Karur Vysya Bank Directors Report, Karur Vysya Reports by Directors
Karur Vysya Bank
BSE: 590003|NSE: KARURVYSYA|ISIN: INE036D01010|SECTOR: Banks - Private Sector
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Directors Report Year End : Mar '14    « Mar 13
Dear Shareholders,
 The Board of Directors have great pleasure in presenting the 95th
 Annual Report together with audited Balance Sheet and Profit and Loss
 Account for the year ended March 31, 2014.
                                     31.03.2014      31.03.2013
 Particulars                         ( Cr)      (Rs. in Cr)
 Gross Deposits                       43757.68        38652.98
 Gross Advances                       34225.98        29705.89
 Total Income                          5680.41         4694.99
 Total Expenditure                     4842.62         3846.16
 Operating Profit                       837.79          848.83
 Net Profit                             429.60          550.32
 Appropriations: Transfer to
 Statutory Reserve                      128.00          165.00
 Capital Reserve                          1.75           16.52
 General Reserve                        157.00          123.00
 Special Reserve                         NIL             50.00
 Investment Reserve                     (21.00)          21.00
 Proposed Dividend                      139.99          150.05
 Dividend Tax                            23.79           25.50
 Total Business
 During the year ended 31.03.2014, Total Business of the Bank recorded
 an increase of 14.08% at Rs. 77983.66 Cr as compared toRs. 68358.87 Cr as
 on 31.03.2013.
 Your Bank''s total Deposits stood at Rs. 43757.68 Cr as on 31.03.2014,
 showing an absolute increase of Rs. 5104.70 Cr and a growth rate of
 13.21% over the previous year. The share of CASA deposits (Current and
 Savings) in Total Deposits stood at 20.54%.
 - Current Deposits stood at Rs. 3580.44 Cr as on 31.03.2014 as compared
 to Rs. 3053.35 Cr as at the end of 31.03.2013 recording a y-o-y growth of
 - Savings Bank Deposits increased to Rs. 5408.45 Cr as on 31.03.2014, up
 from Rs. 4385.80 Cr as on 31.03.2013, growing at a rate of 23.32%.
 - Term Deposits increased from Rs. 31213.83 Cr as on 31.03.2013 to Rs.
 34768.79 Cr as on 31.03.2014, registering a growth rate of 11.39%.
 The Bank has registered qualitative credit growth of 15.22% during the
 FY 2013-14. The Gross Advances of the Bank increased from Rs. 29705.89 Cr
 as on 31.03.2013 to Rs. 34225.98 Cr as on 31.03.2014.
 Priority Sector Advances aggregated Rs. 12617.70 Cr at the end of March
 2014, representing 42.13% of Bank''s Adjusted Net Bank Credit (ANBC) of
 the previous fi scal. The Bank has achieved the prescribed target for
 Priority Sector Advances for the last three years consecutively.
 KVB''s agricultural advances stood at Rs. 5895.29 Cr, constituting 19.69%
 of ANBC as at the end of March 2014 against the regulatory prescription
 of 18%. Additionally, your Bank''s fi nance to Weaker Sections were at
 10.54% against the mandatory requirement of 10%.
 In spite of the difficult economic conditions that prevailed during
 the year under report, the Bank has taken necessary steps to contain
 NPAs and has used all available tools of recovery including negotiated
 settlements and legal means.  Your Bank constituted special recovery
 teams and organized recovery camps at various centers. Bank has
 effectively used the provisions of SARFAESI Act to secure maximum
 recovery.  Frequent Lok Adalats were conducted especially in respect of
 small value NPA accounts. The Bank has framed a policy for sale of
 assets to ARCs. Your Bank has revisited its Recovery Policy to
 facilitate quick settlement in existing NPA accounts.  The Divisional
 Offices are empowered with more discretionary powers to settle
 existing NPAs. Focused attention was given to accounts which are under
 SMA categories to avoid slippages into NPAs.
 In percentage term, gross NPA Ratio of the Bank stood at 0.82% as on
 31.03.2014 as against 0.96% at the end of previous fi scal 12-13. In
 absolute term, Gross NPA stood at Rs. 279.18 Cr as on 31.03.2014. Net NPA
 Ratio of the Bank stood at 0.41% as on 31.03.2014 as against 0.37% as
 on 31.03.2013. In absolute term, Net NPAs stood at Rs. 139.91 Cr as at
 the end of the fi scal under report.
 The Bank continues to maintain Provision Coverage Ratio of 75%.
 Share Capital
 As at March 31, 2014, the Paid-up Equity Capital of the Bank stood at Rs.
 107.18 Cr consisting of 10,71,81,106 shares of Rs. 10/- each.
 The Net Owned funds of the Bank as at 31st March 2014 was Rs. 3326.34 Cr
 comprising paid up equity capital and reserves.
 The Capital Adequacy Ratio stood at 12.77% as per BASEL II norms. The
 Capital Adequacy under BASEL III norms stood at 12.60%. The Bank has
 been consistently maintaining the ratio well above the minimum of 9%
 stipulated by the Reserve Bank of India.
 The market capitalization of your shares at the end of March 31, 2014
 was Rs. 4022.51 Cr.
 Employee Stock Options Scheme
 The information required to be furnished pursuant to Clause 12 of the
 SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999 are annexed to this report and form part of this
 Credit Rating
 CRISIL has reaffi rmed A1  rating (pronounced CRISIL A one plus) for Rs.
 30 bn Certifi cate of Deposits Programme of your Bank.  ICRA Limited
 has confi rmed ICRA A1  (Pronounced ICRA A one plus) rating to the
 Bank''s Certifi cate of Deposits Programme for Rs. 30 bn. Both the ratings
 indicate a very strong degree of safety regarding timely payment of fi
 nancial obligations.
 The Board recommended dividend of Rs. 13/- per Equity Share i.e., 130%
 for the fi scal 2013-14. The dividend is subject to the approval of the
 shareholders at the Annual General Meeting. This is the tenth year in
 succession your Bank has been paying 100% or more dividend
 consecutively since 2004. The total dividend outgo including
 distribution tax will be Rs. 163.78 Cr which works out to 38.12% of the
 Net Profit for 2013-14.
 The gross domestic investments of your Bank stood at Rs. 13445.46 Cr as
 at 31.03.2014 as against Rs. 13868.85 Cr as on 31.03.2013.
 Income earned on investments during the fi scal 2013-14 was at Rs.
 1197.38 Cr registering an increase of Rs. 247.03 Cr (i.e. 25.99%) as
 against Rs. 950.35 Cr recorded during the previous fi scal 2012-13. Profi
 t on sale of investments was Rs. 103.73 Cr for the fi scal 2013-14 as
 against Rs. 88.35 Cr recorded in the previous fi scal 2012-13.
 The average yield on investments decreased to 7.61% during the year
 under report over the previous fi scal of 7.67%. Liquidity position of
 the Bank was comfortable throughout the year.
 Forex Transactions
 The merchant turnover of the Bank grew by 54.39% to reach Rs. 15607 Cr as
 against Rs. 10109 Cr during the previous fi scal 2012-13. The year on
 year export credit grew at 11%. Your Bank has earned a total income of
 Rs. 79.07 Cr on forex business during the fi scal 2013-14, as against Rs.
 54.51 Cr earned during the last fi scal 2012-13, registering an
 increase of 45.06%. Of this, Exchange Profit increased from Rs. 23.16 Cr
 to Rs. 35.59 Cr and other income (commission and others) increased from Rs.
 31.35 Cr to Rs. 43.48 Cr with forex Profit recording an increase of
 53.67% and commission income an increase of 38.69%.
 Branch Network
 During the financial year 2013-14, Bank opened 21 Branches and added
 345 ATMs. With this, as at the end of March 31, 2014 the Bank has a
 total network of 572 branches and 1617 ATMs with PAN India presence.
 The aggregate customer outlets of the Bank (both Branch net work and
 ATMs installed) rose to 2189. To facilitate remittance of cash on real
 time basis to customers'' accounts, your Bank has introduced 153 Cash
 Deposit Machines or Bunch Note Acceptors (BNA).
 Debit Cards
 Your Bank has issued 8.48 lakh debit cards during the fi scal 2013-14
 taking the total number of debit cards issued to 43.8 lakhs.
 During the year under report, your Bank installed 4552 POS terminals
 across various merchant locations, taking the total to 8434 numbers as
 at 31.03.2014. The gross value of transactions routed through such
 terminals stood at Rs. 964.76 Cr till 31.03.2014.
 Technology Initiatives
 Your Bank is a front runner in technology initiatives having
 implemented 100% Core Banking Solution (CBS) in 2005.  In order to
 leverage CBS platform and robust IT infrastructure implemented in the
 Bank, many new initiatives were undertaken during the fi scal under
 report. Internal effi ciency, customer service, Business Process
 Re-engineering (BPR) as well as Information Security were the focus
 The following new initiatives were introduced to add value to the
 customer convenience during the FY 2013-14.
 A special product known as ''Scholar Card'', for students and staff of
 educational institutions, was launched. This card, based on RIFD
 Technology, can be used for all kinds of payments and access system
 like attendance, library, laboratory etc.
 Online Password reset/unlocking of user ID is implemented to strengthen
 the safety and security of our Net Banking System.
 Your Bank has launched BNA – Remittance Card exclusively for depositing
 cash in Cash Deposit Machines.
 Bank has also launched International EMV chip based debit cards.
 Your Bank launched e-collect portal in our Bank''s website for
 collection of fee for Educational Institutions.
 The Bank also has launched IRCTC ticket booking through Direct Debit
 Golden Vision Initiatives
 As already informed in the previous report, M/s Boston Consulting Group
 are assisting the Bank in its pursuit of attaining next higher level of
 growth and development including achieving the targeted business growth
 of Rs. 125000 Cr by the centenary year of the Bank in 2016. Their
 recommendations are being implemented under Golden Vision
 During the year under report, the following initiatives were
 (a) Introduced personalized service to HNI customers of the bank under
 KVB Pride. Under this, the services include door step banking, EMV
 certifi ed chip embedded debit card, free banking privileges, reward
 points etc.
 (b) Branches having high potential of cash remittances are provided
 with Cash Deposit Machines (CDMs). The facility is available with
 instant cash credit to the customers accounts, 153 CDMs are deployed
 over 150 branches.
 (c) Lead Management Software has been launched across all branches for
 effective and effi cient management of sales management team.
 (d) Introduced Career Development System for all officer cadre
 employees across the Bank.
 (e) Single Window system was rolled out to 75 branches this year taking
 the total of such branches to 212 across the country.
 Financial Inclusion
 Your Bank has covered all the 117 allocated villages for providing
 basic banking services under the Financial Inclusion Plan. These
 villages are covered under the Plan with Business Correspondent
 operated banking outlets. As at the end of March 31, 2014, 46,237 basic
 savings accounts (no frill accounts) with Bio-Metric smart cards were
 opened with BC agents in FI villages.Your Bank has also opened 28 Ultra
 Small Branches in the allotted villages to provide banking facility for
 the under privileged section of the society. Going forward the Bank is
 in the process of opening some more Ultra Small Branches/Brick & Mortar
 branches in the allotted villages wherever feasible.
 Statutory Audit
 M/s R K Kumar & Co., Chennai retire at the conclusion of the ensuing
 Annual General Meeting. They have been associated with the Bank as
 Statutory Auditors for the past four financial years and are not
 eligible for re-appointment in accordance with the RBI''s policy of
 rotation and resting. The Board places on record its deep appreciation
 of the professional services rendered by M/s. R K Kumar & Co., Chennai
 during their association with the Bank.
 M/s. Abarna & Ananthan, Chartered Accountants, Bangalore are proposed
 to be appointed as Statutory Auditors of the Bank from the conclusion
 of the ensuing Annual General Meeting till the conclusion of next
 Annual General Meeting of the Bank in terms of Section 139 of the
 Companies Act, 2013 read with Sec 30 (1A) of the Banking Regulation
 Act, 1949.
 Reserve Bank of India vide letter DBS.ARS.No. 15260/ 08.12.005/2013-14
 dated June 3, 2014 conveyed their approval for their appointment as the
 Statutory Auditors of the Bank for the year 2014-15 for their fi rst
 A certifi cate from M/s. Abarna & Ananthan has been received to the
 effect that their appointment, if made, would be within the prescribed
 limits under Section 141 of the Companies Act, 2013.
 Statutory Disclosures
 Considering the nature of activities of the Bank, the provisions of
 Section 217(1)(e) of the Companies Act, 1956 relating to conservation
 of energy and technology absorption do not apply to the Bank. However
 the Bank is making extensive use of technology in all its operations
 and is also constantly pursuing its goal of technological upgradation
 in a cost effective manner to provide quality customer service.
 The Bank supports and encourages the country''s export efforts through
 its export fi nancing operations.
 The Statement containing particulars of employees as required under the
 provisions of Sec 217(2A) of the Companies Act, 1956, read with
 Companies (Particulars of Employees) Rules, 1975, as amended, forms
 part of this report.
 It is hereby confi rmed that the bank has proper systems in place to
 ensure compliance of all laws applicable to the Bank.
 Board of Directors
 Shri K P Kumar, was appointed as (Part-time) Non- Executive -
 Independent Chairman of the Bank, with the prior approval of the
 Reserve Bank of India, for an initial period three years from
 24.09.2010. He is re-appointed as the (Part-time) Non-Executive -
 Independent Chairman for a further period of two years from 24.09.2013
 vide RBI letter DBOD.6277/08.41.001/2013-14 dated 01.10.2013.  Approval
 of members is sought for the re-appointment of Shri K P Kumar, as
 (Part-time) Non-Executive - Independent Chairman of the Bank at the
 ensuing Annual General Meeting as per details provided in the Notice.
 Shri K Venkataraman was appointed, with the prior approval of Reserve
 Bank of India, as the Bank''s Managing Director and CEO for three years
 from 01.06.2011. As his term of office was upto 31.05.2014, the Board
 of the Bank approved his re-appointment for a further period of three
 years from 01.06.2014. RBI has vide its letter DBOD. No.
 18973/08.41.001/2013-14 dated 23.05.2014 accorded its approval for the
 re-appointment as recommended by the Board of the Bank. Approval of
 members is sought for the re-appointment of Shri K Venkataraman as MD &
 CEO of the Bank at the ensuing Annual General Meeting as per details
 provided in the Notice.
 In accordance with the provisions of Companies Act and the Articles of
 Association of the Bank, Non-Executive (Non-Independent) Director Shri
 A J Suriyanarayana, retires by rotation and is eligible for
 Pursuant to Section 149 and 152 of the Companies Act, 2013 and Sec 10 A
 (2A) of the Banking Regulation Act, 1949, approval of the shareholders
 have been sought for the appointment of Shri K K Balu, as an
 Independent Director not liable to retire by rotation for a period up
 to two years, Shri N S Srinath, as an Independent Director not liable
 to retire by rotation for a period up to three years and B Swaminathan
 as an Independent Director not liable to retire by rotation for a
 period up to three years.
 Shri CA K Ramadurai will hold office till the date of forthcoming
 Annual General Meeting consequent to the attainment of maximum age
 limit prescribed under extant guidelines of RBI.  Board places on
 record its gratitude for the valuable contribution rendered by him
 during his tenure as Director on the Board.
 The brief resume and details of directors who are to be appointed as
 Independent Directors are furnished in the Corporate Governance Report
 Directors'' Responsibility Statement
 Pursuant to the requirement under Section 217 (2AA) of the Companies
 Act, 1956 with respect to the Directors'' Responsibility Statement, it
 is hereby confi rmed 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 company at the end of the financial year and of the Profit and
 loss of the company for that period;
 (c) the directors had taken proper and suffi cient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 (d) the directors had prepared the annual accounts on a going concern
 Awards and Accolades
 Your Bank has received the following awards and recognition during the
 year 2013-14.
 (i) Best Small Bank Award given by Business World Magna Awards 2014
 recognising Banking excellence.
 (ii) State Forum of Banker''s Club, Kerala Excellence Awards 2014
 selected KVB as the third Best bank among private sector banks at the
 national level and presented the award.
 (iii) The Sunday Standard Best Bankers'' Awards 2013 awarded the Best
 Banker Growth Mid Sized award to your Bank.
 (iv) Institute of Public Enterprises (IPE)-BFSI awarded Best Bank in
 Private Sector in June 2013.
 (v) Kompella Portfolio Investment Advice Magazine, Hyderabad recognized
 KVB as the ''Top Bank in the Old Private Sector'' and Third best Bank of
 the quarter among public sector, old private sector and new private
 sector banks for the quarter ended 30.06.2013.
 (vi) Best Bank award among small Banks by IDRBT for Banking Technology
 (Electronic Payment Systems) for the year 2012-13.
 (vii) In the NSDL Star Performer Awards 2013, KVB bagged Top Performer
 in New Accounts opened (Bank Category).
 Your Bank is ranked as the 188th rank among India''s Most valuable Top
 500 Companies based on Market Capitalisation as per November 2013 issue
 of Business Today.
 Fortune India December 2013 publication listed KVB as 227th Company
 under Top 500 Companies in India.
 Corporate Social Responsibility
 Your Bank, as a responsible corporate citizen, has been carrying out
 well over the years certain initiatives like participation in social,
 cultural, educational, medical and sports activities aimed at improving
 the quality of life of the people and society. Your Bank believes fi
 rmly that being an integral part of the society, it is the all round
 growth of the society which contributes ultimately the growth of the
 organization. Some of the CSR expenditure undertaken during the year
 2013-14 are given below:
 - Contributed a sum of Rs. 12.57 lakh towards educational cause.
 - Donations amounting to Rs. 20.65 lakh to various
 organizations/hospitals for Health Care.
 - Donations made to the tune of Rs. 15.20 lakh towards welfare of poor
 and downtrodden.
 - Contribution made to the tune of Rs. 14.83 lakh for charitable purpose
 to various organizations/institutions.
 - One lakh was sponsored to an athlete for participation in world
 championship in the World Biathle 2013 at Cyprus.
 The Directors are grateful to the shareholders of the Bank for the
 trust and confi dence reposed by them in the Bank.
 The Directors are also grateful to the Reserve Bank of India,
 Government of India, State Governments, Securities and Exchange Board
 of India and the Stock Exchanges for the guidance and support extended
 by them to the Bank.
 The Board thanks its valued customers and other stakeholders for their
 patronage and looks forward to the growing of this mutually supportive
 relationship in future.
 The Board expresses its deep sense of appreciation to all employees for
 their contribution in your Bank''s quest for sustained growth and profi
 tability and look forward to their continued contribution in scaling
 new heights.
 Place: Karur           For and on behalf of the Board of Directors,
 Date : 15.06.2014                                        K P Kumar
Source : Dion Global Solutions Limited
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