Kotak Mahindra Bank Directors Report, Kotak Mahindra Reports by Directors

Kotak Mahindra Bank

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Directors Report Year End : Mar '16    « Mar 15
The Directors present their Thirty-first Annual Report together with
 the audited accounts of your Bank for the year ended 31st March 2016.
 Pursuant to the approval of the Reserve Bank of India to the Scheme of
 Amalgamation of ING Vysya Bank Ltd. (IVBL) with Kotak Mahindra Bank
 Ltd.  (the Bank), IVBL merged with the Bank effective from 1st April
 2015. The current year consolidated and standalone figures include
 operations of the erstwhile IVBL. Hence, the previous year figures are
 not comparable.
 The financial highlights are summarized below:
 (A) Kotak Mahindra Bank Limited – Consolidated financial highlights:
                                  31st March 2016     31st March 2015
                                        Rs, crore           Rs, crore
 Total income                           28,032.36           21,471.08
 Total expenditure, excluding 
 provisions and contingencies           22,017.06           16,715.37
 Operating Profit                        6,015.30            4,755.71
 Provisions and contingencies, 
 excluding provision for tax               991.56              205.73
 Profit before tax                       5,023.74            4,549.98
 Provision for taxes                     1,592.62            1,484.90
 Profit after tax                        3,431.12            3,065.08
 Less: Share of 
 minority interest                          65.19               59.51
 Add: Share in Profit 
 of Associates                              92.92               39.88
 Consolidated Profit for 
 the Group                               3,458.85            3,045.45 
 Earnings per Equity
 Basic (Rs,)                                18.91               19.75
 Diluted (Rs,)                              18.87               19.70
 (B) Kotak Mahindra Bank Limited – Standalone financial highlights:
                                  31st March 2016    31st March 2015
                                        Rs, crore          Rs, crore
 Total Income                           18,996.42          11,748.32
 Total expenditure, excluding 
 provisions and contingencies           14,955.33           8,750.86
 Operating Profit                        4,041.09           2,997.46
 Provisions and contingencies, 
 excluding tax provisions                  917.37             164.50
 Profit before tax                       3,123.72           2,832.96
 Provision for taxes                     1,033.94             966.98
 Profit after tax                        2,089.78           1,865.98
 Add: Surplus brought forward 
 from the previous year                  5,095.26           4,005.29
 Add: Net Additions on
 Amalgamation                            1,674.71              -
 Amount available for 
 appropriation                           8,859.75           5,871.27 
 Statutory Reserve under 
 Section 17 of the Banking 
 Regulation Act, 1949                      522.45             466.50
 General Reserve                             -                 93.30
 Transfer to / (from) 
 Investment Reserve Account                (41.52)             86.65
 Transfer to Capital Reserve                 9.17               5.91
 Transfer to Special Reserve                45.00              28.00
 Proposed Dividend                          91.84              82.07
 Corporate Dividend Tax                     18.69              13.58
 Surplus carried to 
 Balance Sheet                           8,214.12           5,095.26
 During the year, pursuant to approval of the shareholders of the Bank
 at the Annual General meeting held on 29th June 2015, your Bank issued
 91,28,41,920 Bonus shares in the ratio of 1:1 i.e. one equity share for
 every one equity share held on the Record Date, to the Members on 10th
 July 2015.
 Your Directors are pleased to recommend a dividend of Rs, 0.50 per
 equity share entailing a payout of Rs, 110.53 crore including dividend
 distribution tax.  The dividend would be paid to all the shareholders,
 whose names appear on the Register of Members/Beneficial Holders list
 on the Book Closure date.
 During the year, your Bank has allotted 99,91,715 equity shares
 (adjusted for bonus) arising out of the exercise of Employees Stock
 Options granted to the employees and whole-time directors of your Bank
 and its subsidiaries. As per the ESOP Schemes of erstwhile ING Vysya
 Bank Ltd. (eIVBL), the stock options granted to the employees vested on
 an accelerated basis upon the merger. Consequently, the number of stock
 options on which vesting was accelerated was 1,04,91,900 (on a post
 swap basis, adjusted for bonus shares).
 Post allotment of equity shares as aforesaid and the bonus allotment,
 the issued, subscribed and paid-up share capital of your Bank stands at
 Rs, 9,17,19,10,790 comprising of 1,83,43,82,158 equity shares of Rs, 5
 each as on 31st March 2016.
 Your Bank is well capitalized and has a Capital Adequacy Ratio (''CAR'')
 under Basel III as at 31st March 2016 of 16.34% with Tier I being
 During the year, your Bank has not issued any capital under Tier II. As
 on 31st March 2016, outstanding Unsecured, Redeemable Non-Convertible,
 Subordinated Debt Bonds were Rs, 969.7 crore and outstanding Unsecured,
 Non-Convertible, Redeemable Debt Capital Instruments Upper Tier II
 stood at Rs, 806.31 crore.
 The Global Depository Shares (GDS) of the Bank were listed on
 Luxembourg Stock Exchange. Consequent to the issuance of notice of
 termination of the GDS program by the Bank to the Custodian and the
 Depository, the Depository Agreement entered into between the Bank and
 the Depository was terminated. Subsequently, the GDS program has been
 terminated with effect from 4th September 2015.
 OPERATIONS Consumer Banking
 The merger of ING Vysya Bank (IVBL) with your Bank brought in 577
 branches and 657 ATMs from the erstwhile IVBL.
 Your Bank consolidated its network presence through a measured
 expansion of its footprint across the country and as of 31st March 2016
 had 1333 branches and 2032 ATMs, covering 706 locations. Of the 74 new
 branches commissioned this year, 32 were in rural and semi-urban
 locations. Your Bank added about 10.96 lac new customers this year
 across core banking products of savings and checking accounts, term
 deposits, overdrafts and non-resident accounts.
 Your Bank rolled out several initiatives aimed at offering a superior
 and differentiated customer experience. Some key ones are:
 Products and Services
 l Launched its first E-Lobby at Andheri Metro Station, Mumbai. The
 e-lobby offers a host of self service capabilities such as ATM, Banking
 Kiosk, Tablets, Surface Table, etc. which can be used by both customers
 and non-customers.
 - Enhanced its suite of products positioned at specific customer
 segments and launched two new propositions, MY FAMILY - a savings bank
 proposition tailored exclusively for the entire family. The proposition
 gives the benefit of pooling in balances across family members & also
 gives them the benefit of a dedicated relationship manager for the
 family, and, ALPHA - a savings bank proposition linked to investments.
 The customer gets the benefit of a NMC waived savings account when they
 choose an RD (or) MF SIP (or) NPS along-with a term insurance premium
 of Rs, 300 per month (which offers a cover of Rs,20 lac) linked to
 their savings account. The proposition also offers Cash Back on Debit
 Card spends & is targeted for the age group of 18-55.
 - Tied up with Thomas Cook and Kuoni Travels to offer a Holiday Savings
 Account linked to a Recurring Deposit. Customers get benefit of various
 schemes & offers launched by these travel companies and the banking
 linkage enables them to save on a monthly basis to facilitate the
 holiday expense.
 - Appointed as Authorised Collection Centre (ACC) by Stock Holding
 Corporation of India Ltd (SHCIL) for providing E-stamping facility in
 the states of Punjab and Rajasthan.
 - Appointed as one of the collecting Banks for Government of India''s
 Sovereign Gold Bonds and was actively involved in raising subscriptions
 across all three tranches.
 - Launched three new Current Account products - Kotak Pro Plus, Kotak
 Elite Plus and Kotak Ace Plus offering more efficient cash management
 in select locations.
 - Introduced Kotak Cheque Protect, a calibrated credit oriented program
 for offering cheque protection facility to existing customers for
 honouring cheques in the event of shortfall in the bank account, based
 on certain pre-approved parameters.
 - Implemented Foreign Account Tax Compliance Act (FATCA) / Common
 Reporting Standard (CRS) which requires the Bank to carry out due
 diligence of its customers to identify the individuals and entities
 which fulfill the indices as prescribed by the regulatory bodies and
 reporting to the Indian tax authorities for onward submission of
 information to foreign authorities as appropriate.
 Business Lines
 a) Non Resident Indian Business
 Some of the key initiatives taken this year are:
 - Extended C2R money transfer mode for Canada. Your Bank''s NRI clients
 can now use this medium to transfer money from Canada to their Kotak
 Bank account in India.
 - Further expanded the network of exchange house relationships and the
 count now stands at 26.
 - As a platform to reach out to the overseas Indian community, your
 Bank has participated in various international business forums
 organized by the Indian community in various countries.
 - In order to work closely with the mariner community & shipping
 companies your Bank has participated in various mariner events
 b) Priority Banking Business
 Privy League program, positioned to cater to the affluent segment, now
 services 3.4 lac customers. A new tier-Insignia was launched at
 select locations to cater to customers with group relationship value of
 at least Rs, 1 crore. A Corporate Credit card with exclusive benefits
 for Privy League Business banking customers was introduced to increase
 the segmental focus in the program. To address customers'' need for
 legacy planning, Smart Will, an automated online will writing solution
 was launched in association with Kotak Securities.
 c) Corporate Salary Business
 Salary2Wealth – Your Bank''s corporate salary business now caters to
 over 17 lac customers across 13,700 corporate. The Salary2Wealth book
 grew by 33% Y-o-Y to close the year at Rs, 3,988 crore and acquired
 4.90 lac new customers with more than 1,700 new corporate sign-up''s.
 d) Consumer Assets
 Your Bank has continued to grow the product lines under the Consumer
 Assets business.
 Credit Card: Credit card business has issued 6.34 lac cards by March
 2016 and is in its seventh year of operations. The premium range of our
 products – VISA Signature and VISA Platinum have driven the spends
 growth in the portfolio and it contributes to 42% of spends. The credit
 card business has clocked total spends of Rs, 4,543 crore for the year
 at 42% growth Y-o-Y with a book size of Rs,942 crore.
 Salaried Personal Loan: Salaried personal loan business offers salaried
 individuals personal loans with a tenure of upto 60 months. This year
 the business has grown by 70% with outstanding loans of Rs, 1,416 crore
 as of March 2016. The total customer base stands at 47,500 customers.
 Home Finance: Home finance business clocked growth of 19% in
 disbursements with loan book growth of 19%. Your Bank has expanded its
 home finance business further in Tier II cities. Cross Sell through
 Bank Branches, Corporate Salary, Privy, and Wealth Teams contributed to
 around 38% of total volume. This year also witnessed very low losses on
 account of effective recovery and collection processes and policies
 e) Business Banking Assets (BBA)
 Your Bank through its BBA division offers secured and unsecured
 Business loans, Loans against Property & Working Capital Finance to
 self- employed professionals / non-professionals and Small & Medium
 Enterprises. This has been a landmark year for your Bank''s BBA business
 with its book growing by 30%. It continues to maintain its best in
 class portfolio quality through it effective and efficient risk
 management and recovery policies and practices. Capitalizing on the
 growing retail branch network, your Bank managed to expand its BBA
 product offering in over 450 branches.
 Wholesale Banking
 Your Bank through its consolidated franchise has focused on serving
 customers'' requirements across segments with its wide array of
 customized financial products and services that are driven through
 best-in-class technology platforms. Your Bank is a trusted banking
 franchise consistently delivering right and customized solutions to
 high quality customers through a passionate and entrepreneurial team.
 Focused approach on client selection and constant portfolio monitoring
 has ensured a healthy portfolio through both volatile economic
 situation and tough credit environment in the last financial year. In
 order to give more focus to our client activities, your Bank created a
 separate Corporate, Institutional & Investment Banking vertical which
 covers selected large Indian corporate houses with a view to provide a
 single platform to service both their corporate banking and investment
 banking needs. Consequent to the merger of ING Vysya Bank Limited with
 your Bank, we now have a strong presence in the multinational segment
 i.e. as a banker to various multinational companies present in India.
 The Integrated Global Transaction Banking with enhanced suite of
 products and solutions is steered by innovation, technology & Kona
 Kona Kotak.  The merger has opened up new opportunities to cater to
 needs of customer segments such as Insurance, Corresponding Banking and
 Multinational Companies. In addition to serving existing customers as
 well as being bankers'' Bank on Global Transaction Banking, your Bank
 has led from the front in offering services to new age segments viz.
 E-com and M-com. Your Bank recognizes the dynamic landscape in
 Transaction Banking and the evolving Banking space and has suitably
 invested in fetch initiatives. It is your Bank''s Endeavour to continue
 to provide simple, secure, reliable solutions leading to superior
 customer experience.
 Your Bank has been in the limelight for its people, products and
 services. It has been adjudged Best Cash Management Bank across
 business categories – Small, Medium and Large Corporate. The Global
 Custodian magazine has conferred a dual recognition for the Custody
 Business in the India Domestic Survey and later in the Survey of Agent
 Banks in Emerging Markets.
 Your Bank has introduced the following key initiatives to serve
 customers better:
 - Service Support: To ensure a faster customer response, a Service
 Solutions vertical was set up during the year. This vertical is the
 single point of contact for all service related and documentation
 issues for wholesale customers with personnel present across all key
 major 9 locations across the country.
 - Secure Internet Banking: Given the growing online frauds, the
 security of the net banking platform has been further strengthened by
 offering secured token for logging in. Customers can use the dynamic
 number on the token along with the password to access the account
 online and transact thereafter.
 - KashPay: Offers walkin cash and cheque collection services through
 branch network thereby enhancing the reach and convenience for the
 customer. The product is capable of validating the collection data
 pre-fed by customer to ensure only valid requests are processed. The
 transaction processing is supported by comprehensive MIS for ease of
 reconciliation and instant status of collection.
 - Operation SAHAJ: In order to gain increased efficiencies, your Bank
 has started Operation SAHAJ. This focuses on improving existing client
 facing or back-end process in order to deliver superior service to the
 client with a lower turnaround time without compromising on credit /
 operational risk. One of our client facing Endeavour''s has been able to
 open any account in one day post receiving the complete documentation.
 As of today, courtesy Operation SAHAJ, accounts are being opened within
 the target of one day. Further, various products are implementing
 monitoring and control systems to measure and improve service
 - Trade: Tie up with multiple offshore banks for facilitating client
 transactions like offshore guarantees, ECA financing, ECB funding,
 offshore subsidiary funding etc. Your Bank is preferred trade partner
 for top banks for Europe and US region for their India centric
 business. Financial/ Performance Guarantees, Letter of Credit and
 remittances of these banks now are handled at your Bank counters.
 Commercial Banking
 The Commercial Banking business has registered a reasonable growth in
 FY 2015-16 despite subdued market sentiments and erratic monsoon.
 Commercial Vehicles (CV) and Construction Equipment (CE) sectors, which
 have been witnessing slowdown since 2011, showed strong signs of
 recovery. The CV situation has improved significantly over the previous
 year, especially in the case of Medium Commercial Vehicle (MCV) & Heavy
 Commercial Vehicle (HCV) sales across segments, which was driven by
 replacement demand. Your Bank has increased exposure significantly to
 this sector in FY 2015-16. Light Commercial Vehicle (LCV) segment has
 also grown over the previous year. Further, decrease in energy prices
 and all round improvement of load factors have improved viability for
 transport operations and also reduced levels of delinquency. Small
 Commercial Vehicles (SCV) segment is also showing signs of recovery
 with marginal growth in the last quarter.
 Despite a second back to back dry spell last year, the agri business
 (including the tractor finance business) managed to grow last year with
 the loans outstanding of Rs,17,993 crore. The agri business increased
 its focus on financial inclusion activities by directly financing the
 micro loans segment for women''s Joint Liability Groups. Close to 56,000
 women borrowers were added with loan sizes of around Rs,20,000 each to
 women in the states of UP and Bihar.
 Your Bank has maintained its market share in the tractor finance
 business. While the delinquencies in this segment have increased, it is
 under control.
 Activities in focus were loans for construction of ware houses & cold
 storages, warehouse receipt funding under pledge, micro loans and loans
 for purchase of pumps etc. These loans qualified for small and marginal
 farmer categorizations and direct individual farmer funding. Other Agri
 loans included loans for food and Agro processing units.
 The agri division (including tractor finance) continued to manage its
 delinquency though incremental stress was observed across locations due
 to monsoon shortfall.
 The growth of the Emerging Corporate Group''s (ECG) portfolio has been
 modest in FY 2015-16. There has been an increase in delinquencies in
 this segment, mainly on account of volatile commodity prices and
 uncertainty in the economy.
 Asset Reconstruction
 It was challenging to sell large assets under possession as the market
 was sluggish for real estate sales. The legal judicial system continues
 to languish in terms of passing timely orders which cause significant
 delay in timely and effective recoveries.
 The division continued to focus on last mile financing to companies
 which are on the turnaround path with clear focus on cash fow based
 The recoveries from NPA purchase of retail portfolio continues to be
 Your Bank believes that banks and NBFCs in the next few years will
 continue to sell their retail NPA portfolios, which will help the
 division to acquire more portfolios.
 Your Bank''s treasury actively contributes to your Bank by way of:
 - Proprietary Trading: The various proprietary trading desks actively
 trade in products such as Fixed Income, Money Markets, Derivatives,
 Foreign Exchange and Bullion. Primary Dealer Desk – part of the
 proprietary trading desk, actively participates in the primary auctions
 of government securities, makes market in government securities and
 engages in retailing of government securities.
 - Customer Transactions:
 - Facilitating access to foreign currency markets through cash &
 derivatives products and providing fine market rates to clients for
 remittance and trade transactions.
 - Client solutions - standardized and structured, pertaining to Debt
 Capital Markets including Syndication of Loans, Bonds, Mezzanine
 financing, Promoter funding and acquisition financing and
 - Balance Sheet Management: The Balance Sheet Management Unit (BMU)
 manages the Asset Liability mismatches, Interest rate & Liquidity gaps
 and implementation of Funds Transfer Pricing between various business
 units. The Correspondent Banking Division within treasury actively
 builds on relationships with offshore banks towards improving quality
 and international reach for its customers.
 Human Resources
 The year 2015-16 has been a year of continued focus on employee
 well-being and investment in human capital stayed significant.
 Your Bank undertook substantial work to drive the ''core'' values and
 culture of the Bank in the last year that strengthened the merger of
 erstwhile ING Vysya Bank with Kotak Mahindra Bank. To ensure a seamless
 cultural integration, various initiatives were launched to internalize
 behavioral parameters and the values across the organization. Further
 thrust was laid on employee engagement through its linkage to
 behavioral parameters.
 Your Bank has taken strides in the past year and continues to grow with
 a talent base of over 31,000 employees. A proactive approach to
 adopting the best of human resource practices, efficient systems,
 processes and continuous investments in technology has helped manage
 the scale and complexity of a large and distributed workforce.
 With an average age of 33 years your Bank continues to attract talent
 across all its businesses and hierarchy. Pre-trained manpower
 acquisition channels such as Kotak Sales Officer (KSO) and Junior Sales
 Officer (JSO) programs have been further strengthened to create a
 sustainable workforce pipeline.  To enhance ability to deliver on
 strategic work-force planning and hiring goals, a dedicated team was
 institutionalized to focus on end to end talent acquisition process –
 maximizing channel efficiencies, optimizing costs, simplifying and
 standardizing hiring process and creating a seamless hiring experience
 to potential employees.
 With 19% of the workforce being women, your Bank realizes that
 achieving progressive gender representation requires addressing
 mindsets and developing a more inclusive, holistic diversity agenda.
 Your Bank continues to strive to provide opportunities for a diverse
 and competent workforce.
 Your Bank is committed to developing its capabilities as an
 organization and as individuals to meet current and future business
 challenges. In the year 2015-16, we have invested significantly in
 training and professional development – leveraging the latest
 technologies to deliver highly impactful and relevant training programs
 to our employees. These learning initiatives are designed around
 development of individual and team competencies in partnership with top
 academic institutions and renowned industry professionals. Leadership
 Development Programs focused on developing the leadership capabilities
 of our senior executives, to help them prepare for future roles in the
 Your Bank continues its focus on engagement and retention through
 initiatives that provides a holistic environment where employees get
 opportunities to realize their potential. Talent management as an
 integral part of overall performance management process in the Bank
 aims to provide long term, sustained and meaningful careers to
 employees across the organization. ''Pulse'' engagement survey, along
 with other engagement initiatives, provided insights on distinct
 employee needs that helped developing appropriate interventions.
 We are entering a new age where digital is default and this
 technological change is shaping the sociological change impacting every
 facet of life and work. Anticipating digital being a significant
 transformation opportunity, we are on the journey to leverage digital
 technology to enable greater engagement, interaction and flexibility.
 Guided by our value system that motivates our attitudes and action,
 your Bank is focused on forward looking policies, lean processes and
 nurturing talent.
 With the announcement of the merger with ING Vysya Bank, your Bank took
 up the initiative of merging the technology systems and data of the two
 banks. The merger provided an opportunity to leverage the best of
 breed systems from both banks. As the technology integration
 progressed across business verticals, your Bank identified synergies in
 systems and capabilities to optimize costs across the technology
 operations of the two banks. The merged systems will provide a standard
 customer experience across all channels to all customers of the merged
 Customer data security and risk management need to keep pace with
 digital offerings. With this in mind, the Distributed Denial of Service
 was augmented with an in-premise solution. A fraud management solution
 to track customer transactions across channels was implemented. On the
 regulatory side, a new Enterprise Risk System was implemented for the
 Value at Risk calculation of the treasury products.
 Focus on creating more and more digitally enabled services across
 channels remained a key priority for your Bank in this year. Some of
 the highlights being:
 - Launched a comprehensive micro site for New Pension System with
 various calculators and educative content to demystify the concept of
 pension and also enable people to get started with opening their
 pension account online.
 - Launched a real time customer acquisition platform for personal loan,
 where a customer PAN, Adhaar & CIBIL are checked real time & decision
 about the loan amount and interest rate can be given instantly.
 - Launched Pre-approved Personal Loan on Net Banking for salaried
 customers. This enables a pre-qualified customer to apply for personal
 loan while logged into the net-banking account and the disbursed amount
 is instantly credited to customer''s banking account.
 - Launched tab based account opening process for Saving Account. This
 is an end-to-end digitized workflow, from lead capture to account set
 up, thereby reducing the processing time and enhancing customer
 - Hashtag banking was given further fillip by creating capability to
 order a book or special promotional movies by just a single tweet.
 - Launched Kotak Bharat Banking - India''s first internet-free app. This
 app does not need internet to transact. Customer can do 25 different
 transactions including mobile recharge and small value fund transfer.
 The app is available in 6 languages (Hindi, Gujarati, Marathi, Tamil,
 Kannada and English). Response messages within the app will also be in
 regional language.
 - Rolled out e-store on Net Banking after successful roll out of
 m-store on banking app. This includes travel categories like fight
 tickets, bus tickets and hotel booking.
 - Introduced new features in the iPhone version of mobile app. iPhone
 customers can now book a Recurring Deposit (RD), Add a new biller and
 set Auto Pay amongst various new services introduced.
 - Turn-around times for lending to commercial customers significantly
 improved by digitizing the process by introducing a tablet based lead
 management system for use by sales people in the field.
 - Corporate customers got an upgraded FX trading portal.
 - Digitization for wealth management customers was also strengthened
 with the launch of a portal providing a single view of all their
 Investment in Airtel M Commerce Services Ltd.
 Airtel M Commerce Services Ltd. Company (AMSL), 100% subsidiary of
 Bharti Airtel Ltd. (BAL), had been granted in-principle approval for
 setting up a Payments Bank by the Reserve Bank of India (RBI) in August
 2015. Basic but critical services such as small savings account,
 remittances etc. will bring a large number of low income households and
 small businesses under formal banking network. Your Bank in February
 2016 has signed a Share Subscription and Shareholders Agreement with
 AMSL and BAL for acquisition of 19.90% equity stake in AMSL.
 Subsequently, your Bank has invested in AMSL. AMSL has received final
 license from RBI in April 2016.
 Your Bank''s subsidiaries are established players in the different areas
 of financial services, viz. car finance, investment banking, stock
 broking, asset management and life insurance.
 As at 31st March 2016, your Bank has eighteen (18) subsidiaries as
 listed below:
 Domestic Subsidiaries
 Kotak Mahindra Prime Limited
 Kotak Securities Limited
 Kotak Mahindra Capital Company Limited
 Kotak Mahindra Old Mutual Life Insurance Limited
 Kotak Mahindra Investments Limited
 Kotak Mahindra Asset Management Company Limited
 Kotak Mahindra Trustee Company Limited
 Kotak Investment Advisors Limited
 Kotak Mahindra Trusteeship Services Limited
 Kotak Forex Brokerage Limited
 Kotak Mahindra Pension Fund Limited
 Kotak Mahindra General Insurance Company Limited
 IVY Product Intermediaries Limited (formerly known as ''ING Vysya
 Financial Services Limited'')
 International Subsidiaries
 Kotak Mahindra (International) Limited
 Kotak Mahindra (UK) Limited
 Kotak Mahindra Inc.
 Kotak Mahindra Financial Services Limited
 Kotak Mahindra Asset Management (Singapore) Pte. Limited
 Kotak Mahindra General Insurance Company Limited, which was
 incorporated in December 2014 with principal objective of carrying on
 business of general insurance, received approval from Insurance
 Regulatory and Development Authority of India (IRDAI) to commence the
 business of general insurance in November 2015 and subsequently
 commenced its operations in December 2015.
 The various activities of the subsidiaries and the performance and
 financial position of the subsidiaries and associates are outlined in
 the Management Discussion and Analysis section appended to this Report.
 The Bank''s Policy for determining material subsidiaries is available on
 the Bank''s website viz. URL:
 As at 31st March 2016, your Bank has following four (4) Associate
 ACE Derivatives & Commodity Exchange Limited Infna Finance Private
 Limited Matrix Business Services India Private Limited Phoenix ARC
 Private Limited
 The Annual Report which consists of the financial statements of your
 Bank on standalone basis as well as consolidated financial statements
 of the group for the year ended 31st March 2016, is sent to all the
 members of your Bank. Web link of the Annual Report is sent to all
 members whose email IDs are registered with the Bank/Depository
 Participant(s). For members who have not registered their email IDs,
 physical copies of the Annual Report are sent. It does not contain
 Annual Reports of your Bank''s subsidiary companies. Your Bank will make
 available full Annual Report (including the Annual Reports of all
 subsidiaries) either a hard or soft copy depending upon request by any
 member of your Bank. These Annual Reports will be available on your
 Bank''s website viz. URL: and will
 also be available for inspection by any member at the Registered Office
 of your Bank.
 The shareholders of the Bank at its Annual General Meeting held on 29th
 June 2015 approved a new Scheme under the Securities and Exchange Board
 of India (Share Based Employee Benefits) Regulations, 2014, for the
 purposes of granting options and stock appreciation rights to the
 employees of the Bank, its subsidiaries and its associate companies, as
 applicable, viz. Kotak Mahindra Share Based Employee Benefit Scheme
 2015 comprising of:
 - Kotak Mahindra Equity Option Scheme 2015 and
 - Kotak Mahindra Stock Appreciation Rights Scheme 2015
 Further, pursuant to the Scheme of Amalgamation of ING Vysya Bank
 (IVBL) with the Bank, the ESOP Schemes of the erstwhile IVBL have been
 renamed and adopted by the Bank, as given below:
 - Kotak Mahindra Bank Ltd. (IVBL) Employees Stock Option Scheme 2005
 - Kotak Mahindra Bank Ltd. (IVBL) Employees Stock Option Scheme 2007
 - Kotak Mahindra Bank Ltd. (IVBL) Employee Stock Option Scheme 2010
 - Kotak Mahindra Bank Ltd. (IVBL) Employees Stock Option Scheme 2013
 The stock options granted to the employees currently operate under the
 following Schemes:
 - Kotak Mahindra Equity Option Scheme 2007
 - Kotak Mahindra Equity Option Scheme 2015
 - Kotak Mahindra Bank Ltd. (IVBL) Employees Stock Option Scheme 2007
 - Kotak Mahindra Bank Ltd. (IVBL) Employee Stock Option Scheme 2010
 - Kotak Mahindra Bank Ltd. (IVBL) Employees Stock Option Scheme 2013
 The disclosure requirements under the Securities and Exchange Board of
 India (Share Based Employee Benefits) Regulations, 2014, for the
 aforesaid ESOP & SARs Schemes, in respect of the year ended 31st March
 2016, are disclosed on the Bank''s website viz. URL:
 Pursuant to Regulation 27 of the SEBI (Listing Obligations and
 Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations), a
 separate section entitled ''Report on Corporate Governance'' has been
 included in this Annual Report. The Report of Corporate Governance also
 contains certain disclosures required under the Companies Act, 2013. A
 Business Responsibility Report containing the requisite details under
 Regulation 34 of the SEBI LODR Regulations is disclosed on the Bank''s
 website viz. URL:
 Directors retiring by rotation
 Mr. N.P. Sarda (DIN 03480129), Non-Executive & Non-Independent Director
 of the Bank, retires by rotation as a Director at this Annual General
 Meeting but having crossed 70 years of age is not offering himself for
 re-appointment in line with Reserve Bank of India policy and
 The Bank does not intend to fll this vacancy at this Annual General
 Changes in Directors
 Mr. C. Jayaram (DIN 00012214), retired as Joint Managing Director of
 the Bank on 30th April 2016, on attaining the age of superannuation.
 However, Mr. Jayaram continues as a Non-Executive Non-Independent
 Director of the Bank with effect from 1st May 2016 up to the date of
 this Annual General Meeting. Approval of shareholders is being sought
 at this Annual General Meeting for his appointment as a Non-executive
 Non-Independent Director of the Bank who would be liable to retire by
 Mr. Asim Ghosh (DIN 00116139), retired as a Director of the Bank with
 effect from 9th May 2016 due to completion of his eight years tenure
 pursuant to the provisions of Section 10A(2A)(i) of the Banking
 Regulation Act, 1949.
 Your Directors place on record their appreciation for the valuable
 advice and guidance rendered by Mr. N.P. Sarda and Mr. Asim Ghosh
 during their tenure as Directors of the Bank.
 The details of the Directors appointed are set out in the Corporate
 Governance Report annexed to this Report.
 Declaration from Independent Directors
 The Board has received declarations from the Independent Directors as
 per the requirement of Section 149(7) of the Companies Act, 2013 and
 the Board is satisfied that the Independent Directors meet the criteria
 of independence as mentioned in Section 149(6) of the Companies Act,
 Board Evaluation
 The Nomination and Remuneration Committee of the Bank''s Board under the
 expert advice of an external agency specialized in Human Resource and
 management consultancy, has formulated the criteria for performance
 evaluation of the Directors and the Board as a whole. The Criteria
 formulated broadly covers the Board role, Board/Committee membership,
 practice & procedure and collaboration & style.
 A Board effectiveness assessment questionnaire was designed for the
 performance evaluation of the Board, its Committees, Chairman and
 individual directors in accordance with the criteria set and covering
 various aspects of performance including composition, relationship
 among directors, director competency, contribution to risk management
 compliance, roles and responsibility, board procedures, processes,
 functioning and effectiveness. The said questionnaire was circulated to
 all the directors of the Bank for the annual performance evaluation.
 Based on the assessment of the responses received to the questionnaire
 from the directors on the annual evaluation of the Board, its
 Committees, Chairman and the individual Directors, the Board Evaluation
 Report was placed before the meeting of the Independent Directors for
 consideration.  Similarly, the Board at its meeting assessed the
 performance of the Independent Directors. The Directors were satisfied
 with the results of the performance evaluation of the Board & its
 Committees, Chairman and individual directors.
 Key Managerial Personnel (KMPs)
 Mr. C. Jayaram ceased to be a ''Key Managerial Personnel'' with effect
 from 1st May 2016 upon his retirement as a Joint Managing Director of
 the Bank.
 The following offcials of the Bank continue to be the Key Managerial
 Personnel pursuant to the provisions of Section 203 of the Companies
 Act, 2013:
 - Mr. Uday Kotak, Executive Vice Chairman and Managing Director
 - Mr. Dipak Gupta, Joint Managing Director
 - Mr. Jaimin Bhatt, President & Group Chief Financial Officer
 - Ms. Bina Chandarana, Company Secretary
 Appointment & Remuneration of Directors & KMPs
 The appointment and remuneration of Directors of the Bank is governed
 by the provisions of Section 35B of the Banking Regulation Act, 1949.
 The Nomination and Remuneration Committee of the Bank''s Board has
 formulated criteria for appointment of Senior Management personnel and
 the Directors. Based on the criteria set it recommends to the Board the
 appointment of Directors and Senior Management personnel. The Committee
 considers the qualifications, experience, ft & proper status, positive
 attributes as per the suitability of the role, independent status and
 various regulatory/statutory requirements as may be required of the
 candidate before such appointment.
 The Reserve Bank of India (''RBI'') vide its circular
 no.DBOD.No.BC.72/29.67.001/2011-12 dated 13th January 2012 has issued
 the Guidelines on Compensation of Whole Time Directors / Chief
 Executive Officers / Other Risk Takers of Private Sector Banks on
 Compensation Policy which inter alia cover the following:
 - Proper balance between fixed pay and variable pay;
 - Variable pay not to exceed 70% (Seventy Per Cent) of the fixed pay in
 a year;
 In accordance with the aforesaid RBI Circular, the Board of the Bank
 has adopted a Compensation Policy for its Whole-time Directors, Chief
 Executive Officer of the Bank and other employees which includes issue
 of stock appreciation rights as a form of variable pay, linked to the
 Bank''s stock price, payable over a period of time. The salient features
 of the Compensation Policy are as follows:
 - Objective is to maintain fair, consistent and equitable compensation
 practices in alignment with Kotak''s core values and strategic business
 - Applicable to all employees of the Bank. Employees classified
 into 3 groups:
 - Whole-time Directors/Chief Executive Officer
 - Risk Control and Compliance Staff
 - Other categories of Staff l Compensation structure broadly divided
 into Fixed, Variable and ESOPs
 - Fixed Pay – Total cost to the Company i.e. Salary, Retirals and Other
 - Variable Pay – Linked to assessment of performance and potential
 based on Balanced Key Result Areas (KRAs), Standards of Performance and
 achievement of targets with overall linkage to Bank budgets and
 business objectives. The main form of incentive compensation includes –
 Cash, Deferred Cash/Incentive Plan and Stock Appreciation Rights.
 - ESOPs – Granted on a discretionary basis to employee based on their
 performance and potential with the objective of retaining the employee.
 - Compensation Composition – The ratio of Variable Pay to Fixed Pay and
 the ratio of Cash v/s Non Cash within Variable pay outlined for each
 category of employee classification.
 - Any variation in the Policy to be with approval of the Nomination &
 Remuneration Committee.
 - Malus and Clawback clauses applicable on Deferred Variable Pay.
 - Ensuring no personal hedging strategies by employees which undermine
 risk alignment effects as part of their remuneration.
 The details of the remuneration paid to the Non-Executive Chairman,
 Executive and Non-Executive Directors of the Bank for the year ended
 31st March 2016 is provided in the Corporate Governance Report annexed
 to this Report.
 The Non-Executive Chairman of the Bank receives a fixed amount of
 remuneration as recommended by the Board and approved by the
 shareholders of the Bank and RBI, from time to time. He also receives
 remuneration by way of sitting fees for attending meetings of the Board
 or Committees thereof.
 RBI vide its circular no. DBR.No.BC.97/29.67.001/2014-15 dated June 1,
 2015 has issued guidelines on payment of compensation to the NEDs of
 private sector banks which inter-alia specifies the following:
 - The Board of Directors of the Bank (in consultation with the
 Nomination & Remuneration Committee) needs to formulate and adopt a
 comprehensive compensation policy for NEDs (other than part-time
 non-executive Chairman).
 - Maximum amount of Profit related commission not to exceed Rs,10 lac
 per annum for each director of the Bank.
 Accordingly, in line with the RBI circular and pursuant to the relevant
 provisions of the Companies Act, 2013, and the recommendation of the
 Nomination and Remuneration Committee of the Bank, the Board of
 Directors have adopted a compensation policy for the NEDs (excluding
 the part- time Non-Executive Chairman). The salient features of the
 Compensation Policy are as follows:
 - Compensation structure broadly divided into
 - Sitting fees
 - Re-imbursement of expenses
 - Commission (Profit based) 
 - Amount of sitting fees and commission to be decided by the Board 
 from time to time, subject to the regulatory
 - Overall cap on commission for each director Rs,10 lac per annum.  
 - NEDs not eligible for any stock options of the Bank.
 Approval of shareholders for the payment of commission to the NEDs of
 the Bank is being sought at the ensuing Annual General Meeting of the
 Sr.  Disclosure Requirement Disclosure Details No.
 4 Number of permanent employees on the rolls of Bank at the 31,410 end
 of the year
 5 Explanation on the relationship between average increase in
 Recommendation for increase in remuneration is based on the following
 remuneration and Bank performance factors:
 - Compensation trends based on industry benchmarking
 - Compensation positioning vis-ΰ-vis market trend
 - Alignment between risks and remuneration
 - Applicable regulatory guidelines
 Increase in remuneration for FY 15-16 vis-ΰ-vis FY 14-15 not comparable
 on account of merger (Please refer note 4 below)
 6 Comparison of the remuneration of the Key Managerial For the FY
 2015-16, KMPs were paid approximately 0.38% in aggregate Personnel
 against the performance of the Bank of the Profit Before Tax of the
 Bank on standalone basis and 0.24% on consolidated basis.
 7 Variations in the market capitalization of the Bank, price The market
 capitalization of the Bank has increased from Rs, 101,429 crore
 earnings ratio as at the closing date of the current financial as of
 31st March 2015 to Rs, 124,857 crore as of 31st March 2016. Over the
 year and previous financial year and percentage increase or same
 period, the price earnings ratio on consolidated Profits moved up from
 decrease in the market quotations of the shares of the Bank 33.33 to
 36.08. Kotak Bank stock price as at 31st March 2016 has increased in
 comparison to the rate at which the company came out by 18,051% to Rs,
 680.65 over the last public offering i.e. IPO in March 1993 at with the
 last public offer the price of Rs,150 per share (post bonuses &
 subdivision adjusted price Rs, 3.75).
 8 Average percentile increase already made in the salaries of Average
 percentile increase in remuneration for employees other than employees
 other than the managerial personnel in the last managerial personnel
 for FY 15-16 vis-ΰ-vis FY 14-15 not comparable on financial year and
 its comparison with the percentile increase account of merger (Please
 refer note 4 below)
 in the managerial remuneration and justification thereof
 and point out if there are any exceptional circumstances for Average
 increase for managerial personnel is 7.04% and 9.20% excluding
 increase in the managerial remuneration SARs
 10 Key parameters for any variable component of remuneration The key
 parameters for variable component of remuneration availed by the
 availed by the directors directors are:
 - Overall Performance
 - Achievement of budgets
 - Various risks
 - Variable pay will not exceed 70% of the fixed pay.
 - Cash component of the variable pay will not exceed 50% of the Fixed
 - If variable pay is higher than 50% of fixed pay, at least 40% of the
 variable pay will be deferred over a period of 3 years or longer on a
 pro- rata basis.
 - ESOPs are not considered as variable pay for this purpose
 Sr.  Disclosure Requirement Disclosure Details No.
 11 Ratio of the remuneration of the highest paid director to There are
 11 employees who are not directors but received remuneration in that of
 the employees who are not directors but receive excess of the highest
 paid director during the year.
 remuneration in excess of the highest paid director during
 Considering the average remuneration of these employees, the ratio
 works the year
 out to 1:1.36
 12 Affirmation that the remuneration is as per the remuneration The
 Bank is in compliance with its Compensation Policy policy of the Bank
 1) Remuneration includes Fixed pay   Variable paid during the year  
 perquisite value as calculated under the Income Tax Act, 1961.
 Remuneration does not include value of Stock Options.
 2) Stock Appreciation Rights (SARs) are awarded as variable pay. These
 are settled in cash and are linked to the average market price of the
 Bank''s stock on specified value dates. Cash paid out during the year is
 included for the purposes of remuneration.
 3) * Mr. C. Jayaram retired as Joint Managing Director of the Bank on
 30th April 2016, on attaining the age of superannuation. He continues
 as a non-executive non-independent director of the Bank w.e.f. 1st May
 4) The merger of ING Vysya Bank (''IVBL'') with Kotak Mahindra Bank
 (''Bank'') was effective from 1st April 2015. Accordingly, there has been
 integration of the erstwhile IVBL with the Bank and a consequent
 increase in the employee base for the FY 2015-16. Hence, the numbers
 for FY 2015-16 are not comparable with that of FY 2014-15.
 Pursuant to Section 204 of the Companies Act, 2013, your Bank has
 appointed Ms. Rupal D. Jhaveri, a Company Secretary in Practice, as its
 Secretarial Auditor. The Secretarial Audit Report for the financial
 year ended 31st March 2016 is annexed to this Report.
 Being a banking company, the disclosures required as per Rule 8(5)(v) &
 (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and
 74 of the Companies Act, 2013 are not applicable to your Bank.
 In terms of Section 139 of the Companies Act, 2013, Messrs S.R.
 Batliboi & Co. LLP, Chartered Accountants, were appointed as statutory
 auditors of your Bank for a period of four years from the conclusion of
 the Thirtieth Annual General Meeting until the conclusion of the Thirty
 fourth Annual General Meeting of the Bank, subject to the annual
 approval of RBI and ratification by the members every year.
 Accordingly, requisite resolution forms part of the Notice convening
 the Annual General Meeting.
 The Board of Directors confirms that your Bank has laid down set of
 standards, processes and structure which enables to implement Internal
 Financial controls across the organization with reference to Financial
 Statements and that such controls are adequate and are operating
 effectively. During the year under review, no material or serious
 observation has been observed for inefficiency or inadequacy of such
 All the Related Party Transactions that were entered into during the
 financial year were on arm''s length basis and were in ordinary course
 of business.
 Pursuant to Section 134(3)(h) read with Rule 8(2) of the Companies
 (Accounts) Rules, 2014, there are no transactions to be reported under
 Section 188(1) of the Companies Act, 2013, in form AOC-2.
 All Related Party Transactions as required under Accounting Standards
 AS-18 are reported in Note 24 of Schedule 17 - Notes to Accounts of the
 Consolidated financial statements and Note 7 of Schedule 18 C - Notes
 to Accounts of the Standalone financial statements of your Bank.
 The Bank''s Policy on dealing with Related Party Transactions is
 available on the Bank''s website viz. URL:
 Pursuant to Section 186(11) of the Companies Act, 2013, loans made,
 guarantees given, securities provided or acquisition of securities by a
 banking company in the ordinary course of its business are exempted
 from the disclosure requirement under Section 134(3)(g) of the
 Companies Act, 2013.
 Your Bank is committed to its Vision Statement of upholding its
 Global Indian Financial Services Brand creating an ethos of trust
 across all constituents, developing a culture of empowerment and a
 spirit of enterprise thereby becoming the most preferred employer in
 the financial services sector.
 Consistent with the Vision Statement, your Bank is committed to
 maintain and provide to all its employees and directors highest
 standards of transparency, probity and accountability. The Kotak Group
 Endeavour''s to develop a culture where it is safe and acceptable for
 all employees and directors to raise / voice genuine concerns in good
 faith, and in a responsible as well as effective manner.
 A vigil mechanism has been implemented through the adoption of
 Whistleblower Policy with an objective to enable any employee or
 director, raise genuine concern or report evidence of activity by the
 Bank or its employee or director that may constitute: Instances of
 corporate fraud; unethical business conduct; a violation of Central or
 State laws, rules, regulations and/or any other regulatory or judicial
 directives; any unlawful act, whether criminal or civil; malpractice;
 serious irregularities; impropriety, abuse or wrong doing; deliberate
 breaches and non-compliance with the Bank''s policies; questionable
 accounting/audit matters/financial malpractice. The same option has now
 been extended to the vendors of the Bank also. The concerns can be
 reported on the website viz. URL:
 Currently an online mechanism enabling aforementioned reporting has
 been implemented over and above other modes of communication like
 e-mail, or a letter sent by mail, courier or fax to designated persons.
 Safeguards to avoid discrimination, retaliation, or harassment, and
 confidentiality have been incorporated in the policy. All employees and
 directors have access to the Chairman of the Audit Committee in
 appropriate and exception circumstances.
 The Policy has been uploaded on the Bank''s intranet as well as website
 viz. URL: and regular
 communication is made for sustained awareness.
 Your Bank has constituted a Board Corporate Social Responsibility
 Committee (CSR Committee) and consists of the following Directors:
 - Mr. C Jayaram, Non-Executive Non-Independent Director & Chairman of
 the CSR Committee
 - Mr. Dipak Gupta, Joint Managing Director
 - Prof S. Mahendra Dev, Independent Director
 Your Bank''s CSR Committee drives the CSR programme of the Bank. Your
 Bank has a Board approved CSR policy, charting out its CSR approach.
 This policy articulates the Bank''s aim to positively contribute towards
 economic, environmental and social well-being of communities through
 its Corporate Social Responsibility agenda. The Bank''s CSR agenda is
 driven by its key focus areas:
 a.  Promoting education – primary focus area
 b.  Enhancing vocational skills and livelihood
 c.  Promoting preventive healthcare and sanitation
 d.  Reducing inequalities faced by socially and economically backward
 e.  Sustainable development
 f.  Relief and rehabilitation
 g.  Clean India h.  Sports
 The Bank''s CSR policy is available on the Bank''s website viz. URL :
 Pursuant to the provisions of Section 135, schedule VII of the
 Companies Act 2013 (the Act), read with the Companies (Corporate Social
 Responsibility) Rules, 2014 the report of the expenditure on CSR by the
 Company is as under:
 The average net Profit U/S 198 of the Bank standalone for the last
 three financial years preceding 31st March, 2016 is Rs, 2,366.37 crore.
 The prescribed CSR expenditure required U/S 135, of the Act for FY
 2015-16 is Rs, 4,733 lac.
 The CSR expenditure incurred for the period 1st April 2015 to 31st
 March 2016 under Section 135 of Companies Act, 2013 amounts to Rs,
 1,641 lac as against Rs, 1,197 lac CSR spend in the financial year
 CSR expenditure of Rs, 1,641 lac in FY 2015-16 as a percentage of
 average net Profit U/S 198 of the Bank standalone at Rs, 2,366.37 crore
 is 0.69%.
 Your Bank is building its CSR capabilities on a sustainable basis and
 is committed to gradually increase its CSR spend in the coming years.
 The CSR Committee of the Board confirms that the implementation and
 monitoring of CSR Policy, is in compliance with CSR objectives and
 Policy of the company.
 The details of CSR activities and spends under Section 135 of the
 Companies Act, 2013 for FY 2015-16, are annexed to this Report.
 Your Bank has in place a comprehensive Enterprise wide Risk Management
 (ERM) framework supported by detailed policies and processes for
 management of Credit Risk, Market Risk, Liquidity Risk, Operational
 Risk and various other Risks. Details of identification, assessment,
 mitigations, monitoring and the management of these Risks are mentioned
 in the Management Discussion and Analysis section appended to this
 The provisions of Section 134(3)(m) of the Companies Act, 2013 read
 with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not
 applicable to your Bank.
 The employee strength of your Bank, standalone, was over 31,000 and
 along with its subsidiaries was over 46,000 as of 31st March 2016.
 312 employees employed throughout the year and 132 employees employed
 for part of the year were in receipt of remuneration of Rs, 60 lac or
 more per annum.
 With an average age of 33 years your Bank continues to attract talent
 across all its businesses and hierarchy and has put in place various
 processes and systems to ensure alignment of employee behaviors with
 the organization''s core values.
 Organizational culture aspects like trust & inclusiveness were also
 reiterated through 90  cross functional meets conducted by senior
 business leaders for employees at mid management level under the Meet
 5 initiative.
 In a very short span, your Bank has crossed several milestones in its
 Gender Diversity agenda.
 - A differentiated talent acquisition strategy to increase women
 employee base across various suitable roles has helped us to continue
 adding 20% women amongst all new hires in the Bank. While continuing
 with our philosophy of providing equal opportunities, an aggressive
 push in this area will help us achieve a better balance in gender
 - Your Bank''s top senior women professionals (around forty women across
 Kotak) have been brought together under our diversity initiative
 Astra and these women leaders now play a pivotal role in guiding and
 mentoring other mid-level women employees to sustain and grow in the
 - Prevention of Sexual Harassment (POSH): Your Bank continues with the
 belief on zero tolerance towards sexual harassment at workplace and
 continues to uphold and maintain itself as a safe and
 non-discriminatory organization. To achieve the same Kotak reinforces
 the understanding and awareness of Prevention of Sexual Harassment of
 Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
 Your Bank has formulated Internal Complaints Committee (ICC) at three
 regions for reporting any untoward instance. Any complaints pertaining
 to sexual harassment are diligently reviewed and investigated and
 treated with great sensitivity. The ICC members have been trained in
 handling and resolving complaints and have also designed an online
 e-learning POSH Awareness module which covers the larger employee base.
 Following is a summary of sexual harassment complaints received and
 disposed of during the year 2015-16: o No. of complaints received : 8
 - No. of complaints disposed of : 4
 In the case of 4 pending cases, enquiries were in progress at the close
 of the year.
 With our objective to identify, build and nurture leaders across levels
 to deliver superior business results and address individual career
 aspirations, this year your Bank introduced a new contemporary approach
 to assess and diagnose leadership competency gaps followed by a
 development plan.
 As your Bank enters in its next phase of growth and expansion of
 footprint across urban and rural India, your Bank and its subsidiaries
 continued to carry out several initiatives to attract and retain a pool
 of highly skilled and motivated employees who are aligned to the firm''s
 vision of becoming the most trusted financial services provider.
 In accordance with the provisions of Rule 5 of the Companies
 (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the
 names and other particulars of employees are set out in the annexure to
 the Directors'' Report. In terms of the Proviso to Section 136(1) of the
 Companies Act, 2013, the Directors'' Report is being sent to all
 shareholders excluding the aforesaid annexure. The annexure is
 available for inspection at the Registered Office of your Bank. Any
 shareholder interested in obtaining a copy of the said annexure may
 write to the Company Secretary at the Registered Office of your Bank.
 The Directors, based on the representations received from the
 operational management, confrm in pursuance of Section 134(5) of the
 Companies Act, 2013, that:
 (i) your Bank has, in the preparation of the annual accounts for the
 year ended 31st March 2016, followed the applicable accounting
 standards along with proper explanations relating to material
 departures, if any;
 (ii) they 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
 your Bank as at 31st March 2016 and of the Profit of your Bank for the
 financial year ended 31st March 2016;
 (iii) they have taken proper and sufficient care to the best of their
 knowledge and ability, for the maintenance of adequate accounting
 records in accordance with the provisions of the Act for safeguarding
 the assets of your Bank and for preventing and detecting fraud and
 other irregularities;
 (iv) the annual accounts have been prepared on a going concern basis;
 (v) they have laid down internal financial controls to be followed by
 the Bank and that such internal financial controls are adequate and are
 operating effectively; and
 (vi) they have devised proper systems to ensure compliance with the
 provisions of all applicable laws and that such systems are adequate
 and operating effectively.
 Following statements/reports/certificates are set out as Annexure to
 the Directors'' Report:
 - Extract of Annual Return under Section 134(3)(a) of the Companies
 Act, 2013 read with Rule 12 (1) of Companies (Management &
 Administration) Rules, 2014 (Annexure - A).
 - Secretarial Audit Report pursuant to Section 204 of the Companies
 Act, 2013 (Annexure - B).
 - Details of CSR Activities and Spends (Annexure - C).
 Your Directors would like to place on record their gratitude for the
 valuable guidance and support received from the Reserve Bank of India,
 Securities and Exchange Board of India, Insurance Regulatory and
 Development Authority and other Government and Regulatory agencies.
 Your Directors acknowledge the support of the members and also wish to
 place on record their appreciation of employees for their commendable
 efforts, teamwork and professionalism.
 For and on behalf of the Board of Directors
 Dr. Shankar Acharya     Uday Kotak                    Place: Mumbai,
 Chairman                Executive Vice Chairman 
                         and Managing Director        Date: 11th May 2016
Source : Dion Global Solutions Limited
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