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IDBI Bank

BSE: 500116|NSE: IDBI|ISIN: INE008A01015|SECTOR: Banks - Public Sector
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Directors Report Year End : Mar '19    Mar 18

The Bank’s Board of Directors is pleased to present the Report on its Business and Operations for the financial year ended March 31, 2019.

India''s economic growth decelerated in 2018-19 as compared to the previous year on account of slowdown in agriculture and services sector. While deceleration in the economic activity in India was partly on account of domestic factors such as deficient and uneven monsoon, muted consumption and investment demand, among others, global volatilities also impacted the overall growth momentum. Banks play a major role in India’s growth story as they continue to remain the major source of debt funding by a large margin compared to any other source. Taking this into consideration, various reform measures such as recapitalisation of public sector banks, resolution of stressed assets under the Insolvency and Bankruptcy Code, among other measures, were initiated to strengthen the banking sector. These measures are expected to improve the financial health of banks and subsequently lead to credit off-take in the economy. While these measures are enabling banks to improve their financial position, the overall turnaround in the banking sector performance will be realised with a lag. It is crucial to view the performance of your Bank in this context.

Financial Highlights

As on March 31, 2019, your Bank’s aggregate deposits and advances touched Rs. 2,27,372 crore and Rs. 1,46,790 crore, respectively. Your Bank’s business highlights for the period under review are presented in Table 1:

Table 1: Key Financials (In Rs. crore)

As on March 31, 2018

As on March 31, 2019

Capital

3,083.86

7,736.30

Reserves & Surplus

18,125.87

29,875.40

Deposits

2,47,931.61

2,27,371.72

Borrowings

63,185.53

45,28772

Other Liabilities & Provisions

17,758.85

10,013.35

Total Liabilities

3,50,085.72

3,20,284.49

Cash & Balances with RBI

13,163.69

12,730.47

Balances with Banks & Money at Call & Short Notice

20,522.40

8,503.23

Investments

91,606.06

93,072.63

Advances

1,71,739.94

1,46,790.43

Fixed & Other Assets

53,053.63

59,18773

Total Assets

3,50,085.72

3,20,284.49

For the period

2017-18

2018-19

Total Income

30,040.11

25,371.53

Total Expenses (other than provisions)

22,130.90

21,319.41

Provisions (other than tax)

20,501.74

26,879.29

Profit/ (Loss) Before Tax

(12,592.53)

(22,82717)

Provision for Tax*

(4,354.61)

(7,710.87)

Profit/ (Loss) After Tax

(8,23792)

(15,116.30)

* Net of Current Income Tax and Deferred Income Tax

During the year under review, your Bank’s total income amounted to Rs. 25,372 crore, comprising interest income of Rs. 22,071 crore and other income of Rs. 3,300 crore. Interest expenses stood at Rs. 16,166 crore and operational expenses at Rs. 5,154 crore, accounting for total expenditure of Rs. 21,319 crore (excluding provisions and contingencies).

Total provisioning of your Bank increased in view of continued stress in the Bank’s corporate loan portfolio. The provisions include Rs. 25,747 crore towards provision for non-performing assets, bad debts written-off and investments. As a result, your Bank incurred a net loss of Rs. 15,116 crore during FY 2018-19.

While the Earnings per Share (EPS) during the year was negative due to the losses, the Book Value per Share (excluding intangible assets) stood at Rs. 14.40 per Share as at end-March 2019. In view of the losses incurred, the Board of Directors have not recommended any dividend for the year.

Report on the Performance and Financial Position of Subsidiaries and Joint Venture included in the Consolidated Financial Statement as on March 31, 2019

Name of the entity

Net Assets, i.e., total assets minus total liabilities

Share in profit or (loss)

As % of consolidated net assets

Amount (In Rs. crore)

As % of consolidated profit or (loss)

Amount (In Rs.crore)

1

2

3

4

5

Parent : IDBI Bank Ltd.

97.09

37,611.70

(101.00)

(15,116.30)

Subsidiaries:

Indian:

1. IDBI Capital Markets & Securities Ltd.

0.81

314.91

0.00

0.26

2. IDBI Intech Ltd.

0.15

56.34

0.06

8.84

3. IDBI Asset Management Ltd.

0.28

108.09

(0.03)

(4.34)

4. IDBI MF Trustee Company Ltd.

0.00

1.47

0.00

0.04

5. IDBI Trusteeship Services Ltd.

0.54

207.37

0.25

37.51

Foreign:

NA

NA

NA

NA

Minority Interests in all subsidiaries

0.25

96.98

0.11

16.99

Associates (Investment as per the equity method)

Indian:

1. Biotech Consortium India Ltd.

NA

NA

0.00

0.51

2. National Securities Depository Ltd.

NA

NA

0.19

28.78

3. North Eastern Development Finance

NA

NA

0.09

13.92

Corporation Ltd.

4. Pondicherry Industrial Promotion Development

NA

NA

NA

NA

& Investment Corporation Ltd. (PIPDICL)*

Foreign:

NA

NA

NA

NA

Joint Venture (as per proportionate consolidation/ investment as per the equity method)

Indian:

1. IDBI Federal Life Insurance Company Ltd.

1.13

438.06

0.43

63.73

Foreign:

NA

NA

NA

NA

TOTAL

100

38,737.94

(100.00)

(14,967.04)

Elimination

(101)

(391.23)

(0 13)

(1971)

Net Total

98.99

38,346.71

(100.13)

(14,986.76)

*- In respect of PIPDICL, the Bank has not received any financial statements and transaction details from the company hence information not consolidated in the above. The Bank has written down investment in PIPDICL to Rupee one.

Material changes and commitments, if any, affecting financial position of IDBI Bank which have occurred during the end of financial year and the date of Board Report.

There are no material changes and commitments affecting the financial position of the Bank which have occurred between the end of the financial year of the Bank, i.e. March 31, 2019 and the date of the Directors’ Report.

The details in respect of adequacy of internal financial controls with reference to the financial statements.

According to Section 143(3)(i) of the Companies Act 2013, w.e.f. Financial Year 2015-16, the report of the Statutory Auditors shall state whether the Bank has adequate Internal Financial Control (IFC) system in place and the operating effectiveness of such controls, in the context of the financial statements. IFCs as referred to in Section 143(3)(i) of the Companies Act relates to Internal Financial Controls Over Financial Reporting (IFC-FR). The Bank’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of IFC-FR issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Bank’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013, the Banking Regulation Act, 1949 and the guidelines issued by the Reserve Bank of India.

Your Bank has put in place an IFC-FR Framework for evaluation of the existing internal financial controls system and appointed a Consultant for validating the compliances with respect to the documentation, certification, reporting process of the controls across all business verticals/ departments and ascertaining the adequacy and effectiveness of the controls in the Bank in all material respects with respect to financial reporting.

During 2018-19, the Consultant submitted the Internal Compliance Certificate for the quarters ended June 2018 to March 2019 after carrying out the testing and validation of all the underlying processes as per the Bank’s IFC-FR framework.

Details of Significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with a detailed explanation thereof, including:

In terms of compliance with the SEBI (Listing Obligations & Disclosure Requirements) (Amendment) Regulations 2018, the key financial ratios for the Bank are as follows:

Particulars

2017-18

2018-19

Comments

Return on Average Net Worth

(58.30%)

(155.20%)

The Net Loss for the year has increased to Rs. 15,116.30 crore in FY 2018-19 from Rs. 8,23792 crore in FY 2017-18 mainly on account of additional provisioning on NPAs. The Net Worth as on March 31, 2019 was Rs. 11,140.35 crore as against Rs. 12,031.01 crore as on March 31, 2018.

Return on Average Assets

(2.46%)

(4.68%)

Gross NPA % to Gross Advances

27.95

27.47

Total NPA Provisions have increased by Rs. 3,266.10 crore from Rs. 19,126.14 crore for FY 2017-18 to Rs. 22,392.24 crore for FY 2018-19.

Net NPA % to Net Advances

16.69

10.11

Provision Coverage Ratio (including Technical Write-offs)

63.40%

82.88%

CASA to % of total deposits

37.15%

42.54%

CASA balance increased to Rs. 96,730.41 crore as on March 31, 2019 as against Rs. 92,102.09 crore as on March 31, 2018 and Total Deposits have reduced to Rs. 2,27,371.72 crore as on as on March 31, 2019 from Rs. 2,47,931.61 crore as on as on March 31, 2018.

Capital Adequacy

Your Bank computes regulatory capital requirement for credit, market and operational risks as prescribed under the Pillar 1 guidelines of the Basel III framework on a quarterly basis. Your Bank’s ‘Total Capital Capital Conservation Buffer (CCB)’ ratio was 11.58% as on March 31, 2019. Similarly, your Bank’s ‘Common Equity Tier 1 (CET1) CCB’ ratio was 8.91% as against the regulatory requirement of 7.375%. Your Bank’s ‘Tier 1 CCB'' ratio stood at 9.13% as on March 31, 2019 as against the regulatory requirement of 8.875%.

Your Bank has a Board-approved policy on Internal Capital Adequacy Assessment Process (ICAAP) in line with the Pillar 2 norms of the Basel III framework. This policy enables your Bank to internally assess and quantify those risks which are not covered under Pillar 1 as well as to develop appropriate strategies to manage and mitigate risks under normal and stressed conditions. In line with the RBI’s guidelines on stress testing, your Bank has also put in place a comprehensive stress testing framework. This framework enables your Bank to assess its performance under exceptional but plausible events and facilitates appropriate proactive strategies to meet unforeseen contingencies. The framework has been strengthened during the period under review by inclusion of scenario analysis and reverse stress testing. Your Bank has adopted a Disclosure Policy in accordance with the Pillar 3 requirements under the Basel norms. Accordingly, disclosures as at the end of each quarter are hosted on your Bank’s website, thereby exhibiting high degree of transparency. Your Bank follows the Standardised Approach under Credit Risk for computation of capital charge, Basic Indicator Approach (BIA) to compute regulatory capital charge for Operational Risk and Standardised Measurement Method (SMM) to compute regulatory capital requirement for market risk.

Business Strategy

During the year, your Bank embarked on a strategic initiative to position itself as a retail-focused bank. Towards this end, the business strategy of the Bank was focussed on driving growth through accretion of a low-cost deposit base and granular asset mix through growth in retail asset book. Measures to enhance CASA and retail deposit base has aided in containing the cost of deposits. Additionally, augmenting growth in Retail, Agri and MSME (RAM) advances has enabled the Bank to reduce its Risk Weighted Assets (RWA). Simultaneously, your Bank consciously restricted its corporate portfolio, thereby furthering the process of de-risking its business portfolio mix.

The majority stake acquisition by Life Insurance Corporation of India (LIC) has opened up several business avenues for your Bank. The Bank and LIC, through its collective network of branches, offices and workforce, have been leveraging on the mutual business synergies, especially in various revenue generating areas such as bancassurance, cash management and premium collection services, investment and advisory services, among others.

To capitalise on these synergies, your Bank has created dedicated teams, overseen by the top management, to drive its business growth. Additionally, your Bank has also put in place necessary business enablers to bring the convenience of banking and insurance services at one stop for all its customers.

As a customer-centric bank, the Bank is scaling up its capabilities, especially in Information Technology (IT). Digitalisation is a prominent feature of your Bank’s strategy as it would help in ensuring greater degree of customer convenience as well as enable your Bank to enhance its operational efficiency. Your Bank is making efforts to further strengthen its Customer Relationship Management (CRM) and business intelligence capabilities that will help in better understanding of customer preferences and thereby, provide an impetus to targeted sales. Furthermore, your Bank remains committed to the Government of India’s PSB Reforms Agenda aimed at Enhanced Access and Service Excellence (EASE) and is taking necessary steps towards its implementation.

In addition to putting in place necessary business enablers, the Bank continues to remain focussed on improving its asset quality. Towards this end, your Bank has set up a Collection & Recovery War Room to bring focused and accelerated efforts towards collection and recovery in consonance with the Bank’s objective to drive improvement in its asset quality. Furthermore, your Bank is in the process of putting in place Early Warning Signals to ensure close monitoring of advances to preclude further slippages.

Underpinning these strategic endeavours, the Bank is proactively reinforcing its risk management practices to ensure a stable growth path. Simultaneously, the Bank is fostering a robust compliance culture to meet key regulatory/ policy objectives and consequently, protect interest of all stakeholders.

Key Business Initiatives

In line with the business strategy of positioning itself as a retail-focussed bank, your Bank has initiated measures to broad-base the products and services offering to its diversified customer base. Your Bank continued to introduce new products and upgraded its existing products to cater to the evolving industry trends, regulatory landscape and customer preferences. Additionally, your Bank also offered various value-added products and services to its customers, keeping in view their risk profile and financial goals. Subsequent to stake acquisition by LIC, your Bank has also introduced specially designed product variants to cater to the banking and investment requirements of employees, agents and subsidiaries of LIC.

Your Bank served its customers through its network of 1,892 branches, 3,700 ATMs and 58 e-lounges. The Bank also extended a wide range of digital offerings to make banking more convenient and inclusive to the needs of its customers.

In line with the Government’s DigiDhan Mission of promoting seamless digital payments, your Bank has designated one officer from every retail branch as ''Digital Guru'' to act as a single point of contact for all digital product related queries.

Acknowledging the significance of promoting the priority sector segment, your Bank has been actively contributing to Priority Sector Lending (PSL), thereby also adhering to the RBI’s mandate. Your Bank has also been proactive in furthering the national objective of inclusive growth by ensuring access to financial products and services to the vulnerable sections of the society at affordable cost in a fair and transparent manner. Apart from offering appropriate financial products and expanding its reach by making intensive use of technology, your Bank also placed emphasis on financial literacy to ensure an inclusive and holistic growth. Your Bank leveraged the Business Correspondents (BCs)/ Business Facilitators (BFs) network to increase penetration in rural and semi-urban areas to ensure greater financial inclusion as also provide an added impetus to its PSL business.

Your Bank conducts its Trade Finance (TF) business through its 39 Category B Authorised Dealer TF centres and 177 designated retail TF branches in various locations pan-India. During the year, your Bank got approval from the GoI for dealing in Indo-Iran trade settlements in Indian Rupee for both oil and non-oil transactions. As part of your Bank''s ongoing digital transformation, various IT initiatives have been taken during the year under review to automate the process flow of transaction with a view to enhance security control measures as well as to improve operational efficiency and productivity.

Your Bank also acts as an agent for Central and State Governments to manage their receipts and payments. Your Bank is authorised to collect Central Government taxes (direct and indirect), Goods & Services Tax (GST), Government receipts, online collection for Employee Provident Fund Organisation (EPFO) and Employee State Insurance Corporation (ESIC), offer Small Saving Schemes and extend facility to submit Life Certificate for Central Government pensioners digitally, among others.

Your Bank offers a wide array of collection and payment products as part of its Cash Management Services (CMS). Your Bank is authorised to participate in e-freight payment system of Indian Railways. Your Bank is also authorised to facilitate utility bill payments through Bharat Bill Payment (BBPS).

Your Bank has laid special emphasis on the upgrade and overhaul of many of its critical IT hardware systems and committed long-term investments in enrichment of its assets to ensure that the deployed hardware meets the business needs. Furthermore, your Bank is also embracing technological innovation to ensure seamless customer service and highest level of user experience. Your Bank has also responded to the industry-wide information security concerns by installing various high-end security solutions.

In order to promote analytics driven sales, your Bank has setup a Centre of Excellence (COE) for Data Analytics with the objective of achieving higher customer wallet share by delivering the right product at the right time.

Your Bank strived to identify and digitise activities as part of its objective to automate the existing processes, and thereby, enhance service delivery as well as rationalise related costs.

Your Bank has a Board-approved CSR policy which underscores the Bank’s inclination to make a meaningful contribution towards the welfare of the society. Your Bank, through its various interventions, aims to create long-term social and economic value for the society.

The detailed description of the Bank’s initiatives undertaken during the year is outlined in the Management Discussion and Analysis section of the Annual Report.

Board of Directors

Your Bank’s Board of Directors is broad-based and its constitution is governed by the provisions of the Banking Regulation Act, 1949, the Companies Act, 2013, the Articles of Association of the Bank and the requirements of corporate governance, as envisaged in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [LODR Regulations]. The Board functions directly as well as through various board committees constituted to provide focussed governance in the important functional areas of the Bank. Post-acquisition of 51% controlling stake by LIC, the Board of your Bank has been reconstituted in accordance with the amended Article 116(1) of the Articles of Association and is also in compliance with section 10A of the Banking Regulation Act, 1949. The Board of Directors, as per the amended Articles of Association of the Bank, includes 15 members with the Chairman of LIC as Non-Executive Non Whole-Time Chairman of the Bank, MD & CEO and two DMDs nominated by LIC, one Official Nominee Director of LIC, two Nominee Directors of GOI and eight Independent Directors including one Woman Director.

As on March 31, 2019, the Board comprised of thirteen Directors, including Managing Director and CEO (MD & CEO), two Deputy Managing Directors (DMDs), three Non-Executive Directors and seven Independent Directors. Shri Rakesh Sharma, MD & CEO, Shri K. P. Nair & Shri G. M. Yadwadkar, DMDs as Whole Time Directors; Shri Pankaj Jain & Shri Sudhir Shyam, Central Government official Nominees and Shri Rajesh Kandwal, LIC Nominee Director, as NonExecutive Directors; Shri Gyan Prakash Joshi, Dr. Ashima Goyal, Shri Bhuwanchandra B. Joshi, Shri Samaresh Parida, Shri N. Jambunathan, Shri Deepak Singhal and Shri Sanjay Gokuldas Kallapur as Independent Directors constituted the Board. The present strength of 13 (thirteen) Directors on the Board meets the requirement provided under Article 114(a) of the Articles of Association.

Apex Committees

The Board has a total of fourteen committees to oversee various functional areas of your Bank''s business and operations. The Board committees include Audit Committee of the Board, Executive Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, HR Steering Committee, Frauds Monitoring Committee, Recovery Review Committee, Risk Management Committee, Independent Directors’ Committee, Corporate Social Responsibility Committee, Non-Cooperative Borrowers’ Review Committee, Customer Service Committee, Wilful Defaulters’ Review Committee and Information Technology Strategy Committee.

Corporate Governance

Your Bank is committed to adoption of best corporate governance practices. It believes that effective corporate governance is not just a requirement for regulatory compliance, but also a facilitator for enhancement of stakeholders’ value. The details of your Bank’s corporate governance practices are given in this Annual Report as a separate section under Corporate Governance Report.

Business Responsibility Report

The Securities and Exchange Board of India (SEBI), vide its notification dated December 22, 2015, has mandated the inclusion of Business Responsibility (BR) Report as part of the Annual Report for Top 500 listed entities based on market capitalisation at BSE and NSE. The BR Report should describe initiatives taken by the listed entity from an environmental, social and governance perspective. The Bank’s Business Responsibility Report has been hosted on the website of the Bank (www.idbibank.in).

Dividend Distribution Policy

Your Bank has a Board-approved Dividend Distribution Policy which is hosted on the website of the Bank (www.idbibank.in).

Statement under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

There were no personnel in your Bank’s services, during the financial year under review, who received remuneration of over Rs. 1.02 crore annually. Besides, there were no personnel in the service of the Bank for a part of the year who received remuneration in excess of Rs. 8.50 lakh per month. Further, there was no personnel employed throughout the financial year or part thereof who was in receipt of remuneration at a rate, which in the aggregate, was in excess of that drawn by Managing Director & CEO or Deputy Managing Director of the Bank and who held by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Bank.

Statement under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for year ended March 31, 2019 - Details of Top Ten Employees

The statement indicating details of top ten employees of the Bank in terms of remuneration drawn during FY 2018-19 is as follows:

Sr. No.

Name

Designation

Remuneration received (Rs.)

Nature of employment, whether contractual or otherwise

Qualifications and experience of the employee

Date of commencement of employment

The last employment held by such employee before joining the company

The age of such employee

1

Shri Umesh Jain

CGM

42,11,622

Confirmed Employee

M.Tech., CAIIB, Diploma in Business Finance, M.D.B.A.

31 yrs. 2 months

17-Mar-1988

Voltas Ltd.

59 yrs 11 months

2

Smt. Maya Chakravorty

CGM

38,67,042

Confirmed Employee

B.Sc. (Engg), M.M.S., C.F.A. 25 yrs. 9 months

17-Aug-1993

Oil & Natural Gas Commission

53 yrs 11 months

3

Shri Rajeev Kumar

CGM

37,60,017

Confirmed Employee

B.Tech., M.B.A., CAIIB

25 yrs. 8 months

17-Sep-1993

State Bank of India

56 yrs 5 months

4

Shri Krishnan Srinivasan

GM

37,15,869

Confirmed Employee

B.Com., ICWA (Inter), CAIIB 34 yrs 5 months

17-Dec-1984

Modella Woollens Ltd.

58 yrs 2 months

5

Shri K. R. Murali Mohan

CGM

37,08,185

Confirmed Employee

B.Com., CAIIB 31 yrs

27-May-1988

Indian Overseas Bank

60 yrs

6

Shri Sunit Sarkar

CGM

36,98,482

Confirmed Employee

B.Tech., ICWA, CAIIB, Post Graduate Diploma in Business Management 25 yrs 8 months

1-Sep-1993

ESAB India Ltd.

52 yrs 9 months

7

Shri Shankar V.

GM

36,85,908

Confirmed Employee

B.Sc., M.D.B.A., P.G.D.F.M.,

JAIIB

34 Yrs. 8 months

24-Sep-1984

NABARD

56 yrs 9 months

8

Shri Swapan Kumar Bagchi

CGM

36,77,071

Confirmed Employee

M.Sc. in Exploration Geophysics, M.Tech., P.G.D.M., CAIIB 25 yrs 4 months

25-Jan-1994

Perfect Computers Ltd. and then Self Employed

59 yrs 3 months

9

Shri Nagraj Garla

CGM

36,31,806

Confirmed Employee

B.Com., M.Com., MBA, ICWA (Inter), CAIIB

19 yrs 3 months

17-Feb-2000

The Vysya Bank Ltd.

50 yrs 1 month

10

Shri Krishnendu Banerjee

CGM

35,71,071

Confirmed Employee

M.A., JAIIB 31 yrs 6 months

2-Nov-1987

State Bank of India

58 yrs 5 months

Notes:

1. None of the employees listed above hold 2% or more of the paid-up share capital of the Bank as at March 31,2019.

2. None of the employees listed above is a relative of any director of the Bank.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

a) Conservation of Energy

Various initiatives taken by Bank towards conservation of energy are as follows:

- All conventional light fixtures at the Head Office, Mumbai and Annexe building at CBD-Belapur, Navi Mumbai have been replaced with energy efficient LED light fixtures/ lamps/ tubes to save power consumption. Occupant sensors have been used to control cabin lighting to save power consumption.

- Lifts with variable frequency drive have been installed at the Head Office, Mumbai and Annexe building at CBD-Belapur, Navi Mumbai.

- Energy efficient screw chillers have been installed for air-conditioning at Head Office, Mumbai and Annexe building at CBD-Belapur, Navi Mumbai.

- Solar panels have been installed to cater to common lighting at Annexe building at CBD-Belapur, Navi Mumbai. Installation of solar panels is in progress at Jawaharlal Nehru Institute of Banking and Finance (JNIBF), Hyderabad.

- Solar water heaters are installed at the JNIBF campus. In addition to the above, the Bank is adopting water and energy conservation measures in all its new projects and renovation of existing premises. Further, LED light fixtures are being used for power saving in the new branch furnishing and old branch relocation process.

b) Technology Absorption

Your Bank has been proactively scrutinising and absorbing the latest technology-based innovations which have potential to empower its business functions, enrich its customer experience and optimise its readiness towards opportunities and challenges of the future. A few technology-driven reforms adopted recently by your Bank include deployment of solutions for automation and monitoring of DC/ DR drills from centralised consoles, implementation of enterprise-level proxy solution and upgrades to the Active Directory (AD) and Security Operations Centre (SOC) to strengthen the security posture of the Bank, enhancement of capacity under the private cloud architecture to adequately provide for future business growth, and digitisation of processes like onetime settlement of debt and over-the-counter investments in third party financial instruments aimed at ease of business. Your Bank has also taken steps to increase digital foot-prints/ touch-points by introducing new ‘All in one’ mobile banking app for giving various services to customers.

While your Bank has already embarked upon implementation of various solutions like Early Warning Signal System (EWS) to contain fresh slippages and an Online Loan Review System for automation of the lending related processes, the Bank is also in the process of implementing many security initiatives like Enterprise DLP and Data Classification Solution, Honeypot Solution, Backup Solution for endpoints and encryption, Distributed Denial-of-Service (DDoS) prevention tool to protect internal threats etc. The Bank is also evaluating and exploring the absorption of nascent technologies like Chat Bots/ Voice Bots, Block Chain Technology, API Layer Integration, Artificial Intelligence and Robotic Process Automation to its competitive advantage in the near future. Details of other initiatives taken in the Information Technology ecosphere have been provided in the Management Discussion & Analysis section of this Annual Report.

c) Foreign Exchange Earnings and Outgo

During the year, the total foreign exchange earned by the Bank was Rs. 53.38 crore (excluding foreign currency cash flows in derivatives and foreign currency exchange transactions) and the total foreign exchange outgo was Rs. 87.16 crore towards the operating and capital expenditure requirements.

RBI’s Prompt Corrective Action (PCA)

The RBI, vide its letter dated May 05, 2017, initiated PCA for your Bank in view of its high net Non-Performing Assets (NPA) and negative Return on Assets (ROA). The Bank has been taking necessary actions to comply with the RBI’s directive in this regard. The Bank has also put in place a comprehensive turnaround strategy to improve its financial position. Furthermore, in compliance with the RBI directive with regard to restriction on fresh corporate exposure, the Bank has reviewed its internal credit policy and has been working towards limiting its corporate exposure.

Directors’ Responsibility Statement

The Board of Directors, hereby, declares and confirms that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for that period;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

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

Acknowledgements

Your Bank’s Board of Directors is sincerely grateful to the Government of India, Reserve Bank of India (RBI), all other statutory/ regulatory authorities and Life Insurance Corporation of India (LIC) for their valuable cooperation and guidance. The Board also acknowledges, with gratitude, the co-operation and support received from various State Governments and other banks/ financial institutions. The Board thanks various multilateral institutions and international banks/ institutions for their support. The Board takes this opportunity to put on record its deep sense of gratitude to its loyal shareholders and customers for extending their support during the year, and looks forward to their continued association in the years ahead. The Board appreciates the sincere and devoted services rendered by its entire staff and highly values their commitment towards the Bank.

[G. M. Yadwadkar] [Rakesh Sharma]

Deputy Managing Director Managing Director & CEO

Place: Mumbai

Date: May 30, 2019

Source : Dion Global Solutions Limited
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