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Directors Report of United Bank of India

Mar 31, 2017

The Board of Directors have pleasure in presenting the 67thAnnual Report of the Bank along with the Audited Balance Sheet, Profit and Loss Account and the report on Business and Operations for the year ended March 31, 2017 (FY - 201617).

MANAGEMENT DISCUSSION AND ANALYSIS

1. Economic Outlook

In spite of the demonetization in November, the economy maintained a fairly good growth. International trends are also stronger with Europe and Japan in the recovery mode. The IMF sees the world economic growth accelerating from 3.1% in 2016 to 3.5% in 2017, and 3.6% in 2018. Both advanced and emerging economies are poised to do better.

In US unemployment is down to 4.7 per cent and Emerging Market economies are performing better. After 74 per cent remonetization by the end of March, the Indian monetary system is nearly back to normal with excess liquidity with banks sponged out. After the April 6 meeting of the Monetary Policy Committee (MPC) the RBI left the repo untouched.

Bad Debts in Banks

Non-performing assets (NPAs) or bad loans of public sector banks (PSBs) have reached high levels of over Rs 6 lakh crore, the bulk of which are in sectors such as power, steel, road infrastructure and textiles. The Government of India has promulgated an ordinance, which amends section 35A of the Banking Regulation Act, 1949 and inserts section 35AA and section 35AB in the Banking Regulation Act. The ordinance authorises the “Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016”.

It also empowers RBI to set up sector related oversight panels that will shield bankers from later action by probe agencies looking into loan recasts. The government had earlier enacted the IBC to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner. It was aimed at maximizing the value of assets to promote entrepreneurship, availability of credit and balance the interest of all stakeholders.

These are steps in the right direction to reduce NPA of banks in general and our Bank in particular..

Agriculture

Agriculture Food grains production in 2016-17 may be up about 8 per cent. Except sugar which will be short by about 19 per cent, all other agricultural products would show ample improvement. IMD forecasts above average monsoon rainfall in 2017 as concern over El Nino impact has eased. Hence the possibility of food inflation rearing up in the near future is small.

Industry

IIP for February was down 1.2 per cent and in the first 11 months growth was a mere 0.4 per cent. In February capital goods production declined. So also of consumer goods. Going by the Nikkei PMI manufacturing sector activity improved significantly in March. New orders, including from exports, expanded leading to higher production, additional employment and improved business confidence. Even so industry is still loaded with excess production capacity and over-leveraged balance sheets.

New investment has consequently been slow. Investment by Public Sector Undertaking was Rs. 1.03 trillion against the target of Rs. 3.98 trillion. In the manufacturing sector project valued at Rs. 440 billion were either stalled or abandoned. The service sector activity also improved for the second consecutive month in March. Taken together - manufactures and service - growth was significant which perhaps indicates the trend in the future.

Capital Market

Sensex in FY17 gained 16 per cent with market cap up by Rs.26 trillion. Fresh capital issues aggregated Rs.84 billion, the highest since FY12, with services companies accounting for a half of the IPOs. There was greater recourse to Offer for Sale which amounted to Rs.197 billion. This underscores shortfall in capital expenditure by corporates.

Foreign Direct Investment (FDI) in the first 11 months of FY17 was $55.5 billion, about 7 per cent more than in the same period last year. It is critical that reforms are introduced expeditiously to create the right environment for FDI since US direct investment may decline due to changed policy approach of Trump administration.

Investment by FPIs was however negative with the outflow of $1.3 billion in April-Feb 2016- 17. In the last quarter however there was a strong inflow which prompted Sensex to jump and rupee to harden.

Interest rate and Inflation

After the first bi-monthly meeting of MPC the RBI did not announce any change in the repo but stepped up reverse repo to mop up excess liquidity with the banks following demonetization. The intensive effort made by the Government to substitute cash transactions by digital would have reduced the demand for currency. Digitalization and GST which will be introduced from July will reduce opportunities for black money and increase revenues of Central and State Governments.

Inflation at retail level measured by CPI was 3.8 per cent in March. In recent months WPI has been more buoyant mainly because of the rise in international commodity prices. In the last two years oil prices had substantially dropped giving us advantage by reduction in WPI and current account deficit (CAD) .

The RBI assessment is that inflation will remain above the 4 per cent policy target in the current year. As such it appears that any reduction in repo may be difficult though some reduction in interest on bank credit may be possible if NPAs are taken care of.

Money and Credit

At the end of February total currency in circulation was Rs.10.6 trillion, about two-thirds of the currency a year back. But banks were replete with deposits because of demonetization. The increase in deposits was 12.4 per cent. Credit however did not increase as fast because industrial growth was low and companies resorted to other sources, like bonds, for short term funds.

It is quite likely that corporates in future will depend more on capital and money markets. The rate of interest in the debt market has come down faster than interest on bank credit. For instance, interest on commercial paper ranged between 6 and 14 per cent depending on credit rating.

Foreign Trade

After a long period of decline exports showed improvement in the last two months. The growth in imports was also compressed which resulted in reduction in CAD to 1.4 per cent of GDP. For the first time CAD was fully funded from FPI. The advantage from drop in oil prices may not be available in future. Oil prices may average $50-55 per barrel during the year.

Future Prospects

There are good prospects for the economy to grow in 2017-18. Domestic demand is strong coming mainly from public sector investment and housing, implementation of Seventh Pay Commission and possibly increase in minimum wages. Corporate profitability will improve and stock market should remain bullish. That limits the possibility of any reduction in interest rates. Rupee will be strong and export growth weak. With GST in place and further easing of business, GDP growth may be around 7.4 percent in FY18 and even higher next year.

STRATEGIC ANNOUNCEMENTS: DOMESTIC

- The monsoon is likely to be just normal at 96 percent of the Long Period Average (lpa0 this year for the second year in a row, the India Meteorological Department (IMD) said on 18th April.

- India’s economic growth will be 6.8 per cent in FY17-against the official advance estimates of 7.1 per cent - due to the note ban, if the projections of the international Monetary Fund (IMF) come true.

- Infrastructure, one of the most financially stressed sectors, is expected to see a spurt in consolidation with the Reserve Bank of India (RBI) being given additional powers to deal with non-performing assets.

- The Presidential Ordinance empowering the Reserve Bank of India (RBI) to enforce expeditious resolution of nonperforming assets (NPAs) of banks should hardly come as a surprise. Finance Minister has been hinting at this legal empowerment of central bank to crack down on NPAs of banks, an area where recovery has been a painfully slow process.

- The Goods and services (GST) can boost India’s GDP growth by up to 4.2% - double the previous estimate-as lower taxes on manufactured goods will bump up output and make products cheaper, a US Federal Reserve paper said.

- The government’s move to demonetize Rs.500 and Rs. 1000 notes has helped the authorities bring 9.1 million people under the tax net.

- India has been placed in the second spot in the renewable energy country attractiveness index by EY.

STRATEGIC ANNOUNCEMENTS: FOREIGN

The US Federal Reserve kept interest rates unchanged on 3rd May but downplayed weak first-quarter economic growth and emphasized the strength of the labour market, in a sign it could tighten monetary policy as early as June. It also said consumer spending continued to be solid and inflation had been “running close” to the Fed’s target.

Saudi Arabia’s oil minister said he is confident that an agreement by producers to curb crude output and shrink a market glut will be extended into the second half of the year and possibly beyond.

Euro zone manufacturers began the second quarter at a blistering pace, increasing activity at the fastest rate for six years as demand remained strong despite rising prices, a survey showed.

US rebounded in April as employers added a brisk 211,000 jobs, a sign that the economy’s slump in the first three months of the year could prove temporary. The unemployment rate dipped to 4.44% - its lowest point in a decade-from 4.5% in March.

The International Monetary Fund (IMF) said Asia’s economic outlook faces “significant” uncertainty and downside growth risks from any sudden tightening in global financial conditions or rise in protectionist trade policies.

India on 5th May launched a communication satellite that would be jointly used with Afghanistan Bangladesh, Nepal, Bhutan, Maldives and Sri Lanka.

The US economy grew at its weakest pace in three years, in the first quarter, as consumer spending almost stalled. But a surge in business investment and wage growth suggested activity would regain momentum as the year progresses.

Governments and companies around the world began to gain the upper hand against the first wave of an unrivalled global cyber attack. More than 200,000 computers in at least 150 countries have so far infected, according to Europol, the European Union’s law enforcement agency.

FINANCIAL PERFORMANCE

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

The Bank has registered an Operating Profit of 1552.89 crore during the financial year 2016-17 compared to Rs. 1811.80 crore in the financial year 2015-16, registering a decline of Rs258.91 crore (14.29%). Bank managed its asset portfolio well and earned a Net Profit of Rs.219.51 Crore in FY 2016-17 compared to a Net Profit of Rs -(281.95) crore in FY 2015-16. Gross Profit per Employee decreased from Rs. 12.09 lakh as on Mar’16 to Rs10.38 lakh as on Mar’17.

Key Financial Ratios (%)

March 2016

March 2017

Cost of Funds

6.16

6.12

Yield on Funds

7.99

7.70

Cost of Deposits

6.58

6.00

Yield on Advances

9.93

8.95

Yield on Investments

8.02

7.76

Spread as a % of AWF

1.83

1.57

Net Interest Margin (NIM)

2.01

1.60

Operating Expenses to AWF*

2.39

1.91

Return on Avg. Assets (RoAA)

-0.22

0.16

Return on Equity

-6.01

4.38

Business per Employee (Rs. In Crore)

12.37

13.04

Net Profit per Employee (Rs. In Lakh)

-1.88

1.47

Book Value

50.14

32.94

Income and Expenditure Analysis

Interest income of the Bank declined to Rs.9427.91 crore in 2016-17 compared to Rs.9936.67 crore earned during the year 2015-16. Interest income being a direct function of growth in advances and the rate of interest charged. Bank cut its Base Rate twice during the year 2016-17 to pass on the benefit of rate cut made by RBI. Non-interest income increased by Rs719.09. crore (49%) from Rs. 1467.53 crore in the financial year 201516 to Rs2186.62 crore in the financial year 2016-17. The Yield on Advances declined to 8.95% as at March 2017 compared to 9.93 % as at March 2016.

Interest Expenditure declined by Rsl55.93 crore to Rs7500.18. crore in 201617 compared to Rs.7656.11crore in 2015-16. Lower interest expenditure was ensured by slashing of the rate of interest on retail term deposits in all the brackets. The Cost of Deposit came down from 6.58 %in 2015-16 to 6.00% in 2016-17. The Bank could curtail its operating expenses by13.84.% (411.32cr) and brought down the operating expense from Rs2972.78Crore in Mar2016 to Rs2561.46 crore in Mar 2017.

BUSINESS GROWTH

Deposits

Deposits of the Bank reached Rs. 126939 crore as on 31st March, 2017 registering a Y-o-Y growth of 9.05 %. Bank’s Savings deposits grew by21.20% to reach a level of Rs.49462Crore as on March 31, 2017. Share of CASA deposits to total deposits stood at 47.33 % as on March 31, 2017. Bank’s retail term deposit stood at Rs.63705 crore with a growth of 3.05 %Y-oY. Share of Bulk Deposits and deposits at preferential rate in total deposits further declined to reach at 2.42 % and0.19 % as on March2017from 4.97%and 1.31% as on March2016 respectively.

The Bank’s customer acquisition campaign resulted in growth of customer base of the Bank from 3.93 crore as at March 2016 to 4.27 crore as at March 2017.

Advances

The total credit portfolio of the Bank has declined in Mar2017. Gross Advances of the Bank decreased by Rs909 crore (-1.27%) and reached Rs70502.90 crore as on March 31, 2017. Credit deposit ratio stood at 55.54% as on March 2017. Bank achieved the PRISEC Advance target of 40% of ANBC. Intensive marketing of retail credit products brought considerable growth in Retail Advances supported by increase in Housing Loan.

Bank’s non-food credit decreased from Rs.70046 crore to Rs69890 crore, while food credit came down from Rs.1366 crore as on March 31, 2016 to Rs. 613 crore at the end of March, 2017.

Total Business

The total business of the Bank reached Rs197442crore. at the end of the current financial year 2016-17.

Productivity, as measured by business per employee, increased from Rs.12.37 crore as on 31.03.2016 to Rs13.04. crore as on 31.03.2017.

RETAIL LENDING OPERATIONS

Retail Credit has been one of the thrust areas of the Bank during the FY 2016-17. Bank has laid special emphasis on sanctioning Retail Loans with focus on Housing Loan and Mortgage Loan which are the major contributors to growth under Retail Credit & comprised 69.88% of total Retail Credit portfolio of the Bank.

Performance:

During the FY 2016-17, lending under Retail Credit has witnessed a positive growth of Rs. 569 Crore from Rs. 12652 Crore as on 31st March, 2016 to Rs. 13221 Crore as on 31st March, 2017, registering Y-o-Y growth of 4.50%.

The growth during the period has primarily resulted on account of the Housing Loan segment which has clocked a positive growth from Rs. 5970 Crore as on 31.03.2016 to Rs. 7115 Crore as on 31.03.2017 registering an impressive Y-o-Y growth of 19.18%.

Special Initiatives Undertaken:

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

- Credit guarantee coverage initiated for the students availing loan under Education Loan Scheme

- New products in the name of United Affordable Housing Loan Scheme under Prime Minister Awas Yojana launched with subsidy coverage for the Middle Income Group

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

- Interest rates of Retail Loan Schemes have been modified to make them more competitive and attractive

- United Housing Loan Scheme, United Mortgage Loan Scheme, United Demand Loan Scheme have been revamped to make them attractive and market driven

- The online application facility for Retail Loans like Housing and Education was a major success during the FY2016-17 as many applicants are now actively using this hassle free system for availing such loans.

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

- Bank’s official Face book Page has been effective and featuring latest information on Bank’s products/services and offerings and emerged as a major marketing tool for retail products

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

- Contest in the name of United Retail League and United Premier Retail League was launched with the intent to mobilize CASA Deposit, Promotion and delivery of ADC Products and canvassing and disposal of Retail Loans under United Housing Loan, United Mortgage Loan and United Car Loan Schemes through engagement of all staff members in mission mode

- Bank has signed a MoU with Bihar State Government and launched a scheme namely “BIHAR STUDENT CREDIT CARD” to provide education loans to those students who are residents of Bihar and are unable to pursue higher studies after passing 12th standard due to lack of financial support.

- Launched United Kaushal Rin Yojna for Vocational Education in replacement of an earlier scheme named Skill Loan Scheme

Retail Hubs:

Bank has established Retail Hubs for faster appraisal and professional approach in processing of loan proposals, thereby making loan sanctioning process hassle free and reducing Turn-Around-Time (TAT). During FY 2016-17, 24 Retail Hubs functioning in 24 regions of the Bank sanctioned 6969 retail credit proposals amounting to Rs. 1014 Crore

BANCASSURANCE BUSINESS

Bank has a Corporate Agency Agreement with both Life and Non Life Insurance Companies Under its Bancassurance arm. Under the agency agreement, Bank has made tie up arrangement with Life Insurance Corporation of India (LICI) for selling life insurance policies and with Bajaj Allianz General Insurance Company Limited (BAGIC) for non-life insurance business. During the financial year 2016-17, Bank has sold 7392 policies of LICI(life) with a premium collection of Rs.81.15 Crore and paid Rs.35.34 Crore as premium against 106790 policies to BAGIC(non-life) during the same period.

Bank has earned a commission of Rs. 3.34 Crore from life insurance business and Rs.3.60 Crore from the non-life insurance segment during the FY2016-17 as against Rs.2.87 Crore and Rs. 3.29 Crore respectively during the FY2015-16.

In terms of the new guidelines of Insurance Regulatory and Development Authority of India (IRDAI) on Open Architecture Model of Corporate Agency arrangement, Bank has filed Certificate of Registration with IRDAI which is a statutory requirement for soliciting insurance business under Corporate Agency framework effective from 01.04.2016 to operate with single insurance company in each vertical of Life (LICI) and Non-life insurance (BAGIC).

TREASURY AND INTERNATIONAL OPERATIONS

The investment portfolio of the Bank increased from Rs.44934 Cr as on 31.03.2016 to Rs.53355 Cr as on 31.03.2017 registering a growth of 18.74%. The SLR investment portfolio increased from Rs.36009 Cr as on 31.03.2016 to Rs.38166 Cr as on 31.03.2017. Portfolio modified duration has decreased to 3.90 as at March 2017 compared to 4.66 a year ago. The modified duration of the Available for Sale (AFS) portfolio has also decreased to 2.55 as at March 2017 from 3.73 as at March 2016.

The Bank has earned a total Trading profit of Rs. 1502 Cr from domestic segment of Treasury during the financial year 16-17 as compared to Rs. 824 Cr. for the financial year 15-16 registering a growth of 82.28%. The average return on investment during the year 16-17 was 8.67% and Yield on Investment during the year 16-17 was 7.76%.

Foreign exchange Business turnover of the bank aggregated to Rs.16656.44 Cr comprising of Rs.3743.45 Cr under Exports, Rs.4051.96 Cr under Imports and Rs.8861.03 Cr under remittances during the year ended 31.03.2017.

Outstanding export credit of the bank stood at Rs.1151.46 crore as at 31.03.2017.Bank earned exchange profit of Rs.143 Cr during the year 2016-17 against Rs 135 Cr during 2015-16.

The bank’s overseas presence covered two countries namely Myanmar and Bangladesh with one Representative Office each at Dhaka, Bangladesh and Yangoan, Myanmar. Indo-Myanmar trade is routed through our Bank. Twenty six (26) banks of Bangladesh maintain forty (40) Vostro account in USD and EUR and seventeen (17) banks of Myanmar maintain Twenty five (25) Vostro accounts in EUR, USD and INR with our Bank. Global IME bank Ltd., Nepal is maintaining Vostro accounts in INR & USD with our Bank.

The bank’s International operations are well supported by a wide network of more than 620 correspondent relationships and 16 Nostro accounts opened with overseas banks in 8 currencies maintained abroad.

OTHER SERVICES

Merchant Banking Division managed Bank’s issue of Basel-III compliant Additional Tier-I bonds for Rs.200 Crore on 29.03.2017. Bank holds certificate of Registration issued by SEBI on Banker to an Issue, Debenture Trustee and Merchant Banker under which it continues to discharge defined duties and responsibilities as per regulatory norms

GOVERNMENT BUSINESS

Government Transaction Department undertakes different types of Government Business Activities as following:-

- Collection of Central government revenues viz. Direct and Indirect Taxes (CBDT, CBEC, Service Tax and customs) through physical mode by Authorized branches and through e-mode (Internet Banking) by all branches of the bank.

- Collection of State Revenues and Taxes of different states (both on line and off line).

- Mobilisation of Govt. deposits under small savings like Public Provident Fund, Senior Citizens’ Saving Scheme, Sukanya Samridhi Accounts, different tranches of Sovereign Gold Bonds, Savings Bond etc.

- Handling of Govt. Fund (Departmentalized Ministries’ Accounts, State Govt. Treasury Operation in different states)

- Disbursement of different types of pensions of the Central Govt., State govt. and different autonomous organizations like EPFO,Kolkata Port Trust,Damodar Valley Corporation etc

- Implementation of National Pension System (NPS) and Atal Pension Yojana(APY) for enrolment of unorganized sector people in to the scheme for getting old age annuity/pension as an authorized Point of Presence Service Provider for the Pension Fund Regulatory and Development Authority(PFRDA).

- Implemented the Prime Minister’s Garib Kalyan Yojana a Govt of India scheme to raise funds for the amelioration of the poverty stricken mass of the country.

- Dissemination of information to the Pensioners through ‘Pensioners charter’ being displayed in the banks ’website and on-line pensioners’ Grievance portal and Pensioners’Pay slip have been customized in the bank’s website. Approx 93% of pension accounts have been Aadhar seeded excluding the state of Assam and Meghalaya and digitization of Life Certificate for pensioners through Jeevan Praman has been in popular use.

- The preparation for collection of Goods and Service Tax with full IT integration with the GSTN and RBI according to the requirements of Bank Authorization Reference Model under the new regime of GST to be launched from 1st of July 2017 is on the verge of finalization.

The total turnover in respect of Government Business handled by the bank and the agency commission earned on such business during this financial year (2016-17) amounts to:-

BUSINESS TYPE

TURNOVER

COMMISSION Earned

TAX

3011.41

3.30

PENSION

545S.29

21.72

TREASURY

3767.02

5.02

P P F ,SCSS,SSA, BON D & SOS

1094-35

0.34

DMA

7117.43

2.04

TOTAL

30449.50

31.72

ASSET QUALITY AND RISK MANAGEMENT

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

Despite constant follow up with the recalcitrant borrowers, monitoring of stressed assets and tough measures in hard account, the Bank was not able to contain further growth in NPA level which reached a level of Rs10951.99cr. i.e15.53% of gross advances.,

The major steps taken by the Bank for recovery of stressed assets during the year were a liberalized limited period offer of one time settlement (OTS) for NPAs with outstanding balance below Rs.10 lac. To create general awareness among the public the Bank took the initiative by putting up silent road shows and peaceful demonstrations before the establishments of defaulting borrowers.

Asset Quality

The Bank has been complying with RBI guidelines relating to Income Recognition, Asset Classification and Provisioning in percentage terms, gross NPA Ratio of the Bank stood at 15.53.% as on 31.03.2017 as against 13.26% at the end of the previous year. In absolute terms Gross NPA stood at Rs10951.99. cr. as on 31.03.2017. The Net NPA ratio of the Bank stood at 10.02.% as on 31.03.2017 against 9.04 % as on 31.03.2016. In absolute terms, the Net NPA stood at Rs6592.cr as on 31.03.2017. The Bank could contain the fresh slippages during the FY 2016-17 to Rs3533.cr as against Rs. 5011 cr during the FY 2015-16. The cash recovery during the year was Rs.488 cr and the upgradation during the year was Rs312 cr. The provision coverage ratio of the Bank has improved to 56.45.% as on 31.03.2017 as against 56.36 % as on 31.03.2016. The recovery in technically written off accounts was Rs110.20.cr during the year 2016-17.

The Bank has a comprehensive Recovery Policy duly approved by the Board covering all avenues for recovery and reduction of NPAs like One time settlement (OTS), sale of charged assets, sale to Asset Reconstruction companies (ARC) etc. The Bank came out with liberalized guidelines during the year for recovery of small value NPA accounts having outstanding balance below Rs.10 lac. The Bank preferred to go for sale of NPA to the tune of Rs.. 563.15 cr to ARCs during the FY 2016-17.

Capital & Reserves

Net worth of the Bank was assessed at Rs.5005 crore as on March 31, 2017. Total paid-up capital of the Bank was Rs.1394.36 crore and reserves and surplus was Rs.6349.45 crore. The Government shareholding in the Bank stood at 85.23% at March 2017. Capital Adequacy Ratio under Basel-III norms assessed at 11.14% with Tier-1 Ratio at 8.94% and CET1 ratio at 8.46% as at March 2017. Capital Adequacy Ratio under Basel-II norms assessed at 11.68% with Tier-1 Ratio at 7.93% as at March 2017. The Bank has adequate headroom available under both Tier-1 and Tier-2 options to raise capital to support business growth momentum.

Composition of Capital

March 2017

March 2016

Basel-Ill

Norms

Basel-II

Norms

Basel-Ill

Norms

Basel-II

Norms

Risk Weighted Assets

71198

66634

73079

69249

Tier 1 Capital

6368

5517

5797

5008

Of which CET1 Capital

6023

NA

5660

NA

Tier 1 Ratio (%)

8.94

8.28

7.93

7.23

Of which CET1 ratio (%)

8.46

NA

7.74

NA

Tier 2 Capital

1563

2264

1572

2235

Tier 2 Ratio (%)

2.20

3.40

2.15

3.23

Total Capital

7931

7781

7369

7243

CRAR (%)

11.14

11.68

10.08

10.46

Risk Management (Capital Adequacy Framework & Future Strategies)

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

Risk Management Structure:

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

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

The Operational Risk Management Committee (ORMC) has the responsibility of monitoring the operational risk of the Bank and the responsibility of evaluating and taking necessary steps for mitigation of operational risk by designing and maintaining an explicit operational risk management process. It also ensures that the norms, policies and guidelines laid down in Operational Risk Management Policy are strictly adhered to. ORMC met 12 times to discuss various issues from operational risk point of view.

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

Risk Management Policies:

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

Credit Risk:

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

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

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

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

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

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

Market Risk:

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

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

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

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

Operational Risk:

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

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

Basel-II and Basel-III Compliance:

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

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

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

In line with the ICAAP policy, the Bank prepares the ICAAP Document on yearly basis and submits to RBI after internal validation and approval by the Board of Directors of the Bank. The ICAAP document of the Bank for 2016-17 has been submitted to RBI.

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

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

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

PRIORITY SECTOR ADVANCES

Bank’s lending to the Priority Sector has reached to Rs.30623 crore as at 31st March 2017 which is 40.71% of ANBC. Bank has given special thrust on financing Small & Marginal Farmers, Micro Enterprise segment under MSME apart from exploring other potential avenues of increasing PRISEC advances like engaging Collateral Management Companies for Pledge Financing, financing Food & Agro Processing Units, financing large size Dairy & Poultry units, vegetable and flower production under controlled condition (Poly House), Plantation etc.

Agriculture Lending:

Bank has disbursed Rs.7147 crore during the FY 2016-17 against a target of Rs.7955 crore recording an achievement of target to the tune of 90%. Lending to Agriculture Sector stands at Rs.12124 crore as on 31st March 2017, which is 16.12% of ANBC against the stipulated target of 18% of ANBC. Lending to Small & Marginal Farmers stands at Rs.6124 crore, which is 8.14% of ANBC against the stipulated target of 8% of ANBC for the year 2016-17.

Lending to Weaker Section:

Lending to weaker section reached to Rs.8287 crore as on 31 March 2017 which is 11.02% of ANBC against the stipulated target of 10%.

Lending to Minority Community:

Bank’s lending to Minority Communities reached to Rs.4609 crore as at end of March 2017 which is 15.05% of PSL conforming to the stipulation

Kisan Credit Card:

Bank has organized several special camp for issuance of Kisan Credit Cards to bring more number of new farmers under KCC net as per revised scheme. Bank has issued 76203 fresh KCCs during 2016-17 with credit limits of Rs.469 crore Total number of outstanding KCCs as on 31st March 2017 stands at 565198 with aggregate outstanding balance of Rs.2514.47 crore. In line with the Government guidelines on issuance of Rupay based ATM enabled cards to all the KCC holders, Bank has issued 5.35 lakh ATM cards to the KCC holders (excluding the NPA KCCs) till 31.03.2017 achieving the target of full conversion of entire operative KCCs to RUPAY KCC within the time frame set by the Government.

Self Help Group:

Bank has credit linkages with 94488 SHGs with an outstanding balance of Rs.497.32 crore as on 31st March 2017. Bank has been implementing NRLM programme for SHGs by providing initial credit limit of Rs.1.25 lakh on 1st grading of SHGs as per the decision of SLBC, West Bengal. Bank has started participating in Community Based Recovery Mechanism (CBRM) with the assistance from State Rural Livelihood Mission (SRLM) which has placed Bank Sakhi/ Bank Mitra at the branches.

Corporate Social Responsibility:

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

United Bank Rural Self-Employment Training Institute (UBRSETI)

Bank has so far set up 16 RSETIs in the states of West Bengal (6), Assam (8) and Tripura (2) to impart training to the potential entrepreneurs from the financially weak sections of the society. RSETIs have been actively engaged themselves in number of special training programmes, as directed by the government like PMEGP, Life MGNREGA etc.

During the FY 2016-17, these institutes have imparted training to 11027 rural youths/women, mostly from weaker sections, against the target of 8840 candidates, of which 65% trainees have been settled by establishing own economic venture.

These institutes are providing post training hand holding support to the trainees including arrangement of loan from our bank branches to enable them to set up their own ventures.

FLCC

Bank has also set up 38 Financial Literacy Centre (FLCs) in the states of West Bengal, Assam, Tripura and Manipur to extend financial literacy and credit counseling services to the poorer section of the society. In the Financial Year 2016-17, these FLCs have conducted regular outreach programmes which include Outdoor Activities for imparting financial literacy.

United Bank Socio-Economic Development Foundation (UBSEDF)

United Bank Socio Economic Development Foundation (UBSEDF) was established on 30th March 2007 with the objective of promoting and carrying out social and economic developmental activities and rendering assistance to weaker and under privileged section of the society in terms of decision taken by the Board of Directors of the Bank. Bank has extended financial assistance in 82 various welfare activities involving a total sum of Rs.277 Lakh towards its CSR activities till 31.03.2017. During the financial year 2016-17, focus was on extending assistance to the proposals under Swachh Bharat Mission/ Swachh Vidyalaya Campaign, Safe Drinking Water and Digitization of Adopted Villages. In the year, Bank has disbursed Rs.57.42 Lakh for 8 projects for implementation by the respective organizations towards cause of the society.

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

Advance under MSME of the Bank has marginally increased from Rs.11884.94 Cr as on 31.03.2016 to Rs.12023.29 Cr as on 31.03.2017registering growth of 1.16%. Marginal growth is mainly due to amendment of PRISEC guidelines by RBI for reclassification of Agro processing units to Agriculture from MSME and general economic slowdown.

Category

FY 2014-15

FY 2015-16

FY 2016-17

No. of

a/cs

O/s Amt. (In crore)

No. of

a/cs

O/s Amt (In crore)

Growth

(Y-o-Y)

No. of

a/cs

O/s Amt (In crore)

Growth

(Y-o-Y)

Micro

221214

8287.12

240877

7,491.53

-9.60

229923

7698.13

2.76

Small

14235

4057.59

16632

3,506.50

-13.58

17617

3467.05

(1.13)

MSE

235449

12344.71

257509

10,998.03

-10.91

247540

11165.18

1.52

Medium

332

604.42

774

886.91

46.74

939

858.11

o.2-

MSME

235781

12949.13

258283

11,884.94

-8.22

248479

12023.29

1.16

Strategies to increase MSME portfolio of the Bank.

- The Bank is focused on building a quality MSME asset portfolio by credit linkage to quality MSME entrepreneurs/ units, recovery in NPA accounts and preventing fresh slippages.

- The Bank had set up Centralised MSME - Loan Processing Centre (MSME-LPC) to reduce the turnaround time for loans beyond the Discretionary Power (DP) of Regional Offices. The Regional Offices are also empowered with enhanced DP for quick disposal of MSME proposals.

- The Bank has adopted cluster financing under MSME. MSME specialized Branches (Presently 180) and branches having potentiality of MSME advance including those located in close proximity to industrial area / clusters have been advised to focus on procuring new business from the entrepreneurs.

- The Bank is regularly interfacing with the MSME Associations and participating in their promotional programmes / workshops / seminars and EDP programmes for promotion of MSME products.

- The Bank has extended Collateral Free MSME loans under CGTMSE guarantee coverage up to Rs. 200 lac under “Credit Guarantee Scheme” for credit linkage to entrepreneurs having no collateral. Bank has also encouraged collateral free loans to MSE sector up to Rs. 10.00 lac under MUDRA category.

- The Bank has implemented “Stand up India” Scheme by providing credit to target group in true spirit.

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

- The Bank has been awarded Best bank Award for Promotional Schemes- Winner (Emerging Category) and EcoTechnology Savvy bank Award- Runner Up (Emerging Category) by Chamber of Indian Micro Small and Medium Enterprises (CIMSME).

- The Bank has been awarded Runner up in Government Schemes category under Medium Bank class and Runner up in Best Social Bank category under Medium Bank class by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

LEAD BANK DIVISION

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

The Bank is the Convener of State Level Bankers’ Committee (SLBC) in the States of West Bengal & Tripura. The Bank is entrusted with Lead Bank responsibility in 40 districts spread over four states; 10 districts in West Bengal, 14 districts in Assam, 8 districts in Manipur and 8 districts in Tripura.

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

The year 2016-17 had been eventful for the Bank as SLBC Convener for both West Bengal & Tripura.

The SLBC meeting organized in Tripura State have been attended regularly by dignitaries like Shri Sanjeev Ranjan, Chief Secretary, Government of Tripura, Shri. M. Nagaraju , Principal Secretary, Finance & I & C, Government of Tripura, General Manager, Reserve Bank of India and Senior Executives of Line Department of the State.

Dr. Amit Mitra, Hon’ble Finance Minister of Govt. of West Bengal, Regional Director, RBI, CGM, NABARD, Director, DFS, MoF, GoI and the Principal Secretaries of Line Departments of the State have regularly attended at the SLBC meetings in the State of West Bengal during the year 2016-17 to enrich the level of discussion on important issues concerning development of the State.

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

- Bankers have done excellent job in West Bengal as far as disbursing credit in MSME sector is concerned. In spite of completely being absorbed in Demonetization related work for close to 2 months, all the banks in the State together surpassed the target of disbursement set in MSME under Annual Credit Plan.

- Bankers have performed remarkably well in SHG loan segment. Growth in SHG advances mainly happens in 3rd & 4th quarter of financial year. Inspite of implementation of Demonetization on November 8, 2016, Banks in West Bengal together have surpassed the target of disbursement set for the state under SHG.

- Immediately after implementation of Demonetization, workers under unorganized sectors faced trouble to withdraw their daily wages due to severe cash crunch. In West Bengal, a large chunk of unorganized workers belong to the Tea Garden workers.

- Taking proactive steps, SLBC West Bengal convened a meeting with the Banks who are present either in Dooras and in Darjeeling area of North Bengal having all the Tea Gardens.

- The effort of opening of accounts and activation of the same in the CBS system of the concerned Banks were followed by issuance of ATM Rupay Card and related PIN and installation of either Desktop ATM or a full fledged ATM in a suitable place to be provided by the Garden management for facilitating payment to the garden workers after their wages is transferred to their newly opened accounts.

- Along with the campaign, Rupay Card/ PIN distribution, ATM/POS installation, the concerned Bankers took steps to create general financial awareness among the Tea Garden workers to enable them to undertake seamless transaction through Micro ATM of Bank Mitra/ATM/ POS.

- In both the States of West Bengal and Tripura, the roadmap for covering the Unbanked Gram Panchayats have duly been allotted to the member banks for opening of Brick & Mortar bank branches within 31.03.2017.

- After creation of 7 new districts in the state of Manipur, Bank has been allotted 4 new districts as lead districts, which will definitely improve the business performance of the Bank in the state. Total number of Lead districts in the state of Manipur now stands at 8.

FINANCIAL INCLUSION

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

The highlights of achievements for implementation of Financial Inclusion under Pradhan Mantri Jan Dhan Yojana (PMJDY) during the F.Y. ended 2016-17 are enumerated hereunder:

- Under PMJDY, 105.19 lakh accounts have been opened till end of March’17.

- Rs.7414.03crore deposit has been mobilized in PMJDY Accounts upto March’17.

- Out of 105.19 lakh accounts opened, 14.48 lakh accounts (13.78%) are under ‘Zero’ balance.

- Credit linkage through Bank Mitra channel has been established in 19.32 lakh FI customers with an outstanding amount of Rs.439.85 crore.

- Bank has rolled out JLG Loan module through Bank Mitras. FI customers have availed JLG loan where outstanding balance is Rs.6626.46 lakh as at 31st Mar’17, without any default.

- 100.67 lakh RuPay Debit Cards have been issued.

- 57.26 Lakh PMJDY Accounts have been Aadhaar linked.

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

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

- Out of 1007 death claims lodged under PMJJBY, 965 claims have been settled by LICI.

- Under PMSBY, as against 111 accidental insurance claims received, NIC has settled 63 cases and repudiated 28 cases.

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

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

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

ORGANIZATION & SUPPORT SERVICES

Branch Network :

RBI has imposed restriction on opening of branch vide their letter no. DBS.CO.PSBMD III NO.90/14.01.052/2013-14 dated 14.02.2014 under Prompt Corrective Action (PCA) .

However, RBI had accorded permission for opening 51 Branches vide letter Nos:

1) BAPD.16183/22.03.026/2015-16 dt. June 27,2016 for 36 branches.

2) BAPD.3633/22.03.026/2016-17 dt. September 23,2016 for 12 branches.

3) BAPD.6398/22.03.026/2016-17 dt. December 06,2016 for 3 branches.

The Bank has opened 46 branches up to 31.03.2017 and 3 branches are in the process of opening . The remaining 2 Branches are yet to be opened.

One (1) RETAIL HUB was opened at Ernakulam in Kerala under Southern Region during the Financial Year as per RBI approval No BAPD.4449/22.03.026/2016-17 dt. October 10, 2016

Two (2) LINK OFFICES were opened at PUNE in Maharashtra under Mumbai Region & AGRA in U.P Under Meerut Region as per RBI permission No. BAPD.7991/22.03.026/2016-17 dt. January 10, 2017.

One (1) REGIONAL OFFICE was opened in HYDERABAD by bifurcating BANGALORE Region as per RBI Permission No. BAPD.1327/22.03.026/2016-17 dated July 27, 2016.

BRANCHES & OFFICES CLOSED/MERGED during the period 01.04.2016 to 31.03.2017

No.

Name of the Branch/Office

Region

State

Date of Closing of the office

Remarks

1

G H Colony Branch

Behala

West Bengal

13.06.2016

Merged with South Suburbs branch

2

Sova Bazar Branch

Kolkata North

West Bengal

11.07.2016

Merged with Hatkhola branch

3

Fariapukur Branch

Kolkata North

West Bengal

25.07.2016

Merged with Shyambazar Market Branch

4

Retail Loan Hub -Behala

Behala

West Bengal

20.08.2016

Merged with Retail Loan Hub Kolkata

5

Retail Loan Hub -Bidhannagar

Kolkata North

West Bengal

20.08.2016

Merged with Retail Loan Hub Kolkata

6

Retail Loan Hub-Pune

Mumbai

Maharashtra

17.10.2016

Closed

As on 31.03.2017 the total number of branches of the Bank stands at 2053. The bank has 5 Extension Counters & 36 Regional offices across the country.

Population group-wise Composition of Total Branch Network

Location

Number of Branches (% or total)

31.03.2016

31.03.2017

Metropolitan

330 (16.41%)

372 (16.12%)

Urban

466 (23.17%)

401 {23.43%)

Sami Urban

416 (£0-64%)

423 (20-61%)

Rural

900 (39.78%)

777 (37,84%)

Toial

2011

£063

Geographical location-wise Composition of Total Branch Network

Location

Number of Branches (% of total)

31.03.2016

31.03.2017

Eastern Region

1169 (58.13%)

1180 (57.47%)

North Eastern Region

356 (17.70%)

364(17.73%)

Western Region

85 (4.23%)

88 (4.29%)

Northern Region

123 (6.12%)

126 (6.14%)

Southern Region

124 (6.16%)

139(6.77%)

Central Region

154 (7.66%)

156 (7.60%)

Total

2011

2053

The Bank has 241 specialized branches, catering to the specific clientele segment.

Categories of Specialized Branches

31.03.2017

1. MSME

180

2. Asset Recovery Management

4

3. Retail Hub

24

4. MSME Loan Proc. Hub

1

5. Corporate Finance Branch

4

6. Service Branch

19

7. Women Branch

5

8. Treasury Branch

1

9. Central Pension Processing Centre

1

10.Cash Management Service Hub

1

11. Inward cheques Processing centre

1

Total

241

Out of total 2053 branches as on 31.03.2017, 885 (43.10 %) are located in 85 Minority Concentration Districts (MCDs) throughout the country.

CBS:

All the branches of the Bank are covered under Core Banking System and various other surround applications such as Human Resources Management System, Government Business Module, Asset Liability Management, Anti Money Laundering and Lending Automation Processing System etc have also been implemented to facilitate better customer service and effective management. The facility of interbank remittance through RTGS and NEFT is available at all the branches of the Bank. This facility is also available through our internet banking and mobile banking platform. The Bank also offers cross border remittance through SWIFT network at one ‘A’ Category AD Branch and 41 ‘B’ Category AD Branches. The Core Banking System has also been integrated with SFMS platform to offer inland Letter of Credit (LC) and inland Bank Guarantee operation using Straight Thorough Processing (STP). To prevent incidences of fraud, biometric Authentication System has been implemented across all its branches for accessing Core Banking System.

The Bank has revamped its corporate network architecture to next generation MPLS technology and also upgraded network bandwidth, for high availability & better performance. Bank has deployed VSATs with dedicated bandwidth and High Speed Data Connectivity using 3G as back up connectivity at Branches to provide network connectivity in the event of cable cut.

The Bank conducts Information Security (IS) audit for its Core Banking and other surround applications as well as for infrastructure at the Data Centre. This includes VAPT (Vulnerability Assessment & Penetration Testing) for external facing applications at certain intervals. The Bank also conducts periodic DR (Disaster Recovery) Drills as part of its Business Continuity Plan (BCP).

As part of our other technology initiatives, the following systems have been put in place.

- Centralized Payment Hub solution has been implemented to process all transactions initiated through NACH and APBS platform with host to host connectivity of NPCI. Mandate Management Services are also enabled in this platform. In future, all corporate Collection and Payment services and IMPS gateway will be integrated in this centralized hub.

- The Bank has boarded Public Fund Management Services (PFMS) platform and disbursing DBT payments for various sponsored schemes of Central and State Government. Additionally, Departmental Ministerial Accounts for two ministries are also being handled in this platform.

- As a part of Green initiative, Bank has implemented Board Information System (BIS) for conducting Board level meetings in paperless mode. All agenda and minutes of various Board level committees are uploaded in this portal.

- The MIS solution has been revamped with a new solution and architecture for easy and quick availability of requisite information. Regulatory reports are also being automated through this system.

- The Bank has an intranet portal which is used extensively for information sharing, knowledge management and online examinations.

- Self Service kiosk to offer services like Passbook printing, Cash deposit and Cheque deposit have been installed at selected branches. Bank has also introduced electronic Passbook (United e-Passbook) facility for the customers as a mobile application to view account transactions.

- Bank has deployed some of the next generation tools to prevent various kinds of cyber attacks and has engaged professional agencies to provide Anti-Phishing, Anti-Pharming, Anti-Trojan and Anti-Malware Managed Services.

- Bank has implemented Security Operations Centre (SOC) which provides centralized view of Information Security status and command centre for IS Security operations.

Centralized Payment HUB

1. The Bank has set up a Centralized Payment Hub ( CPH) at Head Office to handle the enormous volume of e-transactions in a secured and reliable manner. The Centralized Payment HUB has started its operation w.e.f. 3.11.2014.

The department is catering the following services:-

a. NACH Debit

b. NACH Credit

c. APBS (Aadhar Payment Bridge System)

d. Mandate Management System of NPCI as Destination Bank

e. Mandate Management System of NPCI as Sponsor Bank

f. DBTL (Direct Benefit Transfer to LPG Customers)

g. ECS Debit as Destination Bank

h. Reconciliation of Aadhaar Enable Payment System ( AEPS)

i. Digidhan Payment

j. CMS (Cash Management Services)

(i) CMS Payment Services

1. Corporate Bulk Payment

2. GePG (Government e-Payment Gateway)

(ii) CMS Collection Services

1. Indo Nepal Remittance Service

2. Centralized Mandate Based Direct Debit Service

3. Corporate Cash & Cheque Collection Service

(iii) ASBA (Application Supported By Blocked Amount)

1. Core ASBA

2. Syndicate ASBA

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

HR Details

The total staff strength comprises 52.31% officers, 30.02% clerks and 17.67% Sub-Staff. Women employees numbering 3238 constitute 21.54% of the Bank’s total staff strength.

For 2016-17 Bank recruited 311 Probationary Officers, 4 Security Officers, 7 Law Officers, 2 Company Secretaries and 246 Clerks. The recruitment process was initiated for filing up the vacancies to meet effectively succession planning process and man power management for smooth running of the organization.

Inter cadre and inter scale promotions were successfully conducted during FY 2016-17 and in total 599 number of employees were promoted to next higher cadre/scale.

Training /Human Resource Development (HRD)

To meet the emerging challenges in the banking sector, the importance of skill up gradation of all categories of employees was keenly felt and as a sequel to this, Bank initiated the following steps in arranging various training programs during the year 2016-17.

i) In-House Training: The training courses organized by the Staff Training College, Kolkata and other four Training centres in which 3047 employees were given in house training.

ii) External Training: During the period under review bank has roped in professional training institutes for imparting various training programmes & workshop in which 211 employees have been trained externally.

Customer Orientation

The bank has taken several initiatives to remain customer friendly by providing prompt service, bringing in diversified technology supported products/ services, quickly responding to customer queries/ suggestions and redressal of customer complaints. The “code of commitment to customers” issued by BCSBI has been made available at the Bank’s website and also sent to all the Branches and Regional Offices across the country. For improving the quality of the customer service, a toll free contact facility at customer services Department is provided to facilitate the customers to represent their grievance/ suggestions. The toll free facility is available from 8am to 10 pm. For ATM related issues, a separate toll free contact facility at head office has been provided and is available 24*7. The bank has put in place online grievances redressal system through the banks website, where the customers can lodge and track the status of their complaints/suggestions..

In order to ensure quicker and non discriminatory redressal of grievances, Bank has introduced a portal named Comprehensive Complaint Management System (CCMS) by leveraging technology. Under this system the complaint received by branches, Regional offices and departments at Head office, are acknowledged on real time basis and status of redressal / settlement is also uploaded on the portal till final redressal. Customer can also lodge complaint on the CCMS Portal directly which is automatically added to the outstanding database of CCMS by the system.

The Comprehensive Complaint Management System helps us to track the status of each complaint and to take a comprehensive look with regard to the total complaints received by the Bank during the period and status thereof. The necessary follow-up measures are immediately taken up for expeditious disposal of the complaints and grievances with concerned Branches/RO/Department at Head Office. The system enables the officials of the Customer Service Department to classify the nature of complaints with respect to the products and services to which the complaints are related. The analysis of data aims to help the Bank management to take appropriate action to improve service in the areas which are found deficient. The complaints from various sources like those received through mails and by post etc. are also entered in the CCMS portal. The consolidation of complaints from all sources on the CCMS portal helps the management to identify the nature of complaints, areas from which maximum complaints are received and also to take account of the time taken for the redressal. Such analysis is aimed at improving the standard of customer service and identifying the areas where staff members are to be trained, modification of products and services are required and remedial actions are to be taken for strengthening of system .

As per recommendation of the Damodaran Committee setup by Reserve Bank of India, our Bank has appointed Internal Ombudsman with effect from 07/12/15 to enhance the customer confidence level..

To have direct feel of the quality of the customer service in the Kolkata based branches, incognito visits by the officials of Head Office are conducted which additionally cover several areas such as ambience, discipline, punctuality and matters related to preventive vigilance to safeguard the interest of Bank and customers.

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

In financial year 2016-17, customer complaints redressal percentage was 99.63% 315 numbers of complaints remained outstanding at the end of year, out of which 10 numbers of complaints were outstanding for more than one month .

The ADC related complaints are resolved within the stipulated period.

Out of 1070 Nos of complaints lodged in Government of India Portal (CPGRAM)for the financial year ending Mar’ 17, 1055 Nos complaints got resolved and 15 Nos complaints remain pending for redressal as on 31/03/2017.

Internal Control

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

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

Risk Based Inter Audit (RBIA) of branches have been carried out to focus on effective Risk management and internal controls in respect of areas of potential risks and to play an important role in protecting the Bank from various risks. System based RBIA has been made operational during the year. During the year 2016-17, Risk Based Internal Audit of 1498 branches has been done.

Concurrent Audit by external audit firms have been conducted in branches/offices to ensure accuracy, authenticity and due compliance with Internal Systems, Procedures and guidelines of the Bank. During the year 2016-17, Concurrent Audit of 514 branches have been completed covering total deposit of 52%, total advance of 86% and total business of 65% of the Bank as a whole.

Credit Audit has been undertaken as an effective monitoring tool by identifying the gaps in the credit delivery process at branches and suggesting ways to bridge the gaps and also monitoring the compliances. During the year 2016-17, credit audit has covered 77% of the total credit portfolio as on 31 March, 2016 of the bank.

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

Know Your Customer (KYC)

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

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

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

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

- The generation of daily alerts for offsite surveillance through our internal web-based application has been started and monitored by our AML Cell. At present, daily alerts are generated on 13 types of alert parameters.

- Numerous STRs on continuous basis and various reports as and when required by FIU-IND, Ministry of Finance was totally taken care by the AML Cell during the period of demonetization.

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

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

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

- Overall KYC compliance of our bank is more than 99%.

- Upload of KYC data in CKYCR portal has been started.

Security Arrangements:-

The Bank has taken necessary steps to strengthen the security arrangement in branches by installing security gadgets from time to time in conformity to the guidelines issued by the Reserve Bank of India. Additional security gadgets / services provided at our Bank’s branches are as follows:-

A. In order to further strengthen the security of the branches all the branches would be equipped with CCTV surveillance system. All the currency chest branches have already been equipped with CCTV system. Total 1553 branches have been covered with the CCTV Surveillance. The purchase formalities for the CCTV are complete and purchase order has been placed and the installation process in the remaining branches is underway.

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

C. In order to implement the Reserve Bank of India Clean note policy 1003 branches have been equipped with (1 1) pocket Desk Top Authenticator cum Sorter to help the branch to identify the Forged Indian Currency Notes (FICN) at the counter itself. This will also enable the branches to sort the currency notes in to issuable and non issuable currency notes for redistribution amongst the customers and members of public.

D. During year 2016-17 the security department pursued and recovered about Rs. 603818.00 of the insurance claim dues, for the money lost during crime against the bank at different branches, pending with the Insurance Company.

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

Premises

Purchase:

- Purchase of 3BHK Flat at 1st Floor, Hindustan House, 28, Altamount Road, Mumbai - 400026 with garage measuring 153 sft. Built-Up area-3857 sft & Carpet Area-2755 sft.

Construction:

- Engagement of BSNL (PSU) as Project Management Consultants for various Construction and Procurement Projects of United Bank of India in different parts of India.

- Construction of Boundary Wall on Bank’s land at CBD-79, International Financial Hub, New-Town-Rajarhat, Kolkata through BSNL (PSU) as Project Management Consultants.

Upgradation:

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

- Installation of Photo-Voltaic Grid connected 50KWp Solar Plant each at H.O. and Staff Training College, Kolkata. Installation and commissioning completed at Staff Training College and is presently operational.

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

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

- Electrical Audit of Branches.

- Renovation of newly acquired 5BHK Apartment at Gujrat Vihar, New Delhi for accommodation of participants of Staff Training Centre.

- Updated and circulated “Policy & Operational Guidelines for Acquisition of Accommodation On Lease/Rental Basis for Bank’s Use”.

- Formulated and circulated “Manual on Policy and Procedures for procurement of Goods and Services by the Bank” on the basis of relevant guidelines of CVC, Ministry of Finance, Govt. of India, Indian Bank Association & views / feedback of departments at H.O.

- Structural Audit of H.O. Building, Central Records/ RSETI Building, Rajpur, Kolkata South Region Office Building & Manicktala Branch Building.

- Repair and Renovation of Bank’s owned Premises at Siliguri, North Bengal Region.

- Phase-Wise conversion of normal light fittings with energy efficient LED Fittings (around 1075 nos. have already been converted).

Ongoing:

- Structural Strengthening / Retrofitting and external repair and painting of Head Office Building through BSNL (PSU) as Project Management Consultants.

- Construction of B G 3 Office Building on Bank’s Land at Agartala for accommodating Tripura Regional Office, Agartala Branch with RBI “AAA” Class Currency Chest through BSNL (PSU) as Project Management Consultants.

- Construction of G 6 Office Building on Bank’s Land at Kolkata (Salt Lake) for accommodating Data Centre, Regional Office, Branch and e-lounge through BSNL (PSU) as Project Management Consultants.

- Construction of G 1 Office cum Residential Building on Bank’s Land at Mizoram University in Aizwal with Mizoram University Branch and RBI “B” Class Currency Chest through BSNL (PSU) as Project Management Consultants.

- Installation of 1 - 1.2 KW Photo-Voltaic solar system aided VSAT operation at 1479 BC branches.

Implementation of Official Language

With a view to implement the Official Language Policy of the Government, 39 Officers were trained in regular Hindi of Praveen & Pragya courses at Head Office. Hindi workshops and Unicode based computer training in Hindi were organized for the Officers & employees of the Bank in each quarter at the Staff Training College, Kolkata. The quarterly meetings of Official Language Implementation Committee of Head Office were held under the chairmanship of the Managing Director & CEO. In-house Hindi magazine of the Bank “United Darpan” and e-magazine in Hindi were released. Inspection of all the Regional Offices and departments of Head Office were done in regard to implementation of Official Language.

Hindi Day was celebrated on 14 Sept, 2016 and subsequently different Hindi competitions and seminar were organized during Hindi Week.

The inspection of Head Office was done by the Committee of Parliament on Official Language in May, 2016 & January, 2017 regarding implementation of Official Language in the Bank. The said committee appreciated the Bank for better performance. Some of the Regional Offices of the Bank i.e. Meerut, Patna & Burdwan received prizes from the Town Official Language Implementation Committees for best performance in Hindi. Besides, different Branches like, Dehradoon & Bikaner had also received prizes from the TOLIC for implementation of Official Language policy successfully.

Regional Rural Banks (RRB)

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

On 31.03.2017 their total Busines was Rs. 39009.17 Cr with Total Deposit of Rs. 27015.00 Cr & Advance of Rs. 11994.17 Cr. Total profit earned by them is Rs. 76.89 Cr. Average Gross NPA was 17.68 %.

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

United Demat

The depository services to the Bank’s customers are provided on the CDSL and NSDL platform under the umbrella of “United Demat”, which aims at providing hassle-free, fast and accurate transactions under depository environment. Some of the benefits are:

- Easy and convenient way of holding securities

- Immediate transfer of securities without any stamp duty on transfer

- Safer than paper-shares (no chances of bad delivery, fake securities, delays, thefts etc. are eliminated)

- Reduced paperwork on transfer of securities

- Auto-credit into Demat account

- Expeditious credit of securities and fund resulting from corporate actions and distribution of corporate benefits;

- A single Demat account can hold investments in both equity and debt instruments.

- Online access through easiest

- Periodic statement of holding and transaction

- Convenience of changing client account details including nomination as and when required hassle-free transmission.

- Direct credit of shares allotted in IPO in Demat Account and credit of Dividend in linked bank account.

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

Demat Services are made available touching all aspects of share trading like:

- Opening of Demat account

- Purchase and Sale of Securities

- Dematerialization & Rematerialization

- Destatementization & Restatementization / Redemption of Mutual Fund Unit

- Pledge / Unpledge / Confiscation

- Freeze & Unfreeze

- Transmission & Transposition

U-Connect - Bank’s Share Trading Services

United Bank of India facilitates share trading for its customers through two products under the umbrella “U-Connect” - one in association with Kotak Securities Limited (KSL) by the brand name ‘Trio’ and other with The Calcutta Stock Exchange Ltd. (CSE).

In these products, the client opens its Bank and Demat accounts with United Bank of India whereas the trading account is opened with Kotak Securities/ CSE. The products are feature-rich with facilities of investment, trading, exposure, margin trading, funding, IPO applications through ASBA, systematic investment, placing after market orders and future orders valid for 365 days, all being made available at an extremely competitive pricing. The investors have flexibility of putting their trades online, offline, using mobile app and through dealer. Apart from equities investors can also trade in bonds, ETFs and MF through our products. The investors will also have access to the research reports and trading tips from the award winning research team

Alternate Delivery Channels

Bank has always been committed to provide convenience based banking and has thus been introducing all popular and latest alternate banking channels. The position of Bank’s alternative delivery channel product / services for the FY period 16-17 is as below:

Channel

Total / User Base

Wallet

89,929

United UPI

5 Lac Plus

Debit Cards

101,88,328

Internet Banking

4,48,469

Mobile Banking

3,89,199

Bank has been regularly upgrading its systems for development of new products and in improvisation of the processes for operational convenience. The following new initiatives have been undertaken during the FY 2016-17:

1. On-line SB Account opening facility.

2. Platinum chip based RuPay debit card with higher limits.

3. Mudra RuPay debit card.

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

5. Sovereign Gold bond application through Internet Banking.

6. Hindi version of Internet & Mobile Banking.

7. Self registration of Internet Banking through debit cards.

8. Personalized debit card proactive issuance against expired cards.

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

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

11. Online Loan against FD - Internet Banking

12. Integration with IRCTC for Debit Card Transactions

13. Salary Payment through Internet Banking

14. Image Card Based International Platinum Rupay Card

15. Launch of POS Terminals for Merchant Acquiring

16. Launch of UPI (Unified Payment Interface)

17. Income Tax eFiling through bank account using EVC

18. IMPS through Branch

19. Voice OTP for internet Banking transactions

20. Missed Call Based Account Statement

21. Instant Internet Banking issuance through Insta Pin

22. Physical Rupay Card for United Wallet

23. Self Generation of Debit Card PIN through Internet Banking

24. RuPay Domestic Debit Card Compliance

Based on the RBI Guidelines & as part of its ongoing sound practices, the Bank has also set up a Compliance Department whose role is to co-ordinate the identification of compliance issues, assessment and mitigation of compliance risks.

Board has adopted Compliance Policy for the Bank. In activity wise areas like deposit & services, advances, KYC-AML, BCSBI Codes, compliance issues are identified and remedial measures are taken therefore. Roles & Responsibilities as regards compliance functions is defined for every tier in the Bank. A reporting system has also been introduced to ensure compliance of regulatory & statutory compliance issues through:

- Self certification

- Random testing through designated Compliance Officers & Officials from H.O.

- Acknowledgement & Compliance of the direction issued by GoI /RBI / IBA from the functional departments of Head Office.

- Quarterly statement by Branches and Regional Offices with details of compliance rules covering the important areas

Under Corporate Governance, The MD & CEO / Executive Directors periodically reviews compliance reports, to ensure timely submission of regulatory returns by the different departments of the Head Office to the RBI / GoI / IBA on regular basis and adherence to all other applicable provisions of law, rules & guidelines.

Corporate Governance:

The report of the Board of Directors on Corporate Governance is covered in the separated section on the subject (Page 38 to 50.

For M/s. Nundi & Associates For M/s. Arun K. Agarwal & Associates For M/s. Mookherjee Biswas & Pathak

Chartered Accountants Chartered Accountants Chartered Accountants

FRN: 309090E FRN: 003917N FRN : 301138E

CA. Soumen Nandi CA. Arun Kumar Agarwal CA. Sankar Prasanna Mukherjee

Partner Partner Partner

Membership No: 059828 Membership. No : 082899 Membership. No : 010807

Date : 18th May 2017

Place : Kolkata


Mar 31, 2016

Dear members,

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

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

Key Financial Ratios (%) March 2015 March 2016

Cost of Funds 6.38 6.16

Yield on Funds 8.44 7.99

Cost of Deposits 6.88 6.58

Yield on Advances 10.80 9.93

Yield on Investments 8.04 8.02

Spread as a % of AWF 2.07 1.89

Net Interest Margin (NIM) 2.21 2.01

Operating Expenses to AWF* 1.50 1.61

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

Return on Equity 5.16 (-)6.01

Business per Employee (Rs. In Crore) 11.53 12.37

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

Book Value 59.20 50.14

*AWF – Average Working Fund

Income and Expenditure Analysis

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

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

BUSINESS GROWTH Deposits

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

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

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

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

Total Business

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

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

RETAIL LENDING OPERATIONS

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

Performance:

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

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

Special Initiatives Undertaken:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Retail Hubs

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

TREASURY AND INTERNATIONAL OPERATIONS

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

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

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

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

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

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

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

OTHER SERVICES

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

GOVERNMENT BUSINESS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2015 - 16

TAX 2.32

PENSION 19.92

SCHOOL SALARY 12.69

TREASURY 6.60

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

DMA 0.65

TOTAL 42.93

ASSET QUALITY AND RISK MANAGEMENT

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

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

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

Asset Quality

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

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

CAPITAL & RESERVES

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

Composition of Capital March 2016 March 2015

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

Risk Weighted Assets 73079 69249 66798 65882

Tier 1 Capital 5797 5008 5021 5117

Of which CET1 Capital 5660 NA 5021 NA

Tier 1 Ratio (%) 7.93 7.23 7.52 7.77

Of which CET1 ratio (%) 7.74 NA 7.52 NA

Tier 2 Capital 1572 2235 2034 2404

Tier 2 Ratio (%) 2.15 3.23 3.05 3.65

Total Capital 7369 7243 7055 7521

CRAR (%) 10.08 10.46 10.57 11.42

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

Risk Management

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

Risk Management Structure:

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

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

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

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

Risk Management Policies:

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

Credit Risk:

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

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

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

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

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

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

Market Risk:

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

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

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

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

Operational Risk:

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

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

Basel-II and Basel-III Compliance:

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

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

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

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

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

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

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

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

PRIORITY SECTOR ADVANCES

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

Agriculture Lending:

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

Lending to Weaker Section:

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

Lending to Minority Community:

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

Kisan Credit Card:

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

Self Help Group:

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

Corporate Social Responsibility:

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

United Bank Rural Self-Employment Training Institute (UBRSETI)

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

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

FLCC

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

United Bank Socio-Economic Development Foundation (UBSEDF)

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

MSME ADVANCES

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

FY 2013-14 FY 2014-15

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

Micro 234888 7259 221214 8287.12 14.16

Small 14807 4225 14235 4057.59 -3.96

MSE 249695 11484 235449 12344.71 7.49

Medium 372 600 332 604.42 0.74

MSME 250067 12084 235781 12949.13 7.16

Category FY 2015-16

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

Micro 240877 7,491.53 -9.60

Small 16632 3,506.50 -13.58

MSE 257509 10,998.03 -10.91

Medium 258283 11,884.94 -8.22

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

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

Strategies to attain MSME target.

Initiatives to increase flow of credit to MSME sector :

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

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

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

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

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

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

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

- Bank has adopted cluster based approach for MSME financing.

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

LEAD BANK DIVISION

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

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

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

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

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

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

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

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

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

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

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

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

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

FINANCIAL INCLUSION

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

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

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

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

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

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

46.97 lakh RuPay Debit Cards have been issued.

21.10 Lakh PMJDY Accounts have been Aadhaar linked.

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

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

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

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

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

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

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

ORGANIZATION & SUPPORT SERVICES BRANCH EXPANSION

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

Population group-wise Composition of Total Branch Network

Number of Branches (% of total)

Location 31.03.2015 31.03.2016

Metropolitan 330 (16.47%) 330 (16.41%)

Urban 463 (23.10%) 466 (23.17%)

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

Rural 800(39.92%) 800 (39.78%)

Total 2004 2011

Geographical location-wise Composition of Total Branch Network

Number of Branches (% of total)

Location 31.03.2015 31.03.2016

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

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

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

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

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

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

Total 2004 2011

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

Categories of Specialised Branches 31.03.2016

MSME 180

- Asset Recovery Management 4

- Retail Hub 24

- MSME Loan Proc. Hub 1

- Corporate Finance Branch 4

- Service Branch 19

- Women Branch 5

- Treasury Branch 1

- Central Pension Processing Centre 1

- Cash Management Service Hub 1

T O T A L 240

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

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

Network :

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

Payment Systems:

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

Bank Website and Intranet:

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

Self-service Kiosk:

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

Mail Messaging System:

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

SOC & IT Security:

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

Biometric:

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

IS AUDIT

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

Electronic Passbook:

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

Centralised Payment HUB

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

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

- NACH Credit

- ABPS (Aadhar Bridge Payment System)

- Mandate Management System of NPCI

- DBTL (Direct Benefit Transfer to LPG Customers)

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

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

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

- AEPS ( Aadhar Enabled Payment System) Reconciliation .

- CMS Payment Services

- Corporate Bulk Payment

- GePG (Government e-Payment Gateway)

- CMS Collection Services

- Indo Nepal Remittance Service

- Centralized Mandate Based Direct Debit Service

- Corporate Cash & Cheque Collection Service

- Core ASBA (Application Supported By Blocked Amount)

- Syndicate ASBA

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

MANPOWER PROFILE

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

Category of employees Mar -15 Mar - 16

Total no of employees 15192 14981 Officers 7355 7687

Clerks 5428 5018

Sub - staff 2409 2276

*Excludes part time employee

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

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

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

Training /Human Resource Development (HRD)

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

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

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

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

Establishment of HRMS Back Office

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

- Centralized salary payment for all branches/offices.

- Centralized TA / LFC /Medical bill processing and payment

CUSTOMER ORIENTATION

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

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

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

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

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

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

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

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

INTERNAL CONTROL

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

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

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

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

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

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

KNOW YOUR CUSTOMER (KYC)

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

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

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

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

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

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

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

SECURITY ARRANGEMENTS

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

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

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

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

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

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

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

PREMISES Purchase:

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

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

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

Construction:

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

Upgradation:

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

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

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

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

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

Ongoing:

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

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

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

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

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

- Electrical Audit of Branches.

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

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

IMPLEMENTATION OF OFFICIAL LANGUAGE

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

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

REGIONAL RURAL BANKR S R (B)

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

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

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

United Demat

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

Benefits:

- Easy and convenient way to hold securities

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

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

- Reduced paperwork for transfer of securities

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

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

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

Services available:

- Opening of Demat account

- Purchase and Sale of Securities

- Dematerialization & Rematerialization

- Pledge & Unpledge

- Freeze & Unfreeze

- Transmission & Transposition

- Redemption of Mutual Fund Units

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

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

ALTERNATE DELIVERY CHANNELS

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

- On-line SB Account opening facility.

- Platinum chip based RuPay debit card with higher limits.

- Mudra RuPay debit card.

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

- Sovereign Gold bond application through Internet Banking.

- Hindi version of Internet & Mobile Banking.

- Self registration of Internet Banking through debit cards.

- Personalized debit card proactive issuance against expired cards.

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

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

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

COMPLIANCE

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

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

Awards/ Accolades

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

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

Corporate Governance:

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

Proposed Dividend:

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

Acknowledgement:

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


Mar 31, 2014

DIRECTORS'' REPORT

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

FINANCIAL PERFORMANCE

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

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

Key Financial Ratios (%) March 2013 March 2014

Cost of Funds 7.24 7.23

Yield on Funds 9.73 9.44

Cost of Deposits 7.08 7.14

Yield on Advances 11.31 10.83

Yield on Investments 7.91 8.00

Spread as a % of AWF 2.39 2.10

Net Interest Margin (NIM) 2.67 2.28

Operating Expenses to AWF 1.45 1.40

Return on Avg. Assets (RoAA) 0.38 -0.99

Return on Equity 7.20 -35.56

Business per Employee (Rs. In Crore) 10.83 10.67

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

Book Value 115.83 84.88

AWF – Average Working Fund Income and Expenditure Analysis

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

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

Capital & Reserves

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

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

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

Risk Weighted Assets 62429 60060 61007

Tier 1 Capital 5242 4359 3987

Of which CET1 Capital NA NA 3987

Tier 1 Ratio (%) 8.40 7.26 6.54

Of which CET1 ratio (%) NA NA 6.54

Tier 2 Ratio (%) 2037 2523 1994

Tier 2 Capital 3.26 4.20 3.27

Total Capital 7279 6882 5981

CRAR (%) 11.66 11.46 9.81

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

BUSINESS GROWTH Deposits

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

Advances

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

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

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

Total Business

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

SWOT analysis of the Bank STRENGTHS

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

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

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

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

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

WEAKNESSES

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

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

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

OPPORTUNITIES

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

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

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

THREATS

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

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

Retail Lending Operations

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

Performance during FY 2013-14:

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

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

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

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

Retail Hubs

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

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

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

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

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

TREASURY AND INTERNATIONAL OPERATIONS

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

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

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

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

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

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

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

OTHER SERVICES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2012 -13 2013 -14

TAX 3.25 2.27

PENSION 16.94 15.90

SCHOOL SALARY 32.26 40.67

TREASURY 9.16 6.21

PPF, SCSS, BOND & SDS 0.47 0.41

DMA 0.83 0.76

TOTAL 62.91 66.22

ASSET QUALITY AND RISK MANAGEMENT

Asset Quality

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

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

Risk Management

Capital Adequacy framework and future strategies

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

Risk Management Structure:

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

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

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

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

Risk Management Policies:

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

Credit Risk:

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

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

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

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

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

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

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

Market Risk:

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

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

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

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

Operational Risk:

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

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

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

Basel-II and Basel-III Compliance:

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

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

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

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

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

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

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

NATIONAL PRIORITIES

Priority Sector Advances

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

Agriculture Lending:

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

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

Lending to MSE

Lending under MSE sector has increased by Rs.166 crore

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

Lending to Weaker Section:

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

Lending to Minority Community:

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

Lending to Women Beneficiaries:

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

Kisan Credit Card:

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

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

Self Help Group:

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

MSME LENDING

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

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

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

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

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

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

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

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

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

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

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

Performance in CGTMSE Sector Amount (Rs. Cr.)

Category Fresh Coverage Cumulative

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

Nos. 8232 10259 25 30839 41098 33

Amount 405.40 479.99 19 1308.88 1788.87 37

Performance of Specialized MSME Branches

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

Progress under various Tie-ups

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

Financial Inclusion

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

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

Branch opening under ABEP 2013-14:

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

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

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

On-line transaction in BC outlets:

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

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

Direct Benefit Transfer:

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

Lead Bank Scheme

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

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

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

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

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

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

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

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

CORPORATE SOCIAL RESPONSIBILITY

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

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

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

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

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

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

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

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

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

2007-08 8 6.50

2008-09 8 7.21

2009-10 7 8.05

2010-11 16 49.39

2011-12 6 17.40

2012-13 9 16.45

2013-14 8 33.02

TOTAL 62 138.02

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

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

ORGANIZATION & SUPPORT SERVICES

Branch Network

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

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

Assam 50 Chhattisgarh 6

Arunachal Pradesh 1 Maharashtra 2

Tripura 10 Gujarat 9

West Bengal 64 Tamil Nadu 15

Bihar 9 Dadra & NH 1



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

Orissa 8 Kerala 6

Jharkhand 6 Karnataka 10

Rajasthan 16 Andhra Pradesh 10

Uttar Pradesh 27 Himachal Pradesh 2

Haryana 9 Madhya Pradesh 1

Nagaland 1 Punjab 6

Uttarakhand 3 TOTAL 272

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

Population group-wise Composition of Total Branch Network

Location Number of Branches (% of total)

31.03.2013 31.03.2014

Metropolitan 330 (19.09%) 332 (16.59%)

Urban 397 (22.96%) 461 (23.04%)

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

Rural 678 (39.21%) 799 (39.93%)

Total 1729 2001

Geographical location-wise Composition of Total Branch Network

Location Number of Branches (% of total)

31.03.2013 31.03.2014

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

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

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

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

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

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

Total 1729 2001

Special Category Branches

Branch Category Number of Branches

31.03.2013 31.03.2014

Service Branch 19 19

Retail Hub 26 26

ARM Branch 4 4

Corporate Finance Branch 3 4

Treasury Branch 1 1

CPPC 1 1

Cash Management Service Hub 1 1

InfoTech Progress

Virtualisation – KC

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

Self-service Kiosk –KC

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

Payment Systems –AB

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

CMS – AS

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

CTS –KSR

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

Network –KC

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

Mail Messaging System –KC

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

Bank Website and Intranet – KC

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

SOC & IT Security – KC

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

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

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

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

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

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

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

f. Antivirus daily update status monitored through SOC.

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

Biometric -KC

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

ADC

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

ATMs:

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

Debit Cards:

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

Internet Banking:

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

Mobile Banking:

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

SMS based Account balance:

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

Manpower Profile

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

Category of Employees March 2013 March 2014

Total No. of Employees 15479 16499

Officers 6445 7550

Clerks 6056 6306

Sub -Staff 2978* 2643*

*Excludes part-time employee

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

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

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

Training / Human Resource Development (HRD)

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

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

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

Employee Welfare

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

Reservation Policy in respect of SC and ST

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

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

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

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

Saral Samadhan

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

Customer Orientation

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

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

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

Systems and Procedures

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

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

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

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

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

Know Your Customers (KYC)

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

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

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

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

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

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

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

Security Arrangements

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

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

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

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

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

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

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

Premises

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

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

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

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

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

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

Implementation of Official Language

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

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

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

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

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

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

Regional Rural Banks (RRBs)

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

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

(Rs/crore)

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

31.03.13 31.03.14 31.03.13 31.03.14

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

Total Business 24,767 28,814 16.93 16.38

Deposit 16,330 19,060 12.85 16.71

Advance 8,437 9,753 16.08 15.72

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

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

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

Awards/ Accolades

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

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

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

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

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

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

Compliance

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

(i) Self- certification,

(ii) Random testing through Designated Compliance Officers,

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

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

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

Corporate Governance

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

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

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

- Extending best of facilities and services to the customers;

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

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

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

Unclaimed Shares

Shares outstanding/unclaimed as on 01.04.2013 - 7107

Shares transferred to beneficiaries till 31.03.2014 - 400

Shares outstanding/unclaimed as on 31.03.2014 - 6707

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

Constitution of Board of Directors:

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

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

BOARD OF DIRECTORS AS ON MARCH 31, 2014

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

1. Sri. Deepak Executive Executive 01.03.2012 Narang Director

2. Sri. Sanjay Exective Exective 18.06.2012 Arya Director

3. Sri Mihir Nomimee-GOI Non 30.09.2013 Kumar Executive

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

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

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

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

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

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

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

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

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

Board & Committee Meetings held during the Year

Type of Meeting Number

Board of Directors 14

Management Committee of the Board of Directors 15

Audit Committee of the Board of Directors 12

Shareholders'' Committee 4

Risk Management Committee of the Board of Directors 2

Special Committee to Review High Value Frauds 2

Board Level Customer Service Committee 2

Directors'' Promotion Committee 1

Remuneration Committee 1

High Powered Committee 2

IT Sub Committee of the Board 4

Nomination Committee 1

Special Committee to Monitor Officers above 55 Years -

Election Committee of the Board of Directors -

Recovery Committee of the Board of Directors 4

Board Level HR Steering Committee 1

Director''s Responsibility Statements

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

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

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

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

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

Proposed Dividend

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

Acknowledgement

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



For and on behalf of the

Board of Directors



Deepak Narang Sanjay Arya

(Executive Director) (Executive Director)



Place: Kolkata

Date: 20thMay, 2014


Mar 31, 2013

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

CORPORATE SOCIAL RESPONSIBILITY

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

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

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

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

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

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

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

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

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

2007-08 8 6.50

2008-09 8 7.21

2009-10 7 8.05

2010-11 16 49.39

2011-12 6 17.40

2012-13 10 21.45

TOTAL 55 110.00

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

ORGANIZATION & SUPPORT SERVICES

Branch Network

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

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

Assam 5 Chhatisgarh 1

Meghalaya 1 Maharashtra 3

Tripura 3 Gujrat 2

West Bengal 4 Tamil Nadu 1

Bihar 2 Pondicherry 1

Orissa 8 Kerala 1

Jharkhand 2 Karnataka 2 Rajasthan 5 Andhra Pradesh 2

Uttar Pradesh 6 TOTAL 49

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

Composition of Branch Network Geographical location-wise

Number of Branches Location 31.03.2012 31.03.2013

Eastern Region 1065 1081

% of Total 63.4 62.5

North Eastern Region 280 289

% of Total 16.7 16.7

Western Region 68 73

% of Total 4.0 4.2

Northern Region 87 92

% of Total 5.2 5.3

Southern Region 70 77

% of Total 4.2 4.5

Central Region 110 117

% of Total 6.5 6.8

Total 1680 1729

Composition of Branch Network Population group-wise

Number of Branches 31.03.2012 31.03.2013

Metropolitan 322 330

% of Total 19.2 19.1

Urban 384 397

% of Total 22.9 23.0

Semi-Urban 310 324

% of Total 18.5 18.7

Rural 664 678

% of Total 39.5 39.2

Total 1680 1729

Special Category Branches

Number of Branches

Branch Category 31.03.2012 31.03.2013

Service Branch 19 19

Retail Hub 26 26

ARM Branch 2 4

Corporate Finance Branch 3 3

Treasury Branch 1 1

CPPC 1 1

Cash Management Service Hub 1 1

InfoTech Progress

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

CBS

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

MIS

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

ADC

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

Virtualisation

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

Self-service Kiosk

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

Payment Systems

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

Bilingualization

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

CMS

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

CTS

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

Network

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

Mail Messaging System

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

Bank Website and Intranet

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

SOC & IT Security

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

Biometric

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

Manpower Profile

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

Category of Employees March 2012 March 2013

Total No. of Employees 15500 15479

Officers 6305 6445

Clerks 6228 6056

Sub -Staff 2967* 2978

Excludes part-time employee

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

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

Employee Welfare

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

Reservation Policy in respect of SC and STs

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

Training / Human Resource Development (HRD)

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

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

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

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

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

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

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

Customer orientation

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

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

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

Systems and Procedures

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

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

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

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

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

Know Your Customers (KYC)

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

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

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

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

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

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

Security Arrangements

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

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

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

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

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

Premises

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

Implementation of Official Language

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

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

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

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

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

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

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

Regional Rural Banks (RRBs)

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

(Rs/crore)

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

Total No. of Branches 1093 1109 3.7 1.37

Total Business 21,839 24,767 16.9 13.93

Deposit 14,470 16,330 13.8 12.85

Advance 7,369 8,437 23.6 16.08

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

Awards/ Accolades

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

Bank has been awarded

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

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

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

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

Compliance

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

- Self- Certification,

- Random testing through Designated Compliance Officer,

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

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

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

Corporate Governance

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

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

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

- Extending best of facilities and services to the customers;

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

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

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

Unclaimed Shares

Shares outstanding/unclaimed as on 01.04.2012 - 7107

Shares transferred to beneficiaries till 31.03.2013 - Nil

Shares outstanding/unclaimed as on 31.03.2013 - 7107

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

Constitution of Board of Directors:

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

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

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

BOARD OF DIRECTORS AS ON MARCH 31, 2013

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

1. Sri. Deepak Executive Executive 01.03.2012 Narang Director

2. Sri. Sanjay D Executive Executive 18.06.2012 Arya Director

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

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

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

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

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

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

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

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

Board & Committee Meetings held during the Year

Type of Meeting Number

Board of Directors 14

Management Committee of the Board of Directors 19

Audit Committee of the Board of Directors 9

Shareholders'' Committee 4

Risk Management Committee of the Board of Directors 4

Special Committee to Review High Value Frauds 2

Board Level Customer Service Committee 2

Departmental Promotion Committee 2

Remuneration Committee 1

High Powered Committee 3

IT Sub Committee of the Board 4

Nomination Committee -

Special Committee to Monitor Officers above 55 Years 1

Election Committee of the Board of Directors 2

Recovery Committee of the Board of Directors 3

Board Level Rights Issue Committee 1

Director''s Responsibility Statements

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

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

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

- Reasonable and prudent judgement and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and the profit of the Bank for the year ended on 31st March 2013.

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

Proposed Dividend

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

17. Acknowledgement

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

For and on behalf of the

Board of Directors

Place : Kolkata (Smt Archana Bhargava)

Date : 6th May, 2013 Chairperson & Managing Director


Mar 31, 2012

The Board of Directors have pleasure in presenting the 62nd Annual Report of the Bank along with the Audited Balance Sheet, Profit and Loss Account and the report on Business and Operations for the year ended March 31,2012 (FY - 2011-12).

1. Performance at a Glance:

The total business of the Bank increased by Rs 21,210 crore to reach Rs1,52,989 crore at the end of the financial year 2011-12 from Rs1,31,779 crore at the end of previous financial year 2010-11, recording a growth rate of 16.1%.

The total deposits of the bank have grown by Rs11,271 crore from Rs77,845 crore as on 31st March 2011 to Rs89,116 crore as on 31st March, 2012 registering a growth rate of 14.5%.

The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The total advances of the Bank increased by Rs9,939 crore from Rs53,934 crore as on 31st March, 2011 to Rs63,873 crore as on 31st March, 2012, registering a growth rate of 18.4%. During the year, focused attention was for lending to retail sector, agriculture, MSME and midsize corporate segments for expansion of credit.

During the year, the bank effected a cash recovery and up- gradation of NPAs of Rs910.73 crore compared to Rs586.11 crore in the previous year. Despite substantial recovery of NPAs due to huge fresh slippages, Gross NPA of the Bank increased from Rs1,356 crore as on March 31,2011 to Rs2,176 crore as on March 31,2012.

While the encouraging performance in different functional areas during the year 2011-12 resulted in increased earnings in absolute terms, interest spread marginally declined from 3.06% as on 31st March 2011 to 3.04% as on 31st March 2012.

2. Income Analysis

Interest income of the Bank during 2011-12 recorded a growth of Rs1,619.63 crore (25.5%) from Rs6,341.46 crore in the year 2010-11 to Rs7,961.09 crore, as against the interest expenses which grew by 31.4% from Rs4,172.11 crore during the year 2010-11 to Rs5,481.85 crore during the year 2011-12. The Net interest income recorded a growth of Rs309.89 crore (14.3%) during the year.

(Amount in Rs/crore)

2010-11 2011- 12 Change in %

Interest Income 6341.46 7961.09 25.5

Interest Expenditure 4172.11 5481.85 31.4

Net Interest Income 2169.35 2479.24 14.3

Non -Interest Income or Other Income 637.05 732.90 15.0

Net Total Income 2806.40 3212.14 14.5

Operating Expenses 1299.41 1383.30 6.5

Operating Profit 1506.99 1828.84 21.4

Provisions & Contingencies (Excl.Tax) 827.51 972.68 17.5

Profit before Tax 679.48 856.16 26.0

Provision for Tax 155.51 223.63 43.8

Net Profit 523.97 632.53 20.7

Dividend (%) 22 24 (proposed)

The total income (total of interest income and non-interest income) ofthe bank improved to Rs8,693.99 crore during the year 2011-12 from Rs6,978.51 crore in the previous year recording arise of Rs1,715.48 crore i.e. 24.6%.

Non-interest income increased by Rs95.85 crore (15.0%) from Rs637.05 crore in the financial year 2010-11 to Rs732.90 crore in the financial year 2011-12. The share of total Non-Interest Income to total Income stood at 8.4% for the year 2011-12. The Non-Interest Income (excluding Trading Profit) increased from Rs438.60 crore in FY2010-11 to Rs515.38 crore inFY2011-12 recording a growth rateof17.5%.

The Net Total Income (Net Interest Income plus Non interest Income) has increased from Rs2,806.40 crore in the financial year 2010-11 to Rs3,212.14 crore in the financial year 2011-12 recording a growth of 14.5%.

The operating Expenses have shown an increase of 6.5% during the financial year 2011-12 and stood at Rs1,383.30 crore as compared to Rs1,299.41 crore in 2010-11.

The Cost to Income ratio (Operating expenses to Net Operating Income) has come down from 46.30% for the financial year 2010-11 to 43.06% in the financialyear2011-12.

3. Spread Analysis (Amount in Rs Crore)

Growth 2010-11 2011-12 Absolute %

Total Interest Income 6341.46 7961.09 1619.63 25.54

Total Interest Expended 4172.11 5481.85 1309.74 31.39

Net Interest Income 2169.35 2479.24 309.89 14.28

Yield on Funds 8.87% 9.81%

Cost of Funds 5.81% 6.77%

Interest Spread 3.06% 3.04%

4. Operating Profit

The Bank has registered an Operating Profit of Rs1,828.84 crore during the financial year 2011-12 as compared to Rs1,506.99 crore in the financial year 2010-11 registering an increase of Rs321.85 crore (21.4%).

The Asset Utilisation Ratio (percentage of Operating Profit to Average Working Funds) stood at 2.02.% for the financial year 2011-12 compared to 1.89% for the previous year.

5. Provisions

The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs1,196.31 crore in the financial year 2011-12 as compared to Rs983.02 crore in the financial year 2010-11.

6. Net Profit

The Bank registered a Net Profit of Rs632.53 crore for the financial year 2011-12 compared to Rs523.97 crore in the financial year 2010-11.

7. Net Worth and CRAR

The Net Worth of the Bank improved to Rs4,938.95 crore as on 31stMarch, 2012 from Rs4,363.24 crore as on 31st March, 2011.

The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 10.48% (Basel I) as on 31st March, 2012 as against 11.16% as on 31st March, 2011 which is much above the norm of 9% stipulated by Reserve Bank of India. The CRAR as per Basel II guidelines works out to 12.69% as on 31st March 2012.

The Tier-I & Tier-II components of CRAR under Basel II are 8.79% & 3.90% respectively as on 31st March 2012 compared to 8.90% & 4.15% respectively as on 31st March, 2011. The Return on Equity, Earnings Per Share and Book Value per Share for the Financial Year 2011-12 stood at 13.16%, Rs15.79 and Rs114.53 respectively, against 12.86%, Rs14.38 and Rs102.89 respectively for the previous year.

8. Branch Expansion

With the opening of 83 branches during the year 2011-12, the total number of branches stands at 1680 as on 31.03.2012 spreading across all the States of the country consisting of 664 Rural (39.5%), 310 Semi-urban (18.5%), 384 Urban (22.8%) and 322 Metro (19.2%) branches. The Bank has also 4 Extension Counters. State wise position of opening of branches during 2011-12 are as under:

State No. of branches State No. of branches opened during opened during 2011-12 2011-12

Assam 4 West Bengal 28

Meghalaya 1 Andaman & NI 1

Manipur 1 Orissa 5

Tripura 5 Delhi 1

Bihar 3 Chandigarh 1

Jharkhand 5 Madhya Pradesh 2

Haryana 2 Punjab 2

Rajasthan 2 Uttar Pradesh 6

Chhatisgarh 3 Maharashtra 4

Tamil Nadu 3 Karnataka 2

Andhra Pradesh 2 TOTAL 83

Bhadoti branch (1st Rural branch of Rajasthan State) of Swaimadhopur District was inaugurated by Sri Namo Narayan Meena, Hon'ble Union Minister of State for Finance on 27.02.2012. The Bank has opened 16 branches in unbanked villages having population 2000 under Financial Inclusion Plan. The Bank has also opened 25 Retail Loan Hubs and 11 Service Branches during the year. Out of 1680 branches, 785 branches (46.7%) are located in 68 Minority Concentration Districts (MCDs) throughout the country and 58% of the total branch networks are in rural and semi-urban areas to serve our country in the hinterland.

The Bank has opened three Regional Offices at Bangalore, Meerut and Katihar on 25.04.2011, 21.11.2011 and 27.02.2012 respectively for better control and monitoring of the branches. Total number of Regions stands at 33 as on 31.03.2012. Bihar Region has been bifurcated into Patna Region and Katihar Region on and from 27.02.2012.

9. Government Business

The Bank undertakes different types of Government Business Activities e.g. collection of Direct Taxes (CBDT), Indirect Taxes (CBEC), Payment of refund under CBEC, State Commercial Taxes etc., both on-line and off-line; collection of Government Deposit e.g. PPF, SCSS, Savings Bond; Handling Government Fund e.g. State Government Treasury transactions, Departmentalised Ministries Accounts, Payment of School Teachers' Salary and different types of pension. Total Tax collection during the financial year 2011-12 was to the tune of Rs8,642.41 crore.

Agency commission earned from Government business during Financial year 2011-12 was as follows:

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

TAX 2.62

PENSION 15.12

SCHOOL SALARY 31.59

TREASURY 8.10

PPF,SCSS, BOND & SDS 0.38

DMA 0.66

TOTAL 58.47

For implementing New Pension Scheme(NPS) for all citizens of India and Swavalamban Yojana for unorganized sector and economically disadvantaged people, the Bank has been registered as Point of Presence (POP) by the Pension Fund Regulatory and Development Authority (PFRDA).

Central Pension Processing Centre (CPPC) has been operationalized in our Bank on 01.09.2010 under Govt. Transaction Deptt., Head Office for undertaking all works relating to pension payment . At present nearly one (1) lakh pensioners' accounts in about 1300 branches under all central Govt. Treasuries viz. Central Civil, Political, Defence, Railway, Telecom/BSNL are being handled by CPPC. On-line pension grievance redressal mechanism is available on Bank's website. Pensioners' Charter has been displayed in all branches and also on Bank's Website.

To sensitize the ground level functionaries and impart knowledge amongst them, Training Programmes and Workshops are being organised regularly by the Bank. During the financial year 2011- 12, following Training Programmes / Workshops were conducted by the Bank.

Training / Workshop No. of Place Programmes

Government Business & 40 Staff Training College, Kolkata Cash Management and Nadia Region

New Pension System (NPS) 1 Staff Training College, Kolkata

Staff Training College, Kolkata CPPC 26 and 24 Regions

10. Corporate Social Responsibilities – CSR Activities

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

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

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

11. United Bank Rural Self-Employment Training Institute (UBRSETI)

Bank has set up one more RSETI during the current year taking the total RSETIs setup by the bank as on 31.03.2012 to 11. The RSETI opened during the year 2011-12 is as follows:

- United Bank Rural Self Employment Training Institute (United R-SETI), Morigaon, Assam- opened on 30.11.2011 Bank has set up United Bank Rural Development and Self Employment Trust (UBRUDSET) as apex policy making body of the institutes. The Trust reviews functioning of RSETIs on quarterly basis. The last such review was undertaken on 11.03.2012 at the meeting of Board of Trustees of UBRUDSET.

Up to 31.03.2012 these institutes have imparted training to 18064 rural youths/women of which 13939 trainees are self employed and 965 trainees are wage employed. Out of 13939 self employed trainees 7292 trainees have got loans from banks.

The institutes are providing post training support (Escort service) including arrangement of loan from our bank branches to enable the trainees to set up their own venture.

- FLCC

Bank has also set up 10 Financial Literacy cum Credit Counselling Centres (FLCCs) in the districts of South 24- Parganas, Uttar Dinajpur, Dakshin Dinajpur, Howrah in West Bengal, Cachar and Morigaon in the state of Assam, South Tripura and Dhalai in Tripura, Ukhrul & Imphal East in Manipur to extend financial literacy and credit counseling services to the poorer section of the society.

- United Bank Socio-Economic Development Foundation (UBSEDF)

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

The Trust has undertaken a series of welfare activities involving total assistance of Rs 89 lac. The year wise breakups of the assistance are furnished below:

YEAR NO. OF UNITS AMOUNT OF ASSISTANCE (Rs in lac)

2007-08 8 6.50

2008-09 8 7.21

2009-10 7 8.05

2010-11 16 49.39

2011-12 6 17.40

Some of the important projects are, installation of two water hand pumps in Muirei village and Hamlei Khong Humdung at Ukhrul District of Manipur State, construction of concrete roof of the class rooms of Dakshin Kamarpole F.P.School at 24 Parganas (South) district and construction of one Residential Farmers' Training Centre, Chaltaberia, 24 Parganas (North) district etc.

12. Progressive use of Official Language

In pursuant to the Official Language Policy of the Government so many measures were taken for implementation of the Official Language Policy in the Bank during the year 2011-12. 26 Regional Offices of the Bank were inspected by the Official

Language Department, Head Office and necessary suggestions were given for achieving the targets and eradication of shortfall. All India conference and review meeting of Official Language Officers of the Bank was held on 04-07- 2011 at Bank's Head Office. During September-October, 2011 Hindi Competitions and other programmes were organized on the occasion of Hindi Day/ Hindi Month with a view to motivate the employees towards using Hindi in day to day official works. 10 Nos. of Hindi Workshops (each for 03 days) and 13 nos. of Hindi Software training programmes (each for 02 days) were organized at Bank's Staff Training College, Kolkata. In addition to this, Hindi workshops were also organized by different Regional Offices. Hindi Training Classes (Praveen & Pragya courses) are conducted. Consequently, 80 Officers / Employees passed Hindi Examination during the year. Being the convener of Town Official Language Implementation Committee (Bank), Kolkata, our Bank organized two meetings on half yearly basis . Government of India, Ministry of Home Affairs, Department of Official Language has awarded our Bank with 1st Prize (Rajbhasa Shield) for commendable performance in implementing the Official Language Policy of the Union during the year 2010-11. The Bank received the prize in the Official Language Conference of East Region heldon09-02- 2012 at Patna. For wide publicity of the Official Language, the Bank is publishing a Hindi magazine 'United Darpan' regularly on quarterly basis. Bank's Website is bilingual. 16100 Computers were installed with Hindi Software as on 31.03.2012. 762 ATMs screen are also bilingual. Process of bilingualization of Finacle in CBS System is in progress and expected to be completed by June 2012. Various types of forms related to Official Language and format of forwarding letters have been uploaded on Bank's portal.

13. Performance of Sponsored Regional Rural Banks

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

(Amount in Rs crore)

Position as on Growth (%) during the year ended on 31.03.2011 31.03.2012 31.03.2011 31.03.2012

Total No. of 1054 1093 1.0 3.7 Branches

Total Business 18,680 21,839 21.0 16.9

Deposit 12,716 14,470 18.3 13.8

Advance 5,964 7,369 27.3 23.6

The four sponsored RRBs have migrated all their branches to CBS platform by 13.08.2011 well before the targeted date. NEFT facility through sponsor bank is available to the customers of RRBs. Under Financial Inclusion Plan the RRBs have also covered all the 2362 villages with population above 2000 allotted to them.

14. Constitution of Board of Directors

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

Shri Deepak Narang, Executive Director, Shri Sandeep Kumar, GoI Nominee Director, Shri Sunil Goyal, Part-time Non-official Director under CA category, Shri Pijush Kanti Ghosh, Officer Employee Director, Shri Hiranya Bora and Shri Kiran B Vadodaria, Non-official Directors joined the Board during the year and the Board of Director sex tends warm welcome to all of them. Shri S. L. Bansal, the preceding Executive Director of the Bank was promoted as the Chairman & Managing Director of Oriental Bank of Commerce during the year. The Board wishes a success in his new assignment.

Shri Sanjeev Kumar Jindal, GoI Nominee Director and Dr. Naina Sharma, Non-official Director vacated their offices during the year. The Board places on record its sincere gratitude and profound appreciation for the valuable contribution made by them towards smooth functioning of the Board.

Board of Directors as on March 31, 2012:

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

1. Shri Bhaskar Sen Chairman & Executive 01.03.2010 Managing Director

2. Shri Deepak Narang Executive Director Executive 01.03.2012

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

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

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

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

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

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

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

10. Shri Soumitra Talapatra Workmen Director Non-Executive 13.01.2010

11. Shri Saumen Majumder Shareholder Non-Executive 27.11.2010 Director Independent

Board & Committee Meetings

During 2011-12 the Board of Directors met 11 times. The details of Committee Meetings are as under -

Management Committee of the Board of Directors -18 meetings

Audit Committee of the Board of Directors -10 meetings

Shareholders Committee - 4 meetings

Risk Management Committee of the Board of Directors - 4 meetings

Special Committee to Review High Value Frauds - 3 meetings

Customer Service Committee - 4 meetings

Director's Promotion Committee - x

Remuneration Committee - 1 meeting

High Powered Committee - 5 meetings

IT Sub-Committee of Board - 3 meetings

Nomination Committee - x

Special Committee to Monitor Officers above 55 years - x

15. Director's Responsibility Statements

The Directors confirm that in the preparation of Annual Accounts for the year ended 31st March 2012 -

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

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

- Reasonable and prudent judgement and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and the profit of the Bank for the year ended on 31st March 2012.

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

16. Proposed Dividend

The Board at its meeting held on May 5th 2012 has recommended, subject to the approval of the shareholders and appropriate regulatory authorities, final dividend at the rate of 24% i.e. Rs2.40 per equity share of face value of Rs10/- each, to all equity shareholders of the Bank whose name appear on the Register of Members on the date of the Book Closure. This will entail an outgo of Rs189.03 crore on account of Dividend and Dividend Tax.

17. Acknowledgement

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

For and on behalf of the Board of Directors

(Bhaskar Sen)

Chairman & Managing Director

Place: Kolkata

Date: 5th May,2012


Mar 31, 2011

The Board of Directors have pleasure in presenting the 61st Annual Report of the Bank along with the Audited Balance Sheet, Prof t and Loss Account and the report on Business and Operations for the year ended March 31, 2011 (FY – 2010-11).

1. Performance at a Glance:

The total business of the Bank increased by Rs.20,843 crore to reach Rs.131,779 crore at the end of the financial year 2010-11 from Rs.110,936 crore at the end of previous f nancial year 2009-10, record- ing a growth rate of 18.8%.

The total deposits of the bank have grown by Rs.9,665 crore from Rs.68,180 crore as on 31st March 2010 to Rs.77,845 crore as on 31st March, 2011 registering a growth rate of 14.2%.

The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The total advances of the Bank increased by Rs.11,178 crore from Rs.42,756 crore as on 31st March, 2010 to Rs.53,934 crore as on 31st March, 2011, registering a growth rate of 26.1%. During the year, focused attention was for lending to retail sector, agriculture, MSME and midsize corporate segments for expansion of credit.

During the year, performance of the Bank under recovery of NPAs was very good. During the year, the bank ef ected a cash recovery and up-gradation of NPAs of Rs.586.11 crore compared to Rs.454.84 crore in the previous year. As a result, Gross NPA of the Bank reduced from Rs.1372 crore as on March 31, 2010 to Rs.1356 crore as on March 31, 2011 in spite of fresh slippages.

While the encouraging performance in dif erent functional areas during the year 2010-11 resulted in increased earnings in absolute terms and the interest spread increased from 2.44% as on 31st March 2010 to 3.06% as on 31st March 2011.

2. Income Analysis

Interest income of the Bank recorded a growth of Rs.1,092.52 crore (20.8%) from Rs.5,248.94 crore in the year 2009-10 to Rs.6,341.46 crore, as against the interesThexpenses which grew by 8.1% from Rs.3,857.72 crore during the year 2009-10 to Rs.4,172.11 crore during the year 2010-11. The Net interest income recorded a growth of Rs.778.13 crore (55.9%) during the same period.

The total income (total of interest income and non-interest income) of the bank improved to Rs.6,978.51 crore during the year 2010- 11 from Rs.5,807.68 crore in the previous year recording a rise of Rs.1,170.83 crore.

(Amount in Rs./crore)

2009-10 2010-11 Change in %

Interest Income 5248.94 6341.46 20.8

InteresThexpen- 3857.72 4172.11 8.1 diture

Net Interest 1391.22 2169.35 55.9 Income

Non-Interest Income or Other 558.74 637.05 14.0 Income

Net Total Income 1949.96 2806.40 43.9

Operating Ex- 1074.12 1299.41 21.0 penses

Operating Prof t 875.84 1506.99 72.1

Provisions & Con- tingencies (Excl. 465.32 838.02 80.1 Tax)

Prof t before Tax 410.52 668.97 63.0

Provision for Tax 88.16 145.00 64.5

Net Prof t 322.36 523.97 62.5

Dividend (%) 20 22 (proposed)

Non-interest income increased by Rs.78.31 crore (14.0%) from Rs.558.74 crore in the f nancial year 2009-10 to Rs.637.05 crore in the f nancial year 2010-11. The share of total Non-Interest Income to total Income stood at 9.1%. The Non-Interest Income (excluding Trading Prof t) increased from Rs.378.27 crore to Rs.438.60 crore in FY 2010-11 recording a growth rate of 15.9%.

The Net Total Income ( Net Interest Income plus Non interest Income) has increased from Rs.1,949.96 crore in the f nancial year 2009-10 to Rs.2,806.40 crore in the f nancial year 2010-11 recording a growth of 43.9%.

The Operating Expenses have shown an increase of 21.0% during the f nancial year 2010-11 and stood at Rs.1,299.41 crore as compared to Rs.1,074.12 crore in 2009-10.

The Cost to Income ratio (Operating expenses to Net Operating Income) has come down from 55.08% for the f nancial year 2009-10 to 46.30% in the f nancial year 2010-11.

3. Spread Analysis

(Amount in Rs./crore)

Growth 2009-10 2010-11

Absolute %

Total Interest Income 5248.94 6341.46 1092.52 20.81

Total Interest 3857.72 4172.11 314.39 8.15 Expended

Net Interest Income 1391.22 2169.35 778.13 55.93

Yield on Funds 8.43% 8.87%

Cost of Funds 5.99% 5.81%

Interest Spread 2.44% 3.06%

4. Operating Prof t

The Bank has registered an Operating Prof t of Rs.1,506.99 during the Financial year 2010-11 as compared to Rs.875.84 crore in the financial year 2009-10 registering an increase of Rs. 631.15 crore (72.1%).

The Asset Utilisation Ratio (percentage of Operating Prof t to Aver- age Working Funds) stood at 1.89% for the f nancial year 2010-11 compared to 1.22% for the f nancial year 2009-10.

5. Provisions

The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs.983.02 crore in the f nancial year 2010-11 as compared to Rs.553.49 crore in the f nancial year 2009-10.

6. Net Prof t

The Bank registered a Net Prof t of Rs.523.97 crore for the f nancial year 2010-11 compared to Rs.322.36 crore in the f nancial year 2009-10.

7. Net Worth and CRAR

The Net Worth of the Bank improved to Rs.5,021.68 crore as on 31st March, 2011 from Rs.3,902.93 crore as on 31st March, 2010.

The Capital to Risk Adjusted Assets Ratio (CRAR) stood at 11.16% (Basel I) as on 31st March, 2011 as against 11.02% as on 31st March, 2010 which is much above the norm of 9% stipulated by Reserve Bank of India. The CRAR as per Basel II guidelines works out to 13.05%.

The Tier-I & Tier-II components of CRAR under Basel II are 8.90% & 4.15% respectively as on 31st March 2011 compared to 8.16% & 4.64% respectively as on 31st March, 2010. The Return on Equity, Earnings Per Share and Book Value per Share for the Financial Year 2010-11 stood at 12.86%, Rs.14.38 and Rs.102.89 respectively, against 10.64%. Rs.10.18 and Rs.91.69 respectively for the previous year.

8. Branch Expansion

With the opening of 63 branches during the year 2010-11, the total number of branches stands at 1597 as on 31.03.2011 spread across

all the states of the country consisting of 645 rural (40,4%), 299 semi-urban (18.7%), 350 urban (21.9%) and 303 metro (19.0%) branches. T e Bank has also 7 Extension Counters and 508 ATMs. The Bank is also having its representative of ce at Dhaka in Bangla- desh. State wise opening of 63 branches are as under:

No. of State State No. of branches branches

Assam 2 Manipur 2

Meghalaya 1 Tripura 2

Sikkim 1 West Bengal 18

Bihar 3 Orissa 8

Jharkhand 5 Delhi 1

Haryana 3 Punjab 2

Rajasthan 2 Uttar Pradesh 2

Chhatisgarh 3 Maharashtra 4

Gujarat 2 Karnataka 1

Andhra Pradesh 1

Two branches at Sagardighi of Murshidabad District and Mirati of Birbhum District were inaugurated by Shri Pranab Mukherjee, Honble Union Finance Minister on 18.04.10 and 31.01.2011 respectively. The Bank has also opened 17 branches in unbanked villages having population 2000+ under Financial Inclusion Plan. Besides the Bank has opened branches at Nongshillong and Tamenglong Bazar to extend banking facilities in unbanked Mawthadraishan Block of Meghalaya state and Tamei and Tousem Blocks of Manipur state respectively. The bank has also opened three Corporate Finance branches in Delhi, Mumbai and Kolkata during the year. Out of 1597 branches, 757 branches (47.4%) are located in 68 Minority Concentration Districts (MCDs) throughout the country and f fty nine percent of the total branch networks are in rural and semi-urban areas to serve our country in the hinterland.

With the opening of two Regional Of ces at Chandigarh and Raipur on 27.10.10 and 01.0 1.11 respectively, the total number of Regions

stands at 30 as on 31.03.2011. Six regions namely Central, Central Assam, North India, 24-Parganas Central, Orissa-I and Orissa-II have also been renamed as Lucknow, Guwahati, New Delhi, Behala, Bhubaneswar and Sambalpur respectively on and from 10.01.11.

9. Government Business

The Bank undertakes dif erent Government Business Activities including collection of Government Revenues e.g. Direct Tax (CBDT), Indirect Tax (CBEC), VAT / Sales Tax, Professional Tax etc., collection of Government DeposiThe.g. PPF, SCSS, RBI Bond etc., Handling Government Fund e.g. Treasury Function, DMA accounts, Payment of School Teachers Salary and dif erent categories of Pension and operation and maintenance of currency chests etc. Total Tax collection during the f nancial year 2010-11 were to the tune of Rs.7366.13 crore.

Centralised Pension Processing Centre (CPPC) of our Bank has been operationalised under Government Transaction Department, Head Of ce for undertaking all works related to payment of pension reimbursement of pension fund, Agency Commission, Pensioners grievance redressal etc. Payments of Central Civil & Political Pension of around 20000 pensioners are already being made through CPPC. The process of data cleaning and capturing of pension data is going on to bring all others treasuries like Defence, Railway, Telecom and all State pensioners under CPPC shortly.

To sensitize the ground level functionaries and impart knowledge amongst them, Training Programmes and Workshops are being organised regularly by the Bank. During the f nancial year 2010- 11, following Training Programmes / Workshops were conducted.

Training / No. of Place Workshop Occasions

Government 6 Staf Training College, Kolkata Business

Currency Chest Operation & 6 Malda, Kolkata & Coochbehar

Cash Manage- ment CPPC 5 Staf Training College, Kolkata

Most of the Workshops on currency chest were conducted with the faculty support from RBI, Kolkata in presence of General Manager, Issue Department, RBI, Kolkata. Agency commission earned from Government Business during the Financial Year 2010-11 are as follows:

BUSINESS TYPE TOC EARNED (Rs. in crore)

TAX 2.40

PENSION 12.99

SCHOOL SALARY 31.60

TREASURY 6.38

PPF,SCSS, BOND & SDS 0.24

DMA 0.45

TOTAL 54.06

10. Corporate Social Responsibilities – CSR Activities

CSR has been assuming greater importance in the corporate world, including the banking sector. Over the years, we at United Bank of India, have integrated CSR principles with the Banks f nancial, pro- motional and development assistance to the Priority Sector, indus- trial growth, infrastructure development, as well as our own internal functioning through good corporate governance practices.

Our CSR pillars are Sustainable Banking, Environment, Social Commitments, Human Resources Development and Stakeholders Engagements.

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

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

11. United Bank Rural Self-Employment Training Institute (UBRSETI)

Bank has set up 5 more RSETIs during the current year and the total RSETIs set up by the bank as on 31.03.2011 stands at 10. The RSETIs opened during the year 2010-11 are as follows:

. United Bank Rural Self Employment Training Institute (UBIRSETI), North Lakhimpur, Assam - opened on 11.05.2010.

. United Bank Rural Self Employment Training Institute (UBIRSETI), Raiganj, Uttar Dinajpur, West Bengal - opened on 20.09.2010.

. United Bank Rural Self Employment Training Institute (UBIRSETI), Balurghat, Dakshin Dinajpur, West Bengal - opened on 24.01.2011.

. United Bank Rural Self Employment Training Institute (UBIRSETI), Dhalai, Ambassa, Tripura- opened on 25.01.2011

. United Bank Rural Self Employment Training Institute (UBIRSETI), Purulia, West Bengal.- opened on 29.03.2011.

Bank has set up Rural Development and Self Employment Trust (UBRUDSET) as apex policy making body of the institutes. The Trust reviews functioning of RUDSETIs on quarterly basis. The last such review was undertaken on 18.03.2011 at the meeting of the Board of Trustees of UBRUDSET.

Up to 31.03.2011 these institutes have imparted training to 11188 rural youths/women of which 8070 trainees are self employed and 463 trainees are wage employed. Out of 8070 self employed trainees 3902 trainees have got loans from banks.

The institutes are providing post training support (Escort service) including arrangement of loan from our bank branches to enable the trainees to set up their own venture.

The bank has been allotted 7 more Districts for opening of RSETIs by the respective SLBC Assam (Hilakandi, Karimganj, Sibsagar, Morigaon & Dhemaji Districts), Manipur( East Imphal District) and Meghalaya( Jayantia Hill District).

. FLCC

Bank has also set up 5 Financial Literacy cum Credit Counselling Centres (FLCCs) in the districts of South 24-Parganas, Uttar Dina- jpur & Dakshin Dinajpur in West Bengal and Cachar in the state of Assam and South Tripura in Tripura to extend f nancial literacy and credit counselling services to the poorer section of the society.

. United Bank Socio-Economic Development Foundation (UBSEDF)

United Bank Socio-Economic Development Foundation (UBSEDF) was established on 30th March 2007 with the objective of promoting and carrying out social and economic developmental activities and

rendering assistance to weaker and under privileged section of the society in terms of decision taken by the Board of Directors of the Bank in its meeting held on 18th December, 2006, towards discharg- ing corporate social responsibility of the Bank.

The Trust has undertaken a series of welfare activities involving total assistance of Rs.71.15 lac. The year wise break up of the assistance are furnished below:

NO. OF AMOUNT OF ASSISTANCE

YEAR UNITS (Rs. in lac)

2007-08 8 6.50

2008-09 8 7.21

2009-10 7 8.05

2010-11 16 49.39

TOTAL 39 71.15

Some of the important projects are ,setting up of an Arsenic Treat- ment plant at Gaighata, North 24-Parganas district with a funding assistance of Rs.14.26 lac and adoption of two girl children from the weaker section in Jharkhand Region for meeting their all educational expenses, etc.

12. Progressive use of Of cial Language

In pursuance to the Of cial Language Policy of the Government of India, the bank has recruited 15 (f fteen) Of cial Language Of cers during the year to speed up propagation and development of of cial Language Hindi for of cial purpose.

To accelerate the progressive use of Hindi in Of cial business, All India Conference of Of cial Language Of cers of the Bank and review meeting was held on 04.06.2010 at Banks Head Of ce. Various Intensive Programmes were introduced for day-to-day use of Hindi based on encouragement and motivation in the Bank so that the targets set up by the Government of India may be achieved

in the prescribed time frame. During September-October 2010, Hindi Competitions were organized on the occasion of Hindi Day/ Hindi Month. To create an atmosphere of working in Hindi, 11 nos. of Hindi Workshops and 14 nos. of Hindi Computer Train- ing Programmes were organized at Banks Staf Training College, Kolkata. During the year 86 Of cers/Employees have passed Hindi Examination (Praveen and Pragya).

The Bank organized two meetings under the banner of the Town Of cial Language Implementation Committee (Banks), Kolkata in capacity of being the Convenor. For its distinguished performance, the Bank was awarded with 2nd prize (Rajbhasha Shield) by the Department of Of cial Language, Ministry of Home Af airs, Gov- ernment of India and bank has received the prize in the Of cial Language Conference of East and North Eastern Region held on 24.03.2011 at Sikkim (Gangtok).

Bank is publishing its quarterly Hindi Magazine United Darpan regularly and a Hindi noting Booklet published for Executives of the Bank. Besides, Banks Website has been updated and informa- tion in Hindi is also available. Number of Computers installed with Hindi Software in dif erent branches/of ces stands 15,800 as on 31.03.2011. Sri Rakesh Kumar, Dy. Director (Implementation), Deptt. of Of cial Language, Ministry of Home Af airs, Government of India, Nizam Palace, Kolkata, visited the Head Of ce of the Bank on 13.01.2011 for inspection to oversee the compliance of Of cial Language Policy of the Government in our Bank.

13. Performance of Sponsored Regional Rural Banks

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

(Amount in Rs./crore) Growth (%) during the Position as on year ended on

31.03.2010 31.03.2011 31.03.2010 31.03.2011

Total Busi- 15,435.56 18,679.55 21.29 21.02 ness

Deposit 10,751.48 12,715.71 21.42 18.27

Advance 4,684.08 5,963.84 20.93 27.32

The four sponsored RRBs have migrated 301 branches to CBS p lat- form by 31.03.2011 and have planned to migrate all their branches to CBS by August 2011. Under Financial Inclusion Plan the RRBs have also covered 729 villages with population above 2000.

14. Constitution of Board of Directors

The Board is constituted in accordance with The Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970 and Nationa- lised Banks (Management and Miscellaneous Provisions) Scheme, 1970.

Sri S L Bansal, Executive Director of the Bank, Smt. Surekha Ma- randi, Reserve Bank of India Nominee Director , Sri Srenik Sett, Non Of cial Director and Sri Saumen Majumder, Shareholder Director joined the Board during the year and the Board of Directors extends a warm welcome to all of them.

Sri Tulsidas Bandyopadhyay, RBI Nominee Director and Sri Suprita Sarkar, Of cer Employees Director vacated their respective of ces during the year. The Board of Directors places on records its sincere gratitude and profound appreciation for the valuable contribution made by them to the functioning the Board.

The present composition of category of the Board of Directors are furnished herein below :

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

Chairman & Sri Bhaskar 1 Managing Executive Sen 01.03.2010 Director

Executive 2. Sri S. L. Bansal Executive 01.04.2010 Director

Sri Sanjeev Nominee Non-Execu- 3. 12.05.2009 Kumar Jindal –GOI tive

Non-Execu- Smt. Surekha Nominee 4. tive 30.07.2010 Marandi –RBI Independent

Non-Execu- Dr. Naina Non-Of cial 5. tive Indepen- 15.07.2008 Sharma Director dent

Non-Execu- Non-Of cial 6. Sri Srenik Sett tive Indepen- 06.10.2010 Director dent

Workmen Sri Soumitra Non-Execu- 7. Employee 13.01.2010 Talapatra tive Director

Non-Execu- Sri. Saumen Shareholder 8. tive Indepen- 27.11.2010 Majumder Director dent

Board & Committee Meetings

During 2010-11 the Board of Directors met 10 times. The details of Committee Meetings are as under

Management Committee of the Board of Directors 19 meetings

Audit Committee of the Board of Directors 8 meetings

Shareholders Committee 5 meetings

Risk Management Committee of the Board of Directors 4 meetings

Special Committee to Review High Value Frauds 4 meetings

Customer Service Committee 4 meetings

Directors Promotion Committee 1 meeting

Remuneration Committee 1 meeting

High Powered Committee 3 meetings

IT Sub-Committee of Board 4 meetings

Nomination Committee 1 meeting

15. Directors Responsibility Statements

The Directors conf rm that in the preparation of the Annual Accounts for the year ended 31st March, 2011:

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

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

Reasonable and prudent judgment and estimates were made so as to give a true and fair view of the state of af airs of the Bank at the end of the f nancial year and the prof t of the Bank for the year ended on 31st March, 2011.

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

16. Proposed Dividend

The Board of Directors at its meeting held on April 29, 2011 have recommended, subject to the approval of the shareholders and ap- propriate regulatory authorities, f nal dividend at the rate of 22% i.e. Rs. 2.20 per equity share of face value of Rs. 10/- each, to all equity shareholders of the Bank whose names appear on the Register of Members on the record date. T is will entail an outgo of Rs. 88.06 crore on account of Dividend and Dividend Tax.

17. Acknowledgement

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

For and on behalf of the

Board of Directors



(Bhaskar Sen)

Chairman & Managing Director

Date : June 18, 2011

Place : Kolkata


Mar 31, 2010

The Board of Directors have pleasure in presenting the 60th Annual Report of the Bank along with die Audited Balance Sheet,Profit and Loss Account and the report on Business and Operations for the year ended March 31,2010 (FY-2009-10).

2.15 INFORMATION TECHNOLOGY

In a landmark achievement in the field of Information Technology, Bank attained 100% CBS on 12-09-2009 keeping in line witii its vision to emerge as a techno savvy premier Banking institution in the country. Bank is leveraging its technology platform for enhancing the schemes of Financial Inclusion.

With a view to provide a reliable, cost effective and robust platform for various financial and non-financial applications, Bank has implemented VPN (Virtual Private Network) based WAN project integrated with VSAT network. All branches and offices of the Bank are connected through WAN.

Bank had 283 ATMs as on 31-03-2010 which can be accessed bv our own customers as well as by customers of other banks. The ATM cum Debit Card holders of the Bank can access more than 50000 domestic ATMs under a sharing arrangement through Cash Tree & NFS and many more internationally through its affiliation to VISA. With 100% CBS and a strong Network of ATM, Bank has been successful in extending "Any Time Any Where Banking" facility to its customers.

Bank is also offering Internet Banking facility for its customers. Customers use this channel for e- payment of direct taxes, balance enquiry etc. Bank is also in the process of implementing a more feature rich Internet Banking System (IBS) which will offer vanous value added net banking products to customers including SMS Banking.

All branches can now perform RTGS & NEFT transactions. These channels have become very popular and efficient mode of fund transfer for the customers of the Bank. Bank has launched felebanking channel for all branches. Customers can avail this facility* to a) enquire account balance, b) request for account statement dirough fax / email, c) stop payment of cheque and d) transfer fund to linked account(s).

As on 31-03-2010, Corporate E-Mail facility is operational in all the 1534 branches and in all controlling offices. Extensive transmission of Data as well as information takes place through this facility resulting in reduction of communication time and operational cost to a great extent.

The Bank has also been participating in Cheque Truncation System (CTS) pilot project now being implemented by Reserve Bank of India through NCC, Delhi in National Capital Region (NCR). The Bank is in the process of developing a sound Management Information Svstem (MIS) bv leveraging CBS. Already a number of MIS reports are being generated from CBS as an aid to management decision making.

During the year Bank has achieved 100% mechanisation in its MDSS (Mini Deposit Salpa Sanchay). This low cost Deposit scheme (MDSS) has interface with CBS through Intelligent Hand Held Machines (IHH) which are provided to Agents. Machine generated receipt with a/c balance is provided to customers immediately on receipt of the deposit.

During the year Banks Data Center at Kolkata and Data Recovery (DR) Center at Mumbai have been upgraded in consonance with 100% CBS infrastructure. Bank has launched its Intranet website during the year to facilitate and improve dissemination and sharing of information within the organization. Bank is also conducting IS Security Audit covering its entire IT Infrastructure with a Cert-in empanelled audit firm.

2.16 OFFICIAL LANGUAGE

For publicity and progressive use of Hindi towards implementation of Governments Official Language Policy, All India Conference of Official Language Officers of the Bank and review meeting was held on 21.05.2009 at Banks Head Office. Various types of programmes and Hindi Competitions were organized on the occasion of Hindi Day/Hindi Month during September—October 2009.12nos. of Hindi Workshops (duration of each for 3 days) and 14 nos. of Hindi Computer Training Programmes (duration of each for 2 days) were organized at Banks Staff Training College, Kolkata. During the year, 46 Officers/Employees Passed Hindi (Praveen/Pragya) Examinations. The Bank organized 2 meetings under the banner of the Town Official Language Implementation Committee (Bank), Kolkata in capacity of being the coordinator. For its distinguished performance, the Bank was awarded with 2nd Prize (Rajbhasha Shield) by the Department of Official Language, Ministry of Home Affairs, Government of India, New Delhi. The Bank received the prize in the Official Language Conference of East & North-East Region held on 05-02-2010 at Shillong (Meghalaya). Bank is publishing its quarterly Hindi Magazine United Darpan regularly. Number of Computers installed with Hindi Software in different Branches/Offices increased from 11,926 to 18,206. Shri Surendra Mohan Nayyar, Joint Director, Ministry of Finance, Financial Services Department, New Delhi, visited the Head Office of the Bank on 26.03.2010 for inspection of implementation of Official Language Policy.

2.17 INSPECTION AND AUDIT

- Internal inspection is a well embedded continuous

process which is earned out to enhance the efficiency of the operating units of a bank in all respects while at the same time ensuring their sound functioning for the safety and security of banks assets. Internal inspection aims to implement total adherence to prescribed systems, procedures and norms.

- Audits and Inspections are carried out in the bank as per the Board approved laid-down policy. The scope of internal inspection process is modified suitably on a continuous basis to cope with the ever changing scenario of Banking system. Under the new system, Internal Inspection focuses on risk-based audit of Banks operating units. For the last three years, Risk Based Internal Audit of Branches is being conducted by Banks own Inspectors. During 2009-10, Risk Based Internal Audit was conducted in 909 branches, 431 branches were subjected to Concurrent Audit and Migration Audit was conducted in 563 branches. The inspections of 16 Regional Offices were done during 2009-10.

- During the year, the IS Audit of CBS Branches was initiated. It has been conducted in 88 branches covering more than 51% of Banks business as on 31st March, 2009. The IT Security Audit of the IT infrastructure of the Bank by CERT-In empanelled auditors was also initiated during the year 2009-10.

- Inspection/Audit function also ensured timely compliance of RBI Annual Financial Inspection/ LFAR.

2.18 CORPORATE GOVERNANCE

The Bank believes that the sound principles of Corporate Governance are important key to be a successful organisation. The Bank ensures adherence to principles of Corporate Governance by maintaining integrity of financial reporting, disclosure of material information and sound investor relations. The Bank has adopted a Code of Corporate Governance with the primary aim to provide good management, adoption of prudent risk management techniques and compliance with the required standards of capital adequacy, thereby guarding the interest of its stake-holders, such as customers, employees, the Government and the society at large.

2.19 BOARD OF DIRECTORS

The Board has been constituted in accordance with Section 9 (3) of the Banking Companies (Acquisition

and Transfer of Undertaking) Act, 1970, and as per the

Central Government Gazette Notification. Presently

the Board comprises —

Sri. Bhaskar Sen — Chairman & Managing Director

Sri. S L Bansal — Executive Director

Sri. Sanjeev Kumar Jindal — Gol Nominee Director

Sri. Tulsidas Bandyopadhyay — RBI Nominee Director

Dr. Naina Sharma — Non-Official Director

Sri. Suprita Sarkar — Officer - Employee Director

Sri. Soumitra Talapatra — Workman Employee Director

During the Year the following directors retired/

demitted office —

Sri. S C Gupta — Chairman & Managing Director

Sri. T M Bhasin — Executive Director

Dr. R K Agrawal - CA Director

Sri. Praveen Davar — Non-Official Director

Sri. M A Ansari - Non-Official Director

Smt. Anusuya Sharma — Non-Official Director

Sri. Biswajit Kakoti — Workmen — Employee Director

The Board of Directors places on records its gratitude and appreciation for the valuable contribution made by them to the functioning of the Board.

BOARD & COMMITTEE MEETINGS

During 2009-10 the Board of Director had held 9 meetings. The details of committee meetings are as under —

Management Committee of the Board -13 meetings

Audit Committee of the Board -11 meetings

Risk Management Committee of the - 4 meetings Board

Special Committee of the Board for - 4 meetings monitoring Large Value frauds

Customer Service Committee of the - 4 meetings

Board

High Power Committee of the Board - 4 meetings

Remuneration Committee of the Board -1 meeting

IT Sub-Committee of the Board of - 4 meetings Directors

PROPOSED DIVIDEND

The Board of Directors at its meeting held on May 3, 2010 have recommended, subject to the approval of the shareholders and appropriate regulatory authorities, final dividend at the rate of 20 per cent i.e Rs. 2/- per equity share of face value of Rs. 10/-, to all equity shareholders of the Bank whose name appear on the

Register of Member on the Record Date. This will entail an outgo of Rs.73.31 crore on account of Dividend and Dividend tax.

ACKNOWLEDGEMENT

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

For and on behalf of the Board of Directors (Bhaskar Sen) Chairman & Managing Director Place: Kolkata Date: May 3, 2010


Mar 31, 2009

The Board of Directors have pleasure in presenting the 59 th Annual Report of the Bank along with the Audited Balance Sheet, Profit and Loss Account and the report on Business and Operations for the year ended March 31, 2009 (FY 08-09).

2.10 CORPORATE SOCIAL RESPONSIBILITY:

Pursuant to the agenda of Financial Inclusion within the philosophy of Corporate Social Responsibilities, the Bank has set up two more Rural Development and Self-Employment Training Institutes (RUDSETI) at Udaipur in South Tripura district of Tripura and Amarkanan in Bankura district of West Bengal thereby taking the total number of RUDSETIs to four. These institutes extend training facilities to fanners, micro and small entrepreneurs apart from providing them financial assistance for self-employment. During the year 18 training programmes involving 435 participants have been conducted by the RUDSETIs.

United Bank Socio-Economic Development Foundation (UBSEDF) Trust which was established to carry out social and economic development activities for the upliftment of the society extended financial help of Rs 8.04 Lakh to 9 social organisations during the finsncial year 2008-09.

The year 2008-09 had been eventful for the Bank under Lead Bank scheme. During the 101st SLBC meeting for the State of West Bengal, a Task Force was formed under the Chairmanship of Sri T. M. Bhasin, Executive Director of the Bank, to examine whether the banking facilities can be extended to the Gram Panchayat level. The Task Force has submitted its Final Report to Reserve Bank of India, Kolkata on 30 September 2008 wherein 938 unbanked Gram Panchayats have been identified in three different groups based on the distance of the Gram Panchayats from the nearest bank branch. Banks are now coming out with proposals to open branches in these Gram Panchayats. SLBC also formulated a model scheme for extending financial assistance to Auto Rickshaw Owners which is being implemented by all banks. Similarly, a model scheme for replacement of old metered Taxis registered prior to 01.01.1993 has also been developed and made effective. As per the directives of Ministry of Finance, Govt, of India, SLBC is organising special monthly meetings on economic package of IBA where representatives of MSME Associations are also participating. SLBC for West Bengal, in its meeting held on 17 March 2009, has allotted six more districts to different Banks to set up new Rural Self Employment Training Institutes in these districts.

2.12 REGIONAL RURAL BANKS:

Consequent upon State- wise merger of the Bank sponsored RRBs, with a view to revitalise their functioning and provide additional capital to make these entities vibrant, a decision was taken to re-capitalise the RRBs which had negative net worth. The combined aggregate deposits of all the sponsored RRBs increased to Rs 8891 Crore as on 31.03.09 recording 22% growth during the year. Combined gross advances of the RRBs increased to Rs 3872 Crore as on 31.03.09, recording a growth of 17%.

2.13 BRANCH EXPANSION:

With addition of 50 new branches during the year 2008-09, the total number of branches stood at 1451 as on 31.03.2009 spread across all the States of the country. The Bank has also 20 Extension Counters. Out of the 1451 branches, 693 (47.8%) are located in 65 Minority Concentration Districts (MCDs) throughout the country and 61% of the total branch network is in rural and semi-urban areas to serve our country in the hinterland. With a view to improve its pan India presence, die Bank has plans to open 118 new branches during the year 2009-10.

2.14 PERSONNEL ADMINISTRATION:

The total staff strength of the Bank as on March 31, 2009 stood at 15111 as against 16009 last year and the women employees constitute 8.84% of the total staff strength. The staff productivity of the Bank has increased to Rs 5.85 Crore as on 31.3.2009 from Rs 4.63 Crore as on 31.3.2008. During the year, through inter-cadre and inter-scale promotion processes, a total of 362 employees have been promoted to higher cadre/grade.In a special drive, 10 clerks belonging to the ST category were promoted as Officers (JMG Scale-I), 5 SC and 1 ST sub-staff were promoted as Clerks. Under us Recruitment Projects, die Bank has directly recruited 30 officers through campus interviews. Besides this.

11 Specialist Officers and 165 clerks have also been recruited from open market. To ensure implementation of proper succession planning, a process of recruitment of 1000 officers and 500 clerks has been commenced by the Bank.

2.14.1 NEW HR INITIATIVES:

To develop the human resources, Bank had initiated various moves to impart proper training to the employees during the year 2008-09. Although the training has been primarily imparted at the Staff Training College, Kolkata, the Bank had arranged various in-company programmes in collaboration with the leading training institutes across die country. Apart from this, Bank has also nominated senior functionaries for overseas programmes during the year. Over 1000 employees from various CMS operating branches were also provided with end- user training for handling CMS software. With an objective of creating awareness among all categories of employees regarding various products and services offered by the Bank, the 6 "Know Your Bank" test was organised on June 22, 2008 which was attended by 1928 employees.

2.14.2 WELFARE OF SCHEDULED CASTE AND SCHEDULED TRIBE EMPLOYEES:

The Bank has been following the Government guidelines for reservation in employment/promotion to specific categories. The representation of SC/ST employees in total staff was 2156 on 31.03.2009 constituting 14.26% of the total employees. During the year 67 employees belonging to SC/ST category were promoted to next higher grade/cadre, which constitutes 17% of total number of promotions effected during the year.

2.14.3 INDUSTRIAL RELATIONS:

The Bank has maintained harmonious industrial relations during the year 2008-09 culminating m creation of a positive atmosphere for all round growth of the individuals as well as the Organisation as a whole. At the same time, emphasis has been given on redressing the grievances of the employees. Considering the aspects of Health Care for its working employees along with dependent members of their families as also the retired employees of the Bank along with their spouse, the Bank continued two separate Mediclaim Insurance Schemes. Besides, the Bank has entered into tie-up arrangements with 3 more hospitals during the year taking the total number of such arrangements to 66.

2.15 ASSET LIABILITY MANAGEMENT

Asset Liability Management was very much effective during 2008-09. The amendments to the RBI guidelines on ALM (in respect of Structural Liquidity) were implemented by adopting a more granular structure of bucketing, increasing the frequency of supervisory reporting to twice a month (from once earlier) and commencing preparation of the statement on a daily basis. Behavioural study in respect of Savings Bank Deposit and Current Deposit were conducted for each item in a thoroughly revised manner. Behavioural Study in respect of Bills Payable and Cash Credit/Overdraft was also done in an improved manner. Both Liquidity Risk and Interest Rate Risk were well under control during the year.

During the year, in all, 25 meetings of ALCO were held wherein pricing and review of various products were done and discussions/ deliberations were held on various important aspects of business development and business growth. The Bank has been prompt in responding to the task of implementing measures on interest rate in line with prevailing market scenario.

2.16 RISK MANAGEMENT:

Risk taking is the essence of the financial sector. The changed operating environment in the Banking sector has exposed banking to newer risks and various regulatory and supervisory policies have been introduced by the regulatory authorities. The Bank has geared itself for improving its effectiveness during 2008-09 to withstand all kinds of challenges and has successfully implemented Basel-II framework by 31.03.2009. During the year, the major developments in the field of Risk Management were as follows:

- Development or Policy on Internal Capital Adequacy Assessment Process (ICAAP).

- Development of Compliance Policy in line with RBI guidelines.

- Revision of Disclosure Policy by taking into consideration the disclosure requirements under Pillar 3 of Basel-II framework.

- Development of the Stress Testing Policy.

In order to maintain the asset quality in the scenario of rapid credit growth, Bank has undertaken following analysis at regular intervals:

- Portfolio analysis of major industries/sectors where Banks exposure has been substantial with a view to study the impact of particular industry/sector on the credit portfolio of the Bank.

- Quarterly Macro Level analysis to ascertain quality and risk return scenario of the credit portfolio of Bank.

- In line with RBI guidelines, Stress Testing on Liquidity Risk, Interest Risk, Credit Risk — impact on Capital Adequacy and profitability of the Bank was conducted on a half yearly basis.

- Half yearly analysis of various exposure norms to ensure that Banks exposure in various fields is within the limits/ceiling fixed by RBI/ Banks Board.

- Analysis on migration of the risk rating for large borrowal accounts on a half yearly basis.

2.17 CUSTOMER SERVICE:

In the present market scenario, customer satisfaction is of prime importance. Based on the findings and recommendations of NIBM, Pune in 2007-08, various remedial measures were undertaken to improve customer service even further. Moreover, regular customer meets were organised at branch level to ascertain the customer grievances and for taking remedial measures. During the year, 13064 customers meets were organised.

The Board Level Committee on Customer Service headed by the Chairman and Managing Director of the Bank, Standing Committee on Customer Service headed by the Executive Director of the Bank are monitoring the improvement in customer service on a regular basis. Bank has taken all necessary steps for implementing the guidelines of "Banking Codes and Standards Board of India (BCSBI)". Bank has also introduced "Online Grievance Redressal Mechanism" for quicker redressal of customer grievances. During 2008-09, Banking Ombudsman has passed three awards which were implemented by the Bank during the year and there was no un-implemented award at the end of the year.

RIGHT TO INFORMATION ACT 2005:

The Bank has designated one General Manager at Head Office as Principal Information Officer. Besides, all the Regional Heads are designated as Regional Information Officer of the Bank for providing information to the public as well as customers under the "Right to Information Act, 2005". The Executive Director of the Bank functions as the Appellate Authority.

2.18 INFORMATION TECHNOLOGY:

In tune with the Banks vision to emerge as a "techno- savvy and customer centric bank", a number of IT initiatives were launched during the year 2008-09, the most important being the faster rollout of CBS. As on March 31, 2009, 1005 out of 1451 branches were successfully migrated on CBS platform covering 94% of the Banks total business. The Bank has upgraded its Primary Data Centre & Disaster Recovery site for migration of all its branches on CBS platform to cover 100% business by September 2009.

All CBS branches are RTGS/NEFT enabled. Bank has also interfaced CBS with CMS software for offline transactions and the team is already working on developing an online interface between the two. "United Online-Internet Banking" facility is being offered to the customers through 250 branches across the country for online e-Payment facility to the customers for paying Service Tax and Excise Duties.

The Bank had 226 ATMs as on 31.03.2009 which can be accessed by the customers of our Bank as well as other banks. The cardholders of the Bank can access more than 32000 ATMs under Cash Tree- ATM network and NFS ATM network. During the year, Bank has issued over 3.75 Lakh "Pre Activated Debit Cards" to the customers taking the total card

UNION FINANCE MINISTER SRI PRANAB MUKHERJEE INAUGURATES CREDIT DELIVERY CAMPS

Honble Finance Minister Shri Pranab Mukherjee inaugurates distributes 11,111 UBI Kisan Credit Cards and 1,111 SMSE/Education/Housing Loan at Credit Delivery Camps held at Sagardighi (Murshidabad)and at Raiganj (Uttar Dinajpur). In the Credit Delivery Camps, loans were disbursed to 12,223 beneficiaries amounting to Rs 67.09 crore. The beneficiaries included those from Minority, Women, Physically Challenged & Distressed Women, SC/ST, SHGs and Professionals. In these Camps, 11,111 Kisan Credit Cards were issued amounting to Rs 32.89 crore. Loans disbursed to other sectors, viz MSME, Housing, Education, etc. amounted to Rs 34.20 crore covering 1,1-12 beneficiaries base to over 7 Lakh as on 31.03.09. Other alternate delivery channels like Tele-banking and M-banking are also being offered to cater to the needs of the young customers.

On August 21, 2008, Bank launched a Bio-Metric Photo Smartcard based Financial Inclusion project at Dohathuba village, Habra, 24 Paragnas (North), West Bengal. During 2008-09, Bank has issued 1000 cards to rural customers, majority being women members of different SHGs. These cards facilitate offsite transactions with the help of Customer Service Points (CSP) equipped with smartcard readers/terminals. All the transactions are settled online to respective customer accounts maintained centrally. This initiative has brought banking to the ¦ doorstep of the unbanked masses. During the course of account mobilization & presentations, special programmes were organised by the Bank to educate : and spread financial literacy among the rural folks.

2.19 SECURITY:

The Standing Security Committee of the Bank has periodically reviewed the implementation of security arrangements at the branches including the installation of Time Lock at the Cash Safe at 150 branches. All the Currency Chest branches have been brought under constant surveillance by installation of Close Circuit TV (CCTV) to monitor and record the movements of any kind inside the branch premises round-the-clock. In accordance with the instructions of the Reserve Bank of India, the Bank has successfully introduced the Integrated Security Solution (ISS) in 4 Kolkata-based Currency Chest branches. Bank has also initiated steps to bring 30 more risk-prone branches across the country - under CCTV surveillance system. As per the Clean Note policy of Reserve Bank of India, all the branches have been provided with "both way visible" cash counting machines. Further, 78 CCRC branches have also been provided with note sorting machines.

2.20 ORGANISATION AND METHODS:

The Bank is in the continuous process of reviewing and updating the existing systems and procedures. maintaining close liaison with IBA/RJBI/Governnienc departments on related issues, all the matters relating to service charges, delegation of discretionary powers to officials of the Bank in various scales and review thereof, publishing Manuals or instructions on various areas of banking, yearly publication of Compendium of selected circulars, Compilation and issuance of Master Circulars on different areas of Banking operations/procedures and formulation of Banks internal policies as per requirements and directives of the regulatory authorities.

2.21 PREMISES:

Premises Department is playing a vital role in providing effective functional support to improve operational objectives of the Bank by ensuring a pleasant ambience of the branches/Offices, providing better customer facilities and undertaking various constructional and refurbishing works at different locations. During the year 2008-09, the Bank has constructed its "Demat Centre" and a sophisticated "Global Cash Management Services Hub" at Kolkata.

2.22 PUBLICITY AND PUBLIC RELATIONS:

The publicity and PR activities during the year were undertaken as per the Publicity Policy of the Bank.

Advertisements in the outdoor media at important Railway Stations, Airport and Public Utility places were undertaken by the Head Office and Regional Offices on a regular basis based on the requirements. Participation in mega events like Kolkata Book Fair-2009, INFOCOM-2008, local ethnic festivals like Bihu, Pous Mela (Santiniketan) and big religious festivals like Durga Puja, Deepavali and Holi etc. have helped in improving the visibility of the Bank among the general public. Celebration of Independence Day, Banks Foundation Day, regular Press Meets are some of the important PR exercises undertaken by the Bank for image building.

2.23 OFFICIAL LANGUAGE:

An all India Conference of "Official Language Officers" of the Bank was held on 09.05.2008. Bank also organised a seminar on Official Language Hindi at Head Office where Deputy Director (Implementation), Govt, of India, Department of Official Language, Kolkata was the Chief Guest Speaker. Bank had observed September 2008 as Hindi Month with a view to propagate usage of Hindi language among the employees of the Bank. Different competitions in Hindi were also organised for the non-Hindi and Hindi Speaking employees of the Bank separately.

Sri Ajay Mallick, Deputy Director (Implementation), Kolkata and Sri Rakesh Kumar, Assistant Director (Official Language), Ministry of Finance, Banking Division, Financial Services Department, New Delhi visited the Head Office of the Bank on 13.06.2008 for inspection of implementation of Official Language Policy of the Bank. Necessary software was installed to enable use of Unicode in every department of Head Office of die Bank. 11926 copies of bilingual software were installed in different branches/offices of the Bank. Bank has also launched its website in Hindi apart from introducing Hindi as additional language for interaction at the ATMs of the Bank.

2.24 INSPECTION AND AUDIT:

The scope of internal inspection process is being modified suitably to cope up with the ever changing scenario of banking in the country. Under the new system, Internal Inspection focuses on risk-based audit of Banks operating units with a view to ensure safety and security of the Banks Assets by adherence to the prescribed systems and procedures. For the last two years, Risk-Based Internal Audit of branches is being conducted by Banks own Inspectors. During 2008-09, a total of 880 branches were covered by Risk Based Internal Audit. Migration Audit has also been conducted in 680 branches out of 1005 branches migrated under CBS.

2.25 CORPORATE GOVERNANCE:

The Bank believes that the sound principles of Corporate Governance are the most important key for a successful organisation. Bank has ensured adherence to principles of Corporate Governance by maintaining integrity of financial reporting, disclosure of material information and sound investor relations. The Bank has adopted a Code of Corporate Governance with the primary aim to provide good management, adoption of prudent risk management techniques and compliance with the required standards of capital adequacy, thereby guarding the interest of all its stake-holders.

2.26 CAPITAL RESTRUCTURING

An important milestone in the history of the Bank is the approval of Capital Restructuring plan by the Government of India. The major highlights of the restructuring plan are:

- Reduction in equity of the Bank to Rs 266 Crore from the present level of Rs 1532 Crore by transfer of balance amount of Rs 1266 Crore to the Capital Reserves after the Central Budget is passed for 2009-10.

- Contribution of Rs 250 Crore by the Government of India in Perpetual Non- cumulative Preference Shares (PNCPS) under Tier-I Capital on March 31, 2009- It is expected that the Bank will receive a further sum of Rs 550 Crore in PNCPS from the Government.

Consequent to the Capital Restructuring, the Bank is well poised to come out with its Initial Public Offer (IPO).

2.27 BOARD OF DIRECTORS

The Board has been constituted in accordance with Section 9 (3) of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 and as per the Central Government Gazette Notification. Presently, the Board comprises of two whole time Directors, the Chairman & Managing Director and the Executive Director appointed by Central Government, one Government Nominee Director, one RBI Nominee Director, one Officer Employee Director, one Workmen Director and five non official Directors appointed by Central Government. All the Directors of the Bank, except the Chairman & Managing Director and the Executive Director are non-Executive Directors. The Chairman & Managing Director presides over the Board. The general superintendence, direction and management of the affairs and business of the Bank are vested with the Board of Directors of the Bank.

Sri P. K. Gupta, Chairman & Managing Director of the Bank ceased to be Director on the Board on his retirement on September 30, 2008. The Board of Directors is pleased to record their appreciation towards Sri P. K. Gupta for services rendered by him.

Sri S.C. Gupta joined the Bank as Chairman & Managing Director on November 6, 2008. Prior to this, Sri Gupta has served Bank of Baroda as Executive Director. The Board of Directors extends its heartiest welcome to Sri S.C. Gupta and is sure that under his able guidance and leadership, the Bank will continue its journey towards achieving greater heights in the days to come.

Sri Alok Bhatnagar, Government Nominee Director retired from the Board on 09-06.2008 and ; Dr. Sanjay Singh was inducted in his place on . 10.06.2008 as die Government Nominee Director. Subsequendy, Dr. Singh has been transferred abroad on 05.01.2009 to take-up new responsibilities assigned by the Govt of India. The Board of Directors is pleased to record the appreciation of the valuable guidance and services rendered by Sri Alok Bhatnagar and Dr. Sanjay Singh during their tenure with the Board. Two other Directors, Sri P.C. Zoram Sangliana and Sri Paban Singh Ghatowar, who had joined the Board of Directors on January 9, 2006 and January 02, 2007 respectively, ceased to be the Directors of the Bank with effect from December 8, 2008 and March 31,2009 respectively after their resignations was accepted by the Board. The Board of Directors places on record its gratitude and appreciation for the valuable contribution made by them in the functioning of the Board. The Board of Directors also extends warm welcome ro Dr Naina Sharma on her joining the Board on july- 15. 2008.

The composition and category of the Board of Directors of the Bank along with brief bio-data of the Directors in the Board as on March 31, 2009 are furnished below:

Date of S. No Name of the Director Qualification Category of Directorship assuming office

1 Sri S. C. Gupta B.E. (Mech.), Chairman & Mg. Director LLB, CAIIB. Whole time Director 06.11.2008

2 Sri T.M.Bhasin M.Sc, LLB, CAIIB, Executive Director MBA (Finance) Whole time Director 07.11.2007

3 Sri T. Bandyopadhyay MA, CAIIB RBI Nominee Director 27.02.2007

4 Sri Suprita Sarkar MA, CAIIB Officer Employee Director 23.11.2007

5 Sri Biswajit Kakoti BA. Workmen Employee Director 27.02.2004

6 Dr. R. K. Agrawal B.Com, FCA, Ph.D Non-official Director 02.01.2007

7 Sri Praveen Davar Graduate Non-official Director 02.01.2007

8 Sri Manzoor A.Ansari B.Sc. Non-official Director 02.01.2007

9 Ms. Anusuya Sharma MA, LLB. Non-official Director 02.01.2007

10 Dr. Naina Sharma MA, Ph.D. Non-official Director 15.07.2008

BOARD MEETINGS:

During the year 2008-09, the Board held 10 meetings on the following dates:

24.04.2008 24.09.2008 07.02.2009

26.05.2008 25.11.2008 25-03.2009

28.06.2008 22.12.2008

28.07.2008 21.01.2009

MANAGEMENT COMMITTEE OF THE BOARD:

The Management Committee of the Board met 13 times during the year on the following dates:

24.04.2008 24.09.2008 07.02.2009

26.05.2008 22.10.2008 05.03.2009

28.06.2008 25.11.2008 25.03.2009

28.07.2008 23.12.2008

04.09.2008 21.01.2009

AUDIT COMMITTEE OF THE BOARD:

The Audit Committee of the Board (ACB) met 11 times during the year 2008-09 on the following dates:

24.04.2008 23.09.2008 06.02.2008

27-06.2008 25.11.2008 07.02.2009

28.07.2008 26.11.2008 04.03.20091

29.07.2008 21.01.2009

RISK MANAGEMENT COMMITTEE OF THE BOARD:

During the year 2008-09, the Risk Management Committee of the Board held 04 meetings on the following dates:

28.06.2008 24.09.2008 22.12.2008

25.03.2009

Special Committee of the Board for monitoring Large Value frauds:

The Special Committee of the Board for monitoring and follow up of Large Value Fraud held 03 meetings on the following dates during the year 2008-09:

26.05.2008 28.07.2008 25.03.2009

CUSTOMER SERVICE COMMITTEE OF THE BOARD:

During the year 2008-09, the Customer Service Committee of the Board met 04 times on the following dates:

28.06.2008 24.09.2008 22.12.2008

25.03.2009

HIGH POWER COMMITTEE OF THE BOARD:

During 2008-09, the High Power Committee (HPC) of the Board held 04 meetings on:

28.06.2008 24.09.2008 22.12.2008

25.03.2009

REMUNERATION COMMITTEE OF THE BOARD:

Remuneration Committee of the Board met once on 24.05.2008.

IT SUB-COMMITTEE OF THE BOARD OF DIRECTORS:

During the year the IT Sub-Committee of the Board of Directors met 03 times on:

23.09.2008 22.12.2008 25.03.2009

ACKNOWLEDGEMENT:

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

For and on behalf of the Board of Directors

(S. C. GUPTA) Place: Kolkata Chairman &

Date: April 29, 2009 Managing Director

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