To the members
The Directors are pleased to present the 96th Annual Report of
business and operations of your Bank together with audited accounts for
the year ended March 31,2015.
Particulars 31.03.2015 31.03.2014
(Rs. in Cr) (Rs. in Cr)
Gross Deposits 44690.27 43757.68
Gross Advances 36690.77 34225.98
Total Income 5976.71 5680.41
Total Expenditure 5033.42 4842.62
Operating Profit 943.29 837.79
Net Profit 464.28 429.60
Appropriations: Transfer to
Statutory Reserve 120.00 128.00
Capital Reserve 12.16 1.75
General Reserve 58.50 157.00
Special Reserve 60.00 NIL
Investment Reserve 53.00 (21.00)
Proposed Dividend 158.42 139.99
Dividend Tax 32.25 23.79
The total business of the Bank stood at Rs. 81381.04 Cr as on March
31,2015, against Rs. 77983.66 Cr a year before, growth of 4.36%.
Gross deposits increased by 2.13% to Rs. 44690.27 Cr against Rs. 43757.68
Cr last year. Savings Deposits increased by 16.75% to Rs. 6314 Cr. Demand
Deposits stood at Rs. 3528 Cr. CASA increased from Rs. 8989 Cr as at
31.03.2014 to Rs. 9842 Cr as on 31.03.2015 recording a y-o-y growth of
9.49%. CASA deposits constituted 22% of the total deposits.
Term Deposits increased from Rs. 34768.79 Cr as on 31.03.2014 to Rs.
34848.10 Cr as at the end of March 31,2015.
During this fiscal, your Bank recorded a growth of 7.20% in its loan
book with the advances increasing to Rs. 36690.77 Cr as at 31.03.2015
from Rs. 34225.98 Cr as at the end of March 31,2014.
Priority sector advances were at Rs. 14332.70 Cr at the end of March 31,
2015, representing 41.43% of Bank''s Adjusted Net Bank Credit (ANBC) of
the previous fiscal. Your Bank has thus achieved its overall priority
sector lending requirements of 40% of ANBC.
Your Bank''s agriculture advances as at the end of the fiscal 2014- 15
were at Rs. 6447.81 Cr, representing 18.72% of the ANBC, as against the
regulatory prescription of 18%. The Bank has also achieved its weaker
section advances requirement which stood at 10.20% as against the
mandatory norm of 10%.
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. The Bank took several initiatives to
contain slippages and speed up recovery from overdue loan accounts.
These include identification of stressed accounts for
restructuring/rephasing in time, conduct of lok adalats at Divisional
office levels, regular follow-up of overdues through call centre and
However in view of the continued slowdown in the economy and
delinquencies in the corporate segment, the Bank''s gross NPAs have
increased from Rs. 279.18 Cr as on 31.03.2014 to Rs. 677.78 Cr as at the
end of the fiscal 2014-15. The Gross NPA of the Bank stood at 1.85% up
from 0.82%, a year ago. The Net NPAs of the Bank stood at Rs. 280.97 Cr
(0.78%) at the end of the fiscal under report as against Rs. 139.91 Cr
(0.41%) at the end of previous fiscal 2013-14.
The Bank maintains a provision coverage ratio of 75.20%.
As at the end of the FY15, your Bank''s paid up share capital stood at Rs.
121.63 Cr, consisting of 12,16,29,609 Equity shares of Rs.10/- each fully
paid up. There has been an increase in the paid up capital to the tune
of Rs. 14.45 Cr on account of issue and allotment of shares to the
Qualified Institutional Investors to the extent of Rs. 13.41 Cr during
August 2014 and allotment of shares consequent to the exercise of
options under Employees Stock Option Schemes. During the year under
report, the Net owned funds of your Bank increased from Rs. 3326.34 Cr as
at the end of FY 14 to Rs. 4246.03 Cr as at the end of FY15, an increase
of Rs. 919.69 Cr (27.65%).
The Capital Adequacy Ratio stood at 14.63 % as per BASEL II and 14.62%
under BASEL III norms. 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 Bank''s shares at the end of
March 31,2015 was Rs. 6615.43 Cr.
Employees Stock Options Scheme
During the fiscal 2014-15, the employees of the Bank exercised the
stock options granted to them to the extent of 10,29,775 options. There
were no unvested options at the end of the fiscal 2014-15. The Bank has
not granted any stock options during the year under report.
ICRA Limited had rated the Unsecured Redeemable Non- convertible
Subordinated (Lower Tier II) debt instruments issued during the earlier
year by re-affirming its A rating.
CRISIL has reaffirmed A1 rating (pronounced CRISIL A one plus) for
Rs.30 bn Certificate of Deposits Programme of your Bank. ICRA Limited has
confirmed ICRA A1 (pronounced ICRA A one plus) rating to the Bank''s
Certificate of Deposits Programme for Rs.30 bn. Both the ratings
indicate a very strong degree of safety regarding timely payment of
Having regard to the overall performance of the Bank and the positive
outlook for the current fiscal, the Board of Directors recommended a
dividend of Rs. 13/- per share (i.e. 130% on the paid up capital same as
the previous fiscal) for the reporting year, thus maintaining 100%
dividend or more for the twelfth year in a row since 2004. The total
dividend outgo including dividend distribution tax will be Rs. 190.67 Cr.
The aggregate investments of the Bank as on 31st March 2015 was Rs.
12833.03 Cr with maturity mix of securities consistent with risk
perceptions and investment policies of the Bank.
Income earned on investments during the fiscal 2014-15 was at Rs.1177.56
Cr registering an slight decrease of Rs. 19.82 Cr (i.e. 1.6%) as against
Rs.1197.38 Cr recorded during the previous fiscal 2013- 14.Profit on sale
of investments was Rs. 71.03 Cr for the fiscal 2014- 15 as against
Rs.103.73 Cr recorded in the previous fiscal 2013-14.
The average yield on investments decreased to 7.50% during the year
under report over the previous fiscal of 7.61%. Liquidity position of
the Bank was comfortable throughout the year.
The Bank has put in place the risk management tools like Duration,
Modified Duration and Value at Risk for all interest bearing
The merchant turnover of the Bank grew by 18.49% to reach Rs.18493 Cr as
against Rs.15607 Cr during the previous fiscal 2013-14. The year on year
export credit grew at 15%. Your Bank has earned a total income of
Rs.89.13 Cr on Forex business during the fiscal 2014-15 as against Rs.79.07
Cr earned during the last fiscal 2013-14 registering an increase of
12.72%. Of this, Exchange Profit increased from Rs.35.59 Cr to Rs.43.76 Cr
and other income (commission and others) increased from Rs.43.48 Cr to
Rs.45.37 Cr with exchange profit recording an increase of 22.95% and
commission income an increase of 4.34%.
Distribution Net Work
During the year your Bank opened 56 branches in 6 States. One Satellite
branch was upgraded to full fledged branch. Your Bank has added 28
As at the end of fiscal 2014-15, your Bank has 2274 customer outlets
comprising of 629 branches and 1645 ATMs, with PAN India presence.
Your Bank has issued 9.81 lakh debit cards during the year taking the
total number of cards issued viz: ATM card, VISA, Master EMV Chip,
Maestro, Rupay Debit and Rupay Kissan to 53.63 lakh.
During FY 15, your bank installed 800 POS terminals across various
merchant locations, taking the total to 9234 as at 31.03.2015. During
the year under report 80.76 lakh transactions were made through KVBPOS
and the gross value of the transactions routed through such terminals
stood at Rs. 2348.16 cr.
The application of technology in day to day operations of the Bank has
been responsible for augmenting and enhancing productivity levels apart
from simplifying mundane tasks. The Bank''s success could be attributed
to proper technology plan targeted at introducing customer friendly
delivery channels providing value added services and facilitating
improvement in overall internal efficiency and decision making process
by bringing in an effective Management Information System and complying
with the regulatory norms. In this direction, the Bank has been lining
up various IT initiatives that add value to the customer convenience
apart from enhancing the internal efficiency.
Technology initiatives launched during the fiscal 2014-15 are given
- Launching of Mobile POS and Handheld GPRS POS
In order to give impetus to CASA business, a preferred IT solution viz:
Mobile POS and Handheld GPRS POS was launched. It guarantees a lot of
mobility and ease in acquiring card transactions in real time purchase
scenarios. It is a preferred payment method to replace Cash on Delivery
Scenario. Wireless and Rechargeable battery gives the equipment the
extra edge. It promotes the customer acceptance of POS Payment in a big
- Launching of Multi-Currency Travel Card Multi-Currency Travel Card
obliterates the need for carrying different currencies during an
overseas trip. Single card is used to load USD, EURO & SGD. Card can be
used for ATM operations, POS purchases & E-Commerce transactions.
Online Access to Travel Card Account is through Password. The card is
loaded with all 3 currencies USD / EURO / SGD
An in-house Android Application developed and styled as an E-Book,
whereby customers of your bank having smart phones can view account
statements and balance details in the mobile itself using the phone
number registered with the bank database.
- Missed call facility
It provides banking services, if the customers give a missed call from
his registered mobile to a designated mobile number for this purpose.
The response is in the form of an SMS . The services offered are
Balances of Running Accounts up to 5 in number and maximum limit of two
missed calls a day. It also can provide Account Statement Enquiry for 3
accounts and a maximum limit of two missed calls per day.
- Anti-Phishing, Anti-Trojan and Anti-Pharming Services
Your bank has implemented Anti-phishing, Anti-pharming and Anti-Trojan
services for preventing any malicious attacks from fraudsters.
Golden Vision Initiatives
Members of the Bank are aware that the Bank has embarked upon Golden
Vision Initiatives during the year 2009 and M/s Boston Consulting
Group, a global consultancy firm of consultants, has been engaged to
assist and advise the bank in its journey of ''Golden Vision'' of
attaining ''125000 Cr business by the centenary year of the Bank in
2016. Most of their recommendations were put in place since their
engagement in the year 2009.
The following initiatives are launched during the fiscal under report.
1. Institutional sales force programs (Divisional sales force) to
target liability (CASA) products from institutional customers (e.g. Mid
- large Corporates, Trusts, Associations, Govt. institutions).
2. Collections / Receivables & Payment module, to meet out the
specific requirement of corporate customers.
3. Commercial sales force team at the branch level comprising of
relationship officers - Commercial Banking (RO - CBG). Target of this
program was to mobilize CA deposits and SME advances.
4. Structured third party sales programs (insurance and mutual funds)
to increase the other income of KVB. In addition, a focused program was
launched in September last year focusing on the debit card usage of the
bank to increase interchange income.
5. Special drives / campaigns viz., for increasing the usage of
alternate delivery channel viz., usage of debit cards both on- line and
in POS terminals and rewarding with loyalty points to the users.
6. Deployment of self-service machines, based on user patterns and
transaction profile of the branches has been carried out. Your Bank
has now covered 50% of branch network with Cash Deposit Machines.
With the basic objective of bringing the unserved population under the
banking mainstream, the Bank is striving towards the more inclusive
growth by making financial products and services available to poor in
particular. As per the Government of India and Reserve Bank directions
your Bank has been actively pursuing the agenda of Financial Inclusion
with key interventions in four groups namely expanding banking
infrastructure, offering appropriate financial products, making
extensive and intensive use of technology and through advocacy and
Your Bank has covered all the 117 allocated villages under rural
Financial Inclusion. These 117 villages are spread over Tamilnadu,
Andhra Pradesh, Telangana and Karnataka States.
Ultra Small Branches (USBs)
During the Fiscal under report, the Bank opened 14 USBs, taking the
count of USBs to 42 as on March 31,2015.
We have conducted 140 Financial Literacy Campaigns through our 98
rural/unbanked branches. We have also conducted 914 Financial Literacy
Campaigns through our metro, urban and semi- urban branches.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
As per the directions of Department of Financial Services, Government
of India your Bank started implementing Pradhan Mantri Jan-Dhan
Yojana which focuses on coverage of households in urban areas also as
against the earlier plan which focused on coverage of villages. The
PMJDY will ensure that all households in the country, both rural and
urban, will get access to the financial services, like bank account
with Rupay debit card, access to credit, remittance, insurance and
pension. Under the PMJDY scheme our Bank has been allotted with 409
wards in semi urban and urban areas, apart from the 117 villages
already allotted under rural financial inclusion scheme. Your Bank
conducted survey of all 1,99,242 households in all these 409 wards and
opened 108502 Basic Savings Bank Deposit Accounts and 104889 Rupay
cards were issued under PMJDY Scheme. All the households bank accounts
are now with either our bank or other bank/s.
M/s. Abarna & Ananthan, Chartered Accountants, Bangalore will retire at
the conclusion of the forthcoming Annual General Meeting and are
eligible for re-appointment, subject to the approval of the Reserve
Bank of India. The Bank has received consent from the Auditors and
confirmation to the effect that they are not disqualified to be
appointed as the Auditors of the Bank in terms of the provisions of the
Companies Act, 2013 and the rules made thereunder. Accordingly, the
Board of Directors has recommended to the shareholders for approval the
re- appointment of M/s. Abarna & Ananthan, Chartered Accountants,
Bangalore, as the Statutory Auditors of the Bank to hold office from
the ensuing AGM till the conclusion of the next AGM on a remuneration
to be decided by the Board or Committee thereof.
Pursuant to the provisions of Sec 204 of the Companies Act, 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, the Bank, with the approval of its Board appointed Shri S
Solaiyappan, Practicing Company Secretary to undertake the Secretarial
Audit of the Bank for the financial year ended 31.03.2015. The
Secretarial Audit Report is annexed herewith as Annexure 1.
The Disclosures to be made under sub-section (3) (m) of Section 134 of
the Companies Act, 2013 read with Rule (8) (3) of the Companies
(Accounts) Rules, 2014 by your Bank are explained as under:
Considering the nature of activities of the Bank, the provisions of
Section 134 of the Companies Act, 2013 relating to conservation of
energy and technology absorption do not apply to the Bank.
However the bank has adopted the following in the areas of conservation
of energy, technology absorption:
The Bank has installed one 850 KW Wind Turbine Generator at
Govindanagaram Village, Theni District, Tamil Nadu in 2011 and has been
utilizing the wind power generated for the Registered and Central
Office at Karur and the Divisonal Office premises at Chennai. 14,57,545
units were generated during the fiscal under report by the windmill.
One floor at the Central Office complex and some select branches were
equipped with energy efficient LED lights. Motion detector sensors were
installed in some select branches of the Bank.
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 financing operations.
The statement containing particulars of employees as required under Sec
197(12) of the Companies Act, 2013, read with Rule 5(2) of the
Companies (Appointment & Remuneration of Managerial Personnel) Rules,
2014 forms part of this report.
The ratio of remuneration of each director to the median employee''s
remuneration and other details in terms of sub-section 12 of Sec 197 of
the Companies Act, 2013 read with Rule 5 (1) of the Companies
(Appointment & Remuneration of Managerial Personnel) Rules, 2014 are
forming part of this report as Annexure 2.
It is hereby confirmed that the bank has proper systems in place to
ensure compliance of all laws applicable to the Bank.
Extract of Annual Return
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of
Section 92 of the Companies Act 2013, read with Rule 12 of the
Companies (Management and Administration) Rules, 2014 extract of the
Annual Return as at March 31, 2015 forms part of this report as
Board of Directors
In accordance with the provisions of Companies Act, 2013 and the
Articles of Association of the Bank, Director Shri G Rajasekaran,
retires by rotation and being eligible, offered himself for re-
Shri. M K Venkatesan, Shri A K Praburaj and Smt K L Vijayalakshmi were
appointed as Additional Directors of the Bank during the year under
report in terms of the provisions of Section161 of the Companies Act,
2013 and Article 27 of the Articles of Association of the Bank. They
hold office upto the date of the ensuing Annual General Meeting of the
Bank. Bank has received notices from them individually signifying their
candidature for the office of Director of the Bank, along with deposit
prescribed under provision of Section 160 of Companies Act, 2013.
The brief resume and details of directors who are to be re-
appointed/appointed are furnished in the Corporate Governance Report
Director Shri S Ganapathi Subramanian would be continuing upto the date
of this AGM consequent upon attainment of maximum age criteria
prescribed under the extant guidelines. Board places on record its
sincere appreciation of the services rendered by him during his tenure
Directors'' Responsibility Statement
Pursuant to the requirement under Section 134 (5) of the Companies Act,
2013 with respect to the Directors'' Responsibility Statement, it is
hereby confirmed 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.
Awards and Accolades
Your Bank has received the following awards and recognition during the
1. Master Card payments Strategy Workshop, Goa 2014 - Karur Vysya Bank
received the Innovation Award for implementation of RFID enabled Debit
2. Best Bank Award for Business Intelligence Initiatives among Small
Banks instituted by The Institute for Development and Research in
Banking Technology (IDRBT) in the IDRBT- Banking Technology Excellence
Awards 2013-14 from the Hon''ble RBI Governor Shri. Raghuram Rajan. Your
Bank has bagged the said Information Technology Award from IDRBT
consecutively for the sixth time.
3. EDGE 2014 Award for managing IT Security by Information Week
magazine for the use of IT for maximizing business impact.
4. National Payments Excellence Awards 2014 - Runner Up in Mid Sized
Banks Category in recognition of excellent performance in National
Financial Switch (NFS) ATM Network. The award was sponsored by NPCI.
5. State Forum of Bankers'' Clubs (Kerala) in their 6th Banking
Excellence Award 2014, adjudged KVB as the Second Best Bank in the
Private Sector Category at National level and presented the award.
6. RUNNER UP AWARD in the old private sector bank category in FY
2012-13, Financial Express Best Banks Award.
7. Received BEST TECH SAAVY BANK- Runner Up award in MSME Banking
Excellence Awards- 2014 constituted by Chamber of Indian Micro Small &
Medium Enterprises (cimsme).
Your Bank is grateful to the RBI, Government of India, SEBI and other
authorities and agencies, Financial Institutions and correspondent
banks for their valuable support and guidance.
The Directors also express their deep sense of appreciation to all
staff members of the bank for their dedicated service and commitment
towards bank''s vision for sustainable growth. Finally, the Board wishes
to sincerely thank all the customers, shareholders, other stake holders
for their valuable support and look forward to their continued support
in the years to come.
For and on behalf of the Board of Directors,
Place: Karur K P Kumar
Date : 28.05.2015 Chairman