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| Chairman's Statement |
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CHAIRMAN AND MANAGING DIRECTOR'S SPEECH DELIVERED AT THE 12TH ANNUAL GENERAL MEETING OF THE BANK HELD AT MANIPAL ON 25.06.2011
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Dear Shareholders, It is my proud privilege to welcome all of you on behalf of the Board of Directors to this Twelfth Annual General Meeting of your Bank. Before I present the highlights of your Bank's performance during the Fiscal Year 2010-11, it would not be out of place to share with you briefly the details of the macro-economic environment- global as well as domestic-that prevailed during the year as this had a strong bearing on the Bank's performance. The year was marked by a fairly tough financial environment due to slowdown in some of the major economies of the world. The economic activities in many developed counties remained sluggish due to sovereign debt turmoil. The lingering uncertainties around global growth hampered long-term investment prospects. As per the data released by International Monetary Fund (IMF), World GDP grew by 5.0 per cent in 2010 and is projected to grow at a lower rate of 4.4 per cent in 2011. In contrast, emerging and developing market economies performed comparatively well by registering growth of 7.3 per cent during 2010, but they suffered from the problem of overheating in the face of closing output gap and high capital inflows. As these economies built up large external surpluses, managing exchange rate appreciation was a critical challenge due to the conflicting demands of reigning in inflationary pressures, on the one hand and reviving the subdued credit demand, on the other. India's economy continued on its high growth trajectory, by registering GDP growth at 8.6 per cent in 2010-11, on the back of spurt in economic activities and robust expansion in agriculture and allied sectors. Agriculture, Industry and Services sectors grew by 5.4%, 8.2 per cent and 9.4 percent respectively in 2010-11 as against 0.4%, 8.3 percent and 9.7 per cent recorded in 2009-10. Tight liquidity conditions continued to drive average overnight borrowing rates throughout the year 2010, but of late, the money market is slowly and steadily getting back to normalcy. Inflation continued to remain a major concern for the policy makers. Aggregate deposits of SCBs grew y-o-y by 15.8 per cent to Rs. 52,04,703 crore during the year (Up to March 25, 2011). On the other hand, outstanding credit of SCBs swelled by 21.4 per cent to Rs.39,38,659 crore as at March 25, 2011. Money supply grew by 16.0 per cent during the year ( Up to March 25, 2011) as against 17.1 per cent registered during 2009-10. Scheduled Commercial Bank's (SCB) investments in government and other approved securities registered a growth of 8.3 percent as against 18.7 percent in the previous fiscal. The financial highlights of the Bank's performance are outlined below: FINANCIAL PERFORMANCE DURING 2010-11 a. Global Business grew by 17.01 per cent from Rs.2,08,476 crore in 2009-10 to Rs.2,43,946 crore in 2010-11. Deposits grew by 15.87 per cent to Rs.1,35,596 crore whereas advances registered a growth of 18.48 per cent to Rs.1,08,350 crore during the year 2010-11. b. Priority Sector Advances registered a growth of 11.92 per cent during 2010-11 and constituted 46.22 per cent of the Adjusted Net Bank Credit against the mandatory requirement of 40 per cent. Credit to Agriculture increased by 12.26 per cent and constituted 18.62 per cent of Adjusted Net Bank Credit (ANBC) as against the mandatory requirement of 18 per cent. c. Total income rose to Rs.12,365.98 crore in 2010-11 from Rs.11,214.64 crore in 2009-10 registering a growth of 10.27 per cent. d. Operating Profit of the Bank grew by 46.82 per cent to Rs. 2,750 crore in 2010-11 up from Rs.1,873 crore in 2009-10. Net Profit, grew by 28.91 per cent to Rs.1,048 crore in 2010-11 up from Rs.813 crore for 2009-10. e. The Bank made a recovery of Rs.902.06 crore under NPA during 2010-11. The Gross NPA stood at Rs.2,598.97 crore as at the end of the year 2010-11 which was 2.40 per cent of the Gross advances. f. The Net NPA constituted 0.97 per cent of the net advances at the end of the financial year 2010-11, as against 1.07 per cent in 2009-10. g. The Credit Deposit (CD) ratio of the Bank at the end of the financial year 2010-11 stood at 79.91 per cent as against 78.15 per cent for the previous year. h. Provision Coverage Ratio improved from 73.31 per cent as at 31.03.2010 to 77.18 per cent as at 31.03.2011. i. Book value per share improved to Rs.122.99 from Rs.107.80 last year. j. The Bank is Basel II compliant. The credit to Risk-Weighted Assets Ratio (CRAR) was 13.04 per cent as at 31.03.2011, compared to 12.70 per cent as at 31.03.2010. k. Net interest income (NII) of the Bank improved from Rs.2740 crore in 2009-10 to Rs.4383 crore in 2010-11. l. The Bank's Net Interest Margin (NIM) improved to 3.40 per cent as at 31.03.2011 from 2.35 per cent as at 31.03.2010. m. The Bank's Return on Assets (ROA) improved from 0.62 per cent in 2009-10 to 0.76 per cent in 2010-11. n. The Net Worth of the Bank (excluding revaluation reserves) increased to Rs. 6,656.94 crore as at March 31, 2011 from Rs. 5,222.86 crore as at March 31, 2010. o. The Board of Directors have recommended a dividend of 37 per cent for the year ended 31st March 2011. BRANCH NETWORK The total network of branches stood at 2494 branches (including London Branch) as at 31.03.2011. The domestic branch network consisted of 803 Rural, 589 Semi urban, 551 urban and 550 metro & port town branches. Out of the total network of branches 708 branches are in underbanked districts and 670 branches are in minority concentration districts. During the year 2010-11, 188 General Banking branches were opened. Out of these, 154 branches were located in Tier 3-6 centres including 131 branches opened under the Financial Inclusion programme of the Govt. of India. Out of the new branches opened as above, 76 Branches are in under-banked Districts All the domestic branches are networked under CBS.
Priority Sector Advances of the Bank rose from Rs.32,713 crore as at the end of March 2010 to Rs.36,611.26 crore as at the end of March 2011 constituting 46.22 per cent of Adjusted Net Bank Credit (ANBC) against the mandatory level of 40 per cent. The Bank continued to participate in implementing the various poverty alleviation and employment generation schemes sponsored by the Government. The Advances to SC/ST beneficiaries under Priority Sector, rose from Rs.1407.81 crore as at the end of March 2010 to Rs.1,957.84 crore as at the end of March 2011, registering a growth of 39.07 per cent. Advances to Minorities rose from Rs. 4399.14 crore as at the end of March 2010 to Rs.5,569.30 crore as at the end of March 2011, registering a growth of 26.60 per cent.
In its endeavour to increase the flow of micro credit, the Bank has so far credit linked 205979 SHGs with a credit exposure of Rs.2,165.43 crore as at the end of March 2011. Of the total SHGs, women groups numbered 182359 and accounted for credit exposure of Rs.1,868.10 crore. EDUCATION LOAN In order to support meritorious students from Economically Weaker Sections of the society, your Bank is implementing the Model Education Loan Scheme formulated by Indian Banks Association (IBA) and providing Interest Subsidy for the period of moratorium on education loans taken by students from Economically Weaker Sections for pursuing technical/professional courses in India. All students belonging to SC/ST Category are eligible for concession of 0.50% on the applicable interest rate. All girl students are eligible for concession of 0.50% on the applicable interest rate. Girl students under SC/ST category are eligible for a further concession of 0.25% on the applicable interest rate. FINANCIAL INCLUSION INITIATIVES The Bank has been allotted 1493 villages having a population of 2000 and above for implementation of Financial Inclusion programme before March 2012. As on 31.03.2011 the Bank has covered 750 villages by opening Brick & Mortar branches in 135 villages and 615 villages by engaging Business Correspondents/Customer Service Providers. The Bank has opened 3,72,740 no-frill accounts in allotted FI villages and distributed over 24,000 smart cards as at 31.03.2011. CREDIT CARD BUSINESS The Bank in association with VISA International, offers Gold and Classic Credit Cards, which can be used at ATMs, Point of Sale terminals, Internet, IVR and for Mail Orders. The cards are valid globally and can be used throughout the world. The Bank introduced One Time Password (OTP), with effect from 11.02.2011. It is an additional security feature made mandatory by Reserve Bank of India, which enables the cardholder to generate the 8 digit One Time Password for doing IVR transactions through telephone / mobile. The Bank has issued 70957 Credit Cards and 52.64 lakh debit cards up to 31.03.2011. CUSTOMER SERVICE INITIATIVES The Bank believes that customer satisfaction is the cornerstone of profitable banking operations. Your Bank has a full-fledged grievance redressal mechanism operating at various levels for prompt redressal of customer complaints. In order to ensure that customer service becomes the driving force at all levels, the Bank has put in place a system of quarterly rating of Regions on the basis of number of complaints and average grievance redressal time. Your Bank also has Board approved policies on Deposits, Cheque Collection, Compensation payable for deficiencies in service etc. These are also displayed on the Bank's website for the information of the customers. HR POLICIES The Bank has drawn a comprehensive and integrated Manpower plan to provide optimum staff at branches/offices. During the year 2010-11, the Bank has recruited Probationary Officers, Specialist Officers, Probationary Clerks and Sub-staff. The Bank has introduced several new staff welfare measures during the year besides enhancing the monetary ceiling under select existing schemes. The Industrial Relations in the Bank have been cordial and harmonious, fostering a healthy work environment. The Unions / Associations have been responsive and proactive and they have extended unstinted support for the measures aimed at the progress and prosperity of the Bank. TRAINING AND DEVELOPMENT Realizing the potentialities of human capital, the Bank has designed a progressive system of training and development. It emphasizes on developing individual potential of employees and harnessing their skills on continuous basis to meet the requirement of rapidly growing and complex business models. Investment in employees training and development has enabled the Bank to improve the preparedness of the staff members to handle increased or new challenges. The Bank is, also, effectively using video conferencing and e-learning system as cost effective methods for imparting training to its employees across the country.
Risk Management is an integral part of operation of banks and FIs. Risk analysis helps in identifying and measuring various risk components viz. credit risk, market risk and operational risk inherent in financial decision making for safety and soundness of the organisation. Keeping in view the above, your Bank has put in place well structured and appropriate risk management system. Risk Management Committee (RMC) of the Board is the apex Committee defining institution's risk appetite and ensures that the Bank's risk management framework includes detailed policies that set specific prudential limits on the Bank's activities consistent with its risk appetite and absorption capacity. The Bank has been continuously upgrading and fine tuning its risk management systems in accordance with the dynamic financial environment and changing policy framework of the regulator. ASSET LIABILITY MANAGEMENT Asset-liability management is a strategic management tool to manage interest rate risk and liquidity risk faced by banks and FIs. With the declining availability of low cost funds, liability management has become the focus of bank management efforts. Your Bank's Asset Liability Management comprises of members of the top management who regularly meet to manage Liquidity Risk, Interest Rate Risk, Gap/Mis-match Risk, Basis Risk, Repricing Risk, Forex Risk and Equity Price Risk. The Bank has a well-documented Contingency Liquidity Funding Plan for managing any contingency. The Bank is also in the process of upgrading the ALM system in line with the market developments and RBI directives.
The Bank has launched a micro-insurance product for its Financial Inclusion customers under a tie-up arrangement with Tata AIG Life Insurance Company. Under this product, the customer is insured against both natural death and accidental death for a nominal premium. Payment Gateway with M/s CCAvenue and with BillDesk has been successfully implemented. The payment gateway enables our customers to make payment for various products and services on-line via Internet banking. The Bank has implemented Mobile Banking Solution through M/s Paymate India Pvt Ltd. for providing Mobile Payments and m-Commerce facilities. These are just a few of the initiatives taken by the Bank in recent months to fulfill the expectations of our customers.
During the year, the Bank received the National Award for outstanding performance in lending to Micro Enterprises from Her Excellency Smt.Pratibha Devisingh Patil, President of India. Andhra Pragathi Grameena Bank (sponsored by SyndicateBank) was selected by the A.P. Govt. as the Best Bank in the State in the field of agriculture financing. CORPORATE SOCIAL RESPONSIBILITY (CSR) As a part of its corporate social responsibility, the Bank has been undertaking activities aimed at economic transformation and uplift of the downtrodden. The Bank has donated funds liberally for varied social causes like the welfare of the serving policemen and their families, providing free medical facilities to the poor people and their children, providing education to the poor students in rural areas for a nominal fee, helping differently abled persons by providing artificial limbs/calipers/wheelchairs etc., providing gainful employment to the Tribals and setting up an integrated Health Care Centre for the common man. THE ROAD AHEAD The road ahead is full of challenges in the face of stiff competition among the existing players and possible entry of new players. Your Bank is fully equipped to meet these challenges and will confidently continue its onward march in the days ahead. Considering the importance of CASA in improving the bottom line, a growth of 15 per cent is planned during the next year. The Bank also intends to continue its proactive role in the area of Priority sector lending. The Bank is committed to promote inclusive growth in the country. To this end, it plans to open a number of Financial Inclusion branches in 2011-12. The strength of the Bank's large branch network, rural presence, state-of-the-art technology solutions and robust services will be fully leveraged in the days ahead to excel in our role of faithful and friendly financial partner to our customers. ACKNOWLEDGEMENT I take this opportunity to thank the members of the Board, the Government of India and the Reserve Bank of India for their valuable support and guidance. I thank all our shareholders for the confidence and faith they have reposed in us. I thank all our customers for their continued co-operation and support. I also place on record my appreciation of the dedicated and committed work put in by our staff members for taking this organization to greater heights of achievement and glory. Finally, I thank all of you for attending this meeting. With regards, Yours Sincerely Place:Manipal (Basant Seth) |
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