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Company Information

Home » Market » Company Information

Lakshmi Vilas Bank Ltd.

Nov 25
7.65 +0.35 (+ 4.79 %)
VOLUME : 8648194
Prev. Close 7.30
Open Price 6.95
Bid PRICE (QTY.) 0.00 (0)
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Lakshmi Vilas Bank Ltd. is not traded in NSE
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Market Cap. ( ₹ ) 257.59 Cr. P/BV 0.25 Book Value ( ₹ ) 31.21
52 Week High/Low ( ₹ ) 0/0 FV/ML 10/1 P/E(X) 0.00
Bookclosure 06/12/2017 TTM EPS ( ₹ ) -22.30 Div Yield (%) 26.47
You can view full text of the latest Director's Report for the company.
Year End :2018-03 


The Directors of your Bank wish to present this 91st Annual Report on the business and operations of your Bank together with the Audited Accounts for the year ended 31st March, 2018 (FY 2017-18).


The highlights of the financial performance of your Bank for the year ended 31st March, 2018 are as under:

For the year ended


(Rs. in crore)

31st March 2018

31st March 2017




Advances (net)



Investments (net)



Total Income



Operating Profit



Provisions & Contingencies



Net profit



Your bank registered a growth of 10.64% in business and attained a total business of Rs. 60,314.02 crore in FY 2017-18 as against total business of Rs. 54,511.81 crore in FY 2016-17.

Deposits grew by 9.02%, from Rs. 30,553.35 crore as at 31st March 2017 to Rs. 33,309.48 crore as at 31st March 2018. CASA represented 21.06% of total deposits. Total advances (net) expanded by 8.59%, from Rs. 23,728.91 crore to Rs. 25,768.20 crore in the same period. The total Priority Sector Advances were Rs. 8801.64 crores forming 41.81% of Adjusted Net Bank Credit (ANBC) against the regulatory prescription of 40% of ANBC for the FY 2017-18.

The total Agricultural Advances stood at Rs. 3793.54 crores forming 18.02% of ANBC against the regulatory prescription of 18.00% of ANBC. Of which, loans to Small and Marginal Farmers stood at Rs. 1970.29 crores forming 9.36% of ANBC against the mandatory requirements of 8.00% of ANBC for the year 2017-18.

Our Bank’s advances to Micro Enterprises under MSME were at 7.60% of ANBC amounting to Rs. 1599.14 crores against the mandatory requirements of 7.50% of ANBC for the year 2017-18.

Bank’s advances to Weaker Sections were Rs. 2133.28 crores forming 10.13% of ANBC against the mandatory requirements of 10.00% of ANBC for year 2017-18.

The Bank continues to comply with the regulatory guidelines under priority sector, agricultural lending, micro enterprises and weaker section advances.

The Bank’s exposures to sensitive sectors including Real Estate and Capital Market were maintained well within the regulatory limits as well as overall internal ceilings prescribed for such exposures.

As at the end of the year under review, the total investments (net) of the Bank stood at Rs. 10,767.75 crore as against Rs. 8,651.73 crore as on 31st March 2017.

Your Bank’s Treasury continues to focus on sound Asset-Liability Management and on servicing clients with appropriate treasury products and was managed reasonably well in a systematic way in a year when yields were constantly rising.


The Bank has posted an operating profit of Rs. 355.38 crores in FY 2017-18 against Rs. 634.06 crores in the previous year FY 2016-17. Excluding Treasury profits, the operating profit for 2017-18 was Rs. 290.98 crores as against Rs. 374.10 crores in the Previous Year. The net loss for the year, after provisions and taxes, amounted to Rs. 584.87 crores as against a net profit of Rs. 256.07 crores recorded in 2016-17.



For the year ended (Rs. in crore)

31st March 2018

31st March 2017

Profit brought forward



Transfer from Investment Reserve



Amount available for appropriation



Transfer to

Statutory Reserve



Capital Reserve



Other Reserve


Investment Reserve



Special Reserve u/s 36(i)(viii)of the IT Act, 1961



Proposed Dividend/Dividend paid for FY 2016-17



Corporate Dividend Tax - FY2016-17



Balance of profit carried forward




In view of the Net Loss for the FY 2017-18, your Board of Directors is unable to recommend any dividend for the year.

Your Bank has a Board approved Dividend Distribution Policy which has been formulated in line with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and extant RBI Circulars / Directives. The Dividend Distribution Policy has been enclosed as Annexure J to the Directors’ Report. The Policy has also been made available in the website of the Bank and can be accessed at

5. RIGHTS ISSUE 2017-18:

During the year 6,39,87,006 equity shares were allotted to eligible shareholders on Rights Basis in line with Chapter II (10) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. These shares were issued at a premium of Rs. 112/-to the face value of Rs. 10/-.

As on March 31, 2018, the post-issue paid-up capital of your Bank stood at Rs. 255,99,37,530 comprising 25,59,93,753 equity shares of Rs. 10 each.


During the year, the Bank had allotted equity shares to eligible shareholders on Rights Basis on 03.01.2018. The issue was done in order to enhance the capital adequacy ratio in line with the RBI norms and the proceeds of the issue were used primarily to enhance the Bank’s Capital Adequacy Ratio and to increase our capacity to lend and for general corporate purposes subject to compliance of applicable laws. There was no variation prompting disclosure under Regulation 32 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015.


Earnings per Share stood at Rs. (-)28.29 for the year ended 31st March, 2018 as compared to Rs. 14.07 as on 31st March, 2017. Book Value of the share, stood at Rs. 84.39 on 31st March, 2018 as compared to Rs. 102.74 as on 31st March, 2017.


Net Owned Funds (NOF) of the Bank increased from Rs. 1,966.85 crores as at the end of FY 2017 to Rs. 2160.41 crores as at the end of FY 2018, reflecting a growth of 9.84%.

The Capital Adequacy Ratio (CAR) as on 31st March 2018 as per BASEL III is 9.81%. The Tier-I and Tier-II components of Capital Adequacy Ratio were maintained at 8.05% and 1.76% respectively.

It is heartening to mention that the rights issue had received overwhelming response and participation by the existing shareholders. The Bank is proposing to go in for raising of further capital to bolster Tier-I to take care of regulatory prescriptions as well as to fund planned growth for at least the next two years.


Ministry of Corporate Affairs (the “MCA”) had given a roadmap on convergence to Ind AS by banks mandating them to adopt Ind AS from April 1, 2018. Consequently opening balance sheet was required to be drawn as on April 1, 2018.

Progressing towards Ind AS, Bank has prepared the Proforma Statement (Unaudited) for the half year ended 30.9.2016 and for the Quarter ended 30.6.2017 with the opening Balance Sheet as on 1.4.2017 as per extant regulatory guidelines as advised by RBI circular DBR.BP.BC.No.2535/21.07.001/2017-18 dated September 13, 2017 and submitted to RBI.

However, on April 05, 2018, Reserve Bank of India (RBI) has announced deferment of implementation of Indian Accounting Standards (Ind AS) by one year for scheduled commercial banks. Accordingly the FY 2019-20 would be the first year of Ind AS with FY 2018-19 as the comparative year. Bank is in the process of upgrading the Core Banking System and has initiated necessary steps for the preparation of financial statements as per Ind AS.


The Gross NPA of all the banks in the country has seen upward movement during the FY 17-18. The Indian Banks’ Gross NPA/Bad loans stood at Rs. 10.25 lakh crores as on 31.03.18. This is 11.80% of the total loans given by the banking industry. During the FY2018, the total bad loans of scheduled banks rose substantially by Rs. 3.13 lakh crores. Both public and private sector banks have faced significant challenges from the bad loan.Our bank, despite accelerated efforts to maintain good health in the quality of the accounts could not control the addition of NPA during the FY 17-18 due to reasons beyond its control (i.e.,) the failure of majority of industries granted under infrastructure, Iron and steel, textiles, etc. The introduction of IBC (Insolvency and Bankruptcy Code) could not bring any drastic results as it is in its initial implementation stage.

With concerted efforts, substantial reduction in NPA of Rs. 862.Cr has been effected;while, the unprecedented slippage of standard assets to NPA has eclipsed the good recovery performance.

The Bank has intensified recovery efforts and these are expected to result in significant improvement in the NPA ratios during the year. Initiatives include disposal of secured assets under SARFAESI/DRT, enforcement of favourable decrees as well as sale of assets to ARCs. In this connection, the Bank has seen considerable interest to purchase such stressed assets, from various interested entities and with these efforts bank is hopeful of significant achievement in reduction of NPA.


The Bank had obtained license to open 75 new branches (69 General Banking Branches and 6 Commercial Banking Branches) during 2017-18 to extend its reach and opened 67 branches during the year including 2 personal Banking (one in Chennai and the other in Bangalore) and 6 commercial banking branches. The Bank’s network spread as on 31st March 2018 stood at 548 branches with 540 General Banking branches, 7 Commercial Banking Branches, 1 Satellite branch and 7 extension counters with its presence spread across 18 states and the union territory of Puducherry. The Bank has added 62 new ATMs during the Fiscal 2017-18 and the ATM network stood at 1020 which includes 596 Offsite ATMs.

The Bank’s augmented Branch and ATM network continues to provide quality banking and financial services to its customers. The Bank continues to focus on providing fine banking &financial services to all its customers.


Financial Inclusion is the delivery of banking services at an affordable cost to the vast sections of disadvantaged, low income groups and providing timely and adequate credit where needed. The essence of financial Inclusion is to ensure that a range of appropriate basic financial services are made available to every individual, enabling them to understand and access those services. Pradhan Mantri Jan Dhan Yojana (PMJDY) project ensure to open at least one bank account to every family/household and issuing of personalized Rupay Debit cards. Rupay debit cards have in-built accidental insurance coverage.

The bank has implemented the financial inclusion plan in 363 Villages & wards allotted by SLBC in Tamilnadu. The Bank has opened 1,84,018 Basic Savings Bank Deposit Accounts (BSBDA) including 85,555 accounts under PMJDY, as on March 31, 2018.


During financial year 2017-18, the rupee marginally depreciated by 0.5%, against a 2.1% gain in previous fiscal year on account of rising twin deficit. Rupee remained largely stable in comparison to other Asian currencies amid global recovery. Sovereign credit rating upgrade by Moody’s from Baa3 to Baa2, recovery of economic growth in second half of the year and record high RBI foreign exchange reserves of USD 424 Billion contributed to a stable rupee for most part of the year. U.S Federal Reserve continued to remain on tightening path by increasing interest rates thrice during the financial year with better than expected U.S.economic growth and rising inflation. The Bank of England increased its interest rates for the first time since 2008.

In the reporting financial year, the Bank has made a substantial growth in the foreign exchange turn over and achieved Rs. 11,192.64 Crores as against Rs. 6416.29 Crores in the previous year and is geared for a higher growth.


The liabilities business continued its growth trajectory in FY18.

- The Bank ended FY18 with total deposits of INR 33,309 Crores.

- Current and Savings Account (CASA) balances registered a y-o-y growth of 20%.

- The growth of CASA on a cumulative daily average balance (CDAB) basis was 23%. CASA as a part of total deposits grew to 21%, in line with the Bank’s objectives for the business.


- The Bank continued with the strategy of expanding the CROWN and NR franchise.

- A team of Relationship Managers acquire new CROWN relationships and work with our existing CROWN customers, to evolve as their preferred financial partner.

- The LVB CROWN SERVICES segment of customers accounted for a Savings Bank book of INR 668 Crores, a y-o-y growth of 81%.

- To enable non-resident customer to open accounts when they are overseas, the Bank has introduced “Virtual Relationship Manager”, and more importantly, pick up of Account Opening Forms and documents through DHL, absolutely free of cost.

- The NR book has grown impressively by 76% y-o-y.

- The Bank has continued to customize products and services to address banking requirements of various segments. Accordingly, 15 new and revamped products in Current and Savings Accounts have been launched, with bespoke benefits.

- LVB Vyapaar, launched towards the end of FY17 contributed handsomely with fee income as well as a growing Current Account book.


The Equity Shares of the Bank are listed with the National Stock Exchange of India Ltd, Mumbai and BSE Ltd,Mumbai which is enhancing the liquidity of your equity shares.


During the financial year 2017-18, your bank had implemented the following digital initiatives:

Your Bank had introduced various digital features and services to serve you better. Bharat - QR, Card Management and Card Less Cash withdrawal features were enabled in mobile banking. Customers can now scan the QR at the merchant location and make payment instantly without need for swiping his/her debit card. The card management feature can be used for locking/unlocking the cards temporarily, manage the card limits for cash withdrawal, e-commerce and POS, set the Green Pin, change the debit card PIN. This is in addition to the card hot-listing feature already available in mobile banking.

Further to meet the ad-hoc cash requirements of customers, card-less cash feature is enabled through IMT (Instant Money Transfer). The customer can initiate cash payment to any other beneficiary in India using the mobile number. The beneficiary can use the secured credentials shared to him directly by the sender and also one received by him on his phone number to withdraw cash from any of IMT enabled ATMs including your Bank’s ATMs.

This year your Bank had launched UPI (Unified Payment Interface) application - LVB Upaay in IOS in addition to Android platform launched during last year. USSD 2.0 services are enabled for customers, wherein the customers can inquire the balance, carry out fund transfer by dialing *99#.

New version of Information Kiosk had been launched by your Bank with enhanced user experience which facilitates customers to recharge mobile, DTH, block debit cards, set Green Pin for debit card, cheque status inquiry including the stop payment, various intra and interbank fund transfer options, along with other options to inquire the account balances, account statement, last 10 transactions etc.

Now retail internet banking users are empowered to set and manage the limits for financial transactions and also set the limit for beneficiaries added by them. In addition to the above, ‘Aadhaar Seeding’ feature is enabled in retail internet banking.


Life Insurance:

Bank has entered strategic alliance with three leading Life Insurance companies in the country, Max Life Insurance, Birla Sun Life Insurance and DHFL Pramerica Life Insurance Company Ltd to offer life insurance cover to the valued customers of the Bank. The products offered to our clients are more diversified and tailor made to meet their requirements.

During the financial year 2017-18, the Bank has insured 9077 lives and grown by 54% and the premium collection has increased from Rs. 28.41 Crs to Rs. 38.07 Crs, registering Y-o-Y growth of 34%.

General Insurance:

Bank has tied up with Future Generali General Insurance Company Ltd to offer non-life insurance products to the various customer segments. During the year,the Bank collected the general insurance premium of Rs. 17.68 Crs while coveringthe assets of our customers.

Health Insurance:

The Bank has tied up with M/s. Cigna TTK Standalone Health Insurance Company Ltd to offer health insurance products to the customers; The Bank collected health insurance premium of Rs. 5.75 Crs during the year and covered 4721 customers.

Wealth Management:

1. FISDOM - Bank has tied up with M/s. Finwizard Technology Pvt Ltd (widely known as FISDOM) to offer mobile based wealth management services to our customers.

- Fisdom enables end-to-end digital transactions for mutual funds and this is first time in India.

- Our customers can invest in equity, debt and liquid instruments, through Fisdom, of almost all leading AMCs.

- The Bank has acquired 12500 clients with AUM of Rs. 35 Cr

- The monthly SIP book stood at Rs. 2 Cr.

- Bank has explored NPS enrollment option in Fisdom App, interested customer can enroll into NPS in fully digital platform and generate the PRAN instantly.

2. The Bank tied up with M/s. Centrum Wealth Management Limited (CWML) offering end to end wealth solution to our Ultra HNI clients, CWML is an established player in the market with AUM of INR 10,000Cr and expertise in area of complete Private Banking.

18. RISK:

The objective of risk management of the Bank is to achieve optimum return while operating within acceptable level of risk appetite. The Bank has an independent risk management function which is tasked with managing risk through policies and processes approved by the Board of Directors. These encompass identification, measurement and management or risks across the various businesses of the Bank. The risk management function in the Bank strives to scientifically study vulnerabilities of process across business portfolios through quantitative or qualitative examination of the embedded risks and controls. The function continues to focus on refining and improving its risk management systems through automation of processes and building and strengthening controls. The Bank has in place a Risk Management Committee of the Board of Directors. The Bank has formulated and adopted a robust risk management framework. The Bank has in place committees such as Credit Risk Management Committee (CRMC), Asset Liabilities Committee (ALCO), Operational Risk Management Committee (ORMC), Business Continuity Management Committee (BCMC), Information Systems and Steering Committee (ISSC). These committees meet frequently and discuss risk related issues arising from businesses and processes and have active participation from Top Management of the Bank.

The overall risk appetite and risk philosophy of the Bank is articulated by the Management to the Risk Management Committee and Board of Directors. The risk appetite framework provides guidance to the management on the permitted levels of exposure to various businesses and maps to the business strategy of the Bank. Further the Internal Capital Adequacy Assessment Process (ICAAP) of the Bank assesses all the significant risks associated with various businesses and projects the requirement of capital. The independent risk management structure within the Bank is responsible for managing the credit risk, market risk, liquidity risk, operational risk, other Pillar II risks like reputation risk and strategic risks and exercising oversight on risks associated with outsourcing. The Bank has in place well-defined policies appropriate for the various risks, viz. credit risk, market risk, operational risk, liquidity risk, counterparty risk, country risk, reputational risk, strategic risk and outsourcing risk. These are reviewed periodically in order to benefit from internal and external experience. IT and cyber risk has assumed significance in keeping with the rising risk in these areas and to keep pace with regulatory advisories.


The Bank has an independent Audit and Inspection Department, which subjects all the branches of the Bank besides the Treasury, Currency Chests, Service Branches, Regional Offices and every department of the Corporate Office, to regular inspection. The Bank also carries out regular IS audits covering application systems and processes in business units.

Key areas including Treasury, centralized operations departments and a large number of branches are under concurrent audit. Concurrent audit is carried out by qualified external auditors and meets requirements of Risk Based Supervision. In addition, the Bank also carries out thematic audits in selected businesses from time to time.

The Audit Committee of the Board constituted in line with RBI guidelines and as per the requirements of SEBI Regulationsreviews the adequacy of the audit and compliance functions, including the policies, procedures and techniques. The Composition of Audit Committee of the Board is provided elsewhere in the report.

During the year, there were no instances wherein the Board has not accepted the recommendations of the Audit Committee of the Board.


The staff strength of the Bank was increased from 4043 as on 31.03.2017 to 4623 as on 31.03.2018 to cater to the manpower requirement on account of branch expansion and business growth. Further, 504 Sales Personnel were also engaged to boost sales. The Bank’s focus on training human resources on a continual basis gained momentum by conducting online e-learning, duly leveraging technology. The Bank has trained a considerable number of resources in offsite training programmes conducted by reputed institutions such as RBI, CAB, SIBSTC, IIBF, NIBM & FEDAI. Further, the Bank has entered into a strategic training collaboration with M/s. Manipal Global Academy of BFSI and launched “Mission Enlighten” which shall facilitate in bridging the skill gap and developing the internal talent pool.


Disclosure under Section 186 of the Companies Act, 2013 does not apply to Banking Company.


There were no related party transactions during the year under review and Form AOC-2 is not applicable to the Bank. During the FY 2017-18, the Bank did not have any Material Related Party Transaction.

The Bank has an approved policy on Related Party Transactions, which has been disclosed on the website and can be viewed at

23. OUTLOOK 2018-19:

The expected growth in Global economy could provide an impetus to India’s exports. The various favourable indicators such as moderate levels of inflation, anticipated growth in the industrial sector, expectation of greater stability in GST, much awaited recovery in investment levels and ongoing structural reforms could propel India’s economy to grow at an accelerated pace. However, the country’s growth could be impacted by the increase in crude oil prices along with the protectionist tendencies in some countries. The outlook from the recently tabled Economic Survey depicts a positive trend for the economy in the long term, which forecasts India to be the world’s fastest growing large economy in the next 10 years.


Going forward, economic activity is expected to gather pace in 2018-19, benefitting from a conducive domestic and global environment. First, the teething troubles relating to implementation of the GST are receding. Second, credit off-take has improved in the recent period and is becoming increasingly broad-based, which portends well for the manufacturing sector and new investment activity. Third, large resource mobilisation from the primary market could strengthen investment activity further in the period ahead. Fourth, the process of recapitalisation of public sector banks and resolution of distressed assets under the Insolvency and Bankruptcy Code (IBC) may improve the business and investment environment. Fifth, global trade growth has accelerated, which should encourage exports. Sixth, the thrust on rural and infrastructure sectors in the Union Budget could rejuvenate rural demand and also crowd in private investment.

India’s GDP growth saw a temporary dip in the last two quarters of 2016-17 and in the first quarter of 2017-18 due to demonetization and disruptions surrounding the initial teething trouble in implementation of GST. The Indian economy is set to revert to its growth trend in the coming years and growth is expected to firm up in 2018-19 on the back of higher private consumption and improvement in investment.


- Real Gross Domestic Product (GDP) is likely to grow by 6.6 per cent in 2017-18 and may accelerate by 70 basis points (bps) in 2018-19 to 7.3% on the back of support from private consumption and investment.

- Real Gross Value Added (GVA) is expected to grow by 7.1 per cent in 2018-19, supported by activity in the industry and services sectors.


Headline Consumer Price Index (CPI) inflation is expected to increase till Q1:2018-19 and thereafter remain below 5% till Q4:2018-19 Forecasters have assigned the highest probability of CPI inflation being in the range 4.5-4.9% in March 2019.

Exports and imports:

The volume of merchandise exports is forecast to rise by 9.4% in 2018-19, slightly more than the rate of growth in the previous year. The volume of imports, on the other hand, is expected to drop sharply. If lower imports help in increasing domestic production, that will be a positive.

Current account deficit:

The Current Account Deficit (CAD) is expected at 1.9% of GDP in 2017-18 and is likely to increase by 20 bps to 2.1% of GDP in 2018-19.

The banking sector:

The banking sector has been experiencing high balance sheet stress with the corporate debt overhang and associated banking sector credit quality concerns. The implementation of the new Insolvency and Bankruptcy Code is an important step towards improving the credit behaviour.

Recapitalization of the Public Sector Banks will improve the banking sector’s ability to support growth, have the potential to ease stress on the banking sector and reinvigorate bank credit.

Reserve Bank of India (RBI) has deferred the implementation of Indian Accounting Standards (Ind AS) by one year for Scheduled Commercial Banks i.e. 2019-20 would be the first year of Ind AS with 2018-19 as the comparative year. This will provide time for the banks to improve their preparedness on technical and operational side requirements, for the smooth implementation of Ind As.


Corporate Governance of the Bank continues to rest on the fundamental pillar of high ethical values, designed to enhance and protect the interests of all the stakeholders. The Bank has complied with the Corporate Governance provisions as specified in SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. In addition to complying with the mandatory requirements, the Bank is also complying with having separate offices of the Chairman and Chief Executive Officer, which is a discretionary requirement under the Regulations. However, the same is also in compliance with the RBI directive. Further, all the Directors on the Board have executed deed of covenant and undertaking individually in line with the recommendations of Dr. Ganguly Committee Report. Pursuant to SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis is presented in Annexure-A and Report on Board Committees is furnished in Annexure-B. Composition of the Board of Directors together with the attendance of Directors at various meetings of the Board, its Committees and Annual General Meeting and the number of directorships held by them alongwith the details of Audit Committee and Stakeholders Relationship Committee are furnished in Annexure-C, including composition of the Audit Committee. General Shareholders’ information is furnished in Annexure-D.


During the financial year, the Board met 16 times. The Board meetings were held in accordance with the provisions of the Companies Act, 2013. The details of the meetings held are provided in the Corporate Governance Report that forms part of this Annual Report.


According to the Articles of Association of our Bank, the number of Directors of the Bank shall not be less than three and more than fifteen and not less than fifty-one percent of the total number of Directors shall be persons who satisfy the requirements of Section10A of the Banking Regulation Act. The process of Due Diligence is undertaken in compliance of Directives/Guidelines/Circulars issued by RBI from time to time in the matter of appointment/re-appointment of Director. The Non-Executive Chairman of the Bank and the Managing Director of the Bank are appointed with prior approval of the RBI. Based on the vacancies that may arise in the Board from time to time, the Board follows a due process of appointment of directors through prior due diligence in line with the regulatory advice given by RBI, SEBI and MCA by way of Circulars / Guidelines / Regulations / enactments. The Nomination, Remuneration and Compensation Committee of the Board have formulated criteria for evaluation for the appointment or re-appointment of directors including Independent Directors. The Managing Director &CEO of the Bank is paid remuneration as approved by the RBI but is not paid any sitting fees. The Non-Executive Chairman of the Bank is paid honorarium as approved by the RBI along with sitting fees paid for attending Board/Board Committee meetings. Other than the MD&CEO and Part-time Chairman, no other directors are paid any remuneration/honorarium apart from sitting fees for attending Board and Board Committee Meetings. The details of remuneration of the MD&CEO and that of the sitting fees paid to the other directors are available elsewhere in the report. The Senior Management and the other KMPs of the Bank along with other employees are paid remuneration based on internal HR policies of the Bank. The senior management of the Bank along with the KMPs abide by the Code of Conduct prescribed by the Bank. The code of conduct has been disclosed at the Bank’s website and can be viewed at For the FY 2017-18, the MD&CEO, ED&CFO (employed till 21.10.2017) and Company Secretary are the Key Managerial Personnel (KMPs) of the Bank, as stipulated by the Companies Act, 2013. As on 31.03.2018, other than the MD&CEO there are no other Whole Time Directors in the bank.


The Company has duly obtained necessary declarations from each Independent Director under Section 149(7) of the Companies Act, 2013 that he/she meets the Criteria of Independence as laid down in the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and the Company has also obtained the ‘Fit and Proper’ declaration as prescribed by the Reserve Bank of India.


The performance of the Board as a whole and that of the individual Directors and of various Committees of the Board were evaluated based on the ‘Criteria for evaluation of Independent Directors and the Board’ as formulated by the Nomination, Remuneration and Compensation Committee of the Board. The Board had already taken note of the evaluation made by the Independent Directors on the Board at their meeting held on 27.03.2018. During the evaluation, the Independent Directors had noted that the performance of the Non-Executive Chairman of the Board, the Non-Independent Directors and the Board as a whole was found to be satisfactory. Based on the inputs received from the evaluation conducted by the Independent Directors and also considering certain specific criteria depending on the role of the director/committee in the Bank and the criteria for evaluation framed by the Nomination, Remuneration and Compensation Committee of the Board, the subject of Board Evaluation consisted of the following:

1. Evaluation of Board as a whole.

2. Evaluation of Board Committees.

3. Evaluation of Individual Directors of the Board.

- Evaluation of Managing Director.

- Evaluation of Non-Independent Directors.

- Evaluation of Independent Directors

While evaluating the performance of the Board, Board Committees and Individual Directors, the Directors considered various parameters including those formulated by the Nomination, Remuneration and Compensation Committee of the Board and the Guidance Note on Board Evaluation prescribed by SEBI. Some of the factors considered include the Structure of the Board, the mix of qualification, the functions of the Board, etc. Being governed by the Banking Regulation Act, 1949, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013, the mandatory Committees of the Board have been entrusted with specific roles and responsibilities under the relevant regulatory provisions. Besides the mandatory Committees as prescribed by the regulators, the Board has separately constituted certain Committees with specific reasons viz., the HR Committee of the Board and the Capital Raising Committee of the Board.

The evaluation of Board Committees was done taking into account their mandate, composition, frequency of their meetings, independence of the Committees from the Board, contribution of the Committees to the decisions of the Board through recommendations and to the Management through decisions, etc. The Managing Director & CEO of the Bank was evaluated based on the Business targets set and the Bank’s overall performance during the year, managing and executing the Board approved business plans, operational plans, risk management, and financial affairs of the organization; ensuring proper coordination between the Board and the Senior Management; Motivating employees and resolving major employee related issues, thus maintaining a healthy work environment; Ensuring strict monitoring of the internal control processes.

The Non-Executive Directors (both Independent and Non-Independent) of the Bank were evaluated based on their attendance and active participation in the Board and Committee meetings, openness to new ideas and ability to challenge old practices and throwing up new ideas for discussion; Coordination and rapport with the fellow Board Members; the positive contribution of the individual Directors who come from a professional background and the quality of suggestions and guidance given by them through their

participation in the meetings with an understanding of the business of the Bank and an understanding of their role and responsibilities and the overall effectiveness; the broad based discussions at Board/Committee Meetings, the understanding of the regulatory requirements; remaining abreast of various developments in the Indian banking arena and keeping up with the various modifications / re-enactments of statutory enactments applicable to the Bank like the Companies Act, SEBI Regulations and the Banking Regulation Act, 1949; approach towards conflicts resolution and their contribution in enhancing the Board’s overall effectiveness and integrity and maintaining of confidentiality.

The Independent Directors of the Bank were also provided a familiarization program about the bank and their ability to bring in an independent judgment to the issues handled by the Board without getting influenced otherwise. The evaluation with respect to individual non-executive directors revolved around various factors as mentioned above and it was ensured that the Board members evaluated their fellow member Directors in the absence of the Director being evaluated.


Resignations/Cessation of tenure of appointment:

- Shri N.S. Venkatesh, Executive Director and Chief Financial Officer of the Bank resigned with effect from 21.10.2017 after serving on the Board of the Bank for a period of 1 year and 3 months.

- Shri S G Prabhakaran retired from the Board on 06.06.2018 as per the provisions of Section 10A (2A) of the Banking Regulation Act, 1949 after serving on the Board continuously for a period of eight years.

- Shri Pankaj Vaish vacated his office by operation of law on 18.07.2017 pursuant to the provisions of Section 161 of the Companies Act, 2013 after serving in the Board for around 10 months in the current tenure of appointment.

- Shri Prakash P Mallya vacated his office by operation of law on 18.07.2017 pursuant to the provisions of Section 161 of the Companies Act, 2013 after serving in the Board for around 10 months in the current tenure of appointment.

- During the year, Smt. E V Sumithasri retired from the Board on 03.09.2017 after completing the tenure of appointment approved by the shareholders. After her retirement, she was re-appointed by the Board as Additional Director (Non-Executive and Independent) on

27.09.2017. However, she resigned from the Board with effect from 30.03.2018 after serving on the Board for around 6 months in the present term.

- During the year, Shri S Dattathreyan retired from the Board on 26.09.2017 after completing the tenure of appointment approved by the shareholders. After his retirement, he was re-appointed by the Board as Additional Director (Non-Executive and Independent) on 27.09.2017. However, he retired from the Board on 07.03.2018 as per the provisions of Section 10A (2A) of the Banking Regulation Act, 1949 after serving on the Board continuously for a period of eight years.


- Shri G Sudhakara Gupta was appointed as an Additional Director on 27.09.2017 pursuant to the provisions of Section 161 of the Companies Act, 2013 and classified as Non-Executive and Non-Independent Director in terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and representing Business under minority sector as per Banking Regulation Act, 1949.

- Shri H S Upendra Kamath was appointed as an Additional Director on 20.04.2018 pursuant to the provisions of Section 149 (4) and Section 161 of the Companies Act, 2013 and classified under Independent category in terms of Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and representing Banking (Practical Experience) and Small Scale Industry (Special Knowledge) under majority sector as per Banking Regulation Act, 1949.

- During the year, the tenure of appointment of Shri Suvendu Pati was extended by RBI for a period of two years from February 12, 2018 to February 11, 2020 or till further orders, whichever is earlier.

Re-appointment of Director retiring by rotation:

Smt Anuradha Pradeep, Director, will be retiring by rotation at the ensuing 91st Annual General Meeting and being eligible, offers herself for re-appointment.

Key Managerial Personnel

- Shri N S Venkatesh, who took charge as the Executive Director of the Bank on 01.07.2016, was additionally designated as the Chief Financial Officer of the Bank with effect from 26.12.2016, in addition to the responsibilities as Executive Director of the Bank, resigned with effect from 21.10.2017 after serving as Chief Financial Officer for about 10 months.

- Shri S Sundar took charge as the Chief Financial Officer of the Bank with effect from 27.04.2018.

Apart from the above, there were no changes in the Key Managerial Personnel during the year.


The Board of Directors of your Bank confirms that in the preparation of the annual accounts for the year ended March 31, 2018:

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

- The Directors had selected such accounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the Company for that period.

- 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 Company and for preventing and detecting fraud and other irregularities.

- The Directors had prepared the annual accounts on a going concern basis;

- The Directors had laid down internal financial controls to be followed by the company and that such internal financial controlsare adequate and were operating effectively; and

- 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.


Your Bank as a responsible corporate citizen has been supporting various philanthropic activities by donating such initiatives to the tune of Rs. 15.56 Lacs. Further, your bank has also taken several initiatives in the area of CSR.

Corporate Social Responsibility (CSR)

In accordance with the directives of Government of India, Bank is required to spend 2% of the average net profit of the last 3 Financial Years or any part thereof on CSR activities. The Bank has disclosed its CSR policy in the website and the same can be viewed at The Annual Report on the CSR activities undertaken during the year as per the format specified by the Ministry of Corporate Affairs is forming part of this Report and is annexed to this Report as Annexure E.


The Business Responsibility Report prepared in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been made available on the Bank’s website at BusinessResponsibilityReport.aspx


Pursuant to Section 134(3)(a) of the Companies Act, 2013, the extract of Annual Return in Form MGT 9 is appended to this Annual Report as Annexure F and a copy of the same will be made available in the website of the bank and can be accessed at


The Bank has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).


The disclosures pursuant to the provisions (as amended) of Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the disclosures pursuant to the provisions of Section 197 (12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure-G.


In the year 2010, the shareholders of the Bank have approved the issue of shares through Stock Option Scheme (ESOS 2010). During FY 17-18, total of 5,60,000 options were exercised by the Managing Director, Former Executive Director and Chief Risk Officer out of the grants made under ESOS 2010. In the year 2017, the shareholders of the Bank have approved the issue of shares through Employees Stock Option Scheme 2017 (ESOS - 2017). The implementation of both the said schemes is in accordance with the applicable SEBI Regulations.

All the options granted so far have been under ESOS 2010 and no options have been granted under ESOS 2017 till date. There is no material changes made in the schemes during the year and all the schemes are in compliance of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Statutory disclosures regarding ESOS have been furnished in Annexure H to the report and can be viewed at annualreport.aspx.


The provisions of Section 134(1) (m) of the Companies Act, 2013 and the applicable rule under the Companies (Accounts) Rules,2014 relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has, however, used Information Technology extensively in its operations. The Bank continues to encourage the country’s exports and will endeavor to enlarge its export financing.


Attention is invited to Note 8 of Notes to Accounts (Schedule 18) for the year ended 31st March 2018:

In the audited financial statement, it has been reported that the advances of the bank (net of provisions) was Rs. 25,768 crore after the adjustment of third party deposits amounting Rs. 794 crore. The said deposits relate to M/s. Religare Finvest Ltd and the same were held as security for the loans extended to M/s. RHC Holding Pvt. Ltd & M/s. RanchemPvt Ltd. On account of default in clearing the loans, the said deposits were closed and the proceeds were adjusted to clear the said loans. As per legal opinion received by the bank, the adjustment of deposits against loans is lawful. Now, M/s. Religare Finvest Ltd has filed a suit in CS.(COMM).940/2018 against our Janpath Branch before the Hon’ble High Court Delhi, disputing the said adjustment and the same is being defended appropriately by the bank.

Apart from the above, no further material changes have occurred between the end of the financial year to which the financial statements relate and the date of the report. Further to SEBI regulations, the Bank is already making disclosures which are material in nature, on an ongoing basis.


During the year under review no significant or material orders were passed by any regulators or courts or tribunals against the Bank other than those disclosed separately in the financial statements, Directors Report and in the Corporate Governance Report.


- The Bank was imposed a penalty of Rs. 74,500.00 on Specified Bank Notes (SBN) currency remittances made to RBI by our Currency Chests for defective/counterfeit currency detected (Rs. 1,000/-, Rs. 5,000/- & Rs. 68,500/- paid by our Vijayawada, Chennai and Salem currency chests respectively).

- The Bank was imposed a penalty of Rs. 89,000.00 on Specified Bank Notes (SBN) currency remittances made to RBI by our Ahmedabad Branch and Janpath Branch, Delhi for defective/counterfeit currency detected (Rs. 31,000/- & Rs. 58,000/- respectively).

- The Bank was imposed a penalty of Rs. 13,830 by Clearing Corporation of India Limited (“CCIL”) towards two instances of intra-day shortfall in maintenance of margin requirement in Security Guarantee Fund (SGF) deals on 22.09.2017 and 27.09.2017. The margin requirements were immediately replenished on the same date, however CCIL has charged a penal amount on technical ground for the shortfall on 27.09.2017.


In order to provide protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and for matters connected therewith or incidental thereto, as sexual harassment results in violation of the fundamental rights of a woman to equality under Articles 14 and 15 of the Constitution of India and her right to life and to live with dignity under Article 21 of the Constitution and right to practice any profession or to carry on any occupation, which includes a right to a safe environment free from sexual harassment, a well-defined policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been adopted in the bank. The complaints registered under the Act, on actions covered under the ambit of Sexual Harassment at work place are handled by a committee represented by Senior Executives of the Bank, a lady Law Officer and an external member. Redressal of such complaints are dealt in a prudent manner, giving equal opportunity to both the aggrieved and the accused for representation of the case and without affecting the dignity and self-esteem of the women employee (permanent, contractual, temporary, trainee).

Number of complaints pending as on the beginning of the financial year - Nil

Number of complaints filed during the financial year - 2

Number of complaints pending as on the end of the financial year - Nil


Disclosure of information in the public interest by the employees of an organization is increasingly gaining acceptance by public bodies for ensuring better governance standards and probity in the conduct of affairs. Large scale corporate frauds had necessitated, internationally, various legislative measures for safeguarding public interest through enactments.

As a proactive measure for strengthening financial stability and with a view to enhance public confidence in the robustness of the financial sector, RBI has formulated a scheme called “Protected disclosures scheme for private sector and foreign banks”.

In the above perspective, our Bank has formulated and implemented a “Whistle Blower Policy” which is made available in the Bank’s Website and local intranet. During the year 2017-18, no personnel has been denied access to the Audit Committee. The Web link thereto is


Pursuant to the Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has to conduct a familiarization programme for newly inducted Independent Directors and the Bank has done accordingly. In compliance with Regulation 46 (2) (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the familiarisation programme conducted are disclosed in the website of the Bank and can be viewed at Independent_Directors-TnC.aspx.


The Bank has formulated a Code of Conduct pursuant to the SEBI (Prohibition of Insider Trading) Regulations, 2015 to regulate,monitor and ensure reporting of trading by the employees and other connected persons towards achieving compliance with the SEBI Regulations and 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 Insider_Trading.aspx


Statutory Auditors:

The Statutory audit of the Bank was carried out by M/s. R. K. Kumar & Co, Chartered Accountants, Chennai whose report is annexed and forms part of this report. The Statutory Central and Branch Auditors have audited all the branches and other offices of the Bank. The qualified opinion of the Statutory Auditors together with the basis and our response to the same are furnished hereunder: Observation:

Basis for Qualified Opinion

* The financial statements of the bank include Advances (net of provisions) of Rs. 25768 crore after adjustment of third party deposits amounting to Rs. 794 crore, duly supported by legal opinions. The said adjustment is being questioned by the deposit holder. Pending resolution of the same, we are unable to comment on the impact, if any on the financial statements and legal/ regulatory consequences.

* The series of transactions leading to the above adjustment has resulted in shortfall in CRR maintenance. Penal consequences if any, thereon is not ascertainable.

Qualified Opinion

* In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the “Basis for Qualified Opinion” paragraph, the financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India of the state of affairs of the Bank, as at 31st March 2018 and its loss and its cash flows for the year then ended.


In the audited financial statement, the advances of the bank (net of provisions) is shown at Rs. 25,768.20 crores after the adjustment of loans against third party deposits amounting Rs. 794.00 crores. The said deposits relate to M/s. Religare Finvest Ltd and the same were held as security for the loans extended to M/s. RHC Holding Pvt. Ltd & M/s. Ranchem Pvt Ltd. Over the last year, the Bank had continuously pursued with the depositor and borrowers for regularization of the loans resulting in some iterations in the deposits and loans.

Eventually, on account of continuing default in clearing the loans, the said deposits were closed and the proceeds were adjusted to clear the said loans. As per legal opinion received by the bank, the adjustment of deposits against the loans is lawful. M/s. Religare Finvest Ltd has filed a suit in the last week of May 2018 in CS.(COMM).940/2018 against the bank before the Hon’ble

High Court, Delhi, disputing the said adjustment and the same is being defended appropriately by the bank and based on the legal advice the bank believes that no loss will arise on this score.

On account of the iterations in the deposits and loans, mentioned above, there arose a small resultant shortfall in the maintenance of CRR for a short period. The Bank has already notified RBI of the shortfall in CRR maintenance and has also provided Rs. 76.62 lakhs towards interest payable, if any for the shortfall. No regulatory proceedings are pending in this regard.

Quote: We draw attention to

(i) Note No. 3.3.6 of the financial statements, regarding deferment of provision for Mark to Market (MTM) losses on investment of Rs. 98.29 crores; and

(ii) Note No. 4.4.2 of the financial statements, regarding deferment of Gratuity provision of Rs. 11.27 crores Our opinion is not qualified in respect of these matters.


(i) Note No:3.3.6. As permitted by RBI vide circular DBR.NO.BP.BC.102/21.04.048/2017-18 dated April 2, 2018, the bank has opted to spread the provisioning for mark to market (MTM) losses on investments held in AFS and HFT for the quarter ended March 31,2018 equally over four quarters. Accordingly, Bank has provided Rs. 32.76 crore for depreciation of the Investment portfolio for the quarter ended March 2018. The balance amounting to Rs. 98.29 crore will be provided in the ensuing three quarters.

(ii) Note No:4.4.2. As permitted by RBI vide DBR.BP.9730/21.04.018/2017-18 dated 27.04.2018, the bank has opted to spread the additional liability on account of the enhancement in Gratuity limits from Rs. 10 lakhs to Rs. 20 lakhs. Accordingly, Employee cost for the quarter ended 31st March 2018 includes the 1/4th of the impact amounting to Rs. 3.75 crore and unamortised portion of Rs. 11.27 crore as on 31st March 2018 will be equally spread over the next three quarters.

Secretarial Auditor

Pursuant to the provisions of Companies Act 2013, the Bank has appointed Mr. K. Muthusamy, Practicing Company Secretary, Coimbatore (CoP 3176) as the Secretarial Auditor for the FY 2017-18. The Secretarial Audit Report dated 14.06.2018 is annexed to this report as Annexure-I. There are no qualifications, reservation or adverse remark or disclaimer in the report.


Your Directors would like to thank the shareholders and customers for their continued goodwill and support. The Board also gratefully acknowledges the guidance and co-operation received from the Reserve Bank of India and other regulatory and government authorities like SEBI, NSE, BSE, NSDL, CDSL and Department of Income Tax.

Your Directors would also like to acknowledge the unstinted support provided by the Management and staff including the Employees’ Union and Officers’ Association and look forward to a more evolved relationship, as steps are taken to re-orient the bank for the future.

For and on behalf of the Board of Directors

B.K. Manjunath Parthasarathi Mukherjee

Chairman of the Bank Managing Director & CEO

Place : Chennai

Date : 26.06.2018