IDBI Bank Directors Report, IDBI Bank Reports by Directors


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Directors Report Year End : Mar '15    « Mar 14
Dear Members,
 The Bank''s Board of Directors is pleased to present the Report on
 the business and operations for the financial year ended March 31,2015.
 In 2014-15, the Bank strived to improve its performance on all fronts
 despite confronting significant challenges emanating from the
 macroeconomic environment as well as various other sector-specific
 factors. The Bank surmounted these challenges through strategic
 initiatives which were complemented by organisational restructuring and
 mission-mode approach to catalyse growth in its business. Furthermore,
 the Bank continued to expand its reach across the country by rapidly
 adding to its branch and ATM network. With the objective of ensuring
 highest level of customer satisfaction, the Bank focused on optimizing
 its customer service to provide hassle-free experience to all its
 customers. The Bank was also able to expand its customer base by
 expanding its network which allowed easier accessibility as also
 offering an array of customized products and services with innovative
 features to meet the customers'' needs in a suitable manner. As on
 March 31, 2015, aggregate deposits and advances touched Rs. 2,59,836
 crore and Rs. 2,08,377 crore, reflecting a growth of 10% and 5%,
 respectively, over the previous year. Your Bank''s performance
 highlights for the period under review are presented in Table 1.
 Profit and Appropriations
 During 2014-15, your Bank''s gross income amounted to Rs. 32,162 crore,
 comprising interest income at Rs. 28,154 crore and other income at Rs.
 4,008 crore. Interest expenses stood at Rs. 22,406 crore and operational
 expenses at Rs. 4,027 crore, accounting for total expenditure (excluding
 provisions and contingencies). Total provisions during the year were at
 Rs. 4,855 crore, which mainly include Rs. 3,480 crore towards provision for
 bad and doubtful debts and investments. During 2014-15, your Bank''s
 operations resulted in Profit Before Tax (PBT) of Rs. 1,287 crore. After
 provision of Rs. 414 crore towards tax, Profit After Tax (PAT) amounted
 to Rs. 873 crore. The appropriation of PAT, as approved by the Board of
 Directors, is given in Table 2.
 Table 1 : Financial Highlights
                                                      (Rs. In crore)
 As on March 31                                   2014        2015
 Capital                                       1,603.94     1,603.96
 Reserves & Surplus                           22,034.92    22,712.96
 Deposits                                   2,35,773.63  2,59,835.97
 Borrowings                                   60,146.29    61,832.98
 Other Liabilities & Provisions                9,429.57    10,044.69
 Total Liabilities                          3,28,988.36  3,56,030.56
 Cash & Balances with RBI                     12,711.11    13,035.77
 Balances with Banks & Money at Call 
 & Short Notice                                4,106.80     1,489.99
 Investments                                1,03,773.50  1,20,963.21
 Advances                                   1,97,686.01  2,08,376.87
 Fixed & Other Assets                         10,710.94    12,164.73
 Total Assets                               3,28,988.36  3,56,030.56
 For the period                               2013-14      2014-15
 Total Income                                 29,576.27    32,161.62
 Total Expenses (other than provisions)       23,894.88    26,433.52
 Provisions (other than tax)                   3,940.26     4,440.78
 Profit Before Tax                             1,741.13     1,287.33
 Provision for Tax*                              619.73       413.94
 Profit After Tax                              1,121.40       873.39
 * Net of Current Income Tax and Deferred Income Tax
 Table 2 : Appropriation of Profits
                                                   (Rs. In crore)
 For the year ended March 31                  2014          2015
 Net Profit/(Loss) for the year             1,121.40       873.39
 Profit/(Loss) brought forward                903.86       896.77
 Profit available for Appropriations        2,025.26      1770.16
 Transferred to Statutory Reserve             281.00       218.35
 Transferred to Capital Reserve                 9.32       229.07
 Transferred to General Reserve               400.00        65.00
 Transferred to Special Reserve created 
 and maintained u/s 36(1)(viii) of            250.00       200.00
 IT Act, 1961
 - Equity Shares                              160.41       120.30
 - Tax on Dividend                             27.76        25.25
 Balance of Profit carried to Balance Sheet   896.77       912.19
 For each share with face value of Rs. 10, Earnings Per Share (EPS) during
 the year stood at Rs. 5.45, while Book Value per Share stood at Rs. 141.24
 as on end-March 2015. The Directors have the pleasure in recommending
 dividend at 75% on the fully paid-up equity share capital for 2014-15.
 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.
 The Bank holds more than 20%, but less than 50%, of equity capital of
 five companies. In the opinion of management, the Bank does not have
 any significant influence in these companies. Accordingly, these
 companies have not been considered as associate companies and the
 financial statements of these companies are not included in the
 consolidated financial statements. Financial Statements of the Joint
 Venture (IDBI Federal Life Insurance Company Ltd.) as incorporated in
 these accounts are unaudited and subject to Audit Committee/Board
 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.
 Material changes and commitments, if any affecting financial position
 of IDBI Bank which have ocurred 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 has occurred between the end of the
 financial year of the Bank i.e. March 31,2015 and the date of the
 Directors'' Report i.e May 26, 2015.
 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 &
 Operational Risks as prescribed under the Pillar-1 guidelines of the
 Basel III framework.  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.
 As on March 31, 2015, the Capital to Risk-weighted Assets Ratio (CRAR)
 of your Bank was 11.76% which is above the minimum regulatory
 requirement of 9.0%. Your Bank''s Common Equity Tier 1 (CET 1) ratio
 was 729% which is also above the minimum applicable CET 1 ratio of 5.5%
 stipulated by RBI. The Tier-I ratio stood at 8.18% as on March 31, 2015
 against the regulatory requirement of 70%.
 Your Bank has a Board approved policy on Internal Capital Adequacy
 Assessment Process (ICAAP), in line with the Pillar-2 norms of the
 Basel III framework, which enables the Bank to internally assess and
 quantify those risks that are not covered under Pillar-1 in addition to
 developing appropriate strategies to manage risks under normal and
 stress conditions. Your Bank has adopted a Disclosure Policy in
 accordance with the Pillar-3 requirements under the Basel norms and
 consequently, publishes disclosures on the Bank''s website at end of
 each quarter.
 Business Strategy
 During the year, your Bank continued to focus on rebalancing its
 business mix, through increasing accent on retail business and priority
 sector lending, with the intent of meeting regulatory requirements as
 well as de- risking its business portfolio. As a critical enabler, the
 Bank recalibrated its organization structure by adopting a
 decentralized approach by dividing the offices across the country into
 zones. Simultaneously, the zonal offices were vested with greater
 powers to facilitate better decision- making to drive the Bank''s
 business growth. A mission- mode approach has been adopted for
 strengthening the Bank''s position in retail banking as well as
 priority sector business while continuing to maintain predominance in
 industry and infrastructure financing. The Bank offers an entire gamut
 of products and services to cater to the financial needs of all
 segments of the society under one roof. These products and services are
 periodically reviewed and modified as well as innovative and customized
 features are introduced in tandem with the constantly evolving demand
 of your Bank''s customers to ensure high level of customer
 satisfaction and consequently, drive growth in its business.
 Key Business Initiatives
 As July 1, 2014 marked the completion of fifty epoch- making years of
 the Bank''s existence, various activities were planned as a part of
 the Golden Jubilee celebrations, commencing from the date. The
 opportunity was used to establish active engagement with various
 stakeholders of the Bank. The stakeholder engagement included
 activities aimed at customers (both Retail and Corporate), employees,
 society at large and opinion makers. The accent of all the activities
 was to reinforce the IDBI Bank brand identity, reiterate that we are a
 true friend of all our stakeholders which finally led to
 top-of-the-mind recall for the brand. The celebrations were kicked-off
 at a flagship event at Head Office on July 1, 2014. As a part of the
 celebrations, the Bank launched its Signature Debit Card, e-inaugurated
 50 branches, inaugurated Zonal Intranet Section and launched its mobile
 banking services, among other such initiatives. Simultaneous events
 were held at all nine zonal headquarters of the Bank (viz. Mumbai,
 Delhi, Kolkata, Chennai, Ahmedabad, Bhuwaneshwar, Bengaluru, Chandigarh
 and Nagpur).  To mark the occasion, a special logo was designed and was
 displayed prominently in the Bank''s ATMs, calendar, stationery and
 other such collaterals. The entire set of activities was planned with
 the theme celebration of 50 years of friendship with the customer
 and was used as an extension of the brand positioning as ''Bank Aisa
 Dost Jaisa'' as well as synchronizing its advertising campaigns,
 including creation of IDBI Anthem, with the Golden Jubilee theme.
 Your Bank continues to target a progressively larger retail business
 portfolio to facilitate a more balanced business mix, in keeping with
 its intended positioning as a full- service commercial bank. Towards
 this end, the Bank continued to rapidly expand its branch and ATM
 network to establish wide presence across the country. As on March 31,
 2015, your Bank''s network stood at 1717 branches (includes one
 overseas branch) marking an addition of 329 branches during the year.
 Pursuant to the objective of expanding the share of retail business in
 the overall business mix, your Bank currently offers a bouquet of
 Liability, Asset, Capital Market and Third Party products which are
 primarily aimed at meeting the customized needs of customers in the
 Retail Banking segment. The Bank''s important products and services
 for the retail segment have been listed in the Corporate Overview
 Section of this Report.
 Your Bank undertook organizational restructuring by merging its
 Priority Sector Group with its Retail Banking Group to provide for a
 more focussed approach to Priority Sector Lending (PSL) across all its
 branches by leveraging its growing branch network for augmenting
 priority sector business. The Bank has established 29 dedicated Credit
 Processing Centers (CPCs) that are staffed with specially trained
 personnel to expedite credit process.
 The Bank has continued to update and strengthen its numerous alternate
 channels of delivery. Expanding the bouquet of its products, your Bank
 launched Credit Card on Visa Platform in two variants, viz. Royale
 (Visa Signature Card) for elite HNI customers and Aspire (Visa Platinum
 Card) for other existing customers. Additionally, the Bank has launched
 its e-lounge facility, which is an automated banking service designed
 for delivering a wide range of banking services on 24x7 basis,
 beginning with Mumbai and has expanded its reach in a number of major
 centres across the country.
 Your Bank''s Corporate Banking Group (CBG) has been structured as
 CBG-I with mandate of looking after large- sized accounts and CBG-II
 with mandate of looking after medium-sized accounts. CBG has presence
 across the country. Your Bank''s CBG accords critical importance to
 multi-product sales, both in assets and liabilities, in order to offer
 a comprehensive portfolio of financial products and services and
 maximise yield.
 Actively providing project appraisal, debt syndication, structuring and
 advisory services across various sectors, your Bank, during the year,
 procured several mandates for appraisal and syndication of debt. Your
 Bank has been consistently ranked as one of the leading debt
 syndicators in India.
 Your Bank conducts its Trade Finance (TF) business through its
 full-fledged TF Centres (Authorized Dealer in Foreign Exchange) with
 presence across the country.  Furthermore, more than 60 Retail Banking
 branches have been enabled for undertaking Inland TF Business (LCs/
 BGs) so as to reach majority of domestic TF customers.
 Your Bank has continued to pursue various legal/ non- legal recovery
 efforts rigorously to improve asset quality and consequently, improve
 its bottom-line.
 Proactively engaging itself in Corporate Social Responsibility (CSR)
 activities, the Bank has put in place a Board-approved CSR Policy which
 provides the platform for undertaking interventions in areas such as
 education, health, gender equality and socio-economic empowerment,
 environmental sustainability, rural development projects, etc.. In
 order to make an even greater impact on targeted strata of society,
 your Bank, during the year, has not only been associated with deserving
 organizations but also has been proactively involved with Government of
 India''s Swachh Bharat Swachh Vidyalaya Abhiyan (SBSVA).
 In cognizance of the imperative to ensure inclusive growth, your Bank,
 in addition to various initiatives undertaken under Financial
 Inclusion, actively participated in the Pradhan Mantri Jan Dhan Yojana
 (PMJDY) which was launched as a National Mission on Financial Inclusion
 by the Hon''ble Prime Minister on August 15, 2014. Under the
 programme, your Bank opened 9.29 lakh accounts with facility of RuPay
 Debit cards and has been extending overdraft facility of up to Rs.
 5,000/- to the eligible account holders. Additionally, your Bank has
 also contributed to IBA Corpus Fund for PMJDY which was created to fund
 the PMJDY campaign.
 Your Bank''s advertising and publicity initiatives intensified during
 the year with focus on enhancing visibility and top- of-mind recall of
 the Bank by augmenting its profile in the media and financial community
 and thereby, reinforce stakeholder perceptions. Your Bank found
 numerous mentions in Print, Electronic and Digital media with an
 overall positive impression. The Bank''s advertisements, which
 essentially depict its supportive role through the visual images of
 everlasting friendship between kids while duly incorporating overall
 theme of Golden Jubilee, were released as a national television
 campaign and in print, Out of Home (OOH) and digital space. Various
 other product-specific campaigns, which focused on different products
 and services offerings of the Bank, were also launched to create
 awareness amongst the customers - existing as well as prospective.
 Your Bank recognises that in the banking sector, a strong Brand Equity
 is extremely important for deepening and widening customer
 relationships as also acquisition of new customers. Accordingly, your
 Bank has invested on building a strong Brand Identity, reinforcing the
 same through multiple initiatives. As a result, the Bank witnessed a
 rise in its Brand Equity as reflected in brand valuation and rankings
 which can be accredited to appropriate strategies, consistently
 supported by brand development activities through advertisements,
 internal communications and public relations. These strengths have been
 recognized by leading global professional bodies and got reflected in
 the high growth of Brand Value and ranking. Leading global research
 organisations like Millward Brown (Brand Z) and Interbrand have come
 out with their listing of top 50 brands in India across sectors. As per
 Brand Z, IDBI Bank ranks 39th among the top 50 brands in the country
 across sectors.  As per recent Interbrand rankings, IDBI Bank ranks
 37th among the top 50 brands in the country across sectors.  The Brand
 Finance Banking 500, published by Brand Finance, a leading global brand
 consultant, evaluates and compares the value of the world''s leading
 banking brands annually. As per the 2015 study, the valuation of IDBI
 Bank Brand has increased by 79% as at December 31, 2014 over the
 previous year. Globally, the ranking of IDBI Bank has improved from 351
 to 255 while in India the ranking has improved from 11th to 9th
 position. As per ''Brand Trust Report 2015, IDBI Bank''s Brand Trust
 ranking has shown a considerable improvement over the past years. The
 Bank was ranked 159th in 2013, 85th in 2014 and 64th in 2015 as per the
 latest report released recently. In the BFSI category, the Bank was
 ranked at the 5th position while among the PSU Banks, it was ranked at
 the 2nd position.
 Gyan Sangam-A Step towards New Banking Paradigm
 Ministry of Finance, Government of India, had organised the Bankers''
 Retreat - Gyan Sangam for Public Sector Banks (PSBs) on January 2-3,
 2015 at Pune to take forward the Government''s commitment to reforms
 in the financial sector. Six working groups were formed therein for
 deliberating and making recommendations on following issues relating to
 banking sector viz. (i) Leveraging Technology and Digital to improve
 banking operations efficiency, (ii) Rethinking Priority Sector Lending,
 (iii) Achieving Universal Financial Inclusion, (iv) Improving Risk
 Management, Asset Quality and Recovery, (v) Building a robust people
 strategy for PSBs and (vi) Consolidation and Restructuring of PSBs for
 better efficiency, governance and capital efficiency. The Working
 Groups made various recommendations which were summarized into two
 categories with separate actionable for the PSBs and policymakers,
 under two different time frames 0-12 months and one-three years. Your
 Bank is drawing up a detailed action plan to systematically take
 forward actionable on the part of the Bank.
 The details of your Bank''s key initiatives during 2014- 15 are
 featured under the Management Discussion and Analysis section of this
 Annual Report.
 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 clause 49 of the
 Listing Agreement. The Board functions directly as well as through
 various Board Committees constituted to provide focused governance in
 the important functional areas of your Bank.
 As on March 31, 2015, the Board comprised of eight Directors, including
 Chairman and Managing Director (CMD), two Deputy Managing Directors
 (DMDs), one Non-Executive Director and four Independent Directors.
 Shri M.S. Raghavan, Chairman & Managing Director as Executive Director,
 Shri B.K. Batra and Shri M.O. Rego, Dy.  Managing Directors as
 Executive Directors, Ms. Snehlata Shrivastava, Central Government
 official Nominee as
 Non-Executive Director, Shri P.S. Shenoy, Shri S. Ravi, Shri Ninad
 Karpe and Shri Pankaj Vats as Independent Directors constituted the
 Board as on March 31,2015.
 As per Government of India''s directives, it is proposed to separate
 the post of CMD into two posts of a Chairman and a Managing Director &
 CEO by amendment of Article 116(1)(a) at the ensuing AGM.
 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, Fraud Monitoring Committee, HR Steering Committee, Risk
 Management Committee, Recovery Review Committee, Corporate Social
 Responsibility Committee, Independent Directors'' Committee,
 Non-Cooperative Borrowers'' Review Committee, 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.
 Statement under Section 134 of the Companies Act, 2013 read with 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 CMD or DMDs of the Bank
 and who held by himself or along with his spouse and dependent
 children, not less than two per cent 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 this Act 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
 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.
 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 banking/ 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.
 Place: Mumbai                                  [M.S. Raghavan]
 Date : May 26, 2015              Chairman and Managing Director
Source : Dion Global Solutions Limited
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