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DIRECTORS’ REPORT: 2015–16
The Board of Directors of the Bank have pleasure in presenting the Twenty–second Annual Report covering business and operations of the Bank, together with the Audited Financial Statements for the year ended March 31, 2016.
During the year under review, despite a pervasive weakness in the global economy and moderate growth in the Indian economy, and a persistently challenging operating environment, the Bank improved its business with Deposits growing by 25.45% and Advances by 28.54% over the previous year.
The Bank continued to focus on increasing earnings from core banking business, strengthening the fee income streams, and maintaining control on operating costs.
Operating Profit (before Depreciation and Provisions and Contingencies) rose robustly by 33.27% to Rs. 4,297.94 crores, as compared to Rs. 3,225.07 crores in the previous year.
The Net Profit of the Bank, after considering all expenses and necessary Provisions and Contingencies, was higher by 27.47% at Rs. 2,286.45 crores, as against Rs.1,793.72 crores in the previous year
The Earning Per Share (EPS) of the Bank rose to Rs. 39.68 during the year 2015–16, from Rs. 33.99 in the previous year. Considering the overall improvement in performance as well as the need to conserve capital for continued growth, the Directors recommend Dividend of Rs. 4.50 per Equity Share of Rs. 10/– each for the year ended March 31, 2016. (Dividend for the year 2014–15 was Rs. 4.00 per Equity Share of Rs.10 each).
During the year, unclaimed dividend pertaining to the financial year 2007–08 was transferred to the Investor Education and Protection Fund (IEPF) after giving due notice to the Members whose names were appearing in the list of unpaid recipients.
The year under review witnessed significant volatility in global markets with commodity prices moving to historical low levels and the Chinese economy facing an unprecedented slowdown, while the global economic growth continued to be fragile. The year started with RBI keeping the Policy rates steady in its first bi–monthly Policy on April 7, 2015, but maintained an accommodative stance for future actions. The repo rate was, later in the year, reduced by 75 bps to 6.75%, which was in addition to the cut of 50 bps done prior to March 2015.
The year under review was the second year of the new Triennial Planning Cycle for the Bank (Planning Cycle 3, for Financial Years 2015–17) with a strategy to gain ‘Market Share with Profitability’ through Diversification and Differentiation. The Bank continued to leverage its business on the three performance planks of Productivity, Profitability and Efficiency.
Backed by improved volumes, the Total Income of the Bank grew by 21.55% to Rs. 14,877.61 crores from Rs. 12,239.97 crores.
The healthy rise in profitability was the result of growth in Net Interest Income (NII) as well as Non–Interest Income. Net Interest Income improved considerably by 32.05% to Rs. 4,516.57 crores from Rs. 3,420.28 crores while Non–Interest Income rose to Rs. 3,296.95 crores from Rs. 2,548.00 crores, registering a growth of 29.39%. Core Fee Income such as commission, exchange, loan processing and account management fees, fees on Investment Banking and distribution of third–party products, and earnings from foreign exchange business grew by 25.95% to Rs. 2,809.59 crores from Rs. 2,230.79 crores earned during the previous year.
Yield on Advances dropped to 12.24% during the year as against 13.12% in the previous year, while the Cost of Deposits fell to 7.25% from 7.92% in the previous year. The Net Interest Margin (NIM) for the year improved to 3.81% as compared to 3.65% in the previous year, mainly due to the composition of the Asset Portfolio, benign interest rate movements during the year, timely equity infusion in July – August 2015, and judicious mobilization of funding resources through deposits and borrowings, including overseas borrowings and refinance from institutions. The Bank expanded its branch network steadily to reach 1,000 branches, as against 801 branches at the beginning of the year. Revenue per employee during the year remained steady at Rs. 34 lakhs.
The quality of the Loan Book remained stable with Net Non–Performing Assets (Net NPAs) standing at 0.36% as at March 31, 2016, as against 0.31% a year ago. The Provisioning Coverage Ratio (PCR) stood at 58.58% as compared to 62.61% in the previous year.
Digitizing businesses has been a key thrust area of the Bank during the year under review, and most offerings across payments, lending, deposits, and third–party distribution products were enabled for online sales and service. The
Bank has tied up with most of the leading financial aggregator portals for online acquisition of clients, besides working with leading e–commerce and payment services providers to offer payment solutions to its Retail, Business and Institutional clients, including Government bodies.
The Bank introduced several new products and services for select client segments through its Consumer Banking, Transaction Banking and Global Markets Groups. IndusMobile, a feature–rich and convenient mobile application was launched during the year. QuickPay, SwiftPay and OnTheGo Social Banking are some of the technology–enabled solutions launched during the year. In October 2015, the Bank became a Corporate Agent of Tata AIA Life Insurance Company Limited. The Bank kept up its focus on deepening as well as strengthening of the fee–based income streams, resulting in a smart growth in Non–Interest Income.
Performance of Subsidiary and Associate Company
ALF Insurance Services Private Limited, a wholly–owned subsidiary of the Bank which was set up to do the business of Insurance Broking, is under Voluntary Winding–up. Having secured appropriate clearances from Tax and other authorities, the Liquidator appointed by the subsidiary realised all the assets and settled all external liabilities. On February 24, 2016, the said Liquidator made the final distribution to the shareholders and subsequently filed necessary documents with the Registrar of Companies.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate Company of the Bank and is engaged in the business of providing manpower services. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including the Financial Statement of its Associate Company, which also forms a part of the Annual Report.
The financial position and performance of IMFS are given in the statement containing salient features of the Financial Statements of the Company, which form part of the Consolidated Financial Statements.
A statement containing the salient features of the financial position of the subsidiary and Associate Company in Form AOC–1 is enclosed as Annexure I.
The Paid–up Equity Capital of the Bank as at March 31, 2016 consisted of 59,49,86,335 Equity Shares of Rs. 10/– each.
During the year under review, the Bank allotted 5,12,18,640 Equity Shares of Rs. 10/– each at a price of Rs. 845.00 per share aggregating Rs. 4,327.98 crores through a Qualified Institutions Placement (QIP). Besides, the Bank also allotted 87,81,360 Equity Shares of Rs. 10/– each to the Promoters of the Bank at a price of Rs. 857.20 per share, aggregating Rs. 752.74 crores through a Preferential Allotment. Further, the Bank allotted 55,36,126 Equity Shares of Rs. 10/– each pursuant to the exercise of Options under its Employees Stock Option Scheme, 2007. The Bank has not issued any Equity Shares with differential voting rights.
The Bank did not issue any debentures during the year under review. Details of Debenture Trustees are as under:
Name of Debenture Trustees : GDA Trusteeship Limited
Address : GDA House, S. No.94/95, Plot No.85, Bhusari Colony (Right), Kothrud, Paud Road, Pune – 411 038, Maharashtra, India Website : www.gdatrustee.com E–mail : firstname.lastname@example.org
Name of Debenture Trustees : IDBI Trusteeship Services Limited
Address : Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai – 400 001 Website : www.idbitrustee.com E–mail : email@example.com
Tier II Capital
The Bank did not raise any Tier II Capital during the year.
The Bank is a banking company governed by the Banking Regulation Act, 1949 and as such, the provisions in the
Companies Act relating to acceptance of Public Deposits are not applicable.
The Bank’s Board comprised eight Directors as on March 31, 2016, viz., Mr. R. Seshasayee, Part–time Non–Executive
Chairman, Mr. Romesh Sobti, Managing Director & CEO, Mr. Yashodhan M. Kale, Non–Executive, Non–Independent Director, and five Independent Directors, inclusive of Mr. Shanker Annaswamy who was appointed by the Board as ‘Additional Director’ on January 12, 2016.
The Board of Directors had, in their meeting held on May 12, 2016, appointed Dr. T. T. Ram Mohan, DIN 00008651, as ‘Additional Director’ in the category of ‘Independent Non–Executive’.
The Board, therefore, presently comprises nine Directors.
(a) Independent Non–Executive Directors
In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and based on the Declarations under Section 149(6) of the Companies Act, 2013 received by the Bank for the financial year ended March 31, 2016, the following Non–Executive Directors are identified as Independent
Directors as on March 31, 2016:
(i) Mrs. Kanchan Chitale
(ii) Mr. Vijay Vaid
(iii) Mr. T. Anantha Narayanan
(iv) Mr. Ranbir Singh Butola
(v) Mr. Shanker Annaswamy
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and the Listing Regulations, specified companies are required to have at least one Woman Director in their Board.
Mrs. Kanchan Chitale, who joined the Board on October 18, 2011, is an Independent Director in the Board and Chairs some important Committees.
(c) Chairman of the Board
Mr. R. Seshasayee, DIN 00047985, has been Part–time Non–Executive, Non–Independent Chairman of the Bank since July 24, 2007.
Shareholders had, in the 21st AGM held on August 17, 2015, approved the re–appointment of Mr. R. Seshasayee as Part–time Non–Executive Chairman of the Bank for a period of 2 years with effect from July 24, 2015. Reserve Bank of India had also conveyed their approval for the re–appointment of Mr. R. Seshasayee for 2 years, until July 24, 2017.
(d) Managing Director & CEO
Mr. Romesh Sobti, DIN 00031034, has been the Managing Director & CEO of the Bank since February 1, 2008.
Shareholders of the Bank had, in the 19th AGM held on June 28, 2013, approved the re–appointment of Mr. Romesh Sobti as the Managing Director & CEO for a period of three years.
Reserve Bank of India had also conveyed their approval for the re–appointment of Mr. Romesh Sobti as Managing Director & CEO of the Bank for a further period of three years, i.e., from February 1, 2015 to January 31, 2018.
(e) Appointment / Re–appointment / Resignation / Retirement of Directors
In order to ensure compliance with Section 152(6) of the Act, the Board has considered Mr. R. Seshasayee, Parttime
Non–Executive Chairman and Mr. Romesh Sobti, Managing Director, as liable to retire by rotation, besides Mr. Yashodhan M. Kale.
Mr. R. Seshasayee, DIN 00047985, Part–time Non–Executive Chairman, being longest in office, shall retire at the ensuing AGM and being eligible, offers himself for re–appointment, for ensuring compliance with Section 152(6) of Act.
Mr. Shanker Annaswamy, DIN 00449634, was appointed as ‘Additional Director’ in the category of ‘Independent Non–Executive’ by the Board in its meeting held on January 12, 2016, and shall hold office up to the date of the ensuing Annual General Meeting.
Dr. T. T. Ram Mohan, DIN 00008651, was appointed as ‘Additional Director’ in the category of ‘Independent Non–Executive’ by the Board in its meeting held on May 12, 2016, and shall hold office up to the date of the ensuing Annual General Meeting.
In terms of requirements of the Companies Act, 2013, approval of the shareholders is requested for appointment of Mr. Shanker Annaswamy and of Dr. T. T. Ram Mohan in the category of “Independent Non–Executive Director” for a period of four years with effect from their respective dates of appointment.
Mr. Ashok Kini, DIN 00812946, who had been a member of the Board as ‘Independent Non–Executive Director’ from January 30, 2008, ceased to hold office with effect from December 12, 2015, on attaining the age of 70 years, the maximum age limit prescribed for Directors.
The Directors wish to place on record their appreciation for the valuable contributions made by Mr. Ashok Kini towards the deliberations in the Board Meetings during his tenure as Director of the Bank.
Relevant details, including brief profiles of the Directors seeking appointment / re–appointment at the ensuing Annual General Meeting, have been furnished in the Notice of the Annual General Meeting and in the Report on Corporate Governance (under the Section titled ‘Board of Directors’), which forms an integral part of this Annual Report.
The Bank has received Notices in writing along with requisite Deposit amounts from Members, pursuant to Section 160 of the Companies Act, 2013, signifying their intention to propose the candidature of the respective persons for the office of Director.
Board and Committee Meetings
During the year, nine meetings of the Board and seven meetings of the Audit Committee were held, the details of which are given in the Corporate Governance Report, which forms an integral part of this Report.
The Board has constituted the Audit Committee with Mr. T. Anantha Narayanan as Chairman and Mrs. Kanchan Chitale, Mr. Ranbir Singh Butola, Mr. Yashodhan M. Kale and Mr. Shanker Annaswamy as Members. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and all its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations (erstwhile Clause 49 of the revised Listing Agreement), the Board has carried out annual evaluation of its own performance (Board as a whole), of the Directors individually, of the Chairman, and of the working of its Committees.
The Statement indicating the manner in which the evaluation exercise was conducted is included in the Corporate Governance Report, which forms an integral part of this Report.
The performance of the Board members, Committees of the Board and the Board as a whole has been evaluated at the meeting of the Committee of Independent Directors, Nomination Committee, and the Board of Directors in their meetings held on May 12, 2016.
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerized environment with a Core Banking System supported by diverse application platforms for handling special businesses such as Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of transactions in each of the application platforms is subject to various forms of controls such as in–built system checks, Maker–Checker authorizations, independent post–transaction reviews, etc. The Financial Statements are prepared based on computer system outputs. Responsibility of preparation of Financial Statements is entrusted to a dedicated unit which is completely independent of business, risk, audit or other functions. This unit does not originate accounting entries except for limited matters such as Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of Financial Statements, and that such internal financial controls were adequate and were operating effectively during the year.
Conservation of energy and technology absorption and foreign exchange earnings and outgo
Considering the nature of its activities as an entity in the Financial Services sector, the Bank has voluntarily taken steps towards conservation of energy and technology absorption, thus ensuring compliance with the provisions of Section 134(3) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014. Details of the same are furnished in the Management and Discussion Analysis Report, which forms part of this Report. The Bank has made optimum use of Information Technology in its operations. The details of foreign exchange earnings and outgo are also mentioned in the section on Management and Discussion Analysis.
The Bank has an integrated Risk Management Department, independent of business functions, covering Credit Risk, Market Risk, Assets–Liabilities Management (ALM), Operational Risk, and Information Security Risk functions.
Risk Management functions in the Bank have been aligned with best industry practices, and are being enhanced progressively, adapting to dynamic business environment and market conditions.
The Bank has comprehensively articulated various risk policies which specify the risk appetite / strategies, risk measurement methodologies, monitoring, and control measures for the respective business segments. The policies have been framed keeping risk appetite as the central objective, and business strategies have been aligned to risk policies.
The Bank has implemented “Internal Capital Adequacy Assessment Process” (ICAAP) in line with the Basel III requirements. The Bank has set up a Board–level Committee, viz., “Risk Management Committee” to examine risk policies and procedures developed by the Bank and to monitor adherence to various risk parameters and prudential limits by different operating departments
Details on Risk Management framework / models adopted by the Bank are furnished in the ‘Management Discussion and Analysis’.
The Bank has in place the “Whistle Blower Policy” since 2009.
The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit Committee of the Board, and placing of Annual Reviews before the Audit Committee and the Board of Directors.
The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private Sector and Foreign Banks, instituted by the Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board–level Committee, viz., the Vigilance Committee, which conducts overview of cases of vigilance nature arising out of actions of the employees of the Bank. The Committee meets at least twice a year.
In compliance with RBI guidelines on “Staff Empowerment”, the Board of Directors have reviewed the Whistle Blower Policy of the Bank during the year 2015–16.
Further details about the Vigil Mechanism are furnished in the Report on Corporate Governance, and the current Whistle Blower Policy of the Bank is available on the Bank’s website at the under–mentioned link: http://www.indusind.com/important–links/other–useful–information.html
M/s Price Waterhouse Chartered Accountants LLP, Chartered Accountants, Mumbai (Firm’s Regn. No. 012754N / N500016), who have audited the accounts of the Bank for the year 2015–16, shall retire at the conclusion of the ensuing Annual General Meeting and are eligible for re–appointment.
Members are requested to consider the re–appointment of M/s Price Waterhouse Chartered Accountants LLP, Chartered Accountants, as the Statutory Auditors of the Bank from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting at remuneration to be decided by the Board of Directors based on the recommendations of the Audit Committee. Their appointment is subject to the approval of the Reserve Bank of India. A certificate has been received from M/s Price Waterhouse Chartered Accountants LLP (PW) to the effect that their appointment, if made, would be within the prescribed limits under Section 141 of the Companies Act, 2013.
Independent Auditor’s Report
M/s Price Waterhouse Chartered Accountants LLP, Statutory Auditors of the Bank, have audited the accounts of the Bank for the year 2015–16 and their Report is annexed. Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also reported on the adequacy and operating effectiveness of the internal financial controls system over financial reporting, which has been enclosed as ‘Annexure A’ to Independent Auditor’s Report.
Significant Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
There are no qualifications, reservations or adverse remarks or disclaimers made in the Auditor’s Report.
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari & Associates, Company Secretaries in Practice (CP. No. 366) to undertake Secretarial Audit. The Secretarial Audit Report submitted by M/s Bhandari & Associates is furnished at Annexure II, and forms an integral part of this Report.
The Secretarial Audit Report submitted by M/s. Bhandari & Associates for FY 2015–16 does not contain any qualification, reservation or adverse remark.
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is given in the Management Discussion and Analysis Report. Also, the other Statutory Information / Disclosures required to be given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to the Bank, have been laid out in the Schedules / Notes attached and forms part of the Balance Sheet and the Profit and Loss Account.
The details pursuant to remuneration of Directors and employees in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given at Annexure III and forms an integral part of this Report.
The information relating to employees required to be furnished under the Companies Act, 2013 and the Rules made there under is given under the head “Particulars of Employees” later in this Report.
Employees Stock Option Scheme
The Bank had instituted an Employee Stock Option Scheme (ESOS–2007) to enable its employees, including Wholetime Directors, to participate in the future growth of the Bank. Under the Scheme, Options can be granted, which upon exercise could give rise to the issuance of a number of shares upto 7% of the issued Equity Capital of the Bank from time to time. The eligibility and number of Options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors.
An aggregate of 3,75,70,300 Options, comprising 6.31% of the Bank’s Equity Capital, have been granted under the Scheme. Statutory disclosures as required by SEBI (Share–Based Employee Benefits) Regulations, 2014 are given at Annexure IV in this Report.
The Annual Certificate on compliance with SEBI (Share–Based Employee Benefits) Regulations, 2014, issued by Statutory Auditors of the Bank, is being placed before Members in the AGM.
The Employees Stock Option Plan is administered by the Compensation Committee of the Board.
Directors’ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors make the following statement in terms of Section 134(3)(c) and 134(5) of the Companies Act, 2013:
(i) that in the preparation of the Annual Accounts for the year ended March 31, 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;
(ii) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and that judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2016 and of the profit of the Bank for the year ended on that date;
(iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities;
(iv) that the Annual Financial Statements have been prepared on a ‘going concern’ basis;
(v) that proper internal financial controls were in place and that the financial controls were adequate and operating effectively;
(vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT–9, as required under Section 92 of the Companies Act, 2013 are included in this Report as Annexure V, and form an integral part of this Report.
Particulars of Employees
The Bank had 23,060 employees on its rolls as on March 31, 2016.
89 employees employed throughout the year were in receipt of remuneration of Rs. 60 lakh per annum or more, and 12 employees employed for part of the year were in receipt of remuneration of Rs. 5 lakh per month or more.
The information containing particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, the above Annexure is not being sent along with this Report to the Members in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining the particulars may please write to the Company Secretary at the Secretarial and Investor Services Office. The aforesaid Annexure is also available for inspection by Members at the Registered Office of the Bank up to the date of this Annual General Meeting during business hours on working days.
None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the Equity Shares of the Bank.
During the year under review, all the Non–Executive Directors received remuneration by way of Sitting Fees for attending the meetings of the Board and of various Board Committees. As per the Bank’s policy, no Stock Options were granted to the Non–Executive Directors.
Details on compensation to Whole–time Directors are given under Report on Corporate Governance which forms part of this Report.
The Board of Directors has, on the recommendations of the HR & Remuneration Committee framed a Policy in relation to remuneration of Directors, Key Management Personnel and Senior Management of the Bank.
The detailed Remuneration Policy of the Bank is given under “Disclosure on Remuneration” at Note No. 12.6 of the Notes in Schedule 18 to the Financial Statements, which is an integral part of this Report.
In view of the guidelines contained in RBI Circular dated June 1, 2015 on compensation of Non–Executive Directors of private sector banks, the Board of Directors have, in their meeting held on May 12, 2016, based on the recommendations of Human Resource & Remuneration Committee, approved the payment of remuneration of Rs. 25 lakhs per annum to Mr. R. Seshasayee, Part–time Non–Executive Chairman of the Bank (subject to approval of Reserve Bank of India) and to the Non–Executive Directors (other than the Part–time Non–Executive Chairman) in the form of Profit–related Commission not exceeding Rs. 10 lakhs per annum for each Director, in such manner as may be decided by the Board of Directors. In compliance with the provisions of the Companies Act, 2013, the above proposals have been placed for approval of the Members in the 22nd Annual General Meeting of the Bank.
Particulars of Loans, Guarantees or Investments outstanding
Details of Loans, Guarantees and Investments made by the Bank are given in the Notes to Financial Statements.
Consolidated Financial Statements
In accordance with Section 129(3) of the Act, Consolidated Financial Statement of the Group comprising IndusInd
Bank Limited (‘the Bank’) and IndusInd Marketing and Financial Services Private Limited (“the Associate”), has been prepared and is included in the Annual Report.
In accordance with Para 30 on Transitional provision of Accounting Standard 21 on preparation of Consolidated
Financial Statements on the first occasion, comparative figures for the previous year are not required to be presented. Consequently, the Bank has prepared the Consolidated Financial Statements of the Bank and its Associate for the year ending March 2016, and no comparative figures for the previous year are presented in the current year’s Financial
Statements as the consolidated financials have been presented to the Board for the first time.
Indian Accounting Standards (IND AS) – IFRS Converged Standards
The Ministry of Corporate Affairs (MCA) vide its notification dated February 16, 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015 and vide its notification dated March 30, 2016 notified Companies (Indian Accounting Standards) (Amendment) Rules, 2016.
The Bank will adopt IND AS beginning April 1, 2018, with previous year comparatives.
Corporate Social Responsibility
The Bank has voluntarily undertaken various initiatives in the area of Corporate Social Responsibility (CSR) by focusing on sustainability–driven growth.
In terms of the requirements of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a Board–level CSR Committee to look after the CSR initiatives of the Bank. The Committee is headed by Mrs.
Kanchan Chitale as Chairperson, with Mr. Vijay Vaid and Mr. Romesh Sobti as Members. The Composition of the CSR Committee is in accordance with Section 135 of the Companies Act, 2013.
The Bank has also framed the CSR Policy and strategy that will guide and govern the Bank’s activities in focus areas namely rural development and inclusiveness, environmental sustainability, preventive healthcare and other areas of special interest.
During the year under review, the Bank has committed to Prime Minister’s Swachh Bharat Abhiyaan and worked towards financial inclusion and legal literacy. The CSR initiatives / projects undertaken by the Bank are largely in accordance with Schedule VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are required to spend at least Two per cent of their Average Net Profits made during the three immediately preceding financial years, in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank was required to spend Rs. 42.76 crores towards CSR activities during FY 2015–16, out of which Rs. 27.32 crores (i.e., 1.27% of the Average Net Profits) was utilized on activities specified in Schedule VII of the Companies Act, 2013. Some of the CSR projects are being executed in a phased manner.
The Report on CSR activities undertaken by the Bank is set out at Annexure VI and forms an integral part of this Report.
Details of the CSR Policy and initiatives adopted by the Bank on CSR are available on Banks website at the link mentioned below:
Related Party Transactions
All transactions entered with ‘Related Parties’ during the year under review were on “arm’s length basis” and in the ‘ordinary course of business’ and therefore do not attract the provisions of Section 188 of the Companies Act, 2013. Further, there are no materially significant Related Party Transactions during the year with any of the Related Parties
viz., Promoters, Directors and Key Management Personnel or other related entities which may have a potential conflict with the interest of the Bank at large.
The Policy on Related Party Transactions as approved by the Board of Directors is available on the website of the Bank at the below given link:
Business Responsibility Report (BRR)
The Securities & Exchange Board of India, vide their Circular dated November 4, 2015, have published revised format of the Business Responsibility Report and have mandated the top 500 listed entities, based on market capitalization on BSE Limited and National Stock Exchange of India Ltd., to include the ‘Business Responsibility Report’ (BRR) as part of the Annual Report, describing the initiatives taken by the listed entity from an environmental, social and governance perspective, in the format as specified by SEBI.
In view of the above and in compliance with Regulation 34(2) of the Listing Regulations, the Business Responsibility Report (BRR) of the Bank has been enclosed as Annexure VII to this Report, and forms an integral part of this Report.
Pursuant to Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section on Corporate Governance practices followed by the Bank, together with a Certificate from Practising Company Secretary confirming compliance, forms an integral part of this Report.
A copy of Certificate issued by Practising Company Secretary is attached as Annexure VIII to this Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2) of the Listing Regulations, forms part of the Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Bank and its futures operations.
Awards and Accolades
During the year under review, the Bank has received many awards and accolades for excellence in managing Risk, in Branding, CSR initiatives, Information Technology, and for Innovations.
Mr. Romesh Sobti, MD & CEO won the most prestigious Business Award “EY Entrepreneurial CEO of the Year 2015” at the 17th EY Entrepreneur of the Year 2015 India Awards.
He also received the “Banker of the Year” award by FE India’s Best Bank 2015.
Brief details of various awards are covered in the initial pages of the Annual Report.
Certain statements in the “Directors’ Report” and in the “Management Discussion and Analysis” describing the Bank’s objectives, estimates and expectations may be ‘forward–looking statements’ within the meaning of applicable Securities Laws and Regulations. Actual results could differ substantially from those expressed or implied. Important factors that could make a difference include economic conditions in the domestic and overseas markets, changes in Laws / Regulations, and other incidental factors.
Material events that have happened after the Balance Sheet date:
No material changes and commitments affecting the financial position of the Bank have occurred between the end of the financial year to which the Financial Statements relate and the date of the Report.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace
The Bank has zero tolerance for sexual harassment at the workplace, and has adopted a ‘Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace’, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under The Policy aims to provide protection to women employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment.
The Bank has also constituted and notified the Internal Complaints Committees, to enquire into the complaints of sexual harassment and recommend appropriate action.
The Directors are grateful to the shareholders of the Bank for the trust and confidence reposed by them in the Bank. The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate Affairs, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and the Stock Exchanges for the guidance and support extended by them to the Bank.
The Board expresses its deep sense of appreciation to all employees for their excellent performance, strong work ethic, and unswerving commitment, which qualities have contributed to the Bank’s continued progress in a challenging environment.
The Board thanks its valued customers for their patronage, and looks forward to the growing of this mutually supportive relationship in future.
For and on behalf of the Board of Directors
Date: May 12, 2016