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DIRECTORS’ REPORT: 2015–16
The Board of Directors have pleasure in presenting the 47th Annual Report together with the Balance Sheet as on 31st March, 2016 and Profit & Loss Account for the financial year ended March 31, 2016.
MANAGEMENT DISCUSSION AND ANALYSIS
I. Economic Environment
India has emerged as the fastest growing economy in the world during the year, amidst weak growth in several major economies. As per the provisional estimates released by the Central Statistical Organization (CSO), India’s Gross Domestic Product (GDP) improved to 7.6% growth in 2015–16 compared to 7.2% in 2014–15. Agriculture and allied activities recorded a growth of 1.2% compared to a decline of 0.2% last year. Mining & quarrying grew by 7.4% compared to 10.8% last year. Manufacturing sector grew higher by 9.3% compared to 5.5% in the previous year. Construction grew by 3.9% against 4.4% last year. Electricity, gas, water and other utility services grew by 6.6% compared to 8.0% last year. In the services segments, trade, hotels, transport and communication and services related to broadcasting grew by 9% (9.8% last year), financial, insurance, real estate and professional services grew by 10.3% (10.6%) and public administration, defense and other services grew by 6.6% (10.7%).
The inflation rate remained volatile during the year. The retail inflation measured by Consumer Price Index (CPI) peaked to 5.69% in the month of January 2016, which subsequently moderated to 4.83% in March 2016. Wholesale Price Index (WPI) remained in the negative territory throughout the year.
External sector growth declined during 2015–16, mainly on account of slowdown in global trade, decline in commodity prices and weak global demand. As per the provisional data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), during 2015–16, merchandise exports of India declined by 15.8% to US $261 billion compared to US $310 billion in 2014–15. Imports declined by 15.2% to US $380 billion compared to US $448 billion last year, mainly owing to lower oil and non–oil imports during the year. On account of the above, trade defi cit narrowed to US $118 billion in 2015–16 compared to US $138 billion in 2014–15. Current Account Deficit (CAD) reduced to 1.1% of GDP in 2015–16 compared to 1.3% last year
Economic conditions have improved during the year, with the numerous measures undertaken by both the Central Government and Reserve Bank of India (RBI). Business sentiments have improved, drawing attention and confidence of both domestic and overseas investors on India’s sustainable growth story. Foreign Direct Investments (FDI) inflows have significantly increased to US $45.19 billion in 2015–16 compared to US $33.66 billion last year. Government of India announced a comprehensive revamp plan under the name of ‘Indradhanush’ during the year for revitalizing and de–stressing public sector banks, including recapitalization support.
Economic Environment in Karnataka
As per the Economic Survey of Karnataka, 2015–16, the Gross State Domestic Product (GSDP) grew by 6.2% compared to 7.8% registered in 2014–15, due to decline in growth rate of agriculture sector. Karnataka contributes 7% to the national GDP.
Canara Bank, owing its origin to the State, is continuing its key position in the State. The Bank has been playing a leading role in the State through its 964 branches and 2138 ATMs, spread across the State. The State contributes more than 18% to total domestic business of the Bank. The total business of the Bank in the State stood at Rs.137528 crore, comprising Rs.80266 crore under deposits and Rs.57262 crore under advances as at March 2016, with a Credit to Deposit (C–D) ratio of 71.34%.
II. MONETARY AND BANKING DEVELOPMENTS
Growth in key monetary aggregates and money supply in 2015–16 reflected the changing liquidity conditions arising from domestic and global financial environment. The monetary policy stance during the year was primarily to contain inflation and manage liquidity. Broad money (M3) growth, which was 12.0% at the beginning of the financial year, moderated to 10.3% by end–March 2016.
During the year, Scheduled Commercial Banks’ (SCBs) aggregate deposits grew by 9.9% and gross credit grew by 11.3% as on March 18, 2016, compared to last year’s growth of 11.4% in deposits and 9.5% in gross credit. The C–D ratio improved to 77.76% as at March 18, 2016 compared to 76.46% last year In its bi–monthly monetary policy statements issued during 2015–16, the RBI reduced the policy rates as under.
• Repo rate and Reverse Repo rate reduced by 75 basis points (bps) to 6.75% and 5.75% respectively.
• Marginal Standing Facility (MSF) Rate and Bank Rate was aligned 100 bps above the repo rate at 7.75%.
• Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and Time Liabilities (NDTL) during the year.
• Statutory Liquidity Ratio (SLR) was kept unchanged at 21.50% during the year.
RBI made the following major policy announcements/ supervisory review during the year.
• In a bid to address concerns over growing bad loans, RBI initiated a comprehensive Asset Quality Review (AQR) in banks.
• In order to enable faster resolution of stress in an MSME account, RBI advised every bank to form Committees for Stressed MSME with revised rules for revival and rehabilitation of MSMEs having loan limits up to Rs.25 crore
• Permitted treatment of certain balance sheet items, among others, like, revaluation reserves at a discount of 55% and foreign currency translation reserves at a discount of 25% and deferred tax assets as CET 1 capital.
• To improve the transmission of policy rates into the lending rates of banks, RBI released the guidelines for implementing the Marginal Cost of Fund Based Lending Rates (MCLR) w.e.f April 1, 2016.
• Scheduled implementation of Net Stable Funding Ratio (NSFR) under Basel III Framework on Liquidity Standards for banks from January 1, 2018.
• More flexibility in maintenance of Liquidity Coverage Ratio (LCR) was permitted under Basel III, by modifying certain norms.
• Issued new directives to banks on implementation of International Financial Reporting Standards converged Indian Accounting Standards (Ind AS). Banks have been asked to submit pro forma Ind AS financial statements to the RBI from the half year ended September 30, 2016 onwards.
• With an aim to promote ease of doing business, the RBI on February 2, 2016, came out with updated regulations under Foreign Exchange Management Act (FEMA), 1999.
• Regulatory Relaxations for ‘Start Ups’ issued to facilitate Government’s initiatives to promote ease of doing business
• On 19th August, 2015, RBI granted in–principle approval for 11 Payments Banks and on 16, September 2015, granted in–principle approval for 10 small finance banks.
• Relaxed norms for sale of bad loans to Asset Reconstruction Companies (ARCs) by banks.
• Advised banks to conduct “Thorough Internal Audit” and place the report before Audit Committee of the Board of the respective banks and forward the summary of findings to RBI.
OUTLOOK FOR 2016–17
Global growth is projected at 3.2% in 2016 compared to 3.1% in 2015, reflecting a gradual recovery in the pace of growth for advanced economies, uneven pace of growth in the emerging market economies (EMEs) and slowing Chinese economy. The International Monetary Fund (IMF), in its latest World Economic Outlook, April 2016, projected global growth at 3.5 in 2017, reflecting a pickup in advanced economies and EMEs. The U.S.A is carrying the growth momentum in 2016 mainly on account of increased consumer spending, trade activity, falling unemployment rate and improved investors’ sentiment.
India is expected to maintain its growth momentum in 2016–17, after showing pick up last year. The RBI, in its Bi–monthly Monetary Policy Statement projected the growth of the economy at 7.6%. Growth is expected to be boosted by the ongoing measures being taken by Government and RBI, easing interest rate and inflation scenario, projected normal monsoon, improving industrial production and investments, improving capital flows and financial market conditions. Downside risks to growth may emerge from spike in commodity prices, including international crude oil prices.
The performance of the banking sector in 2016–17 would largely depend on the overall growth of the economy. Major challenges, however, before the banks during the year would be to address issues of asset quality and recovery, mobilizing capital, financial inclusion and resource mobilization to fund credit growth
III CANARA BANK IN 2015–16
Canara Bank performed better during the year in sync with its major corporate thrust areas, viz., Retail Deposits, including CASA and expanding Retail Assets, including Agriculture, MSMEs, Housing and other retail segments.
Operating profit of the Bank increased to Rs.7147 crore compared to Rs.6950 crore last year Due to sharp increase in provisions & contingencies on account of bad loans, the Bank reported a net loss of Rs.2813 crore in 2015–16 compared to net profit of Rs.2703 crore last year
Income and Expenditure Analysis
The Bank’s interest income increased to Rs.44022 crore compared to Rs.43750 crore last year comprising interest from loans and advances at Rs.31377 crore and interest from investments at Rs.11408 crore.
In line with the thrust areas for the Bank, non–interest income increased to Rs.4875 crore compared to Rs.4550 crore in 2014–15. Excluding treasury trading profit, non–interest income rose by 14.20% to Rs.3885 crore compared to Rs.3402 crore last year. Major segments of the non–interest income, like, service charges & other miscellaneous income grew by 40.97% to Rs.1545 crore compared to Rs.1096 crore last year, recovery from written off accounts grew by 59.58% to Rs.608 crore and income from card activity increased by 45.80% to Rs.328 crore. The share of non–interest income in total income increased to 9.96% from 9.42% last year.
During the year, major emphasis was accorded on containing cost both interest and non–interest expenses. The Bank’s interest expenses increase was marginal at 0.51% to reach Rs.34259 crore vis–a–vis an increase of 11.38% last year. The operating expenses increase was curtailed to 3.14% to Rs.7492 crore compared to an increase of 19.45% in the previous year. Major heads of controllable other operating expenditure were identified and monitored for reducing the cost across the Bank.
Due to conscious efforts to reduce interest cost on deposits, cost of deposits was reduced by 44 bps to 6.94% compared to 7.38% as at March 2015. In line with the industry trends and downward revision in the base rate, the yield on advances declined to 9.71% as at March 2016 compared to 10.75% as at March 2015. Interest spread, the difference between cost of funds and yield on funds stood at 1.80%.
The net interest income, the difference between interest earned and interest paid by the Bank, increased to Rs.9763 crore, resulting in Net Interest Margin (NIM) to stay at 2.19% as at March 31, 2016 compared to 2.16% in the December 2015 and 2.25% as at March 2015.
Capital and Reserves
Networth of the Bank, stood at Rs.25911 crore as at March 2016. While total paid–up capital of the Bank was Rs.542.99 crore, reserves and surplus stood at Rs.31060 crore Capital Adequacy Ratio as at March 2016 stood at 11.08% against regulatory requirement of 9.625%, including Capital Conservation Buffer. Within the capital adequacy ratio, CET 1 ratio stood at 8.18% against requirement of 5.5% and Tier I capital ratio was at 8.80% against the requirement of 7%. Adequate headroom is available under both Tier–I and Tier–II options for the Bank to raise capital in order to support business growth momentum.
During the year, the Bank also raised Rs.1520 crore equity capital by way of preferential allotment of 4 crore shares to LIC of India in April, 2015. Government of India infused Rs.947 crore equity capital in the Bank by way of preferential allotment of 2.78 crore equity shares in September 2015.
Further, the Bank raised Rs.2400 crore BASEL III compliant Tier II Bonds in December 2015 and January 2016 in two tranches. In total, the Bank raised Rs.4867 crore capital in 2015–16. The Government of India’s shareholding in the Bank stood at 66.30% as at March 2016
Total Deposits increased to Rs.479792 crore as at March 2016 compared to Rs.473840 crore a year ago.
Keeping the thrust on mobilizing more retail term deposits, the Bank’s retail term deposits, excluding Certificate of Deposits, share in domestic term deposits increased to 56.5% from 48.5% a year ago.
Current and Savings Bank (CASA) deposits of the Bank increased by 8.82% y–o–y to Rs.123542 crore as at March 2016. The Bank’s CASA deposits to domestic deposits improved to 27.38% as at March 2016 from 25.47% last year. Savings deposits grew by 10.70% to Rs.103715 crore as at March 2016. To increase CASA deposits, the Bank launched nationwide campaigns and introduced new products/services, like, Canara Galaxy, a combo product launched, comprising SB, Demat, OLT, Internet & Mobile Banking, Insurance, card services and Online Savings Bank account opening facility. During the fi nancial year, the Bank added about 56 lakhs CASA accounts. Pursuing a strategy of expanding deposit clientele, the Bank added 59 lakhs deposit accounts during the year, taking the total number of deposit accounts to 6.44 crore.
The Bank expanded its asset base to a well diversified segments of the economy, like, Agriculture and Micro, Small and Medium Enterprises (MSMEs), Retail, including Housing, Education, Vehicle and other productive segments. Advances (Net) of the Bank stood at Rs.324715 crore as at March 2016.
As at March 2016, the number of borrowal clientele accounts increased to 81 lakhs from 72 lakhs last year. Total business of the Bank increased to Rs.804506 crore as at March 2016 compared to Rs.803876 crore last year. Productivity, as measured by business per employee, increased to Rs.14.45 crore from Rs.14.35 crore a year ago. During the year, the Bank’s total clientele accounts increased by 68 lakhs to 7.25 crore from 6.57 crore last year.
Retail Lending Operations
In line with the thrust areas set for the year, the Bank’s retail lending operations recorded robust y–o–y growth Outstanding retail loans portfolio grew by 27.83% y–o–y to Rs.54069 crore as at March 2016. The disbursals under various retail lending schemes amounted to Rs.24279 crore. The outstanding housing loan portfolio rose to Rs.30975 crore, with a y–o–y growth of 38.58% and accounted for 57% of the total retail lending portfolio. The Bank’s vehicle loans and other personal loans increased by 14.24% and 14.32% y–o–y respectively.
Over the years, the Bank has assisted lakhs of promising students to pursue higher education in India and abroad. The Bank’s education loan portfolio increased to Rs.6738 crore. The Bank has financed around 2.9 lakh students as at March 2016.
The Bank is designated as the nodal bank for administering subsidy under the Central Sector Scheme for Interest Subsidy on education loans. During the year 2015–16, the Bank launched Online Instant in–Principle Sanction for Housing Loan and Car Loan, Pradhan Mantri Awaas Yojana and Housing cum Solar Loan.
The Bank has also launched “Vidya Turant’, an online instant loan sanction facility to students and ‘Vidya Sahay’ – a bridge loan scheme for making down payment for Common Entrance Test (CET), counseling authorities at the time of selection and counseling.
Several initiatives were undertaken by the Bank to expand retail credit. These include new retail loan products, viz., Housing Loans to High Net worth Individuals, Non– Resident Indians (NRIs) and Agriculturists. Nationwide launching of Campaigns, conduct of Expos, offering competitive interest rates, tie–ups with reputed Builders, Car Dealers and monitoring the performance and regular interaction with branches, boosted Bank’s retail loan portfolio.
Five new Retail Asset Hubs were opened and three Central Processing Units (CPUs) were upgraded as Retail Asset Hubs (RAHs) during the year, taking total number of RAHs to 66 across major centres in the country. The Bank also undertook several tech–based initiatives, like, missed call facility for retail lending Schemes, informing due dates and amount of EMIs for housing loans and introduction of web–based lead generation system.
Aggregate investments (net) of the Bank as at March 2016 were of the order of Rs.142309 crore. Portfolio modified duration has increased to 4.71 as at March 2016 from 4.37 as at March 2015. Modified duration of the Available for Sale (AFS) portfolio has increased to 4.45 as at March 2016 from 3.58 as at March 2015.
The above increase is mainly on account of allotment of Special State Loans under UDAY Scheme to the tune of Rs.8581 crore. The yield on investments was 7.92% as at March 31, 2016 compared to 8.00% as at March 31, 2015, even though RBI Policy rate was reduced by 125 bps since January 2015. The trading profi t under domestic treasury operations stood at Rs.990 crore during the year.
The Bank continues to be an active player in the Government Securities market as a Primary Dealer. During the year, the aggregate amount of underwriting bids submitted was Rs.56554 crore, out of which the underwriting commitment accepted by RBI was Rs.23950 crore. With regard to Treasury Bills under PD business, as against the minimum success ratio of 40% to be achieved in each half year, the Bank has achieved 65.63% for the first half year ended September 2015 and 43.14% for the second half year ended March 2016. Foreign business turnover of the Bank for 2015–16 aggregated to Rs.201860 crore, comprising Rs.98767 crore under exports, Rs.54047 crore under imports and Rs.49046 crore under remittances. Exchange profit during the year stood at Rs.669 crore.
The Bank’s overseas operations as at 31st March 2016 covered 8 countries, which include branches in London and Leicester (U.K), Hong Kong, Shanghai (China),Manama (Bahrain), Dubai International Financial Centre (DIFC) (U.A.E), Johannesburg (South Africa) and New York (U.S.A); a Representative Office at Sharjah (U.A.E) and a Joint Venture Bank, viz., Commercial Indo Bank LLC in Moscow (Russia) in association with State Bank of India.
The Bank has received approval from the Bank of Tanzania, the Regulators of Tanzania for establishing a wholly owned banking subsidiary at Dar–es–Salaam in Tanzania. The subsidiary has been incorporated in Tanzania on 2nd November, 2015 and has commenced the commercial operations from 9th May, 2016.
Total business of the Bank from the overseas branches aggregated to Rs.50868 crore for the financial year ending March 2016. Overseas business constituted 6.32% of the Bank’s total business. During the year, the Bank opened a branch at Dubai International Financial Centre (DIFC), Dubai on 28th January, 2016. The Bank has approval from the RBI for expansion in another 5 international centres, such as, Frankfurt (Germany), Sao Paulo (Brazil), Tokyo (Japan), Jeddah (Saudi Arabia) and Jakarta (Indonesia).
The Bank has sought RBI’s approval for expansion in 7 more international centres, covering Mexico City (Mexico), Kigali (Rwanda), Singapore, Auckland (New Zealand), Sydney (Australia), Ontario (Canada) and Durban (South Africa)
The Bank’s international operations are well supported by a wide network of 385 Correspondent Banks, spread across 78 countries and the Bank’s overseas branches and offices. Rupee Drawing Arrangement has been made with 36 Exchange Houses and 25 overseas banks for channelizing the remittances of Non–Resident Indians (NRIs). The Bank has been managing two Exchange Houses viz., Al Razouki International Exchange Company, Dubai and Eastern Exchange Est., Qatar under Secondment and Management Agreement respectively.
‘Remit Money’, a web–based speed remittance product has been extended to 35 Exchange Houses and to the Bank’s 4 overseas branches, viz., London, Leicester, Shanghai and Hong Kong. To facilitate instant and hassle free remittances to the benefi ciaries of Canara Bank in India, the ‘Flashremit’, an instant credit facility in association with M/s. UAE Exchange, Abu Dhabi, UAE and ‘Instant Remitmoney’ an instant credit facility with M/s. Al Razouki International Exchange Company, Dubai, M/s. Eastern Exchange Est., Qatar and M/s. Al Ansari Exchange LLC, UAE continued during the year.
The Bank’s Merchant Banking Division handled Private Placement Capital Gain Bond Issues of National Highways Authority of India (NHAI) and Rural Electrification Corporation Ltd (REC) as Arrangers. The amount mobilized in respect of Capital Gain Bonds Issue of NHAI and REC during the year was Rs.92.80 crore.
The Bank acted as Collecting Banker for the Private Placement Capital Gain Bond Issues of REC & NHAI, involving an amount of Rs.1048.38 crore. 93 Public and Debt Issues handled under Application Supported by Blocked Amount (ASBA) and the amount blocked was Rs.880.51 crore. Three specialized assignments of ‘Fair Valuation of Equity’ were also handled by the Division during the year.
The Syndication Group handled projects, involving project cost of Rs.3230 crore during the year, with a total debt size of Rs.2093 crore. The Group generated a fee–based income of Rs.3 crore from the syndication operations. The funds were arranged for projects in various segments, like, infrastructure (Port & Railway) and renewable energy (solar).
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.26.20crore from its joint venture, viz., Canara HSBC OBC Life Insurance Company Ltd. Under the Mutual Fund business, the Bank earned a commission of Rs.10.07 crore from its joint venture, viz., Canara Robeco Asset Management Company Ltd. A commission income of Rs.17.16 crore was earned under Non–Life (General) Insurance business from its tie–up arrangement with M/s United India Insurance Company Ltd (UIICL). The tie–up arrangement with
M/s Apollo Munich Health Insurance Co. Ltd for marketing their health insurance products, resulted in a commission income of Rs.10.67 crore. The Bank also has Corporate Agency Agreement with M/s Export Credit Guarantee Corporation of India for marketing export policies through its branches across India. Under Card Business, the Bank took several initiatives to expand credit and debit card base. The total debit card base of the Bank increased to 3.19 crore and credit card base increased to 2 lakh as at March 2016. Profit under card business during the year stood at Rs.55.42 crore.
The Bank offers its ‘Depository Services’ from 47 DP Service Centres spread across 34 locations in the country. Through these Centres, the Bank is extending Online Trading Facility to DP clients from its own broking subsidiary M/s Canara Bank Securities Limited, Mumbai. Executor, Trustee and Taxation Services outfi t of the Bank provides services, like, Debenture/Security Trusteeship, Will & Executorships, Endowment Trusteeship, Personal Tax Assistance and Power of Attorney services. During the year, it generated a fee income of Rs.1.13 crore and availed Central Value Added Taxes (CENVAT) credit of Rs.91.33 crore against the service tax paid during the year. The Bank has appointed M/s KPMG as consultant for implementation of Reporting System and ensuring compliance under Foreign Account Tax Compliance Act (FATCA)/ Common Reporting Standard (CRS). As per Central Board of Direct Taxes, Government of India (CBDT) guidelines, the first report was filed on 10.09.2015.
The Bank handles various Government Business products comprising Direct and Indirect Tax collections, payment of pensions of Central Government and State Government, Handling of Postal Transactions and State Government Treasury Transactions, Public Provident Fund Scheme and Senior Citizens’ Saving Scheme and issue of Inflation Indexed Bonds of RBI. During the year, the Bank implemented Sukanya Samriddhi Account Scheme, Atal Pension Yojana and Sovereign Gold Bonds Schemes of Government of India. These products contributed to improvement of CASA and also earned a fee income of Rs.121 crore during the year.
The Bank provides several online payment services, viz., E–payment of Sales Tax/ Commercial Tax in Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Bihar, Dadra & Nagar Haveli, Odisha, Punjab, West Bengal and Delhi, Virtual Treasury Package in Maharashtra, E–payment of Taxes to Transport Department in Tamil Nadu, Collection of Property Tax for the Corporation of Chennai in Tamil Nadu and Bengaluru in Karnataka, Online opening of PPF Accounts and E– Stamping project in Jharkhand, Uttar Pradesh, Tamil Nadu and Karnataka.
The Bank has been authorized as the accredited banker for Ministry of Human Resources Development (MHRD), Ministry of Culture, Ministry of Youth Affairs & Sports, Archealogical Survey of India and Unique Identification Authority of India (UIDAI), New Delhi. The Bank extended the coverage under National Pension System for Unorganised Sectors under Swavalamban Scheme during 2015–16.
Agricultural Innovation Center (AIC) outfit of the Bank handled 72 assignments. These 72 assignments consisted of 48 appraisals, 5 viability studies, 18 vetting and trainings and 1 appraisal cum project formulation. The total outlay of the assignments worked out to a term loan component of Rs.396 crore and non–interest income derived by the Bank in the form of processing fee was Rs.2.05 crore.
With the continued stress in the asset quality at the industry level, the Gross NPA of the Bank has increased to Rs.31638 crore as at March 2016 compared to Rs.13040 crore in the last year. Accordingly, the gross NPA ratio has increased to 9.40% from 3.89% as at March 2015. With a Net NPA of Rs.20833 crore, the net NPA ratio has gone up to 6.42% from 2.65% a year ago.
Cash Recovery during 2015–16 aggregated to Rs.4758 crore. Recovery from technically written off accounts amounted to Rs.617 crore, accounting for 8.31% to outstanding amount, including recovery from loss assets at Rs.461 crore. During the year, the Bank also sold 7 NPAAccounts to Asset Reconstruction Companies (ARCs) for consideration of Rs.34 crore. During the year, an amount of Rs.1460 crore was upgraded
During the year, recovery amounting to Rs.816 crore was made under SARFAESI Act. The Bank conducted 13159 recovery meets, which resulted in a recovery of Rs.546 crore. During the year, 47157 cases were referred to Lokadalat, out of which, 25132 cases were settled, covering an amount of Rs.264 crore. Besides, the Bank took several initiatives to contain slippages and speed up recovery from overdue loan accounts. These include, identification of stressed accounts for restructuring/ rephasing in time, conduct of Canadalats at branch level and mega adalats at Circle level for one time settlements (OTS), Lokadalats at district levels and regular follow–up of overdues in loan accounts through Call Centre and conducting e–auctions for sale of seized assets, initiation of stringent recovery measures against Wilful Defaulters.
The Bank also formulated a special Scheme for settlement of small NPAs (up to Rs.10 lakh), with a special focus on Education Loan/ Tractor Loan. As at March 2016, the outstanding restructured assets portfolio (including restructured NPA) of the Bank stood at Rs.23227 crore, accounting for 6.90% of gross advances.
BASEL III Capital Adequacy Framework and Future Strategies
An independent Risk Management Wing at the Head Off i c e is functioning as a nodal centre for overall implementation of various risk management initiatives across the Bank. Risk Management Sections are functioning at all the 47 Circle Offices of the Bank as an extended arm of the Risk Management Wing.
The Bank has in place risk management policies across geographies and across all risks, encompassing the entire gamut of risk profile. These include policies on Credit Risk Management, Operational Risk Management, Market Risk Management, Asset Liability Management and Group Risk Management.
The Bank has in place an Internal Capital Adequacy Assessment Process (ICAAP) under Pillar 2 of Basel III norms. The ICAAP exercise covers the domestic and overseas operations of the Bank, the Subsidiaries, Joint Ventures, Sponsored Entities and Associates. Linkages to Stress Test Scenarios are also documented in ICAAP. The ICAAP document is reviewed and approved by the Risk Management Committee of the Board and the Board of Directors
A Capital Planning Committee is in place. The Committee articulates macroeconomic scenarios vis–à–vis capital requirements of the Bank, in tune with the business strategies. During the year, the Bank has also formed a Board Level Sub–Committee for Capital Planning Process. These Committees ensures maintenance of appropriate level of Capital to Risk Weighted Assets Ratio (CRAR) and evaluates various options for raising the capital.
Adoption of Advanced Approaches
In an endeavour to move towards Advanced Approaches under Basel III for computation of capital for Credit, Market and Operational Risk, the Bank has engaged the services of a Consultant for implementation of Enterprise–wide Integrated Risk Management solution for itself and the group entities so as to build requisite risk management framework.
As a pre–requisite for the implementation of Enterprisewide Integrated Risk Management architecture, the Bank has procured a Risk Solution that would enable it to meet requirements of Advanced Measurement Approaches. The Bank has submitted Letters of Intent to RBI for adoption of Internal Rating Based (IRB) Approach for calculation of capital charge for Credit Risk, Internal Models Approach for calculation of capital charge for Market Risk and Advanced Measurement Approach for calculation of capital charge for Operational Risk.
Preparedness for Basel III
The final guidelines on Basel III Capital Regulations became effective from 1st April, 2013. As per RBI guidelines, the transitional period for full implementation of Basel III Capital Regulations is extended up to 31.03.2019. The banks in India need to maintain a minimum Common Equity Tier 1 (CET1) capital of 5.50%, Tier 1 capital of 7.00%, Total Capital of 9% and Capital Conservation Buffer (CCB) of 2.50% at the end of March 2019. The banks also have to maintain a minimum Tier 1 Leverage Ratio of 4.5% during parallel run from 1st January, 2013 to 1st January, 2017, as a credible supplementary measure to the risk based capital requirements.
The Bank endeavours to remain adequately capitalized and has drawn plans to meet the capital requirements stipulated by the RBI in transitory phase. The Bank has adequate headroom to raise capital from the market including recapitalization support from the Government of India. Moving ahead, the Bank’s capital requirement shall be met by injecting fresh equity capital, retention of profit, optimization of business levers, proactive capital planning and management.
Credit Risk Management
The Bank has various risk management systems for managing Credit Risk with comprehensive policies and procedures in place. The Credit Risk Management Policy articulates, among others, the guidelines on:
• Lending norms for appraisal and decision making
• Defining Exposure Limits and thrust areas for financing
• Delegation of credit sanctioning powers to various authorities/Credit Approval Committees based on internal risk rating of the borrowers
• Entry barriers based on risk rating
• Risk Based Pricing
• Loan Review Mechanism
An exclusive Credit Monitoring Policy has been put in place. The loan review mechanism articulated in the Credit Monitoring Policy covers the entire gamut of review and monitoring as an effective tool for evaluating the loan book continuously. It also intends to bring out qualitative improvements in credit administration, including Credit Audit/ Pre–release Audit, duly administered by the Credit Administration and Monitoring Wing.
Market Risk Management
The Market Risk framework of the Bank aims at restricting loss from all types of market risk loss events and also to establish limit structure and triggers for various market risk factors.
Exposure limits, such as, Stop Loss limits on Trading Book, intraday and overnight limit for various Currency Positions, Dealer–wise limits, Aggregate Gap limit, limits on Money Market Operations, Modified Duration limits for investment portfolio and VaR limits are fixed to act as risk mitigants/triggers. Mid Office of Risk Management Wing monitors these limits, along with other triggers, on a daily basis. A reporting framework has been put in place for effective and timely monitoring of Market Risk limits and triggers
Operational Risk Management
Operational Risk Management framework in the Bank is based on ethics, organization culture and strong operating procedures, involving corporate values, internal control culture, effective internal reporting and contingency planning.
The Bank has adopted polices for management of Operational Risk, which covers various aspects, such as, Operational Risk Management Structure, Outsourcing Activities and Business Continuity Plan. At present, the Bank is in the process of migration to Advanced Approaches of Basel III framework from Basic Indicator Approach (BIA). The Bank has initiated process/activities for implementation of Advanced Approaches and to put in place Incident Management, Key Risk Indicators (KRI), Risk Control & Self Assessment (RCSA), Scenario Analysis to compute capital charge for Operational Risk.
Asset Liability Management
The ALM Policy of the Bank aims at maintaining an appropriate balance in the maturity/re–pricing profile of assets and liabilities so as to reduce liquidity risk and manage interest rate risk. Within the policy framework, the Board of the Bank has set up the Asset Liability Management Committee (ALCO), which is entrusted with the role of management of assets and liabilities, including the funding strategy and its composition, product pricing, stress test and contingency action plan, among others. A balanced ALM structure helps to sustain the spreads, profitability and long–term viability of the Bank.
The Bank has implemented the RBI guidelines with respect to Liquidity Coverage Ratio (LCR) with effect from 01.01.2015. As on 31.03.2016, LCR of the Bank is above the stipulated regulatory minimum of 70%.
The Bank has various Subsidiaries, Joint Ventures and Sponsored Entities, which are engaged in diversified activities. As the Bank has considerable stake in these Group Entities, it has adopted a Group Risk Management Policy to identify and manage risk in intra Group transactions and exposures to raise the standard of Corporate Governance by reducing /avoiding conflicts of interest between the Group Entities and also to ensure ‘Arms Length Principle’ among Entities, in regard to business parameters
Priority Sector Advances
The Bank continues to accord importance to varied goals under national priorities, including agriculture, micro and small enterprises, education, housing, microcredit, credit to weaker sections and specified minority communities.
Priority Sector Advances of the Bank as at March 2016 reached Rs.145558 crore, recording a y–o–y growth of 23.11% and achieved 49.29% to Adjusted Net Bank Credit (ANBC) against 40% mandated norm With a focus on credit delivery to Agriculture, the Bank’s advances under agriculture portfolio increased by 14.11% to Rs.67176 crore, covering over 59 lakh farmers. Under agriculture lending, the Bank achieved 22.75% to ANBC against 18% mandated norm. During 2015–16, the Bank’s agriculture credit disbursal increased to Rs.57018 crore, with a growth of 26.06% over the previous year.
The Bank undertook special campaigns for extending Crop Loans facility to all farmers. During the year, the Bank issued 7 lakh Kisan Credit Cards (KCCs), amounting to Rs.10393 crore. The credit outstanding under KCCs was at Rs.12675 crore as at March 2016. 6.36 lakhs Kisan RuPay Cards were issued against the eligible accounts of 6.69 lakhs, with an achievement of 95%.
The Bank actively participated in various Government Sponsored Schemes, such as, Prime Minister’s Employment Generation Programme (PMEGP), National Rural Livelihood Mission (NRLM), Swarnajayanthi Shahri Rozgar Yojana (SJSRY), Scheme for Liberation and Rehabilitation of Scavengers (SLRS) and Differential Rate of Interest (DRI) Scheme.
As at March 2016, the outstanding advances under the following Government Schemes, aggregated to Rs.1016 crore, involving around 2.39 lakh beneficiaries Advances to DRI stood at Rs.177 crore, consisting of 1.82 lakh beneficiaries, of which, advances by rural and semi–urban branches amounted to Rs.138 crore.
In support of the underprivileged sections of the society, the Bank’s advances to SCs/STs beneficiaries amounted to Rs.6886 crore as at March 2016, covering 5.62 lakh borrowers. The advances to SCs/STs comprised 4.73% of total priority sector advances.
Advances to weaker sections grew by 12.55% to Rs.43498 crore, constituting 14.73% to ANBC against mandated norm of 10%.
As at March 2016, advances to specified minority communities aggregated to Rs.25849 crore, accounting for 17.76% of the total priority sector advances against the stipulated 15% norm.
National Rural Livelihood Mission (NRLM)
Under the Scheme ‘Aajeevika’ (National Rural Livelihood Mission) implemented by Ministry of Rural Development, Women Self–Help Groups (WSHGs) credit linked after 01.04.2013 would be provided credit facilities at 7% up to Rs.3 lakh. Further, prompt repaying WSHGs will get additional interest subvention at 3%. Presently, the Scheme is being implemented in 150 Category–I Districts. Canara Bank was selected to act as the nodal bank for implementation of the Scheme and MoU was signed with Ministry of Rural Development, Government of India. An exclusive web portal was developed for submission of claims by member banks through online mode.
NRLM has replaced the existing SGSY Scheme with effect from 01.04.2013 and the Bank is selected as Nodal Bank for administration of the subsidy for the subject scheme Micro, Small & Medium Enterprises (MSME) Lending
Advances to MSMEs increased to Rs.66689 crore as at March 2016, with a y–o–y growth of 10.04%. Credit to M&SE segments rose to Rs.50898 crore, with a 9.92% growth. The number of Micro Enterprises Accounts recorded a growth of 24.21% against the mandated norm of 10%. Under Pradhan Mantri Mudra Yojana (PMMY), the Bank disbursed Rs.7701 crore, covering 7.90 lakhs accounts and achieved the set target. The disbursal under different Schemes of the Mudra Yojana was as under In the past one year the Bank has taken following initiatives to increase the flow of credit to MSME sector and also brought about continued awareness about the steps taken.
• 165 specialized SME branches are functioning throughout India and for faster processing credit proposals, 45 SME Sulabhs (Specialized SME Processing Centres) are functioning across the country.
• To extend financial assistance to micro and small enterprises without offering any collateral security and with relaxed lending terms, new segment specific schemes have been launched, such as, Doctors’ Choice (improved version), MSE SMART, MSME CAP, MSME Vahan, MSE Vijeta and Canara Contractors’ Scheme, Canara CARAVAN, Flavour and MSME Expo.
• To increase the Bank’s exposure to specific clusters and activities, new area/cluster specifi c schemes have been launched and continued, such as, Rice Shellers’ Scheme, Dal Mills Scheme and Cashew Processors Scheme.
• Mega Credit camps were conducted to create awareness and pool sources for increased credit flow to MSME sector.
• Summits were arranged for start–up entrepreneurs, inviting distinguished guests from Government Departments and local industrial bodies/ organization, for necessary inputs and guidance for successful entrepreneurship.
• MSME Consultancy Services Cells were functioning in five major centres for project report preparation, appraisal and other consultancy services to MSME entrepreneurs
• Micro Enterprises Business Centres were established at Circle Offices for handholding Micro Enterprises.
• In order to support the marketing efforts of the MSME entrepreneurs, the Bank has a website www.CanbankEmart.com and also e–store to display their products.
• The Bank has an exclusive website www.canaramsme.com for easy access and understanding of MSME initiatives.
• The online submission of MSME applications and tracking thereof by the customers is facilitated and used extensively by the MSME clientele.
• The Bank has introduced a Credit Scoring Model to evaluate the MSME entrepreneurs who apply loan from the Bank for the first time.
• Entrepreneur Development Centre at Head Office have been catering to the needs of budding entrepreneurs by way of assimilation of information regarding the challenges and opportunities under MSME, conducting of seminars, training initiatives, interaction with the concerned organizations and propagation of the same through regular bulletins.
• An exclusive set up at Head Office has been looking into the aspects of monitoring, slippage management and handholding in times of stress by way of rehabilitation and restructuring of MSME units as per Government guidelines.
• The Bank has instituted awards for best performing MSME Entrepreneurs at State level to promote and encourage entrepreneurship amongst the youth.
The Bank received an amount of Rs.7.56 crore from the Ministry of Micro, Small and Medium Enterprises, Government of India, during the year as a Nodal Agency for Technology Upgradation of MSMEs under Credit Linked Capital Subsidy Scheme (CLCSS) and fully utilized the amount during the year.
Department of Women Empowerment at Head Office and Centre for Entrepreneurship Development for Women (CEDW) at 47 Circle Offices across the country are working towards economic empowerment of women. These CEDWs reach the potential entrepreneurs, undertake counseling, support training needs, finance adequately and provide marketing support. These centres have conducted a total of 362 training programmes during the year, benefitting 30,545 women, which covered 171 General / Skill EDPs, 90 Awareness Programmes, 49 Seminars / Career Guidance Programmes / Follow– up– Meets and 52 Canara Utsav Marketing Melas.
These centres have also assisted in the formation of Self Help Groups and Credit Linkages. An exclusive Rural Self Employment Training Institute has been set up at Harohalli, Karnataka to provide EDP/ skill trainings to women in various vocations, enabling them to take up self employment ventures. Through this Institute 19,874 women have been trained since inception, out of which 1305 women have been trained during 2015–16.Through 65 Training Institutes supported by the Bank, 3.40 lakh women have been trained in self employment ventures since inception, of which 32731 have been trained in 2015–16. Apart from 2 exclusive Mahila Banking Branches, catering to the banking needs of women, the Bank has converted 14 branches into ‘All Women Employee Branches’ across the country to give a focus to women clientele. 19 Micro finance branches are supporting the financial needs of Micro & Small Women Entrepreneurs and SHG members. The Bank has assisted 27.46 lakhs women, with credit outstanding to the tune of Rs. 42066 crore as at March 2016 and achieved 14.25% to ANBC against the RBI’s requirement of 5%.
Several concessions have been given to women, including relaxation in eligibility norms and 0.5% interest concession on educational loans to girl students, a special loan Scheme ‘MSE Vijeta’ for granting loans up to Rs. 2 crore to women entrepreneurs under Micro & Small Enterprises. Canara Mahila Savings Scheme, a special Savings Bank product was introduced, with many concessions.
During the year, 7 successful Women Entrepreneurs were given cash awards on the occasion of International Women’s Day under “Canara Bank Best Woman Entrepreneur Awards, 2014–15”. Under the marketing support, Bank has provided a unique custom built, high tech, solar powered mobile sales van “Canara Vahini” with computerized billing and card swiping facility to enable women entrepreneurs and SHGs to exhibit/ market their products at Bengaluru city free of cost.
4 more such mobile sales vans have been introduced recently at Aligarh (Uttar Pradesh), Coimbatore (Tamil Nadu), Shivamogga (Karnataka) and Thrissur (Kerala).
Lead Bank Responsibility
The Bank has been assigned additional lead bank responsibilities in 3 Metro Districts of Delhi National Capital Territory. With this, the Bank’s lead bank responsibilities increased to 29 districts in the country, viz., 8 in Karnataka, 7 in Tamil Nadu, 5 in Kerala, 5 in Uttar Pradesh, 3 in Delhi and 1 in Bihar. The Bank is the Convenor of the State Level Bankers’ Committee (SLBC) in Kerala. The State of Kerala was first major state to announce completion of Survey under PMJDY and achieved saturation in terms of opening BSBD accounts.
A Holistic Approach to Financial Inclusion
With the basic objective of bringing the large unserved population under the banking mainstream, the Bank is striving towards a more inclusive growth by making financial products and services available to financially excluded and marginalized sections of society in particular. As per the Government of India and the Reserve Bank of India directions, the Bank has been actively pursuing the agenda of Financial Inclusion (FI), with key interventions in four groups, viz., expanding banking infrastructure, offering appropriate financial products, making extensive and intensive use of technology and through advocacy and stakeholder participation.
The Bank has opened 42 Financial Inclusion (FI) Branches during the year in unbanked villages, taking the tally of FI branches to 848 under branch model. The Bank has also engaged 2459 Business Correspondents Agents (BCAs) under Business Correspondents (BC) model. In addition, 477 Ultra Small Branches (USBs) were also operational in the Bank.
Pradhan Mantri Jan Dhan Yojana (PMJDY)
The Ministry of Finance, Government of India, launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) on 28th August 2014, which aimed at covering 7.50 crore unbanked households in the country with at least one bank account per household. Accounts opened under PMJDY are issued with Rupay Debit card, accidental Insurance coverage to the extent of Rs.1 lakh, life insurance cover of Rs.30,000/– (for accounts opened up to 31.01.2015) and overdraft up to Rs. 5000/– after six months of satisfactory dealing.
The Bank was allotted 3962 Sub Service Area (SSAs) and 3371 Urban Wards for implementation of PMJDY.
Highlights of performance under PMJDY
• Opened 74.31 lakh accounts under PMJDY and mobilized a CASA deposit of Rs.1317 crore.
• Covered all allotted 3962 SSAs and 3371 Wards by opening of 848 Brick & Mortar Branches and engaging 2459 Business Correspondent Agents (Bank Mitras) at remaining locations.
• To provide the facility of payments through the Bank Mitras, handheld devices provided to them, which are enabled for accepting RuPay Cards.
• Zero balance accounts were brought down from 36.83% to 14.95% as at March 2016.
• A Grievance Redressal Mechanism was put in place by providing a toll free No <1800 425 11 222> for PMJDY and the same has been published in national dailies.
• PMJDY overdraft facility up to Rs.5000/– for all eligible account holders was implemented in the Bank. 2.51 lakh PMJDY account holders were provided with overdraft facility, amounting to Rs.47.74 crore. Social Security Schemes
Under various social security schemes launched by the Government of India during the year, the following enrolments have been made.
Under Sukanya Samriddhi Yojana, the Bank has also mobilized 10768 accounts. Apart from the above, the Bank has also made signifi cant progress in the Financial Inclusion related activities during the year as under
Business canvassed in the FI Branches
The business of FI branches reached a level of Rs.12219 crore as at March 2016. The CASA deposits of these branches stood at Rs.2912 crore, constituting 53% of total Deposits.
Position of Basic Savings Bank Deposit (BSBD) Accounts
The Bank opened 17.13 lakh BSBD accounts during the year, taking the tally of BSBD accounts as at March 2016 to 1.55 crore, with an outstanding deposits of Rs.3303 crore.
Formation and Credit Linkage of SHGs
Financing to Self Help Groups has played pivotal role for poverty alleviation and financial inclusion of rural poor. The Bank has formed 44027 SHGs and credit linked 46668 SHGs to the extent of Rs.932 crore during the current financial year. There were 1.22 lakhs SHG accounts at the end of the year, with an amount outstanding at Rs.2344 crore.
The Bank has a noble concept of forming farmers clubs, who volunteered to disseminate the principles of development through credit, better repayment ethics and promote peoples’ participation. During the current financial year, Bank has formed 724 farmers clubs.
Micro Finance Branches
The Bank has opened 18 Micro Finance branches in urban centres. These branches mobilized a total business of Rs.519 crore as at March 2016.
Canara Gramodaya Scheme
The village adoption scheme is being implemented in 63 villages and 3 slums pan India for comprehensive development. Apart from developmental activities, banking activities, like, opening of accounts and extension of credit facilities to all households were taken up. The Scheme also aims at providing health, sanitation, agricultural technology and inputs about livelihood activities, involving various development agencies.
Financial Literacy Centres (FLCs)
Formed ‘Canara Financial Advisory Trust’ to take care of the affairs of the Financial Literacy Centers (FLCs) of the Bank as well as by RRBs sponsored by the Bank. Pan India, the Bank has 70 FLCs, managed by the counsellors (retired bankers).
Financial Literacy Initiatives
• Financial Literacy Centers have educated 13 lakh persons during the year and 32 Lakh persons since inception.
• An interview based programme on Financial Literacy programme on DBTL and Aadhaar seeding was telecast thrice through DD, Trivandrum to educate the people on the need and importance of DBTL and Aadhaar Seeding.
• Educated the people of West Bengal and Orissa on safe parking of their funds through the paper advertisements.
• A Radio talk and interaction programme was aired through FM Radio giving all the benefits and details of PMJDY and social security schemes.
• Engaged Financial Literacy Coordinators to monitor and motivate the Bank Mitras to involve themselves in Financial Literacy in a big way in their sub service areas and encourage the people to do more transactions.
• Trained Bank Mitras through Indian Institute of Banking & Finance (IIBF) and Infrastructure Leasing & Finance Services (IL&FS). They were also provided with extensive training on Banking and Technology aspects by the Bank and the Corporate BCs.
• Special training was given to Branch Managers for conducting financial literacy programmes at their branches and in their service area.
• A short film about PMJDY & Social Security Schemes was made. This film was screened on 137 cinema halls and in all Financial Literacy programmes of the Bank.
• Conducted 2530 financial literacy camps under Financial Inclusion Fund Scheme from the NABARD.
The Bank has empanelled 7 Aadhaar Enrolment Agencies. A total of 161 lakh enrolments have been done. Aadhaar has been seeded in 128 lakh accounts and are on National Payments Corporation of India (NPCI) mapper.
Implementation of Direct Benefit Transfer (DBT) Scheme
The Bank has successfully launched modified DBTL. 428 lakh transactions, amounting to Rs.1216 crore, were processed under modified DBT/DBTL during the year.
CORPORATE SOCIAL RESPONSIBILITY
Setting Examples in CSR Activities
Following founding principles and century old tradition, the Bank is engaged in varied Corporate Social Responsibility (CSR) activities. CSR initiatives of the Bank are multifarious, covering activities, like, training unemployed rural youth, providing primary health care, drinking water, community development, empowerment of women and other social initiatives.
The Bank, through its Canara Bank Centenary Rural Development Trust (CBCRDT), has established 34 exclusive training institutes, including 26 Rural Self Employment Training Institutes (RSETIs), 5 Institutes of Information Technology and 3 Artisan Training Institutes to promote entrepreneurship development among rural youth and encourage them to take up self employment activities. During 2015–16, these Institutes trained 30,387 candidates, taking the tally to 2.57 lakhs unemployed youth since inception, with an impressive settlement rate of 73%.
The Bank has co–sponsored another 27 Rural Development and Self Employment Training Institutes (RUDSETIs) across 17 States, engaged in training of rural youth for taking up self–employment programmes. During 2015– 16, these Institutes trained 26,909 candidates, taking the tally to 3.96 lakhs unemployed youth since inception, with a settlement rate of 72%.
The Bank has co–sponsored Andhra Pradesh Bankers Institute for Rural and Entrepreneurship Development (APBIRED) at Hyderabad, Canara Bank Deshpande RSETI at Haliyal, Karnataka, Karnataka Farmers Resource Centre (KFRC) at Bagalkot, Karnataka and Bharat Ratna Shri M Visvesvaraya Training Institute at Bengaluru. Cumulatively, the Bank’s sponsored/ co–sponsored 65 training institutes have trained 6.78 lakhs unemployed youth, with a settlement rate of 72%.
The Bank has 4 donated a hi–tech, custom built, solar powered ‘Retail Mobile Marketing Van’ to assist women entrepreneurs, SHGs and artisans to market their products.
During the year, the Bank undertook a number of activities for the benefit of the communities as part of CSR programmes.
Health care for the underprivileged
Financial assistance provided to Sri Rangadore Memorial Hospital, a unit of Sri Sri Jagadguru Shankaracharya Mahasansthanam, Sringeri, Karnataka, for procuring “Fully Automated Chemistry & Electrolyte Analyser” equipment, M/s St. Scholastics Convent, Thondernadu, Calicut, Kerala, for Winger Ambulance, M/s Our Lady of Lourds Charitable Hospital, Dharwad, Karnataka, for procuring Ambulance, Central University of Karnataka, Gulbarga for an Ambulance, Sri Ramakrishna Ashrama Charitable Hospital, Trivandrum, Kerala, for an Ambulance, Parvathi Mahabala Shetty Charitable Trust, for a Phaco Eye care machine, Brahma Kumaris Educational Society, Latur for Ambulance, Kanchi Kamakoti Medical Trust – Sankara Eye Foundation, Coimbatore for procuring Bus for conveyance of patients, Model Blood Bank & Blood Component Centre – Gandhi Medical College, Bhopal for Blood storage equipment, Jan Kalyan Health Care Centre, Delhi, for Eye care Phaco machine.
Direct and Indirect support to Education
Education being one of the prime sectors of CSR and a vital part of personality development, the Bank has assisted various educational institutions. Canara Vidya Jyothi Scholarship scheme to meritorious SC/ST girl students studying in Government/Government aided schools has been implemented for the third successive year and as many as 9390 students have been benefi tted utilizing a total amount of Rs.3.68 crore.
The Bank has partnered with M/s Swami Vivekananda Youth Movement (SVYM) Mysuru, Karnataka, sponsored students under Mid Day Meals, scholarship, Solar lights to Schools at Mohani & Adboda villages in Dehradun, Uttarakhand, construction of a portion of Hostel building for Rajapura Saraswatha Samaja, Bengaluru, supply of benches to schools at Vishakapatnam, Andhra Pradesh, School Bus to Bale Ram Brij Bhushan Saraswati Shishu Mandir Inter College, Meerut, Uttar Pradesh, computer accessories to Swarna Gowri Prouda Shaale and Govt. Higher school Yerehalli, Karnataka.
The Bank has assisted Canara Bank Jubilee Education Fund, Bengaluru for upgradation/automation of the Book bank and extending scholarships to students. Construction of Toilets for Girls in Government schools in Lead Districts.
The Bank has undertaken construction of toilets for girls in 78 schools in the Lead Districts at a total cost of Rs.2 crore under CSR.
Swachh Vidyalaya Campaign
The Bank has identifi ed 200 schools in the districts of Dindigul and Madurai, Tamil Nadu for construction of toilets under the Swachh Vidyalaya campaign launched by Government of India.
De–fluoridation – Reverse Osmosis drinking water plants in villages
The Bank has undertaken an ambitious project of providing De–fluoridation – RO plants for pure drinking water facility in fl uoride affected 217 villages of Kolar and Chikkaballapur districts, Karnataka. Installation work has been completed in 156 villages and made operational.
Support to extend Mid Day Meals to students
The Bank has provided vehicles to M/s Marikamba Devasthanam, Sirsi, Karnataka and Akshaya Patra Foundation, Guwahati, Assam for supplying mid–day meals to students.
Assisting the people in distress
During the year, Chennai faced unprecedented heavy rains and fl ash floods. The people were in dire need of food, drinking water, clothing, medicine and other essential requirements. The Bank rose to the occasion and assisted them with food packets, blankets, medicines and other basic materials.
Support to persons with disability to lead a better life
A number of programmes in association with likeminded agencies have been taken up by the Bank to support persons with disability, such as, assistance to M/s Sri Vaishnavi Special Educational Academy, Ramanagara, Karnataka for play ground equipments for mentally challenged children, M/s Seth Anand Lal Poddar Institutes of Deaf & Blind Boys Hostel and Deaf Aid Society, Bengaluru for repairs and renovation of toilets and hostel building, Vehicles to M/s Karnataka Welfare Association for the Blind, M/s Snehadeepa Trust for blind, Bengaluru and distributed Motorized Tricycles & Wheel Chairs through Department of Social Security & Empowerment, Government of Odisha.
Initiatives for environment protection
Bank has participated in environment protection and energization projects, like, providing solar street lights in Bhupsingh village in Philibhit district, Uttara Pradesh, distribution of solar lanterns to 28 tribal families at Moongilpaliam village, Kodaikanal Taluk, Tamil Nadu and 2000 tribal families in Uttara Kannada district, Karnataka. Besides, the Bank has also extended financial assistance to South Andaman Zilla Parishath, Port Blair for construction of foot path, toilets; M/s Mulki Sunder Ram Shetty Trust for construction of Community centre in Mulki village, Dakshina Kannada district, Karnataka and installed RO drinking water plant at Lepakshi Veerabhadra swamy Temple, Lepakshi, Andhra Pradesh for the benefit of the public.
Visits by Parliamentary Committees
During the year, Parliamentary Committees relating to Commerce, Human Resources Development, Urban Development, Industry, Official Language, Transport, Tourism & Culture and prevention of Corruption (Amendment) Bill, 2013 visited the Bank.
ORGANISATION AND SUPPORT SERVICES
Expanding Pan India Presence
The Bank has further expanded its branch network in 2015–16 by adding 175 domestic branches and one foreign branch in Dubai International Financial Centre, Dubai. As at March 2016, the Bank had 5849 branches, including 8 overseas branches
Progress in Alternate Delivery Channels
During 2015–16, the Bank added 718 ATMs, taking the total number of ATMs to 9251. The Bank’s debit card base rose to 3.19 crore compared to 2.54 crore as at March 2015.
The Bank opened 170 hi–tech E–lounges in select branches with facilities like ATM, Cash Deposit Kiosk with voice guided system, Cheque Deposit Kiosk, Self Printing Passbook Kiosk, Internet Banking Terminal, Online Trading Terminal and Corporate Website Access. Interactive Video Conference System is confi gurated at select e–Lounges. Pass–Book Self–Printing Kiosks has been enabled in 1398 branches.
As a result of various alternate delivery measures adopted by the Bank, e–transaction ratio increased to 54.21% as at March 2016 compared to 50.21% last year.
Customer–friendly InfoTech Initiatives
During the year, the Bank introduced and improved upon several tech–products / services for the convenience of the customers.
• Improved Mobile Applications, such as, CanMobile, Canara e–InfoBook and Canara m–Wallet to provide more convenience and facilities to customers. Customers can now download, register and activate CanMobile without visiting a Branch or ATM.
• Upgraded Internet Banking by providing a number of new features, better navigation and refreshed look.
• Implemented Social Security Schemes of Govt. of India. Facility to subscribe these schemes provided to the customers through multiple channels. viz., Branches, ATMs and Internet Banking.
• Implemented Digital Life Certificate (Jeevan Praman) for Pensioners. Pensioners need not to be physically required to be present in the Branch for this purpose.
• Implemented Proactive Risk Manager system for ATM and POS channels with more robust security for transactions through these channels.
• Enabled the facility of closure of Term Deposit through Internet Banking. Customers can now open and close term deposits without visiting Branches.
• Provided e–KYC facility at its Branches. The Customers with Aadhaar number need not bring any KYC document and can get their KYC formalities done by just swiping their Finger on Biometric Device in a Branch. The Customer details are verified from UIDAI.
• Provided facility of Foreign Inward Remittance through IMPS.
• Released Online Instant Loan portal for Housing and Car Loan where applicants will get instant in principle sanction letter based on the information provided.
Bank is in the process of implementing a number of digital initiatives for customer convenience and better service.
Compliance to International Standards
The Bank has fully implemented the recommendations of the RBI Working Group (Chairman, Shri G Gopalakrishna) on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds. The Bank obtained the ISO 27001: 2013 Certification on 12.04.2014.
The Bank’s staff comprised 45% Officers, 37% Clerks and 18% Sub–Staff. Women employees comprising 15729 constituted 29% of the Bank’s total staff. The total number of ex–servicemen staff as at March 2016 stood at 3499. There were 1175 Physically Challenged Employees on the rolls of the Bank.
During the year, the Bank recruited 3747 persons in various cadres, out of which, 634 belonged to Scheduled Castes (SCs) and 309 to Scheduled Tribes (STs) categories. 344 ex–servicemen were recruited in various cadres during the year.
1178 women employees were recruited and 622 women employees were promoted under various cadres during the year.
Reservation Policy in respect of Scheduled Castes and Scheduled Tribes
As at March 2016, the number of Scheduled Castes and Scheduled Tribes together constituted 26.99% of total staff strength of the Bank. The composition of SCs/STs employees in the Bank as at March 2016 was as unde
The Bank has been strictly adhering to the Reservation Policy in respect of Scheduled Castes and Scheduled Tribes as per the Govt. of India guidelines.
(a) Reservation Policy is implemented through mechanism of Post Based Rosters. In terms of the directives of the Ministry of Finance, Government of India, Bank has switched over to Post Based Rosters for all cadres.
(b) The Bank has been extending Reservation/ Relaxations/Concessions in Direct Recruitment as well as in promotions to candidates belonging to Scheduled Castes and Scheduled Tribes as per the Govt. of India guidelines.
(c) Pre–recruitment and pre–promotion training is given to candidates belonging to Scheduled Castes and Scheduled Tribes. In the Advertisement inviting application from the eligible candidates for recruitment to Clerical cadre, a specific reference is made with regard to imparting of pre–recruitment training to candidates belonging to SC / ST / PWD/ Minority Communities / Ex–SM. Pre–recruitment training for Officer Cadre is provided to candidates belonging to SC / ST & Minority Communities. Such of those candidates, who opt for pre–recruitment training, will be given training to prepare themselves for written test as well as interview. The duration of the training is for a week. Study materials, note books, stationeries are provided free of cost to all the participants.
(d) The Bank has setup SC/ST Cell at the Head Office and also at Circle Offices to ensure maintenance of Rosters and proper implementation of other aspects of Reservation Policy.
(e) Chief Liaison Officer has been nominated at Head Office and Liaison Officers have been nominated at Circle Offices for ensuring implementation of
Further, representations received from Scheduled Caste / Scheduled Tribe employees, either directly or through the SC/ST Associations, are looked into by the Liaison Officers/Chief Liaison Officer. Wherever required, necessary enquiries are conducted and appropriate action is taken. A separate register is maintained for recording various representations received from Scheduled Caste/Scheduled Tribe employees and the action taken is also recorded in the register.
In addition to the above, the representatives of majority Scheduled Caste / Scheduled Tribe Employees’ Association are invited for Quarterly Meeting with the Chief Executive of the Bank to discuss on the implementation of guidelines on reservation policy. Quarterly Meetings are also held at Circle Offices, where Rosters are maintained and grievances, if any, are redressed by the Liaison Officer.
(f) The Board of Directors of the Bank also review the progress made in the implementation of Reservation Policy, half yearly and yearly.
Human Resource Development (HRD) Activities
The HR policies of the Bank have been revisited to suit the changing banking scenario. HR initiatives, like, ‘Soft skill training programme’ for bringing attitudinal change among frontline staff and Executives grooming through reputed institutes and other significant HR tools, like, Study Circles, Staff Meetings and Brain Storming Sessions have been implemented for effective team building and fostering collective excellence. Various Corporate Communications were brought out to boost the morale of the employees and educate them in various facets of banking.
The Bank has in place an exhaustive training process that cover Internal Training, External Training, In Company Training and Foreign Training. Internally, the Bank has Staff Training College at Bengaluru and 23 Regional Staff Training Colleges across the country.
The Bank trained 77455 employees during the year, covering a wide range of functional areas, including Credit Orientation, Marketing Skills, Induction Programme for Officers, AEOs and Specialist Officers. Out of the trained staff, 15352 personnel belonged to the Scheduled Caste category and 5220 belonged to the Scheduled Tribe category. The total employees trained include 24943 women employees. The Bank designed and implemented several new training programmes, including Fraud Awareness and Prevention, Compliance and beyond Core banking.
Under a novel programme, viz., Talent Bank, the Bank is providing opportunities for generalist offi cers to assume the role of specialists in 10 identified streams. Establishing a proper Talent Management and Reward System will be the Bank’s focus in the coming years. There will be concerted efforts to identify potential leaders and groom them to take up higher responsibilities.
Further, the Bank’s quest to enhance the competencies of the workforce continued through focused and need based trainings at various institutes of repute, like, IIMs, JNIBF, ISB, XLRI and NIBM, etc. Customized programmes are also organized to develop expertise in certain niche areas, like, Credit, Risk Management, Treasury Operations and IT.
Specialized trainings to the Senior Management Level/ Top Management Level Executives were conducted based on the requirement. The Bank has been able to add substantially to the skill level of its officials through training intervention and motivating them to perform with renewed vigour and enthusiasm.
A Sub–Committee of the Board of Directors on HR is in place to review and improvise the existing HR policies and make suggestions to accelerate the employee engagement initiatives.
Changes brought about in the organizational set up
Further keeping in view the increased business complexities and the need for imparting more focus on certain key functional areas, the reorganization/ realigning functions of Wings at Head Office and Circles was undertaken. Post re–organization, there were 22 Wings at Head Office, apart from Compliance Department and Corporate Communications Department.
In the previous year, the Bank had launched Project ‘Shikhar’ aimed at rejuvenating the Bank by focusing on several themes, like, energizing branches and customer service, increasing sales from branches, growing a robust asset base and revamping the operating model. Global Management Consulting firm viz., M/s Boston Consulting Group (India) Private Limited (BCG) assisted the Bank in this transformation.
In the journey of transformation of branches, 700 branches of the Bank were transformed as ‘Shikhar Branches’, with 75 branches under star 5 category and 38 under star 4 category as at March 2016.
Marketing and Publicity
The Marketing Vertical played a significant role in improving the CASA share, Fee Income from Associate Party Business, wallet maximization and propagating the multifarious technological products and services for the benefit of the customers.
The Bank further strengthened marketing vertical during the year by inducting specialized personnel into the setup, with the support of marketing sections in all Circle Offices overseen by dedicated Marketing Executives and lead management system. Marketing set up has taken initiatives in cross selling and up selling of Bank’s products by launching several campaigns during the year.
The Bank also launched publicity campaigns for its several new products and services introduced during the year and used effectively all channels of communication, including advertising, social media and marketing collaterals to enhance its brand image.
Several initiatives were taken to remain customer focussed through providing fast service, bringing in diversified products/services, responding to customers’ queries and redressal of customer complaints. The ‘Code of Commitment to Customers’ issued by Banking Codes and Standards Board of India (BCSBI) and ‘Revised Citizen’s Charter’ of IBA is available in Bank’s website. As per the instructions of IBA and RBI, the Bank has adopted the newly formulated ‘Customer Rights Policy of RBI’ since July 2015, which spells out the Rights of the Customers and also responsibilities of the Banker. To assess the quality of customer service rendered by the branches and to get the feedback, “Customer Satisfaction Survey Form” is available in the Bank’s website <www.canarabank.com>. Further, during the year, the Bank has undertaken the customer satisfaction survey through an External Agency to assess the level of customer service and customer satisfaction across the Country. Customers’ fortnight was conducted from 16.11.2015 to 30.11.2015 to invite suggestions.
In order to enhance customer focus, ‘Project Shikhar’ for branch transformation was implemented during the year, with various customer centric initiatives introduced, like, Welcome Desk, Queue Management System, Single Window Operation and allocation of larger space for ‘Customer Waiting Area’ along with self–service kiosks were put in place.
As per Damodaran Committee Recommendations, the Bank has appointed the Chief Customer Service Officer (CCSO), who acts as an Internal Ombudsman of the Bank. Call centre with single point contact toll free number <18004250018> is functioning to cater to customers in 6 regional languages, such as, Bengali, Kannada, Malayalam, Marathi, Tamil and Telugu, besides Hindi and English for redressal of grievances. The number of calls received by the Call Centre during the year was 23.10 lakhs and percentage of complaint redressal is 100%.
The Bank has implemented online grievance redressal facility of customers in the website for lodging grievances online under the portal “Canara Public Grievance Redressal System” (CPGRS). The complaints received at Call Centre were also integrated with CPGRS package.
During the year, Call Centre registered 4432 grievances in CPGRS and all grievances were redressed as per prescribed time norms. Centralized Pension Processing Cell has been functioning exclusively for handling pensions and resolving pension related grievances. 41 Central Processing Centres were established at selected places for account opening purposes
During the year, ‘Town Hall Customers Meets’ were conducted at Bhopal, Madhya Pradesh and Sakleshpur, Belur and Chickballapur in Karnataka in association with the Banking Ombudsman, RBI and Banking Codes and Standards Board of India (BCSBI).
Systems and Procedures
Risk based Internal Audit (RBIA) was conducted in 4162 branches / units programmed for onsite RBIA during the year. Information Security audit was conducted along with RBIA. Concurrent/continuous audit was conducted in 825 branches/service units, of which 275 branches / units were subjected to concurrent/continuous audit by internal auditors and 650 branches / service units were subjected to concurrent audit by external auditors, covering 70% of the total business of the Bank. 2321 branches were subjected to income/revenue audit, which included branches identified for income audit on quarterly basis.
The web based package for RBIA was further strengthened with enhanced new version. Plan for computerization of Concurrent Audit of branches and Offices is on the offing. The Bank ensured full implementation of the recommendations of the Committee on Internal and Concurrent Audit Systems in Public Sector Banks under the Chairmanship of Shri Basant Seth.
The Bank introduced a unique audit system called “Stress Audit”, covering Large Borrowal Accounts under Standard Asset Category to identify early warning signals and to take remedial measures. The Stress Audit is first of its kind in Indian banking industry. The Bank also conducted Audit on specific themes, like, functioning of Retail Asset Hubs pan India to evaluate their efficacy towards better customer service. Offsite monitoring has been further strengthened to have an oversight over the transactions on a near real time basis.
Risk Based Supervision (RBS)
The Bank has been brought under Risk Based Supervision (RBS) regime by the RBI, in lieu of Annual Financial Inspection (AFI) from the Financial Year 2014–15. Pesently, it has completed the 2nd cycle of RBS. RBS framework is named as Supervisory Program for Assessment of Risk and Capital (SPARC). Under SPARC, a detailed qualitative and quantitative assessment of the Bank’s risks is made by the RBI on an on–going basis through a combination of Offsite and onsite Risk Discovery process (RDY).
Know Your Customers (KYC)
The Bank took various measures for the effective implementation of guidelines on Know Your Customer (KYC), Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT). Some of the major achievements and initiatives taken were as under:
• System checks/enhancements are put in place to ensure compliance to guidelines on KYC/AML/CFT.
• Branch staff were sensitized by way of issuance of guidelines and periodical training.
• Nodal Executives for KYC/AML/CFT at the Bank’s Circle Offices were sensitized on guidelines by arranging workshops.
• Around 3 crores alerts were processed during the year.
• A robust Offsite Transaction Monitoring System (the third eye supervision) introduced, which monitors the transactions off–site on a near real time basis through desktop audit by leveraging Core Banking Solution (CBS).
The Vigilance Wing of the Bank is headed by Chief Vigilance officer (CVO) in the rank of General Manager. The CVO is assisted by Executives and other Officials in the Wing at HO and Vigilance Officers stationed at Head Office, all Circle Offices, RRBs sponsored by Bank and Subsidiaries of the Bank. The CVO acts as an advisor to the Chief Executive in all matters pertaining to vigilance. He also provides a link between the Bank and the Central Vigilance Commission on one hand and the Bank and the Central Bureau of Investigation on the other.
Vigilance functions in the Bank can broadly be divided into three parts, viz. (i) Preventive vigilance; (ii) Punitive vigilance; and (iii) Surveillance and detection. These functions are interlinked with the objective of the Bank to achieve sustainable and equitable growth. Vigilance functions are primarily aimed at achieving the objective of nurturing and promoting corruption–free, fair and healthy work environment in the Bank. These goals are pursued and promoted through various initiatives taken by the Vigilance Wing throughout the year.
A special campaign of disseminating awareness on vigilance matters was undertaken during “Vigilance Awareness Week” celebrated by Bank from 26th October 2015 to 31st October 2015. Various functions at school/ colleges were organised by Circles and Branches at identified centres during the week to promote vigilance awareness at grass–root level and highlight the vigilance theme of the year “Preventive Vigilance as a Tool of Good Governance”. Other Branches and Circles of the Bank organised various functions during the week long campaign.
In concluding function at HO a talk was organised on 31st October 2015. Sri T M Bhasin, Vigilance Commissioner, CVC, addressed the gathering at Head Office.
The Bank was conferred with “Vigilance Excellence Award” for consecutively 3rd year, instituted by M/s Institute of Public Enterprise, Hyderabad, in commemoration of celebrating the Golden Jubilee year of the Institute with a view to promote excellence in the field of Vigilance in all the Central and State Level Public Sector Enterprises, nationalised Banks and other Financial Institutions.
Out of 5841 branches, and 99 currency chests in 47 Circles, the Bank identified 54 Branches as High Risk, 1583 Branches as Medium Risk and 4204 as Low Risk. These Branches were periodically visited by Security Officers as per statutory guidelines. All the sensitive currency chests were visited by the Chief Security Officer/Circle Security Officers during the year.
The following measures were initiated based on the instruction from RBI and State Police Authorities.
a) All branches are provided with CCTVs. 7858 ATMs are provided with standalone CCTV in addition to the inbuilt CCTV in the equipment.
b) 1729 ATMs are guarded with private Security Guards based on the threat perception and local police directions.
Under ‘Project Shikhar’, layout and ambience of 700 branches (Shikhar Branches) transformed for single window service, implemented through Queue Management System.
Right to Information
Under the Right to Information Act, 2005, an exclusive Right to Information Act outfit is functioning to provide information and bring transparency. As per the requirement of the RTI Act, the Bank has nominated Public Information Officers and Appellate Authorities at Head Office and in all its 47 Circle Offices to provide information to the applicants. During the year, the Bank received 2938 RTI applications, 527 First Appeals and 113 Second Appeals as per the provisions of RTI Act, 2005.
Implementation of Official Language
The Bank made noteworthy progress under the implementation of official language and won many prizes at various levels during the year under review. As at March 2016 around 98% of employees have obtained working knowledge in Hindi and the Bank has notified 3300 Branches under Rule 10(4) of OL Rules 1976. All the employees of the Bank possessing working knowledge of Hindi have been trained in functional Hindi through Hindi workshops. During the year under review, Bank has conducted 384 refresher training programmes for such employees.
In the sphere of using Information Technology in the Official Language, the Bank has furthered the use of Unicode package for word processing and also made provision in ATM screens of the Bank for carrying transaction in 10 Indian languages. Apart from Hindi and English, transaction slips can be obtained in Malayalam, Tamil, Telugu, Kannada, Punjabi and Marathi from ATMs (Transactions done in concerned language). Tele–banking facility has also been provided in Hindi and English and other 6 major regional languages. The Bank’s corporate website is in bilingual. The Bank is also giving SMSs in Hindi to all its customers on special occasions.
With effect from 1st July 2011, Bank has provided Hindi option in Core Banking System. The Bank’s bilingual address booklet CANPATHA is made available to all branches and offices in electronic form. Hindi option provided in Mobile Banking platform, e–Infobook and Internet Banking portal.
To encourage effective implementation of Official Language in the Bank, 238 prizes were given to Branches, Circles, Staff Training Colleges and Sections of Head Offi ce under the award Scheme formulated by the Bank viz., Canara Bank Rajbhasha Akshay Yojana and 148 employees were awarded under Rajbhasha Puraskar Yojana. Bank has also conducted Annual “All India Hindi Essay Competition” for its employees and cash prizes were given to prize winners.
Half Yearly Hindi journal “Canarajyoti” – 15th & 16th issues were brought out during the year. The 15th issue was released by MD&CEO, Shri Rakesh Sharma during Hindi Day Celebration 2015 at Head Office, Bengaluru and 16th issue was released by Dr. V. K. Malhotra, Director (Rtd), Dept. Of OL, Ministry of Railways, GOI. Canarajyoti is brought out to encourage original writing in Hindi. This publication contains articles on banking related subjects as well as Poetry, Short Stories, Travelogues written in Hindi by employees of the Bank.
The 33rd All India Conference of OL Officers of the Bank was held at Regional Staff Training College, Gurgaon on 10th and 11th March 2016.
During the year, the Third Sub Committee of Parliamentary Committee on Official Languages had inspected the Bank’s Kullu Branch (Shimla Circle Office), Khajuraho Branch (Bhopal Circle Office) and Ajmer Main Branch (Jaipur Circle Office). Besides this, the Drafting and Evidence Sub–Committee of the Parliamentary Committee on Official Language had inspected our Delhi Circle Office and Head Office, Bengaluru. The Committee lauded the efforts put in by the Bank in the field of Official Language implementation. The Bank is convening the
Town Official Language Implementation Committees of Bengaluru, Agra, Coimbatore and Thiruvananthapuram. Official Language Implementation Committees are constituted in all the branches of the Bank as per the Government guidelines to propagate the progressive use of Hindi.
The Bank received the following important awards / accolades in recognition of the implementation of the official language.
• IInd prize under Rajbhasha Kirti Puraskar Yojana for effective implementation of Offi cial Language in Region “C” for the year 2014–15. The award received by our Executive Director Sri P S Rawat from Honble President of India on 14.09.2015 at Vigyan Bhavan, New Delhi.
• Encouragement Prize under Region “C” by RBI under RBI Rajbhasha Shield Yojana.
• Sri G Ashok Kumar, Sr. Manager, Bengaluru, Circle Offi ce, received 3rd Prize under “Rajbhasha Gaurav Puraskar Yojana” for the year 2014–15 from Hon’ble President of India on 14.09.2015 at Vigyan Bhavan, New Delhi’.
Promotion of Sports
The Bank has always encouraged and supported sports and contributed generously to the sporting activities all over the country by sponsoring tournaments and providing scholarship to talented sports personalities. A Sports Council at Head Office was set up in the year 1982 to monitor and encourage sports in the Bank
International Sportspersons in the Bank fold are Shri B K Venkatesh Prasad and Shri Sunil B Joshi (Cricket), Smt. M K Asha, Smt. Suma Gopalakrishna (Athletics), and Smt. H M Jyothi (Presently International Athlete), Shri P Shanmugam, Shri Bharath Kumar Chetri (Captain Indian Hockey Team, London Olympics–2012) and Shri K M Somanna (Senior–Hockey), Shri K P Dinesh (Junior–Hockey), Shri D Guruprasad, Shri Vineet Manuel (Shuttle Badminton) and Shri Nitin V Thiruvengadam (International Table Tennis Player). Some of the above sportspersons have earned laurels while representing the Bank in tournaments/competitions at the State/ National level.
During the year, Smt. H M Jyothi secured Gold Medal in the 100 Meters Individual event in the National Senior Athletic Championship held at Chennai. She also secured Bronze Medal in the 100 Meters Individual event in the National Senior Athletic Championship held at Kolkata. She is the only Athletic from all the Public Sector Banks, who is one among the fastest three sprinters in the country at the moment. The Bank’s Cricket Team was Runner–up in the State Level T–20 Cricket tournament held at Mysuru. Shri D Siva Kumar Represented Andhra Pradesh State Cricket Team in the Ranji Trophy. During the year, Shri D Guruprasad secured Bronze Medal in the National Ranking Senior Shuttle Badminton tournaments held at Kakinada, Andhra Pradesh and Kolkata. Shri Vineeth Manuel secured Bronze Medal in the Bahrain International Series/Challenge held at Bahrain and reached up to Pre–Quarter Finals in the Syed Modi International Shuttle Badminton Grand Prix held at Lucknow. He also secured his maiden entry into
All England Badminton Championship at Birmingham, United Kingdom during 2015–16. Shri Hemanth M Gowda was winner of Senior South Zone Shuttle Badminton Championship held at Puducherry. Shri Nitin V Thiruvengadam was shortlisted by the Table Tennis Federation of India for advanced training programme at Germany & Netherlands. The Bank’s Hockey Team won 7th All India Lakshmi Ammal Hockey Tournament held at Kovilpatti, Tamil Nadu. The Bank’s Table Tennis Team was ranked 1st in Karnataka during 2015–16.
Apart from the teams at the Head Office, the Bank is also encouraging sports at the Circle level by allotting annual budget for sports activities and sports competition for employees, monitored by the Circle Sports Council. More than 50 % of the Banks sports persons are representing the State in their respective sports discipline.
Canara Bank, with an objective of offering ‘One Stop Banking’ facilities for the customers, forayed into diversified business activities by opening subsidiaries during late 1980s. Today, the Bank functions as a ‘Financial Supermarket’, with as many as nine subsidiaries/ sponsored entities/ joint ventures in diversified fields.
All the subsidiaries / sponsored entities/joint ventures of the Bank recorded satisfactory performance during the year 2015–16.
CANFIN HOMES LIMITED (CFHL)
Canfin Homes Limited, a sponsored entity of Canara Bank, is one of the premier housing finance entities in the country. The Bank’s stake in the Company is at 43.45%. For FY 2015–16, the Company has sanctioned loans amounting to Rs.4418 crore and disbursed loans amounting to Rs.3922 crore. The loan outstanding was at Rs.10643 crore as on 31.3.2016. The Company earned a profi t after tax of Rs.157.11 crore against Rs.86.24 crore in the previous year, with a growth of 82%. The Company has declared 100% dividend for the year 2015–16.
CANARA BANK SECURITIES LIMITED (CBSL)
Canara Bank Securities Limited is a wholly owned subsidiary of the Bank. The Company offers stock broking services to both institutional and retail clients. Online Trading Counter for retail customers is its flagship product and has diversified into Currency Derivatives, with a clientele base of 39352. The Company has posted a profit after tax of Rs. 5.97 crore for the year 2015–16. The Company has declared a dividend of 12% during the year.
CANARA ROBECO ASSET MANAGEMENT CO LIMITED (CRAMC)
In the year 2007, Canara Bank divested 49% of its stake in Canbank Mutual Fund in favour of M/s Robeco Groep N V and formed a Joint Venture (JV) for managing the assets under Canara Robeco Asset Management Company Limited. The Bank’s share in the JV is at 51%. Total Assets under management was at Rs.7526 crore, with investor base of 6.12 lakhs. The Company is currently managing 29 Mutual Fund Schemes, including Gold ETF. The Company posted a net profit of Rs.15.20 crore for the year 2015–16 and has declared a dividend of 10%.
CANBANK FACTORS LIMITED (CFL)
Canbank Factors Limited is a factoring subsidiary of the Bank, with a 70% stakeholding. During 2015–16, the Company has achieved a total business turnover of Rs.3119 crore. The Company has earned profit after tax of Rs.2.24 crore for the year 2015–16. The Company continues to enjoy the highest rating of “A1+” by CRISIL for its Short Term Debt Programme.
CANARA HSBC ORIENTAL BANK OF COMMERCE LIFE INSURANCE COMPANY LIMITED
A life insurance Joint Venture (JV) was floated by the Bank in association with HSBC Insurance (Asia Pacific) Holding Limited and Oriental Bank Commerce in the year 2007. The JV commenced its business operations from 16.06.2008. Canara Bank holds majority shareholding of 51%, followed by 26% by the HSBC and 23% by the Oriental Bank of Commerce. During the year, the Company recorded new business premium of Rs.859 crore and gross premium of Rs.2045 crore. The Company achieved a statutory profit of Rs.126 crore for the year 2015–16.
CANBANK VENTURE CAPITAL FUND LIMITED (CVCFL)
Canbank Venture Capital Fund Limited is the Trustee and Manager of Canbank Venture Capital Fund and a wholly owned subsidiary of the Bank. The Company has managed 5 funds so far, with total assets under management of Rs.553 crore. The latest fund is the Emerging India Growth Fund, with corpus of Rs.436 crore. CVCFL has been appointed by the Department of Electronics and Information Technology, Govt. of India, to manage the Electronic Development Fund, with a corpus of Rs.2200 crore. The Company recorded a profit after tax of Rs.4.88 crore for the year 2015–16 and has paid a dividend of 1000%.
CANBANK COMPUTER SERVICES LIMITED (CCSL)
Canbank Computer Services Limited is the only Software Company promoted by a Public Sector Bank in the country, with a majority 69.13% held by the Bank. The Company is primarily engaged in IT and Software development services, BPO services, Any Time Payment (ATP)/ATM services training / consultancy and Registrar & Share Transfer agency. The Company has achieved the profit after tax of Rs.6.57 crore for the year 2015–16 and declared a dividend of 50%.
CANBANK FINANCIAL SERVICES LIMITED (CANFINA)
Canbank Financial Services Limited is confining its activities to legal matter arising out of past transactions in securities, besides concentrating on collection of lease rentals and recovery of dues under decreed accounts.
COMMERCIAL INDO BANK LLC (CIBL)
CIBL, a joint venture of Canara Bank and State Bank of India, has been operational since April, 2004 in Moscow, Russia. The Company earned a profit after tax of US$3.94 million for the year ended 31st March, 2016.
Regional Rural Banks (RRBs)
As at March 2016, the Bank had two sponsored RRBs, viz., Kerala Gramin Bank (KGB), covering entire 14 districts of Kerala with 595 branches and Pragathi Krishna Gramin Bank (PKGB), covering 11 districts of eastern Karnataka with 647 branches. Both the RRBs together have a branch network of 1242 and 515 ATMs, of which 32 branches and 103 ATMs were opened during the year.
The aggregate business of the RRBs as at March 2016 stood at Rs.48008 crore, comprising Rs.24957 crore under deposits and Rs.23051 crore under advances. Kerala Gramin Bank, with a total business of Rs.24607 crore, ranked 1st amongst RRBs, followed by the Pragathi Krishna Gramin Bank with Rs.23401 crore business. Both the RRBs achieved the mandated target of 75% of total advances under priority sector lending. Gross NPA and Net NPA levels were below the tolerable level of 5% of their advances.
Both these RRBs were profit making and posted a gross profit of Rs.398 crore and net profit of Rs.188 crore during the year. Their capital adequacy ratios were above the mandatory norm of 9%.
The sponsored RRBs are 100% CBS compliant and ahead of their peers under technology front, with extension of IT based products, like, Mobile Banking, RuPay Debit Card services, Cheque truncation system, eKYC technology, Aadhaar enabled services and remittance facilities through NEFT/RTGS to their customers.
Kerala Gramin Bank was awarded as the ‘Best IT Enabled Regional Rural Bank’ for the year 2014–15 under Banking Technology Excellence Awards of IDRBT. Pragathi Krishna Gramin Bank has received ‘Best Social Bank–2015’ and ‘Best Agricultural Bank–2015’ awards from ASSOCHAM. PKGB has also bagged ‘Best Technology Bank for 2015’ Runners–up from the Indian Banks Association (IBA). Implementation of Financial Inclusion, Pradhan Mantri Jan Dhan Yojana (PMJDY) & Social Security Schemes (SSS) in the Sponsored RRBs
The Bank’s sponsored RRBs are extending basic banking services to villages through 1041 Business Correspondents (BCs). 22 Financial Literacy Counselling Centers (FLCs) were established by the RRBs and financial literacy camps were also conducted during the year.
Under PMJDY both the RRBs together have opened 9.30 lakh accounts and issued RuPay Cards to all the account holders. The Bank’s sponsored RRBs were the first amongst RRBs to implement e–KYC technology and Aadhaar enabled Payment System (AEPS). Together, these RRBs had done 10.50 lakh enrollments under the Social Security Schemes.
AWARDS / ACCOLADES
In recognition of the varied initiatives, the Bank was conferred with the following major awards during the year:
• Golden Peacock Business Excellence Award (GPBEA), 2015, by the Institute of Directors, New Delhi.
• Special Award for the Best Financial Institution – Gold, 2015, by the Federation of Karnataka Chamber of Commerce & Industry (FKCCI), Bengaluru.
• Order of Merit for SME Enablement, 2014–15, by SKOCH Group.
• ‘SKOCH Achiever Award’ as a top Bank in ‘SME Enablement’ by SKOTCH Group.
• ‘Best Use of Digital and Channels Technology’ award amongst large banks in IBA Banking Technology Awards, 2014–15.
• Best MSME Bank award by Chamber of Indian Micro, Small & medium Enterprises (CI MSME).
• “Agricultural and Best Social Bank” award (under large bank category) by ASSOCHAM, for its outstanding performance under Agricultural Banking and Social Banking.
• Global Visa Service Quality Performance Award, 2014, for consistent and superior operating performance.
• Dun & Bradsteet Banking Awards, 2015, for Best Bank under Priority Sector Lending and Best Retail Growth performer amongst the PSBs.
• National Awards for Excellence in CSR & Sustainability, 2015, constituted by World CSR Congress under Best Overall Excellence in CSR category.
• Agricultural and Best Social Banking Excellence Award, 2015, by ASSOCHAM.
• Best Bank Award for implementation of RSETIs, 2013– 14, by the Ministry of Rural Development, Govt. of India.
• 5th Annual Greentech CSR Gold Award, 2015. • CSR World Congress Award for overall excellence in CSR.
• Golden Peacock Award for ‘Corporate Social Responsibility, 2015’ in recognition of its pioneering work done through CSR initiatives.
• Best Banker Award instituted by Elets Technomedia under “Financial Inclusion” for special focus on Micro inance & Financial Literacy.
• Pandit Madan Mohan Malaviya Gold Award for the project Canara Sahara, a CSR activity in education and rehabilitation of physically challenged.
• Awarded 36th Rank in Brandz India’s 50 Most Valuable Indian Brands, 2015, compiled by the research agency Millward Brown and commissioned by WPP Plc, a worldwide communications service group.
• India’s Most Trusted Brand–2015 under India’s Best Banks Category, in a survey conducted by IBC Infomedia & Media Research Group (MRG).
• SKOCH Smart Technology Award, 2015.
• Inspiring Workplace Award, 2015, (PSBs), instituted by Banking Frontiers in partnership with M/s. Deloitte.
• Chanakya Award for Excellence in Business Leadership, 2016, by the Public Relations Council of India (PRCI).
• ‘Vigilance Excellence Award, 2015–16’, 3rd Best in Banking Sector, instituted by M/s Institute of Public Enterprise.
• 2nd Prize in Region ‘C’ under Rajbhasha Kirti Pursakar, 2014–15.
• Reserve Bank Rajbhasha Shield for effective implementation of Official Language in Region ‘C’ for the year 2013–14.
• House Journal “Shreyas”, won Gold in Photography and Silver in Special Column (English) and Features (English), instituted by the ABC.
• Annual Report won 2nd Runner–up under the category of Public Sector Banking Institutions for Best Presented Annual Report Awards, 2014.
• ICC Corporate Governance & Sustainibility Vision Awards, 2016, under Public Sector Banking Institutions, instituted by M/s Indian Chamber of Commerce.
VARIOUS POLICIES OF THE BANK
There is a system of well–defined policies and procedures of the Bank. During the year, concerted efforts were made to streamline the policies and procedures of the Bank in the light of regulatory requirements of the RBI, the directions of the Government of India and the emergent requirements of the Bank in the present day context. Accordingly, there has been a sharper focus on policies relating to, among others, Credit Risk Management, Market Risk Management, Operational Risk Management, Asset Liability Management, Liquidity Risk Management, Group Risk Management, Country Risk, Counterparty Bank Risk, Corporate Governance, Disclosures, Collateral Management, Stress Testing, Compliance Functions, Disaster Recovery and Business Continuity Planning, Business Lines, Outsourcing and ICAAP, KYC, AML, Recovery and Investments
Brief Profile of the newly appointed Directors on the Board of the Bank during 2015–16
Shri T N Manoharan
Shri T N Manoharan has been appointed as the Non– Executive Chairman of the Canara Bank with effect from 14th August 2015.
Shri T N Manoharan, is a Post Graduate in Commerce, a Law graduate and a fellow Chartered Accountant by profession of 32 years standing. He was the President of the Institute of Chartered Accountants of India (ICAI) during 2006–07. He is the founder partner of M/s Manohar Chowdhry & Associates and was associated with Central Statutory Audit of Corporation Bank and for about two decades with Branch Audits of various PSBs, such as, Indian Overseas Bank, Punjab National Bank and Indian Bank.
He was the Chairman of the Committee on Education and Centre for Excellence of South Asian Federation of Accountants in 2004. He was a member of the International Accounting Education Standards Board of IFAC during 2006–07 and Chairman of the National Committee on Accounting Standards constituted by the Confederation of Indian Industry (CII) during 2009–11. Shri Manoharan was nominated by the Government of India as a Special Director for revival of Satyam Company from 2009 to 2012. He was on the Board of the Insurance Regulatory and Development Authority (IRDA) in 2006. Shri Manoharan was a Member of the Advisory Board on Banks, Commercial & Financial Frauds (ABBCFF) constituted by the CVC during 2012–14. He was a Member of the Appellate Authority, constituted by the Government with reference to the disciplinary mechanism for CAs during 2011–14. He has authored books for professionals and students on Indian Tax law. He was a visiting faculty of renowned Institutions. Shri Manoharan is a recipient of many awards. He received the “Business Leadership Award” under the aegis of NDTV Profi t in October, 2009 and in the Business category, the CNN IBN “Indian of the year 2009” as part of the Satyam Revival Team. Shri T N Manoharan was conferred the civilian honour “PADMA SHRI” award by the President of India on 7th April, 2010.
Shri Rakesh Sharma
Shri Rakesh Sharma has been appointed as Managing Director & Chief Executive Officer of the Bank, with effect from the date of his assumption of charge of the post and up to 31.07.2018, i.e., the date of his attaining the age of superannuation or until further orders, whichever is earlier, vide GOI Notification dated 14.08.2015. He has taken over charge on 11.09.2015.
Shri Rakesh Sharma, a Post Graduate in Economics and Certified Associate of the Indian Institute of Bankers, carries with him varied knowledge and multi–dimensional banking experience of over three decades, covering retail and wholesale banking, asset liability management, loan syndication, trade finance, international banking and personnel development.
Shri Rakesh Sharma started his banking career in State Bank of India (SBI). In SBI, he handled most of the important portfolios. He was the Head of the Midcorporate Accounts in Andhra Pradesh region, overseeing the Retail Operations in the States of Rajasthan, Uttarakhand and Western U.P. regions. He administered banking operations for International Banking Group (IBG), encompassing consolidation of balance sheets for all the foreign offices of SBI. He was also in–charge of overall functioning of SBI branches in Japan, while posted at Tokyo. With his expertise and experience, he rose to the level of Chief General Manager in SBI.
Shri Rakesh Sharma also held the post of MD&CEO of M/s Lakshmi Vilas Bank Ltd. since 7th March 2014 till he took over charge as MD&CEO of Canara Bank.
Shri Pankaj Jain
Shri Pankaj Jain is an Associate of Institute of Cost and Works Accountants and holds M.B.A Degree. He has been nominated on the Board of SIDBI, EXIM Bank, IIFCL and IIFC (UK).
Shri Pankaj Jain has also worked earlier in Ministry of Micro, Small & Medium Enterprises, Government of Assam, Government of Meghalaya and Department for International Development.
Presently, he is holding the position of Joint Secretary, Department of Financial Services, Ministry of Finance, Government of India.
Shri Dinabandhu Mohapatra
Shri Dinabandhu Mohapatra joined Bank of India as a Direct Recruit Offi cer in the year 1984. During his career spanning over three decades, he has headed various branches and departments across the country.
He carries with him vast knowledge and multidimensional banking experience, spanning over thirty one years, including international exposure as head of Hong Kong and Singapore branches of Bank of India. Shri Dinabandhu Mohapatra joined Canara Bank as Executive Director on 22nd January 2016. He is presently overseeing International Operations, Overseas Credit, Strategic Planning & Development, Risk Management, Financial Management & Subsidiaries, Priority Credit & Financial Inclusion, including RRBs& LB, Corporate Social Responsibility, MSME, Retail Resources, Marketing, Selling & Cross–selling, Government Business and Fee Income, CDR & Stressed Accounts Wings of the Bank Shri Dinabandhu Mohapatra joined Canara Bank as Executive Director on 22nd January 2016. He is presently overseeing International Operations, Overseas Credit, Strategic Planning & Development, Risk Management, Financial Management & Subsidiaries, Priority Credit & Financial Inclusion, including RRBs& LB, Corporate Social Responsibility, MSME, Retail Resources, Marketing, Selling & Cross–selling, Government Business and Fee Income, CDR & Stressed Accounts Wings of the Bank
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors, in preparation of the annual accounts for the year ended March 31, 2016, confirm the following:
• That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.
• That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for the period.
• That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.
• That they had prepared the annual accounts on a going concern basis.
The Board wishes to place on record its sincere appreciation to the customers for their continued patronage, to the shareholders for their support, to the Government authorities and the Reserve Bank of India for their valuable guidance and support, to the Directors who completed their tenure during the financial year under review, to the Bank’s Correspondents in India and abroad for their co–operation and goodwill and to all the Staff Members for their wholehearted support in the pursuit of organizational growth and excellence.
MANAGING DIRECTOR & CEO