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Can Fin Homes Ltd.

BSE: 511196 | NSE: CANFINHOME |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE477A01020 | SECTOR: Finance - Housing

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Annual Report

For Year :
2019 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

1. FINANCIAL RESULTS

The financial performance for the FY18-19 is summarised here below:

(Rs. in Lakh)

Particulars

Year ended March 31, 2019

Year ended March 31, 2018

Profit before Tax & Provisions

47,059.70

45,318.40

Less: Impairment on financial instruments

109.22

2,210.00

Profit before Tax

46,950.48

43,108.40

Less: Tax expenses:

(a) Provision for Tax - Current Year

17,203.91

16,075.46

- Previous Year

151.54

(334.38)

(b) Deferred Taxation

(78.67)

(1,251.91)

Profit after Tax

29,673.69

28,619.23

Add: Other Comprehensive Income

A. Items that will not be reclassified to profit or loss

(i) Actuarial (Gain )/ loss

(4.21)

(64.53)

(ii) Income tax relating to items that will not be reclassified to profit or loss

1.47

22.33

B. Items that will be reclassified to profit or loss

(i) Income tax relating to items that will be reclassified to profit or loss

0.00

0.00

Other Comprehensive Income

(2.74)

(42.20)

Total Comprehensive Income for the period

29,676.43

28,661.43

Balance brought forward from previous year

81.71

1,025.54

29,758.14

29,686.97

Appropriations:

Transfer to Special Reserve u/s.36(1)(viii) of the Income Tax Act, 1961

8,739.45

8,300.00

Transfer to General Reserve

5,935.29

12,000.00

Additional Reserve (u/s.29C of the NHB Act)

5,935.29

6,100.00

Proposed Dividend #

2,663.08

2,663.08

Tax on Distributed Profits

547.40

542.18

Balance carried forward to balance sheet

5,937.63

81.71

29,758.14

29,686.97

Note: Figures have been regrouped wherever necessary while preparing the statements as per IND-AS requirements.

#The proposed dividend of RS.2/- per equity share and tax thereon are not recognised as liability in the annual accounts as at March 31, 2019 (in compliance with IND AS 10 Events occurring after the Balance sheet date). The same will be considered as liability on approval of shareholders at the 32nd Annual General Meeting.

2. SHAREHOLDERS’ WEALTH

Particulars

Year ended March 31, 2019

Year ended March 31, 2018

Earnings Per Share (EPS) (Rs.)

22.29

21.49

Dividend Rate

100%

100%

Market Price of shares (Rs.)

348.85

484.50

Market Capitalisation (Rs. in Crore)

4,645.08

6,451.32

3. BUSINESS PERFORMANCE HIGHLIGHTS

a) Sanctions

During the year, the Company has sanctioned loans amounting to RS.5952 Crore as compared to RS.5760 Crore in the previous year, recording a growth of 3.3%. Inspite of continued sluggishness in the real estate market post demonetization, teething troubles of RERA and GST implementation, your Company managed to show a slender margin of positive growth, in approvals, during 2018-19.

During the year, as in the previous year, thrust was given to retail (housing and non-housing) loan segment. 88% of fresh loan approvals during the year were for housing and 12% were for non-housing loans. The cumulative loan sanctions since inception of your Company stood at H38074 Crore at the end of the FY19. Average ticket size of incremental housing loans and non-housing loans are RS.18.12 Lakh and RS.9.15 Lakh, respectively.

b) Disbursements

During the year, the Company has disbursed loans amounting to RS.5,479 Crore as compared to RS.5,207 Crore in the previous year, recording a growth of 5.2%. The cumulative loan disbursements from inception to the end of the FY19 was H33,769 Crore.

c) Loans outstanding (Loan Book)

Your Directors are pleased to report that the total loan outstanding as at March 31, 2019 was RS.18381 Crore, recording a growth of around 16.8% over last year (previous year RS.15,743 Crore).

During the year, non-housing loan portfolio has increased from RS.1,654 Crore to RS.1,939 Crore indicating a growth rate of 17.2%, which constitutes 10.5% of total portfolio approximately.

d) Non-Performing Asset (NPA)

The Gross NPA of your Company as on March 31, 2019 was contained at RS.113.51 Crore (previous year RS.67.49 Crore). The net NPA as on date was RS.79.47 Crore, with the NPA provision Coverage Ratio at 39% during the year. The gross NPA percentage as on March 31, 2019 stood at 0.62% compared to 0.43% as on March 31, 2018.

During the year under review, your Company could make a cash recovery of RS.11.44 Crore (previous year RS.9.10 Crore) in respect of accounts which were Non Performing Assets.

e) Profits

Your Directors are happy to inform that during the year under review, your Company recorded an Operating Profit of RS.470.60 Crore (previous year RS.453.18 Crore), Profit Before Tax (PBT) of RS.469.50 Crore (previous year RS.431.08 Crore) and Profit After Tax (PAT) of RS.296.76 Crore (previous year RS.286.62 Crore) registering a Year-on-Year increase of 3.84%, 8.91% & 3.42% respectively. During the year Company has made provisions for standard assets amounting to RS.0.40 Crore (previous year RS.2.10 Crore), provisions for Non-performing assets amounting to RS.0.69 Crore (previous year RS.20.00 Crore), provisions for Taxation and Deferred Tax Asset amounting to RS.172.77 Crore (previous year RS.144.89 Crore).

f) Reserves

For reserves during the year please refer statement of changes in equity for the period ended March 31, 2019 forming part of Financial Statements, 2019.

g) Dividend

Your Company has been paying dividends continuously. Your directors, after giving due consideration to Capital Adequacy requirements, deferred tax liability and the dividend policy, are happy to recommend a dividend of RS.2/- per equity share (100%), for the financial year ended March 31, 2019 for the 4th successive year. The amount of dividend recommended for payment for the year under review is RS.26.63 Crore. The tax on dividends u/s.115-O of the Income Tax Act, 1961, at about 20.56% (RS.5.47 Crore) [Previous year 20.36% amounting to RS.5.42 Crore] is being paid to the Government by your Company. The Dividend Distribution Policy as required under regulation 43A has been provided as Annexure-3 to this report and is also available on the weblink http://www.canfinhomes.com/ pdf/Dividend-Distibution-Policy-120419-pdf

4. EXPANSION OF BRANCH NETWORK

Your Company has been continuously expanding its network of branches. Though our presence in Southern states is predominant, new branches and satellite offices have been opened in various parts of the country after examining the potential on the basis of surveys conducted.

During FY19, 22 new branches were opened and 1 Satellite Office was upgraded to Affordable Housing Loan Centre (AHLC), for exclusively providing smaller ticket size Loans under Credit Linked Subsidy Scheme (CLSS)(Pradhan Mantri Awas Yojana), Loans under Urban Housing (LUH) and Loans under Rural Housing (LRH) schemes. As at the end of FY19, your Company has an expanded network of 189 outlets spread across 21 states comprising 154 branches, 21 AHLCs and 14 Satellite Offices.

During the FY20, your Company has plans to open 30 more branches / AHLCs, (20 in the 1st phase) taking the total number of outlets to about 200. The Branches of your Company as well as the Registered Office are operating in spacious premises situated in good and accessible localities with the objective of providing a pleasant environment and amenities to our customers.

5. TECHNOLOGY INITIATIVES

All the branches and the Registered Office are linked through a core-banking platform (Integrated Business Suite) under the Application Service Provider (ASP) Model. The Company is in advanced phase for implementation of MPLS links for a higher bandwidth and dedicated uptime.

In order to improve operational efficiency, your Company has embarked on technology initiatives like implementation of C-KYC (Central KYC) solution. The CKYC will act as centralized repository of KYC records of customers in the financial sector with uniform KYC norms and inter-usability of the KYC records across the sector. Your Company has launched new website to make it interactive and more user friendly. Online Grievance Redressal portal has been deployed in the new website.

Your Company has introduced online Application Module in its website and a customer portal to access account statements/ certificates and online money transfer. Your Company also provides SMS alerts and missed call facility to provide information on loan balances.

The Company has set up an in-house team of IT professionals drawn from reputed institutions / firms to enhance IT capabilities.

6. CUSTOMER-FRIENDLY INITIATIVES

The Company continues to follow transparent, fair and impartial practices encompassing all the customers across branches. Information related to our Company, products, schemes and charges are made available in the website of the Company. As per NHB directions, the Fair Practices Code (FPC) and Most Important Terms and Conditions (MITC) are regularly updated and uploaded in the Company''s website for disseminating the information to our customers, clients and general public.

The customer portal has been enabled to access account statements, certificates and online money transfer.

As a customer friendly initiative, under CSR activities, our branches are providing tree saplings along with tree pots and guards to customers. We have also provided cotton cloth bags to our customers across the country through our branches, in order to sensitise people and curb the use of plastic.

7. FINANCIAL RESOURCES

a) Refinance from National Housing Bank (NHB) and borrowings from Banks

During the year, your Company had availed fresh refinance amounting to RS.1000 Crore (previous year RS.90 Crore) under the NHB refinance scheme. The cumulative NHB borrowings as on March 31, 2019 were RS.1,971.22 Crore (previous year RS.2,083.09 Crore), with the overall cost of borrowing (including the loans under Rural Housing and Urban Housing Schemes) of 7.11% p.a.

Borrowings from Bank

During the year, borrowings were diversified through a combination of short-term and long-term loans considering the asset liability management position to derive the maximum benefit of competitive interest rates. The lenders included State Bank of India, Lakshmi Vilas Bank, Federal Bank, HDFC Bank and Corporation Bank apart from Canara Bank, the principal bankers to the Company. The aggregate bank borrowings (term loans plus overdraft) at the end of the financial year stood at RS.8,855.86 Crore (previous year RS.4,635.74 Crore); the overall borrowings are within regulatory ceiling of 16 times of net owned funds.

The overall cost of borrowings from banks was 8.05% p.a. as on March 31, 2019. During the year, the long-term ‘rating'' of the Company for term loans was ‘[ICRA] AAA'' (pronounced ICRA triple A) with a negative outlook signifying the highest degree of safety with regard to the timely servicing of financial obligations. The rating has been revised by ICRA as [ICRA] AA (Pronounced as ICRA Double A Plus) outlook stable, signifying high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. The rationale given for downgrade in credit rating is due to the downgrade in credit ratings of the Company''s principal shareholder (Promoter) viz. Canara Bank.

b) Debentures

(i) Secured Non-Convertible Debentures

The Company has not issued any Secured Redeemable Non-Convertible Non-Cumulative Taxable Debentures (SRNCD) during the year (previous year RS.1,400 Crore). The debentures were secured by way of a floating charge on the assets i.e., loan receivables specifically earmarked for the purpose in favour of the Debenture Trustees. Most of the investors in these debentures comprised major insurance companies, public sector banks, corporates, PF Trusts & Funds and investors of repute, indicating their safety perception in your Company''s fundamentals and prospects.

The tenure of the outstanding debentures are range bound for two to five years. The interest on these debentures was serviced regularly. The aggregate borrowings by way of Secured NCDs as on March 31, 2019 was H3,450.15 Crore (previous year RS.4,898.27 Crore) while the overall cost was 7.92% p.a.

The debentures were rated ‘IND AAA'' (Outlook Negative) by India Ratings and Research Pvt. Ltd (FITCH), CARE AAA'' (Outlook Stable) by CARE Limited and ‘[ICRA] AAA'' (Outlook Negative) by ICRA Limited. The rating has been revised by ICRA as [ICRA] AA (pronounced ICRA double A Plus). Outlook stable, signifying high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. These debentures were listed on the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India Limited.

Your Company plans to raise Non- Convertible Debentures up to a maximum of RS.6,000 Crore subject to cost benefit and asset liability management requirements and with the approval of members at ensuing Annual General Meeting.

(ii) Unsecured Non-Convertible Debentures

During FY14-15, your Company had issued 8.94% Unsecured Non-Convertible Debentures in the nature of Tier II Bonds aggregating RS.100 Crore for a tenure of 10 years. These debentures are subordinated to present and future senior indebtedness of the Company and qualify as Tier II Capital under the National Housing Bank (NHB) guidelines for assessing Capital Adequacy Requirements. These Tier II Bonds were rated ‘IND AAA'' (Outlook Negative) long-term rating by India Rating & Research Pvt Limited (FITCH), CARE AAA'' (Outlook Stable) by CARE Limited and ‘[ICRA] AAA'' (Outlook Negative) by ICRA Ltd. The rating has been revised by ICRA as [ICRA] AA (pronounced ICRA double double A Plus). Outlook stable, signifying high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Your Company has serviced the interest on the above debentures on the due date.

The rationale for downgrade in credit rating given by ICRA is due to the downgrade in credit ratings of the Company''s principal shareholder (Promoter) viz. Canara Bank.

c) Commercial Paper

Your Company mobilises funds through commercial paper (CP) also. The outstanding at the end of the March 2019 was RS.2,156.11 Crore (previous year RS.2,075.62 Crore). The effective cost of funds raised through CP was 7.76% p.a. The CP issued by your Company was rated at the maximum [ICRA] A1 rating by ICRA Ltd., and CARE A1 '' by CARE Limited indicating, ‘Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations''.

d) Deposits

During the year your Company accepted deposits of RS.142.56 Crore (Previous year RS.122.71 Crore). The outstanding balance of deposits (including interest accrued, but not due) as of March 31, 2019 was RS.261.09 Crore (previous year RS.228.30 Crore). The rate of interest on public deposits ranged from 7.00% to 8.10%, while the overall cost (average) of deposits was 7.74% p.a. as on March 31, 2019.

As on March 31, 2019, a sum of RS.19.94 Crore relating to 891 accounts of public deposits (RS.8.81 Crore as on March 31, 2018 relating to 762 accounts) remained unclaimed/ overdue. Of this amount, a sum of RS.5.75 Crore relating to 373 accounts (previous year RS.1.86 Crore relating to 67 accounts) were claimed and renewed/settled upto May 15, 2019. Your Company has not defaulted in repayment of deposits or interest during the year. The Company has complied with the requirements under Chapter V of the Companies Act, 2013 to the extent applicable.

During the year, the deposit schemes of your Company have been rated ‘MAAA'' (pronounced as M Triple A) with a outlook revised to stable from negative, by ICRA Ltd., indicating ‘highest credit- quality'' and that the rated deposit programme carried the lowest credit risk. Your Company, being a housing finance Company registered with National Housing Bank (NHB), has complied with the Directions/Guidelines issued by the NHB with regard to deposit acceptance and renewal. Your Company is exempted from the applicability of the Companies (Acceptance of Deposits) Rules 2014.

e) Mortgage-backed securities

Your Company did not opt for securitisation during the year under review. There were no securitised assets outstanding as on March 31, 2019.

8. REGULATORY COMPLIANCES

a) Compliance with Directions/ Guidelines of National Housing Bank (NHB) and other statutes

Your Company adhered to the prudential guidelines for non- performing assets (NPAs) as per the National Housing Bank (NHB) Directions 2010, as amended from time to time. Your Company complied with the guidelines and directions issued by NHB on withdrawal of preclosure charges for all loans. The Guidelines/ norms for asset classification of credit/ investments, credit rating, acceptance of deposits, Fair Practices Code (FPC), Most Important Terms and Conditions (MITC), Customer Complaints Redressal Mechanism, Know Your Customer (KYC), Anti-Money Laundering (AML) Guidelines, Asset Liability Management, Capital Adequacy Ratio (CAR) norms, Information Technology frameworks, CERSAI and other related instructions, issued by the National Housing Bank (NHB) were implemented in letter and spirit with an explicit notification on the website of your Company, to the extent applicable.

During the year the NHB has issued new master circulars/ circulars for Housing Finance Companies relating to:

(i) Circular No. NHB(ND)/DRS/REG/MC-07/2018 dated July 2, 2018 captioned “Master Circular- Housing Finance Companies - Corporate Governance (NHB) Directions, 2016.

(ii) Circular No. NHB(ND)/DRS/Policy Circular No.88/2017-18 dated April 16, 2018 and Circular No. NHB (ND)/DRS/Policy Circular No.89/2017-18 dated June 14, 2018 on “Implementation of Indian Accounting Standards (Ind AS).

(iii) Circular No. NHB (ND)/DRS/Policy Circular No.92/2018-19 dated February 05, 2019 on “Guidelines on Reporting and Monitoring of Frauds in Housing Finance Companies.

Your Company has taken steps to comply with the requirements of all the applicable provisions of the above circulars.

In terms of the Housing Finance Companies - Corporate Governance (NHB) Directions, 2016, the Company has given the Related Party Transactions Policy as Annexure 4 to this Report.

Your Company has complied with requirements as per Para 29 of the Housing Finance Companies (NHB) Directions 2010 except for one instance detailed below:

National Housing Bank (NHB) vide its letter NHB(ND)/DRS/ APPEAL-1/17/A-744/2019 dated January 17, 2019 has imposed a penalty of RS.5900 ( inclusive of GST @ 18%) for alleged contravention of section 32 of the NHB Act, 1987 and the Fair Practice Code issued by NHB, for which the Company has sent a reply and remitted the amount under protest.

During the year, the NHB conducted regular inspection of your Company during August & September 2018, for the position as at March 2018. The compliance on the observations were submitted within the prescribed time to the NHB, which were reviewed by the Audit Committee and the Board.

Your company has complied with other related statutory Guidelines/Directions as applicable to the Company from time to time. Compliance of all Regulatory guidelines of NHB/other statutes are periodically reviewed at Audit Committee and Board.

Your Company has complied with Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standard). Amendment Rules, 2016 as applicable read with Section 133 of the Companies Act, 2013 and guidelines issued by National Housing Bank.

As per NHBletter No.NHB (ND)/DRS/CRCELL/A-3187/2018 dated December 11, 2018, the Company was advised to get registered with National Consumer Helpline (NCH) as convergence partners through INGRAM software. The Company has completed the registration process.

As per National Housing Bank Circular “NHB/ND/DR5/ Policy Circular No.90/2017-18 dated June 15, 2018, IT Strategy Committee has been constituted with Shri G Naganathan, Independent Director as the Chairperson Dy. Managing Director, General Manager and Head of IT Dept. (AGM-IT) [as members of the Committee]. An expert from outside will be invited, if need be.

The National Housing Bank (NHB), vide its Policy Circular NHB(ND)/DRS/Policy Circular No.92/2018-19 dated February 05, 2019 issued Guidelines on reporting and monitoring of Frauds in Housing Finance Companies. Your Company has taken steps to comply with the requirements of the applicable provisions of the above Guidelines.

b) IRDA Compliance

The Company is registered with IRDAI for carrying on the Insurance Agency Business for life and has complied with the applicable requirments under Insurance Regulatory and Development Act, 1999 and IRDAI (Registration of Corporate Agent) Regulations 2015, as amended from time to time.

c) Other Compliances

(i) The Company, on April 04, 2018, had obtained the Legal Entity Identifier No.335800EJ9Y3XDP5ZDRS.81 as required under the RBI Circular -No.RBI/2017-18/82- DBR. No.BP.92/21.04.048/2017-18 dated November 02, 2017 and as advised by NHB. The Registration has been renewed as required on an annual basis.

(ii) As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company has registered itself with National e-governance Services Limited (NeSL) authorized by IBBI obtained registration No.9160743937431514312 and an agreement is executed with NeSL on February 28, 2019.

(iii) As per the ROC letter No. ROCB/Co. No.8699/MSME Notice/2019/3106 dated January 24, 2019 received by the Company and MSME Notification No.S.O. 5621(E) dated November 02, 2018, the Companies registered under the Companies Act, with a turnover of more than RS.500 Crore shall get themselves registered on the Trade Receivables Discounting System (TReDS) platform. The Company has got itself registered on TReDS Platform through Receivables Exchange of India Limited (RXIL) vide registration No.CA0000876.

(iv) As per RBI/2015-16/96 Master Circular No.15/2015-16 on Foreign Investment in India and as per RBI/2017-18/194 A.P (DIR Series) Circular No.30 dated June 07, 2018 on Foreign Investment in India, all types of Companies which have foreign investment are required to report through FIRMS - Reporting in Single Master Form. For the purpose the Company has completed the registration process for Entity User on January 21, 2019 and was issued login credentials. The registration as Business User is in progress.

(v) The Company has complied with all the applicable Regulations of SEBI (LODR) Regulations as amended from time to time and circulars, notifications etc. issued by SEBI.

9. COMPLIANCE UNDER THE COMPANIES ACT, 2013

Your Company has complied with the requirements of the applicable provisions of the Companies Act, 2013 and related Rules during the FY 18-19. In accordance with Sec 134 (3) (a) of the said Act, amended provision, the provisional Annual Return in the prescribed format has been made available on the website of the Company at https://www.canfinhomes. com/pdf/Events/32-AGM/provisionalMGT-7F/2018-19.pdf The extract of Annual Return (MGT-9) is placed as Annexure 8. For more details regarding Compliances, please refer the Secretarial Audit Report (Annexure 2).

10. CAPITAL ADEQUACY

The Capital Adequacy Ratio (CAR) of your Company as at March 31, 2019 was 16.44% (previous year 19.56%). as against the Regulatory benchmark of 12% prescribed by the National Housing Bank (NHB). [This has the impact of Term deposit amounting to RS.25,700.42 Lakh (matured on April 10, 2019) held with Canara Bank which has been reduced for computation of Net owned funds. The Capital to Risk Assets Ratio (CRAR) without considering the aforesaid term deposit would have been 19.24% (Tier I Capital of 17.44%).]

11. DEPRECIATION

Depreciation was calculated on the Written Down Value Method based on useful life, in the manner prescribed in Schedule II to the Companies Act, 2013.

12. DEFERRED TAX ASSET (DTA)

During the year, Deferred Tax Asset (net) of RS.0.77 Crore (previous year RS.12.30 Crore) was considered to the Statement of Profit & Loss, on account of various components of asset & liabilities. The DTA outstanding at the end of the March 2019 was RS.24.00 Crore (previous year RS.23.24 Crore).

13. RECOVERY ACTION UNDER SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI ACT)

During the year, your Company initiated action against 367 defaulting borrowers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (“SARFAESI“) Act, 2002 and recovered H36.69 Crore (previous year RS.15.50 Crore) from borrowers of Non-Performing accounts. Of this RS.9.27 Crore (previous year RS.6.69 Crore) was recovered by way of sale of assets under SARFAESI. This apart RS.2.59 Crore was recovered in Written off accounts (Previous year RS.1.30 Crore).

14. LISTING OF SECURITIES

The equity shares of the Company are continued to be listed on the BSE Limited (BSE), Mumbai, and the National Stock Exchange of India Ltd. (NSE), Mumbai. The listing fee payable to these Stock Exchanges were paid before the due dates. The non-convertable debentures issued on private placement are listed on National Stock Exchange of India Ltd.

15. HUMAN RESOURCES DEVELOPMENT

The total number of employees of the Company was 792 (592 regular and 200 on contract) as on March 31, 2019 as against 648 (594 regular and 54 on contract) as at the end of the previous year.

To upgrade knowledge/skill of the employees, select employees were deputed for training programmes/ seminars organised by the National Housing Bank and other reputed institutions. During the year, training in credit, information technology, human relations customer service, Grievance redressal, finance, taxation, marketing, fraud prevention and other topics of importance were imparted to employees and executives. Your Company has put in place a series of HR measures including promotions and appropriate reward schemes. Industrial relations in your Company continued to be cordial during the year.

Particulars of Employees:

During FY18-19, your Company had not employed anyone with a remuneration of RS.102 Lakh or more per annum nor had employed for a part of the year with a remuneration of RS.8.5 Lakh or more. The ratio of remuneration of each Director to the median of employees remuneration and such other details as required under Sec 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and 2016 are furnished below:

(i) The ratio of the remuneration of Managing Director to the median remuneration of the employees (regular employees) of the Company for the FY18-19 was 3.29: 1 (Non-executive directors and Independent Directors are eligible for sitting fee only).

(ii) The percentage increase in remuneration in the financial year under the head Managing Director was 7.33%, (the remuneration of Managing Director is as per the Service Regulations of Canara Bank in terms of the resolution passed by the members at the General Meeting for appointment in the Company).

The General Manager, Chief Financial Officer and the Company Secretary are employees of the Company and the percentage increase in their remuneration was 7.53%, 9.62% and 1.58 % respectively.

(iii) The percentage increase in the median remuneration of employees in the financial year is 9.32%.

(iv) Apart from 592 permanent employees on the rolls of the Company, there were 200 employees on contract as on March 31, 2019.

(v) Average% increase in remuneration of the employees other than managerial personnel as against that of Managerial remuneration was around 8.36% during the period under review.

The Company affirms that the remuneration is as per the remuneration policy of the Company.

The Company has a Policy on ‘Prevention of Sexual Harassment of Women at Workplace'' and matters connected therewith or incidental thereto covering all the aspects as contained under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. During FY18-19 no cases of sexual harassment were reported.

During the year “Equal Opportunity Policy was drafted as per Section 21(1) of Rights of the Persons with Disabilities Act, 2018 and same was approved by the Board in this meeting held on January 23, 2019.

The Company has laid down a Code of Conduct for Prevention of Insider Trading, in accordance with the requirements under the Securities and Exchange Board of India (Prevention of Insider Trading) Regulations, 2015 and Companies Act, 2013, with a view to regulate trading in Securities of the Company by its directors, designated persons and employees. The same is made available on the website of the Company. For related link, please refer Annexure 9.

16. TRANSFER OF UNCLAIMED AND UNPAID DIVIDEND/ DEPOSIT AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of section 124 and 125 of the Companies Act, 2013, the amounts (dividend, deposits etc., with interest) that remained unclaimed and unpaid for more than 7 years from the date they first became due for payment, should be transferred to IEPF. As an investor-friendly measure, your Company has been intimating the respective shareholders / depositors / investors to encash their dividend warrant/renew matured deposits or lodge their claim for payment of due, if any, from time to time and claims made are settled. As per the statutory requirements, the details of such amounts are made available on the website of MCA-IEPF as well as on the Company''s website. In order to receive prompt payment of dividend, the members/ investors are requested to demat the shares held in physical mode, register bank account particulars, opt for ECS facility, register nomination and intimate change of address, if any, to the Company/ Depository Participants promptly.

a) Unclaimed dividends

As at March 31, 2019, dividends aggregating to RS.163.76 Lakh (previous year RS.152.18 Lakh) relating to dividends declared for the years FY11-12 to FY17-18 (of which H30.36 Lakh related to dividend for the year 2018), had not been claimed by shareholders. As an investor friendly measure, your Company has sent reminders to shareholders to lodge their claims and related particulars were provided in the annual reports each year as well as on the website of your Company. The dividend pertaining to 2010-11, which remained unclaimed/unpaid amounting to RS.7.67 Lakh (in respect of 1,966 shareholders), was transferred to IEPF on September 20, 2018, after the settlement of claims received from members in response to the individual reminder letters sent by your Company. The dividend pertaining to 2011-12 remaining unclaimed and unpaid, amounting to RS.10.04 Lakh (in respect of 2,135 shareholders) as on March 31, 2019, would be transferred to IEPF during August 2019 after settlement of the claims received up to the date of completion of seven years i.e. on August 08, 2019.

b) Transfer of shares to IEPF Demat account

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and refund) Amendment Rules, 2017 was notified by the Ministry of Corporate Affairs (MCA) on October 13, 2017. As per Rule 6 of the said Rules, the shares, in respect of which dividend amounts have not been paid or claimed for 7 consecutive years, are required to be transferred to ‘IEPF demat Account'' of IEPF Authority. On verification of records of unclaimed dividend amounts from 2005 to 2011, which have already been transferred to IEPF on lapse of 7 years (during 2012 to 2018 respectively), 7 shareholders had not claimed dividend for consecutive 7 years and their shares 4750 Nos. have been transferred to IEPF demat account within the prescribed period and the details are provided on the website of the Company. For more details please refer ‘General Information to shareholders'' in this report. In terms of the above Rules, three reminder letters were sent by the Company to all the shareholders who had not claimed their dividends for a consecutive period of 7 years, informing that their shares will be transferred to IEPF suspense account on the due date, August 8, 2019, if they do not place their claim for unclaimed dividend amounts before the Company. Your Company has provided the related details on its website (Investors page).

c) Unclaimed deposits

As required under Section 125 of the Companies Act, 2013, the unclaimed and unpaid deposits together with interest for the year 2010-11 amounting to RS.5.19 Lakh (previous year RS.10.41 Lakh) that remained unclaimed and unpaid for a period of 7 years were transferred to IEPF during the year under review.

17. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

Since your Company is a housing finance Company and does not own any manufacturing facility, the requirement relating to providing the particulars relating to conservation of energy and technology absorption as per Sec 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, are not applicable.

Your Directors are pleased to inform that Solar Power systems and power saving lamps have been installed in 16 branches so far as a measure towards conservation of energy. Your Company has installed Solar-UPS in some of its branches.

As a part of Save Green efforts and leverage of technology, a lot of paper work at branches and the Registered Office has been reduced (also refer para 5).

During the year, your Company did not earn any income or incur any expenditure in foreign currency/exchange other than payment of Dividend 2018 to NRIs on repatriation basis to an extent of RS.26.34 Lakh through authorised dealers.

18. DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS / RE- APPOINTMENTS

The Board of Directors made the following appointments/ re-appointments based on the recommendations of the Nomination, Remuneration & HR Committee:

(1) Shri Shreekant M Bhandiwad, DGM of Canara Bank was appointed as an additional Director and Whole-time Director (designated as Dy. Managing Director) by the Board w.e.f April 28, 2018, and the same was approved at the Annual General Meeting held on July 18, 2018.

(2) Dr. Yeluri Vijayanand was appointed as an Additional Director (Independent) w.e.f. August 29, 2018 for a tenure of 3 years upto the conclusion of the Annual General Meeting of the Company for the financial year 2020-21.

(3) Shri Shankara Narayanan Subramanian (S Subramanian), General Manager of Canara Bank, was appointed as an Additional Director (Non-executive Promoter) w.e.f. October 06, 2018.

(4) Shri Debashish Mukherjee, Executive Director of Canara Bank was appointed as an Additional Director (Nonexecutive Promoter) w.e.f. March 12, 2019.

(5) The tenure of Directorship of Shri G Naganathan in the Company will come to an end on the conclusion of the 32nd Annual General meeting of the Company scheduled to be held on July 17, 2019. Considering the knowledge, expertise, role and contributions of Shri G Naganathan, Independent Director, during the journey of growth of the Company over the last 3 years, Nomination Remuneration & HR Committee has proposed for his re-appointment for a further period of three years i.e., upto the conclusion of the Annual General Meeting of the Company for the financial year 2022, in terms of Section 149(10) of the Companies Act, 2013.

(6) The members had approved the appointment of Shri S K Hota as Managing Director of the Company at the 29th AGM held on June 29, 2016 with effect from May 05, 2016 for a tenure of 3 years and subject to further extension in the period of service, if any, by Canara Bank. In this regard, the Bank has permitted extension of the term of deputation of Shri S K Hota, General Manager of the Bank, for a further period of 6 months i.e., till October 10, 2019, as a special case. Hence, the Board has recommended for his re-appointment/extension of tenure as Managing Director for a further period upto October 05, 2019 to the members and for ratification of actions, since May 19, 2019.

The directors had filed their consent(s) and declarations that they are not disqualified to become directors in terms of the provisions of Companies Act, 2013 and related Rules. The directors have intimated to the Company that they are not holding any shares or taken any loan(s) from the Company. The agenda relating to appointments / reappointments of Directors are provided in the Notice of the 32nd Annual General Meeting of the Company seeking approval from the members. The particulars relating to the Directors and all other relevant information are provided in the explanatory statement forming part of the said Notice for the information of members.

(7) Smt. Bharati Rao, Director (Non-Executive Independent) was elected as the chairperson of the Board w.e.f. July 19, 2018.

(8) Smt. Shamila M, General Manager of the Company was designated as Key Managerial Personnel (KMP) of the Company w.e.f. April 28, 2018.

Resignation/Vacation of Office

1. The tenure of the Office of Shri K N Prithviraj, the NonExecutive Independent Director and Chairperson of the Board, and that of Shri T V Rao, the Non-Executive Independent Director of the Company were completed on conclusion of the 31st Annual General Meeting of the Company held on July 18, 2018. Hence cessed to be the director of the Company.

2. Shri S A Kadur, Director (General Manager, Canara Bank) has laid down his Office on attainment of superannuation w.e.f September 30, 2018. In pursuance of the same, he has tendered his resignation as Director (Non-executive Promoter Director) of the Company and hence cessed to be the director of the Company w.e.f October 01, 2018.

3. Smt. P V Bharathi, Non-executive Promoter Director of the Company has resigned from the Board of the Company w.e.f. February 01, 2019, on her elevation and appointment as the Managing Director & Chief Executive Officer of Corporation Bank.

Retirement by rotation:

In terms of Section 152 and all other applicable provisions of the Companies Act, 2013, and the Articles of Association of the Company, Shri. Shreekant M Bhandiwad, Dy. Managing Director (Whole-time Director), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The particulars relating to Shri. Shreekant M Bhandiwad, Dy. Managing Director are provided in the Report of Directors on Corporate Governance. Your Directors recommend the re-appointment of Shri. Shreekant M Bhandiwad, as a Director, without affecting his tenure and terms and conditions of appointment as Whole-time Director in terms of Article 28 of the Articles of Association of the Company. The agenda relating to re-appointment of Shri Shreekant M Bhandiwad, Dy. Managing Director forms part of the notice convening the ensuing Annual General Meeting and all other relevant information as per SEBI Regulations are also provided in the explanatory statement.

19. MEETINGS OF THE BOARD

During the Financial year 2018-19, ten meetings of the Board of Directors were held and the related details, including that of various committees constituted by the Board, are made available in the Report of Directors on Corporate Governance forming part of the annual report placed before the members.

Your Company has complied with all the requirements as applicable under Companies Act, 2013 and related rules, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also HFCs Corporate Governance (NHB) Directions, 2016, in relation to the Board of Directors and the Committees of the Board.

Committees of the Board:

Currently the Board has seven Committees viz. the Audit Committee, the Nomination, Remuneration & HR Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee, the Management Committee and the IT Strategy Committee. The IT Strategy Committee was constituted during FY 19 as per National Housing Bank (NHB) Circular “NHB/ND/ DR5/Policy Circular No.90/2017-18 dated June 15, 2018.

A detailed note on the composition of the Board and its Committees and other related particulars are provided in the Report of Directors on Corporate Governance forming part of this Annual Report.

20. DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, and based on the information provided by the Management, the Board of Directors report that:

(a) in the preparation of the annual accounts for the year ended on March 31, 2019, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended on March 31, 2019 and of the profit and loss of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) this being a listed Company, the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Declaration by Independent Directors:

The Independent Directors have given declarations to the Company in terms of Section 149(7) and 149(8) of the Companies Act, 2013 and Regulation 25(8) of SEBI (LODR) Regulations, 2015 that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (LODR), 2015.

Code of Conduct:

In terms of Regulation 26(3) of the SEBI (LODR) Regulations, 2015, all the members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct of Board of Directors and Senior Management for the FY18-19. As required under Schedule V (D) of the said Regulations, a declaration signed by the Managing Director & Chief Executive Officer of the Company stating that the members of the Board and the Senior Management Personnel have affirmed compliance of their respective Codes of Conduct, is an annexure to Corporate Governance Report.

21. NOMINATION REMUNERATION AND HR COMMITTEE (NRC) POLICY

Your Company has constituted a Nomination Remuneration and HR Committee (NRC) of the Board in terms of Section 178 of the Act, Regulation 19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Para 3(II) of NHB Corporate Governance (National Housing Bank) Directions, 2016. This Committee identifies persons who are qualified to become Directors of the Company. The appointment, renewal, reappointment, re-categorisation and/ or removal of the Directors so identified, including extension or continuation of the term of appointment, will be recommended by the NRC to the Board. This Committee has also laid down the criteria to identify persons who may be appointed to the senior management of the Company. The NRC has formulated the criteria for determining qualifications, positive attributes and independence of a Director, carrying out evaluation of every Director''s performance, performance of the Board and that of the Committees. The NRC Policy of the Company covering all the above aspects is made available on the official website of the Company at https://www.canfinhomes.com/ pdf/Nomination-Remuneration-and-HR-Policy-120419.pdf, in terms of Section 134(3) of the Companies Act, 2013. For web link please refer Annexure 9. The Board ensures the annual evaluation of the performance of the Board, its Committees and of its individual directors through the meeting of independent directors, the NRC and evaluation by each of the directors independently.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

Your Company constituted a Corporate Social Responsibility (CSR) Committee of the Board as prescribed under Section 135 of the Companies Act 2013 and has put the CSR policy in place. The Company has focussed in promoting education including special education and employment in enhancing vocation skills especially among children. The other areas of focus are women empowerment by promoting gender equality, setting up old age homes, livelihood enhancement projects for the elderly & the differently abled, healthcare sector, Conservation of Solar energy and Ecological balance. During the year the Company also worked in the environmental sustainability by planting trees/saplings.

As a well thought out strategy, all CSR projects of the Company are executed through our own branches with a view to inculcate a sense of social responsibility amongst the staff. The total amount/ budget under CSR for the FY 201819 was RS.10.51 Crore, (including previous year H3.30 Crore), out of which total amount spent under the CSR activities is RS.6.06 Crore. The unspent amount of RS.4.45 Crore has already been sanctioned during the year, however disbursement will be based on progress in the respective projects. A summary of CSR details as on March 31, 2019 is given below:

Sl No.

Activities undertaken

No. of Beneficiaries

Amount in Rupees

1

Construction/ repair & renovation of Schools/ Hostels

7

1,67,98,700

2

Desks & benches/ Tables/ Almirah/ Green Board/ Chairs etc.

32

88,55,728

3

Drinking water facility/ supply of other articles of necessity etc.

10

9,55,956

4

Nali kali round tables/ chairs/ desk & benches/ drinking water facility etc.

13

52,60,763

5

Electrical & Electronic Items to schools

1

72,100

6

Toilet Facility in schools

1

1,18,200

7

Scholarship

3

5,80,052

8

Equipment to hospitals

7

1,48,67,032

9

Equipment to old age home

4

11,07,251

10

Equipment to school

1

3,35,000

11

Eradicating Hunger

3

71,53,333

12

School Bags/Stationery items etc.

2

2,25,278

13

Solar Lighting System

3

24,88,580

14

Environmental Sustainability

1

11,92,270

15

Tree planting under Environmental protection/sustainability/saplings with tree guards/pots to the customers.

2

6,14,240

Total

90

6,06,24,483

The Annual Report on CSR activities including brief contents are provided as Annexure 5 to this report.

23. RISK MANAGEMENT POLICY

Your Company has constituted a Risk Management Committee with three directors and a senior executive of the Company. In terms of Section 134(3)(n) of the Act, your directors wish to state that your Company has adhered to the Risk Management Policy. The above policy was reviewed during the year. For weblink please refer Annexure 9.

24. AUDIT AND INTERNAL CONTROL

Your Company strengthened existing internal control systems for loan reviews at periodical intervals and introduced measures for minimising operational risks commensurate with the nature of its business and size of operations. Further, your Company has reviewed delegation of authorities and streamlined standard operating procedures for all areas of its business/ operations/ functions, strengthened the Offsite Transaction Monitoring System (OTMS) to track transactions/ early-warning signals across all branches by introducing innovative monitoring tools.

The National Housing Bank conducts inspection of your Company on an annual basis. During the year, the NHB conducted regular inspection of your Company in August/ September 2018 for the position as at March 31, 2018. The compliance on the observations were submitted within the prescribed time to the NHB, which were reviewed by the Audit Committee and the Board.

Your Company has also put in place a well- defined policy on Risk Based Internal Audit (RBIA) and as per the said policy, all the 166 branches due for audit, were audited in the FY18-19.

Apart from the RBIA, considering the volume of business, branches are also subjected to quarterly/ half yearly internal audit by empanelled audit firms. The Audit Committee reviewed the audit reports/remarks/ observations and replies/ compliances including the compliance of KYC norms. Management Audit by Canara Bank was conducted during January, 2019 for the period, January 2017 to December 2018.

25. SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT

As required under section 204 of the Companies Act, 2013 and Rules thereof, the Board appointed M/s Kedarnath & Associates, Practising Company Secretaries, for conducting the ‘Secretarial Audit'' of the Company and for submission of the Annual Compliance Report for the financial year 2018-19.

The Secretarial Audit for FY18-19 was conducted as required u/s.204 of the Companies Act 2013, Regulation 24A of SEBI(LODR) Regulation 2015 and SEBI Circular No. CIR/CFD/ CMD1/27/2019 dated February 08, 2019, by S. Kedarnath, FCS, Practising Company Secretary and his team. In terms of Section 204(3) of the Act, your Directors inform that there is a remark in the report i.e. “NHB vide its letter NHB(ND)/ DRS/APPEAL-1/17/A-744/2019 dated January 17, 2019 has imposed a penalty of H 5,900 (inclusive of GST@18%) for alleged contravention of section 32 of the NHB Act, 1987 and the Fair Practice Code issued by NHB, for which the Company has sent a reply and remitted the amount under protest. Other than above the report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report issued by the Practising Company Secretaries is enclosed to the Report of Directors (Annexure 2) in terms of Section 134(3) (f) read with Section 204(1) of the Act.

In addition to the Secretarial Audit Report, Secretarial Compliance report has also been issued by the PCS as per the SEBI Circular No. CIR/CFD/CMD1/27/2019 dated February 02, 2019, and the said report has been submitted to the Stock Exchanges.

Secretarial Standards

The Company complies with the mandatory Secretarial Standards i.e. SS-1 and SS-2 issued by the Institute of Company Secretaries of India and has referred to Secretarial Standards SS-3 and SS-4 for good governance.

Loans, Guarantees or Investments:

There are no particulars of loans, guarantees or investments made during the year in terms of Section 186(1) and 186(2) of the Act requiring disclosure to be made in the report of Directors as required under Section 134(3)(g) of the Act. In terms of Section 186(11)(a) the requirement relating to the disclosure is not applicable to a loan made, guarantee given or security provided by a housing finance Company.

Related Party Transactions:

The particulars of contracts or arrangements with the ‘Related Parties'' referred to in sub-section (1) of Section 188 of the Act are furnished in Note No.42 of the Notes forming part of the financial statements for FY18-19, forming a part of the Annual Report. The particulars of Related Party Transactions as required u/s sec 134(3)(h) in the prescribed format is attached to this Report as Annexure 7.

26. STATUTORY AUDITORS

Pursuant to the provisions of Section 139, 142 and all other applicable provisions of the Companies Act, 2013 and rules made thereunder, M/s. Varma & Varma, Chartered Accountants (Firm Reg.No.004532S) were appointed by the members as the Statutory Auditors of the Company to hold office from the conclusion of this 30th Annual General Meeting until the conclusion of the 35th Annual General Meeting, subject to ratification by members every year, as applicable, at such remuneration and out-of-pocket expenses, as may be decided by the Board of Directors of the Company. Pursuant to the provisions of Section 143(8) of the Companies Act, 2013 and rules made thereunder, the Members had authorised the Board of Directors to appoint any person(s) qualified for appointment as auditor(s) of the Company under Section 141 and all other applicable provisions of the Companies Act, 2013 as Branch Auditors for audit of any of the Branch of the Company, present and future, from the conclusion of this Annual General Meeting until the conclusion of the 35th Annual General Meeting, subject to ratification by members every year, as applicable, on such terms and conditions, including remuneration and out-of pocket expenses, as may be decided by the Board of Directors of the Company.

The requirement of placing the matter relating to such appointment for ratification by members at every annual general meeting has been dispensed with due to omission of the first proviso to Section 139(1) by the Companies (Amendment) Act, 2017 effective from May 07, 2018 as per the Notification issued by Ministry of Corporate Affairs, Govt. of India [File No.1/1/2018-CL.I dated May 07, 2018].

In view of the above, M/s Varma & Varma, Chartered Accountants (Firm Reg.No.004532S) appointed by the members at the 30th Annual General Meeting for a tenure upto the conclusion of the 35th Annual General Meeting will continue as the Statutory Auditors of the Company, at such remuneration and out-of pocket expenses, as may be decided by the Board of Directors of the Company.

The Statutory Auditors'' Report for the FY2018-19 does not contain any qualification, reservation or adverse remark.

27. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this Annual Report.

28. CORPORATE GOVERNANCE

As required under the Companies Act, 2013, Regulation 34 read with Schedule V of the SEBI (LODR) Regulations, 2015 and Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016, the ‘Report of Directors on Corporate Governance'' for the year FY18-19 is placed in this Annual Report.

The said Report covers in detail the Corporate Governance Philosophy of the Company, Board Diversity, Directors appointment and remuneration, declaration by Independent Directors, Board evaluation, familiarisation programme, vigil mechanism etc. The Auditors Certificate on Corporate Governance is provided with this report as Annexure 1.

Business Responsibility Report:

The SEBI (LODR) Regulations, 2015, mandates inclusion of Business Responsibility Report (BRR) in the prescribed format, as a part of the Annual Report for top 500 listed entities based on the market capitalisation. In compliance with the said Regulations, the BRR is provided as a part of this Report as Annexure 6.

Board Evaluation:

In terms of Regulation 17(10) of the SEBI (LODR) Regulations, 2015 read with the SEBI Circular No. SEBI/HO/CFD/ CMD/ CIR/P/2017/004 dated January 05, 2017, your Company has put in place the ‘Board and Director''s Evaluation Policy'' laying down a framework for evaluation of the Board, its Committees and of the individual directors with defined attributes for evaluation. The Board has evaluated the performance of the independent directors including their independence criteria as specified in the said regulations and their independence from the management. The directors who were subject to evaluation did not participate in their own evaluation. The results of the evaluation exercise will be shared with the Board in subsequent Board Meeting(s).

29. SAVE GREEN EFFORTS & RESPONSIBILITY TOWARDS SOCIETY

In recognition and support to the green initiative taken by the Ministry of Corporate Affairs (MCA), Government of India, your Company is sending AGM notices, annual reports, correspondence with the stakeholders etc. to the respective e-mail IDs of stakeholders. To facilitate paperless banking, initiatives taken by your Company include ECS / NACH facility for repayment of loans, streamlining the systems and procedures for reporting by the branches and at the Registered Office through Integrated Business Suite (IBS), networking of branches with the Registered Office, harnessing solar energy for lighting and computer operations in its 16 branches and the like. The usage of paper is minimised.

As in the previous years, we continue to publish only the statutory disclosures in the print version of the Annual Report. Electronic copies of the Annual Report, Annual General Meeting Notices, and such other notices are being sent to all members whose e-mail address are registered with the Company/ Depository participants. For members who have not registered their e-mail address and to those who specifically request for physical copies, the same are sent in the permitted mode.

Through our CSR activities in the field of health care, education and empowerment of the downtrodden, we have strived to improve the lives of lakhs of our country men, women and children. We have sanctioned RS.10.60 Crore for 103 projects and spent RS.6.06 Crore towards the funding of life saving medical equipment and renovation work in about 8 hospitals, supply of books, desks, almirahs, fans, lights water purifiers and other necessary materials as well as repair work in about 68 schools across the country. Scholarships have been provided to meritorious, poor students. The funds were also utilized for improving the lives of inmates in many old age homes, rehabilitation centres for the physically and intellectually disabled. CFHL also contributed to the Akshay Patra Foundation mid-day meal to 6150 children in Mangalagiri for 6 months.

Saplings have been provided to our customers in all parts of the country. Cotton bags have also been procured for distribution to our borrowers and public to discourage the use of plastic.

30. OUTLOOK FOR 2019-20

The slew of measures announced by the Union Government in the Budget to boost housing, particularly PMAY loans, will be a key factor in revival of the real estate market. Your Company will intensify its lending under the Affordable Housing Loan Segment.

We will continue our market expansion in potential locations and have plans to open about 30 new branches during the current fiscal. We have also set the wheels in motion for the distribution of general insurance products through corporate agencies to provide insurance products to secure the health and assets of our customers.

Your Company is targeting a loan book size of RS.23,000 Crore by March 2020. Lending to the salaried class will continue to be our focus. However, with the rising cost of funds, expectations of borrowers for loans at lesser rates, intense competition in the market, etc., margins are expected to remain under pressure.

Your Company would continue its endeavour for growth with quality. Your Company will safeguard and maintain the high standards followed till date, despite the innumerable hurdles that are inevitable in the discharge of its functions.

31. ACKNOWLEDGEMENTS

Your Directors would like to thank Canara Bank, the promoter, for their continuous support.

Your Directors would like to acknowledge the role of all its stakeholders viz., shareholders, debenture holders, CP holders, depositors, bankers, lenders, borrowers, merchant bankers, insurance partners, debenture trustees and all others for their continuous support to your Company and the confidence and faith that they have always reposed in your Company.

Your Directors acknowledge and appreciate the guidance and support extended by all the Regulatory authorities including National Housing Bank (NHB), Insurance Regulatory and Development Authority of India (IRDAI), Securities Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Registrar of Companies, Karnataka, the Stock Exchanges and the NSDL and CDSL.

Your Directors thank the Rating Agencies, viz. ICRA, CARE, India Ratings & Research Ltd., (FITCH), the Registrars & Share Transfer Agents, Debenture Trustees and Trustees of public deposits of your Company, Government(s), local/ statutory authorities, and all others for their whole-hearted support during the year and look forward to their continued support in the years ahead.

Your Directors value the professionalism of all the employees who have proved themselves in a challenging environment and whose efforts have stood the Company in good stead and taken it to present level.

For and on behalf of the Board of Directors

Sd/-

Place: Bengaluru Bharati Rao

Date : May 22, 2019 Chairperson

Director’s Report