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IDBI Bank Directors Report, IDBI Bank Reports by Directors
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IDBI Bank

BSE: 500116|NSE: IDBI|ISIN: INE008A01015|SECTOR: Banks - Public Sector
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Directors Report Year End : Mar '16    « Mar 15
The Bank''s Board of Directors is pleased to present the Report on its
 business and operations for the financial year ended March 31, 2016.
 
 During 2015-16, your Bank''s business strategy was shaped by emerging
 macroeconomic developments and evolving business dynamics. Re-balancing
 the portfolio mix continued to be the mainstay of your Bank''s business
 strategy during the year. This, along with other critical business
 enablers such as a well-calibrated organisational structure, strategic
 expansion of banking touch-points, actively leveraging on its proven IT
 prowess, digitisation of business processes, among other measures, has
 enabled your Bank to deliver enhanced customer experience at a reduced
 operating cost.
 
 Financial Highlights
 
 As on March 31, 2016, your Bank''s aggregate deposits and advances
 touched Rs. 2,65,720 crore and Rs. 2,15,893 crore, respectively,
 implying a growth of 2% and 4%, respectively over the previous year.
 Your Bank''s business highlights for the period under review are
 presented in Table 1.
 
 During the year under review, your Bank''s gross income amounted to Rs.
 31,453 crore, comprising interest income of Rs. 28,043 crore and other
 income of Rs. 3,410 crore. Interest expenses stood at Rs. 21,954 crore
 and operational expenses at Rs. 4,130 crore, accounting for total
 expenditure (excluding provisions and contingencies).Your Bank''s
 operations during the year resulted in an operating profit of Rs. 5,370
 crore.
 
 However, total provisioning of your Bank increased following the RBI''s
 Asset Quality Review (AQR) which required banks to proactively provide
 for certain accounts. Total provisions other than tax during the year
 were at Rs. 10,340.82 crore, which mainly include Rs. 9,191 crore
 towards provision for non-performing assets, bad and doubtful debts and
 investments. As a result, your Bank incurred a net loss of Rs. 3,665
 crore during 2015-16.
 
 Table 1 : Key Financials
 
                                                   (Rs. In crore) 
 
 As on March 31                                    2015          2016
 
 Capital                                      1,603.961      2,058.81
 
 Reserves & Surplus                           22,712.96     25,662.97
 
 Deposits                                  2,59,835.971   2,65,719.83
 
 Borrowings                                   61,832.46     69,573.94
 
 Other Liabilities & Provisions              10,158.651     11,356.57
 
 Total Liabilities                          3,56,144.00   3,74,372.12
 
 Cash & Balances with RBI                     13,152.82     13,822.91
 
 Balances with Banks & Money at 
 Call & Short Notice                          1,489.991       2,75763
 
 Investments                                   97700.88     98,999.43
 
 Advances                                   2,08,376.87   2,15,893.45
 
 Fixed & Other Assets                         35,423.44     42,898.70
 
 Total Assets                               3,56,144.00   3,74,372.12
 
 For the period                                 2014-15       2015-16
 
 Total Income                                 32,161.62     31,453.46
 
 Total Expenses (other 
 than provisions)                             26,433.52     26,083.39
 
 Provisions (other than tax)                  4,440.781     10,340.82
 
 Profit/(Loss) Before fax                       1,28733      (4970.75)
 
 Provision for fax*                              413.94     (1,305.95)
 
 Profit/ (Loss) After fax                        873.39     (3,664.80)
 
 * Net of Current Income Tax and Deferred Income Tax
 
 
 For each share with face value of Rs. 10, Earnings per Share (EPS)
 during the year stood at Rs. (21.77), while Book Value per Share stood
 at Rs. 107.41 as at end-March 2016. For the financial year 2015-16, the
 Board of Directors has not recommended any dividend.
 
 Report on the Performance and Financial Position of Subsidiaries and
 Joint Venture included in the Consolidated Financial Statement
 
 As required by Accounting Standard-21 issued by the
 
 Institute of Chartered Accountants of India, the Bank''s consolidated
 financial statements included in this Annual Report incorporate the
 accounts of its subsidiaries and other consolidating entities.
 
 A statement pursuant to Section 129 of Companies Act, 2013 showing key
 financials of the Bank''s subsidiaries/ Joint Venture is included
 separately in this Annual Report.
 
 The performance and financial position of Subsidiaries, Joint Venture
 and associates of the Bank as on March 31, 2016 has been annexed to
 this report as under.
 
                                                        (Rs. In''000s)
 
 Name of the entity     Net Assets, 
                        i.e., total assets    Share in profit or loss
                        minus total 
                        liabilities
 
                        As % of    Amount          As % of     Amount
                   consolidated               consolidated
                     net assets                  profit or 
 
 Parent : IDBI 
 Bank Ltd               96.92%   2772178 91        103.18%  -3664 80 26
 
 Subsidiaries:
 
 Indian:
 
 1.  IDBI Capital 
 Market Services 
 Ltd.                    1.09%   313 05 081          -0.26%        9 27
 76
 
 2.  IDBI 
 Intech Ltd.             0.13%     37 64 87          -0.12%     4 22 08
 
 3.  IDBI Asset 
 Management 
 Company Ltd.             0.34%   97 16 581          -0.10%     3 47 92
 
 4.  IDBI MF 
 Trustee Company 
 Ltd.                     0.00%     1 07 61           0.00%       17 30
 
 5.  IDBI 
 Trusteeship 
 Services Ltd.             0.46%   13185 45          -1.07%    38 10 39
 
 Foreign:                   NA       NA                NA         NA
 
 Minority 
 Interests in 
 all subsidiaries         0.21%     6145 62          -0.49%    17 26 11
 
 Foreign                  NA             NA             NA           NA
 
 Joint Ventures
 
 (as per 
 proportionate 
 consolidation 
 investment as 
 per the equity 
 method)
 
 Indian
 
 1.  IDBI Federal 
 Life Insurance 
 Company Ltd.             1.05%         300             83           27 
 
                         -0.21%           7             33           53
 
 Foreign                    NA           NA             NA           NA
 
 TOTAL                    100%     28603 41        781 100%  -355199 01
 
 Elimination            -1.91%   -544 98 23           1.09%   -38 82 52
 
 Net Total              98.09%        28058
                                      43 54         101.09%  -3590 8153 
 
 Note: None of the above subsidiaries have any subsidiary
 
 Material changes and commitments, if any, affecting financial position
 of IDBI Bank which have occurred during the end of financial year and
 the date of Board Report.
 
 There are no material changes and commitments affecting the financial
 position of the Bank which have occurred between the end of the
 financial year of the Bank i.e. March 31, 2016 and the date of the
 Directors'' Report i.e. May 20, 2016.
 
 The details in respect of adequacy of internal financial controls with
 reference to the financial statements.
 
 The Bank has adequate internal controls and processes in place with
 respect to its financial statements which provide reasonable assurance
 regarding the reliability of financial reporting and the preparation of
 financial statements.  These controls and processes are driven through
 various policies, procedures and certifications. The processes and
 controls are reviewed periodically.
 
 Capital Adequacy
 
 Your Bank computes regulatory capital requirement for credit, market
 and operational risks, as prescribed under the Pillar-I guidelines of
 the Basel III framework, on a quarterly basis. With regard to the
 requirement for higher quality capital highlighted under Basel III
 norms, your Bank, at present, has sufficient common equity to meet the
 regulatory requirements as stipulated in the guidelines.
 
 The Basel guidelines have introduced a mandatory Capital Conservation
 Buffer (CCB) with effect from March 31, 2016. The CCB is designed to
 ensure that banks build up buffers during normal times (i.e. outside
 periods of stress) which can be drawn down in case of losses incurred
 during stressed period. In line with the transitional arrangements of
 the regulatory guidelines, the CCB applicable for March 31, 2016 is
 0.625% (25% of total CCB of 2.5%). As on March 31, 2016, the Capital to
 Risk-weighted Assets Ratio (CRAR) of your Bank was 11.67% which is
 above the minimum regulatory requirement of 9.625% (including CCB).
 Your Bank''s Common Equity Tier 1 (CET 1) ratio was 7.99% which is also
 above the minimum applicable CET 1 ratio of 6.125% (including CCB)
 stipulated by RBI. The Tier-I ratio stood at 8.90% as on March 31, 2016
 against the regulatory requirement of 7.625% (including CCB).
 
 
 Your Bank has a Board approved policy on Internal Capital Adequacy
 Assessment Process (ICAAP), in line with the Pillar-ll norms of the
 Basel III framework, which enables it to internally assess and quantify
 those risks that are not covered under Pillar-I as well as develop
 appropriate strategies to manage risks under normal and stress
 conditions. Your Bank has adopted a Disclosure Policy in accordance
 with the Pillar-Ill norms under the Basel framework and consequently,
 publishes disclosures on the Bank''s website at the end of each quarter.
 
 Business Strategy
 
 Your Bank is at an inflection point and has a significant opportunity
 to embark on a path of transformation in order to reinvigorate its
 financial health. The comprehensive transformational process of the
 Bank is based on five pillars, viz. Business, People, Processes,
 Technology and Capital Management. Your Bank, along with leveraging on
 these five transformational pillars, will also adopt a multi- pronged
 strategy to achieve its business targets. This multi-pronged strategy
 will encompass further leveraging the synergy across verticals,
 subsidiaries and associate companies; capitalise on areas of core
 competencies such as project advisory and loan syndication business;
 augmenting the depositor base; aggressive focus on raising CASA
 deposits; boosting fee income; stepping up lending to retail including
 agricultural and MSME Lending, particularly PSL; digitisation of
 processes; strengthening recovery efforts etc. These initiatives will
 be complemented by strategic expansion of your Bank''s network and
 adoption of latest cutting edge technology to further leverage on its
 IT prowess to seamlessly cater to the growing business requirements.
 All these initiatives will ensure high level of customer satisfaction
 and consequently, improve the profitability of the Bank. The
 transformation process of your Bank will enable it to carve a niche for
 itself and emerge as a leading financial conglomerate.
 
 Key Business Initiatives
 
 In tandem with the broader objective of obtaining a more balanced
 business portfolio mix, your Bank continued to focus on increasing its
 retail business. To lend support to this business re-orientation
 process, your Bank offers a bouquet of innovative and customised
 products and services covering Liability, Asset, Capital Market, Third
 Party products through its brick and mortar branches and ATMs as well
 as alternate channels to cater to the diverse needs of its customers.
 To lend it a competitive edge, your Bank continued to revamp its
 existing product and services as also introduced new ones.
 
 To widen its reach to the retail customers, the Bank has been
 continuously striving to expand its footprints by tactically augmenting
 its branch and ATM network. As on March 31, 2016, your Bank''s network
 stood at 1,846 branches (including one overseas branch) and the number
 of ATMs stood at 3,310.
 
 Apart from augmenting its brick and mortar branches, your Bank is also
 continuously expanding and strengthening its alternate channels of
 delivery by leveraging its state-of- the-art technology infrastructure
 to provide a wide range of banking services to its customers on 24x7
 basis. Your Bank''s alternate channels of delivery viz. ATM, internet
 banking, mobile and tab banking, kiosks, e-lounge facility etc. are
 designed to deliver a wide range of banking services in a seamless
 manner. Your Bank accords topmost priority to security and
 confidentiality of customer transactions, information and data.
 Consequently, your Bank continues to employ highly sophisticated
 technology to ensure safe and secure environment for the customer while
 transacting through alternate channels. Towards this end, one of the
 path-breaking initiatives launched by your Bank during the year was the
 ''Abhay App'' which enables the customers to manage their debit card,
 thereby minimising chance of misuse.
 
 In adherence to the regulatory guidelines, your Bank continued to focus
 on Priority Sector Lending (PSL). During the year, your Bank launched
 two major products viz. IDBI MUDRA Loan and IDBI Bunkar MUDRA Yojana
 (IBMY) to cater to the credit requirements of all non-farm income
 generating activities under the Pradhan Mantri MudraYojna (PMMY). To
 supplement the Bank''s network, your Bank has appointed corporate as
 well as individual Business Correspondents/ Business Facilitators (BCs/
 BFs) to expand its outreach to the priority sector segments, thereby
 building a sustainable PSL portfolio.
 
 
 Your Bank has been proactive in partnering with the policymakers to
 further the objective of financial inclusion by ensuring access to
 appropriate financial products and services needed by most vulnerable
 sections of the society at an affordable cost in a fair and transparent
 manner.
 
 Your Bank, through its strategically located branches, serves the
 corporate customers through its three dedicated verticals viz.
 Corporate Banking Group-I (CBG-I), Corporate Banking Group-ll (CBG-II)
 and Infrastructure Corporate Group (ICG).  While CBG I and CBG II cater
 to large-sized and mid-sized corporate customers, ICG caters to
 corporate customers in the infrastructure sector which includes power,
 telecom, ports, roads and bridges, airports, urban infrastructure
 development, among other sectors.
 
 Your Bank continues to be proactive in extending project appraisal,
 debt syndication, structuring and advisory services across various
 sectors. During the year, your Bank bagged several mandates for
 appraisal and debt syndication. Your Bank has been consistently ranked
 as one of the leading debt syndicators in India.
 
 Your Bank has been active in the field of environmental banking for
 over two decades and has attained the role of a pioneer in this field.
 Your Bank became the first public sector commercial bank in India to
 have successfully raised US$ 350 million by way of Green Bonds from the
 international market. The funds raised through these Green Bonds will
 be utilised towards funding clean energy projects in India.
 
 Your Bank conducts its domestic and international Trade Finance (TF)
 business through its full-fledged TF Centres (Authorised Dealer in
 Foreign Exchange) and retail banking branches across the country so as
 to serve its corporate and retail trade finance customers. An
 innovative online facility ''IDBI eTrade'' was launched during the year
 for enabling customers to place online requests for various TF products
 in a paperless mode and hassle-free manner.
 
 Your Bank''s overseas branch at the Dubai International Financial Centre
 (DIFC) provides a wide-range of corporate banking services, including
 External Commercial Borrowings (ECB), Foreign Currency Loans (FCL) and
 syndication of ECB/ FCL, and trade finance products. Your Bank is also
 exploring opportunities to expand its presence internationally.
 
 The detailed descriptive of the Bank''s business initiatives undertaken
 during the year is contained in the Management Discussion and Analysis
 section of the Annual Report.
 
 Considering CSR interventions as an investment in building corporate
 reputation and employee engagement, your Bank has put in place a Board
 approved CSR policy in compliance with Companies Act, 2013. Through its
 CSR interventions, your Bank has been, inter alia, contributing towards
 
 promotion of healthcare, improved access to sanitation facilities,
 advancement of vocational and employable skills, enhancement of
 livelihood opportunities for disadvantaged strata of the society,
 supplementing environmental sustainability and holistic development of
 villages.
 
 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, 2013, the Articles of Association of your Bank and the
 requirements of Corporate Governance, as envisaged in SEBI (LODR)
 Regulations, 2015. The Board functions directly as well as through
 various Board Committees constituted to provide focussed governance in
 the important functional areas of your Bank.
 
 As on March 31, 2016, the Board comprised of seven Directors, including
 Managing Director and CEO (MD & CEO), Deputy Managing Director (DMD),
 one Non- Executive Director and four Independent Directors. Shri Kishor
 Kharat, Managing Director & CEO as Executive Director, Shri B.K. Batra,
 Dy Managing Director as Executive Director, Ms. Snehlata Shrivastava,
 Central Government official Nominee as Non-Executive Director, Shri S.
 Ravi, Shri Ninad Karpe, Shri Pankaj Vats and Shri Gyan Prakash Joshi as
 Independent Directors constituted the Board as on March 31, 2016. The
 present strength of seven Directors on the Board, as against
 constitution for the maximum strength of 13 Directors provided for
 under Article 116 (1), meets the requirement of Article 114 (a) of the
 Articles of Association.
 
 Apex Committees
 
 The Board has a total of sixteen committees, namely, Audit Committee of
 the Board, Customer Service Committee, Business Review Committee,
 Information Technology Committee, Executive Committee, Remuneration
 Committee, Stakeholders'' Relationship Committee, Nomination Committee,
 Frauds Monitoring Committee, HR Steering Committee, Risk Management
 Committee, Recovery Review Committee, Corporate Social Responsibility
 Committee, Independent Directors'' Committee, Non-Cooperative Borrowers''
 Review Committee and Wilful Defaulters Review Committee, to oversee
 various functional aspects of your Bank''s business and operations.
 
 Corporate Governance
 
 Your Bank is committed to adopting the best corporate governance
 practices. It 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 your Bank''s
 corporate governance practices are given in this Annual Report as a
 separate section under Corporate Governance Report.
 
 
 Business Responsibility Report
 
 The Securities and Exchange Board of India (SEBI), vide its
 notification in The Gazette of India SEBI/LAD-NRO/ GN/2015-16/27 dated
 December 22, 2015, has mandated the inclusion of Business
 Responsibility (BR) Report as part of the Annual Report for Top 500
 listed entities based on market capitalisation at BSE and NSE. The BR
 Report should describe initiatives taken by the listed entity from an
 environmental, social and governance perspective. The Bank''s Business
 Responsibility Report has been hosted on the website of the Bank
 (www.idbi.com).
 
 Statement under Rule 5 of the Companies (Appointment and Remuneration
 of Managerial Personnel) Rules, 2014
 
 There were no personnel in your Bank''s services, during the financial
 year under review, who received remuneration over Rs. 60 lakh annually.
 Besides, 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. Further, there was no personnel employed throughout the
 financial year or part thereof who was in receipt of remuneration at a
 rate, which in the aggregate, was in excess of that drawn by Managing
 Director & CEO or Deputy Managing Director of the Bank and who held by
 himself or along with his spouse and dependent children, not less than
 2% of the equity shares of the Bank.
 
 Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings and Outgo
 
 The provisions of Section 134(3)(m) of the Companies Act, 2013 read
 with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not
 applicable to your Bank. However, your Bank has been increasingly using
 information technology in its operations.
 
 Directors'' Responsibility Statement
 
 The Board of Directors, hereby, declares and confirms that:
 
 a.  In the preparation of the annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 b.  The Directors had selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the
 
 Bank at the end of the financial year and of the profit and loss of the
 Bank for that period;
 
 c.  The Directors had taken proper and sufficient care 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 fraud and other
 irregularities;
 
 d.  The Directors had prepared the annual accounts on a going concern
 basis;
 
 e.  The Directors had laid down internal financial controls to be
 followed by the Bank and that such internal financial controls are
 adequate and were operating effectively; and
 
 f.  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.
 
 Acknowledgements
 
 Your Bank''s Board of Directors is sincerely grateful to the Government
 of India, Reserve Bank of India (RBI), Securities and Exchange Board of
 India (SEBI), Insurance Regulatory and Development Authority of India
 (IRDA) and all other statutory/ regulatory authorities for their
 valuable co-operation and guidance. The Board also acknowledges, with
 gratitude, the co-operation and support received from various State
 Governments and other banks/ financial institutions. The Board thanks
 various multilateral institutions and international banks/ institutions
 for their periodic support.  The Board takes this opportunity to put on
 record its deep sense of gratitude to its loyal 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
 thankful to all such organisations/ agencies for formally recognising
 the Bank''s efforts. The Board appreciates the sincere and devoted
 services displayed by its entire staff and highly values their
 commitment in improving your Bank''s performance.
 
 [B.K. Batra]                                   [Kishor Kharat]
 
 Deputy Managing Director               Managing Director & CEO 
 
 (DIN-00015732)                                  (DIN-07266945)
 
 Place: Mumbai 
 
 Date : May 20, 2016
Source : Dion Global Solutions Limited
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