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.
Particulars (Rs.in 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
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
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%.
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
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
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.
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%.
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).
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.
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
(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.
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.
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
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.
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
(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
- 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
Place: Karur For and on behalf of the Board of Directors,
Date : 15.06.2014 K P Kumar