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Indian Overseas Bank

BSE: 532388 | NSE: IOB |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE565A01014 | SECTOR: Banks - Public Sector

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Annual Report

For Year :
2021 2019 2017 2016 2015 2014 2013 2012 2011

Director’s Report

DIRECTORS’ REPORT 2020-21

The Board of Directors have pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31st March, 2021.

Global Business Performance

Outbreak of novel Corona virus (COVID-19) pandemic resulted in contraction of global economy growth by 3.3 percent in 2020 as against 2.8 percent growth witnessed in 2019, marking one of the worst financial crises. Substantial fiscal and monetary stimulus packages are released by the Governments and Central Banks across the globe to fight the deadly virus and bring life to normal. Indian Economy is no exception to this event. In line with global economy, India witnessed major economic disruptions during the Financial Year forcing the Government to impose strict lockdown measures, bringing the manufacturing and trade activities to almost zero. Continuous lockdown forced mobility restrictions and social distancing led to unparalleled supply chain disruption and fall out in consumer demand. This forced Indian GDP growth to contract by 8.0% in FY 2020-21 as against the growth of 4.0 percent in FY 2019-20.

Financial Performance

During FY 2020-21, the major focus of the Bank was to impart continuous service to the customer amidst the spread of virus while keeping in place the interest of all the staff members. Bank followed Business Continuity Plan duly adhering to COVID Protocol to serve the interest of the Customer, Staff and all stakeholders.

Bank''s global business stood at Rs.3,79,885 Crores as of 31st March 2021 as compared to Rs.3,57,723 Crores as of 31st March 2020. Deposits and Advances stood at Rs.2,40,288 Crores and Rs.1,39,597 Crores as of 31st March 2021 as compared to Rs.2,22,952 Crores and Rs.1,34,771 Crores as of 31st March 2020 respectively.

On Deposits front, Bank further reduced the concentration of Bulk deposits and improved the share of low cost deposits. CASA deposits grew by 13.83 percent over 31st March 2020 and stood at Rs. 1,02,165 Crores as on 31st March 2021, a milestone achievement in the history of the Bank. CASA ratio remained at 42.52 percent.

The operational efficiency of the Bank improved further during the year. Constraints on capital has restricted the Bank to expand the credit portfolio. Bank continued to accelerate the growth under Capital light advances such as Housing and jewel loan in order to protect the interest income under a falling interest rate regime. The improved non-interest income during the year has further

strengthened the operating efficiency of the Bank. Bank could contain its expenditure on account of lower interest expenses. As a result, Bank could achieve operating profit to the extent of Rs.5896 Crores for FY 2020-21.

Bank could reduce the Gross Non Performing Assets substantially from Rs 19913 Crores to Rs 16,323 Crores and thereby brought down the GNPA percent from 14.78 percent to 11.69 percent through multi-pronged and focused recovery initiatives. NNPA has been brought down from Rs 6603 Crores to Rs 4578 Crores in absolute terms and from 5.44 percent to 3.58 percent. PCR of the Bank has improved substantially from 86.94 percent as on 31.03.2020 to 90.34 percent as on 31.03.2021, one of the highest in industry.

As a result of this approach, Bank could register Net profit to the tune of Rs 831 Crores for FY 2020-21.

Income and Expenditure Analysis

The Interest on advances was limited to Rs.10834 Crores as compared to Rs.11513 Crores received previous year. Interest on investments has improved from Rs.5208 Crores in FY 2019-20 to Rs.5712 Crores in FY 2020-21. However, overall interest income has recorded decline during the year mainly due to falling interest rate regime. Besides, the Interest Income which includes interest recovered from NPA accounts stood lower in FY 2020-21 as against in FY 2019-20.

Growth under low cost deposits and shedding of bulk deposits has helped in controlling the cost of deposit. CASA has improved from Rs.89751Crores as of 31st March-2020 to Rs.102165 Crores as of 31st March-2021 with a growth of 13.83%. CASA% has moved up from 40.26% as of 31st March-2020 to 42.52% as of 31st March-2021. Further, the falling interest rates in Savings Bank deposit and term deposits has kept interest expenditure in control.

Despite reduction in interest on advances, Net Interest Income has improved from Rs.5303 Crores in FY 201920 to Rs 5899 Crores in FY 2020-21. Operating expenses has gone up marginally from Rs 5129 Crores in FY 201920 to Rs.5562 Crores in FY 2020-21 due to provision for performance linked incentives and pension commutation arrears on account of the XIth Bipartite settlement.

Yield on Advances has decreased from the level of 8.62 percent in FY 2019-20 to 8.00 percent in FY 2020-21. Cost of deposits has been brought down from 5.33 percent in FY 2019-20 to 4.70 percent in FY 2020-21. As a result, Net Interest Margin (NIM) stood higher by 9 bps at 2.39 percent in FY 2020-21 as against 2.30 percent in FY 2019-20.

Capital Raised during FY 2020-21

Capital Infusion by Government of India

The Bank received a capital infusion of Rs.4,100 Crores (Rupees Four Thousand One Hundred Crores only) from Government of India towards contribution of Central

Government in the preferential allotment of equity shares of the Bank during the Financial Year 2020-21, as Government’s Investment. The amount of Rs.4,100 Crores (Rupees Four Thousand One Hundred crores only) received by the Bank on 31.03.2021 is kept in Share Application Money Account as on 31.03.2021 for allotment of shares to Government of India.

Capital Adequacy Ratio

The Bank’s capital adequacy ratio as on 31st March 2021 stood at 15.32 % as per Basel III norms.

Branch Network

The Bank has 3,217 domestic Branches as on 31st March 2021 as against 3,270 Branches as on 31st March 2020, comprising of 903 Rural Branches (28.07%), 960 Semi Urban Branches (29.84%), 653 Urban Branches (20.30%) and 701 Metropolitan Branches (21.79%). The Bank also has 48 Regional Offices, 3 Extension Counters, 1 Satellite Office, 3 City Back Offices and 6 Nodal Audit Offices. During the year under review (FY 2020-21), the Bank has merged 53 Branches with other existing branches and closed 7 Zonal Offices and 1 Satellite Office.

Corporate Governance

Corporate Governance reflects the built in value system of the Bank in conducting its day to day affairs. The Bank recognizes the critical importance of effective Corporate Governance for the safe and sound functioning of the Bank and lays emphasis on ensuring that structures, processes and systems are put in place to establish strategic objectives to serve the interest of the Bank and its stakeholders with a view to facilitate effective monitoring.

SEBI (Listing Obligations and Disclosure Requirements Regulations), 2015 (LODR)

As perSEBI (LODR),

• The Bank is providing remote e-voting facility to its shareholders, in all Annual General Meetings/ Extraordinary General Meetings.

• The Code of Conduct is applicable to all members of

the Board and the Senior Management (i.e., General Managers of the Bank).

• The Bank is submitting a quarterly compliance report on Corporate Governance to the Audit Committee of the Board and to BSE & NSE, where the shares of the Bank are listed.

• The Bank is also submitting Quarterly Investor Grievance Report to BSE & NSE.

In view of ongoing Covid19 pandemic, the Bank has conducted Annual General Meeting (AGM 2020) through virtual mode i.e. in compliance with SEBI guidelines.

Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, the Bank has formulated IOB Code of Conduct for Prohibition of Insider Trading for its Designated Person.

Investor Education & Protection Fund (IEPF)

As per the guidelines of Ministry of Corporate Affairs (MCA), Government of India, the Bank transferred Unpaid Dividend amount pertaining to the year 2012-13 to IEPF during September, 2020. The unpaid dividend data pertaining to the years 2013-14 has been uploaded in MCA website and is also available at www.iob.in. Accordingly, the Bank has complied with the guidelines of Government of India in respect of transfer of unpaid dividend to IEPF.

Bank is complying with all guidelines/regulations laid down by the Regulatory Authorities and Government of India from time to time. The Bank redresses the shareholders grievances without any delay.

Board of Directors

The business of the Bank is vested with the Board of Directors. The MD & CEO and EDs function under the superintendence, direction and control of the Board. The strength as on date is six directors comprising three whole time Directors, one GOI Nominee Director, one RBI nominee director, one director elected from amongst the shareholders to duly represent their interest. The MD & CEO presides over the meetings of the Board as Chairman.

The position of the terms of directors during the FY 2020-21 is as under:

Name

Date of Joining

Term Ended on

Designation

Shri Partha Pratim Sengupta

24.07.2020

31.12.2022

Managing Director & Chief Executive Officer

Shri Ajay Kumar Srivastava

09.10.2017

08.10.2022 ~

Executive Director

Ms S Srimathy

10.03.2021

09.03.2024

Executive Director

Ms Annie George Mathew

22.07.2016

***

Govt. Nominee Director

Dr. Deepak Kumar

18.09.2019

***

RBI Nominee Director

Shri Navin Prakash Sinha

08.12.2017 29.01.2021 #

07.12.2020

28.01.2024

Share Holder Director

^ - Shri Ajay Kumar Srivastava, term of office extended for a period of two years with effect from 09.10.2020.

# - Shri Navin Prakash Sinha has been re-elected as Share Holder Director for the second term from 29.01.2021 till 28.01.2024 *** Until Further Orders

During the FY 2020-21, the following directors'' tenure ended as below:

Name

Date of Joining

Term Ended on

Designation

Shri Karnam Sekar

15.04.2019 (w.e.f. 01.04.2019)

30.06.2020

Managing Director & Chief Executive Officer

Shri Sanjay Rungta

08.12.2017

07.12.2020

Share Holder Director

Acknowledgement

The Board of Directors are grateful for the valuable guidance and support received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions and all Overseas Regulators. The Board of Directors acknowledge with thanks the valued Customers, Employees Union, Officers Association, domestic and international banking group, the shareholders & other stake holders for their valued support and continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuable contribution of the Bank’s Staff at all levels and looks forward to their continued involvement with commitment towards achieving the future goals.

For and on behalf of the Board of Directors

-Sd/-

Chennai Partha Pratim Sengupta

. „„ , „„„. Managing Director & Chief Executive Officer

14th June, 2021 a a

Director’s Report