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IDBI Bank
BSE: 500116|NSE: IDBI|ISIN: INE008A01015|SECTOR: Banks - Public Sector
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
The Board of Directors of your Bank is pleased to present its Report on
 the business and operations of your Bank for the financial year ended
 March 31, 2013.
 
 Your Bank''s performance during the financial year 2012-13 improved
 significantly on many fronts, enabled by strategic policy initiatives,
 enhanced reach in terms of branch and ATM network and focussed customer
 service delivery. As on March 31, 2013, your Bank''s aggregate deposits
 and advances touched Rs. 2,27,116 crore and Rs. 1,96,306 crore,
 respectively, reflecting a corresponding growth of 7.90% and 8.71% over
 the previous year. The Performance highlights of your Bank for the
 period under review is presented in Table 1.
 
 Table 1 : Financial Highlights                          (Rs. crore)
 
 As on March 31,                                      2012         2013 
 
 Capital                                           1,278.4      1,332.7
 
 Reserves & Surplus                               18,148.7     19,902.5
 
 Deposits                                       2,10,492.6   2,27,116.5
 
 Borrowings                                       53,477.6     65,808.9
 
 Other Liabilities & Provisions                    6,919.0      8,607.9
 
 Total liabilities                              2,90,316.3   3,22,768.5
 
 Cash & Balances with RBI                         15,090.2     10,544.0
 
 Balances with Banks & Money at Call 
 & Short Notice                                    2,967.4      7,380.6
 
 Investments                                      83,175.4     98,801.0
 
 Advances                                       1,80,572.3   1,96,306.4
 
 Fixed & Other Assets                              8,551.0      9,736.5
 
 Total Assets                                   2,90,316.3   3,22,768.5
 
 For the Period                                    2011-12      2012-13
 
 Total Income                                     25,482.1     28,283.8
 
 Total Expenses (other than provisions)           21,432.5     22,825.6
 
 Provisions (other than tax)                       1,419.9      2,836.4
 
 Profit Before Tax                                 2,629.7      2,621.8
 
 Provision for Tax*                                  598.1        739.7
 
 Profit After Tax                                  2,031.6      1,882.1 
 
 * Net of current income tax and deferred income tax
 
 PROFIT AND APPROPRIATIONS
 
 During FY 2012-13, your Bank''s gross income amounted to Rs. 28,284
 crore, comprising interest income at Rs. 25,064 crore and other income
 at Rs. 3,220 crore. Interest expenses of Rs. 19,691 crore and
 operational expenses of Rs. 3,134 crore led to total expenditure,
 excluding provisions and contingencies, of Rs. 22,826 crore. Total
 provisions during the year were at Rs. 3,576 crore, which mainly
 includes Rs. 1,758 crore towards provision for bad and doubtful debts
 and investments, Rs. 383 crore towards bad debts written off, Rs. 493
 crore towards restructured assets, Rs. 172 crore towards incremental
 prudential provisions for standard assets, and Rs. 740 crore towards
 tax. Your Bank''s working during FY 2012-13 resulted in a Profit Before
 Tax (PBT) of Rs. 2,622 crore, After making a provision of Rs. 740 crore
 towards taxation, Profit After Tax (PAT) amounted to Rs. 1,882 crore.
 The appropriation of PAT, as approved by the Board of Directors, is
 given in Table 2.
 
 Table 2 : Appropriation of Profits                        (Rs. crore)
 
 For the year-ended March 31,                       2012          2013 
 
 Net Profit/(Loss) for the year                  2,031.6       1,882.1
 
 Profit/(Loss) brought forward                     615.0         672.6
 
 Profit available for Appropriations             2,646.6       2,554.7 
 
 Appropriations
 
 Transferred to Statutory Reserve                  507.9         470.8
 
 Transferred to Capital Reserve                     17.0         191.8
 
 Transferred to General Reserve                    750.0         150.0 
 
 Transferred to Special Reserve created and 
 maintained u/s 36(1)(viii) of IT Act, 1961        250.0         300.0 
 
 Dividend
 
 - Equity Shares                                   388.7         466.5
 
 - Tax on Dividend                                  60.3          71.7 
 
 Balance of Profit carried to Balance Sheet        672.6         903.9
 
 For each share with a face value of Rs. 10, Earning Per Share (EPS)
 during the year stood at Rs. 14.70, while Book Value per Share stood at
 Rs. 145.89 as at the end of March 2013. The Directors have the pleasure
 in recommending dividend at 35% on the fully paid-up equity share
 capital for the FY 2012-13.
 
 CAPITAL ADEQUACY
 
 Your Bank is Basel-II compliant and hence, computes its Capital to
 Risk-weighted Assets Ratio (CRAR) in adherence to norms prescribed by
 the RBI in this regard. Credit Risk is computed using the Standardised
 Approach, Market Risk is arrived at by using Duration Method of
 Standardised Approach and Operational Risk exposure is based on Basic
 Indicator Approach. The equity shareholding of the Government of India
 increased to 71.72% as at end-March 2013, through infusion of fresh
 equity capital to the extent of Rs. 555 crore during the FY 2012-13.
 Against the stipulated RBI norm of 9% for total CRAR and 6% for Tier-I
 CRAR, your Bank''s total CRAR stood at 13.13% with Tier-I CRAR of 7.68%,
 as at end-March 2013.
 
 BUSINESS STRATEGY
 
 During FY 2012-13, your Bank undertook various initiatives to drive
 growth in Retail business segment, with special emphasis on mobilising
 higher CASA deposits. Your Bank followed a strategy of deepening and
 widening the corporate banking and investment banking relationships.
 Simultaneously, it also laid special emphasis on acquiring and
 expanding its Priority Sector Business, which includes the MSME and
 Agri business, to broaden its asset portfolio.
 
 KEY BUSINESS INITIATIVES
 
 Pursuant to its aim of targeting a progressively larger retail business
 portfolio to facilitate a balanced business-mix as also to increase the
 complement of low-cost funds, your Bank currently offers a bouquet of
 Liability, Asset, Capital Market and Third Party products, primarily
 aimed at meeting the customised needs of customers in the Retail
 Banking segment. The products are periodically reviewed and
 modifications/ innovations/ customisation of existing products as well
 as introduction of new products are carried out on a regular basis.
 This is done in sync with observed and latent customer preferences,
 both as part of customer-centric service as well as for facilitating
 growth in business volumes.
 
 Business initiatives in the retail banking space are skilfully driven
 by enabling expansion in branch network and skilled manpower. Your Bank
 added 104 new brick and mortar branches during the current financial
 year. Your Bank, as a part of its customer convenience initiatives,
 continued to strengthen its alternate delivery channels by expanding
 its ATM network from 1,542, as on March 31, 2012, to 1,702 on March 31,
 2013.
 
 In the retail liability product segment, your Bank continued to design
 new products aligned to emerging customer needs. Your Bank rationalised
 existing products and also unveiled other customer-friendly initiatives
 to, inter alia, increase the complement of low-cost funds. As a tech-
 savvy, customer-friendly initiative for customers, who prefer to
 transact over the internet, your Bank enabled on-line opening of
 Savings Bank accounts in certain categories. Your Bank also
 successfully launched Online PPF Subscription Facility for its
 customers in February 2013. A customer maintaining PPF account with the
 Bank can now view his/ her PPF account details, print the account
 statement and also transfer funds from Savings Bank account to PPF
 account through Net Banking.
 
 With a view to promote transactions through electronic mode, your Bank
 has made NEFT transactions up to Rs. 1 lakh free of charge for all
 Retail Savings and Current Account customers with effect from June 20,
 2012.  Further, your Bank has extended NEFT facility to walk-in
 customers for cash deposits up to Rs. 50,000. A Floating Rate Interest
 on Retail Term Deposit (FRTD) product was launched in August 2012 to
 enable your Bank''s customers to leverage the upside of an increase in
 interest rates and also hedge floating rate advances. Your Bank has
 been authorised to accept deposits under the Capital Gains Accounts
 Scheme (CGAS), 1988. Four more currencies have been added to help your
 Bank''s NRI customers choose from a total basket of nine currencies for
 booking their FCNR (B) Deposits.
 
 In the retail lending space, a bouquet of initiatives and business
 enablers were put in place during the year.  The objective was to ramp
 up business volumes in all constituents of the retail lending area in
 an otherwise difficult year. Your Bank proceeded with missionary zeal
 to bring about business growth in the socially important Education Loan
 segment.  Towards this end, attractive and bespoke schemes were put out
 for various constituencies of this segment. In the Auto Loan segment,
 apart from attractive pricing, special festive campaigns, payout policy
 regarding Auto Dealers and their functionaries have been made conducive
 for enhanced sourcing of Auto Loan business and mutually gainful
 tie-ups with auto dealers/ manufacturers.
 
 Your Bank introduced online loan application facility with tracking
 system during FY 2012-13, beginning with Home Loans, which was
 subsequently extended to Auto Loans, Personal Loans and Education
 Loans. It is expected that the cost-effective, fast and transparent
 facility will provide an additional and more convenient option to your
 Bank''s customers to apply for its Loan products.  Simultaneously, with
 a view to improve the turnaround time, transparency and accuracy in
 loan processing as well as decision making, your Bank has launched an
 automated Loan Originating System (LOS). LOS is an end- to-end solution
 for retail loan products, which automates the loan process from login
 of the proposal till opening of loan account in Finacle Core.
 
 To augment the Bank''s Priority Sector Loans (PSL) business and develop
 a PSL portfolio, all the personal banking branches of your Bank have
 been tasked with the responsibility of sourcing and processing Agri and
 MSME loans, along with Home Loans and Education Loans, qualifying as
 PSL, from the current financial year.
 
 Your Bank continued to strengthen its Alternate Banking channels like
 ATMs, internet banking, mobile banking and others to provide customers
 with enabling options to reduce their dependence on the branch channel,
 while simultaneously offering 24x7 capabilities. From the Bank''s
 perspective, they are also cost-effective as the transaction cost is
 less compared to the branch channel. The Alternate Channels and
 Merchant Acquisition Business also provided avenues to your Bank for
 augmenting fee-based income, apart from helping acquire/ deepen
 existing relationships. Share of Alternate
 
 Banking Transactions total Branch Banking (Financial) transactions
 increased by 5% during the year to around 49% by March 2013. It helped
 reduce your Bank''s transaction costs, apart from freeing up soft
 resources at the Branch for redeployment in product sales.
 
 Your Bank was ranked among the Top 10 Banks having initiated more than
 10,000 M-remit (IMPS) mobile- based transactions during the National
 Payment Corporation of India (NPCI) campaign conducted in August 2012.
 Your Bank is in the process of launching a comprehensive Mobile Banking
 solution, which would enable customers to have access to their accounts
 24x7 on the move.
 
 Several initiatives were also undertaken by your Bank in the internet
 banking area during the year. To further enhance security of the
 internet banking channel from phishing and various other online frauds,
 your Bank took the lead to expeditiously implement a Digital Signature
 Certificate (DSC) based authentication solution to strengthen and
 further secure its Corporate I-net Banking channel. To drive awareness
 on cyber frauds and its prevention, customers are being educated about
 security measures taken by the Bank through E-mails and SMS. Inserts
 are sent in statements on a periodic basis. A pre-Login caution page
 explaining safe Internet banking practices is also being displayed. A
 series of Safety measures (Do''s and Don''ts) to use Net Banking is also
 displayed on the Bank''s website. In addition to channel alerts (ATM,
 Net Banking and Point of Sale transactions), SMS alerts for all channel
 transactions, including stop payment confirmation/ cheque(s) deposited
 and returned are being sent to all Personal Banking Group (PBG)-tagged
 customers, irrespective of registration for the service, to keep them
 informed and avoid possible misuse.
 
 Your Bank has constantly endeavoured to cater to the diverse needs of
 its MSME clients. Your Bank has also developed innovative and
 user-friendly products and services for the MSME sector to promote
 their growth in the sphere of industry and services. Considering the
 importance of credit rating, your Bank has signed Memorandums of
 Understanding (MoUs) with CRISIL and SME Rating Agency of India (SMERA)
 to provide credit rating-related services to the MSME clients. Your
 Bank has also entered into a MoU with Small Industries Development Bank
 of India (SIDBI) - the apex financial institution for MSME Sector - to
 offer Loan syndication services to the Sector. Your Bank has also
 entered into a Memorandum of Co-operation (MoC) with the Export Import
 Bank of India (Exim Bank) to co-finance, co- arrange and syndicate
 Rupee and Foreign Currency loans to eligible export-oriented companies,
 particularly in the MSME sector.
 
 Consequent upon the reclassification of direct agriculture exposure by
 the Reserve Bank of India in July 2012, the Bank''s focus has veered
 towards catering to direct retail lending to farmers involved in crop
 cultivation and allied activities. To reach out to the remotest part of
 the country, the Bank appointed 35 Business Correspondents/ Business
 Facilitators (BC/BF). Your Bank continued to encourage formation of
 farmers'' clubs in the villages covered by rural branches for garnering
 higher Agri Business. Your Bank''s engagement with farmers and other
 agriculture intermediaries was also enhanced through participation in
 various ''Agri Expos'' and ''Loan Melas'' conducted at different locations
 in the country.
 
 Your Bank''s Corporate Banking Group (CBG) has a strong focus on
 multi-product sales - both assets and liabilities - to maximise yield.
 With the reorganisation of Large and Mid-Corporate Group, a unified
 Corporate Banking Group was formed in June 2012 to cater to all
 corporate clients with funding requirement of more than Rs. 5 crore.
 To effectively operationalise the business, CBG has been reorganised
 into seven regions and operates through 29 Specialised Corporate
 Branches (SCBs) present across 25 cities.
 
 During FY 2012-13, your Bank opened two new Nostro Accounts in AUD and
 SGD currencies, with Australia & New Zealand Banking Group Ltd. (ANZ),
 Melbourne, Australia and United Overseas Bank, Singapore, respectively,
 for DIFC, Dubai Branch operations. A new Nostro account was also opened
 in Korean Won (KRW) currency with Standard Chartered First Bank, Seoul,
 South Korea, for Indian operations. During the year, your Bank opened
 one new Trade Finance (TF) Centre at Bandra-Kurla Complex (BKC),
 Mumbai, thereby increasing the total number of TF locations to 40. Your
 Bank has been establishing inland Letters of Credit (LCs) through
 Structured Financial Messaging System (SFMS) developed by the Institute
 for Development and Research in Banking Technology (IDRBT), Hyderabad.
 Your Bank implemented the SFMS system in all its 40 Specialised Trade
 Finance Branches for issuance of LCs according to the directive of the
 Ministry of Finance, with effect from January 1, 2013. SFMS is a highly
 secure messaging standard developed to serve as a platform for
 intra-bank and inter-bank applications. Your Bank is also fully ready
 for issuance of Bank Guarantees using this highly efficient platform.
 Your Bank is also among the first few institutions to issue Electronic
 Bank Realisation Certificate of Export Realisation (e-BRC). The process
 envisages direct uploading of digitally signed e-BRC covering export
 realisation details to Directorate General of Foreign Trade''s (DGFT)
 site, thereby making the process of settlement of export-related
 benefits/ incentives faster and hassle-free for the exporters.
 
 Strengthening relationship with Foreign Banks continued to be your
 Bank''s priority to enhance Trade Finance Business, which has
 contributed to the augmentation of fee income.
 
 The Singapore Dollar Bond issue by your Bank was the first benchmark
 public bond transaction by any Indian entity in the Singapore Dollar
 bond market, opening up a new source of funding and investor
 diversification for Indian issuers.
 
 Your Bank became the first in the country to launch an internet-based
 portal dedicated to retail investors in Government Securities,
 christened as IDBI Samriddhi GSEC. To popularise Certificate of
 Deposit (CD) as a mode of investment among retail investors, your Bank,
 in August 2012, launched the first online CD portal in the country,
 called IDBI Samriddhi CD portal. This CD portal helps retail investors
 subscribe online to CDs issued by your Bank with a minimum of Rs. 1
 lakh and in multiples of Rs. 1 lakh thereafter. Your Bank also entered
 into Global Master Repurchase Agreements (GMRA) with various market
 participants and was the first Public Sector Bank in the country to
 undertake Repo deal in corporate bonds.
 
 ORGANISATION STRUCTURE
 
 To execute its strategy of building a robust customer base, facilitate
 CASA growth, improve customer service and further the cause of
 inclusive banking, your Bank embarked on a calibrated branch-category
 wise expansion drive. The Bank added 104 domestic branches during FY
 2012-13. Of the domestic network of 1,076 branches, as on March 31,
 2013, as many as 274 are located in metropolitan centres, 388 in urban
 centres, 282 in semi-urban centres and 132 in rural centres, including
 21 branches at hitherto unbanked areas; besides, your Bank has one
 fully operational overseas branch at DIFC, Dubai. Branches at a few
 locations were relocated and renovated to have a uniform decor across
 all branches.
 
 Customer relationship and service forms the core of your Bank''s
 initiatives. Accordingly, your Bank is currently organised on the lines
 of ''Customer Focused Vertical'' model, capable of delivering improved
 services. The model has achieved significant success in enhancing
 customer relationship management. Besides, it has improved credit
 delivery and brought sharper focus to business lines, which are
 sustainable and remunerative.  Both the retail and corporate business
 segments of your Bank were further reorganised to enhance business
 delivery and reduce turnaround time.
 
 BOARD OF DIRECTORS
 
 Your Bank''s Board of Directors is broad-based and its constitution is
 governed by the provisions of the Banking Regulation Act, 1949, the
 Companies Act, 1956 and the Articles of Association of the Bank. Your
 Bank''s constitution satisfies the requirements of good corporate
 governance as envisaged in the Listing Agreement with the Stock
 Exchanges. The Board functions directly as well as through various
 Board Committees, which are constituted to provide focussed governance
 in important functional areas of the Bank.
 
 As on March 31, 2013, the Board comprised seven Directors with two
 Whole-Time Directors (viz., Chairman and Managing Director and Deputy
 Managing Director), one Non-Executive Director and four Independent
 Directors. None of your Bank''s Directors are related to each other.
 
 APEX COMMITTEES
 
 The Board has, in all, eleven committees, viz., Executive Committee,
 Audit Committee, Shareholders''/ Investors'' Grievance Committee, Frauds
 Monitoring Committee, Risk Management Committee, Customer Service
 Committee, Information Technology Committee, Remuneration Committee,
 Nomination Committee, HR Steering Committee and Recovery Review
 Committee. These committees oversee various functional aspects of your
 Bank''s business and operations.
 
 CORPORATE GOVERNANCE
 
 Your Bank is committed to adopt the best practices in corporate
 governance. Your Bank believes that proper corporate governance is not
 just a requirement for regulatory compliance, but also a facilitator
 for enhancement of stakeholders'' value. The details of corporate
 governance practices followed in your Bank are given in this Annual
 Report as a separate section under the Management Discussion and
 Analysis.
 
 Statement under Section 217(2A) of the Companies Act, 1956
 
 During the entire financial year under review, there were no personnel
 in your Bank''s services who received remuneration over Rs. 60 lakh per
 annum. Further, there were no personnel in the service of the Bank for
 a part of the year who received remuneration in excess of Rs. 5 lakh
 per month. The provisions of Section 217(1)(e) of the Act relating to
 conservation of energy and technology absorption do not apply to your
 Bank.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 The Board of Directors hereby declares and confirms that:
 
 a.  In the preparation of accounts, the applicable accounting standards
 had been followed, along with proper explanation relating to material
 departure.
 
 b.  The Directors had adopted such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 your Bank at the end of the accounting year and of the profit or loss
 of your Bank for that year;
 
 c.  The Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records, in accordance with the
 regulatory provisions, for safeguarding the assets of your Bank and for
 preventing and detecting fraud and other irregularities; and
 
 d.  The Directors had prepared the accounts on a going concern basis.
 
 ACKNOWLEDGEMENTS
 
 The Board of Directors of your Bank expresses its sincere thanks to the
 Government of India, Reserve Bank of India (RBI), Securities and
 Exchange Board of India (SEBI), Insurance Regulatory and Development
 Authority (IRDA) and all other Statutory/ Regulatory Authorities for
 their valuable co-operation and guidance. The Board is equally grateful
 for advice received from distinguished colleagues, who ceased to be
 Directors of the Bank during 2012-13. The Board also acknowledges the
 co-operation and support received from various state governments and
 other banking/ financial institutions. The Board thanks various
 multilateral institutions and international banks/ institutions for
 their periodic support. The Board also takes this opportunity to thank
 all its shareholders and customers for extending their support during
 the year and looks forward to their continued association in the years
 ahead. During the financial year, the Bank has received various
 recognitions and accolades for its excellence in the banking domain.
 The Board is indeed thankful to all such organisations/ agencies for
 their appreciation of the Bank''s efforts. The Board appreciates the
 sincere and devoted services displayed by its entire staff and highly
 values their commitment towards improving your Bank''s performance.
 
                                                     (M. S.Raghavan)
 
                                     Chairman and Managing Director
 
 Place: Mumbai
 
 Date: July 8, 2013
Source : Dion Global Solutions Limited
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