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Updated:23 Sep, 2020, 15:57 PM IST

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Updated:23 Sep, 2020, 16:01 PM IST

DIRECTORS' REPORT FOR THE YEAR 2015 – 16

Your Board of Directors is pleased to present the Annual Report on business and operations of the Bank together with the Audited Financial Statements for the Financial Year ended 31st March 2016.

During the year the Bank earned an operating profit of Rs. 833 crore registering an increase of 20% as compared to previous year's operating profit of Rs. 693 crore. The net profit of the Bank for the current year was Rs. 445 crore compared to Rs. 395 crore for the last year registering a growth of 13%. The deposits and advances for the current year stood at Rs. 27,158 crore and Rs. 21,253 crore respectively.The total business stood at Rs. 48,411 crore as compared to Rs. 42,164 crore for the previous year registering a growth of 15%.

DEPOSITS

The total Deposits of the Bank for the current year increased by Rs. 3,083 crore to Rs. 27,158 crore from Rs. 24,075 crore registering a growth of 13%. During the year under review CASA increased by Rs. 902 crore to Rs. 5,533 crore from Rs. 4,631 crore recording a growth of 19%. The cost of deposit of the Bank decreased from 8.15% in the previous year to 7.62% in the current year.

ADVANCES

The gross Advances of the Bank increased by Rs. 3,164 crore to Rs. 21,253 crore from Rs. 18,089 crore, posting a growth of 17%. The yield on advances declined marginally from 13.18% to 12.83% during the year under review.

The Gross and Net NPA for the current year stood at 2.41% and 1.53% respectively as compared to 1.86% and 1.30% in the previous year.

Priority Sector advances during the year increased by Rs. 1,960 crore from Rs. 8,312 crore to Rs. 10,272 crore. Your Bank has achieved 55.27% of Adjusted Net Bank Credit (ANBC) against the regulatory prescription of 40% of ANBC on Priority Sector lending requirements. The total agricultural advances stood at Rs. 3,391 crore as at 31st March 2016 forming 18.24% of ANBC as against the mandatory requirement of 18%.

TREASURY OPERATIONS

Domestic Treasury

The gross investments increased by Rs. 454 crore to Rs. 6,326 crore as on 31st March 2016 from Rs. 5,872 crore as on 31st March 2015 registering a growth of 8% and out of this, the investments in Government Bonds alone amounted to Rs. 5,905 crore.

The 10 year GOI benchmark yield softened during the year from a high of 7.89% to 7.46% as GOI securities saw good buying interest from Banks on account of rate cut by RBI.

It is noteworthy to mention that during the year the Bank earned a profit of Rs. 45 crore from treasury operations due to decline in yield on Govt. Securities by 0.43% as compared to Rs. 60 crore last year when the yield went down by 1.06%. The average yield on investments declined from 8.57% in the previous year to 8.08% in the current financial year.

Forex Treasury

During the year Indian Rupee witnessed swings against major currencies. The INR against USD ranged from Rs. 62.03 to Rs. 66.25 and remained comparatively weaker against USD on the back of rate hike in US. The Bank earned an exchange profit of Rs. 81 crore compared to Rs. 69 crore last year including profit from integrated treasury operations.

OPERATING RESULTS HIGHLIGHTS

The Bank earned a total income of Rs. 3,354 crore as against Rs. 3,103 crore posting a growth of 8%. The total expenditure of the Bank increased by 5% to record Rs. 2,521 crore as compared to previous year total expenditure of Rs. 2,410 crore.

The operating profit increased by Rs. 140 crore to Rs. 833 crore from Rs. 693 crore thereby recording a growth of 20%. The net profit increased to Rs. 445 crore from Rs. 395 crore registering a growth of 13%.

The Net Interest Income for the year under review increased by Rs. 174 crore from Rs. 807 crore to Rs. 981 crore. The non–interest income of the Bank increased from Rs. 404 crore to Rs. 410 crore.

The provision for tax for the year increased from Rs. 126 crore to Rs. 158 crore. The provision for NPA stood at Rs. 205 crore vis–a–vis Rs. 165 crore last year. The total provisions increased by Rs. 79 crore from Rs. 309 crore to Rs. 388 crore.

APPROPRIATIONS

NET WORTH & CAPITAL ADEQUACY RATIO

The paid up Share Capital of the Bank increased from Rs. 59.66 crore as on 31st March 2015 to Rs. 59.82 crore as on 31st March 2016. During the period the Bank allotted 16,23,479 equity shares to employees of the Bank pursuant to CUB ESOS Scheme.

The Net Worth of the Bank improved to Rs. 3,033 crore as on 31st March 2016 from Rs. 2,666 crore as of 31st March 2015.

The concept of Capital Conservation Buffer (CCB) has been newly introduced under BASEL III norms wherein Bank is required to maintain CCB of 2.50% at the end of March 2019 in phased manner beginning from 31st March 2016 @ 0.625% in each year up to 31st March 2019.

DIVIDEND

The Bank believes in rewarding its shareholders handsomely and at the same time endeavors to meet the future capital requirements through plough back of profit. Keeping the twin objective in view, the Board of Directors have recommended a final dividend of Rs. 0.20 paise per equity share of each for the year ended 31st March 2016 besides having declared and paid an interim dividend of 100% during the year i.e., Rs.1.00/– per equity share of face value of each. The total dividend for the year will be 120% as against 110% in the previous year, subject to the approval of final dividend by the shareholders at the ensuing Annual General Meeting. The dividend payout ratio works out to 19.43%. The dividend is subject to Dividend Distribution tax to be paid by the Bank.

The Board recommends the final dividend for declaration by the shareholders at the ensuing Annual General Meeting.

BRANCH EXPANSION

NO. OFBRANCHES

Keeping in mind the twin objectives of business growth and wider customer reach and participation, the Bank has expanded its branch network by opening 50 more branches and 254 ATMs across the country during the Financial Year ended 31st March 2016. The Bank has been successful in widening its presence pan India with 525 branches and 1,325 ATMs for better service to the customers. The Bank is keen to enlarge its presence by tapping potential markets in southern India by opening more branches in this region, in addition to opening of branches in other states.

FINANCIAL INCLUSION

The Government of India and the Reserve Bank of India have been making concerted efforts to promote financial inclusion as one of the important national objectives of the country. It is a process through which the weaker / low income groups are brought within the ambit of formal banking sector with a main focus to protect their financial wealth. Your Bank, following RBI directions, has covered all the allotted 43 villages having population of over 2,000 and 96 villages having population of over 1,000 and below 2,000 by introducing ICT (Information, Communication & Technology) based services, thus providing efficient and cost–effective banking services in the un–banked and remote villages of the country, paving way for inclusive growth.

Further, during the year under review, Basic Savings Bank Deposits (BSBD) accounts numbering 99,166 were opened and 91,779 biometric smart cards were issued to the beneficiaries. SB linked overdraft facility, micro insurance products, Electronic Benefit Fund Transfer (EBT) payments have been extended to such account holders.

PRADHAN MANTRI JAN–DHAN YOJANA (PMJDY)

''Pradhan Mantri Jan–Dhan Yojana' (PMJDY) is a flagship financial inclusion programme of Govt. of India which was launched by our Hon'ble Prime Minister on 28th August 2014 across the country. Under this programme your Bank has been allotted 264 wards apart from 139 villages already allotted under the Rural Financial Inclusion scheme. Your Bank conducted survey of all 1,80,211 households in all these 264 wards.

The Bank has opened 81,045 PMJDY accounts as on date through all its branches and Rupay cards were issued for the account holders under the scheme. As the overdraft facility is one of the features under PMJDY scheme, Bank is considering the same based on conditions fixed by IBA to the PMJDY account holders from Rs. 1,000 to Rs. 5,000.

PRADHAN MANTRI JEEVAN JYOTHI BIMA YOJANA (PMJJBY)

This scheme was launched by our Hon'ble Prime Minister, on 09th May 2015. The scheme provides life insurance cover to people in the age group of 18 – 50 years. Risk cover is available up to 55 years, subject to payment of premium of Rs. 330/– p.a. Risk coverage is Rs. 2 lakh in case of death due to any reason. The Insurance premium for the scheme is auto debited from the bank account of the respective subscriber. We are having tie up with LIC for this scheme.

PRADHAN MANTRI SURAKSHA BIMA YOJANA (PMSBY)

This Scheme provides financial cover against personal accident of the subscribers. It is open for the age group between 18 – 70 years at a nominal annual premium of Rs. 12/–. Risk cover is Rs. 2.00 lakh for death due to accident or full disability and Rs. 1.00 lakh for partial disability. The Insurance premium for the scheme is auto debited from the bank account of the respective subscriber. We are having a tie up with the New India Assurance Co. Ltd for this scheme.

ATAL PENSION YOJANA (APY)

The Government of India launched Atal Pension Yojana for the benefit of all citizens especially for the poor and under privileged. Under APY the subscribers aged 18 – 40 years will receive a fixed minimum pension ranging between Rs. 1,000 – Rs. 5,000 per month depending upon their contribution. Under this Yojana, the Government will also contribute minimum of 50% of the total contribution or Rs. 1,000/ per annum, whichever is lower, to each subscriber.

The enrollment in PMJJBY, PMSBY and APY schemes as on 31st March 2016 is 48,550, 71,167 and 750 respectively.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

The Bank implemented an Employee Stock Option Scheme called 'CUB ESOS 2008' for grant of stock options to eligible employees of the Bank. The Shareholders of the Bank approved the scheme on 26th April 2008 at an Extra Ordinary General meeting of the Bank. The maximum aggregate number of options that may be granted under this scheme is 5,00,00,000. As per the scheme, exercise price of the options shall be decided by the Compensation Committee at the time of issuing stock options. The Bank offers ESOS to its employees which vests over a period of five years from the date of grant of options i.e., 15% options each for first three years and 25% and 30% for fourth and fifth year respectively. Further, the shares are offered at prevailing market prices and no discount is offered. The details of employee stock option are annexed hereto as Annexure I.

HUMAN RESOURCE DEVELOPMENT

The Bank believes that, the Human Resource Development is one of the key elements for ensuring quality in business growth and profitability of its operations. The present global economy is highly competitive calling for effective and efficient human resource management.

The Bank aims at optimum utilization of its resources through deploying effective management tools viz. motivation, training, enhancing leadership qualities and succession planning. The Bank offers ESOS to the employees so as to create a sense of ownership among them as also the Bank believes that the very success of the Bank depends substantially upon its employees.

The Bank has a full fledged training college with experienced faculty and good training infrastructure supported by external specialists and in–house certified trainers to train the employees at various levels for maximizing the staff potential and sharpen their skills. The Bank also deputes its employees to various training institutions like SIBSTC, NIBM, CAB, CAFRAL etc. There exists a cordial relationship between the management and the employees.

As on 31st March 2016, your Bank has 4,517 employees, comprising of 54 Executives in top management cadre, 1,709 Officers, 2,436 Clerks and 318 Subordinate staff as compared to 4,365 employees in the previous year.

AUTOMATION

In today's Banking scenario, 'Technology' plays a vital role in managing and fulfilling the growing customer demands.

During the year under review, the Bank had widened the ATMs reach to 1,325 locations including 660 off–site ATMs. The Bank has also introduced Cash Accepting ATMs (Bulk Note Acceptor – BNA) numbering 321 and has proposed to install it in all branches, which would enable the customer to remit cash directly to the credit of their accounts.

Further, we have also enabled the recycling facility (Bulk Note Recycler – BRM). By this add–on facility the cash deposited by the customers into the machine will be used (recycled) for dispensing also. The burden of manual loading of cash into the machines is considerably reduced now.

The Bank has introduced interactive CUB Mobile Banking – mBank Plus, mPassbook (Mobile Passbook), IMPS in Internet Banking for speedy funds transfer across the Banks and Digital Signature authentication for Corporates as second factor authentication for safe and secure Internet Banking.

We have deployed Xpress Desks (Green Channel Counter) across all our bank branches and the Bank has installed Multi function KIOSKs in select branches and is planning to expand the same. The KIOSK acts as a Self Service Machine, which can be used for funds transfer within own accounts, within CUB accounts and across the Banks, open deposit accounts, etc.

The bank has also installed cheque acceptor KIOSKs and self passbook printing KIOSKs. Customer Self Service Centre – e–Lounge has been set–up at 17 locations facilitating the customers with Bulk Note Acceptor (BNA), Cash Dispenser ATM, Multi–function KIOSK, Cheque depositing KIOSK and Passbook printing KIOSK. This facilitates independent smart banking.The bank has also launched CUB mobile wallet which is a mobile based software application and caters to customer utility services through mobile phone. Anyone (customer / non–customer of CUB) having a smartphone with Android OS can open and operate CUB mWALLET. The customer can load money, send money, recharge (Mobile / DTH) and make bill payments.

Our Bank believes in keeping up with the latest trends in technology. In addition, the Bank promotes efficient use of technology enabled banking facilities among its customers. Through this customer friendly approach, our bank could successfully migrate 78% of transactions to alternative channels.

Our Computer System Department has been certified with ISO/IEC 27001:2013 for providing services for IT infrastructure & operations support and maintaining and monitoring of IT Outsources Processes.

A customer friendly Captive Contact Centre (Call Centre) with Interactive Voice Response System (IVRS), is in place to promote customer support in multi–languages at 24x7 basis.

AWARDS & ACCOLADES

– Your Bank was awarded Best Small sized Bank for 2014–15 by Business World – PWC Best Banks' Survey 2015.

– Your Bank won "Productivity & Efficiency" award for Small banks conducted by Business Today –KPMG study on Indian Best Banks' survey 2015.

– Your Bank was awarded by Financial Express – EY "Best Old Private Sector Bank" for 2015.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Cessation

Shri. S. Balasubramanian, retired as Part–Time Non–Executive Chairman of the Bank on 3rd May 2016, on account of completion of tenure. Shri. S. Balasubramanian started his journey with City Union Bank Ltd., during the year 1971 as a Probationary Officer and rose to the highest position working in all departments and in various capacities.

During the year 2005, Shri. S. Balasubramanian was elevated as the Chairman & CEO of the Bank and thereafter, in 2009 he was appointed as the Managing Director and CEO. The Bank under his leadership has grown manifold to meet the stakeholders' ever increasing expectations and his journey continued with the Bank as Part–Time Non–Executive Chairman since May 2011.

The Board places on record its warm appreciation for the invaluable services rendered by Shri. S. Balasubramanian during his tenure in the Bank.

Appointments

a) After vacation of office by Shri. S. Balasubramanian, pursuant to the provisions of Section 35B and Section 10B (1A) of the Banking Regulation Act 1949, Shri. S. Mahalingam, Independent Director on the Board of the Bank has been appointed as Part–time Chairman for a period of three years w.e.f 04th May 2016. The Reserve Bank of India has approved his appointment terms vide its letter no. DBR.Appt.No.13995/08.42.001/2015–16 dt. 6th May 2016. The complete profile of Shri. S. Mahalingam is made available in the Notice of this Annual General Meeting forming part of Annual Report.

b) In accordance with the provisions of Section 161 of the Companies Act, 2013, Shri. M. Narayanan has been co–opted as an Additional Director on the Board of the Bank w.e.f., 03rd May, 2016 to represent the majority sector having special knowledge in Accountancy, Agriculture & Rural Economy. In the opinion of the Board, Shri. M. Narayanan is a person of knowledge, expertise and competence and hence, his appointment is being placed before the members for approval. The complete profile of Shri. M. Narayanan is made available in the Notice of this Annual General Meeting forming part of Annual Report.

c) Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri. R. Mohan, Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re–appointment.

Key Managerial Personnel

During the year under review, there has been a change in the composition of key managerial personnel of the Bank. Shri. S. Sundar retired as the Chief Financial Officer (CFO) of the Bank w.e.f. 30th June 2015 on account of superannuation. Thereafter, from 1st July 2015 Shri. V. Ramesh, Company Secretary of the Bank was re–designated as Chief Financial Officer & Company Secretary. At present Dr. N. Kamakodi, MD & CEO and Shri. V. Ramesh, CFO & CS of the Bank are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made thereunder.

Declaration by Independent Directors

The Bank has received necessary declaration from each Independent director under Section 149(7) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), that they meet the criteria of independence laid down therein.

Familiarization Program for Independent Directors

The details of programme for familiarization of Independent Directors with the Bank, their roles, rights and responsibilities in the Bank and related matters are provided separately under the Corporate Governance Report forming part of Annual Report.

Performance Evaluation of the Board

In terms of the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Bank had laid down criteria for performance evaluation of Directors, Chairperson, MD & CEO, Board Level Committees and Board as a whole and also the evaluation process for the same.

The performance of the members of the Board, the Board level committees of the Independent Directors and the Board of Directors were evaluated as per statutory requirements.

Board Meetings

All Board meetings of the Bank were held in accordance with the Companies Act, 2013, the Secretarial Standards issued by The Institute of Company Secretaries of India (ICSI) and SEBI Listing Regulations, 2015. The meetings were held to discuss and decide on various business policies, strategies and other businesses in the best interests of the Bank.

During the year under report, 15 meetings were duly held. The details of meetings are provided in the Corporate Governance Report forming part of this Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134 (5) of the Companies Act, 2013, the Board of Directors hereby declares and confirms that:

i) In the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

ii) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the Profit & Loss of the Bank for that period.

iii) The Directors 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.

iv) The Directors had prepared the annual accounts on a going concern basis.

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

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

Code of Conduct to regulate, monitor and report trading by Insiders in securities of City Union Bank Ltd.

The Bank has formulated a Code of Conduct pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, to regulate, monitor and ensure reporting of trading by the employees and other connected persons towards attaining compliance with SEBI Regulations and the same is designed to maintain highest ethical standards of dealing in securities of the Bank by persons to whom it is applicable. The code of conduct and related policy are available in the Bank's website and can be viewed at <http://www.cityunionbank.com>.

Remuneration / Compensation Policy

The Bank has adopted Compensation Policy in accordance with the directives issued by the Reserve Bank of India. The Bank has also constituted a Compensation & Remuneration Committee which also oversees the framing, implementation and review of the Compensation Policy of the Bank. The Remuneration policy is briefed under Corporate Governance Report forming part of Annual Report.

AUDITORS

Statutory Auditors

M/s. P. Chandrasekar, Chartered Accountants, Bengaluru, the present Statutory Central Auditors, will retire at the conclusion of the forthcoming Annual General Meeting and being eligible have offered themselves for re–appointment. The Bank has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as Statutory Auditors of the Bank in terms of Companies Act, 2013 & the rules made there under. The Reserve Bank of India has accorded its approval for the re–appointment of M/s. P. Chandrasekar, Chartered Accountants, to act as Statutory Central Auditors for the financial Year 2016–17. Members are kindly requested to consider and approve their re–appointment as Statutory Auditors of the Bank for FY 2016–17.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Bank has appointed M/s B.K. Sundaram & Associates, Practicing Company Secretaries, to act as Secretarial Auditor for conducting the Secretarial Audit of the Bank for Financial Year 2015–16. The report of Secretarial Auditor 'Secretarial Audit Report' is annexed hereto as Annexure II.

STATUTORY DISCLOSURES

Considering the nature of activities carried out by the Bank, the provision of Section 134(m) of the Companies Act, 2013 relating to conservation of energy and technology observation do not apply to the Bank. However, every effort is being made to conserve energy and absorption of technology.

The Bank continues to encourage country's export promotion by lending to exporters and offers them forex transaction facilities.

The disclosures pursuant to the provisions of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are furnished as Annexure III.

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are furnished as Annexure IV.

It is hereby confirmed that the Bank has proper systems in place to ensure compliance of all laws applicable to the Banks.

RELATED PARTY TRANSACTIONS

The Board of Directors of the Bank has adopted a policy on Related Party transactions which is in line with the Companies Act, 2013 and SEBI listing regulations, 2015. There were no significant "Related Party Transactions" of any material, financial & commercial nature with the Bank by the Directors and their relatives that would have potential conflict with the interest of the Bank at large. A detailed policy on the Related Party Transaction is available at the Bank's website (www.cityunionbank.com ).

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(1)(a) of the Companies Act, 2013 (the Act), the extract of Annual Return in form MGT – 9 as provided under Sub–section (3) of Section 92 of the Act is appended to this Annual Report as Annexure V.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and the related notifications / circulars / guidelines issued by MCA. As per the above, the Bank has established Corporate Social Responsibility (CSR) Committee. Bank is required to spend 2% of the average net profit before tax of previous three financial years or any part thereof on CSR activities. During the year, the Bank has spent an amount of Rs. 10.45 crore towards CSR activities which includes an unspent amount of Rs. 2.40 crore pertaining to FY ended 2015. The Bank has disclosed its CSR Policy in the website and the same can be viewed at <http://www.cityunionbank.com/PageMenuDocs/corp_social_res.pdf>. The Annual Report on the CSR activities undertaken during the year forming part of this Report is annexed hereto as Annexure VI.

CORPORATE GOVERNANCE

Corporate Governance of the Bank is an ethically driven business process that rests on the fundamental pillar of high ethical values aimed to enhance organization's brand and reputation and to protect the interests of all the stakeholders by taking ethical business decisions.

Your Bank is committed to achieve the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set by the Regulators / applicable laws.

Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders. All the Directors on the Board have executed "Deed of Covenant and Undertaking" individually in line with the recommendations of Dr. Ganguly Committee Report.

A separate section on Corporate Governance standards followed by your Bank and the relevant disclosures, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 and rules made there under are disclosed separately forming part of this report.

MANAGEMENT DISCUSSION & ANALYSIS

During 2015, global economic activity remained subdued. Growth in emerging market and developing economies declined for fifth consecutive year, while a modest recovery continued in advanced economies. Global growth estimated at 3.1% in 2015, is projected at 3.4% in 2016 and 3.6% in 2017. The picture for emerging market and developing economies is diverse but in many cases challenging. In the domestic front, there were decelerations of services sector activities, Rabi procurement was lower in April–May 2016 than a year ago, weakness in private investment was major concern although public investment especially in roads and railways etc., gained strength. Except for natural gas and crude oil, the core sector registered strong growth in April 2016 on account of a seasonal pick–up in industries like electricity also supported by a low base. Available information on Q4 earnings suggest double digit growth in EBIDTA levels for non–financial corporate which shows signs that corporate performance is improving. RBI has progressively reduced the policy rate by 150 basis points since January 2015, to its current level of 6.50%. However, the transmission of these reductions by commercial banks to its borrowers has only been partially done

Your Bank, a mid–sized old generation private sector bank, has made significant progress over the last few years through measures like increased efficiency, upgradation of technology to meet new challenges, aspirations and prudent expansion of branches across India. These steps have helped the Bank in enhancing its market share at a rapid pace despite competition as well as the various domestic challenges faced by financial and commercial sectors during the period. A detailed Management Discussion and Analysis Report for the year under review as stipulated in SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 is presented in a separate section forming part of this Annual Report.

WHISTLE BLOWER / VIGIL MECHANISM

The Bank has formed a vigil mechanism to deal with instances of unethical behavior, actual or suspected fraud or violation of Bank's code of conduct or ethics policy. The details of this policy have been described in the corporate governance section and the policy is available at the Bank's website.

ACKNOWLEDGEMENT

The Board of Directors of the Bank would like to take this opportunity to thank all the stakeholders and wish to place on record its deep & sincere gratitude to the Reserve Bank of India, NABARD, NHB, IDBI, SIDBI, EXIM BANK, ECGC, DICGC, SEBI, Stock Exchanges, Depositories, Karvy Computershare Pvt. Ltd., Life Insurance Corporation of India, United India Insurance, New India Assurance, Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange Houses and other regulatory authorities for their continued support, guidance and co–operation and also, to Shri. S Balasubramanian, Non–Executive Part–time Chairman who retired on account of superannuation during this financial year.

The Board hereby appreciates the dedication and the efforts of all the employees for their resolute support and commitment in pursuit of organizational growth & excellence.

FOR AND ON BEHALF OF THE BOARD

S. Mahalingam

Non–Executive Part–time Chairman

(DIN : 00121727)

Place : Chennai

Date : 21st June, 2016

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