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Punjab National Bank Directors Report, PNB Reports by Directors
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Punjab National Bank

BSE: 532461|NSE: PNB|ISIN: INE160A01022|SECTOR: Banks - Public Sector
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Download Annual Report PDF Format 2015 | 2014 | 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '16    « Mar 15
During FY''16, the Bank has crossed several landmarks i.e., Rs. 9.65 lakh
 crore Global Business, Rs. 8.50 lakh crore Domestic Business, Rs. 5.50 
 lakh crore Global Deposits, Rs. 4.00 lakh crore Net Advances, Rs. 2.00 
 lakh crore CASA Deposits and Rs. 12,000 crore Operating Profit.
 
 The Bank''s Global Business reached Rs.9.65 lakh crore as at end of
 March''16 reflecting a growth of 9.5% on yearly basis. The Bank''s
 International Business stood at the level of Rs.1,12,123 crore,
 recording a YoY growth of 11.2%. While the Global Deposits of the Bank
 at Rs.5.53 lakh crore grew by 10.3%, Net Advances recorded growth of
 8.4% to reach Rs.4.12 lakh crore as on 31st March 2016.
 
 In terms of Bottom-line parameters, the Bank''s Operating Profit
 increased from Rs. 11,955 crore as at 31st March''15 to Rs. 12,216 crore
 as at 31st March''16. In terms of key ratios, Domestic Net Interest
 Margin at 2.95% for the year ended March''16 remained one of the highest
 amongst nationalized banks during the period under consideration.
 Further, the CRAR of the Bank at 11.28% stood above the prescribed
 regulatory requirement.
 
 In this backdrop, your Directors take pleasure in placing the Bank''s
 Annual Report for 2015-16 along with its audited annual financial
 statements.
 
 OUR PERFORMANCE
 
 A.  FINANCIAL HIGHLIGHTS
 
 A.1.  BALANCE SHEET
 
                                                    (Rs. crore)
 
                         31st Mar''15   31st Mar''16   Growth (%)
 
 Total Business               881913        965377         9.5
 
 Total Deposits               501379        553051        10.3
 
 Net Advances                 380534        412326         8.4
 
 A.2.  PROFIT
 
                                                    (Rs. crore)
 
 Parameters                   Mar''15        Mar''16          (%)
 
 Operating Profit              11955         12216          2.2
 
 Provisions                     8893         16192         82.1
 
 Net Profit/Loss                3062         -3974            -
 
 A.3.  KEY RATIOS
 
                                                            (%)
 
 Particulars                                    FY''15     FY''16
 
 Cost of Funds                                   5.14      4.93
 
 Yield on Funds                                  8.00      7.28
 
 Global Net Interest Margin                      3.15      2.60
 
 Domestic Net Interest Margin                    3.55      2.95
 
 Return on Assets                                0.53  Negative
 
 Cost to Income Ratio                           46.74     44.94
 
 B OPERATIONAL HIGHLIGHTS
 
 - The Bank implemented a new strategic approach named ''Indradhanush''
 which charts the seven key reform areas for the Bank so as to adapt,
 evolve and thrive in the face of increased competition in the Indian
 banking space.  These seven areas are People Development, Increase CASA
 & Retail Business, Improve CD Ratio through Credit Growth, NPA
 Management, Improve customer service, Digital PNB and Increase Income &
 Control Expenditure. The Bank made a significant progress in these
 areas.
 
 - Towards People Development, the Bank has launched new Mobile App
 based e-Learning Platform named ''PNB Univ''. It is available on all
 major Mobile Platforms, besides web based access through Desktop or
 Laptop to provide a quick access to quality curriculum and high quality
 training 24x7 right on the palm top.
 
 - To unleash the full potential of the newly recruited young, energetic
 and tech-savvy employees, the Bank has initiated an On-boarding &
 Mentoring Program titled PNB Navodaya. This program will help to
 channelize employees'' energies towards the Bank''s development and
 transform them into brand ambassadors for the business growth and
 organizational goal.
 
 - To ensure a consistently superior customer experience and to better
 align with changing customers'' expectations, the Bank launched slew of
 innovative digital products and solutions which are as follows:
 
 - ''PNB ATM Assist'': Unique App enabling the customer not only to locate
 PNB''s ATM but also to lodge complaints related to ATMs.
 
 - ''PNB MobiEase'': Mobile app to provide single touch banking.
 
 - ''PNB Sleep Easy'': To disable and re-enable Internet Banking and
 Mobile Banking password.
 
 - ''Green PIN'': To enable customers obtain duplicate PIN for debit card
 instantly through SMS request.
 
 - Online PPF and RD account opening facility.
 
 - Online booking of locker facility anywhere in India through the
 corporate website.
 
 - The Bank has also introduced the facility to register for Mobile
 Banking through vast network of over 9000 ATMs.
 
 - The Bank registered its presence on the social networking sites i.e.,
 Twitter and LinkedIn, with an aim of strengthening Brand PNB on
 social media and to engage with customers in a cost efficient manner.
 
 - To improve operational processes, the Bank has successfully migrated
 the CBS Data Base from M9000 servers to new Sparc Super Cluster (M6-32)
 servers.  Owing to this, the Bank has become the first bank in India
 to implement 4 node active RAC (Real Application Cluster) setup.
 
 - The Bank is in process of introducing ''PNB Unified Payments
 Interface (UPI)'' which will allow fund transfer via. Mobile App, link
 all accounts including those opened with other banks for making
 transactions and facilitate merchants to pull the transactions through
 Mobile App as an alternate POS & cash transfer
 
 - To improve the recovery, the Bank has created a ''War Room'' at Head
 Offi ce wherein round the clock NPA monitoring is undertaken in a
 systematic manner.
 
 - To provide card based transactions services, Micro ATMs have been
 introduced at Business Correspondent locations.  The Bank has become
 the fi rst bank in the banking industry to start cash deposit through
 Micro ATMs.
 
 - To spread financial awareness across the length and breadth of the
 country, the Bank flagged off ''Vitiya Jan Chetna Abhiyan''. This
 program will also emphasize on creating awareness about the Pradhan
 Mantri Jan Dhan Yojana, Atal Pension Yojana, Mudra Loans, Pradhan
 Mantri Jeewan Jyoti Yojana and Pradhan Mantri Jan Suraksha Yojana.
 
 - For women development, the Bank has formulated new schemes i.e., PNB
 Vanita financing scheme, PNB PoWer Savings and Mahila Kaushal Vikas
 Yojna.
 
 - During FY''16, the Bank has inaugurated 32 ''Akshaya'' branches, managed
 exclusively by women for the women customers only.
 
 - The Ministry of Finance, Government of India, has declared PNB as the
 first among all banks in deposit mobilized through Pradhan Mantri Jan
 Dhan Yojana (PMJDY) accounts.
 
 C.  ASSET QUALITY
 
 The Bank''s Gross NPA stood at Rs.55,818 crore in FY''16 (FY''15 = Rs.25,695
 crore) and the Net NPA stood at Rs.35,423 crore in FY''16 (FY''15=
 Rs.15,396 crore). In terms of ratios, Gross NPA ratio stood at 12.90% in
 FY''16 (FY''15= 6.55%) and Net NPA ratio stood at 8.61% in FY''16
 (FY''15=4.06%).
 
 The accumulation of stressed assets remained a concern for the Bank.
 The Bank initiated various measures to arrest the incremental
 delinquencies and fresh slippages to improve the quality of assets. In
 all NPAs, account-specific resolution strategies were implemented and
 progress was monitored regularly. Daily progress of recovery in NPAs
 (outstanding Rs.10 lakh and above) was monitored and placed before Top
 Management. Further, compromise/negotiated settlements through
 one-to-one meeting with borrowers was adopted as another vital strategy
 to tackle NPAs. The Bank also had 17 Asset Recovery Management Branches
 (ARMBs) which function exclusively for resolving NPAs.
 
 Initiatives taken during FY''16:
 
 - During FY''16, two mega sale campaigns were organized in which
 residential, industrial and other miscellaneous categories of
 properties were put to sale with wide publicity. This increased the
 number of sales and led to substantial recovery during the year.
 
 - The Bank has taken initiative to streamline the entire process of
 SARFAESI action. During FY''16, rigorous follow up was done by ensuring
 timely action and main stress was given in taking physical possession
 of the Immovable Properties (IPs) either with the help of supporting
 agency or by moving application before the DMM/CMM. This has resulted
 into increase in the percentage of properties under physical possession
 of the Bank, thereby, leading to more auctions under Mega Sale
 Campaigns.
 
 - During FY''16, another option available to tackle the rising level of
 NPAs was utilized by putting some difficult accounts for sale to ARCs.
 As a result, 15 accounts with outstanding of Rs.1835 crore was sold to
 ARCs.
 
 - Concerted follow up was also made with the Circle Office/FGMOs for
 having dialogue with the borrower and guarantors which has resulted
 into higher number of settlement during FY''16 vis-a-vis FY''15.
 
 - The Bank also took initiative for identifying Wilful Defaulters and
 according to Reserve Bank of India guideline, notices were issued to
 various borrowers who were found to have committed an act of Wilful
 Default.  As a result, during FY''16, 904 borrowers were finally
 declared as Wilful Defaulters.
 
 - During FY''16, in 6898 Rin Mukti Shivirs, cash recovery of Rs. 742.98
 crore was obtained from 1,16,825 accounts and up gradation of 49,702
 accounts with balance outstanding of Rs.1224.50 crore. Thus, NPAs of
 Rs.1967.48 crore were resolved in these shivirs.
 
 - OTS was marketed as a product for faster resolution of NPAs and OTS
 in 84104 accounts was approved. Through well defined recovery policy
 Rs.854.93 crore were recovered in approved OTS cases through negotiated
 settlements.
 
 - Due to the above highlighted initiatives and concerted follow-up for
 recovery and up gradation, the Bank recovered Rs. 4724.58 crore in
 accounts slipped during FY''16.
 
 - NPA accounts as on 31.03.15 with aggregate outstanding of Rs..1381.66
 crore were upgraded to Standard category.  Total cash recoveries in NPA
 accounts amounted to Rs.4261.88 crore. During FY''16, the Bank recovered
 Rs.2296.95 crore out of the accounts earlier written off (Including
 Technical Write off).
 
 D.  INDUSTRIAL RESTRUCTURING
 
 The Standard Restructured Advances of the Bank has come down from
 Rs.38,315 crore for FY''15 to Rs.20,144 crore for FY''16
 
 a) Industrial Rehabilitation
 
 The Bank continued its efforts towards rehabilitation of potentially
 viable sick units to provide the much needed relief to industrial
 sector by debt restructuring. The Bank has been assigned the role of
 ''Operating Agency'' of Board for Industrial and Financial Reconstruction
 (BIFR) in number of accounts. During FY''16, Draft Rehabilitation Scheme
 (DRS) were formulated by the Bank as ''Operating Agency'' of BIFR in four
 accounts and the Bank has also implemented rehabilitation package in
 one case sanctioned by BIFR during FY''16.
 
 b) Corporate Debt Restructuring (CDR)
 
 To ensure timely restructuring of the debt of viable corporate
 availing credit facilities under consortium / multiple banking, a
 transparent mechanism is formed under CDR system. During FY''16, one
 account with outstanding of Rs. 38.38 crore was restructured under CDR.
 Out of 84 restructured accounts, PNB has been assigned the role of
 Monitoring Institution in 18 accounts.
 
 c) Debt Restructuring Mechanism for Small & Medium Enterprises
 
 The Bank has already adopted Debt Restructuring Mechanism for Small &
 Medium Enterprises (DRM for SMEs) on the lines of CDR since FY''06.
 During FY''16, the Bank restructured 17 accounts with aggregate
 outstanding of Rs. 247.10 crore.
 
 d) Restructuring-Others
 
 The Bank has also put in place a transparent mechanism for
 restructuring of debts of potentially viable units, which are facing
 temporary problems due to factors beyond their control even for cases
 which cannot be covered under BIFR/ CDR/DRM for SMEs. During FY''16, 19
 accounts involving Rs.1002.56 crore were restructured/ rescheduled under
 this category.
 
 E.  DIGITALIZATION: TOWARDS ''DIGITAL PNB''
 
 The Bank undertook several initiatives in its continued efforts to
 provide better, prompt and efficient services to the customers. These
 initiatives were a step towards cash less society and paperless
 banking.
 
 E.1 Alternative Delivery Channels
 
 a) Internet Banking: The Bank has been providing Internet Banking
 Services with following variants viz., Retail Internet Banking and
 Corporate Internet Banking. The Internet Banking Customers of the Bank
 reached 47 lakh as on 31st March 2016. The Bank also updated its
 Internet Banking Services during FY''16 which are given as under:
 
 - Revamped Corporate Internet Banking Module, making it more simple and
 easy to use.
 
 - Launched ''PNB Sleep-easy'' to block/unblock transaction password of
 IBS and Mobile Banking when not required.
 
 - Hot listing and personalization of Debit Card.
 
 - Online resetting of Pin number of Debit Card.
 
 - Online application for OD under PMJDY Accounts through IBS.
 
 - For strengthening security in Internet Banking services operations,
 the Bank has implemented Digital Signature as a second factor of
 authentication for doing transactions in Retail and Corporate Internet
 Banking.
 
 b) Mobile Banking: The Bank is also providing Mobile Banking services
 to around 24 lakh customers as on 31.03.2016. The Bank has provided
 Mobile Banking Services with following variants:
 
 i. SMS Banking: User has to create SMS in the predefined format(s).
 
 ii. Browser Based Mobile Banking: This requires Mobile phone enabled
 with GPRS or Wi-Fi.
 
 iii. Application Based Mobile Banking: The user can download app from
 respective app store.  Currently the Bank is providing Mobile Banking
 App for Android, iOS, Blackberry and J2ME platforms.
 
 iv. National Unified USSD Platform (NUUP): This is offered on a short
 code *99#, which is a common platform for all banks managed by National
 Payment Corporation of India (NPCI).
 
 During FY''16, the Bank added the following features which are as
 follows:
 
 - PNB MobiEase: Using this mobile app, there is no need to remember
 syntax for sending SMS for different enquiries (i.e. Balance Enquiry,
 Mini Statement, Cheque Book request etc.)
 
 - Value Added Services: Facility of Mobile and DTH recharge is
 available through Mobile Banking.
 
 - PNB ATM Assist : A Mobile App to locate ATMs of the Bank using GPS
 and also lodge complaints regarding the functionality of ATMs.
 
 - Online User Registration and Password Reset for Mobile Banking
 without any intervention of branch.
 
 - Online application for OD under PMJDY Accounts through Mobile
 Banking.
 
 - PNB introduced hindi version of Mobile Banking.
 
 c) SMS Alert Services: As on 31st March''16, around 3.95 crore customers
 have subscribed for SMS Alerts Services. On an average per day around
 29.92 lakh SMS Alerts are generated and delivered to these customers.
 
 - SMS Alerts are generated for identified transactions (credit/debit)
 done at branches, ATM, IBS, Mobile Banking and POS terminals.
 
 - In addition, SMS alerts are also sent for non- financial activities
 like Birthdays, Mobile no.  registration/modification, address/name
 change, change of internet banking transaction password, loan
 installment becoming due, loan installment overdue, FD account
 maturing, FD account Matured, NEFT (N10) confirmation, RTGS
 transactions with UTR No, Balance on missed call, etc.
 
 - The channel is also leveraged for providing promotional messages such
 as information on Bank''s products and other services to the Bank''s
 esteemed clients.
 
 The Bank has been continuously adding new features such as:
 
 - SMS alerts implemented in 5 Regional Rural Banks.
 
 - Mandatory/Non-Mandatory Feature Introduced: Customer is provided with
 option to select from Mandatory and Non-mandatory alerts so that in
 case customer requires only mandatory alerts, he / she may not be
 charged.
 
 - Call center is provided with facility to access SMS alerts history
 sent to customer in order to speed up complaint resolution process
 related to SMS alerts and OTP.
 
 - CIBIL Watch Alert: Alerts are sent to branch heads through
 information provided by CIBIL regarding PNB loan customers approaching
 some other Bank for loan.
 
 - Housing/Car Loan Alert: Alert is sent to customer acknowledging
 his/her request whenever he/she visits PNB housing/car loan site and
 submits a request for call back from PNB.
 
 - Cheque Presentment Alert: Alert is sent to customer whenever a cheque
 is presented in his/ her account, providing ample time to respond
 before the same is cleared.
 
 - 15G/15H Alert: Alert is sent to customers requesting submission of
 15G/H to avoid deduction of Tax.
 
 d) ATMs: The Bank has vast network of 9463 ATMs spread across length
 and breadth of the country as on 31.03.2016.
 
 The various new initiatives taken by the Bank to increase the usage of
 ATMs are as follows:
 
 - E- Surveillance systems have been installed at ATM sites to restrict
 the incidences of vandalism and burglaries. Till 31.03.2016, 6136 sites
 are connected and monitored by E- Surveillance.
 
 - To decrease the downtime of ATMs on account of electricity failure,
 Solar UPS are being installed.  Till 31.03.2016, 450 Solar UPS were
 installed at potential sites.
 
 - For online ATM monitoring and to take prompt corrective/preventive
 actions in case of ATMs getting down, ESQ ATM Monitoring System has
 been installed.
 
 e) Self Service kiosk: The Bank has installed 1721 Cash Deposit
 /Multifunction Kiosk (including PNB Cash Acceptor cum ATM), 383
 Electronic Cheque Deposit Machines and 3214 Pass Book Updating Machines
 across the country. The machines installed in e-lobby are made
 available to customers 24*7. Customers may access the same as per their
 convenience.
 
 In order to improve the availability of Self Service Area Machines, a
 real time monitoring tool for remote monitoring of SSA Machines has
 been implemented for effective monitoring and to reduce down time.
 
 E.2 Cheque Truncation System (CTS): Primary site of CTS Western Grid
 has been shifted from LCC-Mumbai to Belapur. Now all the branches under
 Western Grid are participating in CTS clearing through the Belapur
 Site.
 
 Complete infrastructure of LCC Mumbai has been shifted to Data
 Centre-Delhi and DR site of Western Grid is established at Data
 Centre-Delhi.
 
 E.3 IT Security: The Bank has Information Security Policy which is
 approved by Board and reviewed each year to keep it updated as per
 latest trend and best practices.
 
 - Information System Security Architecture Implementation Committee
 (ISSAIC) meetings are held on monthly basis to review and recommend
 implementation of Information security posture.
 
 - Website has been made WCAG (Web Compatibility Access Guideline)
 Version 2.0.
 
 - Corporate website has been made IPV6 Compliant.
 
 - Security Operations centre has been upgraded from RSA Envision to RSA
 Security Analytics.
 
 - Information Security Audit and Process audit is got conducted from
 external qualified Information Security auditors on periodical basis.
 The scope includes external attack and penetration testing,
 Vulnerability Assessment and Penetration Testing (VAPT), WAN Audit and
 process audit.
 
 - ISO Certification was got upgraded from ISO 27001:2005 to ISO
 27001:2013 for data centre, NOC and DR Site.
 
 Business Continuity Plan & Disaster Recovery (BCP & DR)
 
 - The Bank has well defined Business Continuity Plan (BCP) to provide
 un-interrupted Customer Services in case of any exigency.
 
 - The Bank has fully operational Disaster Recovery Site (DRS) of its
 Data Centre and other critical applications with well defined Recovery
 Time Objective (RTO) and Recovery Point Objective (RPO).
 
 - DR drill is conducted regularly to keep testing its functional
 preparedness. As on 31st March''16, DR site is available for 65
 applications including critical ones.
 
 E.4 Other Initiatives
 
 a) Micro ATMs: Under the PMJDY account opening drive, large numbers of
 saving accounts have been opened and RuPay debit cards have been
 issued. To provide card based transactions services to such customers,
 concept of Micro ATMs has been introduced at Business Correspondent
 locations. Micro ATMs are basically PoS/ Handheld Terminal machines
 with Magnetic-stripe Card Reader and Encrypted pin-pad. Currently,
 customer has the facility of cash withdrawal and balance inquiry
 transaction through Micro ATMs. Transaction happens in online real-time
 mode and receipt is immediately generated by the Micro ATM.
 
 The facility was made live in 4410 Micro ATMs and the Bank is under the
 process of implementing the same at remaining BC locations.
 
 b) Branch-Wise Vacant Locker Status: For getting a locker on rent,
 customers have to sometimes make number of visits to particular branch
 to ascertain the position of vacant lockers available. Also, some
 branches in the same city may have vacant lockers & others may be
 having waiting list of customers for issue of locker. To address the
 issue, w.e.f. 24.09.2015, existing & prospective customers have been
 provided an opportunity to locate branch-wise vacant locker status on
 the Corporate Website (www.pnbindia.in). Also, a mechanism was put in
 place to update this vacant locker status on the Bank''s website on
 daily basis.
 
 c) Payment System for PAO/CDDO Files from PFMS:
 
 Ministry of Finance, Government of India has taken a decision to
 process all payments like non plan payment (including PAO/CDDO
 payments) of various Ministries through PFMS (under Ministry of
 Finance) and to integrate various standalone systems. These payments
 are to be digitally signed and sent through PFMS central server. The
 payment fi les from PFMS are being processed through PFMS PAO portal.
 Generation of e-Payment scrolls, Cheque Scrolls, Receipt Scrolls has
 been integrated in this system from 01.11.15.
 
 d) Outward Mandate Management System: To help the branches in garnering
 business of corporate customers wishing to collect funds from their
 customers on a regular frequency on the basis of their mandate, an
 in-house developed Outward Mandate Management System has been put in
 live w.e.f. 03.02.16. For collecting EMI as per mandate from PNB
 borrowers, Debit Transaction File (Outward ACH-Debit) can also be
 generated by service branch through this system.
 
 e) Implementation of new Sparc Super Cluster (M6-32) servers: On
 18.10.2015, the Bank has successfully migrated the CBS Data Base from
 M9000 servers to new Sparc Super Cluster (M6-32) servers on 4-Node RAC
 (Real Application Cluster) Architecture from earlier 2-Node RAC. PNB is
 the fi rst Bank in India to implement 4 node active RAC (Real
 Application Cluster) setup. This implementation will help the Bank in
 future cost savings and provide various operational benefits.
 
 f) Zero Data Loss Centre (ZDLC): ZDLC of the Bank started functioning
 from 29.02.2016. ZDLC will function as Bank''s third line of data
 defense. The Bank''s transaction data would be simultaneously captured
 at DC and ZDLC and then subsequently replicated in DR site, thereby
 guaranteeing 100% synchronization or availability of the transactional
 data. This will ensure zero data loss for critical transactions,
 thereby helping the organisation to quell operation risk, reputation
 risk and enhance stakeholder confidence.
 
 F.  Management Information System
 
 To achieve the objective with which Management Information System
 Division (MISD) was set up, Enterprise-wide Data Warehouse (EDW) was
 implemented in 2008. EDW set up has facilitated ready access to data
 required for Regulatory/Statutory reporting and additionally for
 analytical purposes. This has reduced workload of field functionaries
 to a considerable extent and is assisting Top Management in taking
 timely decisions.
 
 Standardized approach for credit risk under Basel – III has been
 implemented through LADDER (Loans and Advances Data Desk for Evaluation
 & Reports) system enabling calculation of Risk Weighted Assets (RWAs)
 in respect of Loans & Advances as per guidelines of RBI.
 
 Data of all loan accounts is being transmitted to four Credit
 Information Companies (CICs) i.e. CIBIL, Equifax, Experian & High Mark
 on monthly basis from Ladder System. Bureau One solution has been put
 in place since 2012 enabling the branches to draw Credit Information
 Reports (CIRs) using Bank''s intranet (CBS network) for taking credit
 related decisions. CIRs of 14,62,493 prospective borrowers under
 Consumer category and 26,861 CIRs under Commercial category were drawn
 from CIBIL, Experian, High Mark & Equifax databases during FY''16
 
 The Bank is required to register the particulars of equitable mortgages
 with Central Registry. About 4.19 lakh Immovable Properties (IPs) have
 been registered with CERSAI by the Bank till March 2016. The object is
 to avoid multiple financing on same IP, thereby preventing
 perpetration of frauds by mortgaging the same property to more than one
 financial institution.
 
 Anti Money Laundering solution has been implemented to scan the
 customers at the time of customer acquisition and fund transfer by
 verifying various Watch Lists. The system also helps in submitting
 different reports to FIU and other regulatory bodies.
 
 G.  Branch and Office Network
 
 Domestic Presence
 
 The Bank has one of the largest Branch Network of 6759 as on
 31.03.2016. Around 63% of the Bank''s branches are located in Rural and
 Semi-Urban areas. To fulfill the banking needs of unbanked areas, 202
 new branches were added to the vast network of branches during FY''16.
 Besides, 32 ''Women only'' branches named Akshaya were opened during
 FY''16. These branches are managed exclusively by women for the women
 customers only.
 
 International Presence
 
 The Bank has its overseas presence in 9 countries by way of 4 branches
 (2 Hong Kong, one Dubai, & one OBU-Mumbai), 2 Subsidiaries (London &
 Bhutan), one Associate (at Kazakhstan), one Joint Venture (at Nepal)
 and 4 Representative Offices (Sydney-Australia, Shanghai-China,
 Dhaka-Bangladesh and Dubai-UAE).
 
 The Bank is also exploring possibilities of overseas expansion in Sri
 Lanka, Canada, Brazil, Australia and China.
 
 H.  International Banking
 
 The Bank had registered a foreign exchange turnover of Rs. 1,33,881
 crore for FY''16 showing a decline of 2.08% on YoY basis mainly due to
 slowdown in global economies and continuous decline in the country
 exports. At present, the Bank has more than 200 branches authorised to
 handle foreign exchange business and a Centralized Back Office for
 Trade Finance at New Delhi specialized for centralized handling of
 trade transactions. The Bank has specialized International Banking
 Branches at major export centres for extending services to the
 importer/ exporter customers. Besides these Authorised Dealers (AD)
 branches, the Bank has 22 Exchange Bureaus at important tourist centres
 to facilitate encashment of foreign exchange currency notes/travellers
 cheque by foreign tourist/NRIs.
 
 The Bank is also having International Service Branch at New Delhi for
 handling inward remittances for the Bank as a whole. During FY''16, the
 Bank handled remittance business of about Rs.57,886 crore, showing
 growth of about 4% on YoY basis.
 
 The Bank has Rupee Drawing Arrangements (RDA) with 38 exchange Houses
 (32 in the Gulf, 2 in Singapore, 2 in the USA, 1 in Australia and 1 in
 Canada) to facilitate remittance from NRIs.
 
 The Bank also has web based remittance arrangements under Money
 Transfer Service Scheme (MTSS) and has arrangements with 6 Money
 Transfer Organizations Worldwide.
 
 The Bank has actively implemented Gold monetization Scheme (GMS)
 launched by Government of India in FY''16 and systems and procedures
 have been put in place.
 
 I.  Operations Division
 
 Organizational Restructuring: Organizational structure plays a vital
 role in performance of any organization. To improve the productivity
 and hence delivery, number of Circle Offices has been increased from
 69 to 76. Existing 3 tier structure, with Circle Offices linking head
 office to the branches, is being changed to 4 tier structure where
 Zonal Offices will monitor the performance of Circle Offices and
 report to the Head Office.
 
 Business Processes: Business processes are being continuously reworked
 at the micro levels to provide seamless banking experience to customers
 e.g. request for issue of personalized cheque books through ATMs,
 relaxation in inter-sol (branch) cash withdrawals and transfer
 transactions, introduction of payee''s name in SMS sent on presentation
 of cheque for clearing, etc.
 
 Employee Suggestion Scheme: To encourage innovative and progressive
 ideas through employees, Employee Suggestion Scheme is in vogue for
 existing as well as retired employees.
 
 Customers can also send suggestions through feedback or email to
 customer care centre at care@pnb.co.in.
 
 J.  New Initiative Division
 
 To improve the customer service and increasing business prospects, the
 Bank took up many initiatives which are as under:
 
 - Towards brand positioning and connecting with the customers/visitors
 on social media, the Bank has made its presence on Twitter & LinkedIn.
 On social media, the Bank launched various facilities for
 customers/visitors viz., regular updates on offers, customer care
 services including grievances redressal, etc.
 
 - The concept of Digital village was evolved under which the village
 will be wi-fi enabled along with OffSite e-lobby having ATM, Cash
 Deposit Machine, Electronic Cheque Deposits Machine, Passbook Updation
 Machine, PC with internet connection and TV display unit.
 
 - 121 new Offsite e-lobbies started at institutional and cantonment
 areas to acquire business and improve service delivery.
 
 - Skill development programmes like computer literacy, carpentry,
 advanced farming techniques etc. are being conducted with focus on
 creating job opportunities and promote inclusive growth.
 
 - For bringing more efficiency in the ATM functioning and profitability, 
 ATM Profitability Model was designed. This is in-house designed 
 software to monitor the functioning of ATMs Pan India with an aim to 
 minimize/eliminate the pay out.
 
 - In order to communicate effectively with its customers and staff
 continuously, the Bank is coming out with concept of ''Reach in Reach
 out'' which will be akin to TV Channel.
 
 - The Bank is also planning to launch Tab Banking for acquisition of
 new customers using the newly set up marketing vertical and PNB YUVA
 for youth with an objective to bring them in the Bank''s fold through
 Mobile app.
 
 K.  Business Diversification
 
 - Mutual Fund: The Bank is distributing and marketing Mutual Fund
 products of Principal PNB AMC & UTI AMC. During FY''16, the Bank
 mobilized total amount of Rs.3457 crore and Asset under Management stood
 at Rs.580 crore which earned brokerage of Rs.3.38 crore.  Total amount
 mobilized during FY''16 was Rs.2653 crore and Asset under Management
 Rs.515 crore.
 
 - Insurance Business
 
 1.  Life Insurance Business: As a corporate agent of PNB MetLife India
 Insurance Co. Ltd., the Bank mobilized premium of Rs.964 crore (Fresh
 Business Premium of Rs.411 crore & Renewal Business Premium of Rs.553
 crore) during FY''16 from 1,12,200 policies, as against total premium of
 Rs.677 crore mobilized during FY''15, thus showing a growth of 42%. The
 Bank''s earnings from Life-Insurance business during FY''16 amounted to
 Rs.85 crore as against Rs.60 crore during FY''15, showing growth of 42%.
 
 Total business mobilized under Life Insurance business since inception
 is Rs.2840 crore, from 4,45,048 policies and total earning amounted to
 Rs.248 crore.
 
 2.  Non-Life Insurance Business: Under Insurance tie-up with Oriental
 Insurance Co. Ltd. for Non- Life Insurance business, the premium
 collection amounted to Rs.208 crore from 5.15 lakh policies mobilized by
 the Bank, which earned revenue of Rs.24.51crore as against Rs.21.87
 crore, during FY''15 showing a growth of 12%. Premium collected during
 FY''15 was Rs.193 crore from 4.40 lakh policies, thus showing a growth of
 8%. The Bank registered a growth of 31% in selling of customized health
 insurance policy ''PNB-Oriental Royal Mediclaim'' and 1,58,175 policies
 were sold during FY''16 as against 1,20,797 policies sold during FY''15.
 
 - Depository Services: Depository Services as Depository Participants
 of NSDL & CDSL is being provided through all branches covering more
 than 3500 centres across India. The Bank earned an income of Rs.79.60
 lakh during FY''16 for providing Depository Services.
 
 - Online Trading Services: Online trading facility is also being
 provided through the Bank''s associates viz. M/s.  SMC Global Securities
 Ltd., M/s. IDBI Capital Services Ltd. and M/s. Networth Stock Broking
 Ltd.
 
 An income of Rs.19.81 lakh was received from these associates on account
 of online trading activities during FY''16.
 
 - Merchant Banking: As Category-I Merchant Banker, the Bank handled 42
 assignments of Dividend Payment/
 
 Interest Payments during the FY''16 and earned a float income of Rs.2.95
 crore.
 
 Being Self Certified Syndicate Bank (SCSB), Applications Supported by
 Blocked Amount (ASBA) facility for submitting of application in public
 issues (IPO/FPO/ Right Issue) has now been made available from all the
 branches of the Bank. This facility is also available online to Bank''s
 CASA account holders (both retail and corporate IBS users). ASBA
 facility is also available for Syndicate/Sub syndicate Members of SEBI.
 
 During FY''16, the Bank collected applications for Rs.812 crore for 93
 assignments handled by the branches.
 
 - Credit Card: Credit Cards of the Bank have consolidated its market
 share during the year. The Bank achieved a growth rate of 35.32% in
 issuance of cards during FY''16
 
 The Bank also introduced Chip cards with PIN and One Time Password
 (OTP) to facilitate e-commerce transactions. To enhance customer
 awareness about security aspects, various steps are being regularly
 taken including sending text messages to cardholders of the Bank.
 
 Issuance activity has become an independent profit centre. Profit from
 the activity increased to Rs.524 lakh during the year and contributed to
 fee based income.
 
 - Merchant Acquiring Business: Merchant Acquiring Business through
 installation of Point of Sale (PoS)/ GPRS Terminals and Integration of
 Internet Payment Gateway (Debit/Credit Cards) launched in February 2010
 has completed 6 years. The Bank installed 13,699 PoS terminals and
 integrated 176 Internet Payment Gateways.
 
 - RuPay Card: The Bank has taken membership of National Payment
 Corporation of India (NPCI) for acceptance of RuPay Debit card on PNB
 Point of Sale terminals. Now, in addition to acceptance of cards having
 logo VISA or MasterCard / Maestro, PNB POS terminals accept RuPay Debit
 card for all face to face transactions.
 
 - KAIRON Project of Punjab Govt. for Grain Procurement: PUNGRAIN, a
 food grains procurement agency of Punjab Government has launched Kisan
 Arhtia Information and Remittance Online Network (KAIRON) project
 whereby they are making payments to the farmers through Arhtiyas using
 RuPay Debit cards with the help of National Payment Corporation of
 India (NPCI).
 
 The Bank actively participated in the project and has done a business
 of Rs.4150 crore as Acquiring Bank and Rs.2111 crore as Issuing Bank
 during FY''16.
 
 - Bhamashah (e-Mitra) Project: The Bank successfully participated in
 e-Mitra Project of Rajasthan Government and succeeded in obtaining the
 Project, whereby the
 
 Bank is going to install 10000 PoS terminals. Service Level Agreement
 (SLA) was signed and process of implementation has since started.
 
 - Multi level EMI facility in PoS terminals: At present, PoS terminals
 of the Bank are not customized with Multi Level EMI facility. In the
 present scenario, many customers prefer to avail EMI facility. The Bank
 is going to start the Multi Level EMI facility on the PoS terminals.
 Draft Agreement relating to it has been sent to M/s Worldline for the
 purpose of execution.
 
 - Launch of NFC Contactless Dual Interface debit card: The Bank is
 going to introduce NFC (Near Field Communication) technology in PNB PoS
 terminals. In NFC enabled PoS terminals, the card holders can make
 payments by just waving his card near the PoS terminal instead of
 dipping or swiping the card
 
 L.  Government Business
 
 To bring in efficiency in pension disbursement, we have provided the
 following facilities:- - Introduced Digital Life Certificate (DLC) and
 e-PPO which is a step towards digitization and error-free pension
 delivery system.
 
 - Approved CPPC at Allahabad for entire army pensioners
 
 - Set up service centres for pensioners, e.g., for armed forces at
 Allahabad, for naval personnel at Mumbai and air-force personnel at
 Delhi
 
 - Created exclusive e-mail IDs armypension@pnb.co.in;
 airforcepension@pnb.co.in and navypension@pnb.co.in so that pensioners
 of these wings of armed forces can post their grievances/ references.
 
 - Sending reminders through SMS to pensioners to submit life 
 certificate
 
 - Organized Aadhaar seeding Camps across India for convenience of
 pensioners and updated Aadhaar & Mobile numbers in their pensioner
 data.
 
 The Bank introduced Sukanya Samriddhi Yojana, Kisan Vikas Patra Scheme
 and on-line opening of PPF accounts.  These products are made available
 through 5990 SOLS of our Bank.
 
 The Bank started 20 new projects for receipt and payment of Govt. dues.
 The Bank established relationship with State Governments for VAT
 collections in all States except in North- Eastern, J&K, and Goa.
 
 For increasing efficiency in cash management, the Bank has made action
 plan to set up Mega Currency Chest / Cash Processing Centre and
 reducing the number of Currency chests from 195 to 109 in phased
 manner.
 
 Govt. Business Income for FY''16 stood at Rs.102.99 crore as compared to
 Rs.84.92 crore in FY''15. Claims lodged in Jan''16 for Rs.11.67 crore with
 SBI/EPFO/RBI which pertains to FY''16.
 
 M.  Treasury Operations
 
 During the period under review, Gross Investment as on 31st March 2016
 stood at Rs.1,54,727 crore as against Rs.1,49,266 crore as on 31st March
 2015 and registered a YoY growth of 3.66%. The average investments as
 on 31st March 2016 was Rs.1,62,855 crore as against Rs.1,41,340 crore in
 corresponding period last year. The Interest income from investment
 portfolio increased from Rs.10,563 crore for FY''15 to Rs.11,935 crore for
 FY''16. The Bank actively traded in sovereign bonds, Non-SLR bonds and
 equity throughout the financial year. The liquidity position of the
 Bank was comfortable throughout FY''16 and the funds were managed
 through CBLO, Repo and Forex market swaps. The Bank complied with all
 the requirements of CRR/SLR stipulated by the Regulator.
 
 Fixed Income (SLR/NSLR): FY''16 started on a bearish note on the back of
 unfavourable global factors like Grexit (Greece exit from Euro),
 China''s devaluation of its currency and fear of US FED hike. In
 September Monetary policy, the regulator announced a rate cut of 50 bps
 following which yields softened by around 25 bps along with SLR and HTM
 cut. However, market could not sustain at these levels and yields
 hardened on account of excess supply in the market mainly in State
 Development Bonds and expected supply of DISCOM bonds under scheme
 Ujwal DISCOM Assurance Yojana (UDAY). This huge demand supply mismatch
 along with fear of Government not sticking to its fiscal consolidation
 path and expectations of higher Government borrowing numbers further
 put pressure on the yields. However, Budget announcement gave a big
 respite to the market as Government stuck to its fiscal deficit
 target and borrowing numbers came much below the market expectations.
 After the Union Budget 2016-17, 10 year benchmark yields softened by
 around 40 bps. During FY''16, the Bank booked trading profit of
 Rs.418.63 crore profits from sale of investments in Fixed Income.
 
 Equity: During FY''16, Markets declined around 9% and Nifty corrected
 from its high of 9116 (Mar''15) to low of 6825 (Feb''16) due to Global
 events like Fed rate hike, China market sell-off, Yuan devaluation,
 falling crude prices and weak Corporate earnings. However, Markets have
 shown some recovery after Budget as Government stuck to its Fiscal 
 Deficit roadmap. On Global front, dovish stance of Fed and renewed FIIs
 buying supported the market sentiments. Indian Equity Market has been
 relatively resilient during this period compared to other Major
 Emerging Market Economies because of its strong fundamentals and
 domestic consumption story. The Bank booked Rs.204 crore Trading Profit
 in Equity segment and Dividend income increased to Rs.115.50 crore in
 FY''16 from Rs.95.70 crore in FY''15.
 
 Forex: There has been an increase in Forex Income Expenditure due to
 changing accounting policy. Now the income/ expenditure on swaps is
 being reposted on gross basis instead of net as was being done
 previously. Net Forex income has increased from Rs.681.50 crore as on
 March 2015 to Rs.1319.60 crore as on 31st March, 2016 showing an
 increase of 93.63% mainly on account of deployment of surplus of liquid
 fund by way of short term loans in Dollar Market. However, Exchange
 Profit decreased from Rs.397.72 crore in March 2015 to Rs.385.98 crore
 in March 2016.
 
 N.  Customer Care
 
 The Bank continued to accord top priority to providing prompt and 
 efficient service to its customers for FY''16 also. The Bank formulated a
 Grievance Redressal Policy. Efforts were made to redress the grievances
 of the customers within the framework laid down in the Grievance
 Redressal Policy.
 
 Systems and procedures for the grievances redressal mechanism are
 reviewed at regular intervals to remove systemic deficiency, if any,
 which help in further improving the customer service.
 
 Initiatives undertaken during FY''16 for improvement in customer service
 
 - The Bank introduced an On-line Grievance Redressal Management Program
 called Centralized Grievance Redressal Management System (CGRMS).
 Customers can lodge their requests/complaints in the CGRMS through the
 Bank''s website, Internet Banking Service and Mobile Banking Service.
 Complaints received at Head Office, all the Circle Offices and over
 1,862 SAP enabled branches are entered in CGRMS. Through this system,
 the customer gets an immediate automatic acknowledgement and can keep a
 track of his complaint also.
 
 - The position of complaints received by the Bank is reviewed by a
 Sub-Committee of the Board on quarterly basis. The meetings of the
 Sub-Committee are presided over by Managing Director and CEO. All the
 Executive Directors, Directors representing Officers'' Association,
 Ministry of Finance and the shareholders'' Directors are members of the
 Sub-Committee and General Managers of selected business and control
 Divisions are permanent invitees to the above committee. The above
 committee held four meetings during FY''16 and reviewed the position of
 complaints received by the Bank and also complaints received by Chief
 Customer Service Officer (Internal Ombudsman) on quarterly basis.
 
 - The Bank also constituted The Standing Committee on Customer
 Service, which is chaired by the Executive Director with General
 Managers of several business and control Divisions of the Bank. The
 committee also has three eminent non-executives (one senior citizen/
 one pensioner/one woman representative) drawn from the public as
 members. The committee meets every quarter to evaluate feed-back on
 quality of customer service received from various quarters. The
 committee also reviews comments/feed-back on customer service and
 implementation of Code of Bank''s Commitments to Customers received from
 BCSBI. The Standing Committee on Customer Service held four meetings
 during FY''16.
 
 - Customer Service Committees have been set up in all the branches and
 Circle Offices to look into the quality of customer service rendered
 and to critically examine the feedback/suggestions for improvement in
 customer service. These committees meet once in a month where staff and
 the invited customers interact freely on service related issues. Two
 nominated non-official members representing customers are invited in
 the Circle Level Customer Service Committee Meeting on quarterly basis.
 
 - The Bank has established state-of-the-art Contact Centres at Gurgaon
 and NOIDA to provide tele-banking services to its customers on 24 x 7 x
 365 basis through two renowned Service Providers. In addition to these
 two Primary Sites, the Bank also established two Secondary Contact
 Centres at Mangalore and Bhopal to provide tele-banking services to its
 customers in 5 regional languages besides Hindi and English.
 
 - The Bank constituted teams of officials at Customer Care Centre at
 Head Office, Circle Offices and Zonal Offices to pay incognito visit
 to branches to assess their standard of service. During FY''16, officials 
 of the Bank made 4205 incognito visits to branches Pan India.
 Deficiencies pointed out by the visiting officials are being shared
 with the concerned branch and the Circle Office for taking corrective
 steps for removal of the same. This helps in further improvement in
 customer service.
 
 - Theme Based Meetings are conducted at monthly intervals in all
 branches on a common date on a pre-decided Themes, details of which are
 provided by Customer Care Centre, HO to improve awareness of field
 staff about the Bank''s products and services and to sensitize the staff
 about the issues of utmost importance as well as the changes taking
 place in the industry and the Bank.
 
 - The Bank is publishing a monthly magazine titled Customer Speak in
 which selected complaints fi led by customers and the action taken and
 resolution provided to the complainants are also mentioned. Letters
 issued by customers appreciating the service of officials of the Bank
 are also published in this magazine. Besides, the Bank''s guidelines on
 important issues pertaining to customer service, products and services
 are highlighted in this magazine for the benefit of field staff.
 
 Due to various initiatives taken by the Bank to improve the customer
 service, the number of complaints received during FY''16 came down to
 29,654 as compared to 29,759 complaints received during FY''15. Out of
 total number of 29,827 complaints, (i.e., 173 complaints outstanding as
 on 1st April 2015 and 29,654 complaints received during FY''16) 29,610
 complaints were resolved as at 31st March 2016. The number of
 complaints pending as on 31.03.2016 was 217 which have since been
 resolved.
 
 No award has been passed by any Office of the Banking Ombudsman during
 FY''16.
 
 O.  Implementation of Official Language Policy
 
 The Bank has been leading in the area of implementation of Official
 Language and achieved almost all the targets in all parameters fixed
 by the Government of India, Ministry of Home Affairs, Department of
 Official Language for FY''16. All the bilingual CBS and HRMS computers
 are under Hindi Interface.  By adopting this bilingual system,
 implementation of Rajbhasha is increasing. In addition, the Bank is
 using Unicode fonts for Hindi correspondence at all levels.
 
 During FY''16, the Bank has been awarded with more than 50 awards for
 its excellent performance in the use of Hindi which includes some of
 very significant awards namely Rajbhasha Kirti Puraskar (First in ''A''
 region) – a top most award scheme of Govt.  of India, RBI Rajbhasha
 Shield Competition (First in ''A'' region and Second in ''B'' region) and
 other Regional level awards of Ministry of Home Affairs. In addition,
 Town Official Language Implementation Committees situated in different
 locations of the country and other Non-Govt. Organizations have also
 awarded the Bank offices.  The Bank is successfully convening the Town
 Official Language Implementation Committees constituted by Govt. of
 India in Delhi, Bharatpur, Kanpur, Chandigarh, Dharamshala,
 Sriganganagar, Bulandshahar, Dehradun, Gorakhpur, Kurukshetra, Rohtak,
 Muzaffarnagar, Hoshiarpur, Hamirpur and Bathinda.
 
 The Draft and Evidence Committee of Parliament on Official Language
 inspected Ernakulam Circle on 9th January, 2016 and the third
 sub-committee of Committee of Parliament on Official Language visited
 Bharatpur circle on 15th February, 2016. The Committee not only
 expressed satisfaction but also appreciated the efforts made by the
 Bank for progressive use of Hindi.
 
 The Bank celebrates ''Hindi Maah'' in the month of September every year.
 Various competitions are organised at all India, local and Circle
 levels in which staff members of all cadres participate
 enthusiastically. The winners are awarded with prizes in the Rajbhasha
 function. The Bank has its own Lala Lajpat Rai Rajbhasha Shield Yojana
 for its various HO Divisions, Circle Offices, Training Centres, Zonal
 Audit Offices, etc. Under the scheme, every year, offices are awarded
 with prizes for doing excellent work in the area of Rajbhasha
 implementation.  This year also, the Bank organised Hindi Maah and
 other programmes/competitions and awards and prizes were given.  Sixth
 collections of articles received in the competitions on creative
 writing namely PNB Pravah: Ek Aur Kadam has been published.  Under
 Moulik Hindi Pustak Lekhan Yojana of the Bank, cash incentives were
 awarded to staff members for writing original books in Hindi on Banking
 and Non-banking subjects.  All the staff members, working in the Bank
 or retired from bank services, can participate under this scheme.
 
 P.  PNB''s Subsidiaries and Regional Rural Banks 
 
 a.  PNB Housing Finance Limited (PNBHFL)
 
 The housing finance industry continues to be very competitive and has
 given excellent growth over last few decades. Inspite of a very
 challenging year, the Company has achieved its highest ever loans
 disbursements and profitability. On the basis of total loan assets,
 Company is now ranked 5th largest Housing Finance Company (HFC). The
 Company is also ranked the 2nd largest deposit taking housing finance
 company. The Company has earned this distinction in a short span of 
 five years since starting Business Process Re-engineering project 
 through a PPP model.
 
 To keep pace with its rapid expansion in business, which require huge
 Tier I capital, the Company has started the process of getting itself
 listed towards the end of 2nd quarter of FY''17. The Company will
 shortly come out with its initial public offer which will be in the
 vicinity of Rs. 2500 crore.
 
 The Company sanctioned 43,040 loan applications worth Rs.23,011 crore
 (Annual growth in sanction number 59% and sanction amount 53%). Loans
 worth Rs.14,456 crore were disbursed (Annual growth of 53%). The loan
 book of the Company reached Rs.27,177 crore (Annual growth of 62%) and
 Assets Under Management reached at Rs.27,555 crore (Annual growth of
 59%). The Deposits of the Company reached Rs.7,115 crore (Annual growth
 of 45%).
 
 The Company earned Total income of Rs.2697 crore which grew by 52% on
 YoY basis. Operating Profit for the year increased by 76% to reach
 Rs.588.20 crore. Further, Profit before tax for the year was at
 Rs.503.09 crore (Annual growth of 70%) and Profit after tax was
 Rs.326.47 crore (Annual growth of 66%).
 
 Total loan delinquencies were 1.48% of End Period Net Receivables
 (ENR), which is the best in the industry; Gross NPAs were Rs.59.81 crore
 i.e. 0.22% of ENR and Net NPAs were Rs.38.06 crore i.e. 0.14% of ENR
 during FY''16.
 
 The Company has achieved Net Interest Margin (NIM) of 3.08%, Return on
 Total Assets (RoA) of 1.45% and Return on Equity (ROE) of 17.08%. The
 Company had faced tough competition on interest rates from peer HFCs
 and commercial banks. The Company has managed good NIM through efficient 
 funds management and resource planning. During FY''16, the Company
 has achieved the distinction of raising Rs.500 crore of Green Bonds
 through IFC Washington for promoting green housing projects in India.
 
 The Company was felicitated for ''Outstanding Contribution to CSR'' at
 the CREDAI Conclave 2015 by Hon''ble Union Minister Shri Rajiv Pratap
 Rudy. The Company was also awarded the ''Housing Finance Company of the
 Year'' at the 8th Annual Real Estate Summit and Awards hosted by
 Franchise India and ET Now. The Company was honoured for its IT
 transformation journey by EMC Corporation in an event held in
 partnership with Cisco, VM Ware, etc.
 
 b.  PNB Gilts Limited
 
 During FY''16, the yields on Government securities trended down, with
 the ten-year benchmark yield moving down to 7.46% as on 31st March 2016
 as against previous year close of 7.74%.  Though the yields on point to
 point basis declined, the market remained highly volatile with the
 yields moving up for major part of the year. This was despite an
 accommodative stance by RBI with a cut in repo rate of 75 basis points.
 Inflation was well contained and Current Account Deficit was
 comfortable with a slump in global prices of oil and gold.
 Internationally too, the major economies like Euro zone, China, Japan
 were on an easing path whilst USA raised the rates.
 
 The main reason for this directional mismatch was the demand supply gap
 in the government securities and enhanced supply of normal State
 Developmental Loans. The uncertainty hanging over the issuance of UDAY
 bonds also weighed heavily on market. Further, despite accommodative
 Monetary Policy stance, RBI kept the system liquidity in deficit mode
 with average liquidity deficit of more than rupees one lakh crore. It
 was only from February end onwards, with the completion of Government
 borrowings and aggressive OMO purchases by RBI that this demand-supply
 mismatch was reversed. This was further aided by the fiscal deficit
 pegged at 3.5% for FY''17, reduction in small savings rate, lower retail
 inflation and a positive early expectation of a normal monsoon.
 Accordingly the yield on 10- year benchmark Government security which
 opened the year at 7.74%, touched a high of 7.99% and closed the year
 at 7.46%.
 
 Against the backdrop of extreme volatile market conditions, the Company
 managed to post a Profit Before Tax of Rs.51.47 crore as on 31st March
 2016. The Company fulfilled all its obligations as a Primary Dealer in
 both primary and secondary markets. The total outright turnover stood
 at Rs.3.76 lakh crore, whereas, the total Net worth of the Company rose
 to Rs.731.22 crore as on 31st March 2016 from Rs.718.06 crore as on 31st
 March 2015.
 
 c) Punjab National Bank International Limited (PNBIL)
 
 Financial Year 2015-16 was a year of consolidation for the PNBIL.
 During the year, PNBIL adopted holding business strategy with increased
 focus on strengthening the Corporate and Risk Governance frameworks.
 PNBIL also endeavoured for revision in various Credit Risk, Capital and
 Liquidity Management policies.
 
 In order to demonstrate effective 3 Lines of Defence, PNBIL has revised
 its Corporate Governance structure, appointed Chief Risk Officer
 (CRO), Chief Finance Officer (CFO) and Company Secretary. PNBIL
 created/revised structure of the various committees including
 Nomination and Remuneration Committee, Credit Approval Committee, Risk
 and Compliance Committee, Credit Risk Oversight Committee. PNBIL has
 also created a separate Credit Monitoring and Recovery Department for
 the effective management of stressed assets.
 
 This is the ninth year of operations for PNBIL and it achieved a total
 business figure of Rs.2,834 million. Operating Profit for FY''16
 amounted to Rs.38.26 million as against Rs.41.49 million in FY''15. 
 Decrease in operating profit was mainly on account of reduced treasury 
 income by Rs.4.35 million.
 
 During FY''16, total lending stood at Rs.1,476 million as compared to
 Rs.1,555 million in 2015. Net Interest Income has shown improvement which
 increased by Rs.2.90 million signifying better margins. Net trading
 income decreased by Rs.4.19 million due to market rate movements.
 
 Expenditure increases were due to the PNBIL upgrading its governance
 and control environment and investing in systems to enable it to meet
 the increasing regulatory challenges faced by all banks.
 
 Many of the PNBIL''s customers have been adversely affected this year by
 the slow economic growth in India, the delay in flow of funds to the
 much awaited infrastructure projects and the global slowdown. This has
 resulted in increased gross impaired advances to Rs.144.99 million
 (Rs.82.53 million in 2015) necessitating the need for the PNBIL to take a
 higher level of impairment provisions.
 
 In addition to this, PNBIL took the opportunity to further fine- tune
 its impairment recognition and provision methodology resulting in an
 additional impairment provisioning of Rs.71.85 million. The net impaired
 advances have accordingly reduced from Rs.47.03 million in 2015 to 
 Rs.36.37 million in 2016.
 
 PNBIL is the first among Indian Bank subsidiaries/branches that
 launched tax saver Cash ISA product and Contactless Master Debit card,
 which are one of the most popular products of the PNBIL. Strategic
 integration, parental support, continuous innovation, customer centric
 approach, niche positioning and competitive advantage in its targeted
 customer base are the key strengths PNBIL is enjoying in UK. PNBIL has
 its own dedicated treasury at London and a back office in India. PNBIL
 is complying with all regulatory and capital adequacy guidelines of
 Prudential Regulation Authority of UK. Offering basic banking products
 and relationship banking continues to be the strong selling point for
 the Bank. PNBIL has built a strong brand image in the UK market.
 
 d.  Punjab National Bank Investment Services Limited (PNBISL)
 
 PNB Investment Services Ltd (PNBISL) is a wholly owned subsidiary of
 Punjab National Bank. The Company commenced its operation on 8.6.2009.
 The Company has its offices at Mumbai, Delhi, Chennai, Ahmedabad and
 Hyderabad.
 
 The Company is engaged in providing Merchant Banking and Corporate
 Advisory services like Financial Appraisal, Techno- Economic viability
 Study, Debt Syndication and Corporate Debt Restructuring besides
 providing Trusteeship services.
 
 During FY''16, the Company earned fee based income of Rs.7.51 crore with
 a total income of Rs.10.93 crore as against a fee of Rs.11.13 crore and
 Rs.14.53 crore respectively for FY''15. Profit Before Tax during FY''16
 stood at Rs.6.11 crore as against Rs.10.70 crore for FY''15.
 
 There has been an improvement in the revenue generated from the
 Merchant Banking and Trusteeship segments during FY''16.  However, due
 to the withdrawal of the regulatory forbearance by RBI for restructured
 loans with effect from 1st April 2015 and general economic downturn and
 no major CAPEX projects coming up, there was a drop in business in CDR
 and syndication business. Hence, the overall revenue of the Company
 declined in the FY''16.
 
 With the introduction of alternate debt resolution mechanism through fl
 exible restructuring and strategy debt restructuring scheme, the
 Company has taken initiatives and started working in the segment to
 enhance its revenue.
 
 Primary Capital Markets segment is witnessing a revival and the Company
 keeping pace with the development in this segment has bagged a couple
 of IPO assignments and is hopeful of creating its visibility and
 increase its revenues in Merchant Banking segment.
 
 The Company hopes for a better and improved industrial environment in
 the country to bag more business in Merchant Banking, Credit Appraisal
 and Debt syndication segments, thereby significantly enhancing its
 revenues.
 
 e.  DRUK PNB Bank Ltd., Bhutan
 
 The Subsidiary completed 6 years of successful operations in 2016
 registering a growth in total business from Rs.967.55 crore as at
 31.3.15 to Rs. 2344.81 crore as at 31.03.2016. In terms of customer base
 also, the Subsidiary achieved encouraging results with number of
 accounts surpassing 90,000 mark as on 31st March''16, an increase of
 over 17% over last year. Net Profit increased to Rs.21.76 crore during
 FY''16 from Rs.10.71 crore during FY''15.
 
 The Subsidiary not only registered satisfactory business growth, but
 also maintained the quality of assets and liabilities much better than
 the Industry average (Gross NPL estimated at over 10%).  The retail
 deposit base of the Subsidiary, which is considered to be stable
 deposit, is above 81% of the total deposits, while the performing
 advances are 96% of total advances.
 
 f.  Regional Rural Banks (RRBs)
 
 At present, five RRBs are sponsored by the Bank. These RRBs are
 operating in five States, namely, Bihar, Haryana, Himachal Pradesh,
 Punjab and Uttar Pradesh covering 74 districts with a network of 2301
 branches.
 
 The aggregate paid-up capital of these Regional Rural Banks stood at
 Rs.199.30 crore. Central Government, State Governments and PNB
 contributed in paid-up capital of these RRBs in the ratio of 50: 15:
 35, respectively. The Bank''s contribution towards capital of these RRBs
 was Rs.69.76 crore.  The combined net worth of RRBs as on 31st March 2016
 was Rs.2929 crore.
 
 During the year, the aggregate business of all RRBs increased from
 Rs.45,630 crore in FY''15 to Rs.52,133 crore in FY''16 showing an increase
 of Rs.6503 crore (YoY growth: 14.25%). The aggregate deposits and
 aggregate advances as on 31.03.2016 stood at Rs.33,492 crore (YoY
 growth: 14.72 %) and Rs.18,641 crore (YoY growth: 13.42 %).
 
 The aggregate Net Profit of the RRBs as on 31.03.2016 stood at Rs.320
 crore. All PNB sponsored RRBs were in Profit.  The Gross NPAs of the
 RRBs increased from Rs.692 crore to Rs.764 crore (4.10% of Total
 Advances) during FY''16. During FY''16,157 new branches were opened by
 RRBs, taking the total network of Branches to 2301 with all being on
 CBS and total numbers of employees were 8714. The figures pertaining
 to FY''16 are un-audited.
 
 Progress in opening of accounts under PMJDY as on 31.03.16 stood at
 32,99,189 accounts, out of which RuPay debit cards were issued in
 22,86,660 accounts. Balance outstanding in these accounts was Rs.653.70
 crore. Total number of accounts having zero balance as on 31.03.2016
 stood at 1,63,750.
 
 The RRBs sponsored by the Bank are actively participating in economic
 development of the areas of their presence. With the implementation of
 Core Banking Solution (CBS), rural customers are also getting benefit
 of latest technology thus providing services to the rural poor under
 Financial Inclusion Plan at their doorsteps.
 
 RRBs are also opening NRE/NRO accounts. The facility of Micro ATMs,
 RTGS, NEFT, RuPay ATM cards/ KCC cards, KIOSK Banking Solution (KBS)
 under FIP, Aadhaar Payment Bridge System (ABPS) under DBT etc. is also
 being provided to customers in all the RRBs.
 
 Q.  Awards and Accolades
 
 During FY''16, in recognition of its performance and initiatives, PNB
 received various awards, some of which are:
 
 - Golden Peacock National Training Award 2016 by Institute of
 Directors.
 
 - Social Banking Excellence Awards 2015 under Rural Banking Category
 (Large Bank) by ASSOCHAM.
 
 - Best Bank Award for PMJDY (Large Bank)-Winner of Banking Excellence
 Awards 2015 by CIMSME.
 
 - ABP News Brand Excellence Awards 2015 under Banking Financial
 Services and Insurance Category by CMO Asia with World Marketing
 Congress
 
 - Inspiring Work Place Awards 2015 under the category Best HR and
 Talent Management Practices by The Banking Frontiers.
 
 - Agriculture Leadership Award 2015 by Agriculture Today Group.
 
 - FICCI CSR Awards 2014 by Federation of Indian Chambers of Commerce
 and Industry (FICCI).
 
 - Skoch of Merit Award for the project- Transaction Monitoring System
 for internet banking with OTP and adaptive authentication.
 
 R.  Future Business Plan of the Bank
 
 The Bank has been realigning its business strategies to the changing
 macroeconomic scenario. Despite unfavourable macroeconomic condition,
 the Bank was able to maintain good operating profit and efforts for
 healthy Capital to Risk Weighted Asset Ratio (CRAR) in FY''16. Speeding
 up the recovery of bad loans, increasing qualitative credit and
 garnering capital are going to be the focus areas for the Bank in the
 coming financial year 2016-17.
 
 Apart from that, the Bank would focus on augmenting fee based income
 and mobilizing CASA (current account, savings account) Deposits on
 sustainable basis. With increased competition, it is important to guard
 market share in low cost CASA deposits and retail credit. The Bank will
 work towards anticipating growth opportunities first and move fast to
 tap the opportunities. Hence, bettering customer service and marketing
 of products & services will be the key growth enablers for the Bank.
 
 Digitalization is an area where the Bank will lay sharp focus on an
 ongoing basis. It will not only reduce operating cost but also improve
 customer service. Hence, the Bank will take measures to move towards a
 Super Smart Bank and the Bank for the Gen Next.
 
 The Bank will continue to lay emphasis on lending to Priority sector,
 MSME and promoting Financial Inclusion as it traditionally does.
 Digitalization of Business Correspondent (BC) network, improving
 automation of MSME loan processing will also be focused upon in FY''17.
 
 It is expected that the business environment in the economy will
 improve and demand for credit from the Bank will increase in H2 FY''17.
 The reform measures adopted by the Government to transform India, boost
 infrastructure, create self-employment, promote Micro Industries and
 Housing will prove beneficial for the Bank. The development of
 industrial corridors, manufacturing zones and ''smart cities'' will
 further boost investment climate of the country. Along with these, Make
 in India, Startup India, Housing for all by 2022 will create financing
 opportunities for banks. With improvement in the credit demand, the
 bank will also take measures to meet the Capital requirement under the
 Basel III. Hopefully, FY''17 will turn out to be the year of ''Growth &
 Strength'' for the Bank.
 
 S.  Board Of Directors
 
 As on 31.03.2016, there were 11 Directors on the Board of the Bank
 including 4 whole time Directors i.e. One Managing Director & CEO and
 three Executive Directors. During FY''16, the following changes took
 place in the composition of Board of Directors:
 
 - Mrs. Usha Ananthasubramanian was appointed as Managing Director & CEO
 of the Bank w.e.f.  14.08.2015.
 
 - Shri Gauri Shankar completed his tenure as Executive Director due to
 attaining the age of superannuation as on 31.03.2016.
 
 - Shri Prem Narain and Ms. Hiroo Mirchandani were appointed as
 Shareholders'' Directors on the Board of the Bank for a period of three
 years w.e.f. 02.05.2016.  However, Shri Prem Narain ceased to be
 Director on the Bank''s Board w.e.f. 29.08.2015 due to resignation.
 
 - Shri Rajinder Mohan Singh was elected as Shareholders'' Director on
 the Board of the Bank for a period of three years w.e.f. 01.07.2015.
 
 - Shri Sudhir Nayar, was elected as Shareholder Director on the Board
 of the Bank w.e.f. 19.12.2015.
 
 - Shri Tara Chand Jhalani, Workmen Employee Director completed his
 tenure on 07.03.2016 on the Board of the Bank.
 
 The Board wishes to place on record its appreciation for the valuable
 contribution made by Shri Gauri Shankar, Executive Director, Shri Prem
 Narain and Shri Tara Chand Jhalani, Directors.
 
 T.  Directors'' Responsibility Statement:
 
 - The Directors confirm that in the preparation of the annual accounts
 for the year ended March 31, 2016:
 
 - The applicable Accounting Standards have been followed along with
 proper explanation relating to material departures, if any;
 
 - The accounting policies, framed in accordance with the guidelines of
 the Reserve Bank of India, were consistently applied;
 
 - Reasonable and prudent judgment and estimates were made 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 of the Bank for the year ended
 March 31, 2016;
 
 - Proper and sufficient care was taken for the maintenance of adequate
 accounting records in accordance with the provisions of applicable laws
 governing banks in India, and
 
 - The accounts have been prepared on the principle of going concern
 basis.
 
 U.  ACKNOWLEDGEMENT
 
 The Board expressed thanks to the Government of India, Reserve Bank of
 India, Securities and Exchange Board of India, Stock Exchanges, Bank''s
 customers, public and the shareholders for valuable support, continued
 patronage and confidence reposed in the Bank.
 
 The Board wishes to place on record its appreciation for the valuable
 contribution made by the members of the Bank''s staff at all levels and
 look forward to their continued involvement in achieving the future
 goals.
 
                              For and on behalf of Board of Directors
 
                                              Usha Ananthasubramanian 
 
                                              Managing Director & CEO
Source : Dion Global Solutions Limited
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