.

Human Resources Management System (HRMS) and ALM/FTP applications:

HRMS project is being implemented to bring all the details/Profile of Employees, Leave Record, Performance Appraisal, Assets & Liabilities, etc through the common software. Performance appraisals are accepted through HRMS during the Financial Year and other modules are under implementation.

Digital Media Signage:

Digital signage is an easy, low-cost way to advertising in which video content, advertisements, and messages are displayed on digital media with the goal of delivering messages about our products in specific locations. Digital signage content may be frequently and easily updated and allows changing of message as needed, and to vary the message based on time of day, season of the year or whatever factors impact the business. Purchased Order placed on the vendor identified through RFP process.

CUSTOMER-CENTRIC INITIATIVES:

Tracking of On-line Retail Loan proposals: Bank is providing facility for Centralised Registration and On-line tracking of the status of the Loan proposals for all types of Retail Loans including Education, Housing, Vehicle and Salary.

System based loan processing for Mid and Large Corporate Credit:

Bank has taken initiative to implement system based appraisal/process (Laps) for Mid corporate and large corporate credit and the same is under process of implementation. This will enable to reduce turnaround time of credit proposals and help in tracking the proposal at every stage for speedy disposal.

Bunch Note Acceptors (BNA):

Bank has procured 100 Nos. of BNAs for installation in select market areas for accepting bulk cash from the customers. BNA facilitates for on-line credit/debit to the account for cash deposit/withdrawal on 24 X 7 basis. Bank has installed 74 BNAs as on 31.03.2015.

Synd Lounge:

Three types of Customer Kiosks are provided (Passbook Printing, Internet Banking facility and Cheque Deposit facility) in 30 identified locations to enable the customers to have access on 24 X 7 basis.

Synd e-Passbook:

Synd e-Passbook solution is a Smartphone application to cater to the ever growing tech savvy customer base. It is a convenient and secure mobile app to get our account details and statements on our Smartphone. It''s a green initiative of providing Digital Passbook facility on mobile. It is one of the popular products of the Bank and as on 31.03.2015, 49874 users have registered for the application.

E-KYC Solution:

Salient features are -

- Customer''s credentials verified without carrying any paper by accessing information available with UIDAI using biometric authentication.

- Available at all Micro ATMs

- This is operational in about 2700 branches.

Implementation of Govt. Business Module in Core Banking:

Bank has procured Govt. Business Module (GBM) covering PPF, Senior Citizen Savings Schemes (SCSS), RBI Relief Bonds, OLTAS, EASIEST, Collection of State Tax for various States etc.

Govt Sponsored Initiatives:

Bank has implemented the following initiatives as per the directions received from time to time:

- Seamless DBTL credits with negligible % of rejections to our customers.

- Interoperability of FI transactions

- AEPS & PIN based transactions for RuPay card enabled

- 35.78 Lac accounts opened under PMJDY

- 9.10 Lac enrolments under PMSBY

- 3.09 Lac enrolments under PMJJY

- Another 6 Lacs are entered in the System

- Enabled enrolment for Prime Ministers'' Insurance schemes through Net Banking & Mobile banking

- Software utility provided to branches to assess OD eligibility of PMJDY customers and to prepare process notes.

- FI – Kiosk Module enabled for handling FI transactions through Customer Service Kiosks.

- Social Pension Schemes:

- National Pension Scheme enabled o Atal Pension Scheme under testing

Sukanya Samriddhi Scheme 2014:

Bank has taken steps to implement Sukanya Samriddhi Scheme 2014 as per the direction given by Government of India, Ministry of Finance, Department of Economic Affairs and RBI circular No.RBI/2014-15/494-IDMD (DGBA). CDD No.4052/15.02.006/2014-15 dated 11th March 2015. The department of Information Technology of the Bank is in process of developing a separate module for "Sukanya Samriddhi Scheme" in our GBM Software. Service Branch, Bangalore is identified as the Focal Point Branch for Sukanya Samriddhi Accounts operations. Designated Branches shall start opening Sukanya Samriddhi Accounts shortly.

IMPLEMENTATION OF GREEN INITIATIVES

a) Bank has taken steps towards implementation of "Green Initiative in Corporate Governance" by allowing paperless compliances through electronic mode. Bank has been sending soft copies of Annual Report to those members / investors who have registered their email IDs with M/s. Karvy Computershare (P) Ltd., Registrar and Share Transfer Agents of the Bank. Bank is actively encouraging transactions through alternative channel to reduce the usage of paper based payment instruments.

b) Discussions/proceedings of several important meetings are held where the required information/data is kept in the form of soft copies as far as possible.

c) Bank is using corporate e-mail facility and intra- net based IP messaging system and thus reducing dependency on paper based communication.

d) Various periodical and ad hoc reports required by the users across the Bank are being provided in an electronic form obviating the need for paper based reports.

e) 100 % adherence to Green Initiative by Direct Credit to accounts of Bond Holders / Vendors, there by totally eliminating paper based payments.

f) Bank has introduced e-passbook facility for account holders to save papers.

g) Bank has also provided facilities for on-line application to customers for availing various type of loans.

OTHER SERVICES:

SAFE- DEPOSIT LOCKERS:

- Locker Module Software for efficient Management of Safe Deposit Lockers implemented in all branches having Deposit facility.

- Locker Charges made competitive with nominal rents to benefit cross section of the clientele.

CASH MANAGEMENT:

- Cash Deposit Ratio (CDR) is maintained satisfactory level of 0.31% as on 31.03.2015 against the Average CDR of the Bank for the year 2013-14 @ 0.38%.

- All the Cash Vans attached to our Currency Chest Cash Pooling Centers are GPRS enabled.

CURRENCY MANAGEMENT:

- At present there are 46 Currency Chests.

- Clean Note Policy as per RBI expectations is implemented. Under RBI Clean Note Policy, banks are required to provide Note Sorting Machines to Branches and Currency Chests. Bank has taken steps to comply with it.

CHEQUE TRUNCATION SSYSTEM (CTS):

Since CTS is mandatory, Bank has ensured the following

- CTS- 2010 Standard complaint Cheque books issued to all branches/account holders.

- The DDs issued are also CTS enabled.

CTS clearing activities is Grid-based. This is implemented throughout the country in a phased manner. There are 66 MICR centers and in all MICR Centers Centralised Inward Clearing has been implemented in full.

Depositor Education Awareness Fund Scheme (DEAF)

Depositor Education Awareness Fund Scheme-2014 (DEAF) of Reserve Bank of India has been implemented.

Central Pension Processing Centre (CPPC):

The Bank has already migrated Central Civil, Telecom, Postal and Central Freedom Fighter Pensions into Govt. Business Module (GBM) for which Bank has received its approvals from CPAO New Delhi and RBI Mumbai and the same is being handled through CPPC smoothly. CPPC started disbursing Defence Pension payments for all new PPOs issued w.e.f. 01.04.2014. Migration of Defence Pension to Centralised system i.e. GBM for ensuring improved services to this category is in progress. The centralized pension payment through CPPC for other pensions will also be implemented during the year in phases.

HUMAN RESOURCE DEVELOPMENT

Human Capital

Bank recognizes its employees as the most vibrant and valuable asset. HR plays a paramount role in developing human capital in tune with the Vision and Mission of the Bank.

Bank is constantly focussing on HR dimension by developing and retaining the workforce to meet the future HR challenges in the Banking Sector. We are geared up to achieve the same through pragmatic interventions in training and development and creating career growth opportunities.

Investment in employees'' training and development has enabled the Bank to prepare the staff members to handle new HR challenges and make them ''future ready''.

The Human Capital of the Bank as on 31.03.2015 is as under:

Category 31.03.2014 31.03.2015

Officers 11257 12838

Clerks 10270 10553

Sub staff 3534 4055

Sweepers 2161 1688

Total 27222 29134

Average Age Profile

Category 31.03.2014 31.03.2015

Executives 56.88 55.70

Officers 46.97 40.00

Clerks 45.25 42.89

Sub staff 46.85 46.56

Bank as whole 48.98 42.72

Compliance to Government Guidelines

During the year the Bank has complied with the guidelines received from the Government of India on various H.R. matters in the areas of Promotions, Recruitment and Performance Appraisal etc.

Recruitment Planning

Bank had made direct recruitments for inducting skilled manpower in specialized areas like Marketing, Official Language, Law, CA, Rural Development Officers, IT and periodically reviewing the skill gaps keeping in view of the future needs and challenges.

The Bank has also participated in the Common Recruitment Process conducted by IBPS and inducted 1667 Probationary Officers and 1536 Probationary Clerks during the year. Apart from this 240 Specialist Officers and 21 Security Officers are also recruited.

Career Progression

The Bank provides optimum opportunities to its employees to fulfil their growing aspirations for faster career progression in tune with market condition and groom them to shoulder higher responsibilities. The promotion policy has also been fine-tuned to reward outstanding performers and is in sync with the succession planning.

During the year 2014-15, Bank had promoted 3319 employees in various scales which include Executives.

Talent Grooming & Retention

Bank is encouraging the staff to qualify in various professional examinations like NISM, IRDA, CISA, CISSP, ORACLE, Risk Management Examinations, Courses conducted by IIBF etc. with the objective of talent grooming/retention by duly rewarding.

Deputation to Other Organizations

The Bank has deputed our Officers to Ministry of Finance, Department of Financial Services and other organizations like CBI, DRT, National Academy of RUDSETI and Bharatiya Mahila Bank Ltd as per the request/indent of Ministry of Finance, Department of Financial Services/other organizations.

Reservation to SC/ST/OBC

The Bank follows the reservation policy for SCs, STs and OBCs as prescribed by Government of India from time to time and has been extending applicable reservations/ concessions to SC /ST /OBC / PWD employees in recruitment / promotions as per the extant guidelines issued by the Government. A separate SC /ST Cell and OBC Cell are functioning at Head Office to redress the grievances of SC/ ST/ OBC employees working in the Bank and are currently headed by General Managers designated as Chief Liaison Officer. Meetings with the representatives of the SC/ ST Welfare Associations are being conducted to redress their grievances.

The progress made in the implementation of the Reservation Policy is being placed to the Board once in a Year.

The duly vetted Post based Reservation Roster is displayed on the website of the bank in compliance to the directions of the Government.

RTI Applications

RTI Applications were received at HRDD predominantly on the matters of Recruitment Process, Promotion Process, APARs, Reservation Policy, Compassionate Appointments, Ex gratia Payments etc and they have been disposed of within the time frame prescribed under the RTI Act.

Implementation of HRMS in our Bank

Bank has decided to implement the centralized HRMS solution for handling the functions of different divisions of Personnel Department, Regional Offices, Branches and other administrative offices covering all staff members of the Bank. M/s Hewlett Packard India Sales Private Limited have been identified as service provider through RFP process. The process of implementation is in progress. The Bank has introduced the online Annual Performance Appraisal System for the year 2014-15. Other modules like Transfer, Promotion, Leave Management, Payroll, Pension etc., will be rolled out in phased manner.

STAFF WELFARE MEASURES

Bank''s Quarters

As a part of staff welfare measures, Bank is providing additional quarters at Bangalore and construction of 100 flats at Vasundhara, Ghaziabad is completed and taken possession. The same are being allotted to staff of Delhi and Ghaziabad Regional Offices. Bank has also purchased 19 additional flats in Chennai and two flats at Thiruvananthapuram.

Maintenance and repair works have been undertaken by Bank owned properties to enhance their usability.

Scheme for compassionate appointment and payment of Ex-Gratia lumpsum amount in lieu of compassionate appointment

The Bank has formulated a scheme for appointment on compassionate grounds and payment of Ex-Gratia lumpsum amount in lieu of compassionate appointment to the dependents of the employee dies while in service and employee is retiring on medical grounds due to incapacitation before reaching the age of 55 years. The scheme covers all the cases where death of employee occurs on or after 05.08.2014.

The cadre wise ceiling on Ex-Gratia lumpsum amount payable is as under:

(in Rs.) Cadre Maximum amount

Officers 8.00 Lakhs

Clerks 7.00 Lakhs

Subordinate Staff 6.00 Lakhs

Compensation to Bank Employees killed in Bank Robberies & Terrorist Incidents

Bank has formulated a Scheme as per Govt guidelines for Payment of Compensation and Reward so as to motivate the Bank employees and members of public resisting Bank robberies, terrorist incidents including left-wing extremism.

In case of death, the family of deceased will be given compensation by the Bank as follows:

(in Rs.) Category Cadre Maximum amount

Bank Employee Officers 20.00 Lakhs Clerks /Sub Staff 10.00 Lakhs

Other than bank Customers/ 3.00 Lakhs employee members of the public

In case of Bank employees / customers / members of public who actively resists Bank robberies and terrorist attacks on Banks, the Bank may consider a cash reward not exceeding Rs.2.00 Lakhs.

The Bank will look after educational expenses of the children of the deceased up to and inclusive of graduation and will give immediate employment to one member of the family of the deceased as per applicable rules.

TRAINING AND DEVELOPMENT

Syndicate Institute of Bank Management, (SIBM), Manipal at the apex level and the seven Training Centres at Bangalore, Chennai, Delhi, Ernakulam, Hyderabad, Kolkata and Mumbai caters to the training needs of the Bank by conducting various types of training programmes for different cadres of employees. During the year 2014-15, 495 Programmes covering 10323 Officers and 111 Programmes covering 4287 workmen employees were conducted by the SIBM and 7 Training Centres. In addition, 2526 officials were trained through external training programmes conducted by training institutes of repute in India. Further 8 executives/officers were also deputed to overseas training programmes. The Training System has imparted induction training to 1808 Probationary Officers and 1361 Probationary clerks who had joined the Bank during 2014-15. In the year 2014-15, a total of 6588 SC/ST/ OBC employees were trained (consisting of 4649 officers and 1939 workmen), through various training programmes. SIBM and 7 Training Centres have also imparted Pre- Promotion training to 1478 SC/ST/OBC Clerical employees and 1944 SC/ST Officer employees to prepare them for promotion to higher cadres.

Considering the large scale retirements, SIBM has devised a new programme to groom the officers by motivating and empowering them to assume role of Branch Heads. For the officers promoted to Executive Cadre during 2014- 15, SIBM has conducted special Executive Development Programmes, focusing mainly on soft skills. To address the knowledge gap, training programme on Forex and Credit Management were conducted. SIBM also conducted training programmes on disciplinary proceedings/IR issues for officers and Executives and a programme was conducted for newly recruited Security Officers.

The Bank, with the objective of "first day, first hour - productive" has introduced Strategic Talent Pipeline Building Programme in association with Manipal Global Education Services Pvt Ltd, Bangalore and NITTE Institute of Banking and Finance Noida, wherein both the Institutes will train 200 trainees each for a period of 12 months consisting of 9 months'' academic input and 3 months'' internship in the branch. On successful completion of 12 months training, these trainees will be absorbed as Probationary Officers of the Bank. The first such batch has already commenced classroom training in the identified institutes from March 2015.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Bank has been displaying a strong and abiding commitment to encourage the greater use of Hindi in various ways not only because it is the policy of the Government of India but also as an ideal and powerful medium of inclusive banking.

With an object of timely implementation of important guidelines pertaining to Official Language issued by the Government of India, various types of initiatives have been taken up by our Bank for providing assistance to the employees working in branches/offices in the implementation of Official Language duly issuing Internal Annual O L implementation Action Plan.

The Bank has made noteworthy progress under the implementation of Official Language and won prizes at various levels during the year. Regional Office, Panaji was awarded with Second prize by the Government of India, Ministry of Home Affairs, Dept. of Official Language for its outstanding performance in OL implementation in South-West region. Some of our Regional Offices and staff members have received Rajbhasha Shields/Awards from respective Town Official Language Implementation Committees.

Apart from the above, Our Hindi Magazine ''Jagriti'' got 4th Place in Hindi House Magazine Competition conducted by the Reserve Bank of India.

Bank''s Internal Award Schemes like Cash Incentive Schemes for ''Excellent Performance in use of Hindi and Excellent performance in use of Hindi on Computers'' for Region wise individual employees and also ''Bank level/ Department level Shield Competitions/Essay Competitions'' are in vogue. Attractive Cash Incentives are being given to the writers of Hindi articles for house magazines i.e. Giant & Jagruthi.

Bank has notified 2257 branches/offices under Rule 10(4) of O. L. Rule, 1976 to ensure maximum usage of Hindi. Ensured online submission of quarterly Hindi Progress Reports of various Regional Offices to the concerned Regional Implementation Offices of MHA. Functional Hindi workshops, Hindi Stenography trainings, Hindi Coordinator/ Executive OL Seminars, Hindi competitions for School Children/Staff members in connection with ''Vigilance Awareness Week, Independence Day/Republic Day'' and ''Rajbhasha Prayog-Apasi Samvad-Sardhak Disha'' programmes of DFS-MOF were conducted by various Regional offices in addition to attending Govt. guidelines related to OL implementation in day to day official work.

Bank is the convenor of Town Official Language Implementation Committees at Ananthapur, Bijapur, Karwar, Kannur, Meerut, Ghaziabad and Faridabad. Official Language Implementation Committees were constituted in all the branches/offices for the effective implementation of Official Language.

The Drafting & Evidence Sub Committee of the Committee of Parliament on Official Language at Nagpur and the officials of Department of Financial Services, MOF at Lucknow and Thiruvananthapuram appreciated the efforts of concerned Regional Offices of the Bank and also effective monitoring of Head Office in the area of Official Language Implementation.

Special activities ensured during the period:

i. Hosted National Level Seminar in Hindi of RBI-CAB, Pune on "Various Aspects of Information Technology in Banking Sector" at SIBM, Manipal.

ii. Released a CD in Hindi on Internal Trainings Handouts.

iii. Released a book titled ''Write, Read and Speak Hindi'' by Sri Vishwesha Tirtha, Honorable Seer of Udupi Pejavara Mutt on the occasion of our 89th Foundation Day.

iv. Released a booklet titled "6 Easy Steps to Opening a Bank Account" printed in Hindi (prepared by P&D) on 89th Foundation Day itself.

v. Launched Rajbhasha Portal & e-Jagriti developed by DIT, Bengaluru.

vi. Conducted All India Hindi Essay Competition for Nationalised Banks/FIs/RRBs.

vii. Conducted Executive "Rajbhasha Prayog-Apasi Samvad-Sarthak Disha" programme of Department of Financial Services at Bengaluru on 13.02.2015.

viii. Published a revised edition of "Chintan" book.

Bank has paid special attention on providing information related to Financial Inclusion matters, Schemes/Products related literature/pamphlets, display material etc. in Hindi and Regional Languages in addition to English. Books/ Booklets published on "BUSINESS POLICY GUIDELINES, VISION & MISSION and PRODUCT HAND BOOK" made available in Hindi & English both languages to facilitate the customers and staff.

Bank is very particular in promoting Hindi and Regional Languages introducing various innovative models to facilitate its proud customers.

CUSTOMER SERVICE

Believing that quality customer service is not only important but inevitable for survival and growth, Bank has been constantly reviewing the efficacy of existing system of attaining the customer service. Bank''s customer centric approach acts as a key differential in shaping future business potential and also in acquiring, retaining and growing the customer base.

The Bank has Board approved policies on customer service, deposits, customer grievance redressal, cheque collection, compensation payable on account of various deficiencies in service etc. These are well displayed on the Bank''s website for the convenience of the customers, besides displaying at each branches of the Bank.

The Grievances Redressal Policy of the Bank is meant for minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances.

Customer Service Initiatives taken during 2014-15:

- Bank has taken steps to introduce internal ombudsman scheme to redress the customer grievances expeditiously.

- With a view to improving the Customer Service in the branches and sensitize the staff, policy on ''Customer Service'' has been adopted based on the following cardinal principles viz., Courtesy, Communication, Efficiency & timeliness, General Management of the branches, knowledge, etc.

- The Bank is a Member of Banking Codes and Standards Board of India (BCSBI) and committed to implement the provisions of Code of Bank''s Commitment to Customers and Code of Bank''s Commitment to MSE Customers in letter and spirit.

- In its continued efforts to spread awareness and to educate/sensitize customers about provisions of BCSBI Codes, Bank organized Customer Awareness Meet at Bengaluru on April 25, 2014 in which Chief Executive Officer, BCSBI Shri N. Raja graced the occasion. Bank has also actively associated in the "Customer Meets" organized by BCSBI in two centres one at Kolkata on 03.09.2014 and other at Jammu on 09.03.2015. In both places, our branch officials and customers interacted with BCSBI officials.

- Revised code of Bank''s commitment to customers BCSBI 2014 and the ''Code of Bank''s Commitment to Micro and Small Enterprises'' 2012 have been circulated to all branches/offices and a copy of revised code of commitment to customers is available for reference in the customer area of bank branches. Revised code of Bank''s commitment to customers BCSBI 2014 and the ''Code of Bank''s Commitment to Micro and Small Enterprises'' 2012 are uploaded and displayed in our website.

- The guidelines for opening of BSBD (Basic Savings Bank Deposit) accounts issued by BCSBI are exhibited in all our branches.

- Out of 148 accepted recommendations of Damodaran Committee on customer service, Bank has implemented 145 recommendations and remaining 3 recommendations are under various stages of implementation.

- Matters relating to Customer Service and Customer complaints are discussed in the periodical meeting held at Branches/Regional Offices with the involvement of Customers/ Senior Citizens.

- Standing Committee on Customer Service meet at quarterly intervals at Corporate Office and review the customer service related matters / complaints etc.

- The Customer Service related matters are also deliberated during quarterly meeting of Customer Service Committee of the Board and Meeting of Board of Directors at half yearly intervals.

- Executives during their visit to branches interact with customers and review matters relating to Customer Service/ complaints redressal and implementation of BCSBI Codes provisions.

- Bank has introduced customer friendly products and services such as Synd Navratna Accounts, Premium SB Accounts, Multi-city Accounts, Credit Card, Debit/ ATM Card, Internet Banking, SMS Banking, Mobile Banking, Point of Sales Terminals, NEFT / RTGS, Online tax remittances, etc.

Rs. Bank has put in place a robust Customer Grievance Redressal Mechanism for quick redressal of customer grievances. Based on number of complaints received and time taken for Redressal of complaints, all ROs are being graded A: Outstanding, B: Good, C: Satisfactory and D: Poor on quarterly basis.

- Uniform Customer Meet was organized in all branches on 23.05.2014.Executives from HO/CO/RO visited the Meet held at busy branches and obtained feedback from Customers.

- Three types of customer kiosks are provided (Passbook Printing, Internet Banking facility and Cheque Deposit facility) in 30 identified locations. These e-lounges will be functioning 24X7 basis. Such lounges will be extended at strategic locations all over the country in a phased manner.

Missed Call Customer Service

Bank has introduced an innovative customer grievance redressal service i.e. "Missed Call Customer Service" on experimental basis in CM/AGM headed Branches in Bangalore and Chennai Regions for the present from 16.03.2015 to redress customer grievances at the branches facing difficulty in getting required services. Customer has to give a missed call to a dedicated number and he will be addressed immediately to solve his problem. Branches in these cities are advised to extend prompt service to the customers without giving any room for missed call complaint service. Bank is considering to rolling over this services to other Regions in due course.

CORPORATE SOCIAL RESPONSIBILITY

Being a corporate citizen, Bank recognizes its responsibility towards the society and considers CSR (Corporate Social Responsibility) as a part of its business objectives. Over the years, Bank is actively involved in various CSR activities which aimed at socio-economic transformation, rural uplift & sustainable development of the society. By emphasizing on social responsibility, Bank aims at to create enabling environment for sustainable development of the society.

Some of the CSR activities undertaken by the Bank during the year 2014-15 include distribution of blankets to needy persons; water coolers to Govt. school; donation to temple, trust, charitable and philanthropic society for conducting various service activities for poor people; providing training to the children with development disorders such as SLI, DVD, PDD and Autism; donation to hospitals for providing free meals for one day to the patients; donation towards river rejuvenation project; donation to Hud Hud cyclone relief camps for victims in Vishakhapatnam; donation towards making toilets in Government Schools under Swachh Bharat Abhiyan; donation towards rehabilitation of flood victims in Jammu & Kashmir; donation of Ambulance to Medical Colleges & Hospital; donation of RO Water Purifier to colleges/Institutes; donation to special school for mentally retarded and so on.

NEW PRODUCT INITIATIVES

Improving and developing new products is an ongoing task which Bank is dexterously following keeping in view the changing customer requirements, technological innovation and market research. During the year, Bank has come up with the following new products for the benefit of its customers:

Liability Products

a) Synd Disha III & Synd Disha IV: Bank has launched new deposit products SyndDisha III & IV on 05.06.2014 and 10.10.2014 respectively. The deposit will be for a period of 444 days and carries attractive interest rate of 9.15% and 9.00% pa. respectively for deposits less than Rs.10 crore. Senior citizens will get an additional interest of 0.50% pa. This will be beneficial to salaried class, pensioners and other public etc.

b) SyndBalashakti: To inculcate savings habits among minors of 10 years and above, Bank has launched a new product "SyndBalashakti".

c) Synd SmartGen: To provide savings opportunity to customers for meeting towards life''s important goals viz. children''s'' education, family holiday, children''s marriage etc., Bank has launched a smart savings scheme "Synd SmartGen". Under the scheme, on the last day of every month, amount over Rs.10,000/- or average balance of the current month-whichever is less, will be transferred to term deposit in multiples of Rs.10,000/- for 366 days carrying an attractive interest rate of 9% p.a.

d) Synd SmartSHE: To commemorate International Women''s Day, Bank has introduced a new savings product exclusively designed for women "Synd SmartSHE". Under the scheme, the balance amount in the account over and above the minimum balance of Rs.500/-will be transferred in multiples of Rs.500 to a term deposit and earn attractive interest of 9% per annum.

e) SyndJuniorMillionaire: Bank has designed a unique combo product (Savings Bank account and Recurring Deposit) named "SyndJunior Millionaire" for the existing and prospective customers who desire to make their minor children millionaire within a period of 10 years. A special rate of interest is being given for the Recurring Deposit up to a period of 10 years.

Asset Products

a) Synd Contractor: Bank has launched a new products "SyndContrator" to meet the credit requirements of Registered "A class" Civil, Electrical, Mechanical, Mining and Transport Contractors undertaking works on behalf of Central/State Government Department/ Public Sector Undertakings and Reputed Private sector organizations etc for acquiring new equipments/ Machinery/Vehicles for expansion of activity. This will also help MSE in meeting their working capital requirements.

b) Synd Mahila Shakthi: Visualizing the huge potentials of women entrepreneurs, and to encourage their entrepreneurial spirit, Bank has launched a new tailor-made product for women having technical educational background /Diploma /Graduate having knowledge /experience in the line of activity or business filled "Synd Mahila Shakthi" to meet their working capital requirements for existing or new business units. The maximum quantum of loan which can be financed under the scheme is Rs.5 crore with competitive ROI.

c) Synd Kuteer: To address the concern for affordable housing for all, especially for economically weaker section/Low Income Group category, Bank has introduced a new scheme "Synd Kuteer". The quantum of loan upto Rs.5 Lakh for EWS and upto Rs.10 Lakh for LIG. There will not be any documentation charge and no third party guarantee is required.

d) SyndHotel: Keeping in view the huge potential of Hotel, Tourism and Hospitality industry, Bank has launched a new tailor-made product – "SyndHotel" to extend credit facilities to Hotels/Restaurants and Lodges /Fast Food Centres / Motels (Daba) /Bakeries/High Way Inns / Pizza Centres (Franchises) / Mess/Canteen/Catering Service/ Service Apartment entrepreneurs at a very affordable & competitive interest rate. The maximum amount of loan that can be granted under the scheme is Rs.10 crore.

e) SyndJeweller: In order to cater to the needs of Gold Jewellery Traders, Bank has launched a new tailor made product "SyndJeweller" to meet the working capital requirements of entrepreneurs engaged in Gold/Silver ornaments business under MSE-Services (Retail Trade). The maximum amount of loan that can be granted under the scheme is Rs.5 crore.

f) SyndTimber: Bank has launched a tailor made product "SyndTimber" especially designed to finance Entrepreneurs engaged in Timber Trading, Import of Wood and Wooden Products, Processing of Wood products like Sawmill, Steam chambers, Construction of Shed, Furniture Shops etc.

g) SyndConnect: Bank has launched a personal banking loan scheme "SyndConnect" for employees of Central /State Government Departments, reputed Public Sector Undertakings and "Fortune 500" Companies to cater to their personal banking needs.

h) SyndDelight: Bank has launched a hassle free loan product to existing Housing Loan customers who have demonstrated satisfactory repayment record of 3 years or more to meet any genuine personal credit needs of them.

Convenience Banking Products & Services

a) SyndPrivilege Tab Banking: To provide the customers the comfort of opening account at their doorstep in the office or at home, Bank has launched a sophisticated new product "SyndPrivilege Tab Banking". The minimum monthly balance to be maintained under this product is Rs.10,000/- The main features of this product are free personalized cheque book, Free SyndicateBank VISA Personalised Gold Debit Card, Add-on Debit card to joint account holder, SMS, Internet, Mobile and Missed Call Banking Services, Synd Global Credit Card without admission fee, No processing and documentation charges on housing and vehicle loans. This product also provides temporary overdraft facility up to Rs.25,000/- for 15 days.

b) Synd e-Passbook: To facilitate the customers to manage their account through mobile phone, Bank has introduced an interactive mobile application "Synd e-Passbook" designed to provide banking enquiry services available for Android, iPhone, Windows and Black Berry. Under the facility, customers can get e-Passbook on their mobile, view their account details, search their transaction history, SMS/e-mail/ WhatsApp-their account details and they can add their personalized remarks to the transactions without any hassle.

c) Synd Lounges: Bank has started "Synd Lounges" at Bangalore, Mumbai, Pune, Delhi to providing 24X7 banking services like cash dispenser and cash acceptance, cheque acceptance, pass book printing, internet banking etc. under one roof.

MARKETING & FEE INCOME PRODUCTS

Marketing Vertical

With the compression of spreads from the core activities of banking, the necessity is felt in augmenting fee based income which acts as cushions for Bank''s income. In order to have a focused approach to augment fee based income, Bank has created a separate vertical at Corporate Office to accelerate marketing efforts to augment fee based income.

Banks Marketing Setup, consisting of team of 125 Marketing Officers spread across the country, was revamped in April 2014 with clear thrust on the business development. Bank conducted three days Marketing Conclave at Syndicate Institute of Bank Management, Manipal for product knowledge & skill enhancement of the Marketing Team. The team was addressed by the Top Management of the Bank highlighting the significance of marketing and brand development.

For knowledge based selling, soft copy of the Product Booklet covering the basic information on all the Banks products and Para Banking Products was shared with all the Staff members of the Bank.

Cash Management Services

The Bank offers a state-of-the-art technology driven products to corporates, private and foreign banks for efficient management of account receivables and payments.

The Bank offers CMS services to its clients through all Branches across the country. Under Collections CMS provides the facility of Cash Collection, Auto Debit Mandates facility and Centralised Cheque Debit facilities are being offered. Payment of Dividend Warrants / Interest Warrants/DD Drawing arrangement and Remote DD Printing facilities are being offered under Payments.

Applications Supported by Blocked Amount (ASBA)

Bank is registered with SEBI as Self Certified Syndicate Bank (SCSB) for providing Applications Supported by Blocked Amount (ASBA) to its customers. Bank has integrated ASBA facility with its Core Banking Solution during the year. ASBA process is available in all public issues made through the book building route and rights issues and will co-exist with the practices, wherein cheque is used as a mode of making payment.

New Pension System (NPS)

The Bank is registered with the Pension Fund Regulatory and Development Authority (PFRDA) as Point of Presence (PoP) for offering various services under the New Pension System - a scheme introduced by the Government of India for providing old age income security. The Bank has already registered over 2052 branches with NSDL for offering various services under the scope of the NPS as Point of Presence - Service Provider (PoP-SP). The Bank has also been appointed as Aggregator by PFRDA for NPS-Lite scheme.

NPS-Lite (Swavalamban Yojana)

The Swavalamban Yojana Scheme under the NPS has been made available specifically for the citizens in the un- organized sector. The Government of India will contribute Rs.1000 (Rupees One thousand only) per year from 2011-12 and valid till financial year 2016-17 to the NPS Lite account of each such subscriber who saves between Rs.1,000/- and Rs.12,000/- per annum.

Depository Participant Services

The Bank is a Depository Participant of CDSL. This facility enables customers to keep their Capital Market Securities in electronic form. The 3-in-1 account cum on-line trading facility under the brand name "Synd-e-Trade" was launched by the Bank on October 24, 2011. The facility comprises of the CASA account, Demat account and Trading account for enabling our customers to trade in shares online, using the funds in the CASA account and dematerialized securities in the DP account through the Straight Through Process.

BANC ASSURANCE

1. Life Insurance:

- Bank has a Corporate Agency tie-up with Life Insurance Corporation of India for distribution of Life Insurance Products. Bank has a team of 145 Specified Persons for soliciting life insurance business.

- Bank earned commission of Rs.615.71 lakh during FY 2014-15 against a commission of Rs.486.77 lakh in FY 2013-14 from life insurance business. SyndicateBank ranked as number 3 among LIC of India Bancassurance partners in both number of policies & non single premium.

- Bank also offers Life Insurance cover under group policy to Housing Loan borrowers, Educational Loan borrowers, Saving account holders and Savings account holders under Financial Inclusion.

2. General Insurance:

- Bank has a Corporate Agency tie-up with United India Insurance Company Limited (UIICO) for distribution of General Insurance products, including SyndArogya (a Group Mediclaim -Cum -Personal Accident Policy with family floater advantage) at competitive premium for its Account Holders.

- During the FY 2014-15, Bank has earned a commission of Rs.672.81 lakh, compared to commission of Rs.568.17 lakh during the previous year, from general insurance business.

CARD BUSINESS

Credit Card Product:

Bank, in association with VISA International, offers Gold and Classic Credit Cards which can be used at ATMs, Point-of Sale Terminals (POS) and Internet, w.e.f 20.10.2003. Bank has issued 81731 credit cards till 31.03.2015.

Debit Card Product:

1. Debit Cards:

The Bank launched Global Debit Cards in association with VISA on 29.03.2003 and in association with Master Card (Maestro Brand) on 22.06.2011. The Bank has been issuing VISA International Gold Debit Cards with higher transaction limits w.e.f 20.10.2012.

During the year the Bank has launched the following new variants of Debit Cards in association with NPCI.

RuPay Debit Cards RuPay PMJDY Debit Cards RuPay Bhamashah Debit Cards RuPay Junior Debit Cards

The Bank has issued 13918019 debit Cards till 31.03.2015, out of which, over 33.56 lakhs PMJDY RuPay cards were issued under "Pradhan Mantri Jandhan Yogna", a national mission for financial inclusion.

2. SyndicateBank RuPay Kisan Card:

Bank has been issuing RuPay Kisan Cards in association with National Payment Corporation of India (NPCI) w.e.f. 20.10.2012. The Bank issued 173351 SKCC Cards till 31.03.2015. (The issuance of this variant has since been discontinued).

Point of Sale (POS) Acquiring:

Bank ventured into the Merchant Acquiring business on 02.10.2009. All its POS terminals do comply with VISA/ MasterCard/RuPay specified standards and are fully compliant to handle EMV and PIN based transactions for all types of Cards issued by Banks. As on 31.03.2015, Bank had installed 2025 POS Terminals, out of which 554 terminals were installed during the year.

STRATEGIC ALLIANCES & JOINT VENTURES

Bank has strategic alliances & joint ventures with the following corporates:

a) MOU signed with LIC: Bank had signed a Memorandum of Understanding (MOU) with SBI Life Insurance Company Ltd on December 30, 2014 for providing life insurance cover to the savings bank account holders of the Bank under Synd Suraksha and for providing life insurance cover to customers who have opened their accounts under financial inclusion plan of the Bank (Micro Insurance), both under Group Term Insurance Master Policy for the year 2015.

b) MOU signed with TATA AIA Life Insurance Company Ltd & SBI Life Insurance Company Ltd: Bank has also signed MOU with TATA AIA Life Insurance Company Ltd & SBI Life Insurance Company Ltd on 30th March 2015 for providing life insurance cover to the housing loan borrowers and educational loan borrowers of the Bank under group platform.

c) Corporate Agency Tie-up with UIIC: Bank has a Corporate Agency tie-up with United India Insurance Company Limited for distribution of General Insurance products, including SyndArogya- a Group Mediclaim Insurance Cum Personal Accident policy-which is available at competitive premium for SyndicateBank Account Holders.

d) Mutual Fund Distribution Venture: Acting as a Financial Supermarket, offering various financial products under one umbrella, Bank has tied up with nine leading Asset Management Companies for distributing Mutual Fund products. As on 31.03.2015, the Bank had a team of 413 NISM (Series-V-A) Certified Persons and 241 EUIN compliant staff for facilitating informed selling.

BUSINESS PROMOTION CAMPAIGNS

Bank considers business promotion as an integral part of its policy and making continuous effort to popularize its various products and services-newly developed as well as existing ones. In this course bank has held numbers of promotion campaigns during the year. Some of them are enumerated below:

a) Bank launched "CASA Advantage Campaign" from 21.07.2014 to 30.09.2014 with an emphasis on building CASA deposits base, particularly Savings Bank deposits for the bank by canvassing more accounts, bringing government funds, accounts of schools & colleges, public & private organisation and targeting NextGen young customers. Bank has opened 21.60 lakh accounts under the campaign, with an initial balance of Rs.244.28 crore.

b) In order to give a focused thrust to the Housing and Vehicle loan sector, Bank has launched an Incentive Based Campaign for Housing Loans and Vehicle loans from 01.07.2014 to 30.09.2014 which has brought sizeable growth in housing and vehicles loan portfolio of the Bank, yielding long term benefits.

c) During the Financial Year 2014-15, Bank has adopted the theme of "One Non-Single Premium Policy Per Week" by Each Branch & to achieve Numuro Uno Position in LIC Business in the FY 2014-15, "Synd Life Insurance Challenge" Campaign has been launched, not only to augment fee-based income but also to provide a Comprehensive Insurance option to the valued customers.

d) In order to have a more focused attention in canvassing Core Term Deposits, Bank has launched a special term deposit campaign "SYND WELCOME-2015" from 23.12.2014 to 31.12.2014, with the introduction of a new Term Deposit tenor for 500 days.

COMMITTEES VISITED DURING THE YEAR

"Parliamentary Standing Committee on Subordinate Legislation on Industry, Rajya Sabha" visited Bangalore on 9th to 11th November 2014 for discussion with Banks and other Organisations. Our Bank was one of the participating organization alongwith Vijaya Bank, Corporation Bank, State Bank of Mysore, HAL, Electronic Corporation of India Ltd.(ECIL) and Ministry of Environment, Forest & Climate change, Govt. of Karnataka.

"Parliamentary Standing Committee on Finance, Lok Sabha" visited Bengaluru on 19th January 2015 for informal discussion with the representatives of our Bank and Corporation Bank on "Financial Inclusion-Scheme and Achievements'' and Banking Sector in India- Challenges and the Way Forward''.

"Parliamentary Standing Committee on Government Assurances, Rajya Sabha" visited Port Blair on Feb 20, 2015 to have discussion with the managements of some Public Sector Banks (including our Bank) and Insurance Companies alongwith representatives of ministry in connection with fulfillment of the assurances given in the Rajya Sabha regarding demand for pay hike in public sector banks, recapitalization of PSBs, New insurance policy for two wheelers and clearing of insurance products by IRDA.

COMPLIANCE DEPARTMENT

Compliance Policy approved by the Board of Directors of the Bank articulates that the compliance function is an integral part of governance along with the internal control and risk management process. The Compliance Department headed by a Chief Compliance Officer (in the rank of Deputy General Manager) oversees the compliance functions in the Bank and assists the top management in managing the Compliance Risk.

Continuing with the Bank''s commitment to high compliance standards, compliance function is reviewed regularly for making improvements. The compliance policy is reviewed every year and amendments, if necessary are carried out based on the experience gained and utility aspect.

RIGHT TO INFORMATION ACT, 2005

The Bank has implemented the relevant provisions of the Act with effect from October 2005. The information related to the Bank as stipulated under the Act is displayed on the Bank''s website.

The Appellate Authorities for the Bank under the Act and the Public Information Officers (PIOs) and Alternate Public Information Officers (APIOs) at various levels have been designated. The Bank has clearly spelt out the roles and responsibilities at different levels under the Act. During the year, the Bank has designated 19 Appellate Authorities, 66 PIOs, 67 Alternate PIOs and one Transparency Officer for smooth functioning of RTI matters.

As directed by the Parliamentary Committee, the Bank has constituted a Monitoring Committee at Apex level to oversee the implementation of the RTI Act. During the year, the Committee has reviewed the effectiveness of implementation of the RTI Act in the Bank.

The Bank has started RTI portal on our Bank Intranet for assisting our Appellate Authorities, PIOs/ APIOs and Nodal Officers handling RTI matters. The Bank has organized the personal address by Sri Sharat Sabharwal, Information Commissioner, Central Information Commission, New Delhi through video conferencing on 03-03-2015 which was attended by all the Appellate Authorities, PIOs/APIOs and Nodal Officers handling the RTI matter through out the Bank.

During the year, the Bank has received 2689 RTI applications and 368 1st Appeals. The Banks has disposed of all the applications and all appeals received, within the stipulated time.

During the year, the Bank has received 68 orders of Hon''ble Central Information Commissioner on 2nd appeals in which 40 orders were in favour of the Bank and the 28 orders are duly complied as directed by the Hon''ble Central Information Commission. Since the inception of the Act, CIC has not imposed any penalty so far on PIOs of the Bank.

INTERNAL CONTROL SYSTEM

The Bank has an Inspection/ Audit Department at Head Office, Manipal, Karnataka that examines the adherence to Systems, Policies and Procedures of the Bank. The guidelines received on Internal Control from the RBI, Government of India, Bank''s Board, Audit Committee of the Board and the Audit Committee of Executives constitute part of the Internal Control System for better Risk Management.

Eight Regional Inspectorates operate as extended arms of the Inspection Department (ID) to carry out various types of Audits of Branches & Offices to examine adherence to Systems of Internal Control, Policy and Procedures for effective banking supervision to conduct the Business of the Bank in a prudent manner in accordance with the approved Internal Audit Policy of the Bank.

As recommended by Basel Committee (1988), the Bank has adopted Risk Based Internal Audit since 2007. The Risk Based Internal Audit (RBIA) of all the branches is supplemented with Concurrent Audit of High Risk areas like Specialized Branches, Treasury, Capital Market Services and High volume Branches etc. Our Bank is the first Bank to implement software based RBIA among all Public Sector Banks. Bank has implemented the Software based Concurrent Audit w.e.f 01.07.2014 at the Branches covered under Concurrent Audit.

The Audit Committee of the Board (ACB) oversees the Internal Audit function of the Bank and guides the Bank in developing effective Internal Control Systems. It also monitors the functioning of the Audit Committee of Executives (ACE) and the Inspection Department of the Bank.

The ACE, comprising of the Executive Director as Chairman and 5 General Managers of Head office & Corporate Office as members is a layer above the Inspection Department. The Committee monitors the compliances to the major Audit Observations and gives directions for rectification of deficiencies.

The Bank is having a well defined, Board approved Internal Audit Policy covering Risk Based Internal Audit, Concurrent Audit, Information System Audit, AML/ KYC Compliance etc. The Policy is being reviewed / updated on an annual basis.

The Annual Audit Plan (AAP), drawn in accordance with the Internal Audit Policy, involves the Schedule & Rationale of the Audits planned for the year. For 2014-15, Inspection Department has completed 4437 Audits which includes RBIA of Branches and Controlling Offices, Credit Audits, Currency Chest Audits, Service Branch Audits, Compliance Audits of Branches/Offices and Management Audits of Functional Departments. Out of the 3551domestic Branches as on 31.03.2015, 2196 Branches are in Low Risk, 1116 Branches are in Medium Risk and 2 Branches are in High Risk category.

The Bank has surpassed the Ministry of Finance Govt of India stipulation of minimum Concurrent Audit coverage of 70% of total Business. The coverage under Concurrent Audit at 638 branches stood at 75.86% of Business, 78.01% of Advances and 74.05% of Deposits of the Bank as at 31.03.2015. Orientation and reorientation training programmes were conducted for the officials from Inspection system and from RRBs sponsored by the Bank during the year.

The Offsite Monitoring System is an effective Management tool to strengthen the Internal Control Mechanism. It comprises of one OMC unit at Head Office, 46 Regional Offices and 8 Regional Inspectorates. The Audit Committee of the Board during November 2014 has accorded clearance for centralization of OMC functions at Head Office by shifting OMC Units at ROs in phases, for better and focused monitoring at Head Office level.

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

INTERNAL CONTROL AND VIGILANCE

Vigilance administration is a crucial part of the Management function, aimed at improving the efficiency and ethical health of the organization.

Stress is laid on preventive vigilance by initiating preventive vigilance studies at branches, conducting Preventive Vigilance Training Programmes at SIBM & other Training Centres of the Bank and constitution of Preventive Vigilance Committees at the branches with a view to ensure strict adherence to systems and procedures.

During the year under review, Preventive Vigilance Exercises were conducted in 125 Branches and Surprise Verification of goods hypothecated to Bank was conducted in 193 Accounts covering 97 branches.

Vigilance Awareness Week was observed throughout the Bank from 27.10.2014 to 01.11.2014 in a befitting manner as part of Participative Vigilance measures.

The theme for the Vigilance Awareness Week was "Combating Corruption-Technology as an enabler". Accordingly our department took up with various functional departments for implementation of available Technology to prevent frauds/corruption.

KNOW YOUR CUSTOMER / ANTI MONEY LAUNDERING

Bank''s policy on Know Your Customer (KYC) norms and Anti Money Laundering (AML) measures have been reviewed/ modified in the light of RBI/Govt., of India guidelines. The main objective of KYC policy is to prevent Bank from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities.

Branches have been instructed to ensure that no account is opened in anonymous or fictitious/benami name and in the name of persons with a criminal background and/ or having connections with terrorist Organisations. All KYC guidelines are scrupulously followed and implemented.

INFRASTRUCTURE SUPPORT

Enhancement in Asset Value of the Bank

During the year Bank has completed the construction of premises for Currency Chest and a Branch in Bank owned Property at Kasargod, Kerala. The Construction of 100 residential flats at Vasundhara Ghaziabad is completed. The Bank has purchased 19 flats in Chennai from TNHB and 2 flats in Thiruvananthapuram, Kerala from KHB.

Bank has acquired a commercial property at SCO 904, Pocket No.6, Manimajra, Chandigarh. It is proposed to shift our Regional Office Chandigarh to this property and also open a Currency Chest and a specialized Branch. Bank also purchased a plot of 1 acre land at Financial City, Kolkata, West Bengal to house Currency Chest, FGMO and few residential quarters.

Image Building

Wherever branches are functioning in upper floors Bank has taken steps to explore moving such branches to Ground Floor at the time of renewal of lease, to give a better visibility. In the case of new branches, Bank insists following uniform layout, colour pattern etc.as stipulated in Bank''s "Corporate Identity" manual to have a good image. New Glow Sign Boards are being placed with vinyl and sticker on flex instead of printing on flex to increase the life of sign boards and to avoid colour fading.

Bank has initiated steps for providing AC facility for branches in Metro/Urban centres. A total of 100 branches are selected in 1st round conversion during the reporting period.

Technology support

Bank has built the best of technology infrastructure by implementing a state-of-the-art Data Centre at Mumbai and a Disaster Recovery Site at Bangalore in different seismic zone and a Near site at Mumbai. The technology infrastructure is being upgraded with new hardware, additional Storage and New higher version of Oracle software.

Others

As a part of using renewable source of energy Bank has initiated process of installing Solar Panels for supporting UPS of Branch. On a pilot basis, installation of Solar Panels is being implemented in 15 selective branches under RO: Nellore.

Under RBI clean note policy, banks are required to provide Note Sorting machines to branches and Currency Chests. Banks has already procured 900 Note Sorting Machines for Branch use.

CORPORATE STRATEGIES

To be ahead in race of its rivals, Bank continues to visualize the changing market dimension and realign its policies and strategies accordingly, keeping in view the factors which may influence success in delivering the business goal.

Bank has conducted Strategy Meet 2014-15 on 13th and 14th June, 2014 at Bangalore and chalked out various strategies for improving business, CASA growth, alternate delivery channels, customer service and other income.

Bank has pursued the following strategies to meet its corporate objectives during the year:

a) Lending Automation Processing Systems have been introduced for retail loans initially and will be extended to MSME, Mid Corporate, Large Credit applications. This will enable Top Management to closely monitor proposals and ensure quick turnaround time. Applicants will also be enabled to track status of their applications.

b) With a view to popularize its newly launched product "SyndBalashakthi" among the children of 10 years and above age and to augment the CASA base , Bank has launched a campaign from 14.11.2014 to 21.11.2014 coinciding with Children''s Day Celebrations on 14.11.2014.

c) To augment credit flow to MSME sector, Bank has organized "MSME Meet" in Bangalore in association with the Peenya Industries Association on 23rd Dec 2014. The Meet was attended by over 300 MSME beneficiaries. Bank issued sanction letters to MSME borrowers and felicitated successful entrepreneurs on this occasion. Bank is also planning to hold similar MSME Meets at all centers across the country. Bank has already taken various steps to boost the flow of credit towards this sector during the recent past which include reduction in rates of interest, reduction in processing charges, launching of new products to target identified sectors, organization of awareness camps to MSME borrowers, holding of credit camps, sensitization of branch staff etc.

d) In order to extend financial assistance to large number of women entrepreneurs, Bank observed "SyndMahilaShakthi Week" during the period from 15 to 20th December 2014, which is a step towards Financial Inclusion of Women Entrepreneurs. During the week, over 17500 loans amounting to Rs.250 crore were sanctioned, which is a land mark in the history of the Bank.

e) To improve the efficiency and business level of branches having potential to grow exponentially and become Exceptionally Large Branch in a span of 3 years, Bank has articulated an innovative strategy of adoption of at least 300 such large/medium branches by the Executives of Asst. General Manager cadre and above functioning in Regional Offices/Field General Manager Offices/Corporate Office/Head Office. The purpose of adoption of these branches is to work out business strategies, in close liaison with respective Branch heads for overall business development of the branch and to achieve an additional business level of minimum 150 crore (Deposits 50 crore and Advances 100 crore) in the ensuing six months.

Re-organization of Regions

In order to improve the efficiency and business of the organization, institutionalise more effective span of control over the branches/business units, rationalizing geographical spread of branches across the regions, Bank has opened 3 new Regional Offices at Ludhiana, Varanasi and Visakhapatnam during the FY 2014-15.

Bank has also proposed to open two new Regional Offices, one at "Vadodara" by carving out branches from existing Ahmedabad Region and another at "Dehradun" by carving out branches from existing Meerut and Moradabad Regions. This re-organization of Regions will help the Regional Heads to devote more time in developing new business, canvassing more Corporate / Government accounts, improving customer service and also to reduce turn around time.

INDUSTRIAL RELATIONS

During the year Industrial Relations in the Bank has been cordial and harmonious facilitating all-round growth in the Business of the Bank. The Unions/Associations have also been responsive and proactive to the Corporate goals.

ACCOLADES/AWARDS

- Our Bank has been awarded as "Best Bank of the year" by Bangalore Management Association on its 61st anniversary award function on 25th May 2014, in collaboration with Dalal Street.

- Bank has been conferred "Special awards" by National Payments Corporation of India (NPCI) in appreciation & recognition for being one of the highest Rupay cards issuing Bank using NPCI services as platform.

- State Forum of Bankers Clubs (Kerala) has conferred our Kakkanad Branch as "the third best performing branch in the State of Kerala for the year 2013-14 under Public Sector Banks category.

- Our Bank has received "Second Best Bank" award under PSU category by Financial Express India''s Best Banks Survey 2012-13.

SECURITY

The Security Department of the Bank has been making constant efforts to provide effective, efficient and progressively better security solutions to all our Branches, ATMs and offices. The Department had obtained ISO 9001:2000 Certification in May 2007, which was upgraded to ISO 9001:2008 in May 2010 and presently it stands renewed up to 14th September 2016. The Department has thus achieved the unique distinction of being the First Security Department among all the Public Sector Banks to become ISO 9001:2008 compliant. The Certification is currently valid till 14th September 2016 when it will be reviewed.

The guidelines on security matters are disseminated to Regional Offices for implementation through Annual Security Action Plan. All RBI''s guidelines and instructions received during the year for Security of Branches, ATMs, Currency Chests and Administrative Offices have been implemented and complied with.

As per Guidelines, Security Audit has been conducted in respect of all the Currency Chests. All Currency Chests are provided with security and surveillance equipment like CCTVs, Automatic Time Lock, Biometric Access Control, Hotlines, Passive Infra Red Devices, Automatic Fire Detection & Alarm Systems and Auto dialers. All the Cash Vans of the Bank have been provided with Global Positioning Radio System (GPRS) to facilitate real time tracking of remittance in transit.

To augment the security arrangements at Branches and in tune with the directions of the Top Management all branches are to have ATMs and all ATMs are to be covered with CCTV system and accordingly all the branches are being provided with CCTV System. As part of the ongoing process of strengthening the security at branch level, the system of risk categorization of branches has been adopted so as to provide adequate security infrastructure commensurate with the risk category at all branches. In addition, in places where the Law & Order situation deteriorates, flexibility to provide Security guards temporarily till security scenario improves has been made.

In view of the increasing crimes on ATMs, security has been enhanced by introducing two CCTV Cameras one to cover the Lobby and the other to cover the exterior area. A Sound Alarm System with Panic Switch is also being provided to enhance the security environment. Apart from Offsite and Critically sited ATMs, round the clock unarmed guards have been deployed at those ATM centres where the Judicial /Police Authorities have advised for posting of guards and also at places where the law and order situation so warrants.

Based on the crime scenario and threat perceptions, the security arrangements are periodically reviewed and updated. Suitable pro-active preventive and precautionary measures are put in place to adequately safeguard the interests of our Bank.

SYNDBANK SERVICES LTD

SyndBank Services Limited (SBSL) was incorporated under the Companies Act, 1956, on 25.01.2006, as a wholly owned subsidiary of SyndicateBank, with an authorized capital of Rs.10 crore and paid up capital of Rs.25 Lakh to extend back-office services to SyndicateBank, its clients and other financial institutions.

The company has undertaken the following activities during the year 2014-15:

1. To maintain a healthy port folio of Retail Credit, Bank has assigned follow-up of irregular retail loans of the Bank centrally by sending Notices & SMS messages periodically on monthly basis. This results in recovery of approximately 60% of delinquent amount in such accounts.

2. To ensure the supply of procured hardware in conformity with Purchase order, Company provides Pre-shipment Testing of computer hardware procured by SyndicateBank and RRBs sponsored by SyndicateBank and for other Banks / financial institutions.

3. Card personalization services for preparation of instant as well as personalised Debit Cards to SyndicateBank and RRBs sponsored by the Bank.

4. Printing of Internet Banking Passwords for customers of SyndicateBank.

5. Collection of Cheques and cash from BWSSB Kiosks on behalf of SyndicateBank. Preparing clearing outward file for upload to CBS system for cheques so collected.

6. Out sourcing activities like Providing Resources for manning 24 x 7 Internet Banking Help Desk at CO: DIT, Bangalore and resources for call Desk for State Level Bankers Committee (SLBC), at SyndicateBank''s Corporate Office at Bangalore.

7. Conducting of Functionality Test for New version of Internet Banking Solution.

8. Dispatch of Mobile Banking PINs of SyndicateBank to branches for onward delivery to Bank customers.

9. Issue of notices / advisory letters explaining legal and other implications, to the customers of SyndicateBank whose inward clearing cheques are returned unpaid for financial reasons.

10. Company is in process of setting up a call centre to cater to requirements of various functional departments of Bank in the matter of voice calls to customers.

SBSL, a profit making company from its inception, is consistently improving its revenues. The details of its performance during the last three years is as under -

(Rs. in Lakhs) Particulars March '' 13 March '' 14 March '' 15

Authorised Capital 1,000 1,000 1,000

Paid Up Capital 25 25 25

Reserves & Surplus 537 622 780

Fixed Assets (Net) 3 8 6

Total Income 334 329 479

Profit Before Tax 191 163 235

Profit After Tax 129 110 158

CHANGES IN THE BOARD:

i. Services of Shri Sudhir Kumar Jain, Chairman & Managing Director of the Bank was terminated w.e.f. 22.09.2014.

ii. Shri M Anjaneya Prasad, Executive Director, superannuated on 30.11.2014.

iii. Shri R S Pandey, appointed as the Executive Director of the Bank w.e.f. 10.03.2015.

iv Shri M Rajeshwar Rao, RBI Director was replaced by Shri Rudra Narayan Kar w.e.f. 23.02.2015.

v. Shri Dilip Kumar Saxena, Chartered Accountant Director completed his term as Director of the Bank on 21.07.2014.

vi. Shri Jagadish Raj Shrimali, Non Official Director completed his term as Director of the Bank on 28.07.2014.

vii. Shri Ramesh L Adige, Non Official Director completed his term as Director of the Bank on 08.12.2014.

viii. Ms Jasleenn Suri, Shareholder Director resigned from the Board w.e.f.11.12.2014.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

That the applicable accounting standards have been followed in the preparation of annual accounts alongwith proper explanation relating to making departures if any.

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

That reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank as at the end of financial year and of the profit or loss of the Bank for the year ended March 31, 2015.

That proper and sufficient care was taken for maintenance of adequate accounting records in accordance with the provision of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

That the annual accounts have been prepared on a ''going concern'' basis.

ACKNOWLEDGEMENT

The Directors wish to place on record their sincere appreciation to the public, valuable customers, shareholders and staff members for their continued support and patronage in India and abroad.

The Directors are also indebted to the Ministry of Finance, Government of India, RBI, SEBI and other regulatory authorities, various Financial Institutions, Banks and Correspondents in India and abroad for their unflinching and valuable support and guidance from time to time.

The Directors express their indebtedness to Shri M Anjaneya Prasad, former Executive Director, who demitted the office on superannuation during the year and also to Shri Dilip Kumar Saxena, Chartered Accountant Director, Shri Jagadish Raj Shrimali and Shri Ramesh L Adige, Non Official Directors who have completed their term during the year for their able guidance, leadership and support which they had provided during their tenure in the Bank. The Directors also wish to express their heartfelt thanks to Shri M Rajeshwar Rao, RBI nominee Director for his valued guidance and support which he had extended during his tenure in the Bank and also wish to welcome at the same time Shri R S Pandey who has been appointed as the Executive Director of the Bank. Besides, board regrets the termination of services of Shri Sudhir Kumar Jain, former Chairman & Managing Director of the Bank.

For and on behalf of the Board of Directors. Place : Manipal (Arun Shrivastava) Date : 28.05.2015 Managing Director & CEO

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Mar 31, 2014

The Board is pleased to present the Bank''s Directors'' Report along with the Audited Balance Sheet as at 31st March 2014 and the Profit & Loss Account statement for the financial year ended 31st March 2014.

PERFORMANCE HIGHLIGHTS OF THE BANK DURING THE FINANCIAL YEAR 2013-14

Capital & Reserves

Bank''s authorized share capital stood at Rs.3000 crore and the paid-up capital Rs.624.58 crore (624584631 equity shares of Rs.10 each) during the financial year ended at 31.03.2014.

The Reserves and Surplus of the Bank increased from Rs.9939.39 crore in 2012-13 to Rs.11219.61crore in 2013- 14 registering a y-o-y growth of 12.88 per cent over the previous year.

Net worth

Tangible Net Worth of the Bank (excluding revaluation reserves) improved significantly from Rs.9296 crore as at March 31, 2013 to Rs.10663 crore as at March 31, 2014.

Dividend

The Board of Directors of the Bank has proposed a Final Dividend of 30 per cent for the year ended March 2014. This is in addition to an Interim Dividend of 25 per cent paid in January 2014. For the whole year, the Total Dividend is 55%. The total outgo in the form of dividend (inclusive of dividend tax) during the year 2013-14 was Rs.401.91crore as against Rs.471.85 crore of the previous year.

Business Growth

The global business of the Bank grew by 16.07 per cent from Rs.334779 crore in 2012-13 to Rs.388584 crore in 2013-14, whereas, Bank''s domestic business rose by 13.51 per cent from Rs.291337 crore in 2012-13 to Rs.330701 crore in 2013-14.

Deposit Mobilization

Global deposits of the Bank grew by 14.56 per cent from Rs.185356 crore in 2012-13 to Rs.212343 crore in 2013-14. Domestic deposits grew by 11.92 per cent from Rs.167055 crore in 2012-13 to Rs.186966 crore in 2013-14.

CASA Deposits

Domestic CASA deposits of the Bank increased from Rs.51926 crore in 2012-13 to Rs.55911 crore in 2013-14, registering a growth of 7.67 per cent. Percentage of domestic CASA to domestic deposits stood at 29.90 per cent as at 31.03.2014.

Credit Deployment

The Bank''s global advances rose from Rs.149423 crore in 2012-13 to Rs.176241 crore in 2013-14 registering a growth of 17.95 per cent. Domestic advances grew by 15.65 per cent from Rs.124282 crore in 2012-13 to Rs.143735 crore in 2013-14. The global credit deposit ratio stood at 83.00 per cent in 2013-14 as compared to 80.61 per cent of the last year.

Priority Sector Advances increased from Rs.46437 crore in 2012-13 to Rs.52016 crore in 2013-14 forming 43.19 per cent of ANBC as against mandatory level of 40 per cent.

Direct Agriculture Advances increased from Rs.16018 crore in 2012-13 to Rs.18807 crore in 2013-14 forming 15.62 per cent of ANBC as against mandatory level of 13.50 per cent.

MSE Advances increased from Rs.15074 crore in 2012-13 to Rs.18697 crore in 2013-14 registering a growth of 24.03 per cent.

MSME Advances increased from Rs.16428 crore in 2012-13 to Rs.19800 crore in 2013-14 registering a growth of 20.52 per cent.

Profitability

The Bank has registered an increase of 3.29 per cent in Operating profit from Rs.3449.59 crore in 2012-13 to Rs.3562.95 crore in 2013-14.

Net profit of the Bank declined by 14.62 per cent from Rs.2004.42 crore in 2012-13 to Rs.1711.46 crore in 2013-14.

Employees'' Productivity

Business per employee of the Bank improved from Rs.12.57 crore as at March 31, 2013 to Rs.14.30 crore as at March 31, 2014. Profit per employee stood at Rs.6.83 lakh as at March 31, 2014 as compared to Rs.8.11 lakh as at March 31, 2013.

Income & Expenditure

The Bank''s total income rose by 9.02 per cent from Rs.18295.05 crore in 2012-13 to Rs.19945.21 crore in 2013-14.

The Bank''s interest income rose by 8.76 per cent from Rs.17120.69 crore in 2012-13 to Rs.18620.33 crore in 2013-14.

The non-interest income of the Bank improved by 12.82 per cent from Rs.1174.36 crore in 2012-13 to Rs.1324.88 crore in 2013-14.

The Interest expenditure of the Bank increased by 12.12 per cent from Rs.11666.63 crore in 2012-13 to Rs.13080.51 crore in 2013-14.

Operating expenditure of the Bank increased by 3.87 per cent from Rs.3178.83 crore in 2012-13 to Rs.3301.75 crore in 2013-14.

Important Financial Ratios

a) The Return on Assets stood at 0.78 per cent in 2013-14 as compared to 1.07 per cent in 2012-13.

b) The Bank''s Net Interest Margin (NIM) stood at 2.79 per cent in 2013-14 as compared to 3.19 per cent in 2012-13.

c) The yield on advances of the Bank stood at 9.59 per cent in 2013-14 as compared to 10.51 per cent in 2012-13.

d) The cost of deposits of the Bank stood at 6.56 per cent in 2013-14 as compared to 6.83.per cent in 2012-13.

e) The Earning Per Share (EPS) of the Bank stood at Rs.28.21 in 2013-14 as compared to Rs.33.30 in 2012-13.

f) The Book Value per share of the Bank improved from Rs.175.12 in 2012-13 to Rs.189.63 in 2013-14.

g) Net NPA percentage to net advances stood at 1.56 per cent in 2013-14 as compared to 0.76 per cent in 2012-13.

h) Gross NPA percentage to Gross Advances stood at 2.62 per cent in 2013-14 as compared to 1.99 per cent in 2012-13.

i) NPA provision coverage ratio of the Bank stood at 70.02 per cent as at March 31, 2014 as compared to 83.41per cent as at March 31, 2013.

j) The Capital Adequacy Ratio (CRAR) of the Bank, as per Basel II stood at 12.01 per cent in 2013-14 as compared to 12.59 per cent in 2012-13. The Capital Adequacy Ratio (CRAR), as per Basel III stood at 11.41per cent as at 31.03.2014

k) Dividend on equity shares stood at 55 per cent in 2013-14 as compared to 67 per cent in 2012-13.

EXPANSION OF BRANCH NETWORK

During the year the Bank has added 317 brick and mortar branches to its network and the total number of branches (including London Branch) stood at 3251 as on 31.03.2014. These include 78 branches in under banked Districts and 63 branches in minority concentration Districts.

Out of the above, 8 branches are opened in the North Eastern Part of India during the year. Bank opened a branch in Daman and with this Bank has presence in all the States & Union territories of India. Bank also opened Mid corporate branches during the year. Bank opened one all women branch at Makupura, Ajmer. With this the total number of all women branch comes to 4.

As per RBI guidelines, Banks are required to open 25% of the new branches at rural unbanked tier 5-6 centres. As on 31.3.2014, there is a shortfall of 10. These shortfalls will be made good within the next financial year (2014-15) to comply with RBI guidelines.

The domestic branch network consisted of 1032 rural branches, 856 semi-urban branches, 704 urban branches, 658 metro & port town branches. ATMs installed reached to 1946 as at 31.03.2014.

The bank has a customer base of 33.9 million as at March 31, 2014 as against 32 million at the end of the previous fiscal, registering a growth of 5.62 per cent.

RETAIL LENDING

Retail lending continued to be the thrust area of the Bank. Outstanding retail lending of the Bank reached Rs.20925.92 crore as at March 2014. The outstanding housing loans (direct) increased to Rs.9713.62 Crore, constituting 46.42% of the total retail lending portfolio of the Bank. Over the years, the Bank has supported promising student to purse higher education in India and abroad. The Bank''s education loan portfolio increased to Rs.2768.24 crore, constituting 13.23% of the total retail lending portfolio of the Bank. The Bank financed more than 1.16 lakh students as at March 2014.

The Bank took several measures during the year to expand retail credit. Uniform Rate of Interest at Base Rate was fixed irrespective of the loan amount in respect of both existing and new housing loan borrowers. Schemes for payment of service charges to the approved builders for sourcing housing loan proposals and Four Wheeler Dealers and their sales executives for sourcing four wheeler loan proposals were launched by the Bank during the year. Rate of interest on Gold loans was rationalized and made uniform to both priority and non-priority gold loans. Tie-ups with leading car manufacturing companies were renewed to boost vehicle loan advances. Tie-ups with premier educational institutions were executed to mobilize education loan proposals. The Bank also took steps to have tie-ups with leading PSUs/MNCs/Govt Departments for extending loans to their employees at concessional rates of interest. The rates of Interest on vehicles loans and loans for purchase of consumer durables were slashed down during the year. The processing charges on housing loans and vehicle loans were also reduced to compete in the market. The rate of interest on loans against the rent receivables was also reduced to mobilize business under this segment. The Bank actively participated in various Exhibitions /Expos on housing loans and education loans, besides holding meets of car dealers and builders during the year to build brand image of the Bank and to mobilize substantial business.

In order to ensure quality housing loan portfolio, the Bank adopted approved builders'' route to extend housing loans. The Bank also identified large number of reputed builders across the country and approved them to boost housing loan portfolio. The Bank has 17 Central Processing Centers (CPCs) for expeditious disposal of housing loan proposals across the country. The Bank also launched incentive schemes to the branches/regional offices and central processing centers to encourage the staff to re- double their efforts in canvassing new business. The Bank also launched incentive scheme to the branches and regional offices to encourage the staff to mobilize gold loan business.

CORPORATE CREDIT DEPARTMENT

Delegated sanctioning powers of Credit Approval Committee (Tier I) (Committee headed by the Chairman & Managing Director) has been increased to Rs.400 crore for credit and Rs.400 lakh in respect of recovery proposals.

Credit Approval Committee (Tier II) has been constituted headed by Executive Director at Corporate office to dispose of credit up to Rs.75 crore and recovery involving sacrifice of Rs.75 lakh for speedy disposal of the proposals.

Delegated sanctioning powers of Credit Approval Committee (Tier III) (Committee headed by the General Managers) has been increased to Rs.50 crore for credit and Rs.45 lakh in respect of recovery proposals.

MID CORPORATE DEPARTMENT

Mid Corporate Department at Corporate office is handling proposals between Rs.35 crore to Rs.100 crore, including Commercial Real Estate, MFIs, Infrastructure, New Business group. 68 branches were designated as Mid Corporate branches across the country, these branches are having advances outstanding of Rs.14240 crore as on 31.3.2014.

Bank is planning to open 30 Specialized Mid Corporate branches in key cities of the country to have a focused attention to the Mid Corporate Clientele.

Bank is expecting incremental business of Rs.5000 crore from these new branches for 2014-15. These Specialized branches will be posted with trained and experienced people up to the cadre of Asst. General Manager and will focus only high value credit growth and no retail business will be entertained.

PROJECT APPRAISAL & SYNDICATION CELL

Project Appraisal Cell has been constituted for preparation/ vetting of TEV study/IM study in respect of term loan proposals involving project of Rs.50 crore and above, with Bank finance of Rs.25 crore and above. This initiative will reduce the turnaround time (TAT) for credit proposals as well as providing such services to our branches at a short notice.

A Syndication Cell has been constituted headed by a Dy. General Manager for arranging loans under syndication. This initiative will increase the fee based income for the Bank and also will help in creating quality high value high yielding assets for the bank and also for improving the NIM of the Bank.

PRIORITY SECTOR CREDIT

(Amount Rs. in crores)

Parameters March-12 March-13 March-14

Priority Sector 41383 46437 52016 Advances

Total Agriculture 17409 20156 22071

Of which:

Direct 13585 16018 18807

Indirect 3824 4138 3264

Micro & Small 13360 15074 18697 Enterprises

Other PSA 10614 11207 11248

Advances to SC/ST 3284 3712 4243

Weaker Section 11034 11918 12758 advances

Advances to Women 7344 8245 8981

Advances to Minority 6609 7601 8308 Communities

Achievement of national Goals (% to ANBC)

Mandatory March- March- March- Area/Sector Requirement 12 13 14

Priority Sector Credit 40% 45.21 44.62 43.19

Of which :

Total Agriculture 18% 19.02 19.37 18.33

Direct Agriculture 13.5% 14.84 15.39 15.62

Weaker section Advances 10% 12.06 11.46 10.60

Credit to Women 5% 8.03 7.93 7.46

Credit to Minorities (% to PSA) 15% 15.97 16.37 15.98

Syndicate Kisan Credit Card Scheme (SKCC):

The Bank has issued 1.40 lakh Syndicate Kisan Credit Cards during the year 2013-14. The cumulative number of Syndicate Kisan Credit Cards issued so far up to March 2014, excluding the renewals, is 16.25 lakh with a total credit limit of Rs.11014.11 crore. As at March 2014, Rupay Kisan Cards have been issued in case of 116903 operative SKCC A/cs.

Under Syndicate Kisan Samrudhi Credit Card Scheme, the Bank has issued 158 cards with a credit limit of Rs.1.97 crore during the year up to March 2014, which provides hassle free investment credit in addition to need based short-term credit.

Government Sponsored Schemes:

Outstanding advances to SC/ST beneficiaries under Govt. Sponsored Schemes and DRI Scheme as on March 2014

(Amount Rs.in crore)

Balance Of which SC/ST % to SC/ST Scheme outstanding against total (For Accounts A/C Amt. A/C Amt.

PMRY 6446 49.66 1059 7.08 16.43

PMEGP 1941 63.95 998 8.80 51.42

SGSY 8335 60.47 1820 10.13 21.84

SJSRY 6993 49.37 1203 6.06 17.20

SRMS 278 1.38 124 0.45 44.60

DRI 3671 8.96 1579 3.92 43.02

Advances to Minorities:

The advances to Minorities rose from Rs.7601 crore as at March 2013 to Rs.8308 crore as at March 2014, registering a growth of 9% during the year 2013-14. As per GOI directives, Priority Sector Loans extended to Jain Community were included for computing Minority Sector Advance. The information pertaining to credit flow to Minority communities and status on implementation of Prime Minister''s 15 point programme for Minorities and

Sachar Committee recommendations are placed in the Bank''s website. Special interest scheme was introduced by the Bank during 2010 for the benefit of Minority Community under Priority Sector lending, and the same is continued during 2013-14.

Various components of Advances to Weaker Sections as at 31.03.2014:

(Amount Rs. in crores)

Sectors Outstanding

Small & Marginal Farmers, Agri. 6681.61 Labourers, Tenant Farmers and share croppers

Artisans, Village and Cottage 45.29 Industries

SC/ST Beneficiaries 3076.49

DRI Loans 8.96

SHG/JLG Advances 1809.59

Advances to Distressed Poor to repay 57.28 debt to informal sector

Advances to Individual Women 1078.86 beneficiaries up to Rs.50,000

TOTAL 12758.08

New Initiatives and other developments during the year:

- Special Campaign on Agricultural Credit was held from 01.12.2013 to 28.02.2014 and Regions which have secured top 3 places were recognized with Trophies and Certificates.

- Credit Camps were organized in all the Regions for canvassing proposals under Agricultural Advances.

- The Bank has achieved all the mandatory targets under Priority Sector Credit, Total Agriculture, Direct Agriculture, Weaker Section Advances, Credit Women Beneficiaries and credit to Minorities for the last 3 financial years including March 2014.

- The Bank has extended crop production credit of Rs.5798.13 crore benefitting 7.14 lakh farmers during 2012-13 under interest subvention scheme of the Govt. of India. The bank has extended the interest subvention benefit @2% to the tune of Rs.54.27 crore and Rs.9.75 crore as additional incentive subvention @ 3% for timely payment during 2012-13 and making the eligible farmer derive credit at the effective rate of 4%. The Interest Subvention scheme of Govt of India is continued during 2013-14 also.

- 35873 new Self Help Groups (SHGs) were credit linked during 2013-14 with a credit support of Rs.1267.45 crore.

The outstanding advances to SHGs as at March 2014 was 90875 accounts with an outstanding balance of Rs.1799.58 crore. In addition, 543 Joint Liability Groups (JLGs) were credit linked with a credit support of Rs.3.34 crore. The outstanding advances to JLG as at March 2014 was 1618 accounts with an outstanding balance of Rs.10.01 crore.

- The Bank is participating in Jana Sree Bima Yojana of LIC of India to extend insurance cover to all the women members of SHGs credit linked to Bank wherein the premium is subsidized by GOI. Moreover, the scheme has an add-on benefit under Shiksha Sahayog Yojana wherein two children of the insured member of SHG are provided with scholarship at no additional cost.

- A credit scheme with special rate of interest for other Backward Classes(OBCs), Scheduled Castes(SCs) and Scheduled Tribes(STs) was launched.

- The Bank is presently implementing the scheme to ex- tend finance to Solar Home Lighting Systems and Solar Water Heating Systems with subsidy assistance from Ministry of New and Renewable Energy (MNRE) under Jawaharlal Nehru National Solar Mission (JNNSM). During the year 2013-14 up to March 2014, the Bank has financed Rs.1.62 crore for 442 units of Solar Home Lighting Systems and Rs.0.72 crore for 189 units of So- lar Water Heating Systems. Cumulatively, the Bank has financed Rs.22.86 crore for 11415 units of Solar Home Lighting Systems. The cumulative number of Solar Wa- ter Heating Systems financed by the Bank is 3653 units amounting to Rs.102.50 crore up to March, 2014.

- 297 Rural Extension Education Programmes benefitting 44503 farmers / villagers were organized by our branches during the year 2013-14. These programmes included Expert Lectures, Agricultural Demonstrations, Agricultural / Animal Husbandry Seminars, Animal health Check-up Camps etc. Bank has been conducting these programmes to impart technical know-how on crop cultivation practices and allied activities. These programmes will help realize better yield and thereby improve the economic status of the farmers.

- "Syndicate Bank - KVG Bank Professor Chair in Agricultural Finance" instituted by the Bank in association with Karnataka Vikas Gramin Bank was established in September 2012 in the University of Agricultural Sci- ences, Dharwad. Bank had donated Rs.50 lakh towards this cause as part of its Corporate Social Responsibility. The Chair decided to undertake study in three areas of research in Banking in Dharwad District viz., "An enquiry into crop loans ", "An Investigation into No-frill Accounts" and "An investigation into Business Correspondent (BC) Model" during the current year.

- Bank has co-sponsored 27 Rural Development and Self Employment Training Institutes (RUDSETIs) across the country. These institutes have trained 23861 candidates during the year 2013-14. Out of these trained candidates 12708 were women and 6397 were from SC/ST category. Total candidates trained since inception is 353035. The settlement rate is 74%.

- The Bank has established 16 SyndRural Self Employment Training Institutes (Synd RSETIs) in 5 States and 1 Union Territory for imparting training to rural poor. These institutes have conducted 356 training programmes during the year 2013-14, benefitting 9593 persons, of whom 5505 were women and 2377 were from SC / ST category. Total candidates trained since inception are 105856. The settlement rate is 69 %.

- 9 SyndRSETIs have been graded AA '' and 6 SyndRSETIs have been graded ''A by MoRD, Govt. of India during the year. Our Faridabad and Kottayam SyndRSETIs were adjudged as the best RSETIs in the country under category I and II respectively. Our CMD received the awards from the Hon''ble Minister for Rural Development Shri Jairam Ramesh in a function held at New Delhi on 21-11-2013.

- The Bank has been assigned with lead bank responsibilities in 27 districts including UT of Lakshadweep. The Lead District Offices of the Bank have conducted the District Level Review Committee (DLRC) meetings and District Consultative Committee (DCC) meetings regularly. The credit planning process was completed and District Credit Plan (DCP) 2014-15 was launched as per time schedule envisaged by RBI.

- The Bank is also the convener of State Level Bankers'' Committee (SLBC) in Karnataka and the Union Territory of Lakshadweep and satisfactorily discharged the responsibilities cast on it as the convener of State Level Bankers'' Committee. The SLBC for Karnataka and UTLBC for Lakshadweep are implementing recommendations of the High Level Committee to review the Lead Bank Scheme.

- There are 3 Regional Rural Banks sponsored by our Bank, subsequent to amalgamation of North Malabar Gramin Bank with South Malabar Gramin Bank in the State of Kerala as per Govt of India Notification No 7/9/2011-RRB (Kerala ) dated 08.07.2013 and Gurgaon Gramin Bank with Haryana Gramin Bank in the state of Haryana as per Govt of India Notification No7/9/2011- RRB (Haryana) dated 29.11.2013.These three RRBs are covering 18 districts in 3 states, with a network of 1278 branches.

- Total business of RRBs sponsored by the Bank stood at Rs.36532 crore. The total deposits and advances of the RRBs reached a level of Rs.19031 crore and Rs.17501 crore, respectively. The total Priority Sector Advances stood at Rs.14902 crore constituting 85.15 per cent of total advances as at 31.03.2014. Agricultural advances reached a level of Rs.12613 crore forming 72.07 per cent of total advances. In all, the RRBs have issued 6.87 lakh Kisan Credit Cards to farmers with an outstanding credit of Rs.10530 crore. The RRBs together have earned a net profit of Rs.384.64 crore for the year 2013-14. - As per the suggestions of the working group constituted by RBI on Technology up-gradation of RRBs, all the RRBs sponsored by our bank have moved towards implementation of CBS. They have implemented NGRTGS and NEFT, APBS/NACH platform, ECS (debit) and ECS (credit), CPSMS 2.6 version. RRBs are preparing to install CDs and implement RuPay cards very soon. System generated NPA is implemented in all RRBs sponsored by us. All the three RRBs have implemented F I Plan (2013-2016) as per the direction of Reserve Bank of India and Government of India.

ADVANCES TO MICRO, SMALL & MEDIUM ENTERPRISE (MSME) SECTOR

Advances to Micro, Small and Medium Enterprises (MSMEs) reached Rs.19799.80 crore as at March 2014, registering a growth of 20.52% during the year. Advances to Micro and Small Enterprises (MSEs) reached a level of Rs.18697.08 crore, recording a growth of 24.03%. Advances to MSEs accounted for 64.87% of the total advances to MSMEs as at March 2014. The Bank is having 69 specialized branches for exclusive lending to MSME sector across the country. The Bank has covered 38715 accounts with a loan amount of Rs.1940.39 crore as at March 2014 under the Credit Guarantee Scheme of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

As a proactive measure to promote collateral free lending to MSEs, the Bank is absorbing entire guarantee fee and annual service fee payable for loans up to Rs.5.00 lakh under all Govt. sponsored schemes and 50% of fee payable for all other loans up to Rs.50.00 lakh.

To give a boost to MSME business, the Bank implemented various measures during the year. The rate of interest on MSE advances was reduced by 0.25% to 0.50%. Five new products were launched by the Bank to provide focused thrust to identified MSME sectors with reduced rate of interest, margin and processing charges. MOUs with reputed commercial vehicle manufacturing companies were renewed to expand credit to borrowers for purchase of commercial vehicles under MSE sector. The Bank actively participated in various exhibitions, workshops and seminars during the year to build brand image of the Bank in MSME financing. Additionally, it also organized awareness programs in MSME clusters all over the country. The Bank also organized a large number of credit camps at various centers during the year to mobilize MSME proposals. These camps were attended by the Top Executives of the Bank. The Bank also organized the meets of the Doctors, Transporters etc., at various centers to mobilize their proposals and to cross sell the Bank''s products and services. To update the knowledge and skills of the processing and marketing officers, training programs were organized at staff training colleges and regional offices of the Bank during the year. The Bank also introduced an automated loan processing system in all their branches and regional offices for improving the efficiency in processing of MSME loan proposals, there by facilitating timely availability of credit to MSME units. Online Tracking for MSME proposals launched to facilitate MSME borrowers to track and know the status of the applications.

CREDIT MONITORING AND REVIEW DEPARTMENT

During the year, a new vertical headed by a separate General Manager is formed for Credit Monitoring, Review of Credit Sanctions by various Committees, Corporate Debt Restructuring and Monitoring of Special Monitoring Accounts. .

Credit Monitoring Policy:

Due to heavy down turn in Economy and with a view to continuously monitoring the performance of the asset and constant evaluation of associated risks during post sanction period and to maintain the quality of the assets of the Bank the Credit Monitoring and SMA Department has brought out an exclusive Credit Monitoring Policy giving details of monitoring functions of the Department.

Monthly Monitoring Reports (MMR):

To make credit monitoring more robust and with an objective of getting the maximum information in respect of all exposures of Rs.100 lakhs and above, "MMR", a fully web based reporting system is introduced with effect from Dec. 2013. The MMR is system driven tool for detecting early warning signal and to take remedial action on an ongoing basis. This also facilitates as an effective tool for Management Information System.

SMA Department:

The SMA Department functional from 2009 is a well built Mechanism for implementation of the various regulatory guidelines issued by Reserve Bank of India from time to time. This department takes care of asset quality and prevents slippages. All stressed assets are classified as Special Monitoring Accounts and effective follow up is made on an on going basis with branches/ROs/FGMOs. Bank has got prepared for implementing norms for revitalizing the stressed accounts as per recent RBI guidelines effective from 01.04.2014.

ASSET QUALITY & MANAGEMENT OF NPAS

Bank''s Recovery Policy is oriented towards addressing the entire gamut of NPA management and enabled the field functionaries in resolving any category of Non Performing Accounts by bringing out a booklet on "Comprehensive Recovery Policy for Non Performing Assets" during 2013-14.

Bank has introduced / extended special OTS schemes for considering proposals of farmers eligible under agricultural tractor loans, small NPA accounts under doubtful and loss assets category with book balance of Rs.5,00,000/- and below as at March 2013 and of Micro and Small Enterprises borrowers. A special OTS scheme for settling Synd Jaikisan NPA loans of Farmers was extended during 2013-14 for the benefit of majority of NPA farmers.

Bank continued to reduce large number of smaller NPA accounts by settling the dues at "Synd Adalats" at all branches throughout the year by meet, talk and settle approach. Four Bruhat Synd Adalats were conducted at regional/cluster/branch level on 07.06.2013, 20.08.2013, 19.11.2013 and 18.02.2014 and 62030 OTS cases were settled, by recovering a sum of Rs.170.13 crore with an offer amount of Rs.544.40 crore.

Bank was able to register a substantial recovery of Rs.645.47 crore during the year 2013–14 by issuing notices and taking possession/auctioning of properties under SARFAESI Act 2002.The efforts at branch level were supplemented by empanelling more enforcement agencies and approved valuers.

Special intensive NPA recovery campaign named "Synd Vasuli Abhyan-1314" was held successfully from 01st October, 2013 to 31st March 2014 for maximizing recovery.

Top NPAs from each Region were identified for giving focused attention in the beginning of the year itself and many accounts were successfully resolved before March 2014. Stressed Tiny Asset Recovery Team (START) stationed at Regional Offices are extensively utilized for assisting the branches having high concentration of Special Monitoring Assets / Non Performing Accounts of below Rs.10.00 lakh.

All high value NPA accounts are monitored personally by Chairman & Managing Director/ Executive Directors and vigorous follow up is made for resolving these accounts. On account of this, large number of NPA accounts could be resolved.

The recovery in existing NPAs amounted to Rs.1518.39 crore which includes Rs.1015.67 crore recovery towards principal and Rs.501.26 crore towards uncharged interest and a recovery of Rs.1.46 Crore written off accounts. The total cash recovery inclusive of recovery under existing and fresh is Rs.1738.01 crore.

FINANCIAL INCLUSION INITIATIVES

Bank''s committed initiatives towards Financial Inclusion:

The Bank considered Financial Inclusion and Financial Literacy as twin pillars where FI acts on the supply side i.e. for creating access and Financial Literacy acts from the demand side i.e. creating demand for financial products and services. Financial Inclusion is being viewed in the Bank not just as a social commitment but also as an instrument to bring about overall economic development of rural India so as to tap opportunities at the bottom of the pyramid of Indian economy through sustainable ICT based delivery channels.

Strategies and models adopted:

The Ministry of Finance has identified around 6.0 lakh villages across India as unbanked areas. These villages are allocated to various banks by SLBC / DCC under the service area / sub- service area approach. Our Bank has covered 1553 villages of more than 2000 population under its service area as on 31.3.2013.

The Ministry of Finance and RBI has advised Banks to provide banking services at affordable cost to these villages. Accordingly, the Bank has approved a Plan which is disaggregated further to a village level following SSA concept to cover all the 5290 villages of less than 2000 population by providing banking services to them in 3 years time i.e. 2013-16.

The following models are adopted by the Bank for implementation of FI:

1) ICT Based Business Correspondent (BC) Model :

In order to ensure that financial inclusion is implemented in a most efficient manner and is fully integrated with CBS, the Bank has appointed 5 Service Providers for a complete end to end solution i.e. from enrolment of villagers to issuance of smart cards to them. The purpose is to bring technology based banking transactions to the door steps of all villages.

ICT based BC Model is based on Application Service Provider (ASP) model with biometrics Smart Card based technology. Under this approach, BCAs visit villages with a Hand Held Machine (HHM) devices for carrying out customer enrolments and transaction processing. These HHMs are directly connected with the CBS system of the Bank using GPRS technology.

Bank was allotted a target for coverage of 2111 villages of less than 2000 population by 31.03.2014. Bank has extended banking services to 2248 villages as against the target of 2111 villages of less than 2000 population by engaging 729 BCAs and by opening of 32 Branches / Satellite Offices. This is in addition to 1553 villages of more than 2000 population already covered as on 31.03.2013.

2) Ultra Small Branches (USBs):

As per the guidelines of DFS, MOF, GOI, the Bank has opened 952 USBs as on 31.03.2014 across the country in villages having population above 2000 which are covered through BC Model. The Bank''s Officer from the Link Branches visit these USBs on a pre-determined fixed day and time in a week. They would clear all the applications for account opening, loan request, resolving grievances, arrange meeting with villagers on financial literacy, etc., besides advising villagers on various financial products. This initiative of the Bank has facilitated improvement in financial literacy and confidence building at the village level.

Out of 952 USBs, in view of the number of transactions 3 USBs were converted into full-fledged Branches as on 31.03.2014.

3) Brick & Mortar branch model:

The Bank has opened 115 Rural Branches, of which 85 are unbanked during the current financial year.

Financial Literacy: A Key to successful inclusion :

The desired objective of financial inclusion can be achieved only when the Bank is able to generate equal response from the villagers. In order to evoke the response from the villagers, the Bank need to educate them on various banking facilities and its benefits to them. In other words, Financial Literacy would be the key for success of financial inclusion initiatives of any Bank. Therefore, all constituents of FI need to develop a bond with each other not only to provide banking facilities but also to create massive awareness of banking products amongst the population through Financial Literacy wherever a Bank is implementing FI programme.

The Bank is promoting Financial Literacy through JJFLCC Trust which has opened 38 Financial Literacy Centers (FLCs) and 21 Financial Inclusion Resource Centers (FIRCs) in the lead districts of the Bank. These FLCs have conducted 9901 literacy camps benefiting 384742 persons during the year. Bank has also taken up various Financial Literacy initiatives, such as puppet and magic shows, Yakshagana and broachers / pamphlets have been brought out in vernacular languages. Graffiti displayed at prominent places in the villages.

RUDSETIs and RSETIs :

Bank has established 27 RUDSETIs and 16 RSETIs by the Bank in the Lead Districts of the Bank to provide Training to rural unemployed youth and handholding them till they establish their new enterprises to settle in their lives.

Product Innovation in FI:

The Bank has also been using FI as an opportunity to strengthen its functioning of Corporate Social Responsibility. The Bank is taking various steps to increase banking awareness amongst the rural people, educate them on its products, rural credit, technology know-how, credit counseling, problem solving, uplifting women and girl children, formation of Farmers'' Clubs and formation of SHGs, etc.

The Bank has introduced several customer oriented products specifically designed for FI customers. Some of them are as follows:

1) Basic Savings Bank Deposit Account (BSBDA) with inbuilt OD facility:

The product is specially devised for individuals from FI villages with relaxed KYC norms as per the RBI guidelines. The account can be opened without depositing amount which does not attract any penalty and will be opened / operated through BC, Branch and ATM.

Under the BSBDA, the Bank has opened 11.34 lakh accounts during the current financial year 2013-14 and the balance outstanding as on 31.03.2014 is Rs.265.93 crores.

2) FI Recurring Deposit account :

To target the rural savings, the Bank has designed the product wherein the BCA can collect the installments of the RD account from the FI customers.

3) Kisan Credit Card (SKCC) – Synd KCC :

This product is for farmers to cover their needs like production credit. Investment credit, personal loan needs as well as consumption needs. It is flexible in utilization of the limit as he can utilize the limits as per his requirements during the year. As on 31.3.2014, Bank has sanctioned Rs.8.10 lakhs KCCs.

4) General Credit Card (GCC) :

The GCC is implemented through all the rural and semi urban branches of the Bank to cater to the different needs of the villagers / artisans and small business people. As on 31.3.2014, Bank has extended 0.49 lakh GCC accounts.

5) Micro Insurance : Insurance product with low premium :

Bank has entered into an arrangement with M/s Birla Sun Life Insurance Company Limited for extending risk cover to FI customers at a very nominal premium of Rs.15/-pa (inclusive of service tax). Insurance cover is provided up to a limit of Rs.25000/- covering both accidental and natural death besides inbuilt terminal illness benefits during the year. The Bank has covered 10105 FI beneficiaries under micro insurance.

DIRECT BENEFIT TRANSFER :

The Bank has taken a number of steps for successful implementation of Direct Benefit Transfer in the identified 78 districts during the year (w.e.f 01.07.2013). Our Bank has a network of 852 branches in 102 DBT districts. Out of 852 branches, 681 branches are provided with on-site ATMs.

Sensitization programmes for the implementing personnel have been organized. Specific Nodal Officer / Executives have been designated for each of the identified districts for supervision and monitoring. BCAs are appointed in all villages of DBT districts and efforts are made to install on- site ATMs at all branches in DBT districts as per guidelines.

These initiatives will ensure passing on the Government benefits to the intended beneficiaries seamlessly. Under the DBT, which is being implemented in 121 districts, our Bank has Lead Bank responsibility in 5 Districts viz., Anantapur, YSR Kadapa, Kurnool, Kannur and Lakshadweep. Accounts are opened to all the beneficiaries whose list is received from Govt and efforts are made to ensure 100% seeding of Aadhaar numbers and 100% mapping of Aadhaar with NPCI. An amount of Rs.25.54 crores has been credited to the beneficiaries'' accounts under 26 schemes during the year.

Direct Benefit Transfer –LPG (DBTL):

DBTL is presently implemented in 293 Districts. Our Bank is having Lead Bank responsibility in 16 Districts. LDMs are co-coordinating with district administration and also with the Banks in the districts for successful implementation. The progress is also monitored by FID: Corporate Office.

Aadhaar seeding by Banks in our Lead districts (Ananthapur, Kadapa, Prakasam, Kannur and Kasargod) has crossed 50% as per timelines and the same is appreciated by DFS, MOF.

Aadhaar Payment Bridge System (APBS) :

APBS is a new payment service offered by National Payment Corporation of India using Aadhaar Number issued by UIDAI. The Government benefits are transferred to the accounts of the beneficiaries on the basis of Aadhaar Number so that the Bank details and accounts numbers of the beneficiaries need not be maintained by the Government Departments / Agencies. APBS is now operational in our Bank.

Aadhaar Enabled Payment System (AEPS) :

AEPS is a Bank led model which allows online interoperable financial transactions by POs / HHMs through the BC of any Bank using Aadhaar authentication. The four Aadhaar enabled Basic types of banking transactions are as follows:

- Balance enquiry

- Cash deposit,

- Cash withdrawl and

- Aadhaar to Aadhaar fund transfer

AEPS is in a testing phase in our Bank and will be operationalised shortly.

Highlights of the Bank''s performance in FI up to 31.03.2014 :

- Bank has so far covered 3801 Villages under its service area.

- Bank has opened 69.74 lakh BSBD Accounts.

- The average balance outstanding in the No Frill Accounts of the Bank is around Rs.2929 crores.

- Bank has opened 949 USBs in villages with above 2000 population.

- The Bank has approved disaggregated plans upto the Branch level to implement its FI Plan for 5290 villages of less than 2000 population by March 2016.

- Bank has introduced micro insurance product for FI customers. During the current year 10105 FI customers are covered.

- Bank has entered into an agreement with CSE e-governance Ltd to enroll their CSCs in the Bank''s service area as BCAs on Kiosk banking platform under FI.

- Bank has fully prepared technology for audit based payments, UIDAI linkages, village code updating etc.

TREASURY & INTERNATIONAL BANKING DEPARTMENT

Due importance has been given for efficient and effective management of funds in the Treasury and International Banking Department.

Forex Treasury

T&IBD is the A Category Office in our Bank which maintains Foreign Exchange Position, Nostro and Vostro Accounts. Besides, T&IBD also monitors development and follow up of Foreign Exchange Business, Overseas Business and Treasury Operations at our London Branch.

The Bank''s centralized dealing room at T&IBD, Mumbai is supported by one Link Dealing centre at New Delhi to offer competitive rates, to market our services, to develop and maintain customer relationships, and to guide designated branches.

The Bank is one of the first to undertake Web-based trading with Overseas counter party Banks by using state-of-the-art Web platforms. The Bank is having 89 designated Branches (category B) to handle full-fledged FX transactions and 386 nominated branches to handle FCNR business of the Bank.

Bank is also under the process of increasing the Designated and Nominated Branches. NRE/NRO deposits are accepted at all branches of the Bank.

The Bank is a member of Clearing Corporation of India Ltd. (CCIL) for settlement of Inter-Bank Forex Deals in USD/ INR & for settlement of Inter-Bank USD/INR deals in the Forex Forward segment. Further, the Bank is one of the first Banks to participate in Continuous Linked Settlement (CLS) for Cross Currency Deals by CCIL. Both the initiatives address the issue of settlement risk and improve the efficiency of settlement process through notation and central counter party. The Bank is offering only plain vanilla derivatives and no complex derivative products are offered by the Bank.

The Bank is implementing Integrated Treasury Management Software which will integrate the Domestic and Forex Treasury, Reconciliation, Settlement and Core Banking platform of the Bank with Straight-through-Process and access to the branches.

The Bank has become Trading-cum-Clearing Member on three exchanges i.e. MCX-SX, NSE and USE for undertaking trading in Currency Futures. Bank has stopped proprietary trading in Currency Future as per the directives of Reserve Bank of India.

The total Forex Turnover of the Bank was Rs.938085.38 crore for the current financial year, as compared to Rs.642372.84 crore for the previous financial year. The Inter-Bank turnover of the Bank was Rs.899726.76 crore for the current financial year as compared to Rs.596695.40 crore for the previous financial year.

Domestic Treasury

Taking advantage of the robust market, the Bank activated its trading desk and booked trading profits. The bank has also strengthened the non SLR investments by investing in qualitative and rated corporate bonds and debentures, commercial paper, CDs etc. resulting in improved yields on investment portfolio.

The bank has also earned from arbitrage deals, by effectively making use of windows like CBLO, Repo and Call. The bank has managed funds very efficiently by these money market avenues, monitoring continuously the fund flow and the liquidity position, while lending and borrowing, depending on the market conditions and rates.

The domestic investments of the bank were at Rs.55462.03 crore as on 31.03.2014 as against Rs.45574.21crore as on 31.03.2013. Total income from investment portfolio (excluding dividend & trading profits) was Rs.3832.50 crore in the year 2013-14 as against Rs.3275.43 crore in the year 2012-13. Bank''s Investment in SLR securities amounted to Rs.48314.61 crore, which formed 87.11% of Bank''s aggregate investments as on 31.03.2014. Trading profits for the year was Rs.145.83 crore.

Export Finance

The Bank has initiated various measures to increase the flow of credit to export sector. The coverage under the SyndExport Gold Card Scheme, a unique scheme for eligible exporters offering concessional and preferential terms was broadened to include more number of exporters.

Rupee export credit was offered at very competitive interest rates within the ceiling prescribed by RBI. The Interest Subvention Scheme, as designed by Reserve Bank of India, has been made available by the Bank to its customers in certain specified sectors, thus passing on the benefits of concessional interest. Bank also conducted the Exporters meet at strategic places viz., Delhi, Surat, Pune.

Exchange Companies

The Bank is successfully managing two Exchange Houses viz. M/s. National Exchange Co., WLL, Doha, Qatar and M/s. Musandam Exchange, Sultanate of Oman. The Management Agreement is in place for more than three decades and serving the expatriate community in the Gulf Region. The Bank is also having fruitful Rupee Drawing Arrangements with other 7 Exchange Houses for improved and cost-effective funds transfer to India from Gulf countries.

Centralised NRI Cell

With a view to increasing the NRE Portfolio of our Bank, T&IBD has opened the Centralised NRI Cell to enable prompt opening of NRE Accounts. T&IBD is opening the account on behalf of the Branches and is dispatching the NRE kit containing cheque book, ATM card and internet IDs etc. directly to the Exchange Houses for onward delivery to the customer.

Overseas Operations

Bank''s overseas presence is in United Kingdom at London. The Branch is active in money market operations, Investments, besides Treasury and Forex dealing operations. Branch is active in interbank operations. The

Branch focuses of syndications and ECBs, besides bilateral loans. With Indian Corporate going global, branch finds new opportunities of business. The branch has robust risk- management system.

The total business of the branch stands at GBP 5801.602 Million (Rs.57880 crore) as at 31st Mar, 2014 as against GBP 5283.091 Million (Rs.43442 crore) as at the corresponding period of previous year.

RISK MANAGEMENT

Risk Management Architecture

Your bank has implemented a robust and comprehensive Risk Management Framework. The Board of Directors assumes the overall responsibility for risk management initiatives in the bank. It includes defining risk appetite, framing policies, review and effective monitoring. The Risk Management Committee (RMC), which is a subcommittee of the board, assists the Board in the implementation of the enterprise wide Risk Management architecture in your bank. The RMC of the Board is ably assisted by Credit Risk Management Committee (CRMC) which takes care of the Credit Risk, Asset Liability Management Committee (ALCO) looking after the Asset Liability and Liquidity Risk, while Operational Risk Management committee taking care of operational risk aspects.

Credit Risk

Credit risk is the potential loss to the bank caused by the default of payment by counter party either due to the lack of capacity or unwillingness to meet obligation. Your bank has formulated the Credit Policy and Credit Risk policy, approved by the Credit Risk management committee with periodical review to meet the dynamics of the credit market. Your bank has adopted the risk based delegation of power for various levels of hierarchy in the bank for lending and has also constituted various committees at Regional office/Corporate office levels for credit approval.

The credit risk policy is a comprehensive document containing the Regulatory/internal capital exposure norms, setting of ceiling limit for various sectors/industries, Loan review and monitoring tools like credit audit, Concurrent audit. Internal audit etc. The borrowers are rated under two dimensions of Borrower and facility rating. Rating module is used for grading and pricing the loans.

Rating of assets migration are in place for the last five years and your bank is in the process of moving to Foundation Internal rating based (FIRB) approach for capital charge computation.

Market Risk:

Market Risk is defined as the risk of losses in on and off- balance-sheet positions arising from movements in market prices. The different components of market risk can be categorized as under:

1) Interest Rate Risk: The risk that arises from changes in yield curves, credit spreads and volatility in interest rates.

2) Equity Price Risk: The risk that arises from changes in the prices of equities, equity indices, equity baskets and volatility in stock market.

3) Exchange Rate Risk: The risk that arises from changes in the exchange rates and their volatility.

4) Commodity Price Risk: The risk that arises from changes in commodity prices and volatility. However, your bank does not have any exposure to commodity related markets.

Your bank has clearly articulated policies to control and monitor its treasury functions. Your bank has put in place Investment policy including Domestic Treasury, Forex treasury for International Division and London branch with operational guidelines and Integrated Market risk policy. Investment policy is reviewed regularly in line with Regulatory, financial and market conditions.

Your Bank has put in place Integrated Treasury Management Solution (ITMS), where in both Domestic and forex treasury operations are live. Computation of Market risk capital under Standardized Measurement Method (SMM) is live with SAS module at present. Your Bank is in the progress to move to Internal Models Approach (IMA).

Interest rate Risk in your Bank is measured under both Interest rate Sensitivity Gap approach and Duration approach. Further, your Bank computes Earnings at Risk (EaR), Modified Duration (MD) and estimation of ''Economic Value of Equity'' on monthly basis.

Liquidity Risk

Liquidity Risk implies the ''risk'' when the Bank either does not have sufficient financial resources available to meet its financial obligations, as and when they are due, or can only access these financial resources at excessive and unsustainable cost.

Your Bank monitors the liquidity risk through (i) Structural Liquidity Statement (ii) Dynamic Liquidity Statement.

Your Bank draws the Structural Liquidity Statement based on the residual maturity of Assets and Liabilities on Daily basis. Dynamic liquidity statement is estimation of liquidity position for a future period of 90 days, which is prepared on monthly basis. There by Fund position can be planned in advance.

The Asset Liability Management Committee (ALCO) consists of members of the Top Management and regularly meets to monitor Liquidity Risk, Interest Rate Risk, Gaps/Mis-match Risk, Basis Risk, Re-pricing Risk, Forex Risk and Equity Price Risk. It includes product pricing for deposits as well as advances and the desired maturity profile of assets and liabilities.

With the Prudential Regulatory Authority (PRA), UK approving "Whole Firm Modification" approach for our London Branch under the liquidity regime of PRA/FCA (Financial Conduct Authority), the Bank has put in place a mechanism for effective monitoring of liquidity at London Branch and for the Bank as a whole.

The Bank has a well documented Contingency Liquidity Funding Plan for managing any eventuality. The Bank is undertaking stress test on quarterly basis to assess the impact on liquidity and interest income of the Bank.

As per the direction of RBI, Your Bank is the process of Implementing ''Scientific Fund Transfer Pricing (FTP)'' mechanism.

Operational risk:

Operational risk is the risk of loss on account of failure of people, systems, internal process or external factors, including legal risk in the bank. The operational risk management committee of the bank headed by the Top management and the General Managers takes the responsibility of monitoring and controlling the operational risk through periodical meetings through review/ amendment of processes, systems and procedures in the functions of the bank.

Your Bank is successfully launching the system based Operational Risk management system (ORMS) in the first quarter of financial year 2014. This will enable the bank to collect the details of operational losses through system which will enable the bank to compute capital for operational risk using models.

Risk Management Department functioning at Corporate Office oversees the overall implementation of various risk management initiatives across the Bank, with the assistance of Risk Management Cell (RMC) at Regional Offices.

Basel II Compliance

Your Bank has been complying with all Basel II norms. The Capital to Risk Weighted Assets Ratio (CRAR) is computed as per Pillar I requirements adhering to New Capital Adequacy Framework (NCAF) guidelines of RBI. Your Bank is adopting Standardized Approach for Credit Risk, Basic Indicator Approach for Operational Risk and Standardized Duration Approach for Market Risk.

Your Bank has, Board approved comprehensive Internal Capital Adequacy Assessment Process (ICAAP) and Stress test Policy which is reviewed periodically, so as to be in line with the market realities, economic environment and regulatory requirement. Bank is preparing the Annual Capital Plan which is reviewed quarterly based on actual working results so as to assess both Pillar I and Pillar II Risks.

Your Bank has a Board approved Disclosure policy which is reviewed periodically by adhering to the guidelines issued by RBI.

Your Bank has a well documented policy and processes for management of Credit, Market and Operational Risks which are periodically reviewed, so as to adapt to the changing business and market environment.

Basel III Guidelines

Basel III guidelines have been introduced with a view to improve the banking sector''s ability to absorb shocks arising from financial and economic stress, whatever the source, supplementing the Risk-based capital requirement with a Leverage Ratio which require the capital for all on and off balance sheet items and shifting focus towards Common Equity Capital.

During the current year, your Bank has taken various capital optimization measures for improving the quality of capital and improve the Common Equity, Tier 1 capital, CRAR, by plough back of internal accruals and infusion of capital by Government of India.

Your Bank is in a fairly comfortable position as regards Capital and adhere to the ratios prescribed by RBI. Bank is taking all measures to improve the CET, CRAR and Leverage Ratio under Basel III so as to comply with the Basel III requirements in a phased manner as per the schedule prescribed by RBI to meet the regulatory requirements of Capital and Leverage Ratios as on 01.01.2015, while simultaneously achieving the expected growth in business.

Your Bank is also publishing on quarterly/half yearly basis the required information on Basel III disclosures in the website from the quarter ending September 2013.

A comparison of Capital, under Basel-II vis-à-vis Basel –III is given below:

Parameter Basel - II Basel – III

Tier I capital Ratio 8.99% 8.68%

Tier II capital Ratio 3.02% 2.73%

Total Capital 12.01% 11.41%

MIS-MISSION – A game changing initiative

To generate error free and consistent MIS data / Reports for submitting to Regulatory Authorities and also for internal use of the Bank, a robust MIS data in the system will play a significant role. To place a correct MIS data in the system, Bank had constituted a separate vertical ''Management Information System (MIS) Department'' headed by General Manager.

To accomplish the above task, the MIS Department has taken up revamping of MIS data in system through the process of MIS Data Cleaning, De-duplication and MIS Data Enrichment. As a part of revamping process of MIS data, gap analysis has been done and new user friendly screens are provided to capture the MIS details. The Bank had declared ''MIS-MISSION'' from 16.11.2013.

The task has been taken-up seriously at Administrative Offices / Branches and is being attended on a mission mode. The task of MIS capturing in as many as 34 lakhs existing borrowal accounts is in the verge of completion. Once the asset side MIS updation is completed, the liability side MIS updation will also be done. The MIS details that are captured at the account level are being audited by Concurrent / Local Auditors.

The process of development of report generation tools with reference to new MIS details is under way. Trial reports are generated for selected Branches / ROs which are under validation. It is envisaged to generate all reports of the Bank / Regulatory Authorities from the system without manual intervention by September, 2014.

Through this ''game changing'' initiative, the Bank is expected to reap not only the quantitative benefits (financial – on account of saving man-days in manual preparation of reports) but also qualitative benefits viz, better decision making, meeting regulatory requirements, enhancing image of the Bank, better AFI rating etc.

INFORMATION TECHNOLOGY

CORE BANKING SOLUTION (CBS):

The Bank continues to spread its wings with a network of 3,250 Branches and 141 Offices in 2192 centres covering 34 States and Union Territories under the CBS Network as on 31.03.2014. All the branches / offices are currently under Centralized Server Setup.

DELIVERY CHANNELS:

ATM Network:

Bank has operationalised 1946 ATMs as at 31.03.2014, spread across 860 Centres across the country. Bank has a Card-base of over 64.04 Lakh for global access to ATMs and POS Terminals. Average Cash Disbursal through ATMs stands at Rs.1036.52 Crore per month.

Innovative services in ATMs:

Bilingual screens are made available in ATMs of Hindi speaking areas. All the ATMs in the States of Karnataka and Kerala are having multi-lingual screens. ATM screens in Telugu, Malayalam, Oriya, Bengali etc are under process.

SMS for ATM Transactions: As per RBI guidelines, SMS is being sent to the customer''s registered mobile number for all ATM transactions.

ATM/Cash Dispenser to each Branch of the Bank by 31.03.2014:

Bank is in the process of installing 1600 new Cash Dispensers to comply with the directions of DFS. Out of 1600 Cash Dispensers, 1300 is allotted for providing to branches where there is no ATM/CD. 300 CDs are allotted for replacement of old ATMs under buyback arrangement. The process is under progress.

Internet Banking:

Internet Banking facility-User base now stands at 7.97 Lakhs as at 31st March 2014 with an increase of 0.85 Lakhs over March, 2013. Facilities such as National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) facility for transfer of funds, Railway Ticket Reservation, Utility Bills payments, Payment of various types of Taxes, VAT etc. are being extended through Internet Banking channel.

SMS Banking:

Bank has introduced SMS Banking to inform the customer immediately when a transaction occurs in their account. The number of customers who have availed SMS Banking facility has grown from 6,28,750 as at March 31, 2013 to 10,50,955 as at March 31, 2014.

Mobile Banking:

Bank has implemented Mobile Banking Services, whereby customers can conduct their banking transactions through mobile phones. The number of mobile banking users is increased to 24781 as on 31.03.2014 from 9736 as on 31.03.2013.

Centralised Payments System of RBI – RTGS/NEFT:

The Bank is offering NEFT and RTGS, the Fund Transfer facility among the Banks, under the RBI''s Centralised Payments System, through 3,171 branches/Offices for both RTGS and NEFT. During March 2014, there were 19.32 Lakhs NEFT transactions involving an amount of Rs.10,876.54 Crore and 1.74 Lakhs RTGS transactions involving an amount of Rs.1,40,963 Crore.

Customer-centric Initiatives:

Bunch Note Acceptors (BNA):

Bank has procured 100 Nos. of BNAs for installation in select market areas for accepting bulk cash from the customers. BNA facilitates for on-line credit/debit to the account for cash deposit/withdrawal on 24*7 basis.

Outsourcing of Switch Monitoring & Management Services:

Switch Monitoring & Management Services is outsourced to Switch vendor for the advantages like Continuous monitoring of ATM Switch and Support Services on 24x7 basis, deploying organized skill levels for managing switch operations to improve lead times and accuracy on responses, etc.

Implementation of Govt. Business Module in Core Banking:

Bank has procured Govt. Business Module (GBM) covering PPF, Senior Citizen Savings Schemes (SCSS), RBI Relief Bonds, OLTAS, EASIEST, Collection of State Tax for various States etc. It is expected to be implemented shortly.

Revamping of Bank''s Website:

Process initiated for revamping the Bank''s website with additional features like user friendliness, search engine facility, Standardized Public Grievance Redress System (SPGRS) for customers, etc. New higher version of Internet Banking Solution

Bank is in the process of upgrading to a new higher version of Internet Banking Solution. The new version will be compatible in all Browsers (like Chrome, Firefox, opera, Safari) apart from Internet Explorer.

"Synd Protect" - Two-Factor Authentication using RSA Secure ID: It is an Advanced Solution for internet banking transactions by customers, through hard/soft tokens, to prevent transfer of Funds fraudulently.

Missed Call Banking:

Missed Call Banking facilitates the customers to know the Balance Outstanding in their latest CASA Account.

IMPLEMENTATION OF GREEN INITIATIVES

a) Bank has taken steps towards implementation of "Green Initiative in Corporate Governance" by allowing paperless compliances through electronic mode. Bank has been sending soft copies of Annual Report to those members / investors who have registered their email IDs with M/s. Karvy Computershare (P) Ltd., Registrar and Share Transfer Agents of the Bank. Bank is actively encouraging transactions through alternative channel to reduce the usage of paper based payment instruments.

b) Discussions/proceedings of several important meetings are held where the required information/data is kept in the form of soft copies as far as possible.

c) Bank is using corporate e-mail facility and intra- net based IP messaging system and thus reducing dependency on paper based communication.

d) Various periodical and ad hoc reports required by the users across the Bank are being provided in an electronic form obviating the need for paper based reports.

e) 100 % adherence to Green Initiative by Direct Credit to accounts of Bond Holders / Vendors, there by totally eliminating paper based payments.

OTHER SERVICES:

SAFE-DEPOSIT LOCKERS

- Locker Module Software for efficient Management of Safe Deposit Lockers implemented in all branches having Safe Deposit Locker facility.

- Locker Charges made competitive with nominal rents to benefit cross section of the clientele.

CASH MANAGEMENT:

- Cash Deposit Ratio (CDR) is maintained at a satisfactory level of 0.30% as on 31.03.2014 against the Average CDR of the Bank for the year 2013-14 @ 0.40%.

- All the Cash Vans attached to our Currency Chests/ Cash Pooling Centres are GPRS enabled.

CURRENCY MANAGEMENT:

- At present there are 44 Currency Chests. Two new Currency Chests, one at Kasaragod (Kerala) and the other at Ghaziabad(Uttar Pradesh) will be operationalised shortly.

- Clean Note Policy as per RBI expectations is implemented. Under RBI Clean Note Policy, banks are required to provide Note Sorting Machines to Branches and Currency Chests. Bank has taken steps to comply with it.

CHEQUE TRUNCATION SYSTEM (CTS):

CTS is mandatory from 01.04.2013. In this regard, Bank has ensured

- CTS - 2010 Standard compliant Cheque books issued to all branches / account holders.

- The DDs issued are also CTS enabled.

- Specific guidelines are issued to the branches regarding modus operandi of dealing with old and new cheque books and also to exchange new cheque books wherever eligible.

CTS clearing activities is Grid-based. This is implemented throughout the country in a phased manner. There are 66 MICR centers where Centralised Inward Clearing has been implemented in full. 95% of the Non MICR centers are also covered by Centralised Inward Clearing.

CENTRALISED PENSION PROCESSING CENTRE (CPPC):

The Bank has already migrated Central Civil Pensions into Govt. Business Module from February 2012 for which Bank has received its approvals from CPAO New Delhi and RBI Mumbai and the same is handled through CPPC smoothly. Migration of Telecom Pensions into Govt. Business Module is also completed and approvals from concerned authorities and RBI stand received. CPPC started disbursing Defence Pension payments for all new PPOs issued w.e.f.01.04.2012. Migration of Defence Pension to Centralised system for ensuring improved services to this category is in process / progress.

HUMAN RESOURCE DEVELOPMENT

HUMAN CAPITAL

Bank recognizes its employees as the most vibrant and valuable asset. HR plays a paramount role in developing human capital in tune with the Vision and Mission of the Bank.

Bank is constantly focusing on HR dimension by developing and retaining the workforce to meet the future HR challenges in the Banking Sector.

Investment in employees'' training and development has enabled the Bank to prepare the staff members to handle new HR challenges and make them ''future ready''.

The Human Capital of the Bank as on 31.03.2014 is as under:

Category 31.03.2013 31.03.2014

Officers 10394 11257

Clerks 10360 10270

Sub staff 3743 3534

Sweepers 2109 2161

Total 26606 27222

AVERAGE AGE PROFILE

Category 31.03.2013 31.03.2014

Executives 56.06 56.24

Officers 45.23 42.90

Clerks 47.08 45.91

Sub staff 49.72 50.39

Bank as whole 46.72 45.45

COMPLIANCE TO GOVERNMENT GUIDELINES

During the year the Bank has complied with the guidelines received from the Government of India on various H.R. matters in the areas of Promotions, Recruitment and Performance Appraisal etc.

RECRUITMENT PLANNING

Bank had made direct recruitments for inducting skilled manpower in specialized areas like Finance, Marketing, Security, Law and Official Language. It is periodically reviewing the skill gaps and Officers with professional qualifications are recruited to fill up the skill gaps depending upon the future needs and challenges.

The Bank has also participated in the Common Recruitment Process conducted by IBPS and inducted Probationary Officers and Probationary Clerks during the year.

The details of recruitments made in the bank for the year 2013-2014 is shown below

Category No of Officers

Probationary Officers 1383

Probationary Clerks 1267

Finance Officers 03

Asst Manager(Marketing ) 16

Chartered Accountants 03

Security Officers 03

Law Officers 20

Official Language Officers 01

Total 2696

The hiring growth plan proposed during 2014 - 2015 through the Common Recruitment Process by IBPS is depicted below

Category No of Officers

Probationary Officers 2000

Probationary Clerks 2300

Specialist Officers 750

Out of 750 , 686 through IBPS & 64 through lateral recruitment

Bank has a Board approved policy for creating a separate vertical for Specialist Cadre with a career path.

A process for lateral recruitment of Executives is initiated in the category of Public Relations, Chief Economist, Information Technology and Risk Management.

Bank is envisaging to recruit 400 officers for the year 2014- 2015 through one year " Strategic Talent Pipeline Building Programme " in reputed training institutes which includes nine months class room training and three months internship in the bank

CAREER PROGRESSION

The Bank provides optimum opportunities to its employees to fulfill their growing aspirations for faster career progression and motivate them to shoulder higher responsibilities. The promotion policy has also been fine-tuned to reward outstanding performers and is in sync with the succession planning.

During the year 2013-14, Bank had promoted 647 employees in various scales as under

Promotions S No. Numbers From To

01 TEGS-VI TEGS-VII 13

02 SMGS-V TEGS-VI 23

03 SMGS-IV SMGS-V 54

04 MMGS-III SMGS -IV 57

05 MMGS-II MMGS-III 200

06 JMGS-I MMGS-II 300

TOTAL 647

TALENT GROOMING & RETENTION

Bank is reimbursing examination fees besides paying incentives for passing various professional examinations like NISM, IRDA, CISA, CISSP, ORACLE, Risk Management Examinations, Courses conducted by IIBF etc. with the objective of talent grooming and retention

STAFF WELFARE MEASURES

1. Bank''s Quarters

As a part of staff welfare measures, Bank is providing additional quarters at Bangalore and construction of 100 flats at Vasundhara, Ghaziabad is nearing completion. Bank has also purchased 19 additional flats in Chennai and two flats at Thiruvananthapuram.

Maintenance and repair works have been undertaken by Bank owned properties to enhance their usability.

2. Scheme for Payment of Ex-gratia Lump sum

The Bank has formulated a Scheme for appointment on compassionate grounds/payment of Lump sum compensation to the family of the deceased employee/ employee retiring on medical grounds, based on the Government guidelines.

Totally 03 cases are considered under the Scheme for Appointment and 08 cases are considered for payment of Lump sum amounting to Rs.49.86 lakh in the current year (upto 31.03.2014)

The cadre-wise ceiling on Ex-gratia amount payable is as follows: (in Rs.)

Cadre Maximum amount

Officers 8.00 lakhs

Clerks 7.00 lakhs

Sub Staff 6.00 lakhs

3. Compensation to Bank Employees killed in Bank Robberies & Terrorist Incidents

Bank has formulated a Scheme as per Govt guidelines for Payment of Compensation and Reward so as to motivate the Bank employees and members of public resisting Bank robberies, terrorist incidents including left-wing extremism.

In case of death, the family of deceased will be given compensation by the Bank as follows:

Category Cadre Maximum amount

Bank Employee Officers 20.00 lakhs

Clerks /Sub Staff 10.00 lakhs

Other than bank Customers/ employee members of the 3.00 lakhs public

In case of Bank employees / customers / members of public who actively resist Bank robberies and terrorist attacks on Banks, the Bank may consider a cash reward not exceeding Rs.2.00 lakhs.

The Bank will look after educational expenses of the children of the deceased up to and inclusive of graduation and will give immediate employment to one member of the family of the deceased as per applicable rules.

The Bank has paid an amount of Rs.3.05 lakhs as compensation to our customers of Kaveli Branch in Hyderabad Rural Region, for resisting the bank robbery.

RESERVATION TO SC/ST/OBC

The Bank follows the reservation policy for SCs, STs and OBCs as prescribed by Government of India from time to time and has been extending applicable reservations/ concessions to SC/ST/OBC/PWD employees in recruitment/ promotions strictly as per Government guidelines.

A separate SC/ST Cell and OBC Cell are functioning at Head Office to redress the grievances of SC/ST/OBC employees working in the Bank and are currently headed by General Manager designated as Chief Liaison Officer.

The progress made in the implementation of the Reservation Policy is placed to the Board once in a Year.

The Post based Reservation Roster is displayed on the website of the bank in compliance to the directions of the Government.

PRE-PROMOTION TRAINING

The Pre-Promotion training is also extended to OBC employees, in addition to SC/ST employees. During the year, 868 SC/ST/OBC Clerical employees and 836 SC/ST Officer employees have been imparted Pre-Promotion training to prepare them for promotion to the next respective cadres. In all 4923 SC/ST/OBC employees have been given in-house training at SIBM, Manipal and other Staff Training Centres.

TRAINING AND DEVELOPMENT

Syndicate Institute of Bank Management, (SIBM), Manipal at the apex level and the seven Training Centres at Bangalore, Chennai, Delhi, Ernakulam, Hyderabad, Kolkata & Mumbai cater to the training needs of the Bank by conducting various types of training programmes for different cadres of employees.

During the year 2013-2014, 196 Programmes covering 5476 Officers and 107 Programmes covering 2951 workmen employees were conducted by the Training System. Thus a total of 8427 employees were trained through 303 programmes. In addition, 378 executives/ officers were deputed to external training programmes conducted by training institutes of repute in India. Further 12 executives/officers were deputed to overseas training programmes. During the year 2843 Officers and 2080 Clerks/sub staff belonging to SC/ST/OBC category were imparted training.

The Training System has also devised a new programme to groom the newly recruited officers in etiquette and manners for effective and impressionable interaction with the customers by the Front Line Employees.

SIBM conducted training programme on Forex and Credit Management. The Forex training included on the job training of one month at the designated branches. Training programme was also conducted on disciplinary proceedings / IR issues.

On-Line Learning System was inaugurated by the Chairman and Managing Director on 16-08-2013 at Head Office. It is a technology based learning system to the employees which minimizes the expenditure and overheads.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Bank has been displaying a strong and abiding commitment to encourage the greater use of Hindi in various forms not only because it is the policy of the Government of India but also as an ideal and powerful medium of inclusive banking. The Bank made noteworthy progress under the implementation of Official Language and won many prizes at various levels during the year under review. Regional Office, Panaji was awarded second prize by the Government of India, Ministry of Home Affairs, Dept. of Official Language. Apart from this, Regional Office Ahmadabad, Agra, Coimbatore, Mysore and Training Centre, Bangalore have received awards from respective Town Official Language Implementation Committees. Our in house Hindi magazine Jagrithi got 4th place in Hindi House Magazine Competition for the year 2013. As at March 2014, around 99% of employees have obtained working knowledge of Hindi and the Bank has notified 2075 branches under Rule 10(4) of O. L. Rules, 1976.

In the sphere of using Information Technology in the Official Language, the Bank has furthened the use of Unicode package for Word Processing and also made bilingual (Hindi & English) provision in all the ATM screens of the Bank. The Bank has taken Corporate License for ''Script Magic'' software for usage of Hindi in CBS branches for generating pass book entries, accounts statements etc. The Bank''s Corporate Website is made bilingual with Unicode based. A separate Web Page has been created in website. Quarterly Hindi Statement is placed under automated data flow and bilingual applications pertaining to products of the bank are loaded on the website.

To encourage effective implementation of Official Language in the Bank, 47 employees were awarded cash incentives under excellent performance in Hindi as well as excellent users of Hindi on computers. The Bank has conducted an Annual All India Hindi Essay Competition for its employees and cash prizes were given to the winners.

Rajbhasha Nirdeshika'', Scriptmagic, Unicode & Hindi noting related printed help literature got released during the year.

Rajbhasha Sangoshti for Executives, a Seminar on Women Empowerment in Hindi in connection with Hindi Month celebrations and Annual Official Language Officer''s Conference were organized.

The Third Sub Committee of the Committee of Parliament on Official Language inspected the Bank''s HO/CO at Bangalore on 6.7.2013 and lauded the efforts put in by the Bank.

Joint Secretary (OL) & Joint Director (OL), Ministry of Finance, Govt. of India inspected our Head Office/Corporate Office on 14.9.2013 at Bangalore and appreciated the efforts of the Bank in the field of Official Language Implementation.

A cartoon animation CD in Hindi on Financial Inclusion was released on the occasion of Founders'' Day Celebration on 20.10.2013.

Drafting & Evidence Sub Committee of the Committee of Parliament had discussion with our RO: Ahmadabad, Chandigarh and Lucknow along with the member offices of respective Town Official Language Implementation Committees and lauded the efforts put in by the Bank in the field of Official Language implementation. The Bank is the convener of Town Official Language Implementation Committees of Kannur, Ananthapur, Bijapur, Meerut, Ghaziabad, Karwar.

Official Language Implementation Committees are constituted in all the branches of the bank to motivate and guide the employees towards effective implementation of Official Language Policy of the Govt. of India.

CUSTOMER SERVICE

Believing that quality customer service is not only important but inevitable for survival and growth, Bank has been constantly reviewing the efficacy of existing system of customer service. Bank''s customer centric approach acts as a key differential in shaping future business potential and also in acquiring, retaining and growing the customer base.

The Bank has Board approved policies on customer service, deposits, customer grievance redressal, cheque collection, compensation payable on account of various deficiencies in service etc. These are well displayed on the Bank''s website for the convenience of the customers, besides displaying at each branch of the Bank.

The Grievances Redressal Policy of the Bank is meant for minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances.

Customer Service Initiatives taken during 2013-14

- Bank has taken steps to introduce internal ombudsman scheme to redress the customer grievances expeditiously

- With a view to improving the Customer Service in the branches and sensitize the staff, policy on ''Customer Service'' has been adopted based on the following cardinal principles viz., Courtesy, Communication, Efficiency & timeliness, General Management of the branches, knowledge, etc.

- The Bank is a Member of Banking Codes and Standards Board of India (BCSBI) and committed to implement the provisions of Code of Bank''s Commitment to Customers and Code of Bank''s Commitment to MSE Customers in letter and spirit.

- A Customer Meet was organized in association with BCSBI at New Delhi on 28.02.2014 in order to educate/ sensitize Customers about BCSBI Codes provisions.

- Out of 148 accepted recommendations of Damodaran Committee on customer service, Bank has implemented 128 recommendations and remaining 20 recommendations are under various stages of implementation.

- Matters relating to Customer Service and Customer complaints are discussed in the periodical meeting held at Branches/Regional Offices with the involvement of Customers/ Senior Citizens.

- Standing Committee on Customer Service meet at quarterly intervals at Corporate Office and review the customer service related matters / complaints etc.

- The Customer Service related matters are also deliberated during quarterly meeting of Customer Service Committee of the Board and Meeting of Board of Directors at half yearly intervals.

- Executives during their visit to branches interact with customers and review matters relating to Customer Service/ complaints redressal and implementation of BCSBI Codes provisions.

- Bank has introduced customer friendly products and services such as Synd Navratna Accounts, Premium SB Accounts, Multi-city Accounts, Credit Card, Debit/ ATM Card, Internet Banking, SMS Banking, Mobile Banking, Point of Sales Terminals, NEFT / RTGS, Online tax remittances, etc.

- Bank has put in place a robust Customer Grievance Redressal Mechanism for quick redressal of customer grievances. Based on number of complaints received and time taken for Redressal of complaints, all ROs are being graded A: Outstanding, B: Good, C: Satisfactory and C: Poor on quarterly basis.

- Uniform Customer Meet was organized in all branches on 23.05.2013.Executives from HO/CO/RO visited the Meet held at busy branches and obtained feedback from Customers.

- For the first time, BCSBI has started rating Banks on the basis of level of compliance of BCSBI Codes. The rating is labeled as "BCSBI Code-Compliance Rating". The Bank has been rated as "ABOVE AVERAGE". It is also indicated that the Bank''s score is slightly better than the average score for PSBs.

- Four types of customer kiosks are provided (Passbook Printing, Internet Banking facility, cash deposit and Cheque Deposit facility) in 20 identified locations. These e-lounges will be functioning 24X7 basis. Such lounges will be extended at strategic locations all over the country in a phased manner.

CORPORATE SOCIAL RESPONSIBILITY

Being a responsible social citizen, Bank recognizes its responsibility towards society and actively involved itself in various CSR (Corporate Social Responsibility) activities which aimed at socio-economic transformation, rural up liftmen & sustainable development of the society. Some of the Bank''s initiatives in the field of Corporate Social Responsibility taken during the year include donation to the orphanages for the disabled, viklang sahayata samiti, old age home, trust, temple, rural academy, hospital, charitable foundations for supporting their various social activities; distribution of mid-day meals to the underprivileged children; distribution of fans, water coolers/purifiers to Govt. schools; installation of solar lights and hand pumps in certain districts; donation towards assisting victims of natural calamities like flood etc.

NEW PRODUCT INITIATIVES

Bank has always endeavored to bring innovation in new products as well as developing the existing ones by revisiting and reengineering them in line with changing customer preferences.

During the year the following new products have been introduced by the Bank:

Liability Products

1) SyndDisha: Bank has launched a new deposit product SyndDisha on February 6, 2014. The deposit will be for a period of 444 days and carries attractive interest rate of 9.25% p.a. Senior citizens will get an additional interest of 0.50% p.a. This product was offered for limited period only and was applicable for deposits of less than Rs 10 crore only.

Asset Products

Commemorating its 88th foundation day on 20.10.2013, Bank has launched 5 new products viz. SyndDoctor, SyndMarble, SyndTextile, SyndCashew and SyndTransport to address the credit needs of MSME sector. These products are tailor made schemes, to meet the credit requirements of qualified doctors, Marble, Granite and Stone Crushing Units; Textile units, Cashew Processing units and transport operators. The details are provided as under:

1) Synd Doctor:

This product is made to meet the credit requirements of qualified Doctors for setting up Clinic, Nursing Home, Pathological lab, Drug/surgical store etc.

2) Synd Marble

This product is made for financing Marble, Granite and Stone Crushing Units to acquire new equipments / machinery/vehicles to start and for expansion of activity and to meet the Working Capital requirement.

3) Synd Textile

This product is made to meet the credit requirements of units engaged in textile sector and manufacture of readymade garments in order to acquire new equipments / machinery/ vehicles to start the unit and to meet the Working Capital requirement.

4) Synd Cashew

This product is made to meet the credit requirements of Cashew Processing units to acquire new machinery/ equipments / vehicles / stock required for the unit leading to value addition, technology upgradation and shelf life enhancement.

5) Synd Transport

This product is made for financing Transport Operators for purchase of all makes of Transport vehicles, Utility vehicles, Light Commercial, Heavy Commercial vehicles for goods transport and Passenger vehicles like Autorikshaws, Tourist vehicles, Taxies, Cabs for passenger transport registered for commercial purpose.

MARKETING & FEE INCOME PRODUCTS

Marketing vertical

With the compression of spreads from the core activities of banking, the necessity is felt in augmenting fee based income which acts as cushion for Bank''s income. In order to have a focused approach to augment fee based income, Bank has created a separate vertical at Corporate Office and Regional Offices to accelerate marketing efforts to augment fee based income.

Cash Management Services

The Bank offers a state-of-the art technology driven products to corporate, private and foreign banks for efficient management of account receivables and payments.

The Bank offers CMS services to its clients through all its Branches across the country. Under the Collections, Cash Collection, Auto Debit facility through Mandates, and Centralized Cheque Debit facilities are being offered. Payment of Dividend Warrants / Interest Warrants / DD Drawing arrangement and Remote DD Printing facilities are being offered under Payments.

Applications Supported by Blocked Amount (ASBA)

Bank is registered with SEBI as Self Certified Syndicate Bank (SCSB) for providing Applications Supported by Blocked Amount (ASBA) to its customers. Bank has integrated ASBA facility with its Core Banking Solution during the year. ASBA process is available in all public issues made through the book building route and rights issues and will co-exist with the practices, wherein cheque is used as a mode of making payment.

New Pension System (NPS)

The Bank is registered with the Pension Fund Regulatory and Development Authority (PFRDA) as Point of Presence (PoP) for offering various services under the New Pension System-a scheme introduced by the Government of India-for providing old age income security. The Bank has already registered over 2050 branches with NSDL for offering various services under the scope of the NPS as Point of Presence - Service Provider (PoP-SP). The Bank has also been appointed as Aggregator by PFRDA for NPS-Lite scheme.

Depository Participant Services

The Bank is a Depository Participant of CDSL. This facility enables customers to keep their Capital Market Securities in electronic form. The 3-in-1 account cum on-line trading facility under the brand-name "Synd e-Trade" was launched by the Bank on October 24, 2011. The facility comprises of the CASA account, Demat account and Trading account for enabling our customers to trade in shares online, using the funds in the CASA account and dematerialized securities in the DP account through the Straight Through Process.

BANCASSURANCE 1. Life Insurance:

- Bank had signed a Memorandum of Understanding (MOU) with Life Insurance Corporation of India (LIC) on 27th June 2013, as a Corporate Agent for distribution of Life Insurance Products. Before launching commercial operations on 11.10.2013, the Bank had conducted one-day workshops across all Regions and has developed a team of 145 Specified Persons for soliciting life insurance business. Bank collected premium of Rs.3047.37 Lakh and earned commission of Rs.439.12 Lakh during first year of its operations.

- Bank organised "Synd LIC Saptah-Raise the Bar" campaign from 02.12.2013 to 07.12.2013 by marketing of 15119 policies- highest by any of the Bancassurance partners of LIC of India during a week.

- Under "SyndSuraksha" Group Insurance Policy taken from LIC of India, Bank is offering Life Insurance cover of Rs.1.00 lakh (natural death) and of Rs.2.00 lakh (accidental death) at nominal premium.

- Bank offers Life Insurance cover to Housing Loan borrowers, Educational Loan borrowers and for account holders under Financial Inclusion.

2. General Insurance:

- Bank has a Corporate Agency tie-up with United India Insurance Company Limited (UIICO) for distribution of General Insurance products, including SyndArogya (a Group Mediclaim-Cum-Personal Accident Policy with family floater advantage) at competitive premium for its Account Holders.

- Bank celebrated 14th February 2014 as Health Insurance Day by marketing 10,098 SyndArogya (Mediclaim) Policies-Highest in a Single Day by any of the Bancassurance Partners of United India Insurance Company Ltd.

- During the year 2013-14, Bank has collected premium of Rs.5404.26 lakh and earned a commission of Rs.556.39 lakh, compared to Rs.4701.90 lakh and Rs.463.26 lakh respectively during the previous year.

CARD BUSINESS

Credit Card Product:

Bank, in association with VISA International, offers Gold and Classic Credit Cards which can be used at ATMs, Point-of Sale Terminals (POS) and Internet, w.e.f 20.10.2003. Bank has issued 77,592 credit cards till 31.03.2014.

Debit Card Product:

1. Debit Cards: The Bank launched Global Debit Cards in association with VISA on 29.03.2003 and in association with Master Card (Maestro Brand) on 22.06.2011. The Bank has been issuing VISA International Gold Debit Cards with higher transaction limits w.e.f 20.10.2012. The Bank has issued 69,11,468 Debit Cards till 31.03.2014.

2. SyndicateBank RuPay Kisan Card: Bank has been issuing RuPay Kisan Cards in association with National Payment Corporation of India (NPCI) w.e.f. 20.10.2012. These cards are meant for domestic use, which can be operated in ATMs only. The Bank has since issued 1,16,903 SKCC Cards till 31.03.2014.

Point of Sale (POS) Acquiring:

Bank ventured into the Merchant Acquiring business on 02.10.2009. All its POS terminals do comply with VISA / MasterCard / RuPay specified standards and are fully compliant to handle EMV and PIN based transactions for all types of Cards. issued by Banks. As on 31.03.2014, Bank had installed 1,772 POS Terminals, out of which 1,192 terminals were installed during the year.

STRATEGIC ALLIANCES & JOINT VENTURES

a) MOU signed with LIC: Bank had signed a Memorandum of Understanding (MOU) with Life Insurance Corporation of India (LIC) on 27th June 2013, as a Corporate Agent for distribution of Life Insurance Products on fee basis without any risk participation.

b) Corporate Agency Tie-up with UIIC: Bank has a Corporate Agency tie-up with United India Insurance Company Limited for distribution of General Insurance products, including SyndArogya- a Group Mediclaim Insurance Cum Personal Accident policy-which is available at competitive premium for Syndicate Bank Account Holders.

c) Mutual Fund Distribution Venture: Bank continued developing its team of qualified persons facilitating informed selling of mutual funds products. As on 31.03.2014, the Bank had a team of 380 NISM (Series-V-A) Certified Persons and 154 EUIN compliant staff, compared to 134 and 23 respectively as on 31.03.2013.

COMMITTEES VISITED DURING THE YEAR

"Parliamentary Standing Committee on Labor" visited Bangalore on 7/6/2013 for on the spot study of deployment of contract/casual workers/sanitation workers for perennial nature of jobs.

"Parliamentary Standing Committee on Welfare of Scheduled Caste and Scheduled Tribes" visited Port Blair on 15/06/2013 to study all matters concerning the welfare of the Scheduled Castes and Scheduled Tribes, falling within the purview of the Union Government and the Union Territories.

"Parliamentary Committee on Government Assurances" visited Bangalore on 09/07/2013 to scrutinize the matters regarding siphoning of money by financial institutions in debt waiver scheme and also pertaining to meeting regarding liberal lending by banks.

"Parliamentary Standing Committee on Papers Laid on the Table, Rajya Sabha" visited Bangalore on 13/9/2013 for comprehensive review of the laying of Annual Reports and Audited Accounts of the Bank.

Govt. Officials from Ministry of Finance visited and inspected our Head Office/Corporate Office on 14.9.2013 at Bangalore.

"Parliamentary Standing Committee on Industry- Credit Facilitation Scheme of NSIC" visited Bangalore on 11/01/2014 to evaluate Bank''s performance under Credit Facilitation Scheme of NSIC.

The Third Sub Committee of the Committee of Parliament on Official Language inspected the Bank''s HO/CO at Bangalore on 6.7.2013 and Drafting & Evidence Sub Committee of the Committee of Parliament held discussion programme with our RO: Ahmadabad, Chandigarh and Luck now and the Chairman of respective Town Official Language Implementation Committees and with some of the member banks.

COMPLIANCE DEPARTMENT

Compliance Policy approved by the Board of Directors of the Bank articulates that the compliance function is an integral part of governance along with the internal control and risk management process. The Compliance Department headed by a Chief Compliance Officer (in the rank of Deputy General Manager) oversees the compliance functions in the Bank and assists the top management in managing the Compliance Risk.

Continuing with the Bank''s commitment to high compliance standards, compliance function is reviewed regularly for making improvements. The compliance policy is reviewed every year and amendments, if necessary are carried out based on the experience gained and utility aspect.

RIGHT TO INFORMATION ACT, 2005

The Bank has implemented the relevant provisions of the Act with effect from October 2005. The information related to the Bank as stipulated under the Act is displayed on the Bank''s website.

The Appellate Authorities for the Bank under the Act and the Public Information Officers (PIOs) and Alternate Public Information Officers (APIOs) at various levels have been designated. The Bank has clearly spelt out the roles and responsibilities at different levels under the Act.

As directed by the Parliamentary Committee, the Bank has constituted a Monitoring Committee at Apex level to oversee the implementation of the RTI Act. During the year, the Committee has reviewed the effectiveness of implementation of the RTI Act in the Bank.

During the year, the Bank has disposed of all the applications and all appeals received, within the stipulated time. Since the inception of the Act, CIC has not imposed any penalty so far on PIOs of the Bank.

RTI Applications were received at HRDD predominantly on the matters of Recruitment Process, Promotion Process, APARs, Reservation Policy, compassionate appointments, Ex gratia payments etc and they have been disposed of within the time frame prescribed under the RTI Act.

INTERNAL CONTROL SYSTEM

The Bank has an Inspection/ Audit Department at Head Office, Manipal that examines the adherence to Systems, Policies and Procedures of the Bank. The guidelines received on internal control from RBI, Government of India, Bank''s Board and the Audit Committee of the Board and Audit Committee of Executives become part of the Internal Control System for better risk management.

Eight Regional Inspectorates operate as extended arms of the Inspection Department (ID) to carry out various types of Audits of Branches & Offices to examine adherence to Systems of internal control, Policy and Procedures for effective banking supervision to conduct the Business of the Bank in a prudent manner in accordance with the approved internal Audit Policy of the Bank. These internal controls are supplemented by the effective audit function which independently evaluates the adequacy, completeness, operational effectiveness and efficiency of the control systems within the organization.

As recommended by Basel Committee (1988), the Bank has reoriented transaction based Internal Audit to Risk Focused Internal Audit since 2007. All the Branches are brought under Risk Based Internal Audit (RBIA) which is supplemented with Concurrent Audit of High Risk areas like specialized Branches, Treasury and High volume Branches etc. Our Bank is the first Bank to implement software based RBIA among all Public Sector Banks.

The Audit Committee of the Board (ACB) oversees the Internal Audit function of the Bank. The committee guides in developing effective internal control system like Inspection system and related other inspection functions. It also monitors the functioning of the Audit Committee of Executives (ACE) and Inspection Department in the Bank.

ACE is one layer above ID, has been established to monitor the entire Inspection System in the Bank. ACE is constituted with the Executive Director as its Chairman and 5 General Managers of Head office & Corporate Offices as its members. The Committee meets more than the minimum prescribed no. of times during the year. It monitors the implementation of Annual Audit Plan (AAP) and compliances to the major audit observations reported by the Auditors and directs the concerned Departments/ Offices to rectify the lapses.

The Bank is having well defined, Board approved policies on Risk Based Internal Audit, Concurrent Audit, Information System Audit, AML/ KYC Compliance etc. which are being reviewed / updated on annual basis.

The AAP is drawn as per the Internal Audit Policy approved by the Board, which includes the Schedule & Rationale for Audit work planned. During the Financial Year 2013-14, Department has completed all the projected inspections of all kinds - 12919 Audits as on 31.03.2014 viz. RBIA, Credit Audits, Concurrent Audits, Currency Chest Audits, Service Branch Audits, Compliance Audits of Branches/ Offices and Management Audits of all Controlling Offices and Functional Departments. Out of the 3250 domestic Branches as on 31.03.2014, 1988 are in Low Risk, 190 are in Moderate Risk, 806 are in Medium Risk and 5 are in High Risk.

In line with the guidelines issued by Department of Financial Services, Ministry of Finance, Bank has implemented revised Audit Policy during the year and surpassed the target under Concurrent Audit coverage of 70% of total Business, Advances and Deposit in 534 Branches/ Offices and achieved 74.08% of Business, 78.94 % of Advances and 70.03 % of Deposits.

The Offsite Monitoring System was set up in June 2007 as an additional and important Management tool to strengthen the internal control measures. It is an on-going Audit, covering all Branches. It comprises of one unit at Head Office, one each at all 43 Regional Offices and 8 Regional Inspectorates. While OMC units at Regional Offices monitor the transactions / balances of the Branches of their Regions, those in Regional Inspectorates focus on the Branches that do not have Concurrent Auditors and are reflecting persisting irregularities.

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

INTERNAL CONTROL AND VIGILANCE

Vigilance administration is a crucial part of the Management function, aimed at improving the efficiency and ethical health of the organization.

Stress is laid on preventive vigilance by initiating preventive vigilance studies at branches, conducting Preventive Vigilance Training Programmes at SIBM & other Training Centers of the Bank and constitution of Preventive Vigilance Committees at the branches with a view to ensure strict adherence to systems and procedures.

During the year under review, Preventive Vigilance Exercises were conducted in 185 Branches and Surprise Verification of goods hypothecated to Bank was conducted in 254 Accounts covering 134 branches.

Vigilance Awareness Week was observed throughout the Bank from 28.10.2013 to 02.11.2013 in a befitting manner as part of Participative Vigilance measures.

KNOW YOUR CUSTOMER / ANTI MONEY LAUNDERING

Bank''s policy on Know Your Customer (KYC) norms and Anti Money Laundering (AML) measures have been reviewed/ modified in the light of RBI/Govt., of India guidelines. The main objective of KYC policy is to prevent Bank from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities.

Branches have been instructed to ensure that no account is opened in anonymous or fictitious/benami name and in the name of persons with a criminal background and/ or having connections with terrorist Organisations. All KYC guidelines are scrupulously followed and implemented.

SECURITY

The Security Department of the Bank has been making constant efforts to provide effective, efficient and progressively better security solutions to all our Branches, ATMs and Offices. The Department had obtained ISO 9001:2000 Certification in May 2007, which was upgraded to ISO 9001:2008 in May 2010 and presently it stands extended up to 14th September 2016. The Department has thus achieved the unique distinction of being the first Security Department among all the Public Sector Banks to become ISO 9001:2008 compliant.

As per Guidelines, Security Audit has been conducted in respect of all Currency Chests. All Currency Chests are provided with security and surveillance equipment to efficiently secure the premises and the contents.

ATM Security has been enhanced by introducing Second CCTV Camera to cover the Lobby and also a Sound Alarm System. Round the clock guards have been provided at those ATM centers where the Police Authorities have insisted for posting of guards.

SYNDBANK SERVICES LTD

"Synd Bank Services Ltd. (The Company) is a wholly owned Subsidiary of Syndicate Bank, incorporated under the provisions of the Companies Act, 1956 and domiciled in India. The Company is engaged in providing Back Office support to Syndicate Bank and other Financial Institutions. The major activities undertaken by the Company during the Financial Year 2013-14 are customer oriented services like, issue of internet banking passwords, following up of overdue loan accounts under retail portfolio, cheque/ cash collection from Kiosks for select customers, debit card personalization service, assisting customers in filing income tax returns etc.

REGIONAL RURAL BANKS

There are 3 Regional Rural Banks sponsored by our Bank. These three RRBs are covering 18 districts in 3 states, with a network of 1278 branches. RRBs sponsored by the Bank are in the top league among various RRBs of the country, in respect of key business parameters. Total business of RRBs sponsored by the Bank stood at Rs.36532 crore.

The total deposits and advances of the RRBs reached a level of Rs.19031 crore and Rs.17501 crore, respectively. The total Priority Sector Advances stood at Rs.14902 crore constituting 85.15 per cent of total advances as at 31.03.2014. Agricultural advances reached a level of Rs.12613 crore forming 72.07 per cent of total advances. In all, the RRBs have issued 6.87 lakh Kisan Credit Cards to farmers with an outstanding credit of Rs.10530 crore. The RRBs have been making profit for so many years.

All the RRBs sponsored by our bank have moved towards implementation of CBS. All the three RRBs have implemented NGRTGS and NEFT, APBS/NACH platform, ECS (debit) and ECS (credit), CPSMS 2.6 version. RRBs are going to install CDs and implement RuPay cards very soon. System generated NPA is implemented in all RRBs sponsored by us. All the three RRBs have implemented FI Plan (2013-2016) as per the direction of Reserve Bank of India and Government of India.

BUSINESS PROMOTION CAMPAIGNS

Super Deal CASA Campaign

The strategy of emphasizing on growth of customer base and thrust on increasing the share of CASA and core deposit has always been one of the prime objectives of the bank. In order to shore-up the deposit base, particularly, Low Cost Deposits, Bank has launched ''Super Deal CASA Campaign'' from 30/08/2013 to 31/10/2013. The campaign was further extended up to 31.03.2014.

The campaign has proved successful evoking positive response from the customers and Bank was able to garner a net increase of Rs.1549 crore in their CASA base.

Term Deposits Campaign

In the prevailing environment of tight market liquidity, Bank has also been experiencing liquidity mismatch in its funds position, due to declining inflow and increasing outflow under the core term deposits. In order to manage the liquidity position more efficiently and to prevent flight of these deposits as well as to canvas more and more fresh core term deposits by offering attractive rates, Bank has also launched the following two more deposits campaigns from 26.08.2013 to 30.09.2013.- 1) MAXIMA Core Term Deposit Campaign: This campaign had targeted to propel core term deposits of the bank by offering a Special Rate of Interest @ 9.30% p.a. on Term Deposits up to Rs.10 crores for the tenor of 399 days exact.

2) Retail Term Deposit Campaign: To take advantage of the highest Card Rates on Term Deposits and to give a boost to our Deposits level, Bank launched a "Retail Term Deposit Campaign" for retail deposits upto Rs.1 crore.

3) "Save Tax Smartly Campaign"

To augment core term deposits under Synd Tax Shield (with tax benefits u/s 80-C of Income Tax Act,1961) and to increase fee based income by marketing SyndArogya (Mediclaim) Policies, Bank had organized "Save TAX Smartly" campaign from 01.01.2014 to 31.03.2014 with reward and recognition to performers. The campaign has proved to be highly successful.

OTHER INITIATIVES

Synd Nayi Disha Workshop

In order to have a long term business plan for the Bank up to the year 2020 and to revisit the vision mission statements of the bank a work shop was conducted during January 2014. Participants included all Top Management Cadre, Regional Managers, Select Branch Managers, Officers, Clerks and representatives of union / association and employees of the Bank. A long term business plan upto 2020 has been drawn along with the road map. As a milestone, global business target of Rs.10 lakh crore was agreed to be reached as on 31.03.2020. Based on the suggestions arrived at in the workshop the Vision & Mission Statements of the Bank for the period 2014-2020 are finalized.

Business Process Reengineering (BPR)

Bank has initiated process for undertaking BPR (Business Process Re-engineering) in respect of the following after necessary clearance from the Board of Directors:

1. Human Resources Development.

2. Outsourcing of certain Back Office functions like centralised account opening etc. and areas of Marketing of products besides creating Brand image.

3. Retail & MSME

Human Resource Management System (HRMS)

Bank has initiated measures to implement HRMS package in due course which enables automation of majority of the HR functions. Selection of vendor is in final stages. Bank is also in the process of appointing consultants under BPR project.

Re-organization of Regions

For effective control and business development, Bank has opened two new Regional Offices - one at Madurai and another at Ongole. With this, the Bank is having 43 regional offices controlling the functions of 3250 branches besides satellite offices and ultra small branches. Going forward, Bank may open some more Regional Offices to have effective control over the branches and ensure quick Turnaround Time. Bank proposes to open around 300 new branches during the next financial year.

Bank has thought to take forward all these initiatives posting dedicated staff and giving the project name "Synd Nayi Disha", with below given pictorial representation, to gear up the staff for the challenges.

Organizational restructuring

Keeping in view the changing market environment and in order to ensure quick Turn Around Time (TAT) for credit and also to ensure top executive being close to customers & branches, Bank has introduced the concept of "Field General Manager" so that the organisation will be better equipped in meeting their present and evolving needs and challenges. This strategy of organisational restructuring provides competitive edge by meeting the best practices and also brings in administrative efficiencies.

At present, Bank has opened 8 FGM Offices - which are very sleek model & not one more controlling office to drive business & ensure recoveries by being very close to operational units and are operationalised since 01/11/2013. Each FGM Office will cover 6/7 Regions and will be responsible for achievement of Business Targets including recovery targets of the Regions and the FGM office on consolidated basis. FGMOs are empowered suitably by the Board to exercise powers relating to credit and recovery matters under Credit Approval Committee process.

IMAGE BUILDING

As part of a Bank''s brand building exercise and to harness its image, Bank has repositioned its Logo by changing the colour patterns. The logo contains predominantly orange and yellow colours. Orange indicates Bank''s vibrancy, competency and confidence through collective work and thinking. Yellow indicates innovation, backing the vibrancy and quick decision through collective work and thinking. A Brand Manual has been prepared and supplied to all Regional Offices and Field GM''s Offices. The rollout of this new signage will be done during the next financial year 2014-15. Apart from this bank has brought advertisements in important news papers, on local and national important days and also on declaration of quarterly audited / unaudited results. Besides, many of the Bank''s events are carried in all leading newspapers, bringing lot of mileage to the Bank.

ACCOLADES/AWARDS

- Our Bank has been recognised as "BANK OF THE YEAR"

for its splendid performance by magazine ''Investment Advice'' in its June 2013 issue.

- Our Bank has been adjudged as "SECOND BEST PSU

BANKS" by financial express India''s best banks survey 2012-13.

- Farmers clubs promoted by Gurgaon Gramin Bank

- our sponsored RRB - were honoured by Hon''ble Chief Minister of Haryana by presenting a shield for its excellent performance.

- Our Bank has been presented with an award as ''Best Performing Bank in Implementation of SHG linkages programme'' in the state of Andhra Pradesh by Hon''ble Chief Minister of Andhra Pradesh, Shri N Kiran Kumar Reddy.

- Bank has been conferred "Best Bank Award" amongst all the Banks in the RSETI movement by Sri Jairam Ramesh, Hon''ble Minister for Rural Development, Government of India.

- Bank has been awarded "Banking Excellence Award 2013 for the second best public Bank in overall performance" by State forum of Bankers Club Kerala.

- Bank has been awarded for Record Breaking Performance during Synd LIC Saptah (2nd to 7th December, 2013) by marketing 15119 policies Highest by any of the Bancassurance Partners during a week by Life Insurance Corporation of India (LIC).

- Bank has been awarded "CIO Master 2013" - Certification of Recognition for its Business Intelligence by BIZTECH2.COM

- Bank has been awarded "CIO 100 - ASTUTE 100 - HONOREE 2013" for its Business -Technology - Leadership

CHANGES IN THE BOARD:

i. Shri Sudhir Kumar Jain, appointed as the Chairman & Managing Director of the Bank w.e.f. 08.07.2013.

ii. Shri T K Srivastava, appointed as the Executive Director of the Bank w.e.f. 01.09.2013

iii. Shri M Rajeshwar Rao, nominated as RBI Director w.e.f. 31.05.2013.

iv. Shri Sankaran Bhaskar Iyer, nominated as Workmen Director w.e.f. 04.09.2013

v. Shri Sanjay A Manjrekar, nominated as Non workmen Director w.e.f. 17.07.2013

vi. Shri Atul A Galande, elected as Shareholder Director of the Bank w.e.f. 26.06.2013.

vii. Shri M G Sanghvi, Chairman & Managing Director, superannuated on 30.06.2013.

viii. Shri Ravi Chatterjee, Executive Director, superannuated on 31.08.2013.

ix. Shri A S Rao, RBI Nominee Director, completed his term as Director of the Bank on 31.05.2013.

x. Shri Narendra L Dave, Workmen Director completed his term as Director of the Bank on 31.08.2013.

xi. Shri Dinkar S Punja, Non Workmen Director completed his term as Director of the Bank on 12.07.2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors, in preparation of the annual accounts for the year ended March 31, 2014, confirm the following:

That the applicable accounting standards have been followed in the preparation of annual accounts along with proper explanation relating to making departures if any.

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

That reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank as at the end of financial year and of the profit or loss of the Bank for the year ended March 31, 2014.

That proper and sufficient care was taken for maintenance of adequate accounting records in accordance with the provision of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

That the annual accounts have been prepared on a ''go- ing concern'' basis.

ACKNOWLEDGEMENT

The Directors wish to place on record their sincere appreciation to the public, valuable customers, shareholders and staff members for their continued support and patronage in India and abroad.

The Directors are also indebted to the Ministry of Finance, Government of India; RBI; SEBI and other regulatory authorities, various Financial Institutions, Banks and Correspondents in India and abroad for their unflinching and valuable support and guidance from time to time.

The Directors express their indebtedness to Shri M G Sanghvi, former Chairman & Managing Director and Shri Ravi Chatterjee, former Executive Director, who demitted the office during the year and also to Shri A S Rao, RBI nominee Director, Shri Narendra L Dave, Workmen Director, Shri Dinkar S Punja, Non Workmen Director who have completed their term during the year for their able guidance, leadership and support which they had provided during their tenure in the Bank.

For and on behalf of the Board of Director

Place : Manipal (Sudhir Kumar Jain)

Date : 15.05.2014 Chairman & Managing Director

---

Mar 31, 2012

The Board of Directors is pleased to present the Bank's Directors' Report along with the Audited Balance Sheet as on 31st March 2012 and the Profit & Loss Account statement for the financial year ended 31st March 2012.

PERFORMANCE HIGHLIGHTS OF THE BANK DURING THE FINANCIAL YEAR 2011-12

CAPITAL & RESERVES

Bank's authorized Share Capital stood at Rs 3000 crore and the paid-up capital at Rs 601.95 crore (601949955 Equity Shares of Rs 10 each) for the financial year ended 31.03.2012.

The Reserves and Surplus of the Bank increased from Rs 6477.55 crore in 2010-11 to Rs 8439.20 crore in 2011-12 registering a y-o-y growth of 30.28% per cent over the previous year.

During the year the Bank raised an amount of Rs 327. 20 crores from LIC of India by issuing 2,86,64,284 equity shares of Rs 10 each at a premium of Rs 104.15 per share.

NET WORTH

The Net Worth of the Bank (excluding revaluation reserves) improved significantly from Rs 6656.78 crore as at March 31, 2011 to Rs 7994.32 crore as at March 31, 2012.

DIVIDEND

The Bank's Board of Directors has proposed, subject to the approval of shareholders, a final dividend of Rs 3.80 per share (38 per cent), amounting to Rs 265.85 crore (including Dividend Tax of Rs 37.11 crore), for the financial year 2011-12 as compared to dividend of Rs 3.70 per share (37 per cent) declared during the financial year 2010-11.

BUSINESS GROWTH

The global business of the Bank grew by 16.24 per cent from Rs 243946 crore in 2010-11 to Rs 283558 crore in 2011-12, whereas, Bank's domestic business rose by Rs 34330 crore (15.30 per cent) to Rs 258660 crore during the year 2011-12.

DEPOSIT MOBILIZATION

Global deposits of the Bank grew by 16.48 per cent from Rs 135596 crore in 2010-11 to Rs 157941 crore in 2011-12. Domestic deposits grew by 16.49 per cent from Rs 126796 crore in 2010-11 to Rs 147707 crore in 2011-12.

The major thrust throughout the year was to strengthen the customer base by canvassing more number of savings bank and current account. To achieve this goal, Bank has conducted various campaigns during the year and encouraged the staff members for canvassing substantial deposits under the segments.

CASA DEPOSITS

Domestic CASA deposits of the Bank increased from Rs 41690 crore in 2010-11 to Rs 46424 crore in 2011-12, registering a growth of 1 1 .36 per cent. Percentage of domestic CASA to domestic deposits stood at 31.43 per cent as at 31.03.2012.

CREDIT DEPLOYMENT

The Bank's global advances rose from Rs 108350 crore in 2010-11 to Rs 125617 crore in 2011-12 registering a growth of 15.94 per cent. Domestic advances grew by 13.76 per cent from Rs 97535 crore in 2010-11 to Rs 110953 crore in 2011-12. The credit deposit ratio stood at 79.53 per cent in 2011-12 as compared to 79.91 per cent of the last year.

Priority Sector Advances increased from Rs 36886 crore in 2010-11 to Rs 41383 crore in 2011-12 forming 45.21per cent of ANBC as against mandatory level of 40 per cent.

Total Agriculture Advances increased from Rs 14798 crore in 2010-11 to Rs 17409 crore in 2011-12 forming 19.02 per cent of ANBC as against mandatory level of 18 Per cent.

MSME Advances increased from Rs 13382.60 crore in 2010-11 to Rs 14865.96 crore in 2011-12 registering a growth of 11.08 per cent.

Retail lending is the main focus area of Bank along with MSME and mid corporate segment. Bank is making continuous effort to improve the quality of its lending by following due diligence and undertaking effective credit monitoring to enhance qualitative growth rate.

PROFITABILITY

The Bank has registered a substantial increase of 21.71per cent in Operating profit from Rs 2749.78 crore in 2010-11 to Rs 3346.80 crore in 2011-12.

Net profit of the Bank rose by 25.33 per cent from Rs 1047.95 crore in 2010-11 to Rs 1313.39 crore in 2011-12.

EMPLOYEES' PRODUCTIVITY

Business per employee of the Bank improved from Rs 8.75 crore as at March 31, 2011 to Rs 10.74 crore as at March 31, 2012. Profit per employee also improved from Rs 3.99 lakh as at March 31, 2011 to Rs 5.29 lakh as at March 31, 2012.

INCOME & EXPENDITURE

The Bank's total income rose by 32.17 per cent from Rs 12365.98 crore in 2010-11 to Rs 16344.23 crore in 2011-12.

The Bank's interest income rose by 33.34 per cent from Rs 11450.86 crore in 2010-11 to Rs 15268.35 crore in 2011-12.

The Non-interest income of the Bank improved by 17.57 per cent from Rs 915.12 crore in 2010-11 to Rs 1075.88 crore in 2011-12.

The Interest expended by the Bank increased by 44.07 per cent from Rs 7068.10 crore in 2010-11 to Rs 10183.32 crore in 2011-12.

Operating expenditure of the Bank stood at Rs 2814.12 crore as at 31.03.2012 as compared to Rs 2548.10 crore as at 31.03.2011.

PERFORMANCE UNDER CRITICAL RATIOS

a) The Return on Assets improved from 0.76 per cent in 2010-11 to 0.81 per cent in 2011-12.

b) The Bank's Net Interest Margin (NIM) improved from 3.40 per cent in 2010-11 to 3.43 per cent in 2011-12.

c) The yield on advances improved from 9.52 per cent in 2010-11 to 10.98 per cent in 2011-12.

d) The cost of deposits of the Bank stood at 6.74 per cent in 2011-12 as compared to 5.43 per cent in 2010-11.

e) The Earning Per Share (EPS) of the Bank improved from Rs 20.03 as at March 31, 2011 to Rs 22.89 as at March 31, 2012.

f) The Book Value per share of the Bank improved from Rs 122.99 as at March 31, 2011 to Rs 150.13 as at March 31, 2012.

g) Net NPA percentage to net advances brought down from 0.97 per cent in 2010-11 to 0.96 per cent in 2011-12.

h) The provision coverage ratio of the Bank improved from 77.18 per cent as at March 31, 2011 to 80.06 per cent as at March 31, 2012 which is well above the mandatory 70 per cent stipulated by RBI.

i) The Capital Adequacy Ratio (CRAR) of the Bank stood at 12.24 per cent as at March 31, 2012 as compared to 13.04 per cent as at 31.03.2011.

RETAIL BANKING

Bank has introduced new scheme under educational loans "SyndSuperVidya" to cater to the needs of meritorious students getting admission into the prestigious institutes like IITs, IIMs, NIITs, etc., with financial support upto Rs 20 lakh without any collateral security and at reduced rate of interest. To achieve qualitative growth under select branded products viz. SyndNivas, SyndVidya, SyndSuperVidya, SyndSwarna, SyndVahan, SyndPigmy, SyndRent, SyndSmall Credit, SyndUdyog, SyndVyapar, SyndLaghuUdyami, SyndNivas Plus and SyndSaral, Bank has adopted a focused lending approach coupled with strong marketing initiatives.

The growth in retail credit was 9.10 per cent during 2011-12 over the previous year. Bank's total outstanding domestic retail loans and advances amounted to Rs 24724.59 crore as at March 31, 2012 constituting 22.28 per cent of the total outstanding gross domestic advances.

Main thrust areas under Retail Banking during the year 2011-12 were Housing Loans, Education Loans, Vehicle Loans, Personal Loans, Gold Loans and Loans against rent receivables.

SyndNivas

SyndNivas scheme is made more attractive with reduction of rate of interest and enhancing the maximum repayment period up to 25 years. Leverage under LTV is enhanced to 80% and 90% for loans of Rs 20 Lakhs and above and below Rs 20 Lakhs respectively. In order to garner business of defence personnel, Bank has promulgated special scheme for AGIF, AWHO and ANHB. Their tie-up will definitely prove fruitful in future.

Outstanding advances under Housing Loan (direct) stood at Rs 8423.54 crore as at March 31, 2012 with a clientele base of 171290.

Outstanding advances under Housing Loans - Priority sector stood at Rs 7437.25 crore as at the end of March 2012 and Non-Priority sector stood at Rs 986.29 crore.

Centralized Processing Centres for processing Housing Loans have been extended to 6 more centres during the year and presently CPCs are made available in 18 Centres and will be replicated in other identified centres also to bring about a drastic transformation in the loan delivery process. Under this arrangement, the proposals are processed quickly by skilled officers, thus improving the quality of assets and delivery of credit at ease. The focus is mainly on following the approved builder route for financing the buyers of flats in approved projects. A system has been put in place for conducting due diligence on builders and projects. The Bank has introduced an optional insurance scheme for Housing Loan borrowers for covering the life of borrower during the loan period.

SyndNivasPlus:

This is a pre-approved top-up loan product for SyndNivas borrowers with prompt repayment track for 2 years from the date of availment and helps to meet their personal needs.

Outstanding advances under SyndNivasPlus stood at Rs 66.30 crore as at the end of March 2012.

SyndVidya:

During the fiscal year 201 1 -1 2, Education Loan portfolio witnessed a quantum jump from Rs 1902.85 crore as at March 31, 2011 to Rs 2269.76 crore as at March 31, 2012 registering a growth of 19.28 per cent.

Special concession in rate of interest is extended to the extent of 0.50% to all students belonging to SC/ST category and further concession of 0.25% for girl students belonging to SC/ST category.

Bank is charging simple interest during the Repayment holiday/ Moratorium period on Education loans.

SyndSwarna:

Outstanding balance under SyndSwarna loans against jewellery / gold reached Rs 3206.65 crore as at 31.03.2012 as against Rs 1934.55 crore as at 31.03.2011, registering an increase of 65.76 per cent. Our scheme is one of the best in the Industry with easy terms and low interest at BR 1.25%. The timely extension of liberalized guidelines in tune with Gold loan market conditions has helped to register such high rate of growth. Bank has also popularized the scheme by providing overdraft facility against gold ornaments. Bank has taken steps to establish gold loan Shoppes at important centres to provide gold loans in a focused way.

TREASURY AND INTERNATIONAL OPERATIONS TREASURY

The domestic investments of the bank were at Rs 40641.46 crore as at 31.03.2012 as against Rs 34954.27 crore as at 31.03.2011. Total income from investment portfolio (excluding trading profits) increased from Rs 2265.13 crore in 2010-11 to Rs 2788.16 crore in 2011-12. Bank's investment in SLR securities amounted to Rs 36553.54 crore, which formed 89.94 per cent of Bank's aggregate investments as on 31.03.2012.

INTERNATIONAL DIVISION

International Division, Mumbai is the only "Category A" office of the Bank. The Bank's centralized dealing room at International Division, Mumbai is supported by one Link Dealing centre at New Delhi. The Bank is one of the first to undertake WEB-BASED trading with Overseas counter party Banks by using state-of-the- art WEB PLATFORMS. The Bank is having 87 designated Branches (Category B) to handle full-fledged FX transactions and 375 nominated branches to handle the FCNR BUSINESS of the Bank. NRE/ONR deposits are accepted at all branches of the Bank.

The Bank is offering only plain vanilla derivatives and no complex derivative products are offered by the Bank.

The Bank has become Trading-cum-Clearing Member on three exchanges, i.e., MCX-SX, NSE and USE for undertaking trading in Currency Futures.

The total Forex Turnover of the Bank during the year stood at Rs 493406.78 crore as compared to Rs 433099.82 crore for the previous Financial year. The Inter-Bank turnover of the Bank stood at Rs 443009.75 crore as at March 2012 as compared to Rs 374736.09 crore for the previous year.

EXPORT FINANCE

Export Credit outstanding stood at Rs 2144.40 crore as at March 31, 2012, as against Rs 1943.80 crore as at March 31, 2011. The coverage under the SyndExport Gold Card Scheme, a unique scheme for eligible exporters offering concessional and preferential terms, was broadened to include more number of exporters. Rupee export credit was offered at very competitive interest rates within the ceiling prescribed by RBI. The Interest Subvention Scheme, as designed by Reserve Bank of India, has been made available by the Bank to its customers in certain specified sectors, thus passing on the benefits of concessional interest.

EXCHANGE COMPANIES

The Bank is successfully managing two Exchange Companies one each at Qatar and Sultanate of Oman. Besides having rupee drawing arrangements with 8 exchange houses the bank also has speed remittance arrangements with 9 Exchange Houses for improved and cost-effective funds transfer to India from Gulf countries.

OVERSEAS OPERATIONS

Bank's only overseas presence is in UNITED KINGDOM at LONDON. The Branch is active in money market operations, besides treasury and forex dealing operations. The Branch also focuses on syndications and ECBs. With Indian Corporates going global, Branch finds new opportunities of business.

The total business of the branch stands at GBP 3697.586 Million as at March 31, 2012 as against GBP 3078.698 Million as at March 31, 2011.

ASSET QUALITY & MANAGEMENT OF NPAS

The Bank accorded top most priority for management of Non Performing Assets (NPAs), maximizing cash recovery of NPAs and upgrading the existing NPAs.

Bank took up resolving high value Non Performing Assets by meeting large borrowers and settling under One Time Settlement Scheme at Corporate Office level. Bank has introduced / extended special OTS schemes for considering proposals of farmers eligible under Agricultural Tractor loans, small NPA accounts under doubtful and loss assets category with book balance of Rs 1,00,000/- & below as at March 2011 and of Micro and Small Enterprises borrowers.

A total number of 3495 Synd Adalats were conducted at regional/cluster level and 15874 OTS cases were settled.

Provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act - 2002 were effectively utilized. Bank was able to register a recovery of Rs 691.17 crore during the year 2011-12 by issuing notices and taking possession/auctioning of properties.

Special intensive recovery drive, and Synd Vasuli Abhiyan -108, a NPA Recovery campaign was conducted successfully during the year under review for maximizing recovery through active participation of staff members.

The recovery in NPAs amounted to Rs 1137.20 crore comprising Rs 838.03 crore recovery towards principal Rs 296.86 crore towards uncharged interest and Rs 2.31 crore towards bad debts written off accounts. In all, Bank could make cash recovery of NPAs of Rs 1434.75 crore during the year.

The gross NPA level and gross NPA ratio as of 31.03.2012 is Rs 3182.70 crore & 2.53 per cent respectively. The Bank has maintained sufficient cushion towards provision requirement to cover up the unexpected defaults. The provision coverage ratio at 80.06 per cent as at 31.03.2012 is well above the RBI stipulation of 70% coverage ratio.

RISK MANAGEMENT

RISK MANAGEMENT ARCHITECTURE

The Board of Directors is primarily responsible for the risk management initiatives in the Bank. Risk Management Committee (RMC) of the Board is the apex Committee defining institution's risk appetite. The RMC of the Board is ably assisted by Credit Risk Management Committee (CRMC) with respect to Credit Risk, Asset Liability Management Committee (ALCO) with respect to Asset Liability Management and Liquidity Risk and Operational Risk Management Committee (ORMC) with respect to Operational Risk.

Risk Management Department at Corporate Office oversees the overall implementation of various risk management initiatives across the Bank.

IMPLEMENTATION OF BASEL II NORMS

The Bank is Basel II norms compliant since March 31 , 2008. The capital to risk weighted assets ratio is computed as per Pillar I requirements adhering to the new capital adequacy framework guidelines of RBI, adopting Standardized Approach for Credit Risk, Basic Indicator Approach for Operational Risk and Standardized Duration Approach for Market Risk.

The Bank has formulated its Internal Capital Adequacy Assessment Process Policy (ICAAP) which is fine tuned regularly so as to be in sync with the market realities and economic environment and regulatory requirements. Pillar II risks are assessed periodically apart from review of capital plan based on actual quarterly working results. ICAAP is subjected to validation by internal auditors.

The Bank has a Board approved Stress Testing Policy to assess areas of potential problems and to identify future changes that could have unfavourable effect on the Bank's portfolio. As the underlying assumptions keep changing from time to time, the stress test is reviewed periodically so as to be responsive and sensitive to the happenings in the market.

The Bank has put in place a Board approved Disclosure Policy adhering to the disclosure norms under Pillar III of Basel II as per RBI guidelines. The Bank is having well articulated policies and processes with regard to Credit Risk, Market Risk and Operational Risk.

ASSET LIABILITY MANAGEMENT

The Asset Liability Management Committee consists members of the top management and regularly meets to manage Liquidity Risk, Interest Rate Risk, Gaps / mis-match Risk, Basis Risk, Re-pricing Risk, Forex Risk and Equity Price Risk. It includes products pricing for deposits as well as advances and the desired maturity profile of assets and liabilities.

With the Financial Services Authority, UK approving "Whole Firm Modification" approach for our London Branch under the liquidity regime of FSA, the Bank has put in place a mechanism for effective monitoring of liquidity at London Branch and for the Bank as a whole.

The Bank has a well-documented Contingency Liquidity Funding Plan for managing any contingency. The Bank was able to manage its liquidity comfortably during the year.

NATIONAL PRIORITIES

Based on the Bank's experience in lending to different sectors and considering the dynamics of Economic growth, Government directives, National priorities and Socio-economic obligations, thrust was given during the year to Priority Sector lending especially lending to agriculture.

During the year, Bank has adopted various strategies to achieve sustainable credit growth, improving asset quality, ensuring higher earnings and maintaining well diversified credit folio, covering all sections of the society to ensure inclusive growth. The Bank has continued its growth under Priority Sector lending with added thrust on consolidation of its position and focus on asset quality. The focus areas for credit were Agriculture, Micro & Small Enterprises, Education, Housing and other productive sectors of the economy.

For quick disposal of large number of credit applications and to reduce time taken in credit decisions, the bank has introduced the "Online Request" from prospective clients covering credit requirements under various Priority Sector segments including Agricultural loans. The prospective clients can submit their request for loan through prescribed application form made available on the Bank's website. System generated acknowledgement with unique reference number is provided to the applicants immediately which can be used by them for tracking their applications.

PRIORITY SECTOR ADVANCES

Priority Sector Advances of the Bank reached a level of Rs 41383.47 crore as at March 2012 constituting 45.21 per cent of ANBC against the mandatory level of 40 per cent. The Bank has covered more than 24.82 lakh customers under Priority Sector Advances. Lending to Micro & Small Enterprises was at Rs 13491.73 crore. Special care was taken to ensure that the credit needs of SC/ST, Minorities, Weaker sections and Women are fully met exceeding the bench mark levels stipulated. Advances to Weaker Sections have reached a level of Rs 11033.83 crore forming 12.05 per cent of ANBC, thereby surpassing the prescribed norm of 10 per cent. The advances to women customers increased from Rs 6319.76 crore as at March 2011 to Rs 7344.10 crore as at March 2012, forming 8.03 per cent of ANBC against the mandatory norm of 5 per cent. Similarly, advances to minorities increased from Rs 5569.30 crore as at March, 2011 to Rs 6609.08 crore as at March, 2012, forming 15.97 per cent of Priority Sector Advances surpassing the mandatory requirement of 15 per cent.

AGRICULTURE AND ALLIED ACTIVITIES

Credit to Agricultural Sector reached a level of Rs 17408.92 crore forming 19.02 per cent of ANBC as at March 2012 against the mandatory requirement of 18 per cent. Bank has covered more than 15.99 lakh customers under agricultural advances. The disbursement under Special Plan for Agricultural Credit during the year amounted to Rs 10789 crore against the disbursement of Rs 10,045 crore during the corresponding period of last year. The Bank brought 176019 new farmers into its fold during the year through Rural and Semi-urban branches, registering an average of 114 new farmers per rural and semi urban branch and surpassed the Government's stipulation of bringing at least 100 new farmers into Bank's fold, by each rural and semi urban branches.

SYNDICATE KISAN CREDIT CARD SCHEME (SKCC)

The Bank has issued 3.48 lakh SKCC cards during the year 201 1 -1 2. The cumulative number of Syndicate Kisan Credit Cards issued so far, excluding the renewals, is 12.73 lakh with a total credit limit of Rs 7391 crore. The existing Syndicate Kisan Credit Card Scheme was revisited and the following value additions were introduced.

- To take care of increase in scale of finance and enhancement in credit requirement of the farmers, staggered limits were incorporated.

- Debt Swap facility has been simplified and eligibility limit has been increased to Rs 1.00 lakh to cover more number of farmers and enable them to come out of the clutches of private money lenders.

Under Syndicate Kisan Samrudhi Credit Card Scheme, the Bank has issued 749 cards with a credit limit of Rs 4.98 crore during the year, which provides hassle free investment credit in addition to need based short-term credit.

GOVERNMENT SPONSORED SCHEMES

The Bank continued to participate in implementing poverty alleviation and employment generation schemes sponsored by the Government in full scale. Special emphasis was laid on coverage of SC/ST, women and minority beneficiaries under these schemes. The total amount disbursed under these schemes viz. PMEGP SGSY and SJSRY is Rs 43.45 crore benefitting 3814 families during the year. Special thrust was given to extend financial support to SC/ST/OBC and minorities, while implementing the Govt. sponsored schemes.

ADVANCES TO SC/ST

The coverage of SC/ST beneficiaries under various schemes, especially under Govt. Sponsored Schemes is reviewed at regular intervals. Bank has initiated special efforts to create awareness about various schemes of the Bank among SC/STs to motivate them to avail the benefits under these schemes. Advances to SC/ST beneficiaries under Priority Sector, rose from Rs 1957.84 crore as at March 2011 to Rs 2653.30 crore as at March 2012, registering a growth of 35.52 per cent during the year 2011-12.

ADVANCES TO MINORITIES

Bank has taken various measures through Regional Offices and Lead District Offices for popularizing amongst minority communities the various credit products available for their benefit. The advances to Minorities rose from Rs 5569.30 crore as at March 2011 to Rs 6609.08 crore as at March 2012, registering a growth of 18.67 per cent during the year 201 1 -1 2. The information pertaining to credit flow to Minority communities and status on implementation of Prime Minister's 1 5 point programme for Minorities and Sachar Committee recommendations are placed in the Bank's website. Special interest scheme was introduced by the Bank during this year for the benefits of minority community under Priority Sector lending.

CREDIT LINKAGE OF SELF HELP GROUPS/JOINT LIABILITY GROUPS

29066 new Self Help Groups (SHGs) were credit linked with a credit support of Rs 636.90 crore during the year 2011-12. The Bank had 102340 credit linked SHGs with a credit exposure of Rs 1221.33 crore as at 31.03.2012. In addition, 809 Joint Liability Groups (JLGs) were credit linked with a credit support of Rs 8.25 crore. During the year, the Bank secured the state level award from NABARD for highest average lending to SHGs among the Banks in Karnataka.

The Bank is participating in Janashree Bima Yojana of LIC of India to extend insurance cover to all the women members of SHGs credit linked to Bank wherein the premium is subsidized by GOI. Further, the scheme has an add-on benefit under Shiksha Sahayog Yojana wherein two children of the insured member of SHG are provided with scholarship at no additional cost.

HARNESSING SOLAR ENERGY

The Bank has been actively involved in promoting solar energy and implementing the schemes for financing Solar Water Heating Systems and Solar Lighting Systems. The Bank is presently implementing the scheme to extend finance to Solar Home Lighting Systems and Solar Water Heating Systems with subsidy assistance from MNRE (Ministry of New and Renewable Energy) under Jawaharlal Nehru National Solar Mission (JNNSM). During the year, the Bank has financed Rs 1.04 crore for 399 units of Solar Home Lighting Systems and Rs 2.63 crore for 656 units of Solar Water Heating Systems.

REGIONAL RURAL BANKS

There are 5 Regional Rural Banks sponsored by our Bank, covering 32 districts in 5 states, with a network of 1578 branches. RRBs sponsored by the Bank are in the top league among all 82 RRBs of the country, in respect of key business parameters. Total business of RRBs sponsored by the Bank stood at Rs 38307 crore, registering an annual growth of 16.75 per cent during the year.

The total deposits and advances of the RRBs reached a level of Rs 20594 crore and Rs 17713 crore, with an annual growth of 11.57 per cent and 22.69 per cent, respectively. The total Priority Sector Advances stood at Rs 15162 crore constituting 87.76 per cent of total advances as at 31.03.2012. Agricultural advances reached a level of Rs 11418 crore forming 64 per cent of total advances. In all, the RRBs have issued 11.97 lakh Kisan Credit Cards to farmers with an outstanding credit of Rs 5812 crore. The RRBs have earned a net profit of Rs 452 crore for the year 2011-12.

As per the suggestions of the working group constituted by RBI on Technology up-gradation of RRBs, the RRBs sponsored by our bank have moved towards implementation of CBS. System generated NPA for accounts having balance of Rs 5.00 lakh and above is implemented in all RRBs sponsored by us.

During the year, Karnataka Vikas Grameena Bank received the state level awards from NABARD for involvement of highest number of Branches in SHG Bank Linkage and for linking highest number of JLGs in Karnataka State.

SYNDICATE RURAL DEVELOPMENT TRUST (SRDT)

Syndicate Rural Development Trust (SRDT) was established in the year 2000 to promote rural development and rural entrepreneurship among the rural poor, especially women. During the year one more Institute was opened and with that the Bank has established 1 6 SyndRural Self Employment Training Institutes (Synd RSETIs) in 5 States and 1 Union Territory for imparting training to rural poor. These institutes have conducted 323 training programmes during the year 2011-12, benefitting 9739 persons, of whom 6585 were women and 3100 were from SC/ST category. Total candidates trained since inception is 82116. The settlement rate is 67 per cent.

RURAL DEVELOPMENT AND SELF EMPLOYMENT TRAINING INSTITUTE (RUDSETI)

Bank has co-sponsored 26 Rural Development and Self Employment Training Institutes (RUDSETIs) across the country. These institutes have trained 21881 candidates during the year 2011-12. Out of these trained candidates 16564 were women and 4154 were from SC/ST category. Total candidates trained since inception is 284733. The settlement rate is 71 per cent.

Our RUDSETI model has been accepted by Govt. of India, Ministry of Rural Development, as a role model to be replicated in each district of the country. A monitoring cell of National Academy of RUDSETIs was established at Bengaluru during the year.

LEAD BANK SCHEME

The Bank has Lead Bank responsibilities in 27 districts inclusive of UT of Lakshadweep across the country. During the year, the Bank took up the responsibilities of Lead Bank in two new districts - Bhimnagar and Panchsheel Nagar in the state of Uttar Pradesh. Lead District Offices of the Bank in 25 lead districts have conducted the District Level Review Committee (DLRC) meetings and District Consultative Committee (DCC) meetings regularly. The credit planning process was completed and District Credit Plan (DCP) 2012-13 was launched as per time schedule envisaged by RBI. The Bank is also the convener of State Level Bankers' Committee (SLBC) in Karnataka and the Union Territory of Lakshadweep and satisfactorily discharged the responsibilities cast on it as the convener of State Level Bankers' Committee. The SLBC for Karnataka and UTLBC for Lakshadweep are implementing the recommendations of the High Level Committee to review the Lead Bank Scheme.

FINANCIAL INCLUSION (FI)

Under FI Programme, our bank has covered 1 553 Villages having population of over 2000 by March 31, 2012 in excess of target given to the bank. The Bank has already opened 334 branches in FI villages and engaged 1219 BC Agents and thus we have covered 1553 villages, exceeding the allotted villages with banking outlets well ahead of the stipulated date.

The Bank has adopted both Smart Card Technology and Voice based Mobile Technology for implementing ICT based solution for implementation of FI.

Our Bank has opened 8.89 lakh No Frill Accounts in FI villages and has extended 191187 KCCs, 37352 GCCs and issued 170834 smart cards to No Frill Account customers.

All the 5 RRBs have opened banking outlets in the 1606 allotted FI villages with over 2000 population by opening 178 branches, engaging 1428 BCs and also by covering 30 villages through mobile vans.

All 35 Nodal Officers of the Regional Offices and all Base Branch Managers implementing FI Porgramme have been trained on various aspects of implementation of FI. All BC Agents have been sensitized on the products and services available from the Bank for enabling them to take up enrolment of customers and mobilize business. In addition to this, 1023 BC Agents have been exposed to intensive training through IIBF accredited Training Institutions.

The scheme of Ultra Small branches has been introduced to facilitate increased banking transactions amongst customers of villages covered under financial inclusion. We have opened 14 such branches as at 31.03.2012.

The Bank has entered into an arrangement with M/s SBI Life Insurance company to offer comprehensive life insurance for a sum of Rs 25000/- at a nominal premium covering natural and accidental death risk with inbuilt terminal illness benefit for all the No Frill Account holders under FI.

A number of initiatives have been taken to fast track implementation of FI and important among them are:

- Bank has launched a new product viz SB-cum-OD for extending overdraft upto a limit of Rs 10000/- to all rural landless families for meeting their requirements of consumption based on need with a provision to pay interest at SB Rate for the credit balance maintained in the account.

- Another product for extending credit facility of Rs 20000/- to the BC Agents to purchase Micro ATM Kit has also been launched.

- Bank has selected 6 villages to take up various developmental activities under 'Corporate Social Responsibility' to make them 'Model' villages under Meaningful and Holistic Financial Inclusion (MHFI) concept. Activities taken up under this programme includes training and capacity building, solar lighting, infrastructural development, health and hygiene etc.

- As part of promoting financial literacy, Bank has donated a Mobile Publicity Van to JJFLCC Trust to take up awareness programmes in villages. In addition a customized Mobile Publicity Van has also been engaged to spread the message of FI by performing puppet and magic shows in identified villages in Mewat District, brochures, pamphlets have been brought out in vernacular languages, graffiti displayed at prominent places in the villages, Yakshagana programmes organized with FI theme in selected villages, 'Comic' books depicting the various products and services available from the Bank have been published and distributed to the villages.

- 24 FLCCs and 21 FIRCs have been established in the Lead Districts of the Bank.

- 193 Gram Sabhas have been organized in the villages to mobilize customers and open No Frill Accounts.

- Bank has introduced a scheme for offering incentives to the BC Agents to motivate them in contributing to the business development of the Bank and also recovery.

- In order to strengthen the monitoring arrangement, Bank has come out with guidelines on appointment of retired Bank Officers as BC Supervisors to supervise a cluster of 10-12 BCs.

- 96 SyndFI Quiz has been organized in High Schools and Junior Colleges located in FI villages to promote financial literacy amongst school children.

- As part of technology initiative, Bank has already completed Proof of Concept (POC) for enabling interoperability of FI transactions through the HHMs of the BC agents across the Banks.

- Bank is a Registrar for UIDAI for Aadhaar enrolment and has commenced Aadhaar enrolments in UP & Haryana and has completed enrolments close to a lakh.

MEWAT-ROLE MODEL FOR FINANCIAL INCLUSION

The Bank is the Lead Bank in Mewat District of Haryana State and Mewat has been selected by DFS, MOF, GOI, for pilot study on implementation of FI.

Under the leadership of Syndicate Bank, a number of initiatives were taken in the District for FI implementation, such as, streamlining the procedures for extending KCC & GCC so as to cover 1 00% eligible households, strengthening monitoring system in implementation of FI by deputing specific officers to visit FI villages on fixed day and time in a week, opening Banking outlets in all the villages with over 2000 population, testing POC for enabling interoperability of FI transaction through HHMs of BC Agents across the Banks, training and sensitization of staff on e-payment, commencement of Aadhaar enrolment, adopting innovative forms of promoting financial literacy such as puppet show, magic show, etc., adopting the concept of Anchor NGO to facilitate formation and credit linkage of SHG, etc.

Banks in the District have formed 4353 SHGs and credit linked 4253 SHGs. In Mewat District, Bank has issued Debit Cards as well as Smart Cards to enable people to operate through ATMs, Micro ATMs and POS in the District. To inculcate card culture for transaction, Bank has provided EDC POS Machines to merchant establishments. 60 Farmers Clubs have been formed by the Bank along with GGB, sponsored by Syndicate Bank in the District and the Bank has also opened one Financial Literacy & Credit Counselling Centre in the District.

The Ministry of Finance, Government of India, has complemented the Bank for the initiatives taken and the excellent progress made in implementation of FI in Mewat District.

ADVANCES TO MICRO, SMALL & MEDIUM ENTERPRISE (MSME) SECTOR

In tune with the guidelines issued by the Government of India and RBI, the Bank has taken steps for increased flow of credit to MSME sector. Total Advances to MSME sector stood at Rs 14865.96 crore as at March 31, 2012, against Rs 13382.60 crore as at March 31, 2011, registering a growth of 11.08 per cent during the year. Advances to Micro and Small Enterprises reached a level of Rs 13491.73 crore as at March 31, 2012, registering a growth of 11.97 per cent. The total outstanding advances to Micro Enterprises constitute 61.74 per cent of advances to Micro and Small Enterprises Sector exceeds stipulated target of 55 per cent to be achieved by March 2012 and 60 per cent to be achieved by March 2013. Total number of accounts under Micro Enterprises increased from 459884 as on March 2011 to 513206 as on March 2012 registering growth of 11.59 per cent during the year.

During the year, all existing MSE products are revisited and a new scheme "SyndMSE" with reduced rate of interest, margin and liberalized terms and conditions to promote the growth of Micro and Small Enterprises was launched. Further to encourage Micro Enterprises, rebate in interest rate for prompt repayment was introduced. MOUs signed with reputed Commercial Vehicle Manufacturers viz. Tata Motors, TVS Motors and Bajaj Auto Ltd. for financing commercial vehicles under Micro and Small Enterprises. New Board approved policy for Restructure/ Rehabilitation of potentially viable MSME unit is launched to take up timely rehabilitation measures for potentially viable sick units.

CREDIT GUARANTEE TRUST FUND FOR MICRO AND SMALL ENTERPRISES (CGMSE)

CGMSE scheme was introduced by the Govt. of India and SIDBI, to guarantee collateral free credit facilities sanctioned to Micro and Small Enterprises (MSEs). The bank is a member lending institution (MLI) implementing the scheme. As per RBI guidelines, it is mandatory to grant collateral free loans to MSEs upto Rs 10.00 lakh and cover all eligible loans under CGMSE. Bank has also implemented CGTMSE guidelines to extend Collateral free loans without third party guarantee to Micro and Small Enterprises up to Rs 100 lakh and cover all eligible accounts under CGMSE.

The Collateral free loans without third party guarantee granted to Micro and Small Enterprises and covered under CGMSE scheme increased from 12971 as at March 2011 to 21402 as at March 2012 registering a growth of 65 per cent.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Bank has been displaying a strong and abiding commitment to encourage the greater use of Hindi in various forms, not only because it is the policy of the Government of India but also as an ideal and powerful medium of Financial Inclusion.

Hindi Day was celebrated in all the Regional Offices/Head Office, Corporate Office & Port Blair, Agatti and Kavaratti branches in a befitting manner.

Our Hindi House Magazine 'Jagriti' has been consecutively awarded III prize for the year 2010-11 in the Hindi Magazine competition conducted by the Reserve Bank of India. RO: Coimbatore & RO: Bhubaneshwar were awarded first prize by the TOLIC, Coimbatore & TOLIC, Bhubaneshwar respectively. RO: Hyderabad was awarded 2nd prize by the Regional Implementation Office, Dept. of Official Language, Ministry of Home Affairs, Government of India.

EXPANSION OF BRANCH NETWORK

During the year the Bank has added 214 branches to its network thus crossing the landmark of 2700 branches spread throughout the country.

The addition of branches includes 200 General Banking brick and mortar branches and 14 Ultra Small branches. 68 branches are in under banked Districts and 44 branches in minority concentration Districts. During the year, 85 Satellite Offices have been opened.

The opening of ultra small branches and satellite offices are in compliance with the directions of the Government of India, Ministry of Finance to make the banking facilities available to villages coming under financial inclusion.

The target of extending banking facilities to villages coming under financial inclusion has been reached and Bheemanakupe village in Karnataka is the 1500th village to be included under our financial inclusion programme.

The Bank achieved a unique milestone of opening 108 branches spread throughout the country, on a single day on 31st March 2012.

The 1 08 branches were declared open amidst gala function at a venue in Bengaluru which was graced by Shri Namo Narain Meena, Union Hon'ble Minister of State for Finance and Shri K.H.Muniyappa, Union Hon'ble Minister of State for Railways.

Three branches have been opened in the Guwahati Region increasing the bank's presence in the North Eastern Part of India.

In addition to the above, the following offices have been opened.

14 Central Processing Centres for processing Housing Loans/ Retail Loans. One Business Processing Centre at Bengaluru to cater to opening of savings bank accounts to begin with.

The total number of branches of the Bank stood at 2710 including London branch. The domestic branch network consisted of 873 rural branches, 672 semi-urban branches, 584 urban branches, 566 metro & port town branches and 14 Ultra small branches. These ultra small branches have been opened under Financial Inclusion programme of Government of India. Total number of Satellite offices stood at 89 and the number of ATMs installed reached to 1240 as at 31.03.2012.

The bank has a customer base of 28.39 million as at March 31, 2012 as against 26.38 million at the end of the previous fiscal, registering a growth of 7.62 per cent.

AMBIENCE AND VISIBILITY

As an image building exercise consistent efforts are made to ensure a neat and tidy business premises with better visibility to make customers more comfortable when they visit the Branch/ Offices for their banking needs.

INFORMATION TECHNOLOGY

The Bank has been relentless in adopting new and emerging technologies to provide best of customer services and streamlining its internal processes, whether it being one of the first few to adopt "Main Frame" computer at Head Office in the 1970s or being the first among the Public Sector Banks to adopt and implement "Core Banking Solution" in year 2001 to provide technology based banking services to the customers. This passion is only growing and the Bank has achieved several milestones in the reporting Financial Year.

CORE BANKING SOLUTION (CBS)

The Bank continues to spread its wings with a network of 2710 Branches and 127 Offices in 1842 centres covering 32 States and Union Territories under the CBS Network as on 31.03.2012. These include 334 branches newly opened under the Govt. of India's ambitious Financial Inclusion project.

While adopting Technology has almost become passion in the Bank, constant upgradation / improvement / enhancement in the existing systems has also been a continuous endeavour to improve the systems and procedures for better customer services.

CBS FOR REGIONAL RURAL BANKS (RRB)

In accordance with the RBI directive, all the five Regional Rural Banks viz., Karnataka Vikas Grameena Bank, Karnataka, North Malabar Gramin Bank, Kerala, Andhra Pragathi Grameena Bank, Andhra Pradesh, Gurgaon Gramin Bank, Haryana and Prathama Bank, Uttar Pradesh sponsored by the Bank have been successfully brought under Core Banking System (CBS) well before the stipulated cut-off date of 30.09.2011.

DELIVERY CHANNELS

With adoption of Core Banking Solution, providing alternate channels of banking to the customer for providing Anytime, Anywhere, Anyhow (AAA) banking convenience was a natural extension.

ATM NETWORK

The Bank has operationalised 1 240 bi-lingual ATMs as at 31.03.2012, spread across 668 centres covering all demographics across the country. Tri-lingual feature in ATMs is being introduced in a phased manner. The Bank has Global Debit-cum-ATM cards through VISA and Master Card payment gateways with a Card-base of over 48 Lakhs for global access to ATMs and POS terminals. Average Cash Disbursal through ATMs has touched close to Rs 1000 crore per month. Customers have been given access to around 91324 ATMs of 63 other Banks in the Country through National Financial Switch (NFS) operated by National Payments Corporation of India (NCPI) under the aegis of Reserve Bank of India and Indian Banks' Association and to another 10853 ATMs of 14 banks belonging to Cash Tree ATM Network.

SMS BANKING

In order to keep the customer instantly informed of the transactions that went through their account, as also to provide information of their account through message based banking, Bank has introduced Short Message Service (SMS) banking. The number of customers who have availed this facility has grown from 268506 (March, 2011) to 383211 as at March 2012.

MOBILE BANKING

The Bank has implemented Mobile Banking Services during the year, whereby customers can conduct their banking transactions through mobile phones. This includes balance enquiry, statement of accounts, funds transfer within customers of Bank, etc. In addition, funds transfer to other Banks through Interbank Mobile Payment Services (IMPS), offered by National Payment Corporation of India (NPCI) has also been introduced. The number of customers who have availed of Mobile Banking facility as on 31.03.2012 stands at 5255.

CENTRALISED PAYMENTS SYSTEM OF RBI

The Bank is offering NEFT and RTGS, the fund transfer facility among the Banks, under the RBI's Centralised Payments System, through 2560 branches for RTGS and 2765 branches/offices for NEFT. The usage is steadily increasing and during March, 2012, there were 751834 NEFT transactions involving an amount of Rs 3605.79 crore and 156840 RTGS transactions involving an amount of Rs 110628 crore.

INTERNET BASED SERVICES

Bank introduced Internet Banking facility in the year 2003. The User base now stands at 6.35 Lakhs as at 31st March 2012, with an increase of 0.69 Lakhs over March, 2011. National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) facility for transfer of funds between accounts of different banks, Railway Ticket reservation, Utility Bills payments, Payment of Taxes, such as Income Tax, Municipal Corporation Taxes, VAT etc. facilities are being extended through Internet Banking Facility. The number of hits on the Bank's Internet Banking webpage, increased from 36.28 Lakhs in March, 2011 to 45.79 Lakhs in March, 2012.

The Bank has been taking proactive steps to ensure a safe Internet Banking experience for its customers by display of safety tips before logging in to Internet Banking by the customer, provision of virtual keyboard, wherein the key board is displayed on the screen and with each stroke, the position of key changes in the keyboard, educating users on Internet Banking safety measures, round the clock monitoring to detect any attempts of phishing / fraud etc.

As an additional security measure, 2-Factor Authentication, wherein second authentication, apart from user ID and Password while using Internet Banking is being introduced shortly.

PAYMENT GATEWAY SERVICES

Bank introduced its Payment Gateway Services by entering into strategic arrangements with service providers such as M/s Avenues India Limited, (CCAvenue) M/s Indiaideas.com Limited, (BillDesk) and Centralised Port Community System (CPS) floated by Indian Ports Association. While CCAvenue and BillDesk provide gateway for generic commerce such as Hotel Chains, Florists, Art Galleries, Book Sellers, Marriage Bureaus, Stock Brokers, Travel Agents, Jewelers, Insurance, Mutual Funds, BSNL etc, CPS provides convenience of payment of bills due to the Port authorities by their customers.

GOVERNMENT TRANSACTIONS

- e-Payment of Commercial Taxes in the State of Karnataka made operational.

- Facility for collection of Value Added Tax (VAT) for Karnataka and Maharashtra States introduced.

- Facility for viewing Tax Credit Statement (Form 26AS) operationalised during the year.

- Delhi State and UT of Pondicherry is in the pipeline.

- For e-payment of Excise and Service Tax, the link through NSDL has been made operational.

- Centralised Processing and payment of Pensions of Karnataka State Govt. employees is being implemented.

- Implementation of Central Plan Scheme Monitoring System (CPSMS) undertaken by the Govt. of India through Controller of General of Accounts (CGA) (Ministry of Finance) is in progress as per the schedule drawn up by the CGA.

- The Bank is in the process of implementing Central Government e-Payment Gateway (GePG).

THREE-IN-ONE ACCOUNT FOR EQUITY TRADING

Trading in stocks online has gained immense popularity. To facilitate our customers in this venture, the Bank has launched the Three-in-One account facility under the Brand name of Synd e-trade on October 24, 2011.

This facility enables customers to avail Depository facility for safe deposit of their shares in electronic form.

The facility comprises the CASA account, DP account and trading account for enabling our customers to trade in shares online, using the funds in the CASA account and dematerialised securities in the DP account through the Straight through Process.

DATA WAREHOUSING PROJECT

The Enterprise Data Warehousing and Business Intelligence (EDWBI) Solution envisages establishing a comprehensive single robust database in order to query upon to obtain required information for MIS and for analytical purposes. The project has been made operational partly and over 160 reports are being generated through this system as on 31.03.2012. Process of de- duplication of data has been commenced to facilitate bank in knowing customer dealings comprehensively and pave way for giving better customer services. This will also facilitate in Bank's initiatives in Anti money laundering etc.

RISK MANAGEMENT

As part of risk management solutions, Anti-Money Laundering (AML) Solution and Credit Risk Management Solutions have already been implemented. The implementation of Operational Risk Management Solution (ORMS) is in progress.

INFORMATION SECURITY

The Bank has a Board approved IS Security Policy in place. IS Security procedures based on the approved policy have been formulated and implemented. Adherence to policy is closely monitored on a continual basis to avoid any compromises.

In order to strengthen the monitoring system, Bank is establishing a centralised Security Operating Centre (SOC). This will facilitate in countering the IT Security Risks that the Bank faces on a day- to-day basis and keeping the Information Security systems and procedures of the Bank continuously up-to-date.

To protect the Information Assets from viruses, worms etc. the Anti Virus Management System has been automated, with latest virus signatures being automatically updated in all the systems through relay Servers across the CBS Network.

DISASTER RECOVERY MANAGEMENT SYSTEM

As per the directions of Reserve Bank of India, the Bank has formulated a comprehensive Business Continuity Plan (BCP) for the IT Systems. As part of the Plan, the Bank has procured, implemented and tested in the live environment, Enterprise- wide Disaster Recovery Management System (DRMS) for Core Applications in order to seamlessly switch over the operations from Data Centre to Disaster Recovery Site in case of failure of Data Centre (DC).

LONG TERM IT PLAN (Year 2010 to 2013)

The Long Term IT Plan of the Bank, approved and adopted by the Board, is constantly re-visited so that the implementation of the various IT Initiatives is constantly monitored.

ISO 27001 CERTIFICATION

Data Centre - Mumbai, Disaster Recovery Site - Bengaluru and Department of Information Technology - Bengaluru were accorded ISO/IEC-27001: 2005 certification in 2008. This certification is being renewed every year after a review by the ISO authorities and now stands renewed for 2011-2012 also.

CUSTOMER SERVICE KIOSKS

As part of providing convenient and secure way of deposit of clearing cheques by the customers and also speed up the process involved in clearing operations, the Bank has installed 25 Cheque Depository Kiosks in various branches across the country on a pilot basis. The Kiosk accepts the cheque and issues an acknowledgement with details of cheque and an image of cheque printed thereon. The kiosk also captures the details of the cheque and provides data in prescribed format for upload in CBS system, thus saving the time for manual entry of cheque details in system.

GOVT. / RBI INITIATIVES

- Implementation of Express Cheque Clearing System (ECCS) in all Non-MICR Centres by replacing the existing Magnetic Media Based Clearing Software (MMBCS) is in progress.

- The Cheque Truncation System (CTS) introduced in the National Capital Region (NCR) at New Delhi, is now being extended to cover Chennai, Bengaluru and Coimbatore under Grid module. CTS is operational in Chennai since October 2011 and its implementation at Bengaluru and Coimbatore is progressing as per the schedule set by RBI.

- Bank has initiated the process of procuring necessary solution for implementing Automated Data Flow system which envisages data transmission pertaining to periodical returns being submitted by Bank to RBI in prescribed format automatically to RBI without any manual intervention.

- Centralized Payment Processing System (CPPC) has been established for payment of Central Civil, Defence and other pensions.

CUSTOMER-CENTRIC INITIATIVES IMPLEMENTED

- The Bank has been registered with SEBI as Self Certified Syndicate Bank (SCSB) for providing Applications Supported by Blocked Amount (ASBA) facility to its customers. ASBA has been made operational in identified Strategic Branches.

- Customers can now change their ATM password and get Mini Statement from any ATM on National Financial Switch Network of National Payment Corporation of India.

- Facility for Online loan application (with auto generation of acknowledgement), tracking, processing, documentation, follow-up and centralized MIS is introduced.

IMPLEMENTATION OF GREEN INITIATIVES

- Bank has taken a "Green Initiative in Corporate Governance" by allowing paperless compliances by companies through electronic mode. In accordance with the recent circular bearing no.17/2011 dated 21.04.2011 and 1 8/201 1 dated 29-04-201 1 issued by the Ministry, Bank will be sending soft copies of Annual Report 2011-12 to those members / investors who have registered their email IDs with M/s. Karvy Computershare (P) Ltd., Registrar and Share Transfer Agents of the Bank.

- Video Conferencing facility is provided at Head Office, Corporate Office, all Training Colleges, International Division, Mumbai and all Regional Offices for conducting Business Review meetings, reviews of specific areas, meetings of various Committees Offices at various locations, interviews for promotions, for imparting need based trainings etc. It is being extended to other offices and branches in a phased manner.

- Bank is using corporate e-mail facility and intra-net based IP messaging system and thus reducing dependency on paper based communication.

- Various periodical and ad hoc reports required by the users across the Bank being provided in an electronic form obviating the need for paper based reports.

- As part of Enterprise wide Data Warehousing and Business Intelligence initiatives, over 170 reports are being provided to various branches/offices in electronic form only.

CURRENCY MANAGEMENT AND RBI CLEAN NOTE POLICY

RBI 'Scheme of Incentives' for implementation of Clean Note Policy which has been in vogue since October 2008 has been put into practice to ensure effective adherence of the guidelines. The Scheme details have been circulated to all our Currency Chests and all our staff members working in Currency Chests are motivated to implement the Clean Note Policy of RBI in true letter and spirit with a view to render efficient customer service to the members of the public.

32 Cash Processing Centres are established to implement the Clean Note Policy of RBI. More and more centres will be identified in the coming days for establishing Cash Processing Centres which are again Non Interest Income generating avenue.

Cash deposit Ratio as on 31.03.2012 is maintained at a satisfactory 0.20 per cent. Every effort will be made to ensure that the same tempo is maintained throughout this year.

COMMITTEE VISITED DURING THE YEAR

a) Parliamentary Standing Committee on Urban Development

A Standing Committee on Urban Development visited Bengaluru during January 9 to 1 0, 201 2, under the Chairmanship of Shri Sharad Yadav, Honourable Member of Parliament for spot study regarding ongoing schemes / projects of ministries of Urban development and Housing & Urban Poverty Alleviation.

b) Committee on Subordinate Legislation, Rajya Sabha

The Committee on Subordinate Legislation of Rajya Sabha under the chairmanship of Dr. Janardhan Waghmare Honourable Member of Parliament visited Port Blair on February 27, 2012 to discuss with the representatives of State Bank of India and Syndicate Bank on Priority sector Lending Scheme and complaint redressal mechanism for customers and employees.

c) Committee on Government Assurances, Rajya Sabha

A committee on Government Assurances, Rajya Sabha visited Bengaluru on January 17, 2012 under the Chairmanship of Shri Pyarimohan Mohapatra Honourable Member of Parliament to study contract / casual labour in Public Sector Banks and delivery mechanism of direct cash subsidy pertaining to kerosene, cooking gas & fertilsers.

HUMAN RESOURCE DEVELOPMENT

The Human Capital of the Bank as on 31.03.2012 was 26904 comprising 10829 Officers, 10221 Clerks and 5854 Substaff.

The Manpower Planning exercise is being carried out taking into account the Business Plans, Superannuation, Attrition, etc., and the Bank is assessing the manpower requirement for both medium and long term. Process has also been initiated for recruitment of 74 Specialist Officers during the year. The Bank has undertaken Campus Recruitment process at NIBM, Pune and selected 06 Specialist Officers in Middle Management Grade Scale-II to handle specialized functions.

The Bank has come out with well articulated HR Policy with an eye on Succession Planning. During the year about 1 239 promotions were effected in various cadres. Training plays a vital role in developing the employees and for competency building. Efforts are being made to enhance the knowledge level and upskilling of the staff through appropriate training programmes / workshops.

The Industrial Relations in the Bank have been cordial and harmonious, fostering a healthy work environment. The Unions/ Associations have been responsive and proactive to extend unstinted support for the progress and prosperity of the Bank.

SC/ST Cell: The Bank is having a separate SC/ST Cell. A General Manager is designated as Chief Liaison Officer to look after the issues concerning SC/ST Employees of the Bank. SC/ST Cell functioning in Head Office is under his administrative control. The Bank is holding Quarterly Meetings with the representatives of the SC/ST Welfare Association as per the Government guidelines to redress their grievances. Organised Special Training Programmes for SC/ST employees for upskilling and competence building. The

Bank is extending pre-recruitment and pre-promotion training to the SC/ST candidates. The Bank is extending reservation/ concession to SC/ST candidates in recruitment/promotion as per the Government of India guidelines.

TRAINING AND DEVELOPMENT

Syndicate Institute of Bank Management (SIBM), Manipal at the apex level and the seven Training Centres at Bengaluru, Chennai, Delhi, Ernakulam, Hyderabad, Kolkata & Mumbai cater to the training needs of the Bank by conducting various types of training programmes for different cadres of employees.

The facilities available at SIBM Manipal, which is spread over 15 acres of land marked by sylvan surroundings, are state-of- the-art and of high standard enabling a congenial learning atmosphere for the trainees.

During the year 2663 Officers/ Clerks belonging to SC/ST category were imparted training. Further, as per the Government of India guidelines, pre-promotion training was imparted to SC/ ST Officers & Clerks and pre-recruitment training was imparted to SC/ST candidates who had applied for the posts of officers/ clerks in the Bank.

The Training programmes were conducted in accordance with the corporate objectives/priorities and Branch/Functional Department Training Plans, submitted by Corporate Office/Head Office/Regional Offices.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has been fulfilling its social responsibilities as a responsible social citizen by actively participating in activities aimed at economic transformation and uplift of the downtrodden. Some of the Bank's initiatives in the field of Corporate Social Responsibility taken during the year include providing infrastructure for School meant for poor students, assisting and empowering under-privileged children, distribution of free meals to School children, Integrated Tribal Development Programme, Rehabilitation of Endosulfan Victims and so on.

CUSTOMER SERVICE

The Bank has Board approved policies on deposits, customer grievance redressal, cheque collection, compensation payable on account of various deficiencies in service etc. These are well displayed on the Bank's website for the convenience of the customers.

The Grievances Redressal Policy of the Bank is meant for minimizing instances of customer complaints and grievances through proper service delivery and review mechanism and to ensure prompt redressal of customer complaints and grievances.

CUSTOMER SERVICE INITIATIVES TAKEN DURING THE YEAR:

- All Branches have organized 'Customer Contact Week' which facilitated education of the customers about compliance of KYC / AML guidelines, to measure the level of customer service and to ascertain their feedback on systems and procedures / products and services.

- A 'Uniform Customer Meet' has been observed in all branches on 23.09.2011.

- Bank has put in place an effective Grievance Redressal Mechanism and complaints received are categorized depending on gravity / sensitivity of the matter as 'Highly Sensitive' (HS), 'Sensitive' (S) and 'General' (G), so as to enable prioritized handling.

- The Bank is a Member of Banking Codes and Standards Board of India (BCSBI) and has voluntarily adopted the Code of Bank's Commitment to Customers and Code to MSME Customers. The Bank is making every effort to implement the provisions of BCSBI Codes in order to improve customer satisfaction.

- With a view to assess the feedback / impact of customer service at gross root level, a customer interaction programme has been conducted on 15.12.2011. Top Executives of Corporate Office directly interacted with customers of branches of select Regional Offices through Video Conferencing on 15.12.2011.

KNOW YOUR CUSTOMER / ANTI MONEY LAUNDERING

The Bank has a Board approved Policy on Know Your Customer (KYC) norms and Anti Money Laundering (AML) measures. The Policy clearly lays down the customer identification procedures to be adopted for proper identification of customers while opening accounts.

In order to have better compliance of KYC / AML norms, Bank has implemented KYC solution in the CBS system to enable opening of new accounts only with 100 per cent KYC compliance. So also, the CBS system is planned to provide for an integrated checking of Terrorist individuals / entities so that necessary checking is done before opening of accounts.

CASH MANAGEMENT SERVICES

The Bank provides an efficient and tailor-made Web based state- of-the art technology based CMS solution to suit the corporate customer requirements. The Bank is offering Collections and Payments to the Customers under the Cash Management Services.

NEW PENSION SYSTEM (NPS)

The Bank has been registered with the Pension Fund Regulatory and Development Authority (PFRDA) as Point of Presence (PoP) for offering the various services under the New Pension System, a scheme introduced by the Government of India, for providing old age income security. The bank has already registered about 1989 branches with NSDL for offering various services under the scope of the NPS as Point of Presence - Service Provider (PoP-SP). The bank has also been actively participating in offering services under the Swavalamban Yojana Scheme, a component of the NPS, which has been introduced by the government for persons working in the un-organized sector.

BANCASSURANCE

- Bank renewed the Group Life Insurance Policy from MetLife India Assurance Co. Ltd. to provide free life insurance cover to housing loan borrowers under special housing loan package as per Govt. of India/ IBA guidelines.

- Bank has launched Total Suraksha Plan on 06.09.2011 for coverage of Life Insurance of Housing Loan Borrowers in association with TATA AIG Life Insurance Co. Ltd. on optional basis.

- Under "SyndSuraksha" Group Insurance Plan taken from LIC of India the Bank has covered 28883 SB account-holders.

- Bank had taken Group Life Insurance policy from SBI Life Insurance Company Ltd. for providing Micro Insurance cover to the account holders of financially included villages.

- The Bank is corporate agent for general insurance products with United India Insurance Company.

CARD BUSINESS CREDIT CARD PRODUCT:

1. The Bank in association with VISA International, offers Gold and Classic Credit Cards, which can be used at ATMs, Point- of-Sale terminals, Internet, IVR and for Mail Orders. The cards are valid globally and can be used throughout the world. The Bank has issued 80125 Credit Cards up to 31.03.2012.

DEBIT CARD PRODUCT:

1. The Bank launched its Global Debit-cum-ATM Card on 29.03.2003 in association with VISA and the same is issued through all branches of the Bank.

2. During the year the Bank has launched Maestro Debit card in association with MasterCard on 22.06.2011 with the additional authentication of POS transactions through PIN known to the cardholder.

POS ACQUIRING:

The Bank ventured into the Merchant POS-EDC acqu

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Mar 31, 2011

The Board of Directors is pleased to present the Banks Annual Report along with the Audited Balance Sheet as on 31st March, 2011 and the Profit & Loss Account statement for the financial year ended 31st March, 2011.

SECURITY

The Security Department of the Bank has been making constant efforts to provide effective, efficient and progressively better security solutions to all the branches and offices. The Department had obtained ISO 9001:2000 Certification in May 2007, which was upgraded to ISO 9001:2008 in May 2010. The Department has thus achieved the unique distinction of being the first Security Department among all the Public Sector Banks to become ISO 9001:2008 compliant.

The guidelines on security matters are disseminated to Regional Offices for implementation through Annual Security Action plan. RBIs instructions received during the year for preparation of Currency Chest specific Disaster Management Plan and installation of Bio-metric Access System has been implemented in all the 42 Currency Chests of the Bank, which includes 9 Island Currency Chests located in Lakshadweep Islands.

As per RBI guidelines Security Audit has been conducted in respect of all the mainland Currency Chests and 2 Island Currency Chests. All the mainland Currency Chests are provided with security and surveillance equipment like CCTVs, Automatic Time Lock, Hotlines & Auto dialers. All the 48 Cash Vans of the Bank have been provided with Global Positioning Radio System (GPRS) to facilitate real time tracking of remittance in transit.

To augment the security arrangements at branches, CCTV has been installed in 832 identified vulnerable branches. As part of the ongoing process of strengthening the security at branch level, the system of risk categorization of branches has been adopted so as to provide adequate security infrastructure commensurate with the risk category, at all branches.

Based on the crime scenario and threat perceptions, the security arrangements are reviewed and regularly updated. Suitable preventive and precautionary measures are put in place to safeguard the interests of the Bank.

ACCOLADES/AWARDS

- The Bank received the National Award for outstanding performance in lending to Micro Enterprises from the Ministry of Micro, Small and Medium Enterprises, GOI, New Delhi in recognition of its performance in financing Micro Enterprises. The award was handed over by her Excellency, Smt. Pratibha Devisingh Patil, President of India.

- Andhra Pragathi Grameena Bank (sponsored by Syndicate Bank) received the Award for ‘Best Bank in the State from the Govt. of A.P. for its performance in the field of agricultural development.

STRATEGIC ALLIANCE

During the year 2010-11, the Bank entered into the following strategic alliances as part of its strategy to grow its business and broaden the customer base.

a) The Bank signed an MOU with Tata AIG Life Insurance to provide insurance solution to its customers covered under the Financial Inclusion programme. Under the arrangement, these customers will be eligible for life insurance cover of Rs. 25,000/- against payment of nominal premium of Rs. 30/- per year if they are in the age group of 18-65 years. Both accidental and natural death is covered under the scheme.

b) The Bank entered into tie-up arrangements with Technology Service Providers (TSPs), namely, M/s. Integra Micro Systems Pvt. Ltd., M/s. Bartronics India Ltd., M/s. HCL Ltd., M/s. Indian Grameen Service and M/s. Smart Chips Technology for providing end-to-end solution for implementation of the Financial Inclusion project.

c) The Bank has formed a trust jointly with Vijaya Bank to promote financial literacy. To this end, the trust has already set-up Financial Literacy and Credit Counselling Centres (FLCCs) in the districts of Mangalore, Udupi & Karwar in Karnataka.

d) The Bank has been appointed as ‘Point of Presence (POP) under the New Pension System (NPS) by the Pension Fund Regulatory and Development Authority (PFRDA). The Bank has since started enrolling members under the Scheme.

e) The Bank has been appointed as a Registrar for ‘Aadhaar Project of UIDAI.

SYNDBANK SERVICES LTD.

SyndBank Services Limited (SBSL) was incorporated under the Companies Act, 1956 on 25-01-2006, as a wholly owned subsidiary of SyndicateBank, with an authorized capital of Rs. 10 crore and paid up capital of Rs. 25 lakh to extend back-office services to SyndicateBank, its clients and other financial institutions.

The company has undertaken the following activities during the year 2010-11.

1. Follow-up of irregular retail loans and delinquent credit cards of Syndicate Bank by sending Notices & SMS messages and tele-calling.

2. Pre-shipment testing of computer hardware procured by SyndicateBank and RRBs sponsored by SyndicateBank.

3. Dispatch of mailers to HNIs of the Bank giving the details of the products and services being offered by SyndicateBank, Dispatch of letters seeking the PAN details of the customers of SyndicateBank liable for tax deduction at source during the year and dispatch of response sheets to SyndVidya (Education loan) beneficiaries.

4. Card personalization services to SyndicateBank and Prathama Bank.

5. Sending of domestic and international SMS messages to clients of CMSC, SyndicateBank, Mumbai.

6. Maintenance of database of the dormant deposit accounts of Prathama Bank.

7. Centralizing the pension data in respect of Karnataka State Pensions pertaining to the Bangalore Region of SyndicateBank.

8. E-filing of quarterly TDS returns (Form 24Q, 26Q and 27Q) of the branches of Bangalore and Manipal Regions of SyndicateBank.

9. E-filing of IT returns of salaried class through a tie-up with M/s. Span Across.

SBSL, a profit making company, is consistently improving its revenues. The details of its performance during the last three years are as under.

(Rs. lakh)

Particulars March 09 March 10 March 11

Authorized Capital 1000 1000 1000

Paid-Up Capital 25 25 25

Reserves & Surplus 108 203 286

Fixed Assets (Net) 5 4 3

Total Income 161 250 254

Profit Before Tax 102 143 124

Profit After Tax 70 94 83

CHANGES IN THE BOARD

Changes in the Board:

- Shri Ravi Chatterjee joined the Board as a Executive Director of the Bank w.e.f. 01.09.2010.

- Shri A S Rao joined the Board as RBI Nominee Director w.e.f. 30.07.2010.

- Shri H Pradeep Rao joined the Board as Government Nominee Director w.e.f. 10.05.2010.

- Shri Narendra L Dave joined the Board as Employee Director of the Bank w.e.f. 31.08.2010.

- Shri Dinkar S Punja, joined the Board as Officer employee Director of the Bank w.e.f. 12.07.2010.

- Shri R Ramachandran, Executive Director demitted the office on 01.09.2010 on being appointed as Chairman & Managing Director of Andhra Bank.

- Shri K Seetharamu, RBI Nominee Director demitted the office on 30.07.2010.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors, in preparation of the annual accounts for the year ended March 31, 2011, confirm the following:

- That the applicable accounting standards have been followed in the preparation of annual accounts, alongwith proper explanation relating to material departures, if any;

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

- That reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank as at the end of the financial year and of the profit or loss of the Bank for the year ended March 31, 2011;

- That proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

- That the annual accounts have been prepared on a "going concern" basis.

ACKNOWLEDGEMENT

The Board wishes to place on record its sincere appreciation to the public, valuable customers, shareholders and staff members for their continued support and patronage. The Board is also indebted to the Ministry of Finance, Government of India; RBI; SEBI and other regulatory authorities, various Financial Institutions, Banks and Correspondents in India and abroad for their unflinching and valuable support and guidance from time to time.

For and on behalf of the Board of Directors.

Place: Manipal (Basant Seth)

Date: 27.05.2011 Chairman & Managing Director

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Mar 31, 2010

The Board of Directors is pleased to present the Bank’s Annual Report along with the Audited Balance Sheet as on 31st March 2010 and the Profit & Loss Account statement for the financial year ended 31st March 2010.

CORPORATE SOCIAL RESPONSIBILITY

The Bank has been fulfilling its social responsibilities as a responsible social citizen by actively participating in activities aimed at economic transformation & uplift of the downtrodden and sponsoring humanitarian causes. Some of the Bank’s initiatives in the field of corporate social responsibility are outlined below:

Cleaning and Clearing of village tanks and ponds Towards Corporate Social Responsibility, the Bank has taken up the initiative for cleaning and clearing of village tanks and ponds in selected service area villages. The Bank has completed the task of cleaning and clearing of 39 village ponds/ tanks during the year 2009-10 as part of corporate social responsibility.

Helping flood victims

In May 2009, a devastating cyclone “AILA” washed away several island villages of 24 Paraganas (South) District of West Bengal. Considering the gravity of the situation, the Bank has donated a substantial amount to the victims. Further, in October 2009, certain parts of Andhra Pradesh and Karnataka States were devastated by unprecedented floods. The Bank undertook several relief measures, in a big way, to wipe the tears of the flood affected.

Gift of Vision

The Sankara Eye Hospital have been conducting “Gift of Vision” – rural outreach eye care programme which aims at making the lives of several rural people brighter with the gift of vision. The Bank assisted the hospital in carrying out the corneal transplantation surgery on the rural people.

Disability and Rehabilitation Studies The Bank sponsored a 3 Day National Symposium on “Accessibility of Water and Sanitation for Persons with Disabilities in India” conducted by Society for Disability and Rehabilitation Studies.

CUSTOMER SERVICE

The Bank has a robust Customer Grievance Redressal System from the branch level right up to the level of the Corporate Office.

The complaints received are promptly acknowledged and redressal measures initiated immediately. Customers are fully informed of the avenues to escalate their complaints/ grievances within the organization and their rights to alternative remedy, if they are not fully satisfied with the response of the Bank to their complaints.

To supplement the normal avenues for grievance redressal, the home page of the website contains a facility for customers to submit their complaints online. The Bank has also provided a 24 hours Toll Free Voice Mail system to enable customers to record their grievances/suggestions any time of the day. These are redressed/replied within 48 hours.

Further, the Bank has put in place Board approved policies on Deposits, Customer Grievance Redress, Cheque Collection, Compensation payable on account of various deficiencies in service etc. These are also displayed on the Bank’s website.

The status of complaints received directly/through Banking Ombudsman (BO) during the year is furnished below.

A. Customer Complaints (other than BO Complaints)

1 No. of complaints pending as on 1-04-2009 164

2 No. of complaints received during the year 3644

3 No. of complaints redressed during the year 3603

4 No. of complaints pending as on 31-03-2010 205* * Out of 205, 162 complaints since stand closed.

B. Cases referred to Banking Ombudsman during the year

1 No. of complaints pending as on 1-04-2009 19

2 No. of complaints referred to Banking 468 Ombudsman during the year

3 No. of complaints disposed of during the year 458

4 No. of complaints pending as on 31-03-2010 29** ** Out of 29, 10 complaints since stand closed.

C. Status of Awards passed by Banking Ombudsman

1 No. of unimplemented Award as on 1-04-2009 01

2 No. of Awards passed during the year 14

3 No. of Awards implemented during the year 14

4 No. of unimplemented Awards as on 31-03-2010 01

Customer service initiatives taken during the year In order to make the Customer Grievance Redressal Mechanism more effective, during the year, the department introduced the system of categorizing the complaints according to the gravity/sensitivity of the matter involved so as to enable prioritized handling. Accordingly, all complaints received are now categorized as ‘Highly Sensitive’ (HS), ‘Sensitive’ (S) and ‘General’ (G) to facilitate prioritization of the complaints according to their gravity/ sensitivity of the matter.

To supplement the above, the Bank has also put in place a system of quarterly rating of Regions based on the number of complaints received and the average grievance redressal time. The rating is based on the combined score achieved by a region for the two parameters together.

The Bank also brought out a Compendium of Case Studies on Customer Service for the benefit of branches/offices. Each case study deals with a certain facet of customer service. The compendium is intended to help the branches avoid the common pitfalls that lead to customer complaints.

The Bank is a member of the Banking Codes and Standards Board of India. It has adopted the Code of Bank’s Commitment to Customers, which is a voluntary code for fair and transparent treatment of individual customers availing banking services. During the year, BCSBI revised the Code and circulated the same among all banks. The copies of the revised code have been supplied to the branches to be made available to customers.

Know Your Customer / Anti Money Laundering The Bank has a Board approved Policy on KYC Norms/ Anti-Money Laundering (AML) measures. The Policy clearly lays down the customer identification procedures to be adopted for proper identification of customers while opening accounts. However, with a view to ensuring that strict adherence to KYC Standards does not result in banking services being denied to the underprivileged segments of the society, relaxations in the form of simplified KYC norms have been put in place as per RBI guidelines with regard to opening of accounts in the names of persons belonging to the underprivileged sections and those affected by natural calamities. In addition to the customer identification procedures, the Policy also lays down the procedure for working out the risk profile of each account to ensure that monitoring mechanisms/procedures commensurate with the risk category of the account are in place to prevent money laundering, terrorist financing etc.

Steps are taken to strengthen the Anti-money Laundering measures. Cash Transaction Reports (CTRs) covering all the branches were submitted regularly to Financial

Intelligence Unit, INDIA (FIU-INDIA). Suspicious Transactions also were identified and reported to FIU.IND. The Bank has also implemented online software, for generating alerts to identify Suspicious Transactions.

In order to spread awareness about KYC/AML, all the branches of the Bank organized ‘KYC Awareness Week’ from 16-11-2009 to 25-11-2009. During the period, branches arranged special meets to which important customers were invited. Through lectures by staff members and others, efforts were made to educate customers on the importance of the subject and the need for them to extend their co-operation in this regard.

CASH MANAGEMENT SERVICES

The Bank being one of the sought after banks in the CMS market among the Public Sector Banks has retained its prominent position over the years. Because of stiff competition, with the entry of many other Public Sector banks into the CMS market and also sluggishness in the economy during the year, the performance under Turnover, Income and clientele growth were impacted to a certain extent. The increased volumes under Special Clearing and the conscious initiative taken by RBI to encourage Electronic payment by offering RTGS / NEFT at a substantially low cost brought in a paradigm shift in Payment systems and compelled the banks to innovate and customize new Payment and Collection products based on state of the art technology.

To keep pace with the changing market conditions and to meet the corporate customer requirements, the Bank has implemented a new web based CMS software in the last week of March 2010 and launched new payment products:

1. RTGS / NEFT / Bulk Payment facility

2. Cheque writing facility.

3. Remote / Centralised printing of cheques.

The Bank is also in the process of launching new products under Collection viz., NEFT / RTGS Bulk Collection, Synd Bill Payment, Centralised Debiting of Cheques. The above initiative in products and services will help the Bank to sustain the business and make its presence felt in the present CMS market.

INSURANCE BUSINESS

Life Insurance

The Bank has discontinued Corporate Agency arrangement with Bajaj Allianz Life Insurance Co. Ltd., since 1st November 2009.

The Bank has taken Group Life Insurance Policy from SBI Life to provide free life insurance cover to housing loan borrowers under special housing loan package as per Govt. of India/IBA guidelines. All Housing loans sanctioned under the scheme from 15-12-2008 to 31-12-2009 are covered with Life Insurance at Bank’s cost. Under the scheme, the Bank has covered 12820 borrowers for sum assured of Rs. 907 crore by paying premium of Rs.1.43 crore.

Under “SyndSuraksha” Group Insurance Plan taken from LIC of India, the Bank has collected premium of Rs.59.72 lakh covering 19384 accounts and earned a commission of Rs.5.97 lakh during the financial year 2009-10.

The performance of the Bank under Life Insurance business for the last three years is as under:

(Rs. crore)

Premium Commission Year Target Achievement Target Achievement

2007-08 150.00 227.50 15.50 23.07

2008-09 250.00 184.44 26.00 18.48

2009-10* 200.55 99.97 26.00 11.04

* Corporate Agency with Bajaj Allianz Life Insurance Co. Ltd. was discontinued from 01-11- 2009.

General Insurance

The Bank has tied up with United India Insurance Company Limited (UIICo) under a Corporate Agency arrangement since June 2004 for distributing General insurance products. The tie up has been renewed w.e.f. 04-05-2008 for 3 years till 03-05-2011.

Special tailor made products such as ‘SyndArogya’, a Mediclaim-Cum-Personal Accident Cover for all customers, ‘Unihome Care Policy’ for Housing Loan and ‘UniStudy Care Policy’ for SyndVidya borrowers are also distributed by the Bank.

The Bank’s performance under General Insurance including SyndArogya for the last three years is as under:

(Rs. crore)

Premium Commission Year Target Achievement Target Achievement

2007-08 54.00 36.11 5.50 3.71

2008-09 50.00 44.30 5.00 4.64

2009-10 50.00 43.23 5.00 4.48

CARD BUSINESS

Credit Card Product

1. The Bank having an association with VISA International, offers Gold and Classic Credit Cards which can be used at ATMs, Point of Sales terminals, Internet and for Mail Orders. The cards are valid globally and can be used throughout the world.

2. The Bank has added many customer friendly features like monthly billing statements by E-Mail and payments through internet Banking and ECS and viewing of the Balance by the Branches for accepting payments towards credit Cards.

3. During the year with effect from 29-07-2009, the Bank introduced Verified by VISA (VbV), an additional security feature made mandatory by Reserve Bank of India from 01-08-2009, which enables the cardholder to create a password of his choice for doing transactions on internet using the Bank’s Credit Card.

4. The Bank introduced SMS alerts for first transaction on a new card and subsequent transactions of Rs.5,000 and above done by the Credit Cardholders including for Card Not Present (CNP) transactions of Rs.5,000 and above.

5. The Bank has issued 68,414 Credit Cards up to 31-03-2010.

6. The comparative position of Card base, amount outstanding and income earned during last 5 years is furnished below:

(Rs. crore)

Description 2005-06 2006-07 2007-08 2008-09 2009-10

Designated 851 2115 2150 2224 2275 Branches (No.) Card Base 48743 53860 58874 63949 68414 (No.)

Amount 27.53 26.63 29.12 31.76 33.60 Outstanding

Net Income 1.06 2.91 4.67 3.45 7.12 Earned

Debit Card Product

1. The Bank had launched its Global Debit-cum-ATM Card on 29-03-2003 in association with VISA.

2. The Debit Cards are issued through 2275 CBS branches.

3. The Bank has launched innovative Instant Debit Card in November 2008, which can be issued and delivered to the customer at branch level itself soon after opening of the account. Training programmes were conducted at all Regional offices for Managers/Officers and staff of all the branches to equip them to issue instant debit cards to account holders immediately. Through the software all the branches can issue new Instant Debit Cards, Duplicate Cards, Renewal Cards and Add on Cards and they can also hotlist, unblock blocked debit cards from any CBS desk.

4. The Debit Cards are enabled for use on internet with Verified by VISA (VbV), an additional security feature in respect of internet transactions with effect from 4th November 2009.

5. A CASA Campaign was conducted by Retail Banking Department from 25-07-2009 to 25-09-2009. During the period of campaign 3.45 lakh Debit Cards were issued at an average of 7000 cards per working day.

6. The Card Centre has launched a campaign from 01-08-2008 to 31-03-2009 with incentive to Branches and staff to increase the card base and the period was subsequently extended to 30-09-2009.

7. The comparative position of Debit Card base and Transactions for last 5 years is furnished below:

Description 2005-06 2006-07 2007-08 2008-09 2009-10

Debit Cards 560 1477 1785 2224 2275 Issuing Branches

Debit Card 7.81 14.59 22.10 30.16 48.63 issued (in lakh)

No. of 88.78 145.28 280.61 434.38 694.82 transactions (in lakh)

Amt of 128193 242123 470312 811462 1335064 transaction (Rs.in lakh)

Net Income - 15 23 312 150 - 1894 earned (Rs.in lakh)

Other Activities:

1. The Bank has entered into Merchant POS Acquiring activity on 2nd October 2009 and as on 31-03-2010 installed 31 Electronic Data Capturing Machines at different Merchant locations spread across the country.

2. The Bank is on the anvil of obtaining MasterCard membership so that Cards issued in association with MasterCard can also be used at the EDC Machines installed by the Bank.

PRODUCT DEVELOPMENT

Synd Flexi Premium Current Account In order to cater to the needs of high-value customers of the Bank, who are capable of maintaining sizeable balances in their accounts, the Bank has introduced a new product called ‘Synd Flexi Premium Current Account’ with sweep-out and sweep-in facility.

CUSTOMER BASE Customer base of the Bank increased to 24.50 million as at 31st March 2010 from 23 million as at 31st March 2009.

NEW INITIATIVES

Special Monitoring Accounts Department

A Special Monitoring Accounts Department was established in June 2009 in order to improve the asset quality of the Bank by strengthening the mechanism for identification of problem accounts showing early signs of irregularities and sickness and to initiate timely steps for prevention of slippages.

The SMA Department monitors stressed accounts under Standard assets and generates quality MIS to be used by the departments of the Bank for managing the overall quality of the Credit portfolio. The department devises appropriate reporting system/MIS and collects data on overdue accounts from branches/ROs and DIT at regular periodicity. The Regional Offices, Regional heads, SMA task force at ROs and the Recovery Teams at the branches are constantly exhorted to monitor the SMA accounts.

The SMA Department also collects data/MIS periodically in respect of restructured accounts and the account- wise details are maintained as a database for further reference. The Bank has strictly followed the RBI regulations on restructuring by careful assessment of the viability, quick detection of weaknesses and time-bound implementation of restructuring package. The status of each restructured account is monitored on the basis of borrowers’ keeping up of restructuring commitments, actual cash generation vis-à-vis projected cash flows, level of progress of projects under implementation etc. The details of restructured accounts are placed before the top management on quarterly basis and to the Board of Directors on half yearly basis.

e-Stamp Vending

The Bank has signed a memorandum of Agreement with Stock Holding Corporation of India Ltd. for e-Stamp vending across the country. Initially e-Stamp vending will be undertaken by the Bank in the state of Karnataka at 200 identified branches in a phased manner.

Farmers’ Resource Centre (FRC)

Ministry of Finance, Govt. of India had suggested that banks may co-ordinate through SLBC and NABARD for setting up Farmers’ Resource Centre (FRC) for providing training and related services to farmers aimed at mitigating risks in farming and bank credit. Considering the suggestion of GOI and usefulness of the training to the farming community, SLBC Karnataka in its 103rd meeting has decided to set up a dedicated institution for providing training and other services to farming community at Bagalkot in Karnataka. As conveners of SLBC Karnataka, the Bank has taken initiative to set up the centre at Bagalkot in 8 acres of land allotted by Govt. of Karnataka.

Online submission of request seeking credit facilities by SMEs

The Bank has launched the facility for online submission of requests seeking credit facilities by small and medium enterprises (SMEs) and for higher education loan through the Bank’s web site, www.syndicatebank.in. The Bank is the first to launch this facility for SMEs. The technology available in the Bank is being leveraged for better customer service, ensuring faster decisions and hassle-free processing/ sanctioning of loans to prospective clients. The applicant can avail the credit facility from a branch of his / her choice. The applicant will receive an acknowledgement with a unique reference number to his/her e-mail address. The Bank has launched similar facility for professional and self employed persons, traders, agriculturists and housing loan clients.

Currency Management

As per the recommendations of the high level group on currency management for implementing of the clean note policy, the Bank has taken several measures like

- Installing desk top Note Sorting Machines (NSMs) at 50 strategic branches by 31-03-2010 and another 250 machines during the year 2010-2011.

- Identification of 100 branches for setting up of cash processing centres.

- Establishing new currency chest at Manipal.

- Exchange of cut/soiled notes at all branches as per note refund rules.

Coin vending machines have been installed at the following 10 branches:

1) Catholic Centre, Udupi

2) Vikas Puri, New Delhi

3) R. P. Road, Secunderabad

4) Ashram Road, Ahmedabad

5) Sec. 11, Punchkula

6) Matunga Bazar, Mumbai

7) R B Avenue, Kolkata

8) Armenian St., Chennai

9) Ernakulam, North Rly. Station

10) Magadi Road, Bangalore.

Against feeding of currency, the machine disburses coins of any two denominations.

Payment Gateway

The Bank has embarked upon an ambitious project of providing Payment Gateway services, whereby the customers can purchase products / services online and make payment from their accounts with the Bank through the Payment Gateway, via Internet Banking. This enables the customers to get access to an array of Merchant Establishments and a wide range of branded products for doing e-commerce business, which include domestic items like bouquets, consumer durables, Electronic gadgets/equipment etc., and services like booking of Airline tickets, Hotel accommodation etc.

M/s Avenues India Ltd. (CCAvenue) and M/s Indiaideas. com Ltd. (BillDesk) who have a large base of merchant establishments registered with them have been identified to provide the Payment Gateway Services. Payment Gateway with CCAvenue has been successfully implemented from 04-11-2009 and with BillDesk from 20-03-2010. The Payment Gateway services are now available to the customers from merchant sites registered with M/s Avenues India Ltd. and M/s Indiaideas.com Ltd.

CBS for Regional Rural Banks

In line with the RBI directive that all RRBs should begin moving towards CBS as a matter of policy and that the respective sponsor bank may be given the option of selecting the service provider for their RRBs, the Bank proposes to bring all the 5 sponsored RRBs with 1328 branches spread all over India under CBS, which shall bring in uniformity in the functioning and ease of operations. As per the RBI and Govt. of India directive, implementation of CBS in all RRBs should be completed by September 2011.

The Board has accorded permission to implement the project under the Application Service Provider (ASP) model and to float RFP for the identification of a suitable vendor for implementing the CBS in RRBs.

Lending Automation Processing System (LAPS) The Bank has started implementing ‘Lending Automation Processing System (LAPS)’, the salient features of which are as under.

- RBI Defaulters list uploading and easy search for the names before sanctioning of corporate loans.

- Risk rating of the loan can be set based on the borrowers properties like age, credit worthiness etc.

- Fetches/extracts customer details from CBS and only additional details need to be updated.

- Generates the sanction letter, MCB Note and supports querying between the sanctioning authority and the Branch.

- Provision for printing loan documents.

The Bank has obtained licences for implementing the above in 200 branches. The Retail Module has been implemented successfully in 7 CPCs and 162 branches. The Corporate Module is under customization and is expected to be made available to CPCs / branches soon.

Accolades/Awards

- The Bank has received NDTV profit ‘Second Best Award’ in the area of education loans.

- Best Performer Award under SHG-Bank Linkage Programme: The Bank has been awarded with the “Best Performer” award under the category ‘Highest Average Loan Size’ among commercial banks operating in Karnataka for the year 2009-10. The award was instituted by NABARD, Bangalore for outstanding performance by Banks in SHG-Bank Linkage programme.

- Award for Branch Managers under Solar Financing: Two of our Branch Managers from Terdal and Tumari branches, have been awarded 1st and 2nd prizes among the branch managers of commercial banks in south zone for financing maximum number of Solar Home Lighting Systems during 2007-08.

STRATEGIC ALLIANCE

The Bank has entered into a tie-up with:

- International Cars and Motors Ltd. (ICML) on 07-07-2009 for providing retail financing facilities for the buyers of RHINO, their Multi Utility Vehicle which is available in 5 models, with features of passenger car and MUV.

- JCB (India) for financing entrepreneurs for purchasing JCB machines and equipments.

- M/s Maruti Suzuki Ltd. on 24-07-2009, for financing purchase of Maruti Suzuki Vehicles as preferred financiers.

- M/s Mahindra & Mahindra for financing the borrowers for purchase of new vehicles.

- Mahindra First Choice Ltd. for financing the purchase of certified pre-owned cars.

COMPLIANCE DEPARTMENT

Considering the increasing complexities and sophistication in the banking business, the Bank has set up a separate Compliance Department headed by a Chief Compliance Officer to oversee compliance function. The Bank has put in place a Compliance Policy, in line with the RBI guidelines on Compliance Function in Banks.

Major objectives of the Compliance Policy are:

- To ensure observance of statutory, legal and regulatory guidelines.

- To ensure compliance with applicable standards and codes and also Bank’s policies and standards.

- To assist the top management in managing effectively the compliance risk faced by the Bank.

- To assist in establishing a pro-active compliance risk management culture, as an integral part of the Bank’s business activities.

Continuing with the Bank’s commitments and adhering to the high compliance standard, Compliance function is being reviewed periodically.

RIGHT TO INFORMATION ACT, 2005

The Bank has implemented the relevant provisions of the Act with effect from October 2005. The information related to the Bank as stipulated under the Act is displayed on the Bank’s website.

The Appellate Authority for the Bank under the Act and the Public Information Officers [PIOs] at various levels have been designated. The Bank has clearly spelt out the roles and responsibilities at different levels under the Act.

As directed by the Parliamentary Committee, the Bank has constituted a Monitoring Committee at Apex level to oversee the implementation of the RTI Act. During the year, the Committee has reviewed the effectiveness of implementation of the RTI Act in the Bank.

During the year, the Bank has disposed of all the applications and all appeals received, within the stipulated time.

INSPECTION AND AUDIT

The Bank has a well established Inspection Department that examines the adherence to the systems, policies and procedures of the Bank. The guidelines received on various issues of internal control from Reserve Bank of India, Government of India, Board and Audit Committee of the Board have become part of the Internal Control System for better risk management. Inspection Department through its eight Regional Inspectorates carries out inspection of branches / offices as per the periodicity decided by the Audit Committee of the Board and examines adherence to such systems of internal control and risk management (including various aspects of KYC/AML etc.). The Bank has a well articulated Internal Audit Policy in place.

Risk Based Internal Audit Report (RBIA) is the most comprehensive feedback to the Management about the degree of compliance of the Bank’s norms at the operational level as also RBI / Government guidelines, and hence, the most important tool for exercising control.

All the Branches are covered under RBIA. Assessment of the level of risk and its directions is as per risk matrix prescribed by Reserve Bank of India which helps the Management in identifying areas of high risk requiring attention on priority basis.

In 2009-10, 2160 RBIAs of the domestic branches were carried out. RBIA of functional departments at Corporate Office / Head Office is also conducted. In addition, various other inspections / audits are also carried out by the Bank such as Portfolio Audit of functional departments (expenditure portfolio), credit audit of large borrowal accounts, compliance audit to ensure compliance functions, revenue audit, special audits etc. The concurrent audit of the Bank covered 410 branches including International Division, Treasury and Funds Management. Concurrent audit covers more than 67% of deposits and 72% of advances, as against prescribed RBI limits of 50% of deposits and 50% of advances besides 100% of FOREX dealings and domestic investments.

In view of the Bank working on a fully centralized platform, offsite monitoring of the day to day transactions is put in place at Head Office to compliment the traditional supervisory process to get early warning signals in sensitive areas of concern and to take corrective action wherever required.

INTERNAL CONTROL AND VIGILANCE

Vigilance administration is an important part of management function, aimed at improving the efficiency and effectiveness of the organization. Investigations are conducted expeditiously and disciplinary proceedings are ensured wherever frauds or vigilance angle is involved. During 2009-10, 201 vigilance cases were disposed of.

Vigilance Awareness Week was observed in the Bank from 03-11-2009 to 07-11-2009 in a befitting manner. On this occasion, a Souvenir was brought out containing messages from CVC, CMD, EDs & CVO and articles from the staff on preventive vigilance aspects. The Souvenir was released by the Chairman & Managing Director on 23-02-2010.

Stress is being laid on preventive vigilance by initiating preventive vigilance studies at branches, conducting Preventive Vigilance Training Programmes at SIBM & other Training Centres of the Bank and constitution of Preventive Vigilance Committees at the branches with a view to ensuring strict adherence to systems and procedures. During the year under review, Preventive Vigilance Exercises were conducted at 151 branches and Surprise Verification of goods hypothecated to Banks was conducted in 119 accounts covering 77 branches.

A two day training programme on “Public Procurement” was organized at Training Centre : Bangalore on 23-12-2009 and 24-12-2009, specially for the benefit of officers at ROs and other functional departments at Head Office/Corporate Office, who are involved in procurements of goods, works and in engaging consultants. The programme was conducted by Sri R. Radhakrishnan, Ex- General Manager, RBI, Ex-CVO and Chief General Manager of SBI. Sri Basanth Seth, the Chairman & Managing Director also addressed the participants.

A one day Workshop for the Investigating Officials of the 8 Vigilance Units situated at various centres for updating their knowledge and a 3 day on-the-job training to the new incumbents at the Vigilance Units was organized from 29-07-2009 to 31-07-2009.

SECURITY

The ISO 9001:2000 Certified Security Department is proactively providing effective and efficient security in accordance with the Bank’s Policy as also RBI directions. In the backdrop of ever-changing security scenario, the Dept. is keeping pace with complexity of systems, speed of change in doing business and evolving regulatory requirements.

As part of ongoing process of strengthening Security, 435 CCTVs and 18 Global Positioning Radio Systems were installed in identified risk prone Branches and Cash Vans respectively.

Out of 27 cases of crimes reported against the Bank branches, there were only 2 incidents of armed robbery at Ghaziabad – Vaishali & Koparkhairane Branches and one case of theft. All other cases were foiled due to effectiveness of Security safeguards put in place.

SYNDBANK SERVICES LTD.

SyndBank Services Limited (SBSL) was incorporated under the Companies Act, 1956 on 25-01-2006, as a wholly owned subsidiary of SyndicateBank, with an Authorized Capital of Rs. 10 crore and paid up capital of Rs. 25 lakh to extend back-office services to SyndicateBank, its clients and other Financial Institutions.

During the current financial year, the Company has undertaken the following activities:

1. Follow-up of irregular retail loans and delinquent credit cards of the Bank by sending Notices, SMS Message and tele calling.

2. Pre-shipment testing of computer hardware procured by SyndicateBank, RRBs sponsored by SyndicateBank and other Banks.

3. Creation of comprehensive database for tracking beneficiaries of Education Loans to maintain asset quality.

4. Dispatch of mailers to cross-sell various products of the Bank.

5. Card personalization services for SyndicateBank.

6. Sending SMS messages to Clients of Exchange Companies in Oman (having tie-up with SyndicateBank) for their outward remittances through CMS, Mumbai Branch of SyndicateBank.

7. Filing of quarterly TDS returns 24Q and 26Q with the IT authorities on behalf of the branches in Bangalore City.

SBSL has its own website with URL http://www.syndbankservices.in

SBSL, a profit making company, is consistently improving its revenues and the bottom-line. Its performance during the last three years was as under:

(Rs. in lakh)

Particulars March 08 March 09 March 10

Authorized Capital 1,000 1,000 1,000

Paid Up Capital 25 25 25

Reserves & Surplus 39 108 203

Fixed Assets (Net) 5 5 4

Total Income 115 161 250

Profit Before Tax 51 102 143

Profit After Tax 34 70 94

CHANGES IN THE BOARD

Shri Basant Seth was appointed as Chairman & Managing Director of the Bank w.e.f. 31st August 2009. Shri M. Bhaskara Rao, Shri AR Nagappan and Shri Bhupinder Singh Suri were re-elected as directors representing shareholders w.e.f. 27th June 2009 for the second term.

Shri M. Deena Dayalan, Government Nominee under Section 9(3)(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 demitted office on 28th February 2010 on attaining the age of superannuation. Shri Dinkar S. Punja, Director representing Officer employees and Shri Suresh Kumar Rustagi, Director representing Workmen completed their term on 15th September 2009 and 2nd January 2010 respectively.

Shri Kawaljit Singh Oberoi and Ms. Shobha Oza, Government Nominee Directors under Section 9(3)(g) and 9(3)(h) respectively, of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 completed their term on 1st January 2010.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors, in preparation of the annual accounts for the year ended March 31, 2010, confirm the following:

- That the applicable accounting standards have been followed in the preparation of annual accounts, along with proper explanation relating to material departures, if any.

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

- The reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for the year ended March 31, 2010.

- That proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

- That the annual accounts have been prepared on a “going concern” basis.

ACKNOWLEDGEMENT

The Board wishes to place on record its sincere appreciation to the public, valuable customers, shareholders and staff members for their continued support and patronage. The Board is also indebted to the Ministry of Finance, Government of India; RBI; SEBI and other regulatory authorities, various Financial Institutions, Banks and Correspondents in India and abroad for their unflinching and valuable support and guidance from time to time.

For and on behalf of the Board of Directors.

Place : Manipal (Basant Seth)

Date : 27-05-2010 Chairman & Managing Director