Karnataka Bank Directors Report, Karnataka Bank Reports by Directors

Karnataka Bank

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Directors Report Year End : Mar '16    Mar 15
The Directors have pleasure in presenting the Ninety Second Annual
 Report together with the Audited Statement of Accounts for the year
 ended 31st March, 2016 and the Auditors'' Report.
 Your Directors are pleased to inform that during the year under report,
 your Bank has been able to achieve satisfactory growth in all the areas
 of operation.  Performance highlights for the financial year in the key
 financial areas are as under: -
                                                         (Rs. in crore)
 Particulars                         As on / for the   As on / for the
                                     year ended        year ended
                                     31.03.2016        31.03.2015
 Deposits                              50488.21          46008.61
 Advances                              33902.45          31679.99
 Investments                           16256.65          14031.67
 Gross Income                           5535.07           5205.41
 Operating Profit                        854.53            773.38
 Net Profit                              415.29            451.45
 The total business turnover of the Bank was Rs.84390.66 crore as on
 31st March 2016, an increase of 8.63 percent over the preceding year.
 The total assets of the Bank increased from Rs.51836.60 crore to
 Rs.56500.33 crore recording a growth of 8.99 percent for the year
 The total deposits of the Bank grew from Rs.46008.61 crore as on 31st
 March 2015 to Rs.50488.21 crore as on 31st March 2016, registering a
 growth of 9.74 percent.
 During the year, low cost deposits of the Bank, viz.  Savings and
 Current Account Deposits have shown growth of 15.58 percent and
 constitute 26.26 percent of the total deposits of the Bank. The market
 share of the Bank in deposits was 0.527 percent.
 The total advances grew from Rs.31679.99 crore as on 31st March 2015 to
 Rs.33902.45 crore as on 31st March 2016, an increase of 7.02 percent.
 The priority sector advances increased from Rs.14344.96 crore to
 Rs.16152.56 crore which, together with the Rural Infrastructure
 Development Fund (RIDF) exposure, formed 47.57 percent of Adjusted Net
 Bank Credit (ANBC) and agricultural advances increased from Rs.5145.55
 crore to Rs.5838.07 crore which, together with eligible RIDF exposure,
 constituted 17.19 percent of ANBC. Lending under various socio-economic
 schemes has shown satisfactory progress. The market share of the Bank
 in loans and advances was 0.497 per cent.
 As on 31st March 2016, the total investments of the Bank stood at
 Rs.16256.65 crore as against Rs.14031.67 crore as on 31st March 2015,
 an increase of 15.85 percent.
 In the backdrop of continued stress on the assets quality and the
 subdued credit off take during the year ended 31st March, 2016, the
 performance of your Bank can be considered satisfactory. The gross
 income of the Bank was Rs.5535.07 crore and total expenditure
 (excluding provisions and contingencies) was Rs.4680.54 crore. The net
 interest income was Rs.1302.87 crore.
 Your Bank earned an operating profit of Rs. 854.53 crore for the year
 2015-16 as against Rs.773.38 crore for the previous year showing a
 growth of 10.49 percent. The net profit of the Bank decreased from
 Rs.451.45 crore to Rs.415.29 crore on account of the increase in
 provision for loan loss.
 The net profit of Rs.415.29 crore which along with a sum of Rs. 0.40
 crore brought forward from the previous year, aggregating Rs.415.69
 crore, is appropriated as under.  The corresponding figure for the
 previous year was Rs. 451.61 crore.
 Appropriation                                   Rs. in crore
 Transfer to Statutory Reserve                       230.00
 Transfer to Capital Reserve                           8.85
 Transfer to Revenue, General &
 Special Reserves                                     67.24
 Transfer to Investment Reserve                       (3.84)
 Transfer to Proposed Dividend
 (including tax)                                     113.41
 Balance carried to Balance Sheet                      0.03
 Total                                               415.69
 Having regard to the overall performance of the Bank and the positive
 outlook for the future, the Board of Directors recommended a dividend
 of Rs.5 per share i.e.  50 percent on the paid up capital (previous
 year 50 per cent) for the reporting year. The dividend payout ratio for
 the year works out to 22 .69 percent.
 The earnings per share (basic) and the book value per share as on 31st
 March 2016 stood at Rs.22.04 and Rs. 195.83 respectively.
 During the year under report, the capital funds of your Bank increased
 from Rs.3973.18 crore to Rs. 4185.24 crore, registering a growth of
 5.34 percent. The Capital Adequacy Ratio stood at 12.03 percent as on
 31st March 2016, as per BASEL III norms (Previous year 12.41 percent).
 The Bank has been consistently maintaining the Ratio well above the
 minimum of 9.625 percent stipulated by the Reserve Bank of India. The
 market capitalisation as on March 31, 2016 was Rs.  1934.50 crore.
 During the year under report, your Bank achieved a turnover of
 Rs.14277.44 crore in foreign exchange business as against Rs.15005.22
 crore in the previous year. The outstanding advances to export sector
 stood at Rs. 1633.95 crore as on March 31, 2016.
 Your Bank has been focusing on containing the non- performing assets
 through better credit monitoring as well as intensified efforts to
 recover the impaired assets. However, in view of the continuing slow
 down in the economy and delinquencies in select sectors, the Bank''s
 Gross NPAs as on March 31, 2016 have increased from Rs.944.21 crore
 (2.95 percent) to Rs. 1180.40 crore by the year end (3.44 percent). The
 Net NPAs stood at Rs.795.47 crore (2.35 percent) as against Rs. 623.55
 crore (1.98 percent) as on 31st March 2015. The Provision Coverage
 Ratio (PCR) computed in accordance with the RBI guidelines works out to
 48.39 percent as on March 31, 2016 (Previous year 50.54 percent).
 ICRA Limited and Credit Analysis and Research Limited, (CARE) who had
 rated the Unsecured Redeemable Non-Convertible Subordinated (Lower
 Tier-II) debt instruments issued during the earlier years aggregating
 Rs. 600 crore have retained the rating ICRA A and CARE A
 respectively for the aforesaid instruments. The instruments with these
 ratings are considered to have adequate/high degree of safety regarding
 timely servicing of financial obligations. Such instruments carry very
 low credit risk.
 During the year under report, your Bank has opened 50 new branches in 9
 States  one each in the States of Andhra Pradesh, Chattisgarh, Haryana
 , Kerala and Chandigarh (U.T.), 34 in Karnataka, three in Maharashtra,
 four in Tamilnadu, two each in Uttar Pradesh and West Bengal. Out of
 the 34 new branches opened in Karnataka, 13 are in Unbanked Rural
 Centres under Financial Inclusion Initiatives of the Bank. Your Bank
 has opened two more Regional Offices at Udupi & Tumakuru during the
 year under report. Further, your Bank has added 275 ATM outlets at
 various locations during the year 2015-16. Your Bank has also 24X7
 e-lobby facility at 25 locations.
 As at 31st March 2016, your Bank had 2,003 Service Outlets i.e. 725
 branches, 1,275 ATMs and 3 extension counters spread across 21 States
 and 2 Union Territories. Apart from the above, your Bank has 12
 Regional Offices, an International Division, a Data Centre, a Customer
 Care Centre, 4 Service branches, 2 Currency Chests, 2 Central
 Processing Centres and 3 Asset Recovery management branches.
 Further, for better ambience and improved customer service, your Bank
 shifted 15 branches/offices to new premises during the year 2015-16.
 During the year under report, a total of 9266 equity shares have been
 allotted to the employees of your Bank, pursuant to the exercise of
 options vested under the Employees Stock Option Scheme of the Bank.
 Disclosure in respect of Employee Stock Options Scheme pursuant to SEBI
 (Employees Stock Options Scheme and Employees Stock Purchase Scheme)
 Guidelines, 1999 is given in Annexure II to this report.
 As on March 31, 2016, your Bank had a total of twelve Directors,
 including a woman director. All of them, except Messrs U R Bhat and
 Keshav K Desai, Additional Directors and Mr.  P Jayarama Bhat, Managing
 Director and CEO, are Independent Directors. The details of the
 criteria for appointment and remuneration of Directors are provided in
 the report on Corporate Governance forming part of this report.
 Pursuant to the provisions of Section 149(6) of the Companies Act,
 2013, your Bank has received necessary declarations from all the
 non-executive directors confirming that they meet the criteria of
 independence for Independent Directors. Two Additional Directors have
 also furnished similar declarations and subject to their approval of
 their appointment at the ensuing Annual General Meeting, they also meet
 the criteria of independence for Independent Directors.
 Mr. P Jayarama Bhat, MD & CEO of the Bank has been re-appointed by the
 Board for a further period of three years effective from July 14, 2015
 as approved by the Reserve Bank of India vide their letter DBR.Appt.
 No.  18976/08.40.001/2014-15 dated June 15, 2015 and the members of the
 Bank at the Annual General Meeting held on July 16, 2015.
 The Board of Directors has appointed Mr. U R Bhat, Mumbai a well known
 investment advisor and Mr. Keshav K Desai an entrepreneur from Hubballi
 as Additional Directors on February 19, 2016 and as per Section 161 of
 the Companies Act, 2013 they would hold office upto the date of ensuing
 Annual General Meeting. Bank has received necessary notices under
 Section 160 of the Companies Act, 2013 proposing their candidature for
 appointment as Independent Directors of the Bank at the ensuing Annual
 General Meeting.  Having regard to their vast experience, rich
 knowledge and expertise, your Directors recommend their appointment. A
 brief resume and other details of the above Directors are furnished in
 the notice of the Annual General Meeting.
 During the year under report the Board had met 13 times and the details
 thereof are provided in the report on Corporate Governance forming part
 of this report.
 The Bank has 12 Committees which were constituted to comply with the
 requirements of relevant provisions of the applicable laws and for
 operational efficiency.
 Details of the meetings of the Board and the Committees, their
 composition, terms of reference, powers, roles etc are furnished in the
 report on Corporate Governance forming part of this report.
 Your Bank is committed to follow the best practices of corporate
 governance to protect the interests of all the stakeholders of the
 Bank, viz. shareholders, depositors, other customers, employees and the
 society in general and maintain transparency at all levels. A detailed
 report on corporate governance practices is given as Annexure IV to
 this report.
 Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule
 12(1) of the Companies (Management and Administration) Rules, 2014, an
 extract of the Annual Return of the Bank as on March 31, 2016 is
 annexed (Annexure V).
 Your Board of Directors has laid down criteria for performance
 evaluation of Directors, Chairman, MD & CEO, Committees of the Board
 and Board as a whole and also the evaluation process for the same. The
 statement indicating the manner in which formal annual evaluation of
 the Directors, the Board and Committees of the Board etc., are given in
 detail in the report on Corporate Governance, which forms part of this
 Annual Report.  In pursuance to the above, Independent Directors in
 their separate meeting held on March 18, 2016 have reviewed and
 evaluated the performance of Board as a whole, Chairman of the Board
 and the Managing Director and CEO.
 Further, the Board also reviewed the performance of committees of the
 Board and that of individual Independent Directors at its Meeting held
 on March 18, 2016.
 In accordance with Section 134(3)(c), 134(5) of the Companies Act, 2013
 read with Rule 8 of the Companies (Accounts) Rule, 2014, your Directors
 state that:
 (a) in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 (b) the directors have 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 as at the end of financial year March 31, 2016 and profit
 and loss account for that period.
 (c) the directors have 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
 (d) the directors have prepared the annual accounts on a going concern
 (e) the directors have laid down the internal financial controls
 followed by the Bank and that such internal financial controls are
 adequate and are operating effectively.
 (f) the directors have devised proper systems to ensure compliance with
 the provisions of all applicable laws and that such systems were
 adequate and operating effectively.
 Management Discussion and Analysis
 The Management Discussion and Analysis Report for the year under review
 pursuant to Regulation 34(3) read with Schedule V of the SEBI(Listing
 Obligations and Disclosure Requirements) Regulations 2015 is presented
 in a separate section forming part of this report.
 The Bank has implemented the Protected Disclosure Policy (Whistle
 Blower Policy) since the year 2007 intended to promote participation of
 employees at all levels and detection of corruption, misuse of Office,
 criminal offences, suspected /actual fraud, failure to comply with the
 rules and regulations prescribed by the Bank and any events /acts
 detrimental to the interest of the Bank, depositors and the public
 resulting in financial loss/operational risk, loss of reputation etc.
 Further, the mechanism adopted by the Bank encourages the Whistle
 Blower to report genuine concerns or grievances and provides for
 adequate safeguards against victimization of Whistle Blower who avails
 such mechanism and also provides for direct access to the Chairman of
 the Audit Committee, in exceptional cases. There was no occasion when
 an employee was denied access to the Audit Committee for reporting any
 events under the aforesaid policy. The functioning of the Vigil
 mechanism is reviewed by the Audit Committee periodically. The details
 of Whistle Blower Policy is posted in our website and available at the
 link: Disclosure.jsp
 All related party transactions that were entered into during the
 financial year were in the ordinary course of the business of the Bank
 and were on arm''s length basis. There were no materially significant
 related party transactions entered into by the Bank with Directors, Key
 Managerial Personnel or other persons which may have a potential
 conflict with the interest of the Bank. As such disclosure in Form
 AOC-2 is not applicable.
 The policy on dealing with Related Party Transactions as approved by
 the Audit Committee / Board has been placed in the website of the Bank.
 The disclosures under sub-section (3) of Section 134 of the Companies
 Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014
 are furnished below:
 a) Conservation of Energy and technology absorption
 Considering the nature of the Bank''s business, the provisions of
 Section 134(3)(m) of the Companies Act, 2013 relating to conservation
 of energy and technology absorption are not applicable to your Bank.
 The Bank has, however, used information technology in its operations
 b) Foreign Exchange Earnings and outgo: During the year ended March 31,
 2016, the Bank has earned Rs.53.69 crore and spent Rs.17.24 crore in
 foreign currency.
 c) There were no significant and material orders passed by the
 regulators or courts or tribunals impacting the going concern status
 and BankRs.s operations in future.
 d) Internal Financial Control Systems and their adequacy: Your Bank has
 laid down standards, processes and structure facilitating the
 implement- ation of internal financial control across Bank and ensure
 that same are adequate and operating effectively.
 e) Key Managerial Personnel: Mr. P Jayarama Bhat, MD & CEO, Mr.
 Raghurama, CFO and Mr. Y V Balachandra, Company Secretary of the Bank
 were the Key Managerial Personnel of the Bank as on March 31, 2016 as
 per the provisions of the Companies Act, 2013. None of the Key
 Managerial Personnel has resigned. However, the Board has designated
 Mr. Chandrashekar Rao B as CFO in place of Mr. Raghurama w.e.f. April
 23, 2016.
 f) Remuneration of directors: Disclosures pursuant to Section 197(12)
 of the Companies Act, 2013 read with Rule 5 of the Companies
 (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
 given in Annexure VIII to this report.
 g) Employees who are in receipt of remuneration exceeding rupees sixty
 lakhs etc.: Statement showing the particulars of employees who were in
 receipt of remuneration during the year 2015-16 requiring disclosure
 under Rule 5(2) of the Companies (Appointment and Remuneration of
 Managerial Personnel) Rules, 2014 is annexed.
 a.  Statutory Auditors
 M/s. Kamath & Rau, Chartered Accountants, Karangalpady,
 Mangaluru-575003 and M/s. Abarna & Ananthan, Chartered Accountants, #
 521, 3rd Main, 6th Block, 2nd Phase, BSK 3rd Stage, Bengaluru-560085
 would retire as joint Statutory Central Auditors of the Bank at the
 ensuing Annual Meeting of the members of the Bank and are eligible for
 re-appointment subject to the approval of Reserve Bank of India. The
 Bank has received consent from the above auditors and necessary
 confirmation from them that they are not disqualified to be appointed
 as auditors of the Bank pursuant to the provisions of the Companies
 Act, 2013 and the Rules made thereunder. Accordingly having regard to
 the provisions of the Companies Act, 2013, extant guidelines of Reserve
 Bank of India and as approved by the Reserve Bank of India, the Board
 of Directors of the Bank has recommended the re-appointment of
 aforesaid auditors.
 b.  Secretarial Auditor and Secretarial Audit Report
 Pursuant to Section 204 of the Companies Act, 2013 and the rules
 thereunder, your Bank had appointed M/s. Ullas Kumar Melinamogaru,
 Practising Company Secretary, Mangaluru as Secretarial Auditors to
 conduct the Secretarial Audit for the year ended March 31, 2016. The
 audit report from the Secretarial Auditor is annexed to this report as
 Annexure VI.
 Businesses are an integral part of society and play a critical role in
 the sustenance and improvement of a healthy ecosystem, in fostering
 social inclusiveness and equity and in upholding the ethical practices
 and good governance. It is believed that integrating social,
 environmental and ethical responsibilities into governance of business
 ensures long term successes, competencies and sustainability. With this
 in mind, your Bank continues to fulfil its various social
 responsibilities. The Corporate Social Responsibility initiatives of
 the Bank are designed to ensure that the Bank adds social,
 environmental and economic value in all its activities to make a
 positive, sustainable impact on both society and business. In this
 direction, your Bank has been responding well over the years through
 various social initiatives and has identified some core areas of
 intervention like healthcare, education/ livelihood enhancement,
 empowering women/socially and economically disadvantaged, environmental
 sustainability/green initiatives, protection of heritage/ culture,
 promotion of sports, rural development etc.  aimed at improving the
 overall development of the society. The Bank firmly believes that being
 an integral part of society, it is the inclusive growth of society
 which contributes ultimately to the growth of the Bank and in this
 direction, your Bank has been strengthening its rural orientation
 through initiatives aimed at imparting financial literacy and extending
 banking services to the people in rural unbanked areas, in a fair and
 transparent manner, at an affordable cost. Towards this end, your Bank
 had opened 13 branches in unbanked rural centres during the financial
 year 2015-16 as part of its financial inclusion initiative, thus taking
 the total Financial Inclusion branches to 92.
 Further, pursuant to Section 135 of the Companies Act, 2013 read with
 Companies (Corporate Social Responsibility Policy) Rules, 2014, the
 Board has setup a Committee of Directors namely, ''Corporate Social
 Responsibility (CSR) Committee'' and has also put in place a Policy on
 Corporate Social Responsibility (CSR Policy) to undertake
 projects/programmes in pursuance to the above Policy. The contents of
 the CSR Policy along with the report on amount spent on various
 projects/programmes during the financial year 2015-16 is detailed in
 Annexure VII to this report pursuant to Rule 8 of the Companies
 (Corporate Social Responsibility Policy) Rules, 2014.
 The customer has always been the focal point of our initiatives. We
 have been endeavoring to empower our customers by rolling out
 innovative products and services through optimal use of technology
 without compromising on the quality of service rendered across the
 counter and without losing sight of the safety and security aspects.
 During the year 2015-16, your Bank has introduced several technology
 based new products and solutions such as KBL mPassBook & KBL ApnaApp
 (two tailor made mobile Apps), KBL Direct Pay (Mobile Recharge/Utility
 Bill Payment Interface), Online Account Opening Facility and facility
 of e-Filing of Income Tax Return in association with M/s Clear Tax.
 In pursuit of enhancing customer convenience, the Bank has introduced
 ''Online Account Opening'' portal, which facilitates the customers to
 open an account Online. The process is quicker and easier to open an
 account through Online Account opening process from any where and any
 time at customers convenience.
 Your Bank is actively involved in putting in place systems and
 procedures to comply with the recommendations of the Damodaran
 Committee on Customer Service, constituted by the Reserve Bank of
 India, to look into the banking services rendered to customers and the
 grievance redressal mechanism prevalent in banks. In this direction,
 the Bank has introduced the Online Customer Grievance Redressal System
 to ensure quick and speedy redressal of complaints of the customers in
 order to provide hassle free banking experience. Through this system,
 the customer can lodge a complaint and track the status of the
 complaint online, through the Bank''s website. Most of the
 recommendations made by the said Committee have been complied with and
 the remaining few which require up-gradation of the Bank''s Core Banking
 Solution are being pursued for early compliance.
 Facility of Online application system and credit proposal tracking
 system for Micro, Small and Medium Enterprises (MSME) has also been put
 in place under which entrepreneurs/applicants can submit applications
 Online for credit facility from any branch of their choice and track
 the status of such applications besides tracking the status of their
 applications submitted directly at branches.
 Your Bank has also established a special purpose vertical called IT
 enabled Business Solution Cell i.e IT Bus Cell which shall
 identify/provide/enable IT based solutions to the business and other
 units of the Bank by conceiving/conceptualizing new products, services
 and processes ultimately to enhance the customers satisfaction and
 their experience with the product / services offered by the Bank.
 Financial Inclusion means making available the full range of banking
 services at an affordable cost to the people who do not have access to
 banking services. It mainly focuses on the section of society not
 having formal financial institutional support. Through the Financial
 Inclusion Plan, Bank aims at ''connecting people'' with the Bank and not
 just opening accounts.  This includes meeting the small credit needs of
 the rural public, giving them access to the payments system, providing
 remittance facility and life and health insurance. Efforts are being
 made to optimize the resources to achieve the goal of extending banking
 facilities to the unbanked areas/deprived sections.
 All the branches of the Bank are under Core Banking Solution (CBS) and
 all the branches to be opened in future will also be under CBS. Out of
 725 branches, Bank has 163 rural branches and all these branches are
 provided with CBS offering all banking facilities to the rural
 clientele in the gram panchayats or villages where these branches are
 located. All the rural branches are also acting as Financial Literacy
 Centers (FLCs) and imparting Banking literacy among the rural Populace.
 In accordance with announcement of Prime Minister Jan Dhan Yojana
 (PMJDY) on August 15, 2014 revised Strategy & Guidelines of Department
 of Financial Services (DFS), Ministry of Finance, Govt. of India, has
 been considered for implementation of Financial Inclusion activity of
 the Bank. PMJDY takes in to account both rural sub service areas (SSAs)
 and urban wards for Financial Inclusion. Under the revised financial
 inclusion plan, in rural areas, Bank is allocated with 214 Gram
 Panchayats (GPs) for Financial Inclusion, covering 297 Sub service
 Areas (SSAs) consisting of 1039 villages in the states of Karnataka,
 Chattisgarh Maharashtra and Andhra Pradesh and in urban areas 313 wards
 are allocated in Karnataka and other States. The Gram Panchayats are
 being financially included through Brick and Mortar Branches and
 Business Correspondents (BC). Your Bank has been issuing RuPay PMJDY
 Debit Cards under the domestic card payment scheme launch by the
 National Payments Corporation of India (NPCI).
 Brick and Mortar Branches:
 As on March 31, 2016 Bank has covered 547 villages of 102 GPs through
 Brick & Mortar Branches.
 Business Correspondent Services (BC Services):
 Bank has entered into an agreement with M/s BASIX Sub-ki Transaction
 Ltd and M/s Integra Micro Systems Pvt. Ltd. to provide online
 transaction facility and as on March 31, 2016, 121 GPs with 149 SSAs
 covering 561 villages of Karnataka, Andhra Pradesh and
 Chhattisgarh States were covered under the above arrangement.
 Ultra Small Branches (USBs):
 As permitted by the Reserve Bank of India Bank had opened USBs where
 business correspondents (BCs) could conduct operations and thereby
 boost confidence of customers to use their financial services.  As on
 31st March 2016, your Bank has 37 USBs.
 Electronic Benefit Transfer (EBT) - Pilot Project of Govt. of
 Bank is participating in Govt. of Karnataka (GOK) EBT Pilot project for
 NREGA/SSP beneficiaries under - One District - Many Bank Model and is
 disbursing the payments under the above schemes to the beneficiaries
 using smart card and hand held machines at 5 Gram Panchayat locations
 in Chitradurga and Yadgir districts.
 Direct Benefit Transfer (DBT):
 Bank is actively participating in Direct Benefit Transfer (DBT)
 Programme of Govt. India, wherein, the Govt.  would transfer benefits
 of various Schemes directly to the beneficiaries Aadhaar enabled bank
 accounts and also accounts seeded with LPG ID in case of transfer of
 subsidy for LPG. For this purpose, Bank has on boarded with NPCI for
 Aadhaar Payment Bridge System (APBS) under National Automated Clearing
 House (NACH). Revised DBTL was introduced on November 15, 2014 and
 launched throughout the country on January 1, 2015. Both the Aadhaar
 based and LPG ID based approaches are made available to customers
 across all branches of the Bank.
 Financial Literacy and Credit Counseling Centers (FLCCs)
 Bank has sponsored 5 FLCs at B.C Road, Tiptur, Hangal, Kundagol and
 Alur in a joint venture with M/s Jnana Jyothi Financial Literacy and
 Credit Counseling Trust, Manipal. During the financial year 5 FLCs
 sponsored by the Bank have conducted 1321 Financial Literacy campaigns
 and 58161 participants had been covered. In adherence to RBI guidelines
 all the rural branches of your Bank are also conducting financial
 literacy Camps.
 Three Social Security Schemes- Prime Minister Jeeven Jyothi Bima Yojana
 (PMJJBY), Prime Minister Suraksha Bima Yojana (PMSBY) and Atal Pension
 Yojana (APY) have been launched by Hon''ble Prime Minister on 1st June
 2015. All the branches of your Bank are actively providing the above
 schemes to the customers across the country.
 1) PMJJBY provides Insurance coverage of Rs.2,00,000/- by paying yearly
 premium of Rs.330/-.  A person aged between 18 to 50 years holding
 account in a bank is eligible for the scheme.  A total of 1,42,647
 lives have been covered till 31.03.2016.
 2) PMSBY provides Accidental insurance coverage of Rs.2,00,000 by
 paying year premium of Rs.12/-. A person aged between 18 to 70 years
 holding account in a Bank is eligible for the scheme. A total of
 2,07,053 lives have been covered till 31.03.2016
 3) APY : This scheme was launched by the Government of India on 9th
 May, 2015 to address the old age income security needs of the citizen
 in an affordable manner linked to auto debit facility from the bankRs.s
 savings account of the subscriber.  Your Bank is actively participating
 in the scheme, with all branches being registered as Point of Presence
 - Service Provider (POP-SP) for APY.''
 Prime Minister Jan Dhan Yojana (PMJDY):
 In accordance with announcement of Prime Minister Jan Dhan Yojana
 (PMJDY) on August 15, 2014 revised Strategy & Guidelines of Department
 of Financial Services (DFS), Ministry of Finance, Govt. of India, has
 been considered for implementation of Financial Inclusion activity of
 the Bank. PMJDY takes in to account both rural semi urban, urban wards
 and metro for providing basic banking facilities to the unbanked
 populace. PMJDY also provides scope for RuPay debit card that is
 inclusive of Rs.1 Lakh accidental insurance.
 All the branches across the country have opened accounts under PMJDY
 and are issuing RuPay Debit Card under the domestic card payment scheme
 launched by the National Payments Corporation of India (NPCI).
 A total of 15,60,754 accounts have been opened under PMJDY since
 15.08.2014 till 31.03.2016, with outstanding balance of Rs.1,266.42
 crore. A total of 1,06,247 RuPay cards have been issued so far by the
 During the financial year ended March 31, 2016, the Bank has unveiled
 its long term Vision document - KBL Vision 2020 reflecting the
 aspirations of all the stakeholders for achieving various targets
 taking advantage of emerging opportunities, upgrading IT
 infrastructure, strengthening audit, vigilance and risk management
 practices and compliance culture and taking steps to improve efficiency
 of people, processes and products by continuously evolving new
 strategies and policies and create value for our shareholders by
 optimally utilizing capital resources. As per the KBL Vision 2020
 document, BankRs.s total business turnover is projected to increase in
 a progressive manner to touch Rs.1,80,000 crore with deposits of
 Rs.1,00,000 crore and advances of Rs.80,000 crore by March 2020.
 Your Bank bagged the following awards during the year under report in
 recognition of its achievement under technology initiatives, social
 banking, export performance etc.
 - IBA Banking Technology Award 2014-15, Runner up in the category of
 Best Risk and Fraud Management Initiative, amongst Small Banks.
 - ASSOCHAM Social Banking Excellece Awards 2015, under the following
 - Winner - Urban Banking [Small Bank] Category.
 - Winner-Agricultural Banking [Small Bank] Category
 - Runner Up - Participation in government schemes [Small Bank] category
 - Runner Up - Overall Best Social Bank[ Small Bank] category
 - MSME Banking Excellence Awards 2015 [Runner Up] for Eco -Technology
 Emerging Banks, instituted by CIMSME [Chamber of Indian Micro Small &
 Medium Enterprises].
 - Banking Technology Excellence Award - Best Bank for Evangelising
 Technology Adoption among Small Banks for the year 2014-15, instituted
 by IDRBT.
 - Export Excellence award for MSME by the Federation of Indian Export
 Organisations - Western Region.
 - STP AWARD from Bank of New York, Mellon in recognition to the
 improved payment formatting and straight - Through Processing success
 - Outstanding Performance in MSME Funding by the Federation of
 Industry, Trade and Services (FITS).
 Further UKAS, Management Systems, a UK based accreditation certifying
 body has renewed ISO 27001:2013 certificate for our three IT set-ups
 viz.  Data Centre, Near Line Site and Head Office-IT Department
 including Disaster Recovery Site.
 Further, your Bank has been awarded with ''Sanman Patra'' by the Central
 Excise & Service Tax Commissionerate, Mangaluru, for compliance to
 service tax provisions, at the Central Excise Day 2016.
 Your Directors would like to place on record their sincere gratitude to
 the Reserve Bank of India, other government and regulatory authorities,
 financial institutions and correspondent banks for their continued
 guidance and support. Your Directors also place on record their
 gratitude to the Bank''s shareholders, depositors and other customers
 for their continued support, patronage and goodwill. Your Directors
 express their deep sense of appreciation to all the staff members, for
 their contribution in your Bank''s quest for sustained growth and
 profitability and look forward to their continued contribution in
 scaling greater heights.
                For and on behalf of the Board of Directors
 Place: Bengaluru                  Sd/-
 Date : June 21, 2016          Chairman
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